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Published by Medill in Michigan Journal of Law Reform (2011) 44. Copyright 2011, Michigan School of Law. Used by permission.


Absent a federal common law rule of vicarious fiduciary liability, a corporate employer, in its nonfiduciary capacity as the settlor of its ERISA plan, may design the documents that govern the employer's plan as a shield against fiduciary responsibility for the actions of the employer's own internal fiduciary employees. This Article explores the potential for development of another area of federal common law under ERISA - the incorporation of respondeat superior liability principles to impose ERISA fiduciary liability ("vicarious fiduciary liability") upon a corporation for the fiduciary activities of its employees or agents. This claims and remedies system requires that vicarious fiduciary liability must be limited so that a nonfiduciary corporate principal is not subject to a damages claim under ERISA if an employee or an agent of the principal acts in a "rogue" manner as a fiduciary with respect to an ERISA plan. The question simply was not at the forefront of the immediate problems of trust asset mismanagement in the multiemployer and defined benefit plan context that Congress sought to resolve through ERISA's fiduciary responsibilities provisions. ERISA, however, defines "fiduciary" not in terms of formal trusteeship, but in functional terms of control and authority over the plan, thus expanding the universe of persons subject to fiduciary duties - and to damages - under ERISA. Similarly, external corporate fiduciaries and external nonfiduciary service providers who assist employers in administering and operating their ERISA plans may increase the fees for their services if the parameters of vicarious fiduciary liability are ill-defined and therefore difficult to monitor and control. If imposing vicarious fiduciary liability makes corporate employers the proverbial deep pocket for the misconduct of internal fiduciary employees, then employers are likely to respond by engaging in tactics to protect corporate assets from fiduciary liability. To be consistent with ERISA's statutory scheme for claims and remedies under section 502(a), a federal common law rule of vicarious liability must be limited by modifying the common law rule that imposed respondeat superior liability upon a principal who approved or ratified an agent's injurious conduct that occurred outside the scope of employment.

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