Case Title: UNC TETON EXPLORATION DRILLING, INC., A Wyoming Corporation v. KAREN D. PEYTON, MARY D. YOKUM, AND E.O. RISTAU

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1989-05-12T00:00:00Z

Document:
UNC TETON EXPLORATION DRILLING, INC., A Wyoming Corporation v. KAREN D. PEYTON, MARY D. YOKUM, AND E.O. RISTAU1989 WY 109774 P.2d 584Case Number: 88-97Decided: 05/12/1989Supreme Court of Wyoming
UNC TETON EXPLORATION 
DRILLING, INC., A WYOMING CORPORATION, APPELLANT (DEFENDANT),

v.

KAREN D. PEYTON, MARY D. 
YOKUM, AND E.O. RISTAU, APPELLEES (PLAINTIFFS).

Appeal from the District 
Court, NatronaCounty, Daniel R. Spangler, 
J.

J. Kenneth Barbe 
of Brown & Drew, Casper, for appellant.

Donald E. Chapin 
and Charles S. Chapin of Crowell and Chapin, P.C., Casper, for appellees.

Before CARDINE, C.J., and THOMAS, URBIGKIT, MACY 
and GOLDEN, JJ.

URBIGKIT, 
Justice.

[¶1.]     This is a Casper oil industry 
retrenchment employee termination case.1 Three office management personnel, 
Karen D. Peyton, Mary D. Yokum and E.O. Ristau (employees), successfully sued 
their employer, UNC Teton Exploration Drilling, Inc. (UNC Teton), for 
post-discharge salary continuation benefits. UNC Teton appeals from this 
judgment. We affirm the judgment with modifications and partially remand. We 
award appellate attorney's fees to employees.

I. 
ISSUES

[¶2.]     Five issues are 
presented: (1) Effect, if applicable, of the preemptive provision2 of the Federal Employment 
Retirement Income Security Act. Is this an Employee Retirement Income Security 
Act (ERISA) case? (2) Sufficiency of the evidence under whatever rules of law 
are applicable to prove an agreement from which liability flows - sufficiency of 
the evidence to prove violated contractual right. (3) Reversible error in 
limiting cross-examination of one employee - cross-examination limitation. (4) 
Offset of other income received after termination which would serve to reduce 
the damage award - measure of damages or duty to mitigate. (5) Sufficiency of 
employees' proof of attorney's fees and incurred costs - awarded litigation 
costs.

II. 
FACTS

[¶3.]     The three employees who 
were plaintiffs included Ristau, assistant to the president, Yokum, secretary to 
the president, and Peyton, manager of the land department. The defendant, UNC 
Teton, is a Wyoming corporation constituting a 
wholly-owned subsidiary of UNC Resources which, in earlier days, was a major 
participant in national and international energy 
development.

[¶4.]     In the 1984 corporate 
retrenchment ending in employee discharge, question arises as to the 
availability of a salary continuation benefit program for these employees. The 
one time existence of such benefits as policies for both UNC Teton, the employer 
subsidiary, and UNC Resources, the parent corporation, was not an issue.3 What came to be centralized for 
factual analysis at trial was whether the benefit program rights of any kind had 
been effectively rescinded before employees' employment termination. Prior to 
1983, both UNC Teton and UNC Resources had employee policy and procedure 
manuals. Each manual contained a similar longevity based termination benefit 
provision. In 1983, company officials discussed discontinuance of the benefit. 
On September 13, 1983, a memorandum was prepared and circulated within the 
organization announcing:

Effective immediately, 
the UNC Human Resources Policy Manual will no longer be applicable to UNC Teton 
Exploration Drilling, Inc. operations or employees. UNC Teton's personnel manual 
will be the governing policy. This manual is currently under 
review.

All personnel policy 
questions will be reviewed by me [Hall, personnel manager] and directed to K.A. 
Cunningham II [company president] for final recommendations and/or 
approval.

This 
communication became known as the "Exhibit 4 memorandum." 

[¶5.]     By the summer of 1984, 
the work force of UNC Teton had been reduced to very few people and personnel 
manager R. Dan Hall commenced working on changes to the company policy and 
procedure manual, specifically the termination pay provisions. Apparently made 
under authorization of president Keith A. Cunningham, II, the policy statement 
was edited, approved and signed by Hall. Thereafter, the document disappeared 
and UNC Teton contends that this 1984 draft version was never put into 
effect.

[¶6.]     After employees' 
discharge in late 1984, UNC Teton denied wage continuation benefits by assertion 
that all entitlement had been abolished in 1983. Suit was instituted on April 9, 
1985 alleging continued entitlement under the UNC Teton policy manual. The case 
proceeded as a normalized employee handbook contract action in the Seventh 
Judicial District Court, Natrona 
County, Wyoming. The 
factual conflicts addressed benefit rescission before employment termination as 
Leithead v. American Colloid Co., 721 P.2d 1059 (Wyo. 1986) and Armstrong v. American Colloid Co., 721 P.2d 1069 (Wyo. 
1986) inquiries. However, by motion on January 27, 1988 and trial brief the 
following day, UNC Teton raised the preemptory umbrella of ERISA. 29 U.S.C. § 
1002 to 1461. The motion to dismiss presented the failure to state a claim and 
lack of subject matter jurisdiction resulting from the preemptive function of 
ERISA under which employees had not separately made claim. It is not shown in 
the record, but we are advised in briefs, that the trial court held a hearing on 
the motion to dismiss and elected to proceed through trial, and concluding that 
if ERISA controlled, its law would be applied in the final decision. See Evans 
v. Bexley, 750 F.2d 1498 (11th Cir. 1985), defining that any question which has 
been presented to the trial court for a ruling and not thereafter waived or 
withdrawn is preserved for review. Cf. Hagler v. J.F. Jelenko & Co., 719 S.W.2d 486 (Mo. App. 1986), where ERISA was not pleaded. The trial court, both 
in decision letter and resulting favorable judgment to employees, which included 
attorney's fee award pursuant to 29 U.S.C. § 1132(g), enunciated that recovery 
was controlled by the federal act:

This action is governed 
by the Federal Employee Retirement Income Security Program, however, said 
federal act does not benefit the Defendant because it never terminated the 
severance pay benefit made subject of this action.

