SELYA, Circuit Judge.
A cadre of former pilots for Eastern Airlines, Inc. (Eastern) brought an action under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. (1994), against the trustee of the failed air carrier's retirement plan. The district court dismissed the suit after reviewing the trust agreement and concluding that the trustee was not subject to ERISA liability as a fiduciary or co-fiduciary in respect to the harms alleged. The plaintiffs appeal. We affirm.
We draw the facts from the plaintiffs' complaint and the trust agreement. In 1958, Eastern and the union representing its pilots established a defined contribution retirement plan (the Plan) designed to provide retirees with a range of pension options. Almost a quarter-century later, the Plan's administrative committee (the TAC) retained State Street Bank and Trust Company (the Bank) to hold the Plan's assets in trust, manage them as directed, and periodically report their value (so that the TAC, inter alia, could effectuate the Plan by calculating annuity and lump-sum retirement benefits). The parties spelled out the Bank's duties and obligations qua trustee in a trust agreement (the Agreement).
As time went by, the Plan invested heavily in real estate. In reporting the value of these investments, the Bank relied on information obtained from Hawthorne Associates, Inc. (Hawthorne), the Plan's principal investment manager, in the form of periodic appraisals prepared by Blake, a consultant engaged by Hawthorne. Despite a subsequent decline in the real estate market, Blake assigned consistently high valuations to the Plan's properties and the Bank parroted those valuations in its reports to the TAC.
In the summer of 1991, the Bank expressed concern anent the figures supplied by Hawthorne. Eventually, it hired Spaulding & Slye (S & S), an independent appraisal firm, to review Blake's handiwork. Upon encountering difficulty in gaining access to the necessary information, the Bank wrote to Hawthorne stating that:
In short order, Hawthorne relented and an unencumbered review proceeded.
S & S thereafter issued a report that criticized Blake's valuations and recommended that new appraisals be secured from a new appraiser. The Bank submitted the S & S report to the TAC on November 8, 1991. One week later, the Bank wrote to the TAC's attorney expressing concern that, according to S & S, "many of the appraisals are incomplete and/or suffer from methodological flaws." The Bank declared that it was "unwilling to continue to carry these valuations on its books without qualification in light of the[se] concerns." Within a matter of weeks, Hawthorne informed the Bank that it had lowered the appraised values of certain properties. The Bank accepted the new figures without further investigation.
II. THE ENSUING LITIGATION
Eastern filed for bankruptcy in 1989. In due course, several quondam pilots brought an action in a Florida federal court against the Plan, its sponsors, the TAC, and sundry other parties (not including the Bank). The plaintiffs' complaint invoked ERISA and alleged myriad breaches of fiduciary duty in connection with the investment of the Plan's assets. See Beddall v. Eastern Air Lines, C.A. No. 91-1865-CIV (S.D.Fla.) (Beddall I). The Florida court transferred the case to Massachusetts. See 28 U.S.C. § 1404(a).
The Beddall I plaintiffs moved to amend the complaint to add the Bank as a defendant. As a precaution, they also initiated a separate suit against the Bank in the Massachusetts federal court (Beddall II). The complaint in the latter suit charged that the Bank violated ERISA's fiduciary provisions by its failure to ensure that the Plan's holdings were valued appropriately.
Judge Wolf eventually approved a class action settlement in Beddall I, see Beddall v. Eastern Airlines Variable Benefit Retirement Plan for Pilots, No. 93-12074 (D.Mass. Nov. 7, 1996) (order approving final settlement),
III. STANDARD OF REVIEW
We afford de novo review to a district court's resolution of a motion to dismiss. See Garita Hotel Ltd. Partnership v. Ponce Fed. Bank, 958 F.2d 15, 17 (1st Cir.1992). Like the court below we must accept as true the factual allegations of the complaint, construe all reasonable inferences therefrom in favor of the plaintiffs, and determine whether the complaint, so read, limns facts sufficient to justify recovery on any cognizable theory of the case. See Dartmouth Review v. Dartmouth College, 889 F.2d 13, 16 (1st Cir. 1989).
This is familiar lore. Here, however, there is an odd twist: the court below scrutinized not only the complaint but also the Agreement — and it is undisputed that the plaintiffs neither appended the latter document to the complaint nor incorporated it therein by an explicit reference. In this posture of the case, the lower court's consideration of the Agreement gives us pause.
