Gilbert v. Burlington Industries, Inc. Jurisdictional Statement

    No. 85-.

I n t h e

Court of ttjr 3lmtr& i^tatro
O ctober T erm , 1985

I rving  Gilb e r t , et al., 

—against—
Appellants,

B urlington  I ndustries, I n c .,
Appellee.

ON APPEAL EROM THE UNITED STATES COURT OP APPEALS 
FOR THE SECOND CIRCUIT

JURISDICTIONAL STATEMENT

E m ily  M. B ass 
Counsel for Appellants 
740 Broadway at Astor Place 
New York, New York 10003-9518 
(212) 254-1111

Of Counsel:
L inda  A. B ackiel 
B e t h  M argolis 
L eonard B . B oudin  
R abinow itz , B oudin , S tandard,

K rin sk y  & L ieberm a n , P.O.
On behalf of the National Emergency 

Civil Liberties Committee
September 1985



1

Q uestion Presented

1. Whether the provisions of an employer’s personnel 
policy or employee handbook, under which employees are 
promised payroll and vacation severance, constitute an 
“employee benefit plan” within the meaning of. the Em­
ployee Retirement Income Security Act of 1974 (29 TJ.S.C. 
§§ 1001 et seq.) so as to preclude statutory and common 
law actions for the recovery of such benefits under state 
law?1 1

1 The caption of the case in this Court does not contain the name 
of Lillian Roberts, as Commissioner of Labor of the State of New 
York, who was also an appellant in the United States Court of 
Appeals for the Second Circuit. She is docketing a separate ap­
peal to the Court.



Parties to Proceedings Below

The parties to the proceedings in the United States Court 
of Appeals for the Second Circuit were:

Irving Gilbert, Irene Prince, David J. Frank, Herbert 
R. Kaplan, Bernard B. Largman, Dora Nicolini, Her­
bert Peppel, Bertha Richie, David Schoeneck, Raquel 
R. Silensky, Marie Silvestri, Brenda Tillman Hum­
phreys, B. Gaither Shaw, Jr., Robert S. Ahrens, Ben­
jamin F. Blye, Jr., David H. Brunt, Jack R. Carpenter, 
Kenneth E. Eekard, Ronald F. Gauthier, Louis Gore- 
lick, Jeremy Harris, Ronald H. Hicks, Robert D. Hud­
dleston, Thomas R. Jerome, Gaston D. Lopez, Michael 
Loschenko, Phillip R. Mullins, Dorothy Novak, An­
thony J. Petronis, Bernard Porvin, Charles A. Powers, 
Saul Roth, James A. Sbarboro, John Sells, James M. 
Stutts, Gordon L. Van Dusen,

Plaintiffs-Appellants,
—and—

Lillian Roberts, as Commissioner of Labor of the State 
of New York,

Plaint iff-Intervenor- Appellant, 

—against—

Burlington Industries, Inc.,
Defendant-Appellee.

i i



TABLE OF CONTENTS

PAGE

Question Presented ........................................................  i

Parties to Proceedings Below .......................................  ii

Table of Contents ..........................................................  iii

Table of Authorities ......................................................  v

Opinions Below ............................................    2

Jurisdiction .....................................................................  2

Statutory Provisions Involved ...................................... 3

Statement of the Case .....................    4

The Question Presented Is Substantial .......................  8

C onclusion  ........................................................................................  26

A ppen d ix  A: Joint Appendix Being Separately Sub­
mitted by the Commissioner of Labor of the State 
of New York:

Judgment and Opinion of the Court of Appeals .... A1

Opinion of the District C ourt................................. A21

Judgment of the District Court ..............................A34

Text of Relevant Statutory Provisions .................A40

A ppen d ix  B : Other Federal Cases in Which Employer 
Personnel Policies and Practices are Assumed to 
be Plans ......................     B1

I l l



IV

PAGE

A ppen d ix  C : State Wage Collection and Benefit En­
forcement Statutes .............................. .................... Cl

A ppen d ix  D : Recent Cases Deciding Benefit Claims 
Under State Law ....................................................  D1

A ppen d ix  E: Models A  and B .................................... El



V

Cases:
T able of A u th o rities

page

Alford v. City of Lubbock, 664 F.2d 1263 (5th Cir. 
1982), cert, denied, 456 U.S. 975 (1982) ...................  22

Allis-Chalmers Cory. v. Lueck,----- U .S.------ , 53 U.S.
L.W. 4463 (April 16, 1985) ........ ............... ............. 10,11

Barrentine v. Arkansas-Best Freight System, Inc., 450 
U.S. 728 (1981) ....... ................................ ................... 21

Callanan v. United States, 364 U.S. 587 (1961) ............  12
Cal. Ass’n. of Hospitals v. Henning, Nos. 83-6381, 83- 

6416 (9th Cir. Sept. 6, 1985) ...................................... 14
Central States, Southeast and Southwest Areas Pen­

sion Fund v. Central Transport, Inc.,----- U .S.------ ,
53 U.S.L.W. 4811 (June 19, 1985) .................. ..........16,18

Cort v. Ash, 422 U.S. 66 (1975)  ........... ..................  15
Be Camas v. Bica, 424 U.S. 351 (1976) ......................... 9
Equal Employment Opportunity Commission v. West- 

inghouse Electric Corporation, Civ. Action No. 84- 
4799 (E.D. Pa.) .......... .................................... ............  22

EEOC v. Westinghouse, 725 F,2d 211 (3d Cir. 1983), 
cert, denied,-----U .S.------ , 105 S.Ct. 92 (1984) ___  22

Jones v. Rath Packing Co.. 430 U.S. 519 (1976) ........ . 14
Malone v. White Motor Corp., 435 U.S. 497 (1978) ......  21
Massachusetts Mutual Life Insurance Company v. Rus­

sell, -----  U.S. ----- , 53 U.S.L.W. 4938 (June 27,
1985) ............................... ....................... ........ ........... 18

McLaughlin v. Connecticut General Life Ins. Co., 565 
F. Supp. 434 (N.D. Cal. 1983) .......... .......................  21

Metropolitan Life Insurance Co. v. Commonwealth of
Massachusetts, -----  U.S. ----- -, 53 U.S.L.W. 4616
(June 3, 1985) ........................................................ 9,10,21



VI

Motor Coach Employees v. Lockridge, 403 U.S. 274 
(1971) ..........................................................................  10

Nachman Corporation v. Pension Benefit Guaranty 
Corporation, 446 U.S. 359 (1980) ...........................16,18,19

N.L.R.B. v. Bildisco and Bildisco,---- - U.S. — , 104
S.Ct. 1118 (1984) ........ ....... ............. ................. ..... . 23

Pacific Gas £  Electric Co. v. State Energy Resources 
Conservation £  Dev. Com., 461 U.S. 190 (1983) ......  15

Piper v. Chris-Craft Industries, Inc., 430 U.S. 1 (1977) 14
Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947) .... 15
San Diego Building Trades Council v. Garmon, 359 U.S.

236 (1959) ...........................    15
Santa Fe Industries, Inc. v. Green, 430 U.S. 462 (1977) 14
Sedima, S.P.R.L. v. Imrex Co., Inc.,---- - U .S.----- , 53

U.S.L.W. 5034 (July 1, 1985) ......................................  12
Shaw v. Delta Airlines, Inc.. 463 U.S. 85 (1982) ........... 15
Silkwood v. Kerr-McGee Carp., 464 U.S. 238 (1984) .... 15
United Steelworkers of America v. American Manufac­

turing Co., 363 U.S. 564 (1960) ...... ............ ........... . 21
United. Steelworkers of America, v. Warrior £  Gulf 

Navigation Co., 363 U.S. 574 (1960) .........................  21
United, Steelworkers of America v. Enterprise Wheel 

£  Car Corp., 363 U.S. 593 (1960) .......................... 21
Vara v. Sipes, 386 U.S. 171 (1967) ..............................  15

Statutes:
Age "Discrimination in Employment Act, 29 TT.S.O.

§ 621 ot seq. .................................................. ............... 22
Section 623 (f)(2) ................... ............................... 22

PAGE



VII

Bankruptcy Act, 11 U.S.C. § 101 et seq......................... 23

28 U.S.C. § 1254(2) ........................................................  1,3

PAGE

28 U.S.C. § 1331 .............................................................. 3

28 U.S.C. § 1332(a)(1) ................................................... 2

Employee Betirement Income 
U.S.C. § 1001 et seq............

Section 1001(a) ..............
Section 1002 ....................
Section 1002(1) ...............
Section 1002(1) (A) .......
Section 1002(1) (B) .......
Section 1002(2) ...............
Section 1002(2) (A) .......
Section 1002(3) ...............
Section 1002(9) ...............
Section 1002(32) .............
Section 1003(b)(1) .........
Section 1132(a) ...............
Section 1132(a)(1) .........
Section 1132(d)(2) ....... .
Section 1132(e) ...............
Section 1132(e)(1) .........
Section 1132(f) ...............
Section 1144 ....................
Section 1144(d) ...............

