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
239
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
240
Syllabus
sought be "appropriate equitable relief." The common law of
trusts, which offers a starting point for ERISA analysis,
Hughes
Aircraft Co. v.
Jacobson, 525 U. S. 432, 447,
plainly countenances the sort of relief sought by petitioners
against Salomon here, see
Moore v.
Crawford, 130 U.
S. 122, 128. It also sets limits on restitution actions against
defendants other than the principal "wrongdoer." Translated to the
instant context, a transferee of ill-gotten plan assets may be held
liable, if the transferee (assuming he has purchased for value)
knew or should have known of the circumstances that rendered the
transaction prohibited. Those circumstances, in turn, involve a
showing that the
plan fiduciary, with actual or constructive
knowledge of the facts satisfying the elements of a § 406(a)
transaction, caused the plan to engage in the transaction.
Lockheed Corp. v.
Spink, 517 U. S. 882, 888-889.
The common law additionally prompts rejection of Salomon's
complaint that the Court's view of § 502(a)(3) would incongruously
allow not only the harmed beneficiaries, but also the culpable
fiduciary, to seek restitution from the arguably less culpable
counterparty-transferee. The common law sees no incongruity in such
a rule: Although the fiduciary bases his cause of action upon his
own wrongdoing, he may maintain the action because its purpose is
to recover money for the plan. And while Salomon correctly observes
that the antecedent violation of § 406(a)'s
per se
prohibitions on transacting with a party in interest was unknown at
common law, the Court rejects as unsupported Salomon's suggestion
that common-law liability should not attach to an act that does not
violate a common-law duty. Thus, an action for restitution against
a transferee of tainted plan assets satisfies § 502(a)(3)'s
"appropriate[ness]" criterion. Such relief is also "equitable." See
Mertens, supra, at 260. Pp. 249-253.
(c) The Court declines to depart from § 502(a)(3)'s text on the
basis of two nontextual matters: (1) that the congressional
Conference Committee rejected language that would have expressly
imposed a duty on nonfiduciary parties to § 406(a) transactions,
and (2) that the policy consequences of recognizing a § 502(a)(3)
action in this case could be devastating because counterparties,
faced with the prospect of liability for dealing with a plan, may
charge higher rates or, worse, refuse altogether to transact with
plans. In ERISA cases, the Court's analysis begins with the
statutory language and, where that language is clear, it ends there
as well.
Hughes Aircraft Co. v.
Jacobson, supra, at
438. Section 502(a)(3), as informed by §
502(l), satisfies
this standard. Pp. 253-254.
184 F.3d
646, reversed and remanded.
THOMAS, J., delivered the opinion for a unanimous Court.
241
Robert A. Long, Jr., argued the cause for
petitioners.
With him on the briefs were John M. Vine, Michael R. Bergmann,
and Charles C. Jackson.
Beth S. Brinkmann argued the cause for the United States as
amicus curiae urging reversal. With her on the brief were Solicitor
General Waxman, Deputy Solicitor General Kneedler, Henry L. Solano,
Allen H. Feldman, Nathaniel 1. Spiller, and Elizabeth Hopkins.
Peter C. Hein argued the cause for respondents. With him on the
brief were Andrew C. Houston, William F. Conlon, and Richard B.
Kapnick.
*
JUSTICE THOMAS delivered the opinion of the Court. Section
406(a) of the Employee Retirement Income Security Act of 1974
(ERISA), 88 Stat. 879, bars a fiduciary of an employee benefit plan
from causing the plan to engage in certain transactions with a
"party in interest." 29 U. S. C. § 1106(a). Section 502(a)(3)
authorizes a "participant, beneficiary, or fiduciary" of a plan to
bring a civil action to obtain "appropriate equitable relief" to
redress violations of ERISA Title 1. 29 U. S. C. § 1132(a)(3). The
question is whether that authorization extends to a suit against a
nonfiduciary "party in interest" to a transaction barred by §
406(a). We hold that it does.
