OPINION
The plaintiffs, each of whom purports to represent a class of others similarly situated, are former employees who maintained accounts in § 401(k) defined contribution retirement plans sponsored by their employers and who, upon leaving employment, voluntarily sought and obtained full distribution of the vested benefits in then-respective accounts. They commenced these actions under the Employee Retirement Income Security Act of 1974 (“ERISA”) against the fiduciaries of then-respective retirement plans, for breach of their fiduciary duties to the plans based on the fiduciaries’ knowing investment in mutual funds that allowed investors to practice market timing, an abusive form of arbitrage activity that favored the market timers and harmed long-term investors in the funds, such as the plaintiffs. The plaintiffs sued the fiduciaries under §§ 502(a)(2) and 409(a) of ERISA, which allow for a derivative action to be brought by a retirement plan “participant” on behalf of the plan to obtain recovery for losses sustained by the plan because of breaches of fiduciary duties.
The defendants filed motions to dismiss the plaintiffs’ claims, challenging then-standing to assert the claims under both ERISA and Article III of the Constitution. The district court granted their motions, finding that the plaintiffs did not fall within the class of individuals authorized to sue under ERISA § 502(a)(2) because, having cashed-out of the plans, they were no longer seeking “benefits,” as required to have statutory authority to sue, but rather money damages.
Because we conclude that cashed-out former employees remain “participants” in defined contribution retirement plans for purposes of § 502(a)(2) of ERISA when they seek to recover amounts that they claim should have been in their accounts had it not been for alleged fiduciary impropriety, we find that they have “statutory standing.” And because the plans at issue are defined contribution plans, rather than defined benefit plans, we reject the defendants’ argument that the plaintiffs’ injuries are not redressable and therefore that they lack Article III standing. Accordingly, we reverse the judgments of the district court and remand these cases for further proceedings.
I
When Craig Wangberg,
Market timing can harm mutual fund investors by causing mutual funds to manage their portfolios in a manner that is disadvantageous to long-term shareholders. Disclosure Regarding Market Timing, 68 Fed.Reg. at 70,404. For example, investment advisors might maintain a larger percentage of fund assets in cash or liquidate certain portfolio securities prematurely to meet higher levels of redemp-tions due to market timing activity occurring within the fund. Id. “It would make little sense for a fund manager to invest in assets with significant long-term potential but high short-term volatility if a market timer’s redemptions could force the quick sale of fund assets.” Pimco,
Market timing can be especially problematic when it occurs in mutual funds that invest in overseas securities because the time zone differences allow market timers to purchase shares of such funds “based on events occurring after foreign market closing prices are established, but before the fund’s NAV calculation.” Disclosure Regarding Market Timing, 68 Fed.Reg. at 70,403. Prior to the daily NAV calculation, which in the United States generally occurs at or near the closing time of the major U.S. securities markets, the fund price would not take into account any changes that have affected the value of the foreign security. Therefore, if the foreign security had increased in value, the NAV for the mutual fund would be artificially low. Id. After purchasing the shares at the low price, “the market timer would redeem the fund’s shares the next day when the fund’s share price would reflect the increased prices in foreign markets, for a quick profit at the expense of long-term fund shareholders.” Id. Market timing opportunities also exist in mutual funds that do not invest in foreign markets, such as small-cap stocks and high-yield bonds, which are relatively illiquid assets and are not frequently traded. Id.; see also Richard L. Levine, Yvonne Cristovici & Richard A. Jacobsen, Mutual Fund Market Timing, Fed. Lawyer, Jan. 2005, at 28, 30.
