1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-9-1995

Taylor v Peoples Nat Gas Co

Precedential or Non-Precedential:

Docket 94-3109

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Recommended Citation

"Taylor v Peoples Nat Gas Co" (1995). 1995 Decisions. Paper 69.

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UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

___________________ 

 NO. 94-3109 

___________________ 

 THOMAS H. TAYLOR, 

 Appellant

v. 

THE PEOPLES NATURAL GAS COMPANY, 

a subsidiary of Consolidated Natural Gas Company; 

SYSTEM PENSION PLAN OF CONSOLIDATED NATURAL GAS COMPANY, 

Number 001; THE ANNUITIES AND BENEFITS COMMITTEE, 

the plan administrator, 

 Appellees

______________________________________ 

On Appeal From the United States District Court 

For the Western District of Pennsylvania 

(D.C. Civ. No. 92-cv-00394) 

_______________________________________ 

Argued: September 19, l994 

Before: BECKER, COWEN, Circuit Judges, and 

POLLAK, District Judge.

*

 (Filed: March 9, l995) 

 

 THOMAS P. COLE, II, ESQUIRE (ARGUED) 

 15 East Otterman Street 

 Greensburg, PA 15601-2591 

 Attorney for Appellant

 P. JEROME RICHEY, ESQUIRE (ARGUED) 

 PHILIP J. WEIS, ESQUIRE 

 MARK T. PHILLIS, ESQUIRE 

 

 * Honorable Louis H. Pollak, United States District Judge 

for the Eastern District of Pennsylvania, sitting by designation. 
 Buchanan Ingersoll 

 Professional Corporation 

 58th Floor, USX Tower 

 600 Grant Street 

 Pittsburgh, PA 15219 

 JOYCE C. DAILEY, ESQUIRE 

 Peoples Natural Gas Company 

 625 Liberty Avenue 

 Pittsburgh, PA 15222 

 Attorneys for Appellees

 ROBERT E. WILLIAMS, ESQUIRE 

 DOUGLAS S. McDOWELL, ESQUIRE 

 McGuiness & Williams 

 1015 Fifteenth Street, N.W. 

 Washington, DC 20005 

 Attorneys for Amicus Curiae

 Equal Employment Advisory Council

 ______________________________ 

 OPINION OF THE COURT 

 _______________________________ 

BECKER, Circuit Judge. 

 This appeal arises out of an ERISA action brought by 

Thomas H. Taylor, a former employee of Peoples Natural Gas 

Company ("PNG"), against the members of the Annuities and 

Benefits Committee ("the defendants"), which is the plan 

administrator of PNG's pension plan. The district court granted 

summary judgment for the defendants. The gravamen of Taylor's 

claim is that statements regarding the retroactivity of the 

pension plan's early retirement incentive program, made to him by 

PNG's Supervisor of Employee Benefits, John Burgunder, who was 

not a member of the Annuities and Benefits Committee, constituted 
a breach of the defendants' fiduciary obligation to communicate 

complete and correct material information to plan participants 

regarding their status and options under an employee benefit 

plan. The Equal Employment Advisory Council has filed an amicus

curiae brief in support of the defendants. 

 Because Burgunder's statements form the basis of 

Taylor's suit against the defendants and Taylor has not sued 

Burgunder, we first, as a matter of logic, address the important 

question presented -- whether a plan administrator is liable for 

statements made by individuals who have been selected as nonfiduciary agents by the plan administrator to assist it in 

discharging its fiduciary obligation to administer a plan, even 

though such individuals are formally employees of the plan 

sponsor, who is not a fiduciary. We answer this question in the 

affirmative, and conclude that the defendants are responsible for 

any material misstatements made by Burgunder to Taylor regarding 

possible changes in PNG's pension plan since, in counseling 

Taylor, Burgunder was acting, at a minimum, within his apparent 

authority as an agent of the defendants. We will, however, 

affirm the judgment because the statements allegedly made by 

Burgunder do not, as a matter of law, constitute a 

misrepresentation of a material fact. 

I. 

 PNG sponsors a pension plan along with its parent 

corporation, Consolidated Natural Gas Company ("CNG"). The named 

fiduciary and plan administrator of the pension plan is the 

Annuities and Benefits Committee, which is made up of employees 
of both CNG and PNG. The members of this committee are the 

relevant defendants in this action.1 Burgunder was not a member 

of the Annuities and Benefits Committee. 

 During 1988, PNG hired several outside consulting firms 

to conduct efficiency studies to examine ways to decrease costs 

and increase the efficiency of the company's operations. In 

connection with these studies, PNG considered several downsizing 

options, including the offer of an early retirement incentive 

program through the company's pension plan. Taylor, who was 

employed during this period as a general manager in PNG's 

Information System department, participated in the efficiency 

studies and submitted a report to his boss, Scotty Amos, in which 

he concluded that, if certain changes were implemented, Taylor's 

department could operate with six fewer employees. In his report 

 

 

1 Taylor also has brought a claim against PNG, alleging a 

breach of its fiduciary obligations under ERISA. The Magistrate 

Judge granted PNG's motion for summary judgment on this claim, 

concluding that, under the circumstances, PNG was not subject, in 

its capacity as plan sponsor, to ERISA's fiduciary obligations. 