I
Responding to deficiencies in prior law regulating transactions
by plan fiduciaries, Congress enacted ERISA § 406(a)(1), which
supplements the fiduciary's general duty of
* Mary Ellen Signorille, Melvin Radowitz, Paula Brantner,
and Jeffrey Lewis filed a brief for the AARP et al. as amici curiae
urging reversal.
Briefs of amici curiae urging affirmance were filed for the
American Council of Life Insurers et al. by William
J.
Kilberg, Paul Blankenstein, Miguel A. Estrada, and Victoria E.
Fimea; and for the Bond Market Association et al. by Michael R.
Lazerwitz, Paul Saltzman, and Stuart
J. Kaswell.
242
loyalty to the plan's beneficiaries, § 404(a), by categorically
barring certain transactions deemed "likely to injure the pension
plan,"
Commissioner v.
Keystone Consolo Industries,
Inc., 508 U. S.
152, 160 (1993). Section 406(a)(1) provides, among other
things, that "[a] fiduciary with respect to a plan shall not cause
the plan to engage in a transaction, if he knows or should know
that such transaction constitutes a direct or indirect ... sale or
exchange ... of any property between the plan and a party in
interest." 29 U. S. C. § 1l06(a)(1)(A). Congress defined "party in
interest" to encompass those entities that a fiduciary might be
inclined to favor at the expense of the plan's beneficiaries. See §
3(14), 29 U. S. C. § 1002(14). Section 406's prohibitions are
subject to both statutory and regulatory exemptions. See §§ 408(a),
(b), 29 U. S. C. §§ 1l08(a), (b).
This case comes to us on the assumption that an ERISA pension
plan (the Ameritech Pension Trust (APT)) and a party in interest
(respondent Salomon Smith Barney (Salomon)) entered into a
transaction prohibited by § 406(a) and not exempted by § 408.1 APT
provides pension benefits to employees and retirees of Ameritech
Corporation and its subsidiaries and affiliates. Salomon, during
the late 1980's, provided broker-dealer services to APT, executing
nondiscretionary equity trades at the direction of APT's
fiduciaries, thus qualifying itself (we assume) as a "party in
interest." See § 3(14)(B), 29 U. S. C. § 1002(14)(B) (defining
"party in interest" as "a person providing services to [an employee
benefit] plan"). During the same period, Salomon sold interests in
several motel properties to APT for nearly $21 million. APT's
purchase of the motel interests was directed by N ational
Investment Services of America (NISA), an investment manager to
which Ameritech had delegated investment
1 Salomon has preserved for remand arguments that there is no §
406(a) prohibition because it is not a "party in interest" and
that, in any event, the transaction is exempted by Prohibited
Transaction Exemption 75-1, 40 Fed. Reg. 50847 (1975).
243
discretion over a portion of the plan's assets, and hence a
fiduciary of APT, see § 3(21)(A)(i), 29 U. S. C. §
1002(21)(A)(i).
This litigation arose when APT's fiduciaries-its trustee,
petitioner Harris Trust and Savings Bank, and its administrator,
petitioner Ameritech Corporation-discovered that the motel
interests were nearly worthless. Petitioners maintain that the
interests had been worthless all along; Salomon asserts, to the
contrary, that the interests declined in value due to a downturn in
the motel industry. Whatever the true cause, petitioners sued
Salomon in 1992 under § 502(a)(3), which authorizes a "participant,
beneficiary, or fiduciary" to bring a civil action "to enjoin any
act or practice which violates any provision of [ERISA Title I] ...
or ... to obtain other appropriate equitable relief ... to redress
such violations." 29 U. S. C. § 1132(a)(3).
Petitioners claimed, among other things, that NISA, as plan
fiduciary, had caused the plan to engage in a
per se
prohibited transaction under § 406(a) in purchasing the motel
interests from Salomon, and that Salomon was liable on account of
its participation in the transaction as a nonfiduciary party in
interest. Specifically, petitioners pointed to § 406(a)(1)(A), 29
U. S. C. § l106(a)(1)(A), which prohibits a "sale or exchange ...
of any property between the plan and a party in interest," and §
406(a)(1)(D), 29 U. S. C. § l106(a)(1)(D), which prohibits a
"transfer to ... a party in interest ... of any assets of the
plan." Petitioners sought rescission of the transaction,
restitution from Salomon of the purchase price with interest, and
disgorgement of Salomon's profits made from use of the plan assets
transferred to it. App.41.
