Indiana Law Review


ERISA Disclosure Decisions: A Pyrrhic
Victory for Disclosure Advocates

Eugene P. Schulstad*

Introduction

A primary goal ofCongress when it passed the Employee Retirement Income
Security Act of 1 974 ("ERISA" or "Act") was to protect the interests of pension
plan participants and their beneficiaries. ' Congress recognized, however, that the

voluntary nature of private retirement plans made it necessary to balance
requirements placed on employers against the burdens of plan administration.2

Congress hoped that by achieving such a balance there would be an overall
increase both in the number of retirement plans and in the number ofemployees
entitled to receive employee retirement benefits.

3
Contrary to Congress' intent,

however, the combined burdens placed on employers by the passage of ERISA
and subsequent court decisions have caused considerable tension between the

needs of businesses and the desires of plan participants.
4

One area that typifies this tension is disclosure. For example, a common
source of disputes between employers and plan participants arises when
modifications to pension and other benefit plans are under consideration.

5

Questions inevitably arise regarding what information must be communicated to
plan participants as plan changes are contemplated.

6
Circumstances under which

disclosure issues surface include communication of the health care benefits

available under a plan, the procedures that must be followed to take advantage

ofbenefits, and what information should be disclosed when a company converts
from one type of retirement plan to another. A typical disclosure case in
litigation concerns a retirement decision in which an employee opted for early

retirement and later learned that his employer was considering a retirement
incentive program that would have resulted in increased pension benefits for the

employee had retirement been delayed.
7

The statutory requirements of ERISA that address disclosure are largely

* J.D. Candidate, 2001, Indiana University School of Law—Indianapolis; B.A., 1965,

Moorhead State University, Moorhead, Minnesota; M.S., 1967, Kansas State University,

Manhattan, Kansas; M.B.A., 1975, Indiana University.

1. See 29 U.S.C. § 1001(b) (1999) C[T]he policy of this chapter [is] to protect ... the

interests of participants in employee benefit plans and their beneficiaries . . . .").

2. SeeH.K. REP. No. 93-533, pt. 1, at 1 (1974), reprintedin 1974 U.S.C.C.A.N. 4639, 1973

WL 12549.
3. See id.

4. See Mary O. Jensen, Note, Separating Business Decisions andFiduciary Duty in ERISA

Litigation?, 10BYU J.PUB. L. 139, 140(1996).
5. See Ryan P. Barry, Comment, ERISA 's Purpose: The Conveyance ofInformationfrom

Trustee to Beneficiary, 3 1 CONN. L. REV. 735, 736 (1999).

6. See id. at 736-37.

7. See Bins v. Exxon Co. U.S.A., 189 F.3d 929, 931 (9th Cir. 1999), rev 'den banc, 220

F.3d 1042 (9th Cir. 2000).



502 INDIANA LAW REVIEW [Vol. 34:501

confined to the plan administrator's reporting duties to plan participants and
government regulators and therefore do not directly address the issue ofprecisely

what communications are required and when they must be made.8 These
reporting obligations include providing participants with summary plan
descriptions written in a manner that the average plan participant can understand,
filing annual reports with the Internal Revenue Service, and distributing summary
annual reports to participants.

9
Under ERISA, a plan administrator is a fiduciary,

and as such owes a fiduciary duty to participants to disclose the information
required by the Act.

10 A "fiduciary" is defined under ERISA as a person who
exercises control over management of a plan or disposition of plan assets, who
gives investment advice for compensation with respect to the plan, or who has
discretionary authority or responsibility for administration of the plan." Early

court decisions interpreted ERISA narrowly, holding that the fiduciary duties of
a plan adm inistrator were only those specific reporting and disclosure obligations
outlined in ERISA. 12 Subsequent decisions, however, have expanded the
fiduciary duties of plan administrators relating to disclosure far beyond the

specific reporting mandates of ERISA. The Sixth Circuit Court of Appeals, for
instance, found that plan administrators have an affirmative duty not to mislead

or misrepresent plan participants when materia! changes to a plan are under
consideration.

13
Expanding on that decision, the Third Circuit held that a

misrepresentation was "material" if contemplated changes to a plan were under
"serious consideration."'

4
Other courts have reached similar conclusions and

held that if an employee asks his employer whether plan changes are being

considered, and in fact such changes are under serious consideration, the

employer has a fiduciary obligation to disclose that fact.' 5 These decisions have

added to the regulatory burdens ofERISA and therefore have contributed to the
steady decline in the number of traditional pension plans being offered to
employees.

16

8. See29V.S.C. §1021 (1999).

9. See id §§ 1024-1025.

10. See id § 1104.

11. Id. § 1002(21)(A).

12. See Acosta v. Pac. Enters., 950 F.2d 611, 619 (9th Cir. 1992) (indicating requested

disclosures were not "sufficiently related to the provision of benefits or the defrayment of

expenses," which were the purposes ofERISA); see also Porto v. Arrnco, Inc., 825 F.2d 1 274, 1 275

(8th Cir. 1987), cert, denied, 485 U.S. 937 (1988). A plan administrator who meets ERISA's
statutory deadlines for disclosure does not breach his fiduciary duty by not making earlier

disclosures. See 29 U.S.C. § 1021 for specific disclosure requirements.

13. See Berlin v. Mich. Bell Tel. Co., 858 F.2d 1 154, 1 163-64 (6th Cir. 1988).

14. Fischer v. Phila. Elec. Co., 994 F.2d 130, 135 (3d Cir. 1993).

15. See McAuley v. IBM, 165 F.3d 1038, 1043 (6th Cir. 1999); Vartanian v. Monsanto Co.,

131 F.3d 264, 268 (1st Cir. 1997). But see Pocchia v. NYNEX Corp., 81 F.3d 275, 278 (2d Cir.
1996), cert, denied, 519 U.S. 931 (1996) (holding plan administrators have no duty to disclose

contemplated changes until a plan is actually amended).

16. See Colleen T. Congel & Elizabeth A. White, Advisory Council: Consensus on CB



2001] ERISA DISCLOSURE DECISIONS 503

Although the ruling has since been reversed, a three-judge panel ofthe Ninth

Circuit recently attempted to significantly extend ERISA's disclosure
requirements.

17
In Bins v. Exxon, an employee of Exxon asserted that he would

have delayed his retirement had he known that the company was considering a
change to its pension plan that would have resulted in increased retirement
compensation for him.

18
Arguably, the court could have chosen to find in favor

ofthe employee on the basis that the plan was under serious consideration when
he made his inquiry. 19 The Ninth Circuit panel instead opted to expand ERISA
disclosure requirements even further than prior decisions in holding that a

company has a fiduciary duty to affirmatively disclose the fact that it is seriously
considering a change to its pension plan to all potentially affected plan

participants whether or not participants have inquired about the prospects ofsuch

a change.
20 The panel's ruling conflicts with disclosure decisions of other

circuits, none ofwhich had previously required such a broad affirmative duty of

disclosure under ERISA.21 Although the Ninth Circuit reversed this decision en
banc, the panel's holding indeed reflects the views ofrecent commentators who
suggest that ERISA's fiduciary duty requires affirmative disclosure even without
participant inquiry.

22

This Note contends that courts' disclosure decisions have decreased the
availability of traditional pension plans to employees, thus defeating the

Conversions Unlikely; IBMOfficial Defends Company 's Actions, BNA PENSION& BENEFITS DAILY
News, Sept. 10, 1999, at D3 (the Pension Benefit Guaranty Corporation (PBGC) reported that the

number of defined benefit retirement plans it insures has dropped from ! 14,000 to 45,000 since

1985); see also Thomas Lee, A Dying Plan, INDIANAPOLIS STAR, June 12, 2000, at Dl (according

to the PBGC the number of traditional pension plans has now fallen to 40,000 and the number of
actual workers covered by plans decreased from 27.3 million to 22.6 million from 1988 to 1996);

ERISA's Requiem, PENSIONS & INVESTMENTS, Sept. 6, 1999, at 10 (editorial) ("Spooked by
ERISA's requirements, companies terminated 5,000 defined benefit plans in the first nine months

after the law was passed.").

17. See Bins v. Exxon Co. U.S.A., 189F.3d929,931 (9th Cir. 1999), rev'denbanc 220 F.3d

1042 (9th Cir. 2000).

18. See id. at 932.

19. See id. at 940.

20. See id. at 939.

21. See McAuley v. IBM, 165 F.3d 1038, 1043 (6th Cir. 1999) (holding that employers

cannot make either intentional or negligent misrepresentations if a plan change is under serious

consideration); Pocchia v. NYNEX Corp., 81 F.3d 275, 278 (2d Cir. 1996), cert, denied, 5\9 U.S.
931 (1996) (finding no duty to disclose changes before they are adopted); Fischer v. Phila. Elec.

Co., 994 F.2d 130, 135 (3d Cir. 1993) (holding that employer cannot mislead if a plan change is

under serious consideration). In a companion case decided the same day as Bins, the Ninth Circuit

panel applied the "affirmative duty to disclose rule" announced in Bins, holding that Pacific Bell

breached its fiduciary duty to certain employees who took early retirement by not disclosing that

it was seriously considering a more favorable program. See Wayne v. Pac. Bell, 1 89 F.3d 982, 989

(9th Cir. 1999).

22. See generally Barry, supra note 5, at 2; Jensen, supra note 4, at 2.



504 INDIANA LAW REVIEW [Vol. 34:501

balancing intent of Congress in establishing ERISA.23 Court decisions such as
the Ninth Circuit panel's holding in Bins, that attempt to expand disclosure
requirements beyond those set forth in ERISA, only contribute to the rate of
decline in the number of traditional benefit plans being offered. Although
ERISA covers employee benefit plans otherthan pension plans, this Note focuses
on courts' disclosure decisions as they relate to employee retirement decisions.

