Ranke v. Sanofi-Synthelabo Inc.

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
1-27-2006
Ranke v. Sanofi Synthelabo
Precedential or Non-Precedential: Precedential
Docket No. 04-4514
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 04-4514
RICHARD RANKE, PAUL DIAMANTOPOULOS, SUSAN
FANTOLI, DONALD MILES, ROY SAUNDERS, ROBERT
KRINGLE, MARIE SANTORO, JANICE WRIGHT, ANITA
LEE, JUDY VALLE, and PHILIP COZENTINO,
Appellants
v.
SANOFI-SYNTHELABO INC., SANOFI-SYNTHELABO
GROUP PENSION PLAN, EASTMAN KODAK
COMPANY, and KODAK RETIREMENT INCOME PLAN.
On Appeal From The United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action No. 04-cv-1618)
District Judge: Honorable J. Curtis Joyner
Argued September 27, 2005
BEFORE: ALITO, AMBRO, and LOURIE,* Circuit Judges.
(Filed: January 27, 2006)
Jeffrey P. Hoyle, Esquire (Argued)
Law Offices of Jeffrey P. Hoyle
105 West Third Street
Media, PA 19063
Stephen C. Kunkle, Esquire (Argued)
Kunkle & Sennett
Westtown Professional Center
1515 West Chester Pike, Ste B-2
West Chester, PA 19382
Counsel for Appellants
Karen M. Wahle (Argued)
Khuong G. Phan
O’Melveny & Myers LLP
1625 Eye Street, NW
Washington, DC 20006
Counsel for Appellees Eastman Kodak Company and
Kodak Retirement Income Plan
Richard G. Rosenblatt (Argued)
Sharri H. Horowitz
*
Honorable Alan D. Lourie, United States Circuit Judge
for the Federal Circuit, sitting by designation.
2
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Counsel for Appellees Sanofi-Synthelabo Inc. and
Sanofi-Synthelabo Group Pension Plan
OPINION OF THE COURT
_______________
LOURIE, Circuit Judge
Richard Ranke and other similarly situated individuals in
this case are former employees of Eastman Kodak Company
(“Kodak”), and current or former employees of Sanofi-
Synthelabo Inc. (“Sanofi”). They appeal from the decision of
the United States District Court for the Eastern District of
Pennsylvania dismissing their complaint for breach of fiduciary
duty under the Employee Retirement Income Security Act of
1974 (“ERISA”). Ranke v. Sanofi-Synthelabo, Inc., No. 04-
1618 (E.D. Pa. Nov. 3, 2004) (“Decision”). Because their
breach of fiduciary duty claim was time-barred under ERISA
§ 413, 29 U.S.C. § 1113, the District Court dismissed the
complaint for failure to state a claim under Federal Rule of Civil
Procedure 12(b)(6) (“Rule 12(b)(6)”). We affirm.
3
I. BACKGROUND
Because the District Court granted appellees Kodak’s and
Sanofi’s motions to dismiss under Rule 12(b)(6), we take the
factual background of this case from the complaint and accept
all allegations contained therein as true. ALA, Inc. v. CCAIR,
Inc., 29 F.3d 855, 859 (3d Cir. 1994).
Appellants are all former employees of Kodak’s Eastman
Pharmaceutical Division and were participants in the Kodak
Retirement Income Plan (“KRIP”). In 1988, Kodak began the
process of merging its Eastman Pharmaceutical Division with
Sterling Winthrop, Inc. (“Sterling”), a wholly-owned subsidiary
of Kodak. According to the complaint, human resources
personnel at both Kodak and Sterling told appellants that they
would receive pension benefits under both the Kodak and
Sterling pension plans if they decided to accept transfer of
employment to Sterling. Kodak also allegedly informed
appellants that it would use their final average salaries from
Sterling to calculate the pension benefits. In addition, appellants
were allegedly told that their total years of service with Kodak
and with Sterling would be used to determine their early
retirement eligibility. Relying on these representations,
appellants say that they accepted employment with Sterling
instead of remaining at Kodak.
In 1994, Sanofi acquired certain “portions” of Sterling
through an asset purchase agreement. Appellants were selected
to become employees of Sanofi. As an incentive to change
4
employment again, human resources personnel at Sanofi
allegedly advised appellants that their retirement benefits would
remain undiminished for a period of two years after changing
employment. Sanofi is also said to have informed appellants
that during this period, for purposes of calculating benefits, they
would continue to accrue years of service based upon their
original Kodak start dates. Relying on these representations,
appellants say that they accepted employment with Sanofi and
thus became participants in the Sanofi-Winthrop Retirement
Income Plan (“SWRIP”).
