FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ROBERT J. BUGIELSKI; CHAD S. 

SIMECEK, individually as 

participants in the AT and T 

Retirement Savings Plan and as a 

representatives of all persons similarly 

situated, 

Plaintiffs-Appellants, 

 v. 

AT&T SERVICES, INC.; AT&T 

BENEFIT PLAN INVESTMENT 

COMMITTEE, 

Defendants-Appellees.

No. 21-56196 

D.C. No. 

2:17-cv-08106-

VAP-RAO 

OPINION

Appeal from the United States District Court

for the Central District of California

Virginia A. Phillips, Chief District Judge, Presiding

Argued and Submitted October 17, 2022

Portland, Oregon

Filed August 4, 2023
2 BUGIELSKI V. AT&T SERVICES, INC. 

Before: Richard A. Paez and Bridget S. Bade, Circuit 

Judges, and Raner C. Collins,* District Judge.

Opinion by Judge Bade 

SUMMARY**

Employee Retirement Income Security Act

The panel affirmed in part and reversed in part the 

district court’s summary judgment in favor of the defendants 

in an ERISA class action brought by former AT&T 

employees who contributed to AT&T’s retirement plan, a 

defined contribution plan.

Plaintiffs brought this class action against the Plan’s 

administrator, AT&T Services, Inc., and the committee 

responsible for some of the Plan’s investment-related duties, 

the AT&T Benefit Plan Investment Committee (collectively, 

“AT&T”). Plaintiffs alleged that AT&T failed to investigate 

and evaluate all the compensation that the Plan’s 

recordkeeper, Fidelity Workplace Services, received from 

mutual funds through BrokerageLink, Fidelity’s brokerage 

account platform, and from Financial Engines Advisors, 

L.L.C. Plaintiffs alleged that (1) AT&T’s failure to consider 

this compensation rendered its contract with Fidelity a 

* The Honorable Raner C. Collins, United States District Judge for the 

District of Arizona, sitting by designation.

** This summary constitutes no part of the opinion of the court. It has 

been prepared by court staff for the convenience of the reader.
BUGIELSKI V. AT&T SERVICES, INC. 3

“prohibited transaction” under ERISA § 406, (2) AT&T 

breached its fiduciary duty of prudence by failing to consider 

this compensation, and (3) AT&T breached its duty of 

candor by failing to disclose this compensation to the 

Department of Labor.

The panel reversed the district court’s grant of summary 

judgment on the prohibited-transaction claim. Relying on 

the statutory text, regulatory text, and the Department of 

Labor’s Employee Benefits Security Administration’s 

explanation for a regulatory amendment, the panel held that 

the broad scope of § 406 encompasses arm’s-length 

transactions. Disagreeing with other circuits, the panel 

concluded that AT&T, by amending its contract with 

Fidelity to incorporate the services of BrokerageLink and 

Financial Engines, caused the Plan to engage in a prohibited 

transaction. The panel remanded for the district court to 

consider whether AT&T met the requirements for an 

exemption from the prohibited-transaction bar because the 

contract was “reasonable,” the services were “necessary,” 

and no more than “reasonable compensation” was paid for 

the services. Specifically, the panel remanded for the district 

court to consider whether Fidelity received no more than 

“reasonable compensation” from all sources, both direct and 

indirect, for the services it provided the Plan.

For similar reasons, the panel also reversed the district 

court’s summary judgment on the duty-of-prudence 

claim. The panel concluded that, as a fiduciary, AT&T was 

required to monitor the compensation that Fidelity received 

through BrokerageLink and Financial Engines. The panel 

remanded for the district court to consider the duty-ofprudence claim under the proper framework in the first 

instance.
4 BUGIELSKI V. AT&T SERVICES, INC. 

On the reporting claim, the panel affirmed as to the 

compensation from BrokerageLink and reversed as to the 

compensation from Financial Engines. The panel concluded 

that AT&T adequately reported the compensation from 

Financial Engines on its Form 5500s with the Department of 

Labor, but it did not adequately report the compensation 

from Financial Engines because an alternative reporting 

method for “eligible indirect compensation” was not 

available.

COUNSEL

John J. Nestico (argued), Schneider Wallace Cottrell 

Konecky LLP, Charlotte, North Carolina; Todd M. 

Schneider and James A. Bloom, Schneider Wallace Cottrell 

Konecky LLP, Emeryville, California; Todd S. Collins and 

Ellen T. Noteware, Berger Montague PC, Philadelphia, 

Pennsylvania; Jason H. Kim, Schneider Wallace Cottrell 

Konecky LLP, Los Angeles, California; Eric Lechtzin, 

Edelson Lechtzin LLP, Newtown, Pennsylvania; Shoham J. 

Solouki, Solouki Savoy LLP, Los Angeles, California; for 

Plaintiffs-Appellants. 

Ashley E. Johnson (argued), Paulette Miniter, and Katie R. 

Talley, Gibson Dunn & Crutcher LLP, Dallas, Texas; Nancy 

G. Ross, Mayer Brown LLP, Chicago, Illinois; for 

Defendants-Appellees.
BUGIELSKI V. AT&T SERVICES, INC. 5

OPINION

BADE, Circuit Judge:

The Employee Retirement Income Security Act of 1974 

(“ERISA”) establishes standards for employee benefit plans

to protect the interests of plan participants. See 29 U.S.C. 

§ 1001. To that end, ERISA imposes a duty of prudence

upon those who manage employee retirement plans, 

prohibits plans from engaging in transactions that could 

harm participants’ interests, and mandates disclosures to the

United States Department of Labor.

Robert Bugielski and Chad Simecek (“Plaintiffs”) are 

former AT&T employees who contributed to AT&T’s 

retirement plan (“the Plan”), a defined contribution plan. 

They brought this class action against the Plan’s 

administrator, AT&T Services, Inc., and the committee 

responsible for some of the Plan’s investment-related duties,

the AT&T Benefit Plan Investment Committee (collectively, 

“AT&T”). Plaintiffs allege that AT&T failed to investigate 

and evaluate all the compensation that the Plan’s 

recordkeeper, Fidelity Workplace Services (“Fidelity”), 

received in connection with that role. Plaintiffs argue that 

(1) AT&T’s failure to consider this compensation rendered 

its contract with Fidelity a “prohibited transaction” under 

ERISA § 406, (2) AT&T breached its duty of prudence by 

failing to consider this compensation, and (3) AT&T 

improperly failed to disclose this compensation to the 

Department of Labor.

The district court granted summary judgment in AT&T’s 

favor. It concluded that Plaintiffs’ prohibited-transaction 

and duty-of-prudence claims failed because AT&T had no 

obligation to consider this compensation. It also concluded 
6 BUGIELSKI V. AT&T SERVICES, INC.

that AT&T was not required to disclose this compensation 

on its reports to the Department of Labor.

Because we conclude that AT&T was required to 

consider this compensation and report a portion of it, we

affirm in part, reverse in part, and remand for further 

proceedings.

I

A

Fidelity has served as the Plan’s recordkeeper since 

2005. As recordkeeper, Fidelity performs various 

administrative functions, such as enrolling new participants 

in the Plan, maintaining participants’ accounts, and 

processing participants’ contributions to the Plan. In 

exchange for these services, Fidelity charges the Plan a flat 

fee for each participant. Fidelity also offers other services to 

participants on an as-needed basis, including administering 

loans and processing withdrawals. Fees for these 

transactions are charged directly to the Plan participant 

requesting the service.

In approximately 2012, AT&T amended its contract with 

Fidelity to provide Plan participants with access to Fidelity’s 

brokerage account platform, BrokerageLink. For a fee, 

BrokerageLink allows participants to invest in mutual funds 

not otherwise available through the Plan. These fees are

based on a brokerage commission schedule that Fidelity

provides to participants. For example, a participant might 

pay a $75 fee to purchase shares of a particular fund.

In addition to the fees it receives from participants, 

Fidelity receives “revenue-sharing fees” from the mutual 

funds available through BrokerageLink. For example, if a 

participant invested in a mutual fund offered through 
BUGIELSKI V. AT&T SERVICES, INC. 7

BrokerageLink, the fund would pay Fidelity a percentage of 

the amount the participant invested. Participants have 

invested billions of dollars in these mutual funds, resulting 

in millions of dollars in revenue-sharing fees for Fidelity.

In 2014, AT&T contracted with Financial Engines

Advisors, L.L.C. (“Financial Engines”), to provide optional 

investment advisory services to Plan participants. For an 

asset-based fee, Financial Engines would manage a 

participant’s investments.1

However, to do so, Financial Engines needed access to 

participants’ accounts. Accordingly, AT&T amended its 

contract with Fidelity to provide Financial Engines with this 

access. And in its contract with Financial Engines, AT&T 

authorized Financial Engines to contract directly with 

Fidelity to secure the requisite access. Financial Engines and 

Fidelity then entered into a separate agreement under which 

Fidelity received a portion of the fees Financial Engines 

earned from managing participants’ investments. The 

compensation Fidelity received from Financial Engines was 

significant; in some years, Fidelity received approximately 

half of the total fees that Financial Engines charged 

participants, resulting in millions of dollars in compensation 

for Fidelity.

B

In their third amended complaint, Plaintiffs allege that 

AT&T violated several ERISA provisions by failing to

consider the significant compensation that Fidelity received 

through BrokerageLink and Financial Engines.

1 Initially, Financial Engines also charged a flat per-participant fee, but 

AT&T later renegotiated to eliminate this fee.
8 BUGIELSKI V. AT&T SERVICES, INC.

Plaintiffs first allege that AT&T’s amendment of its 

contract with Fidelity to incorporate the services of 

BrokerageLink and Financial Engines was a prohibited 

transaction under § 406(a)(1)(C). See 29 U.S.C. § 1106. 

