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Randal McCullough v. Aegon USA, 08-1952 (2009)

Court: Court of Appeals for the Eighth Circuit Number: 08-1952 Visitors: 32
Filed: Nov. 03, 2009
Latest Update: Mar. 02, 2020
Summary: United States Court of Appeals FOR THE EIGHTH CIRCUIT _ No. 08-1952 _ Randal E. McCullough, * * Appellant, * * v. * * AEGON USA, Inc.; AEGON USA Inc. * Board of Directors; Patrick S. Baird; * James A. Beardsworth; Kirk W. Buese; * Tom A. Schlossberg; Arthur C. * Schneider; Mary Taiber; James R. * Trefz; Does 1-20; Diversified * Investment Advisors, Inc.; * Transamerica Financial Life Insurance * Company; Transamerica Investment * Management, LLC; Transamerica Life * Appeal from the United States
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                  United States Court of Appeals
                        FOR THE EIGHTH CIRCUIT
                                ___________

                                No. 08-1952
                                ___________

Randal E. McCullough,                 *
                                      *
              Appellant,              *
                                      *
       v.                             *
                                      *
AEGON USA, Inc.; AEGON USA Inc. *
Board of Directors; Patrick S. Baird; *
James A. Beardsworth; Kirk W. Buese; *
Tom A. Schlossberg; Arthur C.         *
Schneider; Mary Taiber; James R.      *
Trefz; Does 1-20; Diversified         *
Investment Advisors, Inc.;            *
Transamerica Financial Life Insurance *
Company; Transamerica Investment      *
Management, LLC; Transamerica Life *      Appeal from the United States
Insurance Company; Transamerica       *   District Court for the
Occidental Life Insurance Company;    *   Northern District of Iowa.
Marilyn Carp; Dan Kolsrud; James      *
Halfpap; Jill Anderson; Jeff Rosen;   *
Martha McConell; Steve Albritton;     *
Mark Mullin; James McArdle; Diane     *
Meiners; Daniel Fox; Investment       *
Committee; Trustee of the Plan,       *
                                      *
              Appellees.              *
___________________                   *
                                      *
AARP,                                 *
                                      *
       Amicus on Behalf of Appellant, *
                                      *
American Benefits Council,           *
                                     *
      Amicus on Behalf of Appellee. *
                                ___________

                             Submitted: December 12, 2008
                                Filed: November 3, 2009
                                 ___________

Before BYE and COLLOTON, Circuit Judges, and GOLDBERG,1 Judge.
                            ___________

COLLOTON, Circuit Judge.

       Randal McCullough, a participant in a defined-benefit pension plan sponsored
and administered by AEGON USA, Inc. (“AEGON”), brought suit under section
502(a)(2) of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29
U.S.C. § 1132(a)(2). He alleged that various plan fiduciaries breached their fiduciary
duties to the plan and engaged in prohibited transactions in violation of ERISA. The
district court2 granted summary judgment for the defendants, holding that McCullough
lacked Article III standing to assert his claims. We affirm on an alternative ground,
following the circuit precedent of Harley v. Minnesota Mining & Manufacturing Co.,
284 F.3d 901
(8th Cir. 2002), and its construction of § 1132(a)(2).




      1
       The Honorable Richard W. Goldberg, Judge of the United States Court of
International Trade, sitting by designation.
      2
       The Honorable Linda R. Reade, Chief Judge, United States District Court for
the Northern District of Iowa.

                                         -2-
                                           I.

       As a result of his former employment with one of AEGON’s subsidiaries,
McCullough is a participant in the AEGON USA, Inc. Pension Plan (“the Plan”),
which is sponsored and administered by AEGON and covered by ERISA. The Plan
is a defined-benefit plan, which provides participants fixed periodic payments upon
retirement from a general pool of plan assets. See Hughes Aircraft Co. v. Jacobson,
525 U.S. 432
, 439-41 (1999).

