Court Opinion

ID: 6928505
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:42:42.311911+00
Date Added: 2024-06-11T16:07:02.018080
License: Public Domain

OPINION
WILLIAMS, Circuit Judge:
In these cross-appeals the primary issue we must decide is whether representations by an employer made prior to the adoption of an Employee Stock Ownership Plan, but not incorporated into the formal plan documents, are enforceable against the employer. We conclude that such representations are not enforceable under the Employee Retirement Income Security Act (ERISA), 29 U.S.C.A. §§ 1001-1461 (West 1985 & Supp.1993), and reverse the district court’s findings and conclusions to the contrary. We affirm, however, the district court’s conclusions that the employer was not liable for any delay in appointing a plan fiduciary, that the employer did not make an enforceable promise to maintain a certain level of pension benefits, that the employer did not overvalue the stock contributed to its pension plans, and that ERISA preempted the employees’ state law contract and tort claims against the employer.
I.

INTRODUCTION

A. Factual Background
In response to a hostile takeover bid announced on October 31, 1983, a group of senior management employees at Cone Mills Corporation decided to gain control of the company through a leveraged buy-out (LBO), which became final on March 27, 1984. While planning and implementing the LBO, Dewey Trogdon, Cone Mills’s Chairman of the Board and Chief Executive Officer, communicated regularly with Cone Mills’s employees through various letters, office memo-randa, and video presentations. Many of these communications were addressed to concerns expressed by employees regarding the impact the LBO would have on their jobs, including the impact on their pension benefits. The recurring themes of these communications were that management would protect the interests of Cone Mills’s employees and shareholders and would keep the employees informed of any changes occurring because of the LBO.
Prior to the LBO, Cone Mills maintained one employee pension plan for its hourly employees and three plans for its salaried employees: an Employees’ Retirement Plan (ERP); a Supplemental Retirement Plan (SRP); and an Employee Stock Ownership Plan (PAYSOP).1 Management proposed significant changes in these pension plans, primarily through the adoption of an Employee Stock Ownership Plan (the 1983 ESOP).2 As proposed, the 1983 ESOP would provide Cone Mills’s salaried and hourly employees with pension benefits through stock contributions.
In a December 12, 1983, letter to all Cone Mills employees, Trogdon stated that their *1031“pension plans [would] be left in place with [their] existing benefits guaranteed by the Company,” and that, through the coordination of the 1983 ESOP and the ERP, the employees could “receive no less than the full amount” of their pension benefits. (J.A. at 3695 (emphasis omitted).) This letter also noted that “[t]ogether, the ESOP and your pension plan are expected to provide greater financial security than your present retirement benefits.”3 (Id.) Trogdon estimated that over $50 million in stock could be contributed to the 1983 ESOP in the first two years but expressly noted that he could not legally guarantee that amount.
On December 15th, Trogdon sent a letter to Cone Mills’s salaried employees. This letter explained that Cone Mills would keep in place the ERP, which would work in tandem "with the 1983 ESOP. This letter also explained that the Company had over-funded the ERP, resulting in more funds being in the ERP accounts than were necessary to pay for accrued benefits (the pension reversion surplus),4 and that
[i]f the management and bank proposal to buy the Company is successful, there is agreement among management and the banks that we will contribute the surplus, or its equivalent in Company stock, to the ESOP. When the transaction is executed and the contribution is made, you, I, and all other Cone employees will “take title” to a substantial asset in which we currently have no rights or ownership.
(J.A. at 3700.)5 On page two of the letter, under the heading “General Comments,” Trogdon specifically stated: “As we get more time, we will answer your questions and publish information to the extent that it can be done on a legal and factual basis. We are, however, giving you information now based on our present plans which are subject to revision to meet changing situations.” (J.A. at 3701.) Based on this letter and the December 12th letter, Plaintiffs claim they are entitled to the pension reversion surplus (the surplus claim).
In. video presentations and question-and-answer booklets distributed prior to finalization of the LBO, management reiterated that employees would receive retirement benefits at least comparable to their current.pension plans. Management explained, however, that it was unable to guarantee the future value of each employee’s 1983 ESOP account, that the plan could be amended at any time, and that the written plan documents, rather than other communications, would control the terms of the employees’ actual benefits. The question-and-answer booklet further notified the employees in bold-faced type that “[t]he legal documents control, and if this material differs in any way from the legal documents, the correct source of the information is the legal documents.” (J.A. at 3911.) In addition, a March 15, 1984, memorandum to salaried employees referred to the profit sharing potential of the 1983 ESOP, but made no guarantees of its success. Instead, management only guaranteed that “no employee would losé any of his retirement benefits” from the ERP and that the employees’ pension benefits would not change because of the LBO. (J.A. at 4034.)
*1032The LBO was approved by a nearly unanimous vote of the shareholders on March 26, 1984, and all shares of common stock, including the shares held by the PAYSOP, were purchased for $70 per share.
The 1983 ESOP plan documents were not executed by Lacy Baynes6 until April 2, 1984. The plan documents required the company to contribute stock worth ten percent of each covered employee’s compensation for each of the first two years of the 1983 ESOP’s operation and one percent of each employee’s compensation for each year thereafter (the 10/10/1 formula). The executed documents, however, did not mention the surplus claim.
Between May and December of 1985, Cone Mills received the pension reversion surplus, which had increased in value to $69 million.7 The district court found that from March 1984 through September 1985 Cone Mills contributed junior preferred stock valued at $54,796,6388 to the 1983 ESOP. Consequently, the district court concluded that Defendants did not contribute the entire pension reversion surplus to the 1983 ESOP.9 The district court found that “[f]or a majority of salaried employees, however, after 1984 the 1983 ESOP did not provide additional pension benefits at retirement.” (J.A. at 363.) The failure to receive additional benefits and Cone Mills’s failure to contribute the entire pension reversion surplus prompted this lawsuit.
B. Procedural History
Initially, two former Cone Mills salaried employees filed suit against Cone Mills, Trogdon, and Baynes in South Carolina state court, alleging various state law causes of action relating to the surplus claim.10 Defendants removed the case to federal district court because the pension plans at the heart of this dispute are controlled by ERISA, and Plaintiffs amended their complaint to assert causes of action under ERISA, Rules 10b-5 and 14a-9 of the Securities and Exchange Commission, 17 C.F.R. §§ 240.10b-5 & 240.-14a-9 (1992); § 14(a) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78n (1988); and § 1962 of the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962 (1988). Upon Plaintiffs’ motion, the district court certified a class of 1800 salaried employees who were participants in the SRP and employed by Cone Mills on February 23, 1984, the date Cone Mills distributed its proxy statement in connection with the LBO.
Defendants moved for summary judgment, arguing that Plaintiffs’ state law claims were preempted under ERISA, that ERISA did not provide a remedy for representations made outside formal plan documents, and that Plaintiffs’ claims were insufficient as a matter of law. The district court held that ERISA preempted Plaintiffs’ state law *1033claims with the exception of the state law securities claim and granted summary judgment for Defendants on Plaintiffs’ Rule 10b-5 and RICO claims. The court denied Defendants’ motion for summary judgment with respect to Plaintiffs’ ERISA claims and their claims for proxy violations under state and federal law.
After a bench trial on the remaining issues, the district court found that Plaintiffs were entitled to have the entire pension reversion surplus contributed to the 1983 ESOP, but were not entitled to recover on Defendants’ other alleged ERISA violations, including the failure to appoint a plan fiduciary until April 2, 1984, the contribution of Cone Mills stock to the 1983 ESOP that was worth less than the company claimed, and the failure to provide Cone Mills’s employees with benefits under the post-LBO pension plans at least comparable to an amount they would have received under the pre-LBO plans. The district court also ruled for Defendants on the securities law claims.
In their appeal, Defendants challenge the district court’s finding that Plaintiffs can recover under the surplus claim, and Plaintiffs cross-appeal the district court’s ruling for Defendants on the other remaining ERISA claims and on the preemption of Plaintiffs’ state law contract and tort causes of action; they do not appeal the judgment for Defendants on the securities claim. We first address Defendants’ claims on appeal and then turn to Plaintiffs’ cross-appeal.
II.

