• Retirement Plan Participant ERISA Claims against Law Firm and Actuarial Firm Dismissed
  • September 17, 2009 | Authors: Eric Leppo; Paul N. Farquharson
  • Law Firm: Semmes, Bowen & Semmes, A Professional Corporation - Baltimore Office
  • 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.