Van Gent v. Saint Louis Country Club et al
Filing
206
MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Defendants Motion For SummaryJudgment Docket No. 143 is granted as provided herein. Signed by Magistrate Judge Frederick R. Buckles on 11/27/2013. (RAK)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
HUBERT VAN GENT,
)
)
)
)
)
)
)
)
)
)
Plaintiff,
v.
SAINT LOUIS COUNTRY CLUB,
et al.,
Defendants.
Case No. 4:08CV959 FRB
MEMORANDUM AND ORDER
Presently before the Court is Defendants’ Motion For
Summary Judgment (Docket No. 143), filed by defendants St. Louis
Country Club (“SLCC” or “Club”), David Q. Wells, Stephen D. Lilly,
and
James
M.
Snowden.
All
matters
are
pending
before
the
undersigned United States Magistrate Judge, with consent of the
parties, pursuant to 28 U.S.C. § 636(c).
I.
Unless
undisputed.
Factual Background
otherwise
specified,
the
following
facts
are
Plaintiff Hubert Van Gent (“plaintiff”) began his
employment with SLCC in 1976 as a maitre’d.
In 1984, he was
elevated to the position of SLCC’s General Manager, a position he
held until he resigned in May of 2007.
During his tenure as General Manager of SLCC, plaintiff
was one of the highest paid employees of SLCC, and had the
authority to hire and fire all non-sports related employees of
SLCC. Plaintiff routinely made recommendations regarding salaries,
- 1 -
bonuses, and deferred contribution amounts for SLCC employees,
including himself.
Between 1984 and 2007, while plaintiff was
General Manager of SLCC, there were between 250 and 300 full and
part-time employees, and an average of 40-50 full-time employees.
A.
The Employment Agreement Plan
On July 1, 1984, following plaintiff’s elevation to
General Manager, he and SLCC entered into an Employment Agreement.
(Administrative Record (“A.R.”) 0001).1
Plaintiff negotiated with
SLCC for the inclusion of a deferred compensation plan as part of
that agreement, which the parties refer to as the “Employment
Agreement Plan.”2
The Employment Agreement Plan required the Club
to credit a portion of plaintiff’s salary to a bookkeeping reserve.
(A.R. 0002).
Plaintiff negotiated with SLCC for the ability to
suggest investments for the Employment Agreement Plan because he
felt it was his money.
The parties agree that plaintiff requested
that his account be managed by defendant William Simpson, a broker,
but plaintiff claims that Simpson mismanaged his account since its
inception.
statements.
For
twenty
years,
plaintiff
received
account
Plaintiff alleges that the Employment Agreement does
not provide that SLCC is required to follow plaintiff’s investment
1
The Administrative Record, spanning more than 2,500 pages,
has been filed by defendants under seal. (Docket Nos. 101-128).
2
A deferred compensation plan “is an agreement by the
employer to pay compensation to employees at a future date. The
main purpose of the plan is to defer the payment of taxes.” In re
IT Group, Inc., 448 F.3d 661, 664 (3rd Cir. 2006) (quoting David
J. Cartano, Taxation of Compensation & Benefits § 20.01, at 709
(2004)).
- 2 -
suggestions, and that he in fact suggested very few investments
over the years.
The Employment Agreement contained numerous provisions
regarding the Employment Agreement Plan. These included the manner
in which the Club was to credit and debit plaintiff’s account,
plaintiff’s right to designate a beneficiary or beneficiaries, the
timing and manner in which the funds would be distributed to
plaintiff
or
to
his
beneficiary
or
beneficiaries
following
plaintiff’s termination of service, plaintiff’s right to suggest
investments for his account, a provision that the Club had no duty
to fund its obligations under the agreement, the assets from which
payments would be made under the agreement, and the statement that
a person’s rights to receive payments from the Club under the
Employment Agreement Plan shall be no greater than the rights of an
unsecured creditor of the Club.
(A.R. 0002-0005).
The parties dispute whether they intended for a fiduciary
relationship to be created as a result of the Employment Agreement
Plan.
While defendants contend that the Employment Agreement
specifically provided that no fiduciary relationship was created,
plaintiff denies that he lacked intent for a fiduciary relationship
to be created.
The parties also dispute whether the Employment
Agreement Plan is a “top hat” plan under the Employee Retirement
Income
Security
Act,
29
U.S.C.
3
§
1001
et
seq.
(“ERISA”).3
As will be discussed in detail, infra, a top hat plan is a
plan that is unfunded, used by employers to provide “deferred
compensation for a select group of management or highly
compensated employees,” and exempted from certain ERISA
- 3 -
Defendants claim that the Employment Agreement Plan is a top hat
plan, while plaintiff contends that it is not.
Plaintiff also
contends that the Employment Agreement Plan is not an ERISA plan,
which defendants dispute.
B.
The Deferred Compensation Plan
On or about February 1, 1990, the Club executed the St.
Louis
Country
Club
Deferred
Compensation
Plan
(“Deferred
Compensation Plan”), which provided for retirement benefits, death
benefits, and hardship benefits for plaintiff and other Club
employee participants.
(A.R. 0006-0018).
The parties dispute
whether the Deferred Compensation Plan is a top hat plan under
ERISA, with defendants arguing in the affirmative and plaintiff
arguing
in
the
negative.
Defendants
contend
that
plaintiff
admitted during his deposition that the Deferred Compensation Plan
was a top hat plan, but plaintiff maintains that, while he did so
state during his deposition, his testimony is not dispositive of
the issue.
On
August
23,
2007,
the
Club
filed
a
Top-Hat
Plan
Registration Statement with the United States Department of Labor
for
both
the
Deferred
Compensation
Plan
and
the
Employment
Agreement Plan, stating that both were plans “maintained for a
select group of management or highly compensated employees.” (A.R.
67-68).
requirements that are relevant to plaintiff’s claims in the case
at bar. 29 U.S.C. §§ 1051(2), 1081(a)(3), 1101(a); see also
Emenegger v. Bull Moose Tube Co., 197 F.3d 929, 932 n. 6 (8th
Cir. 1999)(internal citations omitted).
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The parties agree that the Employment Agreement Plan
specifically provided that:
as a condition to the receipt of benefits
hereunder, each participant, upon severance of
employment with the Club, shall execute an
agreement
with
the
Club
whereby,
in
consideration of the receipt of such benefits,
such Participant agrees not to become employed
with any private club within a one hundred
mile radius of the Club for a period of two
years following termination of employment with
the Club.
(A.R. 0015).
The parties agree that plaintiff never executed a noncompete agreement.
SLCC nevertheless attempted to distribute
benefits to plaintiff.
Plaintiff admits this, but disputes the
source of the funds, alleging that the funds from the Employment
Agreement
Plan
and
the
Deferred
Compensation
Plan
have
been
commingled in different accounts to the extent that it is now
unclear what funds belong in what accounts.
The parties also
dispute whether the money distributed to plaintiff represented all
he
would
have
been
entitled
to
had
he
signed
a
non-compete
agreement, with plaintiff maintaining that the Employment Agreement
Plan was mismanaged.
The parties dispute whether failure to
execute a non-compete agreement amounts to forfeiture of benefits
under the Deferred Compensation Plan.
affirmative,
benefits
while
because
plaintiff
he
abided
claims
by
the
agreement.
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Defendants claim in the
that
terms
he
of
did
the
not
forfeit
non-compete
C.
The Accounts
Shortly after the Employment Agreement was created, SLCC
opened, at plaintiff’s request, an account with A.G. Edwards &
Sons, Inc. (although later known as Wachovia Securities, LLC and
now known as Wells Fargo Advisors, LLC, the parties refer to the
account that was created as the “A.G. Edwards Account”).
time,
plaintiff
understood
that
Employment
At that
Agreement
Plan
contributions would be deposited and maintained therein and managed
by defendant William Simpson, a broker.
The parties dispute the
extent to which plaintiff was permitted to suggest investments,
with defendants claiming that plaintiff did so regularly and
plaintiff claiming that he did so rarely. Plaintiff maintains that
Simpson mismanaged the investments in the A.G. Edwards account from
its inception.
Plaintiff does not dispute that he was regularly
provided with account statements.
