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Retirement Plan Participant ERISA Claims Against Law Firm And Actuarial Firm Dismissed
(August 2009) By Eric M. Leppo, Associate.
For more information, contact Paul Farquharson.
Clark v. Feder Semo & Bard, P.C., 2009 WL 2053605 (D.D.C.,
July 16, 2009)
In Clark, the plaintiff, Denise M. Clark ("Plaintiff" or
"Clark"), brought an action against her employer, Feder Semo & Bard, P.C.
("FSB"), its retirement plan and the plan's trustees, asserting ERISA violations
that allegedly led to the underfunding of the plan and present value of her
retirement benefits. After the defendants filed a counterclaim against Clark for
contribution and indemnity under ERISA and federal common law, she filed a
third-party complaint against Much Shelist Denenberg Ament & Rubenstein, P.C.
("MSDAR"), a law firm hired by FSB to provide legal services related to the
retirement plan, and Pension Advisory Fund, Ltd. ("PAF"), an actuarial
consulting firm hired by FSB to provide actuarial services related to the
retirement plan. MSDAR and PAF proceeded to file motions to dismiss the
third-party claims by Clark.
Specifically, the Plaintiff alleged that the defendants
violated ERISA by reducing or eliminating her accrued benefits under the
retirement plan, failing to disclose the retirement plan's lack of insurance,
and breaching their fiduciary duties. Although Clark later conceded that PAF was
not a fiduciary under ERISA, she contended that MSDAR knowingly participated in
fiduciary breaches such that it functioned as a co-fiduciary with respect to the
retirement plan. Clark argued that MSDAR's role in providing legal services to
the retirement plan went beyond the normal advisory role of a law firm and that
it exercised sufficient discretion with respect to the plan to become an ERISA
fiduciary.
The Court, citing 29 C.F.R. § 2509.75-5, stated that
attorneys and fiduciaries "performing their usual professional functions" will
typically not be considered fiduciaries under ERISA. According to the Department
of Labor, an attorney or other consultant to a retirement plan is a fiduciary
only if he or she "(a) exercised discretionary authority or discretionary
control respecting the management of the plan, (b) exercises authority or
control respecting management or disposition of the plan's assets, (c) renders
investment advice for a fee, direct or indirect, with respect to the assets of
the plan, or has any authority or responsibility to do so, or (d) has any
discretionary authority or discretionary responsibility in the administration of
the plan[.]" 29 C.F.R. § 2509.75-5.
The Court found that Clark's allegations that FSB simply
"followed" MSDAR's advice did not establish that MSDAR's actions with respect to
the plan rose to the level of discretionary authority. Clark's other factual
allegations similarly failed to establish that MSDAR's actions fell outside the
scope of normal legal services. Because the Court determined that neither MSDAR,
nor PAF, were fiduciaries of the retirement plan under ERISA, any claim for
recovery against them under ERISA had to be made on a nonfiduciary basis.
Under ERISA, nonfiduciaries are subject only to "appropriate
equitable relief," not money damages. The Court held that Clark's "boilerplate
request for ‘other legal and equitable relief'" did not convert what was plainly
a legal action for damages into one for equitable relief. The Court concluded
that Clark was unable to proceed against MSDAR and PAF as nonfiduciaries.
Accordingly, the Court dismissed the ERISA claims brought by Clark against MSDAR
and PAF.
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