*1 1042 Stеphen’s sep- was practice the Judge, Because SCHWARZER, District Senior marriage, the part: dissenting property in before arate part
concurring in evi- credible any to introduce Judy failed Judge O’Scannlain’s of in all I concur in- community acquired an the dence that remanding IV.B.l section except opinion court bankruptcy the practice, the in terest ruling clarify his judge trial for the I would affirm result. the correct reached in Judy’s of interest the value regarding Judy gave determination the court’s practice. medical the interest relinquishing her by no value Judy held that court bankruptcy The practice. the medical her interest relinquishing by value gave no on may affirm We practice. in the medical record. See by the supported any ground 737, Tambrands, Inc., 107 v.
Papike F.3d Cir.1997). Indeed, trial the (9th
744 if cor affirmed “must be decision
court’s wrong the relied on court
rect, if the even Burlington v. Claar or reasons.” grounds (9th 499, 1 Co., 501 n. 29 F.3d R. Northern Plaintiff-Appellant, BINS, S. Ernest . bank Cir.1994) I the believe Because v. result, I correct the court reached ruptcy U.S.A., a division COMPANY EXXON affirm. Corp., Defendant- Exxon recog opinion Judge O’Scannlain’s As Appellee. 548(c) 9805-06, nizes, because op. at defense, had bur Judy the an affirmative No. 98-55662. See gave. she value the proving den Appeals, Court States United Partners-A, 916 Seedlings Hayes v. Palm Circuit. Cir.1990). Ninth (9th 528, It 535 law, California state, that under enough En and Submitted Argued the value increase community efforts 20, 2000 Banc March business, in property separate of a 10, 2000 community. Aug. Filed belongs to crease Dekker, Cal.App.4th Dekker (1993). prove that To Cal.Rptr.2d value, show that must she gave she increased value actually practice
medical much. how marriage,
during rejects the contention Judy appeal,
On her, instead arguing is on burden
that the proving has the burden
that the trustee separate Stephen’s was practice
that the in this Judy’s posture From
property. present evidence failure her
case flowed community added to value opinion Judge O’Scannlain’s
practice. As
notes, only evidence op. at its value practice
the value of executed; no § was the M.S.A.
the time regarding record in the appears
evidence beginning practice at
the value of impossible marriage, making value,’ any, if increase
determine marriage.
during the
ters a Employee Retire- ment Income Security Act of 1974 (“ERISA”), et seq., U.S..C. has a duty to inform participants that it is considering proposal to offer more gen- erous retirement incentive Ap- benefits.1 pellant Ernest Exxon, Bins worked' for (“EUSA”), U.S.A. a division of Exxon Cor- poration (“Exxon”), for years. In the retired, months before he Bins unsuccess- Moúkawsher, Thomas G. & Moúkawsher fully attempted to confirm Walsh, LLC, rumors that Groton, Connecticut, for the EUSA was’ considering offering eligible plaintiff-appellant. *4 employees lump-sum retirement incen- Severson, Reese, James John R. Robert tive under an' existing plan welfare benefit A. Bundage, Beatty, Heather C. Allyson covered ERISA. Two weeks after- Bins Sonenshine, McCutchen, W. Doyle, Brown retired, EUSA announced precisely the Enersen, LLP, & California, Angeles, Los sort of retirement incentive about which Rivet, and David M. Exxon Company, inquired; Bins had U.S.A., Houston, Texas, for the defendant- appellee. The nature and extent of an ERISA fiduciary’s in duties these Crane, Jr., circumstances is Paul, Paul W. Hastings, Ja- impression matter first in Waslker, nofsky, Francisco, this Circuit. California, San recognize, therefore, We for amicus that the Employment district California Law court Council. did not any have guidance from this Court when it made ruling. its We have Hurd, Hollis T. P.A., Smith Downey, & jurisdiction undеr 28 U.S.C. 1291. We Pittsburgh, Pennsylvania, and A. Stephen review de novo granting decision sum Bokat, Conrad, Robin S. Sussan Mahallati mary judgment, see v. Caterpil Williams Kysela, National Chamber Litigation Cen- lar, Inc., (9th 658, Cir.1991), ter, Inc., D.C., Washington, for. amicus and we reverse. We plan hold that when a Chamber of Commerce of the United inquires participant potential .plan States. about changes, an employer-fiduciary duty has a provide to complete and truthful informa tion any changes such then under serious In consideration. the absence of however, an employee inquiry, the employ er-fiduciary HUG, does not have an Before: affirmative Judge, Chief BROWNING, duty SCHROEDER, to volunteer any information about O’SCANNLAIN, FERNANDEZ, changes prior adoption. to their final' We KLEINFELD, HAWKINS, TASHIMA, further employer hold that an does not MCKEOWN, FISHER, WARDLAW and á duty up háve employee to follow with an Judges. Circuit if, subsequent employee’s inquiry, proposed changes reach the serious Opinion FISHER; by Judge Partial stage, the employer unless Concurrence and Partiаl Dissent by Judge agrees to do so. FERNANDEZ. FISHER, FACTS2 Judge: Circuit must We in Ernest Bins worked for determine this EUSA as a case point at which employer an who Senior Mechanical adminis- Technician on an off- Throughout 1. opinion, intending this to "em- references without restrict .district ployer” or "employer-fiduciary” an assume authority court’s to find otherwise at trial. employer that is a administrator. 