petition — Kurz v. Philadelphia Electric Co.

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Supreme Court, U.S.

no:

97.214 AUG 41997

No. OFFICE OF THE CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1996

DONALD R. KURZ, et al.

Petitioners,

THE PHILADELPHIA ELECTRIC COMPANY, et al.

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

PETITION FOR WRIT OF CERTIORARI

Ronald L. Wolf, Esquire*

Martina W. McLaughlin, Esquire

LITVIN, BLUMBERG, MATUSOW & YOUNG

The Widener Building, 18th Floor

1339 Chestnut Street

Philadelphia, PA 19107

(215) 557-3300

Counsel for Petitioners

*Counsel of Record

QUESTIONS PRESENTED

Under ERISA, when does a plan administrator/fiduciary

who is also the employer have a fiduciary duty to truthfully tell plan

participants that a change to the pension plan is under consideration?

Under ERISA, does the six-year statute of limitations for a

breach of fiduciary duties set forth in 29 U.S.C. §1113 apply when

the breach of duty involves fraud or concealment?

PARTIES TO THE PROCEEDING

The Petitioners are the class members who consist of former

employees of PECo who retired from January through and including

June 1987 under the PECo Annuity Service Plan effective January

1, 1987. [Appendix at 64a]. This class includes the following

named plaintiffs: Donald R. Kurz, William W. Anderson, James

Beck, William T. Bergen, Charles W. Bowden, William H. Brown,

Richard Cahill, Armando L. Capoferri, Robert C. DeMarco, James

J. DiLolle, Sr., Vincent J. DiMaggio, John J. DiValentino, Jr.,

William E. Drumel, Victor J. Gibialante, Francis T. Golden, James

J. Granger, Elmer D. Greim, Jr., James H. Hair, John M. Hoopes,

Benjamin J. Kilian, George c. Linthicum, Hubert A. McKown, Jr.,

Henry P. McNamee, Oliver K. Messner, Robert E. Miller, John A.

Morse, Samuel J. Mullen, John A. Munley, Stanley B. Myers, John

J. Nusspickel, James W. Patterson, Alfred B. Schumann, Joseph C.

Sharkey, William H. Smoyer, Woodrow E. Snyder, James D.

Sutliff, Edward J. Vetner, Dominic C. Viglianese, G. Earle Watt,

Frederick W. Winterling, and John R. Young.

; The Respondents are Philadelphia Electric Company,

Service Annuity Plan of Philadelphia Electric Company, Charles L.

Fritz, J.L. Everett, III, and John H. Austin, Jr.

RULE 29.6 STATEMENT

es or subsidiaries of Philadelphia

There are no affiliat

subsidiaries to

Electric Company other than wholly-owned

petitioners’ knowledge.

iil

TABLE OF CONTENTS

QUESTIONS PRESENTED ...................0.

PARTIES TO THE PROCEEDING ...............

RULE 29.6 STATEMENT .. 1.2... cc ee iil

STATEMENT OF JURISDICTION ..............

STATUTORY PROVISIONS INVOLVED ..........

STATEMENT OF THE CASE ..................

A. WOOUOG OCMINOUNG . ww

B. The Proceedings Below .............

REASONS FOR GRANTING THE

WRIT FOR CERTIORARI ........

A. This Case Presents an Important Question

of Federal Law that has not been Settled by

the Supreme Court ................

B. The Third Circuit’s Decision Conflicts with

the Duties of a Fiduciary under ERISA as

Espoused by this Court..............

ae The Third Circuit’s Decision Conflicts with

Decisions of other Courts of Appeals .....

D. The Third Circuit’s Decision Regarding the

Applicable Statute of Limitations Conflicts

with Decisions of Other Courts of

MS Naw oe ee ee ans

ek eee re era

TABLE OF AUTHORITIES

CASES: PAGE

Ballone v. Eastman Kodak Co.,

109 F.3d 117 (2nd Cir. 1997) ....-.- 17, 19, 20, 22-24

Barker v. American Mobile Power Corp.,

64 F.3d 1397 (9th Cir. 1995)... 6... - ee eee ees 26

Basic Inc. v. Levinson,

485 U.S. 224, 236, 108 S. Ct. 978,

986, 99 L. Ed.2d 194 1) ee ee a 25

Berlin v. Michigan Bell Telephone Co.,

858 F.2d 1154 (6th Cir. CE co to hae eee 19

Diduck v. Kaszycki & Sons Contractors, Inc.,

874 F.2d 912 (2d Cir. 1989) .....--- ee eee: 26

Donovan v. Bierwirth,

680 F.2d 263 (2nd Cir. 1982) ...--- +--+ sere: 18

Drennan v. General Motors Corp.,

977 F.2d 246 (6th Cir. 1992).....- ee re 19

Fischer v. Philadelphia Electric Co..,

96 F.3d 1533 (3d Cir. 1996) ...... 12. 13, 17, 20, 24

Fischer v. Philadelphia Electric Co.,

994 F.2d 130 (3d Cir. 1993) ....---+--> 9, 10, 24

Hockett v. Sun Company, Inc.,

109 F.3d 1515 (10th Cir. 1997) .....-.---- 17, 19

J. Giels Band Employee Benefit Plan v.

Smith Barney Shearson, Inc.,

16 F.3d 1245 (ist Cir. 1996), cert. denied,

136 L.Ed.2d 39, 117, S.Ct.81 (1996) ...-.-----+> 26

CASES: Page

Kurz v. Philadelphia Electric Co.,

96 F.3d 1544 (3d Cir. 1996) ........... 13, 24, 26

Kurz v. Philadelphia Electric Co.,

994 F.2d 136 (3d Cir. 1993) .............0.. 10

Larson v. Northrop Corp.,

21 F.3d 1164 (D.C. Cir. 1994) .............. 26

Maez v. Mountain States Tel. and Tel., Inc.,

54 F.3d 1488 (10th Cir. 1995) ............... 19

Morse v. Stanley,

132 ©.426 L139, 1145 (a Cir. 1984) .... es. oe ees 18

Mullins v. Pfizer, Inc.,

oS F.O6 GOs C6 Ue. FOP nc ce vad cee bev bs 19

Muse v. International Business Machines Corp..,

103 F.3d 490 (6th Cir. 1996),

cert. denied, 137 L.Ed.2d 1048 (1997) ..... 17, 19, 24

Shaefer v. Arkansas Medical Society.

