Court Opinion

ID: 8996606
Source: CourtListenerOpinion
Date Created: 2022-11-27 12:41:12.2165+00
Date Added: 2024-06-11T17:11:03.992472
License: Public Domain

SEITZ, Circuit Judge
(concurring).
I join the court’s affirmance of the District Court’s Order granting summary judgment to the defendant, Self-Funded Plans, Inc. because I agree that this defendant did not have discretion to deny or allow Confer’s claim for ERISA benefits. Therefore, Self-Funded was not a “fiduciary” as that term is defined in section 3(21)(a)(iii) of the Employment Retirement and Income Security Act (ERISA), 29 U.S.C. § 1002(21)(A).
The majority also affirms the District Court’s dismissal of plaintiffs’ claims against the officers of the Custom Engineering Company (“Custom”), Theodore Flower and Peter Traphagen. Their opinion concludes that these corporate officers were not “fiduciaries” as that term is defined in ERISA § 3(21)(A).
I write separately to emphasize that a corporate officer may assume a fiduciary status, even absent a designation as the named fiduciary or trustee of the plan, by performing functions that fulfill the statutory definition of a “fiduciary.” See ERISA § 3(21)(A)(iii), 29 U.S.C. 1002(3)(21)(iii).
The statute provides that,
“[A] person is a fiduciary with respect to a plan to the extent ... (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan.”
When the corporation itself is the trustee of the plan, and an officer of the corporation denies an ERISA benefit without acting as a designated plan administrator, while acting on behalf of the employer, the statute does not clearly define the officer’s status. Indeed, after the passage of the statute in 1974, “[o]ne question that [was] not resolved by ERISA is whether officers or directors of a corporation that is itself a fiduciary can be classified as fiduciaries on an individual basis.” Thrailkill, Fiduciaries Under ERISA: A Narrow Path to Tread, 30 Vand.L.Rev. 1, 7 (1977).
The case law and agency regulations interpreting ERISA have clarified this ambiguity. Congress intended the term “fiduciary” to be construed to include “persons who have authority and responsibility with respect to the matter in question, regardless of their formal title.” Blatt v. Marshall and Lassman, 812 F.2d 810, 812 (2d Cir.1987), citing H.R.Rep. No. 1280, 93d Cong., 2d Sess., reprinted in U.S.Code *40Cong. & Ad.News 1974, 4639, 5038, 5103. The Department of Labor regulations reflect the functional approach that Congress took to defining who is a fiduciary under ERISA. According to an interpretive bulletin issued by the Department of Labor, corporate officers assume a fiduciary status if they “exercise authority, responsibility or control as described in section 1002(3)(21) of the Act.” ERISA Interpretive Bulletin 75-8 at D-3, 29 C.F.R. § 2509.75-8 at D-3 (1991).
Under both the legislative history and agency interpretation of ERISA § 3(21)(A), it is clear that a corporate officer who is not designated as a named fiduciary under the plan may nevertheless assume a fiduciary status by performing, for example, the function of plan administrator. Id. (officers, directors or employees who act as plan administrator “must, by the very nature of the position” be considered section 3(21)(A)(iii) fiduciaries).
Moreover, corporate officers can become fiduciaries under ERISA whether or not they are designated as trustees of the ERISA plan. Donovan v. Mercer, 747 F.2d 304, 309 (5th Cir.1984) (“while the designation of a person as a trustee is not disposi-tive, it is certainly not irrelevant”). Accord Pension Benefit Guarantee Corporation v. Solmsen, 671 F.Supp. 938, 944 (E.D.N.Y.1987). An officer can assume a fiduciary status even if the plan documents fail to state that the corporate officer is a named fiduciary. The Department of Labor regulations provide that the officer will be deemed a “fiduciary” according to the function he performs. See Preamble to ERISA Regs. § 2560.503-1 (Claims Procedure) (officer who reviews appeal of denied claim will be assumed to perform fiduciary role even in the absence of specific designation as such.)
A plaintiff may establish that a corporate officer has assumed a fiduciary status by specifically alleging what functions enumerated in the statute were performed by that officer to make him a fiduciary. Blatt, supra. In Dardaganis v. Grace Capital, Inc., 889 F.2d 1237, 1242-43 (2d Cir.1989), for example, the president and chief executive officer of the corporation was deemed to be a fiduciary, and thus personally liable for breaches of fiduciary duty, only after it was shown that he personally exercised control and/or discretion over ERISA plan assets. See also, Brink v. DaLesio, 496 F.Supp. 1350, 1374 (D.M.D.1980), rev’d in part, aff'd in relevant part, 667 F.2d 420 (4th Cir.1981) (insurance broker was fiduciary for purposes of ERISA based on his “sole responsibility” for rendering investment advice) and Miller v. Lay Trucking Co., Inc., 606 F.Supp. 1326 (N.D.Ind.1985) (holding that one who is named in documents as plan administrator, signs documents as plan administrator, and assumes discretionary authority in the administration of the pension plan is a fiduciary).
The officers argue that they are not fiduciaries within the meaning of the Act, and, as such, they were not bound by the fiduciary standards of ERISA § 404, 29 U.S.C. 1104, in recommending, designing and implementing an amendment to the Custom welfare plan. The majority opinion adopts their argument and holds that “section 3(21)(A) does not extend fiduciary status of a corporation to its officers ... [w]here no designation [of the officer as a fiduciary or trustee of the plan] is made or im-plied_” Op. at 36 (Mansmann, J.) (emphasis added.)
I join the result reached by the majority but do so solely because the plaintiffs’ complaint and answer to defendants’ motion for summary judgment contain absolutely no allegations or facts that would support a finding that these officers assumed a fiduciary status. Indeed, the plaintiffs’ allegations “fail to distinguish between defendants’ duties as corporate officers and those as Plan trustees.” Amato v. Western Union International, Inc., 773 F.2d 1402, 1417 (2d Cir.1985), cert. dismissed, 474 U.S. 1113, 106 S.Ct. 1167, 89 L.Ed.2d 288 (1986). Finally, the fact that Custom admittedly delegated the authority over plan administration to Self-Funded Plans, Inc. contradicts plaintiffs’ mere assertion that these officers performed fiduciary roles.
Since Congress took a functional approach in defining who is a fiduciary, the function that the officer is alleged to have performed in becoming an alleged fiduciary *41must be carefully scrutinized. By failing to allege facts or make specific allegations showing the actual fiduciary authority that these officers possessed or exercised, Landry v. Airline Pilots Ass’n International AFL-CIO, 901 F.2d 404, 418 (5th Cir.), cert. denied — U.S. -, 111 S.Ct. 244, 112 L.Ed.2d 203 (1990), the plaintiffs have failed to carry their burden of coming forward with specific facts to indicate that these officers assumed the status of ERISA fiduciaries. Celotex Corporation v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). See 29 C.F.R. § 2509.75-8 at D-2. Accordingly, I agree that the district court did not err in holding that Flower and Traphagen cannot be held personally liable as fiduciaries under ERISA § 3(21)(iii).