Federal District Court Opinions
IN RE MARSH ERISA LITIGATION, (S.D.N.Y. 12-14-2006) IN RE
MARSH ERISA LITIGATION THIS DOCUMENT RELATES TO: ALL
ACTIONS. Master File No. 04 Civ. 8157 (SWK). United States
District Court, S.D. New York. December 14, 2006
OPINION AND ORDER
SHIRLEY KRAM, Senior District Judge
In October 2004, the Office of the New York State Attorney
General (the “NYAG”) filed a civil action alleging that
Marsh & McLennan Companies, Inc. (“MMC”) and its insurance
brokerage subsidiary, Marsh, Inc. (“Marsh”), engaged in
fraudulent business practices. The announcement of that
lawsuit led to a precipitous decline in the value of MMC
stock. This litigation followed shortly thereafter. The
plaintiffs here, participants in the Marsh & McLennan
Companies Stock Investment Plan (the “Plan”), allege that
the Plan’s fiduciaries violated the Employee Retirement
Income Security Act of 1974 (“ERISA”) by breaching their
fiduciary duties to the Plan during the period spanning
July 1, 2000, to January 31, 2005 (the “Class Period”).
Several defendants have now filed motions to dismiss
certain portions of the Consolidated Class Action Complaint
(the “Complaint”). For the reasons set forth below, these
motions to dismiss are granted in part and denied in part.
Page 2
I. BACKGROUND
On October 14, 2004, the NYAG filed suit against MMC and
Marsh in the Supreme Court of New York. The NYAG alleged
that the corporation and its subsidiary had defrauded their
clients — entities seeking insurance coverage
— by steering business to select third-party
insurance providers for the sole purpose of maximizing
their receipt of contingent commissions from those
providers. (Compl. §§ 90, 97, 114-16.) At
their most egregious, these practices took the form of
bid-rigging, whereby Marsh would allegedly steer a client’s
business to a preordained insurance provider by persuading
other insurance providers to place above-market bids for
that business. (Compl. §§ 117-22.) MMC
ultimately settled the NYAG lawsuit for $850 million
(Compl. § 92), but not before shares of MMC stock
fell 38% and “erased millions of dollars in retirement
savings” (Comp. § 130). While MMC and Marsh were
allegedly engaged in these fraudulent business practices,
the Plan continued to invest heavily in MMC stock
throughout the Class Period, despite the fact that Plan
fiduciaries were allegedly aware of the fraudulent business
practices and failed to communicate the potential risks of
investment in MMC stock to Plan participants or to alter
their investment strategy.
The named plaintiffs, Donald Hundley, Conrad Simon, and
Leticia Hernandez (“Plaintiffs”), all of whom are
participants Page 3 in the Plan (Compl. §§
12-14), brought the instant lawsuit pursuant to ERISA
sections 409 and 502 “in a representative capacity for
losses suffered by the Plan as a result of breaches of
fiduciary duty” (Compl. § 7). Plaintiffs seek damages
for “losses to the Plan for which Defendants are personally
liable” and “other equitable relief from Defendants,
including, without limitation, injunctive relief and, as
available under applicable law, constructive trust,
restitution, equitable tracing, and other monetary relief.”
(Compl. § 6.)
Plaintiffs name several classes of defendants, including
MMC, its CEO, Jeffrey Greenberg (“Greenberg”), its Board of
Directors (the “Director Defendants”), and three committees
— the Investment Committee, the Administrative
Committee, and the Oversight Committee — comprised
of various directors and officers of MMC and Marsh
(collectively, “Defendants”). (Compl. §§
15-31.) Each class of defendants, and each individual
within those classes, is alleged to have been a Plan
fiduciary during the Class Period and to have breached
various fiduciary duties to the Plan under ERISA section
409.
