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Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 12, 2005 Decided January 24, 2006

No. 05-5050

ELAINE L. CHAO, SECRETARY OF DEPARTMENT OF LABOR,

APPELLEE

v.

BRITTIAN P. DAY AND

A & D INSURANCE AGENCY, INC.,

APPELLANTS

Appeal from the United States District Court

for the District of Columbia

(No. 02cv01516)

John W. Karr argued the cause for appellants. With him on

the brief was Theodore S. Allison.

Glenn M. Loos, Senior Trial Attorney, U.S. Department of

Labor, argued the cause for appellee. With him on the brief was

Elizabeth Hopkins, Attorney. Ellen L. Beard, Attorney, entered

an appearance.

Before: GINSBURG, Chief Judge, and SENTELLE, Circuit

Judge, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge SENTELLE.

USCA Case #05-5050 Document #944658 Filed: 01/24/2006 Page 1 of 8
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SENTELLE, Circuit Judge: The A&D Insurance Agency and

its President, Brittian P. Day (collectively, “Day”), appeal the

District Court’s grant of summary judgment in favor of the

Secretary of the Department of Labor, Elaine L. Chao (the

“Secretary”), under the Employee Retirement Income Security

Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461. Day contends

that he is not a “fiduciary” within the meaning of ERISA §

3(21)(A)(i), 29 U.S.C. § 1002(21)(A)(i), and thus not covered by

the statute. We agree with the District Court and affirm. 

I

The Secretary filed a complaint in the United States District

Court for the District of Columbia against Day, alleging that he

violated his fiduciary responsibilities through an illegal scheme

to misappropriate insurance assets. See 29 U.S.C. § 1109(a)

(imposing civil liability for the breach of a fiduciary duty); id.

§ 1132(a)(2) (empowering the Secretary of Labor to bring

enforcement actions for the breach of a fiduciary duty).

Specifically, the Secretary alleged that Day accepted hundreds

of thousands of dollars from twenty-nine ERISA-covered

employee benefit plans for the purpose of purchasing insurance

for the plans. Under his brokerage scheme, Day sent invoices to

the plans for various insurance policies, the plans paid the bills

by sending checks to Day, and Day deposited the checks into his

corporate account. Instead of using the plans’ checks to

purchase insurance, however, Day kept the money and provided

the plans with fake insurance policies.

Day filed a motion to dismiss the Secretary’s complaint,

arguing that he did not fall within ERISA’s definition of a

“fiduciary.” The District Court denied Day’s motion and held

“Defendants, by using plan funds for personal use, plainly

exercised ‘control’ over the ‘disposition’ of plan assets. . . .

USCA Case #05-5050 Document #944658 Filed: 01/24/2006 Page 2 of 8
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[T]he court finds that the factual circumstances of the present

case bring Defendants within the reach of the ERISA statute.”

Thereafter, the Secretary filed a motion for summary judgment,

along with a statement of material facts and numerous exhibits.

In response, Day filed a memorandum in opposition to the

Secretary’s motion, but Day did not file a separate statement of

material facts. Taking the Secretary’s statement of facts as

undisputed, the District Court granted the Secretary’s motion for

summary judgment and ordered Day to pay almost $1 million in

damages. The only issue on appeal is whether Day is a

“fiduciary” under ERISA.

II

We review de novo the District Court’s grant of summary

judgment to the Secretary, viewing the record in the light most

favorable to Day, the nonmoving party. See, e.g., Cruz v. Am.

Airlines, Inc., 356 F.3d 320, 328 (D.C. Cir. 2004). Summary

judgment is appropriate only if there is no genuine issue of

material fact, and judgment in the movant’s favor is proper as a

matter of law. See Fed. R. Civ. P. 56(c); Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986). We take as true the

Secretary’s “statement of material facts” because Day failed to

dispute them below. See Waterhouse v. Dist. of Columbia, 298

F.3d 989, 992 (D.C. Cir. 2002).

Our analysis begins, as always, with the text of the statute.

See Barnhart v. Sigmon Coal Co., 534 U.S. 438, 450 (2002).

Where, as here, it is plain and unambiguous, our analysis ends

with the text as well. See Robinson v. Shell Oil Co., 519 U.S.

337, 340 (1997). 