S53 Fae Gr Gee Ge POD nk hc ce wee ew ee 26

Varity Corp. v. Howe,

__ U.S. ___, 134 L. Ed.2d,

116 S. Ch. TS CI. 6 wee ee ek 16-18, 21-23

Vartanian v. Monsanto Co.,

14 F.36 Gr tak Coe. 10 kk oe ae 19

Wilson v. Southwestern Bell Telephone Company.

55 F.3d 399 (8th Cir. 1995) ........... 17, 19, 24

: * +

STATUTES PAGE

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OPINIONS BELOW

The most recent opinion of the Court of Appeals in this case

is reported at 96 F.3d 1544 (3d Cir. 1996) [Appendix at la-22a].

The most recent opinions of the District Court in this case

(Appendix at 47a-77a) are not reported.' The denial of a Writ of

Certiorari by the United States Supreme Court in this case is

reported at 510 U.S. 1020, 114 S. Ct. 622 (1993) [Appendix at

78a]. The first opinion of the Court of Appeals is reported at 994

F.2d 136 (3d Cir. 1993) [Appendix at 91a-98a]. The previous

opinion of the District Court in this case (Appendix at 99a-141) is

not reported. The Third Circuit Court of Appeals’ opinion denying

a petition for rehearing following the first decision by the Court

(Appendix at 142a-143a) is not reported. The Third Circuit Court

of Appeals’ opinion denying the petition for rehearing on behalf of

class members Frank Monzo, Martin Morgan and Gloria McEntee

following the second decision by the Court (Appendix at 144a-146a)

is not reported.

STATEMENT OF JURISDICTION

The judgment of the Court of Appeals was entered on

October 1, 1996. The jurisdiction of this Court is invoked under 28

U.S.C. §1254(1).

In the District Court, the Kurz case was consolidated with

the case of Fischer v. Philadelphia Electric Co., because

the legal issues involved were virtually identical. The

Court of Appeals also reversed the decision in favor of

the Fischer class members based in part upon the same

legal issues presented in this Petition for Writ of

Certiorari. The Fischer class members filed a Petition for

Writ of Certiorari with the United States Supreme Court

on December 24, 1996, which was denied. In the event

that the Court grants Certiorari in this case, it is

requested that the Court reconsider its decision in Fischer

and grant Certiorari in that case as well given the

common identity of legal issues involved.

EE OOoooeTT|!]!]!]|TClUe

STATUTORY PROVISIONS INVOLVED

The relevant provisions of ERISA are 29 U.S.C. §1104(a),

1113 and 1132(a) and (e). They are reproduced in the Appendix.

[Appendix at 147a-148a].

STATEMENT OF THE CASE

This petition involves the claim that PECo violated a

fiduciary duty under ERISA owed to former employees who

participated in the company’s pension plan prior to their retirement.

The petitioners alleged and, with respect to some of the class

members’ claims, the District Court agreed, that PECo misled them

about its “serious consideration" of a possible change to the pension

plan formula which would have increased their retirement benefits.

The Third Circuit Court of Appeals reversed the decision of the

District Court finding that PECo was not seriously considering a

change to the pension plan under a new three-prong test which the

court imposed. The specific issue presented in this petition is when

under ERISA does a fiduciary duty arise on the part of a plan

administrator who is also an employer to truthfully tell plan

participants that it is considering a possible change to the pension

plan. The second issue presented in this petition concerns whether

the six-year statute of limitations for breach of fiduciary duty in

cases involving fraud or concealment applies to cases where the

breach itself involves fraud or concealment.

A. Factual Background

On July 2, 1987, PECo issued an official bulletin to their

employees announcing an improved minimum formula for the

calculation of pension benefits to be effective August 1, 1987. The

petitioners had retired from January | through June 1, 1987 and,

therefore, were denied eligibility for these enhanced benefits. The

pension benefits they received were calculated under the old formula

which was long recognized by PECo as being lower than average

for the utility industry.

Initial discussions regarding amendment of the pension plan

began at least two years before its official adoption. Significantly,

by the time respondents were making their retirement decisions,

PECo had already anticipated the need to make improvements to the

pension plan and, in fact, had set a target date by which to

accomplish this goal. PECo, however, made a conscious decision

not to disclose this information to prospective retirees before the

official announcement of the amendment on July 2, 1987. As a

result, the respondents were falsely told that there were no plans to

amend the pension plan in response to questions posed to their

retirement counselors and/or supervisors at a time when they were

making important decisions about the timing of their retirement.

The extensive history of PECo’s planning efforts in

developing the amendment to the Service Annuity Plan proves that

"serious consideration" was being given to a change in the Service

Annuity Plan to enhance pension benefits since at least March 1, 1987.7

Petitioners submit that plans to change pension benefits

were under serious consideration at an even earlier date

but at the very least by March 1, 1987 -- the date on

which the District Court determined serious consideration

began. Indeed, petitioners strenuously argued in the

Court below that the date should at least be February 27,

1987 when Frederick Beaver, the Administrative Assistant

in the Benefits Division, contacted on outside consultant,

TPF&C and, on behalf of PECo, requested cost

calculations for a pension formula that represented a

change to the pension plan. It was that same activity,

contacting an outside consultant, which the District Court

in the Fischer case held constituted "serious

consideration.” Even though it is only two days earlier,

it is of utmost significance because under the District

Court’s ruling, those people whose retirement date

became effective on March 1, 1987, were not entitled to

recover. If the Court grants certiorari in this case, the

Subclass B petitioners (those class members whose

retirement was effective before March 1, 1987) ask the

Court to consider their claim that plans to change the

pension formula were under sufficient consideration to

(continued. ..)

From at least as early as 1977, on an annual or bi-annual

basis, PECo participated in surveys that compared the employee

pension benefits of companies in the utility industry. These surveys

assessed and ranked the utility company’s respective pension

benefits. For many years, the survey was performed by the Public

Service Electric and Gas Company and was utilized "to look to see

whether or not any changes in the future should be made."

Frederick Beaver, an administrative assistant in Personnel and

Industrial Relations Department, was one of the employees that

would review the comparative studies performed by PSE&G.

Previously, PECo had amended its pension formula to

increase benefits, effective as of January 1, 1982, after a survey by

PSE&G indicated that PECo’s pension benefits were low, compared

to other companies in the industry. This is significant because in

approximately 1983, PECo began to see some erosion in its

positioning relative to other surveyed utilities with respect to

pension benefits being offered. PECo’s position was eroding

basically as a result of other companies improving their plan

formulas. As a result, over a period of years prior to 1987, there

was a growing interest in adjusting the PECo plan formula to

improve benefits. The events set forth below well documents this

point.

