may only be exercised during employment by GEC or an affiliated company (Amended Complaint, Ex. A), because he was allegedly advised at the time of his termination that he would be allowed to exercise his stock option after his termination. Amended Complaint PP 62, 75.
In Count III, plaintiff claims he was slandered based upon defendant Doug Dunn's statement that "Eric Sandler and the management of Marconi screwed up the company and we had to let them go." Amended Complaint P 78.
Count IV sets forth a claim of employment discrimination based upon religion and nationality, founded upon defendant Dunn's statement that "we were able to kill two birds with one stone, when we got rid of Sandler, a Jew and a Spic." Amended Complaint P 85.
A. Count I
Defendants move to dismiss the ERISA claim in plaintiff's Amended Complaint (Count I) on the ground that claims based on oral misrepresentations concerning a retirement plan are barred by ERISA. This Court agrees and finds that Count I must be dismissed in its entirety as to all of the defendants.
In June 1989, Marconi advised plaintiff that he was eligible to participate in a retirement plan effective July 19, 1989. Plaintiff alleges that he was told that the plan would provide annual benefits commencing at age sixty in the amount of $ 100,000 per year for ten years with full vesting after three years of service with Marconi. Amended Complaint PP 25, 37-38, 49. Following plaintiff's termination, however, he received a written copy of the plan provisions and learned that, contrary to the terms disclosed orally, full vesting would not occur until after three years of plan participation. Plf.'s Ex. A, Supplemental Retirement Agreement, P 4. Accordingly, plaintiff was not entitled to retirement or death benefits under the retirement plan. Amended Complaint PP 26-27.
Plaintiff charges that he relied to his detriment on the oral misrepresentations made to him concerning the company's retirement plan. Amended Complaint PP 45-46. As such, plaintiff's ERISA claim appears to be for promissory estoppel or fraud or breach of contract. Common law claims of promissory estoppel, breach of contract, or fraud, however, are pre-empted under ERISA. 29 U.S.C. § 1144(a) (1988) (ERISA "supersedes any and all State laws insofar as they may now or hereafter relate to any employee benefit plan"); see also Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48, 95 L. Ed. 2d 39, 107 S. Ct. 1549 (1987) (ERISA pre-empts state law claims).
Moreover, oral agreements or modifications to a retirement plan are insufficient to support a claim for recovery under ERISA. See Lister v. Stark, 890 F.2d 941, 946 (7th Cir. 1989) (affirming dismissal under Fed. R. Civ. P. 12(b)(6) because "ERISA does not recognize the validity of in oral modification of a pension plan"), cert. denied, 112 L. Ed. 2d 584, 498 U.S. 1011, 111 S. Ct. 579 (1990); Cefalu v. B.F. Goodrich Co., 871 F.2d 1290, 1297 (5th Cir. 1989) ("oral agreement cannot be the basis of a cause of action under ERISA" because "ERISA expressly requires that employee benefit plans be 'established and maintained pursuant to a written instrument'") (quoting 29 U.S.C. § 1102(a)(1)); Musto v. American Gen. Corp., 861 F.2d 897, 909-10 (6th Cir. 1988) ("Congress in passing ERISA did not intend that participants in employee benefit plans should be left to the uncertainties of oral communications in finding out precisely what rights they were given under their plan"), cert. denied, 490 U.S. 1020, 104 L. Ed. 2d 182, 109 S. Ct. 1745 (1989); Straub v. Western Union Co., 851 F.2d 1262, 1265 (10th Cir. 1988) ("no liability exists under ERISA for purported oral modifications of the terms of an employee benefit plan"); Nachwalter v. Christie, 805 F.2d 956, 960 (11th Cir. 1986) ("requirement that ERISA plans be 'maintained' in writing precludes oral modifications of the Plans; the common law doctrine of estoppel cannot be used to alter this result").
Indeed, courts in this Circuit have routinely rejected claims based upon oral promises which purport to vary the terms of a written ERISA plan. In Smith v. Dunham-Bush Inc., 959 F.2d 6 (2d Cir. 1992), the Second Circuit Court of Appeals held that "ERISA explicitly provides, in section 402(a), that all agreements relating to pension benefits must be in writing." Id. at 10. In Smith, the plaintiff was a British national who claimed reliance on his employer's promise that he would receive a retirement benefits package comparable to what he would have received in the United Kingdom, rather than the lesser benefits provided for under the employee's written plan. Id. at 7.
