Taylor v. Peoples Natural Gas Co. , 49 F.3d 982 ( 1995 )

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
3-9-1995
Taylor v Peoples Nat Gas Co
Precedential or Non-Precedential:
Docket 94-3109
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________________
NO. 94-3109
___________________
THOMAS H. TAYLOR,
Appellant
v.
THE PEOPLES NATURAL GAS COMPANY,
a subsidiary of Consolidated Natural Gas Company;
SYSTEM PENSION PLAN OF CONSOLIDATED NATURAL GAS COMPANY,
Number 001; THE ANNUITIES AND BENEFITS COMMITTEE,
the plan administrator,
Appellees
______________________________________
On Appeal From the United States District Court
For the Western District of Pennsylvania
(D.C. Civ. No. 92-cv-00394)
_______________________________________
Argued: September 19, l994
Before: BECKER, COWEN, Circuit Judges, and
POLLAK, District Judge.*
(Filed: March 9, l995)
THOMAS P. COLE, II, ESQUIRE (ARGUED)
15 East Otterman Street
Greensburg, PA 15601-2591
Attorney for Appellant
P. JEROME RICHEY, ESQUIRE (ARGUED)
PHILIP J. WEIS, ESQUIRE
MARK T. PHILLIS, ESQUIRE
* Honorable Louis H. Pollak, United States District Judge
for the Eastern District of Pennsylvania, sitting by designation.
Buchanan Ingersoll
Professional Corporation
58th Floor, USX Tower
600 Grant Street
Pittsburgh, PA 15219
JOYCE C. DAILEY, ESQUIRE
Peoples Natural Gas Company
625 Liberty Avenue
Pittsburgh, PA 15222
Attorneys for Appellees
ROBERT E. WILLIAMS, ESQUIRE
DOUGLAS S. McDOWELL, ESQUIRE
McGuiness & Williams
1015 Fifteenth Street, N.W.
Washington, DC 20005
Attorneys for Amicus Curiae
Equal Employment Advisory Council
______________________________
OPINION OF THE COURT
_______________________________
BECKER, Circuit Judge.
This appeal arises out of an ERISA action brought by
Thomas H. Taylor, a former employee of Peoples Natural Gas
Company ("PNG"), against the members of the Annuities and
Benefits Committee ("the defendants"), which is the plan
administrator of PNG's pension plan. The district court granted
summary judgment for the defendants. The gravamen of Taylor's
claim is that statements regarding the retroactivity of the
pension plan's early retirement incentive program, made to him by
PNG's Supervisor of Employee Benefits, John Burgunder, who was
not a member of the Annuities and Benefits Committee, constituted
a breach of the defendants' fiduciary obligation to communicate
complete and correct material information to plan participants
regarding their status and options under an employee benefit
plan. The Equal Employment Advisory Council has filed an amicus
curiae brief in support of the defendants.
Because Burgunder's statements form the basis of
Taylor's suit against the defendants and Taylor has not sued
Burgunder, we first, as a matter of logic, address the important
question presented -- whether a plan administrator is liable for
statements made by individuals who have been selected as non-
fiduciary agents by the plan administrator to assist it in
discharging its fiduciary obligation to administer a plan, even
though such individuals are formally employees of the plan
sponsor, who is not a fiduciary. We answer this question in the
affirmative, and conclude that the defendants are responsible for
any material misstatements made by Burgunder to Taylor regarding
possible changes in PNG's pension plan since, in counseling
Taylor, Burgunder was acting, at a minimum, within his apparent
authority as an agent of the defendants. We will, however,
affirm the judgment because the statements allegedly made by
Burgunder do not, as a matter of law, constitute a
misrepresentation of a material fact.
I.
PNG sponsors a pension plan along with its parent
corporation, Consolidated Natural Gas Company ("CNG"). The named
fiduciary and plan administrator of the pension plan is the
Annuities and Benefits Committee, which is made up of employees
of both CNG and PNG. The members of this committee are the
relevant defendants in this action.1 Burgunder was not a member
of the Annuities and Benefits Committee.
During 1988, PNG hired several outside consulting firms
to conduct efficiency studies to examine ways to decrease costs
and increase the efficiency of the company's operations. In
connection with these studies, PNG considered several downsizing
options, including the offer of an early retirement incentive
program through the company's pension plan. Taylor, who was
employed during this period as a general manager in PNG's
Information System department, participated in the efficiency
studies and submitted a report to his boss, Scotty Amos, in which
he concluded that, if certain changes were implemented, Taylor's
department could operate with six fewer employees. In his report
1
Taylor also has brought a claim against PNG, alleging a
breach of its fiduciary obligations under ERISA. The Magistrate
Judge granted PNG's motion for summary judgment on this claim,
concluding that, under the circumstances, PNG was not subject, in
its capacity as plan sponsor, to ERISA's fiduciary obligations.
