1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

11-17-1995

Kemmerer v ICI Americas Inc.

Precedential or Non-Precedential:

Docket 95-1071

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Recommended Citation

"Kemmerer v ICI Americas Inc." (1995). 1995 Decisions. Paper 292.

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1 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

_________________ 

Nos. 95-1071 and 95-1098 

_________________ 

JOHN L. KEMMERER; JAMES H. JORDAN, 

 Appellants in No. 95-1071 

v. 

ICI AMERICAS INC. 

 

JOHN L. KEMMERER; JAMES H. JORDAN 

v. 

ICI AMERICAS INC., 

 Appellant in No. 95-1098 

_________________ 

On Appeal from the United States District Court 

for the Eastern District of Pennsylvania 

(D.C. No. 92-5986) 

_______________ 

Argued October 11, 1995 

BEFORE: GREENBERG, LEWIS, and ROSENN, Circuit Judges

(Filed: November 17, 1995) 

______________ 

 Theodore R. Mann (argued) 

 Carol J. Sulcoski 

 Sharon C. Weinman 

 Mann, Ungar & Spector, P.A. 

 1709 Spruce Street 

 Philadelphia, PA 19103 

 Attorneys for

 John L. Kemmerer

 and John H. Jordan

 

 Michael L. Banks (argued) 
2 

 Morgan, Lewis & Bockius 

 2000 One Logan Square 

 Philadelphia, PA 19103 

 Attorneys for

 ICI Americas Inc.

 

 _______________________ 

OPINION OF THE COURT

_______________________ 

GREENBERG, Circuit Judge. 

 In this case, arising under the Employee Retirement 

Income Security Act (ERISA), the district court held that the 

defendant company breached the terms of the executive deferred 

compensation plan that it offered to its highly compensated 

employees. Yet it also held that the appellants -- participants 

in that plan -- failed to prove they suffered any damages as a 

result of the breach. We hold that the district court correctly 

decided both issues and therefore we will affirm its judgments. 

I. Introduction

 Appellants John L. Kemmerer and James H. Jordan were 

high level executives of the defendant, ICI Americas Inc.0 ICI 

offered its employees the opportunity to participate in a number 

of benefit plans. The dispute on appeal centers around its 

executive deferred compensation plan (the DEC plan), which like 

 

0ICI Americas Inc. explains in its brief that it has changed its 

name to Zeneca Inc. and that the company now known as ICI 

Americas Inc. is an entirely different corporation which came 

into existence as a result of a reorganization of the business 

that began in late 1992. Nevertheless, as a matter of 

convenience, we refer to the defendant as ICI. 
3 

all such plans is commonly referred to as a "top hat" plan. 

Specifically, ICI encouraged its high level executives to 

participate in the DEC plan, under which participants deferred 

receipt of a percentage of their income, and thus initially 

reduced their annual taxable income. Although the DEC plan was 

unfunded, its participants were allowed to track or shadow 

investment portfolios available to participants of an ICI 

deferred contribution plan. ICI would credit the participants' 

balances in the DEC plan as though the hypothetical investments 

actually had been made. Appellants participated in the DEC plan. 

 An executive's account balance in the DEC plan became 

payable after the executive left ICI's employ. The DEC plan 

permitted participants to elect the method of payment by which 

distributions would be made. In this regard, the plan was 

amended on February 1, 1985, to state: 

Amounts deferred under this agreement shall 

be paid to Optionee commencing January 15 of 

the year following the year of his separation 

from service in five percentage installments 

. . . unless, prior to separation from 

service the Optionee files a written notice 

with the Secretary of Company, ('Secretary') 

requesting a different form of distribution. 

Such notice shall be treated as an election 

by the Optionee to receive payment by the 

method requested. The method of distribution 

requested shall be irrevocable after the 

close of business on the date of Optionee's 

separation from service. 

Kemmerer v. ICI Americas, Inc., 842 F. Supp. 138, 139-40 (E.D. 