DEFENDANTS’ CLAIMS ON APPEAL

The district court held that Plaintiffs were entitled to the portion of the pension reversion surplus that Cone Mills did not contribute to the 1983 ESOP. The court found that the surplus claim was part of the 1983 ESOP plan and was enforceable under ERISA. As a result, the district court held that Defendants’ breached their fiduciary duty to Plaintiffs when they failed to contribute the entire pension reversion surplus to the 1983 ESOP. In the alternative, and subject to Plaintiffs proving detrimental reliance on the surplus claim, the district court held that Plaintiffs: (1) had satisfied all of the elements of their claim for equitable estoppel; and (2) were entitled to recover as third-party beneficiaries of a contract between Defendants and their banks which required Defendants to contribute the pension reversion surplus to the 1983 ESOP.11 We address each argument in turn.
A. Breach of Fiduciary Duty
ERISA imposes certain duties upon plan fiduciaries, breaches of which are actionable by any plan participant. 29 U.S.C.A. §§ 1104, 1109(a), 1132(a)(2). The district court concluded that the Defendants, as plan fiduciaries, breached their duties to carry out the responsibilities of their offices solely in the interest of the plan participants “ ‘for the exclusive purpose of ... providing benefits to participants ... in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this title or Title IV.’ ” (J.A. at 369 (emphasis omitted) (quoting 29 U.S.C.A. 1104(a)(1)).) The district court’s conclusion was based on its determination that the governing “documents” and “instruments” of the 1983 ESOP included the surplus claim because it constituted a clear and unambiguous promise of benefits that was formal, authorized, and ratified. The district court reasoned, therefore, that ERISA’s fiduciary duty principles required Defendants to provide benefits in accordance with the surplus claim as part of the plan documents.12
*1034The district court erred in determining that the surplus claim is part of the 1983 ESOP plan. Under ERISA, plan fiduciaries must provide benefits only “in accordance with the documents and instruments governing” the employee pension benefit plan. 29 U.S.C.A. § 1104(a)(1)(D) (emphasis added); see also Dzinglski v. Weirton Steel Corp., 875 F.2d 1075, 1080 (4th Cir.) (“To adhere to the plan is not a breach of fiduciary duty.”), cert. denied, 493 U.S. 919, 110 S.Ct. 281, 107 L.Ed.2d 261 (1989). It is undisputed that the surplus claim was not incorporated into the written terms of the 1983 ESOP plan documents adopted by Defendants on April 2,1984. Instead, the actual plan documents only mandate that Cone Mills provide benefits under the 10/10/1 formula.
Nonetheless, the district court found that an employer representation not contained in the formal plan documents could become a part of the plan if the promise to provide benefits was contained in a written, formal, authorized, and ratified statement sent by the employer’s CEO to all of the employer’s salaried employees.13 In reaching its conclusion, the district court applied the inverse logic of our holding in Pido v. Bethlehem Steel Corp., 884 F.2d 116 (4th Cir.1989). In Pizlo, we held that a plaintiff does not have a cause of action for benefits under ERISA when such benefits were promised in informal and unauthorized amendments to the benefit plan. Id. at 120. We did not state, however, that employees are entitled to recover benefits under any written statement made by a company official, even if authorized and ratified.14 On the contrary, only promised benefits adopted in accordance with the amendment procedures outlined in the formal plan documents will suffice to incorporate the promised benefits into the plan. Miller v. Coastal Corp., 978 F.2d 622, 624 (10th Cir.1992), cert. denied, — U.S. -, 113 S.Ct. 1586, 123 L.Ed.2d 152 (1993). Under the formal plan documents of the 1983 ESOP, no amendment is effective unless the Cone Mills Board of Directors executes a written document containing the amendment, the document is delivered to the plan trustee, and the trustee endorses receipt of the amendment. Even though the Cone Mills Board of Directors ratified Trogdon’s actions and communications with Cone Mills employees, there is no evidence in the record that any written terms regarding the surplus claim were ever delivered to Baynes as trustee or endorsed by him. Therefore, the surplus claim is not enforceable as a valid plan amendment to the 1983 ESOP.
Because the surplus claim is not enforceable under the 1983 ESOP either as initially adopted or as an amendment, Plaintiffs can only prevail if the proposed benefits are recoverable independent of the 1983 ESOP. Some courts have allowed employees to recover promised benefits that are not *1035contained in a formal written plan document if the benefits are contained in an informal benefit plan. See, e.g., Donovan v. Dillingham, 688 F.2d 1367, 1372 (11th Cir.1982) (en banc). In Donovan, the Eleventh Circuit held that an informal ERISA plan has been established “if from the surrounding circumstances a reasonable person can ascertain the intended benefits, a class of beneficiaries, the source of financing, and procedures for receiving benefits.” Id. at 1373. In addition, the informal plan must actually be in existence; the mere decision to create an employee benefit plan is not actionable. James v. National Business Sys., Inc., 924 F.2d 718, 720 (7th Cir.1991); Moeller v. Bertrang, 801 F.Supp. 291, 293 (D.S.D.1992). An informal plan may exist independent of, and in addition to, a formal plan as long as the informal plan meets all of the elements outlined in Donovan. See Henglein v. Informal Plan for Plant Shutdown Benefits for Salaried Employees, 974 F.2d 391, 400 (3d Cir.1992) (absence of integration clause in a formal plan and distribution of informal documents may lead the court to find that an informal plan existed in addition to the formal plan).
