Bell v. Pfizer, Inc.

07-5390-cv
Diana Bell v. Pfizer, Inc. Stock
and Incentive Plan et al.

1 UNITED STATES COURT OF APPEALS

2 FOR THE SECOND CIRCUIT

3 August Term, 2008

4

5 (Argued: March 10, 2009 Decided: August 30, 2010)

6 Docket No. 07-5390-cv
7

8 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

9

10 DIANA BELL,

11 Plaintiff-Appellant,

12 v.

13 PFIZER, INC., PFIZER, INC. STOCK AND INCENTIVE PLAN, PFIZER
14 EMPLOYEE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE,
15 PFIZER, INC. RETIREMENT ANNUITY PLAN, PFIZER, INC. RETIREMENT
16 COMMITTEE,
17
18 Defendants-Appellees.
19
20
21 - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
22
23 B e f o r e: WINTER and SACK, Circuit Judges, and COGAN,
24 District Judge.*
25
26
27
28
29 _________
30 *The Hon. Brian M. Cogan of the United States District
31 Court for the Eastern District of New York, sitting by
32 designation.

1
1 Appeal from a verdict in a bench trial in the United

2 States District Court for the Southern District of New York

3 (Samuel Conti, Judge), finding that appellees had not breached

4 any fiduciary duties owed to appellant under ERISA. We affirm

5 on the ground that any misstatement did not relate to an ERISA

6 plan.

7 Judge Cogan dissents in a separate opinion.

8 ROBERT D. KRAUS (Geoffrey A.
9 Mort, on the brief) Kraus &
10 Zuchlewski LLP, New York, New
11 York, for Plaintiff-Appellant.
12
13 ROBERT P. LEWIS (Peter J.
14 Engstrom, Nancy Chung Allred,
15 Vasilia F.L. Pappas, on the
16 brief), Baker & McKenzie LLP, New
17 York, New York, for Defendants-
18 Appellees.
19
20 WINTER, Circuit Judge:
21
22 Diana Bell, M.D., appeals from Judge Conti’s bench trial

23 verdict that appellees had not breached any fiduciary duties

24 owed to her under the Employee Retirement Income Security Act

25 of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq.

26 On May 31, 2003, Bell terminated her employment with

27 Pfizer, Inc. Before leaving Pfizer, Bell made various

28 inquiries of Pfizer Human Resources (“HR”) personnel and

29 Benefits administrators regarding her eligibility for, and the

2
1 terms of, retirement1 under the Pfizer Retirement Annuity Plan

2 (the “PRAP” or the “Plan”), including the treatment of her

3 stock options if she left Pfizer’s employ. She alleges that

4 she received various writings and oral advice assuring her that

5 her stock options would remain exercisable for the remainder of

6 the grant period if she left Pfizer. However, on or about

7 August 15, 2003, Bell was informed by Pfizer that certain of

8 her stock options had been cancelled and that others would be
9 cancelled on September 1, 2003.

10 Bell commenced the instant action in December 2003. After

11 a bench trial, the district court held that any

12 misrepresentation concerned only appellant’s stock benefits

13 under a non-ERISA plan and, therefore, did not violate any

14 fiduciary obligations under ERISA. Bell appeals.

15 We affirm on the ground that the only misinformation

16 conveyed did not relate to appellant’s status under the ERISA

17 plan.

18 BACKGROUND
19 a) Pfizer’s Retirement Annuity and Stock Incentive Plans

20 At all relevant times, employees at Pfizer were eligible

21 for various retirement benefits under the Pfizer Retirement

1
In this opinion, we use the terms “retire” and “retirement” to refer
only to an employee leaving Pfizer’s employment under Sections 4a, b, or d of
Pfizer’s ERISA plan. The parties and main participants in the case used the
term colloquially to refer to employees who leave and cease work. Moreover,
Pfizer’s stock option plan also uses the broader meaning.

3
1 Annuity Plan, an employee retirement plan governed by ERISA and

2 administered by Pfizer through the Pfizer, Inc. Retirement

3 Committee. The PRAP provides for three categories of

4 retirement: (i) normal retirement under Section 4a, in which

5 PRAP retirement benefits are available to members when they

6 reach age 65; (ii) late retirement under Section 4b, in which

7 PRAP retirement benefits are available to members who remain in

8 service after age 65; and (iii) early retirement under Section
9 4d, in which PRAP retirement benefits are available to

10 qualifying members who have reached age 55.

11 The PRAP specifically defines “retire” or “retirement” for

12 purposes of the Plan as “to terminate or the termination of

13 service . . . after meeting the requirements of Sections 4a, b,

14 or d. . . .” It is undisputed that Bell did not qualify for

15 retirement under Sections 4a, b or d of the PRAP.

16 The PRAP also provides benefits for a narrow class of

17 employees who wish to cease working but are not eligible to

18 retire under Sections 4a, b or d. These benefits are paid

19 pursuant to Section 4k of the PRAP, which is entitled “Special
20 Rules for Certain Members Who Are Not Eligible to Retire Under

21 Sections 4a or 4d” and is known by Pfizer employees as the

22 “Pre-1994 benefit.” Section 4k provides an annuity benefit

23 upon “termination” to employees who have completed at least

24 five years of “creditable service” prior to January 1, 1994 and

25 meet certain other conditions. As elaborated infra, Bell

4
1 understood at all relevant times that she was eligible for, but

2 only for, the Pre-1994 benefit.

3 In addition to the PRAP, Pfizer also offers its employees

4 a Stock and Incentive Plan (“SIP”), a non-ERISA plan managed by

5 appellee Pfizer Employee Compensation and Management

6 Development Committee. Pursuant to Section 6(f) of the SIP, an

7 employee’s stock options terminate when the employee ceases to

8 be an employee “for any reason including retirement,” unless
9 (in pertinent part) the “optionee has retired or is eligible

10 for retirement under Sections 4a., b., or d. of the [PRAP].”

11 The SIP thus uses the term “retirement” more broadly than the

12 PRAP. See supra Note 1. If the employee retires, or is

13 eligible to retire, under Sections 4a, b, or d of the PRAP, the

14 employee’s stock options remain exercisable for the remainder

15 of the ten-year life of the option grant, except for options

16 that had been granted within one year of retirement. Leaving

17 under Section 4k, therefore, falls within the terminate “for

18 any reason” clause of 6(f) of the SIP and causes the employee’s

19 stock options to terminate.

20 While employed at Pfizer, Bell participated in the SIP,

21 and on various occasions received and exercised Pfizer stock

22 options. Although Bell never read the SIP in its entirety

23 prior to commencing her lawsuit, she, along with her lawyer

5
1 husband Wesley Light,2 had read various documents entitled

2 “Points of Interest” that accompanied each of her stock option

3 grant letters. The “Points of Interest” describe, in layman’s

4 terms, the salient features of the SIP, including the treatment

5 of stock options upon the employee’s retirement or other

6 termination of employment with Pfizer.

