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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 11 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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On March 28, 2025, two neighboring district courts issued sharply contrasting decisions on constitutional standing in lawsuits challenging pension risk transfers under the Employee Retirement Income Security Act of 1974 (&ldquo;ERISA&rdquo;).&nbsp; The United States District Court for the District of Columbia, in Camire et al. v. Alcoa USA Corp. (&ldquo;Alcoa Decision&rdquo;), concluded plaintiffs lacked standing to bring a case under Article III of the Constitution (referred to as &ldquo;Article III standing&rdquo;) because they failed to sufficiently allege either actual injury or a concrete, imminent risk of harm.&nbsp; On the same day, however, the District of Maryland reached the opposite conclusion in Konya et al. v. Lockheed Martin Corporation (&ldquo;Lockheed Decision&ldquo;), finding plaintiffs had &ldquo;eked out&rdquo; allegations sufficient to establish injury-in-fact at the pleading stage.&nbsp; These decisions may be an early indication of a future circuit split on what is required to establish constitutional standing with respect to claims brought under ERISA.
<h2 class="wp-block-heading">Background</h2>
<h3 class="wp-block-heading">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pension Risk Transfers</h3>
At a high level, defined benefit pension plans (known simply as &ldquo;pension plans&rdquo;) are retirement plans that typically provide a guaranteed dollar amount of benefits to plan participants payable at normal retirement age.&nbsp; Companies that sponsor a pension plan are responsible for funding the plan according to the legal requirements, and are obligated to make up for any funding shortfall for any reason, including due to underperformance of plan assets.&nbsp; This means that, unlike with respect to 401(k) and other defined contribution plans, the company that sponsors a pension plan assumes the risk that assets will not be sufficient.&nbsp;
Often, companies seek to reduce or eliminate the risk that the pension plan assets will not be sufficient to pay future benefits.&nbsp; One legally-permissible way to &ldquo;derisk&rdquo; a pension plan is the transfer some or all of the pension plan liabilities to an insurance company through the purchase of group annuity contracts that satisfy certain legal requirements. This is known as a &ldquo;pension risk transfer&rdquo; or &ldquo;PRT&rdquo;.&nbsp; PRTs gained popularity as interest rates rose.&nbsp;
While the decision to do a PRT is made by the plan sponsor and is a &ldquo;settlor&rdquo; decision, implementation of that decision, including selection of an annuity provider, is a fiduciary decision subject to ERISA&rsquo;s fiduciary standards.&nbsp; These standards include the requirement to act prudently and solely in the interest of the plan participants and beneficiaries.&nbsp;
In 1995, the DOL issued Interpretive Bulletin 95-1 (&ldquo;IB 95-1&rdquo;), which provides guidance to fiduciaries in discharging their duties under ERISA when selecting an annuity provider for a pension plan.&nbsp; Generally, IB 95-1 advises fiduciaries to select the &ldquo;safest annuity available&rdquo; unless under the circumstances it would be in the interest of participants and beneficiaries to select a different insurer.&nbsp; IB 95-1 lists a number of factors that the DOL states a fiduciary should consider when selecting an annuity provider.&nbsp; In 2024, after a legally required review, the DOL left the guidance in IB&nbsp;95-1 unchanged.
<h3 class="wp-block-heading">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Litigation Against Alcoa and Lockheed</h3>
As of the time of this writing, plaintiffs have filed lawsuits against 9 defined benefit plan sponsors, as well as the plan fiduciaries, relating to certain PRTs most of which involved Athene Holding Ltd. (&ldquo;Athene&rdquo;).&nbsp; Among those lawsuits are the lawsuits against Alcoa USA Corp. (&ldquo;Alcoa&rdquo;) and Lockheed Martin Corporation (&ldquo;Lockheed&rdquo;), which were brought in 2024 by former participants under certain defined benefit pension plans sponsored by either Alcoa or Lockheed.&nbsp;
The Alcoa and Lockheed complaints were filed by the same law firm and make largely identical factual allegations.&nbsp; Generally, the plaintiffs allege that the defendants breached their fiduciary duties when selecting Athene as the insurer in the PRT transaction claiming that Athene is a &ldquo;risky&rdquo; insurer and not the &ldquo;safest annuity available&rdquo;, pointing to Athene&rsquo;s alleged use of offshore reinsurance, private equity ownership, and creditworthiness compared to other insurers.&nbsp; Based largely on the same factual allegations, plaintiffs also make prohibited transaction claims with respect to the PRTs.&nbsp; The plaintiffs allege that due to these fiduciary breaches and prohibited transactions, the plaintiffs suffered increased and significant risk that they will not receive their full plan benefits.
