Petition for Writ of Certiorari — Kinam Gold, Inc. v. Lettes

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je Supreme Court, U.S.

(V) FILED

001631 APR 25 2002

No. 00-.

Supreme Court of the Hntted States

KINAM GOLD INC., a Delaware Corporation, formerly known

as Amax Gold, Inc.; AMAX GOLD, INC. SEPARATION PLAN

FOR KEY EMPLOYEES; AMAX GOLD, INC. BENEFITS

COMMITTEE; KINROSS GOLD CORPORATION BENEFITS

COMMITTEE; and KEINROSS GOLD CORPORATION,

Petitioners,

MARK LETTES,

Respondent.

On PETITION FOR A Writ OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

WILLIAM A. WRIGHT RAYMOND M. DEENy*

SHERMAN & Howarb L.L.C. N. DAWN WEBBER

Suite 3000 SHERMAN & Howarp L.L.C.

633 Seventeenth Street Suite 1500

Denver, CO 80202 90 South Cascade Avenue

(303) 297-2900 Colorado Springs, CO 80903

(719) 475-2440

* Counsel of Record :

Attorneys for Petitioners

166533 g

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

QUESTION PRESENTED

An employer, engaged in interstate commerce, created

a Separation Plan for Key Employees. At the discretion of a

Plan Administrator, the Separation Plan provides lump-sum

severance benefits to select employees who suffer a

“Separation from Service” not for “Cause,” but due to a

“Change in Control,” and who are not offered “Comparable

Employment.” The Separation Plan specifies a source of

funding, eligibility standards for participants, formulae for

benefit calculations, claims and appeals procedures, and

participants’ rights under the Employee Retirement Income

Security Act of 1974,\as amended (“ERISA”).

The question presented here is: Does Fort Halifax

Packing Co. v. Coyne, 482 U.S. 1 (1987), provide the proper

standard to determine whether ERISA preempts state

common law claims for benefits from the employer-

sponsored Separation Plan for Key Employees?

PARTIES TO THE PROCEEDING AND

STATEMENT PURSUANT TO RULE 29.6

The petitioners are Kinam Gold, Inc.; Amax Gold, Inc.

Separation Plan for Key Employees; Amax Gold, Inc.

Benefits Committee; Kinross Gold Corporation Benefits

Committee; and Kinross Gold Corporation. Kinross Gold

Corporation does business in the United States as Kinam

Gold, Inc., a Delaware corporation. Kinross Gold

Corporation is a nongovernmental corporation. Trimark

Financial Company, a Canadian company, owns in excess

of 10% of Kinross Gold Corporation stock. The other named

petitioners are not corporations.

ili

TABLE OF CONTENTS

Question Presented... . stieets Be

Parties to the Proceeding and Statement Pursuant to

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Statement of Jurisdiction ......-......ccccccees

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

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1. The AGI Plan Provides Separation

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2. The AGI Plan Provides Claims and

Appeals Procedures. ...............

3. The AGI Plan Names an Administrator

I, Nc hc aceccaccucacees

Contents

Page

4. The AGI Plan Documents Describe It as

Oh Re OU 6 Shc nus cue eteteess ec cteaee

5. Respondent Applied for Benefits Under

ip AGO: 6.05 60 sasess sees 5

B. The Pracestegs Belew. ...ccccscsceess: 6

S.. FR ee. skein e 6

2. FRO COME OF AMRUI. 005s cciccccess 6

Reasons for Granting the Writ ................. 7

I. The. Court Should Resolve The Federal

Question Concerning ERISA’s Coverage Of

Employer-Sponsored Benefit Plans. ...... 8

A. The Tenth Circuit’s Ruling Conflicts

with ERISA’s Definition of “Plan.” .. . 8

1. ERISA Defines “Plan.” ......... 8

2. The Department Of Labor Has

Interpreted ERISA “Plan.” ....... 10

3. Before Fort Halifax, the Circuit

Courts Interpreted ERISA’s

Definition of “Plan.” ........... 11

Contents

4. Under the Statutory Definition as

Interpreted by the Department of

Labor and the Circuit Courts, the

AGI Plan Is an ERISA Plan. .....

The Tenth Circuit Departed from

Department of Labor and Circuit

Court Interpretations by Determining

that the AGI Plan Is Not A “Plan”

errr reese

B. The Tenth Circuit’s Ruling Misapplies

Pune Fs 6 v4 ka ocd cbs ee

Fort Halifax Held that ERISA Does

Not Preempt State Statutes that Do

Not Require Employers to Establish

ES PRS koa es 6 TS RS

Fort Halifax Did Not Hold that

ERISA Preempts State Law Claims

for Benefits Only If the Employer-

Sponsored ERISA “Plans.”

Fort Halifax held that the “one-time, lump sum payment

triggered by a single event” created by state statute is not a

sufficient administrative scheme to allow ERISA preemption.

482 U.S. at 12. This lean standard has provided no guidance

on what level of administrative complexity would be

sufficient for an employer-sponsored plan. See Schonhoiz v.

Long Island Jewish Med. Ctr., 87 F.3d 72, 76 (2d Cir. 1996)

(“deciding what is not an ongoing administrative program

does not aid our determination of which obligations are

complex enough to require such a program’); Belanger v.

Wyman-Gordan Co., 71 F.3d 451, 454 (1st Cir. 1995)

(“making particularized judgments in this area on the basis

of vague etchings of policy is no mean feat”).

Relying heavily on the specific facts of cases decided .

after Fort Halifax, the Circuit Courts have developed

conflicting standards for ERISA “plans.” The District of

Columbia Circuit asserts that “an employee benefit may be

considered a plan for purposes of ERISA only if it involves

the undertaking of continuing administrative and financial

obligations by the employer to the behoof of employees or

their beneficiaries.” Young v. Washington Gas Light Co.,

206 F.3d 1200, 1203 (D.C. Cir. 2000) (internal quotation

marks and citations omitted).

The First Circuit finds employer-sponsored plans

to be sufficiently complex based on two “important

considerations”:

we will be inclined to find a plan where there are

elements that “involve administrative activity

potentially subject to employer abuse” ....

Similarly, whether a “reasonable employee would

perceive an ongoing commitment by the employer

to provide employee benefits” is an important

consideration.

New England Mut. Life Ins. Co. v. Baig, 166 F.3d 1, 4 (Ist

Cir. 1999) (internal citations omitted).

The Second Circuit describes a “variety of factors” to

consider: + See ae

Whether the employer’s undertaking or obligation

requires managerial discretion in its administration;

whether a reasonable emp!vyee would perceive

an ongoing commitment by the employer to

provide employee benefits; and whether the

employer was required to analyze the

circumstances of each employee’s termination

separately in light of certain criteria.

Schonholz, 87 F.3d at 76 (internal quotation marks and

citations omitted).

The Third, Seventh, and Ninth Circuits have adopted a

standard relyine on individualized decision-making: “the

fence between cases involving real ERISA plans and cases

such as Fort Halifax [is] ... whether the plan in gv<stion

requires an administrative scheme because the circurastances

of each employee’s termination have to be analyzed in light

of certain criteria.” Bogue v. AMPEX Corp., 976 F.2d.1319,

1323 (9th Cir. 1992) (internal quotations and alterations

omitted). See Pane v. RCA Corp., 667 F. Supp. 168, 170

(D.N.J. 1987) (an “ongoing administrative scheme” exists

under Fort Halifax if “the employer made a separate analysis

of each employee’s eligibility for benefits and schedule of

payments”), aff'd, 868 F.2d 631 (3d Cir. 1989); Cvelbar +.

CBI Illinois Inc., 106 F.3d 1368, 1374-75 (7th Cir. 1997)

(“ ‘pivotal inquiry’ ” includes whether the administrator

“ “must analyze each employee’s particular circumstances

in light of the appropriate criteria’ ” in order to “ ‘determine

the employees’ eligibility for and level of benefits’ ”)

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

254, 257 (8th Cir. 1994)).

Other Circuit Courts have continued to rely on the

Dillingham factors, but incorporate the Fort Halifax language

as part of Dillingham’s “procedures for receiving benefits.”

See Johnston v. Paul Revere Life Ins. Co., 241 F.3d 623,

629 (8th Cir. 2001); Williams v. Wright, 927 F.2d 1540, 1544

(11th Cir. 1991).*

The Tenth Circuit, in contrast, has appended the Fort

Halifax requirement to the Dillingham requirements:

A plan, fund, or program exists if from the

surrounding circumstances a reasonable person

can ascertain the intended benefits, a class of

beneficiaries, the source of financing, and the

procedures for receiving benefits. Additionally,

in order to fit within ERISA, the plan must

implicate benefits “whose provision by nature

requires an ongoing administrative program to

meet the employer’s obligation.” Fort Halifax,

482 U.S. atll....

Siemon v. AT&T Corp., 117 F.3d 1173, 1178 (10th Cir. 1997)

(internal quotation marks and citations omitted). In the current

case, the Tenth Circuit focused on the requirement that the

administrative scheme be “ongoing.” (App. at 6a, 10a.)

4. Circuit Courts sometimes ignore Fort Halifax altogether and

simply rely on Dillingham when determining whether an employer-

sponsored arrangement is an ERISA “plan.” See, e.g., emorial

Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 239-40 (Sth

Cir. 1990); Custer v. Pan American Life Ins. Co., 12 F.3d 410, 417

(4th Cir. 1993). See also Williams v. WCI Steel Co., 170 F.3d 598,

604 (6th Cir. 1999) (distinguishing Fort Halifax as concerning

preemption, not plan qualification).

