ERISA class action is dismissed because named Plaintiffs were not "among the injured."

In Taylor, et al. v. KeyCorp, et al., two employees sued numerous defendants arguing that they had breached their fiduciary duty to ERISA participants in mismanaging the company 401(K) retirement plan.  They alleged conflict of interest, failure to disclose the undue risk associated with the investment in company stock, and improper business (lending and tax) practices within the company. 

The Sixth Circuit analyzed the trading history of the lead plaintiff's stock and observed that the price she received for her stock was actually artificially inflated by the alleged company misdeeds and that she netted a profit of $6,000 dollars from her investment.  Having not beern "among [those] injured by the defendants' mis-conduct, she could not act as a plaintiff in the cause of action.  The Court refused to adopt the Plaintiff's "alternative investment" theory.  Under that approach, she alleged that she suffered harm in that she failed to realize a reasonable return on her investment as a result of the Defendants' malfeasance. 

The Department of Labor agreed with the Plaintiff that the Court should look to whether she suffered a loss from her later 401(K) investments, regardless of the total recovery over the entire existence of the Plan.  The three appellate judges insited on the application of a "net" profit analysis of the entire related investment.  They also denied the request by another potential class member to intervene in the case after dismissal by the lower court.