Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-99-07091/USCOURTS-caDC-99-07091-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Submitted on the Briefs January 27, 2000

Decided March 31, 2000

No. 99-7091

Ronald D. Young, et al,

Appellants

v.

Washington Gas Light Company,

Appellee

Appeal from the United States District Court

for the District of Columbia

(No. 97cv03129)

Ronald H. JaraShow filed the brief for appellants.

Robert N. Eccles and Valerie G. Roush were on the brief

for appellee.

USCA Case #99-7091 Document #507413 Filed: 03/31/2000 Page 1 of 8
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Before Edwards, Chief Judge, Ginsburg, Circuit Judge, and

Buckley, Senior Circuit Judge.

Opinion for the court filed by Senior Judge Buckley.

Buckley, Senior Judge: Ronald Young and sixteen other

former employees of Washington Gas Light Company claim

that the company breached its fiduciary duties under the

Employee Retirement Income Security Act by failing to

disclose, prior to their retirement, that the company was

considering implementation of a "one-time-only" voluntary

separation incentive program. The district court dismissed

the case for lack of subject matter jurisdiction based on its

finding that the claims did not arise under the Act. We

affirm.

I. Background

The Employee Retirement Income Security Act

("ERISA"), 29 U.S.C. ss 1001-1461 (1994), is the statute

regulating employee pension and welfare benefit plans. An

"employee welfare benefit plan" is defined as

any plan, fund, or program which ... is ... established

or maintained by an employer ... to the extent that such

plan, fund, or program was established or is maintained

for the purpose of providing for its participants or their

beneficiaries [specified benefits].

Id. s 1002(1). Such plans may include those that provide

severance benefits. See id. s 1002(1)(B) (employee welfare

benefit plans include those that provide any benefit specified

in 29 U.S.C. s 186(c), which includes severance benefits, 29

U.S.C. s 186(c)(6)); see also Fort Halifax Packing Co. v.

Coyne, 482 U.S. 1, 7 n.5 (1987) ("Section 1002(1)(B) has been

construed to include severance benefits paid out of general

assets, as well as out of a trust fund."). ERISA imposes

specified duties on ERISA plan administrators with respect

to the plan and its participants and their beneficiaries. See

29 U.S.C. s 1104.

Young and the other appellants (collectively, "Young") were

employed as first line supervisors or managers with WashingUSCA Case #99-7091 Document #507413 Filed: 03/31/2000 Page 2 of 8
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ton Gas Light Company ("Washington Gas") prior to their

respective retirements during a period from January 1

through June 1, 1996. As such, they participated in Washington Gas's regular retirement plan, which is subject to ERISA

("ERISA retirement plan"). In 1995, Washington Gas began

work on a plan to restructure the company; and, on June 28,

1996, it formally announced the plan, which included a retirement incentive program called "Voluntary Separation Pay

Window Program" ("Window Program" or "Program"). The

Program offered employees classified as "first line supervisors or above" a one-time opportunity to receive specified

severance benefits upon voluntary separation from the company.

Such employees were qualified to receive those benefits if

they (1) elected to receive separation pay under the Program;

(2) had thirty years of service with the company or a combination of age and service totaling ninety as of December 31,

1996; (3) submitted a separation pay election form during a

twelve-day "window" beginning July 8, 1996; (4) remained in

active employment until the separation date without being

terminated for cause; and (5) signed a waiver of claims

against the company. The company would select a separation

date no later than March 31, 1997 for each of the electing

employees. Any employee who met the Program's requirements would receive, upon separation from the company, a

lump-sum payment equal to fifty-two weeks of base pay

together with the option to participate in a three-day outplacement services program.

According to their complaint, Young and his fellow appellants retired under Washington Gas's ERISA retirement plan

between January 1, 1996 and June 1, 1996 while the restructuring of the company was under consideration but before the

final plan and the accompanying Window Program had been

announced. During that period, Washington Gas was aware

that normal attrition among its first line supervisors and

managers would not be sufficient to accomplish its restructuring goals and that it would have to implement a retirement

incentive program in order to encourage the desired number

of voluntary separations. Before retiring, each of the appelUSCA Case #99-7091 Document #507413 Filed: 03/31/2000 Page 3 of 8
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lants asked the company whether such a program was being

considered; and in each case, the company replied that none

was.

