MASSACHUSETTS MUTUAL LIFE INSURANCE CO. ET AL. v. RUSSELL
No. 84-9
Supreme Court of the United States
June 27, 1985
Reargued April 24, 1985
473 U.S. 134
John E. Nolan, Jr., reargued the cause for petitioners. With him on the briefs were Paul J. Ondrasik, Jr., Antonia B. Ianniello, Richard T. Davis, Jr., and David L. Bacon.
Brad N. Baker reargued the cause and filed a brief for respondent.*
*Briefs of amici curiae urging reversal were filed for the Alaska Fishermen‘s Union-Salmon Canners Pension Trust et al. by Thomas J. Hart and Richard P. Donaldson; for the American Council of Life Insurance and Health Insurance Association of America by Erwin N. Griswold, Jack H. Blaine, and Edward J. Zimmerman; for the Board of Trustees of the Northern California Carpenters Trust Funds et al. by Thomas E. Stanton and Donald S. Tayer; for the Motion Picture Health and Welfare Fund by William L. Cole; for the Pipe Trust et al. by Stuart H. Young, Jr.; for the Construction Laborers Pension Trust for Southern California et al. by James P. Watson, George M. Cox, John S. Miller, Jr., and Lionel Richman. Carl B. Frankel and Bernard Kleiman filed a brief for the United Steelworkers of America, AFL-CIO: CLC, as amicus curiae urging affirmance.
The question presented for decision is whether, under the
Respondent Doris Russell, a claims examiner for petitioner Massachusetts Mutual Life Insurance Company (hereafter petitioner), is a beneficiary under two employee benefit plans administered by petitioner for eligible employees. Both plans are funded from the general assets of petitioner and both are governed by ERISA.
In May 1979 respondent became disabled with a back ailment. She received plan benefits until October 17, 1979, when, based on the report of an orthopedic surgeon, petitioner‘s disability committee terminated her benefits. On October 22, 1979, she requested internal review of that decision and, on November 27, 1979, submitted a report from her own psychiatrist indicating that she suffered from a psychosomatic disability with physical manifestations rather than an orthopedic illness. After an examination by a second psychiatrist on February 15, 1980, had confirmed that respondent was temporarily disabled, the plan administrator reinstated her benefits on March 11, 1980. Two days later retroactive benefits were paid in full.1
Although respondent has been paid all benefits to which she is contractually entitled, she claims to have been injured by the improper refusal to pay benefits from October 17, 1979, when her benefits were terminated, to March 11, 1980, when her eligibility was restored. Among other allegations, she asserts that the fiduciaries administering petitioner‘s employee benefit plans are high-ranking company officials who
Petitioner removed the case to the United States District Court for the Central District of California and moved for summary judgment. The District Court granted the motion, holding that the state-law claims were pre-empted by ERISA and that “ERISA bars any claims for extra-contractual damages and punitive damages arising out of the original denial of plaintiff‘s claims for benefits under the Salary Continuance Plan and the subsequent review thereof.” App. to Pet. for Cert. 29a.
On appeal, the United States Court of Appeals for the Ninth Circuit affirmed in part and reversed in part. 722 F. 2d 482 (1983). Although it agreed with the District Court that respondent‘s state-law causes of action were pre-empted by ERISA, it held that her complaint alleged a cause of action under ERISA. See id., at 487-492. The court reasoned that the 132 days petitioner took to process respondent‘s claim violated the fiduciary‘s obligation to process claims in good faith and in a fair and diligent manner. Id., at
According to the Court of Appeals, the award of compensatory damages shall “remedy the wrong and make the aggrieved individual whole,” which meant not merely contractual damages for loss of plan benefits, but relief “that will compensate the injured party for all losses and injuries sustained as a direct and proximate cause of the breach of fiduciary duty,” including “damages for mental or emotional distress.” Id., at 490. Moreover, the liability under § 409(a) “is against the fiduciary personally, not the plan.” Id., at 490, n. 8.
The Court of Appeals also held that punitive damages could be recovered under § 409(a), although it decided that such an award is permitted only if the fiduciary “acted with actual malice or wanton indifference to the rights of a participant or beneficiary.” Id., at 492. The court believed that this result was supported by the text of § 409(a) and by the congressional purpose to provide broad remedies to redress and prevent violations of the Act.
We granted certiorari, 469 U. S. 816 (1984), to review both the compensatory and punitive components of the Court of Appeals’ holding that § 409 authorizes recovery of extra-contractual damages.4 Respondent defends the judgment of the Court of Appeals both on its reasoning that § 409 provides an express basis for extracontractual damages, as well as by arguing that in any event such a private remedy should be inferred under the analysis employed in Cort v. Ash, 422 U. S. 66, 78 (1975). We reject both arguments.