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.
See § 406(a)(1), 29 U. S. C. § l106(a)(1) ("A
244
fiduciary with respect to a plan shall not cause the plan
to engage in a transaction, if he knows or should know that such
transaction ... " (emphasis added)). The District Court denied the
motion, holding that ERISA does provide a private cause of action
against nonfiduciaries who participate in a prohibited transaction,
but granted Salomon's subsequent motion for certification of the
issue for interlocutory appeal under 28 U. S. C. § 1292(b).
The Court of Appeals for the Seventh Circuit reversed.
184 F.3d
646 (1999). It began with the observation that § 406(a), by its
terms and like several of its neighboring provisions,
e.
g., § 404, governs only the conduct of fiduciaries, not of
counterparties or other nonfiduciaries. See
id., at 650. The
court next posited that "where ERISA does not expressly impose a
duty, there can be no cause of action,"
ibid., relying upon
dictum in our decision in
Mertens v.
Hewitt
Associates, 508
U. S. 248, 254 (1993), that § 502(a)(3) does not provide a
private cause of action against a nonfiduciary for knowing
participation in a fiduciary's breach of duty. The Seventh Circuit
saw no distinction between the
Mertens situation (involving
§ 404) and the instant case (involving § 406), explaining that
neither section expressly imposes a duty on nonfiduciaries.
Finally, in the Seventh Circuit's view, Congress' decision to
authorize the Secretary of Labor to impose a civil penalty on a
nonfiduciary "party in interest" to a § 406 transaction, see §
502(i), simply confirms that Congress deliberately selected one
enforcement tool (a civil penalty imposed by the Secretary) instead
of another (a civil action under § 502(a)(3)). Accordingly, the
Seventh Circuit held that a nonfiduciary cannot be liable under §
502(a)(3) for participating in a § 406 transaction and entered
summary judgment in favor of Salomon.
In doing so, the Seventh Circuit departed from the uniform
position of the Courts of Appeals that § 502(a)(3)-and the
similarly worded § 502(a)(5), which authorizes civil actions by the
Secretary-does authorize a civil action against a non-
245
fiduciary who participates in a transaction prohibited by §
406(a)(1). See
LeBlanc v.
Cahill, 153 F.3d
134, 152-153
(CA4 1998) (§ 502(a)(3));
Landwehr
v.
DuPree, 72 F.3d
726, 734
(CA9 1995) (same);
Herman v.
South
Carolina National Bank, 140 F.3d
1413, 1421-1422 (CAll 1998) (§ 502(a)(5)), cert. denied, 525 U.
S. 1140 (1999);
Reich v.
Stangl, 73 F.3d
1027, 1032 (CAlO) (same), cert. denied, 519 U. S. 807 (1996);
Reich v.
Compton, 57 F.3d
270, 287
(CA3 1995) (same). We granted certiorari, 528
U. S. 1068 (2000), and now reverse.
II
We agree with the Seventh Circuit's and Salomon's interpretation
of § 406(a). They rightly note that § 406(a) imposes a duty only on
the fiduciary that causes the plan to engage in the transaction.
