The opinion of the court was delivered by: Ralph R. Erickson, District Judge United States District Court
ORDER ON MOTION FOR RECONSIDERATION AND MOTION FOR ENTRY OF FINAL JUDGMENT
Before the Court is a Motion for Reconsideration of Order on the Motion to Dismiss Dated September 26, 2007, filed by dismissed Plaintiffs Raymond Hans, Chuck LeBlanc, and Larry Richman ("the Dismissed Plaintiffs") (Doc. #192). Defendants Gary and Connie Tharaldson ("the Tharaldsons") have filed a brief in opposition (Doc. #207).
As an initial matter, it should be noted that the Motion for Reconsideration is properly before the Court because final judgment has never been entered in this case. "Judgment" does not encompass an order dismissing fewer than all of the opposing parties or claims, unless the district court directs the entry of a final judgment under Rule 54(b), Fed. R. Civ. P., or expressly indicates that the order is an immediately appealable interlocutory decision under 28 U.S.C. § 1292(b). Auto Servs. Co., v. KPMG, LLP, 537 F.3d 853, 856 (8th Cir. 2008). Here, the order dismissing Plaintiffs Hans, LeBlanc, and Richman clearly did not dispose of all the remaining parties or claims, nor has the Court otherwise directed entry of a final judgment or made findings regarding immediate appeal of the order. Therefore, the Court may "exercise its general discretionary authority to review and revise its interlocutory rulings prior to the entry of final judgment." Id. at 857; see also Fed. R. Civ. P. 54(b) (providing that a non-final order or decision "may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities").
On September 26, 2007, the Court entered an order granting the Tharaldsons' motion to dismiss Plaintiffs Hans, LeBlanc, and Richman from this action. The Court reasoned that because the Dismissed Plaintiffs were former employees of TMI who had cashed out of the ESOP, a defined contribution retirement plan, they were no longer plan participants within the meaning of ERISA and therefore lacked standing. The Dismissed Plaintiffs now urge the Court to reconsider this ruling, pointing in particular to the United States Supreme Court's recent decision in LaRue v. DeWolff, Boberg & Associates, 128 S.Ct. 1020 (2008), as well as several other recent decisions from the circuit courts. In response, the Tharaldsons contend that these decisions change nothing, and that the dismissal order of September 26, 2007, was properly decided.
After carefully considering all the relevant materials in the record, including the fourth amended complaint and the parties' extensive briefing on both the motion to dismiss and the motion to reconsider, as well as recent developments in the case law, the Court is convinced that Plaintiffs Hans, LeBlanc, and Richman are "participants" in the ESOP who may bring a civil enforcement action under §§ 502(a)(2) and 502(a)(3) of ERISA, and therefore they must be reinstated as named plaintiffs in this proposed class action.
The question presented here is one of statutory standing, namely, "whether Congress has accorded this injured plaintiff the right to sue the defendant to redress his injury." See Graden v. Conexant Sys. Inc., 496 F.3d 291, 294-95 (3d Cir. 2007). Under § 502(a) of ERISA, only certain parties may bring certain types of enforcement actions. See 29 U.S.C. § 1132. A "participant" is one of the parties who may bring an action to enforce fiduciary duties owed to the plan under § 502(a)(2), or to obtain injunctive or other appropriate equitable relief for the plan under § 502(a)(3). The fourth amended complaint in this case asserts claims under both §§ 502(a)(2) and 502(a)(3), and the Dismissed Plaintiffs claim that they have standing as participants to bring this action.
In the ERISA statutory scheme, the term "participant" is defined as "any employee or former employee of an employer . . . who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer . . . ." 29 U.S.C. § 1002(7). In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 117-18 (1989) (citations omitted), the United States Supreme Court further elaborated on this definition:
In our view, the term "participant" is naturally read to mean either "employees in, or reasonably expected to be in, currently covered employment," or former employees who "have . . . a reasonable expectation of returning to covered employment" or who have a "colorable claim" to vested benefits. In order to establish that he or she "may become eligible" for benefits, a claimant must have a colorable claim that (1) he or she will prevail in a suit for benefits, or that (2) eligibility requirements will be fulfilled in the future.
See also LaRue, 128 S.Ct. at 1026 n.6 (stating that a plan participant "may include a former employee with a colorable claim for benefits").
Since the Court issued its decision dismissing Plaintiffs Hans, LeBlanc, and Richman from this action, a clear line of cases has emerged in the circuit courts holding that a former employee who cashed out of a defined contribution retirement plan may qualify as a "participant" under ERISA. See Vaughn v. Bay Envtl. Mgmt., Inc., 544 F.3d 1008, 1012 (9th Cir. 2008); Lanfear v. Home Depot, Inc., 536 F.3d 1217, 1223 (11th Cir. 2008); Evans v. Akers, 534 F.3d 65, 71 (1st Cir. 2008); In re Mut. Funds Inv. Litig., 529 F.3d 207, 216 (4th Cir. 2008); Bridges v. Am. Elec. Power Co., 498 F.3d 442, 445 (6th Cir. 2007); Graden v. Conexant Sys., Inc., 496 F.3d 291, 297 (3d Cir. 2007); Harzewski v. Guidant Corp., 489 F.3d 799, 804-05 (7th Cir. 2007). The leading case on this issue is Harzewski v. Guidant Corp., 489 F.3d 799 (7th Cir. 2007), and indeed, the LaRue Court cited to Harzewski in rejecting the argument that the petitioner's case was moot because he withdrew his funds from the plan at issue, noting that "[a] plan 'participant,' as defined by § 3(7) of ERISA, may include a former employee with a colorable claim for benefits." LaRue, 128 S.Ct. at 1026 n.6.
In a defined contribution plan, the participant's pension benefit is the balance of the individual account upon retirement, and the amount of the benefit is directly dependent on the performance of the investments made with the contributions. Evans, 534 F.3d at 67-68. Therefore, "the full 'benefit' to which the participant is entitled by a defined contribution plan is 'the value of [her] account unencumbered by any fiduciary impropriety." Id. at 71 (quoting Graden, 496 F.3d at 297); see also Harzewski, 489 F.3d at 804-05 ("The benefit in a defined-contribution pension plan is, to repeat, just whatever is in the retirement account when the employee retires or whatever would have been there had the plan honored the employee's entitlement, which includes an entitlement to prudent management.").
The courts of appeals have uniformly held that former employees who cashed out of a defined contribution plan have standing to claim benefits as "participants" under ERISA § 502(a) "when they seek to recover amounts that they claim should have been in their accounts had it not been for alleged fiduciary impropriety." See, e.g., In re Mut. Funds. Inv. Litig., 529 F.3d at 210; see also Vaughn, 544 F.3d at 1009 n.1, 1014 (collecting cases). As the Third Circuit clearly explained in Graden v. Conexant Systems, Inc., 496 F.3d 291, 303 (3d Cir. 2007):
[W]hen determining participant standing under ERISA, the relevant inquiry is whether the plaintiff alleges that his benefit payment was deficient on the day it was paid under the terms of the plan and the statute. If so, he states a claim for benefits, which, if colorable, makes him a participant with standing to sue. If, on the other hand, he seeks extracontractual damages or ...