7 For example, the Points of Interest that were mailed with

8 Bell’s 1993 stock option grant specifically addressed the
9 question, “What happens if I retire under the Company’s

10 retirement plan?” as follows:

11
12 If you retire from the Company on or before August 25,
13 1994, your options will terminate on the date of your
14 retirement. Thereafter, if you retire under Section 4,
15 parts a. (normal retirement), b. (late retirement), or
16 d. (early retirement) of the [PRAP] . . . you will
17 have the remainder of the option term to exercise the
18 options that were exercisable on the date of your
19 retirement. . . .
20

21 In addition, the 2003 Points of Interest that was mailed

22 with Bell’s 2003 stock option grant stated:

23 For any and all purposes with respect to this 2003 key
24 employee stock option grant, retirement is defined as
25 having attained a minimum age of 55 and ten years of
26 service at the time of your separation from the
27 company.
28
29

2
While it is not a dispositive fact, we note that throughout her
planning for leaving Pfizer, Bell was assisted by her lawyer husband who
prepared detailed financial analyses of the consequences of her proposed
leaving of Pfizer’s employ.

6
1 b) Bell’s 2001 Retirement Plans

2 In 2001, when Bell was 49 years old, she received a booklet

3 from Pfizer regarding retirement, which explained the “Pre-1994

4 benefit,” i.e., Section 4k. Bell also received a pamphlet that

5 Pfizer distributed to its “legacy employees” -- those who had

6 always been directly employed by Pfizer -- which stated that

7 “[if] you’re a legacy Pfizer [] Colleague age 50 or older,

8 [Pfizer’s] retirement counselor can answer all your retirement
9 questions.” According to this pamphlet, “[t]he retirement

10 counselor is now your primary source for information about

11 eligibility and participation [and] provisions of the [PRAP],”

12 and will provide, inter alia, “one-on-one counseling; a

13 comprehensive, personalized summary of impact of retirement on

14 benefits; [and] a summary of outstanding stock options.” Id.

15 After reading these materials, Bell concluded that she could

16 leave Pfizer under the Pre-1994 benefit provision; however, she

17 desired clarification as to the extent of her benefits under this

18 provision, including the treatment of her stock options. Bell

19 then contacted Leighton Gleicher in Pfizer’s HR department, who

20 referred Bell to Payal Sahni, a Pfizer HR Specialist. In

21 February or March 2001, Bell and Sahni met in person, and later

22 continued their dialog via email.

23 Sahni ultimately referred Bell’s benefits questions to

24 Kimberly Malik in Pfizer’s pension benefits administration

25 department. Sanhi forwarded to Malik an email from Bell with the

7
1 subject line, “Info on Pre-‘94 benefits w/ retirement at age 50.”

2 Malik originally responded to Bell’s inquiries with a preliminary

3 pension estimate “based on a projected retirement date of

4 February 1, 2007" (after Bell’s 55th birthday). The pension

5 estimate referred to Bell as a “retiree” and her employment

6 termination as “retirement.”

7 On receipt of her pension estimate, Bell noticed that it

8 assumed a termination date of February 1, 2007, whereas the
9 information she sought from Sahni was what her pension benefits

10 would be if she left in 2002, at age 50. Bell explained this to

11 Sahni, who then requested an additional preliminary estimate from

12 Malik that assumed Bell terminated employment at age 50.

13 With respect to Bell’s stock option questions, Sahni

14 directed Bell to Jacqueline Gomez, a stock options analyst at

15 Pfizer. In May 2001, Bell contacted Gomez by phone to discuss

16 her stock options; the two continued their discussion via email.

17 In an email dated May 10, 2001, Bell asked Gomez to confirm the

18 following:

19 As I understand it, if I retire under the [PRAP], I
20 would retain all of my options (even those that were
21 not vested) provided I remain employed at Pfizer for at
22 least one year after the grant date. I would be able
23 to exercise these options at any time during the “life”
24 of the option. . . .
25
26 Would you please confirm that my understanding is
27 correct and if this information can be found in some
28 publication, can you direct me to it?
29
30 In her reply email to Bell, Gomez stated:

8
1 Yes, those are the general guidelines for retirement
2 under the [PRAP]. That information is documented in
3 the Points of Interest which is sent to you along with
4 the grant letter you receive when stock options are
5 granted to you.
6
7 In June 2001, Malik sent Sahni a memorandum describing

8 Bell’s estimated benefits “based upon a projected termination

9 date of April 1, 2002.” Malik’s memorandum stated that “[a]s a

10 vested annuitant,” Bell would be eligible to receive early

11 payment of her accrued benefit upon “obtaining age 50, or anytime
12 thereafter.” Unlike the March 27 memorandum, Malik’s June

13 memorandum did not refer to Bell as a “retiree” or to her

14 employment termination as “retirement.”

15 In April 2002, Bell sent a letter to her supervisor, Gary

16 Jortner, designating July 19, 2002 as her final day of

17 employment.

18 On July 15, 2002, four days before Bell’s scheduled final

19 day at Pfizer, the company announced plans to acquire Pharmacia-

20 Upjohn. The proposed merger had two effects on Bell’s retirement

21 plans: first, Pfizer’s stock fell nearly 20 percent on news of
22 the acquisition, which left many of Bell’s stock options

23 underwater; second, Bell viewed the acquisition and

24 reorganization of certain departments as providing her new

25 opportunities to advance in her career within Pfizer. Thus, Bell

26 decided not to retire, and so informed the relevant HR staff

27 members.

28 c) Bell’s 2003 Termination Plans

9
1 When the Pharmacia-Upjohn acquisition did not enhance Bell’s

2 advancement prospects, she again decided to leave Pfizer in

3 Spring 2003. On April 24, 2003, Bell sent Jortner a second

4 resignation letter, stating “This letter is notice that I will be

5 taking retirement under the [PRAP] for pre-1993 employees,

6 effective June 1, 2003.” In her original draft of this letter,

7 Bell wrote “I will be taking an early retirement, effective June

8 1, 2003.” However, her husband recommended, and Bell agreed,

9 that she change the words “taking an early retirement” and

10 replace it with “retiring under the Company’s Retirement Annuity

11 Plan.” Although Bell accepted this advice, which rendered an

12 accurate statement ambiguous, she knew at the time that she was

13 not eligible for retirement within the meaning of Sections 4a, b,

14 or d of the PRAP.

15 After mailing her letter to Jortner, Bell called Pfizer’s

16 then-new Retirement Hotline and spoke with retirement counselor

17 Peggy McGee. Thereafter, McGee sent Bell a Pfizer Retirement

18 Kit, which referred to Bell as “an employee who is eligible to
19 retire under the [PRAP].”

20 McGee also contacted Gomez in the SIP office and asked her

21 to prepare a stock option summary for Bell. Gomez then prepared

22 the summary on the assumption that Bell was retiring under

23 Sections 4a, b, or d of the PRAP. This error occurred because

24 Gomez assumed that she would not have been asked by McGee to

25 prepare a summary for someone who was not retiring under the

10
1 PRAP, i.e., under Sections 4a, b, or d.