Pa. 1994).0 Pursuant to this provision, "Jordan elected to have 

 

0We simplify our discussion of ICI's plans to encompass only what 

is relevant on appeal. The district court's opinion discusses 
4 

his DEC benefits paid in specific annual amounts until the year 

2007. Kemmerer elected to have his plan balance distributed in 

fixed annual amounts until such time as his account balance would 

be exhausted." Id. at 140. After Kemmerer and Jordan retired 

(in 1986 and 1989 respectively), ICI began distributing their 

benefits in accordance with their respective elections. In 1991, 

however, ICI unilaterally decided to terminate the DEC plan. At 

that point, rather than complying with its retired executives' 

elections, ICI decided to distribute their accumulated account 

balances in three annual installments, with 10% interest on the 

unpaid balances, to be paid in January 1992, January 1993, and 

January 1994. ICI advised appellants of this change by letters 

dated November 29, 1991. 

 On October 16, 1992, after ICI made one payment on the 

new distribution schedule, appellants filed this action in the 

district court contending that, by terminating the DEC plan after 

their rights in it had vested, ICI breached its contractual 

obligations and thereby violated ERISA. They requested monetary 

damages for the benefits lost as a consequence of ICI's breach of 

the plan. In this litigation, they contend that the early 

termination of the plan had adverse tax consequences to them and 

required them to incur fees for financial management they 

otherwise would not have incurred. They do not contend, however, 

that ICI did not pay them the full amount of their account 

balances. Consequently, they are in the position, unusual if not 

 

the various plans in greater detail. See Kemmerer, 842 F. Supp. 

at 139-40. 
5 

unprecedented for plaintiffs, of suing for damages because they 

were paid money owed to them. Eventually appellants and ICI 

filed cross-motions for summary judgment on liability, and ICI 

filed a motion for summary judgment on damages. In an opinion 

filed on January 4, 1994, reported at 842 F. Supp. 138, the 

district court granted appellants' motion for summary judgment on 

liability, and denied ICI's motions on both liability and 

damages. The court entered an order on January 5, 1994, in 

accordance with its opinion. 

 The district court held a nonjury damages trial in 

October 1994. In an unreported memorandum opinion filed on 

December 22, 1994, the court rejected appellants' argument that 

ICI had the burden of proof and held that appellants had failed 

to prove that they suffered damages as a result of ICI's conduct. 

Accordingly, it entered a judgment in favor of ICI on December 

23, 1994. On January 19, 1995, the parties stipulated, and the 

court ordered, that all claims except those for attorneys' fees 

and costs had been resolved. The court stayed proceedings as to 

those items pending the completion of this appeal. Both parties 

then filed appeals, appellants from the order of December 23, 

1994, and ICI from the order of January 5, 1994. 

 Arguably, we should dismiss ICI's appeal, as ICI could 

challenge the district court's finding of liability in this court 

as an alternative ground for us to affirm. See Armotek Indus., 

Inc. v. Employers Ins. of Wausau, 952 F.2d 756, 759 n.3 (3d Cir. 

1991). But we will not do so because appellants have filed a fee 

petition which, as we have indicated, the district court has 
6 

stayed pending disposition of this appeal. Thus, even though we 

affirm on the damages issue, ICI may be aggrieved by the judgment 

on liability, because the district court may conclude that, on 

the basis of that judgment alone, it can award the appellants 

counsel fees.0 Of course, we express no opinion on this point. 

However, in view of ICI's success at trial on the damages issue, 

its appeal from the denial of its motion for summary judgment on 

damages is moot and we will not consider it. See McDaniels v. 

Flick, 59 F.3d 446, 448 n.1 (3d Cir. 1995). We have jurisdiction 

over appellants' appeal pursuant to 28 U.S.C. § 1291. The 

district court exercised diversity of citizenship and federal 

question jurisdiction under 28 U.S.C. § 1332(a) and 29 U.S.C. 

§1132(e). 

II. Discussion

A. Liability

 We first consider whether the district court erred in 

concluding that ICI breached the terms of the DEC plan. We 

exercise plenary review on this issue as the district court 

granted the appellants' motion for summary judgment. See

 

0In theory, we could conclude that until such time as the 

district court enters an award of fees against ICI, if it does 

so, ICI has not been aggrieved by the liability judgment and that 

we therefore should dismiss its appeal. However, we will not 

take that approach, as the liability issue has been briefed fully 

and, in any event, we can consider ICI's challenge on that issue 

as an alternative basis to affirm. Furthermore, we think that 

resolution of the liability issue at this time may aid in 

concluding this case. Of course, there is no doubt but that we 

have the power to consider the issue. See United States v. Tabor 

Court Realty Corp., 943 F.2d 335, 342-44 (3d Cir. 1991), cert.

denied, 502 U.S. 1093, 112 S.Ct. 1167 (1992). 
7 

Petruzzi's IGA Supermarket, Inc. v. Darling-Delaware Co., 998 

F.2d 1224, 1230 (3d Cir.), cert. denied, 114 S.Ct. 554 (1993). 

