Jordan v. Federal Express Corp

Filed June 19, 1997

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 96-3103

CAPT. JOHN PAUL JORDAN v.

FEDERAL EXPRESS CORPORATION, Administrator;
FIXED PENSION PLAN FOR SEABOARD WORLD AIRLINEPILOTS;
FLYING TIGER LINE, INC.
VARIABLE ANNUITYPENSION PLAN FOR PILOTS;
FEDERAL EXPRESSCORPORATION EMPLOYEE'S PENSION PLAN

JOHN PAUL JORDAN,

Appellant

On Appeal from the United States District Court
for the Western District of Pennsylvania

(D.C. Civil Action No. 94-cv-00930)

Argued January 16, 1997

Before: SLOVITER, Chief Judge, SCIRICA and SEITZ,Circuit Judges

(Filed June 19, 1997)

DANIEL M. KATZ, ESQUIRE

(ARGUED)

    Katz & Ranzman
    1015 18th Street, N.W., Suite 801
    Washington, D.C. 20036

Attorney for Appellant

THOMAS L. HENDERSON, ESQUIRE

(ARGUED)

    McKnight, Hudson, Lewis &
     Henderson
    6750 Poplar Avenue, Suite 301
    P.O. Box 171375
    Memphis, Tennessee 38187-1375

    JAMES R. MULROY, ESQUIRE
    ELIZABETH C. SMITH, ESQUIRE
    Federal Express Corporation
    1980 Nonconnah Boulevard,
     3rd Floor     Memphis, Tennessee 38132

Attorneys for Appellees

OPINION OF THE COURT

SCIRICA, Circuit Judge.

This is an appeal under the Employee Retirement IncomeSecurity Act involving the failure of a plan administrator tonotify a plan participant of the irrevocability of hisretirement benefit election and joint annuitant designation.There are two principal issues on appeal. First, whether theplan administrator's failure to disclose the irrevocability ofthe retirement benefit election presents a cognizable ERISAclaim. Second, if it does, whether the failure to explain theirrevocability of the benefit election was a breach of theadministrator's fiduciary duty. Finding the plan participantdid not state a cognizable claim under ERISA, the districtcourt granted summary judgment in favor of the plans andthe plan administrator. Jordan v. Federal Express Corp.,914 F. Supp. 1180 (W.D. Pa. 1996). We will affirm in part,reverse in part, and remand for proceedings consistent withthis opinion.

In May 1965, airline pilot Captain John Paul Jordancommenced flying for Seaboard World Airlines, Inc. and joined its Fixed Pension Plan for Seaboard World AirlinePilots. Jordan continued to fly for Flying Tiger Line, Inc.after it merged with Seaboard, until his disabilityretirement on June 1, 1989. He also joined the Flying TigerLine, Inc. Variable Annuity Pension Plan for Pilots(collectively with the Seaboard Plan, the "plans"). FlyingTiger was the plan administrator until 1989, when itmerged with the Federal Express Corporation. ThereafterFederal Express was the plan administrator. The plans are"employee benefit plans" under the Employee RetirementIncome Security Act. 29 U.S.C. § 1002(3).

The plans provide retirement benefits for disabledparticipants in the form of a Statutory Joint and SurvivorAnnuity. According to the plans' provisions, Flying Tigerwas required to furnish participants with information onthe available retirement options prior to selection. Theplans provide:

    Not less than 90 days prior to a Member's Disability
    Retirement Date . . . the Company shall provide such
    member with a written explanation of the availability of
    an election to waive the Statutory Joint and Survivor
    Annuity, and a written explanation of the terms and
    conditions of the Statutory Benefit and the financial
    effect of an election under Section 8.3 [or 7.3].1/

The plans list other retirement benefit options available tothe participants besides the basic Joint and SurvivorAnnuity.2/ Of greater consequence here is the irrevocability restriction placed on the participants' election. The plansmandate that, "subsequent to a Member's Retirement Datethe election of [the Joint and Survivor Annuity] Optioncannot be rescinded nor can the designation of the jointannuitant be changed."

In 1988, Jordan commenced a period of long-term sickleave. By letter, Flying Tiger informed Jordan that afterexhaustion of sick leave benefits, he might be eligible fordisability retirement. To qualify, Jordan had to submitdocumentation of his disqualifying medical condition andthe Federal Aviation Administration's refusal to issue him aflying certificate at least sixty days prior to his retirement.After receiving the necessary paperwork, the BenefitsDepartment would send Jordan a letter explaining hisbenefit level and retirement options.

On March 14, 1989, Jordan asked Flying Tiger to beginprocessing his disability retirement request. Rather thanproviding the necessary medical and FAA documentation,Jordan advised Flying Tiger that the FAA was evaluatinghis certification status. Jordan eventually filed thenecessary documents on June 3, 1989.

Flying Tiger replied to Jordan's request on June 5, 1989,four days after he retired and two days after receipt of theFAA's letter denying flight certification and his physician'sletter describing his debilitating condition. Accompanyingthe plans' response letter were blank copies of a"Retirement Election Form" and a "Spousal Consent Form."3/The benefits letter advised Jordan of his projected monthlydisability benefits under three of "the most commonlyelected benefit payment options:" (1) the Straight LifeAnnuity ($6,769.29); (2) the 50% Joint and Survivor Annuity ($6,109.08); and (3) the 100% Joint and SurvivorAnnuity ($5,576.79).4/

The letter did not mention that the plans prohibit post-retirement changes either to the form of the annuity electedor to the beneficiary designation if the Joint and SurvivorOption were chosen.5/ Jordan never requested informationfrom the administrator on the revocability of his election,nor did he receive, before his retirement election, a copy ofthe terms and conditions of the plans or their SummaryPlan Descriptions.

