In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 04-4258

EARLENE JENKINS,

Plaintiff-Appellant,

v.

MICHAEL D. YAGER and MID AMERICA

MOTORWORKS, INCORPORATED, formerly

known as MID AMERICA DIRECT,

INCORPORATED,

Defendants-Appellees.

____________

Appeal from the United States District Court

for the Southern District of Illinois.

No. 03 C 4007—J. Phil Gilbert, Judge.

____________

ARGUED SEPTEMBER 26, 2005—DECIDED APRIL 14, 2006

____________

Before EASTERBROOK, RIPPLE and ROVNER, Circuit Judges.

RIPPLE, Circuit Judge. Earlene Jenkins, who brought

this action under the Employee Retirement Income Security

Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., appeals the

district court’s grant of summary judgment in favor of plan

administrator Michael Yager and her former employer

Mid America Motorworks (“Mid America”). For the reasons

set forth in this opinion, we affirm in part and reverse in

part the judgment of the district court, and remand the case
2 No. 04-4258

1 In their brief, defendants assert that Erskine was the “financial

advisor” to the plan. Appellees’ Br. at 2. However, there is no

clear support for that statement in the record; in the portions

of their depositions contained in the record, neither Mr. Yager

nor Mr. Erskine describe Erskine’s role as a “financial advisor.”

to the district court for further proceedings consistent with

this opinion.

I

BACKGROUND

A. Facts

Ms. Jenkins was an employee of Mid America, an autoparts distributor, from August 1988 through September

2002. Michael Yager owns and operates Mid America

and serves as the company’s president.

In mid-1991, Mid America established a profit-sharing

and pension plan for the company’s 100-plus employees. At

all times relevant to this litigation, Mid America was

the plan administrator and Mr. Yager was the plan trustee.

The plan was prepared by RSM McGladrey, Inc., and was

reviewed by Mid America’s attorneys. Dwight Erskine,

the Registered Principal of Raymond James Financial

Services in Effingham, Illinois, also advised Mr. Yager

regarding the various funds available for the investment of

plan funds, and Mr. Yager purchased the funds for the plan

through Erskine’s office.1

Under the profit-sharing portion of the plan, Mid America

contributes a discretionary amount to the plan at the end of

the year; that amount then is divided among the participants. The plan requires Mr. Yager to direct the investment
No. 04-4258 3

2 The profit-sharing plan sustained the following investment

losses: in 2000, $165,818.47; in 2001, $98,055.82; and in 2002,

$148,119.68. R.25, Ex.4 at 5; R.25, Ex.5 at 5; R.25, Ex.6 at 3. On

page seven of the plaintiff’s brief, she claims the losses totaled

only $241,686. However, her table reveals that this statement

is based on an arithmetical error, and that actual losses were over

$400,000.

of the discretionary profit-sharing contribution by Mid

America. The profit-sharing assets are invested in four

funds marketed by American Funds: American Mutual

Fund, The Growth Fund of America (“Growth Fund”),

Euro-Pacific Growth Fund and the Capital World Growth &

Income (“Capital World”) Fund. Under the plan, employees

are eligible to collect their profit-sharing earnings along

with their pension earnings upon termination, retirement,

total and permanent disability, or death. During the years

2000 through 2002, the profit-sharing plan sustained

losses of over $400,000.2

The plan also contains a pension component. Employees

may defer up to fifteen percent of their salary for investment

into the pension portion of the plan; Mid America matches

that contribution dollar-for-dollar up to the legal limit of six

percent of that deferral. The plan provides that plan participants may make limited investment directions as to the

salary reduction and the employer-matched plan contributions (the “401(k) assets”) by choosing to direct the investment of those assets among four funds marketed by American Funds: Euro-Pacific Growth Fund, The Growth Fund of

America (“Growth Fund”), The Income Fund of America

(“Income Fund”) and The Cash Management Trust of

America (“Cash Management Fund”). These options have
4 No. 04-4258

3 In 2000, the Cash Management Fund had a net gain of

$2,127.14, the Growth Fund had a gain of $91,493.42 and the

Income Fund had a gain of $17,815.31, while the Euro-Pacific

Growth Fund had a loss of $158,821.94. R.25, Ex.4 at 3. In 2001,

the Cash Management Fund had a gain of $1,507.67 and the

Income Fund had a gain of $11,053.81, while the Euro-Pacific

Growth Fund had a loss of $97,914.74 and the Growth Fund had a

loss of $171,488.66. R.25, Ex.5 at 3. In 2002, the Cash Management

Fund had a gain of $469.67, while the Euro-Pacific Growth Fund

had a loss of $104,632.89, the Growth Fund had a loss of

$286,681.62, and the Income Fund had a loss of $6,505.24. R.25,

Ex.6 at 2.

not changed since 1991. During the calendar years of 2000,

2001 and 2002, the plan’s 401(k) assets sustained investment

losses of over $700,000.3

Mr. Yager testified in his deposition that he never reviewed the participants’ individual 401(k) investment

decisions. From 1991-2002, participants could change

their investment directions only once per year. Beginning in

2002, participants could change investment directions once

every six months. Prior to 2003, each plan participant

received a form letter in November or December that set

forth the participant’s level of salary deferral and the

funds in which the participant’s 401(k) funds were invested.

The letter further stated that the participant could make

changes to the investment of their funds; those changes

would be effective January 1 of the following year. Plan

participants also were given a statement of the balance of

their 401(k) assets once a year, after the end of the calendar

year. Under this arrangement, as a practical matter, plan

participants had to make investment choices for the following year before they knew how their earlier fund choices

had performed in the previous year.
No. 04-4258 5

Additionally, Mid America conducted an annual meeting in December for all participants in the plan; at that

meeting, Mr. Erksine explained the performance of the

funds over the past year and the options available to

participants, as well as answered any questions. However,

Ms. Jenkins attended only one of these annual meetings

during her employment with Mid America. The materials

from this meeting also were left in the break room so that

employees could review them. Mr. Erskine also stated that

he was available in person and by telephone in his office

to answer any questions about the four funds; there is

no indication from the record that Ms. Jenkins availed

herself of his services. 

B. District Court Proceedings

Ms. Jenkins brought this action against Mr. Yager and Mid

America, alleging that Mr. Yager’s performance fell below

the standard imposed on ERISA trustees. The district court

denied Ms. Jenkins’ motion for summary judgment on

December 7, 2004. In doing so, the district court quoted Ms.

Jenkins’ summary of her position:

By [1] providing plan participants with unduly restrictive means to direct investments, by [2] failing to

prudently monitor the [p]lan’s investments, and by [3]

failing to operate the [p]lan according to ERISA, Yager

and Mid America breached their fiduciary duties to

the [p]lan.

R.34 at 2.

The district court began by discussing Ms. Jenkins’ third

contention. Section 403 of ERISA, 29 U.S.C. § 1103(a), states

that “all assets of an employee benefit plan shall be held

in trust by one or more trustees,” and that those named
6 No. 04-4258

trustees “shall have exclusive authority and discretion to

manage and control the assets of the plan.” There are two

explicit exceptions to this rule found in 29 U.S.C.

§ 1103(a)(1) and § 1103(a)(2), although as discussed later,

neither exception applies to the Mid America plan. Ms.

Jenkins contended that Mr. Yager and Mid America had

violated ERISA by delegating control over plan assets to

plan participants. However, the district court noted that

section 404(c) of ERISA absolves a fiduciary from liability

caused by plan participants when the “pension plan . . .

provides for individual accounts and permits a participant

or beneficiary to exercise control over the assets in his

account.” 29 U.S.C. § 1104(c)(1). The district court stated that

“[a] plain reading of that language suggests that participant

control is assumed permissible in the first instance, for the

statute absolves a fiduciary of liability ‘in the case of’ a plan

providing for individual accounts and allowing participant

control.” R.34 at 5. The district court then held that an

“implied exception” to ERISA’s non-delegation provision in

section 403 existed for plans that allow participant control,

and therefore, Mr. Yager and Mid America did not violate

section 403. Id.

Next, with respect to Ms. Jenkins’ remaining claims, the

district court determined that the record established that

Mr. Yager did act prudently in selecting and monitoring

investments. The district court noted that Mr. Yager had

employed a long-term strategy for the investment of the

401(k) funds. He had chosen conservative and stable

funds and had decided to remain invested in those funds

during periods of market fluctuation. The court then

determined that, because Mr. Yager had selected funds

that were conservative and not volatile in the long-term,

he had not breached his fiduciary duty for not “hastily

retreating from that strategy in the face of what appears
No. 04-4258 7

to have been nothing more than mere market fluctuation.”

