Opinion ID: 521022
Heading Depth: 3
Heading Rank: 2

Heading: Liability of Parties in Interest

Text: 17 Kim cross-appeals that portion of the district court's order finding that there was no basis for holding the outer island representatives, as parties in interest, jointly and severally liable with Fujikawa, the breaching fiduciary. Kim contends that parties in interest found to have participated in a prohibited transaction under Sec. 406 are jointly and severally liable for the funds they received in the course of the prohibited transaction. 5 However, since Fujikawa has completely satisfied the judgment, Kim lacks standing to raise this issue. Accordingly, the cross-appeal is dismissed. III APPEAL NO. 88-2509 A. FACTS AND PROCEEDINGS 18 Several weeks after judgment was rendered in Civ. No. 85-1188 (Appeals Nos. 87-1801/87-1931) finding Fujikawa liable for the monies paid to the outer island representatives from September 5, 1985 until the time of trial in November 1986, Kim brought an identical action in Civ. No. 87-0213 seeking to have Fujikawa reimburse the Funds for monies paid to the outer island representatives for the period from trial until judgment was rendered in Civ. No. 85-1188 on March 3, 1987. 19 Fujikawa responded by filing a counterclaim and a third-party complaint, seeking a right of contribution from Kim and the other trustees of the Funds. Fujikawa alleged that Kim and the other trustees participated in the maintenance of the prohibited practice. The district court dismissed the counterclaim and third-party complaint, holding that ERISA did not permit a fiduciary to file an action for contribution. The district court, however, granted Fujikawa leave to amend under some theory other than contribution. 20 Accordingly, Fujikawa filed an amended counterclaim alleging that Kim had essentially approved and ratified the employment of the outer island representatives, and that if such employment constituted a prohibited transaction, Kim should similarly be held liable for damages. Fujikawa's amended third-party complaint alleged that the other trustees similarly maintained and ratified the prohibited practice; thus, if Fujikawa is found liable, the other trustees should likewise be held liable. 21 The district court granted summary judgment dismissing the amended counterclaim and third-party complaint, holding that Kim was the virtual representative of the third-party trustee defendants and that the judgment in Civ. No. 85-1188 barred the actions set forth in the amended claims. The district court similarly granted Kim's motion for summary judgment on his complaint, holding that Fujikawa made payments from the Funds to parties in interest in violation of section 406(a)(1)(C) and (D) of ERISA. The court again assessed, for the period in question, the entire cost of the outer island representative system against Fujikawa, plus prejudgment interest. The court allowed Fujikawa offsets for amounts actually paid by the union for use of the representatives. Judgment was entered against Fujikawa in the amount of $59,948.32. 22 Fujikawa appeals the district court's holding that he was liable for the entire unreimbursed cost of the prohibited transaction, contending again that the court should have reduced his liability by any amount of benefit which the parties in interest may have provided to the Funds. He also contends that the district court erred in ruling that ERISA does not provide him a right of contribution from Kim and the other trustees and that Civ. No. 85-1188 barred his amended counterclaim and third-party complaint. B. DISCUSSION 23 1. Liability for Entire Cost of Prohibited Transaction 24 Fujikawa argues that the district court erred in assessing as damages under 29 U.S.C. Sec. 1109 the entire cost of the prohibited transaction, where not all of the transaction constituted a loss to the Funds. We conclude, however, that there was no error. When the materials submitted in connection with a motion for summary judgment indicate that the non-moving party will be unable to carry its burden of proof on an issue at trial, summary judgment may be entered against the party on that issue. See Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Here, as in Civ. No. 85-1188, Fujikawa failed to point to specific facts indicating that he would be able to establish what portion of the cost of the prohibited transaction was not a loss. Accordingly, the district court, in granting summary judgment, properly assessed against Fujikawa the entire cost of the transaction, less reimbursements made by the Union. 2. Right of Contribution 25 Fujikawa contends that ERISA does not and should not prohibit actions for contribution among fiduciary trustees. He argues that, in enacting ERISA, Congress provided for broad equitable remedies, including contribution, and that actions for contribution are consistent with the language and purposes of the statute. We disagree. As the Supreme Court noted in Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 141-42, 105 S.Ct. 3085, 3090, 87 L.Ed.2d 96 (1984), section 409 of ERISA, 29 U.S.C. Sec. 1109, only establishes remedies for the benefit of the plan. Therefore, this section cannot be read as providing for an equitable remedy of contribution in favor of a breaching fiduciary. See Call v. Sumitomo Bank, 689 F.Supp. 1014, 1017-20 (N.D.Cal.1988). 26 Furthermore, the Supreme Court has noted that, in light of ERISA's interlocking, interrelated, and interdependent remedial scheme, which is in turn part of a 'comprehensive and reticulated statute,'  it seems clear that Congress did not intend to authorize other remedies [under ERISA] that it simply forgot to incorporate expressly. Russell, 473 U.S. at 146, 105 S.Ct. at 3092 (emphasis in original)(quoting Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 361, 100 S.Ct. 1723, 1726, 64 L.Ed.2d 354 (1980)). Given this observation, we cannot agree with Fujikawa's contention that Congress implicitly intended to allow a cause of action for contribution under ERISA. See Russell, 473 U.S. at 145, 105 S.Ct. at 3092 ( 'The federal judiciary will not engraft a remedy on a statute, no matter how salutary, that Congress did not intend to provide.' ) (quoting California v. Sierra Club, 451 U.S. 287, 297, 101 S.Ct. 1775, 1781, 68 L.Ed.2d 101 (1981)). Indeed, implying a right of contribution is particularly inappropriate where, as in this case, the party seeking contribution  'is a member of the class [e.g., fiduciaries] whose activities Congress intended to regulate for the protection and benefit of an entirely distinct class [e.g., ERISA plans],'  and where there is no indication in the legislative history that Congress was concerned with softening the blow on joint wrongdoers. Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 639, 101 S.Ct. 2061, 2066, 68 L.Ed.2d 500 (1981)(using these arguments to conclude that there is no right to contribution under the antitrust laws) (quoting Piper v. Chris-Craft Industries, Inc., 430 U.S. 1, 37, 97 S.Ct. 926, 947, 51 L.Ed.2d 124 (1977)) (emphasis omitted). 27