A federal appellate court dismissed claims by a few BoA DB participants that bank-affiliated funds were used improperly. Upholding a lower court's ruling, the appeals court dismissed the suit on procedural grounds without determining the validity of the claims. Citing harm to the plan caused by the cost of litigation brought by just a few participants, the court noted that there was no cognizable harm and that, unlike with DC plans, DB participants have an interest in future benefits, not assets in plans.
The PBCG and DOL filed amicus briefs expressing their concern that underfunded plans might terminate and tax the system. But the court said the law was unclear and that this suit was not the right one to make law since it was not sufficiently concrete.
Look for more lawsuits — especially the Ameriprise case on alleged improper use of affiliated funds, which is expected to go to trial. As a public policy, courts will be careful about creating law that subjects plans to costly litigation unless there are substantial damages brought by a broad plaintiff base.
