For twenty-two years, William Aramony served as president and chief executive officer of United Way of America, one of the nation’s premier charitable organizations. But in 1992 he was fired amidst a rising tide of allegations that he had engaged in fraud and financial improprieties with respect to United Way funds. Subsequently, Aramony was convicted in the United States District Court for the Eastern District of Virginia on numerous felony counts of fraud, and sentenced to seven years’ imprisonment. In light of these events, United Way determined to deny Aramony an array of pension benefits. Aramony filed suit to regain the benefits, and United Way counterclaimed to recover for, inter alia, Aramony’s breach of fiduciary duty. After a five-day bench trial, both sides prevailed in significant part, and both now appeal.
BACKGROUND
The background of this case is described in detail in the district court’s opinion, Aramony v. United Way of Am., 28
United Way of America, a not-for-profit New York corporation, organizes and provides services to local chapters engaged in a variety of charitable pursuits nationwide. United Way’s activities are primarily funded by dues paid to it by these locals, calculated as a fixed percentage of the charitable contributions each receives. The affairs of United Way are overseen by a Board of Governors, but its day-to-day operations are controlled by its president and CEO, a post held by William Aramony from 1970 until his resignation under fire in 1992. A subcommittee of the board known as the Executive Committee is empowered to adopt pension plans and compensation agreements on United Way’s behalf.
I. United Way’s Pension Plans
United Way provides its employees with a qualified defined benefit plan under which pension benefits are calculated as a function of an employee’s average salary over a five-year period, multiplied by a fixed ratio, and multiplied again by the employee’s years of service. Pursuant to I.R.C. § 415, however, there is a maximum benefit an employee may receive pursuant to this plan in the neighborhood of $100,-000 per annum — $90,000 upwardly adjusted for cost of living increases. See 26 U.S.C. § 415(b)(1).
On February 27, 1984, the Executive Committee met to consider adopting a non-qualified pension plan (“Replacement Benefit Plan” or “RBP”) that would provide those highly compensated employees subject to the § 415 limitation, including Aramony, with benefits offsetting the impact of § 415 and certain other tax-code limitations on the qualified defined benefit plan. United Way’s usual practice when considering pension plan proposals was for the Executive Committee to approve the concept of the plan, leaving the details to be worked out between United Way employees specializing in employee benefits, such as senior vice president and CFO Stephen Paulachak, and United Way’s insurer, Mutual of America Life Insurance Co. The adoption of the RBP proceeded along these lines.
At the February 27 meeting, Paulachak distributed an agenda setting forth the basic principles of a proposed RBP. Aside from indicating the purpose of the proposed plan, the agenda did not refer to specific details, although it did recommend that the Executive Committee “authorize United Way ... to establish a Replacement Benefit Plan ... as outlined under [the attached draft plan].”
The referenced attachment was a partially incomplete sample RBP document, i.e., the document left blank significant terms such as its effective date and controlling law, offered but did not select from among various options for determining eligibility and benefit amounts, and did not contain a signature or signature line. This draft plan did, however, include two specific provisions of note. First, it contained a benefit calculation formula provision based on United Way’s qualified defined benefit plan. Second, it contained a felony forfeiture provision stating:
The right to the payment of any amount provided under this Plan shall be subject to forfeiture upon the commission of a prohibited act by the Participant. A prohibited act shall be the commission of a fraud, embezzlement or other felony involving the Employer for which the Participant has been convicted in a Court of competent jurisdiction.
The draft plan went on to state, however, that “[e]xcept as may be provided in [the felony forfeiture provision], the Participant’s rights under this Plan shall become nonforfeitable upon termination of employment.”
The Executive Committee accepted the recommendation reflected on the agenda and authorized the establishment of an RBP, expecting Paulachak to work out the
There are two significant differences between the plan produced by Mutual and signed by Paulachak (the “signed plan”) and the draft plan that had been attached to the agenda at the February 1984 board meeting (the “draft plan”). First, whereas the draft plan’s benefit-calculation formula referred to and depended upon United Way’s qualified defined benefit plan, the signed plan’s benefit-calculation formula referred to and depended upon a qualified defined contribution plan. United Way did not have a defined contribution plan. Second, the signed plan did not contain the felony forfeiture clause contained in the draft plan, providing instead only that benefits become nonforfeitable upon termination of employment.
