Amending a Plan Not a Fiduciary Act

September 18, 2012 ( – A federal appellate court has ruled trustees of a multi-employer pension plan were not acting as fiduciaries when they amended the plan.

The 2nd U.S. Circuit Court of Appeals said its previous decisions to the contrary were abrogated by subsequent decisions of the U.S. Supreme Court.  

In Curtiss-Wright Corp. v. Schoonejongen, which involved a welfare plan, the Supreme Court said, “Employers or other plan sponsors are generally free under ERISA, for any reason at any time, to adopt, modify or terminate welfare plans.” Lockheed Corp. v. Spink involved a pension benefit plan. The court said, “We see no reason why the rule of Curtiss-Wright should not be extended to pension benefit plans.”   

According to the 2nd Circuit’s opinion, the high court also declared, “Plan sponsors who alter the terms of a plan do not fall into the category of fiduciaries.”   

Hughes Aircraft Corp. v. Jacobson concerned a pension plan to which employees were required to contribute. The 9th U.S. Circuit Court of Appeals had thought that this circumstance distinguished Lockheed Corp. and concluded that an amendment to such a plan was subject to the Employee Retirement Income Security Act’s (ERISA’s) fiduciary standards. The Supreme Court disagreed, saying “Our conclusion [in Lockheed Corp.] applies with equal force to persons exercising authority over a contributory plan, a noncontributory plan, or any other type of plan.” The court added emphatically, the fiduciary duty claims “are directly foreclosed by [Lockheed’s] holding [sic] that, without exception, “[p]lan sponsors who alter the terms of a plan do not fall into the category of fiduciaries.”

The 2nd Circuit concluded that the Supreme Court made it clear that employers and plan sponsors do not act in a fiduciary capacity when they modify, adopt or amend plans, and nothing in the Supreme Court’s decisions or ERISA itself creates an exemption for multi-employer pension plans.”  

The lawsuit was brought on behalf of the former participants and beneficiaries of the former Niagara-Genesee & Vicinity Carpenters Local 280 Pension and Welfare Funds seeking to recover assets they assert were wrongfully depleted by the trustees via plan amendments in violation of their fiduciary duties.  

The 2nd Circuit remanded the case for further proceedings.  

The opinion in Janese v. Fay is here.