Opposition Brief — Long Island Jewish Medical Center v. Schonholz

6 Supreme Court, U.S. |

No. 96-485 I gt Dp

OCT 25 199%

CLERK

IN THE ;

Supreme Court of the Muited States

OCTOBER TERM, 1996

-

LONG ISLAND JEWISH MEINCAL CENTER,

Petitioner,

ce Yee

GLANISS S, SCHONHOLZ,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

70 THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

—_—_—eeeeeeeeeeeeeeeeeee ee

BRIEF IN OPPOSTTION

— OEE

ANTHONY M. RADICE

Counsel of Record

WILLIAM B, ZUCKERMAN

MORRISON & PORRSTER LLP

1290 Avenue of the Americas

New York, New York 10104-0185

(212) 468-8000

Counsel for Respondent

October 25, 1996

es

—

TABLE OF CONTENTS

PAGE

TABLE OF AUTHORITIES ..... 00... o. ccs it

STATEMENT OF THE CASE... ccc !

REASONS FOR DENYING THE WRIP. cS

I.

THE SBCOND CIRCUIT PROPERLY APPLIED

THIS COURT'S PRECEDENT IN DETERMINING

THAT LIN'S SEVERANCE PLAN WAS

GOVERNED BY BRISA... . 6.0 cccccceccnennenes 6

THERE IS NO CIRCUIT SPLIT REGARDING

THE AVAILABILITY OF PROMISSORY

ESTOPPEL UNDER BRISA IN APPROPRIATE

CIRCUMSTANCES »

CONCLUSION ..... 7 rs

TABLE OF AUTHOR} y]Fs

Cases | PAGE

Alday v. Container Corp. of America, $06 F.2d 660

Cie Cir. Po denied, 49% Su. S. 1026

CU99T) CANRURURR OER ERRR REN ERR RE 10

Avmistead ». Veraitren vain S44 B24 1287 (6th Cir.

Lh) RReee ee ANANAA CAN aReancuens RAR Oe 225 ee 10

Belanger . Wyman-Gerden Co, 71 ry 451 (ist Cir.

1h S) D ORO C COCR COCO OCC CCOCS © Ca 7n.4

Black v. TIC Investment Corp,, 900 Fg 112 (7th Cir.

V99O) ccccccccnenercenenenenaen tah ak oe ey Pe 12

Bogue \ Ampex Corp,, 976 R.2d 1319 (on Cir, 1992),

cert, denied, S07 U.S. 1031 (1993) nd, 7

Curete & Joka Mancoeek Mean Ss Mes. Co., 33 F.3d

BEG (SE Cor DBE) cccccccccece cece ees 11

Cerin Wragg Con. ». Sehooineeingee, 115 §. Ct. 1223

CADDIE) wr ccccceccrencceseneewmneen seseeeees 11 n.7, 12

Degen v. Ford Mover Co., 869 F.2d $83 (Sth Cir

ROE) wan cnniencccnctipeuutinnessnagigg pcnubasees 11

Delaye v. Agripac, Inc., 39 F.3d 235 (Sth Cir. 1994),

cert, denied, 115 S, Ct, 1402 (1995) ..0. os... 8 n.5

Devoll v, Burdick Painting, Inc., 35 F.3d 408 (9th Cir.

1994), cert, denied, 115 S, Ct, 1381 (1995)...... 10, 11

Firestone Tire & Rubber Co, v, Bruch, 489 U.S. 101

(1989) pererree sree eeereeereereaeereereee PPPe eee eseseeseeeeseeeos 10

Fontenot v. NL Industries, Ine., 953 F.2d 960 (Sth Cir.