        In October 2005, McCullough filed this action against AEGON and various
other defendants in the United States District Court for the Central District of
California. In his first amended complaint, McCullough alleged that the defendants
breached their fiduciary duties under ERISA. See 29 U.S.C. § 1104. He asserted that
the defendants caused the Plan to invest in funds offered by AEGON subsidiaries and
affiliates and to purchase products and services from such affiliates and subsidiaries,
resulting in the payment of fees “that were higher than the norm.” McCullough also
alleged that this conduct violated 29 U.S.C. § 1106, which prohibits certain
transactions between the Plan and fiduciaries and between the Plan and parties in
interest. In addition, McCullough asserted the same claims against defendants relating
to the management of a defined-contribution plan.

        McCullough sought a refund to the Plan of “all fees paid to AEGON
Subsidiaries and Affiliates by the Plan[], including disgorgement of profits,” as well
as “equitable restitution and other appropriate equitable monetary relief.” He also
sought an injunction against defendants prohibiting “further violations of their ERISA
fiduciary responsibilities, obligations, and duties,” and any other appropriate equitable
relief, “including the permanent removal of the Defendants from any positions of trust
with respect to the Plan[] and the appointment of independent fiduciaries to administer
the Plan[].”



                                          -3-
       AEGON successfully requested transfer of the case to the Northern District of
Iowa, and then moved for partial summary judgment. The parties agreed that at the
time McCullough filed his complaint, and at all times from 2001 to 2006, the Plan was
“substantially overfunded,” according to actuarial valuation reports of the Plan’s
assets and liabilities. The parties also agreed that Plan never failed to pay benefits
owed to participants or beneficiaries, and that AEGON had no intention to terminate
the Plan. In light of these facts, AEGON argued that under Harley, 
284 F.3d 901
,
McCullough lacked standing to assert his claims against the Plan. The district court
agreed that Harley controlled, and granted AEGON’s motion for summary judgment.
See McCullough v. AEGON USA, Inc., 
521 F. Supp. 2d 879
, 894 (N.D. Iowa 2007).
The parties subsequently filed a joint stipulation of dismissal, see Fed. R. Civ. P.
41(a)(1)(A)(ii), dismissing with prejudice McCullough’s claims relating to the
defined-contribution plan, and the district court entered final judgment. McCullough
now appeals the grant of summary judgment, and we review de novo.

                                           II.

       ERISA provides that the Secretary of Labor and participants, beneficiaries, and
fiduciaries of an employee benefit plan may bring an action “for appropriate relief
under section 1109 of this title.” 29 U.S.C. § 1132(a)(2). Section 1109 makes
fiduciaries of a plan personally liable to the plan for any losses resulting from their
breaches of “any of the responsibilities, obligations, or duties imposed upon
fiduciaries” by ERISA. 
Id. § 1109(a).
It also empowers the court to award “such
other equitable or remedial relief as the court may deem appropriate, including
removal of such fiduciary.” As relevant here, ERISA imposes certain duties on plan
fiduciaries in 29 U.S.C. § 1104, including the duty to act “solely in the interest of the
participants and beneficiaries” of the plan, and to act “with the care, skill, prudence,
and diligence” of “a prudent man acting in a like capacity and familiar with such
matters.” 
Id. § 1104(a)(1).
Fiduciaries are also prohibited by 29 U.S.C. § 1106 from



                                          -4-
engaging in certain transactions with the plan or causing the plan to engage in certain
transactions with a “party in interest.” 
Id. § 1106(a)-(b).
       In Harley, this court concluded that § 1132(a)(2) does not permit a participant
in a defined-benefit plan to bring suit claiming liability under § 1109 for alleged
breaches of fiduciary duties when the plan is 
overfunded. 284 F.3d at 905-07
. The
Harley plaintiffs alleged that fiduciaries of the defined-benefit plan in which they
participated breached fiduciary duties by failing to investigate adequately and monitor
properly a $20 million investment in a hedge fund, resulting in a complete loss of the
investment. The plaintiffs also alleged that the plan fiduciaries breached their
fiduciary duties by allowing the Plan to enter into a prohibited transaction under
§ 1106(b)(1) when it paid a $1.17 million fee to the hedge fund’s investment advisor.
See 
id. at 903-04,
908.

