NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 15a0746n.06
FILED
No. 14-4076 Nov 12, 2015
DEBORAH S. HUNT, Clerk
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
ALBERT H. SCHEMPP, )
)
Plaintiff-Appellant, )
) On Appeal from the United States
v. ) District Court for the Northern
) District of Ohio
GC ACQUISITION, LLC; GLASTIC )
CORPORATION SUPPLEMENTAL )
EXECUTIVE RETIREMENT PLAN “A”; )
ROCHLING GLASTIC COMPOSITES, )
LP; JOHN DOES 1-5, )
Defendants-Appellees.
_________________________________/
Before: GUY, BATCHELDER, and GIBBONS, Circuit Judges.
RALPH B. GUY, JR., Circuit Judge. Plaintiff, Albert Schempp, appeals the
district court’s grant of Defendants’ motion to dismiss this case and the court’s denial of
Schempp’s motion for summary judgment. Schempp claims he was entitled to lifetime
pension benefits under Defendant, Glastic Corporation’s Supplemental Executive
Retirement Plan A (“SERP A”). The district court ruled that Schempp waived his rights
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to benefits under SERP A because he entered an agreement that superseded SERP A. For
the following reasons we AFFIRM.
I.
Schempp was President of Glastic Corporation until he retired in 1992. In 1994,
he began receiving lifetime monthly pension benefits in the amount of $4,556 per month
under SERP A. The parties agree that SERP A was an employee pension benefit plan as
defined under 29 U.S.C. § 1002(2)(A) of ERISA, although there is some dispute as to
whether the plan was a funded plan or an unfunded, “top-hat” plan under ERISA.
In 2005, Glastic notified Schempp that it was terminating SERP A effective
January 1, 2006. The reason for the termination is disputed. Glastic claims that it was
due to adverse economic circumstances while Schempp claims it was done to reduce the
company’s liabilities so that the company would be more attractive to purchasers. The
Glastic board of directors prepared a consent resolution to terminate the plan, which the
then president and vice president–Patrick Greene and Mark DiGiampietro, respectively–
purportedly signed. Glastic has not provided a copy of the signed resolution–a fact that
Schempp notes without arguing it has any effect on the present appeal. Schempp does
claim that the resolution was inadequate to terminate SERP A for reasons discussed
below. Schempp stopped receiving payments under SERP A in January 2006.
In March of 2006, the Glastic board approved what is referred to as the
2006 Agreement, which provided retirement benefits to Schempp and others for a fixed
rather than open-ended period of time. The 2006 Agreement also provided certain
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benefits not allowed under SERP A. First, if Schempp died before all payments had been
made, his designated beneficiary would receive the remaining payments. Second, if he
was still living in July 2014, he would receive an additional benefit. Schempp received
$4,556 per month through December of 2013.
Glastic Corporation became “Rochling Glastic Composites, LP” in 2007.
Schempp did not challenge the fact that he was not receiving benefits from SERP
A until he filed the present lawsuit in the fall of 2013, right before the 2006 Agreement’s
benefits were set to end in 2014. It was then that Schempp began to actively argue that
SERP A was never properly terminated and he was entitled to benefits thereunder.
Glastic filed a motion to dismiss Schempp’s claim arguing that Schempp had
waived his rights to SERP A benefits and that his claim was otherwise time-barred
pursuant to a provision in the 2006 Agreement. Schempp filed a motion for summary
judgment. The district court granted Glastic’s motion to dismiss, which it treated as a
motion for summary judgment. The court declined to rule on whether SERP A was
properly terminated and ruled that “Plaintiff and Defendants voluntarily entered into the
2006 Agreement to supersede SERP A and the rights therefrom” and that Schempp,
therefore, waived his rights under SERP A. The court denied Schempp’s motion for
summary judgment.
II.
A “court shall grant summary judgment if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter
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of law.” Fed. R. Civ. P. 56(a). A genuine issue of material fact exists when there are
“disputes over facts that might affect the outcome of the suit under the governing law.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). But when “the record taken
as a whole could not lead a rational trier of fact to find for the non-moving party, there is
no ‘genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986) (quoting First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253,
289 (1968)).
III.
Waiver of Rights under SERP A
Amendment Provision
SERP A included the following provision, entitled “AMENDMENT OF PLAN”:
“Any amendment to or termination of this Plan made after the effective date, must be
agreed upon to in writing in advance of such change by the Board of Directors and G.E.
