1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

6-29-1995

Hennessy v FDIC

Precedential or Non-Precedential:

Docket 94-1857

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Recommended Citation

"Hennessy v FDIC" (1995). 1995 Decisions. Paper 178.

http://digitalcommons.law.villanova.edu/thirdcircuit_1995/178
 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 

 No. 94-1857 

 

JOHN T. HENNESSY; MICHAEL B. HIGH; 

WILLIAM A. BRACKEN; LARRY GIBSON; 

MARTHA C. HITCHCOCK; LAURENCE A. LISS; 

KEN MANCINI; GEORGE S. RAPP; 

ROBERTA GRIFFIN TORIAN; FRANK J. SORIERO 

v. 

FEDERAL DEPOSIT INSURANCE CORPORATION, 

AS RECEIVER FOR MERITOR SAVINGS BANK 

(D.C. Civil No. 93-cv-05589) 

THOMAS CALLAHAN 

v. 

FEDERAL DEPOSIT INSURANCE CORPORATION, 

AS RECEIVER FOR MERITOR SAVINGS BANK 

(D.C. Civil No. 94-cv-01949) 

John T. Hennessy, Roberta Griffin Torian, 

Michael B. High, William Bracken, Laurence Liss, 

Marty Hitchcock, George S. Rapp, Kenneth R. Mancini, 

Lawrence J. Gibson, Frank J. Soriero and Thomas Callahan, 

 Appellants

 

 On Appeal from the United States District Court 

 for the Eastern District of Pennsylvania 

 (D.C. No. 93-cv-05589) 

 

 No. 94-1933 

 

DAVID A. CAMPBELL, JR.; ROBERT F. HANNA; 

LESLIE VOTH; HELEN T. DEMARCO, individually, and 

ROBERT F. HANNA; HELEN T. DEMARCO, on behalf of 
themselves and all others similarly situated, 

(SEPARATION PLAN CLASS), and 

DAVID A. CAMPBELL, JR., 

on behalf of himself and all others similarly 

situated, (RETIREE HEALTH CLASS), and 

DAVID A. CAMPBELL, JR.; ROBERT F. HANNA, 

on behalf of themselves and all others 

similarly situated, (LIFE INSURANCE CLASS) 

v. 

FEDERAL DEPOSIT INSURANCE CORPORATION 

AS RECEIVER FOR MERITOR SAVINGS BANK 

 David A. Campbell, Jr., Robert F. Hanna, 

 Helen T. DeMarco and Leslie Voth, 

 Appellants

 

 On Appeal from the United States District Court 

 for the Eastern District of Pennsylvania 

 (D.C. No. 93-cv-03969) 

 

 No. 94-1934 

 

 

JOSEPH A. ADOLF, LAURENCE J. ARNOLD, 

CHRISTIAN F. AURIG, GEORGE W. BARBER, 

LINDA C. BARCH, RICHARD F. BATE, OWEN J. BEHEN, 

LAUREN BETHEA, ELIZABETH L. BLANKENHORN, 

ANNE MARIE BOBACK, SUSAN M. BROWN, 

JOHN J. BUCZEK, GEORGE S. BUNTING, MARY ANN C. BURCH, 

EDITH BURKEITT, THOMAS P. CALLAHAN, 

DAVID A. CAMPBELL, JR., KARLA J. CARNEY, 

JOHN M. CASAMENTO, JR., WILLIAM J. CATHCART, 

LISA CAVALLI, NANCY L. CEFFARATTI, JOSEPH D. CELLUCCI, 

ESTHER CERBO, CAROLE A. CIRCUCCI, ANTHONY R. COOGAN, 

LARRY A. COOK, SAMUEL J. COOK, WALLACE P. COONEY, 

PAUL L. COPPOLA, LORENE C. COQUILLETTE, 

BETTY R. CORLEY, HARRIET S. CORLEY, JOAN T. CORSON, 

DAVID E. COVERDALE, MARY C. CRAIGE, LOIUS T. CULLEN, 

JOHN F. CULP, EDWARD D. CUSTER, MICHAEL CZINCILA, 

JOAN E. DEBES, IRENE V. DELIZZIO, GAIL L. DELVISCIO, 

HAROLD L. DEMPSEY, HAROLD C. DENGEL, 
DEBRA ANNE DENIGHT, BEATRICE L. DESHER, 

JOSEPH H. DEVORE, JR., ANNA S. DIFELICE, 

MARIO DIFELICE, MARY ANN DIGREGORIO, 

LEONID A. DOBRININ, SARAH S. DOODY, JOSEPH M. DUFFY, 

LEONARD T. EBERT, JOHN A. FATULA, CHARLES J. FERRIE, 

GEORGE W. FETTERS, JR., LORE L. FISHER, JOHN P. FOGARTY, 

CYNTHIA M. FORD, DORIS GAGLIARDI, BARBARA A. GIBSON, 

FRANCES J. GILLEN, WILLIAM R. GOETTLE, 

CHARLES W. GRAY, III, EUGENE A. HEIWIG, 

WILLIAM H. HILLIARD, WILLIAM H.H. HSU, 

STANLEY E. HUNT, CHARLES C. JONES, 

THOMAS C. KEISER, KATHLEEN F. KELLY, LYNN M. KELLY, 

ETHEL S. KEOWEN, JOHN ANDREW KINNERMAN, 

PHILIP W. KLINGER, C. ANDREW KREPPS, JR., 

JOHN DAVID LAMBERT, MICHAEL G. LEWIS, 

PATRICIA LEUTHY, SALVATORE LIZZIO, ALDO S. LOMBARDI, 

ELISABETH W. LORD, KATHLEEN LYNCH, E. DAVID MACNALLY, 

WILLIAM C. MACNEILL, JR., FRANK JOSEPH MARULLO, 

EDWARD M. MASON, JR., THOMAS G. MARVEL, 

RUTH A. MCALLISTER, JOSEPH F. MCCOLE, 

CHRISTINE D. MCCORMICK, PHILIP J. MCCORMICK, 

JANET B. MCCOURT, DAVID C. MELNICOFF, FREDA I. MILLAR, 

ANTHONY M. MINGARINO, JOSEPH J. MOFFA, 

LINDA LEE MONTANA, BARBARA L. MORGAN, 

MARION D. MORGAN, LEONARD V. MORRIS, 

DAVID D. MORRISON, MARY T. MURPHY, ANTHONY J. NOCELLA, 

WILLIAM A. NORRIS, III, MARTHA K. NYLUND, 

MARY E. ORR, JOHN T. OSMIAN, CHARLES E. PADGETT, 

PATRICIA PAWLING, HOWARD F. PEARCE, 

CATHERINE P. PICCONE, PETER P. PRYZBYLKOWSKI, 

DARLENE E. PURUGGANAN, ELIZABETH L. RAFETTO, 

EDWARD W. RAPP, LUBA K. REILLY, LOUISE M. REITANO, 

ANTOINETTE D. RENDINO, MS. JAMIE RINDOCK, 

JEAN DAVIS ROBINSON, RICHARD ROGERS, DIANE S. ROHR, 

HERBERT A. ROTH, ANTHONY J. SANTILLI, JR., 

KATHLEEN M. SAWCHYNSKY, RUTH C. SCHMIDT, 

MICHAEL F. SCUTTI, MARTIN SELGRATH, JOHN W. SEMPLE, 

JOSEPH F. SLANE, ROBERT A. SMALLEY, ELIZABETH K. SONNEBORN, 

FRED B. STAAS, WALTER R. STAPLES, ROBERT C. STEINMAN, 

ARTHUR W. STETTLER, JEAN J. STUBBS, ANTHONY TABASCO, 

ROBERT B. TAYLOR, ANNITA L. TEDESCO, KENNETH C. THOMAS, 

PATRICIA E. THOMPSON, DIANNE T. TINDALL, 

JAMES M. TOOLAN, MORRIS VARANO, STANLEY J. VERBEEK, 

DONNA VOLZ, LESLIE C. VOTH, THERESA M. WEBB, 

CYNTHIA WEST, ROBERT B. WHITELAW, ALTON T. WINNER, JR., 

ANNE M. WISE, VERDELLA WRIGHT, ANTHONY J. ZONGARO AND 

LINA G. ZANONI, 

 

 Appellants
v. 