We think that this situation calls for a practical, commonsense approach — one that does not elevate form over substance. The complaint discusses the Agreement at considerable length. And, although it states conclusorily that "State Street is a fiduciary of the Plan," it then proceeds to summarize the parts of the Agreement that, in the plaintiffs' view, justify this characterization. The Bank responded to these allegations by filing a Rule 12(b)(6) motion and appending to it a
Under these circumstances, the Agreement was properly before the court. When, as now, a complaint's factual allegations are expressly linked to — and admittedly dependent upon — a document (the authenticity of which is not challenged), that document effectively merges into the pleadings and the trial court can review it in deciding a motion to dismiss under Rule 12(b)(6). See Fudge v. Penthouse Int'l, Ltd., 840 F.2d 1012, 1015 (1st Cir.1988); see also Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994) ("[D]ocuments whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss."); 2 James Wm. Moore et al., Moore's Federal Practice § 12.34 (3d ed.1997) (explaining that courts may consider "[u]ndisputed documents alleged or referenced in the complaint" in deciding a motion to dismiss); see generally Fed.R.Civ.P. 10(c) (stating that "[a] copy of any written instrument which is an exhibit to a pleading is a part thereof"). Accordingly, we conclude that the district court had the authority to consider the Agreement if it chose to do so.
This conclusion makes eminent sense. A district court's central task in evaluating a motion to dismiss is to determine whether the complaint alleges facts sufficient to state a cause of action. In conducting that tamisage, the court need not accept a complaint's "bald assertions" or "unsupportable conclusions." Chongris v. Board of Appeals, 811 F.2d 36, 37 (1st Cir.1987). While a plaintiff only is obliged to make provable allegations, the court's inquiry into the viability of those allegations should not be hamstrung simply because the plaintiff fails to append to the complaint the very document upon which by her own admission the allegations rest. Any other approach would seriously hinder recourse to Rule 12 motions, as a plaintiff could thwart the consideration of a critical document merely by omitting it from the complaint. We doubt that the drafters of the Civil Rules, who envisioned Rule 12(b)(6) motions as a swift, uncomplicated way to weed out plainly unmeritorious cases, would have countenanced such a result.
To their credit, the plaintiffs tacitly concede that the lower court had the prerogative to review the Agreement notwithstanding its omission from the complaint. They asseverate instead that the court should not have done so without also enabling them to submit other evidence (and, thereby, convert the motion before the court into one for summary judgment). We reject that asseveration and hold that consideration of the Agreement did not in itself compel the court to treat the motion before it as one for summary judgment.
We begin our treatment of the merits by examining the pertinent portions of ERISA's
The Statutory Scheme.
ERISA's fiduciary duty provisions not only describe who is a "fiduciary" or "co-fiduciary," but also what activities constitute a breach of fiduciary duty. In the first instance, the statute reserves fiduciary liability for "named fiduciaries," defined either as those individuals listed as fiduciaries in the plan documents or those who are otherwise identified as fiduciaries pursuant to a planspecified procedure. 29 U.S.C. § 1102(a)(2). But the statute also extends fiduciary liability to functional fiduciaries — persons who act as fiduciaries (though not explicitly denominated as such) by performing at least one of several enumerated functions with respect to a plan. In this wise, the statute instructs that
