would impose large financial obligations that no company was likely to accept by silence.
--Because he was represented by counsel, Licciardi should have known better than to assume that pension inclusion was dictated by some background legal principle. As the discussion below will demonstrate, the only case that could support that proposition comes from another circuit, is contradicted by Seventh Circuit authority, and was decided eight years after Licciardi signed the Agreement.
It would be difficult to construct a more compelling parallel between the two situations.
Under these circumstances, the present attempt to force inclusion of the $ 650,000 payment in the calculation of Licciardi's pension unquestionably constituted a "known or unknown" claim that was barred by the Release provision. Judge Cudahy's words in Fair could not be more apt. As they used to say on Dragnet, only the names have been changed--though not necessarily (as in Dragnet) "to protect the innocent" ( Fair, 905 F.2d at 1116):
The plain language of the Settlement Agreement precludes [Licciardi] from bringing suit against [Anadite or its successors] on any claim arising from [his] employment relationship with [Anadite]. The Settlement Agreement does not provide that [Anadite] must consider the [$ 650,000] Settlement Payment to be part of (his] monthly compensation for purposes of [his] pension; [Licciardi]'s attempts to add that language now are unavailing.
Just as that reasoning barred Fair's claims brought on both contract and ERISA theories, it bars Licciardi's claim here brought solely under ERISA.
Default Rule Elsewhere
Eckersley v. WGAL TV, Inc., 831 F.2d 1204, 1209 (3rd Cir. 1987) (citation omitted) holds that an employer must include the settlement of a claim for past due compensation toward the plaintiff's pension, even if the settlement agreement includes a release clause and the employer does not concede liability on the underlying claim for compensation:
Had the suit gone to judgment and the payment been made in satisfaction of that judgment, the payment would be treated as compensation. . . . If we were to [hold] that a payment in settlement of a lawsuit to enforce a claim for compensation should be treated differently than a payment on the claim, we would discourage such settlements and encourage their litigation to judgment. Such a result would be inconsistent with the strong public policy favoring pre-judgment settlements of lawsuits.
Licciardi relies heavily on Eckersley, and understandably so. If Eckersley were the law of this circuit, the inclusion of the $ 650,000 in calculating Licciardi's pension would be dictated as a matter of law. And the parties' silence as to pension treatment would be construed to signify their acceptance (or perhaps ignorance) of that background rule.
But unfortunately for Licciardi, in this circuit all's Fair. That case did not even mention Eckersley, suggesting that the parties simply failed to bring the Third Circuit opinion to the court's attention and that the court did not uncover Eckersley on its own.
Yet the conflict between the cases is obvious.
Fair teaches that when there is no express affirmative agreement on the pension treatment of a settlement payment,
the existence of a broad general release bars the recipient of the settlement payment from bringing a later suit to force the inclusion of the payment in his or her pension. Licciardi's claim falls squarely within that teaching. Eckersley effectively deems the terms of a general release irrelevant, because it holds that the pension treatment is dictated as a matter of law. That poses a circuit split, whether or not the circuits have noticed it.
This Court must follow Fair.
A word should be said about the scope of the mute dispute between Fair and Eckersley. One might argue that Fair, by emphasizing the employer's plain intention to exclude the payment from the plaintiff's compensation, does not necessarily depart from the Eckersley background rule. But Judge Cudahy's concluding statement makes that interpretation implausible (905 F.2d at 1117):
Had Fair insisted at the bargaining table that the Settlement Payment be included in her monthly compensation (for purposes of her pension), the nominal value of IFF's settlement offer to it presumably would have been diminished. We refuse to give Fair for free what she evidently declined to purchase at the settlement negotiations for a price.
This statement merely extends to the ERISA context the general rule that a settlement should not ordinarily carry with it the ancillary consequences of a judgment on the merits. Any reversal of that rule should be accomplished at the bargaining table, not in the courtroom.
Settlement payments may connote any number of things: a concession of liability, or a willingness to bear the nuisance value of the lawsuit, or a willingness to buy peace at a much larger price, or a desire to put controversy behind and go on to better things, to name just a few. Whatever the payment in settlement of a disputed compensation claim may really represent in any given case, Eckersley always requires the employer to calculate pension benefits as if 100% of the payment represented a concession of liability. Under such a regime an employer can avoid that consequence only by pursuing litigation to the bitter end in hope of a favorable judgment. Eckersley therefore reverses--without discussing--the policy under which the law encourages settlements by refusing to treat them as admissions of liability unless the parties so agree.
If it were possible to roll back the clock to delve into the question that Anadite never had to answer (even to itself), the result here would probably differ from either side's extreme position. Anadite's willingness to settle--or more accurately the figure at which it was willing to do so--very possibly reflected its recognition of some liability for Licciardi's past services in addition to its desire to get the Licciardi burr out from under its corporate saddle. To the extent that the payment represented the former element, it would be most fair to Licciardi if the eventual pension payment gave credit for that portion. But to the extent that the payment satisfied any one or more of an entire set of other motives, it would be most fair to Anadite (and now to Lone Star) if the pension calculation excluded that portion of the payment.
No Article III commission has been conferred on King Solomon to resolve ERISA disputes in such a fashion. Unless Congress dictates otherwise as a general rule, or unless the parties dictate otherwise in a specific case, one party must bear the entire cost of a decision one way or the other. Or to put the Fair-Eckersley conflict another way, the choice is between Fair's reliance on freedom of contract and Eckersley's treatment of ERISA as overriding the contractual doctrine that parties may release unaddressed issues that go to the ERISA plan consequences of a settlement agreement. Even if this Court were not bound by jurisprudential principles to follow the path marked out by our own Court of Appeals, it would still opt for that route as the better-reasoned one.
Licciardi has not proved his entitlement to a judgment as a matter of law. Hence his Rule 56 motion is denied.
Ordinarily it would be appropriate at this point to order the submission of briefs on Lone star's pending motion for partial summary judgment.
En route to denying Licciardi's motion, however, this opinion has effectively demonstrated that the Release, both by its own terms and under the mandate of Fair, bars any consideration of the merits of this case. Licciardi's one hope was to show that the Agreement clearly established his entitlement to a larger pension. Having failed to make that showing, he is barred by the Release from asking a court to find defendants liable on any other theory.
Therefore the only sensible course is to direct the entry of a judgment as a matter of law in favor of Lone Star and the Plan and against Licciardi. It is so ordered, and this action is dismissed.
Milton I. Shadur
United States District Judge
Date: June 19, 1992