PPA) vavecssaces pbuasegvuas 90 b6b Haan ck Eeaeey 7 n.4, 8-9

PAGE

Fort Halifax Packing Co. vy. Coyne, 482 U.S. 1

POEMPy Rew p eleh Saha dhhens seseecs cases fcc... g passim

Greany v. Western Farm Bureau Life Ins. Co., 973 F.2d

; Paw RO CIN APNE Gm Gee 11,12

Grimo v. Blue Cross and Blue Shield of Vermont, 899

F. Supp. 196 (D. Vt. MERE AS Sipe ee 9 n.6

Izzarelli v. Rexene Products Co., 24 F.3d 1506 (Sth Cir.

oo PES RS SOS Se area 11-12

James v. Fleet/Norstar F inancial Group, Inc., 992 F.2d

eee pk tie aca ecnag: EERE on 7-8

Kane v. Aetna Life Ins., 893 F.2d 1283 (11th Cir.). cert.

denied, 498 U.S. 890 Lt) SRSA SRR aia Bis 10, 12

Kulinski v. Medtronic Bio-Medicus. Inc., 21 F.3d 254

yeah eed ihyess: Pe ee a Ee Rea 8

Law v. Ernst & Young, 956 F.2d 364 (Ist Cir. 1992) ..10, 12

Lee v. Burkhart, 991 F.2d 1004 (2d Cir. 1993) ........ 10

Madonia v. Blue Cross and Blue Shield of Virginia,

11 F. 3d 444 (4th Cir. 1993), cert. denied, 114

Wolts Po tytn: be ata, ee Ee ee ee 9 n.6

Massachusetts y. Morash, 490 U.S. 107 ft: SRS 6n.3

Miller v. Coastal Corp., 978 F.2d 622 (10th Cir. 1992),

_ cert. denied, 507 U.S. 987 SRS fae SS 10

Miller v. Taylor Insulation Co., 39 F.3d 755 (7th Cir.

(a, SE CORIO A Sa a 10, 11

In re Momentum Mfg. Corp., 25 F.3d 1132 (2d Cir.

OE EA REESE SS Soe a 12

Nachwalter vy. Christie, 805 F.2d 956 (11th Cir. 1986) 11

iV

PAGE

National Companies Health Benefit Plan v. St. Joseph's

Hosp. of Atlanta, 929 F.2d 1558 (11th Cir. 1991) 12

Pane v. RCA Corp., 667 F. Supp. 168 (D.N.J. 1987),

aff’d, 868 F.2d 631 (3d Cir. 1989)................ 7n.4

Slice v. Sons of Norway, 34 F.3d 630 (8th Cir. 1994)..10, 11

In re Unisys Corp. Retiree Medical Benefit “ERISA”

Litigation, 58 F.3d 896 (3d Cir. 1995)............ 10

Williams v. Wright, 927 F.2d 1540 (11th Cir. 1991)... 9n.6

Statutes and Regulations

239 USO. 8 IGT OF O06. (ERIGA). i. eR Ss: passim

yr. BAR Rome Bi: | 4 § Seep Ae eye prey Pye re 1]

y. BERN oe SP ) ks Ree Perry rrr corre 11

BD CPR, SSS Fares cans cai iardi onde as ree 9 n.6

22 CEB: 9 25S MEME) i cisiscices. Gua eis Rand ens 9 n.6

IN THE

Supreme Court of the United States

OCTOBER TERM, 1996

No. 96-485

<>

LONG ISLAND JEWISH MEDICAL CENTER,

Petitioner,

—V.—

GLENISss S. SCHONHOLZ,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

——_>—

BRIEF IN OPPOSITION

Respondent respectfully requests that this Court deny the

petition for writ of certiorari submitted by petitioner Long

Island Jewish Medica] Center.

STATEMENT OF THE CASE

Except to highlight the few points below, respondent

Gleniss Schonholz incorporates by reference the statement of

facts in the Second Circuit’s opinion (A-2-4):!

. Schonholz adopts the abbreviations used in petitioner's brief

(“Petition”) unless otherwise noted.

The terms of LIJ’s May 3, 1991 severance pay program (the

“Severance Plan” or the “Plan”), including the eligibility

requirements and other criteria, are succinctly described in

the opinion below:

Payments under the Severance Plan were to be

based upon both the length of time the employee

held his position and his prospects for reemploy-

ment, but they would be made only if the employee

displayed a reasonable and good faith effort to

obtain a position commensurate with his former

level of responsibility. In addition, the employee

would not be eligible for payments under the Sev-

erance Plan if the termination was for either illegal

conduct or substantially deficient performance. The

Severance Plan provided that the terminated

employee would continue to receive other benefits,

and contained no provision for its termination or

amendment.

