Blawgletter reported yesterday that the U.S. Supreme Court granted review of a Fourth Circuit decision involving sections 502(a)(2) and 502(a)(3) of the Employee Retirement Income Security Act in LaRue v. DeWolff, Boberg & Assoc., Inc., No. 06-856 (U.S. June 18, 2007). The court of appeals held against the plaintiffs under both sections.
A reversal will brighten the prospects of unhappy participants in "defined contribution" 401(k) plans. That seems especially so with the section 502(a)(2) issue, which allows recovery of losses on behalf of the plan itself. Defendants have argued that all or substantially all plan participants must suffer the same loss before someone can sue for the plan to recover plan losses. Also that individual losses must flow directly to partipants’ accounts.
Blawgletter hopes that the Court will rule that injury to the plan triggers the right to sue and that the plan fiduciary may allocate the plan recovery among participants and beneficiaries as appropriate.
Barry Barnett