We agree. While "ERISA allows employers to wear two hats" and 

act both as plan sponsor and plan administrator, an employer can 

elect to wear only its plan sponsor "hat" and may designate, 

pursuant to ERISA § 402(a)(1), 29 U.S.C.A. § 1102(a)(1) (1985), a 

separate entity as plan administrator. Fischer v. Philadelphia 

Electric Co., 994 F.2d 130, 133 (3d Cir.), cert. denied 114 S. 

Ct. 622 (1993) (internal quotation marks omitted). PNG has made 

such an election and has designated the Annuities and Benefits 

Committee as plan administrator. Given this election, PNG is not 

subject, in its capacity as employer/plan sponsor, to ERISA's 

fiduciary obligations. See id., 994 F.2d at 133 ("As an 

employer, neither [the plan sponsor] nor its business decision to 

offer an early retirement program were subject to ERISA's 

fiduciary duties."). Thus, Taylor's claim of fiduciary breach is 

properly limited in this case to the plan administrator, the 

Annuities and Benefits Committee. 
Taylor suggested an early retirement incentive plan as a possible 

method to reduce his department's manpower. During the latter 

portion of 1988, Taylor, who started work at PNG in 1959, began 

to consider retirement, while he was aware that PNG was, 

consistent with his suggestion, considering an early retirement 

incentive program as a downsizing option. 

 During the first two months of 1989, Taylor spoke to 

Burgunder about whether PNG would adopt an early retirement 

incentive program and, if such a plan were enacted, whether it 

would be made retroactive to encompass employees retiring before 

the announcement of the program. While, as we have noted, 

Burgunder was not a member of the Annuities and Benefits 

Committee, the defendants concede that he was authorized "to 

advise employees of their rights and options under the Pension 

Plan." Appellees Br. at 21. Moreover, it was generally 

understood by PNG employees that Burgunder was the person with 

whom plan participants should speak regarding possible changes to 

the pension plan. Taylor represents that during one particular 

discussion, Burgunder told him that he believed that, should an 

early retirement program be offered, it might apply 

retroactively. More specifically, Taylor stated: 

 During and prior to the March 1st date I had 

had discussions with Mr. Burgunder relative 

to rumors and possible studies that may have 

been going on that could lead to an early 

retirement program, and it was during one of 

those discussion points where I talked with 

Mr. Burgunder about other people that were 

retiring, and he gave me the -- he told me at 

that time that he believed that if there 

would be any early retirement programs 

offered in 1989, that they would make it 
retroactive to people retired from January 

1st, until such time as they might offer the 

program. 

App. at 8b-9b. Taylor continued: 

 

 I can't recall exactly what his conversations 

were about the retroactivity other than he 

believed that if an early retirement program 

was announced or it was offered -- that might 

be a better word -- it might be retroactive 

to these people that we were talking about. 

App. at 33b. 

 Following these conversations, on November 30, 1988, 

Taylor tendered a written announcement of his intention to 

retire: 

 Please accept my request for permission to 

retire from active employment effective March 

1, 1989. . . . I would also like to change my 

retirement date should a special retirement 

package be proposed or planned on or before 

3-1-89. 

App. at 34a. Taylor in fact retired on March 1, 1989. On August 

10, roughly five months later, the Annuities and Benefits 

Committee announced that an early retirement program had been 

adopted by PNG's Board of Directors and would be available for 

employees retiring between September 1, 1989 and November 1, 

1989. This program was not made retroactive to employees -- such 

as Taylor -- retiring prior to September 1, 1989. 

 Following this announcement, Taylor brought suit 

against the plan administrator contending that the statements 

made to him by Burgunder regarding the possible retroactive 

application of the early retirement program constituted a 
misrepresentation by an ERISA plan fiduciary. The parties 

consented to have this case adjudicated by a Magistrate Judge, 28 

U.S.C.A. § 636(c) (1993), who concluded that the statements made 

by Burgunder to Taylor did not constitute a misrepresentation, 

and hence the defendants had not breached their fiduciary 

obligation. He therefore granted the defendants' motion for 

summary judgment. 

 On this appeal of the Magistrate Judge's order, 

authorized by 28 U.S.C.A. § 636(c)(3) (1993), the defendants ask 

us to affirm on the ground that Burgunder was not acting on 

behalf of the plan administrator when speaking with Taylor about 

possible changes in the pension plan or, alternatively, on the 

basis of the Magistrate Judge's reasoning that there was no 

misrepresentation as a matter of law. In reviewing an order 

granting summary judgment we exercise plenary review, applying 

the same standard that governed the district court. That 

standard provides that summary judgment should be rendered if the 

evidence is such that there is no genuine issue as to any 

material fact and that the moving party is entitled to judgment 

as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 

242, 248, 106 S. Ct. 2505, 2510 (1986). 

 II. 

A. 

 The members of the Annuities and Benefits Committee, 

the plan administrator of PNG's pension plan, are fiduciaries, 

required to "discharge [their] duties with respect to [the] plan 
solely in the interest of the participants and beneficiaries."2 

ERISA § 404(a)(1), 29 U.S.C.A. § 1104(a)(1) (1986). We addressed 

the scope of this fiduciary obligation under a similar set of 

circumstances in Fischer v. Philadelphia Electric Co., 994 F.2d 

at 130. There, employees of the Philadelphia Electric Company 

("PECO") had approached PECO's benefits counselors and questioned 

them about whether any early retirement incentive plan was being 

considered. Although PECO was considering an early retirement 

incentive plan, the benefits counselors, acting pursuant to 

explicit instructions from PECO's senior management, informed the 

plan participants that they had no knowledge of any such plan. 

