Romero v. Allstate Corp.

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit

4-14-2005

Romero v. Allstate Corp
Precedential or Non-Precedential: Precedential

Docket No. 04-2161

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 PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 04-2161

GENE ROMERO; JAMES T. BEVER;
ROGER T. BOYD; RICHARD A. CARRIER;
PAUL R. COBB; CRAIG K. CREASE;
SYLVIA CREWS-KELLY; DWIGHT F. ENGLISH;
DOUGLAS F. GAFNER; RONALD W. HARPER;
MICHAEL P. KEARNEY; THOMAS A. KEARNEY;
LARRY H. LANKFORD, SR.; DAVID C. LAWSON;
NATHAN R. LITTLEJOHN, II; REBECCA R. MASLOWSKI;
CRAIG A. MILLISON; JAMES E. MOOREHEAD;
EDWARD T. MURRAY, III; CAROLYN L. PENZO;
CHRISTOPHER L. PERKINS; RICHARD E. PETERSON;
JAMES P. PILCHAK; PAULA REINERIO;
PAULA M. SCHOTT; DONALD L. TRGOVICH;
RICHARD S. WANDNER; TIMOTHY WEISMAN;
ERNIE P. WENDT; ANTHONY T. WIKTOR;
JOHN W. WITTMAN; RALPH J. WOLVERTON,

Appellants

v.

THE ALLSTATE CORPORATION;
ALLSTATE INSURANCE COMPANY;
AGENTS PENSION PLAN;
 ADMINISTRATIVE COMMITTEE,
IN ITS CAPACITY AS ADMINISTRATOR
OF THE AGENTS PENSION PLAN

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 01-cv-06764)
District Judge: Honorable John P. Fullam

Argued January 24, 2005
Before: SCIRICA, Chief Judge, RENDELL,
and FISHER, Circuit Judges.

(April 14, 2005)

Paul Anton Zevnik
Michael J. Wilson
Morgan, Lewis & Bockius
1111 Pennsylvania Avenue, N.W.
Washington, DC 20004

Daniel Wolf (Argued)
Sprenger & Lang
1614 Twentieth Street, N.W.
Washington, DC 20009
Attorneys for Appellants

2
Richard C. Godfrey
Kirkland & Ellis
200 East Randolph Drive, Suite 6500
Chicago, IL 60601

Peter A. Bellacosa (Argued)
Kirkland & Ellis
153 East 53rd Street
Citigroup Center
New York, NY 10022

Edward F. Mannino
Katherine Menapace
Akin, Gump, Strauss, Hauer & Feld
2005 Market Street
One Commerce Square, Suite 2200
Philadelphia, PA 19103
Attorneys for Appellees

OPINION OF THE COURT

FISHER, Circuit Judge.

A group of plaintiffs seeking to represent different classes of
current and retired insurance agents of the Allstate Insurance
Company brought this action alleging four counts under the
Employee Retirement Income Security Act of 1974 (“ERISA”)
against The Allstate Corporation, the Allstate Insurance Company,
the Agents Pension Plan (“Pension Plan”) and the Administrative
Committee in its capacity as administrator of the Agents Pension Plan

3
(“Plan Administrator”) (collectively herein “Allstate”). The three
ERISA non-fiduciary duty claims, alleged under 29 U.S.C.
§§ 1054(g)(2) and (h), were dismissed by the United States District
Court for the Eastern District of Pennsylvania as time-barred on the
face of the complaint. The ERISA breach of fiduciary duty claim,
alleged under 29 U.S.C. § 1104(a), was also dismissed on the ground
that it was duplicative of claims in two related actions then pending
before the District Court. We will reverse and remand for further
proceedings and in so doing make explicit that the federal discovery
rule should be used to determine the date of accrual of the non-
fiduciary duty claims alleged here.

I. FACTS

For many years Allstate typically hired, as employees, the
agents who sold its policies and handled its claims. These “employee
agents” operated under one of two types of employment contracts
known as “R830" and “R1500.” At some point, Allstate determined
it would be better served by agents operating as “independent
contractors,” and thereafter, all newly hired agents were independent
contractors providing services to Allstate under a contract known as
“R3001.” Beginning in the early 1990's, Allstate also set out to
persuade current employee agents to convert to independent
contractor status.

Allstate maintained a Pension Plan subject to ERISA. Prior
to 1991, full-time employee agents became participants in the Pension
Plan after one year of service and were fully vested after five years.
The pre-1991 version of the Pension Plan contained an attractive
early retirement feature under which agents with at least 20 years of
continuous “credited service” could opt to retire at age 55 and receive
an enhanced early retirement benefit which assumed the retiree had
continued to work until age 63. That version of the Pension Plan

4
provided that “[a]ll service” with Allstate “shall count as ‘Credited
Service’” for purposes of accruing retirement benefits, including the
enhanced early retirement benefit.

In November 1991, Allstate amended the Pension Plan
(retroactive to January 1, 1989) to phase out the enhanced early
retirement benefit over a period of eight years (“Phase-Out
Amendment”).1 The Phase-Out Amendment was re-adopted in
December 1994. Plaintiffs contend that at this time, however, they
could not have been affected by the Phase-Out Amendment because
they had not yet reached 55 years of age and completed 20 years of
credited service.

