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disclose materially adverse information regarding the company's performance. The Third Circuit affirmed the district court's dismissal under Rule 12(b)(6). Said the court of appeals, the employee participants were warned that their investments were tied to the market performance of the company and further encouraged to seek independent financial advice. Under Third Circuit law, the company did not have a duty to provide investment advice or to opine on its stock trading performance. And even if the company had disclosed its earnings to plan participants prior to the public release, noted the court, the market would have adjusted accordingly and the company and its principals would have been subjected to federal securities law violations for insider trading. While the court acknowledged that liability under other federal laws did not excuse ERISA duties, the court held that the company's pension plan warnings satisfied the company's disclosure obligations under ERISA.
* Pension Benefit Guaranty Corp. v. Falcon Prods. (In re Falcon Prods.), 497 F.3d 838 (8th Cir. Aug. 2007) (Shepherd, J.)
Cash infusion for debtor's reorganization was conditioned upon the termination of all pension plans. Without truly adopting the "aggregate approach" over the "plan-by-plan approach," the Eight Circuit affirmed the bankruptcy court's ruling that the chapter 11 debtor satisfied the ERISA test for terminating pension plan. The debtor in this case had three pension plans. As part of its proposed chapter 11 plan of reorganization, an independent investor offered a cash infusion which was conditioned upon the debtor terminating all three pension plans. The PBGC objected, arguing that some of the cash infusion could be used to fund at least one of the pension plans. Rather than taking this plan-by-plan approach, however, the bankruptcy court agreed that the debtor could not effectively reorganize without the cash infusion, and the debtor could not obtain the cash infusion without first terminating its pension plans. The Eight Circuit found no error in the holding.
* Int'l Union, United Auto., Aerospace, & Agric. Implement Workers of Am. v. Gen. Motors Corp., 497 F.3d 615 (6th Cir. Aug. 2007) (Sutton, J.)
Can a collective bargaining agreement freeze the applicable "choice of case law" in time?
The Sixth Circuit declined to reach the issue because -- despite several other objections to the agreement -- the objecting class members were not concerned about the provision. The Sixth Circuit affirmed Ford and GM's modifications to their healthcare coverage for retired hourly employees. What concerned the court most, however, was the one provision that no party considered to be a problem. The agreements included a term purporting to freeze in time the applicable "case law," ostensibly making applicable to the parties only the case law that existed as of the effective date of the agreements. The court noted that no parties could cite any precedent for including such a provision, and that this was not an "everyday" provision to put in these types of agreements. But because the agreements did not allow the companies to terminate coverage until 2011 at the earliest, and because no party objected to the inclusion of the provision, the court left the resolution for another day (though, not before noting that the provision raises a "serious constitutional question"). Was this the court's way of raising the question such that this dicta would be part of the "current case law" existing at the time of the effective date? Perhaps. Nevertheless, the court decided "to await resolution of this novel
