In Re Enron Corp. Securities, Derivative & ERISA

MEMORANDUM AND ORDER

TITTLE ROADMAP

I. Overview of Causes of Action and Pending Motions.531

Annnpimlp Law ii.

A FRTSA

1. Fiduciary Liability.

a. Expansive Definition.

b. Fiduciary Duties...

c. “Two-Hat” Doctrine.

d. Power to Appoint/Remove Plan Fiduciaries.

e. Duty to Disclose.

f. Personal Liability of Corporate Employees.

g. Professional Liability.

h. Section 404(e) Plans.

i. Causation.

2. Co-fiduciary Liability.

3. Directed Trustee Liability.

4. Standing and Remedies.

5. Service on and Liability of the Administrative Committees of the Plans as Unincorporated Associations. 05

RICO Amendment. 05

Common Law Claims . 05

1. Preemption and the Federal Statutes at Issue. 05

a. ERISA (Generally). 05

b. SLUSA (Generally) . ©

2. ERISA Preemption and Plaintiffs’ Common-Law Conspiracy Claim 05

3. ERISA Preemption and Plaintiffs’ Common-Law Negligent Misrepresentation Claim 05

*530 III. Application of the Law to the Complaint s Allegations...

A. Procedural Objections.

B. RICO Amendment.

C. ERISA Breach of Fiduciary and Co-Fiduciary Duty

1. Count I and Count V.

2. Count II.

3. Count III.

4. Count IV .

D. Texas Common Law Causes of Action.

1. Count IX: Civil Conspiracy.

2. Count VIII: Negligent Misrepresentation.

RE TITTLE DEFENDANTS’ MOTIONS TO DISMISS

The above referenced action is brought on behalf of Enron Corporation (“Enron”) employees who were participants in three employee pension benefit plans governed by the Employment Retirement Income Security Act of 1974 (“ERISA”), § 3(2), 29 U.S.C. § 1002(2), specifically the Enron Corporation Savings Plan (“Savings Plan”), the Enron Corporation Employee Stock Ownership Plan (“ESOP”), and the Enron Corporation Cash Balance Plan (“Cash Balance Plan”), 1 and also on behalf of Enron employees who received “phantom stock” as compensation. 2 The first consolidated amended class action com *531 plaint (instrument # 145) alleges that Defendants are liable for the following violations during a proposed Class Period from January 20, 1998 through December 2, 2001:(1) breach of fiduciary and co-fiduciary duties under ERISA, 29 U.S.C. §§ 1104 and 1105; (2) the commission of or conspiracy to commit unlawful acts or omissions in the conduct of certain enterprises’ affairs through a pattern of racketeering activity in a scheme to mislead and defraud Enron employees, shareholders, potential investors, and the securities market in violation of the Racketeer Influenced and Corrupt Organizations Act (civil “RICO”), 18 U.S.C. §§ 1961-1968; and (3) negligence and civil conspiracy under Texas common law.

I. OVERVIEW OF CAUSES OF ACTION AND PENDING MOTIONS

Defendants fall into five groups: (1) Enron and individual officers and directors of the company; (2) committees, trustees, and individuals that administered the three pension plans; (3) Enron’s accountant Arthur Andersen LLP and some of its individual partners and employees (Thomas H. Bauer, Joseph F. Berardino, Debra A. Cash, Donald Dreyfus, James A. Friedlieb, D. Stephen Goddard, Jr., Gary B. Goolsby, Michael D. Jones, Michael M. Lowther, John Stewart, William Swanson, Nancy A. Temple, and Roger D. Willard); (4) Enron’s outside law firm Vinson & Elkins L.L.P. and some of its individual partners (Ronald Astin, Joseph Dilg, Michael Finch, and Max Hendrick, III); and (5) five investment banks (J.P. Morgan Chase & Co., Merrill Lynch & Co., Inc., Credit Suisse First Boston, Citigroup, Inc., and Salomon Smith Barney, Inc).

The complaint asserts its causes of action in nine counts: five under ERISA, two under RICO, one under Texas common-law negligence, and the last under Texas common-law civil conspiracy.

Count I originally asserted a claim on behalf of the Savings Plan and the ESOP 3 against Defendants Enron, the *532 Enron ERISA Defendants, 4 Kenneth L. Lay, 5 Jeffrey K. Skilling [to be dismissed], 6 *533 Richard A. Causey [to be dimsissed], 7 and Arthur Andersen, 8 at a time when Enron, the Enron ERISA Defendants, Lay, and Skilling knew or should have known that Enron stock was an imprudent investment choice, for breaches of their fiduciary and co-fiduciary duties of prudence, care and loyalty under 29 U.S.C. §§ 1104(a)(1)(A)-(D) 9 and 1105, for (1) allowing Savings Plan participants the ability to direct the Plan’s fiduciaries to purchase Enron stock for their individual accounts from monies the participants contributed as deductions from their salaries; (2) inducing the participants to direct the fiduciaries to purchase Enron stock for their individual accounts in exchange for funds they contributed to the Plan; (3) causing and allowing the Savings Plan to purchase or accept Enron’s matching contributions in the form of Enron stock; (4) imposing and maintaining age restrictions and other restrictions on the participants’ ability to direct the Savings Plan fiduciaries to transfer both Savings Plan and ESOP assets out of Enron stock; and (5) inducing the Savings Plan and ESOP participants to direct or allow the fiduciaries of both Plans to maintain investments in Enron stock. Arthur Andersen is charged with breaching its fiduciary duty under § 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3), by participating in the Enron Defendants’ breach of fiduciary *534 duties by actively concealing from the Plan fiduciaries and Plan participants the actual financial condition of Enron and the imprudence of investing in Enron stock.

Count II is brought on behalf of the Savings Plan and the ESOP against Defendants Enron, the Enron ERISA Defendants, Lay, Skilling [since dismissed], Cau-sey [since dismissed], and the Northern Trust Company (“Northern Trust”), for breach of their fiduciary duties under 29 U.S.C. §§ 1104(a)(l)(A)-(D) and 1105, based on the lockdown (freeze, blackout) 10 of the two Plans, without adequate notice *535 to participants, effectually from October 17, 2001 until November 14, 2001, 11 while the Plans were switched to a new record keeper and trustee, 12 during which time the price of Enron stock fell from $33.84 to $10.00 per share. 13 *536 fiduciary duty in violation of 29 U.S.C. § 1104(a)(1)(D) against Enron, the Enron ERISA Defendants (excluding the ESOP Administrative Committee and the Cash Balance Administrative Committee), Lay, Skilling, Causey [since dismissed], and the Northern Trust Company for their failure to diversify the Savings Plan assets, i.e., to liquidate the Enron stock, in accordance with the terms of the plan, because Defendants knew or should have known that investment in Enron stock was imprudent.

*535 In Count III, Plaintiffs, on behalf of the Savings Plan, 14 assert a breach of

*536 In Count IV Plaintiffs on behalf of Certain Retirement Plan Participants and Beneficiaries assert against Enron, the Enron ERISA Defendants, and the Enron Corp. Cash Balance Plan as Successor to the Enron Corp. Retirement Plan [since dismissed], another claim of breach of fiduciary duty, this time with respect to offsets (reductions) of accrued pension benefits that were based on the artificially inflated price of Enron stock from 1998-2000. The Enron Corp. Cash Balance Plan and its predecessor, the Enron Corp. Retirement Plan, constituted a “defined benefit plan” under 29 U.S.C. § 1002(35) 15 and was fully funded by Enron. In essence Plaintiffs allege that until January 1, 1996, the retirement benefits provided to a plan participant of five years or more service were determined by adding different percentages of final average pay multiplied by levels of years of accrued service, and then offset by the annuity value of a portion of that participant’s account in the ESOP (“Offset Account”) as of certain determination dates, usually the date the benefit payments began or, if earlier, the date(s) of distribution(s) from the Offset Account. *537 Effective January 1, 1996, the Retirement Plan was amended, renamed the Enron Corp. Cash Balance Plan, and the benefit formula was changed from an average pay formula to a cash balance formula, while the offset arrangement between the Plan and the ESOP was to be phased out over the coming five-year period. Under the new plan, a plan participant’s accrued benefit under the Cash Balance Plan was based on his employment from 1987-1994 and was offset over the five-year phase-out period by the value of his ESOP stock based on a formula set out in §§ 5.1-5.5 of the Plan. Each January 1st from 1996-2000, the value of one-fifth of the shares of Enron stock credited to each participant’s Offset Account was to be calculated based on the stock’s market price on that date as reported at closing time on the New York Stock Exchange and was thereafter permanently fixed at that amount. Plaintiffs allege that Defendants knew or should have known that the market price of Enron stock from 1998 to 2000 was artificially inflated and not representative of its true value, and that Defendants breached their fiduciary duty by not computing the component of the offset at its true, much lower value. As a result, participants and beneficiaries who accrued benefits under the Retirement Plan between January 1, 1987 and December 31, 1994 have suffered losses because their retirement benefits would be offset by the inflated market price of one-fifth of the shares of Enron stock in their ESOP Offset Account in 1998, 1999, and 2000.

Count V, brought on behalf of the Savings Plan, the ESOP, and the Cash Balance Plan against Enron and the Compensation Committee Defendants, alleges another breach of fiduciary and co-fiduciary duties under 29 U.S.C. § 1104(a)(1)(A)-(D) and § 1105 relating to their failure to appoint and monitor other plan fiduciaries and their failure to disclose to the investing fiduciaries material information about Enron’s true financial condition. Specifically Plaintiffs claim that Defendants breached their fiduciary duties (1) by appointing fiduciaries to manage Plan assets that Defendants knew, or should have known, were not qualified to manage Plan assets loyally and prudently; (2) by failing to monitor adequately the investing fiduciaries investment of these assets; (3) by failing to monitor adequately the Plans’ other fiduciaries’ implementation of the terms of the Plans, including but not limited to investment of the assets; (4) by failing to disclose to the investing fiduciaries material facts concerning Enron’s financial condition that they knew or should have known were material to loyal, prudent investment decisions concerning the use of Enron stock in the Plans and/or with respect to the implementation of the terms of the Plans; (5) by failing to remove fiduciaries who Defendants knew or should have known were not qualified to manage the Plans’ assets loyally and prudently; (6) by knowingly participating in the investing fiduciaries’ breaches by accepting the benefits of those breaches, both personally and on behalf of Enron; (7) by knowingly undertaking to hide acts and omissions of the fiduciaries that Defendants knew constituted fiduciary breaches; and (8) by failing to remedy those fiduciaries’ known breaches.

Count VI asserts RICO violations under section 1962(c), conducting the affairs of a RICO enterprise through a pattern of racketeering activities involving Enron stock, and 1962(d), conspiring to do so, thereby causing injury to Plaintiffs’ and proposed Class Members’ property. 16 *538 Count VI is brought on behalf of all proposed classes against the “Enron Insider Defendants” (i.e., Kenneth L. Lay, Jeffrey K. Skilling, Andrew S. Fastow, 17 Michael Kopper, 18 Richard A. Causey, James V. Derrick, Jr. 19 , the Estate of J. Clifford Baxter, 20 Mark A. Frevert, 21 Stanley C. Horton, 22 Kenneth Rice, 23 Richard B. Buy, 24 Lou L. Pai, 25 Robert A. Belfer, Norman P. Blake, Ronnie C. Chan, John H. Duncan, Wendy L. Gramm, Robert K. Jae-dicke, Charles A. LeMaistre, Joe H. Foy, 26 Joseph M. Hirko, 27 Ken L. Harrison, 28 *539 Mark E. Koenig, 29 Steven J. Kean, 30 Rebecca P. Mark-Jusbasehe, 31 Michael S. McConnell, 32 Jeffrey McMahon, 33 J. Mark Metts, 34 Joseph W. Sutton 35 ); the “Accounting Defendants” (Arthur Andersen, 36 David B. Duncan, Thomas H. Bauer, Debra A. Cash, Roger D. Willard, D. Stephen Goddard, Jr., Michael M. Lowther, Gary B. Goolsby, Michael C. Odom, Michael D. Jones, William Swanson, John E. Stewart, Nancy A. Temple, Donald Dreyfuss, James A. Friedlieb, Joseph F. Berardino, and Andersen Does 2 through 1800); the “Attorney Defendants” (Vinson & Elkins, LLP, Ronald T. Astin, Joseph Dilg, Michael P. Finch, and Max Hendrick, III); and the “Investment Banking Defendants” (Merrill Lynch & Co., Inc., J.P. Morgan Chase & Co., Credit Suisse First Boston Corporation, and Citigroup, Inc. and its subsidiaries Citigroup Securities and Salo-mon Smith Barney).

Count VI identifies the following as RICO enterprises, either legal entities or association-in-fact enterprises: Enron Corporation; an association-in-fact enterprise comprised of the Enron Insider Defendants, the Enron ERISA Defendants, the Accounting Defendants and/or Andersen, the Attorney Defendants, the Investment Banking Defendants, and other investment banks not named as defendants in the complaint (Canadian Imperial Bank of Commerce, Deutsche Bank, Bank America, Lehman Brothers, Barclays Bank, UBS Warburg, First Union Wachovia, Bear Stearns, and Morgan Stanley Dean Witter); the Savings Plan/ESOP/Cash Balance Plan Enterprise (consisting of three separate RICO enterprises, i.e., legal entities); the Enron-Andersen Enterprise (association-in-fact enterprise); the Andersen Enterprise; the LJM1 Enterprise; the LJM2 Enterprise; the Enron-Merrill Lynch Enterprise(s) (association-in-fact enterprise); the Enron-J.P. Morgan Chase-Mahonia Enterprise (association-in-fact enterprise); the Enron-CSFB Enterprise (association-in-fact enterprise); and the Enron-Citigroup Enterprise (association-in-fact enterprise).

According to Count VI, the pattern of racketeering which Defendants allegedly committed, aided and abetted, or conspired to commit was made up of predicate offenses e.g., violations of various federal statutes, including 18 U.S.C. § 664 (embezzlement and conversion of assets of an ERISA employee pension benefit plan), 37 18 U.S.C. §§ 1341 and 1343 (feder *540 al mail and wire fraud), 38 18 U.S.C. § 1512(b)(2) (obstruction of justice 39 ), and 18 U.S.C. § 2814 (interstate transportation offenses 40 )

Count VII asserts a claim against Enron Insider Defendants, Arthur Andersen, and the Investment Banking Defendants for investing income that was derived from racketeering activities involving *541 Enron stock in RICO enterprises, under §§ 1962(a) 41 and 1962(d). Among the various alleged enterprises is an Association-in-Faet Enterprise comprised of the Enron Insider Defendants, the Enron ERISA Defendants, the Accounting Defendants and/or Andersen, the Attorney Defendants, the Investment Banking Defendants, and other investment banks (Canadian Imperial Bank of Commerce, Deutsche Bank, Bank America, Lehman Brothers, Barclays Bank, UBS Warburg, First Union Wachovia, Bear Stearns, and Morgan Stanley Dean Witter). Also named are the Enron Enterprise, the Savings Plan/ESOP/Cash Balance Plan Enterprise, the LJM1-LJM2 Enterprise, the Accountant Defendants Enterprise, the Enron-JP Morgan Chase-Mahonia Enterprise, the Enron CSFB Enterprise, the Enron-Citigroup Enterprise, and the TNPC-New Power Enterprise.

Count VIII asserts a Texas common-law claim for negligent misrepresentation on behalf of the participants and beneficiaries of the Savings Plan and the ESOP against the Andersen Defendants based on Andersen’s data, audits, and certified financial statements for Enron.

Finally, Count IX alleges on behalf of all proposed classes a civil conspiracy claim against Andersen, the Enron Insider Defendants, the Attorney Defendants, and the Investment Banking Defendants. Specifically Count IX states that these Defendants conspired to conceal Enron’s true financial condition and deceive Enron employees into accepting overvalued stock and phantom stock as compensation for their work, into keeping their retirement assets in artificially inflated Enron stock, and into continuing to work at Enron based on a false belief that it was a strong company.

In light of the length of the complaint, which is available to all counsel, and the fact that the Tittle action arises from many of the same facts summarized in detail in instrument # 1194 in Newby, the Court will not here reiterate the facts alleged, but will reference relevant allegations relating to its decisions regarding the following pending motions:

(1) Defendant Michael J. Kopper’s motion to dismiss for failure to state claims upon which relief can be granted (instrument # 207);

(2) Arthur Andersen LLP and Andersen Individual Defendants’ motion to dismiss the complaint (# 208);

(3) Defendant Rebecca Mark-Jus-basche’s Rule 12(b)(6) motion to dismiss all claims asserted against her (# 209);

(4) Defendant Michael C. Odom’s motion to dismiss pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6) and the PSLRA (# 210);

(5) Defendant Ken L. Harrison’s Rule 12(b)(6) motion to dismiss -with prejudice all claims against him (# 216);

(6) Defendant Lou Pai’s motion to dismiss first consolidated and amended complaint (# 222);

(7) Defendants Citigroup, Inc. and Salo-mon Smith Barney, Inc.’s motion to dismiss Plaintiffs’ first consolidated and amended complaint (# 227);

(8) Defendant J.P. Morgan Chase & Co.’s motion to dismiss Plaintiffs’ first *542 consolidated and amended complaint (# 229) and corrected motion to dismiss (# 851);

(9) Defendants Enron Corp. Savings Plan Administrative Committee, the Administrative Committee of the Enron Corp. Cash Balance Plan [since dismissed], and the Administrative Committee of the Enron Employee Stock Ownership Plan (# 231);

(10) Vinson & Elkins Defendants’ motion to dismiss (# 232);

(11) Defendant James V. Derrick, Jr.’s motion to dismiss Plaintiffs’ first consolidated and amended complaint (#233);

(12) Defendant Cindy K. Olson’s motion to dismiss (# 234);

(13) Defendant Richard A. Causey’s motion to dismiss (# 235);

(14) Defendant Credit Suisse First Boston Corporation’s motion to dismiss Plaintiffs’ first consolidated and amended complaint (# 236);

(15) Defendant Merrill Lynch & Co.’s motion to dismiss Plaintiffs’ first consolidated and amended complaint (#238);

(16) The Outside Director Defendants’ motion to dismiss Plaintiffs’ first consolidated and amended complaint (#240);

(17) Defendant the Northern Trust Company’s motion to dismiss Counts II and III of Plaintiffs’ first consolidated and amended complaint as to the Northern Trust Company (# 241);

(18) Defendant Andrew S. Fastow’s motion to dismiss (# 244);

(19) Defendant Joseph W. Sutton’s motion to dismiss (# 251);

(20) Defendant Jeffrey K. Skilling’s motion to dismiss first consolidated and amended complaint (# 262);

(21) Defendant Kenneth L. Lay’s motion to dismiss (# 264);

(22) Motion to dismiss Certain Officer Defendants (collectively, “Officer Defendants,” i.e., The Estate of J. Clifford Baxter, Mark A. Frevert, Stanley C. Horton, Kenneth D. Rice, Richard B. Buy, Joseph M. Hirko, Mark E. Koenig, Steven J. Kean, Michael S. McConnell, Jeffrey McMahon, and J. Mark Metts, who are named as Defendants only in the two RICO and the common law conspiracy claimsX# 265);

(23) Motion to dismiss on behalf of Certain Administrative Committee Members (Philip J. Bazelides, 42 James G. Barnhart, Keith Crane, William Gulyas-sy, Rod Hayslett, Mary K. Joyce, 43 Sheila Knudsen, Tod A. Lindholm, James S. Prentice, 44 Paula Rieker, and David Shields 45 )(# 269) 46 ; and

*543 (24) Enron Corp.’s 47 motion to dismiss the first consolidated and amended complaint (# 370).

When a district court reviews a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), it must construe the complaint in favor the plaintiff and take all well-pleaded facts as true. Kane Enterprises v. MacGREGOR (USA), Inc., 322 F.3d 371, 374 (5th Cir.2003), citing Campbell v. Wells Fargo Bank, 781 F.2d 440, 442 (5th Cir.1986). It may not dismiss the complaint “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Id., quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Nevertheless, a plaintiff must plead specific facts, not merely eonclusory allegations to avoid dismissal. Id., citing Collins v, Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir.2000)(“We will thus not accept as true eonclusory allegations or unwarranted deductions of fact.”). In addition to the complaint, the court may review documents attached to the complaint and documents attached to the motions to dismiss to which the complaint refers and which are central to the plaintiffs claim(s). Collins, 224 F.3d at 498-99.

II. APPLICABLE LAW

The Court hereby incorporates the conclusions of law set forth in its memoranda and orders dealing with the motions to dismiss in Newby. After reviewing the briefs and researching the issues raised in Tittle, the Court concludes that the following law applies.

A. ERISA

1. Fiduciary Liability

The issue of fiduciary status is a mixed question of law and fact. Reich v. Lancaster, 55 F.3d 1034, 1044 (5th Cir.1995).

a. Expansive Definition of Fiduciary

Under ERISA, a person or entity may be deemed a fiduciary either by assumption of the fiduciary obligations (the functional or de facto method) or by express designation by the ERISA plan documents.

The phrase, “fiduciary with respect to a plan” is defined de facto in functional terms of control and authority in § 3(21)(A), 29 U.S.C. § 1002(21)(A):

[A] person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan or has any discretionary authority or discretionary responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan.

“The phrase ‘to the extent’ indicates that a person is a fiduciary only with respect to those aspects of the plan over which he exercises authority and control.” Nora- *544 mers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan (“Sommers II”), 883 F.2d 345, 352 (5th Cir.1989). See also Beddall v. State Street Bank and Trust Co., 137 F.3d 12, 18 (1st Cir.1998)(“[F]iduciary status is not an all or nothing proposition .... ”). “Fiduciary-status under ERISA is to be construed liberally, consistent with ERISA’s policies and objectives,” and is defined “‘in functional terms of control and authority over the plan, ... thus expanding the universe of persons subject to fiduciary duties-and to damages-under § 409(a).’ ” Arizona State Carpenters Pension Trust Fund v. Citibank (Arizona), 125 F.3d 715, 720 (9th Cir.1997), citing John Hancock Mut. Life Ins. v. Harris Trust & Sav. Bank, 510 U.S. 86, 96, 114 S.Ct. 517, 126 L.Ed.2d 524 (1993), and quoting Mertens v. Hewitt Assoc., 508 U.S. 248, 262, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993). “[Fiduciary obligations can apply to managing, advising, and administering an ERISA plan.” Pegram v. Herdrich, 530 U.S. 211, 223, 120 S.Ct. 2143, 147 L.Ed.2d 164 (2000). Nevertheless, ‘“a person is a fiduciary only with respect to those aspects of the plan over which he exercises authority or control.’ ” Bannistor v. Ullman, 287 F.3d 394, 401 (5th Cir.2002), quoting Sommers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan Enters., Inc. (“Sommers I"), 793 F.2d 1456, 1459-60 (5th Cir.1986), cert. denied, 479 U.S. 1034, 107 S.Ct. 884, 93 L.Ed.2d 837 (1987). 48 “[Fiduciary status is to be determined by looking at the actual authority or power demonstrated, as well as the formal title and duties of the parties at issue [emphasis in original].” Landry v. Air Line Pilots Ass’n Inter. AFL-CIO, 901 F.2d 404, 418 (5th Cir.1990), ce rt. denied, 498 U.S. 895, 111 S.Ct. 244, 112 L.Ed.2d 203 (1990).

In recent years several Circuit Courts of Appeals have focused on and contrasted the language used in the two clauses of subsection (i) of § 1002(21)(A), defining a fiduciary as a person who (“exercises any discretionary authority or discretionary control respecting management of such a plan or who exercises any authority or control over the management or disposition of its assets”) and highlighted the fact that the word, “discretionary,” is used only with regard to the first clause [emphasis added]. From a close reading of the literal language and structure of the provision, they conclude that where the person exercises any authority or control over the management or disposition of the assets of the plan, discretion is not required of a fiduciary. See Board of Trustees of Bricklayers and Allied Craftsmen Local 6 of New Jersey Welfare Fund v. Wettlin Associates, Inc., 237 F.3d 270, 273 (3d Cir.2001), quoting IT Corp. v. General Am. Life Ins. Co., 107 F.3d 1415, 1421 (9th Cir.l997)(“any control over disposition of plan money makes the person who has control a fiduciary”), cert. denied, 522 U.S. 1068, 118 S.Ct. 738, 139 L.Ed.2d 675 (1998); FirsTier Bank, N.A. v. Zeller, 16 F.3d 907, 911 (8th Cir.)(“Note that this section imposes fiduciary duties only if one exercises discretionary authority or control over plan management, but imposes those duties whenever one deals with plan assets. This distinction is not accidental— *545 it reflects the high standard of care trust law imposes upon those who handle money or other assets on behalf of another.”), cert. denied sub nom. Vercoe v. Firstier Bank, N.A., 513 U.S. 871, 115 S.Ct. 194, 130 L.Ed.2d 126 (1994); Board of Trustees of Western Lake Superior Piping Industry Pension Fund v. American Benefit Adm’rs, Inc., 925 F.Supp. 1424, 1429 (D.Minn.1996). 49

Such a distinction between authority and control over plan management versus over plan assets in requiring discretion only with regard to the former before fiduciary obligations are triggered appears to have roots in the fiduciary’s traditional duties. “At common law, fiduciary duties characteristically attach to decisions about managing assets and distributing property to beneficiaries” and “the common law trustee’s most defining concern historically has been the payment of money in the interest of the beneficiary.” Pegram, 530 U.S. at 231, 120 S.Ct. 2143. Moreover, “ when Congress took up the subject of fiduciary responsibility under ERISA, it concentrated on fiduciaries’ financial decisions, focusing on pension plans, the difficulty many retirees faced in getting the payments they expected, and the financial mismanagement that had too often deprived employees of their benefits.” Id. at 232, 120 S.Ct. 2143, citing as examples, S.Rep. No. 93-127, p. 5 (1973); S.Rep. No. 93-383, pp. 17, 95 (1973).

In contrast to the functional definition of fiduciary in § 1002(21)(A), § 402(a)(2) of ERISA, 29 U.S.C. § 1102(a)(2), defines a formally “named fiduciary” as “a fiduciary who is named in the plan instrument, or who, pursuant to a procedure specified in the plan, is identified as a fiduciary (A) by a person who is an employer or employee organization with respect to the plan or (B) by such an employer and such an employee organization acting jointly.”

Section 409(a) of ERISA, 29 U.S.C. § 1109(a), provides, “Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter shall be personally ha-ble.” It makes no distinction between the functional definition of a trustee and the *546 formal designation of a fiduciary named by the plan documents or by following the procedure in those documents for designating a fiduciary and thus applies to both,

b. Fiduciary Duties

The common law of trusts “offers a ‘starting point for analysis of [ERISA] ... [unless] it is inconsistent with the language of the statute, its structure, or its purposes.’ ” Harris Trust, 530 U.S. at 249, 120 S.Ct. 2180, quoting Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 447, 119 S.Ct. 755, 142 L.Ed.2d 881 (1999). “[R]ather than explicitly enumerating all of the powers and duties of trustees and other fiduciaries, Congress invoked the common law of trusts to define the general scope of their authority and responsibility.’ ” Varity Corp. v. Howe, 516 U.S. 489, 496, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996), quoting Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 570, 105 S.Ct. 2833, 86 L.Ed.2d 447 (1985). Thus a federal common law based on the traditional common law of trusts has developed and is applied to define the powers and duties of ERISA plan fiduciaries, at least in part, with modifications appropriate in light of the unique nature of the statutory employee benefit plans. See, e.g., Pegram, 530 U.S. at 224, 120 S.Ct. 2143; Varity Corp., 516 U.S. at 497, 116 S.Ct. 1065 (“We also recognize ... that trust law does not tell the entire story.”); Bussian v. RJR Nabisco, Inc., 223 F.3d 286, 294 (5th Cir.2000)(“Although ERISA’s duties gain definition from the law of trusts, the usefulness of trust law to decide cases brought under ERISA is constrained by the statute’s provisions.”); Donovan v. Cunningham, 716 F.2d 1455, 1464 n. 15 (5th Cir.1983)(“ERISA’s modifications of existing trust law include imposition of duties upon a broader class of fiduciaries, 29 U.S.C. § 1003(21)(1976), prohibition of exculpatory clauses, id. § 1110(a), broad disclosure and reporting requirements, id. §§ 1021-31, and nationwide uniformity of rules,” and § 406’s “detailed list” of per se illegal types of transactions), cert. denied, 467 U.S. 1251, 104 S.Ct. 3533, 82 L.Ed.2d 839 (1984). For example, the traditional four overlapping fiduciary duties (of loyalty, care, diversification of plan assets, and adherence to plan documents, where prudent), cited in footnote 9 of this memorandum and order and discussed in detail infra, are derived from the common law of trusts and are imposed upon ERISA fiduciaries. At the same time, in contrast to the common law of trusts, under ERISA the plan fiduciary may have multiple roles and wear many hats; he may serve as an employer and as a plan fiduciary. 50 The scope of the incorporation of the common law of trusts is not clearly defined, however, and different courts have frequently come to different conclusions about the extent of its application.

The most fundamental duty of ERISA plan fiduciaries is a duty of complete loyalty, under 29 U.S.C. § 1104(a)(1)(B), to insure that they discharge their duty “solely in the interests of the participants and beneficiaries,” and to “exclude all selfish interest and all consid *547 eration of the interests of third persons.” Id. Fiduciaries must discharge their duties with respect to the plan “solely in the interest of the participants and the beneficiaries,” i.e., “for the exclusive purpose of (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan.” 29 U.S.C. § 1104(a)(1)(A). Thus among the responsibilities and duties imposed on fiduciaries by ERISA is avoidance of conflicts of interest. Merbens v. Hewitt Assoc., 508 U.S. 248, 251-52, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993).

Second, the fiduciary must meet a “prudent man” standard under 29 U.S.C. § 1104(a)(1)(B), to act “with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use” and “with single-minded devotion” to these plan participants and beneficiaries. According to the Department of Labor, 29 C.F.R. § 2550.404a-l(b), these requirements are satisfied if the fiduciary

(i) Has given appropriate consideration to those facts and circumstances that, given the scope of such fiduciary’s investment duties, the fiduciary knows or should know are relevant to the particular investment or investment course of action involved, including the role the investment or investment course of action plays in that portion of the plan’s investment portfolio with respect to which the fiduciary has investment duties; and

(ii) Has acted accordingly.

“Appropriate consideration” for purposes of this regulation includes but is not limited to

(i) A determination by the fiduciary that the particular investment or investment course of action is reasonably designed, as part of the portfolio (or, where applicable, that portion of the plan portfolio with respect to which the fiduciary has investment duties), to further the purposes of the plan, taking into consideration the risk of loss and the opportunity for gain (or other return) associated with the investment or investment course of action, and

(ii) Consideration of the following factors as they relate to such portion of the portfolio:

(A) The composition of the portfolio with regard to diversification;

(B) The liquidity and current return of the portfolio relative to the anticipated cash flow requirements of the plan; and

(C) The projected return of the portfolio relative to the funding objectives of the plan.

