4 th Quarter, 2011 • Volume 2, Number 4
IN THIS ISSUE
FIDUCIARY OR NOT FIDUCIARY? THAT IS A DIFFICULT
QUESTION...............................................................................................1
SELECT CASE SUMMARIES.......................................................................4
DICKINSON WRIGHT ERISA ATTORNEYS...................................5
EDITOR
Kimberly J. Ruppel, Bloomeld Hills
248.433.7291 • kruppel@dickinsonwright.com
CONTRIBUTORS
Michael R. Holzman, Washington D.C.
202.659.6931 • mholzman@dickinsonwright.com
Christopher T. Horner II, Washington D.C.
202.659.6961 • chorner@dickinsonwright.com
Timothy M. Iannettoni, Detroit
313.223.3142 • tiannettoni@dickinsonwright.com
Nicole M. Wotlinski, Detroit
313.223.3120 • nwotlinski@dickinsonwright.com
Disclaimer: ERISA Legal News is published by Dickinson Wright PLLC to inform
our clients and friends of important developments in the eld of ERISA law.
The content is informational only and does not constitute legal or professional
advice. We encourage you to consult a Dickinson Wright attorney if you have
specic questions or concerns relating to any of the topics covered in ERISA
Legal News.
ERISA
LEGALNEWS
FIDUCIARY OR NOT FIDUCIARY? THAT IS A
DIFFICULT QUESTION
by: Nicole M. Wotlinski
If you are an employer, plan administrator, or nancial
advisor, how can you tell whether you are a duciary
as dened by ERISA? There is a myriad of case law
addressing this exact issue, but still, bright line rules
are dicult to identify.
Express or Implied Status
Fiduciary status can be created in two ways. First, duciar y status is
created if a person or persons are expressly named as duciaries in
the plan documents. 29 U.S.C. § 1102 (a). If not named specically in
the plan, duciary status can be created through action to the ex tent
a party: (1) exercises any discretionary authority or control regarding
management of a plan or exercises any authority or control respecting
management or disposition of its assets; or (2) renders investment
advice for a fee or other compensation, direct or indirect, with respect
to any moneys or other proper ty of such plan, or has any authority
or responsibility to do so; or (3) has any discretionary authority or
discretionary responsibility in the administration of such plan. 29
U.S.C. § 1002(21)(A). Thus, the concept of duciary under ERISA is
broader than common law concept of trustee and it includes not
only those named as duciaries in the plan or those who, pursuant to
procedure specied in the plan, are identied as duciaries, but any
individual who de facto performs specied discretionary functions
with respect to management, assets, or administration of plan. Custer
v. Sweeney, 89 F.3d 1156, 1161 (4th Cir. 1996).
Not every action taken by an employer rises to the level of duciar y
status. Bendaoud v. Hodgson, 578 F. Supp. 2d 257, 276 (D. Mass. 2008).
Thus, the threshold inquiry is “ whether that person was acting as a
duciary (that is, performing a duciary function) when taking the
action subject to complaint.” Pegram v. Herdrich, 530 U.S. 211, 226, 120
S. Ct. 2143, 147 L. Ed. 2d 164 (2000).
For instance, courts have found that day-to-day business decisions by
an employer that may affect a retirement or pension plan do not
necessarily give rise to duciary status. See, e.g., Berger v. Edgewater
Steel Company, 911 F.2d 911, 915 (3rd Cir. 1990) (holding that an
employer’s decision to refuse to grant retirement benets during a
dicult nancial time was a business decision that did not implicate
duciary duties); Flanigan v. General Electric Co., 242 F.3d 78, 88 (2nd
Cir. 2001) (a selling company’s decision to transfer pension funds in
a spino did not implicate duciary duties under ERISA); Dzinglski v.
Weirton Steel Corp., 875 F.2d 1075, 1079 (4th Cir. 1989) (“[b]usiness
decisions can still be made for business reasons, notwithstanding
their collateral eect on prospective, contingent employee benets.”);
Ames v. American Nat’l Can Co., 170 F.3d 751, 757 (7th Cir. 1999) (when
company representatives are negotiating the sale of a division, they
are not acting in their capacity as a plan duciary, and thus they do not
bear the legal obligations that go along with duciary status.).