Also in December 1994, the Pension Plan was amended to
alter the definition of “credited service.” The new definition provided
that only “an Agent’s employment [by Allstate] as an employee shall
count as ‘Credited Service’” (“Credited Service Amendment”). A

1
The Phase-Out Amendment reduced the enhanced early
retirement benefit for employee agents who attained eligibility for
early retirement after January 1, 1991 and eventually eliminated it for
employee agents retiring after 1999. Allstate contends that the Phase-
Out Amendment was adopted initially in November 1991 and re-
adopted in December 1994 in response to the Tax Reform Act of
1986 (“TRA-86”) and related events, including the litigation in Scott
v. Administrative Comm. of the Allstate Agents Pension Plan, No. 93-
1419 CIV-J-10, 1995 WL 661096 (M.D. Fla. 1995), rev’d, 113 F.3d
1193 (11th Cir. 1997). Why the amendment was adopted and re-
adopted, and how that activity was undertaken, has no bearing on our
decision in this appeal which focuses on the statute of limitations
issues that have arisen at this threshold stage of the litigation. We do,
however, appreciate that Allstate intends to defend the amendment’s
legality and effectiveness in terms of TRA-86 and related events.

5
new appendix added to the written Pension Plan explained that agents
who entered into an agreement to provide “substantially similar”
services to Allstate as independent contractors under an R3001
contract would be denied early retirement. Thus, newly hired agents
and former employee agents who had converted to the R3001 contract
would no longer have their service to Allstate count for purposes of
early retirement. In January 1996, Allstate amended the Pension Plan
again, this time adding a new provision to make “employee” a
defined term, and to exclude therefrom any person providing services
to Allstate under an R3001 contract (“Employee Definition
Amendment”).

As the decade advanced, Allstate stepped up it efforts to
persuade remaining employee agents to convert to independent
contractor status. In 1996, Allstate announced it would terminate the
contracts of some 1,600 employee agents in California unless they
converted or retired. In November 1999, Allstate embarked on a
nationwide conversion effort, in the wake of which most remaining
employee agents either converted and signed a comprehensive release
of all claims against Allstate in conjunction therewith, or retired.
Plaintiffs contend that it was only at this time that they could have
known how the Credited Service Amendment would affect them
because it was only then that they converted from employee to
independent contractor status and only then that they were denied
credited service under the Plan. Allstate and its plan administrator
consistently represented to the employee agents considering
conversion during this time period that any service to Allstate
provided after conversion would not count towards early retirement
under the Pension Plan.

6
 II. PROCEDURAL HISTORY

On December 20, 2001, thirty-two named plaintiffs, seeking
to represent three different classes, instituted the present action.
Plaintiffs in the first group, who had converted to the R3001 contract
at a time when they had accrued less than 20 years of credited service,
sought to represent a class of “converted agents.” Plaintiffs in the
second group, who had retired rather than convert to the R3001
contract at a time when they had accrued less than 20 years of
credited service, sought to represent a class of “retired agents.”
Plaintiffs in the third group (which included all of the named
plaintiffs) sought to represent a class of employee agents who
(1) were hired by Allstate as employee agents before January 1, 1992,
(2) remained in Allstate’s service as employee agents after
December 31, 1991, and (3) had not yet attained age 55 by
December 31, 1991 (the “enhanced early retirement benefit class”).

The Complaint contained four counts under ERISA. In Count
I, plaintiffs seeking to represent the class of converted agents alleged
that the 1994 Credited Service Amendment to the Pension Plan and
the 1996 Employee Definition Amendment to the Pension Plan
violated ERISA § 204(g)(2), 29 U.S.C. § 1054(g)(2), because the
amendments had the effect of “eliminating or reducing an early
retirement benefit.”2 In Count II, plaintiffs seeking to represent the

2
The version of ERISA § 1054(g) in effect when the
Complaint in this action was filed provided in full:

(g) Decrease of accrued benefits through amendment
of plan
(1) The accrued benefit of a participant under
a plan may not be decreased by an amendment
of the plan, other than an amendment

7
described in section 1082(c)(8) or 1441 of this
title.
(2) For purposes of paragraph (1), a plan
amendment which has the effect of--
(A) eliminating or reducing an early
retirement benefit or a retirement-type
subsidy (as defined in regulations), or
(B) eliminating an optional form of
benefit,
with respect to benefits attributable to service
before the amendment shall be treated as
reducing accrued benefits. In the case of a
retirement-type subsidy, the preceding
sentence shall apply only with respect to a
participant who satisfies (either before or after
the amendment) the preamendment conditions
for the subsidy. The Secretary of the Treasury
may by regulations provide that this
subparagraph shall not apply to a plan
amendment described in subparagraph (B)
(other than a plan amendment having an effect
described in subparagraph (A)).
(3) For purposes of this subsection, any--
(A) tax credit employee stock
ownership plan (as defined in section
409(a) of Title 26), or
(B) employee stock ownership plan (as
defined in section 4975(e)(7) of such
Code),

8
class of retired agents alleged that Allstate and its plan administrator
violated the fiduciary duty provision of ERISA § 404(a), 29 U.S.C.
§ 1104(a), during the conversion efforts in representing to employee
agents choosing between conversion or retirement that any service
provided under an R3001 contract would not count towards the
Pension Plan. In Count III, plaintiffs seeking to represent the
enhanced early retirement benefit class alleged that the 1991 Phase-
Out Amendment violated ERISA § 204(g) because it too had the
effect of “eliminating or reducing an early retirement benefit.”3 In

shall not be treated as failing to meet the
requirements of this subsection merely
because it modifies distribution options in a
non-discriminatory manner.

