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March 14, 1986


The opinion of the court was delivered by: STERN

STERN, District Judge

 Plaintiff Thomas J. Ricciardi instituted this suit to recover 55% of the value of his account in a pension plan known as the Ricciardi Profit Sharing Plan ("new plan"), which the trustees of the fund declared forfeit when he was fired in 1982. The 55% forfeiture amounts to $36,437.00. Plaintiff contends that the trustees' action was illegal under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. ยง 1053(b)(1) (1985). Even if ERISA does not control, plaintiff further contends, the trustees' action was void as arbitrary and capricious. The new plan is the sole defendant. This matter comes before the Court on cross-motions for summary judgment. For the reasons that follow plaintiff's motion will be granted.


 The Ricciardi Building & Construction Co., Inc., was started in the 1920's by plaintiff's father. Plaintiff and his brother Anthony joined the business in the 1940's. Their brother Rudolph joined in 1952. In 1955, the company was incorporated. Each of the three brothers was a one-third owner of stock and a director. Thomas, the oldest brother, became the President, Anthony became the Vice-president, and Rudolph became Secretary. After a history of conflicts among the brothers, Rudolph and Anthony fired Thomas in 1982. As a result, Thomas brought a suit in state court that ended in settlement but also in much bitterness. Thomas agreed to sell his part of the company to his brothers and to give up his positions in the company. The issue before the Court in the present action was explicitly excluded from the terms of that settlement.

 The three brothers had been the trustees of the new plan. Anthony and Rudolph remain as trustees. After Thomas was fired in 1982, Anthony and Rudolph ruled as trustees that Thomas forfeited 55% of his account in the new plan.

 Prior to 1977, when the new plan was formed, the company had a pension plan known as the Ricciardi Building & Construction Co., Inc., Employees Retirement Plan ("old plan"). Since the company's unionized employees had yet another pension plan, neither the old nor the new plan ever had more than a handful of members including the three brothers. The old plan was a "defined benefit plan," while the new one is a profit-sharing "defined contribution plan." *fn1" When they were deposed, both Rudolph and Thomas agreed that the purpose of switching to the new plan was to give the three brothers more money relative to the few other members. When the old plan ended in 1977, the only members were the three brothers plus an office employee named Mary Ferina. All four members elected to "roll over" his or her benefits into the new plan. These old plan funds were nonforfeitable under the terms of the new plan. However, the new plan provided that any member who terminated employment for any reason other than death, disability, or retirement at 65, would forfeit an amount from the account in accordance with the following schedule: Non-forfeitable Percentage of Company Contribution Account Years of Participation to be Distributed Less than 4 years 0% 4 years but less than 5 years 40% 5 " " " " 6 " 45% 6 years but less than 7 years 50% 7 " " " " 8 " 60% 8 " " " " 9 " 70% 9 " " " " 10 " 80% 10 " " " " 11 " 90% 11 " or more 100%


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