OCTOBER TERM, 1995
Syllabus
VARITY CORP.
v. HOWE ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH
CIRCUIT
No. 94-1471. Argued November 1, 1995-Decided March 19, 1996
After petitioner Varity Corporation decided to transfer
money-losing divisions in its subsidiary Massey-Ferguson, Inc., to
a separately incorporated subsidiary, Massey Combines, it held a
meeting to persuade employees of the failing divisions to change
employers and benefit plans. Varity, the Massey-Ferguson plan
administrator as well as the employer, conveyed the basic message
that employees' benefits would remain secure when they transferred.
In fact, Massey Combines was insolvent from the day it was created,
and, when it ended its second year in a receivership, the employees
who had transferred lost their nonpension benefits. Those
employees, including respondents, filed this action under the
Employee Retirement Income Security Act of 1974 (ERISA), claiming
that Varity, through trickery, had led them to withdraw from their
old plan and forfeit their benefits, and seeking the benefits they
would have been owed had they not changed employers. The District
Court found, among other things, that Varity and Massey-Ferguson,
acting as ERISA fiduciaries, had harmed plan beneficiaries through
deliberate deception, that they thereby violated ERISA § 404(a)'s
fiduciary obligation to administer Massey-Ferguson's plan "solely
in the interest of the [plan's] participants and beneficiaries,"
that ERISA § 502(a)(3) gave respondents a right to "appropriate
equitable relief ... to redress" the harm that this deception had
caused them individually, and that such relief included
reinstatement to the old plan. The Court of Appeals affirmed, in
relevant part.
Held:
1. Varity was acting as an ERISA "fiduciary" when it
significantly and deliberately misled respondents. The District
Court's factual findings, unchallenged by Varity, adequately
support that court's legal conclusion that, when Varity made its
misrepresentations, it was exercising "discretionary authority"
respecting the plan's "management" or "administration," within the
meaning of ERISA § 3(21)(A). The court found that the key meeting
was largely about benefits, for the documents presented there
described the benefits in detail, explained the similarity between
past and future plans in principle, and assured the employees that
they would continue to receive similar benefits in prac-
490
Syllabus
tice. To offer beneficiaries such detailed plan information in
order to help them decide whether to remain with the plan is
essentially an exercise of a power "appropriate" to carrying out an
important plan purpose. Moreover, the materials used at the meeting
came from those at the firm with authority to communicate as
fiduciaries with beneficiaries. Finally, reasonable employees, in
the circumstances found by the District Court, could have thought
that Varity was communicating with them both as employer and as
plan administrator. Pp. 498-505.
2. In misleading respondents, Varity violated the fiduciary
obligations that ERISA § 404 imposes upon plan administrators. To
participate knowingly and significantly in deceiving a plan's
beneficiaries in order to save the employer money at the
beneficiaries' expense is not to act "solely in the interest of the
participants and beneficiaries." There is no basis in the statute
for any special interpretation that might insulate Varity from the
legal consequences of the kind of conduct that often creates
liability even among strangers. Pp. 506-507.
3. ERISA § 502(a)(3) authorizes lawsuits for individualized
equitable relief for breach of fiduciary obligations. This Court's
decision in
Massachusetts Mut. Life Ins. Co. v.
Russell, 473
U. S. 134, that § 502(a)(2)which permits actions "for
appropriate relief under [§ ]409"-does not provide individual
relief does not mean that such relief is not "appropriate" under
subsection (3). The language that the Court found limiting in
Russell appears in § 409, which authorizes relief only for
the plan itself, and § 409 is not cross-referenced by subsection
(3). Further, another remedial provision (subsection (1)) provided
a remedy for the
Russell plaintiff's injury, whereas here
respondents would have no remedy at all were they unable to proceed
under subsection (3). Granting individual relief is also consistent
with ERISA's language, structure, and purpose. Subsection (3)'s
language is broad enough to cover individual relief for breach of a
fiduciary obligation, and other statutory language supports this
conclusion. Nothing in ERISA's structure indicates that Congress
intended § 409 to contain the exclusive set of remedies for every
kind of fiduciary breach. In fact, § 502's structure suggests that
Congress intended the general "catchall" provisions of subsections
(3) and (5) to act as a safety net, offering appropriate equitable
relief for injuries caused by violations that § 502 does not
elsewhere adequately remedy. Contrary to Varity's argument, there
is nothing in the legislative history that conflicts with this
interpretation. ERISA's general purpose of protecting
beneficiaries' interests also favors a reading that provides
respondents with a remedy.
Amici's concerns that permitting
individual relief will upset another congressional purpose-
491
the need for a sensible administrative system-seem unlikely to
materialize. Pp. 507-515.
36 F.3d
746 and
41 F.3d
1263, affirmed.
BREYER, J., delivered the opinion of the Court, in which
REHNQUIST, C. J., and STEVENS, KENNEDY, SOUTER, and GINSBURG, JJ.,
joined. THOMAS, J., filed a dissenting opinion, in which O'CONNOR
and SCALIA, JJ., joined,
post, p. 516.
Floyd Abrams argued the cause for petitioner. With him on the
briefs were Thomas
J. Kavaler, Katherine B. Harrison,
Jonathan Sherman, and William J. Koehn.
H. Richard Smith argued the cause for respondents.
With him on the brief were David Swinton, Michael J. Eason, and
Robert J. Schmit.
Deputy Solicitor General Kneedler argued the cause for the
United States as amicus curiae urging affirmance. With him on the
brief were Solicitor General Days, Richard P. Bress, Thomas S.
Williamson, Jr., Allen H. Feldman, Steven J. Mandel, Mark S. Flynn,
and Judith D. Heimlich.*
JUSTICE BREYER delivered the opinion of the Court.
A group of beneficiaries of a firm's employee welfare benefit
plan, protected by the Employee Retirement Income Se-
*Briefs of
amici curiae urging reversal were filed for
the Chamber of Commerce of the United States by
Evan Miller,
John G.
Roberts, Jr., and
Stephen A. Bokat; and
for the Eastman Kodak Co. et al. by
Robert N Eccles.
Briefs of
amici curiae urging affirmance were filed for
the American Association of Retired Persons by
Steven S.
Saleznick and
Mary Ellen Signorille; and for the
National Employment Lawyers Association by
Stephen R. Bruce,
Jeffrey Lewis, Ronald Dean, and
Edgar Pauk.
Briefs of
amici curiae were filed for the Central States,
Southeast and Southwest Areas Health and Welfare and Pension Fund
by
Thomas C.
Nyhan and
Terence G.
Craig; and for the National Association of Securities and
Commercial Law Attorneys by
Kevin P. Roddy, Jonathan W Cuneo,
Bryan L. Clobes, Stephen P. Hoffman, Henry H. Rossbacher, and
Steve W Berman.
492
curity Act of 1974 (ERISA), 88 Stat. 832, as amended, 29 U. S.
C. § 1001
et seq. (1988 ed.), have sued their plan's
administrator, who was also their employer. They claim that the
administrator, through trickery, led them to withdraw from the plan
and to forfeit their benefits. They seek, among other things, an
order that, in essence, would reinstate each of them as a
participant in the employer's ERISA plan. The lower courts entered
judgment in the employees' favor, and we agreed to review that
judgment.
In conducting our review, we do not question the lower courts'
findings of serious deception by the employer, but instead consider
three legal questions. First, in the factual circumstances (as
determined by the lower courts), was the employer acting in its
capacity as an ERISA "fiduciary" when it significantly and
deliberately misled the beneficiaries? Second, in misleading the
beneficiaries, did the employer violate the fiduciary obligations
that ERISA § 404 imposes upon plan administrators? Third, does
ERISA § 502(a)(3) authorize ERISA plan beneficiaries to bring a
lawsuit, such as this one, that seeks relief for individual
beneficiaries harmed by an administrator's breach of fiduciary
obligations?
We answer each of these questions in the beneficiaries' favor,
and we therefore affirm the judgment of the Court of Appeals.
I
The key facts, as found by the District Court after trial,
include the following: Charles Howe, and the other respondents,
used to work for Massey-Ferguson, Inc., a farm equipment
manufacturer, and a wholly owned subsidiary of the petitioner,
Varity Corporation. (Since the lower courts found that Varity and
Massey-Ferguson were "alter egos," we shall refer to them
interchangeably.) These employees all were participants in, and
beneficiaries of, MasseyFerguson's self-funded employee welfare
benefit plan-an ERISA-protected plan that Massey-Ferguson itself
administered. In the mid-1980's, Varity became concerned that
493
some of Massey-Ferguson's divisions were losing too much money
and developed a business plan to deal with the problem.
The business plan-which Varity called "Project
Sunshine"-amounted to placing many of Varity's money-losing eggs in
one financially rickety basket. I t called for a transfer of
Massey-Ferguson's money-losing divisions, along with various other
debts, to a newly created, separately incorporated subsidiary
called Massey Combines. The plan foresaw the possibility that
Massey Combines would fail. But it viewed such a failure, from
Varity's business perspective, as closer to a victory than to a
defeat. That is because Massey Combine's failure would not only
eliminate several of Varity's poorly performing divisions, but it
would also eradicate various debts that Varity would transfer to
Massey Combines, and which, in the absence of the reorganization,
Varity's more profitable subsidiaries or divisions might have to
pay.
Among the obligations that Varity hoped the reorganization would
eliminate were those arising from the MasseyFerguson benefit plan's
promises to pay medical and other nonpension benefits to employees
of Massey-Ferguson's money-losing divisions. Rather than terminate
those benefits directly (as it had retained the right to do),
Varity attempted to avoid the undesirable fallout that could have
accompanied cancellation by inducing the failing divisions'
employees to switch employers and thereby voluntarily release
Massey-Ferguson from its obligation to provide them benefits
(effectively substituting the new, self-funded Massey Combines
benefit plan for the former Massey-Ferguson plan). Insofar as
Massey-Ferguson's employees did so, a subsequent Massey Combines
failure would eliminate-simply and automatically, without
distressing the remaining Massey-Ferguson employees-what would
otherwise have been Massey-Ferguson's obligation to pay those
employees their benefits.
To persuade the employees of the failing divisions to accept the
change of employer and benefit plan, Varity called
494
them together at a special meeting and talked to them about
Massey Combines' future business outlook, its likely financial
viability, and the security of their employee benefits. The thrust
of Varity's remarks (which we shall discuss in greater detail
infra, at 499-501) was that the employees' benefits would
remain secure if they voluntarily transferred to Massey Combines.
As Varity knew, however, the reality was very different. Indeed,
the District Court found that Massey Combines was insolvent from
the day of its creation and that it hid a $46 million negative net
worth by overvaluing its assets and underestimating its
liabilities.
After the presentation, about 1,500 Massey-Ferguson employees
accepted Varity's assurances and voluntarily agreed to the
transfer. (Varity also unilaterally assigned to Massey Combines the
benefit obligations it owed to some 4,000 workers who had retired
from Massey-Ferguson prior to this reorganization, without
requesting permission or informing them of the assignment.)
Unfortunately for these employees, Massey Combines ended its first
year with a loss of $88 million, and ended its second year in a
receivership, under which its employees lost their nonpension
benefits. Many of those employees (along with several retirees
whose benefit obligations Varity had assigned to Massey Combines
and others whose claims we do not now consider) brought this
lawsuit, seeking the benefits they would have been owed under their
old, Massey-Ferguson plan, had they not transferred to Massey
Combines.
After trial, the District Court found, among other things, that
Varity and Massey-Ferguson, acting as ERISA fiduciaries, had harmed
the plan's beneficiaries through deliberate deception. The court
held that Varity and MasseyFerguson thereby violated an
ERISA-imposed fiduciary obligation to administer Massey-Ferguson's
benefit plan "solely in the interest of the participants and
beneficiaries" of the plan. ERISA §404(a). The court added that
ERISA § 502(a)(3) gave the former Massey-Ferguson employees a
495
right to "appropriate equitable relief ... to redress" the harm
that this deception had caused them individually. Among other
remedies the court considered "appropriate equitable relief" was an
order that Massey-Ferguson reinstate its former employees into its
own plan (which had continued to provide benefits to employees of
Massey-Ferguson's profitable divisions). The court also ordered
certain monetary relief which is not at issue here. The Court of
Appeals later affirmed the District Court's determinations, in
relevant part.
