Adams v. Freedom Forge Corp., 204 F.3d 475 (3^rd Cir. 2000)-Former employees of Freedom Forge Corp. sued alleging that the company breached its ERISA fiduciary duties.  Freedom Forge allegedly induced them into early retirement with oral assurances that their health insurance benefits would continue essentially unmodified until death.    Freedom Forge failed to inform them that it actually retained the power to amend or eliminate the benefits program altogether.  The suit arose after Freedom Forge Corp. announced that it intended to switch from a self-insured benefits program with no premiums to a managed care system in which retirees would choose among plans all requiring premiums (varying with the amount of co-pay.) 

A central issue in this case was a procedural one—whether the district court properly granted a preliminary injunction for all the 136 retirees, when it heard testimony on irreparable harm from only a selection of them.  Furthermore, only a smaller number of the retirees presented evidence that they would have to forgo medical care or other necessities under one of the new plans.  It is not enough to allege simply loss of money, or financial difficulty, to show irreparable harm.  The fact that retirees would have to switch doctors also was not sufficient to show irreparable harm.

Although the district court "understandably relied" on numerous cases from other courts which allowed the judge to assume harm essentially as a matter of "common sense," this court stated that while these cases have a certain "intuitive appeal" (e.g. that termination of coverage will harm a retiree on fixed income), "common sense is no substitute for evidence," especially involving preliminary injunctions.  Additionally, the mere fact that the plaintiffs had sought class status does not mean this court had to treat them as a collective pending certification of the class.

Lastly, this court noted that according to the testimony of three of the plaintiffs, which established irreparable harm, it would uphold the preliminary injunction as applied to them if they also met the "likelihood of success on the merits" requirement.  Otherwise, it could vacate the preliminary injunction.  The court then evaluated the three plaintiffs' likelihood of success on the merits, and the court found that the two of them established likelihood of success on the merits.  The plaintiffs presented sufficient evidence of the company's statements that would cause "a substantial likelihood" of "misleading a reasonable employee in making an adequately informed retirement decision."  ERISA plan administrators have an independent fiduciary obligation "not to misinform employees through material misrepresentations and incomplete, inconsistent, or contradictory disclosures.  Here, only some of the company's materials mentioned a reservation of the right to amend or terminate the plan, and it was not even clear to the participants that these materials applied to them.  See the discussion of Stearns v. NCR Corporation, 2000 U.S. Dist. LEXIS 7028 (D. Minn. May 17, 2000) in the July 2000 issue of ERISA Litigation Alert.