Slip Opinion — LaRue v. DeWolff, Boberg & Associates, Inc.

(Shp Opinion) OCTOBER TERM, 2007 l

Syllabus

NOTE: Where it us feasible, a syllabus (headnote) will be released, as 1s

being dene in connection with this ease, at the time the opinion is issued.

The syllabus constitutes no part of the opinion of the Court but has been

prepared by the Reporter of Decisions for the convemence of the reader.

See United States vy. Detroit Timber & Lumber Co., 200 U.S. 821, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

LARUE v. DEWOLFF, BOBERG & ASSOCIATES, INC.,

ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE FOURTH CIRCUIT

No. 06-856. Argued November 26, 2007—Decided February 20, 2008

Petitioner, a participant in a defined contribution pension plan, alleged

that the plan administrator's failure to follow petitioner's investment

directions “depleted” his interest in the plan by approximately

$150,000 and amounted to a breach of fiduciary duty under the Em-

ployee Retirement Income Security Act of 1971 (ERISA). The District

Court granted respondents judgment on the pleadings. and the

Fourth Cireuit affirmed. Relying on Massachusetts Mutual Life Ins.

Co. v. Russell, A73: U.S. 134, the Cireuit held that ERIS.A §502(a)(2)

provides remedies only for entire plans. not for individuals.

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Held: Although §502(a)(2) does not provide a remedy for individual in-

junes distinct from plan injuries. it does authorize recovery for fidu-

ciary breaches that impair the value of plan assets in a participant's

individual account. Section 502(a)(2) provides for suits to enforce the |

liability-creating provisions of § 109. concerning breaches of fiduciary

duties that harm plans. The principal statutory duties imposed by

§109 relate to the proper management. administration. and invest-

ment of plan assets. with an eve toward ensuring that the benefits

authorized by the plan are ultimately paid to plan participants. The

misconduct that petitioner alleges falls squarely within that category. |

unlike the misconduct in Russell. There, the plaintilf received all of

the benefits to which she was contractually entitled. but sought con-

sequential damages arising from a delay in the processing of her

clam. Russells cmphasis on protecting the “entire plan” reflects the

fact that the chsability plan in Russell, as well as the typical pension

plan at that time. promised participants a fixed benefit. Misconduct

by such a plan's administrators will not affect an individual's enti-

tlement to a defined benefit unless ut creates or enhances the risk of .

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2 LARUE v. DEWOLFF, BOBERG & ASSOCLATES, INC.

> - 2

Syllabus

=

default by the entire plan. For defined contribution plans, however,

fiduciary misconduct need not threaten the entire plan's solvency to

reduce benefits below the amount that participants would otherwise

receive. Whether a fiduciary breach diminishes plan assets payable

to all participants or only to particular individuals, it creates the kind

of harms that concerned §409's draftsmen. Thus, Russell's “entire

plan” references, which accurately reflect §109's operation in the de-

fined benefit context. are beside the point in the defined contribution

context. Pp. 1-8.

150 F. 3d 570, vacated and remanded.

STEVENS, J., delivered the opinion of the Court, in which SouTER,

MNSBURG, BREYER, and ALITO, JJ., joined. Ropers, C.J., filed an opin-

ion concurring in part and concurring in the judgment. in which KEN-

ne = — eS, ee we ee ee oe! OP

a. eee eee — ee = ial -

NEDY. J., joined. THOMAS, J.. filed an opinion concurring in the judg-

: ment, in which SCALIA, J., jomed. 7

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Opinion of the Court

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NOTICE. This opinion is subject to formal revision before publication in the

preliminary pront of the Unmited States Reports. Readers are requested to

notify the Reporter of Decisions. Supreme Court of the |'mited States, Wash-

ington, D.C. 20543, of any typographical or other formal errors, in order

that. corrections may be made before the preliminary print goes to press.

| SUPREME COURT OF THE UNITED STATES

No. 06-856

| JAMES LARUE, PETITIONER ev. DEWOLFF, BOBERG

, & ASSOCIATES, INC., ET AL.

. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

| APPEALS FOR TH FOURTH CIRCUIT

| [February ! @, 2008]

| JUSTICE STEVENS delivered the opinion of the Court.

. In Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S.

. 134 (1985), we held that a participant in a disability plan

| that. paid a fixed level of benefits could not bring suit.