B. The Circuit Courts Confilet Over Whether

Employer-Sponsored Plans Similar to the AGS _—

Are ERISA “Plans.”

The AGI Plan at issue in this case provides severance

benefits over a limited period of time for a few key

employees, if the Administrator in its discretion determines

the Eligible Employee experienced a “Separation from

Service” due to a “Change in Control” and the employee

was not offered “Comparable Employment.” The Tenth

Circuit determined this program did not involve an

administrative scheme sufficient to qualify as an ERISA

“plan.” Other Circuit Courts have considered programs

similar to the AGI Plan and have ruled that they are ERISA

plans.

In Bogue v. AMPEX Corp., 976 F.2d 1319, 1322 (9th

Cir. 1992), the Ninth Circuit considered a plan that existed

for less than two years, provided severance benefits for ten

executives, applied only upon the sale of the employer,

provided benefits only if the employees were not offered

“substantially equivalent” employment with the current

employer or a successor, provided for discretionary decision-

making by the Administrator, and provided only a lump-sum

benefit. Applying Fort Halifax, the Ninth Circuit determined

that the plan did include a sufficient administrative scheme

to make it an ERISA “plan.” Jd. at 1323.

In Schonholz v. Long Island Jewish Med. Ctr., 87 F.3d

72, 74 (2d Cir. 1996), the Second Circuit considered a plan

that provided payments to “senior-level employees upon their

involuntary discharge,” if the employees’ discharge was not

for illegal conduct or deficient performance, and if the

employees continued to make “a reasonable and good faith

effort” to obtain a commensurate position. The Second

Circuit noted Fort Halifax’s requirement of an

“administrative program,” and ruled the plan was subject to

ERISA, inter alia, because it “necessitated both managerial

discretion .ad a separate analysis of each employee in light

of certain criteria.” Jd.

In Collins v. Ralston Purina Co., 147 F.3d 592 (7th Cir.

1998), the Seventh Circuit considered a set of individual

agreements between an employer and key employees. The

agreements were in force for just over a year. They provided

for lump-sum benefits if the employer was sold and the

buyer substantially reduced the employee’s duties or

responsibilities, failed to offer existing or substantially

similar employee benefits, or transferred the employee

outside the metropolitan South Bend, Indiana area. Jd. at 594.

The Seventh Circuit noted that the agreements required the

employer “to budget for the prospect of paying out

disbursements of varying amounts to its managers and at

varying times.” Jd. at 595-96. The court also noted that, to

determine whether the purchaser “substantially reduced” job

responsibilities, the employer would have to compare the

previous and the newly offered job duties, would have to

consult records, and would have to apply consistent

standards. /d. at 596.

Only an ongoing administrative scheme would

allow the company to develop a working

definition of “substantial reduction of duties or

responsibilities,” such that it could be consistently

applied either to a single employee on multiple

occasions or multiple employees on multiple

occasions. It is exactly this prospect of

multiplicity and record-keeping that $

Collins’ case from the one-time, routine

disbursement facing the Court in Fort Halifax.

Id.

The AGI Plan has the same features as these cases.

Nevertheless, relying on the same language in Fort Halifax,

the other Circuit Courts reached positions inconsistent with

that of the Tenth Circuit.

C. The Circuit Courts’ Conflicts over the Appropriate

Standard and over Plans Similar to the AGI Plan

Subject ERISA Plans to Divergent State and Federal

Law.

One purpose of ERISA preemption is to prevent

employee benefit plans from being subject to state law claims

and remedies. See Pilot Life, 481 U.S. at 56; Ingersoll-Rand,

498 U.S. at 139-40. As this Court has noted, employers might

react to being subject to diverse state and federal governing

law by reducing benefits or refraining from offering benefits.

Fort Halifax, 482 U.S. at 11. Applying inconsistent

standards, the Tenth Circuit has found the AGI Plan to be

subject to state law contract claims, while the Second,

Seventh, and Ninth Circuits found similar severance pay

programs to be “plans” subject only to federal claims under

ERISA. Unless this Court addresses these conflicts among

the Circuit Courts, many employers’ severance plans for key

employees will be subject to federal law in some states and

state law in other states. This situation is “fundamentally at

odds with the goal of uniformity that Congress sought to

implement.” Jngersoll-Rand, 498 U.S. at 142.

;

{

CONCLUSION

Under the Tenth Circuit’s application of Fort Halifax to

employer-sponsored plans, ERISA is unable to impose

employee protections on simple welfare and pension benefit

plans. In addition, employers who offer similar, simple

employee benefit plans will be subject to state law in some

areas of the country and federal law elsewhere. This Court

should grant this Petition to clarify the application of Fort

Halifax to employer-sponsored plans and to restore ERISA’s

uniform regulation of private employee benefit programs.

Respectfully submitted,

WILLIAM A. WRIGHT RAYMOND M. DEENY*

SHERMAN & Howarpb 1..L.C. N. DAWN WEBBER

Suite 3000 SHERMAN & HowarbD L.L.C.

633 Seventeenth Street Suite 1500

Denver, CO 80202 90 South Cascade Avenue

(303) 297-2900 Colorado Springs, CO 80903

(719) 475-2440

*Counsel of Record

Attorneys for Petitioners

APPENDIX

bai

a aN ee ee noah cae oe

APPENDIX A — ORDER AND JUDGMENT OF THE

UNITED STATES COURT OF APPEALS FOR THE

TENTH CIRCUIT DATED AND

FILED JANUARY 23, 2001

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

No. 00-1057

(D.C. No. 98-S-1899)

(D. Colo.)

MARK LETTES,

Plaintiff-Appellant,

KINAM GOLD INC., a Delaware Corporation, formerly

known as Amax Gold, Inc.; AMAX GOLD, INC.,

SEPARATION PLAN FOR KEY EMPLOYEES; AMAX

GOLD, INC., BENEFITS COMMITTEE; KINROSS GOLD

CORPORATION BENEFITS COMMITTEE;

KINROSS GOLD CORPORATION,

Defendants- Appellees.

ORDER AND JUDGMENT*

* This order and judgment is not binding precedent, except

under the doctrines of law of the case, res judicata, and collateral

estoppel. The court generally disfavors the citation of orders and

judgments; nevertheless, an order and judgment may be cited under

the terms and conditions of 10th Cir. R. 36.3.

Appendix A

Before BALDOCK, ANDERSON, and HENRY, Circuit

Judges.

After examining the briefs and appellate record, this

panel has determined unanimously to grant the parties’

request for a decision on the briefs without oral argument.

See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.

Mark Lettes appeals from an order dismissing his state

law claims against appellees as preempted by the Employee

Retirement Income Security Act, 29 U.S.C. §§ 1001-1461

(ERISA) but allowing amendment of his complaint to allege

ERISA violations. He also appeals from a second order

granting summary judgment in favor of appellees on the

ERISA claims. Our jurisdiction arises under 28 U.S.C.

§ 1291, and we reverse and remand with instructions to

remand to state court.

I. Background facts and proceedings

The relevant facts are undisputed. Mr. Lettes was

employed by AMAX Gold, Inc. (AGI) as a “key employee.”

In 1997, in anticipation of a pending merger with Kinross

Gold Corporation, AGI adopted a “Separation Plan for Key

Employees” (the plan) that provided an additional, one-time

“golden parachute” monetary payment apart from, and

independent of (but reduced by any amount paid under), the

company’s general severance plan. Appellant’s App. at 689-

705. The additional payment became owing upon a key

employee’s separation from service after a “change of

control” as defined in the plan, id. at 694, and the plan

Appendix A

automatically terminated at the close of business on

December 31, 1999. Jd. at 703. Nine key employees were

eligible to participate in the plan. Jd. at 115. AGI named

itself as the administrator of the plan and initially delegated

its duties under the plan to its benefits committee consisting

of three members. Two of those members were eligible key

employees. See id. at 699-700; 115-16. The committee, in

turn, appointed another AGI employee as plan administrator.

Id. at 116.

Just before the merger agreement was executed, in

February 1998 the plan was amended to redefine the meaning

of “Separation from Service” to include termination without

cause within twelve months of the merger or by the eligible

employee quitting for “Good Reason.” /d. at 740. The

amendment added definitions for “Cause”' and “Good

Reason,” id. at 740-41, and omitted the former requirement

that, in order to receive the golden parachute, the eligible

employee also had to meet the terms and conditions of the

general severance plan, id. at 741, 694. The plan farther

1. The plan defined “Cause” as “(i) substantial and continued

failure by the Eligible Employee to perform his services and duties

to the Company ... (ii) any act of fraud or embezzlement against

the Company ... or (iii) the conviction, or pleading guilty or no

contest, to a felony.” Appellant’s App. at 740.

2. The plan defined “Good Reason” to mean “any of the

following events: (i) material reduction in the Eligible Employee’s

compensation, benefits, title or duties, or (11) a change in the Eligible

Employee's principal place of employment which is more than

35 miles away from the Eligible Employee’s pre-Change of Control

place of employment, and more than 35 miles away from the Eligible

Employee’s primary residence.” Appellant’s App. at 741.

