96 F.3d 1533 (3rd Cir. 1996), 95-1793, Fischer v. Philadelphia Elec. Co.

Docket Nº:Vecchio; Alden F. Tucker & Bernard J. Dress, Appellants in 95-1793.
Citation:96 F.3d 1533
Party Name:Herbert L. FISCHER; Floyd L. Adams; James W. Alfreds; John I. Arena; Earl T. Atkinson; William Auve; Thomas F. Beck; William J. Bono; William A. Burwell, Jr., Joseph C. Calabrese; Peter Carfagno; John B. Creighton; Ralph J. Dafermo, Sr.; Felix A. DeJoseph; Joseph A. Devito; John T. Dougherty; John J. Dowling; Anthony Falasca; Eugene Fink; Rita J. G
Case Date:October 01, 1996
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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Page 1533

96 F.3d 1533 (3rd Cir. 1996)

Herbert L. FISCHER; Floyd L. Adams; James W. Alfreds;

John I. Arena; Earl T. Atkinson; William Auve; Thomas F.

Beck; William J. Bono; William A. Burwell, Jr., Joseph C.

Calabrese; Peter Carfagno; John B. Creighton; Ralph J.

Dafermo, Sr.; Felix A. DeJoseph; Joseph A. Devito; John

T. Dougherty; John J. Dowling; Anthony Falasca; Eugene

Fink; Rita J. Gesualdo; Edwin Haines; Joseph T. Haley;

Daniel J. Hefferan; Leo M. Hill; Robert J. Hoopes; Donald

J. Hoy; Michael Hrynko; Donald Hughes; Carl M. Hunsicker;

Neal Ireland; Walter D. Kraus; Charles E. Lindemuth;

Robert F. Mahoney; Anthony D. Marchesani; Robert P.F.

McCaron; Robert McCormick; Frank L. Mercadante; John P.

Monaghan; David Monzo; John K. Moore; Joseph P. Moran;

Mildred Pearl Morgan; Ralph E. Moyer; Herbert E. Mueller;

James J. Nugent; Thomas E. Oetzel; Frank W. Persichetti,

Sr.; Charles W. Plummer; Lewis Raibley; James J. Roddy;

John J. Saunders; Louis F. Saunders; Nicholas J. Screnci;

Joseph J. Semetti; John Steindl; William F. Thompson;

Michael W. Trendler; Francis R. Tunney, Sr.; Herbert R.

Walters; Richard S. Wilson; John H. Zimmer; Gerald A. Zimmerman

v.

PHILADELPHIA ELECTRIC COMPANY; Joseph F. Paquette, Jr.;

Michael J. Crommie; Service Annuity Plan of Philadelphia

Electric Company; Herbert L. Fischer, John B. Creighton,

Francis R. Tunney, Sr.; Earl Atkinson, Leo M. Hill, Donald

Hughes; Joseph P. Moran; Michael W. Trendler; John H.

Zimmer; William Auve; John Steindl; Louis F. Saunders;

Robert McCormick; William J. Bono; James J. Roddy; Rita

J. Gesualdo; Ralph J. Dafermo, Sr.; Joseph C. Calabrese;

James W. Alfreds; Felix A. DeJoseph; Eugene Fink; Joseph

T. Haley; Walter D. Kraus; Charles W. Plummer; Robert

P.F. McCarron; Richard S. Wilson; John P. Monaghan, Ralph

E. Moyer; John J. Dowling; Joseph J. Semetti; Charles E.

Lindemuth; Robert F. Mahoney; John K. Moore; James J.

Nugent; John J. Saunders; Anthony Falasca; Daniel J.

Hefferen; Nicholas J. Screnci; Thomas E. Oetzel; Donald

J. Hoy; Floyd L. Adams, Thomas F. Beck; John T. Dougherty;

William F. Thompson; Gerald A. Zimmerman; Herbert E.

Mueller; Herbert R. Walters; Lewis Raibley; Joseph L.

