Opinion ID: 785632
Heading Depth: 3
Heading Rank: 2

Heading: Active Misinformation

Text: 27 Although the district court determined that SITE was not seriously considered until the mid-May Meeting, the court also concluded that several prior Chevron misrepresentations were material and thus amounted to breaches of its fiduciary duties. Our holding in Wayne v. Pacific Bell, 238 F.3d 1048 (9th Cir.2001), recognized actionable material misrepresentations are not necessarily limited to periods of serious consideration: even before serious consideration begins, an employer-fiduciary has a duty not to actively misinform its employees [about the availability of future retirement benefits] in an attempt to induce them to retire earlier than they otherwise would. Id. at 1054, citing Ballone v. Eastman Kodak Co., 109 F.3d 117, 124 (2d Cir.1997). Chevron appeals from the judgments in favor of the plaintiffs who prevailed on this theory, while the unsuccessful plaintiffs cross-appeal the denial of relief. 28 Chevron incorrectly asserts that Steelman's statements must have been false for Chevron to be held liable. The active misinformation standard in Wayne is clear: A person actively misinforms by saying that something is true when it is not true. But the person also misinforms by saying that something is true when the person does not know whether it is true or not.  Wayne, 238 F.3d at 1055 (emphasis added). 29 Chevron further insists that the district court erred in holding that an employer need not subjectively intend to induce earlier retirements ... [;] under ERISA, employers are deemed to intend the reasonably foreseeable consequences of their misinformation when that misinformation induces earlier-than-otherwise retirements. Chevron contends that this standard is too low and that instead the plaintiffs must show scienter as they would if they were suing under the common law cause of action for deceit. The scienter requirement would be met, according to Chevron, by establishing [k]nowledge or belief on the part of the defendant that the representation is false. W. PAGE KEETON ET AL., PROSSER AND KEETON ON THE LAW OF TORTS § 105, at 728 (5th ed.1984). 30 We fail to see the logic in transplanting the element of scienter from the tort of deceit into a statutory ERISA claim with roots in the law of fiduciaries and trusts. See Varity, 516 U.S. at 496, 116 S.Ct. 1065([W]e recognize that [ERISA's] fiduciary duties draw much of their content from the common law of trusts, the law that governed most benefit plans before ERISA's enactment.); Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 152-53, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985) (Brennan, J., concurring) (Congress intended by § 404(a) to incorporate the fiduciary standards of trust law into ERISA....). Trust law imposes a duty, when dealing with the beneficiary on the trustee's own account, to communicate to the beneficiary all material facts in connection with the transaction which the trustee knows or should know.  RESTATEMENT (SECOND) OF TRUSTS § 173 cmt. d (1959) (emphasis added); see also Bixler v. Cent. Pa. Teamsters Health & Welfare Fund, 12 F.3d 1292, 1300 (3rd Cir.1993) (looking to comment d of section 173 in stating that ERISA section 404's duty to inform ... entails ... a negative duty not to misinform). Thus, by holding Steelman and Chevron liable for the reasonably foreseeable consequences of their misinformation, the district court accords with the common law of trusts that attaches liability for information the trustee should have known. In articulating Ninth Circuit law in this area, we have followed a line of cases from our sister circuits that does not require a showing of intent. E.g., James v. Pirelli Armstrong Tire Corp., 305 F.3d 439, 449 (6th Cir. 2002) (A fiduciary breaches his duty by providing plan participants with materially misleading information, `regardless of whether the fiduciary's statements or omissions were made negligently or intentionally.' (internal citation omitted)). 31 On the other side, the plaintiffs would have us go further and hold Chevron liable for negligent misstatements. Such a standard would be an oxymoronic command not to negligently actively misinform and would provide confusing guidance to ERISA fiduciaries. We have cautioned in the past that too low a materiality standard risks being overly burdensome and could easily become counter-productive by discouraging employers from considering such proposals in the first place. Bins, 220 F.3d at 1049; see also Fischer, 96 F.3d at 1539 (ERISA does not impose a duty of clairvoyance on fiduciaries. An ERISA fiduciary is under no obligation to offer precise predictions about future changes to its plan. (internal quotations and citations omitted)). 