2. We recite the developed facts as in the rec- ord on the summary judgment, motion for no he had truthfully plied again, eligible became rig. He drilling —that oil shore — offering. an knowledge of such 1995 and Summer retirement 1, 1996. January effective to retire decided 27, until his re- December From hearing 1995, began Bins Fall 1,’ 1996, In the used Bins February on tirement regular retire- that, addition rumors his supplement vacation time accrued lump- offer benefits, would EUSA ment not return days did off-duty scheduled Special under the incentive retirement sum change have acted could Bins work. (“SPO- Allowances of Severance Program prior time any at date retirement his pre-existing SA”). is a The SPOSA December After February on available benefit welfare ERISA into inquiries however, no he further made that, approved, once basis an and no offering, as-needed aof SPOSA possibility special sever- pay EUSA permit would of a likelihood him about the told one to retire employees induce ance benefits to in benefits. its to reduce decides EUSA early when had initiated Fall EUSA In the workforce. Study Effectiveness Organization rumors, Bins to confirm Anxious op ways (“OES”) to determine Team had whom he everyone EUSA asked Department the Production timize have, or expécted he who access In November employed. Bins was which *5 obtain, about information be able to a reor 1995, Team recommended the OES offering. He a SPOSA the likelihood Depart the Production ganization Fore- Mechanical supervisors, his asked surplus— 200-employee a creating ment — Superintendent Field and Kelly man Pease оffering to SPOSA accompanying an and had they that Odom, him told who Jerry workers. excess early retirement of induce they that knew rumors but same the heard proposals several preparing After offering. Bins a about SPOSA nothing SPOSA, and reorganization structuring the counselor, assigned benefits his also asked to EUSA them Team submitted the OES resources and a human Pilgrim, 1995, Becky 29, November On management. Bins, According to advisor, Ray Julson. Peery re J.H. Vice-President EUSA either of these that instructed he had been of the manager As proposals. the viewed rep- company proper Peery individuals was autho two was Department, Production ques- whom to direct through offering resentative implement the SPOSA rized ben- employee company about Exxon. approval tions to from final obtaining after truthfully' that told him Foster They both M.E. efits. Vice-President Senior EUSA 1, about a SPOSA offer- nothing December knew proposals on reviewed Condray Ansel 1995, President
ing. and EUSA on December propоsals reviewed first his retirement postpone Bins decided 15, 1995. 1996, 1, part because February and reveal the offering, new SPOSA us does record before The rumors because, pen- to avoid a first wanted submitted he which part date on EUSA exact Exxon, from his thrift but we know early proposals withdrawal alty for 1995, 11, 1996, Vice- Bins attend- Senior Exxon January In November on account. favorably re- by Lea Harry Longwell seminar conducted a retirement President ed We proposal. attorney. reorganization Connor, During Exxon viewed Condray President an- answered know EUSA seminar, truthfully also Connor reorganiza- review of a final question conducted retiree’s prospective other 24, January on proposals knowledge of and no tion SPOSA had stating that she ap- day, gave his and, same on the retirement offering. At Bins’ new SPOSA Department work, Production proval to the December day of his on last party securing endorsement proceed su- supervisor’s 1995, his 27, Bins asked Exx- from and the SPOSA rеorganization Lucas, EUSA whether Dave pervisor, 26, 1996, Senior Exxon January On re- on. Lucas benefits. to offer SPOSA going (cid:127) Vice-President Robert Wilhelm wrote a had not specifically renewed his inquiry formally benefits, letter approving pro
brief
about SPOSA
EUSA had no affir-
30,
posed reorganization.
January
duty
mative
On
him
inform
it was
1996,
considering such
EUSA Human Resources
Manager
proposal. Finding no
breach of a
Beg
approval
requested
implement
fiduciary duty
ERISA,
Asif
under
the district court granted
proposed
summary judg-
SPOSA from Exxon Vice-
ment for EUSA.'
Resources,
President of Human
D.S. Sand
approved
ers. Sanders
the SPOSA offer
'
DISCUSSION
2, 1996,
ing
February
on
Beg
and
received
5, 1996.
approval
February
on
Congress
pro
enacted ERISA to
tect participants' and beneficiaries of em
13, 1996,
February
On
less than two
ployee
plans
benefit
without discouraging
retired,
weeks after
publicly
Bins
EUSA
employers from offering
plans.
such
reorganization
announced its
and the
Howe,
Varity Corp.
516 U.S.
availability of SPOSA benefits. Bins filеd
(1996).
116 S.Ct.
was no serious
proposal
of a
consideration
Corp.
Schoonejongen,
73, 78,
v.
