# Hunt v. Hawthorn Associates, Inc.

> Court of Appeals for the Eleventh Circuit · August 5, 1997

URL: https://www.frixlaw.com/law-library/cases/72061

## Case

- **Court:** Court of Appeals for the Eleventh Circuit
- **Decided:** August 5, 1997
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 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/72061

## How later opinions describe it (automated extraction)

- finding that recovery for breach of fiduciary duty under ERISA § 409, 29 U.S.C. § 1109, “inures to the benefit of the plan as a whole”
- finding that section 502 claim under ERISA is analogous to state law contract claim and must be tried before jury

## Opinion text

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 95-2078

D.C. Docket No. 92-40064-WS

HARRY L. HUNT,

Plaintiff-Appellee, Cross-Appellant,

versus

HAWTHORNE ASSOCIATES, INC.,

Defendant,

EASTERN AIR LINES VARIABLE BENEFIT RETIREMENT PLAN FOR
PILOTS; TRUST ADMINISTRATIVE COMMITTEE OF THE EASTERN
AIRLINES VARIABLE BENEFIT RETIREMENT PLAN FOR PILOTS,

Defendants-Appellants, Cross-Appellees.

Appeals from the United States District Court
for the Northern District of Florida

(August 5, 1997)

Before TJOFLAT and COX, Circuit Judges, and CLARK, Senior Circuit
Judge.
TJOFLAT, Circuit Judge:

Harry L. Hunt is a retired Eastern Air Lines (“Eastern”)

pilot seeking to recover a lump-sum retirement benefit under the

Eastern Air Lines Variable Benefit Retirement Plan for Pilots

(the “Plan”).1 Eastern, the Plan’s administrator, which is a

debtor before the Bankruptcy Court for the Southern District of

New York, has refused to pay the benefit because the Plan has

been amended, with the approval of the bankruptcy court, to

foreclose the lump-sum benefit Hunt seeks. As the Plan now

stands, Hunt is entitled to receive only a modified lump-sum

benefit: he may receive a partial distribution immediately and

subsequent payments over time as the Plan’s assets are

liquidated.

Hunt rejected this modified lump-sum benefit, as well as

other payment options provided under the Plan, and sued Eastern;

the Air Line Pilots Association (“ALPA”), the pilots’ union;

Charles H. Copeland, the Chairman of the Trust Administrative

Committee (the “TAC”), the Plan’s named fiduciary; Paul M.

O’Connor, Jr., of O'Connor, Morris & Jones, the TAC’s legal

counsel (the “O'Connor law firm”); and Hawthorne Associates, Inc.

(“Hawthorne”), the TAC’s principal investment advisor, to recover

his retirement benefit in a lump sum. Hunt brought his suit

under the Employee Retirement Income Security Act of 1974

("ERISA"), Pub. L. No. 93-406, 88 Stat. 829, 29 U.S.C. §§ 1001-

1
The Plan’s originating document refers to the plan as the
“B-Plan.” For simplicity, we use the name “Plan.”

2
1461 (1994). His complaint, framed in six counts, asked for

compensatory and punitive damages, injunctive relief in the form

of an order requiring the defendants to pay his lump-sum benefit,

statutory penalties, and attorneys’ fees.

Eastern’s Bankruptcy Trustee, in a motion for summary

judgment, contended that Eastern could not be held liable to Hunt

because it had properly discharged its responsibilities as

administrator under the Plan. Later, when opposing Hunt's motion

for leave to filed an amended complaint, Eastern argued that

Hunt’s claim for a lump-sum benefit had been foreclosed by a

bankruptcy court ruling against Hunt in Eastern’s bankruptcy

case. In an apparent attempt to avoid the effect of this ruling,

Hunt voluntarily dismissed Eastern from the case with prejudice

and, with leave of court, filed an amended complaint against

three defendants -- Hawthorne, the TAC, and the Plan -- that

asserted essentially the same claims presented in his initial

complaint.

The case was tried to the district court; by that time, the

only defendants before the court were the TAC and the Plan.

Without referring to the bankruptcy court’s ruling against Hunt,

the court held that he was entitled to his lump-sum benefit and

entered judgment for Hunt in the amount of that benefit. The

judgment stated that the benefit was to be satisfied out of the

Plan's fund of assets. The court rejected Hunt’s remaining

claims and entered judgment for the defendants.

3
The TAC and the Plan now appeal. Hunt cross-appeals the

court’s rejection of his claim requesting the court to impose a

statutory penalty on the defendants. We reverse the court’s

judgment against the TAC and the Plan, and affirm its judgment on

the statutory-penalty claim.

I.

Hunt claims that, under ERISA and the provisions of the

Plan, he is entitled to recover his retirement benefits in a lump

sum. Unlike the typical scenario in which a participant in an

employee benefit plan sues to recover ERISA benefits, Hunt sought

his lump-sum payment while the administrator of the Plan,

Eastern, was undergoing a highly publicized bankruptcy proceeding

that ultimately resulted in the company’s demise. In addition to

scrutinizing ERISA and the provisions and operation of the Plan,

we must therefore consider the interrelationship between the Plan

and Eastern's bankruptcy in order to evaluate Hunt's claims for

relief.

A.

ERISA is a “comprehensive and reticulated statute” that

created a framework for the administration and maintenance of

private employee benefit plans. Nachman Corp. v. Pension Benefit
Guaranty Corp., 446 U.S. 359, 361, 100 S.Ct. 1723, 1726, 64

L.Ed.2d 354 (1980). The cornerstone of an ERISA plan is the

written instrument, which must provide for “the allocation of

4
responsibilities for the operation and administration of the

plan.” ERISA § 402(b)(2), 29 U.S.C. § 1102(b)(2); see also ERISA

§ 402(a)(1), 29 U.S.C. § 1102(a)(1) (“Every employee benefit plan

shall be established and maintained pursuant to a written

instrument.”).

The written instrument must designate an “administrator,”

ERISA § 3(16)(A)(i), 29 U.S.C. § 1002(16)(A)(i), “to run the plan

in accordance with the . . . governing plan documents.” Curtiss-

Wright Corp. v. Schoonejongen, 514 U.S. 73, 115 S.Ct. 1223, 1231,

131 L.Ed.2d 94 (1995); see also Varity Corp. v. Howe, 116 S.Ct.

1065, 1086, 134 L.Ed.2d 130 (1996) (“Essentially, to administer

the plan is to implement its provisions and to carry out plan

duties imposed by [ERISA].”) (Thomas, J., dissenting). In some

instances, ERISA imposes specific obligations on the plan

administrator. See, e.g., ERISA § 101(b), 29 U.S.C. § 1021(b)

(duty to file plan description, modifications and changes, and

reports with the Department of Labor); ERISA § 105(a), 29 U.S.C.

§ 1025(a) (duty to provide plan participants with information

regarding their benefits).

The written instrument must also “provide for one or more

named fiduciaries who jointly or severally shall have authority

to control and manage the operation and administration of the

plan.” ERISA § 402(a)(1), 29 U.S.C. § 1102(a)(1). The

administrator, as well as the named fiduciary, is considered a

5
“fiduciary” under ERISA.2 Both the administrator and the named

fiduciary must discharge their duties “in accordance with the

documents and instruments governing the plan insofar as such

documents and instruments are consistent with [ERISA],” ERISA §

404(a)(1)(D), 29 U.S.C. § 1104(a)(1)(D), “for the exclusive

purpose of providing benefits to participants and their

beneficiaries,” ERISA § 404(a)(1)(A), 29 U.S.C. § 1104(a)(1)(A).

Because both the plan administrator and named fiduciary must

discharge their duties in accordance with the written instrument,

we examine the provisions of the Plan in detail.3

B.

2
The term “fiduciary” has a broader meaning under ERISA
than at common law because ERISA “defines 'fiduciary' not in
terms of formal trusteeship, but in functional terms of control
and
authority over the plan.” Mertens v. Hewitt Associates, 508 U.S.
248, 262, 113 S.Ct. 2063, 2071, 124 L.Ed.2d 161 (1993). Under
ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A), a fiduciary includes
not only those who “exercise[] any discretionary authority or
discretionary control respecting management of such plan or
exercise[] any authority or control respecting management or
disposition of its assets,” but also those who “[have]
discretionary authority or discretionary responsibility in the
administration of such plan.” The Supreme Court has referred to
ERISA's definition of fiduciary as “artificial.” Mertens, 508
U.S. at 255 n.5.
3
Given the seminal importance of the written instrument
under ERISA, we are puzzled why the parties made little more than
a passing reference to the Plan documents in their briefs and at
oral argument.
For simplicity and clarity, we refer to the specific
provisions of the Plan by citing directly to the relevant section
or subsection. In some instances, the title of the section or
subsection is noted parenthetically.

6
The Plan is a variable benefit pension plan for Eastern

pilots that was created in 1958 pursuant to a collective

bargaining agreement between Eastern and ALPA. The parties

rewrote the Plan in the 1970s to comply with ERISA and

subsequently amended it in 1986.4

The Plan is a “defined contribution plan.”5 According to 26

U.S.C. § 414(i), a defined contribution plan is a “plan [that]

provides for an individual account for each participant and for

benefits based solely on the amount contributed to the

participant's account, and any income, expenses, gains and

losses, and any forfeitures of accounts of other participants

which may be allocated to such participant's account.” More

simply, in the words of an ALPA newsletter sent to Eastern

pilots, a participant's interest in a defined contribution plan

is “determined solely by contributions made in a beneficiary's

name and the subsequent investment performance of those

contributions.” The Plan requires that Eastern make

contributions on behalf of each participant, see § 4.1 (“Eastern

Contributions”),6 for investment in stocks, bonds, real estate,

4
The original written instrument that established the Plan
is known as "Document 91." The 1986 amendment is known as
“Document 91A.”
5
Section 12.14 of the Plan, titled “Plan Is Defined
Contribution Plan,” states: “Since [the Plan's inception], the
Plan has been and continues to be a defined contribution plan.”
This section appears in Document 91C, an amendment to the Plan
that will be discussed in part I.D, infra.
6
According to the original agreement, Eastern was to
contribute on behalf of each participant an amount equal to 11%
of his compensation. On February 23, 1986, Eastern and ALPA

7
and other assets. These investments constitute the Plan’s

“Variable Fund” (the “Fund”). See § 1.36 (“Variable Fund”).7 As

a result, the value of a participant's interest in the Plan

depends not only upon the funds contributed but also on the

investment return on the Fund's assets. See Borst v. Chevron

Corp., 36 F.3d 1308, 1311 n.2 (5th Cir. 1994), cert. denied, 115

S.Ct. 1699, 131 L.Ed.2d 561 (1995). The value of the Fund is

calculated annually as of December 31 of each calendar year. See

§ 5.1 (“Fund Value”).

The Plan designates Eastern as the “plan administrator."

Eastern has “those powers necessary to carry out the day to day

operation of the Plan.” See § 2.2(a) (“Administration”). Those

powers include the broad responsibility to “initially determine

all questions arising from the administration, interpretation,

and application of the Plan pursuant to all applicable law,

agreements and contracts and such determination shall be binding

upon all persons, except as otherwise provided by law, and

further provided that each Participant shall be granted the same

signed a collective bargaining agreement that adjusted Eastern's
contribution level in two ways: (1) for pilots employed before
March 2, 1986, Eastern's contribution was set at 10% effective
January 1, 1988; (2) for pilots employed on or after March 2,
1986, Eastern's contribution was set at 3%. In addition,
participants had the option of contributing up to 10% of their
earnings as “optional additional contributions” to augment their
interest in the Plan. See § 4.2 (“Optional Additional
Contributions”).
7
According to § 1.36, the Fund is “the property of the
Plan, . . . all of which is held in trust pursuant to Trust
Agreement between the [TAC] and State Street Bank and Trust
Company . . . and any other trust created for such purpose by the
[TAC].”

8
treatment under similar conditions.” Id. The Plan also charges

Eastern with the responsibility for, inter alia, keeping records,

see § 2.4 (“Records”), preparing and distributing periodic Plan
summaries, see § 2.5 (“Plan Summary”), and sending to each

participant an annual statement reflecting the value of his

investment in the Plan, see § 2.6 (“Annual Statement”). Section

13.1 of Article XIII, which is titled “Modification, Suspension

or Discontinuance,” grants Eastern the authority to unilaterally

modify, suspend, or discontinue any feature of the Plan, provided

that any such action does not "adversely affect" any benefits

"already provided" to a participant under the Plan. An exercise

of this authority, however, would not constitute an amendment to

the Plan.8

The Plan designates the TAC, a small committee that monitors

the management of the Plan’s assets,9 as its "named fiduciary."

