A California federal district court dismissed a plan fiduciary's equitable indemnity claim because such claims are not available to a breaching fiduciary under ERISA. Plaintiff William Brown commenced a putative class action for long-term disability benefits. He alleged that the plan administrator breached its fiduciary duties by failing to inform him that, when his union switch LTD coverage to another provider, he needed to continue paying premiums (which had previously been deducted from his paycheck) in order to remain eligible for disability benefits.
The plan administrator, in turn, filed a third-party complaint against the participant's union, seeking an order that, in the event it was held liable to the class, it should be indemnified by the union since the union allegedly prevented the plan administrator from successfully providing the participant correct information. The plan administrator argued that it tried to inform Brown of the risk of losing his benefits if he did not enroll in the individual plan, but the union prevented it from giving correct information. In dismissing the third-party complaint, the court first held that the union was not a fiduciary by virtue of having made representations to participants that they would keep their LTD benefits. Second, the court held that even if the union was a fiduciary, ERISA does not provide breaching fiduciaries the right to seek relief from other fiduciaries. The case is Brown v. Cal. Law Enforcement Ass'n, No. 3:14-cv-03559-JCS (N.D. Cal., March 2, 2015).
Breaching Fiduciary Cannot Seek Equitable Indemnity From Another Fiduciary
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