A-2; see A-35-37. The Plan thus required LIJ to make a dis-

cretionary, case-by-case analysis of (1) the circumstances of

each employee’s termination, (2) whether the ermployee was

making reasonable efforts to obtain new employment and (3)

whether such new employment was commensurate with the

position the employee had occupied at LIJ (defined in terms of

“former organizational level and scope of responsibility”). See

A-7-8; A-36.

The Plan was created and maintained without ERISA’s

reporting and disclosure formalities: no formal plan docu-

ments were filed with tie Secretary of Labor and no summary

plan descriptions were distributed to the covered employees.

See A-10-11. Moreover, as the Second Circuit noted, the

employees covered by the Severance Plan reasonably per-

ceived that LIJ had made an ongoing commitment to provide

employment benefits (A-7-8), particularly given that “LIJ nei-

ther created nor circulated any documents purporting to

amend [or] modify” the Plan before it was terminated in

March 1993. A-2.

Schonholz was a long-time employee of LIJ and its Senior

Vice President and Chief Operating Officer from 1987 until

her termination on April 1, 1993. Schonholz’s termination

was not for cause, but rather was precipitated by continuing

disagreements and friction with LIJ’s new Chairman. A-3. In

December 1992, LIJ’s then-President, Dr. Robert Match,

informed Schonholz that he was going to ask for her resig-

nation, which he formalized in a letter to her, dated Decem-

ber 18, 1992. /d.; 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.” A-39; A-3. In light of this promise, Schonholz opted

neither to contest her termination nor to seek to negotiate an

individual severance package pursuant to LIJ’s long-standing

policy and practice. R. 1152; Petition at 4. Rather, in accep-

tance of the terms offered in Dr. Match’s letter, Schonholz

submitted her resignation in a letter dated December 22, 1992

(A-40), and agreed to LIJ’s request that she remain at her

position until April 1, 1993. A-39. Nine days before the effec

tive date of Schonholz’s termination, on March 23, 1993,

LIJ’s Board of Trustees resolved to revoke the Severance Plan

and, accordingly, to deny Schonholz the severance benefits to

which she was entitled under the terms of both the May 3,

1991 Plan and Dr. Match’s December 18, 1992 letter request-

ing her resignation.

In addition to the facts highlighted above, Schonholz cor-

rects the following factual inaccuracies in LIJ’s brief:

First, LIJ states that its President merely “purported to

establish” the Severance Pian for Schonholz and the seven

other senior-level employees (Petition at 4) (emphasis added),

suggesting that the Plan was unauthorized because it “was not

submitted to LIJ’s Board of Trustees for review, much less

4

approval.” /d. at 3. In fact, Dr. Match, LIJ’s President and

Chief Executive Officer, indisputably had the authority to

promulgate the Severance Plan, as expressly set forth in LIJ’s

corporate bylaws, which confer upon the CEO the responsi-

bility of “developing and maintaining personnel policies and

practices.” R. 98.? The record is also clear that Dr. Match,

himself a Board member, sought and obtained approval from

then-Chairman of the Board William Mack before imple-

menting the Plan. R. 452, 508, 633-34, 1458-62, 1464.

Second, LIJ incorrectly maintains that the decision below

“dramatically alters” this Court’s precedent by requiring that,

whenever an employer makes a discretionary offer of sever-

ance benefits, “the employer must comply with all of ERISA’s

substantive and procedural requirements—regardless of

whether any plan or administrative program is implicated.”

Petition at 11 (emphasis added). Both the district court «1d

the Second Circuit held that ERISA protects an employee’s

interest in a welfare benefit plan regardless of whether the

employer complies with all the procedural (i.e., administra-

tive and reporting) requirements of ERISA. A-18-19 n.1; see

A-4-8. Indeed, in its brief to the Second Circuit, LIJ asserted

(and Schonholz did not contest) that, pursuant to Department

of Labor regulations, LIJ’s Severance Plan was exempt from

2 Elsewhere, LIJ admits as much by acknowledging that the “deci-

sion whether to grant a senior manager any benefits upon involuntary ter-

mination, and in what amount, rested, ultimately, with Dr. Match.”

Petition at 4. Indeed, Dr. Match routinely authorized and implemented

employee benefit programs that were more extensive and expensive than

the Severance Plan without Board approval or involvement. R. 390-98,

1343-44, 1351-52, 1358-64.

