Pension & Benefits News General release of claims negates standing of former employee to bring fiduciary breach charges against University
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Thursday, November 7, 2019

General release of claims negates standing of former employee to bring fiduciary breach charges against University

By Pension and Benefits Editorial Staff

A former employee who executed a general release of “any and all claims” against a University for violation of “any” federal statutes lacked standing to bring ERISA charges of fiduciary breach against the University for mismanagement of its retirement plans, according to a federal trial court in the District of Columbia. A provision in the release agreement that excluded “claims for vested benefits under employee benefit plans” was limited to contractual claims for benefits under the terms of the plan and did not encompass or save the participant's statutory right to pursue fiduciary breach claims under ERISA Sec. 502(a)(2) or (a)(3).

General release of any and all claims under federal law. A former employee of George Washington University, who participated in two of the University's ERISA-governed defined contribution retirement plans, signed a Confidentiality Settlement Agreement and General Release (Release) with the school in 2016. Pursuant to the agreement, the employee released the University from “any and all claims” arising under “any” federal statute. The agreement was expressly intended to release claims to the “fullest extent permitted by law.” However, the statutes listed as specifically subject to the release did not include ERISA. In addition, the release contained a “carve-out” clause, that expressly excluded “claims for vested benefits under employee benefit plans.”

Approximately two years after executing the release, the employee brought a putative class action suit against George Washington under ERISA Sec. 502(a)(2) and (a)(3), alleging various fiduciary breaches regarding management of the plan. George Washington moved to dismiss the complaint, arguing that the participant lacked standing because, in voluntarily releasing her claims for violation of any federal statute, she had waived her ERISA claims.

In response, the participant conceded that she was not pursuing a claim for vested benefits under the plans. However, she argued that: (1) the general release did not cover her ERISA claims because it did not expressly include ERISA in the list of legislation to which the release applied and (2) the carve-out for vested benefit claims preserved fiduciary breach charges brought under ERISA Secs. 502(a)(2) and (a)(3).

Release covered claims under ERISA. Initially, the court ruled that ERISA fell under the language in the agreement releasing claims brought for violations of any federal statute. The court dismissed the fact that the release did not expressly include ERISA as “unpersuasive,” stressing that the agreement released all claims for violations of federal statutes, “including but not limited to violations of the listed statutes.” Noting that the release was intended to be applied broadly, the court further cited case law establishing that an unambiguous release need not list every conceivable cause of action that may accrue under its terms and the general release of “any claim” covers all ERISA claims without need of an express reference to ERISA.

Carve-out exclusion limited to claim for plan benefits. The court next rejected the participant's argument that the carve-out clause be read so expansively as to preserve the ERISA Sec. 502(a)(2) and (a)(3) claims for fiduciary misconduct. The carve-out clause, the court explained, preserved contractual claims for plan benefits. The participant, however, was not bringing a claim for benefits under the plan but, was bringing statutory claims in order to enforce ERISA's substantive guarantees. As the fiduciary breach claims arose under rights conferred by ERISA, and not the plan, the court concluded that the participant's claims were not covered by the carve-out exclusion and were, therefore, waived.

SOURCE: Stanley v. George Washington University (DC DC).

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