Plaintiffs-Appellants, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, AFL-CIO (98-2113) v. Michigan Conference of Teamsters Welfare Fund

16 Jordan, et al. v. Michigan
Conference of Teamsters, et al.
Nos. 98-1885/2113
have failed to advance. The IBT does not explain how
Plaintiffs’ representation has been lacking in vigor. Indeed,
we need only peruse Plaintiffs’ brief on appeal to appreciate
the thoroughness of Plaintiffs’ representation. Given the
IBT’s failure to identify any potential inadequacy in
Plaintiffs’ continued representation of the IBT’s interests on
appeal, along with the untimeliness of the motion, we
conclude that the IBT’s motion to intervene was properly
denied.
For the reasons set forth above, we REVERSE the district
court’s order finding that Plaintiffs’ remittance of attorney’s
fees to the IBT would constitute a prohibited transfer, and
AFFIRM the district court’s order denying the IBT the right
to intervene in this action.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2000 FED App. 0105P (6th Cir.)
File Name: 00a0105p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
R OBERT J ORDAN , et al.
(98-1885),
Plaintiffs-Appellants,
INTERNATIONAL
BROTHERHOOD OF
TEAMSTERS, AFL-CIO
(98-2113),
Appellant,
v.
M ICHIGAN C ONFERENCE OF
TEAMSTERS W ELFARE FUND ,
et al.,
Defendants-Appellees.
;>

1
Nos. 98-1885/2113
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 96-73113—Nancy G. Edmunds, District Judge.
Argued: September 22, 1999
Decided and Filed: March 24, 2000

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2 Jordan, et al. v. Michigan
Conference of Teamsters, et al.
Nos. 98-1885/2113
*The Honorable Ann Aldrich, United States District Judge for the
Northern District of Ohio, sitting by designation.
Before: MERRITT and CLAY, Circuit Judges; ALDRICH,
District Judge.*
_________________
COUNSEL
ARGUED: Charles R. Both, YABLONSKI, BOTH &
EDELMAN, Washington, D. C., Patrick J. Szymanski,
BAPTISTE & WILDER, Washington, D.C., for Appellants.
Mark D. Wagoner, Jr., SHUMAKER, LOOP & KENDRICK,
Toledo, Ohio, for Appellees. ON BRIEF: Charles R. Both,
YABLONSKI, BOTH & EDELMAN, Washington, D. C.,
Michael J. Passino, LASSITER, TIDWELL &
HILDEBRAND, Nashville, Tennessee, Anne Curry
Thompson, KELMAN, LORIA, SIMPSON, WILL,
HARVEY & THOMPSON, Detroit, Michigan, Elizabeth
Grdina, INTERNATIONAL BROTHERHOOD OF
TEAMSTERS, LEGAL DEPARTMENT, Washington, D.C.,
for Appellants. Michael M. Briley, SHUMAKER, LOOP &
KENDRICK, Toledo, Ohio, Michael J. Mills, LAW
OFFICES OF MICHAEL J. MILLS, Bloomfield Hills,
Michigan, Claudia D. Orr, BARRIS, SCOTT, DENN &
DRIKER, Detroit, Michigan, Gerry M. Miller, PREVIANT,
GOLDBERG, UELMAN, GRATZ, MILLER &
BRUEGGEMAN, Milwaukee, Wisconsin, for Appellees.
_________________
OPINION
_________________
CLAY, Circuit Judge. Plaintiffs Robert Jordan, David Iho,
Patrick Reardon and Bill Sercombe appeal from the order
entered by the district court approving a settlement of
Plaintiffs’ ERISA class action suit brought against
Nos. 98-1885/2113 Jordan, et al. v. Michigan
Conference of Teamsters, et al.
15
required on the part of the IBT to recognize that it believed
the IBT’s interests were implicated, and could have
intervened in the suit before the final judgment was issued.
See Cuyahoga Valley Ry. Co. v. Tracy, 6 F.3d 389, 396 (6th
Cir. 1993) (denying motion to intervene where the intervenors
filed their motion after final judgment was entered, even
though the intervenors long knew of their interest in the
outcome). The IBT chose to remain silent throughout the
litigation process and instead permitted Plaintiffs to resolve
the claims. As this Court stated in Cuyahoga Valley, “[t]he
intervenors chose to rely in the Attorney General’s best
efforts, which they were entitled to do. They are not,
however, entitled to then enter the proceedings after the case
has been fully resolved, in an attempt to achieve a more
satisfactory resolution.” Id.