In 1985, at the request of PECo’s Finance Division,

TPF&C, an outside actuarial consultant, performed an analysis for

a long-term financial planning study, which included a projection of

what PECo’s pension obligations would be in the future. PECo

provided information concerning its long-range “plan

improvements" which were listed, along with the projected date on

which the improvements would become effective, in the March 14,

1985 preliminary report prepared by TPF&C. One of the plan

improvements identified for January 1, 1988 was to increase the

integration percentage of the minimum formula to .35 from .30.

This is an increase to the multiplier used to calculate the part B

*(...continued)

trigger PECo’s duty to truthfully intorm them of the plan

before their retirement.

pension benefits. Significantly, this projected pension improvement

identified in 1985 was part of the improvement which was adopted

on August 1, 1987! As Mr. Fleisher from TPF&C acknowledged at

trial, PECo merely moved up the implementation date of this plan

improvement from January 1988 to August 1, 1987.

On October 2, 1985, the final version of the TPF&C

pension funding study for the Service Annuity Plan was presented

to PECo during which there was a discussion regarding potential

changes that could be made to the pension plan. These discussions

continued among PECo management personnel over the next couple

of years. In October 1985, Michael Crommie, the Director of

Employee Services Division, and Mr. Beaver had discussions

regarding potential changes to the pension plan that could affect the

level of benefits provided in order to increase PECo’s position in

comparison to other utility companies. In the 1985-1986 time

frame, Mr. Beaver and Mr. Crommie also had discussions with

Ronald Downs, the Manager of the Industrial Relations Department,

regarding the competitive position of PECo’s pension benefits and

what alternatives might be available for improvement to the pension

plan, including the possibility of modifying the service factors used

in calculating pension benefits.

The activity aimed at improving the pension plan continued

in 1986 when, after PSE&G had decided to discontinue the benefits

survey, PECo assumed the task of compiling the survey. It was

Mr. Crommie’s intention to complete the survey by February 20,

1987 because, “from a benefit planning standpoint, it’s always

worthwhile to receive the information as early in the year as you

possibly can get it... to give you as much time for planning for that

particular year." Obviously, Mr. Crommie was anticipating the

foreseeable likelihood that the survey would verify the need to

improve the PECo pension plan given the past evidence of the

erosion of the benefits plan in comparison with other surveyed

utility companies. Indeed, as of June 1986, Mr. Crommie informed

management of the continuing deterioration of the pension plan and

stated that changes might be considered to alleviate that situation.

Then, on June 23, 1986, Mr. Crommie sent a memorandum to Mr.

Downs regarding the 1986 pension survey in which he asked

whether to anticipate a study to be conducted by TPF&C based

upon the 1987 survey results. Mr. Downs responded:

"Probably not, but suggest we consider after we

see survey results. Obviously, some input from

TPF&C will be required with regard to our

recommended modifications to plan!"

This verifies that PECo already had recommended modifications to

the pension plan as of June 1986.

Mr. Beaver authored the 1986 pension survey report which

was issued May 22, 1987. In approximately February 1987, he

received the data from the other utilities participating in the 1986

pension study. As a result of the survey, Mr. Beaver concluded that

out of 23 comparison companies, PECo’s position was below the

mid-point and significantly below the mid-point for all management

cases; PECo’s position had become fairly non-competitive.

Consequently, PECo increased its activity with regard to evaluation

of alternatives to improve the pension plan. Mr. Beaver discussed

with colleagues what PECo should do about the further deterioration

of its pension benefits relative to other utility companies and,

significantly, it was his thought that, based on the results of the

pension survey data, it was appropriate to make an improvement to

the pension plan in 1987. Consequently, on February 27, 1987, Mr.

Beaver called Don Fleisher at TPF&C and asked questions

concerning a possible pension plan change. Specifically, Mr.

Beaver asked Mr. Fleisher to give him a cost for a pension formula

that represented a change to the pension plan. Mr. Fritz, the Vice

President of Personnel and Industrial Relations, was aware in

February 1987 that TPF&C was working with PECo to evaluate

such a formula change to the pension plan.

Thereafter, PECo undertook systematic activity to

implement the pension plan change. This included the following

activity:

e In March 1987 Don Fleischer of TPF&C began

calculating benefit projections for senior PECo

officers which included a change to the pension

plan.

Through the month of April 1987 TPF&C worked

on proposed changes to the plan.

Don Fleischer of TPF&C outlined four proposals to

PECo as early as April 2. 1987 and provided

additional updated information on April 13 and

April 20, 1987.

At the April 24, 1987 meeting with the IGA, Mr.

Fritz stated that this was a good year for changes to

the pension plan since it was well funded and

PECo’s plan was below the industry norm.

On May 6, 1987, Murdoch of TPF&C met with

Mr. Crommie of PECo to discuss two competing

alternatives for changing the plan.

On May 11, 1987, Murdoch noted a conversation

with Mr. Fritz regarding pressure from the IGA to

improve the pension plan.

On May 13, 1987, Mr. Fleischer of TPF&C noted

a conversation with McGinley and Beaver of PECo

that the company was being pressured by the IGA

for improvements to the pension plan and that some

commitment had already been made.

On May 20, 1987, TPF&C prepared a discussion

outline of PECo’s retirement plan study

commenting that PECo needed to improve its

pension.

In a May 20, 1987 outline, the employee services

division of PECo concluded that the time for a

pension change had arrived given PECo’s

deteriorating position vis a vis other utilities.

The extensive history of PECo’s activities aimed at remaining

competitive with other utilities by improving its pension plan clearly

and convincingly documents that by March 1, 1987, at the latest,

PECo was seriously considering such an option. The facts

established of record in this case likewise document that PECo

intentionally withheld information regarding its planning efforts

from the petitioners. Indeed, the evidence of PECo’s conduct was

so iron clad that the District Court (in the first opinion)

acknowledged that PECO had an actual policy of keeping potential

changes to the pension plan confidential before being voted on by

the Board of Directors. [Appendix at 132a-133a]. Petitioners

presented glaring evidence of the nature and extent of the

concealment of information by PECo. For example, defendant,

Charles L. Fritz, PECO’s Vice President of Personnel and Industrial

Relations, claims that he thought it was important that potential

retirees at least be told, in answer to questions regarding this matter,

that the IGA (an employee organization) was in fact asking for

improvements to the pension plan because:

"I think it would be wrong for the interviewer to

say that nothing was being discussed or looked into.

