Opinion ID: 3013002
Heading Depth: 3
Heading Rank: 1

Heading: Fiduciary Duty to Investigate

Text: The plaintiffs argue that the District Court erred in concluding that Sweeney did not breach his fiduciary duties under ERISA by failing to review or discuss with Keegan the 2 When reviewing an appeal from a bench trial, “[w]e accept the trial court’s finding of historical or narrative facts unless clearly erroneous, but exercise ‘plenary review of the trial court’s choice and interpretation of legal precepts and its application of those precepts to the historical facts.’” Mellon Bank, N.A. v. Metro Communications, Inc., 945 F.2d 635, 642 (3d Cir. 1991) (internal citation omitted). 5 reciprocal agreements before returning the check to the Local 322 plan. According to Keegan, although he never mentioned the reciprocal agreements in making his request, Sweeney had a fiduciary duty to investigate and inform him about them. According to Sweeney, the opposite is true; because Keegan only asked him about obtaining the credits, there was no reason for him to inquire into the reciprocal agreements. The District Court adopted the factual basis of each sides’ position – that no one discussed the reciprocal agreements – and agreed with Sweeney’s defense. Keegan II, 211 F. Supp. 2d at 644 (stating that when Keegan asked Sweeney about having his pension credits transferred from Local 322, “[h]e did not mention the reciprocal agreements”). But, exhibit 20 in the record is a November 26, 1996, letter from Sweeney to Ford that states: “Mr. Keegan is requesting that since there was no reciprocal agreement between Local’s #322 and #532, if it would be permissible to have those accrued pension benefit[s] transferred into his Local #420 account.” (Emphasis added). This indicates that Keegan was aware of the reciprocal agreements, did understand that they operated to bar the automatic transfer of contributions between Locals, did inform Sweeney of this fact, and Sweeney did act on this understanding to inquire about an alternate avenue to secure the credits. Thus the factual finding on this point appears to be clearly erroneous. Though we set aside this finding, we nonetheless affirm on the alternate ground that Sweeney properly discharged his fiduciary duty by addressing the reciprocal agreements in his inquiries on Keegan’s behalf. We also believe the District Court correctly concluded that Sweeney’s actions did not, as a matter of law, constitute a breach of fiduciary duty. As noted by the District Court: Fiduciary status gives rise to the obligation to act “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of 6 a like character and with like aims.” Keegan II, 211 F. Supp. 2d at 644 (quoting 29 U.S.C. § 1104(a)(1)(B)). When an ERISA beneficiary has requested information from an ERISA fiduciary, a fiduciary’s obligation to convey complete and accurate information that is material to the beneficiary’s circumstances includes “not only a negative duty not to misinform, but also an affirmative duty to inform when the trustee knows that silence might be harmful.” Bixler v. Cent. Pennsylvania Teamsters Health & Welfare Fund, 12 F.3d 1292, 1300 (3d Cir. 1993). See also Eddy v. Colonial Life Ins. Co. of Am., 919 F.2d 747 (D.C. Cir. 1990). Even if we adopt the District Court’s finding that Sweeney never referenced the reciprocal agreement, there was no breach of fiduciary duty because his actions initially were successful. Keegan asked Sweeney to obtain the transfer of his pension credits, which Sweeney did. It would not have been necessary (nor logical) for Sweeney to explain to Keegan why the reciprocal agreements should have, but did not, bar him from receiving the pension credits. It was only later, after officials from Local 322 explained why Keegan had no legal entitlement to the credits – he was not vested in Local 322's plan – that Sweeney returned the check. To find error in that action, Keegan must establish that Sweeney had a fiduciary duty to refuse to return a check that another Local reasonably explained was issued in error. Keegan has not done so. Accordingly, we agree with the District Court that Sweeney’s actions complied with ERISA’s prudent man standard of care.