Legal Document

508 U.S. 248 113 S.Ct. 2063 124 L.Ed.2d 161 William J. MERTENS, Alex W. Bandrowski, James A. Clark, and Russell Franz, Petitioners,v.HEWITT ASSOCIATES. No. 91-1671. Argued Feb. 22, 1993. Decided June 1, Syllabus * Petitioners allege that they represent a class of former employees who participated in the Kaiser Steel Retirement Plan, qualified pension plan under Employee Income Security Act 1974 (ERISA); respondent was plan's actuary when began to phase out its steelmaking operations, prompting early retirement by many participants; failed change actuarial assumptions reflect additional costs, causing be funded inadequately eventually terminated; petitioners now receive only benefits guaranteed ERISA, rather than substantially greater pensions due them plan; is liable for losses as nonfiduciary knowingly fiduciaries' breach their fiduciary duties. The District Court dismissed complaint, Appeals affirmed. Held: ERISA does not authorize suits money damages against nonfiduciaries participate fiduciary's duty. § 502(a)(3) permits participants bring civil actions obtain "appropriate equitable relief" redress violations statute or plan. Assuming arguendo this creates cause action assist duty, requiring make whole it sustained would constitute relief." What fact seek classic form legal relief, compensatory damages. We have held similar language used another precludes awarding See United States v. Burke, 504 ----, 112 1867, 119 34. And text leaves no doubt Congress intended "equitable include those types relief were typically available equity, such injunction, mandamus, restitution. Given ERISA's roots law trusts, could theory mean all trust common-law courts which sought here. Since obtained from an equity court, however, interpretation render modifier "equitable" superfluous; reading also deprive meaning distinction drew between "remedial" "legal" throughout ERISA. 502(l ), authorizes Secretary Labor assess penalty based on monetary recovery "other person[s]" can given meaningful content without adopting petitioners' theory. Pp. ____. 948 F.2d 607 (CA9 1991), SCALIA, J., delivered opinion Court, BLACKMUN, KENNEDY, SOUTER, THOMAS, JJ., joined. WHITE, filed dissenting opinion, REHNQUIST, C.J., STEVENS O'CONNOR, Alfred H. Sigman, Oakland, CA, petitioners. Ronald Mann, Washington, DC, amicus curiae special leave Court. Steven Frankel, Chicago, IL, respondent. Justice SCALIA 1 question presented whether participates duty imposed (ERISA), 88 Stat. 832, amended, 29 U.S.C. 1001 et seq., employee benefit suffers result breach. 2 According allegations we take true, Corporation (Kaiser) Respondent 1980, large number participants. did not, costs retirements. As result, adequately fund plan, assets became insufficient satisfy obligations, Pension Benefit Guaranty (PBGC) terminate pursuant 1341. see 1322, are general lower fully vested 3 sued fiduciaries alleging Mertens Black, 1105 1991) (per curiam ) (affirming denial summary judgment). They commenced respondent,1 had caused allowing select assumptions, failing disclose one clients, funding shortfall. claimed these acts omissions violated effecting respondent's "professional duties" sought, inter alia, relief. In opposing motion dismiss, fleshed claim, asserting (1) committed own duties, (2) (3) duties actuaries Northern California App. Pet. Cert. A17, Ninth Circuit affirmed relevant part, (1991).2 4 certiorari agreed hear case. 506 49, 121 19 (1992). II 5 is, observed, "comprehensive reticulated statute," product decade congressional study Nation's private system. Nachman Corp. PBGC, 446 359, 361, 100 1723, 1726, 64 354 (1980). provides persons named 1102(a), but anyone else exercises discretionary control authority over management, administration, assets, 1002(21)(A), "fiduciary." Fiduciaries assigned detailed responsibilities, "the proper investment [plan] maintenance records, disclosure specified information, avoidance conflicts interest." Massachusetts Mut. Life Ins. Co. Russell, 473 134, 142-143, 105 3085, 3090, 87 96 (1985); 1104(a). Section 409(a), 1109(a), makes specifies remedies them: personally ("to good [the] any resulting each breach"), restitution restore profits been made through use fiduciary"), "such other remedial court may deem appropriate," including removal fiduciary. 