Applying these criteria, the surplus claim does not constitute an informal plan existing independent of the 1983 ESOP. Although the first three Donovan elements (the intended class of beneficiaries, the intended benefits, and the source of the funding) are ascertainable from the December 12th and 15th letters, these letters do not satisfy the fourth element (the procedure for receiving benefits). The only way an employee could ascertain the procedures for obtaining benefits would be to refer to the 1983 ESOP formal plan document, which was not adopted until April 2, 1984. Therefore, we agree with the district court that the letters from Trogdon which are the basis of the surplus claim cannot constitute an informal ERISA plan that entitles Plaintiffs to benefits in lieu of or in addition to the 10/10/1 mandatory contributions contained in the 1983 ESOP.15 Our conclusion that Plaintiffs are not entitled to any relief under the Donovan analysis is supported by the Ninth Circuit’s decision in Carver v. Westinghouse Hanford Co., 951 F.2d 1083 (9th Cir.1991), cert. denied, — U.S. -, 112 S.Ct. 3036, 120 L.Ed.2d 905 (1992). In Carver, several independent companies that operated separate pension plans for their employees were consolidated into one company (WHC) by the Department of Energy (DOE). Id. at 1085. WHC sent the employees of the various companies booklets stating that it would create a new pension plan and would use a particular formula to calculate each participant’s length of service. Id. After the individuals accepted employment with the consolidated company, however, the company finalized the plans *1036for the new pension program using a different formula for calculating years of service. Id. at 1086. The employees filed suit alleging that the promises contained in the booklets created an informal plan under Donovan. Id.
The Ninth Circuit found that the employees had not established the existence of an informal plan under the Donovan analysis because Donovan and its progeny only apply when the surrounding circumstances demonstrate the creation of a de facto pension plan. Id. WHC, in contrast, actually adopted the plan that was discussed in the booklets, albeit with different terms than originally anticipated. The booklets sent to employees prior to the adoption of the formal plan merely “apprise[d] anxious employees of what they might expect once the transition from several employers to WHC was completed. WHC had not completed its negotiations with DOE, and consequently, had not adopted” the plan in the booklets. Id. at 1087. The court also noted that the intent to create a plan is not enough to create liability on the part of the employer:
WHC should have explained in its communications that the plan was not formalized and was subject to DOE approval. Failure to do so, however, did not elevate the newsletters and the preliminary summary booklet to the level of an informal plan in June, 1987. The plan simply was not a reality until that December when it was formally adopted.
Id. The same analysis applies in this case. Trogdon sent the letters in question in an attempt to keep Cone Mills’s employees apprised of the proposed developments in their pension plans. Furthermore, unlike WHC, Cone Mills specifically informed their employees that these plans were subject to change. In this context, Cone Mills’s December 12th and 15th letters were merely preliminary statements of its intentions regarding the plan and do not constitute an enforceable plan. See id. Therefore, because the letters were neither a part of the 1983 ESOP nor created an enforceable informal employee benefit plan, we reverse the district court’s conclusion that Defendants had a fiduciary duty to abide by them.16
B. Equitable Estoppel
Because we conclude that the district court incorrectly held that the surplus claim was a part of the 1983 ESOP, we must review the district court’s alternative determination that Plaintiffs may be able to recover the pension reversion surplus on an equitable estoppel theory under federal common law.
Since the district court rendered its decision, this court has issued two relevant opinions. In Singer v. Black & Decker Corp., 964 F.2d 1449, 1452 (4th Cir.1992), we held that “resort to federal common law generally is inappropriate when its application would conflict with the statutory provisions of ERISA, discourage employers from implementing plans governed by ERISA, or threaten to override the explicit terms of an established ERISA benefit plan.” This is so because