Section 406 “prohibits fiduciaries from involving the plan 

and its assets in certain kinds of business deals,” Lockheed 

Corp. v. Spink, 517 U.S. 882, 888 (1996), and § 406(a)(1)(C)

specifically prohibits the “furnishing of goods, services, or 

facilities” between a plan and a “party in interest,” 29 U.S.C. 

§ 1106(a)(1)(C). 

Although ERISA § 408 exempts certain transactions 

from § 406’s reach, Plaintiffs argue that none of those 

exemptions applies to the transaction between AT&T and 

Fidelity. Specifically, Plaintiffs argue that this transaction 

was not exempt under § 408(b)(2), which exempts from 

§ 406’s bar service contracts or arrangements between a plan 

and a “party in interest” if (1) the contract or arrangement is 

reasonable, (2) the services are necessary for the 

establishment or operation of the plan, and (3) no more than 

reasonable compensation is paid for the services. 29 U.S.C. 

§ 1108(b)(2); 29 C.F.R. § 2550.408b-2(a). For the contract 

or arrangement to be “reasonable,” the party in interest must 

disclose to the plan’s fiduciary all compensation the party 

expects to receive “in connection with” the services provided 

pursuant to the contract or arrangement.2 29 U.S.C. 

§ 1108(b)(2)(B), 29 C.F.R. § 2550.408b-2(c)(1)(iv); see 

also Reasonable Contract or Arrangement Under Section 

408(b)(2)—Fee Disclosure, 77 Fed. Reg. 5632-01 (Feb. 3, 

2 The party in interest must be a “covered service provider” and provide 

services to a “covered plan.” 29 U.S.C. § 1108(b)(2)(B); 29 C.F.R. 

§ 2550.408b-2(c)(1). AT&T does not dispute that Fidelity was a covered 

service provider and the Plan was a covered plan.
BUGIELSKI V. AT&T SERVICES, INC. 9

2012). Plaintiffs argue that AT&T’s amendment of the 

contract with Fidelity to incorporate Financial Engines’s and 

BrokerageLink’s services did not satisfy the requirements of 

§ 408(b)(2) because AT&T failed to obtain the requisite 

disclosures of the compensation Fidelity received from these 

service providers or determine that such compensation was 

“reasonable.” 29 U.S.C. § 1108(b)(2); 29 C.F.R. 

§ 2550.408b-2(a).

Plaintiffs also allege that AT&T violated § 404 and its 

duty to act prudently by failing to consider this 

compensation. See 29 U.S.C. § 1104. Section 404 imposes 

a duty of prudence upon fiduciaries, requiring them to 

discharge their duties “with the care, skill, prudence, and 

diligence under the circumstances then prevailing that a 

prudent man acting in a like capacity and familiar with such 

matters would use in the conduct of an enterprise of a like 

character and with like aims.” Id. § 1104(a)(1)(B).

Finally, Plaintiffs allege that AT&T was required to 

include this compensation on its annual report, the “Form 

5500.” ERISA requires a plan’s administrator to file an 

annual report with the Department of Labor. See id. § 1023. 

Subject to some exceptions, plan administrators are 

generally required to identify in the report any people or 

entities that received compensation for providing services to 

the plan, as well as the amount of compensation received. 

Id. § 1023(c)(3); Revision of Annual Information 

Return/Reports, 72 Fed. Reg. 64731-01, 64739 (Nov. 16, 

2007). Plaintiffs allege that AT&T did not satisfy this 

obligation.

C

The district court granted summary judgment in AT&T’s 

favor. The court addressed the § 404 duty-of-prudence claim 
10 BUGIELSKI V. AT&T SERVICES, INC.

first, rejecting Plaintiffs’ argument that a prudent fiduciary 

would have considered the compensation Fidelity received 

from Financial Engines and BrokerageLink. The court 

adopted the reasoning of another district court in Marshall v. 

Northrop Grumman Corp., No. 2:16-cv-06794, 2019 WL 

4058583, at *11 (C.D. Cal. Aug. 14, 2019), and concluded 

that Plaintiffs’ argument “fails as a matter of law” because 

this sort of third-party compensation “exists independent of 

the Plan and stems from an agreement to which the Plan is 

not a party,” so AT&T is not required to consider it.

The district court next rejected Plaintiffs’ § 406 

prohibited-transaction claim, concluding that even if a 

prohibited transaction occurred, AT&T satisfied the 

exemption requirements of § 408(b)(2). However, in its 

analysis of the exemption’s “reasonable compensation”

requirement, the district court considered only the 

recordkeeping expenses the Plan paid directly to Fidelity. 

Although Plaintiffs argued that the compensation Fidelity 

received from BrokerageLink and Financial Engines also 

must be considered, the district court rejected this argument

for the same reason it rejected Plaintiffs’ argument that 

AT&T violated its duty of prudence: AT&T “had no duty to 

investigate or consider the third-party compensation Fidelity 

was receiving from Financial Engines and/or

BrokerageLink.” The court also found that the remaining 

exemption requirements were satisfied because Fidelity 

provided adequate disclosure to AT&T of the compensation 

Fidelity would receive from Financial Engines and 

BrokerageLink, and there was no dispute that the services 

were necessary for the Plan.

Finally, the district court determined that Plaintiffs’ 

reporting claim failed because AT&T accurately completed 

its Form 5500s. The court concluded that the compensation 
BUGIELSKI V. AT&T SERVICES, INC. 11

from Financial Engines and BrokerageLink qualified as 

“eligible indirect compensation,” and therefore AT&T 

properly used an alternative reporting method that did not 

require the amount of this compensation to be reported on 

the Form 5500.

II

We review de novo a district court’s decision to grant

summary judgment. KST Data, Inc. v. DXC Tech. Co., 980 

F.3d 709, 713 (9th Cir. 2020). “We also review de novo the 

district court’s interpretation of ERISA.” Leeson v. 

Transamerica Disability Income Plan, 671 F.3d 969, 974 

(9th Cir. 2012).

III

A

To address Plaintiffs’ prohibited-transaction claim, we 

begin with the text of ERISA § 406. See Harris Tr. & Sav. 

Bank v. Salomon Smith Barney, Inc., 530 U.S. 238, 254 

(2000) (“In ERISA cases, ‘[a]s in any case of statutory 

construction, our analysis begins with the language of the 

statute . . . . And where the statutory language provides a 

clear answer, it ends there as well.’” (alterations in original) 

(quoting Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438 

(1999))).

Under § 406(a)(1)(C), a fiduciary “shall not cause the 

plan to engage in a transaction, if he knows or should know 

that such transaction constitutes a direct or 

indirect . . . furnishing of goods, services, or facilities 

between the plan and a party in interest.” 29 U.S.C. 

§ 1106(a)(1)(C). A “party in interest” includes “a person 

providing services to such plan.” Id. § 1002(14)(B). Thus, 

the threshold question is whether AT&T, by amending its 
12 BUGIELSKI V. AT&T SERVICES, INC.

contract with Fidelity to incorporate the services of 

BrokerageLink and Financial Engines, “cause[d] the plan to 

engage in a transaction” that constituted a “furnishing of 

goods, services, or facilities between the plan and a party in 

interest.” Id. § 1106(a)(1)(C).

There is no dispute that Fidelity has been AT&T’s 

recordkeeper since 2005 and “provid[es] services to” the 

Plan in that capacity. Id. § 1002(14)(B). Therefore, Fidelity 

has been a “party in interest” since that time. Id. 

Additionally, no one disputes that the transaction (the 

amendment of the contract between AT&T and Fidelity) 

constituted a “furnishing of . . . services.” Id.

§ 1106(a)(1)(C). Under the plain and unambiguous statutory 

text, the contract amendment was a prohibited transaction

under § 406(a)(1)(C).

Indeed, AT&T admits that the language of 

§ 406(a)(1)(C) is “broad” and, if read literally, encompasses 

the transaction with Fidelity. AT&T argues, however, that 

Congress “never intended” for § 406(a) to be “so broad” that 

it would encompass “arm’s-length service transactions.” 

But, in contrast to AT&T’s arguments based on Congress’s 

purported intent, we have previously recognized § 406’s 

“broad” scope, explaining that § 406 creates “a broad per se 

prohibition of transactions ERISA implicitly defines as not 

arm’s-length.” M & R Inv. Co. v. Fitzsimmons, 685 F.2d 

283, 287 (9th Cir. 1982); see also Ronald J. Cooke, ERISA 

Practice & Procedure § 6.49 (Dec. 2022 update) (“Since the 

prohibition against transactions between plans and parties in 

interest is per se in nature, a violation does not depend on 

whether any harm results from the transaction.”).

Moreover, § 406(a)(1)(C) contains no language limiting 

its application to non-arm’s-length transactions, and
BUGIELSKI V. AT&T SERVICES, INC. 13

accepting AT&T’s “statutory intent” argument would 

undermine the scheme Congress enacted. Specifically, 

§ 408(b)(2) broadly exempts from § 406’s bar transactions 

for “services necessary for the establishment or operation of

the plan.” 29 U.S.C. § 1108(b)(2)(A). And the definition of 

“necessary” is similarly broad: a service is necessary if it “is 

appropriate and helpful to the plan obtaining the service in 

carrying out the purposes for which the plan is established or 

maintained.” 29 C.F.R. § 2550.408b-2(b). In other words, 

ERISA already contains an exemption for those “service 

transactions” that keep plans running smoothly, which are 

the very transactions AT&T argues should be exempt. We 

see no reason to fashion a judge-made exemption when 

Congress has already provided a statutory exemption.