[¶7.]     Within the broadly 
defined issues of the existence and effect of ERISA preemption, sufficiency of 
the evidence, denied cross-examination concerning benefit rescission, 
application of mitigation to recovery and adequacy of proof of attorney's fees, 
we generally affirm the trial court decision, except reverse on the other income 
credit being added to the award and remand for proof of costs and attorney's 
fees. Employees will also be granted appellate attorney's fees pursuant to 29 
U.S.C. § 1132(g) if requested before a mandate issues from this court by proper 
request supported by itemized detail. Sokol v. Bernstein, 812 F.2d 559 (9th Cir. 
1987); Bittner v. Sadoff & Rudoy Industries, 728 F.2d 820 (7th Cir. 
1984).

III. PREEMPTION BY 
ERISA

[¶8.]     This subject is one of 
first impression for this court, although not without a national litigative 
history including seven decisions of the United States Supreme Court for 1987 to 
date: Firestone Tire and Rubber Co. v. Bruch, ___ U.S. ___, 109 S. Ct. 948, 103 L. Ed. 2d 80 (1989); Mackey v. Lanier Collections Agency & Service, Inc., ___ 
U.S. ___, 108 S. Ct. 2182, 100 L. Ed. 2d 836 (1988); Laborers Health and Welfare 
Trust Fund for Northern California v. Advanced Lightweight Concrete Co., Inc., 
484 U.S. 539, 108 S. Ct. 830, 98 L. Ed. 2d 936 (1988); Fort Halifax Packing Co., 
Inc. v. Coyne, 482 U.S. 1, 107 S. Ct. 2211, 96 L. Ed. 2d 1 (1987); Metropolitan 
Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S. Ct. 1542, 95 L. Ed. 2d 55 (1987); 
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S. Ct. 1549, 95 L. Ed. 2d 39 
(1987); and California Federal Sav. and Loan Ass'n v. Guerra, 479 U.S. 272, 107 S. Ct. 683, 93 L. Ed. 2d 613 (1987).4

[¶9.]     This case, in pleading 
context, was unusual since the ERISA issue was presented for the first time just 
before trial. Its status here remains similarly confused. UNC Teton asks us to 
agree with the trial court that the federal law with its preemptive character 
applies. Employees, in defending the judgment, attack the basis upon which the 
judgment was entered by the trial court. Nothing of record or argument reveals 
that UNC Teton ever considered its wage continuation benefit policy to be within 
ERISA requirements. Also, nothing shows any federal law compliance by UNC Teton 
in pursuing filings or notices. If ERISA does not apply, attorney's fees cannot 
be awarded since either a statute or an agreement is required to award 
attorney's fees in this jurisdiction. NL Industries, Inc. v. Dill, 769 P.2d 920 
(Wyo. 1989); Bowers Welding and Hotshot, Inc. 
v. Bromley, 699 P.2d 299 (Wyo. 1985); Coulter 
v. City of Rawlins, 662 P.2d 888 (Wyo. 1983). In this case, 
there is no entitling agreement provision.

[¶10.]  The law is settled that wage continuation 
benefits upon discharge are an ERISA benefit. Scott v. Gulf Oil Corp., 754 F.2d 1499 (9th Cir. 1985). Furthermore, we discern no difference in issue analysis 
since the factual question remains as to whether the program was discontinued in 
1983 or continued to the date of employees' discharge in 1984. Existence of the 
right to benefits, if not earlier rescinded, is consequently subject to our 
analysis and decision in Leithead, 721 P.2d 1059. See also Foley v. Interactive 
Data Corp., 47 Cal. 3d 654, 254 Cal. Rptr. 211, 765 P.2d 373 (1988) and Cain v. 
Allen Elec. & Equipment Co., 346 Mich. 568, 78 N.W.2d 296 (1956), consideration 
of contractual rights engendered by employee handbook related to broader review 
of tort liability.

[¶11.]  Although we have reviewed many 
authorities, including more than fifty-five citations by the litigants, the 
preemption ERISA issue is most appropriately addressed as the law of the case. 
UNC Teton asked that ERISA be applied to this case, and the trial court did just 
that. By this resolution of both preemption and entitlement theory application, 
this court will not consider the issues carefully briefed and assiduously argued 
by employees relating to the failure of UNC Teton to appreciably comply with any 
aspect of ERISA. See Blau v. Del Monte Corp., 748 F.2d 1348 (9th Cir. 1984), 
cert. denied 474 U.S. 865, 106 S. Ct. 183, 88 L. Ed. 2d 152 (1985). Cf. Adcock v. 
Firestone Tire and Rubber Co., 822 F.2d 623 (6th Cir. 1987). Neither are we 
faced with the statutory benefit exception as engrafted upon the general 
principles of preemption. Fort Halifax Packing Co., Inc., 482 U.S. 1, 107 S. Ct. 2211; Martori Bros. Distributors v. James-Massengale, 781 F.2d 1349, amended 791 F.2d 799 (9th Cir.), cert. denied 479 U.S. 949, 107 S. Ct. 435, 93 L. Ed. 2d 385, 
cert. denied 479 U.S. 1018, 107 S. Ct. 670, 93 L. Ed. 2d 722 (1986); Teper v. Park 
West Galleries, Inc., 431 Mich. 202, 427 N.W.2d 535 (1988) (reh'g denied 
10/26/88). Cf. Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 101 S. Ct. 1895, 68 L. Ed. 2d 402 (1981).

[¶12.]  For this appeal, we will consider that 
ERISA applies and preemption exists as the law of the case since the position 
taken by the trial court is the same as presented here on appeal by UNC Teton. 
Weisbrod v. Ely, 767 P.2d 171 (Wyo. 1989); Kaler v. Puget Sound Bridge & 
Dredging Co., 72 Wn. 497, 130 P. 894 (1913). See also Gifford-Hill-Western, Inc. 
v. Anderson, 496 P.2d 501 (Wyo. 1972) in analysis of 
the law of the case.

