Court Opinion

ID: 4580326
Source: CourtListenerOpinion
Date Created: 2020-10-24 00:00:21.892303+00
Date Added: 2024-06-11T08:47:54.375647
License: Public Domain

Case: 19-11008       Document: 00515613810             Page: 1     Date Filed: 10/23/2020

              United States Court of Appeals
                   for the Fifth Circuit                               United States Court of Appeals
                                                                                Fifth Circuit

                                                                              FILED
                                                                       October 23, 2020
                                      No. 19-11008                       Lyle W. Cayce
                                                                              Clerk

   Raymond Romo,

                                                                  Plaintiff—Appellant,

                                           versus

   Waste Connections US, Incorporated; Progressive
   Waste Solutions of TX, Incorporated,

                                                               Defendants—Appellees.

                    Appeal from the United States District Court
                        for the Northern District of Texas
                              USDC No. 3:18-CV-570

   Before KING, GRAVES, and OLDHAM, Circuit Judges.
   James E. Graves, Jr., Circuit Judge:*
          Plaintiff-Appellant Raymond Romo appeals from the district court’s
   grant of summary judgment in favor of Defendant-Appellees. Finding his
   appeal without merit, we affirm.

          *
             Pursuant to 5TH CIRCUIT Rule 47.5, the court has determined that this opinion
   should not be published and is not precedent except under the limited circumstances set
   forth in 5TH CIRCUIT Rule 47.5.4.
Case: 19-11008     Document: 00515613810           Page: 2   Date Filed: 10/23/2020

                                    No. 19-11008

                             I. BACKGROUND
           Mr. Romo worked as an accountant in the waste-management
   industry for over 30 years. In 2013, he began working as a district controller
   for IESI MD Corporation (“IESI”), an operating subsidiary of Progressive
   Waste Solutions, Ltd. (“Progressive”). After one year, he was promoted to
   the position of area controller. In that role, his responsibilities included
   managing and providing analytical support for internal operations and
   external transactions, overseeing internal control processes and budgeting,
   and supervising other controllers and accountants.
           In June 2016, Progressive merged with Waste Connections US, Inc.
   (“Waste Connections”). Prior to the merger, Mr. Romo had been designated
   as a participant in several retention and incentive plans. Four of those plans
   are at issue here: the President’s Award; the 2015 Long Term Incentive Plan
   (“2015 LTIP”); the 2016 Long Term Incentive Plan (“2016 LTIP”); and
   the 2016 IESI Change in Control Severance Plan (“Severance Plan”). The
   Severance Plan is an Employee Retirement Income Security Act (“ERISA”)
   plan.
           Mr. Romo continued to work for IESI post-merger, but his title
   changed to division controller. In that role, he directed the accounting and
   supporting financial functions for a 13-district area. To assist with the
   transition to Waste Connections ownership, Mr. Romo’s new direct
   supervisor sent another Waste Connections division controller to support
   and train Mr. Romo and his team. A subset of the policies and procedures on
   which Mr. Romo trained and that he communicated to his staff involved the
   importance of complying with reporting deadlines. Mr. Romo nevertheless
   missed multiple reporting deadlines. His direct supervisor spoke to him
   about that issue in January 2017, but Mr. Romo missed at least one deadline
   even after that conversation.

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          Around the same time, Waste Connections was selling its
   Washington, D.C., assets as part of its merger with Progressive. Those
   districts were part of Mr. Romo’s area, and he was asked to assist with the
   due diligence. He did so in addition to his regular job functions but without
   receiving the additional support he requested. The transaction closed in mid-
   February 2017.
          After the close of the sale, Mr. Romo remained responsible for
   managing accounting functions related to the transaction. Among other
   things, those functions involved reconciling and closing general ledger
   accounts. While performing those functions, Mr. Romo identified a cash
   balance of approximately $400,000 in a zero-balance account. Despite his
   knowledge of that incongruity, he signed off on the February 2017 balance
   sheet as complete. He did the same in March 2017, again without reconciling
   the variance. During that time, he did not ask for assistance or otherwise note
   the issue.
          In April 2017, Mr. Romo, his direct supervisor, and other Waste
   Connections executives toured the region. While on that tour, Mr. Romo’s
   direct supervisor discovered the variance in the zero-balance account. The
   supervisor investigated the discrepancy but found no supporting
   documentation for the cash transfers that should have taken place during the
   process of apportioning payments between Waste Connections and the buyer
   of the Washington, D.C. districts. A few days later, Mr. Romo’s employment
   was terminated.
          Three months later, counsel for Mr. Romo sent a demand letter to
   IESI requesting payments under the President’s Award, 2015 LTIP, and
   2016 LTIP (collectively, the “equity incentive plans”). Mr. Romo also
   sought payment under the Severance Plan. Under the terms of that plan, IESI
   had 90 days to determine whether benefits should be granted. Prior to the

