Court Opinion

ID: 185099
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:27:46+00
Date Added: 2024-06-11T09:13:24.585161
License: Public Domain

206 F.3d 1200 (D.C. Cir. 2000)
Ronald D. Young, et al, Appellantsv.Washington Gas Light Company, Appellee
No. 99-7091
United States Court of AppealsFOR THE DISTRICT OF COLUMBIA CIRCUIT
Submitted on the Briefs January 27, 2000Decided March 31, 2000

Appeal from the United States District Court for the District of Columbia(No. 97cv03129)
Ronald H. Jara Show filed the brief for appellants.
Robert N. Eccles and Valerie G. Roush were on the brief  for appellee.
Before Edwards, Chief Judge, Ginsburg, Circuit Judge, and  Buckley, Senior Circuit Judge.
Opinion for the court filed by Senior Judge Buckley.
Buckley, Senior Judge:

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Ronald Young and sixteen other  former employees of Washington Gas Light Company claim  that the company breached its fiduciary duties under the  Employee Retirement Income Security Act by failing to  disclose, prior to their retirement, that the company was  considering implementation of a "one-time-only" voluntary  separation incentive program.  The district court dismissed  the case for lack of subject matter jurisdiction based on its finding that theclaims did not arise under the Act.  We affirm.

I. Background

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The Employee Retirement Income Security Act  ("ERISA"), 29 U.S.C. SS 1001-1461 (1994), is the statute  regulating employee pension and welfare benefit plans.  An  "employee welfare benefit plan" is defined as

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any plan, fund, or program which ... is ... established or maintained by an employer ... to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries [specified benefits].

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Id. S 1002(1).  Such plans may include those that provide severance benefits.  See id. S 1002(1)(B) (employee welfare  benefit plans include those that provide any benefit specified  in 29 U.S.C. S 186(c), which includes severance benefits, 29  U.S.C. S 186(c)(6));  see also Fort Halifax Packing Co. v.  Coyne, 482 U.S. 1, 7 n.5 (1987) ("Section 1002(1)(B) has been  construed to include severance benefits paid out of general  assets, as well as out of a trust fund.").  ERISA imposes  specified duties on ERISA plan administrators with respect  to the plan and its participants and their beneficiaries.  See  29 U.S.C. S 1104.

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Young and the other appellants (collectively, "Young") were  employed as first line supervisors or managers with Washington Gas Light Company ("Washington Gas") prior to their  respective retirements during a period from January 1  through June 1, 1996.  As such, they participated in Washington Gas's regular retirement plan, which is subject to ERISA  ("ERISA retirement plan").  In 1995, Washington Gas began  work on a plan to restructure the company; and, on June 28,  1996, it formally announced the plan, which included a retirement incentive program called "Voluntary Separation Pay  Window Program" ("Window Program" or "Program").  The  Program offered employees classified as "first line supervisors or above" a one-time opportunity to receive specified  severance benefits upon voluntary separation from the company.

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Such employees were qualified to receive those benefits if  they (1) elected to receive separation pay under the Program;(2) had thirty years of service with the company or a combination of age and service totaling ninety as of December 31,  1996;  (3) submitted a separation pay election form during a  twelve-day "window" beginning July 8, 1996;  (4) remained in  active employment until the separation date without being  terminated for cause;  and (5) signed a waiver of claims  against the company.  The company would select a separation  date no later than March 31, 1997 for each of the electing  employees.  Any employee who met the Program's requirements would receive, upon separation from the company, a  lump-sum payment equal to fifty-two weeks of base pay  together with the option to participate in a three-day outplacement services program.

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According to their complaint, Young and his fellow appellants retired under Washington Gas's ERISA retirement plan  between January 1, 1996 and June 1, 1996 while the restructuring of the company was under consideration but before the  final plan and the accompanying Window Program had been  announced.  During that period, Washington Gas was aware  that normal attrition among its first line supervisors and  managers would not be sufficient to accomplish its restructuring goals and that it would have to implement a retirement  incentive program in order to encourage the desired number  of voluntary separations.  Before retiring, each of the appellants asked the company whether such a program was being  considered;  and in each case, the company replied that none  was.

