Untrustworthy: ERISA's Eroded Fiduciary Law

Abstract

The trust law analogy has come to dominate judicial thinking about employee benefit plans. Yet despite its rise to rhetorical prominence, ERISA fiduciary law has been dramatically transformed by a series of uncoordinated low-visibility judicial decisions on multiple fronts. These apparently unconnected case law developments reveal a startling pattern of mutually reinforcing restrictions on ERISA’s protection of pension and welfare benefits. This study makes the case that both the scope and the intensity of fiduciary oversight have been radically pruned back in the courts. Notwithstanding the congressional declaration that attempts to relax workers’ federal fiduciary protections “shall be void as against public policy”, the U.S. Supreme Court has shown the way to curtail fiduciary obligations. That de facto or implicit exculpation, combined with unilateral employer control over both plan terms and plan interpretation, indicate that the federal courts have defanged — or deranged — ERISA’s fiduciary regime. In the course of chronicling ERISA’s trust law turn and exposing how untrustworthy workers’ fiduciary defenses have become, the article explains, contrasts, extends, and ultimately reconciles the two premier scholarly analyses of ERISA’s fiduciary regime: Daniel Fischel & John H. Langbein, ERISA’s Fundamental Contradiction: The Exclusive Benefit Rule, 55 U. Chi. L. Rev. 1105 (1988); and Dana Muir & Norman Stein, Two Hats, One Head, No Heart: The Anatomy of the ERISA Settlor/Fiduciary Distinction, 93 N.C. L. Rev. 459 (2015).