29 U.S.C. § 1002(21)(A).
The key determinant of whether a person qualifies as a functional fiduciary is whether that person exercises discretionary authority in respect to, or meaningful control over, an ERISA plan, its administration, or its assets (such as by rendering investment advice). See O'Toole v. Arlington Trust Co., 681 F.2d 94, 96 (1st Cir.1982); see also 29 C.F.R. § 2509.75-8, at 571 (1986). We make two points that inform the application of this rule. First, the mere exercise of physical control or the performance of mechanical administrative tasks generally is insufficient to confer fiduciary status. See Cottrill v. Sparrow, Johnson & Ursillo, Inc., 74 F.3d 20, 21-22 (1st Cir.1996); Concha v. London, 62 F.3d 1493, 1502 (9th Cir.1995), cert. dismissed, 517 U.S. 1183, 116 S.Ct. 1710, 134 L.Ed.2d 772 (1996). Second, fiduciary status is not an all or nothing proposition; the statutory language indicates that a person is a plan fiduciary only "to the extent" that he possesses or exercises the requisite discretion and control. 29 U.S.C. § 1002(21)(A). Because one's fiduciary responsibility under ERISA is directly and solely attributable to his possession or exercise of discretionary authority, fiduciary liability arises in specific increments correlated to the vesting or performance of particular fiduciary functions in service of the plan, not in broad, general terms. See Maniace v. Commerce Bank, 40 F.3d 264, 267 (8th Cir.1994); Brandt v. Grounds, 687 F.2d 895, 897 (7th Cir.1982); NARDA, Inc. v. Rhode Island Hosp. Trust Nat'l Bank, 744 F.Supp. 685, 690 (D.Md. 1990).
An ERISA fiduciary, properly identified, must employ within the defined domain "the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use." 29 U.S.C. § 1104(a)(1)(B). The fiduciary should act "solely in the interest of the participants and beneficiaries," and his overarching purpose should be to "provid[e] benefits to the participants and their beneficiaries" and to "defray reasonable expenses of administering the plan." Id. § 1104(a)(1). A fiduciary who fails to fulfill these responsibilities is "personally liable to make good to [the] plan any losses to the plan resulting from ... such breach." Id. § 1109(a).
Co-fiduciary liability is a shorthand rubric under which one ERISA fiduciary may be liable for the failings of another fiduciary. Co-fiduciary liability inheres if a fiduciary
The Bank's Status.
The starting point for reasoned analysis of the Bank's fiduciary status is the Agreement. In support of their assertion that the Bank bears fiduciary responsibility for Hawthorne's misvaluation of the real estate investments, the plaintiffs direct our attention to three sections of the Agreement, which we set out in pertinent part:
We also deem relevant to the Bank's status as regards real estate investments another section of the Agreement that the plaintiffs tend to downplay. We reprint that provision in pertinent part:
The plaintiffs read these provisions, in the aggregate, as conferring upon the Bank sufficient authority to make it a fiduciary in regard to the Plan's real estate investments. We do not agree. The quoted text authorizes the Bank mainly to perform administrative and ministerial functions in respect to those investments which, like real estate, are held within a so-called Investment Manager Account. Without more, mechanical administrative responsibilities (such as retaining the assets and keeping a record of their value) are insufficient to ground a claim of fiduciary status. See O'Toole, 681 F.2d at 96 (concluding that a bank's duties "as the depository for the funds do not include the discretionary, advisory activities described by the [ERISA] statute"); Pension Fund—Mid Jersey Trucking Indus. — Local 701 v. Omni Funding Group, 731 F.Supp. 161, 174-75 (D.N.J.1990) (similar).
To give the devil his due, we acknowledge that section 4, standing alone, might be construed as authorizing the Bank, under some circumstances, to manage the Plan's real estate investments in a manner that would render it a fiduciary with regard to the valuation of those assets. Nevertheless, section 4 cannot be read in a vacuum. The TAC nominated Hawthorne as an investment manager in respect to the Plan's real estate holdings, and the plain language of section 6 of the Agreement leaves little doubt but that the TAC thereby relieved the Bank of all fiduciary responsibility regarding those investments. In terms, section 6 shifts to an appointed investment manager all discretion over affected assets and makes the investment manager — not the trustee — responsible for "perform[ing] such accounting and valuation functions and such other duties as shall be necessary to enable the Trustee to fully perform." To cinch matters, section 6 expressly absolves the trustee of "responsibility for supervising any Investment Manager"; confirms that the trustee is not obliged "to review or make inquiries as to any action or direction of any Investment Manager," or "to review or value the assets held in any Investment Manager account." Further, it proclaims, with a single exception not relevant to this discussion, that the trustee "shall not be liable for any act or omission of any Investment Manager." These stipulations strip any veneer of plausibility from the plaintiffs' bald assertion that the Bank is a fiduciary subject to liability for Hawthorne's overvaluation of the Plan's real property.