In their complaint, appellants identified three
communications from Kodak and Sanofi regarding their pension
plans that took place after their 1994 change of employment.
First, Sanofi purportedly informed appellants in 1996 that the
SWRIP was being merged with the pension plans of other
Sanofi companies to become the Sanofi Group Pension Plan,
which ultimately became the Sanofi-Synthelabo Group Pension
Plan (“SSGP”). Secondly, appellants allege that, sometime
between 1995 and 2000, Kodak informed them that the IRS
“same desk rule” prohibited appellants from combining their
Kodak and Sanofi pension plans. Lastly, sometime between
1998 and 2000, Sanofi allegedly told certain appellants that
discussions were ongoing, but that they could expect to have
their KRIP and SWRIP pension plans combined into a single
pension plan of Sanofi. Until the latter part of 2002, when
appellants received their retirement election forms from Kodak,
there were no other allegations of contact between appellants
and appellees regarding pension plans.
5
The Kodak Lump Sum/Annuity Election form that was
distributed to appellants in 2002 contained estimates of
appellants’ pension benefits. In calculating the benefits, Kodak
only considered appellants’ total years of service with that
company. Moreover, Kodak’s calculation did not include
appellants’ pending or final average salaries at Sanofi, but
instead was based only on their final salaries at Sterling in 1994.
Soon thereafter, upon questioning Sanofi, appellants also
discovered that their Sanofi pension benefits would be
calculated based only on their years of service at Sterling and
Sanofi, but would not include their time at Kodak. According
to appellants, under the current calculations, the value of their
pension benefits are lower than expected and they will lose
certain early retirement opportunities.
Based on these allegations, appellants filed their
complaint in April 2004. In July 2004, Kodak and Sanofi filed
their respective motions to dismiss under Rule 12(b)(6). On
November 3, 2004, the District Court granted the motions to
dismiss in their entirety. This appeal ensued.
In granting the motions to dismiss, the District Court
initially noted that appellants failed to state a claim for breach
of fiduciary duty with respect to the Sanofi and Kodak pension
plans. According to the Court, a pension plan cannot be liable
as a fiduciary under ERISA § 409(a), 29 U.S.C. § 1109(a), since
it is not an individual, corporation, or other association.
Decision, slip op. at 5. That issue has not been appealed here.
6
As for Kodak and Sanofi in their corporate capacities, the
District Court held that appellants’ claims, as pled, were time-
barred under ERISA § 413, 29 U.S.C. § 1113. Specifically,
the Court relied on § 413(1)(A), which required appellants to
have commenced suit within six years of “the date of the last
action which constituted a part of the breach or violation.”
According to the Court, appellants’ complaint contained no
allegations of breach of fiduciary duty or detrimental reliance on
a breach of fiduciary duty occurring after April 1998, six years
prior to the complaint’s filing date. Id., slip op. at 6. The only
acts relevant to a breach of fiduciary duty that the Court could
identify from the complaint were appellees’ purported
misrepresentations regarding the pension benefits and
appellants’ act of reliance in changing their jobs. All these
events, however, occurred no later than April 1998. Id.
In concluding that the complaint was not timely filed, the
District Court rejected appellants’ contention that the complaint
alleged that appellants made “important financial and general
life choices” in detrimental reliance on appellees’
misrepresentations, and that that detrimental reliance occurred
within six years of the complaint’s filing date. Moreover, the
Court found the detrimental reliance allegation to be “vague and
unspecified,” and insufficient to withstand a motion to dismiss.
Id., slip op. at 9. The Court also rejected appellants’ assertion
that Kodak and Sanofi had a continuing duty to furnish accurate
information regarding the plans, and that they breached that duty
after April 1998. According to the Court, “this [continuing]
duty has never been used . . . to extend the ERISA statute of
7
limitations in cases alleging affirmative misrepresentations.”
Id., slip op. at 10 (citations omitted).
The District Court further concluded that the “fraud or
concealment” exception of § 413, which would have extended
appellants’ time for filing their complaint beyond April 1998,
was inapplicable. For the “fraud or concealment” exception to
have applied, the Court required allegations that Kodak and
Sanofi each took “affirmative steps beyond the breach itself to
hide its breach of fiduciary duty.” Id., slip op. at 7. It noted
that, other than the alleged misrepresentations in 1988 and 1994,
appellants identified only three other communications with
appellees: the name change of Sanofi’s pension plan, Kodak’s
representations regarding the IRS “same desk rule,” and
Sanofi’s representations regarding the possible combination of
the KRIP and SSGP pensions. None of these actions, however,
in the Court’s view, constituted “fraud or concealment.” Id.