Grant and R.E. Donnelly.” Schempp argues that he is still entitled to benefits under
SERP A because SERP A was never terminated in accordance with this provision
because Grant and Donnelly did not sign it. Schempp also argues that because the 2006
Agreement did not comply with this provision, it could not affect his rights to SERP A
benefits.
At the time of SERP A’s execution, Grant and Donnelly served as Glastic’s
president and vice president, respectively. They, along with Schempp, were also three of
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the four intended beneficiaries under SERP A. The district court ruled that the provision
was ambiguous noting:
The Amendment Clause is ambiguous because it is unclear in which
capacity Grant’s and Donnelly’s signatures were required. Grant and
Donnelly played multiple roles in the negotiation; not only were they
President and Vice President at Glastic, they were also intended recipients
of the SERP A benefits. Because of this, the requirement of Grant’s and
Donnelly’s signatures for any amendment to or termination of SERP A
could be interpreted in one of three ways: (1) the clause required the
signatures of Grant and Donnelly in their personal capacities, specifically;
(2) the clause required the signatures of Glastic’s President and Vice
President, whomever they may have been at the time the amendment or
termination was sought; or (3) the clause required the signatures of two
persons representing the intended recipients of SERP A benefits at the time
the amendment or termination was sought.
The district court ruled that making a determination about how the Amendment Clause
should be interpreted was unnecessary “because the 2006 Agreement was a valid bilateral
modification of SERP A.”
We agree. Certainly the Amendment Clause would control if Glastic unilaterally
terminated or modified the Plan–an action that would affect all participants and
beneficiaries. But here, Schempp entered into a bilateral agreement to modify his rights
under SERP A (discussed below) rather than amend or terminate the Plan as a whole, and
nothing in the Amendment Clause limits his ability to do that. As a result, the
Amendment Clause does not govern the 2006 Agreement.
Validity of Waiver
Because we hold that the Amendment Clause does not control Schempp’s waiver
of rights to SERP A benefits, we next consider whether the 2006 Agreement was a valid
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waiver of such rights. The district court held that “[t]he 2006 Agreement, on its face,
replaces any rights [Schempp] may have had under SERP A.” The following provision
from the Agreement’s recitals provision was dispositive for the district court: “It is the
intent of the parties that this Agreement, a modification of [SERP A], and all deferrals of
compensation and distributions made pursuant to it, complies with Section 409A of the
Internal Revenue Code of 1986, as amended.”
Schempp challenges this argument, under various theories. First, Schempp argues
that because the 2006 Agreement does not use the word “waiver” or note that it is a
“settlement agreement,” then the 2006 Agreement cannot affect his rights under SERP A.
But the 2006 Agreement explicitly says that it is a modification of SERP A. The recitals
also note that:
Believing, because of significant adverse financial conditions, that [Glastic]
could no longer continue to make payments under [SERP A], the Board of
Directors . . . previously resolved to terminate [SERP A] . . . Despite its
financial difficulties, [Glastic] now has determined that it can continue to
provide a limited supplemental retirement benefit [to] the Participant . . . .
The agreement makes clear that it is modifying his rights to SERP A benefits. The
absence of the specific language Schempp references does not change that fact.
Second, Schempp argues that the 2006 Agreement could not modify Schempp’s
rights to SERP A benefits because he could not agree to modify something that he
already believed was terminated. To support this claim, Schempp filed an affidavit with
the district court, which stated that at the time of the 2006 Agreement, he believed that
SERP A was properly terminated but he also believed that he had preserved any rights he
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had regarding SERP A benefits. Schempp’s statements are contradictory. How could he
truly believe SERP A was terminated if he also believed that he maintained rights under
SERP A? What is more, his affidavit contradicts his response filed to Glastic’s motion
for summary judgment. There Schempp states that Glastic entered into the
2006 Agreement in order to “avoid a major dispute,” which demonstrates he questioned
whether SERP A was properly terminated. Emails between Schempp’s attorney and
Glastic’s counsel also demonstrate that the 2006 Agreement was intended to settle a
dispute relating to Schempp’s continued right to SERP A benefits. In those emails,
Schempp’s counsel referred to the 2006 Agreement as a “settlement arrangement” and
noted that the agreement was “in lieu of the current SERP plans.”1
Schempp argues that such extrinsic evidence should not be considered–a curious
position given that he submits his own extrinsic evidence (his affidavit) to establish his
understanding of the 2006 Agreement. Regardless, such evidence is properly considered
to the extent there is any doubt as to the meaning of the modification language in the
agreement. See Shifrin v. Forest City Enters., Inc., 64 Ohio St. 3d 635, 638 (1992).
