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. e du/thir dc ir c uit_2001/191Filed August 24, 2001

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

NO. 00-1974

IDA K. DANIELS, Widow of Charles P. Daniels, Deceas ed

v.

THOMAS & BETTS CORPORATION; ELECTRICAL DIVISION OF THOMAS & BETTS CORPORATION; JOHN
SCHIERER; JOHN DOES I-X; ABC CORPORATION, I-X

Thomas & Betts Corporation, Electrical Division Of Thomas & Betts Corporation and John Schierer, Appellants

On Appeal From the United States District Court For the District of New Jersey (D.C. Civil Action No. 95-cv-00490) District Judge: Honorable John W. Bissell

Argued February 6, 2001

BEFORE: BECKER, Chief Judge, AMBRO and STAPLETON, Circuit Judges

(Opinion Filed: August 24, 2001)Steven B. Varick (Argued)

McBride, Baker & Coles 500 West Madison Street, 40th Floor Chicago, IL 60606

Steven R. Weinstein

Dunetz Marcus 354 Eisenhower Parkway Plaza II, Suite 1500 Livingston, NJ 07039 Attorneys for Appellants

John M. Esposito (Argued)

Unit A2 870 Pompton Avenue

Canfield Office Park Cedar Grove, NJ 07009 Attorneys for Appellee

OPINION OF THE COURT

STAPLETON, Circuit Judge:

Appellee/Plaintiff Ida K. Daniels ("Mrs. Daniels"), widow of Charles P. Daniels ("Mr. Daniels"), sued her hus band's former employer, Thomas & Betts Corporation ("T&B") , for breach of fiduciary duty, delay in providing ERISA plan documents, and attorney's fees. She alleged inter a lia that T&B materially misled Mr. Daniels into believing th at he had 1.5 times his annual salary in supplemental lif e insurance in addition to the one times annual salar y life insurance T&B provided Mr. Daniels as an employment

benefit.

The District Court granted Mrs. Daniels' motion for summary judgment as to liability on the breach of f iduciary duty claim. It further held, however, that there we re genuine issues of material fact as to the type of e quitable

relief that should be awarded as a result of that b reach. The District Court also granted Mrs. Daniels summar y judgment on her claim that T&B failed for 291 days to provide her plan documents in violation of S 104(b) (4) of

2ERISA, 29 U.S.C. S 1024(b)(4). It awarded her the m aximum

statutory penalty of $100 per day, or $29,100.

The District Court referred the determination of eq uitable relief on the breach of fiduciary duty claim to an arbitrator who subsequently awarded Mrs. Daniels $40,545. Thereafter, the District Court approved an attorney 's fees award of $34,482.28 and entered final judgment in t he amount of $104,127.28, plus interest and taxable co sts. T&B appeals. We will reverse the judgment of the Di strict Court and remand for further proceedings consistent with this opinion.

I.

Mr. Daniels worked for T&B from 1955 until his deat h from cancer in 1993. Prior to 1993, Mr. Daniels rec eived life

insurance in the amount of one times his annual sal ary at T&B's expense as an employment benefit. Also prior to 1993, Mr. Daniels elected to supplement this insura nce by purchasing group life insurance having a face value of 1.5 times his annual salary. The premiums for this supplemental insurance were the same without regard to the employee's age and were deducted from the emplo yee's paycheck.

T&B changed its insurance carrier and, concomitantl y, the structure of its life insurance benefits, effec tive January, 1993. Under the new plan (the "MetLife pla n"), T&B continued to provide at its expense life insura nce in the amount of one times annual salary as an employm ent benefit. Employees could continue to purchase supplemental life insurance, but now only in whole (rather than fractional) multiples of salary. Moreover, thepremiums for this supplemental coverage were "agebanded" so that they increased with the employee's age.

In the fall of 1992, Mr. Daniels became ill and too k a medical leave from T&B. In early December, T&B sent Mr. Daniels a number of documents explaining the life insurance benefits changes that would become effect ive on January 1, 1993. The information packet began with a memorandum from John Schierer, T&B's Manager of

3Employee Relations, to "ALL OFFICE EMPLOYEES." With

regard to life insurance, the memo stated that:

Life Insurance Maximums will be increased to a maximum of five times base salary on [sic] $ 500,000

whichever is less. Thomas & Betts will conti nue to provide one times base salary free of charge . Additional multiples will be available on an age-banded basis.

Details are attached.

The first attached document is entitled, "OPEN ENROLLMENT / GROUP TERM LIFE INSURANCE / EFFECTIVE JANUARY 1, 1993." The document again explains that T&B "will provide salaried employees one times their base salary in group term life insuranc e to a maximum $500,000." The document then sets forth the following two paragraphs which give rise to this su it:

If you currently have supplemental coverage, you will be grandfathered up to your current amount. If your current coverage amount is less than 5 times base salary, you then have the option of electing an additional 1 times base salary up to an incr emental $100,000 without additional proof of insurab ility.

