IN THE UNITED STATES DISTRICT COURT

 FOR THE SOUTHERN DISTRICT OF OHIO

 EASTERN DIVISION

Sandra Hockler, : 

 

Plaintiff, : Case No. 2:12-cv-209 

 

v. : JUDGE EDMUND A. SARGUS, JR. 

 Magistrate Judge Kemp

Innovative American

Manufacturing, Inc., et al., : 

 

 Defendants. :

 REPORT AND RECOMMENDATION

This is a case about a deferred compensation plan. The

parties do not appear to dispute its existence, but, for

jurisdictional purposes, disagree about its nature. Defendant

Innovative American Manufacturing, Inc. (IAM), which (along with

the other named defendants) removed the case to this Court under

28 U.S.C. §1441(b), claims that the plan is a “top hat” plan and

that the obligations of the parties to such a plan are

enforceable only under the terms of ERISA. Were that so, all of

the state law claims which Plaintiff Sandra Hockler has pleaded

would be converted to federal law claims, and this Court would

have jurisdiction over the case. 

Naturally, Ms. Hockler has a different view of the

jurisdictional situation. She filed her case in the Franklin

County Court of Common Pleas, and wants to litigate it there. 

According to her motion to remand, the plan in question is not

really a “plan” at all, but simply an arrangement under which IAM

agreed to pay deferred compensation to her late husband, Norman

Hockler. While she certainly believes the arrangement to be

legally enforceable, she argues that it is not an ERISA plan,

that ERISA regulations relating to funding, the appointment of

plan administrators, the existence of fiduciary duties, and the

like, do not apply here, and, most significantly, neither do

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ERISA’s enforcement provisions. 

The Court’s jurisdiction hinges upon which party has the

better of this argument. The motion to remand has been referred

to the Magistrate Judge for a Report and Recommendation. For the

reasons which follow, it is recommended that the motion to remand

be denied.

I.

It is not difficult to state the basic facts relating to the

plan or the relevant procedural history of the case. The latter

appear on the Court’s docket; the former can be pieced together

from the pleadings and an affidavit filed as part of IAM’s

memorandum in opposition to remand.

Procedurally, on February 13, 2012, Ms. Hockler filed a tencount complaint in the Franklin County Court of Common Pleas

against IAM, another company called Refrigeration Systems Co.,

and two individuals, Thomas A. Leighty and Robert A. Appleton,

who are alleged to own and operate both IAM and Refrigeration

Systems Co. The first eight counts all relate to IAM’s promise

to pay some amount of deferred compensation to Mr. Hockler, who

was, before his retirement in 2008, the president of IAM. Each

of the first eight counts pleads a claim under either Ohio common

law, such as breach of contract, or Ohio statutory law, such as

O.R.C. §4113.15, which mandates the prompt payment of fringe

benefits to employees. Counts nine and ten (which IAM does not

contend are preempted by ERISA) relate to IAM’s continued

commercial use of Mr. Hockler’s name after his retirement.

On March 8, 2012, the defendants removed the case to this

Court, citing 28 U.S.C. §1441(b) as authority to do so. It is

IAM’s position that all eight of the claims relating to the

deferred compensation agreement are completely preempted by

ERISA, and that because they are, by virtue of that preemption,

claims arising under federal law, this Court has federal question

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jurisdiction under 28 U.S.C. §1331. The motion to remand was

filed a month later, and is now fully briefed.

As far as the “plan” or agreement is concerned, both parties

cite to the same provisions which appear to define IAM’s

obligation to Mr. Hockler (and now to his estate, represented by

his wife). Exhibit Two to the complaint describes a “Special

Compensation Package” which was created for Mr. Hockler. Part of

that package is described as “Deferred Compensation.” For the

first five years of IAM’s operation, the amount of the deferred

compensation is a fixed percentage (different for each of those

years) of IAM’s “Net Income Accrual.” For years “beyond” the

first five, the amount of deferred compensation is set at .022

percent of the “Net Income Accrual.” Deferred compensation was

also made subject to four conditions - that payments would last

for ten years, that they would begin the year following Mr.

