In its opinion, the U.S. District Court for the Middle District of Alabama pointed out that the case in the Supreme Court ruling LaRue v. DeWolff differed from the case brought by ESOP participant Benita L. Cook. The LaRue case said that defined contribution plan participants can seek individual account damages in fiduciary breach suits (see Supreme Court Allows Individual ERISA Suits in Landmark Ruling).
The Cook case concerned a plan in which participants were allowed direct investment of their account holdings. In Cook’s case, the plan was required to maintain investments in employer stock.
“There is no allegation that Plaintiffs could make individual choices as to how the ESOP was funded or that Plaintiffs’ losses occurred based on [defendant’s] failure to adhere to Plaintiffs’ individual directives as to how their accounts (i.e., their proportional share of company stock) were to be maintained,” the court said in its opinion.
Senior U.S. District Judge Ira DeMent claimed in the opinion that Cook and the class of participants she represented in the case misunderstood why summary judgment was previously granted to the defendant. DeMent pointed out that the plaintiffs alleged breaches of fiduciary duties that negatively affected the value of the company stock, which not only affected their accounts, but the account of every ESOP participant, or the plan as a whole.
The district court ruled that when a system breach of fiduciary obligations affect the plan as a whole, recovery of damages to individual accounts is not an appropriate form of relief under the Employee Retirement Income Security Act (ERISA) Section 502(a)(2).
The court denied Cook’s motion to reconsider the case.
The opinion in Cook, et.al. v. Campbell is here.