        On appeal, this court affirmed the district court’s grant of summary judgment
for the defendants. With respect to the failure-to-investigate and failure-to-monitor
claims, the court held that § 1132(a)(2) did not permit the plaintiffs to bring suit
because the plan’s surplus was sufficiently large that the “investment loss did not
cause actual injury to plaintiffs’ interests in the Plan.” 
Id. at 907.
The court explained
that “a contrary construction [of § 1132(a)(2)] would raise serious Article III case or
controversy concerns,” because it would “permit[] participants or beneficiaries who
have suffered no injury in fact” to bring an action “to enforce ERISA fiduciary duties
on behalf of the Plan.” 
Id. at 906.
The court also reasoned that “the purposes
underlying ERISA’s imposition of strict fiduciary duties” – namely, “the protection
of individual pension rights” – “are not furthered by granting plaintiffs standing,”
because the plaintiffs’ individual pension rights are “fully protected,” and “would if
anything be adversely affected by subjecting the Plan and its fiduciaries to costly
litigation.” 
Id. at 907.
Although the court did not identify the precise text of
§ 1132(a)(2) that it was construing, we presume the court determined that the suit
would not be one “for appropriate relief” under the circumstances. On the prohibited-

                                           -5-
transaction claim, the court did not discuss whether § 1132(a)(2) permitted the suit,
but dismissed the claim on the merits instead. See 
id. at 908-09.
        McCullough, like the Harley plaintiffs, brought this action under § 1132(a)(2)
and asserts that the defendants are liable to the Plan under § 1109 for breaching their
fiduciary duties to the Plan under § 1104. As in Harley, the Plan is a defined-benefit
plan, and McCullough does not dispute that the Plan was “substantially overfunded”
at the time he brought suit. Unless there is a basis for this panel to disregard Harley,
therefore, McCullough may not bring his § 1104 claim under § 1132(a)(2). See Drake
v. Scott, 
812 F.2d 395
, 400 (8th Cir. 1987) (“One panel of this Court is not at liberty
to disregard a precedent handed down by another panel. Only the Court en banc can
take such action.”).

       McCullough also asserts a claim that the defendants were liable to the Plan
under § 1109 because they caused the Plan to engage in prohibited transactions in
violation of § 1106. The court in Harley skipped to the merits of a claim involving
§ 1106 without addressing whether a participant may bring such a claim under
§ 1132(a)(2) against a “substantially overfunded” defined-benefit 
plan. 284 F.3d at 908-09
. McCullough does not argue, however, that a claim alleging a violation of
§ 1106 should be treated differently than one alleging a violation of § 1104, and like
the district 
court, 521 F. Supp. 2d at 892
, we see no logical basis for a distinction.

       McCullough makes two principal arguments why Harley does not preclude his
action. First, although acknowledging that Harley was decided on statutory grounds,
he argues that the Supreme Court’s intervening decision regarding Article III standing
in Sprint Communications Co. v. APCC Services, Inc., 
128 S. Ct. 2531
(2008),
undermines Harley. A limited exception to the prior panel rule permits us to revisit
an opinion of a prior panel if an intervening Supreme Court decision is inconsistent
with the prior opinion. Young v. Hayes, 
218 F.3d 850
, 853 (8th Cir. 2000).
McCullough argues that Sprint is such an intervening decision.

