Decisions of Interest

Corporate Officer May Be Liable As ERISA Fiduciary

A corporate officer who exercises discretionary authority and control over the administration and management of an ERISA Plan may be liable to participants of the plan as a fiduciary. In re WorldCom, Inc., 2003 WL 21385870 (S.D.N.Y. 6/17/03) (Cote, D.J.).

The plaintiffs, plan participants, alleged that all the WorldCom officers were liable to them as ERISA fiduciaries. The plaintiffs made allegations against one officer, Bernard J. Ebbers, that 'd[id] little more than track the statutory definition of a fiduciary,' but which the court found were nonetheless sufficient to state a claim against Ebbers under the liberal pleading standards of Rule 8 of the Federal Rules of Civil Procedure.

However, the court rejected the plaintiffs' argument that because the Plan authorized WorldCom to appoint 'any' officer as a fiduciary, the Plan automatically appointed all of WorldCom's officers as fiduciaries in the wake of WorldCom's failure to appoint any other individual to be the Plan Administrator. Neither the Plan nor ERISA impose fiduciary responsibilities on any person without assigning to them the duty to perform ERISA fiduciary functions, the court reasoned.

The court also rejected plaintiffs' argument that all the directors of WorldCom exercised fiduciary authority by signing or authorizing the prospectus included in WorldCom's SEC registration statements: 'Although the [Summary Plan Description] incorporates SEC filings by reference and is part of the Section 10(a) prospectus, those connections are insufficient to transform those documents into a basis for ERISA claims against their signatories.'

For Plaintiffs, Lynn Lincoln Sarko, Gary A. Gotto, Erin M. Riley, Seattle, WA.

For Director Defendants, Simpson, Thatcher & Bartlett, by George M. Newcombe and Patrick E. King, Palo Alto, CA, and Paul Curnin, New York.

For Defendant Bruce J. Ebbers, Hogan & Hartson, LLP, by David Wetheimer, Lyndon Tretter, New York; Evan Miller, Washington, DC; Brunini Grantham Grower & Hewes, PLLC, by R. David Kaufman, and M. Patrick McDowell, Jackson, MS.

For Defendant Scott Sullivan, Arnold & Porter, by Juliet Rotenberg, Washington, DC.

For Defendant Arthur Andersen, LLP, Curtis Mallot Prevost Colt & Mosely, by Eliot Lauer, New York.

For Defendant Merrill Lynch Trust Co. of America, Gisbson, Dunn & Crutcher, by William J. Kilberg and Paul Blankenstein, Washington, DC.

Same Standard Applies to Co-employee Liability under City, State Human Rights Laws

A former equipment manager for the New York Yankees failed to state claims under the City Human Rights Law against three players who allegedly verbally and physically abused him on the basis of his sexual orientation. Priore v. New York Yankees, 2003 WL 21236827 (1^st Dept. 5/29/03) (Buckley, P.J., Rosenberg, Ellerin, Wallach and Lerner, JJ.)

The First Department of the Appellate Division held that fellow employees may be liable under the State Human Rights Law only when they possess the power to do more than simply carry out personnel decisions made by others. This holding followed the Second Department case Murphy v. ERA United Realty, 251 A.D.2d 469 (2d Dept. 1998).

The Murphy Court held that Section 8-107(1)(a) of the City Human Rights Law, which extends liability to 'an employer or an employee or agent thereof' applies more broadly than the state law and makes co-employees liable for unlawful actions regardless of their level of authority. In contrast, the First Department held that the City Human Rights Law creates liability in the same situations as the state law, only where such employees or agents act in some supervisory capacity: 'the inclusion of the word 'employee' in the local ordinance does not automatically open the door of liability to an entirely new category of defendants; the term must be read in context.'

For Plaintiff-Respondent, Edward J. Pavia, Jr., Michael F. Mongelli II, P.C., Flushing.

For Defendants-Appellants The New York Yankees, River Operating Co., Inc., and Brian Cashman and Thomas May, Akin Gump Strauss Hauer & Feld, LLP, by Jonathan L. Sulds, and Epstein, Becker & Green, P.C. New York.

For Defendant-Appellant Bob Wickman, Buchanan Ingersoll, P.C., by Robert S. Bernstein and Eugene R. Scheiman, New York.

Pregnancy Discrimination Finding Upheld by Court

Substantial evidence supported the State Division of Human Rights' (SDHR) rejection of an employer's proffered reasons for terminating his employee, and required the Appellate Division to confirm the determination. Mittl v. New York St. Div. of Human Rights, 2003 WL 21285212 (Ct. App. 6/5/03)

The employee alleged that she was unlawfully terminated because she was pregnant. The employer argued that she was lawfully terminated by the employer's wife due to the suspicion that the husband fathered the unborn child; and second, because the employee had an attendance problem. The SDHR rejected the reasons proffered by the employer and determined that the employee was unlawfully terminated because of her pregnancy.

The Appellate Division annulled the determination of the SDHR. The Court of Appeals reversed, holding that the Appellate Division incorrectly applied the substantial evidence test because evidence supported the conclusions that the employer's wife had no supervisory authority to fire employees and that the employer was satisfied with the employee's attendance: 'it is irrelevant that the record could also support petitioner's explanation ' preferred by the Appellate Division ' that he discharged complainant in order to save his marriage and not because of her pregnancy.'

For employee-Appellant, Kathleen Ann Waybourn, New York.

For State Division of Human Rights, Michael K. Swirsky, Bronx.

For Respondents, David J. Wukitsch, Albany.

Unclear Incentive Compensation Plan Hampers Employer

A promise to pay incentive compensation is unenforceable only if the written terms of the compensation plan make clear that the employer has absolute discretion in deciding whether to pay the incentive. Lam v. American Express Co., 2003 WL 21230323 (S.D.N.Y. 5/27/03) (Marrero, D.J.).

An employee established a breach of contract claim based on his receipt of less money than he was promised and less than he set aside under the employer's Compensation Deferment Program.

The employer's summary of compensation benefits contained a general reservation of rights, indicating that it is 'subject to required approval ' [and] there is no assurance that the illustrated performance or payouts in this exhibit will actually occur.' The court reasoned that the employer unambiguously reserved its rights only to adjust the benefits guidelines at the overall plan level, but not on an individual basis with absolute discretion. The employer also failed to explain how and why the employee's deferred compensation was actually reduced, precluding summary judgment.

 

A former equipment manager for the New York Yankees failed to state claims under the City Human Rights Law against three players who allegedly verbally and physically abused him on the basis of his sexual orientation. Priore v. New York Yankees, 2003 WL 21236827 (1st Dept. 5/29/03) (Buckley, P.J., Rosenberg, Ellerin, Wallach and Lerner, JJ.)

The First Department of the Appellate Division held that fellow employees may be liable under the State Human Rights Law only when they possess the power to do more than simply carry out personnel decisions made by others. This holding followed the Second Department case Murphy v. ERA United Realty, 251 A.D.2d 469 (2d Dept. 1998).

The Murphy Court held that Section 8-107(1)(a) of the City Human Rights Law, which extends liability to 'an employer or an employee or agent thereof' applies more broadly than the state law and makes co-employees liable for unlawful actions regardless of their level of authority. In contrast, the First Department held that the City Human Rights Law creates liability in the same situations as the state law, only where such employees or agents act in some supervisory capacity: 'the inclusion of the word 'employee' in the local ordinance does not automatically open the door of liability to an entirely new category of defendants; the term must be read in context.'

For Plaintiff-Respondent, Edward J. Pavia, Jr., Michael F. Mongelli II, P.C., Flushing.

For Defendants-Appellants The New York Yankees, River Operating Co., Inc., and Brian Cashman and Thomas May, Akin Gump Strauss Hauer & Feld, LLP, by Jonathan L. Sulds, and Epstein, Becker & Green, P.C. New York.

For Defendant-Appellant Bob Wickman, Buchanan Ingersoll, P.C., by Robert S. Bernstein and Eugene R. Scheiman, New York.