8
The Plan documents do not explicitly describe how the Plan
may be formally amended. The closest provision is § 14.1, which
states that Eastern and ALPA must agree upon any modification
that is necessary for the Plan to qualify as a pension plan under
ERISA. See § 14.1 (“Qualification of Plan”). The record makes
clear, however, that both Eastern and ALPA must approve any
substantive amendment to the Plan, with the exception of an
amendment made pursuant to § 1113(e) of the Bankruptcy Code, 11
U.S.C. § 1113(e). See infra note 20.
9
The TAC initially consisted of two members selected by
ALPA, two members selected by Eastern, and three “outside”
members chosen by ALPA and Eastern. By the time of the events
involved in the present controversy, the Plan had been amended to
provide that two members were to be selected by ALPA, and five
outside members would be appointed by the existing TAC members
with ALPA’s approval. TAC’s outside members at this time
included former President Gerald R. Ford; a former president of
Citicorp, William I. Spencer; a former chairman of the board of
Metropolitan Life Insurance Company, George P. Jenkins; and a
former dean of the Harvard Business School, Lawrence E. Fouraker.

9
Under the Plan, the TAC has "overall supervisory responsibility

of the administrative functions of the Fund," see § 2.13(b)(i)

(“Fund Administration”), and the duty "to maintain surveillance

over the status and administration of the Plan and the [Fund],"

see § 10.2(b) (“Rights and Duties of the [TAC]”). It must

“regularly and periodically suppl[y]” information to ALPA about

“transactional detail, cash flow reports, investment status,

documentation and Fund performance,” see § 2.11 (“Information and

Accountability”), and furnish to ALPA and Plan participants

reports about the TAC's “functions, actions, and decisions . . .

as are reasonable and appropriate.” See § 10.2(c). Furthermore,

the TAC is charged with the responsibility of selecting and

replacing investment advisors and trustees of the Fund's assets,

see § 2.7(b) (“Trust Agreement and Trustee”), as well as giving

directions and instructions to these trustees, see § 2.8

(“Directions to Trustee(s)”). Before selecting or replacing

investment advisors or trustees, however, the TAC must notify

ALPA of the TAC's planned course of action and give ALPA an

opportunity to respond, see § 2.7(b), thus effectively giving

ALPA a quasi-veto power over these decisions. Similarly, before

giving any notice or instruction to a Fund trustee, the TAC must

notify ALPA and give it fifteen days to object. See § 2.8.

The compensation for the outside TAC members is paid by the
Fund, see § 2.2(b)(iii), whereas the compensation for TAC members
from ALPA is paid by ALPA, see § 10.1(b)(ii).

10
Pursuant to its authority under sections 2.7 and 2.13(d),10

the TAC hired Hawthorne as the Plan's principal investment

advisor/manager for the time period relevant in this case.

Hawthorne's duties are enumerated in a written “investment

advisor agreement" between the TAC and Hawthorne. According to

the testimony of Hawthorne's chairman, Charles G. Dyer, Hawthorne

assumed many of the TAC’s administrative duties involving the

Fund and its assets, including the scheduling of TAC meetings and

the release of quarterly statements to participants about the

value of the Fund's assets. In essence, Hawthorne served "at the

pleasure of the [TAC]."

C.

Since the Plan's inception, an Eastern pilot choosing normal

or early retirement could elect to receive his benefits in the

form of monthly annuity payments.11 Beginning in 1983, a

10
According to § 2.13(d), the TAC “may delegate to any
person, including, but not limited to, Investment Advisors, all
or any portion of the [TAC's] powers, duties and responsibilities
to establish and maintain a Fund Office, to maintain records and
to prepare reports and documentation. The [TAC] shall make such
delegations in writing and is authorized to pay reasonable fees,
charges and costs of the person or persons providing such
service.” This delegation of authority is consistent with ERISA.
See ERISA § 402(c)(3), 29 U.S.C. § 1102(c)(3).
11
The Plan provided participants with a panoply of annuity
options. Retiring pilots selecting an annuity could choose from
the post-retirement joint and survivor annuity, the contingent
annuity, the level income option, the life annuity option, and
the deferred payment option. See § 6.2 (“Available Forms of
Payment”). There also was a disability benefit option. See §
6.3 (“Disability Benefit”).

11
retiring pilot also could elect to receive his benefits in the

form of a lump-sum payment.

Processing an application for a lump-sum benefit involved

five steps.12 First, a pilot seeking a lump-sum payment would

complete the necessary paperwork and inform the Chief Pilot, an

Eastern management employee, of his intention to retire. Second,

the Chief Pilot would check to make sure that the pilot met age

criteria to qualify for normal or early retirement benefits under

the Plan.13 Third, if the pilot met the age qualifications, the

Chief Pilot would inform the Eastern Pension and Insurance

Department about the pilot's decision to retire. Fourth, the

Eastern Pension and Insurance Department would contact the Plan's

actuary, William M. Mercer, Inc., which would determine the

precise amount of benefits to which the retiring pilot was

entitled. Fifth, the actuary would then give that information to

the State Street Bank & Trust Company, a Plan trustee, which

would make the distribution to the pilot. The lump-sum payment

12
The Plan does not explicitly set forth the procedure for
processing claims for retirement benefits. The above account of
the claims-processing procedure is taken from the deposition and
affidavit of Charles Dyer of Hawthorne and from the affidavit of
Brian P. White, who served as Director of the Eastern Pension and
Insurance Department. Both accounts of Eastern's claims-
processing procedure are virtually identical. After the trial,
the district court, in fashioning its order directing the entry
of judgment, relied exclusively on the account given in the White
affidavit.
13
Normal retirement age under the Plan is 60. See § 1.22
(“Normal Retirement Age”). The minimum early retirement age is
50. See § 1.15 (“Early Retirement Date”).

12
would be equal to the entire actuarial present value14 of the

pilot's accrued benefit15 as of his effective retirement date.16

See § 6.2(e)(i) (“Lump Sum Option”). A pilot dissatisfied with

the disposition of his application for benefits could pursue

administrative relief with the Pension Dispute Board pursuant to

Article XI (“Determination of Disputes”) of the Plan.17

D.

In the late 1980s, Eastern was experiencing severe financial

difficulties against the backdrop of a highly publicized labor

dispute. On March 9, 1989, Eastern filed for bankruptcy

protection under Chapter 11 of the Bankruptcy Code, 11 U.S.C. §§

14
“Actuarial present value” is the current value of monthly
benefits determined by the current value of an annuity unit at
the most recent valuation. See § 1.6 (“Actuarial Present
Value”).
15
An “accrued benefit” is essentially the total number of
“annuity units” credited to the account of a participant. See §
1.2 (“Accrued Benefit”). An annuity unit is a unit of measure
representing a share in the Fund. See § 1.7 (“Annuity Unit”).
16
“Effective retirement date” essentially means the normal
retirement date or early retirement date. See § 1.18 (“Effective
Retirement Date”). The normal retirement date is the first day
of the month coinciding with or otherwise next following a
participant's 60th birthday. See § 1.23 (“Normal Retirement
Date”). The early retirement date is the first day of the month
on which a participant elects to retire and receive a pension,
provided that he is at least 50 years old. See § 1.15(a) (“Early
Retirement Date”).
17
The Pension Dispute Board consisted of four members: two
were selected by Eastern and two were selected by ALPA. The
Board had the authority to hear and determine “[a]ll disputes
concerning the application, interpretation or administration of
the Plan in respect to individual employees and their
participation in or their benefits under the Plan.” § 11.2
(“Authority [of Pension Dispute Board]”).

13
1101-1174, in the Bankruptcy Court for the Southern District of

New York. On March 20, 1990, Eastern and ALPA signed an interim

letter of agreement, effective March 2, 1990, fixing Eastern's

contribution to the Plan for all pilots at 3% of compensation.18

On April 18, 1990, the bankruptcy court named Martin R. Shugrue

as Bankruptcy Trustee of Eastern (the “Bankruptcy Trustee”). The

Bankruptcy Trustee began liquidating certain company assets in an

attempt to reorganize Eastern as a smaller carrier.19

On September 11, 1990, the Bankruptcy Trustee, proceeding

under section 1113(e) of the Bankruptcy Code, applied to the

bankruptcy court for an order, which the court entered, approving

an amendment to the Plan.20 Pursuant to this order, Eastern

reduced its contribution to the Plan to 0% for compensation

earned by pilots after August 11, 1990, and provided for

resumption of its contribution of 3% for such compensation on or

after June 1, 1991. This amendment also suspended the Pension

18
For Eastern pilots employed before March 2, 1986, Eastern
had been contributing 10% of compensation since January 1, 1988.
See supra note 6.
19
The record indicates that the Eastern Pension and
Insurance Department retained its authority and continued to
perform its responsibilities under the supervision of the
Bankruptcy Trustee.
20
Section 1113(e) of the Bankruptcy Code, 11 U.S.C. §
1113(e), states that the bankruptcy court, “after notice and a
hearing, may authorize the trustee to implement interim changes
in the terms, conditions, wages, benefits, or work rules provided
by a collective bargaining agreement.” The bankruptcy court may
authorize such measures only if they occur “during a period when
the collective bargaining agreement continues in effect,” and “if
[such measures are] essential to the continuation of the debtor's
business, or in order to avoid irreparable damage to the estate.”

14
Dispute Board’s powers effective August 11, 1991. ALPA objected

to the Bankruptcy Trustee’s action and appealed to the district

court the bankruptcy court’s order authorizing this amendment.

The record does not inform us of the district court’s disposition

of this appeal.

After Eastern's Chapter 11 filing, the Fund became

increasingly illiquid due to three factors. First, because

Eastern had suspended and eventually ceased making contributions

to the Plan, the Fund's sole source of cash was the return on its

investments. Second, a substantial portion of the Fund's assets

were invested in real estate, which was depressed in value due to

a nationwide real estate recession. Third, the lump-sum option

for receiving benefits had become increasingly popular with

retiring pilots. In fact, the annual amount distributed in lump-

sum payments had risen steadily from $52,000,000 in 1986 to more

than $200,000,000 in 1990.

On January 18, 1991, Eastern shut down its operations,

effectively retiring the approximately 2,500 pilots in its employ

at the time. The same day, O'Connor of the O'Connor law firm,

which served as counsel to the TAC, contacted Brian P. White,

Director of Eastern's Pension and Insurance Department, and told

White that the TAC “recommended” that Eastern place a temporary

moratorium on lump-sum payments. White, in response, said that

Eastern lacked the authority to impose a moratorium. On January

19, 1991, O’Connor confirmed the recommendation by letter, a copy
of which he sent to ALPA, the TAC, and Hawthorne.

15
On January 27, 1991, according to the deposition testimony

of former President Gerald R. Ford, the TAC voted unanimously to

impose the temporary moratorium.21 The record does not disclose

how the TAC planned to implement the moratorium.

On January 28, 1991, O'Connor, representatives of ALPA and

Eastern and their respective attorneys,22 met to discuss the need

to place a temporary moratorium on lump-sum payments. The record

does not disclose whether at this meeting the parties discussed

Article XIII of the Plan, which gives Eastern the power to

“modify, suspend . . . or discontinu[e] . . . any feature [of the

Plan].”

On February 1, 1991, the TAC issued a “Certificate of Action

of the [TAC of the Plan] Taken upon Unanimous Written Consent.”

In this document, the TAC stated that it, “as named fiduciary of

the [Plan], has decided to, and hereby does, impose a temporary

moratorium upon the payment of benefits to all Eastern pilots who

shall file requests for benefits after the close of business on

January 18, 1991.”23 This Certificate also instructed O'Connor

to “notify [Eastern] of the [TAC's] request that Eastern, as

21
In his deposition, former President Ford, a member of the
TAC at the time the moratorium was imposed, see supra note 9,
stated that “[the decision to impose the moratorium] was
unanimous between Mr. Spencer, Mr. Jenkins, Mr. Fouraker, the
[ALPA] members, and myself.”
22
The record does not indicate whether the Bankruptcy
Trustee was present, or represented, at the meeting.
23
The moratorium did not affect participants who were
already receiving annuities or who had submitted their
application for a lump-sum benefit by the close of business on
January 18, 1991.

16
[Plan] Administrator, promptly notify all Eastern pilots who

shall file requests for benefits after the close of business on

January 18, 1991, that, until further notice, a temporary

moratorium has been placed in effect by [the TAC].” Pursuant to

the TAC's request, Eastern mailed notice of the moratorium to all

of its pilots on February 4, 1991.24 In this notice, Eastern

advised pilots that “[q]uestions regarding the temporary

moratorium should be addressed to the [TAC]” at one of the

following addresses: (1) the TAC, care of the O'Connor law firm;

or (2) the TAC, care of Hawthorne.

White stated that, after Eastern's shutdown and the

commencement of the moratorium, the procedure for processing

claims for benefits under the Plan remained the same except for

two changes: (1) the retiring pilot would contact Eastern's

Pension and Insurance Department directly rather than go through

the Chief Pilot; and (2) Eastern's Pension and Insurance

Department would inform the actuary whether a participant had

applied for benefits following the shutdown. If the participant

had applied after the shutdown, the bank would not issue a

benefit check.

