Supreme Court Likely to Hear ESOP Indemnification Case
Executive Director
On January 9, the Supreme Court invited the solicitor general to file a brief in a case regarding ESOPs, indicating the Court's interest in hearing the case. The case concerns whether ERISA permits courts to order one fiduciary to indemnify another. In the case, Fenkell v. Alliance Holdings, Inc., the district court ruled that the ESOP trustees needed to restore losses suffered by the plan while at the same time ruling that one trustee, Fenkell, indemnify the other trustees. The district court found that Fenkell was the "more culpable fiduciary," and the Seventh Circuit Court affirmed this decision. The circuit courts are divided on similar questions. Although the Second Circuit Court takes a similar position, the Eighth and Ninth circuits have disagreed.