Opinion
Civil Action No. 02-11785-PBS
January 9, 2003
MEMORANDUM AND ORDER
INTRODUCTION
Plaintiff Gerard M. O'Neill moves for remand under 28 U.S.C. § 1447, on the ground that the severance program offered by the defendant New York Times in 2001 (the "2001 Plan") was not subject to the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1002 et seq. O'Neill argues that the severance program was a one-time benefit package administered by a mechanical formula, with virtually no exercise of discretion by defendants, and was therefore not covered by ERISA.
After hearing, and review of the submissions, I DENY the motion to remand on the ground that the 2001 Plan was an "employee welfare benefit plan" under ERISA § 3(1), 29 U.S.C. § 1002(1).
DISCUSSION
The essence of an ERISA plan is that it "requires an ongoing administrative program to meet the employer's obligation." Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 11 (1987). As the First Circuit recently explained:
In evaluating whether a given program falls under ERISA, we have looked to "`the nature and extent of an employer's benefit obligations.'" Rodowicz, 192 F.3d at 170 (quoting Belanger, 71 F.3d at 454). Those obligations are the touchstone of the determination: if they require an ongoing administrative scheme that is subject to mismanagement, then they will more likely constitute an ERISA plan; but if the benefit obligations are merely a one-shot, take-it-or-leave-it incentive, they are less likely to be covered. Particularly germane to assessing an employer's obligations is the amount of discretion wielded in implementing them. Where subjective judgments would call upon the integrity of an employer's administration, the fiduciary duty imposed by ERISA is vital. But where benefit obligations are administered by a mechanical formula that contemplates no exercise of discretion, the need for ERISA's protections is diminished.
O'Connor v. Commonwealth Gas Co., 251 F.3d 262, 267 (1st Cir. 2001).
Defendants make several persuasive arguments to support their position that the 2001 Plan was subject to ERISA:
First, and most important, the 2001 Plan established an ongoing administrative program requiring the exercise of employer discretion. See id., 251 F.3d at 268 (listing plans found subject to ERISA because the employer was required to exercise discretion and make non-ministerial judgment calls). The 2001 Plan called for a "Plan Administrator" with the "complete authority, in such person's sole and absolute discretion, to construe the terms of the [2001] Plan . . . and to determine the eligibility for, and amount of, benefits due under the [2001] Plan to Participants." (2001 Plan § V.)
The 2001 Plan is attached as Exhibit A to the Memorandum of Law in Support of Plaintiffs' Motion for Compulsory Remand and for Award of Costs and Fees.
A key opportunity for discretion was the determination of whether to accept employees into the 2001 Plan. Although the 2001 Plan defined the class of persons to whom it was offered, the plan expressly reserved defendants' right to "reject any individual employee with special skills or ability, or occupying a position that would require his/her immediate replacement." (Id. § 1.) Defendants did not exercise their right to reject any of the employees that accepted the 2001 Plan, but this does not mean that they never had the discretion to do so.
Second, the 2001 Plan provided for certain ongoing benefits that distinguished the plan from the "lump-sum" paradigm. For example, the 2001 Plan provided participants with twelve months of coverage under the Globe's medical plan, at the Globe's expense. (2001 Plan, § II. 2.) See Shahid v. Ford Motor Co., 76 F.3d 1404, 1410 (6th Cir. 1996) (finding plan subject to ERISA where principal benefits included one-year continuation of medical benefits). Cf. O'Connor, 251 F.3d at 270 (holding that "payment of COBRA premiums for at least one year after separation" "probably falls within ERISA's protections," though the plan as a whole was not an ERISA plan). In addition, the 2001 Plan allowed its participants to elect to defer receiving the lump sum portion of their benefit package for up to two years. (2001 Plan, § II-1.) This placed upon the plan administrator a fiduciary duty to ensure payments.
Third, defendants' intent was to establish an ERISA plan. See Wickman v. N.E. Nat'l Ins. Co., 908 F.2d 1077, 1083 (1st Cir. 1990) (holding employers' provision to employees of a booklet detailing ERISA rights to be "strong evidence that the employer ha[d] adopted an ERISA regulated plan"). The 2001 Plan stated that it was "intended to fall within the definition of an employee welfare benefit plan under Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (`ERISA')." (2001 Plan § 1.) The 2001 Plan included a section discussing the employees rights' under ERISA. (Id. § 7-8). While an expression of employer intent will not make a plan subject to ERISA "where the plan document itself indicate[s] a contrary result," O'Connor, 251 F.3d at 272, here the expression of intent is consistent with the ongoing administrative scheme established by the 2001 Plan.
ORDER
For the foregoing reasons, Plaintiff's motion for a remand (Docket No. 9) is DENIED.