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Young contends that Washington Gas was under an obligation to inform first line supervisors and managers considering retirement during the period between January 1, 1996 and the announcement of the Window Program that the company did not anticipate that normal attrition by retirementwould meet the levels desired for restructuring and that  a retirement incentive program was under consideration. Because that information was withheld, Young brought this  suit alleging that the company had breached its fiduciary  duties under ERISA.  Although Young also asserted various  District of Columbia common law claims, federal jurisdiction  depends on whether he has alleged a claim cognizable under  ERISA.

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District Judge Thomas Penfield Jackson held that the  Window Program was not a "plan" governed by ERISA;  and,  because in the absence of a federal claim, he had no basis for  exercising jurisdiction over the District of Columbia claims,  he dismissed the suit for lack of federal jurisdiction.  Young  v. Washington Gas Light Co., No. 97-3129, order (D.D.C.  Apr. 28, 1999).  Young filed a timely appeal, and we have  jurisdiction pursuant to 28 U.S.C. S 1291.

II. Analysis

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We accept Young's factual allegations as true and review de  novo the dismissal of his complaint for lack of subject matter  jurisdiction.  Moore v. Valder, 65 F.3d 189, 196 (D.C. Cir.  1995).

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Young asserts two bases for claiming that Washington Gas  violated its obligations under ERISA.  First, he maintains  that the Window Program was itself a plan subject to ERISA  and that Washington Gas breached its fiduciary duty in its  role as administrator of that plan.  Second, he claims that  Washington Gas breached its fiduciary duty under its ERISA  retirement plan by failing to inform him and the other appellants that it was considering implementation of the  Window Program.  Neither argument has merit.

A. Jurisdiction based upon Window Program

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ERISA does not specify what constitutes a "plan" within  the meaning of the statute.  The Supreme Court, however,  has made clear that not every grant of an employee benefit is  governed by ERISA.  The Court noted that the statute's  focus was "on the administrative integrity of benefit plans-which presumes that some type of administrative activity is  taking place," Fort Halifax Packing, 482 U.S. at 15, and  concluded that ERISA only applies "with respect to benefits  whose provision by nature requires an ongoing administrative  program to meet the employer's obligation."  Id. at 11.  As a  consequence, ERISA is not implicated by "[t]he requirement  of a one-time, lump-sum payment triggered by a single event"  because "[t]o do little more than write a check hardly constitutes the operation of a benefit plan."  Id. at 12.  Therefore,  whether a benefit is regulated by ERISA turns on the nature  and extent of the administrative obligations that the benefit  imposes on the employer.

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Although Fort Halifax Packing has not yet been applied by  this court, the decisions of other circuits agree with the proposition

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that an employee benefit may be considered a plan for purposes of ERISA only if it involves the undertaking of continuing administrative and financial obligations by the employer to the be hoof of employees or their beneficiaries.

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Belanger v. Wyman-Gordon Co., 71 F.3d 451, 454 (1st Cir.  1995);  see, e.g., Delaye v. Agripac, Inc., 39 F.3d 235, 237 (9th  Cir. 1994);  Kulinski v. Medtronic Bio-Medicus, Inc., 21 F.3d 254, 257-58 (8th Cir. 1994);  Angst v. Mack Trucks, Inc., 969 F.2d 1530, 1538, 1540 (3d Cir. 1992).

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Under the Window Program, the determinations of eligibility and the amount of the benefits to be paid were purely  mechanical and were based on one triggering event:  the  eligible employee's election to retire pursuant to the terms of the Program.  Washington Gas was only required to make  the straightforward factual determination of whether the  employee had met each of the conditions specified in the  Program, such as the requirements that the employee submit  an election form and meet certain length-of-service criteria,  andthen to calculate the amount of the separation payment  by multiplying the employee's base pay rate by fifty-two.These are not the kinds of administrative decisions that  require ERISA's protection.  See, e.g., Velarde v. PACE  Membership Warehouse, Inc., 105 F.3d 1313, 1316-17 (9th  Cir. 1997) (plan offering different benefits to those terminated  for cause or not for cause "failed to rise to the level of  ongoing particularized discretion required to transform a  simple severance agreement into an ERISA employee benefits plan");  Belanger, 71 F.3d at 452, 455 (plan allowing agequalified workers to receive variable payment based on years  of service required only mechanical decision making and was  not governed by ERISA).

