## F I L E D United States Court of Appeals Tenth Circuit 

### MAY 19 2005 

### PATRICK FISHER Clerk PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

DAVID P. COLDESINA, D.D.S., P.C., EMPLOYEE PROFIT SHARING PLAN AND TRUST, a domestic trust; DAVID P. COLDESINA, a trustee, Plaintiffs - Appellants,

v. THE ESTATE OF GREG P. SIMPER; GREYSTONE MARKETING, a Utah corporation, Defendants, TED A. MADSEN, an individual; FLEXIBLE BENEFIT ADMINISTRATORS, a Utah corporation; KANSAS CITY LIFE INSURANCE COMPANY, a Missouri corporation; SUNSET FINANCIAL SERVICES, INC., a Washington corporation, Defendants - Appellees. No. 04-4006

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF UTAH (D.C. No. 2:00-CV-927-DAK)- 2 -

Gary R. Guelker (and Peter Stirba, on the briefs), Stirba & Associates, Salt Lake City, Utah, for Plaintiff - Appellant. Sean D. Reyes (and Spencer A. Austin, on the brief) , Parsons, Behle & Latimer, Salt Lake City, Utah, for Defendants - Appellees, K ansas City Life Insurance Company and Sunset Financial Services, Inc. Keith A. Call (and R. Brent Stephens, with him on t he brief), Snow, Christensen & Martineau, Salt Lake City, Utah, for Defendants - Appellees, Ted Madsen and Flexible Benefit Administrators, Inc.

Before TACHA , Chief Judge, KELLY , and MURPHY , Circuit Judges.

KELLY , Circuit Judge.

I. Introduction This case concerns who, beyond the immediate wrong- doer, might be held responsible by an ERISA plan for a theft from that plan. Plaintiffs-Appellants, David P. Coldesina, D.D.S., P.C. Employee Profits S haring Plan & Trust (“plan” or “the plan”), and Dr. David Coldesina, D.D.S., as plan trustee, are appealing from multiple summary judgment rulings where the di strict court dismissed their claims against two groups of defendants: (1) Flexib le Benefits Administrators, Inc. (“Flexible Benefits”) and Ted Madsen, collecti vely known as the accountant defendants, and (2) Kansas City Life Insurance Comp any (“KCL”) and Sunset Financial Services, Inc. (“Sunset”). On appeal, the plan makes three arguments. First, the district court erred in- 3 -

dismissing its ERISA claims against the accountant defendants given their status as ERISA fiduciaries, or, in the alternative, if th e accountant defendants are not ERISA fiduciaries, the district court erred in dism issing its state-law claims against them based on ERISA preemption. Second, th e district court erred in dismissing its state-law claims against KCL and Sun set based on ERISA preemption. Finally, the district court erred in r efusing to consider Dr. Coldesina’s supplemental deposition offered by the plan in opposition to KCL’s and Sunset’s motion for summary judgment. We have jurisdiction under 28 U.S.C. § 1291, and, addressing each argument in tur n, we affirm in part, reverse in part, and remand for further proceedings consist ent with this opinion.

II. Background As this case was resolved below on summary judgment , the facts are viewed in the light most favorable to the party opp osing summary judgment, here the plan. Atl. Richfield Co. v. Farm Credit Bank o f Wichita , 226 F.3d 1138, 1148 (10th Cir. 2000). Viewed as such, the record revea ls the following. In the early 1980’s, Dr. Coldesina established an e mployee benefits plan for his dental practice, and he has served as the plan’ s trustee since its inception. In approximately 1992, Dr. Coldesina began talking to a personal friend, Gregg Simper, about changing the plan’s investment strate gy, and, as a result of these- 4 -

conversations, Mr. Simper became the plan’s investm ent advisor. While advising the plan, Mr. Simper also operated his own company, Greystone Marketing, Inc., and was a general agent for KCL and a licensed brok er-dealer for Sunset, an affiliate of KCL. His relationships with KCL and S unset authorized him to market and sell the investment products of both companies, and indeed his advice to the plan was primarily, if not completely, based on these products. As plan advisor, Mr. Simper also encouraged Dr. Col desina to hire Ted Madsen, the sole owner and employee of Flexible Ben efits, to replace the plan’s then current administrator. Dr. Coldesina agreed t o the change, and Flexible Benefits began assisting “in the administration of the . . . plan,” and charging “administrative fees.” Flexible Benefits prepared the plan’s tax returns and other documents concerning plan participants’ accounts an d benefits, was involved in making disbursements to plan participants, drafting promissory notes for participant loans, and tracking plan loans to ensur e repayment, and agreed to accept plan contributions and subsequently remit th em on the plan’s behalf as directed. Dr. Coldesina would write checks from th e plan payable to Flexible Benefits, and then Mr. Madsen would deposit the che cks into his business account on which he was the only signatory. This arrangeme nt was adopted so that Mr. Madsen would not have to rely on Dr. Coldesina’s handwritten ledger in tracking the plan’s contributions.- 5 -

