Harris Trust and Sav. Bank v. Salomon Smith Barney Inc., 530 U.S. 238 (2000)

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238

OCTOBER TERM, 1999

Syllabus

HARRIS TRUST AND SAVINGS BANK, as trustee for the AMERITECH PENSION TRUST, et al. v. SALOMON SMITH BARNEY INC. et al.

certiorari to the united states court of appeals for the seventh circuit

No. 99-579. Argued April 17, 2000—Decided June 12, 2000

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," § 406(a), defined to encompass entities that a fiduciary might be inclined to favor at the expense of the plan's beneficiaries, see § 3(14). Section 406's prohibitions are subject to both statutory and regulatory exemptions. See §§ 408(a), (b). The Ameritech Pension Trust (APT), an ERISA pension plan, allegedly entered into a transaction prohibited by § 406(a) and not exempted by § 408 with respondent Salomon Smith Barney Inc. (Salomon), a nonfiduciary party in interest. APT's fiduciaries—its trustee, petitioner Harris Trust and Savings Bank, and its administrator, petitioner Ameritech Corporation—sued Salomon under § 502(a)(3), which authorizes a fiduciary, inter alios, to bring a civil action to obtain "appropriate equitable relief" to redress violations of ERISA Title I. Salomon moved for summary judgment, arguing that § 502(a)(3), when used to remedy a transaction prohibited by § 406(a), authorizes a suit only against the party expressly constrained by § 406(a)—the fiduciary who caused the plan to enter the transaction—and not against the counterparty to the transaction. The District Court denied the motion, holding that ERISA provides a private cause of action against nonfiduciaries who participate in a prohibited transaction, but granted Salomon's motion for certification of the issue for interlocutory appeal. The Seventh Circuit reversed, holding that the authority to sue under § 502(a)(3) does not extend to a suit against a nonfiduciary "party in interest" to a transaction barred by § 406(a).

Held: 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 § 406(a). Pp. 245-254.

(a) In providing that "[a] fiduciary . . . shall not cause the plan to engage in a [prohibited] transaction" (emphasis added), § 406(a)(1) imposes a duty only on the fiduciary that causes the plan to engage in the transaction. However, this Court rejects the Seventh Circuit's and

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