approval of the contract form from the insurance departments of all the states. UF 162. It thus was nothing more than a device for the sale of Home Life's insurance product. To say that in setting up and overseeing the trust, HTNB was a "person acting . . . indirectly in the interest of an employer, in relation to an employee benefit plan," bends the statutory phrase past the breaking point. In declaring the Qualified Corporate Plan Trust, HTNB was really acting in the interest of Home Life, which needed the trust for selling the FA. See generally the Court's recitation of the facts, Section II.
Perhaps because plaintiffs perceived the weakness of this assertion, they later shifted their argument to claim that the Qualified Corporate Plan Trust became an ERISA plan because of the participation agreements entered into by the participants in the AAP pension plans. Reply, at 26-29; Response to HTNB Surreply, at 7. The Court cannot understand how the added detail of the participation agreements somehow makes the declaration of trust a pension plan maintained by an employer or someone acting on an employer's behalf. The fact remains that the Qualified Corporate Plan Trust was a device for the sale of the FA.
Plaintiffs' invocation of Donovan v. Dillingham, supra, is fruitless, for as HTNB points out, that case, if anything, militates against holding the Qualified Corporate Plan Trust to be an ERISA plan. Donovan involved a multiple-employer trust ("MET"). A MET allows employers of relatively small numbers of employees to secure more favorable insurance rates by pooling their contributions. In carrying out this function, the MET in Donovan had acquired a group health insurance policy; employers and employee organizations could then "subscribe" to the MET in order to obtain health coverage for their employees or members. Id. at 1370. The similarities of the MET to the Qualified Corporate Plan Trust are apparent. Thus, the Eleventh Circuit's conclusion regarding the MET is equally applicable to the qualified plan trust, and merits quotation in full: "An issue in other cases has been whether a multiple employer trust -- the enterprise -- is itself an employee welfare benefit plan. The courts, congressional committees, and the Secretary uniformly have held they are not." Id. at 1372. Cf. Ed Miniat, Inc. v. Globe Life Ins. Group, Inc., 805 F.2d 732, 738 (7th Cir. 1986) ("The [plaintiff's] Plan is distinct from the [Retirement Life Reserve policy] trust [set up to accept premiums and purchase life insurance for plaintiff's plan], even though the [plaintiff's] Plan funds the benefits that it provides by the mechanism of the RLR trust.") (footnote omitted), cert. denied, 482 U.S. 915, 96 L. Ed. 2d 676, 107 S. Ct. 3188 (1987).
The Court therefore concludes that the Qualified Corporate Plan Trust is not an ERISA plan. HTNB thus is not a named fiduciary under ERISA § 402(a)(2), 29 U.S.C. § 1102(a)(2).
2. Functional Fiduciary Status
A person may be a fiduciary, however, even if not named a fiduciary by an ERISA plan. The Department of Labor has taken the view -- endorsed by the Seventh Circuit -- that a person might become an ERISA fiduciary to the extent that he performs any functions enumerated in ERISA § 3(21). See 29 U.S.C. § 2509.75-8; Forys v. United Food & Commercial Worker's Int'l Union, 829 F.2d 603, 606-07 (7th Cir. 1987). But it must be emphasized that this sort of functional fiduciary status does not make a person a fiduciary for all purposes; the person is a fiduciary only with respect to those functions enumerated in ERISA § 3(21) which he actually performs. See Chicago Board Options Exchange, Inc. v. Connecticut General Life, Ins. Co., 713 F.2d 254, 259 (7th Cir. 1983); Brandt v. Grounds, 687 F.2d 895, 896-98 (7th Cir. 1982).
Plaintiffs' theories of how HTNB assumed fiduciary status have tended to fluctuate throughout the many memorandums submitted to the Court. Having rejected plaintiffs' primary theory that the Qualified Corporate Plan Trust was an ERISA plan, the Court turns to what it views as their alternative arguments. In their Response to defendants' motions for summary judgment, plaintiffs assert that HTNB is a fiduciary because (1) it exercised control of the plan contributions; (2) it held the GAC, which is a plan asset; (3) it possessed the power to amend the GAC; and (4) by managing and administering the Qualified Corporate Plan Trust, it effectively managed and administered the AAP plans. Response, at 5-7.
Plaintiffs thus allege that HTNB performed (1) the fiduciary functions detailed in ERISA § 3(21)(A)(i), i.e., the exercise of authority or control over management of the plan or its assets; and (2) the functions detailed in ERISA § 3(21)(A)(iii), i.e., the exercise of discretionary authority or responsibility in plan administration.