Id. at § 2550.404a-l(b)(2); Laborers National Pension Fund v. Northern Trust Quantitative Advisors, Inc. 173 F.3d 313, 317-18 (5th Cir.)(noting that these regulations from the Department of Labor, 29 C.F.R. § 2550.404a-1, generally reflect that a fiduciary with investment duties must act as a prudent investment manager under the modern portfolio theory rather than under the common law of trusts standard which examined each investment with an eye toward its individual riskiness), cert. denied, 528 U.S. 967, 120 S.Ct. 406, 145 L.Ed.2d 316 (1999). In 29 C.F.R. § 2509.94-1 Interpretive Bulletin, the Department of Labor observes, “... [B]e-cause every investments necessarily causes a plan to forego other investment opportunities, an investment will not be prudent if it would be expected to provide a plan with a lower rate of return than available alternative investments with commensurate degrees of risk or is riskier than alternative available investments with commensurate rates of return.”

Regarding this overlapping duty of “care, skill, prudence, and diligence under the circumstances then prevailing *548 that a prudent man acting in a like capacity and familiar with such matters would use,” the Fifth Circuit has stated,

In determining compliance with ERISA’s prudent man standard, courts objectively assess whether the fiduciary, at the time of the transaction, utilized proper methods to investigate, evaluate and structure the investment; acted in a manner as would others familiar with such matters; and exercised independent judgment when making investment decisions. “ ‘[ERISA’s] test of prudence ... is one of conduct, and not a test of the result of performance of the investment. The focus of the inquiry is how the fiduciary acted in his selection of the investment, and not whether his investments succeeded or failed.’ ” Thus, the appropriate inquiry is “whether the individual trustees, at the time they engaged in the challenged transactions, employed the appropriate methods to investigate the merits of the investment and to structure the investment [citations omitted].”

Laborers National Pension Fund v. Northern Trust Quantitative Advisors, Inc. 173 F.3d at 317. Since the prudence standard focuses on whether the fiduciary utilized appropriate methods to investigate and evaluate the merits of a particular investment, the “appropriate methods” in a particular case depend “on the ‘character’ and ‘aim’ of the particular plan and decision at issue and the ‘circumstances prevailing’ at the time a particular course of action must be investigated and undertaken.’ ” Bussian, 223 F.3d at 299. Furthermore, the standard of the prudent man is an objective standard, and good faith is not a defense to a claim of imprudence. Reich, 55 F.3d at 1046; Donovan v. Cunningham, 716 F.2d at 1467 (“this is not a search for subjective good faith — a pure heart and an empty head are not enough”).

Third, the ERISA fiduciary must diversify the plan’s investments to minimize risk of loss unless, under the circumstances, it is clearly prudent not to diversify. 29 U.S.C. § 1104(a)(1)(C). The legislative history offers some guidance about diversifying the assets of an ERISA plan:

The degree of investment concentration that would violate this requirement to diversify cannot be stated as a fixed percentage, because a fiduciary must consider the facts and circumstances of each case. The factors to be considered include (1) the purposes of the plan; (2) the amount of the plan assets; (3) financial and industrial conditions; (4) the type of investment, whether mortgages, bonds or shares of stock or otherwise; (5) distribution as to geographical location; (6) distribution as to industries; (7) dates of maturity.

Metzler v. Graham, 112 F.3d 207, 208-09 (5th Cir.1997), citing H.R.Rep. No. 1280, 93d Cong., 2d Sess. (1974), reprinted in 1974 U.S.C.C.A.N. 5038, 5084-85 (Conf. Rpt. at 304). The panel further noted, “We think it is entirely appropriate for a fiduciary to consider the time horizon over which the plan will be required to pay out benefits in evaluating the risk of large loss from an investment strategy.” Metzler, 112 F.3d at 210 n. 6. Moreover, the panel admonished courts, “It is clearly imprudent to evaluate diversification solely in hindsight — plan fiduciaries can make honest mistakes that do not detract from a conclusion that their decisions were prudent at the time.” Id. at 209.

To prevail on a claim that a fiduciary violated its duty to diversify, a plaintiff must show that the portfolio, on its face, is not diversified. The burden then shifts to the defendant to demonstrate that it was “clearly prudent” not to diversify, the express statutory exception *549 to the duty to diversify. Metzler, 112 F.3d at 209. Factors such as the trustees’ “investigation of the purchase, the evaluation of other investment alternatives, and the relative expertise of the trustee ... are relevant to whether there was risk of large loss.” Id. at 212. Both the plaintiffs evi-dentiary burden and the defendant’s evi-dentiary burden “must be analyzed from the perspective of what both parties acknowledge as their purpose; to reduce the risk of large loss.” Id. at 210. “Prudence is evaluated at the time of the investment without the benefit of hindsight.” Metzler, 112 F.3d at 209.

Fourth, the plan fiduciary must follow the documents and instruments governing the plan to the extent that they are consistent with ERISA. 29 U.S.C. § 1104(a)(1)(D). “In ease of a conflict, the provisions of the ERISA policies as set forth in the statute and regulations prevail over those of the Fund guidelines.” Laborers Nat. Pension Fund v. Northern Trust Quantitative Advisors, Inc., 173 F.3d at 322. In accord, Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 568, 105 S.Ct. 2833, 86 L.Ed.2d 447 (1985)(“[T]rust documents cannot excuse trustees from their duties under ERISA and ... trust documents must generally be construed in light of ERISA’s policies .... ”); Donovan v. Cunningham, 716 F.2d at 1467 (“Though freed by Section 408 from the prohibited transaction rules, ESOP fiduciaries remain subject to the general requirements of Section 404.”); Herman v. NationsBank Trust Co., (Georgia), 126 F.3d 1354, 1368 (11th Cir.l997)(fiduciary was “obligated to determine whether the plan provisions ... were contrary to ERISA” and to fulfill his duties to act prudently and solely in the interests of the plan participants), cert. denied, 525 U.S. 816, 119 S.Ct. 54, 142 L.Ed.2d 42 (1998). See also Moench v. Robertson, 62 F.3d 553, 567 (3d Cir.1995)(where the plan language “constrains the [fiduciaries’] ability to act in the best interest of the beneficiaries,” it is inconsistent with ERISA and with the common law of trusts and must not be followed), cert. denied, 516 U.S. 1115, 116 S.Ct. 917, 133 L.Ed.2d 847 (1996); Eaves v. Penn, 587 F.2d 453, 459 (10th Cir.1978)(“While an ESOP fiduciary may be released from certain Per Se violations on investments in employer securities ..., the structure of [ERISA] itself requires that in making an investment decision of whether or not a plan’s assets should be invested in employers [sic ] securities, an ESOP fiduciary, just as fiduciaries of other plans, is governed by the ‘solely in the interest’ and ‘prudence’ tests of §§ 404(a)(1)(A) and (B).”). 51

Given that a fiduciary’s duties are “the highest known to the law,” “[a] trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior.” Donovan v. Bierwirth, 680 F.2d 263, 272 n. 8 (2d Cir.), cert. denied, 459 U.S. 1069, 103 S.Ct. 488, 74 L.Ed.2d 631 (1982); cited and quoted by Bussian v. RJR Nabisco, Inc., 223 F.3d 286, 294 (5th Cir.2000). In determining whether a trustee has breached his duties, the court examines both the merits of the challenged transaction(s) and the thoroughness of the fiduciary’s investigation into the merits of *550 the transaction(s). Donovan v. Cunningham, 716 F.2d at 1467. 52

Unlike the law of conspiracy, “[n]o fiduciary shall be hable with respect to a breach of fiduciary duty under this sub-chapter if such breach was committed before he became a fiduciary or after he ceased to be a fiduciary.” 29 U.S.C. § 1109(b); see also Bannistor v. Ullman, 287 F.3d 894, 405 (5th Cir.2002).

c. “Two-Hat” Doctrine

Unlike the trustee at common law, who must wear only his fiduciary hat when he acts in a manner to affect the beneficiary of the trust, an ERISA trustee may wear many hats, although only one at a time, and may have financial interests that are adverse to the interests of the beneficiaries but in the best interest of the company. Pegram, 530 U.S. at 225, 120 S.Ct. 2143; Bussian, 223 F.3d at 294-95; Martinez v. Schlumberger, Ltd., 338 F.3d 407, 412-13 (5th Cir.2003). For example a fiduciary may wear the hat of an employer and fire a beneficiary for reasons not related to the ERISA plan, or the hat of a plan sponsor and modify the terms of a plan to be less generous to the beneficiary. Pegram, 530 U.S. at 225, 120 S.Ct. 2143. When making fiduciary decisions, however, a fiduciary may wear only his fiduciary hat. Id. Thus instead of defining a fiduciary merely as an administrator of or manager of or advisor to a plan, the statute states that he is a fiduciary only “to the extent that he acts in such a capacity in relation to a plan.” Pegram, 530 U.S. at 225-26, 120 S.Ct. 2143, citing 29 U.S.C. § 1002(21)(A); Schlumberger, 338 F.3d at 412-13. Accordingly, when a plaintiff alleges a cause of action for breach of fiduciary duty, the threshold question is whether the defendant was acting as a fiduciary, i.e., performing a fiduciary function, when he performed the action that constitutes the basis of the complaint. Pegram, 530 U.S. at 226, 120 S.Ct. 2143; Schlumberger, 338 F.3d at 413.

For example, under the “two hats” doctrine, adopted by the Supreme Court in Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78, 115 S.Ct. 1223, 131 L.Ed.2d 94 (1995)(holding that an employer does not act as a fiduciary, but as a settlor 53 in adopting, amending 54 or ter- *551 initiating a welfare plan 55 ), a plan sponsor may function in a dual capacity as a business employer (settlor or plan sponsor 56 ) whose activity is not regulated by ERISA and as a fiduciary of its own established ERISA plan, subject to ERISA. “The ... act of amending ... does not constitute the action of a fiduciary”; “ERISA’s fiduciary duty requirement simply is not implicated where [the employer], acting as the Plan’s settlor, makes a decision regarding the form or structure of the Plan such as who is entitled to receive Plan benefits and in what amounts, or how such benefits are calculated.” Hughes Aircraft, 525 U.S. at 444, 119 S.Ct. 755. The law does not require employers to establish employee benefit plans. Congress sought to encourage employers to set up plans voluntarily by offering tax incentives, methods to limit fiduciary liability, means to contain administrative costs, and giving employers flexibility and control over matters such as whether or when to establish an employee benefit plan, how to design a plan, how to amend a plan, when to terminate a plan, all of which are generally viewed as business decisions of a settlor, not of a fiduciary, and thus not subject to fiduciary obligations. Pegram, 530 U.S. at 226-27, 120 S.Ct. 2143; Martinez v. Schlumberger, Ltd., 338 F.3d at 429 (“a company does not act in a fiduciary capacity by simply amending a plan” or by adopting, modifying or terminating a plan); Akers v. Palmer, 71 F.3d 226, 230 (6th Cir.1995)(“a company is only subject to fiduciary restrictions when managing a plan according to its terms, but not when it decides what those terms are to be”), cert. denied, 518 U.S. 1004, 116 S.Ct. 2523, 135 L.Ed.2d 1048 (1996); Bennett v. Conrail Matched Savings Plan Administrative Committee, 168 F.3d 671, 679 (3d Cir.)(“in amending a plan, the employer is acting as a settlor”; thus “the mere fact that [the employer] amended its plan did not breach any fiduciary duties under ERISA”), cert. denied, 528 U.S. 871, 120 S.Ct. 173, 145 L.Ed.2d 146 (1999); Southern Illinois Carpenters Welfare Fund v. Carpenters Welfare Fund of Illinois, 326 F.3d 919, 924 (7th Cir.2003)(“[S]inee an employer has no duty to create a pension or welfare plan in the first place, neither does he have a duty to amend it to make it more generous, or a duty not to amend it if the amendment would make it less generous”).

With respect to amendment of a plan that has the effect of reducing or eliminating pension benefits, the general rule is that the employer who amends the plan according to the procedures laid out in the plan documents does not breach its fiduciary duty as long as the benefits that are reduced or eliminated had not accrued or were not vested at the time and the amendment does not otherwise violate ERISA or the plan terms. Hines v. Massachusetts Mutual Life Ins. Co., 43 F.3d 207, 210 (5th Cir.1995), citing Izzarelli v. Rexene Prods. Co., 24 F.3d 1506, 1524 (5th Cir.1994); Heinz v. Central Laborers’ Pension Fund, 303 F.3d 802, 804 (7th Cir.2002)(“The accrued benefit of a participant under a plan may not be decreased by an amendment of the plan, other than an *552 amendment described in section 1082(c)(8) [“substantial business hardship”] or 1441 [terminated multiemployer plans] of this title.”), petition for cert. filed, No. 02-891, 71 U.S.L.W. 3429 (Dec. 10, 2002).

Section 204(g), as amended 29 U.S.C. § 1054(g), ERISA’s anti-cutback provision, provides in relevant part,

Decrease of accrued benefits through amendment of the plan

(1) The accrued benefit of a participant under a plan may not be decreased by an amendment of the plan other than an amendment described in section 1082(c)(8) or 1441 of this title. 57

(2) For purposes of paragraph (1), a plan amendment which has the effect of—

(A) eliminating or reducing an early retirement benefit or a retirement-type subsidy (as defined in regulations), or

(B) eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment shall be treated as reducing accrued benefits.

Section 1054(g) statutorily protects against the reduction or elimination of accrued benefits, but not against reduction or elimination of benefits that are expected but not accrued. Campbell v. BankBoston, N.A., 327 F.3d 1, 8-9 (1st Cir.2003); Board of Trustees of Sheet Metal Workers’ Natl. Pension Fund v. C.I.R., 318 F.3d 599, 599 (4th Cir.2003). “Accrued benefits” in the defined benefit context are defined as “the individual’s accrued benefit determined under the plan,” which is “equal to the employee’s accumulated contributions.” Campbell, 327 F.3d at 8, citing 29 U.S.C. § 1002(23)(A) and § 1054(c)(2)(B). Section 1002(23) of ERISA provides, The term “accrued benefit means ... in the case of a defined benefit plan, the individual’s ae-crued benefit determined under the plan and, except as provided in section 1054(c)(3) of this title, expressed in the form of an annual benefit commencing at normal retirement age.” Section 411(d)(6) of the Internal Revenue Code, 26 U.S.C. § 411(d)(6), is a parallel provision prohibiting the same conduct, and Treasury Regulation § 1.411(d)-4, A-4(a), promulgated thereunder to “effectuate these ‘anti-cutback’ principles,” provides in relevant part,

[A pension] plan that permits the employer, either directly or indirectly, through the exercise of discretion, to deny a participant a section 411(d)(6) protected benefit provided under the plan for which the participant is otherwise eligible (but for the employer’s exercise of discretion) violates the requirements of section 411(d)(6).

Perreca v. Gluck, 295 F.3d 215, 228 (2d Cir.2002), citing Treasury Regulation § 1.411(d)-4, A-4. Under Treasury Regulation § 1411(d)-4, A-5, “The term employer includes plan administrator ... [and] trustee ....” Id. at 228 n. 10.

d. Power to Appoint/Remove Plan Fiduciaries

A person or entity that has the power to appoint, retain and/or remove a plan fiduciary from his position has discretionary authority or control over the management or administration of a plan and is a fiduciary to the extent that he or it exercises that power. Coyne & Delany Co. v. Selman, 98 F.3d 1457, 1465 (4th Cir.1996)(“the power ... to appoint, retain and remove plan fiduciaries constitutes ‘discretionary authority’ over the management or administration of a plan within the meaning of § 1002(21)(A)”) 58 ; Hickman v. Tosco Corp., 840 F.2d 564, 566 (8th Cir.1988)(“Tosco is a fiduciary within the *553 meaning of ERISA ... because it appoints and removes the members of the administrative committee that administers the pension plan.”); American Federation of Unions Local 102 Health & Welfare Fund v. Equitable Life Assurance Soc. of the U.S., 841 F.2d 658, 665 (5th Cir.1988)(“Lia-bility for failure to adequately train and supervise an ERISA fiduciary arises where the person exercising supervisory authority is in a position to appoint or remove plan administrators and monitor their activities.”); Henry v. Frontier Industries, Inc., 863 F.2d 886, 1988 WL 132577, *2 (9th Cir.1988)(“Largent was a fiduciary of the ESOP by virtue of his power to appoint and retain, and his duty to monitor the member(s) of the Administrative Committee .... ”); Mehling v. New York Life Ins. Co., 163 F.Supp.2d 502, 509-10 (E.D.Pa.2001); Liss v. Smith, 991 F.Supp. 278, 310, 311 (S.D.N.Y.1998)(“It is by now well-established that the power to appoint plan trustees confers fiduciary status”; “[t]he duty to monitor carries with it, of course, the duty to take action upon discovery that the appointed fiduciaries are not performing properly”).

In Leigh v. Engle, 727 F.2d 113, 133-35 (7th Cir.1984), the Seventh Circuit noted that 29 C.F.R. § 2509.75-5 at FR-3 provides that “a plan instrument which designates the corporation as ‘named fiduciary’ should provide for designation by the corporation of specified individuals or other persons to carry out specified fiduciary responsibilities under the plan.” Furthermore, in Leigh, the Seventh Circuit concluded that two corporate officials exercising a duty to appoint fiduciaries had a duty to monitor their appointees’ actions:

As the fiduciaries responsible for selecting and retaining their close business associates as plan administrators, Engle and Libco had a duty to monitor appropriately the administrators’ actions. Engle and Libco could not abdicate their duties under ERISA merely through the device of giving their lieutenants primary responsibility for the day to day management of the trust. Engle and Libco were obliged to operate with appropriate prudence and reasonableness in overseeing their appointees’ management of the trust.

727 F.2d at 134-35. See also ERISA Interpretative Bulletin 75-8, 29 § 2509.75-8(D-4) (members of a board of directors “responsible for the selection and retention of plan fiduciaries” have “ ‘discretionary authority or discretionary control respecting the management of such plan’ and are, therefore, fiduciaries with respect to the plan.”); (FR-17 Q & A)(“At reasonable intervals the performance of trustees and other fiduciaries should be reviewed by the appointing fiduciary in such manner as may be reasonably expected to ensure that their performance has been in compliance with the terms of the plan and statutory standards, and satisfies the needs of the plan.”). 59

*554 Some courts have placed restrictions on such liability. For instance, in Brock v. Self, 632 F.Supp. 1509, 1523 (W.D.La.1986), the district court wrote,

[I]f the Plan instrument itself provided for a procedure whereby a named fiduciary may designate persons who are not named fiduciaries to carry out fiduciary responsibilities, the named fiduciaries might not be liable for the acts or omissions of the Third-Party Defendants. 29 C.F.R. § 2509.75-8, FR-14 (1985). Because the Plan in the case at bar does not provide for any such procedure, however, then any designation of Third-Party Defendants as fiduciaries by Third-Party Plaintiffs will not relieve Third-Party Plaintiffs from responsibility or liability for the acts and omissions of Third-Party Defendants.

*555 See also Newton v. Van Otterloo, 756 F.Supp. 1121, 1132 (N.D.Ind.1991)(directors have duties to monitor plan fiduciaries whom they appoint but do not breach duties in the absence of “notice of possible misadventure by their appointees”).

e. Duty to Disclose

Plaintiffs have alleged that Enron fiduciary Defendants, including the Administrative Committee members, Lay, and the Compensation Committee members (Blake, Duncan, Jaedicke and LeMaistre), have breached their duty of loyalty to the plan participants by affirmatively and materially misleading them about Enron’s financial condition and performance and its accounting manipulations, while inducing them to hold and purchase additional Enron stock. Plaintiffs have also argued that Defendants charged in Count II (lock-down) and Count IV (Offset formula used by Cash Balance Plan) had a fiduciary duty to disclose Enron’s financial condition to plan participants and beneficiaries.

The fiduciary’s duty to disclose is an area of developing and controversial law.

Under the common law of trusts, which Congress indicated should apply as a threshold step to define duties of plan fiduciaries under ERISA, generally the trustee’s duty to disclose information was triggered by a specific request from a plan participant or beneficiary. According to Restatement (Second) of Trusts § 173 (1959), 60

The trustee is under a duty to the beneficiary to give him upon his request at reasonable times complete and accurate information as to the nature and amount of the trust property, and to permit him or a person duly authorized by him to inspect the subject matter of the trust and the accounts and vouchers and other documents related to the trust.

in addition, as embodied in comment d to § 173, are the seeds of the trustee’s duty to disclose:

The trustee is under a duty to communicate to the beneficiary material facts affecting the interest of the beneficiary which he knows the beneficiary does not know and which the beneficiary needs to know for his protection in dealing with a third person with respect to his interest. ...

Although the duty to disclose has its roots in the common law of trusts, courts recently have been expanding a fiduciary’s affirmative duty to disclose material information to plan participants under ERISA.

It is well established that a plan administrator acts in a fiduciary capacity when it explains plan benefits, even likely future benefits, to its employees. See, e.g., Varity Corp., 516 U.S. at 502-03, 504-05, 116 S.Ct. 1065; McCall v. Burlington Northern/Santa Fe Co., 237 F.3d 506, 510-11 (5th Cir.2000)(“Providing information about likely future plan benefits falls within ERISA’s statutory definition of a fiduciary Act.”), cert. denied, 534 U.S. 822, 122 S.Ct. 57, 151 L.Ed.2d 26 (2001). The Supreme Court has held that § 404(a) of ERISA, 29 U.S.C. § 1104(a)(1)(“a fiduciary shall discharge his fiduciary duty with respect to a plan solely in the interest of the participants and beneficiaries”), imposes a duty on a plan fiduciary not to affirmatively miscommunicate or mislead plan participants about material matters regarding their ERISA plan. See, e.g., Varity Corp. v. Howe, 516 U.S. 489, 493, 505, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996)(holding that an employer which was also an ERISA Plan administrator breached its fiduciary duty of loyalty to the plan beneficiaries when it deceptively induced them to *556 “switch employers and thereby voluntarily release [the company] from its obligation to provide them benefits”). In Varity Corp., the Supreme Court proclaimed, “To participate knowingly and significantly in deceiving plan beneficiaries in order to save the employer money at the beneficiaries’ expense is not to act solely in the interest of the participants and beneficiaries .... [LJying is inconsistent with the duty of loyalty owed by all fiduciaries and codified in section 404(a)(1) of ERISA”. Id. at 506, 116 S.Ct. 1065. See also Martinez v. Schlumberger, Ltd., 338 F.3d at 425 (“When an ERISA plan administrator speaks in its fiduciary capacity concerning a material aspect of the plan, it must speak truthfully”); McCall v. Burlington Northern/Santa Fe, 237 F.3d at 510-11; Mullins v. Pfizer, Inc., 23 F.3d 663, 668 (2d Cir.1994)(holding that “when a plan administrator speaks, it must speak truthfully”).

In Varity Corp. 516 U.S. at 506, 116 S.Ct. 1065, the Supreme Court chose not to “reach the question whether ERISA fiduciaries have any fiduciary duty to disclose truthful information on their own initiative, or in response to employee inquiries.” Nevertheless, in that case the Supreme Court found that a plan sponsor, which distributed materials and called a meeting where it persuaded approximately 1,500 employees to transfer, voluntarily, to positions at a new subsidiary by intentionally misrepresenting that the subsidiary was financially stable and the employees’ benefits would be secure, was acting in a fiduciary capacity and violated its fiduciary duties. “While it may be true that amending or terminating a plan is beyond the power of a plan administrator — and, therefore, cannot be an act of plan ‘management’ or ‘administration’ — it does not follow that making statements about the likely future of the plan is also beyond the scope of plan administration.... [P]lan administrators often have, and commonly exercise, discretionary authority to communicate with beneficiaries about the future of plan benefits.” Varity Corp., 516 U.S. at 505, 116 S.Ct. 1065.

Courts have generally agreed that where an ERISA fiduciary makes statements about future benefits that misrepresent present facts, these misrepresentations are material if they would induce a reasonable person to rely on them. Ballone v. Eastman Kodak Co., 109 F.3d 117, 122-23 (2d Cir.1997); Mullins v. Pfizer, 23 F.3d at 669; Kurz v. Philadelphia Electric Co., 994 F.2d 136, 140 (3d Cir.1993), cert. denied sub nom Philadelphia Electric Co. v. Fischer, 510 U.S. 1020, 114 S.Ct. 622, 126 L.Ed.2d 586 (1993); James v. Pirelli Armstrong Tire Corp., 305 F.3d 439, 439 (6th Cir.2002)(“[A] misrepresentation is material if there is a substantial likelihood that it would mislead a reasonable employee in making an adequately informed decision in pursuing ... benefits to which she may be entitled.”), cert. denied, _ U.S. _, 123 S.Ct. 2077, 155 L.Ed.2d 1062 (2003).

Concern for uninformed and vulnerable plap participants has increasingly led some courts, including the Third Circuit, to conclude that circumstances known to the plan fiduciary can give rise to an expanded affirmative duty to disclose information necessary to protect a participant or beneficiary because that participant or beneficiary “may have no reason to suspect that it should make inquiry into what may appear to be a routine matter.” Glaziers and Glassworkers Union Local No. 252 Annuity Fund v. Newbridge Securities, Inc., 93 F.3d 1171, 1181 (3d Cir.1996). See also Griggs v. E.I. Dupont de Nemours & Co., 237 F.3d 371, 380 (4th Cir.2001)(“ERISA administrators have a fiduciary obligation ‘not to misinform employees through material misrepresentations and incomplete, inconsistent or contradictory disclosures.’ ... Moreover, a fiducia *557 ry is at times obligated to affirmatively provide information to the beneficiary ... [including] ‘facts affecting the interest of the beneficiary which he knows the beneficiary does not know and which the beneficiary needs to know for his protection ... [citations omitted].’ ”); Bins v. Exxon Co. U.S.A., 189 F.3d 929 (1999)(“We believe that once an ERISA fiduciary has material information relevant to a plan participant or beneficiary, it must provide that information whether or not it is asked a question.”), on rehearing en banc, 220 F.3d 1042, 1048-49 (9th Cir.2000)(when a proposed change in retirement benefits becomes sufficiently likely and therefore material, the employer has a duty to provide complete and truthful information); Schmidt v. Sheet Metal Workers’ Nat. Pension Fund, 128 F.3d 541, 546-47 (7th Cir.1997)(“A plan fiduciary may violate its duties ... either by affirmatively misleading plan participants about the operations of a plan, or by remaining silent in circumstances where silence could be misleading.”), ce rt. denied, 523 U.S. 1073, 118 S.Ct. 1513, 140 L.Ed.2d 667 (1998).

A number of the Circuit Courts of Appeals have held that after an ERISA participant/beneficiary requests information from his plan’s fiduciary, who is informed of that participant/beneficiary’s circumstances, the fiduciary has a duty to provide full and accurate information material to the participanVbeneficiary’s situation, including information about which the participant/benefieiary did not specifically ask. See, e.g., Watson v. Deaconess Waltham Hosp., 298 F.3d 102, 114 (1st Cir.2002); Griggs v. E.I. Dupont de Nemours & Co., 237 F.3d 371, 380-81 (4th Cir.2001); Bowerman v. Wal-Mart-Stores, Inc., 226 F.3d 574, 590 (7th Cir.2000); Krohn v. Huron Memorial Hosp., 173 F.3d 542, 547-48 (6th Cir.1999)(“[A] plan administrator has ‘an affirmative duty to inform when it knows that silence might be harmful’...,” including full information about short- and long-term disability benefits when asked about disability benefits generally); Shea v. Esensten, 107 F.3d 625, 629 (8th Cir.)(“Where an HMO’s financial incentives discourage a treating doctor from providing essential health care referrals for conditions covered under the plan benefit structure, the incentives must be disclosed and the failure to do so is a breach of ERISA’s fiduciary duties”), cert. denied, 522 U.S. 914, 118 S.Ct. 297, 139 L.Ed.2d 229 (1997); Anweiler v. American Elec. Power Serv. Corp., 3 F.3d 986, 991 (7th Cir.1993); Drennan v. Gen. Motors Corp., 977 F.2d 246, 251 (6th Cir.1992)(“A fiduciary must give complete and accurate information in response to participants’ questions .... ”); Eddy v. Colonial Life Ins. Co., 919 F.2d 747, 750 (D.C.Cir.1990)(“At the request of a beneficiary (and in some circumstances upon his own initiative), a fiduciary must convey complete and correct material information to a beneficiary”).

Thus some Circuits have concluded that there is an additional affirmative duty, beyond a full and accurate response triggered by a participant/beneficiary’s specific question, to disclose material information to plan participants and beneficiaries. The Third Circuit, one of the most aggressive courts in this area, has held, “[I]t is a breach of fiduciary duty for an employer to knowingly make material misleading statements about the stability of a benefits plan.” Adams v. Freedom Forge Corp., 204 F.3d 475, 480 (3d Cir.2000), citing In re Unisys Corp. Retiree Med. Benefits ‘ERISA” Litig., 57 F.3d 1255 (3d Cir.1995), cert. denied, 517 U.S. 1103, 116 S.Ct. 1316, 134 L.Ed.2d 469 (1996). “[T]he ‘duty to inform is a constant thread in the relationship between beneficiary and trustee; it entails not only a negative duty not to misinform, but also an affirmative duty to inform when the trustee knows that silence *558 might be harmful.’ ” Bixler v. Central Pa. Teamsters Health-Welfare Fund, 12 F.3d 1292, 1300 (3d Cir.1993), quoted for that proposition by James v. Pirelli Armstrong Tire Corp., 305 F.3d 439, 452 (6th Cir.2002), cert. denied, _ U.S. _, 123 S.Ct. 2077, 155 L.Ed.2d 1062 (2003), Watson v. Deaconess Waltham Hosp., 298 F.3d at 115, 61 Shea v. Esensten, 107 F.3d at 629, and Bins v. Exxon Co. U.S.A., 220 F.3d 1042, 1054 (9th Cir.2000)(en. banc). In accord, Griggs, 237 F.3d at 381 (“[A]n ERISA fiduciary that knows or should know that a beneficiary labors under a material misunderstanding of plan benefits that will inure to his detriment cannot remain silent .... ”); Anweiler, 3 F.3d at 991 (“Fiduciaries must also communicate material facts affecting the interests of beneficiaries. This duty exists when a beneficiary asks fiduciaries for information, and even when he or she does not.”). The Third Circuit has asserted that

an employer or plan administrator fails to discharge its fiduciary duty in the interest of the plan participants and beneficiaries when it provides, on its own initiative, materially false or inaccurate information to employees about the future benefits of a plan. Under these circumstances, it is not necessary that employees ask specific questions about future benefits or that they take the affirmative step of asking questions about the plan to trigger the fiduciary duty.

James v. Pirelli, 305 F.3d at 455; in accord McGrath v. Lockheed Martin Corp., 48 FedAppx. 543, 555, 2002 WL 31269646, *10 (6th Cir.2002). See also Restatement (Second) of Trusts § 173, comment d (1957)(The trustee “is under a duty to communicate to the beneficiary material facts affecting the interest of the beneficiary which he knows that the beneficiary does not know and which the beneficiary needs to know for his protection in dealing with a third person .... ”). The Sixth Circuit has additionally held, “A fiduciary breaches his duty by providing plan participants with materially misleading information, ‘regardless of whether the fiduciary’s statements or omissions were made negligently or intentionally.’ ...” James v. Pirelli Armstrong Tire Corp., 305 F.3d at 449.

In comparison, in the very few cases in which the Fifth Circuit has addressed a fiduciary duty to disclose, and then only in narrow circumstances, the Fifth Circuit appears to impose such a duty cautiously. Rather than promulgating broad rules, it approaches the issue case by case, examining the facts and circumstances of each to determine the nature and extent of any duty to disclose that should be imposed. Like many courts, it views the plan administrator as having a fiduciary duty to plan participants as a whole, but not to individual participants with particular problems who do not make a specific request for information. The Fifth Circuit has stated, “[A]bsent a specific participant-initiated inquiry, a plan administrator does not have any fiduciary duty to determine whether confusion about a plan term or condition exists. It is only after the plan administrator does receive an inquiry that it has a fiduciary duty to respond promptly and adequately in a way that is not misleading [footnotes omitted].” Switzer v. Wal-Mart Stores, Inc., 52 F.3d 1294, 1299 (5th Cir.1995)(holding that plan administrator has no duty to give personal *559 ized attention to each and every employee, and in particular to inform a plan participant that he was late in remitting his final COBRA premium).

Nevertheless, in McDonald v. Provident Indem. Life Ins. Co., 60 F.3d 234, 237 (5th Cir.1995), cert. denied, 516 U.S. 1174, 116 S.Ct. 1267, 134 L.Ed.2d 214 (1996), the panel observed, “Section 404(a) imposes on a fiduciary the duty of undivided loyalty to plan participants and beneficiaries, as well as a duty to exercise care, skill, prudence and diligence. An obvious component of those responsibilities is the duty to disclose material information.” In McDonald, an appellate court held that § 404(a) required the fiduciary to disclose a change in its rate schedule that caused a prohibitive premium to be set because of the impact such a premium could have on small employers, including the plaintiff. Subsequently, in Ehlmann v. Kaiser Foundation Health Plan of Texas, 198 F.3d 552, 556 (5th Cir.2000), cert. dismissed, 530 U.S. 1291, 121 S.Ct. 12, 147 L.Ed.2d 1036 (2000)(holding that ERISA does not impose a fiduciary duty on health maintenance organizations to disclose physician compensation and reimbursement schemes to plan participants), 62 the Fifth Circuit described the imposition of a duty to disclose in McDonald as based on the “extreme impact” that the change in rate schedules would have on small employers. The panel observed about McDonald inter alia, “Clearly these cases, which adopt a case by case or an ad hoc approach, do not warrant the wholesale judicial legislation of a broad duty to disclose that would apply regardless of special circumstance or specific inquiry.” Id. Thus the Fifth Circuit does recognize that in addition to a specific inquiry from a plan participant, special circumstances with a potentially “extreme impact” on a plan as a whole, where plan participants generally could be materially and negatively affected, might support imposition of such an affirmative duty in a particular case. 63

*561 The Tittle Plaintiffs complain not only of general material misrepresentations regarding Enron’s financial condition and the inducement to purchase or hold Enron stock, but also of particular employee meetings held in which certain Defendants urged plan participants to continue their employment and purchase or hold Enron stock as part of Defendants’ larger scheme to enrich themselves. Indeed, among the “predicate acts” alleged under their RICO claims, as factual support for their interstate transportation of persons and property in order to defraud, Plaintiffs claim that the Enron Insider Defendants, Arthur Andersen Defendants, and some Investment Banking Defendants conspired to induce Enron employees “to travel ... in the execution of the wrongful scheme alleged herein, ... to Houston, Texas, to attend meetings conducted by the Enron Insider Defendants at which ECSP participants were reassured that their 401(k) funds were safely invested and that they should hold and maintain their investments in Enron stock.” (Complaint at 281-82, ¶796). The facts and holding in Varity Corp. have relevance here.

Mindful of Congress’ balanced intent in enacting ERISA “ ‘to offer employees enhanced protection for their benefits, on the one hand, and, on the other, ... not to create a system that is so complex that administrative costs, or litigation expenses, unduly discourage employers from offering welfare benefit plans in the first place,’ ” in Schlumberger, 338 F.3d at 413-16, the Fifth Circuit discussed Varity Corp. v. Howe, 516 U.S. 489, 116 S.Ct. 1065, 134 L.Ed.2d 130, in some detail in the context of an employer/administrator/fiduciary’s duty to disclose to plan participants future changes to their ERISA plan.

According to the Fifth Circuit, in Varity Corp., former employees of Varity Corporation’s subsidiary Massey-Ferguson, Inc. sued Varity, alleging that “Varity Corporation had affirmatively represented to them that their benefits woúld remain secure if they transferred to a new subsidiary, Massey Combines.” Schlumberger, 338 F.3d *562 at 414, citing Varity, 516 U.S. at 492-93, 116 S.Ct. 1065. In fact Varity created Massey Combines in order to transfer Massey-Ferguson’s money-losing divisions, including its benefit plans, and other debts to Massey Combines with the expectation that Massey Combines would fail. In order to convince the plan beneficiaries to switch to Massey Combines, Varity had a special meeting with the employees and promised that their benefits would remain secure if they transferred, even though Varity knew the result would be quite different. Approximately 1500 employees relied on these promises and made the transfer; Massey Combines went into receivership within a couple of years and those employees lost their benefits. Id. at 414, citing id. at 494, 116 S.Ct. 1065. Although Varity argued that it was wearing its settlor/employer hat when it urged Massey-Ferguson’s employees to switch to Massey Combines, the Supreme Court concluded otherwise and found that when Varity convened the meeting to represent that the transfer would not threaten their benefits, it was acting in its fiduciary capacity as a plan administrator. Id. at 415, citing id. at 501-02, 116 S.Ct. 1065. The high court opined that “ ‘Varity was exercising ‘discretionary authority’ respecting the plan’s ‘management’ or ‘administration’ when it made these misrepresentations’” and that “‘[c]onveying information about the likely future of plan benefits, thereby permitting beneficiaries to make an informed choice about continued participation, would seem to be an exercise of a power ‘appropriate’ to carrying out an important plan purpose.’ ” Id. at 415, citing id. at 498, 502, 116 S.Ct. 1065. Emphasizing that fiduciary duties primarily constrain the exercise of discretionary authority operating beyond duties laid out in the express terms of plan instruments, the Supreme Court emphasized the ERISA fiduciary’s duty of loyalty and concluded that Varity had breached that duty in “ ‘participating] knowingly and significant by in deceiving a plan’s beneficiaries in order to save the employer money at the beneficiaries’ expense’ ” and lying to the employee participants. Id. at 415-16, citing id. at 506, 116 S.Ct. 1065.

Although the facts in Varity Corp. are not precisely on point with those in the instant suit, there are sufficient parallels with the Tittle Plaintiffs’ allegations to state a claim for breach of fiduciary duty in their representations to employees in these meetings.

This Court concludes that in light of the fiduciary’s duties of loyalty and of care, skill, prudence, and diligence, the Tittle plaintiffs have stated a claim generally for breach of a fiduciary duty to disclose based on material information in various ERISA counts, implied or express; they have asserted that Defendants breached their fiduciary duty regarding Enron’s alleged fraudulent accounting, concealment of its deceitful business practices and of the company’s precarious, swiftly deteriorating financial condition, and Defendants’ alleged representations knowingly intended to induce the plan participants’ continued participation in pension plans’ purchase and holding of Enron stock, which were known or should have been known to plan fiduciaries. They have alleged with supporting facts that disclosure was essential to protect the interests (retirement assets) of plan participants and beneficiaries from the threat of substantial depletion. Plaintiffs have specifically alleged that Lay, Olson, the Compensation Committee, the Enron ERISA Defendants, and Enron breached their fiduciary duty under ERISA by failing to disclose information about Enron’s dangerous financial condition that they knew or should have known 64 to plan participants, the Administrative Committee, or plan counsel, while *563 these Defendants were individually selling large amounts of their own Enron holdings.

Certain Committee and Outside Directors (“Compensation Committee”) Defendants 65 have argued that if these Defendants met their duty of loyalty by selectively disclosing only to the plan participants non-public information about material accounting irregularities and financial improprieties, so that the participants could make an informed decision not to purchase additional shares or to sell their currently held shares of Enron stock before the market and the public found out and the price plunged, Defendants would be violating insider trading laws under the federal securities laws. 66

*564 Rule 10b-5, 17 C.F.R. § 240.10b-5, requires that a corporate insider, because he owes a fiduciary duty to shareholders, either disclose material non-public information publicly or abstain from trading his own shares for personal gain. See, e.g., Chiarella, v. United States, 445 U.S. 222, 226-29, 100 S.Ct. 1108, 63 L.Ed.2d 348 (1980). See, generally, # 1269 at 8-12 in Newby, H-01-3624. Furthermore, if a plan fiduciary were to tell plan participants of Enron’s actual financial condition so they could sell at a high price based on this nonpublic information, he would also be violating insider trading laws and he, the plan participants as “tippees,” and the Administrative Committee might be found liable of securities law violations. See 15 U.S.C. § 78u-1(a)(l)(B)(imposmg civil penalties for insider trading against a person who directly or indirectly controlled a person who sold a security while in possession of such material, nonpublic information or violated the law in communicating such information) & (b)(l)(A)(imposing controlling person liability where the “controlling person knew or recklessly disregarded the fact that such controlled person was likely to engage in the act or acts constituting the violation and failed to take appropriate steps to prevent such act or acts before they occurred”).

As authority for their argument, these Defendants cite two unpublished opinions, Hull v. Policy Management Systems Corp., No. CIV.A.3:00-778-17, 2001 WL 1836286 (D.S.C. Feb. 9, 2001), and In re McKesson HBOC, Inc. ERISA Litigation, No. C00-2003RMW, 2002 WL 31431588, *6 (N.D.Cal. Sept. 30, 2002). In Hull the court inter alia dismissed a claim against corporate-defendant administrative committee members for failing to provide correct, adverse information about the actual value of the corporation and failing to act on it and sell the stock in the trust fund to protect the interests of the plan participants. The district court opined that the plaintiffs’ standard of care for the corporation’s stock was illegal and impractical because it

would put the Committee in the untenable position of choosing one of the three unacceptable (and in some instances illegal) courses of action; (1) obtain “inside” information and then make stock purchase and retention decisions based on this “inside” information; (2) make the disclosures of “inside” information itself before acting on the discovered information, overstepping its role and, in any case, likely causing the stock price to drop; or (3) breach its fiduciary duty by not obtaining and acting on “inside” information.

2001 WL 1836286, at *9. In the same vein, in In re McKesson the district court concluded, “Fiduciaries are not obligated to violate the securities laws in order to satis *565 fy their fiduciary duties.” 2002 WL 31431588 at *6. The district court opined, moreover, that had there been public disclosure by ERISA Enron fiduciaries in an efficient market, there would have been a swift adjustment in market price and the plan participants would have been unable to sell the stock at artificially high prices so the court dismissed claims against a number of defendants under Rule 12(b)(6). See instruments #504 and 513 in Tittle.

First, the Court notes that the holding in McKesson, that ERISA fiduciaries must comply with the prohibition on selective disclosure under the securities laws for the fiduciaries’ or their beneficiaries’ personal gain, is limited to ESOP plans, which by their nature are generally excepted from the duty to diversify, and on its face does not apply to 401(k) plans. Second, and more significant, the Court finds that the McKesson court’s rationale is misguided for the following reasons.

Defendants’ argument that despite the duty of loyalty, a fiduciary should make no disclosure to the plan participants, because under the securities laws he cannot selectively disclose nonpublic information, translates in essence into an argument that the fiduciary should both breach his duty under ERISA and, in violation of the securities laws, become part of the alleged fraudulent scheme to conceal Enron’s financial condition to the continuing detriment of current and prospective Enron shareholders, which include his plan’s participants. This Court does not believe that Congress, ERISA or the federal securities statutes sanction such conduct or such a solution, i.e., violating all the statutes and conning the public. As a matter of public policy, the statutes should be interpreted to require that persons foliote the laws, not undermine them. They should be construed not to cancel out the disclosure obligations under both statutes or to mandate concealment, which would only serve to make the harm more widespread; the statutes should be construed to require, as they do, disclosure by Enron officials and plan fiduciaries of Enron’s concealed, material financial status to the investing public generally, including plan participants, whether “impractical” or not, because continued silence and deceit would only encourage the alleged fraud and increase the extent of injury.

At the same time, a fiduciary’s duty of loyalty should also not be construed to require him to enable and encourage plan participants to violate the law, i.e., to sell their stock at artificially high prices to make a profit or avoid loss before disclosure of Enron’s financial condition was made public. Nor would selective disclosure of that information by the fiduciary to plan participants protect any lawful financial interests of the plan participants and beneficiaries. Like any other investor, plan participants have no lawful right, before anyone else is informed of Enron’s negative financial picture, to profit from fraudulently inflated stock prices or to avoid financial loss by selling early before public disclosure. If the material information about Enron’s precarious financial status had been made public by Enron officials and plan fiduciaries in accordance with their legal obligations and the prices of the stock dropped before the plan participants could make a profit or reduce a substantial loss, the damage to the plan participants would not be the fault of the plan fiduciary but of the underlying alleged fraudulent Ponzi scheme and the corporate officials who participated in it concealed it, and against whom the plan would have a cause of action A trustee has no duty to violate the law to serve his beneficiaries. Restatement (Second) Trusts § 166, cmt. a. Nor is an ERISA fiduciary an insurer of the value of plan assets, even where that price is the result of fraud or manipulation; he has, instead, an ongoing obligation to satisfy the pru *566 dent man rule, which, if he performs the necessary investigations and provides accurate information in accordance with it, relieves him of personal liability regardless of the financial success or failure of the purchased assets, even if he does not discover the fraud. If he does not meet the requirements of the prudent man standard, then the plan fiduciary is personally liable to the plan for monetary damages under ERISA. Similarly if Enron directors fail to meet their duties of disclosure but continue to conceal or materially misrepresent Enron’s financial condition, they are subject to liability under the securities laws. Thus under either scenario the plan and/or plan participants and beneficiaries who invest in Enron stock because of material misrepresentations or omissions of corporate officers/fiduciaries have a remedy against those who violate the law and injure them.

“The Department of Labor, the agency responsible for interpreting and enforcing ERISA, flatly rejects the McKesson court’s position on the interaction between ERISA and the securities laws.” Secretary of Labor’s Amended Amicus Curiae Brief (# 1024 at 7). The Court finds that the Secretary’s brief appropriately addresses the issue and suggests practical ways to resolve the alleged tension between ERISA and the federal securities statutes so that both can be followed:

Defendants’ duty to “disclose or abstain” under the securities laws does not immunize them from a claim that they failed in their conduct as ERISA fiduciaries. To the contrary, while their Securities Act and ERISA duties may conflict in some respects, they are congruent in others, and there are certain steps that could have been taken that would have satisfied both duties to the benefit of the plans. First and foremost, nothing in the securities laws would have prohibited them from disclosing the information to other shareholders and the public at large, or from forcing Enron to do so. See MATTER OF CADY, ROBERTS, 1961 WL 60638, at *3 (1961). The duty to disclose the relevant information to the plan participants and beneficiaries, which the Plaintiffs assert these Defendants owed as ERISA fiduciaries, is entirely consistent with the premise of the insider trading rules: that corporate insiders owe a fiduciary duty to disclose material nonpublic information to the shareholders and trading public. See id. (incorporating common law rule that insiders should reveal material inside information before trading) ....

Second it would have been consistent with the securities law for the Committee to have eliminated Enron stock as a participant option and as the employer match under the Savings Plan.... The securities rules do not require an individual never to make any decision based on insider information. To the contrary, the insider trading rules require corporate insiders to refrain from buying (or selling) stock if they have material, nonpublic information about the stock. Thus, the “disclose or abstain” securities law rule is entirely consistent with, and indeed contemplates a decision not to purchase a particular stock. See Condus v. Howard Sav. Bank, 781 F.Supp. 1052, 1056 (D.N.J.1992) (it is perfectly legal to retain stock based on inside information; violation of insider trading requires buying or selling of stock). It would have been entirely consistent with securities laws for the fiduciaries to have eliminated Enron stock as a participant option and the employer match.... Finally, another option would have been to alert the appropriate regulatory agencies, such as the SEC and the Department of Labor, to the misstatements.

*567 Id., # 1024 at 26-27. 67

f. Personal Liability of Corporate Employees

Courts are divided about if and under what circumstances the officers or employees of a corporation that is the named fiduciary in plan instruments may be personally liable for a breach of their fiduciary duty. In light of the traditional rule that the employees of a corporation acting within the course and scope of their employment cannot be personally liable for their actions, some courts have held that the individual corporate employee must have an individual discretionary role in the plan administration to be liable as a fiduciary under ERISA. To shield themselves from liability, Defendants rely heavily on Confer v. Custom Engineering Co., 952 F.2d 34, 37 (3d Cir.1991), holding “that when an ERISA plan names a corporation as a fiduciary, the officers who exercise discretion on behalf of the corporation are not fiduciaries within the meaning of section 3(21)(A)(iii) unless it can be shown that these officers have individual discretionary roles as to plan administration.” 68 *568 See also Torre v. Federated Mutual Ins. Co., Civ. A. No. 91-425-DES, 1993 WL 545237, *3 (D.Kan. Dec. 3, 1993); Eyler v. C.I.R., T.C. Memo 1995-123, No. 16247-92, 1995 WL 127907 (1995) [page references unavailable] (U.S. Tax Ct. Mar. 23, 1995) (following Confer), aff'd, 88 F.3d 445 (7th Cir.1996); Professional Helicopter Pilots Ass’n v. Denison, 804 F.Supp. 1447, 1451 (M.D.Ala.1992).

Other courts, stressing the functional definition of a fiduciary under ERISA, have held that the individuals within the corporations who actually exercised the fiduciary discretionary control or authority in their official capacity may also be personally liable, depending on the facts of the particular case. See, e.g., Kayes v. Pacific Lumber Co., 51 F.3d 1449, 1459-61 (9th Cir.1995) (Because fiduciary status under ERISA depends upon an individual’s functional role rather than title, as exemplified by Department of Labor interpretations, and because of ERISA’s underlying, broadly based liability policy, the Ninth Circuit “reject[s] the Third Circuit’s interpretation in Confer that an officer who acts on behalf of a named fiduciary corporation cannot be a fiduciary if he acts within his official capacity and if no fiduciary duties are delegated to him individually.”), ce rt. denied, 516 U.S. 914, 116 S.Ct. 301, 133 L.Ed.2d 206 (1995). Such a rule would allow a corporation to “shield its decision-makers from personal liability merely by stating in the plan documents that all their actions are taken on behalf of the company and not in a fiduciary capacity.” 69 Id. at 1461. Stewart v. Thorpe Holding Co. Profit Sharing Plan, 207 F.3d 1143, 1156 (9th Cir.2000) (“where, as here, a committee or entity is named as the plan fiduciary, the corporate officers or trustees who carry out the fiduciary functions are themselves fiduciaries and cannot be shielded from liability by the company”), cert. denied, 531 U.S. 1074, 121 S.Ct. 768, 148 L.Ed.2d 668 (2001); Landry v. Air Line Pilots Ass’n Inter. AFL-CIO, 901 F.2d 404, 418 (5th Cir.1990) (Members of the board of directors of an employer that maintains an employee benefit plan will be viewed as fiduciaries for the plan maintained by that employer only “to the ex *569 tent” that they have the responsibility for functions listed in § 3(21)(A) of ERISA, such as selection and retention of plan fiduciaries, over which they necessarily would exercise “discretionary authority or discretionary control respecting management of such plan.”), cert. denied, 498 U.S. 895, 111 S.Ct. 244, 112 L.Ed.2d 203 (1990); Martin v. Schwab, No. CIV. A. 91-5059-CVSW-1, 1992 WL 296531, at *5 (W.D.Mo.1992) (“Defendants’ contention they have no individual exposure as fiduciaries [because they were members of the Board of Directors] is clearly at odds with the language of the statute 70 .... Congress ‘conferred fiduciary status on persons and entities by activity and not by label.’ ”); Kay v. Thrift & Profit Sharing Plan for Employees of Boyertown Casket Co., 780 F.Supp. 1447, 1461 (E.D.Pa.1991) (holding liable the company and the company employees personally involved in a plan decision that was determined to be a breach of fiduciary duty); Eaton v. D’Amato, 581 F.Supp. 743, 747 (D.D.C.1980) (where a corporation’s “key officials exercised far more than ministerial powers[,][t]heir status as administrator may well qualify them automatically as fiduciaries’’); Freund v. Marshall & Ilsley Bank, 485 F.Supp. 629, 641 (W.D.Wis.1979) (“While it is indeed contemplated under ERISA that a corporation, as an entity, may be a plan fiduciary, the analysis does not end there. Individuals within the corporation who exercise the type of authority or control described in section 3(21)(A) of ERISA will themselves be fiduciaries with respect to the Plan.”).

This year the Fifth Circuit emphasized that in last year’s opinion in Bannistor v. Ullman, 287 F.3d 394, 403-06 (5th Cir.2002) (holding that corporate officers were liable as fiduciaries since they exercised control over plan assets, approved a new health plan, and had check-signing authority for their employer corporation), it had demonstrated that it has adopted the functional approach of the Ninth Circuit in Kayes and holds corporate officers personally responsible for the role they played in the management of plan assets, while it clearly rejected Confer. Musmeci v. Schwegmann Giant Super Markets, Inc., 332 F.3d 339, 350 n. 7 (5th Cir.2003). One district court in the Fifth Circuit had previously held corporate officials personally. liable when acting within the scope of their employment on behalf of the corporation. Brock v. Self, 632 F.Supp. 1509, 1523-24 (W.D.La.1986) (“While the ... Company, as an entity, is properly held to be a fiduciary, it cannot shield its officers and employees from liability for their fiduciary breaches under the express terms of ERISA, which provides that [a]ny person who is a fiduciary with respect to a plan who breaches any of the responsibilities imposed upon fiduciaries ... shall be personally liable to make good to such plan any losses to the plan resulting from each such breach ... [emphasis added by court].”), quoting 29 U.S.C. § 1109(a).

In view of the broad language, the functional and flexible definition of “fiduciary,” and the expansive liability policy of the statute, as well as the holding in Mus-meci, this Court agrees with those courts which reject a per se rule of nonliability for corporate officers acting on behalf of the corporation and instead make a functional, fact-specific inquiry to assess “the extent of responsibility and control exercised by the individual with respect to the Plan” to determine if a corporate employee, and thus also the corporation, has exercised sufficient discretionary authority and con *570 trol to be deemed an ERISA fiduciary and thus personally liable for a fiduciary breach. Bell v. Executive Committee of United Food and Commercial Workers Pension Plan for Employees, 191 F.Supp.2d 10, 15 (D.D.C.2002); Musmeci 332 F.3d at 350 n. 7.

g. Professional Liability

Even where a person exercises some control over the plan’s operations or assets, if he is providing only traditional professional services to the plan, he is not a “fiduciary” for such services and is not subject to an ERISA suit for breach of fiduciary duties. “[A]n attorney rendering legal and consulting advice to a plan” will not be considered to be a fiduciary unless he exercises authority over the plan “in a manner other than by usual professional functions” and thus cannot be sued for breach of fiduciary duty under ERISA for pursuing a lawyer’s traditional services. Rutledge v. Seyfarth, Shaw, Fairweather & Geraldson, 201 F.3d 1212, 1220 (9th Cir.2000) (quoting Yeseta v. Baima, 837 F.2d 380, 385 (9th Cir.1988)), amended and superseded on other grounds, 208 F.3d 1170 (9th Cir.), cert. denied, 531 U.S. 992, 121 S.Ct. 482, 148 L.Ed.2d 456 (2000). The same is true for providers of other professional services, including accountants and banks. Rutledge, 201 F.3d at 1220; Painters of Phila. Dist. Council No. 21 Welfare Fund v. Price Waterhouse, 879 F.2d 1146, 1150 (3d Cir.1989); Anoka Orthopaedic Assocs., P.A. v. Lechner, 910 F.2d 514, 517 (8th Cir.1990); O’Toole v. Arlington Trust Co., 681 F.2d 94, 96 (1st Cir.1982). The Department of Labor’s guidelines for interpreting ERISA’s definition of “fiduciary” in 29 U.S.C. 1002(21)(A) note that “attorneys, accountants, actuaries, and consultants will ordinarily not be considered fiduciaries.” Interpretive Bulletin 75-5, 29 C.F.R. § 2509.75-5 (1987).

ERISA does not permit a civil action for legal damages against a non-fiduciary charged with knowing participation in a fiduciary breach. Reich v. Rowe, 20 F.3d 25, 26, 28 (1st Cir.1994), citing Mertens v. Hewitt Associates, 508 U.S. 248, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993). As an alternative to fiduciary liability, a nonfiduciary may be hable as a “party in interest,” but only for “appropriate equitable relief,” including injunctions and equitable restitution, in civil actions brought by plan participants under 29 U.S.C. § 1132(a)(3). 71 See also Useden v. Acker, 947 F.2d 1563, 1581-82 (11th Cir.1991), ce rt. denied sub nom. Useden v. Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, 508 U.S. 959, 113 S.Ct. 2927, 124 L.Ed.2d 678 (1993). A party in interest of an employee benefit plan is defined in 29 U.S.C. § 1002(14) and includes inter alia any fiduciary (administrator, officer, trustee, custodian, etc.), a person that provides services to the plan (such as an accountant, attorney), an employer of any employees covered by the plan and an employee organization including any members covered by the plan. Such non-fiduciaries may be held liable for such “appropriate equitable relief’ if they are “parties in interest” and, with actual or constructive knowledge, they participate in a fiduciary’s breach of its duties in transactions between the plan and a party in interest that are expressly prohibited under § 406(a) of ERISA, 29 U.S.C. § 1106(a).

*571 Section 406(a) bars a plan fiduciary from entering into certain kinds of transactions that he “knows or should know” are transactions with a party in interest to the injury of the participants of the plan. These include purchases of assets, loans and extensions of credit, payments and transfers of assets to the party in interest, and payments for furnishing services. Section 406(b) bars a fiduciary from dealing with plan assets for his own interest. See, e.g., Donovan v. Cunningham, 716 F.2d at 1464-65 (“[T]he object of section 406 was to make illegal per se the types of transactions that experience had shown to entail a high potential for abuse.”). See also Harris Trust and Sav. Bank v. Salomon Smith Barney, Inc., 530 U.S. 238, 241, 248, 120 S.Ct. 2180, 147 L.Ed.2d 187 (2000) (unanimous op.); McDannold v. Star Bank, N.A., 261 F.3d 478, 485-86 (6th Cir.2001); Whitfield v. Lindemann, 853 F.2d 1298, 1303 (5th Cir.) (holding attorney liable as a nonfiduciary), cert. denied sub nom. Klepak v. Dole, 490 U.S. 1089, 109 S.Ct. 2428, 104 L.Ed.2d 986 (1989). 72 When a plaintiff shows that a fiduciary “caused the plan to engage in an allegedly unlawful transaction” listed in § 406(a)(1), 29 U.S.C. § 1106(a)(1), the fiduciary, in contrast to the participating interested party, may be held personally responsible for monetary damages under § 409(a), 29 U.S.C. § 1109(a), “for any losses incurred by the plan, any ill-gotten profits, and other equitable and remedial relief deemed appropriate by the court.” Lockheed Corp. v. Spink, 517 U.S. at 888, 116 S.Ct. 1783.

Although the claim against the party in interest in Harris Trust was brought under § 406 for participation in designated prohibited transactions, the Supreme Court’s broad language indicated that ERISA § 502(a)(3) authorizes a private cause of action for “appropriate equitable relief’ to redress any violations of ERISA’s Title I, which would include violations of § 404’s fiduciary duties. In its ruling, the high court stated that § 502(a)(3) “admits of no limit on the universe of possible defendants” and “the focus ... is on redressing the fact or practice which violates any provision of [ERISA Title I].” Harris Trust, 530 U.S. at 246-47, 120 S.Ct. 2180 (contrasting the fact that § 503(a) “makes no mention at all of which parties may be proper defendants” while other provisions “do expressly address who may be a defendant.”). Thus it would appear that a party-in-interest’s liability under Harris Trust applies beyond prohibited transactions with the plan under § 406 to a knowing participation in a fiduciary’s breach of fiduciary duties under § 404(a). See Rudowski v. Sheet Metal Workers Intern. Ass’n, Local Union Number 24, 113 F.Supp.2d 1176 (S.D.Ohio 2000) (holding that a nonfiduci-ary union may be liable for participating in a fiduciary breach of § 404 in a suit brought under § 502(a)(3)); L.I. Head Start Child Dev. Serv., Inc. v. Frank, 165 F.Supp.2d 367 (E.D.N.Y.2001) (attorneys alleged to have knowingly participated in a breach of duty could be liable to return legal fees received in that improper transaction). Plaintiffs have alleged that Arthur Andersen, while not a plan fiduciary, was a knowing participant in the fiduciary breaches by other Defendants by actively *572 concealing from the plans’ fiduciaries and participants Enron’s actual financial condition and the imprudence of investing in its stock. 73 Moreover, they assert that the accounting firm received large fees that included assets belonging to the plan for Arthur Andersen’s provision of these services that purportedly constituted a knowing participation in the breach of fiduciary duty. Thus Plaintiffs seek to have the court impose a constructive trust on plan assets or proceeds traceable to such assets, and ultimately conveyance of those assets or profits derived from them to the plan, i.e., equitable restitution.

