Opinion ID: 615595
Heading Depth: 3
Heading Rank: 1

Heading: Duty to Provide Information

Text: ERISA contains a comprehensive set of `reporting and disclosure' requirements. Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 83, 115 S.Ct. 1223, 131 L.Ed.2d 94 (1995) (citing 29 U.S.C. §§ 1021-1031). The statute, for example, requires plan administrators to describ[e] the importance of diversifying the investment of retirement account assets, 29 U.S.C. § 1021(m)(2), and to inform participants of the risk that holding more than 20 percent of a portfolio in the security of one entity ( such as employer securities ) may not be adequately diversified, id. § 1025(a)(2)(B)(ii)(II) (emphasis added). Additionally, regulations in place during the Class Period required plan administrators, in certain circumstances, to provide plan participants with a description of the investment alternatives available under the plan and, with respect to each designated investment alternative, a general description of the investment objectives and risk and return characteristics of each such alternative. 29 C.F.R. § 2550.404c-1(b)(2)(B)(1)(ii) (2009). Plaintiffs do not allege any violations of these requirements. Nor could they support such a claim; the Plan documents informed plaintiffs that the Stock Fund invested only in Citigroup stock, which would be retained in this fund regardless of market fluctuations, and that the Fund may undergo large price declines in adverse markets, the risk of which may be offset by owning other investments that follow different investment strategies. Plaintiffs instead argue that defendants violated ERISA's more general duty of loyalty, 29 U.S.C. § 1104(a)(1), by failing to provide participants with information regarding the expected future performance of Citigroup stock. They rely on cases stating, in broad terms, that fiduciaries must disclose to participants information related to the participants' benefits. See, e.g., Dobson v. Hartford Fin. Servs. Grp., Inc., 389 F.3d 386, 401 (2d Cir.2004) (A number of authorities assert a plan fiduciary's obligation to disclose information that is material to beneficiaries' rights under a plan....). The cases cited by plaintiffs are inapposite for two reasons. First, in many of them, the court imposed a duty to inform at least in part because further information was necessary to correct a previous misstatement or to avoid misleading participants. See, e.g., Estate of Becker v. Eastman Kodak Co., 120 F.3d 5, 10 (2d Cir. 1997) (relying in part on the materially misleading information provided by a benefits counselor to conclude that Kodak breached its fiduciary duty to provide Becker with complete and accurate information about her retirement options). Second, all of the cases cited by plaintiffs relate to administrative, not investment, matters such as participants' eligibility for defined benefits or the calculation of such benefits; none require plan fiduciaries to disclose nonpublic information regarding the expected performance of a plan investment option. See, e.g., Devlin v. Empire Blue Cross & Blue Shield, 274 F.3d 76, 88-89 (2d Cir.2001) (holding that an employer may be liable for misstatements or omissions about the availability of lifetime life insurance benefits); Estate of Becker, 120 F.3d at 9-10 (imposing liability based on an employer's providing misleading information about participants' eligibility for lump-sum retirement benefits). We decline to broaden the application of these cases to create a duty to provide participants with nonpublic information pertaining to specific investment options. [4] ESOP fiduciaries do not have a duty to give investment advice or to opine on the stock's condition. Edgar, 503 F.3d at 350 (internal quotation marks omitted). We agree with the district court that such a requirement would improperly transform fiduciaries into investment advisors. In re Citigroup ERISA Litig., 2009 WL 2762708, at . Here, the Administration Committee provided adequate warning that the Stock Fund was an undiversified investment subject to volatility and that Plan participants would be well advised to diversify their retirement savings. Even assuming that they had the ability to do so, defendants had no duty to communicate a forecast as to when this volatility would manifest itself in a sharp decline in stock price.