taking Plaintiffs' factual representations as true for the purpose of the instant motion, Plaintiffs have failed to show that a genuine issue of material fact remains concerning whether retirees have vested rights to medical benefits that prevail over the Company's right to modify its benefits plan or that the Company violated § 301 of LMRA as a result of such modification.
E. Do Plaintiffs State A Claim For Breach of Fiduciary Duty?
As the Third Circuit has emphatically stated in a very recent decision, the failure of Plaintiffs' breach of contract claim due to the unambiguous language in the plan documents does not foreclose the retirees' claims for relief based on a breach of fiduciary duty. In Re Unisys Retiree Medical Benefit "ERISA" Litigation, 58 F.3d 896, 1995 WL 380983 *10 at n. 13. ("Unisys A").17 Indeed, under Unisys A, such an action may be maintained pursuant to 502(a)(3)(B) of ERISA, 29 U.S.C. § 1132(a)(3)(B). Unisys A, at *1. The statutorily defined role of the fiduciary requires that "a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries." 29 U.S.C. § 1104(a)(1). Pursuant to ERISA, fiduciaries must strive to inform plan participants and beneficiaries of important specific information. Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 142-45, 87 L. Ed. 2d 96, 105 S. Ct. 3085 (1985). As a result, the Circuit has held that as a fiduciary exercises these duties it "may not materially mislead those to whom the duties of loyalty and prudence . . . are owed." Fischer v. Phila. Elec. Co., 994 F.2d 130, 135 (3d Cir.) cert. denied, U.S. , 114 S. Ct. 622, 126 L. Ed. 2d 586 (1993). For instance, a fiduciary "may not make affirmative material misrepresentations to plan participants about changes to employee benefit plans." Fischer, 994 F.2d at 135. Similarly, the court held in Bixler v. Central Pa. Teamsters Health and Welfare Fund, 12 F.3d 1292, 1300 (3d Cir. 1994), the duty to inform "entails not only a negative duty to misinform, but also an affirmative duty to inform when the trustee knows that silence might be harmful." See also Curcio v. John Hancock Mutual Life Insurance Co., 33 F.3d 226 (3d Cir. 1994). Thus, the Circuit has concluded that "where a plan administrator . . . fails to provide information when it knows that its failure to do so might cause harm, the plan administrator has breached its fiduciary duty to [plan participants and beneficiaries]." Unisys A, at *6 (emphasis added).
A breach of fiduciary claim
is based on the statutory disclosure requirements set forth in ERISA, 29 U.S.C. § 1102, 1021, and 1022. Unisys A, at *5. As set forth by the Circuit, these statutes require that "every benefit plan be established and maintained pursuant to a written instrument." 29 U.S.C. § 1102. In addition, "a summary plan description of employee benefit plan is to be furnished to plan participants . . . which shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan." 29 U.S.C. § 1022(a)(1).
Most significantly for the case before the Court, § 1022(a)(1) continues "[a] summary of any material modification in the terms of the plan and any change in the information required under subsection (b) of this section shall be written in a manner calculated to be understood by the average plan participant and shall be furnished in accordance with section 1024(b)(1) of this title." 29 U.S.C.§ 1022(a)(1) Among the explanatory information that must be included in a summary plan document pursuant to subsection (a) and listed in subsection (b) are "the name and type of administration of the plan . . . circumstances which may result in disqualification, ineligibility, or denial or loss of benefits; the source of financing of the plan and the identity of any organization through which benefits are provided . . ." 29 U.S.C. § 1022(b).
Of course, a summary plan description "must not have the effect [of] misleading, misinforming or failing to inform participants and beneficiaries." Unisys A at *5, citing 29 C.F.R. § 2520-102-2(b) (1987). Thus, summary plan documents are important informational tools for fiduciaries to use to communicate information about significant structural changes in plan documents or the status of the plan. See, generally, Alexander v. Primerica Holdings, Inc., 967 F.2d 90, 93 (3d Cir. 1992) (significance of summary plan documents and their power to inform participants of possible adverse changes).