It appears Mr. Madsen had little contact with Dr. C oldesina; as such, he interacted almost exclusively with Mr. Simper regar ding plan activities and acted at Mr. Simper’s direction. Initially, when Flexibl e Benefits started accepting plan monies into its account, Mr. Madsen would remit the plan funds payable to KCL for KCL insurance products. However, at Mr. Simper ’s direction, he subsequently began writing checks on behalf of the plan payable to Mr. Simper’s company, Greystone Marketing, with the understandin g that Mr. Simper would transfer the funds to the KCL. The explanation Mr. Simper gave for this change was that it helped him track the commissions he and his agents were earning within his marketing business, which Mr. Madsen didnot challenge. Dr. Coldesina never authorized writing plan checks payable to Mr. Simper or his company, and apparently was not aware of this chang e. Mr. Madsen also relied exclusively on Mr. Simper fo r the information he needed to prepare the plan’s tax forms and annual p lan participant account summaries, which Mr. Simper provided either orally or in handwritten notes. Again, Mr. Madsen never questioned Mr. Simper’s inf ormality or asked him for official verification, and he did not independently verify the information. In 1999, becoming dissatisfied with the plan’s inve stments, Dr. Coldesina decided to re-direct the plan’s assets and asked Mr . Simper for the plan’s account documentation to facilitate the change. Mr. Simperagreed to turn over the- 6 -

necessary documents; however, on the day he was sup posed to do so he committed suicide, leaving a note that explained ho w and why he had misappropriated significant sums from the plan. Dr . Coldesina subsequently discovered that Mr. Simper had stolen over $600,000 from the plan. The plan then brought suit against all the parties involved asserting an ERISA claim and various state-law claims against Mr. Simper’s estat e and the accountant defendants and state-law claims for negligent supervision and vicarious liability against KCL and Sunset based on their agency relati onship with Mr. Simper. The accountant defendants moved for summary judgment arguing ERISA preempted the state-law claims against them and that the ERISA claim was not proper because they were not plan fiduciaries as de fined by the Act. The district court granted their motion as to the state-law clai ms, but denied it as to the ERISA claim. However, after the ERISA claim was se t for trial, the initial judge recused himself, and the new judge allowed the part ies to file cross-motions for summary judgment concerning whether the accountant defendants were ERISA fiduciaries. Upon hearing the motions, the court r uled Mr. Madsen and Flexible Benefits were not plan fiduciaries and granted summ ary judgment in their favor on the ERISA claim as well. KCL and Sunset also moved for summary judgment on the state-law claims asserted against them arguing they were pree mpted by ERISA. The district- 7 -

court again granted the motion finding that Mr. Simper’s status as an ERISA fiduciary triggered the Act’s preemption provisions . In so deciding, the district court refused to consider Dr. Coldesina’s supplemental deposition offered by the plan suggesting as justification for the exclusion that the plan was trying to create a sham issue of fact. This appeal followed entry a s final judgment.

III. Discussion As noted, we review a grant of summary judgment de novo, applying the same legal standard as the district court. WillmarElec. Serv., Inc. v. Cooke , 212 F.3d 533, 535 (10th Cir. 2000). Summary judgment i s only appropriate if there is no genuine issue of material fact and the moving pa rty is entitled to judgment as a matter of law. Celotex Corp. v. Catrett , 477 U.S. 317, 322 (1986); Fed. R. Civ. P. 56(c). A.) Flexible Benefits & Mr. Madsen (the accountant defendants ) The plan asserts that the accounting defendants are fiduciaries as defined by ERISA and therefore dismissal of its ERISA claimagainst them was in error. Further, the plan concedes that if the accountant d efendants are ERISA fiduciaries its state-law claims are preempted; however, if the accountant defendants are not deemed fiduciaries, the plan argues its state-law c laims are not preempted. Whether a party is an ERISA fiduciary is a mixed qu estion of fact and law.- 8 -

