2005 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit
8-19-2005 

# In Re: S che ring P r e c e de n t i al or N on-P r e c e de n t i al : P r e c e de n t i al D ocke t N o . 04-3073

F o l low thi s a nd a dd it ion al work s at : http://d i git alc ommon s .l a w . vi l l a no va . e du/thir dc ir c uit_2005

Thi s de c i sion i s br ou ght t o you for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i l l a no va U nive r sity S choo l of L a

w Di git al Re posit or y

. It h as be e n a c c ept e d for inclusion in 2005 D e c i sion s b y a n author i z e d a dmini s tr at or of V i l l a no va U nive r sity S choo l of L a

w Di git al Re posit or y

. F or mor e inform at ion, p le as e c on t a ct Be n j amin . C a rl s on@l a

w . vi l l a no va . e du
. Re c omme nde d C it at ion

" In Re: S che r in g " (2005). 2005 D e cisio n s . P ape r 595. http://d i git alc ommon s .l a

w . vi l l a no va . e du/thir dc ir c uit_2005/595P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

N o. 04- 3073

I N RE : SCH ER I N G

- PLO U G H CO RPO RA TI O N ER I SA L I T I GAT I ON,

J I N G D O N G Z H U , o n behal f of h im se lf a n d a ll o th e r sim ilarly s i tuat ed; A D R I A N FI E L D S, on b e h a lf o f h im se lf

/h e rse lf a n d a ll ot her s s i m i l ar l ys i tuat ed, A p p e llan ts

O n A p p ea l from the U n it ed S tat es D istri ct C o u rt fo r t h e D istri ct of

N ew Jerse y , N ew ark ( D
. C
. C i vi l A ct i on N o. 03- cv- 01204) D i s t r i ctJ udge: H onor abl e K athar i ne S. H ay den

A r gued J une 7, 2005T he H onor abl e A r t hur L
. A l ar cón, Seni orJ udge, U ni t ed * St a t e s Cou r t o f App e a l s f o r t h e Ni n t h Ci r c u i t , s i t t i n g by des i gnat i on. 2

B efor e: A M B R O , ST A PL E T O N , and A L A R C Ó N , C i r cui tJ udges

* ( Fi l ed: A ugus t19, 2005) R i char d S. Schi ffr i n, E s q. J os eph H
. M el t zer , E s q. Sc h i f f r i n & Ba r r o wayLLP 280 K i ng of Prus s i a R oad R adnor , PA 19087 J os eph D ePal m a, E s q. Li t e DeP a l ma Gr e e n b e r g & Ri v a s , LLC T w o G at ew ayC ent er , 12t h Fl oor N ew ar k, N J 07102 Pet erH
. L eV an, J r . E s q. ( A r gued) H a n g ley, A ro n c h ick , S e g a l & P u d lin O ne Logan Squar e, 27t h Fl oor Phi l adel phi a, PA 19103 C o u n se l f

o r A p p e llan ts3 D ougl as S. E akel ey , E s q. G avi n J
. R ooney , E s q. Low e ns t e i n Sa nd l e r , PC 65 L i vi ngs t on A venue R os el and, N
. J
. 07068 E t han M
. Posne r , E s q. ( A r gued) Pet erJ
. N i ckl es , E s q. A m yN
. M oor e, E s q. C ar ol i ne M
. B r ow n, E s q. Fr eder i ck G
. Sands t r om , E s q. C ovi ngt on & B ur l i ng 1 2 0 1 P e n n s y l v a n i a A v e n u e , N
. W. W as hi ngt on, D
. C
. 2004 J onathan A
. W as s er m an, E s q. Scher i ng- Pl ough C orpor at i on 2000 G al l opi ng H i l l R oad K eni l w or t h, N
. J
. 07033 C ouns el forA ppel l ees H o w a rd M . R a d z e ly T i m ot hyD
. H aus er E l i zabe t h H opki ns , E s q. T her es a S. G ee, E s q. ( A r gued) U ni t ed St at es D epart m entof Labor Pl an B enef

i t s Secur i t yD i vi s i on 2 0 0 C o n s t i tu t i o n A v e n u e , N
. W.4 R oom –4611 W as hi ngt on, D
. C
. 20210 C ouns el forA m i cus C ur i ae U
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. S t r e e t , N
. W. W as hi ngt on, D
. C
. 20049 Co u n s e l f

o rAmi c u s Cu r i a e AARP K entA
. M as on, E s q. J as on K
. B or t z, E s q. Dav i s & Harma n , LLP 1 4 5 5 P e n n s y l v a n i a Av e . , NW W as hi ngt on, D
. C
. 20004 R ober tG
. C hamber s , E s q. J ack W
. C ampbel l I V , E s q. H el m s , M ul l i s s & W i cker 201 N or t h T r y on St r eet C har l ot t e, N
. C
. 28202 C o u n se l f

o r A m icu s C u ria e A m e ric a n B e n e f its C o u n c il

OPI NI ON O F THE COURT5 A L A R C Ó N , C i r cui tJ udge W e mustdeci de i n t hi s m at t erw hether , un d er t he E m p loy ee R eti rem en t Inc o m e S ec u ri ty A ct of 1 9 7 4 (“E R IS A ”), t he D i s t r i ctC our terr ed i n rul i ng t hatfor m erempl oy ees , w ho w er e part i ci pant s i n a def i ned contr ibu ti on pl an, m aynot pr os ecut e a de r i vat i ve ac t i on on behal f of a n empl oy ees ’ s avi ngs pl an t o r ecove rl os s es s us t ai ned by t he savi ngs pl an becaus e of al l eged br eac hes of fi duci arydut y . W e co ncl ude thatt he Pl ai nt i ffs m ays eek mon eydamages on behal f of the fund, not w i t hs t andi ng t he f

a c tth e a l l e ged fi duci aryvi ol at i ons aff ect ed on l ya subset of the savi ng plan’ s part i ci pan t s. A ccor di ngl y , w e w i l l r ever s e and r emand forfur t her proceed i ng s. I
A
T he compl ai ntal l eges t he fol l ow i ng fac t s . J i ngdong Z hu and A dr i an F ie l ds ( t he Pl ai nt i ffs ) ar e form erempl oy ees of S c h e rin g - P lo u g h C o rp o ra tio n (“ S c h e rin g ” ). D u rin g th e ir e m p lo ym e n t w ith S c h e rin g , th e P lain tiff s e lec ted to p a rticip a te i n t he Scher i ng- Pl ough E m pl oy ees ’ Savi ngs Pl an ( “the Savi ngs Pl an” or“the Pl an”)
. U n d er t he Savi ngs Pl an, a Scher i ngA n empl oy ee w ho par t i ci pat es i n a def err ed 1 compensa t i on pl an t o s ave f orr et i r ement qual i fi es for t ax benef i t s pur s uantt o 26 U
. S. C
. § 401( k)
. T he type of de ferr ed c o m p e n sa tio n p lan o f

f e re d to S c h e rin g e m p lo y e e s is re f e rre d to i n E R I SA as an “i ndi vi dual acc ount pl an” or a “ defi ned c o n trib u tio n p lan .” 2 9 U .S .C . § 1 0 0 2 (3 4 ). T h e se ter m s re f e r to “a pe ns i on pl an w hi ch provi des foran i ndi vi dual acc ountfor eac h par t i ci pantand for benef i t s bas ed s ol el yupon t he amount contr i buted t o t he part i ci pant ’ s acc ount , and anyi ncome, expe n s e s , g a i n s a n d l o s s e s , a n d a n y f o r f e i tu r e s o f a c c o u n t s of o ther p arti cipa n ts w h ich m ay b e a ll o ca ted to su ch p arti cipa n t’ s acc ount
. ” I