The harm that market timing can cause to the interests of investors, especially long-term investors, has led many mutual funds to adopt policies and to impose fees intended to limit market timing within their funds. It has also led to increased regulatory action by the Securities and Exchange Commission. See, e.g., Disclosure Regarding Market Timing,
The civil actions concerning mutual fund market timing, including the four cases appealed to us, were transferred by the Judicial Panel on Multidistrict Litigation to three judges in the District of Maryland for coordinated pretrial proceedings. See In re Janus Mut. Funds Inv. Litig.,
The plaintiffs in the four cases initially before us filed class action claims against their employers and other fiduciaries of their defined contribution retirement plans, which had invested in mutual funds allowing market-timing activity. At the time they commenced these actions, none of the plaintiffs remained employed by the companies sponsoring their plans, nor did any continue to have open accounts with these plans. They had all “cashed out” their vested benefits. In their complaints, brought under ERISA § 502(a)(2), the plaintiffs alleged that the defendant fiduciaries knowingly invested in mutual funds that allowed improper and abusive market timing, materially diluting the value of the funds and therefore the value of their individual retirement accounts, in violation of the fiduciary duties imposed by ERISA § 409(a). They alleged that due to the breach of fiduciary duties, their individual retirement accounts in the defined contribution plans suffered a diminution in value and that therefore they did not receive the full benefits to which they were entitled under the relevant plans when they cashed out. The defendants filed motions to dismiss, arguing that because each of the named plaintiffs had terminated his or her employment and had cashed out of his or her retirement plan, taking a full distribution of the account’s contents before filing suit, the plaintiffs lacked standing to sue.
The district court initially denied the defendants’ motions to dismiss in three of the cases, finding that the cashed-out former-employee plaintiffs in those cases had standing to bring their ERISA claims. Corbett v. Marsh & McLennan Cos., Inc., No. MDL-15863, Civ. JFM-04-0883,
My ruling ... should not be read as implying that former participants do not have standing to sue Plan fiduciaries or the Plan itself in the event that a Plan obtains a recovery in an investor class action ... and then chooses not to distribute a pro rata portion of the recovery to former participants whose retirement accounts held shares in the relevant mutual funds during the class period. If that were to occur, the focus of litigation instituted by a former Plan participant would be upon how to allocate a sum certain among various beneficiaries with conflicting claims, not upon determining the fiduciaries’ asserted liability for making imprudent investments — and, in the event of a finding of liability — reducing to a set amount alleged investment losses of inherently inchoate value. These questions are quite different from one another, and former participants may have the right to assure that the Plan or its fiduciaries distribute to them, rather than giving to others or retaining for the Plan itself, benefits that in fairness and good conscience are due to them.
Id. at *n. 2.
The plaintiffs in each of the four cases appealed, and we consolidated their appeals to decide the single issue of whether the plaintiffs have statutory and constitutional standing. Subsequently, the parties to the Walker case filed a stipulation of voluntary dismissal, leaving us with three cases on appeal.
II
Arguing from the language of ERISA, the plaintiffs contend that the district court erred because “participants’ benefits in a ‘defined contribution’ plan are vested in all contributions and earnings and any other plan assets allocated to their individual accounts.” Because “the Plans’ assets (including recovery from loss) are considered the benefits of the Plans’ participants,” when each plaintiff took the distribution of his or her account, the account “had lost value due to Defendants’ actions, [and therefore] each has a colorable claim to the appropriate increase in his or her vested benefit,” giving each standing to assert that claim.
The defendants contend that because the plaintiffs have already been paid their full contributions, they do not have a “col-orable claim to vested benefits,” citing Firestone Tire & Rubber Co. v. Bruch,
Here, plaintiffs have already received the entirety of the net contributions to their accounts, and thus have no claim (much less a “colorable” one) that they are owed some or all of those contributions. Upon termination of their employment, plaintiffs received lump sum distributions of their respective contributions net of expenses, etc. — that is, all benefits then vested. They make no claim that these amounts were miscalculated or misstated. For this reason, plaintiffs err in arguing that “[i]t is the claim to that amount that must be color-able[J not the amount itself.” Plaintiffs*214 have no colorable claim to any amount of vested benefits.
We begin with the relevant texts, noting that ERISA § 502(a)(2) provides that “a participant” may bring a civil action against fiduciaries for breaches of their duties as articulated in ERISA § 409(a). See 29 U.S.C. § 1132(a)(2). Section 409(a) provides:
Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchap-ter 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, and shall be subject to such other equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary.
