Lead Opinion
delivered the opinion of the Court.
A grоup of beneficiaries of a firm’s employee welfare benefit plan, protected by the Employee Retirement Income Se
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, Mаssey-Ferguson’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
The business plan — which Varity called “Project Sunshine” — amounted to placing many of Varity’s money-losing eggs in one financially rickety basket. It 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 Massey-Ferguson 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
After the presentation, about 1,500 Massey-Ferguson employees accepted Varity’s assurances and voluntarily agreed tp 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 Massey-Ferguson 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
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.,
Varity has raised two additional issues. First, Varity points out that the relevant ERISA section imрoses 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.
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.,
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,
We have followed this approach when interpreting, and applying, the statutory provisions here before us.
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 discrеtionary 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.,
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.
(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, “[diagnostic 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’ “[diagnostic 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-and-answer 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 аssets 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.
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 plan-related authority to do so, together provide sufficient support for the District Court’s legal conclusion that Varity was acting as a fiduciary.
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. Vanity’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
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.,
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.,
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
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,
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,
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)) сover 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
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)
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).
“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
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 materiаlize, 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
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.,
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.
Dissenting Opinion
dissenting.
In Massachusetts Mut. Life Ins. Co. v. Russell,
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,
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.).
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 sub-chapter 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
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.” Morales v. Trans World Airlines, Inc.,
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,
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
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.”
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.’ ”
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,
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 оf 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).
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.
A
Under ERISA, an employer is permitted to act both as plan sponsor and plan administrator. § 408(c)(3), 29 U. S. C. § 1108(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,
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,
Though we have recognized that Congress borrowed from the common law of trusts in enacting ERISA, Firestone Tire & Rubber Co. v. Bruch,
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
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.,
An employer will also make countless representations in the course of managing a business about the current and expected financial condition of the corporation.
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.
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.,
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.
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
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.,
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 сompany. Varity repeatedly informed its employees that “[ejmployment 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).
Ill
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 plan-related 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 balаnce Congress struck in enacting ERISA. See Pilot Life Ins. Co. v. Dedeaux,
I respectfully dissent.
Notes
On other occasions we have recognized that “[rledundaneies 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,
The 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,
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 extracon-tractual damages.”
We 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.”
The majority’s citation of §502(1), 29 U. S. C. §1132(() (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,
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,
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,
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
The 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”).
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.
For instance, the benefits plan must be established pursuant to a written instrument. § 402(a)(1), 29 U. S. C. § 1102(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).
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,
Nor is the communication of information about the company’s well-being or the possible effect of a business transaction on plan benefits considered plan administration under the Massey-Perguson 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
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.
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.
The majority’s reliance on Central States, Southeast & Southwest Areas Pension Fund v. Central Transport, Inc.,
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).
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.
That is presumably why Congress exempted welfare benefits from the stringent, and costly, vesting requirements imposed on pension benefits. See Curtiss-Wright Corp.,