In Trauernicht v. Genworth Financial, Inc., 169 F.4th 459 (4th Cir. 2026), the Fourth Circuit delivered a significant win for defendants facing ERISA class actions. Reversing a district court’s certification order, the court held that claims under ERISA § 502(a)(2) seeking monetary relief for alleged fiduciary breaches in a defined contribution plan cannot be certified as a mandatory class under Rule 23(b)(1). The court also rejected the notion that ERISA fiduciary-duty claims “inherently” satisfy Rule 23’s commonality requirement.
Background: A Challenge to Genworth’s Target-Date Funds and Class Certification in the District Court
Two former participants in Genworth Financial’s defined contribution plan alleged that Genworth breached its fiduciary duties by retaining the BlackRock LifePath Index Funds as an investment option, contending the funds underperformed other alternatives the plan could have offered.
The district court certified a mandatory class under Rule 23(b)(1)(A) and (B), reasoning that the plaintiffs were pursuing derivative relief on behalf of the plan and that individual suits risked inconsistent adjudications and impaired interests.
The Fourth Circuit’s Central Holding: These Are Individual Monetary Claims
The Fourth Circuit reversed, stressing the critical distinction between defined benefit and defined contribution plans.
The court explained that in a defined benefit plan (like a pension), assets are held collectively and therefore harm to a plan affects all participants similarly, and any recovery necessarily flows to the plan as a whole. By contrast, in a defined contribution plan, assets are held in individual accounts, and a fiduciary breach may affect participants differently depending on individualized factors such as investment timing and withdrawal dates.
Accordingly, although ERISA § 502(a)(2) authorizes suits “on behalf of the plan,” the court reasoned that in the defined contribution context, the only meaningful “appropriate relief” is recovery tied to each participant’s individual account losses. Some participants actually performed better by having invested in the challenged funds. Therefore the plaintiffs’ claims were better described as claims for individual monetary damages.
No ERISA Exception to Rule 23(b)(1)
The district court had treated ERISA § 502(a)(2) claims as categorically appropriate for mandatory class treatment. The Fourth Circuit rejected that approach.
The court emphasized that Rule 23(b)(1) is reserved for limited circumstances—such as true limited-fund cases or situations where a defendant must treat all claimants alike as a matter of law or necessity. It is not a vehicle for aggregating individualized damages claims, particularly where class members receive no notice and have no right to opt out. The court also anchored its reasoning in due process. Mandatory aggregation of individualized damages claims, the court explained, raises constitutional concerns because absent class members are bound without meaningful choice. Therefore, certification under Rule 23(b)(1) was error.
Commonality: No “Inherent” Shortcut
The Fourth Circuit explained that the district court erred in concluding that ERISA fiduciary-duty claims are “inherently” common, explaining that commonality requires more than alleging a statutory violation—it demands proof that class members suffered the same injury capable of resolution “in one stroke.” In other words, the court reemphasized that commonality requires more than common questions, it requires common answers. Here, that requirement failed for multiple reasons, most importantly because many class members suffered no loss (and some even gained), and participants’ circumstances with respect to the challenged funds varied dramatically—rendering any assumption of uniform injury unsustainable.
Trauernicht Has Significant Practical Implications
Trauernicht marks a meaningful shift for ERISA litigation in the Fourth Circuit. Plaintiffs seeking monetary relief must proceed, if at all, under Rule 23(b)(3)—and satisfy predominance, superiority, requirements while providing notice, and opt‑out opportunities. Defendants now have stronger grounds to challenge certification by focusing on individualized damages, comparator mismatches, and uninjured class members. For plan sponsors and fiduciaries, Trauernicht provides a powerful new roadmap for resisting class certification and restoring Rule 23’s procedural safeguards to ERISA litigation targeting defined contribution plans, which may start to put a damper on one of the most active areas of class action ERISA litigation over the past several years.