Opinions of the United
1996 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


10-1-1996

Fischer v. Phila Elec Co
Precedential or Non-Precedential:

Docket 95-1793,95-1794




Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1996

Recommended Citation
"Fischer v. Phila Elec Co" (1996). 1996 Decisions. Paper 35.
http://digitalcommons.law.villanova.edu/thirdcircuit_1996/35


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                  UNITED STATES COURT OF APPEALS
                      FOR THE THIRD CIRCUIT



                     Nos. 95-1793 and 95-1794



      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 95-1794


                    ----------------------


    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




        On Appeal from the United States District Court
            for the Eastern District of Pennsylvania
              (D.C. Civil Action No. 90-cv-08020)



                     Argued April 29, 1996

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

(Opinion filed October 1, 1996)




Ronald L. Wolf, Esq.
Martina W. McLaughlin, Esq. (Argued)
Litvin, Blumberg, Matusow & Young
1339 Chestnut Street
The Widener Building, 18th Floor
Philadelphia, PA 19107

          Attorneys for Appellants in 95-1793 and
          Cross-Appellees in 95-1794


David H. Marion, Esq. (Argued in 95-1793 & 1794)
Howard J. Bashman, Esq.
Montgomery, McCracken, Walker & Rhoads
Three Parkway, 20th Floor
Philadelphia, PA 19102

          Attorneys for PECO Energy Co.,
          f/k/a Philadelphia Electric Co.;
          Joseph F. Paquette, Jr.; Michael
          J. Crommie; and Service Annuity
          Plan of Philadelphia Electric
          Company Appellees in 95-1793
          and Cross-Appellants in 95-1794
                       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., 

(3d Cir.)
("Fischer I"), cert. denied, 

(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. 

     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 defendant.
                                 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 

. 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 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
Benefits, contacted William Murdoch, a consultant with Towers,
Perrin, Forster & Crosby ("TPF&C"), to discuss various early
retirement options. Discussions between management and TPF&C
continued into June.
     Beaver's memorandum and the TPF&C consultations
occurred roughly contemporaneously with Joseph Paquette's arrival
at PECo as president and chief of operations. Paquette had a
long term goal of reducing the number of PECo employees, and he
would ultimately recommend the 1990 early retirement package. In
June, 1988, however, Paquette decided against an early retirement
plan. At trial, Paquette testified that PECo was then in the
process of completing one nuclear plant and restarting another.
He did not want to risk an early retirement program because
personnel vital to the nuclear effort might leave. He believed
that PECo could not legally institute an early retirement plan
that excluded nuclear plant personnel. After deciding that no
early retirement package would be considered, Paquette shifted
his attention to promoting operational excellence at the company.
     In July, 1989, PECo requested a rate increase from the
Public Utility Commission ("PUC"). PUC staff made a preliminary
recommendation that PECo be granted less than half its requested
increase.
     In November, 1989, as part of the operational
excellence program, PECo hired McKinsey & Co. to explore long-
term strategies and cost-cutting measures. Paquette used the
McKinsey report to calculate the savings that an early retirement
program could produce.
     On December 13, 1989, Paquette held three meetings with
employees to discuss the importance of the rate increase to the
company. In response to questions, Paquette stated that an early
retirement plan might be considered if the rate request was
denied. He explained that the company had no plans for such a
program because the outcome of the rate increase was in doubt.
Paquette stated that PECo's first option in the event the
increase was denied would be to appeal the decision but that the
company would also consider cutting costs and reducing its stock
dividend. On March 1, 1990, an Administrative Law Judge issued
an interim decision recommending that PECo receive 21% of the
rate increase it had requested.
     Events accelerated rapidly following the ALJ's
decision. On March 12, 1990, Kenneth Lefkowitz, Manager of
Compensation & Benefits, contacted Murdoch at TPF&C. Lefkowitz
stated PECo's concern about its rate case before the PUC and the
need to reduce costs quickly. The question of an early
retirement sweetener was mentioned as a possible method. TPF&C
had done no work for PECo on early retirement plans since June,
1988, nor had TPF&C been asked to prepare contingency plans in
case PECo's rate request was denied. On March 20, 1990,
Lefkowitz asked TPF&C to develop a set of early retirement
alternatives. On March 28, 1990, Murdoch proposed three
alternative programs, the first of which resembled the 1988
program in some respects, although it targeted a different group
of eligible employees and contained different severance
provisions. On April 2, 5, and 6, Murdoch had further
discussions with PECo personnel about the details of the early
retirement sweetener. On April 7, senior PECo executives
attended a corporate strategy meeting. Notes from the meeting
indicated a statement by Paquette that on April 20 he would issue
a letter announcing a $100 million cost cutting program. On
April 13, 1990, TPF&C provided PECo with a survey of early
retirement plans used by other utilities. On April 19, 1990, the
PUC granted less than 50% of PECo's rate request. Paquette then
sent the letter to PECo employees announcing his intent to
recommend an early retirement package.
     Based on these findings, the district court held that
PECo began seriously considering an early retirement plan on
March 12, 1990. The district court entered judgment for those
retirees who asked about an early retirement plan and retired
after March 12. It entered judgment for PECo on the claims of
those retirees who asked about retirement and retired before that
date. Both PECo and the plaintiff class appealed. The plaintiff
class appeals the district court's determination that serious
consideration of the early retirement plan did not begin before
March 12, 1990. PECo, on the other hand, asserts that serious
consideration did not begin until after March 12, 1990.
                                II.
     Our analysis proceeds within the confines of Fischer I.
In that decision, we established the general rule that governs
interactions between a company-as-fiduciary and its employee-
beneficiaries regarding changes in benefits: "A plan
administrator may not make affirmative material
misrepresentations to plan participants about changes to an
employee pension benefits plan. Put simply, when a plan
administrator speaks, it must speak 