Security Act of 1974, 29
....................................passim
........................................  16
....................................passim
.................... passim
........ ................................ 14
...................................8,12,14
........................................  10
..........................   4
............................   3
................................ ....... 18
........................................ 20
.............. .........................  20
......................................18,19
....................   19
......................... ..............  18
........................................ 3
...........................................   7

........................................ 3

........ ...............................  3

........................... ..... ......  20



V l l l

Labor Management Relations Act of 1947,
PAGE

29 U.S.C. § 141 et seq..............................................passim

Section 185(a) ....................... ................. ..... .......... 20
Section 186(c)(6) ........................................... ....8,14,20

N.Y. Labor Law 198-c passim

North Carolina General Statutes § 95-25 ......... ...........  2

Other Authorities:
Alice’s Adventures In Wonderland, Lewis Carroll,

Random House (N.Y. 1946) ...................... ....... ..... .24,25
29 C.F.R. 2510.3-1 ................................. ........................  13
29 C.F.R. 2510.3-1 (a) (3) ...............................................  12
29 C.F.R, 2510.3-1 (b) .............................. ..... ................  13
29 C.F.R. 2520.104-20 ........................................... ......... 11
120 Cong. Rec. 29197 (1974) (Statement of Rep. Dent) 17
120 Cong. Rec. 29933 (1974) (Statement of Sen. Wil­

liams) .... ............... ....................................................17, 23
40 Fed. Reg. 24642 (June 9, 1975) ................................  14
Fed. R. Civ. P. Rule 54(b) .............................. ............  2,8
H.R. Rep. No. 533, 93rd Cong., 1st Sess. 2-3, reprinted 

in 1974 U.S. Code Cong. & Admin. News 4640-41 ..... 15
S. Rep. No. 127, 93rd Cong., 1st Sess. 2-4, reprinted in 

1974 U.S. Code Cong. & Admin. News 4839-40 ........ 15



No. 85-

I n  THE

Court of %  littosi i&tatea
October T erm , 1985

I rving G ilb ert , et al.,

—against—

B urlington  I ndustries , I n c .,

Appellants,

Appellee.

on appeal from t h e  u n ited  states court of appeals

FOR THE SECOND CIRCUIT

JURISDICTIONAL STATEMENT

Irving Gilbert and all other persons named as parties- 
appellant in the proceedings below appeal from the judg­
ment of the United States Court of Appeals for the Second 
Circuit which dismissed appellants’ claims under N.Y. 
Labor Law 198-c and at common law.1

1 Insofar as appellants seek review of the dismissal of their com­
mon law claims, the question presented is technically within the 
Court’s certiorari jurisdiction. However, since initiation of the 
appeal “preclude[s] review by writ of certiorari,” 28 U.S.C. 
§ 1254(2), and since the federal question with respect to the dis­
missal of both sets of claims is the same, appellants seek review 
of the entire judgment under the single rubric of an appeal.



2

O pinions Below

The opinion and judgment of the United States Court 
of Appeals for the Second Circuit (App. A, Al-20)2 is re­
ported at 765 F.2d 320 (2d Cir. 1985). The opinion of the 
United States District Court for the Southern District of 
New York was issued on September 17, 1984 and is un­
reported. When the court entered judgment under Rule 
54(b), Fed.R.Civ.P., on October 30, 1984 it amplified its 
September 17 ruling in respects not relevant to this appeal 
in a separate memorandum endorsement. That memoran­
dum is also unreported.

Jurisdiction

This is a civil action by thirty-six former employees of 
Burlington Industries, Inc. to recover payroll and vacation 
severance pay and related damages. After filing claims 
with the New York State Department of Labor, plaintiff 
brought suit in federal district court under state statutory 
and common law and, in the alternative, under the Em­
ployee Retirement Income Security Act of 1974, 29 U.S.C. 
§ 1001 et seq. (hereinafter “ERISA” or “the Act”). They 
alleged five common law causes of action: fraud, unjust 
enrichment, promissory estoppel, quantum meruit, and 
breach of contract; two statutory causes of action under 
New York Labor Law § 198-c and North Carolina General 
Statutes §95-25; and four causes of action under ERISA. 
Federal jurisdiction over the state law causes of action 
was predicated on diversity of citizenship imdcr 28 U.S.C. 
§ 1332(a)(1). Jurisdiction over the federal causes of ac­

2 References to “ (A- ) ” are to pages in the Joint Appendix 
being separately filed by the Commissioner of Labor of the State 
of New York on behalf of both the appellants and the Commis­
sioner. References to “App. B”, “App. C”, “App. D”, and “App. 
E ” are to appendices B, C, D, and E, post.



3

tion was predicated on federal question jurisdiction under 
28 U.S.C. § 1331, 29 U.S.C. § 1132(e) and (f).

The judgment of the United States Court of Appeals for 
the Second Circuit, from which this appeal is being taken, 
was entered on June 17, 1985. (Al). Appellants filed a 
timely notice of appeal with this Court on September 6, 
1985. The jurisdiction of the Court is invoked pursuant to 
28 U.S.C. § 1254(2).

Statutory Provisions Involved

ERISA’s pre-emption provisions are set forth at 29 U.S.C. 
§ 1144 and provide, in pertinent pa rt:

(a) . . . the provisions of this subchapter and sub­
chapter III of this chapter shall supercede any and 
all State laws insofar as they may now or hereafter 
relate to any employee benefit plan . . .

* * #
(c) For purposes of this section :

(1) The term “State law” includes all laws, decisions, 
rules, regulations, or other State action having the 
effect of law, of any State.

To the degree that the terms of art used in ERISA are 
expressly defined, their definitions are set forth in 29 U.S.C. 
§ 1002, which provides in pertinent p a rt:

For purposes of this subchapter:
(3) The term “employee benefit plan” or “plan” 

means an employee welfare benefit plan or an em­
ployee pension benefit plan or a plan which is both 
an employee welfare benefit plan and an employee 
pension benefit plan.

(1) The terms “employee welfare benefit plan” and 
“welfare plan” mean any plan, fund, or program which



4

was heretofore or is hereafter established or main­
tained . . .

(2) (A) . . . the terms “employee pension benefit 
plan” and “pension plan” mean any plan, fund, or 
program which was heretofore or is hereafter estab­
lished or maintained . . .

The full text of these, as well as other, provisions of ERISA 
may be found in the Appendix being separately submitted 
by the Commissioner of Labor of the State of New York 
on the Commissioner’s and appellants’ behalf. (A40-49). 
The relevant portions of N.Y. Labor Law § 198-c, the statute 
found to have been superseded by ERISA, may also be 
found in the Appendix. (A51).

Statement o f the Case

1. Facts Material to Consideration o f the Q uestion Presented.

Appellants’ employment with Burlington Industries was 
automatically terminated by the sale of the Divisions in 
which they worked to Ivayser-Roth Corporation on Jan­
uary 3, 1982.3 Although informed that they could not con­
tinue as employees of Burlington, appellants were also 
told that they would not receive severance pay.

The policy governing the severance payments herein at 
issue was formulated in 1953—twenty-one years before the 
enactment of ERISA. It provides that Burlington em­
ployees removed from the payroll for reasons other than 
wilful misconduct will receive payroll and vacation sever­

3 Tlie Divisions were sold as a going concern, and many of the 
appellants were hired by Kayser-Roth. The question of whether 
they were “unemployed” within the meaning of Burlington’s policy 
is not here at issue. Since the decision in the Second Circuit, 
however, at least one third of the appellants have been terminated 
by Kayser-Roth, which had no severance pay policy. Most of the 
terminated workers received no severance pay. A few received 
nominal amounts.



5

ance payments, in amounts calculated according to the em­
ployee’s age and length of service. Prior to 1974, the policy 
was contained in a company policy manual; since that date 
it has also been published in an employee handbook. Both 
documents refer to severance payments as an integral part 
of an employee’s basic compensation.

Burlington’s procedure for payment of severance bene­
fits under this policy is virtually automatic and purely 
mechanical. An employee may not apply for benefits, ap­
peal a decision to deny them or seek a review of the amount 
paid. Indeed, there is no requirement that an employee 
even be advised of a decision to deny severance benefits 
altogether. Bather, when an employee is about to be ter­
minated, an area or division salary co-ordinator notes on 
his or her termination papers whether severance payments 
are to be made and, if so, in what amount (as calculated 
by fixed tables). When severance payments are to be made, 
clerks in the payroll department review the amount for 
accuracy and issue a check.

As with all other forms of employee compensation, social 
security and income taxes are first deducted from the sever­
ance payments, and the payments made out of the em­
ployer’s general operating assets. There is no fund, trust, 
separate account or insurance out of which the payments 
are made; nor are any assets segregated for purposes of 
ensuring an ability to pay. There is no instrument, con 
tract or plan governing severance benefits; no administra­
tor, fiduciary or trustee has been designated to administer 
them.

2. The Course o f Proceedings and D isposition in the Courts 
Below.

In 1982, ten of the plaintiffs, together with other former 
employees of Burlington, attempted to recover their sev­
erance pay by filing administrative claims with the New 
York State Department of Labor for “unpaid wage sup­



6

plements,” within the meaning of N.Y. Labor Law § 198-c.4 
(A51). On April 22, 1983 Burlington first moved to dis­
miss the state proceedings on the grounds of ERISA pre­
emption.5 (A24). After considering briefs submitted on 
the pre-emption question and conducting both an investiga­
tion and compliance conference, the New York State Com­
missioner of Labor found Burlington to be in violation of 
its obligations under § 19S-c and directed it to honor plain­
tiffs’ severance pay claims. (A25). Burlington petitioned 
for a review of this order by the Industrial Board of Ap­
peals on September 8, 1983, renewing its ERISA conten­
tions and application for dismissal. (A25).

On September 22, 1983 appellants commenced this action 
in the United States District Court for the Southern Dis­
trict of New York, alleging causes of action, in the alterna­
tive, under state law and ERISA.6 (A25). Burlington

4 Like at least 29 other states, New York has a wage collection 
statute which applies to severance payments. § 198-e provides, in 
pertinent part:

1. In addition to any other penalty or punishment otherwise 
prescribed by law, any employer who is party to an agree­
ment to pay or provide benefits or wage supplements to em­
ployees or to a third party or fund for the benefit of employees 
and who fails, neglects or refuses to pay the amount or amounts 
necessary to provide such benefits or furnish such supple­
ments within thirty days after such payments are required 
to be made, shall be guilty of a misdemeanor . .
2. As used in this section, the term “benefits or wage supple­
ments” includes, but is not limited to, reimbursement for ex­
penses health, welfare and retirement benefits; and vacation, 
separation or holiday pay.

