# Petition for Writ of Certiorari — Long Island Jewish Medical Center v. Schonholz > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386004_1527%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1996 - **Citation:** 519 U.S. 1008 ## Text Supreme GOourt, U.> FILED 96 485 SEP 2 419% Nq@PRMR O§ INE CLEAR IN THE Supreme Court of the United States OCTOBER TERM, 1996 LONG ISLAND JEWISH MEDICAL CENTER, Petitioner, VS. GLENISS S. SCHONHOLZ, Respondent. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT PETITION FOR A WRIT OF CERTIORARI CHARLES G. MOERDLER Counsel of Record ALBERT M. APPEL BURTON N. LIPSHIE JAMES M. MCGOVERN STROOCK & STROOCK & LAVAN Seven Hanover Square New York, New York 10004 (212) 806-5400 Counsel for Petitioner QUESTIONS PRESENTED 1. Whether an employer’s undertaking to provide severance benefits to a limited number of senior executives -- an undertaking that neither required nor resulted in the establishment of an “ongoing administrative program” of any kind -- constituted an ERISA “plan” simply because the exercise of discretion might be implicated in determining whether or not to extend benefits to an individual employee, an issue as to which the circuits have expressed confusion and disagreement with respect to the interpretation of this Court's decision in Fort Halifax Packing Company v. Coyne, 482 U.S. 1 (1987). 2. Whether a federal court may create a federal common law remedy based on promissory estoppel to create a claim to benefits under ERISA where, by its terms, ERISA would otherwise not be applicable, an issue as to which the circuits are in conflict. ee RULE 29.1 STATEMENT Petitioner is a New York not-for-profit corporation, which has no parent company. It has one subsidiary, Transitions of Long Island, Inc., a New York Corporation. iii TABLE OF CONTENTS Page QUESTIONS PRESENTED.............0.ccccccccssssscsesesseess i SURPEME AN SPEER EINE cnscenssecesconscaracscasoveseccosscees ii DPBS CE PUTT EIT oo xecsescescsssnesoscscnsesevecsseces \ a I asin si csshadicnechewseonesennons l I ola, 2 cnaininantnbaciachacedacoonsuan 2 STATUTORY PROVISIONS INVOLVED.............. 2 SLATEMENT OF THE CASE. ..............cccccceccsccesssss: 3 The Severance Memorandum.....................0.00000-«- 4 Schonholz’ Termination.................ccccc.ccc0ceeeeeeeeee0e. 5 The LIJ Board Learns of the May 3 Memorandum 7 ih EAE STE Ni Ra ee 8 REASONS FOR GRANTING THE PETITION....... 1] I. Review of This Case is Necessary to Correct the Second Circuit’s Misconstruction of the Fort Halifax Test and to Provide Much Needed Clarification to the Circuits .............. 12 II. Review of the Second Circuit’s Decision is Necessary to Resolve a Split in the Circuits on the Issue of Whether a Federal Common Law Cause of Action for Promissory Estoppel Exists Under ERISA .............0.0000000. 18 cilia iia hislccasiunirinidanianasensemabecin 26 v TABLE OF AUTHORITIES Cases: Page Ackner v. Lenox, Inc),-782-F. Supp. 267 (S.D.N.Y. PPR vsioeasiseienieteiignstedisnedinptk aaabiiiiidiabadibaitatdetiyiadsicntaei: 14 Alday v. Container Corp. of America, 906 F.2d 660 (11th Cir. 1990), cert. denied, 498 U.S. 1026 {2} SRERE ERNE HEN MRE ESR CON 5 Se eee ate 19, 21 Angst v. Mack Trucks, 969 F.2d 1530 (3d Cir. 1992) 14, 16 Armistead v. Vernitron Corp., 944 F.2d 1287 (6th Ss IPI D vesclaniendipatcndehidcehsaviamselilihtebtantaiinsieartiaddiahsciashie 23 Belanger v. Wyman-Gordon Company, 71 F.3d 451 lg Se son ihckaieshcacicbadndihiinhahaidaaaebtenknannies 14, 16 Bogue v. Ampex Corp., 976 F.2d 1319 (9th Cir. 1992), cert. denied, 507 U.S. 1031 (1993) ............ 14, 15 DeVoll v. Burdick Painting, Inc., 35 F.3d 408 (9th Cir. 1994), cert. denied, 115 S. Ct. 1381 (1995)... 19, 20 Degan v. Ford Motor Company, 869 F.2d 889 (Sth CPR Si iisitiecs sctiestcsenvcenivindonabicealacniaetinnensiniinnense 19, 20, 21 Delaye v. Agripac, Inc., 39 F.3d 235 (9th Cir. 1994), cert. denied, 115 S.Ct 1402 (1995)............. 14, 16 Firestone Tire & Rubber Co. v. Bruch, 489 U.S. RE Cb Pe Packsibsssasaitnstcottinsssebdepmdasideddemsstecicanceinels 19, 22 Fontenot v. NL Industries, 953 F.2d 960 (Sth Cir. ESD sccisseiileetcclrs adeinaNedeabnnaniscnticennsbeescsactanieak niall 14 Fort Halifax Packing Company v. Coyne, 482 U.S. BEIT bi citalincniipitncscitntesistailicheebinisiatagiemieniinlinnsdaioncsic passim In re Unisys Corp. Retiree Medical Benefit “ERISA ” Litigation, 58 F.3d 896 (3d Cir. 1995) .. 22 Ingersoll-Rand Co. v. McClendon, 498 U.S. 133 SITU Bick vicskicksiacssciciticneiseseclabiuasehsvumdioeche hoabeotciis ah hliciateciiin 24 vi Cases: James v. Fleet/Norstar Fin Group, Inc., 992 F.2d GS COR Cae NE tisticiisersaciesbiceaneiianaiiaaeneniinn Kane v. Aetna Life Ins., 893 F.2d 1283 (1 ith Cir. 1990), cert. denied, 498 U.S. 890 (1990) .............. Kulinski v. Medtronics Bio-Medicus, Inc., 21 F.3d a CR CG BOD Giisticcasvcehestthasinssubdvutideerasatnlonite Law v. Ernst & Young, 956 F.2d 364 (ist Cir. 1992) Lee v. Burkhart, 991 F.2d 1004 (2d Cir. 1993) ......... Massachusetts Mut. Life Ins. Co. v. Russell, 473 RJotie 2a (0 ele Dincacincsssascndienssenssesnmiaeiionagelaeinnmraiincsis Mertens v, Hewitt Assocs., 508 U.S. 248 (1993)....... Miller v. Coastal Corp., 978 F.2d 622 (10th Cir. 1992), cert. denied, 507 U.S. 987 (1993) .............. Miller v. Taylor Insulation Co., 39 F.3d 755 (7th OOP, RE csseniscdincinarsadp sivtatenadiemaabshehaumbieneaine Mullins v. Pfizer, 23 F.3d 663 (2d Cir. 1994)............ Olson v. General Dynamics Corp., 960 F.2d 1418 (9th Cir. 1991), cert. denied, 504 U.S. 986 (1992) Pane v. RCA Corporation, 667 F. Supp. 168 (D.N.J. 1987), aff'd, 868 F.2d 631 (3d Cir. 1989) ............. Pane v. RCA Corporation, 868 F.2d 631 (3d Cir. EDP) vcesisnciisdansicebianvahantaacsidiaiaiaasibdlabseighiahasbaobcitiniois Schonholz v. Long Island Jewish Medical Center, 858 F. Supp. 350 (E.D.N.Y. 1994) oo. eceeseeee Schonholz v. Long Island Jewish Medical Center, 889 F. Supp. 610 (E.D.N.Y. 1995) 0... Schonholz v. Long Island Jewish Medical Center, FE CO 7a COR Gale TROD Vnikcinencitacpinniniinss 15 2,9 2 | 7 j ee Vii Cases: Page Simas v. Quaker Fabric Corp., 6 F.3d 849 (1st Cir. 2) BRSRE REIS aI EGY seater (RE ERR 14, 15, 16 Singer v. Black & Decker Corp., 964 F.2d 1449 (4th SiN UTI us Goeschnaensaceibsneceissicabeitapiisiiaummelinsiatcncsdinnas 25 Slice v. Sons of Norway, 34 F.3d 630 (8th Cir. 1994) 21 Straub v. Western Union Telegraph Co., 851 F.2d SE II GaN UTED cacishanicscananaslicapieptiatsuansbieckon 21 Statutes: AE Ue CED Stason sothavicideneiniisineiccdnsnteictdienhbaiibhacee 2 IE BB ciialicedntckccnsasinsssentetibideteninbisstraciunnsaes 4,8 Oe ad EO IO 5s ccs setdichssecniniiniacienennbesaiins 3 29 U.S.C. §§ 1021-1025, 1102-1105, 1109.00.00... 17 Fe is Be 6 IEE Pbstisiniccrncncecnesictesenpanichieanniseinns 2,19 eae TE A RITE TD passhscnsesthctssessasonussicitioiancanceniees 2, 19 SUR EWE IR cis taccscdecnts gsanen otoaphaceiacnbedanasdoesicaas 4,8 Fe EE Te iithiicitiarcesendsnnniticcodecniiceinanvinds 18 Se EE BO hiniebicschictupabcidinsibcsenichosinhcisbiasinpninan 17 Be SIs ARI sieves oskhtcdavsbabartiscisctidas canvases a ae — Retirement Income Security Act, 88 Stat. : No. IN THE Supreme Court of the United States OCTOBER TERM, 1996 LONG ISLAND JEWISH MEDICAL CENTER, Petitioner, vs. GLENISS S. SCHONHOLZ, Respondent. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT PETITION FOR A WRIT OF CERTIORARI Long Island Jewish Medical Center (“LIS”) respectfully petitions that a writ of certiorari issue to review the judgment of the United States Court of Appeals for the Second Circuit. OPINIONS BELOW The opinion and order of the Court of Appeals for the Sec- ond Circuit is reported at Schonholz v. Long Island Jewish Medical Center, 87 F.3d 72 (2d Cir. 1996), and reproduced at pages A-1 to A-15 of the accompanying Appendix. The opinion and order of the District Court for the Eastern District of New York, granting LIJ’s motion for summary judgment, is reported at 889 F. Supp. 610 (E.D.N.Y. 1994), and is re- produced at pages A-16 to A-23 of the Appendix. The opinion and order of the District Court for the Eastern District of New York, denying in part and granting in part LIJ’s motion to dismiss, is reported at 858 F. Supp. 350 (E.D.N.Y. 1994), and is reproduced at pages A-24 to A-32 of the Appendix. JURISDICTION The Court of Appeals entered its judgment on June 26, 1996. A-33 to A-34. The jurisdiction of this Court is invoked under 28 U.S.C. § 1254(1). STATUTORY PROVISIONS INVOLVED 29 U.S.C. § 1144(a) provides, in relevant part: Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title. 29 U.S.C. § 1102(a)(1) provides: (1) Every employee benefit plan shall be established and maintained pursuant to a written instrument. Such instrument shall provide for one or more named fiduciaries who jointly or severally shall have authority to control and manage the operation and administration of the plan. 29 U.S.C. § 1102(6)(3) provides, in relevant part: Every employee benefit plan shall -- > * * (3) provide a procedure for amending such plan, and for identifying the persons who have authority to amend the plan. 3 STATEMENT OF THE CASE Following declaration of his intention to retire, the Presi- dent of LIJ, Dr. Robert Match, issued a two-page memoran- dum awarding generous “golden parachute” severance benefits to his Chief Operating Officer, plaintiff-respondent Gleniss Schonholz, in the event her at-will employment was later terminated for reasons other than cause.’ A-35-37. Though the two-page Severance Memorandum stated that seven other members of Match’s inner management circle fell within its ambit, only Ms. Schonholz, who had reviewed the Memorandum prior to its issuance, claims to have benefitted thereunder. By its terms, the Memorandum granted specified benefits for a specified term. The Severance Memorandum was not submitted to LIJ’s Board of Trustees for review, much less approval. R. 453, 484-86, 502. Indeed, it did not come to the Board’s attention until after Dr. Match and Ms. Schonholz exchanged letters requesting and submitting her resignation. R. 1429-31. Sig- nificantly, at that point in time, Ms. Schonholz had already requested an executive search firm to find her another posi- tion, even including one in another field. A-38. The LIJ Board, upon finally learning of the Severance Memorandum, and prior to the effective date of Ms. ' The factual statement largely presupposes the facts are as asserted by plaintiff-respondent. For convenience, “LIJ” refers to the petitioner- defendant, Long Island Jewish Medical Center. The term “ERISA” refers to the Employee Retirement Income Security Act, 88 Stat. 832, as amended, 29 U.S.C. § 1001, et seg. The “Severance Pay Memorandum,” “Severance Memorandum,” or “Program” all refer to the alleged sever- ance arrangement at issue herein, purported to have been estabiished in the May 3, 1991 memorandum to the members of the President’s Council from Dr. Match. The “May 3 Memorandum” refers to that same May 3, 1991 memorandum. * Citations to the accompanying appendix will take the form “A. ” Ci tations to the joint appendix that constituted the record before the Court of Appeals will take the form “R.__.” 4 Schonholz’ resignation, immediately reyoked the Memoran- dum as unauthorized. R. 352-62, 633-34." Ms. Schonholz was employed by LIJ from 1980 until April 1, 1993. R. 25-26. From 1987 until April 1, 1993, Ms. Schon- holz was a Senior Vice-President and Chief Operating Officer of LIJ. Jd. Schonholz was also a member of LIJ’s “President’s Council,” a body established by Dr. Match, consisting of Dr. Match and his eight most senior managers. /d., R. 883. Prior to this litigation, when a senior manager was involun- tarily terminated by LIJ, LIJ would decide what benefits, if any, the manager would receive on a discretionary, ad hoc basis. The discretionary decision as to whether to grant a senior manager any benefits upon involuntary termination, and in what amount, rested, ultimately, with Dr. Match. R. 1090-92, 743-44. The Severance Memorandum In early 1991, Dr. Match was importuned by his inner cir- cle either to develop employment contracts for them or to institute a severance policy because “they were concerned about the possibility that if they were asked to leave, they had no protection whatsoever....” R. 447. On or about May 3, 1991, following review by Ms. Schonholz, Dr. Match circu- lated a two-page internal memorandum -- prominently la- belled as “Confidential” -- to the members of the President’s Council. A-35-37. The May 3 Memorandum purported to establish a “severance pay program” for the eight officials, including Ms. Schonholz, to whom the Memorandum was sent. Dr. Match never forwarded a copy of the May 3 Memorandum or > The sole ground for federal court subject matter jurisdiction alleged by plaintiff-respondent is jurisdiction through ERISA, pursuant to 29 U.S.C. § 1132 and 28 U.S.C. § 1331. The jurisdictional issue is central to this Petition, as LIJ contends that the Second Circuit erred in finding an “ERISA plan” and, as a consequence, federal court jurisdiction existed. i 7 “ ; £ y a j a A, A Ale A iat Salt x Alle Ns An. ig 5 disclosed its contents to the LIJ Board of Trustees. R. 453. 