Hakim v. Accenture United States Pension Plan

In the

United States Court of Appeals

For the Seventh Circuit

No. 11-3438

O MAR H AKIM ,

Plaintiff-Appellant,

v.

A CCENTURE U NITED S TATES P ENSION P LAN, et al.,

Defendants-Appellees.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 08 CV 03682—Robert M. Dow, Jr., Judge.

A RGUED O CTOBER 25, 2012—D ECIDED M AY 23, 2013

Before F LAUM, M ANION, and R OVNER, Circuit Judges.

M ANION, Circuit Judge. In this ERISA action, we deter-

mine whether a release of claims signed by a former

employee in exchange for a severance package is valid

and enforceable. Omar Hakim was an employee of

Accenture LLP (previously Andersen Consulting LLP)

for nearly ten years before being let go as part of a

workforce reduction in 2003. During part of his tenure

with the company, he participated in the company’s

2 No. 11-3438

pension plan. In 1996, Accenture amended the plan to

exclude a number of employees in various “service

lines” (corporate talk for departments) throughout the

company. By virtue of his position in the company,

Hakim remained eligible to participate in the retire-

ment plan when the amendment was adopted, but in

1999 he was promoted to a position in which he was

no longer eligible to participate in the plan under the

terms of the 1996 amendment.

Upon his termination in 2003 when he was 39 years

old, Hakim signed a release in exchange for separation

benefits that waived any and all claims that arose

prior to signing the release. In 2008, while he was em-

ployed elsewhere, Hakim sought additional pension

benefits from Accenture, arguing that the notice of the

1996 amendment to the plan (which was emailed to

employees) was insufficient and therefore violated

ERISA’s notice requirements. After his claim was denied

by Accenture, he sought relief in the district court. The

district court granted summary judgment in favor of

Accenture, holding that Hakim knew or should have

known about his claim when he signed the release, and

thus waived his claim. We agree with the district court

and affirm.

I. Background

Omar Hakim was employed by Accenture LLP from

October 4, 1993, through May 16, 2003. He worked at the

Las Colinas, Texas, office in information technology,

and when he was hired at the age of 29, he was eligible

to participate in the company’s retirement plan (the

No. 11-3438 3

“Plan”). The Plan is a “defined benefits plan” within the

meaning of ERISA, and Accenture is the Plan sponsor and

Plan administrator. Under the Plan, Accenture, as Plan

administrator, has the sole and exclusive discretion to

determine which employees are eligible for the Plan

and the amount of benefits they receive. The Plan also

gave Accenture authorization to amend the Plan at

any time.

When Hakim was hired in 1993, the Plan was struc-

tured such that all of Accenture’s associate partners

were eligible to participate in the Plan regardless of

the service line they worked in, and all other em-

ployees were eligible to participate unless those em-

ployees worked in certain service lines, namely Strategic

Services, Change Management Services, and Systems

Integration. Hakim did not work in any of those three

lines and thus was eligible to participate (and did par-

ticipate) in the Plan. On June 13, 1996, Accenture

decided to amend the Plan. The amendment, which

would take effect on July 1, 1996 (the “1996 Amend-

ment), altered Section 2.2(b) of the Plan to restrict par-

ticipation in the Plan to certain categories of employ-

ees. The 1996 Amendment also provided that employees

hired prior to the date of the Plan’s amendment would

remain eligible to participate in the Plan so long as the

employee did not transfer service lines. Hakim would

thus continue to accrue benefits unless and until he

transferred or was promoted to a new, ineligible

service line.

On June 6, 1996, Julianne Grace, Accenture’s Human

Resources (“HR”) Policy Lead, emailed a memorandum

4 No. 11-3438

to the HR Leads at Accenture’s local offices which ex-

plained the changes the 1996 Amendment would

make to the Plan. Then, on June 13, Grace’s executive

assistant Jeanette Harris sent an email directing all

HR Leads in Accenture’s U.S. offices to:

Please distribute the following memo and attachment

to all personnel in your location. The memo notifies

employees of the changes in retirement eligibility

and is similar to the memo distributed earlier to all

of HR. The attachment is a legally required docu-

ment that must be delivered no later than Friday

Afternoon, June 14, 1996.