6 It was not until after appellants filed their claims with the 
State Department of Labor that Burlington first filed reports 
with the U.S. Department of Labor and Treasury Department, 
claiming its severance policy was governed by ERISA. Interest­
ingly, Burlington found that most of the required information 
was “not applicable” to its policy.

6 Relief was sought at this time under ERISA lest the state 
claims ultimately be found pre-empted at a time when federal claims 
would be barred by the statute of limitations.



7

filed a motion to dismiss the state law causes of action on 
the grounds that they were pre-empted, as well as a motion 
for summary judgment on the ERISA causes of action. 
(A25).

On January 5, 1984 the Commissioner of Labor was 
granted leave to file a complaint in intervention in the 
federal action. (A25). On February 3, 1984, Burlington 
asserted a counterclaim against the Commissioner for a 
permanent injunction pursuant to § 502(e) (1) of ERISA, 
29 U.S.C. § 1132(e)(1). and the Commissioner countered 
with a motion to stay the federal action, pending the 
completion of state administrative proceedings. (A25).

On September 17, 1984, the district court issued a de­
cision and order, granting Burlington’s motion to dismiss 
appellants’ state law causes of action and the Commis­
sioner’s complaint in intervention. (A21-32). Finding that 
Burlington’s policy was an ERISA plan and that claims 
under § 198-c were therefore pre-empted, the court issued 
an injunction against enforcement of the orders of the 
State Department of Labor. (A34-35).

The court held that Burlington’s severance policy was 
an ERISA-covered plan because it provided a “welfare 
benefit” within the meaning of 29 U.S.C. § 1002(1) and was 
a “plan” within the “plain meaning” of the statute. (A26- 
30). It did not specifically address the critical concept at 
the core of appellants’ position—i.e., that ERISA’s pre-emp­
tion provision does not apply to their severance pay claims 
because their employer had failed to “establish and main­
tain” any entity that constitutes a “plan” within the mean­
ing of the Act.7

7 In addition to the issue presented by this appeal, appellants 
also argued to the district and circuit courts that: (1) Burling­
ton’s policy was not an “employee welfare benefit plan” because 
it was not funded so as to provide “pooled” severance benefits as

(footnote continued on following page)



8

On October 30, 1984 the district court, on its own motion, 
entered a judgment under Fed. R. Civ. P. Rule 54(b), 
thereby permitting an immediate appeal. (A35). Plain­
tiffs filed a notice of appeal from this judgment on Novem­
ber 2, 1984.

On June 17, 1985 the United States Court of Appeals 
for the Second Circuit affirmed the district court decision. 
(Al-20). Like the court below, it held that because sever­
ance is a welfare benefit, a severance policy is a “welfare 
plan.” Again, like the lower court, it failed to address 
the threshold question presented on this appeal of whether 
an automatic payroll policy implementing a promise to 
provide benefits constitutes a “plan.”

Plaintiffs filed a timely notice of appeal to this Court 
from the Second Circuit’s judgment on September 6, 1985. 
(A38-39).

The Q uestion Presented Is Substantial

The issue presented by this case involves a four-letter 
word the meaning of which is supposedly apparent to all, 
but precisely defined by none. The word, “plan,” although 
used in the Employee Retirement Income Security Act of 
1974, 29 IT.S.C. § 1001 et seq. as a term of art, has been 
found by many courts to signify something as common­
place as an employer personnel policy or the provisions 
of an employee handbook. A definitive interpretation of 
the term is urgently needed to resolve a number of signifi­
cant and recurring questions to which inconsistent and 
even contradictory answers have been given by the Depart-

(footnote continued from previous page)
required by 29 U.S.C. §§ 186(c)(6) and 1002(1) (B), and (2) that, 
m any event, the laws under which plaintiffs asserted their claims 
did not “relate^ to” a plan within the meaning of ERISA’s pre­
emption provision. Appellants are not pursuing these issues in 
this appeal.



9

ments of Labor of many states, the United States Depart­
ment of Labor, and state and federal courts at all levels.

The basic question is one of statutory construction: 
When has a “plan, fund, or program” been “established 
or maintained” so as to constitute an “employee benefit 
plan” within the meaning of ERISA! Is every promise 
to provide a benefit of a kind referred to by ERISA a 
“plan” within the meaning of the Act? Or, was what Con­
gress intended to regulate not benefits, but a particular 
way of providing them in a unique form—by establishing 
and maintaining an entity known as a “plan”?

Rarely has the meaning attributed to a single word or 
phrase in a statutory scheme had consequences as startling 
in their scope as those that flow from that attributed to 
the phrase “employee benefit plan.” What is more, rarely 
has the foundation for such an interpretation been as lack­
ing as it is in the instant case.

1. Although, in and of themselves, the questions appel­
lants pose appear innocuous, the answers that have been 
given to these questions by the Second Circuit Court of 
Appeals have consequences that are both far-reaching and 
dramatic. By assuming that absolutely anything and every­
thing is a “plan” within the meaning of the Act, the Second 
Circuit threatens to radically alter the historic relation­
ship which has always obtained between the state and the 
federal governments in the field of labor relations.

Until now, that relationship has been a symbiotic one, 
in which states are recognized as having “broad authority 
under their police powers to regulate the employment 
relationship”, Metropolitan Life Insurance Co. v. Com-
monw’lth of Massachusetts, -----  U.S. ----- , 53 U.S.L.W.
4616, 4625 (June 3, 1985), quoting from Be Canas v. Bica, 
424 U.S. 351, 356 (1976). Federal labor law has tradi­
tionally been recognized as “interstitial, supplementing 
state law where compatible, and supplanting it only when 
it prevents the accomplishment of the purposes of the



10

federal act.” Metropolitan Life Insurance Co., supra, 53 
U.S.L.W. at 4625.

It has historically been left to the states to regulate the 
relationship between employers and workers who are not 
protected by the NLRA. Through the vehicle of state 
statutes regulating child labor, minimum labor standards 
and wage collection procedures, states have traditionally 
had the power to protect individual employee rights. To 
the federal government has been left the task of develop­
ing a “framework for self-organization and collective bar­
gaining” within the context of that larger body of state 
law. Metropolitan Life Ins. Co., supra, 53 IT.S.L.W. at 
4625.

Although everyone is, at least theoretically, agreed that 
one “cannot declare pre-empted all local regulation that 
touches or concerns in any way the complex interrelation­
ships between employees, employers, and unions; much 
. . . is left to the States,” Allis-Chalmers Corp. v. Lueck,
-----  U.S. ----- , 53 IT.S.L.W. 4463, 4464 n. 4 (April 16,
1985), quoting from Motor Coach Employees v. Lockridge, 
403 TT.S. 274, 289 (1971), in practice, decisions like the 
one rendered by the Second Circuit leave little, if any­
thing, to the slates to do in this field.

Today, an employee’s compensation consists of much 
more than simple wages or salary. Benefits such as vaca­
tion pay, year-end bonuses, severance pay, accrued sick 
leave or child care leave, and many of the other types of 
benefits adverted to in the definitions section of ERISA 
are part and parcel of the employment contract. See 29 
IT.S.C. § 1002(1) and (2). If one assumes, as the Second 
Circuit did, that the term “employee benefit plan” covers 
simple personnel policies or the provisions of an employ­
ment contract, one must concomitantly assume that, through 
ERISA, Congress intended to regulate the entire employ­
ment relationship. Indeed, if one accepts the infinitely 
expansive construction given the term “plan,” then, with



1 1

the possible exception of employer policies relating to 
hiring and firing, virtually every aspect of the employer- 
employee relationship is covered by ERI'SA. With only 
limited exceptions,8 therefore, nearly every employer pay­
roll or personnel policy is subject to ERISA’s massive 
regulatory framework and nearly every employer, large 
or small, is answerable under federal law for the conse­
quences of a simple personnel decision.

By coupling ERISA’s broad policy of pre-empting all 
state laws that in any way relate to an employee benefit 
plan with the supposition that the benefit provisions of 
a simple employment contract or personnel policy consti­
tute such a plan, the Second Circuit has accomplished, 
sub silentio, what Congress, with its legislative powers, 
has never contemplated doing: federalizing the entire law 
of employer-employee relations. See, e.g. Allis-Ckalmers 
v. Lueck, supra, 53 U.S.L.W. at 4464 (“Congress has never 
exercised authority to occupy the entire field in the area 
of labor legislation”).

2. While the number of federal court cases that have 
contributed to the recent wave of federalization in the 
benefits field is impressive, the grounds upon which they 
have done so are not. There is not a single case, nor a 
single court, that has truly addressed the issue presented 
by this appeal and decided on the basis of the language, 
structure or history of ERISA that an employer’s benefit 
policy is a plan. Indeed, the great majority of cases that 
have concluded that a simple personnel policy or informal 
employer practice is an ERISA plan have done so either 
because the parties to the litigation have agreed that the

8 29 CFR' 2520.104-20 exempts all plans with fewer than 100 
participants from many of ERISA’s reporting and disclosure re­
quirements. Rather than clarifying ERISA’s reach, however, this 
regulation only exacerbates the confusion by forcing employees of 
small employers to police the administration of their plans with­
out the benefit of information that would be obtained were there 
compliance with those requirements.



