Mertens v. Hewitt Associates

Citation508 U.S. 248,124 L.Ed.2d 161,113 S.Ct. 2063
Decision Date01 June 1993
Docket NumberNo. 91-1671,91-1671
PartiesWilliam J. MERTENS, Alex W. Bandrowski, James A. Clark, and Russell Franz, Petitioners, v. HEWITT ASSOCIATES
CourtUnited States Supreme Court
Syllabus *

Petitioners allege that they represent a class of former employees who participated in the Kaiser Steel Retirement Plan, a qualified pension plan under the Employee Retirement Income Security Act of 1974 (ERISA); that respondent was the plan's actuary when Kaiser began to phase out its steelmaking operations, prompting early retirement by many plan participants; that respondent failed to change the plan's actuarial assumptions to reflect the additional retirement costs, causing the plan to be funded inadequately and eventually to be terminated; that petitioners now receive only the benefits guaranteed by ERISA, rather than the substantially greater pensions due them under the plan; and that respondent is liable for the plan's losses as a nonfiduciary that knowingly participated in the plan fiduciaries' breach of their fiduciary duties. The District Court dismissed the complaint, and the Court of Appeals affirmed.

Held: ERISA does not authorize suits for money damages against nonfiduciaries who knowingly participate in a fiduciary's breach of fiduciary duty. ERISA § 502(a)(3) permits plan participants to bring civil actions to obtain "appropriate equitable relief" to redress violations of the statute or a plan. Assuming arguendo that this creates a cause of action against nonfiduciaries who knowingly assist in a fiduciary's breach of duty, requiring respondent to make the plan whole for the losses it sustained would not constitute "appropriate equitable relief." What petitioners in fact seek is the classic form of legal relief, compensatory damages. We have held that similar language used in another statute precludes awarding damages. See United States v. Burke, 504 U.S. ----, ----, 112 S.Ct. 1867, ----, 119 L.Ed.2d 34. And the text of ERISA leaves no doubt that Congress intended "equitable relief" to include only those types of relief that were typically available in equity, such as injunction, mandamus, and restitution. Given ERISA's roots in the law of trusts, "equitable relief" could in theory mean all relief available for breach of trust in the common-law courts of equity, which would include the relief sought here. Since all relief available for breach of trust could be obtained from an equity court, however, that interpretation would render the modifier "equitable" superfluous; that reading would also deprive of all meaning the distinction Congress drew between "equitable relief" and "remedial" and "legal" relief throughout ERISA. ERISA § 502(l ), which authorizes the Secretary of Labor to assess a civil penalty based on the monetary recovery in actions against "other person[s]" who knowingly participate in a breach of fiduciary duty, can be given meaningful content without adopting petitioners' theory. Pp. ____.

948 F.2d 607 (CA9 1991), affirmed.

SCALIA, J., delivered the opinion of the Court, in which BLACKMUN, KENNEDY, SOUTER, and THOMAS, JJ., joined. WHITE, J., filed a dissenting opinion, in which REHNQUIST, C.J., and STEVENS and O'CONNOR, JJ., joined.

Alfred H. Sigman, Oakland, CA, for petitioners.

Ronald J. Mann, Washington, DC, for the U.S. as amicus curiae by special leave of the Court.

Steven H. Frankel, Chicago, IL, for respondent.

Justice SCALIA delivered the opinion of the Court.

The question presented is whether a nonfiduciary who knowingly participates in the breach of a fiduciary duty imposed by the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 832, as amended, 29 U.S.C. § 1001 et seq., is liable for losses that an employee benefit plan suffers as a result of the breach.

I

According to the complaint, the allegations of which we take as true, petitioners represent a class of former employees of the Kaiser Steel Corporation (Kaiser) who participated in the Kaiser Steel Retirement Plan, a qualified pension plan under ERISA. Respondent was the plan's actuary in 1980, when Kaiser began to phase out its steelmaking operations, prompting early retirement by a large number of plan participants. Respondent did not, however, change the plan's actuarial assumptions to reflect the additional costs imposed by the retirements. As a result, Kaiser did not adequately fund the plan, and eventually the plan's assets became insufficient to satisfy its benefit obligations, causing the Pension Benefit Guaranty Corporation (PBGC) to terminate the plan pursuant to 29 U.S.C. § 1341. Petitioners now receive only the benefits guaranteed by ERISA, see § 1322, which are in general substantially lower than the fully vested pensions due them under the plan.

