2001 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

8-24-2001

Daniels v. Thomas & Betts Corp

Precedential or Non-Precedential:

Docket 00-1974

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Recommended Citation

"Daniels v. Thomas & Betts Corp" (2001). 2001 Decisions. Paper 191.

http://digitalcommons.law.villanova.edu/thirdcircuit_2001/191
Filed August 24, 2001 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

NO. 00-1974 

IDA K. DANIELS, Widow of Charles P. Daniels, Deceased 

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 husband'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 alia that 

T&B materially misled Mr. Daniels into believing that he 

had 1.5 times his annual salary in supplemental life 

insurance in addition to the one times annual salary 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 fiduciary 

duty claim. It further held, however, that there were 

genuine issues of material fact as to the type of equitable 

relief that should be awarded as a result of that breach. 

The District Court also granted Mrs. Daniels summary 

judgment on her claim that T&B failed for 291 days to 

provide her plan documents in violation of S 104(b)(4) of 

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

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

The District Court referred the determination of equitable 

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 the 

amount of $104,127.28, plus interest and taxable costs. 

T&B appeals. We will reverse the judgment of the District 

Court and remand for further proceedings consistent with 

this opinion. 

I. 

Mr. Daniels worked for T&B from 1955 until his death 

from cancer in 1993. Prior to 1993, Mr. Daniels received life 

insurance in the amount of one times his annual salary at 

T&B's expense as an employment benefit. Also prior to 

1993, Mr. Daniels elected to supplement this insurance 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 employee's 

paycheck. 

T&B changed its insurance carrier and, concomitantly, 

the structure of its life insurance benefits, effective 

January, 1993. Under the new plan (the "MetLife plan"), 

T&B continued to provide at its expense life insurance in 

the amount of one times annual salary as an employment 

benefit. Employees could continue to purchase 

supplemental life insurance, but now only in whole (rather 

than fractional) multiples of salary. Moreover, the

premiums 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 took 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 effective on 

January 1, 1993. The information packet began with a 

memorandum from John Schierer, T&B's Manager of 

 3 
Employee 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 continue 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 insurance to a 

maximum $500,000." The document then sets forth the

following two paragraphs which give rise to this suit: 

 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 incremental 

 $100,000 without additional proof of insurability. 

 Employees who do not currently have supplemental 

 coverage will be guaranteed coverage for 2 times 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, you may 

 purchase Supplemental Life Insurance by enrolling in 

 the program and paying the required premium.

 Amount of Coverage 

 You may purchase Supplemental Life Insurance in 

 amounts of one, two, three, four or five times your base 

 salary. 

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

Mr. Daniels asked a number of questions about his 

 4 
benefits, none of which related to supplemental life 

insurance. In the context of his health care benefits, Mr. 

Daniels expressed an interest in increasing his take-home 

pay in light of the layoff T&B had warned him he would 

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 Supplemental 

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 "asterisk" 

footnote stated: "I understand that I may have to provide 

medical evidence of insurability before this coverage 

becomes effective." Mr. Daniels placed an "X" in the blank 

next to "None." 

In her deposition, Mrs. Daniels testified to statements Mr. 

Daniels made after the December 20 meeting that tended to 

show what he thought he had done with respect to his 

supplemental life insurance. Mrs. Daniels testified that 

after the terminal nature of her husband's condition 

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 subsequent to 

the new benefits plan becoming effective, her husband 

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 showed an insurance 

deduction in the same amount as his prior statements. His February 11, 

1993, pay statement appears to contain a $50.97 insurance 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 deductions, 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 actually calculates his 

net pay. Mr. Daniels' March 15, 1993, pay statement, issued four days 

after his death, shows no deduction for supplemental insurance. 

T&B explains that because it had not implemented all of the MetLife 

benefits changes as of Mr. Daniels' January 14, 1993, paycheck, it 

erroneously deducted $20.54 for supplemental life insurance. 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 adjustment. 

 5 
After Mr. Daniels' death, Mrs. Daniels received payment 

of $53,000, representing one times her husband's annual 

salary. Mr. Daniels' son, Charles, Jr., asked Schierer if the 

family was entitled to any additional life insurance benefits 

in light of the supplemental life insurance his father 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. Mrs. 

