Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca2-13-03928/USCOURTS-ca2-13-03928-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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13‐3928‐cv

Okun v. Montefiore Medical Center

1       

2 UNITED STATES COURT OF APPEALS

3 FOR THE SECOND CIRCUIT

4

5 August Term, 2014

6

7 (Submitted: May 4, 2015    Decided: July 17, 2015)

8

9 Docket No. 13‐3928‐cv

10 _____________________________________

11

12 ALEXANDER OKUN, MD,  

13

14 Plaintiff‐Appellant,

15

16 v.

17

18 MONTEFIORE MEDICAL CENTER,

19

Defendant‐Appellee.

* 20

21 _____________________________________

22

23 Before:   

24

25 WALKER, LYNCH, and LOHIER, Circuit Judges.

26        

27 Alexander Okun appeals from a judgment of the United States District

28 Court for the Southern District of New York (Gardephe, J.) dismissing his

29 complaint for lack of subject matter jurisdiction.  Suing under the Employee

30 Retirement Income Security Act (ERISA), Okun claimed that his employer

31 denied him severance benefits owed under an “employee welfare benefit

32 plan.”  The District Court held that it lacked jurisdiction because the

33 severance policy did not constitute a “plan” under ERISA.  Because Okun

34 adequately alleged that the severance policy was an ERISA “plan,” we

35 VACATE and REMAND.

                                              

* The Clerk of Court is directed to amend the caption as set forth above.

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2

1       

2 Gail I. Auster, Law Offices of Gail I.

3 Auster & Associates P.C., New York,

4 NY, for Plaintiff‐Appellant.

5

6 Jean L. Schmidt, Deidre A. Grossman,

7 Littler Mendelson, P.C., New York, NY,

8 for Defendant‐Appellee.

9

10 LOHIER, Circuit Judge:

11 Alexander Okun, a physician, appeals from a judgment of the United

12 States District Court for the Southern District of New York (Gardephe, J.)

13 dismissing his complaint against his employer, Montefiore Medical Center

14 (“Montefiore”), and others.  Okun alleged that Montefiore denied him

15 severance benefits in violation of the Employee Retirement Income Security

16 Act of 1974 (ERISA), Pub. L. No. 93‐406, 88 Stat. 829.  Montefiore moved to

17 dismiss the complaint under Federal Rule of Civil Procedure 12(b)(1), arguing

18 that the court lacked subject matter jurisdiction because Montefiore’s

19 severance policy was not an “employee welfare benefit plan” under ERISA.  

20 The District Court dismissed the complaint for lack of jurisdiction.  Because

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1 we conclude that, on the facts alleged in the complaint, the severance policy

was a “plan” governed by ERISA, we vacate and remand.1 2

3 BACKGROUND

4 The following facts are taken from the complaint or from documents

5 integral to it.

6 I. Montefiore’s Severance Policy

7 The Montefiore severance policy at issue, number II‐17a (the “Policy”),

8 provides that all full‐time physicians “employed before August 1, 1996 who

9 [are] terminated for other than cause” are entitled to either twelve months’

10 notice or six months’ severance pay.  Eligible employees with more than

11 fifteen years’ service are also “entitled to automatic review of the amount of

12 severance pay by the President of the Medical Center.”

13 Montefiore has maintained a severance policy since 1987, and the

14 Policy itself has been in place, without revision, since 1996.  The Policy

15 explicitly notes that it “may be changed, modified or discontinued at any time

                                              

1 We need not and do not reach the question whether the failure to allege an

ERISA‐governed “plan” constitutes a failure to allege federal subject matter

jurisdiction or simply a failure to state a claim.  

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1 by the Medical Center’s Senior Vice President of Human Resources, or

2 designee, with or without notice.”

3 II. Okun’s Termination

4 For twenty‐three years, from 1988 until 2011, Okun worked as a

5 pediatrician and professor at Montefiore Medical Center’s Albert Einstein

6 College of Medicine.  On May 1, 2011, Okun notified his supervisor that he

7 would leave Montefiore in September 2011 to take a job elsewhere.  On May

8 11, 2011, Okun attended a meeting with a guest speaker.  Afterwards, Okun’s

9 supervisor chastised him for the comments he made in front of the guest

10 speaker.  On May 13, 2011, Okun was fired “for cause,” purportedly because

11 of what he said at the meeting.

12 Okun then filed this action alleging that his for‐cause termination was a

13 pretext for Montefiore to interfere with his right to severance payments under

14 the Policy and ERISA.