The Complaint alleges five separate counts against the
various classes of defendants. Count I alleges a breach of
fiduciary duty against MMC, the Director Defendants, and
the Investment Committee for failure to prudently and
loyally manage the Plan and its assets (the “Prudence
Claim”). (Compl. §§ 164-82.) Page 4 Count II
alleges a breach of fiduciary duty against the Investment
Committee and the Administrative Committee (together, the
“Communications Defendants”) for failure to provide
complete and accurate information to participants and
beneficiaries. (Compl. §§ 183-97.) Count III
alleges a breach of fiduciary duty against Greenberg, the
Director Defendants, and the Oversight Committee (together,
the “Monitoring Defendants”) for failure to monitor the
performance of other fiduciaries. (Compl. §§
198-207.) Count IV alleges co-fiduciary liability against
MMC, Greenberg, Sandra S. Wijnberg, William L. Rosoff, the
Communications Defendants, and the Monitoring Defendants.
(Compl. §§ 208-20.) Finally, “[t]o the extent
that MMC is found not to have been a fiduciary or to have
acted in a fiduciary capacity with respect to the conduct
alleged to have violated ERISA,” Count V alleges that MMC
knowingly participated in a breach of fiduciary duty.
(Compl. §§ 221-24.)
II. DISCUSSION
In three separate motions, Defendants seek to dismiss the
Complaint on several grounds and against various
defendants.[fn1] The Court first lays out the general legal
standards applicable to Page 5 these motions. The Court
then considers two issues which span multiple counts of the
Complaint: the applicability of Federal Rule of Civil
Procedure 23.1 to representative claims brought pursuant to
ERISA section 502(a)(2); and the ability of Plaintiffs to
state claims for equitable relief under ERISA section
502(a)(3). Finally, the Court addresses arguments
challenging each of the substantive counts of the Complaint.
A. Legal Standards for Pleading ERISA Fiduciary Duty
Claims Under Rule 12(b)(6)
When deciding a motion to dismiss under Federal Rule of
Civil Procedure 12(b)(6), the factual allegations in the
complaint are assumed to be true and all reasonable
inferences are drawn in the plaintiff’s favor. Nechis v.
Oxford Health Plans, Inc., 421 F.3d 96, 100 (2d Cir. 2005)
(citing E.E.O.C. v. Staten Island Sav. Bank, 207 F.3d 144,
148 (2d Cir. 2000)). At the motion-to-dismiss stage, “[t]he
appropriate inquiry is not whether a plaintiff is likely to
prevail, but whether he is entitled to offer evidence to
support his claims.” Id. (citing Chance v. Armstrong, 143
F.3d 698, 701 (2d Cir. 1998)). Thus, dismissal is
“appropriate only if `it appears beyond doubt that the
plaintiff can prove no set of facts in support of his claim
which would entitle him to relief.'” Harris v. City of New
York, 186 F.3d 243, 250 (2d Cir. 1999) (quoting Conley v.
Gibson, 355 U.S. 41, 45-46 (1957)). Page 6
Furthermore, fiduciary duty claims brought under ERISA are
subject only to the “simplified pleading standard” of
Federal Rule of Civil Procedure 8(a) rather than the
heightened pleading standard of Federal Rule of Civil
Procedure 9(b). In re Worldcom, Inc., 263 F. Supp. 2d 745,
756 (S.D.N.Y. 2003) (quoting Swierkiewicz v. Sorema N.A.,
534 U.S. 506, 513 (2002)); accord In re Polaroid ERISA
Litig. (In re Polaroid I), 362 F. Supp. 2d 461, 469-71
(S.D.N.Y. 2005). Thus, to survive this motion to dismiss,
the Complaint must include only a “short and plain statement
of the claim showing that the pleader is entitled to
relief.” Fed.R.Civ.P. 8(a).
B. The Applicability of Rule 23.1 to Section 502(a)(2)
Claims
Defendant Greenberg argues that plaintiffs seeking relief
under section 502(a)(2) must make a demand pursuant to
Federal Rule of Civil Procedure 23.1. Although this
argument is only advanced by Greenberg, the Court notes
that if it were valid, it would require dismissal in favor
of all defendants to the extent that the Complaint is
premised on section 502(a)(2). However, the weight of
authority in this Circuit belies Greenberg’s argument.
