Opinion ID: 5795
Heading Depth: 2
Heading Rank: 1

Heading: Subsection (i)—Authority or Control

Text: The parties agree that trustee Eastland made the final decision to purchase the insurance policies on Schloegel's life. The Plaintiffs, however, contend that Boswell exercised effective control over the Profit Sharing Plan's investments by convincing it to purchase the policies. According to the Plaintiffs, trustee Eastland relied upon Boswell's expertise and long-standing relationship with the Bank when he decided to invest Schloegel's funds in life insurance. The Plaintiffs' general theory of effective control has support from ERISA's legislative history: While the ordinary functions of consultants and advisers to employee benefit plans (other than investment advisers [which are covered in subsection (ii) of the applicable statutory definition] ) may not be considered as fiduciary functions, it must be recognized that there will be situations where such consultants and advisers may because of their special expertise, in effect, be exercising discretionary authority or control with respect to the management or administration of such plan or some authority or control regarding its assets. In such cases, they are to be regarded as having assumed fiduciary obligations within the meaning of the applicable definition. H.R.Conf.Rep. No. 1280, 93d Cong., 2d Sess. 323, reprinted in 1974 U.S.Code Cong. & Admin.News 5038, 5103. The Seventh Circuit, in Pappas v. Buck Consultants, Inc., 923 F.2d 531 (7th Cir.1991), recognized that this legislative history seems to ... contemplate[ ] a ... fact-intensive inquiry that looks to whether the professional transcended her ordinary functions.'  Id. at 537; see also Mertens v. Hewitt Assoc., --- U.S. ----, ----, --- S.Ct. ----, ----, --- L.Ed.2d ---- 61 U.S.L.W. 4510, 4514 (1993) (noting that [p]rofessional service providers such as actuaries become liable for damages when they cross the line from advisor to fiduciary.); 29 C.F.R. § 2509.75-5. Mere influence over the trustee's investment decisions, however, is not effective control over plan assets. See American Federation of Unions Local 102 Health & Welfare Fund v. Equitable Life Assurance Soc'y, 841 F.2d 658, 664 (5th Cir.1988) (Simply urging the purchase of its products does not make an insurance company an ERISA fiduciary with respect to those products.); Pappas, 923 F.2d at 535 (discretionary authority and discretionary control refer to actual decision-making power, not the influence a professional may have over the decisions made by the plan trustees). To satisfy the authority or control element under subsection (i), the Plaintiffs must demonstrate that Boswell caused trustee Eastland to relinquish his independent discretion in investing the plan's funds and follow the course prescribed by Boswell. See Sommers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan Enter., Inc., 793 F.2d 1456, 1460 (5th Cir.1986), cert. denied, 479 U.S. 1034, 107 S.Ct. 884, 93 L.Ed.2d 837 (1987). We rely on the following undisputed facts to conclude that Boswell did not have the degree of control necessary to satisfy the subsection (i) definition of fiduciary. First, trustee Eastl and testified that he has the duty to invest the plan's funds and that he made the ultimate decision to purchase the life insurance policies on Schloegel's life. Second, Eastland wrote to consultant Robert Dowd in 1980 to solicit his advice on whether to use profit-sharing funds to purchase life insurance. This indicates that Boswell was not usurping Eastland's investment power. Third, Boswell presented his life insurance proposal to six or seven members of the Bank's management committee, but Boswell only persuaded two of the members to accept his recommendation. These facts convince us that, as a matter of law, Boswell did not have the authority or control contemplated under subsection (i). Compare Donovan v. Mercer, 747 F.2d 304, 309 (5th Cir.1984) ([A] person who is repeatedly referred to as a t rustee of an employee benefit plan, and who signs documents and takes actions regarding the Plan in an official capacity, is, as a matter of law, a fiduciary....) with American Federation of Unions, 841 F.2d at 664 (merely proposing investments does not make an insurance company an ERISA fiduciary). Boswell made an investment proposal, not an investment decision.