I think it would have been dishonest, and we

certainly try to be completely above board in this

area." [Fritz Deposition, pps. 160-161].

Yet, in March, 1987, after he had specifically told the IGA that

1987 was the right time to make such a change to the pension plan,

Mr. Fritz intentionally did not inform Mr. Crommie, supervisor of

the retirement interviewers, of this fact, claiming that “he didn’t

need to know many of these things at that time...." [Fritz

Deposition, p. 84].

B. The Proceedings Below

Despite the extensive evidence, as outlined above, the

District Court, when initially considering the case, decided that

there were no material misrepresentations made to petitioners

because PECo had not given “serious consideration" to changing the

pension plan until such plans were officially announced. The

District Court granted summary judgment in favor of the

respondents. The petitioners appealed to the Court of Appeals which

relied upon convincing factual evidence to conclude that the District

Court’s characterization of the record as lacking evidence of

material misrepresentations by PECo was incorrect and therefore

reversed and remanded the case for trial. In so deciding, the Court

rejected PECo’s explanation that since the company had never told

the benefits counselors that it was considering changes to the

pension plan, then the counselors’ representations to the

respondents, that no such plans were being contemplated, were

truthful, holding, in the companion case of Fischer v. Philadelphia

Electric Co., 994 F.2d 130, 135 (3d Cir. 1993) [Fischer_1,

Appendix at 88a]:

"This explanation will not do, for the fiduciary

obligations owed to the plan participants were owed

by PECo as plan administrator. These obligations

cannot be circumvented by building a chinese wall

around those employees on whom plan participants

reasonably rely for important information and

guidance about retirement."

The Court of Appeals in the Fischer case also gave the

District Court the following specific instructions to follow on

remand when determining whether the contents of the particular

communications PECo made to the petitioners constituted

affirmative misrepresentations:

"The content of the particular communications

PECo allegedly made to members of the plaintiff

class and whether such communications constituted

affirmative misrepresentations are questions of fact

properly left to the trier of fact on remand.

Whether an affirmative misrepresentation was

‘material’, however, is a ‘mixed question of law

and fact.’ In the present context, 4a

misrepresentation is material if there is a substantial

likelihood that it would mislead a reasonable

employee in making an adequately informed

decision about if and when to retire. Included

within the overall materiality inquiry will be an

inquiry into the seriousness with which a particular

change to an employee pension plan is being

considered at the time the misrepresentation is

made. All else equal, the more seriously a plan

change is being considered, the more likely a

misrepresentation, e.g., that no change is under

consideration, will pass the threshold of

materiality." Id. [Fischer _I, Appendix at 89a].

[Citations omitted].

Finally, in the first opinion issued by the Court of Appeals

in the Kurz case, the Court specifically rejected the establishment of

a bright-line rule for the determination of when serious

consideration begins, noting that "tying serious consideration to a

single objective event in the present context would work unfairly in

some instances." Kurz v. Philadelphia Electric Co., 994 F.2d 136

(3d Cir. 1993) [Kurz 1, Appendix at 97a].

The respondents filed a petition for rehearing and rehearing

en banc to the Third Circuit Court of Appeals which was denied.

[Appendix at 142a-143a]. Thereafter, the respondents filed a

Petition for Writ of Certiorari with this Court which was also

denied. [Appendix at 78a].

On remand, the main question which the District Court was

required to decide was when PECo began to seriously consider a

change to the pension plan formula. The District Court determined

that serious consideration began on March 1, 1987 based upon the

following conclusions.

At that time, according to Mr. Fritz, PECo began

considering not only improving the plan for

journeyman level employees, but also higher

management type positions. Fritz had met with

IGA representatives and stated that the timing was

right for making significant changes in the pension

plan, and that the company was looking into several

alternatives, including the IGA’s proposal from the

year before. Fritz represented that the change

would be in the order of a ten percent increase.

Also in March, 1987, Towers Perrin began

calculating specific benefit projections for senior

PECo officers.

Also supporting this conclusion are the notes of

Don Fleischer of Towers Perrin of May 13, 1987,

in which he noted a conversation with John

McGinley and Fred Beaver of PECo that the

company was being pressured by the IGA for

improvements to the pension plan and that “some

commitment [had] already [been] made." These

PECo executives, at least, believed the company

had been seriously considering improving the

pension formula for some time. [Opinion in the

Court, May 16, 1994, p. 23, Appendix at 63a-64a].

The Court found that PECo, thereafter, undertook systematic

activity to implement the pension plan change. [Id, Conclusion of

Law No. 13, Appendix at 64a].

In addition, because the complaint in the Kurz case was not

filed until approximately three and one-half years after the pension

plan change was announced by PECo, the District Court was

required to determine whether plaintiffs’ claims for breach of

fiduciary duty were timely under the statute of limitations imposed

by ERISA under 29 U.S.C. §1113. The District Court concluded

that because plaintiffs’ complaint alleged concealment of the plan to

implement the pension change and since PECo admitted that it had

a policy of keeping such matters confidential and telling potential

retirees that no such plans existed until formally announced, then the

six-year statute of limitations for cases of concealment set forth in

29 U.S.C. §1113 was applicable. The Court also held that since the

lawsuit was filed less than six years after the breach of fiduciary

duty was discovered by the plaintiff class members, their claims

were not barred by the applicable statute of limitations. [Opinion

of the District Court, May 16, 1994, Conclusions of Law Nos. 22-

24, Appendix at 65a].

The District Court then divided the class members into two

subclasses: Subclass A consisting of all those members of the Kurz

class who solicited information and retired after PECo’s duty to

inform retirees of the pending change arose on March 1, 1987; and

Subclass B consisted of all other members of the Kurz class.

[Opinion of the District Court, May 16, 1994, Conclusion of Law

No. 21, p. 25, Appendix at 65a]. Thereafter, the Court held a

separate hearing to determine the petitioners who constituted

Subclass A of the damages to which they were entitled. In the

damages phase of the trial, the District Court also clarified its prior

opinion and held, on the basis of precedent from the Third Circuit,

that once PECo began to seriously consider changes to the pension

plan, it had a duty to correct information disseminated before that

date to the effect that no change was forthcoming and was also

under an affirmative duty to now inform even those participants who

did not specifically ask about any such changes that the company

was seriously considering an amendment to the pension plan.

[Opinion of the District Court, August 22, (1995, Appendix at

69a-74a]. The Court then entered an order specifically identifying

those members of Subclass A and the amount of damages to which

they were entitled. [Appendix at 76a-77a].