In addition to providing Aramony benefits under the RBP, in October 1984 United Way entered into yet another compensation arrangement with Aramony, the Supplemental Benefits Agreement (“SBA”). In the SBA, United Way agreed to give Aramony an additional retirement benefit equal to the balance on a hypothetical account to which United Way would “contribute” $2,088.38 per month until Ar-amony’s retirement, plus interest at United Way’s option. In contrast to both versions of the RBP, the SBA was silent on the question of forfeiture.
II. Aramony’s Misconduct
From at least as early as September 1982 onward, Aramony engaged in a pattern of financial misconduct and fraud at the expense not only of United Way and its local chapters, but also of those charity-giving members of the general public whose trust he thereby betrayed. During this period, Aramony routinely billed United Way for an array of unauthorized personal expenses, including personal air travel, car rentals, hotels, and meals. Ar-amony also regularly falsified expense reports throughout this period in an effort to conceal his wrongdoing, at times directing other United Way employees to assist him in doing so.
In late' 1991, United Way learned that members of the press were looking into a possible story about United Way including, inter alia, allegations of wrongdoing by Aramony and another United Way officer. United Way responded by retaining the services of investigators at The Investigative Group, Inc. (“IGI”) and of the public relations firm Hill & Knowlton. Later, United Way hired the law firm Verner, Liipfert, Bernhard, McPherson, and Hand (“Verner Liipfert”) to assist and expand IGI’s investigation, and the accounting firm Coopers & Lybrand to perform various audits in connection with the investigation.
III. The Pension Benefits Litigation
As a consequence of Aramony’s misconduct, United Way determined to deny him pension benefits under both the RBP and the SBA. Aramony responded by filing this lawsuit, in which he claimed among other things that he is entitled to benefits under the RBP and SBA pursuant to § 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132(a)(1)(B) (providing a civil action to recover benefits due under certain employee benefit plans). Aramony also sought a declaratory judgment pursuant to 28 U.S.C. § 2201 as to the scope of the benefits to which he is entitled under these plans. United Way counterclaimed arguing among other things that Aramony had breached his fiduciary duty to the organization and should therefore forfeit certain pension benefits and return other compensation already paid to him.
After conducting a five-day bench trial, the district court, in a lengthy, thoughtful, and meticulous opinion, issued a split decision. The court determined that, despite his felony conviction, Aramony was entitled to benefits under the RBP. This conclusion followed from the court’s determination that the signed plan rather than the draft plan controlled. The signed plan unlike the draft plan contained no felony forfeiture provision, providing to the contrary that rights under the RBP become nonforfeitable upon termination of employment. See Aramony,
On the other hand, the district court rejected Aramony’s claim that he was entitled to benefits under the SBA. The court reasoned that the federal common law of forfeiture was applicable to that agreement because the agreement was silent as to forfeitability. Aramony’s disloyalty throughout the period the SBA was in force therefore precluded him from receiving benefits under that agreement. See id. at 171. The court also rejected Aramony’s request for attorneys’ fees. See id. at 174-75.
Addressing United Way’s counterclaims, the district court had little trouble concluding that Aramony was liable to United Way for, among other things, breach of his common-law fiduciary duty. See id. at 175-76. The court determined, first, that as a result of this breach Aramony was obligated to disgorge the $951,250 in sala
Ultimately, the court awarded to Aramo-ny $3,221,057 under the RBP, plus an additional $1,177,121.39 in prejudgment interest. See id. at 184. The court awarded to United Way a total of $1,233,388 in actual, consequential, and punitive damages, plus an additional $788,555.92 in prejudgment interest. See id. at 185. Both parties appeal.
DISCUSSION
United Way’s appeal presents three issues. First, United Way contends that the district court erred by concluding that Ar-amony is entitled to receive pension benefits under the RBP because: (a) the court should have treated the draft rather than the signed plan as effective and the plan’s benefits therefore unavailable to Aramony under the draft’s felony forfeiture clause, and (b) even if it was the signed plan that was effective, the court should have interpreted it either as providing no benefits at all or as implicitly containing the forfeiture provision. Second, United Way argues that, even assuming Aramony is entitled to RBP benefits, the court erred in applying principles of promissory estoppel to conclude that those benefits include compensation to make up for the impact of I.R.C. § 401(a)(17). Third, United Way argues that the district court erred in its calculation of consequential damages on its breach of fiduciary duty counterclaim.
Aramony’s cross-appeal presents two issues. First, he asserts that the district court erred in denying him benefits under the SBA. Second, he argues that the court erred also in denying him attorneys’ fees with respect to his successful claims.