. This overarching duty of truthfulness forms an important
part of our ERISA jurisprudence. See In re Unisys Corp. Retiree
Medical Benefit "ERISA" Litig., 

, 1266-67 (3d Cir.
1995), cert. denied, ___ U.S. ___, 

(1996); Bixler
v. Central Pa. Teamsters Health & Welfare Fund, 

,
1302-03 (3d Cir. 1994).
     The rule of truthfulness that we announced in Fischer Ifocused on the
materiality of a plan administrator's
misrepresentations. We defined materiality as a mixed question
of law and fact, ultimately turning on whether "there is a
substantial likelihood that [the misrepresentation] would mislead
a reasonable employee in making an adequately informed decision
about if and when to retire." 

We further explained
that
     [i]ncluded within the overall materiality inquiry will
     be an inquiry into the seriousness with which a
     particular change to an employee pension plan is being
     considered at the time the misrepresentation is made.
     All else equal, the more seriously a plan change is
     being considered, the more likely a misrepresentation,
     e.g., that no change is under consideration, will pass
     the threshold of materiality.

current case, as in any case where the
misrepresentation in question is the statement that no change in
benefits is under consideration, the only factor at issue is the
degree of seriousness with which the change was in fact being
considered. This factor controls the materiality test: "[T]he
more seriously a plan change is being considered, the more likely
a misrepresentation . . . will pass the threshold of
materiality." 

forms the crux of the
inquiry. See Kurz v. Philadelphia Elec. Co., 

, 140
(3d Cir.) ("Kurz I") ("PECo is entitled to argue . . . that the
statements it allegedly made were not material because at the
time those statements were made, the amendment to the plan was
not under serious consideration"), cert. denied, 

(1993); Berlin v. Michigan Bell Tel. Co., 

, 1163-64
(6th Cir. 1988) ("when serious consideration was given to
implementing [improved benefits, the company] had a fiduciary
duty not to make misrepresentations, either negligently or
intentionally, to potential plan participants concerning the
[change]"); see also Maez v. Mountain States Tel. & Tel., Inc.,

, 1501 (10th Cir. 1995) (holding allegation of
company's denial of early retirement plan when plan was under
serious consideration sufficient to state claim for breach of
fiduciary duty); Mullins v. Pfizer, Inc., 

, 669 (2d
Cir. 1994) (same, following Fischer I); cf. Vartanian v. Monsanto
Co., 

, 702 (1st Cir. 1994) (holding plaintiff had
standing to assert claim for company's misrepresentations when
retirement plan was under serious consideration); Barnes v. Lacy,