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As Young points out, the Window Program required one  discretionary act on the part of Washington Gas, namely the  selection of a specific separation date on or before March 31,  1997 for each of the electing employees.  The exercise of this  limited discretionary right, however, did not create a need for  an ongoing administration of the benefit;  therefore, it did not  bring the Program under ERISA.  Cf. Delaye, 39 F.3d at 237  (severance payments to be made over the course of up to 24  months "does not rise to the level of an ongoing administrative scheme");  Angst, 969 F.2d at 1539 (obligation to make  one-time lump-sum termination payment and to continue  employee's existing benefits for one year not an ERISA plan  because obligation to provide continuing benefits "did not  require the creation of a new administrative scheme, and did  not materially alter an existing [one]").  Therefore, applying  the test established in Fort Halifax Packing, we conclude  that the Window Program was not subject to ERISA.  Accordingly, this claim cannot serve as the basis for federal  jurisdiction over Young's complaint.

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B. Jurisdiction based upon ERISA retirement plan

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The ERISA retirement plan administered by Washington  Gas also fails to provide the district court with jurisdiction  over Young's claims.  The fiduciary responsibilities of an  ERISA plan administrator are detailed in section 1104 of the  Act, as codified, which reads, in relevant part, as follows:

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[A] fiduciary shall discharge his duties with respect to aplan solely in the interest of the participants and beneficiaries and--

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(A) for the exclusive purpose of:(i) providing benefits to participants and their beneficiaries;  and(ii) defraying reasonable expenses of administering the plan....

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29 U.S.C. S 1104(a)(1)(A) (emphasis added).  There is nothing  in the section to suggest that an ERISA plan administrator  has a fiduciary duty to disclose information unrelated to the  plan even if an employee might consider that information  important to his decision to retire.  Nor can we find any  section of the statute that requires disclosures unrelated to  the plan;  indeed, the disclosure requirements are limited to  information about the plan itself.  See, e.g., id. S 1021 (requiring disclosure of summary plan description, terminal reports,  failure to meet minimum funding standards, and transfer of  excess pension assets).

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Although the Supreme Court has stated that the federal  courts, in interpreting the fiduciary standards imposed by  ERISA, will "develop a federal common law of rights and  obligations under ERISA-regulated plans," Varity Corp. v.  Howe, 516 U.S. 489, 497 (1996) (internal quotation and citation omitted), none of the cases dealing with a plan administrator's duties under ERISA have required him to assume  responsibilities that are unrelated to the plan itself.  The  authorities upon which Young relies only serve to underscore  this point, as each concerns a plan administrator's fiduciary  duty when he seeks to modify an existing ERISA plan or to  substitute a new plan for one already in place.  See, e.g., Varity Corp, 516 U.S. at 502-03 (plan administrator breached fiduciaryduty by misrepresenting to plan participants that  benefits would be unchanged by switch from ERISA plan to a  new plan);  Ballone v. Eastman Kodak Co., 109 F.3d 117, 121,  124 (2d Cir. 1997) (company has fiduciary duty to inform  ERISA plan beneficiaries that it is considering implementation of new severance plan which would replace former  ERISA plan);  Eddy v. Colonial Life Ins. Co. of America, 919 F.2d 747, 750, 752 (D.C. Cir. 1990) (ERISA fiduciary had duty  to inform plan beneficiary of available continuation options  under plan once company terminated group plan).

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In contrast to the situations presented in these cases, the  Window Program did not replace, amend, or supplement  Washington Gas's ERISA retirement plan;  it merely created  one-time benefits that were in addition to, and independent  of, those to which the company's employees continued to be  entitled under its ERISA retirement plan.  Therefore, because Washington Gas had no fiduciary duty under its  ERISA retirement plan to inform Young that a retirement  incentive program was under consideration, this claim also  failed to provide the district court with jurisdiction over this  suit.

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Nevertheless, because the district court dismissed only the  ERISA claims with prejudice, Young is free to pursue his  common law claims in the appropriate court.

III. Conclusion

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Because Young has failed to allege a claim under ERISA,  the decision of the district court dismissing this action for  lack of subject matter jurisdiction is

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Affirmed.