12

policy or practice is an ERISA plan,9 or because the per­
sons sought to be protected by the Act, i.e., the intended 
recipients of plan benefits, have sued under ERISA ex­
clusively and claimed the existence of a plan.10 11

Practically speaking, what the courts appear to have done 
is to have invoked the rule of lenity so as to permit em­
ployees to bring suit under the Act. In so doing, however, 
they have forgotten the proviso that the rule of lenity is 
only to be used “as an aid for resolving an ambiguity; it 
is not to be used to beget one.” Sedima, S.P.R.L. v. Imrex
Co., Inc., ----- U.S. — - ,  53 U.S.L.W. 5034, 5037 n. 10
(July 1, 1985), quoting from Callanan v. United States, 364 
U.S. 587, 596 (1961).11 Where it is clear from the language,

9 We set forth in Appendix B to this jurisdictional statement a 
table listing recent federal court cases that have decided an em­
ployee claim for benefits under an employer personnel policy or 
practice pursuant to ERISA. We have divided these cases into 
four categories: (1) those cases that appear to have assumed that 
a policy or practice is a plan because the parties were agreed that 
it was a plan; (2) those cases that appear to have decided that 
a policy or practice is a plan because the plaintiff brought suit 
under ERISA and claimed that it was a plan; (3) those cases 
that avoid the threshold question by concluding that, because a 
policy provides “welfare benefits,” it is a welfare plan, without 
first deciding the question of whether the policy is a “plan” ; and 
(4) those eases that rely on language in 29 C.F.R. § 2510.3-1 (a) (3) 
to the effect that “section 3(1) (B) [29 U.S.C. § 1002(1) (B) ] of 
the Act [includes] within the definition of ‘welfare plan’ those 
plans which provide severance benefits” to support a contention 
which it doesn’t support, i.e., that personnel policies are plans. 
The table lists the name and citation for each ease, and the type 
of policy or practice involved.

10 See the cases collected under category 2 of App. B, post. 
While appellants herein were obliged to file a claim under ERISA, 
an analytically correct interpretation of the Act reveals that since 
their benefits were not being provided under any “plan” estab­
lished and maintained within the meaning of the Act, ERISA does 
not pre-empt their state law claims.

11 The liberal construction given the term “plan” has an ironic 
effect. While motivated by a desire to enable employees to collect

(footnote continued on following page)



13

structure and history of a statute, as it is here, that Con­
gress used a word as a term of art with a specific statu­
tory meaning, the rule of lenity cannot be so invoked as 
to alter or avoid that meaning.

In those few cases that have considered the definitional 
question at all, courts have concluded that a policy or prac­
tice is a “welfare plan” without first considering whether 
it is a “plan”. Put otherwise, they have concluded that 
something is an “employee welfare benefit plan” because 
it provides one or another of the welfare benefits enumer­
ated in Section 1002(1) without first considering whether 
the policy or practice under which the benefit is provided 
is a “plan, fund or program” which has been “established 
or maintained” within the meaning of the Act.12

(footnote continued from previous page)
benefits, this approach, which assumes that virtually any policy 
or practice relating to benefits is an ERISA plan, results in the 
pre-emption of state wage collection statutes and common law 
remedies which specifically provide for the recovery of benefits due 
under employer-employee contracts.

12 It is hardly surprising that the district and circuit courts 
have failed to determine the existence vel non of a plan before 
proceeding to what is logically the second step—deciding whether 
the plan provides a type of benefit properly characterized as a 
“welfare benefit.” The regulations issued by the Department of 
Labor, intended to “clarify the definition of the terms ‘employee 
welfare benefit plan’ and ‘welfare plan’ ” do the same. 29 C.F.R. 
§ 2510.3-1.

§ 2510.3-1 (b) exempts generally from ERISA coverage all “pay­
roll practices” defined generally as “payment of compensation, out 
of the employer’s general assets . . . .” See especially subsections 
(1), (2) and (3) of § 2510.3-l(b). While this language promises a 
useful distinction between plans that provide welfare benefits and 
payroll mechanisms used to satisfy an employer’s promise to pro­
vide benefits, its value appears to have been lost both on its authors 
and the courts. Indeed, the comments published by the Depart­
ment of Labor when it adopted the regulation ignore the threshold 
question of what constitutes a “plan” and how to distinguish one 
from a “payroll practice,” and explain that the practices enumer­
ated in the regulation “are not welfare plans because they do not

(footnote continued on following page)



u

The Second Circuit decision in Gilbert v. Burlington is 
a case in point. Having decided that severance pay was 
an “unemployment benefit” within the meaning of § 1002(1) 
(A) and/or a benefit described in § 186(c) and, therefore, 
encompassed by § 1002(1) (B), the court concluded that the 
policy at issue was a welfare plan. (A9-13). It ignored the 
threshold question of whether the policy itself was a plan 
at all. Although purporting to give this question some 
consideration, the district court did little more than rely 
on what it found to be the “plain meaning” of the statute. 
(A28). Unfortunately, it is in the nature of statutory 
terms of art to have no “plain meaning,” only meanings 
that are acquired from the social, economic, and political 
context that give rise to the specific problem the legisla­
tion is intended to cure.

3. Considering the total absence of established authority 
for the proposition that an employer’s promise is an em­
ployee benefit plan, this case raises substantial question as 
to whether and to what extent federal courts that have de­
cided that promises are plans have violated the rule, rooted 
in principles of federalism, that the federal-state balance 
in the provision of civil remedies will not be disturbed ab­
sent an express declaration of Congressional intent. See, 
general!}!. Santa Fe Industries. Inc. v. Green, 430 U.S. 462, 
478-480 (1977); Piper v. Chris-Craft Industries, Inc., 430 
U.S. 1. 40-41 (1977); Jones v. Bath Packing Co., 430 U.S.

(footnote continued from previous page)
Provide benefits listed in [Section 1002(1)].” 40 Fed. Reg. 24642 
(June 9, 1975). The inaccuracy of this observation aside, see 
29 tl.S.C. § 1002(1), courts ever since have avoided the threshold 
question of what constitutes a plan and have simply compared 
the benefit at issue with the list of excluded practices, concluding 
that if the benefit is listed in the regulation, it is not covered bv 
the Act. Conversely, if it is not listed in the regulation, it is a 
“welfare plan” within the meaning of the Act. See, e.g., Cal. Ass’n. 
of Hospitals v. Henning, Nos. 83-6381, 83-6416 (9th Cir. September 
6, 1985). This mechanical process misses the point.



519, 525 (1976); Cort v. Ash, 422 U.S. 66, 78-84 (1975); 
Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947).

Courts that have found in ERISA’s explicit pre-emption 
clause an express declaration of Congressional intent to 
“occupy the field”, and have read the clause to require the 
result reached by the Second Circuit, have misunderstood 
the task before them. What they have failed to recognize 
is that, where pre-emption is concerned, one cannot simply 
ascertain whether Congress has chosen to occupy the field. 
One must further identify: which field? where is it located? 
how far does it extend! what does it cover? and what 
doesn’t it?13

It is indisputably clear from the language, structure and 
history of the Act that Congress intended to regulate the 
field of “plans”, not “benefits.” 14 It enacted ERISA in 
order to regulate “a relatively modern economic institu­
tion” which, in the years following World War II, had 
experienced “phenomenal expansion”. H.R. Rep. No. 533, 
93rd Cong., 1st Sess. 2-3 (“House Rep.”), reprinted in 1974 
U.S. Code Cong. & Admin. News 4640-41 (“Legis. Hist.”). 
Accord S. Rep. No. 127, 93rd Cong., 1st Sess. 2-4 (“Senate 
Report”), reprinted in Legis. Hist, at 4839-40. The “Con­
gressional findings and declaration of policy” set forth in 
the preamble to ERISA make this clear:

The Congress finds that the growth in size, scope, and 
numbers of employee benefit plans in recent years has 
been rapid and substantial; . . . that they have become 
an important factor in commerce because of the inter­
state character of their activities, . . . that a large

13 Cf. Vaca v. Sipes, 386 IT.S. 171 (1967) with San Diego Build­
ing Trades Council v. Garmon, 359 U.S. 236 (1959) ; cf. Silkwood 
v. Kerr-McGee, 464 U.S. 238, 104 S.Ct. 615, 622 (1984) with Pacific 
Gas <f' Electric Co. v. State Energy Resources Conservation & De­
velopment Comm’n, 461 U.S. 190, 212-213 (1983).

14 Shaw v. Delta Airlines, Inc., 463 U.S. 85, 107 (1982).



16

volume of the activities of such plans is carried on 
by means of the mails and instrumentalities of inter­
state commerce; . . . that owing to the lack of employee 
information and adequate safeguards concerning their 
operation, it is desirable in the interests of employees 
and their beneficiaries, and to provide for the general 
welfare and the free flow of commerce, that disclosure 
be made and safeguards be provided with respect to 
the establishment, operation, and administration of 
such plans; that they substantially affect the revenues 
of the United States because they are afforded prefer­
ential tax treatment; . . . that owing to the inadequacy 
of current minimum standards, the soundness and sta­
bility of plans with respect to adequate funds to pay 
promised benefits may be endangered; . . . and that it 
is therefore desirable in the interests of employees and 
their beneficiaries, for the protection of the revenue of 
the United States, and to provide for the free flow of 
commerce, that minimum standards be provided as­
suring the equitable character of such plans and their 
financial soundness.

29 U.S.C. § 1001(a). Employer personnel policies and em­
ployment contracts, which had for years been effectively 
enforced pursuant to state statutory and common law (and, 
where the provisions of collective bargaining agreements 
were concerned, pursuant to the NLRA), were clearly not 
the object of Congressional concern.

To the contrary, what Congress had in mind when it 
drafted the provisions of ERISA relating to “employee 
benefit plans” were pension plans. See, generally, Central 
States. Southeast and Southwest Areas Pension Fund v.
Central Transport Inc.,-----  U.S. ----- , 53 U.S.L.W. 4811,
4813-14 (June 19. 1985) ; Nachman Corp. v. Pension Benefit 
Guaranty Corp., infra. 446 U.S. at 361-62. The latter had 
specific features and a defined structure which in no way 
resemble the personnel policies and handbook provisions



17

that are now being characterized as plans. By expanding 
the coverage of the Act to include welfare plans, Congress 
can in no way be said to have altered the nature of the 
beast that it intended to regulate. By providing that, in 
addition to pension plans, “plans, funds or programs” that 
were “established or maintained” to provide welfare bene­
fits were also covered by the Act, Congress simply sought 
to ensure that entities which were constituted in the same 
fashion as pension plans, but provided different benefits, 
would also be regulated.* 16

More to the point, given the concrete evidence which 
exists that what Congress intended to regulate was “the 
field of employee benefit plans”, 120 Cong. Rec. 29197 (1974) 
(Rep. Dent) and 29933 (1974) (Sen. Williams), and not 
the entire field of employee benefits,16 this case raises sub­
stantial question as to whether and to what extent decisions 
finding that any agreement to provide one of the benefits 
enumerated in ERISA is a plan governed by ERISA, have 
altered the federal-state balance in express violation of 
Congressional intent.