484-86, 502. The May 3 Memorandum provided, in pertinent part: Under the terms of this program, any member of the President’s Council who is involuntarily terminated or removed from his position, for other than illegal conduct or for substantially deficient performance which is detrimental to LIJ, shall be entitled to re- ceive his regular weekly salary, in effect as of the day before his termination for the specified period of time outlined below .... A-35. The May 3 Memorandum included a table indicating the amount of severance an employee would receive based on years of service. For example, an employee with more than ten years of experience would receive one year of severance, plus an additional six months if the employee could not find employment commensurate with his or her former position within one year, provided the employee had made a good faith effort to find such employment. LIJ took no steps toward establishing any administrative mechanism related to the severance policy as articulated in the May 3 Memorandum. No funds were set aside, no finan- cial projections were made, no filings were prepared or made and no procedures were established for monitoring the avail- ability of funds or for handling potential claims. From an administrative perspective, there was no change from the prior, unwritten, purely ad hoc approach. R. 1387-1389, 477- 79. Schonholz' Termination Dr. Match and Ms. Schonholz have testified that some time before December 18, 1992, Ms. Schonholz was informed of Dr. Match’s intention to request her resignation effective April 1, 1993. Jd, R. 565-67, 1049-50. When a high level LIJ administrator was fired, it was the usual practice for the em- ployee’s supervisor to inform the employee of the 6 termination, but to allow the employee to submit his or her resignation voluntarily. R. 1136-37. The “resignation” process was followed as an accommodation to the person being ter- minated in order to facilitate the employee’s reemployment efforts. R. 1148-49. By letter dated December 18, 1992 (the “December 18 Letter”), Dr. Match requested Ms. Schonholz’ resignation ef- fective April 1, 1993. A-39. The letter stated that: the terms of your severance will be governed by the LIJ Medical Center personnel policies applicable to members of the President’s Council, including the Severance Pay Program dated May 3, 1991. At your option, the initial twelve months of severance pay may be taken in one lump-sum payment on the day of your termination of [sic] bi-weekly over the twelve months after your termination. Id° By letter dated December 22, 1992, Ms. Schonholz submitted her letter of resignation effective April 1, 1993. R. 125. * Ms. Schonholz has admitted that, notwithstanding the fact that the ad- ministrator was allowed to submit a resignation, at the time the employee was asked to resign, the person would know that he or she was fired. The employee thus lacked the “leverage” to bargain, negotiate or the like -- the termination terms, if any, were a matter of grace. In the words of Ms. Schonholz, once the resignation was requested, “it was over.” Ms. Schonholz testified that she resigned because she had no other choice and because it would make her employment search easier. She did not attempt to bargain or negotiate with Dr. Match, or to in any way to change his mind. The existence of the severance pay program was therefore ir- relevant to her decision to “resign.” R. 1090-1093. * Dr. Match’s December 18 letter offer of a “lump sum payment” to Schonholz is revealing. A-39. The May 3 Memorandum -- the claimed severance plan predicate -- did not so provide; it provided, instead that severance benefits “shall be paid on a biweekly basis ....” A-36. Dr. Match explained that he unilaterally determined to vary the May 3 Memorandum to conform to what he understood had been done in other (Footnote continued) NR ae 7 Significantly, however, even before the conversation be- tween Ms. Schonholz and Dr. Match and their exchange of resignation letters, Ms. Schonholz had been in communication with an executive search firm soliciting its assistance in find- ing a new job. A-38. Stating that she had already determined to leave LIJ, Ms. Schonholz expressed her willingness to consider employment even in an unrelated field. Jd The LIJ Board Learzs of the May ? Memorandum Almost two years after issuance of the Severance Memo- randum and some three months after the resignation letter ex- change between Dr. Match and Ms. Schonholz, in March 1993, LIJ’s Board of Trustees learned for the first time of the May 3 Memorandum (R. 1429-31), as well as the December 1992 exchange of correspondence between Dr. Match and Schonholz (R. 627). At its next regular meeting -- on March 23, 1993 -- the LIJ Board was presented with and considered the May 3 Memorandum. R. 1431. The Trustees, who were shocked to learn of the existence of the purported severance program and the December exchange of correspondence be- tween Ms. Schonholz and Dr. Match (R. 1429), adopted, by an overwhelming vote, a resolution declaring the May 3 Memorandum null and void, and revoking it as unauthorized and invalid. R. 352-62, 633-34.° Ms. Schonholz received notice, both orally and in writing, of the revocation from Dr. Match prior to her termination. R. instances (involving the ad hoc procedures, individuals and events pre- dating the May 3 Memorandum). R. 622-24. * The minutes of that March 23 meeting indicate, that, after considerable discussion: [uJpon motion duly made, seconded and adopted, the Board declared that the purported May 1991 severance pay policy for members of the President’s Council is declared invalid, null and void and never to have been effective... R. 361. 1179-80, 635-636, 1202-03.’ Having revoked the purported severance program on March 23, 1993, the Board indicated that it would evaluate to what extent and under what circum- stances Ms. Schonholz would be provided any severance benefits in a fashion similar to prior (and subsequent) termi- nation cases (i.e., on a discretionary case-by-case basis, with the discretion being exercised by the Board’s Compensation Committee or a Committee drawn largely therefrom). R. 721, 417. History of the Action On or about June 11, 1993, Ms. Schonholz commenced this action against LIJ and various individual defendants who served as uncompensated members of LIJ’s Board of Trus- tees, alleging jurisdiction under 28 U.S.C. § 1331 and 29 U.S.C. § 1132. R. 32-40. Ms. Schonholz sought to recover from LIJ and the individual defendants severance benefits al- legedly due her, as well as punitive damages and attorneys’ fees. Thereafter, in addition to this litigation, Schonholz also commenced proceedings against LIJ before the U.S. Equal Employment Opportunity Commission (Charge No. 60940066) charging age discrimination. That action was dismissed by the Commission on a finding that Ms. Schon- holz had, in fact, resigned. Ms. Schonholz did not appeal or seek review of that determination. ” On March 29, 1993, Dr. Match wrote the following letter to Schonholz and to each of the eight recipients of the May 3 Memorandum: It has recently come to the attention of the Board of Trustees of the Medical Center that a memorandum was circulated to the members of the President’s Council in 1991 which pur- ported to establish a severance pay program for these employ- ees. Please be advised that this severance pay program was never approved or adopted by the Board and is deemed inva- lid and null and void and never to have been effective. The Medical Center will not be bound by its provisions. R. 127. SS eT a en ae 9 On or about July 30, 1993, defendants moved to dismiss the complaint in its entirety, under FRCP Rule 12(b)(6), for failure to state a claim upon which relief may be granted. By memorandum and order dated February 18, 1994, the District Court granted in part and denied in part LIJ’s motion to dis- miss. A-24-32. Ms. Schonholz’ claims against the individual defendants were dismissed with prejudice, as were her claims for punitive damages. The District Court also dismissed the second cause of action (based on estoppel), but granted Ms. Schonholz leave to amend to specify with particularity her reliance claims. Given the state of the pleadings and the scope of a Rule 12(b)(6) motion, the District Court denied the mo- tion to dismiss the first cause of action (the claim to enforce the May 3 Memorandum under ERISA) simply because LIJ’s pleading failed to aver that Ms. Schonholz received notice of the Board’s revocation of the May 3 Memorandum. On or about March 7, 1994, Ms. Schonholz filed the Amended Complaint, which now involved only two parties (Ms. Schonholz and LIJ) and two causes of action (ERISA and estoppel). R. 24-31. On August 30, 1994, LIJ moved for an order granting it summary judgment, dismissing Ms. Schonholz’ claims for lack of subject matter jurisdiction and for failure to state a claim. R. 46-47. On or about September 16, 1994, Ms. Schonholz cross-moved for summary judgment, arguing that all of the facts necessary to decide in her favor had been es- tablished and that she was entitled to summary judgment as a matter of law. R. 56-57. By Memorandum-Decision and Order dated February 3, 1995, Judge Bartels (1) denied LIJ’s motion for summary judgment for lack of subject matter jurisdiction; (2) granted LIJ’s motion for summary judgment for failure to state a claim; (3)denied Schonholz’ cross-motion for summary judgment; and (4) dismissed the action in its entirety. A-16- 23. Judge Bartels granted LIJ’s motion for summary judgment on Ms. Schonholz’ first cause of action under ERISA. He 10 based this decision on the undisputed fact that “LIJ had es- tablished that its revocation of the Program was in writing and plaintiff admits that she had both oral and written notification of the LIJ Board’s revocation of the Program prior to the ef- fective date of her termination.” A-19. In addition, Judge Bartels completely rejected Ms. Schonholz’ bad faith and fi- duciary duty theory, holding that the single case Ms. Schon- holz cited in support of this theory stood “against the weight of authority.” A-19-21. Turning to Ms. Schonholz’ common law claims, Judge Bartels likewise granted LIJ’s summary judgment motion. Judge Bartels rejected Ms. Schonholz’ contractual vesting theory, based on Dr. Match’s letter, on two grounds. First, he held that, “although an employer may establish by contract that certain benefits are vested, it may only do so in formal plan documents,” and “[c]learly Dr. Match’s [December 18, 1992] letter is not a formal plan document.” A-21-22. There- fore, Dr. Match’s letter could not contractually vest the Pro- gram’s benefits. Secondly, Judge Bartels held that “even if the Court were to consider Dr. Match’s letter to be a Plan docu- ment, the letter does not explicitly waive LIJ’s rights to ter- minate benefits.” Jd. Finally, Judge Bartels rejected Ms. Schonholz’ promissory estoppel theory on the ground that she could not demonstrate any detrimental reliance or injury. A-23. The United States Court of Appeals for the Second Circuit affirmed the district court’s finding that the Program consti- tuted an ERISA welfare benefits plan for ERISA pre-emption purposes. A-6. The court, however, reversed the district court’s grant of summary judgment, finding several triable issues of fact existed. Specifically, the court reversed the dis- trict court’s holding regarding the contractual vesting issue and held that the December 18 letter could be found by a trier of fact to constitute a sufficiently formal promise on the part of LIJ to bind LIJ under a contractual vesting theory. The Second Circuit agreed with the district court that a cause of action for promissory estoppel exists under ERISA. 11 A-12. The Second Circuit, however, reversed the district court’s dismissal of the promissory estoppel claim. The court found that, even though Ms. Schonholz was involuntarily terminated, a trier of fact could find that she relied on Dr. Match’s December 18 letter in deciding to resign. The Second Circuit also held that a trier of fact could reasonably find that, by agreeing to resign, Ms. Schonholz forfeited something, and, as a result, was injured by virtue of her reliance. Accord- ingly, the Second Circuit remanded the case to the district court. Thus, the Court of Appeals held that the federal courts have subject matter jurisdiction of this case because it comes within ERISA, and that Schonholz’s claim of promissory es- toppel stated a claim under that statute. Petitioner seeks cer- tiorari to review those conclusions. REASONS FOR GRANTING THE PETITION The Second Circuit’s decision in this case dramatically al- ters the test for determining ERISA pre-emption as set out by this Court in Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987). According to the Second Circuit’s formulation, when- ever an employer’s offer of severance benefits -- no matter how limited in scope -- allows for the exercise of any discre- tion on the employer’s part, the employer must comply with all of ERISA’s substantive and procedural requirements -- regardless of whether any plan or administrative program is implicated. That is not what this Court held in Fort Halifax. This case will permit this Court to correct the Second Cir- cuit’s misstatement of the law and to provide much needed clarification of the Fort Halifax test as to which the circuits have expressed confusion and disagreement. In addition, by recognizing a cause of action for promissory estoppel under ERISA, the Second Circuit exacerbated a split among the circuits on the issue of whether such a cause of ac- tion exists. The existence of such a split undermines the pur- pose of ERISA pre-emption -- to provide a consistent, uniform set of requirements and rules. This case, then, 12 provides this Court with an opportunity to resolve that confu- sion and disagreement as well. I. Review of This Case is Necessary to Correct the Second Circuit’s Misconstruction of the Fort Halifax Test and to Provide Much Needed Clarification to the Circuits In Fort Halifax, this Court held that the term “employee welfare benefit plan” -- the jurisdictional nexus under ERISA -- does not apply to every undertaking by an employer to provide employees with severance benefits; instead, it ex- tends only to those undertakings which require the creation of an “ongoing administrative program.” 482 U.S. at 16. Fort Halifax involved a Maine statute that required em- ployers, in the event of a plant closing, to provide a one-time severance payment to employees who were not covered by a contract that dealt with the issue of severance pay. In holding that ERISA did not pre-empt the Maine statute, this Court fo- cused on both the statutory language and the policy behind ERISA pre-emption. Thus, this Court noted that ERISA’s pre-emption provision specifically refers to “employee benefit plans,” not simply to “employee benefits,” and that the terms “plan” and “benefits” are used distinctly throughout the statute. Jd. at 7-8 (quoting 29 U.S.C. § 1144(a), adding emphasis). The Court then looked to the purpose behind ERISA pre-emption and the regulatory scheme as a whole to conclude that the hallmark of an ERISA “plan” -- as contrasted with “benefits” -- is that a plan requires an “ongoing administrative program.” /d. at 11- 12. “Only ‘plans,’” this Court held, “involve administrative activity potentially subject to employer abuse.” Jd. at 16. The severance pay scheme in Fort Halifax, however, did not in- volve a “plan” because it generates no such activity. There is no occasion to determine whether a “plan” is “operated” in the in- terest of its beneficiaries, because nothing is “operated.” No financial transactions take place that Leal tea ten eS wage ae Cee cae aentiing t ‘ ee as FE eT Tn ye ee ee ee ee ae ee ee eT 13 would be listed in an annual report, and no further information regarding the terms of the severance pay obligations is needed because the statute itself makes these terms clear. It would make no sense for pre-emption to clear the way for exclusive federal regulation, for there would be nothing to regulate. Id. at 16. Pre-emption, this Court concluded, was intended to eliminat[e] the threat of conflicting and inconsistent State and local regulation.’” Jd. at 9 (quoting 120 Cong.Rec. 29197 (1974)). An employer that commits to paying certain benefits on a systematic basis “undertakes a host of obligations” and the most efficient method for an employer to meet its respon- sibilities is by establishing a “uniform administrative scheme, which provides a set of standard procedures to guide the proc- essing of claims and disbursement of benefits.” Jd. However, employers would, as this Court observed, have great difficulty establishing such a scheme if they were subject to differing obligations and regulations imposed by different States. oe A plan would be required to keep certain records in some States but not in others; to make certain benefits available in some States but not in others: to process claims in a certain way in some States but not in others; and to comply with certain fiduci- ary standards in some States but not in others. Id. If employers were subject to such a “patchwork scheme of regulation,” they would encounter serious inefficiencies in operating benefit plans, and those with existing plans might choose to reduce benefits, and those without plans might re- frain from adopting them. /d. at 11. Congress intended pre-emption to afford employers the advantages of a uniform set of administrative procedures governed by a single set of regulations. This concern only arises, however, with respect to benefits whose provision by nature requires an on- going administrative program to meet the 14 employer’s obligation. It is for this reason that Con- gress pre-empted state laws relating to plans, rather than simply to benefits. Only a plan embodies a set of administrative practices vulnerable to the burden that would be imposed by a patchwork scheme of regulation. Id. at 11-12. (Emphasis in original.) Thus, this Court ruled, ERISA did not pre-empt the Maine statute, since “[nJeither the possibility of a one-time payment in the future, nor the act of making such a payment, in any way creates the potential for the type of conflicting regulations of benefit plans that ERISA pre-emption was intended to prevent.” Jd. at 14. The Fifth and Eighth Circuits have consistently adhered to the Fort Halifax analysis, looking to the existence of an “ongoing administrative program” as the determinant of ERISA pre-emption, and rejecting arguments that schemes involving a handful of “beneficiaries,” or single or formulated payment approaches constituted cognizable “plans” requiring the imposition of ERISA’s burdens and regulatory oversight, as well as attendant pre-emption’. The Second Circuit was in accord until the decision here sought to be reviewed.” Other courts, however, have openly struggled to find a more elastic basis for invoking pre-emption. See Simas v. Quaker Fabric Corp., 6 F.3d 849 (1st Cir. 1993); Pane v. RCA Corporation, 868 F.2d 631 (3d Cir. 1989); Bogue v. Ampex Corp., 976 F.2d 1319 (9th Cir. 1992), cert. denied, 507 U.S. 1031 (1993). But cf, Belanger v. Wyman-Gordon Company, 71 F.3d 451 (1st Cir. 1995), with Simas, 6 F.3d at 854; Angst v. Mack Trucks, 969 F.2d 1530 (3d Cir. 1992), with Pane, 868 F.2d at 635; and Delaye v. Agripac, Inc., 39 * See, e. g., Kulinski v. Medtronics Bio-Medicus, Inc., 21 F.3d 254 (8th Cir. 1994); Fontenot v. NL Industries, 953 F.2d 960 (Sth Cir. 1992). 3 Compare Schonholz, supra, with James v. Fleet/Norstar Financial Group, Inc., 992 F.2d 463 (2d Cir. 1993). See also Mullins v. Pfizer, 23 F.3d, 663-666 (2d Cir. 1994); Ackner v. Lenox, Inc., 782 F. Supp. 267 (S.D.N.Y. 1992). Eee lat Sad eas i, ai EPA a egal a DRS rte Pate aan Rd 15 F.3d 235 (9th Cir. 1994), cert. denied, 115 S. Ct. 1402 (1995), with Bogue, 976 F.2d at 1323. Generally, without regard to the existence of any “ongoing administrative program,” much less focusing upon the dis- tinction between “plans” and “benefits,” the courts advocating a more expansive approach have largely settled upon an alter- native standard, finding ERISA pre-emption applies where any managerial “discretion” exists or may arise in determin- ing severance benefits. '° To illustrate, in Pane, ERISA pre-emption was invoked when the employer refused to grant a single employee a sev- erance agreement. The district court held that, because the employer had discretion to determine whether to grant the employee a severance agreement, which, if granted, might equate him with a potential class of other participants, an on- going administrative program would then be required, which in turn implicated ERISA. Pane, 667 F. Supp. 168, (D.N.J. 1987), aff'd, 868 F.2d 631 (3rd Cir. 1989). A similar approach was utilized in Bogue. There, as an in- cident of a corporate merger, the employer told a handful of senior executives that, if the successor entity did not offer “substantially equivalent” employment --a defined term -- and their employment was terminated, they would then re- ceive specified severance benefits for a finite period of time. The employee accepted a new position with the successor entity. However, claiming that the new position that he had accepted was not “substantially equivalent” to his former job, he also sought the severance benefit. Holding that application of the defined term “substantially equivalent” involved “discretion,” the Third Circuit sustained ERISA pre-emption on the theory that such discretionary act now implicated ERISA’s regulatory and filing requirements. Bogue, 976 F.2d at 1323. See also Simas, 6 F.3d at 854 (applying Bogue '° See Pane, 868 F.2d at 635, affirming, Pane v. RCA Corporation, 667 F. Supp. 168, 170-171 (D.N.J. 1987), and Bogue, supra, 976 F.2d at 1322- 24. 16 analysis to find ERISA pre-empted Massachusetts “tin para- chute” statute on ground that statute required non-mechanical decision-making). Significantly, in more recent decisions, the First, Third and Ninth Circuits have all taken pains to distinguish their prior decisions in Simas, Pane and Bogue, thus exacerbating the confusion over the test to be applied. '! A similar conflict occurs in the Second Circuit. In James, supra, multiple employees were to receive severance pay- ments over extended time periods. The Second Circuit, how- ever, held that this did not meet the “ongoing administrative program standard under Fort Halifax in that the employer's need to make simple arithmetical calculations as to benefits amounts did not require ‘establishment of a uniform adminis- trative scheme, which provides a set of standard procedures to guide processing of claims and disbursement of benefits’ (Fort Halifax 482 U.S. at 9), the protection of which is the purpose of ERISA pre-emption.” James, 992 F.2d at 466. See also Mullins, 23 F.3d at 666. The instant case, however, places the Second Circuit in the intra-circuit conflict column. Here, the retiring President of a not-for-profit hospital issued a memorandum and referring to some eight managers appointed as his inner circle of advisers, but which in fact has implicated only one, provided that specified and finite benefits would be awarded on termination for other than cause -- the “golden parachute.” No adminis- trative program was contemplated or resulted; no financial statements were considered or prepared, no moneys set aside, no filings made, no further information distributed; nothing further was done. Indeed, the Board of Directors of the hospi- tal-employer was not even told what had transpired (much '' Compare Belanger v. Wyman-Gordon Company, 71 F.3d 451 (ist Cir. 1995), with Simas, 6 F.3d at 854; Angst v. Mack Trucks, 969 F.2d 1530 (3d Cir. 1992), with Pane, 868 F.2d at 635; and Deiaye v. Agripac, Inc., 39 F.3d 235 (9th Cir. 1994), cert. denied, 115 S. Ct. 1402 (1995), with Bogue, 976 F.2d at 1323. 17 less asked to approve the scheme) until after the single em- ployee had sought benefits. Nonetheless, the Second Circuit here holds that ERISA attaches -- and with it the burdens of employer filings and the like -- where the determination as to whether benefits will or will not be granted “necessitated both managerial discretion and a separate analysis of each em- ployee in light of certain criteria.” A-7-8. The issue here tendered is important and of considerable reach. ERISA imposes extensive and ongoing fiduciary obliga- tions and compliance requirements on employers.'* In Fort Halifax, this Court held that those burdensome obligations were not Congressionally intended to be and should not be imposed absent the need for an “ongoing administrative pro- gram,” something (i.e., a plan) that calls for regulation and can be regulated. And the rationale expressed is that, because an “ongoing administrative program,” with all of its burden- some trappings is thus required, pre-emption is required in the interest of regulatory consistency and to ease the undue em- ployer burden. Neither the holding nor the reasoning of Fort Halifax sup- ports the test applied by the Second Circuit here. The mere possibility that a manager may have to exercise discretion in determining whether to extend an offer of benefits does not, without more, transform an offer of severance “benefits” into an ERISA “plan.” Certainly, if the Second Circuit’s holding is to govern, then in all but a handful of instances where sever- ance can be claimed (a) the employer will run the risk of having omitted to comply with ERISA, and (b) a simple con- tract issue will be subject to federal jurisdiction and the com- mon law it will develop:'* This was not Congress’s intent. " See, e.g., 29 U.S.C. §§ 1021-1025, 1102-1105, 1109. "It will also implicate ERISA’s attorneys fee proviso [29 U.S.C. § 1132(g)], and thus provide an added layer of cost. 18 In any event, if this more elastic view -- which focuses upon whether discretion exists to award benefits, even to a single employee, or to make mathematical or like computa- tions -- is to be the rule, then employers should know, so that they can properly weigh the burdens imposed by ERISA against the appropriateness of granting or continuing sever- ance approaches. See Fort Halifax, 482 U.S. at 11. Otherwise, unsuspecting employers run the risk of being in default in failing to comply with ERISA. Employers may not only find themselves embroiled in federal court litigation with, as here, its creation of a body of law that is at variance with the com- mon law of that state or jurisdiction, but, in some instances at least, face potential $1,000 per day fines for failure to comply with ERISA’s annual reporting requirements. See 29 U.S.C. § 1132(c)(2). This Court in Fort Halifax noted: Some severance benefit obligations by their nature necessitate an ongoing administrative scheme, but others do not. Those that do not...simply do not in- volve a state law that “relate(s) to” an employee benefit “plan.” 482 U.S. at 19. If the availability of discretion whether to grant or withhold benefits is now to be the determinant as to whether a plan exists and an ongoing administrative program is implicated -- rather than the Fort Halifax standard that the Second Circuit viewed as “opaque” -- then employers, em- ployees and the courts should know that from this Court, rather than continue the conflicts that now exist. II. Review of the Second Circuit’s Decision is Necessary to Resolve a Split in the Circuits on the Issue of Whether a Federal Common Law Cause of Action for Promissory Estoppel Exists Under ERISA Federal circuit courts are divided on the recurring issue of whether a federal common law cause of action for promissory estoppel exists under ERISA. That division extends beyond 19 severance and increasingly embraces a variety of employee benefits. Thus, the Second Circuit’s decision in this matter conflicts with decisions of the Fifth, Ninth, Tenth and Eleventh Cir- cuits, which have all refused to recognize a claim for promis- sory estoppel under ERISA. In addition to the Second Circuit, the Seventh Circuit and Third Circuit have recognized a claim based on promissory estoppel under ERISA. This Court has never addressed the issue. The majority of jurisdictions have found no cause of action for promissory estoppel under ERISA. See DeVoll v. Burdick Painting, Inc., 35 F.3d 408 (9th Cir. 1994), cert. denied, 115 S. Ct. 1381 (1995); Miller v. Coastal Corp., 978 F.2d 622 (10th Cir. 1992), cert. denied, 507 U.S. 987 (1993); Alday v. Container Corp. of America, 906 F.2d 660 (11th Cir. 1990), cert. denied, 498 U.S. 1026 (1991); Degan v. Ford Motor Company, 869 F.2d 889 (Sth Cir. 1989). These courts have noted that ERISA’s comprehensive re- medial scheme does not provide a cause of action for promis- sory estoppel. They have further noted that, while this Court has sanctioned the development of federal common law to fill interstitial gaps in the statutory scheme [see, e.g., Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 110, (1989)], the “we authority to develop common law is “‘not the authority to revise the text of the statute.’ DeVoll, 35 F.3d at 412, quot- ing Mertens v, Hewitt Assocs., 508 U.S. 248, 259, (1993). ERISA’s express requirements that every employee benefit plan “be established and maintained pursuant to a written in- struinent” (29 U.S.C. § 1102(a)(1)), and that the written plan “provide a procedure for amending such plan, and for identi- fying the persons who have authority to amend the plan” (29 U.S.C. § 1102(b)(3)), provide evidence that Congress did not intend to permit plans to be informally modified or amended based on promises of employers or plan administrators. See, e.g., Alday, 906 F.2d at 665; Degan, 869 F.2d at 895. Thus, to recognize claims based on promissory estoppel would be to revise the statute. 20 In addition, courts that have refused to recognize a claim for promissory estoppel have cited the following policy con- cern: permitting informal modifications to a plan based on representations made by an agent of the employer or plan may threaten the integrity of the plan at the expense of other par- ticipants or beneficiaries. As the court in Degan stated: Applying the common-law concept of estoppel would mean presenting retirement plan administra- tors with claims for payment from individuals, oth- erwise ineligible, who were parties to oral agreements that, like the one before us, have lain unsuspected and inert for years. That prospect would threaten the stability and solvency of many plans upon which so many other employees are de- pendent. 