Lester Gregg, Michael Humeston, Frank Jaeger, Alfred Klinger, Emilio Procelli,… v. TRANSPORTATION WORKERS OF AMERICA INTERNATIONAL, SONNY HALL and JOHN ORLANDO

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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2003 FED App. 0324P (6th Cir.)
File Name: 03a0324p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
LESTER GREGG, MICHAEL
HUMESTON, FRANK JAEGER,
ALFRED KLINGER, EMILIO
PROCELLI, ROBERT
RICHARDS, THOMAS SACK,
PAUL WINKLER and SHIRLEY
WINKLER,
Plaintiffs-Appellants,
v.
TRANSPORTATION WORKERS
OF AMERICA INTERNATIONAL,
SONNY HALL and JOHN
ORLANDO,
Defendants-Appellees.
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No. 01-4159
Appeal from the United States District Court
for the Northern District of Ohio at Cleveland.
No. 99-02659—Patricia A. Gaughan, District Judge.
Argued: June 11, 2003
Decided and Filed: September 11, 2003
2 Gregg, et al. v. Transportation
Workers of America, et al.
No. 01-4159
Before: KEITH, BATCHELDER, and CLAY, Circuit
Judges.
_________________
COUNSEL
ARGUED: Michael F. Dadisman, Independence, Ohio, for
Appellants. Randy D. Rinicella, ROETZEL & ANDRESS,
Cleveland, Ohio, for Appellees. ON BRIEF: Michael F.
Dadisman, Independence, Ohio, for Appellants. Randy D.
Rinicella, ROETZEL & ANDRESS, for Appellees.
CLAY, J., delivered the opinion of the court, in which
KEITH, J., joined. BATCHELDER, J. (pp. 31-32), delivered
a separate opinion concurring in the result only.
_________________
OPINION
_________________
CLAY, Circuit Judge. Plaintiffs Lester Gregg, Michael
Humeston, Frank Jaeger, Alfred Klinger, Emilio Procelli,
Thomas Sack, Robert Richards, Paul Winkler and Shirley
Winkler appeal an October 2, 2001 order granting Defendants
Transportation Workers of America International, Sonny
Hall, and John Orlando summary judgment in Plaintiffs’
action alleging breach of fiduciary duty brought pursuant to
the Employee Retirement Income Securities Act (“ERISA”),
29 U.S.C. § 1132(a)(1)(B) and (e)(1). For the reasons set
forth below, we REVERSE the district court.
FACTS
With the exception of Shirley Winkler, Paul Winkler’s
wife, Plaintiffs are or were members of the Defendant
Transportation Workers Union of America (“TWU”), Air

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1At various points, the policy is called the “TWU OTP” policy. OTP
stands for “Optional Term Policy.”
Transport Division. Plaintiff Sack lives in North Carolina
while the others reside in Ohio. Each obtained group term
life insurance under a master policy issued by Transamerica
Assurance Company.1 Their policies became effective
January 1, 1996.
TWU is an international union with approximately 100,000
members, including, inter alia, employees of American
Airlines. Defendant Hall is the President of TWU and held
that post at all times relevant to this action. Defendant
Orlando is the Vice President of TWU’s Air Transport
Division and also held this post at all times relevant to this
action. Both Hall and Orlando participated in acquiring the
policies on the behalf of TWU’s members.
In 1995, American Airlines announced that it would replace
the prior life insurance policy it provided for its employees,
including members of TWU’s Air Transport Division, with an
age-rated group term life insurance policy. The new plan
would cause premiums to significantly increase, particularly
for older workers. As a result, union members began
contacting their local presidents to express concern about the
high cost of American Airlines’ new insurance plan.
Responding to these concerns, TWU’s Air Transport Division
began to investigate alternative insurance options.
Hall asked TWU’s insurance broker, Future Planning
Associates (“FPA”) to meet with the Union’s local presidents
to determine if more affordable insurance alternatives existed.
FPA received compensation from insurance companies for
facilitating the sale of policies. FPA interviewed at least two
companies. Additionally, TWU retained an independent
actuary, Lawrence Silkes, to review and evaluate the various
insurance proposals. TWU also purports to have retained
4 Gregg, et al. v. Transportation
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No. 01-4159
2W ithout any citation to the record, Defendants claim “the Union
retained an insurance expert who held the Chartered Life Underwriter
(CLU) designation to review the various plans und er consideration.”
(Defend ants’ Brief at 4-5.) The CLU designee is not mentioned
elsewhere in Defendants’ brief, nor does Orlando mention him at any
point in his deposition. The district court’s opinion provides his name,
but cites to one of Hall’s affidavits (merely mentioning Wozny’s name)
and to a pa ge in Hall’s deposition that never mentio ns Christian W ozny.
W ithout the ability to establish what role, if any, Wo zny assumed, we
cannot use W ozny’s ephemeral appearance in D efendants’ brief and
uncertain participation in the policy selection process to support
Defend ants’ argument that no genuine issue o f material fact exists as to
whether Defendants breached their fiduciary duty.
Christian Wozny, an insurance expert holding a Chartered
Life Underwriters (“CLU”) designation, to review different
plans.2 FPA and the actuary determined that the Plan offered
by Transamerica Assurance Corporation represented the best
option. Along with TWU’s local presidents, FPA and Silkes
negotiated the Plan’s precise terms with Transamerica.
After reaching an agreement with Transamerica, FPA
worked with TWU’s local presidents to disseminate the
Plan’s details to the union membership. This effort included
posting information at airports and mailing material to
individual members. As one of these bulletins made clear, in
large print, the policy offered “[a] flat-rate premium that will
not increase with age.” (J.A. at 516.) Another contained the
exuberant headline, “NO INCREASES DUE TO AGE.”
(J.A. at 517.) The union documents also included a question-
and-answer form and other correspondence explaining the
plan’s features. The question-and-answer sheet contained the
following information:
QUESTION: Can I continue my TWU OTP Plan after
retirement at the same monthly flat rate?