Appendix A

provided that an eligible employee was not entitled to

benefits if he had been offered “Comparable Employment,”

as defined by the plan, by AGI or its successor. Finally, the

plan specifically limited benefits to eligible employees who

had performed their job assignments satisfactorily and to the

best of their ability before separation; who had abided by

the terms of confidentiality and noncompetition agreements;

and who had executed a general release of claims in a form

AGI prescribed. Jd. at 695. Thus, under the express terms of

the plan, an eligible employee was entitled to receive golden

parachute benefits after separation from service unless he

had been terminated with cause, as defined by the plan, or

quit without good reason, as defined by the plan, as long as

he also complied with prior agreements with the company

and signed the release.

The plan provided a formula for benefit based on the

employee’s salary grade and target bonus. Jd. at 696-99.

Upon merger with Kinross in June 1998, golden parachute

benefits were automatically paid without separate request

or action of the benefit committee to seven of the nine “key

employees.” See id. at 117. One key employee apparently

resigned and accepted a job with another company before

the change of control. Jd. Thus, Mr. Lettes was the only key

employee in June 1998 who had not already been paid the

severance benefit.

Before the merger, Mr. Lettes was offered a position at

Kinross that AGI and Kinross believed to be “comparable

employment” as defined by the plan. Mr. Lettes disagreed,

arguing that the proffered job did not provide him with the

Appendix A

same level of autonomy, duties, or potential compensation.

He requested, but AGI and then Kinross denied, the golden

parachute benefits under the separation plan.

Mr. Lettes brought suit in Colorado state court, claiming

that the appellees unlawfully refused to pay separation

benefits to which he was entitled. Appellees removed the

case to federal court under 28 U.S.C. § 1331, alleging federal

question jurisdiction under ERISA. The district court then

granted appellees’ motion to dismiss Mr. Lettes’ state law

claims as preempted by ERISA. Because federal jurisdiction

rests on whether ERISA controls the plan, we must answer

that question first. See Steel Co. v. Citizens for a Better Env’t,

523 U.S. 83, 101-02 (1998).

II. Discussion

“(C]ommon law tort and breach of contract claims are

preempted by ERISA if the factual basis of the cause of action

involves an employee benefit plan.” Milton v. Scrivner, Inc.,

53 F.3d 1118, 1121 (10th Cir. 1995) (quotation omitted).

We review de novo the district court’s preliminary determination

that ERISA preempted Mr. Lettes’ state law claims. Pacificare

of Okla., Inc. v. Burrage, 59 F.3d 151, 153 (10th Cir. 1995).

“ERISA was passed by Congress in 1974 to safeguard

employees from the abuse and mismanagement of funds that

had been accumulated to finance various types of employee

benefits.” Massachusetts v. Morash, 490 U.S. 107, 112

(1989). “To that end, it established extensive reporting,

disclosure, and fiduciary duty requirements to insure against

the possibility that the employee’s expectation of the benefit

Appendix A

would be defeated through poor management by the plan

administrator.” /d. at 115. Although an agreement to pay

severance benefits may constitute an employee welfare

benefit plan subject to ERISA’s regulation, the agreement is

subject to ERISA’s control only if it creates benefits requiring

“an ongoing administrative program to meet the employer’s

obligation.” Fort Halifax Packing Co. v. Coyne, 482 U.S. 1,

11 (1987) (emphasis added). To further explain the meaning

of the term “ongoing,” the Court held that, if under the

agreement, the employer has not assumed a responsibility

to process claims and pay benefits “on a regular basis,” it

“faces no periodic demands on its assets that create a need

for financial coordination and control,” and a benefit pian

subject to ERISA has not been established. Jd. at 12. The

Court in Fort Halifax found that a statute requiring employers

to pay as severance a “one-time, lump-sum payment triggered

by a single event” did not create a benefit plan subject to

ERISA’s control. /d.

In Siemon v. AT&T Corp., we stated that the Fort Halifax

decision was primarily based on the fact that “only a one-

time event would trigger the payment,” noting that the Court

distinguished the severance benefit from death payment

benefit plans that create an ongoing need for an administrative

scheme to process claims and pay out benefits. 117 F.3d

1173, 1178 (10th Cir. 1997). Thus, we have decided that the

hallmarks of an ERISA plan are whether the plan pays

benefits triggered by several events, as opposed to a one-

time event, and whether it requires regular periodic payments.

The district court in this case concluded that the language

giving the plan administrator “complete and discretionary

Appendix A

authority to construe and interpret the Plan, correct defects,

supply omissions, and reconcile inconsistencies and

ambiguities in and with respect to the Plan” also gave the

administrator significant discretion in deciding whether 2

change of control had occurred, whether eligible employees

were entitled to benefits, whether eligible employees had

been offered comparable employment, and whether they had

performed their jobs satisfactorily and had abided by the

terms of all agreements after separation.’ Appellant’s App.

at 228 (quotation omitted). Citing a Second Circuit case and

focusing on its conclusion that “the making of severance

payments. . . requires the ‘exercise of managerial discretion,’ ”

the court concluded that “sufficient indicia of an ongoing

administrative scheme to be governed by ERISA” therefore

existed. /d. (citing James v. Fleet/Norstar Fin. Group, Inc.,

992 F.2d 463, 468 (2d Cir. 1993)). Apparently, the district

court found the key factor to be considered was whether a

plan required a “ ‘case-by-case, discretionary application of

its terms.” ” /d. at 229 (quoting Bogue v. Ampex Corp., 976

F.2d 1319, 1323 (9th Cir. 1992)). We read our precedent,

however, to require consideration of additional factors.

3. Although the plan administrator had discretion to interpret

ambiguities in the plan, the language setting out eligibility

requirements was explicit and absolute, thus significantly limiting

the administrator's discretion. The plan set out four specific

components for the administrator to use in determining whether an

eligible employee had good reason to refuse an offer of employment:

“material reduction” in either compensation, benefits, title, or duties.

Appellant's App. at 435. The administrator’s only discretion lay in

determining whether a reduction in any of those four areas was

“material.”

Appendix A

In Bogue, the court found an “ongoing” scheme to exist

solely because the administrator had discretion in

determining eligibility. There, a limited severance program

similar to the one in the case at bar was created for several

executives if they were not offered “substantially equivalent”

employment after a merger. 976 F.2d at 1321. The employer

argued that discretionary decision making was the “hallmark

of an ERISA plan,” and the court agreed. /d. at 1322. The

Bogue court stated that it chose to follow the approach of

Pane v. RCA Corp., 868 F.2d 631 (3d Cir. 1989), and

Fontenot v. NL Industries, Inc., 953 F.2d 960 (5th Cir. 1992),

in determining what constitutes an ERISA plan. 976 F.2d at

1323.

We conclude, however, that the cases Bogue relied upon

poorly support its analysis. For example, the plaintiff in Pane

based federal jurisdiction on ERISA but then argued that

ERISA did not preempt his state law claims, which is an

inconsistent stance. Pane, 868 F.2d at 634-35. Without

analysis, the court stated only that Fort Halifax “suggests”

that the plan at bar was an ERISA plan because it required

an administrative scheme. /d. at 635.

Bogue further proposed that the Fontenot court based

ERISA control on whether “the circumstances of each

employee’s termination [had] to be analyzed in light of

certain criteria.” 976 F.2d at 1323 (quotations omitted). Our

review of Fontenot leads to a different conclusion. In

Fontenot, the plaintiff asserted that the golden parachute plan

at issue was an ERISA plan, apparently arguing that a//

employee benefits requiring administrative schemes are

ERISA plans and relying on Pane v. RCA Corp., 667 F. Supp.

haps pe Rey ST shed

es LES PP I TE D C IP IORA TOY ENB FY Cd ne oe eS Se BO Sin NGM iF IN 7. - e e ee Teer eas way ron

TR EIN ELE GALORE IAL IES VE SEBS FMI ILA

Aedes aie

Appendix A

168 (D.N.J. 1987), aff'd 868 F.2d 631 (3d Cir. 1989).

See Fontenot, 953 F.2d. at 962-63. Fontenot distinguished

Pane by noting that the plan in its case required no

administrative scheme whatsoever and stated only that Pane

did not stand for the proposition that every golden parachute

is an ERISA plan. /d. at 963. The Fontenot court did not, as

Bogue suggests, hold that the hallmark of an ERISA plan is

whether an individualized discretionary eligibility decision

must be made by a plan administrator, although that factor

entered into the court’s analysis.

Whether a plan administrator has discretion in

determining eligibility for benefits may be one factor to be

considered in deciding whether an administrative scheme for

processing claims is necessary, but it says nothing about

whether the plan is sufficiently “ongoing” to trigger ERISA

regulation. The fact that an administrator has even unfettered

discretion in determining eligibility for benefits does not

mean that the employer has assumed a “responsibility to pay

benefits on a regular basis,” thus causing it to face “periodic

demands on its assets that create a need for financial

coordination and control.” Fort Halifax, 482 U.S. at 12.

The district court focused on AGI’s discretion in

determining eligibility without examining whether the

benefit also necessitated an ongoing scheme to coordinate

and control monies that would fund the regular distribution

of payments, as required by Siemon. See 117 F.3d at 1178-

79 (noting that focus of Fort Halifax decision was the one-

time event that triggered single payment); see also Belanger

v. Wyman-Gordon Co., 71 F.3d 451, 454 (ist Cir. 1995)

(stating that “an employee benefit may be considered a plan

10a

Appendix A

for purposes of ERISA only if it involves the undertaking of

continuing administrative and financial obligations by the

employer’) (emphasis added).

The golden parachute agreement in this case was

unfunded, contingent on a one-time event that might never

happen, and expressly limited to a narrow time period. It

involved only nine specific employees and the benefit was

to be paid in a lump sum based on a mathematical formula.