FEDERAL DEPOSIT INSURANCE CORPORATION, 

AS RECEIVER FOR MERITOR SAVINGS BANK 

 

 On Appeal from the United States District Court 

 for the Eastern District of Pennsylvania 

 (D.C. No. 94-cv-01499) 

 

 Argued May 16, 1995 

 Before: COWEN, LEWIS and GARTH, Circuit Judges

 (Filed June 29, l995 ) 

Alice W. Ballard (argued) 

Samuel & Ballard 

225 South 15th Street 

Suite 1700 

Philadelphia, PA 19102 

 COUNSEL FOR APPELLANTS 

 in No. 94-1857 

Harry C. Barbin (argued) 

Barbin, Lauffer & O'Connell 

608 Huntingdon Pike 

Rockledge, PA 19046 

 COUNSEL FOR APPELLANTS 

 in No. 94-1933 

Harry C. Barbin (argued) 

William M. O'Connell 

Barbin, Lauffer & O'Connell 

608 Huntingdon Pike 

Rockledge, PA 19046 

 COUNSEL FOR APPELLANTS 

 in No. 94-1934 

Jaclyn C. Taner (argued) 

Federal Deposit Insurance Corporation 

550 17th Street, N.W. 

Washington, DC 20429 
 COUNSEL FOR APPELLEE 

 Federal Deposit Insurance Corporation 

 as Receiver for Meritor Savings Bank 

 

OPINION 

 

COWEN, Circuit Judge: 

 Plaintiffs in these related cases, former employees and 

managers of Meritor Savings Bank, appeal from three orders of the 

district court that granted summary judgment in favor of the 

defendant, the Federal Deposit Insurance Corporation ("FDIC"), on 

their claims to recover severance pay, medical benefits, and life 

insurance benefits pursuant to the terms of their employee 

welfare benefit plans. The issues raised in these appeals are 

whether the district court erred in determining that: (1) the 

FDIC's takeover and sale of Meritor was not a reorganization for 

purposes of the plaintiffs' separation pay plan; (2) the 

discharge of Meritor employees did not constitute "job 

elimination" or "lack of work" triggering severance payments; (3) 

the plaintiffs had no vested right to severance pay; (4) the FDIC 

properly exercised its repudiation powers; (5) the plaintiffs did 

not incur "actual direct compensatory damages" as provided in 12 

U.S.C. § 1821(e)(3); (6) the FDIC properly terminated life and 

health insurance benefits pursuant to the termination provisions 

in these employee welfare benefit plans; (7) the FDIC was not 

liable for a statutory penalty under 29 U.S.C. § 1132(c)(1) as a 

result of its failure to respond in a timely manner to 
plaintiffs' request for plan documents; and (8) the certification 

of three plaintiff classes was inappropriate. Because we 

conclude that the district court did not err in granting summary 

judgment to the FDIC on plaintiffs' claims for separation pay, 

health insurance benefits, and life insurance benefits, we will 

affirm the orders of the district court. Further, because we 

conclude that the district court did not abuse its discretion in 

finding that the FDIC is not liable for the statutory penalty 

prescribed by 29 U.S.C. § 1132(c), we will affirm the order of 

the district court pertaining to this issue. Finally, because of 

our conclusion on the merits, that the district court did not err 

in granting summary judgment for the FDIC, we need not reach the 

class certification issues. 

 I. FACTS & PROCEDURAL HISTORY 

 On December 11, 1992, the Secretary of Banking of the 

Commonwealth of Pennsylvania issued an order declaring Meritor 

Savings Bank ("Meritor") insolvent and directing that the bank be 

closed. On the same day, the FDIC was appointed as receiver for 

the insolvent bank. As receiver, the FDIC executed a Purchase 

and Assumption Agreement with Mellon Bank ("Mellon") transferring 

a portion of Meritor's assets and liabilities to Mellon. The 

FDIC retained the liabilities not assumed by Mellon, along with 

the unpurchased Meritor assets, which the FDIC proceeded to 

liquidate for the benefit of Meritor's approved creditors. 

 The record demonstrates that until the Secretary of Banking 

declared the bank insolvent, Meritor maintained a separation pay 
plan ("SPP"), a retiree health insurance plan (the Meritor 

Medical Plan 65 Special Option or "65 Special"), and a retiree 

life insurance plan (the Meritor Group Life Insurance Plan or 

"MGLIP").1 Under the SPP, eligible employees were entitled to 

severance pay based on their years of service and salary, up to a 

maximum benefit of twenty-six weeks. Benefits were payable for 

involuntary termination due to "lack of work, job elimination, 

reorganization or reduction-in-force." Campbell App. at 139a. 

No benefits would be paid if separation resulted from sale or 

disposition of a portion of Meritor's assets and the employee was 

employed by the successor entity. Id.

 The SPP was "unfunded," meaning all benefits were paid from 

the general assets of Meritor. Id. at 141a. Meritor retained 

sole authority to determine whether a separation entitled an 

employee to benefits. Id. Moreover, Meritor expressly reserved 

the right to modify or discontinue the SPP in whole or in part at 

any time. Id. at 137a. 

 Under the 65 Special, Meritor provided group health 

insurance coverage for its retirees. Id. at 406a. The 65 

Special was a self-insured plan that qualified as an employee 

welfare benefit plan under the Employee Retirement Income 

Security Act of 1974, as amended, 29 U.S.C. §§ 1001-1461 

 

1. The parties stipulated to the material facts in these cases. 

Statement of Undisputed Facts, Hennessy App. at 187-95; Joint 

Statement of Undisputed and Disputed Facts Regarding Motions for 

Summary Judgment, Campbell App. at 403a-70a; Joint Statement and 

Joint Supplemental Statement of Disputed and Undisputed Facts, 

Adolph App. at 367a-437a. 
("ERISA"). The MGLIP, also an employee welfare benefit plan 

under ERISA, provided retirees with death benefit coverage equal 

to the lesser of $50,000 or 25% of the amount of death benefit 

coverage for which they were insured immediately prior to 

retirement. Id. at 405a-06a. 

 Meritor explicitly reserved the right to terminate the 65 

Special and the MGLIP at any time. The health plan provided: 

 Meritor intends the plan to be permanent, but since future 

conditions affecting your employer cannot be anticipated or 

foreseen, Meritor reserves the right to amend, modify or 

terminate the plan at any time, which may result in the 

termination or modification of your coverage. Expenses 

incurred prior to the plan termination will be paid as 

provided under the terms of the plan prior to its 

termination. 

