One of the most potent and frequently raised defenses in ERISA cases is failure to exhaust claim remedies. In a recent case in the 11th Circuit, an ESOP (employee stock ownership plan) action was dismissed by the district court for failure to exhaust claim remedies before suit was filed. The allegations involved unlawful use of the ESOP by certain officers who were using the plan to enrich themselves at the expense of employees. It was filed without exhaustion in large part because it seemed pointless to make a claim against the very individuals who would decide or influence a decision on the claim. Regardless of whether the claims are valid or not, that exhaustion requirement here is similar to making a claim against a judge for taking bribes, and then the law requiring that the same judge decide the case. That would not happen, but it does with ERISA.

The district court ruled “The exhaustion requirement applies both to claims for benefits and claims for violation of ERISA itself.” Bolton v. Inland Fresh Seafood Corp. of Am., Inc., No. 1:22-cv-04602-LMM, 2023 U.S. Dist. LEXIS 232930, at *7 (N.D. Ga. Dec. 5, 2023). Thus, the plaintiffs had to first assert the claims to the plan administrators. The court noted that “Many circuits do not require exhaustion of breach of fiduciary duty claims but the 11th Circuit still does. Not only is that required but additionally [t]he Eleventh Circuit requires an ERISA plaintiff to affirmatively plead exhaustion or an exception to the rule on the face of the complaint.” Bolton at *8. (Emphasis added).

The ESOP Plaintiffs appealed to the 11th Circuit. The court ruled “… we agree with the district court that dismissal was warranted because no valid excuse relieves the plaintiffs of that obligation. Accordingly, we affirm the dismissal and remand so that the district court can indicate whether the dismissal is without prejudice to allow the plaintiffs another opportunity to exhaust.” Bolton v. Inland Fresh Seafood Corp. of Am., Inc., No. 24-10084, 2025 U.S. App. LEXIS 26838, at *3 (11th Cir. Oct. 15, 2025). The court did recognize that its opinion was at odds with the 3rd, 4th, 5th, 6th, 9th, 10th and D.C. circuits. However, in the end, the court was compelled to affirm the decision, except for remanding on whether the dismissal was with prejudice or without prejudice.

Of interest however was the fact that two circuit court judges concurred - Judge Jill Pryor and Judge Jordan who wrote the concurrence. He advised “I write separately to propose that we convene en banc to consider overruling Mason v. Continental Group, 763 F.2d 1219, 1227 (11th Cir. 1985), which imposed a judicially-created an atextual administrative exhaustion requirement for fiduciary-breach and statutory claims under ERISA, 29 U.S.C. §§ 1109(a), 1132(a)(2)-(3).” Bolton *34. In dissecting the Mason case, it was first noted that the statute does not have an exhaustion requirement, and it is not for the courts to impose requirements that Congress did not put in the statute. Second, while Mason acknowledged that exhaustion minimizes the cost of dispute resolution, the Supreme Court had held that lower courts should not impose exhaustion rules not required by the text of a statute. See, Jones v. Bock, 549 U.S. 199, 203, 217, 127 S. Ct. 910, 166 L. Ed. 2d 798 (2007) “(rejecting judicially-created rule that plaintiffs have to plead exhaustion in suits covered by the Prison Litigation Reform Act)”. Bolton at *36.

Third, the majority of courts do excuse exhaustion for breach of fiduciary duty and statutory claims and only the 7th Circuit aligned with the 11th Circuit. However, the 7th Circuit does not make the exhaustion rule mandatory. It can be excused. Fourth, secondary authorities side with the majority of circuits on this. Fifth, there are more breach of fiduciary duty cases after the Supreme Court's decision in Hughes v. Northwestern University, 595 U.S. 170, 176, 142 S. Ct. 737, 211 L. Ed. 2d 558 (2022) so this issue is going to arise more frequently.

If the Court does vote to rehear the case en banc with an eye toward overruling Mason that exhaustion wall may come tumbling down. Two circuit judges believe there are a number of “bricks in the wall already crumbling”. They make a compelling case for the 11th Circuit to “tear down this wall!”

There is unfairness in ERISA, and this is one of those instances. Requiring the assertion of a breach of fiduciary duty claim before the very people charged with the breach – is contrary to fairness and ethical principles.