KMK Law Complex Litigation Blog

The United States District Court for the Northern District of Illinois recently denied the defendant's joint summary judgment motion in the case Fish, et al. v. Greatbanc Trust Co., et al., where the defendants moved for summary judgment on the grounds that the plaintiffs' claims were barred by ERISA's 3-year statute of limitations. The plaintiffs are four alleged beneficiaries of an ESOP and the current ESOP trustee.

The District Court had previously held in a well-reasoned interpretation of the ERISA statute of limitations that the plaintiffs' claims would be time-barred if the defendants could identify a prior non-breaching fiduciary who could have brought suit within 3 years of the transaction giving rise to the claims at issue in the case. At the court's direction, the parties conducted discovery limited to the "non-breaching fiduciary" issue, and the motions were fully briefed at the close of discovery.

Last week, the Court denied summary judgment, finding that the plaintiffs had raised a genuine issue of material fact concerning the latitude of the non-breaching fiduciary, an internal, directed trustee, to sue his co-fiduciaries for their involvement in an alleged prohibited transaction. The fiduciary had testified under oath that he was aware of his legal obligation to file an action if he was convinced a breach of duty had occurred, and would have brought suit.

The Court, however, found that the fact that the trustee was directed, and that the trust agreement required that he get the authority of other fiduciaries who would have been the litigation targets, itself raised a disputed issue of fact about whether the non-breaching fiduciary was truly in a position to sue. As a result, the Court denied summary judgment. The Court's opinion is reported at 2010 WL 3417835 (N.D. Ill. Aug. 31, 2010).

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