Can Pension Be Taken Away?
Depending on the claim, your ERISA pension could be taken away by companies that will then deprive you of a full and fair review in court. And, unfortunately, some courts go along with them. This was illustrated in a pending ERISA pension and retirement case in Mississippi.
Facts of the Case:
- In 1984, Mr. Sibley was hired as president and CEO by Citizens Bank and Trust Company of Marks, Quitman County Mississippi and was given a very nice retirement benefit through a Supplemental Executive Retirement Plan Agreement (SERP).
- The retirement benefit was significant enough to entice Mr. Sibley to stay with the company as well as on the Board of Directors to maximize the retirement benefit until age 71.
- In July 2019, he resigned but agreed to be a consultant on an as-needed basis. His resignation was reported to the Federal Deposit Insurance Corporation (FDIC).
- After his resignation, there was a significant instance of fraudulent loan activity by a customer, resulting in significant losses for the bank, which required the bank to seek a capital infusion to offset the losses.
- To further offset their losses, the bank terminated the SERP in January 2020 which resulted in over $1 million in capital for the bank to keep its capital ratios above the minimum standards for FDIC requirements.
- The bank also reported an oral conversation with Mr. Sibley stating he did not resign, but was terminated for good cause, and thus, it had a right to require forfeiture of the SERP, which included the retirement benefit.
- Mr. Sibley filed a lawsuit asserting claims for breach of contract, tortious breach of contract, interference with contractual relations, as well as ERISA claims under §§ 502, 503, and 510.
- In response, Citizens Bank filed a motion to dismiss all claims, except the ERISA claims, due to preemption. The court granted that motion.
- Then, Citizens Bank sought to exclude all discovery on the case, and if any was permitted, it had to be limited to the “administrative record.” That would allow it to hide all facts contrary to its claim that the termination was for good cause and that the bank was correct to seize the retirement.
- Fortunately, Magistrate Judge Jane M. Virden, in Sibley v. Citizens Bank & Tr. Co. of Marks, No. 3:20-CV-282-GHD-JMV, 2022 WL 1096854 (N.D. Miss. Apr. 12, 2022), found “unpersuasive” the defendants’ arguments that the breaches of fiduciary duty asserted here did not permit discovery under ERISA.
- Mr. Sibley sought to depose defendants and board members and to serve subpoenas for the production of documents relating to the Board of Directors and their financial interests, the Bank, and the status reports sent to the FDIC.
- Judge Virden did not allow all discovery but held that “discovery regarding fiduciary duty claims under ERISA § 502(a)(3), should not be limited to the administrative record and should instead, be governed by the general scope of discovery provided by Rule 26(b).”
- The court, therefore, granted the discovery motion in part but limited the time frame of several of the document requests.
This case is still pending, so we will have to wait to see what happens after discovery. If you have difficulty with your pension or retirement claim, you should discuss it with an ERISA pension lawyer as soon as possible. Whether you need advice before applying for retirement benefits or you need help with a problem afterward, contact an experienced pension lawyer at The Martin Law Group today.