Substantial evidence supported the State Division of Human Rights' (SDHR) rejection of an employer's proffered reasons for terminating his employee, and required the Appellate Division to confirm the determination. Mittl v. New York St. Div. of Human Rights, 2003 WL 21285212 (Ct. App. 6/5/03)

The employee alleged that she was unlawfully terminated because she was pregnant. The employer argued that she was lawfully terminated by the employer's wife due to the suspicion that the husband fathered the unborn child; and second, because the employee had an attendance problem. The SDHR rejected the reasons proffered by the employer and determined that the employee was unlawfully terminated because of her pregnancy.

The Appellate Division annulled the determination of the SDHR. The Court of Appeals reversed, holding that the Appellate Division incorrectly applied the substantial evidence test because evidence supported the conclusions that the employer's wife had no supervisory authority to fire employees and that the employer was satisfied with the employee's attendance: 'it is irrelevant that the record could also support petitioner's explanation ' preferred by the Appellate Division ' that he discharged complainant in order to save his marriage and not because of her pregnancy.'

For employee-Appellant, Kathleen Ann Waybourn, New York.

For State Division of Human Rights, Michael K. Swirsky, Bronx.

For Respondents, David J. Wukitsch, Albany.

A promise to pay incentive compensation is not enforceable where if the written terms of the compensation plan make clear that the employer has absolute discretion in deciding whether to pay the incentive. Lam v. American Express Co., 2003 WL 21230323 (S.D.N.Y. 5/27/03) (Marrero, D.J.).

An employee established a breach of contract claim based on his receipt of less money than he was promised and less than he set aside under the employer's Compensation Deferment Program.

The employer's summary of compensation benefits contained a general reservation of rights, indicating that it is 'subject to required approval ' [and] there is no assurance that the illustrated performance or payouts in this exhibit will actually occur.' The court reasoned that the employer unambiguously reserved its rights only to adjust the benefits guidelines at the overall plan level, but not on an individual basis with absolute discretion. The employer also failed to explain how and why the employee's deferred compensation was actually reduced, precluding summary judgment.

No attorneys listed.

Corporate Officer May Be Liable As ERISA Fiduciary

A corporate officer who exercises discretionary authority and control over the administration and management of an ERISA Plan may be liable to participants of the plan as a fiduciary. In re WorldCom, Inc., 2003 WL 21385870 (S.D.N.Y. 6/17/03) (Cote, D.J.).

The plaintiffs, plan participants, alleged that all the WorldCom officers were liable to them as ERISA fiduciaries. The plaintiffs made allegations against one officer, Bernard J. Ebbers, that 'd[id] little more than track the statutory definition of a fiduciary,' but which the court found were nonetheless sufficient to state a claim against Ebbers under the liberal pleading standards of Rule 8 of the Federal Rules of Civil Procedure.

However, the court rejected the plaintiffs' argument that because the Plan authorized WorldCom to appoint 'any' officer as a fiduciary, the Plan automatically appointed all of WorldCom's officers as fiduciaries in the wake of WorldCom's failure to appoint any other individual to be the Plan Administrator. Neither the Plan nor ERISA impose fiduciary responsibilities on any person without assigning to them the duty to perform ERISA fiduciary functions, the court reasoned.

The court also rejected plaintiffs' argument that all the directors of WorldCom exercised fiduciary authority by signing or authorizing the prospectus included in WorldCom's SEC registration statements: 'Although the [Summary Plan Description] incorporates SEC filings by reference and is part of the Section 10(a) prospectus, those connections are insufficient to transform those documents into a basis for ERISA claims against their signatories.'

For Plaintiffs, Lynn Lincoln Sarko, Gary A. Gotto, Erin M. Riley, Seattle, WA.

For Director Defendants, Simpson, Thatcher & Bartlett, by George M. Newcombe and Patrick E. King, Palo Alto, CA, and Paul Curnin, New York.

For Defendant Bruce J. Ebbers, Hogan & Hartson, LLP, by David Wetheimer, Lyndon Tretter, New York; Evan Miller, Washington, DC; Brunini Grantham Grower & Hewes, PLLC, by R. David Kaufman, and M. Patrick McDowell, Jackson, MS.

