
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________          No. 93-1567                         ROBERT B. REICH, SECRETARY OF LABOR,                          UNITED STATES DEPARTMENT OF LABOR,                                Plaintiff, Appellant,                                          v.                             RICHARD ROWE, ETC., ET AL.,                                Defendants, Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Edward F. Harrington, U.S. District Judge]                                               ___________________                                 ____________________                                        Before                              Torruella, Cyr, and Stahl,                                   Circuit Judges.                                   ______________                                _____________________               Edward  D.  Sieger,  Senior Appellate  Attorney,  with  whom               __________________          Thomas S. Williamson, Jr., Solicitor  of Labor, Allen H. Feldman,          _________________________                       ________________          Associate  Solicitor  for  Special  Appellate and  Supreme  Court          Litigation, and  Joseph S. Ackerstein, U.S. Department  of Labor,                           ____________________          Office of the Solicitor, were on brief for appellant.               William H.  Kettlewell, with whom Dwyer,  Collora & Gertner,               ______________________            _________________________          was on brief for appellees.                                 ____________________                                    March 31, 1994                                 ____________________                    TORRUELLA,  Circuit Judge.    We address  in this  case                                _____________          whether  the   civil  enforcement  provisions  of   the  Employee          Retirement  Income Security Act ("ERISA"), 29  U.S.C.   1132(a) -          (l),  provide for  equitable  relief against  a nonfiduciary  who          knowingly participates in a fiduciary  breach.  This issue  comes          to  us in  the  shadow of  a recent  United States  Supreme Court          opinion, Mertens v.  Hewitt Associates, 113  S. Ct. 2063  (1993),                   _______     _________________          which   addressed   the   availability   of    remedies   against          nonfiduciaries under  ERISA and concluded, albeit  only in dicta,          that no cause of action like the one brought in this case exists.          Id. at 2067.   After conducting our own analysis of  the statute,          __          we find that, although ERISA may allow for some types of  actions          against nonfiduciaries,  it  does  not  authorize  suits  against          nonfiduciaries charged solely with  participating in a  fiduciary          breach.                                    I.  BACKGROUND                                    I.  BACKGROUND                    The genesis of this appeal was a lawsuit brought by the          United States Secretary  of Labor (the "Secretary")  on March 11,          1991,  against  several   corporate  and  individual   defendants          involved  in the  failed OMNI  Medical Health  and Welfare  Trust          ("OMNI").   In the complaint,  the Secretary alleged  a number of          ERISA   violations  in   relation  to   OMNI's  failure   to  pay          approximately two to three million dollars in medical benefits to          eligible employees of companies  participating in the OMNI health          plan.    The Secretary  also  contended that  appellee,  H. James          Gorman,  Jr.  ("Gorman"),  a  financial  consultant  who provided                                         -2-          professional  services to  OMNI,  knowingly  participated in  the          fiduciary  breaches of  several  of OMNI's  administrators.   The          district court dismissed the action against Gorman for failure to          state a claim under ERISA and the Secretary brought this appeal.                    We   accept  all   the   factual  allegations   in  the          Secretary's  complaint as  true in  order to review  the district          court's  dismissal  under  Rule  12(b)(6).    Garita  Hotel  Ltd.                                                        ___________________          Partnership v. Ponce Federal  Bank, F.S.B., 958 F.2d 15,  17 (1st          ___________    ___________________________          Cir. 1992).                    Between  1986  and 1990,  OMNI provided  group medical,          dental,  and life  insurance and  other benefits  to a  number of          small,  unrelated  business  employers  in  Massachusetts.    The          employers  participating in  OMNI  established  employee  welfare          benefit plans (the "welfare plans") within the meaning of ERISA            3(1),  29  U.S.C.    1003(1).   By  collecting premiums  from the          participating employers,  OMNI held and controlled  the assets of          the  welfare plans and was responsible for paying benefits to the          employees.                    The  Secretary  claimed that  OMNI  falsely represented          itself  to be  a "tax-exempt  ERISA covered  benefit plan"  under          ERISA   3(1), 29 U.S.C.   1002(1), in order to avoid governmental          regulation and oversight.  According to the Secretary, OMNI was a          multiple employer welfare arrangement ("MEWA") within the meaning          of ERISA   3(40)(a),  29 U.S.C.   1002(40)(a),  but not an  ERISA          plan exempt from state insurance regulation.                    Count I  of the  complaint alleged that  Harbor Medical                                         -3-          Administrators,  Inc. ("HMA"),  the  administrator  of OMNI,  and          HMA's President (Mr. Richard Rowe), Executive Vice-President (Mr.          Phillip  Carpenter) and Vice President (Ms.  Ann Dunlop) acted as          fiduciaries with respect  to the employers'  welfare plans.   The          Secretary  asserted that  these  four defendants  breached  their          fiduciary  obligations under  ERISA by  engaging in a  variety of          imprudent and self-serving activities.   The activities  included          engaging in  prohibited  transactions, mismanaging  and  misusing          assets of the  welfare plans, falsely representing  the status of          OMNI to employers and state regulators, and operating an  illegal          insurance company.                    Count II of the complaint alleged that Gorman,  who was          Director of Group Insurance and Welfare Plan Consulting Services,          Actuarial,  Benefits   and   Compensation  Consulting,   at   the          accounting  firm of  Coopers  &  Lybrand, provided  "professional          services"  to  OMNI  from  May  through  October  of  1989.    In          particular,  he provided advice to HMA regarding the legal status          of  OMNI under  ERISA.   