Emmenegger v. Bull Moose Tube Co., 1999 U.S. App. LEXIS 30579 (8^th Cir. November 24, 1999)-Three senior executives sued their former employer after the company failed to honor the terms of two employee benefit plans—a “phantom stock plan” a severance plan. The district court found in favor of the executives, and the company appealed on the basis that neither of the plans were ERISA plans, and therefore the court lacked subject matter jurisdiction. This court found that that the stock plan was not an ERISA plan, while the severance plan was.

After the 1988 acquisition of Bull Moose Tube Co. (BMT) by Caparo, Inc., BMT enjoyed strong earnings. Notwithstanding this success, Emmenegger, Ritzie, and Riley all were terminated in March 1996 and none received payment for any of his phantom stock. The company argued that, because the phantom stock plan (PSP) did not condition redemption of PSP shares upon an employee's termination and because its purpose is not the deferral of income, it was not an ERISA plan but instead is properly characterized as a non-ERISA bonus program. This court agreed, pointing out that the redemption value of the phantom stock was tied inextricably to BMT's current performance, and thus set up a classic "bonus" situation: reward (higher cash value) for superior performance (higher corporate earnings).

As for the severance plan, this court found that it fit the definition of an “employee welfare benefit plan.” ERISA regulates those “benefits whose provision by nature requires an ongoing administrative program to meet the employer's obligation.” Under the BMT severance plan, severance benefits were not to be awarded automatically and mechanically upon termination; the decision to pay benefits was made on an individual, ongoing basis, after exercising the discretion described in the plan. Therefore, the severance plan contemplated a continuing need for processing requests for benefits and making payments, which made it a covered ERISA plan.