Both parties then appealed to the Third Circuit Court of

Appeals. The petitioners, on behalf of the Subclass B members,

argued that the District Court’s decision that serious consideration

did not begin until March 1, 1987 was clearly erroneous given the

extensive history of PECo’s planning efforts before that date. The

respondents, to the contrary, argued that the District Court clearly

erred in finding that serious consideration began as early as March

1, 1987, arguing that senior management having authority to

implement such a pension plan change had not considered such a

program until June 1987.

Despite the factual nature of the decision made by the

District Court, the Court of Appeals reversed the decision of the

District Court in favor of the Subclass A plaintiffs, finding that

serious consideration of the pension plan change did not begin until

May 28, 1987, thereby precluding members who retired before that

date from recovery; and secondly, as to those class members who

retired after May 28, 1987, that their claims were barred by the

applicable statute of limitations under ERISA set forth in 29 U.S.C.

§1113.

To reach the decision regarding the date when serious

consideration began, the Court in Kurz II relied upon the new

definition of serious consideration espoused by the Court in Fischer

y. Philadelphia Electric Co., 96 F.3d 1533, 1539 (3d Cir. 1996),

(Fischer II]. Kurz v. Philadelphia Electric Co., 96 F.3d 1544, 1548

(3d Cir. 1996) [Kurz_I, Appendix at 7a-8a]. In Fischer Il, the

Court redefined serious consideration as follows:

" _ We believe that the following formulation of

serious consideration is appropriate: serious

consideration of a change in plan benefits exists

when (1) a specific proposal (2) is being discussed

for purposes of implementation (3) by senior

management with the authority to implement the

change.” [Fischer II, Appendix at 34a).

The Court determined that these three factors must interact

and coalesce to form a composite picture of serious consideration.

The Court’s further explanation of these factors underscores the

restrictiveness of this definition which had the intended result of

precluding the Subclass A petitioners, who the District Court after

reviewing a substantial amount of evidence had concluded were

indeed misled by the affirmative misrepresentations of PECo, from

recovering. While lengthy, the Court’s explanation bears citation

in full here:

"The first element, a specific proposal, distinguishes

serious consideration from the antecedent steps of

gathering information, developing strategies, and

analyzing options. A company must necessarily go

through these preliminary steps before _ its

deliberations can reach the serious stage. This

factor does not mean, however, that the proposal

must describe the plan in its final form. A specific

proposal can contain several alternatives, and the

plan as finally implemented may differ somewhat

from the proposal. What is required, consistent

with the overall test, is a specific proposal that is

sufficiently concrete to support consideration by

senior management for the purpose. of

implementation.

The second element, discussion for implementation,

further distinguishes serious consideration from the

preliminary steps of gathering data and formulating

strategy. It also protects the ability of senior

management to take a role in the early phases of the

process without automatically triggering a duty of

disclosure. This factor recognizes that a corporate

executive can order an analysis of benefits

alternatives Or commission a comparative study

without seriously considering implementing a

change in benefits. Preliminary stages may also

require interaction among upper level management,

company personnel, and outside consultants. These

discussions are properly assigned to the preliminary

stages of company deliberations. Consideration

becomes serious when the subject turns to the

practicalities of implementation.

The final element, consideration by senior

management with the authority to implement the

change, ensures that the analysis of serious

consideration focuses on the proper actors within

the corporate hierarchy. As noted, large corporate

entities conduct regular or on-going reviews of their

benefit packages in their ordinary course of

business. These entities employ _ individuals,

including middle and upper-level management

employees, to gather information and conduct

reviews. The periodic review process may also

entail contacting outside consultants’ or

commissioning studies. During the course of their

employment, the employees assigned these tasks

necessarily discuss their duties and the results of

their studies. These discussions may include issues

of implementation. The employees may also make

recommendations to upper level management Or

senior executives. AS a general rule, such

operations will not constitute serious consideration.

These activities are merely the ordinary duties of

the employees. Until senior management addresses

the issue, the company has not yet seriously

considered a change.

Consideration by senior management is also limited

to those executives who possess the authority to

implement the proposed change. This focus on

authority can be used to identify the proper cadre of

senior management, but it should not limit serious

consideration to deliberations by a quorum of the

Board of Directors, typically the only corporate

body that in a literal sense has the power to

implement changes in benefits packages. It is

sufficient for this factor that the plan be considered

by those members of senior management with

responsibility for the benefits area of the business,

and who ultimately will make recommendations to

the Board regarding benefits operations." Id, 96

F.3d at 1539-1540. [Appendix at 34a-35a].

On October 1, 1996, the Court of Appeals entered judgment

in favor of the respondents holding that serious consideration did not

arise until May 28, 1987. Despite the fact that PECo was

admittedly engaged in gathering information from outside

consultants concerning development of a pension plan change way

before that date, the Court held that those petitioners who were told

that no plans were in the works were not misled because PECo had

not been seriously considering those plans for implementation until

J.L. Everett, Il, PECo’s chief executive officer, and John H.

Austin, Jr., PECo’s president and chief operating officer, considered

a request by Charles Fritz, to proceed further with the

recommendation of a specific proposal for a pension plan change.

The Court also reversed the decision in favor of those Subclass A

members who retired after the date of serious consideration, holding

that their claims were time-barred by the three year “actual

knowledge" statute of limitations set forth in ERISA, 29 U.S.C.

§1113, which governs the limitations period for breaches of

fiduciary duty. Thereafter, petitioners Frank Monzo, Martin

Morgan, and Gloria McEntee, filed a petition for rehearing on the

basis that the respondents failed to meet their burden of proof

regarding the “actual knowledge" standard for the statute of

limitations which the Third Circuit held was applicable. The Court

of Appeals denied the Petition for Rehearing on May 7, 1997.

[Appendix at 144a-146a]. The petitioners have filed a timely

Petition for Writ of Certiorari to this Honorable Court.

REASONS FOR GRANTING THE

WRIT FOR CERTIORARI

It is respectfully submitted that this Honorable Court should

grant certiorari in this case for the following compelling reasons:

First, the restrictive definition of "serious consideration" imposed

by the Third Circuit Court of Appeals establishes an important

decision on the interpretation of fiduciary duties imposed by ERISA

which has not been settled by the Supreme Court. Because this

decision could impact plan participants and companies throughout

the country, the Supreme Court, as final arbiter of federal issues

arising under ERISA, should finally determine when the fiduciary

obligation to inform plan participants of potential changes to a

pension plan arises, particularly under circumstances where, as

here, the plan fiduciary is aware that participants are asking

questions regarding such changes in order to make important

decisions as to if and when to retire.