The Second Circuit recently stated that “[t]here is
significant doubt as to whether under section 502(a)(2) of
ERISA plaintiffs are required to follow Rule 23.1,” and
recognized that section 502(a)(2) suits are “not controlled
by Diduck,” the Page 7 primary authority upon which
Greenberg relies. Coan v. Kaufman, 457 F.3d 250, 257-58 (2d
Cir. 2006) (discussing Diduck v. Kaszycki & Sons
Contractors, Inc., 974 F.2d 270 (2d Cir. 1992)). Although
Coan does not explicitly hold that plaintiffs bringing suit
under section 502(a)(2) are exempt from Rule 23.1, the
opinion offers considerable support for that proposition by
noting that section 502(a)(2) “provides an express right of
action for [a plan’s] participants,” and by refusing to
affirm the district court’s contrary conclusion. Id. at
258. Consequently, the Court concurs with the conclusion of
In re Polaroid ERISA Litig. (In re Polaroid II), No. 03
Civ. 8335(WHP), 2006 WL 2792202 (S.D.N.Y. Sept. 29, 2006),
that “Plaintiffs were under no obligation to comply with
Rule 23.1 in this action.” Id. at *6. Greenberg’s motion to
dismiss is denied on this ground.
C. The Scope of Equitable Relief Under Section 502(a)(3)
MMC joins Greenberg in arguing that Plaintiffs’ request
for relief goes beyond the scope of ERISA section
502(a)(3).[fn2] First, they argue that section 502(a)(3)
limits plaintiffs to requests for appropriate forms of
equitable relief, and prohibits Page 8 monetary relief
unless the plaintiffs can identify specific funds or
property in the defendant’s possession. As this lawsuit
concerns contributions to a common stock fund, Defendants
argue that Plaintiffs are incapable of identifying such
specific property, and thus Plaintiffs’ request for a
constructive trust, restitution, or other monetary relief
is not available under section 502(a)(3). Second,
Defendants contend that Plaintiffs’ request for injunctive
relief to prevent them from committing “any further
violations of their ERISA fiduciary obligations” (Compl.
74, § E) is improperly vague.
The Second Circuit has recently considered the available
scope of equitable claims for monetary relief under section
502(a)(3). In Coan, after considering the Supreme Court’s
decisions in Mertens v. Hewitt Assocs., 508 U.S. 248
(1993), and Great-West Life & Annuity Ins. Co. v. Knudson,
534 U.S. 204 (2002), the Second Circuit upheld the district
court’s denial of a plaintiff’s claims for monetary relief
that could not be recovered from a specifically identified
fund. Coan, 457 F.3d at 262-64. In addition, the court held
that “an injunction requiring the defendants to restore
funds to the . . . 401(k) plan to be distributed to . . .
participants, `does not transform what is effectively a
money damages request into equitable relief.'” Id. at 264
(quoting Coan v. Kaufman, 333 F. Supp. 2d 14, 26 (D. Conn.
2004)); accord Mertens, Page 9 508 U.S. at 255-58
(compensatory damages by another name are not “equitable
relief” within the meaning of section 502(a)(3)).
The equitable relief requested by Plaintiffs is not
substantially different from that requested in Coan.
Plaintiffs’ request for the recovery of damages allegedly
suffered by the Plan on its investment in MMC stock (Compl.
74, § C) is clearly inappropriate under section
502(a)(3), as legal damages are simply not available under
this expressly equitable remedial provision. The requests
for a constructive trust, restitution, or equitable tracing
are no more successful. Ultimately, Plan participants
invested funds in the Plan, which were then partially
matched in cash by MMC in a proportion corresponding to
each participant’s status within the Plan. Plaintiffs now
seek recovery from this common fund, which was nourished by
cash investments from numerous entities. Investments of
this nature do not create the sort of specifically
identified fund contemplated by the Second Circuit in Coan.