Hamilton v. Carell , 243 F.3d 992, 997 (6th Cir. 2001). However, wher e the parties essentially agree on the underlying facts, as is the case here, the only issue before us is the district court’s legal conclusion, which we review de novo. Id. ;

see also Allison v. Bank One-Denver , 289 F.3d 1223, 1235 n.2 (10th Cir. 2002); Peckham v. Gem State Mut. of Utah , 964 F.2d 1043, 1047 n.5 (10th Cir. 1992). ERISA defines “fiduciary” in reference to the funct ions being performed for the plan. The statute provides: a person is a fiduciary with respect to a plan to t he extent (i) he exercises any discretionary authority or discretion ary control respecting management of such plan or exercises anyauthority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compen sation, direct or indirect, with respect to any moneys or other prope rty of such plan, or has any authority or responsibility to do so, or(iii) he has any discretionary authority or discretionary responsibi lity in the administration of such plan. 29 U.S.C. § 1002(21)(A). Thus, in applying this de finition, the court must conduct a functional analysis. See Lockheed Corp. v. Spink , 517 U.S. 882, 890 (1996). That is to say, regardless of status or ti tle, parties are only plan fiduciaries to the extent they are performing one o f the functions identified in the definition. Varity Corp. v. Howe , 516 U.S. 489, 498, 502-04 (1996); 29 C.F.R. §
2509.75-8 at D-2. Plan management or administration confers fiduciarystatus only to the extent the party exercises discretionary authority or control. Discretion exists- 9 -

where a party has the “power of free decision” or “ individual choice.” Webster’s Ninth New Collegiate Dictionary362 (1991); Herman v. NationsBank Trust Co. , 126 F.3d 1354, 1365 (11th Cir. 1997) (defining “dis cretion”). On the other hand, non-discretionary or ministerial functions are thos e that do not require individual decisionmaking. These include tasks which by theirnature are inherently ministerial, such as clerical services. See Pohl v. Nat’l Benefits Consultants, Inc. , 956 F.2d 126, 129 (7th Cir. 1992) (“[Defendant’s] f unction under the plan was clerical, mechanical, ministerial–not discretionary .”). They also include those tasks that might otherwise require discretion but w hich are performed within the confines of plan policies and procedures. IT Corp. v. Gen. Am. Life Ins. Co. , 107 F.3d 1415, 1420 (9th Cir. 1997) (quoting 29 C.F.R. § 2509.75-8 at D-2); Useden v. Acker , 947 F.2d 1563, 1575 (11th Cir. 1991). Discretion is conspicuously omitted from the fiduci ary function of controlling plan assets. Indeed, the statute provi des that “any authority or control ” over the management or disposition of plan assets is sufficient to render fiduciary status. 29 U.S.C. § 1002(21)(A)(I) (emph asis added). As other courts have recognized, this distinction evidences Congres s’s intent to treat control over assets differently than control over management or administration. Srein v. Frankford Trust Co. , 323 F.3d 214, 220-21 (3d Cir. 2003); IT Corp. , 107 F.3d at1 Several courts gloss over this distinction applyi ng the discretionary

language to control over assets as well as manageme nt and administration. See Herman , 126 F.3d at 1365; Confer v. Custom Eng’g Co. , 952 F.2d 34, 36 (3rd Cir. 1991). However, this approach is unpersuasive as i t cannot be reconciled with the clear statutory language.

2 The Senate Report provides: A fiduciary is one who occupies a position of confi dence or trust. As defined by the amendments, a fiduciary is a person who exercises any power of control, management or disposition with re spect to monies or other property of an employee benefit fund, or w ho has authority or responsibility to do so. . . . The fiduciary res ponsibility section, in essence, codifies and makes applicable to these fid uciaries certain principles developed in the evolution of the law of trusts.

