This interlocutory appeal comes to us from the District Court’s denial of the summary judgment motion of Armco Inc. Our jurisdiction is based on 28 U.S.C. § 1292(b) (1994). The gravamen of Armco’s motion for summary judgment and the primary issue in this appeal is Armco’s contention that this action for recovery of pension benefits, brought by Larry B. Ricke, a trustee appointed by the Pension Benefit Guaranty Corporation (PBGC), is barred by the settlement reached between Armco and 1440 of the 1465 individual employees who were covered by the now-defunct pension plan involved in this ease. Like the District Court,
I.
This case arises out of the bankruptcy of Reserve Mining Company, an iron ore mining and processing company whose operations were located in northern Minnesota. At all times relevant to this appeal, Reserve was a joint enterprise of First Taconite Company, a wholly owned subsidiary of Armco Inc., and Republic-Reserve, Inc., a wholly owned subsidiary of LTV Steel Company, Inc. In July 1986, LTV and Republic-Reserve filed for bankruptcy. In August 1986, Reserve and First Taconite also filed bankruptcy petitions. At the same time Reserve suspended its operations.
During Reserve’s bankruptcy proceedings, the bankruptcy court appointed a trustee for Reserve. The trustee became the administrator of Reserve’s hourly employee pension plan. On January 16, 1987, the administrator notified plan participants and the PBGC that Reserve would terminate the pension plan on May 13, 1987. Under the Employee Retirement Income Security Act of 1974 (ERISA) as amended by the Single-Employer Pension Plan Amendments Act of 1986
The United Steelworkers of America, the union representing Reserve’s hourly employees, then brought an action against Armco under § 301 of the Labor Management Relations Act of 1947 (codified at 29 U.S.C. § 185 (1988)) to recover, inter alia, the unfunded nonguaranteed pension benefits. Armco eventually settled with the Union. All but twenty-five of the 1465 Reserve employees represented by the Union joined the settlement and executed releases. In the fall of 1992, Armco provided $17.3 million for distribution to Reserve’s employees or their beneficiaries in settlement of their claims, including their claims for unfunded nonguaranteed benefits. Of the twenty-five remaining employees, only nineteen had claims for unfunded nonguaranteed benefits. Those nineteen employees filed a separate lawsuit on July 24, 1992, that is still pending in the District of Minnesota, Warner v. Armco, Inc., No. 92-CV-120.
Throughout the course of the Union’s lawsuit against Armco, the PBGC took no action to hold Armco liable as a contributing sponsor
In April 1994 the PBGC sued Armco to recover the cost of the unfunded guaranteed benefits to which it was entitled under 29 U.S.C. § 1362 (Supp. IV 1986).
Armco moved to dismiss Ricke’s complaint, arguing that his action is (1) barred by the releases signed by the vast majority of plan participants and beneficiaries and (2) duplica-tive of the lawsuit filed by the nonsettling plan participants. Memorandum in Support of Armco’s Motion to Dismiss at 2. Prior to the scheduled hearing on the motion to dismiss, a procedural dispute arose between the parties. In a published order, the District Court held that Armco’s motion to dismiss was in fact a summary judgment motion that had been mislabeled in an attempt to avoid filing an answer to Ricke’s complaint. Ricke v. Armco, Inc.,
After the District Court denied Armco’s motion for summary judgment, Armco moved to amend the order to include the court’s certification that the order “involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” Armco’s Memorandum in Support of Motion to Amend Order at 2 (quoting 28 U.S.C. § 1292(b) (providing for appeal of orders “not otherwise appeal-able”)). In a supplemental order, the District Court granted Armco’s motion. Armco then petitioned this Court for permission to appeal the District Court’s interlocutory order denying Armco’s motion for summary judgment. We granted the petition.
The District Court certified the following question for our review: “whether individuals may bring an action under [ERISA as amended by] the Single-Employer Pension Plan Amendments Act of 1986 (‘SEPPAA’) for unfunded non-guaranteed pension benefits, or if only the Section 4049 Trustee may bring such action.” Supplemental Order at l.
II.
