Straight to Court: Eleventh Circuit Ends Mandatory ERISA Exhaustion Requirement for Fiduciary-Breach and Other Statutory Claims – What Florida Plan Sponsors Need to Know

Earlier this month, the full U.S. Court of Appeals for the Eleventh Circuit, whose decisions bind federal courts in Florida, Georgia, and Alabama, issued a decision that will change how employee benefit plan litigation unfolds in Florida.

In Bolton v. Inland Fresh Seafood Corporation of America, Inc., a case that arose in Georgia, the en banc court (meaning the circuit’s full bench of active judges, rather than the usual three-judge panel) overruled a 1985 precedent. The court held that the Employee Retirement Income Security Act (ERISA) does not require plan participants to exhaust (that is, first complete) a plan’s internal claims procedures before suing for statutory violations, including breach of fiduciary duty.

The ruling ends the Eleventh Circuit’s status as the only federal appeals court to mandate exhaustion of these claims and brings it in line with the clear majority of circuits to address the issue, which do not require it.

The practical effect is significant. For four decades, Florida employers facing claims that plan fiduciaries charged excessive fees, selected or retained imprudent investments, engaged in prohibited transactions, overpaid for company stock in an employee stock ownership plan (ESOP) transaction, or otherwise breached ERISA’s duties of prudence and loyalty could often seek early dismissal if the participants had not first filed an internal claim with the plan.

That defense is now largely gone. Here is what Florida plan sponsors and fiduciaries need to know.

ERISA Benefit Claims vs. Statutory Claims

ERISA lawsuits generally fall into two categories. “Benefit claims” seek benefits a participant says are owed under the plan’s terms, such as a disputed pension calculation or a denied disability claim. “Statutory claims” assert that fiduciaries violated duties ERISA itself imposes, such as the duties of prudence and loyalty and the rules prohibiting certain transactions between a plan and related parties.

Statutory claims are at the center of the excessive-fee and investment-lineup class actions that have increased nationally in recent years.

ERISA requires every plan to give participants whose benefit claims are denied a “full and fair review,” and courts generally require participants to use that process before suing over benefits. But the statute says nothing about exhaustion for statutory claims.

In Mason v. Continental Group, Inc. (1985), the Eleventh Circuit nonetheless required exhaustion for all statutory ERISA claims based on policy considerations, such as reducing frivolous lawsuits and lowering the cost of resolving disputes.

Seven other federal circuits (the Third, Fourth, Fifth, Sixth, Ninth, Tenth, and D.C. Circuits) went the other way, and the Seventh Circuit leaves the question to the trial judge’s discretion. Until Bolton, the Eleventh Circuit stood alone in mandating exhaustion of statutory claims.

Bolton arose from a 2016 transaction in which the company’s ESOP used the proceeds of a $92 million loan, guaranteed by the company, to buy all of the company's outstanding common stock from four of its officers and directors. Participants alleged that the plan overpaid by tens of millions of dollars and sued for breach of fiduciary duty without first filing an internal claim.

The district court dismissed the case under Mason, and a three-judge panel affirmed, although two of the panel judges wrote separately to urge the full court to overrule Mason. The full court then vacated the panel opinion and reheard the case. It reversed the dismissal and sent the case back to the panel for further proceedings.

Why the Court Rejected Mandatory Exhaustion

The court called Mason’s exhaustion rule “an atextual product of judicial creation based solely on policy reasons.” Because ERISA contains no exhaustion requirement for statutory claims, courts may not add one.

The court also declined to keep the requirement as a matter of judicial discretion. It reasoned that exhaustion delays the “ready access to the Federal courts” that ERISA promises, and that fiduciaries accused of misconduct “may well have a conflict of interest” in reviewing complaints against themselves.

Applying the normal rule that court decisions operate retroactively, the court applied its ruling to the parties before it and rejected the defendants’ request to limit the decision to future cases.

