Fischer v. Philadelphia Electric Co. (II)

The Philadelphia Electric Company (PEC) (defendant) needed to cut costs and considered offering some employees (plaintiffs) an early-retirement incentive plan. The initial consideration of a plan dated to 1988, when PEC management contacted a consulting firm to discussion a potential plan. But the same year, a new company president, Joseph Paquette, joined PEC and shelved the plan, deciding the time was not right. In 1989, PEC sought governmental approval for a utilities rate increase. In December 1989, Paquette told employees that if the rate increase was denied, PEC might consider an early-retirement plan, but that there were no specific plans at that time. A few months later, on March 1, 1990, an administrative-law judge denied most of PEC’s rate-increase request. PEC executives then revisited the early-retirement plan, reaching out to the consulting firm about the plan on March 12 for the first time since 1988. In meetings, PEC and the firm began developing possible early-retirement plans. At a corporate-strategy meeting of PEC executives on April 7, Paquette stated that he would announce a cost-cutting program on April 20. Paquette announced an early-retirement plan on April 19. The employees (none of whom retired after April 7) sued PEC for violating its fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA) by failing to earlier disclose the consideration of the plan. After a lengthy procedural posture, including an initial appeal, the question became when PEC began seriously considering the plan, which the district court concluded was March 12. Thus, employees who asked about the plan after March 12 and then retired before the plan was announced on April 19 won. Both parties appealed, challenging the date.