502(a)(2), 1132(a)(2)—the second "six carefully integrated enforcement provisions," supra, at 146, 30923—allows beneficiary, participant, "for appropriate section [409]." 6 above described provisions are, limited terms fiduciaries. decided fiduciary, F.2d, 610, do contest holding. Lacking equivalent specifying non potential defendants, remedy them, turned 502(a)(3), 1132(a)(3), action: "(A) enjoin act practice violates provision [ERISA] (B) (i) (ii) enforce . ." 7 502(a)(5), 1132(a)(5) (providing, language, upon violation provisions). contend alleged knowing participation within 502(a)(3). 8 note outset far clear that, even if available, issue It after all, large, purpose "redress[ing any] enforc[ing] provisions" No suggests term has violated, nor enforced requested judgment. while contains various read imposing obligations nonfiduciaries, actuaries,4 explicitly requires avoid (knowing unknowing) unlikely, moreover, oversight, since impose "knowing participation" liability cofiduciaries. 405(a), 1105(a). That limitation appears more deliberate light part both cotrustees third well established common trusts. Scott & Fratcher, Law Trusts 224.1, p. 404 (4th ed. 1988) (hereinafter Fratcher) (cotrustees); Fratcher 326, 291 (third persons). emphasized our unwillingness infer causes context, statute's crafted scheme "strong evidence intend simply forgot incorporate expressly." U.S., 146-147, 3092. All notwithstanding, seem assume (or inaction) address arguments almost exclusively what forms available. respondent, despite considerable amici, expressly disclaims reliance preliminary point. Brief 18, n. 15; Tr. Oral Arg. 46. Thus, although acknowledge oddity resolving dispute where unclear remediable wrong alleged, decide case narrow battlefield parties chosen, reserve decision antecedent question.5 9 maintain object suit traditionally viewed "equitable," injunction (The unavailable, 612, challenged that.) Although often dance around word, nothing —monetary Money course, Curtis Loether, 415 189, 196, 94 1005, 1009, 39 260 (1974); Teamsters Terry, 494 558, 570-571, 110 1339, 1347-1348, 108 519 (1990); D. Dobbs, Remedies 1.1, (1973). though never interpreted precise phrase relief," construed Title VII Civil Rights 1964 (before 1991 amendments)—"any deems 42 2000e-5(g)—to preclude "awards punitive damages." 1872, 34 10 assert, fails Firestone Tire Rubber Bruch, 489 101, 110-111, 109 948, 954-955, 103 80 (1989). "[A]lthough beneficiary's recover superficially resembles damages," Solicitor General suggests, equity" therefore "is, definition, 'equitable relief.' " Amicus Curiae 13-14. true law, exclusive jurisdiction virtually beneficiaries trust. Lessee Smith McCann, 24 How. 398, 407, 16 L.Ed. 714 (1861); 197, 188.6 trustee, Mitchell, 463 206, 226, 2961, 2972, 77 580 (1983); G. Bogert Bogert, Trustees 701, 198 (rev. 2d 1982) Bogert), trustee's breach, Seminole Nation States, 316 286, 296-297, 62 1049, 1054-1055, 86 1777 (1942); Scott, Participation Breach Trust, Harv.L.Rev. 454 (1921). 