Paneccasio v. Unisource Worldwide, Inc.

532 F.3d 101

Eugene PANECCASIO, Plaintiff-Appellant, v. UNISOURCE WORLDWIDE, INC., Georgia-Pacific Corp., IKON Office Solutions, Inc., formerly known as Alco Standard Corp., Board of Directors, Ind. & as Fiduciaries of IKON Office Solutions, Inc., and W.J. Hope, Jr., Ind. & as Admin. & Fiduciary of the 1991 IKON Office Solutions Inc. Deferred Compensation Plan, Defendants-Appellees.

Docket No. 06-3950-cv.

United States Court of Appeals, Second Circuit.

Argued: December 13, 2007.

Decided: July 7, 2008.

Andrew B. Bowman, Westport, CT, for Plaintiff-Appellant.

Felix J. Springer (Howard Fetner, on the brief), Day Pitney LLP, Hartford, CT, for Defendants-Appellees Unisource Worldwide, Inc. and Georgia-Pacific Corporation.

Kay Kyungsun Yu, Pepper Hamilton LLP, (Joseph J. Costello, Morgan Lewis & Bockius LLP, on the brief), Philadelphia, PA, for Defendants-Appellees Alco Standard Corporation, IKON Office Solutions, Inc., Board of Directors of IKON Office Solutions, Inc., and W.J. Hope, Jr.

Before: JACOBS, Chief Judge, POOLER and SACK, Circuit Judges.

DENNIS JACOBS, Chief Judge:

Plaintiff Eugene Paneccasio ("Paneccasio") elected to participate in his company's deferred compensation plan at a level designed to provide him, once fully vested, with a $15,000 annuity for ten years following his retirement no earlier than age 65, plus life insurance. The plan was subject to termination, at the company's election, on payment of certain sums to participants depending on whether they were or were not yet receiving benefits. In 1994, when Paneccasio was 57, he was offered an early retirement package, which he accepted, and which granted accelerated vesting in the deferred compensation plan making him eligible to receive 65 percent of the stated benefits beginning at age 65, along with a number of other inducements that are not at issue here. In 2000, six months short of Paneccasio's 65th birthday, the company terminated the deferred compensation plan and, as required by the termination provision, paid Paneccasio his deferred income at six percent interest. Also pursuant to the termination provision, the life insurance benefit ended.

Paneccasio argues that the early retirement package guaranteed that he would receive benefits under the deferred compensation plan at age 65 and that the plan's termination provision was ineffective as to him, or disabled by estoppel. In support he cites assurances in the early retirement package that he would receive greater benefits if he took it, and that his benefits under all plans would be paid at age 65. Paneccasio seeks his 65 percent participation in the ten year annuity and life insurance benefit that were to begin at age 65. The company argues that a broad and bolded disclaimer in the early retirement package referred Paneccasio to the plan documents (which included the termination provision) and said that they would control.

The United States District Court for the District of Connecticut (Droney, J.), granted summary judgment dismissing Paneccasio's complaint, which alleged violations of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 621 et seq., the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 et seq., and state statutory and common law. Paneccasio appeals. We affirm.

BACKGROUND

From 1971 until he retired in 1994 at age 57, Paneccasio worked for a division of defendant Unisource Worldwide, Inc. ("Unisource"), which was a wholly-owned subsidiary of defendant Alco Standard Corporation ("Alco"). By the time Paneccasio retired, he was a vice president of sales and national accounts.¹

A. 1991 Deferred Compensation Plan

Paneccasio elected to participate at its inception in the Alco Standard Corporation 1991 Deferred Compensation Plan (the "1991 Plan"), which was offered to certain highly compensated employees of Alco and its subsidiaries including Unisource. The 1991 Plan, which was a type of plan commonly referred to as a "top hat" plan, furnished benefits supplemental to the pension plan benefits already provided by Unisource. (Paneccasio had previously vested in the pension plan and in Alco's 1980 deferred compensation plan.)

The 1991 Plan allowed participants to defer a portion of their income until retirement and provided two different life insurance components: coverage for the participant at a certain level prior to retirement, and transfer of a life insurance policy to the participant at age 65. Eligible employees had the choice of selecting among three options under the Plan. Paneccasio chose Option II, which provided that when he retired and reached age 65 he would receive an annuity in the amount of $15,000 per year for ten years, and would own a life insurance policy with a $95,000 cash value and a paid-up death benefit of $375,000. If Paneccasio died before age 65, the death benefit would be $450,000.

