## Facts

- Schwegmann Giant Super Markets (SGSM) operated a large grocery chain in the New Orleans area and employed thousands of workers.
- In 1985 SGSM implemented a retirement grocery voucher program under which qualifying long-term employees received monthly vouchers redeemable for groceries at SGSM stores after retirement.
- SGSM funded the vouchers from general revenues, deducted the voucher amounts as retirement-plan expenses, and issued Form 1099-R reporting voucher value as retirement income.
- In 1997, after selling its stores, SGSM terminated the voucher program.
- Retirees receiving vouchers and eligible employees sued, asserting the program was an ERISA pension plan with vested benefits and seeking reinstatement or the monetary equivalent.
- The district court certified a class, held the voucher program was an ERISA employee pension benefit plan, found benefits vested, and entered a money judgment; it also held an excess insurer’s $1 million self-insured retention (SIR) applied once to the class as a whole.
- SGSM-related defendants and the insurer appealed.

## Issues

1. Whether the retirement grocery voucher program was an “employee pension benefit plan” governed by ERISA.
2. Whether termination of the program violated ERISA such that class members were entitled to monetary benefits, and whether John F. Schwegmann, Sr. could be personally liable as an ERISA fiduciary.
3. Whether the excess insurer’s $1 million SIR applied once to the class’s aggregated claims or separately to each class member’s claim.

## Decision

- The court affirmed that the voucher program was an ERISA-covered employee pension benefit plan.
- The court affirmed the monetary judgment against the SGSM defendants and upheld personal liability against John F. Schwegmann, Sr. on a functional-fiduciary theory.
- The court reversed as to the insurer, holding the SIR applied to each class member’s claim; because no individual claim exceeded $1 million, the excess policy was not triggered.
- The judgment against the insurer was vacated.

## Legal Principles

- A program is an ERISA “employee pension benefit plan” if, in substance, it provides retirement income or delivers benefits tied to retirement rather than discretionary, ad hoc payments.
- Tax and reporting treatment (e.g., deductions as retirement-plan expenses and issuance of Form 1099-R) may support a finding that a benefit constitutes retirement income under ERISA.
- ERISA fiduciary status is functional; an individual with discretionary authority or control over plan management or administration may be personally liable for ERISA violations.
- In construing an excess policy’s self-insured retention in a class action, a “per claim” retention may apply per claimant rather than to aggregated class damages, potentially preventing exhaustion and coverage.

## Conclusion

The Fifth Circuit treated retiree grocery vouchers as ERISA pension benefits based on their retirement-linked design and administration, upheld monetary relief and fiduciary liability for plan termination, and held an excess insurer owed no coverage because a per-claimant $1 million SIR was not met by any individual class member’s loss.


Musmeci v. Schwegmann Giant Super Mkts., Inc., 332 F.3d 339 (5th Cir. 2003)