## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N os. 09- 3428 , 09

- 3452 , 09

- 3497, 10- 1851 , 10

- 2079 & 10

- 2091 J ONAT HAN F. P EA BODY, P la intif f-A pp ellee, Cros s -Appe l l ant, v. A NDR EW A. D AV IS, et al., D efend a nts-A pp ella nts, C ross-A pp ellees

. Appeals from the United States District Court fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No . 05 CV 05026

—David H . C oar, Judge .
A RG UE D N OVE MBE R 2, 2010

— D ECI DE D A PRI L 12, 2011

B efore C UDAH Y, F LA UM, a nd K ANN E , C ircu it Judges . C UDAH Y, Cir cu i tJudg e . In thi s c ase, the Ro ckI sl an d Cor po r at i o n, i ts s ubs i di ar y, i ts Em pl o y ee Re ti r ement I nc om e Secu rity A ct (ER I SA ) p lan an d th e plan ’s tr ustee s, A nd re w Davi s a nd Roby n K ole, al l defendants, appeal fro m t h e dist ri ct c ourt ’ s j ud gm ent that they br ea ch ed th ei r fi duci ar y duty i n mana g ing th e Pl an .2 N os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l.

The Pl an i s ane m pl oyee b en efi tpl an withi n the m ea ni ng 1 ofERIS A § 3 (3), an d a de fi ne d co nt ribut i on pl an withi n the m ea n in g o f § 3 (3 4 ). Pl aint i ffJ o hn F
. Pe ab o dy cr o ss - appeals fr o m the fi ndi ng t h a t h e lacked stan d ing to recover from the P lan’s i ns urer s. F o r the reas ons tha t f o l l o w, we affi r m the fi ndi ng o fl i ab i l i t y, a ffi r m t he c o ur t ’ s fi nd i ng th a tP e ab o dy l ac k s st an di ng to su e th e i ns ur an ce defen dan ts and re m and fo r re consi derat i on o fdam age s.

I
. Facts an d Proced ura l H istory A. Ba ck g r o und This case ar i ses fro m Peabo dy’s em plo ym ent with Ro ckI sl an d Co r po r at i o n ( RI C) , thr o ug h w hi chhe b ec am e a p ar tic ip an t in t h e co m p an y’s E R ISA P lan

. R IC 1 w as a s ecuri ti es fi rm bas ed i n Chicag o, and had a s ubsid iar y, RockI sl and Secur i ti es ( RI S)
. RI C w as a cl ose l y- hel d cor pora ti on with sev eral d oze n shar eho l der s, a nd RI S, i ts s ubs i di ar y, was the sp ons or o fthe c or p or at ion ’s E R ISA P lan

. D efe n d an ts D av is an d K ole w er e the co rpor ati on’ s co - f ounders. T hey ser ved as co rpora te offi cer s o fRI C an d as t rust ees and fi du ci ar i es of RI S ’ s ERI S A Pl an . Peabo dy j oin ed RI C i n 199 8 a s a vi ce pr esi dent f or
“ s t r a t e g i c t e c hn o l o g y a nd a rb i t r a g e . ” In 1 9 9 9 , P e ab o dy firs t i nvest ed i n the ER I SA Plan. H e di d so because m aking t he i nvest m ent a l l owed hi m to r ecei ve hi s 1 999 bonus, as he des i re d, i n cash i nstea d ofst ock

. S peci fi cal l y, Pe ab o dy an d the RI C m an ag ementa g r ee d tha t i fheN os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l. 3

ro lled ov er h is e x te rn al IR A int o R IC ’s P lan , he co u ld r ec ei ve a ca sh bo nus i ns te ad o f r ec ei ving RI C st o ckc o nsi ste nt with the c om pany’s o rdi naryprac ti ce. There

f o r e, Pe ab o dy r o l l ed o ve r o ut si de in ve st m en ts t o ta l i ng $167, 819, o fwh i ch $16 6, 000 w as used to purchase sh ares o fRI C s to ck

. In r eturn, h e recei ve d a 1 99 9 ca shb o nus ofm or e than $21 2, 000. Thi s l eft Peabody’ s a c c ou nt 98 % i nvest ed i n RI C stoc k, wh i l e the ne x t great estco ncentr atio n in an y oth er em p loy ee ’s ac c ou n t w a s a p p ro x ima t e l y 5 %. Because RI C w as a cl ose l y- hel d cor pora ti on, ther e was no m ar ketto in d ica te the v al ue o fthe com pany’s st ock ; in st ea d , v a l u at ion of th e R IC st oc k re q u ire d an an aly sis ofthe com pany’s fi nancial data

. Davi s a nd Kol e i ssued val uati on s tat em ents f or t h e s toc k per i odi cal l y. W hen Pe ab o dy i ni t i a l l y pu r c ha s e d c o mpa ny s t o c k i n the 19 99 ro l l ove r tr ansact i on, it w as pri ced at $2, 000 per shar e. InA p ril of 20 00 , th er e w as a te n -to -o n e s to c k s p lit. In Decem bero f20 00, the R IC stockwas val ued at $ 757 per s ha r e b y a n o ut s i de fi na nc i a l a na l y s t
. In 200 1 P e ab o dy pu rchas ed fi ve add i ti onalRI C share s a t a value o f$5 00 per shar e. A benefi t sta tem ent i n Decem ber of 2001 valued th e s to c k a t $ 62 5 p er sh ar e. A 20 04 st at em en t v alu ed it at $550 pershar e. Peab o dy ’ s e mpl o y men t wi th RI C e nd e d i n J a nu a r y o f 2004
. W he n h e r eque st ed hi s be ne fi ts unde r the Pl an, the co m pan y r espon ded byg i vinghi m s ev er alc ho i ce s: he coul d redeem hi s 835 RI C share s i m m edi ate l y for$2 15 pe r s ha r e , r e de e m the m in 2 0 0 5 f o r $ 3 0 0 pe r shar e o r re deem them i n 200 7 f or$4 00 per shar e. N ot sat isfied wi th a nyo fthe s e o pt i o ns , i n Apr i l o f2 004, P e ab o dy4 N os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l.

R IC’ s decli ne i s app arent ly pri m ari ly at tr ibutable t o a 2000 2 SE C ru le m a k i n g tha t requ ired all U .S. p u b lic exch an g es to al l ow s t ock s t o be t ra ded a tval ues m ea s ur ed i n t er m s of pennies i nst ead o f frac ti onal doll ars . The change, te rm ed