The plaintiffs, plan participants who retired before the 

announcement of the early retirement incentive pension plan, 

alleged that PECO had breached its fiduciary duties under ERISA 

by making affirmative material misrepresentations regarding 

PECO's pension plan. The action against PECO was grounded on its 

alleged violation of fiduciary obligations in its capacity as 

 

 

2 As noted above, the members of the Annuities and Benefits 

Committee are the relevant defendants in this action, and Taylor 

has alleged a fiduciary breach on the part of that Committee for 

statements made by Burgunder, PNG's Supervisor of Employee 

Benefits. It is therefore necessary to analyze accurately under 

appropriate legal doctrine Taylor's appeal of the magistrate 

judge's dismissal of this action. We acknowledge that Taylor has 

also alleged a fiduciary breach on the part of PNG, a claim upon 

which the magistrate judge chose to focus in his memorandum 

opinion and which this court has disposed of in note 1. The 

disposition of this claim does not, however, obviate the need to 

properly address Taylor's parallel claim of fiduciary breach on 

the part of the Annuities and Benefits Committee. 
plan administrator.3 The district court granted summary judgment 

for PECO and the plaintiffs appealed. 

 The Fischer panel began its analysis by recognizing 

that well established case law provides that plan administrators 

have a fiduciary obligation not to affirmatively misrepresent 

material facts to plan participants. Fischer, 994 F.2d at 135 

(citing Eddy v. Colonial Life Ins. Co., 919 F.2d 747, 751 (D.C. 

Cir. 1990) ("This duty to communicate complete and correct 

material information about a beneficiary's status and options is 

not a novel idea.")); see also Bixler v. Central Penn. Teamsters 

Health-Welfare Program, 12 F.3d 1292, 1300 (3d Cir. 1993) 

(recognizing that plan administrators have "an obligation to 

convey complete and accurate information material to the 

beneficiary's circumstances"). The panel restated this 

obligation in the context of fiduciaries who counsel plan 

participants regarding the possible adoption of amendments to a 

plan: 

 we hasten to add that ERISA does not impose a 

"duty of clairvoyance" on fiduciaries. An 

ERISA fiduciary is under no obligation to 

offer precise predictions about future 

changes to its plan. Rather, its obligation 

is to answer participants' questions 

forthrightly, a duty that does not require 

the fiduciary to disclose its internal 

deliberations nor interfere with the 

substantive aspects of the collective 

bargaining process. A plan administrator may 

not make affirmative material 

misrepresentations to plan participants about 

changes to an employee pension benefits plan. 

 

 

3 See supra n.1. 
Put simply, when a plan administrator speaks, 

it must speak truthfully. 

Fischer, 994 F.2d at 135 (internal quotation marks and citations 

omitted). 

 Given this obligation, PECO contended that the 

statements made by the benefits counselors were not affirmative 

misrepresentations, since company officials had not told them of 

the discussions taking place among senior management regarding 

the contemplated adoption of an early retirement incentive 

program. The Fischer panel rejected this argument and reversed 

the district court's grant of summary judgment, concluding that, 

given the facts alleged, the plan administrator was responsible 

for statements made by the benefits counselors, and that PECO, 

which was plan administrator as well as plan sponsor, had 

therefore breached its fiduciary obligation to not affirmatively 

misrepresent material information to plan participants: 

 PECO argues that these communications cannot 

be characterized as "affirmative 

misrepresentations" because "when the 

benefits counselors . . . stated that they 

knew of no [early retirement] plan, their 

representations were correct." . . . This 

explanation will not do, for the fiduciary 

obligations owed to the plan participants 

were owed by PECo as plan administrator. 

These obligations cannot be circumvented by 

building a "Chinese wall" around those 

employees on whom plan participants 

reasonably rely for important information and 

guidance about retirement. 

Fischer, 994 F.2d at 135 (emphasis omitted). 

B. 
 While acknowledging that they had a fiduciary 

obligation as plan administrator not to materially misrepresent 

information regarding possible changes in PNG's pension plan, the 

present defendants contend that they have not violated this 

obligation since Burgunder was not a member of the Annuities and 

Benefits Committee and was not otherwise a fiduciary. The 

defendants attempt to distinguish this case from Fischer, where 

the misrepresentations were allegedly made by benefits counselors 

who were the employees of the plan administrator, PECO. In this 

action, the Annuities and Benefits Committee, and not PNG, is the 

named fiduciary, and hence, the defendants assert, they cannot be 

liable for any affirmative misrepresentations made to plan 

participants by Burgunder, PNG's employee, about possible changes 

to PNG's pension plan. While we agree that Burgunder was not a 

member of the Annuities and Benefit Committee, and otherwise not 

a fiduciary of the plan, we cannot agree with the defendants that 

Burgunder was not acting on their behalf when speaking with 

Taylor. 

