[ Breyer ]
|Syllabus ||Dissent |
[ Thomas ]
NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Washington, D.C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
VARITY CORPORATION, PETITIONER v. CHARLES
HOWE et al.
on writ of certiorari to the united states court of appeals for the eighth circuit
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.
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, Massey 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 some of Massey Ferguson's divisions were losing too much money and developed a business plan to deal with the problem.
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 them together at a special meeting and talked to them about Massey Combines' future business outlook, its likely financial viability, and the security of their employee benefits. The thrust of Varity's remarks (which we shall discuss in greater detail infra, at 8-11) was that the employees' benefits would remain secure if they voluntarily transferred to Massey Combines. As Varity knew, however, the reality was very different. Indeed, the District Court found that Massey Combines was insolvent from the day of its creation and that it hid a $46 million negative net worth by overvaluing its assets and underestimating its liabilities.
After the presentation, about 1,500 Massey Ferguson employees accepted Varity's assurances and voluntarily agreed to 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 right to "appropriate equitable relief . . . to redress" the harm that this deception had caused them individually. Among other remedies the Court considered "appropriate equitable relief," was an order that Massey Ferguson reinstate its former employees into its own plan (which had continued to provide benefits to employees of Massey Ferguson's profitable divisions). The court also ordered certain monetary relief which is not at issue here. The Court of Appeals later affirmed the District Court's determinations, in relevant part. 36 F. 3d 746 (CA8 1994).
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., 46 F. 3d 956 (CA9 1995); Simmons v. Southern Bell Telephone and Telegraph Co., 940 F. 2d 614 (CA11 1991). Other Courts of Appeals, such as the Eighth Circuit in this case, have not read any such limitation into the statute. See Bixler v. Central Pennsylvania Teamsters Health & Welfare Fund, 12 F. 3d 1292 (CA3 1993); Anweiler v. American Electric Power Service Corp., 3 F. 3d 986 (CA7 1993).
Varity has raised two additional issues. First, Varity points out that the relevant ERISA section imposes 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.
We consider all three issues to be fairly within the scope of the questions that Varity posed in its petition for certiorari, although only with respect to the workers who were deceived by Varity, for as we construe Varity's petition, it does not sufficiently call into question the District Court's holding that Varity breached a fiduciary duty with respect to the Massey Ferguson retirees whose benefit obligations had been involuntarily assigned to Massey Combines. With these limitations in mind, we turn to the questions presented.
ERISA protects employee pensions and other benefits by providing insurance (for vested pension rights, see ERISA §4000 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., 472 U.S. 559, 570 (1985) ("[R]ather than explicitly enumerating all of the powers and duties of trustees and other fiduciaries, Congress invoked the common law of trusts to define the general scope of their authority and responsibility"); H. R. Rep. No. 93-533, pp. 3-5, 11-13 (1973), 2 Legislative History of the Employment Retirement Income Security Act of 1974 (Committee Print compiled for the Senate Subcommittee on Labor of the Committee on Labor and Public Welfare by the Library of Congress), Ser. No. 93-406, pp. 2350-2352, 2358-2360 (1976) (hereinafter Leg. Hist.); G. Bogert & G. Bogert, Law of Trusts and Trustees §255, p. 343 (rev. 2d ed. 1992).
We also recognize, however, that trust law does not tell the entire story. After all, ERISA's standards and procedural protections partly reflect a congressional determination that the common law of trusts did not offer completely satisfactory protection. See ERISA §2(a). See also H. R. Rep. No. 93-533, supra, at 3-5, 11-13, 2 Leg. Hist. 2350-2352; 2358-2360; H. R. Conf. Rep. No. 93-1280, pp. 295, 302 (1974), 3 Leg. Hist. 4562, 4569. And, even with respect to the trust like fiduciary standards ERISA imposes, Congress "expect[ed] that the courts will interpret this prudent man rule (and other fiduciary standards) bearing in mind the special nature and purpose of employee benefit plans," id., at 302, 3 Leg. Hist. 4569, as they "develop a `federal common law of rights and obligations under ERISA regulated plans.' " Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 110-111 (1989) (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56 (1987)).
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, 514 U. S. ___, ___ (1995) (slip op., at 4-6), and Mertens v. Hewitt Associates, 508 U.S. 248, 262-263 (1993).
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 discretionary 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 §16 (employer is, in some circumstances, the default plan administrator) with NLRB v. Amax Coal Co., 453 U.S. 322, 329-330 (1981) (common law of trusts prohibits fiduciaries from holding positions that create conflict of interest with trust beneficiaries); Bogert & Bogert, supra, §543, at 218, 264 (same). But, obviously, not all of Varity's business activities involved plan management or administration. Varity argues that when it communicated with its Massey Ferguson workers about transferring to Massey Combines, it was not administering or managing the plan; rather, it was acting only in its capacity as an employer and not as a plan administrator.
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.
