Montrose Medical Group Participating Savings Plan v. Bulger

Opinions of the United
2001 Decisions States Court of Appeals
for the Third Circuit
3-22-2001
Montrose Med'l Group v. Bulger
Precedential or Non-Precedential:
Docket 00-3430
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2001
Recommended Citation
"Montrose Med'l Group v. Bulger" (2001). 2001 Decisions. Paper 58.
http://digitalcommons.law.villanova.edu/thirdcircuit_2001/58
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2001 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
Filed March 22, 2001
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-3430
MONTROSE MEDICAL GROUP
PARTICIPATING SAVINGS PLAN;
MONTROSE GENERAL HOSPITAL, INC.,
Appellants
v.
RICHARD A. BULGER; WALTER GARVEY;
MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
v.
MUTUAL LIFE INSURANCE COMPANY OF NEW YORK;
RICHARD A. BULGER, Third-Party Plaintif fs
v.
EUDORA BENNETT; MONTROSE MEDICAL ARTS
PHARMACY, INC.; MEDICAL ARTS NURSING
CENTER, INC.; MEDICAL ARTS CLINIC,
Third-Party Defendants
On Appeal From the United States District Court
For the Middle District of Pennsylvania
(D.C. Civ. No. 94-cv-02141)
District Judge: Honorable Thomas I. Vanaskie, Chief Judge
Argued: November 30, 2000
Before: BECKER, Chief Judge, and
MAGILL,* Circuit Judge.
(Filed March 22, 2001)
WILLIAM W. WARREN, JR.,
ESQUIRE (ARGUED)
Saul, Ewing, Remick & Saul, LLP
Penn National Insurance Tower
2 North Second Street, 7th Floor
Harrisburg, PA 17101
CATHLEEN M. DEVLIN, ESQUIRE
Saul, Ewing, Remick & Saul, LLP
Centre Square West
1500 Market Street, 38th Floor
Philadelphia, PA 19102
Counsel for Appellants
_________________________________________________________________
* Honorable Frank J. Magill, United States Cir cuit Judge for the Eighth
Circuit, sitting by designation. The Honorable Marjorie O. Rendell
participated in this case from its inception in this Court through pre-
filing circulation of the opinion to the full Court pursuant to Third
Circuit Internal Operating Procedur e 5.6.4. At that juncture, the routine
computer recusal check made for all cir culating opinions revealed, for
the first time, a recusal problem in the nature of contributions to the
political campaign of her husband Edward G. Rendell, former Mayor of
Philadelphia. The background of the problem is encapsulated in the
following notice, that is routinely sent to all parties and their counsel
in
all cases in this Court when the docketing notice is sent.
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
______
NOTICE
________
TO ALL PARTIES AND THEIR COUNSEL:
You are hereby advised that the Honorable Marjorie O. Rendell,
a judge of this Court, whose spouse, Edward G. Rendell, has raised
funds for his campaigns for public office, advises the parties and
counsel in this case that Judge Rendell will automatically recuse
in all cases where the aggregate campaign contribution to Rendell
``95 by a party or law firm repr esenting a party, from January 1,
1995 to the present, is $2501.00 or greater. For contributions less
than $2501.00, Judge Rendell will not automatically recuse unless
2
the parties or counsel in the case file an objection.* Mr. Rendell
does
not currently hold elective office but is chairman of the
Democratic
National Committee, headquartered in Washington, D.C.
During the pendency of this appeal, Judge Rendell could be one
of the judges randomly assigned to decide a motion or the merits of
this case. IF YOU OBJECT TO HER DOING SO BASED ON A
CONTRIBUTION(S) MADE BY A PARTY OR COUNSEL IN THE
CASE, you may object to her participation by filing the enclosed
CONFIDENTIAL REQUEST FOR DISQUALIFICATION within ten
(10) days of the date of the docketing letter.
IF YOU DO SO OBJECT, Judge Rendell will be automatically
disqualified from participation in any aspect of this appeal;
otherwise, Judge Rendell will participate if the case is assigned
to
her.
IF YOU DO NOT OBJECT, you will be deemed to have waived
objection to Judge Rendell's participation in any aspect of this
appeal. Also, if Judge Rendell is automatically recused as set
forth
above, nonetheless all parties can agree to waive disqualification
to
her participation by filing the enclosed JOINT REQUEST FOR
WAIVER. Such waiver would be made part of the public record.
By the Court:
/s/ Edward R. Becker
_____________________________
Edward R. Becker, Chief Judge
Date: Wednesday, June 21, 2000
_____________________________________________________
*Complete reports of contributions to Rendell ``95 are available as
public records from the Office of the City Commissioners, Room
130, City Hall, Philadelphia, PA 19107 (telephone: 215-686-3460);
or from Commonwealth of Pennsylvania Bur eau of Commissions,
Elections & Legislation, 305 North Office Building, Harrisburg, PA
17120; or in the Third Circuit Clerk's Office, U.S. Courthouse, 601
Market Street, Room 21400, Philadelphia, P A 19106. This
information will be updated at the Clerk's Office every 60 days,
and
the names of parties and counsel will be checked against
contributions of record only at the issuance of the briefing order
in
the case.
3
E. THOMAS HENEFER, ESQUIRE
(ARGUED)
Stevens & Lee
111 North Sixth Street
P.O. Box 679
Reading, PA 19603
CHARLES J. BLOOM, ESQUIRE
Stevens & Lee
1275 Drummers Lane
P.O. Box 236, Suite 202
Wayne, PA 19087
Counsel for Appellee/Third-Party
Plaintiff Mutual Life Insurance Co. of
New York
DANIEL MORGAN, ESQUIRE
O'Malley & Harris
345 Wyoming Avenue
Scranton, PA 18503
Counsel for Appellee/Third Party
Plaintiff Richard A. Bulger
_________________________________________________________________
Since July 2000, the Court has utilized the Rendell``95 contributor
data base (as updated), comparing the entries ther eon with the counsel
and parties in cases in this Court. In this instance, the case was
assigned to the panel prior to the time when the automated check of
campaign contributions of Rendell ``95 had been fully integrated into the
Court's recusal system. Judge Rendell ther efore had no constructive
knowledge of a contribution to her husband's campaign by counsel for
one of the parties to this appeal. In fact, she also had no actual
knowledge of any such contribution or of any gr ound upon which her
impartiality could reasonably be questioned.
However, once the recusal problem appeared, earlier this month upon
circulation of the opinion to the full Court, she determined to recuse, in
the absence of agreement of all parties that she continue, which was not
forthcoming.