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ANSWER: Yes. The TWU OTP Plan can be
continued indefinitely after retirement at
the same monthly rate.
. . . .
QUESTION: Can the monthly flat rate for the TWU
OTP Plan increase because of age?
ANSWER: No.
. . . .
QUESTION: Can the monthly flat rate for the TWU
OTP Plan increase for any other reason?
ANSWER: Yes. The rate may increase like all other
plans of this type if the death claims
experience is higher than it has been in
the past for TWU members. . . . If death
claims experience is lower than it has
been for TWU members, the monthly
flat rate for the TWU OTP Plan
members could be reduced.
(J.A. at 521-23) (emphasis in original).
Defendants also made in-person presentations to union
members, including Plaintiffs. At one of these information
sessions, several Plaintiffs asked questions about possible rate
increases and the ability to keep their coverage when retired.
TWU’s representatives and FPA members told the audience
that the current premium would not increase for three years
and that any eventual increase would be minimal. As
Plaintiff Paul Winkler testified in his deposition, the union
claimed that “if the cost went up at all, it would only be a
penny or two, and that wouldn’t be for at least three years.”
(J.A. at 533.) Plaintiff Gregg gave similar testimony:
6 Gregg, et al. v. Transportation
Workers of America, et al.
No. 01-4159
COUNSEL: And the rate increase you’re referring to,
you’ve said it several times, someone told
you it would just be pennies, correct?
GREGG: If anything, it would go up a few cents or a
couple of pennies.
COUNSEL: That was told to you on one occasion,
right?
GREGG: At the meeting. At the meeting from the
representative, whoever those gentlemen
were from.
. . . .
COUNSEL: And you’re not sure the person who spoke
those words about the pennies increase,
you don’t know that person’s name,
correct?
GREGG: No, I don’t know his name, no.
COUNSEL: And you don’t know who they represented,
do you?
GREGG: I understand they represented the union,
because the union sent them there. It was
a union meeting, so it had to be the union,
that’s what I thought.
(J.A. at 433.) The presenters also informed Plaintiffs that
coverage would not decrease nor would rates increase due to
the age of the policyholder, and that coverage would continue
into retirement.
TWU and FPA made policy applications available at these
meetings. Members enrolled using a standard enrollment
form. Every union member who chose to enroll received a

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document titled “Group Term Life Insurance Certificate.”
The Certificate described the insured’s right to review the
Group Master Policy, although Transamerica retained its copy
in New York City and TWU kept the union’s copy at its
Dallas offices. Defendants claim that each Certificate
“expressly described . . . the conditions under which the Plan
could be terminated.” (Defendants’ Brief at 6.) Defendants,
however, do not cite to a specific page in the record. (See id.)
Under the heading “WHEN INSURANCE STOPS,” the
Certificate explains:
Your insurance stops at the earliest of: (1) the date of
your death; (2) 31 days after a premium due date, if the
premiums for your insurance have not been paid; (3) the
date your membership with the Organization ends;
(4) the date the Group Master Policy is amended so that
your insurance stops; (5) the date the Group Master
Policy stops; or (6) the date you ask, in writing, for it to
stop.
(J.A. at 359) (emphasis added). The Certificate does not
explain the circumstances that could cause TWU and
Transamerica to amend the Group Master Policy, nor does the
Certificate describe when (or how) the Group Master Policy
could stop. Following their union’s advice, Plaintiffs
enrolled.
Actually, Transamerica could terminate the policy or
modify its terms after a three-year period. What Defendants
Hall and Orlando knew is unclear. In his deposition, Orlando
generally denied any inconsistency between the Group Master
Policy’s terms and what TWU informed its membership. Hall
evidently never read the Group Master Policy:
COUNSEL: Mr. Hall, you signed the group master
policy for the Transamerica policy for all
members?
8 Gregg, et al. v. Transportation
Workers of America, et al.
No. 01-4159
HALL: Yes.
COUNSEL: Did you read the policy?
HALL: No.
COUNSEL: Why not?
HALL: Because my broker and my ATD [Air
Transportation Division] Director
[Orlando] said this is all that has been
agreed to. Just the policy the International
President would sign and I believe
everything in it was accurate. No, I didn’t
read it.
(J.A. at 590.) Defendant Hall also did not know that
Transamerica could unilaterally terminate the policy on sixty
days notice after January 1, 1999, or that Transamerica could
unilaterally terminate the Master Policy if it covered fewer
than fifty insureds:
COUNSEL: None of these four documents
[distributed to the membership] mention
the fact that there has to be at least fifty
people in this plan?
. . . .
HALL: None of these documents say that.
QUESTION: When did you—when were you first
informed that there has to be at least a
minimum of fifty people?
HALL: Just now.
COUNSEL: Today?

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HALL: You just informed me of that.
. . . .
COUNSEL: Is there anything in any of these exhibits
[the documents distributed to
membership] that even notifies the
bargaining units that in sixty days it can
be unilaterally terminated?
HALL: Not that I read in there, no.
(J.A. at 587-88.) Defendant Hall distributed information to
union members based on what FPA broker John Pescitelli
told him. He did not verify the information Pescitelli
provided with any other source.
After the group policy became effective on January 1, 1996,
Transamerica experienced substantial losses. Various factors
contributed to the insurer’s problems, including (1) American
Airlines’ offer of early retirement to certain union members,
many of whom accepted; (2) a predominately older group of
insureds; and (3) a surprisingly high number of claims. As
early as October of 1996, only nine months after the policy
became effective, Transamerica’s claims expenses equaled
1.4 times the premiums paid. Consequently, in September of
1998, Transamerica notified TWU that it would exercise its
contractual right to terminate the policy effective January 1,
1999.
Faced with this forthcoming termination, FPA negotiated
an amended policy with Transamerica that would become
effective January 1, 1999. The parties agreed to new terms,
pursuant to which union members’ premiums would increase
from $0.40 per $1000 of coverage (regardless of age) to a new
age-based rate schedule:
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No. 01-4159
Age Rate Per $1000 of Coverage
Under 50 $0.45
50-59 $0.73
Over 59 $0.76
The highest new rate still remained lower than the alternative
offered by American Airlines, which required premiums of
$2.55 per $1000 of coverage. Nevertheless, under the policy
the union promised, a fifty-nine-year-old insured would pay
$1,200 annually in monthly premiums for a $250,000 policy,
but that insured now must pay $2,280 for the same initial
coverage. Worse, the $250,000 policy would only remain
worth $250,000 temporarily because coverage would decrease
after age sixty-four:
Age Percentage of Coverage
65 92%
66 85%
67 78%
68 72%
69 66%
70 61%
71 56%
72 52%
73 48%

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74 44%
75 41%
Over 75 38%
Thus, when the insured turns seventy-five under the policy
the union promised, he would still pay only $1,200 in annual
premiums for a $250,000 policy. Under the new policy, a
seventy-five-year-old insured would pay $2,280 for only
$95,000 in coverage. The difference between the promised
policy and the new policy becomes increasingly stark as
insureds age: by seventy-five, the new policy forces insured
to pay an additional $1080 in annual premiums for $155,000
less in coverage.
The union retained the same independent actuary who
reviewed the original policy, and the actuary recommended
the new policy. The FPA also negotiated a one-time election
for all retired union members (or members who would retire
by January 1, 1999) age sixty-five or older, to choose non-
reducing coverage, i.e., death benefits that would not decrease
at the same rates established by the new policy. Plaintiffs
Paul Winkler and Gregg availed themselves of this one-time
election and remain beneficiaries under the new policy.
Dissatisfied with the premium increases and benefit
reductions, Plaintiffs filed a complaint in United States
District Court against TWU, Transamerica, Hall, and
Orlando. Plaintiffs alleged Hall, Orlando and TWU breached
their fiduciary duty under ERISA. Plaintiffs also alleged
breach of contract against Transamerica for terminating the
original Group Master Policy.
On July 25, 2000, Transamerica moved for summary
judgment. The district court granted that motion on
12 Gregg, et al. v. Transportation
Workers of America, et al.
No. 01-4159
November 9, 2000. Plaintiffs do not contest that decision and
Transamerica is not a party to this appeal.
The remaining Defendants moved for summary judgment
on June 13, 2001, and Plaintiffs moved for summary
judgment two days later. On October 2, 2001, the district
court granted Defendants’ motion. On October 26, 2001,
Plaintiffs filed a timely notice of appeal.
DISCUSSION
This case requires us to determine what duties Defendants
had to Plaintiffs and whether a genuine issue of material fact
exists as to whether Defendants breached any such duties.
I.
We review summary judgment de novo. Eastman Kodak
Co. v. Image Technical Servs., Inc., 504 U.S. 451, 466 n.10
(1992). Summary judgment is appropriate when there is no
genuine issue of material fact, thereby entitling the movant
to a judgment as a matter of law. Kocsis v. Multi-Care
Mgmt., Inc., 97 F.3d 876, 882 (6th Cir. 1996). In Anderson
v. Liberty Lobby, Inc., 477 U.S. 242 (1986), the Supreme
Court explained that “[t]he mere existence of a scintilla of
evidence in support of the plaintiff's position will be
insufficient; there must be evidence on which the jury could
reasonably find for the plaintiff.” Id. at 322. Thus, our
“inquiry, therefore, unavoidably asks whether reasonable
jurors could find by a preponderance of evidence that the
plaintiff is entitled to a verdict.” Id.
To defeat summary judgment, the plaintiff "must come
forward with more persuasive evidence to support [his or her]
claim than would otherwise be necessary." Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
If the defendant successfully demonstrates, after a reasonable
period of discovery, that the plaintiff cannot produce

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sufficient evidence beyond the bare allegations of the
complaint to support an essential element of his or her case,
summary judgment is appropriate. Celotex Corp. v. Catrett,
477 U.S. 317, 325 (1986). When determining whether to
reach this conclusion, we view the evidence and draw all
reasonable inferences in the light most favorable to the non-
moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144,
157 (1970); Williams v. Int’l Paper Co., 227 F.3d 706, 710
(6th Cir. 2000); Smith v. Thornburg, 136 F.3d 1070; 1074
(6th Cir. 1998).
II.
“ERISA is a comprehensive statute designed to promote the
interests of employees and their beneficiaries in employee
benefit plans.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90
(1983). In § 404(a)(1), the statute establishes that a trustee
administering a plan that ERISA governs has fiduciary
responsibilities:
[A] fiduciary shall discharge his duties with respect to a
plan solely in the interest of the participants and
beneficiaries and—
(A) for the exclusive purpose of:
(i) providing benefits to participants and their
beneficiaries; and
(ii) defraying reasonable expenses of administering
the plan;
(B) with the care, skill, prudence, and diligence under
the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with
such matters would use in the conduct of an
enterprise of a like character and with like aims;
14 Gregg, et al. v. Transportation
Workers of America, et al.
No. 01-4159
3Courts define “prudent person”as that term is employed in the
common law of trusts. See, e.g., Katsoaros v. Cody, 744 F.2d 270, 279
(2d Cir. 1984). “Prudent person” is an objective standard. 29 U.S.C.
§ 110 4(a)(1)(B ); Marshall v. Glass/Metal Ass’n Pension Plan, 507 F.
Supp. 378, 384 (D. Haw. 1980) (“If fiduciaries commit a pe nsion p lan’s
assets to investments which they do not fully und erstand , they will
nonetheless be judged, as provided in [ER ISA], acco rding to the standards
of others ‘acting in like capacity and familiar with such matters.’”)
(quo ting 29 U.S.C. § 1 104 (a)(1)(B)).
(C) by diversifying the investments of the plan so as
to minimize the risk of large losses, unless under
the circumstances it is clearly prudent not to do
so; and
(D) in accordance with the documents and instruments
governing the plan.
29 U.S.C. § 1104(a)(1).
We have explained that the fiduciary duties enumerated in
§ 404(a)(1) have three components. See Kuper v. Iovenko, 66
F.3d 1447, 1458 (6th Cir. 1995). The first element is a "duty
of loyalty" pursuant to which "all decisions regarding an
ERISA plan 'must be made with an eye single to the interests
of the participants and beneficiaries.'" Kuper, 66 F.3d at 1458
(quoting Berlin v. Mich. Bell Tel. Co., 858 F.2d 1154, 1162
(6th Cir.1988)). Second, ERISA imposes a "prudent man"
obligation, which is "an unwavering duty" to act both "as a
prudent person would act in a similar situation" and "with
single-minded devotion" to those same plan participants and
beneficiaries.3 Id. (quoting Berlin, 858 F.2d at 1162).
Finally, an ERISA fiduciary must "'act for the exclusive
purpose'" of providing benefits to plan beneficiaries. Id.
(quoting Donovan v. Bierwirth, 680 F.2d 263, 271 (2d Cir.
1982)).

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“[T]he duties charged to an ERISA fiduciary are ‘the
highest known to the law.’” Chao v. Hall Holding Co., Inc.,
285 F.3d 415, 426 (6th Cir. 2002) (quotation omitted). When
enforcing these important responsibilities, we “focus[] not
only on the merits of the transaction, but also on the
thoroughness of the investigation into the merits of the
transaction." Id. (citing Howard v. Shay, 100 F.3d 1484,
1488 (9th Cir. 1996)).
III.
The district court found that Defendants properly relied on
expert advice. In Chao v. Hall Holding Co., this Court
adopted a three-part test to evaluate a fiduciary’s reliance
upon financial advisors. The fiduciary must (1) “investigate
the expert’s qualifications”; (2) “provide the expert with
complete and accurate information”; and (3) “make certain
that reliance on the expert’s advice is reasonably justified
under the circumstances.” Chao, 285 F.3d at 430 (citing
Howard v. Shay, 100 F.3d 1484, 1489 (9th Cir. 1995)).
Plaintiffs do not argue that Defendants failed to investigate
their experts’ qualifications or provide the experts with
complete and accurate information. Defendants have failed
to show, however, that no genuine issue of material fact exists
as to whether Defendants were reasonably justified in relying
on the expert advice they received.
A fiduciary’s effort to obtain an independent assessment
serves as evidence that the fiduciary undertook a thorough
investigation. Chao, 285 F.2d at 430; Howard, 100 F.3d at
1489; Donovan v. Cunningham, 716 F.2d 1455, 1474 (5th
Cir. 1983); Montgomery v. Aetna Plywood, Inc., 39 F.
Supp.2d 915 (N.D. Ill. 1998). As the Fifth Circuit explained:
A determination whether a fiduciary's reliance on an
expert advisor is justified is informed by many factors,
including the expert's reputation and experience, the
16 Gregg, et al. v. Transportation
Workers of America, et al.
No. 01-4159
extensiveness and thoroughness of the expert's
investigation, whether the expert's opinion is supported
by relevant material, and whether the expert's methods
and assumptions are appropriate to the decision at hand.
Bussian v. RJR Nabisco, Inc., 223 F.3d 286, 301 (5th Cir.
2000). One extremely important factor is whether the expert
advisor truly offers independent and impartial advice. See id.
at 303 (“[A] reasonable factfinder could conclude that RJR
failed to structure, let alone conduct, a thorough, impartial
investigation of which provider or providers best served the
interests of the participants and beneficiaries.”) (emphasis
added); Donovan v. Bierwirth, 680 F.2d 263, 271 (2d Cir.
1982) (Friendly, J.) (requiring a “careful and impartial
investigation”) (emphasis added).
Defendants relied on FPA, however, and FPA served as a
broker, not an impartial analyst. As Hall explained in his
deposition:
QUESTION: Who is the liaison between the union and
Future Planning Associates?
HALL: That would be John Pescitelli. And at
the time some of his representatives,
agents, but I can’t name them other than
John Pescitelli.
QUESTION: What is Mr. Pescitelli’s title with the
union?
HALL: He is the broker of record. And he is
also the President of Future Planning.
QUESTION: Is he a member of the International
Union too?
HALL: No.

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QUESTION: Does he get paid directly by the union?
HALL: No.
QUESTION: Is his compensation from Future
Planning Associates?
HALL: Yes.
. . . .
QUESTION: And you hired them as the broker for
about seven years when you became
President?
HALL: Yes. We picked up from the Local and
then just hired them as broker for the
International. When I say “hire,” we
don’t pay them, as I said. We use them
as consulting. He makes fees, whatever
he gets from the insurance companies,
whomever.
QUESTION: He gets a percentage?
HALL: I assume he gets that.
(J.A. at 581.) FPA and Pescitelli, therefore, are not
independent analysts. FPA does not work for TWU; rather,
insurance companies like Transamerica pay Pescitelli’s
salary. As a broker, FPA and its employees have an incentive
to close deals, not to investigate which of several policies
might serve the union best. A business in FPA’s position
must consider both what plan it can convince the union to
accept and the size of the potential commission associated
with each alternative. FPA is not an objective analyst any
more than the same real estate broker can simultaneously
18 Gregg, et al. v. Transportation
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No. 01-4159
4Again, as noted in footnote two, supra, we cannot consider what
role Christian Wozny had. One would assume that if he had a substantial
role, Defendants would have done a better job highlighting his
indep endent input to us.
5Orlando also testified:
ORLANDO: By a letter dated September 6, 1995, I addressed
all of the local presidents and gave the outline of
what the insurance plan was. A nd alo ng with it
there was a couple of [sic] two or three pages of
questions that were addressed by P escitelli’s
firm that I ha d attached to it.
QU ESTION : Okay. Yo u say, “Pescitelli’s firm,” right?
ORLANDO: FPA, Future Planning. I think he’s the president
of Future Planning.
QUESTION: But doesn’t he have to report to you because
you’re the Vice President of this area?
ORLANDO: No , he do esn’t.
protect the interests of both buyer and seller or the same
attorney can represent both husband and wife in a divorce.
FPA, however, had an enormous role relative to Silkes, the
union’s actuary.4 Silkes submitted a brief memorandum
endorsing Transamerica. Other than that, no one seems to
know precisely what role Silkes assumed. As Orlando
testified:
[T]his Lawrence Silkes guy, he was the actuary that
reviewed—and I don’t know what they do really,
because I’m not—I’m not an insurance salesman by far,
so I don’t know exactly what they do. But he reviewed
the policies or whatever the plan was, and he’s the one
that made the recommendation that it was okay, you
know, that we would be good with this plan.5