See § 406(a)(1), 29 U. S. C. § 1l06(a)(1) ("A
fiduciary with
respect to a plan shall not cause the plan to engage in a
transaction, if he knows or should know that such transaction ... "
(emphasis added)). We reject, however, the Seventh Circuit's and
Salomon's conclusion that, absent a substantive provision of ERISA
expressly imposing a duty upon a nonfiduciary party in interest,
the nonfiduciary party may not be held liable under § 502(a)(3),
one of ERISA's remedial provisions. Petitioners contend, and we
agree, that § 502(a)(3) itself imposes certain duties, and
therefore that liability under that provision does not depend on
whether ERISA's substantive provisions impose a specific duty on
the party being sued.2
2 Salomon asserts that petitioners waived this theory by
neglecting to present it to the courts below. According to Salomon,
petitioners' claim (until their merits brief in this Court) has
been that Salomon may be sued under § 502(a)(3) only because
Salomon "violated" § 406(a). But, even assuming that petitioners
did not pellucidly articulate this theory before the Seventh
Circuit, it appears to us that the Seventh Circuit understood the
tenor of the argument-namely, that the § 406(a) transaction is the
"act or practice" which violates § 406(a) and therefore may be
redressed by a civil action brought under § 502(a)(3) against
parties to the § 406(a) transaction, even if the defendant did not
itself "violate" § 406(a). See
184 F.3d
646,
246
Section 502 provides: "(a) ...
"A civil action may be brought-
"(3) by a participant, beneficiary, or fiduciary (A) to enjoin
any act or practice which violates any provision of [ERISA Title 1]
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 this title or the terms of the plan." 29 U. S. C.
§ 1132(a)(3).
This language, to be sure, "does not ... 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."
Peacock v.
Thomas, 516 U. S. 349, 353 (1996)
(quoting
Mertens, supra, at 253 (emphasis and alterations in
original)). But § 502(a)(3) admits of no limit (aside from the
"appropriate equitable relief" caveat, which we address
infra) 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 1]." 29
U. S. C. § 1132(a)(3) (emphasis added). Other provisions of ERISA,
by contrast, do expressly address who may be a defendant. See,
e. g., § 409(a), 29 U. S. C. § 1109(a) (stating that
"[a]ny person who is a fiduciary with respect to a plan who
breaches any of the responsibilities, obligations, or duties
imposed upon fiduciaries by this subchapter shall be per-
650 (CA7 1999). Moreover, petitioners' current focus on
the "act or practice" -i.
e., the § 406
transaction-is merely an argument in support of their §
502(a)(3) claim for equitable relief against Salomon, not an
independent claim. "Once a federal claim is properly presented, a
party can make any argument in support of that claim; parties are
not limited to the precise arguments they made below."
Yee
v.
Escondido, 503 U. S. 519, 534
(1992).
247
sonally liable" (emphasis added)); §
502(l), 29 U. S. C.
§
1132(l) (authorizing imposition of civil penalties only
against a "fiduciary" who violates part 4 of Title I or "any other
person" who knowingly participates in such a violation). And §
502(a) itself demonstrates Congress' care in delineating the
universe of
plaintiffs who may bring certain civil actions.
See,
e. g., § 502(a)(3), 29 U. S. C. § 1132(a)(3) ("A
civil action may be brought ...
by a participant, beneficiary,
or fiduciary ... " (emphasis added)); § 502(a)(5), 29 U. S. C.
§ 1132(a)(5) ("A civil action may be brought ...
by the
Secretary ... " (emphasis added)).
In light of Congress' precision in these respects, we would
ordinarily assume that Congress' failure to specify proper
defendants in § 502(a)(3) was intentional. See
Russello v.
United States, 464 U. S. 16, 23 (1983).
But ERISA's" 'comprehensive and reticulated'" scheme warrants a
cautious approach to inferring remedies not expressly authorized by
the text,
Massachusetts Mut. Life Ins. Co. v.
Russell, 473
U. S. 134, 146 (1985) (quoting
Nachman Corp. v.
Pension Benefit Guaranty Corporation, 446 U. S. 359, 361
(1980)), especially given the alternative and intuitively appealing
interpretation, urged by Salomon, that § 502(a)(3) authorizes suits
only against defendants upon whom a duty is imposed by ERISA's
substantive provisions. In this case, however, §
502(l)
resolves the matter-it compels the conclusion that defendant status
under § 502(a)(3) may arise from duties imposed by § 502(a)(3)
itself, and hence does not turn on whether the defendant is
expressly subject to a duty under one of ERISA's substantive
provisions.