Id. at 8. Additionally, the district court held that Mr. Yager

had provided plan participants with all the information that

they needed to make informed investment decisions and

that he did not violate any duty in not providing additional

advice or information. The district court did not address Mr.

Yager’s fiduciary duty with respect to the profit-sharing

funds.

Although the district court denied Ms. Jenkins’ motion for

summary judgment, it did not grant, at that point, summary

judgment to Mr. Yager and Mid America because they had

not cross-moved for summary judgment. However, after the

district court denied Ms. Jenkins’ motion for summary

judgment, Ms. Jenkins determined that, based on the district

court’s interpretation of the law, she could not prevail at

trial. Ms. Jenkins stipulated that the defendants’ memorandum in opposition to summary judgment could be treated

as a motion for summary judgment. In this stipulation, she

reserved her right to appeal any final order granting

defendants’ cross-motion for summary judgment. As a

result of the stipulation, the district court granted summary

judgment to the defendants and dismissed Ms. Jenkins’

claims with prejudice.

II

DISCUSSION

We review a district court’s grant of summary judgment de novo, drawing all reasonable inferences in the light

most favorable to the non-moving party. Vallone v. CNA Fin.

Corp., 375 F.3d 623, 631 (7th Cir. 2004).
8 No. 04-4258

A. The “Implied Exception” to ERISA Sections 403

and 405

Ms. Jenkins submits that the Mid America plan, which

allows plan participants to direct their 401(k) funds, violates

ERISA provisions that forbid the delegation of trustee

duties.

1.

In evaluating Ms. Jenkins’ submission, we begin with

section 403(a) of ERISA. It states:

Except as provided in subsection (b) of this section,

all assets of an employee benefit plan shall be held in

trust by one or more trustees. Such trustee or trustees

shall be either named in the trust instrument or in the

plan instrument described in section 1102(a) of this title

or appointed by a person who is a named fiduciary, and

upon acceptance of being named or appointed,

the trustee or trustees shall have exclusive authority

and discretion to manage and control the assets of the

plan. . . .

29 U.S.C. § 1103(a) (emphasis added). Section 403(a) has two

explicit exceptions that are found in 29 U.S.C. § 1103(a). As

the statutory text makes clear, neither of these exceptions

are pertinent to our present inquiry. More precisely, that

section provides:

(1) the plan expressly provides that the trustee or

trustees are subject to the direction of a named fiduciary

who is not a trustee, in which case the trustees shall be

subject to proper directions of such fiduciary which are

made in accordance with the terms of the plan and

which are not contrary to this chapter, or
No. 04-4258 9

4 29 U.S.C. § 1105(c)(3) defines trustee responsibilities as “any

responsibility provided in the plan’s trust instrument (if any) to

manage or control the assets of the plan.” The Mid America

plan did not have a trust instrument, only a plan instrument.

However, it appears that the plan instrument subsumed the trust

instrument and the one document serves as both. ERISA section

(continued...)

(2) authority to manage, acquire, or dispose of assets of

the plan is delegated to one or more investment managers pursuant to section 1102(c)(3) of this title.

Id. § 1103(b). Because these exceptions are not applicable, we

must determine whether any other provisions of

ERISA provide authorization for the arrangement found

in the plan under review. We therefore must determine

whether other provisions of the statute are pertinent to

our inquiry. 

2.

In undertaking this inquiry, we turn first to ERISA section

405(c) to determine the responsibilities of the trustee under

the plan before us. That subsection provides that a plan

instrument may allocate “fiduciary responsibilities (other

than trustee responsibilities)” among named fiduciaries and

to other persons designated by named fiduciaries. 29 U.S.C.

§ 1105(c)(1). Section 405(c) further defines “trustee responsibilities” as “any responsibility provided in the plan’s trust

instrument (if any) to manage or control the assets of the

plan.” Id. § 1105(c)(3).

