The opinion of the court was delivered by: Marovitz, District Judge.
Motion to Dismiss and Cross-motions for Summary Judgment
Plaintiff David Frary brings this action against Shorr Paper
Products, Inc. (Shorr Paper), Robert Shorr (Shorr), and the Shorr
Paper Products, Inc. Employees' Profit Sharing Plan and Profit
Sharing Trust (the "Plan") under the Employee Retirement Income
Security Act of 1974 (ERISA), 29 U.S.C. § 1001-1381.*fn1
Plaintiff was an employee of Shorr Paper from November, 1970 to
November, 1978 and a participant in and beneficiary of the Plan.
As of November 20, 1978, plaintiff's interest in the Plan
amounted to $9,887.54. Dieter Affidavit, ¶ 12. Shorr Paper is the
Manager of the Plan and Shorr is a trustee of the Plan. The
jurisdiction of this Court is invoked pursuant to 29 U.S.C. § 1132(e).
The gravamen of plaintiff's complaint is that he is being
treated differently than other similarly situated former
employees under the Plan because he has been denied early lump
sum payment of his vested, nonforfeitable interest in the Plan.
Section 5.4 of the Plan, as amended, provides that when an
employee's termination is for a reason other than death,
disability, or normal retirement, the employee's right to
distribution of his interest in the Plan shall commence during
the 60 day period following the end of the Plan year during which
the later of the employee's retirement or normal retirement date
occurs. Plan, as amended § 5.4. Notwithstanding the foregoing,
subsection (c) of section 5.4 vests with the Manager of the Plan
the discretion to distribute to an employee terminated for a
reason other than death, disability, or normal retirement his
interest in the Plan at a time earlier than that provided for in
subsection (b). Id. § 5.4(c). Subsection (c) requires that the
discretion exercised thereunder by the Plan Manager be exercised
in accordance with a uniform and nondiscriminatory policy. Id.
When the Plan Manager decides to distribute early, it is also
within his discretion, in accordance with a uniform and
nondiscriminatory policy, to decide whether distribution shall be
had by way of a lump sum or installments. Id.
Plaintiff does not assert that any of the Plan's provisions
violate the terms of ERISA. Rather, it is plaintiff's contention
that to his knowledge every other Shorr Paper employee whose
termination was for reasons other than death, disability, or
normal retirement has received a lump sum payment of his interest
in the Plan upon his request. Plaintiff alleges that the basis
for the discriminatory treatment which he has allegedly received
is the fact that after he left Shorr Paper he became employed by
one of its competitors. Pending before the Court is defendants'
motion to dismiss or for summary judgment and plaintiff's
cross-motion for summary judgment. For the reasons set forth
below, defendants' motion to dismiss is denied; defendants'
motion for summary judgment is granted as to defendant Shorr and
otherwise denied; and plaintiff's motion for summary judgment is
granted as to defendants Shorr Paper and the Plan.
Second, accepting all of the well-plead allegations of the
complaint as true, it must state a claim upon which some relief
can be afforded. Fed.R.Civ.P. 12(b)(6); Conley v. Gibson, 355
U.S. at 45-46, 78 S.Ct. at 101-102. ERISA authorizes the
commencement of an action by a participant in a Plan to, inter
alia, "enforce his rights under the terms of the plan."
29 U.S.C. § 1132(a)(1)(B). Therefore, accepting plaintiff's allegations as
true, the Court also finds that his complaint states a claim
under ERISA. Plaintiff alleges that pursuant to the terms of the
Plan, defendants have in the past honored the requests of
terminated employees that they receive their interests in the
Plan early and in a lump sum. Complaint, ¶ 9. Plaintiff further
alleges that defendants' refusal to honor his request for an
early and lump sum payment caused him to be treated differently
under the Plan than other employees terminated under similar
circumstances. Complaint, ¶ 11. Plaintiff alleges that this
different treatment was in violation of both the language of the
Plan calling for nondiscriminatory treatment and federal law. Id.
Therefore, the Court finds that plaintiff has stated a claim to
enforce his rights under the Plan.
As to the other two arguments made by defendants in connection
with their motion to dismiss, since those matters are resolved in
defendants' favor in the discussion below, the Court does not
reach those arguments at this point. In sum, the Court thereby
denies defendants' motion to dismiss plaintiff's complaint for
failure to state a claim upon which relief can be granted.
Motion for Summary Judgment
Plaintiff's complaint alleges that Shorr is the Manager of the
Plan. Complaint, ¶ 5. However, the record discloses that Shorr
Paper is the Plan Manager and that Shorr's role with respect to
the Plan is that of trustee. Dieter Affidavit, ¶ 2; Defendants'
Exhibit C. While genuine factual issues may not be resolved by
way of summary judgment, a plaintiff may not rest upon the bare
allegations of his complaint to rebut a properly supported
summary judgment motion and withstand the motion. First National
Bank Co. v. Insurance Company of North America, 606 F.2d 760, 768
(7th Cir. 1979). Under the Plan, it is the province of the Plan
Manager to decide whether a terminated employee shall receive
early payment of his interest in the Plan. Plan, as amended, §
5.4(c). Apart from plaintiff's incorrect allegation that Shorr is
the Plan Manager, plaintiff does not specifically allege that
Shorr was in any way responsible for the acts of which plaintiff
complains. Accordingly, defendants' motion for summary judgment
is hereby granted insofar as it seeks judgment in favor of Shorr.
The Court now turns to the principal issue presented to it by
the instant motions. Namely, whether defendants' refusal to
distribute to plaintiff his interest in the Plan early and in a
lump sum, because of his employment with a competitor of Shorr
Paper after his termination from Shorr Paper, is violative of the
Plan or the Act. This question appears to be one of first
impression. The Court prefaces its discussion of the applicable
law by noting its conclusion that there are no disputed factual
issues herein which are material to the Court's resolution of
this question. See Fed.R.Civ.P. 56(c).
Defendants acknowledge that plaintiff was not paid his interest
in the Plan early pursuant to section 5.4(c) because after he
left Shorr Paper's employ he assumed employment with one of its
competitors. In support of their motion for summary judgment,
defendants first argue that the Plan Manager has absolute
discretion to decide whether an employee shall receive his
interest in the Plan early. Alternatively, defendants assert that
plaintiff's employment with a competitor of Shorr Paper's
violated the terms of his employment contract with
Shorr Paper.*fn2 Defendants maintain that prior to plaintiff's
termination with Shorr Paper, Shorr Paper, as Manager of the
Plan, had a policy within the meaning of section 5.4(c) of the
Plan of declining to make early payments to employees who
breached their employment contracts. Dieter Affidavit, ¶ 17.
Defendants argue that such a policy is not violative of the Plan
First, the Court rejects as wholly untenable defendants'
argument that the Plan Manager's discretion is unbridled as to
whether an employee shall receive his benefits early. The Court's
reading of section 5.4(c) leaves no doubt that the terms of the
Plan impose a requirement upon the Plan Manager that any benefits
be made in accordance with a nondiscriminatory policy. Also,
while the courts recognize that they should be hesitant to
interfere with the administration of pension plans, they have
consistently required that any discretion vested with persons
charged with administering a pension plan may not be exercised
arbitrarily or capriciously. Bueneman v. Central States,
Southeast Southwest Areas Pension Fund, 572 F.2d 1208, 1209 (8th
Cir. 1978), and cases cited therein. Cf., Johnson v. Botica,
537 F.2d 930, 933 (7th Cir. 1976). More importantly, however, section
1104 of ERISA and section 10.3 of the Plan mandate that Plan