Burstein v. Retirement Account , 334 F.3d 365 ( 2003 )

Opinions of the United
2003 Decisions States Court of Appeals
for the Third Circuit
7-2-2003
Burstein v. Retirement Account
Precedential or Non-Precedential: Precedential
Docket No. 02-2666
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PRECEDENTIAL
Filed July 2, 2003
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 02-2666
WILLIAM H. BURSTEIN, M.D.; EFRAIN J. CRESPO, M.D.;
RICHARD R. AUSTIN; ELEANOR HING FAY;
JEAN B. HAAS, individually and on behalf of others
similarly situated,
Appellants
v.
RETIREMENT ACCOUNT PLAN FOR EMPLOYEES OF
ALLEGHENY HEALTH EDUCATION AND RESEARCH
FOUNDATION, c/o Administrator Dwight Kasperbauer,
individually and as Plan Administrator, and named
fiduciary; DAVID C. McCONNELL; WILLIAM F. ADAM; J.
DAVID BARNES; RALPH W. BRENNER; DOROTHY
MCKENNA BROWN; FRANK V. CAHOUET; DOUGLAS D.
DANFORTH; RONALD R. DAVENPORT; HARRY R.
EDELMAN, III; ROBERT L. FLETCHER; IRA J. GUMBERG;
ROBERT M. HERNANDEZ; FRANCIS B. NIMICK, JR.;
ROBERT B. PALMER; ROBERT M. POTAMKIN; DAVID W.
SCULLEY; W. P. SNYDER, III; MELLON BANK NA;
PENSION BENEFIT GUARANTY CORPORATION, as
successor-in-interest
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civ. No. 98-cv-06768)
District Judge: Honorable Charles R. Weiner
Argued: April 24, 2003
Before: SCIRICA, Chief Judge, AMBRO and
GARTH, Circuit Judges
2
(Opinion Filed: July 2, 2003)
Jay W. Eisenhofer (argued)
Denise T. DiPersio
Grant & Eisenhofer, P.A.
1201 North Market Street,
Suite 2100
Wilmington, DE 19801
Mark J. Krum
1515 Market Street, Suite 1100
Philadelphia, PA 19102
Counsel for Appellants
John F. Schultz (argued)
Kristofor T. Henning
Drinker, Biddle & Reath, LLP
18th & Cherry Streets
One Logan Square
Philadelphia, PA 19103
Counsel for Appellees
Retirement Account Plan and
Kasperbauer
David J. Laurent
Babst, Calland, Clements &
Zomnir, P.C.
Two Gateway Center
8th Floor
Pittsburgh, PA 15222
Counsel for Appellee McConnell
David L. McClenahan (argued)
William T. Cullen
Wendy E. D. Smith
Kirkpatrick & Lockhart
535 Smithfield Street
Henry W. Oliver Building
Pittsburgh, PA 15222
Counsel for Appellees Adam, Brown,
Danforth, Edelman, Fletcher,
Gumberg, Hernandez, Nimick,
Palmer, Potamkin,and Sculley
3
Thomas J. Farrell
Thieman & Farrell
436 Seventh Avenue
2312 Koppers Building
Pittsburgh, PA 15219
Counsel for Appellee Barnes
Michele Langer
Marvin, Larsson, Henkin &
Scheuritzel
1500 Market Street
Centre Square West, Suite 3510
Philadelphia, PA 19102
Counsel for Appellee Brenner
James J. Restivo, Jr.
Perry A. Napolitano
Daniel E. Wille
Reed Smith
435 Sixth Avenue
Pittsburgh, PA 15219
Counsel for Appellee Cahouet
Anthony W. Clark
Eric M. Davis
Skadden, Arps, Slate, Meagher
& Flom
One Rodney Square
P.O. Box 636
Wilmington, DE 19899
Henry P. Wasserstein
Jonathan L. Frank
Skadden, Arps, Slate, Meagher
& Flom
Four Times Square
New York, NY 10036
Counsel for Appellee Snyder
4
Jay H. Calvert, Jr.
Joseph B.G. Fay
Steven D. Spencer
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Counsel for Appellee
Mellon Bank, N.A.
James J. Keightley,
General Counsel
Jeffrey B. Cohen,
Deputy General Counsel
Deborah West,
Senior Assistant General Counsel
Sara B. Eagle (argued)
Joseph M. Krettek
Pension Benefit Guaranty
Corporation
Office of the General Counsel
1200 K Street, N.W.
Washington, DC 20005
Counsel for Appellee Pension Benefit
Guaranty Corporation
OPINION OF THE COURT
GARTH, Circuit Judge:
The plaintiff-appellants in this ERISA case appeal from
the district court’s dismissal of their First Amended
Complaint for failure to state a claim and also challenge the
denial of their motion to file a Second Amended Complaint
as futile.
The plaintiffs are five former employees of the now-
bankrupt Allegheny Health Education and Research
Foundation (“AHERF ”). These plaintiffs sought to recover
benefits that they believed they had accrued through
AHERF ’s Retirement Account Plan. They also sought to
represent a class of similarly situated persons, though that
issue is not before us. The plaintiffs filed various claims
5
under provisions of the Employee Retirement Income
Security Act of 1974, 88 Stat. 891, as amended, 29 U.S.C.
§ 1001 et seq.
As we will explain, in the course of resolving this appeal,
we join several other Circuits in ruling that when a
summary plan description under ERISA conflicts with the
complete, detailed ERISA plan document, a plan participant
may nevertheless state a claim for plan benefits based upon
terms contained in the summary plan description.
Therefore, and for further reasons specified in this
opinion, we will reverse the dismissal of the plaintiffs’ claim
for plan benefits against the Plan itself and against the
Pension Benefit Guaranty Corporation (“PBGC”) as Plan
administrator, as distinct from guarantor. We will also
reverse the dismissal of the plaintiffs’ claim for breach of
fiduciary duty against Dwight Kasperbauer, the Plan’s
former administrator. However, we will affirm the dismissal
of the remaining counts and of all other defendants, and
will also direct the district court to permit the plaintiffs to
make a final effort at amending the complaint. Finally, in
light of our disposition, which reverses the district court’s
dismissal of certain counts, we will also reverse the district
court’s ruling that the plaintiffs’ motion for class
certification was moot, inasmuch as the counts we are
reversing must once again receive the district court’s
attention.
I.
Since this appeal is from a Rule 12(b)(6) motion to
dismiss as well as from the denial of leave to file an
amended complaint, we have derived our explication of the
facts from the allegations contained in the plaintiffs’ First
Amended Complaint, supplemented by some additional
facts alleged in the proposed Second Amended Complaint.
A. The Parties
The plaintiffs-appellants in this case are William H.
Burstein, M.D., Efrain J. Crespo, M.D., Richard R. Austin,
Eleanor Hing Fay, and Jean B. Haas. According to the
6
proposed Second Amended Complaint (“SAC” or
“complaint”), Burstein was employed as a doctor at AHERF
for four years, and became an employee of the Tenet
Healthcare Corporation when Tenet purchased some of
AHERF ’s assets. Crespo had been employed as a doctor by
AHERF for “less than five years,” SAC ¶ 13, and also
became a Tenet employee. Austin had been employed by
AHERF as director of major gifts and planned giving at St.
Christopher’s Hospital for three and a half years. Hing Fay
had been employed by AHERF for two and three-quarters
years in the Corporate and Foundation Relations
department at St. Christopher’s Hospital for Children. Haas
had been employed by AHERF for one year in the
development office of (we assume) St. Christopher’s Hospital.1
AHERF laid off Austin, Hing Fay, and Haas on September
30, 1998, and Tenet did not hire them.2
There are several defendants-appellees in this case. They
are: (1) the Plan itself; (2) the PBGC;3 (3) Dwight
Kasperbauer, the former Plan administrator, and a former
executive vice president and chief of human resources at
AHERF; (4) the Plan’s former asset manager, David
McConnell, who had been AHERF ’s chief financial officer;
(5) the members of the Plan sponsor’s Board of Trustees
(“AHERF Trustees”);4 and (6) the Plan’s custodial trustee,
Mellon Bank.
1. The complaint does not specify at which “Development Office” Haas
worked. SAC ¶ 19.
2. We will refer to these five plaintiffs collectively as “Burstein.”
3. The PBGC “is a wholly owned United States Government corporation
. . . The PBGC administers and enforces Title IV of ERISA. Title IV
includes a mandatory Government insurance program that protects the
pension benefits of [tens of millions of] private-sector American workers
who participate in plans covered by the Title.” Pension Ben. Guar. Corp.
v. LTV Corp., 496 U.S. 633, 636-37 (1990) (citing 29 U.S.C. § 1302)
(other citations omitted).
Burstein has sued PBGC both in its role as statutory guarantor under
Title IV of ERISA and in its role as the substituted administrator for
Kasperbauer, the former Plan administrator. As substituted
administrator, PBGC now administers the terminated Plan. We explain
this distinction in Part III, infra.
4. The AHERF Trustees, according to the complaint, are William F.
Adam, J. David Barnes, Ralph W. Brenner, Dorothy McKenna Brown,
7
B. The Events Leading to the Lawsuit
In 1988, AHERF, which operated hospitals and other
health-care facilities in western Pennsylvania, began
acquiring hospitals and associated physician practices and
medical schools in the Philadelphia area.
AHERF had begun to experience significant financial
losses by the late 1990s. In July 1998, AHERF filed for
bankruptcy. The complaint alleges that AHERF, a non-
profit corporation, was profligate in its expenditures and
generous (to a fault) in furnishing its executives with
compensation, stock options, travel opportunities, and the
like. SAC ¶¶ 43-44, 49, 51, 53, 55.
In the months prior to filing for bankruptcy, AHERF
made an $89 million payment on a line of credit to Mellon
Bank (the Plan’s custodial trustee), id. ¶ 47, and the
complaint alleges that Mellon Bank, and certain trustees
with relationships to the bank, exerted improper influence
to secure this payment. Id. ¶ 48.
The bankruptcy court auctioned off AHERF ’s assets,
including eight Philadelphia-area hospitals. The eight
hospitals were purchased by Tenet, a for-profit health care
company. The Retirement Account Plan was not acquired
by Tenet. SAC ¶¶ 56-57.
AHERF ’s Retirement Account Plan was a defined benefit
pension plan under ERISA.5 The AHERF Plan was a “cash
Frank V. Cahouet, Douglas D. Danforth, Ronald R. Davenport, Harry R.
Edelman, III, Robert L. Fletcher, Ira J. Gumberg, Robert M. Hernandez,
Francis B. Nimick, Robert B. Palmer, David W. Sculley, and W.P. Snyder,
III. SAC ¶¶ 24-34, 36-39. Our disposition of claims against the AHERF
Trustees does not require differentiating among them except where
noted.
5. According to ERISA,
The term “defined benefit plan” means a pension plan other than an
individual account plan; except that a pension plan which is not an
individual account plan and which provided a benefit derived from
employer contributions which is based partly on the balance of the
separate account of a participant—
8
balance plan,”6 a form of a defined benefit plan under
ERISA in which “the employer’s contribution is made into
hypothetical individual employee accounts.” SAC ¶ 66. The
complaint alleged that because the Plan “speaks in terms of
a participant’s ‘account,’ many participants are fooled into
thinking that the cash balance plan works like a defined
contribution plan.” Id. Under a cash balance plan, however,
(A) for the purposes of section 202 . . . shall be treated as an
individual account plan, and
(B) for the purposes of paragraph (23) of this section and section
204 . . . shall be treated as an individual account plan to the extent
benefits are based upon the separate account of a participant and
as a defined benefit plan with respect to the remaining portion of
benefits under the plan.
29 U.S.C. § 1002(35). ERISA defines an individual account plan (or
“defined contribution plan”) as “a pension plan which provided for an
individual account for each participant and for benefits based solely
upon the amount contributed to the participant’s account, and any
income, expenses, gains and losses, and any forfeitures of accounts of
other participants which may be allocated to such participant’s account.”
Id. § 1002(34).
6. The Employee Benefits Security Administration (the agency of the
Department of Labor responsible for administering and enforcing
provisions of Title I of ERISA) has explained the difference between
traditional defined benefit pension plans and cash balance plans as
follows:
While both traditional defined benefit plans and cash balance plans
are required to offer payment of an employee’s benefit in the form of
a series of payments for life, traditional defined benefit plans define
an employee’s benefit as a series of monthly payments for life to
begin at retirement, but cash balance plans define the benefit in
terms of a stated account balance. These accounts are often referred
to as hypothetical accounts because they do not reflect actual
contributions to an account or actual gains and losses allocable to the
account.
U.S. Department of Labor, Employee Benefits Security Administration,
“Frequently Asked Questions about Cash Balance Pension Plans,” at
http://www.dol.gov/ebsa/FAQs/faq_consumer_cashbalanceplans.html
(as visited May 23, 2003) (emphasis added).
9
if the plan terminates, “it is possible that the plan will be
underfunded as to some or all of the participants.” Id.
Indeed, ERISA does not require that the cash-balance
plan sponsor fund the plan fully for all participants; rather,
it only requires that these plans be funded for those
participants whose benefits had vested prior to the plan’s
(partial) termination.7 Burstein has not claimed that AHERF
failed to fund the Plan in accordance with these minimum
standards.
Burstein alleges that he was surprised to learn that
AHERF had not funded the Plan for the benefits he believed
had accrued. According to the complaint, the Plan
administrator, defendant Kasperbauer, mailed form letters
dated November 25, 1998, to various former employees.
The complaint alleges that the letter sent to Burstein was
addressed to “Former AHERF Employees who Transferred
to Tenet or the New University.” This letter explained that
a partial plan termination had occurred, but that any
person who had not completed five years of service with
AHERF would not be entitled to any benefits:
As you may be aware, the Retirement Account Plan
also contains a provision, required by the Internal
Revenue Code, concerning vesting in the event of a
partial plan termination. Specifically, this provision
states that, if there is a partial plan termination, the
nonvested benefits of affected participants will become
vested “to the extent funded.” We believe that a partial
plan termination did occur because of the sale of the
hospitals to Tenet and the sale of Allegheny University
of the Health Sciences. However, because nonvested
accrued benefits under the Plan are not “funded” within
the meaning of this provision, you will not be entitled to
any benefits from the Plan if, as of Nov. 10, 1998, you
have not completed at least five years of vesting service.
Letter from Kasperbauer to Burstein at 1, A233 (emphasis
in original).
7. ERISA outlines the minimum funding standards for employee pension
benefit plans. See 29 U.S.C. § 1082. The Internal Revenue Code also
imposes minimum funding standards for a plan’s qualification for
preferential tax treatment. See 26 U.S.C. § 412.
10
The PBGC and AHERF agreed on September 30, 1999,
that the Plan should be deemed terminated as of August
25, 1999, based on PBGC’s determination that the Plan
would be unable to pay benefits when they became due.
Accordingly, the PBGC took over the Plan on September 30,
1999. See Agreement for Appointment of Trustee and
Termination of Plan, A526-27.
C. Procedural History Leading to the Proposed Second
Amended Complaint
On December 30, 1998, shortly after receiving the letters
from Kasperbauer (but before the PBGC took over the Plan
on September 30, 1999), Burstein filed the initial complaint
in the United States District Court for the Eastern District
of Pennsylvania. The bankruptcy court for the Western
District of Pennsylvania stayed the case in April 1999 at the
request of AHERF ’s bankruptcy trustee. In July 2000, the
bankruptcy court lifted the stay. Burstein filed the First
Amended Complaint on August 10, 2000, and the
defendants moved to dismiss. In addition to opposing the
motion to dismiss, Burstein sought leave to file a proposed
Second Amended Complaint.
D. The Claims in the Second Amended Complaint
The Second Amended Complaint contains eleven counts,
which can be grouped into three categories of claims,8
though, as the district court explained, Burstein did not
fully specify the connection between his claims and the
provisions of ERISA. See Burstein v. Retirement Account
Plan for Employees of Allegheny Health, Education and
Research Foundation, ___ F. Supp. 2d ___, 2002 WL
31319407, at *7 (E.D. Pa. May 30, 2002). The complaint
contains class action allegations, but the issue of class
certification is not before us on appeal in view of the fact
that the district court denied Burstein’s motion to file the
Second Amended Complaint. Because we are reversing on
some counts of the First Amended Complaint, we deem it
8. In addition to the first ten counts that fit within the three categories,
Count XI is a claim for attorneys’ fees. SAC ¶ 207.
11
appropriate for the district court to reconsider its class
certification ruling in light of this opinion.9
Category One: Claims for Plan Benefits (Counts VII-X)
One category of counts (Counts VII-X) in Burstein’s
Second Amended Complaint involves claims for plan
benefits under ERISA § 502(a)(1)(B), 29 U.S.C.
§ 1132(a)(1)(B)10 against the Plan and the PBGC.11
9. The district court denied Burstein’s motion for class certification as
moot in light of its dismissal of the complaint for failure to state a claim.
In view of our disposition, we will reverse the order denying class
certification.
10. This provision of ERISA provides that a plan participant may bring a
civil action “to recover benefits due to him under the terms of his plan,
to enforce his rights under the terms of the plan, or to clarify his rights
to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B).
11. At oral argument, Mr. Eisenhofer, counsel for Burstein, conceded
that, in his view, apart from the Plan and the PBGC, none of the other
defendants were proper defendants with respect to this category of
counts.
THE COURT: . . . I don’t understand how any one of the
defendants you have named can be liable other than the Plan, and
I realize the Plan has very lean pockets.
How do you get Mr. Kasperbauer as a defendant? And he’s the
only administrator that I know of.
MR. EISENHOFER: I believe we get him as defendant on the
breach of fiduciary duty claim.
THE COURT: What about the benefits claim? . . .
MR. EISENHOFER: I don’t believe that Mr. Kasperbauer is an
appropriate — there’s [an] appropriate remedy against Mr.
Kasperbauer on the benefits [claim].
THE COURT: So that the only appropriate defendant in the
category of benefits claim, then, would be the Plan, and you feel that
you should be able to litigate that or go beyond at least the 12(b)(6)
as to the Plan, am I correct?
MR. EISENHOFER: The Plan, and to the extent that PBGC stands
as the successor in interest to the Plan . . .
Tr. of Oral Arg. at 26-27.
12
Count VII asserts that Burstein “became eligible to vest
in 100% of [his] accrued benefits” “[w]hen AHERF partially
terminated the Plan.” SAC ¶¶ 186-189.
