Full opinion text
RULING ARTERTON, District Judge. I. Procedural and Factual Background tO CO CO A. Facts Relating to Prudence Challenge to T-Bill Investment (Count III) tO CO CO B. Facts Relating to Failure to Provide Information Claim (Count I). tO 1. Information Provided to Plaintiffs . tO 2. Plaintiffs’ Evidence that Martin and GE had decided on benefits prior to March 23,1993 disclosure. BO 5^ CO C. Facts Relating to Partial Termination Claim (Count II) t>0 Ol O TT. Standard . 250 TTT. Discussion. . .251 A. Prudence Attack on T-Bill Investment (Count III) — Martin’s Motion for Summary Judgment. lO 1. Martin’s fiduciary status. IQ 2. “Knowing Participation” Liability. lO B. Prudence Attack on T-Bill Investment (Count III) — GE’s Motion for Summary Judgment.. ^ U3 CM C. Failure to Provide Information (Count I) — Martin’s Motion for Summary Judgment. 00 lO CM D. Failure to Provide Information (Count I) — GE’s Motion for Summazy Judgment. O CO OJ E. Partial Termination Claim Against Martin (Count II) ^ CO CM- 1. Allocation of Surplus Assets on Partial Plan Termination IQ CO 2. Exhaustion Requirement. 00 co IV. Conclusion. .272 In this litigation under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1101 et. seq., plaintiffs challenge certain aspects of Lockheed Martin’s (“Martin”) purchase of General Electric’s Aerospace Division (“GE”). This large corporate transaction allegedly resulted in the displacement of thousands of employees, reductions in benefits for thousands more, and the premature retirement and/or resignation of a number of employees who did not transfer employment to Martin due to their uncertainties about the benefits to be provided. Martin and GE, for their part, argue that they have done everything ERISA requires and more in facilitating the purchase agreement. After two motions to dismiss resulted in a winnowing of the claims presented, this Court conditionally certified two sub-classes of plaintiffs. Both GE and Martin now seek summary judgment as to all plaintiffs’ claims. I. PROCEDURAL AND FACTUAL BACKGROUND As part of the defense industry cutbacks prevalent in the early 90’s, Martin acquired GE’s aerospace division in a complex transaction that closed in early April 1993. Pursuant to the transaction agreement, Martin agreed to hire all GE Aerospace employees, and a certain portion of GE’s pension assets was transferred to Martin to fund the pension obligations Martin assumed for those employees. Shortly before the closing, plaintiffs (then employees of GE) instituted this action, seeking a preliminary injunction to prevent the pension transfer. In April of 1993, however, the transfer proceeded without intervention by the court. In ruling on GE and Martin’s motions to dismiss, the Court eliminated plaintiffs’ claims that they had an unconditional right to remain participants in the GE Plan notwithstanding the discontinuation of their employment, and that both the pension transfer itself and the amount of the transfer violated ERISA, in that plaintiffs were entitled to a pro rata share of the GE Plan’s excess funding upon transfer. Upon Martin’s second motion to dismiss, the Court also dismissed plaintiffs’ claims that a partial plan termination occurred when Martin eliminated certain layoff benefits that had been part of GE’s Plan, and that the discontinuation of these benefits violated ERISA. See Docs. # 144, # 160. The Court then conditionally certified two sub-classes of plaintiffs to pursue the remaining claims. Sub-class One, defined as all former GE employees who retired or resigned from GE between the announcement of the sale and the closing, challenge the nature and timing of the information provided by GE and Martin regarding the benefits that Martin would offer the transferring employees post-closing (Count I). Sub-class Two, consisting of former GE employees who transferred their employment to Martin, challenges the procedure by which GE and Martin arranged the transfer of an initial $1 billion in pension plan assets from one plan to another (Count III). Sub-class Two also brings a claim against Martin alone, alleging that the sequence of consolidation and downsizing moves subsequent to the GE sale constituted a partial plan termination under ERISA (Count II). A. Facts Relating to Prudence Challenge to T-Bill Investment (Count III) The sale of GE’s aerospace division to Martin was governed by a complex document known as the “Transaction Agreement” which required Martin to offer employment to all GE Aerospace employees and to create a successor pension plan for the transferring employees. Pl.Dep.Ex. 187 at LMC2510-13. The GE pension plan (“GE Plan”) was a defined benefit plan, and the transaction agreement provided that GE employees who accepted Martin’s offer of employment would cease to participate in or accrue further benefits under that plan; instead, they would become participants in a new plan established by Martin, and upon retirement would receive pension benefits paid solely by the Martin plan, but based on cumulative years of service with both GE and Martin. Pl.D.Ex. 187 at LMC2513-14. The transaction agreement required that as of the closing date, the GE Plan would transfer both the accrued pension benefit liabilities of all accepting employees and a defined amount of GE Plan assets to the new Martin plan. Sufficient assets to satisfy the requirements of ERISA and applicable IRS regulations were to be transferred, along with a portion of the GE Plan’s surplus assets, as the GE Plan was over-funded at the time of the merger. The amount of pension assets to be transferred was determined according to a complex formula set out in the transaction agreement. As GE and Martin would not know the number of employees who accepted Martin’s offer until after the closing date, the parties could not calculate the exact amount of pension liabilities and assets that needed to be transferred until that point. Therefore, the transaction agreement provided that the asset transfer was to take place in two stages. An initial amount of $1 billion would be transferred immediately upon the closing, plus an amount adjusted in an agreed-upon manner to reflect the passage of time and interest earned on that amount since. December 31, 1992, the date used to calculate assets and liabilities for ERISA reporting requirements. Bunt Dep. at 51-51, GE Ex. 5. Had a later date been chosen for the valuation, GE would have incurred significant expense and time re-calculating the asset amount, yet had the parties based their calculations on “rough estimates” premised on November 1992 figures, it would have “cause[d] tough sledding with the Govt.” GE Ex. 85. Following the closing, the precise amount to be transferred would be calculated, based on the number of employees accepting Martin’s offer, from which would be subtracted the initial transfer amount of $1 billion, and the “residual transfer amount” would then be transferred to the Martin plan. Pl.D.Ex. 187 at LMC 2513-14. Given that the plan at issue was a defined benefit plan, the sponsoring employer bore the risk of gain or loss from the plan’s investments. See Hughes Aircraft v. Jacobson, 525 U.S. 432, 119 S.Ct. 755, 761, 142 L.Ed.2d 881 (1999) (In context of defined benefit plans, “the employer typically bears the entire investment risk and ... must cover any underfunding as the result of a shortfall that may occur from the plan’s investments.”). The parties to the transaction anticipated that the closing would occur at the end of the first quarter 1993, but the transfer amount had to be determined earlier, as noted above. Therefore, GE and Martin had to determine who would bear both investment responsibility and risk for the $1 billion transfer amount between December 31, 1992, the date at which the amount could be calculated, and the closing, occurring on an as^yet-uncertain date in the future. According to the drafts of the Transaction Agreement contained in the record, and the deposition testimony of various executives involved in the negotiations, GE initially proposed that Martin control the investment of the transfer amount for the specified period, and that any investment gains or losses would be reflected in the ultimate transfer amount. Pl.D.Ex. 25; Barreca Dep. at 52, GE Ex. 1. Martin rejected this proposal, indicating that it wanted the full amount of $1 billion available at closing, and not subject to investment risk, in order to establish the new Martin plan. Dammerman Dep. at 16, 46. According to negotiators on both sides of the table, Martin did not want fiduciary status or obligations prior to the closing. Barreca Dep. at 52; Block Dep. at 211-12, 227. In light of these concerns, the parties finally agreed that the initial transfer amount of $1 billion would be segregated from the remainder of GE’s pension assets as of December 31, 1992 and invested in 90-day treasury bills (“T-bills”). While the record does not indicate who suggested the final compromise, Dammerman, GE’s Chief Financial Officer, and one of the negotiators to the agreement, testified that “I can’t recall specifically whether I said it, someone else said it, whether it was the GE side or the Martin Marietta side, but it’s a pretty obvious thing that you got two choices, if that’s the case, put it in cash or you put it in a treasury instrument that is not subject to swings in market value.” Dammerman Dep. at 16. Plaintiffs do not point to any disputed facts regarding these negotiations, or the respective objectives of Martin and GE in those negotiations. The relevant provision of the final transaction agreement reads as follows: As of December 31, 1992, GE shall cause the trustee of each Pension Plan to segregate, in cash or cash-equivalents $1,000,000,000 representing a portion of the total assets (estimated by GE and understood by MMC to be approximately $1,650,000,000) allocable to Transferred Employees as of December 31, 1992 and to invest such assets (I) in ninety (90) day Treasury Bills or (ii) as mutually agreed in writing by GE and MMC, in each case to the extent consistent with GE’s fiduciary obligations under ERISA. In the case of (ii) above, GE shall designate, and MMC shall acknowledge its status as, a ‘named fiduciary’ (within the meaning of Section 402(a)(2) of ERISA) with respect to the GE Pension Plan. PLD.Ex. 187 at LMC2512 (emphasis added). The agreement further provided that the assets segregated pursuant to the above paragraph, “including earnings or losses attributable to the investment of such assets in the manner provided in [the paragraph quoted above],” would be delivered to the new Martin plan at closing. Id. After the closing, GE was to calculate the residual transfer amount, and deliver it to the Martin plan as well. Id. Neither Martin nor GE ever investigated the alternative investment approach allowed in (ii) of the above paragraph. Block Dep. at 212-213. The trustees of GE’s pension plans then reviewed the transaction agreement. All testified at their depositions that they believed they had an independent obligation to review the proposed investment to determine if it was consistent with their fiduciary duties to the plan, or whether an alternative investment could provide the same required returns by the closing date. Myers Dep. at 32; Bolton Dep. at 28-29; Cosgrove Dep. at 53-54; Frey Dep. at 32-33. The trustees acknowledged, however, that while they considered ideas such as a ‘hedging strategy’ or a ‘put call,’ Frey Dep. at 33, they did riot have many in-depth discussions, because as Trustee Frey put it, “if you had a 90-days investment to make, then a 90 day T-bill jumps right out at you.” Id. Moreover, the parties to the agreement did not engage in an extended market analysis to determine whether the market was likely to go up or down over the first ninety days of 1992. Dammer-man Dep. at 48-49 (recalls no discussions with Martin’s CFO regarding future performance of markets); Block Dep. at 243. The GE trustees testified that short-term market behavior is difficult to predict, and that they made investment decisions based on a long-term strategy. Cosgrove Dep. at 90 (“We, as a general rule, are long-term investors and not market timers.”); Bolton Dep. at 54 (“I don’t believe we would have had a short-term view of the market for a period of weeks with any certainty we would know what was going to happen to the market.”). The trustees received monthly information concerning market conditions and trends, and the November 1992 reports indicated volatility and the possibility of a market correction, due to sluggish growth, international economic factors and the unknown effect of the recent election of President Clinton and the new Congress on the stock market. Cosgrove Dep. at 104-05; GE Exs. 205-06. According to the trustees, given the liquidity need to have the funds available for transfer along with a set amount of interest, and given the fact that in the case of a short-term market downturn GE would have been required to make up the difference at the closing, “the most prudent investment vehicle to deliver the funds that were specified in the contract was the 90-day treasury bill.” Myers Dep. at 45. Plaintiffs point out that GE did not convert any of its remaining assets to cash or invest in T-bills at that time, nor had it done so at any point in the plan’s history. Cosgrove Dep. at 89; PLD.Ex. 101 and 102 (quarterly statements of pension trust). Plaintiffs also look to contemporaneous analyses performed by the trustees and the GE Investments Allocation Committee taking the position that current economic indicators generally favored investments in stocks. PLD.Ex. 206. The plaintiffs’ experts state in their reports that the fundamental principles of prudent investment management require that fiduciaries remain focused on the long-term investment horizon by actively managing the investment portfolio, maintaining most assets in equities and stocks and keeping cash holdings to a minimum. Schwan Report at 3-7. Plaintiffs ERISA expert opines that the change in the sponsorship of the pension plan and the change in the identity of specific investment managers for those investments did not require greater liquidity than the GE plan had at the time, nor was there a justification under prudent investment management fundamentals to change from the “active investment strategy” employed by both GE’s plan and the then-existing Martin plan. Gordon Report at 8. While the trustees testified that they did consider alternative strategies, they agreed that they were locked into the contract between GE and Martin, in terms of the amount that the pension plan had to be able to transfer at the closing. Cosgrove Dep. at 41-42 (“As trustees of the GE Pension Trust we had nothing to decide. We were trying to comply with the legal contract somebody else had written.”); Dammerman Dep. at 38 (only discussions on topic of how to invest pension assets was single discussion of whether “there was another way to invest the billion dollars that would do the same thing, protect the principal”). The record is clear that the trustees did not believe they had the authority to override the agreement between Martin and GE that $1 billion in assets be segregated and transferred at closing along with interest at the 90-day T-bill rate; rather, the trustees simply looked to whether there were any alternate means of achieving the result that had been agreed to by the parties, without subjecting the $1 billion to excessive investment risk. See Cosgrove Dep. at 94 (only discussions among trustees relating to Martin transaction was whether “there was a way, other than the use of Treasuries, to execute a strategy to achieve what [the] contracting parties wanted to do”); Bolton Dep. at 28-29 (discussions with other trustees focused on “how the assets should be invested, the billion dollars that we had to provide at a specific date and time and then some discussion about what alternatives might be to protect or to invest the money so there wouldn’t be any downside over this relatively short period of time”). The trustees were aware that if they chose a less secure investment strategy, and GE’s portfolio lost value due to a market downturn, any short fall would be “to GE’s account” — that is, GE would be required to make up the difference in order to transfer the agreed-upon amount. See Frey Dep. at 33. Several of the Trustees also indicated in their deposition testimony that the contract between GE and Martin determined the outcome of then-decision. Cosgrove Dep. at 42 (When asked who made the decision to put the transfer amount into treasury bills, responded “I think the contract told us to put it into Treasuries.”) GE’s expert Ellen Hennessy states in her report that in her experience, “plan sponsors routinely negotiate the form in which assets are to be transferred from one plan to another,” and “a transfer in cash is not uncommon.” GE Ex. B, Tab 1. She concluded that the GE Plan fiduciaries acted prudently in investing the $1 billion in T-bills prior to the closing, as [t]here would have been a significant risk of large losses during the period between December 31, 1992 and the closing date of the GE aerospace business sale if the $1 billion in assets earmarked for the [transitional Martin plan] had remained invested in the same manner as the GE Pension Plan assets were invested as a whole. Since 1926, a portfolio composed of a 50-50% mixture of large company stocks and long-term corporate bonds has had losses in 86 calendar quarters out of 288. Id. at 3-4. She opined that the fiduciaries were not required to obtain any legal written opinion as to whether the conversion of plan assets and the T-bill investment were prudent under ERISA, as in her experience “such opinions are rarely, if ever, sought or given in such transactions,” because such decisions are investment decisions, not legal issues. Her firm also conducted a survey of 150 large pension plan sponsors for their views as to appropriate actions relating to transfers of pension trust assets. GE Ex. C. A majority of those responding to the survey indicated that if they were required to transfer a certain percentage of the assets in cash or cash equivalents, plus a specified interest rate, on a transfer date that was 90 days after the valuation date, they would liquidate the assets on the valuation date and incur minimal risk on the funds by choosing a conservative investment vehicle that would provide a fixed rate of return comparable to treasury bills. Id. This survey, however, did not disclose the gross amount that the percentage represented in this case, i.e. $1 billion. Plaintiffs’ investment expert conceded in his deposition that, in a hypothetical situation where an ERISA fiduciary needed to liquidate 5% of a pension plan’s assets to provide lump sum distributions to retirees within a 90-day time frame, deciding to not subject those assets to market risk and placing them in a secure investment for the 90-day period was prudent. Schwan Dep. at 211. None of the trustees had any prior experience with an asset transfer in an amount as large as the $1 billion transfer provided for in the transaction agreement, nor were the trustees aware of any pension asset transfers where the assets had been liquidated and held in T-bills prior to the transfer. Bolton Dep. at 44; Bennett Dep. at 19-20. In subsequent agreements with Loral and Lockheed, see infra, pension investments were not liquidated, but were transferred in kind. Martin’s chief negotiator of the benefits and pension assets transfer portion of the transaction agreement, Assistant General Counsel Marion Block, did not consult with Martin officials such as the Director of Pension Investments, Hendon Dep. at 15-16; Martin’s Treasurer, McGregor Dep. at 14; Martin’s Chief Financial Officer, Bennett Dep. at 32; or Martin’s Controller, Buchanan Dep. at 39. GE trustees and pension officials testified that logistically, the pension investments could have been liquidated in a relatively short period of time. Myers Dep. at 57; Frey Dep. at 66 (does not recall how long it took to liquidate assets to raise $1 billion, “but I would imagine we’re pretty good at doing it very fast.”) As demonstrated by the existence of this litigation, the actively invested portion of GE’s pension assets performed better than the 90-day T-bill rate over the relevant period. According to Plaintiffs’ investment expert, the difference between the GE Plan’s portfolio return for the period the $1 billion was invested in 90-day treasury bills and the actual return earned on the T-bill investment is $34,615,000, and it is this amount that plaintiffs seek in recovery for the new Martin plan. B. Facts relating to claim that GE and Martin failed to provide clear and complete information regarding future benefits (Count I) 1.Information Provided to Plaintiffs. As noted above, the final version of the Transaction Agreement dated November 22, 1992 required Martin to offer employment to the more than 30,000 employees of the affected GE units, and to provide “substantially similar” employee benefit plans for those employees through the end of 1993. Pl.D.Ex. 187 at LMC2510-11. The record demonstrates that Martin was reluctant at first to accept the “substantially similar” language, as it wanted to maintain the flexibility to implement benefits plans that were “commercially practicable,” but it ultimately acceded to GE’s position. Block Dep. at 160. The Transaction Agreement also provided that at the closing, GE and Martin would enter into a benefit administrative agreement whereby GE would “provide investment, management and administrative services with respect to benefit plans and arrangements adopted by the parent.” PLD.Ex. 187 at LMC2512. The Transaction Agreement between GE and Martin was signed on November 22, 1992, and announced publicly on November 23. In a November 23 joint letter to GE employees from the CEO’s of both corporations, GE’s Jack Welch and Martin’s Norman Augustin assured employees that We will provide you with regular and complete reports on the status of the merger. You will receive comprehensive information on your benefits, including the successor employer provisions of GE’s plans and the terms for transition to Martin Marietta’s generally comparable benefits package. You will be promptly informed of organization and staffing decisions that affect your role in Martin Marietta. Pl.D.Ex. 35. Employees reacted strongly to the news of the merger, and in particular raised many inquiries regarding the meaning of “generally comparable” benefits. Welch Dep. at 59-60. To address these inquiries, an “Additional Statement on Benefits Provisions in the GE Aerospace — Martin Marietta Merger Agreement” was released on November 24,1992. This statement informed GE Aerospace employees that: 1. Full GE benefits coverage will continue to the merger date. 2. Coverage under Martin Marietta’s plans will begin on the merger date. The merger will occur in the first half of 1993. At that time, Martin Marietta will provide transition benefit plans that are substantially similar to the current GE plans. Coverage under these plans, which will be essentially the same as GE’s plans, will continue at least to the end of 1993. 3. From the merger date forward, transferred employees of all GE operations involved in the merger transaction will be given full credit for GE service for eligibility, vesting, and benefit accruals under Martin Marietta benefit plans and programs. Pl.D.X. 125. On December 2, 1992, a letter from GE CEO Welch was distributed to all GE employees. The letter explained the rationale for the merger, and outlined “key features” of the merger arrangement with Martin. In relevant part, the letter stated that Martin Marietta will provide pay and benefits that are essentially equal to GE’s programs through the end of 1993. For the longer term, employees can expect wages and benefits under Martin Marietta that are competitive with industry practices, as are those provided byGE. PLD.Ex. 124. Beginning on December 10, 1992, a series of communications entitled “Teaming Update” were distributed to GE employees. GE published these updates, but Martin controlled the content pertaining to post-closing benefits. Welch Dep. at 37-38. The first Teaming Update contained the following statements: It is our intent to keep you as fully informed as possible as events connected to the merger unfold and as information becomes available.... The merger announcement has generated literally thousands of questions from employees on a range of issues, from benefits to employment practices in the new company, from transition plans to specifics about Martin Marietta’s current product lines, to cite just a few examples. We want to respond quickly to these concerns, but more importantly, we want our responses to be correct. The fact is that it will take longer to answer some questions than others. For instance, some of the benefit questions raised are very complex. They need to be thoroughly researched and considered by both GE and Martin Marietta people working these issues. Many involve legal and tax ramifications which must be carefully deliberated. This will require diligent effort on our part, and patience on your part. PLD.Ex. 126. This issue, like the ones that followed, included a question-and-answer portion that addressed specific inquiries regarding the transitional and 1994 benefits that Martin would offer: Martin Marietta will provide benefits that are essentially equal to GE’s programs through the end of 1993. Decisions on what the benefits package will be in 1994 have yet to be made. A transition team of Aerospace and Martin Marietta people will be working together on benefits design in the coming year. Martin Marietta will fully inform employees of 1994 benefit plans well before the effective date. Id. References to “essentially equal” benefits were also made in the Teaming Updates issued on December 18, 1992, Pl. D.Ex. 127, and December 23, 1992, Pl. D.Ex. 128. The January 8, 1993 Teaming Update included a question-and-answer exchange suggesting that some employees at GE felt the information being disclosed was insufficient: Q: It seems like the merger closing date is forcing us to make a decision to retire in a hurry and without all the facts. Why are GE and Martin Marietta rushing to complete the merger? A: .... The intent is not for anyone to make a hasty decision to retire. Our efforts have been directed at providing complete GE retirement benefits information for those eligible to retire so they can make an informed decision. PLD.Ex. 129. GE sent a special package to the homes of several thousand retirement-eligible GE employees on or around December 15, 1992. This package included a cover letter from Larry Phillips, Vice President of Human Resources at GE, a set of Benefit Questions and Answers, a brochure entitled ‘A Guide to Retirement Choices,’ and a videotape entitled ‘The GE Aerospace/Martin Marietta Merger: Your Retirement Options.’ GE Exs. 166-170. The videotape also utilized the “essentially equal” language, and in the context of an illustrative hypothetical, describes the future Martin plan as “identical” to the GE plan. GE Ex. 166 at GE04890, GE04895. The videotape explained that: Retirement is one of the biggest decisions you will make during your lifetime. And it is important to have as much information as possible. There is a lot of information in the material that came with this tape. More information from GE and Martin Marietta will follow. But for now you can be assured that you do not have to change your retirement plans due to the merger. Id. at GE04909. The December Teaming Updates also informed GE employees that the last day they would be able to retire directly from GE would be the day before the merger closing date, at that time projected to occur on February 26, 1993. PI. D.Ex. 128 at GE00819. A Philadelphia Inquirer article dated January 13, 1993 reported that GE employees were still concerned about their pension benefits and the soundness of the Martin pension plan, and had authorized an employee group to obtain legal representation. Pl.D.Ex. 131. In a teleconference hosted by GE’s Gene Murphy, a transcript of which was created and distributed via e-mail, GE’s Larry Phillips acknowledged these concerns in stating: That leads me to the other question which is fundamental uncertainty — uncertainty in the form of the rest of 1993. We published a statement that benefits will be substantially similar and everyone is asking the question, and rightly so, what does that mean. I hope we will have an answer to this in a week to ten days. Clearly the savings plan has to change because it is built around a GE plan with GE securities but the changes I expect to see will not be dramatically different than the GE Plan, but we will have wait (sic) until we see that in final form. PLEx. 4 (Pluta Aff.) at P00737. The record further indicates that over this time period, GE was pressing Martin to disclose further information about post-merger benefits in order to quell the apparent employee discontent. For instance, the Philadelphia Inquirer article mentioned above was faxed to Tom Kinstle at Martin with a hand-written note from GE’s Larry Cook: “Per our earlier discussion, it’s critical that MMC communicate ‘93 benefits’ at the earliest opportunity.” PLD.Ex. 131. Perhaps in response to such concerns, Martin CEO Norm Augustine issued a letter addressed to GE Aerospace employees on January 23, 1993. He assured GE employees that the pension benefits they have earned would be fully protected in the transaction, and indicated that the Martin plan was in a surplus position. Pl.D.Ex. 134. He then went on to state that while Martin could not guarantee that the pension plan would never change, “it is our objective to provide each transferring GE employee, who later retires from Martin Marietta, with regular pension benefits no less than those that would have been received under the terms of the GE pension plan now in effect.” Id. Plaintiff emphasizes an earlier draft of the Augustine letter, which read as follows: Alow me first to address the issue of pensions. The impact of this merger on the pensions of former GE employees can be described succinctly as none. Pl.D.Ex. 58 (emphasis in original). This version, however, was not distributed to employees. Accompanying the Augustine letter that did go to employees was a series of “Talking Points” for managers, which included the following bullet points: •The goal is to have identical or “substantially similar” benefits throughout 1993. •The term “substantially similar” is used since, in some cases, identical benefits cannot be provided, as is the case with the Savings Plan since investment options in GE’s S & SP are available only to active GE employees. There may be some other minor differences because of items such as insurance carrier requirements or systems differences. Id. at GE02914. The talking points also acknowledged a “high level of frustration around the amount of pension and benefit information that we have been able to provide to you,” and cited the complexity of the deal as an explanation for the delay in providing information. Id. Augustine’s statement that Martin’s pension would be “no less than” a GE pension also apparently sparked some concerns among GE employees, and on February 9, 1993 GE’s Phillips circulated another question-and-answer series to managers to address any confusion. PL D.Ex. 68. The following exchange is included: Q: So what does Norm Augustine’s statement about an objective of making a transferee’s Martin Marietta Pension at least equal to my GE Regular Pension mean to me? A: It means that it is Martin Marietta’s objective to provide you upon retirement from Martin Marietta with a Pension benefit which is no less than the Regular Pension that you would have received from GE using the formula in effect or implemented prior to that date. Q: Does that mean that Martin will use the GE formula in calculating my pension at retirement? A: Not necessarily. The Martin Pension Plan formula may be different, but the objective is to have the level of benefits provided be no less than what would have been provided if the 1993 GE Pension formula was used. Id. at LMC3489-90. A Martin Marietta planning document entitled “Merger Benefits Communications” was also prepared on February 12, 1993, aimed at “providing the various Martin and GE work teams with a sense of the benefits communication tasks which need to be completed in the next 60 days or so.” Pl.D.Ex. 70 at LMC2945. The document stated that GE employees “are reported to be unsettled about their benefits and are looking for information to fill in the gaps.” Id. at LMC2946. The document lists a number of Communication Objectives,, including “[r]eassure all [employees] that benefits will stay fundamentally the same” and “close any remaining communication gaps.” Id. at LMC2948. The document also indicates that Martin knew from GE that some employees viewed the term “substantially similar” as ambiguous, and were “looking for a clear definition of exactly what ‘substantially similar’ benefits will mean to them for 1993.” Id. A final table entitled “Open Issues” states that “the following open issues will be addressed and reworked weekly until closure is reached.” Id. at LMC2976. The third item on this list asks “[h]ow can we define ‘substantially similar’ benefits?” No resolution date is entered in the adjoining column, nor is the item marked as “fixed” or “tentative.” Id. The February 19, 1993 Teaming Update informed GE employees that “[t]he current GE formula will be used through June, 1994.” PLD.Ex. 71 at LMC2013. The update also referred to Martin’s “objective” to provide transferring employees with pension benefits which are “no less than” the benefits they would have received had they remained employed at GE. Id. During this approximate time period, Norm Augustine and Jack Welch went on the road, and made a series of presentations about the merger at various GE facilities. The March 2, 1993 Teaming Update included a question-and-answer sequence from some of these presentations, including the following exchange: Qll: Some people are making important decisions about retirement, their savings and other things. Can we have a reasonable amount of time to make these decisions before we become Martin Marietta employees, and if so, how much time? A: There is ample time to make important decisions. We are using Teaming Update, as well as special mailings to employees’ homes to provide details about matters affecting benefits as soon as information about them is available. PLD.Ex. 138 at GE01081. The next Teaming Update on March 10, 1993 gave GE employees a “heads up,” and notified them that information about Martin benefits would be distributed “by week of March 22.” Pl.D.Ex. 139. On March 22, 1993 GE and Martin issued a “Special Edition” Teaming Update to notify employees that the transaction would not close before April 1, 1993, and that if the closing did take place on that date, “GE Aerospace employees who submit their paperwork before the close of business on Friday, April 2, 1993 ... will retire under the GE Pension Plan.” Pl.D.Ex. 141. On March 23, 1993 a Teaming Update went out to GE employees detailing Martin benefits for transferring employees. The update again emphasized that if the closing went forward as anticipated on April 1, employees wishing to retire with a pension benefit from GE had to complete their paperwork by the close of business on Friday, April 2, 1993. Pl.D.Ex. 142. The update went on to explain why the benefit summary was only now being released: As you will see from reading the following benefits information, most benefits remain the same with few exceptions. Many of you may question why it has taken so long to finalize this information and provide it to you since so little has been changed. Some insights into the process for developing the Martin Marietta benefits summary may be helpful to appreciate the amount of time required to deal with the many complex benefits details. There have been hundreds of hours of meetings among ... managers from Martin Marietta, GE Corporate; and GE Aerospace headquarters. These meetings helped to familiarize Martin Marietta senior managers and professionals with the numerous details and provisions of the GE Benefit Plans. Then, Martin Marietta had to negotiate contracts with each of the suppliers/administrators for each benefits program ... After each myriad set of details were decided upon, the communications were developed and reviewed by all the people involved in the decision-making process to ensure accuracy.... We understand how important your benefits are to you. That is why so much care and effort has gone into planning for the smooth transition of so many of the benefits-related services that many of you have come to expect. That doesn’t mean there won’t be some unforeseen glitches but certainly all those who have been involved in the transition process have tried their best to make the transition appear as seamless as possible for transferring employees. Id. The attached benefits summary indicates that for 28 benefit programs, including the pension plan and medical benefits plan, “[t]he benefits under these Martin Marietta plans, for employees of transferred GE operations and in effect for 1993, are the same as the comparable GE plans.” Id. (emphasis in original). According to this summary, Martin’s Security Life Insurance and Service Awards benefit programs would change, and Martin would eliminate three benefit programs previously offered by GE: Personal Excess Liability Insurance, the Product Purchase Plan, and Educational Loan Programs. Id. On March 31,1993, GE and Martin announced that a 56-day “window period” GE had negotiated with the International Union of Electronic Workers would be extended to all non-bargaining employees. This “window period” would allow all transferred employees with five years of pension-qualified service to decide by May 30, 1993, to decide whether to retire from GE or continue working for Martin Marietta. PL D.Ex. 191. The March 31, 1993 Teaming Update outlined the “window period,” and provided that employees who had already submitted completed retirement forms could revoke their retirement election by contacting Human Resources by the close of business on March 31, 1993. Although the time of distribution of this update is not clear, the facsimile header indicates that the notice was transmitted from Human Resources at 3:21 p.m. on March 31, 1993. Plaintiffs McGuire, Gilbert and Sedlacek testified that the information provided in the last two Teaming Updates was too late to be of any use, as for various reasons they had already planned for their retirement and completed the requisite paperwork. McGuire Dep. at 86-88; Gilbert Dep. at 36; Sedlacek Dep. at 67. 2. Plaintiffs’ Evidence that Martin and GE had decided on benefits prior to the March 23, 1993 disclosure Plaintiffs point to a number of instances in the record where either GE or Martin officials made reference to providing “mirror” benefits to transferring employees after the closing. For instance, Martin’s Manager of Compensation and Benefits Planning Larry McAllister took notes during a December 8, 1992 telephone conference with GE’s Larry Cook. Under the heading “Issues from Letter,” McAllister made the following notations: “welfare plans — mirror” and “pension — same as now exist.” Pl.D.Ex. 40. Cook’s notes of the same conversation include “mirror welfare plans and FSA [flexible spending account]” and “mirror pension.” PLD.Ex. 115. Immediately after this meeting Cook prepared a memorandum for his superiors at GE indicating that “Bob McAllister, Manager — -Compensation and Benefits Planning has confirmed Martin’s intent to mirror all of the GE benefit plans and programs.” Pl.D.Ex. 114. GE and Martin held a benefits planning meeting on December 15-16, 1992 at GE’s Fairfield facility; the materials prepared for this meeting by Cook and Rick Dunn of GE describe Martin’s post-merger benefit plans as “mirroring” GE’s current benefits. Pl.D.Ex. 46. A December 18, 1992 letter from Dunn to Barreca, Cook and other benefits and human resources professionals at GE regarding the “Outcome of Martin Marietta Meetings — December 15-16, 1992” states that “[w]ith respect to the pension plan, there was no dispute that the only alternative was a ‘mirror’ of the GE Pension Plan through the end of 1993. The details are set out as with the [savings and pension plan option], but it appears to be less of a challenge in that the infrastructure is already in place for the Pension Plan.” Pl.D.Ex. 48. The record indicates that Martin was reluctant to agree to identical benefits. GE’s Jerome Caplan testified that he did not think the December 15 meeting resulted in the agreement implied in the Dunn letter referenced above, as “[t]here were a whole set of issues that Martin had regarding their inability to change even the smallest part of the smallest plan if they were linked to GE under the services agreement.” Caplan Dep. at 145 (Def. Reply App. II). At his deposition Cook stated that he had not understood either McAllister’s authority or the decision-making process at Martin at the time of the above memoranda and letters, and “any understanding I thought I had with McAl-lister did not, in fact, reflect the actual decision process in Martin Marietta.” Cook Dep. at 81 (Def.Reply, App.II). Both GE and Martin officials testified that the Fairfield meeting revealed that Martin had not agreed on mirror plans, nor had the parties reached any agreement regarding what “substantially similar” meant. Cook Dep. at 86; Kinstle Dep. at 66 (“I would comment that the word ‘mirror’ appears [in the December 15, 1992 meeting materials] several places and I don’t recall — someone raised their hand and said ‘the contract says substantially similar.’. The chart was a GE chart and it was their view.”). Kinstle also testified that Martin was bound to provide similar benefits, and that Martin’s focus in December and January was on understanding GE’s benefits and “the practicalities of administration ... [and] actually delivering and determining the benefits and the insurance, the carriers and the providers.” Kinstle Dep. at 45. While Kinstle could not identify a particular point at which Martin decided to offer a pension plan identical to GE’s or medical insurance benefits identical to GE’s, he did state that Martin did not want to deliver information about the new benefits “piecemeal,” but wanted “to give participants a single document they could look to for the broadly based array of benefits they could expect. This (the March 23, 1993 Teaming Update [PLD.Ex. 142]) was the document that did that.” Kinstle Dep. at 178. C. Facts relating to plaintiffs’ Partial Termination claim (Count II). After the April 2,1993 closing of the GE Aerospace/Martin Marietta deal, the transferred employees became participants in the Trans Ops Plan, later named the Martin Marietta Corporation Retirement Income Plan. Following the GE transaction, Martin engaged in a series of business divestitures, consolidations, and mergers that resulted in the termination of some transferred GE employees. In March of 1995, Martin combined with Lockheed Corporation to become Lockheed Martin, and in April 1996 the Loral Corporation merged into Lockheed Martin. As a result of these acquisitions and the continued decline in the defense budget, Martin announced a series of consolidations that resulted in the closing of a number of facilities and the termination of thousands of employees. See Pl.Ex. 10 at LMC 24147 (September 1993 Press Release announcing 5-year “Facilities Consolidation Plan” that was to result in the reduction of approximately 46,000 employees); id. at LMC 24143 (June 1995 Press Release regarding corporate-wide consolidation plan that would eliminate 12,000 positions over next five years); id. (Printout from PR Newswire Web Site announcing additional consolidation actions to fully integrate Loral). Plaintiffs’ actuarial expert Michael Greenstein analyzed the data regarding employment terminations from Martin for the period from April 5, 1993 to December 31, 1997 and determined that the Martin Plan’s active participants declined by 44.8 percent. Greenstein’s calculations are based on “selected exits;” that is, employees who terminated employment for reasons other than death, disability retirements, and retirements at normal retirement age. Greenstein Report, PLEx. 3. “Martin’s analysis reaches a different result, because it excludes terminations attributable to additional reasons, such as terminations resulting from intracompany transfers, resignations, performance-related terminations, and all retirements except retirements in lieu of lay-off and retirements where no specific reason was given by the terminating employee.” Martin Ex. GG. The Martin data show a reduction of 20.3 percent over the entire period, and no more than 15.9 percent in any three-year period. Certain plan benefits present in the GE Plan, such as the Special Early Retirement Option (“SERO”) and the Plan Closing Pension Option (“PCPO”), were eliminated by Martin. Martin Ex. II, JJ. The Martin plan has also been amended to provide a right of reversion to Martin of some of the surplus assets of the Plan in the event of a Plan termination, although the Plan language expressly forbids any of the transferred GE Plan assets from reverting to Martin. Martin Ex. JJ at 69. II. STANDARD Federal Rule of Civil Procedure 56(c) provides that a court shall grant a motion for summary judgment “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits ... show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” See Silver v. City Univ., 947 F.2d 1021, 1022 (2d Cir.1991). “The party seeking summary judgment bears the burden of establishing that no genuine issue of material fact exists and that the undisputed facts establish her right to judgment as a matter of law.” Rodriguez v. City of New York, 72 F.3d 1051, 1060 (2d Cir.1995). In determining whether a genuine issue of material fact exists, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. See Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Brady v. Town of Colchester, 863 F.2d 205, 210 (2d Cir.1988). III. DISCUSSION A. Prudence Attack on T-Bill Investment (Count III): Defendant Martin’s Motion for Summary Judgment Defendant Martin makes three arguments in support of its position that it is entitled to summary judgment on Count Three of the complaint. First, Martin alleges that plaintiffs’ prudence challenge to the segregation of the $1 billion and investment in T-bills is in reality a veiled attack on the amount of the transfer, and thus an attempt to circumvent the Court’s earlier ruling that plaintiffs do not have a claim to the residual assets in the GE plan. Second, Martin argues that it was not a fiduciary of the GE Plan at the time of the challenged investment, as it did not exercise any discretionary control or authority over the plan assets. Finally, Martin claims that plaintiffs’ attempt to impose “knowing participation” liability on a non-fiduciary is unavailing, because recent Supreme Court and Court of Appeals precedent indicate that such a claim is no longer viable under ERISA. As Martin’s first argument is addressed in the context of the Court’s discussion of GE’s summary judgment motion, see infra at 254, the Court will only address Martin’s arguments regarding its fiduciary status. 1. Was Martin a fiduciary of the GE Plan at the time of the T-bill investment? To the extent that plaintiffs seek damages from Martin for the losses resulting from segregating the $1 billion transfer amount and investing in T-bills, the Court must determine whether Martin acted as a fiduciary in negotiating for the transfer. Under ERISA, there are three ways to acquire fiduciary status: being named in a plan as a fiduciary, being named as a fiduciary pursuant to a procedure specified in a plan, or performing “fiduciary” functions. See 29 U.S.C. §§ 1002(21)(A) and 1102(a)(1). The parties appear to agree that it is the third category that applies. Under this provision, [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, ... or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan. 29 U.S.C. § 1102(21)(A). Plaintiffs claim that disputed issues of fact exist as to whether Martin exercised “discretionary authority” over the pension funds by contracting with GE to have the one billion transfer amount invested in T-Bills prior to the closing. The Second Circuit has recognized that “Congress intended ERISA’s definition of fiduciary ‘to be broadly construed.’ ” Lopresti v. Terwilliger, 126 F.3d 34, 40 (2d Cir.1997). The Lopresti court employed a functional analysis to determine that a company officer was a fiduciary, even though he did not administer the funds of the plan, because he made the decisions about which creditors to pay out of the general company account, and had used the plan assets to pay company creditors rather than forwarding those assets to the pension plan at issue. Id. at 41. Even though the second defendant had the authority to sign checks, however, the Second Circuit held that he was not a fiduciary, because while “he had some general knowledge that deductions were made from employees’ wages,” he primarily was involved in production and had no responsibility for determining which of the company’s creditors would be paid or in what order. Id. at 40. Similarly, in Blatt v. Marshall & Lassman, 812 F.2d 810 (2d Cir.1987), the defendant principals of an accounting firm were found to have exercised actual control over plan assets when they intentionally delayed executing certain forms that were necessary for the plaintiff to withdraw funds from the plan, in order to gain collateral advantage in an unrelated state court suit brought by the plaintiff against the firm. Id. at 812. Blatt noted that “[a]n entity need not have absolute discretion with respect to a benefit plan in order to be considered a fiduciary;” rather, “fiduciary status exists with respect to any activity enumerated in the statute over which the entity exercised discretion or control.” Id. Plaintiffs rely on the above cases and argue that Martin had de facto control over the assets in this case, in that it entered into a transaction agreement that obliged GE to “cause the trustee of the GE Pension Plan to” segregate $1 billion in cash and invest such assets in 90-day treasuries. The plaintiffs point to deposition testimony by GE Plan trustees that the segregation of the $1 billion from general plan assets and investment in T-bill would not have occurred but for the Transaction Agreement. Cosgrove Dep. at 99. Certain GE draft letters of agreement and internal memorandum also indicate that the disinvestment of the transfer amount resulted solely from the Transaction Agreement. Pl.D.Ex. 88 (Memorandum to GE Plan trustees MacDougall and Bolton stating that “[u]ntil the assets are released to Martin Marietta ... upon the consummation of the sale, they will remain within GE Pension Trust under the investment control of Bob MacDougall based on the guidelines established by Martin Marietta”); PLD.Ex. 15 (GE draft letter of agreement dated March 29, 1993 noting that “[o]n December 31, 1992, pursuant to the Transaction Agreement, the Trustees caused the segregated assets to be invested in a Treasury Bill.”) Essentially, plaintiffs’ argument is that by entering into a contract with GE, Martin became a fiduciary because the resulting transaction agreement affected the disposition of assets under the plan. Based on the above-described record, the Court concludes that the evidence offered is insufficient to demonstrate Martin’s actual control over the GE Plan. First, applicable Second Circuit precedent undermines the central tenets of plaintiffs’ claim. F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d 1250, 1259 (2d Cir.1987) involved a provider of administrative services who sued the trustees of a pension plan for breach of a contract, and was countersued by the trustees who claimed that the provider was a fiduciary as a matter of law, and was thus liable for having caused the plan to agree to pay it excessive compensation. Id. at 1258. The district court refused to instruct the jury that as a matter of law, the administrative services provider was a fiduciary with respect to the plan, and the Second Circuit affirmed. The Second Circuit held that: When a person who has no relationship to an ERISA plan is negotiating a contract with that plan, he has no authority over or responsibility to the plan and presumably is unable to exercise any control over the trustees’ decision whether or not, and on what terms, to enter into an agreement with him. Such a person is not an ERISA fiduciary with respect to the terms ‘of the agreement. ... Id. This rationale is analogous to the instant circumstances, where a corporate entity (Martin) is negotiating a contract with an entity whose roles include plan administration (GE). While a contracting party may become a fiduciary after entering into the agreement if, pursuant to the agreement, it has control over certain aspects of the plan, see id., throughout the course of the negotiations Martin had no authority to compel GE to reach an agreement or to agree to its terms. Under these circumstances, mere negotiation of the Transaction Agreement with GE did not confer fiduciary status upon Martin. This conclusion is consistent with parties’ obligations under the terms of the Transaction Agreement. The employee benefits portion of the agreement clearly states that the investment will be made “in each ease to the extent consistent with GE’s fiduciary obligations under ERISA,” PLD.Ex. 87 at LMC2512, and the section immediately following states that if a different strategy than the T-bill investment is chosen by both Martin and GE, then Martin will accept fiduciary status with respect to the GE Plan. Id. at LMC2513. Thus the contract recognized that the T-bill investment was to be subjected to an independent determination by the fiduciaries of the GE Plan, and that Martin would only become a fiduciary upon its participation in a decision to invest the funds in a different manner. Plaintiffs argue, and their expert opines, that the terms of the contract required the GE Plan trustees to relinquish their investment authority and discretion in order to carry out the T-bill investment. Pl.Ex. 2 at 12; Gordon Dep. at 382. However, the plain language of the contract conditions the T-bill investment on compliance with GE’s fiduciary obligations, an interpretation borne out by the testimony of the trustees that they independently examined other investment options before deciding to utilize the transfer mechanism specified in the Transaction Agreement. While it is clear that a party cannot contract away its fiduciary obligations arising from its exercise of discretionary authority or control, the contract at issue here is the sole source of plaintiffs contention that Martin was a fiduciary with respect to the T-bill investment, as conceded by plaintiffs’ own expert during his deposition. It is appropriate, therefore, to examine the contract language to determine whether particular individuals are fiduciaries under ERISA. See Loioen v. Tower Asset Mgmt., 829 F.2d 1209, 1218 (2d Cir.1987) (looking to terms of contract with plan to find that defendant investment company was “investment manager” and thus a fiduciary under ERISA). Further, the deposition testimony of negotiators and officers on both sides of the GE/Martin deal demonstrates that Martin continually refused to accept fiduciary responsibility for the transfer amount, insisting that a sum certain be available in cash or cash equivalents at the closing. The record also indicates that Martin did not push for the T-bill investment; rather, that investment was a compromise given Martin’s conditions that it not accept market risk and that a set amount be readily available at the closing to establish Martin’s new plan. This evidence of the intent of the parties, further bolstered by the contract construction outlined above, supports the conclusion that no pre-closing ERISA obligations were incurred by Martin as a result of the purchase and sale transaction with GE. Thus, as a matter of law, Martin was not acting as a fiduciary when it entered into the transaction agreement requiring the GE Plan trustees to segregate $1 billion and invest it in T-bills, “consistent with the GE’s fiduciary obligations under ERISA.” PLD.Ex. 87. 2. Can Martin be Liable for “Knowing Participation” in a fiduciary breach by GE? Even if Martin was not a fiduciary with regard to the T-bill investment, plaintiffs claim that it can still be held liable for knowingly participating in GE’s fiduciary breach under § 502(a)(3). Defendants argue that “knowing participation” claims against non-fiduciaries are no longer cognizable after the Supreme Court’s decisions in Mertens v. Hewitt Assoc. Inc., 508 U.S. 248, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993) and Central Bank of Denver, N.A. v. First Interstate Bank of Denver, 511 U.S. 164, 114 S.Ct. 1439, 1447, 128 L.Ed.2d 119 (1994). Several circuits and district courts have agreed. See Reich v. Rowe, 20 F.3d 25 (1st Cir.1994); Reich v. Continental Cas., 33 F.3d 754, 757 (7th Cir.1994); Reich v. Compton, 57 F.3d 270, 283 (3rd Cir.1995); Aiena v. Olsen, 69 F.Supp.2d 521, 533 (S.D.N.Y.1999). Even if such a claim is still cognizable in this circuit after Mertens, an essential element is an underlying breach by a fiduciary, in this case GE. See Diduck v. Kaszycki, 974 F.2d 270, 281-82 (2d Cir.1992) (laying out well-established elements of cause of action for knowing participation in fiduciary breach under ERISA). The Court will therefore first resolve the predicate question of whether GE breached its fiduciary duties. B. Prudence Attack on T-bill investment (Count III): GE’s Motion for Summary Judgment GE, in contrast to Martin, was indisputably a fiduciary at the time of the challenged T-bill investment. Plaintiffs claim that GE disregarded the interests of the participants in order to advance its corporate goal of closing the deal with Martin, thereby breaching its fiduciary obligations, obligations the Second Circuit has described as “the highest known to law.” Donovan v. Bierwirth, 680 F.2d 263, 272, n. 8 (2d Cir.1982), cert. denied, 459 U.S. 1069, 103 S.Ct. 488, 74 L.Ed.2d 631 (1982). Donovan further explained the statutory sources of this high duty: [ERISA] Sections 404(a)(1)(A) and (B) impose three different although overlapping standards. A fiduciary must discharge his duties ‘solely in the interests of the participants and beneficiaries.’ He must do this ‘for the exclusive purpose’ of providing benefits to them. And he must comply ‘with the care, skill, prudence, and diligence under the circumstances then’ prevailing’ of the traditional ‘prudent man.’- Id. at 271. Plaintiffs cite to a myriad of cases emphasizing the gravity of the strict duties governing ERISA fiduciaries. See e.g. John Blair Communications v.