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June 9, 2007

Two New Cases of First Impression

The Middle District of North Carolina in Tatum v. R.J. Reynolds Tobacco Co., 2007 WL 1612580 (M.D.N.C. May 31, 2007) (the opinion wasn't yet posted when I check this morning) addressed Section 409(a) of ERISA, 29 U.S.C. 1109(a), which imposes liability on "any person who is a fiduciary with respect to" an ERISA plan who breaches a duty. The plaintiff named a Committee as a defendant, and the question for the court was whether "person" included committees. Ultimately, the court, ostensibly applying a plain language approach, and granted the defendant committees' Rule 12(c) (or 12(b)(6), depending on how you look at what the court did procedurally) motion. In part it reasoned:

The language of Section 3(9) clearly and unambiguously sets out eleven categories of “persons” subject to personal liability in a breach of fiduciary duty action under ERISA. Given the comprehensive nature of ERISA, the omission of “committee” from that definition cannot be considered simply a drafting oversight. Committees are, therefore, not properly subject to ERISA breach of fiduciary duty claims. Cf. Boucher v. Williams, 13 F.Supp.2d 84, 93 (D.Me.1998) (holding that a plan “is not a ‘person’ as that term is defined by ERISA and is therefore not subject to claims of breach of fiduciary duty.”); Swanson v. U.A. Local 13 Pension Plan, 779 F.Supp. 690, 702 (W.D.N.Y.1991) (holding “that a pension plan is not a proper defendant” because it is not included in the statutory definition of “person”); Adams v. Koppers Co., 684 F.Supp. 399 (W.D.Pa.1988) (holding that a plan is an improper defendant because “[t]he language of the statute lists a large variety of defendants and does not list plans”).

This interpretation is consistent with the legal status of committees, which “[are] not, by [themselves], legal entit[ies] having the capacity to sue or be sued.” In re RCN Litig., No. 04-5068(SPC), 2006 WL 753149, at *5 (D.N.J. Mar. 21, 2006); cf. Doe v. Bayer Corp., 344 F.Supp.2d 466, 468-69 (M.D.N.C.2004) (“North Carolina does not confer capacity to sue or be sued on unincorporated parts of corporations”) (citing Nelson v. Atl. Coast Line R.R. Co. Relief Dep't, 147 N.C. 103, 60 S.E. 724 (1908)). Accordingly, Defendants' Motion to Dismiss the ERISA breach of fiduciary duty claim against the Committee Defendants is GRANTED.

It's interesting. I haven't done ERISA litigation in a while, but the holding seems at least on the surface to fly against the broad remedial purposes of ERISA. I'd have to think on that one some more.

In another completely unrelated case (nod to Monty Python), The Supreme Judicial Court of Maine in Smith v. Hawthorne, 2007 WL 1630734 (Me. June 7, 2007), issued a splintered decision interpreting the state's tort "reform" statute concerning prelitigation screening of medical malpractice cases. The statute requires a screening panel to rule on negligence and causation. What happens if the panel splits? In this case, the panel unanimously found negligence, and plaintiff's counsel got the findings admitted (in the THIRD trial of the matter) over the defendant's objection. You need to read the case to understand the additional costs, burdens and, some would say violation of constitutional rights, that this statute has created. Bleak House was nothing.

June 9, 2007 in Current Affairs | Permalink


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The Tatum ruling doesn't merely fly against ERISA's broad remedial purposes; it flies against common sense. Committees are frequently named in pension plans as fiduciaries--they were here, for instance--and it takes no leap of logic to recognize that committees are comprised of, not elephants or gingerbread men or lampposts, but "persons." This is an absurd opinion.

Posted by: Dean C. Rowan | Jun 12, 2007 9:57:20 AM

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