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USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 97-1556
LEO VARTANIAN,
Plaintiff - Appellant,
v.
MONSANTO COMPANY, ET AL.,
Defendants - Appellees.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Michael A. Ponsor, U.S. District Judge] ___________________
____________________
Before
Torruella, Chief Judge, ___________
Lynch, Circuit Judge, _____________
and Stearns,* District Judge. ______________
_____________________
John C. Sikorski, with whom Robinson Donovan Madden & Barry, ________________ ________________________________
P.C. was on brief for appellant. ____
Richard J. Pautler, with whom Peper, Martin, Jensen, Maichel __________________ ______________________________
and Hetlage, Francis D. Dibble, Jr. and Bulkley, Richardson and ___________ _______________________ _______________________
Gelinas were on brief for appellees. _______
____________________
December 15, 1997
____________________
____________________
* Of the District of Massachusetts, sitting by designation.
STEARNS, District Judge. This appeal involves a STEARNS, District Judge. _______________
question of first impression in this circuit, namely, the
standard to apply in determining when an employer's consideration
of an employee severance program gives rise to a fiduciary duty
of disclosure under the Employee Retirement Income Security Act
of 1974, 29 U.S.C. 1001-1461 ("ERISA"). Plaintiff-Appellant
Leo Vartanian alleges that his former employer, Monsanto Chemical
Company ("Monsanto"), misled him by failing to respond adequately
to his inquiries about a severance package that was under
internal corporate consideration when he retired from the company
on May 1, 1991. A benefits package for which Vartanian would
have otherwise been eligible was approved by the Monsanto Board
of Directors on June 28, 1991.
Vartanian filed a complaint against Monsanto in 1992
alleging two counts of breach of fiduciary duty under ERISA, one
count of unlawful discrimination in violation of 510 of ERISA,
and one count of common law negligent misrepresentation. The
district court, Ponsor, J.,1 granted Monsanto's motion to dismiss
the action on the grounds that, having taken a lump sum
distribution of all the vested benefits to which he was entitled,
Vartanian could not qualify as a "plan participant" with standing
to assert ERISA violations. Vartanian v. Monsanto Co., 822 F. _________ ____________
Supp. 36, 41 (D. Mass. 1993). This Court reversed, holding,
inter alia, that because Vartanian was a plan member at the time
____________________
1 Judge Ponsor was at the time a Magistrate Judge. He took
office as a District Judge on March 14, 1994.
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the alleged misrepresentations were made, he had standing to sue
under ERISA. Vartanian v. Monsanto Co., 14 F.3d 697, 703 (1st _________ _____________
Cir. 1994)(Vartanian I). _________
On remand Judge Ponsor dismissed Vartanian's claim that
Monsanto had breached an ERISA duty by failing to disclose its
prospective plans to reduce staffing, but permitted the claims of
misrepresentation about the possibility of an early retirement
incentive plan to proceed. Vartanian v. Monsanto Co., 880 F. _________ ____________
Supp. 63, 70-71 (D. Mass. 1995). After discovery, Judge Ponsor
granted Monsanto's motion for summary judgment, holding that
because no enhanced severance package that would have affected
Vartanian was under "serious consideration" at the time he
retired, no actionable misrepresentation had been made.
Vartanian v. Monsanto Co., 956 F. Supp. 61, 66 (D. Mass. 1997). _________ ____________
We affirm.
I. I
Our review of a motion for summary judgment is de novo.
Associated Fisheries of Maine, Inc. v. Daley, ___ F.3d ___, ___, ___________________________________ _____
No. 97-1327, 1997 WL 563584 at *3 (1st Cir. Sept. 16, 1997).
Summary judgment is appropriate where "the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law." Fed. R. Civ. P.
56(c). Inferences are drawn in the light most favorable to the
nonmoving party. Reich v. John Alden Life Ins. Co., 126 F.3d 1, _____ ________________________
-3-
6 (1st Cir. 1997). The nonmovant may not, of course, defeat a
motion for summary judgment on conjecture alone. "The mere
existence of a scintilla of evidence in support of the
plaintiff's position will be insufficient; there must be evidence
on which the jury could reasonably find for the plaintiff."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). ________ ___________________
The following undisputed material facts are drawn from
the parties' Joint Statement of Stipulated Facts, Defendant-
Appellee Monsanto's Statement of Undisputed Facts, and Plaintiff-
Appellant Vartanian's Response to Defendant's Statement of
Undisputed Facts. After thirty-six years at Monsanto, Vartanian
in December 1989 announced his intention to retire on January 1,
1991 (later amended to May 1, 1991). Vartanian was then employed
at Monsanto's plastics facility at Indian Orchard, Massachusetts.