 With the passage of ERISA, Congress set out to "assure 

the equitable character of employee benefit plans and their 

financial soundness." Moench v. Robertson, 62 F.2d, 553, 560 (3d 

Cir. 1995) (citing Central States, Southeast and Southwest Areas 

Pension Fund v. Central Transp., Inc., 472 U.S. 559, 570, 105 

S.Ct. 2833, 2840 (1985)) (internal quotations and alterations 

omitted). ERISA broadly defines the terms "employee pension 

benefit plan" and "pension plan" to include any plan established 

or maintained by an employer that, by its express terms: 

results in a deferral of income by employees 

for periods extending to the termination of 

covered employment or beyond, regardless of 

the method of calculating the contributions 

made to the plan, the method of calculating 

the benefits under the plan or the method of 

distributing benefits from the plan. 

29 U.S.C. § 1002(2)(A)(ii). Thus, top hat plans clearly are 

subject to ERISA. Nonetheless, not every type of pension plan is 

subject to all of ERISA's stringent requirements. Congress 

imposed strict regulations over plans whose participants and 

beneficiaries it most desired to protect -- employer-funded plans 

designed to secure employees' financial security upon retirement. 

ERISA imposes upon the trustees and sponsors of such plans strict 

fiduciary duties and standards of care and further provides for 

detailed disclosure and vesting requirements. Top hat plans, 

however, which benefit only highly compensated executives, and 

largely exist as devices to defer taxes, do not require such 
8 

scrutiny and are exempted from much of ERISA's regulatory scheme. 

See Barrowclough v. Kidder, Peabody & Co., 752 F.2d 923, 930 n.7 

(3d Cir. 1985).0 In particular, top hat plans are not subject to 

certain vesting, participation, and fiduciary requirements. Id.

at 930-31. But despite the exemption of top hat plans from many 

of ERISA's regulations, ERISA's enforcement provision clearly 

permits participants in top hat plans, as well as other covered 

plans, to bring civil actions "to enforce the substantive 

provisions of the Act or to recover benefits due or otherwise 

enforce the terms of the plan." Id. at 935; see 29 U.S.C. 

§1132(1)(B) ("A civil action may be brought by a participant or 

beneficiary to recover benefits due to him under the terms of his 

plan, to enforce his rights under the terms of the plan, or to 

clarify his rights to future benefits under the terms of the 

plan."). 

 Contrary to ICI's intimations, then, Congress' decision 

to exempt top hat plans from certain fiduciary standards does not 

mean that courts may not review their trustees' and sponsors' 

actions. Rather, the exemption means only that they are not held 

to the strict fiduciary standards of loyalty and care otherwise 

applicable to ERISA fiduciaries. 

 In holding that ICI breached the terms of the plan, the 

district court appropriately applied contract principles. As we 

 

0We overruled Barrowclough insofar as it held that arbitration of 

statutory ERISA claims is precluded in Pritzker v. Merrill Lynch, 

Pierce, Fenner & Smith, Inc., 7 F.3d 1110 (3d Cir. 1993), but 

Barrowclough remains good law on the points for which we cite it 

here. 
9 

pointed out in Barrowclough, "this court has repeatedly 

considered claims for benefits by participants . . . that are 

based on the terms of or rights under a plan" even though such 

claims are based not on fiduciary duties but on "breach[es] of 

contract of an employee benefit plan." Id. at 935-36. Thus, in 

such instances, breach of contract principles, applied as a 

matter of federal common law, govern disputes arising out of the 

plan documents. In determining how to apply these principles, 

the district court followed the analysis in Carr v. First 

Nationwide Bank, 816 F. Supp. 1476 (N.D. Cal. 1993), which held 

that top hat plans should be interpreted in keeping with the 

principles that govern unilateral contracts. 

