ERISA-Eighth Circuit Holds That Case, Involving Plaintiff’s Claim Of Breach Of ERISA Fiduciary Duty, Must Be Remanded To Determine Whether Parties Waived The Use Of Collateral Estoppel To Block Plaintiff’s Claim

In Blue Cross Blue Shield of Minnesota v. Wells Fargo Bank, N.A., No. 14-3457 (8th Cir. 2016), the plaintiffs (“Plaintiffs”) are administrators of employee benefit plans governed by ERISA, who entered into securities lending agreements with Wells Fargo Bank (“Wells Fargo”). Plaintiffs alleged that they suffered substantial losses as a result of Wells Fargo’s improper and imprudent investment of their funds and asserted breach of fiduciary duty claims under ERISA. Plaintiffs are seeking to reverse the district court’s judgment that it was bound by collateral estoppel and thus required to find against Plaintiffs and in favor of Wells Fargo on their ERISA claims.

Following the trial, the parties simultaneously submitted Proposed Findings of Fact and Conclusions of Law with respect to the ERISA claims. In its submission, WellsFargo asserted that collateral estoppel should apply and that based on the jury verdict, the court was bound to find that there was no breach of fiduciary duty. The district court determined that it was constrained by collateral estoppel to render judgment on Plaintiffs’ claims consistent with the jury’s determination and issued judgment, dismissing Plaintiffs’ ERISA claims with prejudice. Plaintiffs appeal, arguing that the district court erred in failing to find that Wells Fargo waived any right to assert that the district court was bound by the jury’s findings.

Upon reviewing the case, the Eighth Circuit Court of Appeals (the “Court”) held that, the district court failed to consider whether the parties waived the application of collateral estoppel. As such, the case must be vacated and remanded to the district court to determine whether the waiver occurred.

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