 The defendants concede that Burgunder had actual 

authority, as Supervisor of Employee Benefits, to advise 

employees of their rights and options under the plan, prepare 

reports concerning participants' benefits, and calculate the 

costs of alternative plan amendments on behalf of the plan 

administrator. Appellees Br. at 21. Given that Burgunder's 

activities are limited to these administrative ministerial 

functions, we agree with the defendants that Burgunder is not a 

fiduciary. Department of Labor Regulation § 2509.75-8, 29 C.F.R. 
§ 2509.75-8, Q & A D-2 provides that such individuals, whose 

activities are limited "within a framework of policies, 

interpretations, rules, practices, and procedures made by other 

persons, fiduciaries with respect to the plan," cannot be 

individually liable as fiduciaries under ERISA, since they fail 

to exercise "the discretionary authority or discretionary 

control" over the plan required for the direct imposition of 

fiduciary liability. See ERISA § 3(21)(A), 29 U.S.C.A. 

§ 1002(21)(A) (West Supp. 1993). 

 While Burgunder is not himself a fiduciary with respect 

to the plan (and he is not a defendant in this action), he did 

function, under the regulations, as a non-fiduciary agent of the 

defendants, assisting them in discharging their authority and 

responsibility, as plan administrator, to "control and manage the 

operation and administration of the plan." ERISA § 402(a)(1), 29 

U.S.C.A. § 1102(a)(1) (1986). While Burgunder is formally the 

employee of plan sponsor PNG, he performed his activities for the 

plan on behalf of the plan administrator defendants, and not on 

behalf of the plan sponsor. The conclusion that Burgunder 

performed these tasks on behalf of the plan administrator, the 

named fiduciary with respect to the plan, is clear from the 

regulations. These provide that "[i]n discharging fiduciary 

responsibilities, a fiduciary with respect to a plan may rely on 

. . . persons who perform purely ministerial functions for such 

plan," such as "advising participants of their rights and options 

under the plan." DOL Reg. § 2509.75-8, 29 C.F.R. § 2509.75-8, Q 

& A D-2 & FR-11 (emphasis added); see also 2 JEFFREY D. MAMORSKY,
EMPLOYEE BENEFITS LAW: ERISA AND BEYOND § 12.06[4] (1993) (recognizing 

that, pursuant to DOL Reg. § 2509.75-8, a committee, acting as 

plan administrator, can "select[] agents to perform ministerial 

functions"). 

 The defendants concede, as we have noted, that 

Burgunder is governed by this regulation, and that he had actual 

authority as the Supervisor of Employee Benefits to "advise 

employees of their rights and options under the Pension Plan." 

Appellees Br. at 21. This authority originates from the 

defendants, the plan administrator, and not from the plan 

sponsor, for the plan administrator is the entity with the 

fiduciary obligation to "control and manage the operation and 

administration of the plan." ERISA § 402(a)(1), 29 U.S.C.A. § 

1102(a)(1) (1986). In contrast, PNG, the plan sponsor, is not a 

fiduciary and correspondingly has no duty to administer the plan. 

Thus, under the applicable regulations, Burgunder was acting as a 

non-fiduciary agent of the defendants (the plan administrator) 

and not PNG (the plan sponsor) in "advising participants of their 

rights and options under the plan." Department of Labor 

Regulation § 2509.75-8, 29 C.F.R. § 2509.75-8, Q & A D-2. 

 This conclusion is consistent with our reasoning in 

Fischer, where we held that a plan administrator violates its 

"fiduciary obligations owed to the plan participants" when "those 

employees on whom plan participants reasonably rely for important 

information and guidance about retirement" make material 

misstatements regarding possible changes to a company's pension 

plan. Fischer, 994 F.2d at 135. The fact that the benefits 
counselors who made the misrepresentation in Fischer were the 

employees of PECO does not distinguish that case from ours. The 

employees in Fischer were acting as the agents of PECO in its 

capacity as plan administrator, not as employer/plan sponsor. 

See id. at 133 ("As an employer, neither PECo nor its business 

decision to offer an early retirement program were subject to 

ERISA's fiduciary duties." (internal quotation marks omitted)). 

Like the benefits counselors in Fischer, Burgunder was acting to 

assist the plan administrator, not the plan sponsor, in 

discharging its fiduciary obligation to "control and manage the 

operation and administration of the plan." ERISA § 402(a)(1), 29 

U.S.C.A. § 1102(a)(1) (1986). 

C. 

 Having concluded that Burgunder was acting on behalf of 

the defendants, and not PNG, in performing the functions outlined 

above, we must consider whether Burgunder was acting within the 

scope of his authority as an agent of the defendants in making 

representations to Taylor regarding the possible retroactive 

application of plan amendments under consideration by PNG, the 

plan sponsor. In making this determination, we are governed by 

the law of agency, as developed and interpreted as a matter of 

federal common law. See Firestone Tire and Rubber Co. v. Bruch, 

489 U.S. 99, 110, 109 S. Ct. 948, 954 (1989) ("[C]ourts are to 

develop a federal common law of rights and obligations under 

ERISA-regulated plans."); Franchise Tax Board v. Construction 

Laborers Vacation Trust, 463 U.S. 1, 25, 103 S. Ct. 2841, 2854, 

n.26 (1983) ("`[A] body of Federal substantive law will be 
developed by the courts to deal with issues involving rights and 

obligations under private welfare and pension plans.'" (quoting 

remarks of Sen. Javits at 129 CONG. REC. 29942)); National 

Football Scouting, Inc. v. Continental Assurance Co., 931 F.2d 

646, 648 (10th Cir. 1991) (examining whether "under the federal 

common law of agency" an agent of a plan fiduciary was acting 

within his actual or apparent authority). 

