Wilmington Shipping Co. v. New England Life Insurance

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

WILMINGTON SHIPPING COMPANY; 

PETER BROWN RUFFIN, JR.,

Plaintiffs-Appellants,

and

PETER BROWN RUFFIN,

Plaintiff,  No. 06-2052

v.

NEW ENGLAND LIFE INSURANCE

COMPANY,

Defendant-Appellee.



Appeal from the United States District Court

for the Eastern District of North Carolina, at Wilmington.

Malcolm J. Howard, Senior District Judge.

(7:03-cv-00035-H)

Argued: May 21, 2007

Decided: August 3, 2007

Before WILLIAMS, Chief Judge, and MOTZ and

SHEDD, Circuit Judges.

Affirmed in part and reversed in part by published opinion. Chief

Judge Williams wrote the opinion, in which Judge Motz and Judge

Shedd joined.

COUNSEL

ARGUED: David Calep Wright, III, ROBINSON, BRADSHAW &

HINSON, P.A., Charlotte, North Carolina, for Appellants. Eric D.

2 WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE

Welsh, PARKER, POE, ADAMS & BERNSTEIN, L.L.P., Charlotte,

North Carolina, for Appellee. ON BRIEF: B. Chad Ewing, ROBIN-

SON, BRADSHAW & HINSON, P.A., Charlotte, North Carolina, for

Appellants. Stacy K. Wood, Kristin R. Poolos, PARKER, POE,

ADAMS & BERNSTEIN, L.L.P., Charlotte, North Carolina, for

Appellee.

OPINION

WILLIAMS, Chief Judge:

Appellants Wilmington Shipping Company ("WSC") and Peter

Brown Ruffin, Jr. appeal from the district court’s grant of summary

judgment to New England Life Insurance Company ("NEL") on Ruf-

fin’s claim for breach of fiduciary duty under § 502(a)(2) of the

Employee Retirement Income Security Act of 1974 ("ERISA"), 29

U.S.C.A. § 1132(a)(2) (West 1999 & Supp. 2005), and Appellants’

claims under North Carolina law for unfair and deceptive trade prac-

tices, breach of contract, negligent misrepresentation, and construc-

tive fraud. Appellants allege, among other things, that NEL grossly

mismanaged the assets of WSC’s pension plan (the "Plan"), ulti-

mately resulting in the Plan’s insolvency and termination, and that

NEL consistently misinformed them about the Plan’s financial health

in an effort to conceal this mismanagement. The district court ruled

that Ruffin, a Plan participant, does not have standing to sue under

ERISA § 502(a)(2) because the Plan is now terminated and the Pen-

sion Benefit Guaranty Corporation ("PBGC") has been appointed stat-

utory trustee over the Plan. The district court also ruled that ERISA

preempts Appellants’ various state-law claims because the claims

relate to the Plan.

We agree with the district court that ERISA preempts Appellants’

state-law claims because they "relate to" the Plan. We conclude, how-

ever, that Ruffin has standing to sue under ERISA § 502(a)(2) even

though the Plan is now terminated and the PBGC has been appointed

trustee over the Plan. Accordingly, we affirm the district court’s grant

of summary judgment to NEL on Appellants’ state-law claims and

reverse the district court’s grant of summary judgment to NEL on

Ruffin’s ERISA claim.

WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE 3

I.

A.

This is a summary judgment case, so we construe the facts in the

light most favorable to Appellants, the non-moving parties, drawing

all reasonable inferences in their favor. Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 255 (1986).

WSC is a North Carolina corporation that offers a number of ser-

vices to the steamship industry, including vessel maintenance, repair,

and warehousing. Peter Brown Ruffin, Jr. is a shareholder and officer

in WSC and a participant in the Plan. Ruffin’s father, Peter Brown

Ruffin, Sr., was one of WSC’s founders. NEL is a Massachusetts

insurance company.1

On January 1, 1970, WSC created the Plan as a defined-benefit

pension plan for its employees.2 WSC employed NEL to help create

the Plan. NEL advised WSC concerning all aspects of the Plan and

drafted the Plan documents. The Plan named WSC as the Plan

Administrator, and WSC administered the Plan from its inception to

its termination. As Plan Administrator, WSC did "not have any

authority over the investment of the assets of the Plan." (J.A. at 625.)3

Instead, the Plan provided that WSC would enter into group annuity

policies with an insurance company and that the insurance company

would manage the Plan’s investments.

1

New England Mutual, a subsidiary of NEL, sold WSC the two group

annuity policies at issue in this case. For ease of reference, the opinion

uses "NEL" to refer both to NEL and New England Mutual, although we

note that NEL has asserted an affirmative defense that it is not a proper

party to this action.

2

Under a defined-benefit plan, "the benefits to be received by employ-

ees are fixed and the employer’s contribution is adjusted to whatever

level is necessary to provide those benefits." Ala. Power Co. v. Davis,

431 U.S. 581, 593 n.18 (1977).

3

Citations to "(J.A. at ___.)" refer to the contents of the Joint Appendix

filed by the parties in this appeal.

4 WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE

WSC selected NEL as the insurance company that would perform

these functions.4 In 1970, NEL issued a group investment account

policy (the "GIA Policy") to WSC. The GIA Policy consisted of a

general investment account and other specialized investment accounts

for equity securities, capital growth, bonds, mortgages, and real

estate. Under the terms of the policy, the Plan Administrator had "no

individual ownership of any investments or other assets of the [invest-

ment] Accounts" and NEL had "exclusive ownership and control" of

funds deposited by the Plan. (J.A. at 1225.)

In 1982, NEL issued another policy to WSC, the Developmental

Properties Account ("DPA") Policy. Pursuant to the policy, WSC

deposited Plan funds into the DPA to be used by one of NEL’s

wholly-owned subsidiaries for investment in real estate. (J.A. at

1533.) NEL’s offering brochure for the DPA Policy described NEL

as a "statutory fiduciary under ERISA." (J.A. at 1260.) As with the

GIA Policy, the DPA Policy gave NEL exclusive control and owner-

ship of the funds invested by the Plan.

For nearly a decade, the relationship between the parties was

uneventful, but, in 1991, it changed. In that year, Ruffin and Robert

Hutchens purchased WSC. At the time, the Plan appeared on paper

to be in excellent financial shape, having roughly $5 million in assets

— with the DPA valued at around $1.5 million — and liabilities of

only $3.3 million. In fact, the Plan’s financial health seemed so

assured that, upon purchasing WSC, Ruffin and Hutchens specified

that the Plan’s surplus would go to its participants in the event the

Plan was terminated.

Following the change in ownership, WSC informed NEL during a

July 1991 meeting that it wanted to terminate the Plan and instead

fund a 401(k) plan. During the meeting, however, NEL told WSC that

the Plan could not be terminated at the time because the DPA was

"not currently liquid" due to "all cash [ ] going into properties." (J.A.

at 924-25.) WSC officials were upset by this news. They expressed

their displeasure with NEL’s investment management and questioned

4

In 1969, NEL solicited the Plan’s business by touting its more than

thirty years of experience in pension plan asset and investment manage-

ment.

WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE 5

NEL’s investment decisions with respect to both the GIA and DPA

Policies.

WSC continued to express its strong desire to terminate the Plan.

In response, NEL advised WSC to freeze future benefit accruals and

wait until the DPA was "liquid" to terminate the Plan. (J.A. at 1315.)

NEL estimated that it would take roughly two years to terminate the

Plan, and NEL’s actuary did not believe that WSC would have to

make any more contributions to the Plan, even under a "worst case

scenario." (J.A. at 1318.)

So WSC waited. All the while the DPA’s value spiraled downward.

The GIA Policy did not fare much better, producing lower-than-

market returns in both 1994 and 1995. The large number of partici-

pants entitled to Plan benefits only compounded the Plan’s financial

problems. Nevertheless, from 1991 to 1996, WSC "s[a]t tight," as

NEL advised, waiting for the DPA to become liquid so that the Plan

could be terminated. (J.A. at 1331.)

In 1996, NEL informed WSC that it needed to contribute more than

$130,000 to the Plan to completely fund it. At a meeting, Hutchens

and Bill Emerson, WSC’s CEO, again complained to NEL about

WSC’s inability to terminate the Plan and diversify its assets. NEL

responded that WSC could move the Plan’s funds into other invest-

ments, but only if the Plan paid a penalty to NEL amounting to more

than $200,000. NEL alternatively offered to allow WSC to transfer

twenty percent of the GIA Policy’s assets each year for five years, but

then only to other NEL-controlled accounts.5

WSC took NEL up on its offer to transfer twenty percent of the

GIA Policy’s funds per year. At the time, NEL reaffirmed its commit-

5

Appellants contend that NEL knew all along that the Plan was

doomed and concealed this fact from WSC. In an internal email in April

1996, one NEL employee observed that the GIA policy account was "on

the sick side," that it would "get worse over the next several years," and

that "getting out now is in [WSC’s] best interest." (J.A. at 1313.) In

another email, the employee expressed her concern that, given the Plan’s

impending doom, NEL was "really in for it on this one." (J.A. at 1314.)

6 WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE

ment to monitoring the Plan’s assets. But the DPA never recovered.

It was ultimately liquidated and paid out from 1996 to 2003.

In March 2000, NEL submitted a final termination study to WSC.

Although the study concluded that "much ground ha[d] been made

up" in terms of the Plan’s performance, the Plan was still underfunded

by between $150,000 and $200,000, an amount that NEL concluded

WSC would need to contribute if it chose to terminate the Plan imme-

diately. (J.A. at 1387-88.)

B.

On March 7, 2003, Appellants, along with Ruffin, Sr., brought suit

against NEL under ERISA § 502(a)(2), alleging that NEL had

breached its fiduciary duties to the Plan and caused the Plan severe

financial loss. NEL answered on May 19, 2003, denying the wrong-

doing and asserting a number of affirmative defenses, including that

it was not a fiduciary under ERISA.

NEL’s denial of fiduciary status under ERISA led Appellants to

move to amend their complaint to add state-law claims against NEL

for unfair and deceptive trade practices, breach of contract, negligent

misrepresentation, and constructive fraud. NEL opposed Appellants’

motion, arguing that ERISA preempted the proposed state-law claims.

On November 21, 2003, the district court granted Appellants leave to

amend their complaint to add the state-law claims.

On July 22, 2004, NEL moved for summary judgment on the

grounds that (1) Appellants’ claims were barred by the statute of limi-

tations and laches; (2) NEL was not a fiduciary under ERISA as a

matter of law; (3) ERISA preempted Appellants’ state-law claims;

and (4) there was no factual basis for Appellants’ state-law claims.

Appellants opposed the motion.6

In December 2004, the PBGC, a wholly-owned federal corporation

charged with administering ERISA and its pension insurance pro-

6

Peter Brown Ruffin, Sr. died before Appellants responded to NEL’s

motion for summary judgment.

WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE 7

gram, determined that the Plan lacked sufficient assets to continue

paying benefits to participants. The PBGC concluded that termination

of the Plan would serve the best interests of the Plan’s participants.

Accordingly, on January 28, 2005, the PBGC and WSC executed

an agreement terminating the Plan, effective December 31, 2004, and

appointing the PBGC as statutory trustee of the Plan pursuant to 29

U.S.C.A. § 1342(b) (West 1999 & Supp. 2007). On March 22, 2005,

the PBGC notified the district court of its appointment as trustee of

the now-terminated Plan.

In February 2006, the PBGC moved to dismiss WSC’s ERISA

claim because WSC was no longer a fiduciary of the Plan. In the

motion, the PBGC also informed the court that it had "decided that

it [was] not in the best interest of the terminated Pension Plan [for the

PBGC] to join in this action." (J.A. at 1911.) WSC did not oppose the

motion because it had "effectively ceased its administrative responsi-

bilities with respect to the Plan." (J.A. at 1922.) WSC did, however,

note its belief that the dismissal of its ERISA claim did "not affect

Peter Ruffin’s standing to assert a claim for breach of fiduciary duty."

(J.A. at 1922.) The PBGC took no position on the question of Ruf-

fin’s standing under ERISA.

On March 30, 2006, the district court dismissed WSC’s ERISA

claims and denied as moot NEL’s pending summary judgment

motion, but the court granted NEL leave to file another summary

judgment motion on Ruffin’s ERISA claim and Appellants’ remain-

ing state-law claims.

NEL filed another motion for summary judgment, and on August

28, 2006, the district court granted summary judgment to NEL on

Appellants’ remaining claims. The court ruled that Ruffin lacked

standing as a Plan participant to assert a claim under ERISA once the

PBGC terminated the Plan and assumed the role of statutory trustee.

The court reasoned as follows:

When a pension plan covered by Title IV terminates, PBGC

determines whether the Plan has sufficient funds to pay the

pension benefits earned by participants. 29 U.S.C.

§ 1341(c), 1342(a). If the plan is underfunded, PBGC typi-

8 WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE

cally becomes statutory trustee and assumes the obligations

to pay the benefits earned by plan participants to the extent

that they are guaranteed under Title IV. 29 U.S.C. §§ 1342,

1361. In such cases, Title IV’s insurance program is the

exclusive means through which plan participants, such as

co-plaintiff, Peter Ruffin, Jr., may recover benefits under the

plan.

J.A. at 2182 (internal quotation marks omitted).) With respect to

Appellants’s state-law claims, the court ruled that ERISA preempted

those claims because "they are based on facts, circumstances, and

allegations that relate directly to the Plan, its assets, and its adminis-

tration." (J.A. at 2183.)

Appellants timely appealed. We have jurisdiction pursuant to 28

U.S.C.A. § 1291 (West 2006).

II.

We review de novo the district court’s grant of summary judgment

to NEL. Laber v. Harvey, 438 F.3d 404, 415 (4th Cir. 2006)(en banc).

