• Paul M. Sullivan, Jr.

Supreme Court Denies ERISA Pensioners Have "Standing."​

Another 5-4 food fight in the Supreme Court over "standing." In case you have never heard of "standing," it has spawned similar battles before in the Supreme Court. This one is a ten-rounder, split-decision.

Pensioners brought an ERISA action against a plan's fiduciaries (managers of the plan's assets in simpler terms) basically for walking away with the plan's trust assets and misusing them for their own gain. So at least reads the minority opinion.

The majority opinion holds that, because the plan is a defined benefit plan, as opposed, for example, to a defined contribution plan, and the pensioners have so far been paid their pensions, they have suffered no harm. So the majority holds they cannot sue for mismanagement of the plan's assets.

It does not matter that the plan's fiduciaries allegedly caused the plan to lose $750 billion. (They did restore some $311 billion to the plan after the suit was filed.)

Nothing to see here. Move on! So says the court. The pensioners here have no interest in the plan's trust to protect. (One might say it's none of their business, because they have so far been paid their pension benefits.)

Justice Thomas, joined by Justice Gorsuch, adds a concurrence notiong that, just because ERISA provides a cause of action does not mean that the pensioners get to use it to sue under it.

Justice Sotomayor writes for the minority. The style of the writing varies from colloquial common sense stuff that anyone can easily understand to the abstruse. (Get out your dictionary for the definition of "orthogonal!") Although it seems to be written by committee, the gist of it is crystal clear-- and stinging. The majority does not know the law, and its decision allows pension plans -- at least defined benefit plans -- for all practical purposes to be plundered at will. As she points out, the alleged perpetrators of the plan here are the ones the majority would leave to sue themselves. It is a long, detailed and brutal excoriation of the Court's ruling.

In short, the majority -- in my words --has pulled up the drawbridge and filled the moat with crocodiles. The pensioners are locked out, because they have no "standing."

See Thole v. U.S. Bank N.A. -- U.S. -- (June 1, 2020).

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