11th Cir. Panel Can’t Displace Disputed ERISA Rule, Judge Says

A unique obstacle for retirement plan litigation in the Eleventh Circuit drew criticism during Tuesday arguments over a seafood company’s stock plan, but the three-judge panel suggested it was powerless to unilaterally change the rule.

The arguments centered on the US Court of Appeals for the Eleventh Circuit’s unusual practice of imposing an exhaustion requirement on benefit plan participants claiming fiduciary breach under the Employee Retirement Income Security Act. Workers seeking denied benefits from ERISA-covered plans typically must show they’ve first raised the issue through the plan’s internal appeals process before filing suit.

But unlike other circuits, courts within the Eleventh Circuit also extend this requirement to plaintiffs alleging statutory violations of ERISA.

Judge Adalberto Jordan suggested at multiple points that the panel was bound by the Eleventh Circuit’s prior decision on this topic, even though, he acknowledged, there’s a good argument it was “wrongly decided.” Another judge on the panel, Federico A. Moreno of the US District Court for the Southern District of Florida, asked his colleagues on the bench how to best get this issue before the US Supreme Court or the full slate of Eleventh Circuit judges, which would be empowered to make changes.

Defendants’ attorney Ted Becker of McDermott Will & Emery LLP quipped that they should ask the plaintiffs, as that appears to be “the intention of this case.”

Jordan was quick to provide a roadmap for elevating the issue to the Supreme Court or the full Eleventh Circuit, telling his colleagues it’s “pretty simple” to write an opinion saying the panel is bound by precedent it thinks was wrongly decided.

Overruled to Abrogation?

The lawsuit challenges a 2016 transaction in which Inland Fresh Seafood Corp. of America shareholders sold their stock in the company to a newly-established employee stock ownership plan for $92 million. Workers say this debt-financed transaction was completed without adequate diligence and allowed the selling shareholders to offload their stock at a grossly inflated price.

A Georgia federal judge dismissed the case in 2023 based on the workers’ failure to exhaust their internal remedies.

The workers appealed, asking the Eleventh Circuit overrule its practice of imposing an exhaustion requirement on ERISA fiduciary breach claims, which they say has been “undermined to the point of abrogation” by the Supreme Court.

The workers received support from the US Department of Labor, which also opposes the Eleventh Circuit’s approach. And they unsuccessfully sought to have their appeal considered by the full appeals court instead of a single, three-judge panel.

Plan Waiver

The workers’ attorney, Sean Soyars of Schlichter Bogard LLC, also argued that the case could stay in court because the plan document included language waiving the Eleventh Circuit’s exhaustion requirement.

Jordan appeared to find this idea persuasive, quoting plan language instructing participants that they “may submit a written claim to the committee” but “need not file a claim” to receive benefits.

Becker objected to this interpretation, saying this language is directed to the vast majority of plan participants who receive benefits automatically without needing to raise specific issues. He also suggested that the exhaustion requirement is mandated by the Eleventh Circuit regardless of what the plan says.

Jordan appeared unconvinced, telling him benefit plans have the ability to give participants “more than they’re legally required to.”

Jordan also suggested the plan participants should have been given an opportunity to raise their claims in the future, calling it “very odd” to have a dismissal with prejudice because of a failure to exhaust administrative remedies.

The panel also included Judge Jill A. Pryor.

The case is Bolton v. Inland Fresh Seafood Corp. of Am., Inc., 11th Cir., No. 24-10084, argued 5/13/25.