Chief Judge Becker and Judge Magill have conferr ed in the wake of
this development and reaffirm their commitment to the opinion as
written. Accordingly, the opinion is filed notwithstanding the recusal of
Judge Rendell. See 28 U.S.C. S 46(d).
4
DANIEL T. BRIER, ESQUIRE
Myers, Brier & Kelly
425 Spruce Street, Suite 200
Scranton, PA 18503
Counsel for Appellees/Third Party
Defendants Eudora Bennett;
Montrose Medical Arts Pharmacy,
Inc.; Medical Arts Nursing Center,
Inc.; and Medical Arts Clinic
OPINION OF THE COURT
BECKER, Chief Judge.
This appeal, set in the context of an ERISA br each of
fiduciary duty action, largely concer ns the doctrine of
judicial estoppel. The District Court applied the doctrine to
bar Plaintiffs Montrose General Hospital, Inc. (Hospital) and
Montrose Medical Group Participating Savings Plan (Plan)
from asserting that the Plan is covered by ERISA on
account of representations they had made in a related prior
litigation. Because this suit is based on the pr emise that
ERISA governs the Plan, the District Court's ruling
rendered the Hospital and the Plan unable to state a prima
facie case. The court therefore enter ed summary judgment
in favor of Defendants Mutual Life Insurance Company of
New York (MONY), whose insurance policies funded the
Plan, and Richard Bulger, an outside consultant affiliated
with MONY who had brought the parties together .
Judicial estoppel may be imposed only if: (1) the party to
be estopped is asserting a position that is irr econcilably
inconsistent with one he or she asserted in a prior
proceeding; (2) the party changed his or her position in bad
faith, i.e., in a culpable manner threatening to the court's
authority or integrity; and (3) the use of judicial estoppel is
tailored to address the affr ont to the court's authority or
integrity. Though we agree that the inconsistency prong is
satisfied in this case, the other two are not. Guided by
Cleveland v. Policy Management Systems Corp., 526 U.S.
795 (1999), we hold that a party has not displayed bad
5
faith for judicial estoppel purposes if the initial claim was
never accepted or adopted by a court or agency. Because
the earlier statements in this case were never accepted or
adopted, judicial estoppel was inappropriate.
We hold in the alternative that application of judicial
estoppel was not tailored to address any harm occasioned
by the change of positions. First, the only "har m" identified
by the District Court was inflicted upon thir d parties--
fourteen plan participants who had sued the Hospital, the
Plan, MONY, and Bulger in the prior litigation. Judicial
estoppel's sole valid use, however, is to r emedy an affront
to the court's integrity. Second, judicial estoppel is an
inappropriate sanction here because its ef fects would be
borne not by any wrongdoers, but by innocent third
parties.
Having determined that the District Court was wrong to
invoke judicial estoppel, we turn to MONY's and Bulger's
alternate grounds for affirmance. We ultimately decline to
rule on most of them, concluding instead that it would be
better to let the District Court pass on them in thefirst
instance. We do, however, reach and reject MONY's and
Bulger's assertion that they are entitled to summary
judgment on statute of limitations grounds.
I.
In the late 1970s, the Hospital decided to cr eate a
retirement plan. It informed its accountant, Defendant
Walter Garvey, of its intentions.1 Garvey, in turn, contacted
Bulger, an outside consultant who was affiliated with
MONY. Bulger proposed a plan, which the Hospital
ultimately adopted. The Plan was plagued by financial
troubles from the beginning, and, acting on advice from
Bulger, the Hospital altered its funding mechanism on
_________________________________________________________________
1. Garvey never moved for summary judgment. Concluding that there
was no just reason to delay this appeal and acting pursuant to the
powers conferred upon it by Federal Rule of Civil Procedure 54(b), the
District Court directed the clerk to enter afinal judgment in favor of
MONY and Bulger. The District Court had jurisdiction under 28 U.S.C.
S 1331. Ours is conferred by 28 U.S.C.S 1291.
6
several occasions. These efforts were ultimately
unsuccessful, and the Hospital ceased paying pr emiums in
connection with the Plan in either late 1991 or early 1992.
Soon thereafter, fourteen of the sixty-seven plan
participants sued the Hospital, the Plan, MONY , Bulger,
and Garvey. We will refer to this suit as either the "Hickok
action" or the "Hickok litigation," after its first named
plaintiff, June Hickok. The Hickok plaintiffs alleged that the
Plan was governed by ERISA, and charged the defendants
with numerous violations of their purportedfiduciary duties
under that statute. In their Answer, the Hospital and the
Plan raised eight defenses, two of which are pertinent here.
Paragraph 7 "specifically denied that the plan[was] an
employee pension benefit plan within the meaning of
section 3 of ERISA," and Paragraph 11 averr ed that "[t]he
claims of the Plaintiffs [were] barred by the statute of
limitations." The Hospital and the Plan r epeated these
claims in their Amended Answer and Pre-T rial
Memorandum.
The Hickok action settled for $600,000 in May 1994.
MONY and Bulger assumed responsibility for $500,000,
and the Hospital and the Plan were requir ed to pay the
remaining $100,000. The settlement was distributed among
the fourteen plan participants who were plaintiffs in
Hickok; nothing was paid to the fifty-thr ee who were not.
Following closely on the heels of the Hickok settlement,
the Hospital and the Plan brought this action against
MONY, Bulger, and Garvey, seeking to press claims on
behalf of the remaining fifty-three plan participants. The
claims in this case are essentially the same as those
against which the Hospital and the Plan were co-defendants
in Hickok.2 The Complaint avers that "[t]he plaintiff Plan is
an employee benefit plan within the meaning ofS 3(2)(A) of
ERISA," and that the Hospital is bringing this suit in its
capacity as fiduciary of the Plan. The Hospital and the Plan
_________________________________________________________________
2. The parties disagree as to whether the Settlement Agreement and
Release that ended the Hickok action specifically preserved or precluded
the Hospital and the Plan from later suing MONY , Bulger, and Garvey.
The District Court has never definitively ruled on the question.
7
have not countered the charge that if the claims in Hickok
were time-barred, then those in this case are as well.
