Arena v. ABB Power T & D Company Inc., No. IP 99-0391-C-M/S (S.D. Ind. 7/22/2003)

• Decision Date: 22 July 2003
• Docket Number: No. IP 99-0391-C-M/S.,IP 99-0391-C-M/S.
• Citation: Arena v. ABB Power T & D Company Inc., No. IP 99-0391-C-M/S (S.D. Ind. 7/22/2003) (S.D. Ind. 2003)
• Parties: ARENA, CAROL, ASHBY, LARRY L, BUSSELL, GARY L, DORSTE, DEBBIE, DOSCH, WILLIAM R, DOWD, MICHAEL B, HALER, CAROL D, HARMAN, JOHN W, HESS, WILLIAM M, JONES, CARMEL, KNIGHT, MICHAEL S, LUNA, DIANA K, MCCLAIN, BILL, MORRELL, WILLIAM, PATTERSON, PERLIE M, REECE, DONALD B, RONNAU, RICHARD A, SMITH, FREDERICK A, SNODGRASS, WILLIAM R, SOBEL, RICHARD D, STANLEY, DOUGLAS D, TAYLOR, SALLY J, THOMPSON, ROGER, THORNELL, RICHARD E, TUCKER, JAMES R, TURNER, GARY L, WAGNER, TOM, WEHRLE, GEORGE L, WILLIAMS, GEORGEANN, Plaintiffs, v. ABB POWER T & D COMPANY INC, ASEA BROWN BOVERI INC, EMPLOYEE BENEFIT COMMITTEE OF ABB INC, Defendants.
• Court: U.S. District Court — Southern District of Indiana

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ARENA, CAROL, ASHBY, LARRY L, BUSSELL, GARY L, DORSTE, DEBBIE, DOSCH, WILLIAM R, DOWD, MICHAEL B, HALER, CAROL D, HARMAN, JOHN W, HESS, WILLIAM M, JONES, CARMEL, KNIGHT, MICHAEL S, LUNA, DIANA K, MCCLAIN, BILL, MORRELL, WILLIAM, PATTERSON, PERLIE M, REECE, DONALD B, RONNAU, RICHARD A, SMITH, FREDERICK A, SNODGRASS, WILLIAM R, SOBEL, RICHARD D, STANLEY, DOUGLAS D, TAYLOR, SALLY J, THOMPSON, ROGER, THORNELL, RICHARD E, TUCKER, JAMES R, TURNER, GARY L, WAGNER, TOM, WEHRLE, GEORGE L, WILLIAMS, GEORGEANN, Plaintiffs, v. ABB POWER T & D COMPANY INC, ASEA BROWN BOVERI INC, EMPLOYEE BENEFIT COMMITTEE OF ABB INC, Defendants.

No. IP 99-0391-C-M/S.

United States District Court, S.D. Indiana, Indianapolis Division.

July 22, 2003.

Charles R Clark Beasley Gilkison Retherford Buckles & Clark Muncie, IN David B Rodes Goldberg Persky Jennings & Pittsburgh, PA Bart A Karwath Barnes & Thornburg, Indianapolis, IN

ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT ON COUNT SEVEN

LARRY J. McKINNEY, Chief Judge.

This matter comes before the Court on cross-motions for summary judgment with respect to Count Seven. In Count Seven, the only active count in the case, Plaintiffs, Carol Arena, et al. ("Plaintiffs"), allege that Defendants', ABB, Inc. (f/k/a ABB Power T & D Company, Inc.), Asea Brown Boveri, Inc., and the Employee Benefits Committee of ABB, Inc. (collectively "ABB"), violated § 204(g) of the Employee Retirement Income Security Act ("ERISA") by amending the pension plan at issue to eliminate Plaintiffs' early retirement benefits. The parties do not dispute the facts relevant to this legal issue, and request that the Court decide the matter at the summary judgment stage. The parties have fully briefed their arguments, and the motion is now ripe for ruling.