Summary judgment is appropriate "if the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any mate-

rial fact and that the moving party is entitled to a judgment as a matter

of law." Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477

U.S. 317, 324 (1986). As noted above, we construe the facts in the

light most favorable to Appellants and draw all reasonable inferences

in their favor. Anderson, 477 U.S. at 255. In this appeal, Ruffin chal-

lenges the district court’s ruling that he does not have standing under

ERISA § 502(a)(2) to sue for breach of fiduciary duty now that the

Plan is terminated and the PBGC is statutory trustee, and Appellants

together challenge the district court’s ruling that ERISA preempts

their various state-law claims. We address these arguments in turn.

A.

Because PBGC’s involvement in this case is central to the argu-

ments on appeal, a description of its functions under ERISA is in

WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE 9

order. When PBGC is appointed as statutory trustee over a terminated

plan, it wears two hats: one as guarantor of ERISA’s insurance pro-

gram under Title IV and one as trustee. These roles are different.

1. The PBGC as Guarantor.

The PBGC is a wholly-owned corporation of the United States

Government that is modeled after the Federal Deposit Insurance Cor-

poration. Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633,

636-37 (1990). The PBGC’s Board of Directors consists of the Secre-

taries of the Treasury, Labor, and Commerce. 29 U.S.C.A. § 1302(d)

(West 1999 & Supp. 2007). The corporation administers Title IV of

ERISA, which includes a mandatory government insurance program

that protects the pension benefits of private-sector American workers

who participate in ERISA-covered pension plans. LTV Corp., 496

U.S. at 637; 29 U.S.C.A. §§ 1321-1322a (West 1999 & Supp. 2007).

"The cost of the PBGC insurance is borne primarily by employers that

maintain ongoing pension plans." LTV Corp., 496 U.S. at 638. ERISA

requires covered employers to pay annual premiums into the program.

See 29 U.S.C.A. §§ 1306, 1307 (West 1999 & Supp. 2007). The pro-

gram "is also financed by statutory liability imposed on employers

who terminate under-funded pension plans." LTV Corp., 496 U.S. at

638. "In enacting Title IV, Congress sought to ensure that employees

and their beneficiaries would not be completely deprived of antici-

pated retirement benefits by the termination of pension plans before

sufficient funds have been accumulated in the plan." Id. at 637 (inter-

nal quotation marks omitted).

ERISA authorizes the PBGC to institute termination proceedings

against an ERISA-covered plan whenever, inter alia, the plan has

insufficient assets to satisfy its pension benefit obligations or the pos-

sible long-run loss of the PBGC with respect to the plan will increase

unreasonably if the plan is not terminated. 29 U.S.C.A. § 1342(a).

Once a plan is terminated, the PBGC is authorized to appoint a statu-

tory trustee to administer the plan. 29 U.S.C.A. § 1342(b)(1)-(3). The

trustee must use the plan’s assets to cover what it can of the plan’s

benefit obligations. 29 U.S.C.A. § 1344 (West 1999 & Supp. 2007).

If there is a shortfall, then "[t]he PBGC then must add its own funds

to ensure payment of most of the remaining ‘nonforfeitable’ benefits,

i.e., those benefits to which participants have earned entitlement

10 WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE

under the plan terms as of the date of termination." LTV Corp., 496

U.S. at 637-38. "ERISA does place limits on the benefits the PBGC

may guarantee upon plan termination, however, even if the participant

was entitled to greater benefits under the terms of the plan." Id. at

638.

2. The PBGC as Statutory Trustee.

As noted above, ERISA grants the PBGC authority to appoint a

statutory trustee over a terminated plan. The PBGC may either apply

to the appropriate district court for the appointment of the trustee or

may (as happened here) consult with the plan administrator and agree

upon a trustee. 29 U.S.C.A. § 1342(b)(3). Although the PBGC "may

request that it be appointed as trustee of a plan in any case," id.

§ 1342(b)(1), and in fact does so in the lion’s share of cases, see LTV

Corp., 496 U.S. at 637, the statute does not mandate that the PBGC

be appointed as trustee. See also Boivin v. U.S. Airways, Inc., 446

F.3d 148, 150 (D.C. Cir. 2006) (noting that, although "ERISA . . .

does not require . . . the PBGC to be appointed as the successor

trustee," "[i]n practice, the PBGC has always applied to serve as suc-

cessor trustee for distress-terminated defined-benefit plans"); Pension

Benefit Guar. Corp. v. Beverley, 404 F.3d 243, 249 (4th Cir. 2005)

("Although PBGC may request and often does request that it be

appointed as statutory plan trustee . . ., a third party may also be

appointed as statutory plan trustee.").

ERISA grants the statutory trustee all the powers held by the plan

administrator. 29 U.S.C.A. § 1342(d)(1)(A)(I). In addition, the trustee

has the power "to commence, prosecute, or defend on behalf of the

plan any suit or proceeding involving the plan," 29 U.S.C.A.

§ 1342(d)(1)(B)(iv); "collect . . . amounts due the plan," id.

§ 1342(d)(1)(B)(ii); "pay benefits under the plan," id.

§ 1342(d)(1)(B)(I); "liquidate the plan assets," id.

§ 1342(d)(1)(B)(vi); and "limit payments of benefits under the plan to

basic benefits or [ ] continue payment of some or all of the benefits

which were being paid prior to his appointment," id.

§ 1342(d)(1)(A)(iv). Thus, for example, if the plan becomes fully

funded at any point after plan termination, the statutory trustee may

order that the plan continue to pay full benefits. If, after asset alloca-

tion, the plan is underfunded, the trustee may limit payments under

WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE 11

the plan to basic benefits. In that case, and after the trustee has calcu-

lated the benefits due each participant, the PBGC calculates the

amount of nonforfeitable benefits guaranteed by the PBGC and pays

these guaranteed amounts to the trustee, who in turn pays them to

each participant. 29 U.S.C.A. § 1322.

The distinction between the PBGC’s guarantor/trustee roles is par-

ticularly important with respect to the management of plan assets. As

trustee, the PBGC must hold all plan assets, including assets recov-

ered through litigation, in trust for the plan. See 29 U.S.C.A.

§ 1342(d)(1)(A)(ii). Although, as trustee, the PBGC may pool assets

of terminated plans for the payment of benefits under any plan, see

29 U.S.C.A. § 1342(a), and is thus exempted from the fiduciary duty

imposed on common-law trustees not to pool assets, the PBGC must

still hold the pooled assets in trust for the terminated plans.7 Thus, in

its capacity as guarantor, the PBGC has no power over the assets of

terminated plans. If a private trustee is appointed to administer a ter-

minated plan, the private trustee, not the PBGC, holds and controls

the plan’s assets. See 29 U.S.C.A. § 1342(d)(1)(A)(iii) and

(d)(1)(B)(vi).

As noted above, if a plan becomes funded after termination, the

statutory trustee (be it the PBGC or a private party) retains discretion

to continue to pay full benefits under the plan. See 29 U.S.C.A.

§ 1342(d)(1)(A)(iv). But this is not the only way in which a plan can

continue to pay full benefits. Just as the PBGC may terminate an

insolvent plan, see 29 U.S.C.A. § 1342(a), it may undo the termina-

tion if it determines that the plan participants will be best served by

plan restoration, see 29 U.S.C.A. § 1347 (West 1999). In such cir-

cumstances, the PBGC may order the statutory trustee to return all or

part of the plan’s assets to the plan administrator so that the plan may

resume normal functioning. Id.

Thus, ERISA does not give the PBGC in its capacity as guarantor

any powers of plan administration. Rather, these powers are given to

7

ERISA does permit the PBGC to retain assets of plans administered

under 29 U.S.C.A. § 1342 (West 1999 & Supp. 2007), but only to the

extent that plan assets exceed plan liabilities after the termination is com-

pleted. See 29 U.S.C.A. § 1305(b)(1)(C) (West 1999).

12 WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE

the "trustee," which may or may not be the PBGC. As guarantor, then,

the PBGC’s function with respect to a terminated plan is limited to

calculating the amount necessary to guarantee each participant’s non-

forfeitable benefits and paying that amount to the trustee.

B.

We review questions of standing de novo. White Tail Park, Inc. v.

Stroube, 413 F.3d 451, 459 (4th Cir. 2005). Because "federal courts

. . . have only the power that is authorized by Article III of the Consti-

tution and the statutes enacted by Congress pursuant thereto," a plain-

tiff must posses both Article III and statutory standing, or the federal

court to which the plaintiff has come has no power to decide his case.

Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986). To

this end, "[e]very federal appellate court has a special obligation to

satisfy itself not only of its own jurisdiction, but also that of the lower

courts in a cause under review, even though the parties are prepared

to concede it." Id. (internal quotation marks omitted). And as the

party invoking federal jurisdiction, Ruffin bears the burden of estab-

lishing his standing. DaimlerChrysler Corp. v. Cuno, 126 S. Ct. 1854,

1861 (2006); Lujan v. Defenders of Wildlife, 504 U.S. 535, 561

(1992).

As the Supreme Court has explained, "[n]o principle is more funda-

mental to the judiciary’s proper role in our system of government than

the constitutional limitation of federal-court jurisdiction to actual

cases or controversies." Raines v. Byrd, 521 U.S. 811, 818

(1997)(internal quotation marks omitted). "Article III standing . . .

enforces the Constitution’s case-or-controversy requirement." Elk

Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 11 (2004). And even

if a plaintiff possesses Article III standing, he may still be prevented

from prosecuting his suit in federal court if he lacks statutory stand-

ing. Bennett v. Spear, 520 U.S. 154, 162-63 (1997).

C.

We begin with the question of Ruffin’s standing under Article III.

The requisite elements of Article III standing are familiar: "A plaintiff

must allege personal injury fairly traceable to the defendant’s alleg-

edly unlawful conduct and likely to be redressed by the requested

WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE 13

relief." Allen v. Wright, 468 U.S. 737, 751 (1984); see also Lujan v.

Defenders of Wildlife, 504 U.S. 555, 560 (1992).

1. Injury in Fact.

Although NEL suggests that the injury Ruffin relies on is too spec-

ulative, we conclude that he has sufficiently alleged an injury in fact.

Under the terms of the Plan, Ruffin, as a Plan participant, is entitled

to receive a lump-sum payment of benefits in lieu of other benefits

payable to him over time. This right to a lump-sum payment was lost

once the Plan was terminated. ERISA specifically protects a partici-

pant’s right to receive a lump-sum payment of benefits. See 29

U.S.C.A. § 1054(g)(2)(B) (West 1999 & Supp. 2005) (forbidding plan

amendments that decrease "an optional form of benefit"); 26 C.F.R.

§ 1.411(d)-4 (2007)(defining the ability to receive pensions benefits

in a lump sum as an "optional form of benefit"); Williams v. Cordis

Corp., 30 F.3d 1429, 1431 (11th Cir. 1994) ("The payment of benefits

in a lump sum is one example of a 29 U.S.C. § 1054(g)(2)(B)

‘optional form of benefits.’"). Ruffin’s alleged injury thus satisfies

Article III’s injury-in-fact requirement for it is "concrete and particu-

larized . . . and actual or imminent, not conjectural or hypothetical."

Lujan, 504 U.S. at 560 (internal quotation marks and alterations omit-

ted). As things now stand, Ruffin cannot receive a lump-sum payment

of his benefits.

That Ruffin is suing on behalf of the Plan does not alter this con-

clusion, for a plan participant may not sue under ERISA § 502(a)(2)

unless he seeks recovery on behalf of the plan. See Mass. Mutual Life

Ins. Co. v. Russell, 473 U.S. 134, 140 (1985) (holding that a partici-

pant’s action filed pursuant to ERISA § 502(a)(2) must seek remedies

that provide a "benefit [to] the plan as a whole"); Horan v. Kaiser

Steel Ret. Plan, 947 F.2d 1412, 1417 (9th Cir. 1991)("An individual

beneficiary may bring a fiduciary breach claim [under ERISA

§ 502(a)(2)], but must do so for the benefit of the plan.").8 Ruffin’s

8

Although Ruffin’s primary argument is that Article III’s injury-in-fact

requirement is satisfied because he has suffered a direct injury — the loss

of his right to a lump-sum payment — he also suggests that he satisfies

Article III’s injury requirement, irrespective of any personal injury he

14 WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE

injury is no less concrete because the benefit to him from a favorable

outcome in this litigation would derive from the restored financial

health of the Plan.

2. Causation.

Ruffin has sufficiently alleged that NEL caused the injury he com-

plains of in this case. Ruffin blames NEL for the Plan’s untimely

demise, and he claims that, as a result, he has been deprived of his

right to receive a lump-sum payment of his benefits. This easily satis-

fies Article III’s requirement that there be "a causal connection

between the injury and the conduct complained of" by the plaintiff.

Lujan, 504 U.S. at 560; Elk Grove, 542 U.S. at 12 ("The plaintiff must

show that the conduct of which he complains has caused him to suffer

an ‘injury in fact’. . . .").

3. Redressability.

All that is left is Article III’s requirement that "it [ ] be likely, as

opposed to merely speculative, that [Ruffin’s] injury will be redressed

by a favorable decision." Lujan, 504 U.S. at 560 (internal quotation

marks omitted). Here the parties completely diverge.

Ruffin’s argument is simple enough. Pursuant to his ERISA claim,

Ruffin seeks to recover on behalf of the Plan "all losses to the Plan

resulting from [NEL’s] breach of fiduciary duties" and to compel

NEL "to restore to the Plan all profits (including fees) of [NEL]

which have been made through use of assets of the Plan by [NEL]."

has suffered, because Congress has expressly granted plan participants

the right to bring derivative actions on behalf of ERISA plans for breach

of fiduciary duties. In other words, Ruffin suggests that this is an

instance where "the actual or threatened injury required by Art. III

exist[s] solely by virtue of statutes creating legal rights, the invasion of

which creates standing." Warth v. Seldin, 422 U.S. 490, 500 (1992)

(internal quotation marks omitted). We leave this argument for another

day, for here, in addition to the clear injury the Plan suffered, there is no

doubt that Ruffin has alleged a concrete personal injury, namely, the loss

of his right to a lump-sum benefit.

WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE 15

(J.A. at 77.) If Ruffin prevails in his suit against NEL, he contends

that his injury — the loss of his right to receive a lump-sum payment

of his benefits — will be redressed because funds will be awarded to

the Plan sufficient to pay all of its liabilities. In that case, the PBGC,

acting as statutory trustee, could continue to pay full benefits under

the Plan and could take any action authorized under the Plan, includ-

ing paying Ruffin his benefits in a lump sum. Alternatively, the

PBGC, acting pursuant to its administrative powers under ERISA,

could restore the fully-funded Plan pursuant to 29 U.S.C.A. § 1347,

in which case Ruffin also would be able to receive his lump-sum pay-

ment. Either way, Ruffin argues, he will get his lump-sum payment.

NEL responds that Ruffin does not stand to benefit, either directly

or derivatively, from even a full recovery in this case because the

recovered funds "would . . . be merged into the coffers of the PBGC,

while Ruffin and the other Plan participants will receive their guaran-

teed benefits — no more, no less — no matter what the outcome of

this suit." (Appellee’s Br. at 43 (emphasis in original). This is

because, according to NEL, the value of Ruffin’s benefits under the

Plan does not exceed the value of the guaranteed benefits available to

him.9 Moreover, NEL argues that Ruffin cannot receive his benefits

in a lump sum because the PBGC is generally barred by regulation

from paying guaranteed benefits in lump-sum form. See 29 C.F.R.

§ 4022.7 (2006) ("If a benefit that is guaranteed under this part is pay-

able in a single installment . . . under the terms of the plan, or an

option elected under the plan by the participant, the benefit will not

be guaranteed or paid as such."). So, in a nutshell, NEL argues that

Ruffin will get the full value of his benefits even if he cannot get them

in the form that he wants. This argument derives in part from NEL’s

belief that the PBGC in its capacity as statutory trustee is authorized

to retain recovered Plan assets that exceed the amount necessary to

pay guaranteed benefits to plan participants under 29 U.S.C.A. § 1322

and direct those assets to ERISA’s insurance coffers.

The errors in NEL’s argument are manifold. NEL mistakenly

believes that the overarching governmental interest in the solvency of

ERISA’s insurance program exempts the PBGC from the otherwise

9

NEL cites the affidavit of an actuarial associate as support for this

conclusion.

16 WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE

absolute duty that ERISA imposes on fiduciaries, including statutory

trustees, to hold plan assets in trust for the benefit of plan participants.

As trustee, the PBGC is not authorized to retain Plan assets to the

extent that they exceed the value of plan participants’ guaranteed ben-

efits. Rather, the PBGC, acting as trustee, must hold plan assets in

trust for the benefit of plan participants and pay all plan benefits, if

possible, in accordance with the statutory order of priorities. See 29

U.S.C.A. §§ 1342(d)(1)(A)(ii), 1344. Only after the PBGC as trustee

has allocated plan assets and determined that the plan has insufficient

funds to meet its obligations does the PBGC as guarantor "chip in"

from ERISA’s funds to cover the any unpaid guaranteed benefits. To

be sure, ERISA provides that its insurance funds may be credited with

the value of a terminated plan’s assets administered under § 1342, but

only to the extent that plan assets exceed plan liabilities (not to the

extent they exceed guaranteed benefits), and only after the statutory

trustee has satisfied all plan liabilities. See 29 U.S.C.A.

§ 1305(b)(1)(C) (West 1999).

NEL essentially argues that Ruffin’s injury is not redressable

because ERISA’s insurance guarantees that he will receive the full

value of his benefits, albeit in a less-preferred form, but there would

be no need to resort to ERISA’s coffers if Ruffin were to win a full

recovery. In such case, there would be no need for the PBGC in its

capacity as guarantor to pay guaranteed benefits to Plan participants

from ERISA’s insurance funds, for it could, in its capacity as trustee,

satisfy all Plan benefit obligations out of the recovered assets of the

Plan and in the ways authorized by the Plan. See 29 U.S.C.A.

§§ 1342(d)(1)(A)(I), 1344. This would include the power to pay Ruf-

fin his benefits in a lump sum.10

NEL objects that the PBGC would still be barred by regulation

10

We also question NEL’s premise that, because Ruffin stands to

receive the full dollar amount of his benefits under the Plan through

guaranteed payments, he will receive the full value of his benefits despite

not being able to receive a lump sum. For a participant with a pressing

financial need, whether the result of personal or medical emergency, a

lump-sum payment of benefits may, in relative terms, be worth much

more simply because it is paid in a lump sum as opposed to a series of

smaller payments.

WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE 17

from paying Ruffin’s benefits in a lump sum, even assuming a full

recovery, but, again, this argument conflates the PBGC’s role as

ERISA guarantor with its role as statutory trustee. The regulation at

issue, 29 C.F.R. § 4022.7, generally precludes the PBGC in its capac-

ity as guarantor from paying guaranteed benefits from Title IV’s

insurance coffers in lump-sum form. It says nothing of the PBGC’s

powers as statutory trustee. ERISA, however, does. The statute grants

the trustee all the powers of the plan administrator to do any act

authorized by the Plan or ERISA, see 29 U.S.C.A. § 1342(d)(1)(A)(I),

and the Plan authorizes payment of benefits in a lump sum. See Cooke

v. Lynne Sand & Stone Co., 70 F.3d 201, 202-03 (1st Cir. 1995)

(determining the proper discount rate for trustees of a terminated plan

to apply in calculating the amount of a lump-sum payment to a partic-

ipant, but never questioning the trustees’ authority to make such a

lump-sum payment). The regulatory restraint on the PBGC’s ability

to pay ERISA-guaranteed benefits in lump-sum form has absolutely

no bearing on its ability as statutory trustee to do what ERISA and the

Plan unequivocally grant it the power to do.

Under NEL’s view, it would be particularly disadvantageous to

plan participants for the PBGC to be appointed statutory trustee over

a terminated plan given the PBGC’s license to skirt the duties

imposed on statutory trustees to hold plan assets in trust for the bene-

fit of the plan participants. According to NEL, the PBGC in its capac-

ity as trustee may retain "excess" plan assets to satisfy its insurance

obligations under ERISA when a private trustee would be required to

hold plan assets in trust for plan participants, and a plan participant

who would otherwise be entitled to a lump-sum payment of his bene-

fits upon appointment of a private trustee would be precluded from

receiving such a lump-sum payment when the PBGC is appointed

trustee. On the other hand, NEL argues that the PBGC is not able to

perform acts or functions expressly authorized by ERISA and the Plan

for the statutory trustee to perform, including paying benefits in a

lump sum. This is an odd, even inexplicable, result, and one that we

are quite sure Congress did not intend given that Congress chose to

permit others besides the PBGC to serve as statutory trustee over a

terminated plan. The duties imposed on the statutory trustee do not

fall by the wayside just because the PBGC, and not a private party,

becomes the trustee.

18 WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE

In short, all of NEL’s arguments challenging Ruffin’s Article III

standing are without merit. Accordingly, we conclude that Ruffin has

Article III standing to sue under ERISA § 502(a)(2) for breach of

fiduciary duty.

D.

We now turn to the question of Ruffin’s standing under ERISA.

