Gideon GOLDSTEIN, M.D., PH.D., Appellant, v. JOHNSON & JOHNSON; Retirement Plan of Johnson & Johnson and Affiliated Companies; Consolidated Retirement Plan of Johnson & Johnson; The Excess Benefit Plan of Johnson & Johnson.
No. 00-5149.
United States Court of Appeals, Third Circuit.
Argued Sept. 14, 2000. May 25, 2001.
251 F.3d 433
Weston simply cannot create a genuine issue of material fact that his suspensions were imposed in retaliation for his sexual harassment claims. He cannot establish causation or pretext.
IV. Conclusion
In summation, we will reverse that portion of the District Court‘s dismissal of Weston‘s complaint as to the allegations that the comments, jokes, and jibes of his co-workers and managers created a hostile work environment for which the PDOC would be liable, and we remand the cause for further discovery and proceedings. With regard to that portion of Weston‘s complaint containing allegations that comments, jokes, and jibes of inmates created a hostile work environment, we reverse the District Court and remand with instructions to grant Weston a specified period of time in which to amend the complaint. We affirm the District Court‘s
We likewise affirm the District Court‘s grant of summary judgment in favor of the PDOC on Weston‘s retaliation claims.
Francis X. Dee, (Argued) Stephen F. Payerle, Carpenter, Bennett & Morrissey, Newark, NJ, Counsel for Appellees.
Before: BECKER, Chief Judge, NYGAARD and AMBRO, Circuit Judges.
OPINION OF THE COURT
BECKER, Chief Judge.
This is an appeal by Dr. Gideon Goldstein from the adverse judgment of the District Court in favor of his former employer, Johnson & Johnson (J & J), following a bench trial. It requires us to address again the question of the proper scope of judicial review of the decision of a plan administrator acting under the Employee Retirement Income Security Act of 1974 (ERISA),
In Firestone Tire, the Supreme Court explained that because ERISA plans are analogous to “trusts” for employees, with the plan administrator serving as trustee, a reviewing court owes deference to the discretionary decisions of the administrator just as the discretionary decisions of a trustee would receive deference. See Firestone Tire, 489 U.S. at 111, 109 S.Ct. 948. In Pinto, we interpreted Firestone Tire to mandate a more searching scrutiny of such discretionary decisions in situations where the impartiality of the administrator is called into question, either because the structure of the plan itself in-
In contrast, this Court has routinely treated top hat plans differently from other kinds of plans. See, e.g., In re New Valley Corp., 89 F.3d 143, 148-49 (3d Cir. 1996) (explaining differences between top hat plans and other ERISA plans). This is because top hat plans are expressly exempted from most of the substantive ERISA requirements normally employed to protect workers’ interests in their plans. See
There appears to be no reason, however, why the precondition that mandates deference in the context of the more typical ERISA plan—that is, a written clause explicitly granting authority to the plan administrator to interpret the terms of the plan, see Firestone Tire, 489 U.S. at 111-12, 109 S.Ct. 948—should not be given effect as part of the unilateral contract that constitutes a top hat plan. In accordance with ordinary contract principles, we conclude that, depending on the language used, such a clause has the potential to grant the plan administrator discretion to construe the terms of the plan, subject to the implied duty of good faith and fair dealing. See Restatement (Second) of Contracts § 205. And, as with any other contract term, courts retain the authority to review the administrator‘s compliance with that duty to exercise discretion in good faith.
The dispute in this case centers around the proper characterization of an unusual form of compensation that Goldstein received during his tenure at J & J. The question is whether this compensation, which involved paying to Goldstein a specified percentage of the sales of products he developed, should have been taken into account for the purpose of determining his monthly pension under the terms of J & J‘s retirement plans. Goldstein argues that these payments should have been used to calculate his pension; the plan administrator disagrees. Here, the grant of discretion to the plan administrator to interpret the plan‘s terms was broad, in that the administrator was given “sole authority” to “[i]nterpret the provisions” of the plan, and the administrator‘s actions were to be “final and conclusive for all persons.” Moreover, the District Court‘s factual conclusion that the administrator at all times acted in good faith with respect to the employee‘s claim for benefits is not clearly erroneous. Accordingly, we will affirm the judgment of the District Court denying Goldstein‘s claim for additional benefits.
