Opinion ID: 2803327
Heading Depth: 3
Heading Rank: 2

Heading: Amgen as Properly Named Fiduciary

Text: Amgen argues that it is not a fiduciary under the Plan because it has delegated its discretionary authority. “To be found liable under ERISA for breach of the duty of prudence and for participation in a breach of fiduciary duty, an individual or entity must be a ‘fiduciary.’” Wright v. Or. Metallurgical Corp., 360 F.3d 1090, 1101 (9th Cir. 2004). In defining a fiduciary, ERISA says, HARRIS V. AMGEN 59 a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets . . . or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan. 29 U.S.C. § 1002(21)(A). “We construe ERISA fiduciary status ‘liberally, consistent with ERISA’s policies and objectives.’” Johnson v. Couturier, 572 F.3d 1067, 1076 (9th Cir. 2009) (quoting Ariz. State Carpenters Pension Trust Fund v. Citibank, 125 F.3d 715, 720 (9th Cir. 1997)). Whether a defendant is a fiduciary is a question of law we review de novo. See Varity Corp. v. Howe, 516 U.S. 489, 498 (1996). Under ERISA, a “named fiduciary” is “a fiduciary who is named in the plan instrument.” 29 U.S.C. § 1102(a)(2). The Amgen Plan provides that Amgen is “the ‘named fiduciary,’ ‘administrator[,]’ and ‘plan sponsor’ of the Plan (as such terms are used in ERISA).” ERISA grants a named fiduciary broad authority to “control and manage the operation and administration of the plan.” 29 U.S.C. § 1102(a)(1). “Generally, if an ERISA plan expressly provides for a procedure allocating fiduciary responsibilities to persons other than named fiduciaries under the plan, the named fiduciary is not liable for an act or omission of such person in carrying out such responsibility.” Ariz. State Carpenters, 125 F.3d at 719–20 (citing 29 U.S.C. § 1105(c)(2)). 60 HARRIS V. AMGEN Amgen argues that it delegated authority to trustees and investment managers. Section 15.1 of the Plan provides, “To the extent that the Plan requires an action under the Plan to be taken by the Company [Amgen], the party specified in this Section 15.1 shall be authorized to act on behalf of the Company.” Section 15.1 says nothing about delegation to trustees and investment managers. Rather, it explains that the Fiduciary Committee has the authority, on behalf of the Company, to “review the performance of the Investment Funds . . . and make recommendations” and to “otherwise control and manage the Plan’s assets.” In the absence of a Fiduciary Committee, the Global Benefits Committee will perform these tasks. Section 14.2 of the Plan governs the relationship between Amgen (“the Company”) and the trustees and managers. It provides: The Trustee shall have the exclusive authority and discretion to control and manage assets of the Plan it holds in trust, except to the extent that . . . the Company directs how such assets shall be invested [or] the Company allocates the authority to manage such assets to one or more Investment Managers. Each Investment Manager shall have the exclusive authority to manage, including the authority to acquire and dispose of, the assets of the Plan assigned to it by the Company, except to the extent that the Plan prescribes or the Company directs how such assets shall be invested. Each Trustee and Investment Manager shall be solely responsible for diversifying, in accordance with Section 404(a)(1)(C) of ERISA, the investment of the assets of the Plan assigned HARRIS V. AMGEN 61 to it by the Committee, except to the extent that the plan prescribes or the Committee directs how such assets shall be invested. ERISA requires that a trustee hold plan assets in trust for plan participants. 29 U.S.C. § 1103(a). A trustee has “exclusive authority and discretion to manage and control the assets of the plan” subject to two exceptions. Id. The first exception is that a plan may “expressly provide[] that the trustee or trustees are subject to the direction of a named fiduciary who is not a trustee.” Id. § 1103(a)(1). Under this exception, a named fiduciary with the power to direct trustees is a fiduciary with authority to manage plan assets. The second exception is that an “investment manager,” duly licensed as an investment adviser under federal or state law, may also be appointed to manage plan assets in lieu of the trustee. Id. §§ 1002(38)(B), 1103(a)(2). There is no question that Amgen appointed a trustee. However, nothing in the record indicates that Amgen appointed an investment manager. Neither ERISA nor the Plan requires that an investment manager be appointed. Even if Amgen had appointed an investment manager, the Plan makes clear that the trustee and any investment manager do not have complete control over investment decisions. See 29 U.S.C. § 1002(21)(A)(i) (defining a person with “any authority or control” over plan assets to be a fiduciary) (emphasis added); cf. Gelardi v. Pertec Comp. Corp., 761 F.2d 1323, 1325 (9th Cir. 1985) (finding delegation where defendant “retained no discretionary control”) (emphasis added), overruled on other grounds in Cyr v. Reliance Standard Life Ins. Co., 642 F.3d 1202, 1207 (9th Cir. 2011). 62 HARRIS V. AMGEN Section 15.1 of the Plan, which authorizes the Fiduciary Committee to take action on behalf of Amgen, does not preclude fiduciary status for Amgen. In Madden v. ITT Long Term Disability Plan for Salaried Empl., 914 F.2d 1279, 1284 (9th Cir. 1990), we held that the company had delegated authority to an administration committee where the plan provided that the Committee had “‘responsibility for carrying out all phases of the administration of the Plan’” and had the “‘exclusive right . . . to interpret the Plan and to decide any and all matters arising hereunder.’” (emphasis omitted). This language contains two features absent from the language in the Amgen Plan. First, it delegates responsibility for all phases of administering the plan, rather than responsibility “to the extent that the Plan requires an action . . . to be taken by the Company.” Second, and more important, it provides the Committee the exclusive right to make decisions under the plan. The Amgen Plan merely authorizes the Fiduciary Committee to act on behalf of Amgen. It neither provides exclusive authority to the Committee, nor precludes Amgen from acting on its own behalf. Other courts have found a company’s grant of exclusive authority to a delegate and an express disclaimer of authority to be critical. In Maher v. Massachusetts General Hospital Long Term Disability Plan, 665 F.3d 289 (1st Cir. 2011), the First Circuit held that a hospital had delegated its fiduciary duties when the plan stated, “‘The Hospital shall be fully protected in acting upon the advice of any such agent . . . and shall not be liable for any act or omission of any such agent, the Hospital’s only duty being to use reasonable care in the selection of any such agent.’” Id. at 292. In Costantino v. Washington Post Multi-Option Benefits Plan, 404 F. Supp. 2d 31 (D.D.C. 2005), the district court for the District of Columbia found delegation when the plan granted the plan HARRIS V. AMGEN 63 administrator “‘sole and absolute discretion’” to carry out various Plan duties. Id. at 39 n.8. Given that ERISA allows fiduciaries to have overlapping responsibilities under a plan, a clear grant of exclusive authority is necessary for proper delegation by a fiduciary. See 29 U.S.C. § 1102(a)(1) (“[O]ne or more named fiduciaries . . . jointly or severally . . . have authority to control and manage the operation and administration of the plan”); see also 1 ERISA Practice and Litigation § 6:5 (“Those who wish to avoid liability exposure through allocation of plan responsibilities to others must therefore take pains to ensure that their documents fully authorize the contemplated delegation.”). Because the Plan contains no clear delegation of exclusive authority, we reverse the district court’s dismissal of Amgen from the case as a non-fiduciary.