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Thole v. U.S. Bank, N.A: Don’t Forget About Standing

Brian A Hill and Joshuah Turner

Thole v. U.S. Bank, N.A: Don’t Forget About Standing
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In Thole v. U.S. Bank, N.A., 140 S.Ct. 1615 (decided June 1, 2020), the Supreme Court held that the plaintiffs, two retired participants in U.S. Bank’s defined benefit pension plan, did not have Article III standing to sue for relief under the Employee Retirement Income Security Act of 1974 (ERISA). The plaintiffs lacked standing because they did not suffer any actual financial injury. The participants alleged that plan fiduciaries mismanaged the benefit plan, resulting in a $750 million loss, thereby violating their fiduciary duties of loyalty and prudence.

The Court drew a distinction between the plaintiffs’ defined benefit plan, under which participants are paid a fixed monthly amount notwithstanding plan fiduciaries’ investment decisions, and defined contribution plans, which fluctuate based on investment decisions. The Thole plaintiffs did not have Article III standing because they “have received all of their monthly benefit payments so far,” “the outcome of this suit would not affect their future benefit payments,” and they “would still receive the exact same monthly benefits that they are already slated to receive, not a penny less” and “not a penny more.” Id. at 1619.

Thole thus serves as a reminder that “[t]here is no ERISA exception to Article III” standing requirements. Id. at 1622. While ERISA provides a private right of action for benefit plan participants to sue for plan losses and other equitable relief, plan participants must still satisfy Article III’s injury-in-fact requirements to sue fiduciaries under ERISA.

Thole left open the question of when beneficiaries in plaintiffs’ position might cross the threshold to redressable injury. Amici contended that defined benefit plan participants should have standing to sue “if the plan’s mismanagement was so egregious that it substantially increased the risk that the plan and the employer would fail.” Id. at 1621. The Court declined to address this argument because the plaintiffs did not assert that level of mismanagement.

While Thole is rightfully thought of as an ERISA case, practitioners should also be cognizant of Thole’s potential application to other types of claims. For example, before her arrival to the Supreme Court, Justice Barrett cited Thole in dismissing a claim brought against the City of Chicago for the City’s decision to permit the construction of the Obama Presidential Center in Jackson Park. The Seventh Circuit held that the plaintiffs suffered no concrete injury and therefore lacked standing to bring their public trust claims. Protect Our Parks, Inc. v. Chicago Park Dist., 971 F.3d 722, 730 (7th Cir. 2020).

Finally, while Thole is undeniably a win for fiduciaries of defined benefit plans, such fiduciaries should not assume that malfeasance will go unpunished. The Court noted that although the plaintiffs did not have standing to sue, the Department of Labor has standing to pursue financial misconduct to avoid the financial burden of failed defined-benefit plans. 140 S.Ct. at 1621. Co-fiduciaries likewise have standing to sue fiduciaries who mismanage plan assets. Id. In Thole, the simple act of selecting a different plaintiff in a $750 million case may have led to a different result. Standing matters.