IV. SUFFICIENCY OF THE 
EVIDENCE

[¶13.]  In a singular number of ERISA decisions, 
the validity of the plan administrator's act is to be tested by the arbitrary 
and capricious standard. Adcock, 822 F.2d 623; Cook v. Pension Plan for Salaried 
Employees of Cyclops Corp., 801 F.2d 865 (6th Cir. 1986); Jung v. FMC Corp., 755 F.2d 708 (9th Cir. 1985); Rhoton v. CentralStates, Southeast and Southwest Areas 
Pension Fund, 717 F.2d 988 (6th Cir. 1983). See also Comment, The Arbitrary and 
Capricious Standard Under ERISA: Its Origins and Application, 23 Duq.L.Rev. 
1033, 1037-39 (1985) and Note, Judicial Review of Fiduciary Claim Denials Under 
ERISA: An Alternative to the Arbitrary and Capricious Test, 71 Cornell L.Rev. 
986, 994 n. 40 (1986).

[¶14.]  Whatever confusion the subject may have 
previously engendered, the applicable standard for ERISA review is now firmly 
established by the United States Supreme Court in Firestone Tire and Rubber Co., 
109 S. Ct. 948. Justice O'Connor, writing for the unanimous court, applied a de 
novo standard from trust law.

As this case aptly 
demonstrates, the validity of a claim to benefits under an ERISA plan is likely 
to turn on the interpretation of terms in the plan at issue. Consistent with 
established principles of trust law, we hold that a denial of benefits 
challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard 
unless the benefit plan gives the administrator or fiduciary discretionary 
authority to determine eligibility for benefits or to construe the terms of the 
plan. Because we do not rest our decision on the concern for impartiality that 
guided the Court of Appeals, see [Bruch v. Firestone Tire and Rubber Co.] 828 
F.2d [134] at 143-146 [(3d Cir. 1987)] we need not distinguish between types of 
plans or focus on the motivations of plan administrators and fiduciaries. Thus, 
for purposes of actions under § 1132(a)(1)(B), the de novo standard of review 
applies regardless of whether the plan at issue is funded or unfunded and 
regardless of whether the administrator or fiduciary is operating under a 
possible or actual conflict of interest.

Id. at 956 (emphasis in 
original).

[¶15.]  The court held that "[t]he trust law de 
novo standard of review is consistent with the judicial interpretation of 
employee benefit plans prior to the enactment of ERISA." Id. at 955. The court 
further commented that otherwise "ERISA would require us to impose a standard of 
review that would afford less protection to employees and their beneficiaries 
than they enjoyed before ERISA was enacted." Id. at 956.

[¶16.]  With this standard in mind, attention 
turns to a sufficiency of the evidence analysis. UNC Teton, as employer, argues 
reliance not only on the Exhibit 4 memorandum but also on the 1983 oral 
discussions which occurred and continued through the rewriting process in 1984. 
Consequently, this court considers the decision of the trial court as it 
analyzed the Exhibit 4 memorandum and its effect and then made evidentiary 
rulings on discussions from which the memorandum resulted. Leithead, 721 P.2d 1059; Brooks v. Carolina Tel. & Tel. Co., 56 N.C. App. 801, 290 S.E.2d 370 
(1982); Langdon v. Saga Corp., 569 P.2d 524 (Okla. App. 1976). We apply the normal 
appellate rule that where there is sufficient evidence to support the factual 
deliberation of the trial court, as there is to be found here, this court "will 
not invade the province of the trier of fact by reaching a different 
conclusion." Duncan v. LaramieCountyCommunity 
College, 768 P.2d 593, 596 (Wyo. 1989). For appellate review, "the 
evidence of the prevailing party [is accepted] as true, leaving out entirely the 
evidence presented in conflict therewith, giving every favorable inference which 
may be fairly and reasonably drawn from the prevailing party's evidence." 
Weisbrod, 767 P.2d  at 177.

[¶17.]  Factually, litigants agree that prior to 
the preparation and publication of the Exhibit 4 memorandum, both UNC Resources, 
as parent, and UNC Teton, in its separate employee handbook, had similar wage 
continuation programs. The dispositive question is whether the trial court was 
required to conclude that the Exhibit 4 memorandum constituted not only a 
rescission of UNC Resources benefit program but also constituted a rescission of 
rights provided by the actual employer, UNC Teton. Strangely enough, no other 
relevant documentary evidence was produced at trial such as corporate 
resolutions, notices to employees or otherwise which provided support for UNC 
Teton's thesis of termination of its handbook benefits.

[¶18.]  We find a factual basis for the trial 
court's decision that the memorandum fairly and simplistically not only did not 
terminate the benefits of UNC Teton as interpreted but essentially provided 
evidentiary suggestion that those benefits would be continued until further 
action was taken by actual rescission. A corporation conducts business, which is 
normally authenticated by memoranda, resolutions or decisions in writing, 
through the activities of its officers and directors. The failure of UNC Teton 
to provide any additional written document of termination similar to the Exhibit 
4 memorandum of UNC Resources affords reasoned justification for the trial court 
decision. Hinkeldey v. Cities Service Oil Co., 470 S.W.2d 494 (Mo. 1971). Our analysis 
is not altered by the events of 1984 which addressed the controversy of whether 
an amended policy was actually adopted or not. Those drafting activities were 
certainly consistent with a status of non-rescission during the prior year. An 
oral rescission of a written policy does not suffice.

[¶19.]  For these reasons, we hold that the trial 
court decision was not erroneous in its assessment that the Exhibit 4 memorandum 
was entitled to appropriate evidentiary weight. We also concur that the document 
was not ambiguous and determined what was done (and not done) to discontinue 
benefits. Consequently, we hold, as did the trial court, that employees could 
rely on the UNC Teton policy manual for continued entitlement to date of 
discharge.

V. LIMITATION OF 
CROSS-EXAMINATION OF RISTAU

[¶20.]  The fact is peripherally established in 
this record that employees were not the first former company employees to file 
suit to seek wage continuation benefit recovery. In at least one prior case, 
present appellee Ristau had signed an affidavit.5 That affidavit, filed in an earlier 
state court proceeding in NatronaCounty, involved employee claimant Joe 
Prendergast and partially stated:

4. During or about June 
1981, Defendant adopted several personnel policies from its parent corporation. 
Among those policies was a salary continuation plan for laid-off employees. 
Plaintiff did not "bargain-for" or have anything whatsoever to do with adoption 
of the salary continuation policy. That policy, as well as all others adopted 
from the parent corporation as described above, were rescinded by Defendant 
effective September 13, 1983, and a memorandum to that effect was issued by 
Defendant notifying all employees about that decision.

5. No employee laid-off 
by Defendant since September 13, 1983 has received salary continuation payments 
under that salary continuation policy.

Ristau's 
statements within the affidavit, as well as inquiry in deposition, were 
addressed by UNC Teton in attempted cross-examination to support its thesis that 
the Exhibit 4 memorandum rescinded not only the UNC Resources wage continuation 
benefits, but any similar rights included for employees of UNC Teton by its own 
handbook provisions. We agree with UNC Teton that the restrictions on 
cross-examination of a party under these circumstances was in error; but, in 
total review of the record presented, find the error to have been harmless. 
Herman v. Speed King Mfg. Co., 675 P.2d 1271 (Wyo. 1984); ABC Builders, Inc. v. Phillips, 632 P.2d 925 
(Wyo. 1981); Albrecht v. United States, 
831 F.2d 196 (10th Cir. 1987). The Exhibit 4 memorandum was not a bilaterally 
negotiated agreement; it was a statement by the employer of what would be 
withdrawn in its benefit agreement with its employees. Consequently, the 
citations of authority by UNC Teton, including Hibbett Sporting Goods v. 
Biernbaum, 375 So. 2d 431 (Ala. 1979), are inapposite. Here, the generic 
axiom that "what it is, is what you see" may be most persuasive. To rescind, the 
employer could have specifically and succinctly said so. Any impeachment or 
further restatements by Ristau would not alter the facts. A written recision did 
not exist and any oral recision was in evidentiary 
dispute.

VI. REDUCTION OR 
MITIGATION OF RECOVERY FOR UNEMPLOYMENT COMPENSATION AND RE-EMPLOYMENT 
INCOME

[¶21.]  UNC Teton claims Ristau received 
unemployment compensation for five weeks which would require a reduction of 
recovery of $915 to him, Peyton was re-employed at a reduced salary requiring a 
reduction for the amount she should be awarded, and Yokum received both 
disability benefits and unemployment compensation which also would require a 
reduced total for the wage continuation award. UNC Teton contends that the 
proper damage analysis within the contractual provisions will not permit an 
award of a greater recovery than would have been the case with regularly paid 
benefits in the same circumstances. Employees conversely argue that assessment 
of any mitigative offset is foreclosed by UNC Teton's breach of the agreement. 
This argument is premised on the right of choice of the discharged employee to 
forego re-employment or receipt of collateral benefits, such as unemployment 
compensation, in order to continue to receive the wage continuation payment. 
Technically speaking, the issue is not a classical question of violation of the 
duty to mitigate, but rather whether the conduct which produced substitute 
income offsets the judgment when the employer denied existence of the benefit 
entirely.

[¶22.]  The premise adopted by employees to 
justify the greater award is that equitable estoppel should allow retention of 
more than the benefit of the bargain. Although we do not necessarily determine 
that there was an actual duty to mitigate by seeking other employment or 
accepting unemployment compensation benefits, we cannot agree that equitable 
estoppel prevents offset to reduce the recovery to the amount of actual loss 
sustained. In this construction, the estoppel thesis of Bauer v. State ex rel. 
Wyoming Worker's Compensation Div., 695 P.2d 1048 (Wyo. 1985) and Roth v. First 
Sec. Bank of Rock Springs, Wyo., 684 P.2d 93 (Wyo. 1984) do not apply. At issue is the 
measure of damages resulting from the denial of a contractual benefit. If the 
benefit had been regularly paid, reduction for these factors was specifically 
required by the terms of the policy and procedure detail:

[S]alary continuance is 
reduced by disability payments from any source (Social Security, Workers' 
Compensation, etc.) Salary continuance will cease at the earliest of the 
following occurrances [sic]: completion in accordance with the foregoing 
schedule or when the person on layoff either becomes employed or collects 
Unemployment Compensation, whichever occurs first.

Benefits 
received from disability, unemployment compensation and succeeding employment 
should be credited for liability reduction.

[¶23.]  The apparent concept developed by the 
trial court in its judgment and award of damages was that the breach of contract 
as a denial of payment extinguished the employer's right to offset or credit 
which otherwise would have existed. We do not agree. It is our conclusion that 
the benefit portfolio constituted a substitute for employment or other 
subsequently received income and that the maximum which should be included in 
the judgment is the maximum which the policy provided. Consequently, the 
judgment now awarding the unreduced amount is in error to the extent that 
succeeding employment or receipt of unemployment compensation benefits would 
have reduced liability under the benefit program. Upon remand, the trial court 
should credit UNC Teton with any amounts received by the employees which would 
have reduced eligibility under the criteria of the written UNC Teton benefit 
provision.

[¶24.]  The dispositive consideration is not, 
technically speaking, mitigation in the sense of failure to take action to 
reduce damages:

Doctrine of "mitigation 
of damages," sometimes called doctrine of avoidable consequences, imposes on 
injured party duty to exercise reasonable diligence and ordinary care in 
attempting to minimize his damages after injury has been inflicted and care and 
diligence required of him is the same as that which would be used by man of 
ordinary prudence under like circumstances. Darnell v. Taylor, La. App., 236 So. 2d 57, 61 [(1970)]. 
Mitigation of damages is an affirmative defense and applies when plaintiff fails 
to take reasonable actions that would tend to mitigate his 
injuries.

Black's Law 
Dictionary 904 (5th ed. 1979).

[¶25.]  The rule which we enunciate for damage 
assessment under the contract is an amount which constitutes actual loss. To 
permit recovery for ineligible time without reduction for amounts received 
expands recovery beyond the contractual provision. It is a fundamental principle 
of damage assessment that a person injured shall only receive compensation for 
his loss and no more. Willmschen v. Meeker, 750 P.2d 669 (Wyo. 1988). The purpose 
of damages is to put injured parties in the same position they would have been 
but for the breach. Reynolds v. Tice, 595 P.2d 1318 (Wyo. 1979). "The general 
measure of damages for breach of contract is the amount which will compensate 
the injured person for the loss which full performance of the contract would 
have prevented or the breach of it has entailed." Zitterkopf v. Roussalis, 546 P.2d 436, 438 (Wyo. 1976). No detriment to employees in 
re-employment or application for unemployment compensation is shown and, 
consequently, utilization of estoppel to permit dual recovery is inappropriate. 
See Adcock, 822 F.2d  at 626 n. 8, which lists cases requiring or not requiring 
unemployment for wage continuation benefit entitlement, and Holland v. 
Burlington Industries, Inc., 772 F.2d 1140 (4th Cir. 1985), aff'd 477 U.S. 901, 
106 S. Ct. 3267, 91 L. Ed. 2d 559, cert. denied 477 U.S. 903, 106 S. Ct. 3271, 91 L. Ed. 2d 562 (1986).

