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Wignes v. Aon Corporation Excess Benefit Plan

March 19, 2010

WAYNE WIGNES, PLAINTIFF,
v.
AON CORPORATION EXCESS BENEFIT PLAN, DEFENDANT.



The opinion of the court was delivered by: Hon. Ronald A. Guzman United States District Judge

Judge Ronald A. Guzmán

MEMORANDUM OPINION AND ORDER

Plaintiff Wayne Wignes ("Wignes") has brought this action to challenge the Aon Corp. Excess Benefit Plan's denial of his claim for benefits pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B). Before this Court are the parties' cross-motions for summary judgment. For the reasons provided in this Memorandum Opinion and Order, the Court grants defendant's motion for summary judgment and denies plaintiff's cross-motion for partial summary judgment.

Facts*fn1

On January 1, 1989, Aon Corp. ("Aon") established the "Aon Corp. Excess Benefit Plan" ("Plan"). (Pl.'s LR 56.1(b)(3)(C) Stmt. ¶ 1.) The Plan contains restrictions that may result in a diminution of benefits that are available to some highly compensated employees of Aon. (Id. ¶ 2.) The Plan was established to replace benefits that are lost as a result of such diminution to eligible employees. (Id. ¶ 3.) Thus, the Plan is intended to be an "unfunded deferred compensation plan for a select group of management or highly compensated employees." (Id. ¶ 3.) On November 21, 2003, Aon's Board of Directors enacted the Fifth Amendment to the Plan that provided for the forfeiture of benefits at issue here. (Def.'s LR 56.1(a)(3) Stmt. ¶ 13.)

On July 11, 1989, Aon hired Wayne Wignes. (Id. ¶ 6.) On June 11, 2007, Wignes voluntarily terminated his employment with Aon. (Id. ¶ 8.) On November 19, 2007, Greg Case, the Chief Executive Officer of Aon, was asked to determine whether Wignes had breached the Plan's prohibition-on-competition provision. (Id. ¶ 15.) Aon received information that Wignes attempted to solicit Aon clients to move to the Jardine Lloyd Thompson Group, PLC ("JLT") and was successful in convincing one client to make such a move. (Id. ¶ 16.) Case was told that Wignes had been reminded of obligations under the Plan on his last day of employment and three additional times during the following six weeks. (Id. ¶ 17.) Wignes never denied soliciting Aon customers after he terminated his employment with Aon. (Id. ¶ 18.)

On February 19, 2008, Aon initially denied Wignes' claim for benefits. (Id. ¶ 19.) The denial informed Wignes that Aon had determined that he was directly competing with Aon in violation of the Fifth Amendment to the Plan, which provides for a forfeiture of a member's benefits if that member competes with Aon. (Id.) After this initial denial, Wignes requested a review of the decision by the Administrative Committee of the Aon Excess Benefit Plan ("committee") pursuant to Section 6.3(c) of the Plan. (Id. ¶ 20.) In his request for review, Wignes acknowledged that he was employed by a competitor. (Id. ¶ 21.)

On May 14, 2008, the Administrative Committee of the Aon Excess Benefit Plan informed Wignes that his appeal on the denial of his benefits had been rejected. (Id. ¶ 22.) Such a determination was based on Wignes' argument that "the non-compete provision contained in Section 4.5 of the Plan was introduced without mutual consent or specific consideration and is, therefore unenforceable." (Id.) The Committee instructed Wignes that he "did not offer for the record on review any support for [such an] argument, and it is the belief of the Committee that the Federal District Court for the Northern District of Illinois has previously rejected the same argument." (Id.) Plaintiff then brought this action under ERISA. (Id. ¶ 3.)

Discussion

Summary judgment is to be granted "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c)(2). "In considering cross-motions for summary judgment, we . . . view all facts and draw all reasonable inferences in a light most favorable to the party against whom the motion under consideration is made." Gazarkiewicz v. Town of Kingsford Heights, 359 F.3d 933, 939 (7th Cir. 2004).

I. Exhaustion

ERISA requires a litigant to first exhaust all of its administrative remedies prior to bringing an action in court with respect to a denial of benefits. Gallegos v. Mt. Sinai Med. Ctr., 210 F.3d 803, 807-08 (7th Cir. 2000). There are a number of functions served by requiring the exhaustion of administrative remedies, including: (1) the ability to "assemble a factual record which will assist a court" in reviewing the decision (2) "to minimize the number of frivolous lawsuits;" (3) to "promote a non-adversarial dispute resolution process;" and (4) to "decrease the cost and time of claims settlement." Lindemann v. Mobil Oil Corp., 79 F.3d 647, 649 (7th Cir. 1996). Claims, however, may be waived by a party if they are not presented during prior administrative proceedings. Id. The Seventh Circuit has held that administrative remedies are not exhausted with respect to certain claims where plaintiff failed to raise those claims throughout the entire administrative process. See Hess v. Reg-Ellen Mach. Tool Corp. Employee Stock Ownership Plan, 502 F.3d 725, 729 (7th Cir. 2007).

It is clear from the record that Wignes' claim in Count I was raised during the administrative proceedings. During those proceedings, Wignes' counsel argued that "Aon's attempt to unilaterally impose non-compete language in the Aon Excess Benefit Plan, after the fact, is legally untenable." (Letter from Booher to Naar of 7/31/07, at 2.) In response to Wignes' argument that the "non-compete provision in Section 4.5 of the Plan was introduced without mutual consent or specific consideration and is, therefore, unenforceable," Aon informed Wignes that he "did not offer for the record on review any support for this argument." (Letter from Reschke to Wignes of 5/14/08, at 2.) Wignes brings the same claim in Count I of his Complaint and alleges that "[t]he Fifth Amendment to the [Plan] . . . is void and unenforceable as to [Wignes] because the [Plan] constitutes a unilateral contract which created a vested right in [Wignes] by his continuing in employment with Aon Corporation for the requisite number of years." (Compl. ¶ 27.) The Court holds that Wignes has exhausted his administrative remedies with respect to Count I, and thus, the Court may review this claim.

However, Wignes failed to raise the issues alleged in Count II during the administrative proceedings. Count II states that "[t]he Fifth Amendment to the [Plan] . . . specifically provides that a denial of benefits due to business competition shall act as such denial only to benefits which have not yet accrued to the Plan Member." (Compl. ΒΆ 33.) Wignes alleges that "[u]nder that amendment, only benefits accruing after the adoption of the Fifth Amendment would be subject to a denial or forfeiture as a result of any business competition by the Plan member." (Id.) Wignes never presented this theory during the administrative proceedings. Instead, he merely asserted that the "language [of the Fifth Amendment] conflicts with [his] employment agreement and was introduced without mutual consent or specific consideration." (Letter from Wignes to Reschke of 3/11/08, at 1.) Because his argument was never presented during the administrative ...


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