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   expiration of those 90 days, the plan administrator notified Mr. Romo’s
   counsel that she had been appointed and that she was extending the response
   time, in accordance with the terms of the plan, by an additional 90 days.
          The plan administrator did not issue her determination within the
   extended response time. But 10 days after the extended deadline, she sent
   Mr. Romo two letters. The first denied benefits under the Severance Plan
   and explained the reasons for the denial. The second explained that she had
   also been referred the determination regarding whether to pay Mr. Romo
   under the equity incentive plans and that his claims under those plans were
   also denied. As part of those determinations, the plan administrator
   emphasized that Mr. Romo had been terminated for just cause as defined in
   the Severance Plan, the 2015 LTIP, and the 2016 LTIP.
          Two months later, Mr. Romo sued Waste Connections and
   Progressive Texas (collectively, “Waste Connections”). He alleged that the
   defendants wrongly denied his claim to benefits under the Severance Plan
   and the equity incentive plans. Waste Connections moved for summary
   judgment, and the district court granted the motion in full. Mr. Romo
   appealed, arguing that the district court erred in (1) reviewing his ERISA
   claim under an abuse-of-discretion standard; and (2) granting summary
   judgment in favor of Waste Connections on his breach-of-contract claims.
   Both arguments are without merit.
                      II. STANDARD OF REVIEW
          We review a summary judgment de novo, applying the same standards
   as the district court. Mason v. Lafayette City-Parish Consol. Gov’t, 806 F.3d
268, 274 (5th Cir. 2015) (citation omitted). “The court shall grant summary
   judgment if the movant shows that there is no genuine dispute as to any
   material fact and the movant is entitled to judgment as a matter of law.” Fed.
   R. Civ. P. 56(a). “A dispute is genuine if the evidence is such that a

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   reasonable jury could return a verdict for the nonmoving party.” Westfall v.
   Luna, 903 F.3d 534, 546 (5th Cir. 2018) (internal quotation marks and
   citation omitted). A fact “is material if its resolution could affect the outcome
   of the action.” Sierra Club, Inc. v. Sandy Creek Energy Assocs., L.P., 627 F.3d
134, 134 (5th Cir. 2010) (citation omitted).
          At summary judgment, all reasonable doubts must be resolved against
   the moving party. Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888 (1990).
   “The evidence of the non-movant is to be believed, and all justifiable
   inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255 (1986).
                               III. DISCUSSION
          This court must address whether Waste Connections is entitled to
   summary judgment as to both the Severance Plan and the equity incentive
   plans. We conclude that it is.
          A. The Severance Plan
          With respect to the Severance Plan, Mr. Romo makes two arguments:
   First, that the district court erred by reviewing only for abuse of discretion;
   second, that there was a genuine dispute as to material facts. Neither
   argument succeeds.
          When a benefit plan governed by ERISA grants the plan administrator
   “discretionary authority to determine eligibility for benefits or to construe
   the terms of the plan”—as is the case here—courts review the plan
   administrator’s decision for abuse of discretion. Firestone Tire & Rubber Co.
   v. Bruch, 489 U.S. 101, 115 (1989). While Mr. Romo contends that de novo
   review was appropriate because the plan administrator failed to render a
   timely decision, this court has repeatedly declined to modify the standard of
   review “based on the administrator’s failure to substantially comply with the

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                                          No. 19-11008

