Second Circuit Says That Under ERISA, No Fiduciary Duty Extends To Unintentional Misstatements Regarding Non-ERISA Plan

Blogs, Erisa

The Second Circuit Court of Appeals, in a 2-1 decision, last week issued an opinion in Bell v. Pfizer, Inc., — F.3d —- (2nd Cir. 2010), holding that ERISA fiduciary duties did not extend to unintentional misstatements concerning non-ERISA plan consequences of a decision to retire.

While the case was unique in some ways, the court concluded that employers assume fiduciary status only when and to the extent that they function in their capacity as plan administrators, and not when they conduct business that is not regulated by ERISA.

Thus, misstatements by an ERISA plan as to the statuts of an employee’s stock options, involving employment benefits not governed by ERISA and mistakenly designating the employee as “retirement eligible,” did not constitute breach of a fiduciary duty imposed on an ERISA fiduciary, since the ERISA duty did not extend to unintentional misstatements about non-ERISA consequences of the employee’s retirement decision.

Judge Ralph K. Winter wrote the majority opinion. Judge Brian M. Cogan, sitting by designation, dissented, saying that the company “was acting in a fiduciary capacity” when it made “multiple misrepresentations and omissions to repeated inquiries by one of the plans beneficiaries regarding its ERISA regulated retirement plan.”

Notably, while the plaintiff originally brought “a host of state and federal claims,” she eventually dropped all except the ERISA claim.