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June 16, 1999


The opinion of the court was delivered by: Siragusa, District Judge.


This is an action in which former employees of the defendant Chase Manhattan Bank seek additional retirement benefits pursuant to ERISA, 29 U.S.C. § 1001, et seq. Now before the Court are the parties' cross-motions for summary judgment [# 33] [# 42]. For the reasons that follow, the plaintiffs' motion is denied, and the defendants' motion is granted.


The relevant facts are not disputed. Until July of 1984, all plaintiffs were employed by Lincoln First Bank ("Lincoln") and were participants in Lincoln's retirement plan (the "Lincoln Plan"). In July of 1984, Lincoln was merged into the Chase Manhattan Bank ("Chase"), and was renamed Chase Lincoln First Bank ("Chase Lincoln"). Chase had its own retirement plan (the "1976 Chase Plan"), which provided better benefits than the former Lincoln plan. Rather than allowing the Chase Lincoln employees to join the more beneficial Chase plan, Chase created the Chase Lincoln Plan. Under the Chase Lincoln Plan, at retirement, former Lincoln employees would receive the greater of a) the accrued benefit under the Lincoln Plan as of the merger date [July 31, 1984], plus the Chase Lincoln Formula from that date onward; or b) the Lincoln Plan benefit for the participant's entire career, both with Lincoln First before July 31, 1984, and with Chase Lincoln after July 31, 1984.*fn1 (See, Chase Lincoln plan, Article IV, Section 4.01(c),(d) and Appendix A). On January 1, 1988, the Chase plan and the Chase Lincoln plan were merged, therefore the plaintiffs became participants in the Chase Plan. The Chase Plan is an employee pension benefit plan as defined by ERISA, 29 U.S.C. § 1002(2), and is governed by the provisions of ERISA, 29 U.S.C. § 1001, et seq. Under the merged Chase Plan, the plaintiffs continued to have their benefits calculated as they had been under the Chase Lincoln plan. (See, 1989 Chase Plan, Appendix VIII). Both the Chase Lincoln plan and the Chase Plan calculate benefits using a "final pay formula" based upon final average compensation and years of service, however the two plans calculate benefits differently. Among other differences, the Chase Lincoln formula has a "30-year stepdown," under which former Lincoln employees accrue benefits at a lower rate during their thirty-first through fortieth years of benefit service. For those years of service, a lesser percentage of final average compensation is used to determine the benefit. (Ulterino 2, Appendix A). The Chase Plan was amended again, effective January 1, 1989, however the plaintiffs were "grandfathered" and continued to have the option of having their benefits calculated as before.

Sometime prior to September of 1994, John Farrell, Director of Human Resources for Chase and Administrator of the Chase Plan, began planning an early retirement incentive program designed to reduce the corporation's expenses. Farrell projected that a Voluntary Retirement Program ("VRP") could save Chase approximately $55 million in annual operating costs. As the incentive for employees to take early retirement, the VRP would add five years to an employee's age and years of benefit service.

On October 13, 1994, Farrell presented his VRP proposal to the Chase Board of Directors. Farrell's memo set forth the general details of the proposed VRP, and stated that "[t]he program will be available for acceptance only during the `window' period beginning on October 28, 1994 and ending on December 12, 1994." (Ulterino Affidavit [# 38] Exhibit 9, p. 6437). The memo further stated, in relevant part: "ELECTION PERIOD: `Window' open for election October 28 to December 12, 1994. Legal and competitive review indicates that this is a reasonable time period." (Ulterino Affidavit [# 38], Exhibit 9, p. 6807).