Discovery ensued and both MONY and Bulger eventually
moved for summary judgment. In support of their motions,
MONY and Bulger averred that: (1) judicial estoppel should
bar the claims against them; (2) the claims wer e untimely;
(3) they were not ERISA fiduciaries; (4) the Hospital and the
Plan were not entitled to equitable relief; and (5) the
Hospital's and the Plan's "prohibited transaction" claims
were without merit. Ruling on the motions, the District
Court invoked judicial estoppel to bar the Hospital and the
Plan from repudiating their previously expressed position
that ERISA did not apply to the Plan. Because the claims
pressed in this suit rest on an assertion that ERISA governs
the Plan, the District Court's holding render ed the Hospital
and the Plan unable to state a prima facie case, and the
court entered summary judgment on behalf of MONY and
Bulger. With regard to the other proffered bases for
summary judgment, the court remarked that "[a]n
examination of the record reveals . .. material issues of fact
that would militate against granting summary judgment. In
light of the application of judicial estoppel . . ., these other
issues, however, need not be addressed." This appeal
followed.
II.
Federal courts possess inherent equitable authority to
sanction malfeasance. One such sanction is judicial
estoppel. See Klein v. Stahl GMBH & Co. Maschinefabrik,
185 F.3d 98, 109 (3d Cir. 1999). For r easons explained in
the margin, judicial estoppel is distinct fr om both equitable
and collateral estoppel.3 When pr operly invoked, judicial
_________________________________________________________________
3. "Judicial estoppel looks to the connection between the litigant and the
judicial system while equitable estoppel focuses on the relationship
between the parties to the prior litigation." Oneida Motor Freight, Inc.
v.
United Jersey Bank, 848 F.2d 414, 419 (3d Cir. 1988). Privity and
detrimental reliance--prerequisites for the application of equitable
estoppel--are not required for invocation of judicial estoppel. See Ryan
Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355, 360 (3d
Cir. 1996). Collateral estoppel is used to pr otect the finality of
judgments
8
estoppel bars a litigant from asserting a position that is
inconsistent with one he or she previously took before a
court or agency. Summary judgment is appropriate when
operation of judicial estoppel renders a litigant unable to
state a prima facie case.
Three requirements must be met befor e a district court
may properly apply judicial estoppel. First, the party to be
estopped must have taken two positions that ar e
irreconcilably inconsistent. See Ryan Operations G.P. v.
Santiam-Midwest Lumber Co., 81 F.3d 355, 361 (3d Cir.
1996). Second, judicial estoppel is unwarranted unless the
party changed his or her position "in bad faith--i.e., with
intent to play fast and loose with the court." Id. Finally, a
district court may not employ judicial estoppel unless it is
"tailored to address the harm identified" and no lesser
sanction would adequately remedy the damage done by the
litigant's misconduct. Klein, 185 F.3d at 108 (quotation
marks and citation omitted).4
Though a district court's ultimate decision to invoke the
doctrine is reviewed only for abuse of discr etion, see
Anjelino v. New York Times Co., 200 F.3d 73, 100 (3d Cir.
2000), a court "abuses its discretion when its ruling is
founded on an error of law or a misapplication of law to the
facts," In re O'Brien, 186 F .3d 116, 125 (3d Cir. 1999). In
this case, we agree with the District Court that the Hospital
_________________________________________________________________
and to conserve judicial resources, see Dici v. Pennsylvania, 91 F.3d 542,
547 (3d Cir. 1996), whereas judicial estoppel is concerned solely with
protecting the integrity of the courts, see Klein, 185 F.3d at 109. And
though collateral estoppel may not be employed unless the underlying
issue was actually litigated, see Witkowski v. Welch, 173 F.3d 192, 198-
99 (3d Cir. 1999), there is no such r equirement for the use of judicial
estoppel, see Anjelino v. New York Times Co., 200 F.3d 73, 100 (3d Cir.
2000).
4. We acknowledge that our cases have sometimes omitted this final
inquiry and referred to Ryan Operations's "two threshold questions."
Motley v. New Jersey, 196 F.3d 160, 163 (3d Cir. 1999); see also
McNemar v. Disney Store, Inc., 91 F .3d 610, 618 (3d Cir. 1996). But
because Klein squarely held that a district court may not invoke judicial
estoppel without also conducting this inquiry, see 185 F.3d at 108-11,
we conclude that it is a necessary part of the analysis.
9
and the Plan have taken inconsistent positions. W e hold,
however, that the District Court's finding of bad faith was
built upon an error of law, and was ther efore unsound. We
hold also that the District Court abused its discr etion in
concluding that judicial estoppel was an appr opriate
sanction in this case because it was not tailor ed to address
an affront to the court's integrity and because its use would
create rather than defeat a miscarriage of justice.5
_________________________________________________________________
5. Although both parties briefed it, the possibility of judicial estoppel
was
never addressed during the lengthy oral ar gument before the District
Court. It surfaced in the court's opinion. W e have held that a district
court need not always conduct an evidentiary hearing before finding the
existence of bad faith for judicial estoppel purposes, see Klein, 185 F.3d
at 111 n.13; Ryan Operations, 81 F.3d at 364-65, but two precepts are
nevertheless clear. First, a court considering the use of judicial
estoppel
should ensure that the party to be estopped has been given a meaningful
opportunity to provide "an explanation" for its changed position.
Cleveland v. Policy Management Sys. Corp., 526 U.S. 795, 807 (1999).
Second, though a court may sometimes "discer n" bad faith without
holding an evidentiary hearing, it may not do so if the ultimate finding
of bad faith cannot be reached without first resolving genuine disputes
as to the underlying facts. The facts of this case provide an apt
illustration. The parties agree that the Hospital and the Plan changed
their position regarding ERISA's applicability to the Plan following the
settlement of the Hickok action, but vehemently disagree why they did
so. According to MONY and Bulger, the change represented a cynical
attempt to forestall future suits and to secure a hefty recovery for the
Hospital's owners and other highly-paid employees. Not surprisingly, the
Hospital and the Plan offer a differ ent account, claiming that years of
deception by MONY and Bulger falsely led them to believe that the Plan
was not covered by ERISA until efforts by their current counsel revealed
the truth. If the account offered by the Hospital and the Plan is
accurate,
then they may have been negligent for not realizing that MONY and
Bulger were dissembling sooner, but they almost certainly did not act in
bad faith vis-a-vis the court. In such a situation, it would generally be
inappropriate to make a finding of bad faith without first determining
which of these conflicting accounts is true--something that could not be
done without an evidentiary hearing. Fortunately, as will become clear,
the neglect of the judicial estoppel issue earlier in this case has not
impeded our resolution of this appeal.
10
A.