Further, the IBT has not met its burden of demonstrating
that Plaintiffs would inadequately represent its interest on the
attorney’s fees issue. While this burden is minimal because
the movant need not prove that the representation will in fact
be inadequate, but only that it “may be” inadequate, Miller,
103 F.3d at 1247 (quoting Linton v. Commissioner of Health
and Env’t, State of Tenn., 973 F.2d 1311, 1319 (6th Cir.
1992)), this Court has held that a movant fails to meet his
burden of demonstrating inadequate representation when 1)
no collusion is shown between the existing party and the
opposition; 2) the existing party does not have any interests
adverse to the intervener; and 3) the existing party has not
failed in the fulfillment of its duty. See Bradley v. Milliken,
828 F.2d 1186, 1192 (6th Cir. 1987).
In this case, it is clear that Plaintiffs are not in collusion
with the MCTWF. Plaintiffs have no interests adverse to the
IBT, and Plaintiffs have actively and thoroughly litigated the
attorney’s fees issue at every stage of this suit. The IBT’s
only argument is that the IBT would be more vigorous in
pursuing its claim for reimbursement than Plaintiffs.
However, the IBT does not identify a single argument that the
IBT would have made in support of its position that Plaintiffs

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14 Jordan, et al. v. Michigan
Conference of Teamsters, et al.
Nos. 98-1885/2113
of a motion to intervene pursuant Rule 24(a)(2), we review
the district court’s timeliness determination for abuse of
discretion, where the three remaining Rule 24(a)(2) factors
are reviewed de novo. See id. A district court abuses its
discretion “when it relies on clearly erroneous findings of
fact, or when it improperly applies the law or uses an
erroneous legal standard.” Phelan v. Bell, 8 F.3d 369, 372
(6th Cir. 1993). In denying the IBT’s motion to intervene for
purposes of the reimbursement of attorney’s fees issue, the
district court found that the IBT’s motion was untimely and
that intervention was unnecessary because Plaintiffs could
adequately represent the IBT’s interests on appeal.
The question of timeliness is considered with regard to five
factors: 1) the point to which the suit has progressed; 2) the
purpose for which the intervention is sought; 3) the length of
time preceding the application during which the proposed
intervenor knew or reasonably should have known of his
interest in the case; 4) the prejudice to the original parties due
to the proposed intervenor’s failure, after he or she knew or
reasonably should have known of his interest in the case, to
apply promptly for intervention; and 5) the existence of
unusual circumstances militating against or in favor of
intervention. See Grubbs v. Norris, 870 F.2d 343, 345 (6th
Cir. 1989).
The IBT did not file its motion for intervention until after
the district court issued its final judgment concerning the
attorney’s fees and costs award. We find that the IBT’s
failure to intervene before final judgment was entered renders
the motion untimely. The IBT was aware of its interest in the
attorney’s fees issue before Defendants knew of the IBT’s
monetary stake in the settlement outcome; the IBT also had
numerous opportunities to intervene in this litigation in order
to safeguard its interests on the attorney’s fees issue, ranging
from January 21, 1998, when the Settlement Agreement was
signed, to June 15, 1998, when the district court held that
Plaintiffs’ attorney’s fees award could not include the amount
previously advanced by the IBT. Hence, no foresight was
Nos. 98-1885/2113 Jordan, et al. v. Michigan
Conference of Teamsters, et al.
3
1William A. Bernard, Robert F. Rayes, H.R. Hillard, Robert J.
Lawlor, Motor Carriers Employers Association of Michigan, Ray Buratto,
Michigan Cartagemens Association, Howard McDougall, and Teamsters
Joint Council were also named as Defendants. Plaintiffs are suing
individually on their own behalf and on behalf of the beneficiaries and
participants in the Michigan Conference of Teamsters Welfare Fund.