The plaintiffs in these cases ask the court to order the defendants to disgorge profits gained as a result of the PRTs, to post security to ensure the plaintiffs receive their full benefits, and/or otherwise compensate the plaintiffs for the alleged reduction in the value of their benefits. &nbsp;&nbsp;
The defendants in both cases filed motions to dismiss based on, among other things, lack of Article III standing. Generally, in support of this position, the defendants argued that the plaintiffs have not lost any benefits, and the future harm plaintiffs allege is entirely speculative because plaintiffs do not allege Athene is likely to fail or that plaintiffs&rsquo; benefits would be harmed by such a failure.&nbsp; Additionally, defendants argued that plaintiffs&rsquo; benefits will be the same regardless of the outcome of the litigation, meaning the court cannot redress the injury at this time.&nbsp;
<h2 class="wp-block-heading">The Alcoa and Lockheed Decisions</h2>
In the Alcoa Decision, issued on March 28, 2025, the U.S. District Court for the District of Columbia agreed with the defendants that the plaintiffs lacked Article III standing in that they failed to allege an actual or imminent harm.&nbsp; The court rejected the plaintiffs&rsquo; argument that the mere exposure to alleged risk from the PRT is sufficient to establish injury-in-fact. &nbsp;While the court accepted plaintiffs&rsquo; allegation that Athene was substantially riskier than other insurers for the purpose of resolving the motion to dismiss, it noted that plaintiffs did not claim Athene was likely to fail imminently.&nbsp; The court emphasized that the plaintiffs&rsquo; benefits have not been impacted by the PRT, and that plaintiffs continue to receive their monthly benefits as before.&nbsp; Moreover, regardless of the outcome of the case, plaintiffs would still receive the same benefits.&nbsp; The court acknowledged that this outcome could leave plaintiffs without recourse against Alcoa if Athene fails in the future, but it pointed to Congress&rsquo;s six-year statute of limitations, noting that plaintiffs could still pursue claims against Athene and rely on state guaranty associations.
On the other hand, in the Lockheed Decision the U.S. District Court for the District of Maryland reached the opposite decision in denying the defendants&rsquo; motion to dismiss, holding that plaintiffs sufficiently alleged injury-in-fact to establish Article III standing by claiming that Athene was a riskier insurer, and that selecting Athene for the PRT transactions placed plaintiffs&rsquo; benefits at risk.&nbsp; The court found the allegations regarding the collapse of Executive Life Insurance Company &ndash; an event that resulted in significant losses &ndash; relevant in establishing harm, along with concerns about private equity ownership of Athene.&nbsp; The court further noted that under the Fourth Circuit&rsquo;s decision in Peters v. Aetna, Inc. (a case also addressed in the Alcoa Decision), constitutional standing with respect to equitable claims does not require financial harm, but can be conferred through &ldquo;intangible injuries&rdquo; such as those that result from a breach of fiduciary duty.&nbsp; The court &ldquo;fully acknowledge[d]&rdquo;, however, that the question of constitutional standing is a &ldquo;close call&rdquo;, and reminded the parties that the issue can be raised at any point in the future.&nbsp;
<h2 class="wp-block-heading">Thompson Hine Takeaways</h2>
The contrasting outcomes in Alcoa and Lockheed arise despite substantially similar factual allegations and reliance on the same controlling Supreme Court precedent&mdash;Thole v. U.S. Bank N.A.&nbsp; Both courts acknowledge that Article III standing requires injury-in-fact that is &ldquo;concrete and particularized&rdquo; and &ldquo;actual or imminent&rdquo; and capable of being redressed through the litigation.&nbsp; Yet they fundamentally disagree about what satisfies these requirements, particularly when plaintiffs allege only an increased risk of future harm.&nbsp; So, how did the courts reach opposite conclusions as to the plaintiffs&rsquo; standing to bring these claims?
The Alcoa Decision adhered closely to the standard articulated in Thole, concluding that plaintiffs must allege either actual harm or an imminent likelihood of insurer insolvency.&nbsp; The court rejected the argument that an alleged relative increase in risk to plaintiffs&rsquo; benefits through the selection of Athene was sufficient to establish injury-in-fact where plaintiffs did not allege a significant absolute risk that Athene is likely to imminently fail.&nbsp;&nbsp; Although the court acknowledged the Fourth Circuit&rsquo;s decision in Peters v. Aetna, Inc.&mdash;which held that intangible injuries, such as breaches of fiduciary duty creating heightened risk, can satisfy standing with respect to certain ERISA equitable claims&mdash;it concluded that plaintiffs&rsquo; allegations in the Alcoa case fell short, even under this broader interpretation.
On the other hand, the Lockheed Decision held that substantial increased risk as a result of the PRT is all that is needed to establish injury-in-fact under Thole.&nbsp; While the court did not focus on an imminency requirement in its decision, the court seemed to read into the Lockheed plaintiffs&rsquo; allegations an imminent harm that was not actually alleged, as nowhere in the complaint do the plaintiffs allege that Athene is likely to imminently collapse.&nbsp; &nbsp;&nbsp;
While, of course, the Alcoa Decision is welcomed for plan sponsors and fiduciaries, in courts where the standard articulated in the Lockheed Decision applies, it would seem to be more challenging for defendants to prevail on a motion to dismiss, because all the plaintiffs would need to allege is a possibility &ndash; not an imminent likelihood &ndash; that their pension benefits will harmed as the result of a PRT.&nbsp; The competing decisions serve as a reminder that the future of these cases is still uncertain, and may potentially set the stage for a future circuit spit on the requirements for constitutional standing in ERISA cases and beyond. It is important to keep in mind that both of these rulings tested the sufficiency of the complaints at the pleading stage of the case, where the courts are required to treat the factual allegations made in the complaints as true.&nbsp; Neither ruling addressed the substantive merits of these cases.&nbsp; In fact, even the court in the Lockheed Decision, while denying defendant&rsquo;s motion to dismiss, added:&nbsp; &ldquo;How Plaintiffs fare at later stages of litigation is an entirely different question, and Defendant has provided significant support for its claim that Plaintiffs&rsquo; accusations, though perhaps plausible, are nonetheless incorrect.&rdquo;&nbsp; As a practical matter, we are likely months, if not years, away from receiving judicial guidance on the merits of this wave of challenges to the implementation of pension risk transfers.&nbsp; For now, an early end to these cases at the pleading stage is unsettled.

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A Tale of Two Decisions: District Courts Diverge on Constitutional Standing to Bring Pension Risk Transfer Claims