29 U.S.C. § 1054(g) (West 2001) (emphasis added). Subsection (g)
was amended in 2001, applicable to “years beginning after Dec. 31,
2001.” See Historical and Statutory Notes to 29 U.S.C. § 1054 (West
2004) (citing section 645(a)(3) of Public Law 107-16). These
amendments added an additional sentence to ERISA § 1054(g)(2),
providing: “The Secretary of the Treasury shall by regulations provide
that this paragraph shall not apply to any plan amendment which
reduces or eliminates benefits or subsidies which create significant
burdens or complexities for the plan and plan participants, unless
such amendment adversely affects the rights of any participant in a
more than de minimis manner.” In addition, the amendments added
new subparagraphs (g)(4) and (g)(5) to address the applicability of
subsection (g) to changes in plan distribution forms. See 29 U.S.C.
§ 1054(g) (West 2004).
3
Counts I and III, alleging violations of ERISA § 1054(g)(2),
also alleged violations of Section 411(d)(6) of the Internal Revenue
Code, 26 U.S.C. § 411(d)(6). Section 411 provides in subsection

9
(d)(6), in relevant part (in language mostly tracking that of ERISA
§ 1054(g)):

(6) Accrued benefit not to be decreased by
amendment.
(A) In general. A plan shall be treated as not
satisfying the requirements of this section if
the accrued benefit of a participant is
decreased by an amendment of the plan, other
than an amendment described in section
412(c)(8), or section 4281 of the [ERISA].
(B) Treatment of certain plan amendments.
For purposes of subparagraph (A), a plan
amendment which has the effect of
(i) eliminating or reducing an early
retirement benefit or a retirement-type
subsidy (as defined in regulations), or
(ii) eliminating an optional form of
benefit,
with respect to the benefits attributable to
before the amendment shall be treated as
reducing accrued benefits. In the case of a
retirement-type subsidy, the preceding
sentence shall apply only with respect to a
participant who satisfies (either before or after
the amendment) the preamendment conditions
for the subsidy. The Secretary of the Treasury
shall by regulations provide that this
paragraph shall not apply to any plan
amendment which reduces or eliminates
benefits or subsidies which create significant
burdens or complexities for the plan and plan

10
Count IV, the same plaintiffs as in Count III (i.e., the enhanced early
retirement benefit class) alleged that Allstate and its plan
administrator violated ERISA § 204(h), 29 U.S.C. § 1054(h),4 by

participants, unless such amendment adversely
affects the rights of any participant in a more
than de minimis manner. The Secretary of the
Treasury may by regulations provide that this
subparagraph shall not apply to a plan
amendment described in clause (ii) (other than
a plan amendment having an effect described
in clause (i)).

26 U.S.C. § 411(d)(6)(A) and (B).
4
The version of ERISA § 204(h) applicable to the 1991 Phase-
Out Amendment provided that “[a] plan ... may not be amended so as
to provide for a significant reduction in the rate of future benefit
accrual, unless, after adoption of the plan amendment and not less
than 15 days before the effective date of the plan amendment, the plan
administrator provides a written notice, setting forth the plan
amendment and its effective date” to, inter alia, each plan participant.
29 U.S.C. § 1054(h) (West 1999). ERISA § 204(h) was substantially
revised in 2001 by amendment applicable to “any plan amendment
taking effect on or after June 7, 2001 ...” See Historical and Statutory
Notes to 29 U.S.C. § 1054 (referring to Section 659(c) of Public Law
107-16). The revised ERISA § 204(h) did not alter the basic notice
requirement, but rather set forth requirements for the notice itself and
further provided that:

... [i]n the case of any egregious failure to meet any
requirement of this subsection with respect to any
plan amendment, the provisions of the applicable
pension plan shall be applied as if such plan
amendment entitled all applicable individuals to the
greater of
(i) the benefits to which they would have
been entitled without regard to such

11
failing to provide notice to plan participants when it added the 1991
Phase-Out Amendment, which was alleged to have the effect of
significantly reducing “the rate of future benefit accrual.” See A. 65
(Compl. ¶ 120) (“The November 1991 amendments, under which
Allstate purported to phase out and ultimately eliminate the
[enhanced] early retirement benefits, caused a significant reduction
in early retirement benefits or subsidies that agents accrued under the
Pension Plan”); see also ERISA § 204(h)(9), 29 U.S.C. § 1054(h)(9).
Allstate moved to dismiss each of the four counts under Fed.R.Civ.P.
12(b)(6) on numerous grounds, including that the non-fiduciary duty
claims alleged in Counts I, III and IV were time-barred.

Pending before the District Court at the same time as the
present action were two other actions challenging the legality of
Allstate’s conduct over the course of the conversion process. In the
first action – dubbed “Romero I” – twenty-nine plaintiffs (including
almost all of the same plaintiffs in the present action), also seeking to
represent various classes, alleged seven counts against Allstate and its
President/Chief Executive Officer. The Romero I plaintiffs sought to
invalidate the comprehensive release signed by agents who had
converted on the grounds that it violated ERISA § 510, 29 U.S.C.
§ 1140,5 the Age Discrimination in Employment Act (“ADEA”), and

amendment, or
(ii) the benefits under the plan with regard
to such amendment

29 U.S.C. § 1054(h)(6)(A) (West 2004 Supp.). Additionally, ERISA
§ 204(h) as amended provides that “[f]or purposes of this subsection,
a plan amendment which eliminates or reduces any early retirement
benefit or retirement-type subsidy (within the meaning of subsection
(g)(2)(A)) shall be treated as having the effect of reducing the rate of
future benefit accrual.” ERISA § 204(h)(9), 29 U.S.C § 1054(h)(9).
5
This section of ERISA provides in pertinent part:

It shall be unlawful for any person to discharge, fine,
suspend, expel, discipline, or discriminate against a

12
the common law. They also alleged interference with employment
and retaliation in violation of ERISA § 510, discriminatory treatment
in violation of the ADEA, breach of the R830 and R1500 contracts,
and breach of a fiduciary duty described in the Romero I complaint as
one of “good faith and fair dealing” said to have arisen from the
“special confidence” reposed in Allstate by class members. In the
second pending action – dubbed “the EEOC action” – the Equal
Employment Opportunity Commission brought suit against the
Allstate Insurance Company, alleging violations related to the
conversion process of Title VII of the Civil Rights Act of 1964, Title
I of the Civil Rights Act of 1991, the ADEA, and the Americans with
Disabilities Act.

The District Court dismissed the present action in a single
paragraph of a larger memorandum opinion addressing motions then
pending in all three actions, reasoning:

To the extent that the plaintiffs in [the present action]
complain about the amendments to the pension plan
made in 1991, 1994, and 1996, their complaint, filed
December 20, 2001 is, on its face, time-barred. To
the extent that they lost pension entitlements when
they became independent contractors or former
employees, that consequence would be an element of
damages if they establish that their change of status
was a breach of contract or otherwise illegal – claims
which are being asserted in Romero I and the EEOC

participant or beneficiary for exercising any right to
which he is entitled under the provisions of an
employee benefit plan ..., or for the purpose of
interfering with the attainment of any right to which
such participant may become entitled under the plan,
this subchapter or the Welfare and Pension Plans
Disclosure Act.

29 U.S.C. § 1140.

13
 action. I conclude that [the present action] should be
dismissed in its entirety.

(emphasis added). This appeal followed.

III. JURISDICTION AND STANDARD OF REVIEW

The District Court had jurisdiction over the present action
pursuant to 28 U.S.C. § 1331 and ERISA §§ 502(e)(1) and (f), 29
U.S.C. §§ 1132(e)(1) & (f). This Court has appellate jurisdiction to
review the final order of the District Court pursuant to 28 U.S.C.
§§ 1291 and 1294(1). We exercise plenary review of the District
Court’s dismissal of Counts I, III and IV of the Complaint on statute
of limitations grounds under Fed.R.Civ.P. 12(b)(6). Lake v. Arnold,
232 F.3d 360, 365 (3d Cir. 2000). For purposes of conducting this
review, we take all facts alleged in the Complaint as true and afford
plaintiffs, as the non-movants, the benefit of all reasonable inferences
to be drawn therefrom. See id. We also exercise plenary review over
the District Court’s determination that Count II was duplicative of the
claims then pending in Romero I and the EEOC action, as that
conclusion was based on a legal characterization of the Complaint.

IV. ACCRUAL

A. Applicable Limitations Periods

ERISA contains a statute of limitations for claims, like Count
II here, alleging breach of fiduciary duty under ERISA § 404(a).6

6
Such claims must be brought within:

(1) six years after (A) the date of the last
action which constituted a part of the breach
or violation, or (B) in the case of an omission,
the latest date on which the fiduciary could
have cured the breach or violation, or
(2) three years after the earliest date on which
the plaintiff had actual knowledge of the

14
ERISA does not, however, contain a statute of limitations for non-
fiduciary duty claims, such as those alleged in Counts I, III, and IV.
In Gluck v. Unisys Corp., 960 F.2d 1168, 1180 (3d Cir. 1992), this
Court instructed that the “limitations period applicable to the forum
state claim most analogous to the ERISA claim at hand” is to be
borrowed and applied to an ERISA non-fiduciary duty claim. In
Gluck, this Court held that an ERISA § 204(g) claim, said to involve
“complex issues of statutory interpretation,” had no counterpart in
Pennsylvania law, and therefore the applicable statute of limitations
was Pennsylvania’s general six-year period. See 960 F.2d at 1181-82
(applying 42 Pa. C.S.A. § 5527 (Purdons Supp. 1991)). Gluck thus
dictates that Counts I and III of the Complaint in the present action,
which allege violations of ERISA § 204(g), are subject to a six-year
limitations period.

This Court has never addressed the limitations period
applicable to an ERISA § 204(h) claim; indeed it does not appear that
any court has done so. The parties in the present action appear to
assume that Pennsylvania’s six-year limitations period applicable to
Count III applies also to the ERISA § 204(h) claim alleged in Count
IV, as both challenges involve the same plan amendment. The first
step in borrowing a local time limitation is to determine the “state
claim most analogous to the ERISA claim pursued.” Gluck, 960 F.2d
at 1179. The parties have not identified an analogous state law claim
and we have not found one. We do note, however, that as pleaded,
and as characterized by plaintiffs before this Court, the claims in
Count III and IV appear to be intrinsically tied together in that it is the
effect of the amendment challenged in Count III that plaintiffs say
triggered the notice requirement alleged to have been violated in
Count IV. In this situation, we deem it appropriate to apply

breach or violation;
except that in the case of fraud or concealment, such
action may be commenced not later than six years
after the date of discovery of such breach or violation.

ERISA § 413, 29 U.S.C. § 1113 (emphasis added). This statute of
limitations governs Count II.