Vartanian elected to take a lump sum distribution of his Salaried
Employee's Pension Plan benefits. During past restructurings of
its business, Monsanto had offered early retirement incentives,
sometimes on a company-wide basis and sometimes to specific
groups of employees.
During 1990 and 1991, Monsanto's sales stagnated and
net income shrunk. Rumors began circulating among Monsanto
employees that the company was pondering an early retirement
program as a cost-cutting device. These intensified when in
October of 1990 Monsanto Agricultural Company (a separate
Monsanto operating unit) offered a severance program to some of
its employees as part of a reorganization plan. In the first
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quarter of 1991, Robert Potter, the president of Monsanto, began
discussing with his senior managers various proposals to
streamline operations at Monsanto Chemical. These included the
closing of several plants, but not the Indian Orchard facility
where Vartanian worked. No plans were drawn up to implement a
severance package,2 although Frank Reining, Monsanto's vice-
president of finance, prepared an estimate of the cost of
offering severance benefits to some 400 hypothetical employees.
In March of 1991, Vartanian asked Charles Eggert, his
immediate supervisor, if the rumors about an early retirement
plan were true. After investigating, Eggert reported to
Vartanian that Monsanto was not contemplating any severance
program for which he would be eligible. On March 25, 1991,
Vartanian and his wife executed an Affidavit, General Release,
and Agreement in anticipation of the release of the lump sum
benefits.
During the week of April 15-21, 1991, after gossip
about a possible severance plan revived, Vartanian contacted both
Eggert and Lori Heffelfinger, the personnel representative for
his employee group. Eggert and Heffelfinger told Vartanian that
they had been unable to confirm the rumors, and did not
personally believe that any early retirement package was in the
____________________
2 Vartanian asserts that any downsizing discussions would
inferentially have involved the issue of severance benefits
because of Monsanto's record of offering such incentives as part
of past restructuring.
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works. Vartanian does not dispute the truthfulness of either
statement.
Between April 21 and May 1, 1991, the Monsanto
Management Board met six times, eventually deciding to recommend
to the Board of Directors the closure of six plants. No
presentation concerning early retirement incentives was made at
any of these meetings, and no document analyzing or proposing a
severance program was prepared. Three alternate plans were drawn
up for restructuring Monsanto's multiple product lines. None of
the product lines in Vartanian's Plastics Division was
recommended for discontinuance. Vartanian retired on May 1,
1991.
On May 7, 1991, Potter met with the Monsanto Executive
Management Committee, which endorsed in principle his proposal to
restructure the company. On May 16, 1991, John Manns, the
director of employee benefits, was asked to develop a severance
program for potentially impacted employees. Manns asked
Monsanto's actuaries, Towers, Perrin, Forster & Crosby ("TPF&C"),
to gather the necessary data. On May 24, 1991, Manns gave TPF&C
an outline of his proposal. On May 28, 1991, Manns met with
Robert Abercrombie, the corporate benefits director, and Barry
Blitstein, a corporate vice president, to discuss a concrete
severance plan. It was at this meeting that the idea of
extending an offer of early retirement to all Monsanto employees
was first raised.
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Coincidentally, on May 28, 1991, a St. Louis-based
Plastics Division employee who had decided to retire on June 1,
1991, was assured by letter that he would receive the value of
any increase in benefits if an early retirement program for which
he would otherwise have been eligible was adopted within three
months of his retirement date. On June 12, 1991, another St.
Louis-based Plastics Division employee who planned to retire on
July 1, 1991, was given a similar written assurance. Both
employees were eventually paid the additional benefits from
Monsanto's corporate treasury.
On June 3, 1991, Monsanto's Executive Management
Committee endorsed the idea of a company-wide early retirement
program, and authorized further development work on the project.
