1998 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

4-29-1998

Schoonejongen v. Curtiss Wright Corp

Precedential or Non-Precedential:

Docket 97-5497

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Recommended Citation

"Schoonejongen v. Curtiss Wright Corp" (1998). 1998 Decisions. Paper 94.

http://digitalcommons.law.villanova.edu/thirdcircuit_1998/94
Filed April 29, 1998 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

NO. 97-5497 

FRANK C. SCHOONEJONGEN; WESLEY L. LOSSON; 

JOHN S. DUNNING; WILLIAM MARTONE; WILLIAM V. 

HANZALEK; EDWARD F. ZIEK; MELVIN DEBLOCK; 

JOSEPH COLQUHOUN; JOSEPH MAJERSCAK; GERARD 

ABBAMONT; and OLGA WOLSEY, on behalf of themselves 

and all others similarly situated, 

 Appellants 

v. 

CURTISS-WRIGHT CORPORATION 

ON APPEAL FROM THE 

UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF NEW JERSEY 

(D.C. No. 84-cv-04542) 

Argued March 17, 1998 

Before: SLOVITER, RENDELL and SEITZ, Circuit Judges. 

(Opinion Filed: April 29, 1998) 

 Nicholas F. Lewis, Esquire (Argued) 

 Everett E. Lewis, Esquire 

 Shirely Fingerhood, Esquire 

 Lewis, Greenwald, Clifton & Lewis 

 2l8 West 40th Street 

 New York, New York l0018 

 Attorneys for Appellants 
 Stephen F. Payerle, Esquire (Argued) 

 Laurence Reich, Esquire 

 Carpenter, Bennett & Morrissey 

 100 Mulberry Street 

 Newark, New Jersey 07102-4079 

 Attorneys for Appellee 

OPINION OF THE COURT 

SEITZ, Circuit Judge. 

The sole but important issue in this appeal, which stems 

from an action alleging a violation of section 402(b)(3) of the 

Employee Retirement Income Security Act of 1974, 29

U.S.C. S 1102(b)(3) ("ERISA"), has already been framed for 

us by the Supreme Court in its mandate to our court on 

remand.1 In particular, we will address the question directly 

posed by the Supreme Court: "[W]hether Curtiss-Wright's 

valid amendment procedure -- amendment `by the 

company' -- was complied with in this case." Curtiss-Wright 

Corp. v. Schoonejongen, 514 U.S. 73, 85 (1995). The parties 

agree that we should apply principles of Delaware corporate 

law to resolve that question. See Schoonejongen v. CurtissWright Corp., Nos. 92-5695, 92-5710 (3d Cir. Aug. 30, 

1995) (unpublished opinion). 

I. Factual Background 

A. Procedural History 

The long and contentious history of this case, which 

spans over fourteen years of litigation, is set forth in 

Schoonejongen v. Curtiss-Wright Corp., 18 F.3d 1034 (3d 

Cir. 1994), when this court first considered the matter. To 

summarize, the Curtiss-Wright Corporation ("CW") actively 

maintained a retirement health benefits plan ("the Plan") for 

_________________________________________________________________ 

1. The district court asserted subject matter jurisdiction pursuant to the 

civil enforcement provisions in ERISA, 29 U.S.C. S 1132. Jurisdiction of 

this court arises out of 28 U.S.C. S 1291 to review the district court's 

final order granting summary judgment. 

 2 
all non-bargaining unit employees who worked at its

production facilities, including one such plant in Wood 

Ridge, New Jersey. These retirement health benefits, 

granted in 1966, were governed by two principal 

documents: the Plan Constitution and the Summary Plan 

Description ("SPD"). In early 1983, CW purportedly issued 

an amended SPD providing that upon the closure of a CW 

plant, health benefits for that facility's retirees would be 

terminated.2 Later that year, CW closed its Wood Ridge 

plant and accordingly notified the plant's retirees of the 

termination of health benefits. Mr. Richard Sprigle, who 

was the Executive Vice President in charge of the facility's 

operations, informed Wood Ridge retirees of this 

termination under the amended SPD by a letter dated

November 4, 1983. 

In 1984, the affected retirees instituted a class action in 

the district court, alleging that CW had wrongfully

terminated their retirement health benefits and that they 

had a vested right to these benefits for life. After six years 

of litigation and a bench trial, the district court in 1990 

dismissed most of the plaintiffs' claims, including one 

contention that CW had contractually bound itself to 

provide retirement health benefits for life. The district court 

found, however, that the revised SPD language concerning 

the termination of benefits constituted an "amendment" to 

the Plan and therefore fell within ERISA's section 402(b)(3), 

which requires that every employee benefit plan must 

"provide a procedure for amending such plan, and for 

identifying the persons who have authority to amend the 

plan." 29 U.S.C. S 1102(b)(3). The district court then held 

that, as an amendment, the relevant SPD language was not 

adopted under an amendment procedure as required by

ERISA. Therefore, the district court concluded that the 

terminations of health benefits under the amended Plan 

were void ab initio and ordered CW to pay a significant 

amount in retroactive benefits. 

_________________________________________________________________ 

2. This addition to the SPD, found under the heading "Termination of 

Health Care Benefits," reads: "Coverage under this Plan will cease for 

retirees and their dependents upon the termination of business 

operations of the facility from which they retired." App. at 334. 