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 respond to 

Mrs. Daniels' attorney's request until July 17, 1995, 291 

days later. 

II. 

The District Court held that T&B, as the administrator of 

an ERISA plan, had a fiduciary duty not to "materially 

mislead those to whom the duty of loyalty and prudence 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 material if 

"there is substantial likelihood that it would mislead a 

reasonable employee into making" a decision to his or her 

detriment. Id. T&B does not dispute that it had a fiduciary 

duty; it does dispute that it breached that duty. 

The District Court concluded that T&B made a material 

misrepresentation to Mr. Daniels. As the Court succinctly 

put it: 

 The Court concludes that defendants made a 

 material misrepresentation to Mr. Daniels when they 

 stated in documents sent to him to explain the change 

 in benefits: "If you currently have supplemental 

 coverage, you will be grandfathered up to your current 

 coverage amount." (Esposito Cert., Exh. F). Black's Law 

 Dictionary defines "grandfather clause," in relevant 

 part, as: "Provision in a new law or regulation 

 exempting those already in or a part of the existing 

 system which is being regulated." (Id.) On its face, 

 6 
 defendants' statement conveyed that employees who 

 already had supplemental insurance coverage would be 

 exempted from the changes to defendants' policy. 

 * * * 

 There is no elaboration on this grandfather clause 

 anywhere in the remainder of the explanatory

 memorandum where that sentence is found or in the 

 other information defendants provided to Mr. Daniels, 

 i.e., the cover memorandum, the enrollment form, and 

 the information Mr. Schierer says he conveyed to Mr. 

 Daniels at the December 20, 1992 meeting. 

 * * * 

 Defendants' statement that "[i]f you currently have 

 supplemental coverage, you will be grandfathered up to 

 your current coverage amount" was a material

 misrepresentation. (Esposito Cert., Exh. F). In fact, 

 employees who already had supplemental insurance 

 were not grandfathered up to their current coverage 

 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 material 

misrepresentation by an ERISA fiduciary was sufficient 

alone to warrant summary judgment against T&B "as to 

[its] liability." App. at 36. The Court made no finding as to 

whether Mr. Daniels actually relied on T&B's 

misrepresentation. Instead, it concluded that "genuine 

issues of material fact remain as to the type of equitable 

relief that should be awarded." In the course of so

concluding, the District Court acknowledged that Mr. 

Daniels may not have relied upon the misrepresentation at 

all; instead, Mr. Daniels may have "purposely elected not to 

continue to pay for supplemental insurance." On the other 

hand, the Court observed, the evidence would support an 

inference that the "grandfathered" misrepresentation led 

Mr. Daniels to believe that he did not have to do anything 

to continue his existing supplemental insurance and that 

he should check "None" on the enrollment form to indicate 

that he did not wish to purchase any additional 

supplemental insurance. 

 7 
The arbitrator explicitly acknowledged that the District 

Court had yet to find reliance: "This case boils down to the 

following questions. Did the grandfather clause cause the 

decline of the supplemental plan under the new policy and 

if so what is the remedy?" Having recognized the unresolved 

reliance issue, the arbitrator stated cursorily,"Considering 

the pros and cons of each party's argument makes[this] a 

case which should be decided equitably." The arbitrator 

then summarily awarded Mrs. Daniels $40,545 (or fifty-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 request for 

the "instruments under which [an ERISA] plan is 

established or operated," the District Court held that: (1) a 

request from the attorney of a participant or beneficiary 

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 received 

all of the insurance proceeds she was entitled to receive 

under the MetLife Plan. The District Court then noted that 

T&B had offered no excuses for its failure to provide the 

documents other than the legal arguments the Court had 

just rejected and pointed out that there had not even been 

a response to Mrs. Daniels asserting these legal positions. 

As a result, it imposed penalties of $100 per day for 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) deprives this court of 

jurisdiction to hear this appeal. Section 657(a) provides 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 subject 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 judgment 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, 1999, and T&B filed 

its demand for a trial de novo twenty-nine days later on December 7, 

1999. In its notice demanding trial de novo, T&B stated that it only 

wished to preserve its right to challenge the District Court's liability 

 8 
III. 

Both sides claim to be entitled to summary judgment

with respect to T&B's liability on the breach of fiduciary 

duty claim. Moreover, T&B insists that, even if it is not 

entitled to such a summary judgment, the issue of liability 

must be tried. In order to resolve these contentions 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 element of Mrs. 