- 10 - 1421; FirsTier Bank, N.A. v. Zeller , 16 F.3d 907, 911 (8th Cir. 1994). 1 In Congress’s judgment, and consistent with general trust law, parties controlling plan assets are automatically in a position of confidence by virtue of that contr ol, and as such they are obligated to act accordingly. See FirsTier Bank, N.A. , 16 F.3d at 911; S. Rep. No. 127, 93rd Cong., 2d Sess. 27, reprinted in 1974 U.S.C.C.A.N. 4838, 4864-65. 2 As stated above, Mr. Madsen and Flexible Benefits p repared the plan’s financial statements, received plan contributions a nd subsequently remitted the funds as directed by Mr. Simper, and prepared promi ssory notes for plan loans to participants and tracked the balances of those loan s. Thus, there are two possible grounds for finding that they functioned as plan fi duciaries. First, their- 11 -

involvement in plan administration, and second, the ir control over plan assets. 1.) Discretionary authority over plan administratio n Generally, preparing plan financial documents, incl uding tax forms, is an administrative function; however, it is also minist erial. Anoka Orthopaedic Assocs., P.A. v. Lechner , 910 F.2d 514, 517 (8th Cir. 1990); Yeseta v. Baim a , 837 F.2d 380, 385 (9th Cir. 1988); 29 C.F.R. § 2509 .75-8 at D-2 (preparing “reports required by government agencies” and “repo rts concerning participants’ benefits” are ministerial tasks). That is, once th e preparer has the necessary information, it is, as Dr. Coldesina admitted, “pr etty much a numbers calculation.” Thus, even though the accountant def endants charged “administrative fees” and said they were involved i n “plan administration,” they did not perform the necessary administrative functi ons to be considered plan fiduciaries. 2.) Control over plan assets As stated above, any authority or control over plan assets is sufficient to render fiduciary status. As such, acting as a sign atory on behalf of a plan can indicate fiduciary control. See IT Corp. , 107 F.3d at 1421-22 (“The right to write checks on plan funds is ‘authority or control respe cting management or disposition of [] assets.’”); LoPresti v. Terwillig er , 126 F.3d 34, 40 (2d Cir. 1997) (noting signatory authority in discussing fiduciarystatus). However, performing- 12 -

this function in name only is likely insufficient. See LoPresti , 126 F.3d at 40 (finding signatory who wrote checks on plan funds w as a fiduciary while signatory who never wrote checks and was not involv ed in finances was not a fiduciary). Here, the accountant defendants were signatories in practice as well as name. Mr. Madsen received plan contribution funds from the plan, which he deposited into his business account, and then wrote checks on behalf of the plan for the amount of the contribution. This arrangeme nt was initially set up to facilitate better recordkeeping; however, the pract ical reality is that Mr. Madsen had total control over the plan’s money while it wa s in his account. By way of example only, though not authorized to do so, he co uld have withdrawn the plan’s money to pay his business expenses or go on vacatio n, and certainly if he had done either it would have been appropriate to treathis actions as a breach of fiduciary duty. See Olson v. E.F. Hutton & Co., Inc. , 957 F.2d 622, 626 (8th Cir. 1992) (“A person who usurps authority over a plan's assets and makes decisions about the use or disposition of those assets shouldknow they are acting as a fiduciary.”). Indeed, this practical reality is precisely why con trol over assets is treated differently than control over management. See Mass. Mut. Life Ins. Co. v. Russell , 473 U.S. 134, 142-43 (1985) (“A fair contextual r eading of [ERISA]- 13 -

makes it abundantly clear that its draftsmen were p rimarily concerned with the possible misuse of plan assets . . . .”). As a gen eral matter, a relationship of trust is established when one acquires possession of another’s property with the understanding that it is to be used for the owner’s benefit, and in these circumstances an obligation arises on the part of t he one in possession to act in the owner’s bests interests rather than his own. A s such, assigning fiduciary obligations serves the purposes of ERISA. Indeed, “[t]he words of the ERISA statute, and its purpose of assuring that people wh o have practical control over an ERISA plan’s money have fiduciary responsibility to the plan’s beneficiaries, require that a person with the authority to direct paymentof a plan’s money be deemed a fiduciary.” IT Corp. , 107 F.3d at 1421 (emphasis added). The facts here are even more compelling because the account at issue belonged to the accountant defendants and not to th e plan itself. In IT Corp. , the court assigned fiduciary status where the party act ed as a signatory on an account established and maintained by the plan, 107 F.3d at1421, and under such circumstances, the signatory and the plan likely sh ared control over the assets. But here, where the plan was not affiliated with th e account and had no authority to oversee its activities, it depended upon Mr. Mad sen to ensure the funds were handled properly. Indeed, to say that the accounta nt defendants did not control the money while it was in their account is to say t hat no one had control during- 14 -

