Opinion ID: 788351
Heading Depth: 2
Heading Rank: 1

Heading: Effective Date of the Amendment

Text: 10 Before turning to the merits, we first set forth some background on ERISA. Erisa does not create any substantive entitlement to employer-provided... welfare benefits. Employers or other plan sponsors are generally free under ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans. Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78, 115 S.Ct. 1223, 131 L.Ed.2d 94 (1995); see Bellas v. CBS, 221 F.3d 517, 522 (3d Cir.2000) (ERISA neither mandates the creation of pension plans nor in general dictates the benefits a plan must afford once created.). However, ERISA requires that all employee benefit plans be `established and maintained pursuant to a written instrument,' 29 U.S.C. § 1102(a)(1) .... Ryan by Capria-Ryan, 78 F.3d at 126. Thus, [t]his section precludes oral or informal amendments to employee benefit plans. Confer v. Custom Eng'g, 952 F.2d 41, 43 (3d Cir. 1991) (citing Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155, 1163 (3d Cir.1990)). Although the Supreme Court has established a de minimus standard for compliance with ERISA, see Curtiss-Wright, 514 U.S. 73, 115 S.Ct. 1223, 131 L.Ed.2d 94, the plan must identify the person who has the authority to amend the plan, and amendments must be conducted according to formal procedures. 29 U.S.C. § 1102. 5 [W]hatever level of specificity a company ultimately chooses, in an amendment procedure or elsewhere, it is bound to that level. Curtiss-Wright, 514 U.S. at 85, 115 S.Ct. 1223. Thus, an amendment is ineffective if it is inconsistent with the governing instruments. Delgrosso v. Spang & Co., 769 F.2d 928, 935-36 (3d Cir.1985); see Confer, 952 F.2d at 43 (Only a formal written amendment, executed in accordance with the Plan's own procedure for amendment, could change the Plan.). 11 As a threshold matter, Depenbrock claims that CIGNA's CEO lacked authority to amend the plan. Alternatively, Depenbrock contends that even if the CEO was authorized to amend the plan, he failed to comply with CIGNA's own written amendment procedures so that the amendment was not effective until December 21, 1998, the date when CIGNA finally executed revised formal plan documents in accordance with the amendment procedure set forth in the plan. Because the amendment's effective date came twenty-two days after Depenbrock was rehired, Depenbrock contends the adverse amendment does not apply to him. 12 CIGNA counters that its CEO was duly authorized to amend the plan and he did so pursuant to the doctrine of ratification. According to CIGNA, although the plan amendment was not formally adopted until December 21, 1998, the CEO's approval on November 4, 1997, of a summary of the proposed cash balance pension formula and Rehire Rule, coupled with his subsequent conduct, effected a retroactive ratification of the plan amendment to be effective January 1, 1998. Accordingly, CIGNA claims that the Rehire Rule was effective as of the date specified for the amendment — January 1, 1998 — and applied to Depenbrock because he resigned on January 2, 1998, one day after the alleged effective date of the rule. 13 We first address the CEO's authority to amend. As a threshold determination, we agree with the District Court that the CEO was authorized to amend the plan and adopt the Rehire Rule. Section 16.1 of the CIGNA plan specified three methods for amendment: 1) a resolution of the Board of Directors; 2) a resolution of the People's Resources Committee of the Board of Directors (PRC); or 3) a written instrument approved and executed by one or more duly authorized officers of CIGNA. On July 23, 1997, the PRC adopted a resolution authorizing the CEO to: 14 adopt amendments to the CIGNA Pension Plan ... to be effective January 1, 1998 (or a later date if deemed appropriate by the CEO), as necessary or appropriate to ... [c]hange the Plan's current final average pay benefit accrual formula to a cash balance formula for all eligible participants under the Plan except those who (1) are currently accruing benefits under the formula in effect on December 31, 1988, and (2) whose combined age plus years of credited service... is 45 or more as of December 31, 1997 .... 15 This resolution gave the CEO plenary authority to amend the plan from a final average pay to a cash balance formula. The exception provided for long-term employees does not insulate them from the CEO's decision-making authority so much as clarify that long-term employees are not subject to the plan changes. Accordingly, we conclude that the CEO had authority to adopt the Rehire Rule amendment. 16 However, the CEO did not exercise his authority to amend the plan until December 21, 1998, the date the written amendment was executed and formally adopted. ERISA specifies that a valid amendment can only be made in the manner specified in the plan document. Curtiss-Wright, 514 U.S. at 85, 115 S.Ct. 1223. Regardless of the method specified for amendment, however, an indispensable requirement under ERISA for effective plan amendment is that the amendment be in writing. See Hozier, 908 F.2d at 1163 (citing Nachwalter v. Christie, 805 F.2d 956, 960 (11th Cir.1986) (ERISA precludes oral modifications of employee benefit plans.)); Pizlo v. Bethlehem Steel Corp., 884 F.2d 116, 120 (4th Cir.1989) (stating that informal or unauthorized modification of pension plans is impermissible under ERISA); Degan v. Ford Motor Co., 869 F.2d 889, 895 (5th Cir.1989) (ERISA mandates that [a] plan itself and any changes made to it [are] to be in writing.); Musto v. Am. Gen. Corp., 861 F.2d 897, 910 (6th Cir.1988) ([A] written employee benefit plan may not be modified or superceded by oral undertakings on the part of the employer.), cert. denied, 490 U.S. 1020, 109 S.Ct. 1745, 104 L.Ed.2d 182 (1989); Moore v. Metro. Life Ins. Co., 856 F.2d 488, 492 (2d Cir.1988) ([A]n ERISA welfare plan is not subject to amendment as a result of informal communications between the employer and plan beneficiaries.). The CEO did not sign a written instrument amending the plan until December 21, 1998, more than three weeks after Depenbrock had been rehired. Thus, December 21, 1998, is the effective date of the amendment. However, this does not resolve the issue, for we must consider whether the doctrine of ratification, urged by CIGNA, retroactively rendered the amendment and Rehire Rule effective as of January 1, 1998.