The Hospital and the Plan have taken inconsistent
positions. Three times during the Hickok action they
specifically denied that the Plan was cover ed by ERISA, but
this suit is based on the premise that it is. Furthermore,
the Hospital and the Plan do not deny that the claims they
press in this suit are materially identical to the ones
brought in Hickok. The Hospital and the Plan argued that
the Hickok claims were time-barr ed, and the claims in this
case were brought after those in Hickok. If the Hickok
action was time-barred, then this one is as well. We
therefore agree with the District Court that the
inconsistency element is satisfied.
B.
Inconsistencies are not sanctionable unless a litigant has
taken one or both positions "in bad faith--i.e., with intent
to play fast and loose with the court." Ryan Operations G.P.
v. Santiam-Midwest Lumber Co., 81 F.3d 355, 361 (3d Cir.
1996). A finding of bad faith "must be based on more than"
the existence of an inconsistency, Klein v. Stahl GMBH &
Co. Maschinefabrik, 185 F.3d 98, 111 (3d Cir. 1999)
(emphasis added); indeed, a litigant has not acted in "bad
faith" for judicial estoppel purposes unless two
requirements are met. First, he or she must have behaved
in a manner that is somehow culpable. See Ryan
Operations, 81 F.3d at 362 (stating that judicial estoppel
may not be employed unless " ``intentional self contradiction
is . . . used as a means of obtaining unfair advantage' "
(quoting Scarano v. Central R. Co. of N.J., 203 F.2d 510,
513 (3d Cir. 1953) (emphasis added))); id. ("An inconsistent
argument sufficient to invoke judicial estoppel must be
attributable to intentional wrongdoing ." (emphasis added));
see also In re Chambers Dev. Co. Inc., 148 F.3d 214, 229
(3d Cir. 1998) (quoting this language fr om Ryan
Operations).
Second, a litigant may not be estopped unless he or she
has engaged in culpable behavior vis-a-vis the court. As we
have stressed time and time again, judicial estoppel is
concerned with the relationship between litigants and the
11
legal system, and not with the way that adversaries treat
each other. See, e.g., Ryan Operations , 81 F.3d at 360("Judicial estoppel ``is intended to pr otect the courts rather
than the litigants.' " (quoting Fleck v. KDI Sylvan Pools, Inc.,
981 F.2d 107, 121-22 (3d Cir. 1992))); Delgrosso v. Spang
& Co., 903 F.2d 234, 241 (3d Cir. 1990) (same).
Accordingly, judicial estoppel may not be employed unless
a litigant's culpable conduct has assaulted the dignity or
authority of the court.
To assess whether the Hospital and the Plan have
engaged in wrongful conduct that may fairly be described
as a threat to the integrity of the courts, we must review
what they did. In the Hickok action, fourteen plan
participants charged the Hospital and the Plan with
violating ERISA-imposed fiduciary duties. In their Answer,
Amended Answer, and Pre-Trial Memorandum, the Hospital
and the Plan averred, among other defenses, that the Plan
was not subject to ERISA and that the plaintif fs' claims
were time-barred. Before the district court ruled on any
dispositive motions and before the case went to trial, the
parties settled, and the case was dismissed. Shortly
thereafter, the Hospital and the Plan br ought the present
suit on behalf of the fifty-three plan participants who had
not been plaintiffs in Hickok. In this litigation, the Hospital
and the Plan assert--in direct contravention of their
positions in Hickok--that the Plan is covered by ERISA and
that the specific claims (which are, in all r elevant respects,
identical to those they argued were untimely while
defending Hickok) are timely.
The important threshold question--the answer to which
we find dispositive in this case--is whether a district court
may properly find the existence of bad faith if the initial
inconsistent statement was never accepted or adopted by a
court or agency. MONY and Bulger apparently assume that
it may. Guided by the Supreme Court's r ecent decision in
Cleveland v. Policy Management Systems Corp., 526 U.S.
795 (1999), we disagree.
The issue in Cleveland was whether a person who sought
Social Security Disability Insurance (SSDI) benefits could
later be judicially estopped from claiming pr otected status
under the Americans with Disabilities Act (ADA). In seeking
12
SSDI benefits, the claimant certified that she was "disabled"
and "unable to work," but in a later ADA suit she
submitted that she could "perform the essential functions"
of a job "with . . . a reasonable accommodation." See id. at
798-99. Observing "that, in context, these two seeming
divergent statutory contentions are often consistent with
each other," the Court held that "pursuit, and receipt, of
SSDI benefits does not automatically estop the r ecipient
from pursuing an ADA claim." Id. at 797.
Though Cleveland's earlier claim had been accepted by
the administrative agency, see id. at 802 (stating that she
had "both applied for, and received, SSDI benefits"), the
Court laid down guidance highly pertinent to this case.
Quoting Federal Rule of Civil Procedure 8(e)(2), it noted that
"[o]ur ordinary Rules recognize that a person may not be
sure in advance upon which legal theory she will succeed,
and so permit parties to ``set forth two or more statements
of a claim or defense alternatively or hypothetically' and to
``state as many separate claims and defenses as the party
has regardless of consistency.' " Id. at 805. Stressing that "if
an individual has merely applied for, but had not been
awarded, SSDI benefits, any inconsistency in the theory of
the claims is of the sort normally tolerated by our legal
system," the Court opined that it did "not see why the law
in respect to the assertion of SSDI and ADA claims should
differ." Id.Guided by Cleveland, we hold that it does not constitute
bad faith to assert contrary positions in dif ferent
proceedings when the initial claim was never accepted or
adopted by a court or agency. Because the practice is
specifically sanctioned by the Federal Rules, asserting
inconsistent claims within a single action obviously does
not constitute misconduct that threatens the court's
integrity. In Cleveland, the Supreme Court drew a direct
parallel between pleading inconsistently in a single case
and doing so in subsequent ones, so long as the initial
claim was never sustained. Moreover, the Court described
the latter type of inconsistencies as "the sort normally
tolerated by our legal system." Though the Court did not
use the magic words--"it is not bad faith to assert
inconsistent claims in separate actions so long as the initial
13
position was never accepted by a court or agency"--
Cleveland's import is clear.
