<nobr>Mar 2, 2006</nobr>

Fifth Circuit Sends Milofsky Case Back to District Court

The Fifth Circuit, sitting en banc on an appeal from a three-judge panel, issued a decision per curiam March 2, vacating a district court’s dismissal of a claim for breach of fiduciary duty under section 502(a)(2) of ERISA.

The plaintiffs in Milofsky v. American Airlines, Inc. seek damages under §502(a)(2) for alleged breaches of fiduciary duties. Plaintiffs—who were pilots for a direct subsidiary of American Airlines’ (American) parent company—participated in the subsidiary’s individual-account pension plan. They allege that American misrepresented how and when each of their accounts would be transferred to American’s pension plan and that the values of their individual accounts decreased because of such misrepresentations. The plaintiffs requested that actual damages be paid to American’s plan, to be allocated among the individual accounts proportionate to the losses caused by the alleged breaches.

Both the district court and a Fifth Circuit panel rejected the claims, concluding that plaintiffs’ damage claims were for individual losses, not for “losses to the plan,” as required by ERISA §409. The majority opinion relied on Supreme Court and Fifth Circuit precedent indicating that losses are recoverable under §502(a)(2) only when the fiduciary duty breached is one owed to the plan itself and when the recovery sought would benefit “the plan as a whole.”

The en banc decision vacates those rulings and orders the district court to allow the plaintiffs claims to progress beyond the initial pleading stage. ERIC filed an amicus brief with the court urging the court to uphold the lower court’s ruling.

Text Files:

Fifth Circuit Decision


Websites:

ERIC Amicus Brief

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