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NORMANN v. AMPHENOL CORP.

January 31, 1997

RICHARD W. NORMANN, BRUCE DOWNIE, NORMAN HAYNER, and all others similarly situated, Plaintiffs, against AMPHENOL CORPORATION, Defendant.


The opinion of the court was delivered by: MCAVOY

 I. BACKGROUND

 This case concerns a dispute over early retirement benefits under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. Plaintiffs are a class of current and former salaried employees of the Sidney Division of Amphenol Corporation who are challenging Amphenol's decision to reduce early retirement benefits. Plaintiffs seek invalidation of Amphenol's amendment of its Pension Plan, as well as monetary damages, claiming in their one-count Complaint that Amphenol violated sections 204(g) and 204(h) of ERISA. 29 U.S.C. §§ 1054 (g) & (h).

 In 1987, LPL Technologies, Inc. purchased Amphenol Corporation from Allied Signal. In that same year, LPL adopted a pension plan (the "1987 Plan") with respect to salaried employees at its Sidney Division. The 1987 Plan contained "generous" provisions for Amphenol salaried employees who retired before the age of 65. In 1992, Amphenol was named Plan Sponsor.

 As a result of the Tax Reform Act of 1986 ("1986 Act"), Pub. L. No 99-514, 100 Stat. 2085 (1986), plan sponsors were required to amend certain benefit formulas in order to retain the tax advantages enjoyed by qualified pension plans. The Secretary of the Treasury, through the IRS, was to promulgate regulations that implemented the 1986 Act.

 Because the IRS anticipated that it would take considerable time for it to promulgate regulations interpreting the 1986 Act, the IRS authorized plan sponsors to "freeze" benefits as of January 1, 1989, thus allowing subsequent plan amendments to be retroactively effective to January 1, 1989. *fn1" See IRS Notice 88-131. In addition, the IRS provided a number of Model Plan Amendments that sponsors could adopt on a temporary basis to avoid ERISA's prohibition on decreases in accrued benefits. See IRS Notice 88-131, § II.

 On December 27, 1989, the LPL Pension Committee adopted a resolution ("1989 Resolution") that amended the 1987 Plan by reducing early retirement benefits payable to salaried employees. *fn3" (DeGeorge Aff., Exh. H). For example, the Plan no longer paid an "unusually liberal" benefit to employees who retired at age 55, but instead paid them only 50% of their full age 65 benefit. (DeGeorge Aff., Exh. H). On January 24, 1990, the full Board of Directors of LPL ratified the Pension Committee's resolution and on January 25, 1990, the Pension Committee of Amphenol ratified the 1989 Resolution as well. (DeGeorge Aff., Exhs. H & I).

 On January 19, 1990, Amphenol sent out a memorandum addressed to all Sidney Salaried Employees notifying them that

 
standard early retirement reductions have been put in place effective 1/1/89. In other words, if an employee retires at age 55 on or after 1/1/89, his benefit at age 65 will be reduced by 50%. It is important to note, however, that the early retirement reduction factors in place before 1/1/89 are protected with respect to the benefit credited to 12/31/88. Therefore, an employee will never receive less than his age 65 benefit credited to 12/31/88 reduced by the old liberal early retirement factors.

 ("1990 Memorandum") (DeGeorge Aff., Exh. G).

 On January 14, 1991, Amphenol sent a memorandum explaining the Model Amendment III and at the same time distributed an updated Summary Plan Description ("SPD") to all salaried employees. (DeGeorge Aff., Exh. M). A similar memorandum, updated SPD, and notice regarding adoption of Model Amendment III were provided to all salaried retirees on February 1, 1991. (DeGeorge Aff., Exh. N).

 A. The Claims

 On August 8, 1995, Plaintiffs filed the instant complaint alleging violations of 29 U.S.C. §§ 204(g) & (h). Presently before this Court are Plaintiffs' Motion for Partial Summary Judgment and Defendant's Motion for Summary Judgment. Specifically, Plaintiffs argue that Defendant did not properly "amend" the 1987 Plan until 1994 at the earliest, and thus were not entitled to retroactive application of the reduction in benefits to January 1, 1989. Plaintiffs also assert that Defendant's changes to the 1987 Plan required proper notice to plan beneficiaries under ERISA section 204(h) and that no such notice was properly given.

 Accordingly, Plaintiffs seek to have the Pension Plan for Salaried Employees of the Sidney Division of the Amphenol Corporation reinstated as it existed in its 1987 form prior to Defendant's purported amendments to the plan.

 II. DISCUSSION

 A. Summary Judgment Standard

 Pursuant to Fed. R. Civ. P. 56(c), a court may grant summary judgment if it appears "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Furthermore, it is the substantive law that will determine what facts are material to the outcome of a case. See Anderson, 477 U.S. at 250.

 Initially, the moving party has the burden of informing the court of the basis of its motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). If the moving party satisfies its burden, the burden then shifts to the non-moving party to come forward with "specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). The Court must then resolve all ambiguities and draw all reasonable inferences against the moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). However, the non-moving party must do more than simply show "that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. Only when the Court concludes that no rational finder of fact can find in favor of the non-moving party should summary judgment be granted. Gallo v. Prudential Residential. Servs., Ltd., 22 F.3d 1219, 1223 (2d Cir. 1994).

 B. Amendment of the 1987 Plan

 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, 514 U.S. 73, 115 S. Ct. 1223, 1230, 131 L. Ed. 2d 94 (1995) (quoting H.R.Rep. No. 93-1280, at 297, 1974 U.S. Code Cong. & Admin. News 4639, 5077, 5078) (emphasis removed). 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). 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. See 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); 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) (plan cannot be changed by an oral or informal written amendment); Washington Nat. Ins. Co. v. Hendricks, 855 F. Supp. 1542, 1556-57 (W.D.Wis. 1994) (writing that does not comply with the amendment procedures of the plan cannot become part of the plan).

 However, ERISA does not dictate a set procedure for amending a plan. As the Supreme Court recently stated, "the literal terms of § 402(b)(3) are ultimately indifferent to the level of detail in an amendment procedure, or in an identification procedure" under ERISA. Schoonejongen, 115 S. Ct. at 1229. In Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 115 S. Ct. 1223, 1229, 131 L. Ed. 2d 94 (1995), the Supreme Court held that ERISA's amendment requirements were satisfied even where the sole procedure specified was simply that "the Company reserves the right at any time to amend the plan." Schoonejongen, 115 S. Ct. at 1226.

 The Schoonejongen Court's guidance has not fallen on deaf ears in the Second Circuit. For example, in Schonholz v. Long Island Jewish Medical Center, 87 F.3d 72 (2d Cir.), cert. denied, 136 L. Ed. 2d 401, 117 S. Ct. 511 (1996), Judge Walker rejected the argument that in order to vest a severance plan, the change must be ...


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