Document: 530 U.S. 238120 S.Ct. 2180147 L.Ed.2d 187 NOTICE: This opinion is subject to formal revision before publication in the preliminary print of United States Reports. Readers are requested notify Reporter Decisions, Supreme Court States, Washington, D. C. 20543, any typographical or other errors, order that corrections may be made goes press.HARRIS TRUST AND SAVINGS BANK, AS TRUSTEE FOR THE AMERITECH PENSION TRUST, et al.v.SALOMON SMITH BARNEY INC. al. No. 99-579. SUPREME COURT OF UNITED STATES Argued April 17, 2000 Decided June 12, Syllabus The Employee Retirement Income Security Act 1974 (ERISA) bars a fiduciary an employee benefit plan from causing engage certain prohibited transactions with "party interest," §406(a), defined encompass entities might inclined favor at expense plan's beneficiaries, see §3(14). Section 406's prohibitions both statutory and regulatory exemptions. See §§408(a), (b). Ameritech Pension Trust (APT), ERISA pension plan, allegedly entered into transaction by §406(a) not exempted §408 respondent Salomon Smith Barney Inc. (Salomon), nonfiduciary party interest. APT's fiduciaries-its trustee, petitioner Harris Savings Bank, its administrator, Corporation-sued under §502(a)(3), which authorizes fiduciary, inter alios, bring civil action obtain "appropriate equitable relief" redress violations Title I. moved for summary judgment, arguing when used remedy suit only against expressly constrained §406(a)-the who caused enter transaction-and counterparty transaction. District denied motion, holding provides private cause nonfiduciaries participate transaction, but granted Salomon's motion certification issue interlocutory appeal. Seventh Circuit reversed, authority sue §502(a)(3) does extend interest" barred §406(a). Held: 502(a)(3)'s authorization "participant, beneficiary, fiduciary" extends Pp. 5-15. (a) In providing "[a] - shall [prohibited] transaction" (emphasis added), §406(a)(1) imposes duty on causes However, this rejects Circuit's conclusion that, absent substantive provision imposing interest, held liable one ERISA's remedial provisions. Because itself duties, liability depend whether provisions impose specific being sued. While authorize large, purpose "redress[ing any] enforc[ing] provisions" e.g., Peacock v. Thomas, 516 349, 353, section admits no limit (aside caveat) universe possible defendants. Indeed, makes mention all parties proper defendants-the focus, instead, redressing "act practice violates [ERISA I]." (Emphasis added.) Other ERISA, contrast, address defendant. See, §409(a). And, "civil brought participant, §502(a) demonstrates Congress' care delineating plaintiffs actions. matter conclusively resolved §502(l), assessment Secretary Labor penalty "other person" knowingly participates fiduciary's violation, defining amount such reference "ordered court paid person judicial proceeding subsection (a)(5)." plain implication §502(a)(5) "knowing[ly] participat[es]" notwithstanding absence explicitly upon knowing participation. It thus follows similarly worded (a)(3). Mertens Hewitt Associates, 508 248, 260. Id., 261, distinguished. 502(l), therefore, refutes notion (or (a)(5)) hinges particular defendant labors imposed I's 5-10. (b) argument it would contravene common sense Congress party, as interest "wrongdoer" violating ignores limiting principle explicit §502(a)(3): retrospective relief sought relief." law trusts, offers starting point analysis, Hughes Aircraft Co. Jacobson, 525 432, 447, plainly countenances sort petitioners here, Moore Crawford, 130 122, 128. also sets limits restitution actions defendants than principal "wrongdoer." Translated instant context, transferee ill-gotten assets liable, if (assuming he has purchased value) knew should have known circumstances rendered prohibited. Those circumstances, turn, involve showing actual constructive knowledge facts satisfying elements Lockheed Corp. Spink, 517 882, 888-889. additionally prompts rejection complaint Court's view incongruously allow harmed culpable seek arguably less counterparty-transferee. sees incongruity rule: Although bases his own wrongdoing, maintain because recover money plan. And while correctly observes antecedent violation §406(a)'s per se transacting was unknown law, unsupported suggestion common-law attach act violate duty. Thus, tainted satisfies §502(a)(3)'s "appropriate[ness]" criterion. Such "equitable." Mertens, supra, 10-14. (c) declines depart text basis two nontextual matters: (1) congressional Conference Committee rejected language transactions, (2) policy consequences recognizing case could devastating counterparties, faced prospect dealing charge higher rates or, worse, refuse altogether transact plans. cases, analysis begins and, where clear, ends there well. 438. 