Opinion ID: 545161
Heading Depth: 2
Heading Rank: 1

Heading: Which Plan Controls?

Text: 30 We agree with the plaintiffs' contention that ERISA precludes oral amendments to employee benefit plans. Because defendants concede that the purported 1987 amendment was never reduced to a writing before plaintiffs were terminated, we conclude as a matter of law that the unamended 1985 plan must govern plaintiffs' claims for benefits. 9 31 Section 402(a)(1) of ERISA requires that [e]very employee benefit plan shall be established and maintained pursuant to a written instrument. 29 U.S.C. Sec. 1102(a)(1). Relying primarily on this provision, the Eleventh Circuit in Nachwalter v. Christie, 805 F.2d 956 (11th Cir.1986), held that ERISA precludes oral modifications of employee benefit plans. Id. at 960. Since Nachwalter, at least five different circuits have agreed. See 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v. American General Corp., 861 F.2d 897, 910 (6th Cir.1988) ([A] written employee benefit plan may not be modified or superceded by oral undertakings on the part of the employer.), cert.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, --- U.S. ----, 109 S.Ct. 1745, 104 L.Ed.2d 182 (1989); Moore v. Metropolitan Life Insurance 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.); Straub v. Western Union Telegraph Co., 851 F.2d 1262, 1265 (10th Cir.1988) ([N]o liability exists under ERISA for purported oral modifications of the terms of an employee benefit plan.). 32 Each of these cases rebuffed an attempt to hold an employer to some sort of oral promise to increase benefits from those provided in formal written plans. As a textual matter, however, section 402(a)(1) draws no distinction between oral promises to increase benefits and oral decrees, like Craven's, that benefits be decreased. Indeed, to the extent that ERISA is primarily concerned with promot[ing] the interests of employees and their beneficiaries, Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90, 103 S.Ct. 2890, 2896, 77 L.Ed.2d 490 (1983), the argument for disallowing oral amendments, at least as a policy matter, is even more compelling when such amendments purport to decrease benefits. Section 402(a)(1) was designed to ensure that every employee may, on examining the plan documents, determine exactly what his rights and obligations are under the plan. H.Rep. No. 1280, 93rd Cong., 2d Sess. 297, reprinted in 1974 U.S.Code Cong. & Admin. News 5038, 5077-78. Employees entitled to rely on the terms of a written benefit plan should not have their benefits eroded by oral modifications to the ... plan. Cefalu v. B.F. Goodrich Co., 871 F.2d 1290, 1296 (5th Cir.1989). Congress, in passing ERISA, did not intend that participants in employee benefit plans should be left to the uncertainties of oral communications in finding out precisely what rights they were given under their plan. Musto, 861 F.2d at 909-10. 33 Defendants, however, urge us to distinguish Nachwalter and its progeny on the ground that most of those cases involved pension plans as opposed to welfare plans, which ERISA regulates far less extensively. The text of section 402(a)(1) simply will not bear this limiting construction. When Congress wanted to exempt welfare plans from regulations it imposed on pension plans, it knew full well how to do so. See, e.g., ERISA Sec. 201(1), 29 U.S.C. Sec. 1051(1) (exempting welfare plans from ERISA's participation and vesting requirements); id. Sec. 301(a)(1), 29 U.S.C. Sec. 1081(a)(1) (exempting welfare plans from ERISA's funding requirements). Section 402(a)(1), by contrast, applies to [e]very employee benefit plan, 29 U.S.C. Sec. 1102(a)(1) (emphasis added), not just to employee pension plans. Therefore, we agree with the Second Circuit that an ERISA welfare plan is not subject to amendment as a result of informal communications between an employer and plan beneficiaries. Moore, 856 F.2d at 492 (emphasis added). 34 Because the record is undisputed that defendants failed to reduce their purported 1987 amendment to a writing before plaintiffs were terminated, we must evaluate the summary judgment motions on the assumption that the unamended 1985 severance plan was still in effect.