EFS, Inc. v. Regions Bank (McLemore)
682 F.3d 414
| 6th Cir. | 2012Background
- Stokes, owner of lPoint Solutions, LLC, directed client funds to Regions accounts opened in lPoint's name, enabling theft of plan assets.
- lPoint served as TPA for multiple ERISA-governed and non-ERISA plans, with Regions holding plan assets deposited by lPoint.
- Stokes embezzled funds between 2002–2006, including transfers to his Regions accounts and withdrawals funded by plan assets.
- Regions failed to implement AML controls and face-spotting practices; it faced a prior $10 million FINCEN/Bank Secrecy Act penalty.
- Trustee (as ERISA fiduciary) and EFS sued Regions in bankruptcy court; district court dismissed ERISA claims in 2008 and state-law claims in 2010 due to ERISA preemption; on appeal the court affirmed.
- Dissent argues ERISA preemption should not bar state-law claims against a nonfiduciary bank and that more fact-finding is warranted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Trustee has standing to sue on behalf of ERISA plans | Trustee has ERISA-fiduciary status and authority over plan assets | Trustee lacks standing since funds are no longer in estate and fiduciary status limited to assets under control | Trustee has standing as ERISA fiduciary to pursue plan-beneficiary claims. |
| Whether Regions qualifies as an ERISA fiduciary | Regions exercised authority/control over plan assets and thus is a fiduciary | Regions merely held custody/processed routine fees; not a fiduciary under §1002(21)(A) | Regions does not qualify as an ERISA fiduciary; mere custody and routine fees do not establish fiduciary status. |
| Whether ERISA preempts the state-law claims against Regions | ERISA does not preempt nonfiduciary wrongdoing claims unrelated to plan administration | ERISA preempts state-law claims that relate to ERISA plans; UFA bars negligence claims; remaining claims relate to ERISA duties | ERISA preempts state-law claims that relate to ERISA plans; UFA bars negligence; remaining claims derive from ERISA duties. |
Key Cases Cited
- In re Cannon, 277 F.3d 838 (6th Cir.2002) (trustee standing limits in pari delicto context; ERISA fiduciary status defined)
- Briscoe v. Fine, 444 F.3d 478 (6th Cir.2006) (fiduciary status and liability framework under ERISA)
- Briscoe v. Preferred Health Plan, Inc., 578 F.3d 481 (6th Cir.2009) (fiduciary status and duty in plan administration; post-termination control)
- Smith v. Provident Bank, 170 F.3d 609 (6th Cir.1999) (bank as plan fiduciary and control over assets after termination)
- Aetna Health, Inc. v. Davila, 542 U.S. 200 (2004) (ERISA preemption breadth; exclusive remedies)
- Penny/Ohlmann/Nieman, Inc. v. Miami Valley Pension Corp. (PONI), 399 F.3d 692 (6th Cir.2005) (nonfiduciary service-provider claims under ERISA; preemption considerations)