Id. at 165a (emphasis omitted). The life insurance 

plan provided: 

 Meritor reserves the right to terminate the group life 

insurance policy for its employees and retirees at any time, 

if Meritor determines that such termination is in its best 

interests. If Meritor terminates its group life insurance 

policy, employees and retirees who die after the effective 

date of the termination . . . will not have any life 

insurance. 

Id. at 152a. 

 On the day the Secretary declared Meritor insolvent, a 

meeting was held to discuss the status of Meritor's employees. 

At that meeting, Jack Goodner, the FDIC's closing manager, made a 

brief presentation. When he finished his remarks, an employee 

asked him whether severance benefits would be paid. Goodner 

thought not, but was not sure. After looking towards two other 

FDIC officials for guidance, Goodner responded "no." At the 
close of business on December 11, 1992, the former Meritor 

employees became employees of Keytech Resources, Inc., a firm 

established to provide staffing for the former Meritor offices 

purchased by Mellon. Mellon paid severance benefits to the 

employees who were subsequently laid off based on their years of 

service to Meritor, up to a maximum of four weeks salary. 

 On the Monday following the events of Friday, December 11, 

1992, the former branches of Meritor opened for business as usual 

under the name of Mellon-PSFS without interruption of business to 

regular customers. The FDIC subsequently repudiated the SPP 

pursuant to its powers under 12 U.S.C. § 1821(e). The FDIC did 

not repudiate either the 65 Special or the MGLIP plans. Instead, 

the FDIC sent letters to the former employees and retirees of 

Meritor notifying them that their health and life insurance plans 

were terminated effective December 31, 1992 pursuant to the terms 

of each plan.2 Those letters advised the employees about the 

availability of FDIC-sponsored continuing medical coverage, and 

also provided specific instructions for filing claims for 

benefits under the FDIC's statutory claims process, alerting the 

employees and retirees to a March 19, 1993 bar date for filing 

claims against the assets of the receivership. 

 A. The Hennessy Plaintiffs

 

2. Consistent with the above facts, when we use the term 

"repudiation," we are referring to the statutory power of a 

receiver under 12 U.S.C. § 1821(e) to refuse to recognize a 

contract. "Termination," by contrast, refers to the 

discontinuing of a plan pursuant to the plan's own terms. 
 The Hennessy plaintiffs are former managers of Meritor. 

They filed suit in the Eastern District of Pennsylvania alleging 

the right to recover severance pay pursuant to the terms of the 

SPP. In support of their claim, they rely on the above-stated 

facts and the fact that, prior to the FDIC's takeover of Meritor, 

each of them received a letter from Meritor's Chairman, Roger 

Hillas, stating: 

 Meritor senior management is acutely aware that [it] is 

essential to retain motivated employees such as you in key 

positions. 

 As evidence of this awareness, Meritor is extending the 

severance benefit provided to you under the Separation Pay 

Program to a total of 52 weeks pay. This enhanced benefit 

will be payable under the same terms and conditions as 

provided for in the Separation Pay Program if you are 

separated from employment by Meritor anytime on or before 

December 31, 1992. 

Letter from Hillas to John Hennessy (October 3, 1990); Hennessy 

App. at 68. The Hennessy plaintiffs argued before the district 

court that their severance rights under the SPP were activated 

when "they were terminated as part of a reorganization." 

Hennessy v. FDIC, 858 F. Supp. 483, 487 (E.D. Pa. 1994). 

 The district court rejected the Hennessy plaintiffs' 

argument. The court explained that the FDIC sold Meritor to 

Mellon and was in the process of liquidating the rest of 

Meritor's assets. Id. The court reasoned that because the FDIC 

was involved with the termination of Meritor, rather than the 

continuation of its business, there was no reorganization. Id. 

 In the alternative, the Hennessy plaintiffs argued before 

the district court that given the FDIC's repudiation of the SPP, 
the plaintiffs should be able to recover severance pay pursuant 

to 12 U.S.C. § 1821(e)(3) which provides for compensation for 

actual direct compensatory damages attributable to a repudiation. 

Id. at 488-89. The district court disagreed. Relying on the 

decision of the Court of Appeals for the First Circuit in Howell 

v. FDIC, 986 F.2d 569 (1st Cir. 1993), the district court 

determined that severance payments are not actual direct 

compensatory damages under § 1821(e)(3). Id. at 489. 

Accordingly, the district court granted summary judgment in favor 

of the FDIC. Id. at 485. This appeal followed. 

 B. The Campbell Plaintiffs

 The Campbell plaintiffs include: (1) David Campbell, Jr., an 

employee who retired from Meritor effective December 1, 1987; (2) 

Robert Hanna, Helen DeMarco, and Leslie Voth, employees who were 

employed by Meritor on December 11, 1992; and (3) potential 

plaintiff classes comprised of the above named plaintiffs and 

those similarly situated. The Campbell plaintiffs filed claims 

for benefits with the FDIC. The FDIC, however, rejected these 

claims. 

 Subsequent to the FDIC's denial of their claims, the 

Campbell plaintiffs filed suit in the United States District 

Court for the Eastern District of Pennsylvania. In their 

complaint, plaintiffs Hanna and DeMarco sought severance payment 

pursuant to the SPP. Plaintiff Campbell sought a declaration 

that he and other similarly situated persons are entitled to 

health insurance coverage under the 65 Special. Campbell also 
sought reimbursement with interest for health insurance premiums 

paid since December 11, 1992. In addition to these claims, 

plaintiffs Campbell and Hanna sought a declaration that they and 

other similarly situated persons are entitled to life insurance 

under the MGLIP. They also sought reimbursement with interest 

for life insurance premiums paid since December 11, 1992. 

Finally, plaintiffs Campbell, Hanna, Voth and DeMarco sought a 

monetary penalty under ERISA for the FDIC's failure to provide in 

a timely manner information requested by their counsel.3

 The district court denied Hanna and DeMarco's claims for 

severance pay under the SPP for the reasons set forth in its 

decision in Hennessy. Campbell v. FDIC, No. CIV.A.93-3969, 1994 

WL 475067, at *4 (E.D. Pa. Aug. 29, 1994). In addition, the 

court found that it did not have jurisdiction to hear the claims 

brought by Campbell or Voth because these claims were filed 

prematurely.4 Id. Nevertheless, the court concluded that even 

if it had jurisdiction to hear Campbell's claims for health and 

life insurance benefits, these claims would fail because the FDIC 

terminated both the 65 Special and the MGLIP pursuant to its 

 

3. Plaintiffs' counsel sent an ERISA document request to the 

FDIC on March 16, 1993. The FDIC did not respond to the ERISA 

document request until September 21, 1993, 189 days after the 

initial request. 

4. The court concluded that Campbell's and Voth's claims were 

premature because these plaintiffs did not wait the requisite 180 

days after filing their claims with the FDIC before filing their 

actions in district court. Campbell, 1994 WL 475067, at *4. The 

court noted, however, that Campbell and Voth were added as 

individual plaintiffs in the Adolph case by the filing of the 

First Amended Complaint in that case and thus these plaintiffs 

asserted a timely filing in Adolph. Id. at *7 n.7. 
contractual rights. Id. Finally, the district court granted 

summary judgment in favor of the FDIC on the plaintiffs' claims 

for a statutory penalty because it concluded that: (1) the 

statutory penalty should not apply to the FDIC, an agency of the 

federal government; or (2) even if the statutory requirement does 

apply to the FDIC, the court would exercise its discretion under 

29 U.S.C. § 1132(c) and award no penalty in this case. Id. at 

*7. 