VII. COSTS AND ATTORNEY'S 
FEES

A. 
Costs.

[¶26.]  UNC Teton contends that the proof to 
award attorney's fees was inadequate under our standards and that no 
justification for the requested costs was documented. We agree. Costs are 
allowable after itemization and with a right for contest and hearing. Nothing in 
this record would advise us or inform the trial court how the actual computation 
of $1,178.39 was made. Upon remand, employees should itemize and UNC Teton is to 
be provided a right to object. See Hashimoto v. Marathon Pipe Line Co., 767 P.2d 158 (Wyo. 
1989). Costs must be itemized and proven as reasonable. O's Gold Seed Co. v. 
United Agri-Products Financial Services, Inc., 761 P.2d 673 (Wyo. 1988); Bi-Rite 
Package, Inc. v. District Court of Ninth Judicial Dist. of Fremont County, 735 P.2d 709 (Wyo. 1987).

[¶27.]  The amount of costs as a client's billing 
for "disbursements" which is additionally not itemized in the billing of account 
exhibit does not suffice. What expenses the law firm or the litigant may incur 
in the process of his lawsuit is clearly not necessarily the same as what the 
court should award as costs. Kaess v. State, 748 P.2d 698 (Wyo. 
1987).

B. Attorney's 
Fees.

[¶28.]  The trial court, in application of the 
statutory authorization of 29 U.S.C. § 1132(g)(1), awarded attorney's fees of 
$8,556.25 in addition to an itemized law firm disbursement billing which is the 
amount of the cost award of $1,178.39. The billing of account proposed exhibit 
detailed an individual task performance but included neither time at task nor 
billing rate. Actually, the record reflects that the agreement for legal 
services was by contingent fee of thirty-three and one-third percent through 
trial and forty percent upon appeal.

[¶29.]  The trial record reflects an anomaly 
since the billing of account statement, Exhibit 13, was rejected by the trial 
court when tendered for admission since the fifteen-day cutoff date for notice 
of exhibits had passed before its presentation. Consequently, no itemization of 
any kind was provided for either costs or fees. The fact that an expert witness 
believes that an amount on a rejected exhibit is reasonable cannot constitute 
proof for entitlement. Likewise, whether a one-third contingent fee is a 
reasonable arrangement between attorney and client cannot necessarily determine 
propriety of cost assessment against the opposing party. Cf. Pennsylvania v. DelawareValley Citizens' Council for Clean Air, 483 U.S. 711, 107 S. Ct. 3078, 97 L. Ed. 2d 585 (1987).

[¶30.]  The essential proof actually reveals that 
the trial court took an amount enumerated but not detailed in time or hourly 
rate from a rejected exhibit with proof by a witness that the amount would be 
reasonable in conjunction with a one-third contingent fee arrangement. It was 
the message propounded by the expert witness resulting in the trial court 
decision that the claimed total was "fair and reasonable compensation" since 
claimed only in an amount of $8,556.25, where the contingent fee payable totaled 
about $15,000.

[¶31.]  This court, since Greenough v. Prairie 
Dog Ranch, Inc., 531 P.2d 499 (Wyo. 1975), has considered eleven additional 
cases where the method of proof of attorney's fees has been at issue.6 This litany of cases reveals far 
too much investment of appellate time for a question that should be settled by 
proper proof and discretional decision of the trial court.

[¶32.]  For this case, this court will adopt the 
well-considered principles for attorney's fee award where authorized by federal 
statute that the right to grant is determined by federal law, but the procedure 
for proof and computation of amount will be derived from the consistently 
applied standard of Wyoming law. Dependahl v. Falstaff Brewing 
Corp., 653 F.2d 1208 (8th Cir.), cert. denied 454 U.S. 968, 102 S. Ct. 512, 70 L. Ed. 2d 384, cert. 
denied454 U.S. 1084, 102 S. Ct. 641, 70 L. Ed. 2d 619 (1981). Consequently, we will again establish that standard once undertaken 
in Greenough, 531 P.2d 499 without observable success. With similar evidence of 
frustration, the Third Circuit Court of Appeals in 1983 addressed the subject in 
an ERISA case where the initial award exceeded lodestar 
computation:

Because this court has 
seen a continuing and disturbing increase in appeals from attorney's fee awards 
generally, we fear the guiding precepts may be misapprehended. We reaffirm the 
principle that the discretion to set attorney's fees is allocated to the 
district courts and not to the courts of appeals. Even when a district court 
judgment is vacated by this court and remanded for further proceedings, see, 
e.g., Danny Kresky Enterprises Corp. v. Magid, 716 F.2d 215 (3d Cir. 1983), it 
is the district court, and not this court, which possesses the authority to 
exercise fee setting discretion.

In the case at hand, 
legal error occurred because there was no evidence to support the increase to 
the lodestar amount. We may disturb the fee determination because sufficiency of 
evidence is a matter of law subject to plenary review, and thus our action does 
not amount to the substitution of our discretion for that of the district court. 
* * *

. . . . . 
.

Nevertheless, the 
district court must abide by the appropriate standards and include some 
explanation to allow for careful appellate review. * * * We require that 
district courts, in applying the proper standards, set forth the specific 
reasons underlying the award - what the Supreme Court has described as the need 
to "provide a concise but clear explanation of its reasons for the fee award." 
Hensley v. Eckerhart, [461] U.S. [424] at [437], 103 S.Ct. [1933] 
at 1941 [76 L. Ed. 2d 40] [(1983)].