I. Facts
Goldstein is a physician who specializes in immunobiology research, specifically AIDS research. In 1977, Goldstein, then employed by the Sloan-Kettering Institute for Cancer Research, received a patent on the drug thymopentin, which he assigned to his employer. Later that year, he joined Ortho Pharmaceutical Corporation, a subsidiary of J & J. Ortho licensed the
In 1987, J & J created the Immunobiology Research Institute, headed by Goldstein. At that time, Goldstein entered into a new employment contract with J & J. This new contract contained a section titled “Compensation,” with three subheadings. The first subheading, “Salary, Bonus and Employee Benefits” explained that Goldstein would receive a “salary and cash bonus each year,” and would be “entitled to participate in all general employee benefit plans ... in accordance with their terms, including retirement plans.” The second subheading, “Commissions,” provided that in addition to his salary, Goldstein would receive a commission equal to one and one-fourth percent of the sales of the products he developed. The commissions would continue at a reduced rate for five years after the expiration of the patents, irrespective of Goldstein‘s continued employment with J & J. The agreement also provided that J & J was under no obligation to market Goldstein‘s products, and that the salary and bonus payments were to be paid “in lieu of” that obligation. The third subheading stated that Goldstein would not participate in J & J‘s executive stock bonus plan, a provision to which Goldstein had agreed in exchange for the right to receive commissions. As it happened, throughout Goldstein‘s relationship with J & J, the only patent that was actually marketed—and thus, the only patent that generated income to Goldstein—was the thymopentin patent. Despite this fact, Goldstein‘s commissions greatly exceeded his salary and bonus payments, constituting almost 75% of his total compensation.
Throughout Goldstein‘s tenure with J & J, the company maintained a system of retirement benefits for its employees, consisting of two interrelated plans (together, “the Plan“). The first was an ordinary funded pension plan (the Retirement Plan), subject to all of ERISA‘s substantive requirements. Under this plan, retirees would receive monthly benefits in an amount determined by a formula based on the average compensation earned by the employee during his or her five highest consecutive earning years with the company. The amount of these payments was capped in order for the plan to maintain its qualified status under the Internal Revenue Code. See
Both plans were administered by a Pension Committee. Under the terms of the Retirement Plan, the Pension Committee was granted “sole authority” to “interpret” the terms of the plan. Under the terms of the Top Hat Plan, benefits would be calculated according to the terms of the Retirement Plan, and the “decisions made by and the actions taken by [the Pension Committee] in the administration of this Excess Plan shall be final and conclusive for all persons.” By early 1995, the Committee had delegated much of its authority to interpret the Plan to a subcommittee known as the Benefits Claims Committee (BCC). The Pension Committee was the named fiduciary of the Retirement Plan. However, the Top Hat Plan was, by definition, unfunded (i.e., benefits were paid directly out of J & J‘s operating revenues), and its administrator not only had no fiduciary responsibilities, but was also explicitly exempted from personal liability for actions taken with respect to the plan. Obviously, both the lack of fiduciary responsibility and the exemption from personal liability would not have been possible had the excess benefit plan been subject to ERISA‘s general requirements. See In re New Valley Corp., 89 F.3d 143, 149 (3d Cir.1996).
Because benefits under the Plan were determined by reference to the employee‘s compensation during his or her employment with J & J, it was necessary for the Plan to define the types of compensation that would be included in the benefit calculation. Throughout Goldstein‘s employment with J & J, the relevant Plan provisions explained that:
“Covered Compensation” means basic remuneration paid to an Employee including amounts deferred at the Employee‘s election under the Johnson & Johnson Savings Plan, during periods for which such Employee receives Credited Service under this Plan. Covered Compensation for a year includes straight time pay for a regular work-week, prior year salesman‘s commissions and other specified forms of incentive compensation, and incentive or piece-work earnings, but excludes premiums for overtime shift, Saturday and Sunday (6th or 7th workday) or holiday work, arbitrary bonuses, the value of gifts, management incentive bonuses and certificates of extra compensation.3
In addition, the Summary Plan Description explained that:
Included in your Plan earnings will be your straight time pay for your regular workweek, sales-person‘s commissions, overtime, shift differential, year-end cash Christmas gift, and year-end executive cash bonus. All other earnings, for example, Johnson & Johnson Achievement Award and stock, not specifically described above, are not included in Plan earnings.