The relevant factual circumstances include the following: In the spring of 1986, Varity summoned the employees of Massey Ferguson's money losing divisions to a meeting at Massey Ferguson's corporate headquarters for a 30 minute presentation. The employees saw a 90 second videotaped message from Mr. Ivan Porter, a Varity vice president and Massey Combines' newly appointed president. They also received four documents: (a) a several page, detailed comparison between the employee benefits offered by Massey Ferguson and those offered by Massey Combines; (b) a question and answer sheet; (c) a transcript of the Porter videotape; and (d) a cover letter with an acceptance form. Each of these documents discussed employee benefits and benefit plans, some briefly in general terms, and others at length and in detail:
(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?
"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 assets 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. . . .
"Finally, despite the depression which persists in the North American economy, I am excited about the future of Massey Combines Corporation." Id., at 79-80.
(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.
To decide whether Varity's actions fall within the statutory definition of "fiduciary" acts, we must interpret the statutory terms which limit the scope of fiduciary activity to discretionary acts of plan "management" and "administration." ERISA §3(21)(A). These words are not self defining, and the activity at issue here neither falls clearly within nor outside of the common understanding of these words. The dissent looks to the dictionary for interpretive assistance. See post, at 15. Though dictionaries sometimes help in such matters, we believe it more important here to look to the common law, which, over the years, has given to terms such as "fiduciary" and trust "administration" a legal meaning to which, we normally presume, Congress meant to refer. See, e.g., Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322 (1992). The ordinary trust law understanding of fiduciary "administration" of a trust is that to act as an administrator is to perform the duties imposed, or exercise the powers conferred, by the trust documents. See Restatement (Second) of Trusts §164 (1957); 76 Am. Jur. 2d, Trusts §321 (1992). Cf. ERISA §404(a). The law of trusts also understands a trust document to implicitly confer "such powers as are necessary or appropriate for the carrying out of the purposes" of the trust. 3 A. Scott & W. Fratcher, Law of Trusts §186, p. 6 (4th ed. 1988). See also Bogert & Bogert, Law of Trusts and Trustees §551, at 41; Central States, 472 U. S., at 570. Conveying information about the likely future of plan benefits, thereby permitting beneficiaries to make an informed choice about continued participation, would seem to be an exercise of a power "appropriate" to carrying out an important plan purpose. After all, ERISA itself specifically requires administrators to give beneficiaries certain information about the plan. See, e.g., ERISA §§102, 104(b)(1), 105(a). And administrators, as part of their administrative responsibilities, frequently offer beneficiaries more than the minimum information that the statute requires--for example, answering beneficiaries' questions about the meaning of the terms of a plan so that those beneficiaries can more easily obtain the plan's benefits. To offer beneficiaries detailed plan information in order to help them decide whether to remain with the plan is essentially the same kind of plan related activity. Cf. Restatement (Second) of Agency §229(1) (1957) (determining whether an activity is within the "scope of . . . employment" in part by examining whether it is "of the same general nature as that authorized").
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.
Varity raises three contrary arguments. First, Varity argues that it was not engaged in plan administration because neither the specific disclosure provisions of ERISA, nor the specific terms of the plan instruments, App. 5-26, required it to make these statements. But that does not mean Varity was not engaging in plan administration in making them, as the dissent seems to suggest. See post, at 17-18, and n. 12. There is more to plan (or trust) administration than simply complying with the specific duties imposed by the plan documents or statutory regime; it also includes the activities that are "ordinary and natural means" of achieving the "objective" of the plan. Bogert & Bogert, supra, §551, at 41-52. Indeed, the primary function of the fiduciary duty is to constrain the exercise of discretionary powers which are controlled by no other specific duty imposed by the trust instrument or the legal regime. If the fiduciary duty applied to nothing more than activities already controlled by other specific legal duties, it would serve no purpose.
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. Varity'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 adversely affect the security of their benefits. And, in the present context (see supra, at 8-11), Varity's statements about the security of benefits amounted to an act of plan administration. That Varity intentionally communicated its conclusion through a closely linked set of statements (some directly concerning plan benefits, others concerning the viability of the corporation) does not change this conclusion.
We do not hold, as the dissent suggests, post, at 15-17, 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 26. 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., 514 U. S., at ___ (slip op., at 4-6). How then, it asks, could conveying information about the likelihood of termination be an act of plan administration? While it may be true that amending or terminating a plan (or a common law trust) is beyond the power of a plan administrator (or trustee)-- and, therefore, cannot be an act of plan "management" or "administration"--it does not follow that making statements about the likely future of the plan is also beyond the scope of plan administration. As we explained above, plan administrators often have, and commonly exercise, discretionary authority to communicate with beneficiaries about the future of plan benefits.
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., 698 F. 2d 320, 326 (CA7 1983). See also Central States, 472 U. S., at 570-571 (ERISA fiduciary duty includes common law duty of loyalty); Bogert & Bogert, Law of Trusts and Trustees §543, at 218-219 (duty of loyalty requires trustee to deal fairly and honestly with beneficiaries); 2A Scott & Fratcher, Law of Trusts §170, pp. 311-312 (same); Restatement (Second) of Trusts §170 (same). Because the breach of this duty is sufficient to uphold the decision below, we need not reach the question of whether ERISA fiduciaries have any fiduciary duty to disclose truthful information on their own initiative, or in response to employee inquiries.