As its caption implies,
“(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 equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary. A fiduciary may also be removed for a violation of section 411 of this Act.”6
88 Stat. 886 ,29 U. S. C. § 1109(a) .
Sections 501 and 502 authorize, respectively, criminal and civil enforcement of the Act. While the former section provides for criminal penalties against any person who willfully violates any of the reporting and disclosure requirements of the Act,7 the latter section identifies six types of civil actions
“A civil action may be brought-
“(1) by a participant or beneficiary-
“(A) for the relief provided for in subsection (c) of this section, 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 ....”
88 Stat. 891 ,29 U. S. C. § 1132(a) .
There can be no disagreement with the Court of Appeals’ conclusion that § 502(a)(2) authorizes a beneficiary to bring an action against a fiduciary who has violated § 409. Petitioner contends, however, that recovery for a violation of § 409 inures to the benefit of the plan as a whole. We find this contention supported by the text of § 409, by the statutory provisions defining the duties of a fiduciary, and by the provisions defining the rights of a beneficiary.
The Court of Appeals’ opinion focused on the reference in § 409 to “such other equitable or remedial relief as the court may deem appropriate.” But when the entire section is examined, the emphasis on the relationship between the fiduciary and the plan as an entity becomes apparent. Thus, not only is the relevant fiduciary relationship characterized at the outset as one “with respect to a plan,” but the potential personal liability of the fiduciary is “to make good to such plan any losses to the plan ... and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan ....”8
reprinted in 3 Subcommittee on Labor and Public Welfare of the Senate Committee on Labor and Public Welfare, 94th Cong., 2d Sess., Legislative History of the Employee Retirement Income Security Act of 1974, p. 4587 (Comm. print 1976) (hereinafter Leg. Hist.); S. Rep. No. 93-383, pp. 8, 32, 105 (1973), 1 Leg. Hist. 1076, 1100, 1173; S. Rep. No. 93-127, p. 33 (1973), 1 Leg. Hist. 619.
The floor debate also reveals 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. See 120 Cong. Rec. 29932 (1974) (“[T]he legislation imposes strict fiduciary obligations on those who have discretion or responsibility respecting the management, handling, or disposition of pension or welfare plan assets“) (remarks of Sen. Williams), reprinted in 3 Leg. Hist. 4743; 120 Cong. Rec. 29951 (1974) (“This bill will establish judicially enforceable standards to insure honest, faithful, and competent management of pension and welfare funds“) (remarks of Sen. Bentsen), reprinted in 3 Leg. Hist. 4795; 120 Cong. Rec. 29954 (1974) (“[I]nstances have arisen in which pension funds have been used improperly by plan managers and fiduciaries. . . . [T]his bill contains measures designed to reduce substantially the potentialities for abuse“) (remarks of Sen. Nelson), reprinted in 3 Leg. Hist. 4803; 120 Cong. Rec. 29957 (1974) (“In addition, frequently the pension funds themselves are abused by those responsible for their management who manipulate them for their own purposes or make poor investments with them“) (remarks of Sen. Ribicoff), reprinted in 3 Leg. Hist. 4811; 120 Cong. Rec. 29957 (1974) (“[M]isuse, manipulation, and poor management of pension trust funds are all too frequent“) (remarks of Sen. Ribicoff), reprinted in 3 Leg. Hist. 4812; 120 Cong. Rec. 29961 (1974) (“This legislation . . . sets fiduciary standards to insure that pension funds are not mismanaged“) (remarks of Sen. Clark), reprinted in 3 Leg. Hist. 4823; 120 Cong. Rec. 29194 (1974) (ERISA contains “provisions to insure fair handling of a worker‘s money“) (remarks of Rep. Biaggi), reprinted in 3 Leg. Hist. 4661; 120 Cong. Rec. 29196-29197 (1974) (“These standards... will prevent abuses . . . by those dealing with plans“) (remarks of Rep. Dent), reprinted in 3 Leg. Hist. 4668; 120 Cong. Rec. 29206 (1974) (ERISA imposes “fiduciary and disclosure standards to guard against fraud and abuse of pension funds“) (remarks of Rep. Brademas), reprinted in 3 Leg. Hist. 4694.