Cf. Nechis, 421 F.3d at 103 (declining to permit
“equitable” monetary relief in an action seeking to recoup
health care coverage premiums because the defendant was
“under no obligation to segregate” those funds, and the
plaintiff did “not allege [the funds] to be segregated in a
separate account”). It is clear that Plaintiffs merely
“attempt to cast this action as one for `equitable relief'”
in order to maximize their opportunities for a monetary
Page 10 recovery. Coan, 457 F.3d at 264. Because Plaintiffs
are unable to allege the existence of a specifically
identified fund in which their investments are held, their
claims for monetary relief under section 502(a)(3) must
fail.
With reference to Plaintiffs’ request for an order
enjoining Defendants “from any further violations of their
ERISA fiduciary obligations” (Compl. 74, § E.),
Defendants are correct to note that an injunction framed in
such general terms would be inappropriate. See, e.g.,
Peregrine Myanmar Ltd. v. Segal, 89 F.3d 41, 51 (2d Cir.
1996) (Under Federal Rule of Civil Procedure 65(d), “an
injunction must be more specific than a simple command that
the defendant obey the law.”) (citations omitted). However,
at the pleading stage, the Court will not foreclose the
later possibility of more narrowly tailored injunctive
relief. Plaintiffs have met the pleading requirements of
Federal Rule of Civil Procedure 8(a) by giving Defendants
sufficient notice that they seek injunctive relief
pertaining to the allegations of the Complaint.
D. The Prudence Claim (Count I)
Defendants challenge the fiduciary status of certain
classes of defendants named in Count I and in other counts
of the Complaint. See infra Parts II.E.3 & II.F. ERISA
expressly contemplates two methods of pleading a party’s
fiduciary status: (1) by identifying that party as a named
fiduciary, who is Page 11 explicitly designated as a
fiduciary in plan documents; and (2) by identifying that
party as a de facto fiduciary, who has or performs
discretionary fiduciary responsibility with respect to a
plan. 29 U.S.C. §§ 1102(a) & 1002(21)(A); see
also In re Polaroid I, 362 F. Supp. 2d at 472 (“An
individual may be a fiduciary for ERISA purposes either
because the plan documents explicitly describe fiduciary
responsibilities or because that person functions as a
fiduciary.”). Thus, ERISA “defines `fiduciary’ not in terms
of formal trusteeship, but in functional terms of control
and authority over the plan.” Mertens, 508 U.S. at 262
(citing 29 U.S.C. § 1002(21)(A)).
Fiduciary status, however, does not attach for all
purposes. Rather, an individual is assigned fiduciary
status “only to the extent that he has or exercises the
described authority or responsibility.” Flanigan v. Gen.
Elec. Co., 242 F.3d 78, 87 (2d Cir. 2001) (citation and
internal quotations marks omitted); accord Kerns v. Benefit
Trust Life Ins. Co., 992 F.2d 214, 217 (8th Cir. 1993);
Coleman v. Nationwide Life Ins. Co., 969 F.2d 54, 61 (4th
Cir. 1992). Thus, when considering the fiduciary status of
the various defendants listed in a complaint, the court
must not only consider the plan documents and general
allegations of fiduciary responsibility, but the particular
context in which a fiduciary is named or a defendant is
alleged to exercise discretionary responsibility. Page 12
In their challenge to the Prudence Claim, Defendants argue
that MMC and the Director Defendants were not ERISA
fiduciaries with respect to the management and investment
of the Plan, and thus Count I against those defendants must
be dismissed. While conceding that MMC and the Director
Defendants are not named fiduciaries for the Plan’s
management and investment, Plaintiffs argue that they have
properly alleged that those defendants are de facto
fiduciaries for management and investment of the Plan’s
assets.
