Choppier Waters Ahead For ERISA Fiduciaries

The first substantive decision under the Employee Retirement Income Security Act has been issued in the class action suit against Enron, In re Enron Corp. Securities, Derivative and "ERISA" Litigation (Tittle v. Enron Corp.). Significantly, the court supported the creation of heightened fi...

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Bibliographic Details
Published in:Employee Benefit Plan Review 2003-12, Vol.58 (6), p.7
Main Authors: Kemper, James D, Levine, Jason E
Format: Article
Language:English
Subjects:
Bankruptcy
Class action lawsuits
Compensation
Conspiracy
Disclosure
Employee benefits
Employee stock ownership plans
Energy industry
ERISA
ESOP
Federal court decisions
Fiduciary responsibility
Investments
Political appointments
Savings plans
Scandals
State court decisions
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Summary:The first substantive decision under the Employee Retirement Income Security Act has been issued in the class action suit against Enron, In re Enron Corp. Securities, Derivative and "ERISA" Litigation (Tittle v. Enron Corp.). Significantly, the court supported the creation of heightened fiduciary standards. The Tittle court found that the plaintiffs adequately stated claims for breach of the ERISA fiduciary duties of loyalty and prudence against Enron, the board members on Enron's Compensation and Management Development Committee (Compensation Committee), and Kenneth Lay. The Tittle court noted that the Fifth Circuit Court of Appeals (the circuit that includes the Federal Southern District of Texas) imposes the duty to disclose cautiously. Significantly, the Tittle court rejected the defendants' argument that they did not have a fiduciary duty under ERISA to disclose Enron's failing financial condition to participants and beneficiaries because it would violate insider trading rules under federal securities laws.
ISSN:0013-6808