In the alternative, even if appellants had alleged sufficient
facts to bring their claim within the six-year statute of
limitations, the District Court ruled that it would still dismiss the
complaint because appellants did not seek the “appropriate
equitable relief” authorized by ERISA § 502(a)(3)(B), 29 U.S.C.
§ 1132(a)(3)(B).1 Id., slip op. at 13. Citing Great-West Life &
Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002), the Court
1
In the district court proceedings, appellants voluntarily
withdrew, with prejudice, their claims for legal relief under
ERISA § 502(a)(1), 29 U.S.C. § 1132(a)(1).
8
determined that appellants sought legal, not equitable, relief.
Id., slip op. at 16. Specifically, according to the Court,
appellants’ request for reinstatement of benefits calculated using
formulas from “prior to transfer of employment,” while couched
as an equitable “make-whole” remedy, was closer in nature to
a legal remedy not authorized by § 502(a)(3)(B). Id. Moreover,
the Court noted that the remedy requested in this case would
ultimately require appellees to pay out a sum of money upon
appellants’ retirement, further confirming that it was not an
allowable form of relief as outlined in Great-West. Id.
II. DISCUSSION
Our review of a dismissal under Rule 12(b)(6) is plenary.
Leveno v. Lapina, 258 F.3d 156, 161 (3d Cir. 2001) (citations
omitted). In reviewing the dismissal of a claim under Rule
12(b)(6), we must “accept the allegations of the complaint as
true and draw all reasonable inferences in the light most
favorable to the plaintiffs.” Id. Dismissal is proper “only if it
is clear that no relief could be granted under any set of facts that
could be proved consistent with the allegations.” Id.A. Statute of Limitations
ERISA § 413, 29 U.S.C. § 1113, sets forth provisions
limiting the time when an ERISA beneficiary can commence a
breach of duty claim against a fiduciary. It provides as follows:
No action may be commenced under this
9
subchapter with respect to a fiduciary’s breach of
any responsibility, duty, or obligation under this
part, or with respect to a violation of this part,
after the earlier of—
(1) six years after (A) the date of the last action
which constituted a part of the breach or violation,
or (B) in the case of an omission the latest date on
which the fiduciary could have cured the breach
or violation, or
(2) three years after the earliest date on which the
plaintiff had actual knowledge of the breach or
violation;
except that in the case of fraud or concealment,
such action may be commenced not later than six
years after the date of discovery of such breach or
violation.
29 U.S.C. § 1113 (2000). “This section thus creates a general
six year statute of limitations, shortened to three years in cases
where the plaintiff has actual knowledge of the breach, and
potentially extended to six years from the date of discovery in
cases involving fraud or concealment.” Kurz v. Phila. Elec. Co.,
96 F.3d 1544, 1551 (3d Cir. 1996). Since the complaint in this
case was filed in April 2004, under the general six-year statute
of limitations, April 1998 is the last date on which a breach
could have occurred that could serve as a basis for the
10
complaint.
1. “Date of Last Action”
On appeal, appellants contend that the six-year statute of
limitations had not expired when they brought suit because
under § 413(1)(A), “the date of the last action which constituted
a part of the breach or violation” should have been the last date
that they acted in detrimental reliance on Kodak’s and Sanofi’s
alleged misrepresentations, as opposed to the dates when Kodak
and Sanofi made their alleged misrepresentations.2 Citing our
decision in In re Unisys Corp. Retiree Medical Benefit “ERISA”
Litigation, 242 F.3d 497, 505-506 (3d Cir. 2001) (“Unisys III”),
appellants argue that “the date of the last action” can be the last
date that a beneficiary makes “important financial and general
life choices in reliance upon the representations” of the
fiduciary. In doing so, appellants assign error to the District
Court’s determination that “the date of the last action” was the
date that Kodak and Sanofi breached their fiduciary duties by
allegedly making misrepresentations regarding the pension
benefits in 1988 and 1994, respectively. Appellants also assert
that dismissal of the complaint under Rule 12(b)(6) was
premature since discovery was necessary in order to determine
the particular circumstances of each appellant’s detrimental
reliance. According to appellants, if they did not have actual
2
Since neither party argues that § 413(1)(B) is
applicable to this appeal, we have limited our discussion to
§ 413(1)(A).