Secondly, the restrictive three prong test of serious

consideration imposed by the Court of Appeals permits plan

fiduciaries to advise participants that there are no plans for a change

to the pension plan at a time when the company is indeed

undertaking considerable planning efforts towards such a goal. At

the very least, this communication, authorized by the decision of the

Court of Appeals, is misleading and as such, is in contravention to

the policies established by this Court in the recent case of Varity

Corp. v. Howe, U.S. __, 134 L. Ed.2d, 116 S. Ct. 1065

(1996).

a we wad

Third, there is a serious conflict among the Circuit Courts

which have been asked to address this issue under factual

circumstances similar to the instant case. If this conflict is left

unresolved, companies offering benefit plans, particularly those

which operate on a country-wide basis, will be in the position of not

being able to determine when, under ERISA, they are obliged to

inform plan participants of potential changes to a pension plan. At

one end of the spectrum is the decision of the Second Circuit in

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

wherein the Court concluded, relying principally upon the Supreme

Court’s decision in Varity Corp. v. Howe, supra, that a fiduciary

duty to refrain from making affirmative material misrepresentations

may arise even before a future plan change is under serious

consideration. The Court recognized that serious consideration,

while relevant to the determination of the materiality of a

misrepresentation, is not a prerequisite and is certainly not the sine

qua non of materiality. At the opposite end of the spectrum is

Muse v. International Business Machines Corp., 103 F.3d 490 (6th

Cir. 1996), cert. denied, 137 L.Ed.2d 1048 (1997), wherein the

Court concluded that not only must the plaintitts prove that a plan

change was under serious consideration betore a fiduciary duty

exists, but that serious consideration does not arise until a company

focuses on one particular plan for a particular business purpose.

Under the Sixth Circuit’s new test, serious consideration arises only

when the employer has a concrete, defined plan in place, to the

exclusion of all other variable or alternative enhanced plans and

implementation of that concrete plan is inextricably tied into a

specific triggering business event. The Eighth Circuit in Wilson v.

Southwestern Bell Telephone Company, 55 F.3d 399 (8th Cir.

1995), took a middle ground position, requiring a finding of serious

consideration, but not imposing such strict limitations on the

definition thereby appropriately permitting the trier of fact to

consider all of the evidence which may, as in this case, clearly

establish that the company was seriously considering a change to the

pension plan at a time before a specific proposal was under

discussion by senior management having authority to implement

such a plan. The Tenth Circuit, however, in the case of Hockett v.

Sun Company, Inc., 109 F.3d 1515 (10th Cir. 1997) has followed

the three prong test established in Fischer II, supra. Unequivocally,

the confusion created by these diverse decisions in the Circuit

Courts of Appeals should be resolved by the Supreme Court.

Finally, there is a split in the Circuit Courts of Appeals

concerning the interpretation of the six year statute of limitations for

breaches of fiduciary duties in cases of fraud or concealment as set

forth in 29 U.S.C. §1113 of ERISA which is of sufficient

significance to warrant review by the Supreme Court.

A. This Case Presents an Important Question of

Federal Law that has not been Settled by the

Supreme Court.

ERISA protects employee pensions by, in part, imposing

certain general fiduciary duties applicable to the management of

pension benefit plans. See, ERISA §404, 29 U.S.C. §1104.

[Appendix at 147a]. Indeed, ERISA requires a fiduciary to

“discharge his duties with respect to a plan solely in the interest of

the participants and beneficiaries." ERISA §404(a), 29 U.S.C.

§1104(a). Id.

The duties of an ERISA fiduciary are not limited by the

Statute’s expressed provisions, but instead, include the duties derived

from common law trust principles. Varity Corp. v. Howe, supra.

The fiduciary requirements imposed under ERISA have been

described as having the following three components: "(a) duty of

loyalty pursuant to which all decisions regarding an ERISA plan

“must be made with an eye single to the interest of the participants

and beneficiaries.*" Donovan v. Bierwirth, 680 F.2d 263, 273 (2nd

Cir. 1982); the "prudent man" fiduciary obligation which, when

combined with the duty of loyalty, imposes an unwavering duty on

an ERISA trustee to make decisions with single-minded devotion to

plan participants and beneficiaries and in so doing to act as a

prudent person would act in a similar situation. Morse v. Stanley,

732 F.2d 1139, 1145 (2d Cir. 1984); and finally, an ERISA

fiduciary must act "for the exclusive purpose” of providing benefits

to plan beneficiaries. Donovan v. Bierwirth, supra at 271.

In judicially defining the scope of these fiduciary duties, the

United States Supreme Court has recently confirmed that intentional

misrepresentations are inconsistent with the duty of loyalty owed by

all fiduciaries and codified in Section 404(a)(1) of ERISA. Varity

Corp. v. Howe, supra, 116 S. Ct. at 1074.

The question which the petitioners ask this Court to review -

- when does an ERISA fiduciary have an obligation to truthfully

inform plan participants that it is considering a change to the

pension plan — presents an issue of first impression before this

Court which many courts of appeals around the country have been

asked to address under factual circumstances similar to the instant

case. See, Hockett v. Sun Co., supra; Ballone v. Eastern Kodak

Co., supra; Muse v. International Business Machines Corp., supra;

Vartanian v. Monsanto Co., 14 F.3d 697 (ist Cir. 1994); Mullins

v. Pfizer, Inc., 23 F.3d 663 (2d Cir. 1994); Berlin v. Michigan Bell

Telephone Co., 858 F.2d 1154 (6th Cir. 1988): Drennan v. General

Motors Corp., 977 F.2d 246 (6th Cir. 1992); Wilson _v.

Southwestern Bell Telephone Co., supra, Maez v. Mountain States

Tel. and Tel., Inc., 54 F.3d 1488 (10th Cir. 1995). Most of the

courts addressing the issue have determined that the duty to inform

(or stated otherwise, the duty to refrain from affirmative material

misrepresentations) arises when plans to change a pension benefit

are under “serious consideration." Guidance is required from the

United States Supreme Court to determine just exactly what

constitutes "serious consideration” for purposes of invocation of this

fiduciary duty.

