Court Opinion

ID: 1008048
Source: CourtListenerOpinion
Date Created: 2013-07-04 19:34:37.425106+00
Date Added: 2024-06-11T09:28:40.840203
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

JOHN S. CARR,                           
                 Plaintiff-Appellant,
                 v.
PHILIPS ELECTRONICS NORTH AMERICA              No. 01-2510
CORPORATION, d/b/a Philips Lighting
Company,
                Defendant-Appellee.
                                        
            Appeal from the United States District Court
     for the Northern District of West Virginia, at Clarksburg.
              Irene M. Keeley, Chief District Judge.
                          (CA-00-215-1)

                       Argued: June 4, 2002

                      Decided: July 19, 2002

   Before WILKINSON, Chief Judge, WILKINS, Circuit Judge,
  and Joseph R. GOODWIN, United States District Judge for the
    Southern District of West Virginia, sitting by designation.

Affirmed by unpublished per curiam opinion.

                            COUNSEL

ARGUED: Robert Milton Bastress, Jr., Morgantown, West Virginia,
for Appellant. Larry Joseph Rector, STEPTOE & JOHNSON,
P.L.L.C., Clarksburg, West Virginia, for Appellee. ON BRIEF: Cyn-
thia B. Jones, STEPTOE & JOHNSON, P.L.L.C., Clarksburg, West
Virginia, for Appellee.
2            CARR v. PHILIPS ELECTRONICS NORTH AMERICA
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                              OPINION

PER CURIAM:

   When Paul Helmick, a maintenance machinist at Philips Lighting
Company (Philips), went on disability leave, another Philips
employee, John Carr, replaced him. When Helmick returned to work,
Carr applied to be transferred to a job paying 18% less. He also
applied for a layoff and for Layoff Income and Benefits (LIB) under
Philips’s benefits plan (the Plan). Pursuant to its LIB plan, Philips
refused his lay off and benefits request because he did not meet the
Plan’s eligibility requirements. Applying a modified abuse of discre-
tion standard, the district court granted summary judgment. Carr
appeals on the grounds that (1) the court should have used a de novo
standard to review the plan administrator’s decision, (2) the court
misinterpreted the Plan’s LIB eligibility provisions, and (3) the court
erred by refusing to admit extrinsic evidence. For the reasons that fol-
low, we affirm.

                                   I.

   Philips and Local 627 of the International Union of Electronic,
Electrical, Technical, Salaried Machine and Furniture Workers, AFL-
CIO (the Union) are parties to a Pension and Insurance Agreement
(PIA) that outlines various benefits available to "eligible" Philips
employees, including LIB benefits. Article IV § 5(a) of the PIA
defines eligibility for LIB benefits, and provides that an employee
may become eligible in one of two ways. Subsection 1 makes eligible
certain employees who are laid off involuntarily through no fault of
their own due to lack of work occasioned by "reasons associated with
the business . . . ." PIA Art. IV § 5(a)(1). Subsection 2 makes eligible
certain employees who, in accordance with the Decrease in Working
Force Procedure in the Collective Bargaining Agreement (CBA),
elect to be laid off rather than being placed in jobs that would pay
them 10% less than their current jobs. PIA Art. IV § 5(a)(2); CBA
             CARR v. PHILIPS ELECTRONICS NORTH AMERICA                 3
§ XI(K-M). The Decrease in Working Force Procedure calls for
employees to be laid off "[w]hen there is a definite reduction in the
production schedule for a work group or section . . . ." CBA § XI(K).

   When Helmick went on disability leave, Carr replaced him. When
Helmick returned to work, Philips had to move an employee out of
the maintenance department. Carr alleges that, to make room, Philips
surveyed workers in the maintenance department in order of seniority
to determine if any of them wanted to "bid out" of the department and
transfer to an open job in another department. Carr exercised what he
believed was his right, as most senior member of the maintenance
department, to bid on a truck operator’s job paying 18% less than his
maintenance department job, even though he could have kept his
higher paying job. Philips granted the transfer because Carr was the
most senior employee to bid on the truck operator’s job.* It refused,
however, to grant Carr’s layoff request, or to pay him LIB benefits,
because his voluntary transfer to the lower-paying job had not been
occasioned by a lack of work associated with the business.

  Philips’s human resource manager informed Carr that

    the Company’s position regarding the language pertaining to
    an employee’s ability to elect layoff under Article IV, Sec-
    tion 5.a.2. is that a reduction in force must be in place in
    order for an employee to elect a layoff under this provision.
    It is our contention that Article IV Section 5.1 Eligibility
    defines who is eligible for benefits under the context that a
    reduction in force is necessitated due to lack of work associ-
    ated with the business. It is not intended to provide a means
    for employees to elect layoff when a reduction in force is
    not in effect.