15
Pennsylvania’s six-year limitations period. See 42 Pa.C.S. § 5527
(“Any civil action or proceeding which is neither subject to another
limitation specified in this subchapter nor excluded from the
application of a period of limitation by section 5531 (relating to no
limitation) must be commenced within six years”); see also Gluck,
960 F.2d at 1182.7

B. Date of Accrual

The principal issue before us is when the causes of action
alleged in Counts I, III, and IV accrued for limitations purposes – in
other words, when the clock on the applicable six-year statute of
limitations began to tick. The date of accrual of the ERISA non-
fiduciary duty claims asserted is determined as a matter of federal
common law. See PaineWebber Inc. v. Faragalli, 61 F.3d 1063,
1066-67 (3d Cir. 1995) (stating, in context of a claim to compel
arbitration under the Federal Arbitration Act, “[w]hile a state statute
of limitations may be ‘borrowed’ for a federal claim, federal, not
state, law governs as to when the cause of action accrues”); see also
Admin. Comm. of the Wal-Mart Stores, Inc. v. Soles, 336 F.3d 780,
785 (8th Cir. 2003) (stating in ERISA action, “[f]ederal law also
determines when the cause of action accrues”); Union Pacific R.R.
Co. v. Beckham, 138 F.3d 325, 330 (8th Cir.) (stating in ERISA
action, “despite determining the limitations period by analyzing state
law, this Court looks to federal common law to determine the time at
which a plaintiff’s federal claim accrues”), cert. denied, 525 U.S. 817
(1998).

7
Because we recognize that an ERISA § 204(h) claim can
arise in a context independent of ERISA § 204(g)(2), see, e.g.,
Davidson v. Canteen Corp., 957 F.2d 1404 (7th Cir. 1992) (challenge
to the effectiveness of a pension plan amendment that significantly
reduced the rate of future benefit accrual solely on the ground that the
employer failed to give the required notice), we do not decide the
statute of limitations applicable to every possible iteration of an
ERISA § 204(h) claim, but only that applicable to the ERISA
§ 204(h) claim made here.

16
 The District Court did not explicate its reasoning for
dismissing Counts I, III and IV of the Complaint as time-barred. We
assume, as do the parties before us, that the decision was based at
least in part on this Court’s decision in Gluck. To the extent,
however, that the District Court interpreted Gluck to dictate that
Counts I, III and IV accrued on the date the challenged amendments
were made to the Pension Plan, we reject this reading. Gluck held
only that the ERISA § 204(g) claim alleged in that case accrued, at
the earliest, on the date of the plan amendment. See 960 F.2d at 1182
(“The employees’ claims asserting failure to vest the residual, failure
to distribute the surplus, and improper reduction of early retirement
benefits are claims founded on complex issues of statutory
interpretation. They are subject to Pennsylvania’s six-year statute of
limitations. Because they accrued at the earliest on July 1, 1984 –
the effective date of the amendment – they have been timely
interposed.”) (emphasis added). There was no need to determine in
Gluck exactly when the claim accrued because, even assuming the
earliest date (i.e., the date the plan was amended), the claim was
timely interposed.8 Having clarified that Gluck does not dictate the
dismissal of Counts I, III, and IV, we turn now to identifying the

8
This Court also stated in Gluck, “[t]he validity of the
employees’ claims based on section 204(g), 29 U.S.C. § 1054(g), to
non-contributory and contributory early retirement benefits under [the
plan] depends solely on the actual date of adoption of the 1984
amendment.” 960 F.2d at 1185 (emphasis added). This statement,
however, when placed in proper context, does not express a legal
principle that an ERISA § 204(g) claim accrues on the date of a plan
amendment. Rather, the date of the plan amendment was relevant in
this portion of Gluck for purposes of determining whether ERISA
applied. See id. (“ERISA permitted the reduction of early retirement
benefits prior to July 31, 1984, but not after. Because an ERISA plan
document may not be amended informally, a formal amendment
adopted after July 30, 1984, would be ineffective, even if dated
retroactively. It appears, however, that the employees failed to raise
this argument in the district court. Their complaint alleges July 1,
1984, as the effective date of amendment and is silent as to the date
the amendment was adopted.”) (internal citations omitted).

17
proper standard for determining when those claims accrued for
limitations purposes.

