On Appeal From the United States District Court For the District of New Jersey (D.C. Civil Action No. 93-cv-05016)
BEFORE: STAPLETON, McKEE and SEITZ, Circuit Judges
The issue presented is whether Section(s) 204(g) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Section(s) 1054(g), requires an employer that sells a business but retains the pension plan covering the employees of that business to credit service with the purchaser when determining the eligibility of those employees for an early retirement benefit subsidy. Plaintiffs James Dade, Jerome Budde, Jr., and the class they purport to represent sued to force the North American Philips Corporation ("Philips"), their former employer, to comply with this alleged requirement. The district court held that ERISA does not impose such a requirement and dismissed the claims of plaintiffs for failure to state a claim under Fed. R. Civ. P. 12(b)(6). We will affirm.
This dispute arises in connection with Philips' sale of the assets of its Magnavox Electronic Systems Company ("Magnavox") division to MESC Electronics Systems, Inc. ("MESCESI"). The relevant facts are not in dispute. Plaintiffs were employed by Magnavox on October 22, 1993, when the sale closed. Until the sale, plaintiffs participated in the Philips Electronics North America Corporation Pension Plan for Salaried Employees (the "Philips Plan" or the "Plan").
Under the terms of the Plan, sixty-five is the normal retirement age. However, participants who are at least fifty-five years old can elect to retire earlier. Such early retirees receive benefits reduced by 0.3% for each month their retirement precedes the normal retirement age. Under the Plan's "Rule of 85," early retirement benefits will not be reduced if the sum of the participant's age and years of eligible service at retirement is at least eighty-five. The Plan defines eligible service as service with Philips, an affiliate of Philips, or any other company that has adopted the Plan.
Philips notified the plaintiffs of the impending sale of Magnavox and of the sale's effects on their retirement benefits. After the sale, Philips would remain the sponsor of the Plan and there would be no transfer of Plan assets or liabilities. While the plaintiffs would cease to be Philips' employees at the time of the closing, they would retain their rights under the Plan. Moreover, the Plan would be amended in two respects. All participants' accrued retirement benefits would become 100% vested when the sale closed and Magnavox employees continuing with MESCESI would be entitled to credit for up to one year of additional service with MESCESI towards the Philips Plan's Rule of 85 requirements. No credit would be given for any subsequent service with MESCESI.
After the sale, the plaintiffs continued to work for MESCESI in the same jobs they held with Magnavox. They did not satisfy the Rule of 85 requirements when the sale closed, nor could they do so even with credit for an additional year of service with MESCESI. Plaintiff Budde's age and eligible service summed to eighty-five, but he was not yet fifty-five years old, and would not turn fifty-five by October 1994. Plaintiff Dade did not have sufficient eligible service.
The district court had jurisdiction under 28 U.S.C. Section(s) 1331 and 29 U.S.C. Section(s) 1132. Our jurisdiction over this appeal rests on 28 U.S.C. Section(s) 1291. We exercise plenary review over the district court's order dismissing plaintiffs' complaint under Fed. ...