d. 6 empl oy ee a gr eed t o r educe hi s orhert ake- hom e compens at i on i n or dert o i nves tt hatamount i n one orm or e i nves t m entfunds o n a p re -ta x b a sis . T h e S a v in g s P lan a u th o riz e d a p a rticip a n t to 1 s el ectfr om di ffe r enti nvest m en tfunds
. O ne of the i nves t m ent funds w as t he Scher i ng Pl an C om panyS tock Fund ( “the C om panySt ock Fund”) , w hi ch cons i s t ed of c om panys t ock. U nd er the S avings Plan, a part i ci pan t w as no t perm i t t ed t o invest m or e than 50% of h is orherfutur e contr i but i ons i n Scher i ng s t ock. Som e of the Pl ai nt i ffs ’ defe r r ed compensat i on i ncl uded an i nves t m enti n t he C om panySt ock Fund.
A s of D ece m ber31, 2001 , S ch eri ng s t ock made up ap p roxi m at el y31 % of the value of the Sa ving P l an’s as set s. M or e t han 60% of t he em pl oy ees w ho par t i ci pat ed i n t he Savi ng7 Pl an had a tl eas ts om e of thei ras s et s al l ocat ed t o t he C om pany St ock Fund. I n fi s cal y ear 2001 t he l os s i n t he val ue of Sche r i ng stoc k co n sti tuted 8 7 % o f th e d rop in v alue o f the S av ing P lan’s as s et s , and i n 2002 t he l os s i n Scher i ng’ s stoc k’ s val ue cons ti tut ed 50% of t he Savi ng Pl an’ s netl os s . T he l os s t o t he Savi ngs Pl an w as appr oxi m at el y$138, 000, 000. B yJ une of 2003 t he pr i ce of

Scher i ng s t ock had fal l en bel ow $20 pers har e fr om a cl as s - per i od hi gh of bett ert han $60 a s har e. B O n O ct ober 6, 2003, t he Pl ai nt i ffs fi l ed thi s cl as s act i on pur s uantt o 29 U
. S. C
. § 1132( a) ( 2) on behal f of the Savi ngs Pl an and “[ a] l l per s ons w ho w er e part i ci pant s i n orbene ficiar i es of t he Savi ng Pl an at any t i m e betw een J ul y 29, 1998 an d t he pr es ent( t he ‘ C l as s Per i od’ ) , and w hos e ac count s i ncl uded i n v e s t me n t s i n Sc h e r i n g s t o c k
. ” Th e c o mpl a i n t n a me d as defe ndant s and as fi duci ar i es of the Savi ngs Pl an Scher i ng, R i char d K ogan, i t s for m erC E O , m ember s of the Scher i ng B oar d’ s Pens i on C om m i t t ee, t he Scher i ng- Pl o u gh E m pl oy ees B enef i t s C om m i t t ee a nd on e o f it s m ember s , t he Scher i ngP lo u g h B e n e f

its In v e stm e n t C o m m itt e e a n d th re e o f its m ember s , t he couns el of the I nves t m ent C o m m i t t ee, and V anguar d G r oup, I nc. , t he Trustee of the Savi ngs Pl an (co ll ec ti v ely“the D ef

en d an ts”).29 U
. S
. C
. § 1 10 9 reads as fol l ow s: 2 L iab ili tyf

o r b re a c h o f

f id u c iar yd u ty ( a) A nyper s on w ho i s a fi duci aryw i t h r es pectt o a pl an w ho br eac hes anyof the r es pons i bi l i t i es , obl i gat i ons , or du t i es i m pos ed upon fi duci ar i es byt hi s t i t l e s hal l be p e rso n a lly liab le to m a k e g o o d to su c h p lan a n ylo ss e s to the p lan re su lt ing fro m ea ch su ch b rea ch , an d to restore 8 T h e c o m p lain t alle g e s th a t th e D e f e n d a n ts b re a c h e d th e ir f id u c iar y d u ties o f p ru d e n c e , c a re , a n d lo y a lty b yc o n tin u in g to offe r t he Comp a n ySt o c k Fu n d a s o n e o f t h e Sa v i n g s Pl an al t erna t i ves w hen theyknew t hatScher i ng’ s s t ock pr i ce w as unlaw ful l yand art i fi ci al l yi nfl at ed. A ddi t i onal l y , t he Pl ai nt i ffs al l eged thatt he D efe ndant s fai l ed t o di s cl os e negat i ve mat er i al i nfor m at i on aboutScher i ng, w hi ch i nduced pa r t i ci pan ts i n t he Savi ngs Pl an t o el ect t o i nves ti n t he C om panySt ock Fund. T he compl ai ntal s o al l eges t hats om e of the D efe ndant s di d not lo y a llyse rv e th e S a v in g P lan p a rticip a n ts b ytak in g ste p s to a v o id a c o n f

lict o f in ter e st s u c h a s m a k in g a p p ro p ria te p u b lic di s cl os ur es , di ves t i ng t he Savi ngs Pl an of Scher i ng s t ock, di s cont i nui ng fur t her i nves t m ent s i n Scher i ng s t ock, cons ul t i ng in d e p e n d e n t f

id u c iar ies , o r re sig n in g as Sav i ng s Plan fi du ci ari es. I n l i eu of a ns w er i ng t he compl ai nt , t he D efe ndant s fi l ed a mot i on t o di s m i s s t he act i on for fai l ur e t o s t at e a c l ai m under § 1109( a)
. T he D efe ndant s ar gued that“[b] eca us e [Sec t i on

2t o s uch pl an anypr ofi t s of s uch fi duci aryw hi ch have bee n m ade thr ough us e of a s s et s of the pl an byt he fi duci ary , and s hal l be s ubj ect t o s uch ot herequi t abl e or r emedi al r el i ef a s t he court m aydeem appr opr i at e, i ncl udi ng r emoval of s uch fi duci ary . A fi duci arym ay al s o be r emoved fora vi ol at i on of 29 U SC S § 1111. ( b) N o fi d uci ary s hal l be l i abl e w i t h r es pect t o a br eac h of fi duci arydut yundert hi s t i t l e i f s uch br eac h w as comm i t t ed be fo re he beca m e a f i duci aryoraft erhe c e a s e d t o b e a f

i d u c i a r y. 9 1109( a) ] author i zes r el i ef onl yfor ‘ t he pl an’ , a part i ci pantcan s t at e a c l ai m onl y i f he pr ocee ds i n a r epr es ent at i ve ca paci t yon b eh alf o f ‘t h e p lan as a w h o le’ a n d see k s to rec o v er f o r a llpl an p a rt ic ip a n ts a lle g e d ly in ju re d b yth e f

id u c i a r y b re a c h .” ( E m phas i s i n t he or i gi nal
. )
. I n addi t i on, t heyas s er t ed thatt he P lain tiff s d o n o t se e k re lief

o n b e h a lf

o f th e P lan a s a w h o le beca us e the compl ai ntal l egedl yexcl udes cu r r entempl oy ees w ho w er e partof t he s ub- gr oup t hati nves t ed i n t he C om pany St ock Fund.
T heyfur t her m ai nt ai ned t hat t he consol i dat ed compl ai nt im p ro p e rlyse e k s “ in d iv id u a l re lief f o r e a c h P lan p a rticip a n t” becau se i tpray s for “an al l ocati on ‘am on g the Pa rticipants ’ in d ivid u a lize d

a c c o u n ts i n pr opor t i on t o t he acco un t s’losse s. ’” ( E m phas i s added i n t he D efe ndant s ’ m ot i on. )
. Fi nal l y , t he D e f e n d a n ts c o n ten d e d th a t th e P lain ti f f s f a iled to a lleg e f

a c ts29 U
. S. C
. § 1132( a) ( 2) r eads as fol l ow s : “A ci vi l act i on 3 m a y b e broug ht .
. . byt he S ecret ary , or bya part i ci pa n t, benef i c i a ryo rfi duci aryforappr opr i at e r el i ef unde rs ect i on 1109 o f th is title .” 10 sh o w in g d e trim e n tal re lian c e b y th e S a v in g P lan ’s p a rticip a n ts on t he D efe ndant s ’ al l eged mi s r epr es ent at i ons and nondis cl osures. T he D i s t r i ctC our tgr ant ed the D ef en dant ’ s m ot i on and di s m i s s ed the cons ol i dat ed compl ai ntw i t h pr ej udi ce. I t hel d t hat t he Pl ai nt i ffs l acke d s t andi ng t o pr os ecut e thi s act i on under29 U
. S. C
. §§ 1109( a) and 1132( a) ( 2) beca us e the cons ol i dat ed 3 compl ai ntal l eges onl y“harm s uffe r ed byt he i ndi vi dual Pl an Par t i ci pant s and nott he Savi ngs Pl an, and s eeks r el i ef meas ur ed byt he har m t o i ndi vi dual s and t ai l or ed fort he bene fi tof ind ividu als, an d n o t th e S av ing s P lan.” T h e D istri ct C o u rt sum m ari zed it s conclusi on i n these w ords:

E ven as s um i ng t hateac h defe ndant i s an ER I SA fi duci ary , t hateac h of pl ai nt i ffs ’ al l egat i ons conce r ni ng defe ndant s ’ conductw er e true, and th a t th is c o n d u c t ro se to a lev e l to br eac h E R I S A ’ s fi duci arydut i es ( w ith o u t th e C o u rt o p in in g a s to11 m erit s o f th ese assu m p ti o n s), pl ai nt i ffs cannotdem ons t r at e how a n ydefe nd ant w ou ld b e “ p e rso n a lly l i abl e fordamages ( ‘ t o m ake good t o [t he] pl an anyl os s es t o t he plan resu lt ing fro m ea ch su ch b rea ch ’)” to th e S a v in g P lan s b e c a u se it i s onl yPl an Par t i ci pant s w ho m i ght be abl e t o s how t hatt h eys uffe r ed i nd i vidual i zed loss es. T he D i stri ctC ou rtcom m ented furt her t hat be cause
“ p lain tiff s c a n p o in t to n o se t o f f a c ts th a t w o u ld d e m o n stra te l os s e s t o the pl a n. . . . t he Cour tne e d n otr e a c h d e fe nd ants ’ f u rt h e r a rg u m e n ts in f

a v o r o f d is m is s a l.”
T h e P lai n ti ff

s h a v e tim elyap p ea led. T h e D istri ct C o u rt h a d s u b je c t m a tte r j u ri s d ic tio n p u rs u a n t to 2 9 U .S .C . § 1132( e) ( 1) of ER I SA
. T hi s C our thas appel l at e j ur is di ct i on u n d er 2 8 U
. S
. C
. § § 1 2 9 1 , 1 2 9 4 (1).
II
A
T h e P lain tiff

s c o n ten d th a t “[ t]h e d istric t co u rt e rre d in12 fai l i ng t o di s t i ngui s h betw een t he pl an- w i de natur e of the l os s es caus ed by d ef

endant s ’ fi duci arybr eac hes , and the fa ctt hatt he losse s ca u sed b ytho se b rea ch es a re re flec ted in the P lan’s i ndi vi dual par t i ci pantacc ount s . ” Theyargu e t hatt he D i s t r i ct C o u rt e rre d in c o n c lu d in g th a t th e ir c o n trib u tio n s w e re k e p t in s epar at e, s egr egat ed ac count s and neve rbeca m e a pa r tof the Saving P lan’ s as s et s . I ns t ead, t he Pl ai nt i ffs m ai nt ai n t hatt he Savi ngs Pl an w as a uni t ary t rus t t hatpur chas ed and mai nt ai ned s t o c k i n t h e Comp a n y St o c k Fu n d , whi c h was o n e o f t he four t een i nves t m ental t ernat i v es in a defi ned contr i but i on empl oy ee be nefi tpl an. T he Pl ai nt i ffs al s o as s er t t hatt he D i s t r i ct C our terr ed i n det er m i ni ng t hatt he C om panySt ock Fund w as an i ndi vi dual acc ountpl an and a n E m pl oy ee St ock O w ner s hi p Pl an (“E S O P ”).
W e e x e r c i s e d e n o vo r evi ew over

the di s m i s s al of cl ai m s under F ed era l R u le o f C ivil P roc ed u re 1 2 (b )( 6 ). A .D . B e d e ll W h o les a le C o. v. P hi l i

p Mor r is I

nc. , 263 F. 3d 2 3 9 , 2 4 9 n . 2 5 (3d C ir
. 2 0 0 1 ). F u rth e rm o re , w e m u st ta k e a ll f a c tu a l alle g a tio n s a n d re a so n a b le in f e re n c e s a s tru e a n d v iew th e m in th e l i gh t m ost favo ra b le to P la in tif f s . I d. T h e D istri ct C o u rt13 properl y dis m iss ed P l ai nti ffs’ c o m p lain t o n lyif

P lain ti f f s c o u ld have pr oved no s etof fa ct s ent i t l i ng th e m to re lie f
. I

d.
Mar i ana v. F is her , 3 3 8 F .3 d 1 8 9 , 1 9 5 (3 d C ir. 2 0 0 3 ) (f u ll cit ati o n p rov ided ).
Un d e r§ 1 0 0 2 ( 2 1 ) A o f E RI S A, 2 9 U. S
. C. § 1 0 0 2 ( 2 1 ) A, tho se h av ing d iscreti o n ary aut hor i t yordiscreti o n ary res po nsi bil i t yi n the adm i nis t rat i on of a p lan are fi du ci ari es. Sect i on 1104 i m pos es upon them fi duci ary dut i es i ncl udi ng t he dut i es of “c ar e, s ki l l , prudence , and di l i gence undert he ci r cumst ance s . ” 29 U
. S. C
. § 1104. Sect i on 1109( a) m akes pl an fi duci ar i es “per s onal l yl i abl e t o m ak e good t o [the] pl an any losse s to the p la n re s u lting fro m ea ch
. . . b rea ch ” o f f idu ciary dut y . 29 U
. S. C
. § 1109( a)
. A nd, fi nal l y , § 1132( a) ( 2) pr ovi des t hat a “c i v i l a c t i o n ma yb e b r o u g h t
. . . b ya p a r t i c i p a n tor benef i ci ary . . . forappr opr i at e r el i ef unde rs ect i on 1109. ” 29 U
. S. C
. § 1109.
T he i s s ue pr es ent ed her e i s w hethert he com pl ai nts t at es a cl ai m under§ 11 0 9 – i

. e. , w hethert he compl ai nts eeks r el i ef forthe Scher i ng- Pl ough E m pl oy ees ’ Savi ngs Pl an bas ed on al l egat i ons t hatt her e w er e “l os s es t o t he pl an r es ul t i ng fr om [a] b re a c h ” o f

f id u c ia ry d u ty. W e b e lie v e it c le a rl yd o e s .T h e S u p re m e C o u rt d id n o t h o ld o th e rw ise in 4 Ma ss a c h u se tts Mu tu a l L ife In su ra n c e C o m p a ny v . R u ss e ll , 473 U
. S. 134 ( 1985)
. W hi l e the C our t di d obs er ve i n t hatcas e that § 1 1 3 2 (a )(2 ) ac tio n s se e k re m e d ies w h ich p ro v id e a b e n e f it “to t he pl an as a w hol e, ” the i s s ue pr es ent ed her e w as notbefor e the C our t
. M or eover , t he r ecove r yi n t hi s cas e w oul d go t o t he Pl an as a w hol e t o be hel d i n acc or dance w i t h t he t er m s of the pl an, i ncl udi ng t he paym entof oper at i ng expens es and the l i ke, w hi ch w o u ld re d o u n d to th e b e n e f it o f a ll p a rt ic ip a n ts
. 14 T he compl ai n tal l eges t hat“[a ] s a cons equenc e of the defe n d a n t s ’ b r e a c h e s [ o f f i d u c i a r yd u t y ] , t h e Pl a n s u f f e r ed sig n if ica n t lo ss e s” a n d se e k s “a m o n e tar y p a ym e n t to th e P lan to m ake g o o d t o t he Pl an the l os s es t o t he Pl an r es ul t i ng fr om [thos e] br eac hes of fi duci arydut y . ” Sect i on 1 1 0 9 al l ow s t he P lan t o rec o v er “ any l os s es ” fr om a br eac h of fi duci arydut y . 29 U
. S. C
. § 1109 ( emphasi s added)
. T he fi duci ary ’ s l i abi l i t yi s not lim ited to p lan “ lo ss e s th a t w ill u lti m a telyre d o u n d to th e b e n e f it of al l par t i ci pant s . ” T he P l an hel d Scher i ng- Pl ough s t ock as an a ss e t an d th a t as se t w a s g re a tlyre d u c e d in v a lu e a lleg e d ly becau se of b reaches of fiduci arydu t y . T his cl earl yw as a “l oss” t o t he Pl an w i t hi n t he meani ng of § 1109. 4
J us tas t he fa ctt hatt he as s et s at iss ue w er e hel d fort he ult im ate b enef

