MANCE v. QUEST DIAGNOSTICS INCORPORATED VOLUNTARY SEPARATION PLAN et al

Filing 86

OPINION. Signed by Judge John Michael Vazquez on 2/21/17. (sr, )

Not for Publication
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

ZOE MANCE, on behalf of herself and all
others similarly situated,
Plaintiff
Civil Action No. 12-736 1

QUEST DIAGNOSTICS INCORPORATED
VOLUNTARY SEPARATION
AGREEMENT PLAN, and QUEST
DIAGNOSTICS INCORPORATED, as
PLAN ADMINISTRATOR,

OPINION

Defendants.

John Michael Vazguez, U.S.D.J.
This matter comes before the Court by way of the motions for summary judgment filed by
Defendant Quest Diagnostics Incorporated (“Quest” or “the Company”),1 and by Plaintiff Zoe
Mance. D.E. 71, 72. The parties filed briefs in opposition and in reply.2 The Court reviewed all

Quest denies the existence of the other named Defendant, “Quest Diagnostics Incorporated
Voluntary Separation Agreement Plan,” and that it acts as plan administrator of such a plan.
Consequently, Quest’s summary judgment briefs refer only to Quest, a single Defendant.
The briefs will be referred to as follows: (1) Plaintiffs brief in support of its motion for partial
summary judgment (“P11’s Br.”), D.E. 72-1; (2) Defendant’s brief in opposition to Plaintiffs
motion for partial summary judgment (Defs Opp. Br.), D.E. 75; (3) Plaintiffs reply memorandum

2

submissions and held oral argument on both motions. For the reasons stated below, Defendants’
motion for summary judgment is GRANTED and Plaintiffs motion for partial summary judgment
is DENIED.
I.

FACTUAL AND PROCEDURAL BACKGROUND
1.

Factual Background3

Plaintiff was employed by Quest for seven years. In July 2009, Plaintiff, who was a district
sales manager at the time, was placed on a performance improvement plan (a “PIP”) after receiving
the overall rating of “development needed” on her year-end review. DSOMF ¶ 7. After failing to
complete all of the corrective actions specified in the PIP, Plaintiff was involuntarily terminated
due to poor performance on September 12, 2009. Id.

¶ 9-10. Plaintiff did not ask for, and did

not receive, severance benefits when she was terminated. Id.

¶ 11; PSOMF ¶

53. In addition,

Plaintiff was unaware of any procedure for filing a claim for severance benefits. DSOMF ¶ 15.
Three years after she was terminated, Plaintiff filed this lawsuit alleging that through its
pattern and practice of providing certain employees severance benefits, Quest unwittingly created
a voluntary separation agreement benefits plan that is governed by the Employee Retirement
Security Act of 1974 (“ERI$A”). Plaintiff alleges that Quest failed to offer benefits that she was

of law in support of the motion for partial summary judgment (“Plfs Reply”), D.E. 81; (4)
Defendant’s brief in support of its motion for summary judgment (“Defs Br.”), D.E. 71-1; (5)
Plaintiffs memorandum of law in opposition to Defendant’s motion for summary judgment (Plfs
Opp. Br.”), D.E. 76; and (6) Defendant’s reply brief in support of its motion for summary judgment
(“Defs Reply”), D.E. 80.
The factual background is taken from the record, including the following sources: (1) Plaintiffs
Statement of Undisputed Material F acts (“PSOMF”), D.E. 72-8; and (2) Defendant’s Statement of
Material Facts (“DSOMF”) and supporting exhibits, D.E. 71.
2

entitled to receive under the plan. Quest does have a separate, ERISA-governed severance plan,
which is not at issue.4 Specifically, Plaintiff contends that instead of being terminated, she should
have been provided with an opportunity to voluntarily resign and receive a monetary severance
payment based in part on the length of her employment at Quest. PH’s Br. at 13. Plaintiff alleges
that she was eligible under the plan because (1) she was a managerial employee, (2) who was
viewed as underperforming and (3) management decided to terminate her employment
relationship. Id. at 14.
It is not disputed that in 2002, Quest created a document entitled “Voluntary Separation
Agreement Process” (the “VSA SOP,’ or the “SOP”).