. under §502(a)(2) of the Employee Retirement Income

| Security Act of 1974 (ERISA), 88 Stat. 891, 29 U.S.C.

§1132(a)(2), to recover consequential damages arising from

delay in the processing of her claim. In this case we con-

sider whether that statutory provision authorizes a par-

ticipant in a defined contribution pension plan to sue a

fiduciary whose alleged misconduct impaired the value of

plan assets in the participant's individual account.! Rely-

ing on our decision in Russell, the Court. of Appeals for the

'A\s its names imply. a “defined contribution plan” or “individual

account plan’ promises the participant the value of an individual

account at retirement. which ts largely a function of the amounts

contmbuted to that account and the investment performance of those

contributions. .\ “defined benefit plan” by contrast, generally promises

the participant a fixed level of retirement income. which is typieally

based on the employee's years of service and compensation. See

S$ 435) OL S.C. BLOONS): Po Schneider & LB. Freedman.

ERISA: A Comprehensive Guide §3.02 (2d ed. 2003)

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2 LARUE v. DEWOLFF, BOBERG & ASSOCIATES, INC.

Opinion of the Court

Fourth Circuit held that §502(a)(2) “provides remedies

only for entire plans, not for individuals. ... Recovery

under this subsection must ‘inure| | to the benefit of the

plan as a whole, not to particular persons with rights

under the plan.” 450 F. 8d 570, 572-5738 (2006) (quoting

Russell, 473 U.S., at 140). While language in our Russell

opinion is consistent with that conclusion, the rationale for

Russell's holding supports the opposite result in this case.

I

Petitioner filed this action in 2004 against his former

employer, DeWolff, Boberg & Associates (DeWolff), and

the ERISA-regulated 401(k) retirement savings plan

administered by DeWolff (Plan). The Plan permits par-

ticipants to direct the investment of their contributions in

accordance with specified procedures and requirements.

Petitioner alleged that in 2001 and 2002 he directed De-

Wolff to make certain changes to the investments in his

individual account, but DeWolff never carried out these

(lirections. Petitioner claimed that this omission “de-

pleted” his interest in the Plan by approximately

$150,000, and amounted to a breach of fiduciary duty

under ERISA. The complaint 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.” Civil Action No. 2:04—1747-18 (D.S. C., p. 4, 2

Record, Doc. 1.

Respondents filed a motion for judgment on the plead-

ings, arguing that the complaint was essentially a claim

for monetary relief that is not’ recoverable under

§502(a)(3). Petitioner countered that he “djid] not wish for

the court to award him any money, but ... simply

wantled] the plan to properly reflect that which would be

his interest in the plan, but for the breach of fiduciary

duty.” Reply to Defendants Motion to Dismiss, p. 7, 3 id.,

Doc. 17. The District Court concluded, however, that since

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Cite as: 552 U.S. (2008) 3

Opinion of the Court

respondents did not possess any disputed funds that

rightly belonged to petitioner, he was seeking damages

rather than equitable relief available under §502(a)(3).

Assuming, arguendo, that respondents had beached a

fiduciary duty, the District Court nonetheless granted

their motion.

On appeal petitioner argued that he had a cognizable

claim for relief under §§502(a)(2) and 502(a)(3) of ERISA.

The Court of Appeals stated that petitioner had raised his

§502(a)(2) argument for the first time on appeal, but nev-

ertheless rejected it on the merits.

Section 502(a)(2) provides for suits to enforce the liabil-

ity-creating provisions of §409, concerning breaches of

fiduciary duties that harm plans.2 The Court of Appeals

cited language from our opinion in Russell suggesting that

that these provisions “protect the entire plan, rather than

the rights of an individual beneficiary.” 473 U.S., at 142.

lt then characterized the remedy sought by petitioner as

“personal” because he “desires recovery to be paid into his

plan account, an instrument that exists specifically for his

benefit,” and concluded:

“We are therefore skeptical that plaintiff's individ-

ual remedial interest can serve as a legitimate proxy

for the plan in its entirety, as [§502(a)(2)] requires.

‘To be sure, the recovery plaintiff seeks could be seen

“Section 409(a) provides

“Any person who ts a fiduciary with respect to a plan who breaches

any of the responsibilities, obligations. or duties imposed upon fiduciar-

1s by this title shall be personally hable 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 rehef as the court may deem appropriate

including removal of such fiduciary. .\ fiduciary may also be removed

for a violation of section Hl of this Act’ 88 Stat. 88H, zy LS

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d LARUE v. DEWOLFF, BOBERG & ASSOCIATES, INC.

