Thole v. U.S. Bank N. A., 060120 FEDSC, 17-1712

Docket Nº:17-1712
Opinion Judge:KAVANAUGH, J.
Party Name:JAMES J. THOLE, ET AL., PETITIONERS v. U.S. BANK N. A., ET AL.
Judge Panel:ROBERTS, C. J., and THOMAS, Alito, and Gorsuch, JJ., joined. THOMAS, J., filed a concurring opinion, in which GORSUCH, J., joined. SOTOMAYOR, J., filed a dissenting opinion, in which GlNSBURG, BREYER, and Kagan, JJ., joined. Justice Thomas, with whom Justice Gorsuch joins, concurring. Justice Sot...
Case Date:June 01, 2020
Court:United States Supreme Court
 
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590 U.S. ____ (2020)

JAMES J. THOLE, ET AL., PETITIONERS

v.

U.S. BANK N. A., ET AL.

No. 17-1712

United States Supreme Court

June 1, 2020

Argued January 13, 2020

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT No. 17-1712.

Plaintiffs James Thole and Sherry Smith are retired participants in U.S. Bank's defined-benefit retirement plan, which guarantees them a fixed payment each month regardless of the plan's value or its fiduciaries' good or bad investment decisions. Both have been paid all of their monthly pension benefits so far and are legally and contractually entitled to those payments for the rest of their lives. Nevertheless, they filed a putative class-action suit against U.S. Bank and others (collectively, U.S. Bank) under the Employee Retirement Income Security Act of 1974 (ERISA), alleging that the defendants violated ERISA's duties of loyalty and prudence by poorly investing the plan's assets. They request the repayment of approximately $750 million to the plan in losses suffered due to mismanagement; injunctive relief, including replacement of the plan's fiduciaries; and attorney's fees. The District Court dismissed the case, and the Eighth Circuit affirmed on the ground that the plaintiffs lack statutory standing.

Held: Because Thole and Smith have no concrete stake in the lawsuit, they lack Article III standing. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561. Win or lose, they would still receive the exact same monthly benefits they are already entitled to receive.

None of the plaintiffs' arguments suffices to establish Article III standing. First, the plaintiffs rely on a trust analogy in arguing that an ERISA participant has an equitable or property interest in the plan and that injuries to the plan are therefore injuries to the participants. But participants in a defined-benefit plan are not similarly situated to the beneficiaries of a private trust or to participants in a defined-contribution plan, and they possess no equitable or property interest in the plan, see Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 439-441. Second, the plaintiffs cannot assert representative standing based on injuries to the plan where they themselves have not "suffered an injury in fact," Hollingsworth v. Perry, 570 U.S. 693, 708, or been legally or contractually appointed to represent the plan. Third, the fact that ERISA affords all participants-including defined-benefit plan participants-a cause of action to sue does not satisfy the injury-in-fact requirement here. "Article III standing requires a concrete injury even in the context of a statutory violation." Spokeo, Inc. v. Robins, 578 U.S.____, ____. Fourth, the plaintiffs contend that meaningful regulation of plan fiduciaries is possible only if they may sue to target perceived fiduciary misconduct. But this Court has long rejected that argument for Article III standing, see Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 489, and defined-benefit plans are regulated and monitored in multiple ways.

The plaintiffs' amici assert 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 plaintiffs do not assert that theory of standing here, nor did their complaint allege that level of mismanagement. Pp. 2-8.

873 F.3d 617, affirmed.

OPINION

KAVANAUGH, J.

ROBERTS, C. J., and THOMAS, Alito, and Gorsuch, JJ., joined. THOMAS, J., filed a concurring opinion, in which GORSUCH, J., joined. SOTOMAYOR, J., filed a dissenting opinion, in which GlNSBURG, BREYER, and Kagan, JJ., joined.

To establish standing under Article III of the Constitution, a plaintiff must demonstrate (1) that he or she suffered an injury in fact that is concrete, particularized, and actual or imminent, (2) that the injury was caused by the defendant, and (3) that the injury would likely be redressed by the requested judicial relief. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561 (1992).

Plaintiffs James Thole and Sherry Smith are two retired participants in U.S. Bank's retirement plan. Of decisive importance to this case, the plaintiffs' retirement plan is a defined-benefit plan, not a defined-contribution plan. In a defined-benefit plan, retirees receive a fixed payment each month, and the payments do not fluctuate with the value of the plan or because of the plan fiduciaries' good or bad investment decisions. By contrast, in a defined-contribution plan, such as a 401(k) plan, the retirees' benefits are typically tied to the value of their accounts, and the benefits can turn on the plan fiduciaries' particular investment decisions. See Beck v. PACE Int'l Union, 551 U.S. 96, 98 (2007); Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 439-440 (1999).