On May 22, 1991, the TAC mailed a letter and a videotape to

all Plan participants and beneficiaries. The letter and

videotape were designed to inform these parties about the current

24
This mailing consisted of two documents: (1) a brief
cover letter printed on Eastern stationery; and (2) a two-page
notice about the moratorium signed by the TAC and addressed to
all Eastern pilots.

17
status of the Plan and its plans for the future in light of the

“present liquidity issues confronting the [Plan]” -- that is, the

state of the Plan after Eastern's shutdown and bankruptcy.

On June 25, 1991, the Bankruptcy Trustee and ALPA modified

the Plan by letter of agreement.25 This agreement modified the

Plan in three significant ways. First, the Plan provided for a

periodic-payment option that enabled participants to receive

their retirement benefit in substantially equal monthly payments

that were made for life (or life expectancy). See § 6.11

(“Periodic Payments”). These payments would be exempt from the

ten percent additional tax assessed on early distributions from

qualified retirement plans.26 Second, a new article (Article XV)

was added in order to enable participants to take out loans from

the Plan during this time of financial uncertainty.27 The

25
This agreement is known as “Document 91B.”
26
Under the “periodic payment” option, a participant could
elect to receive the actuarial present value of his accrued
benefit in the form of periodic monthly payments as described in
I.R.C. § 72(t)(2)(A)(iv), 26 U.S.C. § 72(t)(2)(A)(iv); under this
option, the benefit amount was determined as of the date of
receipt. Participants who were receiving an annuity or had an
outstanding balance on a loan from the Fund were not eligible for
this option. If the periodic-payment arrangement was
discontinued or altered within five years after it started or
before the participant reached age 59.5, whichever was later, the
participant's subsequent election of another form of benefit from
the Plan would trigger the 10% penalty tax normally associated
with premature distributions, unless the participant was 55 or
older when separating from Eastern. If the penalty tax was
triggered, it would be applied retroactively to those amounts
previously withdrawn. See § 6.11.
27
Participants who were annuitants or periodic-payment
recipients were not eligible to receive loans from the Plan. The
maximum loan that could be made was the lesser of $50,000 or 25%
of the actuarial present value of the participant's accrued

18
amendment provided that the TAC would serve as administrator for

these two provisions; Eastern, however, retained its

administrative authority for all other provisions of the Plan.

See §§ 6.11(f), 15.1. Third, the Plan was amended to provide

that the value of benefits distributed from the Plan was to be

determined at the time of distribution. Thus, the value of a

participant's lump-sum benefit would no longer be determined as

of the effective retirement date. See § 6.2(e)(i).

On July 27, 1992, pending approval by the bankruptcy court,

the Bankruptcy Trustee and ALPA entered into a letter of

agreement once again. Referred to as Document 91C, this proposed

amendment would make two fundamental changes to the Plan. First,

the Fund would be divided into a liquid portion (i.e., cash,

marketable stocks, and bonds) and an illiquid portion (i.e., real

estate, alternative investments, and working capital). Each Plan

participant would have a percentage interest in both the liquid

and illiquid portions of the Fund rather than an interest in the

Fund as a whole. Second, the lump-sum option was modified to

provide for a partial distribution -- that is, an immediate cash

payment equal to the liquid portion of each eligible

participant's account. A participant selecting this option also

would receive extended payments over time as the real estate and

other illiquid assets were sold. The modified lump-sum option

benefit at the time of loan. See § 15.4 (“Plan Loans”).

19
had become feasible because of recent favorable changes in the

tax code for partial distributions.28

On August 19, 1992, pursuant to its duties under section

10.2(c), the TAC sent a letter to all Plan participants to

describe the modified lump-sum option and to explain why the

moratorium had been imposed:

The lump sum option in the [Plan] has been modified by
Document 91-C to address the reality that the [Plan] has a
substantial amount of high quality illiquid assets that
cannot be liquidated quickly without suffering a substantial
discount in order to achieve a quick sale. The [Plan] does
not have sufficient cash and other liquid assets to allow
eligible participants to take their lump sum in cash. This
is what caused the imposition of the moratorium in January
1991.

On October 1, 1992, the Bankruptcy Trustee and ALPA filed a

joint motion in the Bankruptcy Court for the Southern District of

New York seeking approval of the amendment provided by Document

91C. On November 13, 1992, the bankruptcy court granted their

motion and approved the amendment to the Plan, effectively ending

the moratorium. The operative date of the Document 91C amendment

was June 30, 1992.

II.

A.

28
Effective January 1, 1993, partial distributions from a
qualified pension plan could be rolled over into an individual
retirement account (“IRA”) without adverse tax consequences. See
26 U.S.C. § 402(c)(4) (1993). Before this change, a participant
could not roll over a partial distribution into an IRA without
significant tax liability. See 26 U.S.C. § 402(a)(5)(D) (1991).

20
Harry Hunt worked as a pilot for Eastern for twenty-four

years. He elected to retire effective March 1, 1991, and demands

that he be paid a lump-sum benefit for the value of his interest

in the Plan as of that date.29 On February 22, 1991, Eastern's

Pension and Insurance Department received his application for

benefits, which was signed by Hunt on February 5, 1991. On April

22, 1991, the manager of Eastern's Pension Administration

Department, Ms. S.W. Boles,30 approved Hunt's application and

authorized payment of his benefits.31 Given Eastern's

instruction to the actuary that it apply the moratorium to those

applications submitted after January 18, 1991, the State Street

Bank and Trust never made any payment to Hunt. Although Hunt is

eligible to receive a modified lump-sum benefit and future

payments in accordance with the Document 91C amendment, he has

refused to elect that option. In addition, Hunt did not select

the periodic-payment option nor did he take out a loan from the

Plan.

29
The parties agree that the value of Hunt's accrued
benefit in the Fund as of March 1, 1991, was $352,748.74.
30
The record does not disclose the relationship between
Eastern's Pension and Insurance Department and Eastern's Pension
Administration Department. Given the facts before us, we assume
that the latter department carried out the policies and
directives of the former department.
31
Hunt's application requested that his lump sum be rolled
over into his IRA at Dean Witter Reynolds, Inc. If a lump-sum
distribution was rolled over into an IRA or other eligible
retirement plan within 60 days, the lump-sum payment would not be
included in gross income for the taxable year in which paid. See
I.R.C. § 402(a)(5), 26 U.S.C. § 402(a)(5) (1991).

21
Dissatisfied with the progress of his application, Hunt

dispatched four letters, the first by himself and the other three

through two different attorneys. He alleges that these letters

were sent pursuant to the instructions in Eastern's February 4,

1991, letter to all Eastern pilots. On March 15, 1991, Hunt

wrote to Charles G. Dyer, the chairman of Hawthorne, to inquire

about the status of his pension.32 On March 20, 1991, through

the first of three attorneys whom Hunt employed in this

controversy,33 he wrote to O'Connor in order to request the most

current statement of his account and the most recent financial

statement for the Plan “showing [its] assets and liabilities.”

On July 15, 1991, through a second attorney, he wrote another

letter to Dyer of Hawthorne. In that letter, he requested a

32
In this letter, Hunt expressed his extreme
dissatisfaction with the moratorium, Hawthorne, and the TAC. He
stated among other things: (1) “I have just been informed . . .
that the proposed moratorium could be extensive. THIS IS
COMPLETELY UNSATISFACTORY! (emphasis in original) (2)
“[Hawthorne] is administering a Plan that is already funded and
in place. It would appear the delays are 'stalling tactics' to
financially injure [those] participants who were working on
January 18.” (3) “The proposal that the [TAC] will adopt changes
or amend the provisions of the [Plan] after [Eastern] had ceased
business is ridiculous. The Plan was established and funded long
before the demise of the Airline.” (4) “The possibility of
offering partial payments or '[Plan] loans' is completely
unsatisfactory to me. If I want to borrow money, I go to a bank.
Banks lend money, and retirement funds were established to
provide retirement benefits to their participants. If the
various members need cash then they should apply to a bank, --
banks lend money!”
33
The first lawyer whom Hunt employed wrote the letter of
March 20, 1991. The second lawyer wrote the July 15 and August
19, 1991, letters described in the text above. The third lawyer
employed by Hunt brought the instant law suit and prosecuted it
in the district court and on this appeal; a lawyer in his firm
assisted him with this appeal.

22
statement of “the TAC's position on his application,” copies of

all amendments to the Plan affecting his benefits, an explanation

if the TAC were to deny his application, and the name, address,

and the forms necessary to file a claim with the Pension Dispute

Board if the TAC decided not to pay his lump sum. Hunt also sent

a copy of this letter to the then-chairman of the TAC. Finally,

on August 19, 1991, the same attorney wrote on Hunt's behalf to

O'Connor to request copies of the “amendments to the Plan,” an

explanation of whether the TAC “had the right to amend the

[Plan],” and a statement disclosing the number of applications

for lump-sum benefits filed since January 18, 1991.34 Hunt

complains that none of his letters were answered.

B.

On February 21, 1992, Hunt filed a complaint in the United

States District Court for the Northern District of Florida

against the following parties: Eastern, ALPA, Hawthorne, Charles

H. Copeland as chairman of the TAC, and O’Connor as partner and

34
On August 23, 1991, in response to a purported “request”
by his Congressman, Hunt sent a letter to Mr. Stephen Mayle of
the Office of Filings, Information, and Consumer Services of the
United States Securities and Exchange Commission. He made, inter
alia, the following statements: (1) “I believe Mr. Dyer [of
Hawthorne] and the [TAC], which is packed with [ALPA]
[r]epresentatives, are trying to prevent these lump sum payouts
by arbitrarily modifying the retirement agreements so as to
prevent the retiree from moving his account to other fund
managers or IRA retirement programs of their choice.” (2) “I
request your expeditious assistance in investigating Mr. Dyer's
activities as the Fund Manager to determine if he is in violation
of Security and Exchange Commission Rules relating to investment
fund mangers and request your prompt reply regarding your
findings in this matter.”

23
agent for the O’Connor law firm. The complaint was a typical

“shotgun” pleading.35 With the exception of Count I, Hunt made

only general references to “ERISA,” failing to indicate which

provision of the statute served as his basis for relief.

The complaint contained six counts or causes of action.

Each incorporated the allegations, mostly factual, set out in the

first twenty-four paragraphs of the complaint. In those

paragraphs, Hunt made essentially the following allegations:

he was a participant in the Plan;

on February 5, 1991, he mailed to the Plan administrator’s
(Eastern’s) Pension and Insurance Department a “Notice of
Retirement Status, electing a lump sum payout of his
benefits under the [Plan], effective on his early retirement
date of March 1, 1991";

he inquired of Hawthorne on March 15, 1991, May 3, 1991, and
May 7, 1991 as to when he would receive his lump-sum payment
for his accrued benefit;

35
See, e.g., Ebrahimi v. City of Huntsville Bd. of Educ.,
114 F.3d 162, _______ (11th Cir. 1997); Anderson v. District Bd.
of Trustees, 77 F.3d 364, 366-67 (11th Cir. 1996). As such, the
complaint was not the model of clarity and precision necessary to
enable the defendants to frame a responsive pleading. The
district court would have been within its rights had it stricken
the pleading on its own initiative and required a repleader.
Ebrahimi, 114 F.3d 162 at ______; Anderson, 77 F.3d at 367 n.5;
Cesnik v. Edgewood Baptist Church, 88 F.3d 902, 907 n.13 (11th
Cir. 1996), cert. denied, 117 S.Ct. 946, 136 L.Ed.2d 834 (1997).
As we relate infra, the court subsequently took such action when
Hunt’s attorney moved the court for leave to file an amended
complaint, which amounted to nothing more than a rehash of the
original complaint. The court denied his motion with leave to
file an amended complaint that did not suffer from “some of the
same infirmities contained in his original complaint.” Hunt’s
attorney thereafter filed an amended complaint, but it
constituted no improvement over his original pleading.
Unfortunately, rather than striking the amended complaint from
the record, the court accepted it. As a result, Hunt’s claims
remained ambiguous and in part inconsistent, the issues were not
properly delineated, and the trial yielded the erroneous decision
we set aside today.

24
Hawthorne replied that he would be paid between June 15,
1991, and June 30, 1991;

the Plan administrator had not paid his benefit because a
moratorium had been placed on the payment of lump-sum
benefits;

the “moratorium resulted from resolutions rendered by ALPA”;
and

he retained counsel in order to obtain his lump-sum
benefit.36

Count I of the complaint, titled “Failure to Provide

Information,” alleged that the defendants’ failure “to respond

within 30 days to repeated written requests made by Hunt since

March 20, 1991, as required by 29 U.S.C. § 1132(c)(1)(B),”

rendered the defendants “liable to Hunt in an amount up to $100

per day from the date of this failure to respond pursuant to

[section] 1132(c)(1)(B).” Accordingly, Hunt requested “judgment

against Defendants for the applicable penalty and damages, . . .

such further relief as the court deems appropriate and . . .

prejudgment interest, costs and reasonable attorneys’ fees.”