We are particularly reluctant to adopt an atextual 

interpretation of § 406 because ERISA is “an enormously 

complex and detailed statute,” Conkright v. Frommert, 559 

U.S. 506, 509 (2010) (quoting Mertens v. Hewitt Assocs., 

508 U.S. 248, 262 (1993)), that is “the product of a decade 

of congressional study of the Nation’s private employee 

benefit system,” Mertens, 508 U.S. at 251. Indeed, because 

of ERISA’s complex and carefully crafted nature, the 

Supreme Court has “been especially ‘reluctant to tamper 

with [the] enforcement scheme’ embodied in the statute by 

extending remedies not specifically authorized by its text.” 

Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 

204, 209 (2002) (alteration in original) (quoting Mass. Mut. 

Life Ins. Co. v. Russell, 473 U.S. 134, 147 (1985)). Although 

the Court made this observation in a different context, we 

conclude that we should proceed in a similarly cautious 

manner and decline to read additional limitations, 

requirements, or exceptions into the statutory text.
14 BUGIELSKI V. AT&T SERVICES, INC.

B

The Department of Labor’s Employee Benefits Security 

Administration’s (“EBSA”) explanation for amending the 

regulation implementing § 408(b)(2) confirms our reading 

of § 406. In pertinent part, that explanation provides:

The furnishing of goods, services, or 

facilities between a plan and a party in 

interest to the plan generally is prohibited 

under section 406(a)(1)(C) of ERISA. As a 

result, a service relationship between a plan 

and a service provider would constitute a 

prohibited transaction, because any person 

providing services to the plan is defined by 

ERISA to be a “party in interest” to the plan. 

However, section 408(b)(2) of ERISA 

exempts certain arrangements between plans 

and service providers that otherwise would 

be prohibited transactions under section 406 

of ERISA.

Reasonable Contract or Arrangement Under Section 

408(b)(2)—Fee Disclosure, 77 Fed. Reg. at 5632; see Kisor 

v. Wilkie, 139 S. Ct. 2400, 2413 (2019) (“Want to know what 

a rule means? Ask its author.”). In other words, the

explanation contemplates the sort of arm’s-length 

transactions that AT&T argues § 406(a)(1)(C) was not 

intended to reach, confirms that these transactions

“generally” are prohibited under § 406(a)(1)(C), and 

reiterates the role of § 408(b)(2) and its implementing 

regulation, 29 C.F.R. § 2550.408b-2, in providing relief 

from § 406’s categorical bar of such transactions. Indeed, 

Fidelity correctly noted as much when it told AT&T that 
BUGIELSKI V. AT&T SERVICES, INC. 15

although it might be “surpris[ing]” that contracts between “a 

plan and a service provider, like a recordkeeper, are 

prohibited transactions,” plans are able to “routinely enter 

into contracts with service providers” because of

§ 408(b)(2)’s exemption.

Furthermore, when explaining its reasons for amending 

the regulation, EBSA provided an example of the application 

of § 406 and § 408 that refutes AT&T’s argument that § 406 

was not meant to reach the transaction in this case. After 

explaining that the complexity of compensation 

arrangements for retirement plan services required 

regulatory action, the agency noted that “[p]ayments from 

third parties and among service providers can create 

conflicts of interest between service providers and their 

clients.” Id. at 5650. By way of example, it explained that 

there is a potential for conflicts when “a 401(k) plan vendor 

may receive ‘revenue sharing’ from a mutual fund that it 

makes available to its clients.” Id. That is precisely the 

arrangement here between Fidelity and the mutual funds 

available through BrokerageLink. EBSA clearly recognized 

that such arrangements could lead to potential conflicts of 

interest and, as a result, required disclosure under 

§ 408(b)(2) prior to a fiduciary’s entry into this sort of 

arrangement.

Finally, we are persuaded by the Department of Labor’s

advisory opinion that a company that “provide[d] 

recordkeeping and related administrative services to 

retirement plans” and made available to those plans “a 

variety of investment options, including its own insurance 

company separate accounts and affiliated and unaffiliated 

mutual funds,” would be “a party in interest with respect to 
16 BUGIELSKI V. AT&T SERVICES, INC.

the plan” because it was “a provider of services.”3 U.S. 

Dep’t of Labor, Opinion No. 2013-03A, 2013 WL 3546834, 

at *1–2 (July 3, 2013). The opinion states that 

§ 406(a)(1)(C) “generally prohibit[s]” the furnishing of 

goods, services, or facilities between a plan and a party in 

interest, unless the exemption in § 408(b)(2) applies. Id. at 

*2. Because the situation described in the advisory opinion 

is remarkably similar to this case, it reinforces our 

conclusion that § 406(a)(1)(C) broadly applies to 

transactions constituting a “furnishing of goods, services, or 

facilities between the plan and a party in interest,” and a 

party is a “party in interest” if it “provid[es] services to” a 

plan. 29 U.S.C. §§ 1002(14)(B), 1106(a)(1)(C).

C

In contrast to the statutory and regulatory text, as well as 

EBSA’s explanation of the revised regulation, AT&T relies 

on three decisions to support its reading of § 406(a)(1)(C) as 

excluding arm’s-length transactions from the statute’s

definition of prohibited transactions: Lockheed Corp. v. 

Spink, 517 U.S. 882 (1996); Sweda v. University of 

Pennsylvania, 923 F.3d 320 (3d Cir. 2019); and Albert v. 

Oshkosh Corp., 47 F.4th 570 (7th Cir. 2022). As set forth 

below, we conclude that these cases either do not support 

AT&T’s position, or we decline to follow their reasoning.

3 Agency interpretations “contained in formats such as opinion letters are 

‘entitled to respect’” under Skidmore v. Swift & Co., 323 U.S. 134, 140 

(1944), to the extent that they “have the ‘power to persuade.’” 

Christensen v. Harris County, 529 U.S. 576, 587 (2000) (quoting 

Skidmore, 323 U.S. at 140).
BUGIELSKI V. AT&T SERVICES, INC. 17

1

The first case AT&T relies upon is Lockheed Corp. v. 

Spink, in which an employer amended its defined benefit 

plan to offer increased pension benefits, payable out of the 

plan’s surplus assets, to employees who would retire early, 

under the condition that participants release any 

employment-related claims against the employer. 517 U.S. 

at 885. The plaintiff alleged that this payment of benefits 

was a prohibited transaction under § 406(a)(1)(D), which 

prohibits a fiduciary from causing a plan to engage in a 

transaction that constitutes a “transfer to, or use by or for the 

benefit of a party in interest, of any assets in the plan.” Id.

at 886, 892 (quoting 29 U.S.C. § 1106(a)(1)(D)). The 

plaintiff theorized that the release of employment-related 

claims by participants was a significant “benefit” for the 

employer under § 406(a)(1)(D). Id. at 893.

The Court rejected this theory, holding that “the payment 

of benefits pursuant to an amended plan, regardless of what 

the plan requires of the employee in return for those benefits, 

does not constitute a prohibited transaction.” Id. at 895. The 

Court first recognized that § 406(a)(1)(D) “does not in direct 

terms include the payment of benefits by a plan 

administrator.” Id. at 892; see also id. at 894 (“Section 

406(a)(1)(D) simply does not address what an employer can 

and cannot ask an employee to do in return for benefits.”). 

The Court then looked to “the surrounding provisions” of 

§ 406 to determine whether the payment of benefits was a 

“‘transaction’ in the sense that Congress used that term in 

§ 406(a).” Id. at 892–93. The Court concluded it was not, 

noting that § 406(a) involves “commercial bargains that 

present a special risk of plan underfunding because they are 

struck with plan insiders, presumably not at arm’s length.” 

Id. at 893. The common thread among the transactions in 
18 BUGIELSKI V. AT&T SERVICES, INC.

§ 406(a), the Court continued, “is that they generally involve 

uses of plan assets that are potentially harmful to the plan,” 

whereas the “payment of benefits conditioned on 

performance by plan participants cannot reasonably be said 

to share that characteristic.” Id.

The Court then considered the plaintiff’s concession that 

there were “incidental” and therefore “legitimate” benefits 

that a plan sponsor might also receive from operating a

pension plan, such as attracting and retaining employees or 

providing increased compensation without increasing 

wages. Id. The Court explained that it could not see “how 

obtaining waivers of employment-related claims” could 

“meaningfully be distinguished” from these other objectives 

the plaintiff admitted were permissible. Id. at 894. Thus, the 

Court concluded that there was “no basis in § 406(a)(1)(D) 

for distinguishing a valid from an invalid quid pro quo.” Id.;

see also id. at 895 (“When § 406(a)(1)(D) is read in the 

context of the other prohibited transaction provisions, it 

becomes clear that the payment of benefits in exchange for 

the performance of some condition by the employee is not a 

‘transaction’ within the meaning of § 406(a)(1).”).

AT&T relies on Lockheed’s statement that § 406 bars 

transactions “likely to injure the pension plan,” id. at 888 

(quoting Comm’r v. Keystone Consol. Indus., Inc., 508 U.S. 

152, 160 (1993)), to support its argument that § 406(a)(1)(C) 

was not meant to prohibit “the type of ubiquitous, arm’slength service transactions involved here.” For several 

reasons, we disagree.

First, and most importantly, the text of § 406(a)(1)(D)

did not support the Lockheed plaintiff’s argument. The 

Court began its analysis with the statutory text and 

concluded that the text “does not in direct terms” include 
BUGIELSKI V. AT&T SERVICES, INC. 19

“the payment of benefits” and “simply does not address what 

an employer can and cannot ask an employee to do in return 

for benefits.” Id. at 892, 984. In contrast, § 406(a)(1)(C) 

does, “in direct terms,” encompass the transactions here. 

There is no dispute that AT&T “cause[d] the plan to engage 

in a transaction” involving the “furnishing of . . . services” 

between “the plan and a party in interest.” 29 U.S.C. 

