VARITY CORPORATION, PETITIONER v. CHARLES HOWE ET AL. No. 94-1471 SUPREME COURT OF THE UNITED STATES 116 S. Ct. 1065; 1996 U.S. LEXIS 1954; 134 L. Ed. 2d 130; 64 U.S.L.W. 4138; 96 Daily Journal DAR 3151 November 1, 1995, Argued March 19, 1996, Decided DISSENT: JUSTICE THOMAS, with whom JUSTICE O'CONNOR and JUSTICE SCALIA join, dissenting. In Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 87 L. Ed. 2d 96, 105 S. Ct. 3085 (1985), we held that actions for fiduciary breach under @@ 409 and 502(a)(2), 29 U.S.C. @@ 1109, 1132(a)(2) (1988 ed.), the provisions of ERISA specifically designed for civil enforcement of fiduciary duties, must "be brought in a representative capacity on behalf of the plan as a whole." Id., at 142, n. 9. The Court today holds that @ 502(a)(3), 29 U.S.C. @ 1132(a)(3), the catchall remedial provision that directly follows @ 502(a)(2), provides the individual relief for fiduciary breach that we found to be unavailable under @ 502(a)(2). This holding cannot be squared with the text or structure of ERISA, and to reach it requires the repudiation of much [*47] of our reasoning in Russell. The Court also finds that Varity was subject to fiduciary obligations under ERISA because it engaged in activity of a "plan-related nature" that plan participants reasonably perceived to be conducted in the employer's capacity as plan fiduciary. Ante, at 13. This holding, like the first, has no basis in statutory text. Because these holdings are fundamentally at odds with the statutory scheme enacted by Congress, I respectfully dissent. I A "ERISA is, we have observed, a 'comprehensive and reticulated statute,' the product of a decade of congressional study of the Nation's private employee benefit system." Mertens v. Hewitt Associates, 508 U.S. 248, 251, 113 S. Ct. 2063, 124 L. Ed. 2d 161 (1993) (quoting Nachman Corp. v. Pension Benefit Guaranty Corporation, 446 U.S. 359, 361, 64 L. Ed. 2d 354, 100 S. Ct. 1723 (1980)). The Act is "an enormously complex and detailed statute that resolved innumerable disputes between powerful competing interests--not all in favor of potential plaintiffs." Id., at 262. Given the "evident care" with which ERISA was crafted, we have traditionally been "reluctant to tamper with [the] enforcement scheme" embodied in the statute. Russell, supra, at [*48] 147. Accordingly, we have repeatedly declined invitations by plan participants and beneficiaries to extend benefits and remedies not specifically authorized by the statutory text. See, e.g., Mertens, supra, at 262 (rejecting claim that ERISA affords a cause of action against a nonfiduciary who knowingly participates in a fiduciary breach); Russell, supra, at 145-148 (declining invitation to create an implied private cause of action for extracontractual damages); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56, 95 L. Ed. 2d 39, 107 S. Ct. 1549 (1987) (holding that civil enforcement scheme codified at @ 502(a) is not to be supplemented by state law remedies). Nowhere is the care with which ERISA was crafted more evident than in the Act's mechanism for the enforcement of fiduciary duties. Part 4 of the Act's regulatory provisions, entitled "Fiduciary Responsibility," see @@ 401-414, 29 U.S.C. @@ 1101-1114, assigns fiduciaries "a number of detailed duties and responsibilities." Mertens, supra, at 251. Part 4 also includes its own liability provision, @ 409, which we considered in Russell. Entitled "Liability For Breach of Fiduciary Duty," @ 409 provides: "Any person [*49] who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter 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." @ 409(a), as codified in 29 U.S.C. @ 1109(a) (1988 ed.). Section 409, however, only creates liability. In order to enforce the right and obtain the remedy created by @ 409, a plaintiff must bring suit under @ 502(a)(2), one of ERISA's "carefully integrated civil enforcement provisions." Russell, 473 U.S. at 146. That section allows plan participants, beneficiaries, and fiduciaries, as well as the Secretary of Labor, to bring a "civil action . . . for appropriate relief" under @ 409. Of the nine enforcement provisions currently codified at @ 502(a), @ 502(a)(2) is the only one that specifically authorizes suit for breach of fiduciary duty. The plaintiffs in this case chose not to proceed through this carefully constructed framework, designed specifically to provide a cause of action for claims of fiduciary breach. Instead, the plaintiffs brought their claims for breach of fiduciary duty under @ 502(a)(3) of the Act, which they claim provides an alternative basis for relief. Section 502(a)(3), as codified in 29 U.S.C. @ 1132(a)(3) (1988 ed.), is a catchall remedial provision that authorizes a civil action "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 (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan." Since respondents are seeking equitable relief to redress a claimed violation of @ 404, which is a provision in the same subchapter as @ 502(a)(3), and since @ 502(a)(3) authorizes recovery for breach of any provision in that subchapter, respondents contend that their claim of breach of fiduciary duty is cognizable under the plain language of @ 502(a)(3). Respondents have a plausible textual argument, if @ 502(a)(3) is read without reference to its surrounding provisions or our precedents. Respondents' decision to proceed under @ 502(a)(3)'s catchall provision instead of under @@ 409 and 502(a)(2) was obviously motivated by our decision in Russell, supra. We held in Russell that @ 409 authorizes recovery only by "the plan as an entity," 473 U.S. at 140, and does not allow for recovery by individual plan participants. Id., at 139-144; see also id., at 144 ("Congress did not intend that section to authorize any relief except for the plan itself"). The respondents, however, do not seek relief on behalf of the plan; rather they wish to recover individually. We reserved the question whether relief might be available for individuals under @ 502(a)(3) in Russell, id., at 139, n. 5, and respondents rightly understood this provision to offer the only possible route for securing their desired relief. We would have to read @ 502(a)(3) in a vacuum, however, to find in respondents' favor. Congress went to great lengths to enumerate ERISA's fiduciary obligations and duties, see @@ 401-408; @@ 410-412, to create liability for breach of those obligations, [*52] see @ 409, and to authorize a civil suit to enforce those provisions, see @ 502(a)(2). Section 502(a)(3), in contrast, is a generally worded provision that fails even to mention fiduciary duty. "It is a commonplace of statutory construction that the specific governs the general." Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384, 119 L. Ed. 2d 157, 112 S. Ct. 2031 (1992) (citing Crawford Fitting Co. v. J. T. Gibbons, Inc., 482 U.S. 437, 445, 96 L. Ed. 2d 385, 107 S. Ct. 2494 (1987)). "The law is settled that 'however inclusive may be the general language of a statute, it "will not be held to apply to a matter specifically dealt with in another part of the same enactment."'" Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 228, 1 L. Ed. 2d 786, 77 S. Ct. 787 (1957) (citations omitted). This is particularly true where, as here, Congress has enacted a comprehensive scheme and has deliberately targeted specific problems with specific solutions. See HCSC-Laundry v. United States, 450 U.S. 1, 6, 67 L. Ed. 2d 1, 101 S. Ct. 836 (1981) (per curiam) (This "basic principle of statutory construction" applies "particularly when the two [provisions] are interrelated and closely positioned, both in fact being parts of" the same statutory scheme). Applying this basic [*53] rule of statutory construction, I conclude that Congress intended @@ 409 and 502(a)(2) to provide the exclusive mechanism for bringing claims of breach of fiduciary duty. n1 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n1 On other occasions we have recognized that "redundancies across statutes are not unusual events in drafting," and that where statutes overlap, courts should give effect to both absent a "'positive repugnancy'" between them. Connecticut Nat. Bank v. Germain, 503 U.S. 249, 253, 117 L. Ed. 2d 391, 112 S. Ct. 1146 (1992) (quoting Wood v. United States, 16 Pet. 342, 363 (1842)). But Germain and similar cases involved claims of implied repeal, which we have long held should not be recognized unless two statutes irreconcilably conflict. Germain did not involve simultaneously enacted, consecutive provisions of the same Act, as in this case. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - If Congress had intended to allow individual plan participants to secure equitable relief for fiduciary breaches, I presume it would have made that clear in @@ 409 and 502(a)(2), the provisions specifically enacted to [*54] address breach of fiduciary duty. See Russell, 473 U.S. at 144 (rejecting claim for extracontractual damages for failure timely to provide benefits in part because "the statutory provision explicitly authorizing a beneficiary to bring an action to enforce his rights under the plan-- @ 502(a)(1)(B)--says nothing about the recovery of extracontractual damages") (citation omitted). In fact, Congress did provide for equitable relief in @ 409, which authorizes "such other equitable or remedial relief as the court may deem appropriate" to redress a breach of fiduciary duty, but it only allowed such relief to be recovered by the plan. Congress did not extend equitable relief to individual plan participants, and we reversed the Court of Appeals in Russell for holding that it did. See 473 U.S. at 140. Thus, to accept the majority's position, I would have to conclude not only that Congress forgot to provide for individual relief in @@ 409 and 502(a)(2), but that it clearly intended to provide for individual relief in @ 502(a)(3), a catchall provision that fails even to mention fiduciary breach and uses language identical to that in @ 409, which we have already held authorizes [*55] equitable relief only on behalf of the plan. Compare @ 409 (authorizing "such . . . equitable . . . relief as the court may deem appropriate") with @ 502(a)(3) (authorizing "appropriate equitable relief"). While I would disagree with the majority's strained statutory interpretation in any case, "the assumption of inadvertent omission is rendered especially suspect upon close consideration of ERISA's interlocking, interrelated, and interdependent remedial scheme, which is in turn part of a 'comprehensive and reticulated statute.'" Russell, supra, at 146 (quoting Nachman Corp. v. Pension Benefit Guaranty Corporation, 446 U.S. at 361). See also Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 837, 100 L. Ed. 2d 836, 108 S. Ct. 2182 (1988). n2 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n2 The majority apparently believes that @ 502(a)(1)(B), 29 U.S.C. @ 1132(a)(1)(B), "provides a remedy for breaches of fiduciary duty with respect to the interpretation of plan documents and the payment of claims." Ante, at 22 (citing Russell, c473 U.S. at 144). Since, in the majority's view, @ 502(a)(1)(B) allows for individual recovery for fiduciary breach outside the framework created by @@ 409 and 502(a)(2), the majority wonders "why should we not conclude that Congress provided yet other remedies for yet other breaches of other sorts of fiduciary obligations in another, 'catchall' remedial section?" Ante, at 22. The answer is simple. Contrary to the majority's understanding, @ 502(a)(1)(B) does not create a cause of action for fiduciary breach, and Russell expressly rejected the claim that it does. Thus, the entire premise of the question is flawed. Section 502(a)(1)(B) deals exclusively with contractual rights under the plan. It allows a participant or beneficiary to bring a civil action "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." As we recognized in Russell, this provision "says nothing about the recovery of extracontractual damages." 473 U.S. at 144. If the justification for the Court's holding is that we should allow individual recovery for fiduciary breach under @ 502(a)(3) since such recovery is available under @ 502(a)(1)(B), then there really is no justification at all. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*56] The majority's reading of @ 502(a)(3) also renders a portion of @ 409 superfluous. If, as the Court today holds, @ 502(a)(3) authorizes relief for breaches of fiduciary duty, then that section must authorize relief on behalf of the plan as well as on behalf of individuals. Nothing in @ 502(a)(3) limits relief solely to individuals. And @ 404(a), which the Court holds to be enforceable through @ 502(a)(3), provides protection primarily, if not exclusively, for the plan. See Russell, supra, at 142-143, and n. 10. But if @ 502(a)(3) allows plan participants to secure equitable relief on behalf of the plan, then @ 409's promise of appropriate equitable relief for the plan is entirely redundant. Thus, the Court violates yet another well-settled rule of statutory construction, namely that "courts should disfavor interpretations of statutes that render language superfluous." Connecticut Nat. Bank v. Germain, 503 U.S. 249, 253, 117 L. Ed. 2d 391, 112 S. Ct. 1146 (1992). Of course, this result could be avoided simply by reading the statute as written and by respecting the canon that specific enactments trump general ones in carefully constructed statutes like ERISA. B This is not simply a case about [*57] the "specific governing the general," however. Nor is this a case solely about the interrelationship between @@ 409 and 502(a)(3). At every turn lies statutory proof, most of which the majority ignores, that Congress never intended to authorize individual plan participants to secure relief for fiduciary breach under ERISA. The majority also gives short shrift to our decision in Russell. See ante, at 20. It is only by overlooking the language and structure of ERISA and our reasoning in Russell that the majority is able to reach the conclusion that it does. I begin with the Court's failure to address our reasoning and analysis in Russell. We held in Russell that under @ 409, "actions for breach of fiduciary duty [must] be brought in a representative capacity on behalf of the plan as a whole." 473 U.S. at 142, n. 9. Because the holding in Russell applied only to @@ 409 and 502(a)(2), and because we reserved the question of individual relief under @ 502(a)(3), see id., at 139, n. 5, the majority concludes that "Russell does not control, either implicitly or explicitly, the outcome of the case before us." Ante, at 20. Russell cannot be so [*58] easily dismissed. Our holding in that case was based not only on the text of @ 409, but also on "the statutory provisions defining the duties of a fiduciary, and [on] the provisions defining the rights of a beneficiary." 473 U.S. at 140. The language of @ 409 weighed heavily in our analysis, but it was ultimately "[a] fair contextual reading of the statute," id., at 142, that led to our conclusion that "Congress did not intend that section to authorize any relief except for the plan itself." Id., at 144. The majority is simply wrong when it states that the language "the Court found limiting" in Russell appears only in @ 409. Ante, at 20. Since our holding in Russell relied on the language and structure of ERISA as a whole, and not solely on the text of @@ 409 and 502(a)(2), the Court cannot dismiss Russell on the ground that Russell provides no insight into the provisions at issue in this case. Much of our reasoning in Russell forecloses the possibility of individual relief even under @ 502(a)(3). For instance, in interpreting @ 409 in Russell to afford relief solely on behalf of the plan, we found it significant that "the relevant fiduciary [*59] relationship characterized at the outset [of @ 409 is] one 'with respect to a plan.'" Id., at 140. It must also be significant, then, that Congress employed the same or similar language virtually every time it referred to a fiduciary or a fiduciary obligation in ERISA. See, e.g., @@ 3(21)(A), 404, 405, 406, 409, 411, 29 U.S.C. @@ 1002(21)(A), 1104, 1105, 1106, 1109, 1111. Section 404, the very provision that respondents seek to enforce in this case, governs the manner in which "a fiduciary . . . discharges his duties with respect to a plan." @ 404(a)(1) (emphasis added). And the definition of a fiduciary under ERISA also places the focus on the responsibilities of a "fiduciary with respect to a plan." @ 3(21)(A) (emphasis added). In light of the "basic canon of statutory construction that identical terms within an Act bear the same meaning," Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 479, 120 L. Ed. 2d 379, 112 S. Ct. 2589 (1992) (citation omitted), we should accord Congress' repeated references to a "fiduciary with respect to a plan" the same significance we attributed to it in Russell, namely that it reveals that ERISA's fiduciary obligations were designed to regulate [*60] the relationship between the fiduciary and the plan, and not the relationship between the fiduciary and individual participants. Furthermore, "the emphasis on the relationship between the fiduciary and the plan as an entity" that we found to be "apparent" on the face of @ 409, Russell, 473 U.S. at 140, pervades all of the fiduciary provisions in ERISA. This is to be expected, since the relief available under @ 409 ultimately reflects the fiduciary duties and obligations that @ 409 enforces. We recognized in Russell that, consistent with the wording of @ 409, "the principal statutory duties imposed on the trustees relate to the proper management, administration, and investment of fund assets, the maintenance of proper records, the disclosure of specified information, and the avoidance of conflicts of interest." Id., at 142-143. Though it is true that ERISA requires fiduciaries to discharge their "duties with respect to a plan solely in the interest of the participants and beneficiaries and . . . for the exclusive purpose of providing benefits to participants and their beneficiaries," @ 404(a)(1)(A)(i), it is equally true that the duties to which these commands apply [*61] deal primarily with obligations that relate to the plan, not individual plan participants. In fact, one of the two statutes we specifically cited in Russell as evidence that Congress was primarily concerned with the misuse of plan assets was @ 404, the provision that respondents seek to enforce in this case. See Russell, supra, at 142-143, and n. 10. n3 That Congress was principally concerned with "the financial integrity of the plan," id., at 142, n. 9, is thus reflected not only in @ 409, but throughout the fiduciary provisions @ 409 enforces. n4 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n3 We also observed in Russell that the Act's legislative history, like its statutory provisions, "emphasizes the fiduciary's personal liability for losses to the plan." 473 U.S. at 140, n. 8 (emphasis in original). We gleaned from the legislative history that "the crucible of congressional concern was misuse and mismanagement of plan assets by plan administrators and that ERISA was designed to prevent these abuses in the future." Id., at 141, n. 8. n4 The majority's citation of @ 502(l), 29 U.S.C. @ 1132(l) (1988 ed., Supp. I), in support of its interpretation of @ 502(a)(3) is unpersuasive. Section 502(l) was enacted by Congress in 1989, more than a decade after ERISA was initially enacted. We have recognized that in interpreting ERISA, as with all statutes, "'the views of a subsequent Congress form a hazardous basis for inferring the intent of an earlier one.'" Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 114, 103 L. Ed. 2d 80, 109 S. Ct. 948 (1989) (quoting United States v. Price, 361 U.S. 304, 313, 4 L. Ed. 2d 334, 80 S. Ct. 326 (1960)). See also Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 839-840, 100 L. Ed. 2d 836, 108 S. Ct. 2182 (1988). In any event, to the extent that @ 502(l) indicates Congress' understanding (in 1989) that individual relief might be available for fiduciary breach, @ 502(l) confirms that Congress did not believe that @ 502(a)(3) affords such relief. That is the most reasonable inference from Congress' citation of @@ 502(a)(2) and (a)(5)--and, notably, not of @ 502(a)(3)--in reference to statutes purportedly authorizing amounts to be paid to plan participants and beneficiaries. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*62] Thus, though the majority finds Russell to be irrelevant, it is all but dispositive. We analyzed in that case all of the provisions the Court today holds to be enforceable through @ 502(a)(3). We considered these provisions as part of our "contextual reading" of @ 409, and only when we read @ 409 in conjunction with these surrounding provisions did it become "abundantly clear 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." Russell, supra, at 142. This is not to say that Congress did not intend to protect plan participants from fiduciary breach; it surely did. Congress chose, however, to protect individuals by creating a single remedy on behalf of the plan rather than authorizing piecemeal suits for individual relief. Given Congress' apparent intent to allow suit for breach of fiduciary duty exclusively under @@ 409 and 502(a)(2), and given the abundant evidence of Congress' intent to authorize only relief on behalf of the plan, I would hold that individual relief for fiduciary breach is unavailable under @ [*63] 502(a)(3). II Even assuming that ERISA authorizes recovery for breach of fiduciary duty by individual plan participants, I cannot agree with the majority that Varity committed any breach of fiduciary duty cognizable under ERISA. Section 3(21)(A) of the Act explicitly defines the extent to which a person will be considered a fiduciary under ERISA. See 29 U.S.C. @ 1002(21)(A). In place of the statutory language, the majority creates its own standard for determining fiduciary status. But constrained, as I am, to follow the command of the statute, I conclude that Varity's conduct is not actionable as a fiduciary breach under the Act. n5 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n5 As explained supra, the principal duties that ERISA imposes on plan fiduciaries involve the management of plan assets, the maintenance of records, disclosure of specified information, and avoidance of conflicts of interest. See Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 142-143, 87 L. Ed. 2d 96, 105 S. Ct. 3085 (1985). Accordingly, we have recognized that "fiduciary status under ERISA generally attends the management of 'plan assets.'" John Hancock Mut. Life Ins. Co. v. Harris Trust and Sav. Bank, 510 U.S. , (1993) (slip op., at 1). However, since the Court holds that individual plan participants are entitled to recover for breach of fiduciary duty, I proceed here on the assumption that fiduciary status can be predicated to some extent on interactions with individual plan participants. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*64] A Under ERISA, an employer is permitted to act both as plan sponsor and plan administrator. @ 408(c)(3), 29 U.S.C. @ 1108(c)(3) (1988 ed.). Employers who choose to administer their own plans assume responsibilities to both the company and the plan, and, accordingly, owe duties of loyalty and care to both entities. In permitting such arrangements, which ordinary trust law generally forbids due to the inherent potential for conflict of interest, n6 Congress understood that the interests of the plan might be sacrificed if an employer were forced to choose between the company and the plan. Hence, Congress imposed on plan administrators a duty of care that requires them to "discharge [their] duties with respect to a plan solely in the interest of the participants and beneficiaries." @ 404(a)(1). Congress also understood, however, that virtually every business decision an employer makes can have an adverse impact on the plan, and that an employer would not be able to run a company profitably if every business decision had to be made in the best interests of plan participants. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n6 See NLRB v. Amax Coal Co., 453 U.S. 322, 329-330, 69 L. Ed. 2d 672, 101 S. Ct. 2789 (1981) ("To deter the trustee from all temptation and to prevent any possible injury to the beneficiary, the rule against a trustee dividing his loyalties must be enforced with 'uncompromising rigidity.' A fiduciary cannot contend 'that, although he had conflicting interests, he served his masters equally well or that his primary loyalty was not weakened by the pull of his secondary one'") (citations omitted). See also G. Bogert & G. Bogert, Law of Trusts and Trustees @@ 121, 543 (rev. 2d ed. 1993). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*65] In defining the term "fiduciary" in @ 3(21)(A) of ERISA, Congress struck a balance that it believed would protect plan participants without impinging on the ability of employers to make business decisions. In recognition that ERISA allows trustee-beneficiary arrangements that the common law of trusts generally forbids, Congress "defined 'fiduciary' not in terms of formal trusteeship, but in functional terms of control and authority over the plan." Mertens, 508 U.S. at 262 (emphasis in original). Accordingly, under ERISA, a person "is a fiduciary with respect to a plan" only "to the extent" that "he has any discretionary authority or discretionary responsibility in the administration of such plan." @ 3(21)(A)(iii), 29 U.S.C. @ 1002(21)(A)(iii) (1988 ed.). n7 This "artificial definition of 'fiduciary,'" Mertens, supra, at 255, n. 5, is designed, in part, so that an employer that administers its own plan is not a fiduciary to the plan for all purposes and at all times, but only to the extent that it has discretionary authority to administer the plan. When the employer is not acting as plan administrator, it is not a fiduciary under the Act, and the fiduciary duty of [*66] care codified in @ 404 is not activated. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n7 A person is also a "fiduciary with respect to a plan" under ERISA "to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, [or] (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so." @ 3(21)(A), 29 U.S.C. @ 1002(21)(A). In this case, the parties agree that Varity's status as a fiduciary turns on an interpretation of the statute's third category, which relates to plan administration. See Brief for Petitioner 31; Brief for Respondents 33. See also Brief for United States as Amicus Curiae 25. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - Though we have recognized that Congress borrowed from the common law of trusts in enacting ERISA, Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111, 103 L. Ed. 2d 80, 109 S. Ct. 948 (1989), we must not [*67] forget that ERISA is a statute, and in "'every case involving construction of a statute,'" the "'starting point . . . is the language itself.'" Ernst & Ernst v. Hochfelder, 425 U.S. 185, 197, 47 L. Ed. 2d 668, 96 S. Ct. 1375 (1976) (citation omitted); see Central Bank of Denver, N. A. v. First Interstate Bank of Denver, N. A., 511 U.S. , (1994). We should be particularly careful to abide by the statutory text in this case, since, as explained, ERISA's statutory definition of a fiduciary departs from the common law in an important respect. The majority, however, tells us that the "starting point" in determining fiduciary status under ERISA is the common law of trusts. Ante, at 7. According to the majority, it is only "after" courts assess the common law that they may "go on" to consider the statutory definition, and even then the statutory inquiry is only "to ask whether, or to what extent, the language of the statute, its structure, or its purposes require departing from common-law trust requirements." Ante, at 7. This is a novel approach to statutory construction, one that stands our traditional approach on its head. To determine whether an employer acts as a fiduciary under ERISA, [*68] I begin with the text of @ 3(21)(A)(iii). To "administer" a plan is to "manage or supervise the execution . . . or conduct of" the plan. Webster's Ninth New Collegiate Dictionary 57 (1991). See also Webster's New International Dictionary 34 (2d ed. 1957) (same). Essentially, to administer the plan is to implement its provisions and to carry out plan duties imposed by the Act. The question in this case is whether Varity was carrying out discretionary responsibilities over management or implementation of the plan, when, as respondents argued below, it "made misrepresentations to the class plaintiffs about MCC's business prospects and about the anticipated effect of the employment transfers on plaintiffs' benefits." Brief for Plaintiffs-Appellees in No. 93-2056 (CA8), p. 27. Although representations of this sort may well affect plan participants' assessment of the security of their benefits, I disagree with the majority that such communications qualify as "plan administration" under the Act. In the course of running a business, an employer that administers its own benefits plan will make countless business decisions that affect the plan. Congress made clear in @ 3(21)(A), however, [*69] that "'ERISA does not require that "day-to-day corporate business transactions, which may have a collateral effect on prospective, contingent employee benefits, be performed solely in the interest of plan participants."'" Adams v. Avondale Industries, Inc., 905 F.2d 943, 947 (CA6) (citation omitted), cert. denied, 498 U.S. 984, 112 L. Ed. 2d 529, 111 S. Ct. 517 (1990). Thus, ordinary business decisions, such as whether to pay a dividend or to incur debt, may be made without fear of liability for breach of fiduciary duty under ERISA, even though they may turn out to have negative consequences for plan participants. Even business decisions that directly affect the plan and plan participants, such as the decision to modify or terminate welfare benefits, are not governed by ERISA's fiduciary obligations because they do not involve discretionary administration of the plan. See Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. , (1995) (slip op., at 4) (parenthetically quoting Adams, supra, at 947, for the proposition that "'a company does not act in a fiduciary capacity when deciding to amend or terminate a welfare benefits plan'"). In contrast, the discretionary interpretation of a plan term, or [*70] the discretionary determination that the plan does not authorize a certain type of procedure, would likely qualify as plan administration by a fiduciary. There is no claim in this case, however, that Varity failed to implement the plan according to its terms, since respondents actually received all of the benefits to which they were entitled under the plan, as the courts below found. An employer will also make countless representations in the course of managing a business about the current and expected financial condition of the corporation. n8 Similarly, an employer may make representations that either directly or impliedly evince an intention to increase, decrease, or maintain employee welfare benefits. Like the decision to terminate or modify welfare benefits, the decision to make, or not to make, such representations is made in the employer's "corporate nonfiduciary capacity as plan sponsor or settlor," Borst v. Chevron Corp., 36 F.3d 1308, 1323, n. 28 (CA5 1994), cert. denied, 514 U.S. (1995), and ERISA's fiduciary rules do not apply. Such communications simply are not made in the course of implementing the plan or executing its terms. Rather, they are the necessary [*71] incidents of conducting a business, and Congress determined that employers would not be burdened with fiduciary obligations to the plan when engaging in such conduct. See @ 3(21)(A)(iii). n9 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n8 The statements Varity made in this case are typical of the kind of statements management often makes in assessing the expected financial health of the company. See App. 80 ("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"); ibid. ("Despite the depression which persists in the North American economy, I am excited about the future of Massey Combines Corporation"); id., at 82 ("We are all very optimistic that our new company, has a bright future, and are excited by the new challenges facing all of us"). n9 Applying ERISA's fiduciary obligations to these types of communications will distort corporate decisionmaking in a way never intended by Congress. For instance, as petitioner observes, an employer contemplating the purchase of a competitor or the downsizing of a division "would be required, in order to avoid liability under ERISA, to fully describe [to its employees] its plans to do so because such plans might affect the 'security' of welfare benefits." Reply Brief for Petitioner 16, n. 20. Even if the Court's holding is not extended to cover the nondisclosure of information that might affect employee benefits, a simple inquiry by an employee into the possible effect of a business decision on plan benefits would be sufficient to saddle the employer with fiduciary obligations in conducting the proposed business transaction. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*72] To be sure, ERISA does impose a "comprehensive set of 'reporting and disclosure' requirements," which is part of "an elaborate scheme . . . for enabling beneficiaries to learn their rights and obligations at any time." Curtiss-Wright Corp. v. Schoonejongen, supra, at - (slip op., at 9-10); see @@ 101-111, 29 U.S.C. @@ 1021-1031. n10 But no provision of ERISA requires an employer to keep plan participants abreast of the plan sponsor's financial security or of the sponsor's future intentions with regard to terminating or reducing the level of benefits. n11 And to the extent that ERISA does impose disclosure obligations, the Act already provides for civil liability and penalties for disclosure violations wholly apart from ERISA's provisions governing fiduciary duties. See @@ 502(a)(1)(A), 502(c). Though "this may not be a foolproof informational scheme, . . . it is quite thorough." Curtiss-Wright Corp., 514 U.S. at (slip op., at 11). Congress' decision not to include the types of representations at issue in this case within the Act's extensive disclosure requirements is strong evidence that Congress did not consider such statements to qualify as "plan administration." n12 [*73] - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n10 For instance, the benefits plan must be established pursuant to a written instrument. @ 402(a)(1), 29 U.S.C. @ 1102(a)(1). Plan administrators must also furnish to participants a summary plan description, @ 101(a), 29 U.S.C. @ 1021(a), which "shall be written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan." @ 102(a)(1), 29 U.S.C. @ 1022(a)(1). The summary plan description must describe, among other things, the plan's requirements governing eligibility for participation and benefits as well as the procedures for presenting claims for benefits. @ 102(b), 29 U.S.C. @ 1022(b). Material modifications must be disclosed and must also be "written in a manner calculated to be understood by the average plan participant." @ 102(a)(1). Plan administrators are also required to disclose specified financial information in annual reports filed with the Secretary of Labor and made available to participants upon request. @@ 103(b), 104(b), 29 U.S.C. @@ 1023(b), 1024(b). ERISA also dictates the times at which such disclosures must be made. @ 104(b)(1). [*74] n11 To the contrary, "employers or other plan sponsors are generally free under ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans." Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. , (1995) (slip op., at 4). As we made clear last Term, "ERISA does not create any substantive entitlement to employer-provided health benefits or any other kind of welfare benefits," nor does it "establish any minimum participation, vesting, or funding requirements for welfare plans as it does for pension plans." Ibid. n12 Nor is the communication of information about the company's well-being or the possible effect of a business transaction on plan benefits considered plan administration under the Massey-Ferguson plan at issue in this case. The plan, the terms of which the majority fails to address, contains only two provisions that either require or authorize plan administrators to communicate plan information to plan participants. The first is contained in @ 8.1.3, and it requires the plan administrator to make all disclosures required by ERISA. See App. 19 (requiring plan administrator to file required reports with the appropriate governmental agencies and to "comply with requirements of law for disclosure of Plan provisions and other information relating to the Plan to Employees and other interested parties"). The second, entitled "Communication to Employees," is contained in @ 10 of the plan. That section requires the company, "in accordance with the requirements of the Act, [to] communicate the principal terms of the Plan to the Employees" and to "make available for inspection, by Employees and their beneficiaries, during reasonable hours at the principal office of the Company and at such other places as may be required by the Act, a copy of the Plan, the Trust Agreement, and of such other documents as may be required by the Act." App. 21. The only other responsibility the plan expressly delegates to the plan administrator is the administration of claims pursuant to the plan's claims procedure, which is described in @ 11 of the plan. See generally App. 18-20 (section of plan entitled "Allocation of Responsibilities Among Named Fiduciaries," which enumerates all of the fiduciary obligations imposed by the plan). Though I do not claim that plan administration is necessarily limited to performance of duties imposed by the plan documents, see ante, at 14, the majority's response to this strawman argument--that ERISA's fiduciary obligations would be meaningless if only the performance of duties imposed by the plan qualified as plan administration--is nonetheless flawed. The majority's argument is based on the mistaken assumption that a plan cannot assign discretionary authority to plan administrators (the exercise of which would clearly be subject to fiduciary duties under the Act), an assumption flatly contradicted both by the common law of trusts and by common sense. See Bogert & Bogert, supra n. 6, @ 552. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*75] Because an employer's representations about the company's financial prospects or about the possible impact of ordinary business transactions on the security of unvested welfare benefits do not involve execution or implementation of duties imposed by the plan or the Act, and because these are the types of representations employers regularly make in the ordinary course of running a business, I would not hold that such communications involve plan administration. The untruthfulness of a statement cannot magically transform it from a nonfiduciary representation into a fiduciary one; the determinative factor is not truthfulness but the capacity in which the statement is made. B With only passing reference to the relevant statutory text, the majority discards the limits that Congress imposed on fiduciary status and replaces them with a far broader standard plucked from the common law of trusts. See ante, at 12. Relying on trust treatises and our decision in Central States, Southeast & Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 86 L. Ed. 2d 447, 105 S. Ct. 2833 (1985), the majority concludes that a person engages in plan administration whenever he exercises "'powers as are necessary [*76] or appropriate for the carrying out of the purposes' of the trust." Ante, at 12 (quoting 3 A. Scott, Law of Trusts @ 186, p. 6 (4th ed. 1988)). n13 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n13 Also, the majority twice looks to @ 404(a) in attempting to determine the scope of fiduciary status under ERISA. See ante, at 12, 22. Specifically, the majority relies on @ 404(a)(1)(D), which requires a fiduciary to discharge his duties "in accordance with the documents and instruments governing the plan." But @ 404(a)(1)(D) does not determine whether a person is acting as a fiduciary. Like the other provisions of @ 404, it merely establishes a ground rule for functions performed by a person deemed to be a fiduciary under @ 3(21)(A). The majority cannot rely on @ 404(a)(1)(D) to determine whether a person has assumed fiduciary status, since that provision applies only after it has been established that a person is a fiduciary. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - The majority's approach is flawed in at least two respects. First, the standard that it borrows from the common law of [*77] trusts is not the common-law standard for determining whether a person is a fiduciary. Rather, it is the standard the common law uses to define the scope of a fiduciary's authority once it is settled that a person is a fiduciary. Thus, the Court inexplicably takes a common-law standard that presumes that a person is a fiduciary and applies it to determine whether, under the statute, that person is a fiduciary in the first place. The majority's approach ignores the patent differences between the definition of a fiduciary under ERISA and the common law, and in the process expands the activities that are governed by fiduciary standards beyond those designated by the statutory text. n14 - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n14 The majority's reliance on Central States, Southeast & Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 86 L. Ed. 2d 447, 105 S. Ct. 2833 (1985) (cited ante, at 12), illustrates the flaw in the majority's approach. Although we quoted there the same passage from the Scott treatise that the majority substitutes for the text of @ 3(21)(A), see Central States, supra, at 570, the Court was not attempting to determine in that case, as we are here, whether a person was acting as a fiduciary with respect to a plan under @ 3(21)(A). There was no question that the trustee in Central States was a fiduciary under @ 3(21)(A), and there was no question that the audit the trustees wished to perform was a fiduciary function. The only question in Central States was whether the plan trustees, who were admittedly fiduciaries, were authorized by the plan to perform this concededly fiduciary function. Like the common-law principle cited therein, the Central States dicta only becomes relevant once it is settled that a person is a fiduciary. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*78] Second, the majority disregards any possible distinction between the respective roles of an ERISA trustee and an ERISA plan administrator that might counsel against the wholesale importation, into the statutory definition of plan administration, of common-law rules governing trustees. Under ERISA, a plan trustee is charged with "exclusive authority and discretion to manage and control the assets of the plan." @ 403, 29 U.S.C. @ 1103. Because the trustee's authority over plan assets is exclusive, a plan administrator under ERISA lacks the preeminent responsibility of the common-law trustee, namely the management of the trust corpus. Thus, while it may be true under the common law that a trustee has such powers as are necessary to further the purposes of the trust, it does not automatically follow that the administrator of a benefits plan (who by definition lacks authority over plan assets), possesses all authority "necessary or appropriate" for carrying out the purposes of the plan. And the majority cites no authority for its assumption that an ERISA plan administrator is the functional equivalent of a common-law trustee. See ante, at 12-13, 14, 15. At bottom, the majority's [*79] analysis is an exercise in question-begging. If speculating about the company's financial stability or the security of plan benefits does not involve discretionary authority in plan administration, it is wholly irrelevant that providing such information "would seem" to be related to "carrying out an important plan purpose." Ante, at 12. That a communication was "about benefits," ante, at 11, or an activity was of a "plan-related nature," ante, at 13, is also of little significance unless the act involved plan administration. The whole purpose of @ 3(21)(A)(iii) is to make clear that one who engages even in benefit-related or plan-related conduct is a fiduciary only "to the extent" he has discretionary authority to administer the plan. See John Hancock Mut. Life Ins. Co. v. Harris Trust and Sav. Bank, 510 U.S. , (1993) (slip op., at 18) (Congress uses the phrase "to the extent" to make clear that "to some extent" actions that would otherwise be included in a general category were meant to be excluded). The majority's end-run around this important limitation by reference to inapplicable principles from the common law of trusts is unpersuasive. The majority [*80] confirms that the statutory text is largely irrelevant under its approach by indulging the notion that a plan participant's subjective understanding of the employers' conduct is relevant in determining whether an employer's actions qualify as "plan administration" under ERISA. The majority concludes that Varity was engaged in plan administration