The next day, Vickie Lee, who was the HR Lead for

the Dallas metro area (including Las Colinas, where

Hakim was based), directed Rene Edwards, another

member of the Dallas HR department, to forward the

memo to all personnel in the Dallas metro area. She did

so at approximately 4:30 p.m. that day (June 14, 1996).

The email distribution list indicates that it was sent to

“Las.Colinas.Personnell.All.AC,” among others. While

Hakim was an employee in the Las Colinas office at

this time, he disputes ever receiving the memo. At

least two other employees in the Las Colinas office

did receive this email.

The memorandum stated, in relevant part:

Retirement Eligibility

Retirement benefit plans for personnel in Practice

Management (PM), Business Process Management

(BPM), and for associate partners and position-based

No. 11-3438 5

business unit personnel will remain unchanged.

Effective July 1, 1996, personnel in Process, Change

Management, Strategy, and Technology in the Con-

sulting and Solution Center, Business Integration

Providers, and Americas Information and Technology

Support (AI&TS) organizations will not be eligible

for retirement plan benefits. If, at any time, a retire-

ment eligible employee transfers to a non-eligible

group, as described above, s/he will remain a plan

member but will become inactive. Only those years

accrued as an active member qualify as benefit

service for the employee. (Employees continue to

accrue vesting service even as inactive members.)

The memorandum also explained that pension-eligible

employees hired prior to July 1, 1996, would continue

accruing credit unless and until they transferred to a non-

eligible position. Hakim thus continued to accrue

benefits under the Plan.

In 1997, 1999, and 2001, the company issued Sum-

mary Plan Descriptions to all personnel that sum-

marized changes to the Plan, and those Summaries all

noted, in relevant part, that employees who transfer or

are promoted to ineligible service lines cease accruing

additional benefits under the Plan. In 1999, the com-

pany created an online Benefits Information Database

and emailed all personnel with instructions on how

to view the Plan Descriptions online.

Also in 1999, Hakim was promoted to a new service

line. Hakim sought and received the promotion begin-

ning in the summer of 1999. Hakim testified that he

6 No. 11-3438

had contacted a supervisor around that time and began

negotiating the terms of the promotion, and then

began performing his new duties in September 1999.

The promotion officially took effect, however, on

December 16, 1999. Hakim’s new position was Man-

ager in the Communications and High-Tech Global Mar-

kets/Networks service line and he eventually rose to

the position of Senior Manager in that line. As a Senior

Manager, he was responsible for selling and delivering

client solutions and was required to review and create

client proposals, manage the delivery of work, and pro-

vide subject matter expertise to the company as a whole.

It is undisputed that Hakim’s new service line was

an ineligible line under the 1996 Amendment to the

Plan, and therefore he ceased accruing additional bene-

fits under the Plan in December 1999. In June 2000,

Hakim received a packet via mail that laid out his full

benefits package and compensation in comprehensive

detail. In addition to describing his current salary and

other benefits, the packet discussed Hakim’s retirement

situation. On the top of Page 3 of the packet, it read:

The Retirement Plan

Because of your current employment classification,

you are ineligible to participate in the Retirement

Plan. However, you have earned a monthly benefit

based on your prior period(s) as an eligible employee.

Contact the Andersen Consulting Benefits Informa-

tion Center and select the Retirement Plan option

if you would like more information.

The packet provided a calculation of Hakim’s projected

monthly income in retirement if he were to remain with

No. 11-3438 7

the company until he reached the age of 62, and also

described his total annual compensation (which, as of

June 2000, was $177,961). Hakim does not dispute that

he received this benefits statement.