 In this regard, we recognize that implicit in our 

holding in Fischer is the assumption that in counseling the plan 

participants about possible amendments to the plan, the PECO 

benefits counselors were acting within their authority as agents 

of the plan administrator. In particular, we read our limitation 

of fiduciary liability to "those employees on whom plan 

participants reasonably rely for important information and 

guidance about retirement" as a legal conclusion that such 

individuals operate, at a minimum, within their apparent 

authority to provide such information and guidance to plan 

participants, on behalf of the plan administrator. The 

defendants here admit that Burgunder had actual authority to 

"advise[] employees of their rights and options under the Pension 

Plan." Appellees Br. at 21. Moreover, it is uncontested that 

plan participants reasonably relied on Burgunder for important 

information and guidance about retirement. Considering these 

facts in light of the entire record, we conclude that, like the 

benefits counselors in Fischer, Burgunder was acting within his 

authority as an agent of the plan administrator, the members of 
the Annuities and Benefits Committee, in counseling plan 

participants regarding possible changes in the plan. 

 Our conclusion also accords with established principles 

of apparent authority. It is well settled that apparent 

authority (1) "results from a manifestation by a person that 

another is his agent" and (2) "exists only to the extent that it 

is reasonable for the third person dealing with the agent to 

believe that the agent is authorized." RESTATEMENT (SECOND) OF AGENCY

§ 8 cmts. a & c (1958). In our recent opinion in American 

Telephone & Telegraph v. Winback & Conserve Program, ___ F.3d 

___, 1994 U.S. App. LEXIS 34398, 1994 WL 685911 (3d Cir. Dec. 9, 

1994), applying the concept of apparent authority under the 

federal common law of agency, we held that "[a]pparent authority 

arises in those situations where the principal causes persons 

with whom the agent deals to reasonably believe that the agent 

has authority. . . ." Id. at *64, 1994 WL 685911 at *18 

(internal quotation marks omitted). 

 It is uncontroverted that both elements necessary for 

the existence of apparent authority are present in this case. 

First, the defendants' undisputed vesting of Burgunder with the 

authority to "advise employees of their rights and options under 

the Pension Plan" clearly constitutes a manifestation that he was 

their agent. 

 Second, the plan participants, such as Taylor, 

reasonably believed that Burgunder specifically had the authority 

to counsel plan participants about possible amendments to the 

plan. Taylor actually believed that Burgunder had the authority 
to counsel plan participants about possible changes in the plan. 

App. at 41b ("I accepted his comments because he's the key person 

in the retirement process at Peoples Natural Gas at the time I 

retired."). Moreover, this belief was reasonable in that the 

evidence demonstrates that plan participants generally considered 

Burgunder the person to speak with regarding possible changes in 

retirement benefits. In light of this reasonable belief about 

what information Burgunder was able to provide, the defendants' 

authorization of Burgunder to be their representative to plan 

participants, and the defendants' lack of effort to announce any 

limits to the scope of Burgunder's authority, it was a short and 

reasonable step for plan participants, such as Taylor, to believe 

that Burgunder not only was able, but indeed possessed the 

specific authority, to counsel them about possible amendments to 

the plan. 

 We conclude, therefore, that Burgunder was acting, at a 

minimum, with apparent authority as agent of the defendants in 

counseling Taylor regarding possible changes in the company's 

pension plan. Given this authority, the defendants will be 

liable for any affirmative material misrepresentations made by 

Burgunder concerning the possible retroactive application of the 

plan's early retirement incentive plan. 

D. 

 We therefore are presented with the question whether 

Burgunder's alleged statement to Taylor that "he believed that if 

an early retirement program was . . . offered . . . it might be 

retroactive," app. at 33b (emphasis supplied), constituted a 
material misrepresentation. We agree with the Magistrate Judge 

that, as a matter of law, no reasonable fact-finder could 

conclude that Burgunder's statement constituted a 

misrepresentation.4

 It is uncontested that at the time of Burgunder's 

statement to Taylor, the questions whether PNG would enact an 

early retirement incentive plan, and whether it would apply 

retroactively, were both yet undecided by PNG. Given that the 

plan sponsor, PNG, had yet to make a final decision regarding the 

prospective amendment, we conclude that the defendants did not 

violate their fiduciary obligation by merely confirming to Taylor 

that the adoption of such an amendment was under consideration 

 

 

4 In addition to alleging that the defendants 

misrepresented material facts regarding the proposed amendment's 

retroactivity, Taylor contends that they breached an affirmative 

fiduciary duty to inform plan participants when possible 

amendments to an employee benefit plan are under serious 

consideration by the plan sponsor. While we recognize that in 

certain instances a fiduciary has an affirmative obligation to 

disclose relevant material information to plan participants 

"about which the beneficiary has not specifically inquired," 

Bixler, 12 F.3d at 1300, we do not believe that the facts of this 

case present this issue, and therefore we will not address it. 

