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

No. 04-4258
EARLENE JENKINS,
                                              Plaintiff-Appellant,
                               v.

MICHAEL D. YAGER and MID AMERICA
MOTORWORKS, INCORPORATED, formerly
known as MID AMERICA DIRECT,
INCORPORATED,
                                 Defendants-Appellees.
                   ____________
           Appeal from the United States District Court
              for the Southern District of Illinois.
             No. 03 C 4007—J. Phil Gilbert, Judge.
                        ____________
    ARGUED SEPTEMBER 26, 2005—DECIDED APRIL 14, 2006
                        ____________


  Before EASTERBROOK, RIPPLE and ROVNER, Circuit Judges.
  RIPPLE, Circuit Judge. Earlene Jenkins, who brought
this action under the Employee Retirement Income Security
Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., appeals the
district court’s grant of summary judgment in favor of plan
administrator Michael Yager and her former employer
Mid America Motorworks (“Mid America”). For the reasons
set forth in this opinion, we affirm in part and reverse in
part the judgment of the district court, and remand the case
2                                                    No. 04-4258

to the district court for further proceedings consistent with
this opinion.


                                I
                       BACKGROUND
A. Facts
  Ms. Jenkins was an employee of Mid America, an auto-
parts distributor, from August 1988 through September
2002. Michael Yager owns and operates Mid America
and serves as the company’s president.
  In mid-1991, Mid America established a profit-sharing
and pension plan for the company’s 100-plus employees. At
all times relevant to this litigation, Mid America was
the plan administrator and Mr. Yager was the plan trustee.
The plan was prepared by RSM McGladrey, Inc., and was
reviewed by Mid America’s attorneys. Dwight Erskine,
the Registered Principal of Raymond James Financial
Services in Effingham, Illinois, also advised Mr. Yager
regarding the various funds available for the investment of
plan funds, and Mr. Yager purchased the funds for the plan
through Erskine’s office.1
  Under the profit-sharing portion of the plan, Mid America
contributes a discretionary amount to the plan at the end of
the year; that amount then is divided among the partici-
pants. The plan requires Mr. Yager to direct the investment


1
  In their brief, defendants assert that Erskine was the “financial
advisor” to the plan. Appellees’ Br. at 2. However, there is no
clear support for that statement in the record; in the portions
of their depositions contained in the record, neither Mr. Yager
nor Mr. Erskine describe Erskine’s role as a “financial advisor.”
No. 04-4258                                                      3

of the discretionary profit-sharing contribution by Mid
America. The profit-sharing assets are invested in four
funds marketed by American Funds: American Mutual
Fund, The Growth Fund of America (“Growth Fund”),
Euro-Pacific Growth Fund and the Capital World Growth &
Income (“Capital World”) Fund. Under the plan, employees
are eligible to collect their profit-sharing earnings along
with their pension earnings upon termination, retirement,
total and permanent disability, or death. During the years
2000 through 2002, the profit-sharing plan sustained
losses of over $400,000.2
  The plan also contains a pension component. Employees
may defer up to fifteen percent of their salary for investment
into the pension portion of the plan; Mid America matches
that contribution dollar-for-dollar up to the legal limit of six
percent of that deferral. The plan provides that plan partici-
pants may make limited investment directions as to the
salary reduction and the employer-matched plan contribu-
tions (the “401(k) assets”) by choosing to direct the invest-
ment of those assets among four funds marketed by Ameri-
can Funds: Euro-Pacific Growth Fund, The Growth Fund of
America (“Growth Fund”), The Income Fund of America
(“Income Fund”) and The Cash Management Trust of
America (“Cash Management Fund”). These options have



2
   The profit-sharing plan sustained the following investment
losses: in 2000, $165,818.47; in 2001, $98,055.82; and in 2002,
$148,119.68. R.25, Ex.4 at 5; R.25, Ex.5 at 5; R.25, Ex.6 at 3. On
page seven of the plaintiff’s brief, she claims the losses totaled
only $241,686. However, her table reveals that this statement
is based on an arithmetical error, and that actual losses were over
$400,000.
4                                                   No. 04-4258

not changed since 1991. During the calendar years of 2000,
2001 and 2002, the plan’s 401(k) assets sustained investment
losses of over $700,000.3
  Mr. Yager testified in his deposition that he never re-
viewed the participants’ individual 401(k) investment
decisions. From 1991-2002, participants could change
their investment directions only once per year. Beginning in
2002, participants could change investment directions once
every six months. Prior to 2003, each plan participant
received a form letter in November or December that set
forth the participant’s level of salary deferral and the
funds in which the participant’s 401(k) funds were invested.
The letter further stated that the participant could make
changes to the investment of their funds; those changes
would be effective January 1 of the following year. Plan
participants also were given a statement of the balance of
their 401(k) assets once a year, after the end of the calendar
year. Under this arrangement, as a practical matter, plan
participants had to make investment choices for the follow-
ing year before they knew how their earlier fund choices
had performed in the previous year.


3
  In 2000, the Cash Management Fund had a net gain of
$2,127.14, the Growth Fund had a gain of $91,493.42 and the
Income Fund had a gain of $17,815.31, while the Euro-Pacific
Growth Fund had a loss of $158,821.94. R.25, Ex.4 at 3. In 2001,
the Cash Management Fund had a gain of $1,507.67 and the
Income Fund had a gain of $11,053.81, while the Euro-Pacific
Growth Fund had a loss of $97,914.74 and the Growth Fund had a
loss of $171,488.66. R.25, Ex.5 at 3. In 2002, the Cash Management
Fund had a gain of $469.67, while the Euro-Pacific Growth Fund
had a loss of $104,632.89, the Growth Fund had a loss of
$286,681.62, and the Income Fund had a loss of $6,505.24. R.25,
Ex.6 at 2.
No. 04-4258                                                5

  Additionally, Mid America conducted an annual meet-
ing in December for all participants in the plan; at that
meeting, Mr. Erksine explained the performance of the
funds over the past year and the options available to
participants, as well as answered any questions. However,
Ms. Jenkins attended only one of these annual meetings
during her employment with Mid America. The materials
from this meeting also were left in the break room so that
employees could review them. Mr. Erskine also stated that
he was available in person and by telephone in his office
to answer any questions about the four funds; there is
no indication from the record that Ms. Jenkins availed
herself of his services.


B. District Court Proceedings
  Ms. Jenkins brought this action against Mr. Yager and Mid
America, alleging that Mr. Yager’s performance fell below
the standard imposed on ERISA trustees. The district court
denied Ms. Jenkins’ motion for summary judgment on
December 7, 2004. In doing so, the district court quoted Ms.
Jenkins’ summary of her position:
    By [1] providing plan participants with unduly re-
    strictive means to direct investments, by [2] failing to
    prudently monitor the [p]lan’s investments, and by [3]
    failing to operate the [p]lan according to ERISA, Yager
    and Mid America breached their fiduciary duties to
    the [p]lan.
R.34 at 2.
  The district court began by discussing Ms. Jenkins’ third
contention. Section 403 of ERISA, 29 U.S.C. § 1103(a), states
that “all assets of an employee benefit plan shall be held
in trust by one or more trustees,” and that those named
6                                                  No. 04-4258

trustees “shall have exclusive authority and discretion to
manage and control the assets of the plan.” There are two
explicit exceptions to this rule found in 29 U.S.C.
§ 1103(a)(1) and § 1103(a)(2), although as discussed later,
neither exception applies to the Mid America plan. Ms.
Jenkins contended that Mr. Yager and Mid America had
violated ERISA by delegating control over plan assets to
plan participants. However, the district court noted that
section 404(c) of ERISA absolves a fiduciary from liability
caused by plan participants when the “pension plan . . .
provides for individual accounts and permits a participant
or beneficiary to exercise control over the assets in his
account.” 29 U.S.C. § 1104(c)(1). The district court stated that
“[a] plain reading of that language suggests that participant
control is assumed permissible in the first instance, for the
statute absolves a fiduciary of liability ‘in the case of’ a plan
providing for individual accounts and allowing participant
control.” R.34 at 5. The district court then held that an
“implied exception” to ERISA’s non-delegation provision in
section 403 existed for plans that allow participant control,
and therefore, Mr. Yager and Mid America did not violate
section 403. Id.
  Next, with respect to Ms. Jenkins’ remaining claims, the
district court determined that the record established that
Mr. Yager did act prudently in selecting and monitoring
investments. The district court noted that Mr. Yager had
employed a long-term strategy for the investment of the
401(k) funds. He had chosen conservative and stable
funds and had decided to remain invested in those funds
during periods of market fluctuation. The court then
determined that, because Mr. Yager had selected funds
that were conservative and not volatile in the long-term,
he had not breached his fiduciary duty for not “hastily
retreating from that strategy in the face of what appears
No. 04-4258                                                 7

