United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 12, 2005 Decided January 24, 2006
No. 05-5050
ELAINE L. CHAO, SECRETARY OF DEPARTMENT OF LABOR,
APPELLEE
v.
BRITTIAN P. DAY AND
A & D INSURANCE AGENCY, INC.,
APPELLANTS
Appeal from the United States District Court
for the District of Columbia
(No. 02cv01516)
John W. Karr argued the cause for appellants. With him on
the brief was Theodore S. Allison.
Glenn M. Loos, Senior Trial Attorney, U.S. Department of
Labor, argued the cause for appellee. With him on the brief was
Elizabeth Hopkins, Attorney. Ellen L. Beard, Attorney, entered
an appearance.
Before: GINSBURG, Chief Judge, and SENTELLE, Circuit
Judge, and WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge SENTELLE.
2
SENTELLE, Circuit Judge: The A&D Insurance Agency and
its President, Brittian P. Day (collectively, “Day”), appeal the
District Court’s grant of summary judgment in favor of the
Secretary of the Department of Labor, Elaine L. Chao (the
“Secretary”), under the Employee Retirement Income Security
Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461. Day contends
that he is not a “fiduciary” within the meaning of ERISA §
3(21)(A)(i), 29 U.S.C. § 1002(21)(A)(i), and thus not covered by
the statute. We agree with the District Court and affirm.
I
The Secretary filed a complaint in the United States District
Court for the District of Columbia against Day, alleging that he
violated his fiduciary responsibilities through an illegal scheme
to misappropriate insurance assets. See 29 U.S.C. § 1109(a)
(imposing civil liability for the breach of a fiduciary duty); id.
§ 1132(a)(2) (empowering the Secretary of Labor to bring
enforcement actions for the breach of a fiduciary duty).
Specifically, the Secretary alleged that Day accepted hundreds
of thousands of dollars from twenty-nine ERISA-covered
employee benefit plans for the purpose of purchasing insurance
for the plans. Under his brokerage scheme, Day sent invoices to
the plans for various insurance policies, the plans paid the bills
by sending checks to Day, and Day deposited the checks into his
corporate account. Instead of using the plans’ checks to
purchase insurance, however, Day kept the money and provided
the plans with fake insurance policies.
Day filed a motion to dismiss the Secretary’s complaint,
arguing that he did not fall within ERISA’s definition of a
“fiduciary.” The District Court denied Day’s motion and held
“Defendants, by using plan funds for personal use, plainly
exercised ‘control’ over the ‘disposition’ of plan assets. . . .
3
[T]he court finds that the factual circumstances of the present
case bring Defendants within the reach of the ERISA statute.”
Thereafter, the Secretary filed a motion for summary judgment,
along with a statement of material facts and numerous exhibits.
In response, Day filed a memorandum in opposition to the
Secretary’s motion, but Day did not file a separate statement of
material facts. Taking the Secretary’s statement of facts as
undisputed, the District Court granted the Secretary’s motion for
summary judgment and ordered Day to pay almost $1 million in
damages. The only issue on appeal is whether Day is a
“fiduciary” under ERISA.
II
We review de novo the District Court’s grant of summary
judgment to the Secretary, viewing the record in the light most
favorable to Day, the nonmoving party. See, e.g., Cruz v. Am.
Airlines, Inc., 356 F.3d 320, 328 (D.C. Cir. 2004). Summary
judgment is appropriate only if there is no genuine issue of
material fact, and judgment in the movant’s favor is proper as a
matter of law. See Fed. R. Civ. P. 56(c); Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). We take as true the
Secretary’s “statement of material facts” because Day failed to
dispute them below. See Waterhouse v. Dist. of Columbia, 298
F.3d 989, 992 (D.C. Cir. 2002).
Our analysis begins, as always, with the text of the statute.
See Barnhart v. Sigmon Coal Co., 534 U.S. 438, 450 (2002).
Where, as here, it is plain and unambiguous, our analysis ends
with the text as well. See Robinson v. Shell Oil Co., 519 U.S.
337, 340 (1997).
The relevant section of ERISA defines two classes of
fiduciaries:
4
a person is a fiduciary with respect to a plan to the
extent he [(a)] exercises any discretionary authority or
discretionary control respecting management of such
plan or [(b)] exercises any authority or control
respecting management or disposition of its assets.