36 F.3d
746 (CA8 1994).
We granted certiorari in this case primarily because the Courts
of Appeals have disagreed about the proper interpretation of ERISA
§ 502(a)(3), the provision the District Court held authorized the
lawsuit and relief in this case. Some Courts of Appeals have held
that this section, when applied to a claim of breach of fiduciary
obligation, does not authorize awards of relief to individuals, but
instead only authorizes suits to obtain relief for the
plan
(as, for example, when a beneficiary sues in a representative
capacity, seeking to compel a dishonest fiduciary to return
embezzled funds to the plan). See
McLeod v.
Oregon
Lithoprint Inc., 46 F.3d
956 (CA9 1995);
Simmons v.
Southern Bell Telephone
and Telegraph Co., 940 F.2d
614 (CAll 1991). Other Courts of Appeals, such as the Eighth
Circuit in this case, have not read any such limitation into the
statute. See
Bixler v.
Central Pennsylvania Teamsters
Health &
Welfare Fund, 12 F.3d
1292 (CA3 1993);
Anweiler v.
American Electric Power
Service Corp., 3 F.3d
986 (CA7 1993).
Varity has raised two additional issues. First, Varity points
out that the relevant ERISA section imposes liability only upon
plan
fiduciaries; and it argues that it was acting only as
an
employer and not as a plan
fiduciary when it
deceived its employees. Second, it argues that, in any event, its
conduct did not violate the fiduciary standard that ERISA
imposes.
496
We consider all three issues to be fairly within the scope of
the questions that Varity posed in its petition for certiorari,
although only with respect to the workers who were deceived by
Varity, for as we construe Varity's petition, it does not
sufficiently call into question the District Court's holding that
Varity breached a fiduciary duty with respect to the
Massey-Ferguson retirees whose benefit obligations had been
involuntarily assigned to Massey Combines. With these limitations
in mind, we turn to the questions presented.
II
ERISA protects employee pensions and other benefits by providing
insurance (for vested pension rights, see ERISA § 4001
et
seq.), specifying certain plan characteristics in detail (such
as when and how pensions vest, see §§ 201-211), and by setting
forth certain general fiduciary duties applicable to the management
of both pension and nonpension benefit plans. See § 404. In this
case, we interpret and apply these general fiduciary duties and
several related statutory provisions.
In doing so, we recognize that these fiduciary duties draw much
of their content from the common law of trusts, the law that
governed most benefit plans before ERISA's enactment. See
Central States, Southeast &
Southwest Areas Pension
Fund v.
Central Transport, Inc., 472 U. S. 559, 570 (1985)
("[RJather than explicitly enumerating
all of the powers and
duties of trustees and other fiduciaries, Congress invoked the
common law of trusts to define the general scope of their authority
and responsibility"); H. R. Rep. No. 93-533, pp. 3-5, 11-13 (1973),
2 Legislative History of the Employee Retirement Income Security
Act of 1974 (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, pp. 2350-2352, 2358-2360
(1976) (hereinafter Leg. Hist.); G. Bogert & G. Bogert, Law of
Trusts and Trustees § 255, p. 343 (rev. 2d ed. 1992).
497
We also recognize, however, that trust law does not tell the
entire story. After all, ERISA's standards and procedural
protections partly reflect a congressional determination that the
common law of trusts did not offer completely satisfactory
protection. See ERISA § 2(a). See also H. R. Rep. No.
93-533, supra, at 3-5, 11-13, 2 Leg. Hist. 2350-2352;
23582360; H. R. Conf. Rep. No. 93-1280, pp. 295,302 (1974), 3 Leg.
Hist. 4562, 4569. And, even with respect to the trust-like
fiduciary standards ERISA imposes, Congress "expect[ed] that the
courts will interpret this prudent man rule (and the other
fiduciary standards) bearing in mind the special nature and purpose
of employee benefit plans,"
id., at 302, 3 Leg. Hist. 4569,
as they "develop a 'federal common law of rights and obligations
under ERISA-regulated plans.'"
Firestone Tire &
Rubber Co. v.
Bruch, 489 U. S. 101, 110-111
(1989) (quoting
Pilot Life Ins. Co. v.
Dedeaux,
481 U. S. 41, 56
(1987)).
Consequently, we believe that the law of trusts often will
inform, but will not necessarily determine the outcome of, an
effort to interpret ERISA's fiduciary duties. In some instances,
trust law will offer only a starting point, after which courts must
go on to ask whether, or to what extent, the language of the
statute, its structure, or its purposes require departing from
common-law trust requirements. And, in doing so, courts may have to
take account of competing congressional purposes, such as Congress'
desire to offer employees enhanced protection for their benefits,
on the one hand, and, on the other, its desire not to create a
system that is so complex that administrative costs, or litigation
expenses, unduly discourage employers from offering welfare benefit
plans in the first place. Compare ERISA § 2 with
Curtiss- Wright
Corp. v.
Schoonejongen, 514 U. S. 73, 78-81
(1995), and
Mertens v.
Hewitt Associates, 508 U. S. 248, 262263
(1993).
We have followed this approach when interpreting, and applying,
the statutory provisions here before us.
498
A
We begin with the question of Varity's fiduciary status.
In relevant part, the statute says that a "person is a fiduciary
with respect to a plan," and therefore subject to ERISA fiduciary
duties, "to the extent" that he or she "exercises any discretionary
authority or discretionary control respecting management" of the
plan, or "has any discretionary authority or discretionary
responsibility in the administration" of the plan. ERISA §
3(21)(A).
Varity was
both an employer
and the benefit plan's
administrator, as ERISA permits. Compare ERISA § 3(16) (employer
is, in some circumstances, the default plan administrator) with
NLRB v.
Amax Coal Co., 453 U. S. 322, 329-330
(1981) (common law of trusts prohibits fiduciaries from holding
positions that create conflict of interest with trust
beneficiaries); Bogert & Bogert,
supra, § 543, at 218,
264 (same). But, obviously, not all of Varity's business activities
involved plan management or administration. Varity argues that when
it communicated with its Massey-Ferguson workers about transferring
to Massey Combines, it was not administering or managing the plan;
rather, it was acting only in its capacity as an
employer
and not as a plan
administrator.
The District Court, however, held that when the
misrepresentations regarding employee benefits were made, Varity
was wearing its "fiduciary," as well as its "employer," hat. In
reviewing this legal conclusion, we give deference to the factual
findings of the District Court, recognizing its comparative
advantage in understanding the specific context in which the events
of this case occurred. We believe that these factual findings
(which Varity does not challenge) adequately support the District
Court's holding that Varity was exercising "discretionary
authority" respecting the plan's "management" or "administration"
when it made these misrepresentations, which legal holding we have
independently reviewed.
499
The relevant factual circumstances include the following:
In the spring of 1986, Varity summoned the employees of
Massey-Ferguson's money-losing divisions to a meeting at
Massey-Ferguson's corporate headquarters for a 30-minute
presentation. The employees saw a 90-second videotaped message from
Mr. Ivan Porter, a Varity vice president and Massey Combines' newly
appointed president. They also received four documents: (a) a
several-page, detailed comparison between the employee benefits
offered by MasseyFerguson and those offered by Massey Combines; (b)
a question-and-answer sheet; (c) a transcript of the Porter
videotape; and (d) a cover letter with an acceptance form. Each of
these documents discussed employee benefits and benefit plans, some
briefly in general terms, and others at length and in detail:
(a) The longest document, the side-by-side benefits comparison,
contained a fairly detailed description of the benefit plans. Its
object was to show that after transfer, the employees' benefits
would remain the same. It says, for example, that, under
Massey-Ferguson's plan, "[d]iagnostic x-ray and laboratory expenses
will be paid on the basis of reasonable and customary charges for
such services." App. 70. It then repeats the same sentence in
describing Massey Combines' "[d]iagnostic x-ray and laboratory
expenses" benefits.
Ibid. It describes about 20 different
benefits in this way.
(b) The eight questions and answers on the question-andanswer
sheet include three that relate to welfare benefits or to the ERISA
pension plan Varity also administered:
"Q. 3. What happens to my benefits, pension, etc.? "A. 3. When
you transfer to MCC [Massey Combines], pay levels and benefit
programmes will remain unchanged. There will be no loss of
seniority or pensionable service.
"Q. 4. Do you expect the terms and conditions of employment to
change?
500
"A. 4. Employment conditions in the future will depend on our
ability to make Massey Combines Corporation a success and if
changes are considered necessary or appropriate, they will be
made.
"Q. 8. Are the pensions protected under MCC?
"A. 8. Responsibility for pension benefits earned by employees
transferring to Massey Combines Corporation is being assumed by the
Massey Combines Corporation Pension Plan.
"The assets which are held in the Massey Ferguson Pension Plan
to fund such benefits as determined by actuarial calculations, are
being transferred to the Massey Combines Corporation Plan. Such
benefits and assets will be protected by the same legislation that
protect the Massey Ferguson Pension Plan.
"There will be no change in pension benefits as a result of your
transfer to Massey Combines Corporation."
Id., at 75-77.
(c) The transcript of the 90-second videotape message repeated
much of the information in the question-and-answer sheet, adding
assurances about Massey Combines' viability:
"This financial restructuring created Massey Combines
Corporation and will provide the funds necessary to ensure its
future viability. I believe that with the continued help and
support of you we can make Massey Combines Corporation the kind of
successful business enterprise which we all want to work for.
" .... When you transfer your employment to the Massey Combines
Corporation, pay levels and benefit programs will remain unchanged.
There will be no loss of seniority or pensionable service.
Employment conditions in the future will depend on the success of
the Massey Combines Corporation and should changes be deemed
appropriate or necessary, they will be made ....
501
"Finally, despite the depression which persists in the North
American economy, I am excited about the future of Massey Combines
Corporation." Id., at 80.
(d) The cover letter, in five short paragraphs, repeated
verbatim these benefit-related assurances:
"To enable us to accept you as an employee of Massey Combines
Corporation and to continue to process the payment of benefits to
you, we require that you complete the information below and return
this letter ....
"When you accept employment with Massey Combines Corporation,
pay levels and benefit programs will remain unchanged. There will
be no loss of seniority or pensionable service. Employment
conditions in the future will depend on our ability to make Massey
Combines Corporation a success, and if changes are considered
necessary or appropriate, they will be made.
"We are all very optimistic that our new company, has a bright
future, and are excited by the new challenges facing all of us
....
"In order to ensure uninterrupted continuation of your pay and
benefits, please return this signed acceptance of employment .... "
Id., at 82-83.
Given this record material, the District Court determined, as a
factual matter, that the key meeting, to a considerable extent, was
about benefits, for the documents described them in detail,
explained the similarity between past and future plans in
principle, and assured the employees that they would continue to
receive similar benefits in practice. The District Court concluded
that the basic message conveyed to the employees was that
transferring from Massey-Ferguson to Massey Combines would not
significantly undermine the security of their benefits. And, given
this view of the facts, we believe that the District Court reached
the correct legal conclusion, namely, that Varity spoke, in
significant part, in its capacity as plan administrator.
502
To decide whether Varity's actions fall within the statutory
definition of "fiduciary" acts, we must interpret the statutory
terms which limit the scope of fiduciary activity to discretionary
acts of plan "management" and "administration." ERISA § 3(21)(A).