Plaintiffs allege that MMC “became a de facto fiduciary of
the Plan by in fact exercising discretionary authority and
control over its administration and the investment and
disposition of its assets.” (Compl. §§ 60,
61.) Courts throughout this Circuit have concluded that
similar allegations tracking ERISA’s statutory language are
sufficient at the pleading stage. See Smith v. Local 819
I.B.T. Pension Plan, 291 F.3d 236, 241 (2d Cir. 2002); In
re Polaroid I, 362 F. Supp. 2d at 470, 473; In re
Worldcom, 263 F. Supp. 2d at 759. Likewise, Plaintiffs’
allegations are sufficient to survive MMC’s motion to
dismiss the Prudence Claim against it. This conclusion is
not undermined by the Complaint’s inclusion of more
specific allegations of MMC’s fiduciary status, which on
their own might prove insufficient to plead a defendant’s
fiduciary status. See In re Polaroid I, 362 F. Supp. 2d at
473; In re AOL Time Warner, Page 13 Inc. Sec. & “ERISA”
Litig., No. MDL 1500, 02 Civ. 8853 (SWK), 2005 WL 563166,
at *4 & nn. 4-5 (S.D.N.Y. Mar. 10, 2005); In re Worldcom,
263 F. Supp. 2d at 759-60.
MMC argues that if the Court were to accept the
Complaint’s skeletal allegations of MMC’s fiduciary status,
all employers would be liable for the fiduciary acts and
omissions of their employees. This argument ignores both
the substance of Plaintiffs’ allegations and the procedural
posture of this case. In the first place, Plaintiffs do not
allege that MMC is liable for the actions of its employees,
but that MMC itself exercised authority over the Plan.
Further, failing to dismiss these claims against MMC at
this time does not compel the conclusion that an employer
is automatically liable under ERISA for the fiduciary acts
of its employees; it merely recognizes that the plaintiffs
here have sufficiently alleged that MMC was a de facto
fiduciary for investment decisions “to allow discovery to
proceed.” In re Polaroid I, 362 F. Supp. 2d at 473 (citing
In re Worldcom, 263 F. Supp. 2d at 759). Of course, if
Plaintiffs cannot supplement their allegations after the
benefit of discovery, summary judgment for MMC will be
appropriate on these grounds. Nonetheless, at this stage,
Plaintiffs have sufficiently alleged MMC’s fiduciary status
to survive the motion to dismiss Count I against that
defendant. Page 14
Plaintiffs also allege that the Director Defendants
“exercised authority or control respecting management or
disposition of the Plan’s assets.” (Compl. § 70.) As
with Plaintiffs’ general allegations against MMC, the
Complaint provides allegations against the Director
Defendants which track the statutory language of ERISA.
These allegations are sufficient at the pleading stage. The
merit of these allegations will be considered at a later
stage of the litigation.
E. The Communications Claim (Count II)
Defendants raise several challenges to Plaintiffs’ claim
for breach of fiduciary duty against the Investment
Committee and Administrative Committee for failure to
communicate complete and accurate information to
participants and beneficiaries of the Plan. Defendants
argue that these claims may not be asserted under section
502(a)(2) because they are individual in nature, and that
they may not be brought under section 502(a)(3) because
Plaintiffs seek improper monetary relief. Additionally,
Defendants argue that the Investment Committee did not have
a fiduciary duty to communicate with Plan participants.
1. Communications Claim Is Proper Under Section 502(a)(2)
ERISA section 502(a)(2) provides that participants or
beneficiaries of a plan may bring an action for relief
under ERISA section 409. 29 U.S.C. § 1132(a)(2).
Section 409 indicates that a fiduciary who breaches any of
his duties “shall be Page 15 personally liable to make
good to such plan any losses to the plan resulting from
each such breach.” 29 U.S.C. § 1109(a). These
provisions make clear that, while an individual participant
or beneficiary may bring suit for a breach of fiduciary
duty, such a suit is only proper to the extent that it
seeks to recover losses sustained by “the plan as a whole.”
Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S.
134, 140 (1985). Based on these and other authorities,
Defendants argue that Plaintiffs may not recover on the
communications claim because this variety of claim is
individual in nature and cannot possibly be brought on
behalf of the Plan as a whole.