On  several  occasions, Gorman  informed          Dunlop,  Rowe and  others  at HMA  that  they were  operating  an          illegal insurance  company under Massachusetts law  and that OMNI          did not  enjoy the protection  of the  ERISA provision  exempting          ERISA  plans  from  state regulation.    See  29  U.S.C.    1144.                                                   ___          Despite his own warnings, Gorman advised Dunlop, in response to a          letter from  the New Hampshire Insurance  Department inquiring as          to the legal status of OMNI, that she had the  option to "try the          'red herring' across  the trail of the Insurance  Department just                                         -4-          to  keep them  off balance"  by  telling them  OMNI was  an ERISA          covered plan.   The gist of this advice was that OMNI could avoid          state regulation  by obfuscating its  true legal status.   Gorman          provided  Dunlop with a draft letter to send to the New Hampshire          Insurance  Department falsely  stating that  OMNI was  covered by          ERISA.   Gorman  further advised  that there  was little  risk of          investigation by the state once it was informed of a plan's ERISA          status.   Subsequently,  Rowe adopted  Gorman's draft  letter and          sent it  to New Hampshire's  Insurance Department on  October 17,          1989.                    The  complaint stated  that Gorman  acted at  all times          "within  the  scope  of  his  employment"  and  by   his  actions          participated in the fiduciary breaches of the defendants named in          Count I.   The Secretary did not allege that Gorman himself was a          fiduciary.   The  Secretary concluded,  however, that  "Gorman is          liable under ERISA to the same  extent as the fiduciaries for the          breaches committed."   Gorman's employer, Coopers  & Lybrand, was          also named as a defendant based  on the theory that it was liable          for the actions of its agent.                    To  remedy the alleged violations, the Secretary sought          the  recovery   of  plan   losses,  the  undoing   of  prohibited          transactions and  a permanent injunction against  all defendants,          including Gorman,  from serving  as ERISA fiduciaries  or service          providers to any ERISA plans.                    On  September  1,  1992,  the  district  court  granted          motions to dismiss filed by Gorman and Coopers & Lybrand based on                                         -5-          the  failure of Count  II to state  a claim under  Rule 12(b)(6).          The district court held that neither of the two ERISA enforcement          provisions  under which  the Secretary  could proceed,  29 U.S.C.            1132(a)(2)  and     1132(a)(5),  authorized  a   claim  against          nonfiduciaries like Gorman or Coopers  & Lybrand.1  The  district                                        ____________________          1  29 U.S.C.    1132(a), entitled  "Persons empowered to bring  a          civil action," states in its entirety:                    A civil action may be brought --                    (1) by a participant or beneficiary --                      (A)  for  the  relief  provided   for  in                      subsection (c) of this subsection, or                      (B) to  recover benefits due to him under                      the terms  of  his plan,  to enforce  his                      rights under the terms of the plan, or to                      clarify  his  rights  to future  benefits                      under the terms of the plan;                    (2) by the  Secretary, or  by a  participant,                    beneficiary  or   fiduciary  for  appropriate                    relief under section 1109 of this title;                    (3)   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 violation  or  (ii)  to                    enforce any provisions of this  subchapter or                    the terms of the plan;                    (4) by the Secretary  or by a participant, or                    beneficiary  for  appropriate  relief in  the                    case of a violation of 1025(c) of this title;                    (5)   except   as   otherwise   provided   in                    subsection  (b)  of   this  section,  by  the                    Secretary (A)  to enjoin any act  or practice                    which   violates   any   provision  of   this                    subchapter,   or   (B)   to    obtain   other                    appropriate equitable relief  (i) to  redress                    such  violation  or   (ii)  to  enforce   any                    provisions of this subchapter; or                    (6)  by the  Secretary to  collect any  civil                                         -6-          court found  that the  Secretary  could not  obtain relief  under            1132(a)(5) because  that section  applies only  to nonfiduciary          defendants who  are "parties in  interest."2  The  district court          also  found that no cause  of action existed  under   1132(a)(2),          which authorizes  the Secretary to seek  appropriate relief under          29 U.S.C.   1109,3  because only fiduciaries could be  sued under                                        ____________________                    penalty under subsection (c)(2) or (i) or (l)                    of this section.          2  A "party in interest" includes a "person providing services to          [an employee benefit]  plan."   29 U.S.C.    1002(14)(B).   ERISA          prohibits  certain  transactions  between ERISA  plans  and their          parties in interest.  29 U.S.C.   1106(a)(1).             The complaint contained no allegation that Gorman was  a party          in   interest  nor  that   he  was  engaged   in  any  prohibited          transactions.   The facts stated in the complaint do suggest that          Gorman satisfies the definition of a party in interest, but there          is no indication he  participated in any prohibited transactions.          Although we do not decide whether the complaint must specifically          allege that the nonfiduciary  defendant is a "party in  interest"          in  order to state  a cause of  action under    1132(a)(5), we do          discuss the importance, under  certain circumstances, of alleging          that  a defendant engaged in a  prohibited transaction, see infra                                                                  ___ _____          at pages 15, 18-19 & 23-24.          3  29 U.S.C.   1109(a) provides:                      Any   person  who  is  a  fiduciary  with                      respect to a plan who breaches any of the                      responsibilities, obligations,  or duties                      imposed   upon    fiduciaries   by   this                      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.   A fiduciary                      may also  be removed for  a violation  of                      section 1111 of this title.                                         -7-            1109 and neither Gorman nor Coopers & Lybrand were fiduciaries.                    On June 1, 1993,  the Supreme Court held  in a five  to          four decision that ERISA does  not permit a civil suit for  money          damages against  nonfiduciaries  who knowingly  participate in  a          fiduciary  breach.  Mertens,  113 S. Ct.  at 2072.   The Court in                              _______          Mertens  found that "appropriate equitable relief," as authorized          _______          under    1132(a)  (3),4  includes  only  those  types  of  relief          typically   available  in   equity,   such   as  injunctions   or          restitution.  Such  relief would  not include a  classic form  of          legal relief like  compensatory damages.  Id. at 2068.  The Court                                                    __          discussed,  but expressly refrained  from deciding, whether ERISA          provides any  remedy at all  for nonfiduciary participation  in a          fiduciary breach.  Id. at 2067-68.                             __                    After the  Mertens decision, the Secretary withdrew the                               _______          appeal  of his claim against Coopers & Lybrand because that claim          only sought monetary damages.   The Secretary pursued  the appeal          of Gorman's  dismissal to  the extent the  Secretary was  seeking          only equitable  relief.   The four  fiduciary defendants  in this          case  defaulted leaving Gorman as the only defendant who is party          to this appeal.                                   II.  DISCUSSION                                   II.  DISCUSSION                    At  the  center  of this  case  is  the  language of                                           ____________________          4  Section 1132(a)(3) provides for the same remedies as   1132(a)          (5)   in  civil   actions  brought   by  an   ERISA  participant,          beneficiary, or fiduciary  (as opposed to actions  brought by the          Secretary under     1132(a)(5)), and  contains  nearly  identical          language.  Because the shared language in both provisions "should          be deemed to have the same meaning," Mertens, 113 S. Ct. at 2070,                                               _______          most analyses of one provision apply equally to the other.                                         -8-          502(a)(5)  of ERISA which states  that the Secretary  may bring a          civil action                      (A) to enjoin  any act or practice  which                      violates    any    provision   of    this                      subchapter,  or  (B)   to  obtain   other                      appropriate   equitable  relief   (i)  to                      redress such violation or (ii) to enforce                      any provision of this subchapter.          The  Secretary  maintains  that  its action  against  Gorman  for          alleged  participation  in  the  fiduciary  breaches   of  OMNI's          administrators  constitutes  a claim  for  "appropriate equitable          relief to redress" violations of ERISA or "to enforce" provisions          of ERISA  under   1132(a)(B).5   According to the  Secretary, the          language of the  provision does not  explicitly require that  the          ERISA  violation must be one committed by the person against whom          the relief is sought, so long  as the relief is "appropriate" for          purposes of "redressing" a violation.  See Mertens, 113 S. Ct. at                                   _             ___ _______          2073 n.1 (White,  J., dissenting).  Likewise,  one could arguably          bring an  action  against  a  nonfiduciary for  the  purposes  of          "enforcing"  a provision of ERISA  which imposes no obligation on          that nonfiduciary but nevertheless  requires some judicial relief          against the nonfiduciary in order to remain effective.                    In  this  case,  the  Secretary argues  that  enjoining          Gorman from providing  any services to an ERISA plan  would be an          appropriate way  of redressing  the breaches committed  by OMNI's          administrators  and  of preventing  subsequent  breaches by  some          hypothetical group of fiduciaries  who might take Gorman's advice                                        ____________________          5  The Secretary does  not dispute that it has no  remedy against          Gorman under   1132(a)(2) because Gorman is not a fiduciary.                                          -9-          in the  future.   While  plausible,  we find  that  such a  broad          reading of  this enforcement  provision is  contrary to  a common          sense construction  of the ERISA  statute and to  the established          restriction on our ability to create new causes of action.                    We  interpret    1132(a)(5)  to authorize  actions only          against those who commit  violations of ERISA or who  are engaged          in  an  "act or  practice" proscribed  by  the statute.   Section          1132(a)  (5)(A)  authorizes  injunctions   against  any  "act  or          practice" which violates ERISA,  while   1132(a)(5)(B) authorizes          other  equitable remedies  for such acts  or practices.   Section          1132(a)(5)(B)  simply adds remedies  to the injunction authorized          under    1132(a)(5)(A); it does not  expand the substantive reach          of ERISA to  encompass new parties and transactions not otherwise          covered by its substantive  provisions.  See Mertens, 113  S. Ct.                                                   ___ _______          at  2067 (noting in dicta that identical language in   1132(a)(3)          "does not, after all, authorize 'appropriate equitable relief' at                                                                         __          large, but only 'appropriate equitable relief' for the purpose of          _____          'redress[ing any] violations or . . . enforc[ing] any provisions'          of  ERISA"); Call v. Sumitomo  Bank of California,  881 F.2d 626,                       ____    ____________________________          635 (9th Cir. 1989); Nieto  v. Ecker, 845 F.2d 868, 873-74  & n.7                               _____     _____          (9th  Cir.  1988); see  also Kyle  Rys.,  Inc. v.  Pacific Admin.                             _________ _________________     ______________          Servs.,  Inc., 990 F.2d 513, 516-17 (9th Cir. 1993) (holding that          _____________          relief  for   nonfiduciary  liability  is  only   available  when          nonfiduciary  is engaged  in  a prohibited  transaction under  29          U.S.C.   1106(a)(1)).                    Gorman's  alleged  participation  in   HMA's  fiduciary                                         -10-          breach  is not an  "act or practice"  which violates ERISA.   