Court Opinion

ID: 2709693
Source: CourtListenerOpinion
Date Created: 2014-08-05 15:19:16.962184+00
Date Added: 2024-06-11T13:01:42.836435
License: Public Domain

In the

United States Court of Appeals
               For the Seventh Circuit

No. 11-3438

O MAR H AKIM ,
                                                  Plaintiff-Appellant,
                                  v.

A CCENTURE U NITED S TATES P ENSION P LAN, et al.,

                                               Defendants-Appellees.

             Appeal from the United States District Court
        for the Northern District of Illinois, Eastern Division.
             No. 08 CV 03682—Robert M. Dow, Jr., Judge.

     A RGUED O CTOBER 25, 2012—D ECIDED M AY 23, 2013

  Before F LAUM, M ANION, and R OVNER, Circuit Judges.
  M ANION, Circuit Judge. In this ERISA action, we deter-
mine whether a release of claims signed by a former
employee in exchange for a severance package is valid
and enforceable. Omar Hakim was an employee of
Accenture LLP (previously Andersen Consulting LLP)
for nearly ten years before being let go as part of a
workforce reduction in 2003. During part of his tenure
with the company, he participated in the company’s
2                                            No. 11-3438

pension plan. In 1996, Accenture amended the plan to
exclude a number of employees in various “service
lines” (corporate talk for departments) throughout the
company. By virtue of his position in the company,
Hakim remained eligible to participate in the retire-
ment plan when the amendment was adopted, but in
1999 he was promoted to a position in which he was
no longer eligible to participate in the plan under the
terms of the 1996 amendment.
  Upon his termination in 2003 when he was 39 years
old, Hakim signed a release in exchange for separation
benefits that waived any and all claims that arose
prior to signing the release. In 2008, while he was em-
ployed elsewhere, Hakim sought additional pension
benefits from Accenture, arguing that the notice of the
1996 amendment to the plan (which was emailed to
employees) was insufficient and therefore violated
ERISA’s notice requirements. After his claim was denied
by Accenture, he sought relief in the district court. The
district court granted summary judgment in favor of
Accenture, holding that Hakim knew or should have
known about his claim when he signed the release, and
thus waived his claim. We agree with the district court
and affirm.

                     I. Background
  Omar Hakim was employed by Accenture LLP from
October 4, 1993, through May 16, 2003. He worked at the
Las Colinas, Texas, office in information technology,
and when he was hired at the age of 29, he was eligible
to participate in the company’s retirement plan (the
No. 11-3438                                             3

“Plan”). The Plan is a “defined benefits plan” within the
meaning of ERISA, and Accenture is the Plan sponsor and
Plan administrator. Under the Plan, Accenture, as Plan
administrator, has the sole and exclusive discretion to
determine which employees are eligible for the Plan
and the amount of benefits they receive. The Plan also
gave Accenture authorization to amend the Plan at
any time.
  When Hakim was hired in 1993, the Plan was struc-
tured such that all of Accenture’s associate partners
were eligible to participate in the Plan regardless of
the service line they worked in, and all other em-
ployees were eligible to participate unless those em-
ployees worked in certain service lines, namely Strategic
Services, Change Management Services, and Systems
Integration. Hakim did not work in any of those three
lines and thus was eligible to participate (and did par-
ticipate) in the Plan. On June 13, 1996, Accenture
decided to amend the Plan. The amendment, which
would take effect on July 1, 1996 (the “1996 Amend-
ment), altered Section 2.2(b) of the Plan to restrict par-
ticipation in the Plan to certain categories of employ-
ees. The 1996 Amendment also provided that employees
hired prior to the date of the Plan’s amendment would
remain eligible to participate in the Plan so long as the
employee did not transfer service lines. Hakim would
thus continue to accrue benefits unless and until he
transferred or was promoted to a new, ineligible
service line.
 On June 6, 1996, Julianne Grace, Accenture’s Human
Resources (“HR”) Policy Lead, emailed a memorandum
4                                              No. 11-3438

