Supreme Court Upholds ERISA Action Against Non-Fiduciary

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7/6/2000
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ERISA section 406(a)(1) imposes a duty only on the fiduciary that causes a plan to engage in a prohibited transaction. However, the Supreme Court held, in Harris Trust and Savings Banks trustee for the Ameritech Pension Trust, et al. v. Salomon Smith Barney Inc. et al., No. 99-579, June 12, 2000, that a non-fiduciary party in interest may be held liable under section 502(a)(3), one of ERISA's remedial provisions.

The Court found that while section 502(a)(3) does not authorize "appropriate equitable relief" at large, but only for the purpose of "redress[ing any] violations or ...enforc[ing] any provisions" of ERISA or an ERISA plan, the section admits no limit on the universe of possible defendants. Indeed the section makes no mention at all, of which parties may be proper defendants--the focus, instead, is on redressing the "act or practice which violates any provision of [ERISA Title I]." Other provisions of ERISA, by contrast, expressly address who may be a defendant. And, in providing that a "civil action may be brought by a participant, beneficiary, or fiduciary" section 502(a) itself demonstrates Congress' care in delineating the universe of plaintiffs who may bring these certain civil actions. To the Court, the matter is conclusively resolved by section 502(l), which provides for assessment by the Secretary of Labor of a civil penalty against a fiduciary or "other person" who knowingly participants in the fiduciary's ERISA violation.

Accordingly, a unanimous Supreme Court reversed the Seventh Circuit Court of Appeals and remanded the case for further proceedings.