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QUESTION: Who does he report to?
ORLANDO: Yo u’d have to ask him. I think—I don’t know.
(J.A. at 637.) This exchange further demonstrates FPA’s une xplained ro le
in the pro cess. It is hard to imagine that Orlando justifiably relied on
counsel from an advisor responsible to someone—worse, an unknown
party— other than O rlando himself.
6Orlando testified that “the FPA had their representatives going to the
various locales and conducting meetings either in the union halls or on the
property.” (J.A. at 639.)
(J.A. at 636-37.) Orlando, the Vice-President of TWU’s Air
Transport Division, had no idea what Silkes did except that
Silkes concluded that the Transamerica plan was acceptable.
One can only surmise, for instance, whether Silkes received
the information upon which he based his evaluations directly
from the insurance companies or through Pescitelli.
Throughout the process, FPA, not Silkes, had the primary
role. Orlando testified that FPA “handle[d] everything as far
as communication and as far as working with the
Transamerica people.” (J.A. at 637.) Orlando explained that
FPA managed the in-person meetings with union members.6
Orlando also stated that “Future Planning was the one that did
all of the communication as far as the mail-outs to the homes
[and] the solicitation.” (J.A. at 639.) In fact, Hall concedes
that, other than with Pescetelli, he never double-checked any
of the information related to the policy with any source,
including Silkes. Thus, TWU, Hall and Orlando apparently
relied almost entirely on FPA, which was not an impartial
analyst.
Independent expert advice is not a “whitewash,” Bierwirth,
680 F.2d at 272, and it does not provide a complete defense
to the allegation that plan administrators neglected their
20 Gregg, et al. v. Transportation
Workers of America, et al.
No. 01-4159
responsibilities, see Donovan v. Mazzola, 716 F.2d 1226,
1234 (9th Cir. 1983). "An independent appraisal is not a
magic wand that fiduciaries may simply waive over a
transaction to ensure that their responsibilities are fulfilled.”
Donovan v. Cunningham, 716 F.2d 1455, 1474 (5th Cir.
1983); see also Howard, 100 F.3d at 1489, In re Unisys Sav.
Plan Litig., 74 F.3d 420, 434-36 (3d Cir. 1996); Roth v.
Sawyer-Cleator Lumber Co., 16 F.3d 915, 918 (8th Cir.
1994); Mazzola, 716 F.2d at 1234. Fiduciaries are ultimately
responsible for making a careful and perspicacious choice.
Bussian, 223 F.3d at 301 (explaining that fiduciaries may not
“rely blindly” on advice); In re Unisys., 74 F.3d at 435-36
("[W]e believe that ERISA's duty to investigate requires
fiduciaries to review the data a consultant gathers, to assess its
significance and to supplement it where necessary.");
Katsoaros v. Cody, 744 F.2d 270, 279 (2d Cir. 1984) (“A
trustee’s lack of familiarity with investments is no excuse:
under an objective standard trustees are to be judged
‘according to the standards of others “acting in a like capacity
and familiar with such matters.”’”) (citation omitted); Withers
v. Teachers Retirement Sys., 447 F.Supp. 1248, 1254
(S.D.N.Y. 1978), aff'd mem., 595 F.2d 1210 (2d Cir.1979)
("In the area of investment decisions, the obligation to
exercise prudence [includes] an obligation to . . . make
independent inquiry into the merits of particular investments
rather than to rely wholly on the advice of others.").
As noted above, both Orlando and Hall relied primarily on
FPA. Hall, TWU’s President, did not learn of the group
policy’s termination provision or its fifty-insured minimum
until his deposition. Hall concedes he never bothered to read
the policy. Fiduciaries need not become experts in employee
benefits, and may rely on independent expert advice, but
requiring that a fiduciary read the policy he signs and that he
have a basic understanding of its most important provisions
does not ask too much.

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21
IV.
The district court also determined that Defendants did not
breach their duty of loyalty. Plaintiffs argue Defendants
either lied about or omitted material information regarding
(1) the size of possible premium increases and the possibility
that benefits would decrease with age; (2) Transamerica’s
right to terminate the plan; and (3) the requirement that the
plan maintain at least fifty enrollees.
As one would expect, “[l]ying is inconsistent with the duty
of loyalty owed by all fiduciaries and codified in § 404(a)(1).”
Peoria Union Stock Yards Co. Retirement Plan v. Penn. Mut.
Life Ins. Co., 698 F.2d 320, 326 (7th Cir. 1983). A fiduciary
also may not materially mislead beneficiaries. Varity Corp. v.
Howe, 516 U.S. 489, 505 (1996). We have explained that “a
misrepresentation is material if there is a substantial
likelihood that it would mislead a reasonable employee in
making an adequately informed decision in pursuing . . .
benefits to which she may be entitled.” Krohn v. Huron
Memorial Hosp., 173 F.3d 542, 547 (6th Cir. 1999) (citing In
re Unisys, 57 F.3d at 435-36). Significantly, “a fiduciary
breaches its duties by materially misleading plan participants,
regardless of whether the fiduciary’s statements were made
negligently or intentionally.” Id. at 547 (citing Berlin, 858
F.2d at 1163-64).
Defendants make two arguments. First, Defendants argue
that all of the relevant information “was contained in the
Group Master Policy, available to the union members for the
asking.” (Defendants’ Brief at 14.) Although each individual
policyholder’s certificate explained the insured’s right to
inspect the Group Master Policy during normal business
hours, this does not constitute “disclosure” in any meaningful
sense because Transamerica kept its copy in New York and
TWU retained the union’s copy in Dallas. (J.A. at 358.)
When deposed by Defendants’ counsel, Paul Winkler
complained:
22 Gregg, et al. v. Transportation
Workers of America, et al.
No. 01-4159
QUESTION: Well, you understand that you’d have the
right to inspect the Group Master Policy,
didn’t you?
WINKLER: I’m supposed to go to New York during
their normal business hours?
(J.A. at 535-36.) A fiduciary has not satisfied his
responsibilities by disseminating information in a manner not
reasonably calculated to reach beneficiaries.
Defendants’ second argument warrants more extensive
attention. ERISA distinguishes between pension plans and
welfare plans. A pension plan “provides retirement income
to employees” or “results in a deferral of income by
employees for periods extending to the termination of . . .
employment or beyond.” 29 U.S.C. § 1002(2). Unlike
pension plans, welfare plans include those “established or . . .
maintained for the purpose of providing . . . medical, surgical
or hospital care or benefits.” Id. at § 1002(1). Life insurance
plans qualify as welfare plans. Metro. Life Ins. Co. v.
Bigelow, 283 F.3d 436, 440 n.3 (2d Cir. 2000); Filipowicz v.
Am. Stores Benefit Plans Comm., 56 F.3d 807, 815 (7th Cir.
1995); Brandon v. Travelers Ins. Co., 18 F.3d 1321, 1324
(5th Cir. 1994).
As a matter of law under ERISA, one of the key differences
between welfare and pension plans is that welfare plan
benefits do not vest. 29 U.S.C. §§ 1051, 1084; Wulf v.
Quantum Chem. Corp., 26 F.3d 1368, 1377 (6th Cir. 1994).
Consequently, plan administrators may modify a welfare
plan’s terms at any time, whether or not the employer or
union reserved the right to do so. See, e.g., Lockheed Corp.
v. Spink, 517 U.S. 882, 890 (1996) (citing Curtiss-Wright
Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995)); Helwig v.
Kelsey-Hayes Co., 93 F.3d 243, 248 (6th Cir. 1996). As
Defendants correctly note, fiduciary duties do not apply to the
amendment or termination of an unfunded, contingent benefit

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Workers of America, et al.
23
plan. Pope v. Cent. States Southeast and Southwest Areas
Health & Welfare Fund, 27 F.3d 211, 212 (6th Cir. 1994);
Sutter v. BASF Corp., 964 F.2d 556, 562 (6th Cir. 1992);
Adams v. Avondale Indus., Inc., 905 F.2d 943, 947 (6th Cir.
1990).
At this point, however, Defendants make a leap
unsupported by ERISA or case law by arguing that because
fiduciary duties do not apply to the amendment or termination
of a welfare plan, “a plan administrator need not disclose the
fact that an employee welfare benefit plan is subject to
amendment or termination.” (Defendants’ Brief at 14.) This
is only true if plan administrators are not otherwise providing
beneficiaries with information. Defendants cite Sprague v.
Gen. Motors Corp., 133 F.3d 388 (6th Cir. 1998) (en banc),
in which this Court interpreted, inter alia, ERISA’s disclosure
provisions contained in 29 U.S.C. § 1022(b). Several
decisions from other circuits appear to support Defendants’
position; for instance, in Wise v. El Paso Natural Gas Co.,
986 F.2d 929, 935 (5th Cir. 1993), the Fifth Circuit wrote that
"[s]ection 1022(b) relates to an individual employee's
eligibility under then existing, current terms of the Plan and
not to the possibility that those terms might later be changed,
as ERISA undeniably permits." See also Jensen v. SIPCO,
Inc., 38 F.3d 945, 952 (8th Cir. 1994) (citing Wise); Gable v.
Sweetheart Cup Co., 35 F.3d 851, 858 (4th Cir. 1994) (citing
Wise). Like these cases, Sprague considered whether a plan
administrator must provide unrequested information, not
whether an administrator may mislead when providing
information. See Sprague, 133 F.3d at 406; Jensen, 38 F.3d
at 952; Gable, 35 F.3d at 858; Wise, 986 F.2d at 935.
Sprague involved a putative class of retirees who brought
an action against General Motors alleging that the company
improperly modified a health care plan that would have
provided the beneficiaries with free lifetime basic health
coverage. 133 F.3d at 389-91. The plaintiffs argued, among
several things, that General Motors breached its fiduciary
24 Gregg, et al. v. Transportation
Workers of America, et al.
No. 01-4159
duty by failing to disclose that it could amend or terminate the
plan. Id. at 405-06. Defendants are correct that this Court
held “GM was not required to disclose in its summary plan
descriptions that the plan was subject to amendment or
termination.” Id. at 405. This Court wrote:
We are not aware of any court of appeals decision
imposing fiduciary liability for failure to disclose
information that is not required to be disclosed. A
fortiori, there can be no fiduciary duty to disclose the
possibility of a future change in benefits. Had an early
retiree asked about the possibility of the plan changing,
and had he received a misleading answer, or had GM on
its own initiative provided misleading information about
the future of the plan . . . a different case would have
been presented. But we do not think that GM’s accurate
representations of its current program can reasonably be
deemed misleading. GM having given out no inaccurate
information, there was no breach of fiduciary duty.
Id. at 406 (citations omitted) (first emphasis of “possibility”
in original; other emphasis added). To reiterate, “[h]ad an
early retiree asked about the possibility of the plan changing,”
or “had GM on its own initiative provided misleading
information,” the fiduciary would have had a responsibility to
provide a non-misleading answer. Id.
In this regard, our subsequent decision in Krohn v. Huron
Memorial Hospital, 173 F.3d 542 (6th Cir. 1999), developed
Sprague further. Krohn involved a permanently disabled
plaintiff who claimed she lost the opportunity to secure long-
term disability benefits because the defendant, her prior
employer, breached its fiduciary duty under ERISA. Id. at
545. The defendant never notified the plaintiff about
available long-term disability benefits despite her husband’s
general requests for information about the availability of
disability benefits for his wife. Id. at 548. We held that
“once an ERISA beneficiary has requested information from

