Opinion ID: 3035704
Heading Depth: 3
Heading Rank: 2

Heading: Is the Pensioner Death Benefit Vested?

Text: Having concluded that the pensioner death benefit is a welfare benefit, we must decide if that benefit had vested prior to its termination. “Employers are generally free . . . [,] for any reason at any time, to adopt, modify or terminate welfare plans.” Skinner, 188 F.3d at 138 (internal quotation marks omitted; alteration in original). However, they may “relinquish their right to unilaterally terminate those benefits and provide for lifetime vesting.” Id. “Because vesting of welfare plan benefits constitutes an extra-ERISA commitment, an employer’s commitment to vest such benefits is not to be inferred lightly and must be stated in clear and express language.” Id. at 139. The pensioner death benefit vests for an eligible mandatory recipient (i.e., becomes unalterably the property of 15 the recipient) “[i]n the event of the death” of a pensioner. 1996 Plan Art. 5.4(a)–(b) (making the otherwise discretionary grant of benefits subject to mandatory beneficiary provisions). It vests for a discretionary beneficiary when, after the death of a pensioner, the plan administrator “in its discretion . . . authorize[s] a Death Benefit.” Id. Nothing in the plan documents suggests that the pensioner death benefit vests during the life of the pensioner and the plan documents certainly do not state such vesting in clear and express language. The pensioners nonetheless argue that the pensioner death benefit has vested. They over-read the plan’s language, however, to the extent they claim that, by making the payment of death benefits mandatory for certain recipients, the plan vested the pensioner death benefit. Section 5.4 of the plan does incorporate the “Mandatory Beneficiary” section and instructs that payment “shall be made,” but the vesting event remains the pensioner’s death. Put another way, the pensioner death benefit does not belong irrevocably to living pensioners. The mandatory language merely indicates how the pensioner death benefit should be distributed once death causes the benefit to vest. Moreover, the pensioners do not allege that Lucent failed to pay death benefits that vested (by reason of the death of the pensioner) prior to the termination of the pensioner death benefit. All this leads to one conclusion: the pensioner death benefit was not vested, meaning that Lucent could terminate it. See Hooven v. Exxon Mobil Corp., 465 F.3d 566, 575 (3d Cir. 16 2006) (explaining that vesting does not occur unless “all of the conditions precedent to the employee’s receipt of that benefit have been satisfied”); see also 1996 Plan Art. 10.1 (reservation of rights clause). For the same reasons, we conclude that no unilateral contract binds Lucent to providing the pensioner death benefit. Unilateral contract principles are relevant in ERISA cases only “where the asserted unilateral contract is based on the explicit promises in the ERISA plan documents themselves.” Hooven, 465 F.3d at 573 (internal quotation marks omitted). No such promises appear in these plan documents.