The LaRue v. DeWolff Boberg case was Supreme Court case in which James LaRue sued his former employer for failing to execute his repeated instructions to move his assets to more conservative investments. Because of this failure to respond to repeated instructions, he lost $150,000 in his 401(k) plan and he wanted to be compensated for that loss, especially since he repeatedly told his employer and the administrator he wanted to move his funds.
The Supreme Court unanimously found in favor of LaRue, which was important because until that time individuals couldn’t sue under the ERISA, Employee Retirement Income Security Act, unless the losses affected the entire plan.
Specifically, there were two questions presented:
- Could a participant in a defined contribution pension plan sue to recover losses caused by a breach in fiduciary duty?
- Whether the act of recovering losses caused by this breach of duty counts as “equitable relief.”
The Supreme Court unanimously stated that the ERISA was designed to protect employees from misuse and mismanagement by plan administrators and to protect the employee’s interests in the plan by establishing standards of conduct, responsibility, and obligations for fiduciaries of those plans. You can read more about this case on the WSJ.
One response to “Landmark 401(k) Supreme Court Case: LaRue v. DeWolff Boberg”
On the surface this appears to be a dull ruling. However, it has important implications for the insurance industry.
Coverage is provided to corporations for next to nothing by insurance companies. This ruling will cause the cost of insuring mistakes to rise.