Thole v. U. S. Bank N.A .

140 S.Ct. 1615

207 L.Ed.2d 85

James J. THOLE, et al., Petitioners

v.U. S. BANK N.A ., et al.

No. 17-1712

Supreme Court of the United States.

Argued January 13, 2020

Decided June 1, 2020

Peter K. Stris, Los Angeles, CA, for the petitioners.

Sopan Joshi for the United States as amicus curiae, by special leave of the Court, supporting the petitioners.

Joseph R. Palmore, Washington, DC, for the respondents.

Karen L. Handorf, Michelle C. Yau, Mary J. Bortscheller, Cohen & Milstein, Washington, DC, Peter K. Stris, Brendan S. Maher, Rachana A. Pathak, Douglas D. Geyser, John Stokes, Stris & Maher LLP, Los Angeles, CA, for petitioners.

Stephen P. Lucke, Andrew Holly, Dorsey & Whitney llp, Minneapolis, MN, Joseph R. Palmore, Deanne E. Maynard, Samuel B. Goldstein,^* Morrison & Foerster llp, Washington, DC, James R. Sigel, Morrison & Foerster llp, San Francisco, CA, for the respondents.

Justice KAVANAUGH delivered the opinion of the Court.

To establish standing under Article III of the Constitution, a plaintiff must demonstrate (1) that he or she suffered an injury in fact that is concrete, particularized, and actual or imminent, (2) that the injury was caused by the defendant, and (3) that the injury would likely be redressed by the requested judicial relief. See Lujan v. Defenders of Wildlife , 504 U.S. 555, 560–561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).

Plaintiffs James Thole and Sherry Smith are two retired participants in U. S. Bank's retirement plan. Of decisive importance to this case, the plaintiffs’ retirement plan is a defined-benefit plan, not a defined-contribution plan. In a defined-benefit plan, retirees receive a fixed payment each month, and the payments do not fluctuate with the value of the plan or because of the plan fiduciaries’ good or bad investment decisions. By contrast, in a defined-contribution plan, such as a 401(k) plan, the retirees’ benefits are typically tied to the value of their accounts, and the benefits can turn on the plan fiduciaries’ particular investment decisions. See Beck v. PACE Int'l Union , 551 U.S. 96, 98, 127 S.Ct. 2310, 168 L.Ed.2d 1 (2007) ; Hughes Aircraft Co. v. Jacobson , 525 U.S. 432, 439–440, 119 S.Ct. 755, 142 L.Ed.2d 881 (1999).

As retirees and vested participants in U. S. Bank's defined-benefit plan, Thole receives $2,198.38 per month, and Smith receives $42.26 per month, regardless of the plan's value at any one moment and regardless of the investment decisions of the plan's fiduciaries. Thole and Smith have been paid all of their monthly pension benefits so far, and they are legally and contractually entitled to receive those same monthly payments for the rest of their lives.

Even though the plaintiffs have not sustained any monetary injury, they filed a putative class-action suit against U. S. Bank and others (collectively, U. S. Bank) for alleged mismanagement of the defined-benefit plan. The alleged mismanagement occurred more than a decade ago, from 2007 to 2010. The plaintiffs sued under ERISA, the aptly named Employee Retirement Income Security Act of 1974, 88 Stat. 829, as amended, 29 U.S.C. § 1001 et seq. The plaintiffs claimed that the defendants violated ERISA's duties of loyalty and prudence by poorly investing the assets of the plan. The plaintiffs requested that U. S. Bank repay the plan approximately $750 million in losses that the plan allegedly suffered. The plaintiffs also asked for injunctive relief, including replacement of the plan's fiduciaries. See ERISA §§ 502(a)(2), (3), 29 U.S.C. §§ 1132(a)(2), (3).

No small thing, the plaintiffs also sought attorney's fees. In the District Court, the plaintiffs’ attorneys requested at least $31 million in attorney's fees.

The U. S. District Court for the District of Minnesota dismissed the case, and the U.S. Court of Appeals for the Eighth Circuit affirmed on the ground that the plaintiffs lack statutory standing. 873 F.3d 617 (2017). We granted certiorari. 588 U. S. ––––, 139 S.Ct. 2771, 204 L.Ed.2d 1155 (2019).

We affirm the judgment of the U. S. Court of Appeals for the Eighth Circuit on the ground that the plaintiffs lack Article III standing. Thole and Smith have received all of their monthly benefit payments so far, and the outcome of this suit would not affect their future benefit payments. If Thole and Smith were to lose this lawsuit, they would still receive the exact same monthly benefits that they are already slated to receive, not a penny less. If Thole and Smith were to win this lawsuit, they would still receive the exact same monthly benefits that they are already slated to receive, not a penny more. The plaintiffs therefore have no concrete stake in this lawsuit. To be sure, their attorneys have a stake in the lawsuit, but an "interest in attorney's fees is, of course, insufficient to create an Article III case or controversy where none exists on the merits of the underlying claim." Lewis v. Continental Bank Corp. , 494 U.S. 472, 480, 110 S.Ct. 1249, 108 L.Ed.2d 400 (1990) ; see Steel Co. v. Citizens for Better Environment , 523 U.S. 83, 107, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (same). Because the plaintiffs themselves have no concrete stake in the lawsuit, they lack Article III standing.

