The Solicitor General's Brief in LaRue
As I've noted before, earlier this year the Supreme Court granted the Petition for Writ of Certiorari in LaRue v. DeWolff, Boberg & Assoc., 450 F.3d 570 (4th Cir. 2006). You can read about the LaRue case in an earlier post here. In a nutshell, LaRue presents the Court with the opportunity to clarify what type of relief is available under two separate but related sections of ERISA when an individual suffers economic loss as a direct result of an ERISA administrator's breach of fiduciary duty.
As part of it's evaluation of whether to hear the case, the Supreme Court asked the U.S. Solicitor General, the person who speaks to the Court on behalf of the government, to provide an amicus curiae ("friend of the court") brief to assist the Justices in the consideration of the issues in the case. You can find the brief from the Solicitor General here.
For us ERISA geeks, it's an interesting read. The government takes the position that the Fourth Circuit erred in denying any relief to LaRue. Even though the ERISA plan fiduciary's breach of his obligations under the statute directly resulted in a significant financial loss to LaRue, it was also a loss to the plan that gives rise to a remedy under 29 U.S.C. Secs. 1109 and 1132(a)(2).
In the alternative, the remedy LaRue seeks, for the breaching fiduciary to be held personally responsible for the economic loss LaRue suffered, is simply a request that the Court apply the equitable doctrine of surcharge. Surcharge falls directly within the scope of remedies typically available in equity at common law to beneficiaries of a trust. As a result, LaRue is entitled to recover his losses under 29 U.S.C. Sec. 1132(a)(3).
The SG's arguments are persuasive to me. The language in the last couple of paragraphs of the decision summarizes the analysis nicely:
"'. . . the crucible of congressional concern' that motivated enactment of ERISA 'was misuse and mismanagement of plan assets by plan administrators,' and 'ERISA was designed to prevent these abuses in the future.' . . . Indeed, Congress stated in the statute itself that ERISA's goal is 'to protect . . . the interests of participants in employee benefit plans . . . by establishing standards of conduct, responsibility, and obligation for fiduciaries of [those] plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts.' Given that explicit statement of purpose, it makes little sense that plans and their participants should be left with no relief when plan assets are lost through fiduciary mismanagement (citations omitted, emphasis in original)."
I think oral argument in LaRue, presently scheduled for Monday, November 26th, will provide us with more insight into the thinking of the Justices on these issues.