The relevant section of ERISA defines two classes of

fiduciaries:

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a person is a fiduciary with respect to a plan to the

extent he [(a)] exercises any discretionary authority or

discretionary control respecting management of such

plan or [(b)] exercises any authority or control

respecting management or disposition of its assets.

29 U.S.C. § 1002(21)(A)(i) (emphasis added). In the

Secretary’s view, Day falls within the scope of the second clause

because he exercised “authority or control” over the “disposition

of [the plans’] assets.” In response, Day argues that fiduciaries

under both the first and second clauses—hereinafter referenced

as the “discretionary” and “disposition” clauses,

respectively—require some element of discretionary “authority

or control.” Day contends he was simply an insurance salesman,

and he did not exercise any discretion over the plans’ assets—he

was under strict instructions to use the plans’ funds to purchase

insurance coverage for the plans’ members. Therefore, Day

concludes, he cannot qualify as a “fiduciary” under ERISA.

We reject Day’s interpretation of § 1002(21)(A)(i) because

it does violence to the statutory text. The plain language of that

text connects the two classes of “fiduciaries” with the

disjunctive “or”—not the conjunctive “and.” See, e.g., Garcia

v. United States, 469 U.S. 70, 73 (1984) (“Canons of

construction indicate that terms connected in the disjunctive in

this manner be given separate meanings.”); 1A NORMAN J.

SINGER, STATUTES AND STATUTORY CONSTRUCTION § 21.14 at

181-82 (6th ed. 2002) (“courts presume that ‘or’ is used in a

statute disjunctively unless there is a clear legislative intent to

the contrary”); see also AMERICAN HERITAGE DICTIONARY OF

THE ENGLISH LANGUAGE 873 (4th ed. 2000) (defining “or” as

“[u]sed to indicate . . . [a]n alternative . . .” (emphasis added));

MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 817 (10th ed.

1996) (defining “or” as “a function word [used] to indicate an

alternative” (emphasis added)); VII OXFORD ENGLISH

USCA Case #05-5050 Document #944658 Filed: 01/24/2006 Page 4 of 8
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DICTIONARY 166 (1933) (defining “or” as “[a] particle coordinating two (or more) words, phrases, or clauses, between

which there is an alternative” (emphasis added)). Congress

plainly framed § 1002(21)(A)(i) in the alternative, and it further

bifurcated the subsection with the parallel inclusion of the verb

“exercises” at the beginning of both the discretionary and

disposition clauses. We therefore cannot commingle the

textually distinct provisions of the two clauses. See Overseas

Educ. Ass’n v. FLRA, 876 F.2d 960, 975 (D.C. Cir. 1989)

(Buckley, J., concurring) (“This court has no authority to engraft

restrictions onto the statute that its drafters did not choose to

use, and that the members voting it into law never had the

chance to consider.”). 

 Our conclusion is further buttressed by the structure of the

statute. The “discretion” requirement—which is repeated twice

in the discretionary clause—is conspicuously omitted altogether

from the disposition clause. Instead, in order to qualify as a

“fiduciary” with respect to a plan’s “assets,” a person must

simply exercise “any authority or control” over their

management or disposition. 29 U.S.C. § 1002(21)(A)(i)

(emphasis added). As the Supreme Court has instructed, “[w]e

do not lightly assume that Congress has omitted from its adopted

text requirements that it nonetheless intends to apply, and our

reluctance is even greater when Congress has shown elsewhere

in the same statute that it knows how to make such a

requirement manifest.” Jama v. Immigration & Customs

Enforcement, 125 S. Ct. 694, 700 (2005). Day points to

nothing—in either ERISA or the caselaw interpreting it—to

overcome this reluctance. Day undeniably had “authority or

control” over the “disposition” of the plans’ “assets.” The plans

sent to Day checks made payable to him. Day then deposited

the plans’ funds into his account. Day was obligated to

“control” the “disposition” of those funds for paying the plans’

insurance premiums. Instead, Day absconded with the funds.

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1

 At least one court has suggested that “discretion” is a

prerequisite for all fiduciaries under ERISA § 3(21)(A), 29 U.S.C. §

1002(21)(A). See Useden v. Acker, 947 F.2d 1563, 1574 (11th Cir.