These words are not self-defining, and the activity at issue here
neither falls clearly within nor outside of the common
understanding of these words. The dissent looks to the dictionary
for interpretive assistance. See
post, at 528-529. Though
dictionaries sometimes help in such matters, we believe it more
important here to look to the common law, which, over the years,
has given to terms such as "fiduciary" and trust "administration" a
legal meaning to which, we normally presume, Congress meant to
refer. See,
e. g., Nationwide Mut. Ins. Co. v.
Darden, 503 U.
S. 318, 322 (1992). The ordinary trust law understanding of
fiduciary "administration" of a trust is that to act as an
administrator is to perform the duties imposed, or exercise the
powers conferred, by the trust documents. See Restatement (Second)
of Trusts § 164 (1957); 76 Am. Jur. 2d, Trusts § 321 (1992). Cf.
ERISA § 404(a). The law of trusts also understands a trust document
to implicitly confer "such powers as are necessary or appropriate
for the carrying out of the purposes" of the trust. 3 A. Scott
& W. Fratcher, Law of Trusts § 186, p. 6 (4th ed. 1988). See
also Bogert & Bogert, Law of Trusts and Trustees § 551, at 41;
Central States, 472 U. S., at 570. Conveying information
about the likely future of plan benefits, thereby permitting
beneficiaries to make an informed choice about continued
participation, would seem to be an exercise of a power
"appropriate" to carrying out an important plan purpose. After all,
ERISA itself specifically requires administrators to give
beneficiaries certain information about the plan. See,
e.
g., ERISA §§ 102, 104(b)(1), 105(a). And administrators, as
part of their administrative responsibilities, frequently offer
beneficiaries more than the minimum information that the statute
requires-for example, answering beneficiaries' questions about the
meaning of
503
the terms of a plan so that those beneficiaries can more easily
obtain the plan's benefits. To offer beneficiaries detailed plan
information in order to help them decide whether to remain with the
plan is essentially the same kind of planrelated activity. Cf.
Restatement (Second) of Agency § 229(1) (1957) (determining whether
an activity is within the "scope of ... employment" in part by
examining whether it is "of the same general nature as that
authorized").
Moreover, as far as the record reveals, Mr. Porter's letter,
videotape, and the other documents came from those within the firm
who had authority to communicate as fiduciaries with plan
beneficiaries. Varity does not claim that it authorized only
special individuals, not connected with the meeting documents, to
speak as plan administrators. See § 402(b)(2) (a plan may describe
a "procedure under the plan for the allocation of responsibilities
for the operation and administration of the plan").
Finally, reasonable employees, in the circumstances found by the
District Court, could have thought that Varity was communicating
with them
both in its capacity as employer
and in its
capacity as plan administrator. Reasonable employees might not have
distinguished consciously between the two roles. But they would
have known that the employer was their plan's administrator and had
expert knowledge about how their plan worked. The central
conclusion ("your benefits are secure") could well have drawn
strength from their awareness of that expertise, and one could
reasonably believe that the employer, aware of the importance of
the matter, so intended.
We conclude, therefore, that the factual context in which the
statements were made, combined with the plan-related nature of the
activity, engaged in by those who had planrelated authority to do
so, together provide sufficient support for the District Court's
legal conclusion that Varity was acting as a fiduciary.
504
Varity raises three contrary arguments. First, Varity argues
that it was not engaged in plan administration because neither the
specific disclosure provisions of ERISA, nor the specific terms of
the plan instruments, App. 5-26,
required it to make these
statements. But that does not mean Varity was not engaging in plan
administration in making them, as the dissent seems to suggest. See
post, at 531-532, and n. 12. There is more to plan (or
trust) administration than simply complying with the specific
duties imposed by the plan documents or statutory regime; it also
includes the activities that are "ordinary and natural means" of
achieving the "objective" of the plan. Bogert & Bogert,
supra, § 551, at 41-52. Indeed, the primary function of the
fiduciary duty is to constrain the exercise of
discretionary
powers which are controlled by no other specific duty imposed by
the trust instrument or the legal regime. If the fiduciary duty
applied to nothing more than activities already controlled by other
specific legal duties, it would serve no purpose.
Second, Varity says that when it made the statements that most
worried the District Court-the statements about Massey Combines'
"bright future"-it must have been speaking only as employer (and
not as fiduciary), for statements about a new subsidiary's
financial future have virtually nothing to do with administering
benefit plans. But this argument parses the meeting's
communications too finely. The ultimate message Varity intended to
convey-"your benefits are secure"-depended in part upon its
repeated assurances that benefits would remain "unchanged," in part
upon the detailed comparison of benefits, and in part upon
assurances about Massey Combines' "bright" financial future.
Varity's workers would not necessarily have focused upon each
underlying supporting statement separately, because what primarily
interested them, and what primarily interested the District Court,
was the truthfulness of the ultimate conclusion that transferring
to Massey Combines would not ad-
505
versely affect the security of their benefits. And, in the
present context (see
supra, at 499-501), Varity's statements
about the security of benefits amounted to an act of plan
administration. That Varity intentionally communicated its
conclusion through a closely linked set of statements (some
directly concerning plan benefits, others concerning the viability
of the corporation) does not change this conclusion.
We do not hold, as the dissent suggests,
post, at
529-531, that Varity acted as a fiduciary simply because it made
statements about its expected financial condition or because "an
ordinary business decision turn[ed] out to have an adverse impact
on the plan."
Post, at 539. Instead, we accept the
undisputed facts found, and factual inferences drawn, by the
District Court, namely, that Varity
intentionally connected
its statements about Massey Combines' financial health to
statements it made about the future of benefits, so that its
intended communication about the security of benefits was rendered
materially misleading. See App. to Pet. for Cert. 64a-65a, "65, 68.
And we hold that making intentional representations about the
future of plan benefits in that context is an act of plan
administration.
Third, Varity says that an employer's decision to amend or
terminate a plan (as Varity had the right to do) is not an act of
plan administration. See
Curtiss- Wright Corp., 514 U. S.,
at 78-81. How then, it asks, could conveying information about the
likelihood of termination be an act of plan administration? While
it may be true that amending or terminating a plan (or a common-law
trust) is beyond the power of a plan administrator (or trustee)-
and, therefore, cannot be an act of plan "management" or
"administration"-it does not follow that making statements about
the likely future of the plan is also beyond the scope of plan
administration. As we explained above, plan administrators often
have, and commonly exercise, discretionary authority to communicate
with beneficiaries about the future of plan benefits.
506
B
The second question-whether Varity's deception violated
ERISA-imposed fiduciary obligations-calls for a brief, affirmative
answer. ERISA requires a "fiduciary" to "discharge his duties with
respect to a plan solely in the interest of the participants and
beneficiaries." ERISA §404(a). To participate knowingly and
significantly in deceiving a plan's beneficiaries in order to save
the employer money at the beneficiaries' expense is not to act
"solely in the interest of the participants and beneficiaries." As
other courts have held, "[l]ying is inconsistent with the duty of
loyalty owed by all fiduciaries and codified in section 404(a)(1)
of ERISA,"
Peoria Union Stock Yards Co. v.
Penn Mut. Life
Ins. Co., 698 F.2d
320, 326 (CA7 1983). See also
Central States, 472 U. S.,
at 570-571 (ERISA fiduciary duty includes commonlaw duty of
loyalty); Bogert & Bogert, Law of Trusts and Trustees § 543, at
218-219 (duty of loyalty requires trustee to deal fairly and
honestly with beneficiaries); 2A Scott & Fratcher, Law of
Trusts § 170, pp. 311-312 (same); Restatement (Second) of Trusts §
170 (same). Because the breach of this duty is sufficient to uphold
the decision below, we need not reach the question whether ERISA
fiduciaries have any fiduciary duty to disclose truthful
information on their own initiative, or in response to employee
inquiries.
We recognize, as mentioned above, that we are to apply
common-law trust standards "bearing in mind the special nature and
purpose of employee benefit plans." H. R. Conf. Rep. No. 93-1280,
at 302,3 Leg. Hist. 4569. But we can find no adequate basis here,
in the statute or otherwise, for any special interpretation that
might insulate Varity, acting as a fiduciary, from the legal
consequences of the kind of conduct (intentional misrepresentation)
that often creates liability even among strangers.
We are aware, as Varity suggests, of one possible reason for a
departure from ordinary trust law principles. In arguing about
ERISA's remedies for breaches of fiduciary obli-
507
gation, Varity says that Congress intended ERISA's fiduciary
standards to protect only the financial integrity of the plan, not
individual beneficiaries. This intent, says Varity, is shown by the
fact that Congress did not provide remedies for individuals harmed
by such breaches; rather, Congress limited relief to remedies that
would benefit only the plan itself. This argument fails, however,
because, in our view, Congress
did provide remedies for
individual beneficiaries harmed by breaches of fiduciary duty, as
we shall next discuss.
C
The remaining question before us is whether or not the remedial
provision of ERISA that the beneficiaries invoked, ERISA §
502(a)(3), authorizes this lawsuit for individual relief. That
subsection is the third of six subsections contained within ERISA's
"Civil Enforcement" provision (as it stood at the times relevant to
this lawsuit):
"Sec. 502. (a) A civil action may be brought"(1) by a
participant or beneficiary-
"(A) for the relief provided for in subsection (c) of this
section [providing for liquidated damages for failure to provide
certain information on request], or
"(B) to recover benefits due to him under the terms of his plan,
to enforce his rights under the terms of the plan, or to clarify
his rights to future benefits under the terms of the plan;
"(2) by the Secretary, or by a participant, beneficiary or
fiduciary for appropriate relief under section 409 [entitled
"Liability for Breach of Fiduciary Duty"];
"(3) by a participant, beneficiary, or fiduciary (A) to enjoin
any act or practice which violates any provision of this title 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;
508
"(4) by the Secretary, or by a participant, or beneficiary for
appropriate relief in the case of a violation of 105(c) [requiring
disclosure of certain tax registration statements];
"(5) except as otherwise provided in subsection (b), by the
Secretary (A) to enjoin any act or practice which violates any
provision of this title, or (B) to obtain other appropriate
equitable relief (i) to redress such violation or (ii) to enforce
any provision of this title; or
"(6) by the Secretary to collect any civil penalty under
subsection (i)." ERISA § 502(a), 88 Stat. 891, 29 U. S. C. §
1132(a) (1988 ed.) (emphasis added).
The District Court held that the third subsection, which we have
italicized, authorized this suit and the relief awarded. Varity
concedes that the plaintiffs satisfy most of this provision's
requirements, namely, that the plaintiffs are plan "participants"
or "beneficiaries," and that they are suing for "equitable" relief
to "redress" a violation of § 404(a), which is a "provision of this
title." Varity does not agree, however, that this lawsuit seeks
equitable relief that is
"appropriate." In support of this
conclusion, Varity makes a complicated, four-step argument:
Step One: Section 502(a)'s
second subsection says
that a plaintiff may bring a civil action "for appropriate relief
under section 409."
Step Two: Section 409(a), in turn, reads:
"Liability for Breach of Fiduciary Duty
Sec. 409. (a) Any person who is a fiduciary with respect to a
plan who breaches any of the responsibilities, obligations, or
duties imposed upon fiduciaries by this title shall be personally
liable to make good to such plan any losses to the plan
resulting from each such breach, and to restore to such plan any
profits of such fiduciary which have been made through use of
assets of the plan by the fiduciary, and shall be subject to such
other equi-
509
table or remedial relief as the court may deem
appropriate, including removal of such fiduciary .... " (Emphasis
added.)
Step Three: In
Massachusetts Mut. Life Ins. Co. v.
Russell, 473
U. S. 134 (1985), this Court pointed to the aboveitalicized
language in § 409 and concluded that this section (and its
companion remedial provision, subsection (2)) did not authorize the
plaintiff's suit for compensatory and punitive damages against an
administrator who had wrongfully delayed payment of her benefit
claim. The first two italicized phrases, the Court said, show that
§ 409's "draftsmen were primarily concerned with the possible
misuse of plan assets, and with remedies that would protect the
entire plan, rather than with the rights of an individual
beneficiary."
