Court Opinion

ID: 8972293
Source: CourtListenerOpinion
Date Created: 2022-11-27 10:42:39.448323+00
Date Added: 2024-06-11T17:10:28.826356
License: Public Domain

STAPLETON, Circuit Judge,
Concurring:
If HMW had held the information generated by its deliberations over termination in a fiduciary capacity for Plan participants, I would have difficulty upholding the district court’s summary judgment in favor of the defendants. The present record would permit an inference that HMW’s management had made the decision to terminate the Plan by as early as the end of 1983 and that the continuing deliberations concerned only what would be offered to the employees of HamTech in its place. If one draws this inference (or indeed any of a number of other possible inferences involving somewhat less certainty about Plan termination), I am inclined to believe a fiduciary of the Plan possessing that information as such a fiduciary and knowing that Plan participants were being pressed to sell their interest in the Plan (i.e., roll over to the Wallace or Metals Plans) would be obligated under the common law of trusts to advise Plan participants of the likelihood of a termination.1 I join in affirming the district court, however, because I believe the information HMW and the other defendants are accused of having withheld was held by them in a fiduciary capacity for the corporation and its stockholders and not in a fiduciary capacity for plan participants.
Payonk acknowledges that HMW made its decision to terminate the plan in its capacity as the plan sponsor. Payonk thus concedes, as he must, that the defendants, in making that decision, owed no fiduciary duty to the plan or to its participants. The decision to terminate was a business decision, presumably made in the best interest of the corporation and its stockholders. What Payonk fails to explain is why, if that decision was not made in a fiduciary capacity with respect to the plan, the information generated internally in the course of making that decision is not possessed free of a fiduciary duty to the plan and its participants.
Under ERISA the roles of plan administrator and plan sponsor are distinct. The plan administrator owes a fiduciary duty to plan participants; the plan sponsor, as long as it is not acting as an administrator, generally does not. 29 U.S.C. § 1002(21)(A) (1985); 29 U.S.C. § 1108(c)(3) (1985); Amato v. Western Union Int’l. Inc., 773 F.2d 1402, 1416-17 (2d Cir.1985); Trenton v. Scott Paper Co., 832 F.2d 806, 809 (3d Cir.1987); United Ind. Flight Offi*232cers v. United Air Lines, 756 F.2d 1274, 1279-80 (7th Cir.1985). The Act permits a sponsor to decide whether to have someone else act as plan administrator or to serve itself in both capacities. Amato, 793 F.2d at 1416-17; Sleichter v. Monsanto Co., 612 F.Supp. 856, 858 (E.D.Mo.1985). When the roles are separately filled and the sponsor makes corporate business decisions regarding termination, changes in benefits, or other plan amendments, it has no fiduciary duty to disclose its decision and need not do so until disclosure is expressly required by the Act or the regulations. In the context of plan amendments, the courts have been unanimous in adopting precisely this view: Changes in plans need not be disclosed until they become effective. Young v. Standard Oil (Indiana), 849 F.2d 1039, 1045 (7th Cir.1988); Sleichter v. Monsanto, 612 F.Supp. 856, 858 (E.D.Mo.1985); Sutton v. Weirton Steel Div. of Nat’l Steel Corp., 567 F.Supp. 1184, 1196 (N.D.W.Va. 1983).2 Since the Plan administrator in a situation of this kind will ordinarily receive no information concerning the sponsor’s decision until the sponsor chooses to announce it, the Plan participants will not normally be advised of a change until disclosure is expressly required by the Act or the regulations or until the sponsor voluntarily elects to make an earlier disclosure.
I do not think that Congress, having given sponsors the choice of serving in a dual capacity, intended to penalize those corporations so choosing by requiring greater disclosure of business decisions from them than from corporations acting solely as plan sponsors. And, from the perspective of plan participants, I do not think Congress contemplated that the amount and timing of information available to participants would depend on the unrelated, discrete issue of whether the sponsor also serves as administrator.
Under the PBGC regulations, a plan administrator is not required to give notice of a decision to exercise a power of termination until the sponsor is prepared to go public with the filing of a Notice of Intent to Terminate with the PBGC. 29 C.F.R. § 2616.3(c). This may well constitute a recognition by the PBGC that an independent administrator will have no right to that information before that time. In any event, where, as here, employees of a corporation that serves as both plan sponsor and plan administrator possess information regarding a decision to terminate solely because of services they render to the corporation in connection with that decision, I perceive no basis for imposing a duty of disclosure upon them or their employer beyond that specifically imposed by the Act and regulations. Accordingly, I would hold that the only duty to disclose in this case was the duty imposed by 29 C.F.R. § 2616.1 et seq. and that the judgment in the defendant’s favor should be affirmed because that duty was fulfilled.

. See Restatement (Second) of Trusts § 173, Comment d (1959):
[The trustee] is under a duty to communicate to the beneficiary material facts affecting the interest of the beneficiary which he knows the beneficiary does not know and which the beneficiary needs to know for his protection in dealing with a third person with respect to his interest.

. Rosen v. Hotel & Restaurant Emp. Bartenders Union, 637 F.2d 592, 599-600 (3d Cir.), cert. denied, 454 U.S. 898, 102 S.Ct. 398, 70 L.Ed.2d 213 (1981) is not inconsistent. In Rosen, the information that the employer was not making the required contribution was held by the administrator in his capacity as Administrator, subject to an administrator’s fiduciary duty.