Young, Ronald D. v. WA Gas Light Co

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Submitted on the Briefs January 27, 2000

Decided March 31, 2000

No. 99-7091

Ronald D. Young, et al,
Appellants

v.

Washington Gas Light Company,
Appellee

Appeal from the United States District Court
for the District of Columbia
(No. 97cv03129)

Ronald H. JaraShow filed the brief for appellants.

Robert N. Eccles and Valerie G. Roush were on the brief
for appellee.

 Before Edwards, Chief Judge, Ginsburg, Circuit Judge, and
Buckley, Senior Circuit Judge.

Opinion for the court filed by Senior Judge Buckley.

Buckley, Senior Judge: Ronald Young and sixteen other
former employees of Washington Gas Light Company claim
that the company breached its fiduciary duties under the
Employee Retirement Income Security Act by failing to
disclose, prior to their retirement, that the company was
considering implementation of a "one-time-only" voluntary
separation incentive program. The district court dismissed
the case for lack of subject matter jurisdiction based on its
finding that the claims did not arise under the Act. We
affirm.

I. Background

The Employee Retirement Income Security Act
("ERISA"), 29 U.S.C. ss 1001-1461 (1994), is the statute
regulating employee pension and welfare benefit plans. An
"employee welfare benefit plan" is defined as

any plan, fund, or program which ... is ... established
or maintained by an employer ... to the extent that such
plan, fund, or program was established or is maintained
for the purpose of providing for its participants or their
beneficiaries [specified benefits].

Id. s 1002(1). Such plans may include those that provide
severance benefits. See id. s 1002(1)(B) (employee welfare
benefit plans include those that provide any benefit specified
in 29 U.S.C. s 186(c), which includes severance benefits, 29
U.S.C. s 186(c)(6)); see also Fort Halifax Packing Co. v.
Coyne, 482 U.S. 1, 7 n.5 (1987) ("Section 1002(1)(B) has been
construed to include severance benefits paid out of general
assets, as well as out of a trust fund."). ERISA imposes
specified duties on ERISA plan administrators with respect
to the plan and its participants and their beneficiaries. See
29 U.S.C. s 1104.

Young and the other appellants (collectively, "Young") were
employed as first line supervisors or managers with Washing-

ton Gas Light Company ("Washington Gas") prior to their
respective retirements during a period from January 1
through June 1, 1996. As such, they participated in Washing-
ton Gas's regular retirement plan, which is subject to ERISA
("ERISA retirement plan"). In 1995, Washington Gas began
work on a plan to restructure the company; and, on June 28,
1996, it formally announced the plan, which included a retire-
ment incentive program called "Voluntary Separation Pay
Window Program" ("Window Program" or "Program"). The
Program offered employees classified as "first line supervi-
sors or above" a one-time opportunity to receive specified
severance benefits upon voluntary separation from the com-
pany.

Such employees were qualified to receive those benefits if
they (1) elected to receive separation pay under the Program;
(2) had thirty years of service with the company or a combi-
nation of age and service totaling ninety as of December 31,
1996; (3) submitted a separation pay election form during a
twelve-day "window" beginning July 8, 1996; (4) remained in
active employment until the separation date without being
terminated for cause; and (5) signed a waiver of claims
against the company. The company would select a separation
date no later than March 31, 1997 for each of the electing
employees. Any employee who met the Program's require-
ments would receive, upon separation from the company, a
lump-sum payment equal to fifty-two weeks of base pay
together with the option to participate in a three-day out-
placement services program.

According to their complaint, Young and his fellow appel-
lants retired under Washington Gas's ERISA retirement plan
between January 1, 1996 and June 1, 1996 while the restruc-
turing of the company was under consideration but before the
final plan and the accompanying Window Program had been
announced. During that period, Washington Gas was aware
that normal attrition among its first line supervisors and
managers would not be sufficient to accomplish its restructur-
ing goals and that it would have to implement a retirement
incentive program in order to encourage the desired number
of voluntary separations. Before retiring, each of the appel-

lants asked the company whether such a program was being
considered; and in each case, the company replied that none
was.