Jordan executed and returned the Retirement ElectionForm, selecting the Joint and Survivor 50% Annuity Optionand designating his wife, Linda Jordan, as his jointannuitant. Jordan claims he and his wife were unawarethat his election was irrevocable. Had they known it wasirrevocable they would have chosen the Straight LifeAnnuity because of the tenuous state of their marriage.

In September 1989, Jordan received his first disabilityretirement check.6/ Soon thereafter Captain Jordan divorcedLinda Jordan and married Patricia Jordan. Under theproperty settlement, Linda Jordan relinquished all claim to Captain Jordan's retirement benefits, including her Jointand Survivor beneficiary interest.

In February 1992, Federal Express, the presentadministrator of the plans, denied Jordan's request tosubstitute Patricia Jordan for Linda Jordan as hisdesignated joint annuitant because "there are no provisions[under the plans] for making changes to the payment form,thus your initial election is irrevocable." The letter advisedhim that "your payments will continue as is, with Linda E.Jordan as your survivor, in the absence of a QualifiedDomestic Relations Order certified by the court."

Jordan sent Federal Express a copy of a QualifiedDomestic Relations Order issued by the Mercer CountyCourt of Common Pleas directing that "all rights andinterests of Linda E. Jordan [under the plans] . . . arehereby terminated and extinguished in their entirety, thesame as if such rights and interests had never accrued inthe first instance." He asked the plans either to raise hisbenefit payment to match the monthly amount disbursedunder the Straight Life Annuity or to recognize PatriciaJordan as the beneficiary of his Joint and Survivor 50%Annuity. In response, Federal Express canceled LindaJordan's right to receive the benefits under the planswithout either increasing Jordan's monthly benefits ordesignating Patricia Jordan as the new beneficiary.7/

Jordan appealed the denial of survivor benefits to theFederal Express Corporation Qualified Employee BenefitsCommittee, which acts as fiduciary for the Federal Expresspension plan. The Qualified Employee Benefits Committee denied the appeal but offered to reinstate Jordan'spreviously designated beneficiary (Linda Jordan) if he sodesired.

In June 1994, Jordan filed this action alleging the plansand the administrator violated statutory, regulatory, andplan requirements in their administration of his request fordisability retirement benefits. In his amended complaint,Jordan claims he is entitled to revoke his election of hisformer wife Linda Jordan as his joint annuitant because (1)he did not receive timely written notice of his benefits; (2)he was not informed in advance of his election that he wasbarred from post-retirement changes in his election; (3) hedid not receive a Summary Plan Description; and (4) theplans are being unjustly enriched by "charging" Jordan forthe Qualified Joint and Survivor Annuity through reducedpension benefits without his receiving the benefit of havinga designated joint annuitant.

On cross motions, the district court granted summaryjudgment to Federal Express, holding that Jordan failed tostate valid claims under ERISA §§ 502(a)(1)(B) and502(a)(3), or federal common law. Specifically the courtfound (1) the alleged violations of the plans' reporting anddisclosure provisions could not be remedied under ERISA§ 502(a)(1)(B), which only permits enforcement of the "termsof a plan;" (2) Jordan had failed to allege or put in issueany "extraordinary circumstances" required for a § 502(a)(3)claim; and (3) a federal common law claim for "unjustenrichment" was not available. This appeal followed.

This case arose under the Employee Retirement IncomeSecurity Act ("ERISA"), 29 U.S.C. §§ 1001-1461. We havejurisdiction under 28 U.S.C. § 1291 and our scope of reviewis plenary. "When we review a grant of summary judgment,we apply the same test as the district court should haveapplied initially." Sempier v. Johnson & Higgins, 45 F.3d724, 727 (3d Cir.), cert. denied, 115 S. Ct. 2611 (1995). Acourt may grant summary judgment when "there is nogenuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P.56(c).8/

III

Jordan's cause of action is predicated on theadministrator's failure to disclose material features of hisretirement benefit election and his joint annuitantdesignation. The plans and the administrator contend thealleged violations are not cognizable under ERISA. Citingour prior decisions, they assert there is no § 502(a)(1)(B)liability for ERISA disclosure violations and no"extraordinary circumstances" that would permit a§ 502(a)(3) claim. See Hozier v. Midwest Fasteners, Inc., 908F.2d 1155, 1169 (3d Cir. 1990); Ackerman v. Warnaco, Inc.,55 F.3d 117, 124 (3d Cir. 1995). In response, Jordanclaims there is a valid distinction between disclosureviolations predicated on the ERISA statute and those basedsolely on the plans' language. The latter he contends arecognizable under ERISA. He also maintains his breach of fiduciary duty claim should not be evaluated under theAckerman "extraordinary circumstances" test.

The district court held that under Hozier, Jordan did nothave a viable basis under § 502(a)(1)(B) for his disclosureclaims. Jordan, 914 F. Supp. at 1188 (citing Hozier v.Midwest Fasteners, Inc., 908 F.2d 1155 (3d Cir. 1990)).9/ Section 502(a)(1)(B) provides a participant with a cause ofaction "to recover benefits due to him under the terms ofhis plan, to enforce his rights under the terms of the plan,or to clarify his rights to future benefits under the terms ofhis plan." 29 U.S.C. § 1132(a)(1)(B).

In Hozier we held that while reporting and disclosureviolations may cause "substantive harm," they cannot formthe basis for § 502(a)(1)(B) liability when "the plan definesthe scope of the entitlements it creates without anyreference to reporting and disclosure issues." Hozier, 908F.2d at 1168. Because the employees in Hozier were onlyentitled to benefits under the plan if they were terminatedbecause of a merger, we refused to find a § 502(a)(1)(B)cause of action since the plan entitlement provision did notcreate disclosure and reporting obligations. Id. ("[T]hedetermination of whether a particular employee wasterminated `for the merger,' . . . does not depend on theextent to which the employee was made aware that hewould receive certain severance benefits if terminated `forthe merger.' ").