Although there are factual differences between the

statutorily-required severance payments in Fort Halifax and

the supplemental severance payments that AGI proposed to

make to its key employees, the reasoning of Fort Halifax is

equally applicable to the present case and requires the same

conclusion: AGI’s agreement providing for a lump-sum

payment in the event of a separation after a change of control

during a limited time period did not constitute an employee

welfare benefit “plan” within ERISA’s ambit. Federal

jurisdiction based upon § 1331 therefore must fail.

The judgment of the United States District Court for the

District of Colorado is REVERSED. The order dismissing

Mr. Lettes’ state law claims is reversed. ERISA preemption

is the sole basis of federal jurisdiction in this case. Therefore,

the order granting summary judgment on the ERISA claims

is vacated, and we remand with instructions to remand the

case to state court.

Entered for the Court

Robert H. Henry

Circuit Judge

EEA HVIR OGRE INE BE

HSA VSIA AOD KN

AAERESETIAS LO A ERROR EIT OO

lla

APPENDIX B — MEMORANDUM OPINION AND

ORDER OF THE UNITED STATES DISTRICT

COURT FOR THE DISTRICT OF COLORADO DATED

JANUARY 5, 2000 AND FILED JANUARY 6, 2000

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Judge Daniel B. Sparr .

Civil Action No. 98-S-1899

MARK LETTES,

Plaintiff,

¥.

KINAM GOLD, INC., a Delaware corporation f/k/a AMAX

GOLD, INC., a Delaware corporation; AMAX GOLD, INC.

SEPARATION PLAN FOR KEY EMPLOYEES; AMAX

GOLD, INC. BENEFITS COMMITTEE; KINROSS GOLD

CORPORATION BENEFITS COMMITTEE;

and KINROSS GOLD CORPORATION,

Defendants.

MEMORANDUM OPINION AND ORDER

THIS MATTER comes before the court on Defendants’

Motion for Summary Judgment (filed July 1, 1999). The

court has reviewed the motion, Plaintiff's Brief in Opposition

(filed August 13, 1999), Defendants’ Reply (filed September

10, 1999), the affidavits, the numerous exhibits, the entire

12a

Appendix B

case file, and the applicable law and is sufficiently advised

in the premises. The court has determined that oral argument

will not materially assist resolution of the motion.

I. Standard of Review on Summary Judgment

Summary judgment is appropriate “if the pleadings,

depositions, answers to interrogatories, and admissions on

file, together with the affidavits, if any, show that there is

no genuine issue as to any material fact and that the moving

party is entitled to judgment as a matter of law.” Fed. R.

Civ. P. 56(c). The moving party bears the initial burden of

showing that there is an absence of any issues of material

fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986);

Hicks v. City of Watonga, 942 F.2d 737, 743 (10th Cir. 1991).

The movant need not negate the non-movant’s claim, but

need only point to an absence of evidence to support the

non-movant’s claim. Celotex, 477 U.S. at 325; John Hancock

Mut. Life Ins. Co. v. Weisman, 27 F.3d 500, 503 (10th Cir.

1994); Universal Money Ctrs., Inc. v. American Tel. & Tel.

Co., 22 F.3d 1527, 1529 (10th Cir.), cert. denied, 513 U.S.

1052 (1994). If the moving party meets this burden, the non-

moving party may not rest upon it* »leadings, but must come

forward with specific facts sho .g that there is a genuine

issue for trial as to the elements essential to the non-moving

party’s case. Fed. R. Civ. P. 56(e); Celotex, 477 U.S. at 324;

Anderson vy. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986);

Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475

U.S. 574, 586-87 (1986); Bacchus Indus., Inc. v. Arvin

Industries, Inc., 939 F.2d 887, 891 (10th Cir. 1991); Applied

Genetics Intern. v. First Affiliated Securities, Inc., 912 F.2d

1238, 1241 (10th Cir. 1990). The court must construe the

13a

Appendix B

factual record and reasonable inferences therefrom in the

light most favorable to the non-moving party. Kidd v. Taos

Ski Valley, Inc., 88 F.3d 848, 851 (10th Cir. 1996). The court

must determine “whether the evidence presents a sufficient

disagreement to require submission to a jury or whether it is

so one-sided that one party must prevail as a matter of law.”

Anderson, 477 U.S. at 251-52.

I]. Background

Plaintiff's Amended Complaint (filed June 1, 1999)

asserts two claims for relief: (1) his First Claim for Relief

pursuant to 29 U.S.C. § 1132(a)(1)(B) for recovery of

benefits under the AMAX Gold, Inc. Separation Plan for Key

Employees (“the Plan”) (Exhibit A to Amended Complaint);

and (2) his Second Claim for Relief pursuant to 29 U.S.C.

§ 1109 for breach of fiduciary duties. Plaintiff alleges that

the Defendants’ decision that he was not entitled to benefits

under the Plan was “arbitrary, capricious, and an abuse of

discretion” and that the Plan Administrator breached its

fiduciary duties owed to him. (Amended Complaint 9{ 41,

48-49).

Plaintiff was an employee of Amax, Inc. and then Amax

Gold, Inc. (“AGI”) from September of 1979 to June 1, 1998.

As a “key employee,” Plaintiff was an eligible employee

under the Plan. The Plan contained provisions for severance

pay for eligible key employees “under certain limited

circumstances.” (Exhibit A to Amended Complaint p. 1).

Article II § 2.1. (a) of the Plan provided:

14a

Appendix B

an Eligible Employee who incurs a Separation

from Service and meets the terms and conditions

of the Severance Plan for a benefit payment due

to a ‘change of control,’ as such term is defined

in the Severance Plan, shall be eligible to receive

Benefits.

(Exhibit A to Amended Complaint p. 4). Article II § 2.1.(b)

of the Plan provided that an eligible employee would not be

entitled to benefits under the Plan if AGI, Cyprus Amax

Minerals Co. (“Cyprus”) (the parent company of AGI), or a

successor offered the eligible employee “comparable

employment” after a “change of control,” “regardless

whether the Eligible Employee accepts such offer.”

(Exhibit A to Amended Complaint pp. 4-5).

In March of 1998, the AGI shareholders approved a

merger with Kinross Gold Corporation (“Kinross”). AGI and

Kinross closed the merger agreement on June 1, 1998. It is

undisputed that the merger constituted a “change of control”

under the Plan. Plaintiff alleges that, after the change of

control, he was not offered reasonably comparable

employment as defined by the Plan, and therefore he became

entitled to severance benefits pursuant to the terms of the

Plan. Defendants have denied such benefits.

III. Standard of Review for Denial of ERISA Benefits

The court has previously determined and the parties

agree that the Plan is governed by ERISA. (May 10, 1999

Memorandum Opinion and Order, Exhibit K to Motion for

Summary Judgment; see also Exhibit A to Amended

‘

15a

Appendix B

Complaint § 3.5. pp. 11-12). Title 29 U.S.C. § 1132 provides

the exclusive remedy for the failure to obtain benefits from

an ERISA plan. Winchester v. Prudential Life Ins. Co. of

America, 975 F.2d 1479, 1483 (10th Cir. 1992).

A denial of benefits challenged under 29 U.S.C.

§ 1132(a)(1)(B) is reviewed under a de novo standard unless

the benefit plan gives the administrator or fiduciary

discretionary authority to determine eligibility for benefits

or to construe the terms of the plan. Firestone Tire & Rubber

Co. v. Bruch, 489 U.S. 101, 115 (1989). If the plan

representative, administrator, or fiduciary is entitled to

exercise such discretion, then judicial review of the

challenged denial of benefits is limited to a determination

of whether the decision is arbitrary or capricious. Kimber v.

Thiokol Corp., __ F.3d __, 1999 WL 1020834 at *3 (10"

Cir. (Utah) Nov. 10, 1999); Adams v. Cyprus Amax Minerals

Co., 149 F.3d 1156, 1159 (10th Cir. 1998); Chambers v.

Family Health Plan Corp., 100 F.3d 818, 825 (10th Cir.

1996); Arfsten v. Frontier Airlines, Inc. Retirement Plan for

Pilots, 967 F.2d 438, 440 (10th Cir. 1992); Woolsey v.

Marion Laboratories, Inc., 934 F.2d 1452, 1457 (10th Cir.

1991); Pratt v. Petroleum Production Management Employee

Sav. Plan & Trust, 920 F.2d 651, 657 (10th Cir. 1990); Torix

v. Ball Corp., 862 F.2d 1428, 1429 (10th Cir. 1988); Sage v.

Automation, Inc. Pension Plan and Trust, 845 F.2d 885, 895

(10th Cir. 1988); Naugle v. O’Connell, 833 F.2d 1391, 1393

(10th Cir. 1987); Peckham v. Board of Trustees of Intern.

Broth. of Painters and Allied Trades Union & Industry Nat.

Pension Fund, 719 F.2d 1063, 1066 (10th Cir. 1983).

l6a

Appendix B

Plaintiff concedes that the standard of judicial review

for the challenged denial of benefits is whether the decision

is arbitrary or capricious. However, Plaintiff argues that the

plan administrator was operating under a conflict of interest

and, therefore, the court should grant less deference to his

decision. See Chambers, 100 F.3d at 825 (noting that a

conflict of interest “triggers a less deferential standard of

review.”).

