Plaintiff claims that retroactive implementation is arbitrary and irrational using the following reasoning: Congress adopted this amendment believing the insurance industry relied on the Department of Labor Interpretative Bulletin issued in 1992 to rule that plan assets held in an insurance company's general asset account would not be considered plan assets, see 1975-2, 29 C.F.R. § 2508.75-2(b) (1992); the Interpretative Bulletin could not have such an interpretation as demonstrated in Harris Trust ; therefore, the amendment was irrational. This is illogical. Furthermore, plaintiff cites no cases to support that such a situation would warrant a finding that retroactive implementation would be considered arbitrary and irrational. It is entirely reasonable for Congress to change the law in response to court interpretation contrary to its intention. The court finds that on the facts of this case retroactive application of the SBPA does not violate due process.
As such, MassMutual's motions to dismiss the allegations of liability based on fiduciary and co-fiduciary status are granted.
3. ERISA Liability From the Common Law Doctrine of Respondeat Superior3
Plaintiffs contend that ERISA imposes liability on MassMutual by virtue of MassMutual's relationship with defendants NEBS and the Cordrys. Plaintiffs allege that NEBS and the Cordrys were MassMutual's agents, and that therefore, to the extent that NEBS and the Cordrys were fiduciaries of the plans, so was their principal, MassMutual. Defendants contend that (1) the SBPA amendment to ERISA section 401 excludes MassMutual from liability under any theory; and (2) the doctrine of respondeat superior is not applicable in an ERISA breach of fiduciary duty claim.
First, the amendment to ERISA section 401 does not clearly proscribe defining MassMutual as a fiduciary on other theories. As previously discussed, section 1002(21)(A) expressly identifies the persons or entities that may be sued under sections 1132(c) and 1109; however, this list does not include agents or principals of fiduciaries. Additionally, ERISA contains specific provisions which delimit the circumstances under which a fiduciary can be held liable for "a breach of fiduciary responsibility of another fiduciary with respect to the same plan." 29 U.S.C. § 1105.
Plaintiffs rely on several cases, including American Fed'n of Unions v. Equitable Life Assurance Soc'y, 841 F.2d 658, 665 (5th Cir. 1988). However, Ninth Circuit law is contrary to the American Fed'n case. See Nieto v. Ecker, 845 F.2d 868 (9th Cir. 1988). In Nieto, trustees of a multiemployer pension plan brought an ERISA action against numerous defendants, including an attorney retained to represent the plan in collecting delinquent contributions from employers. The Ninth Circuit rejected the trustees' attempt to hold the attorney, a non-fiduciary, liable under section 1109(a) for a fiduciary's breach of duty. Id. The court noted that the civil enforcement provisions in ERISA "'provide strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.'" Id. (quoting Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146, 87 L. Ed. 2d 96, 105 S. Ct. 3085 (1985)). Accordingly, the court found that section 1109(a) provides a remedy against fiduciaries alone, and that there is no basis for reading into that section a remedy against non-fiduciaries as well. Id.
Moreover, in United Centrifugal Pumps v. Schotz, 1991 U.S. Dist. LEXIS 21100, No. C-89-2291-FMS, 1991 WL 274232, *5 (N.D. Cal. June 12, 1991), Judge Smith of this District granted a motion to dismiss an ERISA breach of fiduciary duty claim that based itself on the allegation that the defendant was a "vicarious fiduciary." The court ruled that, "nothing in ERISA suggests that Congress intended the wholesale importation of the common law of agency and vicarious liability into the fiduciary provisions of the act." Id. The court also remarked that when the Ninth Circuit declined to hold a non-fiduciary liable under section 1109(a) for a fiduciary's breach of duty, it sent "a clear signal that expansion of ERISA actions through the application of common law doctrines should be avoided." Id.
Similarly, the court in Walsh v. Emerson, 1990 U.S. Dist. LEXIS 19921, CIV. Nos. 88-952-DA and 88-1367- DA, 1990 WL 47319, *3 (D. Or. Jan 19, 1990), rejected an attempt to define a party as a fiduciary under ERISA based on the doctrine of respondeat superior. The Walsh court followed the Ninth Circuit's remarks in Gelardi v. Pertec Computer, 761 F.2d 1323, 1325 (9th Cir. 1985):
ERISA anticipates that employees will serve on fiduciary committees but the statute imposes liability on the employer only when and to the extent that the employer himself exercises the fiduciary responsibility allegedly breached.
Walsh, 1990 WL at *3 (quoting Gelardi, 761 F.2d at 1325).
In Moran v. Aetna Life Ins., 872 F.2d 296, 300 (9th Cir. 1989), the court rejected use of the estoppel theory to allow a fiduciary to be sued under ERISA and refused to expand the definition of "administrator" in 29 U.S.C. section 1132(c) to include the defendant. In doing so, the court stated:
We believe that the Supreme Court's refusal to expand the remedies available under ERISA in Russell precludes us from extending liability under section 1132(c) to other persons not named by Congress. The statute expressly identifies in section 1102(16) the persons or entities that may be sued under section 1132(c). We do not have the power to rewrite the statute to extend liability to a business entity that has mistakenly identified itself as the plan administrator by its agent.