73 F.

3d 1027
77 A.F.T.R.2d 96-579, 64 USLW 2440,
19 Employee Benefits Cas. 2473,
Pens. Plan Guide P 23917I

Robert B. REICH, Secretary of Labor, United States

Department of Labor, Plaintiff-Appellant,
v.
Franz G. STANGL, Defendant-Appellee,
Davidson Lumber Sales, Inc., Employees Retirement Plan, and
David R. Davidson, Jr., Defendants.
No. 94-4096.

United States Court of Appeals,

Tenth Circuit.
Jan. 10, 1996.

Michael Alan Schloss, United States Department of Labor, Washington,

DC, Thomas S. Williamson and Karen L. Handort, United States
Department of Labor, Office of Solicitor, Washington, DC, and Marc I.
Machiz, Associate Solicitor, Plan Benefits Security Division, Washington,
DC (with them on the briefs), appearing for plaintiff-appellant.
Dean C. Andreasen (Robert E. Mansfield, with him on the briefs),
Campbell, Maack & Sessions, Salt Lake City, Utah, appearing for
defendant-appellee.
Before BRORBY, KELLY, and HENRY, Circuit Judges.
HENRY, Circuit Judge.

Plaintiff-appellant, the Secretary of Labor (the Secretary), appeals the district

court's summary judgment order dismissing his claims against the defendantappellee Franz C. Stangl. The Secretary brought this action under the Employee
Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Secs. 1001-1461,
alleging that Mr. Stangl was a party in interest who had engaged in prohibited
transactions. The Secretary sought restitution of plan assets and other equitable

relief. Relying upon legislative history, the district court held that Congress did
not intend to create such a cause of action. We exercise jurisdiction pursuant to
28 U.S.C. Sec. 1291 and reverse the decision of the district court.
I. BACKGROUND
2

Mr. Stangl was general partner of the Bowling Property Limited Partnership, an
entity formed with other investors to develop real property in Sandy, Utah. Mr.
Stangl and David R. Davidson were partners in the S & D Limited Partnership
("S & D"). Mr. Davidson held a fifty percent limited partnership interest in S &
D, while Mr. Stangl held a forty-eight percent limited partnership interest and a
two percent general partnership interest in S & D. In addition to his business
association with Mr. Stangl, Mr. Davidson was trustee of the Davidson Lumber
Sales Inc. Employees Retirement Plan (the Plan), an employee welfare benefit
plan under section 2(1) of ERISA, 29 U.S.C. Sec. 1002(1).

In 1979, the Plan made a $200,000 loan to the Bowling Property Limited
Partnership. In exchange for the loan, Mr. Stangl executed a note on behalf of
the Bowling Property Limited Partnership secured by a trust deed on the Sandy,
Utah property in favor of the Plan. Although the note was renewed several
times between 1979 and 1985, the Bowling Property Partnership made no
payments to the Plan.

In 1985, Mr. Davidson and Mr. Stangl entered into a series of agreements
purporting to reconcile their business relationship. Under the terms of one
agreement, Mr. Davidson personally assumed the Bowling Property Limited
Partnership's obligations on the loan from the Plan. Mr. Davidson also caused
the Plan to reconvey the trust deed securing that loan back to the Bowling
Property Limited Partnership. One consequence of this "reconciliation" was
therefore that the Plan fiduciary personally assumed a note to the Plan and then
released the mortgage securing that note.

In 1990, the Secretary filed a civil action against Mr. Davidson and Mr. Stangl.1
The Secretary alleged that Mr. Davidson had violated his fiduciary duty to the
Plan, and that Mr. Stangl was a party in interest under section 2(14) of ERISA,
29 U.S.C. Sec. 1002(14), who participated in a prohibited transaction under
section 406, 29 U.S.C. Sec. 1106. Although it is not a part of the record in this
case, it appears that the allegations against Mr. Davidson have been resolved.
As to Mr. Stangl, the Secretary sought an order of restitution requiring him to
return to the Plan the unjust enrichment that he received from the allegedly
prohibited transactions, the imposition of a constructive trust on his interest in
the Sandy property, and an order permanently enjoining him from serving as a

fiduciary in any ERISA pension plan.

6

The parties filed motions for summary judgment, and the district court ruled in
favor of Mr. Stangl.2 Relying primarily on legislative history, the court held
that the Secretary cannot bring an action in equity against a nonfiduciary party
in interest for engaging in a prohibited transaction under section 406(a) of
ERISA, 29 U.S.C. Sec. 1106(a).