32 The district court properly concluded that there ceased to be a reasonable basis [in fact] for the `Not at Richmond' policy no later than April 22 when Mr. Steelman reversed himself and agreed to send out SITE letters for the HR staff at Richmond. The district court's unchallenged factual findings establish that Richmond's management (including Steelman) represented, via Rumor Busters and town hall meetings, that SITE would not be offered to any of its employees. Likewise, it is undisputed that Steelman, on April 22, 1999, succumbed to the Team's pressure to permit Richmond's HR workers to receive SITE preference letters and faced further insistence from Gyorfi and the Team to implement SITE for Richmond's upper-level management. At this point, Steelman no longer kn[ew] whether it [was] true or not, Wayne, 238 F.3d at 1055, that SITE would not be implemented at Richmond. It also became possible that SITE would be extended to the rank-and-file given Steelman's strict adherence to his equality principle. Thus, by not removing the now-false Rumor Busters postings, Steelman was saying that something [was] true when it [was] not true, id., and hence actively misinforming Richmond's workforce. See id. (reversing summary judgment by pointing to evidence in the record that [the plan's fiduciary] affirmatively represented to its employees that no offer of an improved benefits package would be offered when, in fact, [the plan's fiduciary] knew that it would propose such a package to the Union and that there was at least a reasonable probability that some version of the package would ultimately be incorporated into the collective bargaining agreement). Since the district court found that the post-April 22 misinformation induced Plaintiffs Miller, Mathews, and Buchanan to retire, we affirm the judgment in their favor. 33 We next discuss whether Chevron actively misinformed the plaintiffs between February 26 and April 22, 1999. The evidence in the record is such that we are left with a definite and firm conviction that a mistake has been committed, McClure v. Thompson, 323 F.3d 1233, 1240 (9th Cir. 2003), by the district court in finding that Chevron, during that time period, represent[ed] that a final decision had been made. When we examine the communications of Richmond's management for any representation of a final decision, we observe none: Richmond expressed only what it presently intended to do, not what it conclusively decided. The February 19, 1999, Rumor Buster stated that Richmond was  not planning to have a severance package ... in the foreseeable future  as conditions were unripe for such a plan  at this time  (second emphasis added). The next Rumor Buster continued to speak of SITE in tentative terms, commenting that the refinery does not have plans to utilize [SITE]. This Rumor Buster, as well as the posting on April 21, 1999, also indicated that Richmond was unable to cut its workforce at this time. The letter Steelman sent to a Richmond union fits the pattern, asserting that  at this point in time, we have determined that we do not have a clearly identified need to reduce the number of employees in your bargaining unit through involuntary terminations and, therefore, we do not plan to utilize this Program at this time. Of course, if our plans in this regard change for any reason (which at this time we do not expect), we would contact you to discuss this matter further at that time (emphasis added). 34 By consistently limiting its statements with the phrase at this time, Richmond's management — and hence Chevron — explicitly communicated that its plans were subject to change. Steelman's steady chorus of not at Richmond does not imply a decision has been made; when considered in the full context of Richmond's communications, the refrain loses any connotation of finality. Moreover, whether Steelman should have known his downsizing strategy would fail or that the Team might overrule his intention not to use SITE is of no consequence. Richmond made no representation that it ruled out plan changes for the immediate future, when in fact it had not. Ballone, 109 F.3d at 120. [M]ere mispredictions are not actionable.... Id. at 125. 35 Given our definite and firm conviction that a mistake has been committed, the district court's determination that Chevron actively misinformed plaintiffs between February 26, and April 22, 1999, cannot stand. Moreover, we need not decide if Chevron, by promising employees in its initial blue-top that local management would keep them updated on plan changes, assumed a duty to correct any misleading information prior to the commencement of serious consideration, as there was no misrepresentation to correct until April 22, and the plaintiffs challenging the district ruling on this issue had already retired by that date. See Bins, 220 F.3d at 1054 (stating that ERISA does not impose on employers a duty to follow up an employee's inquiry in the absence of an assurance from the employer that it will provide an update). 36 Our conclusion that Chevron did not actively misinform the plaintiffs prior to April 22 compels us to reverse the judgment in favor of Plaintiffs Hord, Munn, and Rush who retired before then. In addition, we uphold the judgment in favor of Chevron with respect to the claims of Plaintiffs Whatley, Smith, and Moungovan since they, too, based their retirement decisions on statements made prior to April 22, 1999. We likewise affirm summary judgment on those grounds against Plaintiffs Carlock, Morton, Bateman, and Milton who retired before February 26, 1999.