*1037ERISA demands adherence to the written terms of an employee benefit plan.... Federal common law does not provide a backdoor through which these statutory requirements may be evaded, and attempts to import state common law principles such as equitable or promissory estoppel to alter and undermine written obligations have been consistently rebuffed by the courts.
Id. at 1453-54 (Wilkinson, J., concurring).
In Coleman v. Nationwide Life Insurance Co., 969 F.2d 54, 60 (4th Cir.1992), cert. denied, — U.S. -, 113 S.Ct. 1051, 122 L.Ed.2d 359 (1993), we held that estoppel principles cannot be used to effect a modification of an ERISA benefit plan. Adoption of an estoppel theory
would require this court to rewrite the contract of insurance. While a court should be hesitant to depart from the written terms of a contract under any circumstances, it is particularly inappropriate in a case involving ERISA, which places great emphasis upon adherence to the written provisions in an employee benefit plan. Plaintiffs theories, though packaged in different wrappers, all would lead to the same result — the written plan would no longer be the benchmark in an action under ERISA.
Id. at 56.
While the dissent correctly points out that Singer involved an attempt to require an employer to amend a pension plan for one group of employees in the same manner as it had done for another group of employees, 964 F.2d at 1451, and Coleman involved an attempt to receive welfare benefits based on an oral post-plan promise made by an unauthorized individual, 969 F.2d at 57, we believe the concerns expressed in those eases apply equally to written pre-plan promises made by an authorized company official regarding pension plans. If pre-plan statements concerning the proposed terms of a soon-to-be adopted plan were enforced, then “the written plan would no longer be the benchmark in an action under ERISA,” Coleman, 969 F.2d at 56, employers would no longer know what their obligations were under their benefit plans, and employees would be harmed when the actuarial soundness of the employee benefit plans was destroyed by groups of employees claiming benefits for which no contributions were made, see Black v. TIC Inv. Corp., 900 F.2d 112, 115 (7th Cir.1990). Therefore, we hold that equitable estoppel is not an available theory to enforce pre-plan statements regarding benefits proposed under an ERISA plan and reverse the district court’s conclusion to the contrary.17
*1038C. Thirdr-Party Beneficiary
The district court also held that, should this court determine that the surplus claim was not a part of the 1983 ESOP, Plaintiffs could proceed as third-party beneficiaries under a breach of contract theory. Specifically, the district court found that Plaintiffs were third-party beneficiaries of a contract between Cone Mills and the banks providing financing for the LBO and noted its intent to allow Plaintiffs to recover under this contract if they could prove reliance thereon. Because we hold that a third-party beneficiary cause of action cannot be used to modify an employer’s obligations under its ERISA plan, we reverse the district court’s conclusion to the contrary.
There is nothing in ERISA that specifically authorizes participants to file suit for benefits under a third-party beneficiary breach of contract theory. As we have previously stated, however:
ERISA does not contain a body of contract law to govern the interpretation and enforcement of employee benefit plans. Instead, Congress intended for the courts, borrowing from state law where appropriate, and guided by the policies expressed in ERISA and other federal labor laws, to fashion a body of federal common law to govern ERISA suits.
Holland v. Burlington Indus., Inc., 772 F.2d 1140, 1147 n. 5 (4th Cir.1985) (quoting Scott v. Gulf Oil Corp., 754 F.2d 1499, 1501-02 (9th Cir.1985)), aff'd sub nom. Brooks v. Burlington Indus., Inc., 477 U.S. 901, 106 S.Ct. 3267, 91 L.Ed.2d 559 (1986). Therefore, Plaintiffs’ claim can only succeed under a third-party beneficiary theory if we adopt this theory as part of the federal common law applied in ERISA suits.
The guiding principle in fashioning federal common law in ERISA cases is that the common law must be consistent with the purposes of ERISA. See Provident Life & Accident Co. v. Waller, 906 F.2d 985, 992 (4th Cir.), cert. denied, 498 U.S. 982, 111 S.Ct. 512, 112 L.Ed.2d 524 (1990). We agree with the holding of the Fifth Circuit that the “creation of a federal common law of unjust enrichment and third-party beneficiary claims would be inconsistent with ERISA’s terms and policies.” Morales v. Pan Am. Life Ins. Co., 914 F.2d 83, 87 (5th Cir.1990).
In addition, “resort to federal common law generally is inappropriate when its application would ... threaten to override the explicit terms of an established ERISA benefit plan.” Singer, 964 F.2d at 1452. Allowing recovery under a third-party beneficiary breach of contract theory would do just that. The effect of enforcing the alleged contract between Cone Mills and the banks would be to require Cone Mills to make an additional contribution over the 10/10/1 required contribution, even though the formally adopted plan documents specifically provide that all other contributions are completely discretionary. Therefore, we decline to incorporate a third-party beneficiary breach of contract theory into the federal common law governing ERISA suits.
III.

