III. BREACH OF CONTRACT
The parties' cross-motions for summary judgment on Plaintiffs' breach of contract claim turn upon a determination of what rate was "contained in" the Cluett Pension Plan after the February 16, 1989 Committee Action. At all relevant times, the Cluett Pension Plan document contained a discount rate of 5%, and the Cluett Board never voted to amend that rate. Nonetheless, Defendants contend that the February 16, 1989 Committee Action changed the discount rate contained in the Plan from 5% to the PBGC-based rate. Plaintiffs counter that the February 16, 1989 Committee Action was ineffective under ERISA to change the terms of the Cluett Pension Plan.
As a preliminary matter, Defendants argue that Plaintiffs' ERISA analysis is flawed because: (1) the EPI Program was a "top-hat" plan exempt from the ERISA requirements ordinarily applicable to employee benefit plans; and (2) Plaintiffs pled no claim under ERISA, and any such claim would now be barred by the applicable statute of limitations. Defendants arguments are unpersuasive. Plaintiffs do not contend that ERISA's requirements directly govern the EPI Amendment. Rather, Plaintiffs correctly note that those requirements indirectly affect the EPI Amendment because they govern the terms of the Cluett Pension Plan. Similarly, Plaintiffs do not pursue a claim or remedy under ERISA, but simply argue that ERISA's requirements are relevant to interpreting the terms of the Cluett Pension Plan and EPI Amendment. Thus, Plaintiffs' ERISA analysis is relevant to the Court's determination of the parties' motions.
ERISA requires that "every employee benefit plan be established and maintained pursuant to a written instrument" and "specify the basis on which payments are made . . . from the plan." 29 U.S.C. §§ 1102(a)(1), (b)(4). The purpose of the written document requirement is to allow an employee "on examining the plan documents, [to] determine exactly what his rights and obligations are under the plan." Curtiss-Wright Corporation v. Schoonejongen, U.S. , , 115 S. Ct. 1223, 1230, 131 L. Ed. 2d 94, 103 (1995) (quoting H. R. Rep. No. 93-1280, p. 297 (1974)) (emphasis added by quoted case).
ERISA also requires that every benefit plan "provide a procedure for amending such plan, and for identifying the persons who have authority to amend the plan . . . ." 29 U.S.C. § 1102(b)(3).
The Cluett Pension Plan explicitly states that "the Board of Directors reserves the right . . . to . . . amend . . . the [Cluett Pension] Plan." Hausen Aff. Ex. F § 11.1 (Cluett Pension Plan). The Cluett Pension Plan also specifies that the Cluett Board's amendment authority is exclusive: "The Company acting through the Board of Directors shall have the sole authority to . . . amend or terminate, in whole or in part, the Plan . . . ." Pls.' Supp. Authorities Ex. D § 9.1 (Cluett Pension Plan). These clauses adequately identify both the persons capable of amending the Plan -- i.e., the Cluett Board -- and the procedure for making such an amendment -- i.e., a decision to amend by the Cluett Board. Curtiss-Wright, U.S. , 115 S. Ct. at 1228-89, 131 L. Ed. 2d at 102-03.
Under ERISA, a change in the terms of a benefit plan is only valid if made in writing pursuant to the amendment procedure and by the amending authority set forth in the benefit plan. Coleman v. Nationwide Life Ins. Co., 969 F.2d 54, 58-59 (4th Cir. 1992) (modifications to a plan must be in writing and in conformity with formal amendment procedures), cert. denied, 506 U.S. 1081, 122 L. Ed. 2d 359, 113 S. Ct. 1051, 113 S. Ct. 1051, 122 L. Ed. 2d 359 (1993); Singer v. Black & Decker Corp., 964 F.2d 1449, 1453-1454 (4th Cir. 1992) (Wilkinson, J., concurring) ("written modification must be adopted in conformity with the amendment procedures set out in the plan in order to have effect"); Alday v. Container Corp. of America, 906 F.2d 660, 665 (11th Cir. 1990) (a plan cannot be changed by an oral or informal written amendment), cert. denied 498 U.S. 1026, 112 L. Ed. 2d 668, 111 S. Ct. 675 (1991); Washington Nat. Ins. Co. v. Hendricks, 855 F. Supp. 1542, 1556-57 (W.D. Wis. 1994) (a writing that does not comply with the amendment procedures of the plan cannot become part of the plan). Because the Plan sets forth an amendment procedure that may only be utilized by the Cluett Board, the Cluett Committee had no authority under ERISA to change the terms of the Plan.
The Court's conclusion in this respect arguably renders meaningless the Plan's grant of authority to the Cluett Committee to adopt actuarial factors from time to time. That authority was not without substance when first granted, however. Prior to 1983, the Cluett Plan document did not set forth the factors currently applicable under the Plan, but simply defined the factors as those adopted by the Committee. Thus, prior to 1983, the Cluett Committee could change the Plan's actuarial factors simply by adopting new ones, without amending any of the terms of the original Plan document. Such an adoption would probably not have constituted an amendment of the Plan under ERISA. See, e.g., Stewart v. National Shopmen Pension Fund, 235 U.S. App. D.C. 122, 730 F.2d 1552, 1563 (D.C. Cir.), cert. denied, 469 U.S. 834, 83 L. Ed. 2d 68, 105 S. Ct. 127 (1984) (mere exercise of a plan provision held not an amendment for certain ERISA purposes); Dooley v. American Airlines, Inc., 797 F.2d 1447, 1450-52 (7th Cir. 1986), cert. denied, 479 U.S. 1032, 93 L. Ed. 2d 833, 107 S. Ct. 879 (1987) (where (1) plan provided that employer could approve actuarial factors from time to time, (2) employer approved certain actuarial factors pursuant to the plan provision, and (3) employer later approved new factors, latter action was not an amendment of the plan). Accordingly, it was not until Cluett's 1983 addition of the current actuarial factors that the Plan presented a possible conflict between the Cluett Board's and Cluett Committee's authority. The Court, presented with that conflict, reads the Plan in the manner which complies with ERISA's requirement that changes only be made pursuant to a defined amendment procedure by a defined amending authority.
The Cluett Board undisputedly did not act to amend the Cluett Pension Plan.
Accordingly, the 5% discount rate printed in the Cluett Pension Plan was never validly changed and was at all relevant times one of the actuarial assumptions "contained in" the Cluett Pension Plan for purposes of the EPI Amendment.
IV. MUTUAL MISTAKE
The mistake which Plaintiffs argue vitiates their releases is "the parties mutual lack of awareness that, under the EPI Amendment, [Plaintiffs] were entitled to a lump sum amount calculated at a 5% discount rate." Allen, 945 F.2d at 46. The Defendants contend that at the time they solicited Plaintiffs' Releases and made the EPI lump sum payments, they believed that the February 16, 1989 Committee Action had changed the applicable discount rate to the 9.3% PBGC-based rate. Plaintiffs argue that their own mistaken belief "inevitably follows" from that of the Defendants' "since Plaintiffs' mistake was caused by, and is completely derivative of, West Point's mistake." Pls.' Mem. in Supp. at 22. Plaintiffs claim that their mistaken belief was induced by Roark's letter to the Plaintiffs, which stated that the 9.3% PBGC-based rate, not a 5% rate, would be used in calculating lump sum values. Hausen Aff. Ex. Q (Feb. 22, 1989 letter, Roark to EPI Program Participants).