Even though generally a lawyer or accountant providing services to a plan is a party in interest and not a fiduciary, it has been recognized that at times a professional consultant or advisor may go beyond his normal, traditional advisory function and, because of his special expertise and influence, in effect exercise the discretionary authority or control over the management or administration of an ERISA plan to the point that he has assumed the fiduciary obligations and has transmuted into a fiduciary as defined under ERISA, 29 U.S.C. § 1102(21)(A). Mertens, 508 U.S. at 262, 113 S.Ct. 2063 (“professional service providers ... become liable for damages only when they cross the line from advisor to fiduciary”). See also Schloegel v. Boswell 994 F.2d 266, 271 (5th Cir.1993), ce rt. denied, 510 U.S. 964, 114 S.Ct. 440, 126 L.Ed.2d 374 (1993); Reich v. Lancaster, 55 F.3d 1034, 1047-49 (5th Cir.1995); Martin v. Feilen, 965 F.2d 660 (8th Cir.1992) (finding that two partners in an accounting firm who recommended a complex series of transactions, structured deals, provided advice, and had expertise not shared among other corporate insiders exercised effective control over the plan’s assets and were ERISA fiduciaries), cert. denied, 506 U.S. 1054, 113 S.Ct. 979, 122 L.Ed.2d 133 (1993); Carpenters’ Local Union No. 964 Pension Fund v. Silverman, No. 93 CIV. 8787(RPP), 1995 WL 378539 (S.D.N.Y. June 26, 1995) (finding a law firm was a fiduciary under ERISA where plan trustees depended on lawyers’ expertise for a real estate investment, lawyers played a role in investment decisions, and one partner was a plan trustee).. To meet the “authority or control” element under 29 U.S.C. § 1002(21)(A)(i), a plaintiff must show that the consultant or advisor did not merely influence the plan fiduciary, but “caused [the] trustee ... to relinquish his *573 independent discretion in investing the plan’s funds and follow the course prescribed” by the consultant. Schloegel, 994 F.2d at 271-72, citing Sommers Drug Stores Co. Employee Profit Sharing Trust, 798 F.2d at 1460. Alternatively, the rendering of investment advice for a fee on a regular basis pursuant to an agreement or understanding between the consultant and the plan where the agreement indicates that the consultant’s advice will be the primary basis for the plan’s investment decisions and the consultant will provide individualized investment advice according to the plan’s individual needs may also impose fiduciary liability on a professional consultant. Schloegel, 994 F.2d at 273.

There is no per se rule regarding the rendering of professional advice and the point at which a professional may become subject to fiduciary liability. Pappas v. Buck Consultants, Inc., 923 F.2d 531, 537-38 (7th Cir.1991) (the legislative history “seems to ... contemplate! ] ... a fact intensive inquiry that looks at whether the professional transcended her ‘ordinary functions’ ”); Mertens, 508 U.S. at 262, 113 S.Ct. 2063 (“professional service providers ... become liable for damages only when they cross the line from advisor to fiduciary”). A fact intensive examination of the extent of the discretion and control assumed by the administrator is required. Pappas, 923 F.2d at 538; Reich, 55 F.3d at 1047. For instance, where pre-existing policies, practices and procedures sufficiently limit an entity that assumes discretionary authority or control over plan management and/or assets, that entity will not be viewed as a fiduciary. Reich, 55 F.3d at 1047. The performance of ministerial duties or mere processing of claims will not impose fiduciary liability; however, if the administrator has the authority to grant, deny or review claims or has the sole authority to determine the benefits to which the insured plan participant is entitled, the administrator may be a fiduciary under ERISA. Id. (and cases cited therein); Arizona State Carpenters Pension Trust Fund, 125 F.3d at 721-22 (“A person or entity who performs only ministerial services or administrative functions within a framework of policies, rules and procedures established by others is not an ERISA fiduciary. To become a fiduciary, the person or entity must have control respecting the management of the plan or its assets, give investment advice for a fee, or have discretionary responsibility in the administration of the plan.”). The statute “ ‘defines ‘fiduciary' not in terms of formal trusteeship, but in functional terms of control and authority over the plan, thus expanding the universe of persons subject to fiduciary duties — and to damages — under § [1109(a) ].’ ” Id. at 1048, quoting Kayes v. Pacific Lumber Co., 51 F.3d at 1459, and § 1002(21)(A). See also 29 C.F.R. § 2510.3-21(c). 74 Courts have analyzed the extent of authority and control exer *574 cised by attorneys and accountants over plan investment decisions to determine whether they crossed the line and became fiduciaries of the plan. See, e.g., Martin v. Feilen, 965 F.2d 660, 669 (8th Cir.1992) (finding that accountants who provided professional accounting services to an ESOP and also recommended transactions, structured deals, and provided investment advice to the point that they exercised effective control over the plan’s assets and utilized their positions of trust and confidence as corporate insiders to involve the plan in transactions in which they had a personal interest were fiduciaries of the ESOP), cert. denied sub nom. Henss v. Martin, 506 U.S. 1054, 113 S.Ct. 979, 122 L.Ed.2d 133 (1993); Useden v. Acker, 947 F.2d 1563, 1577-78 (11th Cir.1991) (finding that a law firm providing advice on a number of concerns but not beyond the usual professional function of attorneys and otherwise controlling the plan did not become a fiduciary), cert, denied sub nom. Use-den v. Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, 508 U.S. 959, 113 S.Ct. 2927, 124 L.Ed.2d 678 (1993).

h. Section 404(c) Plans

Generally ERISA imposes liability for resulting losses on fiduciaries who commit breaches of their duties. 29 U.S.C. § 1109(a) (“Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchap-ter shall be personally liable to make good to such plan any losses to the plan resulting from each such breach .... ”). Section 404(c) of ERISA, 29 U.S.C. § 1104(c), however, provides that a plan fiduciary is not liable if (1) the plan is an “individual account plan”, (2) the plan participants can exercise control over the assets allocated to their accounts, and (3) the plan participants actually do exercise control over their accounts in a manner proscribed under the regulations. 75 Under § 404(c), the *575 plan participants that exercise such control over their accounts will not be treated as fiduciaries, and neither the plan participants nor the other plan fiduciaries will be hable for any loss or breach that results from the plan participants’ exercise of control over the plan administration; in other words, no one is liable for the participants’ loss that results from the participants’ own informed investment choices. See generally In re Unisys Sav. Plan Litig., 74 F.3d 420, 443-46 (3d Cir.1996), cert. denied sub nom. Unisys Corp. v. Meinhardt, 519 U.S. 810, 117 S.Ct. 56, 136 L.Ed.2d 19 (1996).

There is little case law regarding § 404(c) plans. The legislative history reveals that 29 U.S.C. § 1104(c) created “a special rule” for plans that permit the participant to have “independent control” over his individual account assets and provides that the participant who exercises that independent control, as well as other plan fiduciaries, is not liable for losses caused by the participant’s control. In re Unisys, 74 F.3d at 445, citing H.R. Conf. Rep. No. 1280, reprinted in 1974 U.S.C.C.A.N. at 5085-86. A House Conference Report states,

Therefore, if the participant instructs the plan trustee to invest the full balance of his account in, e.g., a single stock, the trustee is not liable for any loss because of a failure to diversify or because the investment does not meet the prudent man standards. However, the investment must not contradict the terms of the plan, and if the plan on its face prohibits such investments, the trustee could not follow the instructions and avoid liability.

Id., quoting H.R. Conf. Rep. No. 1280, reprinted in 1974 U.S.C.C.A.N. at 5086. The legislative history also indicates that the statute requires the plan to offer “a broad range of investments.” Id. at 446 n. 24.

The Department of Labor issued final regulations regarding § 404(c) in 1992. 76 29 C.F.R. § 2550.404c-1. The Court quotes below portions of the regulations that are relevant to the issues in this class action. It defines a § 404(c) plan as an individual account plan under § 3(34) of ERISA that

(i) Provides an opportunity for a participant or beneficiary to exercise control over assets in his individual account ... ; and

(ii) Provides a participant or beneficiary an opportunity to choose, from a broad range of investment alternatives, the manner in which some or all of the assets in his account are invested ....

29 C.F.R. § 2550.404c-1(b)(1).

Regarding the requirement that an opportunity be provided to a participant or beneficiary to exercise control over his account, to qualify as a § 404(e) plan, the regulation provides:

(A) Under the terms of the plan, the participant or beneficiary has a reasonable opportunity to give investment instructions (in writing or otherwise, with opportunity to obtain written confirmation of such instructions) to an identified plan fiduciary who is obligated to comply with such instructions except as otherwise provided in paragraph (b)(2)(ii)(B) and (d)(2)(ii).

(B) The participant or beneficiary is provided or has the opportunity to obtain sufficient information to make in *576 formed decisions with regard to investment alternatives available under the plan, and incidents of ownership appurtenant to such investments. For purposes of the subparagraph, a participant or beneficiary will not be considered to have sufficient investment information unless-

(1)The participant or beneficiary is provided by an identified plan fiduciary (or a person or persons designated by the plan fiduciary to act on his behalf):

(i) An explanation that the plan is intended to constitute a plan described in section 404(c) of [ERISA], and title 29 of the Code of Federal Regulations Section 2550.440c-l, and the fiduciaries of the plan may be relieved of liability for any losses which are the direct and necessary result of investment instructions given by such participant or beneficiary;

(ii) A description of the investment alternatives available under the plan and, with respect to each designated investment alternative, a general description of the investment objectives and risk and return characteristics of each such alternative, including information relating to the type and diversification of assets comprising the portfolio of the designed investment alternative.

29 C.F.R. § 2550.404c-1(b)(2)(i)(A)-(B)(ii).

The regulation allows a plan to “impose reasonable restrictions on the frequency with which participants and beneficiaries may give investment instructions.” 29 C.F.R. 2550.404(c)-l(b)(i)(C). To be “reasonable,” the plan must, with respect to each investment alternative, allow participants and beneficiaries to provide “investment instructions with a frequency which is appropriate in light of the market volatility to which the investment alternative may reasonably be expected to be subject.” Id. Participants and beneficiaries must be permitted to give investment instructions at minimum at least once in any three-month period and to give transfer instructions as often as they are allowed to give investment instructions. Id.

The Department of Labor’s regulation also prescribes the following guidelines for a “Broad range of investment alternatives”:

(i) A plan offers a broad range of investment alternatives only if the available investment alternatives are sufficient to provide the participant or beneficiary with a reasonable opportunity to:

(A) Materially affect the potential return on amounts in his individual account with respect to which he is permitted to exercise control and the degree of risk to which such amounts are subject;

(B) Choose from at least three investment alternatives:

(1) Each of which is diversified;

(2) Each of which has materially different risk and return characteristics;

(3) Which in the aggregate enable the participant or beneficiary by choosing among them to achieve a portfolio with aggregate risk and return characteristics at any point within the range normally appropriate for the participant or beneficiary; and

(4) Each of which when combined with investments in the other alternatives tends to minimize through diversification the overall risk of large losses, taking into account the nature of the plan and the size of participants’ or beneficiaries’ accounts. In determining whether a plan provides the participant or beneficiary with a reasonable opportunity to diversify his investments, the nature of the investment alternatives offered by the plan and the size of the portion of the individual’s account over which he is *577 permitted to exercise control must be considered.

29 C.F.R. § 2550.404c — 1 (b)(3).

The regulation also addresses “exercise of control.” 29 C.F.R. § 2550.404c-l(c). Inter alia it states,

Whether a participant or beneficiary has exercised independent control in fact with respect to a transaction depends on the facts and the circumstances of the case. However, a participant’s or beneficiary’s exercise of control is not independent in fact if:

(i) The participant or beneficiary is subjected to improper influence by a plan fiduciary or the plan sponsor with respect to the transaction;

(ii) A plan fiduciary has concealed material non-public facts regarding the investment from the participant or beneficiary, unless the disclosure of such information by the plan fiduciary to the participant or beneficiary would violate any provision of federal law or any provision of state law which is not preempted by the Act ....

29 C.F.R. § 2550.404c — 1 (c)(2)(i) — (ii). Plaintiffs here contend that the plan fiduciary concealed material non-public facts about Enron’s financial condition from them so that under the regulation they did not, in fact, exercise independent control in making investment decisions for their individual accounts. As discussed supra, Defendants respond that to have provided such information only to the Savings Plan participants would have violated the federal securities laws. This Court has disagreed with Defendants and adopted the view of the Secretary of Labor.

In addition, “[a] fiduciary has no obligation ... to provide investment advice to a participant or beneficiary under an ERISA section 404(c) plan.” 29 C.F.R. § 2550.404e-l(c)(4).

Finally 29 C.F. R. § 2550.404c-l(d), in relevant part, explains

(d) Effect of independent exercise of control-

(1) Participant or beneficiary not a fiduciary. If a participant or beneficiary of an ERISA section 404(c) plan exercises independent control over assets in his individual account in the manner described in paragraph (c), then no other person who is a fiduciary with respect to such plan shall be liable for any loss

(2) Limitation on liability of plan fiduciaries.

(i) If a participant or beneficiary of an ERISA section 404(c) plan exercises independent control over assets in his individual account in the manner described in paragraph (c), then no other person who is a fiduciary with respect to such plan shall be hable for any loss, or with respect to any breach of part 4 of Title I of the Act, that is the direct and necessary result of that participant’s or beneficiary’s exercise of control.

(ii) Paragraph (d)(2)(i) does not apply with respect to any instruction, which if implemented-

(A) Would not be in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of Title I of ERISA.

(D) Could result in a loss in excess of a participant’s or beneficiary’s account balance; or

(E) Would result in a direct or indirect:

(4) Acquisition or sale of any employer security except to the extent that:

(iii) Such securities are publicly traded on a national exchange or other generally recognized market;

(iv) Such securities are traded with sufficient frequency and in sufficient volume to assure that participant and *578 beneficiary directions to buy or sell the security may be acted on promptly and efficiently;

(v) Information provided to shareholders of such securities is provided to participants and beneficiaries with accounts holding such securities....

29 C.F.R. § 2550.404(c)-l(d).

Because § 404(c) in essence exempts a fiduciary from liability that he normally would have under 29 U.S.C. § 1109(a), the fiduciary seeking protection under § 404(c), and not the plaintiff, has the burden of demonstrating that it applies. In re Unisys, 74 F.3d at 446; Allison v. Bank One-Denver, 289 F.3d 1223, 1238 (10th Cir.2002)(as amended on denial of rehearing). The court must review evidence relating to whether a participant could remove his assets from one fund and place them in an acceptable alternative fund, whether the plan provided the participants with adequate information for an average participant to understand and evaluate his investments and the risks and financial consequences that might be associated with his taking control, information about the rights provided to participants and obligations imposed on fiduciaries by ERISA, the financial condition and performance of the investments, the alternative funds available, and developments which substantially affected that financial status. Unisys, 74 F.3d at 446-47.

If a plan does not qualify as a § 404(c), the fiduciaries retain liability for all investment decisions made, including decisions by the Plan participants. Plaintiffs contend that the Savings Plan did not qualify as a § 404(c) plan for all or most of the Class Period because it did not provide a broad range of diversified investment options, liberal opportunities to transfer assets among allocations, and sufficient information to make sound investment decisions, nor did the plan provide the requisite notice to participants that it intended to qualify as such a plan. The Court has found that they have raised material fact issues as to whether the Savings Plan did qualify as a § 404(c) plan that cannot be resolved on a 12(b)(6) motion.

If the plan does qualify as a § 404(c) plan, and if the participants or beneficiaries exercised independent control over the assets in their individual accounts, “then no other person who is a fiduciary with respect to such plan shall be liable for any loss ... that is the direct and necessary result of that participant’s or beneficiary’s exercise of control.” 29 C.F.R. § 2550.404c-1(4)(d)(2). Losses that do not “result from” the participant’s exercise of control are still charged against the plan fiduciary, which retains the duty to prudently select investment options under the plan and to oversee their performance on a continuing basis. See Advisory Opinion No. 98-04(A)(“... [T]he Department emphasized that the act of designating investment alternatives in an ERISA section 404(c) plan is a fiduciary function to which the limitation on liability provided by section 404(c) is not applicable”); Letter from the Pension and Welfare Benefits Administration, U.S. Dept. of Labor to Douglas O. Kant, 1997 WL 1824017, *2 (Nov. 26, 1997)(“The responsible plan fiduciaries are also subject to ERISA’s general fiduciary standards in initially choosing or continuing to designate investment alternatives offered by a 404(c) plan.”).

Even if the Savings Plan were to qualify as a § 404(c) plan, relating to the Savings Plan and the ESOP in the Department of Labor’s Final Regulation Regarding Participant Directed Individual Account Plans, Preamble, 57 Fed.Reg. 46,906, 924 n. 27 (1992), the agency emphasized,

[T]he act of designating investment alternatives ... is a fiduciary function ... [and][a]ll of the fiduciary provisions of ERISA remain applicable to both the *579 initial designation of investment alternatives and investment managers and the ongoing determination that such alternatives and managers remain suitable and prudent investment alternatives for the plan [emphasis added].

See also Buccino v. Continental Assurance Co., 578 F.Supp. 1518, 1521 (S.D.N.Y.1983)(“as Fund fiduciaries [Defendants] were under a continuing obligation to advise the Fund to divest itself of unlawful or imprudent investments”); Fink v. Nat’l Sav. & Trust Co., 772 F.2d 951, 955-56 (D.C.Cir.1985)(“[T]he requirement of prudence in investment decisions and the requirement that all acquisitions be solely in the interests of plan participants continue to apply. The investment decisions of a profit sharing plan’s fiduciary are subject to the closest scrutiny under the prudent person rule, in spite of the ‘strong policy and preference in favor of investment in employer stock.’ ”); Eaves v. Penn, 587 F.2d 453, 458-60 (10th Cir.1978)(holding that the trustee of an ESOP is subject to the duty of loyalty and the prudent man requirements in deciding whether to invest plan assets in employer’s securities).

i. Causation

Defendants contend that Plaintiffs have failed to plead facts showing that the alleged breaches of fiduciary duty caused the loss to the plans. There is division of opinion about who bears the burden of proving the fiduciary caused the alleged losses to a plan.

The Sixth and Second Circuits have placed the burden of demonstrating causation on the plaintiff. Kuper v. Iovenko, 66 F.3d 1447, 1459-60 (6th Cir.1995)(To satisfy the causation link between a breach of fiduciary duty and an alleged plan loss, “a plaintiff must demonstrate that an adequate investigation would have revealed to a reasonable fiduciary that the investment at issue was improvident.”); Silverman v. Mutual Benefit Life Ins. Co., 138 F.3d 98, 105-06 (2d Cir.)(placing the burden of proof of causation on the plaintiff), cert. denied, 525 U.S. 876, 119 S.Ct. 178, 142 L.Ed.2d 145 (1998).

The Fifth and Eighth Circuits have held that the plaintiff initially must prove a breach of fiduciary duty and a prima facie case of loss by the plan under § 1109(a), and then the burden shifts to the defendant fiduciary to prove that the loss was not caused by the breach of the fiduciary duty. 77 McDonald, 60 F.3d at 237; Martin v. Feilen, 965 F.2d 660, 671 (8th Cir.1992), cert. denied sub nom. Henss v. Martin, 506 U.S. 1054, 113 S.Ct. 979, 122 L.Ed.2d 133 (1993). 78 In accord, *580 Meyer v. Berkshire Life Ins. Co., 250 F.Supp.2d 544, 564, 571 (D.Md.2003); McCurdy v. Wedgewood Capital Management Co., No. CIV. A. 97-4304, 1999 WL 391494, *4 (E.D.Pa. May 28, 1999); Chao v. Moore, No. CIV. A. AW-99-1283, 2001 WL 743204, *7-8 (D.Md. June 15, 2001). This Court is bound by McDonald. Thus Plaintiffs need not plead causation. See Ehlmann v. Kaiser Foundation Health Plan, 20 F.Supp.2d 1008, 1011 (N.D.Tex.1998)(plaintiff not required to plead causation under McDonald), aff'd, 198 F.3d 552 (5th Cir.2000), cert. dismissed, 530 U.S. 1291, 121 S.Ct. 12, 147 L.Ed.2d 1036 (2000). Moreover, because at this point Plaintiffs have pleaded under Counts II and III both fiduciary breach and injury, i.e., that Defendants’ participation in the lockdowns and failure to diversify caused the plans, and indirectly the plaintiffs, to lose hundreds of millions of dollars, Plaintiffs have stated a claim and demonstrated standing to sue, even though they have not alleged that “but for the lockdown” or “but for the failure of the fiduciaries to diversify investments of the Plan,” they, themselves, would have timely diversified their investments or sold the Enron stock in their individual accounts.

2. Co-Fiduciary Liability

A person must be a fiduciary before he can be liable as a co-fiduciary. Sommers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan Enters., Inc. (“Sommers II”), 883 F.2d 345, 352 (5th Cir.1989)(Because a person is a fiduciary only to the extent that he exercises authority or control over that management of a plan or plan assets, in the absence of such authority and control a person cannot be liable as a co-fiduciary).

Under section 405(a) of ERISA, 29 U.S.C. § 1105(a),

In addition to any liability which he may have under any other provision of this part, a fiduciary with respect to a plan shall be liable for a breach of fiduciary responsibility with respect to the same plan in the following circumstances:

(1) if he participates knowingly in, or undertakes knowingly to conceal, an act or omission of such other fiduciary, knowing such act or omission is a breach;

(2) if, by his failure to comply with section 404(a)(1) [29 U.S.C. § 1104(a)(1) ] in the administration of his specific responsibilities, which give rise to his status as fiduciary, he has enabled such other fiduciary to commit a breach; or

(3) if he has knowledge of a breach by such other fiduciary, unless he makes reasonable efforts under the circumstances to remedy the breach. 79

A fiduciary that breaches § 1105(a) is “personally hable to make good to such plan any losses to the plan resulting from each such breach ...” under § 1109(a) of the statute.

Sections 405(a)(1) and (3) require a showing of actual knowledge of the other fiduciary’s breach; there is no vicarious liability under these provisions. Donovan *581 v. Cunningham, 716 F.2d 1455, 1475 (5th Cir.1988), cert. denied, 467 U.S. 1251, 104 S.Ct. 3533, 82 L.Ed.2d 839 (1984); Keach v. U.S. Trust Co., 240 F.Supp.2d 840, 844 (C.D.Ill.2002). But see Diduck v. Kaszycki & Sons Contractors, Inc., 974 F.2d 270, 283 (2d Cir.1992)(constructive knowledge sufficient). 80

The elements of a claim brought under § 405(a)(1), 29 U.S.C. § 1105(a)(1), are “(1) that a co-fiduciary breached a duty to the plan, (2) that the fiduciary knowingly participated in the breach or undertook to conceal it, and (3) damages resulting from the breach.” Silverman v. Mutual Ben. Life Ins. Co., 941 F.Supp. 1327, 1335 (E.D.N.Y.1996), aff'd, 138 F.3d 98 (2d Cir.1998), ce rt. denied, 525 U.S. 876, 119 S.Ct. 178, 142 L.Ed.2d 145 (1998). As noted, under Fifth Circuit law, the plaintiff does not have the burden of pleading or proving the third element, which falls instead on the defendant fiduciary. McDonald, 60 F.3d at 237.

Under § 405(a)(2), 29 U.S.C. § 1105(a)(2), providing the broadest type of co-fiduciary liability without any requirement of knowledge about what the co-fiduciary is doing, to impose liability a plaintiff must prove that the fiduciary “failed to comply with its duties under ERISA, and thereby enabled a co-fiduciary to commit a breach.” Silverman, 941 F.Supp. at 1336. In accord, Free v. Briody, 732 F.2d 1331, 1335 (7th Cir.1984); Brock v. Self, 632 F.Supp. 1509, 1524 (W.D.La.1986).

For a cause of action under § 405(a)(3), 29 U.S.C. § 1105(a)(3), the elements are that the fiduciary had knowledge of the co-fiduciary’s breach and that the losses “resulted from” the co-fiduciary defendant’s failure to take reasonable steps to remedy the breach. Id. at 1337. Under Department of Labor Interpretive Bulletin, 29 C.F.R. § 2509.75-5FR-10, a fiduciary must take all legal and reasonable steps to prevent or remedy a breach by a co-fiduciary, including taking legal action against the co-fiduciary or informing the Department or the plan sponsor.

3. Directed Trustee Liability

There is a factual dispute in Tittle as to whether Northern Trust was a “directed” or discretionary trustee. Plaintiffs argue that it was the latter. The complaint alleges that Northern Trust was the trustee of the Savings Plan and exercised discretionary authority and control over plan assets when it imposed the lockdown, in spite of the fact that it had the power to postpone the lockdown until the price of Enron stock stabilized to avoid injury to the participants, and that numerous red flags should have alerted Northern Trust to the dangers of proceeding with the scheduled lockdown. Furthermore, the complaint asserts, plan documents and the trust agreement 81 gave Northern Trust *582 discretionary authority and control over plan assets and plan administration where there was no direction by the Administrative Committee.

Alternatively, the complaint asserts that if Northern Trust was a directed trustee and if the Administrative Committee gave written instructions to Northern Trust regarding the lockdown, Northern Trust breached its fiduciary duties in following the lockdown instructions because the directions were contrary to ERISA and Northern Trust knew or should have known that the lockdown instructions violated ERISA.

Northern Trust contends that it was a “directed” trustee, as opposed to a “discretionary” trustee, under provisions in the plan documents and trust agreement that subjected it to direction by the Administrative Committee, that the Administrative Committee exercised total authority and discretion over the plan assets and management, and that Northern Trust thus had no responsibility or liability for the lockdown.

While case law addressing the duties of a directed trustee is minimal, it is also in conflict with respect to the extent, if any, of the duty and potential liability of a directed trustee. The issue necessitates consideration of the relationship of several different provisions under ERISA.

As a starting point, under § 408(a)(1), 29 U.S.C. § 1103(a)(1),

All assets of an employee benefit plan shall be held in trust by one or more trustees. Such trustee or trustees shall be either named in the trust instrument or in the plan instrument described in section 402(a) or appointed by a person who is a named fiduciary, and upon acceptance of being named or appointed, the trustee or trustees shall have exclusive authority and discretion to manage and control the assets of the plan, except to the extent that-

(1) the plan expressly provides that the trustee or trustees are subject to the direction of a named fiduciary who is not a trustee, in which case the trustee shall be subject to proper directions of such fiduciary which are made in accordance with the terms of the plan and which are not contrary to [ERISA].

In other words, in contrast to the general rule, pursuant to which trustees hold the assets of every employee benefit plan in trust and have exclusive authority and discretion to manage and control the assets of the plans, an exception 82 may arise when *583 the plan authorizes a named fiduciary (a fiduciary either named in the plan document or designated by an employer or an employee organization according to a procedure described in the plan), who is not a trustee, to direct the trustee, who in turn then becomes a “directed” trustee.

Under § 403(a)(1) of the statute, the directed trustee will escape liability for his actions performed pursuant to the named fiduciary’s direction if the named fiduciary’s directions are “proper” and “in accordance with the terms of the plan” and “not contrary to” ERISA. The underlying issue here can be rephrased as to what extent, if at all, is the directed trustee a fiduciary, as defined in § 3(21)(A), and thus subject to the standards, duties, and obligations of an ERISA fiduciary under § 404(a)(l)(the duty of loyalty, the prudent man rule, the duty of diversification of plan investments, and the duty of acting in accordance with the provisions of the statute)?

Difficulties in construing the scope of the directed trustee’s fiduciary obligations pursuant to the statute are compounded by (1) the lack of a statutory definition of “proper” with respect to the named fiduciary’s directions and (2) a lack of guidance about the nature and extent of a directed trustee’s duty to determine whether the fiduciary’s directions are “in accordance with the terms of the plan” and “not contrary to” ERISA under § 403(a)(1). For example, if the instruction on its face looks consistent with the plan and the statute, does a directed trustee have any duty to investigate further? What if the directed trustee knows or suspects that the directing fiduciary has breached his fiduciary duties?

Implicated by the directed fiduciary provision is § 409(a), which makes a fiduciary personally liable “to make good to such plan any losses to the plan resulting from such breach .... ” Thus if the directed trustee is a fiduciary, the plan may hold him personally liable for losses caused by any breach of his fiduciary duty. If he is not a fiduciary, a plan may not seek a remedy against him for any misconduct under § 409 and § 404 Moreover, § 502(a) does not provide an individual civil action for relief against a non-fiduciary, so plan participants may be without a remedy for a directed trustee’s allegedly wrongful conduct.

Furthermore a directed trustee’s potential fiduciary liability also implicates claims under § 405, 29 U.S.C. § 1105, a plan fiduciary’s liability for breach of duty by a co-fiduciary, discussed supra. Section 405(b)(1)(A) provides that where assets are held by two or more trustees, “each shall use reasonable care to prevent a co-trustee from committing a breach.” 29 U.S.C. § 1105(b)(1)(A). This provision incorporates the common law of trusts. Restatement (Second) of Trusts § 184 (1959); 2A Austin Wakeman Scott & William F. Fratcher, Scott on Trusts § 184 at p. 561 (4th ed.1987).

Section 405(b)(1) of ERISA, 29 U.S.C. § 1105(b)(1), begins, “except as otherwise provided in ... section 1103(a)(1) and (2)”; and § 405(b)(3)(B) states, “No trustee shall be liable under this subsection for following instructions referred to in section 1103(a)(1).” At the same time, § 405(b)(2) states, “Nothing in this subsection shall limit any liability that a fiduciary may have under subsection (a) or other provision of this part.” “[T]his part clearly refers to § 405(b), which includes the requirement that the “directing” named fiduciary’s instructions must be “proper” and in compliance with the terms of the plan and the statute. Section 405 has been criticized as “nearly impenetrable in its awkward structure and phrasing,” while subsection 405(b)(3)(B) in particular has been characterized as “oddly placed,” inexplicable by *584 the rule of statutory construction, and confusing because of phrases that appear to exempt the directed fiduciary from liability for following the instructions of a directing named fiduciary, yet a contrary provision that clearly does not.” Patricia Wick Hatamyar, See no Evil? The Role of the Directed Trustee under ERISA, 64 Tenn. L.Rev. 1, 19-21 (1996). 83 As noted by Ms. Hatamyar, “To say that a trustee is not liable for following [an instruction that is “proper” and “made in accordance with” the plan and ERISA,] is to beg the question of when an instruction is improper enough for the trustee to ignore: in other words, if § 405(b)(3)(“No trustee shall be liable under this subsection for following instructions referred to in section 403(a)(1)”) “refers generally to the directed trustee’s liability for following a named fiduciary’s direction, it is redundant.” Id. at 21.

In contrast, Ms. Hatamyar observes that in the other two statutory exceptions to a trustee’s exclusive authority, i.e., when authority is granted to an investment manager under § 405 or to a plan participant over his own individual account under § 404(c), the statute is quite explicit about the resulting limitations on the directed trustee’s liability. Id. at 17-18. With a properly appointed investment manager, under § 405(d)(1) the trustee has no liability for breaches of duty occurring under the investment manager’s management and control unless the trustee knowingly participates in or conceals a breach of duty by that investment manager as a co-fiduciary under § 405(a). See § 405(d)(1) of ERISA, 29 U.S.C. § 1105(d)(l)(“If an investment manager or managers have been appointed under section 1102(c)(3) of this title, then not withstanding subsections (a)(2) and (3) and subsection (b) of this section, no trustees shall be liable for the acts or omissions of such investment manager or managers, or be under an obligation to invest or otherwise manage any asset of the plan which is subject to the management of such investment manager.”). Similarly, when the plan participant is given control of his individual account, under § 404(c)(1) the participant does not become a “fiduciary” by exercising that control and thus the directed trustee cannot be hable as a co-fiduciary under § 405. Had Congress intended that the directed trustee be completely relieved of liability for following a named fiduciary’s instructions, it could just as easily have stated so. 64 Tenn. L.Rev. at 21 (“If a trustee were free from liability for following a named fiduciary’s directions, one would expect to see that stated unambiguously in section 405.”).