PSOMF

¶

1. The VSA SOP was a

confidential, internal document that “outline[d] a standard process for executing voluntary
separation agreements throughout [Quest]” and set forth the procedures that must be followed “[i]n

cases where management decides it is in the Company ‘s best interest to terminate the employment
relationship through a [VSA].” DSOMF

¶ 27,

Ex. B at $3 (emphasis added). According to the

SOP, the employee’s manager or the local human resources (“HR”) manager/director must go
through an approval process before a voluntary separation agreement (“VSA”) is even offered to
an employee. Most Quest business units had dedicated local HR staff that reported to a regional
leader. The regional leaders reported to corporate HR. Id. ¶3. from 2003 to 2013, David Norgard
was Quest’s Vice President of HR “and was responsible for all HR matters on a company-wide

Quest’s official severance plan is not applicable here as it only “provides severance benefits for
employees terminated under specifically defined circumstances such as layoffs or force
reductions.” Del’s Br. at $ n.2. Plaintiff is not contending that the VSA Plan is a replacement for
benefits under Quest’s official severance pay plan. PSOMF ¶ 34.
3

basis.” Id.

¶ 4. From 1999 to 2013, William Johnson was Senior Counsel for Quest and oversaw

“all employment-related legal issues for the Company.” Id.
If approved, the VSA typically, although not always, provides a lump-sum payment to the
departing employee that “should be based on the appropriate dollar amount to allow the employee
to begin an effective job search.” Id. Ex. At 83. The payment could also include additional money
for COBRA reimbursement, loan forgiveness, and outplacement services. Id. Next, the VSA SOP
provides that Johnson must be contacted to draft the VSA. Id. A departing employee must agree
to the offered tenris and sign the VSA, which contained a release of potential claims and a
confidentiality clause. D$OMF

¶J 33-34. In conjunction with the V$A SOP, Quest used a VSA

Approvals Fonn (the “Approvals Form”). The Approvals Form must be completed before the
VSA was offered to an employee and included a checklist as to the form

and amount of

consideration that would be offered. See, e.g., Savits DecI. Ex. F. The VSA SOP is still utilized
by Quest. PSOMF

¶ 25.

There is also no dispute that since 2000, Quest provided certain departing employees with
a VSA. Quest maintains that VSAs are ad hoc arrangements with certain employees that were
“used as a discretionary tool to secure a release of claims from a terminating employee in exchange
for personalized consideration.” DePs Br. at 7. Johnson testified that between 2000 and 2013, he
prepared approximately 200 VSAs, or about ten to twelve per year.5 DSOMF

¶ 35. Quest also

alleges that whether to offer a VSA and the tenTis of the VSA were within the Company’s sole

Quest has approximately 45,000 employees. DSMOF ¶ 2. The parties did not indicate the
average number of employees that Quest terminates involuntarily on an annual basis.
4

Quest does not dispute that VSAs were at times used for performance-based

discretion. Id.

terminations, however, “[d]efficient performance in and of itself.

.

.

did not require the Company

to offer an employee a VSA.” DSOMF Ex. C at T 125:18-24.
In the Second Amended Complaint (“SAC”), Plaintiff names ten former Quest employees
that were allegedly eligible for and received a VSA, and who were similarly situated to Plaintiff.
SAC

¶ 31.

But Plaintiffs awareness of these employees and their VSAs is based on “rumors” and

“innuendos.” She has no personal knowledge of the circumstances regarding their termination
from Quest or the terms of their VSAs. DSOMF ¶J 16, 18. Plaintiff also identified four employees
who were supposedly eligible for VSA benefits, but like Plaintiff, were not provided with a VSA.
SAC

¶J 32-33.
2.

Procedural History

Plaintiff filed this lawsuit on November 30, 2012, alleging that Quest’s pattern and practice
of providing VSAs to departing employees created an employee welfare benefit plan within the
meaning of ERISA, 29 U.S.C.
violation pursuant to 29 U.S.C.