This case presents a situation whereby the last SPD plan participants received was written in 1981. At that time, insurance policy documents constituted the relevant plan documents and set forth in detail what benefits were available to retirees and their dependents. Then, in 1985, Defendant Company terminated the insurance policies and created a self-funded plan. No SPD was issued to retirees at that time.
In 1987, Defendant Company undertook the complicated and presumably painstaking and expensive task of creating a trust structure and benefit plan, referred to as VEBA plan documents, through carefully drafted trust and plan documents. These documents set forth how Defendant Company would administer its retirees medical benefits plan in the future. Why it chose to completely change the underlying structure of the plan and its funding mechanism is not before the Court. However, this significant alteration was probably influenced by the growing costs and administrative needs of the medical plan as larger numbers of retirees became eligible for the plan.
Thus, detailed, specific documents came out of the 1987 change. These documents included specific language concerning the role of the trustee, the name of the agent for service of process, amendment and termination procedures, as well as eligibility and claim procedures. All of this information is of the type explicitly enumerated in subsection (b) as significant information that an SPD should contain.
Notably, the new 1987 documents, presented by Defendant as "the document that governs the rights of all retirees,"
contained an all-inclusive reservation of rights clause. The parties agree that the 1987 reservation of rights clause is the most explicit reservation of rights clause present in any plan document in this case.
Again, like in 1985, Defendant Company did not issue a revised SPD to retirees although the company then relied on an entirely new set of plan documents. Therefore, in 1987, as in 1985, retirees would still have looked to the 1981 SPD, which did not have the same reservation of rights clause as the 1987 VEBA documents, for a statement of their rights and responsibilities under the benefits plan.
While stating what an SPD must include in terms of relevant information, ERISA goes further. It also requires plan administrators to issue a new SPD;
[following a] modification or change described in § 1022(a)(1) of this title, a summary description of such modification or change shall be furnished not later than 210 days after the end of the plan year in which the change is adopted to each participant, and to each beneficiary who is receiving benefits under the plan.
29 U.S.C. § 1024(b)(1) (1995 Supp.) As outlined above, § 1022 states certain changes require a new SPD including changes relating to the name and type of administration of the plan, circumstances relating to eligibility and termination of benefits, the source of financing, and names of trustees. All of this information arguably changed in 1987 and arguably should have been incorporated into a new SPD. Indeed, if a new SPD was required, such SPD should have been issued by January, 1989. As no SPD was issued, the Company's 1991 modification of the retirees benefit plan generated a strong response from retirees, who allegedly were unaware of any structural change in the organization of the benefits program or that the underlying policy documents had been altered. In addition, Plaintiffs had never encountered an explicit broad reservation of rights in the 1981 SPD, as was present in the 1987 plan documents. Accordingly, the Company failed to communicate through the single
appropriate statutory mechanism specifically designed to ensure clear open communication between fiduciaries and plan participants. To the extent that the changes in the 1987 documents could lead to an impairment of retirees' legal rights at some time in the future, such scope of the changes was significant. For instance retirees' rights could be positively or negatively affected by language in the 1987 VEBA plan documents concerning 1) the insertion of the broadly worded explicit reservation of rights clause, 2) the termination and amendment provisions, 3) the identification of the agent named for the sole purpose of service of process, or 4) the identification of the trustee. The Court need not imagine further what ways in which the VEBA documents could impact retirees' rights. Instead, the Court must consider whether Defendant Company's failure to inform plan participants of relevant developments in the plan's organizational structure and underlying plan documents permits Plaintiffs to state a claim for a breach of fiduciary duty.
