Elmore v. Cone Mills Corp.

23 F.3d 855, 1994 WL 170262

• Court: Court of Appeals for the Fourth Circuit
• Decided: May 6, 1994
• Docket: Nos. 92-1362, 92-1363, 92-1404 and 92-1482
• Status: Published

Opinions

Affirmed in part, reversed in part, and remanded by published opinion. Judge WILLIAMS wrote the majority opinion, in which Judges WIDENER, K.K. HALL, PHILLIPS, MURNAGHAN, WILKINS, NIEMEYER, LUTTIG and MICHAEL, and Senior Judge SPROUSE concur. Judge MURNAGHAN wrote a separate concurring opinion, in which Judges K.K. HALL and MICHAEL and Senior Judge SPROUSE join. Judge WILKINS wrote a separate concurring opinion, in which Judges NIEMEYER and WILLIAMS join. Judge NIEMEYER wrote a separate opinion concurring in part and dissenting in part, in which Judges LUTTIG and WILLIAMS join.

OPINION

WILLIAMS, Circuit Judge:

The primary issue presented by these cross-appeals is whether representations made by Cone Mills prior to the adoption of an Employee Stock Ownership Plan (ESOP), but not incorporated into the formal plan documents, are enforceable against Cone Mills under ERISA. The district court held that the representations were enforceable as part of the 1983 ESOP, an ERISA covered plan, and that Cone Mills and the other Defendants had breached their fiduciary duties to Plaintiffs under ERISA by failing to abide by the representations. In the alternative, and subject to proof of detrimental reliance, the district court held that Plaintiffs could recover under principles of equitable estoppel and as third-party beneficiaries of a contract between Defendants and their banks.¹

A divided panel of this court reversed the judgment of the district court and rejected the alternative theories of recovery in Elmore v. Cone Mills, 6 F.3d 1028 (4th Cir.1993). The original panel majority affirmed the district court’s rulings for Defendants on preemption, stock valuation, and other breach of fiduciary duty claims challenged by Plaintiffs in their cross-appeal. Thereafter, a majority of this court granted Plaintiffs’ petition for rehearing, ordering that the earlier panel opinion be vacated and the case reheard by the court en banc. Elmore v. Cone Mills, No. 92-1362, 1993 U.S.App. LEXIS 33294 (4th Cir. Dec. 13, 1993). The en banc court now unanimously reverses the judgment of the district court that the representations are enforceable under ERISA as a plan or part of a plan, but, by an equally divided court, affirms the alternative theory of recovery that the representation created an enforceable obligation under a federal common law theory of equitable estoppel, subject to proof of detrimental reliance on remand. In all other respects, the en bane court unanimously affirms the rulings of the district court.

I.

In response to a hostile takeover bid announced on October 31, 1983, a group of senior management employees at Cone Mills Corporation decided to gain control of the company through a leveraged buy-out (LBO), which became final on March 27, 1984. While planning and implementing the LBO, Dewey Trogdon, Cone Mills’s Chairman of the Board and Chief Executive Officer, communicated regularly with Cone Mills’s employees through various letters, office memo-randa, and video presentations. Many of these communications were addressed to concerns expressed by employees regarding the impact the LBO would have on their pension benefits. The recurring themes of these communications were that management would protect the interests of Cone Mills’s employees and shareholders and would keep the employees informed of any changes occurring because of the LBO.

The specific representation at issue in this case occurred in a letter sent by Dewey Trogdon to all Cone Mills’s salaried employees on December 15, 1983, regarding management’s proposed LBO. This letter explained that the Company had over-funded the existing Employee Retirement Plan (ERP), resulting in more funds being in the ERP accounts than were necessary to pay for accrued benefits. By the terms of the ERP, Cone Mills was entitled to any pension reversion surplus. Regarding the expected pension reversion surplus, the letter continued:

[i]f the management and bank proposal to buy the Company is successful, there is agreement among management and the banks that we will contribute the surplus, or its equivalent in Company stock, to the ESOP. When the transaction is executed and the contribution is made, you, I, and all other Cone employees will “take title” to a substantial asset in which we currently have no rights or ownership.

(J.A. at 3700.) On page two of the letter, Trogdon specifically stated: “As we get more time, we will answer your questions and publish information to the extent that it can be done on a legal and factual basis. We are, however, giving you- information now based on our present plans which are subject to revision to meet changing situations.” (J.A. at 3701.)

In an earlier December 12, 1983, letter to all Cone Mills employees, Trogdon had stated that their “pension plans [would] be left in place with [their] existing benefits guaranteed by the Company,” and that, through the coordination of the 1983 ESOP and the ERP, the employees could “receive no less than the full amount” of their pre-LBO pension benefits. (J.A. at 3695 (emphasis omitted).) This letter also noted that “[t]ogether, the ESOP and your pension plan are expected to provide greater financial security than your present retirement benefits.” (Id.) Trogdon estimated in the December 12th letter that over $50 million in stock could be contributed to the 1983 ESOP in the first two years but expressly noted that he could not legally guarantee that amount.

Subsequent to these letters, but prior to the actual vote on the LBO, Cone Mills communicated regarding the 1983 ESOP through a bulletin board notice, a February 1984 video presentation, a February 23 proxy statement to all salaried employees, and a March 15 memorandum from Trogdon. The bulletin board notice outlined the 10%/10%/1% contribution levels for the 1983 and 1984 plan years of the ESOP and emphasized the discretionary nature of additional contributions. The February video presentation referred to an expected contribution amount of over $50 million. A questioh-and-answer booklet distributed after the video presentation contained the same estimation that “if all goes according to plan, over $50 million-of stock will be contributed to the ESOP for the years 1983 and 1984. After 1984,'the company’s contribution will be determined by the Board of Directors based on business conditions and company profits.” (J.A. at 3925.) The question-and-answer booklet further notified the employees in bold-faced type that “[t]he legal documents control, and if this material differs in any way from the legal documents, the correct source of the information is the legal documents.” (J.A. at 3911.)

The February 23 proxy statement, sent to salaried employees as participants in the PAYSOP, reiterated the 10%/10%/1% contribution formula as the mandatory ESOP contribution obligation of the Company. In addition, in response to some expressed disappointment and concern of salaried employees regarding the ESOP, Trogdon sent a memorandum to salaried employees on March 15, 1984. In this memorandum, Trogdon referred to the profit sharing potential of the ESOP, but made no guarantee of its success. Trogdon also stated: “I do not believe it is prudent, presently, to guarantee ESOP contributions above the 1% minimum for years 1985 and forward_” (J.A. at 4034.)

The LBO was approved by a nearly unanimous vote of the shareholders on March 26, 1984, and all shares of common stock, including the shares held by the previous employee stock ownership plan (the PAYSOP)², were purchased for $70 per share.

The 1983 ESOP plan documents were executed by Lacy Baynes³ on April 2, 1984. The plan documents required the company to contribute cash, stock or other property worth ten percent of each covered employee’s compensation for each of the first two years of the 1983 ESOP’s operation and one percent of each employee’s compensation for each year thereafter (the 10%/10%/1% formula). The executed documents did not refer to the pension surplus but did provide for discretionary contributions.

Between May and December of 1985, Cone Mills received the pension reversion surplus, which had increased in value to $69 million.⁴ The district court found that from March 1984 through September 1985 Cone Mills contributed junior preferred stock valued at $54,796,638⁵ to the 1983 ESOP. The gravamen of Plaintiffs’ claims is that Cone Mills did not contribute the entire pension reversion surplus to the 1983 ESOP. Based primarily on the December letters, Plaintiffs claim they are entitled to have the full amount of the pension reversion surplus contributed to the 1983 ESOP, approximately $14 million more than Cone Mills’s actual contribution.

II.

ERISA imposes certain duties upon plan fiduciaries, breaches of which are actionable by any plan participant. 29 U.S.C.A. §§ 1104, 1109(a), 1132(a)(2) (West 1985 & Supp.1993). The district court concluded that the Defendants, as plan fiduciaries, breached their duties to carry out the responsibilities of their offices solely in the interest of the plan participants “ ‘for the exclusive purpose of ... providing benefits to participants ... in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this title or Title IV.’” 29 U.S.C.A. § 1104(a)(1) (West Supp.1993). The district court’s conclusion was based on its determination that the governing “documents” and “instruments” of the 1983 ESOP included the representation regarding the pension reversion surplus,in the December 15th letter, because it constituted a clear and unambiguous promise of benefits that was formal, authorized, and ratified. The district court reasoned, therefore, that ERISA’s fiduciary duty principles required Defendants to provide benefits in accordance with the pension reversion surplus representation as part of the plan documents.⁶

We reject the district court’s determination that the representation regarding the pension reversion surplus was part of the 1983 ESOP plan. Under ERISA, plan fiduciaries must provide benefits only “in accordance with the documents and instruments governing” the employee pension benefit plan. 29 U.S.C.A. § 1104(a)(1)(D) (emphasis added); see also Dzinglski v. Weirton Steel Corp., 875 F.2d 1075, 1080 (4th Cir.) (“To adhere to the plan is not a breach of fiduciary duty.”), cert. denied, 493 U.S. 919, 110 S.Ct. 281, 107 L.Ed.2d 261 (1989). It is undisputed that the surplus representation was not incorporated into the written terms of the 1983 ESOP plan documents adopted by Defendants on April 2,1984. Instead, the actual plan documents only mandated that Cone Mills provide benefits under the 10%/10%/1% formula.

Nonetheless, the district court found that an employer representation not contained in the formal plan documents could become a part of the plan if the promise to provide benefits was contained in a written, formal, authorized, and ratified statement sent by the employer’s CEO to all of the employer’s salaried employees.⁷ In reaching its conclusion, the district court applied the inverse logic of our holding in Pizlo v. Bethlehem Steel Corp., 884 F.2d 116 (4th Cir.1989). In Pizlo, we held that a plaintiff does not have a cause of action for benefits under ERISA when such benefits were promised in informal and unauthorized amendments to the benefit plan. Id. at 120. We did not state, however, that employees are entitled to recover benefits under any written statement made by a company official, even if authorized and ratified.

On the contrary, only representations adopted in accordance with the amendment procedures outlined in the formal plan documents will suffice to incorporate the promised benefits into the plan. Miller v. Coastal Corp., 978 F.2d 622, 624 (10th Cir.1992), cert. denied, — U.S. -, 113 S.Ct. 1586, 123 L.Ed.2d 152 (1993). Under the formal plan documents of the 1983 ESOP, no amendment is effective unless the Cone Mills Board of Directors executes a written document containing the amendment, the document is delivered to the plan trustee, and the trustee endorses receipt of the amendment. Even though the Cone Mills Board of Directors generally ratified Trogdon’s actions and communications with Cone Mills employees, there is no evidence in the record that any written terms regarding the surplus claim were ever delivered to Baynes as trustee or endorsed by him. Therefore, the representation regarding the pension reversion surplus is not enforceable as a valid plan amendment to the 1983 ESOP.

Nor does the representation constitute an informal ERISA plan. Some courts have allowed employees to recover promised benefits that are not contained in a formal •written plan document if the benefits are contained in an informal benefit plan. See e.g., Donovan v. Dillingham, 688 F.2d 1367, 1372 (11th Cir.1982) (en banc). In Donovan, the Eleventh Circuit held that an informal ERISA plan has been established “if from the surrounding circumstances a reasonable person can ascertain the intended benefits, a class of beneficiaries, the source of financing, and procedures for receiving benefits.” Id. at 1373. The informal plan must, however, actually be in existence; the mere decision to create an employee benefit plan is not actionable. James v. National Business Sys., Inc., 924 F.2d 718, 720 (7th Cir.1991); Moeller v. Bertrang, 801 F.Supp. 291, 293 (D.S.D.1992). An informal plan may exist independent of, and in addition to, a formal plan as long as the informal plan meets all of the elements outlined in Donovan. See Henglein v. Informal Plan for Plant Shutdown Benefits for Salaried Employees, 974 F.2d 391, 400 (3d Cir.1992) (absence of integration clause in a formal plan and distribution of informal documents may lead the court to find that an informal plan existed in addition to the formal plan).

Applying these criteria, the surplus claim clearly does not constitute an informal plan existing independent of the 1983 ESOP. Although the first three Donovan elements (the intended class of beneficiaries, the intended benefits, and the source of the funding) arguably may be ascertainable from the December 12th and 15th letters, these letters do not satisfy the fourth element (the procedure for receiving benefits). The only way an employee could ascertain the procedures for obtaining benefits would be to refer to the 1983 ESOP formal plan document, which was not adopted until April 2, 1984. Therefore, the letters from Trogdon which are the basis of the surplus claim cannot constitute an informal ERISA plan that entitles Plaintiffs to benefits in lieu of or in addition to the 10%/10%/1% mandatory contributions contained in the 1983 ESOP.

Our conclusion that Plaintiffs are not entitled to any relief under the Donovan analysis is supported by the Ninth Circuit’s decision in Carver v. Westinghouse Hanford Co., 951 F.2d 1083 (9th Cir.1991), cert. denied, — U.S.-, 112 S.Ct. 3036, 120 L.Ed.2d 905 (1992). In Carver, several independent companies that operated separate pension plans for their employees were consolidated into one company (WHC) by the Department of Energy (DOE). Id. at 1085. WHC sent the employees of the various companies booklets stating that it would create a new pension plan and would use a particular formula to calculate each participant’s length of service. Id. After the individuals accepted employment with the consolidated company, the company finalized the plans for the new pension program using a different formula for calculating years of service. Id. at 1086. The employees filed suit alleging that the promises contained in the booklets created an informal plan under Donovan. Id.

The Ninth Circuit found that the employees had not established the existence of an informal plan under the Donovan analysis because Donovan and its progeny only apply when the surrounding circumstances demonstrate the creation of a de facto pension plan. Id. WHC, in contrast, actually adopted the plan that was discussed in the booklets, albeit with different terms than originally anticipated. The booklets sent to employees prior to the adoption of the formal plan merely “apprise[d] anxious employees of what they might expect once the transition from several employers to WHC was completed. WHC had not completed its negotiations with DOE, and consequently, had not adopted” the plan in the booklets. Id. at 1087. The court also noted that the intent to create a plan is not enough to create liability on the part of the employer:

WHC should have explained in its communications that the plan was not formalized and was subject to DOE approval. Failure to do so, however, did not elevate the newsletters and the preliminary summary booklet to the level of an informal plan in June, 1987. The plan simply was not a reality until that December when it was formally adopted.

Id.

The same analysis applies in this case. Trogdon sent the letters in question in an attempt to keep Cone Mills’s employees apprised of the proposed developments in their pension plans. Furthermore, unlike WHC, Cone Mills specifically informed their employees that these plans were subject to change. In this context, Cone Mills’s December 12th and 15th letters were merely preliminary statements of its intentions regarding the plan and do not constitute an enforceable plan. See id. Therefore, because the letters were neither a part of the 1983 ESOP nor created an enforceable informal employee benefit plan, we reverse the district court’s conclusion that Defendants had a fiduciary duty to abide by them.

The fiduciary duty under 29 U.S.C.A. § 1104(a)(1) to “discharge duties with respect to a plan solely in the interest of the participants and beneficiaries” only applies to actions taken by a plan fiduciary in accordance with his duty to administer the employee benefit plan; it does not apply to actions taken by an employer in creating the plan. See Belade v. ITT Corp., 909 F.2d 736, 738 (2d Cir.1990) (design of employee benefit plan is strictly a business decision and does not give rise to any fiduciary duties under ERISA); Dzinglski v. Weirton Steel Corp., 875 F.2d 1075, 1078 (4th Cir.) (‘“Congress left employers much discretion in designing their plans’ under ERISA and in determining the level and conditions of benefits.”) (quoting Hlinka v. Bethlehem Steel Corp., 863 F.2d 279, 283 (3d Cir.1988)), cert. denied, 493 U.S. 919, 110 S.Ct. 281, 107 L.Ed.2d 261 (1989). Cone Mills’s actions with regard to announcing the proposed pension surplus reversion and deciding not to adopt that proposal are left to its sound business discretion and are not subject to the fiduciary duties imposed on plan administrators. At the time the statements were made, the 1983 ESOP was not yet in existence. See Dzinglski, 875 F.2d at 1079-80 (an employer acting as a plan administrator has two roles — employer and plan administrator — but is only a fiduciary with respect to its actions as plan administrator). To hold otherwise would impose liability on Defendants for breach of fiduciary duties with respect to the 1983 ESOP when there was no plan and they were not plan fiduciaries. Accordingly, we reverse the district court’s judgment that the representations in the December letters were part of the 1983 ESOP, and that by failing to carry out these representations, Cone Mills breached its fiduciary duties under ERISA.⁸

III.

With regard to the district court’s alternative avenue of recovery for Plaintiffs based on incorporation of principles of equitable estoppel into the federal common law of ERISA, the district court is affirmed by an equally divided vote. Therefore, the ease is remanded to the district court to examine whether the Plaintiffs can establish reliance creating estoppel of Cone Mills. Because the district court opinion is affirmed on this theory, we need not reach the third-party beneficiary claim. Separate opinions by Judges Murnaghan, WilMns, and Niemeyer regarding this issue follow.

IV.

We also affirm the district court’s rulings in favor of Defendants that ERISA preempts Plaintiffs’ state law contract and tort claims against Cone Mills, that the stock contributed to the 1983 ESOP was not overvalued, that Cone Mills was not liable for any delay in appointing a plan fiduciary, and that Cone Mills did not make an enforceable promise to maintain a certain level of pension benefits.

A. Preemption

ERISA specifically provides that it preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan” covered by ERISA. 29 U.S.C.A. § 1144(a). In interpreting § 1144(a), the Supreme Court has held that ERISA’s preemption provision is to be construed broadly, such that a law “relates to” an employee benefit plan “if it has a connection with or reference to such a plan.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2899-2900, 77 L.Ed.2d 490 (1983).

Plaintiffs asserted state law claims for breach of contract, fraud, unjust enrichment, breach of fiduciary duty, negligence, accounting, and conspiracy in an attempt to enforce representations made in connection with the 1983 ESOP, which is undeniably an ERISA-covered employee benefit plan. Because all of these claims clearly “relate to” an ERISA-covered plan, we affirm the district court’s conclusion that these state law causes of áction are preempted.

B.Stock Valuation

Plaintiffs also contend that the stock contributed to the 1983 ESOP on April 2, 1984, was overvalued, creating a deficiency in the 1983 ESOP accounts which Cone Mills is required to rectify. Specifically, Plaintiffs claim that the stock is not worth the $100 per share reported by the appraisal firm hired by Cone Mills. Plaintiffs also contend that the district court erroneously shifted to them the burden of proving that the stock was overvalued.

Plaintiffs initially contended that it was a prohibited transaction for the ESOP plan fiduciary to acquire the employer’s security unless it proved that it received adequate consideration under ERISA §§ 406(a)(1)(E) and 408(e), 29 U.S.C. §§ 1106(a)(1)(E) and § 1108(e) (1988). As we stated in the initial panel opinion, the rule cited by Plaintiffs does not apply in this case where the employer’s security is acquired by an eligible individual account plan such as 1983 ESOP. 29 U.S.C. § 1107(d)(3)(A) (1988). In their reply brief before this court, Plaintiffs asserted for the first time that Cone Mills’s actions violated ERISA § 406(a)(1)(A), prohibiting transactions involving a sale or exchange of property.

