## Facts

- Philadelphia Electric Company (PECo) faced financial pressure and explored cost-cutting measures, including an early retirement incentive plan.
- PECo discussed a potential early retirement plan with consultants in 1988, but later shelved the idea.
- In December 1989, PECo’s president stated that an early retirement plan might be considered if a requested rate increase was denied, but indicated there were no specific plans at that time.
- On March 1, 1990, a decision denied most of PECo’s requested rate increase.
- On March 12, 1990, PECo re-engaged consultants and began developing and analyzing possible early retirement options, including workforce data and financial effects.
- Around April 2, 1990, consultants produced a more concrete written proposal describing program terms and projected costs.
- On April 7, 1990, senior executives with authority to implement workforce changes discussed the proposal in connection with a broader cost-cutting program.
- PECo publicly announced the early retirement incentive plan on April 19, 1990.
- The plaintiffs were employees who retired before the April 19 announcement; all retired before April 7.
- Some plaintiffs alleged that, before retiring, they asked company representatives about a possible early retirement incentive and were told, in substance, that no such plan was being considered.

## Issues

1. When does an employer’s consideration of a potential benefit change become “serious consideration” for purposes of ERISA fiduciary-duty liability for misleading communications?
2. Under that standard, did PECo breach ERISA fiduciary duties by denying or minimizing the likelihood of an early retirement incentive plan to employees who inquired before retiring?

## Decision

- The Third Circuit reversed the district court’s determination that serious consideration began on March 12, 1990.
- The court held that “serious consideration” began on April 7, 1990, when a specific proposal was discussed for implementation by senior management with authority to implement it.
- Because all plaintiffs retired before April 7, PECo was not liable for breach of ERISA fiduciary duty based on alleged misstatements made before that date.
- The court vacated relief awarded on the earlier serious-consideration date and entered judgment for PECo on the class’s ERISA fiduciary-duty claims.

## Legal Principles

- An ERISA fiduciary may be liable for materially misleading statements to employees about a potential plan change if it represents that no plan is being considered when the plan is, in fact, under “serious consideration.”
- “Serious consideration” exists only when all three elements are present:
  - a specific proposal for a change in benefits,
  - discussed for purposes of implementation,
  - by senior management with authority to implement the change.
- Preliminary fact-gathering, consultant engagement, internal option development, and contingent or conditional discussions do not, without more, constitute serious consideration.
- A written or developed proposal alone is insufficient; the proposal must be under implementation-focused discussion by authorized decision-makers.
- Statements made before serious consideration begins are not actionable under this theory because the duty not to mislead, as framed in this context, is keyed to the serious-consideration threshold.

## Conclusion

The Third Circuit held that PECo did not reach “serious consideration” of its early retirement incentive plan until senior management with implementation authority discussed a specific proposal for implementation on April 7, 1990; because the plaintiffs retired before that date, their ERISA fiduciary-duty misrepresentation claims failed.


Fischer v. Phila. Elec. Co., 96 F.3d 1533 (3d Cir. 1996)