 Applying those principles to ICI's DEC plan, the 

district court noted that the plan provides that "amounts 

deferred . . . shall be paid . . . in five percentage 

installments unless . . . the Optionee files a written notice 

with the Secretary of Company . . . , requesting a different form 

of distribution." Kemmerer, 842 F. Supp. at 145. Therefore, the 

court reasoned, when appellants complied with all the 

prerequisites to vesting they accepted the ICI's offer. The plan 

terms then required ICI to fulfill its end of the bargain by 

making payments consistent with appellants' respective elections. 

 We agree. "A pension plan is a unilateral contract 

which creates a vested right in those employees who accept the 

offer it contains by continuing in employment for the requisite 

number of years." Pratt v. Petroleum Prod. Management Employee 

Sav. Plan, 920 F.2d 651, 661 (10th Cir. 1990) (internal quotation 
10 

marks omitted); Carr, 816 F. Supp. at 1488 ("[P]ension benefit 

plans are unilateral contracts which employees accept by 

appropriate performance."). Thus, the plan constitutes an offer 

that the employee, by participating in the plan, electing a 

distributive scheme, and serving the employer for the requisite 

number of years, accepts by performance. Under unilateral 

contract principles, once the employee performs, the offer 

becomes irrevocable, the contract is completed, and the employer 

is required to comply with its side of the bargain. Accordingly, 

when a participant leaves the employ of the company, the trustee 

is "required to determine benefits in accordance with the plan 

then in effect." Pratt, 920 F.2d at 661. As a corollary, 

"[s]ubsequent unilateral adoption of an amendment which is then 

used to defeat or diminish the [employee's] fully vested rights 

under the governing plan document is . . . ineffective." Id.

Therefore, the district court correctly concluded that after the 

appellants' rights had vested when they completed performance, 

ICI could not terminate the plan in the absence of a specific 

provision in the plan authorizing it to do so. 

 ICI seeks to avoid this result by arguing that the plan 

terms do not impede its ability to terminate the plan. 

Specifically, ICI objects to what it perceives to be the district 

court's overbroad holding -- that in order to retain the power to 

terminate a top hat plan a company explicitly must reserve the 

right to do so in the plan documents. In the first place, ICI's 

argument is simply wrong after Barrowclough because it has no 

basis in contract law. In addition, we find ICI's argument more 
11 

than minimally unfair. As the Carr court recognized, even when a 

plan reserves to the sponsor an explicit right to terminate the 

plan, acceptance by performance closes that door under unilateral 

contract principles (unless an explicit right to terminate or 

amend after the participants' performance is reserved). "Any 

other interpretation . . . would make the Plan's several specific 

and mandatory provisions ineffective, rendering the promises 

embodied therein completely illusory." Carr, 816 F. Supp. at 

1494. Thus, there is no presumption that an employer may 

terminate a top hat plan. Rather, the plan should be interpreted 

under principles of contract law. Consequently, a court must 

determine whether an employer has a right to terminate a plan by 

construing the terms of the plan itself. 

 ICI also contends that our result is incongruous 

because in its view we accord participants in unfunded plans more 

protection than participants in funded plans. Although the cases 

applying unilateral contract principles generally involve funded 

rather than unfunded plans, we agree with the Carr court that the 

cases' "holdings . . . did not rely on ERISA's provisions," id.

at 1488, but rather on principles of contract law. Id., see also

Pratt, 920 F.2d at 658. Indeed, any other result would 

eviscerate our holding in Barrowclough that participants in 

unfunded deferred compensation plans may sue to enforce the terms 

of the plan under contract principles. 

 In this regard, ICI's reliance on Hozier v. Midwest 

Fasteners, Inc., 908 F.2d 1155 (3d Cir. 1990), is misplaced. In 

that case, we pointed out that "virtually every circuit has 
12 

rejected the proposition that ERISA's fiduciary duties attach to 

an employer's decision whether or not to amend an employee 

benefit plan." Id. at 1161. Of course, that only means that 

ERISA's fiduciary duties themselves do not per se "prohibit a 

company from eliminating previously offered benefits." (Phillips 

v. Amoco Oil Co., 799 F.2d 1464, 1471 (11th Cir. 1986), cert.

denied, 481 U.S. 1016, 107 S.Ct. 1893 (1987). As one court has 

explained, "when an employer decides to establish, amend, or 

terminate a benefits plan, as opposed to managing any assets of 

the plan and administering the plan in accordance with its terms, 

its actions are not to be judged by fiduciary standards." Musto 

v. American Gen. Corp., 861 F.2d 897, 912 (6th Cir. 1988), cert. 

denied, 490 U.S. 1020, 109 S.Ct. 1745 (1989); see also Carr, 816 

F. Supp. at 1489 ("[T]he rule that [funded] welfare benefit plans 

are freely amendable means that the amendment or termination of 

such plans is not governed by the fiduciary duty provisions of 

ERISA."). 

