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WEINFURTHER v. SOURCE SERVS. CORP. EMPLES. PROFIT

March 22, 1991

DANIEL WEINFURTHER, et al., Plaintiffs,
v.
SOURCE SERVICES CORPORATION EMPLOYEES PROFIT SHARING PLAN AND TRUST, et al., Defendants



The opinion of the court was delivered by: LEGGE

 CHARLES A. LEGGE, UNITED STATES DISTRICT JUDGE

 Defendants have moved for summary judgment on all causes of action. The motion has been opposed, argued, and submitted for decision. The court has reviewed the moving papers, the opposing papers, the very substantial factual record filed in support of and in opposition to the motion, *fn1" the arguments of counsel, and the applicable authorities. The court concludes that there are no genuine issues of material fact and that judgment should be entered in favor of defendants.

 I.

 Plaintiffs were employed by Source Services Corporation ("Source"), a company engaged in the business of employment search and placement. At the time of their departure in September 1986, plaintiffs formed a new company to engage in search and placement.

 In this action, plaintiffs seek to recover benefits which had accrued during their employment at Source under the company's employee profit sharing plan and trust (the "plan"). Those benefits were denied to plaintiffs by defendants under the forfeiture and deferral provisions of the plan and the guidelines used by the plan's administrative committee. The committee decided that the forfeiture and deferral provisions applied because plaintiffs competed with Source within three years after leaving their employment, in violation of the non-competition provisions of the plan.

 II.

 The complaint alleges three causes of action, all under ERISA, 29 U.S.C. § 1132. The first charges discrimination in the administration of the non-competition, forfeiture and deferral provisions of the plan. The second alleges that plaintiffs did not compete with Source within the meaning of the non-competition clause. The third alleges that the plan did not meet certain of the procedural requirements of the regulations under the ERISA statutes. *fn2"

 The dispute between the parties now centers on three principal issues. The first is whether Source and defendants complied with the requirements of ERISA in making changes to the non-competition provisions of the plan, and in using the guidelines in the interpretation of those provisions. The second is whether plaintiffs were engaged in competition with Source. The third is whether there has been discriminatory enforcement of the non-competition provisions by defendants against plaintiffs. And, of course, the underlying question is whether those questions can be determined with no genuine issue of material fact, as required by Rule 56 of the Federal Rules of Civil Procedure.

 Plaintiffs have no right to a jury trial on their ERISA causes of action. See e.g., Wardle v. Central States, Southeast & Southwest Areas Pension Fund, 627 F.2d 820 (7th Cir. 1980), cert. denied, 449 U.S. 1112, 66 L. Ed. 2d 841, 101 S. Ct. 922 (1981). Because the court is the ultimate trier of fact, it has broader powers to find the facts in the context of this motion. See Schwarzer, Summary Judgment Under Federal Rules, 99 F.R.D. 465, 476-80. And the interpretation of the plan is an issue of law for the court to decide. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 112, 103 L. Ed. 2d 80, 109 S. Ct. 948 (1989).

 III.

 Because the non-competition provisions of the plan are at the heart of the dispute, it is necessary to focus on their language.

 A.

 The plan, as it was amended and restated through December 1985, contained the following non-competition provisions:

 Paragraph 7.5(a)(ii) contained certain provisions for deferring the distributions of vested accounts in the event of competition by the employee. "Competition" was defined by subparagraph (E) as follows:

 
A Quota or Professional Employee will be considered to have competed if he works for a firm engaged, on a contingency, retainer or search basis, in the placement of accounting, financial, engineering or computer personnel in the United States or Canada as a partner, sole proprietor, shareholder, officer, director, employee or agent, or if he engages in any other placement activity or temporary (Virtual Help) activity in competition with the Employer.

 The plan also contained a clause providing for the forfeiture of the interests of an employee who competes with Source within three ...


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