Eleventh Circuit Eliminates Administrative Exhaustion Requirement for ERISA Breach of Fiduciary Duty and Other Statutory Claims

In Bolton v. Inland Fresh Seafood Corporation of America, Inc. (No. 24-10084), the court held that ERISA does not require “administrative exhaustion” of statutory claims, including claims that plan fiduciaries breached their duties. The decision removes a procedural defense that had been available to employers and plan fiduciaries in the Eleventh Circuit for four decades.

The Case

Five former employees of Inland Fresh Seafood Corporation of America filed a proposed class action suit against the company, the trustee of its Employee Stock Ownership Plan (ESOP), the plan’s committee, and several of the company’s officers and directors. They alleged the ESOP used a $92 million loan, which was guaranteed by Inland Fresh, to buy all of the company’s stock at an inflated price, causing the plan and its 578 participants to overpay for the stock by millions of dollars. The district court dismissed the case because the employees had not first pursued the plan’s internal review process, which permitted written claims to be submitted to the plan’s committee. 

The Eleventh Circuit’s Decision

The court described Mason’s exhaustion rule as “an atextual product of judicial creation based solely on policy reasons.” Under US Supreme Court precedent, courts may not impose a requirement to exhaust administrative remedies before filing a statutory claim in court absent the statute’s express say-so. Because ERISA contains no explicit exhaustion requirement for statutory claims, the court found Mason’s holding to be an improper judicially created rule. The court also concluded the Inland Fresh plan did not itself require exhaustion because its language was permissive, rather than mandatory (participants “need not” file a claim and “may” seek review). 

Two limits are important. First, the ruling covers only statutory claims under ERISA, such as breach of fiduciary duty claims. It does not change the Eleventh Circuit’s separate but related rule that participants suing to recover benefits due under a plan governed by ERISA must normally exhaust the plan’s enumerated remedies. Second, since the Inland Fresh ESOP contained permissive rather than mandatory plan remedies, the court left open the question whether a plan’s terms can validly require exhaustion of statutory claims. The US Department of Labor, which filed an amicus brief and participated in oral argument, suggested courts should view such provisions skeptically.

The Inland Fresh decision brings the Eleventh Circuit in line with the clear majority of federal appellate courts. The Third, Fourth, Fifth, Sixth, Ninth, Tenth, and DC Circuits have all held that exhaustion of administrative remedies is not required for statutory ERISA claims. The Seventh Circuit, the only other court that had sided with Mason, leaves exhaustion to the trial judge’s discretion, so the Eleventh Circuit had, up until this point, stood alone in requiring it in every case. 

What This Means for Plaintiffs

Plan participants in Alabama, Florida, and Georgia can now file breach of fiduciary duty and other statutory ERISA claims directly in federal court without completing a plan’s internal review process. The decision removes a common ground for early dismissal and the risk of losing claims because an internal plan appeal deadline has passed. Participants should still expect to exhaust any internal plan or administrative remedy when their claim is a dispute over benefits owed under the plan’s terms and should review plan language carefully for any mandatory administrative procedures.

What This Means for Defendants

Employers, plan sponsors, trustees, and other ERISA fiduciaries lose a threshold defense and should expect breach of fiduciary duty suits, including ESOP valuation and investment management class actions, to reach the merits faster in the Eleventh Circuit. However, as the court emphasized, the overruling of Mason “does not expand liability for statutory claims under ERISA.” At the outset of any litigation, defendants should be sure to distinguish a claim for benefits (where exhaustion still applies) from a statutory claim, and review plan documents and summary plan descriptions. Plan sponsors weighing mandatory exhaustion language should be aware that its enforceability is unresolved for statutory claims and may draw close scrutiny from a court.