29 U.S.C. § 1109(a) (emphasis added). The “participant” who may so sue is defined to be:
any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit.
29 U.S.C. § 1002(7) (emphasis added). As noted, the Supreme Court in Firestone defined a participant under these sections of ERISA to include a former employee with “a colorable claim to vested benefits.” Firestone,
After the district court entered its judgments in these cases, denying the plaintiffs standing, the Supreme Court decided LaRue v. DeWolff, Boberg & Associates, Inc., — U.S. -,
*215 Misconduct by the administrators of a defined benefit plan will not affect an individual’s entitlement to a defined benefit unless it creates or enhances the risk of default by the entire plan.
[Although § 502(a)(2) does not provide a remedy for individual injuries distinct from plan injuries, that provision does authorize recovery for fiduciary breaches that impair the value of plan assets in a participant’s individual account.
Id. at 1026 (emphasis added).
We believe that the holding in LaRue controls the outcome here.
Thus, while Firestone held that former employees who maintained active retirement accounts with funds invested in them would qualify as “participants” under ERISA, LaRue took the short additional step to conclude that even a former employee who cashed out his vested benefits in a plan would remain a “participant,” so long as (1) the fiduciaries are “chargeable with ... any profit which would have accrued to the [plan] if there had been no breach of trust,” LaRue,
As in LaRue and the courts of appeals’ opinions cited, the plaintiffs’ claims here are based on allegations that breaches of fiduciary duties diminished the values of their individual accounts and that the plans entitled them to more than they received on the days they cashed out of them. Had the fiduciaries acted in accordance with their duties, the plaintiffs claim, their accounts would have held more money on the days they cashed out. Thus, because plan documents and ERISA entitled them to more money on the days they cashed out, their claims are for additional benefits, and not for damages as the district court held.
The defendants’ argument that the plaintiffs took full distributions of the contents of their accounts at the time they cashed out is persuasively answered by the discussion in Harzewski-.
Suppose [the defendant] had stolen half the money in a plan participant’s retirement account and a suit by the participant resulted in a judgment for that amount; the suit would have established the retiree’s eligibility for the larger benefit. There is no difference if instead of stealing the money from the account, [the defendant] by imprudent management caused the account to be*216 half as valuable as it would have been under prudent management.
In short, we conclude that participants in defined contribution plans controlled by ERISA have colorable claims against the fiduciaries of their plans when they allege that their individual accounts in the plans were diminished by fraud or fiduciary breaches and that the amounts by which their accounts were diminished constitute part of the participants’ benefits under the plans. The plaintiffs’ claims in this case are for such additional benefits, not damages, and they therefore have standing to sue under ERISA § 502(a)(2).
Ill
Because we conclude that the plaintiffs have “statutory standing” to bring their claims, we must also now decide whether they have constitutional standing, as required by Article III of the U.S. Constitution, for it is conceivable that a person is a member of the class given authority by a statute to bring suit but nonetheless has not, for example, sustained injury that would be redressable by a favorable decision of the court. See, e.g., Cent. States Southeast & Southwest Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C.,
Article III standing is a fundamental, jurisdictional requirement that defines and limits a court’s power to resolve cases or controversies. See Steel Co. v. Citizens for a Better Env’t,
In this case, the first two elements are not at issue: If the plaintiffs’ allegations are true, they suffered injury in that their retirement accounts were worth less than they would have been absent the breach of duty, and this injury was caused, as the plaintiffs have alleged, by the fiduciaries’ misconduct. The defendants contend, however, that the plaintiffs have not satisfied the third element of constitutional standing — that their injury be redressable by a favorable decision in this litigation.