Id., at 142 (emphasis added). The Court added
that, in this context, the last italicized phrase ("other equitable
or remedial relief") does not "authorize any relief except for the
plan itself."
Id., at 144.
Step Four: In light of
Russell, as well as ERISA's
language, structure, and purposes, one cannot read the
third
subsection (the subsection before us) as
including (as
"appropriate") the very kind of action-an action for individual,
rather than plan, relief-that this Court found Congress
excluded in subsection (2). It is at this point, however,
that we must disagree with Varity. We have reexamined
Russell, as well as the relevant statutory language,
structure, and purpose. And, in our view, they support the
beneficiaries' view of the statute, not Varity's.
First,
Russell discusses § 502(a)'s
second
subsection, not its
third subsection, and the language that
the Court found limiting appears in a statutory section (§ 409)
that the
second subsection, not the
third,
cross-references.
Russell's plaintiff expressly disavowed
reliance on the third subsection,
id., at 139, n. 5, perhaps
because she was seeking compensatory and punitive damages and
subsection (3) authorizes only "equitable" relief. See
Mertens, 508 U. S., at 255, 256-258, and
510
n. 8 (compensatory and punitive damages are not "equitable
relief" within the meaning of subsection (3)); ERISA § 409(a)
(authorizing "other equitable
or remedial relief") (emphasis
added). Further,
Russell involved a complicating factor not
present here, in that another remedial provision (subsection (1))
already provided specific relief for the sort of injury the
plaintiff had suffered (wrongful denial of benefits), but said
"nothing about the recovery of extracontractual damages, or about
the possible consequences of delay in the plan administrators'
processing of a disputed claim."
Russell, supra, at 144.
These differences lead us to conclude that
Russell does not
control, either implicitly or explicitly, the outcome of the case
before us.
Second, subsection (3)'s language does not favor Varity.
The words of subsection (3)-"appropriate equitable relief" to
"redress" any "act or practice which violates any provision of this
title"-are broad enough to cover individual relief for breach of a
fiduciary obligation. Varity argues that the title of §
409-"Liability for Breach of Fiduciary Duty"-means that §409 (and
its companion, subsection (2)) cover
all such liability. But
that is not what the title or the provision says. And other
language in the statute suggests the contrary. Section 502(1),
added in 1989, calculates a certain civil penalty as a percentage
of the sum "ordered by a court to be paid by such fiduciary ... to
a plan
or its participants and beneficiaries" under
subsection (5). Subsection (5) is identical to subsection (3),
except that it authorizes suits by the Secretary, rather than the
participants and beneficiaries. Compare § 502(a)(3) with §
502(a)(5). This new provision, therefore, seems to foresee
instances in which the sort of relief provided by both subsection
(5) and, by implication, subsection (3), would include an award to
"participants and beneficiaries," rather than to the "plan," for
breach of fiduciary obligation.
Third, the statute's structure offers Varity little support.
Varity notes that the
second subsection refers
specifically
511
(through its §409 cross-reference) to breaches of fiduciary
duty, while the
third subsection refers, as a kind of
"catchall," to all ERISA Title One violations. And it argues that a
canon of statutory construction, namely "the specific governs over
the general," means that the more specific
second (fiduciary
breach) subsection makes the more general
third (catchall)
subsection inapplicable to claims of fiduciary breach. Canons of
construction, however, are simply "rules of thumb" which will
sometimes "help courts determine the meaning of legislation."
Connecticut Nat. Bank v.
Germain, 503 U. S. 249, 253
(1992). To apply a canon properly one must understand its
rationale. This Court has understood the present canon ("the
specific governs the general") as a warning against applying a
general provision when doing so would undermine limitations created
by a more specific provision. See,
e. g., Morales v.
Trans World Airlines, Inc., 504 U. S. 374, 384-385
(1992);
HCSC-Laundry v.
United States, 450 U. S. 1, 6, 8 (1981);
Fourco Glass Co. v.
Transmirra Products Corp.,
353 U. S. 222,
228-229 (1957). Yet, in this case, why should one believe that
Congress intended the specific remedies in § 409 as a
limitation?
To the contrary, one can read § 409 as reflecting a special
congressional concern about plan asset management without also
finding that Congress intended that section to contain the
exclusive set of remedies for every kind of fiduciary breach. After
all, ERISA makes clear that a fiduciary has obligations other than,
and in addition to, managing plan assets. See § 3(21)(A) (defining
"fiduciary" as one who "exercises any discretionary authority ...
respecting management of such plan
or ... respecting
management or disposition of its assets") (emphasis added). For
example, as the dissent concedes,
post, at 530, a plan
administrator engages in a fiduciary act when making a
discretionary determination about whether a claimant is entitled to
benefits under the terms of the plan documents. See § 404(a)(1)(D);
Dept. of Labor, Interpretive Bulletin 75-8, 29 CFR §2509.75-8
(1995)
512
("[A] plan employee who has the final authority to authorize or
disallow benefit payments in cases where a dispute exists as to the
interpretation of plan provisions ... would be a fiduciary");
Moore v.
Reynolds Metals Co. Retirement Program,
740 F.2d
454,457 (CA6 1984);
Birmingham v.
SogenSwiss Intern.
Corp. Retirement Plan, 718 F.2d
515, 521-522 (CA2 1983). And, as the Court pointed out in
Russell, 473 U. S., at 144, ERISA specifically provides a
remedy for breaches of fiduciary duty with respect to the
interpretation of plan documents and the payment of claims, one
that is outside the framework of the
second subsection and
crossreferenced § 409, and one that runs directly to the injured
beneficiary. § 502(a)(1)(B). See also
Firestone, 489 U. S.,
at 108. Why should we not conclude that Congress provided yet other
remedies for yet other breaches of other sorts of fiduciary
obligation in another, "catchall" remedial section?
Such a reading is consistent with § 502's overall structure.
Four of that section's six subsections focus upon specific
areas, i.
e., the first (wrongful denial of benefits and
information), the second (fiduciary obligations related to the
plan's financial integrity), the fourth (tax registration), and the
sixth (civil penalties). The language of the other two subsections,
the third and the fifth, creates two "catchalls," providing
"appropriate equitable relief" for "any" statutory violation. This
structure suggests that these "catchall" provisions act as a safety
net, offering appropriate equitable relief for injuries caused by
violations that § 502 does not elsewhere adequately remedy. And,
contrary to Varity's argument, there is nothing in the legislative
history that conflicts with this interpretation. See S. Rep. No.
93-127, p. 35 (1973), 1 Leg. Hist. 621 (describing Senate version
of enforcement provisions as intended to "provide both the
Secretary and participants and beneficiaries with broad remedies
for redressing or preventing violations of [ERISA]"); H. R. Rep.
No. 93-533, at 17, 2 Leg. Hist. 2364 (describing House version in
identical terms).
513
Fourth, ERISA's basic purposes favor a reading of the
third subsection that provides the plaintiffs with a remedy.
The statute itself says that it seeks "to protect ... the interests
of participants ... and ... beneficiaries ... by establishing
standards of conduct, responsibility, and obligation for
fiduciaries ... and ... providing for appropriate remedies ... and
ready access to the Federal courts." ERISA § 2(b).
Section 404(a), in furtherance of this general objective,
requires fiduciaries to discharge their duties "solely in the
interest of the participants and beneficiaries." Given these
objectives, it is hard to imagine why Congress would want to
immunize breaches of fiduciary obligation that harm individuals by
denying injured beneficiaries a remedy.
Amici supporting Varity find a strong contrary argument
in an important, subsidiary congressional purpose-the need for a
sensible administrative system. They say that holding that the Act
permits individuals to enforce fiduciary obligations owed directly
to them as individuals threatens to increase the cost of welfare
benefit plans and thereby discourage employers from offering them.
Consider a plan administrator's decision not to pay for surgery on
the ground that it falls outside the plan's coverage. At present,
courts review such decisions with a degree of deference to the
administrator, provided that "the benefit plan gives the
administrator or fiduciary discretionary authority to determine
eligibility for benefits or to construe the terms of the plan."
Firestone, supra, at 115. But what will happen, ask
amici, if a beneficiary can repackage his or her "denial of
benefits" claim as a claim for "breach of fiduciary duty?" Wouldn't
a court, they ask, then have to forgo deference and hold the
administrator to the "rigid level of conduct" expected of
fiduciaries? And, as a consequence, would there not then be two
"incompatible legal standards for courts hearing benefit claim
disputes" depending upon whether the beneficiary
514
claimed simply "denial of benefits," or a virtually identical
"breach of fiduciary duty?" See Brief for Chamber of Commerce as
Amicus Curiae 10. Consider, too, they add, a medical review
board trying to decide whether certain proposed surgery is
medically necessary. Will the board's awareness of a "duty of
loyalty" to the surgery-seeking beneficiary not risk inadequate
attention to the countervailing, but important, need to constrain
costs in order to preserve the plan's funds?
Id., at 11.
Thus,
amici warn that a legally enforceable duty of
loyalty that extends beyond plan asset management to individual
beneficiaries will risk these and other adverse consequences.
Administrators will tend to interpret plan documents as requiring
payments to individuals instead of trying to preserve plan assets;
nonexpert courts will try to supervise too closely, and second
guess, the often technical decisions of plan administrators; and,
lawyers will complicate ordinary benefit claims by dressing them up
in "fiduciary duty" clothing. The need to avoid these consequences,
they conclude, requires us to accept Varity's position.
The concerns that
amici raise seem to us unlikely to
materialize, however, for several reasons. First, a fiduciary
obligation, enforceable by beneficiaries seeking relief for
themselves, does not necessarily favor payment over nonpayment. The
common law of trusts recognizes the need to preserve assets to
satisfy future, as well as present, claims and requires a trustee
to take impartial account of the interests of all beneficiaries.
See Restatement (Second) of Trusts § 183 (discussing duty of
impartiality);
id., § 232 (same).
Second, characterizing a denial of benefits as a breach of
fiduciary duty does not necessarily change the standard a court
would apply when reviewing the administrator's decision to deny
benefits. After all,
Firestone, which authorized deferential
court review when the plan itself gives the administrator
discretionary authority, based its decision upon
515
the same common-law trust doctrines that govern standards of
fiduciary conduct. See Restatement (Second) of Trusts § 187 ("Where
discretion is conferred upon the trustee with respect to the
exercise of a power, its exercise is not subject to control by the
court, except to prevent an abuse by the trustee of his
discretion") (as quoted in
Firestone, 489 U. S., at
111).
Third, the statute authorizes
"appropriate" equitable
relief. We should expect that courts, in fashioning "appropriate"
equitable relief, will keep in mind the "special nature and purpose
of employee benefit plans," and will respect the "policy choices
reflected in the inclusion of certain remedies and the exclusion of
others."
Pilot Life Ins. Co., 481 U. S., at 54. See also
Russell, 473 U. S., at 147;
Mertens, 508 U. S., at
263-264. Thus, we should expect that where Congress elsewhere
provided adequate relief for a beneficiary's injury, there will
likely be no need for further equitable relief, in which case such
relief normally would not be "appropriate." Cf.
Russell,
supra, at 144.
But that is not the case here. The plaintiffs in this case could
not proceed under the
first subsection because they were no
longer members of the Massey-Ferguson plan and, therefore, had no
"benefits due [them] under the terms of [the] plan." §
502(a)(1)(B). They could not proceed under the
second
subsection because that provision, tied to § 409, does not provide
a remedy for individual beneficiaries.
Russell, supra, at
144. They must rely on the
third subsection or they have no
remedy at all. We are not aware of any ERISA-related purpose that
denial of a remedy would serve. Rather, we believe that granting a
remedy is consistent with the literal language of the statute, the
Act's purposes, and pre-existing trust law.