Putting aside Defendants’ narrower argument as to why
communications claims per se do not benefit a plan as a
whole, the weight of authority indicates that a claim may
be brought on behalf of a plan as a whole even if it will
not benefit every plan participant. A number of courts have
held that, while individual relief is not proper under
section 502(a)(2), the provision does not prohibit actions
brought by individuals on behalf of the plan that may only
benefit a subclass of the plan. See In re Polaroid II, 2006
WL 2792202, at *5-*6 (citing LaRue v. DeWolff, Boberg &
Assocs., Inc., 458 F.3d 359, 363 (4th Cir. 2006); Milofsky
v. Am. Airlines, Inc., 442 F.3d 311, 313 (5th Cir. 2006)
(per curiam); In re Schering-Plough Corp. ERISA Litig., 420
F.3d 231, 234-35 (3d Cir. 2005); Kuper v. Iovenko, Page 16
66 F.3d 1447, 1453 (6th Cir. 1995)). But see Fisher v. J.P.
Morgan Chase & Co., No. 03 Civ. 3252 (SHS), 2006 WL 2819606,
at *4 (S.D.N.Y. Sept. 29, 2006) (declining to reconsider
its earlier decision at the class certification stage that
the plaintiffs — plan participants seeking relief on
behalf of a subclass of participants — lacked
standing to bring claims under section 502(a)(2)).
The key consideration in each of these cases was whether
the desired recovery inured to the benefit of the plan or
was explicitly directed towards individuals, rather than
whether every single plan participant would ultimately
recover. With the exception of Fisher, each of these
opinions emphasized the nature of the relief requested,
rather than attempting to look past the plan’s
organizational structure, which serves as a proxy for its
participants and beneficiaries, in order to reveal the
ultimate destination of the recovery. That is because ERISA
section 502 specifically empowers certain persons,
including participants like the plaintiffs here, to bring
suit under section 409 to seek recovery on behalf of the
plan. It is of no consequence that, in the final reckoning,
Plan members will benefit from the recovery, because it is
taken for granted that an ERISA-covered plan ultimately
serves individuals. This is no reason to deprive plan
participants of remedies that are explicitly provided by
section 502(a)(2). Page 17
In fact, breach of fiduciary duty claims based on
misrepresentation have long been recognized as remediable by
way of section 502(a)(2). See, e.g., Russell, 473 U.S. at
142 (recognizing that fiduciary breaches, including those
related to “the disclosure of specified information,” are
secured by “remedies that would protect the entire plan”);
In re Polaroid I, 362 F. Supp. 2d at 478; In re Worldcom,
263 F. Supp. 2d at 765-66. Further, other courts have
explicitly and persuasively rejected the contention that,
because misrepresentation claims require individual
reliance, they can not possibly inure to the benefit of the
plan as a whole. See In re Schering-Plough, 420 F.3d at
235-36 (“[T]he fact that Plaintiffs may have to show
individual reliance on the defendants’ alleged
misrepresentations to prevail on some claims does not mean
they do not seek recovery for Plan losses.”). Consequently,
the Court declines to dismiss Count II of the Complaint to
the extent that it seeks recovery for the Plan under
section 502(a)(2).
2. Communications Claim Is Improper Under Section 502(a)(3)
Although the communications claim may be brought on behalf
of the Plan under section 502(a)(2), Defendants are correct
to note that this claim is not properly brought under
section 502(a)(3) inasmuch as it seeks monetary relief that
may not be recovered from a specifically identified fund.
See supra Part Page 18 II.C. Thus, Count II is dismissed
insofar as it seeks monetary relief under section
502(a)(3).
3. The Investment Committee’s Fiduciary Status for
Communications
The Court has already recognized that general allegations
tracking ERISA’s language are sufficient to plead a
defendant’s fiduciary status. See supra Part II.D. For this
reason, Plaintiffs properly allege that the Investment
Committee was a fiduciary for the purpose of communicating
with Plan participants.
Plaintiffs concede that the Investment Committee was not a
named fiduciary for the purpose of communications. However,
they claim that the Investment Committee was a de facto
fiduciary because it had a “responsibility to provide
complete and accurate information” to the Plan’s
participants (Compl. § 75). The possession of
discretionary responsibility, even without proof that such
responsibility was exercised, provides sufficient ground
for a finding of fiduciary status under ERISA. See 29
U.S.C. § 1002(21)(A)(iii) (indicating that a person
may be a plan fiduciary to the extent that “he has any
discretionary authority or discretionary responsibility in
the administration of such plan”). Accordingly, under the
liberal pleading standard of Federal Rule of Civil
Procedure 8(a), Plaintiffs have adequately alleged that the
Investment Committee was a fiduciary Page 19 for the
purpose of Plan communications. As a result, the Court will
not dismiss Count II against the Investment Committee.