Giorgio; Joseph DeVito; David Monzo; Thomas J. Lee;

Thomas B. Barnes, Jr.; Philip G. Mulligan; Robert L.

Tomlinson; John R. Grimes; W.B. Willsey; William J. Moss;

James T. Pryor; Robert J. Glenn; George C. Zapp; Joseph

J. Della Vecchio; George V. Churach; Charles T. Reimel;

Andrew J. Kelleher; George C. Hall; William P. Zackey;

Francis W. Batipps; Harry C. Frymiare, Jr.; Joseph J.

Greco; Richard R. Rowlands; Jesse P. Boyd; James D.

Dennett; Vernon C. Readman, Jr.; Joseph L. Giorgio;

Edward M. Haile; Eugene C. Schindler; John P. Swahl;

Elmer E. Lucas; James L. Roush; James V. Lewis; Albert J.

Rieger; Thomas J. Sheridan, Jr.; Dolores A. Romano; Helen

J. Throckmorton; Robert E. Spross; William P. Rohlfing;

Edward C. Kistner, Jr.; Harry W. Backhouse; James V.

Mannion, Jr.; Joseph E. Bonaparte; William A. Brady, Jr.;

Malcolm J. MacNeil; Manus J. Cooney; John J. Kuhns;

Marlene Bell; Dean G. Bradford; James W. Bateman; James

S. Herrick; Stanley W. Jacques, Jr.; Rudolph G. Della

Vecchio; Alden F. Tucker & Bernard J. Dress, Appellants in 95-1793.

Herbert L. FISCHER; Floyd L. Adams; James W. Alfreds;

John I. Arena; Earl T. Atkinson; William Auve; Thomas F.

Beck; William J. Bono; William A. Burwell, Jr.; Joseph C.

Calabrese; Peter Carfagno; John B. Creighton; Ralph J.

Dafermo, Sr.; Felix A. DeJoseph; Joseph A. DeVito; John

T. Dougherty; John J. Dowling; Anthony Falasca; Eugene

Fink; Rita J. Gesualdo; Edwin Haines; Joseph T. Haley;

Daniel J. Hefferan; Leo M. Hill; Robert J. Hoopes; Donald

J. Hoy; Michael Hrynko; Donald Hughes; Carl M. Hunsicker;

Neal Ireland; Walter D. Kraus; Charles E. Lindemluth;

Robert F. Mahoney; Anthony D. Marchesani; Robert P.F.

McCarron; Robert McCormick; Frank L. MerCandante; John P.

Monaghan; David Monzo; John K. Moore; Joseph P. Moran;

Mildred Pearl Morgan; Ralph E. Moyer; Herbert E. Mueller;

James J. Nugent; Thomas E. Oetzel; Frank W. Persichetti,

Sr.; Charles W. Plummer; Lewis Raibley; James J. Roddy;

John J. Saunders; Louis F. Saunders; Nicholas J. Screnci;

Joseph J. Semetti; John Steindl; William F. Thompson;

Michael W. Trendler; Francis R. Tunney, Sr.; Herbert R.

Walters; Richard S. Wilson; John H. Zimmer; Gerald A. Zimmerman

v.

PHILADELPHIA ELECTRIC COMPANY; Joseph F. Paquette, Jr.;

Michael J. Crommie; Service Annuity Plan of Philadelphia

Electric Company; PECo Energy Company, formerly known as

Philadelphia Electric Company, Joseph F. Paquette, Jr.,

Michael J. Crommie and Service Annuity Plan of Philadelphia

Electric Company, Appellants in 95-1794.

Nos. 95-1793, 95-1794.

United States Court of Appeals, Third Circuit

October 1, 1996

Argued April 29, 1996.

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Ronald L. Wolf, Martina W. McLaughlin (argued) Litvin, Blumberg, Matusow & Young, Philadelphia, PA, for Appellants in 95-1793 and Cross-Appellees in 95-1794.