The district court held that, now that the Plan is terminated and the

PBGC has been appointed statutory trustee, Ruffin no longer has

standing under ERISA because "Title IV’s insurance program is the

exclusive means through which plan participants, such as [Ruffin],

may recover benefits under the plan." (J.A. at 2182.)

Of course, "our analysis begins with the language of the statute."

Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999) (internal

quotation marks omitted). The question of whether Ruffin as a Plan

participant has standing under ERISA § 502(a)(2) after plan termina-

tion is really a question of whether any participant has such standing

after plan termination.

ERISA § 502(a)(2) provides that "[a] civil action may be brought

— by the Secretary [of Labor], or by a [plan] participant, beneficiary

or fiduciary for appropriate relief under section 1109 of this title."11

29 U.S.C.A. § 1132(a)(2). NEL concedes that Ruffin is a Plan partici-

pant under ERISA (J.A. at 85),12 and Ruffin’s ERISA claim is for

11

Section 1109 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

liable to make good to such plan any losses to the plan resulting

from each such breach, and to restore to such plan any profits of

such fiduciary which have been made through use of assets of

the plan by the fiduciary, and shall be subject to such other equi-

table or remedial relief as the court may deem appropriate,

including removal of such fiduciary. A fiduciary may also be

removed for a violation of section 1111 of this title.

29 U.S.C.A. § 1109 (West 1999).

12

ERISA defines "participant" as "any employee or former employee

of an employer . . . who is or may become eligible to receive a benefit

WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE 19

breach of fiduciary duty, which is squarely within the scope of ERISA

§ 502(a)(2).

It is perhaps a massive understatement to say that the plain lan-

guage of ERISA § 502(a)(2) favors Ruffin. The statute grants plan

participants the right to sue for breach of fiduciary duty without quali-

fication. It does not say that a plan participant can sue for breach of

fiduciary duty "until plan termination" or "before plan termination,"

just that a participant can sue for breach of fiduciary duty. See Fire-

stone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 108 (1989)

("ERISA provides ‘a panoply of remedial devices’ for participants

and beneficiaries of benefit plans."); Glanton ex rel. ALCOA Pre-

scription Drug Plan v. AdvancePCS, Inc., 465 F.3d 1123, 1124 (9th

Cir. 2006) ("ERISA authorizes plan participants to sue fiduciaries for

losses the plan suffers from a breach of their duties."); Madonia v.

Blue Cross & Blue Shield of Va., 11 F.3d 444, 448 (4th Cir. 1993)

("ERISA confers standing upon ‘participants’ and ‘beneficiaries’ of

an ERISA plan.").

Our review of ERISA reveals, and NEL concedes, that there is no

provision in the statutory scheme that expressly revokes participants’

standing upon termination of the plan. See United States v. Morton,

467 U.S. 822, 828 (1984) ("We do not . . . construe statutory phrases

in isolation; we read statutes as a whole."). This makes sense in light

of ERISA’s purpose, which is to "protect . . . the interests of partici-

pants in employee benefit plans and their beneficiaries, . . . by estab-

lishing standards of conduct, responsibility, and obligation for

fiduciaries . . . and by providing for appropriate remedies, sanctions,

and ready access to the Federal courts." 29 U.S.C.A. § 1001(b) (West

1999).13

of any type from an employee benefit plan which covers employees of

such employer . . . or whose beneficiaries may be eligible to receive any

such benefit." 29 U.S.C.A. § 1002(7) (West 1999).

13

Although, to our knowledge, no federal appellate court has directly

addressed the question of whether participant standing ceases at plan ter-

mination, two district courts have squarely held that it does not, albeit in

unpublished opinions. See Naimoli v. Anchor Glass Container Corp.,

2006 WL 1885682, at *14 (M.D. Fla. July 7, 2006)(unpublished) (hold-

20 WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE

Normally, where the statutory language provides a clear answer,

our analysis begins and ends with that language. Hughes Aircraft Co.,

525 U.S. at 438. But NEL argues that the statute is deceiving and that

Congress indeed has given participants standing with one hand and

taken it away with the other. According to NEL, this revelation flows

from ERISA § 502(a)(2)’s placement in Title I of the statute, which

"concerns the establishment of employee benefit plans and the fund-

ing and governance of such plans while they are going concerns," and

not in Title IV, which "concerns the termination of underfunded pen-

sion plans, establishes the PBGC, and provides for the payment of

guaranteed benefits in the event of plan termination." (Appellee’s Br.

at 21-22.) Title IV provides the statutory trustee of a terminated plan

with "the power . . . to collect for the plan any amounts due to the

plan" and to "commence, prosecute, or defend on behalf of the plan

any suit or proceeding involving the plan." 29 U.S.C.A.

§ 1342(d)(1)(B)(ii) and (iv). From this structure, NEL concludes that

"Congress chose to grant broad and exclusive power and authority to

the PBGC to prosecute claims on a plan’s behalf post-termination."

(Appellee’s Br. at 26 (emphasis in original).)

NEL argues that Congress has vested this exclusive power in the

PBGC in order to free the PBGC as statutory trustee from the poten-

tial res judicata or collateral estoppel effects of other litigation on the

plan’s behalf and to protect the Government’s overriding interest in

minimizing the drain on ERISA’s insurance funds. According to

NEL, a participant could settle his ERISA claim or otherwise obtain

a less-than-favorable recovery for the plan, while potentially circum-

scribing the PBGC’s authority to prosecute claims on behalf of the

plan because of the preclusive effects of the litigation. In that case,

the PBGC in its capacity as guarantor would be required to expend

more of ERISA’s insurance funds to pay guaranteed benefits to plan

participants and beneficiaries, thereby resulting in a greater drain on

ing that Congress’s "[g]ranting the PBGC ‘the power’ to bring suit does

not eliminate a participant’s existing right to bring suit, a right specifi-

cally granted to plan participants by 29 U.S.C. § 1132(a)(2)."); Harpster

v. Aarque Mgmt. Corp., 2005 WL 1719120, at *6 (N.D. Ohio July 22,

2005)(unpublished) (same).

WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE 21

the PBGC’s already-limited resources and ultimately leading to

higher premiums for employers.

Putting aside the plain language of ERISA § 502(a)(2) for a

moment, which undoubtedly favors Ruffin and does not speak by

mere implication, NEL’s structural argument suffers from other

intractable problems. Title IV does not expressly grant the statutory

trustee the exclusive right to prosecute claims on behalf of the plan.

See 29 U.S.C.A. § 1342(d)(1)(B)(iv). It only gives the statutory

trustee "the power . . . to commence, prosecute, or defend on behalf

of the plan any suit or proceeding involving the plan." Congress

knows how to use the word ‘exclusive’ (or other similar words) when

it intends to impose the kind of limitation that NEL believes precludes

plan participants from suing after plan termination, and Congress in

fact has done so in another of ERISA’s provisions. See 29 U.S.C.A.