For these reasons, the judgment of the Court of Appeals is
Affirmed.
516
JUSTICE THOMAS, with whom JUSTICE O'CONNOR and JUSTICE SCALIA
join, dissenting.
In
Massachusetts Mut. Life Ins. Co. v.
Russell,
473 U. S. 134
(1985), we held that actions for fiduciary breach under §§ 409 and
502(a)(2), 29 U. S. C. §§ 1109, 1132(a)(2) (1988 ed.), the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA or Act) specifically designed for civil enforcement of
fiduciary duties, must "be brought in a representative capacity on
behalf of the plan as a whole." 473 U. S., at 142, n. 9. The Court
today holds that § 502(a)(3), 29 U. S. C. § 1132(a)(3), the
catchall remedial provision that directly follows § 502(a)(2),
provides the individual relief for fiduciary breach that we found
to be unavailable under § 502(a)(2). This holding cannot be squared
with the text or structure of ERISA, and to reach it requires the
repudiation of much of our reasoning in
Russell. The Court
also finds that Varity was subject to fiduciary obligations under
ERISA because it engaged in activity of a "plan-related nature"
that plan participants reasonably perceived to be conducted in the
employer's capacity as plan fiduciary.
Ante, at 503. This
holding, like the first, has no basis in statutory text. Because
these holdings are fundamentally at odds with the statutory scheme
enacted by Congress, I respectfully dissent.
I A
"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."
Mertens v.
Hewitt Associates, 508 U. S. 248, 251 (1993)
(quoting
Nachman Corp. v.
Pension Benefit Guaranty
Corporation, 446
U. S. 359, 361 (1980)). The Act is "an enormously complex and
detailed statute that resolved innumerable disputes between
powerful competing interests-not all in
517
favor of potential plaintiffs." 508 U. S., at 262. Given the
"evident care" with which ERISA was crafted, we have traditionally
been "reluctant to tamper with [the] enforcement scheme" embodied
in the statute.
Russell, supra, at 147. Accordingly, we have
repeatedly declined invitations by plan participants and
beneficiaries to extend benefits and remedies not specifically
authorized by the statutory text. See,
e. g., Mertens,
supra, at 262 (rejecting claim that ERISA affords a cause of
action against a nonfiduciary who knowingly participates in a
fiduciary breach);
Russell, supra, at 145-148 (declining
invitation to create an implied private cause of action for
extracontractual damages);
Pilot Life Ins. Co. v.
Dedeaux, 481 U.
S. 41, 56 (1987) (holding that civil enforcement scheme
codified at § 502(a) is not to be supplemented by state-law
remedies).
Nowhere is the care with which ERISA was crafted more evident
than in the Act's mechanism for the enforcement of fiduciary
duties. Part 4 of the Act's regulatory provisions, entitled
"Fiduciary Responsibility," see §§401-414, 29 U. S. C. §§
1101-1114, assigns fiduciaries "a number of detailed duties and
responsibilities."
Mertens, supra, at 251. Part 4 also
includes its own liability provision, § 409, which we considered in
Russell. Entitled "Liability for Breach of Fiduciary Duty,"
§ 409 provides:
"Any 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 personally
liable to make good to such plan any losses to the plan resulting
from each such breach, and to restore to such plan any profits of
such fiduciary which have been made through use of assets of the
plan by the fiduciary, and shall be subject to such other equitable
or remedial relief as the court may deem appropriate, including
removal of such fiduciary." § 409(a), as codified in 29 U. S. C. §
1109(a) (1988 ed.).
518
Section 409, however, only creates liability. In order to
enforce the right and obtain the remedy created by § 409, a
plaintiff must bring suit under § 502(a)(2), one of ERISA's
"carefully integrated civil enforcement provisions."
Russell, supra, at 146. That section allows plan
participants, beneficiaries, and fiduciaries, as well as the
Secretary of Labor, to bring a "civil action ... for appropriate
relief" under § 409. Of the nine enforcement provisions currently
codified at § 502(a), § 502(a)(2) is the only one that specifically
authorizes suit for breach of fiduciary duty.
The plaintiffs in this case chose not to proceed through this
carefully constructed framework, designed specifically to provide a
cause of action for claims of fiduciary breach. Instead, the
plaintiffs brought their claims for breach of fiduciary duty under
§ 502(a)(3) of the Act, which they claim provides an alternative
basis for relief. Section 502(a)(3), as codified in 29 U. S. C. §
1132(a)(3) (1988 ed.), is a catchall remedial provision that
authorizes a civil action
"by a participant, beneficiary, or fiduciary (A) to enjoin any
act or practice which violates any provision of this subchapter 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 subchapter or the terms of the plan."
Since respondents are seeking equitable relief to redress a
claimed violation of § 404, which is a provision in the same
subchapter as § 502(a)(3), and since § 502(a)(3) authorizes
recovery for breach of
any provision in that subchapter,
respondents contend that their claim of breach of fiduciary duty is
cognizable under the plain language of § 502(a)(3). Respondents
have a plausible textual argument, if § 502(a)(3) is read without
reference to its surrounding provisions or our precedents.
Respondents' decision to proceed under § 502(a)(3)'s catchall
provision instead of under §§ 409 and 502(a)(2) was obvi-
519
ously motivated by our decision in
Russell. We held in
Russell that § 409 authorizes recovery only by "the plan as
an entity," 473 U. S., at 140, and does not allow for recovery by
individual plan participants.
Id., at 139-144; see also
id., at 144 ("Congress did not intend that section to
authorize any relief except for the plan itself"). The respondents,
however, do not seek relief on behalf of the plan; rather they wish
to recover individually. We reserved the question whether relief
might be available for individuals under § 502(a)(3) in
Russell,
id., at 139, n. 5, and respondents rightly understood this
provision to offer the only possible route for securing their
desired relief.
We would have to read § 502(a)(3) in a vacuum, however, to find
in respondents' favor. Congress went to great lengths to enumerate
ERISA's fiduciary obligations and duties, see §§ 401-408; §§
410-412, to create liability for breach of those obligations, see §
409, and to authorize a civil suit to enforce those provisions, see
§ 502(a)(2). Section 502(a)(3), in contrast, is a generally worded
provision that fails even to mention fiduciary duty. "[I]t is a
commonplace of statutory construction that the specific governs the
general."
M 0
rales v.
Trans World Airlines,
Inc., 504 U. S.
374, 384 (1992) (citing
Crawford Fitting Co. v.
J. T. Gibbons, Inc., 482 U. S. 437, 445
(1987)). "[T]he law is settled that '[h]owever inclusive may be the
general language of a statute, it "will not be held to apply to a
matter specifically dealt with in another part of the same
enactment."'"
Fourco Glass Co. v.
Transmirra Products
Corp., 353 U. S.
222, 228 (1957) (citations omitted). This is particularly true
where, as here, Congress has enacted a comprehensive scheme and has
deliberately targeted specific problems with specific solutions.
See
HCSC-Laundry v.
United States, 450 U. S. 1, 6 (1981)
(per curiam) (This "basic principle of statutory
construction" applies "particularly when the two [provisions] are
interrelated and closely positioned, both in fact being parts of"
the same
520
statutory scheme). Applying this basic rule of statutory
construction, I conclude that Congress intended §§ 409 and
502(a)(2) to provide the exclusive mechanism for bringing claims of
breach of fiduciary duty.l
If Congress had intended to allow individual plan participants
to secure equitable relief for fiduciary breaches, I presume it
would have made that clear in §§ 409 and 502(a)(2), the provisions
specifically enacted to address breach of fiduciary duty. See
Russell, 473 U. S., at 144 (rejecting claim for
extracontractual damages for failure timely to provide benefits in
part because "the statutory provision explicitly authorizing a
beneficiary to bring an action to enforce his rights under the
plan-§ 502(a)(1)(B)-says nothing about the recovery of
extracontractual damages") (citation omitted). In fact, Congress
did provide for equitable relief in § 409, which authorizes "such
other equitable or remedial relief as the court may deem
appropriate" to redress a breach of fiduciary duty, but it only
allowed such relief to be recovered by the plan. Congress did not
extend equitable relief to individual plan participants, and we
reversed the Court of Appeals in
Russell for holding that it
did. See
id., at 140. Thus, to accept the majority's
position, I would have to conclude not only that Congress forgot to
provide for individual relief in §§ 409 and 502(a)(2), but that it
clearly intended to provide for individual relief in § 502(a)(3), a
catchall provision that fails even to mention fiduciary breach and
uses language identical to that in § 409, which we have already
held authorizes equitable relief only on behalf of the plan.
Compare
IOn other occasions we have recognized that "[r]edundancies
across statutes are not unusual events in drafting," and that where
statutes overlap, courts should give effect to both absent a
"'positive repugnancy'" between them.
Connecticut Nat. Bank
v.
Germain, 503 U. S. 249, 253 (1992)
(quoting
Wood v.
United States, 16 Pet. 342, 363
(1842)). But
Germain and similar cases involved claims of
implied repeal, which we have long held should not be recognized
unless two statutes irreconcilably conflict.
Germain did not
involve simultaneously enacted, consecutive provisions of the same
Act, as in this case.
521
§ 409 (authorizing "such ... equitable ... relief as the court
may deem appropriate") with § 502(a)(3) (authorizing "appropriate
equitable relief"). While I would disagree with the majority's
strained statutory interpretation in any case, "[t]he assumption of
inadvertent omission is rendered especially suspect upon close
consideration of ERISA's interlocking, interrelated, and
interdependent remedial scheme, which is in turn part of a
'comprehensive and reticulated statute.'"
Russell, supra, at
146 (quoting
Nachman Corp. v.
Pension Benefit Guaranty
Corporation, 446 U. S., at 361). See also
Mackey v.
Lanier Collection Agency &
Service, Inc.,
486 U. S. 825,
837 (1988).2
The majority's reading of § 502(a)(3) also renders a portion of
§ 409 superfluous. If, as the Court today holds, § 502(a)(3)
authorizes relief for breaches of fiduciary duty, then that section
must authorize relief
on behalf of the plan as well as on
behalf of individuals. Nothing in § 502(a)(3) limits relief
2The majority apparently believes that § 502(a)(1)(B), 29 U. S.
C. § 1132(a)(1)(B), "provides a remedy for breaches of fiduciary
duty with respect to the interpretation of plan documents and the
payment of claims."
Ante, at 512 (citing
Russell, 473
U. S., at 144). Since, in the majority's view, § 502(a)(1)(B)
allows for individual recovery for fiduciary breach outside the
framework created by §§ 409 and 502(a)(2), the majority wonders
"[w]hy should we not conclude that Congress provided yet other
remedies for yet other breaches of other sorts of fiduciary
obligation in another, 'catchall' remedial section?"
Ante,
at 512.
The answer is simple. Contrary to the majority's understanding,
§ 502(a)(1)(B) does
not create a cause of action for
fiduciary breach, and
Russell expressly rejected the claim
that it does. Thus, the entire premise of the question is flawed.
Section 502(a)(1)(B) deals exclusively with contractual rights
under the plan. It allows a participant or beneficiary to bring a
civil action "to recover benefits due to him under the terms of his
plan, to enforce his rights under the terms of the plan, or to
clarify his rights to future benefits under the terms of the plan."
As we recognized in
Russell, this provision "says nothing
about the recovery of extracontractual damages." 473 U. S., at 144.
If the justification for the Court's holding is that we should
allow individual recovery for fiduciary breach under § 502(a)(3)
since such recovery is available under § 502(a)(1)(B), then there
really is no justification at all.
522
solely to individuals. And § 404(a), which the Court holds to be
enforceable through § 502(a)(3), provides protection primarily, if
not exclusively, for the plan. See
Russell, supra, at
142-143, and n. 10. But if § 502(a)(3) allows plan participants to
secure equitable relief on behalf of the plan, then § 409's promise
of appropriate equitable relief for the plan is entirely redundant.