Defendants, the Michigan Conference of Teamsters Welfare
Fund, et al.,1 wherein the court found that any remittance of
attorney’s fees advanced from funds awarded by the district
court to the International Brotherhood of Teamsters AFL-CIO
(“IBT”), constitutes a prohibited transfer of plan assets for the
benefit of a party in interest. The IBT appeals from the order
entered by the district court denying their motion to intervene
in this action. For the reasons set forth below, we REVERSE
the district court’s order finding that Plaintiffs’ remittance of
attorney’s fees to the IBT would constitute a prohibited
transfer and AFFIRM the district court’s order denying the
IBT’s motion to intervene in this action.
I.
Plaintiffs are participants in the Michigan Conference of
Teamsters Welfare Fund, (“MCTWF”), which provides health
care and other welfare benefits to approximately 17,000
members of the IBT. In July 1996, Plaintiffs filed a class
action complaint against MCTWF and the other Defendants
alleging violations of the Employment Retirement Income
Security Act (“ERISA”), 29 U.S.C. § 1001, and the Labor
Management Relations Act, 29 U.S.C. § 185, in connection
with Defendants’ administration of this fund.
The parties subsequently agreed to settle all disputes and
signed a comprehensive Stipulation and Agreement of
Settlement on January 21, 1998 (“Settlement Agreement”).
In relevant part, the Settlement Agreement provided that the
MCTWF would pay Plaintiffs’ counsel its reasonable
attorney’s fees. The agreement read in part as follows:

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4 Jordan, et al. v. Michigan
Conference of Teamsters, et al.
Nos. 98-1885/2113
Counsel for Plaintiffs shall be entitled to seek and
receive an award of reasonable attorney fees from
defendant MCTWF to be determined by the Court. The
amount of the attorney fees sought by Counsel for
Plaintiffs will be on the basis of “lodestar” approach.
See generally, Building Service Local 47 Cleaning
Contractors Pension Plan, et al. v. Grandview Raceway,
et al., 46 F.3d 1392 (6th Cir. 1995). Nothing in this
paragraph shall be deemed a waiver of any right of any
Settling Party or participant/beneficiary to object to the
reasonableness of the fees. Payment of such fees
awarded shall be the sole responsibility of MCTWF. No
additional fees shall be sought by Counsel for Plaintiffs
for activities connected with the monitoring of this
Agreement after the approval of attorney fees in this
case by the Court, as set forth above.
(J.A. at 190.) After a hearing on January 29, 1998, the district
court certified Plaintiffs’ class, tentatively approved the
Settlement Agreement, and approved the proposed class
notice in all respects.
Plaintiffs’ counsel first disclosed the IBT’s role in helping
to finance the litigation in affidavits submitted in support of
their request for attorney’s fees. Defendants subsequently
objected to Plaintiffs’ attorney’s fees request on grounds that
any money paid to Plaintiffs’ counsel that would then be
turned over to the IBT as reimbursement would constitute a
prohibited transaction under ERISA § 406(a)(1)(D), which
prohibits a benefit plan from transferring assets to a party in
interest. Although Defendants agreed with the stated value of
Plaintiffs’ counsel’s services and had no objection to the
amount requested on those grounds, they objected to any
attorney’s fee award that would compel the MCTWF to make
a prohibited transaction under ERISA. A hearing was held in
May of 1998, during which the district court considered
objections to the Settlement Agreement, and Plaintiffs’
motion for an award of attorney’s fees and expenses.
Nos. 98-1885/2113 Jordan, et al. v. Michigan
Conference of Teamsters, et al.
13
The district court misconstrued the language of § 408(b)(2),
by accepting the application of the section proposed by
Defendants, which is to limit payment for “services.”
Specifically, the district court opined that the problem with
this argument is that § 408(b)(2) speaks to services and
§ 406(a)(1)(C) is the only § 406 transaction which addresses
the “furnishing of . . . services,” which would lead the district
court to conclude that § 408(b)(2) provides an exemption only
for § 406(a)(1)(C) transactions. Because Defendants’
objections relied on § 406(a)(1)(D), which prohibits “transfer
to, or use by or for the benefit of, a party in interest, of any
assets of the plan . . .”, nothing in § 408(b)(2) speaks to assets
transfers. The district court found the § 408(b)(2) exemption
inapplicable to the Defendants’ objections. We find no
support for the district court’s interpretation. The language in
§ 408(b) explicitly states that “[t]he prohibitions provided in
§ 406 will not apply” to reasonable arrangements with a party
in interest for legal services. Nowhere is it mentioned that the
exemption should apply only to § 406(a)(1)(D) and not to
§ 406(a)(1)(C). Accordingly, we find that the district court
erred in finding that any remittance of advanced attorney’s
fees to the IBT constitutes a prohibited transfer of plan assets
for the benefit of a party in interest.