Typically in a federal question case, and in the absence of any
contrary directive from Congress, courts employ the federal
“discovery rule” to determine when the federal claim accrues for
limitations purposes. See Keystone Ins. Co. v. Houghton, 863 F.2d
1125, 1127-28 (3d Cir. 1988) (citing, e.g., Sandutch v. Muroski, 684
F.2d 252 (3d Cir. 1982)), abrogated on other grounds by Klehr v.
A.O. Smith Corp, 521 U.S. 179 (1997); see also Union Pacific, 138
F.3d at 330-31 (citing, inter alia, Conners v. Hallmark & Son Coal
Co., 935 F.2d 336, 342 (D.C. Cir. 1991) (listing cases (including
Houghton) in which eight federal courts of appeals had held that “the
discovery rule is the general accrual rule in federal courts ... [and] is
to be applied in all federal question cases”) and Cada v. Baxter
Healthcare Corp., 920 F.2d 446, 450 (7th Cir. 1990) (holding that the
discovery rule is “read into statutes of limitations in federal-question
cases (even when those statutes of limitations are borrowed from state
law)”)); see also Admin. Comm. of the Wal-Mart Stores, 336 F.3d at
786 (citing Union Pacific and applying the discovery rule). Under the
general formulation of the discovery rule, a claim will accrue when
the plaintiff discovers, or with due diligence should have discovered,
the injury that forms the basis for the claim. See, e.g., Union Pacific,
138 F.3d at 330. The rule that has developed in the more specific
ERISA context is that an ERISA non-fiduciary duty claim will accrue
after a claim for benefits due under an ERISA plan has been made
and formally denied. See id. at 330 (citing Cotter v. Eastern Conf. of
Teamsters Retirement Plan, 898 F.2d 424 (4th Cir. 1990)); see also
Daill v. Sheet Metal Workers’ Local 73 Pension Fund, 100 F.3d 62,
65 (7th Cir. 1996); Tanzillo v. Local Union 617, Int’l Broth. of
Teamsters, 769 F.2d 140, 143-44 (3d Cir. 1985). Occasionally,
however, an ERISA non-fiduciary claim will accrue before a formal
application is made and/or before benefits are formally denied, such
as “when there has been a repudiation [of the benefits] by the
fiduciary which is clear and made known to the beneficiar[y].” Miles
v. N.Y. State Teamsters Conf. Pension and Retirement Fund, 698 F.2d
593, 598 (2d Cir.) (internal citations omitted, emphasis in the
original), cert. denied, 464 U.S. 829 (1983). See also Daill, 100 F.3d

18
at 65-67 (“a cause of action accrues upon a clear and unequivocal
repudiation of rights under the pension plan which has been made
known to the beneficiary”); Union Pacific, 138 F.3d at 330-31 (citing
Miles); Carey v. Int’l Broth. of Elec. Workers Local 363 Pension
Plan, 201 F.3d 44, 47-48 (2d Cir. 1999) (listing cases using the clear
repudiation standard in the absence of a formal application for
benefits). This “clear repudiation” concept is consistent with the
federal discovery rule and, in the specific context of ERISA, avoids
a myriad of ills that would accompany any rule that required the
denial of a formal application for benefits before a claim accrues.
See, e.g., Daill, 100 F.3d at 66-67; Carey, 201 F.3d at 48-49. We too
have applied the “clear repudiation” concept in numerous cases
involving ERISA, see Henglein v. Colt Industries Operating Corp.,
260 F.3d 201, 214 (3d Cir. 2001) (“In the circumstances here, where
there was an outright repudiation at the time the employees’ services
were terminated, it is reasonable to expect that the statute of
limitations [on plaintiffs’ claim that they were entitled to shut-down
benefits under an ERISA-governed plan] began to run at that point.”),
cert. denied, 535 U.S. 955 (2002); see also In re Unisys Corp. Med.
Ben. ERISA Litigation, 242 F.3d 497 (3d Cir.) (applying the federal
common law discovery rule in the context of ERISA fiduciary duty
claim), cert. denied, 534 U.S. 1018 (2001), and find it appropriate to
do so here. Accordingly, we hold that when an ERISA plan is
amended but the fact that the amendment actually affects a particular
employee or group of employees cannot be known until some later
event, the cause of action of the employee will not accrue until such
time as the employee knew or should have known that the
amendment has brought about a clear repudiation of certain rights that
the employee believed he or she had under the plan.

We have not had a prior opportunity to consider whether the
discovery rule should govern in the specific context of an ERISA
§ 204(g) claim or whether such a claim should be deemed to have
accrued as of the date of adoption or effective date of the challenged
plan amendment. The basic policies undergirding limitations periods
generally, such as rapid resolution of disputes, repose for defendants,
and avoidance of litigation involving lost or distorted evidence, may
be said to favor a rule that would tie the date of accrual to the date of

19
the plan amendment, and such concerns are magnified in the context
of an ERISA pension plan funded on a long-term, prospective basis.
Additionally, there is intrinsic appeal to adopting such a rule for an
ERISA § 204(g) claim because a claim pursuant to that provision
challenges the amendment itself as having the effect of “eliminating
or reducing an early retirement benefit.” Other courts, however, have
rejected a rule that would tie the date of accrual to the date of
amendment, both in the context of claims alleged under ERISA
§ 204(g) and other ERISA non-fiduciary duty claims. See, e.g.,
Meagher v. Int’l Assoc. of Machinists and Aerospace Workers
Pension Plan, 856 F.2d 1418 (9th Cir. 1988) (reversing dismissal of
ERISA § 204(g) claim as time-barred from the date of amendment
and reasoning that plaintiffs were harmed by the wrongful application
of the challenged amendment, not by its enactment), cert. denied, 490
U.S. 1039 (1989); Laurenzano v. Blue Cross and Blue Shield of
Mass., Inc. Retirement Income Trust, 134 F. Supp.2d 189 (D. Mass.
2001) (refusing to find ERISA challenge to lump sum distribution
paid in lieu of an annuity that did not include a cost of living
adjustment component commenced in 1999 time-barred even though
the lump sum option had been in place since 1976); DeVito v.
Pension Plan of Local 819 I.B.T. Pension Fund, 975 F. Supp. 258
(S.D.N.Y. 1997) (refusing to find ERISA challenge to pension benefit
calculation formula commenced in 1990 time-barred even though
formula had been in place since 1976), abrogated on other grounds
by Strom v. Goldman, Sachs & Co., 202 F.3d 138 (2d Cir. 1999)).
We find the reasoning of these cases to be persuasive. A rule that
unwaveringly ties the date of accrual to the date of amendment would
have the undesirable effect of requiring plan participants and
beneficiaries “likely unfamiliar with the intricacies of pension plan
formulas and the technical requirements of ERISA, to become
watchdogs over potential [p]lan errors and abuses.” DeVito, 975 F.
Supp. at 265. It would also tend to preclude claims by those who
commenced employment after the limitations period applicable to the
particular ERISA claim has elapsed. See id. at 265 n.9. Additionally,
it would impose an unfair duty of clairvoyance on employees, such as
those in this case, who allege that an amendment’s detrimental effect
on them was triggered not at the time of its adoption, but rather at
some later time by a subsequent event. We eschew such a rule in