§ 1303(f)(4) (West 1999) ("This subsection shall be the exclusive

means for bringing actions against the [PBGC] under this subchap-

ter." (emphasis added)). "We do not lightly assume that Congress has

omitted from its adopted text requirements that it nonetheless intends

to apply, and our reluctance is even greater when Congress has shown

elsewhere in the same statute that it knows how to make such a

requirement manifest." Jama v. Immigration and Customs Enforce-

ment, 125 S. Ct. 694, 700 (2005). Insofar as the district court con-

cluded — and NEL argues — that the statutory trustee, irrespective

of who the trustee is, possesses exclusive authority to prosecute

claims on behalf of a terminated plan, there is nothing in ERISA’s

text that supports such a conclusion.

To the extent that NEL argues that the PBGC must possess exclu-

sive authority to bring breach-of-fiduciary claims on behalf of the ter-

minated Plan when it is appointed as trustee because of the overriding

interest in protecting ERISA’s fisc, its argument conflates the

PBGC’s guarantor and trustee roles. Congress has not mandated that

the PBGC serve as statutory trustee over every terminated plan.

Indeed, ERISA provides that other persons or entities (which presum-

ably could include a plan participant) may be appointed as statutory

trustee for a terminated plan. See 29 U.S.C.A. § 1342(b). In such

cases, the PBGC would not have control over the litigation decisions

made by the trustee on behalf of the plan, even if the PBGC disagreed

with the trustee’s litigation strategy. Had Congress intended the

22 WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE

PBGC to make litigation decisions on behalf of all terminated plans

as a means of protecting ERISA’s fisc, it would have mandated that

the PBGC be appointed as statutory trustee over all terminated plans.

But Congress did not so choose, and this dooms NEL’s argument that

the PBGC must possess exclusive authority to prosecute claims on

behalf of terminated plans in order to protect its insurance coffers.

NEL’s res judicata/collateral estoppel argument fares no better.

First, when the PBGC sues as trustee of a terminated plan, it seeks to

vindicate the interests of the plan’s participants, not its own interests

as guarantor of ERISA’s insurance program. In this regard, the PBGC

is no different from a private trustee of an active or terminated plan,

who may undoubtedly be bound by the results of private litigation if

the trustee’s interests were adequately represented in the previous liti-

gation. Moreover, the PBGC in its capacity as statutory trustee can

always intervene in ongoing private litigation, if necessary, to protect

the plan or its participants. See Fed. R. Civ. P. 24. Indeed, the PBGC

declined the opportunity to intervene in this case.

Second, assuming that the PBGC would be bound by the results of

private ERISA litigation, the Government’s hands would not be tied,

for the Secretary of Labor, who sits on the PBGC’s Board of Direc-

tors and has as at least as vested an interest in minimizing the drain

on ERISA’s insurance funds as the PBGC does, would be able to sue

under ERISA § 502(a)(2) on behalf of the plan. Consistent with this

understanding, a number of our sister circuits have held that, in light

of the overarching national interest in ensuring the financial stability

of pension plans and the inability of private plaintiffs to adequately

represent this interest, the Secretary of Labor is not bound by the

results reached by private litigants in ERISA suits. See, e.g., Herman

v. S.C. Nat’l Bank, 140 F.3d 1413, 1424 (11th Cir. 1998)(holding that

Secretary of Labor is not bound under doctrine of res judicata by the

results of private ERISA litigation because of the Secretary’s overrid-

ing public interest that is separate and distinct from a private litigant’s

interests); Sec. of Labor v. Fitzsimmons, 805 F.2d 682, 687-91 (7th

Cir. 1986)(en banc) (same); Donovan v. Cunningham, 716 F.2d 1455,

1462-63 (5th Cir. 1983) (same).

In sum, NEL’s various arguments do not overcome the plain lan-

guage of ERISA § 502(a)(2), which in no uncertain terms grants plan

WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE 23

participants standing to sue for fiduciary breaches. Nothing in the

structure of ERISA evidences Congress’s intent to cut off this stand-

ing after plan termination and appointment of the statutory trustee, be

it the PBGC or a third party. We thus conclude that Ruffin has stand-

ing to sue under ERISA § 502(a)(2) for breach of fiduciary duties

even though the Plan is terminated and the PBGC has been appointed

statutory trustee.

III.

A.

Appellants also challenge the district court’s grant of summary

judgment to NEL on their state-law claims. The district court con-

cluded ERISA preempted the claims because they relate to the Plan.

We review questions of ERISA preemption de novo. See Tri-State

Mach., Inc. v. Nationwide Life Ins. Co., 33 F.3d 309, 311 (4th Cir.

1994).

Preemption is fundamentally a question of congressional intent.

"The purpose of Congress is the ultimate touchstone." Pilot Life Ins.

Co. v. Dedeaux, 481 U.S. 41, 45 (1987)(internal quotation marks

omitted). Courts must "never assume[ ] lightly that Congress has der-

ogated state regulation." N. Y. State Conference of Blue Cross & Blue

Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654 (1995).

B.

ERISA’s preemption clause states that "the provisions of [ERISA]

shall supersede any and all State laws insofar as they now or hereafter

relate to any employee benefit plan." 29 U.S.C.A. § 1144(a) (West

1999). The scope of ERISA’s preemption is "deliberately expansive,

and designed to establish pension plan regulation as exclusively a fed-

eral concern." Pilot Life, 481 U.S. at 46 (internal quotation marks

omitted). "A law ‘relates to’ an employee benefit plan, in the normal

sense of the phrase, if it has a connection with or reference to such

a plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983). The

Supreme Court has repeatedly emphasized that ERISA’s preemptive

scope is not limited to "state laws specifically designed to affect

24 WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE

employee benefit plans." Pilot Life, 481 U.S. at 47-48 (internal quota-

tion marks omitted); see also Aetna Health Inc. v. Davila, 542 U.S.

200, 209 (2004) ("[A]ny state-law cause of action that duplicates,

supplements, or supplants the ERISA civil enforcement remedy . . .

is pre-empted."); Shaw, 463 U.S. at 98 ("It would have been unneces-

sary to exempt generally applicable state criminal statutes from pre-

emption in [§ 1144(b)], for example, if [§ 1144(a)] applied only to

state laws dealing specifically with ERISA plans."). Nor may parties

avoid ERISA’s preemptive reach by recasting otherwise preempted

claims as state-law contract and tort claims. See Davila, 542 U.S. at

214 ("[D]istinguishing between pre-empted and non-pre-empted

claims based on the particular label affixed to them would elevate

form over substance and [improperly] allow parties to evade the pre-

emptive scope of ERISA."). Furthermore, ERISA’s preemptive scope

is not diminished simply because a finding of preemption will leave

a gap in the relief available to a plaintiff. See id. at 214-15.

This is not to say that ERISA’s preemptive scope is unbounded.

"Some state actions may affect employee benefit plans in too tenuous,

remote, or peripheral a manner to warrant a finding that the law

‘relates to’ the plan." Shaw, 463 U.S. at 100 n.21; Mackey v. Lanier

Collection Agency & Svc., Inc., 486 U.S. 825, 833 (1988)(noting that

ERISA does not preempt "lawsuits against ERISA plans for run-of-

the-mill state-law claims such as unpaid rent, failure to pay creditors,

or event torts committed by an ERISA plan" even though such claims

"obviously affect[ ] and involv[e] ERISA plans and their trustees").