A conflict of interest can arise between a plan

administrator’s duty to act ‘solely in the interest

of the participants and beneficiaries’ of the plan,

29 U.S.C. § 1104(a)(1), and his self interest or

loyalty to his employ«r. In Firestone, the Supreme

Court noted that ‘if a benefit plan gives discretion

to an administrator or fiduciary who is operating

under a conflict of interest, that conflict must be

weighed as a “facto[r] in determining whether

there is an abuse of discretion.” ’ Firestone, 489

U.S. at 115 (citation omitted). The standard

always remains arbitrary and capricious but the

amount of deference present may decrease ‘on a

sliding scale in proportion to the extent of conflict

present, recognizing the arbitrary and capricious

standard is inherently flexible.’ McGraw v.

Prudential Ins. Co., 137 F.3d 1253, 1258 (10"

Cir. 1998) (citing Chambers, 100 F.3d at 826-27).

Kimber, 1999 WL 1020834 at *4.

Before the court may apply a decreased amount of

deference based on a conflict of interest, there must first be

IA Ey Tg tees NE et cang an ee eM EN et

‘

Sn a ete se Ma ee he

Dil RA MRS v's

17a

Appendix B

evidence of a conflict of interest, i.e. proof “that the plan

administrator’s dual role jeopardized his impartiality.”

Kimber, 1999 WL 1028034 at * 4 (quoting Jones v. Kodak

Med. Assistance Plan, 169 F.3d 1287, 1291 (10" Cir. 1999)).

Plaintiff advances two arguments in support of his assertion

of a conflict of interest. First, “the plan is unfunded.”

(Plaintiff's Brief in Opposition to Motion for Summary

Judgment p. 17). Second, “both Chris Crowl and Allan

Schoening were responsible for human resources for their

respective employers.” /d.

Chris Crow] was the plan administrator for AGI until

the merger on June 1, 1998. (Crowl Deposition pp. 13-14;

Exhibit 2 p. 21; Exhibit 4 p. 39). Prior to June 1, 1998, Crowl

had determined that Plaintiff was not entitled to severance

benefits. (Exhibit 4 p. 38; Lettes Deposition pp. 148-49).

Allan D. Schoening was hired as Vice President of Human

Resources and Community Affairs for Kinross on July 1,

1998. Schoening was appointed as the plan administrator

for Kinross on November 12, 1998. (Exhibit J). Schoening

reviewed and, on November 19, 1998, denied Plaintiff's

second request for severance benefits. (Schoening Deposition

pp. 6-7, 9; Exhibit 19; Exhibit 1 4 26).

The mere fact that a plan administrator was an employee

of the company is not enough per se to demonstrate a conflict

of interest. Kimber, 1999 WL 1028034 at * 4 (citations

omitted). In determining whether or not a conflict of interest

existed, a court should consider various factors including

whether:

18a

Appendix B

(1) the plan is self-funded; (2) the company

funding the plan appointed and compensated the

plan administrator; (3) the plan administrator’s

performance reviews or level of compensation

were linked to the denial of the benefits; and

(4) the provision of benefits had a significant

economic impact on the company administering

the plan.

Kimber, 1999 WL 1028034 at * 4.

Here, the first factor appears to be present. However,

while Chris Crow] was the plan administrator for AGI until

the merger on June 1, 1998, the evidence demonstrates that

Crowl was never an employee of AGI. (Crowl Deposition

pp. 5, 13-14). And, while Schoening was an employee of

Kinross, neither his compensation nor his performance

reviews were in any way related to the denial of benefits.

(Exhibit M § 4). Moreover, a payment of benefits to Plaintiff

under the AGI Plan would not have had a significant

economic impact on Kinross. (Exhibit M 4 4). After

considering the relevant factors, the court finds that there is

insufficient evidence of a conflict of interest and that review

with deference is appropriate.

IV. Analysis of Denial of Benefits

A decision to Geny benefits is arbitrary and capricious

if it is not a reasonable interpretation of the plan’s terms.

McGraw, 137 F.3d at 1259; see also Miller v. Metropolitan

Life Ins. Co., 925 F.2d 979, 984-86 (6th Cir. 1991); Torix,

862 F.2d at 1429; Naugle, 833 F.2d at 1393-94. Indiciayf— -

19a

Appendix B

arbitrary and capricious conduct include lack of substantial

evidence, mistake of law, bad faith, and conflict of interest.

Sandoval v. Aetna Life and Cas. Ins. Co., 967 F.2d 377, 380

(10th Cir. 1992). When reviewing a denial of benefits under

the arbitrary and capricious standard, the court may consider

only the evidence available to the claims administrator at

the time the final decision was made. Miller, 925 F.2d at

986; Perry v. Simplicity Engineering, 900 F.2d 963, 966 (6th

Cir. 1990); Voliva v. Seafarers Pension Plan, 858 F.2d 195,

196 (4th Cir. 1988).

When reviewing under the arbitrary and

capricious standard, ‘[t]he Administrator[’s]

decision need not be the only logical one nor even

the best one. It need only be sufficiently supported

by facts within [his] knowledge to counter a claim

that it was arbitrary and capricious.’ Woolsey, 934

F.2d at 1460. The decision will be upheld unless

it is ‘not grounded on any reasonable basis.’ /d.

(citation omitted). The reviewing court ‘need only

assure that the administrator’s decision fall[s]

somewhere on a continuum of reasonableness —

even if on the low end.’ Vega v. National Life

Ins. Serv., Inc., 188 F.3d 287, 297 (5" Cir. 1999).

Kimber, 1999 WL 1028034 at * 5 (emphasis in original).

Plaintiff asserts that Defendants arbitrarily and

capriciously denied him severance benefits under the Plan,

as evidenced by Defendants’ failure to comply with

procedural requirements provided by the Plan and 29 C.F.R.

20a

Appendix B

§ 2560.503-1, coupled with Defendants’ failure to offer

Plaintiff comparable employment. (Plaintiff's Brief in

Opposition pp. 9-10, 20).

1. Comparable Employment

In 1994, Plaintiff was promoted to Chief Financial

Officer (CFO) of AGI. (Lettes Affidavit § 4). As part of his

duties as CFO, Plaintiff was responsible for the trading and

hedging program, by which AGI bought and sold

commodities such as gold, silver, energy, and interet rates

through the use of derivatives and securities in order to

maximize prices and minimize the risk of falling prices.

(Lettes Affidavit 4 5, 7; Exhibit 2 pp. 39-40). In 1997,

Plaintiff's position was changed to vice president of trading

and he became responsible for the entire trading and hedging

program. (Lettes Deposition p. 30, Lettes Affidavit 4 10;

Exhibit 2 p. 29).

Plaintiff knew that AGI and Kinross signed a merger

agreement in February of 1998 and that the majority

sha: eholder approved the merger agreement in March of 1998

(Exhibit 15). During the merger transition period, Plaintiff

discussed his potential future employment at Kinross with

Robert Buchan, Chairman and Chief Executive Officer

(CEO) of Kinross. (Lettes Affidavit § 17; Buchan Deposition

p. 15). In approximately April of 1998, Kinross made

Plaintiff an oral offer of employment, indicating that “the

offer was to fulfill [Plaintiff's] needs and allow him to

do what he had done effectively for AGI at Kinross.”

(Exhibit 5 p. 17). On May 4, 1998, Kinross made Piaintiff a

preliminary offer in writing. (Buchan Deposition p. 21;

2la

Appendix B

Exhibit F; Exhibit 5 p. 17). Kinross offered Plaintiff

employment “as Vice President, with essentially the same

duties and responsibilities as you have had with Amax.”

(Exhibit F). On May 5, 1998, Plaintiff wrote a memo to Scott

Shellhaas, President of AGI, indicating that he was rejecting

Kinross’ offer. (Exhibit G). On May 8, 1998, Plaintiff wrote

a memo to Buchan rejecting Kinross’ offer. (Exhibit I).

Plaintiff argues that because he was not offered

comparable employment by Kinross, he was entitled to

severance benefits under the Plan. Defendants denied

Plaintiff severance benefits on the grounds that Kinross had

offered Plaintiff comparable employment and therefore,

pursuant to § 2.1.(b) of the Plan, Plaintiff was not entitled to

severance benefits.

ERISA benefits are determined by reference to the plan.

Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 511-14

(1981). ERISA mandates no minimum substantive content

for employee welfare benefit plans; rather, the private parties

creating the plans control the level of benefits to be provided.

Alessi, 451 U.S. at 511; Ryan by Capria-Ryan v. Federal

Express Corp., 78 F.3d 123, 126 (3d Cir. 1996). Section 1.1.

of the Plan defines “comparable employment” as:

the employment of an Eligible Employee by an

employer in a position that (a) is reasonably

comparable without substantial diminution of

duties to the position the Eligible Employee held

immediately prior to the Change of Control,

(b) pays substantially the same Compensation,

and (c) is entitled to participate in an incentive

22a

Appendix B

plan at substantially the same long-term incentive

award level in effect for the Eligible Employee

immediately prior to the Change of Control.

(Exhibit A to Amended Complaint p. 3).

Since the time he learned of the merger and the severance

benefits provisions of the Plan, Plaintiff has prepared and

asserted a litany of reasons why Kinross’ job offer was not

sufficiently comparable employment and he is entitled to

severance benefits. Plaintiff's primary concerns were that:

(1) the Kinross job would be “truly comparable” only if he

could report to the CEO, Buchan, rather than the CFO, Brian

Penny; (2) his increased salary would not make up for other

losses in compensation; and (3) he would be required to move

to Toronto, Canada. (Exhibit G; Exhibit 1 9 21, 22; Lettes

Deposition pp. 98-99; Exhibit I (May 5, 1998 memo from

Shellhaas); Exhibit I (at handwritten p. 12); Exhibit I (April

29, 1998 memo from Shellhaas); Exhibit 1 4 18).