Section
502(l) provides in relevant part:
"(1) In the case of-
"(A) any breach of fiduciary responsibility under (or other
violation of) part 4 of this subtitle by a fiduciary, or
"(B) any knowing participation in such a breach or violation by
any other person,
248
"the Secretary shall assess a civil penalty against such
fiduciary or other person in an amount equal to 20 percent of the
applicable recovery amount.
"(2) For purposes of paragraph (1), the term 'applicable
recovery amount' means any amount which is recovered from a
fiduciary or other person with respect to a breach or violation
described in paragraph (1)-
"(A) pursuant to any settlement agreement with the Secretary,
or
"(B) ordered by a court to be paid by such fiduciary or other
person to a plan or its participants and beneficiaries in a
judicial proceeding instituted by the Secretary under subsection
(a)(2) or (a)(5) of this section." 29 U. S. C. §§
1132(l)(1)-(2).
Section
502(l) contemplates civil penalty actions by the
Secretary against two classes of defendants, fiduciaries and "other
person[s]." The latter class concerns us here. Paraphrasing, the
Secretary shall assess a civil penalty against an "other person"
who "knowing[ly] participat[es] in" "any ... violation of ... part
4 ... by a fiduciary." And the amount of such penalty is defined by
reference to the amount "ordered by a court to be paid by such ...
other person to a plan or its participants and beneficiaries in a
judicial proceeding instituted by the Secretary under subsection
(a)(2) or
(a)(5)." Ibid. (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; otherwise, there could
be no "applicable recovery amount" from which to determine the
amount of the civil penalty to be imposed on the "other person."
This § 502(a)(5) action is available notwithstanding the absence of
any ERISA provision explicitly imposing a duty upon an "other
person" not to engage in such "knowing participation." And if the
Secretary may bring suit against an "other person" under subsection
(a)(5), it follows that a participant, beneficiary, or fi-
249
duciary may bring suit against an "other person" under the
similarly worded subsection (a)(3). See
Mertens, 508 U. S.,
at 260. 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 the substantive
provisions of ERISA Title 1.
Salomon invokes
Mertens as articulating an alternative,
more restrictive reading of §
502(l) that does not support
the inference we have drawn. In
Mertens, we suggested, in
dictum, that the "other person[s]" in §
502(l) might be
limited to the "cofiduciaries" made expressly liable under § 405(a)
for knowingly participating in another fiduciary's breach of
fiduciary responsibility.
Id., at 261. So read, §
502(l) would be consistent with the view that liability
under § 502(a)(3) depends entirely on whether the particular
defendant violated a duty expressly imposed by the substantive
provisions of ERISA Title 1. But the
Mertens dictum did not
discussunderstandably, since we were merely flagging the issue, see
508 U. S., at 255, 260-261-that ERISA defines the term "person"
without regard to status as a cofiduciary (or, for that matter, as
a fiduciary or party in interest), see § 3(9), 29 U. S. C. §
1002(9). Moreover, § 405(a) indicates that a cofiduciary is
itself a fiduciary, see § 405(a), 29 U. S. C. § 1105(a)
("[A] fiduciary ... shall be liable for a breach of fiduciary
responsibility of another fiduciary ... "), and §
502(l)
clearly distinguishes between a "fiduciary," §
502(l)(1)(A),
29 U. S. C. §
1132(l)(1)(A), and an "other person," §
502(l)(1)(B), 29 U. S. C. §
1132(l)(1)(B).
III
Notwithstanding the text of § 502(a)(3) (as informed by §
502(l)), Salomon protests that it would contravene common
sense for Congress to have imposed 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 the substantive provisions of ERISA Title 1. Salomon
raises the specter of § 502(a)(3)
250
suits being brought against innocent parties-even those having
no connection to the allegedly unlawful "act or practice"-rather
than against the true wrongdoer, i.
e., the fiduciary that
caused the plan to engage in the transaction.
But this
reductio ad absurdum ignores the limiting
principle explicit in § 502(a)(3): that the retrospective relief
sought be "appropriate equitable relief." The common law of trusts,
which offers a "starting point for analysis [of ERISA] ... [unless]
it is inconsistent with the language of the statute, its structure,
or its purposes,"
Hughes Aircraft Co. v.