The rule we adopt is consistent with judicial estoppel's
purpose of protecting the integrity of the courts. "Judicial
estoppel addresses the incongruity of allowing a party to
assert a position in one tribunal and the opposite in
another tribunal. If the second tribunal adopted the party's
inconsistent position, then at least one court has probably
been misled." Edwards v. Aetna Life Ins. Co., 690 F.2d 595,
599 (6th Cir. 1982). But if a party's initial position was
never accepted by a court or agency, then it is difficult to
see how a later change manifests an "intent to play fast and
loose with the court[s]," Ryan Operations G.P. v. Santiam-
Midwest Lumber Co., 81 F.3d 355, 361 (3d Cir. 1996)
(emphasis added), any more than pleading inconsistently in
a single action does. We think this insight explains why the
consensus view among our sister circuits is that judicial
estoppel is inappropriate unless the earlier position was
accepted by a court or agency.6 This rule also has support
in our cases. See Fleck v. KDI Sylvan Pools, Inc., 981 F.2d
107, 121 (3d Cir. 1992) ("[W]her e a party assumes a certain
position in a legal proceeding, and succeeds in maintaining
that position, he may not thereafter , simply because his
interests have changed, assume a contrary position . . . ."
(quotation marks and citation omitted) (emphasis added)).
We are unpersuaded by MONY's and Bulger's contentions
that Cleveland is inapplicable here, or that stare decisis
precludes adoption of the rule we announce today. Citing
Gruber v. Hubbard Bert Karle Weber , Inc., 159 F.3d 780,
789 (3d Cir. 1998), and Deibler v. United Food &
Commercial Workers' Local Union 23, 973 F.2d 206, 209 (3d
Cir. 1992), they submit that the question whether a plan is
covered by ERISA is one of fact rather than law. And
_________________________________________________________________
6. See Faigin v. Kelly, 184 F.3d 67, 82 (1st Cir. 1999); Wight v.
Bankamerica Corp., 219 F.3d 79, 90-91 (2d Cir. 2000); United
Mineworkers of Am. v. Marrowbone Dev. Co., 232 F.3d 283, 290 (4th Cir.
2000); Lara v. Trominski, 216 F .3d 487, 495 n.9 (5th Cir. 2000);
McMeans v. Brigano, 228 F.3d 674, 686 (6th Cir. 2000); Feldman v.
American Mem'l Life Ins. Co., 196 F.3d 783, 790 (7th Cir. 1999); Tuveson
v. Florida Governor's Counsel on Indian Af fairs, Inc., 734 F.2d 730, 735
(11th Cir. 1984) (same rule characterized as equitable estoppel).
14
because in Cleveland the Supreme Court expressly declined
to disturb the law of judicial estoppel relating to "purely
factual matters, such as ``The light was r ed/green,' or ``I
can/cannot raise my arm above my head,' " 526 U.S. at
802, they suggest that Cleveland has no applicability to the
issue now before us. We reject this contention for two
reasons. First, it is waived because it was raised for the
first time at oral argument. See W arren G. v. Cumberland
County Sch. Dist., 190 F.3d 80, 84 (3d Cir. 1999). Second,
we conclude that it is simply wrong on the merits. Though
the question whether a particular plan is cover ed by ERISA
may not be one of pure law, it is also not a"purely factual
matter" in the sense the phrase was used in Cleveland.7
MONY and Bulger also submit that our pre-Cleveland
case law precludes us from holding that there can be no
bad faith for judicial estoppel purposes if the earlier
statement was never accepted by a court or agency. First,
to the extent this claim is true, we note simply that we owe
greater fidelity to the decisions of the Supr eme Court than
to our own. Second, we disagree that any of our cases have
actually held that judicial estoppel may be imposed in a
situation such as this one.
The only case that MONY and Bulger cite in support of
their claim that judicial estoppel may lie in situations
where the initial claim was never accepted or adopted by a
court or agency is Ryan Operations G.P. v. Santiam-Midwest
Lumber Co., 81 F.3d 355 (3d Cir. 1996). Their reliance is
misplaced. Ryan Operations held that a party seeking
estoppel need not have been a party to the earlier
proceedings, see id. at 359-60, and that the party facing
estoppel need not have necessarily "benefitted" from its
switch in position, see id. at 361. But Ryan Operations
never stated that judicial estoppel could validly be applied
_________________________________________________________________
7. Because Cleveland specifically declined to speak to the issue, and
because there may be good reasons to apply a different rule in such
cases, we intimate no view as to whether the rule we announce today
should apply when the inconsistent statements involve purely factual
matters.
15
in a case where the initial position was never accepted by
a court or agency.8
Though our holding today may appear to be in some
tension with our statement in Ryan Operations that there is
no "independent requirement" that a party have "benefitted
from its earlier position" to be estopped fr om changing it
later, id. at 361, this tension is more apparent than real.
First, the Ryan Operations principle r emains true today: so
long as the initial claim was in some way accepted or
adopted, no further showing is necessary that the party
"benefitted" in any particular way. See, e.g., Anjelino v. New
York Times Co., 200 F.3d 73, 100 (3d Cir. 2000) (upholding
a district court's use of judicial estoppel wher e a litigant
sought to withdraw its previous repr esentation to the court
that no further discovery was needed). Second, our rule is
consistent with Ryan Operations's admonition that "benefit
may be relevant insofar as it evidences an intent to play
fast and loose with the courts." 81 F.3d at 361. We do not
hold that judicial or administrative acceptance is a
prerequisite for its own sake, but rather conclude that a
change of position simply cannot evidence bad faith vis-a-
_________________________________________________________________
8. Indeed, the inconsistent "statement" in Ryan Operations had been
accepted by a court. That case involved a construction company's suit
against the manufacturer and suppliers of wood trim that it had used in
constructing houses. Prior to filing suit, the construction company had
filed a voluntary petition under Chapter 11 of the Bankruptcy Code,
which required it to disclose all assets and liabilities, including
potential
claims and causes of action. In violation of these r equirements, the
construction company's disclosure statement did not mention its claims
against the manufacturer and suppliers. The r eoganization plan was
confirmed seven months after the construction company brought suit,
and the defendants then moved for summary judgment on judicial
estoppel grounds. In rejecting the district court's grant of judicial
estoppel, we assumed without deciding that failur e to comply with the
Bankruptcy Code's disclosure obligations "can support a finding that a
plaintiff has asserted inconsistent positions within the meaning of the
judicial estoppel doctrine." Id. at 362. But in that case, the parties'
initial
inconsistent "statement"--i.e., its failur e to list its claims against
the
manufacturer and the suppliers in its originalfiling --had been implicitly
accepted by the bankruptcy court when it appr oved the plan of
reorganization.
16
vis a court unless the initial statement was accepted or
adopted.9
C.
During the course of the Hickok action, the Hospital and
the Plan averred that ERISA did not apply to the Plan and
that the plaintiffs' claims were barr ed by the statute of
limitations. These claims, however, wer e never accepted or
adopted by the district court. Accordingly, their later
change in position cannot, as a matter of law, constitute
bad faith. We therefore hold that the District Court abused
its discretion by invoking judicial estoppel.