PLAINTIFFS’ CLAIMS ON APPEAL

A. Preemption
Plaintiffs argue that if ERISA will not permit a cause of action for the enforcement of the surplus claim, then ERISA does not preempt Plaintiffs’ state law causes of action. ERISA specifically provides that it preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan” covered by ERISA. 29 U.S.C.A. § 1144(a). In interpreting § 1144(a), the Supreme Court has held that ERISA’s preemption provision is to be construed broadly, such that a law “relates to” an employee benefit plan “if it has a connection with or reference to such a plan.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983).
Plaintiffs assert state law claims for breach of contract, fraud, unjust enrichment, breach of fiduciary duty, negligence, accounting, and conspiracy in an attempt to enforce promises *1039made in connection with the 1983 ESOP, which is undeniably an ERISA-covered employee benefit plan. Because all of these claims clearly “relate to” an ERISA-covered plan, we affirm the district court’s conclusion that these state law causes of action are preempted.

B.Stock Valuation

Plaintiffs also contend that the stock contributed to the 1983 ESOP is overvalued, creating a deficiency in the 1983 ESOP accounts which Cone Mills is required to rectify. Specifically, Plaintiffs claim that the stock is not worth the $100 per share reported in an appraisal performed by Cone Mills’s accountant. The district court rejected this claim, finding that Plaintiffs failed to carry their burden of establishing that the stock was overvalued. On appeal, Plaintiffs contend that the district court erroneously shifted the burden of proof to them and that the evidence established that the stock was overvalued.
We find as an initial matter that the district court correctly allocated the burden of proof. Plaintiffs bear the burden of proof with respect to each element of every cause of action, including damages. Aeronca, Inc. v. Style-Crafters, Inc., 546 F.2d 1094, 1096 (4th Cir.1976). Furthermore, Plaintiffs’ acknowledgement of their burden on this issue during trial waived their challenge to its allocation on appeal.18 We also find that the district court thoroughly evaluated the reports submitted by both sides. We cannot say that its determination that Cone Mills’s expert had adequately appraised the stock was clearly erroneous, see Fed.R.Civ.P. 52(a), and we therefore affirm the district court’s determination.