Potter told his division managers that they were to make the
final decision whether to offer the program to their respective
employees. John Tuley, the manager of Vartanian's division,
decided not to participate. Tuley's decision was reversed by his
successor, Arthur Fitzgerald, in mid-June of 1991. The
retirement plan was finalized on June 27, 1991, and approved by
Monsanto's Board of Directors on June 28, 1991. Had Vartanian
been eligible to participate, he would have received an
additional $174,700 in pension benefits.3
II. II.
Although this Court, in Vartanian I, stated that _________
____________________
3 It is unclear whether Vartanian would have qualified for a
lump sum distribution had he chosen the early retirement option.
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Monsanto had "a fiduciary duty not to mislead Vartanian as to the
prospective adoption of a plan under serious consideration," 14
F.3d at 702, it had no occasion to reach the question of what
exactly constitutes "serious consideration." The district court
on remand adopted the standard espoused by the Third Circuit in
Fischer v. Philadelphia Elec. Co., 96 F.3d 1533 (3d Cir. _______ ________________________
1996)(Fischer II), cert. denied, 117 S. Ct. 1247 (1997), that _______ ____________
serious consideration obtains when "(1) a specific proposal (2)
is being discussed for purposes of implementation (3) by senior
management with the authority to implement the change." 956 F.
Supp. at 66 (quoting Fischer II, 96 F.3d at 1539). Finding that _______
"[t]he undisputed facts reveal that none of this occurred at
Monsanto until weeks after plaintiff retired," 956 F. Supp. at
66, Judge Ponsor granted Monsanto's motion for summary judgment.
Id. at 67. ___
Monsanto urges us to follow the lead of the district
court and adopt the Fischer II test. Vartanian asks for a more _______
flexible standard loose enough to fit the facts of his case. For
reasons that will be explained, we prefer the Fischer II _______
approach.4
____________________
4 We are aware that some courts of appeals have recognized the
possibility of an affirmative duty to advise a beneficiary of
potential plan changes, regardless of the existence of employee
inquiry. Antweiler v. American Elec. Power Serv. Corp., 3 F.3d _________ _________________________________
986, 991 (7th Cir. 1993); Eddy v. Colonial Life Ins. Co., 919 ____ _______________________
F.2d 747, 750 (D.C. Cir. 1990); but see Pocchia v. NYNEX, 81 F.3d ___ ___ _______ _____
275, 278 (2d Cir.), cert. denied, 117 S. Ct. 302 (1996)("[A] _____________
fiduciary is not required to voluntarily disclose changes in a
benefit plan before they are adopted."). This issue, however, is
not before us.
-8-
A. A.
It has been said that employers who offer benefit plans
wear "two hats," because of the "distinction between an
employer s prerogative to initiate discretionary policy decisions
such as creating, amending, or terminating a particular plan as
compared to its fiduciary responsibilities to administer an
existing plan for the benefit and interests of its participant-
employees." Drennan v. General Motors Corp., 977 F.2d 246, 251 _______ ____________________
(6th Cir. 1992). When a prospective change in a benefit plan
will adversely impact some or all plan participants, tension
often arises between the employer s fiduciary obligations to its
employees and its institutional desire to keep its internal
deliberations confidential. This conflict is, in many respects,
an inherent feature of ERISA.5 As one district court has
observed, "[w]hen acting on behalf of the pension fund, there is
no doubt that [the employer] must act solely to benefit
participants and beneficiaries. However, . . . . the mere fact
that a company has named itself as pension plan administrator or
trustee does not restrict it from pursuing reasonable business
behavior . . . ." Sutton v. Weirton Steel Div. of Nat'l Steel ______ __________________________________
Corp., 567 F. Supp. 1184, 1201 (N.D.W.Va.), aff'd, 724 F.2d 406 _____ _____
____________________
5 The conflict has generated a fair amount of scholarly comment.
See Mary O. Jensen, Separating Business Decisions and Fiduciary ___ ____________________________________________
Duty in ERISA Litigation?, 10 BYU J. Pub. L. 139 (1996); Steven __________________________
Davi, To Tell the Truth: An Analysis of Fiduciary Disclosure __________________________________________________________
Duties and Employee Standing to Assert Claims under ERISA, 10 St. _________________________________________________________
John's J. Legal Comment. 625 (1995); Edward E. Bintz, Fiduciary _________
Responsibility under ERISA: Is There Ever a Fiduciary Duty to _________________________________________________________________
Disclose?, 54 U. Pitt. L. Rev. 979 (1993). _________
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(4th Cir. 1983). We are called upon in this case to delineate
the point at which one form of reasonable employer behavior,
namely the confidential consideration of an employee severance
proposal, is overbalanced by the corresponding fiduciary duty
imposed by ERISA.
