If there's one thing Americans love, it's filing lawsuits. In fact, you'd think it was scribbled down in the Bill of Rights somewhere.
You hear the one about the disgruntled 401(k) plan participant?
Back in 2004, James LaRue sued his employer at the time, consulting firm DeWolff Boberg & Associates, in federal court in Charleston, S.C. LaRue claims he told his Dallas-based employer to change his investment allocation before the stock market dive between 2001 and 2002. The employer didn't and LaRue claims he lost at least $100,000 from his 401(k) account because of it.
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So, of course, he's suing.
Naturally, the original trial judge threw out the suit, and the 4th Circuit Court upheld that ruling on a 3-0 vote following an appeal. Now the case sits before the U.S. Supreme Court and could have an impact on employer-based retirement plans across the country.
Never mind the 1974 Employee Retirement Security Act, which Congress passed so many years ago to prevent lawsuits such as this. The Appeals Court agreed when they upheld the lower court ruling, pointing out that the ERISA provision that authorizes damage claims applies only when the claim is brought to enforce the rights of the entire plan, not just the interests of a single account.
A ruling is expected next year, so keep your eyes peeled. It will interesting – and a little scary – to see how this one plays out.
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