Mertens v. Hewitt Associates

1993-06-01

Headline: ERISA suits for money against non-fiduciary advisers are limited as Court blocks compensatory claims, narrowing retirees’ ability to recover full pension losses from an actuary or other outside advisor.

Holding: The Court held that ERISA’s §502(a)(3) does not authorize ordinary compensatory money damages against non‑fiduciaries who knowingly participate in a fiduciary’s breach, and affirmed the lower courts’ judgment limiting remedies.

Real World Impact:

Blocks money-damage claims against nonfiduciary advisers under ERISA’s equitable remedy provision.
Leaves retirees reliant on generally lower PBGC-guaranteed benefit payments.
Limits plan participants’ ability to seek full financial recovery from outside advisers.

Topics: pension plans, ERISA enforcement, actuary liability, retiree benefits, equitable relief

Summary

Background

A group of former Kaiser Steel employees sued after their company’s pension plan became underfunded when many workers retired early. The plan’s actuary is accused of letting the company pick actuarial assumptions and failing to disclose a funding shortfall, and the plan was eventually terminated by the Pension Benefit Guaranty Corporation, leaving participants with lower, guaranteed benefits.

Reasoning

The Court considered whether ERISA allows plan participants to get money damages from a non-fiduciary who knowingly helped a fiduciary breach duties. It emphasized ERISA’s detailed enforcement scheme and the statute’s language that permits only “equitable” relief in §502(a)(3). The majority concluded that “other appropriate equitable relief” does not include ordinary compensatory money damages against non-fiduciaries and therefore affirmed the lower court’s judgment on that remedial question, while leaving unsettled whether any ERISA violation was proved.

Real world impact

Because the Court declined to treat §502(a)(3) as a source of compensatory damages against outside advisers, injured plans and participants may lack a path to recover full monetary losses from non-fiduciaries. Claimants remain limited to traditional equitable remedies (like injunction or restitution where available), and the decision can reduce avenues previously available under some state trust rules.

Dissents or concurrances

A dissent argued that courts of equity historically awarded compensatory money for breaches of trust and that ERISA should be read to preserve those remedies, warning the majority’s reading leaves beneficiaries with less protection.