Mid America’s plan instrument, labeled “Employee

Savings and Profit Sharing Plan,” sets forth the responsibilities of the trustee.4

 R.25, Ex.8 at 1. The trustee’s powers
10 No. 04-4258

4 (...continued)

402(a)(1) states that “[e]very employee benefit plan shall be

established and maintained pursuant to a written instrument.” 29

U.S.C. § 1102(a)(1). Additionally, ERISA section 403(a) states that

trustee(s) “shall either be named in the trust instrument or in the

plan instrument described in section 402(a) or appointed by a

person who is a named fiduciary.” See id. § 1103(a). Therefore,

ERISA does not mandate a separate written trust agreement. In

this case, the plan instrument defines the Trust and sets forth

trustee responsibilities. R.25, Ex.8 at 17, 87-95. It also refers to

itself as “[t]his Plan and Trust.” Id. at 98. Therefore, the trustee

responsibilities laid out in the plan instrument are the trustee

responsibilities at issue in 29 U.S.C. § 1105(c)(3).

are “to invest, manage, and control” the plan assets consistent with the “funding policy and method” as determined

by Mid America. Id. at 87. More specifically, the Trustee is

to “invest and reinvest the Trust Fund to keep the Trust

Fund invested . . . in such securities or property, real or

personal, wherever situated, as the Trustee shall deem

advisable. . . .” Id. The plan instrument also describes the

“funding policy and method” that should be established by

Mid America by stating that Mid America “shall determine

whether the Plan has a short run need for liquidity (e.g., to

pay benefits) or whether liquidity is a long run goal and

investment growth (and stability of same) is a more current

need.” Id. at 23. The “Trust Fund” is defined as “the assets

of the Plan and Trust as the same shall exist from time to

time.” Id. at 17.

The plan instrument also states, for the 401(k) funds,

that “[e]ach Participant shall be given the opportunity to

direct the Trustee as to the investment of such Participant’s

account value,” with such designations to be “made not

more frequently than once in any Plan Year.” Id. at 62, 66. In
No. 04-4258 11

addition, a separate “Directed Investment Account” shall be

made for each participant, and such account “shall not share

in Trust Fund earnings, but it shall be charged or credited as

appropriate with the net earnings, gains, losses and expenses as well as any appreciation or depreciation in market

value during each Plan Year attributable to such account.”

Id. at 67.

As established by the plan, the duty to invest the plan

assets was a “trustee responsibility” under section 405(c)(3);

authority to delegate that duty cannot be found in section

403(c)(1). Since section 405 does not provide an exception to

section 403(a), we must look elsewhere in ERISA to find

authorization for the plan’s participant-directed investments.

3.

ERISA section 404, which sets forth the standard of care

for a fiduciary, provides that no fiduciary shall be liable

for any loss which results from a plan participant or beneficiary’s exercise of control in participant-directed plans. See

29 U.S.C. § 1104(c). However, in order to qualify as a

participant-directed plan eligible for the liability shield of

section 404(c), a plan must meet a number of conditions;

prominent among them is that it must provide at least three

investment options and it must permit the participants to

give instructions to the plan with respect to those options at

least once every three months. 29 C.F.R. § 2550.404c1(b)(2)(c). It is undisputed that the Mid America plan does

not qualify under section 404(c) because there is no opportunity to change investments once every three months.

Therefore, we must determine whether compliance with

section 404(c) is the exclusive method of creating a

participant-directed exception to sections 403 and 405.
12 No. 04-4258

Although section 404(c) and its accompanying regulation, 29 C.F.R. § 2550.404c-1, create a safe harbor for a

trustee, we see no evidence that these provisions necessarily

are the only possible means by which a trustee can escape

liability for participant-directed plans. As 29 C.F.R. §

2550.404c-1(a)(2) states:

The standards set forth in this section are applicable

solely for the purpose of determining whether a plan is

an ERISA section 404(c) plan and whether a particular

transaction engaged in by a participant or beneficiary of

such plan is afforded relief by section 404(c). Such

standards, therefore, are not intended to be applied in determining whether, or to what extent, a plan which does not

meet the requirements for an ERISA section 404(c) plan or a

fiduciary with respect to such a plan satisfies the fiduciary

responsibility or other provisions of Title I of the Act.

(emphasis added). The Department of Labor also has

stated that, for plans that do not meet the regulatory

definition of a section 404(c) participant-directed plan, “noncomplying plans do not necessarily violate ERISA; noncompliance merely results in the plan not being accorded

the statutory relief described in section 404(c).” Final

Regulation Regarding Participant Directed Individual

Account Plans (ERISA Section 404(c) Plans), 57 Fed. Reg.

46,906, 46,907 (Oct. 13, 1992).

