Tuesday, August 28, 2007
An employee of a New York law firm rose from a position of secretary to law firm partner. She decided to leave to start her own firm with another firm alumnus. She then sought entitlement to benefits under two of the firm's pension plans. The firm claimed that she was excluded from participation as she was a "salaried employee" and not a shareholder or officer. She then sought administrative relief and eventually filed suit against her former firm. The federal district court granted summary judgment to the firm, holding that the administrative decision foreclosed the claim that she was a partner and that the claims had been waived for failure to exhaust administrative remedies.
On appeal, the United States Court of Appeals for the Second Circuit vacated the district court's decision and remanded for further proceedings. The district court erred by not reviewing the plan administrator's decision de novo. The plan administrators (the firm officers and shareholders) "explicitly refused to decide [the departed attorney's] claim...a non-existent interpretation cannot be deemed a reasonable one..." Further, there was no showing that the attorney had knowingly and voluntarily waived her claims. (Mike Frisch)