869 F.2d at 895. In Devoll, for example, plaintiff claimed that when the company for which he worked opted out of a collective bar- gaining agreement and became a non-union employer, its president assured him and other employees that they would continue to receive the same level of benefits they had re- ceived as union workers. Sometime later, the company changed its medical benefits plan. When plaintiff was denied coverage for a procedure that would have been covered under the previous union plan, he brought an action asserting among other things, a claim based on promissory estoppel. The Ninth Circuit held that plaintiff's state law claim based on promissory estoppel was pre-empted and declined plain- tiffs invitation to fashion a federal common law claim under ERISA based on promissory estoppel. The court cited to this Court’s decision in Mertens v. Hewitt Assocs., supra, for the proposition that the authority to create federal common law under ERISA is not the authority to revise the statute, and to Olson v. General Dynamics Corp., 960 F.2d 1418 (9th Cir. 1991), cert. denied, 504 U.S. 986 (1992), for the proposition that Congress, not the courts, is properly charged with filling gaps in the statute. 21 Similarly, in Miller v. Coastal Corp., supra, plaintiff al- leged that, when he accepted a position as a salaried em- ployee, he was assured that, for purposes of calculating his pension benefits, the company would treat his years of service as a union employee as if he had been a salaried employee. For a period of ten years, plaintiff received written statements that calculated his benefits in a manner consistent with the assurances he had received. Upon plaintiff's retirement, how- ever, defendants refused to treat plaintiff's time as an hourly union employee as if he had been a salaried employee. The Tenth Circuit refused to recognize plaintiff's estoppel- based claim, even though in this instance it was based on written statements. The court stated: As we indicated in [Straub v. Western Union Tele- graph Co., 851 F.2d 1262 (10th Cir. 1988)], we will not import notions of promissory estoppel into ERISA . ... We hold that there is no liability under ERISA for purported informal written modifications to an employee benefit plan. 978 F.2d at 625. (Citations omitted.) See also Alday, 906 F.2d at 666 (no federal common law right to promissory estoppel in Eleventh Circuit); Degan, 869 F.2d at 895 (“Hence, we join the other circuits that have held, consistently with the words of the statute, that ERISA precludes oral modifications to benefit plans and that claims of promissory estoppel are not er in suits seeking to enforce rights to pension bene- ts.” '* In addition, other circuits (e.g., the First and Eighth Circuits), while falling short of holding that no claim for promissory estoppel exists under ERISA, have recognized estoppel-based claims only when (a) the terms of the plan are ambiguous, and (b) the alleged representation at issue consti- tutes an interpretation of the ambiguity. See Slice v. Sons of Norway, 34 F.3d 630, 634 (8th Cir. 1994); Law v. Ernst & Young, 956 F.2d 364, 367- 68 (Ist Cir. 1992). The Ninth and Eleventh Circuits also recognize the use of equitable estoppel under those limited circumstances. See Devoll, 35 F.3d at 412; Kane v. Aetna Life Ins., 893 F.2d 1283 (11th Cir. 1990}, cert. denied, 498 U.S. 890 (1990). 22 In addition to the Second Circuit in this case, the Seventh Circuit and Third Circuit have recognized a federal common law cause of action under ERISA based on promissory estop- pel. Miller v. Taylor Insulation Co., 39 F.3d 755 (7th Cir. 1994); In re Unisys Corp. Retiree Medical Benefit “ERISA” Litigation, 58 F.3d 896, 907-08 (3d Cir. 1995)(claims for es- toppel may exist under “extraordinary circumstances”). In Miller v. Taylor, for example, the Seventh Circuit found a federal common law cause of action for promissory estoppel based on written promises regarding the plaintiff's right to participate in defendant’s plans. When the plaintiff in Miller v. Taylor retired from the defendant company, he entered into a ten-year “Consultation and Non-Competition Agreement,” which provided, among other things, that, for the period the agreement was in effect, plaintiff would be entitled to partici- pate in the medical reimbursement plan that was in effect at the time of his retirement. With two years remaining on the ten-year agreement, the defendant switched insurance carriers, and plaintiff was not listed as a participant under the new medical plan. The Seventh Circuit held that plaintiff had stated a cogni- zable cause of action for promissory estoppel under ERISA, noting: Promissory estoppel is, in the view of this circuit at any rate, a part of the common law that we have been told (for example in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 110, 109 S. Ct. 948, 954, 103 L. Ed.2d 80 (1989)) to create in order to plug gaps in ERISA. 39 F.3d at 758. (Additional citations omitted.) The court ac- knowledged that, in a sense, “using promissory estoppel to allow into a written plan someone excluded by its terms amounts to an oral modification of the terms of a written plan.” Jd. at 759. The court articulated the policy against oral modifications as follows: 23 The main objection to oral modifications, however, is that they would enable the plan’s integrity and possibly its actuarial soundness, to be eroded by relatively low-level employees who in response to inquiries about the scope of coverage advise partici- pants that a particular medical procedure is covered, even though the plan is explicit that it is not cov- ered. 39 F.2d at 759. However, the court reasoned that the concern for protecting the integrity of an ERISA plan is diminished when the representation at issue goes to whether a particular individual is a participant in the plan, as contrasted with a rep- resentation regarding the coverage afforded by a plan, as a promise regarding participation is less likely to come from a low-level employee. '* ERISA is a “comprehensive and reticulated statute” that provides a detailed remedial scheme. Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146 (1985). ERISA does not, by its terms, provide a cause of action based on promis- sory estoppel. Furthermore, its requirements that plans be in writing and include amendment procedures evidence Con- gress’s intent that courts not permit modifications of plans based on alleged promises that conflict with the plan. While this Court has authorized courts to fashion federal common law to fill interstitial gaps, recognizing a cause of action for * The Sixth Circuit has incorporated equitable estoppel principles into the federal common law of contracts, and in Armistead v. Vernitron Corp., 944 F.2d 1287 (6th Cir. 1991), the Court held that the defendant company was estopped from exercising its right to terminate certain retiree insur- ance benefits because of certain representations it had made indicating that the benefits would continue to be provided. The court noted that the concern for protecting a fund’s integrity is not present when dealing with retiree insurance benefits because the company’s obligation is to pay premiums, not to maintain a fund from which retirees or their dependents are compensated in the event of death or illness. 24 promissory estoppel goes beyond gap filling and threatens to revise the statute. '° The Court of Appeals’ decision in this case offers no analysis to support its recognition of a claim for promissory estoppel. The court merely noted that it had previously held that claims for promissory estoppel were cognizable under “extraordinary circumstances,” citing Lee v. Burkhart, 991 F.2d 1004, 1009 (2d Cir. 1993), but gave no indication as to what may constitute “extraordinary circumstances,” and made no effort to reconcile its holding with the statutory language or contrary case law.” There is, therefore, no rational basis for carving out an ex- ception to ERISA’s written amendment requirements for promises that pertain to vesting and participation. Indeed, the December 18 letter at issue here could very well represent the type of “side agreement” that ERISA’s amendment require- ments were intended to prevent. Permitting a claim based on the alleged promise would benefit the party to the agreement at the expense of other employees -- the precise result that ERISA’s requirements were intended to avoid. A clear division exists among the circuits as to whether courts may fashion a federal common law remedy based on promissory estoppel under ERISA. The importance of a de- finitive resolution of that division is readily demonstrable. ERISA’s pre-emption provision, which directs that ERISA “shall supersede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan” (29 U.S.C. § 1144(a)), has been described as “conspicuous for its breadth.” Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138 (1990). (Citations omitted.) Congress’s intent, as this Court has noted, was “to ensure that plans and plan sponsors '® Cf Varity Corp. v. Howe, 116 S. Ct. 1065 (1996). ” Lee provides no further illumination, as the Court there simply held that the plaintiff had not alleged facts establishing extraordinary circum- stances. 25 would be subject to a uniform body of benefits law.” Jd. at 142. See also Fort Halifax, 482 U.S. at 9. Given Congress’s intent to achieve uniformity and to avoid the development of inconsistent bodies of law under ERISA, it is axiomatic that federal common law should be consistent. See Singer v. Black & Decker Corp., 964 F.2d 1449 (4th Cir. 1992). Otherwise, the same employer may find itself subject to different rules in different jurisdictions -- one of the evils Congress sought to avoid. See Fort Halifax, 482 U.S. at 9. In light of the existing conflict among the circuits on the issue of promissory estoppel, certain employees of a multi- state company may have a cause of action based on alleged promises made by agents of the employer, but other employ- ees of the same company may find themselves with no cause of action simply by virtue of their being in a different circuit. Additionally, such divisions and the attendant confusion and disparities will necessarily enhance employer burdens (and, concomitantly, lessen the inclination to grant or continue employee benefits), which, as this Court noted in Fort Hali- fax, Congress sought to avoid. Therefore, in order to effectuate the intent of Congress, this Court should grant certiorari in this case and resolve the ex- isting conflict and confusion. 26 CONCLUSION The petition for a writ of certiorari should be granted. cffully S| Q hieig Bice ween” —_—— ‘ CHARLES G. MOERDLER Counsel of Record ALBERT M. APPEL BURTON N. LIPSHIE JAMES MCGOVERN STROOCK & STROOCK & LAVAN Seven Hanover Square New York, New York 10004 (212) 806-5400 Counsel for Petitioner-Defendant APPENDIX A-1 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT No. 234 -- August Term 1995 (Argued October 20, 1995 Decided June 26, 1996) Docket No. 95-7269 : : PRA HSE EHEAAERREEGASOCR ARE RNEBASEK BASS SHES X GLENISS S. SCHONHOLZ, Plaintiff-Appellant, : | LONG ISLAND JEWISH MEDICAL CENTER, | Defendant-Appellee. Be ee a ra eee Ae eld on Cae eRe “ Before: MESKILL, MAHONEY, and WALKER, Circuit Judges. Appeal from a judgment of the United States District Court for the Eastern District of New York (Bartels, J.), reported at 889 F. Supp. 610 (E.D.N.Y. 1995), finding that the district court had subject matter jurisdiction over plaintiff's claims ‘ under the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001 et seqg., but granting defendant summary judgment on those same claims. LALO AD LE EL SS Affirmed in part, vacated in part, and remanded. ee Me ee oe ANTHONY M. RADICE, New York, NY (William E. Zuckerman, Morrison & Foerster, New York, NY, on the brief), for Plaintiff-Appellant. A-2 CHARLES G. MOERDLER, New York, NY (Albert M. Appel, Sandra Jefferson Grannum, Robert C. Kern, Jr., Stroock & Stroock & Lavan, New York, NY on the brief), for Defendant-Appellee. WALKER, Circuit Judge: Plaintiff Gleniss S. Schonholz appeals from a judgment of the United States District Court for the Eastern District of New York (John R. Bartels, District Judge) in favor of defen- dant Long Island Jewish Medical Center (“LIJ”) in her suit for severance benefits under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001 ef seg. For the reasons stated below, we affirm in part, vacate in part, and remand. BACKGROUND On May 3, 1991, Dr. Robert K. Match, then-President of LIJ, announced in a memorandum to senior employees the details of a severance pay program (the “Severance Plan”) that provided for payments to senior-level employees upon their involuntary discharge. Payments under the Severance Plan were to be based upon both the length of the time the employee held his position and his prospects for reemploy- ment, but they would be made only if the employee dispiayed a reasonable and good faith effort to obtain a position com- mensurate with his former level of responsibility. In addition, the employee would not be eligible for payments under the Severance Plan if the termination was for either illegal con- duct or substantially deficient performance. The Severance Plan provided that the terminated employee would continue to receive other benefits, and contained no provision for its ter- mination or amendment. Apart from those discussed below, LIJ neither created nor circulated any documents purporting to amend, modify, or terminate the Severance Plan. A-3 Schonholz was Senior Vice President and Chief Operating Officer of LIJ between 1987 and April 1, 1993. Schonholz’s departure was precipitated by continuing disagreements in late 1992 between Schonholz and Irving Schneider, who at the time was Chairman of LIJ. Sometime between Decem- ber 10 and December 18, 1992, Match informed Schonholz that he was going to ask for her resignation in the near future. Schonholz agreed that she would submit her resignation, to be effective April 1, 1993. This request was formalized in a letter from Match to Schonholz, dated December 18, 1992, which also stated: Of course, the terms of your severance will be gov- erned by the LIJ Medical Center personnel policies applicable to members of the President’s Council, including the Severance Pay Program dated May 3, 1991. At your option. the initial twelve months of severance pay may be taken in one lump-sum pay- ment on the day of your termination or bi-weekly over the twelve months after your termination. Please arrange to meet with the Vice-Presidents of Finance and Human Resources to discuss and ar- range the details. The letter indicated that Match’s request was due to changes in hospital management connected with his upcoming retire- ment and was unrelated to Schonholz’s performance of her duties. In compliance with the request contained in the De- cember 18 letter, Schonholz formally submitted her resigna- tion, effective April 1, 1993, in a letter dated December 22, 1992. On March 23, 1993, LIJ’s Board of Trustees first became aware of the Severance Plan, the December 18 letter, and the December 22 letter. At a meeting that day, the Board of Trustees voted to revoke the Severance Plan. Match told Schonholz about the Board’s decision the next day, March 24, and added that he thought that she would be contacted by LIJ shortly to discuss her severance arrangements. On March 29, Match wrote Schonholz to the effect that the Board had never A-4 approved or adopted the Severance Plan, that the Severance Plan was “deemed invalid and null and void and never to have been effective,” and that LIJ was not bound by the Severance Plan’s provisions. In the letter, Match made no mention of alternative severance arrangements for Schonholz. No one from LIJ contacted Schonholz thereafter about her situation. On June 11, 1993, Schonholz commenced this ERISA ac- tion below against LIJ and several individuals. LIJ and the other defendants moved to dismiss the case for failure to state a claim. In a memorandum and order, the district court dis- missed the claims against the individual defendants without leave to amend, dismissed the ERISA-based promissory es- toppel claim against LIJ with leave to amend, and struck the request for punitive damages. Schonholz v. Long Island Jew- ish Medical Ctr., 858 F.Supp. 350 (E.D.N.Y. 1994) (“Schonholz I’). Following discovery and the filing of an amended com- plaint, LIJ and Schonholz cross-moved for summary judg- ment. The district court held that the Severance Plan was an employee welfare benefit plan within the meaning of ERISA, and that therefore federal subject matter jurisdiction existed. See Schonholz v. Long Island Jewish Medical Ctr., 889 F. Supp. 610 (E.D.N.Y. 1995) (“Schonholz IT’). However, the district court held that Schonholz’s claims under § 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B), were without merit as a matter of law. From this ruling Schonholz now appeals. On appeal, Schonholz challenges the grant of summary judgment in LIJ’s favor on the ERISA claims, and LIJ argues that the district court erred in finding subject matter jurisdic- tion. We turn to the jurisdictional issue first. DISCUSSION I. ERISA Subject Matter Jurisdiction ERISA grants federal district courts concurrent jurisdiction over all claims by an “employee welfare benefit plan” bene- ficiary who seeks to “recover benefits due to him under the A-5 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.” 