Thus, the Court violates yet another well-settled rule of statutory
construction, namely, that "courts should disfavor interpretations
of statutes that render language superfluous."
Connecticut Nat.
Bank v.
Germain, 503 U. S. 249, 253
(1992). Of course, this result could be avoided simply by reading
the statute as written and by respecting the canon that specific
enactments trump general ones in carefully constructed statutes
like ERISA.
B
This is not simply a case about the "specific governing the
general," however. Nor is this a case solely about the
interrelationship between §§ 409 and 502(a)(3). At every turn lies
statutory proof, most of which the majority ignores, that Congress
never intended to authorize individual plan participants to secure
relief for fiduciary breach under ERISA. The majority also gives
short shrift to our decision in
Russell. See
ante, at
509-510. It is only by overlooking the language and structure of
ERISA and our reasoning in
Russell that the majority is able
to reach the conclusion that it does.
I begin with the Court's failure to address our reasoning and
analysis in
Russell. We held in
Russell that under §
409, "actions for breach of fiduciary duty [must] be brought in a
representative capacity on behalf of the plan as a whole." 473 U.
S., at 142, n. 9. Because the holding in
Russell applied
only to §§ 409 and 502(a)(2), and because we reserved the question
of individual relief under § 502(a)(3), see
id., at 139, n.
5, the majority concludes that
"Russell does not control,
either implicitly or explicitly, the outcome of the case before
us."
Ante, at 510.
523
Russell cannot be so easily dismissed. Our holding in
that case was based not only on the text of § 409, but also on "the
statutory provisions defining the duties of a fiduciary, and [on]
the provisions defining the rights of a beneficiary." 473 U. S., at
140. The language of §409 weighed heavily in our analysis, but it
was ultimately "[a] fair contextual reading of the statute,"
id., at 142, that led to our conclusion that "Congress did
not intend that section to authorize any relief except for the plan
itself."
Id., at 144. The majority is simply wrong when it
states that the language "the Court found limiting" in
Russell appears only in § 409.
Ante, at 509. Since
our holding in
Russell relied on the language and structure
of ERISA as a whole, and not solely on the text of §§ 409 and
502(a)(2), the Court cannot dismiss
Russell on the ground
that
Russell provides no insight into the provisions at
issue in this case.
Much of our reasoning in
Russell forecloses the
possibility of individual relief even under § 502(a)(3). For
instance, in interpreting § 409 in
Russell to afford relief
solely on behalf of the plan, we found it significant that "the
relevant fiduciary relationship characterized at the outset [of §
409 is] one 'with respect to a plan.'" 473 U. S., at 140. It must
also be significant, then, that Congress employed the same or
similar language virtually every time it referred to a fiduciary or
a fiduciary obligation in ERISA. See,
e. g., §§
3(21)(A), 404, 405, 406, 409, 411, 29 U. S. C. §§ 1002(21)(A),
1104, 1105, 1106, 1109, 1111. Section 404, the very provision that
respondents seek to enforce in this case, governs the manner in
which "a fiduciary ... discharge[s] his duties
with respect to a
plan." § 404(a)(1) (emphasis added). And the definition of a
fiduciary under ERISA also places the focus on the responsibilities
of a "fiduciary
with respect to a plan." § 3(21)(A)
(emphasis added). In light of the "basic canon of statutory
construction that identical terms within an Act bear the same
meaning,"
Estate of Cowart v.
Nicklos Drilling
Co., 505 U. S.
469, 479 (1992) (citation omitted), we should
524
accord Congress' repeated references to a "fiduciary with
respect to a plan" the same significance we attributed to it in
Russell, namely, that it reveals that ERISA's fiduciary
obligations were designed to regulate the relationship between the
fiduciary and the plan, and not the relationship between the
fiduciary and individual participants.
Furthermore, "the emphasis on the relationship between the
fiduciary and the plan as an entity" that we found to be "apparent"
on the face of §409,
Russell, 473 U. S., at 140, pervades
all of the fiduciary provisions in ERISA. This is to be expected,
since the relief available under § 409 ultimately reflects the
fiduciary duties and obligations that § 409 enforces. We recognized
in
Russell that, consistent with the wording of § 409, "the
principal statutory duties imposed on the trustees relate to the
proper management, administration, and investment of fund assets,
the maintenance of proper records, the disclosure of specified
information, and the avoidance of conflicts of interest."
Id., at 142-143. Though it is true that ERISA requires
fiduciaries to discharge their "duties with respect to a plan
solely in the interest of the participants and beneficiaries and
... for the exclusive purpose of providing benefits to participants
and their beneficiaries," § 404(a)(1)(A)(i), it is equally true
that the duties to which these commands apply deal primarily with
obligations that relate to the plan, not individual plan
participants. In fact, one of the two statutes we specifically
cited in
Russell as evidence that Congress was primarily
concerned with the misuse of plan assets was § 404, the provision
that respondents seek to enforce in this case. See 473 U. S., at
142-143, and n. 10.3 That Congress was principally con-
3We also observed in
Russell that the Act's legislative
history, like its statutory provisions, "emphasize[s] the
fiduciary's personal liability for losses
to the plan." 473
U. S., at 140, n. 8 (emphasis in original). We gleaned from the
legislative history that "the crucible of congressional concern was
misuse and mismanagement of plan assets by plan administrators and
that ERISA was designed to prevent these abuses in the future."
Id., at 141, n. 8.
525
cerned with "the financial integrity of the plan,"
id.,
at 142, n. 9, is thus reflected not only in § 409, but throughout
the fiduciary provisions § 409 enforces.4
Thus, though the majority finds
Russell to be irrelevant,
it is all but dispositive. We analyzed in that case all of the
provisions the Court today holds to be enforceable through §
502(a)(3). We considered these provisions as part of our
"contextual reading" of § 409, and only when we read § 409 in
conjunction with these surrounding provisions did it become
"abundantly clear that [§ 409's] draftsmen were primarily concerned
with the possible misuse of plan assets, and with remedies that
would protect the entire plan, rather than with the rights of an
individual beneficiary."
Russell, supra, at 142. This is not
to say that Congress did not intend to protect plan participants
from fiduciary breach; it surely did. Congress chose, however, to
protect individuals by creating a single remedy on behalf of the
plan rather than authorizing piecemeal suits for individual
relief.
Given Congress' apparent intent to allow suit for breach of
fiduciary duty exclusively under §§ 409 and 502(a)(2), and given
the abundant evidence of Congress' intent to authorize only relief
on behalf of the plan, I would hold that individual relief for
fiduciary breach is unavailable under § 502(a)(3).
4 The majority's citation of § 502(1), 29 U. S. C. § 1132(l)
(1988 ed., Supp.
I), in support of its interpretation of § 502(a)(3) is
unpersuasive. Section 502(1) was enacted by Congress in 1989, more
than a decade after ERISA was initially enacted. We have recognized
that in interpreting ERISA, as with all statutes, "'the views of a
subsequent Congress form a hazardous basis for inferring the intent
of an earlier one.'''
Firestone Tire & Rubber
Co. v.
Bruch, 489 U. S. 101, 114 (1989)
(quoting
United States v.
Price, 361 U. S. 304, 313
(1960)). See also
Mackey v.
Lanier Collection Agency
&
Service, Inc., 486 U. S. 825, 839-840
(1988). In any event, to the extent that § 502(1) indicates
Congress' understanding (in 1989) that individual relief might be
available for fiduciary breach, § 502(1) confirms that Congress did
not believe that § 502(a)(3) affords such relief. That is the most
reasonable inference from Congress' citation of §§ 502(a)(2) and
(a)(5)-and, notably, not of § 502(a)(3)-in reference to statutes
purportedly authorizing amounts to be paid to plan participants and
beneficiaries.
526
II
Even assuming that ERISA authorizes recovery for breach of
fiduciary duty by individual plan participants, I cannot agree with
the majority that Varity committed any breach of fiduciary duty
cognizable under ERISA. Section 3(21)(A) of the Act explicitly
defines the extent to which a person will be considered a fiduciary
under ERISA. See 29 U. S. C. § 1002(21)(A). In place of the
statutory language, the majority creates its own standard for
determining fiduciary status. But constrained, as I am, to follow
the command of the statute, I conclude that Varity's conduct is not
actionable as a fiduciary breach under the Act.5
A
Under ERISA, an employer is permitted to act both as plan
sponsor and plan administrator. § 408(c)(3), 29 U. S. C. §
l108(c)(3) (1988 ed.). Employers who choose to administer their own
plans assume responsibilities to both the company and the plan,
and, accordingly, owe duties of loyalty and care to both entities.
In permitting such arrangements, which ordinary trust law generally
forbids due to the inherent potential for conflict of interest,6
Congress understood that the
5 As explained
supra, at 524, the principal duties that
ERISA imposes on plan fiduciaries involve the management of plan
assets, the maintenance of records, disclosure of specified
information, and avoidance of conflicts of interest. See
Massachusetts Mut. Life Ins. Co. v.
Russell, 473 U. S. 134, 142-143
(1985). Accordingly, we have recognized that "[f]iduciary status
under ERISA generally attends the management of 'plan assets.'''
John Hancock Mut. Life Ins. Co. v.
Harris Trust and Sav.
Bank, 510 U. S.
86, 89 (1993). However, since the Court holds that individual
plan participants are entitled to recover for breach of fiduciary
duty, I proceed here on the assumption that fiduciary status can be
predicated to some extent on interactions with individual plan
participants.
6 See
NLRB v.
Amax Coal Co., 453 U. S. 322, 329-330
(1981) ("To deter the trustee from all temptation and to prevent
any possible injury to the beneficiary, the rule against a trustee
dividing his loyalties must be enforced with 'uncompromising
rigidity.' A fiduciary cannot contend 'that,
527
interests of the plan might be sacrificed if an employer were
forced to choose between the company and the plan. Hence, Congress
imposed on plan administrators a duty of care that requires them to
"discharge [their] duties with respect to a plan solely in the
interest of the participants and beneficiaries." § 404(a)(1).
Congress also understood, however, that virtually every business
decision an employer makes can have an adverse impact on the plan,
and that an employer would not be able to run a company profitably
if every business decision had to be made in the best interests of
plan participants.
In defining the term "fiduciary" in § 3(21)(A) of ERISA,
Congress struck a balance that it believed would protect plan
participants without impinging on the ability of employers to make
business decisions. In recognition that ERISA allows
trustee-beneficiary arrangements that the common law of trusts
generally forbids, Congress "define[d] 'fiduciary' not in terms of
formal trusteeship, but in
functional terms of control and
authority over the plan."
Mertens, 508 U. S., at 262
(emphasis in original). Accordingly, under ERISA, a person "is a
fiduciary with respect to a plan" only "to the extent" that "he has
any discretionary authority or discretionary responsibility in the
administration of such plan." § 3(21)(A)(iii), 29 U. S. C. §
1002(21)(A)(iii) (1988 ed.).7 This
although he had conflicting interests, he served his masters
equally well or that his primary loyalty was not weakened by the
pull of his secondary one''') (citations omitted). See also G.
Bogert & G. Bogert, Law of Trusts and Trustees §§ 121, 543
(rev. 2d ed. 1993).
7 A person is also a "fiduciary with respect to a plan" under
ERISA "to the extent (i) he exercises any discretionary authority
or discretionary control respecting management of such plan or
exercises any authority or control respecting management or
disposition of its assets, [or] (ii) he renders investment advice
for a fee or other compensation, direct or indirect, with respect
to any moneys or other property of such plan, or has any authority
or responsibility to do so." §3(21)(A), 29 U. S. C. § 1002(21)(A).
In this case, the parties agree that Varity's status as a fiduciary
turns on an interpretation of the statute's third category,
which
528
"artificial definition of 'fiduciary,'"
Mertens, supra,
at 255, n. 5, is designed, in part, so that an employer that
administers its own plan is not a fiduciary to the plan for all
purposes and at all times, but only to the extent that it has
discretionary authority to administer the plan. When the employer
is not acting as plan administrator, it is not a fiduciary under
the Act, and the fiduciary duty of care codified in § 404 is not
activated.