§ 1106(a)(1)(C). And since it decided Lockheed, the Court 

has reiterated that courts “‘must enforce plain and 

unambiguous statutory language’ in ERISA, as in any 

statute, ‘according to its terms.’” Intel Corp. Inv. Pol’y 

Comm. v. Sulyma, 140 S. Ct. 768, 776 (2020) (quoting Hardt 

v. Reliance Standard Life Ins. Co., 560 U.S. 242, 251 

(2010)). Our approach does just that.

Second, no other authority supported the Lockheed

plaintiff’s argument. To the contrary, the Court observed

that federal law “expressly approve[d]” the employer’s 

strategy, and the Court noted its reluctance “to infer that 

ERISA bars conduct affirmatively sanctioned by other 

federal statutes” in the absence of “clearer indication than 

what [the Court had] in § 406(a)(1)(D).” Lockheed Corp., 

517 U.S. at 895 n.6. But here, AT&T identifies no 

equivalent law supporting its position, while Plaintiffs’ 

position is reinforced by EBSA’s explanation of the 

amendments to 29 C.F.R. § 2550.408b-2.

Third, the Court considered the “surrounding 

provisions” of § 406 and observed that the transactions 

identified in § 406 “generally involve uses of plan assets that 

are potentially harmful to the plan.” Id. at 892–93. And 

while we are mindful that “the words of a statute must be 

read in their context and with a view to their place in the 

overall statutory scheme,” Davis v. Mich. Dep’t of Treasury, 

489 U.S. 803, 809 (1989)); see also Lockheed Corp., 517 
20 BUGIELSKI V. AT&T SERVICES, INC.

U.S. at 895, we do not read this general statement as limiting 

§ 406’s scope or requiring that a transaction be harmful to be 

prohibited. Rather, this “general[]” observation explains 

why it made sense that the “direct terms” of the statute did 

not encompass the payment of benefits as a prohibited 

transaction. Lockheed Corp., 517 U.S. at 892. The Court’s 

analysis would have differed if the “direct terms” of § 406 

had encompassed the transaction, id., or if the “statutory 

scheme” had supported the plaintiff’s argument, Davis, 489 

U.S. at 809, as § 408(b)(2) and its implementing regulation 

do here. In short, our analysis is faithful to the Court’s 

holding in Lockheed. Because the “direct terms” of 

§ 406(a)(1)(C) encompass the transaction here, AT&T’s 

contextual argument cannot create an exception to 

§ 406(a)(1)(C) where one does not exist. See Sulyma, 140 

S. Ct. at 777–78 (rejecting contextual argument because 

“that is simply not what [the statute at issue] says”).

Fourth, while the payment of benefits in Lockheed could 

not “reasonably be said” to be “potentially harmful to the 

plan,” 517 U.S. at 893, the transactions here have the 

potential to be harmful. Participants paid additional fees to 

use BrokerageLink and Financial Engines. In a defined 

contribution plan, like the Plan here, “participants’ 

retirement benefits are limited to the value of their own 

individual investment accounts, which is determined by the 

market performance of employee and employer 

contributions, less expenses. Expenses, such as 

management or administrative fees, can sometimes 

significantly reduce the value of an account in a definedcontribution plan.” Tibble v. Edison Int’l, 575 U.S. 523, 526 

(2015). Therefore, if AT&T entered into bad deals—as 

Plaintiffs hypothesize—those fees could “significantly 

reduce” participants’ assets. Id. Put differently, Lockheed 
BUGIELSKI V. AT&T SERVICES, INC. 21

does not support AT&T’s arguments because there is a 

fundamental difference between paying increased pension 

benefits to employees and authorizing transactions that 

generate millions of dollars for a party in interest. The text 

of § 406 recognizes this distinction. Compare Lockheed 

Corp., 517 U.S. at 892 (stating that § 406(a)(1)(d) “does not 

in direct terms include the payment of benefits” as a 

prohibited transaction) with 29 U.S.C. § 1106(a)(1)(c) 

(explicitly prohibiting the “furnishing of . . . services”

between a plan and a party in interest).

Finally, the Court’s analysis in Lockheed emphasized the 

difficulty in distinguishing between those “benefits” the 

plaintiff conceded were proper under § 406(a)(1)(D) and 

those that were not. 517 U.S. at 894–95. There is no 

equivalent line-drawing concern here. To the contrary, 

adopting AT&T’s position would implicate such a concern; 

a “standard that allows some [transactions with parties in 

interest] but not others, as [AT&T] suggests, lacks a basis” 

in § 406(a)(1)(C)’s categorical bar. Id. at 895.

For all these reasons, we do not believe Lockheed

justifies a judicial override of § 406(a)(1)(C)’s unambiguous 

text.

2

We also find unpersuasive the Third Circuit’s decision 

in Sweda v. University of Pennsylvania, which AT&T urges 

us to follow. In Sweda, the Third Circuit affirmed the 

dismissal of various claims alleging that the fiduciaries of 

the University of Pennsylvania’s retirement plan entered into 

agreements with the plan’s recordkeepers that constituted 

prohibited transactions. 923 F.3d at 324. The court found 

that the plaintiffs plausibly alleged that the recordkeepers—

the equivalent of Fidelity here—were “parties in interest” 
22 BUGIELSKI V. AT&T SERVICES, INC.

because they provided services to the plan. Id. at 339; see 

29 U.S.C. § 1002(14)(B). And the court recognized that “it 

is possible to read [§ 406(a)(1)(C)] to create a per se 

prohibited transaction rule forbidding service arrangements 

between a plan and a party rendering services to the plan.” 

Sweda, 923 F.3d at 339–40. Nevertheless, the court 

“declined” to follow that reading of § 406(a)(1)(C), and 

instead established a requirement that a plaintiff plead

“factual allegations that support an element of intent to 

benefit a party in interest” to state a prohibited-transaction 

claim. Id. at 336, 338.

The court reasoned that because § 406(a)(1) was 

“designed to prevent ‘transactions deemed likely to injure 

the . . . plan’ and ‘self-dealing,’” it seemed “improbable” 

that § 406(a)(1)(C) “would prohibit ubiquitous service 

transactions and require a fiduciary to plead reasonableness 

as an affirmative defense.” Id. at 336 (alteration in original)

(quoting Nat’l Sec. Sys., Inc. v. Iola, 700 F.3d 65, 92 (3d Cir. 

2012)). The court also reasoned that reading § 406(a)(1) “as 

a per se rule” would “miss the balance that Congress struck 

in ERISA” by “expos[ing] fiduciaries to liability for every 

transaction whereby services are rendered to the plan.” Id.

at 337. Finally, the court noted that § 404(a)(1)(A)(ii)

“specifically acknowledges that certain services are 

necessary to administer plans,” so interpreting § 406(a)(1) 

“to prohibit necessary services would be absurd.” Id. at 337.

We disagree with this approach, which does not follow 

the statutory text. The Supreme Court has reiterated that “a 

reviewing court’s ‘task is to apply the text [of the statute], 

not to improve upon it.’” EPA v. EME Homer City 

Generation, L.P., 572 U.S. 489, 508–09 (2014) (alteration in 

original) (quoting Pavelic & LeFlore v. Marvel Ent. Grp., 

493 U.S. 120, 126 (1989)). Despite recognizing that each
BUGIELSKI V. AT&T SERVICES, INC. 23

recordkeeper was a “party in interest” and that the 

transaction at issue fit within the terms of § 406(a)(1)(C), the 

Third Circuit “decline[d]” to apply the text of § 406, opting 

instead to create an intent requirement that the statute does 

not demand. Sweda, 923 F.3d at 336–37, 339. We believe 

our reading is more faithful to the text of § 406(a)(1)(C), 

which does not include any intent requirement. See, e.g., 

Lauderdale v. NFP Retirement, Inc., No. SACV 21-301 JVS 

(KESx), 2022 WL 422831, at *20 (C.D. Cal. Feb. 8, 2022) 

(stating, while referencing Sweda, that the court was “not 

inclined to impose an intent requirement that is not in the 

text of the statute”).

Additionally, while the court noted that it seemed 

“improbable” that Congress intended to prohibit “ubiquitous 

service transactions,” Sweda, 923 F.3d at 336, it did not 

consider EBSA’s reasoning for amending § 408(b)(2)’s 

implementing regulation, which contemplates these very 

service transactions and confirms they are prohibited under 

§ 406. See Reasonable Contract or Arrangement Under 

Section 408(b)(2)—Fee Disclosure, 77 Fed. Reg. at 5632

(“[A] service relationship between a plan and a service 

provider would constitute a prohibited transaction, because 

any person providing services to the plan is defined by 

ERISA to be a ‘party in interest’ to the plan.”).

Moreover, in refusing to adopt “a per se rule,” Sweda, 

923 F.3d at 337, the court overlooked that the Supreme Court

had already recognized that § 406 creates a per se rule.

Harris Tr. & Sav. Bank, 530 U.S. at 241–42 (“Congress 

enacted ERISA § 406(a)(1), which supplements the 

fiduciary’s general duty of loyalty to the plan’s beneficiaries, 

§ 404(a), by categorically barring certain transactions 

deemed ‘likely to injure the pension plan.’” (emphasis 

added) (citation omitted)); see also id. at 252 (noting that 
24 BUGIELSKI V. AT&T SERVICES, INC.

§ 406(a) creates “per se prohibitions on transacting with a 

party in interest”).

And even assuming § 408(b)(2) “require[s] a fiduciary 

to plead reasonableness as an affirmative defense,” Sweda, 

923 F.3d at 336, the concern “that putting employers to the 

work of persuading factfinders that their choices are 

reasonable makes it harder and costlier to defend . . . ha[s] to 

be directed at Congress, which set the balance where it is,”

Meacham v. Knolls Atomic Power Lab’y, 554 U.S. 84, 101–

02 (2008). Congress has already set the balance here.

