HARRIS TRUST & SAV. BANK v. SALOMON SMITH BARNEY INC.

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Case Basics
Docket No. 
99-579
Petitioner 
Harris Trust & Sav. Bank
Respondent 
Salomon Smith Barney Inc.
Advocates
(Argued the cause for the United States, as amicus curiae, by special leave of court, supporting the petitioners)
(Argued the cause for the respondents)
(Argued the cause for the petitioners)
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Facts of the Case 

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).

Question 

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)?

Conclusion 
Decision: 9 votes for Harris Trust & Sav. Bank, 0 vote(s) against
Legal provision: Employee Retirement Income Security

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."

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HARRIS TRUST & SAV. BANK v. SALOMON SMITH BARNEY INC.. The Oyez Project at IIT Chicago-Kent College of Law. 26 November 2014. <http://www.oyez.org/cases/1990-1999/1999/1999_99_579>.
HARRIS TRUST & SAV. BANK v. SALOMON SMITH BARNEY INC., The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/1990-1999/1999/1999_99_579 (last visited November 26, 2014).
"HARRIS TRUST & SAV. BANK v. SALOMON SMITH BARNEY INC.," The Oyez Project at IIT Chicago-Kent College of Law, accessed November 26, 2014, http://www.oyez.org/cases/1990-1999/1999/1999_99_579.