“ de c i m a l i z a t i on, ” di m i ni s he d the pr ofi tm a r gi ns y i e l de d b y com m issions o n tra d es. The p oli cy w a s is sued ini ti all y by Liberty’ s pred ece ss or, 3 Pe er l es s I ns ur anc e Com pany . en te re d int o a loan ag re em en t w ith R IC . Sp e c ifica lly, R IC ag re ed to purchase al l o fhi s RI C stoc k, i n consi derat i on o fRI C’ s ag r eeing to pa y Pe ab o dy $3 50 pe r s ha r e i n o ne y ea r . The to ta l amoun t o f th e l o an was $2 92 , 250 pl us i nter est
. Thi s t ra nsacti on was i n effect the t ra n sfor m ati on o fPeabo dy’s equi ty i nter esti n RI C, provi ded by th e st o ck, i nt o a c r edi to r ’ s i nt er es t, pr o vide d b y the loa n . W h en th e t im e c am e fo r p ay m en t o n th e loa n, RIC i nfo r med P e ab o dy tha ti two ul d b e u na bl e t o p a y . On M ar ch1 8, 2 00 5 Pe ab o dy f o r m al l y de m an ded th e di st r ibuti o n t o hi m o fhi s Pl anb en efi t an d was told th at th e l oan proce eds co uld notbe re pai d. So m et im e in 200 5, RI C w ent o ut o fbusi ness. 2 Fr om 19 97 to 2003 , t h e P l an m ai ntai ned a co m m er ci al cri m e pol i cy f orwh i ch i nsurance defe nd ant Liber ty M utual i s no w r esponsibl e. Fr om Februar y 2 2, 20 03 to 3 2006 , the Pl an hel d com m er ci alcr i m e co ver age pro v i d e d b y i n s u r a n c e d e fe n d a n tH a n o v e r In s u r a n c e C o mp a n y . B o th th e s e p o l i c i e s i n s u r e d th e P l a n a g a i n s te mplo yee di shones ty. On A ugust 3 1, 2005 , Peabo dy fi l ed a 2 7- count c om pla i nt. H e a l l ege d m ult i ple theo ri es offi du ci ar y b re ac h ag ai nstN os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l. 5 the Pl an defendants, and al so ar gued that he was en ti tl ed to r ec o ve r da m ag es fr o m the i ns ur an ce de fen dants. In Sep te m b er 20 06, he no ti fi ed the i nsurance defe n d a n t s o f a p o t e n t i a l c l a i m a g a i n s t th e m u n der t he di sh o ne sty bonds

. In Oc tobe r, he na m ed th em as de fen dants i n an am ended com pla i nt.

B
. Proced ura l H istory T h e dist ri ct c ourtco nd ucted a bench tr i ali n J uly20 07 and i n Se ptem ber20 09 iss u ed a m em or andu m o pini on h old i ng Davi s, Kol e a nd RI S l i abl e t o Peabo dy. Ini ti al l y, the c ou r t r ej ec te d Pe ab o dy’ s ar g um en t th atthe de fen d an ts viol ated the P lan term s or breach ed their fidu ciary du ti es by al l ow ing the i ni ti alr ol l ove r tr ansact i on

— Peabody had “a rguabl y” w ai ved any such a rgum ent b y ag r eeing to th e tr an sa ct i o n. Al o ngthe s ame l i ne s, the c ou rth eld t h a t t h e d efe n d an ts h ad n otvio lat ed th eir du ty to dive rs i fy the Pl an a ssets, r eas oni ng tha t P ea body had “know i ng[ l y] and voluntar[ i l y] ” waiv ed th i s cl ai m a t th e ti m e o fthe r o l l o ve r t r an saction
. But th e c ou rth eld th at t h e d efe n d an ts vio lat ed th eir fi du ci ar y duty ofpru d en ce b y m ai ntai ni ng the i nvest
m ent in RI C stoc k thro ughout RI C’s decl i ne, and a lso by fai ling to d is t ribute P eabo d y’s Plan ben efi t. T he cou rt f ound fi du ci ar y b re aches und erse ver aladdit i onal theo ri es not m ate ri alher e. A s to th e loan-for- stock trans action, the d istri ct cou rt ru led th at D av is (b u t n otK ole ) h ad br ea c h ed h is fi duci ar y duty b y o ffer i ngo nl y a l oan in p ay m en t f o r the6 N os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l. RI C s t o c ka nd fur the r, tha tthi s exc ha ng e c o ns t i t ut e d a “p rohibited trans action ” un d er ER I SA § 406(a)( 1)(B). The di stri ctc o ur t r ej ec te d Pe ab o dy’ s ar g um en t th atthe parent com pany, RI C, w as liab le, sta ti ng: “RI C i s no t a fi d u c i a r y o f th e P l a n a n d a l l c l a i ms a g a i n s t i t i n the in st an t a c tio n are d isr eg ar d ed .” As t o the i ns ur an ce de fend ants , the di st r i ctc o ur t co nc lu d ed th at P ea b od y la c ke d st an d in g t o p re ss a c laim o n b e ha l fo fthe P l a n. T he cour tr e a s o ne d tha tP e ab o dy coul d not su st ain hi s cl ai m under § 502( a) ( 1) ( B) o r § 50 2( a) ( 2) b ec au se the i ns ur er s wer e no t prop erde fen dan ts
. The c o ur t r ej ec te d Pe ab o dy’ s a r g um en t th athe co ul d recover i n e qui tyunde r § 5 02 ( a) ( 3) b ec au se he sou gh t m one y d am ages, not eq uitab le r eli ef. The dis tr i ct c ourt s truck Peabody’ s e xpert w i tness o n RI C stock val uati on be cause ofPeabo dy’s nonco m pli ance w i th di sco ve ry r ule s. But the cour t nev er thel ess awarded dam age s. A l though Peab ody had noto ffer ed evi dence o f d a m ages as to eac h th eory of li abili ty, th e cou rt de term i ne d tha t th er e was e vi den ce wi thr es p ectt o the bre a c h o fthe du t y o fp r ud e nc e b e t we e n 2 0 0 1 a nd 2 003, ba s e d o n the r e l a t i v e l y r a pi d de c l i ne i n pr o fi t ab i l i ty of RI C i n that peri od. There f or e, the cour t ca l cul ate d dam age s o n the b asi s o fthatbr each. The co urt accepte d th at th e v alu e o f P ea b od y’s sh a r e s w as atlea st $5 00 in 2001 , bec au se th is w as th e p rice at w hich th e Pla n p urchased fi ve RI C share s forPea b od y’ s a ccount i n 200 1. Consequentl y, the court cal cul ate d Peabody’ s dam age s base d on hi s o w n er shi p of83 5 s hare s, ar ri vi ng ata fi g ur e o f$ 41 7, 50 0. The c o ur t adde d pr ej ud gm enti nter estto ar ri ve at a t ota l fi gure o f$5 06, 601. 82.N os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l. 7 Pe ab o dy fi l ed a po st
-j udg m en t m o ti o n un derF ed. R. Civ. P. 59( e) , re questi ng that the cour t re conside r its denia l o fPeabo dy’s cl ai m for di str ibuti on o fhi s be nefi ts, unde r ERI S A § 5 02 ( a) ( 1) ( B) ( co untXXI I ) , a nd a l so tha t th e di st r i ctc o ur t r et ain j ur i sdi ct i o n o fthe c as e. B eyond the Rule 59(e ) m oti on, Peabo dy re quested two addit i onal f o r m s o fpo st
-j udg m en t r el i efs i g ni fi ca nthe r e. F i r st, he ask ed that th e t rust ees be re m ove d, and seco nd , he r equested thatthe c ou rto rderthe defe nd ants to disc l ose cer tai n hi sto ri cal P lan i nfo rm ati on. The co urt denie d each o fthes e r equests
. Peabo dy and the defendants b o th t i mel y a pp e a l e d.