2 After receiving and reviewing the Retirement Kit, Bell wrote

3 an email to McGee that stated in relevant part:

4 Many of the documents I have state that retirement is
5 defined by the “rule of 90" or by age > 55 + 15 years
6 of credible service. However, we know that under the
7 older, but still honored rule, there is the option to
8 retire at age > 50 w/ receipt of pre-93 pension. I
9 hope I’m correct that this applies to retention of
10 previously granted stock options. Can you please
11 confirm this as this is key to my decision to retire.
12
13 McGee never responded to Bell’s inquiry. However, after

14 sending the email quoted above, Bell received the Stock Option

15 Summary Sheet prepared by Gomez, which designated Bell as

16 “retirement eligible” and listed the majority of her options as

17 exercisable for life. At trial, Bell testified that she

18 interpreted the letter as an answer to her question to McGee

19 regarding her options. However, the letter had actually been

20 sent a day prior to Bell’s email to McGee.

21 Bell left Pfizer on May 31, 2003. Since that date, Bell has

22 been regularly receiving the pre-1994 pension benefit under

23 Section 4k of the PRAP. However, in August 2003, Bell received a

24 Pfizer SIP status report, which stated that some of her stock

25 options had expired, and the balance would expire in several

26 weeks. Bell inquired about the report and was told that she had

27 been incorrectly treated as a retiree with respect to her stock

28 options when she left Pfizer. On August 22, 2003, the manager of

29 the SIP Administration office sent Bell a letter stating:

11
 1 [A]t the time of your termination from Pfizer on
2 May 31, 2003, you did not meet the retirement
3 eligibility criteria under the [PRAP] . . . .
4
5 With regard to your stock options, while you did
6 receive a statement indicating the treatment of stock
7 options at Pfizer if you were retirement eligible,
8 further investigation provided that you did not
9 separate as a retirement but as a termination. . . .
10 As we discussed you had outstanding 1995 and 1996
11 options that lapsed on May 31, 2003. . . . Your grants
12 made in 1997 and later will lapse on September 1, 2003
13 and will no longer be available for exercise after that
14 date.
15
16 Bell exercised the remainder of her stock options on or
17 around August 28, 2003.

18 e) District Court Proceedings

19 Bell filed the present action asserting a host of state and

20 federal claims for, inter alia, promissory estoppel, conversion,

21 breach of contract, negligent misrepresentation, and a breach of

22 fiduciary duty under ERISA. Her complaint sought, inter alia, a

23 declaratory judgment that she was retirement eligible when she

24 ended her employment with Pfizer, reinstatement of her employment

25 at Pfizer, reinstatement of her stock options or issuance of

26 comparable options, or monetary damages estimated to exceed $3

27 million.

28 Before appellees moved for summary judgment, appellant

29 withdrew all claims based on state law, leaving only her ERISA

30 claims. Judge Wood denied appellees’ motion as to the ERISA

31 breach of fiduciary duty claim. Judge Wood concluded that

32 “Pfizer acted in a fiduciary capacity in making statements to

12
1 [Bell] about her eligibility or ineligibility for early

2 retirement under the PRAP, and in answering [Bell’s] questions on

3 the same subject.” Bell v. Pfizer, 499 F.2d 404, 410 (S.D.N.Y.

4 2007). Judge Wood further concluded that genuine issues of

5 material fact existed as to whether Pfizer made material

6 misrepresentations or omissions and whether Bell relied upon

7 these misrepresentations or omissions to her detriment.

8 The case was then reassigned to visiting Judge Conti, who

9 held a bench trial on the remaining claim in October 2007. Prior

10 to the parties’ summations, Judge Conti expressed concern with

11 Judge Wood’s summary judgment ruling. He thought that Judge Wood

12 had possibly conflated the SIP and PRAP in finding that Pfizer

13 employees acted in a fiduciary capacity when they advised Bell

14 about her retirement eligibility and treatment of her stock

15 options.

16 On November 8, 2007, the district court concluded that

17 Pfizer had not breached its ERISA fiduciary duties because “[t]he

18 ‘misrepresentations’ at the center of this dispute are not about
19 whether or not Dr. Bell was eligible for PRAP benefits. There

20 was no point at which a Pfizer employee led Bell to believe that

21 she was eligible for early, normal, or late retirement under

22 sections 4d, 4a, or 4b of the PRAP. Dr. Bell does not allege the

23 contrary. . . . Rather, the misrepresentations relate to the

24 SIP,” which is not an ERISA plan and thus does not give rise to

25 any fiduciary duties. Bell v. Pfizer, No. 03-CV-9945 2007 WL

13
1 3355386 at *9 (S.D.N.Y. Nov. 8, 2007). The court also concluded

2 that even if Bell had somehow persuaded it that the fiduciary

3 duty from the PRAP extended to the SIP, she had still failed to

4 prove that the alleged misrepresentations were made in the course

5 of the fiduciary relationship because the statements were largely

6 made in the performance of ministerial functions, including the

7 “application of rules determining eligibility for participation

8 or benefits, calculation of services and compensation credits for
9 benefits and calculation of benefits.” Id. at 11.

10 This appeal followed.

11 DISCUSSION

12 As noted, appellant withdrew the various state law claims

13 against Pfizer. We also note appellant’s argument that the

14 district court decision violated the law of the case doctrine

15 because Judge Conti did not follow Judge Wood’s earlier decision.

16 However, Judge Wood’s decision does not bind us as to any issue,

17 and we are free, indeed obligated, to apply our own views as to

18 governing law. Steinborn v. Daiwa Sec. Am., Inc., 104 F.3d 351,

19 351 (2d Cir. 1996).

20 a) ERISA’s Fiduciary Duty

21 Section 404 of ERISA imposes fiduciary duties on

22 administrators of ERISA retirement plans that, in pertinent part,

23 require a fiduciary to “discharge his duties with respect to a

24 plan solely in the interest of the participants and beneficiaries

25 . . . for the exclusive purpose of: (i) providing benefits to

14
1 participants and their beneficiaries; and (ii) defraying

2 reasonable expenses of administering the plan.” 29 U.S.C.

3 § 1104(a)(1). The statute also mandates that fiduciaries

4 discharge their duties “with the care, skill, prudence, and

5 diligence under the circumstances then prevailing that a prudent

6 man acting in a like capacity and familiar with such matters

7 would use . . . .” Id.

8 Section 502 of ERISA sets forth a civil enforcement scheme,
9 defining the types of civil actions that can be brought and the

10 parties entitled to seek relief under the Act. See 29 U.S.C.

11 § 1132. In particular, Section 502(a)(3) authorizes a civil

12 action:

13 by a participant, beneficiary, or fiduciary (A) to
14 enjoin any act or practice which violates . . . the
15 terms of the plan, or (B) to obtain other appropriate
16 equitable relief (i) to redress such violations or (ii)
17 to enforce any provisions of . . . the terms of the
18 plan.
19
20 Id. § 1132(a)(3).

