Assessing the Viability and Virtues of Respondeat Superior for Nonfiduciary Responsibility in ERISA Actions

Congress enacted the Employee Retirement Income Security Act of 1974 (ERISA) in order to “safeguard the pension expectations of American workers” and to “aid many millions of employees by making more adequate provision for their retirement needs.” For each employee benefit plan, the Act requires the designation of a fiduciary whose care must comport with minimum standards in the plan’s administration. In short, the Act holds fiduciaries to the objective standard of a “prudent man,” below which their performance constitutes a breach of fiduciary duty. ERISA authorizes a private right of action against the fiduciary, who is personally liable for the resulting losses. 

ERISA’s “governing federal policy” is to make fiduciaries responsible for their breaches. Considering the potential magnitude of such claims, the ability of a fiduciary to compensate fully beneficiaries of the mismanaged plan is far from assured. For example, in one prominent breach of fiduciary duty claim, plaintiffs sought over $500,000, calculated from losses to their retirement and health plans. The responsible fiduciary may thus be judgment proof. If so, does the Act limit the plaintiff to the damages available from the fiduciary, or may she expand the reach of her claim to related nonfiduciaries?

This Comment analyzes the availability of the common law doctrine of respondeat superior to expand breach of duty claims beyond the fiduciary to reach affiliated nonfiduciaries. The Supreme Court, referring to ERISA as a “comprehensive statute,” has suggested that the Act—by explicitly providing for action against fiduciaries—precludes courts from inferring federal common law theories of liability, which would otherwise permit actions against nonfiduciaries for breach of fiduciary duty. The Court has not, however, addressed the availability of respondeat superior specifically, and lower courts disagree over the extent to which ERISA bars application of federal common law.