Olander v. Bucyrus-Erie Co.
| Decision Date | 21 July 1999 |
| Docket Number | BUCYRUS-ERIE,No. 98-1541,98-1541 |
| Citation | 187 F.3d 599 |
| Parties | (7th Cir. 1999) RAY G. OLANDER, Plaintiff-Appellant, v.COMPANY, Defendant-Appellee |
| Court | U.S. Court of Appeals — Seventh Circuit |
Appeal from the United States District Court for the Eastern District of Wisconsin. No. 96 C 215--William E. Callahan, Jr., Magistrate Judge. [Copyrighted Material Omitted]
[Copyrighted Material Omitted]
Before FLAUM, MANION and ROVNER, Circuit Judges.
Ray Olander sued his former employer, Bucyrus-Erie Company ("Bucyrus") for certain benefits under a supplementary pension benefit plan (the "Supp plan") which he had drafted for Bucyrus as its chief legal officer. The central issue in the case is whether a number of payments made to Olander in 1988 were properly excluded from the calculation of his benefits under the Supp plan. With respect to all but one of those payments, we affirm.
Olander worked for Bucyrus from 1961 to 1993. After a leveraged buyout of Bucyrus in 1988, he became vice chairman, chief commercial and legal officer, and a director of the company. He resigned as an officer and director in December 1992 and retired on March 1, 1993. At that time he was covered by the Bucyrus-Erie Salaried Employees Retirement Plan ("BSERP") as well as by the "new" Supp plan, intended as an additional benefit for higher-salaried employees. The new Supp plan was drafted by Olander himself and was effective October 1, 1988. The new Supp plan replaced the "old" Supp plan, which had covered Olander until it was terminated in February 1988.
Olander's annual pension benefit under BSERP was $110,240. Benefit payments under the (new) Supp plan, as in BSERP, were to be calculated on the basis of a participants' average monthly "compensation" in his five most highly compensated calendar years of employment during the ten years before retirement multiplied by the participant's total number of years of service. Olander's five most highly compensated years in the decade prior to retirement were 1988 through 1992. In 1988, he received several payments because the Bucyrus board of directors terminated then-standing plans or agreements between Olander and the company or bought back stock or options awarded to employees. These payments were as follows:
Source Payment to Olander
(1) Old Supp Plan $218,933
(2) Executive Deferred Compensation Agreement $78,500
(3) Employment and Consulting Agreement $61,616
(4) Stock Options $11,947
(5) Restricted Stock Bonus Plan $146,700
The heart of the case is whether these payments constitute "compensation" for purposes of BSERP or the Supp plan. The matter was in dispute since 1988, but on December 9, 1992, the BSERP Retirement Committee (the "Committee") determined that none of the items in question were "compensation" under BSERP, although the Committee had characterized the Restricted Stock as "additional compensation" in a 1987 memorandum to its directors. On December 14, 1992, the Bucyrus board of directors rendered the opinion that one-half of the payments from the Restricted Stock Bonus Plan, or $73,350, should be includable as compensation. The following Spring, after his March 1 retirement, Olander received a letter dated April 29, 1993, informing him that he was entitled to no benefits under the new Supp plan.
The disputed terms of the benefit plans at issue are these: (1) The BSERP plan document unhelpfully defined "compensation" as "the total of base and supplemental compensation, including overtime and bonuses, received by the employee . . . ," and also including any employer payments to the "Becor Western Salaried Employees' Saving Plan in accord with a salary reduction agreement . . ."; but excluding any "amounts not received by employee which are nevertheless included as income for income tax purposes . . . ." BSERP sec. 1.06. (2) Under the new Supp plan, the total amount of supplementary benefits was computed by subtracting the amount of benefit the participant was entitled to under BSERP from the amount the participant would be entitled to under BSERP if that were computed:
(i) without giving effect to the limitations required by Section 415 of the [Internal Revenue] Code [the "Code"];
(ii) without excluding from compensation as defined under BSERP any compensation which is deferred under
(1) any qualified nondeferred compensation agreement with [Bucyrus] (exclusive of the interest earned thereon) and/or
(2) any qualified nondeferred compensation agreement with [Bucyrus] (exclusive of the interest earned thereon), including, without limitation, a cash or deferred compensation arrangement under Section 401(k) of the Code, and
(iii) without excluding from compensation as defined under BSERP any compensation which is includable . . . for purposes of BSERP by reason of any other Section of the Code or regulations thereunder.
However . . . amounts not received by an employee which are nevertheless includable as W-2 income shall not be treated as compensation hereunder.
Supp plan sec. 3.1. (3) Olander also put into the new Supp plan a special provision pertaining to himself. It said that "[i]n determining the amount of any payment to be made to . . . R.G. Olander pursuant to the [new Supp plan], the lump sum payment made to [him] in connection with the termination of the [old Supp plan] shall be offset against any payments made to [him] pursuant to the [new Supp plan]." Id. sec. 3.3. Finally, (4) the new Supp plan incorporated parts of BSERP by reference, stating that "[d]istribution shall be under the same form of payment and subject to the same conditions as is the benefit provided under BSERP . . . ." Id. sec. 3.2.