21 Section 502(a)(3) has been held to allow plan beneficiaries
22 to bring individual actions arising from an employer’s fiduciary

23 breach, see Varity Corp. v. Howe, 516 U.S. 489, 507-15 (1996),

24 but is restricted in the kinds of relief available. See Great-

25 West Life Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209-20

26 (2002) (strictly limiting relief under Section 502(a)(3) to

27 equitable relief); Mertens v. Hewitt Assoc., 508 U.S. 248, 256

28 (1993) (limiting relief under Section 502(a)(3) to “those

15
1 categories of relief that [are] typically available in equity.

2 . . .”).

3 The threshold question in “every case charging breach of

4 ERISA fiduciary duty” is “not whether the actions of some person

5 employed to provide services under a plan adversely affected a

6 plan beneficiary’s interest, but whether that person was acting

7 as a fiduciary (that is, was performing a fiduciary function)

8 when taking the action subject to complaint.” Pegram v.

9 Herdrich, 530 U.S. 211, 226 (2000).

10 The statute generally provides that “a ‘person is a

11 fiduciary with respect to a plan,’ and therefore subject to ERISA

12 fiduciary duties, ‘to the extent’ that he or she ‘exercises any

13 discretionary authority or discretionary control respecting

14 management’ of the plan, or ‘has any discretionary authority or

15 discretionary responsibility in the administration’ of the plan.”

16 Varity, 516 U.S. at 498 (quoting 29 U.S.C. § 1002(21)(A)).

17 “Under this definition, a person . . . has [fiduciary] status

18 only ‘to the extent’ that he has or exercises the described

19 authority or responsibility.” Flanigan v. Gen. Elec. Co., 242

20 F.3d 78, 87 (2d Cir. 2001) (alterations in original) (quoting

21 F.H. Krear & Co. v. Nineteen Named Trs., 810 F.2d 1250, 1259 (2d

22 Cir. 1987)).

23 In addition, although Congress intended the term “fiduciary”

24 to be broadly construed, Frommert v. Conkright, 433 F.3d 254, 271

25 (2d Cir. 2006), “even [this] broad construction has limits.”

16
1 Chapman v. Klemick, 3 F.3d 1508, 1512 (11th Cir. 1993). Falling

2 outside these limits are plan employees who perform ministerial

3 tasks with respect to the plan, such as the application of rules

4 determining eligibility for participation, preparation of plan

5 communication materials, the calculation of benefits, and the

6 maintenance of employee records. See 29 C.F.R. § 2509.75-8

7 (1995); Blatt v. Marshall & Lassman, 812 F.2d 810, 812 (2d Cir.

8 1987). These tasks have been held not to require the exercise of
9 discretionary authority and do not, therefore, implicate any

10 fiduciary duty.

11 Moreover, because employers often act as both plan

12 administrators and employers, ERISA permits employers to “wear

13 two hats,” and not all actions by an employer fall under its

14 fiduciary role. Amato v. Western Union Int’l, Inc., 773 F.2d

15 1402, 1416-17 (2d Cir. 1985) (internal quotation marks omitted),

16 abrogated on other grounds by Mead Corp. v. Tilley, 490 U.S. 714,

17 721 (1989). Rather, employers “assume fiduciary status only when

18 and to the extent that they function in their capacity as plan
19 administrators, not when they conduct business that is not

20 regulated by ERISA.” Id. (internal citations and quotation marks

21 omitted).

22 Once a defendant’s fiduciary status has been determined, the

23 next issue to be resolved is whether the defendant’s conduct

24 breached a fiduciary duty. The statute imposes a number of

25 fiduciary duties that relate principally to “the management of

17
1 plan assets, the maintenance of records, disclosure of specified

2 information, and avoidance of conflicts of interest.” See

3 Varity, 516 U.S. at 526 n.5 (Thomas, J. dissenting) (citing

4 Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 142-43

5 (1985)).

6 ERISA contains an elaborate scheme of disclosure

7 requirements, none of which are pertinent to the instant matter.3

8 In addition, courts, drawing from the common law of trusts, have
9 interpreted the scope of ERISA fiduciary duties to include a duty

10 to avoid intentional material misrepresentations in plan

11 administrators’ communications with plan beneficiaries about the

12 contents of a plan. See, e.g., id. at 506. For example, we have

13 held that fiduciaries may not knowingly or intentionally mislead

14 plan beneficiaries as to changes -- whether effective or under

15 consideration -- to employee benefit plans. See Flanigan, 242

16 F.3d at 84 (“Fiduciaries may be held liable for statements

17 pertaining to future benefits if the fiduciary knows those

18 statements are false or lack a reasonable basis in fact.”);

19 Ballone v. Eastman Kodak Co., 109 F.3d 117, 126 (2d Cir. 1997);

20 Pocchia v. NYNEX Corp., 81 F.3d 275, 278 (2d Cir. 1996); Mullins

3
With respect to disclosure requirements, the statute imposes a
“comprehensive set of ‘reporting and disclosure’ requirements,” which
comprises part of “an elaborate scheme . . . for enabling beneficiaries to
learn their rights and obligations at any time.” Curtiss-Wright Corp. v.
Schoonejongen, 514 U.S. 73, 83 (1995) (citing 29 U.S.C. §§ 1021-31).

18
1 v. Pfizer, Inc., 23 F.3d 663, 669 (2d Cir. 1994).4

2 Finally, where a plaintiff asserts a breach of fiduciary

3 claim based on a material misrepresentation or omission, the

4 plaintiff must establish detrimental reliance. King v. Pension

5 Trust Fund of the Pension Hospitalization & Benefit Plan of the

6 Elec. Indus., 131 F. App’x 740 (2d Cir. 2005) (no breach of

7 fiduciary duty where participant did not rely on administrator’s

8 alleged misrepresentation). A related concept is that the
9 fiduciary’s misrepresentation must be material. That is, there

10 must be a “‘substantial likelihood’ that the misrepresentation

11 ‘would mislead a reasonable employee in making an adequately

12 informed decision about if and when to retire.’” Caputo v.

13 Pfizer, 267 F.3d 181, 192 (2d Cir. 2001) (quoting Ballone, 109

14 F.3d at 123).

15 b) Bell’s Breach of Fiduciary Duty Claim

16 The district court concluded that misrepresentations or

17 omissions relied upon by Bell related solely to the SIP, and,

18 consequently, could not support an ERISA breach of fiduciary duty

4
Fiduciary liability may also arise from a fiduciary’s material
omissions, or failure to speak. See Pocchia, 81 F.3d at 279. However, our
decisions have narrowed a fiduciary’s affirmative duty of disclosure to a
limited number of circumstances. See, e.g., Board of Trustees of the CWA/ITU
Negotiated Pension Plan v. Weinstein, 107 F.3d 139, 146-47 (2d Cir. 1997)
(holding that plan administrator has no affirmative duty to disclose actuarial
valuation reports because it is “inappropriate to infer an unlimited
disclosure obligation [under ERISA] on the basis of general provisions that
say nothing about disclosure”); Weiss v. Cigna Healthcare, 972 F. Supp. 748,
754 (S.D.N.Y. 1997) (ruling that plan fiduciary not required to disclose
“physician compensation arrangements” because such disclosure is not required
by ERISA); In re Polaroid ERISA Litigation, 362 F. Supp. 2d 461, 478 (S.D.N.Y.
2005) (same).

