Opinion ID: 479181
Heading Depth: 2
Heading Rank: 5

Heading: Count VII--Failure to Analyze Advice

Text: 71 The Employees contend that the district court erred in granting a directed verdict on their claim that Ward failed to analyze thoroughly Wyatt's advice and act solely in the Plan participants' interests. The Employees' allegations rest on the assumption that, as Plan Administrator and hence, a fiduciary, Ward could take no action that benefitted the company while disadvantaging participants. 72 It is unquestioned that a plan administrator's conduct, like that of a trustee, must be governed by a fiduciary's duty of loyalty. Bogert, The Law of Trusts and Trustees Sec. 543 at 218 (2d ed. 1978). The fiduciary must discharge his obligations solely in the interests of the participants and beneficiaries. Donovan v. Bierwirth, 680 F.2d 263, 271 (2d Cir.), cert. denied, 459 U.S. 1069, 103 S.Ct. 488, 74 L.Ed.2d 631 (1982); Burud v. Acme Electric Co., 591 F.Supp. 238, 246 (D.Alaska 1984). Thus, when a fiduciary's actions that are taken in connection with the performance of his duties as trustee or administrator are in his own interest as well, we rigorously scrutinize the conduct. Bogert, The Law of Trusts and Trustees Sec. 543 Q (2d ed. 1978) (trustee may not obtain incidental benefit for himself while engaged in trust business); Sutton v. Weirton Steel, 724 F.2d 406, 410 (4th Cir.1983) (a post-ERISA case concluding that an administrator could not assume a position where it had dual loyalties in the administration of the plan), cert. denied, 467 U.S. 1205 (1984); Bierwirth, 680 F.2d at 271 (corporate officers who are also pension trustees, do not violate fiduciary duties by taking action that incidentally benefits the corporation, provided that they carefully and impartially investigate and conclude that it promotes the beneficiaries' position; their decisions must be made with an eye single to the interests of the participants and beneficiaries); Withers v. Teachers Retirement System, 447 F.Supp. 1248, 1256-57 (S.D.N.Y.1978) (although city comptroller's interest conflicted with pension plan's interests, he was not incapable of acting as a trustee, but he had an especial obligation to act fairly on behalf of those concerned with the results of the action taken) (quoting Westchester Chapter, Civil Service Employees Association v. Levitt, 37 N.Y.2d 519, 521, 375 N.Y.S.2d 294, 295, 337 N.E.2d 748, 749 (1975)) aff'd 595 F.2d 1210 (2d Cir.1979). 73 However, in this case, Ward was not acting in connection with its fiduciary responsibilities as Plan administrator, but instead, was acting in its corporate capacity. The decision to terminate the Plan was a business decision that properly rested with Ward's corporate offices. See Amato v. Western Union Int'l., Inc., 596 F.Supp. 963, 968 (S.D.N.Y.1984) (an employer that also acts as plan administrator 'wears two hats'. The employer assumes fiduciary status only when and to the extent that it functions in its capacity as plan administrator, and not when it is conducting business not otherwise regulated by ERISA) (emphasis added); aff'd in part, rev'd in part, on other grounds, 773 F.2d 1402 (2d Cir.1985); Dhayer v. Weirton Steel, 571 F.Supp. 316, 328-29 (N.D.W.Va.1983) (court presumed that employer's sole motivation for sale of division was to avoid pension obligations and concluded that although a  'dual loyalty' inherently exists when the employer (which is naturally interested in keeping its costs for pension benefits at a minimum) also acts as administrator or fiduciary of a pension plan.... [T]he mere fact that a company has named itself as pension plan administrator, fiduciary or trustee does not restrict it from pursuing reasonable business behavior), aff'd, sub nom. Sutton v. Weirton Steel, 724 F.2d 406 (4th Cir.1983), cert. denied sub nom. Sutton v. Weirton Steel, Brunner v. Nahonal Steel, 467 U.S. 1205, 104 S.Ct. 2387, 81 L.Ed.2d 345 (1984). Because Ward was not acting as an administrator when making the decision to terminate the Plan, its actions, although clearly taken in its own best interests, did not constitute a breach of fiduciary duty.