Participants in 401(k) and other retirement plans can file lawsuits claiming their individual accounts were mishandled, the U.S. Supreme Court ruled Feb. 20.

The 7-2 decision in LaRue v. DeWolff Boberg bolsters the legal rights of 70 million people. The justices unanimously allowed a suit by a man who says he lost almost $100,000 in his 401(k) because his employer didn't make investment changes he requested. The court rejected business contentions that participants can sue only to enforce the rights of the entire plan, not to recover losses incurred by a single account.

The ruling affects participants in so-called defined-contribution retirement programs. This category includes 401(k), employee stock ownership and profit-sharing plans, which hold $3.3 trillion in assets.

James LaRue says he tried to change the investments in his 401(k) plan in time to avoid the brunt of the 2001-2002 stock market plunge. He claims his employer, Dallas-based management-consulting firm DeWolff Boberg & Associates, didn't follow his instructions, costing him almost $100,000.

The 4th U.S. Circuit Court of Appeals in Richmond, Va., barred the suit, saying it wasn't allowed under the 1974 Employee Retirement Income Security Act, known as ERISA. The Supreme Court rejected that reasoning, ruling Congress intended to provide broader protection to participants in retirement plans.

The ruling also means that employees can file so-called stock drop suits, which allege that an employer offered its own stock as an investment option while knowing that the shares were trading at an inflated price and would eventually fall.

Federal law “does authorize recovery for fiduciary breaches that impair the value of plan assets in a participant's individual account,” Justice John Paul Stevens wrote for the majority.