Armco has not argued that the § 4049 trustee does not have a statutory basis for bringing an action against Armco for unfunded nonguaranteed benefits. Arm-co contends only that the employees and beneficiaries also have a statutory basis for bringing such an action. Therefore, according to Armco, either the employees and beneficiaries of the pension plan or the § 4049 trustee could have settled with Armco and
The common law of trusts applies to trusts established under ERISA. Central States, Southeast & Southwest Areas Pension Fund v. Central Transp., Inc.,
Armco argues that beneficiaries have the power to settle and release claims of a trust if holding the released third party, in this case Armco, liable to the trust would result in a circuity of action. Armco’s Brief at 13-14 & n. 8 (citing Restatement (Second) of Trusts § 328 cmt. b). Circuity-of-action would occur if the third party “were compelled to pay the trustee, the trustee would be compelled to pay the beneficiary and the beneficiary, having already been paid, would be compelled to repay” the third party. Restatement (Second) of Trusts § 328 cmt. b (1957). In this case, according to Armco, the beneficiaries of the § 4049 trust would have to pay Armco any monies recovered by the § 4049 trustee from Armco and distributed by him to the beneficiaries. This circuity-of-action, in Armco’s opinion, means that the releases signed by the employees bar the trustee’s action. Ricke, on the other hand, notes that the circuity-of-action rule applies only if the beneficiary releases a claim of the trust. Ricke contends that in cases involving multiple beneficiaries “[a] release by less than all of the beneficiaries does not bind the trust.” Ricke’s Brief at 39.
As a general rule, a beneficiary may not bring an action at law on behalf of a trust against a third party. See Restatement (Second) of Trusts § 281(1) (1957). The right to bring such an action belongs to the trustee. Id. § 280. Ordinarily a beneficiary cannot even assert a claim of the trust in equity. Id. § 282(1). It follows from these general principles that a beneficiary has only a limited ability to release a trust’s claims
We are not convinced that the circuity-of-action rule apphes to the facts of this case. First, Ricke would not be required to pay oyer aU amounts recovered from Armco to the beneficiaries nor would the beneficiaries necessarily be required to repay Armco. For example, § 4049 trustees are authorized, by statute, to use trust funds to defray “the reasonable administrative expenses incurred in carrying out responsibilities” as trustee. 29 U.S.C. § 1349(a)(3) (Supp. IV 1986) (repealed 1987). Moreover, Ricke would not make lump-sum payments to the beneficiaries as soon as any judgment is paid by Armco; rather, distributions would be made on an annual basis. See id. § 1349(c). With respect to the beneficiaries’ obligation to repay Armco, we note that the settlement between the Union and Armco apparently did not provide for Armco to pay the full seventy-five percent of its alleged liability for unfunded nonguaranteed benefits. See Ricke’s Brief at 6 (stating that claims for unfunded nonguaranteed benefits were settled for “approximately 24% of their estimated value”). Ricke has the potential to recover more than twenty-four percent of the estimated value of the unfunded nonguaranteed pension benefits. In such circumstances, the beneficiaries, if required to repay any amount to Armco, certainly would not be under any obligation to repay Armco any more than the amounts received pursuant to the settlement.
Second, for the circuity-of-action rule to apply, the beneficiary must release the claim. See Restatement (Second) of Trusts § 328. In this case, not all of the beneficiaries have executed releases. A release by less than all of the beneficiaries does not bind the trust. See id. § 216 cmt. g (stating that consent of one beneficiary “to a deviation from the terms of the trust does not preclude the other beneficiaries from holding the trustee liable for breach of trust”); cf. id. § 282 cmt. i (stating that one of several beneficiaries may maintain suit in equity against third persons in limited circumstances but that all beneficiaries must be joined or the suit must be representative in nature). This rule is consistent with general principles of trust law applicable to trusts with multiple beneficiaries. See, e.g., id. § 337 (stating that in most circumstances trust can be terminated by consent of all beneficiaries); Anderson v. Anderson,
We note that even if the circuity-of-action rule were applicable to this case, and we think it is not, it would afford Armco a defense that is equitable in nature rather than legal. Such an equitable defense would not entitle Armco to judgment as a matter of law. In its answer to Ricke’s complaint, Armco asserts a number of equitable defenses to Ricke’s action based on Armco’s prior settlement with most of the beneficiaries with respect to their claims for unfunded nonguaranteed benefits. The availability of such defenses and the extent to which they benefit Armco are matters for the District Court to decide in the first instance. To date Armco has sought only summary judgment,' which requires Armco to show that it is “entitled to a judgment as a matter of law,” Fed.R.Civ.P. 56(c), and an equitable defense based on the releases of some of the beneficiaries or partial payment to the beneficiaries
The eircuity-of-action rule aside, Armco contends that the employees had a right, under the law of trusts, to settle and release any claims of the trust any time prior to the PBGC’s creation of a § 4049 trust, an event that occurred some seven years after Reserve notified its employees that it planned to terminate its hourly employee pension plan. Armco’s Reply Brief at 2-3. Armco argues, correctly, that, “[u]nder an exception to the general rule” that only a trustee can assert claims of the trust, beneficiaries may bring an action “if the trustee is unavailable or not subject to the court’s jurisdiction.” Id. at 2 (citing 4 Austin W. Scott & William F. Fratcher, The Law of Trusts § 282.2 (4th ed.1989)). As we noted earlier, Ricke does not argue that under the law of trusts beneficiaries lack the power to release the claims of a trust that does not yet exist. See supra at 724 & n. 8. We thus accept as correct Armco’s statement of the law on this point, and we further assume for purposes of this appeal that the releases executed in the settlement with Armco include the claim of the § 4049 trust.