29 U.S.C. § 1132(a)(1)(B) & (e)(1). LIJ contends that the Severance Plan does not constitute an employee wel- fare benefit plan under ERISA and that, therefore, the district court lacked subject matter jurisdiction over Schonholz’s claims. The term “employee welfare benefit plan” is defined by ERISA to include any plan, fund, or program which was heretofore or is hereafter established or maintained by an em- ployer . . . to the extent that such plan, fund, or pro- gram was established or is maintained for the purpose of providing for its participants or their beneficiaries ... (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or va- cation benefits, apprenticeship or other training pro- grams, or day care centers, scholarship funds, or prepaid legal services. 29 U.S.C. § 1002(1); see 29 U.S.C. § 1002(3). Because the district court held that the Severance Plan was within the definition of “employee welfare benefit plan” and thus de- termined jurisdiction as a matter of law, we review its finding de novo. Shapiro v. Republic of Bolivia, 930 F.2d 1013, 1016- 17 (2d Cir. 1991). The term “employee welfare benefit plan” has been held to apply to most, but not all, employer undertakings or obliga- tions to pay severance benefits. Yet, both the Supreme Court and this court have emphasized that ERISA applies only ' LUJ did not cross-appeal from the district court’s decision. Nonetheless, because we may raise the issue of subject matter jurisdiction sua sponie, United Food & Commercial Workers Union, Local 919 v. Centermark Properties Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir. 1994), we reach LIJ’s argument. A-6 where such an undertaking or obligation requires the creation of an ongoing administrative program. For instance, in Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 12 (1987), the Su- preme Court, faced with whether ERISA preempted” a Maine statute that required employers to make a one-time severance payment to employees upon a plant closing, held that the Maine statute did not create an employee welfare benefit plan and thus was not preempted. The Court stated: “The theoreti- cal possibility of a one-time obligation in the future simply creates no need for an ongoing administrative program for processing claims and paying benefits.” Jd. Similarly, in James v. Fleet/Norstar Financial Group, Inc., 992 F.2d 463 (2d Cir. 1993), we addressed whether an em- ployer’s undertaking to give employees severance pay was an employee welfare benefit plan. The employer had announced that one of its offices would be closed but told the workers in that office that, if they stayed on until the closing, they would receive sixty-days additional pay. In our view, the employer’s promise did not constitute an employee welfare benefit plan because “the nature of the payments did not require an ongo- ing administrative employer program to effectuate them.” /d. at 467. Other courts have reached a similar conclusion. See, e.g., Belanger v. Wyman-Gordon Co., 71 F.3d 451, 454 (lst Cir. 1995) (ERISA implicated only if there are “continuing administrative and financial obligations”); Simas v. Quaker Fabric Corp., 6 F.3d 849, 853-54 (1st Cir. 1993) (courts do not apply Fort Halifax where the state statute or employer promise creates “ongoing obligations”); Bogue v. Ampex Corp., 976 F.2d 1319, 1323 (9th Cir. 1992) (adopting ap- proach that ERISA requires “administrative scheme”), cert. denied, 507 U.S. 1031 (1993); Fontenot v. NL Indus., Inc., ? Section 514(a) of ERISA, 29 U.S.C. § 1144(a), states that ERISA “shall supersede any and all State laws insofar as they may now or hereafter re- late to any” employee welfare benefit plan. Thus, if the federal courts have jurisdiction over claims for recovery from a benefit plan, state law is preempted as to that plan. A-7 953 F.2d 960, 962-63 (Sth Cir. 1992) (same); Pane v. RCA Corp., 868 F.2d 631, 635 (3d Cir. 1989) (same). But while it is plain that ERISA subject matter jurisdiction depends upon the need for an administrative program, the test for deciding which employer obligations and undertakings require such a program is opaque. See Simas, 6 F.3d at 854. In James, although the employer’s payments to its employees would have to be calculated individually (because the cir- cumstances of each employee differed as to eligibility, termi- nation, and deductions), we said that the “need to make such simple arithmetical calculations did not” mean that the sever- ance payment program was an employee welfare benefit plan. 992 F.2d at 467. However, deciding what is not an ongoing administrative program does not aid our determination of which obligations are complex enough to require such a pro- gram. Other courts facing this same issue have looked to a variety of factors, including whether the employer’s undertaking or obligation requires managerial discretion in its administration, Bogue, 976 F.2d at 1323; whether a “reasonable employee would perceive an ongoing commitment by the employer to provide employee benefits,” Belanger, 71 F.3d at 455; and whether the employer was required to analyze the circum- stances of each employee’s termination separately in light of certain criteria, Fontenot, 953 F.2d at 963 (citing Pane v. RCA Corp., 667 F. Supp. 168, 170-71 (D.N.J. 1987), aff'd, 868 F.2d 631 (3d Cir. 1989)). We need not decide today which one or more of these factors will be determinative in every case because, in this case, we conclude that all of them favor Schonholz. Cf Belanger, 71 F.3d at 455 (“There is no authoritative checklist that can be consulted to determine conclusively if an employer’s obligations rise to the level of an ERISA plan.”). The Severance Plan required much more than the simple arithmetical calculations we held to be insufficient in James. The Severance Plan necessitated both managerial discretion and a separate analysis of each employee in light of certain A-8 criteria. LIJ would have had to determine whether the em- ployee was involuntarily terminated, and thus qualified for the Severance Plan; whether the termination was for either illegal conduct or substantially deficient performance; whether the employee was making a reasonable and good faith effort to obtain suitable employment elsewhere; and whether, if other employment had been found, it was commensurate with the employee’s former organizational level and scope of respon- sibility. There is also little doubt that a reasonable employee would have believed that the Severance Plan evidenced an ongoing commitment to provide severance benefits. Unlike the em- ployer’s obligation in Fort Halifax and the promise in James, the Severance Plan was not limited either to a single payment or to a short span of time upon a plan or office closing. The Severance Plan’s effective period was unlimited and would have reasonably been perceived by an employee as an ongo- ing commitment. Cf. Belanger, 71 F.3d at 455 (finding no such commitment). Because all factors point to a finding that the Severance Plan is covered by ERISA, we affirm the dis- trict court’s holding that it had subject matter jurisdiction. Il. ERISA Claims Schonholz alleges that LIJ’s refusal to pay her severance benefits violated § 1132(a)(1)(B) under two theories. Schon- holz’s first theory is that LIJ’s December 18 letter and her December 22 response created a binding contract that vested her benefits. Her second theory is that LIJ was barred by promissory estoppel from denying her benefits. The district court based its grant of summary judgment upon its belief that the letters between Schonholz and Match could not result in contractual vesting because they were only “informal communications” and not formal plan documents. In addition, the district court found that Schonholz’s promis- sory estoppel claim failed because she could not demonstrate any injury. A-9 It is well-settled that our review of the grant of a summary judgment motion is de novo, and reversal is required if “there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be re- solved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); see Hanson v. McCaw Cellu- lar Communications, Inc., 77 F.3d 663, 667 (2d Cir. 1996). Because we find that genuine issues of material fact do exist as to both theories advanced by Schonholz, we vacate the district court’s order and remand for further proceedings. A. Contractual Vesting Under ERISA it is the general rule that an employee wel- fare benefit plan is not vested and that an employer has the right to terminate or unilateraliy to amend the plan at any time. Reichelt v. Emhart Corp., 921 F.2d 425, 429-30 (2d Cir. 1990), cert. denied, 501 U.S. 1231 (1991). Nothing in ERISA, however, forbids or prevents an employer from agreeing to vest employee welfare benefits or from waiving its ability to terminate or amend unilaterally a plan, and several of our sis- ter circuits have held that such agreements or waivers will be enforced. For instance, the Seventh Circuit has held that an agreement to vest employee welfare benefits will be upheld. Bidlack v. Wheelabrator Corp., 993 F.2d 603, 604-05 (7th Cir.) (en banc), cert. denied, 114 S. Ct. 291 (1993); see id. at 616 (Easterbrook, J. dissenting) (agreeing that parties may elect to vest employee welfare benefits by contract); see also Wise v. El Paso Natural Gas Co., 986 F.2d 929, 937 (Sth Cir.) (employer may waive. right to modify or terminate a plan), cert. denied, 114 S. Ct. 196 (1993); Anderson v. John Mor- rell & Co., 830 F.2d 872, 876-77 (8th Cir. 1987) (employer may, under certain conditions, contract to vest employee wel- fare benefits); Jn re White Farm Equip. Co., 788 F.2d 1186, 1193 (6th Cir. 1986) (same). We agree that there is nothing in ERISA preventing an employer from contracting to vest em- ployee welfare benefits.” *LU argues that Schonholz never asserted a contractual vesting argument below and that it is therefore barred on appeal. Amended Brief for (Footnote continued) A-10 Not all undertakings by an employer to provide employee welfare benefits result in vesting, however. We previously have noted that ERISA was designed to “ensure[]} that plans be governed by written documents filed under ERISA’s re- porting requirements and that [summary pian descriptions], drafted in understandable language, be the primary means of informing participants and beneficiaries.” Moore v. Metro- politan Life Ins. Co., 856 F.2d 488, 492 (2d cir. 1988). Courts that have allowed contractual vesting have required, at a minimum, that the employer’s intent to vest the benefits be contained in a written document, although the employer’s in- tent need not be stated unambiguously. See Bidlack, 993 F.2d at 608 (benefits could be vested by ambiguous language in a collective bargaining agreement when supported by extrinsic evidence); Anderson, 830 F.2d at 877 (rejecting oral “policy” statement as evidence of vesting of benefits and requiring in- stead a specific, if not written, expression of employer’s intent to be bound). Other courts have gone further, requiring that the employer’s decision to vest benefits be set forth clearly in the plan documents. See Wise, 986 F.2d at 937; see also In re White Farm, 788 F.2d at 1193 (“[T]he parties may themselves set out by agreement or by private design, as set out in plan documents, whether retiree welfare benefits vest, or whether they may be terminated.”). LIJ contends that because the al- leged contractual vesting was not part of any “formal plan document,” Schonholz’s claim must fail. In each case cited by LIJ for the proposition that vesting must be included in formal plan documents, the employer had created such documents and distributed summary plan de- scriptions to the employees. But, in this case, LIJ created no Defendant-Appellee at 33. We disagree. The allegations in Schonhoiz’s amended complaint can be read to set forth exactly such a theory even if it was not explicitly argued in the district court. In any event, we are not prevented from considering a new legal theory on appeal if, as with Schonholz’s contractual vesting theory, we are not required to engage in additional factfinding. See Readco, Inc. v. Marine Midland Bank, 81 F.3d 295, 302 (2d Cir. 1996). PANS eis weet Incl Ae TOD Teta Mallen. Foil Ain Bates Se A-ll such formal documents for the Severance Plan and, as LIJ notes, Department of Labor regulations do not require that the Severance Plan be maintained with the same level of formal- ity that is required of most other employee welfare benefit plans. See 29 C.F.R. § 2520.104-24(a)(1). To require that LIJ’s decision to vest the Severance Plan