11 At there situations—not involving trust—in "establish purely rights grant otherwise beyond scope authority." Pomeroy, Equity Jurisprudence 181, 257 (5th 1941). assuredly mean, it, whatever empowered provide particular issue. But indicated foregoing quotation—which speaks "legal remedies" granted court—"equitable refer categories (such restitution, damages). memories divided bench, familiarity with technical refinements, recede further into past, becomes, perhaps, increasingly unlikely; remains intended. 12 context present statute, think doubt. limiting sort obtainable sense "whatever case" limit all.7 will superfluous. Nordic Village, Inc., 503 1011, 1015-1016, 117 181 (1992); Moskal 498 103, 109-110, 111 461, 465-466, 449 (1990). Regarding "all law" require us either give different bears elsewhere 409(a),8 very same 1132(g)(2)(E); subchapter 1024(a)(5)(C); dealing §§ 1303(e)(1), 1451(a)(1).9 Neither option acceptable. Estate Cowart Nicklos Drilling Co., 505 2589, 2596, 120 379 cf. Lorillard Pons, 434 575, 583, 98 866, 871, 55 40 (1978). develop "federal Firestone, 110, 954, revise statute. 13 point added 1989, Omnibus Budget Reconciliation 1989 (OBRA), Pub.L. 101-239, 2101, 2123, follows: 14 "(1) — 15 responsibility of) "(B) person, 17 shall person amount equal 20 percent applicable amount." 1132(l )(1) (1988 ed., Supp. III). 18 waive reduce he believes [otherwise] able severe financial hardship." )(3)(B). "Applicable amount" defined (in )(2)(B)) "any ordered paid judicial proceeding instituted [§ 502](a)(2) (a)(5)." recalled latter subsection, ("appropriate relief") private-party authorized argue confirms 502(a)(5)—and hence, uses 502(a)(3)—allows damages, "applicable some person" occasion worry about "restore plan" hardship. certainly agree portion (§ 502(a)(3)) should deemed 502(a)(5)). Indeed, zealous advocates principle petitioners, stop short applying directly cannot agree, establishes existence 502(a)(5)—i.e., so inexplicable must expansive trust." For sense, awardable 502(a)(5) includes ill-gotten profits, providing calculate penalty, paying prevent restoration gains assuming ____, cofiduciaries fiduciaries-in-breach )(1)(B). These applications resort strange propose. Secretary's initial accords view. prologue proposed regulation implementing codified CFR 2560.502l-1, states awards relief"—as opposed "monetary damages"—a assessed award involves transfer property. Fed.Reg. 25288, 25289, last analysis, ask strained order achieve "purpose protect beneficiaries." 31. note, have, before generally state trustees's assert pre-empted broad pre-emption clause, 514(a), 1144(a), Ingersoll-Rand McClendon, 133, 139-140, 478, 483-484, 474 contend, construction like less protection existed contradicting basic goal "promot[ing] interests plans," Shaw Delta Air Lines, 85, 90, 2890, 2896, 490 (1983). 114, S.Ct., 956. 21 Even (without deciding) correct previously state-court actions, vague notions "basic purpose" nonetheless inadequate overcome words regarding specific consideration. PBGC LTV Corp., 496 633, 646-647, 2668, 2675-2676, 579 This especially legislation enormously complex resolved innumerable disputes powerful competing interests—not favor plaintiffs. See, e.g., Pilot Dedeaux, 481 41, 54-56, 107 1549, 1556-1558, 95 (1987). nonsensical; allocates plan-related misdeeds reasonable proportion respective actors' power misdeeds. Under traditional beneficiary trustee 2.5, 43. defines "fiduciary" formal trusteeship, functional thus expanding universe subject duties—and —under 409(a). Professional service providers become cross line advisor fiduciary; disgorge parties-in-interest transactions prohibited 406, pay related penalties, 502(i), 1132(i); (assuming enjoined participating breaches, compelled subjected decrees. eliminated, law's joint several liability, direct consequential suffered real did. Exposure high insurance regularly deal offer advice plans, hence plans themselves. There words, "tension primary benefitting subsidiary containing costs." Alessi Raybestos-Manhattan, 451 504, 515, 101 1895, 1902, 68 402 (1981); 148, 17, 3093, 17. attempt adjust balance goals adopted struck. 