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November 9, 2004.

GERALD O. STRAUCH, M.D., Plaintiff,

The opinion of the court was delivered by: MILTON SHADUR, Senior District Judge


After this case had reached the final pretrial order ("FPTO") stage so as to be ready for trial, and after the originally scheduled trial date had to be deferred to permit some additional discovery, counsel for plaintiff Dr. Gerald Strauch expressed the view that the trial could be streamlined materially if certain of Dr. Strauch's multiple claims against defendants American College of Surgeons ("College") and its Staff Members' Retirement Plan ("Plan")*fn1 were susceptible to resolution via summary judgment as a matter of law. Based on its extensive treatment of various issues in its earlier opinions and rulings, this Court considered such an effort worth exploring. Accordingly the parties have complied with this District Court's LR 56.1 in addressing Dr. Strauch's Counts III, V, VI and VII in his Third Amended Complaint ("TAC"). With the final memorandum now in hand, this Court finds Dr. Strauch's motion as to those claims to be ripe for decision.

Counts III and V

  One area of dispute between the parties stems from College's nonpayment of any compensation for the services that Dr. Strauch rendered between December 31, 2001 (the date that College has treated as the termination date of his employment) and January 11, 2002 (the date when College caused his building pass to be deactivated and he ceased work). Dr. Strauch has testified that he continued to provide the same services during that stub period that he had been providing up to December 31, and with College having offered no evidence to the contrary (or even a whisper of evidence that could create a contrary inference), there is no genuine issue of material fact on that score.

  As for Dr. Strauch's entitlement to compensation for that brief period, College seeks to rely on its original December 7, 2001 notification to Dr. Strauch that his employment would terminate December 31. But it is undisputed that the December 7 notification was far from the end of the story. Instead discussions between the parties continued, and on December 19 College sent Dr. Strauch a memo reflecting an offer to continue their relationship under a proposed consulting agreement (a document that accompanied the memo). There was further back and forth, with Dr. Strauch making a counterproposal on January 2. In turn College transmitted alternative proposals — a consulting agreement and a severance agreement — on January 8, with a statement in the forwarding letter that Dr. Strauch had to respond by January 11 (that January 8 communication is what led to the final physical severance on January 11).*fn2 And as stated earlier, all the while Dr. Strauch was continuing to perform the ongoing assignments that Dr. Russell has acknowledged that he had given Dr. Strauch during the prior year as his continuing responsibilities.

  When Dr. Russell was questioned on that score during his deposition, he originally admitted that Dr. Strauch was entitled to be paid for the stub period in question. Then after a break in the deposition, during which he consulted with College's counsel, Dr. Russell changed his story via a purported "clarification" that really reversed his field. That switch became the subject of a motion in limine by Dr. Strauch, which led to this ruling as part of this Court's February 19, 2004 memorandum opinion and order, 2004 WL 524442 (cited "Feb. 19 Op.") at *4-*5:
Strauch's sixth motion (Dkt. No. 93-1) is captioned "Deviation from Deposition Testimony" and seeks to preclude College's witness, Dr. Thomas Russell, from altering his original deposition testimony in two respects to conform to the revised versions that emerged only after what Strauch's counsel has labeled as coaching by College's counsel during breaks in the Russell deposition. This Court has already expressed its views as to the impropriety of the so-called "clarifications" by Russell, a euphemism that would mask what really amounted to changes in his previously sworn answers. It adheres to that view.
At the same time, this Court certainly wishes to avoid any presentation to the jury that would tend to muddy up defense counsel by reference to such coaching and thus create a possibly unfair disadvantage for College in consequence of such a collateral issue. This Court therefore expects that Russell will be instructed in advance of testifying at trial that his testimony is to be in accordance with his earlier (pre-"clarification") deposition testimony on the two subjects at issue. If he were not to do so, the original deposition testimony would become available to Strauch's counsel by way of impeachment — but Strauch's counsel will not be permitted in that respect to argue then that any different version was assertedly concocted for Russell's presentation at trial, for such an argument would in turn open up the admissibility of what would then become a prior consistent statement (that is, the revised "clarification" after Russell had conferred with defense counsel during the course of the deposition).
  It appears from what College has said in its C. St. ¶¶ 18-20 that its counsel do plan to proceed by relying on Dr. Russell's "clarification" (something that is not barred by the last-quoted ruling, although the jury would be entitled to be informed as to the circumstances under which the "clarifying" statement was made). That being so, the Fed.R. Civ. P. ("Rule") 56 requirement of accepting College's factual version, drawing all reasonable inferences in its favor, seems — as hollow as the "clarification" explanation rings — to preclude the granting of Dr. Strauch's motion as a matter of law (even though Dr. Strauch's last filing has taken the contrary position even if College's stance were to be adopted arguendo, and even though the Rule 56 question is certainly a close one).

  But this Court would be remiss if it failed to note the difference between the standard under Rule 56 (paralleled under Rule 50 when the same evidence is viewed at trial) and the standard under Rule 59. If in response to a written interrogatory as to Counts III and V the jury were to rule in College's favor, and if the trial evidence had mirrored what has been proffered to this Court, the standard applicable on a motion for new trial on that score would be very different: whether the jury's verdict was against the clear (often phrased as "manifest") weight of the evidence (among the host of cases from all Circuits so holding, see, e.g., Gen. Foam Fabricators, Inc. v. Tenneco Chems., Inc., 695 F.2d 281, 285, 288 (7th Cir. 1982) and, two decades later, ABM Marking, Inc. v. Zanasi Fratelli, S.R.L., 353 F.3d 541, 545 (7th Cir. 2003)). To that end this Court would be entitled to consider the nature and circumstances of the Dr. Russell "clarification" (a euphemism, as already stated) in the course of evaluating the clear weight of the evidence, and from the present perspective that would mean the issue would have to be retried.*fn3