Jacobson,
525 U. S. 432,
447 (1999) (internal quotation marks omitted), plainly countenances
the sort of relief sought by petitioners against Salomon here. As
petitioners and
amicus curiae the United States observe, it
has long been settled that when a trustee in breach of his
fiduciary duty to the beneficiaries transfers trust property to a
third person, the third person takes the property subject to the
trust, unless he has purchased the property for value and without
notice of the fiduciary's breach of duty. The trustee or
beneficiaries may then maintain an action for restitution of the
property (if not already disposed of) or disgorgement of proceeds
(if already disposed of), and disgorgement of the third person's
profits derived therefrom. See,
e. g., Restatement
(Second) of Trusts §§ 284, 291, 294, 295, 297 (1957); 4 A. Scott
& W. Fratcher, Law of Trusts § 284, § 291.1, pp. 77-78, §
294.2, p. 101, § 297 (4th ed. 1989) (hereinafter Law of Trusts); 5
id., §470, at 363; 1 D. Dobbs, Law of Remedies § 4.7(1), pp.
660-661 (2d ed. 1993); G. Bogert, Law of Trusts and Trustees § 866,
pp. 95-96 (rev. 2d ed. 1995). As we long ago explained in the
analogous situation of property obtained by fraud:
"Whenever the legal title to property is obtained through means
or under circumstances 'which render it unconscientious for the
holder of the legal title to retain and enjoy the beneficial
interest, equity impresses a constructive trust on the property
thus acquired in favor of
251
the one who is truly and equitably entitled to the same,
although he may never, perhaps, have had any legal estate therein;
and a court of equity has jurisdiction to reach the property either
in the hands of the original wrongdoer, or in the hands of any
subsequent holder, until a purchaser of it in good faith and
without notice acquires a higher right and takes the property
relieved from the trust.'" Moore v. Crawford,
130 U. S. 122,
128 (1889) (quoting 2 J. Pomeroy, Equity Jurisprudence § 1053, pp.
628-629 (1886)).
Importantly, that a transferee was not "the original wrongdoer"
does not insulate him from liability for restitution. See also,
e. g., Restatement of Restitution ch. 7, Introductory
Note, p. 522 (1937); 1 Dobbs,
supra, § 4.3(2), at 597 ("The
constructive trust is based on property, not wrongs"). It also
bears emphasis that the common law of trusts sets limits on
restitution actions against defendants other than the principal
"wrongdoer." Only a transferee of ill-gotten trust assets may be
held liable, and then only when the transferee (assuming he has
purchased for value) knew or should have known of the existence of
the trust and the circumstances that rendered the transfer in
breach of the trust. Translated to the instant context, the
transferee must be demonstrated to have had actual or constructive
knowledge of the circumstances that rendered the transaction
unlawful. Those circumstances, in turn, involve a showing that the
plan fiduciary, with actual or constructive knowledge of the
facts satisfying the elements of a § 406(a) transaction, caused the
plan to engage in the transaction.
Lockheed Corp. v.
Spink, 517 U.
S. 882, 888-889 (1996).3
3 The issue of which party, as between the party seeking
recovery and the defendant-transferee, bears the burden of proof on
whether the transferee is a purchaser for value and without notice,
is not currently before us, but may require resolution on remand.
Cf. 4 Law of Trusts § 284, at 40 (noting conflict of authority in
non-ERISA cases on which party bears the burden of proof).
252
The common law additionally leads us to reject Salomon's
complaint that our view of § 502(a)(3) would incongruously allow
not only the harmed beneficiaries, but also the culpable fiduciary,
to seek restitution from the arguably less culpable
counterparty-transferee. The common law sees no incongruity in such
a rule, see Restatement (Second) of Trusts,
supra, § 294, at
69 ("[A]n action can be maintained against the transferee either by
the beneficiary or the trustee"); 4 Law of Trusts § 294.2, at 101,
and for good reason: "Although the trustee bases his cause of
action upon his own voluntary act, and even though the act was
knowingly done in breach of his duty to the beneficiary, he is
permitted to maintain the action, since the purpose of the action
is to recover money or other property for the trust estate, and
whatever he recovers he will hold subject to the trust."