24

Disclosure cases discussing other employee benefit plans will be reviewed only
to the extent that they have been relied upon by courts in making disclosure
decisions involving retirement benefits.

25

Part I of the Note reviews the purpose and background of ERISA. The
discussion sets forth the fiduciary duties, disclosure requirements, and
enforcement schemes established by ERISA. Part II outlines the history of
circuit courts of appeals' disclosure decisions under ERISA and how the courts
have incrementally increased the disclosure burdens on businesses over time.

Part III examines how changes dictated by the competitive needs of business
clash with the fiduciary requirements under ERISA as developed and expanded
by the courts. Part III then concludes by demonstrating how court rulings have
apparently influenced company decisions with respect to pension plan offerings.
Part IV analyzes the initial Bins decision and compares it with the holdings of
other circuits, contains a critique of Bins, and discusses disclosure alternatives

that would more appropriately balance the needs of employers and plan
participants. Part V addresses the need for a resolution of the current split in
circuit court views concerning disclosure under ERISA so that the balance
between business needs and the protection of plan participants originally
envisioned by Congress can be restored.

I. ERISA

A. Origin

The growth in private pension plans was spawned by dissatisfaction with
government retirement plans (i.e., the Social Security Act and the Railroad

Retirement Act) that existed in the 1940s and by employers' recognition of a

responsibility for their employees' welfare beyond retirement.
26

Experience

demonstrated that existing regulations were unable to adequately protect the

rights of workers with respect to their employers' pension plans.
27 Many

employees were reaching retirement age only to find that promised retirement

23. See 29 U.S.C. § 1001 (1999); see also Barry, supra note 5, at 2.

24. See 29 U.S.C. § 1002(1) (2000). Plans other than pension plans are generally referred

to as welfare benefit plans, and include health and disability benefit plans.

25. See Bixler v. Cent. Pa. Teamsters Health & Welfare Fund, 12 F.3d 1292 (3d Cir. 1993);
Eddy v. Colonial Life Ins. Co., 919 F.2d 747 (D.C. Cir. 1990).

26. See H.R. Rep. No. 93-533, pt. 2, at 2 ( 1 974) (providing background), reprinted in 1974

U.S.C.C.A.N. 4639, 1973 WL 12549.
27. See id. at 4.



2001] ERISA DISCLOSURE DECISIONS 505

funds were nonexistent either because of improper funding by the employer or
because the company was in financial trouble.28 ERISA was enacted in 1974 to
provide for disclosures and safeguards "with respect to the establishment,

operation, and administration" of retirement plans.
29

B. Purpose ofERISA

Congress' main purpose in enacting ERISA was "to ensure that workers
receive promised pension benefits upon retirement."

30 To achieve this goal,
Congress established statutory procedures in ERISA to regulate plan funding and
required that participants' benefits become nonforfeitable upon normal
retirement age.

31 ERISA also established minimum standards of fiduciary
conduct

32
for those administering retirement plans and for "public disclosure of

the plan's administrative and financial affairs."
33 To enable plan participants to

enforce their rights under ERISA, including its disclosure and reporting
requirements, Congress provided them access to the federal courts.

34
However,

Congress also recognized that because employers are not required to offer

retirement plans, it is important that employers be able to administer plans with

reasonable expense so that they are not discouraged from establishing or

continuing such plans.
35

C. Fiduciary Duties

ERISA's fiduciary duties are based on the common law of trusts, which
governed most benefit plans before ERISA's enactment.

36
However, the U.S.

Supreme Court in Varity Corp. v. Howe instructed that trust law is only a
"starting point" and that courts must determine when the purposes of ERISA
depart from trust law requirements under the common law.37 ERISA specifies
that a fiduciary will use a "[p]rudent man standard of care" and will "discharge
his duties with respect to a plan solely in the interest of the participants and

beneficiaries."
38 A fiduciary must also act "for the exclusive purpose of: (i)

providing benefits to participants and their beneficiaries; and (ii) defraying

28. See id. at 5.

29. 29U.S.C. § 1001(a) (1999).

30. Dade v. N. Am. Philips Corp., 68 F.3d 1558, 1562 (3d Cir. 1995) (quoting Hoover v.

Cumberland, Md. Area Teamsters Pension Fund, 756 F.2d 977, 985 (3d Cir. 1985)); see also 29

U.S.C. § 1001 (1999).

31. See 29 U.S.C. § 1001.

32. See id. §1104.

33. H.R. REP. NO. 93-533, pt. 7, at 17 (1974), reprinted in 1974 U.S.C.C.A.N. 4639, 1973

WL 12549.
34. See 29 U.S.C. § 1001(b).

35. See id. § 1104(a)(l)(A)(ii).

36. See Varity Corp. v. Howe, 516 U.S. 489, 496 (1996).

37. Mat 497.
38. 29 U.S.C. § 1104(a)(1) (1999).



506 INDIANA LAW REVIEW [Vol. 34:501

reasonable expenses of administering the plan."
39

The Act also generally
requires a fiduciary to exercise prudence by diversitying plan investments to

minimize risk, unless it is prudent not to do so, and to manage the plan in
accordance with the instruments governing the plan.

40

D. Disclosure Requirements Under ERISA

The disclosure and reporting requirements specified under ERISA are
generally administrative and regulatory in nature.

41 The requirements include a
duty to provide participants and beneficiaries with summary descriptions of
plans, financial reports, and other plan information, some automatically and
others on request by a participant.

42
Certain filings with the government, such

as annual reports or premium payment records to the Pension Benefit Guaranty
Corporation ("PBGC"), are also required.

43
Such reporting was seen as a means

to provide employees and the government with enough information to know
whether the plan was being properly administered with financial integrity.

44
In

short, reporting requirements were intended to provide employees with enough

information to reveal what benefits will be received, what procedures must be
followed, who is responsible for the plan, and whether the plan is adequately
funded.

45

E. Enforcement

ERISA contains specific enforcement procedures allowing plan participants
to bring private actions for violations of the Act in order to recover benefits,

enforce rights under the plan, or clarify future rights.
46

Beyond those specific
requirements, Congress noted that "a body of Federal substantive law will be

developed by the courts to deal with issues involving rights and obligations under

private welfare and pension plans."
47

Prior to Varity, courts had held that

remedies were to be attributed only to the benefit plan at issue, but the Court held

in Varity that ERISA's remedial provisions authorize lawsuits for individual
relief.

48

39. Id.

40. See id. But see 29 U. S.C. § 1 1 04(c)( 1 ) (stating that ifa participant is allowed to exercise

control over investments in his account and chooses to do so, the fiduciary will not be liable for any

loss in the account).

41. See29U.S.C. § 1021.

42. See id.

43. See id.

44. See H.R. REP. No. 93-533, pt. 6, at 11 (1974), reprinted in 1974 U.S.C.C.A.N. 4639,

1973 WL 12549.
45. See Porto v.Armco, Inc., 825 F.2d 1274, 1276(8thCir. 1987), cert, denied, 485 U.S. 937

(1988).

46. See 29 U.S.C. § 1132(a).

47. 1 29 Cong. Rec. 29,942 ( 1 974) (remarks of Sen. Jacob Javits).

48. See Varity Corp. v. Howe, 516 U.S. 489, 507 (1996).



200 1 ] ERISA DISCLOSURE DECISIONS 507

F. Competing Interests—Individual Rights and Business Needs
Congress was constrained in its desire to statutorily protect individual benefit

rights through regulation because pension plans are voluntary.
49

The desire to
protect participants' rights was countered by a desire that employers adopt new
plans and expand the coverage oftheir existing plans so that a greater number of
employees would receive retirement benefits.50 The Supreme Court recognized
these concerns in Varity, noting that courts may have to take into account
competing congressional interests, such as Congress' desire to protect employee
benefits versus its concern about creating a system so complex and costly that
employers are discouraged from establishing employee benefit plans.

51
Despite

Congress' stated intent, however, it was evident early on that the complexities of
ERISA administrative regulations were "unduly burdensome" to businesses.52

II. The Progression of Disclosure Decisions Under ERISA

A. The Statutory Duties ofERISA

The first court decisions to address disclosure held that there was no
fiduciary duty to disclose beyond the specific statutory requirements outlined in

ERISA.53 For example, in Porto v. Armco, Inc., a retired employee sued the plan
administrator and his employer claiming that he should have been informed of

an amendment to a benefit plan at the same time active employees were informed
ofthe change in the plan. He had been informed ofthe change, however, within
the statutory limits ofERISA.

54
The Eighth Circuit held that a plan administrator

who complies with ERISA's disclosure standard cannot be said to have breached
the fiduciary duty.

55
Furthermore, in Acosta, the plan participant was employed

by a subsidiary of the appellee and participated in the subsidiary's retirement

plan.
56 The employee claimed that the company breached its fiduciary duty

49. SeeH.R. REP. No. 93-533, pt. l,at 1 (1914), reprinted in 1974 U.S.C.C.A.N. 4639, 1973

WL 12549.
50. See id.

51. See VarityCorp., 516U.S. at 497'; see also Vineeta Anand, A History ofGood Intentions

Gone Awry, Pension & Investments, Sept. 6, 1999, at 19 (quoting remarks of Rep. Al Ullman).
"This legislation provides urgently needed reform in the pension area. But at the same time, it

continues the basic governmental policy of encouraging the growth and development of voluntary

private pension plans." Id.