The significance of Defendant Company's failure to issue a new SPD here relates to the longstanding character of the retirees medical benefits plan. A relatively static plan provided similar health insurance benefits to retirees since the inception of the plan in the 1960s. Of course, Defendant Company had instituted certain changes in benefits particularly in later years but the most significant one by far was the one at issue in this litigation -- the elimination of the "benefits within benefits" approach whereby the plan covered eighty percent charges above the eighty percent covered by Medicare. Issuing a SPD, regardless of what it said, would have reminded retirees that such a change had taken place, and, most importantly, reminded them that such a change warranted their careful attention and review. The issuance of a new SPD would have notified of the changes and attentive retirees might have been encouraged to request an opportunity to look at the new underlying plan documents to inform themselves of their rights and responsibilities in accordance with both the spirit and language of ERISA. Had a new SPD been issued in 1988, no reasonable person could have argued that he or she was unaware that the 1987 changes significantly altered underlying plan documents and the organizational structure of the plan itself. Of course, it is important to recall that Defendant Company relies on the 1987 documents as support for the present modification of benefits.
This may be a case where a substantive remedy should be available for violation of ERISA's reporting and disclosure requirements. See, Ackerman v. Warnaco, Inc., 55 F.3d 117, 1995 U.S. App. LEXIS 10731 *21-22 (3d Cir. May 15, 1995). The Circuit has acknowledged, in Ackerman and in Hozier that such "reporting and disclosure violations can 'wreak especially substantial harm' in the context of a dispute on the validity of a plan alteration." Ackerman, at *22, quoting, Hozier, 908 F.2d at 1168-69, n.15. Thus, in Ackerman, the Circuit recognizes, for instance, the possibility of striking down a plan amendment as a remedy for such a violation. Here retirees argue that they have been significantly harmed as a result of Defendant Company's failure to make appropriate disclosures. Further, there is evidence supporting an inference that Defendant Company was aware of the need for a new SPD. At deposition, John J. Hague, a Defendant Company's employee, indicated that his department was aware of the importance of drafting and issuing a revised SPD for the VEBA documents but that they had not done so. Pls.' Appendix, Ex. 2 at 134-138. In fact, Hague admitted that the VEBA documents amounted to a change requiring a revised SPD. On these facts, there is at least a factual dispute regarding Defendant Company's intent
with regard to its retirees.
The disclosure requirements of ERISA are not empty suggestions for fiduciaries. They amount to specific guidelines imposed for the purpose of ensuring that plan participants can follow and gauge the availability and character of medical benefits plans, including the very structure of the benefit plan itself which may impact on participants' rights. Without adequate information, a participant cannot know or enforce his or her rights to benefits or anticipate alterations in benefits as were effected here by Defendant Company.
Plaintiffs state a claim for a breach of fiduciary duty. Accordingly, Defendant Company's motion for summary judgment on this claim will be denied.
For the foregoing reasons, Defendants' motion for summary judgment will be granted in part as to Plaintiffs' breach of contract claims pursuant to ERISA, 29 U.S.C. § 1132, and as to Plaintiffs' claims under § 301 of the LMRA, 29 U.S.C. § 185. However, Defendants' motion will be denied in part without prejudice as to Plaintiffs' breach of fiduciary duty claim pursuant to ERISA, 29 U.S.C. § 1132.
STANLEY S. BROTMAN
UNITED STATES DISTRICT JUDGE
DATED: August 31, 1995
This matter having come before the Court on the partial motion of Defendants Campbell Soup Company, Campbell Soup Company Voluntary Employee Benefit Plan, and Campbell Soup Company Voluntary Employee Benefit Plan Trust for summary judgment; and
Having considered the submissions of the parties;
For the reasons set forth in the Court's opinion of this date;
IT IS on this 31st day of August, 1995 hereby:
1) ORDERED that Defendants' motion is GRANTED IN PART as to Plaintiffs' breach of contract claims pursuant to ERISA, 29 U.S.C. § 1132; and it is
2) FURTHER ORDERED that Defendants' motion is also GRANTED IN PART as to Plaintiffs' claims under § 301 of the LMRA, 29 U.S.C. § 185; and it is
3) FURTHER ORDERED that Defendants' motion is DENIED IN PART WITHOUT PREJUDICE as to Plaintiffs' breach of fiduciary duty claim pursuant to ERISA, 29 U.S.C. § 1132.
STANLEY S. BROTMAN
UNITED STATES DISTRICT JUDGE