The court need not decide whether Plaintiffs subjective

perception of Kinross’ job offer was reasonable. (See i.e.,

Ward Deposition p. 69; Lettes Deposition p. 147). The court

need only determine whether Defendants’ decision regarding

Plaintiff's entitlement to severance benefits was grounded

on any reasonable basis. Woolsey, 934 F.2d at 1460 (citation

omitted).

Plaintiff was offered an executive officer position at

Kinross, with the title of vice president. (Exhibit 6 p. 35;

Exhibit F). Plaintiff would have been part of an executive

team and been involved in the trading and hedging activities

23a

Appendix B

of the company. (Exhibit 6 p. 19). Kinross’ job offer raised

Plaintiff's salary from 5165,000 to $175,000. (Exhibit 1

4 19; Exhibit F). Kinross offered Plaintiff an option to

purchase 50,000 Kinross shares and to convert Plaintiff's

Amax options to Kinross shares. (Exhibit F; but see Exhibit

1 § 19). While Plaintiff was not offered a target bonus at

Kinross, Plaintiff admitted that he did not always receive

his target bonus at AGI. (Lettes Deposition p. 82). Kinross

offered Plaintiff a discretionary bonus package and offered

to match the retirement, medical, and severance benefits

Plaintiff had at AGI. (Exhibit F). Plaintiff acknowledged that

Kinross’ severance benefits were “the same” and that

Kinross’ benefits were reasonably comparable to AGI’s

benefits. (Exhibit I handwritten p. 12; Lettes Deposition

p. 82).

Plaintiff was concerned with the level of autonomy that

he would be permitted at Kinross. At AGI, Plaintiff reportec

to Shellhaas, President of AGI. (Lettes Deposition p. 37).

Plaintiff also reported to the AGI Risk Management

Committee (Exhibit 3 pp. 38-41). At Kinross, Plaintiff would

have reported to the CFO and to a similar risk management

committee. (Schoening Deposition pp. 10, 12; Exhibit 1

{ 18; Exhibit 5 pp. 22-23; Exhibit 6 pp. 13-15; see also

Shellhaas Deposition p. 37). Plaintiff admitted that Kinross’

CEO would have control over his level of autonomy. (Lettes

Deposition pp. 117-18; see also Exhibit F). The evidence

shows that Kinross planned to give Plaintiff substantial

autonomy and expected Plaintiff to work in “much the same

fashion” that.he had while employed by AGI. (Schoening

Deposition p. 12; Exhibit F).

24a

Appendix B

Plaintiff was also concerned that Kinross would not

permit him to stay in Denver. However, the evidence shows

that Kinross intended Plaintiff to remain in Denver. (Penny

Deposition p. 22; Exhibit F; Exhibit M § 3; Exhibit 5

pp. 23-24, 27; Exhibit 6 p. 37). Plaintiff concedes that no

one at Kinross told him that he would be required to move

to Toronto. (Lettes Deposition p. 123).

Plaintiff found Kinross’ hedging program unequal to

AGI’s hedging program. (Lettes Deposition p. 101). Plaintiff

conceded that energy hedging was not a large part of the

program at AGI. (Lettes Deposition p. 42). Kinross did not

have an interest rate hedging program because, unlike AGI,

Kinross had little or no debt. (Exhibit 6 pp. 10, 18). While

Kinross’ hedging program was not as active or developed as

AGI’s hedging program, Kinross had a hedging program and

Kinross intended to and did further develop its hedging

program. (Exhibit 2 p. 50; Exhibit 3 pp. 44-45; Exhibit 5

pp. 9-14; Exhibit 6 pp. 9-12, 21-22, 34; Schoening Deposition

p. 10). Plaintiff would have performed hedging activities for

Kinross. (Lettes Deposition p. 102; Exhibit 6 pp. 19, 21-22).

Plaintiff's hedging knowledge was the strength that he would

have brought to Kinross. (Schoening Deposition p. 10;

Exhibit 6 pp. 21-22).

It is apparent from the evidence that Plaintiff wanted

Kinross to provide him a job virtually identical to the job he

had at AGI. (Lettes Deposition pp. 61, 64) (“the same status,

the same compensation, the same responsibilities, the same

duties . . . the same discretion . . .). Defendants’ position was

that

25a

Appendix B

in any kind of a merger where two smaller

companies joined together, positions can’t be

exactly the same and responsibilities can’t be

exactly the same. . . . everybody knows that in any

merger event, that job responsibilities and duties

are going to move around as part of the merger

event. And as long as a person had essentially the

same general responsibilities or comparable

responsibilities in another position as to what he

had before the merger, then he would not be

eligible for a benefit.

(Crowl Deposition pp. 12-13, 20).

Based on their assessment of the relative responsibilities

and compensation made in the Kinross job offer, Defendants

believed that the Kinross job offer was “very comparable”

to Plaintiff's job at AGI. (Exhibit H; Lettes Deposition

p. 145; Schoening Deposition p. 9; Ward Deposition p. 66;

Exhibit 5 pp. 22-23; Exhibit 7 p. 18). The court agrees.

Although there were some differences in the reporting

relationship and the amount of hedging that Plaintiff would

do at Kinross, the Kinross job offer provided Plaintiff with

the same title, an increase in salary, a discretionary bonus,

health and welfare benefits equivalent to AGI’s benefits, the

same size staff, and a Denver location. The Kinross job offer

was reasonably comparable to Plaintrff’s job at AGI

immediately prior to the merger. Defendants’ interpretation

of the Kinross job offer was not unreasonable or inconsistent

with the provisions of the Plan. Defendants did not act

arbitrarily or capriciously in denying Plaintiff severance

26a

Appendix B

benefits under the Plan. Defendants are entitled to summary

judgment on Plaintiffs First Claim for Relief in the Amended

Complaint.

2. Alleged Procedural Violations

While Plaintiff has not alleged a claim pursuant to

29 U.S.C. § 1133 for breach of procedural requirements, he

argues that Defendants’ failure to comply with certain

procedural requirements demonstrates that the denial of

severance benefits was arbitrary and capricious, citing,

inter alia, Blau v. Del Monte Corp., 748 F.2d 1348, 1353-54

(9" Cir. 1984), cert. denied, 474 U.S. 865 (1985). But see

McKenzie v. General Telephone Co. of California, 41 F.3d

1310, 1314 (9" Cir. 1994) (“ ‘[c]ourts have either

distinguished the facts of Blau or criticized its holding...’ ”)

(cert. denied, 514 U.S. 1066 (1995)); Hozier v. Midwest

Fasteners, Inc., 908 F.2d 1155, 1167-70 (3d Cir. 1990)

(“[w]e believe that Blau’s rather freewheeling statutory

construction, . . . has little place in the context of a carefully

balanced and reticulated statute like ERISA”). Plaintiff

alleges various procedural violations. (Plaintiff's Brief in

Opposition pp. 12-15). The court concludes that the alicged

procedural violations do not render arbitrary and capricious

Defendants’ decision to deny severance benefits to Plaintiff.

Defendants cooperated with Plaintiff in his active pursuit

of severance benefits under the Plan. “‘[O]n several occasions,”

plan administrator Crowl met with Plaintiff and discussed

“his eligibility for benefits.” (Crowl Deposition pp. 12-13;

see also Exhibit 4 p. 37). Crowl explained to Plaintiff

“specifically what the requiring and triggering events would

SR ANCA te EA BS CO BE oy mae atin COD

27a

Appendix B

be for him to become eligible for the benefits” and “the

definition of comparability” of jobs. (Crowl Deposition p.

12). By at least May 19, 1998, Plaintiff knew that Crowl

had determined that the job offer made by Kinross to Plaintiff

was comparable to Plaintiff's job with AGI. (Lettes Deposition

p. 148).

Because Plaintiff was still employed by AGI until the

date of the merger on June 1, 1998, Crowl determined that

Plaintiff was not entitled to benefits prior to June 1, 1998.

(Crow! Deposition pp. 13-14; Exhibit 2 p. 71; see also

Exhibit 3 p. 124). Deborah Friedman, general counsel for

AGI, consulted with outside counsel, whose opinion was also

that Plaintiff was not entitled to severance benefits before

June 1, 998. (Exhibit 3 pp. 118, 122). Crowl had determined

by May 26, 1998 that Plaintiff was not entitled to severance

benefits. (Exhibit 4 p. 38). Plaintiff was told by Shellhaas

on or about June 1, 1998 that he would not be receiving

severance benefits. (Lettes Deposition p. 149).

Crowl ceased being the plan administrator on June 1,

1998. (Crowl Deposition pp. 13-14). Plaintiff sent his first

claims letter to Crowl on May 26, 1998. Schoening was not

hired by Kinross until July 1, 1998 and was not appointed as

the plan administrator for Kinross until November 12, 1998.

(Exhibit J). Due to the press of business associated with the

merger, Schoening did not respond to Plaintiff's first claims

letter. (Schoening Deposition p. 13). Schoening responded

to Plaintiff's second claims letter. Schoening reviewed the

terms of Kinross’ job offer, Plaintiff's numerous submissions

(Exhibit 1), and consulted with Crowl, Buchan, Penny, and

outside counsel. (Schoening Deposition pp. 6-7, 9). On

28a

Appendix B_

November 19. 1998, Schoening communicated to Plaintiff

in writing that Plaintiff was not entitled to severance benefits

under the Plan. (Exhibit 19; Exhibit 1 § 26).