III.
Motion to Intervene
The IBT argues that the district court abused its discretion
when it denied its motion to intervene. A party moving to
intervene under Federal Rule of Civil Procedure Rule
24(a)(2) must satisfy four requirements before intervention as
of right will be granted: 1) timeliness of the application to
intervene; 2) the applicant’s substantial legal interest in the
case; 3) impairment of the applicant’s ability to protect that
interest in the absence of intervention; and 4) inadequate
representation of that interest by parties already before the
court. See Michigan State AFL-CIO v. Miller, 103 F.3d 1240,
1245 (6th Cir. 1997). In considering a district court’s denial

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12 Jordan, et al. v. Michigan
Conference of Teamsters, et al.
Nos. 98-1885/2113
and because the hours and rates are comparable to the benefit
conferred on the MCTWF and its participants by Plaintiffs’
action, Defendants cannot now assert that they subjectively
intended to benefit the IBT by complying with the attorney’s
fees agreement in the settlement.
Finally, the transaction is permissible under ERISA § 408.
Section 408 serves as an exception to the prohibitions set
forth under § 406. Section 408 reads in part:
(b) The prohibitions provided in section 406 shall not
apply to any of the following transactions . . .
(2) Contracting or making reasonable arrangements
with a party in interest for office space, or legal,
accounting or other services necessary for the
establishment or operation of the plan, if no more
than reasonable compensation is paid therefore . . .
29 U.S.C. § 1108(b)(2). However, Defendants rely on the
express language of § 408(b)(2) and argue, alternatively, that
§ 408(b)(2) does not apply here because IBT did not provide
any services to the Plan. The district court agreed with
Defendants’ contentions.
As part of the settlement, Defendants agreed to pay
Plaintiffs’ reasonable attorney’s fees and acknowledged that
the total fees and expenses sought by Plaintiffs were
reasonable. The fact that Defendants did not object as to the
hours or value of services rendered to the participants in the
fund does not alter the fact that Defendants agreed to pay
Plaintiffs their reasonable attorney’s fees which thereby fall
within the statutory exemption of ERISA § 408(b)(2), because
the IBT advanced the funds to provide legal services
necessary for the plan’s protection. See FirsTier Bank, N.A.
v. Zeller, 16 F.3d 907, 913-14 (8th Cir. 1994) (stating that
§ 408 authorizes reimbursement of legal fees incurred by the
plan trustee in performance of his duties with the plan).
Nos. 98-1885/2113 Jordan, et al. v. Michigan
Conference of Teamsters, et al.
5
In June of 1998, the district court issued a memorandum
order granting final approval to the Settlement Agreement and
awarding Plaintiffs attorney’s fees and litigation expenses.
The court agreed with Defendants that any payment ultimately
remitted to the IBT would constitute a prohibited transaction
under ERISA, and therefore held that the award could not
include money that had been advanced to Plaintiffs’ counsel
by the IBT. Accordingly, the court instructed Plaintiffs’
counsel to submit affidavits delineating the total sums
advanced by the IBT, which the court would then subtract
from the attorney’s fees and costs award.
In July of 1998, following receipt of these affidavits, the
district court entered its final judgment ordering the MCTWF
to pay attorney’s fees of $248,944.71 and litigation expenses
of $5,649.68. This award did not include the sums advanced
to Plaintiffs’ counsel by the IBT as fees ($160,978.04) and
expenses ($61,493.26). Shortly thereafter, the IBT filed a
motion to intervene under Federal Rule of Civil Procedure
24(a)(2) in order to pursue an appeal to recover the money it
had advanced to Plaintiffs’ counsel. In September of 1998,
the district court denied the IBT’s motion on grounds that it
was untimely and unnecessary, and because Plaintiffs could
adequately represent the IBT’s interests on appeal. These
timely appeals followed.
II.