It is beyond cavil that when the TAC appoints an investment manager for designated assets, the Agreement shifts all significant discretion and control over those assets to the investment manager and relegates the trustee to the role of an administrative functionary. With section 6 velivolant, the Bank's remaining powers are ministerial. They involve such details as checking whether Hawthorne's instructions are in a writing signed by an authorized person and issuing periodic reports to the TAC anent the Fund's status. Although the Bank arguably may refuse to follow instructions that are not in an acceptable format, this negative discretion lies well within the administrative sphere, and its existence does not transform the Bank into a fiduciary vis-à-vis the affected assets.
We need not paint the lily. The complaint acknowledges that the TAC appointed Hawthorne to manage its real estate investments. In that circumstance, the trust document, read as a whole, divests the Bank of any and all management authority or discretionary control over those assets. Whatever the Bank's powers may have been in the absence of a duly appointed investment manager, no fiduciary responsibility in regard to the valuation of the Plan's real estate holdings survived the appointment.
The Bank's Actions.
Charting a slightly different flight path, the plaintiffs urge us to set the Agreement to one side and to deem the Bank a fiduciary of the Plan's real estate investments by virtue of its actions. They posit that, because the Bank was not entirely passive — it questioned Hawthorne's valuations, engaged an independent appraiser to review Hawthorne's numbers, and ultimately threatened to report Hawthorne's practices to the authorities — it acted as a fiduciary and thus we should treat it as one. We think not.
As a matter of policy and principle, ERISA does not impose Good Samaritan liability. A financial institution cannot be deemed to have volunteered itself as a fiduciary simply because it undertakes reporting responsibilities that exceed its official mandate. Imputing fiduciary status to those who gratuitously assist a plan's administrators is undesirable in a variety of ways, and ERISA's somewhat narrow fiduciary provisions are designed to avoid such incremental costs. See generally Mertens v. Hewitt Assocs., 508 U.S. 248, 262-63, 113 S.Ct. 2063, 2071-72, 124 L.Ed.2d 161 (1993). Viewed against this backdrop, a rule that would dampen any incentive on the part of depository institutions voluntarily to make relevant information available to fund administrators and other interested parties is counter-intuitive. Moreover, such a wrong-headed rule "would also risk creating a climate in which depository institutions would routinely increase their fees to account for the risk that fiduciary liability might attach to nonfiduciary work." Arizona State Carpenters, 125 F.3d at 722.
To the extent that the plaintiffs' fiduciary claim derives from the Bank's activities with regard to Plan assets apart from real estate, it fares no better. The plaintiffs argue that because the Bank is a fiduciary with regard to the STIF, it had a statutory responsibility to make a timely disclosure to the Plan participants of its concerns about Hawthorne's real estate valuations. We agree with the plaintiffs' premise — clearly, the Bank had some discretion with regard to
Refined to bare essence, the question is whether an ERISA fiduciary for one purpose has an obligation to disclose his suspicions even when there is no nexus between his particular fiduciary responsibilities and the perceived jeopardy. This is an issue of first impression, certainly in this circuit, and perhaps more broadly. Good arguments exist on both sides. On the one hand, the obligations of an ERISA fiduciary, while governed by federal law, are informed by the common law of trusts. That law generally treats the communication of material facts to the beneficiary as "the core of a fiduciary's responsibility." Eddy v. Colonial Life Ins. Co., 919 F.2d 747, 750 (D.C.Cir.1990).
Although this question is both close and interesting, we need not answer it today. Apart from the co-fiduciary claim, considered infra, the plaintiffs' complaint does not premise a claim on the Bank's supposed obligation to inform Plan participants of the suspected misvaluations. Instead, the complaint predicates the plaintiffs' alternate claim of fiduciary liability on the Bank's "willingness to accept Hawthorne's instructions as to the values to be carried on [the Bank's] books." According to the complaint, this gaffe "resulted in those properties being carried on the [Bank's] books for many years at values greatly in excess of their market values, which in turn led to retiring pilots receiving millions more in lump sum benefits than the benefits to which they were entitled." Nowhere in the complaint (or in the plaintiffs' opposition to the motion to dismiss, for that matter) do the plaintiffs make the entirely distinct claim that the Bank breached a fiduciary obligation under ERISA because it failed to notify Plan participants of Hawthorne's erroneous appraisals.