22 judgment 23 Affirmed. whom THE CHIEF JUSTICE, O'CONNOR join, dissenting. 25 majority candidly acknowledges plausible interpret 891, least standing alone, Ante, here—a award—was trustees trust, id., Finally, grounded experience "we [to be] guided principles construing 111, Nevertheless, today holds enacting stripped enjoyed law. assumed party provided "traditional" remedies, damages—"the ____ (emphasis original). Because I believe statutory because recognized anomaly way "would afford enacted," 956 added), dissent. 26 Concerned being corruptly ineptly mismanaged American workers losing security enacted "declar[ing] [it] policy [the statute] beneficiaries, reporting information respect plans], establishing standards conduct, responsibility, obligation sanctions, ready access Federal courts." 1001(b). 27 noted previously, "ERISA's legislative history Act's provisions, 1101-1114, 'codif[y] mak[e] certain developed evolution trusts.' 954 (quoting H.R.Rep. 93-533, (1973) U.S.Code Cong. Admin.News pp. 4639, 4649). explained, "abounds terminology background 954-955; Central Southeast Southwest Areas Fund Transport, 472 559, 2833, 2840-2841, 447 (1985). absent express departure—such broader definition responsible "fiduciary," ante, ----—Congress look settled giving shape 'federal ERISA-regulated plans.' 954; 11; S.Rep. 93-127, 29m 4639; Cong.Rec. 29928, 29932 (1974) (statement Sen. Williams). 28 Accordingly, trusts breaches contemplated 1132(a)(3).1 notes, predominant forum beneficiaries' claims arising forum. instances, (although universally) acknowledged elect her remedies. Clews Jamieson, 182 480-481, 845, 852-853, 45 1183 (1901); 870, 101-107 (2d rev. 1982); 198, 194-203 1988); Hill, *518-*519; Annot., Remedy Available Beneficiary Trust Exclusive Equity, 171 A.L.R. 429 (1947). Restatement sets separate, successive sections (Second) 199 (1959). included "endeavor[ed] possible replace situation in, committed." *522; Tiffany E. Bullard, 585-586 (1862) (defendant chargeable might earned breach). included, necessary, payment victims whole. 479-480, 852-853; 522; 862; Mutual 154, 10, 3096, (1985) (Brennan, concurring 30 history, entirely my view construe 502(a)(3)'s reference encompass equity's routine breaches—a calculated whole, nonfiduciaries. Construing manner avoids interpreting set protect—the ERISA-governed beneficiaries—with "less enacted." 956.2 precisely how four Justices Russell. joined Marshall, 31 majority, struggles find face narrowly construed. First, observes "remedial reasons differentiate concepts Second, crucial describes then asserted "[s]ince relief' 'whatever case' all," rendering Congress' imposition nullity. Searching effect, feels encompassing "those available" run cases, regard cases. example, ibid. descriptive 32 disagree majority's inference using demonstrated considered constrict To sure, 502(g)(2)(E) empowers successfully sues employer required contributions "multiemployer plan." 1132(g)(2)(E). Likewise, 104(a)(5)(C) "a appropriate" force administrator file documents Secretary. 