Daniels' case on liability and, if so, whether there is a 

material dispute of fact as to whether Mr. Daniels relied on 

the "grandfathered" statement; and (3) whether summary 

judgment could properly be entered against T&B on the 

liability issue in the alleged absence of any evidence 

tending to show that it was aware of confusion on Mr. 

Daniels' part. 

Mrs. Daniels' claim is that T&B breached its fiduciary 

duty by misrepresenting that existing supplemental 

insurance would be "grandfathered." We have reviewed the 

elements of such a claim in two recent decisions, Adams v. 

Freedom Forge Corp., 204 F.3d 475 (3d Cir. 2000), and In 

re Unisys Corp. Retiree Medical Benefit "ERISA" Litigation, 

_________________________________________________________________ 

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 be awarded to [Mrs. 

Daniels], . . . [T&B] do[es] not demand trial de novo 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 Local Civil Rule 

201.1 (the authority the arbitrator purported to exercise) 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 party makes it clear, as 

did T&B, that it intends to preserve its right to appeal issues resolved 

by 

the court, neither Section 657(a) nor Local Civil Rule 201.1 precludes 

our exercise of jurisdiction under 28 U.S.C. S 1291 to review issues that 

were not resolved by the arbitrator. 

 9 
242 F.3d 497 (3d Cir. 2001) [hereinafter Unisys III]. In 

Adams, we stated: 

 An employee may recover for a breach of fiduciary 

 duty [under ERISA] if he or she proves that any 

 employer, acting as a fiduciary, made a material 

 misrepresentation that would confuse a reasonable 

 beneficiary about his or her benefits, and the 

 beneficiary acted thereupon to his or her detriment. 

Id. at 492; see also Unisys III, 242 F.3d at 505 (quoting 

Adams and noting that it elucidates "the elements of a 

breach of fiduciary claim"). Following Adams and Unisys III, 

it is thus clear that, in order to make out a breach of 

fiduciary duty claim of the kind here asserted, a plaintiff 

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 the 

defendant; (3) the materiality of that misrepresentation; 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 substantial 

likelihood that it would mislead a reasonable employee 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 minds cannot 

differ.' " Fischer v. Phila. Elec. Co., 994 F.2d 130, 135 (3d 

Cir. 1993) (quoting from TSC Indus., Inc. v. Northway, 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, 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 incremental 

 $100,000 without additional proof of insurability. 

 Employees who do not currently have supplemental coverage will 

 be guaranteed coverage for 2 times base salary up to $200,000. 

 Proof of insurability will be required for the additional coverage 

 chosen in excess of 2 times. 

 10 
emphasizes that this portion advises someone in Mr.

Daniels' position that his existing supplemental coverage 

"will be grandfathered up to your current amount." This 

clearly connotes, in her view, that existing supplemental 

insurance would continue unaffected by the new plan and 

that it would do so without further action on the part of the 

employee. While she acknowledges that this advice is 

followed by information about proof of insurability, she 

points out that everything following the first sentence 

expressly refers only to "additional" supplemental coverage 

or to "employees who do not currently have supplemental 

coverage." She insists that the notion that no action was 

required on the part of an employee who wished to continue 

only existing coverage was confirmed by the fact that 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. This aspect 

of the form clearly suggested that its purpose was to 

provide an opportunity to purchase supplemental 

insurance in "addition" to existing coverage, a suggestion 

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 its 

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 under the 

old program, as well as the new, the "Basic Life Insurance" 

provided at T&B's expense was the only thing that was 

automatic and that supplemental insurance at the 

employee's expense had to be elected annually by him or 

her. It points out that Mr. Schierer's covering letter, 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 materials, the 

Basic Life Insurance is the only thing described as

"automatic," and supplemental coverage is consistently 

described as elective.4 The term"grandfathered" appears 

_________________________________________________________________ 

4. "You are automatically covered for Basic Life Insurance . . . . You are 

also eligible to purchase Supplemental Life Insurance . . . ." App. at 59. 

