Court Opinion

ID: 6937206
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:41:12.907141+00
Date Added: 2024-06-11T16:07:32.225057
License: Public Domain

KOZINSKI, Circuit Judge,
dissenting:
The Visioncare Pension Plan sues for a breach of fiduciary duty that supposedly occurred when fiduciaries of the Revlon Plan bought an unsafe annuity to cover benefits it owed the Revlon Plan’s own beneficiaries. Like the common law, ERISA allows fiduciaries to sue their predecessors or cofiduciaries for breach of trust. But Revlon was never a predecessor fiduciary, a co-fiduciary, or any other kind of fiduciary of the Visioncare Plan; it never owed fiduciary duties to that plan’s beneficiaries. It’s black letter law (adopted by ERISA) that “fiduciary duty” and “fiduciary breach” only have meaning in the context of a fiduciary relationship. See 1 Austin W. Scott & William F. Fratcher, The Law of Trusts § 2.5, at 43 (4th ed. 1987); see also Central States, S.E. & S.W. Areas Pension Fund v. Central Transp., Inc., 472 U.S. 559, 570, 105 S.Ct. 2833, 2840, 86 L.Ed.2d 447 (1985) (ERISA incorporates common law of trusts). There’s no such thing as a fiduciary-at-large, someone who can be sued by anyone and everyone for a breach of duty; a fiduciary can be sued only by a beneficiary or another fiduciary of the trust that creates the duty. See Restatement (Second) of Trusts § 200 & cmt. a. The Revlon Plan and the Visioncare Plan had many of the same participants, but nothing before us — no trust instrument, no contract, no statute, no regulation — makes Revlon a fiduciary of the Vi-sioncare Plan. For me, that’s the end of the case; the majority’s efforts to fill this void leave me unmoved.
The majority argues that “the Visioncare plan effectively is the new Revlon plan in another mantle.” Op. at 1399. What does this mean? If the majority is saying that the Visioncare Plan is the same entity as the Revlon Plan, it’s mistaken. Its assertion that the “fiduciaries of the Pilkington Vision-care Pension Plan ... succeeded to all of the assets and liabilities of the Revlon Plan,” id. at 1398, is simply wrong. CR 45 at 96-97. The contract by which Pilkington bought Vi-sioncare required it to set up a new, independent pension plan that would mimic Revlon Plan benefits for the transferred employees; this became the Visioncare Plan. Id. The *1403Revlon Plan continues to this day and is, in fact, a party to this lawsuit.
If, on the other hand, the majority is merely pointing out that the Visioncare Plan took over the Revlon Plan’s responsibilities vis-a-vis certain former Revlon employees, that’s true enough, but not nearly sufficient to establish a fiduciary relationship between Vi-sioncare and Revlon. Fudge words like “effectively” and “in another mantle” mask that the Visioncare Plan is an entity separate from the Revlon Plan, created for the very purpose of relieving the Revlon Plan of responsibility to outgoing employees. The Vi-sioncare Plan is thus a third party beneficiary of the contract between Pilkington and Revlon — no more, no less.
The majority tries to ford the fiduciary duty gap by claiming the Visioncare Plan “bore the brunt of [Revlon’s] breaches of fiduciary duty” to the Revlon Plan.Op. at 15898. I don’t see the point. If Revlon fiduciaries violated a fiduciary duty to the Revlon Plan, those associated with the plan can sue for the breach. Other victims of the same conduct, such as plaintiffs here, can’t sue for breach of a fiduciary duty not owed to them. Visioncare in fact sued for breach of contract, and later dropped the claim, CR 43, presumably pursuant to settlement. It might also have a fraud claim. But it has no claim for breach of trust.
Still, the majority argues, plaintiffs must be given standing, lest there be no one left to remedy this breach. Op. at 1398-99. The concern is puzzling as there’s no shortage of people with standing to sue. For example, Visioncare employees previously covered by the Revlon Plan can sue their former fiduciaries, claiming a breach in putting them into an underfunded plan. See 29 U.S.C. §§ 1058, 1132(a)(2), (a)(9), ERISA §§ 208, 502(a)(2), (a)(9); Kayes v. Pacific Lumber Co., 51 F.3d 1449, 1454-55 (9th Cir.), cert. denied, — U.S. -, 116 S.Ct. 301, 133 L.Ed.2d 206 (1995). The Secretary of Labor also has standing, ERISA § 502(a)(2), and isn’t known for his timidity in bringing suit, see, e.g., Reich v. King, 867 F.Supp. 341 (D.Md.1994) (harassing faithful fiduciary for no particular reason). In fact, the Secretary has already sued several times for the very breach alleged here. See Br. Amicus Curiae at 2 (listing, as of September 1993, six suits against fiduciaries that purchased Executive Life annuities for other pension plans).
Small wonder that the beneficiaries and the Secretary haven’t sued here: The beneficiaries have suffered no harm, as they have apparently been paid in full. The Visioncare Plan is obligated to pay the benefits, Pilking-ton must stand behind that obligation, and there’s no indication that either the pension plan or Pilkington won’t be good for it. A potential injury not likely ever to materialize gives the beneficiaries and the Secretary little incentive to act. Plaintiffs are clearly eager to sue, as they’re on the hook for any shortfall left by Executive Life, but zeal alone doesn’t confer standing. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).
The majority also believes new ERISA section 502(a)(9) “authorizes a suit like this one.” Op. at 1401. The new provision does no such thing. As we noted in Kayes, it was passed in response to court decisions that had denied former ERISA plan beneficiaries standing to sue their former fiduciaries for breaches committed in closing out their plans. 51 F.3d at 1454-55 & n. 4. The new provision merely clarified existing law (with the exception of a few disapproved decisions) and didn’t enlarge the universe of people who have standing to sue for breach of trust. Id. Like the other standing provisions in section 502, the recent amendment gives standing to “a fiduciary” without elaboration; it doesn’t answer the question here: Which fiduciary?
In addition to being wrong, the majority creates an unacknowledged conflict with Northeast Dep’t ILGWU Health & Welfare Fund v. Teamsters Local Union No. 229 Welfare Fund, 764 F.2d 147 (3d Cir.1985). NE ILGWU considered the standing of one ERISA plan’s fiduciary, under a fiduciary standing provision identical to the one at issue, to enforce the terms of another ERISA plan with which it shared a beneficiary. As the majority notes, the Third Circuit held that the “suit ... could go forward.” .Op. at 1399. But it reached this result on a theory with no application to this case, after holding *1404that section 502 doesn’t give the fiduciary of one plan standing to sue another. See id.
“[W]e have adopted a cautionary rule, counseling against creating intercircuit conflicts.” In re Taffi, 68 F.3d 306, 308 (9th Cir.1995). Where we do differ with a sister circuit, we should do so openly and explain our reasons for parting ways. Handing Pilk-ington its toasted chestnuts isn’t a good enough reason.