In December 1994, J & J modified its plan, retroactive to 1989. In this new version of the plan, the definition of “compensation” was rewritten as:
“Covered Compensation” means basic remuneration paid to an Employee including amounts deferred at the Employee‘s election under the Johnson & Johnson Savings Plan and salary reduction amounts under a plan that meets the requirements of Section 125 of the Code, during periods for which such Employee receives Credited Service un-
der this Plan. Covered Compensation for a year includes straight time pay for a regular workweek, current year sales-person‘s paid commissions, other specified forms of incentive compensation and incentive or piecework earnings, year-end cash Christmas gift, year-end cash executive bonus, overtime, shift, Saturday and Sunday (6th or 7th workday), and holiday pay.... Covered Compensation shall include the annual value of stock contract awards and dividend equivalents paid on unissued stock contract shares and, if applicable, non-vested Certificates of Extra Compensation (CECs).
The new Summary Plan Description defined “Plan Earnings” as:
Compensation used in determining Pension Plan benefits, including consideration of straight-time pay for your regular workweek, salesperson‘s commissions, overtime, shift differential, year-end cash gift, year-end executive cash bonus, the value of delivered restricted stock awards and dividend equivalents paid on undelivered restricted stock awards, dividend equivalents paid on non vested CEC units, and sales management incentive compensation.
As the quote demonstrates, this new Summary Plan Description no longer contained the sentence excluding forms of compensation not otherwise specified.
Just before the changes to the 1994 Plan were enacted, Goldstein retired from J & J and began to receive his pension under the terms of the Retirement Plan and the Top Hat Plan. At this time, J & J and Goldstein also began to negotiate a severance. Discussions continued until April 1996, mostly focusing on the disposition of the intellectual property rights to the research Goldstein had conducted during his tenure. Eventually, an Agreement and Mutual Release was signed by both parties (Release). The Release provided that all claims by Goldstein regarding “the Employment Agreement, the termination of said agreement ... illegal discrimination, harassment or retaliation based on age, sex, race, religion, national origin, citizenship, disability ... breach of contract, breach of promise ... wrongful denial of benefits ....” were waived; however, the Release expressly preserved “Goldstein‘s right to participate in J & J‘s Retirement Plan ... in accordance with the terms of said plan.” Both provisions were added in response to a request by Goldstein‘s attorney that Goldstein be permitted to participate in the pension plans.
The day after the Release was signed, Goldstein telephoned Efrem Dlugacz, a member of the Pension Committee, to protest the calculation of his pension benefits. Specifically, Goldstein objected to the fact that the “compensation” used to compute his pension did not include the commissions he had earned on the thymopentin patent, but rather were based solely on his salary and annual bonuses. Goldstein was then receiving a pension of $7,606 per month; had his commissions been included, his pension would have been $30,126 per month. Goldstein admits that at the time he executed the Release, he was aware of his intention to challenge the calculation of his pension. All of the extra benefits claimed by Goldstein would have been paid out of the Top Hat Plan.
On Dlugacz‘s suggestion, Goldstein lodged his objections in writing. Garry Goldberg, Manager of Pension Administration, having reviewed Goldstein‘s claim, addressed a memo to the BCC taking the position that Goldstein‘s commissions were not pensionable. Considering only whether Goldstein‘s commissions fell into one of the categories of specifically enumerated pensionable items, Goldberg concluded
With Goldstein‘s knowledge, the BCC met in May 1996 to consider his claims. In June of that year, Michael J. Carey, Chair of the BCC, wrote to Goldstein denying his claim, on the ground that Goldstein was not a salesperson and that the commissions were not “incentive compensation” as that term was used in the definition of “Covered Compensation.” Letters were exchanged in which Goldstein argued that his commissions were, in fact, covered under the Plan because his commissions were “incentive or piecework earnings.” Carey maintained the position that the term “incentive or piecework earnings” was intended to apply to production employees who exceeded their quotas, and that any type of earnings not explicitly mentioned in the 1994 definition of “Covered Compensation” was not pensionable. Goldstein began threatening to sue in September 1996, and shortly thereafter, the Pension Committee met and an attorney in the Tax Department, Robert Keefer, “presented” Goldstein‘s claim. After considering the evidence and the correspondence that had been exchanged, the Pension Committee agreed that the BCC‘s determination that Goldstein‘s commissions were not “covered compensation” was “appropriate.”