On appeal, the Secretary challenges this conclusion. We engage in de novo

review of the district court's grant of summary judgment. Boone v. Carlsbad
Bancorporation, Inc., 972 F.2d 1545, 1550 (10th Cir.1992).

II. DISCUSSION
8

ERISA is a comprehensive statute designed to protect employee benefit plans.

See ERISA, Sec. 1, 29 U.S.C. Sec. 1001 (noting that employee benefit plans
have treated beneficiaries unfairly and that Congress intends to establish
standards to provide equitable retirement plans). In furtherance of that policy,
ERISA designates as fiduciaries not only those persons expressly named by a
plan, see ERISA, Sec. 402(a), 29 U.S.C. Sec. 1102(a), but also those persons
who exercise control over the management and administration of the plan and
the distribution of its assets, see ERISA, Sec. 2(21)(A), 29 U.S.C. Sec.
1002(21)(A). Individuals who provide "investment advice for a fee or other
compensation" are also regarded as fiduciaries. Id.

ERISA imposes a number of obligations on fiduciaries, including " 'the proper

management, administration, and investment of [plan] assets, the maintenance
of proper records, the disclosure of specified information, and the avoidance of
conflicts of interest.' " Mertens, 508 U.S. at ----, 113 S.Ct. at 2066 (quoting
Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 142-43, 105 S.Ct.
3085, 3090, 87 L.Ed.2d 96 (1985)). The statute provides specific remedies for
the violation of these obligations. Under section 409, a fiduciary "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."
ERISA, Sec. 409(a), 29 U.S.C. Sec. 1109(a).

10

ERISA also designates certain individuals as "parties in interest." See ERISA,

Sec. 2(14), 29 U.S.C. Sec. 1002(14). The term "party in interest" is defined
broadly and includes fiduciaries, plan employees, employers whose employees
are covered by ERISA plans, service providers, employee organizations whose

members are covered by a plan, and owners of fifty percent or more of stock in
these employer and employee organizations. See id. Parties in interest also
include employees, officers, and directors, as well as shareholders, partners,
and joint venturers owning ten percent or more of entities that are themselves
parties in interest. See ERISA, Sec. 2(14)(H)-(I), 29 U.S.C. Sec. 1002(14)(H)(I). Section 406 of ERISA, 29 U.S.C. Sec. 1106, prohibits fiduciaries from
engaging in certain transactions with these parties in interest.
11

ERISA provides a variety of means to enforce these provisions. Under section

502 of ERISA, 29 U.S.C. Sec. 1132, plan participants, beneficiaries,
fiduciaries, and the Secretary of Labor may bring civil actions to redress various
violations of the statute. In this case, the Secretary asserted claims against Mr.
Stangl pursuant to section 502(a)(5), which authorizes civil actions seeking
"appropriate equitable relief" to redress violations of ERISA. ERISA, Sec.
502(a)(5), 29 U.S.C. Sec. 1132(a)(5).

12

In challenging the district court's dismissal of this action, the Secretary

maintains that the plain language of the statute, its legislative history, ERISA's
enforcement scheme, and persuasive case law allow the Secretary to bring an
equitable action to recover the Plan's assets from a nonfiduciary party in
interest. Mr. Stangl responds that the Supreme Court's decision in Mertens
limits the causes of action the Secretary may bring to those that ERISA
specifically lists and that ERISA does not provide an equitable action against a
nonfiduciary party in interest for engaging in a prohibited transaction. In
analyzing the issues presented, we begin with the statutory language. Then we
discuss the impact of Mertens, ERISA's legislative history, and a related
provision of the Internal Revenue Code.

A. Statutory Language
13

As noted above, section 502(a) provides 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." ERISA, Sec.
502(a)(5), 29 U.S.C. Sec. 1132(a)(5). Section 406(a), "a provision of this
subchapter" to which section 502 applies, states that a fiduciary may not engage
in certain transactions with a party in interest:

Except as provided in section 1108 of this title:

14
15

(1) A fiduciary with respect to a plan shall not cause the plan to engage in a
transaction, if he knows or should know that such transaction constitutes a

direct or indirect-16

(A) sale or exchange, or leasing, of any property between the plan and a party in
interest;

17

(B) lending of money or other extension of credit between the plan and a party
in interest;

18

(C) furnishing of goods, services, or facilities between the plan and a party in
interest;

19

(D) transfer to, or use by or for the benefit of, a party in interest, of any assets of
the plan; or

20

(E) acquisition, on behalf of the plan, of any employer security or employer real
property in violation of section 1107(a) of this title.