in part on the ground that "reasonable employees . . . could have thought" that Varity was administering the plan. Ante, at 13. ERISA does not make a person a fiduciary to the extent reasonable employees believe him to be a fiduciary, but rather to the extent "he has any discretionary authority or discretionary responsibility in the administration of such plan." @ 3(21)(A)(iii). Under ERISA, an act either involves plan administration, or it does not; whether the employees have a subjective belief that the employer is acting as a fiduciary cannot matter. A rule turning on the subjective perceptions of plan participants is simply inconsistent with ERISA's fundamental structure, which is built not upon perceptions, but "around reliance on the face of written plan documents." Curtiss-Wright Corp., 514 U.S. at (slip op., at 9). n15 [*81] - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n15 As petitioner observed, "it is difficult to imagine a situation involving any communication in any 'context' as to future business decisions that might affect a participant's benefit choices that could not 'reasonably' be viewed by employees as an act of a plan administrator, especially when employees directly ask about such intentions." Reply Brief for Petitioner 18 (emphasis in original). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - C Finally, the majority's conclusion that a fiduciary duty was breached is based upon an inaccurate assessment of the record in this case. It is true that Varity expressed falsely optimistic forecasts about its new venture's prospects for success in an effort to entice employees to transfer to the new company. But the majority, I believe, tells only part of the story when it states 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." Ante, at 11. As I read the record, the message Varity [*82] conveyed was that the security of jobs and benefits would be contingent upon the success of the new company. Varity repeatedly informed its employees that "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." App. 76 (emphasis added). n16 The majority also fails to note that the plan documents expressly reserved to Varity the right "to Terminate, Suspend, Withdraw, Amend or Modify the Plan in Whole or in Part." Id., at 43. The Court thus holds today that an employer breaches a fiduciary obligation to participants in an ERISA plan when it makes optimistic statements about the company's financial condition and thereby implies that unvested welfare benefits will be secure, even though the employer simultaneously informs plan participants that changes will be made if economic conditions so require and the plan documents expressly authorize the employer to terminate the unvested welfare benefits at any time. I cannot agree with this result. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n16 See also App. 80 (transcript of videotape message to employees) ("When you transfer your employment to the Massey Combines Corporation, pay levels and benefit programs will remain unchanged. . . . 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"); id., at 82 (cover letter to employees) ("When you accept employment with Massey Combines Corporation, pay levels and benefit programs will remain unchanged. . . . 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"). When read in light of the District Court's finding that the combines industry had been in a state of "unprecedented decline [for the four years prior to the creation of MCC] . . . caused in significant part by an extreme depression in this country's agricultural economy," App. to Pet. for Cert. 53a, the company's qualifications take on even greater significance. - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*83] III I do not read the Court's opinion to extend fiduciary liability to all instances in which the Court's rationale would logically apply. Indeed, the Court's awkward articulation of its holding confirms that this case is quite limited. See ante, at 13-14 ("We conclude . . . 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"); ante, at 15 ("We hold that making intentional misrepresentations about the future of plan benefits in that context is an act of plan administration") (emphasis added). If not limited to cases involving facts similar to those presented in this case, the Court's expansion of recovery for fiduciary breach to individuals and its substantial broadening of the definition of fiduciary will undermine the careful balance Congress struck in enacting ERISA. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. at 54 (ERISA's "civil enforcement scheme . . . represents a careful balancing of the need for prompt and fair [*84] claims settlement procedures against the public interest in encouraging the formation of employee benefit plans"); Mertens, 508 U.S. at 262-263. Although Congress sought to guarantee that employees receive the welfare benefits promised by employers, Congress was also aware that if the cost of providing welfare benefits rose too high, employers would not provide them at all. See Russell, 473 U.S. at 148, n. 17 (warning against expanding liability beyond that intended by Congress, "lest the cost of federal standards discourage the growth of private pension plans") (citation omitted); Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155, 1170 (CA3 1990) (recognizing "Congress's judgment that employees themselves are best served by an enforcement regime that minimizes employers' expected liability for reporting and disclosure violations--and with it, the disincentives against creating employee benefit plans in the first place"). n17 Application of the Court's holding in the many cases in which it may logically apply could result in significantly increased liability, or at the very least heightened litigation costs, and an eventual reduction in plan benefits to accommodate [*85] those costs. Fortunately, the import of the Court's holdings appears to be far more modest, and courts should not feel compelled to bind employers to the strict fiduciary standards of ERISA just because an ordinary business decision turns out to have an adverse impact on the plan. I respectfully dissent. - - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n17 That is presumably why Congress exempted welfare benefits from the stringent, and costly, vesting requirements imposed on pension benefits. See Curtiss-Wright Corp., 514 U.S. at (slip op., at 4). - - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -