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In Re Unisys Savings Plan Litigation John P. Meinhardt, on Behalf of Himself and All Others Similarly Situated v. Unisys Corporation (d.c.civil No. 91-Cv-03067) Michael Heck Joseph McCarthy Angelo Dipietro, on Behalf of Themselves and All Others Similarly Situated v. Unisys Corporation the Administrative Committee of the Unisys Savings Plan the Investment Committee of the Unisys Savings Plan Jack A. Blaine John J. Loughlin Kenneth Miller David A. White Stefan Riesenfeld (d.c.civil No. 91-Cv-03276) Gary Vala, Individually and on Behalf of All Others Similarly Situated v. Jack A. Blaine Michael R. Losey Kenneth L. Miller Stefan C. Riesenfeld Curtis A. Hessler David A. White Unisys Corporation the Northern Trust Company (d.c.civil No. 91-03278) Carolyn A. Gohlike, on Behalf of Herself and All Others Similarly Situated v. Unisys Corporation (d.c.civil No. 91-Cv-03321) Dennis C. Stanga James M. Collins, on Behalf of Themselves and All Others Similarly Situated v. Unisys Corporation (d.c.civil No. 91-Cv-04689) John

Citation: 74 F.3d 420Docket: 95-1156

Court: Court of Appeals for the Third Circuit; February 5, 1996; Federal Appellate Court

Narrative Opinion Summary

The case involves consolidated lawsuits against Unisys Corporation, filed by numerous plaintiffs, including employees and unions, who alleged breaches of fiduciary duties under ERISA regarding the management of the Unisys Savings Plan. The plaintiffs claimed that Unisys imprudently invested in Executive Life Insurance Company’s Guaranteed Investment Contracts (GICs) and failed to diversify investments, violating ERISA's fiduciary responsibilities. The district court granted summary judgment in favor of Unisys for the ERISA claims, concluding that Unisys had provided adequate information allowing participants to control their accounts, and thus was protected by ERISA Section 1104(c). However, the plaintiffs appealed, arguing unresolved factual disputes regarding the prudence of Unisys's investment decisions and the adequacy of disclosures about the investment risks. The appellate court vacated the summary judgment, finding genuine issues of material fact, particularly concerning Unisys's duty to investigate and diversify its investments, as well as its obligations to disclose material information to participants. The case was remanded for further proceedings to address these fiduciary duty breaches under ERISA.

Legal Issues Addressed

Application of ERISA Section 1104(c)

Application: The court analyzed whether Unisys could rely on ERISA Section 1104(c) to shield itself from liability, which depends on whether participants had control over their investments and were adequately informed.

Reasoning: Unisys argues that even if it breached ERISA's prudence and diversification duties by investing in Executive Life GICs, the plaintiffs' losses stemmed from their own investment decisions, derived from the information provided by Unisys.

Disclosure Obligations of Fiduciaries under ERISA

Application: The court assessed whether Unisys fulfilled its fiduciary duty to disclose material information regarding the investments in Executive Life and the associated risks to participants.

Reasoning: Evidence indicates that Unisys communicated with plan participants regarding the risks associated with investments in Fixed Income and Insurance Contract Funds and the downturn of Executive Life. Whether these communications included misrepresentations and were material is a factual matter for trial.

Duty to Diversify Investments under ERISA

Application: The court considered whether Unisys violated ERISA's diversification requirements by concentrating investments in Executive Life GICs, thereby exposing the plan to substantial risks of loss.

Reasoning: Plaintiffs allege that Unisys violated ERISA's fiduciary duty to diversify investments, as mandated by 29 U.S.C. Sec. 1104(a)(1)(C), by excessively investing plan assets in Executive Life GICs, thus increasing the risk of substantial losses.

Fiduciary Duty and Prudence under ERISA

Application: The court examined the fiduciary duties of Unisys under ERISA, focusing on the prudence of their investment decisions and whether they conducted adequate investigations before investing in Executive Life GICs.

Reasoning: Plaintiffs allege that Unisys breached its fiduciary duty by making imprudent investments in Executive Life, while Unisys claims its investment decisions were prudent as a matter of law.

Summary Judgment Standards in ERISA Cases

Application: The court reviewed the district court's grant of summary judgment, focusing on whether genuine issues of material fact regarding fiduciary breaches under ERISA precluded summary judgment.

Reasoning: In reviewing the appeal, the court emphasized the principles of summary judgment, stating it is appropriate when no genuine issue of material fact exists, and the moving party is entitled to judgment as a matter of law.