Opinion of the Court

as accruing to the plan in the narrow sense that. it

would be paid into plaintiffs 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.” 450 F. 3d, at 574.

The Court of Appeals also rejected petitioner's argument

that. the make-whole relief he sought was “equitable”

within the meaning of §502(a)(3). Although our grant of

certiorari, 551 U.S. (2007), encompassed the

§502(a)(3) issue, we do not address it because we conclude

that the Court of Appeals misread §502(a)(2).

I]

As the case comes to us we must assume that respon-

dents breached fiduciary obligations defined in §409(a),

and tnat those breaches had an adverse impact on the

value of the plan assets in petitioner's individual account.

Whether petitioner can prove those allegations and

whether respondents may have valid defenses to the claim

are matters not before us.’ Although the record does not.

reveal the relative size of petitioner's account, the legal

issue under §502(a)(2) is the same whether his account.

includes 1% or 99% of the total assets in the plan.

As we explained in Russell, and in more detail in our

later opinion in Varity Corp. v. Llowe, 516 U.S. 489, 508-

512 (1996), §502(a) of ERISA identifies six types of civil

actions that may be brought by various parties. The

second, which is at issue in this case, authorizes the Secre-

tary of Labor as well as plan participants, beneficiaries,

and fiduciaries, to bring actions on behalf of a plan to

‘For example, we do not decide whether petitioner made the alleged

investment directions m accordance with the requirements specified by

the Plan. whether he was required to exhaust remedies set forth in the

Plan before seeking rehef in federal court pursuant to §502(a)(2), or

whether he asserted his rights in a timely fashion

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Cyte as: 552 U.S. (2008)

pinion of the Court

recover for violations of the obligations defined in §409(a).

The principal statutory duties imposed on fiduciaries by

that section “relate to the proper management, admini-

stration, and investment of fund assets,” with an eye

toward ensuring that “the benefits authorized by the plan”

are ultimately paid to participants and beneficiaries.

Russell, 473 U.S., at 142; see also Varity, 516 U.S., at

511-512 (noting that §409’s fiduciary obligations “relat|e]

to the plan's financial integrity” and “reflec|t| a special

congressional concern about plan asset management’).

The misconduct alleged by the petitioner in this case falls

squarely within that category.'

The misconduct alleged in Russell, by contrast, fell

outside this category. The plaintiff in Russell received all

of the benefits to which she was contractually entitled, but

sought consequential damages arising from a delay in the

processing of her claim. 473 U.S., at 136-137. In holding

that §502(a)(2) does not provide a remedy for this type of

injury, we stressed that the text of §409(a) characterizes

the relevant fiduciary relationship as one “with respect to

a plan,” and repeatedly identifies the “plan” as the victim

of any fiduciary breach and the recipient of any relief. See

id., at 140. The legislative history likewise revealed that

“the crucible of congressional concern was misuse and

'The record does not reveal whether the alleged $150,000 injury

represents a decline in the value of assets that DeWolff should have

sold or an increase in the value of assets that DeWolff should have

purchased. Contrary to respondents argument, however. §502(a)(2)

encompasses appropriate claims for “lost profits. See Brief for Re-

spondents 12-13. Under the common law of trusts. which informs our

interpretation of ERIS.\s fiduciary duties. see Varity, 516 U.S. at

MWi—197, trustees are “chargeable with any profit which would have

accrued to the trust estate if there had been no breach of trust.” melud-

ing profits forgone because the trustee “fuls to purchase speerfic

property which mous his duty to purchase” | Restatement (Second)

Trusts §205. and Comment (. 8211 (1957) see also 3 \. Seott, Law on

Trusts §§205. 211 (3d ed. 1967)

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6 LARUE v. DEWOLFF, BOBERG & ASSOCIATES. INC.

Opinion of the Court

mismanagement of plan assets by plan administrators.”

Id., at 141, n. 8. Finally, our review of ERISA as a whole

confirmed that §§502(a)(2) and 409 protect “the financial

integrity of the plan,” id., at 142, n.9, whereas other

provisions specifically address claims for benefits. See id.,

at. 143-144 (discussing §§502(a)(1)(B) and 503). We there-

fore concluded:

“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 benefici-

ary.” Id., at 142.

