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Section 502(a)(3) of the Employee Retirement Income Security Act of 1974, 29 U.S.C.S. § 1132(a)(3), which authorizes a plan beneficiary, participant, or fiduciary to bring a civil action, states: (A) to enjoin any act or practice which violates any provision of [ERISA] 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 ERISA or the terms of the plan.
An employer's phasing out of its steelmaking operations prompted early retirement by a large number of employees who were participants in the employer's pension plan, which was qualified under the Employee Retirement Income Security Act of 1974 (ERISA) (29 USCS 1001 et seq.), 502(a)(3) (29 USCS 1132(a)(3)) of which permitted pension plan participants to bring civil actions to obtain "appropriate equitable relief" to redress violations of ERISA or a pension plan. As a result of the failure of the plan's actuary to change the plan's actuarial assumptions to reflect the additional costs imposed on the plan by the early retirements, the employer did not adequately fund the plan to satisfy its benefit obligations, and thus, the former employees who were receiving benefits under the plan began to receive only the benefits guaranteed by ERISA, rather than the substantially greater benefits due generally to participants under the plan. Petitioner retirees who were receiving such guaranteed benefits brought against the respondent actuary an action alleging in relevant part that the actuary, as a nonfiduciary of the plan, had violated ERISA by knowingly participating in the plan fiduciaries' breach of their fiduciary duties. The United States District Court for the Northern District of California dismissed the action, and the United States Court of Appeals affirmed the District Court judgment in relevant part. A writ of certiorari was granted.
Under the ERISA, could the retirees bring an action for money damages against the actuary?
The Court affirmed the dismissal of the action, holding that ERISA did not authorize an action by the retirees for money damages against the actuary, as a nonfiduciary who allegedly had participated knowingly in the fiduciaries' breach of fiduciary duty, because even assuming that 502(a)(3) made money damages available, it was not clear that 502(a)(3) made money damages available to the retirees, since no term of the plan had been violated, nor would any have been enforced by the judgment requested by the retirees, and no ERISA provision explicitly required non-fiduciaries to avoid participation, knowing or unknowing, in a fiduciary's breach of fiduciary duty. Moreover, the Court held that 29 U.S.C.S. § 1132(a)(3), which authorized a plan beneficiary to bring a civil action to enjoin any act which violated ERISA or the terms of a plan, to "obtain other appropriate equitable relief" to redress a violation, did not permit a suit for money damages. The Court rejected petitioner's argument that because, at common law, courts of equity had exclusive jurisdiction over all actions by beneficiaries for breaches of trust and could award damages, 29 U.S.C.S. § 1132(a)(3) authorized all forms of relief an equity court was empowered to grant. The Court held that to so interpret 29 U.S.C.S. § 1132(a)(3) would not limit relief at all, and would give the term "equitable" a meaning different than that used elsewhere in ERISA.