Hockler’s retirement, that there was five-year vesting period for

the “program” (which could be waived in the event of disability

or natural death), and that Mr. Hockler had to be working for IAM

at the time of his retirement. Mr. Appleton, who is an officer

of IAM, signed an affidavit (Exhibit B to the memorandum in

opposition, Doc. No. 13) which repeats this information. His

affidavit also states (and these statements are uncontradicted in

the record) that the plan was unfunded, that Mr. Hockler was a

“highly compensated employee of IAM,” that the plan was intended

to provide both deferred compensation and retirement income to

Mr. Hockler, that Mr. Hockler was the only “participant” in the

plan, and that the plan’s existence was reported to the United

States Department of Labor. There are some other factual

materials contained in the record (consisting mostly of some

statements made by IAM’s attorney, Kenneth R. Cookson, to the

effect that the Deferred Compensation Package was “never designed

to be part of ERISA,” statements which IAM claims are

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inadmissible because they were made during the parties’ pre-suit

efforts to settle the case), but, as the Court explains below,

these statements have no impact on the legal question raised by

the removal of the case and the subsequent motion to remand. 

Consequently, the jurisdictional issue will be decided based on

the facts which the Court has just stated.

II.

In support of her motion to remand, Ms. Hockler makes two

different arguments. First, she asserts that the deferred

compensation arrangement between Mr. Hockler and IAM is not an

ERISA plan of any shape, sort or description, so that any claims

relating to that arrangement could not possibly be preempted by

ERISA’s remedy provisions. Second, she responds to IAM’s

argument that the arrangement is actually a “top hat” plan (a

kind of ERISA plan that is designed for the benefit of a small

number of highly-compensated company executives) by saying that

it does not make any difference if the Court finds the

arrangement to be such a plan. That is so, she argues, because

“top hat” plans are, by statute, exempted from many of ERISA’s

requirements, and the scope of that exemption spills over into

the preemption arena; in her words, “it was Congress’ intent that

any plan that is not subject to fiduciary standards should not be

subject to ERISA complete preemption.” Motion to Remand, Doc.

No. 9, at 16. The Court will address these arguments in reverse

order.

A. Are “Top Hat” Plans Subject to ERISA Complete Preemption?

Ms. Hockler’s argument that state law claims brought for the

purpose of obtaining benefits allegedly due under “top hat” plans

are not completely preempted by ERISA’s remedy provisions is

based almost entirely on a single Supreme Court decision, Fort

Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987). Before

beginning an analysis of that decision and its relationship to

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the jurisdictional issue in this case, it is helpful to review

some of the statutory law relating to “top hat” plans.

Assuming that a particular employee benefit plan meets the

definition of a “top hat” plan (which, according to 29 U.S.C.

§§1051(2), 1081(3), and 1101(a)(1), is “a plan which is unfunded

and is maintained by an employer primarily for the purpose of

providing deferred compensation for a select group of management

or highly compensated employees”), issues arise about the extent

to which ERISA - which was primarily designed to establish rules

for plans covering the typical employee, as opposed to the highly

compensated management employee - applies and governs the

administration of such a plan. The three different sections of

ERISA which are cited above and which provide the definition of a

“top hat” plan all do so in the context of language which states

that “[t]his part shall apply to any employee benefit plan ...

other than” a “top hat” plan (and to certain other types of

arrangements as well which are not relevant to this

case)(emphasis supplied). The effect of this language is to

exempt “top hat” plans “from ERISA's vesting, participation,

funding, and fiduciary rules.” In re New England Mut. Life Ins.

Co. Sales Practices Litigation, 324 F.Supp.2d 288, 309 (D. Mass.

2004). It does not appear that IAM disputes this point.

What, however, does this broad exemption from certain

requirements of ERISA mean as far as enforcement is concerned? 

According to Ms. Hockler, it means that any method chosen by the

beneficiary of a “top hat” plan to assert a claim for benefits is

also exempt from ERISA’s requirements. That is, Ms. Hockler

claims, state law remedies otherwise available to such a

participant are not completely preempted by ERISA and thereby

converted into federal law claims. This is so, she says, because

of the way in which the Fort Halifax decision characterized the

intent and effect of ERISA.

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 In Fort Halifax, the Supreme Court was faced with the

question of whether a statute under which the Maine Director of

the Bureau of Labor Standards (a Maine state agency) brought suit

to enforce the provisions of Maine’s severance pay law was

preempted by either ERISA or the NLRA. That, obviously, is not

the same question involved in this case, nor does it deal with

the type of complete preemption which IAM argues for here, but

rather with whether the Maine courts should have recognized

preemption as a defense to the state court action - a somewhat

different concept. Nevertheless, Ms. Hockler claims that the

language used by the Supreme Court in support of its finding that

ERISA did not preempt the Maine statute in question should

persuade this Court to reject IAM’s preemption argument here.

The primary basis for the Supreme Court’s decision on the

ERISA question was the language of ERISA itself, which, as the

Court noted, exhibited a Congressional intent “to legislate with

respect to plans rather than to benefits ....” Fort Halifax, 482

U.S. at 8. Consequently, while it was accurate to say that

Maine’s severance pay statute related to an employee benefit -

namely, severance pay - it did not relate to an employee benefit

plan. This, the Court said, was “a formidable obstacle to

appellant's argument.” Id. 

The Court did not end its analysis there, however. As a

“second answer” to the question, the Court focused on the fact

that “pre-emption of the Maine statute would not further the

purpose of ERISA pre-emption.” Id. The Court analyzed the

legislative history behind ERISA and found evidence that

preemption was intended to prevent employers who established

employee benefit plans, thereby subjecting themselves to “a host

of obligations” imposed by ERISA, not be forced at the same time

to comply with “differing regulatory requirements in differing

States.” Id. at 9. As examples, the Court pointed to State

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regulations relating to record-keeping, claims processing, and

fiduciary standards, all of which could conflict with ERISA - a

result at odds with the need to ensure “that the administrative

practices of a benefit plan will be governed by only a single set

of regulations.” Id. at 10. Since the Maine statute relating to

severance pay imposed no administrative requirements at all, but

simply mandated a single lump-sum payment to employees under

certain circumstances, which obligation could be satisfied by

“do[ing] little more than writ[ing] a check,” it did not create

the type of conflict which motivated Congress to adopt the broad

preemption provisions found in ERISA, and it was therefore not

preempted.

Building on this alternate rationale, Ms. Hockler has

constructed the following argument. First, she notes that due to

the various provisions of ERISA which exempt “top hat” plans from

a multitude of its requirements, there is really no

administrative scheme with which any state regulations or the

allowance of state-law-based legal claims would conflict. 

Second, she reads Fort Halifax as implying, if not directly

holding, that Congress intended that “any plan that is not

subject to fiduciary standards should not be subject to ERISA

complete preemption.” Motion to Remand, at 16. Thus, because to

preempt her state law claims would neither serve any useful

purpose in terms of relieving IAM from having to comply with

conflicting sets of regulations, nor further Congress’ intent

when it provided for preemption under certain circumstances, this

Court should find that her claims are not preempted. She makes

that argument even though, should the Court label the deferred

compensation arrangement involved in this case as an ERISA “top

hat” plan, all of her state law claims are claims made by a

beneficiary of an ERISA plan to obtain benefits from the plan.

As a policy argument, Ms. Hockler’s contentions might carry

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some weight. However, as in most cases which involve construing

legislative enactments, the Court cannot begin its analysis by

attempting to ferret out from the legislative history what

policies would be served by various interpretations of the

statutory scheme. Rather, the Court must start with the language

that actually made it into the final draft of the statute, and

presume that if the language is clear, that language - and not

any debate which preceded it - expresses the will of Congress. 

In other words, "it is elementary that ‘[t]he starting point in

every case involving construction of a statute is the language

itself.’" Southeastern Community College v. Davis, 442 U.S. 397,

405 (1979), quoting Blue Chip Stamps v. Manor Drug Stores, 421

U.S. 723, 756 (1975)(Powell, J., concurring). It is only when

“the literal language of the statute does not conclusively reveal

legislative intent [that] courts must look beyond literal

meaning” to matters such as the underlying policy concerns which

prompted Congress to act. See In re Arnett, 731 F.2d 358, 361

(6th Cir. 1984).