to the HR Leads at Accenture’s local offices which ex-
plained the changes the 1996 Amendment would
make to the Plan. Then, on June 13, Grace’s executive
assistant Jeanette Harris sent an email directing all
HR Leads in Accenture’s U.S. offices to:
     Please distribute the following memo and attachment
     to all personnel in your location. The memo notifies
     employees of the changes in retirement eligibility
     and is similar to the memo distributed earlier to all
     of HR. The attachment is a legally required docu-
     ment that must be delivered no later than Friday
     Afternoon, June 14, 1996.
The next day, Vickie Lee, who was the HR Lead for
the Dallas metro area (including Las Colinas, where
Hakim was based), directed Rene Edwards, another
member of the Dallas HR department, to forward the
memo to all personnel in the Dallas metro area. She did
so at approximately 4:30 p.m. that day (June 14, 1996).
The email distribution list indicates that it was sent to
“Las.Colinas.Personnell.All.AC,” among others. While
Hakim was an employee in the Las Colinas office at
this time, he disputes ever receiving the memo. At
least two other employees in the Las Colinas office
did receive this email.
    The memorandum stated, in relevant part:
     Retirement Eligibility
     Retirement benefit plans for personnel in Practice
     Management (PM), Business Process Management
     (BPM), and for associate partners and position-based
No. 11-3438                                              5

   business unit personnel will remain unchanged.
   Effective July 1, 1996, personnel in Process, Change
   Management, Strategy, and Technology in the Con-
   sulting and Solution Center, Business Integration
   Providers, and Americas Information and Technology
   Support (AI&TS) organizations will not be eligible
   for retirement plan benefits. If, at any time, a retire-
   ment eligible employee transfers to a non-eligible
   group, as described above, s/he will remain a plan
   member but will become inactive. Only those years
   accrued as an active member qualify as benefit
   service for the employee. (Employees continue to
   accrue vesting service even as inactive members.)
The memorandum also explained that pension-eligible
employees hired prior to July 1, 1996, would continue
accruing credit unless and until they transferred to a non-
eligible position. Hakim thus continued to accrue
benefits under the Plan.
  In 1997, 1999, and 2001, the company issued Sum-
mary Plan Descriptions to all personnel that sum-
marized changes to the Plan, and those Summaries all
noted, in relevant part, that employees who transfer or
are promoted to ineligible service lines cease accruing
additional benefits under the Plan. In 1999, the com-
pany created an online Benefits Information Database
and emailed all personnel with instructions on how
to view the Plan Descriptions online.
  Also in 1999, Hakim was promoted to a new service
line. Hakim sought and received the promotion begin-
ning in the summer of 1999. Hakim testified that he
6                                             No. 11-3438

had contacted a supervisor around that time and began
negotiating the terms of the promotion, and then
began performing his new duties in September 1999.
The promotion officially took effect, however, on
December 16, 1999. Hakim’s new position was Man-
ager in the Communications and High-Tech Global Mar-
kets/Networks service line and he eventually rose to
the position of Senior Manager in that line. As a Senior
Manager, he was responsible for selling and delivering
client solutions and was required to review and create
client proposals, manage the delivery of work, and pro-
vide subject matter expertise to the company as a whole.
   It is undisputed that Hakim’s new service line was
an ineligible line under the 1996 Amendment to the
Plan, and therefore he ceased accruing additional bene-
fits under the Plan in December 1999. In June 2000,
Hakim received a packet via mail that laid out his full
benefits package and compensation in comprehensive
detail. In addition to describing his current salary and
other benefits, the packet discussed Hakim’s retirement
situation. On the top of Page 3 of the packet, it read:
    The Retirement Plan
    Because of your current employment classification,
    you are ineligible to participate in the Retirement
    Plan. However, you have earned a monthly benefit
    based on your prior period(s) as an eligible employee.
    Contact the Andersen Consulting Benefits Informa-
    tion Center and select the Retirement Plan option
    if you would like more information.
The packet provided a calculation of Hakim’s projected
monthly income in retirement if he were to remain with
No. 11-3438                                             7

the company until he reached the age of 62, and also
described his total annual compensation (which, as of
June 2000, was $177,961). Hakim does not dispute that
he received this benefits statement.
  In May 2003, Hakim was terminated by Accenture
due to a workforce reduction. All employees affected by
the reduction, including Hakim, were offered a Separa-
tion Benefits package in exchange for signing a Release
Agreement (“Release”). Hakim opted to accept the Sep-
aration Benefits and signed the Release on May 15,
2003. The Release stated, in relevant part:
   As a material inducement to Accenture to enter
   into this Agreement and as part of the consideration
   for the Separation Benefits offered to you, to which
   you agree you are not otherwise entitled, you
   hereby forever release, waive, and discharge Accen-
   ture LLP . . . from any and all claims of any nature
   whatsoever, known or unknown which you now
   have, or at any time may have had, against the Re-
   leased Parties up to and including the date you
   sign this Agreement (“Claims”). This General Re-
   lease of Claims includes, without limitation, any
   Claims related to your employment, your activities
   on behalf of Accenture and its predecessors, parent,
   subsidiaries, divisions and affiliates, the termination
   and layoff of your employment, Claims of wrongful
   discharge, Claims for the payment of any salary,
   wages, bonuses and commissions, Claims of discrimi-
   nation under the common law or any federal or
   state statute . . ., and all other statutory, common
8                                            No. 11-3438

    law or other Claims of any nature whatsoever.
    This General Release of Claims does not apply to
    any Claims concerning breach of this Agreement or
    any Claims arising after you sign this Agreement.
    ...
    You are advised to review this Agreement with
    an attorney of your choice before signing this Agree-
    ment. In any event, you should thoroughly review
    and understand the effect of this agreement and its
    General Release of Claims before taking action
    upon them.
    ...
    By signing this Agreement, you have and acknowl-
    edge that you have carefully read and fully
    understand all of its provisions and that you are
    voluntarily entering into this Agreement. By signing
    this Agreement you agree and acknowledge that
    you have not relied upon any promise, inducement,
    representation or statement, whether oral or in
    writing, made by Accenture or Accenture’s agents,
    representatives or attorneys with regard to this
    subject matter, basis, or effect of this Agreement,
    except as expressly set forth in this Agreement.
Hakim testified that he understood the terms of the
Release and signed it knowingly and voluntarily,
but did not consult with an attorney prior to signing it.
In July 2003, Hakim received a final statement of
benefits from Accenture which again showed that he
had stopped accruing pension benefits under the Plan
in December 1999.
No. 11-3438                                             9

  On July 27, 2007, after meeting with his financial
advisor, Hakim brought an administrative claim for
additional pension benefits, and Accenture’s Benefit
Claims Committee denied the claim in November 2007.
Hakim appealed the Committee’s decision, but Accenture
denied his appeal in April 2008. Hakim then sought
relief in the district court. His claim for additional
benefits centered on his contention that Accenture
violated certain provisions of ERISA. His first, second,
and fourth counts sought additional benefits based on
a lack of notice of the 1996 Amendment to the Plan in
violation of ERISA’s notice provision, Section 204(h),
29 U.S.C. § 1054(h) (1996), which requires that the plan
administrator provide adequate notice of any amend-
ments to a plan that result in a “significant reduction in
the rate of future benefit accrual.” His third count
sought additional benefits based on a failure of the
Plan’s Summary Plan Descriptions to provide an under-
standable description of eligibility for participation in
the Plan. His fifth count alleged that certain of the
Plan Descriptions failed to set forth Hakim’s ERISA
rights and claim procedures. Accenture moved to
dismiss the complaint, and the district court granted the
motion with respect to Counts I-III, and also dismissed
part of Count V. Those Counts are not at issue on appeal.
  Hakim and Accenture both moved for summary judg-
ment for the remaining claims on Counts IV and V. On
August 16, 2010, the district court granted summary
judgment in favor of Accenture on Count V and dis-
missed most of the defendants to Count IV, leaving only
the Plan itself as a defendant. The district court then
10                                           No. 11-3438

denied both parties’ summary judgment motions per-
taining to Count IV against the Plan. With regard to the
defendant’s motion for summary judgment, the district
court held that Hakim’s claim was for a “pension entitle-
ment” and that the Release he signed did not bar his
suit per ERISA’s anti-alienation provision. With regard
to Hakim’s motion, the district court ruled that the
email notice of the 1996 Amendment was not a per se
unlawful method of delivering notice of changes to
the Plan in 1996 and that there existed a question of
fact about whether the email satisfied the requirements
of Section 204(h).
  Before the case could proceed to trial, we decided
Howell v. Motorola, Inc., 633 F.3d 552 (7th Cir. 2011),
in which we held that a Release similar to Hakim’s
barred the plaintiff’s ERISA claim for additional pension
benefits. Accenture moved for reconsideration, and
on September 29, 2011, the district court granted Ac-
centure’s motion and dismissed Hakim’s only re-
maining claim. The district court ruled that, based on
Howell, ERISA’s anti-alienation provision did not apply
and Hakim’s claim was barred by the Release he signed.
The district court’s conclusion centered on the fact that
Hakim had constructive notice of his claim at the time
he signed his release. Hakim now appeals. We agree
with the district court that Hakim had, at the very
least, constructive notice of his claim and that the
Release he signed bars his claim, and we affirm.
No. 11-3438                                              11