 3 
On appeal to our court, CW argued that the revised SPD 

language was in fact adopted under an amendment 

procedure contained in a standard reservation clause which 

provided that "[t]he Company reserves the right at any time 

and from time to time to modify or amend, in whole or in 

part, any or all of the provisions of the Plan." CW

contended that this procedure was valid under section 

402(b)(3) because it identified "the Company" with the 

authority to amend the retirement benefits plan. This court 

rejected that argument, reasoning that the purpose behind 

the section 402(b)(3) requirement was to "ensure that all 

interested parties will know how a plan may be altered and 

who may make such alternations. Only if they know this 

information will they be able to determine with certainty at 

any given time exactly what the plan provides." 

Schoonejongen v. Curtiss-Wright Corp., 18 F.3d 1034, 1038 

(3d Cir. 1994). As a result, our court reasoned that section 

402(b)(3) requires enumeration with specificity "what 

individuals or bodies within the Company could promulgate 

an effective amendment." Id. at 1039. Because simply 

identifying "the Company" did not explicitly identify such 

individuals or bodies, the court affirmed the district court, 

holding that CW adopted the revised SPD under an 

amendment procedure that failed to comply with ERISA 

section 402(b)(3). 

The Supreme Court granted CW's petition for certiorari 

and reversed in a unanimous opinion. The Court observed 

that the text of section 402(b)(3) contains only two 

requirements: "a `procedure for amending [the] plan' and `[a 

procedure] for identifying the persons who have authority to 

amend the plan.' " Curtiss-Wright Corp. v. Schoonejongen, 

514 U.S. 73, 78 (1995) (quoting 29 U.S.C. S 1102(b)(3)) 

(alteration and emphasis in original). Next, the Court held 

that merely identifying "the Company" with the authority to 

amend the plan comports with a literal reading of the 

section, as nothing in the statute required an identification 

with any more particularity. The Court noted, however, that 

for "the Company" language to make sense, there must be 

some reference to principles of corporate law in order to 

determine who has authority to make decisions on behalf of 

a company.3 Id. at 80-81. As to whether CW's reservation 

_________________________________________________________________ 

3. The Supreme Court cited Judge Roth's concurring reasoning on this 

point. See Curtiss-Wright, 514 U.S. at 80 (citing Schoonejongen, 18 F.3d 

at 1039 n.3). 

 4 
clause constituted a procedure for amending the plan, the 

Court once again reasoned that the literal terms of section 

402(b)(3) are ultimately indifferent as to the level of detail in 

an amendment procedure or in an identification procedure. 

Because the unilateral authority to terminate a plan is still 

a "procedure" nonetheless, the reservation clause, in the 

Court's view, satisfied this prong of section 402(b)(3). 

The Court then remanded the case to our court to 

determine "whether Curtiss-Wright's valid amendment

procedure -- amendment `by the Company' -- was complied 

with in this case." Id. at 85. The Supreme Court instructed 

us that "[t]he answer will depend on a fact-intensive 

inquiry, under applicable corporate law principles, into 

what persons or committees within Curtiss-Wright 

possessed plan amendment authority, either by express 

delegation or impliedly, and whether those persons or 

committees actually approved the new plan provision

contained in the revised SPD." Id. If, the Court continued, 

the revised plan is found not to have been properly

authorized when issued, the question would then arise 

whether any subsequent actions attributable to CW could 

serve to ratify the amendment ex post. The Court 

specifically identified as a possible basis for ratification the 

November 4, 1983 letter under Mr. Sprigle's name 

informing individual retirees of the termination. Id. 

On remand from the Supreme Court, both parties argued 

before us that it was possible to decide the case on the 

existing record. The panel, however, decided that a remand 

to the district court was appropriate because of a factual 

dispute -- namely, whether anyone at CW possessed the 

actual or implied authority to amend the plan. See 

Schoonejongen v. Curtiss-Wright Corp., Nos 92-5695, 92- 

5710 (3d Cir. Aug. 30, 1995) (unpublished opinion). In 

remanding, we rejected the argument raised by CW that the 

Board in 1990 had retroactively ratified the Plan by 

resolution so that there was no need to consider questions 

of authority. We held that under Delaware corporate law a 

"[r]atification cannot relate back so as to defeat intervening 

rights of strangers to the transactions." Id. at 4 (quoting 2A 

William M. Fletcher, Fletcher Cyclopedia of the Law of 

Private Corporations S 782, at 647-48 (perm. rev. ed. 1992)) 

 5 
(alteration in original); see also Essential Enterprises Corp. 

v. Automatic Steel Prods., Inc., 164 A.2d 437 (Del. Ch. 

1960). Because the ex post ratification of the amended SPD 

would defeat the rights of third parties, this court rejected 

the 1990 attempted ratification by the board and 

accordingly remanded the matter to the district court for 

further proceedings with respect to the actual or implied 

authority of CW to adopt the 1983 amendment or to ratify 

it. 

B. Facts Discovered on Remand 

Renewed discovery by the parties in the district court 

revealed the following undisputed facts. CW is a Delaware 

corporation and has adopted by-laws applicable at all times 

here pertinent which gives the Chairman of the Board of 

Directors, as Chief Executive Officer ("CEO"), "general and 

active control of [the corporation's] business and affairs." 

