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SISKIND v. SPERRY RETIREMENT PROGRAM

April 13, 1992

PHILIP SISKIND, et al., Plaintiffs, against THE SPERRY RETIREMENT PROGRAM, and UNYSIS (formerly known as Burroughs/Sperry Corporation) and the SPERRY CORPORATION EMPLOYEE BENEFITS EXECUTIVE COMMITTEE, as fiduciaries of THE SPERRY RETIREMENT PROGRAM, Defendants.

BRODERICK


The opinion of the court was delivered by: VINCENT L. BRODERICK

VINCENT L. BRODERICX, U.S.D.J.

 ERISA (29 U.S.C. § 1102(b)) requires that every employee benefit plan "provide a procedure for amending such plan, and for identifying the persons who have authority to amend the plan. . ."

 This case involves an employee pension plan in which a committee of officers of the employer was designated as the fiduciary administrator of the plan. This committee was also identified and authorized by the terms of the plan as the amending authority. The plan provides that "any discretionary actions taken under the Program by the Committee with respect to the classification of employees, Members, contributions or benefits shall be uniform in nature and applicable to all persons similarly situated," and permits the Committee named as fiduciary under the Plan to amend it.

 The controversy before me concerns whether such a committee, specifically designated in the plan as the § 1102(b)(3) amending authority, was justified under ERISA in delegating to the employer decisions which led to offers to some but not to all employees of optional accelerated retirement benefits under the plan. The parties have made cross-motions for summary judgment and at argument submitted the case for plenary decision upon submission. The operative facts are not in dispute. This Memorandum Order reflects my findings of fact and conclusions of law.

 I find the conduct of the Committee violative of ERISA.

 II

 Plaintiffs, 41 former and present employees of defendant UNISYS, allege that the Sperry Employee Benefits Executive Committee violated ERISA, 29 U.S.C. 404, when the Committee amended Sperry's ERISA Plan to include an enhanced early retirement program, authorizing Sperry's management to decide which business units would be included in the program. Plaintiffs have also named as defendants the Sperry Corporation and UNISYS, the present owner of Sperry. *fn1"

 The pension plan involved (the "Plan") was established and maintained by the Sperry Corporation. In 1986 Sperry and the Burroughs Corporation merged and formed UNISYS which became the Plan's sole sponsor. The Plan provided for the creation of an Employee Benefits Executive Committee (the "Committee") which consisted of at least three members of senior management appointed by the Board of Directors. The Committee was the "named fiduciary" of the Plan pursuant to ERISA § 402(a). See Article 4.1. Under the Plan, the Committee was empowered to make and enforce rules and regulations, resolve eligibility issues, and to pay benefits. Plan, Article 4.5.

 Article 4.5 provided that "any discretionary actions taken under the Program by the Committee with respect to the classification of employees, Members, contributions or benefits shall be uniform in nature and applicable to all persons similarly situated." Under Article A5.1: ". . .the Committee may . . . modify or amend in whole or in part any of the provisions of Part A [of the Plan]." No other party was given power to amend the Plan. Article 4.5 was never amended.

 Article A5.1 also stated that "any such amendment which would result in an increased cost of more than $ 3 million per year shall be subject to the approval of the Company's Board of Directors."

 After the Sperry and Burroughs Corporations merged in 1986 to form UNISYS, UNISYS decided that it would reduce the size of its work force and divest itself of certain divisions. As part of this decision, the corporation proposed to the Committee a Plan amendment which would institute an enhanced early retirement Program, named the Special Voluntary Retirement Program (the "SVRP" or "Program"). Coverage of the SVRP would be company-wide, "with organizational exclusions based on business reasons" to be determined by management. SVRP provided enhanced benefits to employees who were at least 55 years old, had 15 years of service, retired before November 30, 1986, and were employed in other facilities than those which the management of the corporation would decide to exclude. The Committee followed management's recommendation and amended the Plan by adopting the SVRP.

 Soon after adoption of SVRP, UNISYS management announced several exclusions from the Program. In most cases, management decided not to extend the SVRP to employees at a facility or in an activity with respect to which UNISYS was considering divestment. In view of these plans, management decided that early retirement of employees at those facilities would decrease the value of the facilities, although early retirement at UNYSIS' retained facilities was paradoxically viewed as beneficial to profitability.

 Excluded employees included those working at the Flight Simulation Systems Division in Reston, Virginia, and the Microwave and Support Systems Division in Clearwater, Florida. Employees at other facilities, such as the Surveillance and Fire Control Division in Great Neck, New York, were offered a modified SVRP early retirement program made ...


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