Restatement (Second) of Trusts,
supra, § 294, Comment
c.
But Salomon advances a more fundamental critique of the
common-law analogy, reasoning that the antecedent violation here-a
violation of § 406(a)'s
per se prohibitions on transacting
with a party in interest-was unknown at common law, and that
common-law
liability should not attach to an act that does
not violate a common-law
duty. While Salomon accurately
characterizes § 406(a) as expanding upon the common law's
arm's-length standard of conduct, see
Keystone Consolo
Industries, 508 U. S., at 160, we reject Salomon's unsupported
suggestion that remedial principles of the common law are tethered
to the precise contours of commonlaw duty.
We note, however, that our interpretation of § 502(a)(3) to
incorporate common-law remedial principles does not necessarily
foreclose accommodation of Salomon's underlying concern that ERISA
should not be construed to require counterparties to transactions
with a plan to monitor the plan for compliance with each of ERISA's
intricate details. See,
e. g., Prohibited Transaction
Exemption 75-1, § lICe), 40 Fed. Reg. 50847 (1975) (requiring that
the plan maintain certain
253
records for a 6-year period). While we have no occasion to
decide the matter here, it may be that such concerns should inform
courts' determinations of what a transferee should (or should not)
be expected to know when engaging in a transaction with a
fiduciary. See Restatement (Second) of Trusts § 297(a), at 74
(defining "notice" to mean what a transferee "knows or
should know" (emphasis added)). Cf. Prohibited Transaction
Exemption 75-1, § II(e)(l), 40 Fed. Reg. 50847 (1975) (providing
that a broker-dealer shall not be subject to civil penalties under
§ 502(i) as a § 406(a) "party in interest" or taxes under 26 U. S.
C. § 4975 as a similarly defined "disqualified person" if such
records are not maintained by the plan).
For these reasons, an action for restitution against a
transferee of tainted plan assets satisfies the "appropriate[ness]"
criterion in § 502(a)(3). Such relief is also "equitable" in
nature. See
Mertens, 508 U. S., at 260 ("[T]he 'equitable
relief' awardable under § 502(a)(5) includes restitution of
ill-gotten plan assets or profits ... ");
ibid. (explaining
that, in light of the similarity of language in §§ 502(a)(3) and
(5), that language should be deemed to have the same meaning in
both subsections).
IV
We turn, finally, to two nontextual clues cited by Salomon and
amici. First, Salomon urges us to consider, as the Seventh
Circuit did, 184 F. 3d, at 652-653, the Conference Committee's
rejection of language from the Senate bill that would have
expressly imposed a duty on nonfiduciary parties to § 406(a)
transactions. See Brief for Respondents 28-29 (quoting H. R. Rep.
No. 93-2, p. 533 (1974) (with amendments as passed by the Senate),
reprinted in 3 Legislative History of ERISA (Committee Print
compiled for the Senate Subcommittee on Labor of the Committee on
Labor and Public Welfare by the Library of Congress), Ser. No.
93-406, p. 3780 (1976) (staff comment on House and Senate
differences on § 409)); 3 Legislative History of ERISA,
supra, at 5259 (staff
254
comment on House and Senate differences on § 409). Second,
Salomon and
amici submit that the policy consequences of
recognizing a § 502(a)(3) action in this case could be
devastating-counterparties, faced with the prospect of liability
for dealing with a plan, may charge higher rates or, worse, refuse
altogether to transact with plans.
We decline these suggestions to depart from the text of §
502(a)(3). In ERISA cases, "[a]s in any case of statutory
construction, our analysis begins with the language of the statute
.... And where the statutory language provides a clear answer, it
ends there as well."
Hughes Aircraft, 525 U. S., at 438
(citation and internal quotation marks omitted). Section 502(a)(3),
as informed by §
502(l), satisfies this standard.
Accordingly, we reverse the Seventh Circuit's judgment and
remand the case for further proceedings consistent with this
opinion.
It is so ordered.
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