Patricia Fox; Maria Cardeno v. Herzog Heine Geduld, Inc.

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No: 06-1333
PATRICIA FOX;
MARIA CARDENO,
Appellants
v.
HERZOG HEINE GEDULD, INC.; EMANUEL E. GEDULD; IRWIN GEDULD;
JOHN E. HERZOG; STEPHEN J. NELSON; JOSEPH J. FRAZZITTA; KENNETH O.
BRADLEY; CHARLES CHRISTOFILIS; STATE STREET BANK & TRUST CO.;
MERRILL LYNCH & CO.; MLIS INC.; MERRILL LYNCH ESOP
Appeal from the United States District Court
for the District of New Jersey
(Civ. No. 01-cv-01827)
District Judge: Hon. William J. Martini
Submitted Pursuant to Third Circuit LAR 34.1(a)
January 8, 2007
Before: McKEE, AMBRO, and FISHER, Circuit Judges
(Filed: April 16, 2007)
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OPINION
_____________________
McKEE, Circuit Judge.
Patricia Fox and Maria Cardeno appeal the District Court’s grant of summary
judgment in favor of Herzog, Heine, and Geduld, Inc.; Emanual E. Geduld, Irwin Geduld,

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John E. Herzog, State Street Bank and Trust Company, and the Merrill Lynch
Employees’ Stock Ownership Plan. We agree that plaintiffs’ claim is wholly without
merit, and we will affirm for the reasons set forth below.
I.
Because we write primarily for the parties, we need not recite the underlying facts
or procedural history of this case.
The District Court had jurisdiction pursuant to 28 U.S.C. §§ 1132(f), and 1331.
We have jurisdiction pursuant to 28 U.S.C. § 1291. We exercise plenary review over the
District Court’s legal conclusions and review the District Court’s factual findings under a
“clearly erroneous” standard. See Kemmerer v. ICI Ams. Inc., 70 F.3d 281, 286 (3d Cir.
1995); U&W Indus. Supply, Inc. v. Martin Marietta Alumina, 34 F.3d 180, 185 (3d Cir.
1994).
The District Court denied relief based upon its finding that the transactions in
question did not result in a “loss to the plan.” Plaintiffs do not challenge that finding, and
the record would not support any such challenge. It is uncontested that Merrill Lynch’s
acquisition of HHG benefitted HHG’s shareholders by allowing HHG’s shareholders to
exchange illiquid shares of HHG stock for shares of Merrill Lynch for a very substantial
gain.
The District Court also correctly held that plaintiffs could not state a claim for
monetary damages for breach of fiduciary duty under ERISA, absent a “loss to the plan”
as opposed to a loss suffered by individual beneficiaries or a subclass of beneficiaries.

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See Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 140 (1985); Hein v. FDIC, 88 F.3d
210, 222-23 (3d Cir. 1996); Fox v. Herzog, Heine, Geduld, Inc., 2005 WL 3542464
(D.N.J. 2005). Plaintiffs mistakenly rely on In re Schering-Plough Corp. ERISA
Litigation, 420 F.3d 230 (3d Cir. 2005), for the proposition that a loss to a subset of plan
participants is actionable when it results from a breach of fiduciary duty. See Appellant’s
Br. at 11-12. However, we there held that the record demonstrated “a ‘loss’ to the Plan
within the meaning of [29 U.S.C.] § 1109.” 420 F.3d at 235.
Plaintiffs simply can not establish that a loss occurred as the result of the merger of
the HHG Employees’ Stock Ownership Plan and the Merrill Lynch Employees’ Stock
Ownership Plan. We have previously explained that ERISA does not confer any
substantive rights. Rather, it ensures that employees receive benefits that they are entitled
to. Bennett v. Conrail Matched Savs. Plan Admin. Comm., 168 F.3d 671, 677 (3d Cir.
1999). Plaintiff primarily respond to Bennett by stating that our decision there “should
be overruled . . .” Appellant’ Br. at 11. However, “[i]t is the tradition of this court that
the holding of a panel in a reported opinion is binding on subsequent panels. Thus, no
subsequent panel overrules the holding in a published opinion of a previous panel. Court
en banc consideration is required to do so.” Third Circuit I.O.P. 9.1; see also Reich v.
D.M. Sabia Co, 90 F.3d 854 (3d Cir. 1996). We realize that plaintiffs argue in the
alternative that the District Court should have distinguished Bennett. However, we agree
that our discussion in Bennett is relevant to this analysis. In Bennett, we stated that
“ERISA does not confer substantive rights on employees; rather it ensures that they will

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receive those benefits that the employers have guaranteed to them.” 168 F.3d at 677. The
challenged transaction here did nothing to jeopardize employees’ benefits.
Accordingly, the District Court correctly concluded that plaintiffs could not
establish the loss that is the condition precedent to their ERISA claim.
II.
The District Court also correctly concluded that plaintiffs were not entitled to
equitable relief under ERISA § 502(a)(3).
In order to award equitable relief under § 502(a)(3), “money or property identified
as belonging in good conscience to the plaintiff [must] clearly be traced to particular
funds or property in the defendant’s possession.” Great-West Life & Annuity Ins. v.
Knudson, 534 U.S. 183, 212 (2002). As the District Court explained, “ since Plaintiffs
have no claim to the unallocated shares, they cannot show that Defendants are in
possession of something that rightfully belongs to them.” A6.
III.
Thus, for the reasons stated above, we will affirm the District Court’s grant of
summary judgment to Defendants and against Plaintiffs.

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