that time. In opposition, the accountant defendants argue theywere not in control of the plan’s assets because they were simply performi ng a ministerial, checkwriting service. First, the dichotomy between disc retionary and ministerial authority is not determinative regarding control ov er assets. Second, this characterization is not entirely accurate. While i t is true Mr. Madsen did not have any involvement in how the plan chose to invest its assets, see Baker v. Kingsley , 387 F.3d 649, 663-64 (7th Cir. 2004), or which clai ms were properly payable under the plan, IT Corp , 107 F.3d at 1420, or even which of various compet ing creditors would be paid, LoPresti , 126 F.3d at 40, he did exercise judgment in naming the payee on the checks he wrote on behalf o f the plan. The original understanding when Mr. Madsen agreed t o accept plan contributions into his business account was that he would write the plan checks payable to KCL. However, at Mr. Simper’s direction , Mr. Madsen subsequently began making the checks payable to Greystone Market ing. There were never any express plan policies directing Mr. Madsen’s check- writing activities, and Dr. Coldesina was unaware Mr. Madsen was writing the ch ecks to Greystone Marketing. As such, Mr. Madsen assumed control ove r disposition of the funds by exercising his own judgment rather than acting at the plan’s direction. On this point, LoPresti and IT Corp. are analogous. In LoPresti , the court- 15 -

held a plan administrator was a fiduciary based on his signatory status and authority to decide which creditors to pay out of t he plan’s assets. 126 F.3d at 40. Likewise, in IT Corp , the court held that an outside company serving as signatory and having the authority to pay claims it deemed pr oper under the plan was a fiduciary because it had the ability to direct the plan’s assets. 107 F.3d at 1421- 22. Certainly, Mr. Madsen had fewer choices in nam ing a payee than in these prior cases and thus exercised a lesser degree of c ontrol over disposition of the assets, but the point is he had this authority. “[ A] person is a fiduciary with respect to a plan to the extent . . . [he] exercise s any authority or control respecting management or disposition of its assets ,” 29 U.S.C. § 1002(21)(A) (emphasis added), and Mr. Madsen’s actions, just li ke the fiduciaries in LoPresti and IT Corp. , demonstrate that “as a practical matter, [he had] a substantial amount of money . . . under [his] control . . . in the form of a bank account which [he] could deplete by writing checks.” IT Corp. , 107 F.3d at 1421. Mr. Madsen also argues he was not a fiduciary becau se he simply followed Mr. Simper’s instruction in writing checks for the plan. This argument has some appeal given the close relationship the accountant defendants had with Mr. Simper concerning plan activities and their virtual ly non-existent interaction with the plan itself; however, it fails to recognize the realities of this case. Regardless of who the accountant defendants dealt with, they w ere hired by the plan, not Mr.- 16 -

Simper, and were entrusted with the plan’s money, n ot Mr. Simper’s. They simply cannot avoid this fact by asserting that the devil made them do it. FirsTier Bank, N.A. , 16 F.3d at 911. Besides, the reason Mr. Simper g ave for requesting that the checks be made to Greystone Marketing rath er than KCL focused on his own business interests and not the plan’s interests , suggesting the instruction may not have been coming from the plan . See id. (explaining person in control of assets only entitled to comply with direction from fiduciary if it complies with duties owed to plan). This cannot be equated to ob eying an established plan policy or procedure and it does not erase the fact that Mr. Madsen, not Mr. Simper, held the plan’s assets in his business acco unt of which he was the only signatory. Flexible Benefits’ involvement with plan loans is m ore complicated. Whereas this activity is more akin to controlling t he disposition of assets than simply preparing financial documents, the current r ecord fails to establish the accountant defendants did much more than draft loan agreements and create a paper trail. Therefore, because we conclude the ac countant defendants were fiduciaries by virtue of the parties’ banking arran gement, we need not decide whether these activities result in fiduciary status

. Thus, we reverse the district court regarding its d ismissal of the plan’s ERISA claim against the accountant defendants and a ffirm as to the state-law- 17 -

claims. B.) KCL & Sunset The plan argues the district court erred in (1) gra nting summary judgment in favor of KCL and Sunset on its state-law neglige nt supervision and vicarious liability claims and (2) refusing to consider its s upplemental deposition offered in opposition to summary judgment. The plan asserted these state-law claims against KCL and Sunset based on their alleged agenc y relationship with Mr. Simper, and the defendants moved for summary judgme nt arguing the claims were preempted by ERISA. Upon consideration of the moti on, the district court issued a two-page decision agreeing that ERISA preempted the state-law claims as the plan was “attempting to hold [KCL and Sunset] liabl e for Mr. Simper’s conduct under state law.” As we have previously noted, “‘any court forced to enter the ERISA preemption thicket sets out on a treacherous path,’ ” Kidneigh v. UNUM Life Ins. Co. of Am. , 345 F.3d 1182, 1184 (10th Cir. 2003) (quoting Gon zales v. Prudential
Ins. Co. , 901 F.2d 446, 451-51 (5th Cir. 1990)), and this i s certainly true here. To begin with, ERISA preemption is a question of law w e review de novo. Kidneigh , 345 F.3d at 1184. There are two aspects of ERISA p reemption: (1) “conflict preemption” and (2) remedial or “complete preemptio n.” ERISA’s express conflict preemption provision state s, “[ERISA] shall- 18 -

supersede any and all State laws insofar as they may now or hereafter relate to any [ERISA] plan.” 29 U.S.C. § 1144(a) (emphasis a dded); Felix v. Lucent Techs, Inc. , 387 F.3d 1146, 1153-54 (10th Cir. 2004). In inte rpreting this language, the Supreme Court has consistently held that the Act’s preemptive scope is broad. Cal. Div. of Labor Standards Enfor cement v. Dillingham Constr., N.A., Inc. , 519 U.S. 316, 324 (1997); Ingersoll-Rand Co. v. M cClendon , 498 U.S. 133, 138 (1990). However, recognizing that “relate s to” cannot reasonably be applied to its logical conclusion, the Court has cl arified that this language must be applied with the objectives of ERISA and the effectof the state law in mind. Egelhoff v. Egelhoff ex rel. Breiner , 532 U.S. 141, 147 (2001). Congress’s primary purpose in enacting ERISA was to protect the interests of plan beneficiaries, Ingersoll-Rand Co. , 498 U.S. at 137, and, in so doing, to “‘minimize the administrative and financial burden of complying with conflicting directives among States or between States and the F ederal Government’” by creating a uniform regulatory scheme for employee b enefits plans. N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co. , 514 U.S. 645, 656 (1995) (quoting Ingersoll-Rand , 498 U.S. at 142). In light of these objectives, the Tenth Circuit has recognized four c ategories of state laws that are preempted by ERISA: (1) laws regulating the type of benefits or terms o f ERISA plans; (2)- 19 -

laws creating reporting, disclosure, funding or ves ting requirements for such plans; (3) laws providing rules for calcul ating the amount of benefits to be paid under such plans; and (4) laws and common-law rules providing remedies for misconduct growing outof the administration of such plans.
Woodworker's Supply, Inc. v. Principal Mut. Life In s. Co. , 170 F.3d 985, 990 (10th Cir. 1999). Conversely, if a state-law claim has only a “tenuous, remote, or peripheral connection” with the plan, as is true of most laws of general applicability, it is not preempted. Felix , 387 F.3d at 1154. Claims that solely impact a plan economically generally fall within th is latter category. Indeed, “[a]s long as a state law does not affect the struc ture, the administration, or the type of benefits provided by an ERISA plan, the mer e fact that the law has some economic impact on the plan does not require that t he law be invalidated.” Airparts Co. Inc., v. Custom Benefit Servs. of Aust in , 28 F.3d 1062, 1065 (10th Cir. 1994) (internal quotations and citations omitt ed). Identifying the relationship the state law seeks to address is also important in deciding whether conflict preemption applies. S ee Gen. Am. Life Ins. Co. v. Castonguay , 984 F.2d 1518, 1521 (9th Cir. 1993) (“The key to distinguishing between what ERISA preempts and what it does not li es, we believe, in recognizing that the statute comprehensively regulates certain relationships

. . . .”). Claims that do not “affect the relations amon g the principal ERISA entities, the employer, the plan, the plan fiduciaries and th e beneficiaries” are not- 20 -

preempted. Woodworker’s Supply Inc. , 170 F.3d at 990 (internal quotations and citations omitted). Necessarily, claims “affect[in g] the relations between one or more of these plan entities and an outside party si milarly escape preemption.” Id. The second aspect of ERISA preemption relates to th e Act’s remedial scheme and is termed “complete preemption.” In lin e with the purpose of creating uniform regulation, ERISA’s civil enforcem ent provision, 29 U.S.C. § 1132(a), is a comprehensive remedial scheme. Aetna Health Inc. v. Davila , 542 U.S. 200, __; 124 S. Ct. 2488, 2495 (2004). Indeed , the Supreme Court has stated: The policy choices reflected in the inclusion of ce rtain remedies and the exclusion of others under the federal scheme wo uld be completely undermined if ERISA-plan participants an d beneficiaries were free to obtain remedies under state law that C ongress rejected in ERISA. The six carefully integrated civil enforceme nt provisions found in § [1132(a)] of the statute as finally enac ted . . . provide strong evidence that Congress did not intend to authorize other remedies . . . .

