Lockheed Corp. v. Spink
517 U.S. 882 (1996)

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OCTOBER TERM, 1995

Syllabus

LOCKHEED CORP. ET AL. v. SPINK

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

No. 95-809. Argued April 22, 1996-Decided June 10, 1996

Because respondent Spink was 61 when petitioner Lockheed Corporation reemployed him in 1979, he was excluded from participation in Lockheed's retirement plan (Plan), as was then permitted by the Employee Retirement Income Security Act of 1974 (ERISA). Section 9203(a)(1) of the Omnibus Budget Reconciliation Act of 1986 (OBRA) repealed ERISA's age-based exclusion provision, and §§ 9201 and 9202 amended ERISA and the Age Discrimination in Employment Act of 1967 (ADEA), respectively, to prohibit age-based benefit accrual rules. To comply with OBRA, Lockheed made Spink and other previously excluded employees Plan members, but made clear that they would not receive credit for their pre-1988 service years. Lockheed subsequently added to the Plan two programs offering increased pension benefits to employees who would retire early in exchange for their waiver of any employment claims against Lockheed. Not wishing to waive any ADEA or ERISA claims, Spink declined to participate and retired without earning the extra benefits. He then filed suit, alleging among other things that Lockheed and petitioner board of directors members violated ERISA by amending the Plan to create the retirement programs, that petitioner Retirement Committee members violated ERISA by implementing the amended Plan, and that the OBRA amendments to ERISA and the ADEA required that Spink's pre-1988 service years be counted toward his benefits. The District Court dismissed the complaint for failure to state a claim, but the Court of Appeals reversed in relevant part. In finding the Plan amendments unlawful under ERISA § 406(a)(1)(D)-which prohibits a fiduciary from causing a plan to engage in a transaction that transfers plan assets to, or involves the use of plan assets for the benefit of, a party in interest-the court decided that there was no need to address Lockheed's status as a fiduciary. It also found that Lockheed's refusal to credit Spink with his pre-1988 service years violated the OBRA amendments, which the court decided applied retroactively.

Held:

1. ERISA § 406 does not prevent an employer from conditioning the receipt of early retirement benefits upon plan participants' waiver of employment claims. Pp. 887-895.


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(a) Unless a plaintiff shows that a fiduciary caused the plan to engage in the allegedly unlawful transaction, there can be no § 406(a)(1) violation warranting relief. Cf. Peacock v. Thomas, 516 U. S. 349, 353. Thus, the Court of Appeals erred by not asking whether fiduciary status existed in this case before finding a § 406(a)(1)(D) violation. Pp.888-889.

(b) Lockheed and the board of directors, as plan sponsors, were not acting as fiduciaries when they amended the Plan. Given ERISA's definition of fiduciary and the applicability of the duties attending that status, the rule that this Court announced with respect to the amendment of welfare benefit plans in Curtiss-Wright Corp. v. Schoonejongen, 514 U. S. 73, applies equally to the amendment of pension plans. Thus, when employers or other plan sponsors adopt, modify, or terminate pension plans, they do not act as fiduciaries, id., at 78, but are analogous to settlors of a trust. Pp. 889-891.

(c) It is not necessary to decide whether the Retirement Committee members acted as fiduciaries, because their payment of benefits pursuant to the terms of an otherwise lawful plan was not a "transaction" prohibited by § 406(a)(1)(D). That section does not in direct terms include an employer's payment of benefits. And the "transactions" prohibited by other provisions of § 406(a) generally involve uses of plan assets that are potentially harmful to the plan. The payment of benefits conditioned on performance by plan participants cannot reasonably be said to share that characteristic. Pp. 892-895.

2. OBRA §§ 9201 and 9202(a) do not apply retroactively to require Lockheed to use pre-1988 service years in calculating Spink's benefits. Congress expressly provided, in OBRA § 9204(a)(1), that the amendments to ERISA and the ADEA would be effective with respect to plan years beginning on or after January 1, 1988. Since the amendments' temporal effect is manifest on the statute's face, "there is no need to resort to judicial default rules," Landgraf v. USI Film Products, 511 U. S. 244, 280, and inquiry is at an end. Pp. 896-897.

60 F.3d 616, reversed and remanded.

THOMAS, J., delivered the opinion of the Court, in which REHNQUIST, C. J., and STEVENS, O'CONNOR, SCALIA, KENNEDY, and GINSBURG, JJ., joined, and in which SOUTER and BREYER, JJ., joined as to all but Part III-B. BREYER, J., filed an opinion concurring in part and dissenting in part, in which SOUTER, J., joined, post, p. 898.

Gordon E. Kirscher argued the cause for petitioners.

With him on the briefs were David E. Gordon, Kenneth E. Johnson, Kenneth S. Geller, and Ralph A. Hurvitz.


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Full Text of Opinion

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