Paneccasio had the option to elect vesting after five years, which he did when he signed up. An employee who terminated employment before "vesting" would no longer be allowed to participate in the Plan, and his aggregate salary deferrals at the time his employment ended would be reimbursed without interest.

The 1991 Plan also gave Alco's Board of Directors the sole authority to terminate the Plan:

Termination. The Board of Directors of Alco shall have the right to terminate the Plan in its entirety and not in part at any time it determines that proposed or pending tax law changes or other events cause, or are likely in the future to cause, the Plan to have an adverse financial impact upon Alco.

Upon termination, a participant would no longer be entitled to an annuity and life insurance benefit. Instead, a participant would be entitled only to a lump-sum distribution, in amounts calculated based on whether the participant's benefit payments had commenced (Paneccasio's payments had not when the Plan was terminated):

Alco shall have no liability or obligation under the Plan or the Participant's Participation Agreement (or any other document), provided that 1) Alco distributes, in lump sum, to any participant whose benefits have not commenced, the value of the amount of the Participant's deferrals to the date of termination plus interest (compounded annually) at a rate of 6% per annum; and 2) Alco distributes, in a lump sum, to any Participant whose benefit payments have commenced, all amounts thereafter due, in an amount as calculated in accordance with Paragraph [20], "Acceleration of Benefits." Such lump-sum distribution, at Alco's election, may be made in the form of cash, or life insurance, or both.

(emphasis added). At his deposition, Paneccasio testified that he read and understood the terms of the 1991 Plan when he elected to participate. He further testified that he had read the termination provision of the Plan, acknowledged that the Board had the right to terminate the Plan under that provision, and understood what benefit would be payable if the Plan were terminated.

B. Early Retirement Package

In 1994, Unisource offered an Early Retirement Package ("ERP") to employees age 55 and older. Paneccasio, who was 57, accepted, and retired effective April 1, 1994. The ERP was described in a brochure provided to Paneccasio entitled, "Your Personal Early Retirement Package: A Window of Opportunity." As a result of his election, Paneccasio received, among other things: a one-time cash bonus of $7,500; full vesting in the company's pension plan; continued medical coverage until age 65; term life insurance paid by Unisource until age 65; full vesting in an Alco stock participation plan, with stock worth $471,840; full vesting in the 1980 deferred compensation plan, resulting in a $3,024 monthly payment starting at age 65 and continuing for 10 years; and 65 percent vesting in the 1991 Plan. Other than his claims relating to the 1991 Plan, it is undisputed that Paneccasio received all benefits pertaining to his early retirement.

But for the ERP, an employee who left employment prior to vesting in the 1991 Plan would be entitled only to the return of the deferred salary in a lump sum, without interest. For such employees, the ERP conferred the benefit of accelerated partial vesting. Partial vesting allowed the retiring employee to leave his deferred salary in the Plan where it would continue appreciating, and thereby enjoy the deferral of tax on the income until age 65, at which time he would receive annuity and life insurance benefits proportionate to his vesting. Partial vesting also allowed the retiring employee to retain his interest in the pre-age-65 life insurance benefit of $450,000, as long as he continued to pay a quarterly premium of $231.75 through age 65.

Attached to Paneccasio's copy of the ERP brochure was a personalized statement called, "A Personal Look ... At Your Retirement," which estimated the benefit enhancements specifically applicable to Paneccasio under the various Unisource benefit plans. As to the 1991 Plan, the "Personal Look" calculated that Paneccasio would be eligible at age 65 to receive 65 percent of the Plan's Option II benefits, i.e., $9,750 each year for 10 years. With respect to the 1991 Plan's life insurance policy, the ERP's partial vesting would allow for a post-age-65 cash value of $61,750 and a death benefit of $243,750.

Other than providing for accelerated vesting in the 1991 Plan, the ERP brochure did not address any other feature of the Plan. It did not alert participants that Alco retained the right to terminate the 1991 Plan, or explain how early termination might affect the 1991 Plan's annuity and life insurance provisions. The ERP brochure did, however, include a broad disclaimer applicable to all benefits plans discussed in the brochure. In bold type in a highlighted box, it said:

In an effort to keep the language as clear and non-technical, yet correct, as possible, the benefits described in this brochure are only summaries of the Early Retirement window's...