I I
. Ap pli cabl e Law Thr ee di st i nc t ca us es o fa ct i o n a r e ce nt r alt o the prese nt cas e: an a cti on o n behal fo fthe Pl an ag ainst Pl an fi d uc iari es for breac h of fidu ciary d u t y un d er § 502(a)( 2); an act i on bya Pl an pa rt icip ant a gainst the Pl an to re cei ve hi s o r her benefi ts und er§ 502( a) (1)(B); and an action f or other eq uitab le r eli ef un d er § 502(a)( 3). The a ct i o n f o r fi duci ar y b r ea cho cc upi es the b ul ko fo ur att enti on. S ecti on 5 02( a) ( 2) o fERIS A al l ows an act i on a g a i ns t a fi du c i a r y f o r a b r e a c h o f the fi du c i a r y duti es setf or th i n § 4 04. T h ose duti es i ncl ud e m anaging i nvest
m ents “w i th the car e, sk i l l, prudence, and dil i gence un d er the circu m stan ces th en prev ail ing,” § 404( a )( 1)(B), and “dive rs i fying the i nvest m ents ofthe pla n so as to mi n i mi z e th e r i s ko fl a r g e l o s s e s , u n l e s s u n d e r t h e c i r c u mstan ces it i s clearly p rud en t not to d o so, ” § 404( a )( 1 )( C ). H owever, cer tai n plan s ter m ed “el i gibl e ind i vi du al8 N os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l.

acco unt pla ns” a re exem pted f ro m the dive rs i fi cati on requ irem en t by § 404(a)(2). The defa ultr ule has l ong been that § 502( a) ( 2) autho ri zes re c ov er y on ly on be h alf ofan en tir e p l a n , an d n otin fav or of an ind ivid u al p ar tic ip an t. See, e . g. P lum b v. Flui d P um p S erv ., 12 4 F .3d 84 9, 86 3 (7 th C ir. 19 97 ). H ow ev er , a parti ci pant i n a defi ned contr ibuti on pl an m ay b ringa § 5 02( a) ( 2) act i on f orbr each offi du ci ar y d u ty as to an i nd i vi du alacc oun t. L aR ue v. D eWolff , Bo be rg & Assocs ., Inc . , 5 52 U. S
. 2 48 , 2 56 ( 20 08 ) ( “Whethe r a fi d uc iary breac h d im in is h es p lan asset s p ayab le to allpa rti ci pants .
. . o r onl y t o perso ns ti ed to part i cul ar i nd i vi du ala c counts, i t cr eat es the k i nd o fhar m s that conce rn ed the draftsm en o f[ ER I SA]. ”)
. To pr evai l under § 5 0 2 (a)(2), the p lai nt iff m us t show a breach of fi d uc iary d u ty , an d its ca u sa tio n of an inju ry . S ee K a m l e rv . H/N Tel e co m m . Se r vs . , 305 F.3d 672 , 681 (7th C ir. 2004). The re m edy i n an ac ti on f orbr each o ffid u c i ar y duty i s f o r the fi duci ar y t o “ m ake good” the l o ss t o the pl an . E R ISA § 40 9; s e eP l u mb , 1 2 4 F .3d at86 3 n .13 ; D onov an v. B ie rwirth , 75 4 F
. 2d 1049 , 10 56 ( 2d Cir

. 19 85) (h old in g that “the m eas ure ofl oss appli cabl e unde r ER I SA .
. . r equi re s a co m pari son ofwh at th e Pl an actual l y e ar ned .

. . with w ha t the Plan w ou ld h ave earn e d [ bu t for th e fi d uc iary bre ach]

. ”) . T he m etho d ofcal cul ati ng dam age s i s r evi ew ed de novo ; the cal cul ati ons pu rs uant to the m etho d ar e re vie w ed for c lea r er ro r. Se eR exa m Be ve r ageCan Co. v. B o lger, 620 F.3d 718 , 727 (7th C ir. 2010). I n contras t t o § 5 02( a) ( 2) , § 502( a) ( 1) ( B) e xpressly pr ovi des f or a n i nd i vi du alto have st anding to re cove rN os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l. 9

Thi s is s o because the Plan i s an individual account plan 4 a n d s p e c ific a lly a sa v in g s p la n, see§ 40 7( d) ( 3) ( A) ( i ) , an d the b asic p lan d ocu m en t e x p licitly p ro v id es f or the P lan to ho ld q u a lify in g em p lo y er sec u ri tie s, see§ 4 0 7 (d )(3)(B ). benefi ts und erthe ter m s o fan ERI SA p l an. U nsurpri si ngl y, th e re m ed y in a su c c es sfu l ac tio n for p lan be n e f its is to rec eiv e th e a c c ru ed be n efit s. § 5 02 (a)( 1)(B ); see M a ss. M ut. Lif e Ins
. Co
. v. Russe ll, 473 U
. S. 134, 146-47 (1985 ). The thi r d c au se o fa ct i o n i s § 50 2( a) ( 3) , whi chi s th e m echani sm through which Peabody a tte m pts to r eco ver f ro m the thi rd- partyi nsurance d efe nd ants. That s ecti on all ows f orthe re cove ryo f“o therappropr i ate equi ta b le re lief,” in c lu d in g p otenti al ly r eco very fro m non- fi du ci ar i es, se e Harris Trus t & Sav. B ankv. Salom on Sm it h B arney, Inc. , 530 U
. S. 23 8, 24 6- 49 ( 2000 ) , but onl y to the extent that su chr el i efi s no t ava i l ab l e unde r the t wo s ec ti o ns d isc u ss ed ea rlier , s e eVa r i ty Corp. v. Howe, 51 6 U.S
. 48 9, 5 1 5 ( 1 9 9 6 )
. Add i t i o na l l a w i s r e v i e we d b e l o w, a s n e e de d.

I I I
. M ai n Defe nd ants W e fi rst ad dress i ssues r el ati ng to defendants o ther than the i nsurer s. The fi rs t i ssue i s l i abi l i ty.

A
. Li abi l i ty I t has es caped att enti on thus f ari n thi s l i ti gat i on that th e RI C S av i ng s Pl anwas a n El i g ibl e I ndi vi dualAcco unt Pl an( EI AP) w i th i n the m ea ni ngofERI S A § 40 7( d) ( 3) , a nd 4 c o ns e qu e nt l y e xe mpt e d b y s t a t ut e fr o m t he § 4 0 4 ( a ) ( 1 ) ( C)10 N os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l.

A lthoug h m uch ofthe precedent disc uss ing the diver si fic a- 5 t i on ex em pt i on f or EI APs f oc us es on a p art i c ul ar type of E IA P called an E m p loy ee Sto ck O p tion Pla n (E SO P ) w hich is exp ressly d esign ed to inv est in em p loy er secu rities, the statu te u na m b igu ou sl y e xem p ts a ll EIAPs fro m the dut y t o di ver s i fy, in cl u d in g sa v in g s p la n s lik e t h e o n e a t is su e. § 40 4 (a )(2); seeWrigh t v. O regon M et al l u rgic a l C orp . , 360 F. 3d 1090, 1094 (9 th C ir . 20 0 4 ). dive rs i fi cati on du ty w i th re spect to em plo ye r securi ti es. See § 4 04 (a)( 2); Kirs ch b aum v. Re l i antEne rgy, 526 F. 3d 243, 24 9 ( 5th C ir. 2 00 8) ( applying the EI A P exem pti on t o savings pl an si m i l arto the one at is su e, and rej ecting a di ve r si fi cation