I. United Way’s Appeal
A. Whether the district court erred in concluding that Aramony was entitled to benefits under the RBP
United Way contended in the district court that Aramony was not entitled to benefits under the RBP because: (1) the draft plan with its felony forfeiture provi
1. Whether the district court erred in determining that the signed plan controls as to the terms of the RBP
The district court’s determination that the RBP does not contain a felony forfeiture provision turned in the first instance on its conclusion that the signed rather than the draft plan is the controlling manifestation of United Way’s intent. In support, the court observed that the signed plan is an executed agreement, is complete as to all its terms, and has been disseminated to United Way’s employees. See Aramony,
On appeal, United Way argues that the district court erred both in determining that the February 1984 vote was not intended to bind United Way to the terms of the draft plan, and in concluding that senior vice president Paulachak had implied authority to bind United Way to the terms of the signed plan. These were factual determinations, made after a bench trial by the district court in its capacity as fact-finder. See Eli Attia Architects v. Safra, No. 94 CIV. 2928(KMW),
We consider first United Way’s claim that the Executive Committee, by voting in favor of a replacement benefit plan at the February 1984 meeting, intended to bind itself to the specific terms set forth in the draft plan put before it, including the felony forfeiture provision, and that the district court’s contrary finding, that the board intended only to approve the general concept of an RBP while leaving the relevant details to be worked out between Paulachak and Mutual, was clearly erroneous. We conclude to the contrary that the district court’s conclusion was well-supported by the record.
Robert Beck, the former chairman of United Way’s board, testified that, in approving pension proposals, “the Board and/or the Executive Committee would get into enough detail to understand what was being proposed but certainly not into the drafting phase or — or the real details of the particulars of the plan.” Such details, Beck explained, would be left to “the em
For similar reasons, we cannot conclude that the district court erred in finding that senior vice president Paulachak had authority to bind United Way to the terms of the signed plan. “Implied authority may be viewed as ‘actual authority given implicitly by a principal to his agent’ or as a ‘kind of' authority arising solely from the designation by the principal of a kind of agent who ordinarily possesses certain powers.’ ” Masuda,
2. Whether the district court erred in concluding that the signed plan unambiguously does not include a felony forfeiture provision
United Way argues that even assuming the signed plan was effective, the district court erred by fading to read it to contain a felony forfeiture clause. The district court rejected this argument on the ground that the signed plan does not contain such a clause, providing unambiguously instead that “ ‘rights under this Plan shall become nonforfeitable upon termination of employment.’” See Aramony,
As a general matter, unambiguous language in an ERISA plan must be interpreted and enforced in accordance with its plain meaning. See, e.g., Devlin v. Transportation Communications Int’l,
Applying these standards to the signed plan, we agree with the district court’s conclusion that the language is unambiguous. The signed plan simply does not
3. Whether the district court erred in concluding that the signed plan’s benefit formula is ambiguous and should be construed as referring to United Way’s qualified defined benefit plan
United Way argues that the district court erred by failing to find that the signed plan’s benefit calculation formula, referring as it does to a non-existent qualified defined contribution plan rather than United Way’s qualified defined benefit plan, renders the entire document meaningless. The district court agreed that the “benefit formula, on its face, would not require the payment of any benefits.” Aramony,
On appeal, United Way argues that the district court erred by failing to apply the “four-eorners-of-the-document” approach to the determination of ambiguity in this instance despite having applied it strictly in the context of the forfeiture provision issue. We see no such inconsistency. It is true, of course, that in order to know that the signed plan’s benefit formula is meaningless one must know also that United Way’s underlying plan is a defined benefit plan. But it is not necessary to go beyond the scope of the “entire integrated agreement,” O’Neil,
We therefore affirm the decision of the district court that Aramony is entitled to benefits under the RBP.
B. Whether the district court erred in concluding that the RBP includes a benefit accounting for the subsequent enactment of I.R.C. § I01(a)(17)
United Way contends next that, even assuming Aramony is entitled to benefits under the RBP, the district court erred in calculating the scope of the benefits provided under that plan to include a benefit offsetting the impact of I.R.C. § 401(a)(17), a tax-code provision enacted subsequent to the adoption of the RBP that can limit significantly the amount of benefits available under the RBP.
T9,10] “ERISA is a federal law regime for regulating employee benefits designed to eliminate the threat of conflicting state and local regulation of benefit plans.” Schonholz v. Long Island Jewish Med. Ctr.,
In order to lessen the danger that commonplace communications from employer to employee will routinely be claimed to give rise to employees’ rights beyond those contained in formal benefit plans, however, we have added that an ERISA plaintiff must “adduce[ ] not only facts sufficient to support the four basic elements of promissory estoppel, but facts sufficient to [satisfy an] ‘extraordinary circumstances’ requirement as well.” Devlin,
Mutual, acting as United Way’s agent, on two occasions gave benefit projections to Aramony that Aramony claimed amounted to representations that the RBP provides a § 401(a)(17)-neutralizing benefit.