, 544 (11th Cir.) (noting that if a company "after
serious consideration of a second [plan]" represented that no
change was being considered, "such a representation would be
characterized as a material misrepresentation"), cert. denied,


(1991).
     Although the test we set out in Fischer I ultimately
turned on "serious consideration," we paid little attention to
the details of that term. We offered nothing in the way of a
definition, standard, or even factors to consider. We simply
remanded the case to the district court, leaving to the district
judge the task of determining when PECo's consideration became
serious. We commend his efforts to apply this amorphous concept.
We will now provide further guidance on the meaning of "serious
consideration."
     The concept of "serious consideration" recognizes and
moderates the tension between an employee's right to information
and an employer's need to operate on a day-to-day basis. Every
business must develop strategies, gather information, evaluate
options, and make decisions. Full disclosure of each step in
this process is a practical impossibility. Moreover, as counsel
for PECo emphasized at oral argument, large corporations
regularly review their benefit packages as part of an on-going
process of cost-monitoring and personnel management. The various
levels of management are constantly considering changes in
corporate benefit plans. A corporation could not function if
ERISA required complete disclosure of every facet of these on-
going activities. Consequently, our holding in Fischer Irequires
disclosure only when a change in benefits comes under
serious consideration.
     Equally importantly, serious consideration protects
employees. Every employee has a need for material information on
which that employee can rely in making employment decisions. Too
low a standard could result in an avalanche of notices and
disclosures. For employees at a company like PECo, which
regularly reviews its benefits plans, truly material information
could easily be missed if the flow of information was too great.
The warning that a change in benefits was under serious
consideration would become meaningless if cried too often.
     We demonstrated our awareness of these competing
policies in Fischer I. Although our decision was clearly driven
by an employee's need for truthful information, we nevertheless
recognized a concomitant "right [of] an employer to make the
business decision of how much and when to enhance pension

. Later in the opinion, we expressed
similar sentiments, cautioning that
     ERISA does not impose a duty of clairvoyance on
     fiduciaries. An ERISA fiduciary is under no obligation
     to offer precise predictions about future changes to
     its plan. Rather, its obligation is to answer
     participants' questions forthrightly, a duty that does
     not require the fiduciary to disclose its internal
     deliberations nor interfere with the substantive
     aspects of the collective bargaining process.

(citations omitted). Other courts of appeals have
likewise emphasized the absence of any "duty of clairvoyance," as
well as the fact that disclosure does not extend to internal
deliberations. See Swinney v. General Motors Corp., 

,
520 (6th Cir. 1995); 

; Drennan v. General
Motors Corp., 

, 251 (6th Cir. 1992), cert. denied,

(1993); 

; 

.
     In light of these concerns, we believe that the
following formulation of serious consideration is appropriate:
Serious consideration of a change in plan benefits exists when
(1) a specific proposal (2) is being discussed for purposes of
implementation (3) by senior management with the authority to
implement the change. We draw this formulation primarily from
the excellent opinions of Judge Weiner in the current case, seeDistrict
Ct. Op. at 17, and Judge Katz in Zschunke v. Bell
Atlantic Corp., 

, 1401 (E.D. Pa. 1995), aff'd,

(3d Cir. 1995). Consistent with our decision in
Fischer I's companion case, this formulation does not turn on any
single factor; the determination is inherently fact-specific.
Kurz 