This Court agrees with Ms. Hatamyar that in light of the common law history, Congress did not intend to release the directed trustee from all liability where the directed trustee follows the directions of a named fiduciary, and that if it had, it would have expressly stated so. 64 Tenn. L.Rev. at 21. After attempting to follow the rules of statutory construction to give meaning to each provision, Ms. Hatamyar concluded that § 405(b)(3)(B) does not provide a safe harbor from liability for the directed trustee, but is a nullity. Id. at 20.

Construction of the statute does require first a determination whether the directed trustee is a fiduciary. If so, and if the directed trustee follows “proper” directions of the named fiduciary with respect to that part of the plan management or control granted to the named fiduciary, *585 and if those directions are “in accordance with the terms of the plan” and “not contrary to” ERISA under § 408(a)(1), the directed trustee is not liable for a co-fiduciary’s [the named fiduciary’s] breaches. Regardless, the same issue must initially be addressed under both § 403(a)(1) and § 405(b)(1) — the extent of a directed trustee’s duty to determine whether the instructions are “proper” and consistent with the terms of the plan and of ERISA.

Defendants rely on the fact that a single sentence in the legislative history of § 403(a)(1) states that the trustee is only required to determine whether the directed action facially complies with the terms of the plan and of ERISA, a fairly minimal duty:

If the plan provides that the trustees are subject to the direction of named fiduciaries, then the trustees are not to have the exclusive management and control over the plan assets, but generally are to follow the directions of the named fiduciary. Therefore, if the plan sponsor wants an investment committee to direct plan investments, he may provide for such an arrangement in the plan. In addition, since investment decisions are basic to plan operations, members of such an investment committee are to be named fiduciaries.... If the plan so provides, the trustee who is directed by an investment committee is to follow that committee’s directions unless it is clear on their face that the actions to be taken under those directions would be prohibited by the fiduciary responsibility rules of the bill or would be contrary to the terms of the plan or trust [emphasis added],

H.R. Conf. Rep. No. 93-1280 (1973), reprinted in 1974 U.S.C.C.A.N. 5038, 5079. Furthermore Defendants argue that the legislative history implies that if the directed trustee meets the facial compliance requirement, his responsibility is less than that of a fiduciary and that he may be free of any liability:

if the trustee properly follows the instructions of the named fiduciaries, the trustee generally is not to be liable for losses which arise out of following these instructions. (The named fiduciaries, however, would be subject to the usual fiduciary responsibilities rules and would be subject to liability on breach of these rules.)

Id. at 5082.

The American Bankers Association (“the Association”), the principal national trade association of the banking industry in the United States, whose members serve as trustees of numerous ERISA pension plans, has submitted an amicus curiae brief (# 464), arguing, based on the single sentence, quoted above, in the minimal legislative history available relating to § 403(a)(1), that the directed trustee’s duty is merely to examine the named fiduciary’s directions to determine whether it is “clear on their face” that following these directions would violate ERISA or the plan or trust document. According to the Association, the directed trustee is not required to examine the merits of the named fiduciary’s direction. 84 The Association maintains that the banking and trust industry has relied on this facial compliance standard since ERISA was enacted in 1974. The Association insists that the directed trustee is not subject to a fiduciary’s duty to act prudently and loyally nor required to exercise independent judgment nor subject to the Department of Labor’s *586 broader and more demanding standard that a directed trustee should not follow the named fiduciary’s directions if he “knows or should know” that the directions violate ERISA’s fiduciary duties of prudence. The Association further claims the Department of Labor’s standard is not supported by its cited authority. 85

For a number of reasons, including the rules of statutory construction, the common law roots of the directed trustee concept, the Department of Labor’s interpretation, as well as some of the case law, all of which are discussed in detail in the remainder of this section, this Court is not persuaded by the Association’s argument for a minimum standard that would shield its members from liability.

The first step in construing a statute is to decide whether the language in question has a plain and unambiguous meaning by examining the plain language, the specific context in which the language is used, and the broader context of the complete statute. Robinson v. Shell Oil Co., 519 U.S. 337, 340-41, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997). “Plain” language does not always mean that it is always “indisputable” or “pellucid.” Aviall Services, Inc. v. Cooper Industries, Inc., 312 F.3d 677, 679 (5th Cir.2002), petition for cert. filed, 02-1192, 71 USLW 3552 (Feb. 12, 2001). Thus, as the proper way to interpret a provision, one should examine the contested passage in connection with other sections and the law as a whole, as well as the statute’s purpose and policies, with the aim of reaching the most reasonable and harmonious result. Id. at 680-81 n. 3.

“Legislative history should be consulted gingerly, if at all, in aid of statutory construction.” Aviall Services, 312 F.3d at 684. Use of legislative history is only appropriate where the language is “opaque,” “translucent,” or ambiguous. Id. at 680 n. 3, citing Perrone v. General Motors Acceptance Corp., 232 F.3d 433, 440 (5th Cir.2000), cert. denied, 532 U.S. 971, 121 S.Ct. 1601, 149 L.Ed.2d 468 (2001). Even when reference to the legislative history is appropriate, there is disagreement about the reliability and persuasiveness of such evidence. See, e.g., Shannon v. U.S., 512 U.S. 573, 583, 114 S.Ct. 2419, 129 L.Ed.2d 459 (1994), citing County of Washington v. Gunther, 452 U.S. 161, 182, 101 S.Ct. 2242, 68 L.Ed.2d 751 (1981)(Rehnquist, J., dissenting)(“[I]t is well settled that the legislative history of a statute is a useful guide to the intent of Congress.”), and Wisconsin Public Intervenor v. Mortier, 501 U.S. 597, 617, 111 S.Ct. 2476, 115 L.Ed.2d 532 (1991)(Scalia, J., coneurring)(Legislative history is “unreliable ... as a genuine indicator of congressional intent.”).

In interpreting § 403(a)(1), as a threshold matter the Court notes that nowhere in that provision relating to the directed trustee, nor in the statute as a whole, is the phrase “clear on their face” or any paraphrase of that facial compliance standard to be found. The Supreme Court has stated, “We are not aware of any case in which we have given an authoritative weight to a single passage of legislative history that is in no way anchored in the text of the statute.” Shannon v. U.S., 512 U.S. 573, 583, 114 S.Ct. 2419, 129 L.Ed.2d 459 (1994). Moreover, in terms of the statute as a whole, the Fifth Circuit has long held that given its remedial purposes, ERISA is “to be construed liberally to safeguard the interests of fund participants and beneficiaries, and to preserve *587 the integrity of fund assets.” Landry v. Air Line Pilots Ass’n Intern., AFL-CIO, 901 F.2d 404, 417 and n. 38 (5th Cir.)(and cases cited therein), cert. denied, 498 U.S. 895, 111 S.Ct. 244, 112 L.Ed.2d 203 (1990). Inter alia, fiduciary status in particular under the statute is broadly construed in accordance with ERISA’s policies and objectives. John Hancock Mutual Life Ins. v. Harris Trust & Sav. Bank, 510 U.S. 86, 96, 114 S.Ct. 517, 126 L.Ed.2d 524 (1993)(“To help fulfill ERISA’s broadly protective purposes, Congress commodiously imposed fiduciary standards on persons whose actions affect the amount of benefits retirement plan participants will receive.”); see also Mertens, 508 U.S. at 262, 113 S.Ct. 2063 (ERISA “defines ‘fiduciary’ not in terms of formal trusteeship, but in functional terms of control and authority over the plan, ... thus expanding the universe of persons subject to fiduciary duties — and damages-under § 409(a).”).

With respect to the language of § 403(a)(1), the Court agrees that the phrase, “proper directions,” is ambiguous because there is no definition of “proper” other than an implied relationship to the remainder of the provision requiring, also in vague language, compliance with the plan and with the statute, similarly undefined; indeed the meaning of the terms and the scope of the trustee’s duty under the whole provision are uncertain. 86

The underlying issue in construing § 403(a)(1) is the same question discussed supra, whether the directed trustee is a fiduciary to any degree, and therefore subject to the fiduciary duties embodied in § 404(a) of the statute. Of significance in this determination, “the underlying purposes of ERISA” have been described by the Supreme Court as “enforcement of strict fiduciary standards of care in the administration of all aspects of pension plans and promotion of the best interests of participants and beneficiaries.” Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 158, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985)(Brennan, J., joined by Justices White, Marshall and Blackmun, concurring). Furthermore, “in enacting ERISA Congress made more exacting the requirements of the common law of trusts relating to employee trust funds.” Id. at 158 n. 17, 105 S.Ct. 3085, quoting Donovan v. Mazzola, 716 F.2d 1226, 1231 (9th Cir.1983), ce rt. denied, 464 U.S. 1040, 104 S.Ct. 704, 79 L.Ed.2d 169 (1984). ERISA’s expansive definition of fiduciary, its enhancement of the fiduciary’s duty incorporated from trust law, and the statute’s purpose and policy of heightened protection of plan assets and plan participants and beneficiaries, together, support the Court’s conclusion that § 403(a) should be read to maintain some, rather than virtually eliminate, fiduciary obligations of a directed trustee to question and investigate where he has some reason to know the directions he has been given may conflict with the plan and/or the statute.

As an example of ERISA’s emphasis on fiduciary protection of plan participants and beneficiaries, increased over that provided by common law beyond the statute’s expansion of the definition of “fiduciary,” “thus expanding the universe of persons subject to fiduciary duties — and damages — under § 409(a),” 87 section 410(a) of ERISA, 29 U.S.C. § 1110(a), seeks to bar a fiduciary’s evasion of its responsibilities: “Any provision in an agreement or instru *588 ment which purports to relieve a fiduciary from responsibility, obligation, or duty under this part shall be void as against public policy.” Unlike the single sentence in the legislative history for § 403(a), which states the “clear on their face” standard notably absent from the statutory provision, the legislative history of § 410 reflects the same purpose as the statutory provision: “[E]xculpatory provisions which reheve a fiduciary from liability shall be void as against public policy.” H.R. Rep. 1280, 93d Cong., 2d Sess., reprinted in 1974 U.S.C.C.A.N. 4639, 5038, 5101.

Moreover, the Association dismisses the origins of the directed trustee’s liability in the common law of trusts by quoting the Supreme Court’s statements, such as “trust law does not tell the entire story,” but “often will inform but will not necessarily determine the outcome of, an effort to interpret ERISA’s fiduciary duties,” or trust law may “offer only a starting point, after which courts must go on to ask whether, or to what extent, the language of the statute, its structure, or its purposes require departing from common-law trust requirements.” Varity Corp., 516 U.S. at 497, 116 S.Ct. 1065. Yet the Association fails to make such an analysis or to demonstrate that the statute was an intentional modification of the common law regarding a directed trustee, but instead basically ignores the question. Other than complaining about the burden that a “knew or should know” standard would impose on a directed trustee, the Association fails to identify reasons to carve out an exception here to the established concept that “rather than explicitly enumerating all of the powers and duties of trustees and other fiduciaries, Congress invoked the common law of trusts to define the general scope of their authority and responsibility.” Varity Corp., 516 U.S. at 496, 116 S.Ct. 1065; Central States, 472 U.S. at 570, 105 S.Ct. 2833 (same); Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 110, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989)(“ERISA’s legislative history confirms the Act’s fiduciary responsibility provisions ... ‘codiffy] and mak[e] applicable to [ERISA] fiduciaries certain principles developed in the evolution of the law of trusts.’ ”).

Moreover, the Association brushes off the Secretary’s reliance on Scott on Trusts § 185 at 562-68, without a close reading, even though it corresponds to the Restatement (Second) of Trusts § 185 and deals expressly with the common-law roots of the statute’s directed-trustee/direeting-named-fiduciary relationship, although the common law uses different terminology than ERISA to describe that relationship. Apparently concluding that § 185 of the Restatement (Second) of Trusts is irrelevant to ERISA, the Association emphasizes that rather than dealing with what the statute terms a “named fiduciary,” § 185 refers generally to a person holding a “power of control” over the trust and permits that person to be a “co-trustee, beneficiary, settlor or person otherwise unconnected with the trust” which would be subject to different rules for determining their level of responsibility, depending on which type of person is the holder of power. Comment a to Restatement (Second) of Trusts § 185(1959).

Section 185, entitled “Duty With Respect to Person Holding Power of Control,” provides,

If under the terms of the trust a person has power to control the action of the trustee in certain respects, the trustee is under a duty to act in accordance with the exercise of such power, unless the attempted exercise of the power violates the terms of the trust or is a violation of a fiduciary duty to which such person is subject in the exercise of the power.

Restatement (Second) of Trusts § 185 (1959). The Court acknowledges that the Restatement (Second) of Trusts § 185 is *589 far more inclusive than § 403(a)(1); it covers situations where persons, including fiduciaries and nonfiduciaries, are given power by the trust to direct the trustee, as well as situations where the holder of the power is acting for his own benefit or as a fiduciary for the benefit of a beneficiary.

Nevertheless Comment e to the Restatement (Second) § 185 specifically addresses the situation where a fiduciary is empowered by the trust document to direct a trustee and provides a guide to the directed trustee’s obligations under common law that also informs and is codified in § 403(a)(1), as well as reveals the seeds for the “knew or should know” standard now advocated by the Secretary of Labor. Comment e to § 185 also reflects that a directed trustee’s obligations derive from those at common law of co-trustees, who, if they have reason to suspect that a co-trustee was breaching his duty, must take reasonable steps to prevent a breach:

Duty of trustee where holder of power is subject to fiduciary obligations. If the power is for the benefit of someone other than the holder of the power, the holder of the power is subject to a fiduciary duty in the exercise of the power. In such a case the trustee is under a duty similar to his duty with respect to the action of a co-trustee. See § 184. If the trustee has reason to suspect that the holder of a power is attempting to exercise it in violation of a fiduciary duty to which the holder is subject in the exercise of the power, the trustee is under a duty not to comply and may be liable if he does comply. If the holder of the power insists upon compliance notwithstanding the objection of the trustee, it is the duty of the trustee to apply to the court for instructions.

Even though the person holding the power holds it as a fiduciary and in fact violates his duty as fiduciary in the exercise of the power, the trustee is not liable for acting in accordance with the exercise of the power if he has no notice that the holder of the power is violating his duty as fiduciary [emphasis added].... [emphasis added]

The Restatement (Second) of Trusts § 184 further stakes out a trustee’s duty with respect to a co-trustee, while § 224 88 sets out the rule for one trustee’s liability for a breach of trust by a co-trustee; these three section (§§ 185, 184 and 224), with their quoted comments, are the basis from which ERISA’s co-fiduciary liability under § 405 is derived. Section 184 states, “If there are several trustees, each trustee is under a duty to the beneficiary to participate in the administration of the trust and to use reasonable care to prevent a co-trustee from committing a breach of trust or to compel a co-trustee to redress a breach of trust.” Id. Comment a to § 184 states in relevant part, “if a trustee has reason to suspect that a co-trustee is committing or attempting to commit a breach of trust, he must take reasonable steps to prevent him from doing so [emphasis added].”

*590 Moreover the ERISA statute, itself, and the underlying common law of trusts also suggest a continuing responsibility on the part of the directed trustee. According to § 403(a) of ERISA, 29 U.S.C. § 1103(a), “[a]ll assets of an employee benefit plan shall be held in trust by one or more trustees.” Furthermore, the trustee “shall have exclusive authority and discretion to manage and control the assets of the plan, except to the extent that ... the plan expressly provides that the trustee or trustees are subject to the direction of a named fiduciary who is not a trustee [emphasis added].” Id. The employment of a trust structure necessarily invests a trustee with common-law fiduciary duties. Restatement (Second) of Trusts § 2, comment h (stating that “a trust involves three elements, namely, (1) a trustee, who holds the trust property and is subject to equitable duties to deal with it for the benefit of another; (2) a beneficiary, to whom the trustee owes equitable duties to deal with the trust property for his benefit; (3) trust property, which is held by the trustee for the beneficiary.”). At common law, a trust is defined as “a fiduciary relationship with respect to property, subjecting the person by whom the title to property is held to equitable duties to deal with the property for the benefit of another person .... ” Restatement (Second) of Trusts § 2 (1959). According to comment f to § 2, a trustee holds a legal interest in trust property, while the beneficiary has an equitable interest. Under § 3(3) of the Restatement (Second) of Trusts, a “trustee” is “[t]he person holding property in trust.” Thus if trust law is applied, as Congress indicated it should be where not inconsistent with ERISA’s purpose and language, as long as the trust remains in existence, the trustee retains a legal interest in, and thus some ultimate authority, over the plan’s assets, which would qualify a trustee to meet the definition of a “fiduciary” under § 3(21)(A)(i)(“exercises any authority or control respecting management or disposition of [plan] assets [emphasis added],” which, as noted in FirsTier, does not require the trustee to have discretion.)

Under the terminology employed in ERISA, when instructed by a named fiduciary, a “trustee” remains designated a “trustee,” though his role is qualified by the adjective “directed.” Moreover, under the statute, the named fiduciary (“who is not a trustee” according to the requirements of the statute) who directs the trustee does not then become a “directing trustee” nor does the named fiduciary replace the trustee. The statutory language appears to this Court to support a continuance of fiduciary responsibility, though modified, in the trustee, who retains a legal interest in the trust and some authority over the plan assets, the res in the trust. According to the statute, the named fiduciary must instruct the directed trustee to perform what actions the named fiduciary wants done, thus interposing the trustee (and any control he has) between the named fiduciary and the act. The trustee’s function as the holder of the legal interest in the property of the trust also precludes direct action on the trust’s res by the named fiduciary. Furthermore the express imposition by the statute of a duty, though its scope is uncertain, on the directed trustee to determine whether the instructions given to him by the directing named fiduciary were “proper,” “made in accordance with the plan,” and “not contrary to ERISA,” also implies that the trustee retains certain supervising and investigative duties and that the directed trustee is still bound by the terms of the plan documents and of ERISA and cannot escape its fiduciary or statutory obligations to the plan participants and beneficiaries. As has been noted by many, the statute fails to define “proper.” The directed trustee’s undefined duty to supervise and question would be determined at *591 minimum by what was prudent under the particular circumstances at the time and, as under the common law, be heightened where the directed trustee knew or should have known of the named fiduciary’s breach of its duties or of potential conflicts of an act or omission with ERISA or the plan, which threatens the interests of the plan participants and beneficiaries. Nevertheless the nature and scope of that higher standard remain unclear. This Court will accordingly apply a fact-specific approach to determining that duty here. In this context, in an ESOP there should be some duty on the part of a directed trustee to keep apprized of the company’s financial condition to the extent that trustee can determine whether its stock is an appropriate, i.e., prudent, investment.

Thus in light of § 40S(a)(l)’s vague language and Congress’ failure to exclude expressly the directed trustee’s heightened common law duty where he has notice, or knows or should know, of a breach by the directing named fiduciary, it appears to this Court that Congress deliberately chose not to hold a directed trustee jointly hable for a directing named fiduciary’s breach of duty under § 405(a)(1) and (8) of ERISA except where the directed trustee has notice (knows or should know) of a directing fiduciary’s breach of its fiduciary duties. Such a choice makes good business sense to keep the costs of administering such plans down and encouraging employers to establish them, but maintaining key protection for the plan participant or beneficiary where the directing trustee’s failure to protect is more egregious. See IIA Scott on Trusts § 185 at 574-75 (“[W]here the holder of the power [to direct the trustee] holds it as a fiduciary, the trustee is not justified in complying with his directions if the trustee knows or ought to know that the holder of the power is violating his duty to the beneficiaries as fiduciary in giving the instructions”; moreover the directed trustee “is ordinarily under a duty to make a reasonable inquiry and investigation in order to determine whether the [directing fiduciary] is violating his duty.”). Furthermore, under § 405(a)(2), where the directed trustee himself breaches his duty by “failing to comply with its duties under ERISA” (at minimum to insure that the directions comply with the plan and the statute) and “thereby enabled a co-fiduciary to commit a breach,” the directed trustee’s knowledge of that co-fiduciary’s resulting breach is not a necessary element for imposition of liability.

In contrast, the American Bankers Association’s proposed facial compliance standard, based on a single line in the legislative history that finds no reflection in the statute, would impose only a minimal duty on the trustee and place the plan participants and beneficiaries and the assets in their pension plans at much greater risk. The Association also argues that a knowledge standard is not needed under § 403(a)(1) because “a directed trustee is subject to co-fiduciary liability under § 405(a), imposing liability on a fiduciary that has knowledge of a breach by such other fiduciary, unless he makes reasonable efforts under the circumstances to remedy the breach.” The Court has indicated previously that the Fifth Circuit requires a more restrictive, actual knowledge standard for claims under § 405. Donovan v. Cunningham, 716 F.2d at 1475 (co-fiduciary must actually know that the other person is a fiduciary, that the other person participated in an act that constituted a breach of his fiduciary duties, and that the co-fiduciary knows that the act was a breach of fiduciary duty). Therefore § 405(a) alone, contrary to the Association’s arguments, would not adequately protect plan participants and beneficiaries.

Moreover, the Association’s argument that the banking and trust industry has relied on the “clear on its face” standard *592 since ERISA was enacted in 1974 is undermined by the judicial decisions that have ruled otherwise, as will be discussed. Plaintiffs furthermore cite a number of advisory opinion letters written by the Department of Labor since ERISA was enacted in response to requests from banks serving as directed trustees that reflect the Department’s long-standing assumptions that these banks are fiduciaries with a duty of inquiry. # 501 at 16. They also point to Ms. Hatamyar’s statement in See No Evil, 63 Tenn. L.Rev. at 31 & n. 203 (citing Committee on Fiduciary Responsibility (Employee Benefits Group), Directed Trusts under ERISA, 12 Real Prop. Prob. & Tr. J. 535, 546-48 (1977)): “Early industry commentators were quick to point out that section 403(a)(1) gave directed trustees no comfort in mechanically following a named fiduciary’s directions.” Ms. Hatamyar also discusses the Department of Labor’s advisory opinions. Id. at 32-335 & nn. 210-230.

These opinion letters issued by the Department of Labor have some weight with respect to defining the obligations of directed trustees. The Supreme Court has held that when an agency, authorized by statute to interpret and enforce that statute, construes the statute that it administers, a court must defer to that interpretation if Congress has not spoken directly on the matter and if the agency’s interpretation “is based on a permissible construction of the statute.” Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). In Chevron, U.S.A., the Supreme Court further held that a court must defer to a regulation issued after formal adjudication or notice-and-comment rulemaking pursuant to the Administrative Procedure Act by an agency, if the agency’s interpretation of an ambiguous statute contains a reasonable (but not necessarily the most reasonable) interpretation of an ambiguous statute. Id. at 842-44, 104 S.Ct. 2778. See also United States v. Mead Corp., 533 U.S. 218, 226-27, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001)(“We hold that administrative implementation of a particular statutory provision qualifies for Chevron deference when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law and that the agency interpretation claiming deference was promulgated in the exercise of that authority.”). Where an agency offers an interpretation that is not the result of formal procedures such as adjudication or notice and comment rule-making, however, as in opinion letters, policy statements, agency manuals, ami-cus curiae briefs, and enforcement guidelines, that interpretation lacks the force of law and does not warrant Chevron-style deference. Christensen v. Harris County, 529 U.S. 576, 586-87, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000)(and cases cited therein). Instead the agency’s interpretations are “entitled to respect,” “but only to the extent that those interpretations have the power to persuade.” Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944); Christensen, 529 U.S. at 587, 120 S.Ct. 1655. Indeed such interpretations merit some deference because of the “specialized experience and broader investigations and information,” as well as the importance of uniformity in the agency’s administrative and judicial understanding of what a federal law requires available to the agency. Skidmore, 323 U.S. at 139-40, 65 S.Ct. 161. In sum,

The weight [given to an agency’s] judgment in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.

Id. at 140, 65 S.Ct. 161. See also Samson v. Apollo Resources, Inc., 242 F.3d 629, *593 638 (5th Cir.)(“Opinion letters by the Department of Labor do not per se bind the court.... Such materials, however, do ‘constitute a body of experienced and informed judgment’ and the court will give these materials ‘substantial weight.’ [citations omitted]”), cert. denied, 534 U.S. 825, 122 S.Ct. 63, 151 L.Ed.2d 31 (2001).

The few advisory or opinion letters from representatives of the Department of Labor which, while not on point because they deal with the issue in different contexts than that involving Northern Trust, in dicta suggest that the Secretary and/or the Pension and Welfare Benefits Administration views a directed trustee as having some further duty under the § 403(a)(1) exception than merely determining that an instruction from the directing named fiduciary is facially in compliance with the terms of the plan and ERISA. While the letters merely state an opinion without indicating the underlying reasoning, and thus lack the force of law and do not carry great weight, they appear to reflect the determination of the agency with expertise in the application of the statute that the directed trustee has obligations requiring more than a superficial determination that the fiduciary’s instructions are in compliance with the plan and the statute.

For example in an advisory opinion letter from the Secretary of Labor’s Director of Regulations and Interpretations, Robert J. Doyle, to attorney John B. Brescher, Jr., Opinion No. 92-23A, 1992 WL 314117 (E.R.I.S.A.), *3 (Oct. 27, 1992), dealing with the applicability of section 406 (prohibited transaction provisions) to a bank acting as a directed trustee, the Director stated,

It should be pointed out, however, that under section 403(a)(1) of ERISA, a trustee that is subject to proper directions from the plan’s named fiduciary remains responsible for determining whether following a given direction would result in a violation of ERISA. The directed trustee also has responsibility to exercise discretion where the directed trustee has reason to believe that the named fiduciary’s directions are not made in accordance with the terms of the plan or are contrary to ERISA. Furthermore, as with other fiduciary duties, the trustee must ascertain whether existing or potential conflicts of interest may interfere with the proper exercise of this responsibility. Whether, in light of all the facts and circumstances, a trustee is subject to a conflict-of-interest or has reason to believe that a particular direction is contrary to ERISA are inherently factual questions as to which the Department generally will not opine.

The phrase, “reason to believe,” which was implied in the common law’s notice standard, informs the standard urged by the Secretary, i.e., “knows or should know.” 89

*594 The Department of Labor’s regulations, on the other hand, do warrant deference, Rather than quote the entire text of 29 C.F.R. § 2550.404c-l(b)(2), which places a long list of specific requirements that must be met before a plan participant or beneficiary can be deemed to “exercise control over assets in his account,” and thus “not be deemed a fiduciary by reason of his exercise of control” or expose the directed trustee to liabffity; the Court briefly gener_ *595 alizes the key category of restrictions: a broadly diversified range of investment options to reduce risk, sufficient information about the plan and about the investments for its participants and beneficiaries to make informed investment decisions, and a structure to allow participants to give directions regarding their securities investments with sufficient frequency “in light of the market volatility to which the investment alternative may reasonably be expected to be subject.” 29 C.F.R. 2550.404(c) — l(b)(i)(C).

The case law on the issue of a directed trustee’s obligations, although far from in agreement, also generally appears to place at least some burdens on the directed trustee beyond merely facial compliance with the terms of the plan and of ERISA suggested by the legislative history text. In the few published opinions available, courts have started from different assumptions and focused on different issues. Some, without considering the question, have assumed that a directed trustee, acting at the direction of a fiduciary authorized by the plan to exercise control over plan management or assets, is still a fiduciary, but is liable only where he knows of a breach of fiduciary obligations by the named fiduciaries under § 404, 90 while other courts analyze the issue of fiduciary duty based on the functional statutory definition, § 3(21)(A), 29 U.S.C. § 1002(21)(A), on the language of the plan and the trust agreement, and on the facts in the particular case. 91 In both kinds of cases, what the directed trustee knew or should have known plays a significant role in deciding what duties and liability would be imposed on the directed trustee.

The Eighth Circuit has issued several, somewhat inconsistent opinions that have been influential in the few subsequent cases addressing the issue of the directed trustee’s responsibility and liability. It has moved from a liberal to a very narrow construction of directed trustee liability.

In FirsTier Bank, N.A. v. Zeller, 16 F.3d 907, 911 (8th Cir.), cert. denied sub nom. Vercoe v. Firstier Bank, N.A., 513 U.S. 871, 115 S.Ct. 194, 130 L.Ed.2d 126 (1994), the Eighth Circuit focused on the language (especially the use of the word, “discretionary”) and the grammatical structure of § 3(21)(A)(i) of ERISA, 29 U.S.C. § 1002(21)(A)(i): “a person is a fiduciary ... to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of [plan] assets [emphasis added].” It distinguished the first half of the provision dealing with authority and control over management of the plan from the second portion concerning authority or control over the plan assets: “this [first] section imposes fiduciary duties only if one exercises discretionary authority or control over plan management, but imposes those *596 duties whenever one deals with plan assets. This distinction is not accidental — it reflects the high standard of care trust law imposes upon those who handle money or other assets on behalf of another.” Id. at 911, 115 S.Ct. 194. In accord IT Corp. v. Gen. American Life Ins. Co., 107 F.3d 1415, 1421 (9th Cir.1997), cert. denied, 522 U.S. 1068, 118 S.Ct. 738, 139 L.Ed.2d 675 (1998); Board of Trustees of Bricklayers and Allied Craftsmen Local 6 of New Jersey Welfare Fund v. Wettlin Assoc., Inc., 237 F.3d 270, 274-75 (3d Cir.2001).

In FirsTier, the trustee was authorized by a profit-sharing plan “to hold, manage, invest, and account for all Plan assets.” Id. In FirsTier, the named fiduciary, who was the plan sponsor, directed the trustee to make loans to plan participants from the plan assets. After the company went bankrupt, plan participants sued the directed trustee for breach of fiduciary duty. On appeal, the appellate court held that § 1103(a), dealing with directed trustees, “no doubt modifies, ... but does not eliminate, the trustee’s fiduciary duty when handling assets. When the direction comes from another fiduciary, ... the law of trusts does not excuse a compliant trustee from all fiduciary responsibility .... ” 16 F.3d at 911. The panel quoted IIA Scott on Trusts § 185 at p. 574 (4th ed.1987) for a rule that the Eighth Circuit determined was adopted by Congress in ERISA:

“[WJhere the holder of the power [to direct the trustee] holds it as a fiduciary, the trustee is not justified in complying with his directions if the trustee knows or ought to know that the holder of the power is violating his duties to the beneficiaries as fiduciary in giving the directions.”

