Court Opinion

ID: 2968351
Source: CourtListenerOpinion
Date Created: 2015-09-22 04:55:47.967711+00
Date Added: 2024-06-11T15:28:33.837102
License: Public Domain

PUBLISHED
                                                 Filed: August 8, 2006

UNITED STATES COURT OF APPEALS
                 FOR THE FOURTH CIRCUIT

JAMES LARUE,                              
                   Plaintiff-Appellant,
                  v.
DEWOLFF, BOBERG & ASSOCIATES,
INCORPORATED; DEWOLFF, BOBERG &
ASSOCIATES, INCORPORATED,                          No. 05-1756
Employees’ Savings Plan,
              Defendants-Appellees.

SECRETARY OF LABOR,
      Amicus Supporting Appellant.
                                          

                               ORDER

   Appellant has filed a petition for rehearing and rehearing en banc
in LaRue v. DeWolff, Boberg & Associates, Inc., 450 F.3d 570 (4th
Cir. 2006), and the Secretary of Labor has filed a motion out-of-time
for leave to file an amicus brief on appellant’s behalf. The court
grants the Secretary’s motion for leave to file out-of-time, but the
petition for rehearing and the petition for rehearing en banc are
denied.

   With respect to the Secretary’s views, the court notes that they are
always welcome on any matter in which the Secretary has an interest.
The timely submission of those views, however, will assist the court
in giving them the attention they deserve. Initial submission of these
views in a petition for rehearing — and an untimely one at that —
affords neither the litigants or this court a proper chance to review the
case in single, rather than piece-meal, fashion. Thus, the Secretary’s
2                LARUE v. DEWOLFF, BOBERG & ASSOC.
belated entry into Taylor v. Progress Energy, Inc., 415 F.3d 364 (4th
Cir. 2005), was a discourtesy both to the parties in that case and to
the court.

   The same holds true of the even more untimely filing here. Federal
Rule of Appellate Procedure 29(e) directs the filing of an amicus brief
"no later than 7 days after the principal brief of the party being sup-
ported is filed." Fed. R. App. P. 29(e) (emphasis added). The term
"principal brief" would appear to refer to the lead brief filed by a
party in anticipation of argument (either before a panel or the en banc
court) and not to something such as a reply brief or petition for
rehearing. The language of that rule sets forth no exceptions. While
a court is not precluded from granting leave to file an amicus brief in
other circumstances, see id. advisory committee’s note, waiting until
a petition for rehearing has been filed is a disfavored litigation tactic
and fails to serve the litigants’ interest in having all views considered
thoroughly at the initial briefing and argument stage. While it may
suit the agency’s convenience to troll for panel results to which it
takes exception, such a practice is not consistent with the orderly and
conscientious disposition of claims in an appellate court. See Sup. Ct.
R. 44(5) ("The Clerk will not file any brief for an amicus curiae in
support of, or in opposition to, a petition for rehearing."); D.C. Cir.
R. 35(f) ("No amicus curiae brief in response to or in support of a
petition for rehearing en banc will be received by the clerk except by
invitation of the court.").

   Having served notice that untimely submissions will henceforth be
disfavored, the court will out of respect for the Secretary address its
views in the instant case. The Department of Labor concedes that
LaRue must be "read broadly" to give rise to the possible difficulties
it envisions. Br. at 1. To begin with, the problems supposed by the
Department are at best speculation: the Secretary says only that they
"could" possibly arise. Id. at 7. The Secretary, moreover, offers no
explanation for and quotes no language from the opinion as to why
the case must be "read broadly." To the contrary, LaRue involves a
single plaintiff who sought to recover for an individual loss; indeed,
LaRue did not even allege a "loss to the plan," but only to his "interest
in the plan." J.A. 7-9. It is, therefore, the Secretary’s position, rather
than the panel’s, that is the broad one — for it stretches the ERISA
statute unacceptably. Neither the text of Section 502(a)(2) nor
                LARUE v. DEWOLFF, BOBERG & ASSOC.                      3
Supreme Court precedent contemplate a remedy for individual, rather
than plan, losses. To adopt the Secretary’s view, however, would nec-
essarily transform every purely individual claim for breach of fidu-
ciary duty into a "plan loss." Such an expansive view of fiduciary
liability would lead to its own parade of horribles, a parade that Con-
gress refused to countenance. See Pilot Love Ins. Co. v. Dedeaux, 481
U.S. 41, 54 (1987).