I. BACKGROUND

A. PLAINTIFFS' FAILURE TO NAME THE PENSION PLAN AS DEFENDANT

As a preliminary matter, the Court will address ABB's argument that Plaintiffs have made a fatal mistake by not naming the Asea Brown Boveri Inc. Cash Balance Plan ("Cash Balance Plan") as a defendant. As ABB notes, "ERISA permits suits to recover benefits only against the Plan as an entity . . ." Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1490 (7th Cir. 1996) (quoting Gelardi v. Pertec Computer Corp., 761 F.2d 1323, 1324 (9th Cir. 1985)). Plaintiffs sued ABB, Inc. (f/k/a ABB Power T & D Company, Inc.), Asea Brown Boveri, Inc. (the parent corporation), and the Employee Benefits Committee of ABB, Inc., but did not not sue the Cash Balance Plan itself.

The Seventh Circuit has warned lawyers that ERISA suits, especially claims for benefits, "should name the plan as a defendant." Mein v. Carus Corp., 241 F.3d 581, 584 (7th Cir. 2001). See also 29 U.S.C. § 1132(d) ("Any money judgment under this subchapter against an employee benefit plan shall be enforceable only against the plan as an entity and shall not be enforceable against any other person unless liability against such person is established in his individual capacity under this subchapter."). Despite this requirement, the Seventh Circuit has allowed ERISA cases to proceed with the company as the named defendant. See, e.g., Anstett v. Eagle-Picher Indus., Inc., 203 F.3d 501 (7th Cir. 2000); Olander v. Bucyrus-Erie Co., 187 F.3d 599 (7th Cir. 1999); Riordan v. Commonwealth Edison Co., 128 F.3d 549 (7th Cir. 1997). In deciding whether to dismiss an ERISA claim for failure to name the pension plan as a defendant, courts must consider whether or not the corporation and the plan are "closely intertwined." See Mein, 241 F.3d at 585.

In the instant case, the Court agrees with ABB that Plaintiffs should have named the Cash Balance Plan as a defendant. However, it is evident that there is a sufficiently close relationship between ABB and the Cash Balance Plan such that the suit may proceed. First, as in Riordan and Mein, the designated agent for legal process is the corporation itself. See Plan § 11.02. Second, as in Mein, the Plan Administrator is also the corporation itself. See id. ("The Administrator for the Plan . . . is hereby designated as Asea Brown Boveri, Inc."). Moreover, § 11.13 of the Cash Balance Plan gives the Plan Administrator, i.e., the corporation, the power to interpret the provisions of the Cash Balance Plan. Id. § 11.13. In addition, the Employee Benefits Committee of ABB amended the Plan in 1994, which was the action that eventually led to this lawsuit. Hence, there is some logical appeal to naming Asea Brown Boveri, Inc., and the ABB Benefits Committee as defendants. Under these circumstances, the Court considers it inappropriate to dismiss this case for failure to name the Cash Balance Plan as a defendant. See Mein, 241 F.3d at 585 (allowing suit to proceed under similar circumstances); Riordan, 128 F.3d at 551 (same).

B. FACTUAL BACKGROUND

1. Joint Venture between ABB and Westinghouse

During the 1980s, defendant Asea Brown Boveri, Inc., and/or its subsidiaries acquired a number of industrial plants across the United States.¹ As a result of the acquisitions, there were a number of different and separate employee benefit plans in place at the various sites where the plants were located. In an effort to consolidate those plans, Asea Brown Boveri, Inc., established the Asea Boveri Brown Inc. Consolidated Pension Plan in 1989 ("Option 1 Plan").

In the mid-1980s, Westinghouse Electric Company ("Westinghouse") operated a number of electric Transmission and Distribution Plants known as its Power T & D Business Unit. On February 14, 1989, Westinghouse entered into a joint venture agreement with Asea Brown Boveri, Inc., to own and operate jointly certain plants within Westinghouse's Power T & D Business Unit. All employees of the joint venture who were employed by Westinghouse on February 13, 1989, and who became employed by the joint venture on February 14, 1989, continued to be participants under the Westinghouse Electric Corporation Pension Plan (the "Westinghouse Plan").