4. The decision of the Second Circuit, as well as the 
similar decisions collected in Appendix B are not only vio­

16 The fact that pension plans and welfare plans are not reg­
ulated in precisely the same manner does not mean that they do 
not have to have the same basic features in order to be regulated 
by the Act in the first place. It only means that experience had 
shown that pension plans were subject to greater abuse than wel­
fare plans, and, therefore, had to be subject to greater constraints.

16 I t is the failure to make this distinction which is at the root 
of the problem. Because the district court concluded that “the 
express purpose of ERISA [is] the establishment of a uniform 
system under which employee benefits are defined and adminis­
tered,” it also concluded that plaintiffs were undermining that 
express purpose by arguing that Burlington’s policy was not a 
“plan” and therefore subject to state law. The reverse is true. 
Since the express purpose of ERISA was the creation of a uniform 
law applicable to employee benefit plans and nothing else, the 
federal courts have encroached on the legitimate preserve of the 
states by construing something to be a plan which is not.



18

lative of principles of federalism and contrary to the lan­
guage, history and structure of the Act, they are contrary 
to the decisions of this Court.

In Nachman Corp. v. Pension Ben. Guaranty Corpora­
tion, 446 U.S. 359 (1980), this Court recognized what all 
other courts have so far failed to recognize: (1) that there 
is a distinction between an employer that sponsors a plan 
and a plan proper,17 and (2) that, consequently, what an 
employer owes and promises to pay is not the same thing 
as what a plan owes and is obligated to pay. The direct 
liability of an employer is established and governed by the 
contract which it enters into with its employees, and is 
enforceable in accordance with general principles of con­
tract law.18 The liability of a plan, on the other hand, is 
established and governed by the terms of a plan instrument 
and enforceable under ERISA.19 See 29 U.S.C. § 1132(a).

Significantly, in addition to recognizing the distinction 
between a plan and an employer, and between a plan ob­

17 See also Massachusetts Mutual Life Insurance Company v.
Bussell, ----- - U.S. ----- , 53 U.S.L.W. 4938, 4940-41 (June' 27,
1985); Central States, Southeast and Southwest Areas Pension 
Fund, supra, 53 U.S.L.W. at 4811, 4814-16.

18 The direct liability of an employer to its employees is not 
governed by ERISA. See 29 U.S.C. § 1132(d) (2) and § 1002(9).

19 The specific question before the Court was whether a “dis­
claimer clause” contained in a pension plan agreement qualified 
the liability of the plan or simply the liability of the employer. 
The Court concluded that the clause was simply a direct liability 
disclaimer clause, “ [t]he only practical significance” of which 
was “to provide protection for the employer.” Nachman, supra. 
446 U.S. at 371-72 (majority opinion). Accord, 446 U.S. 391-92 
(dissenting opinion). But, “ fgjiving the employer protection 
against liability [did] not qualify the beneficiary’s rights against 
the plan itself.” Id. at 372 (majority opinion). Accord, id. at 
391-92 (dissenting opinion).

This Court clearly distinguished between terms of the agreement 
which pertained to the liability of the plan and those that per­
tained to the liability of the employer, even though both provi­
sions coexisted in a single document which was overbroadly char­
acterized as a plan agreement.



19

ligation and a simple and direct employer-employee prom­
ise, Nachman also recognizes that nothing in EBLSA 
operates to obliterate these distinctions. Indeed, to the 
contrary, the opinion contemplates that employers will con­
tinue to contract (or not) with their employees, as the 
parties see tit, and that, where agreements are reached, 
the parties will continue to be able to enforce their con­
tractual rights directly against each other. See Nachman, 
supra, 446 U.S. at 384-85, 385 n. 37 (majority opinion). 
Accord, 446 U.S. at 392 n. 12 (dissenting opinion). Since 
the opinion further contemplates that as part of such agree­
ments employers will continue to choose either to specif­
ically assume or disclaim direct liability for benefits which 
might otherwise have been provided by an established 
“plan”, id. at 384-85, 385 n. 37 (majority); id. at 392 n. 12 
(dissent); employers must also have the ability to assume 
or disclaim liability for benefits which cannot be recovered 
from a plan. Thus, even where no plan has been estab­
lished, an employer remains liable for benefits which it 
has itself undertaken to provide.

While recognizing the authority of the holding in Nach­
man, the Second Circuit rejected its logic: “The short an­
swer is that Nachman and its progeny were based on 
federal rather than state law.” (A16). Behind this com­
ment lie two assumptions: (1) that a contractual promise 
regarding benefits is a “plan” within the meaning of the 
Act and, therefore, enforceable under 29 U.S.C. § 1132(a)20, 
but that (2) where the promise sought to be enforced is set 
forth in a contract which has been collectively negotiated 
rather than one that has been entered into between an in­
dividual employer and employee, the right of workers to * 1

20 § 1132(a)(1)(B) provides:
(aj A civil action may be brought—

(1) by a participant or beneficiary—-
(B) to recover benefits due to him under the terms 
of his plan, to enforce his rights under the terms of 
the plan, or to clarify his rights to future benefits 
under the terms of the plan.



2 0

sue on that contract is a federal right21 which is preserved 
by 29 U.S.C. § 1144(d).22

The Second Circuit’s reasoning is flawed in at least four 
fundamental respects. First, it assumes that Congress in­
tended to create a double standard, under which the basic 
contract rights of workers who have been organized pur­
suant to the NLRA are preserved, while those of all other 
private sector workers23 (both those who are as yet unor­
ganized and those24 * who are organized pursuant to state 
labor relations laws) are eliminated.26 By the same token, 
it assumes that Congress intended to permit organized 
workers to enforce the terms of their plans as stated, while 
requiring unorganized workers to demonstrate “arbitrary 
and capricious” conduct on the part of their employers 
before they can prevail on their claims.26 There is not one

21 See 29 U.S.C. § 185(a).
22 § 1144(d) provides:

Nothing in this subchapter shall be construed to alter, amend, 
modify, invalidate, impair, or supersede any law of the United 
States (except as provided in sections 1031 and 1137(b) of 
this title) or any rule or regulation issued under any such law.

23 Since “governmental plans” are not employee benefit plans 
within the meaning of the Act, see 29 U.S.C. §§ 1003(b)(1) and 
1002(32), public sector workers can still enforce their rights under 
their contracts in accordance with state law.

24 Many states have the equivalent of Taft-Hartley acts under 
which collective bargaining agreements of workers organized pur­
suant to their provisions have the force and effect of law.

26 While Congress clearly intended, when it enacted the NLRA, 
to permit organized workers to use their collective strength to 
secure contract terms from their employers which are more favor­
able than the contract terms that an individual non-unionized 
worker is able to secure, there is nothing in ERISA which indicates 
that Congress intended to increase this disparity in bargaining 
power by depriving unorganized workers of their right to contract 
at all.

26 Again, while Congress clearly contemplated that organized 
workers would have an advantage over their unorganized counter-

(footnote continued on following page)



2 1

iota of evidence, either in the statute or its legislative his­
tory, that Congress intended ERISA to create such in­
equities or to be applied in a disparate manner to different 
groups of workers. Significantly, there is abundant evi­
dence of a contrary intent. See McLaughlin v. Connecticut 
General Life Ins. Co., 565 F. Supp. 434, 445-446 (N.D.Cal. 
1983). See also Malone v. White Motor Corf., 435 U.S. 497, 
507-09 (1978) (construing the Welfare and Pension Plans 
Disclosure Act, the predecessor to ERISA); accord, Metro­
politan Life Ins. Co., supra, 53 U.S.L.W. at 4624; Barren- 
tine v. A r Jeans as-Best Freight System, Inc., 450 U.S. 728, 
739-740 (1981) (similarly construing the Fair Labor Stand­
ards Act).

Second, the procedural consequences that flow from the 
Second Circuit’s reasoning are squarely in conflict with the 
federal preference for resolving employer-employee dis­
putes through the medium of administrative processes, 
where at all possible. See, generally, the Steelworkers’ 
TriologyP Under the Second Circuit’s view of the new 
federal labor policy, as expressed in ERISA and the NLRA, 
workers organized under federal aegis will be encouraged 
to submit their disputes to grievance and arbitration pro­
cedures, while unorganized workers and workers organized 
pursuant to state labor relations laws will be denied access 
to state administrative agencies. These workers will be 
required to initiate adversary proceedings under federal 27

(footnote continued from previous page)
parts when securing contract terms from their employers, there 
is nothing in ERISA which suggests that organized workers should 
be able to invoke a more favorable legal standard against an al­
ready established plan than their unorganized counterparts can 
assert. Indeed, ERISA doesn’t make any distinction between col­
lectively-bargained and unilaterally established plans.

27 United Steelworkers of America v. American Manufacturing 
Co., 363 U.S. 564 (1960); United Steelworkers of America v. War­
rior & Gulf Navigation Co., 363 U.S. 574 (1960) ; United Steel­
workers of America v. Enterprise Wheel <£~ Car Corp., 363 U.S. 
593 (1960).



2 2

law in state or federal court. Even where an employee’s 
claim is for only one week of severance pay, an ERISA 
suit will be the only course of action that he or she can 
pursue.