be included in the “formal plan documents,” would also mean that LIJ and its employees would have to have memorialized that decision by amending formal plan documents that do not exist. The Supreme Court has clarified that such an adherence to formalities is not mandated by the statute. Instead, “ERISA ... follows standard trust law principles in dictating only that whatever level of specificity a company ultimately chooses, in an amendment procedure or elsewhere, it is bound to that level.” Curtiss-Wright Corp. v. Schoonejongen, 115 S. Ct. 1223, 1231 (1995). Therefore, any agreement to vest Schonholz’s benefits would only have to be memorialized at the same level of formality that LIJ chose in promulgating the Severance Plan in the first place. In this case, the alleged promise was memorialized not in a formal plan document, but in the 1991 memorandum that Match sent to senior employ- ees. We easily conclude that the December 18 and Decem- ber 22 letters are at least as formal as the 1991 memorandum and that, therefore, the district court erred in concluding that Schonholz’s claim is barred because “Match’s letter is not a formal plan document.” Schonholz II, 889 F. Supp. at 614. We also disagree with the district court’s holding that LIJ’s commitment to vest Schonholz “must be in ‘precise language denying the right to withdraw benefits.’” Jd. at 615 (quoting Wise, 986 F.2d at 938). We do not think, at least in this case, that Schonholz is required tc point to unambiguous language to support her claim. See Bidlack, 993 F.2d at 608-09. It is enough if she can point to written language capable of rea- sonably being interpreted as creating a promise on the part of LIJ to vest her severance benefits. Because the December 18 letter may be so interpreted by a trier of fact, we remand the contractual vesting claim to the district court. A-12 B. Promissory Estoppel We have previously held that the principles of estoppel can apply in ERISA cases under extraordinary circumstances. Lee v. Burkhart, 991 F.2d 1004, 1009 (2d Cir. 993). The Second Restatement of Contracts defines promissory estoppel as “[a] promise which the promisor should reasonably expect to in- duce action or forbearance on the part of the promisee or a third person and which does induce such action or forbear- ance.” Restatement (Second) of Contracts § 90(1) (1979). The Restatement further provides that such a promise is enforce- able “if injustice can be avoided only by enforcement of the promise.” /d. The First Restatement’s formulation was simi- lar: “A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” Restatement of Contracts § 90 (1932); see also 28 Am. Jur. 2d Estoppel & Waiver § 48 (1966) (“[A]n estoppel may arise from the mak- ing of a promise . . . if it was intended that the promise should be relied upon and in fact it was relied upon, and if a refusal to enforce it would .. . result in . . . injustice.”). The basic elements of promissory estoppel therefore are (1) a promise, (2) reliance on the promise, (3) injury caused by the reliance, and (4) an injustice if the promise is not en- forced. LIJ argues, however, that to prevail, Schonholz must show that the promise contained in the first element is clear and unambiguous. It is true that New York law requires a clear and unambiguous promise, see e.g., Readco, Inc. v. Ma- rine Midland Bank, 81 F.3d 295, 301 (2d Cir. 1996) (applying New York law), but courts elsewhere in this circuit, relying on the Restatement, have formulated the first element in a dif- ferent manner. The Supreme Court of Connecticut has re- quired only the existence of “a clear and definite promise,” i.e., one which if “judged by an objective standard,” the de- fendant had reason to expect reliance by the plaintiff. D'Ulisse-Cupo v. Board of Directors of Notre Dame High Sch., 202 Conn. 206, 213 (1987). The Supreme Court of ME ene en eee eee ee eee A-13 Vermont has articulated the test as whether the plaintiff has shown a promise which the promisor should reasonably ex- pect to induce reliance. Stacy v. Merchants Bank, 144 Vt. 515, 521 (1984). Outside this circuit, the New Jersey Appellate Division has similarly required only “a clear and definite promise made with the expectation that the promisee will rely.” Spaulding v. Hussain, 229 N.J. Super. 430, 438 (App. Div. 1988). ERISA is a federal law regime for regulating employee benefits designed to eliminate the threat of conflicting state and local regulation of benefit plans. Fort Halifax, 482 U.S. at 9. We are not bound by New York law and therefore see no reason to apply New York’s formulation of the first element of promissory estoppel. In accordance with the unifying theme of the statute, we prefer the language of the present Restatement and require, for purposes of ERISA, only that Schonholz demonstrate a promise that LIJ reasonably should have expected to induce action or forbearance on her part. Under this standard, we conclude that a trier of fact reasona- bly could conclude that Schonholz has met her burden on the “promise” element; a jury properly could infer from the De- cember 18 letter a promise on which LIJ should have ex- pected that Schonholz would rely in tendering her resignation. We have no difficulty in concluding that Schonholz has shown evidence of the second element of promissory estop- pel -- reliance on the alleged promise. Schonholz’s submis- sion of her resignation just four days after the December 18 letter is, by itself, enough to create a triable issue as to reli- ance. We also part company with the district court’s finding that Schonholz is unable to demonstrate injury based on her reli- ance. Schonholz II, 889 F. Supp. at 615. Although LIJ was free to terminate the Severance Plan at any time absent any promise to vest Schonholz, the fact alone is not enough to de- feat Schonholz’s claim. If LIJ had not transmitted the Decem- ber 18 letter, Schonholz might never have submitted her resignation. LIJ then would have had to choose between firing A-14 Schonholz and keeping her on for an undetermined period. Each option presumably entailed disadvantages to LIJ be- cause LIJ chose neither. For instance, firing Schonholz might have affected employee morale at LIJ and could have led to a very abrupt and turbulent transition from Schonholz to a new Chief Operating Officer, while permanent retention of Schon- holz would most probably have resulted in a continuation of the same antagonism between Schonholz and Schneider that had precipitated the decision to ask for Schonholz’s_resigna- tion in the first place. In other words, by agreeing to leave amicably, Schonholz conferred a benefit on LIJ, one that may be quantifiable. If Schonholz’s cooperation until the end of March 1993 had been of no value to LIJ, Schonholz might have been terminated without any bargaining. Just as a benefit to LIJ is implicit in the bargaining that led to Schonholz’s submission of her resignation letter, so also is a corresponding detriment to Schonholz in the form of the power to withhold that benefit -- something she gave up, presumably because severance benefits were being offered to her in exchange. It is this possibility of loss that a jury should be permitted to con- sider as injury to Schonholz in satisfaction of the third ele- ment of promissory estoppel. Finally, we note that Schonholz must show “that enforce- ment of the promise must be necessary to avoid an injustice, presumably caused by the reliance.” 4 Richard A. Lord, Wil- liston on Contracts § 8:5 (4th ed. 1992). The district court did not address this element below, but we conclude that if Schonholz is able to prevail on the other three elements of promissory estoppel, she may prevail on this one as well. Cf C & K Eng’g Contractors v. Amber Steel Co., 23 Cal.3d 1, 11 (1978) (task of considering element of injustice is equitable one for court and not jury). Assuming that the jury concludes that LIJ promised to extend Schonholz’s benefits, that LIJ should have known that Schonholz would rely, that Schon- holz did in fact rely, and that Schonholz was injured by that reliance, it is clear to us that she will be able at least to con- tend that an injustice would result if the promise is not en- forced. A-15 Because we find that there are genuine issues of material fact on this claim, we remand it to the district court. CONCLUSION For the reasons stated above, we affirm the district court’s exercise of subject matter jurisdiction, we vacate the district court’s grant of summary judgment, and we remand the case for proceedings not inconsistent with this opinion. A-16 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK x GLENISS S. SCHONHOLZ, Plaintiff, : - against - : 93 CV 2549 LONG ISLAND JEWISH MEDICAL CENTER, Defendant. Xx Bartels, U.S. District Judge. MEMORANDUM-DECISION AND ORDER Defendant Long Island Jewish Hospital (“LIJ”) and plain- tiff Gleniss $. Schonholz cross-move under Rule 56(c) of the Federal Rules of Civil Procedure for summary judgment. Schonholz brought this action pursuant to the Employment Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132(a)(1)(B), to recover benefits allegedly owed to her un- der her former employer’s severance benefit plan. LIJ seeks dismissal of Schonholz’s claims for lack of jurisdiction and for failure to state a claim. Schonholz cross-moves for sum- mary judgment, arguing that all of the facts necessary to de- cide in her favor have been established and that she is:entitled to summary judgment as a matter of law. BACKGROUND Gleniss S. Schonholz was employed by the Long Island Jewish Medical Center from 1980 until 1993. Hired as a Di- visional Administrator, by 1987, Schonholz had been pro- moted to the position of Senior Vice President and Chief Operating Officer of LIJ. During 1991 and 1992, hospital management changed and a new LIJ Board Chairman was A-17 appointed. Due to the incompatibility of Schonholz and the new Chairman, the President and CEO of LIJ, Dr. Robert K. Match, determined that it was in the best interest of the hospi- tal for Schonholz to resign. Dr. Match and Schonholz met some time between December 10 and December 18, 1992, and agreed that Schonholz would submit her resignation to become effective April 1, 1993. He formalized his request in a letter dated December 18, 1992. In his letter, Dr. Match ex- plicitly stated that Schonholz would be eligible for severance pay benefits as detailed in a memorandum dated May 3, 1991. As requested, by letter dated December 22, 1992, Schonholz submitted her resignation. Nine days before the effective date of Schonholz’s termination, on March 23, 1993, the LIJ Board revoked the severance pay program (the “Program”. On June 11, 1993, Schonholz commenced this action against LIJ to recover severance benefits. DISCUSSION I. Subject Matter Jurisdiction LIJ challenges the sole basis of this Court’s jurisdiction, asserting that the LIJ Program was not an “employee welfare benefit plan” within the meaning of ERISA. Severance benefit programs generally are covered by ERISA as they are expressly included in the definition of “employee welfare benefit plan” under 29 U.S.C. 1002(1). See Bradwell v. GAF Corp., 954 F.2d 798, 800 n. 1 (2d Cir. 1992). LIJ argues, however, that the LIJ Program falls within the exception es- tablished by the Supreme Court in Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 107 S. Ct. 2211 (1987), where the Court held that a single lump-sum severance payment payable only on the occurrence of a single event did not implicate ERISA. In order to fall within ERISA preemption, a benefit plan must require ongoing administration separate from other benefit plans administered by the employer. LIJ argues that, because Dr. Match offered Schonholz a lump-sum payment of twelve months’ salary in lieu of bi- weekly installments as provided by the Program, the Program falls within the Fort Halifax exception and no longer qualifies A-18 as an ERISA plan. This argument, however, ignores other provisions of the Program. In addition to the first twelve months’ salary, the Program provided another six months of salary for terminated employees with Schonholz’s length of service who had not yet found “commensurate” employment after a year. The last six months’ salary was to be paid bi- weekly until commensurate employment was found or the additional six months had expired, whichever occurred first. The Program defines commensurate employment as employ- ment placing her at “h[er] former organizational level and scope of responsibility.” In determining what is and what is not an ERISA plan, courts have looked to the degree of managerial discretion in the award of benefits. See, e.g., James v. Fleet/Norstar Fi- nancial Group, Inc., 992 F.2d 463 (2d Cir. 1993) (automatic lump-sum payment of 60 days of salary to employees termi- nated due to consolidation not an ERISA plan); Fontenot v. NL Industries, 953 F.2d 960 (Sth Cir. 1992) (single lump-sum payment of 3 years’ salary to executives terminated following takeover not an ERISA plan). Compare Bogue v. Ampex Corp., 976 F.2d 1319, 1321 (9th Cir. 1992), cert. denied, 113 S.Ct. 1847 (1993) (severance benefits payable to 10 key em- ployees if not offered “substantially equivalent” employment by buyer is plan governed by ERISA). “To do little more than write a check hardly constitutes the operation of a benefit plan.” Fort Halifax, 482 U.S. at 12, 107 S.Ct. 2218. The LiJ Program, had it not been revoked prior to Schonholz’s termi- nation, indisputably would have required its administrator to do more than cut a single severance check. As in Bogue, even though the potential number of participants was small, and its activation uncertain’, the Program’s administration would ' The Program was only available to members of the President’s Council who would be involuntarily terminated. LIJ makes much of the fact that no financial projections had been made prior to the Program’s promulga- tion, nor were any administrative procedures put in place following the distribution of the May 3, 1991 memorandum. Once esiablished, however, ERISA protects an employee's interest in a welfare benefit plan regardless of whether the employer complies with the administrative and reporting (Footnote continued) A-19 have required “a case-by-case, discretionary application of its terms.” Bogue, 976 F.2d at 1323. The Court finds that the LIJ Program was an employee welfare benefit plan within the meaning of ERISA. Accordingly, the Court has jurisdiction over this action. II. Schonholz’s ERISA Claims This Court denied LIJ’s prior Rule 12(b)(6) motion to dismiss on this court solely because LIJ had failed to allege that LIJ had revoked the Program in writing. Schonholz v. Long Island Jewish Medical Ctr., 858 F. Supp. 350, 353 (E.D.N.Y. 1993). LIJ now has established