15 DISCUSSION

16 I. Employee Welfare Benefit Plans Under ERISA

17 ERISA defines “employee welfare benefit plan” to mean:

18 any plan, fund, or program . . . established or

19 maintained by an employer or by an employee

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1 organization, or by both, to the extent that such plan,

2 fund, or program was established or is maintained for

3 the purpose of providing for its participants or their

4 beneficiaries . . . benefits in the event of sickness,

5 accident, disability, death or unemployment, or . . . any

6 benefit described in section 186(c) of this title.

7

8 29 U.S.C. § 1002(1).  On appeal, the parties dispute only whether the Policy is

9 adequately alleged to constitute the kind of undertaking to pay severance

10 benefits that can be described as a “plan, fund, or program,” as that phrase is

11 used in the definition of “employee welfare benefit plan.”  

12 To resolve that dispute, we look first to ERISA’s text.  Of particular

13 importance here, ERISA provides that “any plan, fund, or program”

14 maintained by an employer to pay certain benefits will suffice.  Id. (emphasis

15 added).  Use of the word “any” and inclusion of three undefined, overlapping

16 descriptors (plans, funds, and programs) suggests that Congress intended the

17 definition of “employee welfare benefit plan” to be broad and independent of

18 the specific form of the plan.  Cf. Anderson v. UNUM Provident Corp., 369

19 F.3d 1257, 1263 (11th Cir. 2004) (noting the “broad terms” of the definition).  

20 For this reason, “[t]he term ‘employee welfare benefit plan’ has been held to

21 apply to most . . . employer undertakings or obligations to pay severance

22 benefits.”  Schonholz v. Long Island Jewish Med. Ctr., 87 F.3d 72, 75 (2d Cir.

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1 1996); see also Tischmann v. ITT/Sheraton Corp., 145 F.3d 561, 565 (2d Cir.

2 1998).

3 But not all such undertakings constitute a plan.  Tischmann, 145 F.3d at

4 565; Schonholz, 87 F.3d at 75.  In Fort Halifax Packing Co. v. Coyne, 482 U.S. 1

5 (1987), for example, the Supreme Court held that a Maine statute “requiring

6 employers to provide a one‐time severance payment to employees in the

7 event of a plant closing,” id. at 3,  “neither establishe[d], nor require[d] an

8 employer to maintain, an employee welfare benefit ‘plan,’” id. at 6.  Relying

9 on Fort Halifax, we determined that a similar one‐time employer promise to

10 provide sixty days’ pay to employees discharged in a “plant closing” was not

11 an employee welfare benefit plan.  See James v. Fleet/Norstar Fin. Grp., Inc.,

12 992 F.2d 463, 464‐66 (2d Cir. 1993).   

13 Both Fort Halifax and James relied on the absence of an “ongoing

14 administrative program.”  Fort Halifax, 482 U.S. at 12; accord James, 992 F.2d

15 at 467.  This is partly because, without an ongoing administrative program or

16 scheme, the promise to make a “one‐time, lump‐sum payment triggered by a

17 single event” will rarely if ever implicate the need for uniformity that

18 Congress sought when it included within ERISA a provision that preempted

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1 state laws relating to benefit plans.  Fort Halifax, 482 U.S. at 12; see also 29

2 U.S.C. § 1144(a).

3 Since Fort Halifax, we have identified three non‐exclusive factors to

4 help determine whether an employer’s particular undertaking involves the

5 kind of ongoing administrative scheme inherent in a “plan, fund, or

6 program”:  

7 (1) whether the employer’s undertaking or obligation

8 requires managerial discretion in its administration; (2)

9 whether a reasonable employee would perceive an

10 ongoing commitment by the employer to provide

11 employee benefits; and (3) whether the employer was

12 required to analyze the circumstances of each

13 employee’s termination separately in light of certain

14 criteria.

15

16 Tischmann, 145 F.3d at 566 (quoting Schonholz, 87 F.3d at 76) (quotation

17 marks omitted).  To be clear, there is no separate statutory requirement in

18 § 1002(1) that ERISA plans involve long‐term commitments or include

19 discretionary determinations.  But these factors are useful analytic tools to the

20 extent that they help us decide the ultimate question of whether a particular

21 undertaking or obligation is a “plan, fund, or program.”   

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1 II. Montefiore’s Policy Under ERISA

2 We conclude that, on the facts alleged in the complaint, the Policy

3 involves the kind of undertaking that falls within the meaning of the phrase

4 “any plan, fund, or program.”  The Policy represents a multi‐decade

5 commitment to provide severance benefits to a broad class of employees

6 under a wide variety of circumstances and requires an individualized review

7 whenever certain covered employees are terminated.  As a result, Montefiore

8 assumed the “responsibility to pay benefits on a regular basis, and thus faces

9 . . . periodic demands on its assets” that require long‐term coordination and

10 control.  Fort Halifax, 482 U.S. at 12.    

11 A brief consideration of the pertinent Schonholz factors confirms this

12 conclusion.   

13 First, the Policy requires discretion and individualized evaluation to

14 administer.  In particular, Montefiore must determine whether an employee

15 left voluntarily or was terminated; it must determine whether the termination

was “for cause” or for one of the other reasons listed in the Policy2 16 ; and the

                                              

2 At least on the facts alleged here, we do not agree that a determination as to

whether a termination was “for cause” requires only a “minimal quantum of

discretion” insufficient to raise a policy to the level of an ERISA plan.  

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1 President of Montefiore is required to engage in a discretionary review of the

2 amount of severance benefits whenever an employee with fifteen or more

years of service requests it.3 3

4 Second, Montefiore has maintained a severance policy in one form or

5 another since 1987 and has retained the Policy in its current form since 1996.  

6 At the motion to dismiss stage, we think it plausible that such a longstanding

7 policy would give employees the reasonable impression that Montefiore has

8 undertaken an “ongoing commitment” to provide severance benefits.  

9 Montefiore points out that the Policy’s boilerplate language reserves

10 Montefiore’s unilateral right to modify the Policy without notice.  But many

11 ERISA‐governed plans contain such a reservation, cf. Reichelt v. Emhart

12 Corp., 921 F.2d 425, 430 (2d Cir. 1990) (noting that “under ERISA, the

                                                                                                                                            

Compare Velarde v. PACE Membership Warehouse, Inc., 105 F.3d 1313, 1317

(9th Cir. 1997).

3 Montefiore notes that Okun did not cite the President’s discretionary review

in his opening brief on appeal in support of his argument that the plan

requires managerial discretion and individualized evaluation.  See Appellee

Br. 13 n.2.  We retain broad discretion to address that argument, however,

particularly since it was raised and briefed before the District Court, which

addressed the argument in its opinion.  See Okun v. Montefiore Med. Ctr., 970

F. Supp. 2d 267, 275 (S.D.N.Y. 2013).  Moreover, Okun’s opening brief

described the automatic review provision, see Appellant Br. 11, and his reply

brief augmented the argument, see Appellant Reply Br. 5.

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1 employer has the right at any time to amend or terminate a severance pay

2 plan”), and we have held that a similar provision does not necessarily defeat

3 an employee’s reasonable perception of an ongoing commitment, see

4 Tischmann, 145 F.3d at 566.  A reasonable employee could infer from the fact

5 that Montefiore has not exercised its right to modify the Policy since 1996 that

6 Montefiore does not take its promise to pay severance benefits lightly.  We

7 note, too, that Montefiore’s obligations pursuant to its longstanding policy

8 contrast sharply with the employer’s obligations in James and Fort Halifax,

9 which involved only a one‐time payment in the event of a contingency that

10 was unlikely to recur on a regular basis.  Compare Joint App’x 16‐17, with

11 Fort Halifax, 482 U.S. at 11‐12, and James, 992 F.2d at 466.  Here, Montefiore

12 has undertaken to pay severance every time an eligible employee is

13 terminated for reasons other than cause — a contingency that reasonably can

14 be inferred to occur on a relatively regular basis.   

15 As for the third factor, it is true that the Policy leaves somewhat less

16 room for managerial discretion than other policies that we have held

17 constitute plans under ERISA.  See Tischmann, 145 F.3d at 567; Schonholz, 87

18 F.3d at 76.  But there remains some managerial discretion in the President’s

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1 review of the amount of severance and in the classification of the termination

2 of each eligible employee as for or without cause, and here that is enough.

3 Our conclusion also coheres with the purpose of ERISA’s preemption

4 provision.  The duration of Montefiore’s commitment and the individualized,

5 frequently recurring review contemplated by that commitment implicate the

6 type of administrative concerns that are best “governed by a single set of

7 regulations” rather than “a patchwork scheme of regulation.”  Fort Halifax,

8 482 U.S. at 11‐12.  For example, absent ERISA preemption of a plan such as

9 this one, under circumstances in which an employer operates in multiple

10 States, the different States might define termination “for cause” differently, or

11 might impose different constraints on the discretion an employer can exercise

12 in reviewing the amount of severance due to long‐time employees.

13 CONCLUSION

14 We have considered Montefiore’s remaining arguments and conclude

15 that they are without merit.  For the reasons set forth above, we conclude that,

16 on the facts alleged in the complaint, the Policy constitutes a “plan, fund, or

17 program” under § 1002(1) of ERISA.  We therefore VACATE the judgment of

18 the District Court and REMAND.

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