California Decision Expands Actuary's Potential Liability Based On Aiding And Abetting Theory

The recently published California decision in Nasrawi v. Buck Consultants LLC, issued by the Court of Appeal, Sixth District, has the potential to expand an actuarial firm's liability well beyond its current limits under California law.1

In Nasrawi, the appellate court reversed a trial court order which sustained a demurrer filed by defendants Buck Consultants and one of its actuaries, which sought the dismissal of an "aiding and abetting breach of fiduciary duty" claim against them. The plaintiffs in the case were beneficiaries of the Stanislaus County Employees Retirement Association, the administrator of the County's public employee retirement system (the "Association"). The Court of Appeal ruled that the plaintiffs' fifth amended complaint adequately alleged a claim against Buck for "aiding and abetting" various breaches of fiduciary duty allegedly owed to plaintiffs by the Association itself.

The Nasrawi plaintiffs alleged in their lawsuit that the Association breached its fiduciary duties to plaintiffs by failing to sue Buck for actuarial malpractice in connection with an actuarial valuation prepared for the Association. The Court of Appeal affirmed the dismissal of the plaintiffs' claim against the Association. However, it ruled that the Nasrawi plaintiffs' aiding and abetting allegations against Buck could...