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No. 01-4159 Gregg, et al. v. Transportation
Workers of America, et al.
25
an ERISA fiduciary who is aware of the beneficiary’s status
and situation, the fiduciary has an obligation to convey
complete and accurate information material to the
beneficiary’s circumstance, even if that requires conveying
information about which the beneficiary did not specifically
inquire.” Id. 547 (emphasis added); see also In re Unisys
Sav. Plan Litig., 74 F.3d 420, 434-36 (3d Cir. 1996) (holding
that Unisys breached its fiduciary duty where it "affirmatively
and systematically represented to its employees that once they
retired, their medical benefits would continue for life—even
though as the district court concluded in rejecting the retirees’
contract claim, the plans clearly permitted the company to
terminate benefits"); Anweiler v. Am. Elec. Power Serv.
Corp., 3 F.3d 986, 991 (7th Cir.1993) (finding fiduciary duty
to communicate material facts affecting interests of
beneficiaries "exists when a beneficiary asks fiduciaries for
information, and even when he or she does not"); Eddy v.
Colonial Life Ins. Co., 919 F.2d 747, 750 (D.C. Cir.1990)
("At the request of a beneficiary (and in some circumstances
upon his own initiative), a fiduciary must convey complete
and correct material information to a beneficiary.").
Following this course, we recently decided James v. Pirelli
Amstrong Tire Co., 305 F.3d 439 (6th Cir. 2002). Pirelli
Armstrong involved an employer that, on its own initiative,
provided materially misleading and inaccurate information to
the plaintiffs in group meetings designed to convey
information about benefits. Id. at 443. The employer’s
human resources representative also provided materially
misleading and inaccurate information when she indicated to
employees that the employer could not change their benefits
during retirement. Id. The employer argued that some
plaintiffs did not inquire about their benefits, but we held that
“it is not necessary that employees ask specific questions
about future benefits or that they take the affirmative step of
asking questions about the plan to trigger the fiduciary duty.”
Id. at 454. Rather, we stressed that a “breach of fiduciary
duty occurs when the employer or plan administrator on its
26 Gregg, et al. v. Transportation
Workers of America, et al.
No. 01-4159
own initiative provides misleading information about the
future benefits of a plan.” Id.
Turning to the specific facts this case presents, Plaintiffs
participated in question-and-answer sessions in which,
obviously, Plaintiffs questioned Defendants and their
representatives about the policy. Plaintiff Gregg testified that
“questions were being asked” at these sessions. (J.A. at 433.)
Plaintiff Paul Winkler also testified:
QUESTION: Did you personally ask questions at the
meeting?
WINKLER: Yes.
QUESTION: Tell me some of the things that you
recall being interested in that led you to
ask some questions.
WINKLER: I asked questions pertaining to will the
premium ever go up, number one. The
answer was the premium is guaranteed
for three years. And if it does go up, it
will only be a matter of a couple pennies.
How long is the policy good for? Policy
is good forever until you die. Is it
decreasing insurance? No. Are the
premiums based upon your age? No.
And to verify it, they gave us a hotline to
call, which I most certainly did.
(J.A. at 531.) Thus, Plaintiffs have adduced testimony that
they asked questions.
Defendants distributed bulletins encouraging union
members to consider a policy with “a flat rate premium that
would not increase with age.” (J.A. at 516, 517.)
Defendants’ question-and-answer sheet unequivocally states,

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Workers of America, et al.
27
“Question - Can the monthly flat rate for the TWU OTP Plan
increase because of age? Answer - No.” (J.A. at 521.)
According to Paul Winkler’s testimony, in direct response to
his questions, Defendants (or their representatives) told union
members that the policy would not base premiums on age,
that the premiums would not increase by more than pennies,
and that benefits would not decrease over time. We have held
that “[a] fiduciary must give complete and accurate
information in response to participants’ questions.” Drennan
v. Gen. Motors Corp., 977 F.2d 246, 251 (6th Cir. 1992);
accord Electro-Mechanical Corp. v. Ogan, 9 F.3d 445, 451
(6th Cir. 1993) (“ERISA imposes a duty upon fiduciaries to
respond promptly and adequately to employee-initiated
inquiries regarding the plan or any of its terms.”). Each of
Defendants’ answers to Paul Winkler’s questions, however,
was extraordinarily misleading or outright false. Therefore,
Defendants’ answers violated the requirements of Sprague,
Krohn, and Pirelli. See Pirelli, 305 F.3d at 454; Krohn, 173
F.3d at 547; Sprague, 133 F.3d at 406.
Defendants also suggested that Transamerica could not
cancel the policy. According to the question-and-answer
sheet Defendants distributed:
QUESTION: Can I continue my TWU OTP Plan after
retirement at the same monthly flat rate?
ANSWER: Yes. The TWU OTP Plan can be
continued indefinitely after retirement at
the same monthly rate.
(J.A. at 521) (emphasis added). As recounted above, Paul
Winkler described this exchange from one of the information
sessions: “How long is the policy good for? Policy is good
forever until you die.” (J.A. at 531.) Actually, Transamerica
could terminate the policy at any time after three years, with
appropriate notice. Defendants had a duty to honestly
respond to questions about the plan’s termination provisions.
28 Gregg, et al. v. Transportation
Workers of America, et al.
No. 01-4159
See, e.g., Abbruscato v. Empire Blue Cross & Blue Shield,
274 F.3d 90, 103 (2d Cir. 2001) (“Even if, on remand, the
trier of fact determines that there was no promise to vest the
life insurance benefits, Empire may have still violated any
fiduciary duties in its retiree letters and other communications
which promised lifetime benefits but failed to note that
Empire could reduce or terminate these benefits at any
time.”); Electro-Mechanical, 9 F.3d at 451; Drennan, 977
F.2d at 251.
Defendants also never informed Plaintiffs that the
Transamerica Group Master Policy required that at least fifty
people participate for the insurance coverage to continue.
This important piece of information is material to potential
participants evaluating a life insurance program and the plan
administrators should have disclosed it in response to
Plaintiffs’ questions concerning the conditions and
circumstances under which Transamerica could cancel
insurance coverage. Although no Plaintiff ever asked whether
the policy required a minimum number of insureds, it is
irrelevant that no one asked the precise question because once
an ERISA fiduciary begins affirmatively providing
information not required by statute, the fiduciary may not
mislead, even if this means disclosing information that the
fiduciary would not otherwise need to disclose.
ERISA imposes trust-like fiduciary responsibilities, see
Varity, 516 U.S. at 496, and a trustee “is under a duty to
communicate to the beneficiary material facts affecting the
interest of the beneficiary which he knows the beneficiary
does not know and which the beneficiary needs to know for
his protection in dealing with a third person.” RESTATEMENT
(SECOND) OF TRUSTS § 173, cmt. d (1959). For this reason,
“once an ERISA beneficiary has requested information from
an ERISA fiduciary who is aware of the beneficiary’s status
and situation, the fiduciary has an obligation to convey
complete and accurate information material to the
beneficiary’s circumstance, even if that requires conveying