Petitioners sued the fiduciaries of the failed plan, alleging breach of fiduciary duties. See Mertens v. Black, 948 F.2d 1105 (CA9 1991) (per curiam ) (affirming denial of summary judgment). They also commenced this action against respondent,1 alleging that it had caused the losses by allowing Kaiser to select the plan's actuarial assumptions, by failing to disclose that Kaiser was one of its clients, and by failing to disclose the plan's funding shortfall. Petitioners claimed that these acts and omissions violated ERISA by effecting a breach of respondent's "professional duties" to the plan, for which they sought, inter alia, monetary relief. In opposing respondent's motion to dismiss, petitioners fleshed out this claim, asserting that respondent was liable (1) as an ERISA fiduciary that committed a breach of its own fiduciary duties, (2) as a nonfiduciary that knowingly participated in the plan fiduciaries' breach of their fiduciary duties, and (3) as a nonfiduciary that committed a breach of nonfiduciary duties imposed on actuaries by ERISA. The District Court for the Northern District of California dismissed the complaint, App. to Pet. for Cert. A17, and the Court of Appeals for the Ninth Circuit affirmed in relevant part, 948 F.2d 607 (1991).2

Petitioners sought certiorari only on the question whether ERISA authorizes suits for money damages against nonfiduciaries who knowingly participate in a fiduciary's breach of fiduciary duty. We agreed to hear the case. 506 U.S. ----, 113 S.Ct. 49, 121 L.Ed.2d 19 (1992).

II

ERISA is, we have observed, a "comprehensive and reticulated statute," the product of a decade of congressional study of the Nation's private employee benefit system. Nachman Corp. v. PBGC, 446 U.S. 359, 361, 100 S.Ct. 1723, 1726, 64 L.Ed.2d 354 (1980). The statute provides that not only the persons named as fiduciaries by a benefit plan, see 29 U.S.C. § 1102(a), but also anyone else who exercises discretionary control or authority over the plan's management, administration, or assets, see § 1002(21)(A), is an ERISA "fiduciary." Fiduciaries are assigned a number of detailed duties and responsibilities, which include "the proper management, administration, and investment of [plan] assets, the maintenance of proper records, the disclosure of specified information, and the avoidance of conflicts of interest." Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 142-143, 105 S.Ct. 3085, 3090, 87 L.Ed.2d 96 (1985); see 29 U.S.C. § 1104(a). Section 409(a), 29 U.S.C. § 1109(a), makes fiduciaries liable for breach of these duties, and specifies the remedies available against them: the fiduciary is personally liable for damages ("to make good to [the] plan any losses to the plan resulting from each such breach"), for restitution ("to restore to [the] plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary"), and for "such other equitable or remedial relief as the court may deem appropriate," including removal of the fiduciary. Section 502(a)(2), 29 U.S.C. § 1132(a)(2)—the second of ERISA's "six carefully integrated civil enforcement provisions," Russell, supra, at 146, 105 S.Ct. at 3092 3—allows the Secretary of Labor or any plan beneficiary, participant, or fiduciary to bring a civil action "for appropriate relief under section [409]."

The above described provisions are, however, limited by their terms to fiduciaries. The Court of Appeals decided that respondent was not a fiduciary, see 948 F.2d, at 610, and petitioners do not contest that holding. Lacking equivalent provisions specifying non fiduciaries as potential defendants, or damages as a remedy available against them, petitioners have turned to § 502(a)(3), 29 U.S.C. § 1132(a)(3), which authorizes a plan beneficiary, participant, or fiduciary to bring a civil action: "(A) to enjoin any act or practice which violates any provision of [ERISA] or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of [ERISA] or the terms of the plan. . . ."

See also § 502(a)(5), 29 U.S.C. § 1132(a)(5) (providing, in similar language, for civil suits by the Secretary based upon violation of ERISA provisions). Petitioners contend that requiring respondent to make the Kaiser plan whole for the losses resulting from its alleged knowing participation in the breach of fiduciary duty by the Kaiser plan's fiduciaries would constitute "other appropriate equitable relief" within the meaning of § 502(a)(3).

We note at the outset that it is far from clear that, even if this provision does make money damages available, it makes them available for the actions at issue here. It does not, after all, authorize "appropriate equitable relief" at large, but only "appropriate equitable relief" for the purpose of "redress[ing any] violations or . . . enforc[ing] any provisions" of ERISA or an ERISA plan. No one suggests that any term of the Kaiser plan has been violated, nor would any be enforced by the requested judgment. And while ERISA contains various provisions that can be read as imposing obligations upon nonfiduciaries, including...

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