Thole v. U.S. Bank N.A.

James Thole and Sherry Smith are retired participants in U.S. Bank's defined-benefit pension plan, which guarantees a fixed monthly payment regardless of the plan's investment performance. They filed a class action under ERISA, alleging that U.S. Bank breached its fiduciary duties of loyalty and prudence by imprudently investing plan assets, causing roughly $750 million in losses. The district court dismissed the case for lack of standing, and the Eighth Circuit affirmed. The Supreme Court granted certiorari to decide whether participants in an overfunded defined-benefit plan have Article III standing to sue for fiduciary breach without demonstrating individual financial loss.

In a 5-4 decision authored by Justice Kavanaugh, the Supreme Court affirmed the Eighth Circuit, holding that Thole and Smith lack Article III standing because they have no concrete stake in the lawsuit. Win or lose, they would receive the exact same monthly benefits. The majority reasoned that defined-benefit plan participants possess no equitable or property interest in the plan, and that a statutory cause of action under ERISA does not alone satisfy Article III. Justice Sotomayor dissented, joined by Justices Ginsburg, Breyer, and Kagan, arguing that the decision leaves 35 million defined-benefit plan participants vulnerable to fiduciary misconduct.

Whether participants in a defined-benefit pension plan have Article III standing to sue plan fiduciaries for breaches of fiduciary duty under ERISA when the plan is overfunded and the participants' guaranteed monthly benefits are not at risk of nonpayment.

The decision substantially limits the ability of defined-benefit plan participants to bring private ERISA fiduciary breach lawsuits unless the plan or employer is on the brink of financial ruin. It affects approximately 35 million Americans covered by roughly 47,000 private-sector defined-benefit plans holding nearly $3 trillion in assets. Critics argue the ruling encourages fiduciary misconduct by allowing fund managers to misuse pension assets as long as the employer remains financially sound. Supporters contend it prevents meritless litigation and reduces the risk of managing defined-benefit plan assets. The ruling also contributes to the Supreme Court's broader trend of restricting constitutional standing even where Congress has expressly conferred statutory standing on private plaintiffs.