If there are several beneficiaries, any one or more of them can maintain a suit against the third person where the trustee wrongfully refuses to sue or is not subject to the jurisdiction of the court or where there is a vacancy in the office of trustee, making the other beneficiaries parties plaintiff or defendant. Where the beneficiaries are numerous, one or more of them can maintain a suit on behalf of the others as well as of themselves.
4 Austin W. Scott & William F. Fratcher, The Law of Trusts § 282.4 (4th ed.1989); see also Restatement (Second) of Trusts § 282 cmt. i. The implication of § 282.4 is that, in any action brought by less than all of the beneficiaries of a trust, all of the beneficiaries must be brought into the lawsuit, either as parties or through some representational mechanism such as a class action. The rationale for such a rule is obvious: a lawsuit by some of the beneficiaries will affect all of the beneficiaries, thus all of the beneficiaries must participate in the lawsuit. It therefore follows that for the beneficiaries to release a claim of the trust against a third party, all of the beneficiaries must act together. Here, although Armco obtained releases from a large majority of the Reserve employees, some of the employees did not settle and did not execute releases.
We hold that under the law of trusts the releases executed by the trust beneficiaries do not bar the § 4049 trustee’s action, and we therefore affirm the District Court’s denial of summary judgment to Armco.
III.
In sum, we conclude that the order of the District Court denying Armco’s motion for summary judgment must be affirmed. The District Court, in certifying this interlocutory appeal, asked us whether individuals may bring an action under ERISA as amended by SEPPAA for unfunded non-guaranteed pension benefits, or if only the § 4049 trustee may bring such action. We have concluded, irrespective of any answer that might be given to the certified question, that for the reasons stated above the beneficiaries have not released the claim of the § 4049 trust. Without an effective release of the claim of the § 4049 trust, the trustee’s action may go forward. The District Court’s denial of Arm-co’s motion for summary judgment therefore is affirmed, though for reasons other than the reasons stated in the District Court’s order, and the ease is remanded for further proceedings.
Notes
. The Honorable Donald D. Alsop, United States District Judge for the District of Minnesota.
. The parties agree that the controlling version of ERISA in this case is ERISA as amended by SEPPAA. Our citations to the United States Code are to the versions of the sections relevant to this appeal, some of which have been amended several times. We have noted only the fact of repeal, not amendment.
. Armeo disputes the existence of any unfunded nonguaranteed benefits, but assumes for purposes of this appeal that some nonguaranteed benefits were not funded by the pension plan. Armco’s Brief at 2 n. 2.
. A contributing sponsor is a person who is responsible for meeting the funding requirements of an ERISA plan or a person who is under common control with the responsible person. See 29 U.S.C. § 1301(a)(13), (14) (Supp. TV 1986). The complaint in this case alleges that Reserve, which is a contributing sponsor of Reserve's hourly employee pension plan, was the alter ego of Armco. Although Armco disputes Ricke's allegation, see Armco's Brief at 16 n. 9, we assume for purposes of this appeal that Reserve is the alter ego of Armco and thus Armco is potentially liable as a contributing sponsor. See Minnesota Power v. Armco, Inc.,
. Armco settled with the PBGC on June 30, 1994. The settlement called for Armco to pay the PBGC $10 million. See Ricke v. Armco, Inc.,
. The effect of the PBGC's delay in appointing a trustee until April 1994, if it has any effect at all in this case, is not an issue in this appeal.
. We assume that the District Court intended to certify the issue as we have altered it because there are no provisions of SEPPAA that even arguably authorize individual actions.
. Ricke does not argue that as a matter of the law of trusts the beneficiaries lacked power to release future claims by a trust for their benefit that had not yet been created. We are aware of no such rule of law. In any event, because Ricke has not raised this argument, we do not address it.
. As noted above, see supra p. 724, the documents executed by the vast majority of the plan participants purported to release "any claim ... based directly or indirectly upon any claim which I have now released, including any such claim asserted by ... any other legal entity, specifically including but not limited to any welfare or pension plan.” Claimant's Release and Assignment of Claims at R-3.