Leavitt v. Northwestern Bell Telephone Co.

• Citation: 921 F.2d 160
• Decision Date: 10 December 1990
• Docket Number: No. 89-5300MN,89-5300MN
• Parties: Dennis S. LEAVITT, Appellant, v. NORTHWESTERN BELL TELEPHONE COMPANY, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 160

921 F.2d 160

Dennis S. LEAVITT, Appellant, v. NORTHWESTERN BELL TELEPHONE COMPANY, Appellee.

No. 89-5300MN.

United States Court of Appeals,

Eighth Circuit.

Submitted May 14, 1990.

Decided Dec. 10, 1990.

Marcy S. Wallace, St. Paul, Minn., for appellant.

Steven R. Anderson, Minneapolis, Minn., for appellee.

Before JOHN R. GIBSON, FAGG, and WOLLMAN, Circuit Judges.

FAGG, Circuit Judge.

Dennis S. Leavitt appeals the district court's order granting summary judgment in favor of his former employer, Northwestern Bell Telephone Company (Bell). Leavitt claims Bell breached its fiduciary duties by denying him benefits under its Management Income Protection Plan (the plan) in violation of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Secs. 1001-1461 (1988). The district court rejected Leavitt's claim because he had signed a release settling the dispute with Bell. On appeal, Leavitt claims the district court committed error because the release violates ERISA and is unenforceable. We affirm.

Bell's plan provides separation benefits for employees in management-level positions targeted for elimination. When Bell targets a position, the plan requires Bell to offer separation benefits to managers in that position, in descending order of seniority, until a manager accepts the benefits and voluntarily quits. If no manager chooses to accept benefits, Bell terminates managers and pays them separation benefits in ascending order of seniority.

Leavitt served as a district manager for Bell for almost twenty years and was senior in that position when his supervisor telephoned him to offer benefits under the plan. Leavitt's supervisor informed him another district manager with less seniority was interested in the offer, and requested an immediate response. Leavitt knew this was not Bell's standard procedure for offering benefits. Leavitt declined the offer. Confident his job was secure because of his seniority but fearing an undesirable transfer, Leavitt began seeking employment elsewhere, and was offered a job as president and chief of operations of another company. When Leavitt informed Bell he intended to resign and inquired about benefits under the plan, Bell informed him the only available benefits had been given to the manager with less seniority. After negotiating with Bell, Leavitt voluntarily terminated his employment and began working for his new employer. A few days later, Leavitt signed a separation agreement and general release (the release) that provided Leavitt would not sue Bell on any known or unknown claims of any nature in exchange for $15,000--an amount less than Leavitt would have received under the plan if he had accepted the offered benefits. The release did not affect Leavitt's rights under Bell's management pension plan.

Later, Leavitt sent several letters to Bell asserting he had been unfairly treated. Although Leavitt acknowledged he had relinquished any legal claim by signing the release, he asked Bell for additional compensation on moral grounds. After Bell rejected his requests, Leavitt filed this lawsuit. Bell moved for summary judgment, claiming the release discharged the company from any liability. The district court granted Bell's motion.

To decide Leavitt's appeal, we must first consider whether section 1110(a) of ERISA bars private (unsupervised) releases of statutory claims. If not, we must also determine whether the release Leavitt signed is enforceable.

Section 1110(a) of ERISA provides, "[A]ny provision in an agreement or instrument which purports to relieve a fiduciary from responsibility or liability for any responsibility, obligation, or duty under [the fiduciary responsibility sections] shall be void as against public policy." 29 U.S.C. Sec. 1110(a) (1988). In our view, a release is not an "agreement or instrument" within the meaning of section 1110(a). Section 1110(a) prohibits agreements that diminish the statutory obligations of a fiduciary. A release, however, does not relieve a fiduciary of any responsibility, obligation, or duty imposed by ERISA; instead, it merely settles a dispute that the fiduciary did not fulfill its responsibility or duty on a given occasion. Indeed, Leavitt recognizes in his brief that section 1110(a) "does not mean ... that whenever there is a claim for breach of fiduciary duty under ERISA, litigation must be continued to its bitter end without hope of legitimate, fair, negotiated compromise." We will not assign to Congress "the intent of making an unreasonable law--one requiring terminal litigation, rather than favoring settlements as does the general law." Stobnicki v. Textron, Inc., 868 F.2d 1460, 1463 (5th Cir.1989) (ERISA permits settlement of benefit disputes). We conclude section 1110(a) does not bar releases of breach of fiduciary duty claims under ERISA.

Nevertheless, Leavitt asserts settlements of breach of fiduciary duty claims under ERISA must be supervised by the courts. Nothing in section 1110(a) or its legislative history provides support for Leavitt's assertion. Leavitt, however, analogizes ERISA to the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. Secs. 201-219 (1988). The Supreme Court has interpreted the FLSA to prohibit private releases of certain FLSA statutory coverages and rights, even though the statute is silent on the subject. See Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 707, 65 S.Ct. 895, 902, 89 L.Ed. 1296 (1945). We believe the purposes behind ERISA and the FLSA differ. The FLSA establishes a national standard securing minimum compensation for the lowest-paid workers, but ERISA is concerned with protecting contractual benefits. ERISA addresses an entirely different group of employees, many of whom are well educated, well compensated, experienced in business, and aware of their legal rights. See Runyan v. National Cash Register Corp., 787 F.2d 1039, 1043 (6th Cir.) (ADEA case), cert. denied, 479 U.S. 850, 107 S.Ct. 178, 93 L.Ed.2d 114 (1986). Thus, private settlements of ERISA claims do not compromise the policies underlying ERISA.

Finally, we must decide whether the release Leavitt signed is enforceable. A fiduciary and a beneficiary can settle a...