Finally, we disagree with the Third Circuit’s reasoning 

that because § 404(a)(1)(A)(ii) “specifically acknowledges 

that certain services are necessary to administer plans,”

interpreting § 406(a)(1)(C) “to prohibit necessary services 

would be absurd.” Sweda, 923 F.3d at 337. As an initial 

matter, we know that Congress recognized that 

§ 406(a)(1)(C) would prohibit necessary services; that is 

why it created an exemption. See 29 U.S.C. § 1108(b)(2)(A)

(exempting contracts for “services necessary for the 

establishment or operation of the plan”).

Moreover, while § 404(a)(1)(A)(ii) “acknowledges that 

certain services are necessary to administer plans,” there are 

several reasons why it does not follow that it would be 

“absurd” for § 406 to prohibit necessary services. Sweda, 

923 F.3d at 337. First, § 406(a)(1)(C) only applies to service 

contracts with a “party in interest,” and therefore it poses no 

bar to contracts with parties that do not meet that definition. 

29 U.S.C. § 1106(a)(1)(C). Second, even if a party in 

interest were the sole provider of a necessary service,

§ 406(a)(1)(C) does not completely “prohibit necessary 

services” or “impede necessary service transactions.” 

Sweda, 923 F.3d at 337–38. Instead, it simply ensures that, 
BUGIELSKI V. AT&T SERVICES, INC. 25

when transacting with a party in interest, a fiduciary 

understands the compensation the party in interest will 

receive from the transaction and determines that 

compensation is reasonable. See 29 C.F.R. § 2550.408b2(a), (c), (d). This reading is consistent with ERISA’s 

broader aim to protect plan participants, as well as §§ 406 

and 408’s aim to increase transparency around service 

providers’ compensation and potential conflicts of interest.

See 29 U.S.C. § 1001; Reasonable Contract or Arrangement 

Under Section 408(b)(2)—Fee Disclosure, 77 Fed. Reg. at

5632.

3

AT&T’s reliance on Albert v. Oshkosh Corp. fares no 

better. In Oshkosh, the Seventh Circuit rejected the 

plaintiff’s argument that “paying excessive fees” to the 

plan’s recordkeeper and investment advisor “for Plan 

services” amounted to a prohibited transaction. 47 F.4th at 

575–76, 584. The court acknowledged that “[u]nder a literal 

reading” of § 406(a)(1)(C) and the definition of “party in 

interest,” ERISA “would prohibit payments by a plan to an 

entity providing services for the plan.” Id. at 584. The court 

then cited Sweda, among other cases, as support that courts 

“have declined to read ERISA that way because it would 

prohibit fiduciaries from paying third parties to perform 

essential services in support of a plan.” Id. Concluding that 

the transactions were prohibited would be “inconsistent with 

the purpose of the statute,” the court reasoned, because it 

would be “nonsensical” to read § 406(a)(1) “to prohibit 

transactions for services that are essential for defined 

contribution plans, such as recordkeeping and administrative 

services.” Id. at 584–85.
26 BUGIELSKI V. AT&T SERVICES, INC.

The court distinguished past precedent that did not 

“confront the circularity problem” present in § 406 because 

“the transactions at issue [in that case] did not transform the 

defendants into parties in interest.” Id. at 585. Ultimately, 

the court concluded that prohibiting “routine payments by 

plan fiduciaries to third parties in exchange for plan 

services” would put plan participants in “a worse position”

because plans could no longer “outsource tasks like 

recordkeeping, investment management, or investment 

advising.” Id. at 585–86.

The nature of the “transaction” in Oshkosh is not entirely

clear from the opinion. But considering the court’s 

discussion of a “circularity problem,” it appears the 

“transaction” was simply payment for the services that 

rendered the service provider a “party in interest” in the first 

place. Id. at 583–85.4 In other words, the plaintiff argued 

that the recordkeeper became a “party in interest” by 

4 This understanding of the transaction at issue is further supported by 

the district court’s decision and the plaintiff’s allegations and briefing. 

See Albert v. Oshkosh Corp., No. 20-C-901, 2021 WL 3932029, at *8

(E.D. Wisc. Sept. 2, 2021) (rejecting as “circular reasoning” the 

argument that “an entity which becomes a party in interest by providing 

services to the Plans has engaged in a prohibited transaction simply 

because the Plans have paid for those services” and concluding that 

allegations that the employer paid the service providers “excessive fees 

for their services, without more, do not state a prohibited transaction 

claim” (quotation omitted)); Brief for Appellant Andrew Albert at 45, 

Albert v. Oshkosh Corp., 47 F.4th 570 (7th Cir. 2022) (No. 21-2789), 

ECF No. 27 (arguing that because the employer “paid fees to [the service 

providers] with plan assets” and § 408(b)(2)’s exemption is an 

affirmative defense, the prohibited-transaction claim survives a motion 

to dismiss); Amended Complaint at 64–66, Albert v. Oshkosh Corp., 

2021 WL 3932029 (E.D. Wisc. Sept. 2, 2021) (No. 1:20-cv-00901-

WCG), ECF No. 20 (alleging that the plan engaged in a prohibited 

transaction by “using assets of the Plan to pay” for “unreasonable” fees).
BUGIELSKI V. AT&T SERVICES, INC. 27

providing recordkeeping services to the plan, and the

payment for those services amounted to a prohibited 

transaction. See id. at 584 (“Subsections (A) through (D) [of 

§ 406] cannot be read to categorically prohibit the very 

transactions that cause a person to obtain the status of a party 

in interest.” (quoting Sellers v. Anthem Life Ins. Co., 316 F. 

Supp. 3d 25, 34 (D.D.C. 2018)).

That was not the situation here, where Fidelity was a

longstanding party in interest when AT&T amended its 

contract to incorporate additional services from new 

vendors, resulting in millions of dollars in compensation for 

Fidelity. To the extent the court in Oshkosh premised its 

decision on a situation inapposite from the one here, we find 

it unpersuasive.

To the extent the court was considering a situation 

similar to the one presented here, we simply disagree with

its analysis. As in Sweda, the court in Oshkosh recognized 

that “a literal reading” of § 406(a)(1)(C) led to the 

conclusion that the transaction was prohibited, yet it

concluded such a reading was “nonsensical.” Id. at 584–85. 

And like the court in Sweda, it did not consider EBSA’s 

explanation of its amendment of § 408(b)(2)’s implementing 

regulation; if the court had, it likely would have concluded 

that the “literal reading” is correct. See Reasonable Contract 

or Arrangement Under Section 408(b)(2)—Fee Disclosure, 

77 Fed. Reg. at 5632 (“The furnishing 

of . . . services . . . between a plan and a party in interest to 

the plan generally is prohibited under section 406(a)(1)(C) 

of ERISA.”). We are hard-pressed to find the best reading 

of the statutory text, as corroborated by the agency tasked 

with administering the relevant regulations, “nonsensical.”
28 BUGIELSKI V. AT&T SERVICES, INC.

Finally, the court’s suggestion in Oshkosh that § 406 

would prevent plans from outsourcing recordkeeping and 

investment services also misses the mark. 47 F.4th at 585–

86. Section 406(a)(1)(C) is not a complete ban; instead, it 

requires fiduciaries, before entering into an agreement with 

a party in interest, to understand the compensation the party 

in interest will receive, evaluate whether the arrangement 

could give rise to any conflicts of interest, and determine 

whether the compensation is reasonable. 29 C.F.R. 

§ 2550.408b-2; see generally Reasonable Contract or 

Arrangement Under Section 408(b)(2)—Fee Disclosure, 77 

Fed. Reg. 5632-01. Rather than frustrating “ERISA’s 

statutory purpose,” Oshkosh, 47 F.4th at 585, this scheme

furthers it by ensuring fiduciaries understand the impact the 

transaction will have on participants’ interests. See 29 

U.S.C. § 1001.

* * * *

In sum, AT&T’s arguments based on these cases cannot 

overcome the clear command of ERISA’s text, as reinforced 

by the regulation implementing § 408(b)(2) and EBSA’s 

explanation for its amendment. Because amending 

Fidelity’s contract constituted a prohibited transaction under 

§ 406(a)(1)(C), we next consider whether the requirements 

for an exemption under § 408(b)(2) were satisfied.

IV

Section 408(b)(2) provides relief from the prohibitedtransaction bar for service contracts or arrangements 

between a plan and a party in interest if (1) the contract or 

arrangement is “reasonable,” (2) the services are “necessary 

for the establishment or operation of the plan,” and (3) no 

more than “reasonable compensation is paid” for the 

services. 29 U.S.C. § 1108(b)(2); 29 C.F.R. § 2550.408b-
BUGIELSKI V. AT&T SERVICES, INC. 29

2(a). Only the first and third requirements are at issue here, 

as Plaintiffs agree that the services were “necessary.” See

29 C.F.R. § 2550.408b-2(b).

A

Under § 408(b)(2)’s first requirement, for the contract or 

arrangement to be “reasonable,” the party in interest (which

must be a covered service provider and provide services to a 

covered plan, 29 C.F.R. § 2550.408b-2(c)) must disclose to 

the plan’s fiduciary detailed information about all 

compensation the party expects to receive “in connection 

with” the services provided pursuant to the contract or 

arrangement. 29 C.F.R. § 2550.408b-2(c)(1)(iv). Among 

other things, this includes (1) a description of all “direct 

compensation” the party expects to receive, and (2) a 

description of all “indirect compensation” the party expects 

to receive, including “identification of the services for which 

the indirect compensation will be received, identification of 

the payer of the indirect compensation, and a description of 

the arrangement between the payer and the [party in 

interest] . . . pursuant to which such indirect compensation is 

paid.”5 Id. § 2550.408b-2(c)(1)(iv)(C)(1)–(2).