The district court found the added requirement that “extraordinary circumstances” be shown in ERISA cases to be satisfied based on the same facts underlying its finding that it would be unjust to deny the benefit, especially the court’s conclusion that the RBP is ambiguous on this
The problem with the district court’s approach is that the Kane rule does not control in this Circuit. See Bonovich v. Knights of Columbus,
Aramony points to nothing beyond the ordinary about the circumstances surrounding the promises allegedly made to him except his asserted ability to satisfy the common-law elements of promissory estoppel. Nothing, for example, suggesting that United Way made a promise to Aramony in order to induce him to take action for United Way’s benefit only later to renege on the promise. That sort of behavior by an employer could, under Schonholz and Devlin, amount to “extraordinary circumstances.”
Aramony relies on two determinations by the district court: that the RBP is ambiguous as to whether it provides this benefit, and that Mutual’s benefit projections constituted a promise that the benefit is included. But this combination of ambiguity — which we have concluded does not
The district court’s alternative basis for its ruling does not rescue the claim. The court suggested in a footnote that extraordinary circumstances need only be shown where the “actuarial soundness” of an ERISA plan is in jeopardy and, because extension of the RBP to account for § 401(a)(17) would not trigger this concern, Aramony was not obliged to make such a showing. See Aramony,
It is true, as the district court pointed out, that in Chambless v. Masters, Mates & Pilots Pension Plan,
We therefore reverse the determination of the district court that United Way is estopped from denying that the RBP provides a benefit offsetting the effect of § 401(a)(17). As part of its estoppel analysis, the district court decided, however, that the RBP was ambiguous on this point. We remand, therefore, so that the district court may consider whether United Way is contractually bound by the RBP itself to provide the benefit to Aramony.
C. Whether the district court erred in calculating damages on United Way’s breach of fiduciary duty counterclaim
After finding in United Way’s favor on its breach of fiduciary duty counterclaim, the district court turned to the question of damages. The court first determined that, under New York state law, which the parties agree governs the counterclaims, Aramony was obliged to forfeit salary paid to him during his period of disloyalty. See Aramony,
After determining the extent of Aramony’s salary forfeiture, the district court next considered the question of consequential damages, determining that United Way was entitled to recover for any injury as to which Aramony’s breach was a “substantial factor.”
On appeal, United Way contends that the district court erred by failing to award it a full recovery as to each of these costs. The nub of United Way’s argument is that, in order for it to recover one hundred percent of these costs, it was only necessary for it to demonstrate that Aramony’s misconduct was a substantial factor as to some portion of them. We are not persuaded.
It is true, as United Way argues, that it is unnecessary under the “substantial factor” standard to demonstrate that a defendant’s breach is the sole cause of an injury in order to recover for the entire injury. But the fact that Aramony’s misconduct was a substantial factor in causing United Way to pay for a wide variety of services does not entitle it to recover for other services that the court found to be unrelated to Aramony’s misconduct simply because the same providers rendered the services and they bore some tangential relationship to Aramony’s behavior. The district court therefore correctly concluded that United Way was obliged to establish separately the requisite causation as to these distinct services and costs, and we affirm its conclusion that United Way failed to do so.
Finally, United Way challenges the district court’s decision to award no damages with respect to decreases in United Way’s annual dues revenue and costs associated with those decreases. United Way characterizes the district court’s opinion on this point as recognizing that Ara-mony’s misconduct may have been a substantial factor in causing these injuries, but nonetheless declining to award damages on the inappropriate basis that the court could not quantify the extent of the decreases attributable to the misconduct. This is a misreading of the district court’s ruling. The court specifically found that “Aramony’s criminal conduct was not a ‘substantial factor’ in causing the posb-1991 reduction in dues percentage or in contributions.” Id. at 178.