Therefore, we agree with the district court and believe that

the statute, when read as a whole along with the accompanying regulations, permits a plan trustee to delegate

decisions regarding the investment of funds to plan participants even if the plan does not meet the requirements for

the section 404(c) safe harbor. Therefore, there is an “implied exception” to sections 403 and 405 for participantdirected plans, allowing plan participants to direct the
No. 04-4258 13

investment of their own plan funds. If a participant-directed

plan does not meet the conditions set forth in 29 C.F.R. §

2550.404c-1(b), the plan trustee and fiduciaries simply do

not receive the benefits of section 404(c), and they are not

shielded from liability for losses or breaches of duty which

result from the plan participant’s exercise of control. It does

not necessarily mean that such a plan violates ERISA;

instead, the actions of the plan trustee, when delegating

decision-making authority to plan participants, must be

evaluated to see if they violate the trustee’s fiduciary duty.

B. Violation of Fiduciary Duty

ERISA section 404 imposes standards of fiduciary duty,

including the fiduciary’s duty to act “with the care, skill,

prudence, and diligence” as would a prudent man under

the same circumstances. 29 U.S.C. § 1104(a)(1)(B). If a

fiduciary breaches his duty, he can be personally liable to

the plan for any losses to the plan resulting from his breach,

as well as can be “subject to such other equitable

or remedial relief as the court may deem appropriate. . . .”

29 U.S.C. § 1109(a).

To state a claim for a violation of fiduciary duty, the

plaintiff must “establish: (1) that the defendants are

plan fiduciaries; (2) that the defendants breached their

fiduciary duties; and (3) that the breach caused harm to the

plaintiff.” Brosted v. UNUM Life Ins. Co. of America, 421 F.3d

459, 465 (7th Cir. 2005) (citing Kamler v. H/N Telecomm. Serv.,

Inc., 305 F.3d 672, 681 (7th Cir. 2002)). The first prong is not

at issue in this case as Mr. Yager, as trustee of the plan, and

Mid America, as administrator of the plan, are both fiduciaries under ERISA section 3(21)(A). See 29

U.S.C. § 1002(21)(A).
14 No. 04-4258

5 In Ms. Jenkins’ complaint, she states that Mr. Yager did not

take “adequate action to monitor, review, and change the

investment of Plan assets”—not that he breached his duty in

choosing the initial funds. R.1 at 2. In her brief, her complaints center on the fact that he did not change the investments over time in response to market pressures. She does not

argue that the initial selection of the various American Funds

for plan investments violated a fiduciary duty.

As for the second prong, “ERISA’s fiduciary duty

was meant to hold plan administrators to a duty of loyalty

akin to that of a common-law trustee.” Ameritech Benefit Plan

Comm. v. Comm. Workers of America, 220 F.3d 814, 825 (7th

Cir. 2000). Accordingly, “[t]he fiduciary must act as though

[he] were a reasonably prudent businessperson with the

interests of all the beneficiaries at heart.” Id.

Ms. Jenkins submits that Mr. Yager breached his fiduciary

duties by failing to “investigate, make, and monitor the

Plan’s investments as required by the fiduciary duty of

prudence.” Appellant’s Br. at 21.5

 Ms. Jenkins also alleges

that Mid America violated their fiduciary duty by failing

to monitor adequately Mr. Yager and by failing to take

appropriate actions to remedy Mr. Yager’s fiduciary

breaches. R.1 at 4. Under ERISA section 405, a fiduciary is

responsible for a breach of duty by another fiduciary if he

knew of the breach and did not take action to remedy the

breach. 29 U.S.C. § 1105(a)(3). Therefore, Mid America could

be liable if we determine that Mr. Yager breached

his fiduciary duty. Ms. Jenkins raises two distinct claims for

breach of fiduciary duty: one related to the plan’s 401(k)

funds, and one related to the plan’s profit-sharing funds.
No. 04-4258 15

1. 401(k) Funds

As for the 401(k) funds, it does not appear that Mr. Yager

breached his fiduciary duty to plan participants in his initial

selection of the funds, his monitoring of the funds or in the

information provided to plan participants to assist in their

investment choices. When initially selecting the funds, Mr.

Yager testified that, in choosing the American Funds, he saw

them as a “long-term plan.” R.26, Ex.3 at 40. He stated that

he had selected funds with a good “long-term record” and

an “ability to perform in an up market or a down market.”