   The Secretary’s view — that a purely individual claim that bears
any legal relationship to a plan inures to the benefit of that plan —
is contrary to the plain text of the statute. Section 502(a)(2) incorpo-
rates Section 409 which provides that a fiduciary who breaches a plan
duty "shall be personally liable to make good to such plan any losses
to the plan resulting from each such breach, and to restore to such
plan any profits of such fiduciary which have been made through use
of assets of the plan by the fiduciary." 29 U.S.C. § 1109(a) (2000)
(emphasis added). As the Supreme Court has explained: "[T]he entire
text of § 409 persuades us that Congress did not intend that section
to authorize any relief except for the plan itself." Mass. Mutual Life
Ins. Co. v. Russell, 473 U.S. 134, 144 (1985) (emphasis added). If
Congress meant to authorize individual damages claims under
§ 502(a)(2), it had only to say so. Instead, the text emphasizes the pre-
cise nature of the remedy provided by Congress: a remedy restricted
to plan losses. Furthermore, ERISA is a "comprehensive and reticu-
lated statute," id. at 146, it implements Congress’ various "policy
choices," Dedeaux, 481 U.S. at 54, and courts should therefore be "es-
pecially reluctant to tamper with the enforcement scheme embodied
in the statute . . . by extending remedies not specifically authorized
by its text." See Great-West Life & Annuity Ins. Co. v. Knudson, 534
U.S. 204, 209 (2002)(internal quotation and alteration omitted).

   The Secretary’s view is thus inconsistent with the Supreme Court’s
decision in Russell. The Russell Court held that § 502(a)(2) requires
plaintiffs to seek damages on behalf of the plan as a whole, not on
their own behalf. 473 U.S. at 140, 144; see Varity Corp. v. Howe, 516
U.S. 489, 515 (1996) ("[§ 502(a)(2)] does not provide a remedy for
individual beneficiaries."). As the Supreme Court explained, ERISA’s
fiduciary duty provisions are primarily concerned with protecting the
integrity of the plan, which in turn protects all beneficiaries, rather
than remedying individual wrongs. Russell, 472 U.S. at 141. As a
4               LARUE v. DEWOLFF, BOBERG & ASSOC.
result, a § 502(a)(2) claim must "be brought in a representative capac-
ity on behalf of the plan as a whole." Id. at 141 n.9. The Department
of Labor, however, fails to explain how its overly broad reading of
"loss to the plan" — to include entirely individual claims — can pos-
sibly be squared with Russell’s representative capacity requirement.
Here, LaRue seeks to recover money damages to which he believes
he is individually entitled — such an action is in no sense "representa-
tive."

   The Secretary’s atextual reading of Section 502(a)(2) would also
strip Mertens v. Hewitt Associates, 508 U.S. 248 (1993), and Great-
West Life and Annuity Insurance Co. v. Knudson, 534 U.S. 204
(2002), of any real significance. In those cases, the Supreme Court
refused to read Section 502(a)(3)’s language "appropriate equitable
relief" to authorize money damages, because such a construction
would undermine Congress’ carefully crafted remedial scheme.
Indeed, ERISA provides not one, but two, bases for individual benefi-
ciaries like LaRue to enforce the terms of a plan, but — unlike Sec-
tion 502(a)(2) — neither of these provisions permits the recovery of
money damages. See 29 U.S.C. §§ 1132(a)(1)(B),(a)(3). To read, as
the Secretary suggests we should, § 502(a)(2) to authorize the very
sort of individual damages barred by the Supreme Court in Mertens
and Knudson, would render § 502(a)(3)’s limitation on monetary
relief a dead-letter. It would also deprive of all meaning the careful
distinction Congress drew between plan remedies in § 502(a)(2), and
individual remedies in §§ 502(a)(1) and (a)(3).

   According to the Secretary, "[LaRue] creates a conflict with deci-
sions of the Third, Fifth, Sixth, and Seventh Circuits." Br. at 11. That
assertion overlooks the actual holdings of the cases cited by the Sec-
retary; it also ignores the decisions of other courts of appeals with
which the Secretary’s interpretation of § 502(a)(2) conflicts. To begin
with, each case cited by the Department involved a subset of plan
beneficiaries or participants that alleged plan losses. Not a single case
involved, as here, an individual plaintiff, much less one who failed to
allege a "loss to the plan" as required by Section 502(a)(2).

  In In re Schering-Plough Corp. ERISA Litig., for example, the
Third Circuit held only that where plaintiffs alleged that "the Plan
suffered significant losses" and requested that fiduciaries "make good
                 LARUE v. DEWOLFF, BOBERG & ASSOC.                       5
to the Plan the losses to the Plan," they need not "seek[ ] to recover
for all plan participants allegedly injured by the breach." 420 F.3d
231, 234, 235 (3d. Cir. 2005) (emphasis added). Indeed, the Third
Circuit distinguished the very situation presented here: one in which
a single plaintiff seeks "to recover damages on his or her own behalf."
Id. at 239. And, the Secretary’s assertions notwithstanding, Br. at 14,
the Third Circuit did attach significance to the fact that plaintiffs filed
a class action on behalf of a number of plan participants, distinguish-
ing Russell on precisely that ground. Id. at 241.