Russell's emphasis on protecting the “entire plan” from

fiduciary misconduct reflects the former landscape of

employee benefit plans. That landscape has changed.

Defined contribution plans dominate the retirement

plan scene today.® In contrast, when ERISA was enacted,

and when Russell was decided, “the {defined benefit] plan

was the norm of American pension practice.” J. Langbein,

S. Stabile, & B. Wolk, Pension and Employee Benefit Law

58 (4th ed. 2006); see also Zelinsky, The Defined Contribu-

tion Paradigm, 114 Yale L. J. 451, 471 (2004) (discussing

the “significant reversal of historic patterns under which

the traditional defined benefit plan was the dominant

paradigm for the provision of retirement income”). Unlike

the defined contribution plan in this case, the disability

plan at issue in Russell did not have individual accounts;

‘See. e.g., D. Raynes. An Evolving Pension System: Trends in Defined

Renefit and Defined Contmbution Plans. Employee Benefit: Research

Institute (EBRI) Issue Brief No 219 (Sept. 2002). http://www ebri org/

plfonetspadfagezib palf tall Internet materials as visited Jan. 28. 2008.

and available in Clerk of Court's case file: Facts from EBRE: Retire-

ment Trends in the United States Over the Past Quarter-Century

(lune 2007) http “www ebri org/pdf/publications/fact s4607 fact pdf

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(pinion of the Court

it paid a fixed benefit based on a percentage of the em-

ployee’s salary. See Russell v. Massachusetts Mut. Life

Ins. Co., 722 F. 2d 482, 486 (CAS 1983).

The “entire plan” language in Russell speaks to the

impact of §409 on plans that pay defined benefits. Mis-

conduct by the administrators of a defined benefit plan

will not affect an individual's entitlement to a defined

benefit unless it creates or enhances the risk of default by

the entire plan. It was that default risk that prompted

Congress to require defined benefit plans (but not defined

contribution plans) to satisfy complex minimum funding

requirements, and to make premium payments to the

Pension Benefit Guaranty Corporation for plan termina-

tion insurance. See Zelinsky, 114 Yale L. J., at 475-478.

For defined contribution plans, however, fiduciary mis-

conduct need not threaten the solvency of the entire plan

to reduce benefits below the amount that participants

would otherwise receive. Whether a fiduciary breach

diminishes plan assets payable to all participants and

beneficiaries, or only to persons tied to particular individ-

ual accounts, it creates the kind of harms that concerned

the draftsmen of §409. Consequently, our references to

the “entire plan” in Russell, which accurately reflect the

operation of §409 in the defined benefit context, are beside

the point in the defined contribution context.

Other sections of ERISA confirm that the “entire plan”

language from Russell, which appears nowhere in §409 or

§502(a)(2), does not apply to defined contribution plans.

Most significant is §404(c), which exempts fiduciaries from

liability for losses caused by participants’ exercise of con-

trol over assets in their individual accounts. See also 29

CFR §2550.404c—1 (2007). This provision would serve no

real purpose if, as respondents argue, fiduciaries never

had any liability for losses in an individual account.

We therefore hold that although §502(a)(2) does not

provide a remedy for individual injuries distinet from

8 LaRUE v. DEWOLFF, BOBERG & ASSOCLATES, INC.

Opinion of the Court

plan injuries, that provision does authorize recovery for

fiduciary breaches that impair the value of plan assets

in a participant’s individual account. Accordingly, the

judgment of the Court of Appeals is vacated, and the

case is remanded for further proceedings consistent with

this opinion.”

It is so ordered.

* After our grant of certioran respondents filed a motion to dismiss

the writ. contending that the ease is moot because petitioner is no

longer a parnierpant im the Plan. While his withdrawal of funds from

the Plan may have relevance to the proceedings on remand, we denied

ther motion because the case is not moot. \ plan “partieipant” as

defined by §3(7) of ERISA. zo USC. §he0207). may include a former

employee with a colorable clanm for benefits. See. e.g. Harzewski v

Ciuidant Corp. ABO Bd TIO (CAT 2007)

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(ite as: 552 U.S. (2008) 1

Opinion of ROBERTS, ©. J.

SUPREME COURT OF THE UNITED STATES

No. 06-856

JAMES LARUE, PETITIONER cv. DEWOLFF, BOBERG

& ASSOCIATES, INC., ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE FOURTH CIRCUTT

[February 20. 2008]

CHIRF JUSTICE ROBERTS, with whom JUSTICE KENNEDY

joins, concurring in part and concurring in the judgment.