In Hozier, we acknowledged that imposing § 502(a)(1)(B)liability for statutory disclosure and reporting violationsmight serve the ERISA objective of ensuring that planparticipants receive adequate information about their plansin order to protect their interests. Hozier, 908 F.2d at 1169 (citing H.R. Rep. No. 93-533 (1974), reprinted in 1974U.S.C.C.A.N. 4639, 4649). But there was also thecountervailing ERISA consideration "that employeesthemselves are best served by an enforcement regime thatminimizes employers' expected liability for reporting anddisclosure violations--and with it, the disincentives againstcreating employee benefit plans in the first place . . . ." Id.,at 1170. Because Congress chose to provide planparticipants with a limited set of remedies for statutorydisclosure violations, we refused to fashion an impliedremedy which altered ERISA's comprehensive remedialscheme. Id., at 1171; see also Massachusetts Mut. Life Ins.Co. v. Russell, 473 U.S. 134, 147 (1985) ("We are reluctantto tamper with an enforcement scheme crafted with suchevident care as the one in ERISA.").10/

The plans here set forth disclosure and reportingobligations. Sections 8.2 and 7.2 require the planadministrator to provide the participants with "a writtenexplanation of the availability of an election to waive theStatutory Joint and Survivor Annuity, and a writtenexplanation of the terms and conditions of the StatutoryBenefit and the financial effect of an election under Section8.3 [or 7.3]." Prior to waiving their Joint and SurvivorAnnuity and selecting a different retirement benefit option,participants were to receive a written explanationdescribing the "terms and conditions" of the Annuity fromthe plan administrator. Even if the plans' disclosureviolations led Jordan to make an uninformed retirementselection, he cannot bring a § 502(a)(1)(B) claim where his"plan defines the scope of entitlements it creates withoutany reference to reporting and disclosure issues." Hozier,908 F.2d at 1168.11 This is such a case. Therefore, Jordan does not have a cognizable § 502(a)(1)(B) claim against theplans or the administrator for their alleged disclosurefailures.12/

Jordan also sets forth a § 502(a)(3) claim. Under§ 502(a)(3) a plan participant may bring a cause of action:

    (A) to enjoin any act or practice which violates any
    provision of this subchapter or the terms of the plan,
    or (B) to obtain other appropriate equitable relief (i) to
    redress such violations or (ii) to enforce any provisions
    of this subchapter or the terms of the plan . . . .

29 U.S.C. § 1132(a)(3).

The district court properly dismissed Jordan's § 502(a)(3)claim involving the ERISA statutory reporting anddisclosure violations. We have previously held that"substantive remedies are generally not available forviolations of ERISA's reporting and disclosurerequirements" except "where the plaintiff can demonstratethe presence of `extraordinary circumstances.' " Ackermanv. Warnaco, Inc., 55 F.3d 117, 124 (3d Cir. 1995). We havenot provided a rigid definition of "extraordinarycircumstances." But "extraordinary circumstances"generally involve acts of bad faith on the part of theemployer, attempts to actively conceal a significant changein the plan, or commission of fraud. See id. at 125; Kurz v. Philadelphia Elec. Co., 96 F.3d 1544, 1553 (3d Cir. 1996)("To support [the extraordinary circumstances] element, wehave previously required a showing of affirmative acts offraud or similarly inequitable conduct by an employer.");Curcio v. John Hancock Mut. Life Ins. Co., 33 F.3d 226, 238(3d Cir. 1994); Berger v. Edgewater Steel Co., 911 F.2d 911,920-21 (3d Cir. 1990), cert. denied, 499 U.S. 920 (1991);see also Panaras v. Liquid Carbonic Indus. Corp., 74 F.3d786, 791 (7th Cir. 1996) ("[A] claim for monetary benefits ina suit based on technical violations of the notice provisionswill be awarded only in `exceptional circumstances'involving bad faith, intentional concealment or prejudice tothe employee."). Jordan presented no evidence that FlyingTiger acted in bad faith. Based on the record here, Jordanfailed to establish the requisite "extraordinarycircumstances," and the district court properly dismissedhis § 502(a)(3) ERISA disclosure claims.

In addition to his § 502(a)(3) ERISA disclosure claims,Jordan raised a breach of fiduciary duty claim against theplan administrator. The district court dismissed this claimbecause there was insufficient evidence of "extraordinarycircumstances." In the alternative, the court suggested that" `absent a specific participant-initiated inquiry, a planadministrator does not have any fiduciary duty todetermine whether confusion about a plan term orcondition exists.' " Jordan, 914 F. Supp. at 1192 (quotingSwitzer v. Wal-Mart Stores, Inc., 52 F.3d 1294, 1299 (5thCir. 1995)).

The Supreme Court has held that § 502(a)(3) acts as a"safety net, offering appropriate equitable relief for injuriescaused by violations that § 502 does not elsewhereadequately remedy." Varity Corp. v. Howe, ___ U.S. ___, 116S. Ct. 1065, 1078 (1996).13 This includes breach offiduciary duty. Id. After Varity there is little doubt thatERISA provides plan participants an equitable cause ofaction for an administrator's breach of fiduciary duty. This is the claim that Jordan sets forth in Count II of hisamended complaint - that the administrator breached itsfiduciary obligation to inform him of the material aspects ofhis retirement election.

As a threshold matter, we must consider whether thedistrict court erred when it required Jordan to satisfy the"extraordinary circumstances" test in order to establish a§ 502(a)(3) claim for breach of a fiduciary duty. While wehave required "extraordinary circumstances" to recoverunder ERISA's disclosure and reporting provisions, we havenot employed the same test for breach of fiduciary dutyclaims. We have previously held:

    [S]atisfaction by an employer as plan administrator of
    its statutory disclosure obligations under ERISA does
    not foreclose the possibility that the plan administrator
    may nonetheless breach its fiduciary duty owed plan
    participants to communicate candidly, if the plan
    administrator simultaneously or subsequently makes
    material misrepresentations to those whom the duty of
    loyalty and prudence are owed.

