UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

JACQUES E. MCCORMACK, 

Plaintiff-Appellee,

v.

COMPUTER SCIENCES CORPORATION;  No. 03-2095

POLICY MANAGEMENT SYSTEMS

CHANGE IN CONTROL SEVERANCE PAY

PLAN FOR SELECT EMPLOYEES,

Defendants-Appellants. 

Appeal from the United States District Court

for the District of South Carolina, at Columbia.

Cameron McGowan Currie, District Judge.

(CA-01-3009-3)

Argued: February 25, 2004

Decided: April 29, 2004

Before NIEMEYER, LUTTIG, and WILLIAMS, Circuit Judges.

Affirmed in part, reversed in part by unpublished opinion. Judge Niemeyer wrote the opinion, in which Judge Luttig and Judge Williams

joined. 

COUNSEL

ARGUED: Mason Gardner Alexander, Jr., ELLZEY & BROOKS,

L.L.C., Charlotte, North Carolina, for Appellants. Henry Scarborough

Knight, Jr., CONSTANGY, BROOKS & SMITH, Columbia, South
Carolina, for Appellee. ON BRIEF: C. Frederick W. Manning, II,

ELLZEY & BROOKS, L.L.C., Charlotte, North Carolina, for Appellants. 

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c). 

OPINION

NIEMEYER, Circuit Judge: 

Following the December 2000 merger of Policy Management Systems Corporation ("PMSC") and Computer Sciences Corporation

("Computer Sciences"), Jacques McCormack, an officer of PMSC,

terminated his employment by reason of a change in control of PMSC

and claimed severance benefits available to him in such circumstances. He also claimed a bonus under a stock plan. While Computer

Sciences tendered a severance payment to McCormack, McCormack

disputed the amount, as well as Computer Sciences’ refusal to tender

any benefit under the stock plan. 

Because the parties were unable to resolve their differences

through internal procedures, McCormack commenced this action for

(1) the larger severance payment to which he claimed entitlement and

(2) a stock bonus under the stock plan. Following a bench trial, the

district court awarded McCormack $359,550 in additional severance

pay, plus interest and attorneys fees. It also determined that McCormack was entitled to the stock bonus. 

On this appeal, we affirm the district court’s judgment insofar as

it awards severance benefits to McCormack, but we reverse its award

of bonus stock to McCormack. Our reasons follow. 

I

McCormack began his employment with PMSC in 1997 as a

Senior Vice President and Controller of the company, and he became

2 MCCORMACK v. COMPUTER SCIENCES CORP.
a participant in the company’s "Change in Control Severance Pay

Plan" ("Severance Plan"). The purpose of the Severance Plan was to

provide qualifying employees with severance benefits in the event

that the employees suffered a constructive termination by PMSC as

a result of a change in control of the company. Among other benefits,

the Severance Plan provided three components for calculating an eligible employee’s severance. First, paragraph 7(i) provided that an

employee would receive three times his annual base salary at the time

of termination. Second, paragraph 7(ii) provided that the employee

would receive three times the greater of his target bonus for the year

of termination or the actual bonus he had received during the previous

year. Finally, paragraph 8(c)(ii) provided that the employee was entitled to the greater of the accrued annual bonus for the year of termination or a pro-rata amount of the target bonus for the period of such

year through the date of termination. 

McCormack also became a participant in PMSC’s Restricted Stock

Ownership Plan ("RSOP"). The RSOP required that participating

executives own an amount of company stock consistent with an individualized annual guideline target. If an executive did not reach his

target, one-half of his annual bonus was paid in the form of restricted

company stock. In addition, under the RSOP, an executive would

receive a stock "uplift," which amounted to additional stock equal to

25% of his bonus. 

PMSC did not pay any bonuses in 1999. But in 2000, it targeted

McCormack’s bonus at $76,125, amounting to 35% of his $217,500

salary. The record contains no evidence that an actual bonus for

McCormack for 2000 was ever calculated. 

During the summer of 2000, PMSC entered into an agreement to

merge with Computer Sciences, and the merger was consummated on

December 27, 2000, when Computer Sciences purchased all of

PMSC’s outstanding stock. The closing of the merger constituted a

"change in control," as defined in the Severance Plan, and amounted

to a constructive termination event upon which participants in the

Severance Plan could act to terminate their employment and receive

benefits. The consummation of the merger, however, ended the

RSOP. 