It is of course true that the fiduciary obligations of plan administrators are to serve the interest of participants and beneficiaries and, specifically, to provide them with the benefits authorized by the plan. But 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 in-
Significantly, the statutory provision explicitly authorizing a beneficiary to bring an action to enforce his rights under the plan-
Relying on the four-factor analysis employed by the Court in Cort v. Ash, 422 U. S., at 78,13 respondent argues that a private right of action for extracontractual damages should be implied even if it is not expressly authorized by ERISA. Two of the four Cort factors unquestionably support respondent‘s claim: respondent is a member of the class for whose benefit the statute was enacted and, in view of the pre-emptive effect of ERISA, there is no state-law impediment to implying a remedy. But the two other factors-legislative intent and consistency with the legislative scheme-point in the opposite direction. And “unless this congressional intent can be inferred from the language of the statute, the statutory structure, or some other source, the essential predicate for implication of a private remedy simply does not exist.” Northwest Airlines, Inc. v. Transport Workers, 451 U. S. 77, 94 (1981). “The federal judiciary will not engraft a remedy on a statute, no matter how salutary, that Congress did not intend to provide.” California v. Sierra Club, 451 U. S. 287, 297 (1981).
The voluminous legislative history of the Act contradicts respondent‘s position. It is true that an early version of the
The six carefully integrated civil enforcement provisions found in § 502(a) of the statute as finally enacted, however, provide strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly. The 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.” Nachman Corp. v. Pension Benefit Guaranty Corporation, 446 U. S. 359, 361 (1980). If in this case, for example, the plan administrator had adhered to his initial determination that respondent was not entitled to disability benefits under the plan, respondent would have had a panoply of remedial devices at her disposal. To recover the
We are reluctant to tamper with an enforcement scheme crafted with such evident care as the one in ERISA. As we stated in Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U. S. 11, 19 (1979): “[W]here a statute expressly provides a particular remedy or remedies, a court must be chary of reading others into it.” See also Touche Ross & Co. v. Redington, 442 U. S. 560, 571-574 (1979). “The presumption that a remedy was deliberately omitted from a statute is strongest when Congress has enacted a comprehensive legislative scheme including an integrated system of procedures for enforcement.” Northwest Airlines, Inc. v. Transport Workers, 451 U. S., at 97.15
III
Thus, the relevant text of ERISA, the structure of the entire statute, and its legislative history all support the conclusion that in § 409(a) Congress did not provide, and did not intend the judiciary to imply, a cause of action for extracontractual damages caused by improper or untimely processing of benefit claims.
The judgment of the Court of Appeals is therefore
Reversed.
JUSTICE BRENNAN, with whom JUSTICE WHITE, JUSTICE MARSHALL, and JUSTICE BLACKMUN join, concurring in the judgment.
Section 502(a) of the
This case presents a single, narrow question: whether the § 409 “appropriate relief” referred to in § 502(a)(2) includes individual recovery by a participant or beneficiary of extracontractual damages for breach of fiduciary duty. The Court of Appeals for the Ninth Circuit held that, because § 409 broadly authorizes “such other equitable or remedial relief as the court may deem appropriate,” participants and benefi-
This does not resolve, of course, whether and to what extent extracontractual damages are available under § 502(a)(3). This question was not addressed by the courts below and was not briefed by the parties and amici. Thus the Court properly emphasizes that “we have no occasion to consider whether any other provision of ERISA authorizes recovery of extracontractual damages.” Ante, at 139, n. 5. Accordingly, we save for another day the questions (1) to what extent a fiduciary‘s mishandling of a claim might constitute an actionable breach of the fiduciary duties set forth in § 404(a), and (2) the nature and extent of the “appropriate equitable relief . . . to redress” such violations under § 502(a)(3).
There is dicta in the Court‘s opinion, however, that could be construed as sweeping more broadly than the narrow ground of resolution set forth above. Although the Court
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 equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary. A fiduciary may also be removed for a violation of section 411 of this Act.
“(b) No fiduciary shall be liable with respect to a breach of fiduciary duty under this title if such breach was committed before he became a fiduciary or after he ceased to be a fiduciary.”
Fiduciary Duties in Claims Administration
There is language in the Court‘s opinion that might be read as suggesting that the fiduciary duties imposed by ERISA on plan administrators for the most part run only to the plan itself, as opposed to individual beneficiaries. See ante, at 142-144. The Court apparently thinks there might be some significance in the fact that an administrator‘s fiduciary duties “are described in Part 4 of Title 1 of the Act . . . whereas the statutory provisions relating to claim procedures are found in Part 5.” Ante, at 143. Accordingly, the Court seems to believe that the duties and remedies associated with claims processing might be restricted to those explicitly spelled out in §§ 502(a)(1)(B) and 503. Ante, at 142-144.