Count II, titled “Action to Enforce Rights under [Plan],”

alleged that Hunt had properly submitted his request for a lump-

sum benefit; that he was entitled to the benefit; and that the

“Defendants have failed to pay or direct payment of said benefits

and have failed to provide any disposition of Hunt’s claim.”

Accordingly, Hunt asked the court to “enter an order requiring

36
Hunt also alleged that he “relied on [Hawthorne’s]
representations [that he would receive his benefits between June
15 and 30, 1991] and on the terms of the Plan in establishing his
business and activities following his retirement [from Eastern].”

25
Defendants to pay Hunt his benefits and award to him prejudgment

interest, costs and reasonable attorneys’ fees.”

Count III, titled “Breach of Fiduciary Duty,” alleged in

pertinent part:

the defendants were fiduciaries under ERISA;

“ALPA has a duty not to interfere with Hunt’s interest”;

“[t]he value of Hunt’s [Plan] account continues to decrease
since his effective retirement date”;

the defendants “willfully and wantonly breached their
fiduciary duty to Hunt by failing to pay [his lump-sum
benefit], by failing to respond to Hunt’s requests for
information, by interfering with Hunt’s rights to [his
benefit], and by failing to discharge their duties solely in
the interest of the participants for the exclusive purpose
of providing benefits in accordance with the [Plan]
documents”;

the decision to impose the moratorium on lump-sum benefits
was “arbitrary and capricious, [was] contrary to the terms
of the [Plan] and [was] contrary to law”; and

“[a]s a result of Defendants’ breach of the fiduciary
duties, Hunt has been damaged by failing to receive his lump
sum payout and the resulting payment of increased interest
expense for loans obtained pending payment.”

Accordingly, Hunt demanded “compensatory and punitive damages

against Defendants jointly and severally and request[ed] entry of

an order awarding to him prejudgment interest, costs and

reasonable attorneys’ fees.”

Count IV, titled “Recovery of Benefits,” alleged that “Hunt

has been damaged by Defendants’ failure to pay Hunt the benefits

to which he is entitled under the [Plan].” Accordingly, Hunt

demanded “judgment against Defendants jointly and severally for

payment of his benefits under the [Plan], plus prejudgment

interest, costs and attorneys’ fees.”

26
Count V, titled “Estoppel,” alleged in pertinent part:

“Defendants represented to Hunt that he was fully vested,
that the [Plan] was fully funded, and that his benefits
would be paid before June 30, 1991";

“Hunt relied on the terms of the [Plan] and on the
representation of Defendants in determining his retirement
date and in establishing his business plan and financial
affairs upon retirement”; and

“Defendants should be estopped to deny payment and to refuse
to process payment to Hunt.”

Accordingly, Hunt demanded “judgment against Defendants jointly

and severally for payment of his benefits under the [Plan], plus

prejudgment interest, costs and attorneys’ fees.”

Count VI, titled “Declaratory Judgment,” alleged that the

defendants “failure to pay to Hunt the benefits to which he is

entitled as set forth in the [Plan] have raised dispute regarding

Hunt’s entitlement (right) to immediate payment of the [Plan]

benefits under the terms of the [Plan] and ERISA” and that

“Chapter 86 Fla. Stat.[] provides that such rights may be

determined by the court.” Accordingly, Hunt requested that “this

court enter an order declaring his right to payment of his lump

sum [Plan] benefits under the terms of the [Plan] and pursuant to

ERISA and awarding to Hunt costs of this proceeding, including

reasonable attorneys’ fees.”

The defendants, proceeding individually, responded to Hunt’s

complaint. Hawthorne and the Bankruptcy Trustee, who appeared

for Eastern, filed answers that denied liability and included the

affirmative defense that the complaint failed to state a claim

for relief. The remaining defendants, with the exception of

Copeland, moved to dismiss the complaint under Fed. R. Civ. P.

27
12(b)(6) for failure to state a claim for relief;37 Copeland

moved for dismissal on the ground that Hunt had not served him

with process as required by Fed. R. Civ. P. 4(j).38 Because Hunt

had “demonstrated neither good reason for Copeland’s continued

presence in this lawsuit nor good cause for the lack of timely

service upon Copeland,” the court dismissed Copeland from the

case.39

Before the court could address the question whether the

complaint stated a claim for relief against any of the

defendants, the Bankruptcy Trustee moved the district court on

August 6, 1992, for summary judgment on the grounds, among

others, that Eastern was not a fiduciary under the Plan because

its duties were purely ministerial; that Eastern lacked

discretion to impose the moratorium; and that the moratorium was

imposed at the TAC’s direction. Although the Plan contained no

provision requiring Eastern to accept the TAC’s decisions as

binding, Eastern contended that it “had no choice but to abide

by” the TAC’s decision to impose a moratorium on the payment of

37
ALPA filed alternative motions to dismiss and for summary
judgment.
38
Fed. R. Civ. P. 4(j), now Fed. R. Civ. P. 4(m), provided
in pertinent part:

If a service of the summons and complaint is not made upon a
defendant within 120 days after the filing of the complaint
and the party on whose behalf such service was required
cannot show good cause why such service was not made within
that period, the action shall be dismissed as to that
defendant without prejudice upon the court’s own initiative
with notice to such party or upon motion.
39
The district court issued its order dismissing Copeland
from the case on January 4, 1993.

28
lump-sum benefits. Finally, Eastern contended that “its sole

obligation in the retirement benefits process is limited to

determining eligibility, here whether an applicant meets the age

criteria.” “Once this is done,” Eastern argued, “[it] has no

role in deciding whether to pay an eligible participant benefits,

what benefits an eligible participant is entitled to, or how

those benefits will be distributed” (emphasis in original).

On October 1, 1992, while this motion for summary judgment

and the Rule 12(b)(6) motions to dismiss were still pending, the

Bankruptcy Trustee and ALPA jointly moved the bankruptcy court

for the entry of an order pursuant to 11 U.S.C. § 363 approving

the Document 91C amendment to the Plan. See supra part I.D.

Their motion advised the bankruptcy court of the following:

On July 27, 1992, Eastern and ALPA entered into a
letter of agreement to amend the [Plan], conditioned on the
approval of this Court. Under the agreement, designated as
‘Document 91C’, the [Plan] would be amended to provide . . .
for the segregation of the assets of the [Plan] into liquid
and illiquid segments, and would modify the distribution of
lump-sum benefits under the [Plan].

Under Document 91C, Eastern would remain both the
'Sponsor' and the 'Administrator' of the [Plan] for purposes
of [ERISA]. Eastern and ALPA have been told that one or
more groups object to Document 91C, and may file suit
challenging its implementation. Because Eastern’s
ministerial role in the [Plan] is a continuing obligation of
the estate, and to provide a single forum to consider the
objections to Document 91C, the [Bankruptcy] Trustee and
ALPA hereby jointly seek an Order from this Court approving
Document 91C under its authority to approve contracts made
by the [Bankruptcy] Trustee other than in the ordinary
course of business. See 11 U.S.C. § 363.

On October 26, 1992, Hunt, acting through his attorney in

the instant case, filed with the bankruptcy court an “Objection

to Joint Motion for Entry of Order Approving Amendment to

29
[Plan].” The essence of his objection was that “[t]he movants

have failed to provide any authority which would permit amendment

of the [Plan] in such a manner that would alter or adversely

impact Hunt’s ability to receive a lump sum payment upon his

retirement.” According to Hunt, section 13.1 of the Plan

precluded any amendment that would “adversely affect the

retirement benefits provided to the participant at the time of

the modification.” Alternatively, Hunt had “no objection to any

amendment that excepts or exempts him, or that otherwise permits

him to receive his lump sum payout.” Finally, Hunt contended

that the bankruptcy court lacked jurisdiction over the

administration of the Plan because “Eastern’s involvement in the

[Plan], according to its own representations, is merely

ministerial. The motion seeks to elevate and escalate Eastern’s

involvement in administering the Plan without providing plan

participants with any means of participating in Eastern’s

administration.”

On November 13, 1992, the bankruptcy court held a hearing on

the Bankruptcy Trustee’s and ALPA’s joint motion for approval of

the Document 91C amendment to the Plan. In addressing objections

of Plan participants such as Hunt, the court stated the

following:

It is clear from this record that the objections are
not well-founded. The record does support the relief that
has been requested, which does give equitable treatment to
inherent competing interests to the [Plan]. In any
situation such as this there are always competing interests.
And it is clear from this record that the proposal is
equitable.

30
The bankruptcy court granted the joint motion. According to the

Bankruptcy Trustee, neither Hunt nor any other objector appealed

this ruling.

On December 4, 1992, following the bankruptcy court’s

approval of the Document 91C amendment to the lump-sum benefit

provision of the Plan, Hunt moved the district court for leave to

file an amended complaint. The Bankruptcy Trustee, ALPA, and

Hawthorne opposed Hunt’s motion in separate filings.40 The

Bankruptcy Trustee and Hawthorne argued that Hunt’s motion should

be denied on the ground that the bankruptcy court’s rejection of

Hunt’s objection to the approval of the Document 91C amendment

barred his claim for a lump-sum benefit. The Bankruptcy Trustee

also represented that Hunt “had a full opportunity to address his

concerns before the bankruptcy court. Having failed in his

efforts before the bankruptcy court, he [was] barred under the

doctrine of res judicata from collaterally attacking Document 91C

before this [District] Court.”41 ALPA objected to Hunt’s

proposed amended complaint on the ground that the claims Hunt

proposed to assert against it were frivolous.

On February 1, 1993, the district court disposed of three of

the pending motions. The first two were ALPA’s alternative

motions to dismiss Hunt’s complaint for failure to state a claim

40
Defendants Copeland and O’Connor did not respond to
Hunt’s motion.
41
According to the Bankruptcy Trustee, the bankruptcy court
heard and rejected Hunt’s objection to the approval of the
Document 91C amendment on November 13, 1992, and Hunt did not
appeal this ruling. Hunt did not contest this representation.

31
for relief and for summary judgment. The court granted both

motions. It concluded that ALPA was not an administrator of the

Plan and that Hunt's breach of fiduciary duty claim was

improperly asserted; ALPA, therefore, could not have been held

liable for any of the relief Hunt sought in Counts I through IV.

The court also rejected Hunt’s Count V estoppel claim because the

complaint failed to allege that Hunt had relied on a

representation made by ALPA.

The third motion disposed of was Hunt’s motion for leave to

file an amended complaint. The court denied that motion “because

. . . [the amended complaint Hunt tendered with his motion]

suffer[ed] from some of the same infirmities contained in his

original complaint.” The court did not specify the infirmities

in Hunt’s original complaint; whatever they were, the court gave

Hunt twenty-two days to cure them and to “file an appropriate

amended complaint.”

C.

On February 24, 1993, Hunt filed an amended complaint.

Without obtaining leave of court as required by Fed. R. Civ. P.

21, Hunt dropped from the case four of the defendants named in

his original complaint: Eastern, ALPA, Copeland, and O’Connor.42

42
Fed. R. Civ. P. 21, “Misjoinder and Non-Joinder of
Parties,” provides in pertinent part: “Parties may be dropped or
added by order of the court on motion of any party or of its own
initiative at any stage of the action and on such terms as are
just.” A plaintiff who has been given leave to file an amended
complaint may drop a defendant from the case without obtaining a
Rule 21 order if the defendant has not responded to the original
complaint with an answer. See generally 3 Moore’s Federal

32
He replaced them with two new defendants, the TAC and the Plan,

which joined Hawthorne as the defendants in the case. The

Bankruptcy Trustee subsequently learned that Hunt had dropped

Eastern from the case, and on April 30, 1993, it obtained from

Hunt and filed with the court a stipulation that recited:

Pursuant to Rule 41(a)(1)(ii) of the Federal Rules of
Civil Procedure, plaintiff . . . Hunt and defendant . . .
Eastern . . . hereby agree and stipulate that the above
captioned action shall be and hereby is dismissed with
prejudice as to Eastern, each party to bear its own costs.43

Hunt’s amended complaint contained seven counts. With the

minor exceptions set out in the margin, the first six counts of

the amended complaint simply replicated the allegations and

prayers for relief contained in the original complaint. For

example, as before, Count I was titled “Failure to Provide

Practice, §§ 15.10, 15.11 (3d ed. 1997); 4 Moore’s Federal
Practice, § 21.02[5][b] (3d ed. 1997) (discussing the
interrelationship of Rules 15 and 21 of the Federal Rules of
Civil Procedure). ALPA and O’Connor did not answer Hunt’s
original complaint; ALPA filed alternative motions to dismiss and
for summary judgment, and O’Connor filed a motion to dismiss.
Hunt, therefore, was not required to file a Rule 21 motion and
obtain an order dismissing those defendants from the case.
Eastern, however, answered Hunt’s original complaint;
consequently, Hunt could not drop Eastern from the case without
moving the court pursuant to Rule 21 for an order dismissing
Eastern “on such terms as are just.” Hunt was free, however, to
obtain Eastern’s dismissal from the case by filing with the court
a stipulation under Fed. R. Civ. P. 41(a)(1)(ii). As we observe
above and in part III.B, infra, Hunt eventually followed this
route, obtaining Eastern’s dismissal by entering into a
stipulation providing for the dismissal of his claims against
Eastern with prejudice.
We note that Hunt did not move the court pursuant to Rule 21
to add the TAC and Plan as defendants. Neither party objected to
being added, and thus the matter is not an issue here.
43
The Bankruptcy Trustee's attorney and Hunt's attorney
signed the stipulation on April 22, 1993, and April 29, 1993,
respectively.

