Lee v. Verizon Commc’ns, Inc., — F.3d –, 2016 WL 4926159 (5th Cir. Sept. 15, 2016), held that a defined benefit pension plan participant does not have Article III standing to challenge the plan’s alleged violation of ERISA, in the absence of “concrete injury” to himself.
The case is a putative class action growing out of an amendment to Verizon’s pension plan that terminated it for retirees and replaced it with an annuity. One of the claims asserted fiduciary misconduct in violation of 29 U.S.C. § 1109(a), which requires a fiduciary to “make good … any losses to the plan” from a breach of duty. In an unreported 2015 decision, 623 Fed.Appx. 132 (5th Cir. 2015) (Lee 2015), the court had affirmed the dismissal of that claim for lack of standing. Lee 2015 had held that, though the plaintiff had statutory standing to assert a violation of ERISA by a plan fiduciary, he did not have Article III standing because “standing for defined-benefit plan participants requires imminent risk of default by the plan, such that the participant’s benefits are adversely affected,” and he had not alleged any likelihood of such injury.
The plaintiff petitioned for certiorari, and the Supreme Court granted the petition and vacated Lee 2015 and remanded it for reconsideration in light of Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016). Spokeo had addressed the question whether and when a statutory violation satisfied the concrete harm required for Article III standing.
On reconsideration, the Fifth Circuit observed that “[t]here is only one narrow question for us to consider on remand: namely, whether Spokeo affects our previous conclusion that a plaintiff’s bare allegation of incursion on the purported statutory right to ‘proper plan management’ under ERISA is insufficient to meet the injury-in-fact prong of Article III standing.” The court held that its “conclusion remains as valid in light of Spokeo as it was before Spokeo was decided.
The court observed that Spokeo held that violation of a procedural right granted by statute can be a sufficiently concrete harm to satisfy Article III. However, Spokeo “took care to note that ‘Congress'[s] role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.’” Rather, “the deprivation of a right created by statute must be accompanied by ‘some concrete interest that is affected by the deprivation.’”
The court then ruled that “Spokeo maps surprisingly well onto the present case: in Spokeo, the Supreme Court held that a bare allegation of a Fair Credit Reporting Act violation based on inaccurate reporting of consumer information was insufficient to establish injury-in-fact, as ‘not all inaccuracies cause harm or present any material risk of harm.’” The court then stated that, in Lee 2015, it had recognized that plaintiff’s allegation of an ERISA violation “was not alone sufficient to create standing where there was no allegation of a real risk that [plaintiff’s] defined-benefit-plan payments would be affected. In short, because [plaintiff’s] ‘concrete interest’ in the plan—his right to payment—was not alleged to be at risk from the purported statutory deprivation, [plaintiff] had not suffered an injury that was sufficiently ‘concrete’ to confer standing. More particularly, Lee 2015 “declined to hold that the mere allegation of fiduciary misconduct in violation of ERISA, divorced from any allegation of risk to defined-benefit-plan participants’ actual benefits, could constitute de facto injury sufficient to establish constitutional standing.”
The court held that plaintiff had waived an argument “that Spokeo required consideration of historical practice in determining whether an intangible harm constitutes injury-in-fact … [and] that [plaintiff] has standing based on common-law trust principles.” The court held that the consideration of historical practice was not new, and plaintiff waived it by not raising it prior to Lee 2015.
The court also rejected the argument that Congress’ desire to protect the interests of plan participants was sufficient to support standing, because the interest of a participant in a defined benefit plan is his right to the defined benefits established by the plan. Where there is no alleged risk to those benefits, there is no concrete injury.