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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
No. 98-30766
_______________
SUZANNE L. BABCOCK and ROBERT F. BABCOCK,
Plaintiffs-Appellees,
VERSUS
HARTMARX CORPORATION,
Defendant-Appellant.
_________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
_________________________
July 26, 1999
Before REAVLEY, POLITZ, and SMITH, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Suzanne and Robert Babcock sued Hart-
I.
marx Corporation ("Hartmarx") under the
Craig Babcock worked at Porter's-Stevens,
Employee Retirement and Income Security
Inc., a subsidiary of Hartmarx Specialty
Act of 1974 ("ERISA"), 29 U.S.C. 壯 1001
Stores, Inc. ("HSSI"), which was a subsidiary
et seq., for life insurance benefits owed on
of Hartmarx. Hartmarx's affiliates could adopt
their deceased son's policy. The district court
its employee benefits plans, including a long-
entered summary judgment for the Babcocks.
term disability plan, a group medical plan, and
Concluding that the suit is time-barred, we
a group life insurance plan, with Hartmarx
reverse and render judgment for Hartmarx.
serving as plan administrator. HSSI and

Porter's-Stevens adopted the plans and paid
November 1, 1992.
premiums for Babcock's basic life insurance
benefits in an amount equal to his annual
Babcock qualified for long-term disability.
salary. Babcock also purchased optional life
Loretta Osowski, Hartmarx's Manager of
insurance benefits in the same amount, for
Pension Plans Administration, informed him by
which he paid by payroll deductions. Hart-
letter that his monthly disability benefits would
marx served as a conduit through which HSSI
commence on December 1, 1992, and that the
forwarded premiums to the insurer, John
premiums for his group medical plan and long-
Hancock; Hartmarx never paid an employer
term disability plan would be waived during
portion of any premiums for HSSI or Porter's-
the time that he received long-term disability
Stevens.
benefits. The letter did not mention Babcock's
life insurance coverage.
Babcock discontinued work because of a
terminal illness. He received short-term
Babcock died on February 1, 1993, and
disability benefits in the form of continued
Hartmarx paid a long-term disability death
salary, and, for a few months, premiums were
benefit to his estate a month later. From
deducted for the long-term disability plan, the
February 1993 through August 1993,
group medical plan, and the optional life
Babcock's parents and sister, the executrix of
insurance. For the next couple of months,
Babcock's estate, made oral and written
because of a pending sale by Hartmarx of all of
demands on HSSI and Hartmarx for insurance
its capital stock in HSSI to an unrelated third
benefits. Hartmarx refused to pay because,
party, he sent personal checks to HSSI's office
among other reasons, it had not received any
for the monthly premium payments.
premiums after September 1992.
As of the date of the sale, HSSI ceased to
In August 1993, on Babcock's behalf, his
be a subsidiary of Hartmarx. The stock
sister filed a consumer complaint with the
purchase agreement provided that HSSI would
Illinois Department of Insurance, alleging that
no longer be a participating employer under
Hartmarx had refused to pay life insurance
any of Hartmarx's benefits programs and that
benefits. In April 1994, in bankruptcy
Hartmarx would honor claims under the
proceedings that Porter's-Stevens and HSSI
benefits plans only until November 1, 1992.
had filed in Illinois, Babcock's parents filed
proofs of claim seeking payment of basic and
HSSI set up a new insurance plan with
optional life insurance benefits. They received
Northwestern National Life. Carolyn Haack,
no satisfaction.
HSSI's Vice President of Human Resources,
informed HSSI employees by memo that
II.
Northwestern would be the new insurance
In October 1996, the Babcocks sued Hart-
carrier as of November 1, 1992. John
marx, claiming $64,000 in unpaid life
Hancock ceased covering Babcock and even
insurance benefits. Hartmarx removed to
notified him of a claim that had been denied
federal court, and, on cross-motions for
because the services were rendered after his
summary judgment, the court granted the Bab-
coverage had ended. Northwestern processed
cocks' motion, concluding that Hartmarx had
Babcock's claims for medical benefits after
breached a fiduciary duty under ERISA to
2

advise Babcock of any termination or material
325 (1986). Although we consider the
change in his insurance policies. The court
evidence and all reasonable inferences to be
also determined that the Babcocks had timely
drawn therefrom in the light most favorable to
filed their claim within three years of when
the nonmovant, the nonmoving party must
they had actual knowledge of the breach.
come forward with specific facts indicating a
genuine issue for trial. See Webb, 139 F.3d at
III.