Petitioners submit that the Second Circuit has appropriately

determined that “serious consideration" is not the key factor in

deciding if an employer has breached its fiduciary duty under

ERISA to speak truthfully about future benefits; rather, the

important question to be decided by the trier of fact is whether,

based on all of the evidence presented, the alleged misrepresentation

by the employer regarding future benefits was material to the

employee’s retirement decision. Ballone v. Eastman Kodak Co.,

supra. As the Ballone Court recognized:

Regardless whether the employer is

seriously considering altering its

retirement plan, the employer's

false assurance that future

enhancements have been ruled out

for some specific period can be

decisive in inducing an employee to

hasten retirement, rather than delay

in the hope of receiving enhanced

future benefits. This aspect of the

assurance can render it material

regardless of whether future

changes are under consideration

at the time the misstatement is

made. Id., 109 F.3d at 124.

[Emphasis added].

The Ballone Court appropriately determined that the trier of

fact should analyze all of the evidence to determine whether the

representations made by the employer/fiduciary were materially

false. To the contrary, the Third Circuit in Fischer I], has

essentially usurped the function of the trier of fact by defining

“serious consideration" in such a restrictive manner that the duty to

truthfully inform plan participants about a possible change to the

pension plan can almost never arise until the end stage of an

exhaustive planning process when senior management decides to

recommend such a change to the person who has the ultimate

authority to implement the amendment.

The predictable impact of the Third Circuit’s far reaching

decision is to enable companies to mislead plan participants into

believing that no change to the pension plan is being contemplated

when, at the same time, senior management has indeed delegated to

middle management the responsibility to plan such a change. Under

the Third Circuit’s definition of "serious consideration," such action

would not invoke the fiduciary duty to truthfully inform inquiring

plan participants of this activity even if senior management knows

that recommendation of such a plan change is inevitable given the

particular circumstances with which the company is faced. Indeed,

the instant case provides an excellent example of this scenario.

The extensive history of PECo’s planning efforts submitted

to the District Court for consideration, and set forth above, clearly

established that: (1) as early as 1985, PECo projected that it would

improve the pension plan formula by no later than January 1, 1988;

(2) PECo’s pension benefits were continuing to deteriorate in

comparison with other surveyed utility companies and in fact, the

data from the 1986 pension study received in February 1987

confirmed that PECo’s pension benefits had become fairly non-

competitive; (3) senior management charged with the responsibility

of developing a pension plan change proposal, Mr. Frederick

Beaver already contacted an outside consultant, TPF&C, as of

February 27, 1987 to begin costing out a pension formula that

represented a change to the pension plan. Mr. Fritz, the vice

president of personnel and industrial relations, who was the person

to take proposals which had been developed by TPF&C to the

Board of Directors to formally request a change to the pension plan,

was aware of Mr. Beaver’s action. Despite the fact that there was

a specific event which made consideration of a pension plan change

necessary (the deterioration of PECo’s pension benefits) and its

eventual recommendation to the Board of Directors inevitable, and

despite the fact that the development of the pension plan proposal

was being marshalled by Mr. Beaver and Mr. Fritz in accordance

with their duties, their activity in preparing proposals for the

pension plan change did not constitute "serious consideration" under

the Third Circuit’s three-prong test because they were not senior

management having the ultimate authority to recommend such a

change to the Board of Directors. The Third Circuit has thus

approved of PECo’s action in telling plan participants that no

changes to the pension plan were being contemplated at a time not

only when PECo was indeed spending thousands of dollars to

develop proposals, but at a time when Mr. Fritz in fact advised the

executives of the IGA (an employee group) that the timing was right

for making significant changes in the pension plan. Left

unchallenged, the Third Circuit’s three-prong test sets a dangerous

precedent which is detrimental to the protection afforded to plan

participants under ERISA. For this reason, certiorari should be

granted so that the Supreme Court can finally determine when the

fiduciary duty to truthfully inform plan participants of future

pension changes arises.

B. The Third Circuit’s Decision Conflicts with the

Duties of a Fiduciary under ERISA as Espoused

by this Court.

In Varity Corp. v. Howe, supra, the United States Supreme

Court recently reviewed the circumstances under which an employer

who was also a plan administrator has fiduciary obligations to plan

participants when communicating about plan benefits. The Court

held that “conveying information about the likely future of plan

benefits, thereby permitting beneficiaries to make an informed

choice about continued participation, would seem to be an exercise

of a power appropriate to carrying out an important plan purpose,"

and as such gives rise to the fiduciary obligations under ERISA.

Vari _v. Howe, supra, 116 S. Ct. at 1073. Once reaching

that decision, the Court had no difficulty in deciding that in

misleading beneficiaries, the employer violated the fiduciary

obligations that ERISA §404 imposes upon plan administrators,

noting as other courts have held that “lying is inconsistent with the

duty of loyalty owed by all fiduciaries and codified in Section

404(a)(1) of ERISA. Id, 116 S. Ct. at 1074 [citations omitted].

This Court’s decision in Varity v. Howe, supra, makes it

abundantly clear that a plan fiduciary cannot affirmatively mislead

plan participants about the likely future of plan benefits. Under the

Third Circuit’s three-prong test of serious consideration, however,

a company can effectively engage in such conduct without violating

ERISA fiduciary imposed duties. Consider this possibility. A

company president advises the manager of corporate benefits that he

needs to reduce costs quickly and asks the manager to develop

proposals, including an early retirement incentive, to accomplish

this goal. The manager then, on instruction from the president,

seeks outside assistance in developing such plans for ultimate

consideration by those with authority to recommend such a plan to

the Board of Directors. Despite the fact that the mandate came

from the president of the company himself who had a precise goal

in mind, to reduce costs quickly, the company would still have the

right under the Third Circuit’s definition of serious consideration,

to inform inquiring plan participants that there were no such plans

being contemplated. It is submitted that even though permitted

under the Third Circuit’s definition of serious consideration, such

a Statement is misleading, and consequently, contrary to the policies

established under ERISA for the protection of employee benefits as

espoused by the United States Supreme Court in Varity v. Howe,

supra.

in The Third Circuit’s Decision Conflicts with

Decisions of other Courts of Appeals.

The case under review is indirect and irreconcilable conflict

with Ballone v. Eastman Kodak Company, supra, and this conflict

further illustrates the growing confusion which exists in the lower

Federal Courts regarding the scope of an employer’s fiduciary duty

to communicate truthfully with employees regarding future benefit

plans.

Similar to the instant case, the approach of the District

Court in Ballone limited its deliberation to a single question --

whether the employer was seriously considering implementing an

enhanced plan at the time it made the alleged misrepresentations.

