In Clark v. Feder Semo and Bard, P.C., No. 12-7092 (DC Cir. 2014), the law firm of Feder Semo had closed its doors and terminated its retirement plan (the “Plan”). Plaintiff Denise Clark (“Clark”) was an attorney at the law firm for almost a decade and participated in the Plan. Unfortunately, when the Plan was terminated, there were not enough assets to satisfy all of its obligations. Dissatisfied with the amount of money that came her way, Clark sued, alleging that decisions made by Joseph Semo and Howard Bard (the law firm’s directors who administered the Plan) breached their fiduciary duties under ERISA. The district court rejected all of Clark’s claims, and The DC Circuit Court of Appeals (the “Court”) affirmed.
In affirming the district court’s decision, the Court pointed out that the defendants-Plan fiduciaries- had relied on the advice of counsel when determining the amount payable to Clark from the Plan. In ERISA, Congress provided that a fiduciary must act “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use.” 29 U.S.C. § 1104(a)(1)(B). Doing so, ERISA adopted much of what the common law had, over time, come to require of fiduciaries. However, the courts must be on the lookout for instances in which ERISA departs from the common law, sometimes requiring more, other times requiring less, of fiduciaries. As such, a fiduciary may rely on the advice of counsel when reasonably justified under the circumstances. Here, the district court found that the fiduciaries rightly relied on counsel’s advice, so no breach of ERISA fiduciary duties obtained.