The § 3(21)(A)(iii) claim is disposed of most easily. To begin with, there is no evidence that HTNB performed the sort of functions typically encompassed by § 3(21)(A)(iii), such as granting or denying claims for benefits. See Forys, 829 F.2d at 605-07. Furthermore, to be a fiduciary under § 3(21)(A)(iii), the exercise of authority or responsibility in plan administration must be discretionary. HTNB's actions with respect to these plans, however, were circumscribed by the terms of the Qualified Corporate Plan Trust. The trust required HTNB to collect benefits and purchase group annuity contracts on behalf of subscribing applicants. There is no evidence that HTNB possessed or exercised any discretion with respect to these functions. Thus, even assuming (counterfactually) that HTNB had some sort of authority or control over the administration of the AAP plans within the meaning of § 3(21)(A)(iii), the authority or control was not discretionary. And whatever the case, there is no evidence that HTNB failed or refused to do anything it was required or expected to do with respect to the administration of the AAP plans. Accordingly, the Court concludes that HTNB is not a fiduciary under the terms of § 3(21)(A)(iii), and even if it were, there is no evidence that it breached any fiduciary duty that could be imposed under that section of ERISA.
The Court turns to the requirements of § 3(21)(A)(i). That section sets up two potential grounds for liability: (1) the exercise of discretionary authority or control respecting plan management; and (2) the exercise of authority or control -- without the qualification that this exercise be discretionary -- over management or disposition of plan assets. The first of these grounds cannot support plaintiffs' case against HTNB. As the Court concluded above, the only ERISA plans involved in this case are the two plans that AAP established for its employees. The record before the Court gives no indication that HTNB had any authority or control over the management of these plans, let alone discretionary power over them.
Section 3(21)(A)(i)'s second ground of liability, however, cannot be dispatched with such ease. This part of the statute does not, by its terms, require discretionary authority of control respecting management or disposition of plan assets -- the statute indicates that any sort of authority or control suffices. And HTNB certainly had possession of the plans' contributions and the group annuity contracts, both of which are "plan assets."
Nevertheless, it may well be argued that HTNB does not even exercise nondiscretionary authority or control over the plan assets. In Question D-2 of an interpretive bulletin published at 29 C.F.R. § 2509.75-8, Department of Labor concludes that a person who merely performs administrative functions pursuant to policies established by other parties "does not exercise any authority or control respecting management or disposition of the assets of the plan." Cf. Robbins v. First American Bank of Virginia, 514 F. Supp. 1183, 1189-91 (N.D.Ill. 1981) (performance of "ministerial functions" under directions from another do not render an entity an ERISA fiduciary).
The Court agrees with the view of the labor department and the reasoning of Robbins ; it concurs that a party such as HTNB, performing "ministerial functions" designated pursuant to a document like the Qualified Corporate Plan Trust, is not an ERISA fiduciary. A person does not exercise "authority or control" over a plan's assets if his actions are entirely directed by another. In this case, HTNB did what AAP's plans told it to do, as contemplated by the express terms of the Qualified Corporate Plan Trust: It collected contributions for the purchase of Home Life's FA by means of a group annuity contract and held the contract for the benefit of the plan participants.
The Court, however, does not rest its decision on this conclusion alone. Even assuming that HTNB's holding of the GAC and plan contributions made it a fiduciary pursuant to § 3(21)(A)(i), plaintiffs have not come up with evidence to support a finding that HTNB in fact breached any fiduciary duties.
Plaintiffs' primary theory of breach is that the negative float resulting from the flow-of-funds arrangement between Home Life and HTNB violated HTNB's obligation to use the plan contributions solely for the benefit of the plan participants. It is uncontested that the contributions sent to Home Life, which accepted them as HTNB's designated agent for the administration of the Qualified Corporate Plan Trust, earned interest under the FA from the time that Home Life received them and prior to the time that the checks cleared. UF 251. Similarly, it is uncontested that on the same day that Home Life received contributions it wire-transferred an equivalent amount of money to HTNB, which had interest-free use of the money for up to seven days, at which time the funds would be returned to "pay" the amount due under the FA. This arrangement was set up at Home Life's insistence in order to make the Qualified Corporate Plan Trust an "active," rather than a "passive," trust.
