James v. National Business Systems, Inc., 90-1135
| Decision Date | 11 February 1991 |
| Docket Number | No. 90-1135,90-1135 |
| Citation | 924 F.2d 718 |
| Parties | Kenneth E. JAMES, Plaintiff-Appellee, v. NATIONAL BUSINESS SYSTEMS, INC., et al., Defendants-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
James P. Fenton, J. Michael O'Hara, Barrett & McNagny, Fort Wayne, Ind., for plaintiff-appellee.
William T. Hopkins, Gallucci, Hopkins & Theisen, Fort Wayne, Ind., for defendants-appellants.
Before CUDAHY and POSNER, Circuit Judges, and WILL, Senior District Judge. *
The only question that remains, after a partial settlement of the litigation, is whether the district judge erred in finding that Kenneth James was a participant in a pension plan of his former employer, National Business Systems, Inc.--in which event the federal pension law entitles him, as the judge found, to $25,677.46 in plan benefits. Employee Retirement Income Security Act, 29 U.S.C. Secs. 1001 et seq.; 721 F.Supp. 169 (N.D.Ind.1989). NBS argues that there was no plan, or if there was one that James never enrolled in it.
In 1985 NBS, a Canadian firm, bought a data-processing division in Fort Wayne, Indiana from an American company and installed a management group headed by Vincent Tofany. Tofany hired James, initially as a consultant rather than as an employee, to help design a pension plan for key executives of NBS, both those in Canada and those in NBS's new division in Fort Wayne. By November 1986 a team that included James had worked out most of the details of the plan, including the amount of benefits, when they would vest, which executives would participate in the plan, and the method of funding the plan (insurance on the lives of the participants). The essence of the plan was that in the event of death before retirement at age 65, or retirement at that age, a participant (or his designated beneficiary) would receive, for ten years, the participant's salary as of January 1, 1987. (This would be a pension plan within the meaning of ERISA.) 29 U.S.C. Secs. 1002(1)(B), (2)(A)(i). A member of the team wrote the executives who were to participate that the plan was "to come into effect January 1st 1987 or as soon thereafter as life insurance comes into effect." Tofany testified that the plan did come into effect on January 1, 1987. By that date, the six executives who were eligible to participate had scheduled physical examinations to determine their insurability, and later NBS began paying premiums on life insurance policies for them. These were whole-life policies, meaning that they had a savings as well as an insurance component, the former to fund the retirement benefits provided by the plan and the latter to fund the death benefits.
On August 1, 1987, James became employed by NBS as the personnel director of its Fort Wayne operation and moved to Fort Wayne to assume his duties. His employment contract stated among other things that he would be "immediately eligible for all benefits in effect for U.S. employees including the participation of Maryalice James [his wife] under the Group Medical and Dental Insurance Programs" and that "you shall be enrolled in the Executive Insurance Plan at a time selected by" the chief executive officer of NBS "and you shall participate in all future compensation programs designed for Senior Management personnel." James's salary was fixed at $90,800. This meant--since he was 57 years old--that if he worked for NBS until he was 65 and then retired, he would be entitled to receive $908,000 in pension benefits. But this is provided that the plan was "in effect" on August 1, 1987, when he began his employment with NBS, that the plan was not the "Executive Insurance Plan," and that the benefits conferred by the plan were comprehended within "all benefits in effect for U.S. employees" rather than "future compensation programs designed for Senior Management." The judge thought all three conditions satisfied, the reference to "Executive Insurance Plan" being merely to the life insurance that funded the retirement plan. As to that, James was never scheduled for a physical examination and never given an insurance application. NBS's president, already preoccupied with a financial scandal which was to rock the Fort Wayne division shortly, never selected a time for James to enroll in the Executive Insurance Plan.
James, though ultimately found not to have...
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