1024(a)(5)(C). And, finally, 4003(e)(1) 4301(a)(1) cited empower dispense both," brought fiduciaries, participants, peculiar relating PBGC. 1303(e)(1); 1451(a)(1) (authorizing "an both"). Significantly, none sections—relating financing administrative filing requirements, PBGC—had discernible analogue tradition courts, surprising making free craft most appropriate.3 seems me treacherous leap draw intention foreclose notwithstanding always ____.4 33 accepting, distinguished supposing concept swallows understood matter victim extracompensatory long recognized, not—absent authorization—enforce penalties Tull 412, 422, 7, 1831, 1838, 365 (1987); Stevens Gladding, 447, 454-455, 155 (1855); Livingston Woodworth, 546, 559-560, 809 (1854); Sutherland, Damages 392, 1089 (3d 1903); Hale, 319 1912); T. Sedgwick, Measure 371, 531 (8th 1891). KENNEDY applied well, plaintiffs exemplary 587, 1356, (1990) (dissenting opinion).5 By contrast, among cases historically law—such immediate unconditional funds 6—it Fleishman Krause, Lindsay Nahstoll, 261 Or. 505, 495 P.2d 268 (1972) (reversing remanding jury trial claim damages); Dixon Northwestern Nat. Bank Minneapolis, 297 F.Supp. 485 (Minn.1969) (same). Moreover, adhere Note, Participant ERISA: Extracontractual Punitive After Insurance 71 Cornell L.Rev. 1014, 1029-1030 (1986); 3.9, 211-212 (1973), recent decades drawn powers equity. While acknowledging bar concluded merger modern crafting I.H.P. 210 Park South App.Div.2d 464-466, 228 N.Y.S.2d 883, 887-888 (1962), aff'd, N.Y.2d 329, 239 547, 189 N.E.2d 812 (1963); Gould Starr, 558 S.W.2d 755, 771 (Mo.App.1977), cert. denied, 436 905, 2236, 56 403 (1978); Citizens Southern Haskins, 254 Ga. 131, 136-137, 327 S.E.2d 192, New Jersey Division, Horsemen's Benevolent Protective Assn. Racing Comm'n, 251 N.J.Super. 589, 605, 598 A.2d 1243, 1251 (1991) (present-day Chancery Division "afford full range trust," Charles Epperson 258 Iowa 409, 137 N.W.2d 618 (1965). 35 and, needed, basis distinguishing relief.6 compel rejection advanced General—a plausible, ____.7 III 36 nonfiduciary, construes affording ground conclusion, rests transparently grounds. supports permit necessary Such accord directed corrupt inept mismanagement. perverse case, needless prior enactment. reasons, respectfully syllabus constitutes prepared Reporter Decisions convenience reader. Detroit Lumber 200 321, 337, 282, 287, 50 499. complaint defendants capacity trustee. Court's dismissal appealed, PBGC's cross-claim demanding it. activities constituted party-in-interest transaction professional malpractice reversed pendant state-law declaratory injunctive irrelevant, terminated position actuary. 502(a) reads entirety: "(a) Persons "A participant subsection (c) section, him his clarify future "(2) Secretary, 1109 title; "(3) (A) "(4) [section] 1025(c) "(5) except (b) subchapter, subchapter; "(6) collect (c)(2) (l section." 1132(a) (1980 services "party interest," 1002(14)(B), engage 1106(a), compensation, 1108(b)(2). 1023(d)(8) (annual reports certification enrolled actuary); 1082(c)(3) (minimum "reasonable" assumptions). dissent expresses certitude clearly suit." Post, 1. That, affirmatively suit. meet requirement, enough observe "trust [against actively breach] law." Ibid. A forth ERISA; noted, "nonfiduciaries" namely, fall artificial exceptions chattels immediately unconditionally 198—and 198.3. argues unavailable. notion concern motivated example projecting current attitudes helpless past. Unlike availability central legislatures fashioning action, major today, 1974, enacted. Pacific Haslip, 499 61-62, 1032, ---- - (O'CONNOR, dissenting); P. Huber, Liability 127 (1988); Ellis, Fairness Efficiency Damages, So.Cal.L.Rev. 2-3 (1982). particularly breach-of-trust 1988 edition cites pre-ERISA 205, 239, 2; 1982 two, 862, 12. 1992 supplements treatises, cite dozen 1980s. concerned "extracompensatory post, foolhardy excluding prohibit (while still permitting relief) dissent's confident assertion "were ibid., correspond year earlier, treatise say examined probably refuse cases." 