Goldstein v. Johnson & Johnson

Appeal by Dr. Gideon Goldstein from the
adverse judgment of the District Court in favor of his
former employer, Johnson & Johnson (J&J), following a
bench trial. It requires us to address again the question of
the proper scope of judicial review of the decision of a plan
administrator acting under the Employee Retirement
Income Security Act of 1974 (ERISA), 29 U.S.C. S 1001 et
seq., to deny benefits to a participant. Although this topic
has been exhaustively examined in the context of benefits
denials generally, see Firestone Tire & Rubber Co. v. Bruch,
489 U.S. 101 (1989), and in the context of decisions made
by potentially self-interested administrators specifically, see
Pinto v. Reliance Standard Life Ins. Co., 214 F.3d 377 (3d
Cir. 2000), we now face a benefits-denial decision in a new
context: that of a "top hat" plan, i.e., a "plan which is
unfunded and is maintained by an employer primarily for
the purpose of providing deferred compensation for a select
group of management or highly trained employees." Miller v.
Eichleay Eng'rs, Inc., 886 F.2d 30, 34 n.8 (3d Cir. 1989)
(citations omitted).

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We conclude that although courts need not
defer to the construction of disputed contract ter ms given
by the administrators of top hat plans, effect must be given
to all of the terms, including those conferring discretion on
the administrators (subject as always to the implied duty of
good faith). In this case, the discretion granted to the
administrators was quite broad, and ther e is nothing in the
process by which J&J reached its decision, or in the
decision itself, that would lead us to conclude that the
District Court's determination as to J&J's good faith was
clearly erroneous. Thus, we conclude that J&J did not
breach its contractual obligation to Goldstein. The
judgment of the District Court will be affirmed.

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