Young contends that Washington Gas was under an obli-
gation to inform first line supervisors and managers consider-
ing retirement during the period between January 1, 1996
and the announcement of the Window Program that the
company did not anticipate that normal attrition by retire-
ment would meet the levels desired for restructuring and that
a retirement incentive program was under consideration.
Because that information was withheld, Young brought this
suit alleging that the company had breached its fiduciary
duties under ERISA. Although Young also asserted various
District of Columbia common law claims, federal jurisdiction
depends on whether he has alleged a claim cognizable under
ERISA.

District Judge Thomas Penfield Jackson held that the
Window Program was not a "plan" governed by ERISA; and,
because in the absence of a federal claim, he had no basis for
exercising jurisdiction over the District of Columbia claims,
he dismissed the suit for lack of federal jurisdiction. Young
v. Washington Gas Light Co., No. 97-3129, order (D.D.C.
Apr. 28, 1999). Young filed a timely appeal, and we have
jurisdiction pursuant to 28 U.S.C. s 1291.

II. Analysis

We accept Young's factual allegations as true and review de
novo the dismissal of his complaint for lack of subject matter
jurisdiction. Moore v. Valder, 65 F.3d 189, 196 (D.C. Cir.
1995).

Young asserts two bases for claiming that Washington Gas
violated its obligations under ERISA. First, he maintains
that the Window Program was itself a plan subject to ERISA
and that Washington Gas breached its fiduciary duty in its
role as administrator of that plan. Second, he claims that
Washington Gas breached its fiduciary duty under its ERISA
retirement plan by failing to inform him and the other

appellants that it was considering implementation of the
Window Program. Neither argument has merit.

A. Jurisdiction based upon Window Program

ERISA does not specify what constitutes a "plan" within
the meaning of the statute. The Supreme Court, however,
has made clear that not every grant of an employee benefit is
governed by ERISA. The Court noted that the statute's
focus was "on the administrative integrity of benefit plans--
which presumes that some type of administrative activity is
taking place," Fort Halifax Packing, 482 U.S. at 15, and
concluded that ERISA only applies "with respect to benefits
whose provision by nature requires an ongoing administrative
program to meet the employer's obligation." Id. at 11. As a
consequence, ERISA is not implicated by "[t]he requirement
of a one-time, lump-sum payment triggered by a single event"
because "[t]o do little more than write a check hardly consti-
tutes the operation of a benefit plan." Id. at 12. Therefore,
whether a benefit is regulated by ERISA turns on the nature
and extent of the administrative obligations that the benefit
imposes on the employer.

Although Fort Halifax Packing has not yet been applied by
this court, the decisions of other circuits agree with the
proposition

that an employee benefit may be considered a plan for
purposes of ERISA only if it involves the undertaking of
continuing administrative and financial obligations by the
employer to the behoof of employees or their beneficia-
ries.

Belanger v. Wyman-Gordon Co., 71 F.3d 451, 454 (1st Cir.
1995); see, e.g., Delaye v. Agripac, Inc., 39 F.3d 235, 237 (9th
Cir. 1994); Kulinski v. Medtronic Bio-Medicus, Inc., 21 F.3d
254, 257-58 (8th Cir. 1994); Angst v. Mack Trucks, Inc., 969
F.2d 1530, 1538, 1540 (3d Cir. 1992).

Under the Window Program, the determinations of eligibili-
ty and the amount of the benefits to be paid were purely
mechanical and were based on one triggering event: the
eligible employee's election to retire pursuant to the terms of

the Program. Washington Gas was only required to make
the straightforward factual determination of whether the
employee had met each of the conditions specified in the
Program, such as the requirements that the employee submit
an election form and meet certain length-of-service criteria,
and then to calculate the amount of the separation payment
by multiplying the employee's base pay rate by fifty-two.
These are not the kinds of administrative decisions that
require ERISA's protection. See, e.g., Velarde v. PACE
Membership Warehouse, Inc., 105 F.3d 1313, 1316-17 (9th
Cir. 1997) (plan offering different benefits to those terminated
for cause or not for cause "failed to rise to the level of
ongoing particularized discretion required to transform a
simple severance agreement into an ERISA employee bene-
fits plan"); Belanger, 71 F.3d at 452, 455 (plan allowing age-
qualified workers to receive variable payment based on years
of service required only mechanical decision making and was
not governed by ERISA).