ERISA § 406 and Prohibited Transactions
The Employment Retirement Insurance Security Act
(“ERISA”) § 406 prohibits plan fiduciaries from causing the
benefit plan to engage in certain “prohibited transactions”
because these transactions create a high potential for conflicts
of interest. 29 U.S.C. § 1106(a) (1994).
Section 406(a) provides in part:
(a) Except as provided in 29 U.S.C. § 1108
[ERISA § 408]:

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6 Jordan, et al. v. Michigan
Conference of Teamsters, et al.
Nos. 98-1885/2113
(1) A fiduciary with respect to a plan shall not
cause the plan to engage in a transaction, if he
knows or should know that such transaction
constitutes a direct or indirect–
(A) sale or exchange, or leasing, of any
property between the plan and a party in
interest;
(B) lending of money or other extension of
credit between the plan and a party in
interest;
(C) furnishing of goods, services, or
facilities between the plan and a party in
interest;
(D) transfer to, or use by or for the benefit
of, a party in interest, of any assets of the
plan; or
(E) acquisition, on behalf of the plan, or
any employer security or employer real
property in violation of section 1107(a) of
this title.
29 U.S.C. § 1106(a) (1994). Section § 1002(14)(D) defines
a party in interest as including “an employee organization any
of whose members who are covered by such plan.” 29 U.S.C.
§ 1002(14)(D) (1994).
Statutory construction is a question of law that this Court
reviews de novo. See EEOC v. Frank’s Nursery & Crafts,
Inc., 177 F.3d 448, 454 (6th Cir. 1999). Plaintiffs principally
argue that the award of attorney’s fees, which would then be
turned over to the IBT, is not prohibited by § 406(a)(1)(D)
because 1) the money would first be transferred to Plaintiffs’
counsel (who is not a party in interest) before being remitted
to the IBT; 2) the payment is permissible because the
MCTWF lacks any “subjective intent” to benefit the IBT; 3)
Nos. 98-1885/2113 Jordan, et al. v. Michigan
Conference of Teamsters, et al.
11
intent to benefit a party in interest. We disagree with this
interpretation because it merely skims the surface of the
important phrase “for the benefit of a party in interest” as
contained in § 406(a)(1)(D).
In Reich v. Compton, the United States Court of Appeals
for the Third Circuit considered the meaning of this language
and found as follows:
As we read this language, it provides that a fiduciary
breach occurs when the following five elements are
satisfied: 1) the person or entity is “[a] fiduciary with
respect to [the] plan”; 2) the fiduciary “cause[s]” the plan
to engage in the transaction at issue; 3) the transaction
“use[s]” plan assets; 4) the transaction’s use of the assets
is “for the benefit of” a party in interest; and 5) the
fiduciary “knows or should know” that elements three
and four are satisfied.
57 F.3d 270, 278 (3d Cir. 1995). The court further concluded
that the fourth element requires a subjective intent to benefit
a party in interest. See id. at 279. If a showing of subjective
intent were not required, “section 406(a)(1)(D) would produce
unreasonable consequences that we feel confident Congress
could not have wanted.” Id. That is, § 406 would prohibit
fiduciaries from engaging in transactions that would benefit
the plan. Id. “We thus find strong support for a subjective
intent requirement in the language of section 406(a)(1)(D),
and finding no contrary evidence in the legislative history, we
conclude that element four requires proof of a subjective
intent to benefit a party in interest.” Id. at 280.
Compton is applicable to the instant case in that it compels
the conclusion that the payment here is not prohibited because
it will not be made with the subjective intent to benefit the
IBT. The parties agreed in the Stipulation Agreement that
payment of reasonable attorney’s fees and expenses should be
made by the MCTWF utilizing the lodestar method. Because
Defendants did not object to the hours and rates of counsel,

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10 Jordan, et al. v. Michigan
Conference of Teamsters, et al.
Nos. 98-1885/2113
subchapter other than an action described in paragraph (2) by
a participant, beneficiary, or fiduciary, the court in its
discretion may allow a reasonable attorney’s fee and costs of
action to either party.” 29 U.S.C. § 1132(g)(1) (1994). A
district court has substantial discretion in making attorney fee
awards in ERISA cases. See Central States Southeast and
Southwest Area Pension Fund v. Hitchings Trucking, 492 F.
Supp. 906, 909 (E.D. Mich. 1980).
A number of cases have directed plans to make payments
to attorneys for parties in interest. See, e.g., Anita Founds. v.