In May 2003, Hakim was terminated by Accenture

due to a workforce reduction. All employees affected by

the reduction, including Hakim, were offered a Separa-

tion Benefits package in exchange for signing a Release

Agreement (“Release”). Hakim opted to accept the Sep-

aration Benefits and signed the Release on May 15,

2003. The Release stated, in relevant part:

As a material inducement to Accenture to enter

into this Agreement and as part of the consideration

for the Separation Benefits offered to you, to which

you agree you are not otherwise entitled, you

hereby forever release, waive, and discharge Accen-

ture LLP . . . from any and all claims of any nature

whatsoever, known or unknown which you now

have, or at any time may have had, against the Re-

leased Parties up to and including the date you

sign this Agreement (“Claims”). This General Re-

lease of Claims includes, without limitation, any

Claims related to your employment, your activities

on behalf of Accenture and its predecessors, parent,

subsidiaries, divisions and affiliates, the termination

and layoff of your employment, Claims of wrongful

discharge, Claims for the payment of any salary,

wages, bonuses and commissions, Claims of discrimi-

nation under the common law or any federal or

state statute . . ., and all other statutory, common

8 No. 11-3438

law or other Claims of any nature whatsoever.

This General Release of Claims does not apply to

any Claims concerning breach of this Agreement or

any Claims arising after you sign this Agreement.

...

You are advised to review this Agreement with

an attorney of your choice before signing this Agree-

ment. In any event, you should thoroughly review

and understand the effect of this agreement and its

General Release of Claims before taking action

upon them.

...

By signing this Agreement, you have and acknowl-

edge that you have carefully read and fully

understand all of its provisions and that you are

voluntarily entering into this Agreement. By signing

this Agreement you agree and acknowledge that

you have not relied upon any promise, inducement,

representation or statement, whether oral or in

writing, made by Accenture or Accenture’s agents,

representatives or attorneys with regard to this

subject matter, basis, or effect of this Agreement,

except as expressly set forth in this Agreement.

Hakim testified that he understood the terms of the

Release and signed it knowingly and voluntarily,

but did not consult with an attorney prior to signing it.

In July 2003, Hakim received a final statement of

benefits from Accenture which again showed that he

had stopped accruing pension benefits under the Plan

in December 1999.

No. 11-3438 9

On July 27, 2007, after meeting with his financial

advisor, Hakim brought an administrative claim for

additional pension benefits, and Accenture’s Benefit

Claims Committee denied the claim in November 2007.

Hakim appealed the Committee’s decision, but Accenture

denied his appeal in April 2008. Hakim then sought

relief in the district court. His claim for additional

benefits centered on his contention that Accenture

violated certain provisions of ERISA. His first, second,

and fourth counts sought additional benefits based on

a lack of notice of the 1996 Amendment to the Plan in

violation of ERISA’s notice provision, Section 204(h),

29 U.S.C. § 1054(h) (1996), which requires that the plan

administrator provide adequate notice of any amend-

ments to a plan that result in a “significant reduction in

the rate of future benefit accrual.” His third count

sought additional benefits based on a failure of the

Plan’s Summary Plan Descriptions to provide an under-

standable description of eligibility for participation in

the Plan. His fifth count alleged that certain of the

Plan Descriptions failed to set forth Hakim’s ERISA

rights and claim procedures. Accenture moved to

dismiss the complaint, and the district court granted the

motion with respect to Counts I-III, and also dismissed

part of Count V. Those Counts are not at issue on appeal.

Hakim and Accenture both moved for summary judg-

ment for the remaining claims on Counts IV and V. On

August 16, 2010, the district court granted summary

judgment in favor of Accenture on Count V and dis-

missed most of the defendants to Count IV, leaving only

the Plan itself as a defendant. The district court then

10 No. 11-3438

denied both parties’ summary judgment motions per-

taining to Count IV against the Plan. With regard to the

defendant’s motion for summary judgment, the district

court held that Hakim’s claim was for a “pension entitle-

ment” and that the Release he signed did not bar his

suit per ERISA’s anti-alienation provision. With regard

to Hakim’s motion, the district court ruled that the

email notice of the 1996 Amendment was not a per se

unlawful method of delivering notice of changes to

the Plan in 1996 and that there existed a question of

fact about whether the email satisfied the requirements

of Section 204(h).

Before the case could proceed to trial, we decided

Howell v. Motorola, Inc., 633 F.3d 552 (7th Cir. 2011),

in which we held that a Release similar to Hakim’s

barred the plaintiff’s ERISA claim for additional pension

benefits. Accenture moved for reconsideration, and

on September 29, 2011, the district court granted Ac-

centure’s motion and dismissed Hakim’s only re-

maining claim. The district court ruled that, based on

Howell, ERISA’s anti-alienation provision did not apply

and Hakim’s claim was barred by the Release he signed.