Id. (internal quotations and citations omitted). As s uch, a claim that “duplicates, supplements, or supplants” the remedies provided byERISA runs afoul of Congressional intent and is preempted. Id. ; see also Kidneigh , 345 F.3d at 1185 (holding claim providing additional remedies confli cts with ERISA’s remedial scheme and is preempted). However, a claim only fa lls within ERISA’s civil enforcement scheme when it is based solely on legal duties created by ERISA or- 21 -

the plan terms, rather than some other independent source. Aetna Health Inc. , 124 S. Ct. at 2496. This is termed “complete preemptio n” because not only is the state-law claim preempted, it becomes a federal cla im and can be the basis for removal jurisdiction. Id. at 2495-96; Felix , 387 F.3d at 1155. With these principles in mind, we address each of t he plan’s claims asserted against KCL and Sunset independently. 1.) Negligent Supervision In asserting a negligent supervision claim, a plain tiff is attempting to hold one in control of another’s actions liable for the manner in which he or she exercised this control. Restatement (Second) of Ag ency§ 213 (1958). This is direct, not derivative, liability. The controlling actor is being held responsible for his or her own supervisory behavior or the lackthereof, not the acts of the person being controlled. J.H. By and Through D.H. v. W. Valley City , 840 P.2d 115, 124 (Utah 1992) (“Regardless of whether an emp loyer may be held liable under the doctrine of respondeat superior, an emplo yer may be directly liable for its acts or omissions in hiring or supervising its employees.”). As such, in asserting this claim against KCL and Su nset, the plan has implicated an independent legal duty recognized in agency and tort law that arises out of agency relationships like the one all eged between the defendants and Mr. Simper. Neither the plan nor ERISA are involve d. Certainly, the plan’s- 22 -

structure and administration are not being regulate d, nor does the claim impact relations between plan entities as KCL and Sunset a re both outside parties. Further, unlike the cases where the existence of th e plan was essential to finding liability, here any connection to the plan is fortuitous. See Ingersoll-Rand
Co. , 498 U.S. at 140 (state claim preempted because “i n order to prevail, [the] plaintiff must plead, and the court must find, thatan ERISA plan exists”); Gibson v. Prudential Ins. Co. of Am. , 915 F.2d 414, 417 (9th Cir. 1990) (state claim preempted because “[t]here would be no relationship or cause of action between the [parties] without the Plan.”). This claim coul d have been asserted just as easily if Mr. Simper, functioning as the defendants ’ agent, had given Dr. Coldesina personal investment advice and stolen his personal funds. This is true because the key to finding liability here is the ag ency relationship, not the plan. Thus, preempting this claim does not serve the purp oses of ERISA. There is no risk of inconsistent obligations as it involves an area ERISA does not contemplate, and the interests of the plan benefici aries are better served by allowing the claim to proceed, thereby increasing t he plan’s likelihood of
recovery. Likewise, this claim does not come within ERISA’s r emedial scope. The defendants have argued that, because Mr. Simper’s f iduciary breach gave rise to the plan’s loss and spurred the litigation, by simu ltaneously bringing state-law- 23 -

claims against them and ERISA claims against Mr. Si mper’s estate, the plan is trying to supplement the remedies provided by ERISA . We disagree. While ERISA does regulate and provide remedies for fiduci ary breach, the negligent supervision claim is not based on Mr. Simper’s behavior. Rather, it is a direct claim based on the defendants’ duty to adequately s upervise their agent, which aries independently from ERISA or the plan terms. The Southern District of Ohio has recently addresse d similar facts. See Nat’l Mgmt. Ass’n, Inc. v. Transamerica Fin. Res., Inc. , 197 F. Supp. 2d 1016 (S.D. Ohio 2002). There, Mr. Frank J. Skelly was aregistered representative of the defendant, a security broker-dealer, and he own ed his own business. He contracted with the plaintiff, a non-profit corporation, to place its retirement accounts with the defendant, and he accepted routin e contributions from the plaintiff for deposit into those accounts. However , after Mr. Skelly’s death it was discovered that he had embezzled a significant amou nt of the funds, depositing them into his personal or business accounts. The plaintiff asserted numerous state-law claims ag ainst the defendantbroker, including negligent supervision, but the de fendant moved to have the claims removed to federal court arguing ERISA appli ed. In considering the motion, the court found that because the defendant broker-dealer was not a plan fiduciary, even though its agent, Mr. Skelly, likel y was, ERISA did not apply- 24 -