LIJ is also incorrect to label the Severance Plan a “golden parachvte”

(Petition at 3, 16), with the attendant inference that the Plan was excc s-

sively generous. The record reflects that the Severance Plan was a con-

servative, reasonable and customary severance policy that was, if

anything, less generous than the policies which were prevalent in the

health care industry, both when it was established and when Schonholz

made her claim under the Plan. R. 191, 193, 450-51, 1294, 1297, 1320-

22, 1458-59.

>

ERISA’s reporting and disclosure provisions. See A-1}.

Although LIJ now misstates the holding below as mandating

that all employee welfare benefit plans must comply with all

of ERISA’s procedural requirements, the Second Circuit

expressly stated that this Court has “clarified that such adher-

ence to formalities is not mandated by the statute.” /d.

REASONS FOR DENYING THE WRIT

This Court should deny the writ sought by petitioner

because there is no conflict between the decision of the court

below and those of this Court regarding the standard for

ERISA pre-emption, and there is no circuit split on the avail-

ability of promissory estoppel under ERISA. The Second Cir-

cuit’s determination that LIJ’s Severance Plan was covered by

ERISA is completely consistent with this Court’s holding in

Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987). The

few circuit courts that have declined to apply promissory

estoppel as a basis for recovering ERISA plan benefits did so

in cases in which the facts did not support an estoppel theory.

Moreover, the case at hand affects the rights of just one par-

ticipant in a benefit plan that has since been revoked: no other

beneficiaries’ rights are implicated. Accordingly, there is no

reason for this Court to review the decision below.

6

THE SECOND CIRCUIT PROPERLY

APPLIED THIS COURT'S PRECEDENT IN

DETERMINING THAT LIJ’S SEVERANCE

PLAN WAS GOVERNED BY ERISA.

The Second Circuit correctly held that the Severance

Plan—a typical offer of severance benefits—was an employee

welfare benefit plan governed by ERISA, finding that the Plan

“necessitated both managerial discretion and a separate anal-

ysis of each employee in light of certain criteria.” A-7-8.° LIJ

challenges that ruling t ; misconstruing this Court’s decision

in Fort Halifax, which held that a state statute requiring a

one-time, lump-sum payment to employees who were laid off

due to plant closings was not pre-empted by ERISA. The test

that emerged from Fort Halifax for ERISA pre-emption was

whether the provision of employee benefits required an

“ongoing administrative program.” 482 U.S. at 11-12. LIJ

contends that the Second Circuit in this case has joined other

courts in failing to adhere to the Fort Halifax test by looking

to a plan’s need for managerial discretion. As the Second Cir-

cuit and other courts have correctly recognized, however,

“managerial discretion” is not a standard different from

“ongoing administrative program”; evidence of the former is

merely one way to demonstrate the latter.

The Second Circuit's opinion states that “it is plain that

ERISA subject matter jurisdiction depends on the need for an

administrative program,” and reasons that a “variety of fac-

tors, including whether the employer's undertaking or obli-

; The Second Circuit's determination that this fairly common type

of severance policy was an ERISA plan is entirely consistent with this

Court's opinion in Massachusetts v. Morash, 490 U.S. 107 (1989), which

observed that “plans to pay employees severance benefits, which are

payable only upon termination of employment, are employee welfare ben-

efit plans within the meaning of [ERISA].” /d. at 116 (emphasis in the

original).

gation requires managerial discretion in its administration,”

aids in the “determination of which obligations are complex

enough to require such a program.” A-7 (citing Bogue v.

Ampex Corp., 976 F.2d 1319, 1323 (9th Cir. 1992), cert.

denied, 507 U.S. 1031 (1993)). After discussing other factors

courts have considered in making the determination,‘ the Sec-

ond Circuit remarked, “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.” A-7 (emphasis added).