i tof Pl ai nt i ffs does notal t ert he fa ctt hatt hey w er e hel d by t he P l an, s o, t oo, t he factt hatPl ai nt i ffs m ayhave t o s h o w i n d i v i d u a l r e l i a n c e o n t h e d e f e n d a n t s ’ a l l eged15 m i s r epr es ent at i ons t o pr evai l on s om e cl ai m s d o e s n otm ean they d o n o t se e k re c o v e ry f

o r P lan lo ss e s. A s the C o u rt a p tlyp u t itin I n r e H oneyw ellI

nt ’ lER I SA Li t igat i on, C i vi l N o. 03- 1214 ( D
. N
. J
. , J une 14, 2004) at30: [L]os s es t o t he Pl an mayhave r esul t ed fr om deci s i ons byi ndi vi dual par t i ci pant s , butt hatdoes notm ean thatt hos e l os s es w er e notl os s es of the Pl an; i ts i m pl ym eans t hats om e of the dec i s i on m aki ng forPl an i nves tm en t s w as conduct ed by th e p a rticip a n ts w h o c o n trib u ted to it.
I ti s a non s equi t urt o s ay , as t he D i s t r i ctC our tdi d, t hat P lain tiff s c a n n o t d e m o n stra te a n ylo ss e s to th e P la n b e c a u se it i s a n “ i n d i v i d u a l a c c o u n tp l a n wh i c h i n c l u d e s a n E S OP i nv estm en tal t ernat i ve. ” Fi r s t , w hi l e the Pl an i s , i ndeed, an “i ndi vi dual acc ountpl an, ” t hi s does notpr ecl ude the Pl an fr om havi ng l os s es . Second, t he Pl an i s not an “emp loy ee s t ock ow ner s hi p pl an” oran “ESO P. ” U nder§ 1107 (d)(6 ) ( A ) , an “em ploy ee st ock o w nershi p p l an” is “desi gn ed to i nv est p ri m a r ily in q u a lif

y in g e m p lo y e r s e c u ri tie s .” 2 9 U .S .C . § 1107( d) ( 6) ( A )
. A s t hi s C our texpl ai ned i n Moench v. R ober t s on , 6 2 F
. 3 d 5 5 3 , 5 6 8 (3d C ir
. 1 9 9 5 ): [E S O P s are ] “d ev ice[ s] fo r ex p an d ing the nat i onal capi t al bas e among em pl oy ees – an effec t i ve16 m e rg e r o f

th e ro le s o f

c a p ita lis t a n d w o rk e r.” D onovan v. C unni ngham , 71 6 F
. 2d at 14 58
. T hu s, t he conc ept of empl oy ee ow ner s hi p cons t i tut ed a goal i n and of i t s el f. T o acc om pl i sh thi s end, “C ongr es s . . . enac t ed a numberof l aw s des i gned t o encour age empl oy er s t o s etup s uch pl ans . ” I d.
T he Pl an befor e us w as des i gned t o pr ovi de oppor tuni t i es for savi ng a n d invest m ent. Itw as not desi gn ed to i nv est pr i m ar i l y i n s ecur i t i es of t he em pl oy er . I ndeed, t he Pl an w as not r equi r ed t o offe r Scher i ng- Pl ough s t ock as one of i t s i nves t m ent op po rtun i t i es. T he D i strictC ou rt ’s con cl usi on s ( 1) that Pl ai nti ffs’ contr i but i ons w er e neve ras s et s of th e Savi ngs Pl an and ne ver a g g re g a ted , an d (2 ) th a t P lain tiff s o n ly se e k d a m a g e s f

o r th e ir i ndi vi dual i zed l os s es , di r ect l yconfl i ctw i t h t he expr es s t er m s of th e S a v in g s P lan a s w e ll as o th e r a lleg a tio n s o f th e c o m p lain t.
T he Savi ngs Pl an pr ovides i n A r t i cl e 4. 01( a) t hat contr i but i ons t o t he Savi ngs Pl an

sh all b e inv ested in o n e o r m o re I nves t m entFunds a ut hor i zed byt he I nves t me n tCommi t t e e , w hi ch, fr om t i m e t o t i m e, m ayi nclude17 s u c h e q u i t yf

u n d s , i n t e r n a t i o n al equ i t yfun ds, fi xed i nco m e fun ds, m oneym ar ket funds, a C om pany St ock Fund, and ot herfunds or i nves t m ent veh i cl es as t he In v e stm e n t C o m m itt e e e lec ts to o ff er. A rt i cl e 4. 02 provides as fol l ow s: A parti ci pants hal l m ake one i nves t m entel ect i on cover i ng hi s or h e r A c c o u n ts in a c c o rd a n c e w ith t he fo l l ow i ng op t i on s: (a ) 1 0 0 p e rc e n t in o n e o f th e a v a ilab le Invest m ent Fun ds; ( b) in m or e than one I n v e s t ment Fund al l ocat e d i n mul t i pl es o f 1 p e rc e n t;18 pr ovi ded, how ever , t hati n no event m aya Par t i ci pantal l ocat e more than 5 0 p e rc e n t of fu ture contr i but i ons t o t h e Comp a n ySt o ck Fund. I f a Par t i ci pantfai l s t o m ake an i nves t m entel ect i on w i t h r es pect t o 1 0 0 per centof hi s orher A ccount s , t he por t i on of s uch A ccount s nots ubj ectt o t he Part i ci pant ’ s i nves t m entel ect i on s hal l be i nves t ed i n a m oneym ar ket fund orequi val enti nves t m ent vehi cl e. S ect i on 4. 03 reads as fol l ow s: E a c h P art i ci pan t i s solely re sp o n sib le f