It also read the plan's claims procedures, which stated that a participant “need not file a claim” but “may” submit one, as permissive rather than mandatory. The court found support in the summary plan description (SPD), whose statement of participants’ rights told participants that if plan fiduciaries misuse the plan’s money, they “may file suit in a federal court.” The U.S. Department of Labor, which filed a brief supporting the participants, agreed that the plan’s internal review process was voluntary.

The court also noted its 2025 decision in Williams v. Shapiro, another ESOP case from Georgia. Williams held that a plan arbitration provision requiring individual arbitration, which barred participants from seeking relief on behalf of the plan as a whole, was an unenforceable prospective waiver of their statutory ERISA rights. The Bolton court did not rely on Williams, and Williams involved a provision that eliminated a remedy rather than one that merely delayed suit.

Still, the court’s discussion, together with the Department of Labor’s statement at oral argument that contractual exhaustion requirements for statutory claims would face “an awful lot of judicial scrutiny,” signals that plan terms limiting statutory ERISA rights will be closely examined.

What Bolt on Changes—and What Remains Unsettled

What changed: Participants in Florida, Georgia, and Alabama may now file fiduciary-breach and other statutory ERISA claims directly in federal court. This applies to statutory claims involving any ERISA-governed plan, including health and welfare plans, not only retirement plans. Defendants can no longer obtain dismissal simply because participants skipped the plan's internal process, at least where the plan itself does not clearly require exhaustion. Because the court applied its ruling retroactively, the ruling should also govern pending cases.

What did not change: The court limited its holding to statutory claims and expressly did not disturb its precedent requiring participants to exhaust plan procedures before suing over denied benefits. The court also emphasized that its ruling makes access to the courts easier but does not expand liability. The substantive standards governing fiduciary conduct are unchanged.

What remains open: The court expressly declined to decide whether a plan may require exhaustion of statutory claims through its own terms, because it concluded that this plan did not do so. It also found it unnecessary to address the plan’s arbitration clause, which required exhaustion of the claims procedures before arbitration, because no one had moved to compel arbitration.

What Florida Plan Sponsors and Fiduciaries Should Do Now

1. Strengthen fiduciary processes.

With the early exhaustion defense largely gone, the quality of the fiduciary record matters more. Document fee benchmarking, investment monitoring, service-provider selection, and independent valuation work for ESOP transactions, and review fiduciary liability insurance coverage.

2. Review plan documents and be cautious about new exhaustion language.

In Bolton, the court read the plan’s “may” and “need not” language as making internal review optional, and it relied on the SPD’s statement that participants “may file suit in a federal court.” Many SPDs contain similar language, which is commonly drawn from the Department of Labor’s model statement of ERISA rights.

Sponsors that add exhaustion requirements for fiduciary-breach claims should understand that the Eleventh Circuit has not decided whether such provisions are enforceable and that the Department of Labor has signaled it will oppose them, so they may delay litigation but are unlikely to prevent it. Any such language should be express and consistent across the plan document, SPD, and claims procedures, should not cut short participants' time to sue, and should be coordinated with counsel.

3. Reassess pending matters and benefit-claim procedures.

Because Bolton applies retroactively, defendants in pending cases that relied on an exhaustion defense should revisit their strategy, including whether a claim labeled as a fiduciary breach is really a benefits claim that must still be exhausted.

Exhaustion is still required for benefit claims, but participants may be treated as having exhausted their remedies if a plan's claims procedures do not comply with Department of Labor regulations, so keep those procedures compliant.

The bottom line: Bolton brings Florida in line with most of the country: participants alleging ERISA violations may go straight to court. Mandatory exhaustion language may offer some benefit, but its enforceability for statutory claims is unsettled in the Eleventh Circuit and will likely be tested. The more reliable defense is a well-documented, prudent fiduciary process.

For questions about how this decision may affect your employee benefit plans or fiduciary responsibilities, contact Adam Sanderson at adam.sanderson@lowndes-law.com or 407.418.6695.