The Second Circuit affirmed the District Court's dismissal of the plaintiff's claim, ruling that the claim for additional benefits pursuant to an oral promise was related to an employee benefit plan and therefore was pre-empted by ERISA. In its preemption analysis, the Court further noted that ERISA requires all agreements related to pension benefits to be in writing, the rationale being that a writing would prevent plan administrators from harming the actuarial soundness of the plan by contracting to pay benefits to persons not so entitled under the plan's express terms. Id. at 10. See also Zydel v. Dresser Indus., Inc., 764 F. Supp. 277, 284-85 (W.D.N.Y. 1991) (cause of action based upon oral modification of pension plan is barred by ERISA and promissory estoppel claim is pre-empted by ERISA); Weingord v. Western Union World Comm., Inc., 1991 WL 90742 (S.D.N.Y. 1991) (granting summary judgment in favor of defendant because claim based on promise that plaintiff would receive more severance pay than current written plan allowed is barred as a matter of law by ERISA); Bakersky v. ITT, 1990 WL 33149 (D.N.J. 1990) ("ERISA's express mandate that employee benefit plans be established pursuant to written instruments and the weight of appellate authority compel the conclusion that precluding oral modification of ERISA plans represents the better reasoned approach"); Moore v. Metropolitan Life Ins. Co., 1987 WL 16148 (S.D.N.Y. 1987) ("The Court concludes that it cannot create a federal common law right of estoppel in the manner suggested by plaintiffs because ERISA and the case law interpreting ERISA expressly decline to accept plaintiffs' estoppel theory" based upon "various oral representations made by defendant").
Plaintiff alleges in his Amended Complaint that, despite "reasonable attempts to obtain same", he did not receive a written copy or summary of the retirement plan until two months after his discharge. Amended Complaint PP 27, 47. Disclosure of a written summary and information regarding the plan's provisions is mandated under ERISA and plaintiff undoubtedly could have initiated an action to compel defendants to supply him with such a writing. See 29 U.S.C. § 1021(a) (1988). Plaintiff fails to point to any Second Circuit authority, however, that recognizes a cause of action for monetary relief on the basis of equitable estoppel under such circumstances.
Moreover, plaintiff's allegation with respect to the oral misrepresentations made which he asserts give rise to an equitable estoppel or fraud argument are insufficient. In the first place, it is clear that this is a non-participatory plan, i.e., the employer, not the plaintiff, made all contributions thereto and the employer's contributions of $ 7,500 annually to the plan on behalf of the plaintiff and other executive employees covered thereunder commenced on July 19, 1989. The alleged oral representation to the plaintiff was that the plan "was to provide" for "full vesting following three years of service with the defendant corporation, Marconi" (Amended Complaint P 25) and again "that plaintiff would be fully vested upon the completion of three years of service with the defendant Marconi Circuit Technology Corporation." Amended Complaint P 49. These are truthful representations that the plan would be (future tense) vested upon completion of three years after its adoption. Had an officer of defendant Marconi stated that the plaintiff, having served more than three years as an employee, was fully vested upon the adoption of the plan, then plaintiff might have an argument in another jurisdiction which has recognized the equitable estoppel doctrine in this context.
But plaintiff makes no such allegation and, even if he did, it would not be sustained in this Circuit under the present authorities.
In light of the overwhelming body of case law refusing to allow oral modifications to written retirement plans and the foregoing analysis, it is clear that plaintiff's claim as set forth in Count I of the Amended Complaint is pre-empted and barred by ERISA. Accordingly, Count I is hereby dismissed as to all defendants.
B. Count II
Defendants further argue that plaintiff's claim for breach of a stock option agreement is barred under New York law. As part of his employment compensation package at Marconi, plaintiff received an option to purchase GEC securities. Amended Complaint P 28. Plaintiff alleges that, three days before his termination, defendant Doug Dunn, an officer of both Marconi and Plessey, told plaintiff that he would be permitted to exercise the option after termination of employment. Amended Complaint PP 31-32. When plaintiff attempted to exercise the option two months after his termination, however, he was notified by GEC that he was not permitted to do so under the written terms of the option agreement. Amended Complaint PP 66-67.
The written agreement clearly provides that the option to purchase securities may be exercised only while the participant is employed by GEC or a GEC affiliate or at the discretion of the GEC Board of Directors subject to their conditions. Amended Complaint, Ex. A, at 4. The agreement further provides that, if the participant ceases to be employed for any reason, he "shall not be entitled by way of compensation for loss of office or otherwise howsoever to any sum or benefit to compensate [him] for the loss of any rights under [the agreement]." Id. Plaintiff signed the Form of Acceptance, accepting the provisions of this agreement. Id. at 5.
Plaintiff's claim under the option agreement is barred by the Statute of Frauds, New York Uniform Commercial Code Section 8-319. Section 8-319 provides:
A contract for the sale of securities is not enforceable by way of action or defense unless
(a) there is some writing signed by the party against whom enforcement is sought or by his authorized agent or broker sufficient to indicate that a contract has been made for sale of a stated quantity of described securities at a defined or stated price.