16 F.3d at 911. From the same section of the treatise, the panel found support for imposing a duty to inquire even where the directed trustee does not know that the directing fiduciary is breaching his fiduciary duties:

The trustee is not necessarily justified in complying with the directions of the holder of the power merely because he does not actually know that the latter is violating his duty as fiduciary .... [The trustee] is ordinarily under a duty to make a reasonable inquiry and investigation in order to determine whether the holder of the power is violating his duty.

16 F.3d at 912, citing id. at 575. The panel concluded that the directed trustee must make a reasonable inquiry and investigation to determine if the named fiduciary’s order was “proper” and was “made in accordance with the terms of the plan and ... not contrary to [ERISA].” Id. at 912. In sum the Eighth Circuit held, “[A]n ERISA trustee who deals with plan assets in accordance with proper directions of another fiduciary is not relieved of its fiduciary duties to conform to the prudent man standard of care, see 29 U.S.C. § 1104(a); to attempt to remedy known breaches of duty by other fiduciaries, see 29 U.S.C. § 1105(a); and to avoid prohibited transactions, see 29 U.S.C. § 1106.” Id. at 911. 92

Nevertheless, in Maniace v. Commerce Bank of Kansas City, N.A., 40 F.3d 264 (8th Cir.1994), cert. denied, 514 U.S. 1111, 115 S.Ct. 1964, 131 L.Ed.2d 854 (1995), in dealing with a directed trustee of an ESOP, the appellate court reached a different result and attempted to distinguish the situation from that in Firstier.

*597 This Court briefly summarizes the facts in Maniace. Over a ten-year period, Juvenile Shoe Company’s (“JSC’s”) sales, profits and net worth diminished and the business fell apart, ultimately ending in bankruptcy, with the ESOP’s JSC stock becoming worthless. During the company’s gradual demise, Commerce Bank annually reviewed JSC’s financial statements, but did not become involved in its business difficulties until JSC suffered a large loss in 1988. Commerce Bank then met with JSC officials and voiced its concerns. When the problems were not resolved, Commerce resigned as trustee. Shortly thereafter, JSC filed for bankruptcy. Plan participants then sued Commerce for breach of fiduciary obligations to prudently manage and protect plan assets, on the grounds that Commerce had held onto substantial amounts of JSC stock despite the fact that Commerce knew of the company’s declining value. They also alleged that Commerce knew of, but failed to remedy, breaches of fiduciary duties by the Administrative Committee since Commerce did not involve itself in trying to remedy the company financial difficulties and management disputes.

In Maniace the named fiduciary, i.e., the Administrative Committee, was the plan administrator of the ESOP, which, by its nature, may invest only in the employer’s (JSC’s) stock. Commerce Bank was designated as its trustee in the trust agreement and granted general responsibilities, powers and authority, which allowed it “to invest in savings accounts, certificates of deposit, JSC stock, real estate, securities of companies other than JSC, bonds or mortgages.” 40 F.3d at 265. Nevertheless, according to paragraph 5 of the Trust, which became critical to the decision, “The Trustee’s duties and responsibilities with respect to the purchase sale, retention, distribution or other action with respect to Company stock ... shall be limited to effecting the direction of the [Administrative] Committee, discretionary, fiduciary responsibility with respect to such matters being hereby allocated to the Committee. ” Id. at 266. In contrast, the Maniace panel noted, in Firstier the trustee was given the authority to “hold, invest, and account for all plan assets.” Id. at 268. 93 The Maniace panel ignored Firstier’s distinction between the first half of 29 U.S.C. § 1002(21)(A) concerning a fiduciary’s discretionary authority and control over management of the plan and the second portion concerning a fiduciary’s authority or control over the assets, which did not require a grant of discretionary authority for the imposition of fiduciary duties on the trustee. 16 F.3d at 911. The Maniace panel focused on the language of the plan and concluded that the directed trustee Commerce “had no discretion nor control with respect to JSC stock, the central asset in the ESOP at issue” and thus “did not fit within the ERISA definition of a fiduciary,” but was governed wholly by § 1103(a). 40 F.3d at 267-68. Furthermore, presumably because the plan at issue in Maniace was an ESOP, the Maniace panel stated that the directed trustee “was not required to weigh the merits of an investment in [the company’s] stock against all other investment options every time it was directed to purchase said stock.” 40 F.3d at 268. The panel further found that based on the summary judgment record, the plan participants had failed to establish that Commerce’s conduct at the Committee’s direction was not in accordance with the terms of the plan or was contrary to provisions of ERISA. Id. The panel did recognize that, depending *598 upon the grant of control under the plan, a directed trustee may have some duty beyond merely following directions, but a substantially diminished one, that might subject it to the modified prudent man standard of care imposed on the directed trustee in FirsTier. Nevertheless, the Maniaee panel distinguished the situation before it from that in Firstier on the grounds that in Firstier the trustee was invested with general control to hold manage, invest and account for all plan assets; in contrast, in Maniaee Commerce was given a more limited grant of control with no discretion with respect to JSC stock. Id. The Maniaee panel concluded that “imposing any ‘residual’ duties on Commerce would, in effect, abrogate the distinction between trustees and directed trustees clearly intended by ERISA.” Id.

With respect to the JSC plan participants’ second claim for co-fiduciary liability on the grounds that Commerce had breached its duty when it knew of but failed to remedy breaches of fiduciary duty by the Administrative Committee, the panel determined that it also involved action or inaction with respect to the JSC stock, for which Commerce had no fiduciary responsibility. The panel cited as the standard,

Upon delegation of fiduciary duties, the fiduciary is not thereafter liable for the acts or omissions of the person carrying out fiduciary responsibility, except to the extent it participates knowingly in the breach, or fails to act reasonably in discharging it[s] own responsibilities and thereby enables the other fiduciary to commit the breach, or it has knowledge of a breach by such other fiduciary and makes no reasonable efforts under the circumstances to remedy the breach.

Id. at 268, quoting Presley v. Blue Cross-Blue Shield of Alabama, 744 F.Supp. 1051, 1058 (N.D.Ala.1990) (citing 29 U.S.C. § 1105(a),(c)). The panel found that Plaintiffs/Appellants had not shown that Commerce participated in any breaches of fiduciary duty with the Committee nor that it knew of any breaches and failed to remedy them. Id.

In Herman v. NationsBank Trust Co. (Georgia), 126 F.3d 1354, 1361, 1371 (11th Cir.1997), cert. denied, 525 U.S. 816, 119 S.Ct. 54, 142 L.Ed.2d 42 (1998), the Eighth Circuit noted the divergent holdings of Firstier and Maniaee and made no attempt to reconcile or explain them; nevertheless the Herman panel followed Mani-ace, which it construed as holding that “insofar as a trustee acts at the direction of a named fiduciary in accordance with the terms of the plan and ERISA’s requirements, he is not subject to the fiduciary requirement in § 1104(a) to act prudently,” although the panel did require the directed trustee “to make sure the directing fiduciary’s instructions “were proper, in accordance with the terms of the plan, and not contrary to ERISA.’ ” Id. at 1361, 1371. The panel in Trust, using a relative, as opposed to an absolute, adjective, opined that when a plan falls within one of the three exceptions to exclusive trustee authority under § 1103(a) (provides an investment manager with the authority to control plan assets, gives plan participants control over their individual accounts, or makes the trustee subject to the direction of a named fiduciary that is not a trustee), “the responsibilities of the trustee are correspondingly lessened [emphasis added]”; yet in regard to each exception the panel concluded in absolute language that the trustee was “not liable” for the losses caused by the controlling person. Id. at 1361. See also Grindstaff v. Green, 133 F.3d 416, 426 (6th Cir.1998) (“First American is a directed trustee and is not a fiduciary to the extent it does not control the ‘management or disposition’ of the ESOP stock it holds in trust.... For these reasons we find that the District Court *599 correctly determined that Plaintiffs’ claim that the Bank breached a fiduciary duty to investigate was without merit.”). But see FirsTier, 16 F.3d at 911 (“[A]n ERISA trustee who deals with plan assets in accordance with proper directions of another fiduciary is not relieved of its fiduciary duties to conform to the prudent man standard of care, see 29 U.S.C. § 1104(a), to attempt to remedy known breaches of duty by other fiduciaries, see 29 U.S.C. § 1105(a) 94 , and to avoid prohibited transactions, see 29 U.S.C. § 1106.”); Koch v. Dwyer, No. 98 CIV. 5519(RPP), 1999 WL 528181 (S.D.N.Y. July 22, 1999), clarified on other grounds, 2000 WL 174945 (S.D.N.Y Feb. 15, 2000) (“If [the directed trustee] were aware that the direction to invest in JWP common stock was imprudent or that the fiduciaries’ direction to make that investment was based on an inadequate investigation, then [the directed trustee] would not be immune from liability because it would have knowingly carried out a direction that was contrary to ERISA. What [the directed trustee] knew about the prudence of the investment in question, about the bases on which the fiduciaries directed [the trustee] to make that investment, and about the alleged fraud and conflicts of interest on the part of [JWP’s officers] and others are factual questions inappropriate for resolution on a motion to dismiss.”), clarified on other grounds on denial of reconsideration. No. 00-20030RMW, 2000 WL 31431588 (N.D.Cal. Sept. 30, 2002).

At least where the facts alleged (and ultimately the evidence) provide reason for the directed trustee to have known or should have known of a breach of fiduciary duty, this Court finds that those cases which construe § 403(a)(1) to require something more than a duty to check superficial compliance, which in actuality would serve no purpose, effectuate ERISA’s underlying policies and purposes far better.

For instance, in Koch, 1999 WL 528181, relied upon by the Secretary of Labor, participants in a defined contribution 401 (k) plan, funded by a combination of employee contributions and employer matching contributions and earnings thereon, along with participants in an ESOP, sued the plans’ fiduciaries for breach of fiduciary duties and co-fiduciary duties on the following grounds: that from 1991 until the company went into bankruptcy in December 1993 it was imprudent to retain the company’s stock in the plan because the company was in a precarious financial situation; that the fiduciaries allegedly knew or should have known they were using inflated values for the employer stock because the company was on the verge of bankruptcy; that the stock was overvalued that they continued to invest in the stock for the plans and failed to sell it; that they failed to obtain an independent determination whether the plans should continue to hold the employer’s securities; and that the fiduciaries acted to conceal their breaches of their fiduciary duty by misstating and inflating the value of the stock and the contributions made on various forms. The directed trustee, AET, made the same argument as the Association does in Tittle, i.e., that it was required to follow the fiduciaries’ directions to invest in the employer company’s common *600 stock “unless ‘it is clear on their face’ that those directions constitute a breach of fiduciary duty.” The district court rejected the argument. It opined, “if AET were aware that the direction to invest in JWP common stock was imprudent or that the fiduciaries’ direction to make the investment was based on an inadequate investigation, then AET would not be immune from liability because it would have knowingly carried out a direction that was contrary to ERISA.” 1999 WL 528181 at *10.

The Association dismisses Koch’s rejection of the Association’s “clear on their face” standard by claiming that the district court failed to explain or analyze why, but simply stated that this standard was not used in the statute nor in case law that the court merely cited in passing, but did not discuss, and most of which dealt with discretionary trustees. This Court disagrees, has indicated that the “knows or should know” standard is rooted in the common law of trusts, and reemphasizes that the absence of that “clear on their face” standard in the statute is significant. Furthermore, in the alleged directed trustee situation, the Koch court found appropriate a fact-specific inquiry to determine what the directed trustee knew to determine whether he had any duty to inquire further: “What AET knew about the prudence of the investment in question, about the bases on which the fiduciaries directed AET to make that investment, and about the alleged fraud and conflicts of interest on the part of the ‘individual fiduciaries’ are factual questions inappropriate for resolution on a motion to dismiss.” Id. at *10. Moreover, the Koch court determined that the participants had alleged a continuing decline in the value of the company’s stock over the three years and its documentation in Deloitte & Touche’s accounting report in October 1992, which resulted in a 45% drop in the price of that stock, reflected that the directed trustee had knowledge that the directing fiduciaries breached their duty of prudence by not ordering the sale of the stock before it became worthless, and that their investment instructions to retain the stock were not “proper,” but in fact in violation of ERISA.

In In re McKesson HBOC, Inc. ERISA Litigation, No. C00-2003RMW, 2002 WL 31431588, *11 (N.D.Cal. Sept. 30, 2002), relied upon by Defendants, the district court compared the allegations before it with those in Koch, 1999 WL 528181. The McKesson court found no facts alleged in the complaint before it to demonstrate knowledge by the directed trustee of an ESOP that the directing fiduciary’s instructions violated ERISA and dismissed the complaint with leave to amend. The judge did note, however, “If plaintiffs can demonstrate that [directed trustee] Chase knew that the investment directions it received violated ERISA, then Chase is not necessarily relieved of ERISA liability merely because it followed those improper directions.” Id. at *12 n. 11.

In the only case to come before the Fifth Circuit, which made only a cursory examination of the statute, the Secretary of Labor sued a group of men on the board of directors and administrative committee (and thus fiduciaries) of Metropolitan Contract Services, Inc. for purchasing company stock from Defendant Cunningham, the company’s CEO as well as a member of the administrative committee and board of directors, for more than the stock was worth. Donovan v. Cunningham, 541 F.Supp. 276 (S.D.Tex.1982), aff'd in part, vacated in part, reversed in part, 716 F.2d 1455 (5th Cir.1983), cert. denied, 467 U.S. 1251, 104 S.Ct. 3533, 82 L.Ed.2d 839 (1984). These fiduciary Defendants then filed a third-party complaint against the trustee, Allied Bank of Texas, for co-fiduciary liability, indemnity and contribution. The district court held that the committee members did not breach their fiduciary *601 duties. Nevertheless, the district court seemed to recognize that a directed trustee had a varying legal duty, not clearly defined by the appellate court but less than that of a “primary” fiduciary, and suggested that a directed trustee’s obligations would depend on the specific facts of the case and his actual exercise of control or authority:

The statutory construction of ERISA makes clear that the responsibility of Allied as directed trustee is not equal to that of primary fiduciaries. Section 403(a)(1) of ERISA, 29 U.S.C. § 1103(a)[,] provides that a trustee such as Allied is to follow the “proper directions” of a named fiduciary which directions are made in accordance with the terms of the plan and which are not contrary to ERISA. This court, while acknowledging differentiation in standards of care implied by section 1103, carried Allied’s motion for summary judgment through the trial because the reach of ERISA to entities performing services for the ESOP is quite long. Notwithstanding the limited role prescribed by section 1103, the trustee[’]s actual exercise of authority or control could raise the fiduciary responsibility required of such trustee. Section 3(21)(A) of ERISA, 29 U.S.C. § 1002(21)(A). However it became apparent upon hearing the evidence at trial and upon a review of the depositions of the various principals, that Allied at all times remained within the limited role of directed trustee.

541 F.Supp. at 290. Thus despite potential liability, in view of the evidence, the district court found that the claim against Allied lacked merit and ordered Cunningham to pay Allied’s litigation expenses because he was the only fiduciary financially able to do so. Id. On appeal the Fifth Circuit reversed the ruling as to the fiduciary committee members, found them liable, and concluded that the independent appraisal of the stock’s value on which they relied was not adequate to satisfy their duty to prudently manage and protect plan assets, but affirmed the district court’s determination as to Allied. 716 F.2d at 1475, 1476.

After extensive research, this Court concludes for the reasons discussed supra that even where the named fiduciary appears to have been granted full control, authority and/or discretion over that portion of activity of plan management and/or plan assets at issue in a suit and the plan trustee is directed to perform certain actions within that area, the directed trustee still retains a degree of discretion, authority, and responsibility that may expose him to liability, as reflected in the structure and language of provisions of ERISA. At least some fiduciary status and duties of a directed trustee are preserved, even though the scope of its “exclusive authority and discretion to manage and control the assets of the plan” has been substantially constricted by the directing named fiduciary’s correspondingly broadened role, and breach of those duties may result in liability.

In any ERISA retirement plan, where the plaintiffs, as in Tittle, allege with factual support that the directed trustee knew or should have known from a number of significant waving red flags and/or regular reviews of the company’s financial statements that the employer company was in financial danger and its stock greatly diminished in value, yet the named fiduciary, to which the plan allocated all control over investments by the plan, directed the trustee to continue purchasing the employer’s stock, there is factual question whether the evidence is sufficient to give rise to a fiduciary duty by the directed trustee to investigate the advisability of purchasing the company stock to insure that the ac *602 tion is in compliance with ERISA as well as the plan.

Finally, even if the Court construed § 403(a) to require only that the trustee find that the directions he received from the named fiduciary are “proper” and facially in compliance with the terms of the plan and of ERISA, it finds that the Tittle Plaintiffs still state a claim: “Plaintiffs submit that any order to proceed with lockdowns on its face violated the duties of prudence and loyalty mandated by ERISA” because the alleged exigent circumstances, laid out in the complaint, made its timing highly suspect and clearly injurious to plan participants and beneficiaries. # 501 at 15 n. 9.

4. Standing and Remedies under ERISA

Section 502(a), 29 U.S.C. § 1132(a), sets out the types of civil enforcement actions recognized under ERISA. The Supreme Court has pronounced, “The six: carefully integrated civil enforcement provisions found in § 502 of the statute as finally enacted, ... provide strong evidence that Congress did not intend to authorize other remedies ...” Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 146, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985). See also Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987)(“The deliberate care with which ERISA’s civil enforcement remedies were drafted and the balancing of policies embodied in its choice of remedies argue strongly for the conclusion that ERISA’s civil enforcement remedies were intended to be exclusive.”). Indeed, in addition to its preemption of state-law causes of action, to be discussed infra, “ERISA’s interlocking, interrelated and interdependent scheme, which is in turn part of a ‘comprehensive and reticulated statute,’ ” undermines any assertion that Congress inadvertently omitted other remedies. Russell, 473 U.S. at 146, 105 S.Ct. 3085. Thus if a plaintiff cannot sue under one of the provisions for relief under § 502(a), he has no remedy under ERISA. Bullock v. Equitable Life Ass. Soc. Of U.S., 259 F.3d 395, 400-01 (5th Cir.2001)(“Because section 502(a) provides the exclusive enforcement mechanism for section 510 rights, it preempts any state cause of action seeking such relief, no matter how artfully pled.... ‘The policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA.’ ”)(quoting Pilot Life, 481 U.S. at 54, 107 S.Ct. 1549).

Among the types of civil actions a beneficiary may bring and the kind of relief available under § 502(a), three are relevant here.

First, § 502(a)(1)(B) provides a cause of action “to recover benefits due ... under terms of [a] plan, to enforce .. .rights under the terms of the plan, or to clarify ... rights to future benefits due ... under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B).

Second, § 502(a)(2), 29 U.S.C. § 1132(a)(2), authorizes a plan participant or beneficiary to bring a suit for breach of fiduciary duty to obtain “appropriate relief’ under § 409, 29 U.S.C. § 1109(a). Section 409(a) of ERISA, 29 U.S.C. § 1109(a), which makes a fiduciary personally liable to the plan for a breach of fiduciary duty, provides,

Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchap-ter shall be personally liable to make good to such plan any losses to the plan resulting from such breach, and to restore to such plan any profits of such *603 fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary.

Thus § 409(a) provides for monetary and equitable relief for the plan, but no recovery by an individual participant or beneficiary. The Supreme Court has held that § 502(a)(2) authorizes relief only for the benefit of a plan, and relief may not flow directly to individual plan participants; individual plan participants may therefore sue under § 502(a)(2), 29 U.S.C. § 1132(a)(3), and 29 U.S.C. § 1109(a), only on behalf of the plan as a whole. Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 140-42 n. 8-9, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985)(plan fiduciary may not be held personally liable to individual plan participant or beneficiary for extracontrac-tual, compensatory and/or punitive damages under § 502(a)), construing 29 U.S.C. § 1132(a)(2). See also In re Occidental Petroleum Corp., 217 F.3d 293, 297 n. 14 (5th Cir.2000); Matassarin v. Lynch, 174 F.3d 549, 565-66 (5th Cir.1999), cert. denied, 528 U.S. 1116, 120 S.Ct. 934, 145 L.Ed.2d 813 (2000); Anweiler v. Am. Elec. Power Serv. Corp., 3 F.3d at 992-93 (and cases cited therein).

Third, § 502(a)(3) allows a plan participant to bring a suit “to enjoin any act or practice which violates any provision of [ERISA] or the terms of the plan, or ... to obtain other such appropriate equitable relief ... to redress such violations or ... to enforce any provisions of [ERISA] or the terms of the plan.” Sections 502(a)(3), 29 U.S.C. § 1132(a)(3). It is now established that plan participants individually, as well as on behalf of the plan as a whole, may sue a fiduciary for a breach of fiduciary duty to recover “appropriate equitable relief’ under § 502(a)(3) of ERISA, 29 U.S.C. § 1132(a). Varity Corp., 516 U.S. at 496, 116 S.Ct. 1065 (concluding that § 1132(a)(3), unlike § 1132(a)(2), does not require loss to the plan as a whole); Matassarin, 174 F.3d at 566.

The Tittle plaintiffs seek a judgment on behalf of the plans ordering that “each of the Enron ERISA Defendants, the Compensation Committee, Lay, Skilling [since dismissed], and Northern Trust, are liable to the Savings Plan, the ESOP, and the Cash Balance Plan for violating the duties and responsibilities and obligations imposed [sic] them as fiduciaries and co-fiduciaries by ERISA [under § 502(a)(2) ] with respect [sic ], and that [nonfiduciary] Andersen is liable in equity [under § 502(a)(3) ] 95 for its knowing participation in the afore-mentioned violations of the ERISA fiduciaries [emphasis added].” Complaint, # 145 at page 295.

The Tittle Plaintiffs have also asked the Court to “enjoin the Enron ERISA Defendants and the Cash Balance Plan as the successor to the Enron Corp. Retirement Plan, from computing the value of each component of the ESOP offset according to the market value of the Enron shares on each January 1st of the three-year period 1998-2000, to order those defendants to redress all damages flowing from prior Cash Balance payments made pursuant to the offset arrangement,” and to “enjoin the Enron Defendants and the Compensation Committee from further violating the duties, responsibilities, and obligations imposed upon them as fiduciaries by ERISA and the Plan documents with respect to the Savings Plan, the ESOP and the Cash *604 Balance Plan.” # 145 at 295. Thus they seek “other appropriate equitable relief’ under § 503(a)(8).

In Varity Corp., 516 U.S. at 512, 116 S.Ct. 1065, the Supreme Court stated that § 502(a)(3) acts as a “ ‘catchall’ remedial section” by providing “a safety net, offering appropriate equitable relief for injuries caused by violations that § 502 does not elsewhere remedy.” The high court has since qualified and clarified that remark. The view of the nature of the equitable relief available under the provision has been substantially constricted. Moreover, relief under § 502(a)(3) must be “appropriate” as well as “equitable.” A plaintiff cannot sue for a breach of fiduciary duty for denial of benefits under § 502(a)(3) if he has a remedy expressly provided for his cause of action under § 502(a)(1)(B). See, e.g., Musmeci v. Schwegmann Giant Super Markets, Inc., 332 F.3d 339, 349 n. 5 (5th Cir.2003), citing Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002); Tolson v. Avondale Indus., Inc., 141 F.3d 604, 610 (5th Cir.1998)(concluding that claim for equitable relief for breach of fiduciary duty was precluded because plaintiff had an adequate claim for benefits due under the plan under § 1132(a)(1)); Katz v. Comprehensive Plan of Group Ins., 197 F.3d 1084, 1088-89 (11th Cir.1999); Wilkins v. Baptist Healthcare System, Inc., 150 F.3d 609, 615 (6th Cir.1998).

In Mertens, the Supreme Court rejected the argument that relief available under § 502(a)(3) would include all relief that a court of equity was empowered to grant, which would encompass legal remedies that would “render the modifier [‘equitable’] superfluous.” Id., 534 U.S. at 257-58, 122 S.Ct. 726. The Supreme Court observed in dicta that remedies like injunction, mandamus, and restitution were typically available in equity, but that compensatory damages were not. Id. at 256, 122 S.Ct. 726. Up until recently, courts, including the Supreme Court, flexibly viewed restitution generally as an equitable remedy and allowed it to encompass all kinds of monetary recovery as long at the remedy was not termed “money damages.” See, e.g., Bowen v. Massachusetts, 487 U.S. 879, 108 S.Ct. 2722, 101 L.Ed.2d 749 (1988) 96 ; Griggs v. E.I. Dupont de *605 Nemours & Co., 237 F.3d 371, 384 (4th Cir.2001)(comparing equitable remedies of reinstatement and back pay under Title VII with ERISA); Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574, 592 (7th Cir.2000)(When restitution is sought as a remedy for a breach of fiduciary duty, it is properly viewed as an equitable remedy because the fiduciary concept is equitable).

In Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002)(5-4 opinion), under § 502(a)(3) a medical insurance company sought specific performance of a reimbursement provision in an ERISA health insurance plan to compel a plan beneficiary to pay the proceeds the beneficiary recovered from a third-party tortfeasor in the settlement of a personal injury suit, as restitution for benefit payments previously made by the plan. The Supreme Court held that § 502(a)(3) did not authorize such relief, which in actuality was a legal remedy imposing personal liability on the beneficiary and his wife for a contractual obligation to pay past due money, relief not typically available in equity court.

Justice Scalia, this time writing for the majority of the high court (Justices Scalia, Rehnquist, O’Connor, Kennedy, and Thomas joining), construed § 502(a)(3)’s remedy of “other appropriate equitable relief’ to redress violations or enforce provisions of ERISA and the plan. He examined remedies that, depending upon the circumstances, might be characterized as legal or equitable, such as restitution, and recognized what he conceded was, for the Supreme Court, a new “fine distinction between restitution at law and restitution in equity.” Id. at 214-15, 122 S.Ct. 708. The majority’s decision limited equitable restitution to remedies historically available in the courts of equity when they were separate from courts of law, substantially narrowing the availability of monetary relief under § 502(a)(3). Furthermore Justice Scalia reiterated the holding in Mertens that “the term ‘equitable relief in § 502(a)(3) must refer to those categories of relief that were typically available in equity. ” Great-West, 534 U.S. at 219, 122 S.Ct. 708, quoting Mertens, 508 U.S. at 256, 113 S.Ct. 2063. He observed that where a plaintiff seeks to impose personal liability on a defendant for a contractual obligation, the relief sought is not that typically available in equity, but in an ac *606 tion at law, because money damages “are the classic form of legal relief.” Id. at 205, 210, 122 S.Ct. 708, quoting Mertens, 508 U.S. at 255, 113 S.Ct. 2063. Expanding beyond contracts, he emphasized for the majority of the divided high court, “Almost invariably suits seeking (whether by judgment, injunction, or declaration) to compel the defendant to pay a sum of money to the plaintiff are suits for ‘money damages,’ as that phrase has traditionally been applied, since they seek no more than compensation for loss resulting from the defendant’s breach of legal duty.” Id.,citing Scalia’s dissent in Bowen, 487 U.S. at 918-19, 108 S.Ct. 2722. 97 Moreover, not all relief characterized as restitution or injunction was available in equity. Id. at 209-10, 122 S.Ct. 708, quoting Mertens, 508 U.S. at 258 n. 8, 113 S.Ct. 2063 (“ ‘[e]q-uitable relief must mean something less than all relief ”). According to the majority, an action for restitution in equity, by means of an equitable lien or a security interest or a constructive trust, is appropriate in equity only where the plaintiff in good conscience is the true owner and the particular property being sought is identifiable and in the hands of the defendant; a court in equity could then order transfer of title (imposing a constructive trust) or of a security interest (enforcing an equitable hen) to the true owner. Id. at 213, 122 S.Ct. 708. 98 The defendant may have already disposed of the property at issue; the high court concluded that an action for disgorgement of proceeds is appropriate only where the defendant still holds those identifiable proceeds. The majority reasoned, “Thus, for restitution to lie in equity, the action generally must seek not to impose personal liability on the defendant, but to restore to the plaintiff particular funds or property in the defendant’s possession.” Id. at 214-15, 122 S.Ct. 708. Furthermore, if the property that the plaintiff sought to recover or its proceeds has been dissipated, so that no property remains, the plaintiffs claim is only that of a general creditor and he cannot seek equitable remedies such as a constructive trust or a lien. Id. at 214, 122 S.Ct. 708.

A number of courts have applied the Great-West Life holding to dismiss claims under ERISA’s § 502(a)(3). See, e.g., Cerosa v. Savasta & Co., 329 F.3d 317 (2d Cir.2003)(money sought as reimbursement from a loss in the plan based on the alleged negligent advice of an actuary was held to be consequential money damages since the money was never within the actuary’s possession and thus restitution was not “appropriate equitable relief’), cert. denied, _ U.S. _, 124 S.Ct 435, _ L.Ed.2d _ (2003); Rego v. Westvaco Corp., 319 F.3d 140, 145 (4th Cir.2003)(specific performance in the form of issuance of more company stock sought by terminated plan participant to make up the difference in valuation of his interest in his savings plan on the date he was initially entitled to a distribution and the date one month later when the distribution was actually made was held to not constitute “appropriate equitable relief’ under ERISA because defendants possessed no particular fund or property clearly identifiable as belonging *607 in good conscience to plaintiff and because defendants no longer possessed plaintiffs share in the savings plan); Bauhaus USA, Inc. v. Copeland, 292 F.3d 439 (5th Cir.2002)(affírming dismissal of an ERISA plan administrator’s declaratory judgment suit to enforce a reimbursement clause of the plan in order to obtain part of the settlement funds recovered in a plan participant’s tort suit against a third party because the funds were no longer in the defendant’s possession, but in a court registry, and thus the claim was for legal relief); Wellmark, Inc. v. Deguara, 257 F.Supp.2d 1209, 1216 (S.D.Iowa 2003)(“This Court finds the possession theory is the correct reading of Great-West. That is, attempts by an ERISA plan or insurer to recover settlement proceeds to which it is entitled under a subrogation or reimbursement provision are only prohibited under § 502(a)(3) if the insured is not in possession of clearly identifiable proceeds,” i.e., to make him whole.)

With respect to Count IV, 99 Plaintiffs, apparently drawing on an amicus curiae brief filed by the Secretary of Labor in another suit, seek to escape the reach of Great-West by arguing that under the common law of trusts, where a beneficiary sues a'fiduciary for breach of fiduciary duty, equity required the fiduciary to restore the beneficiary to “the position he would have been if the trustee had not committed the breach of trust.” Restatement (Second) of Trusts § 205, cmt. a (1959). Section 205 provides,

If the trustee commits a breach of trust, he is chargeable with (a) any loss or depreciation in value of the trust estate resulting from the breach of trust; or (b) any profit made by him through the breach of trust; or (c) any profit that would have accrued to the trust estate if there had been no breach of trust.