Count VIII alleges that the “PBGC is obligated, as the
statutory trustee [i.e., substituted administrator] of the
Plan,” to pay benefits to Burstein. SAC ¶¶ 190-194. As we
explain in note 23, infra, Kasperbauer, at this time, was no
longer the administrator of the Plan, and the Plan had
PBGC as its substitute administrator. As such, PBGC, as
administrator, had the obligation of distributing Plan assets
according to statute. Hence, counsel’s colloquy, reproduced
at note 11, supra, must be understood as relieving all
defendants other than the Plan and the Plan’s present
administrator, PBGC, from liability under the claim for plan
benefits.
Count IX alleges that the “PBGC is statutorily required to
insure the payment of all nonforfeitable benefits.” SAC
¶¶ 195-200.
Count X alleges that because the PBGC collected
premiums from AHERF to insure plan assets, “the PBGC
created an insurer-insured relationship with Plaintiffs”
obligating the PBGC to pay benefits. SAC ¶¶ 201-206.
Taken together, then, Counts VII-X may be read as
claims for plan benefits, but only against the Plan and the
PBGC. (But see infra, where we have held that PBGC may
be liable as substituted administrator but not as a
guarantor. See infra note 23 and Part III(D)).
Category Two: Equitable Estoppel Claim (Count VI)
Count VI alleges an equitable estoppel claim against
Kasperbauer, McConnell, and the Trustees, alleging that
they intended to induce, should have anticipated, or in any
event are responsible for, Burstein’s reliance on
“misrepresentations in the Plan Brochure and SPD.” SAC
¶¶ 179-185.
Category Three: Claims for Breach of Fiduciary Duty
(Counts I-V)
Counts I-V of the Second Amended Complaint allege
various breaches of alleged fiduciary duty. Count I alleges
13
that Kasperbauer, McConnell, and the AHERF Trustees
breached their fiduciary duties to Burstein in violation of
ERISA § 404(a), 29 U.S.C. § 1104(a), by representing,
“through the Plan Brochure, the SPD and/or verbal
communications,” that if the Plan was terminated, all
participants would automatically become vested and
entitled to benefits.
Count II alleges that Kasperbauer, McConnell, Mellon
Bank, and the AHERF Trustees failed to warn Burstein
of AHERF ’s imminent bankruptcy and the Plan’s
underfunding. Further, Count II alleges that the defendants
had failed to warn Burstein that he had been misled about
his benefits under the Plan Brochure and SPD. Count II
charges that such failures to warn constitute a failure to
discharge fiduciary duties.
Count III alleges that Kasperbauer, McConnell, and the
AHERF Trustees mismanaged plan assets “in one of the
most favorable investment climates in history, resulting in
an asset shortfall,” and allowed an “$89 million payment to
Mellon Bank.” SAC ¶¶ 156-61.
Count IV alleges that Mellon Bank mismanaged plan
assets and “improperly influenced AHERF to make an $89
million payment” prior to AHERF ’s bankruptcy filing. SAC
¶¶ 162-72.
Count V alleges that certain AHERF Trustees (Cahouet,
Barnes, Gumberg, Adam, and Fletcher) held positions or
were affiliated with Mellon Bank, and improperly influenced
AHERF to make the $89 million payment to the bank.
Burstein claims that this action breached these Trustees’
fiduciary duties. SAC ¶¶ 173-178.
These claims for breach of fiduciary duty under ERISA
are brought pursuant to ERISA § 502(a)(3)(B), 29 U.S.C.
§ 1132(a)(3)(B). See Varity Corp. v. Howe, 516 U.S. 489, 515
(1996). We discuss these claims infra in Part V.12
12. We note that the Supreme Court has drawn a distinction between
legal and equitable remedies in detailing what remedies are available
under ERISA § 502(a)(3)(B) in its recent decision in Great-West Life &
Annuity Insurance Co. v. Knudson, 534 U.S. 204 (2002).
14
E. The District Court’s Decision
In a memorandum opinion and order dated May 30,
2002, the district court granted all of the defendants’
motions to dismiss the First Amended Complaint with
prejudice for failure to state a claim; denied Burstein’s
motion to file a Second Amended Complaint as futile; and
denied the motion for class certification as moot.
The district court first held that Burstein could not
recover under his claims for plan benefits, citing our
decision in Gridley v. Cleveland Pneumatic Co., 924 F.2d
1310 (3d Cir. 1991). The district court held that, under
ERISA § 502(a)(1)(B), “employees cannot recover from the
Plan[,] benefits which are allegedly granted or due under a
summary plan description [SPD] or other secondary
document.” Burstein, ___ F. Supp. 2d ___, 2002 WL
31319407, at *7 (citing Gridley, 924 F.2d at 1318). Under
the district court’s reading of Gridley, because the explicit
terms of the Plan Document itself did not provide Burstein
with a right to benefits, Burstein could not rely on terms of
the SPD to assert a claim for benefits.
The district court next dismissed Burstein’s equitable
estoppel claim, questioning whether the elements of an
equitable estoppel claim could be satisfied, but holding that
Burstein had no standing to enforce the Plan against the
defendants named in this count.
Finally, the district court dismissed all of the breach of
fiduciary claims, holding that all but one of the defendants,
though named fiduciaries, were not fiduciaries for the
purposes of events identified by Burstein that could give
rise to claims for breach of fiduciary duty. As to the claims
against Kasperbauer, the administrator, for breach of
fiduciary duty relating to alleged misrepresentations in the
SPD and Plan brochure, the district court held that
Burstein might have been able to state a claim if he had
alleged that there was reliance to his detriment on the
alleged misrepresentations. Holding that no such
detrimental reliance had been pled, the district court
dismissed the claim against Kasperbauer.
Burstein filed a timely notice of appeal on June 13, 2002.
This appeal followed.
15
II.
The district court had subject matter jurisdiction of this
civil action arising under ERISA pursuant to 29 U.S.C.
§ 1132(f) and 28 U.S.C. § 1331, and, with respect to claims
against the PBGC, pursuant to 29 U.S.C. § 1303(f). We have
jurisdiction over this appeal from the district court’s final
judgment pursuant to 28 U.S.C. § 1291.
We have plenary review of the district court’s grant of a
motion to dismiss for failure to state a claim pursuant to
Fed. R. Civ. P. 12(b)(6). See Nami v. Fauver, 82 F.3d 63, 65
(3d Cir. 1996). In considering an appeal of a granted Rule
12(b)(6) motion, we do not analyze whether Burstein will
ultimately prevail, but only whether he is entitled to offer
evidence to support his claims, attributing all reasonable
inferences in favor of Burstein. Thus, we will affirm the
district court’s order granting the defendants’ motion to
dismiss only if it appears that Burstein could prove no set
of facts that would entitle him to relief. See Conley v.
Gibson, 355 U.S. 41, 45-46 (1957); Nami, 82 F.3d at 65.13
III.
We first examine the district court’s dismissal of
Burstein’s claims for plan benefits. (Category One —
Counts VII - X).
A.
Burstein alleges that language in both the Plan Brochure
and the Summary Plan Description gave rise to his claims
for plan benefits. The complaint alleges that the Plan
Brochure “conveys the impression that each participant has
a funded ‘account’ under the Plan in which they accrue
13. We review a district court’s decision denying leave to file an amended
complaint for abuse of discretion. See, e.g., Bailey v. United Airlines, 279
F.3d 194, 203 (3d Cir. 2002). Our determination that the district court
should allow Burstein to file a Third — and final — Amended Complaint
results from our holding that the district court erred in dismissing the
entire complaint for failure to state a claim, and should not be read as
critical of the district court’s denial of leave to amend. See infra note 32.
16
retirement benefits.” SAC ¶ 75. Specifically, Burstein points
to the Plan Brochure’s statements that:
“AHERF contributes to your account each year based
on your pay, age and service. Your account earns
interest at a guaranteed individual rate.” . . . [and]
“You have your own interest bearing account that is
completely funded by the organization.”
Id.In addition, Burstein cited statements in the Plan
Brochure such as:
• “Retirement Account Plan 100% funded by AHERF ”;
• “You own your account after five years”;
• “You always own your account”; and
• “Guaranteed Interest . . . the minimum amount
your account will earn is 5% per year . . . You will
receive an account statement at least once a year
showing how your account has grown.”
SAC ¶ 76.14
The complaint alleged that the Summary Plan
Description “reinforces the impression created by the Plan
Brochure that each participant had a fully funded account
in which retirement benefits were accrued and grew each
year,” SAC ¶ 83, and cites various statements describing
how “your account is credited.” Id. The SPD states:
A special account is used to record your annual
retirement credits and other increases in your benefit
14. The Plan Brochure to which Burstein refers is significantly different
and less detailed than the SPD or the Plan Document itself. A plan
brochure is distinct from a plan document in that it is neither
comprehensive or detailed, and is more akin to a commonplace flyer.
Whereas Congress has expressed its intent with respect to SPDs, it has
not expressed any such intent with respect to plan brochures. See 29
U.S.C. § 1022; see also discussion infra at pages 22-24. Accordingly, a
plan brochure cannot form the basis for plan benefits. Although Burstein
has pointed to language in the Plan Brochure, our decision here pertains
only to the SPD, not to the Plan Brochure.
17
amount. While your account balance under the
Retirement Account Plan is a way of expressing your
plan benefit, no plan assets are specifically allocated to
your plan account. Instead they are held in a trust for
all participants.
SAC ¶ 86. The complaint alleges that though a reader “may
understand from this language . . . that the funds . . . are
not held separately,” nonetheless such a reader would
interpret the language “to mean that sufficient assets to
fund the individual account balances have been set aside
and are held in trust.” Id.The complaint alleges that the SPD explains that once a
participant is vested, he or she has “a nonforfeitable right
to the value of [his or her] account.” SAC ¶ 87 (quoting SPD
at 14, A208). In general, under the Plan, a participant is
not deemed vested until he or she has completed five years
of service. Central to this case, however, the SPD provides
that a plan participant will become vested upon the
termination of the Plan:
If the Plan is terminated you will automatically become
vested in your account, regardless of how many years
of service you have earned. No more annual retirement
credits will be made to your account, but you will
continue to receive interest credits until payments from
your account begin.
SAC ¶ 87 (quoting SPD at 25, A219) (emphasis added).
By contrast, the language of the Plan Document imposes
a significant qualification on a Plan participant’s vesting in
his or her account:
Upon the termination or partial termination of the
Plan, the right of all affected participants to benefits
accrued to the date of such termination or partial
termination shall become nonforfeitable (within the
meaning of Treas. Reg. § 1.411(a)-4) to the extent
funded as of such date.
Plan § 16.2, A400 (emphasis added).15
15. We note that this Plan Document language is patterned after
§ 411(d)(3) of the Internal Revenue Code, which states that a plan will
not be qualified for preferential tax treatment unless it:
18
The SPD differed from the Plan Document in the way it
described the terms of vesting and funding. In this case,
however, AHERF — presumably by design — funded the
Plan at the minimum level permissible under ERISA. These
minimum ERISA funding standards did not require AHERF
to fund the Plan for those participants who had not yet met
the five-year service requirement for vesting.16
B.
The district court held that the conflict between the terms
of the SPD and the terms of the Plan Document did not
permit Burstein to state a claim that he was “due” benefits
within the meaning of ERISA § 502(a)(1)(B). The district
court grounded this conclusion on its interpretation of our
decision in Gridley v. Cleveland Pneumatic Co., 924 F.2d
1310 (3d Cir.), cert. denied, 501 U.S. 1232 (1991). The
district court read Gridley to hold that a court must only
look to the Plan Document, and therefore determined that
the language contained in the SPD could not operate to
create a right to plan benefits.
On appeal, Burstein argues that the district court
misinterpreted Gridley. He argues that an SPD can be
considered in assessing what benefits are “due” under a
claim for plan benefits pursuant to ERISA § 502(a)(1)(B).
Kasperbauer and the PBGC take the contrary position that
provides that—
(A) upon its termination or partial termination, or
(B) in the case of a plan to which section 412 does not apply,
upon complete discontinuance of contributions under the plan,
the rights of all affected employees to benefits accrued to the date of
such termination, partial termination, or discontinuance, to the extent
funded as of such date, or the amounts credited to the employees’
accounts, are nonforfeitable. . . .
26 U.S.C. § 411(d)(3) (emphasis added).
16. As we have noted, there is no allegation that the way in which the
Plan was funded violated ERISA’s funding requirements. We also are not
informed whether it is typical that a plan sponsor will fund a plan at the
minimum level that ERISA permits.
19
Gridley has “squarely held” that an SPD cannot allow for
recovery of benefits under § 1132(a)(1)(B). Kasperbauer Br.
at 29-30; see also PBGC Br. at 12 n.8 (also citing Gridley).
After a careful and thorough review of Gridley, we have
concluded that the language in Gridley on which the
district court relied constitutes dictum, and therefore does
not bind us in determining whether a conflict between an
SPD and a plan document can give rise to a claim for plan
benefits.17
In Gridley, this Court examined the availability of certain
benefits under a life insurance plan. Gridley, 924 F.2d at
1311. Gridley based her claim on language in an “overview
brochure” that conflicted with, or was silent about,
additional requirements contained in the plan document
language. Id. at 1314.
The district court held in favor of Gridley on the grounds
that the brochure constituted a “summary plan
description,” the terms of which were enforceable. Id. at
1315. The Gridley Court reversed the district court’s
decision, “both because the new overview brochure. . . was
not a summary plan description and because a summary
plan description is not a ‘plan’ within the meaning of
Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B).” Id. at 1316.
The Court explained that the overview brochure on which
Mrs. Gridley based her claim did not constitute a “summary
plan description” for several reasons:
First, the new overview brochure . . . contains an
important internal reference to “summary plan
descriptions.” . . .
Second, the new overview brochure . . . lacks virtually
all of the categories of information required by ERISA
for summary plan descriptions. Under 29 U.S.C.
§ 1022(b), a summary plan description must contain
12 categories of information . . . The new overview
17. See Third Circuit Internal Operating Procedure 9.1 (“It is the
tradition of this court that the holding of a panel in a precedential
opinion is binding on subsequent panels. Thus, no subsequent panel
overrules the holding in a precedential opinion of a previous panel. Court
en banc consideration is required to do so.”).
20
brochure’s . . . description of the life insurance plans,
however, lacks any information relating to all but two
of these categories . . .
Third, the new overview brochure . . . contains
extraordinarily perfunctory descriptions of subjects
treated in other company documents that
unquestionably constituted summary plan
descriptions. . . .
Finally, the new overview brochure . . . was plainly an
updated version of the earlier overview brochure . . .
which was not a summary plan description. As already
noted, when Mr. Gridley received the earlier overview
brochure . . . at the beginning of his employment, he
was also given summary plan descriptions for some of
the company’s plans. In light of these detailed
documents, there can be no doubt that the cursory
descriptions of the same plans in the earlier overview
brochure . . . did not constitute the summary plan
descriptions for those plans.
Id. at 1316-17 (citations and footnote omitted).
Thus, in Gridley we held no more than: Gridley could not
recover benefits because there was no summary plan
description on which to base her claim, since the overview
brochure on which she relied did not constitute an SPD.
Our holding in Gridley that there was no SPD cannot be
read as stating that the terms of a plan document override
the language of the SPD where they conflict. This being so,
Gridley is not a holding that the plan document is superior
to, or trumps, the SPD, and accordingly, it cannot bind us
to this principle as precedent.
It is true that Gridley does discuss the term “plan” as it
appears in ERISA, and claims that it does not encompass
a summary plan description. See id. at 1318. However,
once Gridley held that no summary plan description
existed, its discussions as to the place of a summary plan
description in the statutory scheme can constitute no more
than dictum. And while the district court understandably
may have been influenced by that dictum, neither we nor
the district court are bound to respect it as precedent.
21
Our understanding of Gridley is fortified by the decisions
of several other Circuits, all of which have held that a
summary plan description will govern over contradictory or
conflicting terms in the Plan Document. For example, the
Eleventh Circuit has declared, in a much-cited opinion:
It is of no effect to publish and distribute a plan
summary booklet designed to simplify and explain a
voluminous and complicated document, and then
proclaim that any inconsistencies will be governed by
the plan. Unfairness will flow to the employee for
reasonably relying on the summary booklet.
McKnight v. Southern Life and Health Ins. Co., 758 F.2d
1566, 1570 (11th Cir. 1985).
The Second Circuit has agreed with this view of the
summary plan description:
[O]nly the Booklet, not the Plan itself, was distributed
to employees. The Booklet purported to summarize the
Plan. ERISA and the regulations promulgated under it
require that employees be given such summaries. . . .
Thus, the statute contemplates that the summary will be
an employee’s primary source of information regarding
employment benefits, and employees are entitled to rely
on the descriptions contained in the summary. To allow
the Plan to contain different terms that supersede the
terms of the Booklet would defeat the purpose of
providing the employees with summaries.
Heidgerd v. Olin Corp., 906 F.2d 903, 907-08 (2d Cir. 1990)
(citing 29 U.S.C. § 1022; 29 C.F.R. § 2520.102-2(a) (1989)).
In addition to the Eleventh and Second Circuits, the
Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, and Tenth
Circuits have all adopted similar views (though somewhat
varying in scope, precise context, and extent) that if the
SPD language differs from or conflicts with the plan
language, it is the SPD language that will control.18
18. See Pierce v. Security Trust Life Ins. Co., 979 F.2d 23, 27 (4th Cir.
1992) (per curiam) (“if there was a conflict between the complexities of
the plan’s language and the simple language of the SPD, the latter would
control”); Hansen v. Continental Ins. Co., 940 F.2d 971, 982 (5th Cir.
22
Today, we join with the other Courts of Appeals that have
considered this issue, and hold that, where a summary
plan description conflicts with the plan language, it is the
summary plan description that will control. We are satisfied
that this holding, as we have stated it, is faithful to
Congressional intent. The ERISA provision governing
summary plan descriptions expresses Congress’s desire
that the SPD be transparent, accurate, and comprehensive:
A summary plan description of any employee benefit
plan shall be furnished to participants and
beneficiaries as provided in section 1024(b) of this title.