We need not address this requirement, however, because 

we conclude that remand is necessary for the district court to 

consider § 408(b)(2)’s third requirement: whether Fidelity 

received no more than “reasonable compensation” from all 

sources for the services it provided the Plan.

5 “Direct” compensation is compensation “received directly from the

covered plan,” such as the recordkeeping fees AT&T paid Fidelity. 29 

C.F.R. § 2550.408b-2(c)(1)(viii)(B)(1). “Indirect” compensation 

includes “compensation received from any source other than the covered 

plan.” Id. § 2550.408b-2(c)(1)(viii)(B)(2).
30 BUGIELSKI V. AT&T SERVICES, INC.

B

The parties dispute the meaning of “reasonable 

compensation” under the third requirement. Id.

§ 2550.408b-2(a)(3). AT&T asserts that “reasonable 

compensation” encompasses only the compensation Fidelity 

received directly from the Plan and its participants for 

recordkeeping, while Plaintiffs argue that the reasonableness 

of the compensation also includes the compensation Fidelity 

received from Financial Engines and BrokerageLink. The 

district court adopted AT&T’s position, concluding that

AT&T “had no duty to investigate or consider the third-party 

compensation Fidelity was receiving from Financial Engines 

and/or BrokerageLink, and therefore [its] failure to do so

does not make [the] compensation agreement unreasonable.”

The district court, relying on Marshall v. Northrop 

Grumman Corp., had already concluded that AT&T had no 

duty to consider this compensation in its analysis of the dutyof-prudence claim. 2019 WL 4058583, at *11. The court

applied this reasoning to the prohibited-transaction claim

and analyzed whether Fidelity’s recordkeeping expenses 

alone were reasonable.

Although Marshall is not binding on us, AT&T urges us 

to adopt its reasoning, as the district court did. The plaintiffs 

in Marshall argued that the fiduciary breached its duty of 

prudence under § 404 by failing to monitor the 

compensation the recordkeeper received from the plan’s 

investment advice provider, Financial Engines.6 Id. at *4, 

6 Marshall involved two different types of fees: “[d]ata connectivity 

fees,” which Financial Engines paid the recordkeeper in exchange for 

receiving “up-to-date participant data in a timely manner and format” so 
BUGIELSKI V. AT&T SERVICES, INC. 31

11. The district court rejected this argument, stating that 

“ERISA does not require, as a matter of law,” that fiduciaries 

monitor “the type of third-party fees at issue here” because 

those fees “are not subject to fiduciary control, the fees are 

not paid out of plan assets, and [the fees] are for services [the 

recordkeeper] provides to Financial Engines out of an 

independent business arrangement.” Id. at *11.

But this conclusion is refuted by EBSA’s explanation of 

its amendments to § 408(b)(2)’s implementing regulation—

which the Marshall court did not consider, as the plaintiffs

brought their claim under § 404. See id. at *10–11. EBSA 

stated explicitly that the information the party in interest 

must disclose to the fiduciary about the compensation it 

expects to receive “in connection with” the services provided

“will assist plan fiduciaries in understanding the services and 

in assessing the reasonableness of the compensation, direct 

and indirect, that the [party in interest] will receive.” 

Reasonable Contract or Arrangement Under Section 

408(b)(2)—Fee Disclosure, 77 Fed. Reg. at 5635–36

(emphasis added). Put differently, the regulation 

contemplates that the fiduciary will assess the 

reasonableness of the compensation that the party receives

“directly from the covered plan,” 29 C.F.R. § 2550.408b2(c)(1)(viii)(B)(1) (defining “direct compensation”), and

“from any source other than the covered plan,” id. 

§ 2550.408b-2(c)(1)(viii)(B)(2) (defining “indirect 

compensation”).

it could provide participants with investment advice, and fees from a 

“Master Service Agreement,” under which the recordkeeper “agreed to 

provide data connectivity services and other services to enable Financial 

Engines to pursue sales opportunities within [the recordkeeper’s] 

existing and potential client base.” 2019 WL 4058583, at *5, 11. 
32 BUGIELSKI V. AT&T SERVICES, INC.

In amending § 2550.408b-2, EBSA explained that, when 

“evaluating the reasonableness” of the contract for services,

“responsible plan fiduciaries have a duty to consider 

compensation that will be received by a [party in interest] 

from all sources in connection with the services it provides 

to a covered plan pursuant to the [party in interest’s] contract 

or arrangement.” Reasonable Contract or Arrangement 

Under Section 408(b)(2)—Fee Disclosure, 77 Fed. Reg. at 

5650 (emphasis added). EBSA further explained that the 

phrase “in connection with” should “be construed broadly” 

to encompass compensation the party receives “based in 

whole or in part” on its contract with the plan. Id. at 5637. 

Therefore, to the extent Marshall found that fiduciaries do 

not have a duty to consider “third-party fees,” 2019 WL 

4058583, at *11, it conflicts with the agency’s purpose in 

amending § 408’s implementing regulation, and we reject its 

reasoning.

Rather, to determine whether “no more than reasonable 

compensation is paid” for services under § 408(b)(2)’s 

exemption, 29 C.F.R. § 2550.408b-2(a)(3), a fiduciary must 

consider all compensation—direct and indirect—that the 

party in interest receives “in connection with” the services it 

provides to the plan under the contract. See Reasonable 

Contract or Arrangement Under Section 408(b)(2)—Fee 

Disclosure, 77 Fed. Reg. at 5650 (“In evaluating the 

reasonableness of contracts or arrangements for services, 

responsible plan fiduciaries have a duty to consider 

compensation that will be received by a covered service 

provider from all sources in connection with the services it 

provides to a covered plan pursuant to the service provider’s 

contract or arrangement.”).

This conclusion—that the fiduciary must consider all 

compensation the party in interest receives in connection 
BUGIELSKI V. AT&T SERVICES, INC. 33

with the services it provides the plan—is required by the text 

of the regulation, conforms to the structure and purpose of 

§ 408(b)(2)’s requirements, and is reinforced by EBSA’s 

explanation for revising § 2550.408b-2. The first exemption 

requirement—that the contract or arrangement be

“reasonable”—calls for the party in interest to disclose

information to the fiduciary about the compensation the

party in interest expects to receive in connection with the 

services provided under the contract with the plan. 29 C.F.R. 

§ 2550.408b-2(c)(1)(iv). The third requirement—that “no 

more than reasonable compensation is paid”—expects a 

fiduciary to consider this information. As EBSA explained, 

the point of disclosure is to provide information from which 

the fiduciary can make responsible decisions for the plan. 

Reasonable Contract or Arrangement Under Section 

408(b)(2)—Fee Disclosure, 77 Fed. Reg. at 5634, 5635–36

(stating that the disclosure requirements “should be 

construed broadly to ensure that responsible plan fiduciaries 

base their review of a service contract or arrangement on 

comprehensive information,” and that the disclosed 

information “will assist plan fiduciaries in understanding the 

services and in assessing the reasonableness of the 

compensation” the party will receive). Disclosure is 

pointless if the fiduciary has no obligation to consider the

disclosed information.

Moreover, one of the primary purposes of amending 

§ 408(b)(2)’s implementing regulation was to address 

“third-party fees,” which the court in Marshall found 

fiduciaries need not consider. 2019 WL 4058583, at *11. 

EBSA was particularly concerned with the special risks

presented by these fees. It recognized that “[p]ayments from 

third parties and among service providers can create 

conflicts of interest between service providers and their 
34 BUGIELSKI V. AT&T SERVICES, INC.

clients,” and these payments have “been largely hidden from 

view,” thereby preventing fiduciaries “from assessing the 

reasonableness of the costs for plan services.” Reasonable 

Contract or Arrangement Under Section 408(b)(2)—Fee 

Disclosure, 77 Fed. Reg. at 5650. 

EBSA therefore implemented the regulation to

“improve . . . transparency” and make it easier for 

fiduciaries to satisfy their “duty to consider compensation 

that will be received by a [party in interest] from all sources 

in connection with the services it provides to a covered plan” 

under the contract. Id. (outlining these risks in section titled 

“The Need for Regulatory Action”). The purpose of the 

regulation is clear—indeed, Fidelity even informed AT&T 

that “the regulation is focused on the disclosure of indirect 

revenue.”

In short, to determine whether “no more than reasonable 

compensation is paid” for a party in interest’s services, 

EBSA envisioned that a fiduciary would consider the 

compensation received by the party “from all sources in 

connection with the services it provides to a covered plan 

pursuant to” the contract, not just the compensation the party

receives directly from a plan. See Reasonable Contract or 

Arrangement Under Section 408(b)(2)—Fee Disclosure, 77 

Fed. Reg. at 5650.

Here, that means AT&T needed to consider the 

compensation Fidelity received from Financial Engines and 

BrokerageLink when determining whether “no more than 

reasonable compensation” was paid for Fidelity’s services. 

29 C.F.R. § 2550.408b-2(a)(3). The district court did not 

engage in this analysis; it concluded that AT&T “had no 

duty” to consider this compensation and evaluated whether

the recordkeeping expenses the Plan paid directly to Fidelity, 
BUGIELSKI V. AT&T SERVICES, INC. 35

alone, were reasonable. We therefore remand for the district 

court to conduct this analysis in the first instance.