 With respect to the potential class claims, the district 

court denied plaintiffs' motion to certify a separation pay plan 

class, a retiree health class, and a life insurance class. 

Campbell v. FDIC, No. 93-3969 (E.D. Pa. June 30, 1994) (order 

denying class certification). The court determined that the 

plaintiffs could not satisfy all four of the threshold 

requirements of Rule 23(a) of the Federal Rules of Civil 

Procedure for certifying a plaintiff class. Id. at 5, 7, 8. In 

addition, the district court found that class certification under 

Rule 23(b)(1) or Rule 23(b)(2) would be inappropriate. Id. at 9. 

This appeal followed. 

 C. The Adolph Plaintiffs

 The Adolph plaintiffs are a group of 161 former Meritor 

employees and retirees.5 In their complaint, also filed in the 

United States District Court for the Eastern District of 

 

5. On July 22, 1994 the district court entered an order granting 

the plaintiffs' unopposed motion to amend the complaint in this 

matter to add David Campbell and Leslie Voth as plaintiffs. 
Pennsylvania, the employee plaintiffs challenged the repudiation 

of the SPP by the FDIC. The retiree plaintiffs challenged the 

termination of their medical benefits under the 65 Special. In 

addition, both the employee and retiree plaintiffs challenged the 

termination of the MGLIP. The FDIC and the Adolph plaintiffs 

filed motions for summary judgment on July 26, 1994. The 

district court granted summary judgment for the FDIC for the 

reasons detailed in Hennessy and Campbell. Adolph v. FDIC, No. 

94-1499 (E.D. Pa. Aug. 29, 1994) (order granting summary 

judgment). This appeal followed. 

 II. JURISDICTION 

 These cases commenced under the Financial Institutions 

Reform, Recovery and Relief Act of 1989 ("FIRREA") and ERISA. 

The district court's jurisdiction was predicated upon 28 U.S.C. § 

1331. We have jurisdiction over the instant appeals pursuant to 

28 U.S.C. § 1291. We exercise plenary review over a grant of 

summary judgment. Because the material facts in this matter are 

not in dispute, we review only for errors of law. As to the 

Campbell plaintiffs' argument that an ERISA penalty should be 

assessed pursuant to 29 U.S.C. § 1132(c)(1), our review is for 

abuse of discretion. 

 III. SEVERANCE PAY 

 A. Was there a Reorganization? 

 The Hennessy plaintiffs' first contention is that Meritor 

was "reorganized," triggering a right to severance payments under 
the terms of the SPP. According to these plaintiffs, Mellon Bank 

acquired Meritor as a going concern following the FDIC's takeover 

of Meritor. The Hennessy plaintiffs point out that Meritor's 

offices opened for business as usual on the next business day 

after the takeover under the trademark "Mellon-PSFS." They 

assert that because Meritor continued as a going concern without 

interruption of business, they have a right to severance payments 

under the terms of the SPP. 

 We are unpersuaded by this argument. The written terms of 

the SPP provide that: 

 If the Employee is involuntarily terminated for 

organizational reasons associated with lack of work, job 

elimination, reorganization, or reduction in force . . . 

he/she will be eligible to receive bi-weekly separation 

payments and benefit continuation as outlined in Section IV 

of the Plan Document. 

Meritor Separation Pay Program (effective November 1, 1989); 

Campbell App. at 129a (emphasis added). The district court 

determined that both the facts and the law in this case did not 

support the conclusion that the Hennessy plaintiffs were 

terminated as part of a reorganization. Hennessy, 858 F. Supp. 

at 487. It reasoned that the FDIC's takeover and sale of a 

bank's assets constituted a termination of the bank's business, 

not a continuation of this business. Id. We agree with the 

determination of the district court. 

 A receiver, unlike a conservator, does not have as its 

purpose the preservation of an institution as a going concern. 

Resolution Trust Corp. v. CedarMinn Bldg. Ltd. Partnership, 956 
F.2d 1446, 1454 (8th Cir.), cert. denied, U.S. , 113 S. 

Ct. 94 (1992). Receivers have the power to liquidate and wind up 

the affairs of an institution. Id. (citing FDIC v. Grella, 553 

F.2d 258, 261 (2d Cir. 1977)). As the Court of Appeals for the 

Eighth Circuit has recognized, this distinction was emphasized in 

the Conference Report accompanying FIRREA, which stated: 

 The title . . . distinguishes between the powers of a 

conservator and receiver, making clear that a conservator 

operates or disposes of an institution as a going concern 

while a receiver has the power to liquidate and wind up the 

affairs of an institution. 

Id. (quoting H.R. Conf. Rep. No. 209, 101st Cong., 1st Sess. 398 

(1989)). 

 The Secretary of Banking for the Commonwealth of 

Pennsylvania closed Meritor Savings Bank. The FDIC was appointed 

receiver and it sold some of Meritor's assets to Mellon. As part 

of this transaction, Mellon agreed to assume some of Meritor's 

liabilities. The FDIC proceeded to liquidate the remaining 

assets of Meritor for the benefit of Meritor's creditors. These 

actions are commensurate with the winding up of a failed bank's 

affairs and the proper function of a receiver. To suggest that 

these actions constituted a reorganization of Meritor is to turn 

a blind eye to the dispositive facts. We therefore cannot 

conclude that the district court erred in its determination that 

Meritor did not undergo a reorganization that would trigger 

plaintiffs' rights to severance pay. 

 B. "Job Elimination" or "Lack of Work" 
 Rather than arguing that Meritor was reorganized, the Adolph 

and Campbell plaintiffs suggest that under the terms of the SPP, 

"job elimination" or "lack of work" triggered the receiver's 

obligation to pay severance benefits. According to these 

plaintiffs, the district court failed to adequately consider this 

argument when it simply relied on its discussion in Hennessy to 

grant summary judgment in favor of the FDIC in the Campbell and 

Adolph cases.6 The Adolph and Campbell plaintiffs assert that 

because the FDIC, as receiver, stands in the shoes of Meritor, it 

must provide separation benefits pursuant to the written terms of 

the SPP. 

 This argument also misses the mark. As stated above, the 

written terms of the SPP provide: 

 IF the Employee is involuntarily terminated for 

organizational reasons associated with lack of work, job

elimination, reorganization, or reduction in force . . . 

he/she will be eligible to receive bi-weekly separation 

payments and benefit continuation as outlined in Section IV 

of the Plan Document. 

Meritor Separation Pay Program (effective November 1, 1989); 

Campbell App. 129a (emphasis added). Job elimination, however, 

is defined by the plan to be if "as a result of a reorganization, 

changing business needs, or the sale, closure or relocation of an 

office, a specific position is determined to be unnecessary to 

the company for an indefinite period of time." Id. at 128a. The 

Secretary of Banking's shutdown of Meritor and the appointment of 

 

6. The district court's discussion in Hennessy did not 

specifically address this argument. 
the FDIC as receiver was not "reorganization, changing business 

needs, or the sale, closure or relocation of an office." It was 

the shutdown of the entire bank. Further, no specific position 

was "determined to be unnecessary to the company for an 

indefinite period of time." Rather, Meritor ceased to exist, and 

the employment of all employees (not specific positions) was 

terminated permanently. We therefore cannot conclude that "job 

elimination" triggered a right to severance pay. 

 Similarly, we cannot conclude that a "lack of work," as 

defined by the plan, triggered the right to severance benefits. 

Lack of work is defined by the plan to be if "as a result of a 

decrease in volume of work to be done, a position is temporarily

not needed." Id. at 128a (emphasis added). The facts of this 

case do not support the view that a position was "temporarily not 

needed." The Secretary of Banking closed the entire bank and 

declared Meritor insolvent. We therefore fail to see how the 

Campbell and Adolph plaintiffs have demonstrated a "lack of work" 

as the plan defines that phrase. Accordingly, we are unpersuaded 

that the district court erred in failing to find this argument a 

sufficient basis upon which to ground a claim for severance 

benefits.7

 

7. The Hennessy plaintiffs did not rely on "job elimination" or 

"lack of work" as a basis for recovery in their briefs before 

this Court. At oral argument, however, counsel for the Hennessy 

plaintiffs stated that she believed that "job elimination" or 

"lack of work" would be an alternative grounds of recovery for 

her clients. Further, she stated that the plan document 

containing the definitions of "job elimination" and "lack of 

work" received by the Campbell and Adolph plaintiffs was not 

received by the Hennessy plaintiffs. 
 C. Did plaintiffs' right to severance pay vest? 

 Using slightly different approaches, the Hennessy 

plaintiffs, and the Campbell and Adolph plaintiffs, next argue 

that their rights to severance pay were "fixed and unconditional" 

when the receiver was appointed. Based on certain language in 

the Court of Appeals for the First Circuit's opinion in Kennedy 

v. Boston-Continental National Bank, 84 F.2d 592 (1st Cir. 1936), 

the Hennessy plaintiffs argue that their rights to severance 

benefits vested on the day that Meritor closed its doors and went

into receivership. The Campbell and Adolph plaintiffs, by 

contrast, assert that the Meritor employees had fixed, 

enforceable contract rights to severance pay throughout the term

of their employment as the result of their total compensation 

package. According to the Campbell and Adolph plaintiffs, the 

only contingent aspect of their right to severance pay was the 

amount of the benefits to be paid, an amount that was tied to 

each employee's salary and years of service. These plaintiffs 

cite Citizens State Bank of Lometa v. FDIC., 946 F.2d 408, 415 

(5th Cir. 1991), and that case's analysis of a standby letter of 

credit, to support their argument. 

(..continued) 

 While the Hennessy plaintiffs' argument along these lines 

raises certain questions about which plan documents are 

applicable to them, we need not decide these questions because of 

our determination, see infra part III.D., that the FDIC 

repudiated the SPP. 
 We find these arguments unconvincing. The rights and 

liabilities of a bank and the bank's debtors and creditors are 

fixed as of the date of the declaration of a bank's insolvency. 

American Nat'l Bank of Jacksonville v. FDIC, 710 F.2d 1528, 1540 

(11th Cir. 1983) (citing First Empire Bank v. FDIC, 572 F.2d 

1361, 1367-68 (9th Cir.), cert. denied, 439 U.S. 919, 99 S. Ct. 

293 (1978); FDIC v. Grella, 553 F.2d 258, 262 (2d Cir. 1977); 

Kennedy, 84 F.2d at 597). To establish a claim against an 

insolvent bank in receivership, the liability of the bank must 

have accrued and become unconditionally fixed on or before the 

time it is declared insolvent. Kennedy, 84 F.2d at 597 

(citations omitted). As the Court of Appeals for the First 

Circuit has stated: 

 The amount of a claim may be later established, but it 

must be the amount due and owing at the time of the 

declaration of insolvency . . . . If nothing is due at 

the time of insolvency, the claim should not be allowed 

. . . . 

Id.; see also Dababneh v. FDIC, 971 F.2d 428, 434 (10th Cir. 

1992) (courts analyze "provability" of claims and creditors 

possess "provable" claims only if claims are "in existence before 

insolvency") (quoting FDIC v. Liberty Nat'l Bank, 806 F.2d 961, 

965 (10th Cir. 1986)). 

 The language that the Hennessy plaintiffs cite in Kennedy is 

not to the contrary. To support their argument, the Hennessy 

plaintiffs point to language in Kennedy that states: 

 Had the lease contained a covenant that insolvency shall be 

breach of the lease and thereupon, without any further 

action by the lessor, the lease shall terminate and the 

lessor shall be entitled forthwith to damages measured as 
provided in the covenant of the lease for liquidated 

damages, then, on the declaration of insolvency, no doubt a 

claim would arise and be matured by the agreement for 

liquidated damages . . . so that the claim would be provable 

in bankruptcy. 

Kennedy, 84 F.2d at 597 (citations omitted). Aside from the fact 

that the Hennessy plaintiffs' position ignores the holding of 

Kennedy -- that the claim for failure to rent in that case was 

too contingent and uncertain to support liability -- these 

plaintiffs have made no showing that insolvency itself triggered 

their rights under the SPP. The terms of the SPP do not provide 

that a declaration of insolvency triggers payment of severance 

benefits. Accordingly, their right to severance benefits was 

still contingent at the time of the appointment of the receiver. 

 The Campbell and Adolph plaintiffs' right to severance pay 

was likewise contingent, and their reliance on Citizens State 

Bank of Lometa is unavailing. In Lometa, the Court of Appeals 

for the Fifth Circuit held that claims that "originated" from 

standby letters of credit issued before the bank became insolvent 

passed the "provability test" even though the triggering event 

obligating the bank to pay did not occur until after the bank 

became insolvent. Lometa, 946 F.2d at 415. The court in Lometa, 

however, explained that standby letters of credit are not 

contingent liabilities; they are loans. Id. at 414. Therefore, 

such letters are not directly comparable to a severance pay plan 

under which no vested benefits accrue until a contingency is 

fulfilled. Accordingly, we remain unconvinced that the 
plaintiffs had a vested right to benefits prior to, or at the 

time of, the appointment of the receiver. 

 D. Repudiation 

 Having determined that there was no event that triggered the 

payment of severance benefits, it would ordinarily be unnecessary 

to dispose of the other issues raised by the parties regarding 

their entitlement to severance pay, i.e., repudiation and whether 

the failure to pay severance benefits constituted actual direct 

compensatory damages under FIRREA. However, the parties have 

forcefully argued their positions regarding the various 

"triggering" provisions, and have at least implied that they are 

susceptible to more than one reasonable interpretation. We would 

normally commit the task of construing ambiguous contract terms 

to the fact finder after extrinsic evidence has been adduced. We 

do not do so here because even if we were to assume a triggering 

event had occurred, we would nonetheless affirm the district 

court's grant of summary judgment in favor of the FDIC because 

the FDIC repudiated the SPP pursuant to its statutory authority 

under 12 U.S.C. § 1821. See PACC v. Rizzo, 502 F.2d 306, 308 n.1 

(3d Cir. 1974), cert. denied, 419 U.S. 1108, 95 S. Ct. 780 (1975) 

(we can affirm the district court on any ground). 

 The Hennessy, Campbell, and Adolph plaintiffs all allege 

that following the FDIC's appointment as receiver, the FDIC did 

not properly repudiate the SPP pursuant to the statutory 

requirements found at 12 U.S.C. § 1821(e)(1). According to the 

plaintiffs, 12 U.S.C. § 1821(e)(1) requires the FDIC to make 
formal findings that the terms of the SPP were "burdensome" and 

that repudiation is necessary in order to "promote the orderly 

administration of the institution's affairs." The plaintiffs 

argue that the FDIC made no such formal findings in this case and 

therefore any repudiation of the SPP was ineffective. Further, 

the Hennessy plaintiffs argue that the FDIC improperly relied on 

an undisclosed policy of denying all claims for severance 

benefits in repudiating the SPP.8

 

8. In addition to this procedural argument, the Hennessy 

plaintiffs suggest that the FDIC's repudiation power is limited 

to executory contracts. These plaintiffs cite LaMagna v. FDIC, 

828 F. Supp. 1 (D.D.C. 1993) in support of their position. 

 In LaMagna, the district court determined that an employment 

agreement which provided for severance pay was nonexecutory once 

the employee had rendered his services by working for one year. 

Id. at 2-3. The court concluded that such nonexecutory contracts 

may not be repudiated by the FDIC pursuant to FIRREA. Id.

 We are unpersuaded by the district court's reasoning in 

LaMagna. The district court's conclusory holding that § 1821(e) 

does not permit the receiver to repudiate a "nonexecutory" 

contract lacks support in both the statutory language and the 

case law. As many courts have noted, the statute explicitly 

provides that a conservator or receiver "may disaffirm any

contract or lease," not just executory contracts. E.g., 

Employees' Retirement System of Alabama v. Resolution Trust 

Corp., 840 F. Supp. 972, 984 (S.D.N.Y. 1993) (quoting § 

1821(e)(1)(A)) (emphasis in original). This provision is in 

sharp contrast to the Bankruptcy Code which specifically refers 

only to the trustee's power to reject executory contracts. See

Morton v. Arlington Heights Fed. Sav. & Loan Ass'n, 836 F. Supp. 

477, 481-82 (N.D. Ill. 1993); Employees' Retirement System of 

Alabama, 840 F. Supp. at 984 (noting marked contrast with the 

Bankruptcy Code which gives a trustee in bankruptcy the power to 

"assume or reject any executory contract." (quoting 11 U.S.C. § 

365(a))). Because Congress provided no such limitation here, we 

are unable to conclude that the FDIC's power of repudiation is 

limited only to executory contracts. 
 The provisions governing a receiver's authority to repudiate 

contracts can be found at 12 U.S.C. § 1821(e). Section 1821(e) 

states, in pertinent part: 

 (1) Authority to repudiate contracts 

 In addition to any other rights a conservator or 

receiver may have, the conservator or receiver for any 

insured depository institution may disaffirm or repudiate 

any contract or lease-- 

 (A) to which the institution is a party; 

 (B) the performance of which the conservator or 

receiver, in the conservator's or receiver's 

discretion, determines to be burdensome; and 

 (C) the disaffirmance or repudiation of which the 

conservator or receiver determines, in the 

conservator's or receiver's discretion, will promote 

the orderly administration of the institution's 

affairs. 

12 U.S.C. § 1821(e)(1) (Supp. V 1993). Section 1821(e) does not 

set forth a specific procedure for a receiver to follow in 

repudiating a contract. Indeed, section 1821(e) leaves the 

decision as to whether repudiation is "burdensome" and "necessary 

to promote the orderly administration of the institution" to the 

receiver's discretion so long as repudiation is accomplished 

within "a reasonable period" following the receiver's 

appointment. 12 U.S.C. § 1821(e)(2). 

 Courts have refused to read into this statutory language any 

requirement for formal findings in support of a decision to 

repudiate. In addressing this precise issue in a case involving 

a receiver's obligation to pay rent, the Court of Appeals for the 

Second Circuit recently stated: 
 First, there is no requirement that the conservator or 

receiver make a formal finding that a lease or contract is 

burdensome. Second, it can hardly be said that it was not 

reasonable for the [receiver] to find that it would be 

burdensome for it to assume a $7 million obligation to pay 

rent on premises for which it no longer had use, at a time 

when the real estate market was declining. Third, whether 

the lease is burdensome is to be decided at the discretion 

of the conservator or receiver. 12 U.S.C. § 1821(e)(1)(B). 

1185 Avenue of the Americas Assocs. v. Resolution Trust Corp., 22 

F.3d 494, 498 (2d Cir. 1994). The court went on to uphold the 

district court's grant of summary judgment in favor of a receiver 

that claimed that it had repudiated a lease. Id.; see also

Morton, 836 F. Supp. at 485 ("The statute does not require that 

the receiver give reasons for repudiating a contract . . . . "); 

Jenkins-Petre Partnership One v. Resolution Trust Corp., No. 

Civ.A.91-A-637, 1991 WL 160317, at *5 (D. Col. Aug. 13, 1991) 

("The FIRREA statute does not provide that the [receiver] explain 

its actions or that a court may review the basis for that 

decision."). 

 We see no reason to depart from this line of cases. The 

claimants have failed to demonstrate that the SPP, which provided 

no benefit to the receivership, but which called for millions of 

dollars in payments, should not be considered "burdensome." In 

addition, we conclude that there is no basis in the statute or in 

the case law for requiring the FDIC, which has discretion in 

making the decision concerning whether to repudiate, to produce 

written findings. 

 Nor do we find merit in the Hennessy plaintiffs' argument 

that the FDIC's repudiation is invalid because it was carried out 
pursuant to an undisclosed policy. We fail to comprehend how a 

consistent denial of the same type of claim constitutes an abuse 

of the FDIC's discretion. If anything, such a longstanding 

policy demonstrates a conscious decision to promote uniform 

treatment of similar claims. Accordingly, we cannot conclude 

that the district court erred in determining that the FDIC's 

repudiation was not procedurally defective. 

 E. Actual Direct Compensatory Damages 

 The three sets of plaintiffs next argue that even if the 

FDIC did properly repudiate the SPP, they are entitled to 

severance benefits as actual direct compensatory damages under 12 

U.S.C. § 1821(e)(3). The plaintiffs assert that severance pay in 

the context of at will employment represents additional 

compensation for entering into such a relationship and is 

therefore a compensable loss if not paid. The plaintiffs rely on 

the decision of the Court of Appeals for the District of Columbia 

Circuit in Office and Professional Employees Int'l Union, Local 2 

v. FDIC, as Receiver of Nat'l Bank of Washington ("NBW"), 27 F.3d 

598 (D.C. Cir. 1994), to support their position. 

 While the question is close, we remain unconvinced by the 

plaintiffs' argument. FIRREA provides, in pertinent part, that: 

 the liability of the conservator or receiver for the 

disaffirmance or repudiation of any contract pursuant to 

paragraph (1) shall be-- 

 (i) limited to actual direct compensatory damages; and 
 (ii) determined as of-- 

 (I) the date of the appointment of the conservator 

or receiver; . . . . 

12 U.S.C. § 1821(e)(3)(A) (Supp. V 1993). The statute states, 

however, that the term "actual direct compensatory damages" does 

not include: 

 (i) punitive or exemplary damages; 

 (ii) damages for lost profits or opportunity; or 

 (iii) damages for pain and suffering. 

12 U.S.C. § 1821(e)(3)(B) (Supp. V 1993) (emphasis added). The 

courts are split over the proper interpretation of these 

provisions. The Court of Appeals for the First Circuit has 

determined that the phrase "actual direct compensatory damages," 

does not include severance payments stipulated in advance. 

Howell v. FDIC, 986 F.2d 569, 573 (1st Cir. 1993). According to 

that court, such payments are "at best an estimate of likely harm 

made at a time when only prediction is possible" and are 

analogous to "liquidated damages." Id. That court reasoned that 

because those employees entitled to severance pay "may, or may 

not, have suffered injury," depending on the employment options 

they had in the past and the options available now, and because 

"[c]onceivably," such employees could have suffered "no damage at 

all," severance payments of this type do not fit within the 

language of the statute. Id.; see also Resolution Trust Corp. v. 

Management, Inc., 25 F.3d 627, 632 (8th Cir. 1994) ("Neither 

severance fees nor future lost profits are compensable under 

FIRREA."); Westport Bank & Trust Co. v. Geraghty, 865 F. Supp. 

83, 86 (D. Conn. 1994) ("Courts have found that damages resulting 
from the repudiation of a severance package are not `actual 

direct compensatory damages' within the meaning of § 1821 because 

they are analogous to liquidated damages."); Aguilar v. FDIC, No. 

92-4286 (RR), slip op. at 15-16 (E.D.N.Y. Oct. 4, 1993) (noting 

that courts have been unwilling to permit plaintiffs to recover 

amounts more akin to liquidated than compensatory damages); 

Lanigan v. Resolution Trust Corp., No. 91-7216, slip op. at 5-7 

(N.D. Ill. March 30, 1993) (relying on the reasoning in Howell). 

 As the plaintiffs point out, however, the Court of Appeals 

for the District of Columbia Circuit has taken a different view. 

In NBW, a case involving a collective bargaining agreement 

between the National Bank of Washington and its employees, the 

court of appeals determined that in the context of an at will 

employment relationship, severance payments are "properly 

characterized as consideration for entering into (or continuing 

under) the employment contract and therefore are compensable as 

actual damages under FIRREA." NBW, 27 F.3d at 604. Rejecting 

the "liquidated damages" analogy used by the Court of Appeals for 

the First Circuit, the court determined that the FDIC was liable 

for severance payments. Id. at 604-05. 

 In addition to being confronted with division amongst the 

courts, we must contend with competing policy considerations. On 

the one hand, we have the concern raised in Howell that in 

drafting FIRREA, "Congress, faced with mountainous bank 

failures," was "determined to pare back damage claims founded on 

repudiated contracts." Howell, 986 F.2d at 572. On the other 

hand, we must address the point raised in NBW that the question 
is not whether Congress meant to scale back damage claims, but 

"which damage claims, however few, are preserved." NBW, 27 F.3d 

at 604. Moreover, we are cognizant of the fact that disallowance 

of promised severance pay may chill a troubled bank's ability to 

effectively retain able employees. See Howell, 986 F.2d at 573. 

 We share the view of the Court of Appeals for the First 

Circuit that these payments are analogous to "liquidated 

damages." We therefore agree with the position of the district 

court in this case that these damages are not compensable as 

"actual direct compensatory damages" under 12 U.S.C. § 1821.9 

Accordingly, we will affirm the order of the district court 

granting summary judgment to the FDIC on the issue of separation 

pay. 

 IV. TERMINATION OF HEALTH AND LIFE INSURANCE BENEFITS 

 The Campbell and Adolph plaintiffs next allege that the 

district court erred in granting summary judgment against them on 

their claims for health and life insurance benefits pursuant to 

the 65 Special and the MGLIP.10 According to these plaintiffs, 

 

9. In reaching this decision, we are not unmindful of the 

Hennessy plaintiffs' argument that under the terms of this 

severance pay plan, benefits are actually accelerated if the 

discharged employee finds other employment. Hennessy App. at 106 

("If you are otherwise qualified for separation payments and then 

become employed during the benefit payment period . . . [y]ou 

will then receive a single-sum cash payment equal to the 

remaining separation pay to which you would have been entitled 

had you remained unemployed."). Nevertheless, we believe that 

the function of these provisions is to articulate the timing of 

the payment of benefits rather than to relate the purpose behind 

the SPP. 

10. The Hennessy plaintiffs take no part in this argument. 
the district court erred in determining that the provisions of § 

402(b)(3) of ERISA, 29 U.S.C. § 1102(b)(3), requiring that every 

employee benefit plan provide a "procedure for amending such 

plan," apply only to plan amendments and not to plan 

terminations. These plaintiffs argue that because the FDIC did 

not follow the proper "procedure" in terminating their life and 

health insurance benefits, the FDIC should be responsible for 

these benefits until such time as the FDIC complies with ERISA. 

They suggest that a remand is appropriate to decide this 

question. 

 Relying on our previous decision in Schoonejongen v. 

Curtiss-Wright Corp., 18 F.3d 1034 (3d Cir. 1994), the district 

court held that when a party seeks to terminate an ERISA plan, 

there is no requirement that the ERISA plan have a termination 

procedure. Campbell, 1994 WL 475067, at *5. Subsequent to the 

district court's opinion in this matter, however, the Supreme 

Court reversed our panel's decision in Schoonejongen. CurtissWright Corp v. Schoonejongen, U.S. , 115 S. Ct. 1223 

(1995). Following that reversal, we decided the case of Ackerman 

v. Warnaco, Inc., No. 94-3527, 1995 WL 289682 (3d Cir. May 15, 

1995). In that case, we explicitly held that § 402(b)(3) of 

ERISA applies to plan terminations as well as plan amendments. 

Ackerman, 1995 WL 289682, at *3. Accordingly, we conclude that 

the district court erred in holding to the contrary. 

 Nevertheless, we cannot agree that a remand is appropriate 

or that the district court erred in granting summary judgment for 

the FDIC. Section 402(b)(3) of ERISA requires that every 
employee benefit plan shall "provide a procedure for amending 

such plan, and for identifying the persons who have authority to 

amend the plan." 29 U.S.C. § 1102(b)(3) (1988). The summary 

plan booklet for the 65 Special states that: 

 Meritor intends the plan to be permanent, but since future 

conditions affecting your employment cannot be anticipated 

or foreseen, Meritor reserves the right to amend, modify or 

terminate the plan at any time, which may result in the 

termination or modification of your coverage. 

Campbell App. at 165a. Similarly, the summary plan booklet for 

the MGLIP states: 

 Meritor reserves the right to terminate the group life 

insurance policy for its employees and retirees at any time, 

if Meritor determines that such termination is in its best 

interests. If Meritor terminates its group life insurance 

policy, employees and retirees who die after the effective 

date of the termination (other than those who are totally 

disabled and insured under the provision of "Continuation of 

Life Insurance During Disability") will not have any life 

insurance. 

Campbell App. at 152a. While section 402(b)(3) of ERISA requires 

that every employee benefit plan have a procedure for amending or 

terminating the plan, the Supreme Court has determined that 

language such as that stated above reserving the right of "the 

Company" to modify or amend a plan satisfies the requirements of 

section 402(b)(3). Curtiss-Wright, U.S. at , 115 S. Ct. 

at 1228-29 ("Curtiss-Wright is correct, we think, that this 

states an amendment procedure and one that, like the 

identification procedure, is more substantial than might first 

appear."). The Court explained that "the literal terms of § 

402(b)(3) are ultimately indifferent to the level of detail in an 
amendment procedure, or in an identification procedure for that 

matter." Id. at , 115 S. Ct. at 1229. Further, the Court 

explained that "principles of corporate law provide a ready-made 

set of rules for determining, in whatever context, who has 

authority to make decisions on behalf of the company." Id. 

