LaRue v. DeWolff, Boberg & Associates Inc.
LaRue sued DeWolff, Boberg & Associates (DeWolff), his former employer, and the ERISA-regulated 401(k) retirement savings plan administered by DeWolff (Plan). LaRue claimed that DeWolff breached its fiduciary duty to him by failing to make requested changes to the investments in LaRue's account. According to LaRue, DeWolff's failure to make these changes “depleted” his interest in the 401(k) by approximately $150,000. He sought “‘make-whole’ or other equitable relief as allowed by [§ 502(a)(3)],” as well as “such other and further relief as the court deems just and proper.” DeWolff filed a motion to dismiss, arguing that the complaint was essentially a claim for monetary relief that is not recoverable under § 502(a)(3). LaRue countered that he “d[id] not wish for the court to award him any money, but . . . simply want[ed] the plan to properly reflect that which would be his interest in the plan, but for the breach of fiduciary duty.” The district court ruled in favor of DeWolff.
The Fourth Circuit Court of Appeals affirmed. First, it found that ERISA does not allow individuals to sue for damages caused by a breach of fiduciary duty; rather, the ERISA remedy is intended to beneft the entire plan, not individual members of the plan. Second, it found that the relief DeWolff requested was essentially compensatory damages, a form of legal relief, and thus beyond the scope of equitable relief contemplated by ERISA.
Questions Presented:
1. Section 502(a)(2) of the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. 1132(a)(2), provides that a “civil action may be brought * * * by
a participant * * * for appropriate relief under section 1109 of this title.” 29 U.S.C.
1109 states that “a fiduciary with respect to a plan who breaches any * * * duties
imposed upon fiduciaries * * * shall be personally liable to make good to such plan
any losses to the plan resulting from each such breach.”
The First Question Presented is: Does §502(a)(2) of ERISA permit a participant to bring an action to recover losses
attributable to his account in a “defined contribution plan” that were caused by
fiduciary breach? Hereinafter, this will be referred to as the “502(a)(2) Question.”
2. Section 502(a)(3) of ERISA, 29 U.S.C. 1132(a)(3), provides that a “civil action may be brought * * * by a participant * * * to obtain other appropriate equitable relief * * * to redress * * * violations” of the statute.
The Second Question Presented is: Does §502(a)(3) permit a participant to bring an action for monetary “make-whole”
relief to compensate for losses directly caused by fiduciary breach (known in premerger
courts of equity as “surcharge”)? Hereinafter, this will be referred to as the “ 502(a)(3) Question.”