that its revocation of the Program was in writing and Schonholz admits that she had both oral and written notification of the LIJ Board’s revo- cation of the Program prior to the effective date of her termi- nation. As stated in this Court’s prior opinion, severance plans are not vested under ERISA. Jd. Thus, the Board’s revocation was effective and Schonholz may not recover pursuant to this theory. a. Breach of Fiduciary Duties under ERISA As a second theory, Schonholz argues that she is entitled to recover because the LIJ Board revoked the Program in bad faith and in violation of its fiduciary duty to Schonholz as a beneficiary of the Program. She contends that she is entitled to recover severance benefits because the discontinuation of the Program was not a business decision but was punitive and directed against her individually. Schonholz cites a single case, Dependahi v. Falstaff Brewing Corp., 491 F. Supp. 1188 (E.D. Mo. 1980), aff'd in part. rev'd in part, 653 F.2d 1208 (8th Cir. 1981), for the proposition that an employee may recover benefits where an employer modifies or termi- nates its benefit plan in light of an impending personnel ac- tion, thus depriving an employee of benefits to which she requirements detailed under ERISA. Blau v. Del Monte Corp., 748 F.2d 1348 (9th Cir. 1984), cert. denied, 474 U.S. 865, 106 S. Ct. 183 (1985). A-20 otherwise would be entitled. In Dependahi, the court held that an employer violated his fiduciary duty to his employees when he eliminated a severance plan in contemplation of a mass firing. Dependahi stands against the weight of authority. An em- ployer unilaterally may amend or eliminate a severance plan at any time without violating ERISA requirements. Young v. Standard Oil (Indiana), 849 F.2d 1039, 1045 (7th Cir.), cart. denied, 488 U.S. 981, 109 S.Ct. 529 (1988). Moreover, it may do so without consideration of its employees’ interests. “Virtually every circuit has rejected the. proposition that ERISA’s fiduciary duties attach to an employer’s decision whether or not to amend an employee benefit plan.” Hozier v. Midwest Fasteners. Inc., 908 F.2d 1155, 1161 (3d Cir. 1990). Additionally, the Supreme Court has held that an action for breach of fiduciary duties imposed on plan administrators may be brought only on behalf of a plan itself and not, as Schonholz has here, for the benefit of an individual benefici- ary. Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 105 S. Ct. 3085 (1985); Schonholz, 858 F. Supp. at 354. III. Schonholz’s Common Law Claims Section 514(a) of ERISA explicitly preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.” 29 U.S.C.A. § 1144 (1985). This pre- emption provision has been broadly construed and generally precludes common law actions which “relate to” employee pension and benefit programs. See, e.g., Smith v. Dunham- Bush, Inc., 959 F.2d 6 (2d Cir. 1992) (ERISA preempts em- ployee’s breach of contract and promissory estoppel claims regarding oral promise of increased pension benefits); Reichelt v. Emhart Corp., 921 F.2d 425, 431 (2d cir. 1990), cert. denied, 501 U.S. 1231, 111 S. Ct. 2854 (1991) (“ERISA preempts civil actions against employers for severance pay predicated on common law contract principles”). A-21 a. Contractual Vesting LIJ objects to the consideration of Schonholz’s contract claim as this theory of relief was not articulated in plaintiff's amended complaint nor at any time prior to this motion. Without providing specifics, LIJ urges that Schonholz should not be allowed to pursue her contract argument as it would prejudice LIJ. Pleading in federal court, however, only re- quires a “short plain statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8, and it is not required for the plaintiff to identify a legal theory under which relief is sought. Brock v. Superior Care. Inc., 840 F.2d 1054 (2d Cir. 1988); Siegelman v. Cunard White Star, 221 F.2d 189, 196 (2d Cir. 1955). Further, the Court can see no preju- dice to LIJ since, as LIJ itself notes, Schonholz’s contract the- ory is merely a variant of her second cause of action for promissory estoppel. Therefore, Schonholz’s contract claim has been adequately pleaded and is properly before the court. Schonholz argues that the circumstances of her case fall within a line of cases which recognizes that, under ERISA, an employer contractually may waive its statutory right to mod- ify or terminate benefits. Moore v. Metropolitan Life Ins. Co., 856 F.2d 488 (2d Cir. 1988); see also Wise v. El Paso Natural Gas Co., 986 F.2d 929 (Sth Cir.), cert. denied, US. _, 114 S. Ct. 196 (1993); Aldav v. Container Corp. of America, 906 F.2d 660, 665 (11th Cir. 1990), cert. denied, 498 U.S. 1026, 111 S. Ct. 675 (1991). Schonholz contends that Dr. Match’s letter was such a waiver and that, as a result, her sev- erance benefits vested at the time she tendered her resignation in December 1992. However, Congress has mandated that, although an em- ployer may establish by contract that certain benefits are vested, it may only do so in formal plan documents. Informal communications between an employer and its employees can- not modify the terms of an ERISA plan. 29 U.S.C. § 1102(b)(3). See also Moore, 856 F.2d at 492 (“an ERISA wel- fare plan is not subject to amendment as a result of infor- mal communications between an employer and plan A-22 beneficiaries”). Clearly, Dr. Match’s letter is not a formal plan document. Further, even if the Court were to consider Dr. Match’s letter to be a plan document, the letter does not explicitly waive LIJ’s right to terminate benefits’. In order to override the statutory scheme which allows the employer an unquali- fied right to amend or terminate employee welfare benefits, any extra-ERISA commitment must be in “precise language denying the right to withdraw benefits.” Wise, 986 F.2d at 938. Such is not the case here. Schonholz’s claim amounts to an alternative theory of recovery under state common law and is, therefore, preempted by ERISA. b. Promissory Estoppel Alternatively, Schonholz argues that LIJ should be es- topped from denying her severance pay benefits because she reasonably believed and detrimentally relied on Dr. Match’s representation regarding severance pay. The Court of Appeals for the Second Circuit has recog- nized estoppel as a cause of action under ERISA in “extraordinary circumstances.” Lee v. Burkhart, 991 F.2d 1004, 1009 (2d Cir. 1993) (citing, inter alia, Chambless v. Masters, Mates & Pilots Pension Plan, 772 F.2d 1032, 1039 (2d Cir. 1985), cert. denied, 475 U.S. 1012, 106 S. Ct. 1189 (1986)). Promissory estoppel requires (1) a clear and unambi- guous promise, (2) reasonable and foreseeable reliance by the party to whom the promise is made, and (3) an injury sus- tained by the party asserting the estoppel by reason of her re- liance. See Arcadian Phosphates, Inc. v. Arcadian Corp., 884 F.2d 69, 73 (2d Cir. 1989); Aquilio v. Police Benev. Assn. of N.Y. State Troopers, 857 F. Supp. 190, 199 (N.D.N.Y. 1994). > The December 18, 1992 letter stated that “the terms of [Schonholz’s] severance will be governed by the LIJ Medical Center personnel policies applicable to members of the President’s Counsel, including the Sever- ance Pay Program, dated May 3, 1991.” A-23 While Schonholz is able to show an unambiguous promise and reasonable, foreseeable reliance, she cannot demonstrate injury. Plaintiff argues that, in complying with Dr. Match’s request to resign, she did not: (1) challenge her termination, (2) negotiate a more advantageous effective date for her ter- mination, or (3) negotiate for more attractive payment and benefit terms. Schonholz was an employee at-will and, as such, had little or no leverage to challenge her termination or negotiate its terms. Moreover, although Schonholz contends in her brief that she was injured by submitting her resignation and agreeing to stay with LIJ for an additional three months, in her deposition she acknowledged that this practice was for the benefit of terminated employees to help them to secure employment elsewhere. She further contends that, had she not relied on Dr. Match’s assurance of benefits under the LIJ Pro- gram, she would have negotiated a severance package as oth- ers had before her. LIJ states that they had been willing to negotiate an individual severance package with Schonholz after the Program was terminated but she chose to pursue this action instead. Even if one does not credit LIJ’s statement, its past practice of paying severance to terminated employees did not bind LIJ to pay Schonholz severance. Schonholz’s expec- tation of benefits under the LIJ Program and disappointment at its termination are not sufficient to constitute detrimental reliance. CONCLUSION There being no question of material fact, LIJ’s motion for summary judgment for lack of subject matter jurisdiction is DENIED. Its motion for summary judgment for failure to state a claim is GRANTED and this action is DISMISSED in its entirety. Schonholz’s cross-motion is DENIED. SO ORDERED. Dated: Brooklyn, New York February 3, 1995 /s/ J.R. Bartels United States District Judge A-24 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK X GLENISS S. SCHONHOLZ, Plaintiff, - against - MEMORANDUM LONG ISLAND JEWISH MEDICAL ee nts CENTER, IRVING SCHNEIDER, 93 CV 2549 ELIHU MODLIN, LEONARD (JRB) NADEL, STANLEY GREY, MICHAEL FELDMAN and IRVING WHARTON, JOHN and JANE DOES 1-15, Defendant. Bartels, U.S. District Judge. Plaintiff brings this action pursuant to the Employee Re- tirement Income Security Act [“ERISA”], 29 U.S.C. § 1132(aX1)(B), to recover benefits owed under her former employer’s severance benefit plan. Defendants have moved to dismiss under Federal Rule of Civil Procedure [“Rule”] 12(b)(6) for failure to state a claim upon which relief may be granted. In addition, plaintiff and defendants have each cross-moved for Rule 11 sanctions. For reasons more fully explained herein, defendants’ motion to dismiss is granted in part and denied in part, and the cross-motions for sanctions are denied. FACTS Plaintiff Gleniss Schonholz was employed by Long Island Jewish Medical Center [“LIJ”] as Chief Operating Officer. On May 3, 1991 LIJ implemented a severance pay program for senior management personnel who would be involuntarily terminated or removed from their positions. By letter dated December 18, 1992, LIJ’s President and Chief Executive a errr a A-25 Officer, Dr. Robert K. Match, requested that plaintiff submit her resignation effective April 1, 1993. Dr. Match indicated in his letter that the request for plaintiff's resignation was due to a change in hospital management, and was in no way related to her job performance. Further, Dr. Match’s letter explicitly stated that plaintiff would be eligible for benefits under the May 3, 1991 severance pay program. On December 22, 1992, plaintiff submitted her resignation effective April 1, 1993. It is undisputed that LIJ has not paid plaintiff severance benefits under the May 3, 1991 program. Plaintiff claims that ERISA guarantees her the right to pay- ment under the severance pay program, and that defendants are estopped from denying her benefits based on Dr. Match’s representations. However, defendants argue that ERISA permitted them to amend or terminate the severance program, and that plaintiff has not properly stated a claim of estoppel. DISCUSSION I. STANDARD OF REVIEW The court may grant a motion to dismiss pursuant to Rule 12(b)(6) only where it is beyond doubt that the plaintiff cannot prove any set of facts supporting entitlement to relief. H.J. Inc. v. Northwestern Bell Telephone Company, 492 U.S. 229, 249-50 (1989); Conley v. Gibson, 355 U.S. 41, 45-46 (1957). In deciding the motion, the court must accept as true the material facts alleged in the complaint, LaBounty v. Adler, 933 F.2d 121, 123 (2d Cir. 1991), and must construe all rea- sonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232 236 (1974). In addition, the court is not permitted to consider factual matters submitted outside of the complaint unless the parties are given notice that the motion to dismiss is being converted to « motion for summary judgment under Rule 56 and are af- forded an opportunity to submit additional affidavits. See Festa v. Local 3 International Brotherhood of Electrical Workers, 905 F.2d 35, 38 (2d Cir. 1990) (“this provision .. . is mandatory with respect to motions pursuant to A-26 Rule 12(b)(6)”); Wiener v. Napoli, 760 F. Supp. 278, 282 (E.D.N.Y. 1991). In this case, plaintiff has submitted her own affidavit, sworn to September 2, 1993, in opposition to the motion to dismiss, and the affidavit of Dr. Robert K. Match, sworn to October 22, 1993, in sur-reply to the motion to dis- miss. Similarly, defendants have made factual representations in their memoranda of law in an effort to refute the allegations of the complaint. However, since the parties have not had an opportunity to submit all of the pertinent material for a sum- mary judgment motion’, the court will not consider these affi- davits and additional factual material in assessing the sufficiency of the complaint. II. COUNT ONE - ERISA It is well settled that severance pay policies are employee welfare plans governed by ERISA. See Bradwell v. GAF Corp., 954 F.2d 798, 800 n.1 (2d Cir. 1992); Garrett v. Veter- ans Memorial Medical Center, 821 F. Supp. 838, 840 (D. Conn. 1993). Further, under ERISA, severance benefits are not vested; an employer has the right to amend or eliminate a severance pay plan at any time. See Landy Michaels Realty Corp. v. Local 32B-32J, Service Employees International Union, 954 F.2d 794, 801 (2d Cir. 1992); Reichelt v. Emhart Corp., 921 F.2d 425, 430 (2d Cir. 1990) (citing cases), cert. denied, 111 S.Ct. 2854 (1991). Accordingly, plaintiff may only recover benefits under ERISA § 1132(a)(1)(B) pursuant to the May 3, 1991 severance pay program if this plan was in effect at the time her employment with LIJ terminated. According to the complaint, plaintiff was employed by LIJ until April 1, 1993. See § 9. Although plaintiff argues that she was “terminated” by LIJ in December 1992 when Dr. Match requested her resignation, the severance pay program clearly contemplates the payment of benefits only after the cessation of regular employment. Plaintiff further alleges that ' Moreover, the court declines to convert this motion to dismiss to a Rule 56 motion because significant factual discovery which would make this case ripe for a summary judgment motion has yet to be completed. A-27 defendants revoked the severance pay program “after the termination of the plaintiff's employment”. See 4 15. In this reply memorandum of law in support of the motion to dis- miss, defendants claim that the May 3, 1991 severance pay program was revoked at a meeting of LIJ’s Board of