ILGWU Nat’l Retirement Fund, 902 F.2d 185, 187 (2d Cir.
1990) (awarding attorney’s fees to employer); Operating
Eng’rs. Pension Trust v. Gilliam, 737 F.2d 1501, 1505 (9th
Cir. 1984) (same); Carpenters Southern California
Administrative Corp. v. Russell, 726 F.2d 1410, 1416 (9th
Cir. 1984) (same); Central States Southeast Area Pension
Fund v. Hitchings Trucking, 492 F. Supp. 906, 910 (E.D.
Mich. 1980) (same). Here, the district court pointed to the
“either party” language of § 502(g)(1) and reasoned that
because the party in interest (the IBT) was not a party to the
litigation at the time of the award, a payment by Plaintiffs to
the IBT would constitute a prohibited transfer of assets. The
district court does not, however, provide any authority to
support this conclusion. As we stated in Cyclops, and other
courts have agreed, the transactions prohibited by ERISA
§ 406 cannot be interpreted broadly. See Cyclops, 860 F.2d
at 203; Amato, 773 F.2d at 1417; Phillips, 614 F. Supp at 720.
Because ERISA must be strictly construed, we find the
district court’s interpretation of § 502(g)(1) unpersuasive.
Moreover, the transaction at issue is permissible because
MCTWF lacks subjective intent to benefit the IBT. In the
instant case, the district court noted that nothing in ERISA’s
prohibited transaction provisions “literally requires knowing
or subjective intent to benefit” the party in interest. (J.A. at
53.) Nonetheless, the district court found that Plaintiffs’
counsel’s proposal to remit money to the IBT to reimburse the
IBT for money it expended is enough to create a subjective
Nos. 98-1885/2113 Jordan, et al. v. Michigan
Conference of Teamsters, et al.
7
the transfer is permitted by ERISA § 502(g), which authorizes
a district court to award attorney’s fees to a victorious party
in a lawsuit, even if that party qualifies as “party in interest”
under § 406(a); and 4) such a transfer is expressly authorized
by ERISA § 408 as an exemption from the “prohibited
transfer” provision. We will address each of Plaintiffs’
arguments in turn.
We first consider the Congressional intent of § 406.
Section 406(a)(1) is designed to prohibit transactions that
would clearly injure the plan. See Lockheed Corp. v. Spink,
517 U.S. 882, 888 (1996). Congress adopted § 406 to prevent
employee benefit plans from engaging in transactions that
would benefit parties in interest at the expense of plan
participants and their beneficiaries. See id. at 888. This
Court, as well as others, have noted that because § 406(a)
characterizes per se violations, it should be interpreted
narrowly. See United Steelworkers of Am., Local 2116 v.
Cyclops Corp., 860 F.2d 189, 203 (6th Cir. 1988); Amato v.
Western Union Int’l, Inc., 773 F.2d 1402, 1417 (2d Cir. 1985)
(stating that a broad interpretation of the transactions
prohibited by § 406 bars plaintiff’s claim); Phillips v. Amoco
Oil Co., 614 F. Supp. 694, 720 (N.D. Ala. 1985), aff’d, 799
F.2d 1464 (11th Cir. 1986) (stating that Congress did not
intend a broad interpretation of § 406). Further, the Supreme
Court has maintained that ERISA must be strictly construed
and that courts should not assume causes of action that are not
primarily provided for in the statute. See Mertens v. Hewitt
Assocs., 508 U.S. 248, 251-52 (1993); Massachusetts Mut.
Life Ins. Co. v. Russell, 473 U.S. 134, 146 (1985); Nachman
Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359, 361
(1980); see also Brock v. Citizens Bank of Clovis, 841 F.2d
344, 346-47 (10th Cir. 1988) (finding that a payment made by
a plan to a third party was not a violation of § 406, even when
the third party used proceeds to pay off a loan to a party in
interest because “unless the act complained of falls within the
specific list of dealings proscribed by Sec. 1106 (or within the
self dealing provision of Sec. 1104(a)(1)), the transaction
does not constitute a per se violation of ERISA”).

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8 Jordan, et al. v. Michigan
Conference of Teamsters, et al.