See                                                                        ___          Mertens, 113  S. Ct. at 2067;  Call, 881 F.2d at  635.  Moreover,          _______                        ____          the  Secretary does  not  point to  any substantive  provision of          ERISA  that  imposes a  duty  on nonfiduciaries  to  refrain from          participating   in  a   fiduciary   breach.6     Consequently,             1132(a)(5)  does  not authorize  the  Secretary's action  against          Gorman in this case.                    The Secretary nevertheless asserts that we should apply          the court's broad equitable powers and the court's federal common          law-making authority under ERISA to read   1132(a)(5) expansively          to authorize equitable  relief for Gorman's alleged  conduct.  He          invokes the  established rule that  the courts  have power  under          ERISA  to  fashion  common law  based  on  the law  of  trusts to          construe  ambiguous  statutory  language  and fill  gaps  in  the          statute.  See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101,                    ___ ___________________________    _____          110-15 (1989);  Pilot Life Ins. Co.  v. Dedeaux, 481 U.S.  41, 56                          ___________________     _______          (1987); Kwatcher v. Massachusetts Service Employees Pension Fund,                  ________    ____________________________________________          879 F.2d 957, 966 (1st Cir. 1989).  In several pre-Mertens cases,                                                             _______                                        ____________________          6    The  Secretary  does  argue  that  one  of  the  enforcement          provisions which  imposes civil penalties for  participation in a          fiduciary breach,  29 U.S.C.    1132(l), indicates  that Congress          intended      1132(a)(5)    to    authorize   remedies    against          nonfiduciaries like Gorman.   We reject this argument  below, see                                                                        ___          infra  pages 21-24.  We note here,  however, that   1132(l) is an          _____          enforcement provision  and not a substantive  provision; not even          the  Secretary  claims  that   the  provision  itself  creates  a          substantive  duty  not otherwise  provided  for  in the  statute.          Section  1132(l) was added to  ERISA in 1989,  see Omnibus Budget                                                         ___          Reconciliation  Act of  1989, Pub.  L. No.  101-239,    2101, 103          Stat. 2123.  Instead of extending the substantive reach of ERISA,             1132(l)  explicitly  based  its  penalty  on  amounts  already          recoverable  under existing provisions of the statute.  29 U.S.C.            1132(l)(2)(B).                                         -11-          the courts have exercised  this power to afford a  remedy against          nonfiduciaries who participate in a fiduciary breach.  See, e.g.,                                                                 ___  ____          Diduck v. Kaszycki & Sons Contractors, Inc., 974 F.2d 270, 279-81          ______    _________________________________          (2d  Cir. 1992); Whitfield v. Lindemann, 853 F.2d 1298, 1303 (5th                           _________    _________          Cir.  1988),  cert.  denied,  490  U.S.  1089  (1989);  Brock  v.                        ____   ______                             _____          Hendershott, 840 F.2d 339, 342 (6th Cir. 1988).          ___________                    We refuse to  adopt a  common law remedy  in this  case          because  the Secretary's  expansive application  of    1132(a)(5)          creates a new cause of action and a new source of liability where          neither  currently  exists in  the  statute.   As  Justice Scalia          explained in Mertens,                       _______                      no    provision    explicitly    requires                      [nonfiduciaries]  to avoid  participation                      (knowing or unknowing)  in a  fiduciary's                      breach   of  fiduciary   duty.     It  is                      unlikely,  moreover,  that  this  was  an                      oversight,  since  ERISA does  explicitly                                               ____                      impose "knowing  participation" liability                      on  cofiduciaries.    See     405(a),  29                      U.S.C.     1105(a).     That   limitation                      appears all the  more deliberate in light                      of the fact that  "knowing participation"                      liability  on the part of both cotrustees                                                ____                      and  third  persons was  well established                      ___                      under  the common law  of trusts .  . . .                      In    Russell     we    emphasized    our                            _______                      unwillingness to infer  causes of  action                      in   the   ERISA   context,  since   that                      statute's carefully  crafted and detailed                      enforcement   scheme   provides   "strong                      evidence that Congress did not  intend to                                                 ___                      authorize other remedies  that it  simply                      forgot to incorporate expressly."          Mertens, 113 S. Ct. at 2067 (quoting Massachusetts Mut. Life Ins.          _______                              ____________________________          Co. v. Russell, 473 U.S.  134, 146-47 (1985)) (citations omitted)          ___    _______          (emphasis in original).                    Although this  discussion in  Mertens is  purely dicta,                                                  _______                                         -12-          see id. at 2067-68  (reserving any decision on whether    1132(a)          ___ __          authorizes an action against  a nonfiduciary for participating in          a  fiduciary  breach),  its   reasoning,  based  on  the  Russell                                                                    _______          decision, accords with  this Circuit's jurisprudence  established          in  Drinkwater v. Metropolitan Life  Ins. Co., 846  F.2d 821 (1st              __________    ___________________________          Cir.),  cert. denied,  488 U.S.  909 (1988).   In  Drinkwater, we                  ____  ______                               __________          applied Russell to hold that extra-contractual  damages are not a                  _______          form  of "other  appropriate relief"  under    1132(a)(5) because          such relief was not  expressly granted and we could  not conclude          "Congress  intended to  authorize any form  of relief  other than          what was expressly  granted."  