o r th e se lec tio n o f

h is orheri nves t m entopt ions. T he Tr u s t e e , t h e Commi t t e e , t he I nves t m ent C o m m i t t ee, any E m ploy er, and t he o ffi cers , s uper vi s or s and otherempl oy ees of anyE m pl oy erar e notempow er ed t o advi s e a Part i ci pantas t o t he m anneri n w hi ch hi s orher19 acc ount s s hal l be i nves t ed. T he fa ct th a t a n I n v e stm e n t F u n d is avai l abl e t o P arti ci pant s for i nves t m entundert he Pl an s hal l not be cons t rued as a r ecomm endat i on fori nves t m enti n t hatI nvest m ent Fund.
Pur s uantt o A r t i cl e 4. 05, [ a ] p a rticip a n t m a ye lec t to re a llo c a te h is o r h e r A c c o u n ts a m o n g th e In v e stm e n t F u n d s, in m ul t i pl es o f 1 per cent , bygi vi ng su c h N o tice a s the C o m m itt e e o r its del egat e s hal l pr es cr i be; pr ovi ded, h o w e v e r , t h a ti n n o e v e n tm a y a Par t i ci pantal l ocat e more t han 50 per centof the val ue of hi s orher A ccount s at t he t i m e of the r eal l ocat i on t o t he C om panySt ock Fu n d
. T he r eal l ocat i on s hal l be eff ect i v e a s s oon as adm i ni s t r at i vel ypr act i cabl e af t er t he Trus t ee r ece i ves s uch N ot i ce.20 A rticle 5 .0 1 re q u ire s th e tru ste e o f th e S a v in g s F u n d to val ue ea ch of the I nves t m entFunds e ach bus i nes s day
. “O n eac h V al uat i on D at e ther e s hal l be al l ocat ed t o t he A ccount s of ea ch Par t i ci panthi s orherpr op o rt iona t e s har e of the i ncr eas e or decr eas e i n t he fa i r m ar ket val ue of hi s orherA ccount s i n eac h o f th e In v e stm e n t F u n d s.” A rticl e 5 .0 3 re q u ire s th e tru ste e to fur ni s h eac h par t i ci pantw i t h a s t at ement s ett i ng for t h t he val ue o f h is or h er A cc o u n ts eac h ca lend ar q u arter. A r t i cl e 9
. 06 pr ovi des t hatunt i l t he ac count s of a par t i cipa n tw ho i s ent i t l ed t o di s t r i but i on beca us e of the t er m i nat i on of empl oym ent oraft ert he 65th anni ver s aryof the Par t i ci pant ’ s dat e of bi r t h, ar e compl etelydi s t r i but ed, “the A c c o u n ts o f a P a rticip a n t w h o is e n tit led to a d istrib u tio n sh a ll cont i nue t o be i nves t ed as par tof the funds of the Pl an . . . . ”
I n Sect i on 10. 09 , the Savi ngs Pl an pr ovi des t hat“[t ] he C om m i t t ee ori t s del ega te s hal l m ai nt ai n, orcaus e t o be m ai nt ai ned, r ecor ds sh o w ing the i ndi vi dual bal ance s i n eac h Par t i ci pant ’ s A ccount s . H ow ever , m ai nt enanc e of thos e r ecor ds and A ccount s s hal l notr equi r e anys egr egat i on of the fund s of th e P la n .”
I n Sect i on 11. 01, t he Savi ngs Pl an provi des t hat“[a ] l l t he funds of t he Plan shal l be hel d byt he Trus t ee a ppoi nt ed fr om t i m e t o t i m e by t he Inve s t m entC om m i t t ee ori t s del egat e under21 a t rus t agr eement adopt ed, or as amended, by t he B oard of D ir e c to rs .”
P u rs u a n t to A rt ic le 1 1 .0 3 , “ C om pany St ock h eld by the Trus t ee s hal l be vot ed by t he T rus t ee at eac h annual m eet i ng and ateac h sp ec i al m eet i ng of s t ockhol der s of the C om panyas di r ect ed byt he Par t i ci pantt o w hos e A ccount s s uch C om pany S tock is cred it ed
. ” (e m p h asis ad d ed ).
T hus , contr ary t o t he D i s t r i ct C our t ’ s i nt erpr et at i on of the pr ovi s i ons of t he Savi ngs Pl an, eac h par t i ci pant ’ s deferre d payr ol l compensa t i on w as hel d i n t rus tas t he as s et s of the Savi ngs Pl an. E ach par t i ci pant i n t he S avi ngs Pl an w as pr ovi ded w i t h an i ndi vi dual i zed a ccount and per i odi cal l y i nfor m ed of the i nd i vidual balance i n h i s or he r acco un t
. T he S avings P l an als o m akes cl eart he fa ctt hateac h par t i ci panthas an i ndi vi dual acc ountdoes not“r equi r e anyseg reg at i on of the funds of the P la n .” A rt ic le 1 0 .0 9
. T he D i s t r i ctC our t ci t ed t hi s C our t ’ s deci s i on i n Moench in su p p o rt o f

its d e ter m in a ti o n th a t a p lan th a t p e rm its e mp l o y e e s t o b e c o me p a r to wn e r s o f t h e i re mp l o y e ri s a n E S OP and nota tr adi t i onal pens i on pl an governed byE R I SA
. A s not ed a b o v e , t h e De f

e n d a n t s h a v e c o n c e d e d t h a tt h e S a v i n g s P l a n we ar e cons i der i ng i s not an E SO P. I n Moench , t hi s C our thel d t hat “i n l i m i t ed ci r cumst ance s , E SO P fi duci ar i es can be l i abl e under22 E R IS A f o r co n tin u in g to in v e st in e m p lo y e r sto c k a c c o rd in g to t he pl an’ s di r ect i on . . . . ” Id
. at 5 56. I tw enton t o s ayt hat “[w ]hi l e fi du ci ari es of p ensi on ben efi tplans gen eral l ym ust di ver s i fyi nves t m ent s of the pl an as s et s . . . , fi duci ar i es of E SO PS ar e exe m pt ed fr om t hi s dut y . ” Id
. at 56 8
. In re ver s i ng th e D istric t C o u rt’s h o ld in g th a t an E S O P c a n n o t b e h e ld liab le fo r i n v esti n g so lel yin em p loy er c o m m o n sto ck , this C o u rt e x p lain e d th a t “a n E S O P f id u c iar yw h o in v e sts th e a ss e ts in em p l oy ers t ock i s ent i t l ed t o a pr es um pt i on t hati tact ed co n sist en tl yw ith E R IS A b yv irtue o f th at de cisi o n . H o w ev er, t he pl ai nt i ff mayover come t hatpr es um pt i on byes t abl i s hi ng t hat t he fi duci aryabus ed i t s deci s i on byi nvesti n g i n empl oy er s ecur i t i es . ” Id
. at571. T he pri nci pl e announced i n Moench has no appl i cat i on t o t he dut yof a f i duci aryof pens i on benef i tpl ans t o di ver s i fyi nves t m ent s “s o as t o m ini m i ze the r i s k of l ar ge l os s es.” Id
. at568. “ES O Ps, unl i ke pens i on pl ans , ar e not inten d ed to g u ara n tee reti rem en t ben ef it s, an d ind ee d , b yit s v ery natur e, ‘ an ES O P pl ace s empl oy ee r et i r ement s assets atm uch gr eat er r i s k t han does t he typi cal di ver s i fi ed ER I SA pl an. ’ ” Id
. a t56 8. Bec a us e t he Sa vi ng s Pl a n i n t hi s c a s e w a s no ta n ESO P, t he Moench d e c isio n d o e s n o t re so lv e th e iss u e p re se n ted in th is m att er. I n a l et t ert o t hi s C our tfi l ed pur s uantt o R ul e 28( j ) of the Fed e r a l Rul e s o f App e l l a t e Pr o c e d u r e , t h e Def e n d a n t s c i t ed a re c e n t d e c is io n o f

th e F if th C ir c u it, Mi l of

s ky v

. A m er i canF ift h C i rcui tR ule 41. 3 st at es that “[u]nl ess ot herw i se 5 expr es s l ypr ovi ded, t he gra nt i ng of a r ehea r i ng en banc vaca t es t he p a n e l o p i n i o n a n d j u d g me n to f t h e c o u r ta n d s t a y s t he m a n d a te .” 23 A i r l i nes , Inc. , 4 0 4 F
. 3 d 3 3 8 (5th C ir
. 2 0 0 5 ) r eh’ g en banc gr ant ed , N o . 0 3 -11 0 8 7 , 2 0 0 5 U
. S
. A p p . L E X IS 1 5 1 2 2 , (5th C ir
. J ul y19, 2005) i n s uppor tof th eir a rgum entt hata part i ci pant 5 l acks s t andi ng to br i ng an ac t i on on behal f of a n i ndi vi dual acc ountpens i on pl an i f he or s he does not s eek pl an- w i de r el i ef.
I n Mi l of s ky , t he pl ai nt i ffs w er e empl oy ed as pi l ot s by Bu s i n e s s E x p r e s s , I n c . ( “ BE X” ) wh e n i twa s a c q u i r e d b yAM R E agl e H ol di ng C orpor at i on, t he hol di ng companyof A m er i can E agl e, I nc. ( “A m er i can Eagl e”)
. W h il e empl oy ed byB E X , t he p la in tif f s p a rt ic ip a te d in its in d iv id u a l a c c o u n t p e n s io n p la n . Id
. at 34 0
. A t th e ti m e o f th e acq u isi ti o n o f B E X , the p lai n ti ff s w ere gi ven not i ce thatt he bal ance of thei r acc ount s i n t he B E X pl an w oul d be tr ans ferr ed t o a compar abl e A m er i can Eagl e 401k p lan . T h e n o tice s ad v ise d th e p lain tiff s w h e n th e tra n sf