In the decision below, the Fourth Circuit concluded that

the loss to LaRue’s individual plan account did not permit

him to “serve as a legitimate proxy for the plan in its

entirety,” thus barring him from relief under §502(a)(2) of

the Employee Retirement Income Security Act of 1974

(ERISA), 29 U.S.C. §1132(a)(2). 450 F.3d 570, 574

(2006). The Court today rejects that reasoning. See ante,

at 4, 7-8. | agree with the Court that the Fourth Circuit's

analysis was flawed, and join the Court’s opinion to that

extent.

The Court, however, goes on to conclude that §502(a)(2)_

(loes authorize recovery in cases such as the present one.

See ante, at 7-8. It is not at all clear that this is true.

LaRue’s right to direct the investment of his contributions

was a right granted and governed by the plan. See ante,

at 2. In this action, he seeks the benefits that would

otherwise be due him if, as alleged, the plan carried out

his investment instruction. LaRue’s claim, therefore, is a

claim for benefits that turns on the application and inter-

pretation of the plan terms, specifically those governing

investment options and how to exercise them.

lt is at least arguable that a claim of this nature prop-

erly hes only under §502(a)(1)(B) of ERISA. That provi-

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2 LARUE t. DEWOLFF, BOBERG & ASSOCLATES, INC.

Opinion of Rowers, C. J.

sion allows a plan participant or beneficiary “to recover

benefits due to him under the terms of his plan, to enforce

his rights under the terms of the plan, or to clarify his

rights to future benefits under the terms of the plan.” 29

U.S.C. §1182(a)(1)(B). It is difficult to imagine a more

accurate description of LaRue’s claim. And in fact claim-

ants have filed suit under §502(a)(1)(B) alleging similar

benefit denials in violation of plan terms. See, e.g., Hess v.

Reg-Ellen Machine Tool Corp., 423 V. 3d 653, 657 (CA7

2005) (allegation made under §502(a)(1)(B) that a plan

administrator wrongfully denied instruction to move

retirement funds from employer's stock to a diversified

investment account).

If LaRue may bring his claim under §502(a)(1)(B), it is

not clear that he may do so under §502(a)(2) as well.

Section 502(a)(2) provides for “appropriate” relief. Con-

struing the same term in a parallel ERISA provision, we

have held that relief is not “appropriate” under §502(a)(3)

if another provision, such as §502(a)(1)(B), offers an ade-

quate remedy. See Varily Corp. v. Howe, 516 U.S. 489,

515 (1996). Applying the same rationale to an interpreta-

tion of “appropriate” in §502(a)(2) would accord with our

usual preference for construing the “same terms [to] have

the same meaning in different sections of the same stat-

ute,” Barnhill vy. Johnson, 503 U.S. 393, 406 (1992), and

with the view that ERISA in particular is a “‘comprehen-

sive and reticulated statute” with “carefully integrated

civil enforcement provisions,” Massachusetts Mut. Life Ins.

Co. v. Russell, 473 U.S. 184, 146 (1985) (quoting Nach-

man Corp, v. Pension Benefit Guaranty Corporation, 446

U.S. 359, 361 (1980)). In a variety of contexts, some

Courts of Appeals have accordingly prevented plaintiffs

from recasting what are in essence plan-derived benefit

clams that should be brought under §502(a)(1)(B) as

claims for fiduciary breaches under §502(a)(2). See, e.g.,

Covne & Delany Co. v. Blue Cross & Blue Shield of \a.,

Cite as: 552 U.S. _ (2008) 3

pinion of ROBERTS, C. J.

Inc., 102 F.3d 712, 714 (CA4 1996). Other Courts of

Appeals have disagreed with this approach. See, e.g.,

Graden v. Conexant Systems Inc., 496 F. 3d 291, 301 (CA3

2007).