Third, the Second Circuit’s reasoning sanctions age dis­
crimination in the provision of basic employee benefits 
because it brings within the compass of 29 U.S.C. § 623(f) 
(2)28 simple employer personnel policies, and thereby 
exempts them from the strictures of the Age Discrimination 
in Employment Act, 29 U.S.C. § 621 et seq. Of all the pos­
sible consequences of an overbroad construction of the term 
“plan”, this is perhaps the most ironic. The comprehensive 
legislation which was intended by Congress to bring “secu­
rity” to retirement years is being used to take it away. 
Even workers governed by collective bargaining agreements 
may well become the victims of this new form of discrimi­
nation.29

Fourth and finally, the Second Circuit’s decision effec­
tively permits all employers to do what, up until now, the

28 29 U.S.C. § 623 provides, in pertinent part, that “ [i] t shall not 
be unlawful for an employer, employment agency, or labor organi­
zation . . .  (2) to observe the terms of a . . . bona fide employee 
benefit plan such as a retirement, pension, or insurance plan, . . . 
except that no such . . . employee benefit plan shall excuse the 
failure to hire any individual, and no such . . . employee benefit 
plan shall require or permit the involuntary retirement of any 
individual . . . ”.

29 Indeed, the campaign by some employers to take advantage 
of decisions that broadly construe the word “plan” has already 
begun. In Equal Employment Opportunity Commission v. West- 
inghouse Electric Corporation, Civ. Action No. 84-4799 (E.D. Pa.), 
for example, the employer has argued that it is excused from pro­
viding severance pay to certain of its older employees, under 29 
U.S.C. § 623(f) (2), because its severance policy is a “plan.” But 
see EEOC v. Westinghouse, 725 F.2d 211, 224-5 (3d Cir. 1983)
cert, denied----- U.S.------ •, 105 S.Ct. 92 (1984) (employer’s Layoff
Income and Benefits Policy is not a plan within the meaning of 
the ADEA) ; Alford v. City of Lubbock, 664 F.2d 1263 (5th Cir. 
1982), cert, denied, 456 II.S. 975 (1982) (City’s policy regarding 
accrued sick leave is not a plan within the meaning of the ADEA).



23

Court and Congress have only permitted insolvent em­
ployers to do—i.e., disregard the terms of contracts into 
which they have entered. See N.L.R.B. v. Bildisco and Bil-
disco, -----  U.S. ----- , 104 S.Ct. 1118 (1984); Bankruptcy
Act, 11 U.S.C. § 101 et seq.

5. Is the state common law of contracts (as it applies 
to employer-employee relations) dead? Are state wage 
collection and benefit enforcement statutes soon to be ex­
tinct ? Appellants think not. What is more, appellants are 
not the only ones to hold this opinion.

Last but not least in the litany of contradictions and 
unintended effects wrought by ERISA’s pre-emption provi­
sion is the continuing and often unarticulated clash between 
federal and state courts in the field of employee benefits. 
Notwithstanding the drafters’ expressed intention to “elimi­
nate the threat of conflicting or inconsistent state and local 
regulation of employee benefit plans,” (Statement of Sena­
tor Williams, 120 Cong. Rec. 29933 (1974)) state and federal 
courts have continued to produce two streams of contra­
dictory rulings. The federal courts assert that the states 
have no jurisdiction to decide questions relating to sever­
ance or other employee benefits, and state courts and 
agencies continue to adjudicate such claims on a regular 
basis.

All but two states (Florida and Mississippi) have wage 
collection statutes in effect. In at least thirty states and 
the District of Columbia, severance, holiday, sick pay and 
similar benefits of the kind that may be provided by means 
of a “welfare benefit plan” as defined in §1002(1) of the 
Act are routinely processed by state departments of labor.30 
In still other states31 employees denied severance pay or 
other employee benefits sue and recover on common law 
theories of contract, promissory estoppel, and quantum

80 See table of state statutes attached as Appendix C.
31 See table of state court decisions attached as Appendix D.



2 4

meruit. Virtually none of these eases even mentions 
ERISA, even fewer hold that they are barred from adjudi­
cating benefit claims by virtue of its pre-emption provision.

Clearly, the adoption of the broadest possible pre-emp­
tion language has not succeeded either in eliminating con­
flicting definitions of the pre-empted field or in creating the 
desired uniformity of law. The solution, however, is not 
the abolition of state common law and statutory rights under 
the rubric of pre-emption, but a definitive construction of 
the principal object of ERISA and its pre-emption provi­
sion—the employee benefit plan.

6. In the final analysis, the question presented for con­
sideration on this appeal reduces to a question of which of 
two models obtains in the employee benefit field: (1) a 
model which, because it recognizes the distinction between 
direct employer liability and plan liability, truly promotes 
uniformity, is faithful to ERISA’s intent and preserves 
the proper balance between state and federal law, see 
Model A set forth in App. E at E-2; or (2) a model which, 
in the name of creating uniformity, creates inequality, 
begets confusion, and, because it ignores the distinction 
between employers and plans, interferes with the adminis­
tration of state laws that are not in conflict with ERISA, 
see Model B set forth in App. E at E-3.

7. Thus far, the results reached by courts that have 
tried to identify “employee benefit plans” offer little more 
guidance on these questions than Alice’s verses offered 
Lewis Carroll’s King: “ ‘If there’s no meaning in it, . . . 
that saves a world of trouble, as you know, as we needn’t 
try to find any.’ ” 32 Fortunately, however, contemplating 
the current state of confusion with regard to the meaning 
of a “plan” only forces one to return to the puzzling text:

82 Alice’s Adventures In Wonderland, Lewis Carroll, Random 
House (N.T. 1946). p. 144-45.



25

“ ‘And yet I don’t know/ lie went on, spreading out the 
verses on his knee, looking at them with one eye, ‘I  seem 
to see some meaning in them after all/ ” 33

Although the meaning of the critical terms addressed in 
this appeal may be far from “plain” on their face, they are 
not insusceptible of definition. More importantly, since the 
question of their meaning is of more than metaphysical 
interest, courts cannot simply throw up their hands in 
judicial despair and content themselves with the assump­
tion that, while they cannot define what is meant by a 
“plan”, they can recognize one when they see one. Ulti­
mately, of course, the question of whether a given employer, 
labor organization, or both, have established or maintained 
a plan, fund or program within the meaning of the Act is 
a question of fact to be determined on a case-by-case basis. 
First, however, there must be a definitive ruling on the 
meaning of the terms.

State and federal courts need guidance on this question. 
State attorneys general need guidance on this question. 
State departments of labor need guidance on this question. 
Unorganized workers need guidance on this question. Pri­
vate sector workers organized under state labor laws need 
guidance on this question. Older workers and senior citi­
zens need guidance on this question. The organized labor 
movement needs guidance on this question. Employers 
need guidance on this question. And, finally, practitioners 
and members of the legal profession need guidance on this 
question.

It remains for this Court to provide that much-needed 
guidance and to instill order into what is presently chaos.

33 Id. at 145.



26

CONCLUSION

Foi the leasons stated, the question presented by this 
appeal should be given plenary consideration.

Respectfully submitted,

E m ily  M. B ass 
Counsel for Appellants 
740 Broadway at Astor Place 
New York, New York 10003-9518 
(212) 254-1111

Of Counsel:
L inda A. B ackiel 
B e t h  M ahgolis 
L eonard B . B oudin 
R abinow itz , B o udin , S tandard, 

K rin sk y  & L ieberm a n , P .O .
740 Broadway at Astor Place 
New York, New York 10003-9518 
(212) 254-1111
On behalf of the National Emergency 

Civil Liberties Committee



APPENDIX B 
LEGEND

Categories 1 2 3 4

1. Parties agree that the benefits in question are being 
provided by means of an ERISA-covered plan.

2. Plaintiff-beneficiaries argued that benefits are due under 
an ERISA plan.

3. Court concludes that a "welfare benefit plan" exists 
because severance pay is a "welfare benefit", without first 
considering whether the severance pay is being provided 
through a "plan."

4. Court relies on 29 C.F.R § 2510.3-1(a )(3) to find that a 
welfare plan exists.



CASE NAME &
CITE TYPE OF POLICY—^

& BENEFIT CATEGORY

BLAU v. DEL MONTE,
748 F .2d 1348 (9th Cir. 
1984)

CALHOUN V . FALSTAFF 
BREWING CO., 478 F.Supp. 
357, 359 (E.D. Mo. 1979)

Policy; confidential 
separation allowance 
policy, requiring 
individual executive 
approval
Benefit; severance
Policy: Not Described 
Benefit: severance m

to

It is occasionally impossible to determine the nature of the 
system being used to provide benefits. Indeed, the dearth of infor­
mation about the alleged "plans" contained in the reported decisions 
reflects the absence of both legal and formal criteria for deter­mining the existence of a plan.



