United States District Court, W.D. Washington, Tacoma
ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT
B. Leighton United States District Judge.
MATTER is before the Court on the parties' second round
of cross motions for partial summary judgment [Dkt. #s 37 and
41]. Plaintiffs Marty Paul and Brian Buskirk are financial
consultants (FCs) formerly employed by Defendant RBC Capital
Markets. Paul and Buskirk allege that after they
left RBC, RBC violated the Employee Retirement Income
Security Act (ERISA) by improperly forfeiting millions of
dollars of deferred, unvested compensation that Paul and
Buskirk claim they earned by participating in RBC's
Wealth Accumulation Plan (WAP). In a prior Order, the Court
determined that the Fifth Circuit's opinion in
Tolbert v. RBC Capital Mkts. Corp., 758
F.3d 619 (5th Cir. 2014), collaterally estopped RBC from
re-litigating the WAP's status as an employee pension
benefit plan under ERISA. [Dkt. # 54].
seeks summary judgment on three bases: (1) ERISA cannot
provide the relief plaintiffs seek because they do not claim
that RBC violated the WAP, they have not identified
a breach of fiduciary duty, and they are not entitled to
equitable relief; (2) plaintiffs' claims are untimely
because they knew of and enjoyed the WAP's provisions for
years before they sued; and (3) in any event, the WAP is a
“top hat” plan exempt from most of ERISA's
substantive provisions because it is an “unfunded
plan” “maintained for the benefit of a select
group of highly compensated employees.” See 29
U.S.C. §§ 1051(2), 1081(a)(3), and 1101(a).
and Buskirk seek summary judgment on their claim that the WAP
applied to too many employees (including some who were
neither select nor highly compensated) to qualify for the top
hat exemption. They claim the WAP is therefore subject to
ERISA, including provisions relating to vesting, funding,
fiduciary obligations, notice, and reporting. They seek a
determination that RBC violated ERISA when it forfeited their
deferred compensation, leaving for trial the amount of their
Summary Judgment Standard.
judgment is proper “if the pleadings, the discovery and
disclosure materials on file, and any affidavits show that
there is no genuine issue as to any material fact and that
the movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(c). In determining whether an issue of fact
exists, the Court must view all evidence in the light most
favorable to the nonmoving party and draw all reasonable
inferences in that party's favor. Anderson Liberty
Lobby, Inc., 477 U.S. 242, 248-50 (1986); Bagdadi v.
Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996). A genuine
issue of material fact exists where there is sufficient
evidence for a reasonable factfinder to find for the
nonmoving party. Anderson, 477 U.S. at 248. The
inquiry is “whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is
so one-sided that one party must prevail as a matter of
law.” Id. at 251-52. The moving party bears
the initial burden of showing that there is no evidence which
supports an element essential to the nonmovant's claim.
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
Once the movant has met this burden, the nonmoving party then
must show that there is a genuine issue for trial.
Anderson, 477 U.S. at 250. If the nonmoving party
fails to establish the existence of a genuine issue of
material fact, “the moving party is entitled to
judgment as a matter of law.” Celotex, 477
U.S. at 323-24.
The WAP's status as a top hat plan is a question of
Court's view, the threshold issue is whether RBC's WAP
was a top hat plan. RBC emphasizes that it intended
it to be such a plan, and Plaintiffs implicitly concede that
the ultimate inquiry is one of fact.
ERISA “top hat plan” is “a plan which is
unfunded and is maintained by an employer primarily for the
purpose of providing deferred compensation for a select group
of management or highly compensated employees.” 29
U.S.C. § 1101(a)(1). Top hat plans are generally exempt
from ERISA. ERISA does not define the terms of this exemption
but various authorities have addressed what is required.
Plaintiffs argue that the top hat plans are intended to be a
“rare subspecies” of ERISA plans, because that
statute's protections are to be “liberally
construed” in favor of participants in employee benefit
plans. These protections include prohibitions on forfeiting
vested and accrued benefits.
and Buskirk argue that top hat plans must exist primarily for
the purpose of providing deferred compensation to a
“select group” of “management or highly
compensated employees.” They argue the WAP was
over-inclusive, with as much as 22% of RBC's American
workforce eligible for inclusion in 2008, including some who
were neither management nor highly compensated in comparison
to others. RBC knew that the WAP had problems- acknowledging
internally that it was in “WAP purgatory”-and it
ultimately replaced the WAP with a different plan.
correctly argue that Courts look to several factors to
determine if a plan is a “top hat” plan. See
Duggan v. Hobbs, 99 F.3d 307, 309-310 (9th Cir. 1996)
(considering whether participation was limited to a small
percentage and whether participants exerted influence over
the design and operation of the plan); Bakri v. Venture
Mfg. Co., 473 F.3d 677, 678 (6th Cir. 2007) (considering
Duggan's factors, as well as compensation
disparities and the plan language); see also Tolbert v.
RBC Capital Mkts. Corp., 2015 WL 2138200 at *9 (S.D.
Tex. Apr. 28, 2015).
argue that no court has ever determined a plan to be a top
hat plan when more than 16% of employees participated.
See Guiragoss v. Khouy, 44 F.Supp.2d 649 (E.D. Va.
2006). They seem to suggest that below that figure, a court
must look to other factors, but above it, the question is
settled as a matter of law. They argue that the WAP was not
selective enough to be a top hat plan, and that it fatally
permitted non-managers (including specifically FCs like Paul
and Buskirk) to participate. They provide expert analysis of
the plan, its participants, their compensation and titles,
and the like, all in an effort to obtain a judgment as a
matter of law that the WAP was not a top hat plan.
argues that Paul and Buskirk have distorted the facts and
focused on “alternative” top hat eligibility
tests rather than accepted ones. It argues that the analysis
should include reference to RBC's (and Defendant Royal
Bank of Canada's, which is the WAP's sponsor) total
workforce, not just its U.S. employees, and that when the
analysis properly does so, the WAP is indisputably a top hat
plan-only 2.8% of defendants' workforce was eligible to
participate, and those employees earned more than five times
the amount the average employee earned. It points out that
the median WAP-eligible employee was in the top 3% to 5% of
all RBC and Royal Bank earners.
also argues that even if only the U.S. employees are
considered, the WAP was still a top hat plan, at
least for the bulk of the relevant time from, from 2003 and
2011: less than 16% of those employees were eligible, and
participating employees earned roughly three times more than
the average U.S. employee. It offers its own expert testimony
that plaintiffs' expert's methodology is flawed and
misleading, because it improperly carves the WAP into
subgroups and then compares them to each other.
Court is again persuaded by Tolbert, this time by
the District Court's post-remand opinion on this same
issue. There, Judge Ellison articulated the same two part
inquiry this Court faces: whether the primary
purpose of the plan is to provide deferred compensation
for a group of management or highly compensated
employees. Id. at *3. As the parties agree,
this involves evaluation of both quantitative and qualitative
rejected the parties' claims that the WAP's status as
a top hat plan could be ascertained by looking only at the
“math” or percentage of participating employees:
“the four selectivity factors are interwoven, and no
one factor, standing alone, is determinative. . . . As a
result [RBC has] raised a genuine issue of material fact as
to this quantitative aspect of the selectivity
issue[.]” Id. at *9-10.
proper denominator to be used to ascertain the percentage of
eligible employees in a large, multinational corporation like
the Royal Bank and RBC is not a question that can be or
should be resolved on summary judgment. Plaintiffs argue that
only U.S. employees were eligible to participate in the WAP
(which would not be surprising, since ERISA is a U.S. law)
but even that factual point is disputed; RBC points out that
275 non-U.S. Royal Bank employees were WAP-eligible. They
also argue that over time, the number of eligible employees
was less than the 16% threshold plaintiffs claim is
dispositive. And, even if the percentage was too high for
some portion of the ...