Nearly a year to the day after participants in Delta Air Line’s Delta Family Care Savings Plan filed a proposed class action lawsuit against the company, the plan’s administrative committee and other fiduciaries, a federal district court judge has dismissed the amended complaint.
The plan fiduciaries were accused of imprudence and disloyalty in the now-rejected complaint, filed in the U.S. District Court for the Northern District of Georgia. As amended, the complaint alleged that, given its size and prominent place in the marketplace, the plan had and has the ability to demand and obtain lower-cost investment options from providers.
In short, the judge on the case ruled in favor of dismissal due to a lack of standing on the part of the proposed class of plaintiffs. Citing a number of precedent-setting cases, the decision states that to qualify as a “case or controversy” that can be tried, the plaintiff must have “suffered an injury in fact that is fairly traceable to the challenged conduct of the defendant and is likely to be redressed by a favorable judicial decision.” The injury-in-fact element in turn requires that the injury be “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.”
As the judge observes, an Employee Retirement Income Security Act (ERISA) plaintiff must meet both constitutional and statutory standing requirements, and that is not the case here.
“Defendants contend that plaintiffs have failed to demonstrate that they suffered a concrete and particularized injury because the amended complaint does not allege that they were invested in the criticized investment funds or paid the recordkeeping fees they contend were excessive,” the decision explains. “Plaintiffs, relying upon out-of-circuit law, contend that they may sue on behalf of the plan even if they were not personally injured. However, the Eleventh Circuit is clear that personal injury is a prerequisite to standing.”
The rationale for dismissal continues: “Plaintiffs further contend that even if individual injury is required, the mere fact that defendants allegedly violated ERISA rights creates an injury to them. However, plaintiffs still point to no Eleventh Circuit law to support their assertion, and the cases upon which they rely address situations in which an ERISA plaintiff has been unable to demonstrate that the alleged violations caused her financial injury. They do not address the situation we have here, in which the plaintiffs do not allege that the purported violations affected them at all.”
Important to note, another court in this district has issued a similar ruling when confronting a similar situation. In that case, to proceed with a claim, the plaintiff argued that a breach of fiduciary duty harms all plan participants in itself. However, the court ruled the plaintiff did not adequately describe how the offering of a fund in which she did not invest caused her a non-speculative injury.
The decision goes on: “It has been recognized that in a particular case, a plaintiff might be able to show that the constellation of funds in the plan is structured in such a way that plaintiff would sustain injury from selection and offering of an investment not made by plaintiff. However, the allegations of the amended complaint shed no light on this matter. It is insufficient to allege generally that offering a prohibited investment damaged the plan and its participants. Here, similarly, plaintiffs have not alleged that they were invested in the criticized funds or paid the allegedly excessive fees. Therefore, plaintiffs do not have standing.”
The full text of the decision is available here.