 But these cases do not say anything about the 

application of unilateral contract principles to an employer's 

actions in terminating a plan. The fact that fiduciary standards 

are inapplicable "does not give employers carte blanche to amend 

welfare benefit plans where the plans themselves may be 

interpreted to provide that benefits are contractually vested or 

accrued." Carr, 816 F. Supp. at 1489. And, as we discussed 

above, those principles clearly apply after performance is 

complete and the participant's rights have vested. Moreover, 

nothing in ERISA prohibits the parties from contracting to limit 
13 

the employer's right to amend or terminate a plan. Indeed, the 

point of our holding in Barrowclough was to ensure that 

participants in ERISA plans have an ERISA-based right to sue 

under contract principles to enforce the terms of the plan. As 

the district court reasoned, Congress exempted top hat plans from 

ERISA's vesting requirements in large part because it recognized 

that high level executives retain sufficient bargaining power to 

negotiate particular terms and rights under the plan and 

therefore do not need ERISA's substantive rights and protections. 

Kemmerer v. ICI, 842 F. Supp. at 144. This being so, "'it would 

be absurd to deny such individuals the ability to enforce the 

terms of their plans in contract. . . . [I]t would be difficult 

to imagine what Top Hat participants would have the power to 

obtain through negotiation or otherwise -- apparently not much 

more than illusory promises.'" Id. (quoting Carr, 816 F. Supp. 

at 1492). 

 In this regard, ICI concedes that a plan provision that 

the plan's terms cannot be revoked is controlling. See br. at 23 

("Ordinarily, plan sponsors have unfettered discretion to 

terminate pension plans, unless the plan documents provide to the 

contrary."). This is just such a case. In determining the 

actual terms of the plan, "ERISA plans, like contracts, are to be 

construed as a whole." Alexander v. Primerica Holdings, Inc., 

967 F.2d 90, 93 (3d Cir. 1992). If the plan document is 

unambiguous, it can be construed as a matter of law. 

 The February 1, 1985 amendment to the plan, which we 

quote above, in no uncertain terms provides that a participant's 
14 

election of a particular method of payment is binding and 

irrevocable, and that it shall be complied with. To conclude in 

the face of such language that ICI had unfettered discretion to 

disregard a participant's election would violate the plain 

meaning rule of contract interpretation. See Duquesne Light Co. 

v. Westinghouse Elec. Corp., 66 F.3d 604, 613-16 (3d Cir. 1995) 

(discussing Pennsylvania common law rules of contract 

interpretation). ICI contends that the language is at the very 

least ambiguous, and it points to extrinsic evidence tending to 

show that "the purpose of the amendment was to avoid the 

constructive receipt [tax] problem." Reply br. at 4.0

Furthermore, ICI contends that it terminated the plan because of 

its desire to protect the participants' unfunded balances and 

because of its concern that the tax deferral aspects of the plan 

might not survive the scrutiny of the Internal Revenue Service. 

Yet these circumstances in no way can alter the contractual 

principles that lead to our conclusion that the terms of the plan 

bound ICI so that, in the absence of appellants' consent, ICI 

could not change its method of payment. The district court, 

therefore, correctly held that ICI violated the terms of the 

plan. 

B. Damages

 

0Constructive receipt in this context refers to a situation in 

which participants exercise such a degree of control over plan 

assets so as to be deemed to have received the deferred income. 

In such cases, the income deferred could be considered taxable 

immediately. 
15 

 After granting summary judgment to the appellants on 

liability, the district court found that appellants had failed to 

prove that ICI's termination of the plan damaged them. Appellants 

characterized their claim for damages as falling under 29 U.S.C. 

§ 1132(a)(1)(B), which permits plan participants to sue to 

recover benefits due them under the plan, and 29 U.S.C. 

§1132(a)(3), which permits a participant to bring a civil action 

"to obtain . . . appropriate equitable relief . . . to enforce 

any provisions of this subchapter or the terms of the plan." 