e rs w o u ld occur . T he tr ans fer s di d notoccur , how ever , unt i l m ont hs aft er th e tim e w ri tte n in th e n o tic e . Id
. at340- 41.
T he pl ai nt i ffs fi l ed a c l as s act i on agai ns tA m er i can A i r l i nes and Tow er s Per r i n, a bene fi t s cons ul t i ng fi r m hi r ed by A m e ri c a n A irline s to re n d e r a d m in istra tiv e se rv ice s in24 c o n n e c tio n w ith th e p la n . I d. at 340. T he act i on, w hi ch w as fi l ed under29 U
. S. C
. § 1132( a) ( 2) , al l eged thatA m er i can A i r l i nes a n d T o w e rs P e rrin h a d v io late d f id u c iar yd u ties in m i s r epr es ent i ng how and w hen thei racc ount s w o ul d be tr a n s f e rr e d to th e A m e ri c a n E a g le 4 0 1 (k ) p la n . Id
. “Theyal l eged t hat because of

t he fa i l ure t o eff

ectt he tr ansfer of t he clas s m ember s ’ acc ountbal ance s i n a t i m el yand prudentm anner , t he val ues of t hei r acc ount s decr eas ed bec aus e the as s et s r emai ned i nves t ed i n t he fl ounder i ng B E X Pl an l onger t han expe ct ed. ” Id
. a t 3 4 1 . T h e p lain tiff

s re q u e ste d “ a c tu a l d a m a g e s to b e p a id to t he [A m er i can Eagl e] $ uper $ averPl an, t o be al l ocat ed among t hei ri n d i v i dual acc ount s pr opor t i onat el yt o t hei rl os s es r es ul t i ng fr om t he al l eged br eac h. ” Id
. T he maj or i t yof the thre e-j udge pane l i n Mi l of s ky h e ld th a t “p lain tiff

s la c k sta n d in g b e c a u se th is c a se in e ss e n c e is aboutan al l eged pa r t i cul ar i zed ha r m t ar get i ng a s peci fi c s ubs et of pl an bene fi ci ar i es , w i t h cl ai m s for damages t o benef i t s [s i c] m ember s of t he subcl as s onl y , and not t he pl an gene r al l y . ” Id
. at 3 4 7
. T he fa ct s i n Mi l of s ky ar e cl ear l y di s t i ngui s habl e f r om tho se in the m att er s ub j udi ce . I n Mi l of s ky , t he pl ai nt i ffs al l eged t hatt he val ue of thei ri nves t m ent s i n t he B E X p lan decr eas ed b e c a u se o f

th e f a ilu re o f th e d e f e n d a n ts to tra n sf

e r th e f u n d s to th e A m e ri c a n E a g le 4 0 1 (k ) p la n . I d. at351. T hus , t hi s al l eged25 l oss o ccurr ed pri or t o the t ransferof the B E X plan part i ci pan t s’ i nves t m ent s t o t he A m er i can Eagl e 401( k) pl an. I n Mi l of s ky , t he plai nti ffs soug ht dam ages on beh al f of t he B E X plan m em bers, and di d nots eek t o r es t or e as s et s of the A m er i can Eagl e 401( k) fund. H er e, t he Pl ai nt i ffs s eek dam ages fr om t he fi duci ar i es for t hei rvi ol at i on of t hei rdut yt o a s ubcl as s w hi ch had tr ans ferr ed i t s funds t o t he trus t ee of t he Savi ngs Fund.
I n Kuperv. I

ovenko , 66 F. 3d 1447 (6th C ir
. 1995) , t he S ix th C irc u it h e ld th a t a su b se t o f e m p lo y e e b e n e f

it p a rticip a n ts h a s sta n d in g to b rin g a n a c tio n f o r br e a c h o f f

id u c ia r y d u ty under 29 U
. S. C
. §1109. T he C our tr ej ect ed the s ame ar gum ent pr es ent ed byt he D efe ndant s i n t hi s m at t ert hat“an act i on under 2 9 U .S .C . § 1 1 0 9 m u st b e b ro u g h t o n b e h a lf o f a p lan a s a w h o le a n d th a t a c laim b ro u g h t b y a su b c las s o f p lan p a rticip a n ts f

a ils t o s at i s fyt hi s r equi r ement
. ” Id . at 1 4 5 2 . T h e S ix th C irc u it i n Kuperc o n c lu d e d th a t th e p lain tiff s h a d sta n d in g to b rin g th is act i on pur s uant to §1132( a) ( 2)
. C i t i ng Moench , h o w e v e r, it a f f irm e d th e d ism iss a l o f th e a c tio n o n th e m e rits, ad o p tin g th is C our t ’ s rul e that a fi duci aryw ho i nves t s i n an empl oy er ’ s s t ock is e n tit led to a re b u ttab le p re su m p tio n th a t ita c ted c o n sis ten tly w i t h E R ISA i n conti nu i ng t o investi n an em ploy er’ s secur i t i es. Kuper , 66 F
. 3d at 14 58 -59. T he S i xth C i rcui t affirm ed b ecause i tconcl uded thatt he pl ai nt i ffs had fa i l ed “t o r ebutt he p re su m p tio n th a t d e f

e n d a n ts a c ted re a so n a b lyin c o n tin u in g to hol d Q uantum s t ock. ” Id
. at1459. I n s um , t he courtconcl udedA tl eastone otherci r cui tcour t , and s ever al di s t r i ct 6 c o u r t s , h a v e r e a c h e d a s i mi l a r c o n c l u s i on. I n R oth v. Sa wyerC l eat orLum berC o. , 6 1 F .3 d 5 9 9 (8 th C ir. 1 9 9 5 ), th e E ig h th C i r cui taddr es s ed the i s s ue of w hether pl ai nt i ffs w er e br i ngi ng th e ir a c tio n u n d e r S e c tio n 1 1 3 2 (a )(2 ) in d iv id u a llyo r o n b e h a lf o f th e p la n . I

d. at 60 5. T he cou rt exp l ai ned t hat the d efen dan t s’ br eac h of fi duci arydut yr es ul t ed i n t w o t ypes of l os s : i ndi vi dual loss to the b en ef

ici aries, w h ich is n o t ac ti o n ab le un d er R u ss e ll , and a l os s t o t he p lan, w h i ch i s act i onabl e underSect i on 1132( a) ( 2) , beca us e the pl an it self w as al s o har m ed due t o t he b re a c h
. Id ; s ee al

s o I n r e H oneywel lI

nt er nat i onalER I

SA Li t g. , N o. 03 -1214 , 20 04 U
. S
. D i st
. L E X IS 21 58 5, at*5 1-52. ( D
. N
. J. Sept
. 14, 2004) (h o ld in g th a t e v e n th o u g h p lain tiff s c o u ld ch o o se t h e i n v estm en t v eh icl es i n w h ich t h eir fu n d s w ere inv est ed, t hos e funds w er e s t i l l hel d byt he pl an, and therefo re pl ai nt i ffs w er e perm i t t ed t o br ing thei rcl ai m underSect i on 1 1 3 2 (a )(2 )); I

n r e C M S E ner gy ER I SA Li t g. , 312 F. Sup p . 2d 898, 913 ( E
. D
. M ich. 2004) ( ci t i ng Kuperi n s uppor tof the C o u rt’s d e c isio n to re

je c t d e f e n d a n t’s a rg u m e n t th a t a c laim m us tbe di s m i s s ed underSect i on 1132( a) (2) u n l es s i tal l eges h a rm to a ll o f

a p lan ’s p a rticip a n ts); Kayes v. P ac. Lum berC o. , N o s. C -89 -35 0 0 S B A , C -91 -18 1 2 S B A , 1 9 9 3 U
. S
. D ist
. L E X IS 2 1 0 9 0 , * 6 -7 (N .D . C a l. M a r. 8 , 1 9 9 3 ), a ff’d in p a rt a n d

re v ’din par ton othergr ounds , 51 F. 3d 1449, 1462 ( 9t h C i r . 1995) 26 i n Kuperth a t § 1 1 3 2 (a )(2 ) d o e s n o t au th o ri z e a p la in tiff to r ecove r damages on hi s or her ow n behal f. I ns t ead, a p la i nt i ff m u s t se e k to h a v e th e f

id u c ia ry re im b u rs e th e p la n . Id
. at1453. 6( hol di ng t hata pl ai nt i ff w ho s ues underSect i on 1132( a) ( 2)
“ d o e s s o o n b e h a l f

o f t h e p l a n a n d n o ti n h i s i n d i v i d u a l c a p a c i t y. W h ile th e in d iv id u a l h a s s tan d in g to b rin g th e su it, a n d sta n d s to gai n i f t he s ui t i s s ucce s s ful , hi s benef i ti s s econda r yor d eriva ti v e o f th e p lans [sic] g ain” ). 27 T he maj or i tyi n Mi l of

s ky s t at ed thatt he C our t ’ s r eas oni ng i n K u peri s di rect l ycon t raryt o the pri ncipl e ann ou nced in S upr eme C our t ’ s deci s i on i n M assachu set t

s MutualL ife In su ra n c e C o m

p a ny v . R u ss e ll , 4 7 3 U .S . 1 3 4 (1 9 8 5 ) , th a t a par t i ci pant ’ s act i on fi l ed pur s uant t o § 1132( a) ( 2) m ust se ek re m e d ie s th a t p ro v id e a “ b e n e f it to th e p la n a s a w h o le . . . .” Mi l of s ky , 4 0 4 F .3 d a t 3 4 6 . In h e r d is s e n t, C h ie f J u d g e C a r o l yn D i neen K i ng w r ot e that

