Article Summary
ENLARGING AN EMPLOYER'S FIDUCIARY HAT: VARITY CORP. V. HOWE INCREASES EMPLOYERS'; EXPOSURE TO LIABILITY WHEN THEY ACT AS ERISA FIDUCIARIES
-Shelly Ward

- Ward’s article discusses the circumstances surrounding the 1996 Supreme Court case: Variety corp. V. Howe
- The court ruled that an individual may recover damages stemming from the a breach of fiduciary duty by a plan’s administrator
- Ward explains that ERISA’s principles were based on the common law governing trusts; trust laws were also used in interpreting cases involving ERISA
- Variety V. Howe was unique because trust law was utilized to a large extent rather than ERISA itself
- Ward says ERISA was intended to be a “pension Bill of Rights” and that it required a person to act in a “fiduciary capacity” to manage the plan
- Terms are ambiguous in ERISA in regards to whom is able to be granted relief when there is a breach of the fiduciary duty. (502)
- In Mass. Mutual Life Insurance V. Russel, the Supreme Court ruled that a person cannot sue for extra-contractual damages; ERISA does not imply this right
- In Mertens V. Hewitt associates the Supreme Court ruled that an individual is not entitled to relief from a nonfiduciary who participates in a breach of a fiduciary duty
- Many circuits have adopted similar rulings in that an individual cannot be granted relief concerning a breach of the fiduciary duty states in ERISA. Some other circuits interpret the Supreme Court rulings differently. Essentially, much confusion remains.
- Finally, the Variety case provided some clarity to the issue; The Supreme Court found that the defendant deceived its employees and thus violated the fiduciary duty owed to the employees set forth in ERISA
- Justice Breyer wrote that one must look beyond trust law and actually reliy on parts of ERISA itself
- The key to the case was determining whether Variety could act as both a fiduciary and an employer; then establish that a breach of the fiduciary duty actually took place
- Breyer did not rely on prior court cases when determining if individual monetary relief would be appropriate; the words “appropriate equitable relief” in ERISA was the determining factor
- Determining what “appropriate equitable relief” constitutes is still a matter of controversy among the circuit courts
- Finally, Ward urges employers to be aware that they are both a fiduciary and employer and that they must pay close attention to their communications with employees regarding pension benefits