The significance of the distinction between a

§$502(a)(1)(B) claim and one under §502(a)(2) is not merely

a matter of picking the right provision to cite in the com-

plaint. Allowing a §502(a)(1)(B) action to be recast as one

under §502(a)(2) might permit plaintiffs to circumvent

safeguards for plan administrators that have developed

under §502(a)(1)(B). Among these safeguards is the re-

quirement, recognized by almost all the Courts of Appeals,

see Fallick v. Nationwide Mut. Ins. Co., 162 F.3d 410,

A418, n.4 (CAG 1998) (citing cases), that a participant.

exhaust the administrative remedies mandated by ERISA

§503, 29 U.S.C. §1133, before filing suit under

$502(a)(1)(B).* Equally significant, this Court has held

that ERISA plans may grant administrators and fiduciar-

ies discretion in determining benefit eligibility and the

meaning of plan terms, decisions that courts may review

only for an abuse of discretion. Firestone Tire & Rubber

Co. v. Bruch, 489 U.S. 101, 115 (1989).

These safeguards encourage employers and others to

undertake the voluntary step of providing medical and

retirement benefits to plan participants, see Aetna Llealth

Inc. v. Davila, 542 U.S. 200, 215 (2004), and have no

doubt engendered substantial reliance interests on the

part of plans and fiduciaries. Allowing what is really a

claim for benefits under a plan to be brought as a claim for

breach of fiduciary duty under §502(a)(2), rather than as a

claim for benefits due “under the terms of |the] plan,”

§502(a)(1)(B), may result in’ circumventing such plan

*Sensibly the Court leaves open the question whether exhaustion

may be required of a clammant who seeks recovery for a breach of

fiduciary duty under §50zZ(anK2)) See ante at don 8

4 LARUE v. DEWOLFEF, BOBERG & ASSOCLATES., INC.

Opinion of ROBERTS, C. J.

terms.

I do not mean to suggest that these are settled ques-

tions. They are not. Nor are we in a position to answer

them. LaRue did not rely on §502(a)(1)(B) as a source of

relief, and the courts below had no occasion to address the

argument, raised by an amicus in this Court, that the

availability of relief under §502(a)(1)(B) precludes LaRue’s

fiduciary breach claim. See Brief for ERISA Industry

Committee as Amicus Curiae 13-30. | simply highlight

the fact that the Court's determination that the present

claim may be brought under §502(a)(2) is reached without.

considering whether the possible availability of relief

under §502(a)(1)(B) alters that conclusion. See, e.g.,

United Parcel Service, Inc. v. Mitchell, 451 U.S. 56, 60, n.

2 (1981) (noting general reluctance to consider arguments

raised only by an amicus and not considered by the courts

below). In matters of statutory interpretation, where

principles of stare decisis have their greatest effect, it is

important that we not seem to decide more than we do. |

see nothing in today’s opinion precluding the lower courts

on remand, if they determine that the argument is prop-

erly before them, from considering the contention that

LaRue’s claim may proceed only under §502(a)(1)(B). In

any event, other courts in other cases remain free to con-

sider what we have not—what effect the availability of

relief under §502(a)(1)(B) may have on a plan participant's

ability to proceed under §502(a)(2).

Cite as: 552 U.S. (2008) ]

THOMAS, J., concurring in judgment

SUPREME COURT OF THE UNITED STATES

No. 06-856

JAMES LARUE, PETITIONER v. DEWOLFF, BOBERG

& ASSOCIATES, INC., ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE FOURTH CIRCUTT

[February 20, 2008]

JUSTICE THOMAS, with whom JUSTICE SCALIA joins,

concurring in the judgment.

| agree with the Court that petitioner alleges a cogniza-

ble claim under §502(a)(2) of the Employee Retirement

Income Security Act of 1974 (ERISA), 29 U.S.C.

§1182(a)(2), but it is ERISA’s text and not “the kind of

harms that concerned [ERISA’s] draftsmen” that compels

my decision. .Ante, at 7. In Massachusetts Mut. Life Ins.

Co. v. Russell, 473 U.S. 184 (1985), the Court held that

§409 of ERISA, 29 U.S.C. §1109, read together with

§502(a)(2), authorizes recovery only by “the plan as an

entity,” 473 U.S., at 140, and does not permit individuals

to bring suit when they do not seek relief on behalf of the

plan, id., at 139-144. The majority accepts Russell's

fundamental holding, but reins in the Cour.’s further

suggestion in) Russell that suits under §502(a)(2) are

meant to “protect the entire plan,” rather than “the rights

of an individual beneficiary.” Ante, at 4—8: see Russell,

supra, at 142. The majority states that emphasizing the

“entire plan” was a sensible application of §§409 and

502(a)(2) in the historical context of defined benefit plans,

but that the subsequent proliferation of defined contribu-

tion plans has rendered Russell's dictum inapplicable to

most modern cases. An/e, at 6-7. In concluding that a

loss suffered by a participant's defined contribution plan

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2 LARUE v. DEWOLFF, BOBERG & ASSOCIATES, INC.