 11 
only once in this overall general context of elective 

supplemental coverage and then only in the specific context 

of proof of insurability. As a result, T&B argues that 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 for 

opting out. The reasonable inference to be drawn from the 

materials, T&B insists, is that "grandfathered" referred to a 

right to elect to continue existing coverage without proof of 

insurability and that the only opportunities available for 

supplemental coverage were those provided for on the form, 

with those employees who had existing supplemental 

coverage being entitled to elect supplemental coverage 

without proof of insurability not to exceed existing 

supplemental coverage, i.e., in Mr. Daniels' case, 1 times 

earnings, since 2 times earnings would exceed his existing 

supplemental coverage of 1.5 times earnings. 

We conclude that the message conveyed by the materials 

as a whole is a matter about which reasonable minds could 

differ. Accordingly, we conclude that summary judgment 

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 elements of 

such a breach of fiduciary duty claim and contrary to the 

conclusion of the District Court here, she is not entitled 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 wished 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 reliance. 

 12 
T&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 there 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 that 

T&B's grandfathering statement held a substantial risk of 

misleading one in Mr. Daniels' position, could infer from 

this record that he intended for his supplemental insurance 

to continue and failed to effectuate that intent because the 

grandfathering statement led him to check "None" on the 

form and to take no other steps to elect new supplemental 

coverage under the MetLife plan. Mrs. Daniels' testimony 

that her husband assured her in January of 1993 that he 

had coverage amounting to 2.5 times earnings and that the 

deduction from his pay for supplemental insurance was 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 he 

mistakenly believed that the election form was directed to 

additional supplemental insurance and that continuing 

existing coverage required no further action on his part. 

Since this mistaken belief is precisely the risk that 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 reliance 

is not mandated by this record. It would also support 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 breach of 

fiduciary duty in the absence of evidence of knowledge on 

its part "that Mr. Daniels was confused when he declined to 

purchase supplemental life insurance." Appellants' Br. at 

 13 
14. Finding no such evidence, T&B urges us to direct the 

entry of summary judgment in its favor. 

Again, as the above discussion of the elements of Mrs. 

Daniels' breach of fiduciary duty claim indicates, if an 

employee proves that an employer, acting as a fiduciary, 

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 decision, 

the employee is entitled to equitable relief. If the statement 

creates a substantial risk of misleading a reasonable 

employee, it is foreseeable that an employee will be misled 

to his detriment. That foreseeability and reasonable reliance 

by a beneficiary are all that is required. See Unisys III, 242 

F.3d at 507-10. In such circumstances, we have never 

required a showing that the employer had actual knowledge 

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 the 

employee needs in order to protect himself from harm. See 

Bixler v. Central Pa. Teamsters Health & Welfare Fund, 12 

F.3d 1292, 1300 (3d Cir. 1993) (finding a fiduciary duty on 

the part of an employer to communicate to the beneficiary 

material facts affecting the interest of the beneficiary which 

the employer knows the beneficiary does not know and 

which the beneficiary needs to know for his protection). In 

such a situation, harm to the beneficiary may not be 

reasonably foreseeable in the absence of employer 

knowledge of the employee's knowledge and understanding. 

See Unisys III, 242 F.3d at 509. Where the fiduciary makes 

an affirmative statement that creates a substantial

likelihood of injury to a reasonable beneficiary, however, 

any harm occasioned by the detrimental reliance on the 

affirmative misrepresentation is foreseeable and gives rise 

to liability. 

Contrary to T&B's suggestion, neither International Union, 

United Automobile, Aerospace & Agricultural Implement 

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

(3d Cir. 1999), nor In re Unisys Corp. Retiree Medical 

Benefit "ERISA" Litigation, 57 F.3d 1255 (3d Cir. 1995) 

[hereinafter Unisys II], holds that knowledge of employee 

confusion is an element of a breach of fiduciary duty claim 

like that made by Mrs. Daniels. Those cases, like Bixler, 

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 portions of 

the opinions in those cases to which T&B directs our 

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 that 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 to 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 1265 n.15, 

1266 ("[W]e hold that the district court did not err 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 since 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 request 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 represent a 

participant or beneficiary does not trigger the duty to 

respond unless it is accompanied by written authorization 

from the client; (2) Mrs. Daniels was not a "beneficiary," as 

that term is used in ERISA; and (3) the amount of the 

penalty imposed constitutes an abuse of discretion.