During the time that Taylor made his decision regarding the 

effective date of his retirement, he was not ignorant of the fact 

that PNG was seriously considering an early retirement incentive 

plan. Indeed, Taylor suggested in his own efficiency report that 

an early retirement incentive plan be instituted as a way to 

reduce his department's manpower, and he was aware through his 

discussions with the upper management of PNG that such a plan was 

under consideration. Moreover, Taylor discussed with Burgunder, 

on multiple occasions, the likelihood of the company's enacting 

such an amendment to the plan, and he specifically reserved the 

right, in his letter of resignation, to change his retirement 

date from March 1, 1989 if such an amendment were enacted before 

that time. 
and by expressing a reasonable opinion as to the scope of the 

possible amendment. The record clearly reflects that Burgunder's 

prediction was by all accounts reasonable. Burgunder based his 

prediction on two grounds: (1) an outside consultant had 

suggested a retroactive early retirement program; and (2) a 

member of PNG's board of directors, Mr. Flinn, to whom Burgunder 

had talked about the amendment's possible scope, had stated that 

he supported making the program retroactive. 

 Burgunder's alleged statement is a far cry from the 

statements made by the benefits counselors in Fischer that "there 

was definitely nothing in the planning," when in fact such an 

amendment was under serious consideration by company officials. 

In contrast, Burgunder's attempt to counsel Taylor by offering 

his prediction based on his discussions with a member of PNG's 

board of directors was not a misrepresentation. 

 Taylor conceded that Burgunder's statement was nothing 

more than his "best guess as to what may occur should an early 

retirement package be adopted." App. at 13a. An honest 

statement of belief reasonably grounded in fact does not 

constitute a misrepresentation. As Justice Holmes recognized in 

another context, "[t]he rule of law is hardly to be regretted, 

when it is considered how easily and insensibly word of hope or 

expectation are converted by an interested memory into statements 

of quality or value when the expectation has been disappointed." 

Deming v. Darling, 20 N.E. 107, 148 Mass. 504, 506 (1889). 

III. 
 In sum, we conclude that although the defendants are 

responsible for any material misstatements made by Burgunder to 

Taylor regarding possible changes in PNG's pension plan, the 

statements allegedly made by Burgunder do not, as a matter of 

law, constitute a misrepresentation. We will, therefore, affirm 

the order of the Magistrate Judge granting the defendants' 

request for summary judgment. 

 __________________________ 

Thomas H. Taylor v. The Peoples Natural Gas Company

No. 94-3109 

Cowen, Circuit Judge, concurring. 

 I join in Parts I and IID of the majority opinion and 

therefore concur as to the judgment in this case. I am unable to 

join in Parts IIA-C, however, because I believe that the 

majority's opinion sweeps more broadly than is justified under 

the facts presented here. 

 At issue in this case is a statement made by John 

Burgunder, The Peoples National Gas Company's Supervisor of 

Employee Benefits, to Thomas Taylor, a former employee of The 

Peoples National Gas Company ("PNG"), concerning the 

retroactivity of a potential amendment to PNG's pension plan. 

According to Taylor, Burgunder misrepresented to him that if PNG 

offered an early retirement incentive plan, Taylor would get its 

benefits even if Burgunder retired before the incentive plan was 

enacted. Specifically, Taylor alleged that: 

 During and prior to the March 1st date, I had had 

discussions with Mr. Burgunder relative to rumors and 

possible studies that may have been going on that could 
lead to an early retirement program, and it was during 

one of those discussion points where I talked with Mr. 

Burgunder about other people that were retiring, and he 

gave me the -- he told me at that time that he believed

that if there would be any early retirement programs 

offered in 1989, that they would make it retroactive to 

people retired from January 1st, until such time as 

they might offer the program. 

App. at 8b-9b (emphasis added). He continued: 

 I can't recall exactly what his conversations were 

about the retroactivity other than he believed that if 

an early retirement program was announced or it was 

offered -- that might be a better word -- it might be 

retroactive to these people that we were talking about. 

App. at 33b (emphasis added). 

 As the majority correctly recognizes, the magistrate judge 

who adjudicated this case concluded that the statement made by 

Burgunder to Taylor that he believed the early retirement program 

would be retroactive did not constitute misrepresentation. 

Taylor v. Peoples Natural Gas Co., No. 92-394, slip op. at 4-5 

(W.D. Pa. January 27, 1994). Agreeing with the magistrate judge, 

the majority holds in Part IID that as a matter of law, no 

reasonable fact-finder could conclude that Burgunder's statement 

constituted a misrepresentation. Maj. Op. at [typescript at 

18]. Inexplicably, however, before disposing of this case on the 

unassailable grounds aptly set out by the magistrate judge, the 

majority chooses in Parts IIA-C to pose and answer its own 

questions about the relationship between ERISA fiduciaries and 

their agents in cases, unlike the case at hand, where a party 
demonstrates a misrepresentation. The majority concludes that a 

plan administrator can be held liable for a breach of a fiduciary 

duty for misrepresentations by the plan administrator's nonfiduciary agents. Because the majority reaches out to decide an 

issue that is not squarely before us, I am unable to join in 

Parts IIA-C of the majority opinion. 

