Brown v. Owens Corning Investment Review Committee

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 10a0314p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

_________________

X

-

BRITTON C. BROWN; SANDRA K. BROWN;

-

CAROL A. LINDHUBER; SHIRLEY J. REED;

JOHN L. DELGADO, for themselves and all -

-

No. 09-3692

others similarly situated,

Plaintiffs-Appellants, ,>

-

-

-

v.

-

-

-

OWENS CORNING INVESTMENT REVIEW

-

COMMITTEE; OWENS CORNING BENEFITS

Defendants, -

REVIEW COMMITTEE,

-

-

-

-

OWENS CORNING SAVINGS AND SECURITY

-

PLAN; OWENS CORNING SAVINGS PLAN;

-

RICHARD C. TOBER; DOMENICO CECERE;

FIDELITY MANAGEMENT TRUST COMPANY; -

-

-

DAVID JOHNS; EDWARD MIRRA; STEVEN

Defendants-Appellees. -

STOBEL; MICHAEL THAMAN,

-

N

Appeal from the United States District Court

for the Northern District of Ohio at Toledo.

No. 06-02125—Jack Zouhary, District Judge.

Argued: March 10, 2010

Decided and Filed: September 27, 2010

Before: COLE, GILMAN, and WHITE, Circuit Judges.

_________________

COUNSEL

ARGUED: Gregory Yann Porter, BAILEY & GLASSER, LLP, Washington, D.C, for

Appellants. Erin E. Kelly, SIDLEY AUSTIN LLP, Chicago, Illinois, Howard Shapiro,

PROSKAUER ROSE LLP, New Orleans, Louisiana, for Appellees. ON BRIEF:

Gregory Yann Porter, BAILEY & GLASSER, LLP, Washington, D.C, Bryan T. Veis,

McTIGUE & VEIS LLP, Washington, D.C., for Appellants. Erin E. Kelly, Walter C.

1

No. 09-3692 Brown et al. v. Owens Corning Investment Page 2

Review Committee et al.

Carlson, John M. George, Jr., SIDLEY AUSTIN LLP, Chicago, Illinois, Howard

Shapiro, Robert W. Rachal, Charles F. Seemann III, PROSKAUER ROSE LLP, New

Orleans, Louisiana, Edward A. Brill, PROSKAUER ROSE LLP, New York, New York,

Jennifer J. Dawson, MARSHALL & MELHORN LLC, Toledo, Ohio, William M.

Connelly, Steven R. Smith, Janine T. Avila, CONNELLY, JACKSON & COLLIER

LLP, Toledo, Ohio, for Appellees.

GILMAN, J., delivered the opinion of the court, in which COLE, J., joined.

WHITE, J. (pp. 19-23), delivered a separate opinion concurring in all sections except for

Section II.C. and in the result of the majority opinion.

_________________

OPINION

_________________

RONALD LEE GILMAN, Circuit Judge. A number of former Owens Corning

(OC) employees (the Plaintiffs) brought a class-action lawsuit against the fiduciaries of

their retirement plans pursuant to the Employee Retirement Income Security Act

(ERISA), alleging that the fiduciaries failed to protect plan participants by not divesting

the plans of OC stock before the shares became virtually worthless when the company

filed for bankruptcy. The fiduciaries filed motions to dismiss, based in part on the

defense that the claims against them were barred by ERISA’s three-year statute of

limitations. Their motions were later converted by the district court into motions for

summary judgment.

Although the district court originally denied the motions for summary judgment,

it reversed itself after the fiduciaries filed a motion to reconsider. The court held that the

Plaintiffs’ claims against the fiduciaries were time-barred because the Plaintiffs had

actual knowledge of all the relevant facts more than three years before filing their

lawsuit. For the reasons set forth below, we AFFIRM the judgment of the district court.

No. 09-3692 Brown et al. v. Owens Corning Investment Page 3

Review Committee et al.

I. BACKGROUND

A. Factual background

OC sponsored two defined-contribution retirement plans for its employees: the

OC Savings Plan for salaried employees and the OC Savings & Security Plan for hourly

employees (the Plans). Participants in the Plans could invest in several different

investment funds, including the OC Stock Fund, which primarily invested in OC

common stock.

Plan participants were provided with quarterly account statements, which

reflected a participant’s contribution history as well as the current value of the

participant’s investments. These statements included a “Message from the Plan

Administrator” about various Plan updates. Summary Plan Descriptions (SPDs) for both

the salaried plan and the hourly plan stated that the “Plan Administrator . . . is the Owens

Corning Benefits Review Committee.” They also informed participants that the OC

Investment Review Committee “is a Named Fiduciary” of the Plan.

The SPDs stated that “[t]he Plan is administered on Owens Corning’s behalf by

Fidelity Investments” and listed a contact telephone number for Fidelity. Fidelity was

also listed in the SPDs as the Plan Trustee. The SPDs included several other references

to Fidelity, the Investment Review Committee, and the Benefits Review Committee,

stating that “[u]nder ERISA, the people responsible for operating the Plan are called

‘fiduciaries.’ These individuals have an obligation to administer the Plan prudently and

to act in the interest of Plan participants and beneficiaries.” The parties dispute how

many of the Plaintiffs actually received SPDs, but Richard Tober, the head of

Compensation and Benefits at OC, stated that the SPDs were periodically mailed to all

hourly employees and that salaried employees were notified that the SPDs were

available on the company’s internet website. In addition, Carol Lindhuber, a salaried

employee and one of the named Plaintiffs, acknowledged that she was told where the

electronic version of the Plan documents could be found.

