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COHEN v. STANLEY

June 20, 1983

ROBERT D. COHEN, Plaintiff,
v.
EDMUND A. STANLEY, JR., VICTOR SIMONTE, JR., FRANZ VON ZIEGESAR and CARL R. PITE, Individually and in their capacity as Trustees of the Bowne Profit-Sharing Trust, BOWNE PROFIT-SHARING TRUST and BOWNE HEALTH BENEFIT PLAN AND TRUST, Defendants


Edelstein, District Judge.


The opinion of the court was delivered by: EDELSTEIN

OPINION, FINDINGS OF FACT AND CONCLUSIONS OF LAW

EDELSTEIN, District Judge:

 INTRODUCTION

 This is an action under the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001 et seq. (1976 & Supp. IV 1980) ("ERISA") to compel the trustees of a profit-sharing plan to accelerate payment of the benefits held in the plaintiff's, a former employee's, account such that he would receive a lump sum prior to the date set forth in the plan. The trustees refused the employee's request on the ground that the plaintiff terminated his employment to work for a competitor. This action raises questions as to whether a change of employment by a plan participant is a permissible subject of trustee discretion in deciding whether to accelerate pension payments, and whether in the circumstances of this case the trustees exercised their discretion arbitrarily and capriciously.

 FACTUAL BACKGROUND

 Plaintiff Robert Cohen ("Cohen") commenced his employment with Bowne of New York, Inc. ("Bowne"), a subsidiary of Bowne & Co., Inc., on January 28, 1974. Bowne engages in financial, corporate, commercial and legal printing and in providing computer text, time-sharing services. Bowne's principal place of business is New York City, and it has subsidiaries in various locations throughout the United States.

 During his employment at Bowne, Cohen held the position of pricing analyst in Bowne's pricing and estimating department. In that capacity, he evaluated the cost of work performed by Bowne employees and sent invoices to customers for the work. Trial Transcript ("Tr.") 233. As a pricing analyst Cohen did not have responsibility for generating business and had only infrequent contact with customers. Pre-Trial Order, dated November 30, 1982, Stipulated Fact ("Stipulated Fact") (n).

 On March 17, 1981, Cohen resigned his position at Bowne to accept employment at Pandick Press, Inc. ("Pandick"). Pandick is also a financial, corporate and commercial printer with its principal place of business in New York City and has a number of subsidiaries elsewhere in the United States. Initially, Cohen worked in the pricing department at Pandick, and in the summer of 1982, he was promoted to assistant pricing manager. This position is considered a management position and involves responsibility as to billing decisions, corporate pricing policy and management of the pricing department. Tr. 239.

 During his employment at Bowne, Cohen was a "participant" within the meaning of § 3 of ERISA, 29 U.S.C. § 1002(7), in an employee profit-sharing plan called the Bowne Profit-Sharing Plan and Trust (the "Plan"). The Plan was established in 1961 and amended and restated on October 31, 1972. The Plan is administered pursuant to an agreement known as the Bowne & Co., Incorporated Profit-Sharing Plan and Trust Agreement and is a deferred profit-sharing plan, which receives contributions from the business profits of the participating Bowne subsidiaries for the purpose of providing deferred profit-sharing benefits to their employees. Defendants Edmund A. Stanley, Jr., Victor Simonte, Jr., Franz Von Ziegesar and Carl R. Pite (the "Trustees") were trustees of the Plan at all times relevant herein.

 Article 7.4 of the 1972 Plan (the "forfeiture provision") provided that if a Plan participant left the employ of a Bowne company or was discharged by Bowne and

 
if he shall thereafter, within a period of twelve (12) months, enter into competition with, or become employed by any other employer in a capacity which is directly in competition with any of the Bowne companies, . . . he may be given notice by registered letter to desist from so competing, or from being so employed, and if he shall not desist from doing so within thirty (30) calendar days after the receipt of such registered letter . . ., he shall be deemed to have been discharged for cause, he shall cease to be a Participant and his right or privilege to any payment to the Trust . . . shall thereupon wholly cease, . . .

 In effect, under Article 7.4, all funds previously paid or credited to a participant's account, whether vested or not, were forfeited if an employee went to work for a competitor of Bowne. From 1972 to 1977, three employees left Bowne and became employed by competitors. The Trustees invoked the forfeiture provision and withheld all payments to these three employees. *fn1"

 The Plan was amended and entirely restated effective June 17, 1977, and again on November 29, 1979, to comply with ERISA. In order to bring the Plan into compliance with ERISA, the forfeiture provision was eliminated. This change was the subject of considerable discussion among Bowne's employees including Cohen. Tr. 244-45. Cohen testified that the employees' understanding of the effect of the deletion of the forfeiture provision was they could leave Bowne's employ to work for a competitor and that this would not affect their ability to receive immediate distribution of their account balances. Id.

 Under the 1977 Plan, which is presently in effect, *fn2" Articles 8.1(A) and (B) provides as follows:

 
(A) Distribution to a Participant of the nonforfeitable portion of his Account shall commence not later than the sixtieth (60th) day after the close of the Plan Year in which the later of the following events occur:
 
(1) the earlier of the Participant's Early Retirement Date [age 60, if 30 years of service] or Normal Retirement Date [age 65],
 
or
 
(2) the termination of the Participant's employment with all ...

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