The principle commands 
more than mere ritual. From a review of the cases that have inundated this court 
since Lindy I, [Lindy Brothers Builders, Inc. v. American Radiator & 
Standard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973)] however, we fear that many 
lawyers and some district judges believe that once a fee applicant has touched 
all the Lindy bases he or she is home free. They appear to think that it is only 
necessary to prepare a neat compilation of dates and hours, add a subjectively 
appealing percentage augmentation, and the fee will emerge in a readout of 
deceptive exactness - a computation untouched by human hands or the power of 
reason. As our disposition of the present case should make clear, this view is 
not correct. In all phases of the fee determination, the district judge must 
cast a critical eye on the award request.

Ursic v. 
Bethlehem Mines, 719 F.2d 670, 674-76 (3d Cir. 1983) (footnotes 
omitted).

[¶33.]  In universal application, the first 
principle of award of attorney's fees is that either authentication by contract 
or provision by statute is required. Bowers Welding and Hotshot, Inc., 699 P.2d 299; Alyeska Pipeline Service Co. v. Wilderness Soc., 421 U.S. 240, 95 S. Ct. 1612, 44 L. Ed. 2d 141 (1975). This is the American rule that each party in a 
lawsuit ordinarily shall bear his own attorney's fees unless there is an express 
statutory authorization (or contractual provision) to the contrary. Hensley v. 
Eckerhart, 461 U.S. 424, 429, 103 S. Ct. 1933, 1937, 
76 L. Ed. 2d 40 (1983). The second standard which causes continued litigation in 
current Wyoming jurisprudence is that attorney's fees 
are a kind of punitive damage and, consequently, have to be proven to have been 
incurred and to be reasonable in amount to be awarded. Greenough, 531 P.2d 499.

[¶34.]  In order to achieve some consistency and 
reliability among proof of factors determining reasonableness, we now 
specifically adopt the lodestar concept enumerated for the federal courts in 
Hensley, 461 U.S. 424, 103 S. Ct. 1933. To receive the award, the party must 
prevail and the fee awarded should be determined by the trial court to be 
"reasonable." Justice Powell, writing that court's majority, 
stated:

A request for attorney's 
fees should not result in a second major litigation. Ideally, of course, 
litigants will settle the amount of a fee. Where settlement is not possible, the 
fee applicant bears the burden of establishing entitlement to an award and 
documenting the appropriate hours expended and hourly rates. The applicant 
should exercise "billing judgment" with respect to hours worked, * * * and 
should maintain billing time records in a manner that will enable a reviewing 
court to identify distinct claims.

We reemphasize that the 
district court has discretion in determining the amount of a fee award. This is 
appropriate in view of the district court's superior understanding of the 
litigation and the desirability of avoiding frequent appellate review of what 
essentially are factual matters. It remains important, however, for the district 
court to provide a concise but clear explanation of its reasons for the fee 
award. When an adjustment is requested on the basis of either the exceptional or 
limited nature of the relief obtained by the plaintiff, the district court 
should make clear that it has considered the relationship between the amount of 
the fee awarded and the results obtained.

Id. at 437, 103 S. Ct.  at 
1941. (footnote omitted).

[¶35.]  This is the lodestar test. See also City 
of Riverside v. Rivera, 477 U.S. 561, 106 S. Ct. 2686, 91 L. Ed. 2d 466 (1986) 
and Delaware Valley Citizens' Council for Clean Air, 483 U.S. 711, 107 S. Ct. 3078. Cf. Blanchard v. Bergeron, ___ U.S. ___, 109 S. Ct. 939, 103 L. Ed. 2d 67 (1989). Within the analysis of Justice Powell, the 
product of reasonable hours times a reasonable rate does not end the inquiry 
since the factors of discretionary application must then be considered to adjust 
the fee upwards or downwards.

[¶36.]  Contest and dissent to amounts of awarded 
attorney's fees neither started nor ended with lodestar; just like Greenough, 
531 P.2d 499 failed to eliminate "second major litigation" in Wyoming. The 
claiming litigant should first present the court with an itemized billing 
reflecting time and rate. Thereafter, the determination of reasonableness is 
within the exercised discretion of the trial court. Evidence by the claimant 
including an analysis by his expert witness in affidavit or testimony becomes a 
basic requirement since the burden of proof rests with the claimant. Chambless 
v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869 (2d Cir. 
1987).

[¶37.]  In addition to the lodestar prerequisite 
as factors of discretionary application, we find the analysis in flexibility and 
the efficacy of Johnson v. Georgia Highway Exp., Inc., 488 F.2d 714 (5th Cir. 
1974), which is referenced with approval in Hensley, as appropriate to 
additionally answer variability justification from the arbitrary time/rate 
determinant. With the reasonableness of the award to be judged by the abuse of 
discretion standard of review, these additional factors which may be considered 
by the trial court include: (1) the novelty and difficulty of the questions; (2) 
the skill requisite to perform the legal service properly; (3) the preclusion of 
other employment by the attorney due to acceptance of the case; (4) the 
customary fee; (5) whether the fee is fixed or contingent; (6) time limitations 
imposed by the client or the circumstances; (7) the amount involved and the 
results obtained; (8) the experience, reputation, and ability of the attorney; 
(9) the "undesirability" of the case; (10) the nature and length of the 
professional relationship with the client; and (11) awards in similar cases.7 Johnson, 488 F.2d  at 718-19. See 
somewhat similarly stated in Durdahl v. Bank of Casper, 718 P.2d 23 (Wyo. 1986) and Greenough, 
531 P.2d 499.

[¶38.]  Our present inquiry does not end here 
since, as a matter of federal law, the trial court is given discretion to 
determine whether any attorney's fees should be awarded in this particular case. 
Dependahl, 653 F.2d 1208. We perceive that this decision of right to award is a 
matter of federal law as the resolution similarly applies to other disciplines 
where authorization is statutorily provided to supplant a federal claim and 
right. The Education of All Handicapped Children Act, 20 U.S.C. § 1400 through 
1461 (1976 ed. & Supp. IV 1986), which we recently addressed on appeal in 
detail in Natrona County School Dist. No. 1 v. McKnight, 764 P.2d 1039, 1051 n. 
9 (Wyo. 1988), is an obvious similar example.