In re Unisys Corp. Retiree Med. Benefit "ERISA" Litig., 57F.3d 1255, 1264 (3d Cir. 1995), cert. denied, 116 S. Ct.1316 (1996); see also Kurz, 96 F.3d at 1552 (treatment ofthe breach of fiduciary duty claim is treated as independentand distinct from the equitable estoppel claim based onERISA disclosure violations); Bixler v. Cent. Pa. TeamstersHealth & Welfare Fund, 12 F.3d 1292 (3d Cir. 1993)(employee's claim that the employer violated its fiduciaryduty to inform not analyzed under the "extraordinarycircumstances" test); Genter v. Acme Scale & Supply Co.,776 F.2d 1180 (3d Cir. 1985) (same).

It would appear that the Supreme Court has alsodetermined that fiduciary duties operate bothindependently from and in conjunction with ERISA'sspecifically delineated requirements. See Varity Corp., 116S. Ct. at 1074 ("If the fiduciary duty applied to nothingmore than activities already controlled by other specificlegal duties, it would serve no purpose."); see also CentralStates, Southeast and Southwest Areas Pension Fund v.Central Transp., Inc., 472 U.S. 559, 569 n.9 (1985) ("ERISA's rules concerning reporting, disclosure, andfiduciary responsibility apply to all employee benefitplans.").

As we acknowledged in Hozier, one of ERISA's objectiveswas to provide plan participants with greater disclosureprotection. Hozier, 908 F.2d at 1170. Congress determinedthe prior Welfare and Pension Plans Disclosure Act wasdeficient in that employees were not given sufficientinformation from the plans to protect their interests. H.R.Rep. No. 93-533 (1974), reprinted in 1974 U.S.C.C.A.N.4639, 4649; Board of Trustees of the CWA/ITU NegotiatedPension Plan v. Weinstein, 107 F.3d 139, 143-44 (2d Cir.1997) ("Finding that the Disclosure Act was `weak in itslimited disclosure requirements,' and `inadequate inprotecting rights and benefits due workers,' . . . Congressenacted broader disclosure requirements in ERISA . .. .")(citations omitted). To afford the plan participants andbeneficiaries with greater disclosure protection, Congresscreated reporting and disclosure requirements as well as afiduciary duty framework which "[assures] the equitablecharacter of the plans." Central States, 472 U.S. at 570.This is reflected in the legislative history. S. Rep. No. 93-127 (1974), reprinted in 1974 U.S.C.C.A.N. 4838, 4863("Title V amends the Welfare and Pension Plans DisclosureAct in two significant ways. First, by addition to andchanges in the reporting requirements designed to disclosemore . . . information . . . to participants . . . . Second, bythe addition of a new section setting forth responsibilities. . . applicable to persons occupying a fiduciary relationshipto employee benefit plans."); H.R. Rep. No. 93-1280 (1974),reprinted in 1974 U.S.C.C.A.N. 5038, 5171 ("The confereesalso improved a number of House and Senate provisionswhich are vital for the protection of the pension rights ofemployees. This includes full disclosure of the features andoperation of pension plans.").

While the statutory disclosure and reportingrequirements are clearly set forth in ERISA, see , e.g., 29U.S.C. § 1055; 29 U.S.C. § 1025; 29 U.S.C. § 1024,Congress chose not to enumerate all the fiduciary dutiesowed. Varity, 116 S. Ct. at 1070 ("[W]e recognize that thesefiduciary duties draw much of their content from the common law of trusts . . . . We also recognize, however,that trust law does not tell the entire story.") (citationsomitted). Rather a broader approach was adopted whereCongress assumed "the courts would interpret the prudentman rule (and other fiduciary standards) bearing in mindthe special nature and purpose of employee benefit plans"as they develop a federal common law of rights andobligations under ERISA-regulated plans. Varity Corp., 116S. Ct. at 1070 (citing H.R. Rep. No. 93-1280 (1974),reprinted in 1974 U.S.C.C.A.N. 5038, 5083); see FranchiseTax Bd. of the State of Cal. v. Construction LaborersVacation Trust for S. Cal., 463 U.S. 1, 24 n.26 (1983) ("[A]body of Federal substantive law will be developed by thecourts to deal with issues involving rights and obligationsunder private welfare and pension plans."); Ream v. Frey,107 F.3d 147, 154 n.6 (3d Cir. 1997) ("Consequently, theCourt has indicated that courts must create federalcommon law to flesh out the meaning of ERISA andeffectuate fully its meaning and purpose."). Because thestatutory reporting and disclosure requirements andremedies were carefully considered and described byCongress, we required a showing of "extraordinarycircumstances" for a participant to receive an equitableremedy under § 502(a)(3). See Ackerman, 55 F.3d at 124(citing Gridley v. Cleveland Pneumatic Co., 924 F.2d 1310,1319 (3d Cir. 1991)). But for breach of fiduciary dutyviolations, Congress has left it to the courts to "develop afederal common law of rights and obligations under ERISA-regulated plans." Varity, 116 S. Ct. at 1070 (quotingFirestone Tire & Rubber Co., 489 U.S. at 110-11); seeMenhorn v. Firestone Tire & Rubber Co., 738 F.2d 1496,1499 (9th Cir. 1984) ("But Congress realized that the bareterms, however detailed, of these statutory [ERISA]provisions would not be sufficient to establish acomprehensive regulatory scheme. It accordingly,empowered the courts to develop, in the light of reason andexperience, a body of federal common law governingemployee benefit plans."). This has been done through theemployment of trust principles and the creation of federalcommon law.

