Opinion ID: 2977052
Heading Depth: 5
Heading Rank: 1

Heading: Intended Benefits

Text: 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. 12 Nos. 07-3102, 07-3211 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 13 Nos. 07-3102, 07-3211 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 President6 and the amount of the accrued benefits liability. Thus, even upon the Plaintiff’s reading of the facts, a reasonable person would not 6 In itself, this indicator of the amount owed to Hughes is ambiguous. Plaintiff asserts that 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 Nos. 07-3102, 07-3211 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.”).