                             In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 03-2090
MICHAEL J. VALLONE, JOYCE E.
HEIDEMANN and JAMES J. O’KEEFE,
                                            Plaintiffs-Appellants,
                                 v.

CNA FINANCIAL CORPORATION, a/k/a
CNA CASUALTY OF ILLINOIS, and THE
CONTINENTAL INSURANCE COMPANY,
                                            Defendants-Appellees.

                          ____________
          Appeal from the United States District Court for
         the Northern District of Illinois, Eastern Division.
             No. 98 C 7108—James B. Moran, Judge.
                          ____________
    ARGUED NOVEMBER 6, 2003—DECIDED JULY 15, 2004
                   ____________



  Before CUDAHY, MANION and ROVNER, Circuit Judges.
  CUDAHY, Circuit Judge. This case involves another
episode in the widespread efforts of corporations to reduce
their liabilities by cutting back on retiree benefits. The law
in this circuit is well-established, but this does nothing to
cushion the hardship of pensioners faced with a new drain
on their limited resources.
  In late 1991, The Continental Insurance Company
(Continental) offered an early retirement package to some
2                                                No. 03-2090

of its employees as a cost containment initiative. Michael J.
Vallone, Joyce E. Heidemann and James J. O’Keefe (collec-
tively, the plaintiffs) are three of the 347 Continental
employees who accepted the early retirement package (the
early retirees), which included the “lifetime” welfare benefit
at issue in this case, a Health Care Allowance (HCA). In
1995, Continental was acquired by CNA Financial Corpora-
tion (CNA). In 1998, CNA notified the early retirees that as
of January 1, 1999, their HCA benefit would be terminated.
The plaintiffs challenged this decision by complaining to the
Plan Administrator of CNA’s retirement plan, to no avail.
They subsequently brought suit, alleging claims of wrongful
denial of benefits under the Employee Retirement Income
Security Act (ERISA), breach of contract, estoppel and a
breach of fiduciary duty. The district court granted sum-
mary judgment to the defendants on all claims, and we now
affirm.


                      I. Background
A. Factual and Legal Background
  In November 1991, Continental offered a Voluntary
Special Retirement Program (VSRP) to its employees who
had 85 years of combined age and service (with minima of
55 years of age and 10 years of service). The VSRP included
a monthly Health Care Allowance (HCA), a welfare benefit
that was offered to all retirees. However, the HCA benefit
offered as part of the VSRP differed from the HCA benefit
available to regular retirees. It is the nature of this differ-
ence that is at issue here. Accompanying the VSRP were
explanatory materials, some of which the plaintiffs claim
expressed Continental’s intent to vest the HCA benefit, and
others which CNA claims did just the opposite. The poten-
tial early retirees were also told, both orally and in writing,
that the HCA benefit would be a “lifetime benefit.” The
plaintiffs are three of the 347 Continental employees who
No. 03-2090                                              3

accepted early retirement under the VSRP in early 1992.
Continental was acquired by CNA in 1995.
  All went smoothly until August 1998, when CNA notified
the early retirees that their HCA benefit would be elimi-
nated as of January 1, 1999. The plaintiffs complained by
telephone to CNA officials and were told that the Plan
Administrator’s decision was appropriate and final. Believ-
ing they had no practical recourse under the administrative
appeal procedures made available to them by the general
retirement plan, the plaintiffs sued CNA in a purported
class action on behalf of Continental employees who elected
to retire under the VSRP, bringing claims of violation of
§ 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B) for
wrongfully failing to pay benefits (Count II), breach of
fiduciary duty in violation of § 404 of ERISA, 29 U.S.C.
§ 1104 (Count III), breach of ERISA and common law
bilateral contracts (Count IV) and promissory estoppel
(Count V).1
  Two other putative class members, Bernard A. Serek and
Thomas L. Jones, had submitted written appeals to CNA’s
Plan Administrator, in which they argued that the VSRP
documents created a contract or entitlement that prohibited
unilateral termination of their HCA benefits. Serek and
Jones received substantially the same response as did the
plaintiffs. Because Serek and Jones had exhausted their
administrative claims, the district court found that the
plaintiffs were excused on grounds of futility from the
requirement that they exhaust their own administrative
claims. (Appellants’ Short Appx., Memorandum Op. and
Order 11/10/99 (11/10/99 Order) at 7-8.) However, because
the plaintiffs had not themselves complied with the ad-
ministrative review procedures, the district court was un-


1
  Count I, which was essentially redundant of Count II, was
withdrawn by the plaintiffs.
4                                                No. 03-2090

willing to allow them to “start from scratch in federal court.”
(Appellants’ Short Appx., Memorandum Op. and Order
5/16/00 (5/16/00 Order) at 4.) Thus, purportedly on the basis
that the evidence relevant to evaluating a Plan
Administrator’s discretionary decision to deny benefits is
limited to those materials available to the Plan
Administrator, the district court (at least initially) stayed
discovery on all of the plaintiffs’ claims and limited its
review to the administrative record of Serek’s and Jones’s
complaints. Id. at 4-5. Broader discovery was later allowed
with respect to the fiduciary duty claim, though summary
judgment was granted to CNA on the other three claims.
(Appellants’ Short Appx., Memorandum Op. and Order
12/28/00 (12/28/00 Order) at 3 n.3, 13.) The district court
eventually granted summary judgment to CNA on the
fiduciary duty claim as well. (Appellants’ Short Appx.,
Memorandum Op. and Order 3/28/03 (3/28/03 Order) at 7.)
  The plaintiffs now appeal the district court’s decision to
limit discovery to the administrative record on three of its
claims and from its grant of summary judgment on all
counts. CNA appeals the district court’s decision to widen
the scope of discovery with respect to the plaintiffs’ breach
of fiduciary duty claim, though this would matter only if we
were to reverse the district court’s grant of summary
judgment on that claim.


B. Documents and Oral Representations
  The retirement package in this case involves a com-
plicated construction of enhancements to the general re-
tirement plan in effect at the time. Not surprisingly, the
parties disagree about which documents (and oral repre-
sentations) created the VSRP and its enhanced HCA benefit
at issue here. Continental’s general retirement plan
documents—which (together with their reservations of
rights clauses) CNA argues are part of the VSRP— include
No. 03-2090                                                 5

the 1990 Comprehensive Health Care and Dental Plan of
the Continental Corporation (1990 Plan) (R. 109-1, ex. 1),
Your Benefits in 1991 (1991 General Summary Plan
Description (SPD)) (R. 109-1, ex. 4), A Guide for Benefits for
Employees Considering Retirement During 1991 (1991
Retirement Guide) (R. 109-1, ex. 6), A Guide for Employees
Considering Retirement During 1992 (1992 Retirement
Guide) (R. 109-1, ex. 7), and Retiree Benefits in 1991 (1991
Retiree SPD) (R. 109-1, ex. 8). Additionally, between the
time the plaintiffs (and other early retirees) complained
about the termination of their HCA benefit and the time the
Plan Administrator rendered his decision on the formal
appeals of other early retirees, CNA amended the 1990 Plan
and created the 1996 Continental Insurance Company
Retiree Group Medical and Dental Plan (1996 Plan) (R. 109-
1, ex. 3), which became effective in October 1998. Continen-
tal also supplied the early retirees with several documents
at the time it solicited their participation in the VSRP.
These documents (the VSRP Documents) include a covering
memorandum dated November 21, 1991 (VSRP Covering
Memo) (R. 109-2, ex. 9), A Brief Description of the Volun-
tary Special Retirement Program (Brief Description News-
letter) (R. 109-2, ex. 12), the 1992 Retirement Guide, a
personalized calculation worksheet (R. 109-2, ex. 10), a
payment election form (R. 109-2, ex. 11), an accep-
tance/rejection form (R. 109-2, ex. 13) and a retiree benefit
elections form (R. 109-2, ex. 14).
  Continental is also alleged to have made oral representa-
tions to the potential early retirees regarding the nature of
the HCA benefit. During group and individual meetings
that took place in late 1991 between Continental’s human
resources representatives and eligible employees in various
locations around the country, the HCA was consistently
6                                                     No. 03-2090

described as a “lifetime” benefit.2 Heidemann, who was an
assistant vice president of human resources for the Great
Lakes region and an officer of the company at the time of
her retirement, testified at deposition that she had been
told by her superiors in human resources that the HCA
benefit was a “lifetime” benefit. (R. 118-2, tab 1, Heidemann
dep. at 145, 164.) She could not recall anyone ever telling
her that the VSRP benefits were irrevocable. Id. at 147. She
strongly believed the VSRP was separate and distinct from
the general retirement plan, and since no one in human
resources ever told her the benefits could be revoked, id.,
and none of the documents specifically discussing the VSRP
contained a disclaimer, id. at 163, 218-19, she assumed that
the “lifetime” benefits were irrevocable. When Heidemann
presented the VSRP to the eligible employees in her region
(including Vallone), she represented the benefits as being
for “your lifetime” but did not say anything about their
irrevocability. (R. 118-2, tab 2, Vallone dep. at 77-79, 82.)
  The district court, from the perspective of the evidence
most favorable to the plaintiffs, determined that eligible
employees were told that the benefits were for their own
and their spouses’ lifetimes; that they were not told the
benefits could be changed or revoked (although they were
referred to documents that reserved those rights); that they


2
  CNA disputes that any formal meetings were scheduled and
claims that Heidemann conducted group meetings in her region
on her own initiative. (Appellees’ Br. at 14-15.) CNA moreover ar-
gues that the plaintiffs submitted 23 legally defective affidavits of
other early retirees claiming they also attended meetings in other
parts of the country during which the HCA benefit was described
as “lifetime.” Id. at 17. We need not decide whether these affida-
vits were defective or not, nor whether additional meetings
occurred or not, because, as we point out later, CNA admits that
the HCA benefit was a “lifetime” benefit for all retirees, and the
plaintiffs have not claimed that they were ever told explicitly that
the HCA benefit could not be terminated or altered.
No. 03-2090                                                 7

were not told the “lifetime” benefits were irrevocable, but
they nevertheless concluded that the benefits were ir-
revocable for reasons similar to Heidemann’s reasons; that
this conclusion was material to their decision to retire; that
Continental had no intention at the time of the plaintiffs’
retirement of altering the HCA benefit; and that the
intention and decision to change benefits came several
years later, after Continental had been acquired by CNA.
(3/28/03 Order at 6.) We find that these factual determina-
tions are reasonable and are supported by the record, but
we would add that although Continental may not have had
any intention of terminating the early retirees’ benefits, it
did know that under ERISA its plan documents allowed it
to do so.


                  II. Discovery Issues
  The district court initially stayed discovery with respect
to all of the plaintiffs’ claims, limiting its review to only
those materials considered by the Plan Administrator at the
time he denied Serek’s and Jones’s written claims for
benefits. (5/16/00 Order at 4.) The record could, however, be
augmented (upon motion of the plaintiffs) by any written
materials germane to the interpretation of the VSRP and
the Plan that were not contained in the administrative
record. Id. at 4-5. The plaintiffs never made such a motion.
Later, the district court allowed the plaintiffs to pursue
expanded discovery on their fiduciary duty claim. (12/28/00
Order at 3 n.3.) Of course, neither party is content with the
district court’s handling of discovery, which just proves the
truth of the old saw: if you try to please everybody, you end
up pleasing nobody.
  We review a district court’s decisions on discovery matters
for abuse of discretion. Searls v. Glasser, 64 F.3d 1061, 1068
(7th Cir. 1995). A court does not abuse its discretion “unless
one or more of the following circumstances is present: (1)
8                                               No. 03-2090

the record contains no evidence upon which the court could
have rationally based its decision; (2) the decision is based
on an erroneous conclusion of law; (3) the decision is based
on clearly erroneous factual findings; or (4) the decision
clearly appears arbitrary.” Sherrod v. Lingle, 223 F.3d 605,
610 (7th Cir. 2000), quoting Gile v. United Airlines, 95 F.3d
492, 495 (7th Cir. 1996). Moreover, “[w]e will not reverse
the court’s decision absent a clear showing that the denial
of discovery resulted in actual and substantial prejudice to
the complaining litigant.” Searls, 64 F.3d at 1068.
  The standard of review of a Plan Administrator’s deci-
sions regarding benefits depends on whether the Plan
Administrator was given the discretion to make those deci-
sions. See Perlman v. Swiss Bank Corp. Comprehensive
Disability Prot. Plan, 195 F.3d 975, 980 (7th Cir. 1999)
(“Decisions of ERISA plan administrators presumptively
receive de novo review, but if the plan establishes discre-
tionary authority then review will be deferential.”) (cita-
tions omitted). As we explain in more detail below, CNA’s
Plan Administrator had sufficient discretion that our review
of his decision to deny benefits on the basis that there was
no contract vesting benefits must be deferential. And “[d]e-
ferential review of an administrative decision means review
on the administrative record.” Id. at 981-82. Thus, with
respect to the early retirees’ claims for wrongful denial of
benefits and breach of ERISA and common law contract, the
district court correctly limited discovery to the complete
administrative record since the Plan Administrator’s
decision to deny benefits was based on a determination that
the HCA benefits could be terminated or altered because
they were not vested (i.e., because no contract existed that
vested the plaintiffs’ HCA benefits).
  However, the plaintiffs’ estoppel claim, which the district
court limited to the same record for the same reason, is not
actually an appeal of a decision of the Plan Administrator.
An estoppel claim requires (among other things) a knowing
No. 03-2090                                                   9

misrepresentation—generally in writing—here alleged to be
Continental’s representation to the potential early retirees
that the HCA benefits would be vested when Continental
knew they could be terminated or modified. In reviewing
Serek’s and Jones’s appeals, the Plan Administrator did not
make any finding whether the equities of the situation
required CNA to honor any non-legally-binding representa-
tions it may have made that the benefits were vested. Thus,
since the estoppel claim is not a review of a decision of the
Plan Administrator, the district court erred in limiting
discovery to the administrative record with respect to the
estoppel claim.
  Notwithstanding the district court’s error, its decision
to limit the record with respect to the plaintiffs’ estoppel
claim is harmless, because the plaintiffs never asserted or
demonstrated prejudice. Even after being allowed addi-
tional discovery on their fiduciary duty claim, the plaintiffs
have pointed to nothing—oral or written—that the district
court’s limitation prevented it from considering. Rather, the
plaintiffs argue, citing Bidlack v. Wheelabrator Corp., 993
F.2d 603 (7th Cir. 1993) (en banc), that unspecified “extrin-
sic evidence” should have been allowed to “explain what
was intended under the VSRP and what was promised to
the [early retirees] as an inducement to retire.” (Appellants’
Br. at 25.) The district court, which ultimately found that
oral representations were irrelevant to the plaintiffs’
estoppel claim because the documents were not ambiguous,
specifically allowed the plaintiffs to move to augment the
administrative record with any “written materials germane
to the interpretation of the VSRP and the Plan” which they
learned of that were not already included. (5/16/00 Order at
4-5.) The plaintiffs never made any such a motion. Since the
plaintiffs do not tell us what “extrinsic evidence” the district
court failed to consider due to limitations on the record, and
since the district court seems to have considered all rele-
vant evidence in the entire record (all written documents
10                                                   No. 03-2090