                                          -6-
       In Sprint, the Supreme Court held that “an assignee of a legal claim for money
owed has standing to pursue that claim in federal court, even when the assignee has
promised to remit the proceeds of the litigation to the assignor.” 
128 S. Ct. 2533
. The
Court found the “history and precedent” of allowing assignees to bring suit,
particularly the “strong tradition . . . of suits by assignees for collection,” to be “well
nigh conclusive” in deciding the case, 
id. at 2541-42
(internal quotation omitted), but
also held that assignees “satisfy the Article III standing requirements articulated in
more modern decisions of [the] Court.” 
Id. at 2542.
In considering whether the
assignees suffered an injury in fact, the Court acknowledged that the assignees “did
not originally suffer any injury,” but explained that the assignors “assigned their
claims to the [assignees] lock, stock, and barrel.” 
Id. Sprint also
relied on the Court’s prior decision in Vermont Agency of Natural
Resources v. United States ex rel. Stevens, 
529 U.S. 765
(2000), which held that a
relator possesses standing to bring a qui tam action under the False Claims Act
“because the Act ‘effect[s] a partial assignment of the Government’s damages claim’
and that assignment of the ‘United States’ injury in fact suffices to confer standing on
[the relator].’” 
Sprint, 128 S. Ct. at 2542
(quoting Vermont 
Agency, 529 U.S. at 773
,
774) (alteration in original). The Court noted that in Vermont Agency, it had “stated
quite unequivocally that ‘the assignee of a claim has standing to assert the injury in
fact suffered by the assignor.’” 
Id. (quoting Vermont
Agency, 529 U.S. at 773
).

       McCullough contends that after Sprint, there is no constitutional concern with
interpreting § 1132(a) to permit a participant in an overfunded ERISA plan to sue
fiduciaries based on an injury to the plan. He acknowledges that unlike the assignees
in Sprint, a plan participant has not received a contractual assignment of the plan’s
claim, but he asserts that Congress has conferred an analogous right to sue in
§ 1132(a)(2). McCullough therefore contends that Sprint is inconsistent with the
holding of Harley that a plan participant may not bring an action under § 1132(a)(2)
when the plan is overfunded.

                                           -7-
       We are not convinced that Sprint sweeps as broadly as McCullough suggests.
Sprint and Vermont Agency both involved plaintiffs who were assigned claims by
parties who were originally injured. See 
Sprint, 128 S. Ct. at 2542
; Vermont 
Agency, 529 U.S. at 773
. Sprint also relied on the historical recognition of an assignee’s
ability to 
sue, 128 S. Ct. at 2536-42
, and Vermont Agency relied on the “long tradition
of qui tam 
actions.” 529 U.S. at 775
. Here, however, there is neither a long history
of recognizing suits by ERISA plan participants to sue on behalf of a plan, see 
Harley, 284 F.3d at 907
, nor any assignment by the Plan to McCullough to sue on its behalf.
Nor does McCullough assert that § 1132(a)(2) “assigns” a claim belonging to the
government, as did the qui tam statute at issue in Vermont Agency. 
See 529 U.S. at 773
.

       McCullough suggests instead that Congress assigned a claim of one private
party (the ERISA plan) to another private party (a participant in the plan). This court
in Harley was reluctant to ascribe that intention to Congress, believing that such an
interpretation of § 1132(a)(2) raised serious constitutional concerns. If Congress
could assign an ERISA plan’s claim to a participant who is not injured, the court
wondered, then what principled reason would preclude Congress from assigning the
claim to any stranger? 
See 284 F.3d at 906-07
(“If the statute authorized any stranger
to the plan to bring such an action, would that suffice to confer standing? Surely not,
for ‘Article III forecloses the conversion of courts of the United States into judicial
versions of college debating forums.’”) (quoting Valley Forge Christian Coll. v. Ams.
United for Separation of Church & State, 
454 U.S. 464
, 473 (1982)). Sprint does not
purport to revolutionize the law of standing by authorizing Congress to “assign”
claims from one private party to another and thereby to create a constitutionally
sufficient injury in fact. To the contrary, the Court in Sprint thought it was the
dissenting opinion that advocated “a sea change in the 
law,” 128 S. Ct. at 2543
, and
suggested that its holding merely assured continuity – citing, for example, that
“[t]rustees bring suits to benefit their trusts; guardians ad litem bring suits to benefit
their wards; receivers bring suit to benefit their receiverships; assignees in bankruptcy