III.
We also hold in the alternative that the District Court
abused its discretion by concluding that judicial estoppel
was tailored to address any harm caused by the
inconsistent statements in this case. Judicial estoppel "is
an ``extraordinary remedy' " that should be employed only
" ``when a party's inconsistent behavior would otherwise
result in a miscarriage of justice.' " Ryan Operations G.P. v.
_________________________________________________________________
9. We acknowledge that McNemar v. Disney Store, Inc., 91 F.3d 610 (3d
Cir. 1996) and Lewandowski v. Amtrak, 882 F.2d 815 (3d Cir. 1989)
contain language that could be read as saying that acceptance or
adoption is not a prerequisite for the invocation of judicial estoppel,
but
we decline to so conclude. First, as noted pr eviously, our duty to follow
Cleveland supersedes the requirement that we adhere to prior Third
Circuit law. Second, in both McNemar and Lewandowski, the party
making the inconsistent statements had succeeded in persuading the
original tribunal to adopt his position. See McNemar, 91 F.3d at 615;
Lewandowski, 88 F.2d at 817. We also note that McNemar's actual
holding is no longer good law after Cleveland because the two cases
involved the same issue. See Klein, 185 F .3d at 108 n.6. Moreover,
Lewandowski involved an appeal from a decision of a public law board
rather than a district court. We could not have set aside the board's
decision unless it had "failed to comply with the provisions of the RLA[,]
failed to confine itself to matters within its jurisdiction, or if there
was
fraud or corruption." Lewandowski, 882 F .2d at 819. Under such a high
standard, we could not have granted the petition even had the board's
decision failed to comport with our standards for invoking judicial
estoppel.
17
Santiam-Midwest Lumber Co., 81 F.3d 355, 365 (3d Cir.
1996) (quoting Oneida Motor Freight, Inc. v. United Jersey
Bank, 848 F.2d 414, 419 (3d Cir. 1988) (Stapleton, J.,
dissenting)). Observing that judicial estoppel "is often the
harshest remedy" that a court can impose for inequitable
conduct, we have held that a district court may not invoke
the doctrine unless: (1) "no sanction established by the
Federal Rules or a pertinent statute is up to the task of
remedying the damage done by a litigant's malfeasance;"
and (2) "the sanction [of judicial estoppel] is tailored to
address the harm identified." Klein v. Stahl GMBH & Co.
Maschinefabrik, 185 F.3d 98, 108, 110 (3d Cir. 1999)
(internal quotation marks and citations omitted). In this
case, the District Court failed to conduct the for mer
inquiry, and we hold that its conclusion that judicial
estoppel was tailored to address any har m caused by the
inconsistent representations was not an exercise of sound
discretion.
The application of judicial estoppel constitutes an
exercise of a court's inherent power to sanction
misconduct. See id. at 109. "Because of their very potency,
inherent powers must be exercised with r estraint and
discretion." Chambers v. NASCO, Inc., 501 U.S. 32, 44
(1991). In Chambers, the Supreme Court held that where
"bad-faith conduct in the course of litigation[can] be
adequately sanctioned under" either the Federal Rules or a
particular statute, then a "court ordinarily should rely on"
the Rules or the statute "rather than the inher ent power."
Id. But, said the Court, "if in the infor med discretion of the
court" these other sources of authority ar e not "up to the
task, the court may safely rely on its inher ent power." Id. In
Klein, we interpreted Chambers to mean "that the Rules are
not ``up to the task' when they would not pr ovide a district
court with the authority to sanction all of the conduct
deserving of sanction." 185 F.3d at 109. But we squarely
held that before utilizing its inherent powers, a district
court should consider whether any Rule- or statute-based
sanctions are up to the task. See id. at 110. In this case,
the District Court did not consider whether any such
sanctions (some of which are set forth in the margin) would
18
have sufficed to deal with any misconduct that occurred in
this case.10 That was err or.
Moreover, even had the District Court concluded that use
of its inherent sanctioning power was necessary, we would
still hold that judicial estoppel was inappr opriate here. In
Klein we held that judicial estoppel, like all exercises of a
court's inherent sanctioning power, may not be used unless
it is "tailored to address the har m." Id. at 111. And we
stated that judicial estoppel is not so tailor ed unless, "at a
minimum," the party to be estopped took inconsistent
positions in bad faith--implicitly recognizing that more
would sometimes be required. Id. (emphasis added). We
noted the same possibility in Ryan Operations . See 81 F.3d
at 365 ("As we have already concluded that the district
court erred [in employing judicial estoppel], we need not
reach Ryan's argument that [its use] under the
circumstances of this case would violate principles of equity
and justice. . . . [However, i]n this case, application of
judicial estoppel would be unduly harsh and inequitable.
While we need not and do not decide whether we would
reverse the district court's order on this ground alone, our
equitable concerns lend support to our overall
conclusion.").
The District Court erred in determining that judicial
_________________________________________________________________
10. Federal Rule of Civil Procedure 11 authorizes a court to sanction a
party that files "a pleading, written motion, or other paper," if: (1) the
document was "presented for an[ ] improper purpose;" (2) the "legal
contentions" contained in it were not "warranted by existing law or by a
nonfrivolous argument for the extension, modification, or reversal of
existing law or the establishment of new law;" (3) the document
contained "allegations or [other] factual contentions" that did not have
evidentiary support or denials of an opponent's"factual contention"
without evidentiary support." Federal Rule of Civil Procedure 37 permits
a court to sanction certain discovery-related misconduct. And 28 U.S.C.
S 1927 provides that "[a]ny attor ney . . . who so multiplies the
proceedings in any case unreasonably and vexatiously may be required
. . . to satisfy personally the excess costs, expenses and attorneys' fees
reasonably incurred because of such conduct." We do not intimate that
these or any other particular Rule- or statute-based sanctions would
have been available or "up to the task" in this case. We hold only that
the District Court erred by not considering the issue.