What does ERISA have to say on this subject? A good place to

begin answering this question is the Supreme Court’s decision in

Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987), the

case in which the “complete preemption” doctrine was first

applied to ERISA.

In Metropolitan Life Ins. Co. v. Taylor, the Supreme Court

was faced with the now-familiar scenario of a beneficiary of an

employee benefit plan (there, a disability benefits plan) suing

his employer and claiming that, as a matter of state law,

benefits owed to him pursuant to the plan were improperly

withheld. The Court of Appeals had concluded that the

plaintiff’s state law claims were preempted by ERISA, but were

not replaced by a claim for benefits arising under that statute,

so that the district court lacked jurisdiction to hear the case

(like this case, it had been removed from state court on federal

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question grounds, with the federal question being the ERISA-based

claim for benefits that the plaintiff had never asserted). The

Supreme Court reversed part of that holding. It agreed that

because the state law claims for benefits related to an employee

benefit plan, they were preempted by 29 U.S.C. §1144(a), which

states that “the provisions of this subchapter and subchapter III

of this chapter shall supersede any and all State laws insofar as

they may now or hereafter relate to any employee benefit plan

....” The Supreme Court went further, however, and concluded

that based on Congress’ intent, as expressed in 29 U.S.C.

§1132(a), to make any claim for benefits under an ERISA plan

exclusively federal in nature, state law claims like the ones

pleaded in that case were “displaced” by ERISA’s remedy section

and converted into federal law claims. 

29 U.S.C. §1132 is entitled “Civil Enforcement.” It

describes both those persons “empowered to bring a civil action”

and the type of actions which can be brought. First among those

is an action brought “by a participant or beneficiary,” and the

second-listed claim which a participant or beneficiary may bring

is an action “to recover benefits due ... under the terms of [a]

plan ....” 29 U.S.C. §1132(a)(1)(B). Not only does §1132(a)

permit such suits, however, but the Supreme Court, relying on

legislative history stating that “[a]ll such actions in Federal

or State courts are to be regarded as arising under the laws of

the United States,” concluded that it was Congress’ clear

intention, in enacting §1132(a), “to make causes of action within

the scope of the civil enforcement provisions of §502(a) [29

U.S.C. §1132(a)] removable to federal court.” Metropolitan Life

Ins. Co. v. Taylor, supra, at 66. Obviously, this Court cannot

reinterpret §1132(a) to mean something other than what the

Supreme Court has said it means, no matter what policy arguments

might favor some differing interpretation.

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Once that groundwork has been laid, the application of

§1132(a) to “top hats” plan is not complicated. If, indeed, a

plan qualifies as a “top hat” plan, it is an ERISA plan even if

it has been exempted from substantial portions of ERISA. As the

Supreme Court held in Fort Halifax, ERISA applies to plans. 

Under the plain language of §1132(a), a suit brought by or on

behalf of a beneficiary of a “top hat” plan to recover benefits

due under the plan is an action “to recover benefits due ...

under the terms of [a] plan” and therefore falls within the

literal scope of that statutory provision. Under the binding

interpretation of §1132(a) laid out in Metropolitan Life Ins. Co.

v. Taylor, any such claim, whether brought in state or federal

court, and whether characterized as a federal or state law claim,

“is necessarily federal in character by virtue of the clearly

manifested intent of Congress. It, therefore, ‘arise[s] under

the ... laws ... of the United States,’ 28 U.S.C. § 1331, and is

removable to federal court by the defendants, 28 U.S.C.

§1441(b).” Metropolitan Life Ins. Co. v. Taylor, 481 U.S. at 67.

Were this Court to reach that conclusion, it would not be

alone. Many Courts of Appeals have said as much. See, e.g,

Garratt v. Knowles, 245 F.3d 941 (7th Cir. 2001); Demery v.

Extebank Deferred Compensation Plan, 216 F.3d 283 (2d Cir. 2000);

Hampers v. W.R. Grace & Co., 202 F.3d 44 (1st Cir. 2000). At

least one other Judge of this Court has explicitly so held. See

Hutchison v. Crane Plastics Mfg., Ltd., 2006 WL 3346117, *4 (S.D.

Ohio Sept. 28, 2006)(Graham, J.)(“Because ERISA completely

preempts state law claims that fall within the civil enforcement

provision of ERISA ... actions involving benefits payable from

top hat plans are preempted by ERISA”); see also Foley v.

American Electric Power, 425 F.Supp. 2d 863 (S.D. Ohio

2006)(Marbley, J.). And the Court of Appeals for this Circuit

has agreed, although it expressed its agreement in a case where

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the application of ERISA’s remedy provisions to a “top hat” plan

was “undisputed,” see Peters v. Lincoln Elec. Co., 285 F.3d 456,

467 (6th Cir. 2002). By contrast, Ms. Hockler has cited no cases

to the Court which reach the opposite conclusion. For all of

these reasons, it is recommended that the Court resolve this

issue in the defendants’ favor and hold that if, indeed, the

deferred compensation arrangement in this case is properly

characterized as a “top hat” plan, ERISA both preempts and

displaces Ms. Hockler’s eight state law claims which seek the

recovery of benefits allegedly due under that plan. 

B. Does This Case Involve a “Top Hat” Plan?

The Court’s discussion of whether ERISA preemption and

displacement applies to “top hat” plans demonstrates that,

contrary to Ms. Hockler’s claim that whether or not the deferred

compensation arrangement in this case is such a plan is

irrelevant to the jurisdictional inquiry, the answer to that

question is dispositive of the issue. Consequently, the Court

will review the law, including applicable provisions of ERISA, to

determine what makes this type of arrangement a “top hat” plan,

and whether the deal which Mr. Hockler struck with IAM has those

same characteristics.

ERISA contains a definition section, 29 U.S.C. §1002. In

somewhat opaque language, it states that “[t]he term ‘employee

benefit plan’ or ‘plan’ means an employee welfare benefit plan or

an employee pension benefit plan or a plan which is both an

employee welfare benefit plan and an employee pension benefit

plan,” see §1002(2)(B)(3), and §1002(2)(A) defines “employee

pension benefit plan” and “pension plan” to mean any plan, fund

or program established by an employer to the extent that, among

other things, it “results in a deferral of income by employees

for periods extending to the termination of covered employment or

beyond ....” The actual phrase “top hat plan” is not found in

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ERISA, but has come to mean a pension benefit plan which is

exempted from various regulatory requirements of ERISA because,

as stated in various subsections of the statute such as §1051(2),

it “is unfunded and is maintained by an employer primarily for

the purpose of providing deferred compensation for a select group

of management or highly compensated employees ....” Using only

these statutory sections, it would appear that the deferred

compensation arrangement described in Ms. Hockler’s complaint

would be an employee pension plan because it was established by

an employer and resulted in the deferral of income to Mr. Hockler

“extending to the termination of covered employment or beyond,”

and would be a “top hat” plan because it provided deferred

compensation only for a select group - here, a group consisting

solely of Mr. Hockler - of management or highly compensated

employees. 

Ms. Hockler takes issue with that analysis, however. In her

view, under a multi-factor test described in decisions such as

Kolkowski v. Goodrich Corp., 448 F.3d 843 (6th Cir 2006), the

deal which Mr. Hockler reached with IAM is not a “plan” at all. 

Rather, quoting language that first appears in Fort Halifax, she

contends that an ERISA plan requires “an ongoing administrative

program to meet the employer's obligation,” Fort Halifax, supra,

at 11, and that an arrangement that requires only “[s]imple or

mechanistic determinations” is not a plan and not subject to

ERISA. Motion to Remand, Doc. 9, at 5, quoting Swinney v.

General Motors Corp., 46 F.3d 512, 517 (6th Cir. 1995). Thus,

she argues that because the arrangement reached between Mr.

Hockler and IAM requires IAM to do little more than to send a

check to her, it is not an ERISA plan of any kind, “top hat” or

otherwise, and there is no remedy available to her under ERISA

which could preempt and displace her state law claims.

This Court has acknowledged and applied the criteria for

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deciding if a particular plan which is intended to, and does,

provide some type of benefit to an employee, is an “employee

benefit plan” within the meaning of ERISA. In B-T Dissolution,

Inc. v. Provident Life and Accident Ins. Co., 101 F.Supp. 2d 930,

947 (S.D. Ohio 2000)(Rice, J.), the Court found certain plans to

be covered by ERISA because, under the formulation of the

applicable test set forth by the Court of Appeals in

International Resources, Inc. v. New York Life Ins. Co., 950 F.2d

294, 297 (6th Cir. 1991), 

the documents and surrounding circumstances enable a

reasonable person to ascertain all relevant coverage

information. As noted, ... such relevant information

includes the intended benefits, the intended class of

beneficiaries, the source of financing, and the

procedures for receiving benefits.

See also Hughes v. White, 467 F.Supp. 2d 791, 801 (S.D. Ohio

2006)(Marbley, J.), aff’d 298 Fed.Appx. 404 (6th Cir. 2008):

In determining whether a benefit plan exists under

ERISA, the operative test is that developed by the

court in Donovan v. Dillingham, 688 F.2d 1367 (11th

Cir.1982)(en banc). See WCI [Williams v. WCI Steel Co.,

170 F.3d 598 at 603 n. 3 [6th Cir. 1999] (“The

Dillingham test has been adopted by this court,”

(citations omitted) “as well as by every other

circuit.”) Under the Dillingham framework, a

compensation scheme is governed by ERISA if a

reasonable person examining the surrounding

circumstances can ascertain: (1) the intended benefits;

(2) the class of beneficiaries, (3) the source of

financing; and (4) the procedures for receiving

benefits.

Using this test, IAM asserts that because the written agreement

between itself and Mr. Hockler identifies the intended benefits

(an amount of deferred income calculated with reference to its

“Net Income Accrual”); identifies the intended class of

beneficiaries (Mr. Hockler); identifies the source of financing

(by implication, IAM’s general revenues, since no other source of

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financing is specified); and identifies the procedure for

receiving benefits (the vesting requirement, Mr. Hockler’s death

or retirement, and the ten-year payout period), it easily

qualifies as an ERISA plan.

There would appear to be some tension between the tests

cited to the Court by Ms. Hockler and by IAM. The former appears

to focus almost exclusively on the existence of some type of

administrative scheme accompanying the plan, while the latter

does not seem to take that factor into account at all. It is

also not clear the extent to which other decisions use the factor

of an “administrative scheme” in deciding if a deferred

compensation plan falls within the scope of ERISA. For example,

in Evanoff v. Banner Mattress Co., Inc., 526 F.Supp. 2d 810, 815

n.1 (N.D. Ohio 2007), the court, citing to Hughes, supra, said

that “[d]eferred compensation plans are generally analyzed under

the traditional Thompson-Dillingham three factor test ....” The

Evanoff court considered the four factors analyzed in B-T

Dissolution and in Hughes as the second part of the test,

describing the first inquiry as whether the Department of Labor’s

“safe harbor” provisions exempt the plan from ERISA - an issue

not present here - and the third factor as “‘whether the employer

“established or maintained” the plan [intending to provide]

benefits to its employees.’” Evanoff, 526 F.Supp. 2d at 816,

quoting Thompson v. American Home Assurance Co., 95 F.3d 429, 436

(6th Cir. 1996). The Court will examine these factors first, to

the extent they are implicated here, and, if it appears that the

deferred compensation agreement in this case qualifies as an

ERISA plan under these criteria, will consider if anything in

Swinney might change that result.

Ms. Hockler’s motion to remand does analyze the four factors

that Hughes and other similar decisions find applicable. Her

position on three of these factors (she does not argue that the

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beneficiary of the arrangement cannot be identified) is that:

(1) a reasonable person cannot ascertain the benefits

because their calculation is uncertain;

(2) the plan does not identify the source of funding (Ms.

Hockler claims that there was an insurance policy in place at one

point to fund the payout, but it was canceled and the current

source of funding is unclear); and 

(3) there is no procedure for obtaining benefits (that is,

there is no administrative procedure through which either Mr.

Hockler, while he was still living, or Ms. Hockler could apply

for benefits, and no appeals process from any denial of a claim).

Ms. Hockler relies heavily for this part of the analysis on

Gabelman v. Sher, 2012 WL 1004872 (E.D.N.Y. March 23,2012). That

case involved a former employee’s claim for retirement benefits,

which he asserted as a claim under ERISA. The plan in question

consisted of a salary continuation agreement under which, if

plaintiff remained employed through age 65, would pay him $40,000

per year for the next ten years, payable in 120 equal monthly

payments. Plaintiff’s employment was terminated before he became

eligible for these benefits, and he sued to recover them. Using

a somewhat different test in effect within the Second Circuit,

the district court found that ERISA did not apply because the

“plan” provided for automatic rather than discretionary payments,

determined arithmetically once the participant became eligible,

and it also did not require an individualized analysis of whether

the plaintiff qualified for benefits - he either remained in the

company’s employ until he reached age 65, or he did not. 

Further, the company’s only ongoing commitment after plaintiff

became eligible for benefits was to mail him checks, something

the court found inconsistent with an ongoing and particularized

discretionary analysis which, the court said, is “characteristic

of an ERISA plan.” Gabelman, at *6. The court also found

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noteworthy the absence of any fiduciary to administer the plan,

or any trust fund from which plan benefits would be paid, and

concluded that the plan simply did not meet ERISA’s criteria for

an employee benefit plan. Another district court from that

circuit reached a similar result, articulating the ThompsonDillingham test, but then, along the lines of Swinney, stating

that the “touchstone” factor was the creation and existence of an

ongoing administrative scheme. See Eckardt v. Wiebel Tool Co.,

965 F.Supp. 357, 362-63 (E.D.N.Y. 1997). 

Again, leaving aside for the moment whether there is a

“touchstone” test which transcends the four factors making up the

heart of the Thompson-Dillingham test, the Court finds that IAM

has the better of this argument. In addition to the fact that

the beneficiary of this plan is easily identified, a reasonable

person, armed with enough information, should be able to

determine the benefits due. In fact, according to IAM, because

the company ceased making any net profit before Mr. Hockler

retired, his benefits became fixed before he met all of the

eligibility requirements for receiving deferred compensation, and

the benefit amount is $135,000. Although this amount may have

been indeterminate when the plan was created, Hughes v. White,

supra, held that if the amount of benefits becomes ascertainable

at some time during the life of the plan, at least from that

point forward, this prong of the Thompson-Dillingham test is

satisfied.

Further, absent either an insurance policy or trust fund -

both of which, the parties agree, do not exist here - the source

from which the benefits will be paid cannot consist of anything

other than the general revenues of IAM. As IAM correctly points

out in its memorandum, in Hughes v. White, supra at 801, this

Court noted that “courts have routinely held that it may be

assumed that benefits are to be paid out of the general assets of

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the employer.” It is true that the agreement does not

specifically state to whom a claim for benefits is to be made, or

how to make that claim, so the fourth factor may well favor Ms.

Hockler’s position, but the other three do not.

Turning at last to the significance of whether there is some

type of ongoing administrative scheme in place for dealing with

Ms. Hockler’s claim for benefits, again, as noted in Hughes v.

White, that factor has been deemed important in cases involving

severance benefits, but not necessarily deferred compensation. 