We agree. While "ERISA allows employers to wear two hats" and
act both as plan sponsor and plan administrator, an employer can
elect to wear only its plan sponsor "hat" and may designate,
pursuant to ERISA § 402(a)(1), 29 U.S.C.A. § 1102(a)(1) (1985), a
separate entity as plan administrator. Fischer v. Philadelphia
Electric Co., 994 F.2d 130, 133 (3d Cir.), cert. denied 114 S.
Ct. 622 (1993) (internal quotation marks omitted). PNG has made
such an election and has designated the Annuities and Benefits
Committee as plan administrator. Given this election, PNG is not
subject, in its capacity as employer/plan sponsor, to ERISA's
fiduciary obligations. See id., 994 F.2d at 133 ("As an
employer, neither [the plan sponsor] nor its business decision to
offer an early retirement program were subject to ERISA's
fiduciary duties."). Thus, Taylor's claim of fiduciary breach is
properly limited in this case to the plan administrator, the
Annuities and Benefits Committee.
Taylor suggested an early retirement incentive plan as a possible
method to reduce his department's manpower. During the latter
portion of 1988, Taylor, who started work at PNG in 1959, began
to consider retirement, while he was aware that PNG was,
consistent with his suggestion, considering an early retirement
incentive program as a downsizing option.
During the first two months of 1989, Taylor spoke to
Burgunder about whether PNG would adopt an early retirement
incentive program and, if such a plan were enacted, whether it
would be made retroactive to encompass employees retiring before
the announcement of the program. While, as we have noted,
Burgunder was not a member of the Annuities and Benefits
Committee, the defendants concede that he was authorized "to
advise employees of their rights and options under the Pension
Plan." Appellees Br. at 21. Moreover, it was generally
understood by PNG employees that Burgunder was the person with
whom plan participants should speak regarding possible changes to
the pension plan. Taylor represents that during one particular
discussion, Burgunder told him that he believed that, should an
early retirement program be offered, it might apply
retroactively. More specifically, Taylor stated:
During and prior to the March 1st date I had
had discussions with Mr. Burgunder relative
to rumors and possible studies that may have
been going on that could lead to an early
retirement program, and it was during one of
those discussion points where I talked with
Mr. Burgunder about other people that were
retiring, and he gave me the -- he told me at
that time that he believed that if there
would be any early retirement programs
offered in 1989, that they would make it
retroactive to people retired from January
1st, until such time as they might offer the
program.
App. at 8b-9b. Taylor continued:
I can't recall exactly what his conversations
were about the retroactivity other than he
believed that if an early retirement program
was announced or it was offered -- that might
be a better word -- it might be retroactive
to these people that we were talking about.
App. at 33b.
Following these conversations, on November 30, 1988,
Taylor tendered a written announcement of his intention to
retire:
Please accept my request for permission to
retire from active employment effective March
1, 1989. . . . I would also like to change my
retirement date should a special retirement
package be proposed or planned on or before
3-1-89.
App. at 34a. Taylor in fact retired on March 1, 1989. On August
10, roughly five months later, the Annuities and Benefits
Committee announced that an early retirement program had been
adopted by PNG's Board of Directors and would be available for
employees retiring between September 1, 1989 and November 1,
1989. This program was not made retroactive to employees -- such
as Taylor -- retiring prior to September 1, 1989.
Following this announcement, Taylor brought suit
against the plan administrator contending that the statements
made to him by Burgunder regarding the possible retroactive
application of the early retirement program constituted a
misrepresentation by an ERISA plan fiduciary. The parties
consented to have this case adjudicated by a Magistrate Judge, 28
U.S.C.A. § 636(c) (1993), who concluded that the statements made
by Burgunder to Taylor did not constitute a misrepresentation,
and hence the defendants had not breached their fiduciary
obligation. He therefore granted the defendants' motion for
summary judgment.
On this appeal of the Magistrate Judge's order,
authorized by 28 U.S.C.A. § 636(c)(3) (1993), the defendants ask
us to affirm on the ground that Burgunder was not acting on
behalf of the plan administrator when speaking with Taylor about
possible changes in the pension plan or, alternatively, on the
basis of the Magistrate Judge's reasoning that there was no
misrepresentation as a matter of law. In reviewing an order
granting summary judgment we exercise plenary review, applying
the same standard that governed the district court. That
standard provides that summary judgment should be rendered if the
evidence is such that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment
as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248, 106 S. Ct. 2505, 2510 (1986).
II.
A.
The members of the Annuities and Benefits Committee,
the plan administrator of PNG's pension plan, are fiduciaries,
required to "discharge [their] duties with respect to [the] plan
solely in the interest of the participants and beneficiaries."2
ERISA § 404(a)(1), 29 U.S.C.A. § 1104(a)(1) (1986). We addressed
the scope of this fiduciary obligation under a similar set of
circumstances in Fischer v. Philadelphia Electric Co., 994 F.2d
at 130. There, employees of the Philadelphia Electric Company
("PECO") had approached PECO's benefits counselors and questioned
them about whether any early retirement incentive plan was being
considered. Although PECO was considering an early retirement
incentive plan, the benefits counselors, acting pursuant to
explicit instructions from PECO's senior management, informed the
plan participants that they had no knowledge of any such plan.
