Standing

The extent to which a participant in a tax-qualified defined benefit plan has standing to sue the plan’s fiduciaries for mismanagement of plan assets has long been unclear. The argument against standing is that the participant has not suffered any injury because the participant would receive the same benefit from the plan regardless of the outcome of the lawsuit.
Continue Reading Supreme Court Closes Door to Participant Challenges to Defined Benefit Plan Investments

In the wake of investment losses from the 2008 market downturn, many fiduciaries of employee benefit plans faced lawsuits brought by plan participants.  Most cases involved defined contribution plans, in which participants sought to recover investment losses that had directly reduced their individual benefits.  In contrast, fewer cases were brought against fiduciaries of defined benefit plans, largely because plan sponsors bear the investment risk in the defined benefit context–which means investment losses do not directly affect participants’ individual benefits.  Courts have generally held that participants lack standing to sue defined benefit plan fiduciaries for investment losses–until now.
Continue Reading District Court Opens Door to Suits by Defined Benefit Plan Participants

Seems like we’ve written this before, but this time we (actually a federal district court) really means it:  the court in Lee v. Verizon granted last Friday Verizon’s motion to dismiss a class action lawsuit challenging its transfer in late 2012 of $7.5 billion of pension liabilities to Prudential (Lee v. Verizon, N.D.

Earlier today, a federal district court granted Verizon’s motion to dismiss a class action lawsuit challenging its recent transfer of $7.5 billion of pension liabilities to Prudential (Lee v. Verizon, N.D. Tex.).  The court concluded that plaintiffs had failed to state a claim that the transaction violated ERISA’s disclosure and fiduciary obligations.  The

The Fourth Circuit recently held that participants in a defined benefit plan lacked standing under Article III of the United States Constitution to challenge investment decisions made by the plan’s fiduciaries.  David v. Alphin, No. 11-2181 (4th Cir. Jan. 14, 2013).  The plan at issue was overfunded and the participants had not failed to receive any benefit to which they were entitled under the plan.  The Fourth Circuit held that the plaintiffs had not experienced an injury that would be redressed by a favorable outcome in the litigation.  Without such an injury, the plaintiffs did not have constitutional standing under Article III.
Continue Reading Participants Lack Standing to Challenge Defined Benefit Plan Investment Decisions