App. at 441. They expressly include the authority to sign all 

contracts, obligations, and other instruments on behalf of 

the corporation. Id. The by-laws further designate the 

President as the Chief Operating Officer and bestow

"general and active control of [the corporation's] 

operations," including the authority to execute contracts, 

fix employee compensation other than primary officers, and 

"all other duties and powers usually appertaining to the 

office of president of a corporation," except as otherwise 

stated in the by-laws. Id. at 441-43. Finally, the by-laws 

provide that the Vice-Presidents "shall perform all such 

duties and exercise all such powers as may be provided by 

these by-laws or as may from time to time be determined by 

the Board of Directors, ... the Chairman, or the President." 

Id. at 443. 

Mr. T. Roland Berner, who died in the spring of 1990, 

long before remand to the district court, was CW's 

Chairman of the Board, CEO, and President. Mr. Charles 

Ehinger and Mr. Richard Sprigle, both now retired, were 

CW's two Executive Vice Presidents. While the precise 

responsibilities of Mr. Ehinger and Mr. Sprigle are the 

subject of some disagreement between the parties to this 

action, although not between the two Vice Presidents 

themselves, it is not disputed that Mr. Ehinger generally 

 6 
handled corporate staff issues for all CW employees and 

Mr. Sprigle was essentially in charge of operations at the 

Wood Ridge facility in New Jersey. App. at 181, 247. 

Discovery before the district court also yielded the 

following undisputed facts relating to the Plan's history. 

CW's post-retirement and health benefits plan was 

established, implemented, and administered without any 

formal board action other than a 1976 authorization of an 

undertaking to self-insure its health insurance plans and 

an adoption of a Trust Agreement in connection with that 

self-insurance. There is no written delegation of authority 

over Plan matters to any particular corporate officer, either 

by name or by title. On September 1, 1976, Mr. Ehinger 

executed a Plan Constitution as the general instrument 

governing welfare benefits, and thereby purported to create 

a CW retirement benefits Plan that complied with ERISA. 

The board took no part in this action, and its minutes are 

completely silent as to Plan matters until November 8, 

1990, when it sought to retroactively ratify the 1983 SPD 

amendment at issue. In 1978 and 1981, Plan amendments 

providing for an adjustment of health benefits had been 

made by certain managers working under Mr. Ehinger's 

direction. App. at 337-39. Again, corporate records do not 

show formal involvement by either the board or Mr. Berner 

with respect to these amendments. 

It is undisputed that Mr. Richard A. DuBois, the 

Corporate Manager for Benefits, and Mr. Aaron J. Carr, 

CW's labor counsel, initially drafted the 1983 SPD 

amendment providing for the termination of health benefits 

for a closed plant's retirees. Here the parties' accounts 

begin to diverge. CW contends, based on the deposition 

testimony of Mr. Ehinger and Mr. Sprigle, that Mr. Berner, 

the President, orally delegated the authority to deal with 

Plan matters to Mr. Ehinger. It further argues that Mr. 

Ehinger explicitly authorized Mr. DuBois and Mr. Carr to 

draft the necessary language in the SPD amendment which 

would provide for a termination of health benefits upon the 

closing of a CW plant. CW points to Mr. Ehinger's 

assertions in his deposition that he read the provision at 

issue and approved it pursuant to his authority over Plan 

administration. App. at 195-97. Plaintiffs, on the other 

 7 
hand, strenuously dispute in their briefs the testimony of 

Mr. Ehinger that he had intentionally amended the SPD 

based on an oral delegation of authority by Mr. Berner. 

Pointing to various alleged inconsistencies in Mr. Ehinger's 

deposition, plaintiffs emphasize that CW issued the SPD 

amendment without ever intending it to be a substantive 

change in policy. 

C. The District Court's Disposition on Remand 

Based on the record developed on remand, the district 

court considered the motions for summary judgment 

submitted by the plaintiffs and by CW. In initially

addressing the issue of authority, the court found, relying 

on its earlier opinion, that CW intended to amend the Plan 

in 1983 and did not, as plaintiffs argued, merely seek to 

clarify existing coverage.4 Second, the district court 

identified Mr. Berner as one who possessed the express 

authority to amend the SPD in 1983 based on its reading 

of the corporate by-laws. The court further observed that 

the corporation vested Mr. Ehinger with an implied 

authority to undertake such action because he had 

originally executed the Plan Constitution with the board's 

knowledge. Notably, however, the district court refused to 

find that Mr. Berner orally delegated authority to Mr. 

Ehinger, despite Mr. Ehinger's deposition to that effect, 

because there were "issues of credibility" which the court 

considered inappropriate for resolution at the summary 

judgment stage. Nevertheless, having concluded that Mr. 

Ehinger possessed the necessary authority to amend the 

SPD in 1983 based on the board's silence, the district court 

held that a genuine issue of material fact existed as to 

whether Mr. Ehinger actually approved the revised SPD 

provisions under his authority. Here, the court once again 

observed that the only support for Mr. Ehinger's actual 

_________________________________________________________________ 

4. Plaintiffs on appeal continue to press their argument that CW never 

intended to "amend" the Plan, but only sought to include this language 

as a "clarification" of existing coverage. We agree with the district 

court 

and find this issue settled by its initial finding, after a bench trial, 

that 

"the language ... providing for a termination of benefits in the event of 

a 

plant closing constituted an amendment of the plan, not a clarification 

of existing terms...." App. at 34. 