The plaintiffs, plan participants who retired before the
announcement of the early retirement incentive pension plan,
alleged that PECO had breached its fiduciary duties under ERISA
by making affirmative material misrepresentations regarding
PECO's pension plan. The action against PECO was grounded on its
alleged violation of fiduciary obligations in its capacity as
2
As noted above, the members of the Annuities and Benefits
Committee are the relevant defendants in this action, and Taylor
has alleged a fiduciary breach on the part of that Committee for
statements made by Burgunder, PNG's Supervisor of Employee
Benefits. It is therefore necessary to analyze accurately under
appropriate legal doctrine Taylor's appeal of the magistrate
judge's dismissal of this action. We acknowledge that Taylor has
also alleged a fiduciary breach on the part of PNG, a claim upon
which the magistrate judge chose to focus in his memorandum
opinion and which this court has disposed of in note 1. The
disposition of this claim does not, however, obviate the need to
properly address Taylor's parallel claim of fiduciary breach on
the part of the Annuities and Benefits Committee.
plan administrator.3 The district court granted summary judgment
for PECO and the plaintiffs appealed.
The Fischer panel began its analysis by recognizing
that well established case law provides that plan administrators
have a fiduciary obligation not to affirmatively misrepresent
material facts to plan participants. Fischer, 994 F.2d at 135
(citing Eddy v. Colonial Life Ins. Co., 919 F.2d 747, 751 (D.C.
Cir. 1990) ("This duty to communicate complete and correct
material information about a beneficiary's status and options is
not a novel idea.")); see also Bixler v. Central Penn. Teamsters
Health-Welfare Program, 12 F.3d 1292, 1300 (3d Cir. 1993)
(recognizing that plan administrators have "an obligation to
convey complete and accurate information material to the
beneficiary's circumstances"). The panel restated this
obligation in the context of fiduciaries who counsel plan
participants regarding the possible adoption of amendments to a
plan:
we hasten to add that 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. Rather, its obligation
is to answer participants' questions
forthrightly, a duty that does not require
the fiduciary to disclose its internal
deliberations nor interfere with the
substantive aspects of the collective
bargaining process. A plan administrator may
not make affirmative material
misrepresentations to plan participants about
changes to an employee pension benefits plan.
3
See supra n.1.
Put simply, when a plan administrator speaks,
it must speak truthfully.
Fischer, 994 F.2d at 135 (internal quotation marks and citations
omitted).
Given this obligation, PECO contended that the
statements made by the benefits counselors were not affirmative
misrepresentations, since company officials had not told them of
the discussions taking place among senior management regarding
the contemplated adoption of an early retirement incentive
program. The Fischer panel rejected this argument and reversed
the district court's grant of summary judgment, concluding that,
given the facts alleged, the plan administrator was responsible
for statements made by the benefits counselors, and that PECO,
which was plan administrator as well as plan sponsor, had
therefore breached its fiduciary obligation to not affirmatively
misrepresent material information to plan participants:
PECO argues that these communications cannot
be characterized as "affirmative
misrepresentations" because "when the
benefits counselors . . . stated that they
knew of no [early retirement] plan, their
representations were correct." . . . This
explanation will not do, for the fiduciary
obligations owed to the plan participants
were owed by PECo as plan administrator.
These obligations cannot be circumvented by
building a "Chinese wall" around those
employees on whom plan participants
reasonably rely for important information and
guidance about retirement.
Fischer, 994 F.2d at 135 (emphasis omitted).
B.
While acknowledging that they had a fiduciary
obligation as plan administrator not to materially misrepresent
information regarding possible changes in PNG's pension plan, the
present defendants contend that they have not violated this
obligation since Burgunder was not a member of the Annuities and
Benefits Committee and was not otherwise a fiduciary. The
defendants attempt to distinguish this case from Fischer, where
the misrepresentations were allegedly made by benefits counselors
who were the employees of the plan administrator, PECO. In this
action, the Annuities and Benefits Committee, and not PNG, is the
named fiduciary, and hence, the defendants assert, they cannot be
liable for any affirmative misrepresentations made to plan
participants by Burgunder, PNG's employee, about possible changes
to PNG's pension plan. While we agree that Burgunder was not a
member of the Annuities and Benefit Committee, and otherwise not
a fiduciary of the plan, we cannot agree with the defendants that
Burgunder was not acting on their behalf when speaking with
Taylor.
The defendants concede that Burgunder had actual
authority, as Supervisor of Employee Benefits, to advise
employees of their rights and options under the plan, prepare
reports concerning participants' benefits, and calculate the
costs of alternative plan amendments on behalf of the plan
administrator. Appellees Br. at 21. Given that Burgunder's
activities are limited to these administrative ministerial
functions, we agree with the defendants that Burgunder is not a
fiduciary. Department of Labor Regulation § 2509.75-8, 29 C.F.R.
§ 2509.75-8, Q & A D-2 provides that such individuals, whose
activities are limited "within a framework of policies,
interpretations, rules, practices, and procedures made by other
persons, fiduciaries with respect to the plan," cannot be
individually liable as fiduciaries under ERISA, since they fail
to exercise "the discretionary authority or discretionary
control" over the plan required for the direct imposition of
fiduciary liability. See ERISA § 3(21)(A), 29 U.S.C.A.
§ 1002(21)(A) (West Supp. 1993).
While Burgunder is not himself a fiduciary with respect
to the plan (and he is not a defendant in this action), he did
function, under the regulations, as a non-fiduciary agent of the
defendants, assisting them in discharging their authority and
responsibility, as plan administrator, to "control and manage the
operation and administration of the plan." ERISA § 402(a)(1), 29
U.S.C.A. § 1102(a)(1) (1986). While Burgunder is formally the
employee of plan sponsor PNG, he performed his activities for the
plan on behalf of the plan administrator defendants, and not on
behalf of the plan sponsor. The conclusion that Burgunder
performed these tasks on behalf of the plan administrator, the
named fiduciary with respect to the plan, is clear from the
regulations. These provide that "[i]n discharging fiduciary
responsibilities, a fiduciary with respect to a plan may rely on
. . . persons who perform purely ministerial functions for such
plan," such as "advising participants of their rights and options
under the plan." DOL Reg. § 2509.75-8, 29 C.F.R. § 2509.75-8, Q
& A D-2 & FR-11 (emphasis added); see also 2 JEFFREY D. MAMORSKY,
EMPLOYEE BENEFITS LAW: ERISA AND BEYOND § 12.06[4] (1993) (recognizing
that, pursuant to DOL Reg. § 2509.75-8, a committee, acting as
plan administrator, can "select[] agents to perform ministerial
functions").
The defendants concede, as we have noted, that
Burgunder is governed by this regulation, and that he had actual
authority as the Supervisor of Employee Benefits to "advise
employees of their rights and options under the Pension Plan."
Appellees Br. at 21. This authority originates from the
defendants, the plan administrator, and not from the plan
sponsor, for the plan administrator is the entity with the
fiduciary obligation to "control and manage the operation and
administration of the plan." ERISA § 402(a)(1), 29 U.S.C.A. §
1102(a)(1) (1986). In contrast, PNG, the plan sponsor, is not a
fiduciary and correspondingly has no duty to administer the plan.
Thus, under the applicable regulations, Burgunder was acting as a
non-fiduciary agent of the defendants (the plan administrator)
and not PNG (the plan sponsor) in "advising participants of their
rights and options under the plan." Department of Labor
Regulation § 2509.75-8, 29 C.F.R. § 2509.75-8, Q & A D-2.
This conclusion is consistent with our reasoning in
Fischer, where we held that a plan administrator violates its
"fiduciary obligations owed to the plan participants" when "those
employees on whom plan participants reasonably rely for important
information and guidance about retirement" make material
misstatements regarding possible changes to a company's pension
plan. Fischer, 994 F.2d at 135. The fact that the benefits
counselors who made the misrepresentation in Fischer were the
employees of PECO does not distinguish that case from ours. The
employees in Fischer were acting as the agents of PECO in its
capacity as plan administrator, not as employer/plan sponsor.
See id. at 133 ("As an employer, neither PECo nor its business
decision to offer an early retirement program were subject to
ERISA's fiduciary duties." (internal quotation marks omitted)).
Like the benefits counselors in Fischer, Burgunder was acting to
assist the plan administrator, not the plan sponsor, in
discharging its fiduciary obligation to "control and manage the
operation and administration of the plan." ERISA § 402(a)(1), 29
U.S.C.A. § 1102(a)(1) (1986).
C.
Having concluded that Burgunder was acting on behalf of
the defendants, and not PNG, in performing the functions outlined
above, we must consider whether Burgunder was acting within the
scope of his authority as an agent of the defendants in making
representations to Taylor regarding the possible retroactive
application of plan amendments under consideration by PNG, the
plan sponsor. In making this determination, we are governed by
the law of agency, as developed and interpreted as a matter of
federal common law. See Firestone Tire and Rubber Co. v. Bruch,
489 U.S. 99, 110, 109 S. Ct. 948, 954 (1989) ("[C]ourts are to
develop a federal common law of rights and obligations under
ERISA-regulated plans."); Franchise Tax Board v. Construction
Laborers Vacation Trust, 463 U.S. 1, 25, 103 S. Ct. 2841, 2854,
n.26 (1983) ("``[A] body of Federal substantive law will be
developed by the courts to deal with issues involving rights and
obligations under private welfare and pension plans.'" (quoting
remarks of Sen. Javits at 129 CONG. REC. 29942)); National
Football Scouting, Inc. v. Continental Assurance Co., 931 F.2d
646, 648 (10th Cir. 1991) (examining whether "under the federal
common law of agency" an agent of a plan fiduciary was acting
within his actual or apparent authority).