Young contends that Washington Gas was under an obligation to inform first line supervisors and managers considering retirement during the period between January 1, 1996

and the announcement of the Window Program that the

company did not anticipate that normal attrition by retirement would meet the levels desired for restructuring and that

a retirement incentive program was under consideration.

Because that information was withheld, Young brought this

suit alleging that the company had breached its fiduciary

duties under ERISA. Although Young also asserted various

District of Columbia common law claims, federal jurisdiction

depends on whether he has alleged a claim cognizable under

ERISA.

District Judge Thomas Penfield Jackson held that the

Window Program was not a "plan" governed by ERISA; and,

because in the absence of a federal claim, he had no basis for

exercising jurisdiction over the District of Columbia claims,

he dismissed the suit for lack of federal jurisdiction. Young

v. Washington Gas Light Co., No. 97-3129, order (D.D.C.

Apr. 28, 1999). Young filed a timely appeal, and we have

jurisdiction pursuant to 28 U.S.C. s 1291.

II. Analysis

We accept Young's factual allegations as true and review de

novo the dismissal of his complaint for lack of subject matter

jurisdiction. Moore v. Valder, 65 F.3d 189, 196 (D.C. Cir.

1995).

Young asserts two bases for claiming that Washington Gas

violated its obligations under ERISA. First, he maintains

that the Window Program was itself a plan subject to ERISA

and that Washington Gas breached its fiduciary duty in its

role as administrator of that plan. Second, he claims that

Washington Gas breached its fiduciary duty under its ERISA

retirement plan by failing to inform him and the other

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appellants that it was considering implementation of the

Window Program. Neither argument has merit.

A. Jurisdiction based upon Window Program

ERISA does not specify what constitutes a "plan" within

the meaning of the statute. The Supreme Court, however,

has made clear that not every grant of an employee benefit is

governed by ERISA. The Court noted that the statute's

focus was "on the administrative integrity of benefit plans--

which presumes that some type of administrative activity is

taking place," Fort Halifax Packing, 482 U.S. at 15, and

concluded that ERISA only applies "with respect to benefits

whose provision by nature requires an ongoing administrative

program to meet the employer's obligation." Id. at 11. As a

consequence, ERISA is not implicated by "[t]he requirement

of a one-time, lump-sum payment triggered by a single event"

because "[t]o do little more than write a check hardly constitutes the operation of a benefit plan." Id. at 12. Therefore,

whether a benefit is regulated by ERISA turns on the nature

and extent of the administrative obligations that the benefit

imposes on the employer.

Although Fort Halifax Packing has not yet been applied by

this court, the decisions of other circuits agree with the

proposition

that an employee benefit may be considered a plan for

purposes of ERISA only if it involves the undertaking of

continuing administrative and financial obligations by the

employer to the behoof of employees or their beneficiaries.

Belanger v. Wyman-Gordon Co., 71 F.3d 451, 454 (1st Cir.

1995); see, e.g., Delaye v. Agripac, Inc., 39 F.3d 235, 237 (9th

Cir. 1994); Kulinski v. Medtronic Bio-Medicus, Inc., 21 F.3d

254, 257-58 (8th Cir. 1994); Angst v. Mack Trucks, Inc., 969

F.2d 1530, 1538, 1540 (3d Cir. 1992).

Under the Window Program, the determinations of eligibility and the amount of the benefits to be paid were purely

mechanical and were based on one triggering event: the

eligible employee's election to retire pursuant to the terms of

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the Program. Washington Gas was only required to make

the straightforward factual determination of whether the

employee had met each of the conditions specified in the

Program, such as the requirements that the employee submit

an election form and meet certain length-of-service criteria,

and then to calculate the amount of the separation payment

by multiplying the employee's base pay rate by fifty-two.

These are not the kinds of administrative decisions that

require ERISA's protection. See, e.g., Velarde v. PACE

Membership Warehouse, Inc., 105 F.3d 1313, 1316-17 (9th

Cir. 1997) (plan offering different benefits to those terminated

for cause or not for cause "failed to rise to the level of

ongoing particularized discretion required to transform a

simple severance agreement into an ERISA employee benefits plan"); Belanger, 71 F.3d at 452, 455 (plan allowing agequalified workers to receive variable payment based on years

of service required only mechanical decision making and was

not governed by ERISA).

As Young points out, the Window Program required one

discretionary act on the part of Washington Gas, namely the

selection of a specific separation date on or before March 31,

1997 for each of the electing employees. The exercise of this

limited discretionary right, however, did not create a need for

an ongoing administration of the benefit; therefore, it did not

bring the Program under ERISA. Cf. Delaye, 39 F.3d at 237

(severance payments to be made over the course of up to 24

months "does not rise to the level of an ongoing administrative scheme"); Angst, 969 F.2d at 1539 (obligation to make

one-time lump-sum termination payment and to continue

employee's existing benefits for one year not an ERISA plan

because obligation to provide continuing benefits "did not

require the creation of a new administrative scheme, and did

not materially alter an existing [one]"). Therefore, applying

the test established in Fort Halifax Packing, we conclude

that the Window Program was not subject to ERISA. Accordingly, this claim cannot serve as the basis for federal

jurisdiction over Young's complaint.

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B. Jurisdiction based upon ERISA retirement plan

The ERISA retirement plan administered by Washington

Gas also fails to provide the district court with jurisdiction

over Young's claims. The fiduciary responsibilities of an

ERISA plan administrator are detailed in section 1104 of the

Act, as codified, which reads, in relevant part, as follows:

[A] fiduciary shall discharge his duties with respect to a

plan solely in the interest of the participants and beneficiaries and--

(A) for the exclusive purpose of:

(i) providing benefits to participants and their beneficiaries; and

(ii) defraying reasonable expenses of administering the

plan....

29 U.S.C. s 1104(a)(1)(A) (emphasis added). There is nothing

in the section to suggest that an ERISA plan administrator

has a fiduciary duty to disclose information unrelated to the

plan even if an employee might consider that information

important to his decision to retire. Nor can we find any

section of the statute that requires disclosures unrelated to

the plan; indeed, the disclosure requirements are limited to

information about the plan itself. See, e.g., id. s 1021 (requiring disclosure of summary plan description, terminal reports,

failure to meet minimum funding standards, and transfer of

excess pension assets).

Although the Supreme Court has stated that the federal

courts, in interpreting the fiduciary standards imposed by

ERISA, will "develop a federal common law of rights and

obligations under ERISA-regulated plans," Varity Corp. v.

Howe, 516 U.S. 489, 497 (1996) (internal quotation and citation omitted), none of the cases dealing with a plan administrator's duties under ERISA have required him to assume

responsibilities that are unrelated to the plan itself. The

authorities upon which Young relies only serve to underscore

this point, as each concerns a plan administrator's fiduciary

duty when he seeks to modify an existing ERISA plan or to

substitute a new plan for one already in place. See, e.g.,

Varity Corp, 516 U.S. at 502-03 (plan administrator breached

fiduciary duty by misrepresenting to plan participants that

benefits would be unchanged by switch from ERISA plan to a

new plan); Ballone v. Eastman Kodak Co., 109 F.3d 117, 121,

124 (2d Cir. 1997) (company has fiduciary duty to inform

ERISA plan beneficiaries that it is considering implementation of new severance plan which would replace former

ERISA plan); Eddy v. Colonial Life Ins. Co. of America, 919

F.2d 747, 750, 752 (D.C. Cir. 1990) (ERISA fiduciary had duty

to inform plan beneficiary of available continuation options

under plan once company terminated group plan).

In contrast to the situations presented in these cases, the

Window Program did not replace, amend, or supplement

Washington Gas's ERISA retirement plan; it merely created

one-time benefits that were in addition to, and independent

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of, those to which the company's employees continued to be

entitled under its ERISA retirement plan. Therefore, because Washington Gas had no fiduciary duty under its

ERISA retirement plan to inform Young that a retirement

incentive program was under consideration, this claim also

failed to provide the district court with jurisdiction over this

suit.

Nevertheless, because the district court dismissed only the

ERISA claims with prejudice, Young is free to pursue his

common law claims in the appropriate court.

III. Conclusion

Because Young has failed to allege a claim under ERISA,

the decision of the district court dismissing this action for

lack of subject matter jurisdiction is

Affirmed.

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