 15 
A. Sufficiency of the Request 

As we noted in Bruch v. Firestone Tire and Rubber Co., 

828 F.2d 134, 153 (3d Cir. 1987), "ERISA's legislative 

history makes clear that Congress intended the 

information-producing provisions to enable claimants to 

make their own decisions on how best to enforce their 

rights." We conclude that this objective will be best served 

by a rule that a representation by an attorney that he is 

making a request on behalf of a participant or beneficiary 

triggers the duty to respond under S 1024(b)(4) when the 

administrator has no reason to question the attorney's 

authority. In the rare case where the administrator has 

reason to question that authority, it can respond by 

requesting further evidence. The objective of the statute 

would be ill served, however, by permitting administrators 

to refuse to respond with no indication that authority is 

even an issue. We believe the facts of this case forcefully 

compel that conclusion. 

T&B has asked that we defer to the interpretation of 

S 1024(b)(4) that it finds in the Department of Labor's 

Advisory Opinion Letter 82-021A. That letter addressed a 

request for documents by a non-attorney third party. In 

that context, the Department gave the following advice: 

 [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 also be 

 furnished to a third party where the participant or 

 beneficiary has authorized in writing the release of the 

 information to such third party. Absent such

 authorization, it is the Department's view that a plan is 

 not required by section 104 of ERISA to provide such 

 information to persons who are neither participants 

 nor beneficiaries. 

See Bartling v. Fruehauf Corp., 29 F.3d 1062, 1072 (6th Cir. 

1994). While we agree with this advice as applied to nonattorney third parties, we believe an attorney's 

representation regarding the authority conferred upon him 

or her by the client adds a material factor not present in 

the situation the Department was addressing. The law has 

traditionally accepted such representations in the absence 

 16 
of reason to question them,5 and the statutory objective 

behind S 1024(b)(4) counsels in favor of accepting them 

here. For this reason, we respectfully disagree with the 

conclusion reached by the Sixth Circuit Court of Appeals in 

Bartling. See Moothart v. Bell, 21 F.3d 1499, 1503-04 (10th 

Cir. 1994) (recognizing an attorney's letter similar in all 

material respects to that of Mrs. Daniels' attorney as 

constituting a "request" under the statute and triggering a 

duty to respond). 

B. "Beneficiary" 

Even if a letter from a lawyer on behalf of a beneficiary is 

sufficient to implicate S 1024(b)(4), the attorney must still 

write on behalf of either a "participant" or a"beneficiary." 

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 "beneficiary" 

as "a person designated by a participant, or by the terms of 

an employee benefit plan, who is or may become entitled to 

a benefit thereunder." This requires that we resolve 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 

_________________________________________________________________ 

5. See Graves v. United States Coast Guard , 692 F.2d 71, 74 (9th Cir. 

1982) ("The designation `attorney for Leonard Graves' [on an 

administrative Tort Claims Act claim] is particularly 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 the 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 attorney's request under 

S 1024(b)(4) "the existence of the long-standing legal presumption that an 

attorney has authority to act on behalf of the person he" purports to 

represent). 

6. Mrs. Daniels brought her breach of fiduciary duty 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 fiduciary . . . 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 address the relationship 

between it and section 1002(8). 

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

specific relief that Mrs. Daniels seeks in the instant case-- 

damages stemming from T&B's alleged breach of fiduciary 

duty--does not constitute a "benefit" within the meaning of 

S 1002(8). The Ninth Circuit Court of Appeals came to this 

same conclusion in Kuntz v. Reese, 785 F.2d 1410, 1411 

(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 fiduciary 

duty or of a duty to disclose information about benefits, 

thus any recoverable damages would not be benefits from 

the plan." 