The parties dispute whether the
A.G. Edwards account qualified as the Employment Agreement Plan’s
“bookkeeping reserve.” While the parties agree that SLCC’s audited
financial statements did not reflect the money related to the
Employment
Agreement
Plan
until
the
1999
audited
financial
statements were prepared, they dispute the time at which plaintiff
became aware of this.
SLCC also opened an account at Bank of America to hold
plaintiff’s contributions to the Deferred Compensation Plan.
In
2005, with plaintiff’s knowledge, SLCC transferred the A.G. Edwards
account and several others to Fidelity Investments.
Plaintiff
alleges that the Bank of America account was also transferred to
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Fidelity.
Plaintiff alleges that the A.G. Edwards account and
funds from other accounts were transferred into Fidelity Account
601, thereby consolidating the Deferred Compensation Plan funds
with the Employment Agreement Plan funds.
Plaintiff also alleges
that SLCC subsequently opened Fidelity Account 827 and transferred
to it part of the Employment Agreement Plan funds and other funds.
The parties cannot agree which Fidelity Investment accounts hold
the funds for which plan.
Defendants use two names to refer to the
account which they maintain holds the entirety of the Employment
Agreement Plan funds: the Fidelity EAP Account and Fidelity Account
Z71-68XXX.
Defendants maintain that all plaintiff is entitled to
under the Deferred Compensation Plan is the amount SLCC attempted
to distribute in May of 2009, but plaintiff alleges that defendants
failed to keep the Employment Agreement Plan funds separate from
the
Deferred
Compensation
Plan
funds,
and
instead
wrongfully
commingled them. Plaintiff also alleges that the value of the
accounts should be higher, appearing to challenge the investment
strategy used.
The parties agree that plaintiff informed SLCC’s human
resource director that there were problems with the Employment
Agreement account and that, in January of 2005, SLCC’s President
initiated an investigation of the Employment Agreement account.
The parties dispute what amounts should have been credited to a
bookkeeping reserve, and dispute the nature of two withdrawals, one
in the amount of $28,678.68 in May of 2009 and another in the
amount of $14,024.27 in May of 2010: plaintiff suggests impropriety
- 7 -
while defendants claim the withdrawals were to pay taxes on the
attempted distributions, citing to pages in the administrative
record that show pay stubs from the attempted distributions SLCC
made to plaintiff reflecting taxes paid totaling those amounts.
Plaintiff alleges, and defendants admit, that as of August of 2011
the value of Fidelity Account 827 was $383,889.50.
D.
Plaintiff’s Resignation
The parties dispute the manner in which plaintiff’s
employment at SLCC ended.
While defendants contend that plaintiff
resigned voluntarily, plaintiff contends that his resignation was
due to several factors connected to the plans at issue in this
lawsuit,
and
characterizes
his
departure
from
SLCC
as
a
“constructive discharge.” In support, plaintiff contends that SLCC
failed
to
investigate
Mr.
Simpson’s
plaintiff’s Employment Agreement Plan.
“clear
mishandling”
of
Plaintiff contends that he
repeatedly inquired regarding the Employment Agreement Plan, and
eventually stated that he did not want to work for people who were
stealing from him.
Plaintiff contends that, during a finance
committee meeting in February of 2007, he was asked about tendering
his resignation.
Plaintiff admits that his resignation letter
fails
any
to
mention
intolerable
work
circumstances causing his resignation.
conditions
or
adverse
Plaintiff admits that the
only relevant conversation he had with a member of SLCC’s Board of
Governors was with Fred Hanser who invited plaintiff to continue to
work at SLCC, but plaintiff claims the invitation was not genuine.
Plaintiff admits that SLCC advised him that benefits would commence
- 8 -
within 60 days of his resignation, provided that he execute a noncompete agreement, and that he did not execute such an agreement.
Defendants assert that plaintiff admitted during his deposition
that he resigned because he wished to file a lawsuit, and he was
concerned that the statute of limitations would soon expire.
E.
SLCC’s Attempted Distributions
SLCC contends that, in May of 2009, after the expiration
of the two-year non-compete period, it attempted to distribute
benefits
in
the
amount
of
$31,714.90
under
the
Deferred
Compensation Plan. Plaintiff disputes that these funds constituted
benefits from his Deferred Compensation Plan because the funds from
the two plans had been commingled since 2005. Plaintiff does admit
that the timing of SLCC’s attempted distribution in May of 2009 was
proper.
While
SLCC
makes
several
allegations
regarding
the
balances of the Fidelity Accounts representing the Employment
Agreement Plan funds and the Deferred Compensation Plan funds,
plaintiff contends that, because the funds are commingled, neither
Fidelity Account can properly be referenced as an Employment
Agreement Plan account or a Deferred Compensation Plan account.
Plaintiff disputes that the amounts distributed to him represented
all benefits he would have been due had he signed the non-compete
agreement.
Plaintiff has returned all attempted distributions.
Plaintiff paid no income tax on his contributions to the Employment
Agreement Plan in the years the contributions were made.
The parties dispute plaintiff’s level of knowledge about
- 9 -
deferred compensation and the funding of ERISA top hat plans at the
time he entered into the Employment Agreement.
that
he
stated,
during
his
deposition,
Plaintiff admits
that
the
Deferred
Compensation Plan was a top hat plan under ERISA, but denies that
he was qualified to draw a legal conclusion to that effect.
II.
Procedural History
Plaintiff filed his original complaint on July 1, 2008,
alleging various claims arising under ERISA and state law.
Before
responsive pleadings were filed, plaintiff filed a First Amended
Complaint on October 6, 2008, again alleging claims pursuant to
ERISA and state law. Upon the motion of defendants, several counts
of plaintiff’s First Amended Complaint were dismissed on various
grounds, including ERISA preemption.
In addition, a motion to
compel arbitration, filed by former party-defendants A.G. Edwards
& Sons, Inc., Wachovia Securities, L.L.C., and William Simpson,
Jr., was granted.
On December 2, 2010, plaintiff sought and was given leave
to
file
a
Second
Amended
Complaint.
On
December
22,
plaintiff filed a nine-count Second Amended Complaint.
through VIII alleged claims pursuant to ERISA.
2010,
Counts I
Count IX alleged
civil conspiracy against eight individual defendants.
These eight
individual defendants were named only in Count IX.
On April 4, 2011, the eight individual defendants filed
a motion to dismiss Count IX, arguing that the civil conspiracy
cause of action plaintiff asserted therein was preempted by ERISA.
In his responsive pleading, plaintiff stated that he intended to
- 10 -
withdraw Count IX, and stated that he also intended to seek leave
of court to file a third amended complaint.
When ordered by this
Court to respond to the substantive arguments presented by the
individual
defendants
in
their
motion
to
dismiss
Count
IX,
plaintiff, on October 12, 2011, filed a response stating that,
while he intended to withdraw Count IX, the claims therein were not
preempted by ERISA because they were only tangentially related to
the administration of the Plans at issue, and because the actions
detailed in Count IX caused harm separate from the claims alleged
in the Second Amended Complaint’s ERISA counts.
At no time did
plaintiff argue that the Employment Agreement Plan was not governed
by ERISA.
In fact, throughout this litigation, plaintiff has
proceeded under the theory that the Employment Agreement Plan and
the Deferred Compensation Plan were governed by ERISA.
Based upon
the submissions and representations of the parties, this Court
granted the individual defendants’ motion to dismiss Count IX on
October 12, 2011.
In
January
of
2012,
plaintiff
filed
a
motion
for
permission to obtain discovery which, following stipulation between
the parties, was granted as to the following issues: whether the
plans
were
top
hat
plans
under
ERISA,
the
manner
in
which
plaintiff’s employment relation with SLCC ended, and the transfer
of funds between and among certain accounts related to the two
plans at issue.
On May 4, 2012, the defendants filed motions for summary
judgment. When counsel of record for plaintiff at that time failed
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to timely respond, this Court entered an order giving counsel until
July 23, 2012 to do so.
On that date, plaintiff, proceeding pro
se, filed a motion for an extension of time due to counsel’s
negligence.
A
hearing
was
subsequently
held,
during
which
plaintiff’s counsel indicated his intent to file responses to the
motions for summary judgment, and this Court entered an order
granting counsel until August 10, 2012, to do so.
On that date,
counsel filed a memorandum, stating that illness prevented him from
complying
with
the
Court’s
order,
and
stating
his
intent
to
withdraw as counsel for plaintiff. This Court entered an order
granting plaintiff until September 14, 2012, to respond to the
motions for summary judgment either pro se or through new counsel.
The
following
day,
present
counsel
entered
an
appearance
on
plaintiff’s behalf, and thereafter filed responses to the motions
for summary judgment.
In the Second Amended Complaint, plaintiff alleges that
“[t]he deferred compensation portion of the Employment Agreement is
an ‘employee pension benefit plan’ or ‘pension plan’ as defined
pursuant to ERISA Section 3(2)(A)(i) and (ii)” or § 1002(2).
(Docket No. 61 at 20).
Plaintiff also alleges that he lacked
“knowledge and expertise in the structure and characteristics of
employee
benefit
bargaining power.”
Plan
plans,”
and
(Id. at 21).
Administrator,
failed
administrative procedures.
that
the
parties
had
“unequal
Plaintiff alleges that SLCC, as
to
follow
various
required
(Id. at 21-24).
In the Second Amended Complaint, plaintiff alleges that
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SLCC established an investment account at A.G. Edwards in 1984 for
the purpose of funding the Employment Agreement Plan.
Plaintiff
alleges that this account was liquidated in September of 2005 and
transferred to a Fidelity Investments account representing the
Deferred Compensation Plan’s Trust account, account number Z83296503.
Plaintiff alleges that, in late 2005 and early 2006, SLCC
consolidated all of plaintiff’s deferred compensation accounts into
a single Fidelity Investments account, account number Z83-976601
(“Fidelity account 601”).
Plaintiff alleges that in May of 2007,
SLCC separated Fidelity account 601 into two separate Fidelity
accounts: Fidelity Account 601 and a second Fidelity Account
bearing account number Z71-68827 (“Fidelity Account 827”).
Plaintiff alleges that Fidelity Account 601 represented
the
Employment
Agreement
Plan,
while
Fidelity
Account
827
represented the Deferred Compensation Plan. Plaintiff alleges that
SLCC,
by
and
through
its
directors
and
officers,
wrongfully
transferred funds between and among Fidelity Accounts 601 and 827
such that funds were commingled, and Fidelity Account 601’s value
dropped significantly while Fidelity Account 827’s value increased
significantly.
Plaintiff alleges that, in May of 2009, SLCC, by
and through its directors and officers, removed $30,000.00 from
Fidelity Account 827 and closed Fidelity account 601, leaving
approximately $60,000.00 unaccounted for.
Plaintiff also alleges
that, in April of 2010, SLCC, by and through its directors and
officers, removed approximately $14,000.00 from Fidelity Account
827.
The parties dispute which Fidelity Account represents the
- 13 -
funds for which plan.
In Counts I and II of the Second Amended Complaint,
plaintiff seeks benefits under the Deferred Compensation Plan and
the Employment Agreement Plan, respectively, pursuant to 29 U.S.C.
§ 1132(a)(1)(B).
In Counts III through VI, plaintiff proceeds
under
enforcement
the
civil
section
of
ERISA,
29
U.S.C.
§
1132(a)(2), which allows a participant to bring a civil action for
relief under 29 U.S.C. § 1109 for breach of fiduciary duty.
In Count VII, citing 29 U.S.C. § 1140, plaintiff alleges
that SLCC, Snowden, Lilly and Wells interfered with his protected
rights
under
defendants
assertion
ERISA.
In
discriminated
of
his
Agreement Plan.
ERISA
support,
against
rights
plaintiff
him
in
alleges
that
retaliation
pertaining
to
the
the
for
his
Employment
Plaintiff alleges that this discrimination took
the form of constructive discharge from his position at SLCC, and
defendants’ failure and refusal to: (1) release certain benefits;
(2) provide plaintiff with requested documents and availability of
people with information useful to plaintiff; and (3) make timely
benefit payments under both plans.
In Count VIII plaintiff,
proceeding against SLCC, alleges that SLCC, the Plan Administrator,
failed to provide information under 29 U.S.C. § 1024.
Plaintiff
alleges that SLCC did not provide him with copies of the Summary
Plan Description or other documents related to the Employment
Agreement Plan or the Deferred Compensation Plan.
III.
Discussion
Pursuant to Fed. R. Civ. P. 56(c), a court may grant
- 14 -
summary judgment if the information before it shows that there are
no material issues of fact in dispute, and that the moving party is
entitled to judgment as a matter of law.
Lobby, Inc., 477 U.S. 242, 247 (1986).
Anderson v. Liberty
The moving party bears the
burden of proof to set forth the basis of its motion, Celotex Corp.
v. Catrett, 477 U.S. 317, 323 (1986), and the court must view all
facts and inferences in the light most favorable to the non-moving
party, Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574,
587 (1986).
Once the moving party shows there are no material issues
of fact in dispute, the burden shifts to the adverse party to set
forth facts showing there is a genuine issue for trial.
Id.
The
non-moving party may not rest upon his pleadings, but must come
forward with affidavits or other admissible evidence to rebut the
motion.
Celotex, 477 U.S. at 324.
Summary judgment is a harsh
remedy and should not be granted unless the movant “has established
[its] right to judgment with such clarity as to leave no room for
controversy.”
New England Mutual Life Ins. Co. v. Null, 554 F.2d
896, 901 (8th Cir. 1977).
29 U.S.C. § 1132(a)(2) permits a participant to bring a
civil action for appropriate relief under 29 U.S.C. § 1109.
undisputed that plaintiff is a participant.
moreover,
that
suit
under
§
1132(a)(2)
It is
“It is well settled,
is
‘brought
in
a
representative capacity on behalf of the plan as a whole’ and that
remedies under § 1109 ‘protect the entire plan.’
Braden v. Wal-
Mart Stores, Inc., 588 F.3d 585, 593 (8th Cir. 2009) (quoting Mass.
- 15 -
Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 142 & n. 9 (1985);
LaRue v. DeWolff, Boberg & Assocs., 552 U.S. 248, 256 (2008) (§
1132(a)(2) “does not provide a remedy for individual injuries
distinct from plan injuries.”)).
In the instant motion, defendants argue that they are
entitled to judgment as a matter of law on plaintiff’s claim in
Count I because plaintiff forfeited his right to receive benefits
from the Deferred Compensation Plan when he failed to execute a
non-compete agreement.
Regarding Count II, defendants ask that
judgment be entered directing SLCC to pay benefits to plaintiff
equal to the contents of Fidelity Account No. Z71-68XXXX4 less
applicable withholdings on the date of judgment.
Regarding Counts III through VI, defendants argue that
they are entitled to judgment in their favor as a matter of law
because
both
the
Employment
Agreement
Plan
and
the
Deferred
Compensation Plan were top hat plans under ERISA, and are therefore
exempted from the ERISA fiduciary provisions upon which plaintiff’s
claims rest.
Regarding Count VII, defendants argue that they are
entitled
judgment
to
as
a
matter
of
law
because
voluntarily resigned his employment with SLCC.
plaintiff
Regarding Count
VIII, defendants argue that they are entitled to judgment as a
matter of law because SLCC satisfied the reporting requirements for
top hat plans.
In response, plaintiff claims that neither plan is
a top hat plan.
4
Defendants state that they are excluding the last four
digits of this account number for privacy reasons.
- 16 -
A.
Top Hat Plans
Defendants claim that both the Employment Agreement Plan
and the Deferred Compensation Plan are top hat plans under ERISA.
Defendants argue that, because plaintiff’s claims in Counts III
through VI and Count VIII arise under substantive ERISA provisions
from which top hat plans are exempted, defendants are entitled to
judgment as a matter of law on those claims. In response, plaintiff
argues that neither plan is a top hat plan.
A top hat plan is a plan that is unfunded, and used by
employers to provide “deferred compensation for a select group of
management or highly compensated employees.”
29 U.S.C. §§ 1051;
see also Emenegger v. Bull Moose Tube Co., 197 F.3d 929, 932 n. 6
(8th Cir. 1999).