  Count VII

  As a result of the current motion this Court has taken a fresh look at the issue of Dr. Strauch's claim based on College's refusal to honor his election to receive his pension funds under the Plan in a lump sum. It acknowledges with regret that in looking at College's effort to resist Strauch's motion (Dkt. No. 91-1) in Feb. 19 Op. at *3, this Court succumbed to what further study and analysis discloses to be a total red herring.*fn4 Let us then begin anew. Dr. Strauch had an absolute and unrestricted right to a lump sum distribution of his retirement benefits: By its February 5, 1999 Amendment to the Plan, College amended Plan § 6.4(c) effective January 1, 1999 to create such an absolute right (before that amendment, lump sum treatment was available only to participants whose Accrued Benefit determined in accordance with Internal Revenue Code § 417(e) had a present value of $25,000 or less). And College indeed admitted that in its Answer § 81 to the TAC and admits it once again in its C. St. ¶ 23.

  That being the case, College had no right whatever to respond as it did to Dr. Strauch's election by imposing a condition that he post security (or, for that matter, by imposing any other condition) before it made the required prompt payment of his retirement benefits under the Plan. To be sure, if College did not take some action to address the actuarial sufficiency of the remaining Plan assets to avoid an adverse tax consequence, it might have faced the possible loss of tax qualification for the Plan. But that was College's problem, not Dr. Strauch's.

  Here is what Feb. 19 Op. at *2-*3 said, with total accuracy, on the subject: As for Strauch's asserted failure to post security, it must be remembered that the evidence previously identified for consideration by this Court is that before College insisted that Strauch had to do so it had imposed no such requirement on anyone else as the price of a lump sum benefit distribution from the Plan — and that such lump sum distributions had indeed been made to others without any such requirement. And Strauch is right in stating that neither the Treasury Regulation nor the Revenue Ruling on which College and the Plan seek to rely imposes any such obligation on employee benefit plan participants.

Moreover, it is uncontested that if College and the Plan wished to avoid any possible loss of its qualification for tax purposes, College had ample funds to maintain the Plan's funding level at the required 110% of its assets or to post any required security that the Treasury Regulation or Revenue Ruling might require.
But Feb. 19 Op. at *3 then went on to posit the presentation of the question as a jury issue at trial:
For one thing, there is no dispute that College "has at all times had sufficient assets and/or resources to fund the Plan so that Plan's current assets were equal to or exceeded 110% of current liabilities in order to enable Strauch to receive the lump sum distribution of retirement benefit as requested" (FPTO Ex. 2(a) ¶ 44). From that premise Strauch seeks a ruling that no legal impediment prevented College, as both employer and Plan sponsor, from posting any security or providing any funding that would be needed to allow the lump sum distribution to Strauch while still retaining Plan's tax-qualified status. Neither College nor the Plan really takes issue with that position, urging instead that College had no legal obligation to act as Strauch contends it should have. Although College says that demonstrates Strauch's misstatement of its position, it seems plain that College has in turn impermissibly recharacterized Strauch's position.
In short, Strauch's motion will be granted in the respect just discussed, but without preventing either side (1) from arguing that the other should have provided the wherewithal to allow the lump sum distribution without sacrificing the Plan's tax qualification or (2) from responding that the Internal Revenue Code and its regulations imposed no obligation to do so. Again the issue is whether College's failure to take any such steps, as it had the power and ability to do, constituted retaliation for Strauch's complaints of age discrimination.³
³ Defendants' Mem. 13 misleadingly states that Treasury Regulation (actually Revenue Ruling) 92-76 "explicitly states" that an employee in such circumstances "shall post security." Not at all. What the Revenue Ruling states instead (unsurprisingly) is that a plan that contains an express provision for an employee's escrow deposit or bond or letter of credit does not violate the applicable Treasury Regulation, something far different from a ruling that employees have the legal obligation to do so if a plan contains no such requirement. And here, of course, the Plan lacks any such requirement. That leaves the issue to be resolved in this case in the manner already identified in the text.
  On further consideration such prospective treatment was mistaken, for it would give College far more than it is entitled to as a matter of law. Rev. Rul. 92-76 cuts directly against College's position, rather than providing it any support (as College would have it): Because under that 1992 Ruling it would have been legally permissible for the Plan to have imposed a requirement for an employee's posting of security, and because the Plan was amended in 1999 (some seven years later) to confer an unfettered right on the employee's part to lump sum distribution without, imposing any such requirement,*fn5 it was impermissible for College or the Plan to attempt to place such an unauthorized burden on Dr. Strauch.

  It should again be emphasized that if College wished to maintain the Plan's tax qualification (a matter plainly not Dr. Strauch's responsibility at all), it had more than ample resources and more than ample time to do so. Most importantly, College's counsel are dead wrong in mischaracterizing a payment of lump sum benefits, as mandated under the Plan, to be barred somehow by the Internal Revenue Code if the payment were unaccompanied either by an actuarially calculated funding of the Plan or by the posting of security — instead such things were simply the price that had to be paid if the Plan's favored tax treatment were to be maintained.

  In short, whatever the Feb. 19 Opinion may heretofore have indicated as expressing a different view of this aspect of the dispute between the parties, this Court now holds unequivocally that College violated Dr. Strauch's unambiguous right under the Plan to receive a lump sum payment of his accrued retirement benefit without the imposition of any condition. It is thus unnecessary for Dr. Strauch to rely on any argument of disparate treatment based on the fact that College had paid others without seeking their posting of security, as it demanded of Dr. Strauch. Instead such payments to others must be ...

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