As a preliminary matter, Defendants oppose Plaintiffs' mutual mistake claim on the grounds that the parties' alleged mistake could easily have been discovered when Plaintiffs were first notified of the PBGC-based rate. See DaSilva v. Musso, 53 N.Y.2d 543, 551, 428 N.E.2d 382, 444 N.Y.S.2d 50 (1981) (quoting Grymes, 93 U.S. at 61) (rescission on the basis of mistake unavailable "where the means of knowledge were easily accessible"). Defendants' argument must be rejected. Contrary to Defendants' contention, Defs.' Mem. in Opp. at 16, the issue dispositive of Plaintiffs' mistake claim is not whether the Cluett Board voted to change the Plan's discount rate, but whether Cluett validly changed that rate absent such a vote. The Court's resolution of this issue has required a complicated legal analysis of the EPI Amendment, the Cluett Pension Plan, and the requirements of ERISA. Further, Plaintiffs' mistake was allegedly based, at least in part, on representations by Defendants that Cluett had validly changed the rate. Thus, Defendants have failed to provide any evidence that "the means of knowledge were easily accessible" to Plaintiffs.
Plaintiffs' awareness of their entitlement to a lump sum payment based on the 5% discount rate is, however, an issue of fact inappropriate for summary judgment disposition. "In light of the court's obligation to draw all reasonable inferences against the nonmoving party, summary judgment is rarely appropriate where the moving party's state of mind is a material issue." Equal Employment Opportunity Comm'n v. Home Ins. Co., 672 F.2d 252, 257 (2d Cir. 1982). See also 10 Charles A. Wright, Arthur R. Miller & Mary Kay Kane, 10A Federal Practice and Procedure § 2730 at 238 (2d ed. 1983) (summary judgment on state of mind is often inappropriate because such a determination "usually entails the drawing of factual inferences as to which reasonable [persons] might differ -- a function traditionally left to the jury . . . "). Further, contrary to Plaintiffs' assertions, Pls.' 3(g) Statement PP 38, 40, their submissions do not establish as a matter of law that each of the Plaintiffs believed, at the time he executed his Release and accepted his lump sum payment, that such payment was properly calculated on the basis of a 9.3% discount rate and that he was receiving all to which he was entitled. See, e.g., Hausen Aff. Ex EE at 29-30, 48 (Currier Dep.); Id. Ex. FF (Dunne Dep.) at 42-43, 55-56; Id. Ex. GG at 53-54, 73 (Fornero Dep.); Id. Ex. KK at 75, 100 (Pallota Dep.). Accordingly, Plaintiffs' claim for rescission on the grounds of mutual mistake presents material issues of fact which must be resolved by the fact finder.
V. JOINT AND SURVIVOR AND EARLY RETIREMENT FACTORS
The EPI Program provides for a joint and survivor benefit -- a benefit paid monthly to the participant for his life, and 50% of that benefit paid to the participant's spouse for her life after the participant's death. Thus, to determine the amount of each Plaintiff's lump sum payment, West Point had to ascertain the actuarial equivalent of future payments to the participant's spouse as well as to each participant. To do so, the actuary divided each participant's benefit by a "joint and survivor factor." In calculating Plaintiffs' lump sum payments, West Point's actuary used a joint and survivor factor of .95 taken from the West Point Pension Plan, rather than the .9 joint and survivor factor printed in the Cluett Pension Plan. The actuary believed that the February 16, 1989 Committee Action made the West Point assumptions applicable to the Cluett Pension Plan. Plaintiffs contend that "if this Court finds that the committee's action was ineffective to change the assumptions applicable to the November 11, 1988 EPI Amendment, then . . . a Cluett joint and survivor factor should be used to calculate the appropriate lump sum benefit." Pls.' Mem. in Supp. at 19.
In calculating Plaintiffs' lump sum payments, West Point's actuary also assumed that each participant would elect the EPI's early retirement option, which allowed participants to receive their monthly benefits prior to age 65 at a reduction of 1/2 of 1% for each month before age 65 that he began receiving benefits. The actuary assumed the participants' election of the early retirement reduction because the option was favorable to the participants under the actuarial assumptions used. Plaintiffs contend that "if this Court finds a 5% discount rate applicable, it should also hold that the early retirement factor should not be applied to the extent it may reduce the lump sum benefits due any of the plaintiffs." Pls.' Mem. in Supp. at 20.
