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ERISA – Breach of Fiduciary Duty

By: Derek Hawkins//September 26, 2021//

ERISA – Breach of Fiduciary Duty

By: Derek Hawkins//September 26, 2021//

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7th Circuit Court of Appeals

Case Name: Alan D. Halperin, et al., v. Mark R. Richards, et al.,

Case No.: 20-2793

Officials: KANNE, ROVNER, and HAMILTON, Circuit Judges.

Focus: ERISA – Breach of Fiduciary Duty

We consider in this case whether the Employee Retirement Income Security Act (ERISA) preempts certain state-law claims brought by bankruptcy creditors on behalf of a company against its directors and officers and others alleged to have inflated the company’s stock value to conceal the company’s decline and to benefit corporate insiders. We hold that ERISA does not preempt the plaintiffs’ claims against the company’s directors and officers.

ERISA expressly contemplates parallel corporate liability against directors and officers who serve dual roles as both corporate and ERISA fiduciaries. We also hold, however, that ERISA preempts the plaintiffs’ claims against the former ERISA trustee of the employee benefit plan and its nonfiduciary contractor. Corporation-law aiding and abetting liability against these defendants would interfere with the cornerstone of ERISA’s fiduciary duties—the exclusive benefit rule in Section 404, 29 U.S.C. § 1104(a)(1)(A).

Affirmed in part. Reversed and remanded in part.

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Derek A Hawkins is Corporate Counsel, at Salesforce.

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