In Trustees Of The Upstate New York Engineers Pension Fund v. Ivy Asset Management, Docket No. 15-3124 (2nd Cir. 2016), the plaintiff Board of Trustees of a pension fund was suing the fund’s investment manager, Ivy Asset Management, alleging breach of fiduciary duty in failing to advise the fund in 1998 that it had become imprudent to continue as a customer of Bernard L. Madoff Investment Securities LLC. The Board of Trustees were also suing Bank of New York Mellon Corporation, alleging that it knowingly participated in the fiduciary breach. The district court dismissed the Board of Trustees’ complaint for failure to state a claim and for failure to allege an actual injury sufficient to establish Article III standing. Upon review, the Second Circuit Court of Appeals (the “Court”) affirmed the district court’s dismissal.
As to the standing issue, the Court said that, in order to establish standing: (1) the plaintiff must have suffered an injury-in-fact; (2) there must be a causal connection between the injury and the conduct at issue; and (3) the injury must be likely to be redressed by a favorable decision. Further, in a case arising under ERISA, the plaintiff must allege some injury or deprivation of a specific right that arose from a violation of an ERISA duty in order to meet the injury-in-fact requirement. In this case, the Court found that there is no cognizable investment loss. The Board of Trustees did not claim that the fund suffered a loss that exceeded profits, and an increase in pension funds, shown in this case, is not a recognizable loss. Further, a breach of fiduciary duty under ERISA, as alleged here, in and of itself does not constitute an injury-in-fact sufficient for constitutional standing. Accordingly, the Court found that the Board of Trustees failed to allege facts sufficient to show Article III standing.