Term: 2007
Docket: 06-856
James Larue v. Dewolff, Boberg & Associates, Inc., Et Al
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06-856 LARUE V. DEWOLFF, BOBERG & ASSOC., INC. DECISION BELOW: 450 F3d 570 CERT. GRANTED 6/18/2007 QUESTION PRESENTED: 1. Section 502(a)(2) of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. 1132(a)(2), provides that a “civil action may be brought * * * by a participant * * * for appropriate relief under section 1109 of this title.” 29 U.S.C. 1109 states that “a fiduciary with respect to a plan who breaches any * * * duties imposed upon fiduciaries * * * shall be personally liable to make good to such plan any losses to the plan resulting from each such breach.” The First Question Presented is: Does §502(a)(2) of ERISA permit a participant to bring an action to recover losses attributable to his account in a “defined contribution plan” that were caused by fiduciary breach?¹ 2. Section 502(a)(3) of ERISA, 29 U.S.C. 1132(a)(3), provides that a “civil action may be brought * * * by a participant * * * to obtain other appropriate equitable relief * * * to redress * * * violations” of the statute. The Second Question Presented is: Does §502(a)(3) permit a participant to bring an action for monetary “make-whole” relief to compensate for losses directly caused by fiduciary breach (known in pre-merger courts of equity as “surcharge”)?² ¹Hereinafter, this will be referred to as the “502(a)(2) Question.” ²Hereinafter, this will be referred to as the “ 502(a)(3) Question.” LOWER COURT CASE NUMBER: 05-1756
In the case of James LaRue v. DeWolff, Boberg & Associates, Inc., et al., 2007, the U.S Supreme Court ruled in favor of James LaRue who claimed that his employer's mishandling of his 401(k) plan led to a significant loss in its value. The court held that an individual can sue under section 502(a)(2) of the Employee Retirement Income Security Act (ERISA), which allows for lawsuits when fiduciary duties are breached and result in losses to retirement plans. This decision was groundbreaking as it allowed individuals to bring suits against their employers for mismanagement or misconduct related to individual accounts within defined contribution plans like a 401(k). Prior to this ruling, such claims were typically only brought forward by plan trustees or participants suing on behalf of all affected members rather than individually.
In the dissenting opinion for James LaRue v. DeWolff, Boberg & Associates, Inc., et al, Justice Clarence Thomas argued that Section 502(a)(2) of the Employee Retirement Income Security Act (ERISA) does not provide a remedy for individual injuries distinct from plan injuries. He contended that this section only allows recovery for losses to the plan as a whole and not to an individual account within it. Therefore, he believed that Mr. LaRue's claim was improperly framed under ERISA because his alleged injury affected only his personal retirement account rather than the entire pension plan's assets or solvency. Furthermore, Justice Thomas expressed concern about potential negative implications of allowing such claims on future litigation and administrative costs associated with managing employee benefit plans.