                                           -8-
bring suit to benefit bankrupt estates; executors bring suit to benefit testator estates;
and so forth.” 
Id. Without more
specific guidance from the Supreme Court that it has
expanded Article III standing as broadly as McCullough suggests – and beyond the
historically grounded examples cited in Sprint – we do not feel at liberty to disregard
this court’s more circumspect view in Harley.3

        There is another reason why Sprint does not compel us to disregard Harley.
The statutory holding of Harley did not rest solely on constitutional avoidance. The
court also reasoned that allowing participants in an overfunded plan to bring an action
under § 1132(a)(2) would not advance ERISA’s primary purpose of protecting
individual pension rights, because the pension rights of such plaintiffs are “fully
protected,” and “would if anything be adversely affected by subjecting the Plan and
its fiduciaries to costly litigation.” 
Harley, 284 F.3d at 907
. This aspect of the prior
panel’s rationale survives, no matter how broadly one interprets Sprint and its
discussion of Article III standing.

       McCullough’s second bid to avoid circuit precedent is based on a factual
distinction between this case and Harley. He contends that because this action seeks
to enjoin ongoing and future violations of ERISA, rather than just to recover losses
to a plan from a single investment transaction that allegedly violated ERISA, he
should be permitted to bring suit under § 1132(a)(2). McCullough’s factual
distinction, however, is not material to the reasoning of the prior panel. Harley
reasoned that a breach of a fiduciary duty causes no harm to a participant when the
plan is overfunded, and that allowing costly litigation would run counter to ERISA’s


      3
       Nor do we think that Sprint stands for the more general proposition urged by
McCullough that a party who suffers no injury has standing to bring an action as a
representative of an injured third-party, so long as “the party bringing suit is legally
authorized to sue.” Sprint made clear that it did not involve representational or third-
party standing, because the plaintiffs were asserting their own legal rights under a
contractual assignment. 
See 128 S. Ct. at 2544
.
                                          -9-
purpose of protecting individual pension rights. That logic applies whether an action
alleges a single breach or a series of breaches.

       Harley addressed only claims for monetary relief, and McCullough also seeks
injunctive relief under § 1132(a)(2). Given Harley’s holding that a participant suffers
no injury as long as the plan is substantially overfunded, however, we see no basis to
construe § 1132(a)(2) to authorize an action against fiduciaries of an overfunded plan
for injunctive relief, but not for the monetary relief sought in Harley. McCullough
points to cases from other circuits concluding that a plan participant may seek
injunctive relief under § 1132(a)(3), see Loren v. Blue Cross & Blue Shield of Mich.,
505 F.3d 598
, 607-10 (6th Cir. 2007); Horvath v. Keystone Health Plan E., Inc., 
333 F.3d 450
, 455-56 (3d Cir. 2003), but he has not relied on that section. See
McCullough, 521 F. Supp. 2d at 892
n.8. As to § 1132(a)(2), we are bound by circuit
precedent.

       The balance of McCullough’s brief is a frontal assault on the reasoning of
Harley. He contends that Harley takes too narrow a view of a plan participant’s
injuries, misapplies the Supreme Court’s standing jurisprudence, e.g., Gollust v.
Mendell, 
501 U.S. 115
, 125-27 (1991), and undermines the enforcement mechanism
created by Congress in ERISA. These points echo arguments raised by the Secretary
of Labor in support of a petition for rehearing en banc in Harley. Whatever the merit
of these contentions, they challenge the decision of a prior panel, and must therefore
be addressed to the court en banc.

                                   *      *       *

      The judgment of the district court is affirmed.




                                         -10-
BYE, Circuit Judge, dissenting.

