CACD Federal MTD — ERISA Forfeiture Claims

A growing C.D. Cal. and N.D. Cal. consensus forecloses the plaintiffs'-bar theory that ERISA fiduciary duty requires applying forfeited contributions to plan expenses rather than reducing future employer contributions. The theory is rejected because (a) it contravenes 38+ years of settled rules and federal regulations, and (b) it would create benefits beyond what was promised in the plan.

Section 1104(a) fiduciary duty elements

A breach-of-fiduciary-duty claim under 29 U.S.C. § 1104(a) requires (1) defendant is an ERISA fiduciary, (2) breach of duty of loyalty, prudence, or plan-text compliance, and (3) loss to the plan. Bafford v. Northrop Grumman Corp., 994 F.3d 1020, 1026 (9th Cir. 2021).

ERISA does not require maximizing benefits

ERISA "does no more than protect the benefits which are due to an employee under a plan." Wright v. Oregon Metallurgical Corp., 360 F.3d 1090, 1100 (9th Cir. 2004). A fiduciary's duties are owed to the plan as a whole and protect only the contractually defined benefits. US Airways, Inc. v. McCutchen, 569 U.S. 88, 100 (2013). Where the plan expressly authorizes applying forfeitures to offset employer contributions, complying with that plan term is permitted, not a breach.

Anti-inurement (§ 1103(c)(1))

The anti-inurement provision focuses on "whether fund assets were used to pay . . . benefits to plan participants." Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 442 (1999). Incidental benefits to the employer do not constitute a breach. Failure to allege any plan assets left the plan is dispositive.

Prohibited transactions (§ 1106)

Reallocating funds within the plan is not a "transaction" within the meaning of § 1106. Lockheed Corp. v. Spink, 517 U.S. 882, 892–93 (1996). Section 1106 targets commercial bargains presenting "special risk of plan underfunding" — third-party sales, leases, and similar dealings — not internal reallocation of plan funds.

Failure-to-monitor is derivative

"A failure to monitor claim is only viable when there is an underlying claim for breach of fiduciary duty." Partida v. Schenker, Inc., 2024 WL 1354432, at *9 (N.D. Cal. 2024). When the predicate § 1104(a) claim fails, failure-to-monitor falls.

The growing C.D. Cal. / N.D. Cal. consensus

The foreclosure consensus includes: Hutchins v. HP Inc. I & II, 737/767 F. Supp. 3d (N.D. Cal. 2024/2025); Wright v. JPMorgan Chase, 2025 WL 1683642 (C.D. Cal. June 13, 2025); Madrigal v. Kaiser Foundation Health Plan, 2025 WL 1299002 (C.D. Cal. May 2, 2025); Cano v. Home Depot; Cain v. Siemens; McWashington v. Nordstrom. By late 2025 the body of decisions had grown large enough that judges deny leave to amend on futility grounds without further analysis.

How CACD applies it (corpus examples)

• 459042395 (Hernandez v. AT&T — Wright II): granted without leave to amend; court collected the foreclosure cluster and found plaintiff's failure to distinguish them dispositive.
• 438385598 (Madrigal v. Kaiser — Almadani): this opinion is itself one of the foreclosing decisions; granted with 21 days leave to amend, but on a thoroughly-developed Bafford/Hughes/Spink analysis.

If you're the moving party

• Lead with the foreclosure cluster; collect every C.D. Cal. and N.D. Cal. ruling rejecting the theory. The volume itself is doing real work.
• Attach the plan documents under incorporation by reference. The plan's express authorization of forfeiture-to-offset typically resolves the plan-text-compliance prong.
• Frame the claim element-by-element: who is the fiduciary, what was the breach, where did plan assets leave, was there a prohibited transaction. Hold plaintiff to specifics on each.
• Press functional-fiduciary analysis (Acosta v. Brain) to separate plan administrator from plan committee where the plan delegates forfeiture authority.

If you're the opposing party

• Distinguish the plan terms — not every plan grants forfeiture-to-offset authority. Quote plan language carefully.
• Identify a specific assets-leaving-the-plan theory if available; bare reallocation will not survive.
• Address the foreclosure cluster head-on — a meaningful distinction (different plan structure, different fiduciary alignment) is the only path through.
• Recognize that the failure-to-monitor claim falls with the predicate; do not waste briefing on it as a standalone theory.