purporting to relate to the VSRP and/or the general retire-
ment plan, as well as Continental’s oral and written
representations that the HCA benefits were “lifetime”), the
plaintiffs fail to demonstrate any prejudice, even after being
invited to do so by CNA in its brief.
  From another direction, CNA challenges the district
court’s decision to expand the record with respect to the
fiduciary duty claim (12/28/00 Order at 3 n.3), even though
the district court eventually granted summary judgment in
its favor in the face of the augmented record. CNA argues
that the district court erred in permitting the plaintiffs
to take discovery beyond the record with respect to their
fiduciary duty claim, and that the Plan Administrator’s
discretion requires that review be limited to the administra-
tive record as it was for the other claims. However, the
breach of fiduciary duty is alleged to have occurred when
oral misrepresentations were made to the potential early
retirees at the time they were considering whether to take
the VSRP package and, as such, their claim does not involve
a decision of the Plan Administrator. For that reason, there
was no need to limit review of the fiduciary duty claim to
the administrative record, and the district court did not
abuse its discretion to allow additional discovery.3


3
   Moreover, we note that although there are many more decisions
reviewing a district court’s denial of discovery than decisions
reviewing a grant of discovery, apparently the requirement that
prejudice be shown applies equally to parties aggrieved by a grant
of discovery as by a denial. See, e.g., Belcher v. Bassett Furniture
Industries, Inc., 588 F.2d 904, 907 (4th Cir. 1978) (reviewing a
grant of discovery, court held that “[g]ranting or denying a request
under rule 34 is a matter within the trial court’s discretion, and
it will be reversed only if the action taken was improvident and
affected substantial rights.”), quoting Tiedman v. American
Pigment Corp., 253 F.2d 803, 808 (4th Cir. 1958); 8 Charles Alan
Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice
                                                      (continued...)
No. 03-2090                                                      11

                   III. Substantive Issues
   On December 28, 2000, the district court granted CNA’s
motion for summary judgment on the plaintiffs’ claims of
wrongful denial of benefits under ERISA (Count II), breach
of ERISA and common law contract (Count IV) and equi-
table estoppel (Count V). On March 28, 2003, the district
court granted CNA’s motion for summary judgment on
the plaintiffs’ one remaining count, their breach of fiduciary
duty claim (Count III). We review the district court’s grants
of summary judgment de novo. Hrobowski v. Worthington
Steel Co., 358 F.3d 473, 475 (7th Cir. 2004). To succeed on
a motion for summary judgment, the moving party must
show that there is no genuine issue of material fact and
that the moving party is entitled to judgment as a matter of
law. Fed. R. Civ. P. Rule 56(c); Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). In making this determination, “we
draw all reasonable inferences from the evidence in the
light most favorable to the nonmoving party.” Williamson
v. Ind. Univ., 345 F.3d 459, 462 (7th Cir. 2003).


A. ERISA Violation for Failure to Pay Benefits
   (Count II)
1. Standard of review applicable                       to    Plan
   Administrator’s decisions
    First, we must determine the appropriate standard for


3
   (...continued)
& Procedure (3d ed. 1998) § 2006 (“A discovery order can always
be reviewed on appeal from a final judgment in the case, even
though it is difficult at that stage to show that the party has been
prejudiced by the order . . . , and the harmless-error doctrine,
together with the broad discretion the discovery rules vest in the
trial court, will bar reversal save under very unusual circum-
stances.”) (footnotes omitted). CNA, like the plaintiffs, fails to
demonstrate how it was prejudiced by the district court’s decision
to expand discovery on the fiduciary duty claim.
12                                              No. 03-2090

reviewing the decisions of the Plan Administrator. Ordi-
narily, “[a] denial of benefits will be reviewed de novo ‘un-
less the benefit plan gives the administrator or fiduciary
discretionary authority to determine eligibility for benefits
or to construe the terms of the plan.’ ” Militello v. Cent.
States, Southeast & Southwest Areas Pension Fund, 360
F.3d 681, 685 (7th Cir. 2004) (quoting Firestone Tire &
Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). If the plan’s
language “indicates with the requisite if minimum clarity
that a discretionary determination is envisaged,” Herzberger
v. Standard Ins. Co., 205 F.3d 327, 331 (7th Cir. 2000),
“then a denial of benefits will be reviewed under an ar-
bitrary and capricious standard.” Militello, 360 F.3d at 685
(citing Hess v. Hartford Life & Accident Ins. Co., 274 F.3d
456, 461 (7th Cir. 2001)).
  The district court neatly sidestepped the question
whether the provisions of the 1990 Plan or the provisions of
the 1996 Plan were in effect at the time the benefits were
denied. It did so by finding that the language in the 1990
Plan “indicate[s] with sufficient clarity that the Plan
Administrator has the discretionary authority to interpret
the Plan” and that, if anything, the 1996 Plan (which was
adopted between the time the plaintiffs complained about
the termination of the HCA benefit and the time the Plan
Administrator responded to those complaints) “confers
discretionary authority on the Plan Administrator even
more clearly.” (12/28/00 Order at 5 & n.5.) Thus, under
either Plan, the arbitrary and capricious standard applies.
We agree that it is unnecessary to determine which of the
two Plans controls, because in addition to the district
court’s correct determination that the 1990 Plan conferred
sufficient discretion on the Plan Administrator and that the
1996 Plan expanded it, the fact is that it doesn’t matter
which Plan controls or which standard of review is applica-
ble. For the ultimate issue is whether the benefits were
vested. If the benefits were vested, the denial of benefits
No. 03-2090                                               13

would be wrongful even under an arbitrary and capricious
standard; and if the benefits weren’t vested, the denial of
benefits would be lawful even under a de novo standard. We
now proceed to the merits.


2. Analysis
  As they argued in the district court, the plaintiffs main-
tain that under the VSRP, which they believe was separate
and distinct from the general retirement plan, they received
a vested “lifetime” HCA benefit, and the Plan Administrator
therefore violated ERISA when he terminated their HCA
benefit. The district court rejected this argument by noting
that employers are free to amend or terminate welfare
benefits, which do not vest absent a showing of clear intent
to vest in written plan documents. The VSRP was a modifi-
cation of the general retirement plan (and the 1992 Retire-
ment Guide was specifically incorporated into the VSRP).
Hence, the reservation of rights clauses in the general
retirement plan documents became part of the VSRP. The
district court further found that the Brief Description
Newsletter, which described the VSRP’s enhanced benefits,
did not create an ambiguity because the plaintiffs’ interpre-
tation of language in the Newsletter as vesting the HCA
benefit (i.e., guaranteeing that the HCA benefit amount
would never be reduced) was not reasonable.
  We start from the premise that “[e]mployers . . . are gen-
erally free under ERISA, for any reason at any time, to
adopt, modify, or terminate welfare plans.” Curtiss-Wright
Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995). For this
reason, if ERISA welfare benefits “vest at all, they do so
under the terms of a particular contract.” Pabst Brewing Co.
v. Corrao, 161 F.3d 434, 439 (7th Cir. 1998). The Supreme
Court, followed by several courts of appeals, has indicated
that a modification that purports to vest welfare benefits
must be contained in the plan documents and must be
14                                              No. 03-2090

stated in clear and express language. See Inter-Modal Rail
Employees Ass’n v. Atchison, Topeka & Santa Fe Ry. Co.,
520 U.S. 510, 515 (1997); Frahm v. Equitable Life Assur-
ance Soc’y, 137 F.3d 955, 958 (7th Cir. 1998) (citing Sprague
v. General Motors Corp., 133 F.3d 388, 400 (6th Cir. 1988)
(en banc) as sensibly extending the requirement of a writing
to all long-term commitments); Gable v. Sweetheart Cup
Co., Inc., 35 F.3d 851, 855-56 (4th Cir. 1994); Wise v. El
Paso Natural Gas Co., 986 F.2d 929, 937 (5th Cir. 1993).
Given our presumption against the vesting of welfare
benefits, silence indicates that welfare benefits are not
vested. See Rossetto v. Pabst Brewing Co., 217 F.3d 539, 544
(7th Cir. 2000) (“Our presumption against vesting, it is
important to emphasize, kicks in only if all the court has to
go on is silence.”). Moreover, although ERISA itself “[left]
open . . . the possibility that a written plan may be com-
bined with an oral promise, such as an undertaking to give
a worker twice the benefits so established,” wholly oral
promises cannot be used to require the employer to provide
irrevocable benefits. Frahm, 137 F.3d at 958. If there is
some ambiguity in the language of the written agreement
that is not disambiguated elsewhere in the document, only
then may we consider evidence of the parties’ intent that is
“extrinsic” to the written documents, such as oral represen-
tations. See Rossetto, 217 F.3d at 547; Bidlack, 993 F.2d at
609.


a. The “lifetime” nature of the HCA benefit
  The plaintiffs claim that all of the VSRP’s enhanced ben-
efits were vested, including the HCA, and that the HCA
cannot be “carved out” of the VSRP package of vested
retirement benefits. This contention is easily disposed of
since the HCA benefit differs qualitatively from the VSRP’s
other enhanced benefits: it is a welfare benefit, as the
No. 03-2090                                                    15

plaintiffs concede (Appellants’ Br. at 22-23), not a pension
benefit. Thus, absent language expressly indicating that the
HCA benefit is vested, it would not vest upon retirement.4
  The plaintiffs argue that the VSRP documents indicate
that the HCA is a “lifetime” benefit, and that this had been
confirmed in oral representations made to them. Specifi-
cally, they assert that the personalized calculation work-
sheet, which states that eligible employees will receive an
HCA allowance of $465 per month to age 65 and $180 per
month thereafter, indicates that this benefit is “for life.” (R.
109-2, ex. 10.) The payment election form, which prescribes
the same HCA allowance amounts as appear on the person-
alized calculation worksheet and which allows eligible
employees to choose to have their surviving spouses receive
the HCA benefit after their death, is also offered for the
implication that the benefits were for life (and even be-
yond). (R. 109-2, ex. 11.)
   That the HCA benefit was a “lifetime” benefit—both for
regular retirees and for retirees who accepted the VSRP
package—is actually conceded by CNA. (Appellees’ Br. at
27; 1992 Retirement Guide at 6.) The problem for the
plaintiffs is that “lifetime” may be construed as “good for
life unless revoked or modified.” This construction is parti-
cularly plausible if the contract documents include a reser-
vation of rights clause (which, as will be shown, is the case
here). See UAW v. Rockford Powertrain, Inc., 350 F.3d 698,
704 (7th Cir. 2003) (“We must resolve the tension between
the lifetime benefits clause, and the plan termination and



4
  As we discuss in more detail below, the characterization of
a benefit as “lifetime” can, absent a reservation of rights clause,
indicate that the benefit is vested. However, the packaging of a
welfare benefit with pension benefits does not on its own alter our
presumption against vesting in the absence of express language
to the contrary.
16                                               No. 03-2090

reservation of rights clauses, by giving meaning to all of
them. Reading the document in its entirety, the clauses
explain that although the plan in its current iteration
entitles retirees to health coverage for the duration of their
lives and the lives of their eligible surviving spouses, the
terms of the plan—including the plan’s continued exis-
tence—are subject to change at the will of [the employer].
The health insurance section of the plan description unam-
biguously does not provide the plaintiffs with vested
lifetime health insurance benefits.”) (internal citations
omitted); Diehl v. Twin Disc, 102 F.3d 301, 307 (7th Cir.
1996) (“[W]hen potentially conflicting provisions coexist . . .
within a single contract formed of several documents, the
rule that contractual provisions be read as parts of an
integrated whole will lead a court to seek an interpretation
that reconciles those provisions.”); see also In re Unisys
Corp. Retiree Med. Benefit “ERISA” Litig., 58 F.3d 896,
904 (3d Cir. 1995) (“An employer who promises lifetime
medical benefits, while at the same time reserving the right
to amend the plan under which those benefits were pro-
vided, has informed plan participants of the time period
during which they will be eligible to receive benefits pro-
vided the plan continues to exist.”); Chiles v. Ceridian Corp.,
95 F.3d 1505, 1512 n.2 (10th Cir. 1996) (“[T]he weight of
case authority supports the Unisys approach, that a reser-
vation of rights clause allows the employer to retroactively
change the medical benefits of retired participants, even in
the face of clear language promising company-paid lifetime
benefits.”). As laypersons, the plaintiffs’ confusion on this
issue is understandable; it is also very unfortunate, if it was
a basis for their accepting the VSRP package. But in the
perhaps beady eyes of the law, the “lifetime” nature of a
welfare benefit does not operate to vest that benefit if the
employer reserved the right to amend or terminate the
benefit, given “what it takes to overcome the presumption
that welfare benefits do not vest, combined with [our] re-
luctance to interpret a contract as being at war with itself.”
Diehl, 102 F.3d at 307.
No. 03-2090                                               17

   It is true that some of our decisions have indicated that
the use of “lifetime” to denote the duration of benefits may
create an ambiguity and is not tantamount to silence (with
its presumption against vesting). See id. at 306 (finding
that separate agreement containing entitlement to lifetime
benefits modified reservation of rights clause incorporated
from another agreement and entitled retirees to welfare
benefits for their lifetime); Bidlack, 993 F.2d at 608 (“But
the agreements are not silent on the issue; they are merely
vague. They say that once retired employees reach the age
of 65 the company will pick up the full tab for their health
insurance and that when they die their spouses will con-
tinue to receive supplemental health benefits, again at the
company’s cost. This could be thought a promise to retired
employees that they and their spouses will be covered for
the rest of their lives.”). However, none of those decisions
involve situations where a reservation of rights clause is an
integral part of the contract that provides the “lifetime”
benefits. In Diehl, we found that the contract providing
“lifetime” benefits “was an independent contract, supported
by separate consideration and capable of modifying or sup-
planting prior contractual arrangements,” such as the one
that contained the reservation of rights clause. Diehl, 102
F.3d at 306-07. Here, the nature of the HCA as a “lifetime”
benefit is not one of the enhancements created by the VSRP
because the HCA is also a “lifetime” benefit for regular
retirees according to the general retirement plan docu-
ments. Thus, unlike Diehl, the “lifetime” nature of the HCA
benefit could not abrogate the reservation of rights clause
included in the 1992 Retirement Guide and other general
retirement plan documents because both were offered by
the same contract. Moreover, the reservation of rights
clause in Diehl provided an “unsure foundation of the
putative right to discontinue” benefits. Id. at 308. The use
of “lifetime” with respect to the VSRP’s HCA benefit simply
does not operate to vest that benefit for the early retirees.
In Bidlack, the only reservation of rights clause applicable
18                                                    No. 03-2090

to the plan at issue was in a contract between the employer
and an insurance company for the purchase by the former
of health insurance sold by the latter. Bidlack, 993 F.2d at
606. We specifically found that clause inapplicable to the
contract between the employees and the employer as to
duration of benefits, the main issue in that case. Id. Thus,
Bidlack did not involve the situation here where “lifetime”
benefits were granted by the employer while the right to
terminate or modify them was reserved. We have held that,
when “lifetime” benefits are granted by the same contract
that reserves the right to change or terminate benefits, the
“lifetime” benefits are not vested. See Rockford Powertrain,
350 F.3d at 704.
  The plaintiffs additionally argue that the Brief
Description Newsletter’s heading, “No reductions in the
Retiree Health Care Allowance” indicated that the HCA
benefit levels could not be altered. (Brief Description
Newsletter at 2.) However, the paragraph accompanying
that heading shows that no such promise was made. The
paragraph reads:
     The maximum Retiree Health Care Allowance is earned
     at age 62 after 25 years of service as an active em-
     ployee. If you retire under the Voluntary Special
     Retirement Program, you will be credited with the
     maximum Retiree Health Care Allowance, even if you
     have less than 25 years of service or are under age 62.”5



5
  We note, as an aside, that although “earned” might seem to
connote “vested,” the two are distinguishable (though related)
concepts. In the context of claims to benefits related to a break in
service, the Second Circuit has noted that
     “[a]ccrued” benefits refer to those normal retirement benefits
     that an employee has earned at any given time during the
     course of employment. 29 U.S.C. § 1002(23)(A); see generally
                                                      (continued...)
No. 03-2090                                                       19

Id. With respect to the plaintiffs’ contention here, we agree
with the district court that the “plaintiffs’ interpretation of
the provision is not the most sensible one.” (12/28/00 Order
at 8-9.) In context, the heading in the Brief Description
Newsletter refers to and rejects the reduced benefit
amounts that would otherwise apply if an employee who
does not meet the age and service requirements retires
under the general retirement plan.6 Thus, the VSRP’s
enhancement to the regular retirement plan’s HCA benefit
was to ensure that the early retirees qualified for the max-
imum HCA amounts; it was not, and could not reasonably
have been construed as, a promise to vest the HCA benefit
at that maximum level for the remainder of the early


5
    (...continued)
       Esden v. Bank of Boston, 229 F.3d 154, 162-63 (2d Cir. 2000).
       “Vested” benefits, on the other hand, refer to those normal
       retirement benefits to which an employee has a “nonforfeit-
       able” claim; in other words, those accrued benefits he is en-
       titled to keep. 29 U.S.C. § 1002(19).
McDonald v. Pension Plan of the NYSA-ILA Pension Trust Fund,
320 F.3d 151, 156 (2d Cir. 2003). Moreover, we have held that
“ ‘[a]ccrued benefit’ . . . has been interpreted to include retirement
benefits and to exclude ‘ancillary benefits not directly related to
retirement benefits’ like insurance or disability benefits.” Heinz v.
Cent. Laborers’ Pension Fund, 303 F.3d 802, 804-05 (7th Cir.
2002), aff ’d, 2004 U.S. LEXIS 4028 (U.S. June 7, 2004). Thus,
while the use of “earned” as applied to the maximum HCA benefit
level might indicate poor drafting, it does not here indicate an
intent to vest.
6
  The plaintiffs may have recognized this in their Statement
of Undisputed Material Facts In Opposition to the Defendant’s
Second Motion for Summary Judgment. (See R. 117 at 5, ¶ 19
(“The VSRP retirees were entitled to receive the maximum Retiree
Health Care Allowance even if they had less than 25 years of
service or were under the age of 62. This benefit was not offered
under the general retirement plan.”).)
20                                                    No. 03-2090

retirees’ lives. The plaintiffs’ insistence to the contrary is
unsupportable.


b. Reservations of rights clauses
  The plaintiffs next argue that, as a separate and distinct
program, the benefits in the VSRP were not subject to the
reservations of rights clauses in the various general retire-
ment plan documents, and that the documents specifically
mentioning the VSRP did not contain reservation of rights
clauses. However, regardless of how the plaintiffs believe
the VSRP was marketed to the early retirees, their initial
premise that the VSRP was separate and distinct from the
general retirement plan is incorrect. This is evident from a
review of the Brief Description Newsletter, which repeat-
edly refers to the general retirement plan in discussing the
VSRP’s enhanced benefits, making clear that the general
retirement plan is the baseline program to which the
VSRP’s enhancements would be made.7 The plaintiffs


7
   We note four references in the three page document. (Brief
Description Newsletter, R. 109-2, ex. 12.) On page 1, it states, “the
Retirement Plan’s benefit formula for accruing your retirement
allowance usually is a percentage of your average final pay over
the last five years, multiplied by your years of service, but reduced
if you want to retire before age 62. Under the [VSRP], the
following enhancements will apply.” On page 2, it states that
“[u]nder the Retirement Plan, your allowance is normally re-
duced . . . . But if you elect to retire through the [VSRP], these
reduction factors will not apply.” Later on the same page, it states,
“[i]n addition to these changes, we have already announced an
expansion of the Retirement Plan’s definition of pay.” And on page
3: “In addition to the enhanced retirement benefits that are
described above . . . .” Moreover, the VSRP would fail to qualify as
an ERISA retirement program if it were comprised solely of the
documents that specifically mentioned the VSRP and did not take
                                                       (continued...)
No. 03-2090                                                   21

themselves admit that the VSRP was a modification of the
regular retirement plan. (Appellants’ Br. at 32.) We also
note that if the plaintiffs were correct that the VSRP was
comprised only of those documents that specifically men-
tioned the VSRP, it would lack such fundamental prere-
quisites as administrative procedures and descriptions of
the very benefits being offered.
  Moreover, the Covering Memo specifically incorporated
the 1992 Retirement Guide and its reservation of rights
clause. The Covering Memo stated that “[r]etirement means
a major change in lifestyle for most people, and you’ll need
to weigh the pros and cons carefully. The enclosed materials
are intended to help you arrive at the right decision for
you.” (Covering Memo at 1.) One of the enclosed documents
was the 1992 Retirement Guide, which eligible employees
were told “provides information about the benefits available
to you during retirement and highlights the decisions you
need to make regarding those benefits.” Id. Continental
thus unambiguously stated in writing that the 1992
Retirement Guide, which included a reservation of rights
clause, was part of the VSRP program and contained in-
formation about retirement benefits under the VSRP,
including Continental’s reserved right to alter or terminate
those benefits. The reservation of rights clause appears in a
box near the bottom of the last page of the 15-page docu-
ment: “The coverages described in this Guide may be
amended, revoked or suspended at the Company’s discre-
tion at any time, even after your retirement. No manage-
ment representative has the authority to change, alter or