 In addressing the parties' summary judgment motions, 

the district court rejected ICI's argument that the damages 

appellants sought constituted unrecoverable extracontractual 

damages. Kemmerer v. ICI, 842 F. Supp. at 146. ICI contends 

that the district court erred in that determination. The 

question ICI raises is difficult, requiring a close examination 

of precisely what damages appellants seek. In Massachusetts Mut. 

Life Ins. Co. v. Russell, 473 U.S. 134, 144, 105 S.Ct. 3085, 3091 

(1985), the Court noted that "the statutory provision explicitly 

authorizing a beneficiary to bring an action to enforce his 

rights under the plan -- § [1132(a)(1)(B)] says nothing about the 

recovery of extracontractual damages." And in Mertens v. Hewitt 

Assocs., 113 S.Ct. 2071-72, 2068 (1993), the Court held that the 

provision for equitable relief in section 1132(a)(3) does not 

allow the recovery of monetary damages. In In re Unisys Corp., 

57 F.3d 1255, 1267-68 (3d Cir. 1995), we held that an individual 

participant may sue on his or her own behalf to recover equitable 

relief under section 1132(a)(3), and characterized reimbursements 
16 

of back benefits as "remedies which are restitutionary in nature 

and thus equitable." Id. at 1269 (citing Curcio v. John Hancock 

Mut. Life Ins. Co., 33 F.3d 226, 238-39 (3d Cir. 1994)). 

 We are inclined to agree with ICI that appellants' 

claims are for extracontractual damages for purposes of section 

1132(a)(1)(B) and monetary damages for purposes of section 

1132(a)(3) and thus are not cognizable claims under ERISA. After 

all, the possibly adverse tax ramifications of the plan 

termination and the financial management fees which appellants 

may incur are possible consequences of the breach. On the other 

hand, the plan required ICI to pay money, and by its payment of 

their account balances to the appellants, ICI satisfied that 

obligation, though it did so prematurely. Further, it is 

difficult for us to see how such damages can be regarded as 

claims for equitable relief under section 1132(a)(3). But be 

that as it may, we decline to resolve such intricate issues of 

ERISA law because appellants failed at trial to prove they were 

damaged at all.0

 In the first instance, we reject appellants' argument 

that the district court improperly placed the burden of proof on 

them. They rely on the proposition that when the existence of 

damage is clear, damages should not be denied simply because it 

is difficult to quantify the amount of loss. As a corollary, 

appellants argue that after they have proved they have been 

damaged, the district court cannot rely on burden of proof 

 

0Appellants concede that they can advance damage claims only 

under ERISA. 
17 

principles to reject their damages claims outright. For this 

proposition they rely on Anderson v. Mt. Clemens Pottery Co., 328 

U.S. 680, 66 S.Ct. 1187 (1946). But in that Fair Labor Standards 

Act case, the Court assumed that "the employee has proved that he 

has performed work and has not been paid in accordance with the 

statute." Id. at 688, 66 S.Ct. at 1193. As the Court noted, 

"[t]he damage is therefore certain. The uncertainty lies only in 

the amount of damages arising from the statutory violation by the 

employer." Id. Here, the opposite is true -- the very existence 

of damages is in dispute. ICI presented persuasive evidence that 

appellants had not suffered any damages. When the very issue of 

damages is the subject of a good faith dispute, the principle 

that "'it would be a perversion of fundamental principles of 

justice to deny all relief to the injured person, and thereby 

relieve the wrongdoer from making any amend for his acts'" simply 

does not apply. Id. (quoting Story Parchment Co. v. Paterson 

Parchment Co., 282 U.S. 555, 563, 51 S.Ct. 248, 250 (1931)). 

 Nor are we moved by appellants' contention that the 

burden should shift simply because this is an ERISA case. To be 

sure, courts have, in certain ERISA cases, placed the burden of 

proof on the trustee of the plan. But those cases involved 

first, the trustee's breach of fiduciary duty, and second, a 

definite loss. For instance, in Martin v. Feilen, 965 F.2d 660 

(8th Cir. 1992), cert. denied, 113 S.Ct. 979 (1993), the court 

held that "once the ERISA plaintiff has proved a breach of 

fiduciary duty and a prima facie case of loss to the plan or illgotten profit to the fiduciary, the burden of persuasion shifts 
18 

to the fiduciary to prove that the loss was not caused by, or his 

profit was not attributable to, the breach of duty." Id. at 671. 