V

For similar reasons, we also reverse the district court’s 

judgment in favor of AT&T on Plaintiffs’ duty-of-prudence 

claim and remand for further proceedings. Plaintiffs assert

that AT&T breached its duty of prudence under ERISA 

§ 404 by failing to monitor the compensation Fidelity 

received through BrokerageLink and Financial Engines. See 

29 U.S.C. § 1104(a)(1) (requiring a fiduciary to discharge 

his or her duties “with the care, skill, prudence, and diligence 

under the circumstances then prevailing” and for the 

“exclusive purpose” of “providing benefits to participants” 

and “defraying reasonable expenses of administering the 

plan”).

AT&T again relies on Marshall as support for its 

argument that a fiduciary need not consider this 

compensation, and again this reliance is misplaced. As our 

prior discussion of Plaintiffs’ § 406 prohibited-transaction 

claim demonstrates, AT&T was required to consider this 

compensation under §§ 406 and 408. Moreover, EBSA’s 

explanation of the amendments to 29 C.F.R. § 2550.408b-2

explicitly envisions that fiduciaries will consider such 

compensation to satisfy their duty of prudence under 

§ 404—directly refuting Marshall.

When amending § 2550.408b-2, EBSA explained that 

fiduciaries must have information about the compensation—

direct and indirect—received by service providers like 

Fidelity “to satisfy their fiduciary obligations under ERISA 

[§] 404(a)(1) to act prudently.” Reasonable Contract or 

Arrangement Under Section 408(b)(2)—Fee Disclosure, 77 

Fed. Reg. at 5632. These disclosures are necessary because 
36 BUGIELSKI V. AT&T SERVICES, INC.

the duty of prudence requires a fiduciary to discharge his or

her duties “solely in the interest of [plan] participants and 

beneficiaries” and for the purpose of “defraying reasonable 

expenses of administering” the plan. 29 U.S.C. 

§ 1104(a)(1)(A)(ii). A fiduciary cannot do so, however, if 

he or she is unaware of how and to what extent a service 

provider is compensated. See Reasonable Contract or 

Arrangement Under Section 408(b)(2)—Fee Disclosure, 77 

Fed. Reg. at 5632 (stating that § 408(b)(2) requires service 

providers to disclose all compensation they receive in 

connection with a plan because “plan fiduciaries need this 

information, when selecting and monitoring service 

providers,” to be able to “assess[] the reasonableness of the 

compensation paid for services and the conflicts of interest 

that may affect a service provider’s performance of services” 

and satisfy their duty of prudence).

Indeed, EBSA amended § 408(b)(2)’s implementing 

regulation to better allow fiduciaries to fulfill their 

responsibilities. EBSA recognized that “the way services 

are provided to employee benefit plans and . . . the way 

service providers are compensated” had changed, making “it 

more difficult for plan sponsors and fiduciaries to understand 

what service providers actually are paid for the specific 

services rendered”—as “[§] 404(a)(1) of ERISA requires 

plan fiduciaries” to do. Reasonable Contract or 

Arrangement Under Section 408(b)(2)—Fee Disclosure, 75 

Fed. Reg. 41600-01, 41600 (July 16, 2010) (interim rule); 

see also Reasonable Contract or Arrangement Under Section 

408(b)(2)—Fee Disclosure, 77 Fed. Reg. at 5637–38 (final 

rule) (explaining how the final rule’s disclosure 

requirements better enable “a responsible plan fiduciary” to 

understand “what compensation will be received and from 
BUGIELSKI V. AT&T SERVICES, INC. 37

whom” so he or she can “make informed decisions about 

service costs and potential conflicts of interest”).

AT&T counters that the duty-of-prudence claim must 

fail because Plaintiffs offered no expert testimony to 

establish that a prudent fiduciary would have considered the 

fees Fidelity received from BrokerageLink and Financial 

Engines. However, AT&T identifies no Ninth Circuit 

precedent suggesting that expert testimony is a prerequisite 

to a successful claim, and we decline to create a per se rule

requiring such evidence. See Hughes v. Northwestern Univ., 

142 S. Ct. 737, 742 (2022) (“Because the content of the duty 

of prudence turns on ‘the circumstances . . . prevailing’ at 

the time the fiduciary acts, § 1104(a)(1)(B), the appropriate 

inquiry will necessarily be context specific.” (quoting Fifth 

Third Bancorp v. Dudenhoeffer, 573 U.S. 409, 425 (2014)).

Similarly, we cannot conclude that AT&T, in fact, 

considered these fees. AT&T does not even attempt to argue 

that it considered the compensation Fidelity received from 

the mutual funds available through BrokerageLink. And to 

support its argument that it considered the compensation 

Fidelity received from Financial Engines, AT&T cites 

testimony from an AT&T executive that he “took note of” 

that compensation and took it “into account.” But another

AT&T executive testified that “what Financial Engines and 

Fidelity worked out for fees, was between them,” while 

another echoed that sentiment and suggested that AT&T 

“really didn’t make an inquiry about whether [the fee paid 

by Financial Engines to Fidelity] was a reasonable” one. On 

balance, this conflicting testimony does not support AT&T’s 

claim that it considered the compensation Fidelity received 

from Financial Engines.
38 BUGIELSKI V. AT&T SERVICES, INC.

On this record, we cannot conclude that AT&T satisfied 

its duty of prudence as a matter of law. We therefore remand 

for the district court to consider Plaintiffs’ duty-of-prudence 

claim under the proper framework in the first instance. See 

Nunez v. Duncan, 591 F.3d 1217, 1222–23 (9th Cir. 2010)

(in reviewing a district court’s grant of summary judgment, 

we determine “whether there are any genuine issues of 

material fact and whether the district court correctly applied 

the relevant substantive law” (quoting Devereaux v. Abbey, 

263 F.3d 1070, 1074 (9th Cir. 2001) (en banc)).

VI

Finally, we turn to Plaintiffs’ reporting claim. Plaintiffs 

argue that AT&T breached its “duty of candor” by failing to 

accurately report on its Form 5500s the indirect 

compensation Fidelity received from Financial Engines and 

BrokerageLink. See 29 U.S.C. § 1023(c)(3). Plaintiffs seek 

injunctive relief requiring AT&T to correct the Form 5500s.

The Form 5500 requires plan administrators to identify

service providers, like Fidelity, that receive a certain amount 

of compensation in connection with services rendered to the 

plan. U.S. Dep’t of Labor, Emp. Benefits Sec. Admin., 

Schedule C (Form 5500), at 1. Administrators generally 

must report the direct and indirect compensation that the 

service provider received. See id. at 3. However, if the 

indirect compensation qualifies as “eligible indirect 

compensation” and was adequately disclosed to the plan, an 

alternative reporting method is available. Id. Under those 

circumstances, the administrator can check a box on the 

Form 5500 indicating that the service provider received 

eligible indirect compensation without reporting the amount. 

Id.
BUGIELSKI V. AT&T SERVICES, INC. 39

AT&T contends that it properly used this alternative

reporting method, while Plaintiffs argue that, even if the

compensation from BrokerageLink qualified as eligible 

indirect compensation, it was reported incorrectly, and the 

compensation from Financial Engines was not eligible 

indirect compensation. We address Plaintiffs’ arguments in 

turn.

A

Plaintiffs argue that AT&T incorrectly reported 

Fidelity’s compensation from BrokerageLink because the 

alternative reporting method is available only if the “sole

compensation received by a recordkeeper is eligible indirect 

compensation,” and Fidelity received other types of 

compensation. But, as AT&T points out, if the service 

provider received compensation other than eligible indirect 

compensation, the plan administrator simply “must complete 

line 2” of the Form 5500, which AT&T did. U.S. Dep’t of 

Labor, Emp. Benefits Sec. Admin., Instructions for Form 

5500, at 28. Plaintiffs do not acknowledge this portion of 

the Form or argue that AT&T needed to do something more 

on line 2.

Additionally, AT&T received the disclosures necessary 

to utilize the alternative method to report the BrokerageLink 

compensation. See id. AT&T received written materials 

from Fidelity disclosing (1) “the existence of” the 

compensation from the mutual funds available through 

BrokerageLink, (2) “the services provided for” the 

compensation (certain recordkeeping or shareholder 

services), (3) the “amount (or estimate) of the compensation 

or a description of the formula used to calculate or determine 

the compensation” (ranges of basis points or flat fees, 

depending on the fund), and (4) “the identity of the party or 
40 BUGIELSKI V. AT&T SERVICES, INC.

parties paying and receiving the compensation” (Fidelity 

received the compensation from the mutual funds, their 

investment advisors, or their affiliates). Id.; see also 

Revision of Annual Information Return/Reports, 72 Fed. 

Reg. 64731-01, 64742 (Nov. 16, 2007) (stating these 

requirements). Therefore, we agree with the district court 

that AT&T adequately reported the compensation from 

BrokerageLink and affirm its judgment on this ground.

B

As to the compensation Fidelity received from Financial 

Engines, Plaintiffs challenge AT&T’s position that this 

compensation was eligible indirect compensation. The 

Form 5500 instructions define “eligible indirect 

compensation,” and we emphasize the portion of the 

definition on which AT&T relies: 

[F]ees or expense reimbursement payments 

charged to investment funds and reflected in 

the value of the investment or return on 

investment of the participating plan or its 

participants, finder’s fees, “soft dollar” 

revenue, float revenue, and/or brokerage 

commissions or other transaction-based fees 

for transactions or services involving the plan 

that were not paid directly by the plan or plan 

sponsor (whether or not they are capitalized 

as investment costs). 

Investment funds or accounts for this purpose 

would include mutual funds, bank 

commingled trusts, including common and 

collective trusts, insurance company pooled 

separate accounts, and other separately 
BUGIELSKI V. AT&T SERVICES, INC. 41

managed accounts and pooled investment 

vehicles in which the plan invests.

Investment funds or accounts would also 

include separately managed investment 

accounts that contain assets of individual 

plans.