21

ERISA, Sec. 406(a), 29 U.S.C. Sec. 1106(a). Read together, sections 406 and
502 indicate that the Secretary's action against Mr. Stangl is an action under
section 502 "for appropriate equitable relief" to redress a violation of section
406 and to enforce that section's prohibition of transactions with parties in
interest.

22

Several other circuits have agreed with this interpretation, concluding that these
sections authorize equitable actions against parties in interest who have
engaged in prohibited transactions. In Nieto v. Ecker, 845 F.2d 868, 873-874
(9th Cir.1988), the court addressed section 502(a)(3), which authorizes
equitable actions by a participant, beneficiary, or fiduciary in language similar
to the language used in section 502(a)(5) for actions brought by the Secretary.3
In concluding that section 502(a)(3) authorizes equitable actions against parties
in interest, the Ninth Circuit noted that section 502(a)(3)'s language expressly
grants equitable power to redress violations of ERISA and that transactions
prohibited under section 406 constitute violations for which equitable relief
may be obtained. The Ninth Circuit reasoned that "[c]ourts may find it difficult
or impossible to undo such illegal transactions unless they have jurisdiction
over all parties who allegedly participated in them." Nieto, 845 F.2d at 874.
The Ninth Circuit has recently reaffirmed this holding. See Landwehr v.
Dupree, 72 F.3d 726, 734-35 (9th Cir.1995); Concha v. London, 62 F.3d 1493,
1503-04 (9th Cir.1995). The Third Circuit has reached the same conclusion.
See Reich v. Compton, 57 F.3d 270, 285-87 (3d Cir.1995).

23

The First Circuit's decision in Reich v. Rowe, 20 F.3d 25 (1st Cir.1994), adopts
the same interpretation of these ERISA provisions. In Rowe, the court held that
ERISA did not authorize the Secretary to bring an equitable action against a
nonfiduciary for participating in a breach of a fiduciary's duties. However, in
reaching that conclusion, the court contrasted actions against nonfiduciaries
alleging participation in a fiduciary's breach with actions against nonfiduciary
parties in interest alleging participation in prohibited transactions. As to the
latter, the court reasoned that transactions prohibited under section 406
constituted " 'acts or practices' ... for which [section 502(a)(5) ] provides a
remedy." Id. at 31. Importantly, the Rowe court found it insignificant that Sec.
406 imposes the obligation on fiduciaries rather than parties in interest:

24

The fact that [section 406] imposes the duty to refrain from prohibited
transactions on fiduciaries and not on the parties in interest is irrelevant for our
purposes because [section 502(a)(5) ] reaches "acts or practices" that violate
ERISA and prohibited transactions violate [section 406]. 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.

25

Id. at 31 n. 7.

26

We agree with the analysis of Nieto, Compton, and Rowe. Like those courts,
we conclude that the fact that section 406(a) expressly imposes duties on
fiduciaries rather than on parties in interest does not limit the Secretary's
authority to file equitable actions against those parties in interest who have
engaged in prohibited transactions. The transactions specified in section 406(a)
necessarily involve two parties: the fiduciary and the party in interest. In the
absence of an express limitation as to who may be named as a defendant in an
equitable action filed by the Secretary, we read the statutory prohibition of
certain kinds of transactions to offer some protection for ERISA plans from the
misdeeds of both parties to the prohibited transaction. Importantly, the
Supreme Court has noted that, in enacting section 406, "Congress' goal was to
bar categorically a transaction that was likely to injure the pension plan."
Commissioner v. Keystone Consol. Indus., Inc., 508 U.S. 152, ----, 113 S.Ct.
2006, 2012, 124 L.Ed.2d 71 (1993). Interpreting sections 406(a) and 502(a)(5)
to allow the Secretary to bring an equitable action against a party in interest
comports with that goal by providing a remedy for the injurious effects of
prohibited transactions.

