Larue v. Dewolff, Boberg & Associates, Inc.

• Decision Date: 19 June 2006
• Docket Number: No. 05-1756.,05-1756.
• Citation: 450 F.3d 570
• Parties: James LaRUE, Plaintiff-Appellant, v. DeWOLFF, BOBERG & ASSOCIATES, INCORPORATED; DeWolff, Boberg & Associates, Incorporated, Employees' Savings Plan, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

450 F.3d 570

James LaRUE, Plaintiff-Appellant, v. DeWOLFF, BOBERG & ASSOCIATES, INCORPORATED; DeWolff, Boberg & Associates, Incorporated, Employees' Savings Plan, Defendants-Appellees.

No. 05-1756.

United States Court of Appeals, Fourth Circuit.

Argued: May 22, 2006.

Decided: June 19, 2006.

ARGUED: Robert Edward Hoskins, Foster Law Firm, L.L.P., Greenville, South Carolina, for Appellant. Thomas Peter Gies, Crowell & Moring, L.L.P., Washington, D.C., for Appellees. ON BRIEF: Rebecca Lee, Crowell & Moring, L.L.P., Washington, D.C., for Appellees.

Before WILKINSON and TRAXLER, Circuit Judges, and RICHARD L. WILLIAMS, Senior United States District Judge for the Eastern District of Virginia, sitting by designation.

Affirmed by published opinion. Judge WILKINSON wrote the opinion, in which Judge TRAXLER and Senior Judge WILLIAMS joined.

OPINION

WILKINSON, Circuit Judge:

The plaintiff in this case alleges that defendant fiduciaries breached their duty to him by failing to implement the investment strategy he had selected for his employee retirement account. Relying on two separate provisions of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1132(a)(2) and 1132(a)(3) (2000), he seeks recovery of the amount by which his account would have appreciated had defendants followed his instructions. The district court concluded that his complaint did not request a form of relief available under ERISA, and it therefore granted defendants' motion for judgment on the pleadings.

We affirm. Section 1132(a)(2) provides remedies only for entire plans, not for individuals. And while § 1132(a)(3) does in some cases furnish individualized remedies, the Supreme Court's decisions in Mertens v. Hewitt Associates, 508 U.S. 248, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993), and Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002), compel the conclusion that it does not supply one here. Plaintiff has alleged no unjust enrichment, unlawful possession, or self-dealing on the part of defendants, and the remedy he seeks falls outside the scope of the "equitable relief" that § 1132(a)(3) authorizes.

I.

DeWolff, Boberg & Associates, Inc. is a nationwide management consulting firm organized under the laws of South Carolina. It administers, and is thus a fiduciary of, an ERISA-regulated 401(k) retirement savings plan in which its current and former employees participate. The plan permits participants who so desire to manage their own accounts by selecting from a menu of various investment options.

Plaintiff James LaRue has participated in this 401(k) plan since 1993. He alleges that in 2001 and 2002, he directed DeWolff to make certain changes to the investments in his plan account, but that these directions were never carried out. In 2004, he brought suit against DeWolff and the plan, claiming that this omission amounted to a breach of fiduciary duty.^* According to the complaint, his "interest in the plan ha[d] been depleted approximately $150,000.00" as a result of defendants' failure to follow his instructions. To recover for this loss, the complaint sought "appropriate `make whole' or other equitable relief pursuant to [29 U.S.C. § 1132(a)(3)]."

Defendants subsequently filed a Rule 12(c) motion for judgment on the pleadings, contending that plaintiff's requested remedy was not available under § 1132(a)(3). The district court agreed, and thereafter dismissed the case with prejudice.

Plaintiff appeals. We review de novo a district court's decision to grant judgment on the pleadings. See Burbach Broad. Co. of Del. v. Elkins Radio Corp., 278 F.3d 401, 405-06 (4th Cir.2002).

II.

In enacting ERISA, Congress sought to uniformly regulate the wide universe of employee benefit plans. See Aetna Health Inc. v. Davila, 542 U.S. 200, 208, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004). A salient feature of this effort was the careful delineation of civil remedies available to litigants seeking to enforce their rights under such plans. See id. at 208-09, 124 S.Ct. 2488. Congress broadly preempted previously available state-law causes of action, see 29 U.S.C. § 1144(a), and set forth in a single section of ERISA the exclusive list of civil actions available to parties aggrieved by a statutory violation, see id. § 1132(a); see also Ingersoll-Rand Co. v McClendon, 498 U.S. 133, 144, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990).

Section 1132(a) stops short of providing ERISA complainants with a full arsenal of relief. ERISA is "an enormously complex and detailed statute that resolve[s] innumerable disputes between powerful competing interests—not all in favor of potential plaintiffs." Mertens v. Hewitt Assocs., 508 U.S. 248, 262, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993). Its civil enforcement provision in particular attempts to settle "a tension between the primary ERISA goal of benefiting employees and the subsidiary goal of containing pension costs." Id. at 262-63, 113 S.Ct. 2063 (internal quotation marks and alterations omitted). Congress has consequently made various "policy choices" resulting in "the inclusion of certain remedies and the exclusion of others." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987).

Interpretation of § 1132(a) is therefore no easy task. As the Supreme Court's ERISA decisions have repeatedly cautioned, "vague notions of a statute's `basic purpose' are . . . inadequate to overcome the words of its text regarding the specific issue under consideration." Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 220, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002) (internal quotation marks omitted); Mertens, 508 U.S. at 261, 113 S.Ct. 2063 (same). Section 1132(a) represents an "interlocking, interrelated, and interdependent remedial scheme" that "provide[s] strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly." Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985).

With these constraints in mind, we consider whether the statute's text provides the particular relief at issue here.

III.

Plaintiff first suggests that remuneration of his plan account finds express authorization in the text of 29 U.S.C. § 1132(a)(2). That subsection allows for a civil action "by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title." Section 1109, in turn, provides that

[a]ny person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter shall be personally liable to make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial relief as the court may deem appropriate ....

29 U.S.C. § 1109(a).

Plaintiff's argument regarding the applicability of § 1132(a)(2) is made for the first time on appeal. Even if the argument were not therefore waived, see, e.g., Jones v. Liberty Mut. Ins. Co. (In re Wallace & Gale Co.), 385 F.3d 820, 835 (4th Cir.2004), he could not succeed on the merits. Recovery under this subsection must "inure[] to the benefit of the plan as a whole," not to particular persons with rights under the plan. Russell, 473 U.S. at 140, 105 S.Ct. 3085 (emphasis added); see also Coyne & Delany Co. v. Blue Cross & Blue Shield of Va., Inc., 102 F.3d 712, 714 (4th Cir.1996). "A fair contextual reading of the statute makes it abundantly clear that its draftsmen were primarily concerned with the possible misuse of plan assets, and with remedies that would protect the entire plan, rather than with the rights of an individual beneficiary." Russell, 473 U.S. at 142, 105 S.Ct. 3085 (footnote omitted).

It is difficult to characterize the remedy plaintiff seeks as anything other than personal. He desires recovery to be paid into his plan account, an instrument that exists specifically for his benefit. The measure of that recovery is a loss suffered by him alone. And that loss itself allegedly arose as the result of defendants' failure to follow plaintiff's own particular instructions, thereby breaching a duty owed solely to him.

We are therefore skeptical that plaintiff's individual remedial interest can serve as a legitimate proxy for the plan in its entirety, as § 1132(a)(2) requires. To be sure, the recovery plaintiff seeks could be seen as accruing to the plan in the narrow sense that it would be paid into plaintiff's personal plan account, which is part of the plan. But such a view finds no license in the statutory text, and threatens to undermine the careful limitations Congress has placed on the scope of ERISA relief.

This case is much different from a § 1132(a)(2) action in which an individual plaintiff sues on behalf of the plan itself or on behalf of a class of similarly situated participants. See Smith v. Sydnor, 184 F.3d 356, 363 (4th Cir.1999); see also In re Schering-Plough Corp. ERISA Litig., 420 F.3d 231, 233, 235 (3d Cir.2005); Kuper v. Iovenko, 66 F.3d 1447, 1452-53 (6th Cir. 1995). In such a case, the "remedy will undoubtedly benefit [the plaintiff] and other participants in the [p]lan," but "it does not solely benefit the individual participants." Smith, 184 F.3d at 363 (emphasis added); see also Roth v. Sawyer-Cleator Lumber Co., 61 F.3d 599, 605 (8th Cir. 1995) (permitting recovery for losses to the plan but not losses to the individual plaintiff beneficiaries for defendants' alleged breach of fiduciary duty). Here, by contrast, plaintiff seeks to particularize the recovery to himself. Section 1132(a)(2) is not a proper avenue for him to obtain such relief.

IV.

We thus turn to plaintiff's second theory of relief, which relies on a different ERISA remedial provision, 29 U.S.C. § 1132(a)(3). Tha...