The district court’s conclusion centered on the fact that

Hakim had constructive notice of his claim at the time

he signed his release. Hakim now appeals. We agree

with the district court that Hakim had, at the very

least, constructive notice of his claim and that the

Release he signed bars his claim, and we affirm.

No. 11-3438 11

II. Discussion

We review an appeal from a district court’s grant

of summary judgment de novo. Jajeh v. Cnty. of Cook,

678 F.3d 560, 566 (7th Cir. 2012). Summary judgment is

appropriate when the pleadings, depositions, answers

to interrogatories, and admissions on file, together with

the affidavits, if any, show that there is no genuine

issue as to any material fact and that the moving party

is entitled to summary judgment as a matter of law. Fed.

R. Civ. P. 56(c). We construe all facts and draw all rea-

sonable inferences in favor of the nonmoving party.

Foley v. City of Lafayette, 359 F.3d 925, 928 (7th Cir.

2004). The party opposing the motion for summary judg-

ment must “submit evidentiary materials that set forth

specific facts showing that there is a genuine issue for

trial.” Siegel v. Shell Oil Co., 612 F.3d 932, 937 (7th Cir.

2010) (citations omitted). “The nonmoving party must do

more than simply show that there is some metaphysical

doubt as to the material facts.” Id. Summary judgment

is properly entered against a party “who fails to make

a showing sufficient to establish the existence of an

element essential to the party’s case, and on which that

party will bear the burden of proof at trial.” Parent v.

Home Depot U.S.A., Inc., 694 F.3d 919, 922 (7th Cir. 2012)

(internal quotations omitted).

The central issue on appeal is whether the Release

Hakim signed when he parted ways with Accenture in

2003 bars his present claim. The Release purported to

cover “any and all claims of any nature whatsoever,

known or unknown, which you now have, or at any

12 No. 11-3438

time may have had” against Accenture and its subsidi-

aries. Accenture argues that the Release completely

bars Hakim’s claim; Hakim contends that the Release

does not bar his claim for two reasons: (1) ERISA’s anti-

alienation provision prohibits the release of ERISA

claims through a general release, and (2) his claim for

additional pension benefits under the Plan did not

accrue until Accenture denied his administrative claim

for those benefits in April 2008, and thus arose after

the time period covered by the Release.

We begin with Hakim’s first argument. ERISA’s anti-

alienation provision states that “[e]ach pension plan

shall provide that benefits provided under the plan

may not be assigned or alienated.” 29 U.S.C. § 1056(d)(1).

We have held, however, that pension entitlements are

subject to the anti-alienation provision and cannot be

alienated, but contested pension claims fall outside the

realm of the provision and can be alienated. See Lynn

v. CSX Transp., 84 F.3d 970, 975 (7th Cir. 1996). The dis-

tinction is crucial because if the benefit Hakim is

seeking is a pension entitlement, the anti-alienation

provision effectively nullifies the Release he signed, at

least with regard to the entitlement. If, however,

Hakim’s suit is not for an entitlement, but rather a claim

for additional benefits to which he is not entitled under

the terms of the Plan itself, the anti-alienation provi-

sion does not apply, and the question becomes whether

the Release bars this claim.

Pension entitlements are, without exception, subject

to the anti-alienation provision of ERISA. See Patterson

No. 11-3438 13

v. Shumate, 504 U.S. 753, 760 (1992). A pension entitle-

ment arises under the terms of the pension plan itself.

Lynn, 84 F.3d at 975. In other words, an entitlement, as

its name would suggest, refers to vested benefits to

which a plaintiff is entitled under the terms of the

pension plan itself. In Lynn, the plaintiff sought “to

protect military service benefits to which he believe[d]

he [was] entitled to under the terms of the plan.” Id. at

977. We held that the plaintiff was “asking the court

to interpret the pension plan itself” and thus the plain-

tiff’s suit involved a pension entitlement, which sub-

jected it to the anti-alienation provision. Id.