J.A. 35. Five months later Carr retired and eventually filed this law-

  *Carr admits that simply bidding into a lower-paying job does not
entitle him to elect to be laid off and receive LIB benefits. Appellant’s
Br. at 23. He may elect to be laid off only if he is placed in a lower-
paying job in accordance with the Decrease in Working Force Procedure
provided in the CBA. PIA Art. IV § 5(a)(2).
4            CARR v. PHILIPS ELECTRONICS NORTH AMERICA
suit against Philips seeking LIB benefits. The district court granted
summary judgment to Philips, and Carr now appeals.

                                   II.

   The district court’s grant of summary judgment is reviewed de
novo. Ellis v. Metro Life Ins. Co., 126 F.3d 228, 232 (4th Cir. 1997).
ERISA plans, as contractual documents, are reviewed de novo by the
court to determine the degree of discretion afforded to the plan
administrator. Booth v. Wal-Mart Stores, Inc. Assocs. Health & Wel-
fare Plan, 201 F.3d 335, 341 (4th Cir. 2000). This court also reviews
de novo the question of whether the district court applied the proper
standard of review. Natural Res. Def. Council, Inc. v. E.P.A., 16 F.3d
1395, 1400 (4th Cir. 1993).

                                   III.

       A. Use of the Modified Abuse of Discretion Standard

   When a benefit plan vests an administrator with discretion to deter-
mine eligibility for benefits or to construe the terms of the plan, the
administrator’s actions are reviewed for an abuse of discretion. Ellis,
126 F.3d at 232. Otherwise, de novo review applies. Id. The district
court found that the PIA gives Philips the discretionary authority to
determine Carr’s eligibility for benefits, but applied a modified abuse
of discretion standard to reflect a potential conflict of interest because
Philips is both the fiduciary of the beneficiaries and the Plan’s insurer.
In finding that Philips had discretionary authority, the district court
relied on Article I § 2(b) of the PIA:

     [A]n employee who files a claim for correction of any state-
     ment furnished to him from the Pension Plan, and who is not
     willing to accept a decision of the Company after the Com-
     pany’s review of such claim . . . may, within ninety (90)
     days after he is informed of such decision, request the Union
     to represent him in discussing the matter further with the
     Company. The Company’s records or the decision regarding
     eligibility for Disability Pension, as either modified or main-
     tained without change after the review shall be final and
     conclusive and shall not be subject to further review.
             CARR v. PHILIPS ELECTRONICS NORTH AMERICA                 5
J.A. 163. The district court also relied on provisions in the PIA stating
that Philips shall have the sole responsibility for the administration of
the benefits plan and pension plan and payment of expenses thereun-
der.

   These provisions do not relate to LIB benefits eligibility determina-
tion. Rather, they concern the benefits plan and pension plan. Article
IV § 5(a) provides the sole criteria for determining who is an "eligible
employee" for LIB benefits, and it does not vest Philips with discre-
tion to make eligibility determinations. Moreover, no provision of the
PIA gives Philips the authority to construe disputed or doubtful terms.
We find that the proper standard of review was de novo, because
"there is no evidence that . . . the administrator has the power to con-
strue uncertain terms or that eligibility determinations are to be given
deference." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111
(1989).

                   B. Entitlement to LIB Benefits

   Having determined that the district court should have applied the
de novo standard of review, we will now apply that standard. We
begin by construing the eligibility provisions found in Article IV
§ 5(a) of the PIA. This Section provides that:

    1. . . . [A]n Eligible Employee is an employee with two (2)
    or more years of service who is not on disability or leave of
    absence, who is laid off through no fault of his own for lack
    of work occasioned by reasons associated with the business
    (such as changed customer ability and willingness to buy as
    reflected in adjusted production requirements, changed man-
    ufacturing processes, product discontinuance or plant clos-
    ing), and who has not been recalled to work.

    2. Notwithstanding 1. above, when an employee who in
    accordance with the applicable Decrease in Working Force
    Procedure, would be placed in a labor grade the maximum
    keysheet rate for which is more than 10% (10%) lower than
    the maximum keysheet rate for the labor grade of record in
    which the employee was assigned on the day six months
    prior to the placement in question, the employee may elect
6            CARR v. PHILIPS ELECTRONICS NORTH AMERICA
    to be laid off. Such employee who otherwise qualifies as an
    Eligible Employee will not affect his eligibility by his elec-
    tion of layoff.

PIA Art. IV § 5(a). Philips argued, and the district court found, that
Carr was not an "eligible employee" under the terms of section 5(a)(1)
because he was not "laid off through no fault of his own for lack of
work occasioned by reasons associated with the business . . . ." Carr
asserts that the district court erred because, notwithstanding section
5(a)(1), he is eligible under section 5(a)(2).