Employees who do not currently have suppleme ntal coverage will be guaranteed coverage for 2 t imes base salary up to $200,000. Proof of insurability will be required for the additional coverage chosen in excess of

2 times.

An additional document, entitled "LIFE INSURANCE," further explains T&B's employees' supplemental life

insurance benefits as follows:

In addition to your Basic Life Insurance, y ou may purchase Supplemental Life Insurance by enro lling in the program and paying the required premium.

Amount of Coverage

You may purchase Supplemental Life Insuranc e in amounts of one, two, three, four or five tim es your base salary.

On December 20, 1992, Mr. Daniels met with Schierer

. Mr. Daniels asked a number of questions about his

4benefits, none of which related to supplemental lif e

insurance. In the context of his health care benefi ts, Mr. Daniels expressed an interest in increasing his tak e-home pay in light of the layoff T&B had warned him he wo uld soon face. At some point during the conference, Mr. Daniels executed a "Group Insurance Enrollment/Change Form. " The form provided an option for "Your Supplemental Life Insurance" and stated, "I wish to purchase Suppleme ntal

Life Insurance in the amount indicated below.*" The possible choices were "None," "1 time,""2 times," " 3 times," "4 times," and "5 times my annual earnings." The "a sterisk" footnote stated: "I understand that I may have to p rovide medical evidence of insurability before this covera ge becomes effective." Mr. Daniels placed an "X" in th e blank

next to "None."

In her deposition, Mrs. Daniels testified to statem ents Mr. Daniels made after the December 20 meeting that ten ded to show what he thought he had done with respect to hi s supplemental life insurance. Mrs. Daniels testified that

after the terminal nature of her husband's conditio n became known in January, 1993, he told her "four or five times" that she would receive 2.5 times his salary in life

insurance benefits. She further testified that subs equent to the new benefits plan becoming effective, her husba nd reviewed his payroll deductions for a supplemental life insurance entry and, finding one, told her that"it was in

order."1

___________________________________________________ ______________

1. Mr. Daniels' January 14, 1993, pay statement sho wed an insurance deduction in the same amount as his prior statement s. His February 11, 1993, pay statement appears to contain a $50.97 ins urance deduction; that amount is listed under the heading "Deduction Type." Despite this entry's appearance, it is in fact a credit. The pay statement itself contains no visible indicia that this entry, listed as it is below the heading "Deduction Type" and next to other, true de ductions, is in fact a credit. One only discovers that this entry is in fact a credit if one

takes Mr. Daniels' February 11, 1993, gross pay and actua lly calculates his net pay. Mr. Daniels' March 15, 1993, pay statement , issued four days after his death, shows no deduction for supplementa l insurance.

T&B explains that because it had not implemented al l of the MetLife benefits changes as of Mr. Daniels' January 14, 199 3, paycheck, it erroneously deducted $20.54 for supplemental life i nsurance. Although T&B is correct that the February 13, 1993, entry is in fact a credit and not a deduction, it points to no record evidence to support its explanation of what necessitated this pay adjustmen t.

5After Mr. Daniels' death, Mrs. Daniels received pay ment

of $53,000, representing one times her husband's an nual salary. Mr. Daniels' son, Charles, Jr., asked Schie rer if the family was entitled to any additional life insuranc e benefits in light of the supplemental life insurance his fat her had been electing. Schierer produced the form on which Mr.

Daniels had marked "None" and informed the Daniels that

there were no additional life insurance benefits. M rs. Daniels then obtained counsel who, on September 29, 1994, wrote to T&B and requested "all benefit plan document [sic] or plan summaries which explain any and all plan terms, benefits, and procedures applicable to

benefits available to Mr. Daniels." T&B did not res pond to Mrs. Daniels' attorney's request until July 17, 199 5, 291 days later.

II.

The District Court held that T&B, as the administra tor of an ERISA plan, had a fiduciary duty not to "materia lly mislead those to whom the duty of loyalty and prude nce are owed." App. at 16 (quoting from In re Unisys Corp. Retiree Med. Benefit "ERISA" Litig., 57 F.3d 1255, 1261 (3d Cir. 1995)). A misrepresentation, it explained, is mater ial if

"there is substantial likelihood that it would misl ead a reasonable employee into making" a decision to his or her detriment. Id. T&B does not dispute that it had a f iduciary duty; it does dispute that it breached that duty.

The District Court concluded that T&B made a materi al misrepresentation to Mr. Daniels. As the Court succ inctly put it:

The Court concludes that defendants made a material misrepresentation to Mr. Daniels wh en they stated in documents sent to him to explain t he change in benefits: "If you currently have suppleme ntal coverage, you will be grandfathered up to yo ur current coverage amount." (Esposito Cert., Exh. F). Black's Law Dictionary defines "grandfather clause," in relevant part, as: "Provision in a new law or regulat ion exempting those already in or a part of the existing system which is being regulated." (Id.) On i ts face,

6defendants' statement conveyed that employee s who

already had supplemental insurance coverage would be exempted from the changes to defendants' pol icy.

* * *

There is no elaboration on this grandfather clause anywhere in the remainder of the explanatory

memorandum where that sentence is found or i n the other information defendants provided to Mr. Daniels, i.e., the cover memorandum, the enrollment f orm, and the information Mr. Schierer says he conveye d to Mr. Daniels at the December 20, 1992 meeting.

* * *

Defendants' statement that "[i]f you curren tly have supplemental coverage, you will be grandfath ered up to your current coverage amount" was a material misrepresentation. (Esposito Cert., Exh. F). In fact, employees who already had supplemental insur ance were not grandfathered up to their current c overage amounts. Instead, they had to elect to be grandfathered up to those amounts . . . .

App. at 17, 17-18, 18.

In the District Court's view, this finding of a mat erial misrepresentation by an ERISA fiduciary was suffici ent alone to warrant summary judgment against T&B "as t o [its] liability." App. at 36. The Court made no fin ding as to whether Mr. Daniels actually relied on T&B's misrepresentation. Instead, it concluded that "genu ine issues of material fact remain as to the type of eq uitable

relief that should be awarded." In the course of so concluding, the District Court acknowledged that Mr

. Daniels may not have relied upon the misrepresentat ion at all; instead, Mr. Daniels may have "purposely elect ed not to continue to pay for supplemental insurance." On the other hand, the Court observed, the evidence would suppor t an inference that the "grandfathered" misrepresentatio n led

Mr. Daniels to believe that he did not have to do a nything to continue his existing supplemental insurance and that

he should check "None" on the enrollment form to in dicate that he did not wish to purchase any additional supplemental insurance.

7The arbitrator explicitly acknowledged that the Dis trict

Court had yet to find reliance: "This case boils do wn to the following questions. Did the grandfather clause cau se the decline of the supplemental plan under the new poli cy and if so what is the remedy?" Having recognized the un resolved reliance issue, the arbitrator stated cursorily,"Co nsidering the pros and cons of each party's argument makes[th is] a case which should be decided equitably." The arbitr ator then summarily awarded Mrs. Daniels $40,545 (or fif ty-one percent of her desired recovery) plus costs.

With respect to appellees' claim that T&B violated 29 U.S.C. S 1024(b)(4) by refusing to comply with a re quest for the "instruments under which [an ERISA] plan is established or operated," the District Court held t hat: (1) a request from the attorney of a participant or benef iciary triggers the statutory duty to respond; and (2) Mrs . Daniels was a "beneficiary" as defined in ERISA at the time of her attorney's request even though she had previously r eceived all of the insurance proceeds she was entitled to r eceive

under the MetLife Plan. The District Court then not ed that T&B had offered no excuses for its failure to provi de the documents other than the legal arguments the Court had just rejected and pointed out that there had not ev en been a response to Mrs. Daniels asserting these legal po sitions. As a result, it imposed penalties of $100 per day f or the 291 days T&B had refused to respond.2

___________________________________________________ ______________

2. The District Court had jurisdiction pursuant to 28 U.S.C. S 1331 and 29 U.S.C. S 1132(f).

This court has jurisdiction pursuant to 28 U.S.C.S 1291. We reject Mrs. Daniels' argument that 28 U.S.C. S 657(a) depr ives this court of jurisdiction to hear this appeal. Section 657(a) pr ovides that arbitration awards made under Chapter 44 of Title 28 "shall be entered as the judgment of the court after the time [30 days] has expired for requesting a trial de novo. The judgment so entered shall be s ubject to the same provisions of law and shall have the same force and effect as a judgment of the court in a civil action, except that the jud gment shall not be subject to review in any other court by appeal or otherwise ." (emphasis added). The arbitrator's award was entered on November 8, 1 999, and T&B filed its demand for a trial de novo twenty-nine days lat er on December 7, 1999. In its notice demanding trial de novo, T&B st ated that it only wished to preserve its right to challenge the Distr ict Court's liability

8III.

Both sides claim to be entitled to summary judgment with respect to T&B's liability on the breach of fi duciary duty claim. Moreover, T&B insists that, even if it is not entitled to such a summary judgment, the issue of l iability

must be tried. In order to resolve these contention s and the arguments addressed in support of them, we must determine: (1) whether there is a material dispute of fact as to whether T&B made a material misrepresentation; ( 2)

whether detrimental reliance is an essential elemen t of Mrs. Daniels' case on liability and, if so, whether ther e is a material dispute of fact as to whether Mr. Daniels relied on the "grandfathered" statement; and (3) whether summ ary judgment could properly be entered against T&B on t he liability issue in the alleged absence of any evide nce tending to show that it was aware of confusion on M r. Daniels' part.

Mrs. Daniels' claim is that T&B breached its fiduci ary duty by misrepresenting that existing supplemental insurance would be "grandfathered." We have reviewe d the elements of such a claim in two recent decisions, A dams v. Freedom Forge Corp., 204 F.3d 475 (3d Cir. 2000), a nd In re Unisys Corp. Retiree Medical Benefit "ERISA" Lit igation,

___________________________________________________ ______________

determinations on both the breach of fiduciary duty and S 1024(b)(4) claims. T&B stipulated that "[t]o the extent . . . that the arbitration award determined only the amount of the remedy to b e awarded to [Mrs. Daniels], . . . [T&B] do[es] not demand trial de no vo and will accept $40,545 as a reasonable calculation of the remedy, subject to [T&B's] right to appeal the underlying issues of liability. "

We have some question as to whether S 657(a) or Loc al Civil Rule 201.1 (the authority the arbitrator purported to ex ercise) can be read to authorize referral to arbitration of an issue , as opposed to an action or a claim. We need not determine that issue, however, because even if those provisions are understood to authorize such a referral, they should not be read to bar appellate review of issues that were adjudicated by the court and not by the arbitrator. At least where a p arty makes it clear, as did T&B, that it intends to preserve its right to a ppeal issues resolved by the court, neither Section 657(a) nor Local Civil R ule 201.1 precludes our exercise of jurisdiction under 28 U.S.C. S 1291 to review issues that were not resolved by the arbitrator.

9242 F.3d 497 (3d Cir. 2001) [hereinafter Unisys III ]. In

Adams, we stated:

An employee may recover for a breach of fid uciary duty [under ERISA] if he or she proves that any employer, acting as a fiduciary, made a mate rial misrepresentation that would confuse a reaso nable beneficiary about his or her benefits, and t he beneficiary acted thereupon to his or her de triment.

Id. at 492; see also Unisys III, 242 F.3d at 505 (q uoting Adams and noting that it elucidates "the elements o f a breach of fiduciary claim"). Following Adams and U nisys III, it is thus clear that, in order to make out a breac h of fiduciary duty claim of the kind here asserted, a p laintiff must establish each of the following elements: (1) the defendant's status as an ERISA fiduciary acting as a fiduciary; (2) a misrepresentation on the part of t he defendant; (3) the materiality of that misrepresent ation; and (4) detrimental reliance by the plaintiff on the misrepresentation.

Like the District Court here, we explained in Adams that a misrepresentation is material if there is a subst antial likelihood that it would mislead a reasonable emplo yee in making a decision regarding his benefits under the ERISA plan. See id. "Summary judgment on the`question of materiality' is appropriate only if `reasonable min ds cannot differ.' " Fischer v. Phila. Elec. Co., 994 F.2d 13 0, 135 (3d Cir. 1993) (quoting from TSC Indus., Inc. v. Northw ay, Inc., 426 U.S. 438, 450 (1976)).

A. Material Misrepresentation

The portion of T&B's explanatory materials on which Mrs. Daniels primarily bases her case is set forth again in the margin for the reader's convenience.3 Mrs. Daniels

___________________________________________________ ______________

3. If you currently have supplemental coverage, y ou will be grandfathered up to your current amount. If your current coverage amount is less than 5 times base salary, you then have the option of electing an additional 1 times base salar y up to an incremental $100,000 without additional proof of insurab ility.

Employees who do not currently have supplem ental coverage will be guaranteed coverage for 2 times base sala ry up to $200,000. Proof of insurability will be required for t he additional coverage

chosen in excess of 2 times.

10emphasizes that this portion advises someone in Mr.

Daniels' position that his existing supplemental co verage "will be grandfathered up to your current amount." This clearly connotes, in her view, that existing supple mental insurance would continue unaffected by the new plan and that it would do so without further action on the p art of the employee. While she acknowledges that this advice i s followed by information about proof of insurability , she points out that everything following the first sent ence expressly refers only to "additional" supplemental coverage or to "employees who do not currently have suppleme ntal coverage." She insists that the notion that no acti on was required on the part of an employee who wished to c ontinue only existing coverage was confirmed by the fact th at the election form signed by Mr. Daniels provided an opportunity to elect coverage of only 1, 2, 3, 4 or 5 times earnings but provided no way to elect continuation of coverage of 1.5, 2.5, 3.5 or 4.5 times earnings. Th is aspect of the form clearly suggested that its purpose was to provide an opportunity to purchase supplemental insurance in "addition" to existing coverage, a sug gestion that is supported by the footnote indicating that, whichever election was made, it might be subject to proof of insurability.