Defendants contend that even if the plaintiffs can prove the merits of their ease, it is wholly speculative whether any recovery by the plan would pass through to the plaintiffs’ individual accounts. Yet, for an injury to meet the redressability standard, “it must be ‘likely,’ as opposed to
First, they assert that whether the plaintiffs recover any money in these cases is “entirely dependent on the discretionary actions of third parties (retirement plan fiduciaries)” and that therefore Article III standing cannot be met, citing ASARCO, Inc. v. Kadish,
In these cases before us, the plaintiffs have made the plan fiduciaries parties to the actions, suing all of the fiduciaries that controlled the investment decisions of the plans’ funds. As applicable to their respective plans, the plaintiffs sued the plan sponsors, the plan administrators, the plan trustees, and members of advisory investment committees, and they alleged that these fiduciaries knew that the mutual funds in which they were investing allowed market timing activity and that this activity favored the market timers at the expense of longterm investors, such as the plaintiffs. They asserted that because of imprudent investment decisions by the fiduciaries, their individual accounts in the respective plans were diminished.
Unlike the circumstances in ASARCO and the other similar cases cited by the defendants, the fiduciaries are in fact before the court in these cases and can respond to court orders to redress wrongs. Section 409(a) of ERISA provides that a court may direct fiduciaries to repay the plans and that, in addition, fiduciaries “shall be subject to such other equitable or remedial relief as the court may deem appropriate.” 29 U.S.C. § 1109(a).
The defendants’ second point in support of their redressability argument is that “ [pjlaintiffs have failed to adduce any facts showing that the plan fiduciaries are likely to distribute any award in this action to former employees, nor have they demonstrated that the district court would have the authority to order the plan fiduciaries to do so in this case.” They point out that recovery by the plans for fiduciary misconduct would become plan assets over which the fiduciaries would have full discretion, and that their discretion must be exercised “solely in the interest of the participants and beneficiaries” and “for the exclusive purpose of: (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan.” 29 U.S.C. § 1104(a)(1)(A). They conclude that the duties of plan fiduciaries run to the plan as a whole, not to any individual subset of plan participants, and therefore it can only be speculation whether the plaintiffs’ individual accounts would benefit from a favorable decision.
This traditional argument based on Russell, however, rests on ERISA jurisprudence governing defined benefit plans,
[Although § 502(a)(2) does not provide a remedy for individual injuries distinct from plan injuries, that provision does authorize recovery for fiduciary breaeh-es that impair the value of plan assets in a participant’s individual account.
Id. at 1026 (emphasis added). Thus, the defendants’ argument that only the entire plan has an interest in the recovery is defeated by the LaRue Court’s observation that “our references to the ‘entire plan’ in Russell, which accurately reflect the operation of § 409 in the defined benefit context, are beside the point in the defined contribution context.” Id. at 1025 (emphasis added).
Of course, a participant suing to recover benefits on behalf of a defined contribution plan for breach of a fiduciary duty is still not entitled to have monetary relief paid directly to him. See LaRue,
The defendants’ argument that restoration of individual accounts would be speculative following any recovery in these cases thus fails to recognize that in a defined contribution plan, it is the plan assets in the individual accounts that are restored — less, of course, fees and expenses incurred. Accordingly, the redressability problem that arises in defined benefit plans does not exist with respect to defined contribution plans.
In sum, if we take the plaintiffs’ cases as they come to us and therefore accept for now the allegations of the complaints as true — that the defendants breached fiduciary obligations imposed by ERISA § 409(a) and those breaches had an adverse impact on the value of the plan assets in the plaintiffs’ individual accounts — then the plaintiffs have constitutional standing to bring these claims. Because we find both statutory standing and constitutional standing in the assumed circumstances of these cases, we reverse the judgments of the district court and remand for further proceedings.
REVERSED AND REMANDED
Notes
. Craig Wangberg's case has, from the beginning, incorrectly carried his name into the caption as "Wangberger.”
. See Graden v. Conexant Sys., Inc., No. Civ. 05-0695,
. Distinguishing a defined contribution plan from a defined benefit plan, the Court explained that a defined contribution plan "promises the participant the value of an individual account at retirement,” whereas a defined benefit plan "promises the participant a fixed level of retirement income.” LaRue,
. The defendants argue in addition that the Securities and Exchange Commission settle
. Here, too, the "withdrawal of funds from the Plan may have relevance to the proceedings on remand.” LaRue,