Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Mechanics Bank must pay at least $1.3 million in supplemental executive retirement benefits to its former president and chief executive officer ( Buster v. Comp. Comm. of Bd. of Dirs. of Mechs. Bank , 2017 BL 246399, N.D. Cal., No. 3:16-cv-01146-WHA, 7/14/17 ).
The bank and its compensation committee abused their discretion in denying Steven K. Buster’s claim for benefits, Judge William Alsup of the U.S. District Court for the Northern District of California held July 14. Buster never knowingly and voluntarily waived his entitlement to accrued supplemental executive retirement benefits, notwithstanding his signing of the retirement agreement and release in connection with his termination in 2012, Alsup said. Alsup’s ruling comes after a three-day bench trial.
Founded in 1905, Mechanics Bank operates more than 30 banking branches in California, according to company data on the Bloomberg Terminal.
Buster sued the bank under the Employee Retirement Income Security Act to recover more than $8,540 monthly in benefits he was owed under the bank’s supplemental executive retirement plan. The dispute between the parties stems from a $3.8 million release agreement Buster signed in 2012 when he left the bank. By accepting the multimillion-dollar payment, Buster waived all claims he had against Mechanics Bank, according to the bank. Buster, however, alleged that he signed the release after he was told that his supplemental retirement benefits would be unaffected.
Last year, Alsup denied the bank’s request to dismiss the lawsuit, holding that there was a “strong showing” that it “cheated” Buster out of his benefits by telling him the release he signed wouldn’t affect his pension and later reversing its statement. Subsequently, Alsup also denied the parties’ cross motions for summary judgment, holding that there were disputed issues of fact that should be resolved at trial.
In his latest findings, Alsup pointed out that both sides to the dispute understood that the retirement agreement and release preserved Buster’s entitlement to his accrued supplemental benefits once he reached age 65. However, two years after executing the agreement, and to save itself over a million dollars, the bank took the new and opposite position that the retirement agreement and release had extinguished Buster’s entitlement to those benefits, Alsup said.
The evidence showed that Mechanics Bank changed its position in relation to Buster’s benefits right around the time it sought to sell a majority interest to private equity firm Ford Financial Fund II LP.
The bank’s position that it offered Buster $1 million to secure his waiver of approximately $1.3 million in vested and accrued benefits wasn’t credible, Alsup concluded.
Louderback Law Group and David F. Crutcher represented Buster. Trucker Huss APC represented Mechanics Bank.
To contact the reporter on this story: Carmen Castro-Pagan in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)