19
1 claim. We agree.

2 Nothing in the record supports Bell’s claim on appeal that,

3 in 2001 or in 2003, she was misled into believing that she was

4 eligible to retire under Sections 4a, b, or d of the PRAP. It is

5 true that the terms “retire” or “retirement” were

6 indiscriminately used by PRAP representatives to refer to Bell’s

7 intentions and ultimate act of leaving the company, while the

8 PRAP used those words only in connection with Sections 4a, b, and
9 d. However, the use of “retire” and “retirement” was

10 colloquially correct. Bell used it herself. Moreover, the SIP

11 used the terms in the broader sense also.

12 Most significantly, however, Bell clearly understood that

13 Sections 4a, b, and d did not apply to her. When Bell first

14 inquired about leaving Pfizer and Malik sent Bell benefit

15 projections based on a retirement age of 55, Bell’s emails and

16 phone conversations with Sahni clearly stated that Bell sought

17 information regarding benefits only under the special Pre-1994

18 benefits plan. For example, the subject matter of these emails
19 reads: “Info on pre-‘94 benefits w/ retirement at age 50.” (The

20 district court found as a fact that “pre-1994 benefits” was the

21 term used to refer to the “Special Rules” under Section 4k.)

22 Bell v. Pfizer, 2007 WL 3355386 at *2.

23 After losing and then regaining interest in leaving Pfizer

24 in 2003, and when McGee sent Bell a “Retirement Kit” that

25 referred to Bell as “an employee who is eligible to retire under

20
1 [the Plan],” Bell emailed McGee that she was retiring under the

2 special plan, i.e., Section 4k. Finally, Bell testified that she

3 “was clear” she was not leaving Pfizer under Sections 4a, b, or d

4 of the PRAP and that she and her advisor husband knew that she

5 did not fit within those categories.5 There is no sustainable

6 claim, therefore, that Bell was misled as to her status under the

7 PRAP.

8 The only misstatement that could have misled Bell was made
9 by Gomez, but only in 2003. When Bell first contacted Gomez in

10 2001, Bell asked Gomez whether she could retain her stock options

11 “if I retire under the Pfizer retirement annuity plan,” and asked

12 further for direction to a “publication” in which “this

13 information can be found.” Gomez replied: “yes, those are the

14 general guidelines under the Pfizer annuity plan” and, with

15 regard to the inquiry as to publication, referred Bell to the

16 “Points of Interest” that accompanied every stock option grant.

17 Gomez’s response was accurate given the question posed: the

18 continuation of stock options does generally occur under the

19 “retirement” options offered under the PRAP. In response to

20 Bell’s request for a reference to relevant documents, Gomez

21 referred Bell to the “Points of Interest,” which both Bell and

22 her husband reviewed prior to Bell’s departure from Pfizer.

5
Some of the confusion may have been caused by Bell’s following the
recommendation of her husband to replace “early retirement” to “retiring under
the company’s Retirement Annuity Plan” in the April 2003 letter to Jortner.
The replacement phrasing was less accurate than the original and more likely
to be understood to qualify Bell under the SIP.

21
1 These expressly stated that a departing employee’s options would

2 expire unless the employee “retired” under Sections 4a, b, or d

3 of the Plan. Thus, not only was there no misrepresentation at

4 this point, but Bell had been provided accurate and dispositive

5 information on her stock option rights if she left Pfizer.

6 The misstatement as to the status of Bell’s stock options

7 came in May 2003, when Gomez mailed Bell a “Stock Option Summary

8 Sheet” that mistakenly designated her as “Retirement Eligible”
9 and indicated that her options would be valid for the life of

10 their respective grants.

11 As described earlier, this document was prepared and sent as

12 a result of a misunderstanding between McGee and Gomez. When

13 McGee sent the “Retirement Kit” to Bell, McGee also asked Gomez

14 to prepare a summary of Bell’s stock options. Gomez did so on

15 the assumption that McGee would have made such a request only if

16 the particular employee was eligible to retire under Sections 4a,

17 b, or d. The summary thus indicated that Bell’s stock options

18 would last for the life of the grant and was promptly mailed.
19 The day after the summary was mailed, Bell responded to the

20 “Retirement Kit” by noting that she was actually leaving under

21 the Special Plan and by asking for information about the status

22 of the stock options. McGee did not respond. When Bell received

23 the summary mailed by Gomez, Bell claims to have assumed that it

22
1 was a response to Bell’s email to McGee.6 Bell correctly

2 asserts, therefore, that a Plan employee, McGee, was a cause in

3 fact of Bell’s claimed loss because McGee caused Gomez to act on

4 an incorrect assumption about Bell’s status and to send out an

5 incorrect summary regarding Bell’s stock options.

6 The only issue before us is whether these facts constitute a

7 breach of the fiduciary duty imposed on an ERISA fiduciary. The

8 various state law claims concerning the incorrect information
9 conveyed about Bell’s stock options have been withdrawn. That

10 withdrawal limits Bell to the relief authorized under Section

11 502(a)(3), which is limited to equitable relief, Knudson, 534

12 U.S. at 207-20, and does not include monetary damages, Coan v.

13 Kaufman, 457 F.3d 250, 264 (2d Cir. 2006). Whether appellees

14 could be ordered to give Bell stock options equivalent to those

15 lost, which would require a purchase, is a question that we do

16 not decide. Also, Bell’s ERISA claim raises a host of liability

17 issues that we also do not decide. These include whether a Plan

18 may be liable for unintentional misunderstandings among, or
19 innocent mistakes by, Plan or company employees involving details

20 and calculations concerning termination benefits. Another issue

6
There are no district court findings as to Bell’s reliance on the
summary. While her version of events is certainly plausible, there is a
countercase to be made. The “Points of Interest,” which accurately described
the effect of early termination on stock options, were received and read by
Bell and her husband. Also, although Bell’s email to McGee emphasized the
importance of the stock options to her retirement decision, she had set a
retirement date of June 1, 2003 before receiving Gomez’s misleading summary.

23
1 we need not reach is a Plan’s liability for such errors when

2 fully accurate documents describing those details and

3 calculations have been provided to the beneficiary. The parties

4 here debate that issue in arguing whether Bell’s asserted

5 reliance on Gomez’s summary was reasonable.

6 We do not reach these issues because Bell was

7 unintentionally misled, if at all, only as to matters other than

8 the terms of the Plan itself and her status under those terms.
9 While numerous factors other than ERISA pension benefits are

10 critical to a person’s retirement decision, advice or

11 misstatements regarding them goes well beyond any duty imposed by

12 ERISA. To be sure, the SIP, in designating those employees

13 eligible to retain their stock options after employment

14 termination, used the employees’ status under the PRAP’s

15 provisions. But Bell was not misled as to her status under those

16 PRAP provisions. Rather, she was misled, if at all, as to the

17 continuation of her stock options under the SIP.

