“No Injury, No Standing” – The Second Circuit Mandates Individualized Loss for ERISA 401(k) Plaintiffs in Collins v. Northeast Grocery, LLC

1. Introduction

The U.S. Court of Appeals for the Second Circuit, in a precedential opinion dated 18 August 2025, has reshaped the pleading landscape for ERISA class actions challenging the management of defined-contribution plans (principally 401(k) plans). In Collins v. Northeast Grocery, LLC, a panel comprised of Judges Walker, Wesley, and Bianco affirmed the district court’s dismissal of large portions of the plaintiffs’ complaint for want of Article III standing. The Court held—unequivocally—that participants in a defined-contribution plan must allege a “constitutionally cognizable individual injury,” i.e., a personal financial loss or imminent threat of such loss to their own 401(k) accounts, before they may seek any monetary or injunctive relief for purported breaches of fiduciary duty.

Four former supermarket employees (Collins, DeVito, Lamoureux, and Lobdell) sued Northeast Grocery, Inc., its Plan Administrative Committee, and unnamed committee members (“Defendants”) under ERISA §§ 502(a)(2) and (a)(3). They alleged (i) imprudent investment-menu construction (expensive share classes and under-performing funds), (ii) excessive recordkeeping fees via revenue sharing, and (iii) breaches of the duty of loyalty. The district court dismissed most claims on standing grounds and the remainder for failure to state a claim. On appeal, the Second Circuit addressed standing in a published opinion and disposed of the Rule 12(b)(6) issues in a separate summary order.

2. Summary of the Judgment

Article III Standing Rule: A defined-contribution plan participant must plausibly allege individualized monetary harm (actual or imminent) to press ERISA breach-of-fiduciary-duty claims.
Application to Plaintiffs: None of the named plaintiffs invested in the allegedly imprudent share classes, the two under-performing funds, or the single revenue-sharing fund identified in the complaint. Consequently, they failed to plead individual injury.
Class Standing: Without personal injury, Plaintiffs also lacked “class standing” under NECA-IBEW to litigate on behalf of absent participants.
Disposition: The Circuit affirmed dismissal of the share-class, alternative-fund, indirect-fee, and loyalty claims for lack of standing. Other portions of the judgment were vacated or remanded as addressed in the unpublished summary order.

3. Analysis

3.1 Precedents Cited and Their Influence

TransUnion LLC v. Ramirez, 594 U.S. 413 (2021) – Reinforced that standing “is not dispensed in gross.” Collins uses this to require injury for each ERISA claim.
Spokeo, Inc. v. Robins, 578 U.S. 330 (2016) – Articulated concreteness and particularization; applied to reject a purely statutory-rights theory without concrete harm.
Thole v. U.S. Bank, 590 U.S. 538 (2020) – Denied standing to defined-benefit participants who suffered no personal loss; Collins extends the logic to defined-contribution participants.
Kendall v. Avon, 561 F.3d 112 (2d Cir. 2009) & Central States v. Merck-Medco, 433 F.3d 181 (2d Cir. 2005) – Earlier Second-Circuit cases requiring “identifiable and quantifiable injury.” Collins unifies and clarifies these strands.
NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145 (2d Cir. 2012) & Retirement Board v. Bank of New York Mellon, 775 F.3d 154 (2d Cir. 2014) – The Circuit’s “class standing” framework (two-step “same set of concerns” test).
ERISA fee-case precedents: Sacerdote v. NYU (share-class prudence), Singh v. Deloitte (excessive fees), and Pension Benefit Guar. Corp. v. Morgan Stanley (alternative funds) provide substantive standards but ultimately prove irrelevant without standing.
Long Island Head Start v. EOC of Nassau County, 710 F.3d 57 (2d Cir. 2013) – Plaintiffs’ reliance on a footnote suggesting plan-wide standing was rejected as over-reading.