The summary plan description shall include the
information described in subsection (b) of this section,
shall be written in a manner calculated to be
understood by the average plan participant, and shall
be sufficiently accurate and comprehensive to
reasonably apprise such participants and beneficiaries
of their rights and obligations under the plan. A
1991) (“the summary plan description is binding, and . . . if there is a
conflict between the summary plan description and the terms of the
policy, the summary plan description shall govern. Any other rule would
be, as the Congress recognized, grossly unfair to employees and would
undermine ERISA’s requirement of an accurate and comprehensive
summary.”); Edwards v. State Farm Mut. Auto Ins. Co., 851 F.2d 134,
136 (6th Cir. 1988) (“statements in a summary plan are binding and if
such statements conflict with those in the plan itself, the summary shall
govern”); Senkier v. Hartford Life & Acc. Ins. Co., 948 F.2d 1050, 1051
(7th Cir. 1991) (“The insured is protected by the fact that, in the event
of a discrepancy between the coverage promised in the summary plan
document and that actually provided in the policy, he is entitled to claim
the former.”); Barker v. Ceridian Corp., 122 F.3d 628, 633 (8th Cir. 1997)
(“Summary plan descriptions are considered part of ERISA plan
documents. . . . Adequate disclosure to employees is one of ERISA’s
major purposes. . . . Because of the importance of disclosure, in the
event of a conflict between formal plan provisions and summary plan
provisions, the summary plan description provisions prevail.”) (citations
omitted); Atwood v. Newmont Gold Co., 45 F.3d 1317, 1321 (9th Cir.
1995) (“Where the SPD . . . differs materially from the terms of the plan,
the SPD is controlling.”); Chiles v. Ceridian Corp., 95 F.3d 1505, 1515
(10th Cir. 1996) (“Because the SPD best reflects the expectations of the
parties to the plan, the terms of the SPD control the terms of the plan
itself.”).
23
summary of any material modification in the terms of
the plan and any change in the information required
under subsection (b) of this section shall be written in
a manner calculated to be understood by the average
plan participant and shall be furnished in accordance
with section 1024(b)(1) of this title.
29 U.S.C. § 1022(a) (emphasis added).19 See also 29 U.S.C.
§ 1022(b) (setting forth information that must be included
in an SPD). Indeed, § 1022(b) requires that an SPD provide
“the plan’s requirements respecting eligibility for
participation and benefits; a description of the provisions
providing for nonforfeitable pension benefits; [and]
circumstances which may result in disqualification,
ineligibility, or denial or loss of benefits.” Id.
Thus, “ERISA requires, in no uncertain terms, that the
summary plan description be ‘accurate’ and ‘sufficiently
comprehensive to reasonably apprise’ plan participants of
their rights and obligations under the plan.” Hansen, 940
F.2d at 981 (quoting 29 U.S.C. § 1022). The SPD is the
document to which the lay employee is likely to refer in
obtaining information about the plan and in making
decisions affected by the terms of the plan. Indeed, the SPD
in this case suggests that the Plan Document is not
provided to employees as a matter of course, but must be
either inspected on AHERF ’s designated premises or
requested in writing. The front page of the SPD, after
explaining that the “[P]lan [D]ocument always governs” if
there is a difference between the SPD “booklet” and the
“official [P]lan [D]ocument,” describes how and where a
participant may read the official Plan Document:
You may look at the [P]lan [D]ocument during regular
business hours at the Allegheny Health, Education and
Research Foundation, Benefit Service Center, Suite
260, One Allegheny Center, Pittsburgh, Pennsylvania
15512-5408. You also may obtain a copy of the official
[P]lan [D]ocument by writing to the Benefit Service
19. Section 1024(b) provides detailed requirements as to how a plan
administrator must publish and furnish summary plan descriptions to
plan participants or beneficiaries.
24
Center. A small charge may be made to cover the
copying costs.
SPD at 1, A195. The relative inaccessibility of AHERF ’s
Plan Document serves to highlight that, as Congress
intended, the SPD is the primary document on which plan
participants must rely.
Some of the defendants-appellees argue that an SPD is,
by its nature, a summary, and cannot include all the terms
contained in the full Plan. Of course this is so, and it would
defeat the purposes of having a summary of a full plan
document if the SPD were to parrot all the terms of the
plan document. In this case, however, the conflict between
the SPD and the Plan Document is unquestionably
material. The SPD indicates to the Plan participant that the
Plan assets are held in a trust and that benefits will
“automatically vest” upon Plan termination. But, as we
have earlier noted, the Plan Document here does not
provide for full funding or for unqualified vesting. The fact
that the AHERF Retirement Account plan would not be fully
funded is never expressed in the Summary Plan
Description.
As we have explained, the SPD states, “If the plan is
terminated you will automatically become vested in your
account, regardless of how many years of service you have
earned.” SPD at 25, A219 (emphasis added). By contrast,
the Plan says:
Upon the termination or partial termination of the Plan,
the rights of all affected participants to benefits
accrued to the date of such termination or partial
termination shall become nonforfeitable (within the
meaning of Treas. Reg. § 1.411(a)-4) to the extent
funded as of such date.
Plan § 16.2, A400 (emphasis added).
The difference that exists between the SPD and the Plan
Document respecting how much would be available to a
vested participant is not only stark but presents a material
conflict that the PBGC does not address. It does not
address that conflict because, under its reading of Gridley,
it is the Plan Document that governs, whereas under our
25
interpretation and reading of Gridley, it is the SPD that
governs. Hence, where the PBGC finds no conflict — we do.
The PBGC’s argument that the SPD is “silent” with respect
to partial termination is unavailing. We are satisfied that “[i]f
the plan is terminated,” that termination applies with equal
force to a completed termination as well as to a partial
termination of the Plan. Thus, we reject the PBGC’s
argument that no conflict exists.
C.
We also conclude that a plan participant who seeks to
claim plan benefits on the basis of a conflict between an
SPD and a plan document need not plead reliance on the
SPD. We recognize that other Courts of Appeals that have
spoken to this issue have taken differing positions on this
question.
The Eleventh Circuit, for example, has declared: “We . . .
hold that, to prevent an employer from enforcing the terms
of a plan that are inconsistent with those of the plan
summary, a beneficiary must prove reliance on the
summary.” Branch v. G. Bernd Co., 955 F.2d 1574, 1579
(11th Cir. 1992). The First, Fourth, and Seventh Circuits
have similarly required reliance.20
The Sixth Circuit, by contrast, has disclaimed the
necessity of reliance. In Edwards v. State Farm Mutual Auto
Ins. Co., 851 F.2d 134 (6th Cir. 1988), the Sixth Circuit
explained that, “[a]lthough in the instant case, the appellee
20. See Govoni v. Bricklayers, Masons and Plasterers Int’l Union, 732
F.2d 250, 252 (1st Cir. 1984) (“[c]ase law suggests . . . that to secure
relief, Govoni must show some significant reliance upon, or possible
prejudice flowing from, the faulty plan description”); Aiken v. Policy
Mgmt. Sys. Corp., 13 F.3d 138, 141-42 (4th Cir. 1993) (holding that
showing of reliance or prejudice necessary, but reversing and remanding
district court’s grant of summary judgment against plan participant for
“for further development of the record on the issue of reliance or
prejudice”); Health Cost Controls of Illinois, Inc. v. Washington, 187 F.3d
703 (7th Cir. 1999) (if “the plan and the summary plan description
conflict, the former governs . . . unless the plan participant or
beneficiary has reasonably relied on the summary plan description to his
detriment”), cert. denied, 528 U.S. 1136 (2000).
26
relied to his detriment . . . existing precedent does not
dictate that a claimant who has been misled by summary
descriptions must prove detrimental reliance. Congress has
promulgated clear directives prohibiting misleading
summary descriptions. This court elects not to undermine
the legislative command by imposing technical
requirements upon the employee.” Id. at 137.
The Second Circuit has not provided a definitive answer
to this question. In Feifer v. Prudential Insurance Co. of
America, 306 F.3d 1202 (2d Cir. 2002), that court stated,
“Unlike most other circuits, this Court has not yet decided
whether a showing of these factors [i.e., reliance or
prejudice] is ever necessary for a plaintiff to succeed in an
action brought under ERISA.” Id. at 1213. The Fifth Circuit
has also avoided answering the question. See Rhorer v.
Raytheon Engineers and Constructors, Inc., 181 F.3d 634,
644 n.12 (5th Cir. 1999) (“This Court has never held that
an ERISA claimant must prove reliance on a summary plan
description in order to prevail on a claim to recover
benefits,” and also explaining that precedent had
acknowledged the reliance issue but had not resolved
whether reliance is a necessary element).
Upon consideration of the “reliance” issue, we now hold
that a plan participant who bases a claim for plan benefits
on a conflict between an SPD and plan document need
neither plead nor prove reliance on the SPD.
Claims for ERISA plan benefits under ERISA
§ 502(a)(1)(B) are contractual in nature. Cf. Feifer, 306 F.3d
at 1210 (“A claim under § 1132(a)(1)(B), ‘in essence, is the
assertion of a contractual right.’ . . . In interpreting plan
terms for purposes of claims under § 1132(a)(1)(B), we apply
a federal common law of contract, informed both by general
principles of contract law and by ERISA’s purposes as
manifested in its specific provisions.”) (quoting Strom v.
Goldman, Sachs & Co., 202 F.3d 138, 142 (2d Cir. 1999)).
Our determination that a SPD controls over the plan
document where the two conflict does not change the
contractual character of these claims. Instead, our holding
recognizes that because Congress requires that an SPD be
“sufficiently accurate and comprehensive to reasonably
27
apprise . . . participants . . . of their rights and obligations,”
29 U.S.C. § 1022(a), the SPD serves as a summary of the
contract’s (i.e., the plan document’s) key terms. If an SPD
conflicts with a plan document, then a court should read
the terms of the “contract” to include the terms of a plan
document, as superseded and modified by conflicting
language in the SPD. And, just as a court’s enforcement of
a contract generally does not require proof that the parties
to the contract actually read, and therefore relied upon, the
particular terms of the contract, we are persuaded that
enforcement of an SPD’s terms under a claim for plan
benefits does not require a showing of reliance.21 As the
Second Circuit has explained,
[W]e are unaware of caselaw to the effect that a plaintiff
must show reliance or prejudice to enforce terms of a
plan. Such a limitation on the reliance or prejudice
requirement is consistent with the principle that an
action under ERISA to enforce plan terms sounds in
contract, and a plaintiff generally need not show
equitable factors such as reliance or prejudice to
enforce contractual terms.