MCCORMACK v. COMPUTER SCIENCES CORP. 3
On December 29, 2000, two days after the merger, McCormack

wrote Pete Boykin, the President of Computer Sciences, and notified

him that the acquisition of PMSC worked a "change in control,"

which, under the Severance Plan, constituted a "constructive termination event." McCormack further informed Boykin: 

[T]his letter is provided solely to establish and preserve my

rights under the Plan, by notifying you that I consider the

above described "constructive termination event" to have

terminated my employment effective December 27, 2000.

Without waiving any of my rights under the Plan I am

pleased to provide services during the thirty day cure period

set forth in the plan. 

McCormack made himself available, as promised, and continued to

assist Computer Sciences in the transition. On January 11, 2001,

Computer Sciences advised McCormack that his services would no

longer be needed beyond January 19, 2001. 

On February 1, 2001, Computer Sciences tendered McCormack a

check in the sum of $879,550, which it claimed fully satisfied its obligation to McCormack under the Severance Plan. McCormack disputed the amount of the severance payment, stating that it was

miscalculated under the terms of the Severance Plan. McCormack

noted that because he was constructively terminated on December 27,

2000, his severance payment should have been computed on the following basis: three times his annual salary, per paragraph 7; plus three

times his targeted 2000 bonus, per paragraph 7(ii); plus a pro-rata portion of his 2000 targeted bonus, per paragraph 8(c)(ii). Instead, Computer Sciences had taken the position that McCormack was

terminated on January 19, 2001 and therefore that his severance payment should be calculated with respect to the 19 days that McCormack had worked in 2001, not the 360-odd days that McCormack had

worked in 2000. McCormack also disputed the fact that Computer

Sciences provided no benefit under the RSOP. 

Because the parties were unable to resolve their differences,

McCormack commenced this action against Computer Sciences under

the Employee Retirement Income Security Act of 1974 ("ERISA") for

benefits to which he claimed he was entitled. See 29 U.S.C.

4 MCCORMACK v. COMPUTER SCIENCES CORP.
§ 1132(a)(1)(B) (affording participants in a qualified plan a private

right of action to enforce their rights under the plan). In the course of

the proceedings, the parties stipulated that Computer Sciences’ acquisition of PMSC worked a "change in control" on December 27, 2000,

and that, because McCormack suffered a material reduction in his

responsibilities and authority, he had experienced a "constructive termination event." The parties continued to dispute, however, whether

McCormack’s termination occurred on December 27, 2000, as he

claimed in his December 29 letter to Computer Sciences, or on January 19, 2001, as claimed by Computer Sciences when it indicated it

would no longer need his services. 

The district court determined that McCormack was entitled to date

his constructive termination as of December 27, 2000. It also ruled

that, because the RSOP’s lapse occurred simultaneously with the

"constructive termination event," McCormack was entitled to the "uplift" bonus of stock under the RSOP. The court included in its judgment a monetary award in favor of McCormack in the amount of

$359,557.60 in unpaid severance benefits, $127,482.24 in interest,

and $123,096.27 for attorneys fees. 

This appeal followed. 

II

We review a district court’s interpretation of an ERISA plan de

novo and its findings of fact for clear error. See Johannssen v. Dist.

No. 1 - Pac. Coast Dist., MEBA Pension Plan, 292 F.3d 159, 168 (4th

Cir. 2002). 

The issue on the claim for Severance Plan benefits reduces to the

question of whether McCormack’s employment with Computer Sciences terminated in December 2000, when he sent his notice of termination to Computer Sciences, or on January 19, 2001, when Computer

Sciences no longer needed McCormack’s services, as it had stated on

January 11, 2001. For the reasons that follow, we conclude that

McCormack’s letter of December 29 effectively terminated his

MCCORMACK v. COMPUTER SCIENCES CORP. 5
employment and that that termination date provided the date for computing McCormack’s severance benefits.*

The Severance Plan provides unequivocally that severance benefits

are payable, based on the date of a "covered termination": 

The severance payment to be made shall be paid to the Eligible Employee in a single lump sum cash payment, net of

any required tax withholding, within fifteen (15) calendar

days after the date of the Eligible Employee’s Covered Termination. 