Furthermore, a review of the case law indicates that thefiduciary duty jurisprudence has evolved from a different set of policy concerns from those animating ERISA'sstatutory disclosure requirements. The "extraordinarycircumstances" limitation set forth in Ackerman flows from"Congress's judgment that employees themselves are bestserved by an enforcement regime that minimizes employers'expected liability for reporting and disclosure violations--and with it, the disincentives against creating employeebenefit plans in the first place . . . ." Hozier, 908 F.2d at1170. But the basis for fiduciary duty jurisprudence is "toprotect and strengthen the rights of employees, to enforcefiduciary standards, and to encourage the development ofprivate retirement plans." In re Unisys Sav. Plan Litig., 74F.3d 420, 434 (3d Cir.), cert. denied, 117 S. Ct. 56 (1996).Congress believed this protection would best be providedthrough the enforcement of fiduciary duties and theprovision of information concerning the plans. H.R. Rep.No. 93-533 (1974), reprinted in 1974 U.S.C.C.A.N. 4639,4649. Moreover, Congress has stated that its objectivesbehind adopting the fiduciary duty requirement are "thatreliance on conventional trust law often is insufficient toadequately protect the interests of plan participants andbeneficiaries . . . [and] assuming that the law of trusts isapplicable, . . . without standards by which a participantcan measure the fiduciary's conduct he is not equipped tosafeguard either his own rights or the plan assets." Id.

As a consequence, we evaluate fiduciary duty to informclaims differently from violations of ERISA's reporting anddisclosure requirements. Because "extraordinarycircumstance" is not required under our fiduciary dutyanalysis, the district court erred when it held there was nocognizable § 502(a)(3) claim for a fiduciary breach.

In the alternative, the district court suggested that evenif there were a cognizable claim for breach of fiduciary duty,there was no basis to find the administrator breached thatduty by failing to disclose the irrevocability of Jordan'selection beforehand.14/ Jordan contends the administratorviolated its duty to disclose by providing him with an incomplete explanation of the terms and conditions of hiselection.15/ The district court correctly found that neitherERISA, the Internal Revenue Code, nor the TreasuryRegulations specifically require administrators to informplan participants that the retirement benefit election as wellas the joint annuitant designation is irrevocable during thepost-retirement period. But this is not dispositive ofwhether the administrator breached its fiduciary duty toinform.

It is undisputed that Flying Tiger, as the administrator ofthe plans, was a fiduciary. In fact, the plans define the roleof administrator as "a named fiduciary." 16/ The question hereis whether the administrator breached its duty to discloseeven though the participant made no specific inquiry.

On June 5, 1989, Jordan received a four page letterwhich provided information "pertinent to [his] interest inDisability Retirement effective June 1, 1989." The letterfailed to mention that post-retirement changes to theparticipant's retirement plan selection are prohibited.Unaware of the revocability restriction, Jordan selected the50% Joint and Survivor Annuity and designated his wifeLinda Jordan as the beneficiary, even though they hadmarital difficulties at the time. Jordan brought this action,in part claiming that Flying Tiger maintained a duty toinform him of the irrevocability of his decision, and itsfailure to do so constitutes a breach of its fiduciary dutiesunder ERISA.

ERISA defines the scope of a fiduciary's duty as follows:

    [A] fiduciary shall discharge his duties with respect to
    a plan in the interest of the participants and
    beneficiaries and --

(A) for the exclusive purpose of:

(i) providing benefits to participants and their
beneficiaries; and

(ii) defraying reasonable expenses of administerin g
the plan;

    (B) with the care, skill, prudence, and diligence under
    the circumstances then prevailing that a prudent man
    acting in a like capacity and familiar with such matters
    would use in the conduct of an enterprise of a like
    character and with like aims . . . .

29 U.S.C. § 1104(a). Furthermore, the Supreme Court hasfound that "Congress intended by § 404(a) to incorporatethe fiduciary standards of trust law into ERISA, and . . .that fiduciaries owe strict duties running directly tobeneficiaries in the administration and payment of trustbenefits." Massachusetts Mut. Life Ins. Co. v. Russell, 473U.S. 134, 152-53 (1985); Ream, 107 F.3d at 153 ("Afiduciary's duties under ERISA are based both on ERISA,particularly the prudent person standard as set forth inERISA § 404, 29 U.S.C. § 1104, and on the common law oftrusts."); In re Unisys Sav. Plan Litig., 74 F.3d 420, 434 (3dCir. 1996) ("We also bear in mind that Congress hasinstructed that section 1104 `in essence, codifies andmakes applicable to . . . fiduciaries certain principlesdeveloped in the evolution of the law of trusts.' ") (quotingS. Rep. No. 93-127 (1974), reprinted in 1974 U.S.C.C.A.N.4838, 4863).

Through the application of trust principles, we have heldthat fiduciaries have a duty to inform which "entails notonly a negative duty not to misinform, but also anaffirmative duty to inform when the trustee knows thatsilence might be harmful." Bixler, 12 F.3d at 1300.17/ But "a fiduciary has a legal duty to disclose to the beneficiary onlythose material facts known to the fiduciary but unknown tothe beneficiary, which the beneficiary must know for itsown protection." Glaziers, 93 F.3d at 1182; see also Bixler,12 F.3d at 1300 ("[T]he duty to disclose materialinformation `is the core of a fiduciary's responsibility.' ")(quoting Eddy v. Colonial Life Ins. Co. of America, 919 F.2d747, 750 (D.C. Cir. 1990)). The inquiry here is whether theadministrator failed to inform Jordan of a material aspect ofhis upcoming benefit election. See In re Unisys, 57 F.3d at1265 n.15 ("An ERISA fiduciary does have . . .`a duty tocommunicate complete and accurate information about abeneficiary's status.' ") (quoting Eddy, 919 F.2d at 751).

In Unisys we held a misrepresentation rises to a materiallevel if "there is a substantial likelihood that it wouldmislead a reasonable employee in making an adequatelyinformed retirement decision." In re Unisys, 57 F.3d at 1264.18/ An omission may rise to a material level for the samereason. Irrevocability is arguably of material importance.We need not take judicial notice of the national divorce rateto hold that the non-disclosure of the irrevocability of ajoint annuitant's designation may be a material omissionon the part of an administrator. Plan participants mightreasonably expect that a written explanation of aRetirement Benefit would inform them of the permanence oftheir benefit election post-retirement.

