Seventh Circuit Review


In Summers v. State Street Bank & Trust Company, the United States Court of Appeals for the Seventh Circuit was asked whether State Street Bank & Trust Company, a directed trustee of United Airlines’ employee stock ownership plan, acted imprudently by failing to cause the plan to sell its United stock after the company suffered massive financial losses in the aftermath of the September 11, 2001 terrorist attacks. Ultimately, the court found that although State Street, as a directed trustee, was bound by certain fiduciary duties under ERISA, it did not act imprudently by continuing to follow the named fiduciary’s instruction to maintain the United stock, even as the stock’s value continued to plummet. This Comment discusses the Summers decision. Specifically, it focuses on how the decision, while in some ways consistent with ERISA, ultimately breaks away from both the underlying policies and language of ERISA. This Comment also analyses a United States Department of Labor Bulletin and how the Summers decision failed to utilize the standard that it offers.

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