As retirees and vested participants in U.S. Bank's de-fined-benefit plan, Thole receives $2, 198.38 per month, and Smith receives $42.26 per month, regardless of the plan's value at any one moment and regardless of the investment decisions of the plan's fiduciaries. Thole and Smith have been paid all of their monthly pension benefits so far, and they are legally and contractually entitled to receive those same monthly payments for the rest of their lives.

Even though the plaintiffs have not sustained any monetary injury, they filed a putative class-action suit against U.S. Bank and others (collectively, U.S. Bank) for alleged mismanagement of the defined-benefit plan. The alleged mismanagement occurred more than a decade ago, from 2007 to 2010. The plaintiffs sued under ERISA, the aptly named Employee Retirement Income Security Act of 1974, 88 Stat. 829, as amended, 29 U.S.C. §1001 et seq. The plaintiffs claimed that the defendants violated ERISA's duties of loyalty and prudence by poorly investing the assets of the plan. The plaintiffs requested that U.S. Bank repay the plan approximately $750 million in losses that the plan allegedly suffered. The plaintiffs also asked for injunctive relief, including replacement of the plan's fiduciaries. See ERISA §§502(a)(2), (3), 29 U.S.C. §§1132(a)(2), (3).

No small thing, the plaintiffs also sought attorney's fees. In the District Court, the plaintiffs' attorneys requested at least $31 million in attorney's fees.

The U.S. District Court for the District of Minnesota dismissed the case, and the U.S. Court of Appeals for the Eighth Circuit affirmed on the ground that the plaintiffs lack statutory standing. 873 F.3d 617 (2017). We granted certiorari. 588 U.S. _____ (2019).

We affirm the judgment of the U.S. Court of Appeals for the Eighth Circuit on the ground that the plaintiffs lack Article III standing. Thole and Smith have received all of their monthly benefit payments so far, and the outcome of this suit would not affect their future benefit payments. If Thole and Smith were to lose this lawsuit, they would still receive the exact same monthly benefits that they are already slated to receive, not a penny less. If Thole and Smith were to win this lawsuit, they would still receive the exact same monthly benefits that they are already slated to receive, not a penny more. The plaintiffs therefore have no concrete stake in this lawsuit. To be sure, their attorneys have a stake in the lawsuit, but an "interest in attorney's fees is, of course, insufficient to create an Article III case or controversy where none exists on the merits of the underlying claim." Lewis v. Continental Bank Corp., 494 U.S. 472, 480 (1990); see Steel Co. v. Citizens for Better Environment, 523 U.S. 83, 107 (1998) (same). Because the plaintiffs themselves have no concrete stake in the lawsuit, they lack Article III standing.

*

* *

If Thole and Smith had not received their vested pension benefits, they would of course have Article III standing to sue and a cause of action under ERISA §502(a)(1)(B) to recover the benefits due to them. See 29 U.S.C. § 1132(a)(1)(B). But Thole and Smith have received all of their monthly pension benefits so far, and they will receive those same monthly payments for the rest of their lives.

To nonetheless try to demonstrate their standing to challenge alleged plan mismanagement, the plaintiffs have advanced four alternative arguments.

First, analogizing to trust law, Thole and Smith contend that an ERISA defined-benefit plan participant possesses an equitable or property interest in the plan, meaning in essence that injuries to the plan are by definition injuries to the plan participants. Thole and Smith contend, in other words, that a plan fiduciary's breach of a trust-law duty of prudence or duty of loyalty itself harms ERISA defined-ben-efit plan participants, even if the participants themselves have not suffered (and will not suffer) any monetary losses.

The basic flaw in the plaintiffs' trust-based theory of standing is that the participants in a defined-benefit plan are not similarly situated to the beneficiaries of a private trust or to the participants in a defined-contribution plan. See Varity Corp. v. Howe, 516 U.S. 489, 497 (1996) (trust law informs but does not control interpretation of ERISA). In the private trust context, the value of the trust property and the ultimate amount of money received by the beneficiaries will typically depend on how well the trust is managed, so every penny of gain or loss is at the beneficiaries' risk. By contrast, a defined-benefit plan is more in the nature of a contract. The plan participants' benefits are fixed and will not change, regardless of how well or poorly the plan is managed. The benefits paid to the participants in a...

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