1102, and that the decision to deny her a VSA is an ERISA

§
§

1 132(a)(1)(B). D.E. 1. Quest moved to dismiss Plaintiffs

complaint, and Judge Cavanaugh granted the motion on September 11, 2013 because Plaintiff did
not have standing to pursue her ERISA claim. D.E. 26. Plaintiff filed a motion for reconsideration.
D.E. 28. On November 6, 2013, Judge Cavanaugh denied Plaintiffs motion for reconsideration
on the merits but provided her with an opportunity to file an amended complaint. D.E. 30. Plaintiff
filed an amended complaint on December 6, 2013, and on January 17, 2014, Quest filed a second

5

motion to dismiss. D.E. 31, 34. Judge Salas granted the motion because Plaintiff failed to establish
statutory standing but provided her with a second opportunity to amend her pleading. D.E. 40.
Plaintiff filed her SAC on October 3, 2014, which Quest also moved to dismiss. D.E. 43,
45. Judge Salas, however, denied this motion. Judge Salas determined that the SAC cured the

previously identified pleading deficiencies such that Plaintiff had alleged a “colorable claim to
vested benefits.” D.E. 49 at 1. Judge Salas determined that the critical point of contention
concerned whether the VSA plan is an ERISA plan, which should be addressed through a motion
for summary judgment, not a motion to dismiss. Id. As a result, Judge Salas scheduled a Rule 16
conference and permitted the parties to take limited discovery to resolve whether the VSA plan
was in fact an ERISA plan. Id. at 2. The parties were permitted to take discovery as to the ten
employees named in the SAC who were allegedly similarly situated to Plaintiff. The parties were
also permitted to conduct discovery into the VSAs provided to twenty additional, randomly
selected former employees. D.E. 54.
After this limited discovery concluded, the parties filed these motions for summary
judgment. The Court will address the parties’ specific arguments below, but generally, Quest
maintains that summary judgment must be granted because the Company did not create an
informal ERISA severance plan. D.E. 71. Plaintiff alleges that through its practice of providing
VSAs to some employees, Quest unwittingly created an ERISA plan.

Plaintiff alleges that

summary judgment should be entered with the finding of an informal plan. D.E. 72.
II.

SUMMARY JUDGMENT STANDARD

6

A moving party is entitled to summary judgment where “the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). A fact in dispute is material when it “might affect the outcome of the suit
under the governing law” and is genuine “if the evidence is such that a reasonable jury could return
a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 24$ (1986).
Disputes over irrelevant or unnecessary facts will not preclude granting a motion for summary
judgment. Id. “In considering a motion for summary judgment, a district court may not make
credibility determinations or engage in any weighing of the evidence; instead, the nonmoving
party’s evidence ‘is to be believed and all justifiable inferences are to be drawn in his favor.”
Marino v. Indits. Crating Co., 35$ F.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at
255)). A court’s role in deciding a motion for summary judgment is not to evaluate the evidence

and decide the truth of the matter but rather “to determine whether there is a genuine issue for
trial.” Anderson, 477 U.S. at 249.

A party moving for summary judgment has the initial burden of showing the basis for its
motion and must demonstrate that there is an absence of a genuine issue of material fact. Cetotex
Corp.

V.

C’atrett, 477 U.S. 317, 323 (1986). After the moving party adequately supports its motion,

the burden shifts to the nonmoving party to “go beyond the pleadings and by her own affidavits,
or by the depositions, answers to interrogatories, and admissions on file, designate specific facts
showing that there is a genuine issue for trial.” Id. at 324 (internal quotation marks omitted). To
withstand a properly supported motion for summary judgment, the nonmoving party must identify
specific facts and affinnative evidence that contradict the moving party. Anderson, 477 U.S. at
7

250. “[I]f the non-movant’s evidence is merely ‘colorable’ or is ‘not significantly probative,’ the
court may grant summary judgment.” Messa v. Omaha Prop. & Cas. Ins. Co., 122 F. Supp. 2d
523, 528 (D.N.J. 2000) (quoting Anderson, 477 U.S. at 249-50)).
Ultimately, there is “no genuine issue as to any material fact” if a party “fails to make a
showing sufficient to establish the existence of an element essential to that party’s case.” Celotex
Corp., 477 U.S. at 322. “If reasonable minds could differ as to the import of the evidence,”
however, summary judgment is not appropriate. See Anderson, 477 U.S. at 250-51.
III.

ANALYSIS

The Court is presented with a single issue: whether Quest’s decision to provide some
departing employees with a VSA created a plan under ERI$A. ERISA applies to “any employee
benefit plan if it is established or maintained
U.S.C.

.

.

.

by any employer engaged in commerce.” 29

§ 1003(a). Severance plans may qualify as ERISA plans. See Aiston v. At]. Elec. Co., 962

F. Supp. 616, 623 (D.N.J. 1997). ERISA requires employers to establish benefit plans through a
written instrument (29 U.S.C.

