Abstract
In 1974, Congress enacted the Employee Retirement Income Security Act (ERISA) to provide oversight to voluntary employee benefit plans in the private sector. The statute, which draws from a deep well of common law history, places robust requirements on fiduciaries who safeguard such plans. Shortly after ERISA’s enactment, courts were forced to interpret the broad fiduciary duties set forth in 29 U.S. § 1104, which simply mandates that fiduciaries must discharge duties solely in the interest of the participants and beneficiaries. Considering this broad language, courts set out to define specific standards to which fiduciaries should be held, particularly surrounding miscommunications.
Circuits split on the issue. Some circuits decided that fiduciary misrepresentation liability demands a tort-like standard akin to fraud with a showing of intentional deceit, while other circuits, citing to the statute’s roots in the common law of trusts, determined that intent was inconsequential for misrepresentations. Complicating the matter, the Supreme Court has declined to rule on unintentional miscommunications, allowing the split to widen. The resulting inconsistency is staggering, with some circuits allowing recipients to recover for accidental miscommunications and others barring recovery for flagrantly negligent misinformation.
This Comment offers a critical analysis of both the tort and trust approach to ERISA fiduciary liability and recommends a variation on the trust approach to resolve the discrepancy. This Comment analyzes why courts, high and low, have been hesitant to follow the law of trusts standard uniformly and acknowledges that the trust standard may expose employers to heightened liability. At the same time, this Comment emphasizes how the alternative tort standard often bars employees from the very plan protection that ERISA seeks to cement. To analyze both approaches diligently, this Comment traces ERISA’s common law of trusts roots, initial circuit splits, and Supreme Court cases that failed to instruct firmly on how to approach unintentional misrepresentations. This Comment also discusses more recent circuit splits, tracing how judicial benefit enforcement grows inconsistent as the split widens. Finally, to encourage a compromise between the two approaches, this Comment urges Congress to cast aside the issue of intentionality altogether and focus on the miscommunication’s materiality.
Recommended Citation
Kristen Hobbs,
The Communication Conundrum: Weighing the Need to Prove Intent in ERISA Misrepresentation Claims,
73
Emory L. J.
1545
(2024).
Available at:
https://scholarlycommons.law.emory.edu/elj/vol73/iss6/5