In Thole v. U.S. Bank, No. 16-1928 (8th Cir. 2017), plaintiffs James Thole and Sherry Smith (together, the “plaintiffs”) brought a putative class action against U.S. Bank, N.A. (“U.S. Bank”) and others (collectively, the “defendants”), challenging the defendants’ management of a defined benefit pension plan of U.S. Bank (the “Plan”) from September 30, 2007, to December 31, 2010.
The plaintiffs alleged that the defendants violated Sections 404, 405, and 406 of ERISA by breaching their fiduciary obligations and causing the Plan to engage in prohibited transactions with a U.S. Bank subsidiary. The plaintiffs’ complaint asserts that these alleged ERISA violations caused significant losses to the Plan’s assets in 2008 and resulted in the Plan being underfunded in 2008. The plaintiffs sought to recover Plan losses, disgorgement of profits, injunctive relief, and other remedial relief pursuant to ERISA Sections 409 and 502(a)(2). They also sought equitable relief pursuant to ERISA Section 502(a)(3).
In response, the defendants moved to dismiss the plaintiffs’ complaint, arguing that the plaintiffs lacked standing to bring the suit, the ERISA claims were time-barred or had been released, and the pleading otherwise failed to state a claim on which relief could be granted. During the litigation, the factual backdrop of the case changed. In 2014, the Plan became overfunded; in other words, there was more money in the Plan than was needed to meet its obligations. The defendants, alleging that the plaintiffs had not suffered any financial loss upon which to base a damages claim, moved to dismiss the remainder of the action for lack of standing. The district court agreed and dismissed the case as moot. It concluded that, because the Plan is now overfunded, the plaintiffs lack a concrete interest in any monetary relief that the court might award to the Plan if the plaintiffs prevailed on the merits. The Eighth Circuit Court of Appeals (the “Court”) affirmed the district court’s decision to dismiss the plaintiffs case as moot. The Court also found that the case should be dismissed because, as argued by the defendants, the claims were time-barred and failed to state a claim for which relief could be granted.