52. Reorg. Plan No. 4 of 1978, 43 Fed. Reg. 47,713 (Aug. 10, 1978), reprinted in 29 U.S.C.

§ 1 00 1 ( 1 999) (Letter from President Carter describing a plan intended to reduce the administrative

burdens and complexity of ERISA).

53. See Acosta v. Pac. Enters., 950 F.2d 61 1, 619 (9th Cir. 1992); Porto v. Armco, Inc., 825

F.2d 1274, 1276 (8th Cir. 1987).

54. See Porto, 825 F.2d at 1274-75.

55. See id. at 1276.

56. See Acosta, 950 F.2d at 6 1 5.



508 INDIANA LAW REVIEW [Vol. 34:501

under ERISA because it refused to provide the employee with names and
addresses of all plan participants, which the employee wanted in order to solicit

votes for an individual he favored for a director's position on the company's
board.

57 The Ninth Circuit in Acosta agreed with the Eighth Circuit, holding that
the employee's requested disclosure was not "sufficiently related to the provision
of benefits or the defrayment of expenses" to be mandated under ERISA and
therefore no disclosure was required.

58

B. Fiduciary Duty Not to Mislead or Misrepresent

A number ofcourts deciding disclosure issues moved quickly beyond a mere
statutory interpretation of the disclosure requirements of ERISA and began
interpreting the scope of a plan administrator's duty to disclose under the

auspices ofthe common law oftrusts.59 Court decisions informed by the law of
trusts that have focused on the plan administrator's general fiduciary duties under
ERISA have increasingly interpreted those duties in favor of plan participants.
Early decisions recognized a fiduciary duty to "speak truthfully" to plan

participants.

In Berlin v. Michigan Bell Telephone,
60
employees contended that Michigan

Bell intentionally misled them by indicating that the company was not
considering an enhanced early retirement package and that employees should

therefore not delay their retirement decisions.
61 The Sixth Circuit held that the

company's actions constituted a breach of fiduciary duty in affirmatively
misrepresenting the plan terms to plan participants.62 In 1 996, the Second Circuit
in Pocchia v. NYNEX Corp. agreed with the Sixth Circuit and noted that it is
"well-settled that plan fiduciaries may not affirmatively mislead plan participants
about changes, effective or under consideration, to employee pension benefit

plans."
63

In Varity Corp. v. Howe, the Supreme Court weighed in on the subject of
misrepresentation, holding that "deceiving a plan's beneficiaries in order to save

the employer money at the beneficiaries' expense is not to act 'solely in the
interest of the participants and beneficiaries'" and is therefore a breach of the

employer's fiduciary duty under ERISA.64 The egregious employer behavior in
Varity involved employees being told that if they agreed to voluntarily transfer

57. See id.

58. Id. at 619.

59. For further discussion of fiduciary duties under the common law of trusts, see Barry,

supra note 5, at 741-43. See also Jensen, supra note 4, at 145-49.

60. 858 F.2d 1 154 (6th Cir. 1988).

61. See id. at 1158.

62. See id. at 1163.

63. 81 F.3d 275, 278 (2d Cir. 1996). See also Mullins v. Pfizer, Inc., 23 F.3d 663, 669 (2d

Cir. 1994); Fischer v. Phila. Elec. Co.,994F.2d 130, 135 (3d Cir. 1993); Drennan v. Gen. Motors

Corp., 977 F.2d 246, 251 (6th Cir. 1992), cert, denied, 508 U.S. 940 (1993).

64. 516 U.S. 489, 506 (1996) (quoting 29 U.S.C. § 1021).



200 1 ] ERISA DISCLOSURE DECISIONS 509

to a new company formed by Varity, their benefits would remain secure when,
in fact, Varity knew that the newly formed company was insolvent when it was
created.

65 When the new company went into receivership during its second year
ofoperation, the employees who had transferred to it lost all oftheir non-pension
benefits.

66
The Supreme Court agreed with the district court that Varity's

communications to its employees concerning the security oftheir benefits were

materially misleading and therefore a violation of Varity's fiduciary duty.
67

In Anweiler v. American Electric Power Service Corp.
,

68
the Seventh Circuit

found that silence could also be misleading and constitute a breach of fiduciary

duty under ERISA. In Anweiler, an employee was asked by his insurer to sign
a reimbursement agreement that made the insurer a beneficiary under the
employee's group life insurance policy. The request was made because Anweiler
had been receiving disability benefits in excess of what he was owed.69 The
Seventh Circuit found that because the employee was informed neitherthat it was
unnecessary for him to sign the agreement in order to receive his long-term
disability benefits nor that the agreement was revocable at will, the company
breached its fiduciary duty to the employee.

70

C. Materiality

Not all misrepresentations are necessarily material, and only material
misrepresentations constitute a breach offiduciary duty. The issue ofmateriality
was addressed by the Third Circuit in Fischer v. Philadelphia Electric Co.

71
In

Fischer, the court linked materiality to the degree of seriousness with which a

change to a plan is being considered.
72

Employees in Fischer complained that

they took early retirement because they received assurances from company
representatives that no enhanced early retirement plans were under

consideration.
73

The company argued that the plan counselors were telling
employees the truth because the company had never told the counselors it was
considering a new plan. The Fischer court did not accept this argument and
instead held that the company's fiduciary obligations "cannot be circumvented

by building a 'Chinese wall' around those employees on whom plan participants
reasonably rely for important information and guidance about retirement."

74
The

court went on to instruct that the "more seriously a plan change is being

65. See id. at 494.

66. See id.

67. See id. at 505.

68. 3 F.3d 986, 991 (7th Cir. 1993).

69. See id. at 989.

70. See id. Despite the court's holding, the plaintiff received no remedy as the employer had

already paid out more than the beneficiary was due under the plan. See id. at 994.

71. 994F.2d 130 (3d Cir. 1993).

72. See id. at 135.

73

.

See id.

74. Id.



510 INDIANA LAW REVIEW [Vol. 34:501

considered, the more likely a misrepresentation, e.g., that no change is under
consideration, will pass the threshold of materiality."

75

The case was reviewed a second time by the Third Circuit after the district
court found on remand that the company was in fact seriously considering an
early retirement program at the same time employees were requesting
information about such programs.

76
In Fischer II, the court offered a formulation

that "[s]erious consideration of a change in plan benefits exists when (1) a
specific proposal (2) is being discussed for purposes of implementation (3) by

senior management with the authority to implement the change."
77
Applying this

three-pronged test, the Third Circuit held that none of the plaintiffs were

materially misinformed after the earliest date at which the retirement plan was
being seriously considered.

78
Given a similar set of facts, the First Circuit held

that there was no fiduciary duty of disclosure when an employee inquired about
plan changes because the changes were not under serious consideration at the

time of inquiry.
79

The Second Circuit took the Fischer II "serious consideration test" even
further in Ballone v. Eastman KodakCo. , holding that employers cannot mislead
employees by making statements about a plan that they know are false whether
or not they are seriously considering altering the plan.

80
In another case dealing

with early retirement issues, McAuley v. IBM, the Sixth Circuit applied the
Fischer litest to determine that communications to employees were made at a
time plan when changes were under "serious consideration" by management.
The court remanded the case to determine if the representations were materially
misleading.

81 The Supreme Court, on the other hand, specifically declined to
consider the validity ofthe "serious consideration test" in VarityP

75. Id. The case was remanded to the district court to determine if the changes were being

seriously considered when the employee requests were made. See id. at 1 36.

76. See Fischer v. Phila. Elec. Co., 96 F.3d 1533 (3d Cir. 1996), cert, denied, 520 U.S. 1116

( 1 997). This case is referred to in subsequent cases as Fischer II. See Vartanian v. Monsanto Co.,

131 F.3d 264, 268 (1st Cir. 1997).

77. 96F.3datl539.

78. See id. at 1544.

79. See Vartanian, 131 F.3dat272.

80. 1 09 F.3d 1 1 7, 1 26 (2d Cir. 1 997).

8 1

.

McAuley v. IBM, 1 65 F.3d 1 038, 1 043-47 (6th Cir. 1 999). The Sixth Circuit disagreed

with the district court as to the date that serious consideration ofthe early retirement plan had begun

and remanded the case. IBM subsequently reached a settlement with its former employees. See Jon

G. Auerbach & Ellen E. Schultz, IBMSettles Pension Suit at $15.5 Million, WALL St. J., Sept. 14,
1999, at B 14.

82. See Varity Corp. v. Howe, 516 U.S. 489, 506 (1996) ("[W]e need not reach the question

whether ERISA fiduciaries have a fiduciary duty to disclose truthful information on their own

initiative, or in response to employee inquiries.").



200 1 ] ERISA DISCLOSURE DECISIONS 5 1

1

D. Voluntary Duty to Disclose

Although most ofthe circuit courts have embraced the "serious consideration
test" as it applies to disclosure in response to inquiries by plan participants, the

courts' differences are more pronounced on the issue ofwhether a fiduciary duty
to voluntarily disclose information exists. The D.C. Circuit in Eddy v. Colonial
Life Insurance Co.

83
applied the Restatement (Second) of Trusts section 173 to

find that "[rjegardless ofthe precision ofhis questions, once a beneficiary makes
known his predicament, the fiduciary 4 is under a duty to communicate ... all
material facts in connection with the transaction which the trustee knows or
should know/"84 The Seventh Circuit in Anweiler also found a breach of
fiduciary duty where the company did not provide its employee complete
information at the appropriate time.

