JUSTIFYING FIDUCIARY REMEDIES

Fiduciary remedies are notoriously potent. Fiduciaries who profit from their disloyalty are liable to be ordered to disgorge all of their gains, even where they act for the primary purpose of benefitting their beneficiaries. It is commonly assumed that any plausible justification for disgorgement awards will be inconsistent with formal corrective justice. Formal corrective justice asserts that remedies rectify wrongs and share in the justification for primary rights. Disgorgement seems inconsistent with formal corrective justice because it appears responsive to public-interest considerations having nothing to do with the primary right to loyalty. This article challenges conventional wisdom and offers an argument that explains how disgorgement for disloyalty effectuates formal corrective justice. It does so by restoring gains to beneficiaries to which they are entitled as a matter of primary right by virtue of their exclusive claim over fiduciary power.