33
Information”; Count II was titled “Action to Enforce Rights under

[Plan]”; Count III was titled “Breach of Fiduciary Duty”; Count

IV was titled “Recovery of Benefits”; Count V was titled

“Estoppel”; and Count VI was titled “Declaratory Judgment.”44

44
The principal difference between the two complaints was
that instead of seeking recovery from the parties named as
defendants in the original complaint, the counts of the amended
complaint sought relief only from the defendants named in the
amended complaint. Other than this difference, the “amended”
Count I was an exact duplicate of the original Count I. Count II
added the following allegation, which was implicit in the
allegations of the original Count II: “These defendants have
improperly, and without authority, interfered with Hunt’s
attempts to receive payment through the imposition of a
moratorium, or modification and amendment of the [Plan].”
Count III, the breach of fiduciary duty claim, added the
allegations listed below in an attempt to circumvent the
dismissal of this claim on the ground that an individual plan
participant lacks standing under ERISA to sue a plan fiduciary
for money damages. That Hunt lacked standing as a plan
participant to bring a breach of fiduciary duty claim against the
TAC had previously been brought to the district court’s
attention, and the court had informed his attorney that Hunt
could not bring the claim for his own benefit, as opposed to the
benefit of all participants. As Hunt’s attorney well knew, the
right to sue for breach of fiduciary duty belonged to all of the
plan’s participants as a group. See Massachusetts Mut. Life.
Ins. Co. v. Russell, 473 U.S. 134, 140, 105 S.Ct. 3085, 3089, 87
L.Ed.2d 96 (1985) (finding that recovery for breach of fiduciary
duty under ERISA § 409, 29 U.S.C. § 1109, “inures to the benefit
of the plan as a whole”). In an effort to shore up the original
Count III and persuade the district court to accord him standing
for the breach of fiduciary claim, Hunt alleged:

The [Plan] itself is effectively precluded from
challenging the fiduciary duties of these defendants in that
these defendants are inextricably tied to the [Plan] itself
through their roles, activities, insured interests and
administration of the [Plan]. Hunt has no other recourse
for the actions of these fiduciaries with regard to his
interest in the [Plan].

Defendants have willfully and wantonly breached their
fiduciary duty to Hunt and to the [Plan] itself, by failing
to pay [Plan] benefits to Hunt, by failing to respond to
Hunt’s requests for information, by interfering with Hunt’s
rights to these monies, and by failing to discharge their
duties solely in the interest of the participants for the

34
In the original complaint, twenty-four paragraphs preceded

the presentation of the counts. The amended complaint had

twenty-five such paragraphs. These paragraphs, compared to their

counterparts in the original complaint, differed materially in

the following way. After alleging in the original complaint that

the Document 91C amendment affecting Hunt’s lump-sum benefit had

been made by Eastern and ALPA, which were no longer parties in

the case, Hunt changed his position and alleged that the TAC,

which “renders decisions regarding administration of the [Plan],”

was the party responsible for the moratorium rather than Eastern

exclusive purpose of providing benefits in accordance with the
[Plan] documents (emphasis added).

The new Count III also added this allegation, which followed
the replicated allegation that the moratorium was “arbitrary and
capricious, [was] contrary to the terms of the [Plan], and [was]
contrary to law”:

Alternatively, if the moratorium was imposed because of
the [Plan’s] inability to pay lump sum benefits to
retiring employees electing that option, then these
Defendants have breached their fiduciary duties to the
[Plan] and to Hunt through mismanagement and failure to
take such action to ensure that the [Plan] was
adequately funded so as to pay the lump sum benefit
option exercised by Hunt.

Finally, the new Count III added this language to its prayer
for compensatory and punitive damages: “[I]n the alternative,
[Hunt] demands judgment for damages on behalf of the [Plan] in an
amount sufficient to fully fund the retirement benefits
authorized under the [Plan].”

The sole addition of note to new Count IV was the allegation
that the moratorium and the Document 91C amendment to the lump-
sum benefit provision, which the bankruptcy court had approved,
were “arbitrary, capricious, unreasonable and [] contrary to the
provisions of the [Plan].” New Count V, the estoppel claim,
added the allegation that the defendants were estopped from
enforcing against Hunt the moratorium or the Document 91C
amendment. Count VI, the declaratory judgment claim, was renewed
verbatim.

35
or ALPA. According to Hunt, Eastern and ALPA were “the only

entities which can act to amend or modify the [Plan]”; he

therefore implied that the moratorium allegedly imposed by the

TAC constituted an unauthorized amendment or modification of the

Plan.

As noted, the amended complaint added a seventh count to

those asserted in the original complaint. Count VII, titled

“Injunctive Relief,” alleged essentially that the defendants had

breached their duty to maintain sufficient “reserves” with which

to pay Hunt’s lump-sum benefit. It alleged further that

[n]o other parties will be prejudiced by enjoining the
imposition of the moratorium, modification or amendment or
payments made thereunder beyond keeping sufficient reserves
for the payment of Hunt’s lump sum benefit; i.e., payments
would continue under the [Plan], but defendants would be
enjoined from so depleting the liquid portion of the fund
that Hunt’s total lump sum benefit could be paid.

Accordingly, Hunt “demand[ed] that [the] Court enter an order

enjoining payment of benefits under the [Plan] to current

beneficiaries, at least to the extent that sufficient funds are

retained to pay Hunt’s lump sum benefit, interest, costs and

attorney’s fees.”

The TAC and the Plan jointly moved the court to dismiss the

counts of the amended complaint on the ground that none stated a

claim for relief.45 In part, they repeated the arguments

previously addressed to the sufficiency of Hunt’s original

complaint and advanced in the Bankruptcy Trustee’s and ALPA’s

objections to Hunt’s motion for leave to file an amended

45
The TAC and the Plan were represented by the same counsel
throughout this case.

36
complaint. These arguments included the claim that Hunt lacked

standing to sue for breach of fiduciary duty and that the

moratorium and the bankruptcy court's approval of the Document

91C amendment foreclosed his claim. As for Hunt’s claim seeking

the $100 per day statutory penalty, these defendants contended

that such penalties were assessable only against the

administrator of the Plan, Eastern, which had been dismissed from

the case with prejudice. Hawthorne answered the complaint with a

general denial of liability.

The district court disposed of the joint motion to dismiss

the amended complaint in the following manner: the court (1)

denied the motion to dismiss Count I; (2) denied the motion to

dismiss Count II; (3) dismissed Count III to the extent that it

sought comprehensive and punitive damages for Hunt, but held that

he had standing to sue the TAC for breach of fiduciary duty on

behalf of the Plan’s participants; (4) denied the motion to

dismiss Count IV; (5) dismissed Count V after Hunt conceded that

he had no case for estoppel; (6) dismissed Count VI on the ground

of ERISA preemption; and (7) denied the motion to dismiss Count

VII, although the court was unable to discern -- from what it

described as an “inartfully” drafted pleading -- whether Hunt

stated a claim for relief.

Following these rulings, the TAC and the Plan answered the

amended complaint, denying liability, and then jointly moved for

summary judgment. Their motion essentially restated the

arguments presented in their motion to dismiss. Hawthorne also

moved for summary judgment. It contended, among other things,

37
that Hunt’s claim for the lump-sum benefit (Counts II and IV)

could be brought only against the Plan and a person or entity,

such as the Plan administrator, possessing the authority to order

the payment of his benefit. Hawthorne argued that it had no such

authority and, thus, could not provide the relief sought. In

addition, Hawthorne contended that it could not be held liable

for breach of fiduciary duty (Count III) because the Plan, the

appropriate plaintiff for such a cause of action, was not injured

by the failure to pay Hunt his lump-sum benefit.

The court deferred ruling on these motions for summary

judgment until the morning that the trial of the case began. In

the meantime, Hawthorne settled with Hunt and agreed to the entry

of judgment in favor of Hunt on Count I in the sum of $10,000;

all other counts against Hawthorne were to be dismissed with

prejudice. The court denied the only motion that was pending,

the TAC’s and the Plan’s motion for summary judgment, and the

trial commenced.

D.

The case was tried to the court. Five counts from the

amended complaint were at issue: Hunt’s claim for the $100 per

day statutory penalty under Count I; his identical claims under

Counts II and IV seeking judgment in the amount of the lump-sum

benefit, prejudgment interest, costs, and attorneys’ fees; his

claim on behalf of the Plan participants for breach of fiduciary

duty under Count III; and his request that the TAC and the Plan

38
be enjoined from paying benefits to other participants until they

satisfied his claim under Count VII.

After considering the evidence adduced by the parties, the

court, in an “Order Directing Entry of Judgment,” held as

follows:

Count I. The court found that only designated plan

administrators are subject to the $100 penalty imposed by ERISA

§ 502(c), 29 U.S.C. § 1132(c), for failing to respond to a plan-

participant's requests for information as required by the

statute. Because Hunt had neither established that the TAC was

the Plan administrator nor that it had assumed the “information-

providing function” of the administrator, the TAC could not be

held liable under section 502(c).

Counts II and IV. The court first found that Hunt had

properly applied for the lump-sum benefit and that his

application had been denied because of the moratorium the TAC had

“imposed” unilaterally. The TAC had done so because it concluded

that a “moratorium was needed to maintain the financial integrity

of the [Plan] and to protect the economic interests of all plan

participants and beneficiaries.” The court then turned to the

question whether the TAC had the authority to impose the

moratorium for such purpose. Although the Plan did not expressly

give the TAC such authority, the court assumed that the common

law of trusts did so. Having made that determination, the court

addressed the question whether Hunt or the TAC had the burden of

proof regarding the need for the moratorium: it concluded that

the TAC had the burden.

39
With this ruling in hand, the court considered whether the

TAC’s proof established that “its action was both prudent and

necessary to protect the interests of all plan participants and

their beneficiaries.” The court held that although the

moratorium may have been justified, the TAC’s proof was

insufficient to carry the day. The court therefore gave Hunt

judgment on Counts II and IV in the sum of $352,748.74 plus

costs.

Count III. The court’s findings on this claim are

ambiguous. Hunt had alleged that “if the moratorium was imposed

[by the TAC] because of the [Plan’s] inability to pay lump sum

benefits to retiring employees electing that option, then these

Defendants have breached their fiduciary duties to the [Plan] and

to Hunt through mismanagement and failure to take such action to

ensure that the [Plan] was adequately funded so as to pay the

lump sum benefit option exercised by Hunt.” See supra note 44.

In other words, the TAC breached its fiduciary duty to the Plan’s

participants, and therefore to Hunt, by imposing the moratorium

because of its inability to pay the lump-sum benefits.

The court found no such breach: “Hunt submitted neither

evidence of mismanagement nor -- assuming, for the sake of

argument, that he proved a breach of fiduciary duty -- evidence

from which this court could fashion a remedy. Hunt having thus

failed to satisfy his burden of proof on Count III, judgment will

be entered in favor of the defendants.”

Therefore, under the district court's analysis, whether the

TAC had breached its fiduciary duty to the Plan participants,

40
including Hunt, by imposing the moratorium turned on which party

had the burden of proof. On Counts II and IV, the court held

that the TAC had the burden but failed to sustain it by showing

that prudence required that a moratorium be imposed. On Count

III, the court held that Hunt had the burden of proof but failed

to show that the TAC had acted imprudently in imposing the

moratorium.46

The district court’s “Order Directing Entry of Judgment”

makes no mention of the remaining count (Count VII). After

disposing of the other counts in the amended complaint by number,

including Counts V and VI which were dismissed from the case

prior to trial, the court instructed the clerk of court in

paragraph four of its order (“paragraph 4") how judgment should

be entered: “4. On the remaining counts [i.e., Counts II, IV,

and VII], the clerk shall enter judgment in favor of Harry L.

Hunt in the amount of $352,748.74 plus costs. The judgment shall

be paid from the [Plan] [F]und.” We read this language, and the

final judgment entered by the clerk, as disposing of Count VII in

46
How the court could assume, “for sake of argument, that
[Hunt] proved a breach of fiduciary duty” and then deny him
relief on Count III is a question that the court’s dispositive
order does not answer.

41
favor of Hunt,47 although the court did not grant the injunctive

relief the count requested.48

Following the entry of final judgment, the TAC and the Plan

appealed the district court’s judgment on Counts II and IV. Hunt

cross-appealed the court’s judgment on Count I but not Count III.

For the reasons that follow, we reverse the court’s judgment on

Counts II and IV, and affirm as to Count I.