Id. at  824; see also Russell  473                                         __           ________ _______          U.S. at 145-48  (refusing to imply a private  cause of action for          individual beneficiaries to obtain  damages caused by a fiduciary          breach because Congress had created such liability  only in favor          of the ERISA plans  themselves).  In this case,  Congress did not          expressly  provide  for  a   remedy  against  nonfiduciaries  who          participate  in a fiduciary breach.   Therefore, and  in light of          the  potentially broad  area  of liability  such  a remedy  would          create, we conclude that Congress did not intend for its grant of          equitable relief in   1132 (a)(5) to authorize the present action          against Gorman.   See Framingham  Union Hosp., Inc.  v. Travelers                            ___ _____________________________     _________          Ins. Co, 744 F. Supp. 29, 33 (D. Mass. 1990)  (finding that under          _______          ERISA, "the  courts' authority  to adopt trust-law  principles is          limited to fashioning 'appropriate relief' under specified causes          of action, among specified  parties") (citing Nieto, 845  F.2d at                                                        _____          872).                                         -13-                    The Secretary  claims that  the Russell  and Drinkwater                                                    _______      __________          decisions  do  not  apply  to this  case  because  they  involved          situations  where  the statutory  language  clearly  excluded the          requested  remedy.   See Russell,  473 U.S.  at  141-43 (language                               ___ _______          granting damage remedies "to the plan" excluded  damages to other          parties like  beneficiaries);  Drinkwater,  846  F.2d  at  824-25                                         __________          (finding express grant of "equitable relief" excluded other types          of  relief  such as  compensatory  and  punitive  damages).   The          court's  common lawmaking  authority was  not exercised  in those          cases  because  that authority  does  not include  the  power "to          revise the text of the statute."  Mertens, 113 S. Ct. at 2070.                                            _______                    The  Secretary maintains  that  in this  case, however,          where the statute is  silent or ambiguous, courts should  look to          ERISA's  broader   purposes  of   protecting  the  interests   of          participants and  beneficiaries, see Firestone, 489  U.S. at 113,                                           ___ _________          and provide a remedy  where necessary to further  those purposes;          the  court should  not just  assume that  the absence  of express          authority is a  deliberate omission  and thus a  bar to  remedial          measures.  According to the Secretary, our decisions in Kwatcher,                                                                  ________          879 F.2d  at 965-66, and Malden Mills  Indus., Inc. v. Alman, 971                                   __________________________    _____          F.2d  768, 774-75 (1st Cir. 1992), are examples of this principle          because  in  those  cases  we  applied  common  law  remedies  to          situations in which the ERISA statute did not specify a cause  of          action.   Kwatcher, 879 F.2d  at 965-66 (applying  federal common                    ________          law to allow restitution  action for recovery of  overpayments to          an  ERISA  pension  fund);  Malden  Mills,  971  F.2d  at  774-75                                      _____________                                         -14-          (recognizing a  common law right to  "restitution for overpayment          of contributions by an employer to a Fund").                    All   things   considered,   judicial    remedies   for          nonfiduciary participation in a  fiduciary breach fall within the          line  of cases  where Congress  deliberately omitted  a potential          cause  of action rather than the cases where Congress has invited          the courts to engage  in interstitial lawmaking.  To  begin with,          Congress  proscribed  several  "acts  or  practices"  in  ERISA's          substantive provisions  that involve  nonfiduciaries but  did not          include among  them a  nonfiduciary's knowing participation  in a          fiduciary breach.  See  Mertens, 113 S. Ct. at  2067 & n.4.   For                             ___  _______          example,  29 U.S.C.    1106(a)(1) prohibits  certain transactions          between  "parties  in interest,"  see  supra, note  2,  and ERISA                                            ___  _____          plans,7  and 29  U.S.C.    1023(d)(8)  prohibits  actuaries  from          breaching their  duty to certify that  their actuarial statements          are  "complete  and accurate."   In  addition,  29 U.S.C.    1105          imposes liability on cofiduciaries for knowingly participating in                               _____________          a fiduciary breach.  It is  such "acts or practices" as these for          which   1132(a)(5) provides a remedy.                    If  Congress desired  to augment the  existing remedies          against fiduciary breaches, 29 U.S.C.   1109(a), by providing for                                        ____________________          7    The fact  that     1106 imposes  the  duty  to refrain  from          prohibited transactions on fiduciaries and not on  the parties in          interest  is irrelevant  for  our purposes  because    1132(a)(5)          reaches  "acts or  practices" that  violate ERISA  and prohibited          transactions violate    1106.   Although fiduciary  breaches also          violate  ERISA, nonfiduciaries cannot,  by definition,  engage in          the   act   or   practice   of  breaching   a   fiduciary   duty.          Nonfiduciaries,  can, however, engage  in the act  or practice of          transacting with an ERISA plan.                                         -15-          an action against nonfiduciaries for assisting those breaches, it          could have  done so with  provisions similar to  those concerning          cofiduciaries and prohibited transactions.  See Russell, 473 U.S.                                                      ___ _______          at 147 ("'The  presumption that a remedy was deliberately omitted          from  a  statute  is  strongest  when  Congress   has  enacted  a          comprehensive legislative  scheme including an  integrated system          of  procedures for  enforcement.'") (quoting  Northwest Airlines,                                                        ___________________          Inc.  v. Transport  Workers, 451  U.S. 77,  97 (1981));  see also          ____     __________________                              ________          Useden  v. Acker,  947 F.2d  1563, 1581  (11th Cir.  1991), cert.          ______     _____                                            ____          denied,  113   S.  Ct.  2927  (1993)  ("[A]   court  should  only          ______          incorporate a  given trust  law principle  if the  statute's text          negates an inference that  the principle was omitted deliberately          from  the statute.").  In contrast, the Kwatcher and Malden Mills                                                  ________     ____________          cases presented a situation not  of deliberate omission, but  one          where  the remedy  was "fully  consonant with  ERISA's underlying          policies as expressed in  29 U.S.C.   1103(c)(2)(A)."   Kwatcher,                                                                  ________          879 F.2d at 967 (finding common law restitution action consistent          with  statutory provision  allowing  for the  return of  mistaken          contributions); see also  Malden Mills, 971  F.2d at 775  (noting                          ________  ____________          that   the  same   statutory  provision   supports  a   right  of          restitution).                    More  importantly, we  do  not find  it appropriate  to          authorize  a  common law  cause of  action  in this  case because          nonfiduciary participation  in a fiduciary breach  is most likely          to  involve,  as  it  does  here,  service  providers  and  other          nonfiduciary  professionals who  provide  advice or  expertise to                                         -16-          ERISA fiduciaries.   The advice and  expertise provided by  these          individuals  --  whether  actuaries,  lawyers,   accountants,  or          consultants --  is vital for  the successful  operation of  ERISA          plans  which  must function  in  a highly  complex  and regulated          environment.   At  the same  time,  such advice  is  particularly          vulnerable  to  remedies  that  impose  liability  like  the  one          requested by  the Secretary.  We  do not mean  to countenance the          action of someone  who advises a fiduciary to break  the law, but          we  are concerned that extending the threat of liability over the          heads  of those  who only  lend professional  services to  a plan          without exercising  any control  over, or transacting  with, plan          assets  will  deter  such  individuals  from  helping fiduciaries          navigate the intricate financial and legal thicket of ERISA.                    Congress  recognized this  danger and  was purposefully          circumspect  about  limiting  the liability  of  those  providing          professional  services  to ERISA  plans.   See,  e.g.,  29 U.S.C.                                                     ___   ____            1108 (b)(2) (exempting from the list of transactions prohibited          under ERISA, contracts  or arrangements with a  party in interest          for  "legal,  accounting, or  other  services  necessary for  the          establishment or operation of the plan").  The text of ERISA                      allocates   liability  for   plan-related                      misdeeds  in   reasonable  proportion  to                      respective actors' power  to control  and                      prevent the misdeeds.  . . . Professional                      service   providers  such   as  actuaries                      become liable for damages when they cross                      the line from  advisor to fiduciary, [and                      they]  must  disgorge assets  and profits                      obtained    through    participation   as                      parties-in-interest    in    transactions                      prohibited by [  1106(a)] and pay related                      civil  penalties, see   502(i), 29 U.S.C.                                         -17-                        1132(i) . . . .          Mertens, 113 S. Ct. at 2071-72.          _______                    While we recognize that our decision to limit liability          for  nonfiduciaries  may  provide  less  protection than  existed          before  ERISA  was  enacted  and  that  the decision  may  appear          contrary  to  ERISA's  purpose  of protecting  the  interests  of          participants  and  beneficiaries,  we  also  recognize  that  the          present structure  of  ERISA was  the  outcome of  certain  cost-          benefit analyses  that Congress undertook  in order to  fashion a          comprehensive regulatory scheme.   Exposure not only to liability          for damages but to other forms of liability as well "would impose          high insurance  costs upon persons  who regularly  deal with  and          offer  advice  to   ERISA  plans,  and  hence  upon  ERISA  plans          themselves."   Id.  at 2072.   We  will normally  not attempt  to                         __          adjust  the balance  between  the competing  goals of  protecting          employees' interests  and containing pension costs  that Congress          has  struck  in  the  ERISA  statute.    Id.  (citing  Alessi  v.                                                   __            ______          Raybestos-Manhattan, Inc., 451 U.S.  504, 515 (1981) and Russell,          _________________________                                _______          473 U.S. at 148 n.17)); see also Pilot Life Ins.  Co. v. Dedeaux,                                  ________ ____________________    _______          481 U.S. 41, 54 (1987).  Congress decided that the  best approach          was  to limit  liability for  nonfiduciaries,  especially service          providers, while  at  the  same time  increasing  the  number  of          fiduciary parties and the scope of fiduciary responsibility.  See                                                                        ___          Mertens, 113 S.  Ct. at 2071.  We decline  to upset this decision          _______          by invoking our common law authority in this case.                    We  are more willing to create common law remedies that                                         -18-          are directed  toward undoing specific transactions  or recovering          assets of an ERISA  plan.  In those  situations, the parties  are          more likely to be in control of plan assets and thus functionally          more like fiduciaries.  As we demonstrated in Kwatcher and Malden                                                        ________     ______          Mills, the provision of restitution  remedies to seek the  return          _____          of  plan assets can be a  proper exercise of our common lawmaking          authority.   