                      II. Discussion
  We review an appeal from a district court’s grant
of summary judgment de novo. Jajeh v. Cnty. of Cook,
678 F.3d 560, 566 (7th Cir. 2012). Summary judgment is
appropriate when the pleadings, depositions, answers
to interrogatories, and admissions on file, together with
the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party
is entitled to summary judgment as a matter of law. Fed.
R. Civ. P. 56(c). We construe all facts and draw all rea-
sonable inferences in favor of the nonmoving party.
Foley v. City of Lafayette, 359 F.3d 925, 928 (7th Cir.
2004). The party opposing the motion for summary judg-
ment must “submit evidentiary materials that set forth
specific facts showing that there is a genuine issue for
trial.” Siegel v. Shell Oil Co., 612 F.3d 932, 937 (7th Cir.
2010) (citations omitted). “The nonmoving party must do
more than simply show that there is some metaphysical
doubt as to the material facts.” Id. Summary judgment
is properly entered against a party “who fails to make
a showing sufficient to establish the existence of an
element essential to the party’s case, and on which that
party will bear the burden of proof at trial.” Parent v.
Home Depot U.S.A., Inc., 694 F.3d 919, 922 (7th Cir. 2012)
(internal quotations omitted).
  The central issue on appeal is whether the Release
Hakim signed when he parted ways with Accenture in
2003 bars his present claim. The Release purported to
cover “any and all claims of any nature whatsoever,
known or unknown, which you now have, or at any
12                                            No. 11-3438

time may have had” against Accenture and its subsidi-
aries. Accenture argues that the Release completely
bars Hakim’s claim; Hakim contends that the Release
does not bar his claim for two reasons: (1) ERISA’s anti-
alienation provision prohibits the release of ERISA
claims through a general release, and (2) his claim for
additional pension benefits under the Plan did not
accrue until Accenture denied his administrative claim
for those benefits in April 2008, and thus arose after
the time period covered by the Release.
  We begin with Hakim’s first argument. ERISA’s anti-
alienation provision states that “[e]ach pension plan
shall provide that benefits provided under the plan
may not be assigned or alienated.” 29 U.S.C. § 1056(d)(1).
We have held, however, that pension entitlements are
subject to the anti-alienation provision and cannot be
alienated, but contested pension claims fall outside the
realm of the provision and can be alienated. See Lynn
v. CSX Transp., 84 F.3d 970, 975 (7th Cir. 1996). The dis-
tinction is crucial because if the benefit Hakim is
seeking is a pension entitlement, the anti-alienation
provision effectively nullifies the Release he signed, at
least with regard to the entitlement. If, however,
Hakim’s suit is not for an entitlement, but rather a claim
for additional benefits to which he is not entitled under
the terms of the Plan itself, the anti-alienation provi-
sion does not apply, and the question becomes whether
the Release bars this claim.
  Pension entitlements are, without exception, subject
to the anti-alienation provision of ERISA. See Patterson
No. 11-3438                                            13

v. Shumate, 504 U.S. 753, 760 (1992). A pension entitle-
ment arises under the terms of the pension plan itself.
Lynn, 84 F.3d at 975. In other words, an entitlement, as
its name would suggest, refers to vested benefits to
which a plaintiff is entitled under the terms of the
pension plan itself. In Lynn, the plaintiff sought “to
protect military service benefits to which he believe[d]
he [was] entitled to under the terms of the plan.” Id. at
977. We held that the plaintiff was “asking the court
to interpret the pension plan itself” and thus the plain-
tiff’s suit involved a pension entitlement, which sub-
jected it to the anti-alienation provision. Id.
  Contested pension claims, however, are “simply
outside the realm of the [anti-alienation] provision.” Id.
at 975. We have previously explained that a contested
claim is one that “the claimant had actual or construc-
tive knowledge of . . . at the time of the signing of the
release,” such “that it could have been contested and
resolved at the time the release was entered into (but
was not).” Id. A contested claim does not seek benefits
to which the plaintiff believes he is entitled under
the terms of the pension plan itself, but rather for addi-
tional benefits above and beyond the benefits to which
he was entitled under the terms of the plan. For example,
a plaintiff might, like Hakim, claim that he deserves
more benefits than he accrued under the terms of the
plan on the grounds that the plan administrator failed
to provide adequate notice of a reduction in benefits
or that the plan administrator somehow violated his
fiduciary duty. Such claims could be resolved before
a plaintiff signs a release of those claims, and this is
14                                              No. 11-3438

critical because general releases of claims are valid as
long as the signing party has actual knowledge of the
claims (or could have discovered those claims with a
reasonable inquiry) he or she is giving up. Fair v. Int’l
Flavors & Fragrances, 905 F.2d 1114, 1116 (7th Cir. 1990).
   Hakim’s suit is a contested pension claim, not an en-
titlement suit. Hakim contests how his benefits
(namely, the amount of money he will receive each
month from his pension) were calculated. His suit
centers on his argument that, because the Accenture
failed to provide adequate notice of the 1996 Amend-
ment to the Plan, he did not receive information in-
dicating that he and his employer calculated his
defined benefits differently until long after he signed
the Release. In other words, he claims he did not know
that Accenture had calculated his benefits differently
than he originally expected. He says he never received
notice that his promotion placed him in a position
where he was no longer eligible to participate in the
Plan until he discovered the deficiency five years after
he signed the Release, and is therefore entitled to addi-
tional benefits. Unlike the plaintiff in Lynn, he is not
asking us to interpret the Plan itself—indeed, the Plan
is quite clear: Hakim accrued pension benefits under
the Plan until he was promoted to a position in which
he was no longer eligible to participate in the Plan.
He continues to be eligible to receive those vested
benefits that accrued prior to his promotion in Decem-
ber 1999. As we have previously held:
     The basic point is that the release released the defen-
     dants from liability based on contestable pension
No. 11-3438                                              15

    claims. . . . [T]he release did not wipe out [the plain-
    tiff’s] claims to any pension benefits to which the
    plan entitled him. If the release were thought
    broad enough to wipe out actual pension entitle-
    ments, its enforceability would be questionable in
    light of ERISA’s provision forbidding the aliena-
    tion of pension benefits. For then it might be a case
    of [the plaintiff] having “sold” his pension rights,
    in exchange for [his severance package] and any
    other consideration in the omnibus agreement.
Licciardi v. Kropp Forge Div. Emps’ Ret. Plan, 990 F.2d 979,
982 (7th Cir. 1993). Thus, as the district court correctly
held, “a release cannot bar a plaintiff’s recovery of his
pension as it stood when he signed a release, but it can
bar claims that a plaintiff is entitled to additional
benefits based on purported ERISA violations, provided
that the plaintiff had actual or constructive notice
of the claims at the time that he executed the release.”
Hakim v. Accenture U.S. Pension Plan, 818 F. Supp. 2d.
1075, 1080 (N.D. Ill. 2011).
  Hakim did not “sell” or barter away his pension
benefits in exchange for his severance package because
he will still receive those entitled benefits he accrued
while working in an eligible service line at Accenture.
He is not suing to recover money that was in the retire-
ment account at the time he left his employer, which
the plaintiff in Lynn was doing. Instead, he wants the
court to rule that his retirement account would have
been worth more had Accenture not violated ERISA’s
notice provision by providing inadequate notice of the
16                                              No. 11-3438

1996 Amendment. This is similar to the relief the
plaintiff was seeking in Howell v. Motorola, Inc., 633 F.3d
552 (7th Cir. 2011). In Howell, we considered whether a
general release signed by one of the plaintiffs effectively
waived his claim for breach of fiduciary duty under
ERISA Section 502(a)(2), and held that it did. Id. at 558-
560. We determined that the plaintiff had a right to
his benefits and they could not be confiscated, but he
waived any right to bring a lawsuit claiming that
his account would have been worth more had the de-
fendants not breached a fiduciary duty. Id. Thus, as in
Howell, Hakim’s claim is a contested pension claim, and
ERISA’s anti-alienation provision does not apply to it.
   Now we must determine whether Hakim had actual
or constructive notice of the claim he now makes at
the time he signed the Release in 2003. The Release only
bars claims that existed prior to the date Hakim signed
it, and Hakim contends that his claim for benefits did
not accrue until Accenture denied his administrative
claim in April 2008. However, for purposes of Section
204(h) claims, courts have held that a claim accrues
when a plaintiff became aware or should have be-
come aware of a change in a plan that affected his
right to continue to participate in the plan. See Romero
v. Allstate Corp., 404 F.3d 212, 225 (3d Cir. 2005) (holding
that claims arising under Section 204(h) accrue when
a plaintiff “knew or should have known that the amend-
ment has brought about a clear repudiation of certain
rights that [the plaintiff] believe[s] [he] had under
the plan.”).
No. 11-3438                                            17

  Even if the email distributed on June 14, 1996, was
insufficient to apprise Hakim of the amendment to
the Plan (and we need not consider that question here),
the absolute latest he can reasonably claim to be
unaware of his changed status is when he received his
Statement of Individual Benefits in 2000. That document
clearly informed him that his promotion terminated
his participation in the Plan. Page 3 of the document
states: “Because of your current employment classifica-
tion, you are ineligible to participate in the Retirement
Plan.” This language is not highly technical, nor is it
buried deep in a document. It occurs on the third page
of a document that described Hakim’s compensation
package, and it lays out in plain language that Hakim
was no longer eligible to participate in the Plan due to
his new position. It is difficult to imagine a more
effective means of providing notice that an employee is
no longer eligible to participate in Accenture’s retire-
ment plan. While Hakim continues to claim he had
no knowledge that his promotion left him ineligible to
continue participating in the Plan, the benefits state-
ment makes it clear that, at the very least, he should
have known about his claim well before he signed
the Release in 2003. This more than satisfies Romero’s
constructive notice requirement. See id. at 225.
  Having decided that Hakim had, at the least, construc-
tive notice of his claim, the last question we must
consider is whether Hakim’s Release of claims against
Accenture was valid.
   For a release to be valid, the party must sign it know-
   ingly and voluntarily. A court must examine the
18                                              No. 11-3438

     totality of the circumstances surrounding the signa-
     ture, including such matters as: (1) the employee’s
     education and business experience; (2) the em-
     ployee’s input in negotiating the terms of the settle-
     ment; (3) the clarity of the agreement; (4) the amount
     of time the employee had for deliberation before
     signing the release; (5) whether the employee
     actually read the release and considered its terms
     before signing it; (6) whether the employee was repre-
     sented by counsel or consulted with an attorney;
     (7) whether the consideration given in exchange for
     the waiver exceeded the benefits to which the em-
     ployee was already entitled by contract or law; and
     (8) whether the employee’s release was induced
     by improper conduct on the defendant’s part.
Howell, 633 F.3d at 559 (citing Pierce v. Atchison, Topeka, &
Santa Fe Ry. Co., 65 F.3d 562, 571 (7th Cir. 1995)).
  Hakim admitted that he read the Release in full and
signed it knowingly and voluntarily. Given Hakim’s
education level and considerable professional achieve-
ments, we cannot say that he lacked the sophistication
to understand what he was reading and giving up in
exchange for his severance package. The Release was
not overly technical, nor was it excessively lengthy—it
clocked in at seven pages and clearly laid out what
Hakim was giving up. While he did not consult with
an attorney, the Release advised him to do so and he
chose not to. And while he did not negotiate the terms
of the Release, there is no evidence that a rational
person could not have deemed the amount of that
No. 11-3438                                         19

payment adequate compensation for the rights he was
giving up. Like the plaintiff in Howell, Hakim fails to
put forth sufficient evidence “to create a genuine
issue of fact on the questions of knowledge and volun-
tariness,” and summary judgment in favor of Accenture
was appropriate. Id.

                   III. Conclusion
  For the reasons set forth above, the Release Hakim
signed in exchange for separation benefits is valid and
bars him from raising his Section 204(h) claim. The
district court’s order granting summary judgment in
favor of Accenture is A FFIRMED.

                        5-23-13