Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

401(k) Participants May Sue for Breach of Fiduciary Duty

By Michael S. Melbinger and Steve Flores
May 27, 2008

In a closely watched case arising under the Employee Retirement Income Security Act of 1974, as amended ('ERISA'), the U.S. Supreme Court recently clarified the right of employees to sue plan fiduciaries for mismanaging their individual 401(k) accounts. Prior to the Supreme Court's clarification, the lower courts were divided as to whether certain remedies under Sections 502(a)(2) and 409 of ERISA (29 U.S.C. ' 1132(a)(2) and 29 U.S.C. ' 1109 respectively) allowed recovery for breaches by fiduciaries that affected only individual accounts, rather than the plan as a whole. In LaRue v. DeWolff, Boberg & Associates, Inc., 128 S. Ct. 467, 42 EBC 2857 (2008), the Supreme Court has now settled the issue, holding that ERISA authorizes a plan participant to recover for fiduciary breaches even if those breaches affect only the participant's individual account.

The Facts and Holding of LaRue

While employed at the management consulting firm DeWolff, Boberg & Associates ('DeWolff'), James LaRue ('LaRue') participated in the firm's ERISA-regulated 401(k) retirement savings plan (the 'Plan'). Under the Plan, participants had the option of instructing DeWolff on how to invest their money. According to LaRue's complaint, in 2001 and 2002 DeWolff failed to invest LaRue's money as he directed, causing an estimated loss of $150,000. In June 2004, LaRue filed suit against DeWolff and the plan, alleging breach of fiduciary duty.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

Legal Possession: What Does It Mean? Image

Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.

The Anti-Assignment Override Provisions Image

UCC Sections 9406(d) and 9408(a) are one of the most powerful, yet least understood, sections of the Uniform Commercial Code. On their face, they appear to override anti-assignment provisions in agreements that would limit the grant of a security interest. But do these sections really work?