Kwatcher, 879 F.2d at 965-67; Malden Mills, 971 F.2d                       ________                      ____________          at 774; accord Provident Life &  Accident Ins. Co. v. Waller, 906                  ______ ___________________________________    ______          F.2d 985, 992-94 (4th  Cir.), cert. denied, 498 U.S.  982 (1990);                                        ____  ______          Luby  v. Teamsters  Health, Welfare, &  Pension Trust  Funds, 944          ____     ___________________________________________________          F.2d 1176, 1185-87 (3d Cir. 1991).                    In this  case, however, no  restitution remedy  exists.          The Secretary  never alleged  that Gorman received  or controlled          ERISA  plan assets, and we  would not consider  the salary Gorman          presumably  earned8 as  ill-gotten  profits.   Instead, we  would          consider Gorman's  salary as a part  of the ERISA plan's  cost of          operations.  Furthermore, the facts of this case do not present a          situation where the court  must use its equitable powers,  as the          Secretary warns, "to stop an ongoing bribery or kickback  scheme,          or  [provide] restitution  and  a constructive  trust to  recover          funds  transferred  from a  plan to  a  nonfiduciary."   In those          situations, unlike the  present case, the  act or practice  being          remedied is  either  expressly proscribed  by the  statute (by                                           ____________________          8    The  Secretary  makes no  allegation  that  Gorman  received          unreasonable compensation for his services.  If such had been the          case, the Secretary might have stated a cause of action  based on          Gorman's  engagement in  a  prohibited transaction,  29 U.S.C.             1106, but not for participation in a fiduciary breach.                                         -19-          1106, for  example, which prohibits certain  transactions between          the  plan and a "party in interest"), and thus explicitly covered          under    1132(a)(5),  or  else within  our  recognized powers  of          granting restitution.                    On a somewhat different tack, the Secretary attempts to          characterize  the suit against Gorman as merely a request for the          court  to  exercise its  equitable powers  to remedy  an existing          violation  of ERISA and not a request for creating an independent          cause  of  action or  imposing  new  liability.   This  assertion          ignores the  allegations made in the complaint  and the essential          nature of the charge against Gorman.  The complaint states:                      Gorman at  all times herein  acted within                      the scope  of his  employment and  by his                      actions  participated  in  and  furthered                      what he knew  or should  have known  were                      the fiduciary breaches of  [the fiduciary                      defendants].     Accordingly,  Gorman  is                      liable under ERISA to  the same extent as                      the   fiduciaries    for   the   breaches                      committed after September 13, 1989.                    The Secretary makes no claim that enjoining Gorman from          working for any ERISA plans in the future is necessary to redress          the breaches  committed by OMNI's administrators  or is necessary          to  enforce  the  ERISA  provisions  imposing  fiduciary  duties.          Instead, the Secretary is  asking that Gorman be held  liable "as          the  fiduciaries,"  a result  plainly  at odds  with  Russell and                                                                _______          Drinkwater as discussed above.  If the  Secretary really intended          __________          merely  to remedy  the acts  committed by other  individuals, the          complaint would  not have  focussed on Gorman's  alleged misdeeds          but rather  on  how  Gorman  is  in  a  position  to  remedy  the                                         -20-          fiduciary's  misdeeds.   In  fact, under  the Secretary's  theory          Gorman's  misdeeds would  be irrelevant  -- "innocent"  and well-          meaning parties would be reachable  as long as they were in  some          position to help redress the fiduciaries' breaches.                    Moreover, even  if the  Secretary were to  rephrase the          complaint  as   a  request  for  an   injunction  against  Gorman          specifically for  the purpose of redressing  past, and preventing          future,  fiduciary breaches,  the Secretary  would still  fail to          state a  cause of action.  The  Secretary's claim would still, in          substance, constitute  a request for the  imposition of liability          for an act that is not proscribed by the statute.                    The suit  against Gorman  constitutes an appeal  to the          court to impose liability for committing a specific act -- giving          improper advice to fiduciaries.  It is not an appeal to the court          to remedy  the subsequent  breaches committed by  the fiduciaries          themselves.   The  appropriate  equitable  relief for  redressing          those  breaches is not the  action against Gorman  but the remedy          already requested from the fiduciaries  in Count I, which sought,          among  other things,  the  restoration  of  plan losses  and  the          reversing of prohibited transactions.   We see nothing that makes          Gorman  a particularly suitable target for this type of relief as          he was not party to any prohibited transactions nor the recipient          of  plan  assets.    For  similar  reasons,  the  assertion  that          equitable  relief against  Gorman  is necessary  to prevent  some          hypothetical  fiduciary breaches committed  by those  whom Gorman          may  advise in  the future  is  unpersuasive.   ERISA extensively                                         -21-          regulates and polices fiduciaries,  see 29 U.S.C    1101  - 1114,                                              ___          and  it  provides  ample  remedies to  prevent  future  fiduciary          breaches,  see 29  U.S.C.    1132(a)(2),    1109.   Should Gorman                     ___          advise  future  fiduciaries to  break  the law,  we  should think          ERISA's  existing  provisions  are  sufficient  to  deter   those          fiduciaries from following his advice.                    It  is in  light  of the  foregoing  that we  can  best          understand the apparent  fly in our analytic ointment,  29 U.S.C.            1132(l).9   The  Secretary argues  that this  civil enforcement                                        ____________________          9  29 U.S.C.   1132(l) provides in relevant part:                    (1) In the case of --                      (A)     any    breach     of    fiduciary                      responsibility under  (or other violation                      of) part 4 by a fiduciary, or                      (B)  any knowing participation  in such a                      breach or violation by any other person,                     the  Secretary shall  assess a  civil penalty                    against such fiduciary or  other person in an                    amount  equal to 20 percent of the applicable                    recovery amount.                    (2)  For purposes of  paragraph (1), the term                    "applicable recovery amount" means any amount                    which is recovered from a fiduciary or  other                    person with respect to  a breach or violation                    described in paragraph (1) --                      (A) pursuant to any  settlement agreement                      with the Secretary, or                      (B) ordered by a court to be paid by such                      fiduciary or  other person  to a  plan or                      its participants and  beneficiaries in  a                      judicial  proceeding  instituted  by  the                      Secretary  under   subsection  (a)(2)  or                      (a)(5) of this section.             Under paragraph (3) of    1132(l), the Secretary may  waive or          reduce this penalty if  he believes that "the fiduciary  or other                                         -22-          provision, which authorizes civil  penalties for participation in          a fiduciary breach by "other  persons" based on amounts recovered          by  the Secretary under   1132(a)(2) and   1132 (a)(5), indicates          that Congress intended for    1132(a)(5) to provide a  remedy for          nonfiduciary violations  of a  fiduciary breach.   Otherwise, the          Secretary  claims,  no civil  penalties  against "other  persons"          under   1132(l)(1)(B) would  be possible and the  provision would          be rendered meaningless.                    Justice Scalia  rejected this argument in  Mertens, 113                                                               _______          S. Ct. at 2070-71, by noting that                       the  "equitable  relief" awardable  under                      [ 1132(a)(5)]  includes  restitution   of                      ill-gotten   plan   assets  or   profits,                      providing an "applicable recovery amount"                      to use  to calculate  the penalty, .  . .                      and even assuming nonfiduciaries  are not                      liable at all  for knowing  participation                      in  a fiduciary's  breach  of  duty,  see                      supra,   at    2067-2068,   cofiduciaries                      _____                      expressly are, see [29 U.S.C.   1105], so                      there  are  some  "other person[s]"  than                      fiduciaries-in-breach  liable   under  [                       1132(l)(1)(B)].          Id. at 2071.          __                    We find  it significant that the  Secretary invokes the          civil penalty provision in a case where, because he is seeking an          injunction,   1132(l)'s civil  penalty based on amounts recovered          under     1132(a)(5) is  not  applicable.   Cofiduciary  breaches                                        ____________________          person will [otherwise] not be able to restore all losses  to the          plan  without  severe  financial  hardship."  29  U.S.C.     1132          (l)(3)(B).                                         -23-          aside,10  it is  difficult  to  imagine  any case  where  knowing          participation  in  a fiduciary  breach  by  a nonfiduciary  would          occasion  the  type of  remedy  (restitution  awards) that  would          trigger    1132(l)(1)(B) without  the nonfiduciary having engaged          in  a  prohibited  transaction  under   29  U.S.C     110611   or          otherwise having obtained some ill-gotten plan assets in a manner          not covered by the prohibited transaction  section.  We conclude,          therefore,  that   1132(l)  makes little  sense as  independently          authorizing equitable relief  against nonfiduciaries like Gorman,          who allegedly  participated in  a  fiduciary breach  but did  not          engage  in an act prohibited  by the statute  or otherwise obtain          plan assets,  when it can  never be used  for such relief.   If            1132(l)  fails  to demonstrate  Congressional  intent to  provide          money  damages for  nonfiduciary  participation  in  a  fiduciary          breach, see id. at 2070-71, it is even less likely to demonstrate                  ___ __          Congressional  intent to  provide nonmonetary  equitable remedies                                            ___________                                        ____________________          10  The Secretary takes issue with Justice Scalia's proposal that          "any   other  person"   in      1132(l)(1)(B)   could  refer   to          cofiduciaries.      According  to   the   Secretary,  cofiduciary          liability,  established under  29  U.S.C.    1105, clearly  falls          under     1132(l)(1)(A) and  not    1132(l)(1)(B).   We  need not          resolve this dispute and therefore do not.          11  We recognize that prohibited transactions are also covered by          a separate civil penalty provision, 29 U.S.C.   1132(i), but that          does  not   necessarily  mean  civil   penalties  for  prohibited          transactions cannot be  obtained under    1132(l) as  well.   The          penalty under   1132(i)  is completely discretionary and adjusted          according to whether the  prohibited transaction was corrected or          not.   The  penalty under    1132(l),  however, is  mandatory and          contains  special procedures for a general waiver.  Thus, the two          provisions appear to serve distinct and coextensive purposes: one          is tailored specifically to redress individual transactions while          the other is designed to penalize conduct more generally.                                         -24-          for nonfiduciary participation in a fiduciary breach.                                   III.  CONCLUSION                                   III.  CONCLUSION                    The  Secretary's  interpretation  of     1132(a)(5)  as          authorizing  an actionable claim in  any situation where an ERISA          violation  has  occurred  and  the  Secretary  thinks  relief  is          "appropriate,"  regardless  of  whether  or not  that  relief  is          directed  at  an act  or  practice addressed  by  the substantive          provisions  of the statute, stretches the language of   502(a)(5)          past its breaking point.  For this reason and because  we decline          to  exercise  our  common  lawmaking authority  or  our  inherent          equitable  powers  in  situations  where  a professional  service          provider assists in a fiduciary breach but receives no ill-gotten          plan assets, the judgment of the district court is affirmed.                                                             ________                                         -25-