II. Procedural History
In October 1996, Goldstein filed suit against J & J in New Jersey Superior Court for the additional benefits under
The District Court then held a bench trial in which Goldstein claimed that his commissions were covered under the Plan, either as “salesperson‘s commissions” or “sales management incentive compensation,” or because the items included on the list of pensionable compensation were meant only as exemplars of the general category of “basic remuneration,” into which his commissions fell. J & J defended on the ground that the Plan, by its terms, did not cover Goldstein‘s commissions, and further that the interpretation of the Plan offered by the Plan administrators was deserving of deference under Firestone Tire.4 The case was tried prior to our decision in Pinto v. Reliance Standard Life Insurance Co., 214 F.3d 377 (3d Cir.2000), and the District Court reviewed the determination of the BCC de novo, concluding that Goldstein‘s commissions were not “Covered Compensation” as that phrase was used in the Plan. Further, the
III. Discussion
A. Standard of Review of a Plan Administrator‘s Interpretations
ERISA was enacted to ensure that employer-provided benefit plans are safeguarded and maintained so as to be available to employees when they are due. The Act does not mandate that an employer provide benefits, and has nothing to say about how these plans are to be designed. See Nazay v. Miller, 949 F.2d 1323, 1329 (3d Cir.1991). The Act does, however, ordinarily impose fiduciary duties upon plan administrators once a plan has been implemented. See Noorily v. Thomas & Betts Corp., 188 F.3d 153, 158 (3d Cir.1999).
Administrators of ERISA plans may have various degrees of responsibility, depending on the plan‘s design. Some may be charged simply with carrying out the plan according to its terms; others may have more discretionary authority to interpret the terms of the Plan and make benefits determinations. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). For many years, in cases in which beneficiaries sued administrators alleging that benefits had been wrongly denied them, courts attempted to set standards as to the degree to which they would defer to the decisions of the administrators who, by the design of the plan—which the employer was completely free to set—were charged with implementing it.
In Firestone Tire, the issue finally reached the Supreme Court. Firestone Tire had sold its plastics division to a new company, and the former employees, who had been rehired without interruption and at the same pay rates, sued Firestone for the benefits they had accrued under Firestone‘s termination pay plan. Firestone, which was also the administrator of the plan, denied the benefits on the ground that the sale to the new company did not constitute a triggering event within the terms of the plan requiring the payment of benefits. See id. at 105-06, 109 S.Ct. 948. In determining the appropriate standard of review to apply to Firestone‘s interpretation of its plan, the Supreme Court began by observing that “ERISA abounds with the language and terminology of trust law.” Id. at 110, 109 S.Ct. 948. The Court, particularly noting that ERISA requires that benefits plans have named fiduciaries and authorizes suits against them for breach of fiduciary duty, see id., analogized ERISA administrators to trustees, and explained that in setting a standard of review for an administrator‘s decision, it would follow ordinary principles of trust law, see id. at 111, 109 S.Ct. 948.
If J & J‘s Plan were an ordinary ERISA plan, then, given the broad discretion granted to the Pension Committee, we would apply the standards set forth in Firestone Tire and Pinto. We would first determine whether any conflict of interest existed for the Plan administrators, and then we would calibrate our standard of review for their benefits decision accordingly. Because Goldstein‘s claim for benefits would be paid entirely out of the Top Hat Plan and the funds would come directly from J & J‘s operating revenues, we perforce would consider these facts relevant in choosing our standard of review. See Pinto, 214 F.3d at 389.
However, a top hat plan is a unique animal under ERISA‘s provisions. These plans are intended to compensate only highly-paid executives, and the Department of Labor has expressed the view that such employees are in a strong bargaining position relative to their employers and thus do not require the same substantive protections that are necessary for other employees. See DOL Opin. Letter 90-14 A, 1990 WL 123933, at *1 (May 8, 1990). We have held that such plans are more akin to unilateral contracts than to the trust-like structure normally found in ERISA plans. See In re New Valley Corp., 89 F.3d 143, 149 (3d Cir.1996); Kemmerer v. ICI Americas Inc., 70 F.3d 281, 287 (3d Cir.1995). Accordingly, top hat plans are not subject to any of ERISA‘s substantive provisions, including its requirements for vesting and funding. See
Given the unique nature of top hat plans, we believe the holding of Firestone Tire requiring deferential review for the discretionary decisions of administrators to be inapplicable. The deferential standard of review granted to plan administrators exercising discretionary authority was specifically an outgrowth of the Supreme Court‘s analogy to trust law, and particularly the fiduciary responsibilities possessed by administrators with discretion-
In reaching this conclusion, we reject J & J‘s contention that, because ERISA‘s definitional section lists a “fiduciary” as one who exercises discretion in interpreting the terms of a plan, see
We acknowledge that our holding may appear to have the potential to create anomalous results. To begin with, many plans may be structured as the one currently before us, whereby benefits are calculated in a similar manner whether they are to be paid from an ordinary retirement plan or from a top hat plan. Different standards of review for each may result in different interpretations of a single plan‘s terms, even though on paper the two halves are designed to work in tandem and to yield identical results. Our holding may also seem anomalous in that we appear to be according the least deference to plan administrators when they are determining benefits of highly-paid employees, the very group that the Department of Labor believes is best able to protect its own interests.