Because the 65 Special and the MGLIP reserve to Meritor (the 

Company) the right to terminate these plans, we find no violation 

of the terms of section 402(b)(3). 

 The question therefore becomes what "procedure" the FDIC 

must follow when it is appointed receiver for Meritor and it 

terminates an employee welfare benefit plan pursuant to such a 

reservation clause. Certainly, under such circumstances, it 

would make little sense to require the FDIC to follow Meritor's

procedure for terminating these plans (i.e., calling a meeting of 

the Board of Directors of Meritor or taking other corporate 

action). While the appropriate analog within the FDIC to 

Meritor's Board of Directors is not immediately apparent, it is 

clear that an official receiver has great discretion in taking 

action that would previously have been handled through the normal 

methods of corporate governance. Thus, the receiver alone may 

act in ways that might otherwise require Board action. The 

record reflects, and the plaintiffs concede, that on December 11, 

1992, "the FDIC" sent the Campbell and Adolph plaintiffs mailings 

notifying them of the termination of the 65 Special and the 

MGLIP. Joint Statement of Undisputed And Disputed Facts 

Regarding Motions for Summary Judgment, Campbell App. at 416a17a; Joint Statement of Undisputed and Disputed Facts Regarding 
Motions for Summary Judgment, Adolph App. at 368a (incorporating 

statement of undisputed facts in Campbell case by reference). 

Since the plaintiffs acknowledged that they received notice of 

the plan terminations from "the FDIC," we decline to require 

further investigation into the methods by which the FDIC makes 

its decisions. Accordingly, we will uphold the district court's 

grant of summary judgment for the FDIC on plaintiffs' claims for 

health and life insurance benefits. 

 V. STATUTORY PENALTY UNDER 29 U.S.C. § 1132(c)(1) 

 The Campbell plaintiffs next allege that the district court 

erred in determining that the FDIC was not liable for the penalty 

found at 29 U.S.C. § 1132(c)(1) for failure to respond in a 

timely manner to a request for plan documents. According to 

these plaintiffs, their counsel sent an ERISA document request to 

the FDIC as administrator of the Meritor Pension Plan and the 

Meritor Savings Bank Savings Plan on March 16, 1993. The FDIC 

did not respond until September 21, 1993, 189 days after the 

initial request. Because ERISA provides that the plan 

administrator must mail requested material within 30 days of such 

a request, the Campbell plaintiffs assert that they are entitled 

to the requisite statutory penalty of up to $100.00 a day for 

each day the plan administrator failed to comply. 

 We cannot agree. ERISA provides that an administrator who 

fails or refuses to mail requested documents within 30 days after 

such request: 
 may in the court's discretion be personally liable to such 

participant or beneficiary in the amount of up to $100 a day 

from the date of such failure or refusal, and the court may 

in its discretion order such other relief as it deems 

proper. 

29 U.S.C. § 1132(c)(1)(B) (Supp. V 1993) (emphasis added). The 

district court in this case made two alternative findings. 

First, it determined that while by its terms ERISA's requirements 

and penalties apply to all administrators, "the requirement 

should not apply to the FDIC since it is an agency of the federal 

government." Campbell, 1994 WL 475067, at *7. Second, it 

determined that even if the statutory penalty for failure to 

provide requested information in a timely manner is applicable to 

the FDIC, "the court shall exercise its discretion under 29 

U.S.C. § 1132(c)(1) and award no penalty in this case." Id. The 

court explained that any penalty applied "would be an 

unjustifiable windfall to the plaintiffs and would hinder the 

FDIC in achieving its public mission -- the orderly wrapping up 

of Meritor's affairs." Id.

 As the district court noted, the issue of whether the 

penalty provision of § 1132(c)(1) applies to the FDIC when it 

acts as receiver for a failed financial institution is one of 

first impression. Id. at *6. We agree that nothing on the face 

of § 1132(c) exempts the FDIC from the requirement of furnishing 

requested documents in a timely manner. We therefore see no 

reason to adopt a rule categorically excluding the FDIC from this 

important ERISA obligation. The reasoning of the district court, 

that the requirement should not apply to the FDIC since it is an 
agency of the federal government, is unconvincing. Employees' 

need for access to significant information about plan coverage 

does not diminish because the entity currently in charge of the 

plan is an agency of the federal government.11 

 Concerning the district court's alternative holding, 

however, we have previously determined that whether a district 

court awards a plaintiff monetary damages under 29 U.S.C. § 

1132(c)(1) is a matter of discretion. Gillis v. Hoechst Celanese 

Corp., 4 F.3d 1137, 1148 (3d Cir. 1993), cert. denied, U.S. 

, 114 S. Ct. 1369 (1994). Since the district court did determine 

that any penalty in this case would be an "unjustifiable 

windfall" and "would hinder" the FDIC in "the orderly wrapping up 

of Meritor's affairs," we cannot conclude that the district court 

abused its discretion in declining to award a statutory penalty. 

Accordingly, we will affirm the order of the district court 

denying the Campbell plaintiffs a § 1132(c)(1) penalty award. 

 VI. CLASS ACTION ISSUES 

 The Campbell plaintiffs also raise a number of issues 

concerning the district court's decision to deny certification of 

three plaintiff classes. The district court determined that the 

plaintiffs failed to establish the threshold requirements under 

 

11. The FDIC suggests that 12 U.S.C. § 1825(b)(3), a FIRREA 

provision, creates an exemption from the ERISA penalty 

requirement. That provision states that the FDIC, when acting as 

receiver, "shall not be liable for any amounts in the nature of 

penalties or fines." 12 U.S.C. § 1825(b)(3). Read as a whole, 

however, § 1825 appears to concern exemptions from taxes. We 

therefore find this argument unconvincing. 
Rule 23(a) of the Federal Rules of Civil Procedure. Campbell, 

No. 93-3969, at 5, 7, 9 (E.D. Pa. June 30, 1994) (order denying 

class certification). In addition, the district court found that 

class certification under Rule 23(b)(1) or Rule 23(b)(2) would be 

inappropriate. Id. at 9. Because of our decision on the merits 

of the Campbell plaintiffs' claims, that these claims cannot 

survive summary judgment, we need not address the propriety of 

the district court's decision to deny class certification. We 

therefore take no position with respect to these issues. 

 VII. CONCLUSION 

 The district court did not err in granting summary judgment 

to the FDIC on the plaintiffs' claims for separation pay, health 

insurance benefits, and life insurance benefits. We will 

therefore affirm the orders of the district court. Further, 

because the district court did not abuse its discretion in 

declining to find the FDIC liable for the statutory penalty 

prescribed by 29 U.S.C. § 1132(c)(1), we will affirm the order of 

the district court pertaining to this issue. Finally, because of 

our conclusion on the merits of the Campbell plaintiffs' claims, 

that the district court did not err in granting summary judgment 

for the FDIC, we do not reach the class certification issues. 

 Each party to bear its own costs.