536.
Hartmarx contends that the action is time-
barred because the Babcocks filed it more than
B.
three years after they had actual knowledge of
As the parties agree, ERISA's statute of
the facts relevant to their suit, that it did not
limitations, found in � 413 of ERISA,
have a fiduciary duty to inform Babcock of the
29 U.S.C. � 1113, applies because the Bab-
change in his life insurance coverage, and that,
cocks allege a breach of fiduciary duty.2 That
even if it did breach a duty, it should be liable
section imposes a limitations period that
for only half of the claimed damages, because
expires on the earlier of (1) six years from the
no premiums were paid on the life insurance
date the cause of action arose or (2) three
policy for several months before Babcock's
years from the date the plaintiff had "actual
death. We agree with Hartmarx that the ac-
knowledge" of his claim. See 29 U.S.C.
tion is time-barred. Because we render
� 1113. Hartmarx does not dispute that the
judgment for Hartmarx on this ground, we do
Babcocks filed within the six-year limitations
not reach the remaining contentions.
period: They sued in October 1996, well
within six years from the alleged breach in July
A.
1993, when Hartmarx denied life insurance
We review the grant or denial of summary
benefits to Babcock's beneficiaries, or in late
judgment de novo, applying the same
1992, when Hartmarx failed adequately to
standards as did the district court. See Webb
notify Babcock of pending changes in his
v. Cardiothoracic Surgery Assocs., P.A.,
coverage.
139 F.3d 532, 536 (5th Cir. 1998).1 Summary
judgment is appropriate if the record "show[s]
To determine whether the Babcocks sued
that there is no genuine issue as to any material
within the three-year period, we must decide
fact and that the moving party is entitled to
when they had "actual knowledge" of the
judgment as a matter of law." FED. R. CIV.
breach or violation. In Maher v. Strachan
P. 56(c). The moving party bears the initial
Shipping Co., 68 F.3d 951 (5th Cir. 1995), we
burden of demonstrating an absence of
explained that "actual knowledge" means
evidence supporting the nonmovant's case.
"actual knowledge of all material facts
See Celotex Corp. v. Catrett, 477 U.S. 317,
necessary to understand that some claim
exists, which facts could include necessary
opinions of experts, knowledge of a
1
transaction's harmful consequences, or even
The Babcocks suggest we review for
clear error because the district court conducted a
mini-trial before making its ruling. The court's
opinion, however, states that it disposed of the case
2 The Babcocks originally also alleged a
on cross-motions for summary judgment; de novo
breach of their contractual plan rights but have
review therefore applies.
abandoned this claim on appeal.
3

actual harm." Id. at 954 (quoting Gluck v.
and now you deny us, the beneficiaries,
Unisys Corp., 960 F.2d 1168, 1177 (3d Cir.
the right to it."
1992)); see also Reich v. Lancaster, 55 F.3d
1034, 1057 (5th Cir. 1995). That is to say,
(3) On August 26, 1993, Lisa Babcock
actual knowledge requires that the Babcocks
filed a formal complaint with the Illinois
know not only of the events constituting the
Department of Insurance against Hart-
breach, but "also that those events supported
marx, contending that Hartmarx was
a claim for breach of fiduciary duty or
decedent's employer and should
violation under ERISA." Id. (quoting
therefore pay the proceeds of the now-
International Union of Elec., Elec., Salaried,
transferred life insurance policies.
Mach. & Furniture Workers, AFL-CIO v.
Murata Erie N. Am., 980 F.2d 889, 900 (3d
The veiled references to possible legal
Cir. 1992)).
action indicate the Babcocks' belief that they
had legal recourse against Hartmarx. In
Even under this permissive definition of
addition, to the extent the claim rests on a
actual knowledge, the Babcocks failed to file
failure to notify Babcock of changes in his
their suit within the three-year statute of
insurance, Robert Babcock testified in
limitations. Their actions between April and
deposition that he handled all of Craig's mail
August 1993 evince actual knowledge that
during the last several months of his life, and
they had a potential claim under ERISA,
thus must have been aware of any alleged
making the suit filed in October 1996 untimely.
failure.
Hartmarx points to several facts that
demonstrate this knowledge:
Hartmarx thus persuasively argues that, by
August 1993, the Babcocks knew that it had
(1) On April 12, 1993, Lisa Babcock,
denied their life insurance claims; knew of the
sister and executrix of decedent's estate,
harm they allegedly suffered; were aware that
wrote to Hartmarx demanding payment
the group insurance plan was covered under
on decedent's life insurance policies and
ERISA guidelines; had made demands for the
noting that the relevant "group
money; knew that Hartmarx had denied their
insurance plan functions under ERISA
claim; and were aware that they might have a
guidelines."
legal claim. This fulfills Hartmarx's summary
judgment obligation to point out the absence
(2) In separate letters, dated July 12 and
of evidence supporting the timeliness of the
August 30, 1993, Robert and Suzanne
Babcocks' case.
Babcock wrote to Hartmarx demanding
that it pay on the decedent's life
The district court explained neither when it
insurance policy. Robert's letter argues
thought the Babcocks had actual knowledge,
that "my son was your employee," and
nor why the undisputed evidence of the Bab-
"he paid his premiums on this insurance
cocks' demand letters does not evince actual
and I demand the proceeds." Suzanne's
knowledge. Instead, in essence, it held that,
letter reiterated the Babcocks' view that
because of confusion over which company was
"[t]his son of our's (sic) had payroll
responsible for life insurance, the Babcocks did
deductions for life insurance for years
not have actual knowledge until they began
4

litigating. The Babcocks make a similar
have not held that the plaintiff must know the
argument, asserting that they did not have
precise cause of action.
actual knowledge of the breach until they had
retained legal counsel and discovery began in
The uncontradicted summary judgment evi-
similar litigation.
dence amply demonstrates that the Babcocks
knew all material facts and that they could
But the Babcocks fail to point to any
seek legal recourse for an ERISA violation.
specific information learned in that litigation
They have not pointed to any evidence that
that made them aware of this claim of breach
might constitute a genuine material fact for
of fiduciary duty. Indeed, they point to no
trial, nor have then even mentioned any
material information related to these claims
material fact that shows they did not have
that they learned after August 1993. The
actual knowledge of an ERISA action against
correspondence indicates that the Babcock
Hartmarx by the end of August 1993. Our
family knew not only of these material facts,
own review of the record finds no such
but that the benefits were governed by ERISA
genuine issue of material fact on the question
and that they could seek redress in court. The
of actual knowledge.
formal complaint filed with the Illinois
Department of Insurance demonstrates an
Judgment is REVERSED and RENDERED
acute awareness of the legal wrong they allege
for Hartmarx.
Hartmarx had committed.3
The Babcocks appear to argue that, even if
they were aware that they had been wronged
and could seek legal redress, it was not until
they began discovery in the related litigation
that they knew the exact cause of action. In
fact, our precedent requires more than
knowledge of the material facts; it requires
knowledge that the facts support a claim under
ERISA. See Maher, 68 F.3d at 954.4 But we
3 See Hogan v. Kraft Foods, 969 F.2d
142, 145 (5th Cir. 1992) (holding that "[t]he letters
of complaint to the State Board of Insurance and to
the Plan Administrator further evidence actual
knowledge of the facts giving rise to their causes of
action more than four years before they filed
suit.").
4 Accord International Union, 980 F.2d
at 900; Gluck, 960 F.2d at 1177-78. But see Rush
v. Martin Petersen Co., 83 F.3d 894, 896 (7th Cir.
4(...continued)
1996) (holding that plaintiff needs to know all
material facts of transaction or conduct, but not its
(continued...)
illegality).
5