Section 406(a) of the Employee Retirement Income Security Act of 1974 (ERISA) bars a fiduciary of an employee benefit plan from causing the plan to engage in certain prohibited transactions with a "party in interest." Such a party encompasses entities that a fiduciary might be inclined to favor at the expense of the plan's beneficiaries. After the Ameritech Pension Trust (APT), an ERISA pension plan, allegedly entered into a transaction prohibited by ERISA with Salomon Smith Barney Inc., APT's fiduciaries sued Salomon under section 502(a)(3), which authorizes a fiduciary to bring a civil action to obtain appropriate equitable relief." Salomon arguing that section 502(a)(3) only authorizes a suit against the fiduciary who caused the plan to enter the prohibited transaction. Ultimately, the District Court held that ERISA provides a private cause of action against nonfiduciaries who participate in a prohibited transaction. In reversing, the Court of Appeals held that the authority to sue under section 502(a)(3) does not extend to a suit against a nonfiduciary "party in interest" to a transaction barred by section 406(a).
Does section 502(a)(3) of the Employee Retirement Income Security Act of 1974, which authorizes a "participant, beneficiary, or fiduciary" of a plan to bring a civil action to obtain "appropriate equitable relief" to redress violations of ERISA, extend to a suit against a nonfiduciary "party in interest" to a transaction barred by section 406(a)?
Yes. In a unanimous opinion delivered by Justice Clarence Thomas, the Court held that Section 502(a)(3)'s authorization to a plan "participant, beneficiary, or fiduciary" to bring a civil action for "appropriate equitable relief" extends to a suit against a nonfiduciary "party in interest" to a prohibited transaction barred by section 406(a). "We reject," wrote Justice Thomas that, "absent a substantive provision of ERISA expressly imposing a duty upon a nonfiduciary party in interest, the nonfiduciary party may not be held liable under [section 502(a)(3)]." Justice Thomas concluded that "[section 502(a)(3)] itself imposes certain duties, and therefore that liability under that provision does not depend on whether ERISA's substantive provisions impose a specific duty on the party being sued."
Decisions
Decision: 9 votes for Harris Trust & Sav. Bank, 0 vote(s) against Legal provision: Employee Retirement Income Security
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Full Opinion by Justice Clarence Thomas