C A S E  N A M E  &
C I T E

DEPENDAHL v. FALSTAFF 
BREWING CO., 491 F .Supp. 
1188, 1196 (E.D. Mo. 1980) 
aff'd, 653 F .2d 1208, 1211 
(8th Cir.) cert, denied 
sub nom. DEPENDAHL v. 
KALMANOVITZ, 454 U.S. 1084 
(1981)

DHAYER V .  WIERTON STEEL 
DIV. of NATIONAL STEEL 
CORP., 571 F.Supp. 316, 
329-330 (N.D.W.Va. 1983) 
aff'd, sub nom.
SUTTON v. WIERTON

T Y P E  O F  P O L I C Y
& B E N E F I T

Policy: employer personnel 
policy
Benefit: severance

CATEGORY
i  nr I 3 I 4

X X X

Policy: personnel policy 
Benefit: severance

X X 03U1



C A S E  N A M E  &
C I T E

STEEL DIV. of NAT. 
CORP., 724 F .2d 406 
(4th Cir. 1983), 
cert, denied,

U.S. , 104
S.ct. 2387 (1984)

STEEL

DONNELLY v. AETNA LIFE 
INSURANCE CO., 465 F.Supp 
696, 698 (E.D. Pa. 1979)

T Y P E  O F  P O L I C Y
& B E N E F I T

C A T E G O R Y

Policy: personnel 
policy calculated 
by salary and length 
of service 
Benefit: severance

w



C A S E  N A M E  &
C I T E

T Y P E  O F  P O L I C Y
& B E N E F I T

C A T E G O R Y

DONOVAN v .  DILLINGHAM, Dicta r e ;  / S e v e r a n c e
688 F .2d 1367, 1371 n.4 beneTits-2 * * * * 7
(11th Cir. 1982)

X

OGDEN v .  MICHIGAN BELL 
TEL. CO., 571 F.Supp. 520, 
521 (E.D. Mich. 1983)

Policy: formally established 
Management Income Protection 
Plan
Benefit: retirement 
severance and related 
benefits D3

2 7 ~  " ~  ■  ;—— This was a suit by the Secretary of Labor to enforce fiduciary
standards on trustee of Union Insurance Trust. In an interesting
discussion of the concept of "employee benefit plan," the Court notes 
that: "Not so well defined are the first two prerequisites: 'plan
fund or program' and 'established and maintained.'" 688 F.2d at
1372-3. See also Taggart Corp. v. Life & Health Ben. Admin., 617 
F . 2d 1208, 1211 (5th Cir. 1980). ' ~~ ~ ~ ~



CASE NAME &
CITE

JUNG v. F.M.C. CORP.,
Dkt. No. C-82-0018-WAI 
(N.D.Cal. 1983), 
aff’d, 755 F .2d 708, 709, 
710 n .2 (9th Cir. 1985)
PETRELLA V. NL INDUSTRIES, 
INC., 529 F.Supp. 1357, 
1361 (D.N.J. 1982)

PINTO v. ZENITH RADIO 
CORP., 480 F.Supp. 361, 
362-63 (N.D. 111. 1979) 
aff1d n .op ., 618 F.2d 
110 (7th Cir. 1980)

TYPE OF POLICY
& BENEFIT

C A T E G O R Y

Policy: discretionary 
policy guide 
Benefit: severance

X

Policy: internal policy 
statement on separation 
allowances—
Benefit: severance

X X X

Policy: discretionary 
severance policy requiring 
administrative decision on 
a case-by-case basis 
Benefit: severance

X X X

toCT)

- The Court noted that: "Neither Congress nor the Department of
Labor has been very specific about what constitutes a 'plan, fund or 
program' for purposes of § 1002." 529 F.Supp. at 1362.



C A S E  N A M E  &
C I T E

T Y P E  O F  P O L I C Y
& B E N E F I T

C A T E G O R Y
4

RUSSELL v. MASS. MUTUAL 
LIFE INS. CO., 722 F.2d 
482, 485 n .2 
(9th Cir. 1982 ) rev1d 
on other grds, U.S. , 
53 U.S.L.W. 4938, 4940 n.4 
(June 25, 1985)

SCOTT v. GULF OIL,
754 F .2d 1499 
(9th Cir. 1985)

Policy: program with 
written policy featuring 
appeal and review rights 
Benefit: disability benefits

Policy: oral and written 
promises to make payments 
based on length of service 
and salary—
Benefit: severance

03

4 / . .— While noting that "ERISA does not contain a clear definition of 
the word 'plan’," the Court concludes that an oral or written promise 
or undertaking can constitute a plan. 754 F.2d at 1503-04. The 
court does not distinguish between promises enforceable directly 
against an employer and promises enforceable against the plan as a 
separate entity.



C A S E  N A M E  &
C I T E

T Y P E  O F  P O L I C Y
& B E N E F I T

C A T E G O R Y
4

SLACK v. BURLINGTON 
INDUSTRIES, F .2d
(4th Cir. 1985), Nos. 84- 
2241(L) and 84-2257 (4th 
Cir. 9/3/85

LIVERNOIS v. WARNER-LAMBERT, 
723 F .2d 1148, 1152 n.6 
(4th Cir. 1983)

SLY v. P.R. MALLORY CO., 
712 F .2d 1209, 1211 (7th 
Cir. 1983)

Policy: employer 
personnel .policy & payroll 
practice—
Benefit: severance

Policy: employer personnel 
policy, based on age and 
length of service 
Benefit: severance

Policy: "standard practice 
instruction" or employer 
personnel policy; payments 
not automatic—
Benefit: severance

57— The policy and practice involved in Slack are the same as are 
herein at issue.
6 / Payments were to be determined by a designated employer executive.

CD
03



APPENDIX C
STATE WAGE COLLECTION STATUTES

This table is based on a review of the applicable 
statutory material reported in State Law No. 1, 2, 3, Lab. L. 
Rep. (CCH) and BNA Reports, an examination of the statutes of 
each state, and information provided by State Departments of 
Labor of several states. Where an appears in the last
column next to the citation for a state wage collection 
statute, it signifies that appellants were unable to 
ascertain whether or not the statute may be invoked in 
connection with benefit claims.



State
Wage
Collection
Statute

Alabama Ala. Code § 25-3-4
Alaska Alaska Stat.

§§ 23.05-140 to .260
Arizona Ariz. Revised 

Statutes § 23-355
Arkansas Ark. Stat.

§§ 81-311(1) to 312
California Cal. Labor Code 

§ 227.3
Colorado Colo. Rev. Stat. 

(1973) § 8-4-101 
et seq.

Applicable to 
Severance, 
Vacation 
and other 
Benefits

★

yes

yes
n
to

yes

yes

yes



State

Wage
Collection
Statute

Connecticut Conn. Gen. Stat. 
(Rev. 1983) § 31-72

Delaware Del. Code Annot. 
Title 19 § 1109

District of 
Columbia

D.C. Code § 101-110 
(1981 ed.)

Florida None

Georgia Georgia Code 
§§ 34-7-2 to 4

Hawaii Hawaii Rev. Stat., 
Chap. 388

Applicable to 
Severance, 
Vacation 
and other 
Benefits

yes

yes

yes nUJ

it

yes



State
Wage
Collection
Statute

Idaho Idaho Code § 45-608
Illinois 111. Stat. Annot. 

§ 39m-l et seq.
Indiana Ind. Code § 22-2-9-5
Iowa Iowa Code Annot. 

Chap. 91A
Kansas Kansas Stat. Annot. 

§ 44-313
Kentucky Ky„ Revised Statutes 

§ 337.020

Applicable to 
Severance, 
Vacation 
and other 
Benefits

yes
yes

yes
yes

n

yes

yes



A p p l i c a b l e  t o

State
Wage
Collection
Statute

Severance 
Vacation 
and other 
Benefits

Louisiana La. Revised Statutes 
§ 23:631 et secj.

yes

Maine Maine Rev. Stat Annot. 
Title 26, § 629-A

yes

Maryland Annot. Code of Md., 
Art. 100 § 94

yes

Massachusetts Mass. Gen'l Laws 
Ch. 149 § 148-150

yes

Michigan Mich. Comp. Laws 
§ 408.473

yes



Applicable to

State
Wage
Collection
Statute

Severance 
Vacation 
and other 
Benefits

Minnesota Minn. Comp. Laws 
§ 181.74 yes

Mississippi None
Missouri Mo. Revised Statutes 

§ 290.110
no

Montana Montana Code Annot. 
§ 39-3-201 et seq.

yes

Nebraska Neb. Revised Statutes 
§§ 48-1228 to 1232 yes

Nevada Nev. Revised Statutes 
§§ 607.160 to .170, 
608.050 to .190

*



State

New Hampshire

New Jersey 

New Mexico 

New York

Wage
Collection
Statute

N.H. Rev. Stat. 
Annot.,Chap. 275 
§ 43
N.J. Stat. Annot. 
§ 2A:170-90.2
N.M. Stat. Annot. 
§ 50-4-1 et seq.
N.Y. Labor Law 
§ 198-c
N.C. Gen. Stat., 
Chap. 95, Art. 2A

North Carolina

Applicable to 
Severance, 
Vacation 
and other 
Benefits

yes

yes
o-jyes

yes

y e s



State
Wage
Collection
Statute

North Dakota

Ohio

Oklahoma

Oregon

N.D. Century Code 
§ 34-14-01 et seq
Ohio Rev. Stat.
§ 4113.5
Okla. Stat. Annot 
Title 40, Chap. 5 
§ 165.1 et seq.
Oregon Statutes 
§ 652.200
43 Pa. Stat.
§ 260.1 et seq.

Pennsylvania

Applicable to 
Severance, 
Vacation 
and other 
Benefits

yes

yes

yes n
00

yes

yes



Applicable to

State

Wage
Collection
Statute

Severance 
Vacation 
and other 
Benefits

Rhode Island R.I. Gen'1 Laws 
§ 28-14-19 et seq.

yes

South Carolina S.C. Code §§ 41-11-110 
to 240

yes

South Dakota S .D . Compiled Laws 
§§ 60-11-7 to 18

no

Tennessee Tenn. Code Annot.
§ 50-2-101 et seq.

yes

Texas Tex. RCS §§ 5157, 5159 yes

Utah Utah Labor Code 
§ 34-28-8

yes



Applicable to

State
Wage
Collection
Statute

Severance 
Vacation 
and other 
Benefits

Vermont Vermont Stat. Annot. 
§ 345(a) yes

Virginia Va. Code of 1950 
§ 40.1-29 et seq.

★

Washington Wash. Rev. Code 
§ 49.48.010 et seq.

★

West Virginia W. Va. Code, 
Chap. 21, Art. 5 yes

Wisconsin Wise. Stat. Annot. 
Chap. 109.36 yes

Wyoming Wyo. Stat. Annot. 
§ 27-4-501 yes

CIO



APPENDIX D
POST-ERISA CASES DECIDING 

BENEFIT CLAIMS UNDER STATE LAW

* Asterisk indicates that the 
court is the highest in the state

Case Name and Cite Benefit(s) at Issue
1. AL YOUNGER, et al.