 8 
approval was his own testimony at deposition, which it also 

concluded would not constitute an appropriate basis for 

summary judgment because issues of credibility remained. 

Because the district court did not find that anyone at CW 

with authority to amend the Plan actually approved the 

SPD amendment, it addressed whether the doctrine of

ratification provided an appropriate alternative basis to 

hold the 1983 Plan amendment as a valid corporate act. 

Here, the district court concluded that the 1983 letter 

bearing Mr. Sprigle's name and on CW letter head served to 

ratify the revised SPD. Reasoning that Mr. Sprigle 

possessed the authority to act on behalf of the Wood Ridge 

facility, the letter to that plant's retirees advising them of 

the health benefits termination could be considered an 

authorized act on behalf of CW. Thus, the district court 

concluded that even if Mr. Carr and Mr. DuBois had revised 

the SPD without authority from Mr. Ehinger, Mr. Sprigle's 

subsequent actions constituted a valid corporate act 

ratifying the Plan amendment. 

Plaintiffs now appeal the district court's grant of

summary judgment in favor of CW. Our standard of review 

is plenary. Hozier v. Midwest Fasteners, Inc., 908 F.2d 

1155, 1158 (3d Cir. 1990). 

II. Authority 

As we have noted, the district court refused tofind, at 

the summary judgment stage, that any corporate officer 

with the appropriate authority actually authorized the 1983 

SPD amendment, despite CW's argument to the contrary. 

CW renews that same contention before us, which the

plaintiffs again oppose. 

In considering the issue of a valid amendment procedure 

under ERISA section 402(b)(3) -- amendment by "the 

Company" -- the Supreme Court held that principles of 

corporate law provide a ready-made set of rules for

identifying the natural persons authorized to make 

decisions on behalf of a company. Curtiss-Wright, 514 U.S. 

at 80. Thus, the Court's mandate requires us to determine 

whether there was compliance with Curtiss-Wright's valid 

amendment procedure, which necessarily entails a fact- 

 9 
intensive inquiry into "what persons or committees within 

Curtiss-Wright possessed plan amendment authority, either 

by express delegation or impliedly, and whether those 

persons or committees actually approved the new plan 

provision contained in the revised SPD." Id. at 85 (citing 2 

William M. Fletcher, Fletcher Cyclopedia of the Law of 

Private Corporations S 444, at 397-98 (perm. rev. ed. 

1992)). Indeed, as the Supreme Court emphasized, only 

natural persons make decisions and the issue now before 

us is whether, on the record, those persons who amended 

the SPD in 1983 acted with corporate authority so that the 

Plan's amendment is properly characterized as a valid 

corporate act or, to use the parlance of ERISA section 

402(b)(3), was an amendment by "the Company." 

A. Who Possessed the Authority to Amend the Plan? 

1. The Board's Authority to Amend the Plan and 

Delegate Plan Matters 

Because it is tacitly conceded that the board possessed 

the authority to amend the Plan, see Del. Code Ann.

S 141(a), but never actually undertook such an amendment, 

we pause to address the plaintiffs' argument that only the 

board of directors had authority to adopt amendments to 

the Plan in this case. The answer must be that unless 

otherwise provided by the certificate of corporation and 

subject to the limitations set forth in 8 Del. Code Ann. 

S 141(c), the board may freely delegate the authority to 

manage the business and affairs of the corporation. See 1 

R. Franklin Balotti & Jesse A. Finkelstein, The Delaware 

Law of Corporations & Business Organizations S 4.17, at 32 

(collecting cases). Indeed, the ability to delegate is the 

essence of corporate management, as the law does not 

expect the board to fully immerse itself in the daily 

complexities of corporate operation. See Grimes v. Donald, 

673 A.2d 1207, 1215 (Del. 1996) (The board "retains the 

ultimate freedom to direct the strategy and affairs of the 

Company."); Cahall v. Lofland, 114 A. 224, 229 (Del. Ch. 

1921) ("The duties of directors are administrative, and 

relate to supervision, direction and control, the details of 

the business being delegated to inferior officers, agents and 

 10 
employees. This is what is meant by management."); 1 

Balotti & Finkelstein, supra, S 4.17. The record does not 

suggest that the board's delegation of the administration or 

amendment of the Plan would violate CW's certificate of 

corporation or the specific prohibitions embodied in section 

141(c) of the Delaware code. 

Nor do we agree with the plaintiffs' assertion that the 

delegation of Plan matters, including its amendment, to a 

corporate officer or agent would necessarily constitute an 

abdication of managerial duties. The business decision of 

appointing a corporate officer to manage retirement health 

benefits for the corporation does not have the effect of 

"removing from directors in a very substantial way their 

duty to use their own best judgment on management 

matters." Abercrombie v. Davies, 123 A.2d 893, 899 (Del. 

Ch. 1956), rev'd on other grounds, 130 A.2d 338 (Del. 

Super. Ct. 1957). Moreover, nothing in the record 

demonstrates that a delegation of authority in this context 

would "formally preclude the ... board from exercising its 

statutory powers and fulfilling its fiduciary duty." Grimes, 

673 A.2d at 1214 (citation omitted). The board's 1976 

resolution with respect to the Plan's self-insurance 

illustrates this conclusion. Therefore, contrary to the 

plaintiffs' contentions, the board could freely delegate its 

authority to administer and amend CW's retirement 

benefits plan appropriately. 