§ 1102(a)), however, courts have concluded that ERISA plans may

exist even with the absence of a written summary plan document. See, e.g., Henglein v. Informal
Plan for Plant Shutdown Benefits for Salaried Emps., 974 F.2d 391, 399-400 (3d Cir. 1992).
The ERISA statutory framework, however, fails to define “plan.” As a result, the Third
Circuit has adopted the standard established by the Eleventh Circuit in Donovan v. Dillingham,
688 F.2d 1367, 1373 (11th Cir. 1982), for determining whether an informal ERISA plan exists.
Henglein, 974 F.3d at 399-400. Pursuant to the Donovan standard, “a court must determine
whether from the surrounding circumstances a reasonable person could ascertain the intended
8

benefits, beneficiaries, source of financing, and procedures for receiving benefits.” Id. at 399
(quoting Donovan, 688 f.2d at 1373).

This standard is flexible.

Woerner v. fram Gip.

Operations, LLC, 658 F. App’x 90, 95 (3d Cir. 2016). “The crucial factor in determining whether
a plan has been established is whether the employer has expressed an intention to provide benefits
on a regular and long-term basis.” Menkes v. Prudential Ins. Co. ofAm., 762 F.3d 285, 290 (3d
Cir. 2014) (quoting Gruther v. Hubbard Bert Karl Weber, Inc., 159 F.3d 780, 789 (3d Cir. 199$))
(internal quotation marks omitted).
Whether an informal plan exists is a question of fact.

Deibler v. United food &

Commercial Workers’ Local Union 23, 973 f.2d 206, 209 (3d Cir. 1992). A court “should first
determine what written representations were made by a putative sponsor to its employees over the
course of their employment.” Henglein, 974 F.2d at 400. The representations may encompass
formal, distributed summary plan documents and “widely distributed informal documents.” Id. If
properly distributed written documents do not limit the available benefits,6 a court must consider
all evidence “that would indicate the presence or absence of an informal employee benefit plan,”
such as “internal or distributed documents, oral representations, existence of a fund or account to
pay benefits, actual payment of benefits, the deliberate failure to correct known perceptions of a
plan’s existence, the reasonable understanding of employees, and the intentions of the putative
sponsor.” Id.

6

Quest does not argue that the summary plan document for its official, ERISA-governed severance
plan clearly limits the availability of other severance benefits such as those at issue here. As a
result, the Court assumes that the official severance plan summary document does not have this
type of language.
9

In determining whether an informal ERISA plan exists, courts must also be mindful of the
United State Supreme Court’s decision in fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 12
(l987). In fort Hat fax, the Supreme Court determined that severance benefits do not implicate
ERISA “unless they require the establishment and maintenance of a separate and ongoing
administrative scheme.” Angst v. Mack Trucks, Inc., 969 f.2d 1530, 1538 (3d Cir. 1992). Such
an administrative scheme “may arise where the employer, to deteniiine the employee’s eligibility
for and level of benefits, must analyze each employee’s particular circumstances in light of the
appropriate criteria.” Shaverv. Siemens Corp., 670 F.3d 462, 477 (3d Cir. 2012) (quotingKulinsld
v. Medtronic Bio-Medictts, Inc., 21 F.3d 254, 257 (8th Cir. 1994)).

Simple or mechanical

determinations, however, do not create an administrative scheme. Id.

Thus, a court should

consider whether the plan requires “ongoing, particularized, administrative, analysis” for each
employee, and if”a reasonable employee would perceive an ongoing commitment by the employer
to provide some employee benefits.” Id. (quoting Kosakow v. New Rochelle Radiology Assocs.,
274 F.3d 706, 737 (2d Cir. 2001)).
Turning to the case at hand, Plaintiff does not allege that Quest created or distributed a
formal summary plan document regarding VSA benefits for poor perfonriers. In addition, Plaintiff
does not allege that Quest distributed any other documents pertaining to VSA benefits to its