11
knowledge of the fiduciary’s misrepresentation, but they
acted in detrimental reliance on a misrepresentation within six
years of the complaint’s filing date, the complaint was not
barred by the statute of limitations. In appellants’ view, it does
not matter when the fiduciary made the misrepresentation
leading to the breach of fiduciary duty.
Kodak and Sanofi disagree with appellants’ assertion that
the last date of detrimental reliance was “the date of the last
action” in this case. Instead, they argue that the last date when
Kodak and Sanofi made their purported misrepresentations
leading to the breach of duty was “the date of the last action.”
Pointing to the complaint, Kodak and Sanofi contend that all of
appellants’ alleged misrepresentations occurred in 1988 and
1994, thereby making the claims barred by the statute of
limitations. Moreover, appellees argue that allowing the last
date of detrimental reliance to be “the date of the last action”
would contravene the statutory scheme of § 413. According to
appellees, § 413 is a statute of repose, and allowing the last date
of detrimental reliance to be the starting date for the running of
the statute of limitations would potentially allow a beneficiary
to extend the statute indefinitely, as reliance can be said to occur
continuously into the future.
Kodak and Sanofi also dispute appellants’ interpretation
of Unisys III as permitting the last date of detrimental reliance
to be “the date of the last action.” They argue that Unisys III
supports their position that the dates on which they allegedly
made the misrepresentations leading to the breach of duty were
12
“the date[s] of the last action,” and that, those dates cannot
logically be later than the dates that appellants relied on the
alleged misrepresentation to change employment in 1988 and
1994. Appellees further submit that even if the last date of
detrimental reliance can be considered to be “the date of the last
action,” the District Court properly rejected appellants’
conclusory allegation that they “made important financial and
general life choices in reliance upon the representations of
[Kodak and Sanofi]” as “vague and unspecified” and
“insufficient to withstand a motion to dismiss.”
Unisys III guides the outcome in this case. In Unisys III,
plaintiffs were retirees and disabled former employees who filed
complaints against Unisys Corporation for breach of fiduciary
duty under ERISA. The dispute arose from Unisys’s decision
to terminate all of its preexisting medical benefit plans and
replace them with a new one. Id. at 499. Under most of the old
plans, Unisys paid the entire medical premium during the
lifetimes of the retirees and provided continuing benefits for
their spouses. Id. The new plan, however, required the retirees
to contribute increasing amounts to the cost of the premiums
until, eventually, the retirees were responsible for the entire
premium. Id.
According to the retirees in Unisys III, “the date of the
last action” occurred in November 1992, when Unisys
announced the termination of the “lifetime” medical benefit
plans and after the plaintiff retirees had retired. Id. at 505. They
argued that until the termination of the “lifetime” plan occurred,
13
there was no actual harm, and thus a claim for breach of
fiduciary duty would have been premature. Id. This Court
disagreed and determined that “any breach that may have
occurred was completed, and a claim based thereon accrued, no
later than the date upon which the employee relied to his
detriment on the misrepresentations.” Id. at 505-06.
Consequently, the Court rejected Unisys’s 1992 announcement
as “the date of the last action.” The Court refrained from
choosing between the date of the misrepresentation and the date
of the detrimental reliance as “the date of the last action,”
because both were agreed by the parties to be the same. Id. at
505-06.
Similarly, in this case, accepting all of the complaint’s
allegations as true, Kodak and Sanofi initiated the breach of
fiduciary duty by purportedly misrepresenting the pension plan
benefits in an attempt to persuade appellants to change
employment in 1988 and 1994, respectively, and appellants
relied on those activities at those times. Therefore, “the date of
the last action” was in 1988 for Kodak and in 1994 for Sanofi.
Appellants’ complaint contains no other allegation of
misrepresentations occurring after April 1998 that are
independent of and not mere continuations of the initial
misrepresentations that led to the changes of employment.
Appellants rely on an exceptional circumstance noted in
Unisys III to argue that the last date of detrimental reliance can
be “the date of the last action.” In Unisys III, the Court
recognized that plaintiffs who retired more than six years before
14
their complaints were filed may still have viable claims if they
relied to their detriment in making non-retirement-related
decisions within the six-year statute of limitations. Id. at 506-
07. The favorable presumption for those plaintiffs opposing a
summary judgment motion was that, before the running of the
statute of limitations, Unisys may have engaged in additional
acts of breach that were separate from the original breaches
prompting the retirement of other plaintiffs. The plaintiffs who
received this favorable presumption had not detrimentally relied
when they retired. Their post-retirement reliances were
apparently their first reliances, and (as the parties stipulated) the
reliances occurred simultaneously with the misrepresentations.