Early decisions grappling with the employer's duties in
this context focused mainly on the extent of the cause of action
engendered by an employer's material misrepresentations regarding
prospective changes in plan benefits. See Maez v. Mountain ___ ____ ________
States Tel. & Tel., Inc., 54 F.3d 1488 (10th Cir. 1995); ____________________________
Vartanian I, 14 F.3d at 703; Fischer v. Philadelphia Elec. Co., _________ _______ ______________________
994 F.2d 130 (3d Cir. 1993)(Fischer I); Berlin v. Michigan Bell _______ ______ _____________
Tel. Co., 858 F.2d 1154 (6th Cir. 1988). As a consensus on that ________
issue developed, attention began to shift to the question of when
the consideration of a change in benefits reached a point of
seriousness sufficient to trigger a fiduciary duty of disclosure.
See Hockett v. Sun Co., Inc., 109 F.3d 1515, 1522-24 (10th Cir. ___ _______ _____________
1997); Muse v. I.B.M., 103 F.3d 490, 493-94 (6th Cir. 1996), ____ ______
cert. denied, 117 S. Ct. 1844 (1997); Fischer II, 96 F.3d at _____________ _______
1538-41.
Vartanian urges us to reject the Fischer II test, _______
ostensibly because it is too deferential to an employer's
corporate interests. Citing Varity Corp. v. Howe, 116 S. Ct. ____________ ____
1065 (1996), Vartanian advocates a more diffuse test of when
corporate deliberations achieve the level of "serious
consideration." But he fails to suggest much by way of content
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for his proposed test. It is true that Varity Corp. reaffirms ____________
the common law principle that a fiduciary must discharge its
duties "with respect to a plan solely in the interest of the
participants and beneficiaries." 116 S. Ct. at 1074 (quoting
ERISA 404(a), 29 U.S.C. 1104(a)). Varity Corp.'s relevance to ____________
the facts of this case, however, is questionable. In Varity ______
Corp., the employer deliberately misled its employees about the _____
actuarial soundness of a benefit plan to induce them to transfer
to a new division which had been tacitly created for the purpose
of consolidating the company's money losing ventures. Id. at ___
1068-70. Because of the deception, the Court determined that it
"need not reach the question of whether ERISA fiduciaries have
any fiduciary duty to disclose truthful information on their own
initiative, or in response to employee inquiries." Id. at 1075. ___
Vartanian proposes that, in the alternative, we adopt
the multiple factors test used by the Second Circuit to analyze
the materiality of an employer's misleading statements in Ballone _______
v. Eastman Kodak Co., 109 F.3d 117, 125 (2d Cir. 1997). These __________________
factors include "[h]ow significantly [the false] statement
misrepresent[ed] the present status of internal deliberations
regarding future plan changes, the special relationship of trust
and confidence between a plan fiduciary and beneficiary, . . .
and the specificity of the assurance." Id. (citations omitted). ___
Ballone, however, is also inapposite. Although the district _______
court in Ballone, like the district court here, dismissed ERISA _______
claims because of the lack of any evidence of "serious
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consideration," 109 F.3d at 122, the complaint in Ballone _______
alleged that the employer falsely informed the inquiring
plaintiff that the company had decided not to offer an early
retirement plan for at least two years. Id. at 121. It seems ___
reasonable that where an allegation of positive misrepresentation
is involved, that "aspect of the assurance can render it material
regardless of whether future changes are under consideration at
the time the misstatement is made." Id. at 124. We are not here ___
presented with facts that suggest a deliberate attempt on
Monsanto's part to affirmatively mislead Vartanian, and therefore
have no occasion to consider whether we would apply Ballone in an _______
appropriate case.
It is true that in considering the scope of ERISA
fiduciary duties, we are counseled "to apply common-law trust
standards [while] 'bearing in mind the special nature and purpose
of employee benefit plans.'" Varity Corp., 116 S. Ct. at 1075 ____________
(quoting H.R. Conf. Rep. No. 93-1280, at 302, 3 Legislative
History of the Employee Retirement Income Security Act of 1974 at
4569 (1976)). The common law impresses on a trustee the duty to
give a beneficiary "upon his request at reasonable times complete
and accurate information as to the nature and amount of the trust
property . . . ." Restatement (Second) of Trusts 173 (1957).
"[T]he beneficiary is always entitled to such information as is
reasonably necessary to enable him to enforce his rights under
the trust or to prevent or redress a breach of trust." Id. at ___
cmt. c. Any application of trust principles in an ERISA context
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must, however, as the Supreme Court cautioned in Varity Corp., be ____________
tempered by a scrupulous regard for the delicate balance Congress
struck in enacting ERISA.
[C]ourts may have to take account of
competing congressional purposes, such as
Congress' desire to offer employees enhanced
protection for their benefits, on the one
hand, and, on the other, its desire not to
create a system that is so complex that
administrative costs, or litigation expenses,
unduly discourage employers from offering . .
. benefit plans in the first place.
Varity Corp., 116 S. Ct. at 1070. ____________
The Third Circuit, in our view, carefully reconciled
these competing concerns in shaping the Fischer II test. _______
The concept of "serious consideration"
recognizes and moderates the tension between
an employee's right to information and an
employer's need to operate on a day-to-day
basis. Every business must develop
strategies, gather information, evaluate
options, and make decisions. Full disclosure
of each step in this process is a practical
impossibility. Moreover . . . large
corporations regularly review their benefit
packages as part of an on-going process of
cost-monitoring and personnel management. . .
. A corporation could not function if ERISA
required complete disclosure of every facet
of these on-going activities. . . .
Equally importantly, serious consideration
protects employees. Every employee has a
need for material information on which that
employee can rely in making employment
decisions. Too low a standard could result
in an avalanche of notices and disclosures. .
. . [T]ruly material information could easily
be missed if the flow of information was too
great. The warning that a change in benefits
was under serious consideration would become
meaningless if cried too often.
Fischer II, 96 F.3d at 1539. _______
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The Third Circuit concluded that "[s]erious
consideration of a change in plan benefits exists when (1) a
specific proposal (2) is being discussed for purposes of
implementation (3) by senior management with the authority to
implement that change." Id.6 Notably important to the Fischer ___ _______
II court was the effect that a less definite standard might have
on the availability of employee severance packages.
Finally, as a matter of policy, we note that
imposing liability too quickly for failure to
disclose a potential early retirement plan
could harm employees by deterring employers
from resorting to such plans. Our
formulation avoids forcing companies into
layoffs, the primary alternative to
retirement inducements. This further
protects the interests of workers.
Id. at 1541 (internal citations omitted). ___
Those of our sister circuit courts that have addressed
the issue have generally followed the reasoning of Fischer II. _______
The Tenth Circuit recently applied the Fisher II test in holding ______
that "serious consideration" of a severance plan did not occur
until a meeting was convened that "gathered together the heads of
all departments related to employee benefits" to discuss a
specific proposal. Hockett, 109 F.3d at 1524. In Hockett, the _______ _______
Sun Company's vice president of human resources was contacted by
the plaintiff-employee regarding the possibility of an early
____________________
6 We add a gloss to the Fischer II court's formulation by way of _______
clarification. To prevail under the Fischer II test, a plaintiff _______
must show that a specific proposal under serious consideration
would have affected him. This we recognize is implicit in _________________________
Fischer II and the rules governing ERISA standing, but to avoid _______
any misunderstanding it is best said explicitly.
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retirement program. Id. at 1519. The vice president did not ___
respond to the employee's inquiry, despite the fact that he knew
that the subject was being discussed by senior management. Id. ___
at 1521. Because of the employer's frequent need to review
retirement plans, the Hockett panel determined that the "Fischer _______ _______
II formulation appropriately narrows the range of instances in
which an employer must disclose, in response to employees'
inquiries, its tentative intentions regarding an ERISA plan."
Id. at 1523. ___
Although the Sixth Circuit's opinion in Muse v. I.B.M. ____ ______
did not directly refer to Fischer II, it advocated a similar _______
test, holding that "serious consideration" exists only when "a
company focuses on a particular plan for a particular purpose."
103 F.3d at 494. The Muse court was guided by what it found to ____
be Congress's main object in imposing disclosure requirements on
ERISA fiduciaries, namely, 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.'" Id. at 494 (alteration in original)(quoting H.R. ___
Rep. No. 533, at 11 (1974), reprinted in 1974 U.S.C.C.A.N. 4639,
4649). Because an early disclosure requirement would "increase
the likelihood of confusion on the part of the beneficiaries
[and] . . . management would be unduly burdened by the continued
uncertainty of what to disclose and when to disclose it," the
court required the existence of a "particular plan for a
particular purpose." Id. It also found that "there [was] no ___
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convincing evidence that suggest[ed] that IBM studied the
possibility of enhanced benefit plans for any reason other than
to gain a general appreciation of its options." Id. ___
As we have already indicated, our embrace of the
Fischer II approach is influenced by similar appreciation of the _______
conflicting interests that ERISA seeks to reconcile. A primary
concern of Congress in enacting ERISA was not to discourage
employers from offering employee pensions. "We know that new
pension plans will not be adopted and that existing plans will
not be expanded and liberalized if the costs are made overly
burdensome, particularly for employers who generally foot most of
the bill." 120 Cong. Rec. 29,945 (1974)(statement of Senator
Long)(reprinted in Jensen, supra note 5, at 155-56). Equally _____
important, the practical constraints of a severance program, and
the very purpose for which it is designed, counsel delaying
disclosure of a company's plans until a proposal becomes
sufficiently firm. "Changing circumstances, such as the need to
reduce labor costs, might require an employer to sweeten its
severance package, and an employer should not be forever deterred
from giving its employees a better deal merely because it did not
clearly indicate to a previous employee that a better deal might
one day be proposed." Swinney v. General Motors Corp., 46 F.3d _______ ____________________
512, 520 (6th Cir. 1995). Indeed, it is not implausible that
imposing a threshold lower than that of Fischer II would _______
frustrate the very purposes for which a severance program
typically is designed: to reduce a workforce by voluntary means.
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See Pocchia, 81 F.3d at 279 ("Employees simply would not leave if ___ _______
they were informed that improved benefits were planned if
workforce reductions were insufficient.").
At the same time, the fiduciary concerns underlying
ERISA are not to be ignored. "After all, ERISA's standards and
procedural protections partly reflect a congressional
determination that the common law of trusts did not offer
completely satisfactory protection." Varity Corp., 116 S. Ct. at ____________
1070. ERISA's primary goal is to "protect[] employee pensions
and other benefits by . . . setting forth certain general
fiduciary duties applicable to the management of both pension and
nonpension benefit plans." Id. The Fischer II court was ___ _______
therefore careful to emphasize that "this formulation does not
turn on any single factor; the determination is inherently fact-
specific. Likewise, the factors themselves are not isolated
criteria; the three interact and coalesce to form a composite
picture of serious consideration." Fischer II, 96 F.3d at 1539 _______
(citation omitted).
Thus, "[a] specific proposal can contain several
alternatives, and the plan as finally implemented may differ
somewhat from the proposal. What is required, consistent with
the overall test, is a specific proposal that is sufficiently
concrete to support consideration by senior management for the
purpose of implementation." Id. at 1540. Correspondingly, while ___
"[c]onsideration by senior management is . . . limited to those
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executives who possess the authority to implement the proposed
change," id., this prong ___
should not limit serious consideration to
deliberations by a quorum of the Board of
Directors . . . . It is sufficient for this
factor that the plan be considered by those
members of senior management with
responsibility for the benefits area of the
business, and who ultimately will make
recommendations to the Board regarding
benefits operation.
Id. This emphasis on flexibility permits a trial court to apply ___
the three-pronged standard without slighting the core fiduciary
principle that "[l]ying is inconsistent with the duty of loyalty
owed by all fiduciaries and codified in section 404(a)(1) of
ERISA." Varity Corp., 116 S. Ct. at 1074 (alteration in _____________
original) (quoting Peoria Union Stock Yards Co. Retirement Plan ______________________________________________
v. Penn Mut. Life Ins. Co., 698 F.2d 320, 326 (7th Cir. 1983)). _______________________
Our primary reason for emphasizing the Fischer II _______
test's flexibility is to remove any temptation that might exist
to deliberately evade one of its three factors as a means of
subverting ERISA's fiduciary commands. If it is clear from the
totality of the facts that a severance package is, in fact, under
serious consideration, we do not think that clever manipulation
of the Fischer II test should relieve a wrongdoer from ERISA _______
liability. The ultimate question is whether "a composite picture
of serious consideration" has developed. Fischer II, 96 F.3d at _______
1539. We recognize, of course, that this cautionary note is
directed to the exceptional case. Thus, in the typical case,
where there is no evidence of a deliberate attempt to circumvent
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ERISA, a straightforward application of the Fischer II test is _______
all that is required.
We thus conclude, modifying Fischer II, that serious _______
consideration of a change in plan benefits exists when (1) a
specific proposal which would affect a person in the position of
the plaintiff (2) is being discussed for purposes of
implementation (3) by senior management with the authority to
implement that change.
B. B.
Turning to the facts of this case, it is clear that no
early retirement plan affecting Vartanian was under serious
consideration by Monsanto's senior management on April 21, 1991,
the day when Vartanian began his final inquiries. President
Potter had begun conferring with his senior managers about the
possibility of a corporate restructuring. He had asked for an
estimate of the cost that Monsanto would incur if 400 employees
were laid off. But these corporate ruminations, precipitated by
the downturn in Monsanto's business, did not trigger any
contemporaneous duty of disclosure.
First, there was no specific proposal under
consideration. At most, there was a suggestion that an enhanced
severance package might be one way to deal with the company's
fiscal woes. Second, although Potter was certainly among those
individuals qualifying as "senior management with the authority
to implement the change," there is no evidence that anything of
substance was, in fact, being discussed for implementation. The
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ideas that were floating among top management were only that --
ideas. As a result, the answers that Vartanian received in March
and April of 1991, that no material changes affecting his benefit
plan were being considered, were not misrepresentations.
Potter received an endorsement on May 7, 1991, of his
restructuring proposal from the Monsanto Executive Management
Committee. Nine days later, he ordered the director of employee
benefits to begin planning a severance program for those
employees who would be displaced. Not until the May 28, 1991
meeting of senior managers was it proposed to extend the early
retirement plan to all Monsanto employees. This is the point at
which "the three [factors] interact[ed] and coalesce[d] to form a
composite picture of serious consideration," giving rise to a
fiduciary duty of disclosure. Fischer II, 96 F.3d at 1539.7 _______
Conclusion Conclusion
Vartanian's additional arguments on appeal are of no
merit.8 While we recognize that the outcome of this protracted
____________________
7 It appears that Monsanto went further than we might require.
After serious consideration had occurred, two employees who had
announced their intention to retire without inquiring about
possible changes in their retirement plans were retroactively
paid the value of the benefits enhancement.
8 Vartanian asserts error in the district court's grant of
summary judgment to Monsanto on his claim under 510 of ERISA,
which makes it unlawful for any person to discriminate against a
plan participant for purposes of interfering with any right under
a benefit plan. Vartanian's assertion, however, depends upon a
finding of a material misrepresentation.
He also suggests that, because a determination of "serious
consideration" is fact-specific, it can only be resolved by a
jury. At the summary judgment stage, however, only disputes of
material fact need be resolved by a fact-finder. Fed. R. Civ. P.
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litigation is an unhappy one for Vartanian, benefit plan rules
and practices "inevitably hurt 'some individuals who find
themselves on the wrong side of the line.'" Palino, 664 F.2d at ______
859 (quoting Rueda v. Seafarers Int'l Union, 576 F.2d 939, 942 _____ ______________________
(1st Cir. 1978)). While it may be small comfort, Vartanian's
perseverance has resulted in the clarification of an important
area of ERISA law in this circuit.
For the foregoing reasons, the judgment of the district
court is affirmed. Costs to appellees. affirmed ________
____________________
56(c).
Finally, Vartanian asserts error in the district court's grant
of a motion to strike his jury demand. Because we affirm the
district court's grant of summary judgment, we need not reach the
issue of Vartanian's failure to file a timely notice of appeal.
See Smith v. Barry, 502 U.S. 244, 248 (1992)(noncompliance is ___ _____ _____
jurisdictional and fatal).
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Document Info
Docket Number： 97-1556
Filed Date： 12/16/1997
Precedential Status： Precedential
Modified Date： 9/21/2015