Opinion ID: 479181
Heading Depth: 2
Heading Rank: 2

Heading: Summary Judgment on Count X--Violation of the Pension Plan

Text: 36 In Count X, the Employees claim that Ward breached the terms of Article XIII of the Plan by agreeing to purchase annuities for the 55+ Group while not treating the 45 & 10 Group identically. 7 37 It is uncontested that when Honiron closed its plant, Ward gave employees in the 55+ category a choice of receiving either severance pay or a pension under the Honiron Plan. When the Plan terminated one year later, Ward once again decided to offer those employees eligible for early retirement the option of severance pay or a retirement benefit. The Banker's Life annuities, voluntarily purchased with corporate assets, provided this benefit to those employees who elected not to receive the severance pay. 38 The district court held, as a matter of law, that Plan provisions pertaining to distribution priorities did not apply to these corporate assets used to purchase additional benefits for 55+ Group members after the Plan already had terminated. The district court stated that any guarantees that Ward made to the 55+ Group to provide such benefits were irrelevant to the Employees' claims. The court reasoned that the Employees' contractual rights were defined by the Plan itself, and not by Ward's extrinsic promises to the 55+ Group. Cunha, 545 F.Supp. at 96. 39 We find no error in the district court's decision. Had the court found that Ward used plan assets to discriminate in favor of the 55+ Group, this clearly would have constituted a violation of the Plan's terms. See Hardy v. H.K. Porter Co., 417 F.Supp. 1175, 1184 (E.D.Pa.1976). 40 Similarly, had the funds that Ward used represented corporate assets that Ward legally was required to contribute to the Plan prior to termination, but did not, then this too might have constituted illegal discrimination. However, these are not the facts before us. 41 The Plan distribution requirement prohibited any discrimination in the allocation of Plan assets between the 55+ and 45 & 10 Group at termination. In this case, there were no Plan assets to distribute to participants other than those who had retired. Nothing in Article XIII can be construed as a prohibition against treating the 55+ Group differently, provided that the preferential treatment did not involve Plan assets. Ward's conduct in this case had the same legal effect as if Ward had decided to issue across-the-board severance checks to eligible 55+ Group members and not to the 45 & 10 Group employees. That Ward provided an option of severance pay or an annuity does not change the analysis. Those employees who opted for the annuity did not receive the severance pay to which they otherwise were entitled. 42 We hold that Ward's decision to allocate corporate monies, that were never Plan assets and that Ward never had any obligation to contribute to the Plan, see infra Section C(2), to provide a benefit for former participants after Plan termination, did not violate the Plan's terms. 8