While Plaintiff disagrees with Defendants’ ultimate

decision that he was not entitled to severance benefits, the

evidence shows that Plaintiff was afforded ample opportunity

to pursue his claim for benefits. The evidence does not show

that Plaintitf was caused any substantive harm by the alleged

procedural violations. The evidence does not demonstrate

that Defendants’ decision was arbitrary and capricious based

on the alleged procedural irregularities. The alleged

procedural violations do not establish that Defendants’

decision to deny severance benefits to Plaintiff was arbitrary

and capricious.

In sum, Defendants are entitled to summary judgment

on Plaintiff's First Claim for Relief in the Amended

Complaint.

V. Breach of Fiduciary Duty Claim

Plaintiff claims that Defendants breached their fiduciary

duties by failing to pay him benefits under the Plan and by

failing to recover benefits alleged improperly paid to other

key employees. (Amended Complaint 4 49).

ERISA fiduciaries must discharge their “duties with

respect to a plan solely in the interests of the participants

and beneficiaries, . . . in accordance with the documents and

instruments governing the plan,” and with the care, skill,

prudence, and diligence that a prudent person would use.

SE Te TES RTE Se TEENY SEG OS re IE TTL DD ae a!

ers

29a

Appendix B

29 U.S.C. § 1104(a)(1)(A), (B), (D). ERISA does not

enumerate all the powers and duties of trustees and other

fiduciaries, but borrows some of the principles from the

common law of trusts to impose a duty on a fiduciary to

exercise such skill and care as a person of ordinary prudence

would exercise, bearing in mind the special nature and

purpose of an employee benefits plan, to preserve the trust

corpus, deal impartially with the beneficiaries, and not to

prefer the present interest of one group, among other things.

Ershick v. United Missouri Bank of Kansas City, N.A., 948

F.2d 660, 666 (10th Cir. 1991); Morse v. Stanley, 732 F.2d

1139, 1145 (2d Cir. 1984); Smith v. National Distillers &

Chemical Corp., 728 F. Supp. 491, 493-94 (W.D. Tenn.

1989). A court may intervene in the administration of an

employee benefit plan only when the trustees transgress their

fiduciary duties by acting in an arbitrary and capricious

manner. Morse, 732 F.2d at 1145.

Defendants dispute whether they are fiduciaries within

the meaning of ERISA. Defendants assert that an unfunded

deferred compensation plan, such as this Plan, does not

involve fiduc'ary obligations and is not subject to fiduciary

standards, citir.g Pane v. RCA Corp., 868 F.2d 631, 637 (3d

Cir. 1989). In light of the court’s conclusions in parts III

and IV of this Memorandum Opinion and Order, above, that

Defendants’ denial of severance benefits to Plaintiff was not

arbitrary and capricious, the court concludes that, even if

the Plan were subject to fiduciary standards, Defendants did

not transgress any fiduciary duties under ERISA. Defendants

are entitled to summary judgment on Plaintiff's Second

Claim for Relief in the Amended Complaint.

30a

Appendix B

Accordingly, IT IS ORDERED:

1. Defendants’ Motion for Summary Judgment is

GRANTED. Summary judgment shall enter in favor of

Defendants and against Plaintiff on Plaintiff's Amended

Complaint.

2. Each party shall bear his, her, or its own costs and

attorney fees.

3. The trial preparation conference scheduled Wednesday

February 16, 2000 and the trial scheduled Monday February

28, 2000 are hereby VACATED.

DATED at Denver, Colorado, thi. 5th day of January,

2000.

BY THE COURT:

s/ Daniel B. Sparr

Daniel B. Sparr

United States District Judge

3la

APPENDIX C — MEMORANDUM OPINION AND

ORDER OF THE UNITED STATES DISTRICT

COURT FOR THE DISTRICT OF COLORADO

DATED AND FILED MAY 10, 1999

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Judge Daniel B. Sparr

Civil Action No. 98-S-1899 :

MARK LETTES,

Plaintiff,

- AMAX GOLD, INC. and KINROSS

GOLD CORPORATION,

Defendant.

MEMORANDUM OPINION AND ORDER

THIS MATTER comes before the court on the

Recommendation of United States Magistrate Judge

Watanabe that Defendant Kinross’ Motion to Dismiss (filed

September 4, 1998) be granted and that Plaintiff be allowed

to amend his complaint to allege his claims pursuant to the

Employees Retirement Income Security Act (ERISA), 29

U.S.C. § 1001 et seq. The Recommendation was filed om

April 14, 1999 and served by mail on April 15, 1999. On

April 23, 1999, Plaintiff filed his Objections to the

Recommendation. The court must make a de novo

32a

Appendix C

determination of those portions of the proposed findings or

recommendations to which specific objection is made. 28

U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). The court has

reviewed de novo Defendant’s motion, Plaintiff's Response

(filed October 9, 1998), Defendant’s Reply (filed November

18, 1998), Defendant’s Supplemental Authority (filed

February 24, 1999), Plaintiff's Supplemental Response (filed

March 5, 1999), the Recommendation, Plaintiff's Objections,

Defendant’s Response (filed May 3, 1999), the exhibits, and

the applicable law, and is sufficiently advised in the premises.

1. Standard of Review

If, on a motion to dismiss pursuant to Fed. R. Civ. P.

12(b)(6) for failure to state a claim upon which relief can be

granted, matters outside the pleadings are presented to and

not excluded by the court, the motion shall be treated as one

for summary judgment and disposed of as provided in

Rule 56. Fed. R. Civ. P. 12(b). Because both parties have

submitted and the Magistrate Judge and the court have

considered materials outside the pleadings, the court will

treat the Defendant’s motion as one for summary judgment

under Fed. R. Civ. P. 56. Summary judgment is appropriate

“if the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that -

the moving party is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(c); accord Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 247 (1986); Russillo v. Scarborough, 935

F.2d 1167, 1170 (10th Cir. 1991). The court must determine —

“whether the evidence presents a sufficient disagreement to

33a

Appendix C

require submission to a jury or whether it is so one-sided

that one party must prevail as a matter of law.” Anderson,

477 U.S. at 251-52.

2. Background

Plaintiff was an employee of AMAX Gold, Inc. (“AGT”).

As a “key employee,” Plaintiff was party to an agreement

known as the Separation Plan for Key Employees (“the

Plan”). The Plan contained provisions for severance upon

certain conditions precedent. (Exhibit B to Plaintiff's

Response Brief). Plaintiff alleges that when Defendants AGI

and Kinross Gold Corporation merged, he was not offered a

reasonably comparable position as defined by the Plan.

Therefore, Plaintiff asserts that he became entitled to certain

payments and benefits pursuant to the terms of the Plan.

Defendants have denied such payments and benefits. Plaintiff

alleges four claims for relief: (1) Defendants have breached

the Separation Plan for Key Employees (“the Plan”);

(2) Plaintiff is entitled to a declaratory judgment determining

the rights and obligations of the parties under the Plan;

(3) Defendants are “promissorily estopped” from denying

that payments and benefits are due and owing to Plaintiff

under the terms and provisions of the Plan; and

(4) Defendants have been unjustly enriched to Plaintiff's

detriment by failing and refusing to pay payments and

benefits due and owing to Plaintiff under the terms and

provisions of the Plan. (Complaint).

Defendant Kinross asserts that the Complaint must be

dismissed because the Plan is an ERISA plan and, therefore,

Plaintiff's state law claims are preempted by ERISA. The

34a

Appendix C

Magistrate Judge agreed that the Plan is governed by ERISA ,

and that Plaintiff's state jaw claims must be dismissed

because they are preempted by ERISA. Plaintiff objects that

the Plan is not governed by ERISA. However, Plaintiff

concedes that if ERISA governs the Plan, his state law claims

are preempted and he must pursue his claims under ERISA.

(Response Brief p. 3).

3. Analysis

ERISA is a comprehensive federal statute enacted by

Congress to regulate employer-sponsored empluyee benefit

plans. If a state law claim relates to an employee welfare

benefit plan, it is preempted by ERISA. 29 U.S.C. § 1144(a);

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 52, 57 (1987);

Settles v. Golden Rule Ins. Co., 927 F.2d 505, 508 (10th Cir.

1991). ERISA’s provisions are deliberately expansive,

designed to ensure that employee benefit plans are regulated

exclusively by federal law. Pilot Life, 481 U.S. at 45-46.

ERISA governs “employee benefit plan[s]}.” 29 U.S.C.

§ 1003(a). One form of employee benefit plan is an

“employee welfare benefit plan.” 29 U.S.C. § 1002(3). An

“employee welfare benefit plan” is

any plan, fund, or program which was heretofore

or is hereafter established or maintained by an

employer or by an employee organization, or by

both, to the extent that such plan, fund or program

was established or is maintained for the purpose

of providing for its participants or their

beneficiaries, through the purchase of insurance

35a

Appendix C

or otherwise, (A) medical, surgical, or hospital

care or benefits, or benefits in the event of sickness,

accident, disability, death or unemployment, or

vacation benefits, apprenticeship or other training

programs, or day care centers, scholarship funds,

or prepaid legal services, or (B) any benefit

described in section 186(c) of this title [which

includes “severance or similar benefits,” 29

U.S.C. § 186(c)(6)} (other than pensions on

retirement or death, and insurance to provide such

pensions).