However, appellants in this case detrimentally relied on the
alleged misrepresentations in 1988 and 1994, at which time their
claims accrued. Unisys III did not hold that plaintiffs may
“reset the clock” by later detrimental reliances occurring after
their claims first accrued. 2. “Fraud or Concealment”
In the alternative, appellants assert that the “fraud or
concealment” exception of ERISA § 413 is applicable to this
case, and that the six-year statute of limitations did not begin to
run until after appellants received a statement of their estimated
retirement benefits in 2002. Appellants argue that the common
law “discovery rule,” implicit in the “fraud or concealment”
exception, is applicable when an ERISA beneficiary does not
know that his or her retirement benefits were misrepresented,
but the fiduciary does. In such a situation, according to
appellants, the “fraud or concealment” exception tolls the
general six-year statute of limitations until the fiduciary corrects
15
its misrepresentations. At a minimum, appellants maintain that
their complaint should not have been dismissed before they were
given an opportunity to investigate “the conduct [of the
fiduciary] both surrounding the breach and its concealment.”
Thus, if appellants can discover acts of concealment by either
Kodak or Sanofi within the relevant time frame, i.e., after April
1998, they can invoke the “fraud or concealment” exception and
defeat the statute of limitations defense.
Appellees counter that the “fraud or concealment”
exception is inapplicable since the complaint does not allege that
appellees took any affirmative steps to conceal the alleged
misrepresentations. Citing our decisions in Kurz, 96 F.3d at
1552, and Unisys III, 242 F.3d at 502, appellees assert that an
ERISA beneficiary must plead that “the fiduciary took steps to
hide its breach of fiduciary duty.” Moreover, they argue, the
fact that a breach is self-concealing or not readily apparent does
not extend the statute of limitations under the “fraud or
concealment” exception. Unisys III, 242 F.3d at 503-04.
Appellees also dispute the contention that they had a continuing
duty to correct any prior misrepresentation. Instead, appellees
agree with the District Court’s determination that such an
obligation has never been recognized to extend an ERISA
statute of limitations.
We agree with the District Court that the “fraud or
concealment” exception is not applicable to this case. As we
instructed in Kurz,
16
We now join our sister courts and hold that
§ 413’s “fraud or concealment” language applies
the federal common law discovery rule to ERISA
breach of fiduciary duty claims. In other words,
when a lawsuit has been delayed because the
defendant itself has taken steps to hide its breach
of fiduciary duty, the limitations period will run
six years after the date of the claim’s discovery.
The 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.
96 F.3d at 1552 (citation omitted). We further discussed the
standard for “fraud or concealment” in Unisys III: “The issue
raised by this provision is not simply whether the alleged breach
involved some kind of fraud but rather whether the fiduciary
took steps to hide its breach.” 242 F.3d at 502.
At a minimum, our decisions in Kurz and Unisys III
require an ERISA fiduciary to have taken affirmative steps to
hide an alleged breach of duty from a beneficiary in order for
the “fraud or concealment” exception to apply. For example, in
Unisys III we concluded that a fiduciary’s act of responding to
questions in a manner that diverted the beneficiary from
discovering a prior misrepresentation could make the “fraud or
concealment” exception applicable. Id. at 505. The complaint
in this case, however, does not contain any allegation of
17
affirmative steps taken by either Kodak or Sanofi that prevented
appellants from discovering the alleged breach of duty before
the statute of limitations expired. The complaint alleges only
that neither Kodak nor Sanofi informed appellants that “their
pension entitlements, under either the KRIP or the SSGP Plan,
would be adversely affected or diminished.” Kodak’s and
Sanofi’s failures to notify their beneficiaries of any change in
the method of calculating retirement benefits or warn them of
any misconception regarding their benefits are not “affirmative
steps,” and cannot on their own bring the “fraud or
concealment” exception into play.
Moreover, we do not agree with appellants’ assertion that
because discovery may reveal appellees engaged in “fraud or
concealment,” dismissal of the complaint was premature.
