Opinion ID: 510248
Heading Depth: 2
Heading Rank: 3

Heading: Is Resistoflex Equitably Estopped from Asserting the 180-day Limitations Period?

Text: 35 Clark draws his equitable estoppel argument from Felty v. Graves-Humphreys, 785 F.2d 516 (4th Cir.1986). There, the employee was arguably induced to refrain from communicating with an attorney or the EEOC as a quid pro quo for the employer's promise of generous severance benefits. Id. at 519-20. Given these facts, the Fourth Circuit held that equitable tolling of the filing period was unwarranted because the employee knew of his ADEA rights at the time of his termination. However, the court reversed summary judgment for the employer on ground that the district court had failed to recognize that a material question of equitable estoppel was also raised on the facts presented. Id. 4 36 On remand, the district court in Felty conducted an evidentiary hearing, on the basis of which it reinstated summary judgment. Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1128 (4th Cir.1987). When the case was then appealed for a second time, the Fourth Circuit affirmed, describing the level of employer culpability required to trigger equitable estoppel in terms of a recklessness standard: The doctrine may properly be invoked when the employee's untimeliness in filing his charge results from either the employer's deliberate design to delay the filing or actions that the employer should unmistakeably have understood would result in the employee's delay. Id. 37 We hold that Clark's summary judgment evidence clearly raises a fact issue under this test. The March 12 termination letter provides for some $44,000.00 in severance benefits to be paid out over 5 1/2 months, or approximately 170 days. As a condition of receipt thereof, Clark agreed not to disclose proprietary information belonging to Resistoflex. In a subsequent paragraph, the letter also contained the following admonition: 38 This Agreement may be terminated at any time by UniDynamics should you violate your obligations thereunder or take any action, by word or deed, which would be derogatory or detrimental to or otherwise prejudicial to the interests of UniDynamics, its divisions [i.e., Resistoflex] or subsidiaries. [Emphasis added.] 39 In his affidavit Clark testified--and we hold that a reasonable trier of fact could believe--that the above-quoted admonition deterred him from filing suit or from seeking legal advice until June 1985. A reasonable trier of fact could also conclude that Resistoflex, by design or with a clear understanding of the consequences, worded the severance agreement in such a way as to deter Clark from asserting his ADEA rights, and thus, from seeking legal advice for that purpose. 5 40 In granting summary judgment, the district court construed the word or (emphasized in the above-quoted admonition) in an explicative sense: The entire passage introduced by or is read as merely rephrasing Resistoflex's right to terminate Clark's severance pay if he violated his obligations under the severance agreement. In a preceding paragraph of the agreement is the company's prohibition against Clark's use of proprietary information. Thus, the district court maintains that the admonition, when read in the light of the previous paragraph[,] clearly refers to the dissemination of information by the plaintiff which would injure the company. 41 We disagree, based upon a disjunctive reading of the word or. As we have stated, it would hardly be unreasonable for a trier of fact to infer from the same language that Resistoflex intended that Clark refrain from taking any detrimental action against the company, including the filing of a lawsuit. We note, moreover, that this is not a typical contract action where the court's function is to construe the parties' agreement as a question of law. No one here is seeking to enforce the severance agreement.III. The ERISA Claim. 42 Section 510 of ERISA prohibits employer action against an employee who participates in a pension benefit plan for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan. 29 U.S.C. Sec. 1140. To recover under section 510, a plaintiff need not show that the sole reason for his [or her] termination was to interfere with pension rights; however, the plaintiff must show that the employer had the specific intent to violate ERISA. Gavalik v. Continental Can Co., 812 F.2d 834, 851 (3d Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 495, 98 L.Ed.2d 492 (1987) (emphasis in original; citations omitted). 43 This appeal raises the question of whether an employee, fully vested in a retirement plan, can state a claim under section 510 of ERISA by demonstrating that the employer took action calculated to prevent accrual of additional retirement benefits under the vested plan. The district court answered negatively and further concluded that, assuming arguendo the validity of such a claim, Clark has failed to raise a fact issue as to whether the motive for his discharge was to interfere with his attainment of enhanced pension benefits. 44 Clark urges us to adopt a liberal reading of the statutory language any right, contending that section 510 protects a plan participant from interference with the attainment of a right to increased benefits irrespective of whether the participant's right to some amount of benefits is already vested. Clark's benefits under the plan would have increased by one and one-half percent (1 1/2%) for each additional year of employment. Resistoflex, conversely, contends that section 510 protects only employees whose benefits have not yet vested. 45 This purely legal question raised by the parties is one of first impression in this circuit. The Seventh Circuit addressed it in Kross v. Western Elec. Co., 701 F.2d 1238 (7th Cir.1983). Kross reversed summary judgment which had been based upon the theory that once an employee has qualified for participation in an insurance plan, the employee can attain no increased right under section 510. As the Seventh Circuit noted: 46 There is no evidence that Congress intended ERISA to afford less protection to senior employees than that enjoyed by probationary or junior employees who have not qualified for coverage under particular employee benefit plans. Certainly, Congress did not enact ERISA with the intent to negate the long established practice of affording greater benefits and protections to those employees who have more seniority in time of service with the company than to junior employees. Accordingly, we reject the district court's unsupported and narrow interpretation of Sec. 510. Id. at 1243. 6 47 In opposition, Resistoflex points to the Sixth Circuit's statement in West v. Butler, 621 F.2d 240, 245 (6th Cir.1980), that [t]he legislative history [of Sec. 510 of ERISA] reveals that the [statute's] prohibitions were aimed primarily at preventing unscrupulous employers from discharging or harassing their employees in order to keep them from obtaining vested pension rights. As we read this passage, however, the qualifying word primarily leaves room for a construction that extends section 510 protection to vested employees as well. 48 In addition, the holding of West v. Butler is not to the contrary. There, the plaintiffs were pension fund trustees who sought to enjoin picketing that prevented coal miners from earning wages otherwise used to fund the pension plan. The Sixth Circuit held that section 510 did not support such a claim, and used ERISA's legislative history to clarify the distinction between the nonemployer interference at issue in West and employer interference proscribed by ERISA. West does not hold that section 510 protects only employees whose pension rights have not vested. 49 Nevertheless, even if we were to read section 510 as supporting Clark's claim for his alleged loss of an opportunity to enhance his vested pension rights--an issue which we need not decide today--the inference from facts he adduces as to the company's specific intent to violate ERISA is speculative and, hence, fails to raise a fact question precluding summary judgment. Clark's main contention is that Resistoflex will realize certain economies by not having to pay him the larger pension he would receive upon retirement at a later date. He also contends his discharge was pretextual, based upon his old time salesman's image. 50 A party against whom summary judgment is sought cannot raise a fact issue simply by asserting a cause of action to which state of mind is a material element. There must be some indication that he can produce the requisite quantum of evidence to enable him to reach the jury with his claim. Hahn v. Sargent, 523 F.2d 461, 468 (1st Cir.1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976). 51 Here, it is undisputed that no benefits previously earned by Clark will be forfeited by reason of his discharge. Thus, regardless of whether the discharge was arbitrary, its impact upon retirement benefits was only incidental--the resulting loss was simply that which would result from any discharge. It follows, then, that where the only evidence that an employer specifically intended to violate ERISA is the employee's lost opportunity to accrue additional benefits, the employee has not put forth evidence sufficient to separate that intent from the myriad of other possible reasons for which an employer might have discharged him. 7 Accordingly, the district court properly dismissed Clark's ERISA claim by summary judgment. 52