Discussions about how much, if anything, Olander was entitled to under the new Supp plan continued for several years. When these informal attempts to resolve the dispute failed, Olander filed this lawsuit. The magistrate judge, hearing the case by consent, and exercising jurisdiction under 28 U.S.C. sec. 636(4)(c)(1), pursuant to Fed. R. Civ. P. 73, declined to address Olander's request to amend his complaint with respect to the Restricted Stock payment and found on summary judgment that the Supp plan was governed by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. sec. 1001 et seq., and that with one small exception,1 Olander's payments were correctly calculated by the Committee, a plan administrator with proper discretion to construe the plan. Olander appeals, arguing (1) that the plan is excluded from ERISA and is governed by Wisconsin contract law, (2) that the Committee lacked discretion to construe the Supp Plan, and (3) that, if it had such discretion, it nonetheless acted arbitrarily and capriciously in excluding from the calculation of his benefits the contested five payments. Olander also argues (4) that the magistrate judge abused his discretion in declining to address his request to amend his complaint.
This court reviews a grant of summary judgment de novo, construing the evidence in the light most favorable to the non-moving party. Bragg v. Navistar Internat'l Transp. Corp, 164 F.3d 373, 376 (7th Cir. 1998). Summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Id.; Fed R. Civ. Pro. 56(c). The facts in this case are not in dispute and the only questions to be addressed are legal ones.
The parties disagree about the applicable law and consequently, about the nature of our jurisdiction. At issue in part in this dispute is the standard of review. According to Bucyrus, the new Supp Plan is an ERISA "top hat" plan, an unfunded plan the employer maintained "primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees." 29 U.S.C. sec.sec. 1051(2), 1081(3), & 1101(a). Accordingly, it is subject to ERISA's enforcement provisions even if it is excepted from ERISA's vesting, participation, funding, and fiduciary rules. See In re New Valley Corp., 89 F.3d 143, 149 (3d Cir. 1996). In the ordinary case ERISA preempts state law. 29 U.S.C. 1144(a); see Collins v. Ralston Purina Co., 147 F.3d 592, 595 (7th Cir. 1998). Moreover, in an ERISA plan which gives the fiduciary discretion to interpret the plan or to determine eligibility for benefits, the fiduciary is entitled to great deference and his determinations will be sustained if reasonable. Firestone Tire and Rubber v. Bruch, 489 U.S. 101, 110 (1989).
Olander, in contrast, contends that the Supp plan is an "excess benefit plan" altogether exempted from ERISA. An excess benefit plan is one the employer maintains "solely for the purpose of providing benefits for certain employees in excess of the limitation on contributions and benefits imposed by Section 415 [of the Code] on plans to which that section applies without regard to whether the plan is funded." 29 U.S.C. sec.sec. 1002(36). When an excess benefit plan is unfunded, none of the provisions of ERISA apply. Id. sec. 1003(b)(5); Gamble v. Group Hospitalization & Medical Services, Inc., 38 F.3d 126, 128 (4th Cir. 1994). In that case, ERISA would not preempt and, Olander argues, we would apply Wisconsin contract law, see, e.g., Gallione v. Flaherty, 70 F.3d 724, 729 (2d. Cir. 1995), undisputedly the state law that would apply if any did. Under Wisconsin law, a court is to construe a contract de novo, without deference to the interpretation of a party. Donaldson v. Urban Land Interests, Inc., 564 N.W.2d 728, 731 (Wis. 1997).
The magistrate judge concluded that the Supp Plan is governed by ERISA. We concur, but doubt that the ultimate outcome of the case would be different were we to apply Wisconsin law. The magistrate judge reasoned that an excess benefit plan is one...
To continue reading
Request your trial
-
United States v. Rodriguez, CR 12–3109–10 JB.
...evidence in a scholarly work, and it is likewise unacceptable in an expert disclosure." (footnote omitted)). Cf. Olander v. Bucyrus–Erie Co., 187 F.3d 599, 608 (7th Cir.1999) ("[O]ne bald assertion is as good as another...."). A third danger is that stray facts and background information ar......
-
McCarthy v. Commerce Grp., Inc.
...Sznewajs v. U.S. Bancorp Amended and Restated Supplemental Benefits Plan, 572 F.3d 727, 733 (9th Cir.2009)(same); Olander v. Bucyrus–Erie Co., 187 F.3d 599, 607 (7th Cir.1999)(same). The First Circuit has not taken a position. Here the CGI Employment Agreement provided: “[A]ny determination......
-
Crowell v. Shell Oil Co.
...authority. See Edwards v. Texas — New Mexico Power Co., 259 F.Supp.2d 544, 550 (N.D.Tex.2003); see also Olander v. Bucyrus Erie Co., 187 F.3d 599, 607 (7th Cir.1999). Edwards is directly on point. In that case, the court encountered an analogous situation with a pension plan and supplementa......
-
United States v. Chapman, CR 14-1065 JB
...evidence in a scholarly work, and it is likewise unacceptable in an expert disclosure." (footnote omitted)). Cf. Olander v. Bucyrus-Erie Co., 187 F.3d 599, 608 (7th Cir. 1999)("[O]ne bald assertion is as good as another . . . ."). A third danger is that stray facts and background informatio......
-
Conflicting Review Standards In Executive Retirement Plan Benefit ClaimsIs There Really A Difference?
...determination. 554 U.S. 105, 115, 43 EBC 2921 (2008); (119 PBD, 6/20/08; 35 BPR 1501, 6/24/08). 10 Olander v. Bucyrus-Erie Co., 187 F.3d 599, 23 EBC 1369 (7th Cir. 1999) ( 26 BPR 1955, 8/2/99); see also Comrie v. IPSCO, Inc., 636 F.3d 839, 842, 50 EBC 2473 (7th Cir. 2011) (upholding Olander......