Individuals Can Sue for Damages to Individual Account for Plan Fiduciary's Breach

In a much anticipated decision, the United States Supreme Court held yesterday that an individual participating in a defined contribution plan, such as a 401(k), can sue under ERISA section 409(a) for individual damages caused by breach of fiduciary duty by the plan administrator, when such fiduciary breach impaired the value of the assets in the individual's account.  See LaRue v. DeWolff, Boberg & Assocs., Inc., No. 06-856 (S. Ct. Feb. 20. 2008).

In this case, the plaintiff claimed that the plan administrator failed to make requested changes to his investment choices, causing approximately $150,000 in losses.  Section 409(a) imposes fiduciary duties for management, administration, and investment of fund assets.  

Prior to this case, it was generally believed that under ERISA Section 502(a)(2) individuals could not sue for individual monetary relief for a breach of fiduciary duty, as compared to suing for equitable relief awarded to the plan.  The Supreme Court made held that in circumstances involving a defined contribution plan (such as a 401(k)), as compared to a defined benefit plan (such as a pension), individuals can sue in circumstances involving the statutory duties imposed by section 409(a).