scheme, specifying the types of actions that can be brought by
particular litigants. See ERISA § 502, 29 U.S.C. § 1132. In the
instant case, the government relies on ERISA § 502(a)(2) and
Pursuant to ERISA § 502(a)(2): "A civil action may be brought
by the Secretary, or by a participant, beneficiary or fiduciary
for appropriate relief" for breach of fiduciary duty.
29 U.S.C. § 1132(a)(2). Under this section, the government may bring an
action for breach of fiduciary duty on behalf of the plan itself
and not on behalf of individual beneficiaries. See Massachusetts
Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 142-44, 105 S.Ct.
3085, 87 L.Ed.2d 96 (1985); Lee v. Burkhart, 991 F.2d 1004,
1009 (2d Cir. 1993); Tabasko v. Direct Communications Group,
Inc., No. 90 Civ. 7954, 1996 WL 94816, at *2 (S.D.N.Y. Mar.4,
ERISA § 502(a)(5) is a catchall provision pursuant to which the
government may seek an order enjoining "any act or practice which
violates any provision of this subchapter, or . . . obtain other
appropriate equitable relief (i) to redress such violation or
(ii) to enforce any provision of this subchapter."
29 U.S.C. § 1132(a)(5); see Marshall v. Chase Manhattan Bank, 558 F.2d 680,
682 (2d Cir. 1977); Reich v. Polera Bldg. Corp., No. 95 Civ.
3205, 1996 WL 67172, *5 (S.D.N.Y. Feb. 15, 1996). The government
may rely on the catchall provision if the equitable relief
required for complete relief is unavailable under the other
provisions in the statute. See Varity v. Howe, 516 U.S. 489,
512, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996) ("[C]atchall
provisions act as a safety net, offering appropriate equitable
relief for injuries caused by violations that § 502 does not
elsewhere adequately remedy.").
The statute permits only participants and beneficiaries "to
recover benefits due to him [or her] under the terms of his [or
her] plan, to enforce his [or her] rights under the terms of the
plan, or to clarify his [or her] rights to future benefits under
the terms of the plan." ERISA § 502(a)(1)(B),
29 U.S.C. § 1132(a)(1)(B). That participants or beneficiaries may have claims
for benefits, however, does not preclude the government from
bringing a separate action. See Beck v. Levering, 947 F.2d 639,
642 (2d Cir. 1991) (noting that ERISA authorizes the government
"to bring suit concurrently with private plaintiffs to recover
appropriate damages"), cert. denied sub nom. Levy v. Martin,
504 U.S. 909, 112 S.Ct. 1937, 118 L.Ed.2d 544 (1992).
Defendants' motion is denied. First, as a technical matter, the
government has sufficiently alleged that the Administrative
Committee and Time Warner breached their fiduciary duties under
ERISA. The government alleges, and defendants do not dispute,
that the Administrative Committee and Time Warner are
fiduciaries. The government further alleges that defendants
breached their fiduciary obligations primarily by failing to
identify workers, who were indeed eligible to participate in the
plans but who were misclassified by the hiring managers as
temporary employees and independent contractors. The government
contends that as a consequence defendants failed to comply with
ERISA's mandatory disclosure requirements (as defendants could
not provide information to unidentified employees) and with plan
documents (as the misclassified employees were excluded from
participation). The government has alleged the elements of a
breach of fiduciary duty claim, and it has the authority under §
502(a)(2) to bring such a claim.
Second, from a broader perspective, if the allegations of the
complaint are true, governmental action is appropriate here.
Misclassified employees, for example, may not even know that
their rights under ERISA might have been violated, a great many
employees may have been affected, and the public also may have a
interest in the issues presented. Under these circumstances, it
makes sense for the government to bring suit.
Defendants' contention that the government's breach of
fiduciary duty claim is in reality an impermissible claim for
benefits*fn2 is rejected. That misclassified employees might
have been deprived of benefits does not mean that the plans
themselves could not have been injured as well.*fn3 The
government has alleged injury to the plans. It contends, for
example, that employees who should have been included in the
plans were not and that as a consequence the plans suffered
losses. The government seeks relief on behalf of the plans,
including, for example, removal of fiduciaries pursuant to ERISA
§ 409 and recoupment of damages allegedly suffered by the plans.
As the Supreme Court has held:
[O]ne can read § 409 as reflecting a special
congressional concern about plan asset management
without also finding that Congress intended that
section to contain the exclusive set of remedies for
every kind of fiduciary breach. After all, ERISA
makes clear that a fiduciary has obligations other
than, and in addition to, managing plan assets. For
example, . . . a plan administrator engages in a
fiduciary act when making a discretionary
determination about whether a claimant is entitled to
benefits under the terms of the plan documents.
Varity v. Howe, 516 U.S. 489, 511, 116 S.Ct. 1065, 134 L.Ed.2d
130 (1996) (citations omitted).
Finally, defendants argue that permitting the government's
action to proceed would "eviscerate" ERISA's administrative
scheme because the misclassified individuals could obtain
benefits without exhausting their administrative remedies.
Defendants are essentially arguing that employees who defendants
contend are not covered by an administrative process must exhaust
that process anyway. The argument makes no sense. The government
need not wait to assert its breach of fiduciary duty claims until
misclassified workers exhaust an administrative process that
defendants contend is inapplicable. See In re Blue Cross of W.
Pa. Litig., 942 F. Supp. 1061, 1064 (W.D.Pa. 1996).
I have considered the remainder of defendants' arguments and
they are rejected.
Defendants' motion to dismiss is denied. The parties shall
appear for a pretrial conference on September 17, 1999 at 10:30
a.m. in Courtroom 11A at 500 Pearl Street.