-ba se d c l ai m )
. The e xe m pti o n fr o m the 5 du ty to divers i fy r efl ects a congr ess i onalj ud gm ent that the ben efi ts ofbr oadeni ng em plo yee o w ners hi p outw ei gh the gr eat l y incre ase d r i sks o fan undiv er si fi ed in ve st m en t. Se e Summ e rs v. St at e St
. Bank & Trust Co. , 45 3 F.3d 4 04 , 40 9- 10 ( 7th Ci r. 20 06)
. That ca l cul ati on m ay have been m or e pl ausible at the t i m e ERI SA w as enacte d th an it is to day, bec ause i n 1974 the pre vai l i ng f or m o f re ti re m ent pl an was the defined benefi t pensi on f or w h ich th e d u ty to d ive rs ify is fu l l y a p p lica b le, w h ile t o d a y d e fi n e d c o n t r ib u t i o n p l a ns ( whi c h e nj o y th e e mplo yerst ockexem pti on fro m the du ty to dive rs i fy) pre dom i nate. See Su sa n Sta b ile, P a terna lism Isn’t A lw a ys a D i r ty Wor d: Can theLa w Bet t e rPr ot e ctD e f i ne d Cont r i b ut i on P la n P a rticip a nts? , 5 Em pl. Rts. & Em plo y. Pol ’ y J
. 49 1, 49 2 (2001). Inan y e ve n t, w h i l e t h e e x p re ss d u ty to d ive rs ify is i napp l i cabl e t o EIAPs i nvest i ng i n em plo yerse cu riti es,N os. 09

- 3428, 09

- 3452, 09

- 3497, 10

- 1851 , etal

. 11

It is u nc lear w he the r this “ M oe nch” p resu m p tion sho u ld ap p ly 6 to a ll E I A P s, or o nly to E SO P s ( w hich exist f or the exp ress p u rp o se o f in v es tin g in co m p a n y sto ck ). C ompareWright, 360 F. 3d at 1098 n. 3 ( indicati ng that the M oe nch rea son ing w ou ld a p p ly eq u a lly to E IA P s a n d E S O P s) w i t h In reSche ri ng-Pl ough C o rp . E R IS A L itig
. , 42 0 F
. 3d 2 31 , 23 8 ( 3d Ci r. 20 05 ) ( hol di ng that the M oe nch p resu m p tion of pr u d en ce d oe s no t ap p ly to E IA P s th a t are o nly p erm itted , b u t no t requ ired , to in v est in em p lo y er sec u ri tie s). th e full E R ISA d u ty of pr u d en c e ne ve rt h ele ss ap p lies

. See A rm strong v. LaSalleBa nk N at’l Ass’ n , 44 6 F
. 3d 728, 73 2 ( 7th Ci r. 20 06) (st ating that pla ns with no di ver si fi catio n d u ty “d em an d [] an ev en m or e w at c h fu l eye , d ive rs ifica ti o n n o t b e i n g i n th e p i c tu r e t o b u ffe r th e r i s k t o t he ben efi ciaries shou ld th e com p an y enc ou nt er ad versity.”)
. S o m e co ur ts , b eg i nni ngwi ththe Thi r d C ircuit i n M oench v. Rob e r t s on , 62 F.3d 5 53, 57 1 ( 3d Cir

. 19 95) , have r e c o n c i l e d th e r e s i d u a l d u t y o f p r u d e n c e wi th t he ab se nc e o fa n e xpr es s di ve r si fi ca ti o n duty by pr o vi di ng that f oran EI A P orESOP, t h ere i s apre sum pti on that 6 in ve st in g i n e m p loy er st oc k is p ru d en t. S e eQu a n v . C o mpu ter Scien ces C o rp . , 623 F. 3d 870, 881 ( 9th Cir . 201 0) ( adopti ng M oe nc h in th e 9 th C irc u it); see also Su m m ers , 45 3 F. 3d at 410 (citing M oe nc h w i th approv al, al though no t ex p ressly ad op ting it)
. W e ne ed no t g r appl e wi th th e ex te nt of M oench ’ s for ce as to EIAPs i n thi s ci rcui t, bec ause ev en ifthe M oench presum pti on o fprude n c e appli ed w e would ag re e with th e d ist ric t c ou rtth at D av is a n d K ole br ea c h ed th eir du ty ofprudence as to P ea body. W e no te at the o utset12 N os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l. th atthe RI C Pl andi d no t affi r m at i ve l y r equi r e o r e ncour age inves tm ent i n em plo yerse curi ti es

— i nd eed, o ther th an P ea b od y, ap p a r e n t ly on ly D av is a n d K ole h eld R IC stock i n th eir Plan accou nt s, an d s o f a r as the reco rd i nd i cate s, theyheld RI C i n thei r Pl an acc ounts at a m uch l ower co ncentr ati on a nd absolu te value than Peab od y. In o th er w or d s, d ive st m en t fro m R IC st oc k w ou ld not ha v e r e qu i r e d a ny de v i a t i o n f r o m the Pl a n t e r ms nor would i t ha ve b ee n un us ua l i n the c o nt ex t o fRI C, s o the ba r rier s to di ve st m en t wer e l o w co m par ed to many o th er E IA P p lan s. Se eQ uan , 6 23 F
. 3d at8 83 ( “A g ui di ng pri nci ple

. . . i s that the bur den to re but the [ M oench ] p resu m p tion varies d irectly w ith t h e streng th of a pla n’s r equi re m ent that fi du ci aries inves t in em plo yer st oc k.” ); Kirs ch b aum , 52 6 F
. 3d at 255 ( “[ M oench ] cl ear ly i m pli es that a pl an p ar ti ci pant w oul d bearan e ven he a v i e r b ur de n o fs ho wi nga fi du c i a r y du t y b r e ach wher e the pl anutt er l y co m pel l ed i nv es tmenti n c o m pan y st oc k.” ); cf

. In reSche r i ng- Plou gh , 42 0 F
. 3d at 238 ( “Because the S avi ngs Pl an i n thi s ca se w as n ot an ES OP [ an d di d no t r equir e, b utmer ely a l l o wed f o r, the pr o vi si on ofc o m pan y s to cka s ani nv es tmento pti o n] , the M oench de cision do es not [ ap p ly]

. ”). W e a gr ee w i th the di str i ct c ourtthata p rudent i nvest or w ou ld n o t h ave rem ained so heav il y i nv ested i n R I C ’s st oc k a s t h e c om p an y’s fort u n es d ec lin ed p re c ip ito u sly ove r a fi ve- yea r peri od f orr eas ons th at f or eto l d fur ther and conti nuing decl i nes. In part i cul ar, Davi s t est i fi ed th atRI C i nc o m e ca m e f r o m c om m i ss i o ns , a nd tha t th e SE C ’ s d e c i m a l i z a t i o n r u le “ c ru sh ed ” R IC ’s p ro fit m ar gi ns, such that by20 03 or20 04 profi t m ar gi ns hadN os. 09

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. 13

W e em p ha size the na rro w ne ss of ou r r e a so nin g in this 7 r e s pe c t
. Mos tbu s i ne s s f a i l ur e s a r e n ots o f or e s e eable, a nd a s eve re dec l i ne i n c om pany s t oc k val ue does no t, without c ons i der abl y m or e, c re at e a duty t o di ves tfro m com p any sto ck