F. The Monitoring Claim (Count III)
Defendants also argue that Plaintiffs have failed to
allege that the Director Defendants were fiduciaries for
the purpose of monitoring. Instead of directly rebutting
the Complaint’s allegations that the Director Defendants
had duties “to review the reports of the Administrative and
Investment Committees” (Compl. § 68) and “to oversee
the Oversight Committee” (Compl. §§ 69, 86),
the defendants seize on Plaintiffs’ allegations that the
Director Defendants delegated their appointment and removal
powers to the CEO. Even if these delegations absolve the
Director Defendants of liability for their delegates’
exercise of those powers, however, the Complaint separately
alleges that those defendants had an express duty to review
and oversee the Administrative, Investment, and Oversight
Committees, each of which is recognized as a fiduciary by
the Defendants. Consequently, the allegations of the
Complaint sufficiently put the Director Defendants on
notice of the monitoring claim against them. The Court
declines to dismiss Count III against those defendants.
G. The Co-Fiduciary Liability Claim (Count IV)
Because the Complaint includes sufficient allegations that
MMC and the Director Defendants are fiduciaries for either
Page 20 investment or monitoring, the co-fiduciary
liability claims have also been properly alleged against
those defendants. Accordingly, the Court has no basis for
dismissing Count IV against any of the defendants.
H. The Knowing Participation Claim (Count V)
Defendant MMC also challenges the fifth and final count of
the Complaint. Count V alleges that, to the extent that the
Court were to find that MMC is not a fiduciary, “MMC
knowingly participated in the breaches of those Defendants
who were fiduciaries and acted in a fiduciary capacity and
as such is liable for equitable relief as a result of
participating in such breaches.” (Compl. § 223.)
Although the Court has already determined that Plaintiffs
have properly alleged MMC’s fiduciary status with respect
to Count I, and thus need not address MMC’s non-fiduciary
liability, the facial invalidity of Count V compels the
Court to dismiss it at this time.
Specifically, regardless of whether the breach of
fiduciary duty claims alleged here may be pursued against a
non-fiduciary, and it seems unlikely that the alleged
breaches fall within the narrow scope of the section 406(a)
party-in-interest transactions considered in Harris Trust &
Sav. Bank v. Salomon Smith Barney, Inc., 530 U.S. 238
(2000), the Supreme Court has clearly stated that any ERISA
claims brought against non-fiduciaries would be limited to
appropriate equitable relief. Page 21 Id. at 246.
Accordingly, as the relief that Plaintiffs request is
simply legal damages in the guise of equitable relief, see
supra Part II.C, Plaintiffs would be unable to obtain the
relief sought by Count V, and thus this claim must be
dismissed.
III. CONCLUSION
For the foregoing reasons, Defendants’ motions to dismiss
are granted in part and denied in part. Specifically, all
counts are dismissed to the extent that they seek monetary
relief under section 502(a)(3), and the knowing
participation claim is dismissed against MMC in its
capacity as a non-fiduciary. In all other respects, the
motions to dismiss are denied.
SO ORDERED.
[fn1] MMC filed a motion seeking to dismiss several claims
in their entirety and others as against particular classes
of defendants. Lawrence Lasser, who is a defendant solely
in his capacity as an MMC director, filed a motion joining
MMC’s position to the extent that it pertains to the
Director Defendants. Finally, Greenberg filed his own
motion, seeking the dismissal of all claims against him.
[fn2] ERISA section 502(a)(3) provides in relevant part that
a civil action may be brought “by a participant,
beneficiary, or fiduciary (A) to enjoin any act or practice
which violates any provision of this subchapter or the
terms of the plan, or (B) to obtain other appropriate
equitable relief. . . .” 29 U.S.C. § 1132(a)(3).