18 As Bell concedes, the SIP is not an ERISA plan, but is
19 rather a distinct employment benefit not governed by ERISA. The

20 SIP is: (i) governed by a written document separate from the

21 PRAP; (ii) overseen by a Pfizer committee (i.e., the Pfizer

22 Compensation Committee) that has no authority or responsibility

23 concerning the PRAP or Plan benefits; and (iii) administered by

24 non-Plan employees who bear no responsibility for administering

25 ERISA Plan benefits. The PRAP itself contains no provision

24
1 providing for employee stock options, save for a provision that

2 excludes stock options from the definition of “Earnings.”

3 In essence, Bell seeks to extend the ERISA fiduciary duty to

4 unintentional misstatements regarding collateral, non-ERISA plan

5 consequences of a retirement decision.7 The language of the

6 statute weighs against such an extension. The statute states:

7 “a fiduciary shall discharge his duties with respect to a plan

8 solely in the interest of participants and beneficiaries.” 29
9 U.S.C. § 1104 (emphasis added). This language imposes no duties

10 on ERISA fiduciaries with regard to all information relevant to

11 retirement. Further, the “two-hats” doctrine described earlier

12 confines the fiduciary obligation of an employer to actions in

13 its capacity as administrator of the ERISA plan. See Amato, 773

14 F.3d at 1416-17. In the present case, as noted, the SIP is

15 concededly separate from the PRAP, and Gomez was not acting in

16 any way for Pfizer in its capacity as Plan administrator.

17 Whether Pfizer might be liable for Gomez’s actions under a state

18 law tort or contract theory is not before us.
19 Even where non-ERISA benefits (or exclusion therefrom) turn

7
The issues that arise with regard to intentional misstatements
regarding non-ERISA collateral consequences of retirement are quite different
from those before us. Intentional misstatements are apt to be self-serving
and designed to induce employees to take or forgo some action with respect to
plan options. See Varity, 516 U.S. at 506 (Employer breached ERISA fiduciary
duty by “knowingly and significantly [] deceiving a plan’s beneficiaries in
order to save the employer money at the beneficiaries expense”). No such
issues arise here because the record shows at most simple misunderstandings
resulting in a non-intentional misstatement.

25
1 on a person’s status under an ERISA plan, the ERISA fiduciary

2 duty cannot extend to more than the person’s qualification for

3 that status. If it did, Plan administrators would be forced to

4 search out and master all collateral programs relevant to

5 employment termination, e.g. private medical plans administered

6 by insurance companies and long-term care plans, determine

7 whether they are in any way related to the ERISA plan, and

8 monitor their administration, while often having no power over
9 them. Beneficiaries might seek (and actually have sought)8

10 recovery for misstatements regarding tax consequences, the likely

11 rate of inflation, future interest rates, and the availability of

12 public medical benefits. The extension of liability to all facts

13 material to retirement decisions would expand -- particularly in

14 an age of notice pleading -- the potential costs of ERISA plans,

15 thereby reducing the number created and the benefits provided in

16 those that are created.

17 Congress was concerned about the role costs play in

18 determining the creation of plans and the level of benefits
19 provided and wanted to control these costs. As the Senate Report

20 stated:

8
One court has stated that a failure to advise a potential retiree of
the tax consequences of an early retirement plan violated ERISA’s fiduciary
duty. Farr v. U.S. West Comm., Inc., 151 F.3d 908, 914-15 (9th Cir. 1998),
amended by 179 F.3d 1252 (9th Cir. 1999). However, it is unclear whether the
failure to provide the relevant information in Farr was deliberate and
intended to induce the taking of early retirement, facts that would take the
decision out of the rule we establish here.

26
 1 At the same time, the committee is aware that under our
2 voluntary pension system, the cost of financing pension
3 plans is an important factor in determining whether any
4 particular retirement plan will be adopted and in
5 determining the benefit levels if a plan is adopted,
6 and that unduly large increases in costs could impede
7 the growth and improvement of the private retirement
8 system. For this reason, in the case of those
9 requirements that add to the cost of financing
10 retirement plans, the committee has sought to adopt
11 provisions which strike a balance between providing
12 meaningful reform and keeping costs within reasonable
13 limits.
14
15 S. Rep. No. 93-383 at 14 (1974) reprinted in 1974 U.S.C.C.A.N.

16 4889, 4904. Indeed, among the explicit duties the statute

17 charges plan fiduciaries is “defraying reasonable expenses of

18 administration.” 29 U.S.C. § 1104(a)(1)(A)(ii); see also, id. §§

19 1001a(c)(2) & 1001b(b)(3).

20 That increased plan costs are borne by employers, and may

21 dissuade them from creating plans, is a concern that has been

22 recognized by academic commentators and courts alike. See Edward

23 A. Zelinsky, The Defined Contribution Paradigm, 114 Yale L. J.
24 451, 476 (2004) (“Compliance with ERISA’s [regulations] also

25 entails significant administrative costs for defined benefit

26 arrangements, i.e., actuarial, accounting, and legal fees, costs

27 to which many employers, particularly smaller ones, are quite

28 sensitive. . . . To the extent employers must absorb these extra

29 costs, those costs deter the creation and continuation of defined

30 benefit plans.”); Phillip R. Lochner, Jr., Economic Regulation

27
1 and Democratic Government, 25 J. Corp. L. 831, 834 (2000)

2 (commenting on the disappearance of defined benefit plans post-

3 ERISA: “Why should an employer put itself in the position of

4 having to hire numerous lawyers, benefits consultants,

5 accountants, and actuaries, just to be able to tell whether its

6 defined-benefit plan is complying with ERISA?”).

7 Courts have also noted the concern expressed by Congress in

8 enacting ERISA that these costs would provide a disincentive for
9 employers to create pension benefit plans:

10 Though Congress was concerned chiefly with protecting
11 the employees’ expectations of pension benefits, it
12 also realized that employers would not create,
13 maintain, or expand pension plans if ERISA imposed too
14 much cost. Consequently, the entire statute is a
15 finely tuned balance between protecting benefits for
16 employees while limiting the costs to employers.
17
18 A-T-O, Inc. v. Pension Benefit Guarantee Corp., 634 F.2d

19 1013, 1021 (6th Cir. 1980) (citing S. Rep. No. 94-383

20 (1974), reprinted in 1974 U.S.C.C.A.N. 5166, 5167).

21 More recently, in Conkright v. Frommert, 130 S. Ct.

22 1640 (2010), the Supreme Court reiterated its longstanding
23 concern with ERISA litigation expenses. In Frommert, the

24 Court addressed the deference that courts should accord to a

25 plan administrator’s interpretation of an ERISA plan.

26 Central to the Court’s holding was the increased litigation

27 costs associated with de novo review of a plan

28 administrator’s decisions as to plan benefits. As the Court

29 explained:

28
 1 Congress enacted ERISA to ensure that employees would
2 receive the benefits they had earned, but Congress did
3 not require employers to establish benefit plans in the
4 first place. We have therefore recognized that ERISA
5 represents a careful balancing between ensuring fair
6 and prompt enforcement of rights under a plan and the
7 encouragement of the creation of such plans. Congress
8 sought to create a system that is not so complex that
9 administrative costs, or litigation expenses, truly
10 discourage employers from offering [ERISA] plans in the
11 first place. ERISA induc[es] employers to offer
12 benefits by assuring a predictable set of liabilities,
13 under uniform standards of primary conduct and a
14 uniform regime of ultimate remedial orders and awards
15 when a violation has occurred.
16
17 Id. at 1648-49 (internal quotation marks and citations omitted).