Feifer, 306 F.3d at 1202.22 Based upon our view of
Congress’s intent, an SPD furnishes the plan’s terms to the
extent that it conflicts with (and thus supersedes) the
language of a formal plan document. We thus hold that, in
enforcing an SPD’s terms, a participant does not need to
plead reliance or prejudice, since the claim for plan benefits
under ERISA § 502(a)(1)(B) is contractual.
Accordingly, in light of our conclusion that a summary
plan description controls over a plan document where the
two conflict, and thus serves as a source for benefits due
21. Indeed, as the Second Circuit has noted, “those courts that have
imposed requirements such as reliance or prejudice did so only where
plaintiffs sought to enforce provisions other than those that the court
deemed ‘plan’ terms.” Feifer, 306 F.3d at 1213 (citing, inter alia, Gridley).
22. In Feifer, the Second Circuit did not deal with an SPD that conflicted
with a formal plan document; rather, it treated the relevant summary
documents in the case before it as constituting the plan. See Feifer, 306
F.3d at 1202 (“the Program Summary (with the accompanying
memorandum) was the plan”) (emphasis in original).
28
under an ERISA plan, we hold that Burstein has stated a
claim against the Plan itself for plan benefits and thus
against the PBGC as administrator.23
D.
We reach a different conclusion as to claims against the
PBGC in its role as guarantor. As the district court
concluded, see Burstein, ___ F. Supp. 2d ___, 2002 WL
31319407, at *9, the statute governing the PBGC’s
guarantee of benefits does not require PBGC to guarantee
the benefits at issue here.
The Supreme Court has outlined the limited role of the
PBGC as guarantor:
When a plan covered under Title IV terminates with
insufficient assets to satisfy its pension obligations to
the employees, the PBGC becomes trustee of the plan,
taking over the plan’s assets and liabilities. The PBGC
then uses the plan’s assets to cover what it can of the
benefit obligations. . . . The PBGC then must add its
own funds to ensure payment of most of the remaining
“nonforfeitable” benefits, i.e., those benefits to which
participants have earned entitlement under the plan
terms as of the date of termination. ERISA does place
limits on the benefits PBGC may guarantee upon plan
termination, however, even if an employee is entitled to
greater benefits under the terms of the plan. . . .
Finally, active plan participants (current employees)
cease to earn additional benefits under the plan upon
its termination and lose entitlement to most benefits not
yet fully earned as of the date of plan termination.
23. Because Kasperbauer ceased to be the administrator of the Plan once
the Plan was terminated, the PBGC was obliged to take over the
administration of the Plan. To the extent that the PBGC took the place
of the Plan administrator, Burstein, if he was to prove that benefits are
due him under the language of the SPD, could seek to enforce his claim
for benefits against the Plan, with PBGC as its administrator. In such a
case, PBGC, as Plan administrator, would allocate funds from Plan
assets pursuant to the asset allocation priorities contained in 29 U.S.C.
§ 1344.
29
Pension Ben. Guar. Corp. v. LTV Corp., 496 U.S. 633, 637-
38 (1990) (emphasis added) (citations omitted).
The statutory provision covering the single-employer plan
guarantee, 29 U.S.C. § 1322, provides as follows:
Subject to the limitations contained in subsection (b) of
this section, the [PBGC] shall guarantee, in accordance
with this section, the payment of all nonforfeitable
benefits (other than benefits becoming nonforfeitable
solely on account of the termination of a plan) under a
single-employer plan which terminates at a time when
this subchapter applies to it.
29 U.S.C. § 1322(a) (emphasis added).
The bold text above, which qualifies the statutory
guarantee requirement, is directly applicable to this
situation. PBGC’s obligation to guarantee certain benefits
does not apply to benefits that have become nonforfeitable
solely on account of the termination of the plan.24 The
benefits claimed by Burstein, even if due under the Plan by
virtue of the SPD’s language, would have become
“nonforfeitable” (vested) solely due to the plan’s partial
termination. See SPD at 25, A219 (“If the Plan is terminated
you will automatically become vested in your account,
regardless of how many years of service you have earned.”)
(emphasis added).25
Under the plain terms of 29 U.S.C. § 1322(a), the PBGC,
in its guaranty role, is not responsible for guaranteeing or
insuring plan benefits that become vested solely as a result
of a plan termination. We hold that here, where the
complaint may be read only to allege that the claimed
benefits vested as a result of the partial termination,
§ 1322(a)’s exception for benefits that “become
nonforfeitable solely on account of the termination of a
24. A “nonforfeitable benefit” means “a benefit for which a participant
has satisfied the conditions for entitlement under the plan or the
requirements of this chapter.” 29 U.S.C. § 1301(a)(8). See also Mead
Corp. v. Tilley, 490 U.S. 714, 717 n.1 (1989) (quoting same).
25. As we explained supra, the SPD’s language relating to “termination”
encompasses “partial termination” for the purpose of examining whether
benefits were due under the Plan.
30
plan” applies with equal force to benefits that have become
nonforfeitable solely on account of a partial termination of a
plan that is later terminated.
We therefore conclude that Burstein has failed to state a
claim against the PBGC, in its role as guarantor. Section
1322(a) precludes the federal courts from ordering as relief
to Burstein the payment of these benefits out of PBGC’s
own guarantee funds. Accordingly, we will affirm the
district court’s dismissal of claims against PBGC as
guarantor.
IV.
Burstein also seeks relief under an equitable estoppel
theory against Kasperbauer, McConnell, and the AHERF
trustees. This claim arises under Count VI, which we have
characterized as Category Two. We have held that to state
a cause of action for equitable estoppel under ERISA
§ 502(a)(3), 29 U.S.C. § 1132(a)(3), an “ERISA plaintiff must
establish (1) a material representation, (2) reasonable and
detrimental reliance upon the representation, and (3)
extraordinary circumstances.” Curcio v. John Hancock Mut.
Life Ins. Co., 33 F.3d 226, 235 (3d Cir. 1994).
First and foremost, Burstein has alleged no extraordinary
circumstances. We have held that “ ‘extraordinary
circumstances’ generally involve acts of bad faith on the
part of the employer, attempts to actively conceal a
significant change in the plan, or commission of fraud.”
Jordan v. Federal Express Corp., 116 F.3d 1005, 1011 (3d
Cir. 1997). None has been alleged here. Furthermore, “we
have consistently rejected estoppel claims based on simple
ERISA reporting errors or disclosure violations, such as a
variation between a plan summary and the plan itself, or an
omission in the disclosure documents.” Kurz v. Philadelphia
Elec. Co., 96 F.3d 1544, 1553 (3d Cir. 1996) (emphasis
added).
Moreover, we are aware that the district court held that
equitable estoppel claims could not run in any event
against Kasperbauer, McConnell, or the AHERF Trustees,
because these defendants have no power over, or present
relationship to, the Plan. Hence, Burstein had no claim
31
against them under an equitable estoppel theory, which
sought to estop them from enforcing the Plan in any
manner other than in accordance with the SPD.
Additionally, Burstein did not argue on appeal that
equitable estoppel applied to the PBGC. We hold that the
district court did not err in dismissing Burstein’s equitable
estoppel claims.
V.
We will affirm the district court’s dismissal of all but one
of the claims for breach of fiduciary duty. Counts I-V of the
complaint, which we have characterized as Category Three,
deal with alleged breaches of fiduciary duty.
ERISA sets out certain obligations for fiduciaries.26 Under
ERISA § 502(a)(3)(B), 29 U.S.C. § 1132(a)(3)(B), a plan
participant may have a cause of action for a breach of
fiduciary duty.27 To allege and prove a breach of fiduciary
duty for misrepresentations,
26. Under ERISA, a fiduciary:
shall discharge his duties with respect to a plan solely in the
interest of the participants and beneficiaries and—
(A) for the exclusive purpose of:
(I) providing benefits to participants and their beneficiaries; and
(ii) defraying reasonable expenses of administering the plan;
(B) with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct
of an enterprise of a like character and with like aims; . . .
(D) in accordance with the documents and instruments governing
the plan insofar as such documents and instruments are consistent
with the provisions of this subchapter and subchapter III of this
chapter.
29 U.S.C. § 1104(a).
27. Section 502(a)(3) of ERISA provides that a plan participant may bring
a civil action “(A) to enjoin any act or practice which violates any
provision of this subchapter or the terms of the plan, or (B) to obtain
other appropriate equitable relief.” 29 U.S.C. § 1132(a)(3).
32
a plaintiff must establish each of the following
elements: (1) the defendant’s status as an ERISA
fiduciary acting as a fiduciary; (2) a misrepresentation
on the part of the defendant; (3) the materiality of that
misrepresentation; and (4) detrimental reliance by the
plaintiff on the misrepresentation.
Daniels v. Thomas & Betts Corp., 263 F.3d 66, 73 (3d Cir.
2001). We evaluate the dismissal of the breach of fiduciary
duty claims with this framework in mind.
A.
