Washington, DC – The ERISA Industry Committee (ERIC) is pleased the U.S. Supreme Court ruled in favor of U.S. Bank in James J. Thole v. U.S. Bank N.A. holding that the plaintiffs lacked standing since they would receive the same benefits whether they won or lost.
“Today’s decision is an important one for retirement plans as it recognizes that parties alleging fiduciary breach must demonstrate financial harm,” said Aliya Robinson, Senior Vice President of Retirement and Compensation Policy, ERIC. “Plan sponsors voluntarily offer retirement benefits, and a Supreme Court decision allowing more frivolous lawsuits would have discouraged employers from continuing to offer these benefits.”
ERIC previously filed an amicus brief with the U.S. Supreme Court, asking the Court to uphold the U.S. Court of Appeals for the Eighth Circuit’s decision that the plaintiffs did not have the standing to sue.
The amicus brief argued that participants in a defined benefit retirement plan do not have standing under Article III for a breach of fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA) unless the alleged breach dramatically increases the risk that the participant will not receive the promised benefit. The brief further explained that the investment risk in a defined benefit plan is largely born by the employer, who must make additional contributions if an investment strategy fails to meet the plan’s funding requirements. As such, a breach of fiduciary duty under ERISA in a defined benefit plan would occur only where the participant can show that there is a risk of the promised benefit not being paid.