Some courts have questioned whether Donovan remains applicable in light of fort Halifax. See,
e.g., Sandstrom v. Cultor food ScL, Inc., 214 F.3d 795, 797 (7th Cir. 2000) (“It is not clear that
the approach taken in [Donovan] is compatible with more recent decisions of the Supreme Court,
which emphasize different considerations when asking whether an informal policy or arrangement
is a ‘plan.”). The Third Circuit, however, applies Donovan and fort Halifax together. See
Menkes, 762 F.3d at 290; Deibler, 973 F.2d at 209.
10

employees. Plaintiff alleges only that Quest’s informal pattern or practice of providing some
employees with VSAs created an informal plan subject to ERISA. PIP s Br. at 19-20. As a result,
the Court must detennine whether the available evidence demonstrates that Quest created an
informal plan and whether a reasonable person can ascertain its parameters. Henglein, 974 F.2d
at 400.
At the outset, Plaintiff fails to provide evidence demonstrating that Quest expressed an
intention to its employees to regularly provide severance benefits to underperforming personnel.
Unlike many cases in which a court determined that an informal benefit plan existed, the record
here is devoid of facts suggesting that poorly performing Quest employees expected to receive
VSA benefits. See, e.g., Deibler, 973 F.2d at 210 (concluding that the available documents
demonstrate an intent to establish a regular and ongoing severance plan). In fact, at oral argument
Plaintiffs attorney stated that the majority of Quest employees did not know that a VSA plan
existed and, therefore, did not know to ask for benefits.
In addition, Plaintiff did not learn about Quest’s use of VSAs until the Spring of 2009
(DSOMF Ex. A at 114:2-9), almost seven years after she began working at Quest and months
before she was terminated. PSOMF

¶ 51. Once she did learn about VSAs, Plaintiffs knowledge

was extremely limited and inaccurate. Plaintiff only knew that VSA benefits were “available for
managers and above, that [Quest] basically wanted to get rid of.” DSMOF Ex. A at T14:5-7.
Plaintiff never saw a copy of the VSA SOP before this case and only knows, through this litigation,

11

that the individuals named in the SAC received VSAs.8 DSOMF

¶J

16, 24. Although Plaintiff’s

personal knowledge of the alleged VSA plan is not dispositive, it is probative of Quest employees’
understanding (or lack thereof) of the Company’s intent to provide severance benefits to all poor
perforniers. This lack of representations by Quest to its employees countenances against finding
an ERISA plan. See, e.g., Kawsid v. Johnson & Johnson, 347 F. App’x 610, 612 (2d Cir. 2009)
(“Although we have never found any one factor to be determinative in all cases, the absence of
evidence of any promise of benefits made by Johnson & Johnson to its employees demonstrates
that ERISA’s purpose of enforcing employer commitments is not implicated here.”) (internal
quotations omitted); Dick v. Dwyer, Costello & Knox, P.C., 33 F.3d 809, 811 (7th Cir. 1994)
(“[W]e look to whether the decision ‘constituted an expressed intention by the employer to provide
benefits on a regular and long-term basis.” (quoting Wickman v. iVw. Nat ‘1 LU Ins. Co., 908 F.2d

1077, 1083 (1st Cir.), cert. denied 498 U.S. 1013 (1990))); see also Henglein, 974 F.2d at 400
(noting that in deciding whether an informal ERISA plan exists, a court “should first determine
what written representations were made by a putative sponsor to its employees over the course of
their employment.”).9

Quest alleges that this suit is manufactured by Plaintiff’s counsel afier they received VSA related
documents through discovery in an unrelated case. Del’s Opp. Br. at 8-10. “There is a fair bit of
judicial skepticism about ‘informal plans’ specifically whether by allowing their concoction by
imaginative counsel in litigation employers will actually be deterred from offering certain types of
benefits.” Brines v. XTRA Corp., 304 F.3d 699, 702 (7th Cir. 2002).
8

—

Plaintiff, citing to Brown v. Arnpco-Pittsburgh Corp., 876 F.2d 546 (6th Cir. 1989), emphasizes
that an ERISA plan can exist even if it is completely confidential and the relevant employees are
not aware of it. Pif’s Reply at 3 n.2. Yet, pursuant to Third Circuit law, a court must consider
what representations, if any, were made to employees by the alleged plan sponsor. Henglein, 974
F.2d at 400. Moreover, Brown is factually distinct from the present matter. There, the severance
12

