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29 U.S.C.S. § 1132(a) identifies six types of civil actions that may be brought by various parties. The second authorizes the Secretary of Labor as well as plan participants, beneficiaries, and fiduciaries, to bring actions on behalf of a plan to recover for violations of the obligations defined in 29 U.S.C.S. § 1109(a). The principal statutory duties imposed on fiduciaries by that section relate to the proper management, administration, and investment of fund assets, with an eye toward ensuring that the benefits authorized by the plan are ultimately paid to participants and beneficiaries.
Petitioner, a participant in a defined contribution pension plan, alleged that the plan administrator's failure to follow petitioner's investment directions "depleted" his interest in the plan by approximately $ 150,000 and amounted to a breach of fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA). The District Court granted respondents judgment on the pleadings, and the Fourth Circuit affirmed. Relying on Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 105 S. Ct. 3085, 87 L. Ed. 2d 96, the Circuit held that ERISA § 502(a)(2) provides remedies only for entire plans, not for individuals.
Did ERISA § 502(a)(2) authorize participant in defined contribution pension plan to sue fiduciary whose alleged misconduct impaired value of plan assets in participant's individual account?
The Fourth Circuit’s judgment was vacated. The court held that although § 502(a)(2) did not provide a remedy for individual injuries distinct from plan injuries, it did authorize recovery for fiduciary breaches that impair the value of plan assets in a participant's individual account. Section 502(a)(2) provided for suits to enforce the liability-creating provisions of § 409, concerning breaches of fiduciary duties that harm plans. The principal statutory duties imposed by § 409 relate to the proper management, administration, and investment of plan assets, with an eye toward ensuring that the benefits authorized by the plan were ultimately paid to plan participants. The misconduct that petitioner alleged fell squarely within that category, unlike the misconduct in Russell. There, the plaintiff received all of the benefits to which she was contractually entitled, but sought consequential damages arising from a delay in the processing of her claim. Russell's emphasis on protecting the "entire plan" reflected the fact that the disability plan in Russell, as well as the typical pension plan at that time, promised participants a fixed benefit. Misconduct by such a plan's administrators will not affect an individual's entitlement to a defined benefit unless it creates or enhances the risk of default by the entire plan. For defined contribution plans, however, fiduciary misconduct need not threaten the entire plan's solvency to reduce benefits below the amount that participants would otherwise receive. Whether a fiduciary breach diminishes plan assets payable to all participants or only to particular individuals, it creates the kind of harms that concerned § 409's draftsmen. Thus, Russell's "entire plan" references, which accurately reflect § 409's operation in the defined benefit context, were beside the point in the defined contribution context.