Harris Trust and Sav. Bank v. Salomon Smith Barney Inc.
530 U.S. 238

Annotate this Case

OCTOBER TERM, 1999

Syllabus

HARRIS TRUST AND SAVINGS BANK, AS TRUSTEE FOR THE AMERITECH PENSION TRUST, ET AL. v.

SALOMON SMITH BARNEY INC. ET AL.

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

No. 99-579. Argued April 17, 2000-Decided June 12,2000

The Employee Retirement Income Security Act of 1974 (ERISA) bars a fiduciary of an employee benefit plan from causing the plan to engage in certain prohibited transactions with a "party in interest," § 406(a), defined to encompass entities that a fiduciary might be inclined to favor at the expense of the plan's beneficiaries, see § 3(14). Section 406's prohibitions are subject to both statutory and regulatory exemptions. See §§ 408(a), (b). The Ameritech Pension Trust (APT), an ERISA pension plan, allegedly entered into a transaction prohibited by § 406(a) and not exempted by § 408 with respondent Salomon Smith Barney Inc. (Salomon), a nonfiduciary party in interest. APT's fiduciaries-its trustee, petitioner Harris Trust and Savings Bank, and its administrator, petitioner Ameritech Corporation-sued Salomon under § 502(a)(3), which authorizes a fiduciary, inter alios, to bring a civil action to obtain "appropriate equitable relief" to redress violations of ERISA Title I. Salomon moved for summary judgment, arguing that § 502(a)(3), when used to remedy a transaction prohibited by § 406(a), authorizes a suit only against the party expressly constrained by § 406(a)-the fiduciary who caused the plan to enter the transaction-and not against the counterparty to the transaction. The District Court denied the motion, holding that ERISA provides a private cause of action against nonfiduciaries who participate in a prohibited transaction, but granted Salomon's motion for certification of the issue for interlocutory appeal. The Seventh Circuit reversed, holding that the authority to sue under § 502(a)(3) does not extend to a suit against a nonfiduciary "party in interest" to a transaction barred by § 406(a).

Held: Section 502(a)(3)'s authorization to a plan "participant, beneficiary, or fiduciary" to bring a civil action for "appropriate equitable relief" extends to a suit against a nonfiduciary "party in interest" to a prohibited transaction barred by § 406(a). Pp. 245-254.

(a) In providing that "[a] fiduciary ... shall not cause the plan to engage in a [prohibited] transaction" (emphasis added), § 406(a)(1) imposes a duty only on the fiduciary that causes the plan to engage in the transaction. However, this Court rejects the Seventh Circuit's and


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Salomon's conclusion that, absent a substantive ERISA provision expressly imposing a duty on a nonfiduciary party in interest, the nonfiduciary party may not be held liable under § 502(a)(3), one of ERISA's remedial provisions. Because § 502(a)(3) itself imposes certain duties, liability under that provision does not depend on whether ERISA's substantive provisions impose a specific duty on the party being sued. While § 502(a)(3) does not authorize "appropriate equitable relief" at large, but only for the purpose of "redress[ing any] violations or ... enforc[ing] any provisions" of ERISA or an ERISA plan, e. g., Peacock v. Thomas, 516 U. S. 349, 353, the section admits of no limit (aside from the "appropriate equitable relief" caveat) on the universe of possible defendants. Indeed, § 502(a)(3) makes no mention at all of which parties may be proper defendants-the focus, instead, is on redressing the "act or practice which violates any provision of [ERISA Title I]." (Emphasis added.) Other provisions of ERISA, by contrast, expressly address who may be a defendant. See, e. g., § 409(a). And, in providing that a "civil action may be brought by a participant, beneficiary, or fiduciary" (emphasis added), § 502(a) itself demonstrates Congress' care in delineating the universe of plaintiffs who may bring certain civil actions. The matter is conclusively resolved by § 502(l), which provides for assessment by the Secretary of Labor of a civil penalty against a fiduciary or "other person" who knowingly participates in a fiduciary's ERISA violation, defining the amount of such penalty by reference to the amount "ordered by a court to be paid by such ... other person ... in a judicial proceeding ... by the Secretary under subsection ... (a)(5)." (Emphasis added.) The plain implication is that the Secretary may bring a civil action under § 502(a)(5) against an "other person" who "knowing[ly] participat[es]" in a fiduciary's violation, notwithstanding the absence of any ERISA provision explicitly imposing a duty upon an "other person" not to engage in such knowing participation. It thus follows that a participant, beneficiary, or fiduciary may bring suit against an "other person" under the similarly worded subsection (a)(3). See Mertens v. Hewitt Associates, 508 U. S. 248, 260. Id., at 261, distinguished. Section 502(l), therefore, refutes the notion that § 502(a)(3) (or (a)(5)) liability hinges on whether the particular defendant labors under a duty expressly imposed by ERISA Title 1's substantive provisions. Pp.245-249.

(b) The Court rejects Salomon's argument that it would contravene common sense for Congress to impose civil liability on a party, such as a nonfiduciary party in interest to a § 406(a) transaction, that is not a "wrongdoer" in the sense of violating a duty expressly imposed by ERISA Title 1's substantive provisions. This argument ignores the limiting principle explicit in § 502(a)(3): that the retrospective relief


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Full Text of Opinion

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