Supreme Court Finds that ERISA Fiduciaries May Be Liable for Damages to an Individual 401(k) Plan Participant’s Account
Yesterday, the Supreme Court vacated the Fourth Circuit's decision in LaRue v. DeWolff, Boberg & Assoc., Inc., --S.Ct.--, No. 06-856, 2008 WL 440748 (2008). The Court held that § 502(a)(2) of the Employee Retirement Income Security Act of 1974 ("ERISA") authorizes recovery by an individual 401(k) plan participant for breaches of fiduciary duty that impair the value of the individual participant’s account, even if all participants in the plan are not affected. Yesterday's ruling has potential wide ranging implications for so-called "stock drop" ERISA class actions, which frequently accompany federal securities fraud actions and are brought on behalf of a subset of 401(k) plan participants, as the Court has now given tacit approval to the rights of individual plan participants, or subsets plan participants, to bring these actions.