. S ee Ki r s ch ba um , 52 6 F .3d at 25 6 n .12 (de scrib ing f acts f ound i ns uffi c i en tt o r ebutthe pr es um pt i on ofpr udenc e of invest m ents i n com pany s tock, in cl u ding the “i ll

- f ated (co n tin u ed ...) decl i ned by 7 0- 80%

. H e furtherte sti fi ed that thi s e ffect w as bei ng fel t, beg i nning i n 200 0, i n com m i ssion -b ased firm s like R IC a c r o s s t h e c ou n tr y. K ole likew ise ac kn ow led ge d th at by 20 03 an d 20 04 , RIC w as “g oin g d ow n h ill.” A l though these devel opm ents w ere p u bl i c, no one w as be tt er po si ti o ne d to k no w o f RI C’ s pr o spe ct s and the future ofi ts sto ck val ue than Davi s a nd Ko le, w ho co

f ounded the com pany and setthe sh are va l ue. These f acts ar e co nsi ste nt with ci rcum sta nces und erwh i ch si ste r cour ts w oul d find i t i m prudent to c on tinu e a n in ve st m en t in co m p an y s to c k. Se eQ uan , 62 3 F
. 3d at 882 (exp lai nin g tha t to de m ons trate im p rud en ce, a plaintiff m us t sh o w ci r cumstanc es tha t “ ‘ cl ea r l y i m pl i ca te [ ] the com p an y ’s vi abili ty as an ongoing co nc ern’ or show ‘a preci pit ous decl i ne i n the em plo yer ’ s s toc k .

. . co m bi ned w i th ev i dence thatthe com pany i s o n the brink o fco l l apse o r i s unde r g o i ngs er i o us mis m an ag ement
. ”) ( ci ting Wr ight, 3 6 0 F
. 3 d a t1 0 9 9 n. 5)
. I n s h o r t, a wi d e l y - k n o wn an d pe rm an en t ch an g e i n the r egul at o r y e nv i r o nm en t had und er m i ned RIC’ s co re busi ness m odel, and conse

que nt l y the c o m pan y s tock be ca m e ani m pr ude nti nvest m ent. 714 N os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l.

(
. . . c on t i nu e d) 7 m erg er, rev erse stoc k split, and se v e n t y -fiv e p erce nt d ro p in stoc k pr i c e” i n Wright ; the “ c ompa ny - wi de fi na nc i a l woes and e i ghty pe rc en tdro p i n s t oc k pr i c e” i n K uper v . Io venko , 66 F
. 3 d 1 4 4 7, 1 4 5 1 , 1 4 5 9 ( 6 th C i r . 1 9 9 5 ) ; a n d th e “ a c c o unt i ng vi ol a t i on s , r e s t a t e d r e ve nu e s f orthr e e y e a r s , a nd s e ve nty- fi ve per c en td ro p i n s t oc k pr i c e” i n In r e M cKe s s o n HBOC, Inc . ERI SA Li t ig. , 39 1 F . Su p p . 2d 81 2 , 83 0 -3 3 (N .D . C a l. 2 0 0 5 )). 29 U .S. C
. § 11 04 p ro v id es as follow s: 8 ( c ) Cont ro l ove r as s et s by pa rt i c i pantor be ne fi c i ar y. ( 1) ( A) I n the c as e ofa pen s i on pl an whic h pro v ides f or individu al acco un ts and p erm it s a parti ci pant or benefic iar y t o e xe rc i s e c ont ro l ove r as s et s i n h i s ac c ount, i fa par t i c i pant or b en eficiary e x e r c i se s con tro l ov er th e assets in h is account ( as determ ined und er r egulati ons ofthe Sec ret ar y)

— (co n tin u ed ...) The i ssue ofwaive r or conse nt by Peabo dy w i th r espect to the no n-di ver si fi ed RI C stoc k invest m ent ( anot her br an cho fthe fi duci ar y duty que st i o n) i s cl o se . The d ist ric t c ou rth eld th at P ea b od y h ad “a rg u ab ly w aiv ed ” h is claim that the d efend an ts ha d breach ed their fidu ciary du ty by agr eeing t o the RI C stoc k invest m ent ini ti al l y, and by nev er re q u es tin g t h a t t h e fid u c iar ies red u c e t h is i n v e s t me n t
. T h i s a r g u ab l e w a i v e r i s e ffe c t i v e l y th e s a me as a de fen se tha t th e fi duci ar y i s no t l i ab l e i fa pa r ti ci pan t has exer ci sed contr ol ove r the acco unt. Th is d efense i s a vai l abl e under l im ite d ci rcum sta nces w hi ch ar e no t cl ear l y a pp l ica bl e her e. S peci fi cal l y, ERIS A § 404( c) f r e e s fi du c i a r i e s f r o m r e s po ns ib i l i t y f o r Pl a n l o s s e s at
tr ibut ab l e to the pa r ti ci pan t’ s i nv es tmentde ci si ons , b ut 8N os. 09

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(
. . . c on t i nu e d) 8 * * * (ii) n o p er so n w h o is o th er w ise a fid u ci a ry sh a ll b e lia b le

. . . fo r a n y lo ss[.] G en er al l y, the Pl an m us t i nfor m par t i c i pant s that i t i s a 9 § 4 04 ( c ) pl an, an d i tm us toffera c er t ai n a rr ay ofi nve s t m en t o p tio n s. S ee M ei n hard t v. U n i sy s C orp . , 74 F. 3d 420, 444 n. 21 (3 d C ir . 19 9 6 ). o nl y f o r c er ta i n ty pes ofa cc o unt s pr es cr ibe d b y the st a tu te an d by D ep ar tm en t o f L ab or reg u lat ion s. See E R ISA § 40 4(c ); 29 C .F.R . § 25 50 .40 4c -1 ; s e eal s o L aRue, 55 2 9 U
. S. at25 6 ( sta ti ng tha t § 40 4( c) “ w ou ld se rv e no r eal pu rpos e i f

. . . fi du ci ar i es neverhad any l i abi l i ty f orl oss es in an in d i v i d u al a c c ou n t.” ). M or eo ve r, w h eth er a p ar tic ip an t exe rcises con trol un d er § 404(c) “stem s from a plan ’s speci fi c pro vision s, not f ro m el em ents
. . . wh i ch m ay ar gu ab ly a m ou n t t o c on tr ol in co n n e c t i o n w ith a sin gle tr ansact i on. ” SeeM ei nhardt, 74 F. 3d at 446. Fi du ci ar i es b ea r th e b u rd en of th e § 40 4(c ) d efe n se . Id

. W e ha ve ex pl aine d tha t when a pl ani s no nc o m pl i an t w ith § 404(c), fid u c ia r ies are den ied th e statu tory safe ha rbo r . Howev er, i t do es no t ne ce ss ar i l y f o l l o w tha t an y del ega ti on o fi nvest m ent di scr eti on t o pla n part i cip an ts vi o l at es ERI S A. Ra th er, “the pl ant r us te e, whende l eg at i ng deci si on- m aking autho ri ty to pla n part i ci pants, m ust be ev al ua te d to se e i f [ su ch del eg at i o ns ] vi o l ate the tr ustee ’ s fi du ci ar y duty. ” Jenk ins v . Ya ger, 44 4 F
. 3d 916, 92 416 N os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l.

