Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Daniel C. Quigley, et al v. the Citigroup Supplemental Plan For Shearson Transfers

March 29, 2011

DANIEL C. QUIGLEY, ET AL., PLAINTIFFS,
v.
THE CITIGROUP SUPPLEMENTAL PLAN FOR SHEARSON TRANSFERS, AND THE PLANS ADMINISTRATION COMMITTEE OF CITIGROUP INC., AS PLAN ADMINISTRATOR,
DEFENDANTS.



The opinion of the court was delivered by: Paul G. Gardephe, U.S.D.J.:

MEMORANDUM OPINION & ORDER

Plaintiffs bring this action under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"), alleging a denial of benefits under the terms of the Citigroup Supplemental Plan for Shearson Transfers (the "Plan"). The Plan and the Plans Administration Committee of Citigroup Inc. (the "Committee," collectively "Defendants") have moved to dismiss, asserting that Plaintiffs have failed to exhaust their administrative remedies under the Plan. The Court has jurisdiction over this matter pursuant to Section 502(e)(1) of ERISA and 28 U.S.C. §1331(a).

For the reasons stated below, Defendants' motion to dismiss will be granted.

BACKGROUND

Plaintiffs are forty-seven former employees of Citigroup, Inc., who are now employed at Morgan Stanley Smith Barney ("MSSB"). (Am. Cmplt. ¶ 5) Plaintiffs are participants in the Plan, which is an ERISA-governed benefit plan, administered by the Committee. (Id.) Citigroup established the Plan on January 1, 2008. (Id. ¶ 6) The Plan is a "Top Hat" plan, which ERISA defines as "a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees." (Id. (citing 29 U.S.C. §§ 1051(2), 1081(a)(3), 1101(a)(1))

Effective December 31, 2007, Citigroup froze the benefit accrued by participants in its Cash Balance Defined Benefit Pension Plan ("Cash Balance Plan"), and instead increased contributions to its "Redesigned 401(k) Defined Contribution Plan" ("401(k) Plan"). (Id. ¶ 8) Plaintiffs assert that this action had a "potentially negative impact on the future pension benefits of certain Citigroup employees, including Plaintiffs, who are referred to as 'Shearson Transfers.'" (Id.)

Under the Plan, a "Shearson Transfer" means a participant in the Citigroup 401(k) Plan who

(1) was a former employee of Shearson Lehman who transferred to Smith Barney, Harris Upham & Co., Incorporated as of August 1, 1993 or within one year after that date;

(2) is continuously employed by [Citigroup or a Citigroup affiliated company] from August 1, 1993 until the date he or she attains age 65; and

(3) was an eligible participant in The Citigroup Pension Plan as of December 31, 2007 and had his or her accrued benefit under such plan frozen as of such date.

(Decl. of Lewis R. Clayton ("Clayton Decl."), Ex. A, Art. II; Am. Cmplt. ¶ 9) Because they are highly compensated employees, Plaintiffs assert that a substantial portion of Citigroup's contributions to their 401(k) Plan accounts was prohibited by contribution limitations imposed by Section 415(c) of the Internal Revenue Code, thereby prejudicing Plaintiffs. (Id. ¶ 10)

I.THE CITIGROUP SUPPLEMENTAL PLAN FOR SHEARSON TRANSFERS The Amended Complaint asserts that Citigroup adopted the Plan, effective January 1, 2008, "in order to compensate Shearson Transfers for the negative impact of the change from the Cash Balance Plan to the 401(k) Plan." (Id. ¶ 11) The Plan provides for an "excess One-Time Shearson Transfer Supplemental Contribution" to the Plan accounts of Shearson Transfers (the "Excess Benefit"). (Id. ¶ 12) The "Excess Benefit is payable to eligible Shearson Transfers, namely those who would otherwise suffer a decrease in total retirement benefits at age 65" as a result of the shift from the Cash Balance Plan to the 401(k) Plan. (Id. ¶ 13) Plaintiffs are all eligible for the Excess Benefit under the Plan. (Id.) Section 6.01 of the Plan provides:

While the Company intends to maintain the Plan in conjunction with the Citigroup 401(k) Plan as long as necessary, the Company reserves the right to amend and/or fully or partially terminate the Plan at any time for whatever reasons it may deem appropriate, provided that no amendment or termination of the Plan shall affect any Employer's obligation to pay the benefits due to the Participants hereunder but only to the extent of the value of such benefits which have accrued up to the date of the amendment or termination. (Clayton Decl. Ex. A, § 6.01; Am. Cmplt. ¶¶ 14-15) Plaintiffs thus allege that if the Plan is amended or terminated, they are entitled to receive the value of the benefits accrued as of that date. (Am. Cmplt. ¶ 15)

II.THE JOINT VENTURE

On January 13, 2009, Morgan Stanley and Citigroup formed a joint venture (the "JV") and agreed to contribute certain portions of their brokerage businesses to the JV. (Id. ¶ 16) As part of the JV agreement, Citigroup planned to transfer all Shearson Transfers to the JV (the "Transfer"). (Id. ¶ 17) The Transfer would leave the Plan with no participants, as they would become part of the JV. (Id. ¶ 18) Plaintiffs assert that, as a result, Citigroup effectively terminated or amended the Plan, triggering application of Section 6.01. (Id.) Under Section 6.01, Citigroup is obligated to "pay the benefits due to the Participants hereunder but only to the extent of the value of such benefits which have accrued up to the date of the amendment or termination." (Id.) Plaintiffs assert that the Plan fails, however, to define the method for determining that value. (Id.)

III.THE FIRST AMENDMENT TO THE PLAN

Prior to the Transfer, Citigroup amended the Plan, effective May 29, 2009 (the "First Amendment"). The First Amendment, inter alia, re-designates Shearson Transfers as "MSSB Shearson Transfers," and provides them with the Excess Benefit under the Plan. (Id. ¶ 19) As to the Excess Benefit, the First Amendment provides:

For any MSSB Shearson Transfer who will attain age 65 in 2009 or later, the amount of such contribution shall equal the projected estimated One-Time Shearson Transfer Supplemental Contribution determined and discounted as of the date of transfer to the MSSB joint venture, using reasonable actuarial assumptions to be set forth in a schedule to the Plan before the first such contribution in 2009.

(Clayton Decl. Ex. B ¶ 2; Am. Cmplt. ¶ 19)

The definition of "Shearson Transfer" was ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.