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Workers of America, et al.
29
information about which the beneficiary did not specifically
inquire.” Krohn, 173 F.3d at 547 (emphasis added); see also
In re Unisys Corp., 57 F.3d at 1264 (holding that Unisys
breached its fiduciary duty where it "affirmatively and
systematically represented to its employees that once they
retired, their medical benefits would continue for life—even
though as the district court concluded in rejecting the retirees'
contract claim, the plans clearly permitted the company to
terminate benefits"); Anweiler v. Am. Elec. Power Serv.
Corp., 3 F.3d 986, 991 (7th Cir.1993) (fiduciary duty to
communicate material facts affecting interests of beneficiaries
"exists when a beneficiary asks fiduciaries for information,
and even when he or she does not"); Eddy v. Colonial Life
Ins. Co., 919 F.2d 747, 750 (D.C. Cir.1990) ("At the request
of a beneficiary (and in some circumstances upon his own
initiative), a fiduciary must convey complete and correct
material information to a beneficiary."). By not explaining
the Group Master Policy’s minimum participation
requirement, Defendants did not provide full and complete
information.
Defendants thus misled Plaintiffs with respect to the size of
possible premium increases and the possibility that benefits
would decrease with age, Transamerica’s right to terminate
the plan, and the requirement that the plan maintain at least
fifty enrollees. Defendants had an affirmative obligation to
provide Plaintiffs with this material information whether or
not they asked for it. See, e.g., Pirelli Armstrong, 305 F.3d at
454; Krohn,173 F.3d at 547. The fact that Plaintiffs did
request disclosure of this material information renders
Defendants’ violations of Pirelli Armstrong and Krohn all the
more apparent. See Pirelli Armstrong, 305 F.3d at 454;
Krohn, 173 F.3d at 547.
30 Gregg, et al. v. Transportation
Workers of America, et al.
No. 01-4159
V.
Plaintiffs have raised a genuine issue of material fact as to
whether Defendants breached their fiduciary duty by
abandoning their responsibilities, overly relying on an
untrustworthy advisor, and misleading beneficiaries. For all
the aforementioned reasons, we REVERSE the decision of
district court.

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No. 01-4159 Gregg, et al. v. Transportation
Workers of America, et al.
31
_________________
CONCURRENCE
_________________
ALICE M. BATCHELDER, Circuit Judge, concurring in
the result only. I concur in the result reached by the majority
because I believe that the plaintiffs have set forth just enough
evidence to require that a trier of fact determine whether the
Defendants breached their duty with respect to the potential
change in the amount of the premiums. However, for several
reasons I cannot simply concur in the opinion. First, I believe
the majority opinion distorts the facts, particularly with regard
to the Defendants’ reliance on experts in selecting the plan.
Second, even if the majority’s factual picture in that respect
were accepted as being correct, the majority’s creation of a
new requirement that a fiduciary may not rely on expert
advice unless the fiduciary himself has read everything that he
signs, regardless of the complexity of the document, the
expertise—or lack of expertise—of the fiduciary, or the
degree of expertise of the experts or advisors on whom the
fiduciary relies to evaluate the document for him, is
imprudent and without legal precedent.
Finally, and perhaps most importantly, I believe the
majority opinion extends this circuit’s cases of Sprague v.
General Motors Corp, 133 F.3d 388 (6th Cir. 1998), Krohn
v. Huron Mem’l Hosp., 173 F.3d 542 (6th Cir. 1999), and
James v. Pirelli Armstrong Tire Corp., 305 F.3d 439 (6th Cir.
2002), beyond their rational application in all respects except
with regard to the information disseminated about the
potential change in premium amounts. These cases stand for
the limited proposition that, if the fiduciary is providing
information on its own initiative, then it must not make any
materially misleading statements; but if it is responding to
inquiry, it must provide accurate and complete information
that bears in mind the needs of the particular beneficiary.
Ranging far afield of these limited rules, the majority opinion
32 Gregg, et al. v. Transportation
Workers of America, et al.
No. 01-4159
appears to add to an ERISA fiduciary’s duties in an area
already highly regulated by Congress and the Department of
Labor, and gives no clear guidance as to what fiduciaries in
this circuit must disclose to potential plan beneficiaries.
Accordingly, I concur only in the result reached by the
majority.

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