III.

Paragraph 4 of the district court’s “Order Directing Entry

of Judgment,” which gave Hunt judgment on Counts II, IV, and VII

for the lump-sum benefit, presents several threshold issues that

must be resolved before we can consider the merits of his claim

47
By treating the district court’s final judgment as having
terminated Count VII of Hunt’s amended complaint, we have a final
judgment before us that is appealable under 28 U.S.C. § 1291
because the judgment has adjudicated all claims against all
parties. See, e.g., Penton v. Pompano Constr. Co., 963 F.2d 321,
321-22 (11th Cir. 1992). Hunt’s amendment of his complaint,
which deleted ALPA and O’Connor from the action, operated to
dismiss those parties from the suit. See supra note 42. The
amendment, however, did not operate to dismiss Eastern from the
case. Id. Rather, Eastern was dismissed from the case, with
prejudice, when Hunt and Eastern executed a stipulation of
dismissal and filed it with the court. See Oswalt v. Scripto,
Inc., 616 F.2d 191, 194-95 (5th Cir. 1980). In Bonner v. City of
Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), this
circuit adopted as binding precedent all decisions of the former
Fifth Circuit handed down prior to October 1, 1981.
48
The district court, despite deciding sub silentio Count
VII in Hunt’s favor, granted him no relief on this count. In
their briefs, the parties have ignored Count VII altogether; like
the district court, they made no mention of it. Because of our
disposition of Hunt’s explicit claim for benefits contained in
Counts II and IV, Count VII falls by the wayside. That is to
say, we vacate the court’s judgment on Count VII and direct the
court to enter judgment in favor of the TAC and the Plan on that
count.

42
to that benefit. As stated previously, in paragraph 4, the court

directed the clerk to “enter judgment in favor of [Hunt] in the

amount of $352,748.74 plus costs. The judgment shall be paid

from the [Plan] [F]und.”49

The first threshold question is whether the relief granted

in paragraph 4 is legal or equitable;50 that is, does the relief

granted constitute a money judgment or an in personam order

directing the TAC or the Plan to pay Hunt a sum of money from the

assets of the Plan’s Fund. The answer to this question is

important because, as we explain below, the relief provided in an

action to recover benefits under ERISA is equitable, not legal.

More specifically, the relief consists of an order directing a

person or entity having the necessary authority under the benefit

plan to pay the participant the benefit that he seeks. Hunt

sought such equitable relief in Count II of his amended

complaint, asking the district court to enter “an order requiring

Defendants to pay Hunt his benefits.” In Count IV, Hunt sought

legal relief, demanding “judgment against Defendants . . .

jointly and severally for payment of his benefits.” In Count

VII, titled “Injunctive Relief,” Hunt asked the court to “enter

an order enjoining payment of benefits . . . to current

beneficiaries, at least to the extent that sufficient funds are

retained to pay Hunt’s lump sum benefit.”

49
We note that the final judgment entered by the clerk
quoted this language verbatim.
50
If the relief granted in paragraph 4 is equitable, we
have jurisdiction to review the grant under 28 U.S.C.
§ 1292(a)(1). See supra note 47.

43
Nothing in the language of paragraph 4 orders the TAC to do

anything. If, however, we construe -- that is, effectively

rewrite -- paragraph 4 so that it orders the TAC to pay the

benefit from the Fund,51 then we must decide whether the TAC has

the authority under the Plan to effect payment; if not, the TAC

cannot provide the relief sought. Despite its representations to

the contrary, Eastern, the Plan administrator, obviously could

effect payment if ordered to do so, see supra part I.C and infra

part III.B, but Hunt voluntarily dismissed it from the case with

prejudice. Nor can the Plan as an entity provide any relief; the

Plan alone is simply a written instrument executed by Eastern and

ALPA.

We turn now to these issues, taking them up in order.

A.

Section 502(a)(1)(B) of ERISA provides that “[a] civil

action may be brought by a participant or beneficiary . . . to

recover benefits due to him under the terms of his plan, to

enforce his rights under the terms of the plan, or to clarify his

rights to future benefits under the terms of the plan." 29

U.S.C. § 1132(a)(1)(B). On its face, this language does not

51
In his original complaint, of course, Hunt took the
position that Eastern, as Plan administrator, was the party
having the authority to effect payment of the benefit he is
seeking; this was his reason for naming Eastern as a party
defendant in his claims to recover his lump-sum benefit. Since
eliminating Eastern from his amended complaint as a party
defendant, Hunt has taken the position that the TAC, not Eastern,
is the entity having the authority to effect payment of the
benefit.

44
indicate whether a participant seeking to recover retirement

benefits may obtain legal or equitable relief. Although the

“causes of action authorized by section 502(a)(1)(B) [of ERISA]

are not explicitly denominated as equitable,” see Pane v. RCA

Corp., 868 F.2d 631, 636 (3d Cir. 1989),52 this circuit has

treated actions to recover benefits under section 502(a)(1)(B) as

equitable in nature. See, e.g., Shannon v. Jack Eckerd Corp.,

113 F.3d 208, 209-10 (11th Cir. 1997) (denying appeal of district

court's judgment ordering plan administrator to pay benefits to

plan participant); Godfrey v. BellSouth Telecomm., Inc., 89 F.3d

755, 756-57 (11th Cir. 1996) (affirming district court's issuance

of “an injunction ordering [Plan administrator] to comply with

ERISA and pay [participant] . . . benefits”). This position is

consistent with our view that participants suing under section

502(a)(1)(B) are not entitled to a jury trial. In Blake v.

Unionmut. Stock Life Ins. Co. of Amer., we reasoned:

The nature of an action under section 502(a)(1)(B) is for
the enforcement of the ERISA plan. Although the plaintiffs
assert that they are claiming money damages, in effect they
are claiming the benefits they are allegedly entitled to
under the plan. Although . . . a money judgment would
satisfy their demands, . . . only an order for continuing
benefits would be sufficient. This is traditionally
equitable relief . . . .

52
In Pane, the Third Circuit aptly captured the distinction
between legal and equitable relief in the context of an action
brought under section 502(a)(1)(B) of ERISA: “A legal remedy
would result in a money judgment enforceable only by execution,
or other conventional common law process such as ejectment or
replevin. An equitable remedy would result in a judgment
enforceable in personam and by contempt.” 868 F.2d at 635-36.

45
906 F.2d 1525, 1526 (11th Cir. 1990). This view accords with the

majority of circuits that have considered this issue.53 We

therefore hold that Hunt's claim for legal relief (i.e., a money

judgment) under section 502(a)(1)(B) fails to state a claim.

Accordingly, we dismiss Count IV of Hunt's amended complaint,

leaving only his claim for equitable relief in Count II to

recover his lump-sum benefit.

Given the equitable nature of Hunt's recovery-of-benefits

claim under ERISA, we also find that an in personam order

enjoining the payment of benefits under section 502(a)(1)(B) must

be directed to a person or entity other than the plan itself.

While ERISA § 502(d)(1), 29 U.S.C. § 1132(d)(1), does state that

“[a]n employee benefit plan may sue or be sued . . . as an

entity,” nothing in ERISA permits the district court to issue an

53
See Wardle v. Central States, Southeast & Southwest Areas
Pension Fund, 627 F.2d 820, 829 (7th Cir. 1980) (“We conclude
that Congress' silence on the jury right issue reflects an
intention that suits for pension benefits by disappointed
applicants are equitable.”), cert. denied, 449 U.S. 1112, 101
S.Ct. 922, 66 L.Ed.2d 841 (1981); see also Sullivan v. LTV
Aerospace and Defense Co., 82 F.3d 1251, 1258-59 (2d Cir. 1996);
Berry v. Ciba-Geigy Corp., 761 F.2d 1003, 1007 (4th Cir. 1985);
Turner v. CF&I Steel Corp., 770 F.2d 43, 47 (3d Cir. 1985), cert.
denied, 474 U.S. 1058, 106 S.Ct. 800, 88 L.Ed.2d 776 (1986); In
re Vorpahl, 695 F.2d 318, 321-22 (8th Cir. 1982); Calamia v.
Spivey, 632 F.2d 1235, 1237 (5th Cir. Unit A 1980). Some
district courts have suggested that Firestone Tire & Rubber v.
Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), calls
these holdings into doubt. See, e.g., Hulcher v. United
Behavioral Sys., 919 F.Supp. 879, 885 (E.D. Va. 1995) (holding
that “action to recover [ERISA] benefits under the subject plan
are legal in nature” and that “[p]laintiff is constitutionally
entitled to trial by jury on any claim raised under §
1132(a)(1)(B)”); Vaughn v. Owen Steel Co., 871 F.Supp. 247, 250-
51 (D.S.C. 1994) (finding that section 502 claim under ERISA is
analogous to state law contract claim and must be tried before
jury). None of the courts of appeals mentioned above, however,
have endorsed the reasoning of these district courts.

46
injunctive order solely against the plan.54 Rather, the case law

of this circuit demonstrates that an order enjoining the payment

of benefits from an ERISA plan must issue against a party capable

of providing the relief requested. See, e.g., Shannon, 113 F.3d

at 209-10; Godfrey, 89 F.3d at 756-57; cf. Fisher v. Metro. Life

Ins. Co., 895 F.2d 1073, 1074 (5th Cir. 1990) (affirming district

court's dismissal of plaintiff's second amended complaint in part

for failure to name the plan administrator as an “indispensable

party”). We therefore reject the notion that an injunctive order

to pay benefits under section 502(a)(1)(B) of ERISA can issue

solely against an ERISA plan as an entity.

B.

We next examine the district court's ruling in paragraph 4

that “the clerk shall enter judgment in favor of Harry L. Hunt

[on Counts II, IV, and VII]” and that “[t]he judgment shall be

paid from the [Plan] fund.” Because an injunctive order cannot

issue against the Plan itself, we assume that we have discretion

to construe -- i.e., effectively rewrite -- paragraph 4 so that

it directs the TAC to pay Hunt the lump-sum benefit from the

Fund.

54
ERISA § 502(d)(2) states that “[a]ny money judgment . . .
against an employee benefit plan shall be enforceable only
against the plan as an entity and shall not be enforceable
against any other person unless liability against such person is
established in his individual capacity.” 29 U.S.C. § 1132(d)(2).
This provision contemplates legal relief and does not apply to an
action to recover benefits under section 502(a)(1)(B).

47
Our review of the record and the Plan,55 however, makes

clear that the TAC has no authority under the Plan to issue or

deny payment of a lump-sum benefit to a participant. Rather, the

TAC has limited powers under the Plan56 and plays no role in the

process of reviewing applications for retirement benefits.

Unlike Eastern, the TAC's authority is primarily limited to the

management and supervision of the Fund's assets. Its "overall

supervisory responsibility” is restricted to the “administrative

functions of the Fund,” see § 2.13(b)(i) (“Fund Administration”),

and its duty to the Plan is limited “to maintain[ing]

surveillance over the status and administration of the Plan and

the [Fund]," see § 10.2(b) (“Rights and Duties of the [TAC]”).

In addition, as discussed in part I.B, supra, the TAC must

exercise its limited powers in a manner consistent with its

obligations to ALPA. For example, before selecting and replacing

investment advisors and trustees, the TAC must notify ALPA of its

planned course of action and give ALPA an opportunity to respond.

See § 2.7(b) (“Trust Agreement and Trustee”). Similarly, before

giving any notice or instruction to a trustee of the Fund, the

TAC must serve a copy of the trust direction on ALPA and give it

fifteen days to object to the TAC's proposed direction. See §

55
Unless otherwise specified, the term “Plan” in part III
refers to the written instrument in effect at the time Hunt's
application was “approved” on April 22, 1991 (i.e., Documents 91
and 91A).
56
We review the relevant provisions of the Plan here
because a named fiduciary must discharge its duties “in
accordance with the documents and instruments governing the plan
insofar as such documents and instruments are consistent with
[ERISA].” ERISA § 404(a)(1)(D), 29 U.S.C. § 1104(a)(1)(D).

48
2.8 (“Directions to Trustee(s)). In addition, the TAC must

“regularly and periodically suppl[y]” information to ALPA about

transactional detail, cash flow reports, investment status,

documentation and Fund performance,” see § 2.11 (“Information and

Accountability”), and furnish to ALPA and Plan participants

reports about the TAC's “functions, actions, and decisions . . .

as are reasonable and appropriate,” see § 10.2(c).

In stark contrast, the plain language of the Plan gives

Eastern broad discretion as administrator to make decisions for

the Plan. The Supreme Court has stated that a plan administrator

has a “statutory responsibility [under ERISA] . . . to run the

plan in accordance with the currently operative, governing plan

documents.” Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73,

115 S.Ct. 1223, 1230, 131 L.Ed.2d 94 (1995). Section 2.2(a) of

the Plan confers upon Eastern “those powers necessary to carry

out the day to day operation of the Plan.” Its responsibilities

include the authority to “initially determine all questions

arising from the administration, interpretation, and application

of the Plan pursuant to all applicable law, agreements and

contracts, and such determination shall be binding upon all

persons, except as otherwise provided by law, and further

provided that each Participant shall be granted the same

treatment under similar conditions.” Id. The Plan also charges

Eastern with the responsibility for, inter alia, keeping records,

see § 2.4 (“Records”), preparing and distributing periodic Plan

summaries, see § 2.5 (“Plan Summary”), and sending to each

49
participant an annual statement reflecting the value of his

investment in the Plan, see § 2.6 (“Annual Statement”).