   procedural requirements of ERISA.” Lafleur v. La. Health Serv. & Indem.
   Co., 563 F.3d 148, 159 (5th Cir. 2009); see also Wade v. Hewlett-Packard Dev.
   Co., 493 F.3d 533, 538 (5th Cir. 2007), abrogated on other grounds by Hardt v.
   Reliance Standard Life Ins. Co., 560 U.S. 242 (2010) (“Wade has cited no
   direct authority by the Supreme Court or the Fifth Circuit dictating a change
   in the standard of review based upon procedural irregularities alone, and we
   see no reason to impose one.”).1 Our review, like that of the district court, is
   therefore for abuse of discretion alone.
           Under that standard, “[e]ven if an ERISA plaintiff support[s] his
   claim with substantial evidence, or even with a preponderance, he will not
   prevail for that reason. Rather, it is the plan administrator’s decision that
   must be supported by substantial evidence, and, if it is, the administrator’s
   decision must prevail.” Foster v. Principal Life Ins. Co., 920 F.3d 298, 304 (5th
   Cir. 2019) (emphasis, citation, and quotation marks omitted). “Substantial
   evidence is more than a scintilla, less than a preponderance, and is such
   relevant evidence as a reasonable mind might accept as adequate to support
   a conclusion.” Id. (citation omitted). A plan administrator’s decision is
   arbitrary only when it is “made without a rational connection between the
   known facts and the decision or between the found facts and the evidence.”
Id. (citing Holland v. Int’l Paper Co. Ret. Plan, 576 F.3d 240, 246–47 (5th Cir.
   2009)).
           Here, the Severance Plan provides that an employee may be fired for
   just cause if he

           1
            Moreover, if the plan administrator had not substantially complied with ERISA,
   the appropriate remedy would be remand to the plan administrator—not a change in the
   standard of review. See Lafleur, 563 F.3d at 157 (“Remand to the plan administrator for full
   and fair review is usually the appropriate remedy when the administrator fails to
   substantially comply with the procedural requirements of ERISA.”)

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                                      No. 19-11008

          (i) willfully fails to perform his/her duties with the Company
          or any of its affiliates; (ii) commits theft, fraud, dishonesty or
          misconduct involving the property, business or affairs of the
          Company or any of its affiliates or in the performance of
          his/her duties; (iii) willfully breaches or fails to follow any
          material term of his or her employment agreement; (iv) is
          convicted of a crime which constitutes an indictable offense; or
          (v) engages in conduct which would be treated as cause by a
          court of competent jurisdiction in the jurisdiction in which the
          [e]ligible [e]mployee is employed.
      The plan administrator’s denial letter explained that she had made the
   following findings:

      • Mr. Romo missed several key deadlines;

      • “[J]ust before the termination of his employment, Mr. Romo failed to
        perform several key tasks that were central to an important business
          divestiture, including failing to keep journal entry records or any other
          records to account for the movement of millions of dollars of [c]om-
          pany funds between business accounts”;

      • Mr. Romo’s supervisor “repeatedly counseled him on the need to
          meet deadlines and perform as expected”; and

      • “[T]here were incidents where subordinate employees of Mr. Romo
        experienced confusion or frustration because Mr. Romo was not re-
          sponsive to their needs.”
          Those details, which are not in dispute, led the plan administrator to
   conclude that the facts fully supported a “just cause” termination under the
   Severance Plan, which precluded Mr. Romo from receiving severance
   benefits.

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          Given the facts before the plan administrator, her finding can hardly
   be characterized as arbitrary. As such, Waste Connections is entitled to
   summary judgment with respect to the Severance Plan claims.
          B. The Equity Incentive Plans
          Mr. Romo also argues that the district court erred by granting
   summary judgment in favor of Waste Connections as to the equity incentive
   plans: the 2014 President’s Award, 2015 LTIP, and 2016 LTIP. We conclude
   that summary judgment in favor of Waste Connections was appropriate as to
   these claims.
          1. Legal Standards
          “Under Texas law, the essential elements of a breach of contract
   claim are the existence of a valid contract, performance or tendered
   performance by the plaintiff, breach of the contract by the defendant, and
   damages sustained as a result of the breach.” Innova Hosp. San Antonio, Ltd.
   P’ship v. Blue Cross & Blue Shield of Ga., Inc., 892 F.3d 719, 731 (5th Cir. 2018)
   (internal quotation marks and citation omitted). “A contract is not
   ambiguous merely because the parties have a disagreement on the correct
   interpretation.” REO Indus., Inc. v. Nat. Gas Pipeline Co. of Am., 932 F.2d
447, 453 (5th Cir. 1991). Courts are to construe contracts “‘from a utilitarian
   standpoint bearing in mind the particular business activity sought to be
   served’ and ‘will avoid when possible and proper a construction which is
   unreasonable, inequitable, and oppressive.’” Frost Nat’l Bank v. L & F
   Distribs., Ltd., 165 S.W.3d 310, 312 (Tex. 2005) (quoting Reilly v. Rangers
   Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987)).