The Supreme Court has recognized that "[i]f ‘relate to’ were taken to

extend to the furthest stretch of its indeterminacy, then for all practi-

cal purposes pre-emption would never run its course, for really, uni-

versally, relations stop nowhere." Travelers, 514 U.S. at 655 (internal

quotation marks omitted). Thus, as the Court put it, courts must go

"beyond the unhelpful text . . . and look instead to the objectives of

the ERISA statute as a guide to the scope of the state law that Con-

gress understood would survive." Id. at 656.

Considering ERISA’s objectives set forth in 29 U.S.C.A.

§ 1001(b), the Supreme Court has explained that Congress intended

ERISA to preempt at least three categories of state law: (1) laws that

"mandate[ ] employee benefit structures or their administration"; (2)

laws that bind employers or plan administrators to particular choices

WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE 25

or preclude uniform administrative practice; and (3) "laws providing

alternate enforcement mechanisms" for employees to obtain ERISA

plan benefits. Id. at 658-59; Coyne & Delaney Co. v. Selman, 98 F.3d

1457, 1469 (4th Cir. 1996). A key feature of these categories of laws

is that they "implicate the relations among the traditional ERISA plan

entities." Selman, 98 F.3d at 1469 (internal quotation marks omitted).

C.

Appellants’ state-law claims against NEL consist of claims under

North Carolina law for unfair and deceptive trade practices, breach of

contract, negligent misrepresentation, and constructive fraud. Each of

these claims incorporates the allegations from Ruffin’s ERISA claim.

Appellants also set forth independent factual allegations to support

each of the claims, but these allegations largely, if not completely,

restate the general allegations underlying Ruffin’s ERISA claim. The

state-law claims, like the ERISA claim, are, as the district court noted,

"based on the investment of the Plan and the Developmental Proper-

ties Account ("DPA"), the illiquidity of the DPA, and termination of

the Plan." (J.A. at 2183.) Indeed, Appellants acknowledge that their

state-law claims "arise from the same factual circumstances as [Ruf-

fin’s] ERISA claim." (Appellant’s Br. at 46.)

It is thus not surprising that Appellants admit that the district court

ultimately "may have been right" in concluding that ERISA preempts

their state-law claims. (Appellants’ Br. at 45.) They contend, how-

ever, that the district court acted prematurely in granting summary

judgment to NEL on the basis of ERISA preemption "without deter-

mining predicate issues of fact concerning NEL’s fiduciary status."

(Appellants’ Br. at 45.) Appellants argue that their state-law claims

may not be preempted if it is later determined that NEL is not a fidu-

ciary under ERISA, this despite conceding that their state-law claims

arise from the same set of facts supporting Ruffin’s ERISA claim.

Appellants’ wait-and-see argument is unavailing. We have held

that ERISA preempts state-law claims against nonfiduciaries if those

claims relate to a plan. Custer v. Pan Am. Life Ins. Co., 12 F.3d 410,

419 (4th Cir. 1993). The central question is not whether a particular

defendant is a fiduciary, or whether the preemption decision would

create a gap in the law with respect to suits against nonfiduciaries,

26 WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE

"but rather [ ] whether the action relates to any employee benefit

plan." Id. (emphasis in original); see also Consol. Beef Indus., Inc. v.

N.Y. Life. Ins. Co., 949 F.2d 960, 964 (8th Cir. 1991)("Whether [an

entity] is a fiduciary under ERISA or not does not affect our ERISA

preemption analysis."); Gibson v. Prudential Ins. of Am., 915 F.2d

414, 418 (9th Cir. 1990) ("Congress intend[ed] ERISA to preempt

claims that relate to an employee benefit plan even if the defendant

is a nonfiduciary."); Howard v. Parisian, Inc., 807 F.2d 1560, 1565

(11th Cir. 1987) (holding that Congress’s failure to provide for com-

prehensive relief against nonfiduciaries does not alter the principle

that state-law actions against nonfiduciaries are preempted if they

relate to an ERISA-covered plan).

This focus on the conduct underlying a claim also makes good

sense given that fiduciary status under ERISA is not "an all-or-

nothing concept." Coleman v. Nationwide Life Ins. Co., 969 F.2d 54,

61 (4th Cir. 1992). Under ERISA, a person is a fiduciary

to the extent that (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 authority or responsibility to do so, or (iii) he has any

discretionary authority or discretionary responsibility in the

administration of such plan.

29 U.S.C.A. § 1002(21)(A) (West 1999) (emphasis added).The defi-

nition is couched in terms of functional control and authority over the

plan, thus necessitating that courts "examine the conduct at issue

when determining whether an individual is an ERISA fiduciary."

Hamilton v. Carell, 243 F.3d 992, 998 (6th Cir. 2001). A person may

be an ERISA fiduciary for some purposes and not for others. NEL’s

stance in this case is illustrative: although it denies fiduciary status

with respect to Appellants’ claims, it concedes that it is a fiduciary for

some purposes under ERISA.

Here, by conceding that their state-law claims would otherwise be

preempted if NEL had admitted its fiduciary status under ERISA,

WILMINGTON SHIPPING CO. v. NEW ENGLAND LIFE 27

Appellants effectively admit that substantively their state-law claims

relate to the Plan. They could hardly do otherwise. The focus of

Appellants’s state-law claims is on NEL’s management and invest-

ment of Plan assets, conduct that, irrespective of NEL’s denial of

fiduciary status, clearly lies near the heartland of ERISA’s coverage.

Indeed, Appellants candidly characterize their state-law claims as "al-

ternatives" to Ruffin’s ERISA claim, a good tip off that they seek the

kind of "alternate enforcement mechanism[ ]" that ERISA preempts.

See Travelers, 514 U.S. at 658.

In a final effort to salvage their state-law claims, Appellants con-

tend that our decisions in LeBlanc v. Cahill, 153 F.3d 134 (4th Cir.

1998),and Custer v. Sweeney, 89 F.3d 1156 (4th Cir. 1996), leave

open the possibility that their claims might not be preempted, but no

such comfort can be found in those cases. Both of those cases

involved state-law claims against third parties who did not have

exclusive, or even primary, responsibility for or discretion over

investment of the plan’s assets. Here, in contrast, Appellants’ state-

law claims rest on the very same allegations that support Ruffin’s

ERISA claim and focus on NEL’s alleged mismanagement and

imprudent investment of Plan funds. Leblanc and Custer thus are fac-

tually inapposite.

In sum, the district court did not err in ruling that ERISA preempts

Appellants’ state-law claims without first establishing NEL’s fidu-

ciary status with respect to each function it served in its relationship

with the Plan. Because Appellants’ state-law claims merely repackage

Ruffin’s ERISA claim, they are preempted by ERISA.

IV.

For the foregoing reasons, we reverse the district court’s grant of

summary judgment to NEL on Ruffin’s ERISA claim and affirm the

district court’s grant of summary judgment to NEL on Appellants’

state-law claims for unfair and deceptive trade practices, breach of

contract, negligent misrepresentation, and constructive fraud. We

remand to the district court for further proceedings consistent with

this opinion.

AFFIRMED IN PART AND REVERSED IN PART