514 U.S.
offer
SPOSA benefits as of December
1223,
(1995)
115 S.Ct.
employer’s (SECOND) OF RESTATEMENT (citing it considers suspended while ciary are not 229(1) (1957)). AGENCY, § existing ERISA an proposal amend a plan. The replacement adopt a plan or Consideration B. Serious fiduciary is to of an ERISA obligation core circuits our sister have Several respect “discharge duties [its] determining when for adopted standards partici- interest of solely in the plan employer will an the likelihood ERISA beneficiaries.” pants an en- plan to offer an ERISA amend 1104(a)(1); 404(a)(1), § see 29 U.S.C. incentive or severance retirement hanced S.Ct. 516 U.S. Varity, also to re- sufficiently substantial program law to the common Looking 1065.4 an ERISA employer who is also quire аn Supreme Court guidance, the potential trusts fiduciary to communicate communicating information straightfor- accurately has held amendment plan participants. with- inquiring benefits falls likely wardly future about II, from the case is Fischer leading of a fidu- The statutory definition in ERISA’s Circuit, employ- that an which Third holds ciary act: truthfully ques- er-fiduciary must answer likely about the information Conveying potential of a tions about substance benefits, thereby permit future of employer is “seri- if in benefits an to make informed beneficiaries ting proposal. considering” such ously participation, continued about choice II, Fischer According to 1538-40. F.3d at power of a an to be would seem .exercise place takes serious impor out carrying “appropriate” (2) “(1) being dis- proposal specific all, ERISA After plan purpose. tant (3) implementation purposes of cussed for requires administrators specifically itself authority- with the certain information give bеneficiaries at 1539. change.” Id. to implement , ERISA e.g.; plan. parts these three as II treats See 105(a). 104(b)(1), And §§ adminis elements but related criteria as isolated “in- together in an trators, analyzed administrative part of their that must be as review to determine herently fact-specific” offer benefi frequently responsibilities, seriously consid- employer when the first the minimum informa more than ciaries change in proposed implementing ered requires-for exam tion that statute *7 Id. benefits. questions ple, answering beneficiaries’ plan the a meaning of terms of about the test, a Thus, II under the Fischer eas can more that those so beneficiaries be retirement benefits change in potential To offer plan’s the benefits. ily obtain likely therefore sufficiently comes —and in plan beneficiaries detailed employ information sufficiently material becomes trig them decide whether help plan order to participants ment decisions employ duty essentially fiduciary plan ger is remain with the —when proposal a er-fiduciary seriously considers plan-related activity. kind of same expenses (ii) defraying of ad- (1996). reasonable vested case does not involve 153 This plan; ministering the benefits. skill, care, prudence, (B) and with the 404(a)(1) provides pertinent in § 4. ERISA then diligence circumstances under the part: acting a prudent man a in prevailing that (a) of care Prudent man standard such with mat- capacity familiar like (1) discharge duties fiduciary his ... a shall of an enter- in conduct would use ters solely interest plan in respect to a with with like prise of like character and— and beneficiaries participants of the aims[.] (A) purpose of: for the exclusive 1104(a)(1). § 29 U.S.C. (i) participants providing benefits to beneficiaries; their
1049 change those benefits. Most of our a materiality, lower standard of see Fisch- II, sister circuits that have considered the er 96 1539. “Too low a stan- question have also held “serious considеr dard could in result an avalanche of notices critical, relevant, ation” to be or at least and disclosures.... The warning that a See, point materiality inquiry. in the e.g., benefits was under serious con- Inc., McAuley Corp., v. IBM 165 F.3d sideration would become meaningless if (6th Cir.1999) 1038, 1043 (noting that cried too often.” Id. Until review aof “ consideration’ does occur ‘[s]erious potential plan amendment reaches the ser- company until a on a particular ‘focuses ious consideration stage, prospects for ” particular purpose,’ for a and find adoption its ultimate sufficiently are uncer- ing specific II’s delineation of Fischer fac tain that it questionable would be of mate- tors determining “useful consider” when riality to the decision-making process of a the issue of (quoting serious consideration plan participant contemplating retirement. (6th 490, Muse v. IBM Corp., 103 F.3d 494 A requiring rule earlier disclosure risks Cir.1996)));5 Co., Vartanian v. Monsanto being overly burdensome and could easily (1st Cir.1997) 264, 131 F.3d 272 (applying counter-productive become by discourag- II, making explicit Fischer but the re ing employers from considering such pro- quirement that the specific proposal at is posals place. in the first sue under consideration would “affect a Nonetheless, we also recognize that person position plaintiff’); II Fischer test applied should not be (R Co., M), v. Hockett Sun Inc. & 109 F.3d so rigidly as to distract attention from the (10th Cir.1997) 1515, 1522-24 (adopting inquiry, core which always must be wheth modification); II without Ballone er the employer-fiduciary has Co., violated its Eastman Kodak 109 F.3d (2d Cir.1997) fiduciary' duty of loyalty plan partici (holding that “serious pants by failing consideration” is relevant to the disclose material infor factor pot materiality inquiry agree “prerequi but mation. We the First Circuit site”). flexibility inherent in the Fischer Vartanian, II test is essential. similarly We believe that Fischer II’s F.3d at 272. “The question ultimate serious consideration proper test is the composite picture ‘a whether of serious ensuring tool for that an employ- ERISA developed.” consideration’ has Id. (quot er-fiduciary discharges its “duties with re- II, 1539). ing Fischer 96 F.3d at This spect to a solely the interest of the flexibility particularly necessary in cases beneficiaries,” participants and Varity, 516 present evidence employer’s U.S. at (quoting S.Ct. 1065 of. 1104(a)) (internal attempt “deliberate U.S.C. ERISA” quotation