Trustees held on March 23, 1993, prior to the termination of plaintiff's employment. However, the court is not permitted to consider factual matters outside of the complaint in deciding a motion to dismiss. Plaintiff alieges that she has not been paid benefits according to the severance pay program in effect at the time her employment terminated; these allegations are sufficient to state a claim under ERISA and therefore to withstand a mo- tion to dismiss. Moreover, ERISA requires every employee benefit plan to be established and maintained pursuant to a written instru- ment. 29 U.S.C. § 1102. An employee benefit plan cannot be unilaterally amended or superseded by an employer by oral modification. See Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155, 1163-64 (3d Cir. 1990) (citing cases); Adler v. Aztech Chas P. Young Co., 807 F. Supp. 1068, 1071 (S.D.N.Y. 1992). See also Moore v. Metropolitan Life Insurance Co., 856 F.2d 488, 492 (2d Cir. 1988). There is no allegation in the complaint that defendants revoked the severance pay program in writing. Therefore, defendants’ alleged revocation of the May 3, 1991 severance pay program would not have been ef- fective to deprive plaintiff of her benefits if the revocation was not reduced to writing prior to the termination of plain- tiffs employment. For all of the foregoing reasons, defendants’ motion to dismiss plaintiff's first cause of action under ERISA is de- nied. Ill. COUNT TWO - PROMISSORY ESTOPPEL Plaintiff's second cause of action alleges that defendants are estopped from denying her severance benefits because Dr. Match’s letter seeking plaintiff's resignation explicitly stated that she would receive benefits under the May 3, 1991 A-28 severance pay program. The Second Circuit has held that es- toppel principles can apply in ERISA under “extraordinary circumstances”. See Lee v. Burkhart, 991 F.2d 1004, 1009 (2d Cir. 1993). In order to state a claim for promissory estoppel, plaintiff must allege: (1)a material misrepresentation, (2) reliance, and (3) damages. Jd. The complaint in this case alleges damage to plaintiff in the amount of the benefits she would have received under the_ severance pay program. The complaint also alleges a material misrepresentation by Dr. Match on behalf of LIJ. Defendants argue that Dr. Match’s letter promised plaintiff no more than the benefits provided under LIJ’s severance policy in effect on the date her employment terminated. The court disagrees. Dr. Match’s letter states, in relevant part: “the terms of [plaintiff's] severance will be gov- erned by the LIJ Medical Center personnel policies applicable to members of the President’s Council, including the Severance Pay Program dated May 3, 199]. At your option, the initial twelve months of severance pay may be taken in one lump-sum pay- ment on the day of your termination or bi-weekly over the twelve months after your termination.” Dr. Match’s letter is unambiguous in referring to the May 3, 1991 severance pay program. In addition, the letter goes on to explicitly describe the benefits plaintiff would receive under that program. Therefore, the court finds that Dr. Match’s letter constitutes an alleged material misrepresentation for purposes of a motion to dismiss. Accordingly, plaintiff has sufficiently plead the first and third elements of her estoppel claim. However, the complaint fails to allege the second element of estoppel, actual reliance. Plaintiff does not allege that she resigned relying on the fact that she would receive severance benefits; she states instead that she resigned upon the request of LIJ in connection with a change in hospital administration. Nor does the complaint describe any other actions taken by plaintiff in reliance on Dr. Match’s statements. Accordingly, defendants’ motion to dismiss plaintiff's second cause of A-29 action is granted without prejudice, and plaintiff is granted leave to amend the complaint and replead her estoppel claim. IV. CLAIMS AGAINST THE INDIVIDUAL DEFENDANTS Plaintiff brings suit against defendants Irving Schneider, Leonard Nadel, Stanley Grey, Michael Feldman and Irving Wharton, members of LIJ’s Board of Trustee’s Compensation Committee, and defendant Elihu Modlin, a member of the Board’s Legal Committee, alleging that they breached fiduci- ary duties as administrators of LIJ’s severance plan. However, the complaint fails to allege specific facts which, if proven, would constitute a breach of fiduciary duty on the part of any of the defendants. Plaintiff's general allegations that these de- fendants “were responsible for the decision not to pay any severance benefits to plaintiff and for the attempt to revoke LIJ’s severance benefit plan retroactively” are insufficient to state a cause of action against any individual defendant. Moreover, the Supreme Court has held that thee fiduciary duties imposed by ERISA on plan administrators run only to the plan itself, not individual beneficiaries. Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134, 144 (1985). See also Lee v. Burkhart, 991 F.2d at 1009; Donnelly v. Bank of New York Company, Inc., 801 F. Supp. 1247, 1253-54 (S.D.N.Y. 1992). Plaintiff argues that the individual defendants are proper parties to this action, citing Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155 (3d Cir. 1990). Al- though Hozier holds that plan administrators owe a fiduciary duty to plan participants, the Third Circuit specifically rec- ognized that any liability accrues to the benefit of the plan only, not participants seeking to recover damages in their in- dividual capacities. 908 F.2d at 1162 n. 7. Accordingly, defendants’ motion to dismiss the complaint against the individual defendants is granted, with prejudice. Plaintiff will not be granted leave to file an amended com- plaint against the individual defendants as such filing would be futile. See, e.g., Kaster v. Modification Systems, Inc., 731 F.2d 1014, 1018 (2d Cir. 1984); Jenkins v. Sea-Land Service, A-30 Inc., 1993 U.S.Dist. LEXIS 11580 at *15 (S.D.N.Y. August 19, 1993). Vv. CLAIM FOR PUNITIVE DAMAGES In Massachusetts Mutual Life Insurance Co. v. Russell, the Supreme Court held that extra-contractual compensatory or punitive damages are not available in an action for breach of fiduciary duty under § 409 of ERISA, 29 U.S.C. § 1109. 473 U.S. at 147-48. Although the Supreme Court declines to de- termine the availability of punitive damages under other sec- tions of ERISA and the Second Circuit has not yet addressed the issue, virtually every court to face the question has de- cided that punitive damages are not available under ERISA. See McRae v. Seafarers’ Welfare Plan, 920 F.2d 819, 821 (11th Cir. 1991); Reinking v. Philadelphia American Life In- surance Co., 910 F.2d 1210, 1219-20 (4th Cir. 1990); Pane v. RCA Corporation, 868 F.2d 631, 635 n.2 (3d Cir. 1989); Drinkwater v. Metropolitan Life Insurance Co., 846 F.2d 821, 825 (ist Cir.), cert. denied, 488 U.S. 909 (1988); Sage v. Automation, Inc. Pension Plan and Trust, 845 F.2d 885, 888 n.2 (10th Cir. 1988); Varhola v. Doe, 820 F.2d 809, 817 (6th Cir. 1987); Sokol v. Bernstein, 803 F.2d 532, 534 (9th Cir. 1986) (damages for emotional distress); Sommers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan Enterprises, Inc., 793 F.2d 1456, 1464-65 (Sth Cir. 1986), cert. denied, 479 U.S. 1034 (1987); Swanson v. U.A. Local 13 Pension Pian, 779 F. Supp. 690, 700 n.4 (W.D.N.Y.), aff'd, 953 F.2d 636 (2d Cir. 1991); Lawford v. New York Life Insurance Co., 739 F. Supp. 906, 914 (S.D.N.Y. 1990); Giuntoli v. Garvin Guybutler Corp., 726 F. Supp. 494, 509-10 (S.D.N.Y. 1989). But see Reeves v. Continental Equities Corporation of Amer- ica, 767 F. Supp. 469, 474 (S.D.N.Y. 1991) (declining to strike plaintiff's claim for punitive damages on a motion to dismiss). In light of the overwhelming weight of authority supporting defendants’ position that punitive damages are not available to plaintiff, the motion to dismiss the punitive damages claims is granted with prejudice. VI. RULE ll The Federal Rules place an affirmative obligation on par- ties and their counsel to make an objectively reasonable in- quiry into the facts and the law and not to conduct a lawsuit for an improper purpose. See Rule 11; Calloway v. Marvel Entertainment Group, 854 F.2d 1452, 1470 (2d Cir. 1988), rev ‘don other grounds sub nom Pavelic & LeFlore v. Marvel Entertainment Group, 493 U.S. 120 (1989). The “key to Rule 11 lies in the certification flowing from the signature to a pleading, motion, or other paper in a lawsuit.” Oliveri v. Thompson, 803 F.2d 1265, 1274 (2d Cir. 1986), cert. denied, 480 U.S. 918 (1987). See also Coltrade International, Inc. v. United States, 973 F.2d 128, 131 (2d Cir. 1992). Accordingly, sanctions may not be imposed based on broad findings of bad faith or frivolous litigation; rather, the court must identify particular papers certified to a federal court by specific indi- viduals. Jd.; McMahon v. Shearson/American Express, Inc., 896 F.2d 17, 22 (2d Cir. 1990). When Rule 11 is violated, the court must impose sanctions. Eastway Construction Corp. v. City of New York, 762 F.2d 243, 254 (2d Cir. 1985), modified, 821 F.2d 121 (2d Cir.), cert. denied, 484 U.S. 918 (1987); Mars v. Anderman, 136 F.R.D. 351, 353 (E.D.N.Y. 1989). However, the court should resolve all doubts in favor of the signer and avoid using hind- sight. Oliveri v. Thompson, 803 F.2d at 1275. The standard under Rule 11 is an objective test, based on what a reasonably competent attorney would believe under the circumstances, consistent with minimal standards of professional compe- tence. Greenberg v. Hilton International, Inc., 870 F.2d 926, 934 (2d Cir. 1989); Krauss v. Bowen, 738 F. Supp. 648, 653 (E.D.N.Y. 1990). Defendants argue that plaintiff violated Rule 11 by submit- ting a sur-reply in opposition to the motion to dismiss, and by asserting factual matters beyond the scope of the complaint. The filing of a sur-reply, while not explicitly authorized by the Federal or Local Rules, does not in itself constitute a fail- ure to inquire into the facts or law. In addition, defendants are A-32 equally guilty of injecting into the motion to dismiss factual matters outside of the complaint allegations. On the other side, plaintiff claims defendants are liable for sanctions based on counsel’s frivolous and unsworn allega- tions of fraud and misuse of Rule 11. The court is inclined to agree that defendants’ allegations regarding a concealed scheme by Dr. Match to raid the hospital’s strained coffers for the benefit of his intimate friends appear to be lacking in fac- tual support. However, although these statements come dan- gerously close to a Rule 11 violation, the court has resolved all doubts in favor of defendants and declines to impose sanc- tions at this time. CONCLUSION For all of the foregoing reasons, defendants’ motion to dismiss is GRANTED in part and DENIED in part. The mo- tion to dismiss plaintiff's first cause of action under ERISA is DENIED. The motion to dismiss plaintiff's second cause of action based on estoppel is GRANTED, with leave to amend. The motion to dismiss plaintiff's claims against the individual defendants and for punitive damages is GRANTED with prejudice. The cross-motions for Rule 11 sanctions are DE- NIED. SO ORDERED. Dated: Brooklyn, New York February 18, 1994 /s/ John R. Bartels United States District Judge A-33 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT UNITED STATES COURT HOUSE 40 FOLEY SQUARE NEW YORK 10007 BKNY MANDATE 93-CV-2549 GEORGE LANGE III BARTELS CLERK At a Stated Term of the United States Court of Appeals for the Second Circuit, held at the United States Courthouse, Foley Square, in the City of New York, on the 26th day of June, one thousand nine hundred and ninety-six. PRESENT: — HON. Thomas J. Meskill HON. J. Daniel Mahoney HON. John M. Walker, Jr. Circuit Judges UNITED STATES COURT OF APPEALS FILED JUN 26 1996 ‘eoookttt hen ith, ‘ ia Docket No: 95-7484 SPERNH bIBELT GLENISS S. SCHONHOL4, plaintiff-Appellant, me LONG ISLAND JEWISH MEDICAL CENTER, pefendant-Appellee. Appeal from thé United States District Court for the Eastern District of New York. A-34 This cause came on to be heard on the transcript of record from the Eastern District of New York and was argued by counsel. ON CONSIDERATION WHEREOF, it is now hereby ORDERED, ADJUDGED and DECREED that the judg- ment of said district court be and it hereby is affirmed in part, vacated in part, and remanded to the said district court for further proceedings in accordance with the opinion of this court. For the Court GEORGE LANGE III, Clerk By: /s/ Arthur M. Heller Arthur M. Heller Administrative Attorney A TRUE COPY GEORGE LANGE III, CLERK /s/ George Lange III ISSUED AS MANDATE. JUL 11 1996 A-35 LONG ISLAND JEWISH MEDICAL CENTER MEMORANDUM To: Members of President’s Date: May 3, 1991 Council From: Robert K. Match, MD Subject: Severance President Pay Program Confidential In order to deal effectively with the ever changing and chal- lenging health care environment of the 1990s and beyond, it is essential that LIJ be able to recruit and retain the services of high level senior management personnel. In light of the fact that we do not provide Employment Con- tracts but wish to encourage continued professional career de- velopment at LIJ, I have decided to implement for all members of the President’s Council a severance pay program. Under the terms of this program, any member of the Presi- dent’s Council who is involuntarily terminated or removed from his position, for other than ‘lle al conduct or for sub- stantially deficient perfortnance which is detrimental to LI, shall be etititled to receive His teptilat Weekly salaty, ih effect a8 Of tHe diy — His tettHiHAHOH fit the specified BeHdd uf HHHE BHHIHed RelA Ww: Veare at bimplayment ab bid Severance Payment ()- 2 years None; More than 2 yearsandupto § 6 months plus up to an 5 years additional 3 months in the event the individual has not found employment; More than 5 years and up to 1 year plus up to an 10 years additional 3 months in the event the individual has not found employment; A-36 10 years and beyond 1 year plus up to an additional 6 months in the event the individual has not found employment. The initial severance pay entitlement of six months or one year, depending upon years of service at the time of termina- tion, shall be paid on a biweekly basis and for the full term regardless of whether the individual seeks or obtains other employment during this period. RECEIVED OFFICE OF THE ADMINISTRATOR HILLTOP HOSPITAL LONG ISLAND JEWISH MEDICAL CENTER Should he still be seeking employment commensurate with his former organizationa [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386004_1527%3A1. Public record. Not legal advice.