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          2. The President’s Award
          With respect to the President’s Award, we conclude that Mr. Romo
   was not entitled to receive any shares because he was not employed on April
   1, 2018, the vesting date provided in the award letter.
          The September 2015 letter conferring the President’s Award upon
   Mr. Romo stated (1) that the shares granted therein would be held in a trust
   until they vested on April 1, 2018; and (2) that Mr. Romo had to be employed
   on that date in order to receive the value of the shares. Mr. Romo was
   terminated in April 2017, a year before the April 2018 vesting date. He
   concedes that fact, but argues that the 2016 merger between Progressive and
   Waste Connections triggered a change-of-control provision that caused the
   shares to become fully vested at that time. We disagree.
          The change-of-control provision appears in the text of the 2015 LTIP,
   which the President’s Award letter incorporates. But “[i]t is a fundamental
   axiom of contract interpretation that specific provisions control general
   provisions.” Baton Rouge Oil & Chem. Workers Union v. ExxonMobil Corp.,
   289 F.3d 373, 377 (5th Cir. 2002) (citation omitted). Here, the President’s
   Award incorporates the LTIP, but itself identifies “the specifics of the plan.”
   Second on the list of specific provisions is that “[i]f a participant leaves prior
   to the completion of the three year period, all shares are forfeited except for
   a qualified retirement.”
          We therefore affirm the district court’s grant of summary judgment in
   favor of Waste Connections as to the President’s Award.
          3. 2015 and 2016 LTIPs
          Mr. Romo likewise contends that Waste Connections breached the
   2015 and 2016 LTIPs by refusing to pay. We agree with Waste Connections,

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   however, that it is not required to pay because Mr. Romo was terminated for
   just cause.
           The 2015 and 2016 LTIPs have identical “just cause” clauses, which
   read:
           “Just Cause” has the meaning set out in the employment
           agreement of the Participant, if applicable, and otherwise
           means the Participant (i) willfully fails to perform his duties
           with the Corporation; (ii) commits theft, fraud, dishonesty or
           misconduct involving the property, business or affairs of the
           Corporation or any of its affiliates or in the performance of
           his/her duties: (iii) willfully breaches or fails to follow any
           material term of his or her employment agreement; (iv) is
           convicted of a crime which constitutes an indictable offence; or
           (v) engages in conduct which would be treated as cause by a
           court of competent jurisdiction in the jurisdiction in which the
           Participant is employed.
           Mr. Romo “concedes [that] accounting mistakes were made” but
   alleges that a genuine dispute as to a material fact exists because “the
   principal problem was brought on by Defendants’ intentional understaffing
   of Plaintiff’s [d]ivision by dumping the jobs of multiple people onto Plaintiff,
   their refusal to retain key personnel who could have avoided the errors, and
   mistakes by its own staff which were never punished.” However, he cites no
   evidence in support of these statements, which are therefore inadequate. See
   Nat’l Ass’n of Gov’t Emps. v. City Pub. Serv. Bd. of San Antonio, Tex., 40 F.3d
698, 713 (5th Cir. 1994) (“Conclusory allegations unsupported by specific
   facts . . . will not prevent an award of summary judgment; the plaintiff
   [can]not rest on his allegations . . . to get to a jury without any significant

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   probative evidence tending to support the complaint.” (quotation marks and
   citation omitted)).
          Mr. Romo further argues that “there is reason to doubt the
   [d]efendants’ stated reasons” for firing him, as “age related comments and
   a practice of firing older workers to be replaced by cheaper and younger
   employees casts doubt on the credibility of Defendants’ denial of benefits.”
   Mr. Romo cites no case law supporting his attempt to graft the pretext
   analysis from the Age Discrimination in Employment Act into a breach of
   contract claim. Moreover, the deposition testimony and affidavit he cites do
   not provide any support for his own conclusory statements. His argument
   therefore fails. See E.E.O.C. v. Exxon Shipping Co., 745 F.2d 967, 976 (5th Cir.
   1984) (“[P]retext cannot be established by mere ‘conclusory statements’ of
   a plaintiff who feels he has been discriminated against.” (citation omitted));
   Nat’l Ass’n of Gov’t Emps. 40 F.3d at 713 (“Conclusory allegations
   unsupported by specific facts . . . will not prevent an award of summary
   judgment[.]”). Waste Connections has satisfied its burden and is entitled to
   summary judgment as to the LTIPs.
                              IV. CONCLUSION
          The district court’s entry of summary judgment in favor of
   Defendant-Appellees is AFFIRMED.

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