circumvent omitted), marks creating carefully patterning without un- its conduct so as to necessary confusion that could result from evade one Any three factors.6 Id. Questions originated concept The Sixth Circuit Regarding "How SPOSA Should trigger point "serious consideration” as Addressed/Legal Guidance/Organization Be *8 fiduciary duty Michigan ERISA’s in Berlin v. Study .Implementation.” Effectiveness The Co., (6th Bell Tel. F.2d 1163-64 provided and memorandum attachment a list Cir.1988). “acceptable responses” questions of to from employees supervisors and their about the assumptions 6. We make no about EUSA’smo- possibility offering. aof new SPOSA keep tives but attempt note that it did to personnel Human potential resources were instruct- information about the SPOSA offer- 24, 1996, ing reply response tight wraps. January employee ed to as in to under On follows inquiries: study reviewing reorganiza- while Exxon "The is still under I the review. proposal, having Oper- ap- tion EUSA Human don’t know of a Resources SPOSA been Manager proved.” explained ations W.M. “Butch” Snow Snow sent The memorandum supervisor members of the EUSA Human if a Resources De- asked whether he she or partment a possibility confidential memorandum enti- could the discuss of SPOSA bene- Questions Respond tled Regard- employee "How to to fits with an who intended to retire ing SPOSA" and February personnel an attachment entitled as of human resources work, preliminary its completed nar- Team risks of the test application formalistic for proposals several “prepared the it dilty by giving when fiduciary the
rowing the reorganization employеr-fiducia- to the structuring doubt of the benefit ¶ 5, test words of the forwarded SPOSA,” the with Decl. comply who Snow ries their spirit with comply manage- not senior but do EUSA proposals these ERISA. obligations fiduciary developed fully is not The record ment.7 mind, ap- framework we this however, id. With the remand and on point, on this the test consideration the serious ply the content examine should district court case. facts of this more initial recommendations of those determina- a final making closely before “Specific Proposal” merely proposals that the may It be tion. first of this function primary The vari- of the outline rough, a abstract gave II test is to “distin the Fischer element of of- and SPOSA ways reorganization a ous an from the consideration guish[ ] serious structured, case in which be fering could information, gathering steps of tecedent sufficiently concrete to not be they would op analyzing strategies, developing test. On prong of the satisfy this II, at 1539-40. tions.” Fischer if hand, be sufficiеnt it would other need not “describe proposal Although the options possible laid -the out proposals form,” it must in its final detail, management permitting more thus support consider “sufficiently concrete imple- purpose them for discuss pur for management by ation senior mentation. Id. at 1540. implementation.” pose of presented EUSA Team the OES That OES done work preliminary The alternatives management with several Team, gather “was to informa focus whose Bins, question against not resolve the does develop strate tion, options, and evaluate because, recognized, “[a] II as Fischer Snow, EUSA gies,” Declaration W.M. several alter- can contain specific proposal Manager Operations Human Resources dis- F.3d at 1540. Nor natives.” ¶ Decl.”) 6, does (hereinafter thus “Snow proposal Team’s OES positive theAt above standard. satisfy the changes before undergone some may have however, argument time, Exxon’s same imрlementation, since approval not become did final proposal that the SPOSA 26, 1996, may dif- implemented January finally plan as “specific” until “the Exxon In- proposal.” asked Id. from the senior EUSA fer somewhat imple whether, approval management for stead, be on the focus should SPOSA, fo probably proposed ment the pro- perspective, management’s from process. in the cuses too late a permit concrete sufficiently posal was From implementation. about discussion first element this Instead, we believe Bins, like employee perspective OES soon after the met may have been inqui- respond to SPOSA any about how bers” supervisor not to initiate should tell employees. ries. discussion SPOSA-related wisdom of express opinion on offering We no supervisor the SPOSA knew Even if possi- supervisors limiting access information about approval, were final had received However, inter- if an saying change in questions by respond ble benefits. supposed to (insert potential inquires employee about is scheduled ested "[a]n announcement stage month)." The memorandum after the serious portion reached, super- that, supervisors prevent from not be defense it would explained expect- and thus “it is approval, were unaware status learning SPOSA visors truthfully to the em- knowledge approval, ignorantly if but responded SPOSA any ed that *9 tightly given, inquiry. will be ployee’s ever is approval such person- resources human held.” It instructed SPOSA was that the record indicates "acceptable 7. of The use the list should nel as- on an plan that was available pre-existing re- appropriate responses" determine both to basis, subject to amendments but site needed advise local sponses questions Exxon. from requiring final authorization leadership team mem- managers "natural Instead, is material to his retirement decision packages.” held, what Id. the court offering likеly; that a is the SPOSA is sufficient “[i]t for this factor the exact, significant. final terms are less plan be by considered those members of senior management with responsibility for Purposes
2. Imple- “Discussed business, the benefits area of the and who mentation” ultimately will make recommendations to the Board regarding operations.” This benefits “recognizes element that a Id. corporate analysis executive can order an of benefits alternatives or commission a applies This caution equally to a comparative study seriously without con present one, like the setting which the sidering implementing bene proposal only affects division within a .... fits Consideration becomes serious larger corporate structure corpo and the subject practicalities
when the
turns to the
may
ration
function similarly to a board of
II,
implementation.”