C.Promise of Greater Benefits under Posí-LBÓ Plans

Plaintiffs also argue ’ that Defendants should be liable under ERISA because the benefits provided under the 1983 ESOP were not greater than the benefits they would have received if the pre-LBO benefit plans had remained in effect after the LBO. Plaintiffs base this claim on the December 12th and March 15th letters, video presentations, and a question-and-answer booklet which promised Plaintiffs that they could not lose any of their benefits under the post-LBO plans and that they would most likely receive even greater benefits because of the- profit sharing potential of the 1983 ESOP. As the district court correctly noted, these statements were not included in the 1983 ESOP plan documents. Therefore, under the analysis employed in section II of this opinion, Plaintiffs are not entitled to recover for any failure to abide by these alleged commitments.

D.Delay in Appointment of a Trustee

Finally, Plaintiffs contend that the district court erred in dismissing their cause-of action for breach of fiduciary duty based on Cone Mills’s failure to appoint a trustee for the 1983 ESOP upon the creation of the plan in December 1983. The district court reasoned that even if Plaintiffs could bring a cause of action on this basis, they suffered no damage as a result of the delayed appointment. We agree with the district court.
ERISA requires an employer to .appoint a plan fiduciary or trustee. 29 U.S.C.A. § 1102(a)(1) (the benefit plan “shall provide for one or more named fiduciaries who jointly or severally shall have authority to control and manage the operation and administration of the plan”). In this case, Plaintiffs allege that Cone Mills established the 1983 ESOP in December of 1983 when the Board of Directors adopted a Detailed Plan Description, but failed to appoint a trustee until Baynes assumed that role on April 2, 1984. Thus, according to Plaintiffs, Cone Mills breached its fiduciary duty to its employees by operating the 1983 ESOP for a short time without a named fiduciary.
*1040Plaintiffs’ analysis is flawed for two reasons. First, there was no delay in appointing a plan fiduciary. Cone Mills did not adopt the 1983 ESOP in December 1988. At that time, Cone Mills had not finalized all of the plans for the 1983 ESOP and only adopted the plan description, which contained terms that were materially different from the terms of the 1983 ESOP plan documents. It was not until April 2, 1984, that Cone Mills formally adopted the 1983 ESOP, and on the same day Cone Mills appointed Baynes as the plan fiduciary. Second, even if the plan had been adopted in December 1983, Cone Mills did not make any contributions to the 1983 ESOP until June 1984. Until that time, there was no corpus of the 1983 ESOP trust for a fiduciary to manage or administer. Therefore, we question whether Plaintiffs could have suffered any damages by Cone Mills’s failure to appoint' a plan fiduciary or trustee immediately. The district court correctly ruled for Cone Mills on this claim.
IV.

CONCLUSION

For the reasons discussed above, we affirm the district court’s determinations in favor of Defendants on the value of the contributed stock, the promise to maintain pre-LBO benefits, the preemption issue, and the claim for delay in appointing a plan fiduciary. We reverse the district court’s determination that Defendants are liable under the surplus claim.

AFFIRMED IN PART, REVERSED IN PART.

. The PAYSOP gave ownership rights in the company through profit sharing contributions of Cone Mills’s common stock. At the time of the LBO, the PAYSOP owned 1.3% of Cone Mills’s common stock.

. Under management's proposed changes to the pension plans, the ERP fiduciary would actuarially determine the value of each employee's ERP benefits accruing through December 31, 1983, and would use the funds in each individual's ERP account to purchase an annuity that would cover those benefits. The amount remaining in the ERP accounts after the annuities were purchased would constitute a pension reversion surplus, which, under the terms of the ERP, Cone Mills would be entitled to retain.
Plan participants in the ERP would continue to accrue benefits under the ERP after December 31, 1983, but Cone Mills would not continue to make contributions to the ERP accounts. Instead, the value of a salaried employee’s 1983 *1031ESOP account would be used to satisfy his ERP benefits accruing after 1983. If the amount in an employee's 1983 ESOP account was insufficient to meet this obligation. Cone Mills would be required to make an additional contribution to the individual's ERP. If the employee's 1983 ESOP account exceeded his ERP obligations, however, the employee would receive the excess.

.The December 12, 1983, letter, along with statements made in a video presentation, a question-and-answer booklet, and a March 15, 1984, letter, form the basis for Plaintiffs' claim that they are entitled to receive benefits under the post-LBO plans at least comparable to the amount they would have received under the pre-LBO plans. See discussion infra part III.C.

. The surplus was created when the assets of the ERP accounts exceeded the actuarially determined present value of pension benefits accrued by employee participants. The funds remaining in the accounts after Cone Mills purchased annuities to pay for the accrued benefits became the pension surplus reversion alluded to in the December 12th and 15th letters.