[¶39.]  Synthesized within the federal case law 
are two additional principles. First, although an attorney's fee award is 
discretionary, it is an abuse of discretion to deny without a supported finding. 
McConnell v. Meba Medical and Benefits Plan, 778 F.2d 521 (9th Cir. 1985); 
Gordon v. United States Steel Corp., 724 F.2d 106 (10th Cir. 1983); Hummell v. 
S.E. Rykoff Co., 634 F.2d 446 (9th Cir. 1980). Second, a general five-point test 
has been adopted for analysis against which any finding for denial can be 
tested. Preliminarily, bad faith is not a criteria for fee award. Landro v. 
Glendenning Motorways, Inc., 625 F.2d 1344 (8th Cir. 1980). The five-point test 
is variously stated in many cases, but was initially developed by Judge Barrett 
in Eaves v. Penn, 587 F.2d 453 (10th Cir. 1978) and restated in Gordon, 724 F.2d 
at 109:

The Eaves criteria is an 
effective means of providing the guidance needed by district courts to exercise 
their discretion under section 1132(g)(1). Thus, we hold that when determining 
whether to award attorney's fees under section 1132(g)(1), the district court 
should consider these factors among others: (1) the degree of the opposing 
parties' culpability or bad faith; (2) the ability of the opposing parties to 
personally satisfy an award of attorney's fees; (3) whether an award of 
attorney's fees against the opposing parties would deter others from acting 
under similar circumstances; (4) whether the parties requesting fees sought to 
benefit all participants and beneficiaries of an ERISA plan or to resolve a 
significant legal question regarding ERISA; and (5) the relative merits of the 
parties' positions.

See also, 
Hummell, 634 F.2d 446. Cf. Bittner, 728 F.2d 820.

[¶40.]  Clearly, the trial court did not abuse 
its discretion in the fee award under this federal standard. Consequently, an 
award of attorney's fees is affirmed.

[¶41.]  The final problem is what to do about 
unproven amounts. Recent history in this court advances no realistic or 
consistent result whether to deny as unproven or remand for trial court 
consideration upon proper proof. Since remand is required in any event to 
recompute the damage award, it will also include an opportunity for proper 
assessment of costs and attorney's fees.8 Cf. Miles v. CEC Homes, Inc., 753 P.2d 1021 (Wyo. 1988).

VIII. 
CONCLUSION

[¶42.]  We affirm the judgment for the employees 
and remand for assessment of credit against their judgment in accord with this 
opinion. The judgment granting costs and attorney's fees is reversed and 
remanded for further trial court consideration. Employees are entitled to claim 
appellate attorney's fees since successful upon appeal in defending their 
entitlement to a compensatory judgment.

GOLDEN, J., filed a dissenting 
opinion.

FOOTNOTES

1 See also NL Industries, 
Inc. v. Dill, 769 P.2d 920 (Wyo. 1989).

2 29 U.S.C. § 
1144(a).

3 The provisions were 
contained in the UNC Teton Human Resources Policy and Procedure Employee Manual 
in a section designated "Reduction in Force (Layoff)." Time of eligibility was 
determined by years of service and the manual provisions then 
stated:

Salary continuation 
begins after all earned vacation is used. Vacation does not accrue during the 
period of salary continuation. Further, salary continuance is reduced by 
disability payments from any source (Social Security, Workers' Compensation, 
etc.) Salary continuance will cease at the earliest of the following occurrances 
[sic]: completion in accordance with the foregoing schedule or when the person 
on layoff either becomes employed or collects Unemployment Compensation, 
whichever occurs first.

This program is 
broadly characterized in ERISA terminology as an unfunded welfare benefit plan 
for wage continuation protection upon employment termination. See California 
Hosp. Ass'n v. Henning, 770 F.2d 856 (9th Cir. 1985), opinion amended and reh'g 
denied 783 F.2d 946 (9th Cir. 1986) and Holland v. Burlington Industries, Inc., 772 F.2d 1140 (4th Cir. 1985), aff'd 477 U.S. 901, 106 S. Ct. 3267, 91 L. Ed. 2d 559, 
cert. denied 477 U.S. 903, 106 S. Ct. 3271, 91 L. Ed. 2d 562 
(1986).

4 Federal District Judge 
Richey in Schultz v. National Coalition of Hispanic Mental Health and Human 
Services Organizations, 678 F. Supp. 936, 938 (D.D.C. 1988) 
related:

Courts have decided 
nearly 100 cases about the reach of the ERISA preemption clause since the 
Supreme Court issued the Pilot Life and Metropolitan Life v. Taylor 
decisions.

Since that 
February 1988 decision, the volume of litigation has not ended. West search 
service for all reporters-1988-ERISA produces 1,323 federal court entries and 
716 state court entries.

5 His statement in the 
affidavit and examination at trial considered the effect of the Exhibit 4 
memorandum and whether it extended beyond its clear language to also rescind the 
UNC Teton program. As that issue was clearly defined in testimony presented to 
the trial court, Ristau asserted that the memorandum only rescinded the benefit 
provisions of the parent, UNC Resources. Cross-examination was directed to the 
unexpressed intention of officers to rescind all benefits. In speaking of the 
Exhibit 4 memorandum, Ristau testified:

Q. Okay, and after that 
exhibit was - I am sorry - after that memorandum was posted UNC Teton no longer 
followed any termiantion [sic] pay policy, did it?

A. I don't think we had 
any need for it until they started closing.

Q. To your knowledge 
though UNC Teton didn't have a termination policy after that date, did 
it?

A. It did in their 
manual.

In further 
cross-examination inquiry, questions concerned what he said in a 
deposition:

Q. Your answer to my 
knowledge, no, sometime during that period there were revisions to the UNC 
manual, implemented sometime in 1984. Answer: That's 
right.

A. May I say something? 
In another place in this desposition [sic] it asks the same thing, and I 
referred to the fact that the memo didn't take out of effect the UNC Teton 
manual, it was to be reviewed.

6 Including and since 
Greenough, 531 P.2d 499, direct trial court attorney's fee disputes which have 
been appealed have numbered twelve. This does not include divorces or worker's 
compensation cases where somewhat different maximizing principles may be 
applied, although touchstone principles for proof still apply. See Graves v. 
Utah Power & Light Co., 713 P.2d 187 (Wyo. 1986); Lebsack v. Town of 
Torrington, 698 P.2d 1141, reh'g denied 703 P.2d 338, amended 707 P.2d 1389 
(Wyo. 1985); Klatt v. Klatt, 654 P.2d 733 (Wyo. 1982); Paul v. Paul, 616 P.2d 707 (Wyo. 1980); and Prentice v. Prentice, 568 P.2d 883 (Wyo. 1977) (McClintock, 
J., dissenting).