In this regard, we recognize that implicit in our
holding in Fischer is the assumption that in counseling the plan
participants about possible amendments to the plan, the PECO
benefits counselors were acting within their authority as agents
of the plan administrator. In particular, we read our limitation
of fiduciary liability to "those employees on whom plan
participants reasonably rely for important information and
guidance about retirement" as a legal conclusion that such
individuals operate, at a minimum, within their apparent
authority to provide such information and guidance to plan
participants, on behalf of the plan administrator. The
defendants here admit that Burgunder had actual authority to
"advise[] employees of their rights and options under the Pension
Plan." Appellees Br. at 21. Moreover, it is uncontested that
plan participants reasonably relied on Burgunder for important
information and guidance about retirement. Considering these
facts in light of the entire record, we conclude that, like the
benefits counselors in Fischer, Burgunder was acting within his
authority as an agent of the plan administrator, the members of
the Annuities and Benefits Committee, in counseling plan
participants regarding possible changes in the plan.
Our conclusion also accords with established principles
of apparent authority. It is well settled that apparent
authority (1) "results from a manifestation by a person that
another is his agent" and (2) "exists only to the extent that it
is reasonable for the third person dealing with the agent to
believe that the agent is authorized." RESTATEMENT (SECOND) OF AGENCY
§ 8 cmts. a & c (1958). In our recent opinion in American
Telephone & Telegraph v. Winback & Conserve Program, ___ F.3d
___, 1994 U.S. App. LEXIS 34398, 1994 WL 685911 (3d Cir. Dec. 9,
1994), applying the concept of apparent authority under the
federal common law of agency, we held that "[a]pparent authority
arises in those situations where the principal causes persons
with whom the agent deals to reasonably believe that the agent
has authority. . . ." Id. at *64, 1994 WL 685911 at *18
(internal quotation marks omitted).
It is uncontroverted that both elements necessary for
the existence of apparent authority are present in this case.
First, the defendants' undisputed vesting of Burgunder with the
authority to "advise employees of their rights and options under
the Pension Plan" clearly constitutes a manifestation that he was
their agent.
Second, the plan participants, such as Taylor,
reasonably believed that Burgunder specifically had the authority
to counsel plan participants about possible amendments to the
plan. Taylor actually believed that Burgunder had the authority
to counsel plan participants about possible changes in the plan.
App. at 41b ("I accepted his comments because he's the key person
in the retirement process at Peoples Natural Gas at the time I
retired."). Moreover, this belief was reasonable in that the
evidence demonstrates that plan participants generally considered
Burgunder the person to speak with regarding possible changes in
retirement benefits. In light of this reasonable belief about
what information Burgunder was able to provide, the defendants'
authorization of Burgunder to be their representative to plan
participants, and the defendants' lack of effort to announce any
limits to the scope of Burgunder's authority, it was a short and
reasonable step for plan participants, such as Taylor, to believe
that Burgunder not only was able, but indeed possessed the
specific authority, to counsel them about possible amendments to
the plan.
We conclude, therefore, that Burgunder was acting, at a
minimum, with apparent authority as agent of the defendants in
counseling Taylor regarding possible changes in the company's
pension plan. Given this authority, the defendants will be
liable for any affirmative material misrepresentations made by
Burgunder concerning the possible retroactive application of the
plan's early retirement incentive plan.
D.
We therefore are presented with the question whether
Burgunder's alleged statement to Taylor that "he believed that if
an early retirement program was . . . offered . . . it might be
retroactive," app. at 33b (emphasis supplied), constituted a
material misrepresentation. We agree with the Magistrate Judge
that, as a matter of law, no reasonable fact-finder could
conclude that Burgunder's statement constituted a
misrepresentation.4
It is uncontested that at the time of Burgunder's
statement to Taylor, the questions whether PNG would enact an
early retirement incentive plan, and whether it would apply
retroactively, were both yet undecided by PNG. Given that the
plan sponsor, PNG, had yet to make a final decision regarding the
prospective amendment, we conclude that the defendants did not
violate their fiduciary obligation by merely confirming to Taylor
that the adoption of such an amendment was under consideration
4
In addition to alleging that the defendants
misrepresented material facts regarding the proposed amendment's
retroactivity, Taylor contends that they breached an affirmative
fiduciary duty to inform plan participants when possible
amendments to an employee benefit plan are under serious
consideration by the plan sponsor. While we recognize that in
certain instances a fiduciary has an affirmative obligation to
disclose relevant material information to plan participants
"about which the beneficiary has not specifically inquired,"
Bixler, 12 F.3d at 1300, we do not believe that the facts of this
case present this issue, and therefore we will not address it.