1991) (rejecting Appellant’s argument that a bank “exercise[d] . . .

discretionary authority or control over Plan assets such that it acquired

fiduciary status”); see also O’Toole v. Arlington Trust Co., 681 F.2d

94, 96 (1st Cir. 1982). However, the Useden court did not explain

which provision within § 1002(21)(A) it was relying upon or analyze

the textual distinctions between the statute’s various subsections. To

the extent the Useden court imputes a “discretionary” requirement to

the disposition clause, we reject its approach for the reasons set forth

in this opinion. 

Because the disposition clause contains no “discretion”

requirement, it is irrelevant whether Day exercised “discretion”

in his thievery. “[A]ny authority or control” is enough. 

Therefore, in light of ERISA’s statutory text and structure,

we conclude Day was a “fiduciary,” regardless of whether he

possessed “discretionary authority or discretionary control” over

the disposition of the plans’ assets. Our conclusion comports

with the results reached by every Court of Appeals that has

considered the issue.1 See David P. Coldesina, D.D.S., P.C.,

Empl. Profit Sharing & Trust v. Estate of Simper, 407 F.3d

1126, 1132-35 (10th Cir. 2005) (holding an accountant is a

“fiduciary” under the disposition clause where he wrongfully

disbursed the plans’ funds); Srein v. Frankford Trust Co., 323

F.3d 214, 220-22 (3d Cir. 2003) (holding a bank is a “fiduciary”

under the disposition clause where it wrongfully disbursed the

plans’ funds); LoPresti v. Terwilliger, 126 F.3d 34, 40 (2d Cir.

1997) (holding that insurance premiums deducted from

employees’ paychecks and commingled with corporate assets

were plan assets in accordance with Department of Labor

regulations, see 29 C.F.R. § 2510.3-102(a), and therefore that

president of employer corporation acted as a fiduciary when he

failed to separate those assets for payment to the funds and

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instead used them to pay company creditors); IT Corp. v. Gen.

Am. Life Ins. Co., 107 F.3d 1415, 1421 (9th Cir. 1997) (holding

a plan administrator is a “fiduciary” under the disposition clause

where it wrongfully disbursed the plan’s funds). 

While it is not necessary to our holding, we note that the

common law definition of a “fiduciary” further supports our

interpretation of the disposition clause. Under the common law,

insurance brokers, such as Day, are the agents of the insureds,

such as the plans, not the companies. See, e.g., Evvtex Co. v.

Hartley Cooper Assocs. Ltd., 102 F.3d 1327, 1331-32 (2d Cir.

1996); 43 Am. Jur. 2d Insurance § 129 (“Ordinarily, when

employed to procure insurance, the broker becomes the agent of

the person for whom the insurance is procured.”); 44 C.J.S.

Insurance § 181 (“[I]n the absence of a statute to the contrary,

[an insurance broker] is the agent of insured as to all matters

within the scope of his employment.”). As the plans’ agent, Day

was bound by a broker’s common law fiduciary duty to

faithfully deliver the plans’ assets to the insurer. See, e.g.,

Offshore Prod. Contractors, Inc. v. Republic Underwriters Ins.

Co., 910 F.2d 224, 230-31 (5th Cir. 1990); 44 C.J.S. Insurance

§ 215 (“Where an insurance agent or broker acts as agent for

insured, there is a fiduciary relationship between them, and the

agent or broker has a fiduciary responsibility to insured. Thus,

an agent or broker employed to effect insurance for another, like

other agents, owes to his principal the duty to discharge with

loyalty and good faith the trust imposed in him, to obey the

instructions given to him by insured, and to exercise reasonable

skill, care, and diligence in effecting the insurance.” (footnotes

omitted)). Thus, even though our holding in this case rests

exclusively on ERISA’s statutory definition of a “fiduciary,” our

conclusion is also consistent with the long-prevailing common

law definition of the term.

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 We hasten to emphasize the limited scope of today’s

holding. Our interpretation of the disposition clause does

not—as Day fears—extend fiduciary status to every person who

exercises “mere possession, or custody” over the plans’ assets.

Day was far more than a mere custodian; he was a broker who

solicited, accepted, and then pilfered the plans’ assets by

reneging on his promise to purchase insurance for the plans’

members. On the facts presented here, we hold simply that Day

exercised sufficient “authority or control” over the “disposition”

of the plans’ assets to qualify as a “fiduciary” under the

disposition clause.

III

For the reasons set forth above, the District Court’s entry of

summary judgment in favor of the Secretary is 

Affirmed.

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