The district court rejected all of Burstein’s breach of
fiduciary duty claims, holding that Burstein failed to state
a claim. We agree with the district court as to all but one
of the breach of fiduciary duty claims.
“ERISA . . . defines ‘fiduciary’ not in terms of formal
trusteeship, but in functional terms of control and authority
over the plan.” Mertens v. Hewitt Associates, 508 U.S. 248,
262 (1993). As the district court properly noted, “[f]iduciary
duties ‘attach not just to particular persons, but to
particular persons performing particular functions.’ ”
Burstein, ___ F. Supp. 2d ___, 2002 WL 31319407, at *15
(quoting Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155,
1158 (3d Cir. 1990)). “[U]nder ERISA, a person ‘is a
fiduciary with respect to a plan’ only ‘to the extent’ that ‘he
has any discretionary authority or discretionary
responsibility in the administration of such plan.’ ” Varity
Corp., 516 U.S. at 527 (quoting 29 U.S.C. § 1002(21)(A)(iii));
see also Confer v. Custom Eng’g Co., 952 F.2d 34, 36 (3d
Cir. 1991) (“In determining who is a fiduciary under ERISA,
courts consider whether a party has exercised discretionary
authority or control over a plan’s management, assets, or
administration.”).
The district court dismissed Counts II through V,
inclusive, and Count I as to all named defendants but
Kasperbauer, based on its analysis of those defendants’
functions with respect to the Plan. Count I, against
Kasperbauer, McConnell, and the AHERF Trustees, was for
misrepresentations based on the SPD, Plan Brochure, and
verbal representations. Count II, against Kasperbauer,
33
McConnell, the AHERF Trustees, and Mellon Bank, was for
“failure to disclose material information.” Counts III-V
alleged “mismanagement of plan assets.”28
After an independent and careful review of the record, we
are satisfied that the district court’s analysis respecting all
of Burstein’s claims against Kasperbauer, McConnell, the
AHERF Trustees,29 and Mellon Bank, except for Count I as
to Kasperbauer, was correct. The district court properly
dismissed these claims either because the defendants other
than Kasperbauer did not hold fiduciary positions that
could render them liable, or because the assets alleged to
be Plan assets were not Plan assets. Except for the claims
that Burstein has alleged against Kasperbauer and that
pertain to Kasperbauer’s fiduciary responsibilities, we have
considered Burstein’s “breach of fiduciary duty” arguments
on appeal against the other defendants and conclude that
they are without merit. We also conclude that Burstein’s
claims against Kasperbauer, other than the claims in Count
I (misrepresentation), were properly dismissed by the
district court.
B.
With respect to Count I (“Claim . . . for Breach of
Fiduciary Duties — Misrepresentation”), the district court
stated that Kasperbauer, as Plan administrator, “was
clearly a fiduciary . . . for purposes of . . . communicating
with plan participants.” Burstein, ___ F. Supp. 2d ___, 2002
WL 31319407, at *16. Kasperbauer does not dispute his
fiduciary status for these purposes.
In analyzing whether Burstein had stated a claim against
28. Count III named Kasperbauer, McConnell, and the AHERF Trustees
as defendants. Count IV named Mellon Bank. Count V named particular
AHERF Trustees: Cahouet, Barnes, Gumberg, Adam, and Fletcher.
29. As we have stated, the AHERF Trustees named in the complaint are
William F. Adam, J. David Barnes, Ralph W. Brenner, Dorothy McKenna
Brown, Frank V. Cahouet, Douglas D. Danforth, Ronald R. Davenport,
Harry R. Edelman, III, Robert L. Fletcher, Ira J. Gumberg, Robert M.
Hernandez, Francis B. Nimick, Robert B. Palmer, David W. Sculley, and
W.P. Snyder, III. See note 4, supra.
34
Kasperbauer, the district court looked to our decision in In
re Unisys Corp. Retiree Medical Ben. ERISA Litigation
(Unisys II), 57 F.3d 1255 (3d Cir. 1995), cert. denied, 517
U.S. 1103 (1996), in which we described the elements of an
ERISA breach of fiduciary duty claim as “proof of fiduciary
status, misrepresentations, company knowledge of the
confusion and resulting harm to the employees.” Id. at
1265.
As noted above, the district court determined that the
“proof of fiduciary status” element had been met. The
district court also held, and Kasperbauer does not
challenge on appeal, that statements in the SPD and Plan
Brochure could be misleading, thus meeting the
“misrepresentation” element.30
30. The district court stated:
With regard to the content of the SPD, the court cannot say as a
matter of law that the statement that participants would vest in their
accounts upon termination regardless of how many years of service
they had completed, without advising participants that they only
received a vested right to those accounts to the extent funded, is not
a “material misrepresentation” or “incomplete, inconsistent, or
contradictory disclosure.” A factfinder could reasonably conclude
based on the unqualified statement in the SPD that participants who
had not otherwise vested could reasonably expect to receive the value
of their account upon termination, regardless of whether the Plan was
adequately funded. . . . Further, in light of the conclusion that the
disclosures in the SPD may qualify as incomplete disclosures, the
court cannot say as a matter of law that the lack of information
regarding Plan termination in the Plan Brochure was not also a
material omission. . . .
We reach the same conclusion with regard to statements in the SPD
and the [Plan] Brochure that plaintiffs claim led them to believe that
they had individual accounts and a nonforfeitable right to the funds
in those accounts. Although the SPD unambiguously explained that
the accounts were only hypothetical and that participants’ benefits
were pooled in a single trust account, the Plan Brochure did not
contain such an explanation and describes participants’ interests in
the Plan as individual “accounts” which they “own.”
Burstein, ___ F. Supp. 2d ___, 2002 WL 31319407, at *17-*18 (emphasis
added) (citations omitted).
35
In addition, the district court determined that “the
allegations in Count I and throughout the rest of the
proposed Second Amended Complaint, if true, can
reasonably support an inference that Kasperbauer was
aware of Plan participants’ misunderstanding as to the
scope of their rights to retirement benefits upon
termination.” Burstein, ___ F. Supp. 2d ___, 2002 WL
31319407, at *18. For this reason, the district court stated
that the “Second Amended Complaint adequately alleges
that Kasperbauer knew of the confusion created.” Id.Kasperbauer does not challenge this conclusion on appeal.31
The district court concluded, however, that the fourth
element of an ERISA breach of fiduciary duty claim —
which it termed “causation” or “resulting harm,” based on
its use of Unisys II as the guiding precedent — had not
been met. The district court explained that “in the context
of a breach of fiduciary duty claim premised on a
misrepresentation or omission, it is difficult to conceive of
any type of causation other than some kind of detrimental
reliance by the plan beneficiary.” Burstein, ___ F. Supp. 2d
___, 2002 WL 31319407, at *19. The district court also
cited our cases that identified detrimental reliance as an
element of a breach of fiduciary duty claim based upon a
misrepresentation. See id. (citing, inter alia, Adams v.
Freedom Forge Corp., 204 F.3d 475, 492 (3d Cir. 2000); In
re Unisys Corp. Retiree Medical Benefit “ERISA” Litigation
31. In Daniels, we did not identify “knowledge of the confusion” as an
element of a breach of fiduciary duty claim. See Daniels, 263 F.3d at 73.
Instead, we identified the third element as the “materiality” of the
misrepresentation. Id. Our formulation in Adams v. Freedom Forge Corp.,
204 F.3d 475 (3d Cir. 2000), combines these ideas by requiring that, to
state a claim for breach of fiduciary duty, the fiduciary, among other
things, must have “made a material misrepresentation that would
confuse a reasonable beneficiary about his or her benefits.” Id. at 492.
Though the Adams court did not use the word “knowledge,” the
requirement that a misrepresentation must “confuse a reasonable
beneficiary” suggests that a fiduciary, as an objective matter, knew or
should have known that a beneficiary would be confused. Because
Kasperbauer has conceded this element, at least for purposes of the
motion to dismiss, we need not parse out precisely what role “knowledge”
has in stating a claim for breach of fiduciary duty.
36
(Unisys III), 242 F.3d 497, 507-09 (3d Cir.), cert. denied,
534 U.S. 1018 (2001)).
The district court held that Burstein had failed to plead
reliance; rather, he had alleged only the mere “expectation
that benefits would materialize,” without alleging “reliance
on that expectation.” Id. (emphasis in original). The court
found “telling” that, in its view, Burstein had failed to cite
an action taken in reliance on this expectation by the time
of his Second Amended pleading. Id. at *20.
On appeal, Burstein argues that the district court’s
reading of our precedent to require pleading of detrimental
reliance constituted error. Pointing to the “resultant harm”
language from Unisys II, Burstein claims that detrimental
reliance is one of many ways to show “resultant harm.”
Unisys II, 57 F.3d at 1265. This view, however, does not
comport with our explicit identification in Daniels of
detrimental reliance as a necessary element of a breach of
fiduciary duty claim based on misrepresentation. See
Daniels, 263 F.3d at 73. As we have recited, in order to
state a claim for misrepresentation by an ERISA fiduciary,
Burstein must allege the four elements found in Daniels: (1)
that Kasperbauer was acting as a fiduciary; (2) that
Kasperbauer made misrepresentations; (3) that the
misrepresentations are material; and (4) that Burstein relied
on the misrepresentations to his detriment. Id. Even in cases
prior to Daniels, we had also explained that detrimental
reliance is an element of an ERISA breach of fiduciary
claim. See Adams, 204 F.3d at 492 (3d Cir. 2000) (“An
employee may recover for a breach of fiduciary duty if he or
she proves that an employer, acting as a fiduciary, made a
material misrepresentation that would confuse a reasonable
beneficiary about his or her benefits, and the beneficiary
acted thereupon to his or her detriment.”) (emphasis added)
(citing Unisys II); see also Unisys III, 242 F.3d 497, 505 (3d
Cir. 2001) (quoting Adams).