ABB subsequently exercised its option to purchase Westinghouse's interest in the joint venture, and established, effective December 31, 1989, the ABB Power T & D Company, Inc. (renamed ABB Inc. in 2001), to own and operate the assets of the joint venture. Other than the employees who retired from the joint venture effective January 1, 1990, all employees of the joint venture as of December 31, 1989, became employees of ABB. Effective January 1, 1990, ABB created and put into place the ABB Power T & D Company Inc. Pension Plan (the "Option 2 Plan") as an option for certain employees of ABB who were employed at a joint venture location and who were participants in the Westinghouse Plan on December 31, 1989.

2. The Pre-1994 Cash Balance Plan

On January 1, 1992, the Option 1 Plan and Option 2 Plan, along with other plans not relevant in this case, were merged into the ABB Cash Balance Plan. Upon creation of the Cash Balance Plan, the assets and liabilities of the predecessor plans were transferred to it.

One benefit contained in the predecessor plans that carried over to the Cash Balance Plan was the Special Early Retirement Pension benefit ("SERP"). The SERP provision provides benefits to plan participants who satisfy certain age, service, and eligibility requirements, and whose employment was "terminated as a result of a Permanent Job Separation." See Cash Balance Plan §§ 4.08, 4.09 & 4.10. In particular, § 4.08 of the Cash Balance Plan provides in relevant part:

(a) Eligibility. An Active Member who meets the following conditions shall be eligible for the immediate benefits provided under paragraphs (b), (c) and (d) of this Section 4.08:

(1) The Member was in employment . . . on December 31, 1991; and, (2) The Member was an employee of ABB Power T & D Company Inc. at a Covered Location as of December 31, 1991 (including employees who were transferred to a Covered Location on or prior to December 31, 1991) and participated in either the Prior T & D Plan or the Prior ABB Plan. . . and, (3) The Member incurs a Permanent Job Separation in a calendar year in which the Member has attained, or would have attained by December 31 of such year had he remained in active employment, one of the following age and service conditions.

— age 50 with 25 or more years of Vesting Service — age 51 with 22 or more years of Vesting Service — age 52 with 19 or more years of Vesting Service — age 53 with 16 or more years of Vesting Service — age 54 with 13 or more years of Vesting Service — age 55 with 10 or more years of Vesting Service . . .

Def.'s Evid. Appdx. (Vol. I), Plan § 4.08 (emphasis added). Individuals who met the eligibility requirements of § 4.08(a) would receive certain early retirement benefits detailed in (b), (c), and (d) of § 4.08. Id. Sections 4.09 and 4.10 of the Cash Balance Plan contain similar early retirement benefit provisions for different groups of employees. Id. The Cash Balance Plan defines "Permanent Job Separation" as the termination of an employee "through no fault of his own for lack of work for reasons associated with the business for whom an Employer or Affiliated Entity determines there is no reasonable expectation of recall." Id. § 1.41.

3. The 1994 Amendments

On May 6, 1994, ABB's Employee Benefits Committee (the "Benefits Committee") officially adopted amendments to the Cash Balance Plan that inter alia eliminated the SERP benefit in §§ 4.08, 4.09 & 4.10 for all non-represented salaried employees. The amendment was effective June 1, 1994 ("June Amendment"). On May 13, 1994, ABB gave written notice to all affected plan participants of the June Amendment and its effective date.

On August 23, 1994, the Benefits Committee officially adopted amendments to the Cash Balance Plan that inter alia eliminated the SERP Benefit in §§ 4.08, 4.09 & 4.10 for all non-represented hourly employees. The amendment was effective August 31, 1994 ("August Amendment"). On August 15, 1994, ABB gave written notice to all affected plan...