Consequently, if we were to assess "beneficiary" status as 

of the time of the present appeal, Mrs. Daniels would not be 

a "beneficiary" and, therefore, would not be entitled 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 damages 

stemming from T&B's alleged breach of fiduciary duty. Any 

recovery Mrs. Daniels would receive as a consequence of 

the present cause of action for fiduciary breach would come 

out of T&B's pocket (i.e., on the theory that T&B made 

materially misleading statements about the plan), and 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 present 

appeal. Instead, the temporal focus of the "beneficiary" 

inquiry should be the time the request for plan documents 

was made. An individual who "is . . . entitled" to a plan 

benefit or who "may become entitled" to such a benefit, as 

of the time that individual makes the request of the 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 which 

would entitle her to a benefit, i.e., that she would "become 

entitled" at some future date. The issue for decision 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 "entitled," it is 

 18 
not necessary that she establish that she had a meritorious 

claim; it is sufficient if she demonstrates that she had a 

"colorable claim that . . . she will prevail in a suit for 

benefits." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 

101, 117 (1989). We conclude that she had such a claim. 

As we have recounted, Mrs. Daniels had been told by her 

husband shortly before his death that he had life insurance 

through his employer's plan in the amount of 2.5 times his 

annual salary. He was in a position to have personal 

knowledge of this matter and had an interest in accurately 

advising her regarding it. As of September 29th, Mrs. 

Daniels knew she had received materially less than 2.5 

times Mr. Daniels' salary in insurance proceeds. While her 

son had been shown the group insurance election form, its 

significance could not be reliably assessed in isolation. With 

this knowledge, we conclude that Mrs. Daniels had a

colorable claim to additional insurance proceeds and that 

Congress intended that she have access to the documents 

necessary to determine whether she had a meritorious 

claim as well as a colorable one. The concept of a colorable 

claim necessarily encompasses situations in which the 

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 of 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 breach of 

fiduciary duty claim.7 We do not believe, however, that one 

in Mrs. Daniels' position should be held to have made an 

election of remedies based on the precise wording of a letter 

seeking access to the information necessary to make an 

informed decision regarding available remedies. If an 

administrator has concerns about whether someone 

_________________________________________________________________ 

7. One paragraph of the letter reads as follows: 

 We are representing the family on their claims for damages 

 concerning the actions of Thomas & Betts, and its employees, 

 resulting in the denial of life insurance benefit payments on life 

 insurance benefits that were provided to Mr. Daniels prior to his 

 death. 

App. at 69. 

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

for the facts upon which a claim to a benefit is being 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 discretion, a 

plan administrator may be required to pay a beneficiary 

penalties of up to $100 per day from the date of the 

administrator's failure "to comply with a request for . . . 

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 Court noted, 

there was no indication that T&B's refusal was "some sort 

of administrative mistake," and the Court found it difficult 

to accept that T&B acted based on the legal arguments 

advanced here without giving any indication of its position 

to Mrs. Daniels' attorney. T&B characterizes the District 

Court's findings in this regard as findings of an absence of 

bad faith and, on that basis, insists that the maximum fine 

was an abuse of discretion. While we believe T&B's conduct 

fell something short of a good faith effort at compliance, it 

is not necessary for us to so characterize it. Suffice it to say 

that the reasons identified by the District Court are 

sufficient to bring its ultimate conclusion well within the 

scope of its considerable discretion. 

We will, however, direct that, on remand, the penalty be 

reduced by $3,000. The District Court found that T&B 

withheld plan documents for 291 days, from September 29, 

1994, until July 17, 1995. Section 1132(c) directs that the 

fine commence "from the date of such failure or refusal" 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 or 

beneficiary's request. Effectively, there is a 30 day 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, this is a 

"failure" to produce the documents for 261 days. Thus, the 

maximum penalty would be $26,100, not $29,100. See 

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

1994). 

V. 

Having found that T&B breached its fiduciary duty to Mr. 

Daniels and that it improperly withheld plan documents 

from Mrs. Daniels, the District Court awarded Mrs. Daniels 

attorney's fees pursuant to 29 U.S.C. S 1132(g).8 Because 

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 attorney's fees. 

After Mrs. Daniels' breach of fiduciary duty claim is finally 

resolved, the District Court may, of course, revisit the 

attorney's fee issue. 

VI. 

Because genuine issues of material fact exist as to

whether T&B's "grandfathered" statement is materially 

misleading and, if it was, as to whether Mr. Daniels 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 opinion. 

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 paragraph (2) [delinquent 

contributions]) by a participant, beneficiary, or fiduciary, the court in 

its 

discretion may allow a reasonable attorney's fee and costs of action to 

either party." 

 21