2. Mr. Berner's Authority to Amend the Plan Pursuant 

to Board Delegation 

Beyond the board of directors, the corporation may 

validly act through its directors and officers as authorized 

corporate agents. In general, an officer's powers stem from 

the organic law of the corporation, or a board delegation of 

authority which may be express or implied. 2 William M. 

Fletcher, Fletcher Cyclopedia of the Law of Private

Corporations S 434, at 339 (perm. rev. ed. 1992). Express 

authority to act on behalf of the corporation is usually 

manifested through a statute, the certificate of corporation, 

the by-laws, or a board or shareholder action. Id. S 434, at 

339-40; Petition of Mulco Prods., 123 A.2d 95, 103 (Del. 

Super. Ct.), aff'd sub nom., Mulco Prods., Inc. v. Black, 127 

 11 
A.2d 851 (1956). Implied actual authority, which is express 

authority circumstantially proved, may be found through 

evidence as to the manner in which the business has

operated in the past, the facts attending the transaction in 

question, circumstantial evidence of board declarations 

surrounding the given transaction, or the habitual usage or 

course of dealing common to the company. 2 Fletcher, 

supra, S 437.2, at 353; Mulco, 123 A.2d at 103. Similarly, 

authority will be implied when it is reasonably necessary 

and proper to effectuate the purpose of the office or the 

main authority conferred.2 Fletcher, supra, S 434, at 340. 

Pursuant to these principles of corporate law, the 

undisputed facts show that Mr. Berner, the CEO and 

President of CW possessed the express authority to amend 

the Plan without the board's prior approval. The corporate 

by-laws, adopted by the board, affirmatively bestow on the 

CEO the authority to take "general and active control of 

[the corporation's] business and affairs," which specifically 

includes the power to fix employee compensation. App. at 

441-43. Delaware courts have held that attendant to this 

unqualified grant of authority, the president as general 

manager commands the power to "do anything the 

corporation could do in the general scope and operation of 

its business." Phoenix Finance Corp. v. Iowa-Wisconsin 

Bridge Co., 16 A.2d 789, 793 (Del. Super. Ct. 1940); see 

also Mulco, 123 A.2d at 104. It certainly follows that the 

broad power to fix employee compensation subsumes the 

authority to amend a specific type of compensation-- 

retirement health benefits governed by ERISA -- and logic 

would consequently dictate that the board expressly

approved the CEO's authority to create, administer, or 

amend CW's retirement plan. Indeed, Delaware courts have 

been receptive to this line of reasoning, and have generally 

upheld a general manager's action on behalf of the 

corporation unless it is "unusual" or "extraordinary." See 1 

Ernest L. Folk, Folk on the Delaware General Corporation 

Law S142.6, at 6-7 (3d ed. 1997). 

We once again pause to address plaintiffs' arguments 

against finding express authority vested in Mr. Berner 

pursuant to an express delegation by the board. Plaintiffs 

assert that although Mr. Berner expressly commands the 

 12 
authority to "fix employee compensation," the termination 

of medical benefits would be an "extraordinary" exercise of 

authority that would require explicit board approval. 

Plaintiffs do not point to any record support for this 

contention other than the allegation that it would be 

"outside the ordinary course of business" for the CEO to 

undertake such an action. This argument is unavailing 

particularly in view of the board mandate allowing the CEO 

to fix employee compensation and the complete absence of 

any suggestion that the board intended Plan amendments 

to be subject to its prior approval. In fact, the board 

adopted the by-laws well before the Plan's creation and 

acted in a manner perfectly consistent with the assumption 

that the Plan was valid. If the board had considered the 

Plan's creation as a reasonable act without its prior 

authorization, then surely the board would not have

considered the Plan's amendment to be so "extraordinary" 

that it was outside Mr. Berner's authority. 

3. Mr. Berner's Delegation Under His Authority 

As the record demonstrates, however, Mr. Berner did not 

amend the Plan, which leaves us with the necessity to 

decide whether another corporate officer or agent possessed 

the requisite amendatory authority. It is, of course, firmly 

established that an officer broadly charged with managing 

the affairs of a corporation impliedly possesses the 

authority to appoint subordinate agents under his control 

to act on behalf of the corporation. See 2 Fletcher, supra, 

S 503, at 598. Delaware is no stranger to this rule. See 8 

Del. Code S 122(5); 1 Balotti & Finkelstein, supra, S 4.17. 

Nevertheless, the power of delegation is not without limits, 

and the language of case law generally focuses on whether 

the delegated authority involves "ministerial" functions or 

acts that require "the exercise of discretion" by the subagent. See 2 Fletcher, supra, S 503, at 598. As the very 

term "management" connotes, however, corporate officers 

and subordinate agents must be afforded some level of 

discretion when faced with the demands of supervising a 

modern corporation. Thus, given the "necessities of the case 

and usage," corporate law recognizes that many 

"discretionary" acts will be carried out by officers and other 

 13 
subordinates. 1 Balotti & Finkelstein, supra, S 4.17, at 35 

(citing 2 Fletcher, supra, S 495, at 580); see also Kelly v. 

