Employees of Boeing Corporation and International Paper filed suit against their respective companies and benefit plan committees, accusing each of causing the plans to pay excessive fees and expenses, including imprudent investment options, and concealing from participants material information regarding plan fees, expenses and investment options. Both cases were heard in the same district court, which certified both classes of plaintiffs. On appeal, Boeing and International Paper argued that the class definition given by the district court did not meet the standards of the Federal Rules of Civil Procedures (FRCP) Rule 23(c)(1)(B), and that the district court erred in concluding the classes met the criteria of Rule 23(a).
Relying on LaRue v. DeWolff, Boberg & Associates, Inc., the Seventh Circuit determined that beneficiaries can resort to ERISA section 502(a)(2) after a breach of fiduciary duty has reduced the value of plan assets in their defined contribution accounts. However, LaRue provided little guidance regarding whether, and under what circumstances, participants and beneficiaries can proceed as a class under FRCP 23. Therefore, the Seventh Circuit held that to determine whether class treatment is appropriate, courts must distinguish between an injury to a person's retirement account that affects only that individual and an injury to one account that qualifies as a plan injury. The second type of injury potentially could be appropriate for class treatment, while the first type would not.
In reviewing the classes certified by the district court, the Seventh Circuit found the class certifications flawed and vacated the district court's certification order in both cases. However, the court was careful to point out that nothing in its decision "should be understood as ruling out the possibility of class treatment for one or more better-defined and more-targeted classes" of plaintiffs.