29 U.S.C. § 1002(21)(A)(i) (emphasis added). In the
Secretary’s view, Day falls within the scope of the second clause
because he exercised “authority or control” over the “disposition
of [the plans’] assets.” In response, Day argues that fiduciaries
under both the first and second clauses—hereinafter referenced
as the “discretionary” and “disposition” clauses,
respectively—require some element of discretionary “authority
or control.” Day contends he was simply an insurance salesman,
and he did not exercise any discretion over the plans’ assets—he
was under strict instructions to use the plans’ funds to purchase
insurance coverage for the plans’ members. Therefore, Day
concludes, he cannot qualify as a “fiduciary” under ERISA.
We reject Day’s interpretation of § 1002(21)(A)(i) because
it does violence to the statutory text. The plain language of that
text connects the two classes of “fiduciaries” with the
disjunctive “or”—not the conjunctive “and.” See, e.g., Garcia
v. United States, 469 U.S. 70, 73 (1984) (“Canons of
construction indicate that terms connected in the disjunctive in
this manner be given separate meanings.”); 1A NORMAN J.
SINGER, STATUTES AND STATUTORY CONSTRUCTION § 21.14 at
181-82 (6th ed. 2002) (“courts presume that ‘or’ is used in a
statute disjunctively unless there is a clear legislative intent to
the contrary”); see also AMERICAN HERITAGE DICTIONARY OF
THE ENGLISH LANGUAGE 873 (4th ed. 2000) (defining “or” as
“[u]sed to indicate . . . [a]n alternative . . .” (emphasis added));
MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 817 (10th ed.
1996) (defining “or” as “a function word [used] to indicate an
alternative” (emphasis added)); VII OXFORD ENGLISH
5
DICTIONARY 166 (1933) (defining “or” as “[a] particle co-
ordinating two (or more) words, phrases, or clauses, between
which there is an alternative” (emphasis added)). Congress
plainly framed § 1002(21)(A)(i) in the alternative, and it further
bifurcated the subsection with the parallel inclusion of the verb
“exercises” at the beginning of both the discretionary and
disposition clauses. We therefore cannot commingle the
textually distinct provisions of the two clauses. See Overseas
Educ. Ass’n v. FLRA, 876 F.2d 960, 975 (D.C. Cir. 1989)
(Buckley, J., concurring) (“This court has no authority to engraft
restrictions onto the statute that its drafters did not choose to
use, and that the members voting it into law never had the
chance to consider.”).
Our conclusion is further buttressed by the structure of the
statute. The “discretion” requirement—which is repeated twice
in the discretionary clause—is conspicuously omitted altogether
from the disposition clause. Instead, in order to qualify as a
“fiduciary” with respect to a plan’s “assets,” a person must
simply exercise “any authority or control” over their
management or disposition. 29 U.S.C. § 1002(21)(A)(i)
(emphasis added). As the Supreme Court has instructed, “[w]e
do not lightly assume that Congress has omitted from its adopted
text requirements that it nonetheless intends to apply, and our
reluctance is even greater when Congress has shown elsewhere
in the same statute that it knows how to make such a
requirement manifest.” Jama v. Immigration & Customs
Enforcement, 125 S. Ct. 694, 700 (2005). Day points to
nothing—in either ERISA or the caselaw interpreting it—to
overcome this reluctance. Day undeniably had “authority or
control” over the “disposition” of the plans’ “assets.” The plans
sent to Day checks made payable to him. Day then deposited
the plans’ funds into his account. Day was obligated to
“control” the “disposition” of those funds for paying the plans’
insurance premiums. Instead, Day absconded with the funds.
6
Because the disposition clause contains no “discretion”
requirement, it is irrelevant whether Day exercised “discretion”
in his thievery. “[A]ny authority or control” is enough.