19
estoppel would be tailored to address any harm in this case
for two reasons. First, judicial estoppel is not an
appropriate response to the only type of harm identified by
the court. In its explanation of why judicial estoppel was
"appropriate relief in this case," the court faulted the
Hospital and the Plan for "abandon[ing]" the fourteen plan
participants who were plaintiffs in Hickok, but now seeking
to assert precisely the same claims on behalf of fifty-three
other participants who were not involved in Hickok. The
difficultly with the District Court's reasoning is that judicial
estoppel may not be used to punish litigants for how they
treat other litigants or third parties;11 its only legitimate
purpose is to remedy an affront to the court's integrity. See,
e.g., Ryan Operations, 81 F.3d at 360 ("Judicial estoppel ``is
intended to protect the courts rather than the litigants.' "
(quoting Fleck v. KDI Sylvan Pools, Inc., 981 F.2d 107, 121-
22 (3d Cir. 1992))). Because the court's opinion contains no
hint that it invoked judicial estoppel to respond to a threat
to its own authority, the sanction was not tailor ed to
address the harm in this case.
Perhaps more fundamentally, judicial estoppel was
simply not tailored to address any malfeasance that may
have occurred here. The only potential wr ongdoers are the
Hospital and the Plan, and the District Court's application
of judicial estoppel did result in the dismissal of their
claims against MONY and Bulger. The pr oblem arises
because the Hospital and the Plan do not seek personal
gain in this case, but rather bring this action solely in their
fiduciary capacities on behalf of fifty-thr ee plan
participants. It is those participants, not the Hospital and
the Plan, that will be harmed by the District Court's
dismissal. Even assuming that the Hospital and the Plan
acted wrongly in "abandon[ing]" the Hickok plaintiffs, it is
difficult to see how equity would be served by punishing
fifty-three other plan participants in r eturn.
In sum, the District Court erred in not considering
whether any Rule or statute was "up to the task" before
_________________________________________________________________
11. The fourteen Plan participants whom the District Court faulted the
Hospital and the Plan for abandoning were other litigants in the Hickok
litigation and are third parties in this case.
20
deciding to utilize its inherent sanctioning power, and
abused its discretion in concluding that judicial estoppel
was tailored to address any harm in this case.
IV.
MONY and Bulger advance several alternate gr ounds for
affirming the District Court's judgment. They aver that, as
a matter of law: (1) the claims against them ar e time-
barred; (2) they cannot be held liable under ERISA because
they were not fiduciaries of the Plan; (3) the Hospital and
the Plan are not entitled to "equitable r elief "; and (4) the
Hospital and the Plan cannot prevail on their"prohibited
transactions" claim. MONY and Bulger raised these
arguments before the District Court, which declined to
reach them in light of its judicial estoppel holding. The
court did comment, however, that: "An examination of the
record in relation to these other gr ounds asserted as bases
for summary judgment reveals material issues of fact that
would militate against granting summary judgment."
Though we certainly could reach and rule on each of the
alternate grounds, we conclude--subject to one exception--
that interests of sound judicial administration compel that
we remand the case without considering them. 12 This is a
complicated case with a voluminous recor d. The able
district judge plainly pondered these issues, and at one
_________________________________________________________________
12. "When a district court has failed to r each a question below that
becomes critical when reviewed on appeal, an appellate court may
sometimes resolve the issue on appeal rather than remand to the district
court." Hudson United Bank v. LiTenda Mortgage Corp., 142 F.2d 151,
159 (3d Cir. 1998). This practice is appropriate if: (1) "the factual
record
is developed;" and (2) "the issues provide purely legal questions[ ] upon
which an appellate court exercises plenary r eview." Id. On the other
hand, appellate courts should not step in "[w]hen the resolution of an
issue requires the exercise of discretion or fact finding." Id. Hudson's
requirements are met in this case. Because each party has filed a
supplemental appendix, the factual recor d is developed. Had the District
Court granted summary judgment on other grounds, our review would
have been plenary. And whether a genuine issue of material fact exists
presents a purely legal question that does not require or allow a district
court to exercise discretion. In light of these facts, we are entitled to
consider MONY's alternate grounds.
21
point suggested that there were genuine issues of material
fact as to at least some of them. We think it better under
these circumstances to let the District Court r eview in the
first instance the arguments that neither Bulger nor MONY
were ERISA fiduciaries, that the request for equitable relief
should be denied, and that the prohibited transactions
claim fails as a matter of law. Because the issue is so
straightforward, however, we reach and reject MONY's claim
that it is entitled to summary judgment on statute of
limitations grounds.
ERISA's statute of limitations for fiduciary violations
expires on "the earlier of ": (1)"six years after . . . the date
of the last action which constituted a part of the breach or
violation;" or (2) "three years after the earliest date on
which the plaintiff had actual knowledge of the breach or
violation." The statute also provides, however, that "in the
case of fraud or concealment," the period is extended to "six
years after the date of discovery of such br each or
violation." 29 U.S.C. S 1113. We have described Section
1113 as creating "a general six year statute of limitations,
shortened to three years in cases where the plaintiff has
actual knowledge, and potentially extended to six years
from the date of discovery in cases involving fraud or
concealment." Kurz v. Philadelphia Elec. Co. , 96 F.3d 1544,
1551 (3d Cir. 1996).
A.
MONY and Bulger first contend that this suit is barred by
ERISA's three year limitations period, which does not begin
to run until "the plaintiff ha[s] actual knowledge of the
breach or violation," 29 U.S.C. S 1113. We have interpreted
the actual knowledge requirement "stringent[ly]." Gluck v.
Unisys Corp., 960 F.2d 1168, 1176 (3d Cir . 1992); see also
id. ("Section 1113 sets a high standar d for barring claims
against fiduciaries prior to the expiration of the section's
six-year limitations period."). Because other sections of
ERISA demonstrate that "Congress knew how to require
constructive knowledge," we have opined that"[w]e do not
think that Congress' failure to" pr ovide such a standard "in
section 1113 was accidental." Id. Accor dingly, we have held
that "actual knowledge . . . requires that a plaintiff have
22
actual knowledge of all material facts necessary to
understand that some claim exists," but we have
emphasized "that our holding does not mean that the
statute of limitations can never begin to run until a plaintiff
first consults with a lawyer." Id. at 1177.
MONY and Bulger recite seven facts that they claim show
that the Hospital and the Plan had "actual knowledge of the
facts necessary to understand that some claim existed"
more than three years prior to filing this suit in December
1994. They stress that:
- Bulger warned [the Hospital] in writing in 1988
about not paying premiums";
- The Hospital "knew of persistent funding problems
for a ten year period";
- The Plan Administrator "knew of the financial
problems by, at the latest, the late 1980s ";
- The Plan Administrator "knew [the Hospital] could
not make the payments by 1987";
- The Hospital "stopped paying benefits in the summer
of 1991 and disclosed the problems to the
participants";
- The Hospital's Administrator "reported to the
[Hospital's] Board before 1991 his conclusion that
the Plan could not continue"; and
- The Hospital received a letter fr om Plaintiff 's
counsel in the Hickok action "in November 1991
outlining potential ERISA violations and claims."