However, we believe that these potentially anomalous results are not as severe as may appear at first blush. The “deference” ordinarily due an ERISA plan administrator is only available to the extent
Ordinary contract principles require that, where one party is granted discretion under the terms of the contract, that discretion must be exercised in good faith—a requirement that includes the duty to exercise the discretion reasonably. See Restatement (Second) of Contracts § 205 & cmt a; see also Berger v. Edgewater Steel Co., 911 F.2d 911, 919 (3d Cir.1990) (term of an ERISA retirement plan allowing early retirement when “the Company considers that such retirement would ... be in its interest” obligates the employer to reach its decision in good faith). As with any other contract term, courts retain the authority to conduct a de novo review as to whether a party has complied with its good-faith obligations.
Goldstein argues that if the plan is a traditional contract, the clause granting interpretive discretion to J & J administrators should be voided as unconscionable for it is the functional equivalent of designating an interested party as an arbitrator. We do not agree. Contracts are often considered to be enforceable even when particular parties are able to specify terms in the course of dealing, subject only to the duty of good faith. See, e.g., O.N. Jonas Co., Inc. v. Badische Corp., 706 F.2d 1161 (11th Cir.1983) (interpreting the Uniform Commercial Code); TCP Indus., Inc. v. Uniroyal, Inc., 661 F.2d 542 (6th Cir.1981) (same). Goldstein has cited nothing to the contrary, and we do not consider cases involving due process rights to impartial arbitrators, such as United Retail & Wholesale Employees Teamsters Union Local No. 115 Pension Plan v. Yahn & McDonnell, Inc., 787 F.2d 128 (3d Cir. 1986), to be apposite to the issue at hand. Thus, we see nothing improper in Goldstein and J & J contracting to allow Goldstein to participate in a pension plan under which J & J will have responsibility to administer the plan and interpret ambiguous terms, so long as its interpretations are reasonable and it exercises its responsibilities in good faith. In fact, given that the Top Hat Plan was designed to work in concert with a retirement plan that has designated the same entity as the fiduciary (a perfectly legitimate design), the Top Hat Plan could hardly be administered effectively without granting J & J this discretion.
B. Interpreting the Terms of J & J‘s Top Hat Plan
The District Court concluded, and Goldstein has not disputed, that under the language of the Plan documents the Pension Committee was given broad authority to interpret the terms of the Plan and to make final decisions with regard to the payment of benefits.7 Nonetheless, Gold-
J & J responds that the list of pensionable earnings was intended as an exclusive list of all covered items, and that because Goldstein‘s commissions were not included in the list, they are therefore not pensionable. As explained above, the question presented to the Court is not whether J & J‘s interpretation offers the best reading of the contract; rather, given the discretion granted to the Pension Committee, the question is whether the interpretation offered by J & J was reached in good faith. The District Court, after listening to the testimony of the parties and examining the documentary evidence, concluded that J & J‘s interpretation of the terms of its Plan was reasonable, and that J & J administrators had used their “best efforts” to interpret the Plan accurately and fairly to assess Goldstein‘s claim. The District Court‘s findings are not clearly erroneous.
In reaching its conclusions, the court first relied on its assessment of the credibility of J & J‘s plan administrators, and specifically found that the members of the Pension Committee and the BCC were not biased in their decisions, and had “exerted their best efforts accurately to interpret the plan and fairly to adjudicate Goldstein‘s claim.” It is axiomatic that we defer to a district court‘s credibility determinations.
Further, we find no fault with the District Court‘s determination that the numerous “irregularities” identified by Goldstein in the process by which the administrators interpreted the Plan do not give rise to an inference of bias or bad faith. These alleged irregularities relate first to the manner by which the Pension Committee delegated its responsibilities to the BCC, and second to what Goldstein perceives as the lack of opportunities for him to present arguments and evidence on his behalf.