Id. The Third Circuit has said that “the adequacy of a

fiduciary’s independent investigation and ultimate investment selection is evaluated in light of the ‘character and

aims’ of the particular type of plan he serves.” In re Unisys

Sav. Plan Litigation, 74 F.3d 420, 434 (3d Cir. 1996) (citing

Donovan v. Cunningham, 716 F.2d 1455, 1467 (5th Cir. 1983)).

In this case, Mr. Yager’s investment strategy was to find

long-term, conservative, reliable investments that would do

well during market fluctuations. It was part of his investment strategy to pick solid funds and to stay with them

long-term. We cannot say such a strategy was unreasonable

or imprudent.

Mr. Yager also did not breach his duty in failing to

monitor or alter the investments once the four funds

were selected in 1991. Ms. Jenkins contends that Mr. Yager

did not stay adequately aware of losses in the funds.

However, Mr. Erskine testified in his deposition that he

spoke to Mr. Yager about once a week and frequently

discussed the performance of the plan’s funds, as well as

other funds. Mr. Erskine also testified that he provided

Mr. Yager with written information on fund performance at

least six times a year, including fund reports, prospectuses

and newspaper articles. Mr. Yager testified that he reviewed
16 No. 04-4258

6 Ms. Jenkins herself could have changed the direction of her

investment and directed Mr. Yager to invest her 401(k) funds

for years 2000, 2001 and 2002 in a fund that was not losing

money. However, she did not do so, electing to invest 50% into

the Euro-Pacific Growth Fund and 50% into the Growth Fund for

each of those years. R.25, Ex.3 at 1-3. As noted above, the EuroPacific Growth Fund lost money in 2000, and both the EuroPacific Growth Fund and the Growth Fund lost money

in 2001 and 2002.

the reports for the four funds each year. Therefore, it

appears that Mr. Yager adequately monitored the funds.

Similarly, Mr. Yager did not breach his fiduciary duties by

keeping the same four mutual funds for 401(k) fund investment from 1991 until present. Ms. Jenkins contends that Mr.

Yager should have considered moving some of the plan

assets out of the three funds that were losing money in 2000,

2001 and 2002.6

 While three of the four funds did lose

money in 2000, 2001 and 2002, that alone is not evidence

that Mr. Yager violated his fiduciary duty. We have stated

that investment losses are not proof that an investor violated

his duty of care. See DeBruyne v. Equitable Life Assurance Soc.

of the United States, 920 F.2d 457, 465 (7th Cir. 1990). Mr.

Yager, in his deposition, reiterated that his strategy was to

pick conservative funds that would perform well during

market fluctuation. He stated that he would stay with those

funds even in a year where the fund loses money because,

in the long-term, those funds would still perform well. Mr.

Yager, in keeping the four mutual funds, did not violate his

standard of care. Nothing in the record suggests that it was

not reasonable and prudent to select conservative funds

with long-term growth potential and to stay with those

mutual funds even during years of lower performance.

Notably, Ms. Jenkins does not suggest any concrete course of
No. 04-4258 17

7 While Bowerman and Chojnacki refer to the duty to inform

employees about health benefits and severance benefits, not

the duty to inform employees as to the prudent way to invest

their 401(k) funds in a participant-directed plan, the fiduciary

duty at issue is the same as in this case: to what extent fiduciaries

must communicate material facts affecting the interests of plan

participants. See Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574,

590 (7th Cir. 2000); Chojnacki v. Georgia-Pacific Corp., 108 F.3d 810,

817-18 (7th Cir. 1997).

action that would have been better than the one selected by

Mr. Yager.

Finally, Mr. Yager did not breach his duty in allowing

plan participants to direct their investments. We previously have stated that fiduciaries must communicate

“material facts affecting the interests of plan participants

or beneficiaries,” even when the participants or beneficiaries

do not ask for such information. Bowerman v. Wal-Mart

Stores, Inc., 226 F.3d 574, 590 (7th Cir. 2000). Mr. Yager set

up an informational meeting each year at which Mr. Erskine

would discuss the various funds’ performance and outlook

and at which materials on fund performance would be

distributed. Additionally, the materials with information

about the various funds were left in the company break

room, so that all employees would have access to the

information. Although Ms. Jenkins claims that Mr. Yager

violated his fiduciary duty by failing to review each participants’ investment directions throughout the year to ensure

they were appropriate, we have held that ERISA does not

require “plan administrators to investigate each participant’s circumstances and prepare advisory opinions for