T&B counters by insisting that, in the context of i ts material as a whole, there was no significant risk that a reasonable employee would receive the understanding for which Mrs. Daniels contends. It emphasizes that und er the old program, as well as the new, the "Basic Life In surance" provided at T&B's expense was the only thing that w as automatic and that supplemental insurance at the employee's expense had to be elected annually by hi m or her. It points out that Mr. Schierer's covering let ter, which explains supplemental coverage and its cost to the employee, begins by stating, "It is once again time to make your Benefit Choices for 1993. Please note that you will have the following choices effective 1/1/93." App. at 56. T&B further notes that in the accompanying material s, the Basic Life Insurance is the only thing described as "automatic," and supplemental coverage is consisten tly described as elective.4 The term"grandfathered" app ears

___________________________________________________ ______________

4. "You are automatically covered for Basic Life In surance . . . . You are also eligible to purchase Supplemental Life Insuran ce . . . ." App. at 59.

11only once in this overall general context of electi ve

supplemental coverage and then only in the specific context of proof of insurability. As a result, T&B argues t hat no reasonable employee was likely to conclude from its materials that supplemental insurance under the old program was being imposed on employees at their own expense with no opportunity provided on the form fo r opting out. The reasonable inference to be drawn fr om the materials, T&B insists, is that "grandfathered" ref erred to a right to elect to continue existing coverage withou t proof of insurability and that the only opportunities availa ble for supplemental coverage were those provided for on th e form, with those employees who had existing supplemental coverage being entitled to elect supplemental cover age without proof of insurability not to exceed existin g supplemental coverage, i.e., in Mr. Daniels' case, 1 times earnings, since 2 times earnings would exceed his e xisting supplemental coverage of 1.5 times earnings.

We conclude that the message conveyed by the materi als

as a whole is a matter about which reasonable minds could differ. Accordingly, we conclude that summary judgm ent was entered contrary to the teachings of Fischer .

B. Detrimental Reliance

Mrs. Daniels claims that she is in a worse position than

she would have been in if T&B had not made its "grandfathered" statement and seeks relief on that basis.

Consistent with the above discussion of the element s of such a breach of fiduciary duty claim and contrary to the conclusion of the District Court here, she is not e ntitled to

relief unless she can establish that her failure to receive more than $53,000 was attributable to Mr. Daniels' reliance on the alleged misrepresentation, i.e., that he wis hed his 1.5 times earnings coverage to continue and failed to effectuate that wish because he was misled by T&B's "grandfathered" statement. See also Unisys III, 242 F.3d at 505. It necessarily follows that the District Court erred in entering summary judgment against T&B on the issue of its liability for breach of fiduciary duty without the required finding of uncontroverted evidence of detrimental r eliance.

12T&B asks that we remand with instructions to enter

summary judgment in its favor because there is no competent evidence from which a trier of fact could find detrimental reliance by Mr. Daniels. Finding that t here is a material dispute of fact on this issue, we decline to so

instruct the District Court.

We believe that a trier of fact, having concluded t hat T&B's grandfathering statement held a substantial r isk of misleading one in Mr. Daniels' position, could infe r from this record that he intended for his supplemental i nsurance to continue and failed to effectuate that intent be cause the grandfathering statement led him to check "None" on the form and to take no other steps to elect new supple mental coverage under the MetLife plan. Mrs. Daniels' test imony that her husband assured her in January of 1993 tha t he had coverage amounting to 2.5 times earnings and th at the deduction from his pay for supplemental insurance w as in order would clearly support the conclusion that he desired to have his supplemental coverage continue and that he believed it was continuing. This could be viewed as consistent with his having checked "None" only if h e mistakenly believed that the election form was dire cted to additional supplemental insurance and that continui ng existing coverage required no further action on his part. Since this mistaken belief is precisely the risk th at the trier of fact would have previously found inherent in T&B 's "grandfathered" statement, a conclusion of a causal connection between the two could naturally follow.

On the other hand, a conclusion of detrimental reli ance is not mandated by this record. It would also suppo rt an inference that Mr. Daniels, facing a period of unemployment, wanted to reduce the deductions from his pay and checked "None" in order to accomplish that objective.

C. T&B's Knowledge of Confusion

T&B insists that it can have no liability for a bre ach of fiduciary duty in the absence of evidence of knowle dge on its part "that Mr. Daniels was confused when he dec lined to purchase supplemental life insurance." Appellants' Br. at

1314. Finding no such evidence, T&B urges us to direc t the

entry of summary judgment in its favor.

Again, as the above discussion of the elements of M rs. Daniels' breach of fiduciary duty claim indicates, if an employee proves that an employer, acting as a fiduc iary, made an inaccurate statement holding a substantial likelihood of misleading a reasonable employee into making a harmful decision regarding benefits, and that he relied to his detriment on that statement in making such a de cision, the employee is entitled to equitable relief. If th e statement creates a substantial risk of misleading a reasonab le employee, it is foreseeable that an employee will b e misled to his detriment. That foreseeability and reasonabl e reliance by a beneficiary are all that is required. See Unis ys III, 242 F.3d at 507-10. In such circumstances, we have neve r required a showing that the employer had actual kno wledge that a particular employee was about to be misled.

