Firm Victory for Vandegrift Forwarding Company, Inc.

Reavis Parent Lehrer LLP won a significant victory on behalf of its client Vandegrift Forwarding Company, Inc. (“Vandegrift”) when Judge Dora Irizarry of the United States District Court for the Eastern District of New York dismissed a complaint asserting claims under the federal Employee Retirement Income Security Act, commonly known as ERISA. A copy of the Decision in Gabelman v. Vandegrift Forward Company, No. 1:11-cv-02718, 2012 WL 1004872 can be accessed here.

At issue in Gabelman was a “Salary Continuation Agreement” between Vandegrift and its employee William Gabelman, under which certain payments over time would be made to Gabelman if he remained continuously employed by the Company through retirement at age sixty-five. Before that date, however, Gabelman was terminated for cause.

Gabelman sued in federal court, asserting that his agreement was an ERISA “plan” subject to the rights, obligations and remedies under ERISA. The firm moved to dismiss on the ground that the agreement was not an ERISA plan, but rather a simple contract subject to state contract law. ERISA is designed to regulate how employee benefit and retirement plans are administered; however, an agreement is governed by ERISA only where it involves a plan that includes an ongoing administrative scheme with significant management discretion. As we demonstrated and Judge Irizarry agreed, in this case an agreement involving a single employee, with payments in a liquidated amounts payable upon the happening of a clearly defined event, did not involve the ongoing administration, discretion and oversight needed to qualify as an ERISA plan.

The Firm’s representation was led by Litigation Partner Lawrence Brocchini, who, with Litigation Partners Mark Moore and Alice Jump, regularly counsels on and litigates employment matters on behalf of companies and individuals. Because employee benefit and post-employment arrangements may unknowingly fall within ERISA, employers should consult counsel before entering into such agreements. The Firm’s employment group, lead by Senior Partner Helen D. “Heidi” Reavis, regularly counsels employees and employers on compliance and regulatory matters, including ERISA.