Invitation Brief in No. 06-856, LaRue v. DeWolff, Boberg & Associates

By Amy Howe
on May 22, 2007 at 1:10 pm

Another invitation brief is in, and it looks like the Court may have another case for its OT2007 line-up: the United States (in a brief available here) recommended that cert. be granted in No. 06-856, LaRue v. DeWolff, Boberg & Associates. (For those of you keeping score at home, so far this spring the U.S. has recommended two denials (in No. 05-10787, Murphy v. Oklahoma, and No. 06-273, Cox v. DaimlerChrysler Corp.) and one grant (in this case). We expect that five more invitation briefs will be filed in the coming weeks; you can see the complete list in my earlier post on the invitation briefs here.

LaRue presents two questions: (1) whether, pursuant to Section 502(a)(2) of ERISA, a participant in a defined contribution pension plan may sue to recover losses to the plan caused by a breach of fiduciary duty, even when those losses affected only the participant’s individual account; and (2) whether an action by a plan participant against a fiduciary to recover losses caused by a breach of duty seeks “equitable relief” for purposes of ERISA Section 502(a)(3).

In the view of the U.S., the Fourth Circuit in LaRue erred in answering both of the two questions presented in the negative. With regard to the first question, the government explains that ERISA Section 502(a)(2), read in conjunction with Section 409, authorizes a plan participant to bring a suit to recover for the plan “losses to the plan” resulting from a breach of fiduciary duty. The fact that petitioner James LaRue seeks to recover funds (approximately $150,000) that he allegedly lost when respondent failed to make certain investments that he had directed does not, the U.S. contends, take his suit outside the purview of Section 502(a), as any recovery by LaRue will ultimately benefit the plan as a whole by “directly increas[ing] the overall amount of assets held by the plan.” Certiorari is further warranted, the U.S. explains, both because the Fourth Circuit’s holding conflicts with those of the four other courts of appeals that have addressed the question, and because the question presented is one of substantial importance.

With regard to the second question, the United States argues that a suit such as LaRue’s seeks “equitable relief” because “both [his] claim, breach of fiduciary duty, and the relief he seeks, surcharge of the trustee for the losses resulting from the breach, were typically—indeed, exclusively—equitable in the days of the divided bench.” Here, the United States notes, certiorari is warranted because although the Fourth Circuit’s erroneous holding comports with those of five other circuits, the Seventh Circuit has reached the opposite conclusion.

In closing, the United States notes that ERISA was enacted to address “misuse and mismanagement of plan assets by plan administrators,” as well as “to protect . . . the interests of participants in employee benefit plans . . . by establishing standards of conduct, responsibility, and obligation for fiduciaries of [those] plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts.” As such, the United States concludes, certiorari should be granted “to clarify that ERISA provides monetary remedies to recompense plans and participants who have been harmed by fiduciary breaches.”