Defendants argue that Plaintiffs' joint and survivor and early retirement factor claims are not properly before the Court because they are outside the scope of Plaintiffs' complaint. Defendants contend that "at no time during the past five years did Plaintiffs provide West Point with any notice that the joint and survivor factors or the early retirement factors were in issue." Defs.' Mem. in Opp. at 17 (emphasis in original). Plaintiffs do not claim to have provided West Point with such notice. A motion for summary judgment is not the appropriate place to present new claims which effectively amend the complaint. See Coppola v. Connecticut Student Loan Found., 1989 U.S. Dist. LEXIS 3415, *10, 1989 WL 47419, * 3 n.14 (D. Conn. Mar. 2, 1989) (Cabranes, J.). Accordingly, Plaintiffs' motion for summary judgment on the joint and survivor and early retirement factors is denied.
VI. ATTORNEY'S FEES
The EPI Amendment provides for West Point's payment of an executive's attorney's fees on a current basis "if at any time upon or after a Change of Control there should arise any dispute as to the validity, interpretation or application of any term or condition of this Agreement . . . regardless of whether the Executive is the prevailing party." Hausen Aff. Ex. E P 16 (EPI Amendment). Plaintiffs seek summary judgment on their entitlement to attorney's fees in connection with this suit. By its terms, the EPI Amendment only provides for the payment of attorney's fees in connection with disputes that arise "upon of after a Change of Control." Plaintiffs contend that their dispute arose on April 5, 1989, by which time the parties agree a change of control had occurred, and at which time Defendants paid them their lump sum payments on the basis of the PBGC-based interest rate. Defendants challenge Plaintiffs' entitlement to attorney's fees, arguing that the EPI Amendment's attorney's fee provision "served to deter acquirors from reneging on prior management's promises," and does not apply to disputes arising out of prior management's administration of change in control benefits. Defs.' Mem. in Opp. at 18.
The dispositive question is when the Plaintiffs' dispute "arose" for purposes of the EPI Amendment. Despite Plaintiffs' contentions that their dispute arose at the time of their lump sum payments, other dates -- such as, inter alia, the time of the February 16, 1989 Committee Action or of Roark's February 22, 1989 letter -- are also plausible trigger dates under the attorney's fee provision. The parties' submissions do not establish as a matter of law any particular triggering event or date. Thus, the applicability of the attorney's fee provision cannot yet be decided, and summary judgment on Plaintiffs' entitlement to attorney's fees is denied. Compare Brodie Aff. Ex. 3 at 4 ( Krumme v. West Point-Pepperell, Inc., 735 F. Supp. 575 (S.D.N.Y. 1990) (Mem. End.) (finding issue of fact with respect to plaintiff's entitlement to attorney's fees in the Krumme action).
According to the terms of the EPI Amendment, Plaintiffs' lump sum payments were due no later than May 30, 1989. The EPI Amendment provides for interest on overdue payments at 2% over the Manufacturers Hanover reference rate. Manufacturers Hanover merged with Chemical Bank in July 1991, at which time the Manufacturers Hanover reference rate became the Chemical Bank prime rate. Plaintiffs move for summary judgment on their contractual entitlement to interest on any award they receive in this action. Defendants do not oppose this portion of the Plaintiffs' motion. The EPI Amendment is unambiguous on this point and the Court may therefore resolve the issue as a matter of law. See e.g. John Hancock Mut. Life Ins. Co., 22 F.3d 458, 461. If Plaintiffs obtain a judgment recognizing their right to lump sum payments in excess of those they received, then they will be entitled to interest on the amount of their underpayment at a rate of 2% over the Chemical Bank prime rate.
For the reasons stated, the Court grants Plaintiffs' motion for reargument; denies Defendants' cross-motion for partial summary judgment; and grants in part and denies in part Plaintiffs' cross-motion for partial summary judgment.
In summary, the Court holds that:
(1) the "promptness requirement" does not apply to this suit;
(2) the Cluett Committee's attempt to amend the terms of the Cluett Pension Plan was ineffective under ERISA;