20
light of the underlying purposes of ERISA and its disclosure
requirements, see In re Unisys Corp. Retiree Med. Ben. ERISA
Litigation, 58 F.3d 896, 901 (3d Cir. 1995) (“ERISA is a
comprehensive statute enacted to promote the interests of employees
and their beneficiaries in employee benefit plans, and to protect
contractually defined benefits”) (internal citations omitted); see also
Hunger v. AB, 12 F.3d 118, 119 (8th Cir. 1993) (“Congress enacted
ERISA to ensure that an employee would not lose fully vested,
accrued benefits in the event the employer terminated or amended its
pension plan”), and accordingly hold that the federal discovery rule,
which includes the “clear repudiation” concept, applies in the specific
context of the ERISA § 204(g) claims alleged here.

Use of the federal discovery rule to discern the date of accrual
does not necessarily prevent the date of amendment from serving as
the accrual date for an ERISA § 204(g) claim, as there may be
circumstances under which benefits are clearly repudiated as of that
date. On the face of this Complaint, however, one cannot determine
when such clear repudiation occurred. As to that portion of Count I
which challenges the 1994 Credited Service Amendment, the
Complaint does not allege when or if the plaintiffs were notified that
such amendment had been adopted and does not allege, or allege
other facts from which it might be inferred, that plaintiffs knew or
should have known that they would someday be forced to convert to
independent contractor status prior to the conversion drive of 1999,
such that they might understand that the amendment would apply to
them.9 While facts may be developed from which one could conclude

9
As to that portion of Count I which challenges the 1996
Employee Definition Amendment, it is not clear to us on the present
record whether a challenge under ERISA § 204(g) can be made to that
amendment standing alone since it appears that the 1996 amendment
only purported to clarify what the 1994 Credited Service Amendment
actually did – i.e., prevent agents who were not employees from
accruing credited service. If the plaintiffs can explain how the 1996
Employee Definition Amendment had an impact independent of the
1994 Credited Service Amendment, then the District Court should
reconsider its dismissal of that portion of Count I challenging the

21
that clear repudiation did occur before the actual act of conversion, it
is premature at this point to dismiss Count I on limitations grounds.
As to Count III, which challenges the Phase-Out Amendment, the
Complaint specifically alleges that notice was not given to
participants and further did not allege facts from which it might be
inferred that plaintiffs knew or should have known the effect such
amendment would have on their benefits at some point before
(roughly) December 1995 (i.e., six years before the Complaint was
filed in December 2001). Again, while facts may be developed from
which one could conclude that clear repudiation did occur at a time
which renders the subsequent assertion of the claim untimely, it is
premature at this point to dismiss Count III on limitations grounds.

The ERISA § 204(h) claim in Count IV is certainly of a
different character than the ERISA § 204(g) claims raised in Counts
I and III, and for that reason, Allstate urges this Court to recognize an
accrual date tied to the procedural requirement of the statute as
opposed to one discerned using the federal discovery rule.
Specifically, relying on the language of ERISA § 204(h), Allstate
contends that the date of accrual should be the date on which notice
should have been given – i.e., 15 days before the effective date of the
Phase-Out Amendment. See ERISA § 204(h) (“[a] plan ... may not
be amended so as to provide for a significant reduction in the rate of
future benefit accrual, unless after adoption of the plan amendment
and not less than 15 days before the effective date of the plan
amendment, the plan administrator provides a written notice setting
forth the plan amendment and its effective date”) (emphasis added).
Plaintiffs, however, urge that the federal discovery rule be used also
to discern the date of accrual for Count IV, arguing that “[a]
participant cannot have knowledge that he has not been given the
notice required under [ERISA § 204(h)] without first learning of the

1996 Employee Definition Amendment as untimely. The action, filed
on December 21, 2001, was brought within six years of the earliest
date on which that portion of Count I might have accrued (i.e.,
January 1, 1996). See Gluck, 960 F.2d at 1182. We leave the
characterization of the amendments challenged in Count I to the
District Court in the first instance.

22
existence of the benefit reducing amendment itself.” We agree with
the plaintiffs. It would make no sense, and indeed do a remarkable
disservice to the underlying purposes of ERISA and its disclosure
requirements, to deem a notice claim to have accrued before a
plaintiff knows or should have known that an amendment has the
effect which triggers the notice requirement. Thus, it is appropriate
to use the federal discovery rule to discern the date of accrual of the
ERISA § 204(h) claim made here.