Contested pension claims, however, are “simply

outside the realm of the [anti-alienation] provision.” Id.

at 975. We have previously explained that a contested

claim is one that “the claimant had actual or construc-

tive knowledge of . . . at the time of the signing of the

release,” such “that it could have been contested and

resolved at the time the release was entered into (but

was not).” Id. A contested claim does not seek benefits

to which the plaintiff believes he is entitled under

the terms of the pension plan itself, but rather for addi-

tional benefits above and beyond the benefits to which

he was entitled under the terms of the plan. For example,

a plaintiff might, like Hakim, claim that he deserves

more benefits than he accrued under the terms of the

plan on the grounds that the plan administrator failed

to provide adequate notice of a reduction in benefits

or that the plan administrator somehow violated his

fiduciary duty. Such claims could be resolved before

a plaintiff signs a release of those claims, and this is

14 No. 11-3438

critical because general releases of claims are valid as

long as the signing party has actual knowledge of the

claims (or could have discovered those claims with a

reasonable inquiry) he or she is giving up. Fair v. Int’l

Flavors & Fragrances, 905 F.2d 1114, 1116 (7th Cir. 1990).

Hakim’s suit is a contested pension claim, not an en-

titlement suit. Hakim contests how his benefits

(namely, the amount of money he will receive each

month from his pension) were calculated. His suit

centers on his argument that, because the Accenture

failed to provide adequate notice of the 1996 Amend-

ment to the Plan, he did not receive information in-

dicating that he and his employer calculated his

defined benefits differently until long after he signed

the Release. In other words, he claims he did not know

that Accenture had calculated his benefits differently

than he originally expected. He says he never received

notice that his promotion placed him in a position

where he was no longer eligible to participate in the

Plan until he discovered the deficiency five years after

he signed the Release, and is therefore entitled to addi-

tional benefits. Unlike the plaintiff in Lynn, he is not

asking us to interpret the Plan itself—indeed, the Plan

is quite clear: Hakim accrued pension benefits under

the Plan until he was promoted to a position in which

he was no longer eligible to participate in the Plan.

He continues to be eligible to receive those vested

benefits that accrued prior to his promotion in Decem-

ber 1999. As we have previously held:

The basic point is that the release released the defen-

dants from liability based on contestable pension

No. 11-3438 15

claims. . . . [T]he release did not wipe out [the plain-

tiff’s] claims to any pension benefits to which the

plan entitled him. If the release were thought

broad enough to wipe out actual pension entitle-

ments, its enforceability would be questionable in

light of ERISA’s provision forbidding the aliena-

tion of pension benefits. For then it might be a case

of [the plaintiff] having “sold” his pension rights,

in exchange for [his severance package] and any

other consideration in the omnibus agreement.

Licciardi v. Kropp Forge Div. Emps’ Ret. Plan, 990 F.2d 979,

982 (7th Cir. 1993). Thus, as the district court correctly

held, “a release cannot bar a plaintiff’s recovery of his

pension as it stood when he signed a release, but it can

bar claims that a plaintiff is entitled to additional

benefits based on purported ERISA violations, provided

that the plaintiff had actual or constructive notice

of the claims at the time that he executed the release.”

Hakim v. Accenture U.S. Pension Plan, 818 F. Supp. 2d.

1075, 1080 (N.D. Ill. 2011).

Hakim did not “sell” or barter away his pension

benefits in exchange for his severance package because

he will still receive those entitled benefits he accrued

while working in an eligible service line at Accenture.

He is not suing to recover money that was in the retire-

ment account at the time he left his employer, which

the plaintiff in Lynn was doing. Instead, he wants the

court to rule that his retirement account would have

been worth more had Accenture not violated ERISA’s

notice provision by providing inadequate notice of the

16 No. 11-3438

1996 Amendment. This is similar to the relief the

plaintiff was seeking in Howell v. Motorola, Inc., 633 F.3d

552 (7th Cir. 2011). In Howell, we considered whether a

general release signed by one of the plaintiffs effectively

waived his claim for breach of fiduciary duty under

ERISA Section 502(a)(2), and held that it did. Id. at 558-

560. We determined that the plaintiff had a right to

his benefits and they could not be confiscated, but he

waived any right to bring a lawsuit claiming that

his account would have been worth more had the de-

fendants not breached a fiduciary duty. Id. Thus, as in

Howell, Hakim’s claim is a contested pension claim, and

ERISA’s anti-alienation provision does not apply to it.