Though we have recognized that Congress borrowed from the common
law of trusts in enacting ERISA,
Firestone Tire &
Rubber Co. v.
Bruch, 489 U. S. 101, 111
(1989), we must not forget that ERISA is a statute, and in "'every
case involving construction of a statute,'" the" 'starting point
... is the language itself.'"
Ernst &
Ernst v.
Hochfelder, 425 U. S. 185, 197 (1976)
(citation omitted); see
Central Bank of Denver, N.
A.
v.
First Interstate Bank of Denver, N.
A., 511 U. S. 164, 173
(1994). We should be particularly careful to abide by the statutory
text in this case, since, as explained, ERISA's statutory
definition of a fiduciary departs from the common law in an
important respect. The majority, however, tells us that the
"starting point" in determining fiduciary status under ERISA is the
common law of trusts.
Ante, at 497. According to the
majority, it is only "after" courts assess the common law that they
may "go on" to consider the statutory definition, and even then the
statutory inquiry is only "to ask whether, or to what extent, the
language of the statute, its structure, or its purposes require
departing from common-law trust requirements."
Ibid. This is
a novel approach to statutory construction, one that stands our
traditional approach on its head.
To determine whether an employer acts as a fiduciary under
ERISA, I begin with the text of § 3(21)(A)(iii). To "administer" a
plan is to "manage or supervise the execution
relates to plan administration. See Brief for Petitioner 31;
Brief for Respondents 33. See also Brief for United States as
Amicus Curiae 25.
529
... or conduct of" the plan. Webster's Ninth New Collegiate
Dictionary 57 (1991). See also Webster's New International
Dictionary 34 (2d ed. 1957) (same). Essentially, to administer the
plan is to implement its provisions and to carry out plan duties
imposed by the Act. The question in this case is whether Varity was
carrying out discretionary responsibilities over management or
implementation of the plan, when, as respondents argued below, it
"made misrepresentations to the class plaintiffs about MCC's
business prospects and about the anticipated effect of the
employment transfers on plaintiffs' benefits." Brief for
PlaintiffsAppellees in No. 93-2056 (CA8), p. 27. Although
representations of this sort may well affect plan participants'
assessment of the security of their benefits, I disagree with the
majority that such communications qualify as "plan administration"
under the Act.
In the course of running a business, an employer that
administers its own benefits plan will make countless business
decisions that affect the plan. Congress made clear in § 3(21)(A),
however, that "'ERISA does not require that "day-to-day corporate
business transactions, which may have a collateral effect on
prospective, contingent employee benefits, be performed solely in
the interest of plan participants."'"
Adams v.
Avondale
Industries, Inc., 905 F.2d
943, 947 (CA6) (citation omitted), cert. denied, 498 U. S. 984
(1990). Thus, ordinary business decisions, such as whether to pay a
dividend or to incur debt, may be made without fear of liability
for breach of fiduciary duty under ERISA, even though they may turn
out to have negative consequences for plan participants. Even
business decisions that directly affect the plan and plan
participants, such as the decision to modify or terminate welfare
benefits, are not governed by ERISA's fiduciary obligations because
they do not involve discretionary administration of the plan. See
CurtissWright Corp. v.
Schoonejongen, 514 U. S. 73, 78 (1995)
(par-
530
enthetically quoting
Adams, supra, at 947, for the
proposition that "'a company does not act in a fiduciary capacity
when deciding to amend or terminate a welfare benefits plan' "). In
contrast, the discretionary interpretation of a plan term, or the
discretionary determination that the plan does not authorize a
certain type of procedure, would likely qualify as plan
administration by a fiduciary. There is no claim in this case,
however, that Varity failed to implement the plan according to its
terms, since respondents actually received all of the benefits to
which they were entitled under the plan, as the courts below
found.
An employer will also make countless representations in the
course of managing a business about the current and expected
financial condition of the corporation.8 Similarly, an employer may
make representations that either directly or impliedly evince an
intention to increase, decrease, or maintain employee welfare
benefits. Like the decision to terminate or modify welfare
benefits, the decision to make, or not to make, such
representations is made in the employer's "corporate nonfiduciary
capacity as plan sponsor or settlor,"
Borst v.
Chevron
Corp., 36 F.3d
1308, 1323, n. 28 (CA5 1994), cert. denied, 514 U. S. 1066
(1995), and ERISA's fiduciary rules do not apply. Such
communications simply are not made in the course of implementing
the plan or executing its terms. Rather, they are the necessary
incidents of conducting a business, and Congress determined that
employers
8The statements Varity made in this case are typical of the kind
of statements management often makes in assessing the expected
financial health of the company. See App. 80 ("I believe that with
the continued help and support of you we can make Massey Combines
Corporation the kind of successful business enterprise which we all
want to work for");
ibid. ("[D]espite the depression which
persists in the North American economy, I am excited about the
future of Massey Combines Corporation");
id., at 82 ("We are
all very optimistic that our new company, has a bright future, and
are excited by the new challenges facing all of us").
531
would not be burdened with fiduciary obligations to the plan
when engaging in such conduct. See § 3(21)(A)(iii).9
To be sure, ERISA does impose a "comprehensive set of 'reporting
and disclosure' requirements," which is part of "an elaborate
scheme ... for enabling beneficiaries to learn their rights and
obligations at any time."
Curtiss-Wright Corp. v.
Schoonejongen, supra, at 83; see §§ 101-111, 29 U. S. c. §§
1021-1031.10 But no provision of ERISA requires an employer to keep
plan participants abreast of the plan sponsor's
9 Applying ERISA's fiduciary obligations to these types of
communications will distort corporate decisionmaking in a way never
intended by Congress. For instance, as petitioner observes, an
employer contemplating the purchase of a competitor or the
downsizing of a division "would be required, in order to avoid
liability under ERISA, to fully describe [to its employees] its
plans to do so because such plans might affect the 'security' of
welfare benefits." Reply Brief for Petitioner 16, n. 20. Even if
the Court's holding is not extended to cover the nondisclosure of
information that might affect employee benefits, a simple inquiry
by an employee into the possible effect of a business decision on
plan benefits would be sufficient to saddle the employer with
fiduciary obligations in conducting the proposed business
transaction.
10 For instance, the benefits plan must be established pursuant
to a written instrument. § 402(a)(1), 29 U. S. C. § 1l02(a)(1).
Plan administrators must also furnish to participants a summary
plan description, § 101(a), 29 U. S. C. § 1021(a), which "shall be
written in a manner calculated to be understood by the average plan
participant, and shall be sufficiently accurate and comprehensive
to reasonably apprise such participants and beneficiaries of their
rights and obligations under the plan." § 102(a)(1), 29 U. S. C. §
1022(a)(1). The summary plan description must describe, among other
things, the plan's requirements governing eligibility for
participation and benefits as well as the procedures for presenting
claims for benefits. § 102(b), 29 U. S. C. § 1022(b). Material
modifications must be disclosed and must also be "written in a
manner calculated to be understood by the average plan
participant." § 102(a)(1). Plan administrators are also required to
disclose specified financial information in annual reports filed
with the Secretary of Labor and made available to participants upon
request. §§ 103(b), 104(b), 29 U. S. C. §§ 1023(b), 1024(b). ERISA
also dictates the times at which such disclosures must be made. §
104(b)(1).
532
financial security or of the sponsor's future intentions with
regard to terminating or reducing the level of benefits.ll And to
the extent that ERISA does impose disclosure obligations, the Act
already provides for civil liability and penalties for disclosure
violations wholly apart from ERISA's provisions governing fiduciary
duties. See §§ 502(a)(1)(A), 502(c). Though "[t]his may not be a
foolproof informational scheme, ... it is quite thorough."
Curtiss-Wright Corp., supra, at 84. Congress' decision not
to include the types of representations at issue in this case
within the Act's extensive disclosure requirements is strong
evidence that Congress did not consider such statements to qualify
as "plan administration." 12
11 To the contrary, "[e]mployers or other plan sponsors are
generally free under ERISA, for any reason at any time, to adopt,
modify, or terminate welfare plans."
Curtiss-Wright Corp. v.
Schoonejongen, 514 U. S. 73, 78 (1995).
As we made clear last Term, "ERISA does not create any substantive
entitlement to employer-provided health benefits or any other kind
of welfare benefits," nor does it "establish any minimum
participation, vesting, or funding requirements for welfare plans
as it does for pension plans."
Ibid.
12 Nor is the communication of information about the company's
wellbeing or the possible effect of a business transaction on plan
benefits considered plan administration under the Massey-Ferguson
plan at issue in this case. The plan, the terms of which the
majority fails to address, contains only two provisions that either
require or authorize plan administrators to communicate plan
information to plan participants. The first is contained in §
8.1.3, and it requires the plan administrator to make all
disclosures required by ERISA. See App. 19 (requiring plan
administrator to file required reports with the appropriate
governmental agencies and to "comply with requirements of law for
disclosure of Plan provisions and other information relating to the
Plan to Employees and other interested parties"). The second,
entitled
"Communication to Employees," is contained in § 10
of the plan. That section requires the company, "[i]n accordance
with the requirements of the Act, [to] communicate the principal
terms of the Plan to the Employees" and to "make available for
inspection, by Employees and their beneficiaries, during reasonable
hours at the principal office of the Company and at such other
places as may be required by the Act, a copy of the Plan, the Trust
Agreement, and of such other documents as may be required by the
Act."
Id., at 21. The only other responsibility the plan
expressly delegates to the plan administrator
533
Because an employer's representations about the company's
financial prospects or about the possible impact of ordinary
business transactions on the security of unvested welfare benefits
do not involve execution or implementation of duties imposed by the
plan or the Act, and because these are the types of representations
employers regularly make in the ordinary course of running a
business, I would not hold that such communications involve plan
administration. The untruthfulness of a statement cannot magically
transform it from a nonfiduciary representation into a fiduciary
one; the determinative factor is not truthfulness but the capacity
in which the statement is made.
B
With only passing reference to the relevant statutory text, the
majority discards the limits that Congress imposed on fiduciary
status and replaces them with a far broader standard plucked from
the common law of trusts. See
ante, at 502. Relying on trust
treatises and our decision in
Central States, Southeast
&
Southwest Areas Pension Fund v.
Central Transport,
Inc., 472 U. S.
559 (1985), the majority concludes that a person engages in
plan administration whenever he exercises "'powers as are necessary
or appropriate for the carrying out of the purposes' of the trust."
Ante, at
is the administration of claims pursuant to the plan's claims
procedure, which is described in § 11 of the plan. See generally
id., at 18-20 (section of plan entitled
"Allocation of
Responsibilities Among Named Fiduciaries," which enumerates all
of the fiduciary obligations imposed by the plan).
Though I do not claim that plan administration is necessarily
limited to performance of duties imposed by the plan documents, see
ante, at 504, the majority's response to this straw man
argument-that ERISA's fiduciary obligations would be meaningless if
only the performance of duties imposed by the plan qualified as
plan administration-is nonetheless flawed. The majority's argument
is based on the mistaken assumption that a plan cannot assign
discretionary authority to plan administrators (the exercise of
which would clearly be subject to fiduciary duties under the Act),
an assumption flatly contradicted both by the common law of trusts
and by common sense. See Bogert & Bogert,
supra n. 6, §
552.
534
502 (quoting 3 A. Scott & W. Fratcher, Law of Trusts §
186,
The majority's approach is flawed in at least two respects.