For Defendant Scott Sullivan, Arnold & Porter, by Juliet Rotenberg, Washington, DC.

For Defendant Arthur Andersen, LLP, Curtis Mallot Prevost Colt & Mosely, by Eliot Lauer, New York.

For Defendant Merrill Lynch Trust Co. of America, Gisbson, Dunn & Crutcher, by William J. Kilberg and Paul Blankenstein, Washington, DC.

Same Standard Applies to Co-employee Liability under City, State Human Rights Laws

A former equipment manager for the New York Yankees failed to state claims under the City Human Rights Law against three players who allegedly verbally and physically abused him on the basis of his sexual orientation. Priore v. New York Yankees, 2003 WL 21236827 (1^st Dept. 5/29/03) (Buckley, P.J., Rosenberg, Ellerin, Wallach and Lerner, JJ.)

The First Department of the Appellate Division held that fellow employees may be liable under the State Human Rights Law only when they possess the power to do more than simply carry out personnel decisions made by others. This holding followed the Second Department case Murphy v. ERA United Realty , 251 A.D.2d 469 (2d Dept. 1998).

The Murphy Court held that Section 8-107(1)(a) of the City Human Rights Law, which extends liability to 'an employer or an employee or agent thereof' applies more broadly than the state law and makes co-employees liable for unlawful actions regardless of their level of authority. In contrast, the First Department held that the City Human Rights Law creates liability in the same situations as the state law, only where such employees or agents act in some supervisory capacity: 'the inclusion of the word 'employee' in the local ordinance does not automatically open the door of liability to an entirely new category of defendants; the term must be read in context.'

For Plaintiff-Respondent, Edward J. Pavia, Jr., Michael F. Mongelli II, P.C., Flushing.

For Defendants-Appellants The New York Yankees, River Operating Co., Inc., and Brian Cashman and Thomas May, Akin Gump Strauss Hauer & Feld, LLP, by Jonathan L. Sulds, and Epstein, Becker & Green, P.C. New York.

For Defendant-Appellant Bob Wickman, Buchanan Ingersoll, P.C., by Robert S. Bernstein and Eugene R. Scheiman, New York.

Pregnancy Discrimination Finding Upheld by Court

Substantial evidence supported the State Division of Human Rights' (SDHR) rejection of an employer's proffered reasons for terminating his employee, and required the Appellate Division to confirm the determination. Mittl v. New York St. Div. of Human Rights, 2003 WL 21285212 (Ct. App. 6/5/03)

The employee alleged that she was unlawfully terminated because she was pregnant. The employer argued that she was lawfully terminated by the employer's wife due to the suspicion that the husband fathered the unborn child; and second, because the employee had an attendance problem. The SDHR rejected the reasons proffered by the employer and determined that the employee was unlawfully terminated because of her pregnancy.

The Appellate Division annulled the determination of the SDHR. The Court of Appeals reversed, holding that the Appellate Division incorrectly applied the substantial evidence test because evidence supported the conclusions that the employer's wife had no supervisory authority to fire employees and that the employer was satisfied with the employee's attendance: 'it is irrelevant that the record could also support petitioner's explanation ' preferred by the Appellate Division ' that he discharged complainant in order to save his marriage and not because of her pregnancy.'

For employee-Appellant, Kathleen Ann Waybourn, New York.

For State Division of Human Rights, Michael K. Swirsky, Bronx.

For Respondents, David J. Wukitsch, Albany.

Unclear Incentive Compensation Plan Hampers Employer

A promise to pay incentive compensation is unenforceable only if the written terms of the compensation plan make clear that the employer has absolute discretion in deciding whether to pay the incentive. Lam v. American Express Co., 2003 WL 21230323 (S.D.N.Y. 5/27/03) (Marrero, D.J.).

An employee established a breach of contract claim based on his receipt of less money than he was promised and less than he set aside under the employer's Compensation Deferment Program.

