and New Blair Plans were treated the same.
In their first Memorandum of Law, plaintiffs contend that the electing participants are entitled to the "surplus." This contention is without merit.
Section 1109 of Title 29 requires a plan fiduciary to restore to the plan any personal profits the fiduciary has made through use of plan assets in violation of his obligations under ERISA. Plaintiffs, however, have not shown that the delay in transferring the assets from the Equity Fund to the Short Term Investment Fund violated any provision of ERISA. In the cases cited by plaintiffs, employees suffered economic losses due to the failure of a plan administrator to act promptly on their instructions concerning the sale or transfer of assets. See, e.g., Clarke v. Bank of New York, 687 F. Supp. 863, 868 (S.D.N.Y. 1988) (failure to comply with plan's own guidelines concerning liquidation of participant's accounts resulted in lower yield); Rex v. Lincoln Trust, 5 Employee Benefits Cas. (BNA) 1138 (D. Colo. 1983) (failure to effectuate transaction for plaintiff's account caused plaintiff to lose money). Here, by contrast, since the account balances of the electing participants reflected the investment experience of the funds chosen from the effective date of elections, the electing participants are in the same position they would have been in had defendants transferred the assets on the day on which their elections became effective. These cases, therefore, do not support plaintiffs' position that the electing participants are entitled to recover as a result of the delay in the actual transfer of assets.
The Restatement (Third) of Trusts § 210(1)(b) is similarly inapposite. Section 210(1)(b) states that trust beneficiaries may affirm any investments improperly made by the trustee, thereby taking the gains from these investments. But this section deals with the situation in which the trustee made investments that were expressly prohibited. Plaintiffs have pointed to no provision of the Old Blair Plan (which governed the elections by New Blair participants, see § 17.7 of the Agreement) which defendants violated.
Plaintiffs also argue, without any supporting authority, that defendants violated § 1104(a) (obligation to administer plan solely in the interest of participants) and § 1106(a) (obligation not to transfer plan assets to a party in interest) and § 1106(b) (obligation not to deal with plan assets in own interest). ERISA, however, does not prohibit a plan fiduciary from being a participant in the plan so long as any benefit he or she receives is consistent with the terms of the plan as applied to all other participants. 29 U.S.C. § 1108(c). And plaintiffs do not even contend that the delay in transferring the assets was part of a plan on defendants' part to make use of the plan's assets for the benefit of someone other than the plan participants.
In their Reply Memorandum of Law, however, plaintiffs argue that the surplus in the Equity Fund should be allocated among the remaining New Blair Plan Equity Fund participants. In support of their position, plaintiffs point to § 5.5 of the Old Blair Plan.
A superficial reading of § 5.5 might support plaintiffs' position. The section calls upon the plan administrators to value the assets in the Equity and Short Term Investment Funds semiannually and credit or charge any change in the asset values from one valuation to the next to the accounts in these funds. Plaintiffs argue that this provision explicitly requires the Telemundo Committee to allocate the surplus to those who remained in the Equity Fund. The more reasonable interpretation of the section, however, is that it is meant to provide a mechanism whereby asset gains and losses occurring by virtue of the investment performance of the funds are allocated among the participants. The goal of the section seems only to credit or charge the accounts with the market performance of the investments that the participants have chosen, not to credit them with surpluses caused by an extraordinary event such as occurred here. Indeed, plaintiffs would get a windfall if they were to receive this surplus. If the Short Term Investment Fund had performed better than the Equity Fund, the accounts of participants in the Equity Fund could not have been reduced by the extra amount that Telemundo would have been required to contribute to the Short Term Investment Fund.
Section 7.2(a) of the old Blair and New Blair Plans gives the Plan administrators the right "to interpret the provisions of the Plan." Faced with this unforeseen circumstance, defendants treated the surplus as an employer contribution, which is how forfeitures are treated under these plans. In view of the fact that if the Short Term investment Fund had outperformed the Equity Fund, Telemundo would have been required to fund the shortfall, this was a reasonable (perhaps the most reasonable) interpretation of the plan and thus should not be disturbed by a reviewing court. See Pratt v. Petroleum Prod. Management, Inc. Employee Sav. Plan & Trust, 920 F.2d 651, 662 (10th Cir. 1990). Cf. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 103 L. Ed. 2d 80, 109 S. Ct. 948 (1989) (holding that a denial of benefits challenged under § 1132(a)(1)(b) is to be reviewed under a de novo standard unless the plan gives the fiduciary the discretion to interpret the plan's terms).
Since this was a reasonable interpretation of the original Plan without reference to the later post hoc amendment, it is not necessary to consider the propriety of the amendment.
For the foregoing reasons, the Clerk is directed to enter judgment in this action for defendants.
Dated: New York, New York
March 31, 1993
MIRIAM GOLDMAN CEDARBAUM
United States District Judge