       I believe the Supreme Court's recent decision in Sprint Communications Co. v.
APCC Services, Inc., 
128 S. Ct. 2531
(2008), compels us to reach a different result
in this case than the result reached in Harley v. Minnesota Mining & Manufacturing
Co., 
284 F.3d 901
(8th Cir. 2002). I therefore respectfully dissent.

       "Although one panel of this court ordinarily cannot overrule another panel, this
rule does not apply when the earlier panel decision is cast into doubt by a decision of
the Supreme Court." Patterson v. Tenet Healthcare, Inc., 
113 F.3d 832
, 838 (8th Cir.
1997). In order to disregard Harley, we must "explicitly identify the error or changed
circumstances and explain why a different result is justified." Jacobs v. Lockhart, 
9 F.3d 36
, 38 (8th Cir. 1993). For the reasons discussed below, I believe Sprint requires
us to disregard Harley.

       The majority concludes Sprint does not compel us to disregard Harley because
the latter turned on statutory grounds, rather than on Article III standing, and the
statutory holding in Harley remains intact after Sprint. The notion Harley turns on a
statutory holding is dubious at best. Although Harley purported to avoid the standing
issue by interpreting the statute in a way which prohibits participants or beneficiaries
from bringing suit to recover for a loss suffered by the plan, the statute plainly and
unambiguously permits such an action. See 29 U.S.C. § 1132(a)(2) ("A civil action
may be brought . . . by the Secretary, or by a participant, beneficiary or fiduciary for
appropriate relief under section 1109 of this title."). Thus, as I pointed out in my
dissent in Harley, "we have no choice but to address the Article III question head-on."
Harley, 284 F.3d at 910
(Bye, J., dissenting).

       Remarkably absent from Harley is any discussion of the statutory language it
purports to interpret in order to avoid the constitutional standing concerns. In this
case, the majority's discussion of Harley's statutory holding consists of a single

                                         -11-
sentence speculating about the textual basis for the holding. See Ante at 5
(recognizing Harley does not identify the textual basis for its holding and merely
"presum[ing]" what it might be). As a consequence, both decisions seem to rest on
a free-floating statutory interpretation untethered to any actual statutory construct.
The resolution of McCullough's ability to sue to recover for a loss suffered by the plan
necessarily requires us to address his Article III standing, and Sprint casts
considerable doubt on the standing principles addressed in Harley.

       The majority also suggests Harley's "statutory holding" rests on its conclusion
which allows plan participants to sue on behalf of the plan would not advance
ERISA's primary purpose of protecting individual pension rights, because it would
subject a plan and its fiduciaries to costly litigation. 
Id. at 9.
The majority also relies
upon this aspect of Harley to avoid addressing Sprint's discussion of Article III
standing. This second aspect of Harley's "statutory holding," however, is also cast
into doubt directly by the Supreme Court, which has recognized the very purpose for
allowing beneficiaries and fiduciaries to sue on behalf of the plan under § 1132(a)(2)
is "the common interest shared by [participants and beneficiaries] in the financial
integrity of the plan." Mass. Mut. Life Ins. Co. v. Russell, 
473 U.S. 134
, 141 n.9
(1985).

       Harley held plan participants and beneficiaries cannot rely upon a loss suffered
by a fully-funded defined benefit plan to establish Article III standing to bring suit
under 29 U.S.C. § 1132(a)(2) to recover for a loss suffered by the plan. The three
elements which must be present to satisfy Article III standing requirements are: (1)
the plaintiff has a concrete and particularized injury-in-fact which is actual or
imminent rather than merely conjectural or hypothetical; (2) a causal connection exists
between the injury and the challenged conduct; and (3) a favorable decision will likely
redress the injury. Lujan v. Defenders of Wildlife, 
504 U.S. 555
, 560-61 (1992). This
case, like Harley, turns on the presence or absence of the first element – a concrete
injury-in-fact.