“Top hat plans are almost completely exempt from
‘ERISA’s substantive requirements.’”
Simpson v. Mead Corp., 187
Fed.Appx. 481, 483-84 (6th Cir. 2006) (quoting Senior Executive
Benefit Plan Participants v. New Valley Corp. (In re New Valley
Corp.), 89 F.3d 143, 148 (3rd Cir. 1996)); see also Emenegger, 197
F.3d at 932 n. 6 (citing 29 U.S.C. §§ 1051(2) (participation and
vesting),
1081(a)(3)
responsibility)).
(funding),
1101(a)
(fiduciary
This is so because Congress recognized that
“certain individuals, by virtue of their position or compensation
level, have the ability to affect or substantially influence,
through negotiation or otherwise, the design and operation of their
deferred compensation plan, taking into consideration any risks
attendant thereto, and therefore, would not need the substantive
rights and protection of Title 1.” DEPARTMENT
- 17 -
OF
LABOR, OFFICE
OF
PENSION
AND
WELFARE BENEFIT PROGRAMS, OPINION 90-14A, 1990 WL 123933 at *1 (May
8, 1990).
More specific to the case at bar, under 29 U.S.C. §
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,
transactions and investments.’”
and
limitations
on
Simpson, 187 Fed.Appx. at 484
(quoting In re New Valley Corp., 89 F.3d at 148).
When Congress
exempts a plan from ERISA’s fiduciary duty requirements, as it did
with top hat plans, plaintiffs may not use state law to put back in
what Congress has taken out.
54.
See Pilot Life Ins. Co., 481 U.S. at
Even if the facts of a given case make “an ERISA action
[unavailable] against particular defendants, the relief provided by
Smith v. Provident Bank, 170
ERISA is the only relief available.”
F.3d 609, 615 (6th Cir. 1999).
Regarding
requirements,
ERISA’s
while
top
part
hat
1
plans
reporting
are
not
and
disclosure
exempted,
ERISA
authorizes the Secretary of Labor to promulgate alternative methods
for
satisfying
these
requirements.
29
U.S.C.
§
1030.
The
Secretary’s regulations provide that a top hat plan will not be
subject to ERISA’s reporting and disclosure requirements if the
employer files a statement with the Secretary of Labor describing
the plan as a top hat plan.
29 C.F.R. § 2520.104-23(b); see also
Miller v. Pharmacia Corporation, 2005 WL 1661500 at *4 (E.D. Mo.
2005).
- 18 -
1.
ERISA Plan Status
In order for a plan to be considered a top hat plan, it
must be an ERISA plan in the first instance.
at 932 n. 6.
Emenegger, 197 F.3d
In the case at bar, the parties do not dispute, and
the undisputed facts establish, that the Deferred Compensation Plan
is an employee pension benefit plan under ERISA, 29 U.S.C. § §
1002(2)(A).
The parties do, however, dispute whether the Employment
Agreement Plan is an ERISA plan.
Plaintiff would have this Court
resolve that question in the negative based upon Dakota, Minnesota
& Eastern R.R. Corp. v. Schieffer, 648 F.3d 935 (8th Cir. 2010), in
which the Eighth Circuit decided that a one-person employment
contract providing for severance benefits was not an “employee
welfare benefit plan” under ERISA, 29 U.S.C. § 1002(1).
Plaintiff
raised this same argument in a previously-filed motion for leave to
file a third amended complaint.
As this Court explained in detail
in its Memorandum and Order denying such relief, Schieffer is
inapplicable to the case at bar.
In Schieffer, the Court analyzed only a contract offering
a severance benefit under the definition of an “employee welfare
benefit plan,” 29 U.S.C. § 1002(1).
The Court expressly limited
its holding to employee welfare benefit plans offering severance
benefits.
Schieffer is inapplicable to the case at bar, which
involves disputes over two employee pension benefit plans offering
pension benefits.
offering
severance
Courts analyze employee welfare benefit plans
benefits
differently
- 19 -
than
employee
pension
benefit plans offering pension benefits.
See Fort Halifax Packing
Co. v. Coyne, 482 U.S. 1, 7 n. 5 (1987) (addressing the uncertainty
of the ERISA status of such plans given the lack of an ongoing
administrative scheme, and explaining how severance benefits come
within the definition of an employee welfare benefit plan).
Other
courts have rejected the argument that case law involving employee
welfare benefit plans offering benefits applies equally to cases
involving employee pension benefit plans offering pension benefits.
See Robbins v. Friedman Agency, Inc., 760 F. Supp. 2d 564, 567
(E.D. Va. 2010) (rejecting the argument that Fort Halifax should be
applied to decide that the single-participant deferred compensation
portion of an employment agreement was not an ERISA pension benefit
plan, noting that Fort Halifax was “inapposite here, where there is
no dispute over severance benefits.”)
Plaintiff’s argument, based
upon Schieffer, that the Employment Agreement Plan was not an
employee pension benefit plan under ERISA is not well taken.
The
Employment Agreement Plan is an employee pension benefit plan under
ERISA.
Having determined that both the Deferred Compensation
Plan and the Employment Agreement Plan are ERISA plans as defined
in 29 U.S.C. § 1002(1)(A), the undersigned addresses the issue of
whether they are top hat plans as defined by ERISA.
(a).
Select Group of Management or Highly Compensated
Employees
Considering the second requirement first, there can be no
doubt, for purposes of both the Employment Agreement Plan and the
- 20 -
Deferred Compensation Plan, that both plans were used by SLCC to
provide deferred compensation to a select group of management or a
highly compensated employees.
While ERISA provides no bright line
test for determining whether a participant qualifies as a member of
a “select group of management or highly compensated employees,”
courts
examining
this
issue
have
considered
qualitative
and
quantitative factors such as the percentage of the workforce
participating in the plan, the participant’s job duties, and
sometimes whether the participant had bargaining power over the
plan’s terms. See Alexander v. Brigham and Women’s Physician Org.,
Inc., 513 F.3d 37, 43-47 (1st Cir. 2008).
The evidence of record establishes, and the parties do
not dispute, that “[t]he Deferred Compensation Plan was offered to
a limited number of highly compensated employees.” (Docket No. 194
at 3, ¶ 7); see also (Docket No. 186, Attachment 1) (Declaration Of
Maxine
Munzert
Judgment).
In
Support
Of
Defendants’
Motion
For
Summary
The parties do not dispute that, during the relevant
time period, SLCC employed between 250 and 300 full and part-time
employees, and an average of 40-50 full time employees.
The
parties do not dispute that no more than six SLCC employees
participated in the Deferred Compensation Plan in any one year, a
very small percentage of SLCC’s workforce.
dispute
that
the
employees
who
The parties do not
participated
in
the
Deferred
Compensation Plan held key positions in SLCC management, including
the Clubhouse Manager, the Golf Course (Greens) Superintendent, the
Maintenance
Superintendent,
the
- 21 -
Controller/Comptroller,
the
Executive Chef, the Locker Room Manager, and plaintiff himself, the
General Manager.
The undersigned therefore concludes that the
Deferred Compensation Plan meets the second requirement necessary
for classification as a top hat plan under ERISA.
See Alexander,
513 F.3d at 43-47 (to determine whether a plan meets the second
requirement,
courts
examine
the
percent
of
the
workforce
participating in the plan, the participant’s job duties, and
whether the plan participant possessed bargaining power over the
plan terms).
Applying those same standards to the Employment Agreement
Plan, the undersigned concludes that it too meets the second
requirement.
Regarding quantitative factors, while other highly
compensated members of SLCC management were offered employment
contracts
with
deferred
compensation
provisions
that
were
substantially similar to plaintiff’s, the parties do not dispute
that plaintiff was the only participant in the Employment Agreement
Plan.
It therefore cannot be said that the Employment Agreement
Plan was not offered only to a select group. Regarding qualitative
factors, the parties do not dispute that plaintiff, as General
Manager, was the highest ranking employee of SLCC and as such, was
able to make recommendations regarding the various compensation
provided to other employees, employee programs, and operational
guidelines, and had the authority to hire and fire non sportsrelated employees.
The fact that plaintiff’s duties evolved such
that they were greater at the end of his long tenure as General
Manager
than
they
were
at
the
beginning
- 22 -
do
not
change
the
conclusion that plaintiff’s job duties were commensurate with a
high-ranking management employee.
The parties also agree that
plaintiff was one of the highest paid employees at SLCC.
Finally,
plaintiff undisputedly possessed bargaining power over the terms of
the Employment Agreement Plan.
As plaintiff alleges in his Second
Amended Complaint, he negotiated with SLCC for inclusion of a
deferred
compensation
agreement
in
his
Employment
Agreement,
selected the size of his contributions, sought to modify the
agreement concerning the payment of taxes, and had the ability to
suggest investments. While plaintiff contends that he did not have
such
power
when
he
first
became
General
Manager,
and
while
plaintiff attempts to portray himself as unsophisticated regarding
deferred compensation in general, the parties do not dispute that
plaintiff negotiated the amount of compensation he would defer, his
ability to suggest investments, and the tax status of the amounts
he deferred. This shows that plaintiff possessed bargaining power.
Based upon the foregoing, the undersigned determines that the
Employment
Agreement
Plan
meets
the
second
classification as a top hat plan under ERISA.
requirement
for
See Alexander, 513
F.3d at 43-47 (to determine whether a plan meets the second
requirement,
courts
examine
the
percent
of
the
workforce
participating in the plan, the participant’s job duties, and
whether the plan participant possessed bargaining power over the
plan terms).
(b). Unfunded
In order to be properly classified as a top hat plan
- 23 -
under ERISA, a plan must be unfunded.
29 U.S.C. §§ 1051(2).
ERISA
does not define what makes a plan unfunded for the purpose of
determining whether it qualifies as a top hat plan, but case law
provides guidance.
The Eighth Circuit’s seminal decision in
Dependahl v. Falstaff Brewing Corp., 653 F.2d 1208 (8th Cir. 1981)
is particularly instructive.
In
Dependahl,
the
Falstaff
Brewing
Corporation
instituted, in the form of a whole life insurance plan, a death
benefits plan for approximately a dozen of its higher-ranking
executives.
Id. at 1213-14.
The plan was specifically a death
benefits plan, and the death of a covered executive triggered both
the
insurance
company’s
obligation to pay.
Id.
obligation
to
pay,
and
the
plan’s
The plan provided that the covered
executive’s beneficiaries would receive annuity income benefits,
and Falstaff would recover the annual premiums it had previously
paid, with interest.
Id.
The district court concluded that the plan was funded.
Dependahl v. Falstaff Brewing Corp., 491 F.Supp. 1188, 1195 (E.D.
Mo. 1980)(aff’d in relevant part, 653 F.2d 1208). In reaching that
conclusion, the district court reasoned that a plan would be
considered funded if benefits were to be paid through a specific
insurance policy, as it was in that case, and unfunded if benefits
were paid from the employer’s general assets.
Id.
On appeal, the
Eighth Circuit affirmed the district court, concluding that:
Funding implies the existence of a res
separate from the ordinary assets of the
corporation.
All
whole-life
insurance
- 24 -
policies which have a cash value with premiums
paid in part by corporate contributions to an
insurance firm are funded plans. The employee
may look to a res separate from the
corporation in the event the contingency
occurs which triggers the liability of the
plan.
Dependahl, 653 F.2d at 1214 (emphasis added).
In
analyzed
a
contrast
case
which
to
Dependahl,
also
the
involved
the
Eighth
Circuit
purchase
of
later
a
life
insurance policy in Belsky v. First Nat. Life Ins. Co., 818 F.2d
661 (8th Cir. 1987).
There, the employer instituted a salary
continuance agreement with the intent of providing retirement,
disability and death benefits to covered employees.
Id. at 663.
To cover the cost of providing the benefits, the employer bought a
life insurance policy that would accrue a cash surrender value that
the employer could use to pay benefits under the plan.
Id.
Unlike
Dependahl, the employer was the owner and beneficiary under the
policy, and the language of the plan did not directly tie the
policy to the plan.
only
for
benefits.
death
Id.
In addition, the Belsky plan provided not
benefits,
but
for
Belsky, 818 F.3d at 663.
retirement
and
disability
In concluding that the plan
was unfunded, the Eighth Circuit found these to be significant
factors, and also found it significant that the plan expressly
provided that:
the rights of the Executive or any beneficiary
of the Executive shall be solely those of an
unsecured creditor of the Bank. If the Bank
shall acquire an insurance policy or any other
asset in connection with the liabilities
assumed by it hereunder, then, except as
- 25 -
otherwise provided, such policy or other asset
shall not be deemed to be held under any trust
for the benefit of the Executive or his/her
beneficiary or to be collateral security for
the performance of the obligations of the
Bank, but shall be, and remain, a general
unpledged, unrestricted asset of the Bank.
Id. at 663.
A plan is “funded when benefits are paid
through a specific insurance policy and unfunded when they are paid
from the employer’s general assets.”
Id. (citing Dependahl, 491
F.Supp. at 1195, aff’d in relevant part, 653 F.2d 1208).
In
Northwestern Mutual Life Insurance Co. v. Resolution
Trust Corp., 848 F.Supp. 1515 (N.D. Ala. 1994), the employer
purchased life insurance policies to recoup its costs of paying
retirement benefits.
Addressing the issue of whether insurance
policies purchased by the employer in conjunction with a deferred
compensation plan resulted in the plan being classified as funded,
the Northwestern court wrote: “[t]he essential feature of a funded
plan is that its assets are segregated from the general assets of
the employer and are not available to general creditors if the
employer becomes insolvent.”
Id. at 1517.
Another factor of some relevance to this inquiry is
whether
the
participants
compensation amounts
paid
income
taxes
on
the
deferred
in the years they deferred the income.
A
“plan is more likely than not to be regarded as unfunded if the
beneficiaries under the plan do not incur tax liability during the
year that the contributions to the plan are made.”
Miller v.
Heller, 915 F.Supp. 651, 659 (S.D. N.Y. 1996)(analyzing Dependahl
- 26 -
and Belsky, et al., in addressing whether a plan was unfunded for
purposes of determining whether it qualified as a top hat plan
under ERISA).
Based upon Dependahl and Belsky, the Miller court
concluded that courts considering this issue must ask: “can the
beneficiary establish, through the plan documents, a legal right
any greater than that of an unsecured creditor to a specific set of
funds from which the employer is, under the terms of the plan,
obligated to pay the deferred compensation?”
(i).
Id. at 660.
The Employment Agreement Plan
Having examined the Employment Agreement Plan, and having
considered the arguments of the parties in light of the foregoing
guiding principles, the undersigned determines that the Employment
Agreement Plan is unfunded. As in Belsky, the Employment Agreement
did not provide plaintiff with any rights to a specific res that
was separate from SLCC’s general assets.
In fact, the Employment
Agreement specifically provided that plaintiff’s rights were no
greater than those of an unsecured creditor of SLCC, and that the
funds could be used to satisfy SLCC’s creditors, if necessary. The
Employment Agreement provides that SLCC:
shall be under no duty to fund its obligations
under this Agreement. All payments hereunder
shall be made from the general assets of the
Club. Any assets which may be acquired by the
Club in anticipation of its obligations
hereunder shall be part of the general funds
of the Club and no person other than the Club
shall, by virtue of any provisions of this
Agreement, have an interest in such assets.
To the extent that any person acquires a right
to receive payments from the Club under this
Agreement, such right shall be no greater than
the right of an unsecured general creditor of
- 27 -
the Club.
(A.R. 0003-0004).
The
undersigned
finds
this
language
particularly
significant in determining that the Employment Agreement Plan was
unfunded.
See Belsky, 818 F.2d at 663-64 (in determining that the
plan was unfunded, it was “particularly significant” that the plan
language provided that the rights of the executive would be “solely
those of an unsecured creditor.”)
In addition, plaintiff admits
that, when he signed the Employment Agreement, SLCC’s President and
Controller discussed with plaintiff the fact that his contributions
to the Employment Agreement Plan would be subject to claims of
SLCC’s general creditors. (Docket No. 164 at 7-8). The Employment
Agreement
further
provided
that
“[n]othing
contained
in
this
Agreement and no action taken pursuant to the provisions hereof
shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Club and Employee, or any other
person.”