85
The Anweiler court held there was an

affirmative duty to communicate facts concerning employee rights whetheror not
a beneficiary asks the fiduciaries for information.

86

The Second Circuit established a bright line rule in Pocchia v. NYNEXCorp. ,
holding that a fiduciary does not have a duty under ERISA to "voluntarily
disclose changes in a benefit plan before they are adopted."

87
In Pocchia,

although changes to the company's retirement plan were announced several

months after the employee's retirement, he contended that the company had
already decided to implement a new plan when he was negotiating his retirement,
and that he should have been informed at that time.

88 The Pocchia court
recognized that the uncertainty faced by employers ifsuch a disclosure rule were

adopted would be an undue burden on management because it would be difficult
to determine when and what needed to be disclosed.

89

Finally, the Ninth Circuit panel in Bins v. Exxon Co. extended the duty to

disclose beyond that required by all other circuits, holding that "once an

employer-fiduciary seriously considers a proposal to implement a change in

ERISA benefits, it has an affirmative duty to disclose information about the

83. 919 F.2d 747 (D.C. Cir, 1990).

84. Id at 75 1 (quoting RESTATEMENT (SECOND) OF TRUSTS § 1 73 ( 1 959)). In contrast with

the "retirement cases" with which this note is primarily concerned, Eddy dealt with an insurer's

duty as a fiduciary under ERISA § 1 104 to convey to a "lay beneficiary" correct and material

information about his status and options when a group health policy is canceled. Id. at 750; see

also Bixler v. Cent. Pa. Teamsters Health & Welfare Fund, 12 F.3d 1292, 1300 (3d Cir. 1993)
(citing Eddy, the court held that an "ERISA fiduciary who is aware ofthe beneficiary's status and

situation . . . has an obligation to convey complete and accurate information material to the

beneficiary's circumstance . . . even if that information comprises elements about which the

beneficiary has not specifically inquired"). Like the facts in Eddy, Bixler dealt with a beneficiary's

claim for insurance benefits after her spouse had died. See id

85. See Anweiler v. Am. Elec. Power Serv. Corp., 3 F.3d 986, 991-92 (7th Cir. 1993).

86. See id at 991.

87. 81 F.3d 275, 278 (2d Cir. 1996).

88. See id. at 277.

89. See id. at 278.



512 INDIANA LAW REVIEW [Vol. 34:501

proposal to all plan participants and beneficiaries to whom the employer knows,
or has reason to know, that the information is material."

90 The facts in Bins are
similar to those in Fischer. Bins, an employee of Exxon, was contemplating
retirement but had heard rumors that a retirement incentive program was being
considered. Bins asked his supervisor and others about such a program, but

received no confirmation that it was under consideration. A few weeks after Bins
retired, Exxon announced a reorganization plan and an enhanced retirement plan
for early retirees.

91
Bins brought suit against Exxon, contending that under

Fischer, once the company "began 'seriously considering' a proposal to offer
enhanced benefits under the ERISA severance plan, it had not only a duty to
respond accurately ... to Bins' questions, but also an affirmative duty to provide

information even in the absence of specific questions."
92

The district court
applied the holding in Fischer II and held that although Exxon was seriously
considering the incentive benefits before Bins retired, there was no breach of
fiduciary duty because Bins did not ask about the benefits during the time that

they were under consideration.
93

The Ninth Circuit panel agreed that the Fischer litest was the appropriate
test to determine when information becomes material, but disagreed with Fischer
II to the extent it "characterizes the 'serious consideration' test as a compromise
between an employer's role as a fiduciary . . . and its role as a business in seeking

to maximize returns for its owners."
94

The court held that there was no room for
compromise between these roles and that the "employer's need to operate
efficiently as a business should play no role in determining when the employer
has an obligation to communicate with employees about a proposed change in

benefits."
95 The Bins panel indicated that "this view of the fiduciary's duty is

compelled by the Supreme Court's decision in Varity, where the Court focused
on ERISA's requirement that a fiduciary 'discharge his duties with respect to a
plan solely in the interest of the participants and beneficiaries.'"

96 The Ninth
Circuit panel then reviewed the application ofthe "serious consideration test" by
other circuits.

97
The court concluded, "The core inquiry must always be whether

90. 189 F.3d 929, 939 (9th Cir. 1999), rev'den banc 220 F.3d 1042 (9th Cir. 2000).

91. See id. at 932.

92. Id. at 933.

93. See id.

94. Id. at 936. The Ninth Circuit en banc agreed that Fischer II is the appropriate test to

determine materiality, but disagreed with the panel's rigid interpretation. See Bins, 220 F.3d at

1049-50.

95. Bins, 189F.3d at 936.

96. Id. (quoting Varity Corp. v. Howe, 516 U.S. 489, 506 (1996)).

97. See id. at 936-37; see also Vartanian v. Monsanto Co., 1 3 1 F.3d 264, 272 ( 1 st Cir. 1 997)

(holding that the plan change under consideration must affect a person in the plaintiffs position);

Hockett v. Sun Co., Inc., 109 F.3d 1515, 1522-24 (10th Cir. 1997) (adopting the Fischer II test

without modification); Ballone v. Eastman Kodak Co., 109 F.3d 1 17, 123 (2d Cir. 1997) (finding

that serious consideration is only one "factor in the materiality inquiry"); Muse v. IBM, 103 F.3d

490, 494 (6th Cir. 1996) (holding that serious consideration occurs when a company "focuses on



2001] ERISA DISCLOSURE DECISIONS 513

the employer has violated its duty of loyalty to plan participants by failing to
disclose material information, making misleading statements, or otherwise
putting its business goals ahead of its fiduciary obligations."

98

The Bins panel addressed the issue of an affirmative duty to disclose plan
information by first recognizing a split in other circuits as to "whether an ERISA
fiduciary has an affirmative duty to disclose a proposed change in benefits."

99

In its discussion, the court dismissed its earlier decision in Acosta that conflicting

provisions ofERISA limit the affirmative duty to disclose, simply noting that the
court was "aware of no conflicting provisions of ERISA that would undermine
the affirmative duty ofdisclosure in this case."

100 The court concluded that there
is an affirmative duty to disclose information regarding plan changes to plan

participants and beneficiaries to whom the employer knows, or has reason to
know, that the information is material.

101

III. The Tension Between Business Needs and Fiduciary Requirements

A. Congressional Intent

Congress' original intent was to balance the needs ofplan beneficiaries with
the business requirements of employers.

102
This intent was clearly indicated by

Senator Long's statement in the Congressional Record that stated, "[W]e know
that new pension plans will not be adopted and that existing plans will not be
expanded and liberalized if the costs are made overly burdensome, particularly
for employers who generally foot most of the bill." 103 Since the enactment of
ERISA in 1974, courts have repeatedly acknowledged this congressional
sentiment. As early as 1985, in Massachusetts Mutual Life Insurance Co. v.
Russell™ the Supreme Court noted that while Congress emphasized that
ERISA's objective was to guarantee that employees receive their pension
benefits, Congress was concerned that if the cost of complying with federal

standards became too high, employers would be discouraged from providing

a particular plan for a particular purpose").

98. Bins, 189 F.3d at 937.

99. Id. at 938. See Vartanian, 1 3 1 F.3d at 268 (declining to address affirmative duty issue);

Hockett, 109 F.3d at 1525 n.4 (reserving the question of whether an affirmative "duty to disclose

exists"); Pocchia v NYNEX Corp., 81 F.3d 275, 278 (2d Cir. 1996) (citing Stanton v. Gulf Oil
Corp., 792 F.2d 432, 435 (4th Cir. 1986) (finding no duty to disclose plan changes until they are

adopted)).

100. Bins, 189F.3dat938n.5.

101. See id. at 939.

102. SeeH.R. REP. No. 93-533, pt. 1, at 1 (1974), reprinted in 1974 U.S.C.C.A.N. 4639, WL
12549.

103. Cong. Rec. 29,945 (1974) (statement of Sen. Russell Long).

104. 473 U.S. 134(1985).



514 INDIANA LAW REVIEW [Vol. 34:501

pension plans.
105

Again, in 1987, in Pilot Life Insurance Co. v. Dedeaux,
106

the

Supreme Court recognized the need for balance, stating ERISA's "civil
enforcement scheme . . . represents a careful balancing of the need for prompt
and fair claims settlement procedures against the public interest in encouraging

the formation ofemployee benefit plans."
107

The Supreme Court reaffirmed this
view most recently in Varity.

m

B. Business Needs Versus Fiduciary Responsibility

Prior to the enactment of ERISA, benefit plans were generally governed by
the common law oftrusts. 109 Congress intended that the fiduciary duties codified
under ERISA continue to be informed by the common law of trusts. 110

Accordingly, the courts have looked to trust law to develop the plan

administrator's fiduciary duties under ERISA. 111 However, as noted earlier, the
Varity court instructed that the "courts must go on to ask whether, or to what
extent, the language ofthe statute, its structure, or its purposes require departing

from common-law trust requirements" in order to properly interpret ERISA's
fiduciary duties.

1 12
Arguably, therefore, some departure from a literal application

of trust law to ERISA is necessary in order to avoid the danger of upsetting the
desired balance between businesses' and participants' needs.

The natural conflict that exists between a company's business needs and its
fiduciary responsibility to plan participants is recognized by the Fischer II court,

which noted that the "concept of 'serious consideration' recognizes and

moderates the tension between an employee's right to information and an

employer's need to operate on a day-to-day basis."
113 The dramatic difference

in how the circuits view the need to strike a compromise between business

105. See id at 148.

106. 481 U.S. 41 (1987).