R u ss e ll n ever r eac hed t he c o n c lu sio n th at th e m a jo rity reaches, i
. e. , t hat st and i ng can ex i st under[§ 1132( a) ( 2) ] onl yi f a llpl an par t i ci pant s w oul d benef i t fr om t he l i t igat i on. I ns t ead, i tonl yhel d t hat a s i ngl e pl an part i ci pant , s eeki ng i ndi vi dual r ecove r yfo rextr ac o n tra c tual dam ages p a y a b le di r e c t l yt o h e r , c o u l d n o tp r o c eed w i t h h e r l a wsui t under [§28 1 1 3 2 (a )( 2 )]
. R u ss e ll , 473 U
. S. at 1 3 4 , 1 0 5 S
. C t
. 3 0 8 5
. A c c o r d i n g l y, t he maj or i t y ’ s hol di ng go es far bey ond t he hol di ng of R u ss e ll
. Id
. at 34 9 (em p h asis ad d ed ) (fo o tno te om itted). In foo t no t e 4 o f her op i nion, C hief J u d g e K i ng al so s t at ed:
T he maj or i t ycorrect l ynot es t hat

R u ss e ll d i s t i n g u i s h e s betw een r el i ef fori ndi vi duals and r el i ef f ort he pl an as a w hol e. M aj or i t yO pi ni on, [ 3 4 4 -4 5 ]. R u ss e ll do es not, how ever , s t and for t he propos i t i on th a t th e ‘p lan a s a w h o le’ is sy n o n ym o u s w ith ‘a ll p a rticip a n ts o f th e p lan ,’ an d se v e ra l co u rts have r ej ect ed thi s defi n it i on of the ‘p la n a s a w h o le .’ Id
. W e agr ee w i t h C hi ef J udge K i ng’ s i nt erpr et at i on of R u ss e ll , and dec l i ne t o fol l ow t he maj or i t y ’ s opi ni on i n Mi l of s ky
. I n R u ss e ll , t h e p l a i n t i f f wa s a b e n e f

i c i a r yu n d e rt wo29 empl oy ee he al t h benef i tpl ans funded by h erempl oy erand governed byE R I SA
. 473 U
. S. at 136. She beca m e di s abl ed and r ece i ved pl an bene fi t s unt i l O ct ober17, 197 9. She r eques t ed i nt ernal r evi ew of the t er m i nat i on deci sion
. T he pl an admi ni s t r at orr ei ns t at ed herbenef i t s on M ar ch 11, 1980, and s he w a s p a id re tr o a c tiv e b e n e f its in f u ll. Id
. T he pl ai nt i ff i n R u ss e llfil ed an ac tio n in state co u rt se e k in g d a m a g e s f

o r m e n tal a n d e m o tio n a l d istre ss u n d e r sta te l aw and ER I SA cl ai m s r esu l t i ng fr om t he i nt errupt i on of her b e n e f it p a ym e n ts , a s w e ll a s p u n itiv e d a m a g e s . Id
. at137. T he defe ndantr emoved the act i on t o t he D i s t r i ctC our tand moved fors um m aryj udgm ent
. T he D i s t r i ctC our tgr ant ed the mot i on. I thel d t hat t he st at e- l aw cl ai m s w er e pre empt ed by E R I SA , and t hatE R IS A b arr ed cl ai m s forextr a- contr actual and puni t i ve d a m a g e s . Id
. T h e N inth C ir cu itaf firm ed the D istri ct C o u rt ’s det er m i nat i on t hatt he s t at e l aw cl ai m s w ere pr e- empt ed by E R I SA , but al s o concl uded thatt he compl ai ntal l eged a caus e of act i on under§1132( a)(2) and thatpuni t i ve damages coul d be a w a rd e d
. Id
. at138.
T he S up rem e C ou rtrever sed t he judgm ent of t he N in th C i r cui t
. I thel d t hat§ 1109 does notauthor i ze e xt r aco n t r actual o r pu n it ive d am ag es. T h e C o u rtalso rejected the p lai n ti ff ’s ar gum entt hata pr i vat e r i ghtof ac t i on forextr acontr actual d a m a g e s w a s i m p l i e d i n § 1 1 0 9
. Id
. at148. I n r ej ect i ng t heT h u s , R u ss e lli nvol ved an a ct i on br oughtbyone 7 i ndi vi dual w ho err oneous l y s ought t o r ecove r extr a contr actual d a ma g e s u n d e rE RI S A. 30 empl oy ee’ s cl ai m s , t he C our ts t at ed that“[a ] fai rcont extual re a d in g o f

th e sta tu te m a k e s it a b u n d a n tlyc lea r th a t it s dr aft s m en w er e pr i m ar i l yconce r ned w i t h t he pos s i bl e m i s us e of pl an as s et s , and w i t h r emedi es t hat w oul d pr ot ect t he ent i r e pl an, r athert han w i t h t he r i ght s of an i ndi vi dual benefi ciary
. ” Id
. at 142.
U n lik e th e c irc u m sta n c e s p re se n ted in th is m a tter, in R u ss e ll t he pl ai nt i ff di d notfi l e a c l as s act i on on behal f of a n E R I SA empl oy ee be nefi t s pl an t o r equi r e t he def endant s t o pay damage s t o t h e h e a l t h b e n e f i tp l a n b e c a u s e o f

t h e i ra l l eged breach o f t heirfi du ci arydu t y . Inst ead, s he fil ed a pri vate cause o f a cti o n fo r ex tr ac o n tr ac tual an d p u n it ive d am ag es. T h e C o u rt 7 di d nothol d i n R usse llth a t a s u b g ro u p o f p lan p a rticip a n ts cannotfi l e der i vat i ve ac t i on on behal f of a n E R I S A empl oy ee benef i t s pl an i f t he fi duci ar i es ’ al l eged br eac h di d notaff ectt he i nves t m ent s of part i ci pant s i n ot hers ubgr oups . T hati s s ue s im p ly w a s n o t b e f

o re th e C o u rt
. T he D i s t r i ctC our tr el i ed i n par ton R u ss e lla n d its p ro g e n yin h o ld in g th a t31 [a]l t ho ug h indi vidual em ploy ees’ c o n t r i b u t i o n s w e r e neve r aggr egat ed and al l empl oy ees r em ai ned ca pabl e of i nves t i ng on an i ndi vi dual i zed ba s i s , pl ai n t i ffs n o w se e k to th e o re tica llya g g re g a te th e se in d iv id u a lize d lo ss e s in to l os s es by “the pl an. ” Such an aft er - t h e - fa c t aggr egat i on by i ndi vi dual s i n or d er t o s ue on behal f of t he pl an i s n o t per m i t t ed undert he l anguage o f S ect i ons 1 1 0 4 , 1 1 0 9 o r , m o st im p o rta n tly 1 1 3 2 (a )( 2 ).
T he D i s t r i ctC our tbas ed thi s hol di ng on i t s m i s rea d ing of the Savi ngs Pl an. W hi l e empl oy ees w er e abl e t o choos e w hi ch fund to in v e s t th e ir a ss e ts in , the S a v in g s P lan m a k e s c lea r th a t it s as s et s ar e aggr egat ed and a r e hel d i n t rus tby t he Savi ngs Pl an t rus t ees atal l t i m es . T he D i s t r i ctC our t ’ s r el i ance on R u ss e lland i t s progen y i n s up po rt of i t s ho l ding i n thi s part i cularcase w as, th e re f o re , m is p la c e d
. T h e D efen dan t s ci t e t he N i nth C i rcui t ’s decis i on in H or an v. Kais er St eel R et i r em ent P l an , 9 4 7 F
. 2 d 1 4 1 2 (9th C ir
. 1991) , i n s uppor tof thei rar gum ent t hat t he Pl ai nt i ffs ’ caus e of32 act i on i n t hi s cas e s houl d be di s m i s s ed becau se the r emedi es t heys eek a r e fort hei row n bene fi t , and noton behal f of the Saving s P la n. I n H