More important, based on the record before us,57 we find

that Eastern exercises ultimate authority in determining whether

a participant should receive payment of his benefit. The record

reveals that Eastern plays the central role in the process of

reviewing applications for benefits. The Plan makes Eastern

responsible for providing the benefit-application forms to

participants. See § 12.9(a) (“Application for Benefits”).58 A

pilot seeking a lump-sum payment must complete the necessary

paperwork and inform an Eastern management employee, the Chief

Pilot, of his intention to retire. The Chief Pilot checks the

pilot's eligibility under the Plan, and then informs the Eastern

Pension and Insurance Department about the pilot's decision to

retire.59 The application is then presented to the Eastern

Pension Administration Department, which must provide an

authorizing signature beneath a line that states: “The above

57
As stated in part I.C and note 12, supra, the Plan does
not set forth the procedure for processing claims for retirement
benefits. This account of the claims-processing procedure is
taken from the affidavit and deposition of Charles Dyer of
Hawthorne and the affidavit of Brian White, who served as
Director of the Eastern Pension and Insurance Department. Both
accounts of Eastern's claims-processing procedure are virtually
identical.
58
Section 12.9 also states that each participant “shall
. . . furnish the Administrator with such documents, evidence,
data, or information in support of such application as the
Administrator shall consider necessary or desirable.”
59
As stated in part I.D, supra, after the moratorium began,
the retiring participant would contact Eastern's Pension and
Insurance Department directly rather than go through the Chief
Pilot.

50
information is approved and the appropriate allocation from the

Plan to provide the benefit payable is hereby authorized.” If

the application is approved, the Eastern Pension and Insurance

Department contacts the Plan's actuary, which determines the

precise amount of benefits to which the retiring participant is

entitled. The actuary then gives that information to the State

Street Bank & Trust, which makes the distribution to the

participant. Eastern is responsible for establishing and

maintaining a procedure for giving the participant written

notification if the application is denied. See § 2.3

(“Notification of Denial of Benefits”). If there is a legal

dispute as to the proper recipient of a benefit, Eastern may

withhold payment pending final determination of the proper

beneficiary. See § 12.10 (“Beneficiary Dispute”).

The facts of this case support our reading that Eastern, not

the TAC, has the authority to order payment of retirement

benefits. First, the record makes clear that Eastern retained

its authority as administrator at all times during the events

giving rise to this litigation. When Hunt's application was

“approved” by Eastern's Pension Administration Department on

April 22, 1991, Eastern was listed in the written instrument as

the Plan administrator.60 When the Plan was amended effective

June 25, 1991, Eastern continued to serve as administrator for

all aspects of the Plan, with the exception of the newly

introduced periodic-payment option and the provision for Plan

60
At this time, the Plan consisted of Document 91 and
Document 91A.

51
loans. See § 6.11(f) (“Periodic Payments”), Article XV (“Plan

Loans”).61 Even after the Plan was amended effective June 30,

1992, with the bankruptcy court’s approval of Document 91C,

Eastern retained its authority as Plan administrator.

Second, the record demonstrates that Eastern, despite its

representations to the contrary, made the decision to honor the

moratorium and ultimately prevented the State Street Bank and

Trust from issuing a lump-sum payment to Hunt. As noted in part

I.D, supra, the director of Eastern's Pension and Insurance

Department stated that the process for reviewing benefit claims

after the shutdown “basically remained the same, except that

. . . Eastern would inform Mercer [the Plan actuary] whether a

participant had applied for benefits following shutdown, thus

implicating the lump-sum moratorium.” By this statement, Eastern

effectively admits that it ratified the imposition of the

moratorium and thus denied Hunt's application. In essence,

Eastern's order to the actuary to halt the processing of Hunt's

application foreclosed the State Street Bank and Trust from

issuing him a benefit check.

Furthermore, there is nothing in the record to indicate that

Eastern challenged the legality of the moratorium after its

imposition. Eastern's inaction is especially glaring when one

considers that Article XIII of the Plan, titled “Modification,

Suspension or Discontinuance,” vests Eastern with the exclusive

61
This version of the Plan included the amendment referred
to as Document 91B.

52
authority to modify, suspend or discontinue a feature of the

Plan:

Eastern expects to continue the Plan indefinitely, but
necessarily reserves the right to modify, suspend or
terminate it at any time including, but without limiting the
generality of the foregoing, discontinuance of the
contributions of Eastern under the Plan or modification,
suspension, or discontinuance in its entirety or with
respect to any feature thereof. However, any modification,
suspension, or discontinuance shall not adversely affect the
retirement, death or termination benefits already provided
at that time under the Plan for any Participant, contingent
annuitant, or beneficiary as of the date of such
modification, suspension, or discontinuance. In the event
the Plan shall be discontinued, such action shall be taken
as shall insure to the extent possible the satisfaction of
all liabilities to Participants, contingent annuitants, and
beneficiaries that have accrued under the Plan.

§ 13.1 (“General”) (emphasis added). Although this provision

enumerates only one specific application of this subsection

(i.e., the discontinuation of Eastern's contributions), the

phrases “including, but without limiting the generality of the

foregoing” and “with respect to any feature thereof” would

encompass other scenarios, such as the suspension of the lump-sum

payment option. Thus, if Eastern wanted to challenge the TAC's

purportedly “unilateral” imposition of the moratorium, the Plan

certainly gave Eastern the authority to do so.62

62
Hunt suggests that the moratorium on lump-sum payments
was impermissible because it was inconsistent with § 13.1's
provision that “any modification, suspension, or discontinuance
shall not adversely affect the retirement, death or termination
benefits already provided at that time under the Plan for any
Participant.” We note, however, that the moratorium on lump-sum
payments had no effect on Hunt's actual interest in the Plan --
i.e., the total number of annuity units in his accrued benefit;
rather, the moratorium only changed the manner in which Hunt and
other similarly situated participants could receive their
benefits.
Given the Plan's status as a defined contribution plan, the
value of a participant's interest in the Plan fluctuates with the

53
It is clear that Eastern, not the TAC, bears ultimate

responsibility for the denial of Hunt's lump-sum benefit. Hunt,

however, in an obvious attempt to avoid the effect of the

bankruptcy court’s approval of the Document 91C amendment,

voluntarily dismissed Eastern with prejudice as a party to this

action pursuant to Fed. R. Civ. P. 41(a)(1)(ii) shortly after

filing his amended complaint.63

Nevertheless, the district court ruled in paragraph 4 of its

order that the TAC possessed the authority to issue payment from

the Fund. In so ruling, the district court implicitly rewrote

the Plan to give the TAC that power. Although we recognize that

the “principal object of [ERISA] is to protect plan participants

and beneficiaries,” Boggs v. Boggs, 117 S.Ct. 1754, ______

(1997), 65 U.S.L.W. 4418 (1997), we agree with the First

performance of the Fund's assets. See supra part I.B. After
all, the full name of the Plan is the “Variable Benefit
Retirement Plan for Pilots”: a participant's interest in the Plan
depends not only on the contributions made but also on how the
Fund's assets perform.
63
Eastern’s dismissal from the case with prejudice operated
as an adjudication on the merits in favor of Eastern on all
claims Hunt had brought against the company. Citibank, N.A. v.
Data Lease Fin. Corp., 904 F.2d 1498, 1501-02 (11th Cir. 1990)
(“[A] stipulation of dismissal with prejudice . . . at any stage
of a judicial proceeding, normally constitutes a final judgment
on the merits which bars a later suit on the same cause of
action.”) (citation omitted). This adjudication by dismissal
would include, of course, Hunt’s claims (1) that Eastern, as the
administrator and as a fiduciary under the Plan, breached its
obligation to Hunt and other Plan participants by declaring, or
ratifying the TAC’s declaration of, the moratorium, and (2) that
Eastern wrongfully refused to pay Hunt the lump-sum benefit he
seeks. In this appeal, the TAC and the Plan have not argued that
this disposition of Hunt’s claims against Eastern had a
preclusive effect on Hunt’s claims against them. Accordingly, we
do not consider the issue.

54
Circuit's admonition that “courts have no right to torture

language in an attempt to force particular results . . . . To the

exact contrary, straightforward language in an ERISA-regulated

insurance policy should be given its natural meaning.” Burnham

v. Guardian Life Ins. Co., 873 F.2d 486, 489 (1st Cir. 1989)

(citation omitted). See also Hamilton v. Air Jamaica, Ltd., 945

F.2d 74, 78 (3d Cir. 1991) (“While ERISA was enacted to provide

security in employee benefits, it protects only those benefits

provided in the plan. . . . ERISA mandates no minimum

substantive content for employee welfare benefit plans, and

therefore a court has no authority to draft the substantive

content of such plans.”) (citation and quotation marks omitted),

cert. denied, 503 U.S. 938, 112 S.Ct. 1479, 117 L.Ed.2d 622

(1992); cf. Nachwalter v. Christie, 805 F.2d 956, 960 (11th Cir.

1986) (written employee benefit plans governed by ERISA may not

be modified by oral agreements). We therefore reject the

district court's sub silentio revision of the Plan which enabled

the court to direct the TAC to pay Hunt his lump-sum benefit.

C.

Given the district court's view that the TAC denied Hunt's

lump-sum benefit by issuing the moratorium, however, we will

assume arguendo that the TAC could order the State Street Bank

and Trust to issue Hunt payment from the Fund. For the district

court's theory of liability to make sense, the TAC would

necessarily have acted as de facto Plan administrator in
Eastern's stead; as discussed above, this theory is inconsistent

55
with the Plan and clearly unsupported by the record. Yet, even

if we indulge the assumption that the TAC functioned as de facto

administrator, we remain convinced that the facts of this case

justified the imposition of the moratorium and the concomitant

denial of Hunt's lump-sum benefit.64

When evaluating a plan administrator's decision to deny

benefits, a district court must first determine the appropriate

standard of review. Firestone v. Bruch holds that “a denial of

benefits challenged under § 1132(a)(1)(B) is to be reviewed under

a de novo standard unless the benefit plan gives the

administrator or fiduciary discretionary authority to determine

eligibility or to construe the terms of the plan.” 489 U.S. 101,

115, 109 S. Ct. 948, 956, 103 L.Ed.2d 80 (1989). We have

interpreted Firestone to mandate an arbitrary and capricious

standard of review, which is often used interchangeably with an

abuse of discretion standard, if the administrator has

discretionary authority to make eligibility determinations or to

construe disputed terms of the plan. See Jett v. Blue Cross and
Blue Shield of Ala., 890 F.2d 1137, 1139 (11th Cir. 1989). To

trigger this standard of review, the language conferring

discretion on the administrator must be “express language

unambiguous in its design.” Kirwan v. Marriott Corp., 10 F.3d

784, 789 (11th Cir. 1994) (internal citations omitted). If the

64
In its analysis, the district court assumed that the
common law of trusts gave the TAC the power to impose the
moratorium. We need not make this assumption for this
hypothetical scenario, however, because Article XIII of the Plan
clearly gives the administrator the authority to impose a
moratorium.

56
administrator suffers from a conflict of interest in rendering

its determination, the district court should apply a heightened

arbitrary and capricious standard. See Firestone, 489 U.S. at

115, 109 S. Ct. at 957; see also Marecek v. BellSouth Telecomm.,

49 F.3d 702, 705 (11th Cir. 1995).

The arbitrary and capricious standard is the appropriate

standard of review in this case because the Plan contains express

language conferring discretionary authority upon the

administrator to construe its terms. Under section 2.2(a)

(“Administration”), the administrator enjoys the authority to

“initially determine all questions arising from the

administration, interpretation, and application of the Plan

pursuant to all applicable law, agreements and contracts, and

such determination shall be binding upon all persons, except as

otherwise provided by law.” We have held that comparable

language is sufficient to trigger review under the arbitrary and

capricious standard. See Jett, 890 F.2d at 1139 (“[Plan

administrator] has the exclusive right to interpret the

provisions of th[is] Plan, so its decision is conclusive and

binding.”); Guy v. Southeastern Iron Workers' Welfare Fund, 877
F.2d 37, 38-39 (11th Cir. 1989) (“[Administrator has] full power

to construe the provisions of [the] Trust”). Thus, we apply the

arbitrary and capricious standard of review to the TAC's

“decision” as de facto administrator to deny Hunt's lump-sum

benefit. We stress that our principal inquiry in this

hypothetical situation is not whether the TAC was justified in

imposing the moratorium, but whether the TAC was justified in

57
denying Hunt's application for a lump-sum benefit. Of course,

our analysis of the latter issue necessarily implicates the

former.