18 Extending ERISA liability to unintentional misstatements

19 regarding non-plan consequences of retirement decisions would run

20 counter to these goals.

21 CONCLUSION

22 We therefore affirm.

23

24

25

29
 1 07-5390-CV
2 Bell v. Pfizer
3
4 COGAN, District Judge, dissenting:

5 This is a case about a company making multiple misrepresentations and omissions to

6 repeated inquiries by one of the plan’s beneficiaries, Dr. Diana Bell, regarding its ERISA-

7 regulated retirement plan. Because I conclude that Pfizer was acting in a fiduciary capacity

8 when it made those misrepresentations and omissions, I dissent. I express no view on whether

9 Pfizer’s misrepresentations and omissions were material, and whether Bell reasonably relied on

10 them to her detriment, as I believe the district court should address these issues in the first

11 instance. I would therefore remand to the district court for that purpose.

12 This is a unique case. Pfizer has a special provision in its Retirement Annuity Plan

13 (“PRAP”) – Section 4k. This provision allows beneficiaries to end their employment before

14 attaining retirement status and still receive annuity benefits. For individuals like Dr. Bell,

15 understanding Section 4k is critical because in Pfizer’s unusual scheme, it determines whether

16 one qualifies for the non-ERISA Stock Incentive Plan (“SIP”). That is, Bell had to understand

17 the difference between ending her employment under Sections 4a, 4b or 4d and ending it under

18 4k. What she sought to find out was whether Section 4k constituted a form of retirement. Pfizer,

19 mistakenly, led her to believe that it was.

20 The majority finds it significant – indeed determinative – that Bell asked Pfizer about

21 Section 4k not because she was confused about her eligibility, but because the meaning of this

22 provision bore on her rights under the SIP. The majority reasons that because Bell knew for

23 which PRAP section she qualified, Pfizer’s fiduciary duty was at its end. It holds that an

24 unintentional misrepresentation made by a company interpreting a provision of its retirement

25 plan, is not a misrepresentation of the plan within the meaning of ERISA. In reaching this

1
 1 conclusion, the majority adds a new layer of analysis to an ERISA challenge, which focuses on a

2 beneficiary’s reasons for requesting information about a retirement plan. I find no support for

3 this reading of the statute.

4 To begin with, I disagree with the district court’s finding, which the majority adopts, that

5 Pfizer’s misrepresentations and omissions relied upon by Bell, “related solely to the SIP, and,

6 consequently, could not support an ERISA breach of fiduciary duty.” And I disagree with the

7 majority’s related premise that only one misstatement could have misled Bell – the one made by

8 Gomez in 2003 when she sent Bell the stock option summary, identifying Bell as “retirement

9 eligible” and discussing Bell’s stock option rights based on this classification. That was

10 certainly one misrepresentation but there were others, including omissions regarding Bell’s

11 eligibility to retire under the PRAP. For instance, the May 6, 2003 letter to Bell from Peggy

12 McGee, retirement counselor, enclosing her Retirement Kit, referred to Bell as an “employee

13 eligible to retire under the [PRAP].” This statement was clearly incorrect; the PRAP itself

14 defines “retire” or “retirement” as “the termination of service . . . after meeting the requirements

15 of Section 4a, b, or d,” and there is no dispute that Bell did not meet the requirements of any of

16 these sections.

17 Additionally, the fact that the company’s personnel database initially listed Bell as

18 “retired,” and that her status was not changed to “terminated” until after August 2003, further

19 demonstrates the initial confusion within the company as to Bell’s retirement status. An August

20 19, 2003 email chain originating between Michaeline Von Drathen and McGee, flagging a

21 potential error by the retirement hotline in processing Bell’s retirement inquiry, and culminating

22 in a Pfizer employee, Deb Alexander’s clear statement to McGee and Geronimo Colon (Pfizer’s

23 manager of PRAP Administration) that Bell was “NOT eligible for retirement . . . the Retirement

2
 1 status in PeopleSoft [is] not correct,” further supports the conclusion that Pfizer’s retirement

2 counselors misrepresented Bell’s eligibility for retirement both internally and to Bell.

3 In addition to these affirmative misrepresentations, the record also contains evidence of

4 omissions regarding Bell’s eligibility to retire under the PRAP, which the district court did not

5 address and the majority overlooks. For example, the record reflects that Sasni and Malik,

6 employees in Pfizer’s HR and pension benefits administration departments, knew that Bell

7 planned to take “retirement at age 50,” but never told Bell that her plan was not actually

8 considered “retirement” under the PRAP. Likewise, Corbett, an HR manager, knew that Bell

9 intended to retire before age 55; while Corbett advised her that she was not eligible for medical

10 benefits prior to age 55, she did not advise her that neither was she eligible for “retirement” as

11 the PRAP defined it. Bell also explicitly told McGee, a person designated by Pfizer as a

12 retirement counselor whose job it was to field retirement questions for its employees, that she

13 intended to leave the company prior to age 55 and take the pre-1994 benefits. Not only did

14 McGee never advise Bell that she was not eligible to retire (as McGee testified was her normal

15 practice when an ineligible employee asked for retirement information), she entirely failed to

16 answer one of Bell’s most specific questions about whether eligibility for the pre-1994 benefit

17 qualified her as “retired” under the PRAP in the sense that she could retain favorable treatment

18 of her stock options. These omissions all concern Bell’s eligibility to retire under the PRAP;

19 their absence from the district court’s factual analysis further demonstrates the insufficiency of

20 its analysis.

21 The majority’s analysis begins by observing that Pfizer’s employees use the terms

22 “retire” and “retirement” correctly in the colloquial sense (referring to Bell’s leaving the

23 company), and that Bell used the words loosely herself. It also notes that “Bell clearly

3
 1 understood that Sections 4a, b, and d did not apply to her.” I find these observations irrelevant

2 given the fiduciary’s duty to provide “full and accurate information . . . regarding the

3 administration of the plan,” In re Long Island Lightning Co., 129 F.3d 268, 271 (2d Cir. 1997),

4 including “complete and accurate information about . . . retirement options.” Estate of Becker v.

5 Eastman Kodak Co., 120 F.3d 5, 10 (2d Cir. 1997); see also, Switzer v. Wal-Mart Stores, Inc., 52

6 F.3d 1294, 1299 (5th Cir. 1995); Electro-Mechanical Corp. v. Ogan, 9 F.3d 445, 451 (6th Cir.

7 1993); Anweiler v. American Elec. Power Serv. Corp., 3 F.3d 986, 991 (7th Cir. 1993); Bixler v.

