964 F.2d 556 (6th Cir. 1992), 91-1419, Sutter v. BASF Corp.

Docket Nº:Lester SUTTER (91-1419); Anna Karbosky, Michael Manyak,
Citation:964 F.2d 556
Case Date:May 18, 1992
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

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964 F.2d 556 (6th Cir. 1992)

Lester SUTTER (91-1419); Anna Karbosky, Michael Manyak,

Jr., and Stephen G. Panson (91-1420), Plaintiffs-Appellants,


BASF CORPORATION, a Delaware corporation, formerly known as

BASF Wyandotte Corporation, and Wyandotte

Chemicals Corporation, Defendant-Appellee.

Nos. 91-1419, 91-1420.

United States Court of Appeals, Sixth Circuit

May 18, 1992

Argued March 30, 1992.

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John A. Lygizos (argued and briefed), Detroit, Mich., for plaintiffs-appellants.

Robert A. Marsac (argued and briefed), Eric H. Lipsitt, Karen E. Bridges, Wise & Marsac, Detroit, Mich., for defendant-appellee.

Before: MARTIN, Circuit Judge; and LIVELY and BROWN, Senior Circuit Judges.

LIVELY, Senior Circuit Judge.

These consolidated appeals concern rights of retirees under the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. All of

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the plaintiff-retirees worked for the employer prior to the enactment of ERISA, and their claims also implicate the requirements of a pre-ERISA federal law, the Welfare and Pension Plan Disclosure Act (WPPDA), 29 U.S.C. §§ 301-309 (1958) (repealed effective January 1, 1975).



The plaintiffs are former salaried employees of BASF 1 who were covered under the company's "Basic Retirement Income Plan," adopted in January 1950. All salaried employees with 180 months of credited service were automatically enrolled in this plan and only BASF made contributions. Later in 1950 BASF adopted a "Supplemental Retirement Income Plan." This was a separate plan under which eligible salaried employees could voluntarily contribute a prescribed percentage of their salaries; BASF would then make a contribution for the benefit of each participant. Three plaintiffs seek compensation for service time lost in calculation of their retirement benefits based on their failure to contribute voluntarily to the Supplemental Plan. The other plaintiff seeks compensation for service time lost because he withdrew his contributions to the Supplemental Plan. All claim that BASF breached its duty to disclose to them the effect noncontribution and withdrawal of contributions would have on the final computation of their retirement benefits.

The first literature prepared by BASF about the Supplemental Plan did not address the effect of employees withdrawing their voluntary contributions before retirement. However, by 1960, the information booklets periodically published by BASF regarding the Supplemental Plan did explain:

What if I do not join the plan when I am first eligible?

You can join at a later date, but, of course, you will not be allowed credited service for the period during which you were eligible but did not participate.

The 1960 Supplemental Plan summary described "credited service" as:

1) The total number of years you were continuously employed prior to June 1, 1950, after the month in which you attained age 30, and

2) Each month after June 1, 1950 during which you received compensation from the company provided you joined the Plan immediately upon becoming eligible and made the contributions required under the Plan. (emphasis added)

BASF merged the Basic and Supplemental Plans in 1961, and the consolidated Retirement Income Plan for Salaried Employees (The Plan) contained the components of both earlier plans. In 1961 The Plan set forth three formulae that could be used to calculate an employee's benefits upon retirement, with the assurance that an employee's final benefits calculation would be made under the formula yielding the highest monthly payment to the employee. Formulae A and C took into account all of an employee's years of credited service as defined by the earlier Basic Plan, plus a variety of other factors; Formula B did not count the years of credited service during which an eligible employee did not contribute to the Supplemental Plan.

In 1965 BASF eliminated the voluntary contributions feature of The Plan. Employee benefits could then be calculated under two formulae: Formula I counted, among other things, only those years of credited service between 1950 and 1965 during which an eligible employee made voluntary contributions; and Formula II counted, among other things, all of an employee's credited service. A draft of a Memorandum explaining the change to BASF's employees stated:

Those employees who have been eligible to make contributions, but elected not to

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do so, will receive full benefits on our final pay formula (Formula A as described in booklet dated August 1, 1961) if that formula is to their advantage, for service after May 1, 1965, only.

Beginning in 1950 BASF periodically published summaries of the Basic Plan, the Supplemental Plan and The (consolidated) Plan. The summaries all set forth eligibility requirements, options for the payment of benefits, and interaction of pensions with Social Security benefits. In addition, many of the summaries included examples to help employees calculate their own benefits under the various formulae.

BASF presented undisputed testimony that the summary booklets were placed on file in the company's Benefits Department at the principal office in Wyandotte, Michigan. The director of employee benefits also testified that, to his knowledge, the booklets were distributed to employees, but the plaintiffs in this case contend they did not see or receive any benefits summaries until the 1970s. After the enactment of ERISA, in addition to making numerous changes in the structure of The Plan to bring it into compliance with federal law, BASF complied with ERISA's requirement that each participant and beneficiary affected by a plan be furnished with a Summary Plan Description (SPD). Some of the...

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