To the extent the Court suggests that administrators might not be fully subject to strict fiduciary duties to participants and beneficiaries in the processing of their claims and
Moreover, the Court‘s suggestion concerning the distinction between Parts 4 and 5 of Title I is thoroughly unconvincing. Section 502(a)(3) authorizes the award of “appropriate equitable relief” directly to a participant or beneficiary to “redress” “any act or practice which violates any provision of this title or the terms of the plan.”9 This section and
administering the trust for the exclusive purposes previously enumerated, and in accordance with the documents and instruments governing the fund unless they are inconsistent with the fiduciary principles of the section.”
See also S. Rep. No. 93-127, pp. 28-29 (1973); H. R. Conf. Rep. No. 93-1280, p. 303 (1974) (“[T]he assets of the employee benefit plan are to be held for the exclusive benefit of participants and beneficiaries“); 120 Cong. Rec. 29932 (1974) (remarks of Sen. Williams); Central States Pension Fund v. Central Transport, Inc., 472 U. S. 559, 570 (1985) (“Congress invoked the common law of trusts to define the general scope of [fiduciary] authority and responsibility“); NLRB v. Amax Coal Co., 453 U. S. 322, 329 (1981) (“Where Congress uses terms that have accumulated settled meaning under either equity or the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms“); Leigh v. Engle, 727 F. 2d 113, 122 (CA7 1984); Donovan v. Mazzola, 716 F. 2d 1226, 1231 (CA9 1983); Sinai Hospital of Baltimore, Inc. v. National Benefit Fund For Hospital & Health Care Employees, 697 F. 2d 562, 565-566 (CA4 1982); Donovan v. Bierwirth, 680 F. 2d 263, 271 (CA2), cert. denied, 459 U. S. 1069 (1982).
Judicial Construction of ERISA
Russell argues that a private right of action for beneficiaries and participants should be read into § 409. Because the Court has concluded that Congress’ intent and ERISA‘S overall structure restrict the scope of § 409 to recovery on behalf of a plan, ante, at 139-142, such a private right is squarely barred under the standards set forth in Cort v. Ash, 422 U. S. 66, 78 (1975).11
and to “clarify rights to receive future benefits under the plan,” but also to obtain other “relief from breach of fiduciary duty.” Id., at 326-327. See also 120 Cong. Rec. 29933 (1974) (remarks of Sen. Williams) (beneficiaries entitled to recover benefits “as well as to obtain redress of fiduciary violations“).
The Court‘s discussion, I say respectfully, is both unnecessary and to some extent completely erroneous. The Court may or may not be correct as a general matter with respect to implying private rights of action under ERISA; as the respondent has sought such an implied right only under § 409,12 we of course cannot purport to resolve this question in the many other contexts in which it might arise under the statute. Moreover, the Court‘s remarks about the constrictive judicial role in enforcing ERISA‘s remedial scheme are inaccurate insofar as Congress provided in § 502(a)(3) that beneficiaries could recover, in addition to the remedies explicitly set forth in that section, “other appropriate equitable relief . . . to redress” ERISA violations. Congress already had instructed that beneficiaries could recover benefits, obtain broad injunctive and declaratory relief for their own personal benefit or for the benefit of their plans, and secure attorney‘s fees, so this additional provision can only be read precisely as authorizing federal courts to “fine-tune” ERISA‘s remedial scheme. Thus while it may well be that courts generally may not find implied private remedies in ERISA, the Court‘s remarks have little bearing on how courts are to go about construing the private remedy that Congress explicitly provided in § 502(a)(3).
legislative intent, explicit or implicit, either to create such a remedy or to deny one?,” and “is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff?” 422 U. S., at 78.
The Court today expressly reserves the question whether extracontractual damages might be one form of “other appropriate relief” under § 502(a)(3). Ante, at 139, n. 5. I believe that, in resolving this and other questions concerning appropriate relief under ERISA, courts should begin by ascertaining the extent to which trust and pension law as developed by state and federal courts provide for recovery by the beneficiary above and beyond the benefits that have been withheld;17 this is the logical first step, given that Congress intended to incorporate trust law into ERISA‘s equitable remedies.18 If a requested form of additional relief is
I concur in the judgment of the Court.
oped, particularly in the insurance field, is statutory. In certain areas of public concern, the state legislatures have been quite active in enacting comprehensive regulatory schemes, and state statutory sources of law will no doubt play a major role in the development of a federal common law under ERISA, particularly in defining rights under employee benefit plans.” Wayne Chemical, Inc. v. Columbus Agency Service Corp., 426 F. Supp. 316, 325 (ND Ind.), modified on other grounds, 567 F. 2d 692 (CA7 1977).