                                           -12-
       Harley focused on whether the plan participants or beneficiaries themselves
suffered a concrete injury and concluded "the limits on judicial power imposed by
Article III counsel against permitting participants or beneficiaries who have suffered
no injury in fact from suing to enforce ERISA fiduciary duties on behalf of the 
Plan." 284 F.3d at 906
. Thus, even though Harley recognized the defined benefit plan itself
suffered an injury, 
id. at 905,
the court concluded participants and beneficiaries lacked
Article III standing because they themselves did not suffer a concrete injury.

       Sprint addressed the question whether one party's concrete injury confers
Article III standing on a second party who has the right to prosecute the former's claim
pursuant to a contractual assignment. In that context, the Supreme Court indicated the
assignors' concrete injury is the focus for purposes of Article III standing, not whether
the assignees suffered an injury. See 
Sprint, 128 S. Ct. at 2542
(recognizing "an
assignee can sue based on his assignor's injuries."). Indeed, Sprint went one step
further by indicating the party with the right to prosecute the claim has Article III
standing despite the lack of any right to the recovery. See 
id. ("[Our] inquiry
focuses,
as it should, on whether the injury that a plaintiff alleges is likely to be redressed
through the litigation – not on what the plaintiff ultimately intends to do with the
money he recovers."). As the dissenters noted, the majority separated "the right to
recover from the right to prosecute a 
claim," 128 S. Ct. at 2551
(Roberts, C.J.,
dissenting), and recognized Article III standing for the party holding the right-to-
prosecute "strand" of standing. 
Id. Thus, Sprint
indicates when A possesses the right to prosecute a claim on B's
behalf, A has constitutional standing to bring a claim arising from B's injuries; that is,
our inquiry in determining the presence of a concrete injury focuses on B's injury, not
A's. If there is no legally significant difference between the party prosecuting the
claim in Sprint (the assignees) and the party prosecuting the claim in Harley (the plan
participants), Sprint necessarily casts doubt on Harley's failure to focus on the plan's
concrete injury for standing purposes.

                                          -13-
       A notable difference between the Harley plan participants and the Sprint
assignees is that the former obtained their right to prosecute the plan's claim pursuant
to statute, while the latter obtained their right to prosecute the assignors' claims
pursuant to contract. In Sprint, the Supreme Court discussed in detail the "history and
tradition" of allowing an assignee to prosecute an assignor's claim. See 
id. at 2535-41.
Admittedly, there is no similar history and tradition of allowing ERISA plan
participants to prosecute a fully-funded defined benefit plan's claim. But the Supreme
Court also noted "there is considerable, more recent authority showing that an
assignee for collection may properly sue on the assigned claim in federal court." 
Id. at 2541.
One of the "more recent" cases specifically discussed by the Supreme Court
was Vermont Agency of Natural Resources v. United States ex rel. Stevens, 
529 U.S. 765
(2000). 
Id. at 2542.
       In Vermont Agency, the Supreme Court addressed the standing of a party with
the statutory right to prosecute a qui tam action on behalf of the government under the
False Claims Act4 and held it was the government's concrete injury which conferred
standing on the 
relator. 529 U.S. at 774
. The Court noted the False Claims Act
effects a "partial assignment of the Government's damages claim," 
id. at 773,
and
referred to the relator as "the statutorily designated agent of the United States," 
id. at 772.
Sprint subsequently clarified the key in Vermont Agency was the "partial
assignment"5 giving the relator the right to prosecute the claim, not the right to share
in the recovery, because in Sprint the assignees still had standing despite the fact that



      4
        The False Claims Act provides in relevant part: "A person may bring a civil
action for a violation of section 3729 [of the False Claims Act] for the person and for
the United States Government. The action shall be brought in the name of the
Government." 31 U.S.C. § 3730(b)(1).
      5
        The assignment of the right to prosecute was "partial" in Vermont Agency
because both the relator and the government have the right to prosecute a claim for a
violation of § 3729. See 31 U.S.C. § 3730(a) & (b).
                                          -14-
any recovery would inure only to the benefit of the assignors. See 
Sprint, 128 S. Ct. at 2542
(discussing Vermont Agency).