Considering such evidence, no reasonable fact finder could find that the 2006 Agreement
was anything other than a waiver of Schempp’s rights to SERP A benefits.
1
Schempp challenges the admissibility of these emails arguing that they are: (1) subject to the attorney-
client privilege; and (2) that they are inadmissible under Rule 408 of the Federal Rules of Evidence
because they relate to a statement made in settlement negotiations. Both arguments fail. First, the emails
noted above were between Schempp’s attorney and opposing counsel in settlement negotiations, and not
subject to the attorney-client privilege. See State ex rel. Leslie v. Ohio Hous. Fin. Agency, 105 Ohio St.
3d 261, 265 (2005). And, Schempp has waived his right to challenge the emails under Rule 408 as he
previously relied on such emails before the district court. See Top Flight Entm’t, Ltd. v. Schuette,
729 F.3d 623, 633 (6th Cir. 2013) (noting that arguments not raised before the district court are generally
waived on appeal).
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Schempp next argues that because the consideration referenced in the
2006 Agreement was not Schempp’s explicit waiver of claims to SERP A benefits, this
evinces that Schempp did not waive such claims. Schempp offers no law to support this
claim and we find none. The 2006 Agreement was undoubtedly supported by
consideration – the parties do not dispute this. And, as discussed above, the Agreement
was clearly a modification of Schempp’s rights under SERP A. Schempp’s claim on this
point fails.
Finally, Schempp argues that he was coerced into signing the 2006 Agreement.
The only fact that Schempp offers to support this claim is that Glastic had stopped
payment of his SERP A benefits in December of 2005, and he was therefore in a
“disadvantaged position.” However, Schempp was represented by an attorney who
extensively negotiated the 2006 Agreement–an arms-length transaction. Certainly
Schempp could have challenged Glastic’s termination of SERP A benefits at that time,
but he chose to accept the 2006 Agreement instead. Such situation does not constitute
coercion. See Blodgett v. Blodgett, 49 Ohio St. 3d 243, 246 (1990) (holding that a party’s
acceptance of a settlement agreement because she could not afford to wait for the
outcome of an appeal does not constitute coercion).
Was Waiver Made Knowingly and Voluntarily
In his reply brief, Schempp, argues that the district court erred in analyzing the
2006 Agreement under simple contract law. Citing Frommert v. Conkright, 535 F.3d 111
(2d Cir. 2008), rev’d on other grounds, 559 U.S. 506 (2010), Schempp argues that
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ERISA requires consideration of another factor–whether such waiver was made
knowingly and voluntarily. This court has not previously ruled on whether a waiver of
rights under an ERISA pension plan must be made knowingly and voluntarily to be valid.
Other circuits to have considered the issue have generally applied the knowing-and-
voluntary requirement in this context. See Russell v. Harman Intern. Indus., Inc.,
773 F.3d 253, 255-56 (D.C. Cir. 2014) (compiling cases). When evaluating whether the
knowing-and-voluntary requirement is satisfied, other circuits generally consider the
following, non-exhaustive list of factors:
1) the plaintiff's education and business experience, 2) the amount of time
the plaintiff had possession of or access to the agreement before signing it,
3) the role of plaintiff in deciding the terms of the agreement, 4) the clarity
of the agreement, 5) whether the plaintiff was represented by or consulted
with an attorney, as well as whether an employer encouraged the employee
to consult an attorney and whether the employee had a fair opportunity to
do so and 6) whether the consideration given in exchange for the waiver
exceeds employee benefits to which the employee was already entitled by
contract or law.
Id. at 256 (citing Laniok v. Advisory Comm. of Brainerd Mfg. Co. Pension Plan, 935 F.2d
1360, 1368 (2d Cir. 1991)).
Assuming without deciding that the knowing-and-voluntary requirement applies in
this case, we are convinced that a rational trier of fact would conclude that Schempp both
knowingly and voluntarily waived his rights under SERP A. Schempp was President of
Glastic Corporation before he retired, which demonstrates a high level of business
experience. Schempp’s lawyer had access to the 2006 Agreement for enough time to
thoroughly review it, discuss various provisions with Schempp, and negotiate various
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terms with Glastic. The agreement is clear. Finally, ample consideration was given for
Schempp’s assent. In fact, if Schempp were to die before all of the benefits under the
2006 Agreement had been paid out, he was in a position to gain more than he would have
received under SERP A as SERP A did not provide a payment to his beneficiary in such
situation.2
AFFIRMED.
2
Because we hold that Schempp waived his rights to SERP A benefits, we need not consider the question
of whether SERP A was properly terminated or the effect of the one-year limitations provision.