Is a general release of “any and all” claims signed by a former employee in exchange for a severance package enforceable in an ERISA action for contested pension benefits?
On May 23, 2013, the Court of Appeals for the Seventh Circuit answered YES, in a decision in which Seyfarth Shaw LLP was counsel of record for the defendant pension benefit plan.
In Hakim v. Accenture United States Pension Plan, Case No. 11-3438 (7th Cir, 2013 U.S. App. LEXIS 10475 (7th Cir. May 23, 2013), Mr. Hakim sought pension benefits claiming that he did not receive notice of a 1996 plan amendment that reduced his benefit accruals that complied with ERISA Section 204(h), 29 U.S.C. § 1054(h).
- In 2000, Hakim received a benefit statement that stated, among other things: “Because of your current employment classification, you are ineligible to participate in the Retirement Plan.”
- In 2003, Hakim was let go as part of a reduction in force and signed a release in return for a severance package. The release provided, in relevant part: “[Y]ou hereby forever release, waive, and discharge Accenture LLP, its . . . affiliates . . . from any and all claims of any nature whatsoever, known or unknown which you now have, or at any time may have had . . . .”
- In 2007, Hakim submitted a formal claim for additional pension benefits, arguing that the notice of the 1996 amendment violated ERISA’s notice requirements.
- In April 2008, Hakim’s claim was denied by the Accenture ERISA Benefit Claims Committee.
- In June 2008, Hakim sued.
The district court granted summary judgment in favor of the plan, holding that Hakim knew or should have known about his claim when he signed the release, and thus waived his claim.
The Seventh Circuit affirmed. The Court drew a distinction between entitlement claims, which it said are subject to ERISA’s anti-alienation provision, and contested claims, which it said fall outside the realm of the anti-alienation provision. The Court defined a pension entitlement as a claim “for vested benefits to which a plaintiff is entitled under the terms of the pension plan itself;” whereas a contested claim is “a claim for additional benefits to which [a plaintiff] is not entitled under the terms of the Plan itself.” The Court characterized Hakim’s claim as “contested” and not “entitled.”
The Court next addressed the question of whether Hakim had actual or constructive notice of the claim at the time he signed the release in 2003. The Court found that the 2000 benefit statement clearly repudiated his claim by advising him that he was no longer eligible to participate in the plan; the claim did not accrue when Hakim filed his claim for benefits in 2008. Hakim thus knew or should have known about his claims before he signed the release.
The Court then addressed whether Hakim knowingly and voluntarily signed the release. The Court found that Hakim admitted during his deposition that he read the release, and signed it knowingly and voluntarily.
This case is important because it may help ERISA defendants when confronted with a plaintiff, as an individual or on behalf of a class, who previously signed a release. The decision also sheds light on when the 7th Circuit finds that a claim accrues. Here, the Court found accrual upon receipt of a benefit statement, and not upon a formal claim and appeal denial. This accrual holding will make it easier for defendants to prevail on statute of limitations defenses, which also turn on the date of the accrual of the claim.