literally thousands of employees.” Id. at 590-91 (citing

Chojnacki v. Georgia-Pacific Corp., 108 F.3d 810, 817-18 (7th

Cir. 1997)).7

 Mr. Yager provided his employees with the

necessary information to enable them to direct the invest-
18 No. 04-4258

8 Though the district court did not address Ms. Jenkins’ claim

that Mr. Yager and Mid America breached their fiduciary duties

with regard to the profit-sharing funds, Ms. Jenkins did argue

that such a breach had been committed in her motion for

summary judgment. See R.25 at 7-8, 14. Ms. Jenkins renews

her argument in her appellate brief, see Appellant’s Br. at 22-23,

as well as in her reply brief, see Appellant’s Reply Br. at 12.

ment of their 401(k) funds among four different funds,

including yearly employee meetings with Mr. Erskine.

Therefore, he did not breach his fiduciary duty by failing to

provide adequate information.

2. Profit-Sharing Funds

Next, we turn to Ms. Jenkins’ claim that Mr. Yager

violated his fiduciary duty to the plan by his failure to make

a prudent, reasonable investigation of the profit-sharing

investments and by failing to monitor those investments.8

Ms. Jenkins relies on Mr. Yager’s deposition testimony to

support her claim, where the following exchange occurred:

Q: With respect to the [profit-sharing] contribution that

is made in any given year, what percentages of

those—of that contribution goes into each of these

four funds?

A: I have no knowledge of how that’s—I don’t recall

how that is made.

. . . .

Q: Do you know? Is [the distribution among the funds]

equal? Is it 25 percent to each of ‘em, or—

A: No, I don’t know how that’s—don’t recall how that

is split up.
No. 04-4258 19

9 In 2000, the profit-sharing fund made purchases of $9,468.26 in

the American Mutual Fund, $45,813.56 in the Growth Fund,

$19,801.96 in the Euro-Pacific Growth Fund, and $82,281.09 in the

Capital World Fund. R.25, Ex.4 at 5. In 2001, the profit-sharing

fund made purchases of $6,777.16 in the American Mutual Fund,

$536.30 in the Growth Fund, $3,796.81 in the Euro-Pacific Growth

Fund, and $16,843.28 in the Capital World Fund. R.25, Ex.5 at 5.

In 2002, the profit-sharing fund made purchases of $4,771.68 in

(continued...)

Q: Do you know what documents there might be to

show how those are split up?

A: No. Not aware of anything.

R.25, Ex.7 at 107-08. Mr. Yager further testified that he did

not recall considering or making any changes as to how

the profit-sharing money was invested since 1991. Id. at 112.

When asked who would know how the money is

to be invested, Mr. Yager replied that it would be a “Dwight

[Erskine]/McGladrey-type situation” and that Mr. Erskine

would have the information on how the profit-sharing

money was allocated amongst the four different funds. Id.

at 110-12. However, Mr. Erskine testified that it was his

understanding that Mr. Yager made the decisions as to how

profit-sharing contributions would be invested amongst the

four funds. R.26, Ex.5 at 42.

From the record, it is unclear exactly how the profitsharing contribution was allocated across the four funds.

Mr. Erskine testified that he believed that the Capital World

Fund was given a larger share of the contribution in order

to “get a little more of the international element into the

plan.” Id. at 44-45. The annual reports in the record for the

profit-sharing funds support Mr. Erskine’s recollection of

profit-sharing investments.9
20 No. 04-4258

9 (...continued)

the American Mutual Fund, $2,457.69 in the Growth Fund,

$2,460.52 in the Euro-Pacific Growth Fund, and $15,911.75 in the

Capital World Fund. R.25, Ex.6 at 3.

10 See Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915, 919 (8th Cir.

1994) (stating that deposition testimony “suggesting that the

trustees did very little to evaluate the propriety” of their actions with regard to plan assets could support a judgment at trial

for the plaintiffs); but see DeBruyne v. Equitable Life Assurance Soc.

of the United States, 920 F.2d 457, 465 (7th Cir. 1990) (holding that

plaintiff’s evidence that an investment lost money, coupled with

an expert’s opinion that a typical funds manager would not have

acted as the fiduciary had acted, was not sufficient to rebut the

fiduciary’s assertion at summary judgment that its investment

strategies were prudent).

