Opinion ID: 3013244
Heading Depth: 2
Heading Rank: 2

Heading: Murphy and Other Circuit Court Cases

Text: In Murphy, the company gave bonuses to certain key employees, including Murphy, the president of Inexco, by assigning a specific royalty interest in a drilling prospect it planned to develop. Each employee was given participation 4. We affirm all other remaining issues addressed by the district court without discussion. 6 units, or rights to receive a fractional portion of any proceeds that might thereafter accrue from the designated project. Murphy, 611 F.2d at 572. Murphy claimed that this bonus plan violated ERISA. His complaint was dismissed by the district court for lack of subject matter jurisdiction on the grounds that the bonus plan was not subject to ERISA. Id. at 570. The Fifth Circuit agreed. Relying upon 29 U.S.C. § 1002(1), for the ERISA definition of employee welfare benefit plan,5 29 U.S.C. § 1002(2), for the ERISA definition of employee pension benefit plan,6 and the regulations promulgated thereunder, 29 C.F.R. § 2510.3-2(c),7 the Fifth Circuit reasoned that the 5. ERISA defines an “employee welfare benefit plan” as: [A]ny plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care, or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services or (B) any benefit described in section 186(c) of this title (other than pensions on retirement or death, and insurance to provide such pensions). 29 U.S.C. § 1002(1). Section 186(c) includes within the definition of “employee welfare benefit plan” those plans that provide holiday and severance benefits, and benefits that are similar. See 29 C.F.R. § 2510.3-1(a)(3). 6. ERISA defines an “employee pension benefit plan” as any plan established or maintained by an employer that, by its express terms, “results in a deferral of income by employees for periods extending to the termination of covered employment or beyond, regardless of the method of calculating the contributions made to the plan, the method of calculating the benefits under the plan or the method of distributing benefits from the plan.” 29 C.F.R. § 1002(2). 7. The Department of Labor, in its regulations, has interpreted ERISA employee pension benefit plans to exclude “payments made by an employer to some or all of its employees as bonuses for work performed, unless such payments are systematically deferred to the termination of covered employment or beyond, or so as to provide retirement income to employees.” 28 C.F.R. § 2510.3-2(c). 7 Murphy bonus program was not an ERISA plan because it “was evidently designed to provide current rather than retirement income to Inexco’s employees.” Id. at 575-76. In addition, the Murphy court considered it significant that contributions were discretionary, given in recognition of special service, awarded in addition to regular compensation, and did not result in the deferral of income. Id. The Murphy court reasoned that an ERISA plan is only a plan “designed for the purpose of paying retirement income whether as a result of [its] express terms or surrounding circumstances.” Id. It concluded that the mere fact that some payments under a plan may be made after an employee has retired or has left the company does not result in ERISA coverage by statutory definition. Id. at 576. See Williams v. Wright, 927 F.2d 1540 (11th Cir. 1991) (relying on Murphy, where a letter agreement between an employee and an employer providing $500 per month on the first of each month was not considered to be an ERISA plan); Whitt v. Sherman Int’l Corp., 147 F.3d 1325 (11th Cir. 1998) (where a long term incentive plan for senior executives was not considered to be an ERISA plan); Mauldin v. Worldcom, Inc., 263 F.3d 1205 (10th Cir. 2001) (where the court noted its surprise that neither party argued that the stock option agreements were subject to ERISA); Kerkhof v. MCI Worldcom, Inc., 282 F.3d 44 (1st Cir. 2002) (where neither party argued that the MFS plan or the stock option agreement were governed by ERISA).