:: Court Holds ERISA Does Not Permit Suit For Contribution
In Toledo Blade Newspaper Unions-Blade Pension Plan v. Toledo Blade Newspaper Unions-Blade Pension Plan v. Investment Performance Services, LLC 2006 WL 2662706 (N.D.Ohio) (September 18, 2006), Plaintiffs sued Defendants for relief pursuant to § 409 of ERISA (29 U.S.C. § 1109), claiming Defendants breached the fiduciary duties in violation of § 404 of ERISA (29 U.S.C. § 1104) through improper investment strategies. Defendants asserted a counterclaim against the Trustees seeking contribution from Plaintiff Trustees as co-fiduciaries. Plaintiffs filed motions to dismiss the counterclaim.
The Court observed that a split of authority existed on the issue of whether ERISA permits a remedy of contribution. The Court stated:
The Second and Seventh Circuits, as well as numerous district courts, have held that the remedy of contribution exists under ERISA. Chemung Canal Trust Co. v. Sovran Bank/Maryland, 939 F.2d 12 (2d Cir.1991); Alton Memorial Hospital v. Metropolitan Life Ins. Co., 656 F.2d 245 (7th Cir.1981); Site-Blauvelt Engrs. Inc. v. First Union Corp., 153 F.Supp.2d 707 (E.D.Pa.2001); Cooper v. Kossan, 993 F.Supp. 375 (E.D.Va.1998); Green v. William Mason & Co., 976 F.Supp. 298 (D.N.J.1997); Duncan v. Santaniello, 900 F.Supp. 547 (D.Mass.1995); Maher v. Strachan Shipping Co., 817 F.Supp. 43 (E.D.La.1993); Jones v. Trevor, Stewart, Burton and Jacobsen, Inc., 1992 U.S. Dist. LEXIS 14441, 1992 WL 252137 (N.D.Ga.1992).
Collecting cases asserting the opposing view that ERISA does not permit a remedy of contribution, the Court observed:
On the other hand, the Ninth Circuit and several district courts, including three Courts in this District, have held that ERISA does not provide for a right of contribution from co-fiduciaries. Kim v. Fujikawa, 871 F.2d 1427 (9th Cir.1989); Williams v. Provident, 279 F.Supp.2d 894 (N.D.Ohio 2003) (Carr, C.J.), Roberts v. Taussig, 39 F.Supp.2d 1010 (N.D.Ohio 1999) (Economus, J.), and Daniels v. National Employee Ben. Services, 877 F.Supp. 1067 (N.D.Ohio 1995) (Aldrich, J.); Center Physicians Inc. v. Painewebber Group Inc., 1996 U.S. Dist. LEXIS 22657, 1996 WL 622470, (E.D.Mo.1996); Int’l Bhd. of Painters & Allied Trades Union Pension Plan v. Duval, 1994 WL 903314 (D.D.C.1994); Aks v. Southgate Trust Co., 1992 U.S. Dist. LEXIS 20442, 1992 WL 401708 (D.Kan.1992); Schloegel v. Boswell, 766 F.Supp. 563 (S.D.Miss.1991); Physicians Healthchoice v. Trs. of the Auto. Employee Benefit Trust, 764 F.Supp. 1360 (D.Minn.1991); Hollingshead v. Burford Equipment Co., 747 F.Supp. 1421 (M.D.Ala.1990); NARDA, Inc. v. Rhode Island Hosp. Trust National Bank, 744 F.Supp. 685 (D.Md.1990); Franklin v. Aetna Life Insurance Co., 1988 U.S. Dist. LEXIS 10842 (D.S.C.1988); and North Carolina Life & Accident & Health Ins. Guar. Ass’n v. Alcatel, 876 F.Supp. 748 (N.C.1995).
The Court sided with the authorities opposing allowing a suit for contribution. In the view of the Court, the underlying purpose of ERISA, protecting the interests of participants, would not be served by allowing contribution from co-fiduciaries who are bringing a claim for breach of fiduciary duty. In the words of the Court:
Defendants are seeking to include Plaintiff Trustees as counter-defendants for the same breach of fiduciary duty claim which Plaintiffs are seeking to enforce. The interest of the participants of the plan would not be helped by allowing such a counterclaim. Therefore, to deny Defendants’ motion is to rule consistently with the underlying purpose of ERISA.
Note: The Court aptly summarized the key points of the debate over this issue. On the one hand, courts rejecting contribution reason that the expansive and detailed nature of ERISA reflects a Congressional intent that ERISA’s remedies are exclusive. On the other hand, courts allowing a claim for contribution interpret Congress’ silence on the issue of contribution as consistent with a Congressional intent that the courts fill gaps by applying priniciples of trust law. The Supreme Court’s rejection of wholesale importation of trust law remedies in Mertens v. Hewitt Assocs., 508 U.S. 248 (1993) may cast doubt on the authorities permitting incorporation of contribution claims in the ERISA remedial scheme, but the conflict in the circuits will remain until the Supreme Court makes its view explicit in a future case.