On October 17, 1994, the Chase Board of Directors passed a resolution authorizing the VRP. (Chase Plan, Appendix VIII). That Resolution stated, in relevant part:

  RESOLVED, that the recommendation of Compensation
  Committee with respect to the amendment of [the
  Retirement Plan] . . . in order to establish and
  offer the proposed Voluntary Retirement Program
  described in the memorandum which has been presented
  to this meeting be, and it hereby is, approved, and
  that the Executive Vice President and Human Resources
  Executive of this Bank [Farrell] and such other
  officers as he shall designate be, and each of them
  hereby is, authorized and directed to adopt such
  specific amendments to the Retirement Plan . . . to
  the extent necessary to conform to the amendments to
  the Retirement Plan authorized by this resolution, as
  in their judgment shall be necessary or appropriate
  to carry out such recommendation.
  RESOLVED, that the officers of this Bank be, and each
  of them hereby is, authorized, in the name and on
  behalf of this Bank, to perform all such further
  acts, and to execute and deliver all such further
  agreements or other writings, as they may deem
  advisable in order to carry out the intent of the
  foregoing resolutions.

(Ulterino Affidavit [# 38], Exhibit 11).

On or about October 18, 1994, Chase sent two letters to each of the plaintiffs, informing them of the upcoming VRP. The letters informed them, inter alia, that they would receive specific details of the VRP by the end of October, and that they would have to make an election on whether or not to participate by December 12, 1994, and that if they elected to participate, they would have to actually retire by December 31, 1994. As mentioned earlier, the incentive to retire was the addition of five years of service credit and five years of age for purposes of calculating retirement benefits.

In August or September of 1994, Chase had retained an actuarial firm, Buck Consulting Group ("Buck"), to perform benefit calculations for Chase Plan employees who were eligible to take early retirement under the VRP. (Ulterino 7, p. 152). Once the VRP was approved, Buck was responsible for calculating the individual VRP enhancements. The plaintiffs admit that Buck is "one of the largest and most reputable actuarial firms in the country." (Plaintiffs' Memorandum of Law [# 43], p. 21). One of Buck's employees, Mary Beth McBride, was responsible for preparing individual benefit estimates for the eligible former Chase Lincoln employees based using information provided by Chase. The Chase Lincoln formula was the final pay formula applicable to the plaintiffs, and as mentioned earlier, that formula includes a "step-down" for service between years 30 and 40. However, McBride failed to take this "step-down" into consideration when she created the computer program for computing benefit estimates. This error resulted in erroneously-high benefit estimates for 61 employees, including the plaintiffs.

Chase gave Buck a list of sixteen former Chase Lincoln employees, for which Buck was supposed to prepare sample benefit estimate calculations. The list of sixteen employees included two of the plaintiffs, Antinelli and Maclean. (Ulterino Affidavit [# 38], Exhibit 19, p. 500475). Once McBride prepared these test calculations, she was supposed to send them to Peggy McEachen, an employee of the Chase Human Resources department, who was responsible for verifying the accuracy of the calculations using a Lotus Spreadsheet which she had prepared for that purpose. (Ulterino Aff, Ex. 13, p. 152). Since McEachen's program was properly programmed to account for the "30-year stepdown," it could have detected the error if McEachen had tested one of McBride's erroneous estimates. However, McBride sent only "five or so" calculations to McEachen, who performed tests on those calculations. (Ulterino Affidavit [# 38], Exhibit 13, McEachen Dep. p. 159). McBride states that she sent "several" test cases to McEachen, but she can only positively identify two cases, one for an employee named Hasman and one for an employee named Adams (Ulterino Aff, Ex. 14, p. 36). On one of the test cases, McEachen's calculations did not match McBride's. (Ulterino Aff. Ex. 13, p. 161). However, after speaking with McBride, and after consulting others at Chase, McEachen concluded that the discrepancy was related to an error involving Social Security benefits. (Ulterino Aff, Ex 13, pp. 161-166). It is unclear whether or not McEachen re-tested the calculation that she had initially found to be incorrect. McEachen then had McBride run additional sample estimates, and McEachen states that she tested these and found no disrepancies. (Ulterino Aff, Ex. 13, p. 166). McEachen believes that she missed the error because Buck did not provide her with any samples involving the 30-year stepdown. (Ulterino Aff, Ex. 13, p. 254). However, the plaintiffs contend that the Adams sample did implicate the "30-year stepdown."*fn2 It appears clear from the record, however, that McBride's error would have been discovered if McBride and McEachen had tested the sixteen names on the list of test cases which Chase sent to Buck. However, that did not happen, and McEachen approved McBride's erroneous calculations. As a result, on October 24, 1994, Buck delivered its erroneous calculations to the printer who was to prepare the personalized benefit statements for those employees who were eligible for the VRP.