 It is well settled law that in general "[c]ases are to 

be decided on the narrowest legal grounds available, and relief 

is to be tailored carefully to the nature of the dispute before 

the court." United States v. Rias, 524 F.2d 118, 120 n.2 (5th 

Cir. 1975) (quoting Korioth v. Briscoe, 523 F.2d 1271, 1275 (5th 

Cir. 1975)); see also In re Chicago, Rock Island and Pac. R.R, 

772 F.2d 299, 303 (7th Cir. 1985) (it is an "elementary maxim of 

our legal system" that a court should decide "only the case 

before it"), cert. denied, 475 U.S. 1047, 106 S. Ct. 1265; 

Shamloo v. Mississippi State Bd. of Trustees of Insts. of Higher 

Learning, 620 F.2d 516, 524 (5th Cir. 1980) (expressing concern 

that cases be decided on the narrowest legal grounds available); 

Finley v. Hampton, 473 F.2d 180, 189 (D.C. Cir. 1972) (explaining 

that courts do not decide hypothetical controversies). This 

proposition is a corollary to the rule that federal courts are 

not to render advisory opinions, but rather are to decide 

specific issues for parties with real disputes. See, e.g., 

Korioth, 523 F.2d at 1274-75; see also United States v. Leon, 468 

U.S. 897, 963, 104 S. Ct. 3430, 3447 (1984) (Stevens, J., 
concurring) ("[W]hen the Court goes beyond what is necessary to 

decide the case before it, it can only encourage the perception 

that it is pursuing its own notions of wise social policy, rather 

than adhering to its judicial role."). 

 The statements the majority makes concerning the 

possible liability of ERISA fiduciaries due to misrepresentations 

of their non-fiduciary agents run afoul of this rule because the 

majority's holding that there was no misrepresentation here is 

sufficient to put this case to rest. Moreover, the majority's 

choice to explore agency law is particularly ill-advised because 

(1) we have not had the benefit of the magistrate judge's 

thinking and findings on these important matters, (2) these 

issues were neither argued nor briefed by counsel, and (3) the 

majority breaks considerable new ground in the area of ERISA 

fiduciary liability. 

 The majority's opinion states that the Annuities and 

Benefits Committee of the System Pension Plan, the plan 

administrator and co-defendant in this matter, can be held liable 

for statements by Burgunder because Burgunder was acting within 

the scope of his apparent authority as an agent of the plan 

administrator in making representations to Taylor. The opinion 

of the magistrate judge disposing of this case, however, is 

completely devoid of any references to the question of whether an 

ERISA fiduciary can be held liable for statements of its nonfiduciary agents acting within the scope of their apparent 
authority. Indeed, in his opinion, the magistrate judge reaches 

only two conclusions of law. First, he concludes that there is 

no general duty on the part of an employer to inform its 

employees of any action it is considering taking in the future. 

As he states, "[t]he fact that PNG was considering an early 

retirement package for 1989 is not information which ERISA 

requires an employer to disclose." Taylor, slip op. at 3 

(emphasis added). Second, he concludes that since "[p]laintiff 

concedes that he was not informed that a decision had been made 

to offer any early retirement program at all, and that this was 

simply Mr. Burgunder's best guess as to what may occur should an 

early retirement program be adopted," there was "no 

misrepresentation, and thus no breach of fiduciary duty." Id. at 

4-5. There is absolutely no discussion of the position now 

advanced by the majority that the plan administrator could be 

held liable for statements of the plan administrator's nonfiduciary agents.5

 

 

5Accordingly, footnote one of the majority opinion is 

slightly misleading when it first states that "[t]he Magistrate 

Judge granted PNG's motion for summary judgment on this claim 

concluding that, under the circumstances, PNG was not subject, in 

its capacity as plan sponsor, to ERISA's fiduciary obligations" 

and then draws the conclusion that "Taylor's claim of fiduciary 

breach is properly limited in this case to the plan 

administrator." Maj. Op. at [typescript at 4]. While it is 

certainly accurate to explain that PNG, the plan sponsor, is not 

a fiduciary, the majority's footnote makes it appear as if the 

magistrate judge drew the distinction between the duty of an 

employer as a plan sponsor and the fiduciary duty of the 

Annuities and Benefits Committee as a plan administrator. 

Indeed, the magistrate judge did not even distinguish between the 
 Even more importantly, the magistrate judge's factual 

recitation and the record before us are insufficient to establish 

the precise nature of the relationship between the System Pension 

plan administrator and Burgunder, a failing that makes it 

extremely difficult to perform a careful analysis of the possible 

applicability of the apparent authority doctrine. PNG asserts 

that Burgunder was merely an employee of PNG and was not a member 

of the "separate and distinct plan administrator." Appellee's 

Brief at 21. The magistrate judge's factual recitation does not 

even touch on the relationship between Burgunder and the plan 

administrator. As the majority recognizes, "apparent authority 

arises in those situations where the principal causes persons 

with whom the agent deals to reasonably believe that the agent 

has authority." Maj. Op. at [typescript at 16] (citing 

American Telephone & Telegraph v. Winback & Conserve Program, No. 

94-5305, 1994 U.S. App. Lexis 34398, at *64, 1994 WL 685911, at 

*18 (3d Cir. Dec. 9, 1994)). The majority, however, fails to 

adduce a single fact which convincingly demonstrates that the 

plan administrator caused employees of PNG to conclude that 

Burgunder was authorized to make representations to employees 

concerning potential plan amendments.

