Brenda Tolbert v. RBC Capital Markets Corp.
758 F.3d 619
| 5th Cir. | 2014Background
- Plaintiffs were former RBC employees who participated in RBC’s Wealth Accumulation Plan (WAP); portions of their WAP accounts were forfeited upon separation.
- WAP is described as a nonqualified deferred compensation plan for a select group of management/highly compensated employees and allows voluntary and mandatory deferrals plus company contributions.
- Voluntary deferrals are always vested; mandatory deferrals and company contributions vest per Committee schedule but vest on death or separation if certain criteria are met; failure to meet separation criteria causes forfeiture.
- Plaintiffs sued under ERISA § 502(a) (29 U.S.C. § 1132), alleging breach of fiduciary duty and seeking equitable relief based on the contention that the WAP is an “employee pension benefit plan.”
- District court granted summary judgment for RBC, holding the WAP is not an ERISA pension plan; Fifth Circuit reviews de novo and considers whether the WAP falls under 29 U.S.C. § 1002(2)(A)(i) or (ii).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether WAP "provides retirement income" under §1002(2)(A)(i) | WAP enables deferral of compensation until retirement or separation, so it qualifies | WAP’s primary purpose is retention/bonus during employment, not retirement income | No — WAP is not a pension plan under (i) (court agrees WAP not designed to provide retirement income) |
| Whether WAP "results in a deferral of income…to termination or beyond" under §1002(2)(A)(ii) | WAP’s express terms create voluntary/mandatory deferrals — employees forego current income for later distribution, including on separation | WAP is a retention/bonus tool; mere option to defer is not enough; reliance on DOL regulation and Emmenegger supports noncoverage | Yes — WAP is a pension plan under (ii); its express terms cause deferral to termination or beyond |
| Applicability of 29 C.F.R. §2510.3–2(c) (bonus-plan exclusion) | N/A (plaintiffs did not argue specifically under the regulation) | RBC contends the WAP is akin to a bonus program and should be excluded unless "systematically deferred" | Regulation does not apply because WAP is not a bonus program and fits §1002(2)(A)(ii) based on express terms |
| Whether WAP is an exempt "top hat" plan (unfunded & for select management/highly compensated employees) | Plaintiffs contest ERISA claims if plan is a top-hat exempt plan | RBC asserts top-hat exemption applies, which would exempt many fiduciary duties | Not decided — Fifth Circuit remanded for district court to resolve factual issues about top-hat status |
Key Cases Cited
- Aetna Health Inc. v. Davila, 542 U.S. 200 (2004) (describes ERISA’s integrated civil-enforcement scheme)
- Murphy v. Inexco Oil Co., 611 F.2d 570 (5th Cir. 1980) (plans must be designed to pay retirement income to qualify under §1002(2)(A)(i))
- Boos v. AT&T, Inc., 643 F.3d 127 (5th Cir. 2011) (to trigger §1002(2)(A)(ii), employees must forgo income now in exchange for later income)
- Burrage v. United States, 134 S. Ct. 881 (2014) (ordinary meaning of "results" as "arises as an effect, issue, or outcome")
- Emmenegger v. Bull Moose Tube Co., 197 F.3d 929 (8th Cir. 1999) (bonus/phantom-stock plan treated as non-pension under DOL regulation)