American International Group, Inc. v. Guterman

No. 11-4222-cv
AIG v. Guterman
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY
PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit,
held at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in
the City of New York, on the 19th day of September, two thousand twelve.
PRESENT: GUIDO CALABRESI,
SUSAN L. CARNEY,
Circuit Judges.*
_____________________________________
AMERICAN INTERNATIONAL GROUP,
INC. AMENDED AND RESTATED
EXECUTIVE SEVERANCE PLAN,
Plaintiff –Cross-Defendant–Counter-Defendant–Appellee,
v. No. 11-4222-cv
STEVEN GUTERMAN,
Defendant–Cross-Claimant–Counter-Claimant–Appellant.
_____________________________________
FOR APPELLANT: Paul W. Mollica (Wayne N. Outten, on the brief), Outten
& Golden LLP, Chicago, IL.
*
The third judge originally assigned to the panel was unable to hear the case
because of a health issue. The two remaining members of the panel, who are in
agreement, have decided the case. See 28 U.S.C. § 46(d); 2d Cir. IOP E(b); United
States v. Desimone, 140 F.3d 457, 458–59 (2d Cir. 1998).
FOR APPELLEE: Patrick W. Shea (Marc E. Bernstein, on the brief), Paul
Hastings LLP, New York, NY.
Appeal from the United States District Court for the Southern District of
New York (Laura Taylor Swain, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of the district court is AFFIRMED.
Steven Guterman, a former executive at American International Group, Inc.
(“AIG”), appeals from the District Court’s award of summary judgment to the AIG
Amended and Restated Executive Severance Plan (the “Plan”) in this ERISA
benefits case. We assume the parties’ familiarity with the facts and the record of
prior proceedings.
From 2001 to 2009, Guterman served as a Senior Managing Director and the
Head of Global Business Development for a division of AIG known as AIG
Investments, and, concurrently, as a Vice President of AIG, the parent organization.
In September 2009, as part of a major reorganization, AIG offered Guterman the job
of Global Head of Retail Sales in place of his previous position. The newly-offered
position carried less responsibility than Guterman had enjoyed in his prior roles
and promised reduced (but still substantial) compensation. Guterman did not
accept the new position by the deadline set by AIG, and then left AIG’s employ.
Whether his employment ended pursuant to a termination (as Guterman contends)
or a resignation (as AIG contends) determines Guterman’s entitlement to severance
benefits under the Plan.
2
The Plan is a so-called “top hat” plan, meaning primarily that it establishes
the terms on which the company will make certain deferred compensation
payments (here, severance payments) to highly-compensated executives. See
generally Demery v. Extebank Deferred Comp. Plan (B), 216 F.3d 283, 286-87 (2d
Cir. 2000). Such plans are exempt from many of ERISA’s provisions, and
administrators of such plans are not subject to ERISA’s fiduciary responsibility
obligations. Id. The Plan at issue here assigns the role of administrator to the
Compensation and Management Resources Committee (the “Plan Administrator”) of
AIG’s board of directors. It expressly grants the Plan Administrator authority to
interpret the Plan “in its sole discretion.” Plan § VII.A (Ex. 5.A to Bernstein Decl.,
at 9).
After the events leading up to Guterman’s departure, the Administrator
determined that Guterman had resigned, and, accordingly, denied Guterman
severance benefits under the Plan. Guterman sued. On summary judgment, the
district court upheld the Administrator’s determination, which it examined under
an “arbitrary and capricious” standard of review.
In an ERISA benefits appeal, we review the district court’s grant of summary
judgment de novo, and apply the same legal standards as are required of the
district court on its review of a plan administrator’s determinations. Hobson v.
Metro. Life Ins. Co., 574 F.3d 75, 82 (2d Cir. 2009). When an ERISA plan explicitly
vests its administrator with discretion to interpret the plan, federal courts may
ordinarily overturn the administrator’s benefits determination only upon a finding
3
that the determination is arbitrary and capricious. Id.; see also Firestone Tire &
Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Guterman maintains, however, that
with respect to top hat plans – particularly those administered by entities within
the corporate structure, which in some respect operate under an inherent conflict of
interest – we should apply a less deferential standard of review, even when the plan
expressly vests the administrator with discretion to interpret its terms. This is a
matter of some debate in the circuit courts of appeal. Compare Goldstein v.
Johnson & Johnson, 251 F.3d 433, 441-44 (3d Cir. 2001) (holding Firestone Tire
analysis inapplicable to top hat plans), with Comrie v. IPSCO, Inc., 636 F.3d 839,
842 (7th Cir. 2011) (applying Firestone Tire and rejecting Goldstein’s analysis). We
have not previously addressed this question head-on. See Paneccasio v. Unisource
Worldwide, Inc., 532 F.3d 101, 108-09 (2d Cir. 2008) (applying arbitrary and
capricious review to administrator’s determination to terminate top hat plan
without examining whether a different standard of review might apply). We do not
reach this question here, however, because, even making a de novo determination
on the administrative record, we reach the same conclusion as did the
Administrator.
The record provides ample grounds for concluding that Guterman’s departure
from AIG constituted a resignation for purposes of the Plan. As a part of the
reorganization, AIG was willing to continue Guterman’s employment. It offered
Guterman a substantial position, albeit one with less responsibility and lower
compensation. Guterman had sufficient opportunity to accept the newly-offered
4
position. He failed to do so by the deadline reasonably established by AIG, and
which had already been extended once on Guterman’s request. Moreover, the Plan
expressly precludes departing employees from asserting constructive discharge in
support of a severance benefits claim. It also provides that only those employees
with the rank of Senior Vice President – which Guterman did not have – maintain
eligibility for severance benefits when resigning for “Good Reason” (a term defined
by the Plan to include “[a] diminution in the Eligible Employee’s duties or
responsibilities” or a “material reduction” in base salary or bonus opportunity).
Plan §§ IV, IV.K (Ex. 5.A to Bernstein Decl., at 2, 8). Applying these Plan terms to
the undisputed facts, we too conclude that Guterman “resigned,” making him
ineligible for a Plan severance payment. He could have remained at AIG in a lesser
role, yet he failed to accept the offered position by an established deadline.
Guterman’s argument that he had been inadequately informed of the specifics of
the new job is beside the point: the job he was offered had a title and compensation
terms, and was his to accept or reject. By his actions, he rejected it.
For the foregoing reasons, the judgment of the district court is AFFIRMED.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
5