   The parties disagree over the meaning of these two sections. When
read in pari materia, their meaning is clear. A worker with two or
more full years of service who is not on disability leave becomes eli-
gible if: (1) he is laid off through no fault of his own for lack of work
occasioned by reasons associated with the business, and has not been
recalled to work; or (2) if he elects to be laid off because, in accor-
dance with the applicable Decrease in Working Force Procedure in
the CBA, he would be placed in a labor grade that pays 10% less than
his current job. In other words, section 5(a)(1) provides for eligibility
due to involuntary lay off under certain conditions, and section
5(a)(2) provides for eligibility due to voluntary lay off under certain
conditions. While this is the reading that Carr urges, it does not help
him. His attempt at voluntary layoff was not "in accordance with the
applicable Decrease in Working Force Procedure" as required by sec-
tion 5(a)(2).

   Under Article IV § 5(a)(2) of the PIA, a voluntary layoff election
qualifies an employee for LIB benefits only if it was made pursuant
to the Decrease in Working Force Procedure. Section XI subsection
K of the CBA defines the Decrease in Working Force Procedure; sub-
section L outlines the operating procedures to be used during a
decrease; and subsection M provides how employee assignments will
be made thereunder. Subsections L and M provide that, when the
decrease procedure would result in an employee being down-graded
to a job paying him 10% less than his current job, he instead may
elect to be laid off. Subsection K, however, explains that the decrease
procedure will be invoked only where "there is a definite reduction
in the production schedule for a work group or section . . . ." CBA
§ XI(K). This clear language supports Philips’s contention that an
             CARR v. PHILIPS ELECTRONICS NORTH AMERICA                 7
employee may elect layoff only when there is a lack of work. An
employee is not eligible for LIB benefits under section 5(a)(2) unless
there was an actual decrease in the work force. PIA Art. IV § 5(a)(2);
CBA § XI(K).

   Carr cites language from the CBA regarding processing a worker
through a decrease when the disabled employee whom he has
replaced returns to work. That language, however, comes from sub-
section M, which specifies how workers will be placed in the event
of a decrease in the work force. This section does not apply to Carr
because he did not replace the disabled Helmick in the context of such
a decrease.

   Alternatively, Carr argues that, although he could have stayed in
his higher-paying job, it was his prerogative as the most senior mem-
ber in the department to chose to be subjected to the decrease proce-
dure when Helmick returned. However, no Decrease in the Working
Force occasioned Carr’s election to transfer jobs. CBA § XI(K).
While Helmick’s return required one person in the department to be
placed elsewhere, there was no "reduction in the production schedule"
for his work group or section. Therefore, because he neither filled nor
left Helmick’s job in accordance with the Decrease in Working Force
Procedure, Carr’s election to be laid off did not render him eligible
for LIB benefits under PIA Article IV § 5(a)(2).

                        C. Extrinsic Evidence

   Carr argues that it was Philips’s practice to invoke the decrease
procedure and allow workers displaced to 10% lower-paying jobs to
elect layoff in situations such as this one, even where the return did
not result in a reduction in force. The district court struck some of the
evidence he offered to support this contention. Because the evidence
was at odds with the unambiguous terms of the CBA and the PIA,
striking it was proper. Coleman v. Nationwide Life Ins. Co., 969 F.2d
54, 56 (4th Cir. 1992) ("Courts cannot ignore a plan’s plain language
to award coverage. In the absence of ambiguity, the Court’s inquiry
is limited to the written terms and conditions set forth in the written
plan."). Although normal rules of contract interpretation are applied
more loosely in the context of collective bargaining agreements,
courts nevertheless will bar extrinsic evidence that is inconsistent
8           CARR v. PHILIPS ELECTRONICS NORTH AMERICA
with an unambiguous writing. Pace v. Honolulu Disposal Serv., Inc.,
227 F.3d 1150, 1157-58 (9th Cir. 2000); Brown-Graves Co. v. Cent.
States, Southeast & Southwest Areas Pension Fund, 206 F.3d 680,
683 (6th Cir. 2000) (refusing, where collective bargaining agreement
was unambiguous, to consider extrinsic evidence of "informal
arrangement" between employer and union). This principle is espe-
cially important where, as here, the collective bargaining agreement
specifically disavowed supplemental oral agreements. Pace, 227 F.3d
at 1159. Here, although the CBA provides that the parties can negoti-
ate temporary modifications to the decrease in work force procedure,
its terms require that any such modifications must be in writing. The
district court properly excluded Carr’s extrinsic evidence.

                                IV.

  The district court correctly concluded that the plan administrator
had properly denied Carr’s application for LIB benefits. We affirm.

                                                        AFFIRMED