27

Additionally, we find it significant that the Secretary can bring an action to

enjoin an ongoing breach of a fiduciary's duty to the plan. See ERISA, Sec.
502(a)(5), 29 U.S.C. Sec. 1132(a)(5) (authorizing civil actions "to enjoin any
act or practice which violates any provision of this subchapter"). It would make
little sense to grant the Secretary such broad enforcement powers to stop
ongoing violations of ERISA and then to limit the Secretary's power to recover
plan assets acquired through these same violations. Such an interpretation of
section 502(a)(5) would effectively create a zone of immunity, protecting the
illegitimate gains of parties in interest who have completed prohibited
transactions that the Secretary could have enjoined while they were occurring.
We therefore conclude that the language of sections 406(a) and 502(a)(5)
allows the Secretary to bring an equitable action against a party in interest who
has engaged in a prohibited transaction.
B. Mertens
28

Notwithstanding the statutory language, Mr. Stangl argues that the Supreme
Court's decision in Mertens forecloses the Secretary's action against him. In
Mertens, the plaintiffs filed a claim against the actuary of their former
employer's pension plan. The plaintiffs argued that the actuary's advice had
caused the pension plan to be inadequately funded and sought equitable relief
under section 502(a)(3) of ERISA. Both parties assumed that the plaintiffs had
pled a legally sufficient cause of action, and the only issue before the Court was
whether the plaintiffs truly sought equitable relief. The Supreme Court held
that the plaintiffs had sought legal, not equitable, relief and that they could not
recover legal damages from a nonfiduciary for knowingly participating in a
fiduciary breach under section 502(a)(3) of ERISA. Mertens, 508 U.S. at ---- - ---, 113 S.Ct. at 2066-2071.4 However, in dicta, the Mertens Court also
expressed doubt as to whether ERISA provides any cause of action against
nonfiduciaries for participating in a fiduciary breach:

29 provision explicitly requires [nonfiduciaries] to avoid participation (knowing or

[N]o
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 Sec. 405(a), 29 U.S.C. Sec. 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."
30

Id. at ----, 113 S.Ct. at 2067 (quoting Russell, 473 U.S. at 146-47, 105 S.Ct. at

3092-93) (citation omitted).

31

32

For several reasons, we do not read Mertens to preclude the Secretary's action
against Mr. Stangl. Most importantly, in discussing the fact that ERISA does
not expressly prohibit a nonfiduciary from participating in a fiduciary's breach
of duty, the Mertens Court did not suggest a similar interpretation of the
provisions regarding prohibited transactions with parties in interest. In fact, like
the First Circuit in Rowe, the Court contrasted the lack of ERISA provisions
regarding a nonfiduciary's participation in a fiduciary's breach with various
ERISA provisions "that can be read as imposing obligations upon
nonfiduciaries." Id. As an example of a provision that imposes such an
obligation, the Court cited section 406(a)'s prohibition on parties in interest
offering services or engaging in other transactions with the plan. Id. at ---- n. 4,
at 2067 n. 4. The Court's reference to these provisions indicates that its
statements regarding the lack of statutory provisions addressing a
nonfiduciary's participation in a fiduciary's breach should not be read to
preclude claims concerning prohibited transactions under section 406.
Moreover, in reaching its conclusion regarding actions for money damages
against nonfiduciaries, the Mertens Court discussed section 502(l )(1) of
ERISA, 29 U.S.C. Sec. 1132(l )(1), a provision added to ERISA in 1989.
Section 502(l )(1) provides:

In the case of-33

34

(A) any breach of fiduciary responsibility under (or other violation of) part 4 by
a fiduciary, or

35

(B) any knowing participation in such a breach or violation by any other

person,

36 Secretary shall assess a civil penalty against such fiduciary or other person in an
the
amount equal to 20 percent of the applicable recovery amount.
37

ERISA Sec. 502(l )(1), 29 U.S.C. Sec. 1132(l )(1) (emphasis added). The
Supreme Court rejected the plaintiffs' argument that the reference to "the
applicable recovery amount" established that legal damages could be recovered
from a nonfiduciary participating in a fiduciary's breach. However, the Court
noted that " 'equitable relief' awardable under Sec. 502(a)(5) includes
restitution of ill-gotten plan assets or profits, providing an 'applicable recovery
amount' to use to calculate the penalty." Mertens, 508 U.S. at ----, 113 S.Ct. at
2071 (emphasis added). The Court's definition of appropriate equitable relief

under section 502(a)(5) is surely broad enough to include the recovery of the
fruits of a prohibited transaction from a party in interest.
38

Finally, the circuits that have discussed the issue after Mertens have not found
that the Supreme Court's decision bars equitable actions seeking restitution
from parties in interest. See Concha, 62 F.3d at 1503-04; Compton, 57 F.3d at
287; Rowe, 20 F.3d at 33. These decisions and the Supreme Court's discussion
in Mertens establish that the Court has not foreclosed the Secretary's action
against Mr. Stangl.