The twelve fee litigation 
cases include four with appellate decision that proof of reasonableness was 
adequate, Jones Land and Livestock Co. v. Federal Land Bank of Omaha, 733 P.2d 258 (Wyo. 1987); DeWitt v. Balben, 718 P.2d 854 (Wyo. 1986); Anderson v. Meier, 
641 P.2d 187 (Wyo. 1982); and State Sur. Co. v. Lamb Const. Co., 625 P.2d 184 
(Wyo. 1981). See also Smith v. Equitable Life Assur. Soc., 614 F.2d 720 (10th 
Cir. 1980), applying Wyoming law and citing Greenough. In five 
cases, proof of attorney's fees was inadequate and the case in conjunction with 
summary judgment status or otherwise requiring remand was returned to the trial 
court to determine reasonableness of legal fees, Meyer v. Travelers Ins. Co., 
741 P.2d 607 (Wyo. 1987); Durdahl v. Bank of Casper, 718 P.2d 23 (Wyo. 1986); 
Shanor v. A-Pac, Ltd., 711 P.2d 420 (Wyo. 1986); Gifford v. Casper Neon Sign 
Co., Inc., 618 P.2d 547 (Wyo. 1980); and Greenough, 531 P.2d 499. Finally, in 
the last three cases, this court found inadequate proof of amount of attorney's 
fees resulting in judgment reversal and denial without remand, Albrecht v. 
Zwaanshoek Holding En Financiering, B.V., 762 P.2d 1174 (Wyo. 1988); Miles v. 
CEC Homes, Inc., 753 P.2d 1021 (Wyo. 1988); and Downing v. Stiles, 635 P.2d 808 
(Wyo. 1981).

7 This court expressly 
declines incurrence into the Delaware Valley Citizens' Council for Clean Air, 
483 U.S. 711, 107 S. Ct. 3078 morass of United States Supreme Court contingent 
fee inquiries, since in this case, the fee requested is clearly less than that 
which the client will be required to pay to the attorney on their one-third 
contingent fee agreement. See likewise, Blanchard, 109 S. Ct. 939 as the converse 
issue of whether awarded fee can exceed agreed contingent 
fee.

8 Generally, the 
practicing bar should be advised that proof of attorney's fees is essentially no 
different than proof of other elements of damage. A second chance upon remand 
for proof according to the appellee lacks something in litigative fairness to 
the opposing contestant. In this case, we 
will remand since a broad and comprehensive rule is now enunciated. For 
cases to be tried after the date of publication of this opinion, any similar 
retrial opportunity could seldom, except in the most unusual circumstances, be 
available. Appellate litigation for attorney's fee assessments should diminish 
in prevalence, or even perhaps in optimistic review, disappear. The controlling 
concepts are adequate proof and broad trial court discretion. To observe what 
will likely happen hereafter if proof to support amount is lacking, see Key 
Constructors, Inc. v. H & M Gas Co., 537 So. 2d 1318, 1325 (Miss. 
1989).

GOLDEN, Justice, 
dissenting.

[¶43.]  I respectfully dissent to part IV 
entitled, "Sufficiency of the Evidence," and part V entitled, "Limitation of 
Cross-Examination of Litigant Ristau," of the majority 
opinion.

[¶44.]  Under the majority's 
sufficiency-of-the-evidence analysis in part IV of the opinion, it is said that 
this court considers the trial court's decision "as it analyzed the Exhibit 4 
memorandum and its effect and then made evidentiary rulings on discussions from 
which the memorandum resulted." The majority then states that the "dispositive 
question is whether the trial court was required to conclude that the Exhibit 4 
memorandum constituted not only a rescission of UNC Resources benefit program 
but also constituted a rescission of rights provided by the actual employer, UNC 
Teton." In UNC Teton's failure to provide any written evidence of termination of 
benefits and rights, other than Exhibit 4, the majority finds a factual basis 
for the trial court's decision that Exhibit 4 not only did not terminate UNC 
Teton's benefits, but also provided "evidentiary suggestion that those benefits 
would be continued" until UNC Teton actually rescinded them. According to the 
majority, Exhibit 4 was not ambiguous.

[¶45.]  This conclusion, however, is at odds with 
that recognized by the majority in its part V discussion of the trial court's 
erroneous limitation of UNC Teton's cross-examination of Ristau. As the majority 
correctly notes, the trial court erroneously restricted UNC Teton's 
cross-examination of party Ristau to support UNC Teton's thesis that Exhibit 4 
rescinded not only UNC Resources wage continuation benefits, but also UNC 
Teton's wage continuation benefits. This error cannot be designated as harmless. 
Had UNC Teton been allowed to fully cross-examine Mr. Ristau, the evidence would 
have shown: (1) on or about September 11 or 12, 1983, a day or two before 
Exhibit 4 was published, Ristau attended a meeting with Keith Cunningham II and 
Dan Hall in which they discussed UNC Teton's termination pay policies and then 
decided to discontinue termination pay practices at UNC Teton; and (2) Ristau 
was aware UNC Teton had discontinued all termination pay policies applicable to 
its employees. Appellees' objections to UNC Teton's attempted cross-examination 
of Mr. Ristau were erroneously sustained on the basis of the parol evidence 
rules. Exhibit 4 was not evidence of a contract; rather, it was evidence of a 
fact, i.e., that UNC Teton did not discontinue its termination pay policy. The 
contract itself, if it existed, was to be found in UNC Teton's personnel manual, 
which was only referred to in Exhibit 4. Exhibit 4, which is used as evidence of 
a fact rather than as evidence of a contract, may be susceptible of explanation 
by extrinsic circumstances or facts. Kinser v. Elkadi, 674 S.W.2d 226, 234 
(Mo. App. 
1984). UNC Teton was prejudiced by the trial court's erroneous restriction of 
its request to cross-examine Mr. Ristau; it should have been allowed to offer 
evidence to contradict the appellees' contention that UNC Teton did not 
discontinue its termination pay policy.

[¶46.]  I would reverse and remand for a new 
trial at which UNC would have full opportunity to examine Mr. 
Ristau.