8 Central Pennsylvania Teamsters Health & Welfare Fund, 12 F.3d 1292, 1300 (3d Cir. 1993);

9 Eddy v. Colonial Life Ins. Co., 919 F.2d 747, 750 (D.C. Cir. 1990). First, there is no safe harbor

10 under ERISA allowing for the ascription of colloquial meaning as opposed to proper definition

11 of plan terms. Second,there is nothing in the statute or the caselaw to suggest that a fiduciary’s

12 level of accuracy should be calibrated to the beneficiary’s remarks or knowledge; the meaning of

13 “complete and accurate” does not change based on the beneficiary’s state of mind. Whether

14 Pfizer’s statements were material or whether Bell relied on them to her detriment – perhaps

15 because she had sufficient information, expertise, and opportunity to avoid the misunderstanding

16 – are not questions before this court and are properly decided on remand.

17 The thrust of the majority’s holding is that the ERISA fiduciary duty does not extend to

18 “unintentional misstatements regarding collateral, non-ERISA plan consequences of a retirement

19 decision.” 1 In reaching this conclusion, the majority rests on the language of the statute and the

20 “two-hats” doctrine, which allows employers to escape fiduciary status when they are not acting

21 as PRAP administrators, and instead conduct business that is not regulated by ERISA.

22 I do not see how a fiduciary is not discharging its duties “with respect to a plan,” 29

23 U.S.C. § 1104, when it is interpreting – or misinterpreting – key terms in its provisions. That
1
The opinion makes the point that intentional misstatements may be different.

4
 1 those misrepresentations and omissions may have non-ERISA consequences does not foreclose

2 liability for breach of fiduciary duty. See e.g., Farr v. U.S. West Commc’ns, Inc., 151 F.3d 908,

3 914-15 (9th Cir. 1998) (finding a violation of ERISA’s fiduciary duty for failing to advise a

4 potential retiree of the tax consequences of an early retirement plan), amended, 179 F.3d 1252

5 (9th Cir. 1999).

6 Nor do I agree that the two-hats doctrine saves Pfizer from liability. The majority bases

7 this part of its holding on the finding that Gomez, whom “McGee caused to act on an incorrect

8 assumption about Bell’s [retirement] status,” was not acting as a PRAP administrator.

9 Determining whether an employer acted as plan administrator requires a context-specific inquiry

10 into (1) the factual circumstances in which the employer was acting; (2) whether the activity in

11 which the employer engaged was plan-related; and (3) whether the activity was “engaged in by

12 those who had plan-related authority to do so.” Varity Corp. v. Howe, 516 U.S. 489, 503 (1996).

13 Plan-related activities that may give rise to an employer’s ERISA fiduciary duty include

14 communicating to employees about future plan benefits, Flanigan v. Gen. Elec. Co., 242 F.3d 78,

15 84 (2d Cir. 2001), and “answering beneficiaries’ questions about the meaning of the terms of a

16 plan so that those beneficiaries can more easily obtain the plan’s benefits.” Varity, 516 U.S. at

17 502-03.

18 If a reasonable employee could think that the employer was communicating with her in

19 both its capacity as an employer and its capacity as a plan administrator, the employer can be

20 found to be acting as an ERISA fiduciary. See e.g., Bouboulis v. Transp. Workers Union of

21 Am., 442 F.3d 55, 65 (2d Cir. 2006) (quoting Varity, 516 U.S. at 504-05). Thus, this court has

22 previously found that the communications between employees and benefits counselors

23 designated by the employer to give plan advice can give rise to an ERISA fiduciary duty. See

5
 1 Becker, 120 F.3d at 10 (finding a breach of ERISA fiduciary duty based in part on

2 misrepresentations and omissions made by a benefits counselor); see also Fischer v. Philadelphia

3 Elec. Co., 994 F.2d 130, 135 (3d Cir. 1993) (noting an employer cannot avoid fiduciary liability

4 by walling off “those employees on whom plan participants reasonably rely for important

5 information and guidance about retirement”). It seems to me that if a plan fiduciary wants to

6 wear two hats, it is incumbent upon him to make it clear to beneficiaries which hat he is wearing

7 when he gives advice, especially when both hats have common features.

8 Because Pfizer’s misrepresentations and omissions concerned Bell’s eligibility to retire

9 under the ERISA-governed PRAP, the interactions between Bell and company employees

10 concerning the PRAP gave rise to a fiduciary duty if the Pfizer employees were acting as PRAP

11 administrators, or if Bell could reasonably have perceived them to be acting in such a capacity.

12 I would find that Pfizer employees acted as PRAP administrators for both reasons. In contrast to

13 the “ministerial functions” that do not implicate an entity’s fiduciary duties under the statute and

14 that the district court in this case found Pfizer employees to have been performing, the majority

15 of the PRAP administrators and retirement counselors with whom Bell interacted gave detailed

16 advice in response to her specific benefits-related inquiries. The context-specific nature of these

17 interactions removes them from the realm of the mechanical or ministerial, and makes them

18 administrative in nature. See e.g., Varity, 516 U.S. at 502-03 (noting that answering

19 beneficiaries’ questions about the meaning of plan terms to help beneficiaries obtain plan

20 benefits is one of the functions of a fiduciary).

21 And Bell could reasonably have concluded that she was communicating with Pfizer-the-

22 PRAP-administrator, not Pfizer-the-employer, when she made her retirement eligibility inquiries.

23 She originally initiated contact with Pfizer’s HR department after receiving a pamphlet from

6
 1 Pfizer advising her that its “retirement counselor can answer all your retirement questions.”

2 Likewise, when Bell ultimately made her decision to retire, she called Pfizer’s retirement hotline

3 at the direction of an HR supervisor. McGee, an individual specifically designated by Pfizer as

4 someone who could advise employees about the mechanics of retirement, interacted with Bell as

5 her retirement counselor, and answered Bell’s questions about her specific retirement needs.

6 Indeed, the pamphlet Bell originally received in 2001 stated that the “retirement counselor is

7 now your primary source for information about . . . provisions of the [PRAP]” and could advise

8 her, among other things, of the “impact of retirement on benefits.” Bell could have reasonably

9 concluded that these employees “had expert knowledge about how their plan worked,” and

10 reasonably could have relied on them for their expertise. Varity, 516 U.S. at 503; Fischer, 994

11 F.3d at 535. The employees had the apparent authority to bind Pfizer as fiduciary. See Estate of

12 Dermady v. Eastman Kodak Co., 136 F. Supp. 2d 181, 188–89 (W.D.N.Y. 2001).

13 I share the majority’s concern with extending potential liability for ERISA plans. But as

14 I noted earlier, this is a unique case – Pfizer’s stock option plan cross-references its retirement

15 plan, and the retirement plan in turn has an unusual provision that allows collection of benefits

16 without attaining retirement status. Nor am I ready to conclude whether Bell detrimentally relied

17 on material misrepresentations, which the majority correctly points out would be another bar to

18 liability. Thus this is not a case that will expand ERISA beyond congressional intent; it is a case

19 that squarely falls within the language of the statute. The employees who misrepresented parts

20 of the PRAP to Bell were the very ones responsible for discharging the plan. The facts may be

21 unusual, but the misrepresentations are unmistakable. I therefore respectfully dissent.

7