   Likewise, in Kuper v. Iovenko, 66 F.3d 1447, 1453 (6th Cir. 1995),
the Sixth Circuit concluded that a subclass of plan participants could
sue where the remedy sought by plaintiffs "would benefit the plan as
a whole and . . . cure any harm the plan had suffered." Indeed, the
Kuper court noted that the Sixth Circuit had "repeatedly held that
ERISA does not permit recovery by an individual who claims a
breach of fiduciary duty." Id. at 1452-53. (collecting cases). Similarly,
in Milofsky v. Am. Airlines, Inc., 442 F.3d 311, 313 (5th Cir. 2006),
a subset of participants sought "to recover losses to [American Air-
lines’ 401K] $uper $aver Plan." As for Steinman v. Hicks, 352 F.3d
1101, 1102 (7th Cir. 2003), the Seventh Circuit specifically noted that
— in contradistinction to § 502(a)(3), the appropriate vehicle for indi-
vidual relief — § 502(a)(2) requires a loss to the plan. The cases cited
by the Secretary thus stand only for the limited proposition that liabil-
ity under § 502(a)(2) is not limited to losses that accrue to all plan
participants — it is, however, limited to plan losses.

   Indeed and ironically, it is the Secretary’s overly broad view of the
term "losses to the plan" that creates the circuit split. A number of
courts of appeals have stated that individual loss is not cognizable
under § 502(a)(2). In Strom v. Goldman, Sachs & Co., for example,
the Second Circuit held that an individual plaintiff "cannot proceed
under Section 502(a)(2) because it affords no remedies to individual
beneficiaries." 202 F.3d 138, 149 (2d Cir. 1999), abrogated on other
grounds by Knudson, 534 U.S. at 214-15; see Matassarin v. Lynch,
174 F.3d 549, 566 (5th Cir. 1999) (affirming grant of summary judg-
ment under Section 502(a)(2) because plaintiff’s allegations "concern
only her individual account"); see also Smith v. Sydnor, 184 F.3d 356,
363 (4th Cir. 1999) ("Under ERISA, damages for breach of fiduciary
duty inure to the benefit of the plan as a whole rather than to individu-
6               LARUE v. DEWOLFF, BOBERG & ASSOC.
als."); McDonald v. Provident Indem. Life Ins. Co., 60 F.3d 234, 237
(5th Cir. 1995) ("[P]laintiffs failed to prove a loss to the plan as
required by 29 U.S.C. § 1109(a).") (emphasis in original); Parker v.
BankAmerica Corp., 50 F.3d 757, 768 (9th Cir. 1995) ("Any recovery
for a violation of section 1132(a)(2) must be on behalf of the plan as
a whole, rather than inuring to individual beneficiaries."); Horan v.
Kaiser Steel Retirement Plan, 947 F.2d 1412, 1418 (9th Cir.
1991)(same); Tregoning v. American Community Mut. Ins. Co., 12
F.3d 79, 83 (6th Cir. 1993) ("§ 1109(a) provides relief only for a plan
and not for individual participants."); Lee v. Burkhart, 991 F.2d 1004,
1009 (2d. Cir. 1993)("Russell . . . bars plaintiffs from suing under
Section 502(a)(2) because plaintiffs are seeking damages on their own
behalf, not on behalf of the Plan."); Physicians HealthChoice, Inc. v.
Trustees of Auto. Employee Ben. Trust, 988 F.2d 53, 54 (8th Cir.
1993) ("The Supreme Court has construed [§ 1109(a)] literally . . .
that section [does not] ‘authorize any relief except for the plan
itself.’")(quoting Russell, 472 U.S. at 144).

   In ERISA, Congress sought to provide fair and generous remedies
for plan participants without imposing ruinous personal liability on
plan fiduciaries. That balance pervades the statute, and it is not for us
to readjust it. With respect, we think the Secretary’s view does recali-
brate the balance, and we do not possess authority to modify plain
statutory text, several Supreme Court decisions, and the corpus of cir-
cuit law on the subject. If the Department believes fiduciaries should
face personal liability for every wrong alleged by individual benefi-
ciaries, even in the absence of personal profit or misuse of plan assets,
it will have to seek a forum other than this court.

   Entered at the direction of Judge Wilkinson with the concurrence
of Judge Traxler and Judge Williams (USDJ,ED/VA).

                                        For the Court

                                        /s/ Patricia S. Connor
                                                Clerk