James Thole v. U.S. Bank, National Assn.
873 F.3d 617
| 8th Cir. | 2017Background
- Plaintiffs (U.S. Bank retirees) sued U.S. Bank, U.S. Bancorp, and directors alleging ERISA breaches in managing the defined‑benefit U.S. Bank Pension Plan (2007–2010), including (1) an all‑equity “Equities Strategy” and (2) investing >40% in proprietary FAF mutual funds. Plaintiffs sought plan‑wide monetary and equitable relief under 29 U.S.C. §§ 1132(a)(2), 1109 and § 1132(a)(3).
- Plaintiffs alleged the Equities Strategy produced a $1.1 billion loss in 2008 that turned the Plan from overfunded in 2007 to substantially underfunded in 2008, causing increased risk of default and injury to participants.
- District court: (a) found plaintiffs had standing at filing and allowed FAF‑fund/prohibited‑transaction claims to proceed; (b) dismissed Equities Strategy claims as time‑barred under ERISA’s six‑year repose; later (c) dismissed the remainder as moot after the Plan became overfunded again (defendants made voluntary contributions), and denied plaintiffs’ fee request.
- On appeal the panel considered whether an overfunded plan precludes plaintiff relief under §§ 1132(a)(2) and (a)(3), whether the Equities Strategy claims were time‑barred, and whether plaintiffs were entitled to fees under the “catalyst” theory.
- The majority affirmed dismissal: it held Harley/McCullough preclude § 1132(a)(2) claims when a defined‑benefit plan is overfunded and extended that reasoning to deny § 1132(a)(3) injunctive relief; it also affirmed denial of fees because plaintiffs failed to show the suit was a material cause of defendants’ contributions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an overfunded plan defeats relief under § 1132(a)(2) | Plaintiffs: standing assessed at filing (plan was underfunded then); later overfunding does not strip statutory authority to pursue plan relief | Defendants: plan is overfunded now; Harley/McCullough bar § 1132(a)(2) suits by participants when plan surplus removes cognizable injury | Held: Affirmed dismissal as to § 1132(a)(2). Harley/McCullough mean an overfunded defined‑benefit plan removes the class authorized to sue under § 1132(a)(2) for § 1109 relief. |
| Whether plaintiffs may seek injunctive/equitable relief under § 1132(a)(3) despite overfunding | Plaintiffs: injunctive relief can remedy past breaches and is available even if plan later becomes overfunded | Defendants: no actual or imminent injury to the Plan now; overfunding defeats statutory authorization for relief | Held: Majority affirmed dismissal under § 1132(a)(3), reasoning injury to the Plan is required and overfunding removes that injury; concurrence dissented, arguing § 1132(a)(3) independently authorizes injunctive suits and plaintiffs alleged actual/imminent injury. |
| Whether Equities Strategy claim was time‑barred | Plaintiffs: pleaded ongoing breach/monitoring failures and did not admit the strategy was fixed more than six years before suit | Defendants: Equities Strategy began >6 years before suit; claims barred by ERISA’s six‑year statute of repose | Held: District court’s dismissal of the Equities Strategy claim as time‑barred was not reached on appeal because all claims were dismissed on overfunding grounds; court did not need to decide on rehearing. |
| Whether plaintiffs are entitled to attorneys’ fees under § 1132(g) (catalyst theory) | Plaintiffs: defendants’ post‑filing contributions (2014) were motivated by the litigation and thus constitute some success on the merits | Defendants: contributions were made to reduce PBGC/insurance premiums and for other independent reasons; plaintiffs offer no evidence linking the suit to contributions | Held: Affirmed denial of fees. No evidence that litigation materially caused the voluntary contributions; plaintiffs failed to show any degree of success on the merits. |
Key Cases Cited
- Hughes Aircraft Co. v. Jacobson, 525 U.S. 432 (explains nature of defined‑benefit plans and that participants generally lack claims to particular plan assets)
- Harley v. Minn. Mining & Mfg. Co., 284 F.3d 901 (8th Cir. 2002) (holding § 1132(a)(2) does not authorize participants to sue for plan losses when a defined‑benefit plan is overfunded)
- McCullough v. AEGON USA Inc., 585 F.3d 1082 (8th Cir. 2009) (affirming Harley’s statutory‑standing rationale for overfunded plans)
- LaRue v. DeWolff, Boberg & Assocs., Inc., 552 U.S. 248 (2008) (recognizes that fiduciary misconduct can create cognizable injuries to plan assets)
- Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010) (fee‑applicant must show some degree of success on the merits)
- Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014) (statutory‑standing/zone‑of‑interests analysis)
- Soehnlen v. Fleet Owners Ins. Fund, 844 F.3d 576 (6th Cir. 2016) (requires a showing of actual or imminent injury to the plan for injunctive relief under § 1132(a)(3))