Full opinion text
MEMORANDUM AND ORDER HARMON, District Judge. TITTLE ROADMAP I. Overview of Causes of Action and Pending Motions.531 Annnpimlp Law ii. A FRTSA 1. Fiduciary Liability. a. Expansive Definition. b. Fiduciary Duties... c. “Two-Hat” Doctrine. d. Power to Appoint/Remove Plan Fiduciaries. e. Duty to Disclose. f. Personal Liability of Corporate Employees. g. Professional Liability. h. Section 404(e) Plans. i. Causation. 2. Co-fiduciary Liability. 3. Directed Trustee Liability. 4. Standing and Remedies. 5. Service on and Liability of the Administrative Committees of the Plans as Unincorporated Associations. 05 RICO Amendment. 05 Common Law Claims . 05 1. Preemption and the Federal Statutes at Issue. 05 a. ERISA (Generally). 05 b. SLUSA (Generally) . © 2. ERISA Preemption and Plaintiffs’ Common-Law Conspiracy Claim 05 3. ERISA Preemption and Plaintiffs’ Common-Law Negligent Misrepresentation Claim 05 III. Application of the Law to the Complaint s Allegations... A. Procedural Objections. B. RICO Amendment. C. ERISA Breach of Fiduciary and Co-Fiduciary Duty 1. Count I and Count V. 2. Count II. 3. Count III. 4. Count IV . D. Texas Common Law Causes of Action. 1. Count IX: Civil Conspiracy. 2. Count VIII: Negligent Misrepresentation. RE TITTLE DEFENDANTS’ MOTIONS TO DISMISS The above referenced action is brought on behalf of Enron Corporation (“Enron”) employees who were participants in three employee pension benefit plans governed by the Employment Retirement Income Security Act of 1974 (“ERISA”), § 3(2), 29 U.S.C. § 1002(2), specifically the Enron Corporation Savings Plan (“Savings Plan”), the Enron Corporation Employee Stock Ownership Plan (“ESOP”), and the Enron Corporation Cash Balance Plan (“Cash Balance Plan”), and also on behalf of Enron employees who received “phantom stock” as compensation. The first consolidated amended class action complaint (instrument # 145) alleges that Defendants are liable for the following violations during a proposed Class Period from January 20, 1998 through December 2, 2001:(1) breach of fiduciary and co-fiduciary duties under ERISA, 29 U.S.C. §§ 1104 and 1105; (2) the commission of or conspiracy to commit unlawful acts or omissions in the conduct of certain enterprises’ affairs through a pattern of racketeering activity in a scheme to mislead and defraud Enron employees, shareholders, potential investors, and the securities market in violation of the Racketeer Influenced and Corrupt Organizations Act (civil “RICO”), 18 U.S.C. §§ 1961-1968; and (3) negligence and civil conspiracy under Texas common law. I. OVERVIEW OF CAUSES OF ACTION AND PENDING MOTIONS Defendants fall into five groups: (1) Enron and individual officers and directors of the company; (2) committees, trustees, and individuals that administered the three pension plans; (3) Enron’s accountant Arthur Andersen LLP and some of its individual partners and employees (Thomas H. Bauer, Joseph F. Berardino, Debra A. Cash, Donald Dreyfus, James A. Friedlieb, D. Stephen Goddard, Jr., Gary B. Goolsby, Michael D. Jones, Michael M. Lowther, John Stewart, William Swanson, Nancy A. Temple, and Roger D. Willard); (4) Enron’s outside law firm Vinson & Elkins L.L.P. and some of its individual partners (Ronald Astin, Joseph Dilg, Michael Finch, and Max Hendrick, III); and (5) five investment banks (J.P. Morgan Chase & Co., Merrill Lynch & Co., Inc., Credit Suisse First Boston, Citigroup, Inc., and Salomon Smith Barney, Inc). The complaint asserts its causes of action in nine counts: five under ERISA, two under RICO, one under Texas common-law negligence, and the last under Texas common-law civil conspiracy. Count I originally asserted a claim on behalf of the Savings Plan and the ESOP against Defendants Enron, the Enron ERISA Defendants, Kenneth L. Lay, Jeffrey K. Skilling [to be dismissed], Richard A. Causey [to be dimsissed], and Arthur Andersen, at a time when Enron, the Enron ERISA Defendants, Lay, and Skilling knew or should have known that Enron stock was an imprudent investment choice, for breaches of their fiduciary and co-fiduciary duties of prudence, care and loyalty under 29 U.S.C. §§ 1104(a)(1)(A)-(D) and 1105, for (1) allowing Savings Plan participants the ability to direct the Plan’s fiduciaries to purchase Enron stock for their individual accounts from monies the participants contributed as deductions from their salaries; (2) inducing the participants to direct the fiduciaries to purchase Enron stock for their individual accounts in exchange for funds they contributed to the Plan; (3) causing and allowing the Savings Plan to purchase or accept Enron’s matching contributions in the form of Enron stock; (4) imposing and maintaining age restrictions and other restrictions on the participants’ ability to direct the Savings Plan fiduciaries to transfer both Savings Plan and ESOP assets out of Enron stock; and (5) inducing the Savings Plan and ESOP participants to direct or allow the fiduciaries of both Plans to maintain investments in Enron stock. Arthur Andersen is charged with breaching its fiduciary duty under § 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3), by participating in the Enron Defendants’ breach of fiduciary duties by actively concealing from the Plan fiduciaries and Plan participants the actual financial condition of Enron and the imprudence of investing in Enron stock. Count II is brought on behalf of the Savings Plan and the ESOP against Defendants Enron, the Enron ERISA Defendants, Lay, Skilling [since dismissed], Cau-sey [since dismissed], and the Northern Trust Company (“Northern Trust”), for breach of their fiduciary duties under 29 U.S.C. §§ 1104(a)(l)(A)-(D) and 1105, based on the lockdown (freeze, blackout) of the two Plans, without adequate notice to participants, effectually from October 17, 2001 until November 14, 2001, while the Plans were switched to a new record keeper and trustee, during which time the price of Enron stock fell from $33.84 to $10.00 per share. fiduciary duty in violation of 29 U.S.C. § 1104(a)(1)(D) against Enron, the Enron ERISA Defendants (excluding the ESOP Administrative Committee and the Cash Balance Administrative Committee), Lay, Skilling, Causey [since dismissed], and the Northern Trust Company for their failure to diversify the Savings Plan assets, i.e., to liquidate the Enron stock, in accordance with the terms of the plan, because Defendants knew or should have known that investment in Enron stock was imprudent. In Count III, Plaintiffs, on behalf of the Savings Plan, assert a breach of In Count IV Plaintiffs on behalf of Certain Retirement Plan Participants and Beneficiaries assert against Enron, the Enron ERISA Defendants, and the Enron Corp. Cash Balance Plan as Successor to the Enron Corp. Retirement Plan [since dismissed], another claim of breach of fiduciary duty, this time with respect to offsets (reductions) of accrued pension benefits that were based on the artificially inflated price of Enron stock from 1998-2000. The Enron Corp. Cash Balance Plan and its predecessor, the Enron Corp. Retirement Plan, constituted a “defined benefit plan” under 29 U.S.C. § 1002(35) and was fully funded by Enron. In essence Plaintiffs allege that until January 1, 1996, the retirement benefits provided to a plan participant of five years or more service were determined by adding different percentages of final average pay multiplied by levels of years of accrued service, and then offset by the annuity value of a portion of that participant’s account in the ESOP (“Offset Account”) as of certain determination dates, usually the date the benefit payments began or, if earlier, the date(s) of distribution(s) from the Offset Account. Effective January 1, 1996, the Retirement Plan was amended, renamed the Enron Corp. Cash Balance Plan, and the benefit formula was changed from an average pay formula to a cash balance formula, while the offset arrangement between the Plan and the ESOP was to be phased out over the coming five-year period. Under the new plan, a plan participant’s accrued benefit under the Cash Balance Plan was based on his employment from 1987-1994 and was offset over the five-year phase-out period by the value of his ESOP stock based on a formula set out in §§ 5.1-5.5 of the Plan. Each January 1st from 1996-2000, the value of one-fifth of the shares of Enron stock credited to each participant’s Offset Account was to be calculated based on the stock’s market price on that date as reported at closing time on the New York Stock Exchange and was thereafter permanently fixed at that amount. Plaintiffs allege that Defendants knew or should have known that the market price of Enron stock from 1998 to 2000 was artificially inflated and not representative of its true value, and that Defendants breached their fiduciary duty by not computing the component of the offset at its true, much lower value. As a result, participants and beneficiaries who accrued benefits under the Retirement Plan between January 1, 1987 and December 31, 1994 have suffered losses because their retirement benefits would be offset by the inflated market price of one-fifth of the shares of Enron stock in their ESOP Offset Account in 1998, 1999, and 2000. Count V, brought on behalf of the Savings Plan, the ESOP, and the Cash Balance Plan against Enron and the Compensation Committee Defendants, alleges another breach of fiduciary and co-fiduciary duties under 29 U.S.C. § 1104(a)(1)(A)-(D) and § 1105 relating to their failure to appoint and monitor other plan fiduciaries and their failure to disclose to the investing fiduciaries material information about Enron’s true financial condition. Specifically Plaintiffs claim that Defendants breached their fiduciary duties (1) by appointing fiduciaries to manage Plan assets that Defendants knew, or should have known, were not qualified to manage Plan assets loyally and prudently; (2) by failing to monitor adequately the investing fiduciaries investment of these assets; (3) by failing to monitor adequately the Plans’ other fiduciaries’ implementation of the terms of the Plans, including but not limited to investment of the assets; (4) by failing to disclose to the investing fiduciaries material facts concerning Enron’s financial condition that they knew or should have known were material to loyal, prudent investment decisions concerning the use of Enron stock in the Plans and/or with respect to the implementation of the terms of the Plans; (5) by failing to remove fiduciaries who Defendants knew or should have known were not qualified to manage the Plans’ assets loyally and prudently; (6) by knowingly participating in the investing fiduciaries’ breaches by accepting the benefits of those breaches, both personally and on behalf of Enron; (7) by knowingly undertaking to hide acts and omissions of the fiduciaries that Defendants knew constituted fiduciary breaches; and (8) by failing to remedy those fiduciaries’ known breaches. Count VI asserts RICO violations under section 1962(c), conducting the affairs of a RICO enterprise through a pattern of racketeering activities involving Enron stock, and 1962(d), conspiring to do so, thereby causing injury to Plaintiffs’ and proposed Class Members’ property. Count VI is brought on behalf of all proposed classes against the “Enron Insider Defendants” (i.e., Kenneth L. Lay, Jeffrey K. Skilling, Andrew S. Fastow, Michael Kopper, Richard A. Causey, James V. Derrick, Jr., the Estate of J. Clifford Baxter, Mark A. Frevert, Stanley C. Horton, Kenneth Rice, Richard B. Buy, Lou L. Pai, Robert A. Belfer, Norman P. Blake, Ronnie C. Chan, John H. Duncan, Wendy L. Gramm, Robert K. Jae-dicke, Charles A. LeMaistre, Joe H. Foy, Joseph M. Hirko, Ken L. Harrison, Mark E. Koenig, Steven J. Kean, Rebecca P. Mark-Jusbasehe, Michael S. McConnell, Jeffrey McMahon, J. Mark Metts, Joseph W. Sutton); the “Accounting Defendants” (Arthur Andersen, David B. Duncan, Thomas H. Bauer, Debra A. Cash, Roger D. Willard, D. Stephen Goddard, Jr., Michael M. Lowther, Gary B. Goolsby, Michael C. Odom, Michael D. Jones, William Swanson, John E. Stewart, Nancy A. Temple, Donald Dreyfuss, James A. Friedlieb, Joseph F. Berardino, and Andersen Does 2 through 1800); the “Attorney Defendants” (Vinson & Elkins, LLP, Ronald T. Astin, Joseph Dilg, Michael P. Finch, and Max Hendrick, III); and the “Investment Banking Defendants” (Merrill Lynch & Co., Inc., J.P. Morgan Chase & Co., Credit Suisse First Boston Corporation, and Citigroup, Inc. and its subsidiaries Citigroup Securities and Salo-mon Smith Barney). Count VI identifies the following as RICO enterprises, either legal entities or association-in-fact enterprises: Enron Corporation; an association-in-fact enterprise comprised of the Enron Insider Defendants, the Enron ERISA Defendants, the Accounting Defendants and/or Andersen, the Attorney Defendants, the Investment Banking Defendants, and other investment banks not named as defendants in the complaint (Canadian Imperial Bank of Commerce, Deutsche Bank, Bank America, Lehman Brothers, Barclays Bank, UBS Warburg, First Union Wachovia, Bear Stearns, and Morgan Stanley Dean Witter); the Savings Plan/ESOP/Cash Balance Plan Enterprise (consisting of three separate RICO enterprises, i.e., legal entities); the Enron-Andersen Enterprise (association-in-fact enterprise); the Andersen Enterprise; the LJM1 Enterprise; the LJM2 Enterprise; the Enron-Merrill Lynch Enterprise(s) (association-in-fact enterprise); the Enron-J.P. Morgan Chase-Mahonia Enterprise (association-in-fact enterprise); the Enron-CSFB Enterprise (association-in-fact enterprise); and the Enron-Citigroup Enterprise (association-in-fact enterprise). According to Count VI, the pattern of racketeering which Defendants allegedly committed, aided and abetted, or conspired to commit was made up of predicate offenses e.g., violations of various federal statutes, including 18 U.S.C. § 664 (embezzlement and conversion of assets of an ERISA employee pension benefit plan), 18 U.S.C. §§ 1341 and 1343 (federal mail and wire fraud), 18 U.S.C. § 1512(b)(2) (obstruction of justice), and 18 U.S.C. § 2814 (interstate transportation offenses) Count VII asserts a claim against Enron Insider Defendants, Arthur Andersen, and the Investment Banking Defendants for investing income that was derived from racketeering activities involving Enron stock in RICO enterprises, under §§ 1962(a) and 1962(d). Among the various alleged enterprises is an Association-in-Faet Enterprise comprised of the Enron Insider Defendants, the Enron ERISA Defendants, the Accounting Defendants and/or Andersen, the Attorney Defendants, the Investment Banking Defendants, and other investment banks (Canadian Imperial Bank of Commerce, Deutsche Bank, Bank America, Lehman Brothers, Barclays Bank, UBS Warburg, First Union Wachovia, Bear Stearns, and Morgan Stanley Dean Witter). Also named are the Enron Enterprise, the Savings Plan/ESOP/Cash Balance Plan Enterprise, the LJM1-LJM2 Enterprise, the Accountant Defendants Enterprise, the Enron-JP Morgan Chase-Mahonia Enterprise, the Enron CSFB Enterprise, the Enron-Citigroup Enterprise, and the TNPC-New Power Enterprise. Count VIII asserts a Texas common-law claim for negligent misrepresentation on behalf of the participants and beneficiaries of the Savings Plan and the ESOP against the Andersen Defendants based on Andersen’s data, audits, and certified financial statements for Enron. Finally, Count IX alleges on behalf of all proposed classes a civil conspiracy claim against Andersen, the Enron Insider Defendants, the Attorney Defendants, and the Investment Banking Defendants. Specifically Count IX states that these Defendants conspired to conceal Enron’s true financial condition and deceive Enron employees into accepting overvalued stock and phantom stock as compensation for their work, into keeping their retirement assets in artificially inflated Enron stock, and into continuing to work at Enron based on a false belief that it was a strong company. In light of the length of the complaint, which is available to all counsel, and the fact that the Tittle action arises from many of the same facts summarized in detail in instrument # 1194 in Newby, the Court will not here reiterate the facts alleged, but will reference relevant allegations relating to its decisions regarding the following pending motions: (1) Defendant Michael J. Kopper’s motion to dismiss for failure to state claims upon which relief can be granted (instrument # 207); (2) Arthur Andersen LLP and Andersen Individual Defendants’ motion to dismiss the complaint (# 208); (3) Defendant Rebecca Mark-Jus-basche’s Rule 12(b)(6) motion to dismiss all claims asserted against her (# 209); (4) Defendant Michael C. Odom’s motion to dismiss pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6) and the PSLRA (# 210); (5) Defendant Ken L. Harrison’s Rule 12(b)(6) motion to dismiss -with prejudice all claims against him (# 216); (6) Defendant Lou Pai’s motion to dismiss first consolidated and amended complaint (# 222); (7) Defendants Citigroup, Inc. and Salo-mon Smith Barney, Inc.’s motion to dismiss Plaintiffs’ first consolidated and amended complaint (# 227); (8) Defendant J.P. Morgan Chase & Co.’s motion to dismiss Plaintiffs’ first consolidated and amended complaint (# 229) and corrected motion to dismiss (# 851); (9) Defendants Enron Corp. Savings Plan Administrative Committee, the Administrative Committee of the Enron Corp. Cash Balance Plan [since dismissed], and the Administrative Committee of the Enron Employee Stock Ownership Plan (# 231); (10) Vinson & Elkins Defendants’ motion to dismiss (# 232); (11) Defendant James V. Derrick, Jr.’s motion to dismiss Plaintiffs’ first consolidated and amended complaint (#233); (12) Defendant Cindy K. Olson’s motion to dismiss (# 234); (13) Defendant Richard A. Causey’s motion to dismiss (# 235); (14) Defendant Credit Suisse First Boston Corporation’s motion to dismiss Plaintiffs’ first consolidated and amended complaint (# 236); (15) Defendant Merrill Lynch & Co.’s motion to dismiss Plaintiffs’ first consolidated and amended complaint (#238); (16) The Outside Director Defendants’ motion to dismiss Plaintiffs’ first consolidated and amended complaint (#240); (17) Defendant the Northern Trust Company’s motion to dismiss Counts II and III of Plaintiffs’ first consolidated and amended complaint as to the Northern Trust Company (# 241); (18) Defendant Andrew S. Fastow’s motion to dismiss (# 244); (19) Defendant Joseph W. Sutton’s motion to dismiss (# 251); (20) Defendant Jeffrey K. Skilling’s motion to dismiss first consolidated and amended complaint (# 262); (21) Defendant Kenneth L. Lay’s motion to dismiss (# 264); (22) Motion to dismiss Certain Officer Defendants (collectively, “Officer Defendants,” i.e., The Estate of J. Clifford Baxter, Mark A. Frevert, Stanley C. Horton, Kenneth D. Rice, Richard B. Buy, Joseph M. Hirko, Mark E. Koenig, Steven J. Kean, Michael S. McConnell, Jeffrey McMahon, and J. Mark Metts, who are named as Defendants only in the two RICO and the common law conspiracy claimsX# 265); (23) Motion to dismiss on behalf of Certain Administrative Committee Members (Philip J. Bazelides, James G. Barnhart, Keith Crane, William Gulyas-sy, Rod Hayslett, Mary K. Joyce, Sheila Knudsen, Tod A. Lindholm, James S. Prentice, Paula Rieker, and David Shields )(# 269); and (24) Enron Corp.’s motion to dismiss the first consolidated and amended complaint (# 370). When a district court reviews a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), it must construe the complaint in favor the plaintiff and take all well-pleaded facts as true. Kane Enterprises v. MacGREGOR (USA), Inc., 322 F.3d 371, 374 (5th Cir.2003), citing Campbell v. Wells Fargo Bank, 781 F.2d 440, 442 (5th Cir.1986). It may not dismiss the complaint “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Id., quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Nevertheless, a plaintiff must plead specific facts, not merely eonclusory allegations to avoid dismissal. Id., citing Collins v, Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir.2000)(“We will thus not accept as true eonclusory allegations or unwarranted deductions of fact.”). In addition to the complaint, the court may review documents attached to the complaint and documents attached to the motions to dismiss to which the complaint refers and which are central to the plaintiffs claim(s). Collins, 224 F.3d at 498-99. II. APPLICABLE LAW The Court hereby incorporates the conclusions of law set forth in its memoranda and orders dealing with the motions to dismiss in Newby. After reviewing the briefs and researching the issues raised in Tittle, the Court concludes that the following law applies. A. ERISA 1. Fiduciary Liability The issue of fiduciary status is a mixed question of law and fact. Reich v. Lancaster, 55 F.3d 1034, 1044 (5th Cir.1995). a. Expansive Definition of Fiduciary Under ERISA, a person or entity may be deemed a fiduciary either by assumption of the fiduciary obligations (the functional or de facto method) or by express designation by the ERISA plan documents. The phrase, “fiduciary with respect to a plan” is defined de facto in functional terms of control and authority in § 3(21)(A), 29 U.S.C. § 1002(21)(A): [A] person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan or has any discretionary authority or discretionary responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan. “The phrase ‘to the extent’ indicates that a person is a fiduciary only with respect to those aspects of the plan over which he exercises authority and control.” Nora- mers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan (“Sommers II”), 883 F.2d 345, 352 (5th Cir.1989). See also Beddall v. State Street Bank and Trust Co., 137 F.3d 12, 18 (1st Cir.1998)(“[F]iduciary status is not an all or nothing proposition .... ”). “Fiduciary-status under ERISA is to be construed liberally, consistent with ERISA’s policies and objectives,” and is defined “‘in functional terms of control and authority over the plan, ... thus expanding the universe of persons subject to fiduciary duties-and to damages-under § 409(a).’ ” Arizona State Carpenters Pension Trust Fund v. Citibank (Arizona), 125 F.3d 715, 720 (9th Cir.1997), citing John Hancock Mut. Life Ins. v. Harris Trust & Sav. Bank, 510 U.S. 86, 96, 114 S.Ct. 517, 126 L.Ed.2d 524 (1993), and quoting Mertens v. Hewitt Assoc., 508 U.S. 248, 262, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993). “[Fiduciary obligations can apply to managing, advising, and administering an ERISA plan.” Pegram v. Herdrich, 530 U.S. 211, 223, 120 S.Ct. 2143, 147 L.Ed.2d 164 (2000). Nevertheless, ‘“a person is a fiduciary only with respect to those aspects of the plan over which he exercises authority or control.’ ” Bannistor v. Ullman, 287 F.3d 394, 401 (5th Cir.2002), quoting Sommers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan Enters., Inc. (“Sommers I"), 793 F.2d 1456, 1459-60 (5th Cir.1986), cert. denied, 479 U.S. 1034, 107 S.Ct. 884, 93 L.Ed.2d 837 (1987). “[Fiduciary status is to be determined by looking at the actual authority or power demonstrated, as well as the formal title and duties of the parties at issue [emphasis in original].” Landry v. Air Line Pilots Ass’n Inter. AFL-CIO, 901 F.2d 404, 418 (5th Cir.1990), cert. denied, 498 U.S. 895, 111 S.Ct. 244, 112 L.Ed.2d 203 (1990). In recent years several Circuit Courts of Appeals have focused on and contrasted the language used in the two clauses of subsection (i) of § 1002(21)(A), defining a fiduciary as a person who (“exercises any discretionary authority or discretionary control respecting management of such a plan or who exercises any authority or control over the management or disposition of its assets”) and highlighted the fact that the word, “discretionary,” is used only with regard to the first clause [emphasis added]. From a close reading of the literal language and structure of the provision, they conclude that where the person exercises any authority or control over the management or disposition of the assets of the plan, discretion is not required of a fiduciary. See Board of Trustees of Bricklayers and Allied Craftsmen Local 6 of New Jersey Welfare Fund v. Wettlin Associates, Inc., 237 F.3d 270, 273 (3d Cir.2001), quoting IT Corp. v. General Am. Life Ins. Co., 107 F.3d 1415, 1421 (9th Cir.l997)(“any control over disposition of plan money makes the person who has control a fiduciary”), cert. denied, 522 U.S. 1068, 118 S.Ct. 738, 139 L.Ed.2d 675 (1998); FirsTier Bank, N.A. v. Zeller, 16 F.3d 907, 911 (8th Cir.)(“Note that this section imposes fiduciary duties only if one exercises discretionary authority or control over plan management, but imposes those duties whenever one deals with plan assets. This distinction is not accidental— it reflects the high standard of care trust law imposes upon those who handle money or other assets on behalf of another.”), cert. denied sub nom. Vercoe v. Firstier Bank, N.A., 513 U.S. 871, 115 S.Ct. 194, 130 L.Ed.2d 126 (1994); Board of Trustees of Western Lake Superior Piping Industry Pension Fund v. American Benefit Adm’rs, Inc., 925 F.Supp. 1424, 1429 (D.Minn.1996). Such a distinction between authority and control over plan management versus over plan assets in requiring discretion only with regard to the former before fiduciary obligations are triggered appears to have roots in the fiduciary’s traditional duties. “At common law, fiduciary duties characteristically attach to decisions about managing assets and distributing property to beneficiaries” and “the common law trustee’s most defining concern historically has been the payment of money in the interest of the beneficiary.” Pegram, 530 U.S. at 231, 120 S.Ct. 2143. Moreover, “ when Congress took up the subject of fiduciary responsibility under ERISA, it concentrated on fiduciaries’ financial decisions, focusing on pension plans, the difficulty many retirees faced in getting the payments they expected, and the financial mismanagement that had too often deprived employees of their benefits.” Id. at 232, 120 S.Ct. 2143, citing as examples, S.Rep. No. 93-127, p. 5 (1973); S.Rep. No. 93-383, pp. 17, 95 (1973). In contrast to the functional definition of fiduciary in § 1002(21)(A), § 402(a)(2) of ERISA, 29 U.S.C. § 1102(a)(2), defines a formally “named fiduciary” as “a fiduciary who is named in the plan instrument, or who, pursuant to a procedure specified in the plan, is identified as a fiduciary (A) by a person who is an employer or employee organization with respect to the plan or (B) by such an employer and such an employee organization acting jointly.” Section 409(a) of ERISA, 29 U.S.C. § 1109(a), provides, “Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter shall be personally ha-ble.” It makes no distinction between the functional definition of a trustee and the formal designation of a fiduciary named by the plan documents or by following the procedure in those documents for designating a fiduciary and thus applies to both, b. Fiduciary Duties The common law of trusts “offers a ‘starting point for analysis of [ERISA] ... [unless] it is inconsistent with the language of the statute, its structure, or its purposes.’ ” Harris Trust, 530 U.S. at 249, 120 S.Ct. 2180, quoting Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 447, 119 S.Ct. 755, 142 L.Ed.2d 881 (1999). “[R]ather than explicitly enumerating all of the powers and duties of trustees and other fiduciaries, Congress invoked the common law of trusts to define the general scope of their authority and responsibility.’ ” Varity Corp. v. Howe, 516 U.S. 489, 496, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996), quoting Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 570, 105 S.Ct. 2833, 86 L.Ed.2d 447 (1985). Thus a federal common law based on the traditional common law of trusts has developed and is applied to define the powers and duties of ERISA plan fiduciaries, at least in part, with modifications appropriate in light of the unique nature of the statutory employee benefit plans. See, e.g., Pegram, 530 U.S. at 224, 120 S.Ct. 2143; Varity Corp., 516 U.S. at 497, 116 S.Ct. 1065 (“We also recognize ... that trust law does not tell the entire story.”); Bussian v. RJR Nabisco, Inc., 223 F.3d 286, 294 (5th Cir.2000)(“Although ERISA’s duties gain definition from the law of trusts, the usefulness of trust law to decide cases brought under ERISA is constrained by the statute’s provisions.”); Donovan v. Cunningham, 716 F.2d 1455, 1464 n. 15 (5th Cir.1983)(“ERISA’s modifications of existing trust law include imposition of duties upon a broader class of fiduciaries, 29 U.S.C. § 1003(21)(1976), prohibition of exculpatory clauses, id. § 1110(a), broad disclosure and reporting requirements, id. §§ 1021-31, and nationwide uniformity of rules,” and § 406’s “detailed list” of per se illegal types of transactions), cert. denied, 467 U.S. 1251, 104 S.Ct. 3533, 82 L.Ed.2d 839 (1984). For example, the traditional four overlapping fiduciary duties (of loyalty, care, diversification of plan assets, and adherence to plan documents, where prudent), cited in footnote 9 of this memorandum and order and discussed in detail infra, are derived from the common law of trusts and are imposed upon ERISA fiduciaries. At the same time, in contrast to the common law of trusts, under ERISA the plan fiduciary may have multiple roles and wear many hats; he may serve as an employer and as a plan fiduciary. The scope of the incorporation of the common law of trusts is not clearly defined, however, and different courts have frequently come to different conclusions about the extent of its application. The most fundamental duty of ERISA plan fiduciaries is a duty of complete loyalty, under 29 U.S.C. § 1104(a)(1)(B), to insure that they discharge their duty “solely in the interests of the participants and beneficiaries,” and to “exclude all selfish interest and all consideration of the interests of third persons.” Id. Fiduciaries must discharge their duties with respect to the plan “solely in the interest of the participants and the beneficiaries,” i.e., “for the exclusive purpose of (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan.” 29 U.S.C. § 1104(a)(1)(A). Thus among the responsibilities and duties imposed on fiduciaries by ERISA is avoidance of conflicts of interest. Merbens v. Hewitt Assoc., 508 U.S. 248, 251-52, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993). Second, the fiduciary must meet a “prudent man” standard under 29 U.S.C. § 1104(a)(1)(B), to act “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” and “with single-minded devotion” to these plan participants and beneficiaries. According to the Department of Labor, 29 C.F.R. § 2550.404a-l(b), these requirements are satisfied if the fiduciary (i) Has given appropriate consideration to those facts and circumstances that, given the scope of such fiduciary’s investment duties, the fiduciary knows or should know are relevant to the particular investment or investment course of action involved, including the role the investment or investment course of action plays in that portion of the plan’s investment portfolio with respect to which the fiduciary has investment duties; and (ii) Has acted accordingly. “Appropriate consideration” for purposes of this regulation includes but is not limited to (i) A determination by the fiduciary that the particular investment or investment course of action is reasonably designed, as part of the portfolio (or, where applicable, that portion of the plan portfolio with respect to which the fiduciary has investment duties), to further the purposes of the plan, taking into consideration the risk of loss and the opportunity for gain (or other return) associated with the investment or investment course of action, and (ii) Consideration of the following factors as they relate to such portion of the portfolio: (A) The composition of the portfolio with regard to diversification; (B) The liquidity and current return of the portfolio relative to the anticipated cash flow requirements of the plan; and (C) The projected return of the portfolio relative to the funding objectives of the plan. Id. at § 2550.404a-l(b)(2); Laborers National Pension Fund v. Northern Trust Quantitative Advisors, Inc. 173 F.3d 313, 317-18 (5th Cir.)(noting that these regulations from the Department of Labor, 29 C.F.R. § 2550.404a-1, generally reflect that a fiduciary with investment duties must act as a prudent investment manager under the modern portfolio theory rather than under the common law of trusts standard which examined each investment with an eye toward its individual riskiness), cert. denied, 528 U.S. 967, 120 S.Ct. 406, 145 L.Ed.2d 316 (1999). In 29 C.F.R. § 2509.94-1 Interpretive Bulletin, the Department of Labor observes, “... [B]e-cause every investments necessarily causes a plan to forego other investment opportunities, an investment will not be prudent if it would be expected to provide a plan with a lower rate of return than available alternative investments with commensurate degrees of risk or is riskier than alternative available investments with commensurate rates of return.” Regarding this overlapping duty of “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,” the Fifth Circuit has stated, In determining compliance with ERISA’s prudent man standard, courts objectively assess whether the fiduciary, at the time of the transaction, utilized proper methods to investigate, evaluate and structure the investment; acted in a manner as would others familiar with such matters; and exercised independent judgment when making investment decisions. “ ‘[ERISA’s] test of prudence ... is one of conduct, and not a test of the result of performance of the investment. The focus of the inquiry is how the fiduciary acted in his selection of the investment, and not whether his investments succeeded or failed.’ ” Thus, the appropriate inquiry is “whether the individual trustees, at the time they engaged in the challenged transactions, employed the appropriate methods to investigate the merits of the investment and to structure the investment [citations omitted].” Laborers National Pension Fund v. Northern Trust Quantitative Advisors, Inc. 173 F.3d at 317. Since the prudence standard focuses on whether the fiduciary utilized appropriate methods to investigate and evaluate the merits of a particular investment, the “appropriate methods” in a particular case depend “on the ‘character’ and ‘aim’ of the particular plan and decision at issue and the ‘circumstances prevailing’ at the time a particular course of action must be investigated and undertaken.’ ” Bussian, 223 F.3d at 299. Furthermore, the standard of the prudent man is an objective standard, and good faith is not a defense to a claim of imprudence. Reich, 55 F.3d at 1046; Donovan v. Cunningham, 716 F.2d at 1467 (“this is not a search for subjective good faith — a pure heart and an empty head are not enough”). Third, the ERISA fiduciary must diversify the plan’s investments to minimize risk of loss unless, under the circumstances, it is clearly prudent not to diversify. 29 U.S.C. § 1104(a)(1)(C). The legislative history offers some guidance about diversifying the assets of an ERISA plan: The degree of investment concentration that would violate this requirement to diversify cannot be stated as a fixed percentage, because a fiduciary must consider the facts and circumstances of each case. The factors to be considered include (1) the purposes of the plan; (2) the amount of the plan assets; (3) financial and industrial conditions; (4) the type of investment, whether mortgages, bonds or shares of stock or otherwise; (5) distribution as to geographical location; (6) distribution as to industries; (7) dates of maturity. Metzler v. Graham, 112 F.3d 207, 208-09 (5th Cir.1997), citing H.R.Rep. No. 1280, 93d Cong., 2d Sess. (1974), reprinted in 1974 U.S.C.C.A.N. 5038, 5084-85 (Conf. Rpt. at 304). The panel further noted, “We think it is entirely appropriate for a fiduciary to consider the time horizon over which the plan will be required to pay out benefits in evaluating the risk of large loss from an investment strategy.” Metzler, 112 F.3d at 210 n. 6. Moreover, the panel admonished courts, “It is clearly imprudent to evaluate diversification solely in hindsight — plan fiduciaries can make honest mistakes that do not detract from a conclusion that their decisions were prudent at the time.” Id. at 209. To prevail on a claim that a fiduciary violated its duty to diversify, a plaintiff must show that the portfolio, on its face, is not diversified. The burden then shifts to the defendant to demonstrate that it was “clearly prudent” not to diversify, the express statutory exception to the duty to diversify. Metzler, 112 F.3d at 209. Factors such as the trustees’ “investigation of the purchase, the evaluation of other investment alternatives, and the relative expertise of the trustee ... are relevant to whether there was risk of large loss.” Id. at 212. Both the plaintiffs evi-dentiary burden and the defendant’s evi-dentiary burden “must be analyzed from the perspective of what both parties acknowledge as their purpose; to reduce the risk of large loss.” Id. at 210. “Prudence is evaluated at the time of the investment without the benefit of hindsight.” Metzler, 112 F.3d at 209. Fourth, the plan fiduciary must follow the documents and instruments governing the plan to the extent that they are consistent with ERISA. 29 U.S.C. § 1104(a)(1)(D). “In ease of a conflict, the provisions of the ERISA policies as set forth in the statute and regulations prevail over those of the Fund guidelines.” Laborers Nat. Pension Fund v. Northern Trust Quantitative Advisors, Inc., 173 F.3d at 322. In accord, Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 568, 105 S.Ct. 2833, 86 L.Ed.2d 447 (1985)(“[T]rust documents cannot excuse trustees from their duties under ERISA and ... trust documents must generally be construed in light of ERISA’s policies .... ”); Donovan v. Cunningham, 716 F.2d at 1467 (“Though freed by Section 408 from the prohibited transaction rules, ESOP fiduciaries remain subject to the general requirements of Section 404.”); Herman v. NationsBank Trust Co., (Georgia), 126 F.3d 1354, 1368 (11th Cir.l997)(fiduciary was “obligated to determine whether the plan provisions ... were contrary to ERISA” and to fulfill his duties to act prudently and solely in the interests of the plan participants), cert. denied, 525 U.S. 816, 119 S.Ct. 54, 142 L.Ed.2d 42 (1998). See also Moench v. Robertson, 62 F.3d 553, 567 (3d Cir.1995)(where the plan language “constrains the [fiduciaries’] ability to act in the best interest of the beneficiaries,” it is inconsistent with ERISA and with the common law of trusts and must not be followed), cert. denied, 516 U.S. 1115, 116 S.Ct. 917, 133 L.Ed.2d 847 (1996); Eaves v. Penn, 587 F.2d 453, 459 (10th Cir.1978)(“While an ESOP fiduciary may be released from certain Per Se violations on investments in employer securities ..., the structure of [ERISA] itself requires that in making an investment decision of whether or not a plan’s assets should be invested in employers [sic ] securities, an ESOP fiduciary, just as fiduciaries of other plans, is governed by the ‘solely in the interest’ and ‘prudence’ tests of §§ 404(a)(1)(A) and (B).”). Given that a fiduciary’s duties are “the highest known to the law,” “[a] trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior.” Donovan v. Bierwirth, 680 F.2d 263, 272 n. 8 (2d Cir.), cert. denied, 459 U.S. 1069, 103 S.Ct. 488, 74 L.Ed.2d 631 (1982); cited and quoted by Bussian v. RJR Nabisco, Inc., 223 F.3d 286, 294 (5th Cir.2000). In determining whether a trustee has breached his duties, the court examines both the merits of the challenged transaction(s) and the thoroughness of the fiduciary’s investigation into the merits of the transaction(s). Donovan v. Cunningham, 716 F.2d at 1467. Unlike the law of conspiracy, “[n]o fiduciary shall be hable with respect to a breach of fiduciary duty under this sub-chapter if such breach was committed before he became a fiduciary or after he ceased to be a fiduciary.” 29 U.S.C. § 1109(b); see also Bannistor v. Ullman, 287 F.3d 894, 405 (5th Cir.2002). c. “Two-Hat” Doctrine Unlike the trustee at common law, who must wear only his fiduciary hat when he acts in a manner to affect the beneficiary of the trust, an ERISA trustee may wear many hats, although only one at a time, and may have financial interests that are adverse to the interests of the beneficiaries but in the best interest of the company. Pegram, 530 U.S. at 225, 120 S.Ct. 2143; Bussian, 223 F.3d at 294-95; Martinez v. Schlumberger, Ltd., 338 F.3d 407, 412-13 (5th Cir.2003). For example a fiduciary may wear the hat of an employer and fire a beneficiary for reasons not related to the ERISA plan, or the hat of a plan sponsor and modify the terms of a plan to be less generous to the beneficiary. Pegram, 530 U.S. at 225, 120 S.Ct. 2143. When making fiduciary decisions, however, a fiduciary may wear only his fiduciary hat. Id. Thus instead of defining a fiduciary merely as an administrator of or manager of or advisor to a plan, the statute states that he is a fiduciary only “to the extent that he acts in such a capacity in relation to a plan.” Pegram, 530 U.S. at 225-26, 120 S.Ct. 2143, citing 29 U.S.C. § 1002(21)(A); Schlumberger, 338 F.3d at 412-13. Accordingly, when a plaintiff alleges a cause of action for breach of fiduciary duty, the threshold question is whether the defendant was acting as a fiduciary, i.e., performing a fiduciary function, when he performed the action that constitutes the basis of the complaint. Pegram, 530 U.S. at 226, 120 S.Ct. 2143; Schlumberger, 338 F.3d at 413. For example, under the “two hats” doctrine, adopted by the Supreme Court in Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78, 115 S.Ct. 1223, 131 L.Ed.2d 94 (1995)(holding that an employer does not act as a fiduciary, but as a settlor in adopting, amending or ter-initiating a welfare plan), a plan sponsor may function in a dual capacity as a business employer (settlor or plan sponsor) whose activity is not regulated by ERISA and as a fiduciary of its own established ERISA plan, subject to ERISA. “The ... act of amending ... does not constitute the action of a fiduciary”; “ERISA’s fiduciary duty requirement simply is not implicated where [the employer], acting as the Plan’s settlor, makes a decision regarding the form or structure of the Plan such as who is entitled to receive Plan benefits and in what amounts, or how such benefits are calculated.” Hughes Aircraft, 525 U.S. at 444, 119 S.Ct. 755. The law does not require employers to establish employee benefit plans. Congress sought to encourage employers to set up plans voluntarily by offering tax incentives, methods to limit fiduciary liability, means to contain administrative costs, and giving employers flexibility and control over matters such as whether or when to establish an employee benefit plan, how to design a plan, how to amend a plan, when to terminate a plan, all of which are generally viewed as business decisions of a settlor, not of a fiduciary, and thus not subject to fiduciary obligations. Pegram, 530 U.S. at 226-27, 120 S.Ct. 2143; Martinez v. Schlumberger, Ltd., 338 F.3d at 429 (“a company does not act in a fiduciary capacity by simply amending a plan” or by adopting, modifying or terminating a plan); Akers v. Palmer, 71 F.3d 226, 230 (6th Cir.1995)(“a company is only subject to fiduciary restrictions when managing a plan according to its terms, but not when it decides what those terms are to be”), cert. denied, 518 U.S. 1004, 116 S.Ct. 2523, 135 L.Ed.2d 1048 (1996); Bennett v. Conrail Matched Savings Plan Administrative Committee, 168 F.3d 671, 679 (3d Cir.)(“in amending a plan, the employer is acting as a settlor”; thus “the mere fact that [the employer] amended its plan did not breach any fiduciary duties under ERISA”), cert. denied, 528 U.S. 871, 120 S.Ct. 173, 145 L.Ed.2d 146 (1999); Southern Illinois Carpenters Welfare Fund v. Carpenters Welfare Fund of Illinois, 326 F.3d 919, 924 (7th Cir.2003)(“[S]inee an employer has no duty to create a pension or welfare plan in the first place, neither does he have a duty to amend it to make it more generous, or a duty not to amend it if the amendment would make it less generous”). With respect to amendment of a plan that has the effect of reducing or eliminating pension benefits, the general rule is that the employer who amends the plan according to the procedures laid out in the plan documents does not breach its fiduciary duty as long as the benefits that are reduced or eliminated had not accrued or were not vested at the time and the amendment does not otherwise violate ERISA or the plan terms. Hines v. Massachusetts Mutual Life Ins. Co., 43 F.3d 207, 210 (5th Cir.1995), citing Izzarelli v. Rexene Prods. Co., 24 F.3d 1506, 1524 (5th Cir.1994); Heinz v. Central Laborers’ Pension Fund, 303 F.3d 802, 804 (7th Cir.2002)(“The accrued benefit of a participant under a plan may not be decreased by an amendment of the plan, other than an amendment described in section 1082(c)(8) [“substantial business hardship”] or 1441 [terminated multiemployer plans] of this title.”), petition for cert. filed, No. 02-891, 71 U.S.L.W. 3429 (Dec. 10, 2002). Section 204(g), as amended 29 U.S.C. § 1054(g), ERISA’s anti-cutback provision, provides in relevant part, Decrease of accrued benefits through amendment of the plan (1) The accrued benefit of a participant under a plan may not be decreased by an amendment of the plan other than an amendment described in section 1082(c)(8) or 1441 of this title. (2) For purposes of paragraph (1), a plan amendment which has the effect of— (A) eliminating or reducing an early retirement benefit or a retirement-type subsidy (as defined in regulations), or (B) eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment shall be treated as reducing accrued benefits. Section 1054(g) statutorily protects against the reduction or elimination of accrued benefits, but not against reduction or elimination of benefits that are expected but not accrued. Campbell v. BankBoston, N.A., 327 F.3d 1, 8-9 (1st Cir.2003); Board of Trustees of Sheet Metal Workers’ Natl. Pension Fund v. C.I.R., 318 F.3d 599, 599 (4th Cir.2003). “Accrued benefits” in the defined benefit context are defined as “the individual’s accrued benefit determined under the plan,” which is “equal to the employee’s accumulated contributions.” Campbell, 327 F.3d at 8, citing 29 U.S.C. § 1002(23)(A) and § 1054(c)(2)(B). Section 1002(23) of ERISA provides, The term “accrued benefit means ... in the case of a defined benefit plan, the individual’s ae-crued benefit determined under the plan and, except as provided in section 1054(c)(3) of this title, expressed in the form of an annual benefit commencing at normal retirement age.” Section 411(d)(6) of the Internal Revenue Code, 26 U.S.C. § 411(d)(6), is a parallel provision prohibiting the same conduct, and Treasury Regulation § 1.411(d)-4, A-4(a), promulgated thereunder to “effectuate these ‘anti-cutback’ principles,” provides in relevant part, [A pension] plan that permits the employer, either directly or indirectly, through the exercise of discretion, to deny a participant a section 411(d)(6) protected benefit provided under the plan for which the participant is otherwise eligible (but for the employer’s exercise of discretion) violates the requirements of section 411(d)(6). Perreca v. Gluck, 295 F.3d 215, 228 (2d Cir.2002), citing Treasury Regulation § 1.411(d)-4, A-4. Under Treasury Regulation § 1411(d)-4, A-5, “The term employer includes plan administrator ... [and] trustee ....” Id. at 228 n. 10. d. Power to Appoint/Remove Plan Fiduciaries A person or entity that has the power to appoint, retain and/or remove a plan fiduciary from his position has discretionary authority or control over the management or administration of a plan and is a fiduciary to the extent that he or it exercises that power. Coyne & Delany Co. v. Selman, 98 F.3d 1457, 1465 (4th Cir.1996)(“the power ... to appoint, retain and remove plan fiduciaries constitutes ‘discretionary authority’ over the management or administration of a plan within the meaning of § 1002(21)(A)”); Hickman v. Tosco Corp., 840 F.2d 564, 566 (8th Cir.1988)(“Tosco is a fiduciary within the meaning of ERISA ... because it appoints and removes the members of the administrative committee that administers the pension plan.”); American Federation of Unions Local 102 Health & Welfare Fund v. Equitable Life Assurance Soc. of the U.S., 841 F.2d 658, 665 (5th Cir.1988)(“Lia-bility for failure to adequately train and supervise an ERISA fiduciary arises where the person exercising supervisory authority is in a position to appoint or remove plan administrators and monitor their activities.”); Henry v. Frontier Industries, Inc., 863 F.2d 886, 1988 WL 132577, *2 (9th Cir.1988)(“Largent was a fiduciary of the ESOP by virtue of his power to appoint and retain, and his duty to monitor the member(s) of the Administrative Committee .... ”); Mehling v. New York Life Ins. Co., 163 F.Supp.2d 502, 509-10 (E.D.Pa.2001); Liss v. Smith, 991 F.Supp. 278, 310, 311 (S.D.N.Y.1998)(“It is by now well-established that the power to appoint plan trustees confers fiduciary status”; “[t]he duty to monitor carries with it, of course, the duty to take action upon discovery that the appointed fiduciaries are not performing properly”). In Leigh v. Engle, 727 F.2d 113, 133-35 (7th Cir.1984), the Seventh Circuit noted that 29 C.F.R. § 2509.75-5 at FR-3 provides that “a plan instrument which designates the corporation as ‘named fiduciary’ should provide for designation by the corporation of specified individuals or other persons to carry out specified fiduciary responsibilities under the plan.” Furthermore, in Leigh, the Seventh Circuit concluded that two corporate officials exercising a duty to appoint fiduciaries had a duty to monitor their appointees’ actions: As the fiduciaries responsible for selecting and retaining their close business associates as plan administrators, Engle and Libco had a duty to monitor appropriately the administrators’ actions. Engle and Libco could not abdicate their duties under ERISA merely through the device of giving their lieutenants primary responsibility for the day to day management of the trust. Engle and Libco were obliged to operate with appropriate prudence and reasonableness in overseeing their appointees’ management of the trust. 727 F.2d at 134-35. See also ERISA Interpretative Bulletin 75-8, 29 § 2509.75-8(D-4) (members of a board of directors “responsible for the selection and retention of plan fiduciaries” have “ ‘discretionary authority or discretionary control respecting the management of such plan’ and are, therefore, fiduciaries with respect to the plan.”); (FR-17 Q & A)(“At reasonable intervals the performance of trustees and other fiduciaries should be reviewed by the appointing fiduciary in such manner as may be reasonably expected to ensure that their performance has been in compliance with the terms of the plan and statutory standards, and satisfies the needs of the plan.”). Some courts have placed restrictions on such liability. For instance, in Brock v. Self, 632 F.Supp. 1509, 1523 (W.D.La.1986), the district court wrote, [I]f the Plan instrument itself provided for a procedure whereby a named fiduciary may designate persons who are not named fiduciaries to carry out fiduciary responsibilities, the named fiduciaries might not be liable for the acts or omissions of the Third-Party Defendants. 29 C.F.R. § 2509.75-8, FR-14 (1985). Because the Plan in the case at bar does not provide for any such procedure, however, then any designation of Third-Party Defendants as fiduciaries by Third-Party Plaintiffs will not relieve Third-Party Plaintiffs from responsibility or liability for the acts and omissions of Third-Party Defendants. See also Newton v. Van Otterloo, 756 F.Supp. 1121, 1132 (N.D.Ind.1991)(directors have duties to monitor plan fiduciaries whom they appoint but do not breach duties in the absence of “notice of possible misadventure by their appointees”). e. Duty to Disclose Plaintiffs have alleged that Enron fiduciary Defendants, including the Administrative Committee members, Lay, and the Compensation Committee members (Blake, Duncan, Jaedicke and LeMaistre), have breached their duty of loyalty to the plan participants by affirmatively and materially misleading them about Enron’s financial condition and performance and its accounting manipulations, while inducing them to hold and purchase additional Enron stock. Plaintiffs have also argued that Defendants charged in Count II (lock-down) and Count IV (Offset formula used by Cash Balance Plan) had a fiduciary duty to disclose Enron’s financial condition to plan participants and beneficiaries. The fiduciary’s duty to disclose is an area of developing and controversial law. Under the common law of trusts, which Congress indicated should apply as a threshold step to define duties of plan fiduciaries under ERISA, generally the trustee’s duty to disclose information was triggered by a specific request from a plan participant or beneficiary. According to Restatement (Second) of Trusts § 173 (1959), The trustee is under a duty to the beneficiary to give him upon his request at reasonable times complete and accurate information as to the nature and amount of the trust property, and to permit him or a person duly authorized by him to inspect the subject matter of the trust and the accounts and vouchers and other documents related to the trust. in addition, as embodied in comment d to § 173, are the seeds of the trustee’s duty to disclose: The 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 with respect to his interest. ... Although the duty to disclose has its roots in the common law of trusts, courts recently have been expanding a fiduciary’s affirmative duty to disclose material information to plan participants under ERISA. It is well established that a plan administrator acts in a fiduciary capacity when it explains plan benefits, even likely future benefits, to its employees. See, e.g., Varity Corp., 516 U.S. at 502-03, 504-05, 116 S.Ct. 1065; McCall v. Burlington Northern/Santa Fe Co., 237 F.3d 506, 510-11 (5th Cir.2000)(“Providing information about likely future plan benefits falls within ERISA’s statutory definition of a fiduciary Act.”), cert. denied, 534 U.S. 822, 122 S.Ct. 57, 151 L.Ed.2d 26 (2001). The Supreme Court has held that § 404(a) of ERISA, 29 U.S.C. § 1104(a)(1)(“a fiduciary shall discharge his fiduciary duty with respect to a plan solely in the interest of the participants and beneficiaries”), imposes a duty on a plan fiduciary not to affirmatively miscommunicate or mislead plan participants about material matters regarding their ERISA plan. See, e.g., Varity Corp. v. Howe, 516 U.S. 489, 493, 505, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996)(holding that an employer which was also an ERISA Plan administrator breached its fiduciary duty of loyalty to the plan beneficiaries when it deceptively induced them to “switch employers and thereby voluntarily release [the company] from its obligation to provide them benefits”). In Varity Corp., the Supreme Court proclaimed, “To participate knowingly and significantly in deceiving plan beneficiaries in order to save the employer money at the beneficiaries’ expense is not to act solely in the interest of the participants and beneficiaries .... [LJying is inconsistent with the duty of loyalty owed by all fiduciaries and codified in section 404(a)(1) of ERISA”. Id. at 506, 116 S.Ct. 1065. See also Martinez v. Schlumberger, Ltd., 338 F.3d at 425 (“When an ERISA plan administrator speaks in its fiduciary capacity concerning a material aspect of the plan, it must speak truthfully”); McCall v. Burlington Northern/Santa Fe, 237 F.3d at 510-11; Mullins v. Pfizer, Inc., 23 F.3d 663, 668 (2d Cir.1994)(holding that “when a plan administrator speaks, it must speak truthfully”). In Varity Corp. 516 U.S. at 506, 116 S.Ct. 1065, the Supreme Court chose not to “reach the question whether ERISA fiduciaries have any fiduciary duty to disclose truthful information on their own initiative, or in response to employee inquiries.” Nevertheless, in that case the Supreme Court found that a plan sponsor, which distributed materials and called a meeting where it persuaded approximately 1,500 employees to transfer, voluntarily, to positions at a new subsidiary by intentionally misrepresenting that the subsidiary was financially stable and the employees’ benefits would be secure, was acting in a fiduciary capacity and violated its fiduciary duties. “While it may be true that amending or terminating a plan is beyond the power of a plan administrator — and, therefore, cannot be an act of plan ‘management’ or ‘administration’ — it does not follow that making statements about the likely future of the plan is also beyond the scope of plan administration.... [P]lan administrators often have, and commonly exercise, discretionary authority to communicate with beneficiaries about the future of plan benefits.” Varity Corp., 516 U.S. at 505, 116 S.Ct. 1065. Courts have generally agreed that where an ERISA fiduciary makes statements about future benefits that misrepresent present facts, these misrepresentations are material if they would induce a reasonable person to rely on them. Ballone v. Eastman Kodak Co., 109 F.3d 117, 122-23 (2d Cir.1997); Mullins v. Pfizer, 23 F.3d at 669; Kurz v. Philadelphia Electric Co., 994 F.2d 136, 140 (3d Cir.1993), cert. denied sub nom Philadelphia Electric Co. v. Fischer, 510 U.S. 1020, 114 S.Ct. 622, 126 L.Ed.2d 586 (1993); James v. Pirelli Armstrong Tire Corp., 305 F.3d 439, 439 (6th Cir.2002)(“[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.”), cert. denied, _ U.S. _, 123 S.Ct. 2077, 155 L.Ed.2d 1062 (2003). Concern for uninformed and vulnerable plap participants has increasingly led some courts, including the Third Circuit, to conclude that circumstances known to the plan fiduciary can give rise to an expanded affirm