Opinion ID: 619740
Heading Depth: 2
Heading Rank: 2

Heading: The Plan's Other Arguments Against Enforceability

Text: In its attempt to avoid enforcement of the district court's judgment, the Plan also relies on several other provisions of the plan document, ERISA, and New York State law that, it argues, prohibit Milgram from recovering from the Plan before the Plan has recouped the funds that it erroneously disbursed to Breen. These arguments are no more persuasive than the Plan's anti-alienation argument. For example, Section 9.7 of the plan document reads, Except as provided below and otherwise specifically permitted by law, it shall be impossible . . . for any part of the corpus or income . . . to be used for, or diverted to, purposes other than the exclusive benefit of Participants, Retired Participants, or their Beneficiaries. The Plan suggests that the use of plan funds to compensate Milgram for the Plan's misapplication of funds from his account would contravene this provision. That argument, however, ignores both the fact that Milgram himself is a Retired Participant and that, under ERISA § 502(d), the enforcement of a money judgment against plan assets is specifically permitted by law. See Mackey, 486 U.S. at 832, 108 S.Ct. 2182. The Plan further objects that to permit enforcement of the judgment would require Orthopedic, as plan administrator, to violate its fiduciary duties under the statute. ERISA § 404 requires the plan administrator to discharge its duties solely in the interest of the participants and beneficiaries, but it defines defraying reasonable expenses of administering the plan to be a purpose consistent with that duty. See ERISA § 404(a)(1)(A)(ii), 29 U.S.C. § 1104(a)(1)(A)(ii). Although the Plan maintains that the cost of compensating Milgram does not constitute a reasonable expense within the meaning of the statute, the authority that it cites, an advisory opinion published by the Pension and Welfare Benefits Administration, see Advisory Opinion 97-03A (Jan. 23, 1997), addresses a situation entirely different from the one that we confront here. To the extent that the opinion is relevant to this case as all, its assertion that as a general rule, reasonable expenses of administering a plan include direct expenses properly and actually incurred in the performance of a fiduciary's duties to the plan, cuts against the Plan's argument. We have little trouble concluding that the payment of a judicial judgment that the Plan is required by law to satisfy, in favor of a plan beneficiary whose rights have been violated by the Plan, is an expense that the administrator would properly and actually incur[] in the performance of its duties. Indeed, it could well be argued that it is the failure to pay Milgram the money to which he is entitled as a plan participant that would violate the administrator's fiduciary duties. This conclusion also answers the Plan's claim that withdrawing plan assets to pay the judgment would constitute a prohibited transaction under ERISA § 406(b)(1), 29 U.S.C. § 1106(b)(1). That section prohibits an ERISA fiduciary from deal[ing] with the assets of the plan in his own interest or for his own account. The Plan argues that if Orthopedic were to use plan assets to satisfy the judgment it would be acting in its own interest, since Milgram also had a claim against Orthopedic for its misconduct as plan administrator. But, as we noted above, the Plan is under a legal duty to reimburse Milgram. Orthopedic's payment of the judgment is therefore a ministerial function, not a discretionary one to which fiduciary liability might attach. See Harris Trust and Sav. Bank v. John Hancock Mut. Life Ins. Co., 302 F.3d 18, 29 (2d Cir.2002). The Plan also maintains that permitting recovery against plan assets would run afoul of ERISA's directive that a money judgment . . . against an employee benefit plan . . . shall not be enforceable against any other person unless liability against such person is established in his individual capacity. ERISA § 502(d)(2), 29 U.S.C. § 1132(d)(2). In the Plan's view, the district court's judgment is effectively a prohibited judgment against plan members, because it is their individual retirement accounts that will suffer. While enforcement of the judgment may cause current plan participants to receive less generous pension benefits than they otherwise might have received, that does not change the fact that, as a matter of law, Milgram seeks enforcement against the plan rather than against any of the participants individually. Moreover, because each participant's potential loss on a judgment against the Plan is capped at the balance of his individual account, suing the Plan is not the economic or legal equivalent to suing the participants directly. Finally, the Plan argues that the district court erred in refusing to suspend enforcement of the judgment pursuant to either N.Y. C.P.L.R. 5239 and 5240 or Federal Rule of Civil Procedure 60(b)(6). But C.P.L.R. 5239 and 5240 are state procedural rules; they provide no substantive rights and therefore have no relevance to this proceeding in federal court. In contrast, Rule 60(b)(6) is a federal rule that permits the district court to relieve a party from a final judgment in the interests of justice. But the rule does not require the district court to withhold enforcement of the judgment; it merely confers discretion on the court, whose denial of relief under the rule may be overturned only if we conclude that that discretion was abused. See Transaero, Inc. v. La Fuerza Aerea Boliviana, 162 F.3d 724, 729 (2d Cir.1998). We find no basis for reaching that conclusion in this case. Not only does ERISA specifically authorize the judgment at issue here, but also it seems likely that any harm done to the Plan or its participants will be mitigated significantly by the Plan's recovery of some or all of the funds from Breen. The district court, therefore, did not abuse its discretion in concluding that the enforcement of the judgment was consistent with the interests of justice. In sum, we have considered all of the Plan's arguments, and find that none of them warrants reversal of the district court's judgment that the Plan must pay Milgram what he is due, whether or not it can succeed in recovering the funds that it, through no fault of Milgram's, erroneously paid to Breen.