502(a)(3), informed standard. 14-15. 184 F.3d 646, reversed remanded. CERTIORARI TO APPEALSFOR SEVENTH CIRCUIT J., delivered unanimous Court. Opinion Justice Thomas 1 406(a) (ERISA), 88 Stat. 879, interest." 29 U.S.C. § 1106(a). 502(a)(3) 1132(a)(3). question We hold does. 2 * Responding deficiencies prior regulating fiduciaries, enacted §406(a)(1), supplements general loyalty §404(a), categorically barring deemed "likely injure plan," Commissioner Keystone Consol. Industries, Inc., 152, 160 (1993). 406(a)(1) provides, among things, respect knows know constitutes direct indirect sale exchange property between 1106(a)(1)(A). those beneficiaries. §3(14), 1002(14). (b), 1108(a), 3 comes us assumption (the (APT)) (respondent (Salomon)) §408.1 APT benefits employees retirees Corporation subsidiaries affiliates. Salomon, during late 1980's, provided broker-dealer services APT, executing nondiscretionary equity trades direction qualifying (we assume) §3(14)(B), 1002(14)(B) (defining "a [an benefit] plan"). During same period, sold interests several motel properties nearly $21 million. purchase directed National Investment Services America (NISA), investment manager had delegated discretion over portion assets, hence §3(21)(A)(i), 1002(21)(A)(i). 4 litigation arose fiduciaries discovered were worthless. Petitioners been worthless along; asserts, contrary, declined value due downturn industry. Whatever true cause, sued 1992 "to enjoin I] appropriate violations." 5 claimed, NISA, purchasing account participation Specifically, pointed §406(a)(1)(A), 1106(a)(1)(A), prohibits "sale §406(a)(1)(D), 1106(a)(1)(D), "transfer plan." rescission price disgorgement profits use transferred it. App. 41. 6 1106(a)(1) ("A " added)). provide subsequent appeal 28 1292(b). 7 Appeals reversed. 646 (1999). began observation terms like neighboring provisions, §404, governs conduct counterparties nonfiduciaries. id., 650. next posited "where duty, can action," ibid., relying dictum our decision 254 (1993), breach saw distinction situation (involving §404) §406), explaining neither Finally, view, §406 §502(i), simply confirms deliberately selected enforcement tool (a Secretary) instead another §502(a)(3)). Accordingly, cannot participating judgment Salomon. 8 doing so, departed uniform position Courts §502(a)(5), §406(a)(1). LeBlanc Cahill, 153 134, 152 (CA4 1998) (§502(a)(3)); Landwehr DuPree, 72 726, 734 (CA9 1995) (same); Herman South Carolina 140 1413, 1421 1422 (CA11 (§502(a)(5)), cert. denied, 1140 (1999); Reich Stangl, 73 1027, 1032 (CA10) (same), 519 807 (1996); Compton, 57 270, 287 (CA3 (same). certiorari, 528 1068 (2000), now reverse. II 9 agree interpretation They rightly note reject, however, contend, we agree, therefore sued.2 502 provides: 10 "(a) A 11 . 12 "(3) (A) (B) (i) (ii) enforce title 13 language, sure, "does 'appropriate relief' 'redress[ing provisions' 353 (1996) (quoting 253 alterations original)). But caveat, infra) 1132(a)(3) added). do §409(a), 1109(a) (stating "[a]ny breaches responsibilities, obligations, duties subchapter personally liable") added); 1132(l) (authorizing imposition penalties "fiduciary" part I "any violation). added)); 1132(a)(5) 14 light precision these respects, ordinarily assume failure specify intentional. Russello 464 16, 23 (1983). 'comprehensive reticulated' scheme warrants cautious approach inferring remedies authorized text, Massachusetts Mut. Life Ins. Russell, 473 146 (1985) Nachman Benefit Guaranty Corporation, 446 359, 361 (1980)), especially given alternative intuitively appealing interpretation, urged suits whom case, §502(l) resolves compels status arise itself, turn 502(l) relevant part: 15 "(1) 16 "(A) responsibility of) subtitle 17 "(B) person, 18 "the assess equal 20 percent applicable recovery amount. 19 "(2) For purposes paragraph (1), term 'applicable amount' means recovered described pursuant settlement agreement Secretary, 21 ordered participants beneficiaries instituted (a)(2) (a)(5) section." 