Musmeci v. Schwegmann Giant Super Markets

Schwegmann Giant Super Market Partnership (partnership) (defendant) managed a chain of grocery stores primarily around New Orleans, Louisiana. The partnership included Schwegmann Giant Super Markets, Inc. (SGSM), G. G. Schwegmann Company, and John Schwegmann Jr. Trust Estate. SGSM owned a 70 percent interest in the partnership and was the managing partner. John Schwegmann (Mr. Schwegmann) was the chief executive officer of SGSM and made most daily operations decisions. Mr. Schwegmann created a voucher program for long-term retired partnership employees. Retirees received four $216 vouchers each month that could be exchanged for groceries in partnership stores. The partnership funded the vouchers through its general revenue. Each year, the partnership deducted the total face value of the vouchers as business expense on its tax returns under the retirement-plans category. The partnership also sent voucher recipients an Internal Revenue Service (IRS) 1099-R form reflecting the value of the vouchers they received that year. The partnership took a financial downturn and cancelled the voucher program. Retirees enrolled in the voucher program, including John Musmeci, and current employees who met voucher eligibility (plaintiffs), filed a class-action lawsuit in federal district court against the partnership and Mr. Schwegmann, claiming that they were vested in a pension benefit plan under the Employee Retirement Income Security Act (ERISA). The district court ruled in favor of Musmeci and the employees, finding that the voucher program constituted a pension plan under ERISA. The partnership appealed to the United States Court of Appeals for the Fifth Circuit.