That ends the matter. Afterthought theories — even cleverly constructed after-thought theories — cannot be introduced for the first time in an appellate venue through the simple expedient of dressing them up to look like preexisting claims. "If any principle is settled in this circuit, it is that, absent the most extraordinary circumstances, legal theories not raised squarely in the lower court cannot be broached for the first time on appeal." Teamsters Local No. 59 v. Superline Transp. Co., 953 F.2d 17, 21 (1st Cir.1992); accord McCoy v. M.I.T., 950 F.2d 13, 22 (1st Cir.1991). Since there are no extraordinary circumstances here — when the plaintiffs sued, they had experienced counsel, a good grasp of the facts (honed by the rigors of Beddall I), and ample time to decide which arguments to press — that principle applies full bore.
The plaintiffs' final approach centers around a claim that the Bank is liable as a co-fiduciary. This claim comes perilously close to suffering from the same procedural infirmity that we have just identified. The complaint is not artfully pleaded and no explicit co-fiduciary liability claim appears on its face. Nevertheless, the plaintiffs argued a co-fiduciary liability claim theory below and the district court addressed it.
29 U.S.C. § 1105(a). Given their allegations, the plaintiffs' claim must stand or fall on the third of these scenarios.
29 U.S.C. § 1105(d) provides that a fiduciary (such as the Bank) cannot be held responsible as a co-fiduciary on the basis of acts described in section 1105(a)(2) or (3):
29 U.S.C. § 1105(d) (emphasis supplied). Given its literal meaning, section 1105(d) defenestrates the plaintiffs' claim that the Bank is subject to co-fiduciary liability in this instance.
The plaintiffs attempt to steer away from the obvious conclusion and to ensure a soft landing by two stratagems. First, they point to the exact language of section 6 of the Agreement ("The Trustee shall not be liable for any act or omission of the Investment Manager, except as provided in Section 405(a) of ERISA [29 U.S.C. § 1105(a)].") (emphasis supplied). This verbiage, they assert, evinces an intent to hold a fiduciary liable for all the conduct described in section 1105(a), without reference to the exculpatory provisions of section 1105(d). We reject that assertion out of hand. The Agreement's reference to 29 U.S.C. § 1105(a) can only be read as incorporating that section to the extent that it would impart liability under the statute. Cf. Chicago Bd. Options Exchange, Inc. v. Connecticut Gen. Life Ins. Co., 713 F.2d 254, 259 (7th Cir.1983) (stating that "although the parties may decide how much authority to vest in any person, they may not decide how much [ERISA] liability attaches to the exercise of that authority").
The plaintiffs' second attempt to avoid the clear implication of section 1105(d) is disingenuous at best. They speculate that Hawthorne may not be an "investment manager" within the meaning of the statute. This suggestion contradicts the premise on which the case has been argued up to this point and is thus precluded. In the district court, the plaintiffs repeatedly characterized Hawthorne as the Plan's "principal money manager," and never contended otherwise during the hearing on the motion to dismiss. The plaintiffs must have recognized that the district court understood their representations to be an admission that Hawthorne was an investment manager (at least for the purpose of the pending Rule 12(b)(6) motion). Moreover, the plaintiffs made no effort to correct the district court's understanding by moving for reconsideration after Judge Wolf had issued his decision. See, e.g., VanHaaren v. State Farm Mut. Auto. Ins. Co., 989 F.2d 1, 4-5 (1st Cir.1993). We generally will not permit litigants to assert contradictory positions at different stages of a lawsuit in order to advance their interests. See Patriot Cinemas, Inc. v. General Cinema Corp., 834 F.2d 208, 211-12 (1st Cir.1987); see also United States v. Levasseur, 846 F.2d 786, 792-93 (1st Cir.1988) (stating the rule but
We need go no further. Because the trust agreement (coupled with the TAC's appointment of Hawthorne) unambiguously establishes that the Bank retained no discretionary authority over the Plan's real estate investments, we hold that the complaint fails to state an actionable claim against the Bank for Hawthorne's overvaluation of those assets. By the same token, the complaint fails to state an actionable claim for co-fiduciary liability inasmuch as ERISA, specifically 29 U.S.C. § 1105(d), limits such liability to knowing participation or concealment — facts not alleged in this case. Hence, the district court appropriately granted the Bank's motion to dismiss.