to–and therefore did not preempt–the state-law clai ms. Practically, the claims had nothing to do with the areas ERISA meant to regulat e because the only wrongful conduct alleged was the defendant’s supervision of Mr. Skelly. 197 F. Supp. 2d
at 1025. Though the present case was presented in a differen t posture, the same reasoning applies. Without more involvement with t he plan and its activities, KCL’s and Sunset’s actions are the subject of state agency and tort law, not ERISA. Indeed, other than being part of the factua l backdrop of this case, the plan’s existence is irrelevant here. 2.) Vicarious Liability Vicarious liability is “[t]he imposition of liabili ty on one person for the actionable conduct of another, based solely on the relationship between the two persons.” Black’s Law Dictionary1566 (6th ed. 1990). Thus, by definition this is a derivative claim. For purposes of preemption, the fate of a derivative claim depends on the nature of the corresponding direct c laim. See Kidneigh , 345 F.3d at 1189 (derivative state-law consortium claim base d on direct ERISA claim preempted); Jass v. Prudential Health Care Plan, In c. , 88 F.3d 1482, 1490-91 (7th Cir. 1996) (vicarious liability claim preempted bec ause direct claim dealing with denial of benefits based on ERISA). So, for exampl e, when the direct claim is based on ERISA, as in Kidneighand Jass , any finding of derivative liability is- 25 -

also dependent on the substance of ERISA, and underthese circumstances, the state-law claim clearly “relates to” the plan trigg ering conflict preemption. However, derivative claims can also serve to provid e additional remedies than those recognized by ERISA, thus falling within the scope of complete preemption. Here, both ERISA preemption doctrines are implicate d. The direct action supporting vicarious liability is an ERISA claim fo r breach of fiduciary duty asserted against Mr. Simper’s estate. Obviously th is claim regulates the relationship between plan entities, which means the derivative claim also depends on the regulation of a plan entity relationship, th us triggering ERISA conflict preemption. Regulation of fiduciary duties is also one of the primary subjects of ERISA’s civil enforcement scheme, which triggers co mplete preemption. As previously noted, a claim that is completely preemp ted becomes a federal claim, but here that is not possible. The only remedies E RISA provides for breach of fiduciary duty are to hold the fiduciarypersonally liable, or to seek other appropriate equitable relief. 29 U.S.C. §§ 1109(a) , 1132(a)(3). By claiming that KCL and Sunset are vicariously liable for Mr. Simpe r’s actions, the plan is attempting to hold non-fiduciaries personally liable. Thus, the claim is preempted and it cannot be recast because there is no compara ble federal claim. The plan argues this is not an appropriate result b ecause it is left without a remedy. First, given our analysis of the plan’s ne gligent supervision claim, this is- 26 -

not entirely true. But more important, the availab ility of a remedy under ERISA is not relevant to the preemption analysis. Cannon v. Group Health Serv. of Okla., Inc. , 77 F.3d 1270, 1274 (10th Cir. 1996). As the Supr eme Court recently reiterated, ERISA’s remedial scheme evidences Congr ess’s policy choices and intent to provide only the remedies it specified, A ETNA Health Inc. , 124 S. Ct. at 2495, and this court is not in a position to second -guess Congress simply because the facts of a particular case might be sympathetic

. 3.) Supplemental Deposition The plan’s final argument is that the district court erred in refusing to consider a supplemental deposition it offered in op position to summary judgment. However, given our disposition of the merits of the district court’s ruling, it is unnecessary to address this issue.
Conclusion Regarding the district court’s grant of summary jud gment in favor of defendants Ted Madsen and Flexible Benefits, we AFF IRM in part, REVERSE in part, and REMAND for further proceedings in light o f this opinion. Likewise, regarding the district court’s grant of summary jud gment in favor of defendants KCL and Sunset, we AFFIRM in part, REVERSE in part, and REMAND for further proceedings in light of this opinion.