The opinion of the court was delivered by: Milton I. Shadur Senior United States District Judge
MEMORANDUM OPINION AND ORDER
Robert Fishman ("Fishman") charges Zurich American Insurance Company ("Zurich") and Zurich North America Supplemental Executive Retirement Plan ("Plan") with improperly terminating his Plan benefits in contravention of the Employee Retirement Income Security Act ("ERISA"). Fishman seeks (1) reinstatement of his benefits, (2) payment of withheld past benefits and (3) a civil penalty to be imposed for nonproduction of certain documents that he requested relating to his denial of benefits. Counterclaiming for unjust enrichment, Zurich and the Plan respond that Fishman forfeited his Plan benefits by accepting employment with a competitor, so that they seek repayment of the one payment that had been made to Fishman.
All parties now move for summary judgment under Fed. R. Civ. P. ("Rule") 56. For the reasons stated in this memorandum opinion and order, the Zurich-Plan motion for summary judgment is granted almost in its entirety, while Fishman's motion is granted to a minor extent.
Summary Judgment Standard
Every Rule 56 movant bears the burden of establishing the absence of any genuine issue of material fact (Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)). For that purpose courts consider the evidentiary record in the light most favorable to nonmovants and draw all reasonable inferences in their favor (Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir. 2002)). But to avoid summary judgment a non-movant "must produce more than a scintilla of evidence to support his position" that a genuine issue of material fact exists (Pugh v. City of Attica, 259 F.3d 619, 625 (7th Cir. 2001)) and "must set forth specific facts that demonstrate a genuine issue of triable fact" (id.). Ultimately summary judgment is warranted only if a reasonable jury could not return a verdict for the non-movant (Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
One more complexity is added here, where cross-motions for summary judgment are involved. Those same principles require the adoption of a dual perspective that this Court often refers to as Janus-like: As to each motion the non-movant's version of any disputed facts must be credited.*fn1
Zurich employed Fishman from January 1994 through the end of June 2004 (F. St. ¶4). From November 1999 until some time near the end of Fishman's term at Zurich (or perhaps until the end) he held the position of "Vice President -- Diversified Products" (F. St. ¶4; Z. Resp. St. ¶4). Fishman became a participant in the Plan on January 1, 2001 (Z. St. ¶2).
Immediately upon departing Zurich, Fishman received one benefit payment of $62,081.67 from the Plan (Z. St. ¶53). Shortly thereafter, however, Zurich learned that Fishman had accepted a position as President of U.S. Insurance at Quanta U.S. Services ("Quanta") and, upon decision of the Administrative Committee, deemed that Fishman had forfeited his Plan benefits through breach of the Plan's non-compete clause (Z. St. ¶¶54-56). Zurich terminated his Plan benefits, and Fishman has received nothing further.
Fishman contends that the Plan is not a so-called "top-hat plan" (more on what constitutes a top-hat plan later), so that it is not exempt from ERISA's vesting provisions and his benefits cannot be forfeited. Alternatively, even if the Plan is a tophat plan and the forfeiture provision can operate against Fishman, he argues that the Administrative Committee that denied his benefits was improperly constituted and lacked the power to make benefit decisions. Fishman further asks for a civil penalty to be levied against Zurich (as the Plan's administrator) because of the nonprovision of requested documents during his appeal of the denial of his benefits. As a counterclaim, Zurich and the Plan charge that Fishman should be made to repay the benefits he already received under the Plan (Z. Motion ¶7).
As an "employee pension benefit plan" defined by 29 U.S.C. §1002(2),*fn2 the Plan is subject to ERISA's strictures (F. St. ¶1). Primarily at issue is how much of ERISA applies. If the Plan is a "top-hat plan," as Zurich and the Plan would have it, "it is excepted from ERISA's vesting, participation, funding, and fiduciary rules" (Olander v. Bucyrus-Erie Co., 187 F.3d 599, 604 (7th Cir. 1999)). Fishman urges that the Plan is not a top-hat plan, rendering those sections of ERISA applicable.