It is apparent why a participant might considerirrevocability material. According to the Jordans' affidavits,both Linda Jordan and Captain Jordan would have chosento forego the Joint and Survivor benefit package in favor ofthe Straight Life Annuity option if they had known of theirrevocability of the selection. In fact, only a few monthsafter his election they divorced and reached a settlementwhere Linda Jordan relinquished all entitlement to herbeneficiary interest. According to Jordan, this unrealizedexpectation resulted in his relying on an incomplete writtenexplanation and making an uninformed benefit selection.

Barring post-retirement changes to a participant'selection or joint annuitant designation is justified. Thispolicy is necessary to avoid manipulation of annuitydisbursements through the selection of a Straight LifeAnnuity or the designation of a younger joint annuitantwhen the original joint annuitant's life expectancydiminishes. But there is an issue of fact here whether theplan administrator breached its duty to inform Jordan inits June 5th letter of the existence of such a restrictionbefore he made his irrevocable election.

We recognize that participants have a duty to informthemselves of the details provided in their plans, Genter v.Acme Scale & Supply Co., 776 F.2d 1180, 1185 (3d Cir.1985), and that the irrevocability restriction was contained in Jordan's plans. But it is uncontested that Jordan did notreceive copies of the plans or their Summary PlanDescriptions before his election. We also recognize thatJordan never requested information on irrevocability. Thedistrict court held this potentially dispositive since " `absenta specific participant-initiated inquiry, a plan administratordoes not have any fiduciary duty to determine whetherconfusion about a plan term or condition exists. It is onlyafter the plan administrator does receive an inquiry that ithas a fiduciary obligation to respond promptly andadequately in a way that is not misleading.' " Jordan, 914F. Supp. at 1192 (quoting Switzer v. Wal-Mart Stores, Inc.,52 F.3d 1294, 1299 (5th Cir. 1995)).

But in prior cases, we have held a specific request forinformation is not necessarily a prerequisite forfinding afiduciary breach to inform. As we held in Glaziers, "it isclear that circumstances known to the fiduciary can giverise to this affirmative obligation [to inform] even absent arequest by the beneficiary." Glaziers, 93 F.3d at 1181.Moreover, in Bixler we held that "while the beneficiary may,at times, bear a burden of informing the fiduciary of hermaterial circumstance, the fiduciary's obligations will notbe excused merely because she failed to comprehend or askabout a technical aspect of the plan." Bixler, 12 F.3d at1300. Here, we do not believe Jordan's failure to inquire isfatal to his claim. Glaziers, 93 F.3d at 1181 ("Indeed,absent such information, the beneficiary may have noreason to suspect that it should make inquiry into whatmay appear to be a routine matter."). Under the terms ofthe plans, the administrator was obligated to provide allparticipants, before they made their retirement selection,with a written explanation of the annuity, which contained"information pertinent to [their] interest in DisabilityRetirement." Letter from Flying Tiger to Jordan of 6/5/89at 1. Although the eighty-one page Flying Tiger Plan andthe fifty-one page Seaboard Plan described the irrevocabilityof the participant's retirement election post-retirement, theJune 5th letter describing his retirement options containedno reference to irrevocability. Interestingly, the June 5thletter explicitly discussed Jordan's ability to revoke hisINVEST pension plan election. And before retirement,Jordan was permitted to freely change his retirement plan option. But once Jordan retired, his annuity electionbecame irrevocable. The letter describing his retirementoptions did not notify him of this crucial difference.Because of Jordan's previous experience with changing hisretirement options, the explicit reference to his ability torevoke his INVEST plan selection, and the administrator'sfailure to disclose the irrevocability of his retirementannuity selection in the June 5th letter, Jordan was notput on notice that a change in revocability would resultupon retirement. For these reasons, we do not believeJordan's failure to inquire bars his claim.

There still is an issue of fact whether the administrator'sfailure to describe the irrevocability of Jordan's retirementselection constituted a material omission and a breach ofits duty to exercise the "care, skill, prudence and diligence"as required under ERISA.19/ This question is left to the factfinder.

If Jordan is entitled to relief, he may recover backbenefits, recision of his retirement selection, and theopportunity to select a new disability retirement option. SeeIn re Unisys, 57 F.3d at 1269.

Jordan also contends the written explanation wasuntimely as he did not receive it at least "ninety (90) daysprior to [his] Disability Retirement Date." It appears thatthe administrator violated the plans' provision requiring atleast a ninety day review period. Jordan retired on June 1,1989 and received his written explanation on June 5, 1989.But we find as a matter of law that this does not constitutea breach of the administrator's fiduciary duty. Before theplans were to supply Jordan with the retirement electioninformation, he was required to provide the administrator,at least sixty days prior to his projected retirement date,with a written request for disability retirement, a letter from the FAA medical examiner which documented hisdisqualifying medical condition, and supporting medicaldocumentation. Jordan failed to timely submit thesedocuments. Rather he sent the administrator a letter whichmerely stated that the FAA was currently reviewing hisdisability application.

The plan administrator would not have exercised itsfiduciary duties with the "care, skill, prudence anddiligence" of a "prudent man" if it started to processJordan's retirement application and sent him theinformational letter before it was assured that Jordanqualified for disability retirement. It was not until June 3,1989 that the Administrator received the documentsestablishing Jordan's disability status. Once thisinformation was received, the administrator immediatelysent out the informational letter and selection forms. Underthe circumstances, the administrator did not breach itsfiduciary duty by sending Jordan the informational letteron June 5, 1989.20/

The administrator's failure to provide Jordan with all ofthe required retirement alternatives in the benefits letterwas not raised before the district court. For this reason, wewill not reach this issue. Harris v. City of Phila., 35 F.3d840, 845 (3d Cir. 1994) ("This Court has consistently heldthat it will not consider issues that are raised for the firsttime on appeal."); Newark Morning Ledger Co. v. UnitedStates, 539 F.2d 929, 932 (3d Cir. 1976) (same).

