# Farr v. U.S. West Communications, Inc.

> Court of Appeals for the Ninth Circuit · June 15, 1998 · 151 F.3d 908

URL: https://www.frixlaw.com/law-library/cases/6972762

## Case

- **Full name:** Donald J. FARR Gregory H. Ishmiel Rod W. Tracy Willis L. Rader Joseph T. Dean Robert Heuser Jeanette P. Neufeld v. U.S. WEST COMMUNICATIONS, INC. U.S. West, Inc. U.S. West Management Pension Plan U.S. West Employee's Benefit Committee
- **Court:** Court of Appeals for the Ninth Circuit
- **Decided:** June 15, 1998
- **Citations:** 151 F.3d 908; 98 Daily Journal DAR 6273; 22 Employee Benefits Cas. (BNA) 1289; 98 Cal. Daily Op. Serv. 4573; 1998 U.S. App. LEXIS 38875
- **Precedential status:** Published
- **Opinion:** Concurrence by Noonan
- **Judges:** Hawkins, Merhige, Noonan
- **Cited by:** 19 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/6972762

## How later opinions describe it (automated extraction)

- holding that, even though defendants breached their fiduciary duties by failing to inform plaintiffs about the potential tax consequences of the lump sum distributions of their pension benefits, § 1132(a)(3) did not authorize recovery of compensatory damages for the tax benefi…
- concluding that although defendants breached their fiduciary duties to plaintiffs, plaintiffs were not entitled to any of the equitable remedies they sought under ERISA
- finding a breach of fiduciary duty when fiduciary provided information regarding tax consequences of electing an early retirement option, but left out known facts regarding possible adverse tax consequences
- holding that defendants breached their fiduciary duties by failing to explain negative tax consequences of participation in early retirement plan

## Opinion text

NOONAN, Circuit Judge,
concurring':'
The decision is compelled by Ninth Circuit precedent but I believe we should ask the circuit to take the case en banc and distinguish Mertens v. Hewitt Assocs., 508 U.S. 248 , 113 S.Ct. 2063 , 124 L.Ed.2d 161 (1993). Mertens dealt with damages to be obtained from a non-fiduciary. Id. at 251 , 113 S.Ct. 2063 . When it is a fiduciary that has breached its trust, of course the remedy must be equitable. What else could a court making a trustee true to its trust be doing except providing equitable relief?
If we are unable to do equity here, I agree with Judge Hawkins that Congress should right the wrong.
HAWKINS, Circuit Judge,
specially concurring:
The very best thing that can be said about what happened to the U.S. West employees who elected to participate in this early retirement program is that it represented a gross violation of fiduciary duty. U.S. West officials knew there would be significant tax consequences to some of those who elected to receive their benefits in a lump sum. They even talked about it before a televised presentation to employees and affirmatively decided to withhold the information from plan beneficiaries. This left in place an earlier statement from U.S. West that electing lump sum payments might “offer significant tax advantages.”
It was particularly important that employees considering early retirement know this information, as the form for electing the program also required an election with respect to lump sum dr periodic payment. Employees, in other words, could not elect early retirement and then take some time to seek outside advice whether lump sum or periodic payment made the best economic sense. But these employees were not even told what the phrase “qualifying amount” meant or that amounts that did not “qualify” would be taxed as ordinary income in the year received. One suspects that if the CEO of U.S. West were eligible for this program, he or she would have been told. If fiduciary duty means anything, it is that the information the greatest in a group needs to know must also be told to the least.
In Varity Corp. v. Howe, 516 U.S. 489 , 116 S.Ct. 1065 , 134 L.Ed.2d 130 (1996), the Supreme Court stated: “it is hard to imagine why Congress would want to immunize breaches of fiduciary obligation that harm individuals by denying injured beneficiaries a remedy.” Id. at 1078. Yet that is exactly, according to the Supreme Court interpretation of ERISA § 502(a)(3), 29 U.S.C. § 1132 (a)(3), what Congress has done. See Mertens v. Hewitt Assocs., 508 U.S. 248, 255 , 113 S.Ct. 2063 , 124 L.Ed.2d 161 (1993).
We have faithfully applied Mertens and its restrictive interpretation of § 502(a)(3). See FMC Medical Plan v. Owens, 122 F.3d 1258, 1261 (9th Cir.1997); McLeod v. Oregon Lithoprint Inc., 46 F.3d 956, 960 (9th Cir.1995); Waller v. Blue Cross of California, 32 F.3d 1337, 1339 (9th Cir.1994). Although money damages are available under § 502(a)(3) in the form of restitution, such a remedy does not help Plaintiffs here. I recognize that ERISA is a complex set of interrelated rules that create and also limit beneficiaries’ rights and remedies. But as this case so aptly demonstrates, perhaps Congress should rethink the limited remedies provided in § 502 and afford a greater range of relief to beneficiaries when a fiduciary so clearly breaches its duties.. .

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/6972762. Public record. Not legal advice.