107. Id. at 54.

108. Varity Corp. v. Howe, 516 U.S. 489, 497 (1996) (noting that courts must take into

account Congress' desire to balance the need for protection of benefits with its desire not to create

a plan that is so costly in terms of administrative and litigation expenses that it discourages

employers from offering benefit plans).

1 09. See id. at 496; see also Barry, supra note 5, at 735, 737-45 (reviewing the origins of the

common law oftrusts and its evolution in American courts). This article develops the view that the

state of the law under ERISA is such that there is a mandatory duty for voluntary disclosure on the

part of fiduciaries whenever information is "material to an employee's retirement decision." Id. at

761 . This view, of course, is consistent with that of the Ninth Circuit in Bins v. Exxon Co. U.S.A.,

189 F.3d 929 (9th Cir. 1999), rev 'den banc 220 F.3d 1042 (9th Cir. 2000).

1 10. See H.R. REP. No. 93-533, pt. 6, at 12 (1974), reprinted in 1974 U.S.C.C.A.N. 4639, WL
12549.

111. SeeVarity Corp., 516 U.S. at 496.

112. Id. at 497.

113. Fischer v.Phila.Elec. Co., 96 F.3d 1533, 1539 (3d Cir. 1996), cert, denied, 520 U.S. 116

(1997).



2001 ] ERISA DISCLOSURE DECISIONS 5 1

5

realities and fiduciary duties under ERISA is demonstrated by comparing the
view ofthe Third Circuit in Fischer with that of the Ninth Circuit panel in Bins:

[W]e disagree with one aspect of Fischer .... In our view, there is no
such thing as an appropriate compromise between these two roles. The
employer, when acting as a fiduciary, has an undivided duty of loyalty
to the participants and beneficiaries ofthe plan. The employer's need to
operate efficiently as a business should play no role in determining when
the employer has an obligation to communicate with employees about a
proposed change in benefits.

n4

The Bins panel justified its approach by saying it is compelled by Varity, "where
the Court focused on ERISA's requirement that a fiduciary 'discharge his duties
with respect to a plan solely in the interest of the participants and

beneficiaries.
'" n5

However, Bins
9

reliance on Varity is not supported

contextually by Varity. First, the statement the panel in Bins finds so compelling

is merely a recitation by the Varity court of the common law principle of
fiduciary duty as stated in the statute.

116
Moreover, Varity is distinguishable

because the employer's acts in that case were more egregious.
117

The Varity
employees lost all of their benefits because of the employer's

misrepresentation.
118 The employee in Bins, however, received his promised

benefits. The only question was whether he should have received more.
119

Other courts have adopted a more measured interpretation of Varity. In

Vartanian v. Monsanto,
120

for example, the First Circuit interpreted Varity in a

less aggressive fashion, noting specifically the Supreme Court's mention in

Varity of the need to temper application of trust principles with a "scrupulous

regard for the delicate balance Congress struck in enacting ERISA."
121 The facts

in Vartanian were similar to those in Bins. The employee in Vartanian heard

rumors of a possible early retirement buyout, asked his superiors about it, and

was told by them that they were unaware of any such plan. Shortly after he

retired, a buyout plan was announced.
122

Applying the Fischer II test, the

Vartanian court held that the plan was not under serious consideration when the
employee asked about it.

123
In arriving at its decision, the Vartanian court

specifically declined to follow the more flexible standard of affirmative

1 14. Bins v. Exxon Co. U.S.A., 189 F.3d 929, 936, rev 'd en banc 220 F.3d 1042 (9th Cir.

2000) (citing Varity Corp., 516 U.S. at 506).

1 1 5. Id. (quoting Varity Corp., 5 1 6 U.S. at 506).

116. See 29 U.S.C. § 1104(a) (1999).

1 1 7. See Varity Corp., 516 U.S. at 493-94 (employer made blatantly false misrepresentations

to plan participants).

118. See id. at 494.

1 1 9. See Bins, 1 89 F.3d at 933-34.

120. 131 F.3d 264 (1st Cir. 1997).

121. Id. at269.

122. See id. at 266-67.

123. See id, 2X212.



516 INDIANA LAW REVIEW [Vol. 34:501

disclosure urged by the employee.
124

In general, courts have considered the needs of business in a considerably

more sympathetic fashion than that of the Bins panel. In Pocchia, for example,
the court noted that if disclosure was required prior to adoption of a plan, a
business would not be able to develop a strategy for reducing its workforce
because if "fiduciaries were required to disclose such a business strategy, it
would necessarily fail. Employees simply would not leave ifthey were informed
that improved benefits were planned if workforce reductions were
insufficient."

125
In Pocchia, an employee claimed that the company breached its

fiduciary duty under ERISA because it did not inform him at the time of his
resignation that a decision had already been made to implement an early
retirement incentive plan. The employee had received a lump sum payment upon
his resignation, and the new plan was not announced until seven months later. 126

The Pocchia court believed that mandatory disclosure prior to adoption ofa plan
would cause confusion for participants and "unduly burden management, which
would be faced with continuous uncertainty as to what to disclose and when to
disclose it."

127
In reaching its decision, the Pocchia court joined the courts in

Porto, Acosta, and Vartanian in noting, "Congress' main purpose in imposing a

disclosure requirement on ERISA fiduciaries was to ensure that 'employees
[would have] sufficient information and data to enable them to know whether the
plan was financially sound and being administered as intended.'" 128

Bettis v. Thompson™ a decision diametrically opposed to Bins, ironically
involved the same employer:

The idea of imposing a fiduciary duty affirmatively not to mislead

a beneficiary once a company has begun to take a plan into serious
consideration is unworkable. . .

.

The only duty a corporation has to employees is accurately to
explain the current state of affairs about the pension[s] plan then in

effect.

. . . ERISA does not create a duty that requires the disclosure ofplan
amendments before they are put into effect. A different rule would
cause employers to be reluctant to improve benefits because everyone

who retired just before a change could sue. 130

Finally, the Verity court itselfrecognized the necessity of balancing the needs of

business with those of employees.
131

The Varity court also appears to

124. See id. at 268.

125. Pocchia v.NYNEX Corp., 81 F.3d 275, 289 (2d Cir. 1996).
1 26. See id.

127. Id.

1 28. Id. at 279 (citing H.R. Rep. No. 93-533, pt. 6 ( 1 974)).

129. Bettis v. Thompson, 932 F. Supp. 173, 175-76 (S.D. Tex. 1996) (citations omitted).

130. Mat 175-76.
131. See Varity Corp. v. Howe, 516 U.S. 489, 497 (1996).



2001] ERISA DISCLOSURE DECISIONS 517

acknowledge that its holding concerning fiduciary responsibility was intended
to be quite narrow and based on the specific facts of that case.

132

C. The Changing Workplace

Tension between the needs of business and plan participants has grown in
recent years, in part because of changing conditions in the workplace.

Businesses must reduce costs and attract and retain key workers to remain

competitive.
133

Another factor driving change in pension plan offerings is the

mobility oftoday's work force. Unlike workers ofthe 1960s and 1970s, today's
workers rarely spend an entire career at the same company. Employees who
frequently switch jobs receive little from defined benefit plans where the size of

the benefit is determined by length of service and final average pay.
134 The

mobility of employees also creates the need for companies to find new ways to
attract and retain workers.

135
Finally, changes involving corporate structure such

as mergers, business sales, and the creation ofjoint ventures have dramatically

affected the pension industry.
136

Businesses responded to the changing workplace in part by introducing

benefit plans more attuned to the needs of younger, more mobile workers. In
1999, in defense of a controversial decision to switch from a traditional final

average pay pension plan to a cash balance plan, IBM executives noted that
"[seventy-five] percent of its high-tech competitors, such as Microsoft Corp. .

.

. don't even offer pensions and have more money for other expenses." 137 IBM,

1 32. See id. at 503 ("We conclude, therefore, that the factual context in which the statements

were made, combined with the plan-related nature of the activity, engaged in by those who had

plan-related authority to do so, together provide sufficient support for the District Court's legal

conclusion that Varity was acting as a fiduciary."); see also id. at 538 ("I do not read the Court's

opinion to extend fiduciary liability to all instances in which the Court's rationale would logically

apply.") (Thomas, J., dissenting).

133. See Curt Anderson, Congress, Feds Examine Pension Plan, YAHOO NEWS, Sept. 22,
1 999, available at http://dailynews.yahoo.eom/h/cp/l 9990922/bs/pensions_older_workers_3.html.

134. See PATRICK J. PURCELL, CONG. RESEARCH SERV., PENSION ISSUES: CASH BALANCE

PLANS (1999).

135. See Stephen Franklin, A Corporate Pension Headache; How May IBMEmployees Spell

Relief? U-N-I-O-N, CHI. TRIB., Aug. 29, 1999, at CI.

136. See Pension Bills: Hearings Before the Sen. Fin. Comm. on Pension Reform Legislation,

106th Cong. (1999) [hereinafter Pension Bills] (statement of Scott J. Macey, senior counsel,

American Society of Actuaries) (explaining that such changes accounted for forty percent of the

new plans set up in 1995 by one large pension manager).

137. Anderson, supra note 133 (explaining that defined benefit pension plan provides the

employee a fixed monthly income based on years of service and income level the last several years

of employment). See also 29 U.S.C. § 1 002(34) (1 999); Pension Bills, supra note 1 36 (statement

of Patrick J. Purcell, Specialist in Social Legislation, Congressional Research Service). A defined
contribution plan is a pension plan that "provides for an individual account for each participant"

and where benefits are "based solely on the amount contributed to the participant's account." Id.



