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JAMESON v. BETHLEHEM STEEL CORP.

April 7, 1986

L. D. JAMESON,
v.
BETHLEHEM STEEL CORPORATION, et al.



The opinion of the court was delivered by: HUYETT

 HUYETT, J.,

 Plaintiff Jameson brought this action pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, against his former employer, Bethlehem Steel Corporation, the Pension Plan of Bethlehem Steel Corporation, the Pension Plan of Bethlehem Steel Corporation and Subsidiary Companies ("Pension Plan"), and the General Pension Board which administers the pension plan. He alleges that defendants violated provisions of ERISA by refusing to credit him with service earned while he was employed by Iron Mines Company of Venezuela ("IMCOV"), a subsidiary of Bethlehem Steel Corporation. Presently pending before me are cross-motions for summary judgment. For the reasons outlined below, I will grant defendants' motion and deny plaintiff's.

 The material facts in this case are undisputed. Plaintiff worked for IMCOV from May 5, 1953 to February 28, 1970. When his assignment with IMCOV terminated in 1970, defendant Bethlehem Steel paid him $ 56,492 in "Cesantia and/or Antiquades" ("C&A"), a form of severance or separation pay provided for under Venezuelan law. On March 1, 1970, plaintiff commenced working for Bethlehem Mines, a subsidiary in Spain.

 In 1970, it was defendant Bethlehem's policy that any person who worked in Venezuela and who upon completion of his or her assignment in Venezuela was given the "C&A" payment had to elect either to return the C&A or lose credit, for pension purposes, for their years of service with IMCOV. This policy was reflected in a memorandum dated January 27, 1967 from the Secretary of the General Pension Board to the Vice President of Bethlehem; the memorandum clearly states that an employee who accepts and does not repay the C&A to the company at the time he is rehired at another Bethlehem operation beings at such other operation as a new employee. This policy existed before 1967, and plaintiff was advised of it in a memorandum dated September 6, 1966. See Defendant's Memorandum, Exhibit 2.

 Plaintiff acknowledges that he was aware of Bethlehem's policy with respect to the C&A payments. In February of 1979, plaintiff made arrangements for his resignation from Bethlehem. The final terms of his resignation were encompassed in a written agreement dated March 23, 1979 which in turn incorporated a memorandum dated February 15, 1979. See defendant's memorandum, exhibit 4 and attachment A. The February 15, 1979 memorandum specifically stated that as of his formal resignation and termination on February 29, 1980, plaintiff would have accumulated ten years' continuous service with Bethlehem. Plaintiff signed the March 23, 1979 memorandum, stating his agreement with its terms. Moreover, Bethlehem agreed to continue plaintiff at half his regular salary from March 1, 1979 to February 29, 1980 to give plaintiff ten years' credit and therefore make him eligible for a deferred vested pension.

 When plaintiff resigned in 1980, the General Pension Board determined that plaintiff was entitled to a deferred pension, based on ten years of service - - from March 1, 1970 to February 29, 1980. Plaintiff claimed that he should also receive credit for the seventeen years he spent in Venezuela, but the General Pension Board, relying on the company policy in effect in 1970, denied credit for that period. Because plaintiff did not refund the C&A, the Pension Board refused to include the Venezuela years in computing his pension benefits. Plaintiff now alleges that the Pension Board's refusal to include the Venezuelan years in its calculation was in violation of ERISA's provision barring forfeitures after ten years of service. 29 U.S.C. § 1053(a)(2)(A).

 Previously, I granted defendant's motion for summary judgment on the issue of jurisdiction under ERISA. The Third Circuit reversed and remanded the case for me for further proceedings. See Jameson v. Bethlehem Steel Corporation, 765 F.2d 49 (3d Cir. 1985). The Third Circuit concluded that plaintiff's cause of action arose in 1980 and therefore came within the scope of ERISA's jurisdictional provision. 29 U.S.C. § 1144(b). The court suggested, however, that state law may govern: "once jurisdiction has attached, the 'act or omission' provision of § 514, does no more than inform the court that ERISA's substantive provisions are not to be used to determine the law at the time of incidents occurring before January 1, 1975." 765 F.2d at 52.

 What law governs the issues raised by the cross-motions for summary judgment is the first question for me to resolve. Defendants contend that the Third Circuit decision dictates that state law governs the merits of this suit. Plaintiff, on the other hand, contends that his claim is based entirely on ERISA; he claims that defendants' refusal to credit the plaintiff with the years of service in Venezuela in computing his pension benefits constitutes a violation of the pension plan which is controlling in this case and a violation of section 203(a) of ERISA which prohibits the forfeiture of an employee's rights to his pension once they have vested. Plaintiff also argues that section 402(a)(1) of ERISA, 29 U.S.C. § 1102(a)(1), which provides that every employee benefit plan should be established and maintained pursuant to a written instrument, requires that defendants credit his years in Venezuela.

 I agree with plaintiff that he has stated a claim arising under ERISA. Therefore, ERISA must be applied to determine whether plaintiff's pension rights were nonforfeitable. *fn1" However, to the extent of acts or policies in effect prior to 1975, the effective date of ERISA, are determinative of the outcome here, ERISA will not govern. I cannot apply the rules and restrictions of ERISA to acts or policies predating ERISA's effective date.

 The starting point is to examine which of ERISA's substantive provisions govern plaintiff's claim - - a claim based on an employment history prior to January 1, 1975 but filed after that date. Section 203 of ERISA, 29 U.S.C. § 1053 govern the vesting of pensions, and plaintiff relies on subsection (a)(2)(A) in claiming that his pension rights were nonforfeitable. *fn2" Subsection (b) (1)(F) provides, however, that certain periods of time may not be included in calculating the nonforfeitable percentage under subsection (a)(2):

 
(1) In computing the period of service under the plan for purposes of determining the nonforfeitable percentage under subsection (a)(2) of this section, all of an employee's years of service with the employer or employers maintaining the plan shall be taken into account, except that the following may be disregarded:
 
(F) years of service before this part first applies to the plan if such service would have been disregarded under the rules of the plan with respect to breaks in service, as in effect on the applicable date;

 As the Third Circuit, in Tanzillo v. Local Union 617, 769 F.2d 140, 145 (3d Cir. ...


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