David H. Marion (argued in 95-1793 & 1794), David Zalesne, Howard J. Bashman, Montgomery, McCracken, Walker & Rhoads, Philadelphia, PA, for PECo Energy Co., f/k/a Philadelphia Electric Co.; Joseph F. Paquette, Jr.; Michael J. Crommie; and Service

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Annuity Plan of Philadelphia Electric Company Appellees in 95-1793 and Cross-Appellants in 95-1794.

Before: COWEN and ROTH, Circuit Judges and CINDRICH 1, District Judge.

OPINION OF THE COURT

ROTH, Circuit Judge:

In this appeal, we must review the application of a decision we reached when this case first came before us. In Fischer v. Philadelphia Elec. Co., 994 F.2d 130 (3d Cir.) (" Fischer I "), cert. denied, 510 U.S. 1020, 114 S.Ct. 622, 126 L.Ed.2d 586 (1993), we reversed the district court's grant of summary judgment to defendant Philadelphia Electric Co. ("PECo"), holding that there were genuine issues of material fact as to whether PECo, acting in its role as fiduciary under the Employee Retirement Income Security Act ("ERISA"), had made affirmative material misrepresentations to its employee-beneficiaries. The misrepresentations alleged were that PECo had denied, or failed to disclose when asked, that it was seriously considering an early retirement program. We remanded the case to the district court to determine when PECo began to give serious consideration to an early retirement program. Id. at 135.

On remand, the district court concluded that PECo was seriously considering an early retirement program as of March 12, 1990. Fischer v. Philadelphia Elec. Co., C.A. No. 90-8020, slip op. at 19 (E.D.Pa. May 16, 1994) ("District Ct. Op."). Applying Fischer I, the district court held that any employee who sought information about retirement benefits during the period from March 12, 1990, until the announcement of the plan on April 19, 1990, and who was told that no change was under consideration, had received material misinformation.

We find that the district court misunderstood the concept of "serious consideration." We will therefore reverse the decision of the district court, and we will enter judgment for defendants.

I.

This action arises out of PECo's efforts to cut costs and reduce its payroll by implementing an early retirement plan. On April 19, 1990, Joseph Paquette, PECo's President and Chief Operating Officer, announced in a letter to all employees that he would recommend to PECo's Board of Directors that the company cut its payroll through early retirement. On April 26, 1990, PECo sent a letter to all employees who had announced an intent to retire, suggesting that they delay their retirement until the company's early retirement package was finalized. On May 25, 1990, PECo's Board of Directors approved a plan, which included inducements such as a five year time-in-service credit, a five year age credit, and severance pay. These events caused much consternation among employees who had retired in the months preceding the plan's announcement.

Various pre-plan retirees filed suit in the U.S. District Court for the Eastern District of Pennsylvania, alleging that PECo had long known of its intent to offer an early retirement package, or at least that it was considering a package, and had breached its fiduciary duty under ERISA § 404, 29 U.S.C. § 1104, by providing material misinformation. The district court certified a class, then entered summary judgment for PECo. In Fischer I, we reversed, holding that PECo could be liable for breach of fiduciary duty if the company represented that no early retirement plan was being considered at a time when the plan was in fact under serious consideration. 944 F.2d at 133. We remanded for a trial on the merits; a bench trial followed. The facts we recite here were found by the district court; the vast majority were stipulated.

PECo had long engaged in a practice of reviewing its retirement and pension benefits packages as part of its ordinary course of business. During one such review, on March 21, 1988, Fred Beaver, an Administrative Assistant in the Benefits Division of Human Resources, prepared a memorandum for

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Charles Fritz, Vice President of Personnel and Industry Relations, on the possibility of reducing the size of PECo's work force. The memorandum suggested that a modest "sweetener" could induce approximately 50% of a target group of workers to retire. During the same period, on May 5, 1988, Michael Crommie, PECo's Director of...

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