During the time that Taylor made his decision regarding the
effective date of his retirement, he was not ignorant of the fact
that PNG was seriously considering an early retirement incentive
plan. Indeed, Taylor suggested in his own efficiency report that
an early retirement incentive plan be instituted as a way to
reduce his department's manpower, and he was aware through his
discussions with the upper management of PNG that such a plan was
under consideration. Moreover, Taylor discussed with Burgunder,
on multiple occasions, the likelihood of the company's enacting
such an amendment to the plan, and he specifically reserved the
right, in his letter of resignation, to change his retirement
date from March 1, 1989 if such an amendment were enacted before
that time.
and by expressing a reasonable opinion as to the scope of the
possible amendment. The record clearly reflects that Burgunder's
prediction was by all accounts reasonable. Burgunder based his
prediction on two grounds: (1) an outside consultant had
suggested a retroactive early retirement program; and (2) a
member of PNG's board of directors, Mr. Flinn, to whom Burgunder
had talked about the amendment's possible scope, had stated that
he supported making the program retroactive.
Burgunder's alleged statement is a far cry from the
statements made by the benefits counselors in Fischer that "there
was definitely nothing in the planning," when in fact such an
amendment was under serious consideration by company officials.
In contrast, Burgunder's attempt to counsel Taylor by offering
his prediction based on his discussions with a member of PNG's
board of directors was not a misrepresentation.
Taylor conceded that Burgunder's statement was nothing
more than his "best guess as to what may occur should an early
retirement package be adopted." App. at 13a. An honest
statement of belief reasonably grounded in fact does not
constitute a misrepresentation. As Justice Holmes recognized in
another context, "[t]he rule of law is hardly to be regretted,
when it is considered how easily and insensibly word of hope or
expectation are converted by an interested memory into statements
of quality or value when the expectation has been disappointed."
Deming v. Darling, 20 N.E. 107, 148 Mass. 504, 506 (1889).
III.
In sum, we conclude that although the defendants are
responsible for any material misstatements made by Burgunder to
Taylor regarding possible changes in PNG's pension plan, the
statements allegedly made by Burgunder do not, as a matter of
law, constitute a misrepresentation. We will, therefore, affirm
the order of the Magistrate Judge granting the defendants'
request for summary judgment.
__________________________
Thomas H. Taylor v. The Peoples Natural Gas Company
No. 94-3109
Cowen, Circuit Judge, concurring.
I join in Parts I and IID of the majority opinion and
therefore concur as to the judgment in this case. I am unable to
join in Parts IIA-C, however, because I believe that the
majority's opinion sweeps more broadly than is justified under
the facts presented here.
At issue in this case is a statement made by John
Burgunder, The Peoples National Gas Company's Supervisor of
Employee Benefits, to Thomas Taylor, a former employee of The
Peoples National Gas Company ("PNG"), concerning the
retroactivity of a potential amendment to PNG's pension plan.
According to Taylor, Burgunder misrepresented to him that if PNG
offered an early retirement incentive plan, Taylor would get its
benefits even if Burgunder retired before the incentive plan was
enacted. Specifically, Taylor alleged that:
During and prior to the March 1st date, I had had
discussions with Mr. Burgunder relative to rumors and
possible studies that may have been going on that could
lead to an early retirement program, and it was during
one of those discussion points where I talked with Mr.
Burgunder about other people that were retiring, and he
gave me the -- he told me at that time that he believed
that if there would be any early retirement programs
offered in 1989, that they would make it retroactive to
people retired from January 1st, until such time as
they might offer the program.
App. at 8b-9b (emphasis added). He continued:
I can't recall exactly what his conversations were
about the retroactivity other than he believed that if
an early retirement program was announced or it was
offered -- that might be a better word -- it might be
retroactive to these people that we were talking about.
App. at 33b (emphasis added).
As the majority correctly recognizes, the magistrate judge
who adjudicated this case concluded that the statement made by
Burgunder to Taylor that he believed the early retirement program
would be retroactive did not constitute misrepresentation.
Taylor v. Peoples Natural Gas Co., No. 92-394, slip op. at 4-5
(W.D. Pa. January 27, 1994). Agreeing with the magistrate judge,
the majority holds in Part IID that as a matter of law, no
reasonable fact-finder could conclude that Burgunder's statement
constituted a misrepresentation. Maj. Op. at [typescript at
18]. Inexplicably, however, before disposing of this case on the
unassailable grounds aptly set out by the magistrate judge, the
majority chooses in Parts IIA-C to pose and answer its own
questions about the relationship between ERISA fiduciaries and
their agents in cases, unlike the case at hand, where a party
demonstrates a misrepresentation. The majority concludes that a
plan administrator can be held liable for a breach of a fiduciary
duty for misrepresentations by the plan administrator's non-
fiduciary agents. Because the majority reaches out to decide an
issue that is not squarely before us, I am unable to join in
Parts IIA-C of the majority opinion.
