Opinion ID: 554068
Heading Depth: 1
Heading Rank: 4

Heading: did hartt and buck become fiduciaries?

Text: 28 Pappas argues alternatively that even if the legislative history of ERISA's definition of fiduciary does not compel the conclusion that Hartt and Buck became fiduciaries merely by advising the IIG Plan, he alleged facts sufficient to state a claim that defendants became fiduciaries because their relationship with Feinman and Pappas transcended the ordinary functions of actuaries serving an ERISA plan. They point to their allegations that Hartt concealed shortages in the Plan's funding, discriminated in favor of Feinman, and encouraged deferral of termination until after Feinman had received his distribution and the 1987 Pension Protection Act precluded recovery from Feinman of the amount he had been paid in excess of his ERISA-mandated benefits. Plaintiff's Brief at 23-24. These discretionary decisions were not revealed to Pappas, an unsuspecting Plan trustee, who relied on the superior knowledge of Hartt and Buck. Id. at 24. 29 We agree with plaintiff that there is no per se rule that prevents professionals who render advice to an ERISA plan from becoming fiduciaries. As the Conference Committee Report and Labor Department regulations indicate, the question of whether a consultant has or has not exercised such an unusual degree of influence over a Plan as to become a fiduciary involves factual determinations, see Landry v. Air Line Pilots Ass'n., 901 F.2d 404, 418 (5th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 244, 112 L.Ed.2d 203 (1990), particularly where the consultant undertakes tasks that transcend the usual scope of a professional-client relationship. See 29 C.F.R. Sec. 2509.75-5 (1990). However, we disagree with the implication of Pappas's argument, which is that consultants become fiduciaries when they perform professional functions in a tortious manner, regardless of what capacity they are acting in when their tortious deeds occur. 30 Plaintiff also argues that Hartt and Buck became fiduciaries when they failed to disclose the reasoning behind the actuarial assumptions and methodologies they adopted. This failure, Pappas argues, left him with no choice but to rely on the conclusions of the Plan's actuaries, circumscribing his freedom of action so much that the actuaries assumed effective control of Plan administration. Brief at 25. We are unconvinced by this argument as well. ERISA plan trustees hire actuaries because they lack the training to perform the required calculations themselves and because it would be inefficient for them to acquire it given the small amount of actuarial work they need to do to manage their plans. Because actuaries exist, in other words, plan administrators do not need to become actuaries and can instead rely on the actuaries they retain. This does not mean, of course, that plan administrators may not question their actuary's conclusions. Some may choose to do so, to a greater or lesser degree. Plaintiff's argument, however, would effectively require actuaries to lead their clients through the methodologies, assumptions, and calculations underlying the conclusions they reach, step by tortuous step; actuaries who did not provide this level of tutelage would risk coming within ERISA's definition of a fiduciary, with the potential liability that entails. Some plan administrators may find this sort of relationship with their actuaries helpful, perhaps because they hope to avoid becoming the victims of the kind of mistakes alleged here. But we are reluctant to reshape the relationship between actuaries and their clients in this way, at least absent an unambiguous indication that Congress intended this result. 31 The district court correctly described plaintiff's complaint as alleging nothing more than that defendants (negligently) perform[ed] their usual professional functions. They allege that they prepared government required reports (erroneously) and made actuarial calculations. Mem.Op. at 6. These allegations, even under the permissive standard applied at the motion to dismiss stage, see Yeksigian v. Nappi, 900 F.2d 101, 102 (7th Cir.1990), simply do not suggest that Hartt transcended the normal role of an actuary providing advice to an ERISA plan. They also do not suggest that in relying on Hartt's advice, Pappas ceded discretionary control or discretionary authority over the IIG Plan to the Plan's actuary. For these reasons the district court was correct to rule that Pappas's allegations failed to state a claim for breach of fiduciary duties under ERISA.