to have been nothing more than mere market fluctuation.”
Id. at 8. Additionally, the district court held that Mr. Yager
had provided plan participants with all the information that
they needed to make informed investment decisions and
that he did not violate any duty in not providing additional
advice or information. The district court did not address Mr.
Yager’s fiduciary duty with respect to the profit-sharing
funds.
   Although the district court denied Ms. Jenkins’ motion for
summary judgment, it did not grant, at that point, summary
judgment to Mr. Yager and Mid America because they had
not cross-moved for summary judgment. However, after the
district court denied Ms. Jenkins’ motion for summary
judgment, Ms. Jenkins determined that, based on the district
court’s interpretation of the law, she could not prevail at
trial. Ms. Jenkins stipulated that the defendants’ memoran-
dum in opposition to summary judgment could be treated
as a motion for summary judgment. In this stipulation, she
reserved her right to appeal any final order granting
defendants’ cross-motion for summary judgment. As a
result of the stipulation, the district court granted summary
judgment to the defendants and dismissed Ms. Jenkins’
claims with prejudice.


                             II
                       DISCUSSION
 We review a district court’s grant of summary judg-
ment de novo, drawing all reasonable inferences in the light
most favorable to the non-moving party. Vallone v. CNA Fin.
Corp., 375 F.3d 623, 631 (7th Cir. 2004).
8                                                 No. 04-4258

A. The “Implied Exception” to ERISA Sections 403
   and 405
  Ms. Jenkins submits that the Mid America plan, which
allows plan participants to direct their 401(k) funds, violates
ERISA provisions that forbid the delegation of trustee
duties.


                              1.
  In evaluating Ms. Jenkins’ submission, we begin with
section 403(a) of ERISA. It states:
    Except as provided in subsection (b) of this section,
    all assets of an employee benefit plan shall be held in
    trust by one or more trustees. Such trustee or trustees
    shall be either named in the trust instrument or in the
    plan instrument described in section 1102(a) of this title
    or appointed by a person who is a named fiduciary, and
    upon acceptance of being named or appointed,
    the trustee or trustees shall have exclusive authority
    and discretion to manage and control the assets of the
    plan. . . .
29 U.S.C. § 1103(a) (emphasis added). Section 403(a) has two
explicit exceptions that are found in 29 U.S.C. § 1103(a). As
the statutory text makes clear, neither of these exceptions
are pertinent to our present inquiry. More precisely, that
section provides:
    (1) the plan expressly provides that the trustee or
    trustees are subject to the direction of a named fiduciary
    who is not a trustee, in which case the trustees shall be
    subject to proper directions of such fiduciary which are
    made in accordance with the terms of the plan and
    which are not contrary to this chapter, or
No. 04-4258                                                     9

    (2) authority to manage, acquire, or dispose of assets of
    the plan is delegated to one or more investment manag-
    ers pursuant to section 1102(c)(3) of this title.
Id. § 1103(b). Because these exceptions are not applicable, we
must determine whether any other provisions of
ERISA provide authorization for the arrangement found
in the plan under review. We therefore must determine
whether other provisions of the statute are pertinent to
our inquiry.


                               2.
  In undertaking this inquiry, we turn first to ERISA section
405(c) to determine the responsibilities of the trustee under
the plan before us. That subsection provides that a plan
instrument may allocate “fiduciary responsibilities (other
than trustee responsibilities)” among named fiduciaries and
to other persons designated by named fiduciaries. 29 U.S.C.
§ 1105(c)(1). Section 405(c) further defines “trustee responsi-
bilities” as “any responsibility provided in the plan’s trust
instrument (if any) to manage or control the assets of the
plan.” Id. § 1105(c)(3).
  Mid America’s plan instrument, labeled “Employee
Savings and Profit Sharing Plan,” sets forth the respon-
sibilities of the trustee.4 R.25, Ex.8 at 1. The trustee’s powers


4
  29 U.S.C. § 1105(c)(3) defines trustee responsibilities as “any
responsibility provided in the plan’s trust instrument (if any) to
manage or control the assets of the plan.” The Mid America
plan did not have a trust instrument, only a plan instrument.
However, it appears that the plan instrument subsumed the trust
instrument and the one document serves as both. ERISA section
                                                   (continued...)
10                                                    No. 04-4258

are “to invest, manage, and control” the plan assets consis-
tent with the “funding policy and method” as determined
by Mid America. Id. at 87. More specifically, the Trustee is
to “invest and reinvest the Trust Fund to keep the Trust
Fund invested . . . in such securities or property, real or
personal, wherever situated, as the Trustee shall deem
advisable. . . .” Id. The plan instrument also describes the
“funding policy and method” that should be established by
Mid America by stating that Mid America “shall determine
whether the Plan has a short run need for liquidity (e.g., to
pay benefits) or whether liquidity is a long run goal and
investment growth (and stability of same) is a more current
need.” Id. at 23. The “Trust Fund” is defined as “the assets
of the Plan and Trust as the same shall exist from time to
time.” Id. at 17.
  The plan instrument also states, for the 401(k) funds,
that “[e]ach Participant shall be given the opportunity to
direct the Trustee as to the investment of such Participant’s
account value,” with such designations to be “made not
more frequently than once in any Plan Year.” Id. at 62, 66. In


4
   (...continued)
402(a)(1) states that “[e]very employee benefit plan shall be
established and maintained pursuant to a written instrument.” 29
U.S.C. § 1102(a)(1). Additionally, ERISA section 403(a) states that
trustee(s) “shall either be named in the trust instrument or in the
plan instrument described in section 402(a) or appointed by a
person who is a named fiduciary.” See id. § 1103(a). Therefore,
ERISA does not mandate a separate written trust agreement. In
this case, the plan instrument defines the Trust and sets forth
trustee responsibilities. R.25, Ex.8 at 17, 87-95. It also refers to
itself as “[t]his Plan and Trust.” Id. at 98. Therefore, the trustee
responsibilities laid out in the plan instrument are the trustee
responsibilities at issue in 29 U.S.C. § 1105(c)(3).
No. 04-4258                                                11

addition, a separate “Directed Investment Account” shall be
made for each participant, and such account “shall not share
in Trust Fund earnings, but it shall be charged or credited as
appropriate with the net earnings, gains, losses and ex-
penses as well as any appreciation or depreciation in market
value during each Plan Year attributable to such account.”
Id. at 67.
  As established by the plan, the duty to invest the plan
assets was a “trustee responsibility” under section 405(c)(3);
authority to delegate that duty cannot be found in section
403(c)(1). Since section 405 does not provide an exception to
section 403(a), we must look elsewhere in ERISA to find
authorization for the plan’s participant-directed invest-
ments.


                             3.
  ERISA section 404, which sets forth the standard of care
for a fiduciary, provides that no fiduciary shall be liable
for any loss which results from a plan participant or benefi-
ciary’s exercise of control in participant-directed plans. See
29 U.S.C. § 1104(c). However, in order to qualify as a
participant-directed plan eligible for the liability shield of
section 404(c), a plan must meet a number of conditions;
prominent among them is that it must provide at least three
investment options and it must permit the participants to
give instructions to the plan with respect to those options at
least once every three months. 29 C.F.R. § 2550.404c-
1(b)(2)(c). It is undisputed that the Mid America plan does
not qualify under section 404(c) because there is no opportu-
nity to change investments once every three months.
Therefore, we must determine whether compliance with
section 404(c) is the exclusive method of creating a
participant-directed exception to sections 403 and 405.
12                                                   No. 04-4258

   Although section 404(c) and its accompanying regula-
tion, 29 C.F.R. § 2550.404c-1, create a safe harbor for a
trustee, we see no evidence that these provisions necessarily
are the only possible means by which a trustee can escape
liability for participant-directed plans. As 29 C.F.R. §
2550.404c-1(a)(2) states:
     The standards set forth in this section are applicable
     solely for the purpose of determining whether a plan is
     an ERISA section 404(c) plan and whether a particular
     transaction engaged in by a participant or beneficiary of
     such plan is afforded relief by section 404(c). Such
     standards, therefore, are not intended to be applied in deter-
     mining whether, or to what extent, a plan which does not
     meet the requirements for an ERISA section 404(c) plan or a
     fiduciary with respect to such a plan satisfies the fiduciary
     responsibility or other provisions of Title I of the Act.
(emphasis added). The Department of Labor also has
stated that, for plans that do not meet the regulatory
definition of a section 404(c) participant-directed plan, “non-
complying plans do not necessarily violate ERISA; non-
compliance merely results in the plan not being accorded
the statutory relief described in section 404(c).” Final
Regulation Regarding Participant Directed Individual
Account Plans (ERISA Section 404(c) Plans), 57 Fed. Reg.
46,906, 46,907 (Oct. 13, 1992).
  Therefore, we agree with the district court and believe that
the statute, when read as a whole along with the accompa-
nying regulations, permits a plan trustee to delegate
decisions regarding the investment of funds to plan partici-
pants even if the plan does not meet the requirements for
the section 404(c) safe harbor. Therefore, there is an “im-
plied exception” to sections 403 and 405 for participant-
directed plans, allowing plan participants to direct the
No. 04-4258                                                  13

investment of their own plan funds. If a participant-directed
plan does not meet the conditions set forth in 29 C.F.R. §
2550.404c-1(b), the plan trustee and fiduciaries simply do
not receive the benefits of section 404(c), and they are not
shielded from liability for losses or breaches of duty which
result from the plan participant’s exercise of control. It does
not necessarily mean that such a plan violates ERISA;
instead, the actions of the plan trustee, when delegating
decision-making authority to plan participants, must be
evaluated to see if they violate the trustee’s fiduciary duty.


B. Violation of Fiduciary Duty
  ERISA section 404 imposes standards of fiduciary duty,
including the fiduciary’s duty to act “with the care, skill,
prudence, and diligence” as would a prudent man under
the same circumstances. 29 U.S.C. § 1104(a)(1)(B). If a
fiduciary breaches his duty, he can be personally liable to
the plan for any losses to the plan resulting from his breach,
as well as can be “subject to such other equitable
or remedial relief as the court may deem appropriate. . . .”
29 U.S.C. § 1109(a).
  To state a claim for a violation of fiduciary duty, the
plaintiff must “establish: (1) that the defendants are
plan fiduciaries; (2) that the defendants breached their
fiduciary duties; and (3) that the breach caused harm to the
plaintiff.” Brosted v. UNUM Life Ins. Co. of America, 421 F.3d
459, 465 (7th Cir. 2005) (citing Kamler v. H/N Telecomm. Serv.,
Inc., 305 F.3d 672, 681 (7th Cir. 2002)). The first prong is not
at issue in this case as Mr. Yager, as trustee of the plan, and
Mid America, as administrator of the plan, are both fiducia-
ries under ERISA section 3(21)(A). See 29
U.S.C. § 1002(21)(A).
14                                               No. 04-4258

  As for the second prong, “ERISA’s fiduciary duty
was meant to hold plan administrators to a duty of loyalty
akin to that of a common-law trustee.” Ameritech Benefit Plan
Comm. v. Comm. Workers of America, 220 F.3d 814, 825 (7th
Cir. 2000). Accordingly, “[t]he fiduciary must act as though
[he] were a reasonably prudent businessperson with the
interests of all the beneficiaries at heart.” Id.
  Ms. Jenkins submits that Mr. Yager breached his fiduciary
duties by failing to “investigate, make, and monitor the
Plan’s investments as required by the fiduciary duty of
prudence.” Appellant’s Br. at 21.5 Ms. Jenkins also alleges
that Mid America violated their fiduciary duty by failing
to monitor adequately Mr. Yager and by failing to take
appropriate actions to remedy Mr. Yager’s fiduciary
breaches. R.1 at 4. Under ERISA section 405, a fiduciary is
responsible for a breach of duty by another fiduciary if he
knew of the breach and did not take action to remedy the
breach. 29 U.S.C. § 1105(a)(3). Therefore, Mid America could
be liable if we determine that Mr. Yager breached
his fiduciary duty. Ms. Jenkins raises two distinct claims for
breach of fiduciary duty: one related to the plan’s 401(k)
funds, and one related to the plan’s profit-sharing funds.




5
  In Ms. Jenkins’ complaint, she states that Mr. Yager did not
take “adequate action to monitor, review, and change the
investment of Plan assets”—not that he breached his duty in
choosing the initial funds. R.1 at 2. In her brief, her com-
plaints center on the fact that he did not change the invest-
ments over time in response to market pressures. She does not
argue that the initial selection of the various American Funds
for plan investments violated a fiduciary duty.
No. 04-4258                                                 15

                      1. 401(k) Funds
  As for the 401(k) funds, it does not appear that Mr. Yager
breached his fiduciary duty to plan participants in his initial
selection of the funds, his monitoring of the funds or in the
information provided to plan participants to assist in their
investment choices. When initially selecting the funds, Mr.
Yager testified that, in choosing the American Funds, he saw
them as a “long-term plan.” R.26, Ex.3 at 40. He stated that
he had selected funds with a good “long-term record” and
an “ability to perform in an up market or a down market.”
Id. The Third Circuit has said that “the adequacy of a
fiduciary’s independent investigation and ultimate invest-
ment selection is evaluated in light of the ‘character and
aims’ of the particular type of plan he serves.” In re Unisys
Sav. Plan Litigation, 74 F.3d 420, 434 (3d Cir. 1996) (citing
Donovan v. Cunningham, 716 F.2d 1455, 1467 (5th Cir. 1983)).
In this case, Mr. Yager’s investment strategy was to find
long-term, conservative, reliable investments that would do
well during market fluctuations. It was part of his invest-
ment strategy to pick solid funds and to stay with them
long-term. We cannot say such a strategy was unreasonable
or imprudent.
  Mr. Yager also did not breach his duty in failing to
monitor or alter the investments once the four funds
were selected in 1991. Ms. Jenkins contends that Mr. Yager
did not stay adequately aware of losses in the funds.
However, Mr. Erskine testified in his deposition that he
spoke to Mr. Yager about once a week and frequently
discussed the performance of the plan’s funds, as well as
other funds. Mr. Erskine also testified that he provided
Mr. Yager with written information on fund performance at
least six times a year, including fund reports, prospectuses
and newspaper articles. Mr. Yager testified that he reviewed
16                                                 No. 04-4258

the reports for the four funds each year. Therefore, it
appears that Mr. Yager adequately monitored the funds.
  Similarly, Mr. Yager did not breach his fiduciary duties by
keeping the same four mutual funds for 401(k) fund invest-
ment from 1991 until present. Ms. Jenkins contends that Mr.
Yager should have considered moving some of the plan
assets out of the three funds that were losing money in 2000,
2001 and 2002.6 While three of the four funds did lose
money in 2000, 2001 and 2002, that alone is not evidence
that Mr. Yager violated his fiduciary duty. We have stated
that investment losses are not proof that an investor violated
his duty of care. See DeBruyne v. Equitable Life Assurance Soc.
of the United States, 920 F.2d 457, 465 (7th Cir. 1990). Mr.
Yager, in his deposition, reiterated that his strategy was to
pick conservative funds that would perform well during
market fluctuation. He stated that he would stay with those
funds even in a year where the fund loses money because,
in the long-term, those funds would still perform well. Mr.
Yager, in keeping the four mutual funds, did not violate his
standard of care. Nothing in the record suggests that it was
not reasonable and prudent to select conservative funds
with long-term growth potential and to stay with those
mutual funds even during years of lower performance.
Notably, Ms. Jenkins does not suggest any concrete course of


6
  Ms. Jenkins herself could have changed the direction of her
investment and directed Mr. Yager to invest her 401(k) funds
for years 2000, 2001 and 2002 in a fund that was not losing
money. However, she did not do so, electing to invest 50% into
the Euro-Pacific Growth Fund and 50% into the Growth Fund for
each of those years. R.25, Ex.3 at 1-3. As noted above, the Euro-
Pacific Growth Fund lost money in 2000, and both the Euro-
Pacific Growth Fund and the Growth Fund lost money
in 2001 and 2002.
No. 04-4258                                                       17

action that would have been better than the one selected by
Mr. Yager.
   Finally, Mr. Yager did not breach his duty in allowing
plan participants to direct their investments. We pre-
viously have stated that fiduciaries must communicate
“material facts affecting the interests of plan participants
or beneficiaries,” even when the participants or beneficiaries
do not ask for such information. Bowerman v. Wal-Mart
Stores, Inc., 226 F.3d 574, 590 (7th Cir. 2000). Mr. Yager set
up an informational meeting each year at which Mr. Erskine
would discuss the various funds’ performance and outlook
and at which materials on fund performance would be
distributed. Additionally, the materials with information
about the various funds were left in the company break
room, so that all employees would have access to the
information. Although Ms. Jenkins claims that Mr. Yager
violated his fiduciary duty by failing to review each partici-
pants’ investment directions throughout the year to ensure
they were appropriate, we have held that ERISA does not
require “plan administrators to investigate each partici-
pant’s circumstances and prepare advisory opinions for
literally thousands of employees.” Id. at 590-91 (citing
Chojnacki v. Georgia-Pacific Corp., 108 F.3d 810, 817-18 (7th
Cir. 1997)).7 Mr. Yager provided his employees with the
necessary information to enable them to direct the invest-


7
  While Bowerman and Chojnacki refer to the duty to inform
employees about health benefits and severance benefits, not
the duty to inform employees as to the prudent way to invest
their 401(k) funds in a participant-directed plan, the fiduciary
duty at issue is the same as in this case: to what extent fiduciaries
must communicate material facts affecting the interests of plan
participants. See Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574,
590 (7th Cir. 2000); Chojnacki v. Georgia-Pacific Corp., 108 F.3d 810,
817-18 (7th Cir. 1997).
18                                                  No. 04-4258

ment of their 401(k) funds among four different funds,
including yearly employee meetings with Mr. Erskine.
Therefore, he did not breach his fiduciary duty by failing to
provide adequate information.


