Dan H. Wilson, Plaintiff-Appellant,
Safelite Group, Inc., Defendant-Appellee.
Argued: December 5, 2018
from the United States District Court for the Southern
District of Ohio at Columbus. No. 2:16-cv-00877-Michael H.
Watson, District Judge.
Ford, IV, AHMAD, ZAVITSANOS, ANAIPAKOS, ALAVI & MENSING
P.C., Houston, Texas, for Appellant.
J. McGowan, Jr., BAKER & HOSTETLER LLP, Cleveland, Ohio,
Ford, IV, Steven J. Mitby, AHMAD, ZAVITSANOS, ANAIPAKOS,
ALAVI & MENSING P.C., Houston, Texas, for Appellant.
J. McGowan, Jr., BAKER & HOSTETLER LLP, Cleveland, Ohio,
Robert M. Kincaid, Jr., Georgeann G. Peters, BAKER &
HOSTETLER LLP, Columbus, Ohio, for Appellee.
Before: ROGERS, STRANCH, and THAPAR, Circuit Judges.
B. STRANCH, CIRCUIT JUDGE.
dispute centers on what constitutes an employee pension
benefit plan under the Employee Retirement Income Security
Act (ERISA), and its resolution determines whether the duties
and protections of ERISA apply to the plan at issue.
Plaintiff Dan Wilson, the former President and Chief
Executive Officer of Defendant Safelite Group, Inc., sued
Safelite for breach of contract and negligent
misrepresentation arising from the company's alleged
mismanagement of its deferred compensation plan for executive
employees. Finding that the plan was an employee pension
benefit plan under 29 U.S.C. § 1002(2)(A)(ii) and not a
bonus plan exempted from ERISA under 29 C.F.R. §
2510.3-2(c), the district court granted Safelite's motion
for partial summary judgment on the basis that Wilson's
state law claims were preempted by ERISA. Based on the plain
text of ERISA and the bonus plan regulation, we
was the President and CEO of Safelite from 2003 to 2008. In
2005, Safelite's Board of Directors created the Safelite
Group, Inc. 2005 Transaction Incentive Plan (TIP), which
provided for substantial bonus payments to its
participants-five Safelite executives, including Wilson-if
they secured a strategic buyer for the company.
2006, Belron SA emerged as a likely buyer. Realizing that
Belron's acquisition of Safelite would trigger
significant payments under the TIP that could increase
participants' tax obligations, on December 29, 2006, the
Board adopted the Safelite Group, Inc. Nonqualified Deferred
Compensation Plan (Safelite Plan), a plan to allow
participants to defer compensation and thereby avoid certain
tax consequences. At the time the Safelite Plan was adopted,
only four executive employees, including Wilson, were
eligible to participate in it. In February 2007, less than
two months later, Belron purchased Safelite for $334 million,
generating substantial payments to the TIP participants that
could be deferred by operation of the Safelite Plan.
Safelite Plan, the plan at issue, allows eligible executive
employees to defer two types of income: (1) compensation
(defined as a participant's base annual salary and any
annual or long-term bonuses) and (2) "TIP Amounts"
triggered by Safelite's sale to Belron. To become a
participant in the Safelite Plan, an eligible employee must
submit a completed election form and must indicate what
income to defer. To defer any TIP Amount, an eligible
employee was required to submit an election form on or before
December 31, 2006. An eligible employee could choose to defer
each upcoming year's compensation by submitting an
election form before January 1 of that year. The election
forms provide spaces to indicate what percentage of the
employee's TIP Amount, base annual salary, and bonus he
seeks to defer and in which year or years the employee wishes
to receive distributions of his deferred income, either
during employment or after the termination of employment.
Safelite Plan provides two timing options for participants to
receive distributions of deferred income. The default
distribution of deferred compensation for each participant is
payment "in a lump sum as soon as administratively
feasible after the [participant] Terminates" from
employment. A participant can elect to receive deferred
distributions on January 1 of a designated year or following
a disability, and that distribution can be "in a lump
sum or monthly . . . or annual payments over a period of up
to ten years," subject to some limitations.
Distributions made during a participant's employment are
referred to as "in-service distributions."
properly submitted an election form and so became a
participant in the Safelite Plan. Between 2006 and 2013, he
elected to defer hundreds of thousands of dollars of
compensation each year. Wilson left Safelite on July 5, 2008.