3.2 Court’s Legal Reasoning

Statutory vs. Constitutional Standing
ERISA § 502(a) gives plan participants a cause of action, but Article III requires a separate inquiry into concrete harm. The Court revived the notion (formerly dubbed “statutory standing”) only to clarify that it cannot replace constitutional standing.
Injury-in-Fact in the 401(k) Context
Because 401(k) balances rise or fall exclusively with investments chosen by each participant, injury must be traceable to funds in which the plaintiff actually invested. Allegations that fiduciaries mismanaged other options are insufficient.
Rejection of “Plan as Plaintiff” Theory
Plaintiffs argued they sued “derivatively” for the plan. Relying on Thole, the Court ruled that participants may not piggy-back on plan injuries; they still need personal loss to establish a live controversy.
Class Standing Analysis
Under NECA, a named plaintiff can litigate on behalf of others only when (a) he suffers an injury and (b) the disputed conduct “implicates the same set of concerns.” Without the first element, the inquiry never reaches the second.
Disposition of Specific Claims
- Share-class imprudence – Three challenged funds; no plaintiff invested ⇒ no standing.
- Alternative-fund imprudence – Two challenged funds; same defect.
- Indirect recordkeeper fees / revenue sharing – Only one fund identified; no plaintiff invested.
- Loyalty breach (revenue-sharing motive) – High-cost funds again not held by plaintiffs.
- Other monitoring claims – Some survived standing but were dismissed on Rule 12(b)(6) grounds in the summary order.

3.3 Impact of the Decision

Collins is likely to have immediate and far-reaching effects on ERISA litigation within the Second Circuit and potentially nationwide:

Pleading Standard Elevated – Complaints must now contain investment-by-investment allegations linking each named plaintiff to the challenged option or fee structure. A boiler-plate “plan-wide mismanagement” narrative will not suffice.
Class Certification Strategy – Plaintiffs’ counsel will need to select multiple named plaintiffs holding different funds to create overlap with the full menu. Otherwise, many class claims will be dead on arrival.
Employer / Fiduciary Defenses Strengthened – Plan sponsors can move to dismiss entire cases at the threshold by scrutinizing account statements of the named plaintiffs.
Forum and Circuit Split Potential – Some circuits (e.g., the Sixth in Boley v. Universal Health) have been more lenient. Collins positions the Second Circuit firmly on the strict-injury side, teeing up a possible future Supreme Court review.
Practical Compliance Incentives – Fiduciaries should still practice robust monitoring, but the decision reduces exposure where alleged imprudence concerns niche funds used by a few participants.

4. Complex Concepts Simplified

Defined-Contribution Plan: A retirement plan (e.g., 401(k)) where each employee has an individual account and chooses from an investment menu. The ultimate benefit equals contributions plus or minus investment performance.
Article III Standing: The constitutional requirement that a plaintiff show (1) a concrete, particularized injury, (2) caused by the defendant, and (3) redressable by court action.
Share Class: Mutual funds often offer multiple “share classes” investing in the same portfolio but carrying different fee structures (e.g., retail vs. institutional). Prudence dictates using the lowest-cost class available to the plan.
Revenue Sharing: An arrangement where a mutual fund’s expense ratio includes a pre-set “kick-back” to the plan’s recordkeeper or other service providers. While permissible, excessive revenue sharing can inflate fees.
Class Standing (“Same Set of Concerns” Test): Even when a named plaintiff has personal standing, he may represent absent class members only if the challenged conduct that harmed him would be proven (or disproven) by substantially the same evidence as their claims.

5. Conclusion

The Second Circuit’s opinion in Collins v. Northeast Grocery crystallizes the principle that individualized economic injury is the price of admission to the federal courthouse for participants challenging 401(k) plan management. By refusing to “dispense standing in gross,” the Court has tightened the gateway for ERISA fee and prudence litigation, compelled more precise pleadings, and provided fiduciary defendants with a potent early-stage defense. Whether this stricter approach spreads to other circuits or invites Supreme Court clarification remains to be seen, but for now, plaintiffs in the Second Circuit must mind the simple post-Collins mantra: “No injury, no standing.”