Now we must determine whether Hakim had actual

or constructive notice of the claim he now makes at

the time he signed the Release in 2003. The Release only

bars claims that existed prior to the date Hakim signed

it, and Hakim contends that his claim for benefits did

not accrue until Accenture denied his administrative

claim in April 2008. However, for purposes of Section

204(h) claims, courts have held that a claim accrues

when a plaintiff became aware or should have be-

come aware of a change in a plan that affected his

right to continue to participate in the plan. See Romero

v. Allstate Corp., 404 F.3d 212, 225 (3d Cir. 2005) (holding

that claims arising under Section 204(h) accrue when

a plaintiff “knew or should have known that the amend-

ment has brought about a clear repudiation of certain

rights that [the plaintiff] believe[s] [he] had under

the plan.”).

No. 11-3438 17

Even if the email distributed on June 14, 1996, was

insufficient to apprise Hakim of the amendment to

the Plan (and we need not consider that question here),

the absolute latest he can reasonably claim to be

unaware of his changed status is when he received his

Statement of Individual Benefits in 2000. That document

clearly informed him that his promotion terminated

his participation in the Plan. Page 3 of the document

states: “Because of your current employment classifica-

tion, you are ineligible to participate in the Retirement

Plan.” This language is not highly technical, nor is it

buried deep in a document. It occurs on the third page

of a document that described Hakim’s compensation

package, and it lays out in plain language that Hakim

was no longer eligible to participate in the Plan due to

his new position. It is difficult to imagine a more

effective means of providing notice that an employee is

no longer eligible to participate in Accenture’s retire-

ment plan. While Hakim continues to claim he had

no knowledge that his promotion left him ineligible to

continue participating in the Plan, the benefits state-

ment makes it clear that, at the very least, he should

have known about his claim well before he signed

the Release in 2003. This more than satisfies Romero’s

constructive notice requirement. See id. at 225.

Having decided that Hakim had, at the least, construc-

tive notice of his claim, the last question we must

consider is whether Hakim’s Release of claims against

Accenture was valid.

For a release to be valid, the party must sign it know-

ingly and voluntarily. A court must examine the

18 No. 11-3438

totality of the circumstances surrounding the signa-

ture, including such matters as: (1) the employee’s

education and business experience; (2) the em-

ployee’s input in negotiating the terms of the settle-

ment; (3) the clarity of the agreement; (4) the amount

of time the employee had for deliberation before

signing the release; (5) whether the employee

actually read the release and considered its terms

before signing it; (6) whether the employee was repre-

sented by counsel or consulted with an attorney;

(7) whether the consideration given in exchange for

the waiver exceeded the benefits to which the em-

ployee was already entitled by contract or law; and

(8) whether the employee’s release was induced

by improper conduct on the defendant’s part.

Howell, 633 F.3d at 559 (citing Pierce v. Atchison, Topeka, &

Santa Fe Ry. Co., 65 F.3d 562, 571 (7th Cir. 1995)).

Hakim admitted that he read the Release in full and

signed it knowingly and voluntarily. Given Hakim’s

education level and considerable professional achieve-

ments, we cannot say that he lacked the sophistication

to understand what he was reading and giving up in

exchange for his severance package. The Release was

not overly technical, nor was it excessively lengthy—it

clocked in at seven pages and clearly laid out what

Hakim was giving up. While he did not consult with

an attorney, the Release advised him to do so and he

chose not to. And while he did not negotiate the terms

of the Release, there is no evidence that a rational

person could not have deemed the amount of that

No. 11-3438 19

payment adequate compensation for the rights he was

giving up. Like the plaintiff in Howell, Hakim fails to

put forth sufficient evidence “to create a genuine

issue of fact on the questions of knowledge and volun-

tariness,” and summary judgment in favor of Accenture

was appropriate. Id.

III. Conclusion

For the reasons set forth above, the Release Hakim

signed in exchange for separation benefits is valid and

bars him from raising his Section 204(h) claim. The

district court’s order granting summary judgment in

favor of Accenture is A FFIRMED.

5-23-13