Comment a, addressing “[ajlternative remedies for breach of trust,” states,

If the trustee commits a breach of trust, the beneficiary may have the option of pursuing a remedy which will put him in the position in which he was before the trustee committed the breach of trust; or of pursuing a remedy which will give him any profit which the trustee has made by committing the breach of trust; or of pursuing a remedy which will put him in the position in which he would have been if the trustee had not committed the breach of trust. These three types of remedies are not always distinct and are not always all of them available ....

Comment c, which addresses § 205(a), provides in relevant part, “If as a result of his breach of trust, trust property is destroyed or lost, the trustee is chargeable with the value of the property so destroyed or lost.” See also Restatement (Second) of Trusts § 199 (1959)(entitled “Equitable Remedies Of Beneficiary,” which includes a suit “to compel the trustee to redress a breach of trust.”); Id. § 197 (“Except as stated in § 198, the remedies of the beneficiary against the trustee are exclusively equitable.”); Id., § 198 (fisting “Legal Remedies Of Beneficiary,” cmt. a (stating that beneficiary has concurrent legal and equitable remedies against the trustee)). The Tittle Plaintiffs distinguish Mertens and Great-West on the grounds that those suits grounded in § 502(a)(3) were actions against non-fiduciaries; monetary relief in such circumstances was legal relief, even though a court of equity had the power to grant it. 100 They urge that if the Court *608 adopts the restrictive reading of equitable relief urged by Defendants’ construction of Great-West, they and many other beneficiaries would be without remedy for serious breaches of duty by plan fiduciaries. 101

Searching for further support in treatises for their contention that they seek an equitable remedy against fiduciary Defendants for breach of their obligations of loyalty and prudence, Plaintiffs quote G. Bogert, The Law of Trusts and Trustees § 861 at 3-4 (Rev.2d ed.1995):

Equity is primarily responsible for the protection of rights arising under trusts and will provide the beneficiary with whatever remedy is necessary to protect him and recompense him for the loss, in so far as this can be done without injustice to the trustee or third parties.

They also cite 3 A. Scott & W. Fraher, The Law of Trusts § 199 at 203-04, 206 (4th ed.1988), characterizing payment of money to redress a fiduciary’s breach as an “equitable” remedy available to the beneficiary.

Plaintiffs also rely on a Fifth Circuit case, Corcoran v. United HealthCare, Inc., 965 F.2d 1321 (5th Cir.1992), cert. denied, 506 U.S. 1033, 113 S.Ct. 812, 121 L.Ed.2d 684 (1992), 102 which they claim demonstrates that a fiduciary’s duty to a beneficiary is equitable and that the remedies for breach of that duty (monetary make-whole *609 relief under trust law principles) are not within the definition of “money damages” as defined by Justice Scalia in Bowen, 487 U.S. at 913, 108 S.Ct. 2722 (“[T]he term ‘damages’ refers to money awarded as reparation for injury resulting from breach of legal duty [emphasis added].”). In Corcoran, 965 F.2d at 1336, written ten years before Great-West was issued, the Fifth Circuit wrote about “other appropriate equitable relief’ under § 502(a)(3)

The characterization of equitable relief as encompassing damages necessary to make the plaintiff whole may well be consistent with the trust law principles that were incorporated into ERISA and which guide its interpretation.... Section 205 of the Restatement (Second) of Trusts allows for monetary damages as make whole relief, providing that a beneficiary has “the option of pursuing a remedy which will put him in the position in which he was before the trustee committed the breach of trust” or “of pursuing a remedy which will put him in the position in which he would have been if the trustee had not committed the breach of trust.” In the context of the breach of a trustee’s investment duties, “the general rule [is] that the object of damages is to make the injured party whole, that is, to put him in the same condition in which he would have been if the wrong had not been committed....” Both direct and consequential damages may be awarded.... [citations, some to the same sources as are relied upon by the Tittle Plaintiffs, omitted]

Id. at 1336. Moreover, in view of the preemption by ERISA of the plaintiffs’ tort claim, the appellate court concluded that assuming that make-whole relief “is a proper construction of that section,” it was not available to the plaintiffs because such extracontractual, make-whole damages for emotional distress and mental anguish are not available on a contract between a patient and a physician unless there is an express agreement to perform a particular* service or achieve a particular cure, not present in the plan booklet, as well as the fact that it was “dubious” whether the relationship at issue constituted a fiduciary doctor-patient relationship that would support a contractual theory of recovery. Corcoran, 965 F.2d at 1336-38. It further wistfully noted that plaintiffs “have no remedy, state or federal, for what may have been a serious mistake.” Id. at 1338.

In Corcoran, however, the Fifth Circuit did not conclude as a certainty that make-whole relief is available under § 502(a)(3), but entertained it as a possibility, as it indicated in a later opinion. Rogers v. Hartford Life and Acc. Ins. Co., 167 F.3d 933, 944 (5th Cir.1999)(“[I]n Corcoran, we assumed without deciding, that the ‘other appropriate equitable relief provided for in section 502(a)(3) encompassed ‘damages necessary to make the plaintiff whole.’ ”). Five years after Corcoran, after the issuance of Mertens but still before Greatt-West, the Fifth Circuit concluded in Rogers that under Mertens, 508 U.S. at 255, 113 S.Ct. 2063, such “make whole” relief was actually compensatory, i.e., legal, relief not recoverable under § 502(a)(3). 167 F.3d at 944.

More to the point of Plaintiffs’ argument that they are entitled to “make-whole” monetary relief under § 502(a)(3) in Rogers, 167 F.3d at 944, the Fifth Circuit opined that it was not typical equitable relief:

Although our decision in Corcoran may have “left the door open” to the possibility of recovering certain extra-contractual damages necessary to make a plaintiff whole, the Supreme Court firmly closed this door in Mertens .... In Mertens, the Supreme Court rejected the petitioners’ arguments that ERISA permitted a remedy calculated to make them whole, holding that ERISA does not *610 permit recovery of compensatory damages. As the Supreme Court stated,

Petitioners maintain that the object of their suit is “appropriate equitable relief’ under § 502(a)(3) .... They do not, however, seek a remedy traditionally viewed as “equitable,” such as an injunction or restitution.... Although they often dance around the word, what petitioners seek is nothing more than compensatory damages for all losses their plan sustained as a result of the alleged breach of fiduciary duties. Money damages are, of course, the classic form of legal relief. ...

Rogers, 167 F.3d at 944, quoting Mertens, 508 U.S. at 255, 113 S.Ct. 2063. The Fifth Circuit concluded, “Thus compensatory damages, whether extra-contractual or not, are not recoverable under ERISA.” Id. This conclusion came even before Great-West’s restrictive definition of equitable restitution.

Furthermore Tittle Plaintiffs urge that Mertens and Great-West were not suits against an employer/fiduciary for an alleged breach of fiduciary duty, but only suits against a non-fiduciary for unjust enrichment, unlike Tittle Plaintiffs here The Court finds that Tittle Plaintiffs’ distinction is without merit. In Strom v. Goldman, Sachs & Co., 202 F.3d 138 (2d Cir.1999)(holding that “equitable relief’ or “make-whole” relief under § 502(a)(3) includes compensatory damages for breach of fiduciary duty), another pre-Great-West case, the Second Circuit reviewed an action and agreed with many of the same arguments put forth by Tittle Plaintiffs here. It concluded that under § 502(a)(3) a half a million dollars was recoverable as “equitable relief.” The “make-whole” relief in Strom was money that a plaintiff/widow would have received in life insurance proceeds under the terms of an ERISA plan had her deceased husband’s employer not breached its fiduciary duty by failing to send timely his application to the insurer, with the result that the husband’s life insurance did not become effective before his death. The Second Circuit found that the monetary relief sought was like that traditionally sought in an equitable action to enforce duties of loyalty and prudence owed by a fiduciary to a trust. After a lengthy and detailed analysis based on the same basic argument as Tittle Plaintiffs make here, the Second Circuit described the action as follows:

Here, the gravamen of the claim against Goldman is not that it holds property which in equity and good conscience belongs to the plaintiff and which must be surrendered to avoid unjust enrichment. Rather the claim is that Goldman was a fiduciary within the meaning of ERISA and that it breached its fiduciary duty. Its analog is the conventional action by a cestui que trust against a trustee for breach of trust.

Claims of this sort do not depend upon the fiction of constructive trusts but on the positive duties of loyalty and prudence owed by fiduciaries to their beneficiaries. They have lain at the heart of equitable jurisdiction from time immemorial.

Id. at 144.

In the aftermath of Great-West, however, although the Second Circuit has not reexamined its holding in Strom, several of' its district courts have and have concluded that it has been abrogated. For example, in Kishter v. Principal Life Ins. Co., 186 F.Supp.2d 438, 444-45 (S.D.N.Y.2002)(granting summary judgment to defendants on a claim brought by an executor of an ERISA beneficiary’s estate, who sued to recover money that the beneficiary would have received if the defendants had not allegedly breached their fiduciary duty by failing to provide information about a life insurance policy), the *611 district court concluded that “there is substantial reason to believe that Great-West Life has repudiated Strom and its reasoning” and documented how the majority of the Supreme Court in Great-West “expressly rejected” each of the arguments on which the Strom decision was founded. 103 In De Pace v. Matsushita Elec. Corp. of America, 257 F.Supp.2d 543, 561-63 (E.D.N.Y.2003), the court found that the monetary relief sought by former employees claiming that they were fraudulently induced by their employer to participate in a voluntary resignation program was a tort-related monetary remedy that did not constitute “equitable relief” under § 502(a)(3) as construed in Great-West. Furthermore, in Bona v. Barasch, No. 01 CIV. 2289(MBM), 2003 WL 1395932 (S.D.N.Y. Mar. 20, 2003), individual participants and beneficiaries of union employee benefit funds sued the funds’ trustees, as well as the companies and officers involved in the management and investment services to those funds inter alia, claiming they had manipulated the services contracts to increase the fees and enrich themselves, i.e., failed to manage the funds prudently. The district court announced that “Strom’s holding cannot be reconciled with Great-West,” and addressed the specific distinction argued by Tittle Plaintiffs:

On the surface Strom might be distinguished from Great-West because Strom involved an alleged breach of fiduciary duty, and “[a]n alleged breach of fiduciary duty always has been within the exclusive jurisdiction of equity.” Strom, 202 F.3d at 145. However the broad language in Great-West suggests otherwise.

Id. at *11, citing Kishter, 186 F.Supp.2d at 444-45. The Bona judge concluded that the individual plaintiffs’ request for monetary relief from the trustees was barred. Id.

The Fourth Circuit also has applied the holdings in Mertens and Great-West to a suit asserting breach of fiduciary duty and rejected the contention that “any remedy, when sought for breach of fiduciary duty, is always an equitable remedy.” Rego v. Westvaco Corp., 319 F.3d 140, 145 (4th Cir.2003). In Rego a plan participant sued his employer, two ERISA-governed employee benefit plans (a Savings Plan and a pension plan), and the administrator of the plans, alleging inter alia breach of fiduciary duty in that they had failed to provide him with complete and accurate information about his benefit plans after he requested it in breach of their fiduciary duties and had prevented him from withdrawing his share of one of the plans in time to take advantage of a high price for the stock in the plan. He sought specific performance under § 502(a)(3) in the form of an order from the court that defendants issue to him Westvaco stock equal in value to the difference in the amount of money the stock was valued at on October 21, 1997 and on March 2, 1999. Id. at 144-45. Rego argued that at common law a beneficiary could only bring actions for breach of fiduciary duty by a trustee in equity and thus any remedy for such a cause of action “is always an equitable remedy.” Id. at 145.

*612 The Fourth Circuit disagreed and quoted from Mertens, 508 U.S. at 256-57, 113 S.Ct. 2063 (rejecting this argument because it would render the adjective “ ‘equitable’ ” superfluous because “ ‘all relief available for breach of trust could be obtained from a court of equity’ ”); Section 502(a)(3), 29 U.S.C. § 1132(a)(3), “authorizes only ‘those categories of relief that were typically available in equity (such as injunction, mandamus, and restitution, but not compensatory damages.’ ”), and Great-West, 534 U.S. at 213-14, 122 S.Ct. 708 (generally a claim for equitable restitution may not seek “ ‘to impose personal liability on the defendant but to restore to the plaintiff particular funds or property in the defendant’s possession,’ ” i.e., “money or property identified as belonging in good conscience to the plaintiff [that] could clearly be traced to particular funds or property in the defendant’s possession.’ ”). 319 F.3d at 145. The Fourth Circuit found that the defendants possessed no particular fund or property that could clearly be identified as belonging in good conscience to Regó and that Rego’s share of his Savings Plan had long ago been transferred to him and was no longer in defendants’ possession. Id.

This Court is in full agreement with these cases. Corcoran and Strom are no longer good law. No matter how artfully pled, “make-whole” relief for a claim of breach of fiduciary duty by a trustee cannot cloak a claim for compensatory damages. Whether monetary relief is available under § 502(a)(3) under Great West’s analysis depends upon whether it constitutes equitable restitution as defined by the majority, i.e., whether it is a type of relief that was typically available in equity and whether the suit seeks “to restore to the plaintiff particular funds or property in the defendant’s possession.” 534 U.S. at 214, 122 S.Ct. 708. 104

As a general matter, the Fifth Circuit has held that as long as the plaintiff is entitled to some type of relief under the ERISA, pleading of an unavailable remedy or failure to specify a particular kind of equitable relief to which the plaintiff claims entitlement will not result in dismissal. Heimann v. Nat’l Elevator Industry Pension Fund, 187 F.3d 493, 511 (5th Cir.1999) 105 (holding that the plain *613 tiffs’ suit should not be dismissed even though they failed to specify that they were seeking equitable relief), citing Doss v. South Central Bell Tel. Co., 834 F.2d 421, 423 n. 3 (5th Cir.1987)(“The court stated that it dismissed those claims because the plaintiff had requested legal relief rather than the equitable relief authorized by Title VII. However, demand of an improper remedy is not fatal to a party’s pleading if the statement of the claim is otherwise sufficient to show entitlement to a different form of relief.”); and Fed. R.Civ.P. 54(e)(“[E]very final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in the party’s pleadings.”).

With respect to the lockdown claims under Count II, brought on behalf of the Savings Plan and the ESOP, Defendants have argued that Plaintiffs lack standing because they have not alleged that they, personally, complained about the lockdown at the time or that they would have ordered Northern Trust to sell their Enron stock had the lockdown not been imposed. The Court sees no reason, and Defendants provide no authority, for the proposition that Plaintiffs had to show that they, personally, complained in order to assert their claim that Defendants breached their fiduciary duty in proceeding with the lock-downs despite protests (notice, warning) from numerous plan participants. The general outcry, which has not been denied by Defendants, was sufficient to put Northern Trust on notice of the threat posed by the lockdowns.

Furthermore, Plaintiffs provide authority for their insistence that they do not have the burden of proving loss to the plans here, citing Bierwirth, 754 F.2d 1049, 1056 (2d Cir.1985). In Bierwirth, the Second Circuit held that under § 409 [and § 502(a)(2) 106 ] the “appropriate remedy in cases of breach of fiduciary duty is the restoration of the trust beneficiaries to the position they would have occupied but for the breach of trust.” Id., citing Restatement (Second) of Trusts § 205 (1959). 107 The Second Circuit explained,

In determining what the Plan would have earned had the funds been available for other Plan purposes, the district court should presume that the funds would have been treated like other funds being invested during the same period in proper transactions. Where several alternative investment strategies were equally plausible, the court should presume that the funds would have been used in the most profitable of these. The burden of proving that the funds would have earned less than that amount is on the fiduciaries found to be in breach of their duty. Any doubt or ambiguity should be resolved against them.... [0]nce a breach of trust is established, uncertainties in fixing damages will be resolved against the wrongdoer.

Id. (if, but for the breach, the trust fund would have earned more than it actually *614 earned, there is a “loss” to the plan), citing Leigh v. Engle, 727 F.2d at 138 (“[W]e believe that the burden is on the defendants who are found to have breached their fiduciary duties to show which profits are attributable to their own investments apart from their control of the ... [t]rust assets.... [W]hile the court may be able to make only a rough approximation, it should resolve doubts in favor of the plaintiffs.”). See also Dardaganis v. Grace Capital Inc., 889 F.2d 1237, 1243-44 (2d Cir.1989)(“uncertainties in fixing damages will generally be resolved against the defendant,” except where “the defendant comes forward with particularly reliable evidence that, had the funds not been improperly invested, they would have been put into a particular alternate investments”); Meyer v. Berkshire Life Ins. Co., 250 F.Supp.2d 544, 572 n. 36 (D.Md.2003).

ERISA does not provide for recovery of extra contractual damages (e.g., punitive damages, damages for emotional distress). Mass. Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985); Mertens, 508 U.S. 248, 113 S.Ct. 2063, 124 L.Ed.2d 161. An award of pre-judgment interest is discretionary with the court. See, e.g., Diduck v. Kaszycki & Sons Contractors Inc., 974 F.2d 270, 286 (2d Cir.1992); Holmes v. Pension Plan of Bethlehem Steel Corp., 213 F.3d 124, 131-32 (3d Cir.2000).

5. Service on and Liability of the Administrative Committees of the Plans as Unincorporated Associations

Federal Rule of Civil Procedure 17(b), addressing “Capacity to Sue or to be Sued” for a federal statutory claim, indicates in relevant part that other than an individual or a corporation,

[i]n all other cases capacity to sue or be sued shall be determined by the law of the state in which the district court is held except (1) that a partnership or other unincorporated association, which has no such capacity by the law of such state, may sue or be sued in its common name for the purpose of enforcing for or against it a substantive right existing under the Constitution or the laws of the United States .... 108

Defendants Enron Corp. Savings Plan Administrative Committee, the Administrative Committee of the Enron Corp. Cash Balance Plan, and the Administrative Committee of the Enron Employee Stock Ownership Plan 109 identify themselves as *615 “unincorporated associations,” but not under Texas law, and move to dismiss on the grounds that (1) they are not legal entities capable of being sued under the law of Texas, (2) retaining the Committees as parties to this action is “impractical, unnecessary, and inappropriate” under ERISA, (3) they have not been properly served, and (4) they should be dismissed because their individual committee members should be dismissed.

Defendants argue that under the law of Texas “an unincorporated association is a voluntary group of persons without a charter formed by mutual consent for the purposes of promoting a common enterprise,” which includes “churches, voters’ groups, homeowners’ associations, unions, and social groups such as the Independent Order of Odd Fellows.” #231 at 2, citing inter alia Cox v. Thee Evergreen Church, 836 S.W.2d 167, 169 (Tex.1992); Citizens for Fair Taxes v. Sweetwater Indep. School Dist. Bd. of Trustees, 807 S.W.2d 451, 452 (Tex.App.—Eastland 1991), motion to file mandamus overruled; Dutcher v. Owens, 647 S.W.2d 948, 950 (Tex.1983).

Committee Defendants argue that they do not fit the Texas definition of unincorporated associations because their service on the Plan Committees was not completely voluntary since the members are employees of Enron, appointed to the committee by Enron, removable by Enron, and their membership ceases if they cease employment by Enron. Thus membership is a function of their employment rather than a voluntary activity undertaken for their own purposes. Defendants further argue that they do not exhibit other characteristics of unincorporated associations, such as (i) a membership too large to join feasibly all members as defendants; (ii) operation under a constitution, bylaws, or other detailed organizational documents; (iii) accumulation of funds by the association for its own use; (iv) the conduct of business or other activities under its own name and for its own benefit or in furtherance of its own interests. #231 at 3 (no authority cited).

Defendants also contend that under Plan documents, they act solely on behalf of the plans and their participants and beneficiaries and were never considered separate legal entities with the power to enter into contracts or conduct business for their own benefit. Nor have they registered as an association with Harris County. Tex. Bus. & Com.Code § 36.10 (2002)(“Any person who regularly conducts business or renders professional services other than as a corporation, limited partnership, registered limited liability partnership, or limited liability company in this state under an assumed name shall file in the office of the county clerk in each county in which such person has or will maintain business or professional premises or, if no business or professional premises are or will be maintained in any county, in each county where such person conducts business or renders a professional service, a certificate 110

Plaintiffs respond that Defendants’ argument is meritless because “a cursory search of the Westlaw or Lexis computer databases for cases involving ERISA claims of fiduciary breach in which a plan ‘Admin. Committee’ is named a defendant yields a score of cases .... ” # 315 at 21. Plaintiffs do not provide any legal authori *616 ty to support their claim that these committees are suable.

After reviewing the law related to the issue, the Court finds that Defendants’ challenge is frivolous. First the Court points out that Defendants’ list of typical unincorporated associations and their usual characteristics is not exclusive and that unincorporated associations have proved difficult to pigeonhole and have resulted in development of special and often flexible rules. Cox, 836 S.W.2d at 169 n. 3 (“Unincorporated associations long have been a problem for the law. They are analogous to partnerships and yet not partnerships; analogous to corporations, and yet not corporations .... ”); Karl Rove & Co. v. Thornburgh, 39 F.3d 1273, 1286 (5th Cir.1994)(analogically extending the law of unincorporated nonprofit associations to persons affiliated with and to unincorporated political campaign committees even though the latter are not organized with bylaws, membership rosters, or other instruments of governance or formalities characteristic of the unincorporated association). Although Defendants cite Cox as authority on the characteristics of an unincorporated association under Texas law, the Texas Supreme Court stated in that case. “[A]n issue regarding what constitutes an unincorporated association is not before this Court.” 836 S.W.2d at 169 n. 1. Furthermore, issues such as whether the members’ services were “voluntary” or whether or not the Administrative Committees are unincorporated associations under Texas law are questions which can only be answered after a factual record has been established. Moreover, assuming that the Administrative Committees are unincorporated associations, from the record before it, the Court cannot be sure whether they are nonprofit associations subject to the law of agency or they are associations organized for profit or to conduct a business, subject to the principles of partnership law. Karl Rove, 39 F.3d at 1284-85.

As for the merits of Defendants’ argument, at common law an unincorporated association was not recognized as a legal entity, was not suable in its own name, but only in the name of its members, had no existence separate from that of its individual members, and one member’s personal liability could not be enforced against any other members unless they also expressly or impliedly assented to, authorized or ratified the transaction on which liability was based. Karl Rove, 39 F.3d at 1285; Cox v. Thee Evergreen Church, 836 S.W.2d 167, 168-69 (Tex.1992); Beta Beta Chapter of Beta Theta Pi Fraternity v. May, 611 So.2d 889, 892 (Miss.1992). The reason for holding individual members personally liable was that since the unincorporated association was not recognized as a legal entity, no judgment could be rendered against it for contracts it entered into or torts that it may have perpetrated. Karl Rove, 39 F.3d at 1285 n. 14.

Since that time, many states and the federal government have passed statutes that expressly or impliedly authorize suits by and against unincorporated associations. Id. at 1285-86; Beta Beta, 611 So.2d at 891-92. It has become “well-established that the members of an unincorporated association may be sued, ‘as to third parties, under the association’s assumed name as a legal entity.’ ” Gonzales v. American Postal Workers Union, AFL-CIO, 948 S.W.2d 794, 798 (Tex.App.—San Antonio 1997, writ denied), citing Cox, 836 S.W.2d at 171. See also Hutchins v. Grace Tabernacle United Pentecostal Church, 804 S.W.2d 598, 600 (Tex.App.-Houston [1st Dist.] 1991, no writ)(Texas Rule of Civil Procedure 28 authorizes suit by or against an unincorporated association in the common name for purpose of defending or enforcing a substantive right, but *617 does not enlarge or diminish any substantive rights or obligations of parties.). The authorization by statute for an unincorporated association to act as a legal entity in its own name need not be express, but may rise by implication from a statute. Beta Beta, 611 So.2d at 893-94. ERISA, which provides the substantive law here, expressly contemplates that when an administrative committee acts in the denial of plan benefits or as a fiduciary in breach of its fiduciary duties, it may be sued. In Texas, a statute now authorizes suits against an unincorporated association; furthermore the recognition of such a group as a jural person with entity status expressly does not “affect nor impair ... the right of a plaintiff to sue in the individual names of ... members.” Tex.Rev.Civ. Stat. Ann. arts. 6133 (“Any unincorporated ... association, whether foreign or domestic, doing business in this State, may sue or be sued in any court of this state having jurisdiction of the subject matter in its company or distinguishing name; and it shall not be necessary to make the individual ... members thereof parties to the suit.”) and 6138 (Vernon 1970 and Supp.2003); Kerney v. Fort Griffin Fandangle Ass’n, Inc., 624 F.2d 717, 719-20 (5th Cir.1980). Thus contrary to Defendants’ arguments, it appears that Plaintiffs may sue both the unincorporated association and its members in Texas. Moreover, like Fed.R.Civ.P. 17(b), Texas Rule of Civil Procedure 28 (“Any ... unincorporated association ... may sue or be sued in its ... common name for the purpose of enforcing for or against it a substantive right”) has been construed to permit such organizations a procedural right to sue or be sued as legal entities in their names. Cox, 836 S.W.2d at 171-73.

Although Defendants argue that Plaintiffs should not be allowed to sue the unincorporated association and them, individually, this contention also lacks merit. In Karl Rove, 39 F.3d at 1286, the Fifth Circuit addressed this issue:

One could argue, therefore, that it is no longer necessary or even appropriate for the laws of these jurisdictions to permit third parties to sue individually the members of an association for the contract debts incurred by the association in its own name. The argument would go as follows: The third party is no longer being misled or deceived about a nonexistent principal; such a party is contracting with a disclosed juridical entity, the assets of which can be reached to satisfy any debt that the association may owe.

As appealing and logical as that argument might appear, however, that is not the way the law has developed. The courts of the states that have adopted statutes permitting suit against unincorporated associations have not altered or supplanted the preexisting common law rule governing the personal liability of association members. The courts of both Pennsylvania and Texas have continued to hew this line, [footnotes omitted]

As for service, under Federal Rule of Civil Procedure 4(h)(1), in relevant part,

service upon ... a partnership or other unincorporated association that is subject to suit under a common name, and from which a waiver of service has not been obtained and filed, shall be effected ... in a judicial district of the United States in the manner prescribed for individuals by subdivision (e)(1), or by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or law to receive service of process ....

See also, for recognized connections between unincorporated associations and partnerships insofar as defending a lawsuit is concerned, Penrod Drilling Co. v. Johnson, 414 F.2d 1217, 1219-25 (5th Cir.1969), *618 cert. denied, 396 U.S. 1003, 90 S.Ct. 552, 24 L.Ed.2d 495 (1970). A plaintiff suing an unincorporated association may either serve the entity under its common name or serve authorized individuals who comprise the group. See, e.g., Furek v. Univ. of Del., 594 A.2d 506, 513-14 (Del.Supr.1991).

Administrative Committee Defendants have argued that they were not personally served. Plaintiffs state in a footnote, # 315 at 22 n. 10, “The Admin. Committee’s claim that as of the date of its filing it has not ‘been properly served with any complaint’ is surprising in light of its counsel’s agreement to accept service of the Kemperer complaint, consolidated herewith. If counsel is now withdrawing his agreement to accept service on behalf of the Committee, that can and will be promptly remedied through the use of a process server....” If there is still a valid challenge that Defendants have not been properly served, the Court directs Defendants to file a specific motion to that effect.

Finally Defendants have contended that because the Enron bankruptcy court appointed State Street Bank and Trust Company to take over their duties, and because they no longer have any assets that could be used to satisfy a judgment nor any power to cause recalculation and redistribution of benefits, a suit against them has no purpose. Plaintiffs’ response is sufficient to deny the motion to dismiss: they seek declaratory as well as legal and equitable relief and co-fiduciary liability of others. Moreover they are entitled to discovery to determine whether there are any assets now controlled by the independent fiduciary that would be available to satisfy a judgment, if one is obtained.

B. RICO Amendment

Section 107 (“the RICO Amendment”) of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), as amended, 18 U.S.C. § 1964(c), to eliminate securities fraud as a predicate act under § 1961(1) for a private cause of action under RICO:

Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States District Court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney’s fee, except that no person may rely upon any conduct that would have been actionable as fraud in the purchase or sale of securities to establish a violation of section 1962. The exception contained in the preceding sentence does not apply to an action against any person that is criminally convicted in connection with the fraud, in which case the statute of limitations shall start to run on the date the conviction becomes final.

18 U.S.C. § 1964(c)(emphasis added).

Before the RICO Amendment, a plaintiff could allege a private civil RICO claim for securities laws violations sounding in fraud because “fraud in the sale of securities” was listed as a predicate offense. Bald Eagle Area School Dist. v. Keystone Financial, Inc., 189 F.3d 321, 327 (3d Cir.1999) (citing Sedima v. Imrex Company, Inc., 473 U.S. 479, 504-05, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985) (Marshall, J., dissenting)), cer t. denied, 526 U.S. 1067 (1999).

The Conference Committee Report for § 107 makes clear that the RICO Amendment was intended by Congress “to eliminate securities fraud as a predicate offense in a civil RICO action” and to bar a plaintiff from “plead[ing] other specified offenses, such as mail or wire fraud, as predicate acts under civil RICO if such offenses are based on conduct that would have been actionable as securities fraud.” Bald Eagle, 189 F.3d at 327, quoting H.R. *619 Conf. Rep. No. 104-369, at 47 (1995), reprinted in 1995 U.S.C.C.A.N. 730, 746. See also Mathews v. Kidder Peabody & Co., Inc., 161 F.3d 156, 157 (3d Cir.1998) (The PSLRA amended 18 U.S.C. § 1964 “to eliminate, as a predicate act for a private cause of action under [RICO], any conduct actionable as fraud in the purchase or sale of securities”), cert. denied, 526 U.S. 1067, 119 S.Ct. 1460, 143 L.Ed.2d 546 (1999); Scott v. Boos, 215 F.3d 940, 945 (9th Cir.2000); In re Ikon Office Solutions, Inc. Sec. Litig., 86 F.Supp.2d 481, 487 (E.D.Pa.2000) (Congressional intent behind the RICO Amendment “was substantive — to deprive plaintiffs of the right to bring securities fraud based RICO claims.”); Heffernan v. HSBC Bank USA, No. 1:99CV07981, 2001 WL 803719, *1-2 (E.D.N.Y. Mar. 29, 2001); Mezzonen, S.A. v. Wright, No. 97 CIV 9380 LMM, 1999 WL 1037866, *3-4 (S.D.N.Y. Nov. 16, 1999); Krear v. Malek, 961 F.Supp. 1065, 1074-75 (E.D.Mich. Mar.31, 1997); Ostler v. The Codman Research Group, Inc., No. CIV. 98-356-JD, 1999 WL 1059684, *6 (D.N.H. April 20, 1999); ABF Capital Management v. Askin Capital Management, Inc., 957 F.Supp. 1308, 1319 (S.D.N.Y.1997). 111

The RICO Amendment’s “focus” was on “completely eliminating the so-called ‘treble damage blunderbuss of RICO’ in securities fraud cases.” Mathews v. Kidder, Peabody & Co., Inc., 161 F.3d at 157 (quoting 141 Cong. Rec. H2771). See also Hemispherx Biopharma, Inc. v. Asensio, No. CIV. A. 98-5204, 1999 WL 144109, *4 (E.D.Pa. Mar. 15, 1999) (“The legislative history indicates that Congress intended that RICO, which provides treble damages and attorney’s fees, not be used for securities fraud claims at all because there were, generally speaking, other statutes that more appropriately provided for recovery in such- cases.”).