5 1

8

INDIANA LAW REVIEW [Vol. 34:501

therefore, changed its overall compensation package to compete and to attract the
people necessary for its success.

138
IBM's change to a cash balance plan

generated a major uproar primarily among its older employees, who in turn
succeeded in attracting the attention of Congress.

139

According to one industry source, the main reasons why employers convert
a defined benefit plan to a cash balance plan are to reduce costs, remain

competitive, and attract younger workers.
140

Younger workers generally support
cash balance plans because benefits are accumulated faster than under traditional

defined benefits plans.
141

Following a conversion, however, senior workers may
find that the change from defined benefit plans to cash value plans lowers their

future benefit accruals because long-time workers may not accrue additional
benefits until they "wear away" the old benefit.

142
The conversion may force

older workers to work additional years before the cash-balance account exceeds
the level of benefits that had accrued under the old plan.

143

Most cash balance conversions, however, do not save the company money
because most companies that convert to such plans provide enhancements to

benefits at the same time the conversion takes place.
144

Critics of cash balance

plans, however, claim that cash balance sponsors fail to disclose changes to

benefit computation methods and do not provide enough information about the
plan amendments.

145 "The issue ofdisclosure—how far companies should go to
make sure their employees are informed about plan amendments that replace a
traditional defined benefit plan arrangement with a cash balance plan

arrangement—is one ofthe more contentious topics surrounding the debate over
cash balance conversions."

146
Although both employees and industry

representatives agree on the need for disclosure, the issues of when and how

A popular example ofa defined contribution plan is a 401 (k) plan. A cash-balance plan, sometimes
referred to as a "hybrid," is a defined benefit plan that has characteristics of a defined contribution

plan. An employer contributes a percentage ofpay into an employee 'account' and credits interest

to the account. Id. at 1

.

138. See Pension Bills, supra note 136.

1 39. See Congel & White, supra note 16, at D3.
140. See Colleen T. Congel, Advisory Council: Cash Balance Plan Conversions Focus of

ERISA Council Working Group, BNA PENSION & BENEFITS DAILY NEWS, Apr. 9, 1999, at D3.
141. See Colleen T. Congel, Plans Draw Both Praise, Criticism, BNA PENSION & BENEFITS

Daily NEWS, Mar. 5, 1999, at D9; see also Vivian Marino, Old Pensions Put Out to Pasture,

TOPEKA CAP.-J., July 18, 1999, at CI.

142. See Congel, supra note 141, at D9.

143. See id

144. See Minimal Cost Savings Found in Cash Balance Conversions, WATSON WYATT
Worldwide, Feb. 2 1 , 2000, available at http://www.watsonwyatt.com/homepage/us/new/ pres_rel/

febOO/cashbal.htm (study done by Watson Wyatt found average employer savings of only 1 .4%

during plan conversions).

145. See Congel, supra note 140, at D3.

146. Congel & White, supra note 16, at D3.



2001] ERISA DISCLOSURE DECISIONS 519

much plan participants need to be told are the focus of much debate. 147

A review of the debate surrounding proposed legislation relating to cash
balance plan disclosure requirements suggests that Congress remains concerned

about the tension between plan participants and business needs. Legislation has

been proposed that would substantially expand ERISA's notice requirements, but
it has faced strong opposition because it would result in significantly increased
administrative costs to employers.

148 One such disclosure bill, introduced by
former New York Senator Moynihan, would require that companies disclose to
employees how a conversion to a cash balance plan would affect them and
mandate that each employee be given a "personal statement comparing benefits

under the old and new plans." 149 Employers oppose Moynihan's bill because of
the cost ofproviding individual disclosure statements to each plan participant and

note that "[a] 11 pension plans are voluntary . . . and companies have the right to

make appropriate changes to their business plans." 150 Employers argue that it is
sufficient to provide employees with hypothetical examples to i llustrate the effect

of the change.
151

While Congress tries to decide what to do in terms of

disclosure, "corporate America is sending a clear message: Without varied
benefit options, more companies will opt not to offer pensions."152

D. Net Effect on Pension Plans

Beginning in the 1980s market pressures, combined with the burdensome

requirements ofERISA, caused many companies to terminate traditional pension
plans.

153
Commentators have surmised that the traditional defined benefit

pension plans may not be compatible with the "flexible labour market of the
American economy's so-called 'New Era."*

154
For example, "400 to 600 mid and

large sized companies, including [twenty-two] of the Fortune 100 companies,

have adopted cash balance plans covering approximately [seven] million

people."
155 The overall reduction in defined benefit plans, along with the

conversion to alternate plans such as cash balance plans, is a signal that the

requirements of ERISA and additional court-imposed regulations are too
burdensome for businesses in today's marketplace.

Although ERISA has protected promised worker benefits for plans that are
in effect, the reduction in the number ofpension plans is a clear indication ofthe
failure to achieve Congress' intended balance between business needs and

147. See Congel, supra note 141, at D9; see also Anderson, supra note 133.

148. See Congel, supra note 140, at D3.

149. Marino, supra note 1 4 1 , at C
1

'.

150. Id.

151. See Pension Bills, supra note 1 36.

1 52. Anderson, supra note 133.

153. See Congel & White, supra note 1 6, at D3.
1 54. Richard A. Hawkins, The Promise ofPrivate Pensions: The First Hundred Years, Bus.

Hist., July 1998, at 157.

155. Congel, supra note 1 4 1 , at D9.



520 INDIANA LAW REVIEW [Vol. 34:501

protection of benefits for plan participants.
156

Representative Rob Portman
recently stressed the need to provide relieffrom regulatory burden as an incentive

for business owners to offer retirement plans to their employees.
157

In response

to opponents of his pension reform legislation, Portman commented, "I sort of

view pensions, particularly defined benefit plans, as kind of like the Titanic

sinking and someone saying, 'gee, I'm worried there might be an officer in the
lifeboat, so we don't want to put the lifeboats out.'" 158

IV. ANALYSIS

A premise of this Note is that the amount of disclosure required by ERISA
should not be the same for all circumstances, but rather should be determined by

the factual context of each case. Two common fact patterns emerge in most
disclosure cases that reach the circuit courts. The first fact pattern occurs where
an employee is not provided complete or correct information concerning a
medical or insurance plan covered by ERISA.

159
If the need for a fiduciary duty

to disclose information is viewed on a continuum, it is strongest in these cases.

The need is strongest because the statutory requirements ofERISA clearlyjustify
an interpretation by the courts that an employer has an affirmative duty to

disclose complete information to plan participants to protect their existing rights

and benefits.
160

The second typical fact pattern occurs when an employee opts
to retire or resign his position and learns thereafter that delaying the termination

would have resulted in an enhanced retirement package.
161

In these cases,

ERISA' s fiduciary requirements do not dictate an affirmative duty to disclose and
no intention ofCongress to promote such a requirement can be inferred from the

legislative history.
162

This view, of course, is contrary to the Ninth Circuit

panel's holding in Bins, as well as to arguments presented by other commentators

regarding the ERISA disclosure issue. 163

1 56. See ERISA s Requiem, supra note 1 6, at 1 (noting benefits promised by defined benefit

plans are today more secure than before ERISA, but that the number of such plans has dropped

dramatically, and is still dropping).

1 57. See Elizabeth A. White, Retirement Policy: Portman, Cardin Bill Gets Positive Airing

at Hearing on Legislation 's ERISA Provisions, BNA PENSIONS & BENEFITS DAILY, July 1, 1999,
at 16.

158. Id.

159. See, e.g., Eddy v. Colonial Life Ins. Co. of Am., 919 F.2d 747, 750 (B.C. Cir. 1990).

160. See 29 U.S.C. § 1 104 (1999).

161. .See, e.g., Binsv. Exxon Co. U.S.A., 189 F.3d 929, 931 (9th Cir. 1999), rev'denbanc 220

F.3d 1042 (9th Cir. 2000).

162. See29U.S.C.§ 1 104 (1999); see afcoH.R. REP. No. 93-533, pt. 1, at 1 (1974), reprinted

in 1974 U.S.CC.A.N. 4639, 1973 WL 12549.
163. See Bins, 1 89 F.3d at 939; see also Barry, supra note 5, at 761 (the "state of the law has

arrived to a point where voluntary disclosure is mandatory"); Jensen, supra note 4, at 1 59 ("Courts

should continue along the path ofseveral recent circuit and district court decisions toward requiring

increased accountability and disclosure from ERISA employers . . . .").



2001] ERISA DISCLOSURE DECISIONS 521

The panel's approach in Bins would impose an affirmative duty on employers
to voluntarily disclose information to participants with no apparent reservation.

There is nothing in ERISA however that demands that an employer's fiduciary
duty rise to the level requested by the panel in Bins, nor was it ever the intent of
Congress that ERISA create such a duty. Rather, the sponsors of ERISA knew
that to place too heavy a burden on employers might result in companies ceasing

to provide plans, thus thwarting the objective of having more workers covered
by pension plans.

164

The panel's holding in Bins represents a culmination ofdisclosure decisions
made by the courts in the years since the enactment of ERISA. In arriving at its
sweeping holding, the Ninth Circuit panel reviewed the rulings of the most
significant circuit court decisions dealing with the disclosure issue.

165
For that

reason, as well as the fact that the arguments of the panel in Bins will likely be

reflected in future disclosure cases, it serves as a logical and convenient vehicle

for analysis of ERISA's fiduciary and disclosure requirements.