Therefore, in light of ERISA’s statutory text and structure,
we conclude Day was a “fiduciary,” regardless of whether he
possessed “discretionary authority or discretionary control” over
the disposition of the plans’ assets. Our conclusion comports
with the results reached by every Court of Appeals that has
considered the issue.1 See David P. Coldesina, D.D.S., P.C.,
Empl. Profit Sharing & Trust v. Estate of Simper, 407 F.3d
1126, 1132-35 (10th Cir. 2005) (holding an accountant is a
“fiduciary” under the disposition clause where he wrongfully
disbursed the plans’ funds); Srein v. Frankford Trust Co., 323
F.3d 214, 220-22 (3d Cir. 2003) (holding a bank is a “fiduciary”
under the disposition clause where it wrongfully disbursed the
plans’ funds); LoPresti v. Terwilliger, 126 F.3d 34, 40 (2d Cir.
1997) (holding that insurance premiums deducted from
employees’ paychecks and commingled with corporate assets
were plan assets in accordance with Department of Labor
regulations, see 29 C.F.R. § 2510.3-102(a), and therefore that
president of employer corporation acted as a fiduciary when he
failed to separate those assets for payment to the funds and
1
At least one court has suggested that “discretion” is a
prerequisite for all fiduciaries under ERISA § 3(21)(A), 29 U.S.C. §
1002(21)(A). See Useden v. Acker, 947 F.2d 1563, 1574 (11th Cir.
1991) (rejecting Appellant’s argument that a bank “exercise[d] . . .
discretionary authority or control over Plan assets such that it acquired
fiduciary status”); see also O’Toole v. Arlington Trust Co., 681 F.2d
94, 96 (1st Cir. 1982). However, the Useden court did not explain
which provision within § 1002(21)(A) it was relying upon or analyze
the textual distinctions between the statute’s various subsections. To
the extent the Useden court imputes a “discretionary” requirement to
the disposition clause, we reject its approach for the reasons set forth
in this opinion.
7
instead used them to pay company creditors); IT Corp. v. Gen.
Am. Life Ins. Co., 107 F.3d 1415, 1421 (9th Cir. 1997) (holding
a plan administrator is a “fiduciary” under the disposition clause
where it wrongfully disbursed the plan’s funds).
While it is not necessary to our holding, we note that the
common law definition of a “fiduciary” further supports our
interpretation of the disposition clause. Under the common law,
insurance brokers, such as Day, are the agents of the insureds,
such as the plans, not the companies. See, e.g., Evvtex Co. v.
Hartley Cooper Assocs. Ltd., 102 F.3d 1327, 1331-32 (2d Cir.
1996); 43 Am. Jur. 2d Insurance § 129 (“Ordinarily, when
employed to procure insurance, the broker becomes the agent of
the person for whom the insurance is procured.”); 44 C.J.S.
Insurance § 181 (“[I]n the absence of a statute to the contrary,
[an insurance broker] is the agent of insured as to all matters
within the scope of his employment.”). As the plans’ agent, Day
was bound by a broker’s common law fiduciary duty to
faithfully deliver the plans’ assets to the insurer. See, e.g.,
Offshore Prod. Contractors, Inc. v. Republic Underwriters Ins.
Co., 910 F.2d 224, 230-31 (5th Cir. 1990); 44 C.J.S. Insurance
§ 215 (“Where an insurance agent or broker acts as agent for
insured, there is a fiduciary relationship between them, and the
agent or broker has a fiduciary responsibility to insured. Thus,
an agent or broker employed to effect insurance for another, like
other agents, owes to his principal the duty to discharge with
loyalty and good faith the trust imposed in him, to obey the
instructions given to him by insured, and to exercise reasonable
skill, care, and diligence in effecting the insurance.” (footnotes
omitted)). Thus, even though our holding in this case rests
exclusively on ERISA’s statutory definition of a “fiduciary,” our
conclusion is also consistent with the long-prevailing common
law definition of the term.
8
We hasten to emphasize the limited scope of today’s
holding. Our interpretation of the disposition clause does
not—as Day fears—extend fiduciary status to every person who
exercises “mere possession, or custody” over the plans’ assets.
Day was far more than a mere custodian; he was a broker who
solicited, accepted, and then pilfered the plans’ assets by
reneging on his promise to purchase insurance for the plans’
members. On the facts presented here, we hold simply that Day
exercised sufficient “authority or control” over the “disposition”
of the plans’ assets to qualify as a “fiduciary” under the
disposition clause.
III
For the reasons set forth above, the District Court’s entry of
summary judgment in favor of the Secretary is
Affirmed.