Neither of the prerequisites to burden-shifting is present here. 

 Turning to the evidence of damages, we are troubled by 

the fact that appellants, though claiming they were aggrieved by 

the plan termination, failed to request equitable relief 

requiring ICI to comply with the plan terms. Even though ICI 

advised them in November 1991 that it was changing the 

distribution schedule, they brought this action almost one year 

later, and only after ICI made one payment to them, and they 

filed a motion for summary judgment only after ICI made two of 

the accelerated payments. Yet section 1132(a)(3) explicitly 

authorizes participants to bring civil actions "to enjoin any act 

. . . which violates . . . the terms of the plan" and "to obtain 

. . . equitable relief . . . to enforce . . . the terms of the 

plan." Surely, if appellants really felt that ICI had injured 

them, they could have rejected the accelerated payments and 

sought injunctive relief enforcing the terms of the plan. Given 

the circumstances, it seems obvious that appellants sought to 

play a no-lose game -- trying to capitalize on the freed-up funds 

but claiming damages based on utterly speculative projections as 

to the financial consequences had the plan not been terminated. 

 Indeed, appellants' projections of damages at the trial 

were so speculative as to be unascertainable. First, they 

contended that they suffered tax-related losses because they were 

forced immediately to pay taxes on the accelerated payments to 

them and thereby forgo the benefits of tax deferral. Standing 
19 

alone there would be force to this argument because ordinarily 

from a taxpayer's viewpoint it is advantageous to defer the 

payment of taxes. Yet the existence of such damages depends in 

part on what the tax rate will be at any given time and thus is 

speculative. And, as ICI properly points out, by virtue of the 

plan termination the appellants' account balances were taxed at a 

much lower rate than would have been the case had payments been 

made several years later. Furthermore the tax consequences of 

the accelerated payments were simply part of a larger picture 

including investment rates of return which the district court 

concluded did not establish that appellants had suffered or would 

suffer any financial loss as a result of the acceleration of 

payments. 

 Second, the appellants contended that they incurred 

management fees and transactions costs as a result of the breach. 

But ICI presented evidence that appellants "can replicate the 

investment options under [the] DEC without incurring material 

transaction costs." Op. at 6. The district court credited this 

testimony and concluded that "I cannot find . . . that it is more 

likely true than not that plaintiffs will now incur either 

material transactions costs or management fees." Op. at 6-7. The 

district court's finding is certainly supported by the record. 

 Most significantly, appellants' expert did not take 

into account the risk involved in keeping money in an unfunded 

plan. The district court pointed out that "[a]ny evaluation of 

one's interest in an unfunded plan must . . . give some 

consideration to the fact that there is a risk to the participant 
20 

that there will be no funds and the value of his interest in the 

plan should be adjusted to reflect that risk." Op. at 6. The 

failure to take the risk into account not only called all of 

appellants' projections into question, but is itself a reason for 

denying damages because a conclusion that they were damaged would 

rest on insupportable speculation.0 In light of all of these 

factors, we cannot say that the district court's conclusion that 

appellants failed to prove that they were damaged was clearly 

erroneous. Oberti v. Board of Educ., 995 F.2d 1204, 1220 (3d 

Cir. 1993).0 Thus, we cannot find that they were entitled to 

relief in this case.0

Conclusion

 For the reasons detailed above, we will affirm the 

district court's judgment of December 23, 1994, in favor of ICI 

and its order of January 5, 1994, granting appellants summary 

judgment on liability, and we will dismiss as moot ICI's appeal 

from the order of January 5, 1994, to the extent that the order 

denied ICI summary judgment on damages. 

 

0Thus, we reject appellants' argument that the district court 

failed to make adequate findings. 

0The conclusion we expressed above that ICI's concern about the 

security of the participants' accounts in the DEC plan did not 

justify its termination of the plan, does not mean that the 

security factor cannot be considered in a damages calculation. 

0We realize that in some situations a wronged plaintiff may 

recover nominal damages without proof of actual injury. See

e.g., Carey v. Piphus, 435 U.S. 247, 266, 98 S.Ct. 1042, 1054 

(1978). We see no reason, however, to apply that principle here 

as we do not regard the right which appellants seek to vindicate 

as worthy of such special protection.