As for the four Donovan factors, a reasonable person could ascertain the source of funding
for VSA payments. The V$A SOP provides that the legal department is responsible for generating
the severance check, however, it does not address what account the money should come from.
D$MOF Ex. A at 84. Plaintiff contends that VSA benefits were paid from “Quest’s general
account and outplacement assistance benefits are generally paid directly by Quest to an
outplacement assistance vendor.” P1? s Br. at 9. Quest does not offer a contrary position and fails
to address this factor. Paying benefits from a general fund is sufficient under Donovan; a company
is not required to establish a separate fund. See, e.g., Diak, 33 f.3d at $13 (concluding that
payment of benefits from general fund satisfied the requirement of an ascertainable source of
funding). As a result, a reasonable person could ascertain the source of funding for the alleged
VSA benefit plan.
The class of beneficiaries rarely seems to be a contested issue when determining whether
an informal ERISA plan exists. See, e.g., Deibler, 973 F.2d at 210 (finding a regular plan for
retiring union officers); Brown v. Ampco-Pittsburgh Corp., $76 F.2d 546, 547 (6th Cir. 1989)
(noting that the class of beneficiaries was terminated non-union salaried employees); see also
Shaver, 670 f.3d at 479 (observing that if plan existed, it would include “legacy employees”);
Williams v. WCI Steel Co., 170 f.3d 598, 603 (6th Cir. 1999) (ruling that although informal plan

did not exist, the class of beneficiaries was clear). Plaintiff argues that the class consists of

plan clearly set forth eligibility (permanent reduction in force for non-union salaried employees
who were not yet 70 or otherwise eligible for an unreduced pension) and payment (specific weekly
salary payments tied directly to length of service). $76 F.2d at 54$.
13

“managerial employees viewed by management as underperfonning and whom management has
decided to separate from the company.” PiP s Br. at 14.
Plaintiffs suggested class, however, is not supported by the record. The VSA SOP states
that it applies to “{a]ll voluntary separation agreements executed company wide,” and does not
mention performance or limit itself to managerial-level workers. DSOMF Ex. B at 83. Instead,
the SOP provides Quest with sole discretion to decide whether “it is in the Company’s best interest
to terminate the employment relationship through a [VSA].” Id. Further, of the thirty VSAs that
were produced during discovery, Plaintiff alleges that only ten employees met her alleged
eligibility criteria and were similarly situated.1° PSOMF ¶ 40. Instead, the thirty VSAs produced
through discovery demonstrate that Quest offered VSAs to employees for a variety of reasons, not
just due to poor performance as claimed by Plaintiff. For example, Quest gave VSA benefits to
Former Employee No. 15 upon his retirement “to persuade the employee to remain reasonably
available afier retirement and support a management transition.” DSOMF ¶ 36. Former Employee
No. 14 received VSA benefits when he voluntarily resigned due to family or personal reasons (Id.

¶ 44), and Fonner Employee No. 20 received VSA benefits because he “expressed dissatisfaction
with his current role.” Id.

¶ 56.

‘

Plaintiff argues that “10 employees is actually a relative[ly] large number upon which to
establish a pattern and practice compared to other cases that relied on smaller number of
employees.” Plfs Reply at 10 (citing Deibler, 973 F.2d at 210). In Deibler, however, the class of
intended beneficiaries was not disputed. Deibter, 973 F.2d at 210. To the contrary, the written
document expressly applied to union officers, which included the plaintiff.
14

Quest maintains that any employee could technically be eligible for a V$A and that they
were offered for “any number or combination of reasons.” Defs Opp. Br. at 22-23. The Company
continues that the determination of which employees received a VSA is too amorphous and cannot
be objectively defined. As a result, a reasonable person cannot ascertain the intended class of
beneficiaries. Id. The Court agrees. The VSA SOP provides that severance benefits would only
be offered when Quest decided that it was in “the Company’s best interest.” DSOMF Ex. B at 83.
Therefore, the Court could find the “best interest” group as the intended class of beneficiaries.
However, this intended class is difficult to determine through objective criteria. Obviously, the
“best interest” of Quest is largely a subjective decision made from Quest’s perspective.1’
Theoretically, all Quest employees were potential beneficiaries of the VSA. Yet, in reality, only
a small subset of Quest employees agreed to a VSA with Quest. Between 2000 and 2013, Quest
extended VSA benefits to approximately ten to twelve employees per year.

DSOMF

¶

35.