1132(l)(1) (2). 22 contemplates classes defendants, person[s]." latter class concerns here. Paraphrasing, participat[es] in" fiduciary." Ibid. violation; otherwise, "applicable amount" determine person." available "knowing participation." (a)(5), U.S., 24 25 invokes articulating alternative, more restrictive reading support inference drawn. suggested, dictum, person[s]" limited "cofiduciaries" §405(a) responsibility. 261. So read, consistent depends entirely violated did discuss understandably, since merely flagging issue, 255, 260 261 defines "person" without regard cofiduciary (or, matter, interest), §3(9), 1002(9). Moreover, indicates §405(a), 1105(a) ("[A] "), clearly distinguishes "fiduciary," §502(l)(1)(A), 1132(l)(1)(A), person," §502(l)(1)(B), 1132(l)(1)(B). III 26 Notwithstanding (as §502(l)), protests raises specter innocent even having connection unlawful practice" rather wrongdoer, i.e., 27 reductio ad absurdum [of ERISA] [unless] inconsistent statute, structure, purposes, 447 (1999) (internal quotation marks omitted), As amicus curiae observe, long settled trustee transfers trust third takes trust, unless notice then (if already disposed proceeds of), person's derived therefrom. Restatement (Second) Trusts §§284, 291, 294, 295, 297 (1959); A. Scott & W. Fratcher, Law §284, §291.1, pp. 77 78, §294.2, p. 101, §297 (4th ed. 1989) (hereinafter Trusts); §470, 363; Dobbs, Remedies §4.7(1), 660 661 (2d 1993); G. Bogert, Trustees §866, 95 96 (rev. 2d 1995). ago explained analogous obtained fraud: "Whenever legal through 'which render unconscientious holder retain enjoy beneficial impresses acquired truly equitably entitled same, although never, perhaps, estate therein; jurisdiction reach either hands original holder, until purchaser good faith acquires right relieved trust.' 128 (1889) J. Pomeroy, Equity Jurisprudence §1053, 628 629 (1886)). Importantly, wrongdoer" insulate him restitution. also, Restitution ch. 7, Introductory Note, 522 (1937); §4.3(2), 597 ("The based property, wrongs"). bears emphasis trusts Only existence transfer trust. must demonstrated unlawful. 888 889 (1996).3 30 leads reject rule, Trusts, §294, 69 ("[A]n maintained beneficiary trustee"); reason: "Although voluntary act, though done permitted action, estate, whatever recovers will trust." Comment c. 31 advances fundamental critique analogy, reasoning here accurately characterizes expanding law's arm's-length standard conduct, 160, principles tethered precise contours 32 note, incorporate necessarily foreclose accommodation underlying concern construed require monitor compliance each intricate details. Prohibited Transaction Exemption 75 1, §II(e), 40 Fed. Reg. 50847 (1975) (requiring records 6-year period). occasion decide inform courts' determinations what not) expected engaging fiduciary. §297(a), 294 "notice" mean "knows know" Cf. §II(e)(1), (providing §502(i) taxes 4975 "disqualified plan). 33 reasons, criterion §502(a)(3). "equitable" nature. ("[T]he 'equitable awardable includes "); ibid. (explaining similarity §§502(a)(3) (5), meaning subsections). IV 34 finally, clues cited amici. First, urges consider, did, F.3d, 652 653, Committee's Senate bill transactions. Brief Respondent H. R. 2, 93d Cong., Sess., §511, 533 (1974) (with amendments passed Senate), reprinted Legislative History (Committee Print compiled Subcommittee Public Welfare Library Congress), Ser. 93 406, 3780 (1976) (staff comment House differences §409)); 5259 §409). Second, amici submit 35 decline suggestions "[a]s construction, statute clear answer, well." Aircraft, 438 citation omitted). 36 reverse remand further proceedings opinion. 37 so ordered. NOTES: preserved arguments prohibition event, (1975). asserts waived theory neglecting present courts below. According petitioners' claim (until their merits brief Court) "violated" But, assuming pellucidly articulate Circuit, appears understood tenor namely, redressed "violate" 650 (CA7 1999). current focus independent claim. "Once federal properly presented, make claim; they below." Yee Escondido, 503 519, 534 (1992). seeking defendant-transferee, burden proof notice, currently us, resolution remand. (noting conflict non-ERISA cases proof).

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