In Harris v. Amgen, Inc., No. 08-55389 (9th Cir. 2009), Steve Harris and Dennis F. Ramos (the “Plaintiffs”) sued Amgen, Inc. (“Amgen”) and several Amgen directors and officers. The Plaintiffs alleged that the defendants had breached their fiduciary duties under ERISA in their operation of two defined contribution retirement plans, by allowing the plans to purchase and hold Amgen stock while knowing that the stock price was artificially inflated because of improper off-label drug marketing and sales, resulting in losses to the plan participants due to a significant decline in the stock price after the off-label activity became public. The district court had dismissed Harris’s complaint on the ground that he lacked standing as an ERISA plan “participant” because he had earlier withdrawn all of his assets from his account in the retirement plan in which he had participated. The Ninth Circuit reversed the dismissal of Harris’s complaint, finding that he has standing as an ERISA plan participant to seek relief under Section 502(a)(2) of ERISA.
In determining that Harris has standing as a plan participant, the Court noted that a plan participant under ERISA is any employee or former employee who is or may become eligible to receive a benefit of any type from the plan. This definition includes a former employee who has a colorable claim to vested benefits, but not a former employee who is seeking only a damage award. According to the Court, a former employee, who has received a full distribution of his or her account balance under a defined contribution plan, is treated as having a colorable claim to vested benefits, and not as seeking a damage award, when suing to recover losses to his or her account occasioned by a breach of fiduciary duty which allegedly reduced the account balance. Therefore, Harris has standing to sue. Also, the Court determined that, under these circumstances, Harris has standing to sue under Section 502(a)(2) of ERISA (suit against plan fiduciaries), even though he may also sue under Section 502(a)(1)(B) of ERISA (suit against the plan itself). In addition, the Court rejected the defendants’ argument that Harris lacked standing under Article III of the United States Constitution because Harris has not sustained an injury that is redressable by the Court.