Bu ts eeIn re En ro n C orp. Sec. D er i vat i ve & ER I SA Li t igat i on , 284 10 F
. S u p p . 2 d 51 1 , 57 8 (S.D . T ex . 20 0 3 ) (“I f a p la n d o es n o t q u a lify as a § 4 04 ( c ) , the fid u ci ar i es r et ai n l i abi l i t y f or al l i nve s t m en t d ec isi o n s m a d e, in cl u d in g d ec isi o n s b y th e P la n p a rt ic ip a n ts.” ). ( 7th Ci r . 2 0 0 6 )
. I n o the r wo r ds , whe r e § 4 0 4 ( c ) do es not 10 ap pl y, ERI S A fi duci ar i es ca n be l i ab l e f o r al l o wi ngpa rtic ip an ts to s e l e c t co m p an y s to c k a s a n inv es tm en t if it is m an ifes tly im p ru d en t t o a llow t h em to d o s o. Se ege ne r al ly Roge rs v. Baxt e rInt ’ l Inc . , 52 1 F
. 3d 702, 70 5- 06 ( 7th C ir. 2008) (discu ssing th e po ssibil ity that th e plaintiff s c ou ld p re va il on rem an d by sh o w i n g t h at th e a rt ificia lly h igh p ri ce o fthe com pany’s st ockcr eat ed a “ du ty und er E R I SA
. . . to preve nt pa rtici p an ts from i nv esting” i n it). The defe nd ants here have m ade no eff or t t o sh ow that th e P lan c om p lied w ith E R ISA § 40 4(c ), an d co n se q u en tly the quest i on be com es w hethercar ry i ng o ut the ro l l ove r tr ansact i on an d subsequentl y a l l owing Peabo dy to r emai n inv es te d e xc l usively i n RI C s to ckdur i ngthe com pany’s decl i ne was consi ste nt with the defendants’ fi du ci ar y duty. A s n ote d, the defendants have not j usti fi ed thei r f ai l ure to dive st f rom R IC stock

. There f or e, the f act that Peabo dy agr eed to the RI C i nves tm ent a t the ou tse t di d not fre e the defendants fro m the exer ci se of thei r fi du ci ar y du ty. H ence, w e affi rm the dist ri ct cour t’ s fi nd i ng o fbr each ofthe du ty ofprudence. Fi nal l y, as an a l ternati ve theo ryo fl i abi l i ty, P eabo dy has ar gued tha t the defendants and the sponsorco m pany, RI C, v i o l at ed ERI S A w i ththe l o an - f o r - st o ckt r an sa ct i o n. P ea b od y is t ec h n ica lly c or re c t in h is a r g u m en t, bu t h isN os. 09

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. 17

This loan- f or- st ock tr ansac ti on is also of arguab le s ignific ance 11 i n thati tm ay affec tthe l i abi l i t y ofRIC. As no t ed, RIC i s the parent c om pany ofRIS, the Plan s pon sor. The d is tr ic t c ourt rejected sum m arily the n otio n th at R IC cou ld b e l i a b le to Pe abody, obs er vi ng s i m ply tha tRIC was no ta Pl an fi duci ar y. H ow ever, a non - fi duci ar y m ay bec om e l i abl e f or r es t i t ut i on i f i t en gage s i n a § 40 6 pro hibi t ed t ra ns ac t i on with th e P l an, u n d er § 5 0 2 (a )(3). Se e Har ris Tr us t& Sa v. Ban k, 530 U.S
. at 253 (co n tin u ed ...) su cce ss is ofno ben efi t t o h im
. U nd er E R I SA § 406(a)( 1)(B), i t is a “pro hibi ted tr ansact i on” f orfi du ci ar i es to l oan Pl an m o ne y t o a “ par ty ini nt er es t. ” The c o m pan y e m pl o y i ng th e Pl anpa r ti ci pan t

— h er e R IC

— i s a “ partyi n i nter est ” pur su an t to ERI S A § 3(14) ( C)
. Thu s, the r e ha s be ena viol ation of § 406 even thou gh there h as been no inj ury to th e p lan

. Se e, e . g., K eac h v. U
. S. Tr us tCo. , 41 9 F
. 3d 626, 63 5 (7 th C ir
. 2 00 5). E R ISA p ro vid es E IA P s w ith ce rt ain exem pti ons f ro m the prohibi ti on o n § 4 06 tr ansact i ons, see § 408( e) , but the defe nd ants have not argu ed h ow they m i ght apply here , and a ny such ar gum ent ha s b een w ai ve d

. S ee E lm o re v. C o ne M ills C o rp . , 23 F. 3d 855, 86 4 ( 4th Ci r. 19 94 ) (e n banc) ( pla ci ng the burden o fpro of f orthe § 408( e) exem pti on o n the defe nd ant)
. N eve rtheles s, it se em s c lea r th at n o los s e s w e re at tr ibu ta b le d ire c tly to th e loa n -f o r - st oc k t ra n sa c tio n ; rat h er , i t appears th at thi s t ra nsacti on co nsi ste d ofthe exchange of w orthless stoc k for a w or t h le s s loan. A lthou gh there ha s been a viol ation of ER I SA § 406(a)( 1)(B), there ar e no t dam age s t o Peabo dy fro m a substi tuti on o fdebt f orequi ty. 1118 N os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l.

(
. . . c on t i nu e d) 11 ( “[ A ] n act ion f or res ti tuti on against a tr ansferee of tai nted plan a sse t s sa tis fie s th e ‘a p p ro p ri a te n es s’ cr ite ri o n in § 5 0 2 (a )(3). Su ch relief i s also ‘ equ itab le’ in na tu re.”). Pe ab od y d id no t cite § 502( a) ( 3) , but he did cl a im R IC w as li able as the counter
party in a p ro h ibit ed loan tr ansac ti on und er the theory o f Har r i s Tr u st
. S ee id. a t2 4 5 n . 2
. Howe ve r , a s we h a ve i ndi c at ed, the re ar e no evi dentdam age s t o Pe abody fl owin g f ro m the l oan . B. Ca l cul at i o n o fDa m ag es Re qui r es Re m an d A s pre vi ously ind i cate d, the di str i ct c ourt’s m etho d of cal cul ati ng dam age s was er ro n eous. The r em edy i n an ac tio n for b re ac h of fid u c i a r y d u tie s u n d er § 50 2(a )(2) is for th e fid u c iar y t o m ak e g oo d th e los s t o t h e P lan

. See P l u mb , 1 24 F.3d at 86 3 n.13. B ut here, the $500 per sh are basi s o n w hi ch dam age s were base d w as ti ed onl y t o a si ngl e, pl ausibl e v al uati on s om ew here i n the peri od of i m pr ude nc y . Nei th erthe $ 50 0 pers ha r e fi g ur e no r the $417, 500 pre- i nter estto talar e s ol i dlyti ed to the br each offi du ci ar y duty. W e underst and the di str i ct c ourt ’ s pre dica m ent: Peabody’ s a ccount w as ar guabl y m i sm anage d i n sev er al ove rl apping w ays duri ng t h e fi ve yea rs wh en the as set s i n h i s ac co untdi sa ppea r ed. And the v al ue of the a cc o unt re prese nti ng RI C share s duri ng this p eri od w as quit e elusive. The key qu estions are w he n d id th e fi d uc iary b re ac h oc c u r, an d w h at w as t h e re su lta n t los s. See M a rtin v . Feilen , 965 F.2d 660 , 671-72 (8th C ir. 1992). On rem and, w e be l i eve the dist ri ct cour t s houl d procee d on the the or y that the defendants were re quired t o dive stN os. 09

