NOT RECOMMENDED FOR FULL-TEXT PUBLICATION

File Name: 08a0600n.06

Filed: October 6, 2008

Nos. 07-3102, 07-3211

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

NATALIE A. HUGHES, duly-appointed

representative of the Estate of Martin J.

Hughes, Jr.,

Plaintiff-Appellant and Cross-Appellee,

v.

KIMBERLY A. ZURZ, Director, Ohio

Department of Commerce; JOHN B.

REARDON, Superintendent, Division of

Financial Institutions; KENNETH A.

ROBERTS, Acting Deputy Superintendent for

Credit Unions; AMERICAN MUTUAL SHARE

INSURANCE CORPORATION, as purported

Conservator for the United Telephone Credit

Union Inc.,

Defendants-Appellees and CrossAppellants.

 /

ON APPEAL FROM THE UNITED

STATES DISTRICT COURT FOR THE 

SOUTHERN DISTRICT OF OHIO

BEFORE: DAUGHTREY, CLAY, and McKEAGUE, Circuit Judges.

CLAY, Circuit Judge. Plaintiff Natalie A. Hughes, representative of the estate of Martin

J. Hughes, Jr., appeals the district court’s December 22, 2006 judgment granting summary judgment
Nos. 07-3102, 07-3211

Doug White and F. Scott O’Donnell have been replaced as parties in this suit by the current 1

Director of the Ohio Department of Commerce, Kimberly A. Zurz, and the current Superintendent

of the Division of Financial Institutions, John B. Reardon.

Hughes subsequently died, and his widow and the administrator of his estate, Natalie A. 2

Hughes, replaced Carl F. Hughes as the plaintiff in this suit.

2

to Defendants American Mutual Share Insurance Corporation, Inc. (“ASI”), Doug White, Director 1

of the Ohio Department of Commerce, F. Scott O’Donnell, Superintendent of the Division of

Financial Institutions, and Kenneth A. Roberts, Acting Deputy Superintendent for Credit Unions.

Plaintiff claimed that Defendants violated the Employment Retirement Income Security Act of 1974

(“ERISA”), 29 U.S.C. §§ 1001-1381, and the Due Process Clause of the United States Constitution

by improperly confiscating benefits due Martin J. Hughes, Jr. pursuant to an ERISA benefits plan.

Defendants appeal the district court’s grant of Plaintiff’s motion for summary judgment and motion

to dismiss ASI’s counterclaim alleging fraud, misappropriation of funds and breach of fiduciary

duties. For the reasons stated below, this Court AFFIRMS the district court’s grant of summary

judgment for Defendants on Plaintiff’s claims and DISMISSES AS MOOT ASI’s appeal of the

district court’s disposition of its counterclaim.

BACKGROUND

A. Procedural History

On January 24, 2005, Carl F. Hughes, the son and legal guardian of Martin J. Hughes, Jr.

(“Hughes”), filed a complaint in United States District Court for the Southern District of Ohio on

Hughes’ behalf. The complaint was brought against Ohio officials Doug White, Director of the 2
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3

Ohio Department of Commerce, F. Scott O’Donnell, Superintendent of the Division of Financial

Institutions, and Kenneth A. Roberts, Acting Deputy Superintendent for Credit Unions (“State

Defendants”). After filing an amended complaint on February 25, 2005, Plaintiff filed a second

amended complaint on April 6, 2005, adding as a defendant American Mutual Share Insurance

Corporation, Inc. (“ASI”), the appointed conservator for the United Telephone Credit Union, Inc.

(“UTCU”).

Count I of the second amended complaint requested equitable relief as a result of the State

Defendants’ violation of Hughes’ due process rights by unlawfully confiscating benefits due to

Hughes for his years of service as a director and manager of UTCU. Count II of the second amended

complaint alleged that Defendants violated the Employment Retirement Income Security Act of 1974

(“ERISA”), 29 U.S.C. §§ 1001-1381, by improperly confiscating the benefits payable to Hughes

pursuant to an ERISA-covered employee benefits plan. Count III alleged that Defendants breached

their fiduciary duties under ERISA.

The State Defendants filed an answer on April 9, 2005, and ASI filed an answer along with

its counterclaim on April 26, 2005. ASI’s counterclaim alleged that Hughes had committed fraud,

misappropriated funds, and breached fiduciary duties as the director and secretary/treasurer of

UTCU. Plaintiff moved for partial summary judgment on ASI’s counterclaim on May 3, 2005, and

moved to dismiss ASI’s counterclaim on May 13, 2005. Plaintiff argued that ASI was not lawfully

appointed as conservator and thus lacked standing to bring claims on UTCU’s behalf. On September

23, 2005, the district court granted Plaintiff’s motion for partial summary judgment and motion to

dismiss ASI’s counterclaim.
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On April 28, 2006, Defendants filed a joint motion for summary judgment on Counts II and

III of Plaintiff’s second amended complaint. The State Defendants subsequently filed a motion for

summary judgment on Count I of Plaintiff’s second amended complaint. In response, Plaintiff filed

a motion for partial summary judgment regarding Defendants’ affirmative defenses. On December

22, 2006, the district court granted Defendants’ motion for summary judgment on Counts II and III

and the State Defendants’ motion for summary judgment on Count I. The district court also

dismissed Plaintiff’s motion for partial summary judgment as moot. On January 19, 2007, Plaintiff

filed a timely notice of appeal from the district court’s grant of summary judgment, and on February

2, 2007, Defendants filed a joint notice of cross-appeal from the district court’s dismissal and grant

of summary judgment on ASI’s counterclaim and from the district court’s final judgment.