Severance Plan, ¶ 7 (emphasis added). McCormack asserts that the

termination effected by his December 29 letter was a "covered termination" and that severance benefits therefore are payable within 15

days after that date. Computer Sciences, however, contends that

McCormack continued working after December 29 and that he was

not terminated until January 19, 2001, when the company told him his

services would no longer be needed. In addition, Computer Sciences

argues that even if the December 29 date were used, the effective date

of a covered termination must be pushed back 30 days after the

notice-of-termination date in order to permit Computer Sciences to

"cure" the facts giving rise to the covered termination — in this case,

a change of control. In essence, Computer Sciences argues that the

30-day cure period postpones the date from which severance payments are computed because only after the 30-day period can it be

concluded that a termination was a "covered termination." 

While Computer Sciences’ position is not frivolous, we believe that

the better reading holds that the cure period established in the Severance Plan is a condition subsequent that determines whether a "constructive termination event" qualifies to make the employee’s

termination a "covered termination." In providing a cure period, how-

*The district court found that McCormack’s termination was on

December 27, the date on which McCormack said his termination was

effective. Because McCormack did not give notice of termination until

December 29 and because the constructive termination event of December 27 was not self-actuating, however, we conclude that McCormack’s

employment terminated on December 29. 

6 MCCORMACK v. COMPUTER SCIENCES CORP.
ever, the Severance Plan does not purport to change the actual date

of termination. Paragraph 7 says that benefits are payable 15 days

after the date of a covered termination. A "covered termination" is a

defined term, to which paragraph 6 of the Severance Plan is devoted.

Consequently, whatever is written in paragraph 6 determines whether

the employee’s termination was a "covered termination," but it does

not, for purposes of the severance payment provided by paragraph 7,

change the "date" from which severance payments are payable. 

Under paragraph 6 of the Severance Plan, a termination is a "covered termination" if it follows a "constructive termination event," and

a "constructive termination event" is defined as, among other things,

a "material reduction in an Eligible Employee’s title, position, reporting relationship, responsibilities or authority." In order for a "constructive termination event" to be treated as one under paragraph 6,

the employer must have a 30-day period within which to cure the

events giving rise to a "constructive termination event" — in this

case, the change in McCormack’s authority. Only after the cure

period has been allowed may the "constructive termination event" be

"treated" as a "constructive termination event" for purposes of qualifying a termination as a "covered termination," and, consequently, not

until 30 days have elapsed can one know whether a termination qualifies as a "covered termination." But waiting this 30-day period does

not postpone the date of the termination that an employee has posited

as a "covered termination." It is only a condition subsequent that must

be fulfilled before the original "constructive termination event" can be

"treated" as one. 

In the facts of this case, the merger between PMSC and Computer

Sciences on December 27, 2000 was a "constructive termination

event," and the parties have so stipulated. McCormack’s letter of

December 29, 2000 was a termination of his employment which he

posited as a "covered termination" because it followed a "constructive

termination event." Accordingly, under paragraph 7 of the Severance

Plan, he would be entitled to severance pay as of that notice letter if

it turned out that he was correct that his termination was a "covered

termination." Because a constructive termination event could not be

"treated" as one until the 30-day cure period elapsed, McCormack

could not know on December 29 whether his termination was a covered termination. But by the end of January 2001, when the 30-day

MCCORMACK v. COMPUTER SCIENCES CORP. 7
cure period elapsed, he was able to know that his termination on

December 29 was a "covered termination." Nothing in paragraph 6 of

the Severance Plan, describing how a termination qualifies as a covered termination, purports to state that McCormack is denied the benefit of the termination date that was established by his letter of

termination. Because his letter of December 29 terminated his

employment, which by the passage of time could be treated as a covered termination, McCormack became entitled to severance benefits

from December 29, not from some date in January 2001. 

Accordingly, we affirm the district court’s judgment insofar as it

awards McCormack severance benefits. 

III

Computer Sciences argues that even if it owes severance benefits

as of December 29, 2000, it has no liability under the RSOP because

that plan ended when all of the PMSC stock was acquired by Computer Sciences on December 27, 2000. We agree. With the termination of the RSOP in the merger documents and the transfer of all of

PMSC’s stock to Computer Sciences, the plan no longer existed and

could no longer function. 

Accordingly, we reverse the district court’s judgment insofar as it

awards benefits under the RSOP. 

AFFIRMED IN PART, REVERSED IN PART

8 MCCORMACK v. COMPUTER SCIENCES CORP.