Bell, 254 A.2d 62, 72 (Del. Ch. 1969), aff'd, 266 A.2d 878 

(Del. 1970). The critical factors are often the complexity of 

the corporation, see Kelly, 254 A.2d at 72, the intent of the 

board, and the corporation's implied course of conduct. See 

1 Balotti & Finkelstein, supra, S 4.17, at 35 (citing 2 

William F. Fletcher, supra, SS 494-95). 

These principles of corporate law, when applied to the 

record before us, lead us to conclude that Mr. Berner 

properly delegated to Mr. Ehinger, one of CW's Executive 

Vice Presidents, the authority to amend the Plan. It is not 

disputed that CW is a large, complex corporation with 

operations well beyond its facilities in New Jersey. While 

plaintiffs assert that the power to amend the Plan was 

outside Mr. Berner's authority to delegate because it was 

not "routine," we do not find this to be the case. To be sure, 

the Plan's amendment required some level of discretion on 

Mr. Ehinger's part, but this would not defeat a proper 

delegation by Mr. Berner in view of his authority. The bylaws specifically vest Mr. Ehinger, as Executive Vice 

President, with the authority to "perform all such duties 

and exercise all such powers as may be provided by ... the 

President." App. at 443. Certainly, such a duty would 

include significant changes to the Plan's retirement health 

benefits and there is no indication on the record that the 

board limited the Vice President's authority to "routine" 

matters that would not include significant Plan 

amendments. Moreover, the prior course of dealings 

between Mr. Berner, Mr. Ehinger, and the board -- none of 

which are disputed by the plaintiffs -- all show that Mr. 

Berner and the board were well aware that Mr. Ehinger 

established and administered the current Plan. In light of 

these undisputed facts, we conclude that the validity of the 

Plan's amendment did not depend upon the prior express 

approval of Mr. Berner in his capacity as CW's President 

and CEO. 

The district court refused to find such a delegation of 

authority to Mr. Ehinger in fact at the summary judgment 

stage. It did so because, in its view, "issues of credibility" 

remain as to Mr. Ehinger's deposition testimony that he 

 14 
had received an oral authorization by Mr. Berner to manage 

employee benefits. We therefore face the inescapable issue 

of deciding whether there is a "genuine issue of material 

fact" surrounding the delegation of amendatory authority 

from Mr. Berner to Mr. Ehinger. Fed. R. Civ. P. 56(c). A fact 

is "material" if, under the substantive law of the case, it is 

outcome determinative. See Anderson v. Liberty Lobby, Inc., 

477 U.S. 242, 247-48 (1986). A "genuine" issue is one 

where a reasonable jury, based on the evidence presented, 

could hold in the nonmovant's favor with regard to that 

issue. Id. This formulation reflects the same standard as is 

applied in a directed verdict motion under Fed. R. Civ. P. 

50(a), where the court inquires whether reasonable minds 

may differ as to the verdict. Id. at 250. Once the moving 

party has demonstrated that there is no genuine issue of 

material fact, the nonmoving party must come forward with 

"specific facts showing that there is a genuine issue for 

trial." Fed. R. Civ. P. 56(e); Matsushita Elec. Indus. Co. v. 

Zenith Radio Co., 475 U.S. 574, 586 (1986). Where the 

record taken as a whole could not lead a rational trier of 

fact to find for the nonmoving party, there is no"genuine 

issue for trial." Id. (citation omitted). 

Notwithstanding this well settled law, federal courts have 

found difficulty in applying the summary judgment 

standard when faced with certain questions of credibility. 

See 10 Charles Alan Wright & Arthur R. Miller, Federal 

Practice and Procedure S 2726, at 115 (2d ed. 1983). It is 

by now axiomatic that "a nonmoving party ... cannot defeat 

summary judgment simply by asserting that a jury might 

disbelieve an opponent's affidavit to that effect." Williams v. 

Borough of West Chester, 891 F.2d 458, 460 (3d Cir. 1989) 

(citing Liberty Lobby, 477 U.S. at 256-57); see also Hozier 

v. Midwest Fasteners, Inc., 908 F.2d 1155, 1165 (3d Cir. 

1990). On the other hand, certain scenarios may arise 

where a material fact cannot be resolved without weighing 

the credibility of a particular witness or individual -- such 

as when the defendant's liability turns on an individual's 

state of mind and the plaintiff has presented circumstantial 

evidence probative of intent. Williams, 901 F.2d at 460. In 

such a case, we have said that summary judgment is 

inappropriate because there is a sufficient quantum of 

evidence on either side for reasonable minds to differ and 

 15 
therefore the issue is "genuine." Id. at 461; see also Hozier, 

908 F.2d at 1165 ("[N]othing in Rule 56 prevents [the 

nonmoving party] from creating a genuine issue of material 

fact by pointing to sufficiently powerful countervailing 

circumstantial evidence."). Indeed, the Advisory Committee 

notes to the federal rules mirror this result. See Advisory 

Committee Notes, 1963 Amendment to Fed. R. Civ. P. 56(e). 

But, as the Advisory Committee notes also indicate, it is 

important to emphasize that issues of credibility only defeat 

summary judgment "[w]here an issue of material fact

cannot be resolved without observation of the demeanor of 

witnesses in order to evaluate their credibility." Id. 

