The opinion of the court was delivered by: Campbell, District Judge.
The complaint in this action alleges that the plaintiffs are
former employees of defendant; that, on February 1, 1944,
defendant put into effect a certain retirement income plan for
its employees; that all contributions were to be made by
defendant; that such contributions were to be used to purchase
retirement insurance with the Equitable Life Assurance Society of
the United States; that said plan was an inducement to the
employees to continue in the employ of the defendant; that
defendant failed to make the necessary deposits with Equitable
for the years 1948 and 1949, thereby depriving plaintiffs of
their benefits for said years. Plaintiffs bring suit as a class
action seeking, on behalf of themselves and all other employees
of defendant, to compel defendant to pay the sums of money
necessary to continue in effect the Retirement Plan for the years
1948 and 1949, together with the amounts necessary to purchase
retirement income for the years of service prior to the entry
into the Plan.
Defendant moves to dismiss the action on the following grounds:
1. The Court is without jurisdiction for the reason that the
interest of each of the plaintiffs is less than the
jurisdictional amount of $3,000, and this is not a true class
action wherein the claims of all the members of the class may be
aggregated to reach the jurisdictional amount.
2. The complaint fails to allege facts showing that the
plaintiffs are proper representatives of the class which they
purport to represent and, on the contrary, they are not such
representatives of the class described in the complaint so as to
entitle them to maintain this suit.
3. The complaint fails to state a cause of action for the
(a) Plaintiffs fail to allege facts necessary to make out an
equitable estoppel in their favor and there is, in fact, no basis
for an equitable estoppel.
(b) There exists no contract between plaintiffs and defendant
upon which to base an action at law; at most, defendant's
employee benefit plan constituted an unenforceable gratuity.
(c) Even construing the Plan as a contract between plaintiffs
and defendant, plaintiffs are bound by its terms and precluded
from maintaining this action.
(d) Even construing the Plan as a contract and refusing to give
effect to its express provisions sufficient notice was given
plaintiffs by defendant to constitute an effective termination
pursuant to the terms thereof.
In disposing of the motion to dismiss, the Court will assume
that this is a true class action and will then proceed to
consider the question of whether the complaint states a claim
upon which relief can be granted. In that regard, an exposition
of the Retirement Plan and the defendant's administration of it
(as revealed in defendant's affidavits and exhibits submitted in
connection with the motion) should be made. In substance, the
Plan provided that employees who, on February 1, 1944, had
completed two years of continuous service and had attained the
age of thirty would become participants under the Plan as of that
date, provided that they had not then attained their sixtieth
birthday. New employees and employees with less than two years of
service would become eligible on the February 1st next preceding
their completion of two years continuous service and the
attainment of their sixtieth birthday. All contributions to the
Plan were to be made by defendant. These contributions were to be
paid to Equitable to purchase retirement income for eligible
employees according to a formula applied to each employee. The
details of this formula are set out in Section 6 of the plan.
Briefly, the amount of retirement income purchased for each
employee each year was computed on the basis of the employee's
monthly average earnings for the preceding calendar year
multiplied by a percentage factor determined by his age at the
time of his entry into service. A further provision provided for
the purchase over a period of years of retirement income based on
years of service occurring prior to the adoption of the Plan.
When the employee attained the age sixty-five, he would then
receive an annuity determined by the amount of contributions that
had been made for him. Optional provisions were provided with
respect to continuation of payments to beneficiaries designated
by the employee and certain death benefits also accrued under
certain conditions. Section 10 of the Plan provided that if the
service of any employee participating in the plan was terminated
prior to the completion of five years of employment, he would
receive no benefit under the Plan; it provided that if an
employee's service as terminated for any reason after five years
of service, but before attainment of age forty-five, he would
receive the cash value of all retirement income purchased for him
prior to termination of service; it provided that if the
employee's service was terminated for any reason after five years
of service and attainment of forty-five years, he would receive a
paid-up annuity covering all retirement income purchased for him
prior to termination of service.
Pursuant to the Plan, defendant entered into a Group Annuity
Contract with Equitable to take effect on February 1, 1944.
Equitable thereupon issued individual participation certificates
to those employees coming under the Plan. Payments were made by
defendant to Equitable for all participants on February 1st of
the years 1944, 1945, 1946 and 1947. In 1948 defendant purchased
the retirement income under the Plan at the end of the year
instead of at the beginning and, therefore, the payments for 1948
were made in January of 1949.
Pertinent sections of the old Plan provided:
"Section 12. Certificates. The Equitable will issue for
delivery to each Participant who is covered under the Plan a
certificate of his inclusion under the Group Annuity Contract
issued to the Company by the Equitable. Benefits under the Plan
will be governed in every respect by the Group Annuity Contract.
The only rights or benefits that any Participant may have under
the Plan shall consist only of those rights and benefits
purchased for him ...