No. 09-3692 Brown et al. v. Owens Corning Investment Page 4

Review Committee et al.

OC was obligated under the Plans to partially match employee contributions. In

the 1990s, the Plans mandated that all employer matching contributions and one-half of

the employer profit-sharing contributions be invested in the OC Stock Fund. Beginning

in 2000, however, employees were permitted to invest new OC contributions in any

investment fund and could transfer portions of previous OC contributions to any other

investment fund. OC’s Compensation Committee decided in late September 2000 to

close the OC Stock Fund to new investments and to permit participants to immediately

transfer all prior OC contributions into other investment funds. Participants were

notified of this change through a “Message from the Plan Administrator” on their

account statements and by a letter sent from OC Chairman and CEO Glen Hiner on

September 29, 2000 to all Plan participants. The letter listed a contact telephone number

for the OC Compensation and Benefits Call Center as well as for Fidelity if participants

had any questions about the change.

At the same time that these changes to the Plans were being made, OC was

preparing to file for bankruptcy. Prior to 1972, OC had manufactured an industrial

insulating product containing asbestos. OC began to face increased liability in the 1990s

as a result of countless claims by those injured from asbestos exposure. Moreover, two

Supreme Court cases in 1997 and 1999 severely limited the ability of asbestos

manufacturers to settle claims against them through either a class action or a mass-

settlement fund. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) (asbestos

class action); Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999) (asbestos mass-settlement

fund). As a result of the asbestos litigation and damage costs, OC filed for bankruptcy

on October 5, 2000. CEO Hiner sent a letter on the same date to all OC employees,

informing them of the bankruptcy filing and how it would affect their employment,

compensation, and benefits.

OC stock began to significantly decline in value after the two Supreme Court

cases were publicized. On the day that Ortiz was decided—June 23, 1999—the stock

closed at $35.44 per share. By the end of 1999, the per-share price had dropped to

$19.31, and in mid-2000 it closed at $9.25. The day before OC filed for bankruptcy, the

No. 09-3692 Brown et al. v. Owens Corning Investment Page 5

Review Committee et al.

stock closed at $1.81 per share, and the day after, at $0.50. As a result of this steep

decline in value, the OC Stock Fund lost tens of millions of dollars. Plaintiff Lindhuber

eventually filed a proof of claim against OC in the bankruptcy proceedings in April

2002, seeking to recoup the losses that she had suffered in her retirement account.

B. Procedural history

On September 1, 2006, Britton Brown and Sandra Brown filed a purported class-

action lawsuit on behalf of participants in the Plans against the following defendants:

the Plans themselves; the OC Investment Review Committee, which was a named

fiduciary of the Plans; individual members of the OC Investment Review Committee;

the OC Benefits Review Committee, which was the administrator for the Plans;

individual members of the OC Benefits Review Committee; Tober; and several John

Does who performed administrative functions for the Plans. (These parties will

hereinafter be referred to as the OC Defendants.) OC itself was not named as a

defendant.

The Plaintiffs alleged that by July 1, 1999, “when the impact of Ortiz would have

sunk in, the Plans’ fiduciaries knew or should have known that OC’s asbestos liability

threatened OC’s future and that investing in OC stock was highly risky.” Specifically,

the Plaintiffs contended that the OC Defendants breached their fiduciary duties to both

the Plans and the Plan participants by continuing to offer the OC Stock Fund as an

investment option and by limiting the ability of participants to transfer previously

invested funds out of the OC Stock Fund until the company was on the verge of

bankruptcy. The Plaintiffs also alleged that the OC Defendants should have filed a proof

of claim against OC during its bankruptcy proceedings. They brought suit under ERISA

§ 404, 29 U.S.C. § 1104, which requires plan fiduciaries to exercise a prudent standard

of care when administering a plan, as well as ERISA § 405, 29 U.S.C. § 1105, which

imposes liability on a fiduciary for breaches by a cofiduciary.

In December 2006, the Plaintiffs filed their first amended complaint, which

added Lindhuber as a named plaintiff, Fidelity Management Trust Company as a

No. 09-3692 Brown et al. v. Owens Corning Investment Page 6

Review Committee et al.

corporate defendant, and specific members of the Investment Review Committee as

individual defendants. Fidelity was also sued as the trustee of the Plans. The Plaintiffs

alleged that it violated ERISA § 404 by failing to protect Plan assets when Fidelity did

not file a timely proof of claim against OC in the bankruptcy proceedings for the alleged

breaches of fiduciary duties by the OC Defendants. On the other hand, the first amended

complaint dropped the Investment Review Committee and the Benefits Review

Committee as defendants.

In March 2007, the OC Defendants and Fidelity filed their respective motions to

dismiss. In addition to other arguments, the OC Defendants contended that the

Plaintiffs’ claims were barred by ERISA’s three-year statute of limitations. Fidelity

joined that aspect of the OC Defendants’ motion. In July 2007, the district court

converted the OC Defendants’ and Fidelity’s motions to dismiss into motions for

summary judgment on the issue of whether the Plaintiffs’ claims were barred by

ERISA’s statute of limitations. It also permitted discovery on that issue. The district

court denied summary judgment to all of the defendants in March 2008.

In April 2008, the Plaintiffs filed a second amended complaint, adding additional

named Plaintiffs and alleging that the Plaintiffs did not know until 2006 or 2007 that “the

Plans had fiduciaries, there was an Investment Review Committee, [and] fiduciaries

were responsible for managing the Owens Corning Stock Fund.” The OC Defendants

subsequently filed a motion for reconsideration on the statute-of-limitations issue. This

prompted the Plaintiffs to move for leave to file a third amended complaint. The

proposed third amended complaint added additional OC Defendants and contained

allegations that various OC officials had engaged in fraud to conceal the identities,

duties, and fiduciary breaches of the Investment Review Committee members.

In December 2008, the district court granted the OC Defendants’ motion for

reconsideration, finding that all of the Plaintiffs’ claims against the OC Defendants and

against Fidelity were barred by ERISA’s three-year statute of limitations. It also denied

as moot the Plaintiffs’ motion to file a third amended complaint.

No. 09-3692 Brown et al. v. Owens Corning Investment Page 7

Review Committee et al.

In response, the Plaintiffs filed a motion to alter or amend the judgment, arguing

that the district court erred in dismissing their claims against Fidelity without making

separate findings regarding the Plaintiffs’ actual knowledge of Fidelity’s alleged

breaches. They also contended that the court erred in granting summary judgment

without first deciding the Plaintiffs’ motion to further amend their complaint.

The district court granted in part the motion to alter the judgment, clarifying that

it was dismissing the Plaintiffs’ motion to amend their complaint on the basis that the

motion was futile, not moot, and separately discussing why Fidelity was also entitled to

summary judgment on the statute-of-limitations issue. A timely appeal was filed by the

Plaintiffs regarding the district court’s rulings on the motion for reconsideration and the

motion to alter the judgment.

II. ANALYSIS

A. Standard of review

We review de novo a district court’s grant of summary judgment. ACLU of Ky.

v. Grayson County, 591 F.3d 837, 843 (6th Cir. 2010). Summary judgment is proper

where no genuine issue of material fact exists and the moving party is entitled to

judgment as a matter of law. Fed. R. Civ. P. 56(c)(2). In considering a motion for

summary judgment, the district court must draw all reasonable inferences in favor of the

nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587

(1986). The central issue is “whether the evidence presents a sufficient disagreement to

require submission to a jury or whether it is so one-sided that one party must prevail as

a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986).

When a district court denies a motion for leave to amend a complaint because the

proposed amendment would be futile, we also employ de novo review of such a decision.

Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 569 (6th Cir. 2003).

No. 09-3692 Brown et al. v. Owens Corning Investment Page 8

Review Committee et al.

B. ERISA’s statute of limitations

ERISA’s statute of limitations provides for three-year and six-year time periods

during which a plaintiff may bring suit:

No action may be commenced under this subchapter with respect to a

fiduciary’s breach of any responsibility, duty, or obligation under this

part . . . after the earlier of—

(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 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.

29 U.S.C. § 1113. So even though an ERISA plaintiff alleging a breach of fiduciary

duty generally has six years in which to file suit, “this period may be shortened to three

years when the victim had ‘actual knowledge of the breach or violation.’” Wright v.

Heyne, 349 F.3d 321, 327 (6th Cir. 2003) (quoting 29 U.S.C. § 1113(2)).

Actual knowledge means “knowledge of the facts or transaction that constituted

the alleged violation.” Id. at 330. An ERISA plaintiff has actual knowledge when he

or she has “knowledge of all the relevant facts, not that the facts establish a cognizable

legal claim under ERISA.” Id. at 328. In Wright, this court specifically rejected an

interpretation of actual knowledge adopted by at least two other circuits that “requires

a showing that plaintiffs actually knew not only of the events that occurred which

constitute the breach or violation but also that those events supported a claim for breach

of fiduciary duty or violation under ERISA.” Id. at 327-28, 330 (quoting Int’l Union v.

Murata Erie N. Am., Inc., 980 F.2d 889, 900 (3d Cir. 1992)).

No. 09-3692 Brown et al. v. Owens Corning Investment Page 9

Review Committee et al.

C. The Plaintiffs’ actual knowledge of the OC Defendants’ alleged breaches

The district court held that the Plaintiffs obtained actual knowledge sufficient to

trigger the three-year period by October 2000. On appeal, the Plaintiffs contend that

they did not have actual knowledge until 2006 or 2007, when they first learned “that the

Plans had fiduciaries, that there was an Investment Review Committee (which was the

named fiduciary for the Plans), and that fiduciaries were responsible for managing the

OC Stock Fund.”

But the Plaintiffs do not dispute that, by October 2000, they were aware of OC’s

bankruptcy filing and that their investment in the OC Stock Fund was virtually

worthless. Moreover, as the district court correctly noted, the Plaintiffs were aware by

October 2000 that “someone was exercising discretionary oversight of the Plan by

altering transfer restrictions and thereby allowing greater diversification.” (Emphasis

in original.) This knowledge came from the message by the Plan Administrator on Plan

participants’ quarterly account statements for the period ending on September 30, 2000,

as well as from CEO Hiner’s September 29, 2000 letter, both of which explained the new

rules on contributions to the OC Stock Fund. These communications gave Plan

participants actual knowledge that they were not locked into that particular investment.

The Plaintiffs respond by contending that these changes merely related to Plan

amendment, not Plan management. They thus argue that, at most, the Plaintiffs knew

that someone had the authority to amend the Plans’ terms. But this is a difference in

semantics only. The communications informed Plan participants that someone had the

authority to close the OC Stock Fund and to permit the participants to transfer prior

contributions, which is the very solution that the Plaintiffs wanted, albeit a solution that

they wanted many months before the OC stock became virtually worthless. They

therefore knew that someone had the power to take steps to protect their Plan

investments.

Moreover, at least some participants were provided with access to the SPDs,

which clearly identified the OC Benefits Review Committee as the Plan Administrator

No. 09-3692 Brown et al. v. Owens Corning Investment Page 10

Review Committee et al.

and the OC Investment Review Committee as a Named Fiduciary of the Plan. But the

Plaintiffs argue that even if the Plan participants were provided with access to the SPDs,

this, at most, would amount to constructive knowledge of the terms contained therein,

not actual knowledge. We disagree. Actual knowledge does not “require proof that the

individual Plaintiffs actually saw or read the documents that disclosed” the allegedly

harmful investments. See Young v. Gen. Motors Inv. Mgmt. Corp., 550 F. Supp. 2d 416,

419 n.3 (S.D.N.Y. 2008) (holding that the plaintiffs had actual knowledge of an alleged

failure to diversify plan investments when they were provided with plan documents that

described the investments as undiversified, regardless of whether the plaintiffs “actually

saw or read the documents”), aff’d on other grounds, 325 F. App’x 31 (2d Cir. 2009);

see also Edes v. Verizon Commc’ns, Inc., 417 F.3d 133, 142 (1st Cir. 2005) (stating that

Congress did not intend “the actual knowledge requirement to excuse willful blindness

by a plaintiff”). The Plaintiffs attempt to distinguish these cases by arguing that they

involved situations where plan participants were directly given plan documents, rather

than, as is the case here, provided with information on how to access plan documents.

But we see no material distinction between being directly handed plan documents

and being given instructions on how to access them. When a plan participant is given

specific instructions on how to access plan documents, their failure to read the

documents will not shield them from having actual knowledge of the documents’ terms.

See Shirk v. Fifth Third Bancorp, No. 05-cv-049, 2009 WL 3150303, at *3 (S.D. Ohio

Sept. 30, 2009) (“[B]ecause Plaintiffs’ actual knowledge runs from the date that

documents were provided, or made available, to Plan Participants disclosing the facts

underlying the alleged breach of fiduciary duty, Plaintiffs cannot avoid the bar of

ERISA’s three year statute of limitations by merely claiming that they did not read the

documents that form the basis for their claims.” (emphasis added)).

At oral argument, the Plaintiffs argued that the SPDs did not provide actual

knowledge that the Plans had fiduciaries in charge of managing the OC Stock Fund

because the SPDs state that OC’s “Investment Review Committee has been delegated

the authority to alter, adjust, eliminate, substitute or replace any or all of the Funds made

No. 09-3692 Brown et al. v. Owens Corning Investment Page 11

Review Committee et al.

available to participants from time to time (except the Owens Corning Stock Fund).”

(Emphasis added.) The Plaintiffs thus contend that this statement would have given Plan

participants the impression that no one had the authority to get them out of the OC Stock

Fund.

This contention is unavailing for two reasons. First, the argument that the SPDs

would not have notified Plan participants that someone was exercising discretionary

control over the OC Stock Fund is directly counter to their repeated assertion that the

Plaintiffs gained actual knowledge when they allegedly first received the SPDs in

August 2006. Second, any potential misconception that may have been created by this

lone statement in the SPDs would have been cleared up when, in September 2000, Plan

participants were notified that the OC Stock Fund was closed to new investments and

that participants could transfer all prior OC contributions into other investment funds.

The SPDs and other Plan communications thus gave the Plaintiffs actual

knowledge that someone was responsible for managing the Plans—i.e., that some

individual or committee or entity was responsible for the decision to allow participants

to continue to invest in the OC Stock Fund when the Fund was declining in value. So

by October 2000, the Plaintiffs knew that they had been harmed by someone who had

allegedly failed to adequately manage the Plans. These were all the “relevant facts”

needed to trigger the start of the statute-of-limitations period. See Wright v. Heyne, 349

F.3d 321, 328 (6th Cir. 2003). Contrary to what the Plaintiffs argue, they did not need

to know that the responsible parties were charged with fiduciary duties under ERISA.

That is the type of legal conclusion rejected by this court in Wright as not necessary to

a finding of actual knowledge. In any event, the Plaintiffs did receive notice that federal

laws protected their investments. The October 5, 2000 letter from CEO Hiner notified

all employees that “[a]ny investments you have in the company’s profit sharing or

401(k) savings plans are . . . protected by federal regulations.”

Nor did they need to know the specific identity or name of the responsible

individuals or committees. Plaintiffs are permitted to bring suit against unnamed “John

No. 09-3692 Brown et al. v. Owens Corning Investment Page 12

Review Committee et al.

Doe” defendants until discovery or other information reveals the identity of the party.

See, e.g., Cox v. Treadway, 75 F.3d 230, 240 (6th Cir. 1996). Indeed, the Plaintiffs filed

their original complaint without any of the names of the members of the Investment

Review Committee or the Benefits Review Committee. They could have therefore

brought suit long before 2006 against “John Doe” as a placeholder for the individual or

entity responsible for managing the Plans.

The Plaintiffs, however, contend that they needed to know more information to

trigger the actual-knowledge requirement because the breach complained of in the

instant case is a “stealth” breach, i.e., a failure to act to protect Plan participants from

the decline in value of their investments in OC stock. To support this argument, they

rely on Brown v. American Life Holdings, Inc., 190 F.3d 856 (8th Cir. 1999), where the

court stated in dicta that

the nature of the alleged breach is critical to the actual knowledge issue.

For example, if the fiduciary made an illegal investment—in ERISA

terminology, engaged in a prohibited transaction—knowledge of the

transaction would be actual knowledge of the breach. But if the fiduciary

made an imprudent investment, actual knowledge of the breach would

usually require some knowledge of how the fiduciary selected the

investment.

Id. at 859 (emphasis in original).

But the Brown court used the Third Circuit’s definition of actual knowledge,

which has been specifically rejected by this court. See Wright, 349 F.3d at 328-30.

Moreover, the plaintiff in Brown alleged that the plan trustees breached their fiduciary

duties by investing plan assets in overly conservative investments and by taking too long

to decide whether to terminate the plan and roll its assets into another plan. Brown, 190

F.3d at 858-59. Despite the court’s statement in dicta, it ultimately held that “[t]he

alleged failure to diversify, from Brown’s perspective, was severe and apparent from an

examination of the [Plan’s] assets any time after October 20, 1994”—the date the Plan

invested in the allegedly conservative funds. Id. at 859. The Brown court therefore

rejected the plaintiff’s argument that he did not have actual knowledge until he received

No. 09-3692 Brown et al. v. Owens Corning Investment Page 13

Review Committee et al.

a letter in 1997 from the company vice president explaining that “there is no

contemporaneous detailed explanation” for the decisions to invest in conservative

investments. Id. at 860.

Thus, on closer examination, Brown does not support the Plaintiffs’ argument.

In the instant case, the alleged failure to eliminate the harmful effects of the investment

in the OC Stock Fund would have been apparent in October 2000—when OC filed for

bankruptcy and the stock value dropped well below one dollar per share. The Plaintiffs

at that point were on notice that they had been harmed by the retention of OC stock in

the OC Stock Fund.

In sum, the Plaintiffs allege that the OC Defendants breached their fiduciary

duties to the Plaintiffs by their “failure to act to eliminate or otherwise minimize the

harmful effects of an investment—the OC Stock Fund—that had become imprudent.”

But by October 2000, the Plaintiffs knew (1) that they had been harmed because their

investments in OC stock had lost almost all value, and (2) that someone was acting to

manage those investments. This knowledge was sufficient to trigger the three-year

statute-of-limitations period. Because the Plaintiffs did not file their first complaint until

September 2006, their claims against the OC Defendants are time-barred.

D. The Plaintiffs’ motion for leave to amend

While the OC Defendants’ motion for reconsideration was pending, the Plaintiffs

moved to file a third amended complaint. The proposed complaint contained allegations

that various OC officials took steps “to hide the OC Defendants’ breach of fiduciary

duty, as well as to frustrate the efforts of any participant who might seek to bring suit for

breach of the duty.” As quoted above, the ERISA statute of limitations increases to six

years “after the date of discovery” of the alleged breach or violation “in the case of fraud

or concealment.” 29 U.S.C. § 1113. The Plaintiffs presumably sought this amendment

in an attempt to save their lawsuit.

No. 09-3692 Brown et al. v. Owens Corning Investment Page 14

Review Committee et al.

ERISA’s fraud exception to the statute of limitations “requires the plaintiffs to

show (1) that defendants engaged in a course of conduct designed to conceal evidence

of their alleged wrong-doing and that (2) [the plaintiffs] were not on actual or

constructive notice of that evidence, (3) despite their exercise of diligence.” Larson v.

Northrop Corp., 21 F.3d 1164, 1172 (D.C. Cir. 1994) (alteration in original) (citation

omitted); see also Schaefer v. Ark. Med. Soc’y, 853 F.2d 1487, 1491-92 (8th Cir. 1988)

(applying the same standard). The second element of this test is particularly critical in

the present case because the majority of the actions that the Plaintiffs contend constituted

fraud and concealment were taken at or after the time when the Plaintiffs gained actual

knowledge in early October 2000 of the facts underlying the alleged breaches.

They allege, for example, that the pattern of fraud and concealment includes the

letter from CEO Hiner on October 5, 2000 claiming that the company’s bankruptcy

filing “does not affect” participants’ investments, a statement by Hiner on December 4,

2000 that nothing could be done to recoup losses from the OC Stock Fund, and an April

25, 2001 letter from Hiner stating that “[s]teps would be taken to change the 401(k) Plan

in a positive direction.” The Plaintiffs further contend that several participants asked

questions in mid-October 2000 about their losses and whether the OC Stock Fund had

been properly managed, but that no one at OC responded to these specific inquiries.

Although OC did issue a general “Question and Answer” communication to all

employees, the Plaintiffs contend that the answers did not inform the Plan participants

that they had legal rights under ERISA or that Plan fiduciaries had breached their duties.

The Plaintiffs also claim that when the company made a $2.2 million restorative

payment to participants in November 2000, various OC officials explained in a letter to

Plan participants that the payment was “[b]ased on the unintended consequences [that]

unit accounting had on the participants remaining in the Stock Fund.” This explanation

was misleading, the Plaintiffs argue, because the letter should have also informed the

Plan participants that restorative payments are permitted by ERISA when a fiduciary’s

actions create a substantial risk of liability for breach of fiduciary duty. The Plaintiffs

further claim that several of the OC Defendants were aware that they could face lawsuits

No. 09-3692 Brown et al. v. Owens Corning Investment Page 15

Review Committee et al.

for breaches of their fiduciary duties because they discussed potential liability with

outside counsel in October and November 2000.

None of these allegations, however, support a finding of fraud or concealment

sufficient to invoke ERISA’s six-year statute of limitations because the Plaintiffs were

already on actual notice of the alleged wrongdoing—the failure to properly manage the

Plans—when these acts occurred. See Schaefer, 853 F.2d at 1492 (stating that the fraud-

or-concealment provision requires plaintiffs to show that, “despite their exercise of due

diligence or care, they were not on notice of [a defendant’s] breach of duty”). In other

words, the OC Defendants could not have engaged in fraud to conceal from the Plaintiffs

what the Plaintiffs already knew.

The one allegation that predates the Plaintiffs’ actual knowledge is the claim that

OC never informed Plan participants of the identities of the members of the OC

Investment Review Committee during all relevant times (1999 to 2006), an action

required by Plan language. This failure allegedly concealed the identity of the

Committee members. But this sole allegation is insufficient to invoke the six-year

statute of limitations period because, at most, it shows inaction on the part of OC and its

officials and thus “does not rise to the level of active concealment, which is more than

merely a failure to disclose.” See Schaefer, 853 F.2d at 1491. “Concealment by mere

silence is not enough.” Martin v. Consultants & Adm’rs, Inc., 966 F.2d 1078, 1094 (7th

Cir. 1992) (citation omitted). The OC defendants must have engaged in “some trick or

contrivance intended to exclude suspicion and prevent inquiry.” See id. (citation

omitted). The Plaintiffs’ proposed amendment contains no such claims.

Because these allegations are not sufficient to invoke the fraud-or-concealment

exception for ERISA’s statute of limitations, the Plaintiffs’ amendment would have been

futile. See Rose v. Hartford Underwriters Ins. Co., 203 F.3d 417, 420 (6th Cir. 2000)

(holding that a proposed amendment is futile if the complaint, as amended, would not

withstand a motion filed pursuant to Rule 12(b)(6) of the Federal Rules of Civil

No. 09-3692 Brown et al. v. Owens Corning Investment Page 16

Review Committee et al.

Procedure to dismiss for failure to state a claim). The district court thus did not err in

denying the Plaintiffs’ motion to amend.

E. Statute of limitations for Plaintiff Lindhuber

We turn now to Lindhuber, one of the named plaintiffs in the instant action.

Lindhuber filed a proof of claim against OC during its bankruptcy proceedings in April

2002 because she believed that OC was responsible for the losses in the OC Stock Fund.

In June 2006, OC moved to disallow and expunge her claim. The Plaintiffs now argue

that the statute of limitations should be equitably tolled for Lindhuber for the time that

her proof of claim was pending against OC.

Strictly defined, equitable tolling is “[t]he doctrine that if a plaintiff files a suit

first in one court and then refiles in another, the statute of limitations does not run while

the litigation is pending in the first court if various requirements are met.” Black’s Law

Dictionary (8th ed. 2004). We have found only one case where this court has equitably

tolled ERISA’s statute of limitations. The court did so in Farrell v. Automobile Club of

Michigan, 870 F.2d 1129 (6th Cir. 1989), because the plaintiffs there had timely filed

suit in state court and the state court arguably had jurisdiction over the case because the

plaintiffs’ lawsuit could have been interpreted as seeking to recover accrued benefits

under ERISA, “a claim for which federal jurisdiction is concurrent with state court

jurisdiction.” Id. at 1134. Other courts have interpreted Farrell narrowly in declining

to apply equitable tolling. See Shofer v. Hack Co., 970 F.2d 1316, 1319 (4th Cir. 1992)

(interpreting Farrell to hold that equitable tolling of ERISA claims applies only where

the state court’s lack of jurisdiction was not clear); Smith v. Eaton Corp., 102 F. Supp.

2d 439, 442 (W.D. Mich. 2000) (“This Court reads Farrell to apply equitable tolling

only to claims over which state courts have concurrent jurisdiction.”).

We analyze five factors in determining whether equitable tolling is justified:

“1) lack of notice of the filing requirement; 2) lack of constructive knowledge of the

filing requirement; 3) diligence in pursuing one’s rights; 4) absence of prejudice to the

defendant; and 5) the plaintiff’s reasonableness [in] remaining ignorant of the particular

No. 09-3692 Brown et al. v. Owens Corning Investment Page 17

Review Committee et al.

legal requirement.” Truitt v. County of Wayne, 148 F.3d 644, 648 (6th Cir. 1998).

Equitable tolling is thus narrowly applied. Egerer v. Woodland Realty, Inc., 556 F.3d

415, 424 (6th Cir. 2009) (declining to apply equitable tolling where the plaintiffs did not

exercise due diligence to discover their cause of action under the Real Estate Settlement

and Procedures Act).

Applying the above factors to Lindhuber leads us to the conclusion that she did

not lack notice of her rights under ERISA. Lindhuber acknowledged that she was told

how to access Plan documents prior to 2003. She also said that she had “seen” the SPDs,

but the record is unclear as to whether she had read them. The SPDs had two pages of

information on participants’ rights under ERISA, and they specifically stated that

“[u]nder ERISA, the people responsible for operating the Plan are called ‘fiduciaries.’

These individuals have an obligation to administer the Plan prudently and to act in the

interest of Plan participants and beneficiaries.” The SPDs also had a chart listing the

Plan Administrator and the Plan Fiduciary, as well as addresses and telephone numbers

so that participants could contact these entities. Moreover, the October 5, 2000 letter

from CEO Hiner, which was sent to all employees, notified them that their 401(k)

savings plans were “protected by federal regulations.”

Given these facts, Lindhuber did not lack notice of her right to file suit under

ERISA. She thus had no basis to claim ignorance of ERISA as the proper avenue

through which to pursue her claims. Equitable tolling is therefore not appropriate in the

instant case.

F. Statute of limitations for the Plaintiffs’ claims against Fidelity

The Plaintiffs’ final argument on appeal is that the district court erred in

dismissing their claims against Fidelity pursuant to ERISA’s statute of limitations. They

claim that Fidelity breached its fiduciary duties as trustee of the Plans by failing to sue

the other cofiduciaries on behalf of the Plans. The Plaintiffs contend that Fidelity had

actual knowledge of a fiduciary breach by the OC Defendants when OC filed for

bankruptcy in October 2000. All parties therefore agree that Fidelity’s statute-of-

No. 09-3692 Brown et al. v. Owens Corning Investment Page 18

Review Committee et al.

limitations period for bringing a suit against the cofiduciaries would have expired three

years later, in October 2003. The Plaintiffs’ claim against Fidelity thus accrued in

October 2003, at which point no suit had been brought by Fidelity. But the Plaintiffs did

not sue Fidelity until December 2006, so if the Plaintiffs had actual knowledge of the

relevant facts regarding Fidelity’s alleged breach before December 2003, their claim

against Fidelity is time-barred.

All of the quarterly account statements in the record contain references to

Fidelity and at least one specifically has a “Message from Fidelity.” Moreover, the

October 5, 2000 letter from CEO Hiner informs Plan participants that their 401(k)

investments were “maintained in trusts separate from the company.” Finally, the SPDs

identify Fidelity as the trustee and were provided to at least some of the Plaintiffs. All

of the Plaintiffs therefore had actual knowledge by October 2000 that Fidelity was

intimately involved in the Plans and that the Plans were held in a trust, and at least some

of the Plaintiffs knew that Fidelity was the trustee for the Plans.

Moreover, by October 2003, the Plaintiffs knew that no one had brought suit

against OC on behalf of the Plans or the Plan participants and that their losses had not

been recouped. This constitutes “knowledge of all the relevant facts”; i.e., their

investments had suffered, Fidelity was significantly involved in managing the Plans, and

no one had sued OC on behalf of the Plans. See Wright, 349 F.3d at 330. The Plaintiffs

did not need to know that Fidelity was legally deemed a trustee or that, as such, it had

a duty to sue the Plan fiduciaries. Because the Plaintiffs had actual knowledge of the

relevant facts regarding Fidelity’s alleged breach by October 2003, but did not file suit

until December 2006, their claims against Fidelity are barred by ERISA’s three-year

statute of limitations.

III. CONCLUSION

For all of the reasons set forth above, we AFFIRM the judgment of the district

court.

No. 09-3692 Brown et al. v. Owens Corning Investment Page 19

Review Committee et al.

_____________________

CONCURRENCE

_____________________

HELENE N. WHITE, Circuit Judge, concurring. I concur in all but Section II.C.

of the majority opinion, as to which I write separately to identify two points of

disagreement. I nevertheless concur in the ultimate conclusion of that section – that

Plaintiffs had actual knowledge sufficient to trigger the statute of limitations.

I.

Plaintiffs argue that even after receiving the message from the Plan Administrator

in the quarterly account statement for the period ending on September 30, 2000, and the

September 29, 2000, letter from CEO Hiner, they still did not know that someone had

discretionary oversight over the plans and could have worked to move their money from

the OC Stock Fund sooner. They emphasize that the communications that explained the

new rules on contributions to the OC Stock Fund relate to plan “amendment” rather than

plan “management.” The majority rejects this argument as presenting a mere semantic

difference, concluding that “[t]he communications informed Plan participants that

someone had the authority to close the OC Stock Fund and to permit the participants to

transfer prior contributions. . . . They therefore knew that someone had the power to take

steps to protect their Plan investments.” (Opinion at 9.)

I must disagree. After reviewing the communications, I see nothing in them

indicating that a fiduciary, charged to protect Plan participants’ interests, was involved

in the change in rules. The September 29th letter from CEO Hiner merely states that

“the Compensation Committee of the Board of Directors has approved certain changes

to your 401(k) Plan.” (App. 115.) Thus, it appears that the change was effected by OC,

not the Plan administrator or anyone acting to protect the participants. And, even

assuming that the “the Compensation and Benefits Call Center,” to which the letter

directs any questions from Plan participants, is related to the Plan Administrator, the OC

Benefits Review Committee, this provides no indication that the Plan Administrator

No. 09-3692 Brown et al. v. Owens Corning Investment Page 20

Review Committee et al.

played any role in bringing about the changes. Similarly, the “Message From The Plan

Administrator” in the quarterly account statement at issue simply states the new status

quo: “Effective September 29, 2000[,] the Owens Corning Stock fund was closed to any

new contributions or transfers into the fund. Additionally, all company contributions

that were previously restricted are now available to be transferred to any of the other

investment options offered in the plan.” (App. 122.) These documents convey the

message that Owens Corning alone had the authority to amend the plans, and that the

company exercised that authority and then announced the unilateral change via the Plan

Administrator. Thus, a plaintiff receiving this information would not necessarily have

“kn[own] that someone had the power to take steps to protect their Plan investments.”

(Opinion at 9.)

II.

The majority also concludes that the SPDs provided Plaintiffs with actual

knowledge that someone had the power to take steps to protect their Plan investments.

I find the record insufficient to establish such notice as a matter of law, especially as to

the salaried employees.

The majority observes that “at least some participants were provided with access

to the SPDs.” (Opinion at 9.) The evidence concerning Plaintiffs being provided SPDs

comes primarily from the testimony of Richard Tober, head of Compensation and

Benefits for OC. Tober testified that, with regard to hourly employees, SPDs were

“periodically” mailed to participants, and that with regard to salaried employees, SPDs

were “available online” and that their availability was “communicated to all employees.”

(R. 134-2 at 12-13.) Tober also testified that “some were at plant locations that would

have been available.” (R. 134-2 at 13.) In addition, one salaried-employee plaintiff said

that she received a notice (apparently by email) about once a year that stated that a plan

existed and “told you how to find the entire plan if you wanted to,” though the notice did

not contain a link to the entire SPD and she never actually looked up the entire SPD. (R.

54-20 at 15-16.) The majority concludes that this is sufficient to establish that Plaintiffs

No. 09-3692 Brown et al. v. Owens Corning Investment Page 21

Review Committee et al.

had actual knowledge of the information contained in the SPDs: “we see no material

distinction between being directly handed plan documents and being given instructions

on how to access them.” (Opinion at 10.)

Although I agree with the majority that a plaintiff’s failure to read an SPD

furnished to him (or other types of willful blindness) do not prevent a plaintiff from

having actual knowledge of the information in the SPD, the record does not adequately

establish that the SPDs were furnished to Plaintiffs. A helpful yardstick is provided by

the ERISA statute and regulations that describe the publication and disclosure

requirements that apply to SPDs. According to 29 U.S.C. § 1024(b),

Publication of summary plan descriptions and annual reports shall be

made to participants and beneficiaries of the particular plan as follows:

(1) The administrator shall furnish to each participant,

and each beneficiary receiving benefits under the plan, a

copy of the summary plan description, and all

modifications and changes referred to in section

1022(a)(1) of this title--

(emphasis added.) 29 C.F.R. § 2520 sheds some light on how an SPD must be

“furnished” to a plan participant. See Leyda v. AlliedSignal, Inc., 322 F.3d 199, 208 (2d

Cir. 2003); Gertjejansen v. Kemper Ins. Companies, Inc., 274 F. App’x 569, 570 (9th

Cir. 2008). The regulation provides that “the plan administrator shall use measures

reasonably calculated to ensure actual receipt of the material by plan participants,

beneficiaries and other specified individuals.” 29 C.F.R. § 2520.104b-1(b)(1). In

particular, “[m]aterial which is required to be furnished to all participants covered under

the plan . . . must be sent by a method or methods of delivery likely to result in full

distribution.” Id. This standard is high. For example,

in-hand delivery to an employee at his or her worksite is acceptable.

However, in no case is it acceptable merely to place copies of the

material in a location frequented by participants. . . . Material distributed

through the mail may be sent by first, second, or third-class mail.

However, distribution by second or third-class mail is acceptable only if

return and forwarding postage is guaranteed and address correction is

No. 09-3692 Brown et al. v. Owens Corning Investment Page 22

Review Committee et al.

requested. Any material sent by second or third-class mail which is

returned with an address correction shall be sent again by first-class mail

or personally delivered to the participant at his or her worksite.

29 C.F.R. § 2520.104b-1(b)(1). With regard to electronic distribution, the administrator

must

(i) take[] appropriate and necessary measures reasonably calculated to

ensure that the system for furnishing documents–

(A) Results in actual receipt of transmitted information

(e.g., using return-receipt or notice of undelivered

electronic mail features, conducting periodic reviews or

surveys to confirm receipt of the transmitted information)

...

29 C.F.R. § 2520.104b-1(c)(1)(i) & (i)(A). In addition, the plan administrator must

ensure that

(iii) Notice is provided to each participant . . . at the time a document is

furnished electronically, that apprises the individual of the significance

of the document when it is not otherwise reasonably evident as

transmitted (e.g., the attached document describes changes in the benefits

provided by your plan) and of the right to request and obtain a paper

version of such document . . .

29 C.F.R. § 2520.104b-1(c)(1)(iii).

Thus, ERISA’s requirements for furnishing SPDs to plan participants are quite

demanding. It would be strange, indeed, for a plaintiff in an ERISA suit to be

understood to have actual knowledge of the information in an SPD that was not

sufficiently furnished to the plaintiff under ERISA’s own standards. Because it is not

clear from the record whether the ERISA requirements were met, I cannot conclude that

there is no genuine issue whether Plaintiffs possessed actual knowledge of the

information contained in the SPDs.

No. 09-3692 Brown et al. v. Owens Corning Investment Page 23

Review Committee et al.

III.

Despite the above observations, I agree with the result of the majority opinion.

Even without the SPD information, Plaintiffs knew that they had investments that were

protected by ERISA’s requirements. And, by October 2000 they knew about the

bankruptcy and knew that OC stock was nearly worthless. They also knew that their

investments had not been liquidated or moved to another fund before they had lost their

value. I understand these facts to be the “facts . . . that constituted the alleged violation”

under this court’s standard as articulated in Wright v. Heyne, 349 F.3d 321, 330 (6th Cir.

2003).