The same-day wire transfer of funds from Home Life to HTNB was not, in actuality, a use of plan assets for the benefit of HTNB, regardless of what the legal form used by Home Life and HTNB might have been. Although the negative float operated as an additional compensation to HTNB not mentioned in the documents, Home Life bore this cost itself, at least in terms of the contractual agreements between the parties. No doubt Home Life passed at least part (if not all) of this cost on to the plaintiffs in the form of a lower rate of return on the FA. But this relates to the question of Home Life's alleged failure to fully disclose the terms of the FA. It does not alter the fact that whatever plaintiffs contributed was immediately put out at interest under the FA, and they were charged directly no fees higher than those specified in the trust documents. The actual economic effect of the arrangement was that plaintiffs' funds were immediately invested with Home Life for the receipt of interest, and HTNB, in return for its services, received the interest-free use of an equal amount of Home Life's money.
Plaintiffs argue alternatively that this arrangement constitutes an illicit "sweep service," in which banks "sweep" idle cash balances of pension plans and other customers into short-term investments. The analogy is inapt; the funds were not idle; they were earning interest from Home Life.
Taking a different tack, plaintiffs argue that HTNB is a fiduciary because of its power to alter the terms of the GAC by agreement with Home Life. See PLX 29. But as HTNB points out, such changes would not be effective with respect to existing participants unless made in order to comply with changes in laws or regulations. Id. at 7. Consequently, HTNB had no discretionary power to amend the contract with respect to parties already possessing interests in the GAC. In any case, the Seventh Circuit has made plain that "if [a contractholder] is a fiduciary because of the power to amend, this status only governs actions taken in regard to amending the contract and does not impose fiduciary obligations upon [the contractholder] more generally." Chicago Board, 713 F.2d at 259. Plaintiffs have identified no amendments to which HTNB agreed that affected their interests and constituted a breach of its fiduciary duties. The same holds true with respect to HTNB's power to amend the Qualified Corporate Plan Trust.
The plaintiffs' other arguments are of the make-weight variety. For example, they argue that HTNB violated its fiduciary duties by choosing Home Life as the trust administrator and failing to oversee its actions, and that HTNB failed to comply with the terms of the trust. The Court finds these arguments untenable both factually and legally.
Accordingly, the Court concludes that HTNB was not an ERISA fiduciary, and even if it were, it violated no fiduciary duties that plaintiffs have been able to identify.
B. Claims Against Home Life
Plaintiffs argue that Home Life is a fiduciary under all three subsections of ERISA § 3(21) (A). Because plaintiffs' argument is most tenable respecting § 3(21)(A)(i), the Court will address this subsection first.
1. Applicable ERISA Provisions
At the outset, the Court observes that Home Life is not a fiduciary under the first prong of § 3(21)(A)(i), the exercise of discretionary authority or control over the management of an ERISA plan. The Court previously has rejected the argument that the Qualified Corporate Plan Trust was itself an ERISA plan that could subject Home Life and HTNB to ERISA fiduciary duties. Moreover, there is no evidence before the Court that Home Life possessed any discretionary authority or control over the management of the ERISA plans set up by AAP. In fact, there is no evidence that Home Life exercised any type of authority or control over these plans. Liability, if any, can be grounded only upon the second prong of § 3(21)(A)(i), the "exercise [of] any authority or control respecting management or disposition of [plan] assets."
ERISA contemplates that a plan's investment in an equity interest of another entity can result in the plan's possession of two assets: The equity interest it has acquired, as well as a share of the underlying assets of the other entity. The underlying assets of the other entity then have a dual nature, because they in part constitute the assets of the investing plan and in part constitute the operating assets of the other entity. In turn, the entity's power over these assets could then render it an ERISA fiduciary, because the entity "exercises . . . authority or control respecting management or disposition of [plan] assets." § 3(21)(A)(i). See Peoria Union Stock Yards Co. v. Penn Mutual Life Ins. Co., 698 F.2d 320, 326-27 (7th Cir. 1983).
The drafters of ERISA recognized this implication of the statute's design, and enacted § 401(b), 29 U.S.C. § 1101(b). Section 401(b)(1) provides that a plan's investment in a security issued by an investment company registered under the Investment Company Act of 1940, 15 U.S.C. § 80a-1 et seq., does not give the plan an interest in the underlying assets of the investment company. Section 401(b)(2) creates an additional exclusion that is relevant here:
In the case of a plan to which a guaranteed benefit policy is issued by an insurer, the assets of such plan shall be deemed to include such policy, but shall not, solely by reason of the issuance of such policy, be deemed to include any assets of such insurer. For purposes of this paragraph:
(A) The term "insurer" means an insurance company, insurance service, or insurance organization, qualified to do business in a State.