* * *

If Thole and Smith had not received their vested pension benefits, they would of course have Article III standing to sue and a cause of action under ERISA § 502(a)(1)(B) to recover the benefits due to them. See 29 U.S.C. § 1132(a)(1)(B). But Thole and Smith have received all of their monthly pension benefits so far, and they will receive those same monthly payments for the rest of their lives.

To nonetheless try to demonstrate their standing to challenge alleged plan mismanagement, the plaintiffs have advanced four alternative arguments.

First , analogizing to trust law, Thole and Smith contend that an ERISA defined-benefit plan participant possesses an equitable or property interest in the plan, meaning in essence that injuries to the plan are by definition injuries to the plan participants. Thole and Smith contend, in other words, that a plan fiduciary's breach of a trust-law duty of prudence or duty of loyalty itself harms ERISA defined-benefit plan participants, even if the participants themselves have not suffered (and will not suffer) any monetary losses.

The basic flaw in the plaintiffs’ trust-based theory of standing is that the participants in a defined-benefit plan are not similarly situated to the beneficiaries of a private trust or to the participants in a defined-contribution plan. See Varity Corp. v. Howe , 516 U.S. 489, 497, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996) (trust law informs but does not control interpretation of ERISA). In the private trust context, the value of the trust property and the ultimate amount of money received by the beneficiaries will typically depend on how well the trust is managed, so every penny of gain or loss is at the beneficiaries’ risk.

By contrast, a defined-benefit plan is more in the nature of a contract. The plan participants’ benefits are fixed and will not change, regardless of how well or poorly the plan is managed. The benefits paid to the participants in a defined-benefit plan are not tied to the value of the plan. Moreover, the employer, not plan participants, receives any surplus left over after all of the benefits are paid; the employer, not plan participants, is on the hook for plan shortfalls. See Beck , 551 U.S. at 98–99, 127 S.Ct. 2310. As this Court has stated before, plan participants possess no equitable or property interest in the plan. See Hughes Aircraft Co. , 525 U.S. at 439–441, 119 S.Ct. 755 ; see also LaRue v. DeWolff, Boberg & Associates, Inc. , 552 U.S. 248, 254–256, 128 S.Ct. 1020, 169 L.Ed.2d 847 (2008). The trust-law analogy therefore does not fit this case and does not support Article III standing for plaintiffs who allege mismanagement of a defined-benefit plan.

Second , Thole and Smith assert standing as representatives of the plan itself. But in order to claim "the interests of others, the litigants themselves still must have suffered an injury in fact, thus giving" them "a sufficiently concrete interest in the outcome of the issue in dispute." Hollingsworth v. Perry , 570 U.S. 693, 708, 133 S.Ct. 2652, 186 L.Ed.2d 768 (2013) (internal quotation marks omitted); cf. Gollust v. Mendell , 501 U.S. 115, 125–126, 111 S.Ct. 2173, 115 L.Ed.2d 109 (1991) (suggesting that shareholder must "maintain some continuing financial stake in the litigation" in order to have Article III standing to bring an insider trading suit on behalf of the corporation); Craig v. Boren , 429 U.S. 190, 194–195, 97 S.Ct. 451, 50 L.Ed.2d 397 (1976) (vendor who "independently" suffered an Article III injury in fact could then assert the rights of her customers). The plaintiffs themselves do not have a concrete stake in this suit.

The plaintiffs point to the Court's decisions upholding the Article III standing of assignees—that is, where a party's right to sue has been legally or contractually assigned to another party. But here, the plan's claims have not been legally or contractually assigned to Thole or Smith. Cf. Sprint Communications Co. v. APCC Services, Inc. , 554 U.S. 269, 290, 128 S.Ct. 2531, 171 L.Ed.2d 424 (2008) ; Vermont Agency of Natural Resources v. United States ex rel. Stevens , 529 U.S. 765, 771–774, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000) (qui tam statute makes a relator a partial assignee and "gives the relator himself an interest in the lawsuit") (emphasis deleted). The plaintiffs’ invocation of cases involving guardians, receivers, and executors falls short for basically the same reason. The plaintiffs have not been legally or contractually appointed to represent the plan.

Third , in arguing for standing, Thole and Smith stress that ERISA affords the Secretary of Labor, fiduciaries, beneficiaries, and participants—including participants in a defined-benefit plan—a general cause of action to sue for restoration of plan losses and other equitable...