Alan Halperin v. Mark Richards, 7f4th534

Background:

Appvion, Inc. experienced severe decline (2012–2016); ESOP-held company stock valuations were allegedly fraudulently inflated to benefit directors/officers whose pay tied to valuations.
Argent Trust (ESOP trustee) engaged Stout Risius Ross (independent appraiser) to lead ESOP valuations; plaintiffs allege coordinated knowing inflation and unlawful dividends to parent via restructured intercompany notes.
Appvion filed bankruptcy in 2017; a liquidating trust (Halperin and Davis, co-trustees) was authorized to pursue corporate-law claims on Appvion’s behalf in bankruptcy‑transferred litigation.
District court dismissed Counts I–VIII as preempted by ERISA § 514 (state law "relate to" ERISA plans); plaintiffs appealed.
Seventh Circuit: reversed dismissal as to corporate fiduciary claims against dual‑hat directors/officers (Counts I–IV, VII–VIII); affirmed dismissal of aiding-and-abetting claims against Argent (ESOP trustee) and Stout (Counts V–VI) as preempted, and remanded.

Issues:

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether ERISA preempts state corporate‑law fiduciary‑duty claims against directors/officers who served as ERISA fiduciaries (dual‑hat)	Halperin: state corporate claims are independent corporate duties and not an ERISA end‑run; plaintiffs (liquidating trust) cannot sue under ERISA so no alternative remedy problem	Directors/officers: their ESOP work was performed in ERISA capacity and thus state claims "relate to" the plan and are preempted	Not preempted — ERISA contemplates dual‑hat fiduciaries and allows parallel state‑law corporate liability where duties run parallel (no conflict)
Whether ERISA preempts state aiding‑and‑abetting claims against Argent (ESOP trustee, single‑hat fiduciary)	Halperin: Argent knowingly aided breaches; state law may impose aiding liability	Argent: as a single‑hat ERISA fiduciary, subject only to exclusive federal duties; state aiding claims would interfere with exclusive‑benefit rule and plan administration	Preempted — state aiding‑and‑abetting would dilute ERISA’s exclusive‑benefit rule and improperly impose corporate duties on single‑hat fiduciaries
Whether ERISA preempts state aiding‑and‑abetting claims against Stout (non‑fiduciary contractor/appraiser)	Halperin: Stout knowingly aided breaches and is liable to the corporation under state law	Stout: not a dual‑hat actor; imposing corporate aiding liability would interfere with ERISA’s administration and remedial regime; Stout already faces limited ERISA exposure (Secretary suits)	Preempted — allowing corporate aiding claims would undermine ERISA’s exclusive‑benefit rule, disrupt trustee contracting, and risk remedies inconsistent with ERISA’s limits
Whether plaintiffs’ claims are an "end‑run" around ERISA remedies (alternative remedies/complete‑preemption concerns)	Halperin: plaintiffs are creditors suing derivatively for the corporation and cannot bring ERISA claims, so they are not seeking a substitute ERISA remedy	Defendants: state claims "relate to" the plan and therefore conflict‑preempt under § 514	Court: plaintiffs cannot sue under ERISA (weighs against preemption), but exclusive‑benefit rule independently bars state aiding claims against single‑hat actors; plaintiffs’ lack of ERISA remedy supports allowing parallel corporate claims against dual‑hat directors/officers

Key Cases Cited

New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (establishes limits and interpretive principles for ERISA § 514 "relate to" preemption)
Gobeille v. Liberty Mut. Ins. Co., 577 U.S. 312 (describes two categories of state law that "relate to" ERISA plans)
Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (ERISA preemption where state law has connection with or reference to ERISA plan)
Aetna Health Inc. v. Davila, 542 U.S. 200 (test for complete preemption / whether plaintiffs could have brought ERISA claims)
Egelhoff v. Egelhoff, 532 U.S. 141 (preemption where state rule governs central matter of plan administration)
Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825 ("run‑of‑the‑mill" torts against plans not necessarily preempted)
Donovan v. Bierwirth, 680 F.2d 263 (2d Cir.) (treatment of dual‑hat fiduciaries; need for intensive, scrupulous investigation to neutralize conflicts)
Sommers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan Enterprises, Inc., 793 F.2d 1456 (5th Cir.) (dual‑hat officers may face parallel but independent state corporate duties)
Leigh v. Engle, 727 F.2d 113 (7th Cir.) (applies Donovan framework; dual‑hat conflicts may require stepping aside or intensified scrutiny)
Harris Trust & Sav. Bank v. Salomon Smith Barney, Inc., 530 U.S. 238 (Secretary may sue non‑fiduciaries under ERISA for knowing participation in breach)
Mertens v. Hewitt Associates, 508 U.S. 248 (limits remedies against non‑fiduciaries to equitable relief under ERISA)