Opinion ID: 553359
Heading Depth: 1
Heading Rank: 4

Heading: The Extended Earnings Plan

Text: 27 The Extended Earnings Plan compensates an agent by paying him a sum equal to his earnings from renewal fees over the prior twelve months. The district court, basing its decision largely on our holding in Fraver v. North Carolina Farm Bureau Mut. Ins. Co., 801 F.2d 675 (4th Cir.1986), cert. denied, 480 U.S. 919, 107 S.Ct. 1375, 94 L.Ed.2d 690 (1987), held that the Extended Earnings Plan did not constitute a pension plan under ERISA. In Fraver, we addressed a benefits plan similar to the Extended Earnings Plan at issue in the instant case. In Fraver, as here, the insurance company agreed to pay an amount equal to the renewal commissions of the final twelve months following termination of service. In concluding that such an agreement did not constitute a pension plan, we stated: 28 The post-termination benefits are calculated on the basis of the agent's commissions for the prior year and, in that respect, are like a final commission, paid over an extended term. 29 .... 30 The amount of the payment is tied to only one factor, the amount of business in the last year prior to termination. Finally, the payments are recouped from the individual's successor. In sum, the benefits are in the nature of a buy-out in which the departing agent receives payments based on what he leaves behind in the way of business for his successor. If the departing agent goes into competition with his successor, he is destroying the resource that would be used to pay him. 31 Fraver, 801 F.2d at 678. 32 On his cross-appeal, Darden contends that the Extended Earnings Plan, like the Deferred Compensation Plan, is a pension plan. He argues that the ASCP is a single plan and if we hold that the Deferred Compensation Plan is a pension plan we likewise must find the Extended Earnings Plan to be a pension plan. We disagree. While both the Deferred Compensation Plan and the Extended Earnings Plan are components of a single plan, they have distinct purposes, employ distinct terms and impose distinct obligations. The district court did not err in analyzing the plans separately. 33 Darden relies on Plazzo v. Nationwide Mut. Ins. Co. in support of his position. In Plazzo, an Ohio federal district court held that an Extended Earnings Plan, such as the one at issue in the instant case, is not a buy-out, but rather a pension plan. Plazzo, 697 F.Supp. at 1450-51. Darden impliedly requests that we discard the holding in Fraver and adopt the position taken by the court in Plazzo. However, two other district courts, analyzing the same issue, concluded that an Extended Earnings Plan is not a pension plan under ERISA. See Petr, 712 F.Supp. at 507; Wolcott, 664 F.Supp. at 1539. More importantly, the Extended Earnings Plan at issue here closely parallels the benefit agreement in Fraver and the outcome here is controlled by that precedent. 34 In view of the above, the judgment of the district court is affirmed. 35 AFFIRMED.