In arriving at its conclusion that ERISA governs the Sev-

erance Plan, the Second Circuit expressly distinguished its

decision in James v. Fleet/Norstar Financial Group, Inc., 992

F.2d 463 (2d Cir. 1993), which involved an obligation simi-

lar to the one analyzed in Fort Halifax. In James, the court

found that an employer's promise to provide its employees

60-days’ additional pay in the event of a plant closing did not

require an ongoing administrative program and thus was not

ms In addition to Bogue, which assessed a plan's need for admin-

istration by whether it required “a case-by-case discretionary application

of its terms,” 976 F.2d at 1323, the court cited Belanger v. Wyman-Gor-

don Co., 71 F.3d 451 (1st Cir. 1995), and Fontenot v. NL Industries, Inc..

953 F.2d 960 (Sth Cir. 1992). See A-7. In Belanger, the First Circuit

looked to whether a “reasonable employee would perceive an ongoing

commitment by the employer to provide employee benefits.” 71 F.3d at

455. In Fontenot, the Fifth Circuit considered whether the employer was

required to analyze the circumstances of each employee's termination

separately in light of certain criteria. 953 F.2d at 963 (citing Pane v. RCA

Corp., 667 F. Supp. 168, 171 (D.N.J. 1987), aff'd, 868 F.2d 631 (3d Cir.

1989)).

Although LIJ argues that the district court in Pane and the Ninth Cir-

cuit in Bogue incorrectly applied Fort Halifax (Petition at 15), both

courts expressly adhered to the ongoing administrative program standard

and factually distinguished Fort Halifax in finding ERISA pre-empted

the plans at issue. Pane, 667 F. Supp. at 170-71; Bogue, 976 F.2d at 1323.

Indeed, LIJ seeks to create a circuit conflict merely by focusing on the

results of the consistent Fort Halifax analyses conducted by the several

circuits.

pre-empted by ERISA. A-6. By contrast, various managerial

assessments and decisions inherent in the terms of the Sev-

erance Plan “required much more than the simple arithmetic

calculations we held to be insufficient in James.” A-7.

“Unlike the employer'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 plant or

office closing. The Severance Plan’s effective period was

unlimited and would have reasonably been perceived by an

employee as an ongoing commitment.” A-8.°

LIJ cannot support its assertion that the Second Circuit's

decision places it at odds with the Fifth and Eighth Circuits,

which have “consistently adhered to the Fort Halifax analy-

sis.” Petition at 14 (citing Kulinski v. Medtronic Bio-Medicus,

Inc., 21 F.3d 254 (8th Cir. 1994), and Fontenot v. NL Indus-

tries, Inc., 953 F.2d 960 (Sth Cir. 1992)). In Kulinski, the

Eighth Circuit determined a benefit plan did not require an

administrative program by assessing whether it implicated the

exercise of managerial discretion and finding that “there was

nothing for the company to decide” and “no discretion for it

to exercise.” 21 F.3d at 258. In Fontenot—cited with approval

by the Second Circuit (see A-7; note 4, supra)—the Fifth Cir-

> Thus, this case does not “place[ ] the Second Circuit in the intra-

circuit conflict column,” as LIJ asserts. Petition at 16. The Second Cir-

cuit factually distinguished the undertakings of the Severance Plan from

the lesser obligation at issue in James in arriving at a different conclu-

sion as to ERISA’s applicability.

Moreover, although unsuccessful before the district court and the Sec-

ond Circuit, LIJ continues to try to find significance in the fact that an

administrative program was not yet in place when Schonholz made the

first claim under the Severance Plan. See Petition at 5, 16. Plainly, Fort

Halifax and its progeny look to the need for an administrative program,

not to its implementation. See Fort Halifax, 482 U.S. at 11 (“[pre-emp-

tion] arises . . . with respect to benefits whose provision by nature

requires an administrative program”); see also, e.g., Delaye v. Agripac,

Inc., 39 F.3d 235, 237 (9th Cir. 1994) (the test that has emerged from

Fort Halifax is “does the benefit package implicate an ongoing admin-

istrative scheme?”), cert. denied, 115 S. Ct. 1402 (1995).

9

cuit looked to whether the circumstances of each employee's

termination had to be analyzed in light of certain criteria in

determining whether the plan at issue required an adminis-

trative scheme. 953 F.2d at 963.° These were two of the three

factors the Second Circuit considered in finding that all of

them supported the conclusion that the Severance Plan

required an ongoing administrative program and thus was

covered by ERISA. See A-7-8. The very cases on which LIJ

relies thus demonstrate that there is no conflict among the cir-

cuits in interpreting the Fort Halifax standard for ERISA

pre-emption.