By 2014, Wilson had deferred compensation totaling $9, 111,
384. That year, a federal audit revealed that some of
Wilson's elections failed to comply with 26 U.S.C. §
409A, a tax statute regulating deferred compensation plans.
As a result, Wilson owed income taxes and incurred
substantial tax penalties.
September 12, 2016, Wilson sued Safelite in federal court,
asserting state law claims for breach of contract and
negligent misrepresentation. Safelite moved for partial
summary judgment on Wilson's state law claims, arguing
that they were preempted by ERISA. The district court granted
Safelite's motion, finding that the Safelite Plan met the
statutory definition of "employee pension benefit
plan" under ERISA Section 3(2)(A)(ii), 29 U.S.C. §
1002(2), and was not a bonus plan exempted from ERISA
coverage under Department of Labor (DOL) regulation 29 C.F.R.
§ 2510.3-2(c). The district court granted Wilson 28 days
to file an amended complaint asserting claims under
ERISA's civil enforcement provision. Wilson chose not to
amend his complaint, and the district court entered final
judgment on April 19, 2018. Wilson timely appealed.
review a grant of summary judgment de novo. Kolkowski v.
Goodrich Corp., 448 F.3d 843, 847 (6th Cir. 2006).
Whether an ERISA plan exists is usually "a question of
fact to be answered in light of all the surrounding
circumstances and facts" and reviewed for clear error.
Id. at 847-48. But "[w]here key facts are
undisputed, the determination is better considered a mixed
question of law and fact that we review de novo."
Wolf v. Causley Trucking, Inc., 719 Fed.Appx. 466,
470 n.1 (6th Cir. 2017). The standard of review in a mixed
question of law and fact generally depends on "whether
answering it entails primarily legal or factual work."
U.S. Bank Nat. Ass'n v. Vill. at Lakeridge, LLC,
138 S.Ct. 960, 967 (2018). We review a district court's
statutory interpretation de novo. Bartling v. Fruehauf
Corp., 29 F.3d 1062, 1069 (6th Cir. 1994).
parties here present two mixed questions of law and fact: (1)
whether the Safelite Plan is an employee pension benefit plan
covered by 29 U.S.C. § 1002(2)(A)(ii), and (2) whether
the Safelite Plan is exempt from ERISA pursuant to DOL
regulation 29 C.F.R. § 2510.3-2(c). The facts of the
case are undisputed, and these mixed questions "entail
primarily legal . . . work" in interpreting the language
of the statute and the bonus plan regulation. U.S.
Bank, 138 S.Ct. at 967. We therefore review de novo the
district court's interpretation of ERISA and the bonus
ERISA Employee Benefit Plans
parties do not dispute that the Safelite Plan constitutes a
"plan" for purposes of ERISA. See Hughes v.
Zurz, 298 Fed.Appx. 404, 412 (citing Donovan v.
Dillingham, 688 F.2d 1367, 1372 (11th Cir. 1982)). The
question then is whether the Safelite Plan is an ERISA
employee pension benefit plan. See Buchanan v. General
Motors, LLC, 597 Fed.Appx. 305, 309 (6th Cir. 2015).
Such a plan must satisfy the statutory requirements that
"by its express terms or as a result of surrounding
circumstances," the plan either:
(i) provides retirement income to employees, or
(ii) results in a deferral of income by employees for periods
extending to the termination of covered employment or beyond
. . . .
29 U.S.C. § 1002(2)(A). The parties agree that the
Safelite Plan does not fall under subsection (i) but disagree
about the application of subsection (ii). We turn now to
starting point is the language of the statute. See Hale
v. Johnson, 845 F.3d 224, 227 (6th Cir. 2016).
"Where the statute's language is clear and
unambiguous and the statutory framework is coherent and
consistent, 'the sole function of the courts is to
enforce it according to its terms.'" Id.
(quoting United States v. Ron Pair Enters., Inc.,
489 U.S. 235, 241 (1989)). But "we must take care not to
interpret the language [of a statute] in a vacuum; instead,
we must look to the 'structure, history, and purpose'
of the statutory scheme." Id. (quoting
Abramski v. United States, 573 U.S. 169, 179
is a complex statute, but its purpose is simple: to establish
a "uniform regulatory regime" for plan
administration that protects monies belonging to plan
beneficiaries while such funds are held and managed by
others. Milby v. MCMC LLC, 844 F.3d 605, 609 (6th
Cir. 2016) (quoting Aetna Health Inc. v. Davila, 542
U.S. 200, 208 (2004)). In creating ERISA, Congress intended
"to protect interstate commerce and the interests of
participants in employee benefit plans and their
beneficiaries" by (1) "requiring the disclosure and
reporting to participants and beneficiaries"; (2)
"establishing standards of conduct, responsibility, and
obligation for fiduciaries of employee benefit plans";
and (3) "providing for appropriate remedies, sanctions,
and ready access to the Federal courts." 29 U.S.C.