7
  (...continued)
as its baseline the general retirement plan’s terms, procedures
and benefit descriptions. See 29 U.S.C. §§ 1102(a)(1), 1024(a)(1)
(requiring employee benefit plans to be governed by written plan
documents filed with the Secretary of Labor).
22                                                 No. 03-2090

amend these coverages.”8 (1992 Retirement Guide at 15.)
Although the plaintiffs argue that this reservation of rights
clause on its face applies to “the coverages described in this
Guide” and that the VSRP was not mentioned in the 1992
Retirement Guide, we noted earlier that the “lifetime”
nature of the HCA benefit was set out in the 1992 Retire-
ment Guide and that the HCA benefit’s “lifetime” nature
was not one of the VSRP’s enhancements.
  Although the 1992 Retirement Guide (with its applicable
reservation of rights clause) was part of the VSRP, along
with, as will be shown, the 1990 Plan and the annual SPDs
available at the time the VSRP was offered, it is worth
addressing CNA’s argument that the lack of any reserva-
tions of rights clauses in the documents that mention the
VSRP amounts to silence (with its presumption against
vesting). If the benefits were not “lifetime” benefits, CNA
would be correct. But, as we noted in Rossetto v. Pabst
Brewing Co., “[i]f there is language in the agreement to
suggest a grant of lifetime benefits, and the suggestion is
not negated by the agreement read as a whole, the plaintiff
is entitled to a trial.” Rossetto, 217 F.3d at 547; see also
Abbruscato v. Empire Blue Cross & Blue Shield, 274
F.3d 90, 98 (2d Cir. 2001) (vacating district court’s grant of
summary judgement in plan’s favor because “lifetime” life
insurance benefits in early retirement plans “are ambiguous


8
  Even if the general retirement plan documents were inapplic-
able to the VSRP, the omission of a reservation of rights clause
from the documents mentioning the VSRP would not necessarily
operate to waive CNA’s right to terminate or modify the HCA,
which is an ERISA welfare benefit. See, e.g., Gable v. Sweetheart
Cup Co., 35 F.3d 851, 855 (4th Cir. 1994) (citing Wise v. El Paso
Natural Gas Co., 986 F.2d 929, 938 (5th Cir. 1993) (holding that
“silence” as to an employer’s right to modify the plan does not
“impliedly cede the right to later amend or discontinue cover-
age”)).
No. 03-2090                                                    23

and susceptible to interpretation as a promise of vested
benefits” where neither of the early retirement plans
“contain unambiguous reservation of rights clauses”);
Devlin v. Empire Blue Cross & Blue Shield, 274 F.3d 76, 85
(2d Cir. 2001) (where no reservation of rights clause was
present, “[s]uch ‘lifetime’ language, we believe, is sufficient
to create a triable issue of fact as to whether Empire prom-
ised to vest retiree life insurance benefits at the stated
level.”). Thus, if the plaintiffs had been correct that the
reservation of rights clauses in the general retirement plan
documents did not apply to the VSRP, the grant of “life-
time” benefits would have created an ambiguity allowing
them a trial and allowing us to examine extrinsic evidence
of the parties’ intent. However, since we determined that
this was not the case, there is no ambiguity requiring an
examination of extrinsic evidence. See Rockford Powertrain,
350 F.3d at 704 (“The health insurance section of the plan
description unambiguously does not provide the plaintiffs
with vested lifetime health insurance benefits. Therefore,
we need not resort to extrinsic evidence to interpret the
contractual obligation between the parties.”).
  Finally, the plaintiffs argue that language in the 1990
Plan authorized the vesting of their retirement benefits in
such a way that the reservation of rights clause in the 1990
Plan, which they concede was “the controlling document in
existence at the time that the putative class elected to
accept the VSRP plan” (Appellants’ Br. at 23), allowed the
benefits to be changed or terminated only prior to their
retirement.9 For this proposition, the plaintiffs seize upon


9
  The 1990 Plan incorporates by reference the Plan’s annual
SPDs and “any changes announced in writing to Employees or to
Retired Employees before the beginning of the calendar year, for
the year in which the services are rendered.” (1990 Plan § 4.2, at
15.) The 1990 Plan is the umbrella ERISA plan under which the
                                                    (continued...)
24                                                   No. 03-2090

the following language: “However, no such amendment or
termination shall diminish or eliminate any claim for a
benefit under the Plan to which a participant shall have
become entitled prior to such amendment or termination, as
applicable.” (1990 Plan § 8.1, at 30.) But this argument
presumes the very things the plaintiffs are trying to prove:
that upon their retirement, the early retirees became
entitled to their retirement benefits, which could not be
diminished or eliminated by later amendments. As we have
already explained, welfare benefits, unlike pension benefits,
do not vest upon retirement. And the reservation of rights
clauses contained in the 1992 Retirement Guide and other
general retirement plan documents, which were applicable
to the VSRP, allow amendment or modification of retire-
ment benefits even after retirement. Thus, there was no
entitlement to the HCA benefit on a going-forward basis.
See Hackett v. Xerox Corp., 315 F.3d 771, 774 (7th Cir.
2003) (analyzing language in a benefits plan similar to the
language here and holding that “[r]ights to benefits do not
accrue prospectively”). The language at issue here pre-
vented CNA from amending its retirement plan to require
retirees to pay back HCA allowances already paid out, or
retroactively terminating coverage for a claim to medical
benefits to avoid paying such a claim. The reservations of
rights clauses, on the other hand, allow CNA to prospec-
tively alter or amend its welfare benefits offered to retirees,
even after retirement, and that is what it did.



9
  (...continued)
general retirement plan as well as the VSRP were both created.
As the controlling document at the time the plaintiffs elected to
accept the VSRP plan, we find that its reservation of rights clause
also applies to the VSRP. In addition, since the SPDs are incorpo-
rated by reference into the 1990 Plan, any reservation of rights
clauses in the SPDs available to the early retirees at the time the
VSRP was offered are also applicable to the VSRP.
No. 03-2090                                                    25

B. Breach of ERISA and Common Law (Bilateral)
   Contract (Count IV)
  The district court unsurprisingly had difficulty distin-
guishing this purported contract claim from the plaintiffs’
claim that they were wrongfully denied ERISA benefits.10
As with denial of benefits claims, claims that a contract
vested retirement benefits require that the vesting be done
in writing, not orally. See Frahm, 137 F.3d at 958 (“Al-
though . . . a written plan may be combined with an oral
promise, such as an undertaking to give a worker twice the
benefits so established—the utility of reducing retirement
promises to writing and avoiding arguments about who said
what to whom are so fundamental to both ERISA and
contract law that an extension of the writing requirement
to all long-term commitments is an inescapable ingredient
of the federal common law slowly accumulating in ERISA’s
shadow.”). As we have noted, the HCA benefit at issue was
not vested in writing, so no bilateral contract was created
that vested the HCA benefit.
  Although we need not discuss CNA’s argument that the
plaintiffs’ bilateral contract claim is duplicative of its denial
of benefits claim under ERISA, we note that claims by a
beneficiary for wrongful denial of benefits (no matter how
they are styled) have been held by the Supreme Court to
“fall[ ] directly under § 502(a)(1)(B) of ERISA, which


10
  We note in this regard that the plaintiffs merely incorporated
their arguments made in support of their wrongful denial of ERISA
benefits claim and did not add any separate legal or factual argu-
ments. (Appellants’ Br. at 36-37.) Moreover, the plaintiffs char-
acterize their wrongful denial of benefits claim in Count II as an
“ERISA Contractual Claim,” id. at 27, quote from a decision in-
volving interpretation of a written ERISA contract, id. at 28-29,
and discuss the issue using contractual language such as “bar-
gained . . . in consideration for,” id. at 27, and “offered and
accepted,” id. at 32.
26                                               No. 03-2090

provides an exclusive federal cause of action for resolution
of such disputes.” Metropolitan Life Ins. Co. v. Taylor, 481
U.S. 58, 62-63 (1987). Recent decisions of both this circuit
and the Supreme Court have held that state law claims,
such as the plaintiffs’ breach of common law contract claim
here, are pre-empted by ERISA. See Aetna Health Inc. v.
Davila, 2004 WL 1373230, at *10 (U.S. June 21, 2004)
(“Congress’ intent to make the ERISA civil enforcement
mechanism exclusive would be undermined if state causes
of action that supplement the ERISA § 502(a) remedies
were permitted, even if the elements of the state cause of
action did not precisely duplicate the elements of an ERISA
claim.”); Klassy v. Physicians Plus Ins. Co., 2004 WL
1326717, at *4 (7th Cir. June 15, 2004) (“ERISA provides a
remedy for plan participants wrongfully denied benefits.
However, such claims must be brought under ERISA and
creatively pleading a denial of benefits claim as a state law
claim does not defeat the broad preemptive force of
ERISA.”). Thus, even if we had found that a written
agreement vested the HCA benefit, the breach of common
law contract claim would be pre-empted by ERISA § 502(a),
while the breach of ERISA contract claim is duplicative of
Count II, as is evident from the plaintiffs’ briefs on appeal.
It is appropriate to disallow a breach of common law
contract claim here because plaintiffs should not be allowed
to bring a denial of ERISA benefits claim in the guise of a
common law breach of contract, thereby ensuring de novo
review and no limitations on the record even if (as here) the
plan administrator had the discretion to determine that no
contract vested benefits and that benefits could therefore
legally be terminated.


C. Estoppel (Count V)
  In order to prevail on an estoppel claim under ERISA, we
ordinarily require that plaintiffs show (1) a knowing mis-
No. 03-2090                                                27

representation; (2) that was made in writing; (3) with
reasonable reliance on that misrepresentation by them; (4)
to their detriment. See Coker v. TWA, 165 F.3d 579 (7th Cir.
1999). However, we have found an exception when plan
documents are ambiguous or misleading, in which case oral
representations as to the meaning of the documents may be
relevant. See Bowerman v. Wal-Mart Stores, 226 F.3d 574,
588 (7th Cir. 2000). The district court found that exception
inapplicable here—a finding that is not contested by the
plaintiffs—and decided the issue on the basis that the
plaintiffs unreasonably relied on the representation that
the HCA benefit was a “lifetime” benefit as meaning that it
was also a vested benefit. Their reliance was unreasonable
given that the general retirement plan documents, to which
the plaintiffs were referred, contained “numerous, unambig-
uous provisions reserving CNA’s right to amend, suspend,
or terminate the health care subsidy.” (12/28/00 Order at
13.) As a guideline for the boundaries of ERISA estoppel, we
have emphasized the “narrow scope” of estoppel claims and
have noted that “only extreme circumstances” justify such
claims. Sandstrom v. Cultor Food Science, 214 F.3d 795,
797 (7th Cir. 2000); Coker, 165 F.3d at 585.
  In their brief on appeal, the plaintiffs argue that there is
a material question of fact whether a promise made to them
in writing that their HCA benefit would not be terminated,
referring specifically to the heading in the Brief Description
Newsletter stating that there would be no reduction in the
HCA benefit. But this estoppel claim fails for two reasons.
First, the plaintiffs have not shown a knowing misrepresen-
tation of fact. Although “[r]epresentations about plans and
intentions could be false if, at the time the statements were
made, the speaker actually had a different intention,”
Frahm, 137 F.3d at 961, the district court found that, at the
time the VSRP was offered, Continental had no intention of
terminating the “lifetime” HCA benefit. Moreover, the
plaintiffs have pointed to no false statements about whether
28                                               No. 03-2090

the HCA benefit could be terminated, and the district
court’s uncontested finding that the early retirees were not
told explicitly that the “lifetime” benefits were irrevocable
is therefore dispositive. The fact that the benefits were
“lifetime” was not a misrepresentation; as we have dis-
cussed, the plaintiffs’ confusion stems from their erroneous
(though understandable) equation of “lifetime” with
“vested.”
  Second, the plaintiffs cannot show reasonable reliance.
We agree with the district court that, even if there were
material written misrepresentations as to the nature of the
HCA benefit, the plaintiffs unreasonably ignored the
reservations of rights clauses in the general retirement plan
documents that put them on notice that the HCA benefit
could be terminated or modified. The plaintiffs argue that
“[a]ll of the benefits were packaged in a single plan,” which
justified their reliance on the alleged representation that
“the VSRP and all of its entitlements would not be termi-
nated.” (Appellants’ Br. at 38.) However, not only were no
representations made that benefits would not be terminated
or altered, but, as we explained earlier, the packaging of a
welfare benefit (such as the HCA) with pension benefits
does not by itself make the welfare benefit a vested benefit.


D. Breach of ERISA Fiduciary Duty (Count III)
  ERISA requires a trustee or other fiduciary to “discharge
his duties with respect to a plan solely in the interest of the
participants and beneficiaries.” 29 U.S.C. § 1104(a)(1). In
interpreting this statute, the Supreme Court has held that
an employer breaches its fiduciary obligation by lying to
employees in order to induce them to surrender their
benefits. Varity Corp. v. Howe, 516 U.S. 489, 506 (1996).
The plaintiffs point us to decisions from the Second, Third
and Sixth Circuits which have supported claims for breach
No. 03-2090                                                 29

of fiduciary duty on similar facts. The Second Circuit, which
has given the broadest scope to ERISA fiduciary duty
claims, has held that representing to plan participants that
a plan’s benefits are “lifetime” when they are not vested can
create a genuine issue of material fact as to whether
misrepresentations were made or whether there was a
failure to provide complete and accurate information.
Abbruscato, 274 F.3d at 102-03. The Third Circuit has held
that a fiduciary duty claim could proceed, despite the
employer’s reservation of the right to terminate retirement
benefits, when oral and written representations were made
to employees that the benefits would continue for life and
the employer was aware that retirement decisions were
being based on the mistaken assumption that the benefits
were also vested. In re Unisys Corp. Retiree Med. Benefit
“ERISA” Litig., 57 F.3d 1255, 1266-67 (3d Cir. 1995). And
the Sixth Circuit has held that a breach of fiduciary duty
claim was made out where a company—both of its own ac-
cord and in response to specific employee inquiries—mis-
represented to employees that a reservation of rights clause
in the plan did not allow retirement benefits to be changed
when the legal effect of the clause was precisely the oppo-
site. James v. Pirelli, 305 F.3d 439, 455-56 (6th Cir. 2002).
  In this circuit, a breach of fiduciary duty exists if fiducia-
ries “mislead plan participants or misrepresent the terms
or administration of a plan.” Anweiler v. American Elec.
Power Serv. Corp., 3 F.3d 986, 991 (7th Cir. 1993), quoted
in Bowerman, 226 F.3d at 590. “Although not every error in
communicating information regarding a plan will be found
to violate a fiduciary’s duty under ERISA, we have made
clear that fiduciaries must communicate material facts
affecting the interests of plan participants or beneficiaries
and that this duty to communicate exists when a partici-
pant or beneficiary ‘asks fiduciaries for information, and
even when he or she does not.’ ” Bowerman, 226 F.3d at 590
(citations omitted). However, in Frahm, we found that
30                                               No. 03-2090

advice to employees stressing the availability of “lifetime”
benefits without any qualifiers indicating that the employer
reserved the right to change or terminate the benefits was
not a breach of fiduciary duty. Frahm, 137 F.3d at 959. As
we noted in Frahm:
     Some readers must have mentally added the word
     “unreduced” after a word such as “lifetime.” Yet unless
     § 1104(a)(1) is a guarantor of accurate information at
     all times and for the indefinite future—unless it creates
     not only a duty of care, but also a duty of previ-
     sion—then claims that one or another bit of advice was
     misleading do not violate this statute.
Id. at 959-60. We also found in Frahm that “[t]he district
court’s finding that [the employer] did not set out to deceive
or disadvantage plan participants therefore forecloses
plaintiffs’ claim under § 1104(a)(1).” Id. at 960.
   Although the plaintiffs attempt to distinguish Frahm, the
bases upon which they draw distinctions are irrelevant. The
plaintiffs assert that Frahm did not involve a claimed
ambiguity in the documents, but rather, conflicting evi-
dence about what representations were made to plaintiffs.
But the need to address the claimed ambiguity does not
detract from the relevance to the plaintiffs’ situation of
Frahm’s legal conclusions, and the plaintiffs don’t explain
why Frahm’s legal conclusions are irrelevant. The plaintiffs
also assert that, contrary to the district court’s finding,
there was a “campaign of disinformation” here as in Varity.
If this were correct, that would indeed serve to distinguish
Frahm, but there is no evidence of any intent to purpose-
fully mislead employees. Rather, our conclusion that
Continental fulfilled its duty of loyalty with respect to the
potential early retirees is supported by the district court’s
finding that at the time the VSRP was offered, Continental
had no intention of eliminating the “lifetime” HCA benefit
in the future. The plaintiffs characterize Continental’s
No. 03-2090                                                 31

failure to explain, expressly and clearly, that the HCA
benefit could be altered or terminated—just like the other
welfare benefits offered to all retiring Continental employ-
ees—as “an intentional failure to warn VSRP participants”
that Continental or a future merger partner could termi-
nate the HCA at any time (Appellants’ Br. at 34), and, even
more egregiously, as “a concerted effort by CNA to remain
silent about the HCA termination potential, in order to
achieve its goals of maximizing retirements” (Appellants’
Br. at 36). But just because Continental wanted as many of
its eligible employees as possible to accept the VSRP does
not mean that it purposefully violated its duty of loyalty by
failing to provide an explicit warning when the necessary
information was already in the early retirees’ hands. If
anything, the failure to provide an explicit warning is just
as easily explainable by non-actionable negligence as by a
disloyal intent, and in that sense, Frahm is on all fours. See
Frahm, 137 F.3d at 959 (“[S]lipups in managing any
complex enterprise are inevitable, and negligence—a
violation of the duty of care— is not actionable.”). In this
respect, it is significant that the reduction of retiree welfare
benefits in the face of rising health care costs is generally
a relatively recent development, and warning of that
possibility only recently became important. Cf. Bidlack, 993
F.2d at 613-14 & n.3 (Cudahy, J., concurring) (noting that
the idea that retiree health benefits could be granted on
anything less than a “lifetime” basis was a fairly recent
development and that a presumption that silence indicated
vesting was probably more in keeping with the parties’
expectations at the time the agreement at issue was made).
  The district court was correct that Frahm demonstrates
a narrower interpretation of Varity than exists in other
circuits. Specifically, while there is a duty to provide ac-
curate information under ERISA, negligence in fulfilling
that duty is not actionable. See Frahm, 137 F.3d at 959.
That is why the employer must have set out to disadvan-
32                                              No. 03-2090

tage or deceive its employees, as in Varity, in order for a
breach of fiduciary duty to be made out. See id. at 960.
Here, there is no evidence that Continental purposefully
intended to confuse plan participants by “packag[ing] the
HCA with pension incentives” when “[t]hey knew that
welfare benefits can be terminated, yet they never warned
the retirees.” (Appellants’ Br. at 35.) For one thing,
Continental’s general retirement plan also “packaged”
pension benefits with welfare benefits. We believe that this
is a common practice, and we cannot find that it evinces
an intent to confuse or deceive on Continental’s part. For
another, as we have already noted, the mere fact that pen-
sion and welfare benefits are part of the same retirement
package does not mean, up to this point at least, that
employers are required to warn employees that the welfare
benefits, unlike the pension benefits, are terminable. As we
have repeatedly held, silence indicates that welfare benefits
are not vested, see Rossetto, 217 F.3d at 544, and we have
not limited these holdings to retirement plans containing
only welfare benefits. Thus, the lack of a specific warning
that welfare benefits are terminable would not alone create
a breach of fiduciary duty. There is simply no evidence that
Continental set out to deceive its employees by its actions,
and the district court therefore correctly found that the
plaintiffs’ claimed breach of fiduciary duty fails under
Frahm.
  In fact, it is not even clear that the information provided
was inaccurate. As we found earlier, the general retirement
plan documents containing reservation of rights clauses
were made part of the VSRP by the documents setting out
the VSRP’s enhancements. There was no evidence that any
employee ever specifically asked about the irrevocability of
the HCA benefit, that Continental falsely indicated to any
employee that the HCA benefit was irrevocable or that
Continental was aware that the early retirees were com-
ing to the mistaken conclusion that “lifetime” equated to
No. 03-2090                                                33

“vested.” And in this circuit, if accurate written information
is provided, as it was here, then the plaintiffs are unfortu-
nately out of luck. See Kamler v. H/N Telcom. Servs., 305
F.3d 672, 682 (7th Cir. 2002), cert. denied, 2003 U.S. LEXIS
2536 (U.S. Mar. 31, 2003); Librizzi v. Children’s Mem. Med.
Ctr., 134 F.3d 1102, 1305 (7th Cir. 1998). In law, the
inclusion of reservation of rights clauses in an agreement
accurately conveys that benefits may be altered or termi-
nated. Thus, the plaintiffs’ fiduciary duty claim fails.


                     IV. Conclusion
   This story does not have a happy ending. What this case
comes down to, in the end, is the distinction between
“lifetime” and “vested” welfare benefits—a legal distinction
that understandably escaped many of Continental’s em-
ployees who elected to take early retirement under the
VSRP. It is also a distinction that, as we have pointed out
above, only relatively recently became important. But now
this legal distinction has indeed become an important one,
because the lack of a writing that expressly vests the “life-
time” HCA benefit combined with Continental’s reservation
of the right to terminate benefits means that the plaintiffs’
claims of wrongful denial of benefits, breach of contract and
estoppel must fail. As for the plaintiffs’ fiduciary duty
claim, we agree with the district court’s observation that, in
hindsight, Continental would have better served its employ-
ees by proactively clarifying its intent with respect to the
HCA benefit during the time its employees were deciding
whether to take early retirement under the VSRP. Its
failure to do so has left the plaintiffs, and undoubtedly
many other long-time former Continental employees, feeling
betrayed. However, we also agree with the district court
that, at least in this circuit, Continental’s failure is not
actionable as a breach of fiduciary duty. For the foregoing
34                                           No. 03-2090

reasons, the district court’s grant of summary judgment to
the defendants on all of the plaintiffs’ claims must be
                                               AFFIRMED.

A true Copy:
      Teste:

                       ________________________________
                       Clerk of the United States Court of
                         Appeals for the Seventh Circuit




                  USCA-02-C-0072—7-15-04