or an , for m erempl oy ees of K ai s erSt eel soug htt o f

or c e i tt o u s e pl a n a s s e t s i n o r de rt o p ur c hase a n n u itie s f

o r t h e b e n e f

it o f e a c h f o rm e r e m p lo y e e . Id
. at1415. T h e N in th C irc u it h e ld th a t th e p lain tiff s c o u ld n o t s tate a c laim b e c a u se “ [ t]h e re m e d ies so u g h t b yth e p lain tiff s a re f o r th e ir ow n benef

i t , and notfor t he benef

i t of t he Pl an. T he obj ect i ve of t h e p lai n t i ffs ’ s ui ti s t o r ecove ran annui t yforeac h i ndi vi dual pl ai nt i ff. ” I

d. a t 1 4 1 8
. H or an i s eas i l ydi s t i ngui s habl e fr om t hi s cas e. U nl i ke the pl ai nt i ffs i n H

or an , the P la in ti f

f s in th is c a se d o n o t se e k to for ce the Savi ngs Pl an t o pur chas e annui t i es fort hei ri ndi vi dual benef i t
. Inst ead, t heys eek t o for ce the D efe ndant s t o m ake p ay m en ts t o the S av ing s P lan fo r th e D ef en d an ts’ all eg ed fa il u re t o ful fi l l t h eir fi duci aryobl i gat i ons , i n or dert o r emedyt he damage t hei ract i ons caus ed t o t he Savi n g s P lan. T he fa ctt hat d am ag es p aid to the S av ing s P lan f o r bre ac h es o f f

id u c ia ry d u ti es w il l al so ind ir ec tl yb en ef itit s p arti cipa n ts do es n o t bar a d e ri v a tiv e a c tio n u n d e r § § 1 1 0 9 a n d 1 1 3 2 (a )( 2 ). Sm i th v. Sydnor , 1 8 4 F
. 3 d 3 5 6 , 3 6 3 (4th C ir
. 1 9 9 9 ).
W e a re p e rsu a d e d th a t th e D istric t C o u r t e rre d in concl udi ng t hatt he compl ai ntfai l s t o s t at e a cl ai m on behal f of t he Savi ngs Pl an pur s uantt o §1109.T he D i s t r i ctC our thas y ett o addr es s t he pr opr i etyof 8 t his sui tb ei ng m ai ntai ned as a cl ass act i on and w e, of co urse expr es s no vi ew t her eon. 33 B
T he D efe ndant s cont end thatt he “i ndi vi dual i zed na tur e” of P l ai nt i ffs ’ cl ai m s i s r efl ect ed i n t he fa ctt hatt he cons ol i dat ed c o m p lain t “e x p re ss lye x c lu d e s a ll P lan p a rticip a n ts c u r re n tly e m p lo y e d b yS c h e rin g ” in th e c las s d e f in iti o n . W h ile th is s t at ement i s l i t er al l yt rue, i t s eems t o us m or e l i kel yt han nott hat t he r efe r ence d al l eg ati on w as i nadvert ent , gi ven the other al l egat i ons of t he com pl ai nt m aki ng i t cl eart hatt hi s act i on w as b rou g h t fo r t h e u lt im ate b en ef ito f “ [a ]l l perso n s w h o w ere p arti cipa n ts i n . . . the P lan a t anyti m e [ d u ri n g the c lass p eriod ], a n d w h o s e a c c o u n ts in c lu d e d i n v e s tm e n ts in S c h e ri n g s to c k .” A p p . at 6 7 . C o m p a re C o m p lain t p a ra g ra p h 6 2 , A p p . at 67 , w ith par agr aph 3, A pp. at48 ( “D efe ndant s , as fi duci ar i es of t he Pl an, b re a c h e d th e ir d u ties to [ th e P lain tiff s] a n d to o th e r p a rticip a n ts a n d b e n e f

icia rie s o f

th e P lan
. . . p a r ti c u lar lyw ith re g a rd to hol di ngs of Scher i ng s t ock. ”) A tt hi s poi nt , how ever , any ambi gui t yt hus cr eat ed i s nots i gni fi cant and ca n be cl ar i fi ed by 8 amendm enton r emand.34 III
I n t hei rm ot i on t o di s m i s s , t he D efe ndant s r eques t ed that t h e Di s t r i c t Cou r t d i s mi s s t h e a c t i o n o n t h e me r i t s b e c a us e t he Pl ai nt i ffs fai l ed t o al l ege fac t s s how i ng a br eac h of dut ybyany of the fi du ci ar i es named i n t he cons ol i dat ed compl ai nt
. T he D i s t r i ctC our texpr es s l ydecl i ned t o det er m i ne the mer i t s of P lain tiff s’ a lleg a ti o n s th a t th e D e f e n d a n ts b re a c h e d th e ir fi d u ciar ydut i es , orw hethert he count s agai ns tM r . K ogan s houl d be di s m i s s ed “be caus e the com pl ai ntfai l ed t o al l ege that M r . K ogan per for m ed anys peci fi c fi duci aryact s . ”
T h e iss u e s ra ise d b y th e D e f e n d a n ts re g a rd in g th e m e rits of t he c lai m s of br eac hes of fi duci arydut i es i nvol ve compl ex l egal and fac tual ques t i ons . T hi s m at t er w as di s m i s s ed forl ack of s t andi ng pr i ort o t he fi l i ng of an ans w er , oranyot herpr e- t r i al proceed i ng s. W e decli ne to r eview t he m eri t s of the D efen dan t s’ alt ern ati v e b ase s fo r d ism issi n g this a cti o n b ec au se “ the re co rd as pr es ent ed t o us i s not s uffi ci ent l y adequa t e for us t o gi ve the car eful and thought ful cons i derat ion thes e i s s ues m er i t
. Si nce t he cas e m us t go back t o t he D i s t r i ctC our t , w e thi nk t hes e i s s ues w ou l d b enef

i tfrom fu rther el abo rat i on t here i n the fi rs t i ns t ance . ” C al l ahan v. A

. E

. V

. , I nc. , 1 8 2 F
. 3 d 2 3 7 , 2 4 9 (3d C ir
. 1 9 9 9 ). A d d iti o n a l d isc o v e ryp ro c e e d in g s a n d p o ss ib le a m e n d m e n ts to th e p lea d in g s m a yc lar if yth e iss u e s s h o u ld fur therappel l at e r evi ew become nece s s aryt o fi nal l ydi s pos e of35 this m att er. C oncl usi on W e conc l ude thatt he D i s tr ict C our terr ed i n di s m i s s i ng t hi s act i on on t he s ol e gr ound t hatt he Pl ai nt i ffs fai l ed t o s t at e a c l a i m u n d e r§ 1 1 0 9 o n b e h a l f o f t h e S a v i n g s P l a n . A c c o r d i n g l y, w e r ever s e the j udgm entdi s m i s s i ng thi s act i on w i t h pr ej udi ce and r emand w i t h i ns t ruct i ons t o t he D i s t r i ctC o u rt to conduct fur therpr ocee di ngs r egar di ng t he mer i t s of the cl ai m s as s er t ed in th e c o n s o lid a te d c o m p la in t.