Our jurisprudence therefore requires “detrimental
reliance” as an element of a breach of fiduciary duty claim.
See Daniels; Adams; Unisys III. Burstein argues that “[i]n
some cases, causation may be established based upon the
employee’s expectancy interest in the misrepresented
benefits.” Burstein Reply Br. at 10-11 (emphasis added)
37
(citing Unisys III, 242 F.3d at 506 n.7). The footnote to
which Burstein points in Unisys III, 242 F.3d at 506 n.7,
however, does not refer to an “expectancy interest” as an
element of an ERISA breach of fiduciary duty, but rather to
the character of potential ERISA remedies. Indeed, the very
next footnote in Unisys III, id. at 506 n.8, reiterates
that “detrimental reliance is a necessary element of a
breach of fiduciary duty of this kind,” i.e., involving
misrepresentations.
As counsel for Burstein conceded at oral argument, the
proposed Second Amended Complaint cannot be read to
plead detrimental reliance. In answer to our questions at
oral argument, however, counsel represented to us that, if
Burstein was given yet another opportunity to plead
reliance, he could do so.
During counsel’s opening argument, counsel stated that
the element of detrimental reliance had been pled in the
proposed Second Amended Complaint. See Tr. of Oral Arg.
at 23 (“It’s in our proposed Second Amend[ed] Complaint.
That’s absolutely in our proposed Second Amended
Complaint.”). After reviewing the complaint, however, the
following colloquy between the Court and counsel occurred
during counsel’s rebuttal argument:
THE COURT: Mr. Eisenhofer. Were you able to find
the provisions [concerning detrimental reliance]?
MR. EISENHOFER: I’ll tell you, what I found was, I
found a way in which we pled the element of resulting
harm, because that is what we understood from this
Court’s opinions were the elements of the breach of
fiduciary duty claim, and one of the ways to show
resulting harm was through detrimental reliance.
THE COURT: Did you plead detrimental reliance?
MR. EISENHOFER: We did not plead specifically that
the receipt of less compensation and benefits for being
employed at AHERF when they were led to believe that
they would receive it[; we] did not say that that
constitutes detrimental reliance. We did plead the loss
of expectancy in the compensation of benefits. That’s
what I recall.
38
Tr. of Oral Arg. at 57-58.
The Court questioned counsel further on the choice not
to plead detrimental reliance:
THE COURT: Isn’t that a different animal?
MR. EISENHOFER: I don’t believe so, your Honor. I
believe that the element of breach of fiduciary duty is
the resulting harm, and one of the ways in which this
Court has said you can show resulting harm is
detrimental reliance. Another way in which you can
show resulting harm is to receive something less than
what you have been led to believe you would.
THE COURT: Well, your opponent said it was a
deliberate decision on your part, because you feared
problems with a possible class certification motion later
on.
MR. EISENHOFER: They may be giving me a little bit
more credit than I deserve, your Honor.
Tr. of Oral Arg. at 58-59.
Counsel then sought to argue that (contrary to what we
have held, supra) detrimental reliance is not a necessary
element of a breach of fiduciary duty. The Court then asked
whether, if it were to disagree, Burstein would be able to
plead detrimental reliance:
THE COURT: Let’s assume for the moment that we
don’t agree with you on that, and the question then
becomes, can you, in good faith, state that these
plaintiffs relied on the Summary Plan Description by
some action that they took, and that as a result of that
reliance, they were thereafter harmed?
MR. EISENHOFER: I believe so, your Honor. I mean,
I think that the element that has been —
THE COURT: There has to be more than just beliefs,
though, because what you’re asking us to do is to
reverse [the District Court,] send it back for a Third
Amended Complaint so that you can state precisely
what Judge Ambro has informed you must be stated.
And there’s no point in our sending it back and holding
39
that he abused his discretion . . . if indeed, you don’t
know that you can do that. . . .
MR. EISENHOFER: Your Honor, as I said, I believe
that we can do that as to these plaintiffs. I think that
the element that has been missing . . . from the
argument, because I don’t know that is dispositive . . .
is that the misstatements in the Summary Plan
Description were not the only misstatements. . . .
[T]here was a whole other brochure which created a
whole host of different misunderstandings on the part
of these persons which are all part of the mix.
THE COURT: . . . The question in my mind is, how
do . . . we then turn around and say . . . to the District
Court judge who has assembled in his mind [the
defendants’] arguments and yours and who said
plaintiffs still didn’t do this [i.e., plead detrimental
reliance]? How do we tell him that he abused his
discretion?
MR. EISENHOFER: Your Honor, what I would
suggest is that we thought that we pled the element of
harm. . . .
Our position had been that detrimental reliance is
not the sole way in which you can show causation, but
having an expectancy in these benefits is implicitly
relying upon their existence.
To the extent that this Court disagrees with our
argument on the expectancy and the implicit nature of
the reliance in having that expectancy, I would ask for
leave to replead to meet that standard, but . . . I’m
hopeful that the Court not eliminate the expectancy at
the motion to dismiss stage as a possible way of
showing harm . . .
Tr. of Oral Arg. at 62-66.
It is our understanding, therefore, that Mr. Eisenhofer,
counsel for Burstein, has represented to this Court that
Burstein can and will plead the element of detrimental
reliance in alleging the breach of fiduciary duty by
Kasperbauer. We emphasize that it is on the basis of Mr.
Eisenhofer’s representation that we will direct the district
40
court to permit Burstein to file a Third — and final —
Amended Complaint so that Burstein, if he can, may plead
detrimental reliance on the Summary Plan Description.32
To simplify the morass which may have been created by
our permitting the Second Amended Complaint to be filed,
even though we have affirmed the district court’s dismissal
of many of its counts and defendants, our direction that the
district court permit a Third and final Amended Complaint
to be filed should be read as requiring the following:
1. Burstein, in conformance with this opinion, is to
eliminate and delete all but the actionable claims against
those defendants who we have held may be liable. This
means that where the district court has dismissed
particular defendants, and we have affirmed those
dismissals, Burstein may not allege the same claims
against them.
2. Thus, where we have affirmed the district court’s
dismissal of Count VI, Burstein may not reallege those
claims.
3. Where Burstein’s counsel has represented to us that
detrimental reliance can be pled in his cause of action
asserted against Kasperbauer for breach of fiduciary duty,
he may do so if indeed there has been detrimental reliance.
If he cannot plead such reliance, then his complaint must
delete the claim for breach of fiduciary duty.
Thus, the remaining viable portions of the Second
Amended Complaint (which had not been filed) may now be
transferred to Burstein’s Third and final Amended
Complaint, and the district court, after such filing, may
again exercise its discretion in reviewing the Third
Amended Complaint.
32. We do so particularly since we are reversing and remanding to the
district court in any event. Thus, in so instructing the district court, we
emphasize that we do not fault the district court for denying Burstein’s
motion for leave to file the proposed Second Amended Complaint. Under
the district court’s reading of Gridley, the district court could well have
considered filing a new complaint to be futile.
41
VI.
We summarize our holdings in this case.
Because we hold that a plan beneficiary may state a
claim for plan benefits based on a conflict between a
summary plan description and a plan document, we will
reverse the dismissal of the claim for plan benefits
pursuant to 29 U.S.C. § 1132(a)(1)(B) (Counts VII and VIII)
only as against the Plan itself, and the PBGC as
administrator of the Plan, and will affirm the dismissal of
all other defendants.
Because 29 U.S.C. § 1322(a) specifically limits the
responsibility of the PBGC to guarantee plan benefits and
excludes from that guarantee those benefits that — as in
this case — have become nonforfeitable “solely” as a result
of the Plan’s partial termination, we will affirm the
dismissal of the claim for plan benefits against the PBGC in
its role as guarantor. (Counts IX-X).
We will affirm the dismissal of the equitable estoppel
claim (Count VI) against all defendants because the relief
Burstein seeks with respect to the equitable estoppel claim
is no longer viable (as injunctive relief is unavailable) and
because extraordinary circumstances were not pled.
We will affirm the dismissal of all defendants but
Kasperbauer on the breach of fiduciary duty claims (Count
I, except as to Kasperbauer, and Counts II through V,
inclusive). We will reverse the district court’s dismissal of
the claim for breach of fiduciary duty against Kasperbauer
(Count I as to Kasperbauer), as Kasperbauer was the only
plan fiduciary with responsibilities related to the Summary
Plan Description.
Based upon the representation that counsel for Burstein
made to this Court, we will direct the district court, on
remand, to permit Burstein to file a final, Third Amended
Complaint as described above.
Given our disposition of these claims, we will also reverse
the denial of the motion for class certification as moot. We
express no opinion as to whether a class should be
42
certified, and instead leave that determination to the
district court’s discretion in the first instance.33
Thus, we will AFFIRM IN PART and will REVERSE IN
PART the judgment of the district court, and will REMAND
for further proceedings consistent with this opinion.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
33. The district court is free, in its full discretion, to hold hearings if
deemed necessary or to take other actions deemed appropriate based on
the remaining issues before it.