On October 28, 1994, Chase delivered a VRP information package to each of the plaintiffs. The packages included a summary plan description of the VRP, and an Acceptance and Release Form. The VRP Summary Plan Description ("SPD") accurately set forth the terms of the VRP. The VRP SPD booklet also stated, in relevant part, that "[t]he back pocket of this booklet contains a personalized statement of your Retirement Plan benefits which illustrates your estimated benefit under the Voluntary Retirement Program." (Ulterino Affidavit [# 39], Exhibit 31, p. 2). This estimate, entitled "Schedule B," listed the monthly benefits available to each recipient using various forms of payment and equalizing options. At the bottom of each Schedule B is the following notice:

  These benefits are based on Chase Retirement Plan
  provisions, current Social Security law, and
  continued employment through your retirement.
  Final Average Earnings are based on your compensation
  PLEASE NOTE — The amounts shown above may change as a
  result of:

(1) Revision of the Social Security law.

    (2) Use of actual versus estimated Social Security
    earnings history.

(3) Plan amendments to comply with legislation.

(Plaintiffs' Memorandum of Law [# 43], Exhibit 1, p. 2622). In order to accept the VRP, participants had to submit a completed Acceptance and Release Form by December 12, 1994. Participants could revoke their acceptances within seven days, after which, the election to take early retirement became irrevocable.

Because Buck had failed to account for the "30-year stepdown" in its calculations, the plaintiffs' benefit estimates were erroneously high. The overstatement of monthly benefit payments ranged from a high of $747 to a low of $3. The average overstatement of monthly benefits was $389. This error only affected estimates for employees with more than twenty-five years of service.*fn3 The VRP was offered to approximately 2,200 Chase employees, however, the aforementioned error affected only 61 employees, which is less than 3%.

During the weeks following the issuance of the VRP packages, some employees attempted to calculate their own benefits, but could not make their figures match the erroneous estimates contained in their VRP packets, and accordingly, they notified Chase's Human Resources staff about this problem. Some of the problems that employees were experiencing was due to the fact that incorrect personal data had been used in preparing their estimates. As to these types of problems, where the error was apparent, Chase personnel made the necessary corrections and had new estimates prepared. However, for other employees, such as certain of the plaintiffs, who could not make their calculations match the estimate on Schedule B, Chase staff told the employees that the discrepancy had to be due to the fact that the VRP estimates used estimated Social Security information. The Chase staff refused to recalculate the estimates at that time, but told employees that they would recalculate the benefits once the actual Social Security information was obtained. McEachen, who was one of the persons responsible for conducting counseling sessions with VRP-eligible employees, told persons who requested recalculations that she would recalculate benefits when she was finished with the counseling sessions. On or about October 31, 1994, one of the plaintiffs, Eugene Oliver, contacted McEachen and told her that he could not get his own pension benefit calculations to match those that were contained on Schedule B of his VRP packet. In response, McEachen assured him that the figures he received in his VRP packet were correct. (Oliver Affidavit [# 44] pp. 9-10). Most of the plaintiffs claim that during counseling sessions, they were reassured that the benefit figures contained in their VRP packets were correct.

On or about November 21, 1994, McEachen was contacted by a service center manager at National Bank of Westchester, a Chase affiliate also participating in the VRP, regarding an employee named Mr. O'Malley, who was unable to reconcile his personal calculations with the VRP estimate he had been provided. At that point, McEachen attempted to calculate O'Malley's benefits, and discovered a discrepancy. On November 22, McEachen contacted McBride at Buck regarding this employee's estimate. On November 23, McBride discovered that Buck's program failed to account for the "30-year step-down." That same day, which was the day before Thanksgiving, McBride called McEachen and left a voice mail message stating that "she found a problem with the 30-year step-down and she was working on it."(Ulterino Affidavit [# 38] Exhibit 13, p. 216). McEachen received McBride's message on November 25, the day after Thanksgiving. After the discovery of the error, McEachen and McBride first spoke to each other on November 28, the Monday after Thanksgiving. At that time, McBride explained the programming error to McEachen. On November 30, McEachen informed her managers at Chase about the error. McEachen's supervisors directed her to identify the persons effected by the error, recalculate the benefit estimates, and inform the effected employees "as quickly as possible." Chase contends that while it wanted to let those effected know as soon as possible, it did not know exactly who was effected until the calculations were redone. Moreover, Chase did not want to notify the effected employees until it had the corrected figures. (Ulterino Affidavit [# 38], Exhibit 7, Markuson Deposition, p. 224-25, 290; Exhibit 8, Kuchar Deposition, pp. 205-206). McEachen completed the recalculation of the benefits on or about December 6, 1994.

