Key Points

  • The en banc Eleventh Circuit overruled Mason v. Continental Group and its progeny to the extent they hold that ERISA itself requires administrative exhaustion of statutory claims, including breach-of-fiduciary-duty claims.
  • The court held that Mason's exhaustion rule rested on policy rather than ERISA's text, noting that seven circuits reject an exhaustion requirement for statutory claims and the Seventh Circuit treats exhaustion as discretionary.
  • The court declined to overrule Mason only prospectively and applied its holding to the parties under the Glazner/Chevron Oil test.
  • The Inland Fresh plan's claims-procedure language is permissive and does not independently mandate exhaustion; the court left open whether a plan can contractually require exhaustion of statutory claims.
  • The court reversed the dismissal of the ESOP class action and remanded to the panel; the holding does not reach exhaustion requirements for benefit-denial claims under plan terms.

The full U.S. Court of Appeals for the Eleventh Circuit on Oct. 13 overruled Mason v. Continental Group, a 1985 precedent that required workers suing under the federal law governing employee benefit plans to take their complaints through the plans' internal claims procedures first. The court acknowledged that the mandatory rule had left it alone among federal appeals courts.

Sitting en banc, the court revived a class action by former employees of Inland Fresh Seafood Corporation of America. The workers allege that the company's employee stock ownership plan, a pension plan that bought the company's shares, overpaid for that stock by tens of millions of dollars. Judge Jordan wrote for the en banc court.

Under the ruling, participants who sue over violations of the Employee Retirement Income Security Act itself, including breaches of the fiduciary duties the statute imposes, may go to federal court without first filing a claim with the plan and seeking its internal review, a step known as administrative exhaustion. The court made the holding retroactive. A footnote says the court does not address the circuit's separate precedents requiring exhaustion in suits challenging a denial of benefits under a plan's terms.

"We do not take our decision to overrule Mason lightly," Judge Jordan wrote. "But our holding requiring administrative exhaustion in Mason was an atextual product of judicial creation based solely on policy reasons."

In November 2016, the plan used a $92 million loan, guaranteed by Inland Fresh, to buy all of the company's outstanding common stock from four of its officers and directors. According to the plaintiffs, false financial projections, among other things, inflated the price far above the company's fair market value.

Five former employees sued on behalf of the plan and a proposed class of its 578 participants. They named Inland Fresh, the plan's trustee, the plan's committee and the four officers and directors, alleging fiduciary breaches under Sections 502(a)(2) and (a)(3) of ERISA, including the trustee's failure to conduct proper due diligence on the price.

A federal judge in the Northern District of Georgia dismissed the suit in December 2023 for failure to exhaust and refused to stay it, acknowledging that the Eleventh Circuit "may be unique in requiring exhaustion of administrative remedies prior to filing suit." A panel affirmed in 2025, also holding itself bound by Mason. Judge Jordan, joined by Judge Jill Pryor, wrote separately that Mason was wrongly decided, and the full court then vacated the panel opinion and ordered rehearing en banc.

ERISA contains no exhaustion requirement for statutory claims, the en banc court held, and the Mason court acknowledged as much before imposing one to reduce frivolous lawsuits and minimize the cost of dispute resolution. Citing the Supreme Court's 2007 decision in Jones v. Bock, Judge Jordan wrote that "crafting and imposing" exhaustion rules a statute's text does not require "exceeds the proper limits on the judicial role."

The opinion also counted seven circuits, the Third, Fourth, Fifth, Sixth, Ninth, Tenth and D.C. Circuits, that have held statutory ERISA claims do not require exhaustion. The Seventh Circuit, Mason's only ally, leaves exhaustion to trial judges' discretion. "So we stand alone in requiring mandatory exhaustion for fiduciary-breach and statutory claims under ERISA," Judge Jordan wrote.

The defendants had invoked stare decisis, arguing that the court "should . . . not discard forty years of predictability." Assessing the quality of Mason's reasoning, the opinion said, "Having taken measure of it, we find it to be wanting," and cited the 2001 film "A Knight's Tale."

The court also declined to keep the rule as a matter of judicial discretion, reasoning that in fiduciary cases "those being accused of malfeasance may well have a conflict of interest in administratively reviewing a complaint against them." The defendants had cited Congress's inaction on Mason. "Given that the circuit split on the exhaustion question is a whopping 7-1-1, we very much doubt that Congress would take the time necessary to amend ERISA to expressly reject the view of the two minority circuits," Judge Jordan wrote.

Any reliance on Mason, the court said, "is likely minimal," because the rule added a procedural hurdle without changing the claims, duties or remedies ERISA provides. The court refused the defendants' request to overrule Mason only for future cases, concluding under its 2003 en banc decision in Glazner v. Glazner that retroactive application would advance ERISA's goal of "ready access to the [f]ederal courts" without expanding liability.

The court also rejected the panel's conclusion that the Inland Fresh plan itself required exhaustion. Section 8.10 of the plan states that a participant "need not file a claim to receive a benefit under the Plan" but "may submit a written claim to the Committee," and the court held that the word "may" made the procedure permissive. The district court and the panel read the language differently, Judge Jordan wrote, but they ruled in "a different ERISA world—one where Mason and its mandatory exhaustion requirement governed." The Labor Department, which filed a friend-of-the-court brief, agreed that the plan documents "make clear that its internal review process is voluntary, not mandatory."

The court did not decide "whether the parties can contract through the language of a plan to require exhaustion of statutory claims where ERISA itself is silent on the matter," because this plan's language was permissive. At oral argument, the Labor Department asserted that parties to an ERISA plan should not be able to contract away statutory rights that ERISA provides. The court also treated as irrelevant an exhaustion clause in the plan's arbitration provision. "The simple reason is that no one has moved to compel arbitration," Judge Jordan wrote.

The court reversed the dismissal and returned the case to the panel "for any further proceedings that may be necessary." The defendants' motion to dismiss had raised other arguments, which the en banc opinion did not address.