96 F.3d at
directors.8 The
Corpora
fact that Exxon
precise
1540. The
date when this element
may
tion
only cоrporate
be the
body that
of the test was' satisfied is difficult to de
“in a
implement
literal sense” can
benefits
on
termine
the record before us.
re Oh
changes by .placing
imprimatur
its
aon
mand, the
court
district
should focus its
proposal from
management
EUSA
should
inquiry on the content of the various SPO-
necessarily push
back the date of seri
options
initially
by
SA
as
formulated
ous consideration in this case to the date
OES Team and on what the various re
on which the
proposals
SPOSA
landed on
by
views
EUSA and Exxon senior man
desks at
If
relationship
Exxon.
EUSA’s
agement entailed to determine
to Exxon
corporation’s
resembles a
rela
subject
practicalities
turned to the
of im
directors,
tionship to its board of
then
below,
plementation. As we discuss
once
serious consideration by EUSA’s senior
senior management began
relevant
management would
satisfy
be sufficient to
.proposals
address how the various
the Fischer II test.
implemented
within the Production De
partment,
this
The
element would have been
American Law Institute’s
Principles
satisfied.
Corporate Governance are
concerning
instructive
the relationship be
“By
Management
3.
Senior
with Au-
corporation
tween a
and its board of di
thority
Implement
Change”
rectors,
respective
and their
functions and
here,
responsibilities.
Insofar as relevant
This final element is intended to
the role’ of
the board
to “oversee” or
analysis
“that the
ensure
of serious consid
corporation’s
“monitor” the conduct of the
eration
proper
focuses on the
actors within
approve major
business and to
corporate
corporate
hierarchy....
Until senior
plans and
issue,
actions. See American Law
management addresses the
the com
Inst., Principles
Corporate Governance:
pany
yet seriously
has not
considered a
3.01,
II,
Analysis
§§
and Recommendations
change.” Fischer
principal . Fischer II. satisfy sufficient by its senior actually managed may be tion dеgree of del a substantial executives.with highly appears to be Although EUSA autonomy. The authority and egated Exx- entity the broader autonomous within function, turn, may be del in management structure, the record on this corporate on executive senior other to various egated remand, developed. fully not On is issue of by course officers, formally or either wheth- should determine the district court (noting & cmt. c § 8.01 See id. conduct. fact, was, essentially self- in er EUSA either from may come delegation that such court the district Specifically, managed. ex senior principal fromor the the board in Exxon’s role assess should whether 1.30, 1.27, ecutives); §§ 1.33 see also id. actively operations was business EUSA’s execu “officer,” senior “principal (defining properly more managerial or characterized executive,” respectively). tive,” “senior to this issue oversight. Relevant as one of acts like a Accordingly, corporation the required regularly is whether Exxon role is general when its of directors board for policies referred to it in the changes oversight over its divi of limited to one regularly whether Exxon ini- approval, and sions, the corporation the “retains even if change for EUSA’s suggestions tiated major actions.” [division] on policies decisive voice management and other personnel self-managed turn, like a a division acts place. In A re- put had been once t delegated has been prior when i corporation approval to im- of Exxon quirement not, its own man autonomy over in and of policies is plementation substantial of itself, the dispositive decisions. than was agement any more directors the board of approval by need for oversight and between This distinction of II. Exxon’s retention some in Fischer the determining is critical management oversight necessarily does not degree of autonomy enjoyed by corporate level of ability to makе its from EUSA’s detract II. It Fischer is for purposes division fully If the de- managerial decisions. own lines in this con- precise draw difficult to that EUSA was veloped record reveals relationships corporate within text because prong third self-managed, then the Nonetheless, the vary widely. structures the senior II be met when whether, should be on focus management began seriously of EUSA structure, corporate the division particular proposal.9 considering the SPOSA essentially whereby self-managed is stated, cogently court by prac- As the Fischer II policy or corporation (by allows consideration test is tice) goal of the serious to de- executives the senior division potential “[e]mployees learn the divi- for implement policies [to] for velop. company’s deliberations authority, changes when part delegated as of their sion employee when an reached a level input from the have subject oversight potential rеasonably au- factor not ultimate should corporation. The issue decision.” employment Id. because, of di- into like the board thority, though a Consequently, even rectors, at 1541. corporation ] can “retainf corporate may division self-managed corporate, actions.” major voice on decisive changes with- Instead, implement authorized to the issue is cmt. a. Id. 3.02 management when senior policy approval, is within the out proposed whether seriously considering an delegat- such a division scope of the divisional executives’ benefits, an em- special offer severance management authority such ed Bins, considering who is ployee such as approve their corporation likely will most possible so, inquired has by retirement and If recommendations. ment, record, him as a identified Peery, and EUSA's counsel appears On this authority carry manager De- EUSA partment, might of the Production Vice-President relеvant senior offering be one of the been once it had the SPOSA out responsibil- EUSA executives. had overall He approved by Exxon. depart- ity affected
