Opinion ID: 700665
Heading Depth: 2
Heading Rank: 2

Heading: Is the entity experiencing the loss the Plan or a participant?

Text: 22 In Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134, 147, 105 S.Ct. 3085, 3092-93, 87 L.Ed.2d 96 (1985), the Supreme Court distinguished between a loss to a plan itself, for which trustees may be personally liable under Sec. 409(a), and a loss to beneficiaries, for which trustees are not liable. Roth I, 16 F.3d at 919-20. Here, the alleged breach of fiduciary duty consists of (1) using Company stock to secure the promissory notes (2) executed by the Plan. Id. at 917. This breach results in two types of loss: The beneficiaries suffer a loss because their security interest is, due to the trustees' breach of trust, tied to the Company stock which is now worthless. This is a loss to the beneficiaries personally, which is not actionable under Russell. However, the Plan also has an interest in the stock due to the breach. The decision to make the Plan the obligated party on the notes is the direct cause of the Plan's possession of the shares of Company stock that are now worthless. Accordingly, we conclude that the loss is to the plan and is therefore actionable under ERISA Sec. 409(a). 23