B. Substantive Facts

Hughes was employed by the Communications Workers of America (“CWA”) union from

the 1950s until 1987. During his CWA employment, Hughes helped found UTCU for CWA

employees. From 1957 to 1987, Hughes served as a member of the board of directors and as the

secretary/treasurer of UTCU on an unpaid voluntary basis. Hughes also served as the Manager or

Chief Executive Officer of UTCU.

Hughes’ Compensation and Benefits

Beginning in 1987, UTCU’s board of directors considered paying Hughes a salary. On

November 28, 1987, the minutes of a board of directors meeting reflect the passage of a motion

regarding Hughes:
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In 1987, Hughes would have earned $74,784 if he had continued working as a CWA Vice3

President.

The accrued benefits liability was listed in UTCU’s financial records as “Disability Ins. & 4

Other” and later as “Accrued Benefits.” For the years for which liability for deferred compensation

purportedly was accrued, the amount of this liability was as follows: 1989-$109,306.79, 1990-

$233,067.28, 1991-$283,681.21, 1992- $284,761.86, 1993-$288,762.81, 1994- $284,390.60, 1995-

$283,289.17, 1996-$280,000. From 1996 to January 2002, the accrued benefits liability remained

constant at $280,000.

5

Motion Carried: To approve the salary of Martin J. Hughes as an employee at his

current pay level.

(J.A. 572.) Carl Hughes, a member of the board of directors when the 1987 resolution was passed,

gave deposition testimony that the term “current pay level” contained in the resolution referred to

Hughes’ pay level as a Vice President of CWA. According to Carl Hughes, Hughes deferred the 3

salary due to him beginning in 1987 instead of being paid contemporaneously.

The UTCU board of directors passed another resolution regarding Hughes’ compensation on

January 28, 1989:

Motion Carried: To set aside earnings to pay salary and benefits for Martin J. Hughes

for services rendered on behalf of this Credit Union and to anyone designated by the

Board of Directors who may perform similar services.

(J.A. 1360.) Beginning in 1989, an accrued benefits liability was reflected in UTCU’s financial

records. Robert A. Sorin, a Certified Public Accountant who served on a supervisory audit

committee for UTCU, testified when deposed that the accrued benefits liability reflected the

payments owed Hughes for deferred salary benefits; however, he also testified that the accrued

benefits liability was too small to account for Hughes’ salary being deferred each year. The Ohio 4

Division of Financial Institutions (“DFI”), which conducted periodic examinations of UTCU, noted
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6

with disapproval the presence of the accrued benefits in UTCU’s financial records. In DFI’s

November 1990 examination report, the agency stated:

There are some accounts that cannot be adequately explained to the examiners . . .

[A]pproximately $200,000 is being set aside, as a payable (accrued expense) for

unspecified future “employee benefits.” The Board of Directors should determine

what form these benefits will take and so specify in the minutes.

(J.A. 1264.) No indication of UTCU’s action in response to this criticism is contained in the record.

However, DFI’s September 1996 examination report stated:

The Accrued Benefits account has not changed since the last examination. This

account was set up many periods ago for future retirement benefits. It has been

reviewed and approved by the Division of Financial Institutions. Management has

no intention of increasing this account in the near future.

(J.A. 951.)

On July 24, 1999, UTCU passed another resolution regarding Hughes’ benefits. The 1999

resolution affirmed that since November 28, 1987, Hughes “was authorized to receive a salary from

[UTCU] equal to the same salary of a Vice President of [CWA], but such authorized salary has not

been paid. [UTCU] established a Reserve Account of Accrued Benefits that has been set aside for

Martin J. Hughes.” (J.A. 574.) The resolution further provided that Hughes would be paid an annual

salary of $90,000, “and in the event of his death or disability, payments of four (4) times his present

annual salary should be paid his widow, . . .” (J.A. 574.) On August 1, 1999, Hughes entered into

an employment agreement with UTCU incorporating the salary provisions of the 1999 resolution and

including a death benefit of five times his annual salary ($450,000) and five weeks of annual paid

vacation, which could be paid in cash if not taken. The 1999 agreement also provided that Hughes

was eligible to participate in pension and retirement programs “now or in the future.” (J.A. 581.)
Nos. 07-3102, 07-3211

Roberts was explicitly given the authority to appoint a conservator for UTCU by a February 5

21, 2003 order of F. Scott O’Donnell, the Superintendent of Financial Institutions. 

7

DFI’s Imposition of a Conservatorship

DFI took issue with Hughes’ employment contract in its 2001 examination of UTCU,

viewing the employment agreement as evidence of self-dealing by the board, which consisted of

Hughes, his friends, and his family members. DFI also found accounting irregularities,

misappropriation of credit union funds, and failure to comply with Internal Revenue Service

regulations. As a result, DFI entered into a supervisory agreement on July 18, 2002 with UTCU that

required the credit union to take corrective action, including revising Hughes’ employment

agreement. On July 19, 2002, DFI sent UTCU an examination report in which it instructed the credit

union to increase the accrued liability entry in its financial reports to $450,000 to properly reflect

UTCU’s liability for Hughes’ death benefit. On February 24, 2003, Acting Deputy Superintendent

of Credit Unions, Kenneth A. Roberts, appointed ASI as the conservator for UTCU because DFI

determined that UTCU had failed to abide by the supervisory agreement. As conservator, ASI was 5

ordered to take possession of the business and property of UTCU, exercise the authority of the

officers, directors, and members of UTCU, and to bring and defend law suits in the name of UTCU.

Soon after ASItook charge of UTCU’s affairs, the newly appointed manager of UTCU removed the

accrued benefits liability from UTCU’s financial statements. UTCU’s auditor explained that:

The Conservator believes that the employment contract is unenforceable due to the

DFI’s removal action against the former manager and, potentially, for the breach of

fiduciary duties by the Credit Union’s former Board of Directors in approving the

employment contract. Accordingly, the Credit Union does not recognize any

obligation under the contract and has not recorded any liability as of May 31, 2003.
Nos. 07-3102, 07-3211

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(J.A. 1409.)

Hughes brought suit on behalf of UTCU in the Franklin County Court of Common Pleas

contesting Roberts’ authority to appoint ASI as UTCU’s conservator. United Tel. Credit Union v.

Roberts, No. 03-CVH-02-2278 (Franklin Cty. Ct. Comm. Pleas). This suit was subsequently

withdrawn. Because ofthe challenge to Roberts’ appointment authority, Superintendent O’Donnell

issued an order on July 23, 2003 ratifying Roberts’ appointment of ASI as UTCU’s conservator.

Natalie Hughes brought another suit on behalf of UTCU in the Franklin County Court of Common

Pleas challenging Roberts’ authority to appoint a conservator, and the trial court ruled in her favor

on July 26, 2005. United Tel. Credit Union, Inc. v. Roberts, No. 04-CVH-055436 (Franklin Cty.

Ct. Comm. Pleas July 26, 2005). Following this ruling, DFI terminated Roberts’ original order

appointing ASI as UTCU’s conservator and issued a second order to the same effect signed by

O’Donnell himself. The trial court’s judgment was later overruled by the Ohio Court of Appeals,

which held that Natalie Hughes did not have the authority to bring suit on behalf of UTCU. United

Tel. Credit Union, Inc. v. Roberts, Nos. 05AP-827, 05AP-870, 2006 WL 1174507 (Ohio Ct. App.

May 4, 2006) (unpublished), aff’d, 875 N.E.2d 927 (Ohio 2007).

Termination of Hughes’ Relationship with UTCU and Claims for Benefits

In an effort to transition out of the leadership of UTCU, Hughes approached Sam Rizzo about

replacing him as Manager of UTCU. In a memo to Roberts written on July 6, 2002, Rizzo recounted

Hughes’ assertions that retirement benefits were due to him:

Mr. Hughes has created a liability on the credit unions [sic] booksfor approximately

$500,000. This sum is intended to pay him $100,000 per year for five (5) years after

he retires. When I asked him about this account he told me that that was for the 40
Nos. 07-3102, 07-3211

9

years he served as a volunteer for the credit union. By definition, he should not be

paid for volunteerism.

(J.A. 1379.) Martin J. Hughes, III, Hughes’ son, also called Roberts and requested that Hughes

receive some portion of the deferred compensation Hughes believed was owed to him as a condition

for Hughes stepping down from the board of directors. Roberts refused to consider this option. In

February and May of 2003, Hughes contacted the ASI-appointed manager of UTCU requesting his

“paycheck” and his “pension.” (J.A. 1386, 1392.) Hughes was told to “put his concerns in writing,

addressed to the conservator.” (J.A. 1386.)

On May 28, 2003, Roberts ordered Hughes suspended from his roles as a director and officer

of UTCU and indicated DFI’s intent to remove Hughes from these positions. Hughes’ counsel sent

a letter to UTCU’s manager requesting Hughes’ “retirement entitlement or severance compensation”

on June 19, 2003. On December 2, 2003, the Cuyahoga County Probate Court found Hughes

incompetent due to depression, dementia and cognitive impairments. As a result, Carl Hughes was

appointed Hughes’ guardian. On July 29, 2004, Carl Hughes entered into a settlement agreement

with DFI consenting to Hughes’ removal as an officer and director of UTCU. On December 1, 2004,

Hughes’ attorney sent a letter to ASI’s counsel requesting Hughes’ deferred compensation and

death/disability benefits, amounting to $1,941,271.23.

DISCUSSION

I. ERISA CLAIMS 

A. Standard of Review
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This Court reviews a district court’s grant of summary judgment de novo. Kolkowski v.

Goodrich Corp., 448 F.3d 843, 847 (6th Cir. 2006). Summary judgment is proper where “the

pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no

genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(c). The moving party bears the initial burden of demonstrating the absence of any

genuine issue of material fact, and all inferences should be made in favor of the non-moving party.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). 

The moving party may meet its burden by showing “that there is an absence of evidence to

support the nonmoving party’s case.” Id. at 325. In response, the nonmoving party may not simply

rely on its pleadings, but instead must “set out specific facts showing a genuine issue for trial.” Fed.

R. Civ. P. 56(e)(2). While all inferences must be drawn in favor of the nonmoving party, “the mere

existence of a scintilla of evidence in support of the plaintiff's position will be insufficient [to defeat

a motion for summary judgment]; there must be evidence on which the jury could reasonably find

for the plaintiff.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).

B. Analysis

The Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-

1381, governs employers’ administration of employee benefits plans. ERISA defines an employee

benefits plan as an employee welfare benefits plan, an employee pension benefits plan, or a plan that

is both an employee welfare benefits plan and an employee pension benefits plan. 29 U.S.C. §

1002(3). Included in ERISA’s definition of an employee welfare benefits plan is a 
Nos. 07-3102, 07-3211

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plan, fund, or program [that] was established or is maintained for the purpose of

providing for its participants or their beneficiaries, through the purchase of insurance

or otherwise, . . . medical, surgical, or hospital care or benefits, or benefits in the

event of sickness, accident, disability, death or unemployment, or vacation benefits,

apprenticeship or other training programs, or day care centers, scholarship funds, or

prepaid legal services . . .

29 U.S.C. § 1002(1). An ERISA employee pension benefits plan is a

plan, fund, or program which was heretofore or is hereafter established or maintained

by an employer or by an employee organization, or by both, to the extent that by its

express terms or as a result of surrounding circumstances such plan, fund, or

program--

(i) provides retirement income to employees, or

(ii) results in a deferral of income by employees for periods extending to the

termination of covered employment or beyond,

regardless of the method of calculating the contributions made to the plan, the

method of calculating the benefits under the plan or the method of distributing

benefits from the plan.

29 U.S.C. § 1002(2). 

In order to determine whether a plan qualifies as an ERISA employee benefits plan, this

Court applies the four-part test first set forth by the Eleventh Circuit Court of Appeals in Donovan

v. Dillingham, 688 F.2d 1367 (11th Cir. 1982). See Int'l Resources, Inc. v. New York Life Ins. Co.,

950 F.2d 294, 297 (6th Cir.1991) (adopting the Dillingham test). The Dillingham court held that a

“‘plan, fund, or program’ under ERISA is established if from the surrounding circumstances a

reasonable person can ascertain the intended benefits, a class of beneficiaries, the source of

financing, and procedures for receiving benefits.” Dillingham, 688 F.2d at 1372. Both parties agree

that the intended beneficiaries of this compensation plan (Hughes) and the source of funding (general

funds) are clear. See Williams v. Wright, 927 F.2d 1540, 1544-45 (11th Cir. 1991) (holding that plan

covering single employee funded by employer’s general assets was an employee benefits plan).
Nos. 07-3102, 07-3211

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However, Defendants contend and the district court agreed that the intended benefits and procedures

for receiving benefits are not reasonably ascertainable.

1. Intended Benefits

The district court found that the intended benefits of the deferred compensation aspect of the

plan were not reasonably ascertainable based on its evaluation of the actions of the UTCU board of

directors in 1987, 1989, and 1999 and its evaluation of UTCU’s financial statements for the relevant

time period. Because the 1987 motion only stated the board’s intention to pay Hughes a salary at

an undefined “current pay level” and made no mention of the salary being deferred, the district court

found that the 1987 motion was insufficient to establish a deferred compensation plan. The court

found that the 1989 motion did not cure these defects because it simply memorialized the board’s

intention to “set aside earnings to pay salary and benefits” without specifying the amount to be set

aside or the nature of benefits to be provided to Hughes. The district court also noted that the 1999

motion, although acknowledging that the board had authorized Hughes to receive a salary beginning

in 1987, did not explicitly state that salary had been deferred. 

In holding that the intended benefits of the deferred compensation plan were not reasonably

ascertainable, the district court also relied upon the accrued benefits liability that Plaintiff claims was

recorded to account for Hughes’ deferred compensation. The court noted that the accrued benefits

liability did not correspond to a deferred compensation plan because the liability did not increase

between 1996 and January 2002, a period during which Plaintiff claims a salary of over $80,000 was

deferred annually.
Nos. 07-3102, 07-3211

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Plaintiff faults the district court for discounting deposition testimony and for examining

discrete pieces of evidence instead of viewing the evidence as a whole. Instead, Plaintiff argues, the

district court should have applied the factors considered in Henglein v. Informal Plan for Plant

Shutdown Benefits for Salaried Employees, 974 F.2d 391 (3d Cir. 1992). In determining whether

an informal employee benefit plan existed, the Henglein court considered “internal or distributed

documents, oral representations, existence of a fund or account to pay benefits, actual payment of

benefits, a deliberate failure to correct known perceptions of a plan’s existence, the reasonable

understanding of employees, and the intentions of the putative sponsor.” Henglein, 974 F.2d at 395.

Plaintiff correctly argues that the district court focused too narrowly on individual pieces of

evidence and failed to consider deposition testimony. Although it is unnecessary to adopt the

Heinglein factors as part of the Dillingham test, in considering “the surrounding circumstances”

regarding Hughes’ compensation, the individual board motions must be viewed in relationship to

each other and in light of the deposition testimony of Carl Hughes and Robert Sorin. Carl Hughes,

who was a member of UTCU’s board in 1987, testified that the 1987 motion established a salary for

Hughes that was equal to the amount Hughes had been receiving as Vice President of CWA. Carl

Hughes also testified that Hughes deferred this salary. Sorin testified that a deferred compensation

plan was created for Hughes in the mid-80s. Viewed in the light most favorable to Plaintiff, the 1999

board resolution is a clarification of the 1987 and 1989 motions establishing compensation for

Hughes. The board resolution explicitly recognizes the 1987 motion’s authorization of Hughes’

salary and that the authorized salary had not been paid. The 1999 resolution also states that an

accrued benefits account had been set aside for Hughes. Thus, the 1999 resolution, viewed in the
Nos. 07-3102, 07-3211

In itself, this indicator of the amount owed to Hughes is ambiguous. Plaintiff asserts that 6

Hughes was entitled to the amount that CWA vice-president would have been paid for each of the

years between 1987-1999. The only evidence presented regarding Hughes’ pay level is the 1987

resolution authorizing him to be compensated at his “current pay level” and Carl Hughes’ testimony

that this language referred to Hughes’ salary as a CWA Vice President. However, Plaintiff has

pointed to no evidence to indicate whether Hughes’ salary was to rise at the same rate as that of a

CWA Vice President or whether he was to be awarded a fixed salary equal to the 1987 CWA salary

level.

14

light most favorable to Hughes, establishes that Hughes’ salary had been deferred and was reflected

in an accrued benefits liability in UTCU’s financial records.

Although viewing the evidence as a whole leads to the conclusion that UTCU had the

intention to allow Hughes to defer compensation and to reflect this compensation in an accrued

benefits liability, this evidence does not establish the reasonably ascertainable benefits necessary for

the existence of a plan. As the Plaintiff would have this Court read the 1999 resolution, the

resolution states that UTCU owes Hughes the salary of a CWA Vice-President but also provides that

Hughes’ accrued benefits would be contained in a specific account, the accrued benefits account.

Yet, at no time did the amount of the accrued benefits liability correspond to the accrued CWA

salary. Although Plaintiff claims that Hughes was owed a salary for each year between 1987 and

2002, DFI’s 1996 report remarks that UTCU had no intention of increasing the accrued benefits

liability in the near future. This intention was borne out by the fact that the amount of the accrued

benefits liability did not change between 1996 and January 2002. The 1999 resolution states that

Hughes is entitled to compensation but provides two contradictory indications of the amount to

which Hughes is entitled, the salary of a CWA Vice President and the amount of the accrued

6

benefits liability. Thus, even upon the Plaintiff’s reading of the facts, a reasonable person would not
Nos. 07-3102, 07-3211

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be able to ascertain the amount of deferred compensation owed Hughes. See Williams v. WCI Steel

Co., Inc., 170 F.3d 598, 603 (6th Cir. 1999) (“Assuming that plaintiffs were to prevail on their

ERISA claim, the district court would have to fashion essentially all of the details of the purported

plan and determine exactly what benefits would go to which employees or retirees, since no one can

ascertain what WCI intended to provide for its workers.”).

2. Procedure for Receiving Benefits

The parties dispute whether there exists a reasonably ascertainable procedure for obtaining

benefits. Defendants claim that this prong of the Dillingham test has not been met because UTCU

had no “ongoing administrative scheme.” Plaintiff counters that the ongoing scheme requirement

applies only to severance cases and that Hughes’ assertion of a claim for benefits is sufficient proof

that a reasonably ascertainable procedure existed to survive summary judgment. 

In Fort Halifax Packing Company, Inc. v. Coyne, 482 U.S. 1 (1987), the Supreme Court held

that a Maine statute that required certain employers to make a one-time severance payment to

employees in the event of a plant closing was not pre-empted by ERISA. The Fort Halifax majority

found an ongoing administrative scheme necessary for a “plan” within the definition of ERISA to

exist: 

The Maine statute neither establishes, nor requires an employer to maintain, an

employee benefit plan. The requirement of a one-time, lump-sum payment triggered

by a single event requires no administrative scheme whatsoever to meet the

employer’s obligation. . . . To do little more than write a check hardly constitutes the

operation of a benefit plan.
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Fort Halifax, 482 U.S. at 12. This language can be read very broadly to exclude all arrangements

that call for lump-sum payments from the ambit of ERISA. However, the Fort Halifax court

addressed this concern by explaining that death benefits would still fit within this definition of a

plan. Id. at 15 n.9. The Court noted that even though death benefits are generally paid in a lump

sum, since it is predictable that former employees will die at various points in the future, the

employer has to provide a mechanism for making “payments to survivors on an ongoing basis. The

ongoing, predictable nature of this obligation therefore creates the need for an administrative scheme

to process claims and pay out benefits, whether those benefits are received by beneficiaries in a lump

sum or on a periodic basis.” Id. Thus, a benefits arrangement that provides for a lump-sum

payment to an employee may qualify as an ERISA benefits plan if the employer is potentially

required to pay out benefits on a regular basis. 

This Court has recognized that the ongoing administrative scheme requirement is a lesser

hurdle than the reasonably ascertainable claims procedure requirement. WCI, 170 F.3d at 604 (“In

our view, Dillingham requires more than just the existence of an administrative scheme. If a

reasonable person cannot ascertain the claims procedures in a purported plan, then the plan is not an

‘employee benefit plan’ under ERISA.”). Even when benefits are due in a lump-sum payment in a

non-severance benefits scheme, there remains the possibility that benefits will need to be calculated

and paid through the claims procedure at any time. See Fort Halifax, 482 U.S. at 15 n.9. See also

Kolkowski, 448 F.3d at 849 (noting that an ongoing administrative scheme existed in part because

the severance package “covered every involuntary termination over a two-year period”). Thus, the
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claims procedure, a requirement for all ERISA benefits plans, in itself constitutes an ongoing

administrative scheme.

In Hughes’ case, the district court agreed with Defendants that no reasonably ascertainable

claims procedure existed. Hughes argues that a genuine dispute of material fact remains regarding

the existence of a claims procedure because Hughes made multiple attempts to claim benefits.

Hughes asserts that since he presented a claim for benefits, a jury could infer that a claims procedure

existed.

A specific claims procedure need not be set out in writing in order for the third Dillingham

factor to be satisfied. See Dillingham, 688 F.2d at 1372 (“ERISA does not, however, require a

formal, written plan.”). As evidence of the existence of a procedure for receiving benefits, courts

have been willing to accept past practices of plaintiffs in pursuing claims. In particular, when prior

requests for benefits have been awarded as the result of a plaintiff taking action to present his claim

to a plan administrator, courts have found that a reasonably ascertainable claims procedure exists.

See, e.g., Deibler v. UFCW, 973 F.2d 206, 210 (3d Cir. 1992); Whitfield v. Torch Oper. Co., 935 F.

Supp. 822, 828 (E.D. La. 1996). However, there is little guidance in the case law regarding the

inference to be drawn when no claims have been processed or have resulted in the award of benefits.

In discussing whether a claims procedure exists, the parties focus on the question of whether

there is a specific person an applicant for benefits should contact to make a claim. This emphasis

seems to be misguided because in situations where benefits are awarded automatically upon the

occurrence of a stated contingency, this Court has not required the identity of the person to whom

the claim is presented to be clear. Kolkowski, 448 F.3d at 850. As the Dillingham court specified,
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this Court must look to all the surrounding circumstances to determine whether the claims procedure

is reasonably ascertainable. In the instant case, there is little doubt that no claims procedure existed

for deferred compensation benefits since there was no clear indication of the amount of

compensation deferred, no specification of when the deferral was to end, and no indication of how

the benefits would be received. On the other hand, the death benefits were more clearly set forth,

specifying the amount of the benefit and the person to whom the benefit should be disbursed (Natalie

Hughes). Even though there is more precision regarding this benefit, Plaintiff has given no evidence

of how the death benefit is to be claimed. In fact, Hughes attempted to claim the benefit as a

disability benefit before his death, exhibiting some uncertainty regarding the nature and claims

procedure for this benefit. Even if this Court takes Hughes’ actions in attempting to claim benefits

into account, the evidence shows that no reasonably ascertainable claims procedure existed.

Plaintiff claims that even if no reasonably ascertainable claims procedure exists, a plan may

by governed by ERISA. For this contention, Plaintiff cites 29 C.F.R. § 2560.503-1(l):

Failure to establish and follow reasonable claims procedures. In the case of the failure

of a plan to establish or follow claims procedures consistent with the requirements

of this section, a claimant shall be deemed to have exhausted the administrative

remedies available under the plan and shall be entitled to pursue any available

remedies under section 502(a) of the Act on the basis that the plan has failed to

provide a reasonable claims procedure that would yield a decision on the merits of

the claim.

Plaintiff argues that this Department of Labor regulation implies that a benefits scheme may be

governed by ERISA despite its failure to establish a claims procedure. However, we believe that it

would be more reasonable to interpret 29 C.F.R. § 2560.503-1(l) as explaining that exhaustion of

remedies will not be required when claim procedures are deficient instead of interpreting the
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regulation as doing away with the reasonably ascertainable claims procedure requirement. This

interpretation is consistent with the regulation as a whole since 29 C.F.R. § 2560.503-1 explains in

detail the claims procedures employers are required to put in place to comply with ERISA. See e.g.

29 C.F.R. § 2560.503-1(b)(3) (prohibiting employers for charging a fee for claims procedures and

noting that such a procedure would not be deemed reasonable). Viewed in this light, 29 C.F.R. §

2560.503-1(l) would free claimants from having to comply with unduly onerous, but still reasonably

ascertainable claim procedures. Thus, the lack of a reasonably ascertainable claims procedure is fatal

to Hughes’ ERISA claims.

II. DUE PROCESS CLAIM

A. Standard of Review

As stated above, we review a district court’s disposition of a motion for summary judgment

de novo.

B. Analysis

In order to bring a claim for a violation of due process, a plaintiff must show that the state

has deprived him of a protected property interest. For a person to have a property interest in a

benefit, the person must have more than a one-sided expectation of receiving the benefit but also “a

legitimate claim of entitlement to it.” Board of Regents v. Roth, 408 U.S. 564, 577 (1972). Even

when a protected property interest exists, a deprivation of that interest is not a violation of the due

process clause unless the procedure by which the state deprives the owner of the property interest

is inadequate. Midkiff v. Adams County Regional Water Dist., 409 F.3d 758, 762 (6th Cir. 2005).
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The district court dismissed Plaintiff’s claim because it found that bringing a suit under state

contract law would be an adequate procedure to vindicate any property interest Plaintiff had in

claimed benefits. For this conclusion, the district court relied upon Lujan v. G & G Fire Sprinklers,

Inc., 532 U.S. 189 (2001). In Lujan, a subcontractor that was denied payment for services performed

for the state of California brought a 42 U.S.C. § 1983 action against the state claiming that it had

been deprived of property without due process of the law because no hearing was held regarding the

denial of payment. Id. at 191-92. The Supreme Court held that assuming the subcontractor was

deprived of a property interest, the deprivation was not a violation of procedural due process because

the subcontractor could bring a breach of contract suit in state court. Id. at 197. The Court held that

the ordinary judicial process sufficed because the subcontractor had not been deprived of a “present

entitlement.” Id. at 196. Although Lujan contains little discussion of what constitutes a present

entitlement, the Court distinguished the subcontractor’s situation from that in which “the claimant

was denied a right by virtue of which he was presently entitled either to exercise ownership

dominion over real or personal property, or to pursue a gainful occupation.” Lujan, 532 U.S. at 196.

In distinguishing the type of interests for which a breach of contract suit would provide

adequate process and interests for which due process necessitated a reasonably prompt hearing, the

Court discussed cases in which it had held that a hearing was necessary. In United States v. James

Daniel Good Real Property, 510 U.S. 43 (1993), the Supreme Court held that the government must

hold a hearing before seizing a house subject to forfeiture. In Barry v. Barchi, 443 U.S. 55 (1979),

the Court held that a racetrack trainer was entitled to a prompt post-deprivation hearing upon his

suspension from training. In FDIC v. Mallen, 486 U.S. 230 (1988), the Court held that a bank
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official was entitled to a post-deprivation hearing after being suspended from participating in his

bank’s affairs. Finally, in Sniadach v. Family Finance Corp. of Bay View, 395 U.S. 337 (1969), the

Court determined that “due process requires notice and a hearing before wages may be garnished.”

Lujan, 532 U.S. at 196. 

Defendants argue that Plaintiff’s claim resembles that of G & G Fire Sprinklers in Lujan and

not those which the Court held to be claims regarding present entitlements. Defendants base this

argument on the disputed nature of Plaintiff’s claim for benefits and the fact that the deprivation of

the disputed benefits have not deprived Plaintiff of the ability to pursue a gainful occupation.

Plaintiff attempts to characterize his interest in deferred compensation and death benefits as similar

to the interest of the petitioner in Sniadach. Plaintiff argues that like Sniadach, Hughes earned

wages, and those wages were being held by his employer, UTCU. However, as Defendants note, in

Sniadach, absent the garnishment, the entitlement of the petitioner to the underlying wages was

undisputed. Sniadach, 395 U.S. at 338 (garnishment concerned wages “earned by petitioner and

unpaid”). By contrast, in the instant case, whether a wage was earned at all is unclear. Because of

the uncertainty regarding whether Plaintiff is entitled to payment, Plaintiff’s case more closely

resembles Lujan than Sniadach, and, as a result, Plaintiff has no present entitlement and no right to

a post-deprivation hearing other than the normal judicial process.

III. ASI’S COUNTERCLAIMS

A. Standard of Review
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As stated above, this Court reviews the district court’s grant of summary judgment de novo.

The district court’s grant of a motion to dismiss is also reviewed de novo. Dubay v. Wells, 506 F.3d

422, 427 (6th Cir. 2007). A motion to dismiss may be granted only if “it appears beyond doubt that

the plaintiff can prove no set of facts which would entitle him to relief.” Id. (quoting Ricco v. Potter,

377 F.3d 599, 602 (6th Cir.2004)). All factual allegations must be viewed in the light most favorable

to the plaintiff, and this Court must make all reasonable inferences from the facts in the complaint

in favor of the plaintiff. Id. 

B. Analysis

The district court granted Plaintiff’s motionsfor summary judgment on ASI’s counterclaims

and Plaintiff’s motion to dismiss the counterclaims because the court found that ASI was never

properly appointed as UTCU’s conservator and thus lacked standing to bring the counterclaims. The

district court held that pursuant to Ohio law, a conservator may only be appointed by the

Superintendent of the Division of Financial Institutions and not by the Deputy Superintendent for

Credit Unions. Since ASI was appointed conservator of UTCU by Roberts, Acting Deputy

Superintendent of Credit Unions, the district court held that ASI lacked standing to bring

counterclaims against Plaintiff.

Defendants ask this Court to either vacate or reverse the district court’s grant of summary

judgment for Plaintiff and its dismissal of ASI’s counterclaims for a variety of reasons. Defendants

argue that the judgment should be vacated because ASI’s counterclaims were rendered moot by the

district court’s grant of summary judgment on Plaintiff’s ERISA claims, by DFI’s re-appointment
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of ASI as UTCU’s conservator, and by the state courts’ assumption of exclusive jurisdiction over

any challenge to the appointment of a conservator. Alternatively, Defendants assert that this Court

should reverse the district court on the merits.

Pursuant to Article III of the Constitution, federal courts “may only adjudicate actual,

ongoing controversies.” Honig v. Doe, 484 U.S. 305, 317 (1988). Thus, a case must present “a real

and substantial controversy admitting of specific relief through a decree of a conclusive character,

as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.”

Preiser v. Newkirk, 422 U.S. 395, 401 (1975) (quoting North Carolina v. Rice, 404 U.S. 244, 246

(1971)). The SupremeCourt has recognized that an action may become moot at any stage of review.

United States Bancorp Mortg. Co. v. Bonner Mall Partnership, 513 U.S. 18, 21 (1994). “When a

civil case becomes moot pending appellate adjudication, the established practice in the federal

system is to reverse or vacate the judgment below and remand with a direction to dismiss.” Stewart

v. Blackwell, 473 F.3d 692, 693 (6th Cir. 2007) (en banc order) (quoting Coalition for Gov't

Procurement v. Federal Prison Indus., Inc., 365 F.3d 435, 484 (6th Cir. 2004) (internal quotation

marks omitted)). However, vacatur is not appropriate in all cases and is generally utilized “to avoid

entrenching a decision rendered unreviewable through no fault of the losing party.” Id.

Defendants assert that ASI’s counterclaims were meant as a setoff to Plaintiff’s ERISA claim

and were rendered moot when the district court granted summary judgment for Defendants on the

ERISA claim. A claim that a judgment in favor of a plaintiff be set off to compensate for the

plaintiff’s wrongdoing would necessarily be mooted by a dismissal of the plaintiff’s claim. See

Sweet Pea Marine, Ltd. v. APJ Marine, Inc., 411 F.3d 1242, 1251 (11th Cir. 2005). However, ASI’s
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answer in which it sets forth its counterclaims does not frame the counterclaims as conditional upon

the success of Plaintiff’s ERISA claim. ASI’s answer states:

Defendant ASI asserts these claims for affirmative relief and, alternatively, to the

extent this Court were to find that Plaintiff Hughes is otherwise entitled to employee

benefits under ERISA, for forfeiture, mitigation, restitution, set-off, and recoupment.

(J.A. 96.) Because ASI’s request for relief as a set-off to any damages awarded Plaintiff was clearly

a fallback from its main request for affirmative relief, ASI’s argument that its counterclaims were

mooted by the disposition of Plaintiff’s ERISA claim is not convincing.

Defendants also assert that Plaintiff’s challenge to ASI’s standing has become moot because

DFI has re-appointed ASI as UTCU’s conservator pursuant to undoubtedly legitimate procedures.

Although we agree that DFI’s re-appointment of ASI moots the question of whether ASI had

standing to pursue litigation, this fact alone is insufficient to require vacatur of the district court’s

judgment. The Supreme Court has made clear that vacatur is proper where appellate review results

from the unilateral action of the party that prevailed below or is “prevented through happenstance.”

Bonner Mall, 513 U.S. at 22-23 (quoting United States v. Munsingwear, Inc., 340 U.S. 36, 40

(1950)). The Court explained that the equitable tradition of vacatur ensures that a losing party is not

bound by a ruling that is set in stone due to “the vagaries of circumstance” or the prevailing party’s

unilateral action. Id. at 25. However, when the losing party causes mootness by his own action

“[t]he judgment is not unreviewable, but simply unreviewed by his own choice.” Id. Thus, absent

exceptional circumstances, vacatur is inappropriate where the party that lost at the district court

caused the mootness by settlement or other actions of its own. Id. at 29. As a result, DFI’s
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reappointment of ASI as UTCU’s conservator cannot justify vacatur of the district court’s judgment

unless justified by extraordinary circumstances.

Defendants argue that vacatur is necessary because Ohio courts have exclusive jurisdiction

over challenges to administrative orders. In support of their contentions, Defendants cite Gaunce

v. deVincentis, 708 F.2d 1290 (7th Cir. 1983), and Green v. Brantley, 981 F.2d 514 (11th Cir. 1993),

for the proposition that “collateral attacks upon administrative orders are not permissible.” (ASI Br.

57 (quoting Gaunce, 708 F.2d at 1293).) Gaunce and Brantley are inapposite because both address

the ability of federal courts to entertain collateral attacks on federal administrative orders. The

Supreme Court has held that “where Congress has provided statutory review procedures designed

to permit agency expertise to be brought to bear on particular problems, those procedures are to be

exclusive.” Whitney Nat. Bank in Jefferson Parish v. Bank of New Orleans & Trust Co., 379 U.S.

411, 420 (1965). Defendants’ arguments fail to provide a basis for any contention that the federal

courts lack the ability to exercise jurisdiction with respect to an action grounded in the ERISA

statute. As a result, ASI’s argument that the district court lacked jurisdiction to determine ASI’s

standing is unpersuasive. 

Defendants also argue that vacatur is appropriate because the district court’s judgment relied

upon a decision by the Franklin County Court of Common Pleas that was subsequently overruled

on appeal. The district court specifically relied upon the Ohio court’s holding that ratification by the

Superintendent of the Division of Financial Institutions after the fact was insufficient to remedy an

invalid appointment of a conservator. Defendants claim that this reliance is undermined by the fact

that the Common Pleas’ court’s decision was overturned. However, the Ohio Court of Appeals
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overturned the lower court’s decision solely upon procedural grounds that do not undermine the

substantive basis of the lower court’s holding. As a result, Defendants have made no showing of

extraordinary circumstances, and vacatur is inappropriate. Thus, we dismiss ASI’s appeal of the

dismissal of its counterclaim as moot.

CONCLUSION

Based upon the foregoing analysis, this Court AFFIRMS the district court’s grant of

summary judgment for Defendants on all of Plaintiff’s claims and DISMISSES AS MOOT ASI’s

appeal of the dismissal and grant of summary judgment on its counterclaims.