THOMAS, J., concurring in judgment

account because of a fiduciary breach “creates the kind of

harms that concerned the draftsmen of §409,” the majority

holds that §502(a)(2) authorizes recovery for plan partici-

pants such as petitioner. Ante, at 7-8.

Although | agree with the majority’s holding, | write

separately because my reading of §§409 and 502(a)(2) is

not contingent on trends in the pension plan market. Nor

(loes it depend on the ostensible “concerns” of ERISA’s

drafters. Rather, my conclusion that petitioner has stated

a cognizable claim flows from the unambiguous text of

§§409 and 502(a)(2) as applied to defined contribution

plans. Section 502(a)(2) states that “[a] civil action may be

brought” by a plan “participant, beneficiary or fiduciary,”

or by the Secretary of Labor, to obtain “appropriate relief”

under §409. 29 U.S.C. §1182(a)(2). Section 409(a) pro-

vides that “|a]ny person who is a fiduciary with respect. to

a plan ... shall be personally liable to make good to such

plan any losses to the plan resulting from each [fiduciary]

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 ....” 29 U.S. C. §1109(a) (em-

phasis added),

The plain text of §409(a), which uses the term “plan”

five times, leaves no doubt that §502(a)(2) authorizes

recovery only for the plan. Likewise, Congress’ repeated

use of the word “any” in §409(a) clarifies that the key

factor is whether the alleged losses can be said to be losses

“to the plan,” not whether they are otherwise of a particu-

lar nature or kind. See, e.g.. Ali v. Federal Bureau of

Prisons, ante, at 4 (noting that the natural reading of

“any is “one or some indiscriminately of whatever kind”

(internal quotation marks omitted)). On = their face,

§$§409(a) and 502(a)(2) permit. recovery of all plan losses

caused by a fiduciary breach.

The question presented here, then, is whether the losses

to petitioner's individual 401(k) account resulting from

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Cite as: 552 U.S. (2008) 3

THOMAS, J., concurring in judgment

respondents’ alleged breach of their fiduciary duties were

losses “to the plan.” In my view they were, because the

assets allocated to petitioner's individual account were

plan assets. ERISA requires the assets of a defined con-

tribution plan (including “gains and losses” and legal

recoveries) to be allocated for bookkeeping purposes to

individual accounts within the plan for the beneficial

interest of the participants, whose benefits in turn depend

on the allocated amounts. See 29 U.S. C. §1002(34) (de-

fining a “defined contribution plan” as a “plan which pro-

vides for an individual account for each participant and for

benefits based solely upon the amount contributed to the

participant's account, and any income, expenses, gains

and losses, and any forfeitures of accounts of other par-

ticipants which may be allocated to such participant’s

account”). Thus, when a defined contribution plan sus-

tains losses, those losses are reflected in the balances in

the plan accounts of the affected participants, and a recov-

ery of those losses would be allocated to one or more indi-

vidual accounts.

The allocation of a plan’s assets to individual accounts

for bookkeeping purposes does not change the fact that all

the assets in the plan remain plan assets. A defined con-

tribution plan is not merely a collection of unrelated ac-

counts. Rather, ERISA requires a plan’s combined assets

to be held in trust and legally owned by the plan trustees.

See 29 U.S.C. §1108(a) (providing that “all assets of an

employee benefit plan shall be held in trust by one or more

trustees”). In short, the assets of a defined contribution

plan under ERISA constitute, at the very least, the sum of

all the assets allocated for bookkeeping purposes to the

participants’ individual accounts. Because a defined

contribution plan is essentially the sum of its parts, losses

attributable to the account of an individual participant are

necessarily “losses to the plan” for purposes of §409(a).

Accordingly, when a participant sustains losses to his

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LARUE v. DEWOLFF, BOBERG & ASSOCIATES, INC.

THOMAS, J., concurring in judgment

individual account as a result of a fiduciary breach, the

plan’s aggregate assets are likewise diminished by the

same amount, and §502(a)(2) permits that participant to

recover such losses on behalf of the plan.*

*O" course, a participant suing to recover benefits on behalf of the

plan is not entitled to monetary relief payable directly to him: rather.

any recovery must be paid to the plan.