Appellants were well-positioned to know, upon reviewing their
own past experiences, whether they had any communications
from Kodak or Sanofi that prevented or diverted them from
discovering the alleged breach of duty at an earlier time. To the
extent that any misleading communication did occur, or was
believed to have occurred, it should have been pled in the
complaint, but it was not. Indeed, were we to reverse the
dismissal here to allow for discovery, we would be permitting
appellants to conduct a fishing expedition in order to find a
cause of action. We cannot do so. Furthermore, even if
appellants might discover that Kodak and Sanofi knew they
made misrepresentations but decided to withhold that
information from appellants, such conduct, as we explained
above, is not “fraud or concealment.” Unisys III, 242 F.3d at
18
503 (“We held in Kurz that, regardless of whether the acts to
conceal the breach occur in the course of the conduct that
constitutes the underlying breach or independent of and
subsequent to the breach, there must be conduct beyond the
breach itself that has the effect of concealing the breach from its
victims.”).
This analysis conforms to the statutory scheme of § 413.
In Unisys III, we noted that § 413(2) contains a statute of
limitations provision encompassing situations where the
beneficiary has “actual knowledge” of the fiduciary’s breach.3
Id. at 504. Thus, we deemed § 413(1)’s general six-year limit,
which does not require “actual knowledge,” to create a period of
repose, which is applicable here. Id. Appellants’ “failure to
notify” argument is similar to the equitable tolling argument that
we rejected in Unisys III. Both arguments hinge on an ERISA
beneficiary’s lack of knowledge of a fiduciary’s breach.
Starting the running of the statute of limitations on the date of
discovery of the breach, absent “fraud or concealment,” would
prevent the fiduciary from being able to recognize a firm cutoff
date for future breach of duty claims, which is inconsistent with
a statute of repose. Thus, we reject appellants’ argument. Since
we do not consider a fiduciary’s decision not to notify the
beneficiary of a prior misrepresentation a separate breach of
duty falling within the “fraud or concealment” exception,
3
No argument has been made under § 413(2) in this
appeal, presumably because the six-year period of § 413(1)
occurred earlier than the three-year period of § 413(2).
19
appellants cannot invoke the discovery provision of the
exception.
Lastly, we respond to appellants’ strained
characterization of several decisions from this Court, including
Unisys III, Harte v. Bethlehem Steel Corp., 214 F.3d 446 (3d
Cir. 2000), and Bixler v. Central Pennsylvania Teamsters Health
& Welfare Fund, 12 F.3d 1292 (3d Cir. 1993). Citing those
cases as support, appellants assert that this Court “found that the
discovery provisions of the statute of limitations extended a
beneficiary’s claims which were based upon the fiduciary’s
failure to meet its ‘duty to convey complete and accurate
information’ which predictably and reasonably could result in
the beneficiary taking action in detrimental reliance thereon.”
In Unisys III, as we have discussed above, ERISA’s general six-
year statute of limitations is triggered by a fiduciary’s action, not
a beneficiary’s discovery of the breach. Harte and Bixler
addressed the standard for proving breach of fiduciary duty.
They did not discuss any aspect of the ERISA statute of
limitations, let alone implicate the common law “discovery rule”
in situations not involving § 413’s “fraud or concealment”
exception.
3. Equitable Relief
As an additional basis for dismissing the complaint, the
District Court held that appellants did not plead relief falling
within the scope of “appropriate equitable relief” authorized by
ERISA § 502(a)(3)(B), 19 U.S.C. § 1132(a)(3)(B). As they
20
must in order to sustain their complaint, appellants challenge
that holding. There is no need for us to address the correctness
of that holding, however, as we have affirmed the decision that
the complaint was barred under the statute of limitations.
B. Motion to Amend the Complaint
Appellants also contend that the District Court abused its
discretion in not granting leave to amend the complaint.
According to appellants, in their responses to Kodak’s and
Sanofi’s motions to dismiss, they requested leave to file an
amended complaint if the court determined that the original
complaint was defective. In appellants’ view, it was an abuse
of discretion for the Court not to even address their request in
the opinion dismissing the original complaint. Presumably,
appellants argue that, if given the opportunity, they could have
pled additional facts that would have allowed them to withstand
the motions to dismiss.
We agree with Kodak and Sanofi that appellants did not
properly request leave to file an amended complaint and thus the
District Court did not abuse its discretion in not granting it.
Appellants do not dispute that their “request” for leave to amend
was nothing more than the following two sentences: “To the
extent that plaintiffs may develop evidence of fraud that is not
alleged in the Complaint, they would seek leave to amend their
Complaint as appropriate. To the extent that this Court may
determine that the existing allegations of misrepresentation are
not pled sufficiently specifically, plaintiffs respectfully submit
21
that dismissal is inappropriate, and rather that they should be
permitted leave to file a more definite statement pursuant to Fed.