. This statement formed the basis for Plaintiffs’ claims as third party beneficiaries of a contract between Cone Mills and the bank. See discussion infra part II.C.

. Baynes was Cone Mills's Secretary and was the plan fiduciary for the 1983 ESOP from April 2, 1984, to June 20, 1984.

. In the December 1983 letters, management had estimated that the pension reversion surplus would be approximately $50 million. Because the reversion created taxable income, Cone Mills deferred receipt until 1985 so that it could reclaim 1981 taxes paid in excess of $17 million. This intentional delay in receiving the pension reversion surplus increased its value from the original estimate of $50 million to the $69 million received by December 1985.

. The district court found that Cone Mills made the following contributions: $36,023,000 on March 30, 1984; $3,948,815 on September 13, 1985; and $14,824,823 on September 15, 1985. These contributions did not coincide with Cone Mills's receipt of the pension reversion surplus. In comparison, Cone Mills received the pension reversion surplus over the following installments: $59,000,000 on May 20, 1985; $2,000,000 on September 27, 1985; $5,800,000 on December 6, 1985; and $2,200,000 on December 23, 1985.

. Plaintiffs also argued that the value of the junior preferred stock contributed to the 1983 ESOP was less than $54,796,638, thereby creating a larger contribution deficiency. The district court found, however, that Plaintiffs failed to meet their burden of proof on this issue. See discussion infra part III.B.

. Plaintiffs’ state law claims included civil conspiracy, breach of contract, breach of fiduciary duty, breach of contract accompanied by fraudulent acts, misrepresentation, unjust enrichment, and violation of state securities laws. Plaintiffs also sought an accounting.

. The district court noted its intention to allow Plaintiffs to proceed on these two alternative theories should we determine that Defendants had not breached their fiduciary duties. The district court certified its conclusions on these issues for interlocutory appeal pursuant to 28 U.S.C. § 1292(b) (1988).

. The district court found that Defendants violated three fiduciary duties: (1) the duty to act in accordance with the documents and instruments governing the plan; (2) the duty to discharge the responsibilities of their offices for the exclusive benefit of the plan participants; and (3) the duty not to engage in certain prohibited transactions. All three of these findings, however, first require a determination that the surplus claim was a part of the 1983 ESOP.

. The district court found that the surplus claim was ratified on May 15, 1984, at the annual Board of Directors meeting during which the Directors passed a general resolution ratifying all actions taken by the company’s officers and directors on the company's behalf during the preceding year and another resolution that generally ratified all actions taken by Trogdon with respect to the company’s benefit plans.

. The dissent suggests that extending the rule in Pizlo to promises made before the adoption of the official plan documents is somewhat irrational. See Dissenting Op. at 1041. The thread of the dissent's argument is that any promises made before the adoption of the plan documents would have been enforceable under principles of contract law, and thus, under our decision, the adoption of the 1983 ESOP divested Plaintiffs of vested contract rights. We disagree. The statements concerned proposed employee pension benefits and as such are statements of an employer’s intent to create an “employee pension benefit plan,” as defined in ERISA. 29 U.S.C.A. § 1002(2)(A) ("employee pension benefit plan” includes any plan, fund, or program established by an employer to provide retirement income to employees or to result in a deferral of income by employees for periods extending to or beyond an employee’s termination). ERISA, therefore, is the governing law, and would have been the governing law even if the 1983 ESOP had never been adopted. Id. § 1003(a)(1) (ERISA covers all employee benefit plans established by an employer engaged in interstate commerce); Biggers v. Wittek Indus., 4 F.3d 291, 295-96 (4th Cir.1993) (company’s promise to provide a severance arrangement for an individual employee could only be enforced, if at all, under ERISA and not under state contract law). As explained hereafter in this opinion, the statements involved would not have been enforceable either under ERISA's fiduciary duty provisions or under the federal common law doctrines advanced by Plaintiffs.

. Under the dissent's view, however, both the surplus claim and the 10/10/1 formula should be enforced. See Dissenting Op. at 1046. This approach may present difficulty in determining damages. If Cone Mills was required to contribute the entire surplus reversion in addition to the 10/10/1 formula contributions, then the district court's method of determining the surplus deficiency (comparing the total amount of contributions made by Cone Mills with the total amount of surplus reversion received by the company) was inadequate and the calculation of damages must be remanded. The district court should subtract the amount of money required to be contributed under the 10/10/1 formula from the total amount of contributions made by Cone Mills. The resulting figure then should be subtracted from the total amount of surplus received by Cone Mills to determine the actual surplus contribution deficiency. If, however, the dissent would allow the surplus reversion to be used to satisfy the 10/10/1 formula obligation, then the district court may be required to determine over what time frame the surplus should have been contributed. If there is no time limit on when the surplus must be contributed, then it is possible that Plaintiffs are not entitled to the remainder of the surplus at this time, but that Cone Mills is entitled to retain the money to make future contributions.
Another issue that should be considered under the dissent's view is whether the district court abused its discretion in denying prejudgment interest. See Quesinherry v. Life Ins. Co., 987 F.2d 1017, 1031 (4th Cir.1993). Specifically, this court would need to decide whether an award of prejudgment interest is required to compensate them for the loss of use of money wrongfully diverted from the 1983 ESOP, see Brink v. DaLesio, 667 F.2d 420, 429 (4th Cir.1981) (reversing district court order denying pre-judgment interest because the failure to award prejudgment interest allowed a plan fiduciary to profit from his breach of fiduciary duty and denied the plan participants full recovery), and the amount of the award based upon the date the surplus should have been contributed.

