Opinion ID: 716602
Heading Depth: 2
Heading Rank: 1

Heading: NYNEX's Fiduciary Duties

Text: 8 The parties are in agreement that the NYNEX pension plan is covered under ERISA, that NYNEX is a plan fiduciary, and that Pocchia is a plan beneficiary. Pocchia claims that NYNEX breached its fiduciary duty owed to him under ERISA by not informing him at the time he retired that it had decided to implement or, alternatively, was considering implementing, an early retirement plan. Pocchia claims that the district court misapplied the law to the facts in finding that such a duty did not exist. 9 The duties owed by a fiduciary under ERISA are codified at 29 U.S.C. § 1104 which, in relevant part, provides:(a) Prudent man standard of care[:] (1) ... a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and ... (B) 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 a like character and with like aims. 10 Because the statute does not enumerate or elaborate in any detail on the duties owed by a fiduciary to a plan beneficiary, the courts have been called upon to define the scope of a fiduciary's responsibilities. See Bixler v. Central Pa. Teamsters Health & Welfare Fund, 12 F.3d 1292, 1299 (3d Cir.1993) (Although the [ERISA] statute articulates a number of fiduciary duties, it is not exhaustive.); see also Central States, Southeast & Southwest Areas Pension Fund v. Central Transp., Inc., 472 U.S. 559, 570, 105 S.Ct. 2833, 2840, 86 L.Ed.2d 447 (1985) ([R]ather than explicitly enumerating all of the powers and duties of trustees and other fiduciaries [in ERISA], Congress invoked the common law of trusts to define the general scope of their authority and responsibility.). 11 It is well-settled that plan fiduciaries may not affirmatively mislead plan participants about changes, effective or under consideration, to employee pension benefit plans. See Mullins v. Pfizer, Inc., 23 F.3d 663, 669 (2d Cir.1994); Fischer v. Philadelphia Elec. Co., 994 F.2d 130, 135 (3d Cir.1993); Drennan v. General Motors Corp., 977 F.2d 246, 251 (6th Cir.1992), cert. denied, 508 U.S. 940, 113 S.Ct. 2416, 124 L.Ed.2d 639 (1993); Barnes v. Lacy, 927 F.2d 539 (11th Cir.), cert. denied, 502 U.S. 938, 112 S.Ct. 372, 116 L.Ed.2d 324 (1991); Berlin v. Michigan Bell Tel. Co., 858 F.2d 1154, 1163 (6th Cir.1988). The law is not well-developed, however, with respect to whether fiduciaries must disclose plan changes that have been proposed and/or considered but not yet adopted in the absence of a request for such information by a plan beneficiary. Courts that have held that fiduciaries must disclose proposed changes absent a request have done so in the limited context of cases where confusion had been created on the part of the beneficiary by prior actions of the fiduciary. See, e.g., Fischer v. Philadelphia Elec. Co., Nos. Civ. A. 90-8020, Civ. A. 91-2771, 1995 WL 510300,  2 (E.D.Pa.1995); Bixler, 12 F.3d at 1300. Such cases provide limited guidance for dealing with the more frequent situation in which no such confusion was created by the fiduciary but where the beneficiary simply believes that he should have been provided with more information to enable him to make a more informed decision with respect to the financial consequences of his retirement. 12 Although the circumstances present in the Mullins case did not require us to decide whether a fiduciary must volunteer proposed plan changes, we stated in dicta that we do not require an ERISA fiduciary to be perfectly prescient as to all future changes in employee benefits. Nor do we require a fiduciary to disclose its internal deliberations. Mullins, 23 F.3d at 669 (internal quotations and citations omitted). The question whether fiduciaries have a duty to volunteer information regarding proposed plan changes that have not been adopted is now squarely before us. We answer the question in the negative and hold that a fiduciary is not required to voluntarily disclose changes in a benefit plan before they are adopted. In so doing, we join the Fourth Circuit which has held that [i]t is not a violation of ERISA to fail to furnish information regarding amendments before these amendments are put into effect. Stanton v. Gulf Oil Corp., 792 F.2d 432, 435 (4th Cir.1986). We recognize that a plan may be formally adopted by a fiduciary prior to the time that it becomes effective and believe that when this occurs, it is the adoption date, rather than the effective date, that gives rise to a duty to disclose. 13 Until a plan is adopted, there is no plan, simply the possibility of one. Insisting on voluntary disclosure during the formulation of a plan and prior to its adoption would, we think, increase the likelihood of confusion on the part of beneficiaries and, at the same time, unduly burden management, which would be faced with continuing uncertainty as to what to disclose and when to disclose it. Moreover, any requirement of pre-adoption disclosure could impair the achievement of legitimate business goals. One commentator has posited the situation where a business seeking to reduce its workforce contemplates a future improvement of an initial early retirement or severance plan if necessary reductions do not occur through retirements or resignations. If fiduciaries were required to disclose such a business strategy, it would necessarily fail. Employees simply would not leave if they were informed that improved benefits were planned if workforce reductions were insufficient. See, Edward E. Bintz, Fiduciary Responsibility Under ERISA: Is There Ever a Fiduciary Duty to Disclose?, 54 U. Pitt. L.Rev. 979, 997 (1993). 14 Congress's main purpose in imposing a disclosure requirement on ERISA fiduciaries was to ensure that employees [would have] sufficient information and data to enable them to know whether the plan was financially sound and being administered as intended. H.R.Rep. No. 533, 93d Cong., 2d Sess. VI (1974), reprinted in 1974 U.S.C.C.A.N. 4639. See also Porto v. Armco, Inc., 825 F.2d 1274, 1276 (8th Cir.1987) (The fiduciary duty imposed by ERISA is generally applied to the management of plan assets. Common law trust principles provide the foundation for the statutory standard, which prohibits the use of plan assets for the primary benefit of a party other than the plan itself.), cert. denied, 485 U.S. 937, 108 S.Ct. 1114, 99 L.Ed.2d 274 (1988); Morse v. Stanley, 732 F.2d 1139, 1145 (2d Cir.1984) (Congress in its findings and declaration of policy sought to assure the equitable character and financial soundness of trustee benefit plans.); Fine v. Semet, 699 F.2d 1091, 1094 (11th Cir.1983) (proper financial management of plans was Congress's goal in holding ERISA fiduciaries to the prudent man standard). Permitting plan fiduciaries to keep secret their pre-adoption deliberations and discussions in no way frustrates this purpose. Rather, such a bright-line rule protects the interests of beneficiaries, who will receive information at the earliest point at which their rights can possibly be affected, as well as the interests of fiduciaries, who will be required to provide information only at the point at which it becomes complete and accurate.