R. Civ. P. 12(e).” And appellants do not claim that they
provided the Court with a formal motion for leave to amend or
a proposed amended complaint containing additional allegations
that they believe would allow the amended complaint to
withstand dismissal under Rule 12(b)(6).
If appellants had been in possession of facts that would
have augmented their complaint and possibly avoided dismissal,
they should have pled those facts in the first instance. They
failed to do so. In Ramsgate Court Townhouse Assoc. v. West
Chester Borough, 313 F.3d 157 (3d Cir. 2002), we addressed
that issue directly. The Ramsgate plaintiffs concluded their
opposition to a motion to dismiss by stating: “However, in the
event that the Court concludes that the Complaint fails to state
claims upon which relief may be granted, Plaintiffs . . .
respectfully request that they be granted leave to amend the
Complaint.” Id. at 161. We noted that such a conclusory
remark was not a motion to amend, and deemed fatal the fact
that, like appellants here, plaintiffs did not provide the District
Court with a proposed amended complaint. Id. “As a
consequence, the court had nothing upon which to exercise its
discretion.” Id. (citing Lake v. Arnold, 232 F.3d 360, 374 (3d
Cir. 2000)). Because the same result applies here, we hold that
the District Court did not abuse its discretion in not granting
appellants leave to file an amended complaint.
22
III. CONCLUSION
For the foregoing reasons, we affirm the decisions of the
District Court.
AMBRO, Circuit Judge, Dissenting
Plaintiffs allege in their complaint that, in exchange for
their willingness to transfer employment, they were promised in
1988 and 1994 enhanced pension benefits. More than six years
later they discovered, per the complaint, these commitments to
be delusive. Yet the District Court dismissed the complaint at
the Rule 12(b)(6) stage notwithstanding that plaintiffs’ factual
allegations must be accepted as true. My colleagues follow suit.
Both the District Court and my colleagues believe that we are
bound by our Court’s decision in In re Unisys Corp. Retiree
Medical Benefit “ERISA” Litigation (Unisys III), 242 F.3d 497(3d Cir. 2001), which dealt with, inter alia, when the statute of
limitations runs for a misrepresentation of pension benefits. I
respectfully disagree, as I believe there is also a duty to disclose
that has support in our case law. When a fiduciary fails to
follow that duty, the clock for suit starts only when a
beneficiary discovers, or should discover, the omitted
information that has harmed him or her.
By the reasoning of Unisys III, “the date of the last
action” of Kodak’s and Sanofi’s breach was 1988 and 1994,
respectively. This follows, by this reasoning, because Kodak
and Sanofi purportedly made misrepresentations on those dates
23
and plaintiffs relied on those misrepresentations at those times.
But we know that the plaintiffs did not find out the truth
behind those purported misrepresentations until sometime
around 2000 or 2002. What our holding in this case therefore
does is allow a “safe harbor” for breaches of ERISA fiduciary
duties. See Unisys III, 242 F.3d at 510 (Mansmann, J,
concurring in part, concurring in the result in part). A fiduciary
can therefore avoid all liability for misrepresentations “so long
as [it] arranges to keep the beneficiaries in the dark for six years
after they rely on [its] misrepresentations.” Id. This is hardly a
recipe for “ensur[ing] that employees receive sufficient
information about their rights under employee benefit plans to
make well-informed employment and retirement decisions.”
Harte v. Bethlehem Steel Corp., 214 F.3d 446, 451 (3d Cir.
2000) (discussing the reasons that ERISA was enacted). Quite
the opposite.
Taking a cue from Judge Mansmann’s concurrence in
Unisys III and our decisions in Unisys III, Unisys II, Harte,
Bixler, and Glaziers, I believe that Kodak and Sanofi breached
their duty by failing to disclose the details of plaintiffs’
retirement benefits, thereby leaving them uninformed as to how
Kodak and Sanofi intended its representations pertaining to
those benefits. “Because this continuing breach involved an
omission rather than an act, the six-year limitations period
would not commence until ‘the latest date on which the
fiduciary could have cured the breach or violation.’” Unisys III,
242 F.3d at 512 (Mansmann, J, concurring in part, concurring in
24
the result in part) (quoting 29 U.S.C. § 1113(1)(B)). Thus, the
statute of limitations would not have expired until six years after
the 2000 or 2002 dates on which Kodak and Sanofi finally
disclosed the details of plaintiffs’ retirement benefits.
This duty to disclose is supported by several of our cases.
