1. How can an employee ensure that she or he knows all of the facts relevant to a question such as the one present in the case?

2. Why do you think Varity handled this in the way that it did?

Issue: Did Varity breach its fiduciary duty in leading the employees to believe that their funds would be secure?

Facts: Two classes of former employees (appellees) and retirees brought Employee Retirement Income Security Act (ERISA) action against the owner of Varity Corporation and a subsidiary (appellant). At the time employer Varity Corporation transferred its money-losing divisions in its subsidiary Massey-Ferguson, Inc. to Massey Combines, a separate firm (they called the transfer “Project Sunshine”), it held a meeting to persuade its employees of theses failing divisions to change benefit plans. Varity conveyed the impression that the employees’ benefits would remain secure when transferred. In fact, Massey Combines was insolvent from the day it was created and, by the end of its receivership the employees who had transferred lost all of their non-pension benefits.

Decision: The Court of Appeals held for the employees. The Court held that (1) employer was acting as ERISA fiduciary when it misled employees regarding security of their benefits if they transferred; (2) employer violated fiduciary obligations of ERISA in misleading employees and (3) ERISA authorized lawsuit for individualized equitable relief.