If Fishman is right, ERISA's nonforfeitability provision (Section 1053) applies, and Fishman's Plan benefits would have become fully nonforfeitable after either his fifth or seventh year of service (which of those alternatives applies is irrelevant, because Fishman was with Zurich for ten years). Conversely, if the Plan is a top-hat plan ERISA's nonforfeitability provision is taken out of play, and the Plan's forfeiture clause is valid. Plainly there is a great deal at stake.
To qualify as a top-hat plan, a plan must be "unfunded and [ ] maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees" (Section 1051(2)). Any such plan must be written to conform to, and must actually operate within, those requirements.*fn3 And as a general proposition, ERISA's status as a remedial statute causes its coverage to be liberally construed, with exemptions confined to their narrow purpose (Kross v. W. Elec. Co., 701 F.2d 1238, 1242 (7th Cir. 1983)).
One part of the top-hat definition requires that such a plan must be unfunded (Section 1051(2)). In his own motion for summary judgment Fishman has not challenged that element--yet in response to the Zurich-Plan motion for summary judgment Fishman does assert that the Plan is funded (Fishman Resp. Mem. 10). Hence this opinion must examine that issue.
During the lifetime of the Plan at least two outside plans merged into it. When the Maryland Casualty Company Supplemental Executive Retirement Plan ("MCC Plan") was merged with the Plan, Zurich's Board of Directors resolved that "all assets and liabilities of the [MCC] Plan shall be deemed assets and liabilities of the [Zurich] Plan, effective January 1, 2000" (Fishman Resp. Mem. 10; F. St. Ex. 14 at Z22059). Fishman says that shows the MCC Plan was funded and held "plan assets," in turn causing the Plan to be funded because it took on those "plan assets" in the merger (Fishman Resp. Mem. 10).
To be sure, as the non-movant on that issue Fishman gets the benefit of all reasonable favorable inferences. But for their part Zurich and the Plan contend that such "boilerplate language" in a Board resolution fails to establish the existence of any assets,*fn4 and the single piece of testimony on the subject is a statement of unawareness of any assets having been transferred from the MCC Plan to the Plan in the merger (Z. Reply Ex. 10 at 269:17-272:17). Despite the vast amount of discovery over the 2-1/2 year life of this case (including Fishman's full opportunity of access to the Plan's financial information), Fishman has not identified any Plan assets. In those circumstances an inference from the resolution alone cannot be said to be reasonable, and Fishman flunks on the "unfunded" component.*fn5 Primarily Providing Deferred Compensation
To qualify as a top-hat plan, a plan must also be maintained primarily for the purpose of providing deferred compensation for a select group (Section 1051(2)). As the statutory language itself makes clear, providing deferred compensation need not be the sole reason for the plan's existence (Garratt v. Knowles, 245 F.3d 941, 946 n.4 (7th Cir. 2001)("the top hat plan can have multiple broad purposes")). Fishman concedes on that element of top-hat plan qualification.
Select Group of Management or Highly Compensated Employees
It is on the question whether only a select group of management or highly compensated employees was eligible to and did participate in the Plan that the parties butt heads most squarely. Fishman argues that lower level employees were also eligible to and did participate in the Plan, while Zurich and the Plan strongly challenge that assertion.
In arguing that the Plan limited eligibility to a select group of management or highly compensated employees, Zurich and the Plan stress Plan §10.11:
This Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of "management or highly-compensated employees" within the meaning of Sections 201, 301, and 401 of ERISA.
That provision was part of Plan Art. X, entitled "General Provisions." Indisputably the Plan was created with the intention of operating as a top-hat plan.
Fishman counters with Plan Art. II, dubbed "Eligibility," which deals specifically with eligibility to participate in the Plan. Plan §2.01 (F. St. Ex. 3) states:
An Employee shall be eligible to participate in this Plan if that individual is:
(a) At least age fifty-five (55) years of age and has ten (10) or more Years of Service; and
(b) The Chief Executive Officer of the Company; or is a direct report to the Chief Executive Officer of the Company; or is designated in writing as a participant in this Plan by the Chief Executive Officer of the Company and the Executive Vice President of Corporate Development (or succeeding position); or is designated in writing as a participant in this Plan by the ...