As we noted in Unisys III, there are situations in which the employer's knowledge of an employee's knowledge and understanding is important to the liability issue. Most frequent are those situations in which an employer has not affirmatively misled the employee but has failed to provide the employee information which the employer knows t he employee needs in order to protect himself from har m. See

Bixler v. Central Pa. Teamsters Health & Welfare Fu nd, 12 F.3d 1292, 1300 (3d Cir. 1993) (finding a fiduciary duty on the part of an employer to communicate to the benef iciary material facts affecting the interest of the benefi ciary which the employer knows the beneficiary does not know an d which the beneficiary needs to know for his protect ion). In such a situation, harm to the beneficiary may not b e reasonably foreseeable in the absence of employer knowledge of the employee's knowledge and understan ding. See Unisys III, 242 F.3d at 509. Where the fiduciar y makes

an affirmative statement that creates a substantial likelihood of injury to a reasonable beneficiary, h owever, any harm occasioned by the detrimental reliance on the affirmative misrepresentation is foreseeable and gi ves rise to liability.

Contrary to T&B's suggestion, neither International Union, United Automobile, Aerospace & Agricultural Impleme nt

14Workers, U.A.W. v. Skinner Engine Company, 188 F.3d 130

(3d Cir. 1999), nor In re Unisys Corp. Retiree Medi cal Benefit "ERISA" Litigation, 57 F.3d 1255 (3d Cir. 1 995) [hereinafter Unisys II], holds that knowledge of em ployee confusion is an element of a breach of fiduciary du ty claim like that made by Mrs. Daniels. Those cases, like B ixler, involved situations in which the plan administrator allegedly failed to provide complete and adequate

information when it knew that such information was necessary to avoid harm to beneficiaries. The porti ons of the opinions in those cases to which T&B directs ou r attention do not involve claims of affirmative misrepresentation. See, e.g., Skinner , 188 F.3d at 150 ("[T]here is no competent evidence which suggests t hat the company made any affirmative misrepresentations concerning the duration of retiree benefits."); id. at 148, 150 (characterizing the plaintiffs as arguing that the defendant breached its fiduciary duty "by failing t o inform them that the CBAs did not provide lifetime welfare benefits" and "by failing to correct the retirees' mistaken belief ") (emphasis added); Unisys II, 57 F.3d at 1 265 n.15, 1266 ("[W]e hold that the district court did not er r as a matter of law in concluding that the duty to convey complete and accurate information that was material to its employees' circumstance arose from these facts sinc e the trustees had to know that their silence might cause
harm.").

IV.

Section 1024(b)(4) of Title 29 provides in relevant part that "[t]he administrator shall, upon written reque st of any participant or beneficiary, furnish a copy of the .

. . instruments under which the plan is established or operated." T&B insists that the judgment entered by the District Court against it must be reversed because (1) a written request from an attorney purporting to repr esent a participant or beneficiary does not trigger the dut y to respond unless it is accompanied by written authori zation from the client; (2) Mrs. Daniels was not a "benefi ciary," as that term is used in ERISA; and (3) the amount of t he penalty imposed constitutes an abuse of discretion.

15A. Sufficiency of the Request

As we noted in Bruch v. Firestone Tire and Rubber C o., 828 F.2d 134, 153 (3d Cir. 1987), "ERISA's legislat ive history makes clear that Congress intended the information-producing provisions to enable claimant s to

make their own decisions on how best to enforce the ir rights." We conclude that this objective will be be st served by a rule that a representation by an attorney that he is making a request on behalf of a participant or bene ficiary triggers the duty to respond under S 1024(b)(4) whe n the administrator has no reason to question the attorne y's authority. In the rare case where the administrator has reason to question that authority, it can respond b y requesting further evidence. The objective of the s tatute would be ill served, however, by permitting adminis trators to refuse to respond with no indication that author ity is

even an issue. We believe the facts of this case fo rcefully compel that conclusion.

T&B has asked that we defer to the interpretation o f S 1024(b)(4) that it finds in the Department of Lab or's Advisory Opinion Letter 82-021A. That letter addres sed a request for documents by a non-attorney third party . In that context, the Department gave the following adv ice:

[I]f information is required to be furnished to a participant or beneficiary under section 104 (b)(4)[29 U.S.C. S 1024(b)(4)], the information must a lso be furnished to a third party where the partici pant or beneficiary has authorized in writing the re lease of the information to such third party. Absent such authorization, it is the Department's view t hat a plan is not required by section 104 of ERISA to prov ide such information to persons who are neither parti cipants

nor beneficiaries.