211 speaking general. riskier presume unavailable subclass law-type routinely awarded, few allow Rivero Thomas, Cal.App.2d 225, 194 533 (1948). two decisions relies, (1972), (Minn.1969), entitling trial. passing neither said obtained, much Courts exclude 6, unfounded. exist (viz., Kuntz Reese, 760 926 1985). (a) precedent subsequently (1985), Kuntz, 938; formally withdrawn vacated grounds, 785 1410 479 916, 318, 93 relied again, Circuit. dissent, 4, artless, consider meaningless. "Equitable" something has, ("other elsewhere. 8477(e)(1)(A). postulates authorizing lacked trusts," means indicating "free appropriate." demonstrably so. Administrative accounting requirements ones 1024(a)(5)(C) (which equitable" formulation) unheard-of 2A 172, 456, "analogue" keep accounts demand 172; 861, 7-9. 1986 amendment created governing termination single-employer 1370(a)(2). reflects referred employ formulation). matter, uncertainty affords view, gives "to violations" care managing 1104. [a] violatio[n]" breaching extend import intended, beneficiaries. adding understanding remedy. "knowing[ly] participat[e]" )(1)(B) "equal parallels (2); contemplates implication, 502(a)(3)—against "breach responsibilit[ies]." )(1). well-established undergirding compatible doubting validity action. 514(a) pre-empts State laws insofar hereafter relate governed 1144(a). stops deciding implications holding, difficult imagine harm here—participation concerning plan—could survived enactment 'deliberately expansive' provision. 138, 482, (citation omitted). 104(a)(5)(C), likening failure accounts. 9. analogy reach. account behalf bears, best, slight resemblance ERISA-created administrators annual reports, descriptions, descriptions. 1024(a)(1). So, too, States—by —have 456 1988), 9, establish 104(a)(5)(C). careful differentiation posits, presumably 1109(a) (breaching "shall appropriate"). convey readily imagine. "Remedial," "intended remedy," Webster's Collegiate Dictionary 996 (1983), "relief" commonly synonym "remedy," 995. least, apparent imprecision undermines confidence strong inferences varying phraseology KENNEDY's observation history. aim commonlaw "endeavor[ing] 205 Historically, conscience just right element vengeance." Beals Washington International, 386 1156, 1159 (Del.Ch.1978); accord, Williamson Chicago Mill 59 918, 922 (CA8 1932); Stolz Franklin, Ark. 999, 1008, (1975); Superior Constr. Elmo, 204 Md. 16, 104 581, 583 (1954); Fuel Gas 84 W.Va. 301, 306, 99 S.E. 476, 478 (1919); Orkin Exterminating Florida Truly Nolen, So.2d 419, 422-423 (Fla.App.1960); "where, becomes allowed." Karns Allen, 135 Wis. 48, 58, 115 N.W. 357, 361 (1908); Coca-Cola Dixi-Cola Laboratories, 59, 63 (CA4), 329 773, 67 91 665 (1946); Bernard, 202 F. 728, 732 1913); denigrates rule citing Professor Dobbs' 1973 "modern" trend (on eve enactment) remained otherwise. Dobbs identified driven consequent belief longer reason disallow actions. rule—well ensconced time enactment—that remedy, Not surprisingly, passed question] Varhola Doe, 820 809, 817 (CA6 1987); Harsch Eisenberg, 651, 661 (CA7), denied sub nom. Bihler 61, Drinkwater Metropolitan 846 821, 825 (CA1), 488 909, 261, 102 249 Amos Blue Cross-Blue Shield Alabama, 868 430, 431, (CA11), 493 855, 158, 116 (1989); Sommers Drug Stores Profit Sharing Corrigan Enterprises, 793 1456, 1464-1465 (CA5 1986), 1034, 884, 837 Powell Chesapeake Potomac Telephone Virginia, 780 424 (CA4 1985), 476 1170, 106 2892, 90 980 (1986). With 1132(a)(2) (allowing title"), split recovered. Compare 926, 938 1985) recovery), (1986), Stores, 1463 (disallowing recovery); Cox Eichler, 765 601, 610-611 (NDCal.1990) (punitive 502(a)(2) 502(a)(3)). reserved recovered 502(a)(2). 144, 12, 3091, faults "[t]he Congress" drafting grounds issue" 1974. 7. Neither, anything suggest "major hesitate attribute 93d Congress. event, considerably fanciful suppose desire moved possibly make-whole

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