should similarly be excepted from ERISA coverage because it too requires no ongoing administrative supervision or discretionary judgments.
As an initial matter, the two decisions on which the defendant principally relies, Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 96 L. Ed. 2d 1, 107 S. Ct. 2211 (1987), and James v. Fleet/Norstar Financial Group, Inc., 992 F.2d 463 (2d Cir. 1993), do not rest solely on the absence of administrative supervision and discretionary analysis in determining that the severance pay policies under review in those cases were not covered by ERISA. In Fort Halifax the Supreme Court addressed a Maine statute that required employers to make a lump sum severance payment to all employees terminated because of a plant closing. The Court determined that the statute did not establish, and did not require the employer to maintain, an employee welfare benefit plan, and therefore was not preempted by ERISA. The Court focused on the word "plan" in making that determination, and, in that context, cited various reasons why a one-time, lump sum payment made on the occurrence of a single event, i.e., plant closing, did not amount to a "plan." The Court concluded, "To do little more than write a check hardly constitutes the operation of a benefit plan. Once this single event is over, the employer has no further responsibility. The theoretical possibility of a one-time obligation in the future simply creates no need for an ongoing administrative program for processing claims and paying benefits." 482 U.S. at 12.
In the Fleet/Norstar case, the Second Circuit confronted an analogous situation where an employer had offered a one-time lump sum severance payment to a group of its employees as an inducement to continue working until the employer had completed a consolidation of operations that would result in the discharge of those employees. Fleet/Norstar, 992 F.2d at 464-65. Relying on Fort Halifax, the court found that such a program did not constitute a "plan," because it did not require an ongoing program for processing and disbursing severance pay benefits. Id. at 466-67.
Both decisions turned on the fact that the severance pay programs under scrutiny were one-time payments provided to a circumscribed group of employees and triggered solely by the occurrence of a single, non-recurring event, as distinguished from an ongoing program of providing severance pay which is available generally to employees upon termination for a variety of reasons. As both decisions pointed out, in the former situation, "'The employer assumes no responsibility to pay benefits on a regular basis and thus faces no periodic demands on its assets that create a need for financial coordination and control.'" Fleet/Norstar, 992 F.2d at 466, quoting Fort Halifax, 107 S. Ct. at 2218. Thus, the focus on administrative supervision in those cases was not on the quality or extent of such supervision, but rather on the fact that, because a plan covered by ERISA is ongoing, an employer has to establish some kind of administrative system to identify, on a recurring basis as employees are terminated, those who qualify for severance benefits and to keep track of the payment of those benefits. More importantly, the focus on administrative supervision in those cases was premised on the notion that the presence of such supervision is a bellwether for identifying a plan as an ongoing program in need of the protections of ERISA because it is likely to create "periodic demands on ... assets that create a need for financial coordination and control." Id.
Although "managerial discretion" did not figure prominently in the decisions in either Fort Halifax or Fleet/Norstar, to the extent the latter case and other cases have addressed that issue the analysis was directed to the ultimate question of whether there was an ongoing program with an administrative scheme that required ERISA protection. Thus, to the extent that a particular plan involves the exercise of discretion, that is simply one indicator, among others, that a particular severance program requires an ongoing administrative scheme to accomplish its purpose. See, e.g., Fleet/Norstar, 992 F.2d at 468; Bogue v. Ampex Corp., 976 F.2d 1319, 1322-23 (9th Cir. 1992) (Wisdom, J.), cert. denied, 507 U.S. 1031, 113 S. Ct. 1847, 123 L. Ed. 2d 471 (1993); Fontenot v. NL Indus., Inc., 953 F.2d 960, 962 (5th Cir. 1992).
NatWest's "bridging pay" policy is not at all similar to the programs in Fort Halifax and Fleet/Norstar which were held not to be "plans" within the meaning of ERISA. It is not triggered solely by the occurrence of a single event like a plant closing or a consolidation of operations. Nor is it limited to a select group of employees, but rather is generally available to all officers employed by the bank. Perhaps most importantly, it is an ongoing program which requires the bank to make coverage determinations and pay out benefits on a regular and recurring basis as employees are terminated. The administrative scheme for carrying out that program is an integral and regularized part of the separation process, and is incorporated in the bank's standard separation form which is completed for all employees who leave the bank. The scheme involves the exercise of discretion when the judgment is made at the time of separation as to the appropriate designation to give to the reason for the employee's termination.
The scheme further requires the bank's human resources generalist to take the administrative steps necessary to assure the proper implementation of bridging pay for those who are entitled to it. That the administration of the program thereafter is accomplished largely by computerized functions does not make it any less of an administrative scheme implementing an ongoing program for providing severance pay benefits.
For the foregoing reasons, the undersigned reports and recommends that the "bridging pay" policy of NatWest is an "employee welfare benefit plan" within the meaning of ERISA and that the court accordingly has subject matter jurisdiction to determine the claims raised in the plaintiff's complaint.
Any objections to this Report and Recommendation must be filed with the Clerk of the Court with a copy to the undersigned within 10 days of the date of this report. Failure to file objections within the specified time waives the right to appeal the District Court's order. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298 (2d Cir.) cert. denied, 506 U.S. 1038, 113 S. Ct. 825, 121 L. Ed. 2d 696 (1992); Small v. Secretary of Health and Human Serv., 892 F.2d 15, 16 (2d Cir. 1989) (per curiam).
Dated: Uniondale, New York
September 26, 1995
VIKTOR V. POHORELSKY
United States Magistrate Judge