It is well settled law that in general "[c]ases are to
be decided on the narrowest legal grounds available, and relief
is to be tailored carefully to the nature of the dispute before
the court." United States v. Rias, 524 F.2d 118, 120 n.2 (5th
Cir. 1975) (quoting Korioth v. Briscoe, 523 F.2d 1271, 1275 (5th
Cir. 1975)); see also In re Chicago, Rock Island and Pac. R.R,
772 F.2d 299, 303 (7th Cir. 1985) (it is an "elementary maxim of
our legal system" that a court should decide "only the case
before it"), cert. denied, 475 U.S. 1047, 106 S. Ct. 1265;
Shamloo v. Mississippi State Bd. of Trustees of Insts. of Higher
Learning, 620 F.2d 516, 524 (5th Cir. 1980) (expressing concern
that cases be decided on the narrowest legal grounds available);
Finley v. Hampton, 473 F.2d 180, 189 (D.C. Cir. 1972) (explaining
that courts do not decide hypothetical controversies). This
proposition is a corollary to the rule that federal courts are
not to render advisory opinions, but rather are to decide
specific issues for parties with real disputes. See, e.g.,
Korioth, 523 F.2d at 1274-75; see also United States v. Leon, 468
U.S. 897, 963, 104 S. Ct. 3430, 3447 (1984) (Stevens, J.,
concurring) ("[W]hen the Court goes beyond what is necessary to
decide the case before it, it can only encourage the perception
that it is pursuing its own notions of wise social policy, rather
than adhering to its judicial role.").
The statements the majority makes concerning the
possible liability of ERISA fiduciaries due to misrepresentations
of their non-fiduciary agents run afoul of this rule because the
majority's holding that there was no misrepresentation here is
sufficient to put this case to rest. Moreover, the majority's
choice to explore agency law is particularly ill-advised because
(1) we have not had the benefit of the magistrate judge's
thinking and findings on these important matters, (2) these
issues were neither argued nor briefed by counsel, and (3) the
majority breaks considerable new ground in the area of ERISA
fiduciary liability.
The majority's opinion states that the Annuities and
Benefits Committee of the System Pension Plan, the plan
administrator and co-defendant in this matter, can be held liable
for statements by Burgunder because Burgunder was acting within
the scope of his apparent authority as an agent of the plan
administrator in making representations to Taylor. The opinion
of the magistrate judge disposing of this case, however, is
completely devoid of any references to the question of whether an
ERISA fiduciary can be held liable for statements of its non-
fiduciary agents acting within the scope of their apparent
authority. Indeed, in his opinion, the magistrate judge reaches
only two conclusions of law. First, he concludes that there is
no general duty on the part of an employer to inform its
employees of any action it is considering taking in the future.
As he states, "[t]he fact that PNG was considering an early
retirement package for 1989 is not information which ERISA
requires an employer to disclose." Taylor, slip op. at 3
(emphasis added). Second, he concludes that since "[p]laintiff
concedes that he was not informed that a decision had been made
to offer any early retirement program at all, and that this was
simply Mr. Burgunder's best guess as to what may occur should an
early retirement program be adopted," there was "no
misrepresentation, and thus no breach of fiduciary duty." Id. at
4-5. There is absolutely no discussion of the position now
advanced by the majority that the plan administrator could be
held liable for statements of the plan administrator's non-
fiduciary agents.5
5
Accordingly, footnote one of the majority opinion is
slightly misleading when it first states that "[t]he Magistrate
Judge granted PNG's motion for summary judgment on this claim
concluding that, under the circumstances, PNG was not subject, in
its capacity as plan sponsor, to ERISA's fiduciary obligations"
and then draws the conclusion that "Taylor's claim of fiduciary
breach is properly limited in this case to the plan
administrator." Maj. Op. at [typescript at 4]. While it is
certainly accurate to explain that PNG, the plan sponsor, is not
a fiduciary, the majority's footnote makes it appear as if the
magistrate judge drew the distinction between the duty of an
employer as a plan sponsor and the fiduciary duty of the
Annuities and Benefits Committee as a plan administrator.
Indeed, the magistrate judge did not even distinguish between the
Even more importantly, the magistrate judge's factual
recitation and the record before us are insufficient to establish
the precise nature of the relationship between the System Pension
plan administrator and Burgunder, a failing that makes it
extremely difficult to perform a careful analysis of the possible
applicability of the apparent authority doctrine. PNG asserts
that Burgunder was merely an employee of PNG and was not a member
of the "separate and distinct plan administrator." Appellee's
Brief at 21. The magistrate judge's factual recitation does not
even touch on the relationship between Burgunder and the plan
administrator. As the majority recognizes, "apparent authority
arises in those situations where the principal causes persons
with whom the agent deals to reasonably believe that the agent
has authority." Maj. Op. at [typescript at 16] (citing
American Telephone & Telegraph v. Winback & Conserve Program, No.
94-5305, 1994 U.S. App. Lexis 34398, at *64, 1994 WL 685911, at
*18 (3d Cir. Dec. 9, 1994)). The majority, however, fails to
adduce a single fact which convincingly demonstrates that the
plan administrator caused employees of PNG to conclude that
Burgunder was authorized to make representations to employees
concerning potential plan amendments.6 Accordingly, I am
plan sponsor and the plan administrator in the discussion section
of his opinion.