Under the arbitrary and capricious standard of review, the

court seeks “to determine whether there was a reasonable basis

for the [administrator's] decision, based upon the facts as known

to the administrator at the time the decision was made.” Jett,

890 F.2d at 1139. The facts presented at trial bear out that the

TAC acted reasonably in its decision as de facto administrator to

impose the moratorium on lump-sum payments. First, the record

paints an extremely bleak picture for the Plan in January 1991.

It is undisputed that the Plan was low on liquid assets as of the

eighteenth of that month. Following the commencement of the

Chapter 11 reorganization proceeding on March 9, 1989, Eastern

reduced and eventually stopped making contributions on behalf of

its pilots. Moreover, between 1986 and 1990, the amount of lump-

sum payments paid to retiring pilots dramatically increased;

fewer than twenty-five pilots selected another benefit option

after the lump-sum option became available in 1983. In 1986,

roughly $52,000,000 was disbursed in lump-sum payments; that

number grew to more than $200,000,000 in 1990.65 Between January

65
The following amounts were distributed in lump-sum
payments between 1986 and 1990: $52,091,000 (1986); $79,389,000
(1987); $107,954,000 (1988); $181,856,000 (1989); and
$200,540,000 (1990).

58
1 and January 18, 1991, already $38,000,000 had been disbursed as

lump-sum payments.66

This paucity of liquid assets was further exacerbated by the

depressed performance of the Plan's substantial real estate

holdings. Former Citicorp president William Spencer, a member of

the TAC during the period in question, stated at trial that

“[t]he real estate which comprised a sizable part of the fund was

in a funk, and . . . unless some time was developed [so the real

estate] could evolve, the hardships on all of the [Plan's]

members would be very extreme.” Another former TAC member,

former President Ford, stated in his deposition that the Plan

could not have made lump-sum payments to all retiring pilots

without subjecting its real estate holdings to a “fire sale” at

prices far below market value. Both former TAC members agreed

that holding a fire sale of such potentially valuable assets

would have been grossly imprudent. Hunt did not dispute the

validity of this testimony.

Second, the terms of the Plan make clear that the

administrator owes an equal fiduciary duty to all Plan

participants, including annuitants and those who have not elected

any benefit option. The administrator is required to treat all

participants equally at all times in running the Plan. See §

2.2(a) (“[T]he Administrator . . . shall have those powers

necessary to carry out the day to day operation of the Plan . . .

and initially determine all questions arising from the

66
At this rate, more than $60,000,000 would have been
disbursed in lump-sum payments in January 1991 alone.

59
administration, interpretation, and application of the Plan . . .

provided that each Participant shall be granted the same

treatment under similar conditions.”) (emphasis added).

Moreover, as named fiduciary, the TAC bears a heavy obligation to

ALPA. See supra part III.B (discussion of TAC's obligations to

ALPA under §§ 2.7(b), 2.8., and 2.11).

Hunt was one of approximately 2,500 pilots who were affected

by Eastern's shutdown and the moratorium. Like the hundreds of

other Eastern pilots who failed to submit their benefit

applications by the close of business on January 18, 1991, Hunt

was unable to take advantage of the original lump-sum option that

was in effect prior to Eastern's shutdown.

If the Plan administrator were to grant Hunt's lump-sum

benefit application, however, it would be arbitrarily favoring

Hunt over all of the other pilots who, like Hunt, did not submit

their application before the imposition of the moratorium. As a

fiduciary under ERISA, the administrator owes a responsibility to

administer the plan “in accordance with the documents and

instruments governing the plan.” ERISA § 404(a)(1)(D), 29 U.S.C.

§ 1104(a)(1)(D). The Plan plainly states that the administrator

is required to discharge its duties in a manner ensuring that

“each Participant shall be granted the same treatment under

similar conditions.” See § 2.2 (“Administration”) (emphasis

added). Given this fiduciary responsibility, the administrator,

when faced with Hunt's benefit application, made the reasonable

decision to treat Hunt exactly like all of the other pilots in

his position -- that is, to deny his lump-sum benefit despite its

60
“approval” by Eastern's Pension Administration Department.

Therefore, even assuming arguendo that the TAC functioned as de

facto administrator, we would find that its “denial” of Hunt's

lump-sum benefit was reasonable based upon the facts known by it

at that time.67 Accordingly, in this hypothetical case, the

TAC's “denial” of Hunt's lump-sum benefits would pass muster

under the arbitrary and capricious standard of review.68

IV.

Hunt cross-appeals the district court's refusal to impose a

statutory penalty on the TAC for its alleged failure to comply

with Hunt's requests for information.69 Under section 502(c) of

67
As indicated above, we have managed to locate ample
information in the record to justify under the arbitrary and
capricious standard of review the imposition of the moratorium.
We would agree, however, with the district court's assessment
that the TAC presented its supporting evidence at trial in a
wholly incoherent manner: “[B]ecause the [TAC's data was] either
incomplete or not adequately explained, this court was left to
wonder what the numbers and figures really meant.”
68
Although Hunt is not entitled to receive the total value
of his accrued benefit in one full lump-sum payment, we assume
that he remains eligible to elect the modified lump-sum option
available under Document 91C like all other similarly situated
Eastern pilots affected by the shutdown and moratorium.
69
As stated in part II.A, supra, Hunt dispatched four
letters allegedly in response to Eastern's February 4, 1991,
letter to all Eastern pilots. His March 15, 1991, letter to Dyer
of Hawthorne inquired about the status of his pension. His March
20, 1991, letter to O'Connor requested the most current statement
of his account and the most recent financial statement for the
Plan “showing [its] assets and liabilities.” His July 15, 1991,
letter to Dyer requested a statement of “the TAC's position on
his application,” copies of all amendments to the Plan affecting
his benefits, an explanation if the TAC were to deny his
application, and the name, address, and the forms necessary to
file a claim with the Pension Dispute Board if the TAC decided
not to pay his lump-sum benefit. This letter also was sent to

61
ERISA, an administrator who “fails or refuses to comply with a

request for any information which such administrator is required

by [ERISA] to furnish to a participant or beneficiary . . .

within 30 days after such request may . . . be personally liable

to such participant or beneficiary in the amount of up to $100 a

day from the date of such failure or refusal.” 29 U.S.C. §

1132(c).70 ERISA requires the administrator to provide

participants with, inter alia, the latest updated summary plan

description, the latest annual report, a statement to each

participant indicating the total benefits accrued, and “other

instruments under which the plan is established or operated.”71

See ERISA §§ 104(b)(4), 105(a)(1), 29 U.S.C. §§ 1024(b)(4),

1025(a)(1). The imposition of this penalty is committed to the

district court's discretion. ERISA § 502(c), 29 U.S.C. §

1132(c).

The issue in this cross-appeal is whether the TAC should be

considered an “administrator” for purposes of section 502(c) of

ERISA. The previous discussion shows that the Plan designated

Eastern as Plan administrator, whereas the TAC served as named

the then-chairman of the TAC. His August 19, 1991, letter to
O'Connor requested copies of the “amendments to the [Plan],” an
explanation of whether the TAC “had the right to amend the
[Plan],” and a statement disclosing the number of applications
for lump-sum benefits filed since January 18, 1991.
70
Section 502(a)(1)(A) of ERISA empowers participants and
beneficiaries to sue “for the relief provided for in
subsection(c) of [section 502]." 29 U.S.C. 1132(a)(1)(A).
71
In the alternative, the TAC argued that Hunt did not
request information that ERISA requires an administrator to
provide. Like the district court, we make no ruling on this
issue.

62
fiduciary and as administrator of only the periodic-payment and

loan options.72 Hunt contends, however, that the TAC functioned

as de facto administrator and thus should be held liable for

failing to respond to his requests for information.

Hunt bases his claim on Law v. Ernst & Young, 956 F.2d 364

(1st Cir. 1992), and Rosen v. TRW, Inc., 979 F.2d 191 (11th Cir.

1992), in which we endorsed the analysis set forth in Law.73 In

Law, an ERISA-plan participant sued his former employer for

failing to provide requested information about his benefits in a

timely fashion; the plan documents in that case did not designate

the former employer as administrator. After reviewing the plan

documents in question, the First Circuit held that if the company

“acted as the plan administrator in respect to dissemination of

information concerning plan benefits, it may be properly treated

as such for purposes of the liability provided under [section

502(c)].” Law, 956 F.2d at 373; see also Rosen, 979 F.2d at 193-

94 (“We agree with the reasoning of the First Circuit and we hold

that if a company is administrating the plan, then it can be held

liable for ERISA violations, regardless of the provisions of the

plan document.”) The Law court further reasoned that to refrain

72
See supra parts I.D and III.C. We note again that our
discussion in part III.C merely assumes for the sake of argument
that the TAC served as Plan administrator. Of course, neither
the Plan nor the record provides a legitimate basis for making
that assumption.
73
Other circuits have concluded that, for the statutory
penalty to apply, the administrator must be the entity so
designated in the plan documents. See Jones v. UOP, 16 F.3d 141,
144-45 (7th Cir. 1994); McKinsey v. Sentry Ins., 986 F.2d 401,
404-05 (10th Cir. 1993).

63
from imposing liability on such an entity simply because it is

not named as plan administrator “would cut off the remedy

Congress intended to create.” Law, 956 F.2d at 373. Finding “a

plethora of evidence” showing that the company had “controlled

the provision of information,” id. at 372, 373, the First Circuit

affirmed the lower court's judgment for the statutory penalty.

Id. at 374. In reaching this conclusion, the court emphasized

two facts in particular: (1) that the company, according to the

plan documents, still exercised considerable control over plan

administration; and (2) that the plaintiff's requests for

information were eventually answered by company employees on

company stationery. Id. at 373-74.

Although Hunt states in his brief that “Eastern had

delegated, and TAC had assumed, the role of Plan Administrator,”

the record demonstrates that this statement is patently

inaccurate. First, as discussed in parts I.D and III.C, supra,

the record makes clear that with the exception of the periodic-

payment and loan options, which were added effective June 25,

1991,74 Eastern retained its authority as administrator of the
Plan at all relevant times. In fact, a July 1991 letter sent

from the TAC to all plan participants regarding the periodic-

payment and loan options makes this fact unambiguously clear:

“The [Plan's] Trust Administrative Committee is designated as

Administrator of both of these new [Plan] provisions only. As in

the past, Eastern retains administrative authority over all other

74
Hunt did not participate in either the periodic-payment
or loan option, so this issue is not germane to his claim.

64
provisions of the [Plan].”75 Consequently, Eastern retained its

responsibility under the Plan to provide information such as plan

summaries and annual statements to all participants. See §§ 2.5,

2.6.

Second, Hunt's claim fails because he misinterprets

Eastern's simple instructions to all participants in its

February 4, 1991, letter. Hunt argues in his brief that this

letter, which was sent by Eastern and printed on Eastern

stationery, indicated that the “TAC was the authority designated

by the Plan Administrator for dissemination of information

regarding the [Plan].” This short letter, however, stated that

“[q]uestions regarding the temporary moratorium should be

addressed to the [TAC]” (emphasis added); it made no

representation that the TAC was now responsible for providing

plan summaries, annual statements, amendments, and other such

information to participants.76 Furthermore, with the exception

of the TAC’s responsibilities as administrator of the periodic-

payment and loan options, the record is devoid of evidence

showing that the TAC had assumed any of Eastern's duties

75
This letter was sent pursuant to the TAC's authority
under § 10.2(c) “[t]o furnish to . . . Participants such reports
with respect to the functions, actions, and decisions of the
[TAC] as are reasonable and appropriate.”
76
Hunt's arguments on this claim reveal a profound
misunderstanding about basic aspects of the Plan. For example,
he contends that the “TAC further held themselves out to be the
Plan Administrator by claiming to be negotiating for, and
selecting, an administrative services provider.” The Plan,
however, charges the TAC, as named fiduciary, with the
responsibility for selecting investment advisors and other
administrative service personnel, provided that the TAC obtains
ALPA's consent. See §§ 2.9, 2.13(c),(d).

65
regarding the provision of information to participants. We

therefore hold that Hunt has failed to support his contention

that the TAC functioned as de facto Plan administrator and that

the district court properly declined to impose a penalty on the

TAC pursuant to ERISA § 502(c), 29 U.S.C. § 1132(c).

V.

In light of the above, we REVERSE the judgment of the

district court awarding $352,748.74 plus costs to Hunt from the

coffers of the Plan's Fund (Counts II and IV).77 We AFFIRM the

decision of the district court to deny Hunt the assessment of a

statutory penalty under section 502(c) of ERISA (Count I).

77
Although the district court gave Hunt judgment on Count
VII, it refused to give him the relief he sought in that count.
See supra note 48 and accompanying text. Nonetheless, for
completeness, we reverse the court’s judgment on Count VII as
well as the court’s judgment on Counts II and IV.

66

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/72061. Public record. Not legal advice.