One of the highest duties under the law are those of a fiduciary. A fiduciary usually refers to a trustee/beneficiary relationship. The trustee is obligated to act in the best interests of the beneficiary in managing assets for him or her. A good example is the orphaned child whose parents leave a sizable amount of money for the child's benefit which is managed by a trustee such as a family member. It's wrong for the family member to personally benefit from the assets that were intended for the child. Many of the duties addressed by ERISA are fiduciary duties. The fiduciaries are charged with acting in the best interest of all of those participating in the ERISA benefit plans.

The key duties for a fiduciary under ERISA are those of loyalty and prudence. The duty of loyalty requires that the fiduciary not act in its own best interest but in the interest of the participants. Prudence requires that financial decisions be prudent and reasonable.

In Thole v. US Bank NA, the Supreme Court recently decided, in a narrow 5 to 4 decision, that pension plan participants had no right to proceed with breach of fiduciary duty claims where their plan had $750 million in losses. They wanted to remove and replace the plan's fiduciaries and obtain injunctive relief regarding mismanagement of plan assets. The courts, from the trial court to now the Supreme Court, all said the case should be dismissed.

The plan at issue was a defined benefit plan not a defined contribution plan. That means that the participants did not have an equitable interest or legal right to some certain amount of money paid in as with a 401(k). The employer was responsible for paying the promised benefit. (Generally employees or unions negotiate that a certain part of wages are put toward a pension benefit such as a defined benefit plan but the opinion doesn't mention that).

The Court held that the plaintiffs had no claim because the lead plaintiffs were still receiving their agreed benefits. Perhaps the plan would have a shortfall in the future, but presently they were still receiving their benefits. The Court said that a bare allegation of plan underfunding does not itself demonstrate a substantially increased risk that the plan and the employer would both fail. Cf. LaRue, 552 U. S., at 255 (“Misconduct 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”).

Further the Court found that the plaintiffs lacked standing. Though the plan was alleged to have suffered harm, the participant plaintiffs had no right to act on behalf of the plan. They had not received any assignment from the plan. And, even though ERISA provides that a participant can sue for restoration of plan losses, the standing requirement is still not satisfied. To have standing one must have suffered an injury in fact.

Lastly the court ruled that regulating the conduct of plans is the responsibility of the Department of Labor's and the Pension Benefit Guarantee Corporation, not the participants or the courts.

The dissenting justices argued that the plaintiffs did have a case because they had an equitable interest in making certain that the plan's assets remained solvent. Significant harm to those assets placed their benefit in jeopardy. But the dissenters were outnumbered.

It is a challenge to attempt to explain how unfair ERISA can be. The law appears to be that a breach of fiduciary duty is not grounds for a participant lawsuit if there is no present harm. Unless you have harm right now, lying, cheating and even stealing are fine, even if the Department of Labor and the PBGC do not take action.

This is yet another reason why you need experienced ERISA counsel. Many clients have an unfounded belief that there is justice lurking somewhere in ERISA. But it is important that they understand the uphill battle that they may be facing. This is our ongoing struggle and effort… to rebuild justice one case at a time.