(emphasis added). By logical implication from this rule, if a 

moving party has demonstrated the absence of a genuine 

issue of material fact -- meaning that no reasonable jury 

could find in the nonmoving party's favor based on the 

record as a whole -- concerns regarding the credibility of 

witnesses cannot defeat summary judgment. Instead, the 

nonmoving party must "present affirmative evidence in 

order to defeat a properly supported motion for summary 

judgment." Liberty Lobby, 477 U.S. at 256-57 (citation 

omitted). Thus, summary judgment is particularly 

appropriate where, notwithstanding issues of credibility, the 

nonmoving party has presented no evidence or inferences 

that would allow a reasonable mind to rule in its favor. In 

this situation, it may be said that the record as a whole 

points in one direction and the dispute is not "genuine." 

Matsushita, 475 U.S. at 586. 

The record here is replete with evidence showing that Mr. 

Berner had in fact orally delegated the authority to amend 

and administer the Plan to Mr. Ehinger, even apart from 

Mr. Ehinger's own testimony to that effect. Mr. Sprigle, 

CW's other Executive Vice President, testified under oath 

that based on his experience in the corporation Mr. Berner 

had divided responsibilities among Vice Presidents and that 

Mr. Ehinger was delegated matters relating to human

resources and plan administration. App. at 249. Similarly, 

Mr. Carr, the corporation's labor counsel, submitted an 

affidavit showing that he always understood Mr. Ehinger to 

command operating authority with respect to Plan 

amendments, based on a delegation from Mr. Berner. App. 

at 420. Moreover, it is undisputed that both the human 

 16 
resources department and welfare benefits group reported 

directly to Mr. Ehinger and not to Mr. Berner. App. at 109- 

10. It is also not disputed that Mr. Ehinger had previously 

amended the Plan and reported to Mr. Berner about Plan 

administration. App. at 207. 

Against all these affidavits, deposition testimony, and 

undisputed facts, the plaintiffs, who would bear the burden 

of proof on this issue at trial,5 have not set forth even the 

slightest quantum of evidence or reasonable factual

inference to support a jury finding that Mr. Ehinger had no 

authority to amend Plan benefits. Nor does the record 

reflect any reasonable inference, whether through 

circumstantial evidence or otherwise, that Mr. Ehinger did 

not act under Mr. Berner's oral delegation of authority. 

While the plaintiffs argue that the absence of a written 

delegation creates an inference against authority, corporate 

law clearly allows for oral delegations of authority, see 2 

Fletcher, supra, S 444, at 398 (citing Hessler, Inc. v. Farrell, 

226 A.2d 708 (Del. 1967)), and the plaintiffs have offered no 

reason why this lack of writing would seem suspicious. As 

a result, we conclude that plaintiffs did not raise a 

"genuine" issue as to the delegation of authority, even on 

an implied basis, to Mr. Ehinger regarding Plan 

amendments.6 The district court's conclusion that the 

_________________________________________________________________ 

5. As CW correctly points out, because plaintiffs seek affirmative relief 

in 

this action, they must establish the invalidity of the amendment in 1983 

under both ERISA law, see Hozier, 908 F.2d at 1163, and under general 

corporate law. See 2 Fletcher, supra, S 437.3. 

6. We recognize that in certain situations discovery for a nonmoving 

party may be particularly difficult where the party seeking summary 

judgment has exclusive possession of all the material facts, thereby 

diminishing the nonmovant's ability to show a genuine issue. See, e.g., 

10A Charles Alan Wright & Arthur R. Miller, Federal Practice and 

Procedure S 2740, at 536-37 (2d ed. 1983); 6 James W. Moore, Moore's 

Federal Practice S 56.24, at 796 (2d ed. 1996). The plaintiffs have never 

contended, however, that they faced such a problem during any 

discovery phase of litigation. Cf. Fed. R. Civ. P. 56(f) (allowing a 

district 

court to, among other things, "refuse application for judgment" if it 

appears "from the affidavits of a party opposing the motion that the 

party cannot for reasons stated present by affidavit facts essential to 

justify the party's opposition"). Indeed, we note that the plaintiffs 

 17 
evidence of delegated authority to Mr. Ehinger by Mr. 

Berner consisted solely of Mr. Ehinger's testimony is too 

narrow a view, based not only on the evidence in the 

record, but also on the realities of modern corporations and 

applicable corporate law. 

B. Did the Persons with the Necessary Authority 

 Actually Approve the Amended Plan? 

Having identified the persons with the necessary 

authority to amend CW's retirement benefits Plan, we must 

decide whether a person so situated actually exercised that 

authority in 1983. The record, as described above, shows 

that the analysis must focus on the authority delegated to 

Mr. Ehinger in his capacity as the corporation's Executive 

Vice President. We now turn to that record. 

It is not disputed that Mr. DuBois, the Corporate 

Manager for Benefits, and Mr. Carr, CW's labor counsel, 

initially drafted the 1983 SPD amendment at issue 

providing for the termination of health benefits for a closed 

plant's retirees. As the parties agree, it is quite clear that if 

Mr. DuBois and Mr. Carr acted without the specific 

authorization of Mr. Ehinger, then the SPD amendment, 

without more, cannot be considered a valid corporate act 

on any delegation theory. The question then is primarily 

factual in nature -- did Mr. Ehinger actually authorize the 

amendment to the Plan in 1983 terminating benefits? Once 

again, the district court denied summary judgment to CW 

on this question because, in its view, "the only evidence in 

the record on this issue is the deposition testimony of 

Ehinger [and] questions of credibility remain." 

