921 F.3d 1200
10th Cir.2019Background
- Great‑West Life offers the Key Guaranteed Portfolio Fund (KGPF), a stable‑value fund that guarantees principal and credited interest; it invests participant contributions in Great‑West’s general account and sets a quarterly “Credited Rate.”
- Participants can transfer out principal and accrued interest from the KGPF at any time without a fee; contracts permit Great‑West to defer payout to a terminating plan for up to 12 months and to prohibit plans from offering competing stable‑value or money‑market options alongside the KGPF.
- Plaintiff John Teets (class of ~270,000 KGPF participants) sued under ERISA alleging (1) Great‑West is a functional fiduciary that breached duties by setting a low Credited Rate and retaining the spread, and (2) alternatively, Great‑West is a non‑fiduciary party in interest that participated in a prohibited transaction and must disgorge profits.
- The district court granted summary judgment for Great‑West on both fiduciary and non‑fiduciary claims; the Tenth Circuit affirms on summary judgment review.
- The court’s analysis focuses on (a) whether Great‑West exercised ERISA § 3(21)(A) “authority or control” over plan assets or compensation (functional fiduciary inquiry) and (b) whether Teets presented an equitable remedy available under § 502(a)(3) (traceability/constructive‑trust/accounting issues).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Great‑West is a functional fiduciary by setting the quarterly Credited Rate | Teets: Great‑West unilaterally sets the rate without plan/participant approval, so it exercises control over plan assets | Great‑West: Rate setting follows contract terms and participants/plans can reject by withdrawing; no unilateral, exercised power to force terms | Not a fiduciary — plaintiff failed to show plans/participants were unable to reject the rate (no evidence Great‑West exercised waiting period or that participants were effectively locked in). |
| Whether Great‑West’s control over the Credited Rate makes it a fiduciary as to its compensation | Teets: Credited Rate determines Great‑West’s margin, thus it controls compensation | Great‑West: Compensation depends on market returns and participants’ choices; any effect of rate on margin is indirect and attenuated | Not a fiduciary as to compensation — no demonstrated unilateral control over compensation. |
| Whether Great‑West’s contract terms (12‑month payout deferral; ban on competing funds) prevented meaningful rejection of rate | Teets: Contract options and non‑compete effectively lock in plans/participants | Great‑West: Options are contractual but unexercised; many plans terminated KGPF; participants can withdraw without penalty | Court: No evidence these contractual provisions were used or deterred withdrawals; speculative rights insufficient to create fiduciary duty. |
| Whether Teets can obtain equitable relief (disgorgement/accounting) against a non‑fiduciary party in interest | Teets: Disgorgement and accounting are equitable remedies; tracing of a specific res is not required to disgorge profits | Great‑West: Plaintiff cannot identify particular property/res in Great‑West’s possession traceable to plan assets; remedy sought is effectively monetary damages | Summary judgment affirmed — Teets failed to identify a particular res or traceable property; §502(a)(3) equitable relief unavailable without traceable property (and he waived injunctive remedy). |
Key Cases Cited
- Mertens v. Hewitt Assocs., 508 U.S. 248 (1993) (ERISA § 502(a)(3) limited to traditional equitable relief, not compensatory damages)
- John Hancock Mut. Life Ins. Co. v. Harris Trust & Sav. Bank, 510 U.S. 86 (1993) (Congress imposed fiduciary standards on persons affecting plan benefits)
- Salomon v. Salomon Smith Barney (Harris Tr. & Sav. Bank v. Salomon Smith Barney, Inc.), 530 U.S. 238 (2000) (non‑fiduciary party in interest liable only with actual or constructive knowledge of unlawfulness of transaction)
- Knudson v. Great‑West Life & Annuity Ins. Co., 534 U.S. 204 (2002) (equitable restitution under § 502(a)(3) requires identifiable, traceable res for constructive trust or equitable lien)
- Montanile v. Board of Trustees of Nat’l Elevator Indus. Health Benefit Plan, 136 S. Ct. 651 (2016) (commingled or dissipated funds limit availability of equitable relief against defendant’s general assets)
- Coldesina v. Estate of Simper, 407 F.3d 1126 (10th Cir. 2005) (describing functional fiduciary standard under ERISA § 3(21)(A))
- Chicago Board Options Exch. v. Connecticut General Life Ins. Co., 713 F.2d 254 (7th Cir. 1983) (contractual or unilateral power to limit withdrawals can create fiduciary duties)