In Unisys III, we recognized a “fiduciary’s duty to deal fairly
with its beneficiary and, more specifically, ‘to communicate to
the beneficiary material facts affecting the interest of the
beneficiary which he knows the beneficiary does not know and
which the beneficiary needs to know for his protection.’” Id. at
509 (majority opinion) (quoting Bixler v. Cent. Pa. Teamsters
Health & Welfare Fund, 12 F.3d 1292, 1300 (3d Cir. 1993)).
We also in that case recognized a “duty to advise,” which can
arise “even in the absence of beneficiary-specific information
concerning confusion or mistake” as long as a reasonable
fiduciary in that position would have foreseen reliance based on
this confusion. Id.In Unisys II, we held that “when a plan
administrator . . . fails to provide information when it knows that
its failure to do so might cause harm, [it] has breached its
fiduciary duty to individual plan participants and beneficiaries.”
In re Unisys Corp. Retiree Med. Benefit “ERISA” Litig. (Unisys
II), 57 F.3d 1255, 1264 (3d Cir. 1995). Likewise, in Glaziers
we held that “a fiduciary has a legal duty to disclose to the
beneficiary . . . those material facts, known to the fiduciary but
unknown to the beneficiary, which the beneficiary must know
for its own protection.” Glaziers & Glassworkers Union Local
25
No. 252 Annuity Fund v. Newbridge Sec., Inc., 93 F.3d 1171,
1182 (3d Cir. 1996). We further held that the “scope of that
duty to disclose is governed by ERISA’s Section 404(a), and is
defined by what a reasonable fiduciary, exercising ‘care, skill,
prudence and diligence,’ would believe to be in the best interest
of the beneficiary to disclose.” Id. In Bixler, we held that the
“duty to inform is a constant thread in the relationship between
beneficiary and trustee; it entails not only a negative duty not to
misinform, but also an affirmative duty to inform when the
trustee knows that silence might be harmful.” Bixler, 12 F.3d at
1300; cf. Buccino v. Cont’l Assurance Co., 578 F. Supp. 1518,
1521 (S.D.N.Y. 1983) (“[A]s Fund fiduciaries [defendants] were
under a continuing obligation to advise the Fund to divest itself
of unlawful or imprudent investments. Their failure to do so
gave rise to a new cause of action each time the Fund was
injured . . . . If defendants failed, for ten years, to inform the
Fund that its insurance plan was unlawful or otherwise
improper, they continuously and repeatedly violated their
fiduciary duties under ERISA. Only those violations that
occurred more than six years before this action was filed are
time barred.”).
As in the Unisys III case, Kodak and Sanofi failed to
disclose for several years the true state of affairs for plaintiffs’
retirement benefits. In this context, Kodak and Sanofi “had an
ongoing duty to inform the participants of the true state of
affairs.” Unisys III, 242 F.3d at 513 (Mansmann, J, concurring
in part, concurring in the result in part). For as long as Kodak
and Sanofi could have “had reason to believe that the [plaintiffs]
26
remained unaware of the material fact that [their retirement
benefits were not in fact as generous as they had been told], it
was a violation of trust (i.e., a breach of fiduciary duty) every
day for [Kodak and Sanofi] not to inform them.” Id. (emphasis
in original).
The plaintiffs “should be permitted to prove that they
relied to their detriment on [Kodak’s and Sanofi’s] continuing
non-disclosure . . . by refraining from bringing the present suit
until after the omitted information was supplied.” Id. Judge
Mansmann went on to say that “[r]ecognition of an ongoing
duty to correct prior misstatements entails that the statute of
limitations does not run while a misstatement remains
uncorrected.” Id.4 Therefore, as she recognized, the majority’s
holding that the statute runs from the date of misrepresentation
and reliance “amounts to absolving the fiduciary from any
ongoing duty to correct the misstatement[, which] is therefore
contrary to our decisions in Bixler and Harte.” Id.With more than ten years of precedent in our Circuit
pointing to an independent duty to inform pension beneficiaries
4
I also agree with Judge Mansmann that the objection
that § 1113 is a statute of repose is met by the notion that “a
fiduciary who has misled his beneficiary may never seek refuge
behind the statute of limitations as long as he allows the
deception to continue unabated.” Unisys III, 242 F.3d at 513 n.9
(Mansmann, J, concurring in part, concurring in the result in
part).
27
of their rights, Kodak and Sanofi were on notice that they played
Three-Card Monte at their peril with plaintiffs. To reward their
nondisclosure is to make pension promises little more than
chimerical commitments. A duty to inform would further
ERISA’s goals and protect ERISA beneficiaries from being
cheated out of their rightful claims by a fiduciary’s six-year wall
of silence. I respectfully dissent.
28