First, the standard that it borrows from the common law of
trusts is not the common-law standard for determining whether a
person is a fiduciary. Rather, it is the standard the common law
uses to define the scope of a fiduciary's authority once it is
settled that a person is a fiduciary. Thus, the Court inexplicably
takes a common-law standard that presumes that a person is a
fiduciary and applies it to determine whether, under the statute,
that person is a fiduciary in the first place. The majority's
approach ignores the patent differences between the definition of a
fiduciary under ERISA and the common law, and in the process
expands the activities that are governed by fiduciary standards
beyond those designated by the statutory text.14
13 Also, the majority twice looks to § 404(a) in attempting to
determine the scope of fiduciary status under ERISA. See
ante, at 502, 511. Specifically, the majority relies on §
404(a)(1)(D), which requires a fiduciary to discharge his duties
"in accordance with the documents and instruments governing the
plan." But § 404(a)(1)(D) does not determine whether a person is
acting as a fiduciary. Like the other provisions of § 404, it
merely establishes a ground rule for functions performed by a
person deemed to be a fiduciary under § 3(21)(A). The majority
cannot rely on § 404(a)(1)(D) to determine whether a person has
assumed fiduciary status, since that provision applies only after
it has been established that a person is a fiduciary.
14 The majority's reliance on
Central States, Southeast
&
Southwest Areas Pension Fund v.
Central Transport,
Inc., 472 U. S.
559 (1985) (cited
ante, at 502), illustrates the flaw in
the majority's approach. Although we quoted there the same passage
from the Scott treatise that the majority substitutes for the text
of § 3(21)(A), see
Central States, supra, at 570, the Court
was not attempting to determine in that case, as we are here,
whether a person was acting as a fiduciary with respect to a plan
under § 3(21)(A). There was no question that the trustee in
Central States was a fiduciary under § 3(21)(A), and there
was no question that the audit the trustees wished to perform was a
fiduciary function. The only question in
Central States was
whether the plan trustees, who were admittedly
535
Second, the majority disregards any possible distinction between
the respective roles of an ERISA trustee and an ERISA plan
administrator that might counsel against the wholesale importation,
into the statutory definition of plan administration, of common-law
rules governing trustees. Under ERISA, a plan trustee is charged
with "exclusive authority and discretion to manage and control the
assets of the plan." § 403, 29 U. S. C. § 1103. Because the
trustee's authority over plan assets is exclusive, a plan
administrator under ERISA lacks the pre-eminent responsibility of
the common-law trustee, namely, the management of the trust corpus.
Thus, while it may be true under the common law that a trustee has
such powers as are necessary to further the purposes of the trust,
it does not automatically follow that the administrator of a
benefits plan (who by definition lacks authority over plan assets)
possesses all authority "necessary or appropriate" for carrying out
the purposes of the plan. And the majority cites no authority for
its assumption that an ERISA plan administrator is the functional
equivalent of a common-law trustee. See
ante, at 502, 505,
506.
At bottom, the majority's analysis is an exercise in question
begging. If speculating about the company's financial stability or
the security of plan benefits does not involve discretionary
authority in plan administration, it is wholly irrelevant that
providing such information "would seem" to be related to "carrying
out an important plan purpose."
Ante, at 502. That a
communication was "about benefits,"
ante, at 501, or an
activity was of a "plan-related nature,"
ante, at 503, is
also of little significance unless the act involved plan
administration. The whole purpose of § 3(21)(A)(iii) is to
fiduciaries, were authorized by the plan to perform this
concededly fiduciary function. Like the common-law principle cited
therein, the
Central States dicta only becomes relevant once
it is settled that a person is a fiduciary.
536
make clear that one who engages even in benefit-related or
plan-related conduct is a fiduciary only "to the extent" he has
discretionary authority to administer the plan. See
John Hancock
Mut. Life Ins. Co. v.
Harris Trust and Sav. Bank,
510 U. S. 86,
104-105 (1993) (Congress uses the phrase "to the extent" to make
clear that "to
some extent" actions that would otherwise be
included in a general category were meant to be excluded). The
majority's end run around this important limitation by reference to
inapplicable principles from the common law of trusts is
unpersuasive.
The majority confirms that the statutory text is largely
irrelevant under its approach by indulging the notion that a plan
participant's subjective understanding of the employers' conduct is
relevant in determining whether an employer's actions qualify as
"plan administration" under ERISA. The majority concludes that
Varity was engaged in plan administration in part on the ground
that "reasonable employees ... could have thought" that Varity was
administering the plan.
Ante, at 503. ERISA does not make a
person a fiduciary to the extent reasonable employees believe him
to be a fiduciary, but rather to the extent "he has any
discretionary authority or discretionary responsibility in the
administration of such plan." § 3(21)(A)(iii). Under ERISA, an act
either involves plan administration, or it does not; whether the
employees have a subjective belief that the employer is acting as a
fiduciary cannot matter. A rule turning on the subjective
perceptions of plan participants is simply inconsistent with
ERISA's fundamental structure, which is built not upon perceptions,
but "around reliance on the face of written plan documents."
Curtiss-Wright Corp., 514 U. S., at 83.15
15 As petitioner observed: "It is difficult to imagine a
situation involving
any communication in any 'context' as to
future business decisions that might affect a participant's benefit
choices that could not 'reasonably' be viewed by employees as an
act of a plan administrator, especially when employees directly ask
about such intentions." Reply Brief for Petitioner 18 (emphasis in
original).
537
C
Finally, the majority's conclusion that a fiduciary duty was
breached is based upon an inaccurate assessment of the record in
this case. It is true that Varity expressed falsely optimistic
forecasts about its new venture's prospects for success in an
effort to entice employees to transfer to the new company. But the
majority, I believe, tells only part of the story when it states
that "the basic message conveyed to the employees was that
transferring from Massey-Ferguson to Massey Combines would not
significantly undermine the security of their benefits."
Ante, at 501. As I read the record, the message Varity
conveyed was that the security of jobs and benefits would be
contingent upon the success of the new company. Varity repeatedly
informed its employees that "[e]mployment conditions in the future
will depend on our ability to make Massey Combines Corporation a
success and
if changes are considered necessary or appropriate,
they will be made." App. 76 (emphasis added).16 The majority
also fails to note that the plan documents expressly reserved to
Varity the right "[t]o Terminate, Suspend, Withdraw, Amend or
Modify the Plan in Whole or in Part."
Id.,
16 See also App. 80 (transcript of videotape message to
employees) (''When you transfer your employment to the Massey
Combines Corporation, pay levels and benefit programs will remain
unchanged .... Employment conditions in the future will depend on
the success of the Massey Combines Corporation and should changes
be deemed appropriate or necessary, they will be made");
id., at 82 (cover letter to employees) (''When you accept
employment with Massey Combines Corporation, pay levels and benefit
programs will remain unchanged .... Employment conditions in the
future will depend on our ability to make Massey Combines
Corporation a success, and if changes are considered necessary or
appropriate, they will be made").
When read in light of the District Court's finding that the
combines industry had been in a state of "unprecedented decline
[for the four years prior to the creation of MCC] ... caused in
significant part by an extreme depression in this country's
agricultural economy," App. to Pet. for Cert. 53a, the company's
qualifications take on even greater significance.
538
at 43. The Court thus holds today that an employer breaches a
fiduciary obligation to participants in an ERISA plan when it makes
optimistic statements about the company's financial condition and
thereby implies that unvested welfare benefits will be secure, even
though the employer simultaneously informs plan participants that
changes will be made if economic conditions so require and the plan
documents expressly authorize the employer to terminate the
unvested welfare benefits at any time. I cannot agree with this
result.
III
I do not read the Court's opinion to extend fiduciary liability
to all instances in which the Court's rationale would logically
apply. Indeed, the Court's awkward articulation of its holding
confirms that this case is quite limited. See
ante, at 503
("We conclude ... that the factual context in which the statements
were made, combined with the plan-related nature of the activity,
engaged in by those who had planrelated authority to do so,
together provide sufficient support for the District Court's legal
conclusion that Varity was acting as a fiduciary");
ante, at
505 ("[W]e hold that making intentional representations about the
future of plan benefits
in that context is an act of plan
administration") (emphasis added).
If not limited to cases involving facts similar to those
presented in this case, the Court's expansion of recovery for
fiduciary breach to individuals and its substantial broadening of
the definition of fiduciary will undermine the careful balance
Congress struck in enacting ERISA. See
Pilot Life Ins. Co.
v.
Dedeaux, 481 U. S., at 54 (ERISA's "civil enforcement
scheme ... represents a careful balancing of the need for prompt
and fair claims settlement procedures against the public interest
in encouraging the formation of employee benefit plans");
Mertens, 508 U. S., at 262-263. Although Congress sought to
guarantee that employees receive the welfare benefits promised by
employers, Congress was also
539
aware that if the cost of providing welfare benefits rose too
high, employers would not provide them at all. See
Russell,
473 U. S., at 148, n. 17 (warning against expanding liability
beyond that intended by Congress, "lest the cost of federal
standards discourage the growth of private pension plans")
(citation omitted);
Hozier v.
Midwest Fasteners, Inc.,
908 F. 2d 1155, 1170 (CA3 1990) (recognizing "Congress's
judgment that employees themselves are best served by an
enforcement regime that minimizes employers' expected liability for
reporting and disclosure violations-and with it, the disincentives
against creating employee benefit plans in the first place")P
Application of the Court's holding in the many cases in which it
may logically apply could result in significantly increased
liability, or at the very least heightened litigation costs, and an
eventual reduction in plan benefits to accommodate those costs.
Fortunately, the import of the Court's holdings appears to be far
more modest, and courts should not feel compelled to bind employers
to the strict fiduciary standards of ERISA just because an ordinary
business decision turns out to have an adverse impact on the
plan.
I respectfully dissent.
17 That is presumably why Congress exempted welfare benefits
from the stringent, and costly, vesting requirements imposed on
pension benefits. See
Curtiss-Wright Corp., 514 U. S., at
78.
540
The next page is purposely numbered 801. The numbers between 539
and 801 were intentionally omitted, in order to make it possible to
publish the orders with
permanent page numbers, thus making
the official citations available upon publication of the
preliminary prints of the United States Reports.
541
OCTOBER 2, 1995
Affirmed on Appeal
No. 94-1922. RURAL WEST TENNESSEE AFRICAN-AMERICAN AFFAIRS
COUNCIL, INC., ET AL.
V. SUNDQUIST, GOVERNOR OF TENNESSEE,
ET AL. Affirmed on appeal from D. C. W. D. Tenn. JUSTICE STEVENS
would note probable jurisdiction and set case for oral argument.
Reported below: 877 F. Supp. 1096.
Appeal Dismissed
No. 95-132. VOINOVICH, GOVERNOR OF OHIO, ET AL.
V.
QUILTER, SPEAKER PRO TEMPORE OF OHIO HOUSE OF REPRESENTATIVES,
ET AL. Appeal from D. C. N. D. Ohio dismissed. The stay granted by
this Court on September 8, 1995 [515 U. S. 1184], is continued
pending final disposition by this Court of the appeal in No.
95-378,
Voinovich, Governor of Ohio, et al. v.
Quilter,
Speaker Pro Tempore of Ohio House of Representatives, et
al.
Vacated and Remanded on Appeal
No. 94-2032. FRANKLIN ET AL.
V. LAWRIMORE ET AL. Appeal
from D. C. S. C. Judgment vacated and case remanded to the District
Court for entry of a fresh judgment from which a timely appeal may
be taken to the United States Court of Appeals for the Fourth
Circuit.
Certiorari Granted-Vacated and Remanded
No. 94-1871. EXXON CORP.
V. YOUELL ET AL. C. A. 2d
Cir.
Certiorari granted, judgment vacated, and case remanded for
further consideration in light of
Wilton v.
Seven Falls
Co., 515 U. S.
277 (1995). JUSTICE BREYER took no part in the consideration or
decision of this case. Reported below:
48 F.3d
105.
No. 94-1926. KAPOOR
V. UNITED STATES. C. A. 2d Cir.
Certiorari granted, judgment vacated, and case remanded for further
801
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