See Bartling v. Fruehauf Corp., 29 F.3d 1062, 1072 (6th Cir. 1994). While we agree with this advice as applied t o nonattorney third parties, we believe an attorney's representation regarding the authority conferred up on him or her by the client adds a material factor not pre sent in the situation the Department was addressing. The la w has traditionally accepted such representations in the absence

16of reason to question them,5 and the statutory obje ctive

behind S 1024(b)(4) counsels in favor of accepting them here. For this reason, we respectfully disagree wit h the conclusion reached by the Sixth Circuit Court of Ap peals in Bartling. See Moothart v. Bell, 21 F.3d 1499, 1503- 04 (10th Cir. 1994) (recognizing an attorney's letter simila r in all material respects to that of Mrs. Daniels' attorney as constituting a "request" under the statute and trig gering a duty to respond).

B. "Beneficiary"

Even if a letter from a lawyer on behalf of a benef iciary is sufficient to implicate S 1024(b)(4), the attorney must still write on behalf of either a "participant" or a"bene ficiary." Mr. Daniels, not Mrs. Daniels, was the participant; to invoke the protection of S 1024(b)(4), Mrs. Daniels , then, must be a beneficiary.

Section 1002(8) of Title 29 defines an ERISA "benef iciary" as "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become enti tled to a benefit thereunder." This requires that we resolv e two issues: (1) what constitutes a relevant "benefit"?; and (2) when does an individual making a request for plan documents qualify as "a person . . . who is or may become

entitled" to such a benefit?6

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5. See Graves v. United States Coast Guard , 692 F. 2d 71, 74 (9th Cir. 1982) ("The designation `attorney for Leonard Grave s' [on an administrative Tort Claims Act claim] is particular ly important in view of the body of case law holding that the appearance of an attorney for a party raises a presumption that the attorney has th e authority to act on that party's behalf.") See also Anderson v. Flexel, Inc., 47 F.3d 243, 249 (7th Cir. 1995) (recognizing in the context of an a ttorney's request under S 1024(b)(4) "the existence of the long-standing le gal presumption that an attorney has authority to act on behalf of the pers on he" purports to represent). 6. Mrs. Daniels brought her breach of fiduciary dut y claim under 29 U.S.C. S 1132(a)(3) which provides in part that a " civil action may be brought . . . by a participant, beneficiary or fidu ciary . . . to obtain .

. . appropriate equitable relief . . . to redress . . . violations" of ERISA.

T&B does not contend that Mrs. Daniels fails to qualify as a beneficiary under this section, and we thus have no occasion to addre ss the relationship between it and section 1002(8).

17With regard to the first of these two questions, th e

specific relief that Mrs. Daniels seeks in the inst ant case-- damages stemming from T&B's alleged breach of fiduc iary duty--does not constitute a "benefit" within the me aning of S 1002(8). The Ninth Circuit Court of Appeals came to this same conclusion in Kuntz v. Reese, 785 F.2d 1410, 1 411 (9th Cir. 1986), in which the court observed: "The

. . . plaintiffs do not allege that their vested benefits were improperly computed, rather they allege breach of f iduciary duty or of a duty to disclose information about ben efits, thus any recoverable damages would not be benefits from the plan."

Consequently, if we were to assess "beneficiary" st atus as of the time of the present appeal, Mrs. Daniels wou ld not be a "beneficiary" and, therefore, would not be entitl ed to lodge a request for plan documents to which T&B would be legally obligated to respond. As of the time of the present appeal, Mrs. Daniels presses only a claim for damag es stemming from T&B's alleged breach of fiduciary dut y. Any recovery Mrs. Daniels would receive as a consequenc e of the present cause of action for fiduciary breach wo uld come out of T&B's pocket (i.e., on the theory that T&B m ade materially misleading statements about the plan), a nd not out of MetLife's (i.e., on the theory that the plan 's provisions entitle Mrs. Daniels to payment pursuant to its
terms).

We conclude, however, that ERISA beneficiary status should not be measured as of the time of the presen t appeal. Instead, the temporal focus of the "benefic iary" inquiry should be the time the request for plan doc uments

was made. An individual who "is . . . entitled" to a plan benefit or who "may become entitled" to such a bene fit, as of the time that individual makes the request of th e plan administrator, thus constitutes a "beneficiary."

As of the time of her request, Mrs. Daniels had no reason to believe that events would happen in the future w hich would entitle her to a benefit, i.e., that she woul d "become

entitled" at some future date. The issue for decisi on is thus

narrowed to whether Mrs. Daniels was "entitled" to a plan benefit on September 29, 1994, when her request for

documents was made. In order for her to be "entitle d," it is

18not necessary that she establish that she had a mer itorious

claim; it is sufficient if she demonstrates that sh e had a "colorable claim that . . . she will prevail in a s uit for benefits." Firestone Tire & Rubber Co. v. Bruch, 48 9 U.S. 101, 117 (1989). We conclude that she had such a cl aim.