1053 501, at play. come into See id. 116 possi- factor that ties obviously would changes, (“Conveying 1065 information about decisionmaking process. S.Ct. into his bility benefits, plan likely thereby future of summary granted court The district permitting beneficiaries to make an in on its in favor of EUSA based judgment partic formed choice about continued did serious consideration conclusion that seem to be an exercise of a ipation, would 1996, 26, January when until begin an im power ‘appropriate’ carrying to out management reviewed Exxon’s senior If portant plan purpose.”). employee an judgment on this ba- Summary proposals. (or pro an inquiry inquiries) makes court because the district improper sis was spective plan changes, employer’s fidu corporate struc- examine Exxon’s did not duty respond completely' is to and ciary relationship between ture to determine af truthfully present about the state of the latter’s level of Exxon and EUSA and is, fairs —that whether serious consider a self-managed If autonomy. EUSA employer’s duty The begun. ation has division, management’s ser- EUSA’s employees not extend to who do not does offering of the SPOSA ious consideration potential plan changes, how inquire about re- fiduciary duty to trigger that, ever. hold such an We absent inqui in- inquiries to Bins’ and spond truthfully fiduciary not have ah ry, an ERISA does potential him status of the form of the approval final duty prior affirmative to offering. SPOSA plan changes to general dissemination' Fiduciary’s Duties Scope employees The volunteer information to who C. fiduciary specifically have not alerted the duty beyond EUSA’s argues Bins information is materi to the fact that such inquiries, it respond truthfully his Corp., v. NYNEX al to them. Pocchia Cf. notify him if serious duty both to had a Cir.1996) (“While (2d 275, 279 81 F.3d made his in began after he considerаtion fiduciary duty not to make NYNEX had a all information to and to volunteer quiries misrepresentations or omis affirmative absence of potential retirees even sions, duty it not have a to disclose did We hold that'no such specific questions. proposed changes inquiry the absence of except affirmative to the ex duties exist Pocchia.”).10 by by employer. an agreed tent are question A more difficult concerns amending, or con The act of inquire who are cor employees who of, be plan sidering the amendment rectly at that time that no serious told power plan of a administrator yond the employ If the has occurred: plan and thus is not an act of the serious con subsequently er reaches 516 Varity, U.S. or administration. duty go stage, does have sideration 505, 116 Consequently, an em S.Ct. 1065. who had employees and inform those back of a ployer’s serious consideration employer the- who not, itself, previously inquired and impli in and of to a does retired? The answer yet have not knows fiduciary But cate ERISA’s duties. when employ precise turns on the content em employer communicates with its an inquiry. fiduciary responsibili- ee’s plan, about a ployees 1995) fiduciary (holding has a question that an ERISA holding, By we do not our suspicions duty investigate he has with disclosure of other "affirmative” existence maintenance, funding respect employer-fiduciary under circum duties of an information, See, concerning convey failing e.g., v. present here. Farr stances not Communications, Inc., partici suspicions responding when 151 F.3d those U.S. West 1998) affir (9th inquiries can be construed as an (finding pants' Cir. breach 914-15 misrepresentation); Acosta duty fiduciary provided in mative fiduciary Pacific 1991) Enters., (9th Cir. regarding consequences of tax formation fiduciary has an (holding "an ERISA option, electing early but left an retirement of cir duty inform beneficiaries possible affirmative regarding adverse out known facts funding of bene cumstаnces that threaten fits”). consequences); v. American Mobil tax Barker (9th Corp., Cir. 64 F.3d Power inquir gives fiduciary obligations, rise to such as employee, If in the course an fiduciary prej- “knowledge when the has possible plan changes, asks ing about employer udicial acts as the any changes in the status kept abreast of *12 —such employer an to failure of to contribute a employer and the potential change aof id., effect, ineligi- fund as or “when an required,” that then the provides assurances to person ble contributes to a fund” and the fiduciary duty a to employer will have or fiduciary ineligibili- knows learns of employee. In such a up follow with that contrast, ty, employer’s id. at 751. In an situation, that employer should know stage arrival at the serious consideration conveys an part on its thereafter silence independently to a fidu- give does not rise no serious consider implicit message that to ciary obligation volunteer information employee and that the ation has occurred inquiry. an absence of on that to his or her rely will silence 505, 116 Vzrity, 516 at detriment. U.S. promise Accordingly, Cf. the absence of a “plan that administra (noting S.Ct. 1065 update employee, an an ERISA fiducia- have, exercise, commonly tors often and ry’s duty beyond giving does not extend discretionary authority to communicate complete accurate em- and answers to the with about the future of beneficiaries contrary A ployee’s questions. rule would benefits”); v. Pa. Team Bixler Central process whereby employees a would invite Fund, 12 sters Health & boilerplate requests updated Welfare include to be (3d Cir.1993) (“Th[e] duty 1300 they an a inquiry. whenever made Such only duty ... not a negative inform entails upon employer rule would force a re- misinform, not to but also an affirmative sponsibility which it may unwilling be duty inform when the trustee knows could, consequently, assume and discour- harmful.”). might that be silence age employers seriously considering from If, plan changes. otherwise beneficial on however, decline, impose on em .We remand, provide Bins can evidence that ployers duty up employee’s follow an any representatives of the EUSA he asked assurance inquiry in absence an. potential change prom- about the SPOSA employer provide that it will from the anything changed, ised to let him know if update. requirement Such extend then, assuming serious oc- consideration fiduciary an ERISA administrator’s curred before his retirement be- decision duty beyond conveying truthful informa irrevocable, promise came would be any discretionary duties it has tion and recovery. basis for assumed, thus would be inconsistent Varity. with No other court has so ex REVERSED and REMANDED for fur- fiduciary’s duty tended a to disclose. Con proceedings opin- ther consistent with this Eddy v. trary suggestion, to Bins’ Colonial ion. Co., (D.C.Cir.1990), F.2d 747 Ins.