Nos. 98-1885/2113
Congress adopted § 406(a)(1) of ERISA to prevent plans
from engaging in certain types of transactions that had been
used in the past to benefit other parties at the expense of the
plans’ participants and beneficiaries. Prior to the
implementation of ERISA, benefit plans normally engaged in
transactions with related parties so long as the transactions
were at “arm’s-length.” See Comm’r of IRS v. Keystone
Consol. Indus., 508 U.S. 152, 160 (1993). However, this rule
was difficult to monitor and therefore “provided an open door
for abuses” by plan trustees. Id. Congress then enacted
§ 406(a) with the goal of creating a bar to certain types of
transactions that were regarded as likely to injure a plan. Id.;
See S. Rep. No. 93-383, 93rd Cong., 2d Sess. (1974),
reprinted in 1974 U.S.C.C.A.N. 4890, 4981.
Plaintiffs first contend that § 406 does not apply because
the money will first be transferred to Plaintiffs’ counsel. In
recognizing that the IBT is a party in interest here, the proper
focus of the analysis is whether there is intent to benefit the
IBT. We find that there is no such intent. The legislative
history indicates that § 406 was intended to protect plan
members by preventing fiduciaries from engaging in
transactions that could hurt the plan. In Cyclops, this Court
recognized that a narrow construction of § 406 provides
flexibility. See Cyclops, 860 F.2d at 203. Notwithstanding
the narrow interpretation of prohibited transactions under
§ 406, the pertinent language in § 406 is actually quite broad.
Specifically, the language of § 406 is broad when it refers in
part, to “transfer to, or use by or for the benefit of, a party in
interest, of any assets of the plan.” 29 U.S.C. § 1106(a)
(1994). Even the narrowest construction demonstrates that
the drafters of § 406 did not intend to view the transaction at
issue as a prohibited transaction. The remittance of attorney’s
fees to the IBT would not benefit the IBT in the manner
intended to be proscribed by the statute. A benefit is defined
as an advantage, privilege, profit or gain. See Black’s Law
Dictionary 150 (7th ed. 1999). IBT would not receive a
benefit in the context of the statutory framework involved in
the instant case inasmuch as the transaction would merely
Nos. 98-1885/2113 Jordan, et al. v. Michigan
Conference of Teamsters, et al.
9
constitute repayment for money already expended by IBT in
support of Plaintiffs’ suit against Defendants. Moreover, the
IBT would receive the attorney’s fees advanced without the
payment of interest. IBT therefore does not stand to receive
a profit or gain from the alleged “prohibited transaction.”
Indeed, the transaction at issue does not contain the “abuse”
Congress sought to protect in promulgating § 406(a), as the
transaction will not injure the plan. Comm’r of IRS, 508 U.S.
at 160; S. Rep. No. 93-383, 93rd Cong., 22 Sess. (1974).
Plaintiffs, as plan members, presumably would not have
been able to bring this suit without the financial support of the
IBT, since the IBT advanced the legal costs. Plaintiffs
brought suit against Defendants because they believed that the
fund managers were engaged in corruption and
mismanagement. Indeed, if we followed the reasoning of the
district court, groups such as the IBT would be discouraged
from assisting plan members to right the wrongs committed
by fiduciaries. We believe that such a result would go against
the very core of what § 406 seeks to prevent. See Comm’r v.
Keystone Consol. Indus., Inc., 508 U.S. 152, 160 (1993)
(noting that in enacting § 406(a) barring transactions between
a “party in interest” and an ERISA plan, “Congress’ goal was
to bar categorically a transaction that was likely to injure the
pension plan”).
We now consider Plaintiffs’ contention that the transaction
at issue is permitted by ERISA § 502(g) and therefore, beyond
the reach of § 406(a)(1)(D). While § 406(a)(1)(D) prohibits
a fiduciary from causing a plan to engage in certain conduct
that is deemed to involve a prohibited transaction, it does not
limit a district court’s authority to award fees or to direct plan
trustees to make payments pursuant to a court order. Such an
interpretation of § 406 is both narrow and strained; Congress
did not intend the section to be read in that manner. See
Phillips, 614 F. Supp. at 720. ERISA § 502(g)(1) authorizes
a district court to award a reasonable attorney’s fee to a party
without regard to the party’s interest in the plan. Section
502(g)(1) reads in pertinent part: “[i]n any action under this

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