29 U.S.C. § 1002(1).

A plan to pay severance benefits may constitute an

“employee welfare benefit plan.” 29 U.S.C. § 1002(1); Fort

Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 7n.5 (1987);

Tischmann v. ITT/Sheraton Corp., 145 F.3d 561, 565 (2d

Cir.), cert. denied, 119 S.Ct. 406 (1998); Schonholz v. Long

Island Jewish Medical Center, 87 F.3d 72, 75 (2d Cir.),

cert. denied, 519 U.S. 1008 (1996). Because ERISA’s

preemption provision was intended “to afford employers the

advantages of a uniform set of administrative procedures

governed by a single set of regulations,” only “benefits whose

provision by nature requires an ongoing administrative

program to meet the employer’s obligation” will implicate

ERISA’s preemption provision. Fort Halifax, 482 U.S. at

11-12; see also Collins v. Ralston Purina Co., 147 F.3d 592,

595 (7th Cir. 1998); Siemon v. AT&T Corp., 117 F.3d 1173,

1178 (10th Cir. 1997).

36a

Appendix C

Citing several cases where other severance plans were

found not governed by ERISA, Plaintiff argues that the Plan

in this case is not governed by ERISA because it does not

require an ongoing administrative scheme; rather, the Plan

“contemplates a single event, short-term payout to a key

employee of a lump sum that can be determined

arithmetically ....” (Response Brief p. 6). The Plan here

provides severance pay for its eligible key employees under

certain limited circumstances. (Exhibit B to Plaintiff's

Response Brief). The Plan provides certain employees

severance benefits if they are separated from employment

due to a “change of control” of the employer. (Exhibit B to

Plaintiff's Response Brief pp. 1-9). Plaintiff contends that

because all payments must be made within a short time after

a “change of control,” because the Plan extends only to a

small number of key employees, and because the Plan was

unfunded, the Plan does not require an ongoing

administrative scheme and is not governed by ERISA. The

court disagrees and concludes that the Plan here demonstrates

sufficient indicia of an ongoing administrative scheme to be

governed by ERISA.

The Plan requires more from its Administrator than a

mere one-time mechanical calculation and payment. See Fort

Halifax, 482 U.S. at 12; Kulinski v. Medtronic Bio-Medicus,

Inc., 21 F.3d 254, 258 (8th Cir. 1994); Fontenot v. NL

Industries, Inc., 953 F.2d 960, 962-63 (Sth Cir. 1992); Hijeck

v. United Technologies Corp., 24 F. Supp. 2d 243, 250-51

(D. Conn. 1998). The making of severance payments

pursuant to the Plan requires the “exercise of managerial

discretion.” James v. Fleet/Norstar Financial Group, Inc.,

992 F.2d 463, 468 (2d Cir. 1993). The Plan grants the

37a

Appendix C

Administrator “complete and discretionary authority to

construe and interpret the Plan, correct defects, supply

omissions, and reconcile inconsistencies and ambiguities in

and with respect to the Plan.” (Exhibit B 4 3.2(a) to Plaintiff's

Response Brief). The Plan Administrator must determine,

inter alia, whether a “change of control” has occurred under

the terms of the Plan (Exhibit B Article I to Plaintiff’s

Response Brief), whether eligible employees are entitled to

benefits (Exhibit B Article II to Plaintiff's Response Brief),

and whether eligible employees have been offered

“Comparable Employment,” have performed their jobs

satisfactorily, and have abided by the terms of all agreements

even after separation. (Exhibit B J 2.1 to Plaintiff's Response

Brief). The Plan provides a dispute procedure for employees

to challenge a denial of benefits. (Exhibit B 4 3.3 to Plaintiff's

Response Brief). The Pian requires managerial discretion to

the extent that benefits may be denied if

there exists a special situation or circumstances

for which it is necessary to establish a separate

nolicy disallowing severance pay, on a group

or individual basis, as determined by the

Administrator in its sole discretion.

(Exhibit B 4 2.1(b)(3) to Plaintiff's Response Brief). The

fact that AGI actually has in place an express administrative

regime (Exhibit B Article III to Plaintiff's Response Brief)

to evaluate applications for severance benefits is also “strong

evidence that an onge::g administrative scheme is

necessary... .” Siemon, 117 F.3d at 1178. Like the plans

interpreted in several other cases, although severance payments

were to be made within a short time after a “change of

38a

Appendix C

control,” the Plan extends only to a small number of key

employees, and the Plan was unfunded, the Plan’s

administration requires “case-by-case, discretionary

application of its terms... .” Bogue v. Ampex Corp., 976

F.2d 1319, 1323 (9th Cir. 1992); see also Collins, 147 F.3d

at 597; Tischmann, 145 F.3d at 566-67; Siemon, 117 F.3d

at 1179.

4. Conclusion

The court concludes that the Plan requires administrative

discretion and that it is governed by ERISA. Therefore, all

of Plaintiff's claims are concededly preempted by ERISA

and must be dismissed.

Accordingly, IT IS ORDERED:

1. The Recommendation of United States Magistrate

Judge is ACCEPTED.

2. Defendant’s Motion to Dismiss is GRANTED.

3. Plaintiff may file and serve an amended complaint

alleging his claims pursuant to ERISA within 20 days after

the date of this Memorandum Opinion and Order.

DATED at Denver, Colorado, this 10th of May, 1999.

BY THE COURT:

s/ Daniel B. Sparr

Daniel B. Sparr

U.S. District Judge

39a

APPENDIX D — RELEVANT STATUTES

Employee Retirement Income Security Act of 1974

as Amended, 29 U.S.C. §§ 1002(1)-(3), 1003, 1144(a) (1994)

§ 1002. Definitions

(1) The terms “employee welfare benefit plan” and

“weifare plan” mean any plan, fund, or program which was

heretofore or is hereafter established or maintained by an

employer or by an employee organization, or by both, to the

extent that such plan, fund, or program was established or is

maintained for the purpose of providing for its participants

or their beneficiaries, through the purchase of insurance or

otherwise, (A) medical, surgical, or hospital care or benefits,

or benefits in the event of sickness, accident, disability, death

or unemployment, or vacation benefits, apprenticeship or

other training programs, or day care centers, scholarship

funds, or prepaid legal services, or (B) any benefit described

in section 186(c) of this title (other than pensions on

retirement or death, and insurance to provide such pensions).

(2)(A) Except as provided in subparagraph (B), the

terms “employee pension benefit plan” and “pension plan”

mean any plan, fund, or program which was heretofore or 1s

hereafter established or maintained by an employer or by an

employee organization, or by both, to the extent that by its

express terms or as a result of surrounding circumstances

such plan, fund, or program —

(1) provides retirement income to

employees, or

40a

Appendix D

(ii) results in a deferral of income

by employees for periods extending to

the termination of covered employment

or beyond,

regardless of the method of calculating the

contributions made to the plan, the method of

calculating the benefits under the plan or the

method of distributing benefits from the plan.

(B) The Secretary may by regulation

prescribe rules consistent with the standards and

purposes of this chapter providing one or more

exempt categories under which —

(1) severance pay arrangements,

and

(11) supplemental retirement income

payments, under which the pension

benefits of retirees or their beneficiaries

are supplemented to take into account

some portion or all of the increases in

the cost of living (as determined by the

Secretary of Labor) since retirement,

shall, for purposes of this subchapter, be treated

as welfare plans rather than pension plans. In the

case of any arrangement or payment a principal

effect of which is the evasion of the standards or

purposes of this chapter applicable to pension

plans, such arrangement or payment shall be

4la

Appendix D

treated as a pension plan.

(3) The term “employee benefit plan” or “plan” means

an employee welfare benefit plan or an employee pension

benefit plan or a plan which is both an employee welfare

benefit plan and an emp!cyee pension benefit plan.

§ 1003. Coverage

(a) Except as provided in subsection (b) of this section

and in sections 1051, 1081, and 1101 of this title, this

subchapter shall apply to any employee benefit plan if it is

established or maintained —

(1) by any employer engaged in commerce

or in any industry or activity affecting commerce;

(2) by any employee organization or

organizations representing employees engaged in

commerce or in any industry or activity affecting

commerce; or

(3) by both.

(b) The provisions of this subchapter shall not apply to

any employee benefit plan if —

(1) such plan is a governmental plan (as

defined in section 1002(32) of this title);

42a

Appendix D

(2) such plan is a church plan (as defined in

section 1002(33) of this title) with respect to

which no election has been made under section

410(d) of Title 26;

(3) such plan is maintained solely for the

purpose of complying with applicable workmen’s

compensation laws or unemployment compensation

or disability insurance laws;

(4) such plan is maintained outside of the

United States primarily for the benefit of persons

substantially all of whom are nonresident aliens;

(5) such plan is an excess benefit plan (as

defined in section 1002(36) of this title) and is

unfunded.

§ 1144. Other laws

(a) Supersedure; effective date

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. This section shall take effect on

January 1, 1975.

43a

APPENDIX E — AMAX GOLD INC. SEPARATION

PLAN FOR KEY EMPLOYEES EFFECTIVE

MARCH 5, 1997

{Omitted here but submitted separately

as Lodging Appendix]

44a

APPENDIX F — RESOLUTIONS RELAYING TO

EMPLOYEE BENEFIT PLANS

[Omitted here but submitted separately

as Lodging Appendix]

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.