A. Fiduciary Duty

The Ninth Circuit panel in Bins agreed with the Fischer II "serious
consideration test" as to when "information about a proposed change in benefits
becomes material." 166 The panel disagreed, however, with the Fischer II
characterization that the test is a compromise between an "employer's role as a

fiduciary . . . and its role as a business."
167

In the panel's view, there is no room
for compromise between these roles, and business considerations cannot be
considered with regard to communications to employees about proposed changes

in benefits.
168

As noted earlier, the Bins panel believed its view was compelled by Varity.
Bins adopted the Varity holding that "making intentional misrepresentations

about the future of plan benefits is an act of plan administration" and therefore

a fiduciary act, because to deceive a plan's beneficiaries in order to save the

employer money is not acting "solely in the interests of the participants and
beneficiaries."

169
However, in coming to its conclusion that Varity 's

interpretation ofERISA's fiduciary duty compels an affirmative duty to disclose
future plan benefits, the Bins panel suggested a very broad and expansive

164. See H.R Rep. No. 93-533, pt. 1, at 1 (1974), reprinted in 1 974 U.S.C.C.A.N. 4639, 1973

WL 12549. But see Lorraine A. Schmall, Keeping Employer Promises when Relational Incentives
No Longer Pertain: "Right Sizing" and Employee Benefits, 68 GEO. WASH. L. Rev. 276, 279

(2000) (claiming the complexity ofERISA has not overly deterred employees from creating pension

plans). That claim does not square, however, with the significant drop in defined benefit plans that

has occurred in the years since ERISA was enacted.

1 65. See Bins, 1 89 F.3d at 936-39.

166. Id at 936.

167. Id.

168. See id.

169. Id.



522 INDIANA LAW REVIEW [Vol. 34:501

interpretation of the fiduciary duty outlined in Varity.
m

Several objections can be raised to the Bins panel's view of an employer's

fiduciary duty under ERISA. First, ERISA itself does not mandate the standard
of fiduciary duty prescribed in Bins.

111
Rather, a reading of the fiduciary duty

requirements set forth in ERISA demonstrates that the duty is tied very closely
to the protection of existing plan benefits.

172
Second, the Bins view disregards

the intent ofERISA's sponsors to balance the needs ofbusinesses and employees
as outlined in the legislative history.

173
Finally, the Supreme Court's decision in

Varity does not dictate the result reached by the Bins court.

In Varity, information was communicated to employees to fraudulently
induce them to accept a transfer to another company that the fiduciary knew was
insolvent, rather than to help them determine whether or not to stay in a plan.

174

The employer's actions were an affirmative misrepresentation and a per se
violation of ERISA's "duty to act solely in the interests of participants." 175 The
decision therefore falls squarely within the purview of ERISA.

176

However, nothing in Varityjustifies the unprecedented broad application of
this duty in a fact pattern such as that in Bins. The employee in Bins had already

made the decision to retire, and there was no question about the benefits due him
or about whether he would be paid those benefits.

177
Bins was simply trying to

determine whether a "better deal" might be forthcoming if he delayed his

retirement. His position bears little resemblance to that ofthe plaintiffs in Varity,

or to that in other cases where an employee seeks information to assist in making

benefit decisions related to benefits already in existence.
178

Simply stated, in one

case a participant is attempting to protect his existing rights to benefits, which

falls within the purposes of ERISA, and in the other case the participant is trying
to use the Act to gain a greater future benefit than he has neither earned nor was
promised.

The Bins court's view ofbusiness needs versus disclosure requirements is in
direct conflict with the Supreme Court and most other circuits' recognition of

Congress' intent to balance the tensions between business and the protection of

170. See id.

171. SeeAcostav. Pac. Enters., 950 F.2d 611 (9th Cir. 1991);Portov. Armco,Inc, 825 F.2d

1274, 1276 (8th Cir. 1987).

172. See 29 U.S.C. § 1 104 (1999).

173. SeeH.R. Rep. No. 93-533, pt. 1, at 1 (1974), reprintedin 1974 U.S.C.C.A.N. 4639, 1973

WL 12549.
174. See Varity Corp. v. Howe, 516 U.S. 489, 494 (1996).

175. Id. at 494. See also 29 U.S.C. § 1 104 (1999).

176. See 29 U.S.C. § 1001 (1999); Dade v. N. Am. Philips Corp., 68 F.3d 1558, 1562 (3d Cir.

1995) ("Congress' chief purpose in enacting [ERISA] was to ensure workers receive promised

pension benefits. . . .").

177. See Bins v. Exxon Co. U.S.A., 189 F.3d 929, 93 1-33 (9th Cir. ! 999), rev 'd en banc 220

F.3d 1042 (9th Cir. 2000).

1 78. See generally Bixler v. Cent. Pa. Teamsters Health & Welfare Fund, 1 2 F.3d 1 292, 1 300
(3d Cir. 1993); Eddy v. Colonial Life Ins. Co., 919 F.2d 747, 750 (D.C. Cir. 1990).



200 1 ] ERISA DISCLOSURE DECISIONS 523

plan participants.
179

In fact, the Varity court, which the Bins court claims
compels its view, recognized that:

[CJourts may have to take account ofcompeting congressional purposes,
such as Congress' desire to offer employees enhanced protection for
their benefits, on the one hand, and, on the other, its desire not to create
a system that is so complex that administrative costs, or litigation
expenses, unduly discourage employers from offering welfare benefit

plans in the first place.
180

Accordingly, it does not seem that either Varity or ERISA itself compels the
expansive application offiduciary duty ofdisclosure suggested by the Bins panel

.

B. Affirmative Duty to Disclose

After reviewing the disclosure decisions ofother circuits that have addressed
the Fischer //"serious consideration test," the Bins panel summarized its view
ofthe test: "The core inquiry must always be whether the employer has violated
its duty of loyalty to plan participants by failing to disclose material information,

making misleading statements, or otherwise putting its business goals ahead of
Usfiduciary obligations

"m
The panel then turned to the issue of whether there

is an affirmative duty to disclose information, even when a beneficiary has made
no request for information.

182

The Bins panel began by summarizing prior decisions in which courts have
indicated that an affirmative duty to volunteer information exists.

183 As noted by
the court, however, all of the cases cited dealt with considerably different

circumstances than did Bins.
m The panel's inquiry then focused on other circuit

179. See Varity Corp. v. Howe, 516 U.S. 489, 497 (1996) (discussing competing

Congressional purposes); Vartanian v. Monsanto Co., 131 F.3d 264, 268 (1st Cir. 1997) (tension

often rises and is in "many respects, an inherent feature of ERISA"); Hockett v. Sun Co., 109 F.3d

1515, 1522 (10th Cir. 1997) (agreeing with the Fischer II comment on the tension between

employer and employee rights); Muse v. IBM, 103 F.3d 490, 494 (6th Cir. 1996) (discussing

disclosure versus burden on management with respect to what and when to disclose); Fischer v.

Phila. Elec. Co., 96 F.3d 1533, 1539 (3d Cir. 1996) (stating their serious consideration test

"moderates the tension between an employee's right to information and an employer's need to

operate on a day to day basis"), cert, denied, 520 U.S. 1116 (1997).

180. Varity, 5\6 U.S. at 497.

181. Bins, 1 89 F.3d at 937 (emphasis added).

182. See id. at 938.

183. See id.

1 84. See id. In one case the fiduciary did not conduct an investigation or alert plan participants

concerning his suspicions that plan funds were being mismanaged. See Barker v. Am. Mobil Power

Corp., 64 F.3d 1397, 1403 (9th Cir. 1995). In a second case, the fiduciary withheld information

about potential negative tax consequences of early retirement. See Fair v. U.S. W.

Communications, Inc., 151 F.3d 908, 914 (9th Cir. 1998), as amended, 179 F.3d 1252 (9th Cir.

1999). A third case suggested an affirmative duty to inform when silence might be harmful. See



524 INDIANA LAW REVIEW [Vol. 34:501

decisions about whether ERISA compels an affirmative duty for fiduciaries to
disclose proposed changes in benefits. Although a split was noted in the circuits,
the Bins court concluded that, once a "fiduciary has material information relevant

to a plan participant or beneficiary, it must provide that information whether or

not it is asked a question."
185

The Ninth Circuit panel could see no reason why there should be a duty to
supply information when a participant asks, as the "serious consideration test"
requires, but not supply information ifthe participant does not think to ask.

186
In

the court's view, there was no justification for rewarding those lucky enough to
ask, but allowing employers to remain silent with respect to those who did not
take such initiative.

187

The Bins panel realized the problems its holding of an affirmative duty to
disclose may cause employers but stated that it did not believe the affirmative
duty it placed on plan fiduciaries would be such a heavy burden that it would
discourage companies from offering benefit plans or from enhancing them to
induce early retirements.

188
This view, ofcourse, is diametrically opposed to that

ofthe Second Circuit in Pocchia.
m

The Pocchia court recognized that insisting
on voluntary disclosure prior to adoption of a new plan would likely confuse
beneficiaries, unduly burden management, and "impair the achievement of

legitimate business goals."
190

Significantly, the Pocchia court went on to note

that a business strategy to induce early retirements with plan incentives would
fail if participants were "informed that improved benefits were planned if

workforce reductions were insufficient."
191

C. Discussion

The view espoused by this Note is that the Second Circuit in Pocchia has
formulated the most appropriate rule with respect to a fiduciary-employer

disclosure requirement, at least in early retirement incentive cases.
192 As the

Pocchia court notes:

[S]uch a bright line rule protects the interests of beneficiaries, who will
receive information at the earliest point at which their rights can possibly

be affected, as well as the interests of fiduciaries, who will be required

Bixler v. Cent. Pa. Teamsters Health & Welfare Fund, 12 F.3d 1292, 1300 (3d Cir. 1993).
185. Bins, 189 F.3d at 939. But see Vartanian v. Monsanto Co., 131 F.3d 264, 268 (1st Cir.

