Can a Participant in a Defined Benefit Plan Sue for Injunctive Relief under ERISA Section 502, without a Showing of Individual Financial Loss or an Imminent Risk of Such Harm?

CASE AT A GLANCE James Thole and Sherry Smith, participants in the U.S. Bancorp Pension Plan, brought a putative class action under the Employee Retirement Income Security Act of 1974 (ERISA) Section 502(a)(2), to enjoin plan fiduciaries from investing over 40 percent of plan assets in the bank's proprietary mutual funds in violation of ERISA's prohibited transaction rules, and from investing 100 percent of plan assets in high-risk equities in violation of ERISA's diversification rule. After incurring a loss of $1.1 billion in 2008, the plan, which had been significantly overfunded, became 84 percent underfunded. Participants sued for the restoration of $748 million in plan losses under ERISA Section 502(a)(2). In response, U.S. Bancorp contributed $339 million to the plan, which brought the plan to overfunded status. The district court held that since the participants no longer were suffering a loss, they did not have constitutional standing to sue. The Eighth Circuit affirmed and unanimously held that the plaintiffs did not have standing to sue for restorative losses, but the panel disagreed on whether the plaintiffs had standing to sue for injunctive relief. The majority held that, absent proof of monetary loss, plaintiffs were not entitled to injunctive relief. Judge Jane L. Kelly dissented, stating that financial harm was not a prerequisite for injunctive relief because the alleged injury was not speculative.