Again, as with the claim alleged in Count III, it may be that
facts exist to demonstrate that plaintiffs knew or should have known
that the Phase-Out Amendment had the effect which triggered the
notice requirement at a time which would render the subsequent
assertion of Count IV untimely. Here, however, the Complaint
alleges that notice of the Phase-Out Amendment was not given, and
further alleges no other facts from which to infer that plaintiffs
otherwise knew or should have known the effect of the amendment
on their benefits and, correspondingly, that they had not received the
required notice. As with the claim in Count III, it would be premature
to dismiss Count IV on limitations grounds at this point in the
litigation.10

V. THE FIDUCIARY DUTY CLAIM

The District Court appears to have dismissed the ERISA
fiduciary duty claim alleged in Count II for the reason that it was
duplicative of the claims pending in Romero I and the EEOC action.11

10
Nothing in this opinion precludes the District Court on
remand from considering the other grounds upon which Allstate
moved to dismiss Count IV before reassessing the statute of
limitations defense.
11
Allstate did not seek dismissal of Count II as time-barred
and has not defended such as the actual basis for the dismissal before
this Court. Plaintiff-Appellants, however, do contend in the
alternative that the District Court erred in dismissing Count II as
time-barred. Like Allstate, we understand the dismissal to have been

23
We fail to see an overlap between the actions of a kind reasonably
necessary to support a dismissal based on duplication. First, the
Complaint in the present action names thirty-two plaintiffs, of which
only twenty-nine are also plaintiffs in Romero I. Obviously, the three
individuals involved in the present action but not in Romero I would
not necessarily be entitled to relief should the plaintiffs in Romero I
succeed. Second, the fiduciary duty claim alleged in this case is
different from that alleged in Romero I which is not premised on
ERISA. Thus, even if the plaintiffs in Romero I succeed on their
fiduciary duty claim, it does not necessarily follow that Allstate
breached a fiduciary duty under ERISA. Count II deserves to be
considered in its own right and in the context of this case which
sounds solely in ERISA.

premised on the overlay between the actions. We note, however, that
if a time-bar was the basis for dismissal, that too would be reversible
error. As it relates to representations made in the context of the
November 1999 conversion effort, Count II was timely interposed
because, even assuming under ERISA § 413(2) that plaintiffs knew
of the breach in November 1999, the claim was timely filed within
three years in December 2001. As it relates to representations made
during the January 1996 effort, if the limitations period applicable to
Count II was six years under ERISA § 413(1), then the period would
not have expired until January 2002, again making the claim timely.
If, however, the plaintiffs at some point had “actual knowledge” of
the alleged breach of fiduciary duty, then ERISA § 413(2) would be
triggered, making the limitations period three years, and possibly
rendering a portion of Count II untimely. A plaintiff does not have
“actual knowledge” unless he “actually knew not only of the events
that occurred which constituted the breach or violation but also that
those events supported a claim for breach of fiduciary duty or
violation under ERISA.” Richard B. Rousch, Inc. Profit Sharing
Plan v. New England Mut. Life Ins. Co., 311 F.3d 581, 586 (3d Cir.
2002) (internal citation omitted). Here, the Complaint contains
nothing to indicate that the plaintiffs understood the representations
at issue to have been unlawful when communicated. Hence, it would
be premature to dismiss Count II on this basis at this time.

24
 Allstate also asks that we affirm the dismissal of Count II on
the alternative ground that it fails to state a claim. “[I]n order to make
out a breach of fiduciary duty claim ..., a plaintiff must establish each
of the following elements: (1) the defendant’s status as an ERISA
fiduciary acting as a fiduciary; (2) a misrepresentation on the part of
the defendant; (3) the materiality of that misrepresentation; and
(4) detrimental reliance by the plaintiff on the misrepresentation.”
Daniels v. Thomas & Betts Corp., 263 F.3d 66, 73 (3d Cir. 2001).
“[W]hen a plan administrator affirmatively misrepresents the terms
of a plan or 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 individual plan participants and beneficiaries.” In
re Unisys Corp. Retiree Med. Ben. ERISA Litigation, 57 F.3d 1255,
1264 (3d Cir. 1995). Allstate’s theory in support of a merits-based
dismissal is that it and its plan administrator cannot be understood to
have made any misrepresentations to employee agents considering
retirement during the 1996 and 1999 conversion efforts because the
employee agents were told exactly what the Pension Plan then stated.

We decline as premature Allstate’s invitation to affirm the
dismissal of Count II on this ground. The Complaint puts at issue
Allstate’s knowledge at the time it made the challenged
representations. See A. 62-63 (Compl. ¶¶ 109 (“The representation
... that former ‘employee agents’ ... who continued to provide
compensated ‘service’ to Allstate under the R3001 contract would no
longer be eligible to accumulate ‘service’ for purposes of eligibility
for early retirement benefits and [enhanced early retirement] benefits
under the Pension Plan was materially false and misleading. ...”); 110
(“At the time [the representations were made], Allstate and/or [the
Plan Administrator] knew or should have known of the falsity of
th[ose] representation[s]”); and 112 (“the [Plan Administrator] had a
duty to correct the aforementioned misrepresentation , [and] ... failed
to do so ...”)). Even assuming the representations accurately
described the terms of the written Pension Plan, if the representations
were made for the purpose of intentionally misleading those
considering conversion or retirement, then these representations may
still give rise to a breach of fiduciary duty under ERISA.

25
Accordingly, dismissal of Count II at this early stage of the litigation
is inappropriate.

V. CONCLUSION

For the foregoing reasons, that portion of the order of the
District Court entered on March 31, 2004, which dismissed Civil
Action No. 01-6764 in its entirety with prejudice will be reversed and
the matter will be remanded for further proceedings consistent with
this opinion.

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