Labor Law
LaRue v. DeWolff, Boberg & Associates, Inc., 552 U.S. 248 (2008)
Study notes for LaRue v. DeWolff, Boberg & Associates, Inc.: professor notes, cold call prep, exam angles, and memory aids.
An individual participant in a 401(k) plan can sue fiduciaries for losses to their account due to breaches of duty.
In LaRue v. DeWolff, the Supreme Court underscored the importance of fiduciary duties in 401(k) plans and affirmed individual participants' rights to seek remedies for losses due to fiduciary breaches. The Court focused on the specific language of ERISA § 502(a)(2), illustrating its application to individual accounts within defined contribution plans. Professors may emphasize the implications of this ruling for how plan fiduciaries must operate and the potential for increased litigation as participants assert their rights under ERISA.
The case also raises critical questions about the role of individual accountability and the expectations placed on both plan participants and fiduciaries. Professors might examine the tension between protecting participants' assets and the fiduciaries' need for some discretion and flexibility in managing plans. These issues can lead to rich classroom discussions about the balance between regulation and the free market in retirement planning.
LaRue’s loss leads to a true review of fiduciary duties.
| Case | Distinction |
|---|---|
| Massachusetts Mutual Life Insurance Co. v. Russell | Unlike LaRue, Russell limited recovery under ERISA § 502(a)(2) to losses incurred by the plan as a whole, not individual account losses. |
| Varity Corp. v. Howe | In Varity, the Court dealt with misleading communications by fiduciaries; LaRue focuses specifically on fiduciary duties related to asset management. |
Allowing individual participants to sue enhances accountability and reinforces fiduciary responsibilities, ultimately protecting the interests of employees saving for retirement.
Allowing individual lawsuits may lead to increased litigation costs for fiduciaries, which could deter companies from offering 401(k) plans or burden them with excessive oversight.
LaRue v. DeWolff is often tested on how fiduciary duty under ERISA applies to individual accounts and the potential for participant lawsuits. Expect questions on the implications for plan management and litigation risks for fiduciaries.