These facts, MONY and Bulger contend, demonstrate that
"by November 1991 (at the latest) [the Hospital and the
Plan] had actual knowledge sufficient to understand that
(as they allege) a fiduciary duty had been br eached or
ERISA provision violated."
We are unpersuaded. "Gluck . . . requires a showing that
plaintiffs actually knew not only of the events that occurred
which constitute the breach or violation but also that those
events supported a claim of breach of fiduciary duty or
violation under ERISA." International Union of Elec., Elec.,
23
Salaried, Mach. & Furniture Workers v. Murata Erie N. Am.,
980 F.2d 889, 900 (3d Cir. 1992) (emphasis added). Until
the Hospital and the Plan had actual knowledge that the
Plan might be covered by ERISA, they obviously had no
reason to suspect that any actions by MONY or Bulger
could support a claim for breach of fiduciary duty under
that statute.
The only piece of evidence to which MONY and Bulger
point that could have put the Hospital and the Plan on
notice that the Plan was covered by ERISA was the letter
the Hospital received in 1991 from the lawyer for the
Hickok plaintiffs. Though the letter suggested that the Plan
was subject to ERISA, two reasons counsel against reading
this letter as establishing--as a matter of law--that the
Hospital and the Plan thereafter possessed actual
knowledge that they had ERISA claims against MONY and
Bulger. First, the letter came from an attorney who was
threatening to sue the Hospital and the Plan for ERISA
violations. Parties are not requir ed to believe every claim
hurled by their adversaries, nor are they likely to do so.
Second, the letter in no way suggested that the Hospital
and the Plan might have an ERISA action against MONY
and Bulger. Though MONY and Bulger ar gue that this
information was supplied by the other pieces of evidence to
which they point to establish actual knowledge, we do not
believe that the evidence must, as a matter of law, be read
that way. We therefore decline to affirm the District Court's
judgment on this alternate ground.
B.
Nor is this suit barred as a matter of law under the six
year statute of limitations. ERISA's default limitations
period expires "six years after . . . the date of the last action
which constituted a part of the breach or violation." 29
U.S.C. S 1113. "[I]n the case of fraud or concealment,"
however, this period is extended to "six years after the date
of discovery of such breach or violation." Id. Even assuming
that this suit was not brought within the general six year
limitations period, we conclude that there is at least a
genuine dispute of material fact as to whether the fraud or
concealment exception is applicable.
24
We have interpreted S 1113 "as incorporating the federal
doctrine of fraudulent concealment: The statute of
limitations is tolled until the plaintiff in the exercise of
reasonable diligence discovered or should have discovered
the alleged fraud or concealment." Kurz v. Philadelphia Elec.
Co., 96 F.3d 1544 (3d Cir. 1996). Section 1113 applies
"when a lawsuit has been delayed because the defendant
itself has taken steps to hide its breach offiduciary duty,"
and "[t]he relevant question is . . . not whether the
complaint ``sounds in concealment,' but rather whether
there is evidence that the defendant took affirmative steps
to hide its breach of fiduciary duty." Id. It is generally
accepted that "there must be actual concealment,--i.e.,
some trick or contrivance intended to exclude suspicion
and prevent injury." Larson v. Northr op Corp., 21 F.3d
1164, 1173 (D.C. Cir. 1994) (quotation marks and citation
omitted).
In arguing against the applicability of this exception,
MONY and Bulger assert that neither of them concealed
anything. But the Hospital and the Plan assert, with
support in the record, that "fr om the time of the Plan's
creation and throughout its 14-year operation, Defendants
consistently deceived the Hospital by misrepr esenting that
the Plan was not even subject to ERISA." They also submit,
with record support, that although they were "generally
aware that MONY, Bulger, and other MONY representatives
were replacing various life insurance policies with new
policies of the same or different types[,] . . . Bulger falsely
represented to Hospital representatives that they would
reduce costs while substantially increasing benefits."
Finally, Eudora Bennett, the Plan Administrator , claimed in
an affidavit that Bulger and Garvey thwarted her efforts "to
gain access to information about the operations of the
Plan."
Assuming that these allegations are true, which we must
for summary judgment purposes, we cannot conclude as a
matter of law that no fraud or concealment occurr ed in this
case. MONY and Bulger's (alleged) repeated denials that
ERISA applied to the Plan could reasonably have hindered
the Hospital and the Plan's ability to realize that any
breach of ERISA-imposed fiduciary duties had occurred.
25
Further, it is possible that Bulger's (alleged)
misrepresentations as to the reasons for replacing the life
insurance policies inhibited their capacity to discover that
the Plan had been imprudently designed. Finally, the
(alleged) conduct of Bulger and Garvey may have actively
impeded Bennett's ability to discover facts that could have
led her to conclude that fiduciary violations had taken
place.
MONY and Bulger offer two responses. They aver that
because " ``[t]he problems sur faced soon after the
establishment of the Plan,' " "the alleged design defects
constituted information readily available to" the Hospital
and the Plan. But MONY and Bulger provide no citations to
the record, and fail to explain why the mere existence of
problems means that the Hospital and the Plan were on
notice that ERISA applied to the Plan or that it was
designed in violation of ERISA-imposed fiduciary duties.
Because conclusory allegations unsupported by explanation
or facts in the record do not suffice to meet a movant's
burden of persuasion, see 11 James Wm. Moore et al.,
Moore's Federal Practice S 56.13[1] (3d ed. 2000), we
conclude that MONY and Bulger cannot prevail on this
point.
Finally, MONY and Bulger submit that there was no
"reasonable reliance as is requir ed to trigger the fraud or
concealment exception." They contend that the Hospital
and the Plan "did not delay this lawsuit because of
misrepresentations; instead, they delayed as long as
possible to avoid subjecting themselves to liability and filed
suit only after Hickok was resolved and they could no
longer hope to avoid similar claims." MONY and Bulger
point to no undisputed facts that demonstrate why the
Hospital and the Plan brought this case when they did,
and, accordingly, MONY and Bulger are not entitled to
summary judgment on this ground. We ther efore hold that
MONY and Bulger are not entitled to summary judgment on
statute of limitations grounds.
For the foregoing reasons, the judgment of the District
Court will be reversed and this case remanded for further
proceedings consistent with this opinion.
26
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
27