Opinion ID: 72881
Heading Depth: 2
Heading Rank: 1

Heading: Secretary’s Statutory Role

Text: 14 In Lockheed Corp. v. Spink, 517 U.S. 882, 116 S. Ct. 1783 (1996), the Supreme Court acknowledged that Mertens’s statements about § 406 were dicta, but declined to retreat from that dicta and stated again, albeit in dicta, that “a party in interest who benefitted from an impermissible transaction can be held liable under ERISA.” Id. at 1789 n.3. 20 In § 502(a), Congress granted the Secretary an independent and unqualified right to sue and seek redress for ERISA violations because ERISA plans significantly affect the “national public interest.” ERISA itself contains a declaration of public purpose that recognizes that the economic impact of private benefit plans affects the “national public interest.”15 See 29 U.S.C. § 1001(a) (ERISA § 2(a)). Private ERISA litigants seek to redress individual grievances. However, in suing for ERISA violations, the Secretary seeks not only to recoup plan losses, but also to supervise enforcement of ERISA, to guarantee uniform compliance with ERISA, to expose and deter plan asset mismanagement, to protect federal revenues, to safeguard the enormous amount of assets and investments funded by ERISA plans, and to assess civil penalties for ERISA violations. One circuit court succinctly summarized the Secretary’s national public interest in bringing ERISA actions as ensuring “the financial stability of billions of dollars of assets which in turn have a monumental effect on not only the Treasury of the United States, but on the national economy and commerce as well.” Secretary of Labor v. 15 ERISA’s statement of purpose provides “that the growth in size, scope, and numbers of employee benefit plans in recent years has been rapid and substantial; that the operational scope and economic impact of such plans is [sic] increasingly interstate; that the continued well-being and security of millions of employees and their dependents are directly affected by these plans; that they are affected with a national public interest;....” 29 U.S.C. § 1001(a) (ERISA § 2(a)) (emphasis supplied). 21 Fitzsimmons, 805 F.2d 682, 692 (7th Cir. 1986) (en banc). In addition to recovering plan losses, the Secretary “has an even stronger and paramount obligation to protect the very integrity, heart and lifeline of the program itself.” Id. at 692-93. ERISA’s legislative history also emphasizes the Secretary’s national public interest in deterrence, including the need for the Labor Department to have “broad authority to monitor employee benefit plans and deter violations of the law,” and to “restructure its enforcement efforts to emphasize deterrence.” H. Conf. Rep. No. 101386, at 431-32 (1989), reprinted in 1989 U.S.C.C.A.N. 3018, 3035.16 The congressional Conference Committee concluded that the Secretary must have and use enforcement powers and civil penalties to make ERISA meaningful, as follows: [I]t has become apparent that the Department must use its enforcement powers more vigorously to make the protection of ERISA meaningful. The conferees believe strengthened civil penalties will better enable the Department to protect participants and beneficiaries. The conferees further believe that the need for strengthened enforcement and deterrence of violations of ERISA applies not only to the Department of Labor, but to judicial oversight of private rights of action affecting employee benefit plans. It remains the intent of Congress that the courts use their power 16 In 1989, Congress expanded § 502 to confer additional enforcement powers upon the Secretary, including assessment of civil penalties against plan administrators, § 502(c)(2), “parties in interest,” § 502(i), fiduciaries, § 502(l)(1)(A), (m), and, in some instances, against “any person,” § 502(c)(4), (c)(5), (l)(1)(B). Omnibus Budget Reconciliation Act of 1989, Pub. L. 101-239, 103 Stat. 2123. These civil penalties go directly to the United States Treasury. While the Secretary must assess civil penalties, none of the contested issues about these civil penalties is presently before the court on appeal. 22 to fashion legal and equitable remedies that not only protect participants and beneficiaries but deter violations of the law as well. Id. at 3035-36. Against this statutory background, we examine why the private litigants’ settlement in Knop does not bar the Secretary’s action here.