Jordan also asserts a federal common law claim forunjust enrichment. We have held that federal common lawcauses of action are warranted when they are "necessary tofill in interstitially or otherwise effectuate the statutorypattern enacted in the large by Congress." Plucinski v. I.A.M. Nat'l Pension Fund, 875 F.2d 1052, 1056 (3d Cir.1989). Furthermore, we have previously held "that thedistrict courts should not easily fashion additional ERISAclaims . . . under the guise of federal common law." Curciov. John Hancock Mut. Life Ins. Co., 33 F.3d 226, 239 (3dCir. 1994); Van Orman v. American Ins. Co., 680 F.2d 301,312 (3d Cir. 1982) ("Where Congress has established anextensive regulatory network and has expressly announcedits intention to occupy the field, federal courts will notlightly create additional rights under the rubric of federalcommon law."); see also Massachusetts Mut. Life Ins. Co. v.Russell, 473 U.S. 134, 146 (1985) ("The six carefullyintegrated civil enforcement provisions found in § 502(a) ofthe statute as finally enacted . . . provide strong evidencethat Congress did not intend to authorize other remediesthat it simply forgot to incorporate expressly.") (emphasis inoriginal). Because Jordan brought a claim under § 502(a)(3),the district court correctly dismissed his federal commonlaw "unjust enrichment" claim because it was not needed to"fill in interstices of ERISA."

Finally, Jordan presents a claim for damages based onthe plans' failure to provide Jordan with a Summary PlanDescription pursuant to ERISA sections 102(a)(1) and104(b)(1). This ERISA statutory claim is not cognizableunder § 502(a)(1)(B) or § 502(a)(3). Hozier, 908 F.2d 1155;see also Ackerman, 55 F.3d 117. We will affirm the districtcourt's dismissal.

In conclusion, we hold that Jordan's § 502(a)(3) breach offiduciary duty claim alleging failure of the administrator toinform him of the irrevocability of his benefit selection iscognizable under ERISA. We believe there is a factual issuewhich precludes summary judgment - whether theadministrator's failure to mention irrevocability in its June5, 1989 letter breached its fiduciary duty. We will affirm thedismissal of the timeliness, unjust enrichment, andsummary plan description claims. We will also affirm the dismissal of the other ERISA statutory and regulatoryclaims.

For the foregoing reasons we will affirm in part, reversein part and remand for proceedings consistent with thisopinion.

A True Copy:Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

Footnotes

1/ The "Company" is defined under both plans as "Flying Tiger Line Inc.or any successor corporation. The Company shall be the PlanAdministrator and a named Fiduciary with respect to the Plans."

2/ Sections 7.3 of the Variable Annuity Pension Plan (Flying Tiger Plan)and 8.3 of the Fixed Pension Plan (Seaboard Plan) provide that adisabled participant:

    may elect to waive the [Joint and Survivor Annuity Option] at any
    time during the 90 days prior to retirement by filing [a] written
    election with the Company on a form suitable for such purposes.
    Such election shall clearly indicate that the Member is electing to
    receive Retirement benefits in accordance with [the Joint and
    Survivor Option, the Social Security Adjustment Option (only for
    Seaboard Plan), and the Certain and Life Option]. An election under
    this Paragraph may be revoked at any time prior to a Member's
    Retirement Date by filing a further written request in like manner
    that the election be changed . . . [N]o such election shall be valid
    unless a Spousal Consent is filed with the Retirement Board.

3/ The Spousal Consent Form was required to be executed by Jordanand his wife if he selected the Straight Life Annuity over the Joint andSurvivor Annuity. This was explained in the letter.

4/ Even though the plans stipulated that Jordan should receive anexplanation of the 75% Joint and Survivor Annuity Option and theCertain and Life Option in sections 8.3 and 7.3, the letter failed tomention them.

5/ Jordan was informed that his INVEST pension plan selection wasrevocable as he was entitled to receive additional benefits under theterms of the "INVEST" pension plan, and "after a period of five yearsha[d] elapsed from [his] disability retirement date, [he] may elect adifferent option for benefit payments, including a single lump sumpayment, based on the current account balance at that time." But thiswas independent and unrelated to his disability retirement election.

6/ The benefits letter stated that Jordan's "Disability Retirement wouldcommence the first day of the month following or coincident withapproval of disability, exhaustion of all sick pay and vacation, receipt ofyour FAA Letter of Denial and your request for disability benefits."Despite Jordan's failure to submit in a timely fashion the requisite FAAcertified documents and retirement election form, the pension plansagreed to pay him the retirement benefits retroactive as of June 1, 1989.Therefore the September 1989 check included payment for the monthsof June, July, and August.

7/ Federal Express contends that several months before Jordanrequested the change in his retirement option, one of its staff attorneysexplained to Jordan's domestic relations attorney that the QualifiedDomestic Relations Order would only extinguish Linda Jordan's rights,and not permit Patricia Jordan to receive Linda Jordan's benefits orincrease Jordan's monthly retirement payments. Federal Express claimsit suggested to Jordan that he negotiate a settlement with his formerwife. But Jordan asserts these conversations did not occur and underFederal Rule of Civil Procedure 56 all inferences must be made in hisfavor. In any event, the content of these phone conversations isimmaterial for purposes of this appeal.