Unlike the situation with the 401(k) funds, Mr. Yager, as

trustee, retained all responsibility to “invest, manage,

and control the [p]lan assets.” R.25, Ex.8 at 87. A trustee

is required to use due care and diligence when investing

plan funds, meaning that he or she must “employ[] the

appropriate methods to investigate the merits of the investment and to structure the investment.” Eyler v. C.I.R., 88

F.3d 445, 454 (7th Cir. 1996) (citing Katsaros v. Cody, 744 F.2d

270, 279 (2d Cir. 1984)); see also Chao v. Hall Holding Co., Inc.,

285 F.3d 415, 426 (6th Cir. 2002) (citing cases); In re Unisys,

74 F.3d at 434. Viewing Mr. Yager’s deposition statements

in the light most favorable to Ms. Jenkins, it appears that

Mr. Yager did not explore the merits of investing the profitsharing money, nor did he select what proportion of the

money to invest in each of the four funds each year, even

though he was investing new money into the funds annually during this time period.10 If Mr. Yager delegated the

investment decision-making to Mr. Erskine or to RSM
No. 04-4258 21

McGladrey, Inc., as was indicated by his deposition testimony, he was not fulfilling his trustee duty of care and

prudence by not making an independent investigation as to

the propriety of the profit-sharing investments. The trustee

may “take into consideration the advice of qualified others,

as long as he exercises his own judgment.” In re Unisys, 74

F.3d at 434. We have stated that the “degree to which a

fiduciary makes an independent inquiry [before acting] is

crucial.” Eyler, 88 F.3d at 456 (holding that the fiduciary’s

reliance on the opinion of attorneys and a financial advisor

was not sufficient to show that the fiduciary “exercised [its]

own judgment” before completing an employee stock

ownership plan transaction). Therefore, it appears that there

are material issues of fact remaining as to whether or not

Mr. Yager invested the profit-sharing contributions with the

care and diligence that is required of a fiduciary under

ERISA.

Finally, we consider the third prong, which is harm to

the plaintiff. There also appears also to be a genuine issue of

fact as to whether Mr. Yager and Mid America’s alleged

breaches harmed Ms. Jenkins. According to the plan’s

annual reports, the profit-sharing fund suffered a loss of

$165,818.47 in 2000, $98,055.82 in 2001 and $148,119.68 in

2002. R.25, Ex.4 at 5; R.25, Ex.5 at 5; R.25, Ex.6 at 3. Ms.

Jenkins’ account also suffered a loss, reflected in her individual plan statements; the profit-sharing portion of her

account lost $151.68 in 2000, $1,282.38 in 2001 and $2,637.61

in 2002. R.25, Ex.10 at 8-10. Given that the profit-sharing

funds in the plan experienced losses, it is possible that Mr.

Yager’s alleged breach of his fiduciary obligation caused

these losses. For example, Mr. Yager continued to invest a

proportionally larger amount of the profit-sharing money

into the Capital World Fund in 2000 and 2001, even though

it was losing money while the American Mutual Fund was
22 No. 04-4258

not. R.25, Ex.6 at 3; R.25, Ex.5 at 5. Had he been monitoring

the investments adequately, he might not have made such

a choice. It is difficult to tell from the limited record what

impact his alleged neglect had on the profit-sharing funds;

however, viewing the facts in the light most favorable to Ms.

Jenkins, it does appear that there is at least a genuine issue

as to whether or not his breach caused the losses to the plan.

See Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915, 919 (8th

Cir. 1994) (stating that the causal connection between breach

and loss “is a fact-intensive inquiry” that might not be

susceptible to summary judgment in some cases).

Given these remaining issues of material fact, we therefore

reverse the district court’s grant of summary judgment as to

Ms. Jenkins’ claim that Mr. Yager and Mid America violated

their fiduciary duty to carefully invest and monitor the

profit-sharing funds.

Conclusion

For the foregoing reasons, we affirm the grant of the

defendants’ motion for summary judgment on claims

related to the 401(k) funds and reverse the grant of summary judgment on claims related to the profit-sharing

funds. Therefore, the judgment of the district court is

affirmed in part, reversed and remanded in part. The parties

shall bear their own costs on appeal.

AFFIRMED in part;

REVERSED and REMANDED in part
No. 04-4258 23

A true Copy:

Teste:

 _____________________________

Clerk of the United States Court of 

Appeals for the Seventh Circuit 

USCA-02-C-0072—4-14-06