What is a Pension Plan?

I recently came across Guilbert v. Gardner, 480 F.3d 140 (2d Cir. 2007), which addresses the all important issue of what is a pension plan under ERISA? Unfortunately, this is not always an easy question to answer.

When Plaintiff was offered a job, he informed his new employer that he had accumulated $39,000 in pension funds from his old job. Plaintiff was told that if he joined the company, the employer would establish a pension fund with an initial deposit of $39,000 and a $10,000 deposit each year thereafter. Plaintiff alleges that these terms were written down on a yellow pad, but those notes were not produced at trial. Plaintiff also alleged that defendant orally assured him on numerous occasions that they had taken care of his pension needs.

Guess what, when it came time to collect his pension it turns out that a pension plan was never established. Can plaintiff maintain an action under ERISA? That depends upon whether he was covered by a pension plan and the court held that he was not.

Under the leading case of Donovan v. Dillingham, 688 F. 2d 1367 (11th Cir. 1982)(en banc),the decision to extend benefits is different from the establishment of a plan.  It is the reality of the plan, fund or program that courts look to. A plan is established if a reasonable person can ascertain the intended benefits, a class of beneficiaries, the source of financing and the procedures for receiving benefits. Here, the court held that no reasonable fact finder could find that the employer established or maintained a pension plan under ERISA and the employer was awarded summary judgment.

Plaintiff also brought a common law fraud claim which was dismissed as time-barred. All might not be lost for plaintiff because his breach of contract claim survived summary judgment.

Mitchell H. Rubinstein