THERE IS NO CIRCUIT SPLIT

REGARDING THE AVAILABILITY OF

PROMISSORY ESTOPPEL UNDER ERISA

IN APPROPRIATE CIRCUMSTANCES.

The Second Circuit’s holding that Schonholz has a viable

- promissory estoppel claim is consistent with that circuit's

precedent and does nothing to create or exacerbate a circuit

split on this issue. As the Second Circuit had previously held,

and reiterated in this case, “principles of estoppel can apply

in ERISA cases under extraordinary circumstances.” A-12

. LU cites no authority for its suggestion that the Fifth and Ei ghth

Circuits have declined to apply ERISA to plans in part because they cov-

ered only “a handful of ‘beneficiaries.’ ” Petition at 14. In fact, “it is well

established that the requirement of a class of beneficiaries may be sat-

isfied even when there is only one employee participating in the plan.”

Grimo v. Blue Cross and Blue Shield of Vermont, 899 F. Supp. 196, 202

n.6 (D. Vt. 1995) (citing Madonia v. Blue Cross and Blue Shield of Vir-

ginia, 11 F. 3d 444, 447-49 (4th Cir. 1993), cert. denied, 114 S. Ct. 1401

(1994); Williams v. Wright, 927 F.2d 1540, 1545 (11th Cir. 1991)). See 29

C.F.R. §§ 2510.3-3(b) & 2510.3-3(c)(1) (Department of Labor regula-

tions providing that plan must involve at least one employee other than

corporation's sole owner to satisfy ERISA “participant” requirement).

10

(citing Lee v. Burkhart, 991 F.2d 1004, 1009 (2d Cir. 1993)).

Such circumstances can occur, as here, when an employer

makes a writte.1 promise that is at the same level of formality

as a plan creation document which lacks an amendment pro-

cedure, and an employee reasonably and detrimentally relies

on that promise. See A-11, A-13-14. Estoppel claims under

ERISA have been denied where the facts cannot support

them; there is no circuit split on the availability of estoppel in

appropriate circumstances.

This Court has sanctioned the development of federal com-

mon law to fill the interstitial gaps in ERISA’s statutory

scheme, see, e.g., Firestone Tire & Rubber Co. v. Bruch, 489

U.S. 101, 110 (1989), and, accordingly, the Second Circuit is

among the many circuit courts to recognize estoppel claims

under federal common law principles. E.g., In re Unisys Corp.

Retiree Medical Benefit “ERISA” Litigation, 58 F.3d 896,

907-08 (3d Cir. 1995); Miller v. Taylor Insulation Co., 39 F.3d

755 (7th Cir. 1994); Devoll v. Burdick Painting, Inc., 35 F.3d

408 (9th Cir. 1994), cert. denied, 115 S. Ct. 1381 (1995);

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);

Armistead v. Vernitron Corp., 944 F.2d 1287 (6th Cir. 1991);

Kane v. Aetna Life Ins., 893 F.2d 1283 (11th Cir.), cert.

denied, 498 U.S. 890 (1990).

The cases LIJ cites for the proposition that some circuits do

not allow promissory estoppel claims under ERISA simply do

not involve facts in which estoppel would be appropriately

applied. See Miller v. Coastal Corp., 978 F.2d 622, 625 (10th

Cir. 1992) (where ERISA plan at issue adhered to statutory

formalities, the court declined to “enforce an informal writ-

ten agreement under a theory of federal common law estop-

pel”), cert. denied, 507 U.S. 987 (1993); Alday v. Container

Corp. of America, 906 F.2d 660, 666 (11th Cir. 1990) (“no

federal common law right to promissory estoppel under

ERISA in cases involving oral amendments to or modifica-

tions of employee plans”) (citing Nachwaiter v. Christie, 805

1]

F.2d 956, 960 (11th Cir. 1986)), cert. denied, 498 U.S. 1026

(1991); Degan v. Ford Motor Co., 869 F.2d 889, 895 (Sth Cir.