6
The majority states that Taylor's belief was reasonable
because "evidence demonstrates that plan participants generally
considered Burgunder the person to speak with regarding possible
changes in retirement benefits." Maj. Op. at [typescript at
troubled by the majority's analysis and concerned with the logic
of deciding a question without relevant facts.
Equally disturbing in this case is the majority's
willingness to advance arguments that were not put forward by the
appellant in the first instance and that were not briefed by the
parties. We have repeatedly recognized the impropriety of
reaching issues that are not properly briefed before us. United
States v. Martinez-Hidalgo, 993 F.2d 1052, 1057 n.10 (3d Cir.
1993), cert. denied, U.S. , 114 S. Ct. 699 (1994);
Francesconi v. Kardon Chevrolet, Inc., 888 F.2d 18, 19 n.1 (3d
Cir. 1989); H. Prang Trucking Co. v. Local Union No. 469, 613
F.2d 1235, 1239 (3d Cir. 1980); see also United States v.
17] (emphasis added). In support of this proposition the
majority cites a portion of the deposition testimony of Taylor,
App. at 22a, and a portion of the deposition testimony of
Burgunder, App. at 39a-40a. In the portion of Taylor's testimony
that the majority cites, Taylor simply recounts his feeling that
most people "felt comfortable" dealing with Burgunder concerning
their retirement. Taylor never makes the claim that others felt
comfortable relying on Burgunder's statements about potential
plan amendments. Further, in the portion of Burgunder's
testimony that the majority cites, Burgunder merely testifies
that he had discussed "rumors" of a new retirement program with
employees.
As a preliminary matter, it is difficult to understand how a
discussion of "rumors" could give rise to a reasonable belief
that Burgunder could authoritatively speak to the issue of plan
amendments. Even more importantly, it is hard to comprehend how
the majority can rely on statements by Burgunder, the alleged
agent, to conclude that the principal (i.e., the plan
administrator), made a representation to the employees that
Burgunder could speak authoritatively about possible amendments.
What the majority lacks is a statement by the plan administrator,
the principal, disclosing that Burgunder could give advice
concerning potential plan amendments.
Crawley, 837 F.2d 291, 293 (7th Cir. 1988) (expressing concern
over decisions based on issues not refined by the fires of
adversary presentation). In his opening brief, Taylor simply
argued that a fiduciary may not materially mislead a plan
participant. Appellant's Brief at 11.7 Moreover, in his reply
brief, Taylor makes it clear that his argument is that PNG is a
fiduciary and it owed the fiduciary duty of conveying complete
and accurate information to him. Appellant's Reply Brief at 2.
Taylor states, "PNG continues to assert its status as employer
only, to which the Appellant disagrees. [sic]." Id. at 1. Since
the majority apparently agrees that PNG is not a fiduciary, see
Maj. Op. at n.1 [typescript at 4 n.1], it is difficult to see
how Taylor's arguments make it necessary to discuss the plan
administrator's possible liability due to statements by non-
fiduciary agents. Taylor never specifically pressed on appeal
the claim that because the plan administrator is a fiduciary, it
should be liable for statements of its non-fiduciary agents.
Accordingly, counsel for PNG and the Annuities and Benefits
Committee had no occasion to evaluate this issue in their
7
Taylor also argued that (1) an employer has an affirmative
duty to inform its employees of any action it is considering
taking in the future, and (2) that there are insufficient facts
in this record to resolve certain disputed issues. The first
argument is disposed of by the majority opinion at footnote
three. The second argument becomes irrelevant once we conclude
that there was no misrepresentation.
briefs.8 Without proper argument and discussion of this issue,
it is ill-advised to reach such claims.
Finally, the majority's decision to reach the issue of
a plan administrator's liability for non-fiduciary agents is ill-
advised because the majority's conclusion is not firmly dictated
by our previous precedents. The majority states that the
conclusion it reaches is consistent with our reasoning in Fischer
v. Philadelphia Electric Co., 994 F.2d 130 (3d Cir.), cert.
denied, U.S. , 114 S. Ct. 622 (1993). In Fischer,
however, we merely held that "[a] plan administrator may not make
affirmative material misrepresentations to plan participants
about changes to an employee pension benefits plan." Fischer,
994 F.2d at 135. We did not comment on the possible liability of
a plan administrator for statements by its non-fiduciary agents.
While the majority's position may be a logical extension of
Fischer, I would have left our decision as to whether such an
extension is justified to another day when the issue is more
squarely presented. Accordingly, relying simply on the fact that
Taylor failed to demonstrate misrepresentation in this case, I
would affirm the decision of the magistrate.
8
PNG does argue, by way of an alternative grounds to affirm
the magistrate's decision, that PNG is not a fiduciary and that
Burgunder is not a fiduciary. It does not, however, reach the
question of whether Burgunder could bind the plan administrator
as a non-fiduciary agent.