Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.
Circuit Split over ERISA Standing Remains, Despite Clear Statutory Provisions
The Employee Retirement Income Security Act of 1974 (ERISA) is a comprehensive remedial statute designed to provide uniform laws and a federal forum for claims concerning employee benefit plans, to protect the interests of participants and beneficiaries, and to assure prudent financing of these plans. This federal statute grants participants, beneficiaries, and fiduciaries express standing to sue in federal court to enforce provisions of ERISA.
There is currently a circuit split among the federal courts regarding whether employee benefit plans themselves have standing to sue under ERISA. The Second and Ninth Circuits have ruled that plans do not have standing because they are not participants, beneficiaries, or fiduciaries. The Sixth and Seventh Circuits have granted plans standing, finding jurisdiction in ERISA’s provision that employee benefit plans may “sue or be sued” and in the strict substantive requirement that employers abide by the commitments they make to contribute to multi-employer benefit plans. The Sixth and Seventh Circuits have also held that benefit plans can fit into ERISA’s definition of a fiduciary, and therefore have standing to sue under the statute’s specific standing provision.
In November 2008, a district court in the Seventh Circuit decided Line Construction Benefit Fund v. Allied Electrical Contractors, Inc., deepening the circuit split over whether or not employee benefit plans have standing under ERISA. A multi-employer benefit fund brought suit against an employer for delinquent contributions, and the court, after surveying the circuit split, simply followed Seventh Circuit precedent and granted the plan standing.
The decision in Line Construction Benefit Fund constitutes judicial interference into an area of law that has been comprehensively legislated by Congress. As a matter of statutory construction, employee benefit plans do not have standing to bring suit under ERISA in federal court. Moreover, there are practical reasons that Congress limited standing to participants, beneficiaries, and fiduciaries.
Part I of this Note will discuss the facts of Line Construction Benefit Fund and explain the court’s succinct opinion, which lacked any sort of statutory analysis. In Part II, the Note will explore the history and current state of the circuit split, discussing decisions of the Second and Ninth Circuits, which hold that plans do not have standing, and decisions of the Sixth and Seventh Circuits, which hold that plans do have standing. Part III.A. of the Note will first engage in a close statutory analysis of ERISA provisions that have been held to grant plans standing, an analysis that was absent in Line Construction Benefit Fund, and prove that there is no statutory authority for plans to bring suit under ERISA in federal courts. Part III.B. will discuss Supreme Court precedent that has provided guidance for interpreting ERISA’s standing provisions. Finally, Part III.C. will analyze the practical reasons that plans should not have standing under the statute. In Part IV, this Note will recommend that the Supreme Court resolve the circuit split by penning an opinion that will instruct the circuits on the appropriate application of the ERISA standing provisions.