Life FERNANDEZ, Judge, Circuit with go Eddy’s does not so far. broad dictum McKEOWN, whom O’SCANNLAIN and duty only has a not fiduciary “[a] join, Judges, concurring Circuit beneficiary inform nеw and relevant dissenting: arises, information as it but also to advise him of circumstances threaten inter agree parts I with A and C1 [fiduciary] ests to the relation majority opinion part relevant B to the and with added), ship,” (emphasis proper id. at refers extent that it holds that the test for examples employer’s employee where the mere answering inquiries is seri- However, acquisition independently of information ous test.2 I can- I, meaning unduly captious, maj. op. 1. Without to be remand on that basis. See however, nothing must indicate that in this suggests record a determination that some special promise as it to disclose information Philadelphia 2. See Elec. Co. 96 Fischer developed by any represen- was made to Bins Cir.1996) II). (3d (Fischer F.3d 1533 employer. tative of the I no see reason proposed change.” Id. That test ment puts on the gloss, it agree with not would, on gloss including disagree employees, exclude most especially management” elemеnt might part the “senior who of sen- some executives II, in turn which 96 F.3d hand, other -management. ior On the to the district this case it to return induces as as high it mean to ascend did while further, extepsiye and perhaps court for itself, it did mean to the board directors That, itself, would expensive, proceedings. manage- of “senior heights ascend bad, enough. it is drear although so not be for the responsibility ment .with benefits However, employ- ill portends also business,, ultimately area of the and who ers, must to know who seek will make recommendations to the Board *13 a-hatehing at only are plans which disclose Id.; see regarding operations.” benefits best.3 Co., Inc., 109 F.3d also Hockett v. Sun it, put the serious consid- Fischer II As (10th Cir.1997). In other 1524 three eléments: test consists of eration words, very considering highest it was (2) “(1) being is dis- specific proposal even corporate management, of but level (3) implementation purposes for of cussed high-level ex- further limited that to those authority manаgement with the by senior responsibility. It ecutives with benefits major- Id. The change.” implement directly were re- people referred to who (2) (1) parts of the of ity’s discussion of the sponsible to the board of directors that suggest It troubling. seems test is people whom the company. Those are the at a employees look lower echelon heavily upon, likely rely most board is by options submitted possible mere mix of the board and whose recommendations that can be sufficient underlings, their from. likely least to deviate See parts of the test. satisfy the first two enough to might That test be difficult troubling, at But most maj. op. 1050-51.4 I see no apply in some circumstances.5 (3) here, part of- that focus my immeasurably dif make it more reason to maj. op. 1051-53. formulation. like: asking questions ourselves by ficult (3) it, part explained Fischer II As delegated directors has If the board of on the designed “[to focus] test was decision-making authority to the true final corporate hiеrar proper actors within managers company, does sen senior manage And senior chy.” Id. a constructive become management ior It meant really Fischer II “senior.” ment board, employees echelon be while lower individu corporations, “employ that noted management? senior come constructive man als, upper-level including middle and that, do we commit ourselves Once we gather information agement employees, that questions progression an endless those Clearly, Id. and conduct reviews.” if we re Especially is that true nature. Certainly, people not the intended. were begin over the test and puzzling sort to anyone who II meant exclude Fischer to. in the abstract what imple- asking ourselves authority “possess not did might, someday, recognize be emplo 5. I that there perfect, II itself is far from if 3. Fisher y encouraged company will ma good ill-disposed will are to be ers of case where an emplоyee benefit "the formation of give undertake nipulate in order to itself its structure Dedeaux, 481 plans.” Pilot Ins. Co. misrepresentations to its em ability to make Life 1549, 1556, 41, 54, L.Ed.2d 107 S.Ct. U.S. impunity. Should that ployees apparent with (1987). accept agree we should But I eventuate, that the courts will I am certain de mieux. it faute problem. Suffice it to able to deal with placed any can be say that rule of law reify spirit lurking within 4. That seems to ' disposed; that does not pressure by the ill formulation,, may which to make tend every rule make stated mean that we should ingredient in sort of II a mere some Fischer Co., 131 mushy. Vartanian v. Monsanto maj. op. Cf. 1049-50. indeterminate mix. See event, Cir.1997). (1st any In That, give litigants and courts surely, would any manipulation indication there is no hardly help em- flexibility, but it would more affecting in this case. Bins occurred ployers to their affairs. “authority implement” board-report- is meant not the ones who were at the clause then, seeing ing company. Clearly, rather than level of thе accomplish, is, viz, phrase it a limitation of the were not the to whom Fischer II for what ones managers Again, than an referred. I see no reason to ex- class of senior rather beyond expansion pand to some class below level of the class and below that set lofty II. top judges position can live with forth The management. We really we not uncertainty, management but should the senior class executives . Companies so must live serves to assure us that of a have to do it, they really truly should not have to do so. has reached a serious level in a but way that little else could. ap-