As Young points out, the Window Program required one
discretionary act on the part of Washington Gas, namely the
selection of a specific separation date on or before March 31,
1997 for each of the electing employees. The exercise of this
limited discretionary right, however, did not create a need for
an ongoing administration of the benefit; therefore, it did not
bring the Program under ERISA. Cf. Delaye, 39 F.3d at 237
(severance payments to be made over the course of up to 24
months "does not rise to the level of an ongoing administra-
tive scheme"); Angst, 969 F.2d at 1539 (obligation to make
one-time lump-sum termination payment and to continue
employee's existing benefits for one year not an ERISA plan
because obligation to provide continuing benefits "did not
require the creation of a new administrative scheme, and did
not materially alter an existing [one]"). Therefore, applying
the test established in Fort Halifax Packing, we conclude
that the Window Program was not subject to ERISA. Ac-
cordingly, this claim cannot serve as the basis for federal
jurisdiction over Young's complaint.

B. Jurisdiction based upon ERISA retirement plan

The ERISA retirement plan administered by Washington
Gas also fails to provide the district court with jurisdiction
over Young's claims. The fiduciary responsibilities of an
ERISA plan administrator are detailed in section 1104 of the
Act, as codified, which reads, in relevant part, as follows:

[A] fiduciary shall discharge his duties with respect to a
plan solely in the interest of the participants and benefi-
ciaries and--

(A) for the exclusive purpose of:

(i) providing benefits to participants and their benefi-
ciaries; and

(ii) defraying reasonable expenses of administering the
plan....

29 U.S.C. s 1104(a)(1)(A) (emphasis added). There is nothing
in the section to suggest that an ERISA plan administrator
has a fiduciary duty to disclose information unrelated to the
plan even if an employee might consider that information
important to his decision to retire. Nor can we find any
section of the statute that requires disclosures unrelated to
the plan; indeed, the disclosure requirements are limited to
information about the plan itself. See, e.g., id. s 1021 (requir-
ing disclosure of summary plan description, terminal reports,
failure to meet minimum funding standards, and transfer of
excess pension assets).

Although the Supreme Court has stated that the federal
courts, in interpreting the fiduciary standards imposed by
ERISA, will "develop a federal common law of rights and
obligations under ERISA-regulated plans," Varity Corp. v.
Howe, 516 U.S. 489, 497 (1996) (internal quotation and cita-
tion omitted), none of the cases dealing with a plan adminis-
trator's duties under ERISA have required him to assume
responsibilities that are unrelated to the plan itself. The
authorities upon which Young relies only serve to underscore
this point, as each concerns a plan administrator's fiduciary
duty when he seeks to modify an existing ERISA plan or to
substitute a new plan for one already in place. See, e.g.,

Varity Corp, 516 U.S. at 502-03 (plan administrator breached
fiduciary duty by misrepresenting to plan participants that
benefits would be unchanged by switch from ERISA plan to a
new plan); Ballone v. Eastman Kodak Co., 109 F.3d 117, 121,
124 (2d Cir. 1997) (company has fiduciary duty to inform
ERISA plan beneficiaries that it is considering implementa-
tion of new severance plan which would replace former
ERISA plan); Eddy v. Colonial Life Ins. Co. of America, 919
F.2d 747, 750, 752 (D.C. Cir. 1990) (ERISA fiduciary had duty
to inform plan beneficiary of available continuation options
under plan once company terminated group plan).

In contrast to the situations presented in these cases, the
Window Program did not replace, amend, or supplement
Washington Gas's ERISA retirement plan; it merely created
one-time benefits that were in addition to, and independent
of, those to which the company's employees continued to be
entitled under its ERISA retirement plan. Therefore, be-
cause Washington Gas had no fiduciary duty under its
ERISA retirement plan to inform Young that a retirement
incentive program was under consideration, this claim also
failed to provide the district court with jurisdiction over this
suit.

Nevertheless, because the district court dismissed only the
ERISA claims with prejudice, Young is free to pursue his
common law claims in the appropriate court.

III. Conclusion

Because Young has failed to allege a claim under ERISA,
the decision of the district court dismissing this action for
lack of subject matter jurisdiction is

Affirmed.