C. Legislative History
39

Through an examination of ERISA's legislative history, the district court

concluded that, in spite of the broad authorization of "appropriate equitable
relief" under section 502(a)(5), Congress did not intend to allow the Secretary
to bring equitable actions against parties in interest engaging in prohibited
transactions. The court relied primarily on the initial Senate version of ERISA,
which stated that

40 party in interest who participates in a transaction prohibited by this Act

[a]ny
knowingly, or with reason to know that the transaction was a transaction to which
this Act applies, shall be personally liable to make good to the fund any losses
sustained by the fund resulting from such transaction, and to pay to the fund any
profits realized by him from such transaction.
41

S. 4, 93d Cong., 1st Sess., at 180 (1973).

42

The district court noted that this language regarding personal liability of parties
in interest was not included in the final version of the statute and that, in the
final version, Congress addressed the issue of prohibited transactions in section
406(a) by imposing the obligation to avoid these transactions on fiduciaries
rather than on parties in interest. The adoption of the narrower language of
section 406(a) signified to the district court that Congress had rejected the
notion that parties in interest were proper defendants in Secretarial actions
seeking equitable relief.5

43

The Secretary responds by noting that the final version of ERISA did contain an
enforcement provision significantly broader than the provision contained in the
initial House version. In particular, the Secretary observes that the initial House
version did not contain the broad authorization of civil actions seeking "other
appropriate equitable relief" that was ultimately inserted into section 502(a)(5).
See H.R. 2, 93d Cong., 1st Sess., at 150 (1973).6

44

The Secretary's response is persuasive. In light of the broad language that

Congress did include in section 502(a)(5), the fact that no provision of ERISA
(as ultimately enacted) expressly imposes "personal liability" on parties in
interest (as the initial House version did) does not indicate that a party in
interest can never be a proper defendant in an equitable action. Indeed, as we
have noted, the Supreme Court has observed that "equitable relief" under
section 502(a)(5) includes restitution of what parties in interest may obtain
from engaging in prohibited transactions: "ill-gotten plan assets or profits."
Mertens, 508 U.S. at ----, 113 S.Ct. at 2071. Moreover, the legislative history of
ERISA repeatedly states that the statute was enacted to protect plan
beneficiaries' interests in plan assets. See S.Rep. No. 127, 93d Cong., 2d Sess.
(1974), reprinted in 1974 U.S.C.C.A.N. 4838, 4866-71 (1974); H.Rep. No. 533,
93d Cong., 2d Sess. (1974), reprinted in 1974 U.S.C.C.A.N. 4639, 4649-51
(1974). Given the language of section 502(a)(5) and the policy of protecting
plan beneficiaries that underlies ERISA, we conclude that the legislative
history does not preclude the Secretary's action against Mr. Stangl.

E. Parallel Tax Provisions

45

In challenging the district court's grant of summary judgment to Mr. Stangl, the
Secretary also invokes certain provisions of ERISA that authorize the Secretary
of the Treasury to assess taxes on persons participating in prohibited
transactions. 26 U.S.C. Sec. 4975(h) provides that, before assessing an excise
tax on a party in interest, the Secretary of the Treasury must notify the
Secretary of Labor and "provide him a reasonable opportunity to obtain a
correction of the prohibited transaction or to comment on the imposition of
such tax." As used in section 4975(h), " 'correction' ... mean[s], with respect to a
prohibited transaction, undoing the transaction to the extent possible, but in any
case placing the plan in a financial position not worse than that in which it
would be if the disqualified person were acting under the highest fiduciary
standards." 26 U.S.C. Sec. 4975(f)(5). The Secretary maintains that section
4975(h)'s reference to his "correcting" a transaction indicates that he may seek
equitable relief against a party in interest under section 502(a)(5).

46

Like the Third Circuit, we find this argument convincing. See Compton, 57
F.3d at 286 ("Since 'correction of the prohibited transaction' implies an order of
restitution directed to the party who participated in the transaction with the
plan, this provision buttresses the Secretary's position."). We therefore conclude
that section 4975(h)'s recognition of the Secretary's authority to correct a
prohibited transaction rebuts Mr. Stangl's contention that Congress did not
intend to subject parties in interest to civil actions seeking equitable relief.