. The dissent urges, however, that the Defendants’ failure to contribute the surplus violated their fiduciary . duty under 29 U.S.C.A. § 1104(a)(1) to "discharge [their] duties with respect to a plan solely in the interest of the participants and beneficiaries.” See Dissenting Op. at 1041. This duty, however, only applies to actions taken by a plan fiduciary in accordance with his duty to administer the employee benefit plan; it does not apply to actions taken by an employer in creating the plan. See Belade v. ITT Corp., 909 F.2d 736, 738 (2d Cir.1990) (design of employee benefit plan is strictly a business decision and does not give rise to any fiduciary duties under ERISA); Dzinglski v. Weirton Steel Corp., 875 F.2d 1075, 1078 (4th Cir.) (" 'Congress left employers much discretion in designing their plans' under ERISA and in determining the level and conditions of benefits.”) (quoting Hlinka v. Bethlehem Steel Corp., 863 F.2d 279, 283 (3d Cir.1988)), cert. denied, 493 U.S. 919, 110 S.Ct. 281, 107 L.Ed.2d 261 (1989). Cone Mills's actions with regard to announcing the proposed pension surplus reversion and deciding not to adopt that proposal are left to its sound business discretion and are not subject to the fiduciary duties imposed on plan administrators. In addition, the dissent’s rationale would impose liability on Defendants for breach of fiduciary duties with respect to the 1983 ESOP when they were not plan fiduciaries. At the time the statements were made, the 1983 ESOP was not yet in existence. See Dzinglski, 875 F.2d at 1079-80 (an employer acting as a plan administrator has two roles—employer and plan administrator—but is only a fiduciary with respect to its actions as plan administrator).

. The dissent expresses its concern that failure to enforce this promise under an equitable estop-pel theory would encourage employer fraud. See Dissenting Op. at'1046. We share the dissent’s concern with discouraging fraud and our holding is not that a plan participant is powerless against employer fraud with respect to an employee benefit plan. We simply do not believe that adoption of the common law principle of equitable estoppel is the appropriate course of action in response to this concern. Perhaps under the proper fact pattern a federal common law fraud theory could be incorporated into ERISA's statutory scheme. See Fischer v. Philadelphia Elec. Co., 994 F.2d 130, 133-35 (3d Cir.1993) (recognizing that employers may make business decision concerning the formation of an employee benefit plan without being subject to fiduciary duties, but may not make affirmative misrepresentations about their then-existing intentions during the formation stage). However, we need not reach that issue in this case because Plaintiffs did not argue a federal common law fraud theory in the district court. Moreover, the facts of this case do not demonstrate employer fraud, but merely that Cone Mills expressed its intentions regarding proposed plan terms. Such an expression of intended future business plans is not actionable unless the statement of intent was false when made. See Greenwood Mills, Inc. v. Russell Corp., 981 F.2d 148, 152 (4th Cir.1992) (statement of intended future business plans is not actionable as a misrepresentation unless statement of intent was false when made).
In addition, while the dissent is of the view that the equitable relief sought in this case is not likely to be a significant factor in employers’ decisions, see Dissenting Op. at 1047, we disagree. We believe that incorporating the broad common law principle of equitable estoppel into ERISA would discourage an employer from adopting employee benefit plans because of uncertainty about the potential extent of its liability. For the same reason, adopting the dissent's rationale may chill an employer from communicating with its employees about its intentions with regard to such plans. While we share the dissent’s concern with encouraging truthful communications, there is no evidence that Cone Mills was untruthful regarding its intentions when the communications at issue were made. In addition, the record reflects that Cone Mills was *1038careful in drafting the December letters to alert its employees that all plans were tentative and subject to change.

. Even were we to believe that the issue was properly before this court, we would reach the same conclusion. Plaintiffs’ argument that a plan fiduciary cannot acquire the employer's security unless it proves that it received adequate consideration is not applicable here. See 29 U.S.C.A. §§ 1106(a)(1)(E), 1108(e). The rule cited by Plaintiffs does not apply when the employer’s security is acquired by an eligible individual account plan, which includes the ESOP in question. 29 U.S.C.A. § 1108(e)(3)(A).