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, p. 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 obligation, Varity says that Congress intended ERISA's fiduciary standards to protect only the financial integrity of the plan, not individual beneficiaries. This intent, says Varity, is shown by the fact that Congress did not provide remedies for individuals harmed by such breaches; rather, Congress limited relief to remedies that would benefit only the plan itself. This argument fails, however, because, in our view, Congress did provide remedies for individual beneficiaries harmed by breaches of fiduciary duty, as we shall next discuss.
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;
"(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), 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 equitable 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, 473 U.S. 134 (1985), this Court pointed to the above italicized language in §409 and concluded that this section (and its companion remedial provision, subsection two) did not authorize the plaintiff's suit for compensatory and punitive damages against an administrator who had wrongfully delayed payment of her benefit claim. The first two italicized phrases, the Court said, show 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." Id., at 142 (emphasis added). The Court added that, in this context, the last italicized phrase ("other equitable or remedial relief") does not "authorize any relief except for the plan itself." Id., at 144.
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 two. 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 three authorizes only "equitable" relief. See Mertens, 508 U. S., at 255, 256-258, and n. 8 (compensatory and punitive damages are not "equitable relief" within the meaning of subsection three); ERISA §409(a) (authorizing "other equitable or remedial relief") (emphasis added). Further, Russell involved a complicating factor not present here, in that another remedial provision (subsection one) already provided specific relief for the sort of injury the plaintiff had suffered (wrongful denial of benefits), but said "nothing about the recovery of extracontractual damages, or about the possible consequences of delay in the plan administrators' processing of a disputed claim." Russell, supra, at 144. These differences lead us to conclude that Russell does not control, either implicitly or explicitly, the outcome of the case before us.
Second, subsection three's language does not favor Varity. The words of subsection three--"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 two) cover 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(l), 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 five. Subsection five is identical to subsection three, 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 five and, by implication, subsection three, 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 (through its §409 cross reference) to breaches of fiduciary duty, while the third subsection refers, as a kind of "catchall," to all ERISA Title One violations. And it argues that a canon of statutory construction, namely "the specific governs over the general," means that the more specific second (fiduciary breach) subsection makes the more general third (catchall) subsection inapplicable to claims of fiduciary breach. Canons of construction, however, are simply "rules of thumb" which will sometimes "help courts determine the meaning of legislation." Connecticut Nat. Bank v. Germain, 503 U.S. 249, 253 (1992). To apply a canon properly one must understand its rationale. This Court has understood the present canon ("the specific governs the general") as a warning against applying a general provision when doing so would undermine limitations created by a more specific provision. See, e.g., Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384-385 (1992); HCSC Laundry v. United States, 450 U.S. 1, 6, 8 (1981); Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 228-229 (1957). Yet, in this case, why should one believe that Congress intended the specific remedies in §409 as a limitation?
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 16, 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) ("[A] plan employee who has the final authority to authorize or disallow benefit payments in cases where a dispute exists as to the interpretation of plan provisions . . . would be a fiduciary"); Moore v. Reynolds Metals Co. Retirement Program, 740 F. 2d 454, 457 (CA6 1984); Birmingham v. Sogen Swiss Intern. Corp. Retirement Plan, 718 F. 2d 515, 521-522 (CA2 1983). And, as the Court pointed out in Russell, 473 U. S., at 144, ERISA specifically provides a remedy for breaches of fiduciary duty with respect to the interpretation of plan documents and the payment of claims, one that is outside the framework of the second subsection and cross referenced §409, and one that runs directly to the injured beneficiary. §502(a)(1)(B). See also Firestone, 489 U. S., at 108. Why should we not conclude that Congress provided yet other remedies for yet other breaches of other sorts of fiduciary obligation in another, "catchall" remedial section?
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).
Fourth, ERISA's basic purposes favor a reading of the third subsection that provides the plaintiffs with a remedy. The statute itself says that it seeks
"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 claimed simply "denial of benefits," or a virtually identical "breach of fiduciary duty?" See Brief for Chamber of Commerce as Amicus Curiae 10. Consider, too, they add, a medical review board trying to decide whether certain proposed surgery is medically necessary. Will the Board's awareness of a "duty of loyalty" to the surgery seeking beneficiary not risk inadequate attention to the countervailing, but important, need to constrain costs in order to preserve the plan's funds? Id., at 11. 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 materialize, 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 the same common law trust doctrines that govern standards of fiduciary conduct. See Restatement (Second) of Trusts §187 ("Where discretion is conferred upon the trustee with respect to the exercise of a power, its exercise is not subject to control by the court, except to prevent an abuse by the trustee of his discretion") (as quoted in Firestone, 489 U. S., at 111).
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., 481 U. S., at 54. See also Russell, 473 U. S., at 147; Mertens, 508 U. S., at 263-264. Thus, we should expect that where Congress elsewhere provided adequate relief for a beneficiary's injury, there will likely be no need for further equitable relief, in which case such relief normally would not be "appropriate." Cf. Russell, supra, at 144.
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