Moreover, Quest states that V$As were offered for a number of reasons and provided a list a
potential reasons it may determine a VSA is warranted. Defs Br. at 13; DSOMF Ex. D at T59:719. This list fails to provide any clear guidance as to the parameters of the “best interest” group.
Consequently, a reasonable person cannot fashion an objective set of criteria to determine if a
Quest employee is eligible for VSA benefits.
Citing to Deibler, Plaintiff argues that “having discretion to determine beneficiary
eligibility does not negate the existence of an ERISA plan.” P1? s Opp. Br. at 24. In Deibler, the

There is no indication in the record that Quest made such determinations based on prohibited
characteristics, such as race or ethnicity.
15

court determined that an informal ERISA plan existed even though the plan administrator was
tasked with determining whether a union official left the union for “a valid reason.” Deibler, 973
F.2d at 210 n.6. The plan at issue in Deibler, however, clearly applied to retiring union officials
and had a set formula for determining benefits.

Id. at 210.

Despite this discretionary

determination, i.e. what constituted a “valid reason,” the court in Deibler determined that the
policy was predictable. Id. In contrast, the alleged plan here is anything but predictable. The
standard to which Quest’s discretion is to be applied in this case

—

Quest’s determination that it is

in its own best interest is largely subjective and determined from Quest’s perspective. Moreover,
—

in Deibler, the eligible group was clearly defined

—

departing union officers. By comparison, the

VSA plan may apply to any departing employee. Finally, the plan administrator in Deibler had
one discretionary decision to make, that is whether the union officer left for a valid reason. Here,
Quest looks to numerous and varying factors, none of which are mandatory considerations. Thus,
the Court concludes that due to the lack of criteria for determining Quest’s “best interest,” there is
no objectively defined class of intended beneficiaries.
A reasonable person is also unable to determine the intended benefits of the alleged
infoniial plan.’2

Plaintiff argues that the benefits are (1) providing an employee with an

12

Although not currently before the Court, the Court questions whether Plaintiff could realistically
show that she was entitled to benefits under the VSA plan if the Court determined that an ERISA
plan exists. As noted, Quest put forth evidence demonstrating that poor performance was not the
sole consideration in determining eligible employees. Indeed, Quest has submitted evidence that
in certain cases, poor performance was not even considered. More importantly, if Plaintiff applied
for and was denied benefits under her proposed plan, she also faces a difficult task in appealing
the denial because “[i]f an intended benefit is discretionary,
review of a denial of benefits will
be for an abuse of discretion.” Henglein, 974 F.2d at 401 (citing Firestone Tire & Rubber Co. v.
Bruch, 489 U.S. 101, 111 (1989)). It would be difficult for the Court, to say the least, to detennine
16
.

.

.

opportunity to resign and (2) “a monetary component based, in whole or in part, on the employee’s
length of service.” P1? s Br. at 13. But again, Plaintiffs argument is not supported by the record.
The SOP states that the payment “generally should be based on the appropriate dollar amount to
allow the employee to begin an effective job search.” DSOMF Ex. B at $3. A VSA package could
also include “amounts for [COBRA] reimbursement, loan forgiveness and outplacement services.”
Id. Although the SOP clarifies the possible options of benefits, it does not provide any objective
formula or method for determining an appropriate payment. Moreover, the produced VSAs also
fail to provide any indication as to how Quest determines “the appropriate dollar amount” or when
to include any additional benefits. Finally, VSAs were bilaterally negotiated agreements. See
DSOMF

¶ 2$. This further demonstrates the difficulty of objectively ascertaining the specific

benefits due to qualifying employees. Thus, a reasonable person is unable to objectively determine
the monetary benefit that a poorly performing manager would be entitled to receive. See, e.g.,
Diak, 33 F.3d at $12 (“Obviously, a plaintiff need not show the exact dollar amount she would
expect to receive in benefits. However, there must be some evidence in the record from which the
court can ascertain the benefits due under a plan. In all of the authorities [the plaintiff] cites, the
amount of benefits due or the method of calculating benefits was clear on the face of the record.”);
Hughes v. White, 467 F. Supp. 2d 791, 801-02 (S.D. Ohio 2006) (“It is not enough that ‘some form
of benefits exist:’ the compensation scheme should specify the extent of the benefits and the form
in which they are to come.” (quoting Williams, 170 F.3d at 603)).

that Quest abused its discretion in deciding that not offering Plaintiff a VSA was not in the
Company’s best interest.
17