_________________________________________________________________ 

exercised their right to cross-examine most material witnesses during 

their depositions. Consequently, the defendant was entitled to summary 

judgment in its favor notwithstanding the "desire... for an opportunity 

to cross examine the [defendant's] witnesses in the hope of turning up 

something ..., at least in the absence of a showing, such as is 

contemplated by Rule 56(f), that all of the facts were necessarily within 

the exclusive knowledge of the plaintiffs and not accessible to the 

defendants." United States ex rel. Kolton v. Halpern, 260 F.2d 590, 591 

(3d Cir. 1958) (Maris, J.). 

 18 
We reiterate at the outset that the burden of showing the 

unauthorized nature of the SPD amendment falls squarely 

on the plaintiffs. See Hozier v. Midwest Fasteners, Inc., 908 

F.2d 1155, 1163 (3d Cir. 1990). In support of its motion for 

summary judgment, CW points to Mr. Ehinger's testimony 

that he approved the SPD termination language during its 

drafting. App. at 207-208. In addition to the deposition 

testimony of Mr. Ehinger, Mr. Carr also submitted an 

affidavit that Mr. Ehinger approved the decision to

terminate benefits. App. at 421. Further, it is not disputed 

that the decision to amend the Plan was the result of 

similar issues raised by litigation that occurred over the 

earlier closing of CW's Marquette facility in Cleveland. App. 

35. Indeed, plaintiffs do not deny that Mr. Ehinger and the 

benefits group played a significant role in that litigation and 

anticipated a change in the present Plan description to 

avoid future litigation. App. at 115. 

Against this evidence, plaintiffs point to only two relevant 

instances in the record which they claim would allow a 

reasonable jury to conclude in their favor and therefore 

render the issue genuine. First, plaintiffs again emphasize 

that there is no documentation -- whether a memorandum, 

resolution, or otherwise -- reflecting Mr. Ehinger's actual 

exercise of authority. As we have stated before, however, 

the law recognizes an oral delegation or exercise of 

authority, which may be proved by parol evidence. See, e.g., 

2 Fletcher, supra, S 444, at 398 (citing Hessler, Inc. v. 

Farrell, 226 A.2d 708 (Del. 1967)); Restatement (Second) of 

Agency SS 26, 33 (1958). Thus, while we agree that CW's 

record keeping is not a paragon of desirable corporate 

practice, the plaintiffs have offered no reason why the 

absence of documentation, when the law requires none, 

should be subject to suspicion or provide a basis for a 

reasonable inference in their favor, particularly in view of 

the corporation's established practices to the contrary. Cf. 

Ansin v. River Oaks Furniture, Inc., 105 F.3d 745, 755 (1st 

Cir. 1997) (where a transaction would ordinarily leave a 

"heavy paper trial," an inference of fact arises from a 

"complete absence of contemporaneous documentation"); 

Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155, 1165-66 

(3d Cir. 1990) (where a memorandum written in 

contemplation of a merger does not include a new ERISA 

 19 
benefits schedule, a factual inference is created because the 

author had personal knowledge of the transaction and the 

omission seemed "odd" from the circumstances of the case). 

But on the undisputed evidence of CW's corporate practice, 

we conclude that the absence of record documentation 

reflecting the nature and exercise of Mr. Ehinger's authority 

is not sufficiently probative that it provides, without more, 

a basis for a reasonable inference in favor of the plaintiffs. 

Plaintiffs also point to Mr. Ehinger's deposition testimony 

in 1986 where he stated: 

 It had been the policy of the Curtiss-Wright 

 Corporation, which was put in practice in closing the 

 East Paterson facility in 1971 ... [and] the Marquette 

 facility, that post-retirement insurance would terminate 

 at the closing of the facility. 

 I expected my personnel to reflect such policy in 

 such documents. I did not myself read the individual 

 policies or question them where does it say what in it. 

App. at 136 (emphasis added by plaintiffs). Plaintiffs argue 

that Mr. Ehinger's admission of not having read the

individual benefits policies supports their contention that 

he did not specifically authorize the Plan amendment in 

1983. We believe plaintiffs' conclusion is a non sequitur. 

Simply because Mr. Ehinger did not read the individual 

retirement health benefits policies does not mean that he 

did not authorize the change in the language of the

amendment. In fact, Mr. Ehinger specifically states that he 

"expected [his] personnel to reflect such[a] policy in [the] 

documents," which at least raises an inference that he 

authorized any changes in the Plan that would conform to 

his expectations. Id. We therefore do notfind this 

deposition testimony to create a genuine issue of material 

fact in the plaintiffs' favor. 

Beyond these two arguments, which lack merit, plaintiffs 

do not identify any other instance in the record developed 

on remand that would render the question of Mr. Ehinger's 

exercise of authority a "genuine" dispute. This is not a case 

where a material issue of fact "cannot be resolved without 

observation of the demeanor of witnesses in order to 

evaluate their credibility." Advisory Committee Notes to Fed. 

 20 
R. Civ. P. 56(e). The record points in but one direction and, 

as a result, summary judgment for CW was proper. 

III. Ratification 

In view of our conclusions, we need not address the

district court's reliance on the doctrine of ratification and 

its application to this case.' 

IV. Conclusion 

For the aforementioned reasons, the judgment of the

district court in Curtiss-Wright's favor will be affirmed. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 21