. Likewise, the factors themselves are
not isolated criteria; the three interact and coalesce to form a
composite picture of serious consideration. For purposes of
discussion, we address each in turn.
     The first element, a specific proposal, distinguishes
serious consideration from the antecedent steps of gathering
information, developing strategies, and analyzing options. A
company must necessarily go through these preliminary steps
before its deliberations can reach the serious stage. This
factor does not mean, however, that the proposal must describe
the plan in its final form. A specific proposal can contain
several alternatives, and the plan as finally implemented may
differ somewhat from the proposal. What is required, consistent
with the overall test, is a specific proposal that is
sufficiently concrete to support consideration by senior
management for the purpose of implementation.
     The second element, discussion for implementation,
further distinguishes serious consideration from the preliminary
steps of gathering data and formulating strategy. It also
protects the ability of senior management to take a role in the
early phases of the process without automatically triggering a
duty of disclosure. This factor recognizes that a corporate
executive can order an analysis of benefits alternatives or
commission a comparative study without seriously considering
implementing a change in benefits. Preliminary stages may also
require interaction among upper level management, company
personnel, and outside consultants. These discussions are
properly assigned to the preliminary stages of company
deliberations. Consideration becomes serious when the subject
turns to the practicalities of implementation.
     The final element, consideration by senior management
with the authority to implement the change, ensures that the
analysis of serious consideration focuses on the proper actors
within the corporate hierarchy. As noted, large corporate
entities conduct regular or on-going reviews of their benefit
packages in their ordinary course of business. These entities
employ individuals, including middle and upper-level management
employees, to gather information and conduct reviews. The
periodic review process may also entail contacting outside
consultants or commissioning studies. During the course of their
employment, the employees assigned these tasks necessarily
discuss their duties and the results of their studies. These
discussions may include issues of implementation. The employees
may also make recommendations to upper level management or senior
executives. As a general rule, such operations will not
constitute serious consideration. These activities are merely
the ordinary duties of the employees. Until senior management
addresses the issue, the company has not yet seriously considered
a change.
     Consideration by senior management is also limited to
those executives who possess the authority to implement the
proposed change. This focus on authority can be used to identify
the proper cadre of senior management, but it should not limit
serious consideration to deliberations by a quorum of the Board
of Directors, typically the only corporate body that in a literal
sense has the power to implement changes in benefits packages.
It is sufficient for this factor that the plan be considered by
those members of senior management with responsibility for the
benefits area of the business, and who ultimately will make
recommendations to the Board regarding benefits operations.
     At the risk of redundancy, we stress that these factors
do not establish a bright-line rule. In Kurz I, we expressly
rejected the suggestion that serious consideration could be tied
to any single objective 

. Our decision
today, which merely elaborates on Fischer I and Kurz I, contrasts
markedly with a true bright-line rule, such as that recently
adopted by the Court of Appeals for the Second Circuit. ComparePocchia v.
NYNEX Corp., 

, 278 (2d Cir. 1996) (adopting
bright-line rule where employee fails to request information
about changes in benefits, finding no duty to disclose changes
until new plan goes into effect), with Mullins v. Pfizer, Inc.,

, 668-69 (2d Cir. 1994) (following Fischer I and
adopting materiality standard for affirmative
misrepresentations). The elements that we have outlined limit
serious consideration to the latter stages of corporate decision-
making, but they remain flexible and fact-specific.
     We believe that our explanation of serious
consideration maintains the balance struck in Fischer I. Our
formulation respects the division of responsibility in corporate
entities and the day-to-day realities of running a business.
Even more importantly, it protects the right of employees to
material information. Characterizing serious consideration in
this fashion ensures that disclosures to employees about
potential changes in benefits will be meaningful. Employees will
learn of potential changes when the company's deliberations have
reached a level where an employee should reasonably factor the
potential change into an employment decision. This guarantees
that employees will have the information they need, while
avoiding a surfeit of meaningless disclosures. Finally, as a
matter of policy, we note that imposing liability too quickly for
failure to disclose a potential early retirement plan could harm
employees by deterring employers from resorting to such plans.
See 

("If fiduciaries were required to
disclose such a business strategy, it would necessarily fail.
Employees simply would not leave if they were informed that
improved benefits were planned if workforce reductions were
insufficient."); cf. 

("Changing
circumstances, such as the need to reduce labor costs, might
require an employer to sweeten its severance package, and an
employer should not be forever deterred from giving its employees
a better deal merely because it did not clearly indicate to a
previous employee that a better deal might one day be
proposed."). Our formulation avoids forcing companies into
layoffs, the primary alternative to retirement inducements. This
further protects the interests of workers.
                               III.
     Having explained our understanding of serious
consideration, we now apply it to the case at bar. Although we
would ordinarily remand to allow the district court to apply our
standard in the first instance, we see no need in the current
case. Judge Weiner's thoughtful opinion has set out clearly the
necessary factual findings, and we can simply apply the law to
reach the requisite conclusion. Based on our three factor test,
we find that serious consideration began on April 7, 1990. We
will therefore reverse the district court to the extent that it
found serious consideration as of March 12, 1990.
         The district court correctly dismissed events prior to
March 12, 1990, as failing to rise to the level of serious
consideration. Any potential consideration of an early
retirement program prior to June, 1988, was conclusively ended by
Paquette's decision to forego an early retirement option and
focus on operational excellence. These events had no bearing on
the subsequent decision to implement an early retirement plan in
August, 1990.
         The district court was equally correct to dispose of
Paquette's statements during his speeches to employees on
December 13, 1989. Paquette responded truthfully to employee
questions regarding PECo's potential responses to an adverse
decision in the rates case. Paquette explained that PECo would
first appeal the decision but might also have to consider cutting
costs by reducing its stock dividend or other methods. This is
the type of frank response to employee concerns that should be
encouraged. Paquette's statements will not support an inference
that an early retirement plan was then under serious
consideration.
         The district court then concluded that PECo began
seriously considering a plan sometime between December and April.
Citing Lefkowitz's March 12, 1990, telephone call to TPF&C as the
earliest example of affirmative action to implement the plan, the
district court marked the start of serious consideration on that
date. Under our three factor inquiry, this is incorrect.
         As we have explained, serious consideration requires
(1) a specific proposal (2) discussed for purposes of
implementation (3) by senior management with the authority to
implement the change. In the case at bar, these three factors
did not coincide until April 7, 1990, when senior PECo management
met to discuss the TPF&C report on staff reduction options. The
TPF&C report is an excellent example of a specific proposal.
This document outlined various early retirement alternatives and
served as the basis for management's deliberations. Senior
management was present at the meeting. The subject of the
meeting was corporate strategy, and meeting notes indicate that
Paquette disclosed his intent to announce $100 million in cost
cuts. Both facts suggest that an early retirement plan was
discussed for purposes of implementation at the April 7 meeting.
         Events prior to April 7, by contrast, do not rise to
the level of serious consideration. The March 12 Lefkowitz
telephone call is clearly insufficient. First, the substance of
the March 12 call involved nothing more than a general discussion
of early retirement options. Lefkowitz was reestablishing
contact on a subject where TPF&C had done no work since 1988.
The subject matter of the contact was therefore preliminary.
Second, Lefkowitz was a middle management employee in PECo's
benefits department. His official duties entailed monitoring
PECo's benefits package and exploring potential changes. Nothing
in the record indicates that, when Lefkowitz made his March 12
telephone call to TPF&C, he was doing anything more than acting
within the scope of his normal duties. This type of action by a
middle management employee is preliminary. Third, even if
Lefkowitz were acting on orders from senior management, his call
to TPF&C would still fall under the rubric of gathering
information. Senior management is free to start the process of
exploration and evaluation without immediately triggering a duty
of disclosure. For each of these reasons, the March 12 phone
call took place prior to serious consideration. The district
court was therefore incorrect.
         The March 20 contact between Lefkowitz and TPF&C
confirms this conclusion. It was on March 20 that Lefkowitz
asked TPF&C to develop a set of options for staff reduction,
including various early retirement plans. This is crucial.
Serious consideration can only begin after information is
gathered and options developed. The record indicates that the
March 20 phone call assigned TPF&C the task of developing
options. This contact therefore preceded serious consideration.
         Events between March 20 and April 7 can similarly be
categorized under preliminary stages such as information
gathering and strategy formulation. The record indicates that
Murdoch, a partner at TPF&C, met with Lefkowitz and other PECo
executives during this period. These meetings are consistent
with TPF&C's efforts to develop a report for PECo, the very task
it had been assigned on March 20. The fact that TPF&C submitted
its report on April 2 removes any lingering doubt. It was only
after April 2 that a specific proposal existed.
         Given that TPF&C submitted its report on April 2, the
meetings that occurred on April 2, 5, and 6 between Murdoch,
Paquette, and other PECo management present a closer question. A
proposal had been developed and PECo management was involved in
the meetings. However, details of the proposals were still being
discussed. On April 7, a corporate strategy meeting was held.
Paquette stated at the meeting that he would announce targets and
programs on April 20. Based on this clear example of a meeting
of senior PECo executives to address the early retirement issue
at a time when a specific proposal had been submitted, we
conclude that serious consideration began on April 7, 1990.
         Under the rule established in Fischer I, any employee
who asked about a potential early retirement plan after serious
consideration began on April 7, 1990, but before the plan's
formal announcement on April 19, 1990, received material
misinformation. Such an employee would have established a claim
for breach of fiduciary duty under ERISA. However, all of the
members of the plaintiff class retired before this period. We
will, therefore, enter judgment for PECo on the plaintiff's
breach of fiduciary duty claim.
                                IV.
     The plaintiff class raised two alternative theories of
liability which we will discuss briefly. Neither has merit.
     First, the plaintiff class proceeded on an alternative
theory of common law estoppel. To establish a claim for
equitable estoppel under ERISA, a plaintiff must prove: (1) a
material representation, (2) reasonable and detrimental reliance
upon the representation, and (3) extraordinary circumstances.
Curcio v. John Hancock Mut. Life Ins. Co., 

, 235 (3d
Cir. 1994). We need look no further than the first element.
Because no change in the plan was under serious consideration at
the time the members of the plaintiff class requested
information, no material representations were made. The estoppel
claim fails.
     Second, the plaintiffs argue that PECo engaged in
conduct violative of ERISA § 510, 29 U.S.C. § 1140. Section 510
provides:
          It shall be unlawful for any person to discharge,
     fine, suspend, expel, discipline, or discriminate
     against a participant or beneficiary for exercising any
     right to which he is entitled . . . or for the purpose
     of interfering with the attainment of any right to
     which such participants may become entitled . . .. It
     shall be unlawful for any person to discharge, fine,
     suspend, expel, or discriminate against any person
     because he has given information or has testified or is
     about to testify in any inquiry or proceeding relating
     to this chapter . . ..
29 U.S.C. § 1140. To recover under this provision, an employee
must show "(1) prohibited employer conduct (2) taken for the
purpose of interfering (3) with the attainment of any right to
which the employee may become entitled." Gavalik v. Continental
Can Co., 

, 852 (3d Cir.), cert. denied, 

(1987); see also Berger v. Edgewater Steel Co., 

, 922
(3d Cir. 1990), cert. denied, 

(1991). None of these
elements are present in the current case.
     Nothing in the record suggests that PECo engaged in
prohibited employer conduct. PECo attempted none of the actions
listed in § 510 as giving rise to a discrimination claim. None
of the employees were "discharge[d], fine[d], suspend[ed],
expel[led], [or] discipline[d]." They were simply allowed to
retire when they wished. Nor were the class members
"discriminate[d] against." PECo treated the class members no
differently from any other workers. It announced the early
retirement program to all employees at the same time after the
April 7 meeting of senior management. As a result, the plaintiff
class has failed to make out a claim under § 510.
     In addition, under the law of this circuit, suits for
discrimination under § 510 are "limited to actions affecting the
employer-employee relationship," not mere changes in the level of
benefits. Haberern v. Kaupp Vascular Surgeons Ltd. Defined
Benefit Pension Plan, 

, 1503 (3d Cir. 1994), cert.
denied, ___ U.S. ___, 

(1995). PECo's early
retirement offer only changed the benefit level of its pension
plan; the plan did not alter PECo's relationship with its
retirees.
     Finally, nothing in the record indicates that PECo had
the requisite intent for a discriminatory violation. To recover
under § 510, a plaintiff must show that the defendant had a
specific intent to violate ERISA. "Proof of incidental loss of
benefits as a result of a termination will not constitute a
violation of § 

(citations omitted).
     For each of these reasons, the plaintiff class has
failed to make out a claim for discrimination under ERISA § 510.
As noted, the plaintiff class has also failed to make out a claim
for common law estoppel. We will reverse the holding of the
district court on both counts.
                                V.
     Under the rule in Fischer I, PECo's liability turns on
the point at which serious consideration began. Applying our
understanding of serious consideration, we find that serious
consideration began on April 7, 1990. Because all the members of
the plaintiff class retired before this date, none were provided
with material misinformation. The class's alternative theories
of recovery likewise fail. We will reverse the holding of the
district court and enter judgment for the defendant.