Hughes, supra, citing Kolkowski v. Goodrich Corp., 448 F.3d 843

(6th Cir. 2006). Kolkowski noted that in those types of cases,

whether the payment of the severance benefits required some ongoing involvement of the employer was a factor, although that

test and the Thompson-Dillingham test were described as

“different tools that can both be used to determine whether an

ERISA plan exists.” Kolkowski, 448 F.3d at 850. And one of the

factors under the “on-going involvement” test was whether the

plan required the employer to make payments over time, and

therefore represented “on-going demands on an employer's assets,”

as opposed to calling for a single lump-sum payment. Kolkowski,

at 848. It is significant that the Kolkowski court found an

ERISA plan even though there was evidence that the employer “did

not comply with ERISA's reporting requirements, there was

admittedly no plan administrator at times, and no claims

procedure was in place.” Id. at 849. The Court also finds

instructive the observation made in Emmenegger v. Bull Moose Tube

Co., 197 F.3d 929, 935 (8th Cir. 1999), that “no single factor is

determinative on this issue ....” It is, rather, the combination

of the relevant factors which persuades the Court that it is

dealing with an ERISA plan here. 

This is, admittedly, not a routine case, and the deferred

compensation plan does not resemble the prototypical ERISA

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benefit plan. But it does not have to. The intent to benefit an

IAM employee is clear. Further, Ms. Hockler’s disagreement about

how the language in the plan relating to “Net Income Accrual”

should be interpreted illustrates the fact that the plan requires

either some discretionary calculations to be made, or, at the

very least, requires the ongoing involvement on the part of IAM

in the payment of benefits. Given the small size of the company

and Mr. Hockler’s intimate familiarity with it, the absence of a

formal claims procedure does not appear to be a determinative

factor. Finally, the Court is persuaded that the absence of any

other designated source of funding - something the parties appear

to agree on - creates a reasonable presumption that IAM would

fund the payments out of its general revenues or assets. Again,

given Mr. Hockler’s position with the company, he would have

known that such revenue was the only potential source of payment,

as would a reasonable person in his position. There are

therefore enough indicia of a “plan” to bring this arrangement

within the scope of ERISA. That being so, the Court does have

jurisdiction over Ms. Hockler’s claim for benefits, which, by

operation of law, is a claim under 29 U.S.C. §1132(a).

 III.

As the Court noted briefly in the introductory section of

this Report and Recommendation, Ms. Hockler seeks to make much of

the fact that IAM’s counsel denied that the deferred compensation

plan was subject to ERISA. Without deciding whether Ms. Hockler

or IAM has the better of the argument about whether Fed.R.Evid.

408 bars the use of that statement in the context of the Court’s

jurisdictional inquiry because it was supposedly made while the

parties were discussing settlement, it suffices to say that none

of the factors which the courts have identified for determining

if a particular agreement between an employer and an employee is

an ERISA plan have anything to do with the employer’s subjective

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intent. That is logical; an employer may not avoid the

application of ERISA to a plan it creates, assuming the statutory

criteria for an ERISA plan are met, just by saying that it does

not intend for that law to apply. The converse is true as well;

no amount of intent on the part of an employer can transform a

non-ERISA plan into one which is subject to Congress’ regulation

as expressed in that statute. The Court has therefore determined

the jurisdictional issue without reference to, or reliance on,

the statements made by Mr. Cookson about whether ERISA applies

here.

IV.

For all of the reasons set forth above, the Court recommends

that the plaintiff’s motion to remand this case to the Court of

Common Pleas of Franklin County, Ohio (#9) be denied.

V.

If any party objects to this Report and Recommendation,

that party may, within fourteen (14) days of the date of this

Report, file and serve on all parties written objections to

those specific proposed findings or recommendations to which

objection is made, together with supporting authority for the

objection(s). A judge of this Court shall make a de novo

determination of those portions of the report or specified

proposed findings or recommendations to which objection is

made. Upon proper objections, a judge of this Court may

accept, reject, or modify, in whole or in part, the findings

or recommendations made herein, may receive further evidence

or may recommit this matter to the magistrate judge with

instructions. 28 U.S.C. §636(b)(1).

 The parties are specifically advised that failure to

object to the Report and Recommendation will result in a

waiver of the right to have the district judge review the

Report and Recommendation de novo, and also operates as a

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waiver of the right to appeal the decision of the District

Court adopting the Report and Recommendation. See Thomas v.

Arn, 474 U.S. 140 (1985); United States v. Walters, 638 F.2d

947 (6th Cir. 1981).

/s/ Terence P. Kemp 

United States Magistrate Judge

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