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. 19

W e do no tr equi re thatthe di s t ri c tc our tonr em and m ay not 12 u s e th e RI C s t oc k v a l u a t i o n s i n c a l c u l a t i n g d a mag e s , b u twe no te tha t the u se of th e se v alu atio ns resu lted in a su rp rising ly l ar ge awar d i n vi ew ofPe abody’ s or igi nali nve s t m en tof $167, 819. I t is eas y to s ee how thi s happ ened: Peabo dy purchas ed shares at $2, 000 i n Febru ary o f2000; i n A pril, 2000, the re w as a te n-to -one s tock s plit( prod ucing, one w ould im agine, a s hare value of$200) ; but in A pril of2001 Peabod y pu rchas ed post- spli t s tock f or his acc oun t at $500 per s hare. In other w or d s, w ithin the fou rteen m on ths a fter Pea b od y first pu rchas ed R IC st ock, the s up posed v alue o f RIC s tock had incr e ased b y 250 %

. T he d istrict cou rt im p licitly acc ep ted this ex t ra or di nary s t at i s t i c , an d i ndee d, bas ed i t s awar d on the Apri l , 20 01 t ra ns ac t i on val ui ng RI C s t oc k a t$5 00
. Consequ en tly, the d istr i c t c o u rt’ s aw ard b oils d ow n to a m u ltiplic ati on of Peabo dy ’ s origi nal i nvestm ent by 2. 5. f ro m RI C as the pro fi tabil i ty ofthe com pany decl i ned sh ar pl y . T he v al ue o fPe ab o dy’ s i ni ti ali nv es tment ( $167, 819) wil l pl ay an o bvious parti n thes e ca l cul ati ons, and at a l ate r date the use ofave ra ge val ues m ay be appr o pr i at e. W e th i nktha t f o r pur po se s o fc alcula ting 12 dam age s per haps an as sum pti on th at a t le asta quarte r to a thi r d o fthe ori ginal RI C s to ckc o ul d b e l eft i n the acco unt w h en it was conve rt ed to a l oan, witho ut an i m prudence vi olat ion, i s r eas onabl e. In other w or ds, because o fthe uncert ai nti es i nvol ved, prudence di d not r equi r e th atthe a ccou ntb e to ta l l y dr aine d o fthe ar guably i m prudent RI C sto ck i nvest m en t im m edi ate l y, ev entho ugh thati nv es tmente ve ntua l l y b ec ame wo r th

l ess . Thi s is not t o saythatther e was a gener alduty t o20 N os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l. “div er si fy” Peabo dy’s hol dings , sin c e that i s for ecl ose d by the s tatute. Rather, ther e was a prudentia l d u ty to re du ce e xposu re t o com pany st ocki n an o rder l y way, as c om p an y p ro fita b ility ab ru p tly an d op en ly d ro p p ed

. C f. St e i nm a n v. H i cks , 35 2 F
. 3d 1101 , 11 06 ( 7th Ci r. 20 03) ( r e c o g ni z i ngtha tu nd e r c e r t a i n c i r c ums t a nc e s a n ES OP tr ustee m ay have a duty t o sel l co m pany st ock, that m ight “be com e a d ut y to diversify, even thou gh f ail ure to d iversify an E SO P’s asse ts is not i m p rud en ce p er se. ”). A fi na l n ote o n Pe ab o dy ’ s r e med y i s i n o r de r . On appeal Peabo dy has ar gued, as he di d i n the dist ri ct c ourt, that he sho uld be enti tl ed to “di str ibuti on o fhi s Pl an b en efit s,” u n d er § 50 2(a )(1) (B ) an d c o u n t X X II of h is co m p laint

. A s d iscus sed above, the d istri ct cou rt form all y d en ied th is cl aim as du p li cative of th e cou rt’s aw ard un d er § 502(a)( 2). Bu t in ad d r e s s in g Pea bod y’s p o s t-ju d gm en t m ot ion to am en d , th e d ist ric t c ou rtind icate d that i t di d w ant t o gr an t th i s r el i ef, atl eas t insof ar as i t intended that the dam age s would be p aid in to Peab od y’s E R ISA ac c ou n t a n d th en w ou ld b e im m ed iat ely a v a i l ab l e t o h i m wi th the t a x r o l l o v e r b e ne fi t s p r e s e r v e d. Th e c o ur ts t a t e d: Peabo dy re quests that th e Cour t r ule expl i ci tl y o n hi s be nefi t cl ai m to ensur e th at al l dam age s a re tr ansfer re d to hi m as di str ibutable b en efi ts i n hi s Pl an acco un t, as soo n as pract i cabl e. Peabo dy see ks to prese rve rol l ove r el i gibi l i ty w i th the fund s, with at te nda ntt ax b enefi ts
. In i ts o r i g i na l j udg m en t, the Court or dered Davi s a nd Kol e t o re st or e the dam age s am ount to [ Peabo dy’s ] acc ount under 2 9 U.S
. C. § 1 109.N os. 09

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. 21 A n alteration of the cou rt’s d ecision
. . . i s un ne cess ary to acco m pli sh the ends so ught byPeabo dy. * * * I f

. . . Pe ab o dy i s pr i m ar i l y c o nc erne d tha t Dav i s an d K ol e wil l pre vent hi m fro m ti m el y a cces si ng hi s Pl an ass ets , the Court sim p ly n eeds t o cl ar i fy that upon prom pt paym ent into Peabo dy’s acc ount, the dam age s sh all b e m ad e a va ilab le for im m ed iat e d ist rib u tio n [.] W e do no t di sturb th e di st r i ctc o ur t’ s r uling. S i nc e th e Suprem e Cou rtsa ncti oned i nd i vi du alcl ai m s under § 50 2( a) (2) i n LaRuei n 200 8, the re l ati onshi p between tha ts ub s e c t i o n a nd the t r a di t i o na l me c ha ni s m o fi nd i v i du al re lief, § 50 2(a )(1) (B ), ha s b ee n m u d d ied

. Se eLa Rue, 55 2 U .S. at 2 57 -59 (R ob er ts , C .J., co n c u rrin g); H owell v. M ot or ol a, Inc . , N o. 07

- 3837, 20 11 U
. S. A pp . LEX I S 1193 , at * 16- 17 ( 7th Ci r. J an. 21 , 20 11 ). W e s ee l i ttl e be nefi t t o ex pl o r i ngthi s l eg alfr o nt i erg i ve n tha t, w he n the de fen dan ts c o m pl y wi ththe di st r i ct cou r t’ s o r deri n the m anner the c ourt p re scr ibed, al l o fPeabo dy’s ta x-r el ate d conce r ns s ho ul d b e a l l a y e d. P e ab o dy i s e nt i t l e d t o h ave hi s da mag e s di s t r ib ut e d wi th the t a x fe a t ur e s p r e s e r v e d, but thi s co urt need n ot cr edi t m ult i ple theo ri es ofr el i ef to acco m pli sh i t. See Grad e n v . ConexantSy s . Inc . , 49 6 F
. 3d 291, 30 1 ( 3d Cir