The District Court concluded that since the plan was not under

serious consideration, any alleged misrepresentations were

immaterial. The Second Circuit, however, disagreed with the

District Court’s approach:

We first address the District

Court’s conclusion that “serious

consideration” of a plan change is

the prerequisite to materiality,

where a plan fiduciary makes

alleged misrepresentations to

ERISA plan beneficiaries leading

them to believe that future plan

changes have been ruled out. We

hold that it is not. We next address

the Court’s conclusion that absent

serious consideration of plan

changes, no statement about future

plan benefits can be misleading.

We disagree with the District

Court’s conclusion on this point as

well. Id, 109 F.3d at 122.

Relying principally on Varity Corp. v. Howe, supra, the

crux of the Second Circuit holding is captured in the following:

Applying these trust-law principles,

it is clear that Kodak may not

actively misinform its plan

beneficiaries about the availability

of future retirement benefits to

induce them to retire earlier than

they otherwise would, regardless

of whether or not it is seriously

considering future plan changes.

Kodak has a duty to deal fairly and

honestly with its beneficiaries. Id,

109 F.3d at 124. [Emphasis

added].

The holding in Ballone is in direct conflict with the Third

Circuit’s opin: as in Fischer II and Kurz II, and the Tenth Circuit’s

opinion in Muse v. International Business Machine Corp., supra,

wherein the Courts held that serious consideration was the only

factor which would trigger the employer’s duty to truthfully inform

plan participants about future benefits under ERISA.

The Third Circuit’s decision is also in conflict with the

decision of the Eighth Circuit, in Wilson v. Southwestern Bell

Telephone Company, supra, wherein the Court, although relying on

the "serious consideration" test, left the question of when serious

consideration begins up to the trier of fact who, after all, is in the

best position to weigh and evaluate all of the evidence in the context

in which it is presented. No restrictive three prong test or other

definition of serious consideration is imposed upon the trier of fact

by the Eighth Circuit. To this extent, the novel, three prong test

developed by the Third Circuit is in conflict with the decision of the

Eighth Circuit.

In reality, the Third Circuit’s opinions in Fischer I] and

Kurz II are also in conflict with the Third Circuit’s initial decisions

in these case. In Fischer I, the Court likewise concluded that the

determination of whether "the content of the particular

communications PECo allegedly made to members of the plaintiff

class and whether such communications constituted affirmative

misrepresentations are questions of fact properly left to the trier of

a ee

fact on remand." Fischer 1, supra, 994 F.2d at 135. [Appendix at

89a]. It is obvious that after the District Court fulfilled its

obligation as the trier of fact to determine when serious

consideration began in this case, the new panel for the Third Circuit

Court of Appeals hearing the case on the second appeal was

unhappy with the outcome and therefore developed a restrictive

definition of serious consideration which would assure that serious

consideration can never be deemed to begin until all of the planning

efforts for a change to pension benefits is virtually completed and

recommendation to the person with ultimately authority to

implement such changes is imminent.

Significantly, in the first appeal in the Kurz, case supra, the

Third Circuit rejected the imposition of a bright-line rule in

determining when an affirmative misrepresentation is material

recognizing that “any approach that designates a single fact or

occurrence as always determinative of an inherently fact-specific

finding such as materiality, must necessarily be overinclusive or

underinclusive." Id, 994 F.2d at 139 (Appendix at 97a), quoting

Basic Inc. v. Levinson, 485 U.S. 224, 236, 108 S. Ct. 978, 986, 99

L. Ed.2d 194 (1988). Yet, the three prong test unequivocally

establishes such a bright-line rule in the sense that it does not permit

the trier of fact to take into consideration fact specific evidence

which may lead to the conclusion that serious consideration began

before the three prong test is satisfied.

This conflict among the Circuits should be resolved by the

Supreme Court, particularly given the far-reaching implications of

the Third Circuit Court of Appeals’ decision.

D. The Third Circuit’s Decision Regarding

the Applicable Statute of Limitations

Conflicts with Decisions of Other Courts

of Appeals.

On remand to the District Court, the respondents raised the

statute of limitations as a defense to petitioners’ claims based upon

PECo’s breach of fiduciary duties, arguing that the three year

“actual knowledge" statute of limitations set forth in ERISA, 29

U.S.C. §1113 (Appendix at 147a) barred the petitioners’ action

which was filed approximately three and one-half years after the

announcement by PECo of the pension plan change. The District

Court, however, disagreed that the petitioners’ claims were barred,

finding that the six-year exception to the three year statute of

limitations in cases involving fraud or concealment was applicable

and that therefore the petitioners’ claims were timely filed. The

Third Circuit reversed, holding that the six-year statute of

limitations for fraud or concealment was not applicable because

there was no claim that PECo had attempted to conceal its alleged

breach of fiduciary duty. In this respect, the Third Circuit has

joined the First, Seventh, Eighth, Ninth and D.C. Circuits in

finding that this statute of limitations incorporates the federal

doctrine of fraudulent concealment, meaning that the defendant must

have taken affirmative steps to hide the underlying breach of

fiduciary duty for the six year statute of limitations to be applicable.

Stated otherwise, these courts have held that the mere fact that the

underlying breach of fiduciary duty involves a claim of fraud or

concealment is not sufficient to trigger the six year statute of

limitations for fraud or concealment. Kurz v. Philadelphia Electric

Co., supra, 96 F.3d at 1552; J. Giels Band Employee Benefit Plan

v. Smith Barney Shearson, Inc., 76 F.3d 1245 (ist Cir. 1996), cert.

denied, 136 L.Ed.2d 39, 117, S.Ct.81 (1996); Barker v. American

Mobile Power Corp., 64 F.3d 1397 (9th Cir. 1995); Larson v.

Northrop Corp., 21 F.3d 1164 (D.C. Cir. 1994); Martin v.

Se Ae 966 F.2d 1078 (7th Cir.

1992); Shaefer v. A ociety, 853 F.2d 1487 (8th

Cir. 1988). To the mr the at Circuit has considered this

issue and held that "for a breach of fiduciary duty involving fraud

or concealment, the three year exception of actual knowledge does

not apply, and a party has six years from the time it discovered the

breach to bring an action." Diduck v. Kaszycki & Sons

Contractors, Inc., 874 F.2d 912, 919 (2d Cir. 1989). Petitioners

submit that the United States Supreme Court must intervene to

resolve this dispute among the circuits, particularly in view of the

fact that the majority of the circuits are interpreting the statute in a

manner inconsistent with its clear language.

CONCLUSION

The Petition for Writ of Certiorari should be granted as to

carry out the Court’s mandate that honesty should prevail in the

administration of pension plans by employer fiduciaries.

Respectfully submitted: