in light of all surrounding circumstances.
There is some force to plaintiff's argument that the
fiduciary obligation imposed by § 1104 may require funds to do
more than merely comply with applicable notice regulations. In
enacting ERISA, Congress sought to ensure that "the private
pension promise . . . become real rather than illusory." H.Rep.
93-533, reprinted in U.S. Code Cong. & Ad.News (1974), pp.
4639, 4648. Application of an overriding fiduciary standard of
fairness and reasonableness, apart from any question of
regulatory compliance, would do much to facilitate the
realization of this goal.
Moreover, other courts that have considered challenges to
fund notice procedures have subjected fund actions to exacting
judicial scrutiny. See, e.g., Palino v. Casey, 664 F.2d 854,
859 (1st Cir. 1981) ("we judge the Trustees' actions [with
regard to notice] in accordance with the principle that changes
in a fund's eligibility rules must be made, and notice given,
subject to the limits of fundamental fairness." (citations
This "fundamental fairness" approach suggests that even if
funds have technically complied with administrative
regulations, a court must still test the notice for its
fairness in light of all relevant circumstances. Cf. Burke v.
Metal Carbides Corp., No. 81 C 2506, slip op. at 4 (N.D.Ill.
Feb. 15, 1983) [Available on WESTLAW, DCTU database] (Grady,
J.) (in age discrimination case, fact that notice posted by
employer was supplied by Department of Labor did not
necessarily mean notice was adequate; the employer's duty to
provide accurate notice existed irrespective of compliance with
On the other hand, there is also something to the Fund's
argument that fiduciaries should be able to rely on the
detailed and uniform guidance provided by administrative
regulations without being subjected to the vagaries of a
"fundamental fairness" or "prudent man" test, as those
concepts are understood and applied by each reviewing court.
We do not find it necessary to decide the question of
whether compliance with the regulations satisfies a fund's
fiduciary obligation as a matter of law, however, for all
would agree that if administrative regulations do suffice to
provide funds with a safe harbor, then funds must comply fully
with the terms of those regulations in order to avail
themselves of that harbor. In this case, the Fund failed in
every way to comply with the regulation it allegedly relied
Treasury Department regulation 26 C.F.R. § 1.401(a)-(11),
relied on by the Fund, authorizes funds to notify participants
of plan changes by mail, and provides that when notice is given
by mail, one timely notice is all that is necessary to satisfy
disclosure requirements. The Fund attempts to bring itself
within this regulation by arguing that the advertisements in
the B & C News constituted notice by mail, as the newspaper was
delivered by mail to all subscribers.
The Fund's argument that it provided notice by mail is
strained. We think it clear that when a regulation authorizes
use of the mail to give notice, it contemplates the mailing of
individual notices of some sort, rather than the insertion of
an advertisement in a publication that happens to be mailed.
See Staats v. Ohio River Co., 570 F. Supp. 22, 24-25 (W.D.Pa.
1983), aff'd, 735 F.2d 1351 (3d Cir. 1984). Our conclusion is
bolstered by the fact that a separate Treasury regulation which
lists approved methods of notification expressly distinguishes
between, and sets out as alternative methods, notice "by
mailing" and notice "by printing it in a publication of . . .
an employee organization. . . ." 26 C.F.R. § 1.7476-2(c).
Accordingly, the insertion of an advertisement or other notice
in a newspaper that is mailed does not, by virtue of the
happenstance that the paper is delivered by mail, convert the
notice by publication into notice by mailing.
Thus, the Fund utilized a method other than mailing to
provide notice of the
pre-retirement pension.*fn6 Title
26 C.F.R. § 1.401(a)-11(C)(ii) states:
. . If a method other than mail or personal
delivery is used to provide participants
with . . . information, if [sic] must be a method
which is reasonably calculated to reach the
attention of a participant . . . [and must] . . .
continue to reach the attention of such participant
during the election period applicable to him for
which the information is being provide [sic] (as,
for example, by permanent posting, repeated
Because the Fund did not send individual notices by mail to
all participants, then, it was obligated under the regulation
it cites to provide continual notice in some form. We do not
think the notices in the B & C News satisfied this obligation.
Those notices were not likely to reach the participants
continuously throughout the election period; two publications
in the space of fourteen months does not in our view constitute