V .  THOMAS 
INTERNATIONAL 
CORPORATION, 275 Ark. 
327,629 S.W. 2d 294 
(1982)*

severance pay 
provision in 
personnel policy

2. VIOLA A. HARTMAN v. vacation pay
FREEDMAN, 197 Colo.
275, 591 P .2d 1318 
(1979 ) *

Rule of Decision

common law 
of contracts

state wage 
collection 
statute



Case Name and Cite Benefit(s) at Issue Rule of Decision
HEYMAN v. FINANCIAL 
PROPERTIES 
DEVELOPERS, No.
70080 (Ga. Ct. App. 
filed May 30, 1985), 
rehearing denied June 
17, 1985

severance pay 
provision in 
employment contract

common law 
of contracts

SHANNON V .  HUNTLEY'S 
JIFFY STORES, INC., 
174 Ga. App. 125, 329 
S.E.2d 208 (1985)

vacation pay 
provision in 
employee manual

common law 
of contracts

GEORGIA PORTS AUTHORITY 
v. ROGERS, 173 Ga.
App. 538, 327 S.E.2d 
511 (1985)

occupational accident 
leave pay provision 
in employee manual

common law 
of contracts

CALVIN C. JOHNSON v .  
ALLIED STORES 
CORPORATION, 100 
Idaho 384, 597 
P .2d 1074 (1984)*

severance pay and 
discount privilege 
provision in 
personnel policy

state wage 
collection 
statute



C a s e  N a m e  a n d  C i t e B e n e f i t ( s )  a t  I s s u e R u l e  o f  D e c i s i o n

7. EARL McCLURE v. severance pay
INTERNATIONAL LIVESTOCK provision in 
IMPROVEMENT SERVICES employment contract
CORPORATION, No.
114/84-964 (Iowa Sup. Ct., 
filed June 19, 1985)*

8. DANTE VIGNAROLI, et al. severance pay 
v. BLUE CROSS OF IOWA provision in
et al., No. 83-1445 employment manual
(Iowa Sup. Ct., filed 
January 16, 1985)*

9. WHEELAN'S, INC. v.
KANSAS DEPARTMENT OF 
HUMAN RESOURCES, 235 
Kan. 425, 681 P.2d 621 
(1984)*

vacation benefit 
provision in 
employment contract

state wage 
collection 
statute

common law 
of contracts

state wage 
collection 
statute

u00



Case Name and Cite Benefit(s) at Issue Rule of Decision
10. ALFREDA MICHEAUX et al. severance pay 

v. AMALGAMATED MEATCUT- provision in 
TERS AND BUTCHER employment contract
WORKMEN OF NORTH 
AMERICA, AFL-CIO,
LOCAL P-94, DISTRICT 
LOCAL 340 AND UNITED 
FOOD COMMERCIAL WORKERS 
INTERNATION UNION,
AFL-CIO,CLC DISTRICT 
LOCAL 340,231 Kan. 791,
648 P .2d 722 (1982)*

11. MID AMERICA AEROSPACE, vacation pay 
INC. v. DEPARTMENT OF provision in
HUMAN RESOURCES, personnel handbook
10 Kan. App.2d 144,
694 P .2d 1321 (1985)

state wage 
collection 
statute

state wage 
collection 
statute

a
■Ct



C a s e  N a m e  a n d  C i t e B e n e f i t ( s )  a t  I s s u e R u l e  o f  D e c i s i o n

FULL VISION, INC. V. 
KANSAS DEPARTMENT OF 
HUMAN RESOURCES AND 
HAROLD H. GLEASON,
No. 56, 773 (Kan. Ct. 
App. April 25, 1985)

vacation pay 
provision in 
employee handbook

common law 
of contracts

WILLIAM G. ADAMS v. 
ASSOCIATES CORPORATION 
OF NORTH AMERICA, 390 
So.2d 539 (La. Ct.
App. Oct. 8, 1980), 
rehearing denied 
Dec. 1, 1980

severance pay 
provision in 
personnel policy 
manual

common law 
of contracts

aai

ANDERSON v. KENNEBEC 
RIVER PULP AND PAPER 
CO., 433 A.2d 752 (Sup. 
Judicial Ct. Me. 1981) *

severance and 
vacation benefits

equitable
estoppel



Case Name and Cite Benefit(s) at Issue Rule of Decision
15. RICHARD SMALL AND 

FREDDIE COX v.
CHEMLAWN CORPORATION, 
No. 84-1320 (6th Cir. 
May 23, 1985)(on appeal 
from the Western 
District of Michigan)

severance and 
vacation pay 
provision in 
employment contract 
and personnel 
documents

16. PAUL J. HRUSKA v. severance pay
CHANDLER ASSOCIATES, provision in
INC. v. SCOTT BAGNE employment contract
AND PENDLE-HANSEN-BAGNE,
INC., No. C3-84-342 
(Minn. Sup. Ct. 
en banc Aug 16, 1985)*

17. PAT LINZ V .  CHAMPION 
INTERNATIONAL 
CORPORATION, 675 
P.2d 979(Mont.
Sup. Ct. 1984)*

severance pay 
provision in 
personnel policy

common law 
of contracts

common law 
of contracts

common law 
of contracts

D
<Ti



C a s e  N a m e  a n d  C i t e B e n e f i t ( s ) a t  I s s u e R u l e  o f  D e c i s i o n

18. JEWISH NATIONAL FUND 
v. JACK GARLAND,
No. 83 Civ. 7796 
(S.D.N.Y.Jan. 3, 1985)

severance and 
vacation benefits 
provided in 
personnel policy

19. IN MATTER OF GLENVILLE vacation benefit 
GAGE CO. v. INDUSTRIAL provision in
BOARD OF APPEALS, personnel policy
52 N .Y .2d 777, 436 
N .Y .S .2d 621, 417 N.E.2d 
1009 (1980)

20. HAUPTMAN v. HELENA 
RUBENSTEIN, 70 
A.D.2d 285, 452 
N .Y .S .2d 989 (1981)

severance pay 
provision in 
employment contract

common law 
of contracts

state wage 
collection 
statute

common law 
of contracts, 
promissory 
estoppel and 
state wage 
collection 
statute

o



Case Name and Cite
2 1 .

2 2.

23.

24.

Benefit(s) at Issue Rule of Decision
GLEN NARRON v. HARDEE'S 
FOOD SYSTEMS, INC., 331 
S.E.2d 205 (N.C. Ct. 
App. 1985)

vacation benefit 
provision in 
personnel policy

state wage 
collection 
statute

ROBERT G. BENS v. 
TRAILMOBILE, INC., No. 
C-840724 (Ohio Ct. App. 
Aug. 21, 1985)

severance pay 
provision in 
personnel policy

common law 
of contracts

ARMSTRONG et al., v. 
DIAMOND SHAMROCK CORP., 
7 Ohio App 3d 296,
455 N.E.2d 702 (1982)

vacation and 
severance benefit 
provisions in 
personnel policy

common law 
of contracts

o00

CHVATAL v. UNITED 
STATES NATIONAL BANK OF 
OREGON,285 Or. 11, 589 
P .2d 726 (1979)*

vacation and 
severance pay 
provision in 
letter agreement

common law 
of contracts



C a s e  N a m e  a n d  C i t e  B e n e f i t ( s ) a t  I s s u e  R u l e  o f  D e c i s i o n

25. LOREN L. WYSS v. J. management bonus
JERRY INSHEEP, et al., plan provision in 
73 Or.App. 661, 699 personnel policy
P .2d 1161(1985)

26. JAMES H. KNIERIEM v. 
ARA SERVICES,
No. 84-3695 (E.D. Pa. 
August 26, 1985)

severance pay 
provision in 
personnel policy

27. STEPHEN A. MORSE v. 
ASSOCIATED PET 
SUPPLY, INC.,
No. 84-4125 (E.D. Pa. 
June 14, 1985)

vacation benefit 
provision in 
employment contract

28. DULANY FOODS, INC. v. severance pay 
C.M. AYERS et al., provision in
220 Va. 502, 260 S.E.2d personnel policy 
196 (1979)*

common law 
of contracts

common law 
of contracts

common law

common law 
of contracts

a
VO



Case Name and Cite Benefit(s) at Issue Rule of Decision
29. RICHARD T. KOENINGS v. vacation and

JOSEPH SCHLITZ BREWING severance provisions
COMPANY, 123 Wise in employment contract
2d 490, 368 
N.W.2d 690 (1985)

30. NORMAN D. FOLTS, et al. 
V .  LIBBY, MeNEIL & 
LIBBY, INC., 109 Wise. 
2d 698, 327 
N.W.2d 724 (1982)

severance pay 
provision in 
personnel policy

common law

common law 
of contracts

DIO



APPENDIX E 
LEGEND

ER - Employer 
EE - Employee
Class 1 - covers workers protected by the NLRA.
Class 2 - covers private sector workers protected by 

state labor relations laws.
Class 3 - covers unorganized workers.



APPENDIX E MODEL A

Mto

EE'S



APPENDIX E MODEL B

ER = PLAN
Provisions of ER-EE Contract = Plan Instrument

CONTRACT REMEDIES REMEDIES UNDER ERISA
Class 1 - entitled to have 
benefit provisions of collective 
bargaining agreement enforced 
according to their terms.

Class 2 - none; state law 
contract rights pre-empted.

Class 3 - none; state law 
contract rights pre-empted.

Class 1 - could sue under ERISA, 
but would have to meet standard 
of "arbitrary and capricious" 
conduct; would therefore pro­
bably sue under LMRA. [See 
other side].

Class 2 - only recourse is to 
ERISA and must satisfy standard 
of "arbitrary and capricious" 
conduct.

Class 3 - only recourse is to 
ERISA and must satisy standard 
of "arbitraty and capricious" 
conduct.

K
CO



*G 8**«*