Thus if Defendants’ alleged misconduct to support a claim is characterized by the plaintiff as wire, mail, or bank fraud, but also “amounts to securities fraud,” the court should not permit a “surgical presentation” of the cause of action to “undermine the congressional intent behind the RICO Amendment.” Bald Eagle, 189 F.3d at 329-30; Burton v. Ken-Crest Services, Inc., 127 F.Supp.2d 673, 677 (E.D.Pa.2001) (After Plaintiff recast as embezzlement and theft his claims that he was deprived of his legal right to select investments in his pension plan after plan officials with conflicts of interest chose low-yielding investments, the court opined, “[T]here is no question that the whole of Plaintiffs allegations concern a fraudulent transaction of securities. Plaintiff cannot magically revive his claim by picking out discrete details of his allegations and then claiming that they are not actionable as securities fraud.”); In re Ikon Office Solutions, Inc. Sec. Litig., 86 F.Supp.2d 481, 486-87 (E.D.Pa.2000) (where plaintiff alleged as predicate acts accounting improprieties that were effected to provide certain individuals with large bonuses, but where they also inflated stock prices, the court found the acts actionable as securi *620 ties fraud, the court dismissed “regardless of the injury alleged”).

In Bald .Eagle, a number of school districts sued a bank that was custodian of funds that they had collected from bonds, loans and other revenues and that acted according to investment directions from the plaintiffs’ investment advisor. That bank in turn was a knowing and essential participant with the investment advisor in a Ponzi scheme involving numerous acts of what the plaintiffs characterized as bank, mail and wire fraud which defrauded the school districts of approximately $70 million. The bank used the funds in impermissible and risky investments in Collater-alized Investment Agreements (“CIAs”), fraudulently reported market values as the value declined, failed to maintain the requisite 100% collateral on the assets in its custody, and paid out more money to withdrawing clients than their fair share so the bank could continue to conceal losses and entice new money for investments. Just before the plaintiffs filed their suit, the SEC contemporaneously brought a civil enforcement action based on the same scheme as a securities fraud action. The Third Circuit affirmed the district court’s dismissal of the school districts suit as barred by the RICO Amendment.

The proper inquiry according to the Third Circuit is not whether the wrongful conduct is “connected to and dependent upon securities fraud,” but whether the conduct is “actionable as securities fraud.” Bald Eagle, 189 F.3d at 330. The Third Circuit rejected plaintiffs’ “contention that the conduct alleged as predicate offenses was not in connection with the purchase or sale of securities” on the grounds that their argument

completely ignores the hard reality that the conduct was an integral part of Black’s securities fraud Ponzi scheme. A Ponzi scheme is ongoing, and it continues only as long as new investors can be lured into it so that early investors can be paid a return on their “investment.” Consequently, conduct undertaken to keep a securities fraud Ponzi scheme alive is conduct undertaken in connection with the purchase and sale of securities.

Id.

The RICO Amendment bars claims based on conduct that could be actionable under the securities laws even when the plaintiff, himself, cannot bring a cause of action under the securities laws. The language of the statute does not require that the same plaintiff who sues under RICO must be the one who can sue under securities laws; its wording (“no person may rely upon any conduct that would have been actionable as fraud in the purchase or sale of securities to establish a violation of section 1962”) does not make such a connection. See Hemispherx Biopharma, 1999 WL 144109 at *4 (agreeing with Defendants that “when Congress stated that ‘no person’ could bring a civil RICO action alleging conduct that would have been actionable as securities fraud, it meant just that. It did not mean ‘no person except one who has no other actionable securities fraud claim.’ It did not specify that the conduct had to be actionable as securities fraud by a particular person to serve as a bar to a RICO claim by that same person.”).

Even if the provision were deemed unclear or ambiguous, the legislative history indicates a concern that securities fraud defendants not be exposed to multiple kinds of suits and especially the need to limit the “treble damage blunderbuss” of a RICO claim. Chairman of the SEC Arthur Levitt testified before the Telecommunications and Finance Subcommittee of the House Commerce Committee during hearings on the RICO Amendment on *621 February 10, 1995, reprinted in 1996 U.S.C.C.A.N. 679, 746,

Because the securities laws generally provide adequate remedies for those injured by securities fraud, it is both unnecessary and unfair to expose defendants in securities cases to the threat of treble damages and other extraordinary remedies provided by RICO.

Quoted by Rowe v. Marietta Corp., 955 F.Supp. 836, 847 (W.D.Tenn.1997).

Statements, quoted in Krear, 961 F.Supp. at 1075-76 n. 16 (citing 141 Cong. Rec. H2771), by California Representative Cox, who introduced the bill, explain that the purpose of the RICO Amendment was to provide remedies for injured investors while “reducing] the cost of capital” and limiting the “imposition of excessive penalties on all participants in our capital market”, because of RICO’s “treble damage blunderbuss” that results in exorbitant litigation costs and imposes the rising costs of raising capital on consumers and emerging innovative companies:

[0]ur economy’s health depends on the efficient operation of America’s capital markets. We must continue to balance the provisions of adequate remedies for injured investors and the imposition of excessive penalties on all participants in our capital markets. The treble damage blunderbuss of RICO undermines the balance and imposes exorbitant litigation costs, impedes the raising of capital and ultimately puts these costs on the shoulders of consumers and emerging innovative companies.

Krear, 961 F.Supp. at 1075, citing 141 Cong. Rec. H2773. Cox also made clear that the amendment, as indicated supra, was intended to rein in what many perceived as the misapplication of RICO beyond racketeering and organized crime to matters never intended by Congress, including securities fraud lawsuits, which at the time of the amendment represented forty percent of the cases brought under RICO. Id., at 1075-76 n. 16. Representative Cox further stated,

Because many claims that could be asserted as securities claims can also be characterized as mail or wire fraud and because mail and wire fraud are also predicates for civil RICO liability, Plaintiffs’ attorneys have a devastating, potent, and readily available alternative for bringing actions under RICO instead of under our securities laws.

Id. at 1075 n. 16, citing 141 Cong. Rec. H2772. In contrast to the express limitation on actual damages available under federal securities statutes, the availability of treble damages under RICO was leading plaintiffs to craft their pleadings to obtain relief, contrary to Congressional intent. Id. at 1076. Representative Cox maintained that passage of the RICO Amendment was necessary to stop attorneys from “doing an end run” around all the reform [of the securities laws] by simply using the RICO statute instead and thereby obtaining “discovery going back 10 years to show a pattern which is part of RICO, not part Of the securities laws,” and in effect “gin up settlements where a settlement is not in order.” Id. at 1076, citing 141 Cong. Rec. H2771, H27778.

Among the few courts addressing the issue, the Ninth Circuit has held that the RICO Amendment bar applies even if a plaintiff lacks standing to sue under the securities laws because he did not purchase or sell securities. Howard v. America Online, Inc., 208 F.3d 741, 749 (9th Cir.2000) (claims that AOL misrepresented revenues, profits and number of subscribers, used improper accounting practices, and illegally sold stock at a profit were actionable as fraud in the purchase or sale of securities and are barred by the RICO Amendment even though Plaintiffs lack standing to sue for securities fraud), cert. *622 denied, 531 U.S. 828, 121 S.Ct. 77, 148 L.Ed.2d 40 (2000). See also Florida Evergreen Foliage v. E.I. DuPont De Nemours and Co., 165 F.Supp.2d 1345, 1356-58 (S.D.Fla.2001) (“the fact that Plaintiff-Growers are not DuPont shareholders and therefore cannot bring a securities fraud claim against DuPont does not preclude the use of Section 107 to bar their claim” when it could have been brought “ ‘by a [different] plaintiff with proper standing’”), affirmed on other grounds sub nom. Green Leaf Nursery v. E.I. DuPont De Nemours and Co., 341 F.3d 1292 (11th Cir.2003); Columbraria Ltd. v. Pimienta, 110 F.Supp.2d 542, 548 (S.D.Tex.2000) (RICO Amendment bar applied where plaintiff was time-barred from suing under Rule 10b-5); Hemispherx Biopharma, 1999 WL 144109 at *4-5 (holding that the RICO Amendment barred suit even though plaintiffs had no cause of action under § 10(b) of the Securities Exchange Act).

In an attempt to preserve their RICO claims, Tittle Plaintiffs have argued that unlike predicate acts of mail and wire fraud, their predicate acts of embezzlement (18 U.S.C. § 664), obstruction of justice (18 U.S.C. § 1512), and interstate transportation offenses (18 U.S.C. § 2314) do not sound in fraud and therefore cannot be barred by the RICO Amendment as a matter of law. This Court disagrees. Plaintiffs have clearly alleged five types of named predicate acts that are parts of an overarching scheme and conspiracy to defraud current and prospective shareholders of Enron stock in a Ponzi scheme, with all alleged acts and omissions intended to achieve the same goal, personal enrichment of Defendants at the expense of the corporation, its shareholders, and its ERISA plan participants and beneficiaries. A “scheme to defraud” necessarily embraces “ ‘[fintentional fraud, consisting in deception intentionally practiced to induce another to part with property or to surrender some legal right, and which accomplishes the designed end.’ To allege intentional fraud there must be ‘proof of misrepresentations or omissions which were reasonably calculated to deceive persons of ordinary prudence and comprehension [citations omitted].’ ” Kenty v. Bank One, Columbus, N.A., 92 F.3d 384, 389-90 (6th Cir.1996). While a “scheme to defraud” is an express element of mail and wire fraud, the complaint’s allegations explicitly relate to all the other predicate acts charged, i.e., embezzlement, obstruction of justice and interstate transportation, to lure and keep Enron investors in an overarching Ponzi scheme to defraud. Any conduct that sustains a securities fraud Ponzi scheme is intrinsically conduct undertaken “in connection with the purchase or sale of securities” and is barred by the RICO Amendment. Bald Eagle, 189 F.3d at 330.

Similarly, Tittle Plaintiffs attempt to limit § 10(b) violations to statements of misrepresentation or omissions. The Court refers the parties to its memorandum and order of December 19, 2002, # 1194, in Newby, for its more inclusive determination that § 10(b) and Rule 10b-5 also reach a course of business, a deceptive device, and/or a scheme or artifice that operated as a iraud on sellers or purchasers of securities.

There is little case law addressing the application of the last sentence of § 107, 18 U.S.C. § 1964(c)(“The exception contained in the preceding sentence does not apply to an action against any person that is criminally convicted in connection with the fraud, in which case the statute of limitations shall start to run on the date the conviction becomes final”), dubbed the “criminal conviction exception.” The exception was an issue of first impression in Krear v. Malek, 961 F.Supp. 1065 (E.D.Mich.1997), which noted that “the *623 Congressional record is devoid of any substantive discussion of the exception.” 961 F.Supp. at 1074.

In a multi-defendant case, the Krear court dismissed all RICO claims against one defendant who had not been convicted, noting that if he were subsequently convicted, he could be sued again because the RICO Amendment explicitly provides that the statute of limitations does not start to run until the conviction becomes final. Id. at 1076 n. 17. The defendant who had pleaded guilty to an information, which also named other persons who had not pleaded guilty, argued that the conviction exception applied to them, too, because his conviction was based on a Pon-zi scheme involving all the defendants. Id. at 1076. The court rejected this argument and found that in light of evidence that “Congress was weary of the susceptibility of civil RICO to litigation abuses in the securities fraud area,” the court would “interpret the ‘conviction exception’ as narrowly as possible so that the exception is only available to those plaintiffs against whom a defendant has specifically been convicted of criminal fraud.... [T]o find otherwise, plaintiffs who were not found to have been criminally defrauded would be allowed to ‘bootstrap’ their RICO claims to the claims of those plaintiffs who were found to have been criminally defrauded. This would necessarily cause the ‘conviction exception’ to swallow the rule which prohibits civil RICO claims for securities fraud.” Id. “Simply put, those plaintiffs who were not found to have been criminally defrauded, cannot, by merely asserting that a Ponzi scheme existed, invoke the ‘criminal exception.’ ” Id. at 1077. See also Florida Evergreen Foliage v. E.I. DuPont De Nemours and Co., 165 F.Supp.2d 1345, 1356-57 (S.D.Fla.2001)(“Section 107’s criminal conviction exception only applies to persons that have been criminally convicted in connection with the fraud .... ”)(citing Krear, 961 F.Supp. at 1076, (“[T]he exception is only available to those plaintiffs against whom a defendant has specifically been convicted of criminal fraud.”)), affirmed on other grounds sub nom. Green Leaf Nursery v. E.I. DuPont De Nemours and Co., 341 F.3d 1292 (11th Cir.2003).

Moreover, the legislative history also indicates that the conviction exception applies only to a defendant that has been criminally convicted. Senator Biden had offered a broader statement of the conviction exception than that ultimately enacted: “if any participant in the fraud is criminally convicted in connection therewith.” 141 Cong. Rec. § 9150, § 9163 (amendment 1481). The Conference Committee rejected such language in favor the more restricted exception that was passed, with Senator Biden noting the distinction:

Under an amendment I offered, the Senate bill allowed the RICO statute to be used in a securities fraud civil case if at least one person in the civil case has been criminally convicted. Under this bill, RICO could only be used in the civil case against the person who was actually criminally convicted.

141 Cong. Rec. S17991, S17992 (Dec. 5, 1995); see also Krear, 961 F.Supp. at 1075 n. 14.

Thus although Plaintiffs argue that because of the guilty plea of Michael Kopper to conspiracy to commit wire fraud and money laundering and Arthur Andersen’s conviction for obstruction of justice, 112 all Defendants fall within the criminal exception. This Court disagrees. The language of the § 107’s conviction exception is plain *624 and unambiguous; even if it were not, the legislative history reflects, and the available case law supports, the Court’s conclusion that the securities-fraud-based RICO claims can be used only against the particular defendant that was criminally convicted of fraud.

Moreover, it is unclear at what point the “criminal conviction” exception is triggered; the statute does not state when the criminal exception claim accrues, but indicates that limitations does not begin to run until the conviction becomes final, not yet the case with Kopper and David Duncan, who have not been sentenced. Indeed Kopper recently filed a motion to stay discovery in the civil cases based on his indictment. Arthur Andersen’s conviction and sentence are being appealed, and thus its conviction is not final. Others remain under indictment awaiting trial. In the absence of clarity in the statute or authority on the issue, the Court concludes that it is reasonable that the conviction must be final before the exception is triggered. To hold otherwise would undermine the core purpose of the statutory bar. 113

C. COMMON LAW CLAIMS

1. Preemption and the Federal Statutes at Issue

Preemption by ERISA and preemption by SLUSA, defined by the particular statutory language, are different. The Court addresses the law relating to each statute and then the issues of preemption of the Texas common law claims of civil conspiracy and negligent misrepresentation. RICO, of course, has no preemption provision.

a. ERISA

Once viewed as a fairly straight forward doctrine, preemption under ERISA has recently become a somewhat complex, uncertain, and thorny issue. 114 The Court addresses the developing doctrine.

“State law” is broadly defined by ERISA as including “all laws, decisions, rule, regulations, or other State action having the effect of law.” 29 U.S.C. § 1144(c)(1).

There are two conceptually distinct doctrines of preemption of state law under ERISA: (1) “ordinary” preemption (also called “express” or “conflict” preemption) under § 514, 29 U.S.C. § 1144(a), which occurs when a state law that conflicts with federal law is the basis of the petition, and preemption is asserted as an affirmative defense to the complaint; and (2) “complete” preemption under § 502(a), 29 U.S.C. § 1132(a), the civil enforcement section (constituting the exclusive remedy for rights guaranteed under ERISA, discussed earlier under the *625 “Standing and Remedies Under ERISA” section in this memorandum and order). Both ordinary and complete preemption result in the displacement of state law by federal law, but only complete preemption under § 502(a) provides removal jurisdiction. Haynes v. Prudential Health Care, 313 F.3d 330, 333-34(5th Cir.2002). In other words, only state law claims that duplicate or seek relief falling within the scope of ERISA’s § 502(a) are completely preempted. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 64-66, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987); Roark v. Humana, Inc., 307 F.3d 298, 305 (5th Cir.2002), petition for cert. filed, No. 02-1845, 72 U.S.L.W. 3007 (June 20, 2003). The Court examines the preemption issue in greater detail below.

Of the two types of ordinary preemption, express preemption occurs by express statutory term, as reflected in § 514(a) of ERISA. Heimann v. National Elevator Industry Pension Fund, 187 F.3d 493, 500 (5th Cir.1999). “Conflict preemption,” on the other hand, occurs (1) when there is a direct conflict between the operation of federal and state law so that it is impossible to comply with both, or (2) when the state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress” in the federal statute. Boggs v. Boggs, 520 U.S. 833, 844, 117 S.Ct. 1754, 138 L.Ed.2d 45 (1997); Crosby v. Natl Foreign Trade Council, 530 U.S. 363, 372-73, 120 S.Ct. 2288, 147 L.Ed.2d 352 (2000); Id.

Ordinary preemption falls under § 514(a) of ERISA, 29 U.S.C. § 1144(a) (“ ... [T]his provision ... of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan ... ”), and preempts such laws unless that state law asserted “regulates insurance” under the savings clause in § 514(b)(“nothing in this title shall be construed to exempt or reheve any person from any law of any State which regulates insurance, banking or securities”). 115 McClelland v. Gronwaldt, 155 F.3d 507, 517 (5th Cir.1998), overruled on other grounds, Arana v. Ochsner Health Plan, 338 F.3d 433 (5th Cir.2003) 116 ; Haynes, 313 F.3d at 334.

Traditionally, under the “well pleaded complaint rule,” the plaintiff is the master of his complaint, may choose whether to bring his claim under state or federal law, and must assert a federal cause of action on the face of a complaint before a defendant may remove the case from state court on federal question jurisdiction grounds. Louisville & Nashville Ry. Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908). “The presence of a federal question ... in a defensive argument does not overcome” the well pleaded complaint rule. Caterpillar Inc. v. Williams, 482 U.S. 386, 398-99, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987)(emphasis added). Thus “ordinary” federal preemption, which occurs where a federal law claim serves only as an affirmative defense, does not appear on the face of the complaint, and does not provide federal question jurisdiction for purposes of removal. Franchise Tax Bd. of State of Cal. v. Construction Laborers Vacation Trust for Southern *626 Cal., 463 U.S. 1, 9-12, 25-27, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983).

Ordinary preemption under § 514(a), in contrast to the jurisdictional scope of complete preemption, “governs the law that will apply to state law claims, regardless of whether the case is brought in state or federal court.” Haynes, 313 F.3d at 334. Thus if the case is brought in state court, without a basis for federal jurisdiction, ERISA would preempt or extinguish the state law claims, but the case would remain in state court.

An exception to the well pleaded complaint rule occurs where Congress intends that a federal statute have “extraordinary pre-emptive power” and so “completely preempts” a particular field of law that “a state common law complaint [is converted] into one stating a federal claim for purposes of the well-pleaded complaint rule.” Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987); see also Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 475, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998); McClelland v. Gronwaldt, 155 F.3d at 516-17 (complete preemption not only displaces substantive state law, but also ‘recharacter-izes’ preempted state law as ‘arising under’ federal law for the purposes of determining federal question jurisdiction, typically making removal available to the defendant. Thus ‘complete preemption’ is less a principle of substantive preemption than it is a rule of federal jurisdiction. In other words, complete preemption principally determines not whether state or federal law governs a particular claim, but rather whether that claim will, irrespective of how it is characterized by the complainant, be treated as ‘arising under’ federal law.). “Complete preemption” is sometimes called “implied preemption” or “field preemption.” See, e.g., Orson, Inc. v. Miramax Film Corp., 189 F.3d 377, 380-81 (3d Cir.1999), cert. denied, 529 U.S. 1012, 120 S.Ct. 1286, 146 L.Ed.2d 232 (2000).

The civil enforcement cause of action, § 502(a), 29 U.S.C. § 1132(a), constitutes the complete preemption provision under ERISA; it “functions as an exception to the well-pleaded complaint rule” and “completely preempts any state cause of action seeking the same relief, regardless of how artfully pleaded as a state action.” Haynes, 313 F.3d at 334 (citations omitted). Whether a state-law claim is subject to complete preemption by ERISA is determined by whether it falls within the scope of the civil enforcement provision of § 502(a). McClelland, 155 F.3d at 517 nn. 30, 31. The Fifth Circuit has succinctly restated the rule for complete preemption: “States may not duplicate the causes of action listed in ERISA § 502(a).” Roark v. Humana, Inc., 307 F.3d at 310-11.

The complete preemption doctrine is something of a misnomer because it does not completely preempt all state-law claims; only where a state law claim is found to fall “within the scope” of a statute’s preemption provision is it considered to be converted to a federal cause of action. Metropolitan Life, 481 U.S. at 64-66, 107 S.Ct. 1542. In Metropolitan Life the Supreme Court examined the language and structure of ERISA and the legislative history to conclude that the statute completely preempted state law contract and tort claims because the plaintiff’s claim for benefits was within the scope of § 502(a)(1)(B), 29 U.S.C. § 1132(a), and that the “ultimate touchstone” guiding that determination is Congressional intent. Id. at 65-66, 107 S.Ct. 1542. The Fifth Circuit interprets the scope of complete preemption as encompassing the whole § 502(a) provision, even though it acknowledges there is some uncertainty about whether its scope is limited to claims fall *627 ing within § 502(a)(1)(B), which was the only section at issue in Metropolitan Life. McClelland, 155 F.3d at 517 n. 34.

It is important to note that a federal remedy need not be available under the federal statute for federal preemption of a state law cause of action. Lister v. Stark, 890 F.2d 941, 946 (7th Cir.1989), cert. denied, 498 U.S. 1011, 111 S.Ct. 579, 112 L.Ed.2d 584 (1990). See, e.g., Pilot Life, 481 U.S. at 54, 107 S.Ct. 1549 (“The policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA.”); Agrawal v. Paul Revere Life Ins. Co., 205 F.3d 297, 302 (6th Cir.2000)(“As a general rule, the absence of a remedy under ERISA does not mean that state-law remedies are preserved.”); Hubbard v. Blue Cross & Blue Shield Ass’n, 42 F.3d 942 (5th Cir.1995)(summary judgment appropriate where preempted claim had no remedy under the statute), cert. denied, 515 U.S. 1122, 115 S.Ct. 2276, 132 L.Ed.2d 280 (1995). 117 See also Caterpillar, 482 U.S. at 391 n. 4, 107 S.Ct. 2425 (rejecting Court of Appeals’ holding that “a case may not be removed on the ground that it is completely pre-empted unless federal cause of action relied upon provides the plaintiff with a remedy.”).

After the enactment of ERISA, the Supreme Court initially read the ordinary preemption clause very broadly. It found that Congress intentionally drafted the provisions of ERISA to be expansive and to “establish pension plan regulation as exclusively a federal concern.” Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523, 101 S.Ct. 1895, 68 L.Ed.2d 402 (1981). See also FMC Corp. v. Holliday, 498 U.S. 52, 58, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990)(“[T]he ERISA preemption clause is conspicuous for its breadth. It establishes as an area of exclusive federal concern the subject of every state law that relates to an employee benefit plan governed by ERISA.”). Thus the phrase, “relate to” in § 514(a) was construed in its “broad” common-sense meaning as “hav[ing] a connection with or reference to such plan” and as not limited to “state laws specifically designed to affect employee benefit plans.” Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985); Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 98, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983); Reliable Home Health Care, Inc. v. Union Central Ins. Co., 295 F.3d 505, 515 (5th Cir.2002). Courts have also held that state law causes of action were preempted by 29 U.S.C. § 1144(a) when two elements are present: 1) the state laws “address an area of exclusive federal concern, such as the right to receive benefits under the terms of an ERISA plan; and 2) the claims directly affect the relationship [among] the traditional ERISA entities the employer, the plan and its fiduciaries, and the participants and beneficiaries.” Hollis v. Provident Life and Acc. Ins. Co., 259 F.3d 410, 414 (5th Cir.2001); 29 C.F.R. § 2510.3-3(b)(2001); Memorial Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 245 (5th Cir.1990).

In recent years the Supreme Court has shown greater deference to state law in finding its early definition of “relates to” overly inclusive and in narrowing the *628 scope of and establishing a stricter standard for ERISA’s § 514(a) preemption. See, e.g., Arizona Carpenters, 125 F.3d at 723 (“[T]he ‘relates to’ test may lead to an overly expansive view of preemption.”), citing New York State Conference of Blue Cross and Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). 118 Noting that even if the state law does not “refer to” ERISA plans, it may still be preempted if it has a “connection with” such plans, the Supreme Court realized that “an uncritical literalism” in applying the standard of a “connection with” ERISA plans was not very useful in determining Congress’ intent regarding the scope of preemption under § 514(a). Travelers, 514 U.S. at 656, 115 S.Ct. 1671. Acknowledging ERISA’s “unhelpful text and the frustrating difficulty of defining its key terms,” the Supreme Court began focusing instead on the “federal interest in uniformity” and the objectives of the statute “as a guide to the scope of the state law that Congress understood would survive.” Bullock v. Equitable Life Ass. Soc. Of U.S., 259 F.3d 395, 399 nn. 10, 11 (5th Cir.2001), quoting inter alia De Buono v. NYSA-ILA Med. & Clinical Services Fund, 520 U.S. 806, 813-15, 117 S.Ct. 1747, 138 L.Ed.2d 21 (1997). ERISA’s primary objectives are to “protect ... the interests of participants ... and their beneficiaries, by requiring the disclosure and reporting ... of financial and other information ... by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, ... providing for appropriate remedies, sanctions, and ready access to the Federal courts, and by improving the equitable character and soundness of such plans by requiring them to vest the accrued benefits of employees with significant periods of service, to meet minimum standards of funding, and requiring plan termination insurance.” 29 U.S.C. § 1001(b) and (c). In California Labor Standards, the Supreme Court added that the objectives of ERISA should be used to consider the “nature of the effect of the state law on ERISA plans.” 519 U.S. at 325, 117 S.Ct. 832. Moreover, Congressional intent focused on the need for uniformity of law regulating ERISA employee benefit plans

to ensure that plans and plan sponsors would be subject to a uniform body of benefits law; the goal was to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government ..., [and to prevent] the potential for conflict in substantive law ... requiring the tailoring of plans and employer conduct to the peculiarities of the law of each jurisdiction.

Travelers Ins. Co., 514 U.S. at 656-57, 115 S.Ct. 1671, quoting Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990).

As previously discussed, in Shaw the Supreme Court defined § 514(a)’s “relates to” an employee benefit plan as “hav[ing] a connection with or reference to” such a plan. 463 U.S. at 96-97, 103 S.Ct. 2890. *629 The Supreme Court subsequently has attempted to refíne and to limit the meaning of the phrase, “reference to.”

In Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988), a collection agency obtained money judgments against some participants in an ERISA employee welfare benefit plan. The Supreme Court, reviewing two Georgia statutes, found there was no preemption by ERISA of a state garnishment statute of general applicability that was applied to collect the judgments against ERISA plan fiduciaries even though it might burden the administration of that plan. It reached this determination on the grounds that Congress did not intend ERISA to forbid garnishment of welfare benefit plans and because the statute made no reference to ERISA plans, did not require that a plan be established or maintained, and did not regulate the terms or conditions of the plan. In contrast the Supreme Court found that another statute that expressly singled out ERISA plans for protective treatment was preempted by § 514(a), i.e., because it was “related” by express reference to ERISA plans and was specifically designed to affect ERISA plans. Furthermore the preemption occurred even though the statute might have been enacted to effect ERISA’s underlying objectives, because § 514(a) “ ‘displaces all state laws that fall within its sphere, even including those that are consistent with ERISA’s substantive requirements.’ ” Id. at 829, 108 S.Ct. 2182, quoting Metropolitan Life, 471 U.S. at 739, 105 S.Ct. 2380.

While most of the cases dealing with the more restrictive preemption analysis concern statutes, in Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990), the Supreme Court addressed a wrongful discharge claim brought under state tort and contract theories and seeking compensatory and punitive damages. In that action the plaintiff-employee alleged that his employer wrongfully discharged him, mainly to avoid having to contribute to and pay him benefits under his ERISA pension fund plan. When the litigation had earlier reached the Texas Supreme Court, the state high court had recognized that an at-will employee can state a cause of action for wrongful discharge where the alleged motive was contrary to public policy, in this instance that the employee was fired by the employer to deprive the employee of pension benefits. McClendon v. Ingersoll-Rand Co., 779 S.W.2d 69, 70-71 (Tex.1989), rev’d, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990).

On final appeal, the United States Supreme Court focused on Congressional intent behind ERISA by examining ERISA’s language, structure, and purposes to determine if the common law claim was preempted. McClendon, 498 U.S. at 137-38, 111 S.Ct. 478. The Supreme Court held that there was express preemption by ERISA, under the language of § 514(a), of the common-law wrongful discharge claim, because the plaintiff had pleaded and the trial court ultimately found (1) as “the critical factor,” the existence of an ERISA pension plan, and (2) a “pension-defeating motive” for the termination of plaintiffs employment, which thus “relates to” that plan. Id. at 139-40, 111 S.Ct. 478. The Court also emphasized that to allow state-law suits such as this wrongful discharge action to go forward would impose burdensome administrative and financial costs of complying with differing requirements among states or between a state and the federal government and potential conflicts in substantive law contrary to the purposes of § 514(a). Id. at 142, 111 S.Ct. 478. Moreover, the Supreme Court concluded that there was also conflict preemption in McClendon because the state common-law claim conflicts with ERISA § 510, *630 29 U.S.C. § 1140, which prohibits interference with rights provided to plan participants by the statute, including the termination of any plan participant in order to interfere with his attainment of any right ... under the plan, in combination with the limitations of the civil enforcement provision in § 502(a) with its explicit exclusive federal court jurisdiction and remedy for violation of participants’ rights guaranteed by ERISA. Id. at 142-44, 111 S.Ct. 478. 119 The high court emphasized, “ ‘[T]he mere existence of a federal regulatory or enforcement scheme’ ” by itself was not sufficient to imply preemption; the added “special feature” was § 514(a)’s exclusive jurisdiction and remedies for participants deprived of their rights under ERISA, which warranted preemption, even when state law authorized a remedy not available under ERISA. Id. at 143-44, 111 S.Ct. 478.

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