Between December 6 and December 8, Chase orally informed most of the plaintiffs about the error. On December 8, Chase also issued a memo which informed the plaintiffs of the error in the benefit estimates they had received. Some of the plaintiffs did not actually receive this memo until December 10.*fn4 The memo contained a corrected benefit estimate and also informed the affected employees that the deadline for making an election would be extended by one week, until December 19, 1994, and that the employees would have until December 27, 1994 to revoke their acceptance of the VRP. Chase contends that this extension of the deadlines was authorized by the October 17, 1994 Board of Directors Resolution authorizing the VRP. The plaintiffs contend that they were not notified that they had the right to revoke their acceptances, however, the Court notes that the Chase memo dated December 8, 1994 clearly states, in relevant part:

  In order to provide you with time to consider these
  revised calculations, your acceptance deadline has
  been changed to December 19, 1994. You must have your
  acceptance letter or decline letter to Human
  Resources by that date. You will have until December
  27, 1994 to revoke your acceptance of this program.

(Ulterino Affidavit [# 38], Exhibit 20) (Emphasis added). Moreover, the plaintiffs' deposition testimony demonstrates they were aware they had the right to revoke their acceptances of the VRP.

To participate in the VRP, the plaintiffs each had to sign an Acceptance and Release Form, which states, in relevant part, that the incentive under the VRP is to receive an additional five years of benefit service, subject to a maximum of 40 years, and an additional five years of age. The Acceptance and Release Form does not set forth a specific dollar amount of monthly benefit. (Plaintiffs' Memorandum of Law [# 43], Exhibit 2).

Despite the reduction in their initial benefit estimates, none of the plaintiffs elected to revoke their acceptance of the VRP. A few of the plaintiffs contend that they did not revoke because they believed that Chase was going to eliminate their positions in the near future. Some of the plaintiffs contend that they felt they could not revoke and go back to work for Chase because they had lost faith in Chase after being given incorrect benefit estimates. One of the plaintiffs, Antinelli, had actually decided to retire prior to the announcement of the VRP. Two of the plaintiffs, Fitch and Lee, had already taken other employment at the time they were given the option to revoke their acceptance of the VRP, but that is not why they chose not to revoke. Each stated that he did not want to return to Chase because they felt they had been mistreated, and in addition, Lee wanted to spend time caring for his wife. (Ulterino Affidavit [# 51], Exhibit 42, p. 84, Exhibit 43, pp. 119-121).

On February 3, 1995, one of the plaintiffs, Walczak, wrote to Farrell, the Plan Administrator, and requested that Chase provide him with the level of benefits stated in the original VRP estimate. On March 7, 1995, Farrell notified Walczak that Chase would not pay him the benefits as originally estimated. Walczak appealed this decision to the Named Fiduciaries, and raised two claims on appeal. First, he claimed that he was entitled to receive the amount of benefits erroneously stated in the first VRP estimate. Second, he claimed that he was entitled to have his benefits calculated under the Chase formula for all years of service, even for those years he was employed by Lincoln First. As for this second contention, while the plaintiffs did assert such a claim in their amended complaint, it appears that they have now abandoned this theory, inasmuch as they do not attempt to rebut the arguments made in the defendants' memorandum of law on this point. (Defendants' Memorandum of Law [# 37] pp. 30-31).

Under the 1989 Chase Plan, the named fiduciaries had been given, inter alia, the following ...

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