U.S. Dep’t of Labor, Emp. Benefits Sec. Admin., 

Instructions for Form 5500, at 28 (emphasis added).

AT&T asserts that the fees paid by Financial Engines to 

Fidelity are “fees . . . charged to investment funds and 

reflected in the value of the investment” because the fees 

paid to Financial Engines “came directly from the 

‘investment funds’ contributed by” Plan participants.7 In 

other words, AT&T argues that these fees are “charged to 

investment funds” because “investment funds” includes 

“separately managed investment accounts that contain assets 

of individual plans.”

But a “separately managed investment account” is a 

specific type of investment vehicle; it does not mean, as 

AT&T asserts, simply an “investment account” that is 

“managed” by an adviser like Financial Engines. Although 

a separately managed account is a “portfolio[] of assets 

managed by an investment adviser,” it is “usually targeted 

towards wealthy individual investors” and differs from a

7 Plaintiffs do not dispute that these fees “were not paid directly by the 

plan or plan sponsor.” Moreover, AT&T does not argue that the fees 

paid by Financial Engines to Fidelity would qualify as any other type of

“eligible indirect compensation” as that term is defined in the 

instructions for Form 5500. See U.S. Dep’t of Labor, Emp. Benefits Sec. 

Admin., Instructions for Form 5500, at 28; see also Revision of Annual 

Information Return/Reports, 72 Fed. Reg. at 64742 (EBSA’s discussion 

of the revisions to the Form 5500 reporting requirements). 
42 BUGIELSKI V. AT&T SERVICES, INC.

typical investment account in which the average investor 

invests in bonds and mutual funds. Standards for Covered 

Clearing Agencies for U.S. Treasury Securities and 

Application of the Broker-Dealer Customer Protection Rule 

With Respect to U.S. Treasury Securities, 87 Fed. Reg. 

64610-01, 64659 (proposed Oct. 25, 2022). Unlike with a 

mutual fund, in which an investor shares ownership of the 

underlying securities with other investors, an investor in a 

separately managed account directly owns shares of the 

individual securities, allowing for a high degree of

personalized investment. BlackRock, Separately Managed 

Accounts to construct personalized portfolios, 

https://www.blackrock.com/us/financialprofessionals/investment-strategies/managed-accounts 

[https://perma.cc/2YD8-ZZLN]; Investopedia, Should You 

Have a Separately Managed Account?, 

https://www.investopedia.com/articles/mutualfund/08/mana

ged-separate-account.asp [https://perma.cc/MHU3-3A2B] 

(explaining that with a mutual fund, an investor “share[s] 

ownership of the underlying securities with all of the other 

investors in the fund,” whereas with a separately managed 

account, an adviser purchases shares of specific 

companies—not shares of a mutual fund—on the investor’s 

behalf).

Here, Financial Engines was not purchasing individual 

securities on behalf of Plan participants. Rather, Financial 

Engines considered a participant’s age, risk tolerance, and 

other characteristics; provided recommendations on how the

participant should invest his or her money; and allocated the 

participant’s contributions among the Plan’s “menu of 

investment alternatives.” This does not constitute a 

“separately managed investment account.” Therefore, 

AT&T’s argument that the fees paid to Financial Engines 
BUGIELSKI V. AT&T SERVICES, INC. 43

were “eligible indirect compensation”—and therefore did 

not need to be separately reported on the Form 5500—fails.

Nor can we affirm on any of the other grounds AT&T 

proposes.

AT&T invokes our decision in Mathews v. Chevron 

Corp., 362 F.3d 1172 (9th Cir. 2004), where we stated that 

to “establish an action for equitable relief under ERISA 

section 502(a)(3), the defendant must be an ERISA fiduciary 

acting in its fiduciary capacity,” id. at 1178 (internal 

citations omitted), and must violate “ERISA-imposed 

fiduciary obligations,” id. (quoting Varity Corp. v. Howe, 

516 U.S. 489, 506 (1996)). AT&T argues that it did not act 

in a fiduciary capacity when completing the Form 5500, so 

Plaintiffs cannot establish a claim for equitable relief.

8

But in Mathews, we made this statement in the context 

of a claim for breach of fiduciary duty, see id. at 1176, 1180 

(stating that “[a]t issue here is an alleged violation of 

8 Plaintiffssometimes frame their reporting claim as a breach of the “duty 

of candor,” which we assume is in response to this language in Mathews. 

Because equitable relief under § 502(a)(3) is not limited to breaches of 

fiduciary duties, we do not decide whether a fiduciary “duty of candor” 

exists.

Additionally, contrary to AT&T’s argument, Plaintiffs have not 

waived this claim. Plaintiffs have not failed to argue before the district 

court that the reporting failures violated ERISA § 103. See 29 U.S.C. 

§ 1023. Although Plaintiffs sometimes phrased this argument in terms 

of a “duty of candor” under § 404, Plaintiffs have regularly identified 

§ 103 as authorizing their claim. They have argued, at least as far back 

as their opposition to AT&T’s motion to dismiss the second amended 

complaint, that they sought relief “under ERISA § 502(a)(3) enjoining 

[AT&T] from filing incomplete and inaccurate Annual Reports and to 

correct previous inaccurate disclosures pursuant to 29 U.S.C. 

[§] 1023(a)(2).”
44 BUGIELSKI V. AT&T SERVICES, INC.

[§] 404(a)(1),” which imposes the fiduciary duty of 

prudence), and the defendant specifically argued that it did 

not act in a fiduciary capacity when taking the actions at 

issue, id. at 1178. But ERISA’s authorization of suits for

equitable relief, § 502(a)(3), is not limited to claims against 

fiduciaries for breach of fiduciary duty. See 29 U.S.C. 

§ 1132(a)(3). Instead, § 502(a)(3) authorizes a “participant, 

beneficiary[,] or fiduciary” to bring an action “(A) to enjoin 

any act or practice which violates any provision of this 

subchapter or the terms of the plan, or (B) to obtain other 

appropriate equitable relief (i) to redress such violations or 

(ii) to enforce any provisions of this subchapter or the terms 

of the plan.” 29 U.S.C. § 1132(a)(3) (emphases added); see 

also U.S. Dep’t of Labor, Emp. Benefits Sec. Admin., FAQs 

about Retirement Plans and ERISA 14, 

https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/ouractivities/resource-center/faqs/retirement-plans-and-erisafor-workers.pdf [https://perma.cc/TJ3M-NDLV] (“[Y]ou 

have a right to sue your plan and its fiduciaries . . . [t]o 

address a breach of a plan fiduciary’s duties; or [t]o stop the 

plan from continuing any act or practice that violates the 

terms of the plan or ERISA.”). Some violations of ERISA 

involve a breach of fiduciary duty, as in Mathews, but

ERISA has other “provisions” that can be violated. See

Bafford v. Northrop Grumman Corp., 994 F.3d 1020, 1029

(9th Cir. 2021) (“The [defendant’s] escape from liability on 

the fiduciary duty claim does not necessarily exonerate it 

from its other statutory obligations.”).

Indeed, in Sereboff v. Mid Atlantic Medical Services, 

Inc., 547 U.S. 356 (2006), a fiduciary sued a beneficiary

under § 502(a)(3), not for breach of fiduciary duty, but to 

enforce “the terms of the plan,” 29 U.S.C. § 1132(a)(3). 547 

U.S. at 359–61. The Court stated that the “only question”
BUGIELSKI V. AT&T SERVICES, INC. 45

regarding the applicability of § 502(a)(3)(B) was whether 

the requested relief was “equitable.” Id. at 361. Therefore, 

we cannot read Mathews to impose the limitations AT&T 

suggests because such a reading would be in direct conflict 

with Sereboff—in which the defendant was a beneficiary, 

not “an ERISA fiduciary acting in its fiduciary capacity,”

Mathews, 362 F.3d at 1178, and which was brought to 

enforce the terms of the plan, not to remedy violations of 

“ERISA-imposed fiduciary obligations,” id. (quotation 

omitted). And we have recognized that Mathews must be 

read in context, as we have framed the inquiry differently in 

other cases. See, e.g., Warmenhoven v. NetApp, Inc., 13 

F.4th 717, 725 (9th Cir. 2021) (“A § [502(a)(3)] claim has 

two elements: ‘(1) that there is a remediable wrong, i.e., that 

the plaintiff seeks relief to redress a violation of ERISA or 

the terms of a plan; and (2) that the relief sought is 

appropriate equitable relief.’” (quoting Gabriel v. Alaska 

Elec. Pension Fund, 773 F.3d 945, 954 (9th Cir. 2014)). 

Thus, Plaintiffs can bring an equitable reporting claim 

without a breach of fiduciary duty claim.

AT&T also argues that Plaintiffs’ reporting claim must 

fail because Plaintiffs cannot show that any errors in the 

Form 5500s led to loss. But we have rejected this argument 

when the plaintiff seeks only equitable relief, as Plaintiffs do 

here. See Shaver v. Operating Eng’rs Local 428 Pension Tr. 

Fund, 332 F.3d 1198, 1203 (9th Cir. 2003). Therefore, we 

reverse the judgment of the district court regarding AT&T’s 

reporting of the compensation from Financial Engines.

VII

Because the district court did not correctly apply the 

relevant substantive law to Plaintiffs’ prohibited-transaction 

and duty-of-prudence claims, we reverse and remand for it 
46 BUGIELSKI V. AT&T SERVICES, INC.

to do so. On Plaintiffs’ reporting claim, we affirm the 

judgment of the district court as to the compensation from 

BrokerageLink and reverse as to the compensation from 

Financial Engines. Costs are awarded to Plaintiffs.

AFFIRMED IN PART, REVERSED IN PART, AND 

REMANDED.