III. CONCLUSION
47

The language of sections 406(a) and 502(a)(5) of ERISA, the legislative history
of ERISA, the decisions of other circuits, the Supreme Court's decision in
Mertens, the policies underlying ERISA, and 26 U.S.C. Sec. 4975(h) establish
that the Secretary may bring a civil action for equitable relief under section
502(a)(5) against a party in interest who has engaged in a prohibited
transaction. Accordingly, the decision of the district court granting summary
judgment to Mr. Stangl is REVERSED and the case is REMANDED to the
district court for proceedings consistent with this opinion.

In his original complaint, the Secretary also sought legal damages. However, he
withdrew his legal claim against Mr. Stangl during the course of this litigation
when the Supreme Court issued its opinion in Mertens v. Hewitt Assocs., 508
U.S. 248, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993), holding that ERISA does
not authorize legal damages against nonfiduciaries for participating in a
fiduciary breach. Id. at ---- - ----, 113 S.Ct. at 2068-72

Because the district court held that ERISA does not provide a cause of action
against nonfiduciaries, the district court did not reach the issue of whether Mr.
Stangl was a party in interest

Section 502(a)(3) provides that civil actions may be brought

by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice
which violates any provision of this subchapter or the terms of the plan, or (B)
to obtain other appropriate equitable relief (i) to redress such violations or (ii) to
enforce any provisions of this subchapter or the terms of the plan.
ERISA, Sec. 502(a)(3), 29 U.S.C. Sec. 1132(a)(3).

Writing for four Justices in dissent, Justice White argued that Congress
intended that ERISA provide more protection for employees and their
beneficiaries than the common law provided, that the common law of trusts
provided a cause of action in equity against nonfiduciaries for participating in a
fiduciary breach, and that the language of ERISA did not compel the majority's
conclusion. Id. at ---- - ----, 113 S.Ct. at 2072-78 (White, J., dissenting)

The House Conference Report explains the differences between the Senate and
House versions of ERISA:
Under the House bill, fiduciaries generally are prohibited from dealing on

behalf of a plan with persons known to be parties-in-interest unless the dealings

are for adequate consideration. Also, the bill generally prohibits fiduciaries
from dealing with plan assets for their own accounts, receiving consideration
from other parties dealing with the plan in a transaction involving the plan, or
acting in a transaction involving the plan on behalf of a person who is adverse
to the plan.
Under the House bill, a fiduciary is to be personally liable for losses to the plan
resulting from violations of the fiduciary responsibility rules.
The Senate amendment includes rules governing fiduciary responsibility in
both the labor and tax provisions. The labor provisions of the amendment, as in
the case of the House bill, deal with the basic responsibility of fiduciaries, plan
administrators, and structure; also and [sic] these provisions would establish
certain transactions as prohibited transactions. Fiduciaries (and parties-ininterest) are to be personally liable under the labor provisions for losses
sustained by a plan that result from a violation of these rules.
H.R.Rep. No. 1280, 93d Cong., 2d Sess. (1974), reprinted in 1974
U.S.C.C.A.N. 5038, 5075. In addition, the House Conference Report explains
that the fiduciary was the main focus of the prohibited transaction rules in the
amended version of ERISA ultimately adopted by Congress:
The conference substitute prohibits plan fiduciaries and parties-in-interest from
engaging in a number of specific transactions. Prohibited transaction rules are
included both in the labor and tax provisions of the substitute. Under the labor
provisions (title I), the fiduciary is the main focus of the prohibited transaction
rules. This corresponds to the traditional focus of trust law and of civil
enforcement of fiduciary responsibilities through the courts. On the other hand,
the tax provisions (title II) focus on the disqualified person. This corresponds to
the present prohibited transaction provisions relating to private foundations.
Id. at 5087 (footnote omitted).
6

The initial House version provided that

Civil actions under this title may be brought-(2) by the Secretary or by a participant, beneficiary or fiduciary for appropriate
equitable relief under section 111(d)
(3) by the Secretary, or by a participant, beneficiary, or fiduciary to enjoin any
act or practice which violates any provision of this title.

H.R. 2, 93d Cong., 2d Sess., at 150 (1974).

Section 111(d) of the initial House version addressed a fiduciary's personal
liability for breach of duty. See id. at 42.