. 20 07) (s tati ng tha t a n acti on under § 5 02 (a)( 2) is “t h e s en sib le ro u te ” fo r a b en efit s c laim unde r the c i r cumst an ce s, b ec au se i t woul d a ll o w the pla i nti ff s “ to getthe m oneyi n the fi rs t instance fro m a s ol vent partyl i abl e t o m ak e good on the l oss , not from the p lan itself

. ”).22 N os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l. C. Peabo dy’s A dd i ti onalRequests f orRel i ef As d i s c u s s e d ab o v e , P e ab o d y i s a g g r i e v e d b y t he dist ri ct c ourt’ s deni alo fhi s r equests f orthe re m ova l o f Dav i s an d Kol e as t r us te es o fthe ERISA P lan; f o r the d ist ric t cou rt to c om p el D av is an d K ole to m a k e ce rt ain dis c los ures ; and f orthe cour t t o re tai n j uri sdic ti on o f the c a s e t o e ns ur e tha tP e ab o dy ’ s j ud g men ti s s a t i s fi e d. The dis tr i ct c ourtenj oy ed dis cre ti on a s to the r em ova l of t ru st e e s, s e eKat s ar os v. Cody, 744 F.2d 270 , 281 (2d Cir. 19 84 ); Iron Wo rkers Lo ca l #2 7 2 v. B o w en , 62 4 F
. 2d 1255 , 1262 ( 5th Ci r. 1 98 0), and d i d not abuse i ts disc re ti on i n decl i n in g to re m ove them

. Peabo dy has b een a w ar ded an enf or ceabl e j ud gm ent a nd has not supp l i ed pers uasi ve re aso ns to bel i eve thatthe defe nd an ts w i l l di shonor i t. Len g th y an d co nt en ti o us l i ti g at i o n pr ec ede s th e i ss ua nc e o fmany j udg m en ts , a nd do es no t, wi th o ut m or e, d ep riv e t h e d ist ric t c o u rtof its d isc re tio n to ret ain orr em ove ERIS A tr ustee s. Fo r m u c h t h e s am e r eas ons, w e affi rm the cour t’ s denia l of Peabo dy’s re quest f or an o r dertha t trus te es make di sc l o su r es t o e ff ectua te the j ud gm ent. W e nee d not o pine on the d ist rict co urt’ s deci si on t o rej ec t Peabody’ s r equest that the c ourtr eta i n j uri sdic

tio n . The di str i ct c ourtwas cor re ct insof aras i t obser ved that i t was witho ut j uri sdic ti on o fth e c as e once i t was a p p ea led

. See M a rrese v. A m . Ac a dem y o f O rtho pa edic Su rge ons , 470 U .S. 37 3, 3 7 8 (19 85 ). B ec au se th e c ou rt ’s s ole ra tio nal e fordenyi ng thi s r equest w as i ts l ack ofj uri sdic

ti on wh i l e the cas e was o n app eal, we do not know how i t wou l d h a v e r u l e d u n d e r d i ffe r e n tc i r c u ms t a n c e s . WeN os. 09

- 3428, 09

- 3452, 09

- 3497, 10

- 1851 , etal

. 23

ex pr es s no o pi ni o n a s to the p rop er o ut co m e i fthe i s s ue a r i s e s a g a i n o n r e man d.

I V. The Li abi l i ty ofthe I nsurerDefendants W e turn now to the m atter of t h e l ia b il ity ofthe insu rance defen d an ts und erthei r disho nestybo nd s i ssued to th e RIC Plan. Th e d istri ct cou rt ruled that the p la intiff s lacked stan d ing un d er ER I SA to sue t h e non -fidu ciary i nsurance defe nd ants, and w e a gr ee. Peabo dy conce des thatthe in su re rs ar e no t pr oper defe nd ants und er§ 502( a) ( 1) ( B) o r § 502( a) ( 2) , but ar gues that hi s c l a i m ca n pr e v a i l u nd e r § 5 0 2 ( a ) ( 3 ) , a s “ o ther appropri ate equi ta b le r el i ef

. ” Peabody’ s a rgum ent under § 5 02( a) ( 3) f ai l s be cause th e re liefhe s eek s, m oney dam age s under the Pl an’ s insurance pol i cy, cannotbe described as typi cal l y “ equi tabl e. ” See Wa l- M a r t Sto res, Inc. A ss ociate s’H ealth & Wel fareP lan v
. Wel ls , 21 3 F
. 3d 398, 401 ( 7th Cir
. 2000 ) ( “[ T]he Suprem e Court sai d

. . . th at onl y t ypi cal e qu i t a b l e r el i efi s a vai l abl e under [ ER I SA.]”); N o va kv. A nd ersen C o rp . , 96 2 F
. 2d 757, 76 0 ( 8th Cir
. 19 92) ( “[ W ] e fi n d n ot hi ng i n the sta tutor y l anguage to p er su ad e u s t o in te rp re t ‘o th er ap p r o p r iat e e q u ita b le re lief’ t o m e an an yt h in g ot h er th an w h at it u su ally m ea ns

— d eclaratory or i nju n ctive reli ef. ”). Peab od y’s at te m pt to ci r cumve nt th i s pr o bl em by r ely i ng o n the equi tabl e doct rine o fadver se dom i nati on i s unavai lin g. A dvers e dom i na tio n “ tol l s the r unning o fthe sta tute of l i m i tat i ons peri od w here the enti ty i s . . . dom i nated by w ro ngdoer s. ” R esolu tio n Tru s t C o rp. v. G a llagh er, 80 0 F
. S u p p . 5 9 5 , 6 0 0 ( N. D. I l l

. 1 9 9 2 )
. E v e n a s s u mi n gt he24 N os . 09-3 42 8, 09 -34 52 , 09-3 49 7, 10 -18 51 , et a l. appl i ca ti o n o fthi s do ctri ne wer e i ndi ca te d ( ana r g um en t th at th e d ist ric t cou rt c on vin c in gly rej ec t e d ) , it w oul d not chan ge the nature o fPeabo dy’s cl ai m ag ai nst the insurer s, o r “cl oakthe l i ti gan t w ith standing ” a s P ea b o d y u rg es . C re d itin g P ea b od y’s th eo ry w ou ld extend the doctr i ne f ar beyond i ts pu rpos e r el ati ng to th e t im elin es s o f cla im s, an d it w ou ld be p a r t i c u lar ly i napp ro pri ate to so co ntort the doctr i ne to cr eat e a n E R ISA rem ed y w h er e n on e e x ist ed b e f or e. See G reat-West Li f e& Annu i ty Ins . Co. v. Knud s on , 53 4 U.S . 2 04 , 2 09 ( 2002 ) ( “W e hav e . . . bee n especi al l y r el uctant to ta m per w i th [ th e] e nf o r ce m en t sc he m e embo di ed i n [ ERI S A] bye xtendi ng r em edi es not speci fi cal l y a uthor i zed byi ts tex t.”) ( intern al quo tation om itted ). Forthe f or ego i ng rea sons, the j ud gm ent o fthe dist ri ct cour t i s a ffi rm ed i n part, r eve rs ed in p ar t, and the ca se i s r emande d fo r pro ce eding s co ns i st en t wi ththi s o pi ni o n.

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