Nor is the difference between the proach majority begin II in- ruminating of Fischer Nor will do to Here, example, employees whether consequential. we the EUSA “resem- because, a mere division of bled” management per- know that EUSA subsidiary haps, It and did only Exxon. was not the real senior directors, not have its own board of directors. The “resembled” а board of but also reviewing employ- or activities of the acted as a mere for a significantly titles overseer *14 division, managed ees within that division should be no autonomous or self of course, import. real None of them were the sen- whatever that I recog- means.8 Of managers company.6 adepts ior of We also nize that common law are able managers senior anything something know that actual of define at all into else give entirely. Exxon did not serious consideration to There good is no reason to do so here, January until 1996 at the and once we that path, SPOSA start down I time, By it too principled way earliest.7 that late for see no to distinguish among divisions, question he never asked a departments, flung Bins- because or even far True enough, groups operate pretty after that date. EUSA offi- independently day-to-day pur- cers had considered before on a basis.9 More to the that, but, again, they surely peo- were pose, slightest not there is not the hint in the ple authority go who had the corporate forward record that the Exxon officers anything. surely, they fine, with Just as were stamps were rubber for In EUSA.10 That, course, Peery, power 6. of the EUSA includes tion of the allocation of between Department. Vice-President of the Production management. boards of directors But maj.’op. See 1052 n. 9. that cannot conceal the fact that what the majority doing turning manage- is is senior early might 7. well be too That earliness —its corporation quasi ment of a directors, into a board of being unsupported record —because the management quasi and lesser into suggests a But record later date. Exxon es management. The discussion does adopts sentially certainly that date and does spread distractingly diaphanous cloak over Thus, argue purposes otherwise. determination, dangerous it but is no less appeal this Exxon be held must to that. must, to, disturbing to those who wish or see Int'l, (In Resorts Inc. v. Lowenschuss re Low through diaphragm and deal with the (9th Cir.1995); enschuss), 67 F.3d dragon Again, legally factually beneath. Lassen, Doty County 37 F.3d speaking “subsidiary” and "division” are as (9th Cir.1994). "corporate entity” "corporate different as simply Perhaps means that a board of or, will, employee,” you if chalk and cheese. puts great upon its directors reliance chief officers, management executive and senior Beg, 10.vNeither A. the human man resources might put great upon have reliance individu- EUSA, Snow, ager of nor W.M. human so, als at EUSA. If still I see no reason EUSA, operations manager resources saw by reading way. destabilize the test it that management stamp. Exxon as a rubber Nor Indeed, say do we even dare that senior man- authority anything did have to do wit agement significantly independent is and self h approval out the of that and its governing vis-a-vis board of directors? Nothing authorization. in the record to the majority engage contrary, 9. The but we now send the case in a somewhat back does upon explica- develop something. elaborate rumination the ALI's see if Bins can uncertainty into enough injects II law, uncertainty but some area of the this attempting are when we inevitable has misrepresentation just when a
decide beneficiary of a inquiring to an
been made no reason to exacerbate I see
plan. unnecessary; I see no
inevitable already peril to the this new to add
reason seas.
parlous ERISA
Thus, adoption I concur while test, respectful- I serious consideration ma- which the glosses from the
ly dissent turn, test, which, on that
jority puts case.11 In of this in the remand
result
fíne, affirm the decision I would court.
district Debtor. H. HATTON
In re James America, Appellant, States
United *15 Hatton, Appellee. H.
James
No. 98-35248. Appeals, States Court of
United
Ninth Circuit. Aug.
Argued and Submitted Aug.
Filed Nor, as not, course, appropriate officer. by poten- sideration foreclose 11. This preclude a corporation where a in footnote does this relief in a situation indicated tial making for the bene- company improperly has vested decision invoked its itself claim that manage- at issue in members fit fig dis- corporate as a leaf avoid structure Because of most senior rank. ment below the Again, record here obligations. closure may circumstances possibility, there simply does not this case demonstrates necessary to determine wheth- where a trial is fall into either category. con- proposed change serious er