Plaintiffs and the Secretary of Labor correctly point out that in order to avoid liability for a prohibited transaction under § 406, Cone Mills bears the burden of proving the transaction was for adequate consideration in compliance with § 408(e). Nevertheless, as an initial matter, we reiterate our view that Plaintiffs’ acknowledgement of their burden of proof on this issue during trial waived their challenge to its allocation on appeal. Even if this were not so, there is no evidence that the district court’s findings that “defendants acted reasonably and prudently in the selection and retention” of an appraiser and “were justified in relying on [the] appraisal of the junior preferred stock” were clearly erroneous. (J.A. at 359, 361.) Moreover, Plaintiffs failed to present any evidence that the stock was in fact worth less than the $100 for which it was appraised and failed to prove that they suffered a loss. As distinguished from the facts in Reich v. Valley Nat’l Bank, 837 F.Supp. 1259 (S.D.N.Y.1993), relied on by Plaintiffs and the Secretary of Labor, Cone Mills’s junior preferred stock has held its value, it has been “put” for at least $100 per share each time an employee has retired, and Cone Mills has never missed a dividend payment.

C. Promise of Greater Benefits under Post-LBO Plans

Plaintiffs also argue that Defendants should be liable under ERISA because the benefits provided under the 1983 ESOP were not greater than the benefits they would have received if the pre-LBO benefit plans had remained in effect after the LBO. Plaintiffs base this claim on the December 12th and March 15th letters, video presentations, and a question-and-answer booklet which promised Plaintiffs that they could not lose any of their pre-LBO benefits under the post-LBO plans, and that they would most likely receive even greater benefits because of the profit sharing potential of the 1983 ESOP. As the district court correctly noted, these statements were not included in the 1983 ESOP plan documents. Therefore, under the analysis employed in section II of this opinion, Plaintiffs are not entitled to recover for any failure to abide by these alleged commitments.

D. Delay in Appointment of a Trustee

Finally, Plaintiffs contend that the district court erred in dismissing their cause of action for breach of fiduciary duty based on Cone Mills’ failure to appoint a trustee for the 1983 ESOP upon the creation of the plan in December 1983. The district court reasoned that even if Plaintiffs could bring a cause of action on this basis, they suffered no damage ás a result of the delayed appointment. We agree.

ERISA requires an employer to appoint a plan fiduciary or trustee. 29 U.S.C. § 1102(a)(1) (1988) (the benefit plan “shall provide for one or more named fiduciaries who jointly or severally shall have authority to control and manage the operation and administration of the plan.”). In this case, Plaintiffs allege that Cone Mills breached its fiduciary duty by failing to appoint a trustee for the 1983 ESOP in December 1983, when the Board of Directors adopted a Detailed Plan Description, and by failing to appoint a trustee until Baynes assumed that role on April 2, 1984.

Plaintiffs’ analysis is flawed for two reasons. First, there was no delay in appointing a plan fiduciary. Cone Mills did not adopt the 1983 ESOP in December 1983. At that time, Cone Mills had not finalized all of the plans for the 1983 ESOP and had only adopted a plan description, which contained terms that were materially different from the terms of the 1983 ESOP plan documents. It was not until April 2, 1984, that Cone Mills formally adopted the 1983 ESOP, which was the same day Cone Mills appointed Baynes as the plan fiduciary. Second, even if the plan had been adopted in December 1983, Cone Mills did not make any contributions to the 1983 ESOP at that time. Until April, there was no corpus of the 1983 ESOP trust for a fiduciary to manage or administer. Therefore, we question, as the district court did, whether Plaintiffs could have suffered any damage by Cone Mills’s failure to appoint a plan fiduciary or trustee immediately. The district court correctly ruled for Cone Mills on this claim.

V.

For the reasons discussed above, we affirm the district court’s determinations in favor of Defendants on the value of the contributed stock, the preemption issue, the promise to maintain pre-LBO benefits, and the claim for delay in appointing a plan fiduciary. We reverse the district court’s determination that the representation regarding the pension reversion surplus was part of the 1983 ESOP or an informal ERISA plan. We affirm by an equally divided court the district court’s alternative holding that Plaintiffs are entitled to recover based on incorporation of equitable estoppel principles into the federal common law of ERISA.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

1 . The district court noted its intention to allow Plaintiffs to proceed on these two alternative theories should we determine that Defendants had not breached their fiduciary duties. The district court certified its conclusions on these issues for interlocutory appeal pursuant to 28 U.S.C. § 1292(b) (1988).

2 . The PAYSOP gave ownership rights in the company through profit sharing contributions of Cone Mills's common stock. At the time of the LBO, the PAYSOP owned 1.3% of Cone Mills's common stock.

3 . Baynes was Cone Mills's Secretary and was the plan fiduciary for the 1983 ESOP from April 2, 1984, to June 20, 1984.

4 . In the December 1983 letters, management had estimated that the pension reversion surplus would be approximately $50 million. Because the reversion created taxable income. Cone Mills deferred receipt until 1985 so that it could reclaim 1981 taxes paid in excess of $17 million. This intentional delay in receiving the pension reversion surplus increased its value from the original estimate of $50 million to the $69 million received by December 1985.

5 . The district court found that Cone Mills made the following contributions: $36,023,000 on March 30, 1984; $3,948,815 on September 13, 1985; and $14,824,823 on September 15, 1985. These contributions did not coincide with Cone Mills’s receipt of the pension reversion surplus. In comparison, Cone Mills received the pension reversion surplus over the following installments: $59,000,000 on May 20, 1985; $2,000,000 on September 27, 1985; $5,800,000 on December 6, 1985; and $2,200,000 on December 23, 1985.

6 . The district court specifically found that Defendants violated three fiduciary duties: (1) the duty to act in accordance with the documents and instruments governing the plan; (2) the duty to discharge the responsibilities of their offices for the exclusive benefit of the plan participants; and (3) the duty not to engage in certain prohibited transactions. All three of these findings first require a determination that the surplus claim was a part of the 1983 ESOP.

7 . The district court found that the surplus claim was ratified on May 15, 1984, at the Board of Directors meeting during which the Directors passed a general resolution ratifying all actions taken by the company’s officers and directors on the company's behalf during the preceding year and another resolution that generally ratified all actions taken by Trogdon with respect to the company’s benefit plans.

8 . Our reversal of the district court's judgment that there was a breach of fiduciary duty by necessity requires reversal of its holding that Trogdon and Baynes are jointly and severally liable for the breach of fiduciary duty. As the district court pointed out, only Cone Mills would be liable for the equitable estoppel and third-party beneficiary claims.

Our reversal of the prior judgment also requires that we vacate the award of attorneys’ fees to Plaintiffs. We note, however, that if Plaintiffs are able to demonstrate detrimental reliance, prevail, and seek attorneys fees again, enhancement based on the risk of contingency would be inappropriate in light of City of Burlington v. Dague,-U.S.-,--, 112 S.Ct. 2638, 2643-44, 120 L.Ed.2d 449 (1992). See also Broyles v. DOWCP, 974 F.2d 508, 509 (4th Cir.1992) (referring to the Supreme Court's holding in City of Burlington "that the typical fee shifting statute does not permit an attorney's fee award to be enhanced on account of contingency.''); Drennan v. General Motors, Corp., 977 F.2d 246, 253 (6th Cir.1992) (rejecting multiplier for attorneys' fee award under ERISA to the extent the enhancement was for the risk of contingency), cert. denied, -U.S. -, 113 S.Ct. 2416, 124 L.Ed.2d 639 (1993). Reversal of the judgment also moots Plaintiffs’ cross-appeal of the district court's denial of pre-judgment interest, which is a matter committed to the sound discretion of the district court. Quesinberry v. Life Ins. Co., 987 F.2d 1017, 1030 (4th Cir.1993):