On March 24, 2020, the D.C. Circuit Court upheld a district court ruling that an ERISA plan participant’s broad release of claims includes breach of fiduciary duty claims against ERISA plan fiduciaries, notwithstanding the release’s carve-out for any “claims for vested benefits.”  The ruling extinguishes a participant’s class action claims under ERISA sections 502(a)(2) and (a)(3) that 403(b) plan fiduciaries breached their fiduciary duties of prudence and loyalty by paying excessive recordkeeping fees and allowing participants to invest in investment options that were more expensive and underperformed comparable options available in the market.

Two years before filing the lawsuit, plaintiff and George Washington University (GWU) agreed to resolve an unrelated suit and entered into a settlement agreement and general release wherein plaintiff agreed to release all “claims for violation of any federal statute.”  The release included a carve-out for any “claims for vested benefits under employee benefit plans.”  GWU moved to dismiss the lawsuit on the ground that the plaintiff lacked standing because she had released her claims under the terms of the settlement agreement.  The district court granted the motion and concluded that the carve-out “plainly” referred to plan-based claims for benefits typically brought pursuant to ERISA section 502(a)(1)(B) and not statutory ERISA claims for breach of fiduciary duty under ERISA sections 502(a)(2) and/or (a)(3).  In a brief per curiam order, the D.C. Circuit affirmed the district court decision ruling that plaintiff had “released her ERISA claims as part of a prior settlement.”

The case is Stanley v. George Washington University, et al., No. 19-7079 (D.C. Cir. March 24, 2020).

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Proskauer’s Perspective:  By upholding the district court ruling, the D.C. Circuit ruling provides assurances to Plan sponsors that the requirement to carve-out of general releases individual claims for vested benefits will not leave open the door to representative claims for fiduciary breach. The district court decision did not directly discuss other related questions that have been addressed by other circuit courts in similar cases, including whether an employee may lawfully release claims brought on behalf of the plan under ERISA section 502(a)(2).  But by implication, the decision may be viewed as authorizing such releases. The decision may likewise provide support to defendants seeking to enforce employee agreements containing class action waivers in favor of individual arbitration, in response to ERISA claims brought on behalf of the plan.

Photo of Tulio Chirinos Tulio Chirinos

Tulio D. Chirinos is an associate in the Labor & Employment Law Department and a member of the Employee Benefits & Executive Compensation Group and the Workplace Investigations Practice Group.

Tulio works on a wide variety of ERISA and non-ERISA plan litigation matters…

Tulio D. Chirinos is an associate in the Labor & Employment Law Department and a member of the Employee Benefits & Executive Compensation Group and the Workplace Investigations Practice Group.

Tulio works on a wide variety of ERISA and non-ERISA plan litigation matters, including fee and investment litigation cases, breach of fiduciary duty claims and benefits claims. He also represents management in workplace investigations and litigation of employment-related matters, including claims of unlawful discrimination, harassment and retaliation. Tulio focuses his pro bono efforts on immigration matters where he has represented several juveniles from Central America in their asylum petitions and special immigrant juvenile status (SIJ) petitions.

Tulio is the author of several ERISA-related articles, including several focusing on ERISA fee and investment litigation that appeared in the Benefits Law Journal (2016-2023), Bloomberg BNA, and Law360. He is a contributing author to Chapter 10 (Fiduciary Responsibility) of BNA’s Employee Benefits Law treatise. He is also the co-editor and a frequent contributor to Proskauer’s Employee Benefits & Executive Compensation Blog.

Prior to joining Proskauer, Tulio clerked for the Federal Public Defender’s office for the Middle District of Florida. Tulio is a retired Lieutenant Colonel in the Army National Guard and served three tours of duty in Iraq, Kuwait, and Jordan.