Opinion ID: 663131
Heading Depth: 2
Heading Rank: 3

Heading: Loss to the ESOP

Text: 16 The trustees may also escape personal liability even if they breached their duties and a hypothetical prudent fiduciary would not have made the same decision that they did if the trustees can show that there was no loss to the ESOP. The plaintiffs are suing under ERISA Sec. 502(a)(2). See 29 U.S.C. Sec. 1132(a)(2) (codifying ERISA Sec. 502(a)(2)). Under Sec. 502(a)(2), plan participants may sue trustees to enforce ERISA Sec. 409. See id.; id. Sec. 1109 (codifying ERISA Sec. 409). Section 409 provides that trustees may be personally liable, but only for losses to the plan, id. Sec. 1109(a) (emphasis added); if individual plan participants suffer losses, but the plan does not, the trustee is not personally liable for damages under Sec. 409. 4 As noted above, once the plaintiff shows a breach of duty and a prima facie case of loss to the plan, the trustee then has the burden of persuasion to show that the loss was not caused by the breach. Martin, 965 F.2d at 671. The trustee may also prevail at trial by showing that there was in fact no loss to the plan or, on a motion for summary judgment, by showing that the plaintiff cannot establish a prima facie case of loss. 17 The trustees here argue that the ESOP did not suffer a loss as a result of their decision to secure the plaintiffs' notes with Company stock. We decline to review this argument, however, because the trustees did not raise the loss issue in their memorandum supporting their summary judgment motion; they raised it only in their reply to the plaintiffs' cross-motion for summary judgment. See II Joint App. at 535. Thus, the trustees, as the moving party, did not satisfy their burden under Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986), of informing the district court and the opposing party that the absence of loss to the plan was a basis for their summary judgment motion. We note that the plaintiffs have never proffered evidence of loss to the plan, which they must do to prevail on a breach of duty claim. Regardless of this failure of proof, however, our holding is based on the fact that the trustees never made loss to the plan an issue in their motion for summary judgment. On remand, they may demonstrate that the ESOP did not suffer losses, but they cannot prevail on summary judgment where they failed to alert the district court to the issue.