1997) (declining to address the issue of an affirmative duty to disclose); Hockett v. Sun Co. Inc.,

109 F.3d 1515, 1525 (10th Cir. 1997) (reserving the question on an affirmative duty); Pocchia v.

NYNEX Corp., 81 F.3d 275 (2d Cir. 1996) (holding no duty to disclose until a plan is amended).
186. See Bins, 189 F.3d at 939.

187. See id.

188. See id.

1 89. See Pocchia v. NYNEX Corp., 8 1 F.3d 275, 279 (2d Cir. 1 996).
190. Id. at 278.

191. Id at 279.

1 92. See id. at 278 (holding no duty to disclose until plan changes have been adopted).



2001] ERISA DISCLOSURE DECISIONS 525

to provide information only at the point at which it becomes complete
and accurate.

193

This decision demonstrates an understanding of the tension between employer

and beneficiary interests which was recognized by Congress at the inception of
ERISA. It is also directly in line with the stated intent of ERISA to protect
participant benefits.

194
Employees will receive all the benefits promised.

Employers, meanwhile, can operate their businesses and plan business strategy

in an efficient manner without wondering whether they have crossed the point at
which they must notify employees of a potential change in plan benefits.

The Bins panel, on the other hand, ignores any need for a balance between
employers and plan participants and creates a climate that will almost assuredly

result in a net decrease in pension plans or benefits thereunder. In effect, the

panel shifts an approach that was intended to be balanced to one that significantly
favors employees. While ERISA was intended to protect employees' retirement
benefits and to provide for administration of plans at a reasonable cost,

195
the

panel's ruling in Bins essentially turns ERISA into a tool for employees to
leverage maximum financial benefits from employers regardless of the
circumstances and no matter what the costs. It allows employees "to have their

cake and eat it too."
196

An affirmative duty to disclose information concerning the possibility of
increased benefits in this context is unrealistic, and it ignores the fiduciary

responsibilities corporate officers and directors have to their shareholders, many
of whom are also employees. For example, a business may be considering an
early retirement incentive as part ofa merger discussion or as part ofa corporate

reorganization or cost reduction. A requirement on employers to disclose
information with respect to potential plan changes prior to announcement ofthe

event prompting the changes would undermine the company's strategy and could

easily result in a negative impact on company stakeholders, employees and
shareholders alike. Disclosure of such information might cause a company's

stock price to change, thus affecting the cost of a merger, or it could inspire

competitive actions that would derail the merger altogether.

A very likely result of an affirmative duty to disclose such as the Bins panel
proposed would be an accelerated reduction in the number of benefit plans

offered by employers, at least in part, because of the uncertainty such a

requirement will create among businesses. There is no requirement that
companies offer pension plans.

197
In fact, that is one reason why Congress and

193. Id. at 219.

194. S«?29U.S.C. § 1104(1999).

195. See id § 1001.

196. For example, an employee plans to retire and is fully informed of his or her retirement

benefits when the decision is made, but believes that he or she perhaps could squeeze a bit more

out of the company or the plan.

197. See H.R. REP. No. 93-533, pt. 1, at 1 (1974), reprinted in 1974 U.S.C.C.A.N. 4639, 1973

WL 12549.



526 INDIANA LAW REVIEW [Vol. 34:501

the courts have attempted to use caution in the implementation and interpretation

of ERISA. The concern remains that placing too extensive a burden on
employers will result in a reduction in the number of plans offered. Further,
since an employer has no legal obligation to provide a retirement plan, the

employer has no obligation to increase the payments under a plan that already
exists.

198 Why then, should an employer be obligated to divulge business
strategies by telling employees they might receive more if they stay longer?

As Pocchia suggests, 199 employees would have no incentive to retire under
those circumstances. Also, in some cases, the additional cost to the employer
may well exacerbate a company's already deteriorating financial position, thus
jeopardizing the employment position of all its workers. Imposing the
requirement suggested by Bins may also work to employees' disfavor in another
way. One reason for offering early retirement incentives is to reduce
employment in a less egregious manner than simply terminating employees.
Decisions like that ofthe Bins panel that increase the burden on employers in this
situation could well lead to companies exercising the undesirable option of

simply terminating employees in order to achieve their goals. In that event,

neither those who would like to leave early nor those who would like to stay
would be satisfied.

Bins suggests there is no reason why some employees (those who ask) should
be lucky enough to receive additional incentive benefits versus those who do not
ask. That argument is eliminated if Pocchia is adopted, because under that

court's bright line test there is no need to disclose such information to any

employee.
200 Whether employees ask or not, the only duty is not to mislead or

misinform them.
201

Even ifthat were not the case, however, luck is not the issue.
For example, if an early retirement incentive program is introduced, it generally

requires participants to be fifty-five or older. Many of those who are near the
cut-off age would also consider themselves "unlucky" because they were not

quite old enough to take advantage of the incentives. Of course, it would be
ridiculous to require the company to lower the age level so the "unlucky" ones
who are only fifty-four are covered. There simply must be a definite cut-off level
for age and for disclosure requirements.

Businesses generally operate as rational economic entities. They will attempt
to operate in an efficient manner in order to remain profitable and competitive.
In their attempt to control costs, they will try to reduce uncertainty to the extent

possible in the operation of their businesses. A disclosure requirement such as
that suggested by Bins would increase both uncertainty and the cost burden on

companies. An employer's reaction may very well be to eliminate plans affected
by the court's ruling, or in the case of new enterprises, to refrain from adopting
such plans in the first place. The net effect, therefore, may well be the

198. See id.

199. See Pocchia v. NYNEX Corp., 81 F.3d 275 (2d Cir. 1996); see also supra text
accompanying note 125.

200. See Pocchia, 81 F.3d at 279.

201. See id. at 278.



2001] ERISA DISCLOSURE DECISIONS 527

elimination ofthe need for such disclosure as the benefit plans that fall under its

aegis are terminated.

The circuit court decisions with respect to disclosure requirements under
ERISA diverged in opinion prior to the Ninth Circuit panel's ruling in Bins, but
an affirmative duty to disclose as suggested by the panel would significantly
widen the gap.

202
It is important that there be continuity in disclosure

requirements since a substantial number ofemployers who are affected by such
rulings engage in business activities and have employees in multiple states. As
a result, these businesses would be essentially required to conform with any
circuit holding that is similar to that in Bins, as unhappy plan participants would
almost certainly file complaints in that jurisdiction whenever possible. The
Supreme Court specifically declined to address the issue of the serious
consideration test in Varity and denied certiorari in Pocchia and Fischer, thus

allowing the circuit courts to develop the law in this area.
203

The divergence in
circuit court opinions has now reached the point, however, that the Supreme
Court should review a case with a similar fact pattern to Bin that applies an

"affirmative duty to disclose" requirement. It is important that this be resolved

in order to establish continuity in the circuits so that both employers and

participants know their rights on this issue.

Conclusion

An affirmative duty to disclose as suggested by the Bins panel obliterates the
intent ofCongress, which was recognized by the Varity court to balance business
requirements with the protection ofbeneficiaries. This tilting ofthe scales would

likely quicken the exodus of employers from those still offering defined benefit

plans. The net effect will be a reduction in the number ofemployees covered by
such plans.

If the Supreme Court addresses the "affirmative duty to disclose" issue, it

should conclude that the type of disclosure requirements suggested by the Bins

panel, at least in the context of early retirement cases, are invalid. The panel's
ruling clearly goes beyond what Congress ever intended in adopting ERISA. The

employee considering an early retirement decision is making a voluntary choice

as to his or her retirement date. The employee is not required to retire but simply

desires to do so. There is no legitimate reason an employer should be required

to disturb its business strategies to inform the prospective retiree that an

improved plan might be forthcoming if he or she delays retirement. The

requirement to do so exceeds the protection intended by Congress and, in effect,

forces the company to increase an employee's benefits in the case ofa voluntary

retirement.

202. See Bins v.Exxon Co. U.S.A., 189F.3d929,939(9thCir. 1 999), rev den banc 220 F. 3d

1042 (9th Cir. 2000). But cf. Pocchia, 81 F.3d at 279; Fischer v. Phila. Elec. Co., 96 F.3d 1530

(3d Cir. 1996), cert, denied, 520 U.S. 1116 (1997).

203. See Pocchia v. NYNEX Corp., 517 U.S. 931 (1996); Varity Corp. v. Howe, 516 U.S.
489, 506 (1996); Fischer, 96 F.3d at 1530.



528 INDIANA LAW REVIEW [Vol. 34:501

Finally, businesses seek as much certainty as possible in conducting their
affairs. In the context ofearly retirement cases such as Bins, the superior option

is the Second Circuit's bright line rule established in Pocchia that there is no
duty to inform until plan changes have been adopted.

204
This option enables all

parties to have a degree of certainty with respect to ERISA administration, yet
beneficiaries are still protected from misleading statements or misrepresentations

on the part of fiduciaries. Concurrently, it fulfills the purpose of ERISA that
existing plan benefits be protected. The certainty and reasonableness created by
the Pocchia rule would therefore encourage companies to provide pension
benefits and help fulfill Congress' intent that more workers be covered by
retirement plans.

204. See Pocchia, 81 F.3d at 278.