(A.R. 0004).
Also of some significance is the fact that
plaintiff did not pay income taxes on his contributions to the
Employment Agreement Plan in the years the contributions were made.
A “plan is more likely than not to be regarded as unfunded if the
beneficiaries under the plan do not incur tax liability during the
year that the contributions to the plan are made.”
Miller, 915
F.Supp. at 659.
Plaintiff cannot establish a legal right any greater than
that of an unsecured creditor of SLCC to a specific set of funds
- 28 -
from which SLCC is, under the terms of the plan, obligated to pay
the deferred compensation.
Dependahl, 653 F.2d at 1214.
For the
foregoing reasons, the undersigned concludes that the Employment
Agreement Plan was unfunded.
(ii).
In
The Deferred Compensation Plan
support
of
their
argument
that
the
Deferred
Compensation Plan was a top hat plan, defendants contend that
plaintiff admitted as much during his deposition.
However, the
determination of whether the Deferred Compensation Plan was a top
hat plan is a question of law.
While plaintiff’s deposition
testimony is relevant to what plaintiff believed the Deferred
Compensation Plan to be, it is not dispositive of the legal issue
of whether the Deferred Compensation Plan was a top hat plan under
ERISA.
As
discussed
above,
the
Deferred
Compensation
Plan
satisfies the second requirement to be considered a top hat plan,
inasmuch as it was used by SLCC “primarily for the purpose of
providing deferred compensation for a select group of management or
highly compensated employees.”
29 U.S.C. § 1051(2).
This leaves
the issue of whether the Deferred Compensation Plan was funded or
unfunded.
Plaintiff contends that the Deferred Compensation Plan
was funded because SLCC created a separate trust to hold funds that
could be used to satisfy SLCC’s obligation. However, as defendants
contend in response, the fact that an employer maintains a trust in
connection with a deferred compensation plan (commonly called a
- 29 -
“rabbi trust”) will not undermine a plan’s unfunded status.
In re
IT Group, Inc., 448 F.3d 661, 670 n. 5 (3rd Cir. 2006) (citing
DEPARTMENT
OF
LABOR, PENSION & WELFARE BENEFIT PROGRAMS, Opinion Letter 91-
16A, 1991 ERISA LEXIS 16, at *6-7 (Apr. 5, 1991)).
In In re IT Group, Inc., the Third Circuit determined
that the plan at issue was unfunded even though the employer had
established
a
trust
in
participants’ benefit.
connection
with
the
448 F.3d at 669-70.
plan
for
the
In reaching this
conclusion, the Court noted that the documents associated with the
plan evidenced the employer’s obvious intent to create an unfunded
plan.
Id. at 669.
The Court also noted that a “Questions and
Answers” document circulated to potential participants along with
the plan document explained that the trust created in association
with the plan was a “Rabbi Trust” that “does not provide security
in
the
event
that
IT
Corporation
or
its
subsidiaries
become
insolvent or file for bankruptcy,” and the trust document stated
that the trust assets were subject to creditors’ claims in the
event of insolvency.
Id. at 669-70.
Finally, the Court noted that
the participants did not report their deferred amounts as income
for tax purposes.
In
the
Id. at 670.
case
at
bar,
SLCC
filed
a
Top-Hat
Plan
Registration Statement with the United States Department of Labor,
describing it as a top hat plan.
As plaintiff contends, SLCC’s
submission of the Registration Statement was untimely.
However,
the Registration Statement is evidence that SLCC intended for the
Deferred Compensation Plan to be a top hat plan.
- 30 -
Beyond SLCC’s
intent, examination of the factors set forth above fully support
the conclusion that the Deferred Compensation Plan was unfunded.
First, plaintiff does not identify, nor is it apparent that, there
exists a res separate from SLCC’s general assets to which he could
look to satisfy his claims.
See Dependahl, 653 F.2d at 1214
(funding implies a res separate from the employer’s general assets
to which participants can look to satisfy their claims).
Second, in his response to defendants’ statement of
material facts, plaintiff stated that SLCC sent him a letter
concerning the Deferred Compensation Plan, and attached a copy of
the letter as an exhibit to that document. (Docket No. 164,
Attachment 1).
In that letter, as in the “Questions and Answers”
document circulated to potential participants in In re IT Group,
Inc.,
SLCC
explains
the
nature
of
the
trust
established
in
connection with the Deferred Compensation Plan, and specifically:
Under Federal tax laws, however, the assets in
the trust must be available for creditors of
the Club in the event it should become
bankrupt or insolvent.
If the Plan did not
provide for this contingency, you would be
taxed each year on the amounts allocated to
your account. Under the current arrangement,
contributions and earnings allocated to your
account are not taxable; however, you, or your
beneficiary in the event of your death, will
be taxed on distributions when they are made
from the Plan.
(Docket No. 164, Attachment 1, page 1).
As was the case
in In re IT Group, Inc., this language provides further support for
the conclusion that the Deferred Compensation Plan was unfunded. In
re IT Group, Inc., 448 F.3d at 670 n. 5 (citing DEPARTMENT
- 31 -
OF
LABOR,
PENSION & WELFARE BENEFIT PROGRAMS, Opinion Letter 91-16A, 1991 ERISA
LEXIS 16, at *6-7 (Apr. 5, 1991)(a “rabbi trust” maintained in
connection with a deferred compensation plan will not undermine the
plan’s “unfunded” status).
Finally, plaintiff admits that he did
not report the money he deferred under the Deferred Compensation
Plan as income for tax purposes.
See Miller, 915 F.Supp. at 659 (a
“plan is more likely than not to be regarded as unfunded if the
beneficiaries under the plan do not incur tax liability during the
year that the contributions to the plan are made”).
Having determined that both the Employment Agreement Plan
and the Deferred Compensation Plan are top hat plans under ERISA,
the undersigned now addresses each count of plaintiff’s Second
Amended Complaint.
B.
Counts I and II: Claims For Benefits Under 29 U.S.C.
§ 1132 (a)(1)(B)
In Count I, plaintiff seeks to recover benefits due under
the Deferred Compensation Plan.
In Count II, plaintiff seeks to
recover benefits due under the Employment Agreement Plan.
SLCC is
the only defendant named in Counts I and II.
In both Counts I and II, plaintiff proceeds under 29
U.S.C.
§
1132(a)(1)(B),
which
authorizes
a
participant
or
beneficiary to bring a claim to recover benefits due under a plan.
A plaintiff making a claim under § 1132(a)(1)(B) bears the burden
of proving entitlement to plan benefits, see Farley v. Benefit
Trust Life Ins. Co., 979 F.2d 653, 658 (8th Cir. 1992), and his
recovery is limited to benefits due under the relevant plan.
- 32 -
29
U.S.C. § 1132(a)(1)(B), Kerr v. Charles F. Vatterott & Co., 184
F.3d 938, 943 (8th Cir. 1999).
In the case at bar, the parties do
not dispute that plaintiff is entitled to benefits under either
plan.
1.
Count I
Regarding Count I, SLCC first argues that it is entitled
to judgment as a matter of law because plaintiff forfeited his
right to benefits under the Deferred Compensation Plan when he
failed to execute a non-compete agreement.
In response, plaintiff
argues that the plan did not require him to execute a non-compete
agreement,
and
merely
required
him
to
refrain
from
becoming
employed with another club located within a certain distance of
SLCC for two years following the date of his resignation.
SLCC
alternatively argues that, even if plaintiff did not forfeit his
right to benefits under the Deferred Compensation Plan, SLCC is
entitled to judgment as a matter of law on Count I that the
benefits due plaintiff under the Deferred Compensation Plan total
$59,067.79, the amount of SLCC’s attempted distribution in May of
2009.
In support, SLCC argues that plaintiff admitted, during his
deposition, that: (1) $59,067.79 was the amount he was entitled to
receive under the Deferred Compensation Plan; and (2) the timing of
the May 2009 attempted distribution was proper.
In response,
plaintiff contends that funds from his two accounts were not kept
separate, and the funds SLCC attempted to distribute were the
“wrong” funds.
(Docket No. 163 at page 16).