United Way’s argument that that conclusion was clearly erroneous is unpersuasive. United Way contends that the district court should have found that the misconduct was a substantial factor in the revenue decreases in light of press reports and opinion polls indicating the possibility that donors and potential donors
II. Aramony’s Cross-Appeal
Although Aramony appeals the district court’s determination that he is not entitled to benefits under the SBA, he fails to contest the basis for the court’s ruling: that common-law forfeiture rules apply to the SBA, and that he forfeited his SBA benefits under those rules. Aramony’s argument, in substance, is limited to the contention that there somehow is an inconsistency between the court’s application of the statute of limitations to United Way’s recovery of his salary on its breach of fiduciary duty counterclaim and the court’s determination that Aramony’s misconduct resulted in a forfeiture of benefits accrued under the SBA for a considerably longer period. Any discrepancy, however, is only apparent. The statute of limitations gave United Way a specified amount of time in which to commence a lawsuit to recover salary it paid to Aramony despite his disloyalty. See N.Y. C.P.L.R. § 213-b. United Way is barred by the statute of limitations from bringing suit for and recovering salary from Aramony paid to him before the limitations period began. By contrast, the SBA is a contract under which United Way was to pay money to Aramony. The SBA did not provide that his rights under the SBA vested and became nonforfeitable at a particular time. On the contrary, because he was disloyal he forfeited all contractual rights he may otherwise have had under the SBA. This forfeiture is unaffected by when suit is brought by Aramony in an attempt to recover the benefits or when a defense is asserted by United Way to resist payment. That the statute of limitations limits United Way’s tort claim for recovery of past salary is irrelevant to Aramony’s contract claim under a contract that is now a nullity.
Aramony purports also to appeal the district court’s denial of his claim for attorneys’ fees, but he makes no attempt to specify how the district court abused its discretion in determining that an award was not justified. See Aramony,
We therefore deny Aramony’s cross-appeal.
CONCLUSION
For the reasons set forth above, we affirm the decision of the district court
Notes
. The district court found that between September 1989 and December 1991, "Aramony improperly billed [United Way] for personal expenses, including (1) personal trips to Gainsville, Florida ...; (2) personal hotel accommodations ...; (3) personal car rentals ...; (4) his girlfriend's travel expenses ...; (5) a personal, overseas vacation ...; and (6) the furnishing of a Florida condominium....” Aramony,
. Aramony ultimately was indicted and convicted in the United States District Court for the Eastern District of Virginia of an array of federal crimes: conspiracy to defraud the United States by impeding the lawful functions of the IRS, in violation of 18 U.S.C. § 371; six counts of mail fraud, in violation of 18 U.S.C. § 1341; two counts of wire fraud, in violation of 18 U.S.C. § 1343; nine counts of engaging in the interstate transportation of fraudulently acquired property, in violation of 18 U.S.C. § 2314; two counts of engaging in monetary transactions in the proceeds of specified unlawful activity, in violation of 18 U.S.C. § 1957; three counts of filing false tax returns, in violation of I.R.C. § 7206(1); and two counts of aiding the filing of false tax returns, in violation of I.R.C. § 7206(2). See United States v. Aramony, 88 F.3d 1369, 1373 (4th Cir.1996)(reversing solely as to the § 1957 convictions), cert. denied,
. As noted, United Way’s qualified defined benefit plan calculates benefits as a function of an employee’s average salary over five years, multiplied by a set ratio, and multiplied again by the employee’s years of service. Nonetheless, under I.R.C. § 415, the maximum benefit an employee may receive is capped at about $100,000 per year, an
. The projections did not explicitly state that the RBP provided a § 401(a)(17)-neutralizing benefit, but the court agreed with Aramony that the magnitude of the projections necessitated the conclusion that such a benefit in fact was provided since, otherwise, the projections would have been vastly overstated. Additionally, annual valuation reports prepared by Mutual for United Way explicitly indicated that Mutual was accounting for the impact of § 401(a)(17) on the RBP. See Aramony,
. In Schonholz, although explicitly acknowledging the extraordinary circumstances requirement, the Court did not discuss the requirement in the course of its analysis; instead, it merely analyzed whether the four basic elements had been met. See
. The district court noted first that United Way's counterclaim was subject to one of three statutes of limitations: (1) the seven-year period New York law provides to a crime victim to assert claims against his or her malefactor, see N.Y. C.P.L.R. § 213-b, (2) the six-year period New York law provides generally, see N.Y. C.P.L.R. § 213, or (3) the one-year period provided by Virginia law, see Va. Code Ann. § 8.01-243. The court then concluded that the seven-year period was applicable because United Way "did not press the Court to decide this issue as it had the benefit of a seven year limitations period, even though its recovery was limited to damages caused by Aramony’s criminal conduct.” See Aramony,
. On appeal, Aramony does not challenge the district court’s use of this standard in an effort to overturn the damages award against him. Nonetheless, he relies on a recent decision by this Court, LNC Invs., Inc. v. First Fidelity Bank, N.A. New Jersey,