As we have recounted, Mrs. Daniels had been told by her husband shortly before his death that he had life i nsurance through his employer's plan in the amount of 2.5 ti mes his annual salary. He was in a position to have persona l knowledge of this matter and had an interest in acc urately advising her regarding it. As of September 29th, Mr s. Daniels knew she had received materially less than 2.5 times Mr. Daniels' salary in insurance proceeds. Wh ile her son had been shown the group insurance election for m, its significance could not be reliably assessed in isol ation. With this knowledge, we conclude that Mrs. Daniels had a colorable claim to additional insurance proceeds an d that Congress intended that she have access to the docum ents necessary to determine whether she had a meritoriou s claim as well as a colorable one. The concept of a colorable claim necessarily encompasses situations in which t he requester has a reasonable basis for believing that he or

she has a meritorious claim but is in fact mistaken . If Mrs. Daniels' situation on September 29th were not one o f these, we would have difficulty hypothesizing one.

It is true, as T&B stresses, that the letter of Mrs . Daniels' attorney was consistent with her contemplating a br each of fiduciary duty claim.7 We do not believe, however, that one in Mrs. Daniels' position should be held to have ma de an election of remedies based on the precise wording o f a letter seeking access to the information necessary to make an informed decision regarding available remedies. If an administrator has concerns about whether someone

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7. One paragraph of the letter reads as follows:

We are representing the family on their cla ims for damages concerning the actions of Thomas & Betts, an d its employees, resulting in the denial of life insurance be nefit payments on life insurance benefits that were provided to Mr. Daniels prior to his

death.

App. at 69.

19requesting access lacks a colorable claim, it is fr ee to ask

for the facts upon which a claim to a benefit is be ing made. If, like T&B, it fails to do so, it proceeds at its own risk.

C. The Penalty

Section 1132(c) provides that, in the court's discr etion, a plan administrator may be required to pay a benefic iary penalties of up to $100 per day from the date of th e administrator's failure "to comply with a request f or . . . information . . . by mailing the material requested

. . . within 30 days . . . ." The District Court imposed the maximum fine because T&B had refused to respond in any way over a very extended period of time and offered no explanation whatsoever for that refusal. As the Cou rt noted,

there was no indication that T&B's refusal was "som e sort of administrative mistake," and the Court found it difficult to accept that T&B acted based on the legal argumen ts advanced here without giving any indication of its position to Mrs. Daniels' attorney. T&B characterizes the Di strict Court's findings in this regard as findings of an a bsence of bad faith and, on that basis, insists that the maxi mum fine

was an abuse of discretion. While we believe T&B's conduct fell something short of a good faith effort at comp liance, it is not necessary for us to so characterize it. Suff ice it to say that the reasons identified by the District Court a re sufficient to bring its ultimate conclusion well wi thin the scope of its considerable discretion.

We will, however, direct that, on remand, the penal ty be reduced by $3,000. The District Court found that T& B withheld plan documents for 291 days, from Septembe r 29, 1994, until July 17, 1995. Section 1132(c) directs that the

fine commence "from the date of such failure or ref usal" to provide the requested documents. Section 1132(c)

characterizes the relevant "failure" as the failure to provide the documents within 30 days of the participant's o r beneficiary's request. Effectively, there is a 30 d ay grace period in S 1132(c) before the "failure" to provide the documents begins. Thus, although T&B produced the documents 291 days after Mrs. Daniels' request, thi s is a "failure" to produce the documents for 261 days. Th us, the maximum penalty would be $26,100, not $29,100. See

20Bartling v. Freuhauf Corp., 29 F.3d 1062, 1069 (6th Cir.

1994).

V.

Having found that T&B breached its fiduciary duty t o Mr. Daniels and that it improperly withheld plan docume nts from Mrs. Daniels, the District Court awarded Mrs. Daniels attorney's fees pursuant to 29 U.S.C. S 1132(g).8 B ecause we have concluded that we must reverse the District Court's grant of Mrs. Daniels' motion for summary judgment as to her breach of fiduciary duty claim, we must also vacate the District Court's imposition of atto rney's fees. After Mrs. Daniels' breach of fiduciary duty claim is finally resolved, the District Court may, of course, revisi t the attorney's fee issue.

VI.

Because genuine issues of material fact exist as to whether T&B's "grandfathered" statement is material ly misleading and, if it was, as to whether Mr. Daniel s relied on it in making his supplemental insurance election , we will reverse the judgment of the District Court and remand for further proceedings consistent with this opinio n.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

___________________________________________________ ______________

8. Section 1132(g) provides as follows: "(1) In any action under this subchapter (other than an action described in parag raph (2) [delinquent contributions]) by a participant, beneficiary, or f iduciary, the court in

its discretion may allow a reasonable attorney's fee an d costs of action to either party."

21