                  2. Profit-Sharing Funds
  Next, we turn to Ms. Jenkins’ claim that Mr. Yager
violated his fiduciary duty to the plan by his failure to make
a prudent, reasonable investigation of the profit-sharing
investments and by failing to monitor those investments.8
Ms. Jenkins relies on Mr. Yager’s deposition testimony to
support her claim, where the following exchange occurred:
     Q: With respect to the [profit-sharing] contribution that
        is made in any given year, what percentages of
        those—of that contribution goes into each of these
        four funds?
     A: I have no knowledge of how that’s—I don’t recall
        how that is made.
         ....
     Q: Do you know? Is [the distribution among the funds]
        equal? Is it 25 percent to each of ‘em, or—
     A: No, I don’t know how that’s—don’t recall how that
        is split up.


8
  Though the district court did not address Ms. Jenkins’ claim
that Mr. Yager and Mid America breached their fiduciary duties
with regard to the profit-sharing funds, Ms. Jenkins did argue
that such a breach had been committed in her motion for
summary judgment. See R.25 at 7-8, 14. Ms. Jenkins renews
her argument in her appellate brief, see Appellant’s Br. at 22-23,
as well as in her reply brief, see Appellant’s Reply Br. at 12.
No. 04-4258                                                   19

    Q: Do you know what documents there might be to
       show how those are split up?
    A: No. Not aware of anything.
R.25, Ex.7 at 107-08. Mr. Yager further testified that he did
not recall considering or making any changes as to how
the profit-sharing money was invested since 1991. Id. at 112.
When asked who would know how the money is
to be invested, Mr. Yager replied that it would be a “Dwight
[Erskine]/McGladrey-type situation” and that Mr. Erskine
would have the information on how the profit-sharing
money was allocated amongst the four different funds. Id.
at 110-12. However, Mr. Erskine testified that it was his
understanding that Mr. Yager made the decisions as to how
profit-sharing contributions would be invested amongst the
four funds. R.26, Ex.5 at 42.
  From the record, it is unclear exactly how the profit-
sharing contribution was allocated across the four funds.
Mr. Erskine testified that he believed that the Capital World
Fund was given a larger share of the contribution in order
to “get a little more of the international element into the
plan.” Id. at 44-45. The annual reports in the record for the
profit-sharing funds support Mr. Erskine’s recollection of
profit-sharing investments.9


9
  In 2000, the profit-sharing fund made purchases of $9,468.26 in
the American Mutual Fund, $45,813.56 in the Growth Fund,
$19,801.96 in the Euro-Pacific Growth Fund, and $82,281.09 in the
Capital World Fund. R.25, Ex.4 at 5. In 2001, the profit-sharing
fund made purchases of $6,777.16 in the American Mutual Fund,
$536.30 in the Growth Fund, $3,796.81 in the Euro-Pacific Growth
Fund, and $16,843.28 in the Capital World Fund. R.25, Ex.5 at 5.
In 2002, the profit-sharing fund made purchases of $4,771.68 in
                                                   (continued...)
20                                                     No. 04-4258

  Unlike the situation with the 401(k) funds, Mr. Yager, as
trustee, retained all responsibility to “invest, manage,
and control the [p]lan assets.” R.25, Ex.8 at 87. A trustee
is required to use due care and diligence when investing
plan funds, meaning that he or she must “employ[] the
appropriate methods to investigate the merits of the invest-
ment and to structure the investment.” Eyler v. C.I.R., 88
F.3d 445, 454 (7th Cir. 1996) (citing Katsaros v. Cody, 744 F.2d
270, 279 (2d Cir. 1984)); see also Chao v. Hall Holding Co., Inc.,
285 F.3d 415, 426 (6th Cir. 2002) (citing cases); In re Unisys,
74 F.3d at 434. Viewing Mr. Yager’s deposition statements
in the light most favorable to Ms. Jenkins, it appears that
Mr. Yager did not explore the merits of investing the profit-
sharing money, nor did he select what proportion of the
money to invest in each of the four funds each year, even
though he was investing new money into the funds annu-
ally during this time period.10 If Mr. Yager delegated the
investment decision-making to Mr. Erskine or to RSM


9
  (...continued)
the American Mutual Fund, $2,457.69 in the Growth Fund,
$2,460.52 in the Euro-Pacific Growth Fund, and $15,911.75 in the
Capital World Fund. R.25, Ex.6 at 3.
10
   See Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915, 919 (8th Cir.
1994) (stating that deposition testimony “suggesting that the
trustees did very little to evaluate the propriety” of their ac-
tions with regard to plan assets could support a judgment at trial
for the plaintiffs); but see DeBruyne v. Equitable Life Assurance Soc.
of the United States, 920 F.2d 457, 465 (7th Cir. 1990) (holding that
plaintiff’s evidence that an investment lost money, coupled with
an expert’s opinion that a typical funds manager would not have
acted as the fiduciary had acted, was not sufficient to rebut the
fiduciary’s assertion at summary judgment that its investment
strategies were prudent).
No. 04-4258                                                 21

McGladrey, Inc., as was indicated by his deposition testi-
mony, he was not fulfilling his trustee duty of care and
prudence by not making an independent investigation as to
the propriety of the profit-sharing investments. The trustee
may “take into consideration the advice of qualified others,
as long as he exercises his own judgment.” In re Unisys, 74
F.3d at 434. We have stated that the “degree to which a
fiduciary makes an independent inquiry [before acting] is
crucial.” Eyler, 88 F.3d at 456 (holding that the fiduciary’s
reliance on the opinion of attorneys and a financial advisor
was not sufficient to show that the fiduciary “exercised [its]
own judgment” before completing an employee stock
ownership plan transaction). Therefore, it appears that there
are material issues of fact remaining as to whether or not
Mr. Yager invested the profit-sharing contributions with the
care and diligence that is required of a fiduciary under
ERISA.
   Finally, we consider the third prong, which is harm to
the plaintiff. There also appears also to be a genuine issue of
fact as to whether Mr. Yager and Mid America’s alleged
breaches harmed Ms. Jenkins. According to the plan’s
annual reports, the profit-sharing fund suffered a loss of
$165,818.47 in 2000, $98,055.82 in 2001 and $148,119.68 in
2002. R.25, Ex.4 at 5; R.25, Ex.5 at 5; R.25, Ex.6 at 3. Ms.
Jenkins’ account also suffered a loss, reflected in her indi-
vidual plan statements; the profit-sharing portion of her
account lost $151.68 in 2000, $1,282.38 in 2001 and $2,637.61
in 2002. R.25, Ex.10 at 8-10. Given that the profit-sharing
funds in the plan experienced losses, it is possible that Mr.
Yager’s alleged breach of his fiduciary obligation caused
these losses. For example, Mr. Yager continued to invest a
proportionally larger amount of the profit-sharing money
into the Capital World Fund in 2000 and 2001, even though
it was losing money while the American Mutual Fund was
22                                               No. 04-4258

not. R.25, Ex.6 at 3; R.25, Ex.5 at 5. Had he been monitoring
the investments adequately, he might not have made such
a choice. It is difficult to tell from the limited record what
impact his alleged neglect had on the profit-sharing funds;
however, viewing the facts in the light most favorable to Ms.
Jenkins, it does appear that there is at least a genuine issue
as to whether or not his breach caused the losses to the plan.
See Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915, 919 (8th
Cir. 1994) (stating that the causal connection between breach
and loss “is a fact-intensive inquiry” that might not be
susceptible to summary judgment in some cases).
  Given these remaining issues of material fact, we therefore
reverse the district court’s grant of summary judgment as to
Ms. Jenkins’ claim that Mr. Yager and Mid America violated
their fiduciary duty to carefully invest and monitor the
profit-sharing funds.


                        Conclusion
  For the foregoing reasons, we affirm the grant of the
defendants’ motion for summary judgment on claims
related to the 401(k) funds and reverse the grant of sum-
mary judgment on claims related to the profit-sharing
funds. Therefore, the judgment of the district court is
affirmed in part, reversed and remanded in part. The parties
shall bear their own costs on appeal.
                                       AFFIRMED in part;
                          REVERSED and REMANDED in part
No. 04-4258                                            23

A true Copy:
       Teste:

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




                USCA-02-C-0072—4-14-06