Plaintiff argues that the benefits can be objectively detenTiined because they are based, “in
whole or in part” on an employee’s length of service. P1? s Reply at 5. While Quest concedes that

an employee’s length of service may be a factor in detennining severance benefits, this does not
help a reasonable person ascertain the intended benefits. First, years of service is a potential factor
but it is not a necessary factor. Second, even if an employee’s time of service were a factor, there
is no indication as to how this factor is to be weighed and considered. In fact, Plaintiff provides
no evidence demonstrating how an employee’s length of service is used to calculate VSA benefits
(for example one week of benefits for each year of service), and admits that other factors play a
role in the benefits determination. PH’s Br. at 5.
Finally, a reasonable person cannot detennine the how to request benefits under the alleged
ERISA plan. Plaintiff argues “that the procedures for obtaining benefits are embodied in the [VSA
SOP], the VSA approvals form, and the testimony of Mr. Johnson and David Norgard.” P1? s Br.
at 15. Quest argues that there are no established procedures for requesting benefits under the
alleged VSA plan. The Company also maintains that “[t]he record contains nothing regarding
avenues to apply for or appeal a denial of VSA benefits, both hallmarks of an ERI$A plan.” Defs
Br. at 30. Moreover, Plaintiff admitted that “she was not aware of any process through which she
could have submitted a claim for VSA benefits.” Id.
While the VSA SOP establishes the internal steps Quest must follow, Plaintiff fails to
explain how employees or Quest initiated the process. In fact, the record demonstrates that there

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was no set process; at times employees asked for and received a VSA,’3 other times the process
was initiated by Quest, and on at least one occasion, a VSA was offered after an employee was
terminated. See DSOMF

¶

36 (Former Employee No. 15 “was offered” a VSA);

¶

38 (Former

Employee No. 1 “was terminated and thus qualified for benefits under the Company’s Severance
Pay Plan” and was offered a VSA to receive benefits for an additional two week’s salary); PSOMF

¶ 36 (“Some employees

asked for [a VSA] and were not provided it, and some never asked and it

was offered.”). Therefore, a reasonable person cannot ascertain the process for requesting benefits.
See, e.g., Williams, 170 F.3d at 604 (“In our view, [Donovan] requires more than just the existence
of an administrative scheme. If a reasonable person cannot ascertain the claims procedures in a
purported plan, then the plan is not an ‘employee benefit plan’ under ERISA.”); Diak, 33 F.3d at
813 (finding that there was no evidence as to how employees “applied for” and received benefits
or why others did not receive benefits); Haghes, 467 F. Supp. 2d at 802 (noting that argument that
a reasonable person would know who to ask to receive benefits “is contradicted by the fact that
Hughes did not seek out any one particular person to demand his benefits”). In fact, here Plaintiff
did not know how to seek VSA benefits.
The Court does, however, conclude that pursuant to Fort Hatfax, there was a separate
administrative scheme to determine eligibility for VSA benefits. Specifically, Quest created multi
layers of review to determine whether an offer of VSA benefits was appropriate. This review
process appears to have been created solely for the VSA program. See Kulinski, 21 F.3d at 257

13

The record is not clear that departing employees actually used the term “VSA” or other similar
language when requesting VSA benefits. In other words, the employees may have simply asked
for some form of remuneration, which was ultimately paid through the VSA process.
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(“[A]n employer’s need to create an administrative system may arise where the employer, to
detennine the employee’s eligibility for and level of benefits, must analyze each employee’s
particular circumstances in light of the appropriate criteria.”). While not extensive, the VSA SOP
clearly sets forth the requirements Quest must complete before offering an employee a VSA: Quest
had to determine whether it was in the Company’s best interest to offer a VSA, decide what
benefits the severance package should include, and seek the appropriate approvals. DSOMF Ex.
B at 22-84. The SOP also established a procedure for making severance payments once approved.

Id. Moreover, as noted, this was a separate process created to determine eligibility for VSA
benefits.

Id.

In addition, Quest created the Approvals Form and required that the fonn be

completed before VSA benefits were offered.
The existence of an administrative scheme alone, however, is not enough to conclude that
an informal ERISA severance plan exists here. As already explained, a reasonable person cannot
determine the class of intended beneficiaries, the intended benefits, or the process to request
benefits under the alleged VSA benefit plan. Therefore, Quest did not unwittingly create an
informal ERISA plan.
IV.

CONCLUSION

For the foregoing reasons, Defendants’ motion for summary judgment (D.E. 71) is
GRANTED and Plaintiff’s motion for partial summary judgment (D.E. 72) is DENIED. An
appropriate form of order accompanies this opinion.

Dated: February 21, 2017

(QQ \J)
John Michael VaziejJ.S.D.J.
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