Fiduciary Liability: Thole vs. U.S. Bank I came across this Supreme Court decision and thought it might
Question:
Fiduciary Liability: Thole vs. U.S. Bank |
I came across this Supreme Court decision and thought it might make for a good class discussion topic that touches on defined benefit plans and fiduciary liability. This discussion is asking you to consider the case Thole vs U.S. Bank and see in you can identify possible breaches in fiduciary duty to the U.S. Bank defined benefit pension plan.
Paraphrased from the Cornell Law School Library website: Case Facts:Plaintiff James Thole and others brought a class action lawsuit against U.S. Bank and others over alleged mismanagement of a defined benefit pension plan between 2007 and 2010. The plaintiffs alleged that the defendants violated the Employee Retirement Income Security Act of 1974 (ERISA) by breaching their fiduciary duties and causing the plan to engage in prohibited transactions with a subsidiary company of U.S. Bank. Specifically, they claim that U.S. Bank usedits subsidiary to invest plan assets and thereby violated ERISA's duties of loyalty and prudence by self-dealing and making poor investment decisions ofthe plan assets.The plaintiffs argued that as a result of these prohibited transactions, the plan suffered significant losses and became underfunded in 2008 by $750 million. The defendants filed a motion to dismiss the complaint, which the district court granted in part. However, the court permitted the plaintiffs to proceed with their claim that the defendants engaged in a prohibited transaction by investing plan money usinga subsidiary. In 2014, with the parties still in litigation, the plan became overfunded; that is, it contained more money than was needed to meet its obligations. The defendants raised the argument that the plaintiffs had not suffered any financial lossand moved to dismiss the remainder of the action. Conclusion: 5 - 4 Decision for U.S. Bank Majority: Roberts, Thomas, Alito, Gorsuch and Kavanaugh Minority: Ginsburg, Breyer, Sotomayor and Kagan Article from Pension & Investments on the Thole vs. U.S. Bank decision - Pension & Investments: Participants in Fully Funded Plans Can't Bring ERISA Suits
Question:The Supreme Court's decision addressed the question of standing, not fiduciary liability . For this discussion, let's forget the standing consideration and focus on whether there was a fiduciary breach. Do you believe there was a fiduciary breach of duty on the part of the defendants? If so, identify the breach or breaches. If you believe there was no breach of fiduciary liability, what was the flaw in the plaintiffs argument? |
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Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts