Court Opinion

ID: 2974675
Source: CourtListenerOpinion
Date Created: 2015-09-22 17:21:36.995677+00
Date Added: 2024-06-11T13:15:09.775966
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
                                       Pursuant to Sixth Circuit Rule 206
                                               File Name: 07a0023p.06

                          UNITED STATES COURT OF APPEALS
                                           FOR THE SIXTH CIRCUIT
                                             _________________

                                                  X
                             Plaintiff-Appellant, -
 REBECCA A. BAKRI,
                                                   -
                                                   -
                                                   -
                                                        No. 05-4532
         v.
                                                   ,
                                                    >
 VENTURE MFG. COMPANY,                             -
                           Defendant-Appellee. -
                                                  N
                    Appeal from the United States District Court
                    for the Southern District of Ohio at Dayton.
                  No. 03-00405—Thomas M. Rose, District Judge.
                                            Argued: November 1, 2006
                                     Decided and Filed: January 17, 2007
  Before: MERRITT and BATCHELDER, Circuit Judges; HEYBURN, Chief District Judge.*
                                               _________________
                                                     COUNSEL
ARGUED: William J. O’Malley, O’MALLEY & OGLESBEE, Columbus, Ohio, for Appellant.
R. Gary Winters, McCASLIN, IMBUS & McCASLIN, Cincinnati, Ohio, for Appellee. ON BRIEF:
William J. O’Malley, O’MALLEY & OGLESBEE, Columbus, Ohio, for Appellant. R. Gary
Winters, Ian R. Smith, McCASLIN, IMBUS & McCASLIN, Cincinnati, Ohio, for Appellee.
                                               _________________
                                                   OPINION
                                               _________________
        MERRITT, Circuit Judge. The question in this ERISA case arising from a company’s
deferred compensation plan is whether the District Court erred in granting summary judgment for
the defendant company by holding that the plaintiff, Rebecca Bakri, a former employee,1 was a
participant in a “top hat” deferred compensation plan as defined by 29 U.S.C. § 1051(a)(2) which

         *
           The Honorable John Heyburn II, Chief United States District Judge for the Western District of Kentucky,
sitting by designation.
         1
             Section 1051 of ERISA provides that the various protections for plans provided by ERISA do not apply to:
         (2) A plan which is unfunded and is maintained by an employer primarily for the purpose of providing
         deferred compensation for a select group of management or highly compensated employees . . . .
Such plans, therefore, fall outside the “coverage” of ERISA and are generally referred to as “top hat” plans.

                                                           1
No. 05-4532           Bakri v. Venture Mfg. Company                                            Page 2

exempts such plans from the vesting or nonforfeitability requirements of § 1053. We do not believe
that the plan in question qualifies as a “top hat” plan because it does not meet the “selectivity”
requirements of § 1051(2). Therefore, we reverse the judgment below and remand for further
proceedings.
        The purpose of the “top hat” exception to ERISA coverage has been characterized by the
Department of Labor as a recognition by Congress “that certain individuals, by virtue of their
positions or compensation level, have the ability to affect or substantially influence, through
negotiations or otherwise, the design and operation of their deferred compensation plan . . . and
would, therefore, not need the substantive rights and protections of” ERISA. DOL, Office of
Pension & Welfare Benefit Programs, Opinion 90-14A, 1990 WL 123933 at *1 (May 8, 1990). The
Second Circuit has said that such “top hat” plans were “excluded from ERISA’s vesting, funding,
and fiduciary responsibility requirements because Congress deemed top-level management, unlike
most employees, to be capable of protecting their own pension expectations.” Gallione v. Flaherty,
70 F.3d 724, 727 (2d Cir. 1995). Accord Spacek v. Maritime Ass’n, 134 F.3d 283, 289, 297 n.12
(5th Cir. 1998) (“Top hat” participants should be “high-ranking management personnel” who “are
therefore better equipped than ordinary pension plan participants to effectively protect their
interests.”); Carrabba v. Randalls Food Markets, Inc., 38 F. Supp. 2d 468, 477 (N.D. Tex. 1999).
        In determining whether a plan qualifies as a top hat plan, we consider both qualitative and
quantitative factors, including (1) the percentage of the total workforce invited to join the plan
(quantitative), (2) the nature of their employment duties (qualitative), (3) the compensation disparity
between top hat plan members and non-members (qualitative), and (4) the actual language of the
plan agreement (qualitative). See Carrabba, 38 F. Supp. 2d at 479. The Carraba opinion concludes
that “the ‘select group’ test is whether the members of the group have positions with the employer
of such influence that they can protect their retirement and deferred compensation expectations by
direct negotiations with the employer.” Id. at 478. The court then went on to say:
       Of course, as a group, to the extent that they could act cohesively, they undoubtedly
       could influence the design and operation of the NSP [the deferred compensation
       plan], but that would be true of any group of employees within a company.
Id.
        In this case we must accept as true the affidavit of Rebecca Bakri filed in opposition to the
summary judgment motion of the company. Ms. Bakri’s affidavit claims that she was an excellent
employee for 20 years who believed she was underpaid because she was a woman. When she sought
a pay raise, the company president, Mr. Hollis, told her, “Women do not need to make as much as
a man” and directed her to “destroy evidence relevant to [a similar ERISA] . . . case in federal
court.” The affidavit further alleges the following relevant facts:
       5. When my employment ended, Venture decided to keep all of the money in my
       deferred compensation plan. The deferred comp plan was created in 1992. It was
       explained to me that the plan was being created so that long term loyal salaried
       employees would have a retirement plan. The hourly employees at Venture already
       had a separate company funded retirement plan. The terms and conditions of the
       deferred comp plan that I participate in were the same as the plans created for the
       other salaried participants, except the amount contributed by Venture was different
       for each employee.
       6. Venture Mfg. Company contributed regularly to the initial deferred compensation
       plan and then to the subsequent deferred compensation plan. Venture contributed
       roughly $5,500 per year for ten years (1993 through 2002). When I was terminated,
No. 05-4532           Bakri v. Venture Mfg. Company                                             Page 3

       Venture took back all of the contributions. I received nothing of the $55,000 plus
       interest in my deferred compensation plan.
       ....
       8. Plus, the top level executives at Venture did not participate in the plan. Russ
       Hollis was the President and 90% shareholder until the past couple years. Paul
       Hollis is Russ Hollis’ son. He was the Vice President and 10% shareholder until his
       father transferred the stock to him. Neither participated in the salaried employees
       deferred compensation plan. Greg Steinhauer was my boss at the time my
       employment ended. (He assumed the systems management duties I had performed
       and then was paid nearly twice what I had been earning.) Mr. Steinhauer does not
       participate in the plan. Mr. Idzakovich did participate in the plan, but it is my
       understanding that when he was promoted to top management a couple years ago he
       ceased to participate in the plan and Venture stopped contributing to his plan.
       ....
       10. Looking at who was in the plan and who was not, it is clear that the deferred
       comp plan was made available to the long-term salaried employees who were not at
       the very top of management. Participation was not limited to high level management
       or even high level positions; it included secretarial/administrative positions and
       people with manager titles who supervised no one. For example, I supervised no
       one. Neither did Mike Green, Valera Jones, or Becky Ferguson. Ms. Jones was an
       administrative assistant. Ms. Ferguson was an administrative assistant in finance.
       Mr. Cyphers ran the tool room. We (Cyphers, Ferguson, Jones, Green, and myself)
       represented half of the participants in the salaried employees deferred compensation
       plan.
        Taking into account the allegations of the affidavit quoted above and the record in the case
showing that the deferred compensation plan consisted of employees like Rebecca Bakri, who had
no supervisory, policy making, or executive responsibility, and had little ability to negotiate pension,
pay or bonus compensation, we must conclude that the “selectivity” element of the “top hat”
exception to coverage is missing in this plan. Accepting the affidavit presented by Rebecca Bakri
in opposition to the company’s motion for summary judgment as true for this summary judgment
analysis, we reverse the District Court and remand the case for further proceedings in accordance
with this opinion.
       Accordingly, it is so ordered.