Lead Opinion
OPINION OF THE COURT
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,
I. BACKGROUND
Because the District Court granted ap-pellees 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.,
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 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
In their complaint, appellants identified three communications from Kodak and Sa-nofi 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.
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,
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,
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 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,
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).
II. DISCUSSION
Our review of a dismissal under Rule 12(b)(6) is plenary. Leveto v. Lapina,
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 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.,
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.
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 “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, 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
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 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 reli-ances were apparently their first reliances, and (as the parties stipulated) the reli-ances 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 reli-ances 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 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, ie., 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,
We agree with the District Court that the “fraud or concealment” exception is not applicable to this case. As we instructed in Kurz,
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.
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 Uni-sys 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 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 Sano-fi 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,
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.
Lastly, we respond to appellants’ strained characterization of several decisions from this Court, including Unisys III, Harte v. Bethlehem Steel Corp.,
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), 29 U.S.C. § 1132(a)(3)(B). As they 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 com
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 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 Townhome Assoc. v. West Chester Borough,
III. CONCLUSION
For the foregoing reasons, we affirm the decisions of the District Court.
Notes
. 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).
. Since neither party argues that § 413(1)(B) is applicable to this appeal, we have limited our discussion to § 413(1)(A).
. 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).
Dissenting Opinion
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),
By the reasoning of Unisys III, “the date of the last action” of Kodak’s and Sanofi’s breach was 1988 and 1994, respec
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,
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,
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,
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),
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,
The plaintiffs “should be permitted to prove that they relied to their detriment on [Kodak’s and Sanofi’s] continuing nondisclosure ... 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.
With more than ten years of precedent in our Circuit pointing to an independent duty to inform pension beneficiaries 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.
. 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,