§ 1001(b). As we have previously noted,
"ERISA's purpose is among the broadest, if not the
broadest, recognized by the Supreme Court," Sherfel
v. Newson, 768 F.3d 561, 564 (6th Cir. 2014), and
Congress purposefully designed the scheme so that
"[e]mployers can establish ERISA plans rather
easily," Int'l Resources, Inc. v. New York Life
Ins. Co., 950 F.2d 294, 297 (6th Cir. 1991) (citation
and internal quotation marks omitted). This integrated system
envisions that "any state-law cause of action that
duplicates, supplements, or supplants the ERISA civil
enforcement remedy conflicts with the clear congressional
intent to make the ERISA remedy exclusive and is therefore
pre-empted." Hogan v. Jacobson, 823 F.3d 872,
879 (6th Cir. 2016) (quoting Davila, 542 U.S. at
209). At issue here is whether Wilson's state law claims
are preempted because the Safelite Plan is an employee
pension benefit plan covered by ERISA and not exempted as a
this statutory framework and purpose in mind, we examine the
statutory definition. An "employee pension benefit
plan" is established where a "plan, fund, or
program . . . by its express terms or as a result of
surrounding circumstances . . . results in a deferral of
income by employees for periods extending to the termination
of covered employment or beyond." 29 U.S.C. §
begin with the meaning of "results," a key word in
subsection (ii). The ordinary meaning of the word
"results," as specified by the Supreme Court, is
that "[a] thing 'results' when it
'[a]rise[s] as an effect, issue, or outcome from
some action, process or design.'" Burrage v.
United States, 571 U.S. 204, 210-11 (2014) (quoting 2
The New Shorter Oxford English Dictionary 2570 (1993)).
According to that ordinary meaning, a plan is an employee
pension benefit plan when a "deferral of income by
employees," 29 U.S.C. § 1002(2)(A)(ii), arises as
an "effect, issue, or outcome from" the provisions
of that plan. Burrage, 571 U.S. at 210. Wilson
posits that to fit within the initial phrase of subsection
(ii), "results in a deferral of income," a plan
"must require" deferrals to the termination of
covered employment or beyond. But "results in" and
"requires" are not synonymous. Moreover, Congress
specifically used the words "require" or
"requirement" in numerous other sections of Title I
of ERISA but instead chose "results" here. See,
e.g., 29 U.S.C. § 1107(b)(2)(B)(i) ("This
paragraph shall apply to any eligible individual account plan
if any portion of the plan's applicable elective
deferrals (or earnings allocable thereto) are
required to be invested in qualifying employer
securities or qualifying employer real property or both. . .
.") (emphasis added). "[W]here Congress includes
particular language in one section of a statute but omits it
in another section of the same Act, it is generally presumed
that Congress acts intentionally and purposely in the
disparate inclusion or exclusion." N. Fork Coal
Corp. v. Fed. Mine Safety & Health Review
Comm'n, 691 F.3d 735, 741 (6th Cir. 2012) (quoting
Russello v. United States, 464 U.S. 16, 23 (1983)).
In light of the ordinary meaning of the word
"results" and Congress's exclusion of the word
"requires," § 1002(2)(A)(ii) covers plans
containing terms that have as an effect, issue, or
outcome-even if not as a requirement-deferral of income by
employees to periods extending to the termination of covered
employment or beyond.
next to the remainder of the statutory language: "a
deferral of income by employees for periods extending to the
termination of covered employment or beyond." 29 U.S.C.
§ 1002(2)(A)(ii). Wilson reads the phrase to mean that
employees must defer income "to the period that begins
as one's employment ends," or "until
termination," and argues that subsection (ii) does not
cover plans that permit employees to withdraw deferred income
before their termination from employment. Safelite argues
that ERISA covers a plan that results in deferrals of income
"for periods extending to the termination of covered
employment or beyond" and also permits participants to
receive in-service distributions of deferred income.