- 33 -
The parties agree that plaintiff did not become employed
by another club located within a certain distance of SLCC during
the two years following his resignation from SLCC.
By its own
admission, SLCC attempted to distribute Deferred Compensation Plan
benefits to plaintiff on May 30, 2009, after the two-year noncompete period ended.
forfeited
his
Compensation
right
Plan
Therefore, SLCC’s argument that plaintiff
to
receive
because
he
benefits
failed
to
under
sign
the
the
Deferred
non-compete
agreement is not compelling.
However, SLCC’s alternative argument is well taken.
As
SLCC asserts, on April 16, 2012, plaintiff testified that he did
not dispute that the benefits he was entitled to receive from the
Deferred Compensation Plan totaled $59,067.79.
Attachment 2, page 207).
(Docket No. 145,
Plaintiff also agreed that the timing of
SLCC’s attempted distribution was appropriate.
(Id. at page 208).
In response to the instant motion, plaintiff does not refute this
testimony.
As stated above, 29 U.S.C. § 1132(a)(1)(B) limits a
plaintiff’s recovery to benefits due under the relevant plan.
Kerr, 184 F.3d at 943.
Here, plaintiff has admitted that the
benefits he is entitled to receive under the Deferred Compensation
Plan total $59,067.79.
Having considered the arguments of the
parties in light of the record, the undersigned concludes that SLCC
has established its right to judgment as a matter of law on Count
I
that
plaintiff
is
entitled
to
$59,067.79.
- 34 -
benefits
in
the
amount
of
2.
Count II
In Count II, plaintiff seeks to recover against SLCC for
benefits under the Employment Agreement Plan.
In support of the
instant motion, SLCC argues that it acted reasonably in determining
that the amount owed to plaintiff was the amount in the Fidelity
EAP account on the date that the distributions began, and that
plaintiff is entitled to receive the benefits from that account.
In response, plaintiff contends that SLCC should have been aware
that his Employment Agreement Plan account had been mishandled from
the outset, and that SLCC commingled funds from the Employment
Agreement Plan and the Deferred Compensation Plan and failed to
maintain a bookkeeping reserve.
Plaintiff strenuously asserts
that, by the terms of the Employment Agreement Plan, the balance of
the Fidelity EAP account is insufficient and he is entitled to a
“prudent investment amount.”
(Docket No. 192 at 7).
For the
following reasons, SLCC is entitled to judgment in its favor on
Count II.
The
parties
agree
that
benefits
determinations
of
administrators of top hat plans are reviewed under a de novo
standard.
Craig v. Pillsbury Non-Qualified Pension Plan, 458 F.3d
748, 752 (8th Cir. 2006). Observing that the policy considerations
relied upon in Firestone Tire & Rubber Co. v. Bruch were absent in
top hat plans, the Craig Court held that top hat plans should be
treated as unilateral contracts and reviewed in accordance with
ordinary contract principles.
Craig, 458 F.3d at 752.
The Craig
Court held a plan’s grant of discretion must be given effect as
- 35 -
ordinary contract principles would require, which meant that a
party
granted
discretion
must
exercise
it
in
good
faith,
“a
requirement that includes the duty to exercise the discretion
reasonably.”
concluded
Id. (internal citations omitted).
that,
ultimately,
a
reviewing
court
whether the plan’s decision was reasonable.
In
the
case
at
bar,
the
The Craig Court
must
determine
Id.
Employment
Agreement
Plan
required SLCC to credit a portion of plaintiff’s salary to a
bookkeeping reserve account, and provided that SLCC would invest
the
funds
at
its
discretion,
determine
how
investments
were
reflected, decide whether to fund its obligations under the plan,
and determine how to distribute benefits.
(A.R. 0001-0004).
The
Employment Agreement Plan further provided that SLCC would credit
the account with each item of gain and charge the account with each
item of loss. (A.R. 0002). Although the Employment Agreement Plan
did not
consistently use the term “discretion,” its language did
confer upon SLCC sole responsibility for the administration of the
Employment Agreement Plan.
The undersigned determines that the
plan indeed granted SLCC administrative discretion. See Kennedy v.
Georgia–Pacific Corp., 31 F.3d 606, 609 (8th Cir. 1994).
Thus, at
the summary judgment stage, the issue is whether a reasonable
factfinder5 could determine that SLCC’s actions were reasonable.
If the answer is yes, SLCC is entitled to summary judgment in its
5
ERISA confers no right to jury trial, so the Court would be
the factfinder in the event of trial. See Houghton v. SIPCO,
Inc., 38 F.3d 953, 957 (8th Cir. 1994).
- 36 -
favor on Count II.
The parties agree that SLCC opened an account at A.G.
Edwards at plaintiff’s request to hold the Employment Agreement
Plan funds, and that plaintiff requested that the account be
managed by broker William Simpson. Plaintiff does not dispute that
the monthly contributions were made.
plaintiff was routinely provided
The parties agree that
account statements.
The parties
agree that SLCC transferred the A.G. Edwards account to Fidelity
Investments in 2005.
The parties agree that SLCC subsequently
attempted to distribute those funds to plaintiff.
As SLCC argues,
there is no dispute that the Fidelity accounts contain all of the
assets to which plaintiff could be entitled.
Plaintiff contends that SLCC mishandled and wrongfully
commingled funds between the Fidelity accounts, and complains that
he
took
a
substantial
salary
reduction
in
order
to
build
a
substantial nest egg and is therefore entitled to receive the
“prudent investment” value of his salary deferrals.
192 at 6-7).
(Docket No.
The crux of plaintiff’s argument appears to be that
SLCC should have employed some other investment strategy. However,
Count II is a claim for benefits, and plaintiff’s recovery is
limited to benefits due under the relevant plan.
1132(a)(1)(B).
29 U.S.C. §
Despite plaintiff’s contentions that the account
balance should be higher, plaintiff is not entitled to receive an
amount greater than the benefits that are available under the plan.
Kerr, 184 F.3d 938, 943 (8th Cir. 1999) (the plaintiff was not
entitled to receive an amount greater than the plan benefits even
- 37 -
though he had to wait three years and ultimately file a lawsuit to
recover them).
As SLCC submits, the “sole issue before the Court is
whether [SLCC] acted reasonably in determining that the amounts
owed to Plaintiff were the amounts in the accounts on the date that
the distributions began.” (Docket No. 184 at 26). The undersigned
resolves that issue in the affirmative, and concludes that SLCC
acted reasonably in determining that the amounts owed to plaintiff
were the amounts in the Fidelity accounts on the date that the
distributions began. SLCC is therefore entitled to judgment in its
favor on Count II.
C.
Counts III through VI
All of plaintiff’s claims in Counts III through VI rely
upon assertions of breach of fiduciary duty. Defendants argue that
they are entitled to judgment as a matter of law on these claims
because both plans are top hat plans, and are therefore exempt from
ERISA’s fiduciary responsibility requirements.
In response, while
plaintiff agrees that top hat plans are “specifically exempt from
ERISA’s provisions on participation and vesting, funding, and
fiduciary responsibility,” plaintiff argues that defendants “are
not entitled to summary judgment of [sic] Counts III-VI because the
plans at issue are not top hat plans.”
(Docket No. 163 at 5).
Plaintiff offers no other argument in support of his claims in
Counts III through VI.
Review of the procedural history of this
case reveals that leave to amend has been granted numerous times,
and plaintiff has had sufficient opportunity to properly frame his
- 38 -
claims against defendants.
Top hat plans, like the Employment Agreement Plan and the
Deferred Compensation Plan, while subject to the civil enforcement
provisions
of
ERISA,
are
responsibility provisions.
exempted
from
ERISA’s
fiduciary
See 29 U.S.C. § 1101(a)(1); Craig v.
Pillsbury Non–Qualified Pension Plan, 458 F.3d 748, 752 (8th Cir.
2006); see also Demery v. Extebank Deferred Compensation Plan (B),
216 F.3d 283, 286-87 (2nd Cir. 2000); Simpson, 187 Fed.Appx. at
484; In re New Valley Corp., 89 F.3d at 148.
ERISA’s civil
enforcement provisions afford plaintiff his sole remedies for
recovery of benefits due, or for enforcement of the terms of the
Employment Agreement Plan and the Deferred Compensation Plan.
