Today the Supreme Court decided Thole v. U.S. Bank in favor of the U.S. Bank holding that the plaintiffs lacked standing since they would receive the same benefits whether they won or lost. As you will recall, ERIC joined an amicus brief with the American Benefits Council and the US Chamber of Commerce, on behalf of U.S. Bank, arguing that participants in a defined benefit retirement plan do not have standing under Article III for a breach of fiduciary duty under ERISA, unless the alleged breach greatly increases the risk that the participant will not receive the promised benefit. The court agreed!
The decision was 5-4. Justice Kavanaugh delivered the opinion and was joined by Chief Justice Roberts and Justices Thomas, Alito, and Gorsuch. Justice Sotomayor filed the dissenting opinion and was joined by Justices Ginsburg, Breyer, and Kagan.
One point to note is that the plaintiffs’ amici asserted that defined-benefit plan participants have standing to sue if the plan’s mismanagement was so egregious that it substantially increased the risk that the plan and the employer would fail and be unable to pay the participants’ future benefits. The Court did not opine on this point because the plaintiffs themselves did not assert the theory and the complaint did not allege that level of mismanagement. Even though this leaves a small door open, it still aligns with our amicus position that the alleged breach must increase the risk of loss of benefits to the participants.
Article by Aliya Robinson, Senior Vice President of Retirement and Compensation Policy