ERISA Class Action Review – 2025

these losses, the defendants settled with non-party fund managers for approximately $110 million. Id. The settlement proceeds, along with the money that was left over after the crash, were invested in more conservative index fees. Id. at *7. As a result, the plaintiffs had more money at the time of the suit than they did following the crash. Id. at *8. According to the district court, this meant that the plaintiffs had not actually suffered a concrete injury and therefore did not have standing to sue. Id. at *9. On appeal, however, the Ninth Circuit reversed, in Johnson v. Carpenters of West Washington Board of Trustees , 2024 U.S. App. LEXIS 18785, at *3 (9th Cir. July 30, 2024). The Ninth Circuit distinguished between “absolute loss” and “relative loss.” Id. While the plaintiffs had not suffered an absolute loss because their account balances had grown, they had plausibly alleged a relative loss by claiming that their balances were lower than they would have been had defendants not breached their fiduciary duties. Id. at *3-5. In addition, the Ninth Circuit held that the plaintiffs’ claimed injuries were fairly traceable to the defendants’ conduct, because defendants chose to keep their investments in speculative funds and because they ignored the risks of doing so. Id. at *5. In Trauernicht, et al. v. Genworth Financial, Inc., 2024 U.S. Dist. LEXIS 146092 (E.D. Va. Aug. 15, 2024), the plaintiffs also were able to fend off a challenge to standing brought by defendant in opposition plaintiffs’ motion for class certification. There, the plaintiffs were former employees of the defendant who sued the defendant for breach of fiduciary duties. The plaintiffs asserted that the plan administrator failed to monitor and manage underperforming investments, which allegedly led to financial losses for the plan and its participants. The defendant countered that the plaintiffs lacked standing to sue because they had failed to adduce evidence that each class member had suffered a concrete injury. Id. at *9. The court rejected this argument, holding that its role at the class certification stage was only to consider whether the named plaintiff had standing. Id. Because the named plaintiff was seeking both declaratory and monetary relief, the court considered these issues separately. According to the court, standing for the purposes of declaratory relief only requires that the plaintiff plausibly allege a breach of fiduciary duties, and does not require that he or she identify a concrete financial injury. Id. at *10. Because the plaintiffs had sufficiently alleged a breach, they had standing to seek declaratory relief. Id. at *11. However, according to the court, claims for monetary relief require evidence of individualized financial harm resulting from the breach. Id. The defendant argued that even if there was a breach, the plaintiff had not actually suffered any harms as a result of it, and therefore lacked standing. Id. Ultimately, the question of whether the plaintiff had been harmed would have required the court to determine which side’s experts had identified appropriate comparators. Id. at *11-12. The court ruled that while there were disputes over the appropriate damages model to use to show economic losses, these issues pertained to the merits of the case rather than the threshold inquiry of standing. Id. at *16. In Knudsen, et al. v. MetLife Group, Inc. , 2024 U.S. App. LEXIS 24319 (3d Cir. Sept. 25, 2024), however, the Third Circuit dismissed a putative class action on standing grounds because the injuries asserted were too speculative. There, the plaintiffs sued MetLife, their former employer, alleging that it had misappropriated their plan’s funding by diverting $65 million in drug rebates from the plan to itself from 2016 to 2021. Id. at *1-2. The district court dismissed the suit for lack of standing, and the Third Circuit affirmed. Id. at *2. The plaintiffs’ theory of standing essentially was that they paid more for health insurance because MetLife kept $65 million in rebates instead of using those rebates to reduce plaintiffs’ out-of-pocket expenses. Id. at *10. The Third Circuit acknowledged that financial harm can constitute a concrete injury for the purpose of standing, but held that plaintiffs in this case fell short of alleging concrete financial harm. Id. at *14-15. According to the Third Circuit, the plaintiffs’ complaint should have included non-speculative allegations that, if proven, would establish that they had paid or would pay more in premiums or other out-of-pocket costs as a result of MetLife keeping the $65 million in rebates. Id. at *15. The complaint only stated that MetLife may have reduced contributions, co-pays, and co-insurance, or may have distributed rebates to plan participants. Id. at *20. The Third Circuit reasoned that even if MetLife had not committed ERISA violations, it just as easily may not have taken any of these actions and the plaintiffs’ out-of-pocket costs would have still increased. Id. Therefore, the Third Circuit determined that the complaint was not sufficient to support Article III standing because it did not allege “actual or imminent” financial harm. Id. Knudsen demonstrates that plaintiffs must allege actual or imminent financial harms because speculation about what a plan administrator could have done to reduce their costs is not a sufficient basis for standing. Smith, et al. v. UnitedHealth Group Inc. , 106 F.4th 809 (8th Cir. 2024), represents another example of a case

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