6 Accordingly, I am 

 

plan sponsor and the plan administrator in the discussion section 

of his opinion. 

 

6The majority states that Taylor's belief was reasonable 

because "evidence demonstrates that plan participants generally 

considered Burgunder the person to speak with regarding possible 

changes in retirement benefits." Maj. Op. at [typescript at 
troubled by the majority's analysis and concerned with the logic 

of deciding a question without relevant facts. 

 Equally disturbing in this case is the majority's 

willingness to advance arguments that were not put forward by the 

appellant in the first instance and that were not briefed by the 

parties. We have repeatedly recognized the impropriety of 

reaching issues that are not properly briefed before us. United 

States v. Martinez-Hidalgo, 993 F.2d 1052, 1057 n.10 (3d Cir. 

1993), cert. denied, U.S. , 114 S. Ct. 699 (1994); 

Francesconi v. Kardon Chevrolet, Inc., 888 F.2d 18, 19 n.1 (3d 

Cir. 1989); H. Prang Trucking Co. v. Local Union No. 469, 613 

F.2d 1235, 1239 (3d Cir. 1980); see also United States v. 

 

17] (emphasis added). In support of this proposition the 

majority cites a portion of the deposition testimony of Taylor, 

App. at 22a, and a portion of the deposition testimony of 

Burgunder, App. at 39a-40a. In the portion of Taylor's testimony 

that the majority cites, Taylor simply recounts his feeling that 

most people "felt comfortable" dealing with Burgunder concerning 

their retirement. Taylor never makes the claim that others felt 

comfortable relying on Burgunder's statements about potential 

plan amendments. Further, in the portion of Burgunder's 

testimony that the majority cites, Burgunder merely testifies 

that he had discussed "rumors" of a new retirement program with 

employees. 

 As a preliminary matter, it is difficult to understand how a 

discussion of "rumors" could give rise to a reasonable belief 

that Burgunder could authoritatively speak to the issue of plan 

amendments. Even more importantly, it is hard to comprehend how 

the majority can rely on statements by Burgunder, the alleged 

agent, to conclude that the principal (i.e., the plan 

administrator), made a representation to the employees that 

Burgunder could speak authoritatively about possible amendments. 

What the majority lacks is a statement by the plan administrator, 

the principal, disclosing that Burgunder could give advice 

concerning potential plan amendments. 
Crawley, 837 F.2d 291, 293 (7th Cir. 1988) (expressing concern 

over decisions based on issues not refined by the fires of 

adversary presentation). In his opening brief, Taylor simply 

argued that a fiduciary may not materially mislead a plan 

participant. Appellant's Brief at 11.7 Moreover, in his reply 

brief, Taylor makes it clear that his argument is that PNG is a 

fiduciary and it owed the fiduciary duty of conveying complete 

and accurate information to him. Appellant's Reply Brief at 2. 

Taylor states, "PNG continues to assert its status as employer 

only, to which the Appellant disagrees. [sic]." Id. at 1. Since 

the majority apparently agrees that PNG is not a fiduciary, see

Maj. Op. at n.1 [typescript at 4 n.1], it is difficult to see 

how Taylor's arguments make it necessary to discuss the plan 

administrator's possible liability due to statements by nonfiduciary agents. Taylor never specifically pressed on appeal 

the claim that because the plan administrator is a fiduciary, it 

should be liable for statements of its non-fiduciary agents. 

Accordingly, counsel for PNG and the Annuities and Benefits 

Committee had no occasion to evaluate this issue in their 

 

 

7Taylor also argued that (1) an employer has an affirmative 

duty to inform its employees of any action it is considering 

taking in the future, and (2) that there are insufficient facts 

in this record to resolve certain disputed issues. The first 

argument is disposed of by the majority opinion at footnote 

three. The second argument becomes irrelevant once we conclude 

that there was no misrepresentation. 
briefs.8 Without proper argument and discussion of this issue, 

it is ill-advised to reach such claims. 

 Finally, the majority's decision to reach the issue of 

a plan administrator's liability for non-fiduciary agents is illadvised because the majority's conclusion is not firmly dictated 

by our previous precedents. The majority states that the 

conclusion it reaches is consistent with our reasoning in Fischer 

v. Philadelphia Electric Co., 994 F.2d 130 (3d Cir.), cert.

denied, U.S. , 114 S. Ct. 622 (1993). In Fischer, 

however, we merely held that "[a] plan administrator may not make 

affirmative material misrepresentations to plan participants 

about changes to an employee pension benefits plan." Fischer, 

994 F.2d at 135. We did not comment on the possible liability of 

a plan administrator for statements by its non-fiduciary agents. 

While the majority's position may be a logical extension of 

Fischer, I would have left our decision as to whether such an 

extension is justified to another day when the issue is more 

squarely presented. Accordingly, relying simply on the fact that 

Taylor failed to demonstrate misrepresentation in this case, I 

would affirm the decision of the magistrate. 

 

 

8PNG does argue, by way of an alternative grounds to affirm 

the magistrate's decision, that PNG is not a fiduciary and that 

Burgunder is not a fiduciary. It does not, however, reach the 

question of whether Burgunder could bind the plan administrator

as a non-fiduciary agent.