Goldstein begins by submitting that the Pension Committee never formally delegated authority to the BCC to make benefits determinations, and therefore its decision to “rubber stamp” the BCC decision
In this case, Goldstein‘s argument that discretionary power was never delegated to the BCC rests on the fact that the formal resolution delegating the Pension Committee‘s power to the BCC specifically granted the BCC only the authority to “hear and decide claims and appeals.” Whether the power to “hear and decide claims and appeals” necessarily carries with it a discretionary power to interpret the terms of the Plan (and it is difficult to see why it would not), any technical flaws in the Pension Committee‘s efforts to delegate discretion to the BCC do not bear on the issue of good faith. The Plan documents themselves granted the Pension Committee the right to delegate its authority, and the Committee declared its intention to do so in the Summary Plan Description. Additionally, the final disposition of Goldstein‘s claim was made by the Pension Committee itself in September 1996. Thus, it cannot be said that the delegation to the BCC, and the decision of the Pension Committee to adopt its reasoning, somehow violated the contractual provisions of the Plan granting the Pension Committee the power to interpret the Plan terms, or demonstrated any lack of good faith on the part of J & J.
As for Goldstein‘s second argument, that he was denied an opportunity to make his case before the BCC, the facts simply do not bear him out. He exchanged numerous letters with J & J employees, including the Chair of the BCC, in which he was able to explain his interpretation of the Plan. In fact, during cross-examination, Goldstein admitted that he had, at one time or another, submitted to the BCC all of the information he believed it needed to reach a determination. Goldstein was informed of the initial BCC meeting, but never asked to attend or to submit evidence. Finally, as the District Court found, Goldstein‘s claim was reviewed by J & J on at least three separate occasions: during the initial meeting of the BCC, during the course of Goldstein‘s exchange of correspondence with Carey, and during the Pension Committee‘s September 1996 meeting. In the face of this evidence, we see no grounds for concluding that the District Court‘s finding of good faith on the part of J & J was clearly erroneous.9
Further, the contract specifically avers that the commissions were intended to replace other forms of executive compensation such as CECs. As the District Court observed, these forms of executive compensation were not pensionable at the time of the execution of Goldstein‘s contract, and only some of them became pensionable when they were explicitly added to the list of pensionable earnings in 1994. Thus, it is clear that the phrase “basic remuneration” did not encompass either these alternative forms of compensation, or Goldstein‘s commissions, in 1989, and the fact that these forms of executive compensation had to be explicitly added to the list of pensionable earnings in 1994, while the phrase “basic remuneration” remained intact, suggests that there was no “implied” broadening of the definition of “basic remuneration,” but instead an expanded list of included items.
Additionally, as the District Court concluded, the phrase “Covered Compensation includes” is reasonably susceptible of meaning either that the earnings listed are a “sample” of the types of compensation to be included, or that the phrase “Covered Compensation” is intended to encompass only those forms of compensation explicitly mentioned in the list.10 Thus, there is nothing unreasonable in J & J‘s interpretation of the Plan to cover only those forms of compensation specifically enumerated. And although Goldstein plausibly argues that the 1994 deletion from the Summary Plan Description of the clause excluding forms of compensation not otherwise specified must be interpreted as evincing an intent to alter the Plan from providing an exclusive list to providing only a “sample” listing, the District Court credited testimony of J & J employees that the phrase had been deleted as surplusage, because the intent all along was to create a list of “covered compensation” solely by listing the included items. Certainly, such an
Goldstein‘s position is not an unsympathetic one, and we can understand his anger that, notwithstanding the large sums that his thymopentin patent yielded to J & J (and the fact that he was brought into J & J for his expertise in developing profitable drugs, a skill that might often be rewarded by large royalty-like payments), he was nonetheless given a pension based merely upon his salary. Concomitantly, were we reviewing the plan‘s terms de novo, we might reach a different result. After all, the fact that Goldstein‘s employment contract specifies that the salary and bonus payments were to be made in lieu of J & J‘s obligation to market Goldstein‘s products suggests that it was the commissions—and not the salary—that constituted Goldstein‘s “basic remuneration.” But, as the Department of Labor has explained, highly-compensated employees such as Goldstein are well-placed to form employment contracts that protect their interests, and in this case, the contract expressly grants the Pension Committee the power to make final determinations as to the types of compensation that are pensionable.
Therefore, we conclude that although courts need not defer to the construction of disputed contract terms given by the administrators of top hat plans, effect must be given to all of the terms, including those conferring discretion on the administrators (subject as always to the implied duty of good faith). In this case, the discretion granted to the administrators was quite broad, and there is nothing in the process by which J & J reached its decision, or in the decision itself, that would lead us to conclude that the District Court‘s determination as to J & J‘s good faith was clearly erroneous. Thus, we conclude that J & J did not breach its contractual obligation to Goldstein. The judgment of the District Court will be affirmed.