8/ An administrator's benefit eligibility determination is reviewed underan arbitrary and capricious standard if the plan grants the administratordiscretionary authority to determine benefits or construe the terms of theplan. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989);Abnathya v. Hoffmann-La Roche, Inc., 2 F.3d 40, 44 (3d Cir. 1993);Taylor v. Continental Group in Control Severance Pay Plan, 933 F.2d1227, 1232 (3d Cir. 1991). Whether the administrator or fiduciary isoperating under a possible or actual conflict of interest is a factor whichmust be weighed in determining whether the decision was arbitrary andcapricious. Firestone Tire & Rubber Co., 489 U.S. at 115. But it appearsthat this deferential standard only applies to actions brought under§ 502(a)(1)(B) and not those brought under§ 502(a)(3). See id., at 108("The discussion which follows is limited to the appropriate standard ofreview in § 1132(a)(1)(B) actions challenging denials of benefits based onplan interpretations. We express no view as to the appropriate standardof review for actions under other remedial provisions of ERISA"); Luby v.Teamsters Health, Welfare, and Pension Trust Funds , 944 F.2d 1176,1183 (3d Cir. 1991) ("[W]e read the sentence limiting the scope of theFirestone Court's discussion as intended to distinguish between remedialactions challenging claim denials brought under 29 U.S.C.§ 1132(a)(1)(B) and remedial actions based on or brought under otherERISA provisions."). Because we hold there is no § 502(a)(1)(B) cause ofaction, we exercise plenary review.

9/ The district court describes Jordan's attempt to state a § 502(a)(1)(B)claim as "halfhearted" because "his claims clearly are not based on theterms of his retirement plans which, just as clearly, preclude therevocation of election or designation of another joint annuitants (sic) heseeks." Jordan v. Federal Express Corp., 914 F. Supp. at 1188 (emphasisin original).

10/ Moreover, we found that Congress provided other viable routes forthe prosecution of the statutory disclosure violations under § 502(a)(1)(A)or § 502(a)(4).

11. In Hozier we stated:

    An employee who never receives information about gaps in the
    coverage of his benefits package . . . is unable to make fully
    informed decisions about whether to purchase alternative insurance,
    or even to seek alternative employment. . . . It cannot, however,

    plausibly be deemed relevant to a court's construction of "the terms
    of [a] plan" where, as here, the plan defines the scope of the
    entitlements it creates without any reference to reporting and
    disclosure issues."

Hozier, 908 F.2d at 1168.

12/ Even if the plans defined the scope of the benefit entitlements withreference to disclosure and reporting issues, Jordan would still have todemonstrate that the Qualified Employee Benefit Committee's denial ofhis benefit request was arbitrary and capricious in order for him torecover under § 502(a)(1)(B), as the plans provide the Committee with therequisite discretionary authority. Firestone Tire & Rubber Co. v. Bruch,489 U.S. 101 (1989).

13/ The district court did not have the benefit of this decision as it wasdecided after the district court granted summary judgment.

14. Because the district court held there was no cognizable § 502(a)(3)claim, it did not reach the fiduciary breach issue, even though itdiscussed the claims' merits.

15/ Under the plans' disclosure requirements found in § 7.2 and § 8.2,the administrator was required to provide the participants in advance oftheir retirement selection with a "written explanation of the availabilityof an election to waive the Statutory Joint and Survivor Annuity, and awritten explanation of the terms and conditions of the Statutory Benefitand the financial effect of an election under 8.3[or 7.3]."

16/ "There are three ways to acquire fiduciary status under ERISA: (1)being named as the fiduciary in the instrument establishing theemployee benefit plan, 29 U.S.C. § 1102(a)(2); (2) being named as afiduciary pursuant to a procedure specified in the plan instrument, . . .29 U.S.C. § 1102(a)(2); 29 U.S.C. § 1002(38); and (3) being a fiduciaryunder the provisions of 29 U.S.C. § 1002(21)(A) . . . ." Glaziers &Glassworkers Union Local No. 252 Annuity Fund v. Newbridge Securities,Inc., 93 F.3d 1171, 1179 (3d Cir. 1996).

17/ The Restatement (Second) of Trusts provides:

    d. Duty in the absence of a request by the beneficiary. Ordinarily
    the trustee is not under a duty to the beneficiary to furnish
    information to him in the absence of a request for such information.
    . . . In dealing with the beneficiary on the trustee's own account,
    however, he is under a duty to communicate to the beneficiary all
    material facts in connection with the transaction which the trustee
    knows or should know. . . . Even if the trustee is not dealing with
    the beneficiary on the trustee's own account, he is under a duty to
    communicate to the beneficiary material facts affecting the interest
    of the beneficiary which he knows the beneficiary does not know
    and which the beneficiary needs to know for his protection in
    dealing with a third person.

Restatement (Second) of Trusts § 173, comment d (1959) "(cited in,Bixler, 12 F.3d at 1300).

18/ Similar tests for materiality have been adopted in other contexts. Arepresentation is material for purposes of the Immigration andNationality Act if it "had a natural tendency to influence the decisions of. . ." a party. Kungys v. United States, 485 U.S. 759, 772 (1988). Also "anomitted fact is material [for purposes of the securities law] if there is a`substantial likelihood that, under all the circumstances, the omitted factwould have assumed actual significance in the deliberations of thereasonable shareholder.' " Shapiro v. UJB Fin. Corp., 964 F.2d 272, 280n.11 (3d Cir.) (quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438,

449 (1976)), cert. denied, 506 U.S. 934 (1992). Additionally, Black's LawDictionary defines a "Material representation" as something that "relatesto a matter upon which plaintiff could be expected to rely in determiningto engage in the conduct in question." Black's Law Dictionary at 977 (6thed. 1990).

19/ "Summary judgment on `the question of materiality' is appropriateonly if `reasonable minds cannot differ.' " Fischer v. Philadelphia Elec.Co., 994 F.2d 130, 135 (3d Cir.) (quoting TSC Indus., Inc. v. NorthwayInc., 426 U.S. 438, 450 (1976)), cert. denied, 510 U.S. 1020 (1993).

20/ As stated previously, Jordan's timeliness claim based on ERISA'sdisclosure requirements is not cognizable. Ackerman, 55 F.3d 117 (3dCir. 1995).