The employer's summary of compensation benefits contained a general reservation of rights, indicating that it is 'subject to required approval ' [and] there is no assurance that the illustrated performance or payouts in this exhibit will actually occur.' The court reasoned that the employer unambiguously reserved its rights only to adjust the benefits guidelines at the overall plan level, but not on an individual basis with absolute discretion. The employer also failed to explain how and why the employee's deferred compensation was actually reduced, precluding summary judgment.

 

A former equipment manager for the New York Yankees failed to state claims under the City Human Rights Law against three players who allegedly verbally and physically abused him on the basis of his sexual orientation. Priore v. New York Yankees, 2003 WL 21236827 (1st Dept. 5/29/03) (Buckley, P.J., Rosenberg, Ellerin, Wallach and Lerner, JJ.)

The First Department of the Appellate Division held that fellow employees may be liable under the State Human Rights Law only when they possess the power to do more than simply carry out personnel decisions made by others. This holding followed the Second Department case Murphy v. ERA United Realty , 251 A.D.2d 469 (2d Dept. 1998).

The Murphy Court held that Section 8-107(1)(a) of the City Human Rights Law, which extends liability to 'an employer or an employee or agent thereof' applies more broadly than the state law and makes co-employees liable for unlawful actions regardless of their level of authority. In contrast, the First Department held that the City Human Rights Law creates liability in the same situations as the state law, only where such employees or agents act in some supervisory capacity: 'the inclusion of the word 'employee' in the local ordinance does not automatically open the door of liability to an entirely new category of defendants; the term must be read in context.'

For Plaintiff-Respondent, Edward J. Pavia, Jr., Michael F. Mongelli II, P.C., Flushing.

For Defendants-Appellants The New York Yankees, River Operating Co., Inc., and Brian Cashman and Thomas May, Akin Gump Strauss Hauer & Feld, LLP, by Jonathan L. Sulds, and Epstein, Becker & Green, P.C. New York.

For Defendant-Appellant Bob Wickman, Buchanan Ingersoll, P.C., by Robert S. Bernstein and Eugene R. Scheiman, New York.

Substantial evidence supported the State Division of Human Rights' (SDHR) rejection of an employer's proffered reasons for terminating his employee, and required the Appellate Division to confirm the determination. Mittl v. New York St. Div. of Human Rights, 2003 WL 21285212 (Ct. App. 6/5/03)

The employee alleged that she was unlawfully terminated because she was pregnant. The employer argued that she was lawfully terminated by the employer's wife due to the suspicion that the husband fathered the unborn child; and second, because the employee had an attendance problem. The SDHR rejected the reasons proffered by the employer and determined that the employee was unlawfully terminated because of her pregnancy.

The Appellate Division annulled the determination of the SDHR. The Court of Appeals reversed, holding that the Appellate Division incorrectly applied the substantial evidence test because evidence supported the conclusions that the employer's wife had no supervisory authority to fire employees and that the employer was satisfied with the employee's attendance: 'it is irrelevant that the record could also support petitioner's explanation ' preferred by the Appellate Division ' that he discharged complainant in order to save his marriage and not because of her pregnancy.'

For employee-Appellant, Kathleen Ann Waybourn, New York.

For State Division of Human Rights, Michael K. Swirsky, Bronx.

For Respondents, David J. Wukitsch, Albany.

A promise to pay incentive compensation is not enforceable where if the written terms of the compensation plan make clear that the employer has absolute discretion in deciding whether to pay the incentive. Lam v. American Express Co., 2003 WL 21230323 (S.D.N.Y. 5/27/03) (Marrero, D.J.).

An employee established a breach of contract claim based on his receipt of less money than he was promised and less than he set aside under the employer's Compensation Deferment Program.

The employer's summary of compensation benefits contained a general reservation of rights, indicating that it is 'subject to required approval ' [and] there is no assurance that the illustrated performance or payouts in this exhibit will actually occur.' The court reasoned that the employer unambiguously reserved its rights only to adjust the benefits guidelines at the overall plan level, but not on an individual basis with absolute discretion. The employer also failed to explain how and why the employee's deferred compensation was actually reduced, precluding summary judgment.

No attorneys listed.