       Reading Sprint and Vermont Agency together, there is no legally significant
difference between the assignees in Sprint and the plan participants here or in Harley.
Although an assignee's right to prosecute another's claim derives from contract, while
an ERISA plan participant's right to prosecute a plan's claim derives from statute, in
both instances the Supreme Court clearly instructs us as to the standing of the party
with the right to prosecute the claim turns not on whether they themselves suffered an
injury, but on whether the party holding the right-to-recover "strand" has a concrete
injury which can be redressed by the lawsuit. In Sprint it did not matter that the
assignees would not retain any of the recovery from the lawsuit. Likewise, here, it is
irrelevant as to McCullough not being entitled to any recovery from the lawsuit.
Applying Sprint and Vermont Agency to this case, then, McCullough has Article III
standing to bring a claim arising from the Plan's injuries so long as he possesses the
right to prosecute the Plan's claim pursuant to § 1132(a)(2), even though he may not
possess any of the right to recover.

       The only remaining question, then, for purposes of constitutional standing in
this case, is to determine whether § 1132(a)(2) assigns to plan participants the right
to prosecute on a plan's behalf, or whether it might also give them the right to
prosecute a claim on their own behalf. For if McCullough is merely suing on his own
behalf, he still must show he suffered a concrete injury in order to establish his
standing, and the lessons taught in Sprint and Vermont Agency would have no
bearing.

       The Supreme Court has already answered the question whether McCullough
can sue on his own behalf under § 1132(a)(2) – actions authorized under § 1132(a)(2)
to recover for violations of § 1109 must "inure[] to the benefit of the plan as a whole"
and cannot inure to the benefit of individual plan participants. Russell, 473 U.S. at

                                         -15-
141; see also Conley v. Pitney Bowes, 
176 F.3d 1044
, 1047 (8th Cir. 1999) (indicating
"§ 1109(a) provides relief only to a plan and not to individual beneficiaries"); Wald
v. Southwestern Bell Corp. Customcare Med. Plan, 
83 F.3d 1002
, 1006 (8th Cir.
1996) (following Russell and holding that an individual plan participant could not sue
on his own behalf under § 1132(a)(2)). Thus, the only right granted to plan
participants and beneficiaries under § 1132(a)(2) is the right to prosecute a claim on
a plan's behalf.

       Harley distinguished Vermont Agency on the grounds that "the qui tam statute
partially assigned the government's claim to the private qui tam relator; here, on the
other hand, § 1132(a)(2) contains no such assignment." 
Harley, 284 F.3d at 907
. We
can presume Harley was consistent with the Supreme Court's decision in Russell,
which clearly recognized § 1132(a)(2) does not assign the right to recover for a plan's
injury to plan participants, but does give them the right to prosecute the plan's claim.
Thus, the "assignment" Harley referred to in distinguishing Vermont Agency was the
assignment of the right to recover, not the right to prosecute. Sprint makes clear the
"assignment" which mattered in Vermont Agency was the assignment of the right to
prosecute, not the right to recover. Sprint tells us, therefore, that Harley distinguished
Vermont Agency upon an incorrect premise. What mattered in Vermont Agency, and
thus what matters here, is § 1132(a)(2) statutorily assigns the right to prosecute the
plan's claim to plan participants and beneficiaries: the fact § 1132(a)(2) contains no
assignment of the right to recover is irrelevant.

      Because Harley would compel a result opposite the one we reach when
applying Sprint and Vermont Agency, the Supreme Court's decisions necessarily cast
doubt on Harley. Under Sprint and Vermont Agency, McCullough's Article III
standing to sue under § 1132(a)(2) turns not on whether he suffered an injury, but on
whether the Plan suffered a concrete injury which can be redressed through this
lawsuit.

      I respectfully dissent.
                        ______________________________

                                          -16-

Source:  CourtListener

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