See
29 U.S.C. § 1132(a)(1)(B); Great–West Life & Annuity Ins. Co. v.
Knudson, 534 U.S. 204, 209 (2002) (expressing reluctance to afford
remedies not specifically authorized by the text of ERISA).
Because plaintiff’s claims in Counts III through VI rely
upon assertions of breach of fiduciary duty, they fail as a matter
of law. Defendants are entitled to summary judgment in their favor
on plaintiff’s claims in Counts III through VI.
See Paneccasio v.
Unisource Worldwide, Inc., 532 F.3d 101, 108 (2nd Cir. 2008)
(citing Demery, 216 F.3d at 290) (“to the extent Paneccasio’s ERISA
claim relies on an assertion of breach of fiduciary duty, it was
properly dismissed”).
D.
Count VII
In Count VII, plaintiff alleges that SLCC and defendants
Snowden,
Lilly
and
Wells
interfered
- 39 -
with
his
ERISA-protected
rights, inasmuch as they retaliated against him when he asserted
his
ERISA
rights
by
constructively
discharging
him
from
his
position at SLCC.
As both parties recognize, to make a prima facie case of
ERISA
retaliation,
a
plaintiff
must
demonstrate
that
he
participated in statutorily protected activity; that an adverse
employment action was taken against him; and a causal relationship
between the two.
Rath v. Selection Research, Inc., 978 F.2d 1087,
1090 (8th Cir. 1992) (internal citation omitted).
“The requisite
causal connection may be proved circumstantially by proof that the
discharge followed the protected activity so closely in time as to
justify an inference of retaliatory motive.”
Id.
“If plaintiff
makes out a prima facie case of retaliation, the employer must
articulate a legitimate, nondiscriminatory reason for its actions.
If the employer meets that burden, plaintiff must prove that the
proffered reason is pretextual.”
Id.
In support of the instant motion, defendants argue that
they are entitled to judgment as a matter of law because plaintiff
cannot establish that an adverse employment action was taken
against
him.
Citing
cases
in
which
claims
of
constructive
discharge were dismissed based upon various facts, defendants ask
this Court to conclude that plaintiff was not constructively
discharged, but resigned voluntarily.
In response, plaintiff
contends that his employment conditions were intolerable, citing
various facts in support, including learning in May of 2004 that
the balance of the A.G. Edwards account was extremely low, and that
- 40 -
SLCC knew of this fact.
Plaintiff also alleges that SLCC failed to
properly credit amounts to a bookkeeping reserve, and responded to
his inquiries in a dilatory fashion.
In reply, defendants contend
that the facts plaintiff relies upon are incorrect or inadequate to
support a claim of constructive discharge, arguing that, while
plaintiff maintains that he did not learn of the low account
balance until May of 2004, he admitted that he received statements
on that account over the course of his tenure as General Manager.
Defendants further contend that, even if the facts plaintiff
alleges were true, they do not amount to a deliberately-created
intolerable work environment.
Defendants also set forth facts in
support of the conclusion that plaintiff’s resignation was entirely
at his own volition, including the text of plaintiff’s resignation
letter. In response, while plaintiff does not dispute the language
in the letter, he does dispute that the letter reflected the true
nature of his working conditions. Defendants also suggest that the
real reason plaintiff resigned was because he wanted to pursue a
claim against SLCC and felt unable to work there simultaneously,
which plaintiff disputes.
Defendants are entitled to summary judgment in their
favor on Count VII. Plaintiff admitted that he resigned from SLCC.
As defendants argue, the text of plaintiff’s resignation letter
contains nothing to indicate that plaintiff’s resignation was
involuntary
intolerable.
or
that
he
considered
his
working
environment
In fact, plaintiff wrote that he was “grateful to be
in a position to enjoy whatever life will throw [his] way,” and he
- 41 -
expressed his thanks for the “respect and cooperation” he had
received from the Board and Committee members over the years and
for the confidence shown in him when he was appointed General
Manager.
(Docket No. 145, Attachment 4, page 2).
Plaintiff
testified that he decided that he needed to file suit against SLCC,
that he needed to do so before the expiration of the statute of
limitations, and that he did not want to work for SLCC afterwards.
(Docket
No.
Finally,
145,
Attachment
plaintiff
2,
testified
page
that,
214,
after
paragraphs
he
2-25).
tendered
his
resignation, the then-president of SLCC, Fred Hanser, invited him
to continue his employment with SLCC and that plaintiff “could have
definitely taken him up on it, you know, if I wanted to.”
No.
145,
Attachment
2,
page
226-227).
As
(Docket
defendants
argue,
plaintiff has failed to demonstrate that an adverse employment
action was taken against him and has therefore failed to make a
prima facie claim of ERISA retaliation.
1090.
See Rath, 978 F.2d at
Defendants are entitled to summary judgment in their favor
on plaintiff’s claims in Count VII.
E.
Count VIII
In Count VIII, plaintiff alleges that SLCC failed to
provide
requested
Compensation
summary
plan
Plan
plan
and
documents
the
descriptions,
pertaining
Employment
top
hat
bookkeeping reserve account entries.
to
Agreement
filings,
the
Plan;
Form
Deferred
namely,
5500s,
and
Defendants argue that they
are entitled to judgment as a matter of law because SLCC satisfied
the minimal reporting and disclosure requirements for top hat plans
- 42 -
when it filed a top hat registration statement for both plans with
the Department of Labor on August 23, 2007.
In response, while plaintiff acknowledges that ERISA and
the
Secretary’s
regulations
establish
alternative
reporting
requirements for top hat plans, he contends that a genuine issue of
fact
exists
regarding
whether
the
plans
are
top
hat
plans.
Plaintiff alternately contends that SLCC’s failure to timely file
a top hat registration statement subjects SLCC to ERISA’s reporting
and disclosure requirements, but cites no legal authority in
support.
Plaintiff also states: “[t]he fact that the club did not
even file a top-hat registration until after Plaintiff resigned and
was
therefore
entitled
to
compensation
from
Agreement Plan has caused harm to Plaintiff.”
11).
his
Employment
(Docket No. 163 at
Plaintiff alleges no facts in support of this statement.
A “top hat plan is deemed to have satisfied the reporting
and disclosure requirements of ERISA, including the furnishing of
a
summary
plan
description
and
annual
reports
to
plan
beneficiaries, by filing a short statement with the Secretary of
Labor and providing plan documents to the Secretary upon request.”
Demery,
216
F.3d
at
291
(citing
29
C.F.R.
§
2520.104-
23(b)(prescribing alternative method of compliance); 29 U.S.C. §
1030 (authorizing Secretary to promulgate alternative methods of
compliance for qualifying plans, including top hat plans)).
Such
statement is to be filed within 120 days of the date the plan
became subject to ERISA.
29 C.F.R. § 2520.104-23(b)(2).
- 43 -
SLCC filed a top hat registration statement for both
plans on August 23, 2007.
(A.R. 67-68).
Although not filed within
120 days of the date either plan became subject to ERISA, SLCC’s
top hat registration statement satisfies 29 C.F.R. § 2520.104-23(b)
and
therefore
requirements.
satisfies
Plaintiff’s
ERISA’s
reporting
responsive
and
pleading
disclosure
includes the
conclusory statement that SLCC’s late filing caused him harm.
However, plaintiff alleges no facts in support of this statement.
In the absence of any evidence of prejudice to plaintiff, the
undersigned determines that no genuine issues of material fact
exist, and defendants are entitled to judgment as a matter of law
on plaintiff’s claims in Count VIII.
See Demery, 216 F.3d at 291
(employer’s failure to timely file registration statement for
deferred
compensation
plan
with
Department
of
Labor
did
not
preclude plans’ top hat status, absent evidence of prejudice to
participants, and district court therefore properly declined to
impose the penalties provided in 29 U.S.C. § 1132(c)).
Therefore, for all of the foregoing reasons,
IT IS HEREBY ORDERED that Defendants’ Motion For Summary
Judgment (Docket No. 143) is granted as provided herein.
_______________________________
UNITED STATES MAGISTRATE JUDGE
Dated this 27th day of November, 2013.
- 44 -
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