1989) (promissory estoppel not cognizable to enforce “oral

modifications to benefit plans”); see also Devoll, 35 F.3d at

412 (holding that, while ERISA pre-empts promissory estop-

pel under state common law, “ ‘federal equitable estoppel

principles can, in certain circumstances, apply to some claims

arising out of ERISA’ ”) (quoting Greany v. Western Farm

Bureau Life Ins. Co., 973 F.2d 812, 821 (9th Cir. 1992)).

LIJ thus cannot support its suggestion that circuits recog-

nizing estoppel-based claims under ERISA have misused their

authority to create federal common law by “revis[ing] the

Statute.” Petition at 20. As shown above, courts have con-

Sistently denied estoppel claims based on oral promises or

informal communications in cases where the plans are formal

and properly maintained under ERISA procedures, because

ERISA provides that “[e]very employee benefit plan shall be

established and maintained pursuant to a written instrument,”

29 U.S.C. § 1102(a)(1), which shall contain “a procedure for

amending such plan, and for identifying the persons who have

authority to amend the plan.” /d. § 1102(b)(3).’ Such claims

are precluded by the terms and purpose of the statute. The

Severance Plan, however, was created without ERISA’s

reporting and disclosure formalities and did not contain an

amendment procedure. Several courts have recognized that

employer communications may Support an estoppel claim

where they construe ambiguous plan language or are no less

formal than other plan documents. See, e.g., Taylor Insula-

tion, 39 F.3d at 759-60; Slice, 34 F.3d at 634: Curcio v. John

Hancock Mutual Life Ins. Co., 33 F.3d 226, 236-37 & n.17

(3d Cir. 1994); Izzarelli v. Rexene Products Co., 24 F.3d 1506,

Notwithstanding these statutory provisions, as noted in Tayler

insulation, “[t}here are no particular formalities that a welfare plan must

comply with to be an ERISA plan. It need not even be in writing; . .. this

is not a prerequisite to coverage.” 39 F.3d at 760. See Curtiss-Wright

Corp. v. Schooenjongen, 115 S. Ct. 1223, 1230-31 (1995); A-11.

12

1517-18 (Sth Cir. 1994); Greany, 973 F.2d at 821-22; Law,

956 F.2d at 367-68; National Companies Health Benefit Plan

v. St. Joseph’s Hosp. of Atlanta, 929 F.2d 1558, 1571-74 (11th

Cir. 1991); Black v. TIC Investment Corp., 900 F.2d 112, 114-

16 (7th Cir. 1990); Kane, 893 F.2d at 1285 & n.3; see also,

e.g., In re Momentum Mfg. Corp., 25 F.3d 1132, 1134, 1137

(2d Cir. 1994) (estoppel claim upheld where bankrupt com-

pany’s “Disclosure Statement, together with other company

communications,” led employees to believe company’s

promise of severance, which it later sought to withdraw). This

approach is consistent with this Court’s recent pronouncement

that ERISA “follows standard trust law principles in dictating

only that whatever level of specificity [an employer] ulti-

mately chooses, in an amendment procedure or elsewhere, it

is bound to that level.” Curtiss-Wright Corp. v. Schoonejon-

gen, 115 S. Ct. 1223, 1231 (1995). Accordingly, the court

below properly ruled that where an ERISA plan contains no

amendment procedure, an employer’s written communication

to a plan participant that is at the same level of formality as

other plan documents may support an estoppel claim.® The

circuits are not split on this issue.

. The Second Circuit also held that the written communication

promising Schonholz benefits under the Severance Plan supports her

ERISA contract-based claim, an issue LIJ did not raise before this Court.

Schonholz thus would have an alternate basis for recovery even if her

estoppel claim were rejected.

13

CONCLUSION

The decision below does not conflict with any decision of

this Court and does not present any genuine conflict among

the circuits on any issue warranting this Court’s review.

Rather, the decision represents a proper resolution of the

issues presented, consistent with the language and purpose of

ERISA. For these reasons, the petition for writ of certiorari

should be denied.

Dated: New York, New York

October 25, 1996

Respectfully submitted,

ANTHONY M. RADICE

Counsel of Record

WILLIAM E. ZUCKERMAN

MORRISON & FOERSTER LLP

1290 Avenue of the Americas

New York, New York 10104-0185

(212) 468-8000

Counsel for Respondent