Opinion ID: 2973813
Heading Depth: 2
Heading Rank: 2

Heading: The SERP

Text: Simpson and Mead agree that the 1982 plan, like the 1992 plan, is a “top hat” plan.2 “A ‘top hat plan’ is . . . ‘a plan which is unfunded and is maintained by an employer primarily for the purposes of providing deferred compensation for a select group of management or highly compensated employees.’” Wolcott v. Nationwide Mut. Ins. Co., 884 F.2d 245, 250 n.2 (6th Cir. 1989) (quoting 29 U.S.C. § 1051(2)). Top hat plans are almost completely exempt from “ERISA’s substantive requirements.” Senior Executive Benefit Plan Participants v. New Valley Corp. (In re New Valley Corp.), 89 F.3d 143, 148 (3d Cir. 1996), cert. denied, 519 U.S. 1110 (1997). Under 29 U.S.C. § 1051(2), top hat plans are exempted from “ERISA’s minimum participation standards, minimum vesting standards, . . . various other content requirements,” id. at 148–49, and “ERISA’s anti-cutback provision,” Cogan v. Phoenix Life Ins. Co., 310 F.3d 238, 242 (1st Cir. 2002) (citing Demery v. Extebank Deferred Comp. Plan (B), 216 F.3d 283, 287 (2d Cir. 2000)). Under § 1081(a)(3), top hat plans are exempted from “ERISA’s minimum funding requirements.” In re New Valley Corp., 89 F.3d at 149. Under § 1101(a)(1), top hat plans are exempted from “ERISA’s fiduciary responsibility provisions, including the requirement of a written plan, the need to give control of plan funds to a trustee, the imposition of liability on fiduciaries, and limitations on transactions and investments.” Id. Under § 1051(2), top hat plans are exempted from “ERISA’s 2 Simpson and Mead argue that we must determine first whether the 1982 or 1992 plan controls Simpson’s eligibility for early retirement benefits. To this end, both parties advance theories on the application of the federal common law of contracts to this issue. However, because Simpson has no entitlement to the asserted benefits under either plan, there is no need to decide which plan would apply under federal common law. -5- No. 05-3707 Simpson v. Mead Corp. reporting and disclosure requirements” but subject to administrative regulations. Id. (citing 29 C.F.R. § 2520.104-23 (for top hat plans it established minimal alternative reporting requirements)). Top hat plans are basically only “subject to the enforcement provisions” of ERISA. Id.; Peters v. Lincoln Elec. Co., 285 F.3d 456, 468 n.10 (6th Cir. 2002). See also id. (top hat “plans are exempt from much of ERISA’s regulatory scheme, but are covered by the definitions and enforcement provisions of ERISA” (citing Kemmerer v. ICI Am. Inc., 70 F.3d 281, 286–87 (3d Cir. 1995), cert denied, 517 U.S. 1209 (1996))). While both the 1982 and the 1992 plans provide that the laws of the state of Ohio are to govern their interpretation, ERISA provides that federal law supersedes “all state laws that ‘relate to an ERISA plan.’” Unicare Life & Health Ins. Co. v. Craig, 157 F. App’x. 787, 790–91 (6th Cir. 2005) (quoting 29 U.S.C. § 1144(a)). “A particular state law relates to an ERISA plan ‘if it has a connection with or reference to such a plan.’” Id. at 791 (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97 (1983)). Simpson argues that, under the 1982 plan, he is entitled to early retirement benefits because he retired “with company consent” prior to age fifty-five. Mead counters that Simpson was separated from employment prior to age fifty-five and, therefore, is not entitled to early retirement benefits under the 1982 plan. The district court agreed with Mead: “While Simpson is free in his personal affairs to refer euphemistically to have been fired as ‘early retirement with company consent,’ this does not seem a natural reading.” However, the district court also determined that Mead’s interpretation of the contract was not a natural one and looked to the larger context of the -6- No. 05-3707 Simpson v. Mead Corp. contract to ascertain the meaning of the 1982 plan in determining that Simpson was not entitled to early retirement benefits. Article 4 of the 1982 plan reads, in pertinent part, as follows: Article 4. Benefits for Eligible Executives 4.1 Basic Retirement Benefits. (a) Eligibility. An Eligible Executive shall receive a basic retirement benefit upon termination of service with the Company on or after his 62nd birthday. 4.2 Early Retirement Benefits. (a) Eligibility. An Eligible Executive shall receive an early retirement benefit under the Plan following termination of his service with the Company prior to his 62nd birthday. ... (c) Commencement and Form. For early retirement between the ages of 55 and 62, or prior to age 55 with written Company consent, monthly early retirement benefit payments shall be paid . . . following the latest of (i) the date an Eligible Executive terminates his service with the Company, (ii) his 55th birthday, or (iii) the first of any calendar month after his 55th birthday . . . For retirement prior to age 55 without written Company consent, monthly early retirement benefit payments shall be paid . . . commencing as of the first day of the calendar month coincident with or next following an Eligible Executive’s 62nd birthday. We first look to Article 4.2(c). The parties disagree as to the meaning of “with written Company consent” and as to what that phrase modifies. If the phrase modifies “monthly early retirement benefit payments shall be paid,” as Mead argues and as the district court indicated,3 then Mead could withhold consent from payment of early retirement benefits and Simpson would have no argument for an entitlement. It is clear from the record that Mead did not consent to the early 3 The district court stated that “‘with written company consent,’ modifies the words following the comma.” -7- No. 05-3707 Simpson v. Mead Corp. payment of retirement benefits. Therefore, under this reading of the 1982 plan, Simpson cannot prevail. As it is clear that Mead did not consent to pay Simpson early retirement benefits, Simpson must rest his claim on an alternative interpretation of the 1982 plan that “with written Company consent” modifies “early retirement . . . prior to age 55.” Even if we were to assume that this alternative interpretation of the 1982 plan is correct, Simpson cannot prevail. If Mead gave such consent, then it follows that Simpson would be entitled to early benefits. Under this reading, if an Eligible Executive — a term defined in the 1982 plan — retires on his own between the ages of fifty-five and sixty-two, he is entitled to early benefits. However, if an Eligible Executive retires prior to age fifty-five, he must do so with written company consent in order to receive early benefits. If Mead does not consent to the early retirement, then the Eligible Executive would have to wait until he reached the age of sixty-two to receive his retirement benefits. Thus, under this reading it is clear that if an Eligible Executive under the 1982 plan retired or left Mead’s employ of his own volition, and Mead did not consent to this early retirement, then the Eligible Executive would not lose his benefits; he merely could not collect them until he attained the age of sixty-two. It makes no sense at all for an employer to award early retirement benefits but not to pay them until the normal retirement age was reached. Yet, even if we were to accept Simpson’s proposed interpretation of the plan his claim sill fails as Simpson cannot show, as he must, that termination amounts to retiring with company consent. Such a reading is contrary to the meaning of “consent” in the ordinary and popular sense. The record reflects that Mead terminated Simpson, not that it gave consent to his early retirement. -8- No. 05-3707 Simpson v. Mead Corp. It is plainly unreasonable to infer that, when Mead informed Simpson that he was terminated, Mead was consenting in writing to Simpson’s early retirement. In conclusion, it does not matter what “with written Company consent” modifies, because: 1) if the phrase modifies “monthly early retirement benefits shall be paid” Simpson is not entitled to early retirement benefits, and 2) if the phrase modifies “early retirement . . . prior to age 55” Simpson is not entitled to early retirement benefits. Therefore, under any interpretation of the 1982 plan, Simpson is not entitled to the retirement benefits he seeks.