Featured Chrome Extensions:

Casey IRACs are produced by an AI that analyzes the opinion’s content to construct its analysis. While we strive for accuracy, the output may not be flawless. For a complete and precise understanding, please refer to the linked opinions above.

Keywords

defendantliabilityappealtrialfiduciarytrustfiduciary dutybreach of fiduciary dutycommon lawjury instructions
trialfiduciaryfiduciary dutybreach of fiduciary duty

Related Cases

In re Paris Air Crash of March 3, 1974, 69 F.R.D. 310
View Case »
Shapiro & Son Curtain Corp. v. Glass, 348 F.2d 460
View Case »
Kerobo v. Southwestern Clean Fuels, Corp., 285 F.3d 531, 2002 Fed.App. 0116P
View Case »
Toledo Soc. for Crippled Children v. Hickok, 152 Tex. 578, 261 S.W.2d 692, 43 A.L.R.2d 553
View Case »
City of Ladue v. Gilleo, 512 U.S. 43, 114 S.Ct. 2038, 129 L.Ed.2d 36, 62 USLW 4477
View Case »
Justia Law Link
LexisNexis Link
Westlaw Link
CourtListener Link
Oyez Link

Sommers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan, 883 F.2d 345, 11 Employee Benefits Cas. 1673

Facts

Sommers Drug Store Company began negotiations to sell its drug store assets to Malone & Hyde, Inc. Shareholders approved a reverse stock split, after which Walter N. Corrigan held approximately 52% of the shares and the Employee Profit Sharing Trust held about 20%. Following the sale, Corrigan and Corrigan Enterprises offered to buy stock from other shareholders at a price below fair market value. The Trust was liquidated, and in October 1980, the class sued Corrigan and Corrigan Enterprises for breach of fiduciary duty under ERISA and state common law.

Sommers Drug Store Company began negotiations to sell its drug store assets to Malone & Hyde, Inc. As part of this effort to sell, the shareholders approved a reverse stock split recommended by the board.

Issue

Did the class representatives have standing to sue under ERISA, and were the jury instructions on fiduciary liability under ERISA appropriate?

The class argues that the trial court failed to instruct the jury properly on its ERISA claim and erroneously dismissed its state law claim.

Rule

Under ERISA, a 'participant' is defined as any employee or former employee who is or may become eligible to receive a benefit from an employee benefit plan. The court must determine whether the defendants exercised discretionary authority or control over the plan's management.

The class brought this ERISA action pursuant to 29 U.S.C. § 1132(a)(2). That provision authorizes either the Secretary of Labor or a 'participant,' 'beneficiary' or 'fiduciary' to bring a civil action for breach of fiduciary duty as proscribed by § 1109(a).

Analysis

The court found that the class representatives had colorable claims for vested benefits, qualifying them as 'participants' under ERISA. The court also determined that the jury instructions regarding fiduciary liability were adequate and that the trial court properly dismissed the state law claim based on Maryland law, which does not recognize a fiduciary relationship between controlling shareholders and minority shareholders.

We are persuaded that the class representatives have colorable claims for vested benefits and therefore qualify as 'participants' authorized to bring suit under ERISA.

Conclusion

The Court of Appeals affirmed the trial court's dismissal of the state law claim and upheld the jury's finding that the defendants were not fiduciaries under ERISA.

We therefore conclude that the class's present claim is for 'vested benefits' and that its representatives qualify as 'participants' authorized to bring suit under ERISA.

Who won?

Corrigan Enterprises, Inc. and Walter N. Corrigan prevailed because the court found that the class representatives had standing to sue under ERISA but that the jury instructions were appropriate and the state law claim was properly dismissed.

We therefore conclude that the class's present claim is for 'vested benefits' and that its representatives qualify as 'participants' authorized to bring suit under ERISA.

You must be