Court Opinion

ID: 9498382
Source: CourtListenerOpinion
Date Created: 2023-08-05 17:16:18.299937+00
Date Added: 2024-06-11T17:58:48.450090
License: Public Domain

DIANA GRIBBON MOTZ, Circuit Judge,
concurring in part and dissenting in part:
I concur in Parts I and II of Judge Gregory’s opinion for the court, holding that the stock options Honeywell granted to Dr. Varghese did not constitute “wages” under the Maryland Wage Payment & Col*424lection Law, Md.Code Ann., Lab. & Employ., § 3-501 et seq. (2004) (“MWP & CL” or “the Act”). However, because I believe that Honeywell’s argument that ERISA preempts Dr. Varghese’s state law separation pay claim is properly before us, I respectfully dissent from Part III.
I.
I agree with Judge Gregory’s analysis and resolution of Dr. Varghese’s stock option claim. In interpreting the MWP & CL’s definition of “wages,” the Maryland Court of Appeals has focused on whether the options were promised as remuneration for services rendered. See Whiting-Turner Contracting Co. v. Fitzpatrick, 366 Md. 295, 783 A.2d 667, 671-72 (2001) (“[T]o be wages [within the statute], the payment must have been promised to the employee as compensation for work performed.”); see also Medex v. McCabe, 372 Md. 28, 811 A.2d 297, 302-03 (2002).
These cases indicate that, while it is crucial that the benefit at issue is remuneration for work performed, it is equally crucial that the compensation was “promised as part of the compensation for employment.” Whiting-Turner, 783 A.2d at 672. Moreover, Whiting-Turner holds that this promise must be included in the compensation package. See id. (asserting that the compensation to be paid is a matter “for agreement in advance of the employment or to become a part of the undertaking during the employment”).
Dr. Varghese does not contend that Honeywell promised to grant him stock options as part of the employment agreement negotiated and agreed upon either in advance of or during the tenure of his employment. Indeed, he admits that Honeywell never promised him options. Consequently, because a promise to grant stock options was not part of the “conditions of employment,” id., Dr. Varghese’s options do not constitute “wages” under the MWP & CL.
Thus, Judge Hamilton’s contention that, “once Honeywell actually granted Dr. Varghese the stock options with the concomitant promises that he could exercise them ..., Dr. Varghese’s right to exercise those options ... constituted ‘remuneration promised for service,’ ” post, though interesting, misses the mark. Because the grant of stock options was “not a part of the compensation package promised,” Whiting-Turner, 783 A.2d at 673, the mere fact that the options, once granted, could be exercised in accordance with their terms does not convert them into “wages” under the MWP & CL. Indeed, because all stock options include a “promise” that they can be exercised in accordance with their terms, the position advocated by the dissent would transform every grant of stock options by an employer to an employee— no matter how unexpected and voluntary — into “wages” under the Act. This result “would read out of the statute the words ‘promised for service.’ ” Id. at 672. Controlling precedent from Maryland’s highest court prohibits this interpretation.
II.
I disagree, however, with the conclusion in Part III of Judge Gregory’s opinion that binding circuit precedent, specifically Chesapeake Paper Products Co. v. Stone & Webster Engineering Corp., 51 F.3d 1229 (4th Cir.1995), forecloses our review of the district court’s rejection of Honeywell’s ERISA preemption defense at the summary judgment phase. In so holding, the majority ignores the critical differences between Chesapeake and the case at hand. Thus, rather than simply following the entirely proper rule we adopted in Chesapeake, the majority imprudently expands that rule. The important policy justifying the Chesapeake rule provides no support *425at all for this expansion. For these reasons, I would join most of our sister circuits in rejecting such an expansion.
In Chesapeake the district court denied Stone & Webster’s motion for summary judgment on a contract claim because it found that Chesapeake had presented sufficient evidence to create “genuine issues of material fact regarding the formation of the contract and ultimately the proper interpretation of what one finds to be the contract between the parties.” Id. at 1233 (internal quotation marks omitted). The ease proceeded to trial, which concluded with a verdict for Chesapeake. Without filing Rule 50 motions for judgment as a matter of law, Stone & Webster sought review of the summary judgment denial on appeal. In refusing to review that ruling, we reasoned that “[rjeviewing a pretrial denial of summary judgment after a full trial is inappropriate because the denial was based on an undeveloped, incomplete record” that was examined not to “settle or even tentatively decide anything about the merits of the claim,” but only to decide whether or not “the case should go to trial.” Id. at 1236 (internal quotation marks and citations omitted). Permitting appellate review of a summary judgment denial in such circumstances would “deprive a party of a jury verdict after the evidence was fully presented, on the basis of an appellate court’s review of whether the pleadings and affidavits at the time of the summary judgment motion demonstrated the need for a trial.” Id. at 1237 (internal quotation marks and citation omitted). Thus, once a trial has occurred, a party must make an appropriate Rule 50 motion to preserve a challenge on appeal to the sufficiency of the evidence. See id. at 1236.
This is a sound rule, which, as we noted in Chesapeake, many of our sister circuits have adopted. See id. at 1234. The majority, however, apparently concludes that Chesapeake holds that an appellate court can never review a district court’s denial of summary judgment after a full trial. But Chesapeake does not hold this; indeed, it clearly implies the contrary. The Chesapeake court carefully noted that it did not need to describe the “specific circumstances in which this Court would review the denial of summary judgment after a full trial.” . Id. at 1235 n. 8. Such a notation would be unnecessary if no such “circumstances” existed.
A case, like the one at hand, in which the sole basis of the district court’s denial of summary judgment was rejection of a purely legal defense — here preemption— obviously presents such a “circumstance.” The evidentiary concerns discussed in Chesapeake are simply not at issue when a party seeks to reassert on appeal a legal defense that the court below rejected at the summary judgment stage.
The Seventh Circuit made precisely this point in Rekhi v. Wildwood Industries, Inc., 61 F.3d 1313 (7th Cir.1995). There the defendant argued that summary judgment was appropriate because another legal defense — res judicata — barred the plaintiffs claim. The Rekhi court recognized that if a trial court denied summary judgment merely on the ground that the nonmoving party had presented sufficient evidence to take the case to trial, it would be unjust for an appellate court to review that denial after “the plaintiff went on to present at trial enough evidence to show that he [was] entitled to win his suit.” Id. at 1318. However, the court went on to explain that there is no unfairness in allowing a party to reassert on appeal a legal defense rejected as a basis for summary judgment (e.g., res judicata, statute of limitations, immunity, preemption) because by definition a legal defense provides a basis to avoid liability for an other*426wise meritorious claim. Id. Even when a plaintiff has sufficient evidence to escape summary judgment and proceed to trial, a legal defense may entitle a defendant to the award of summary judgment. A subsequent trial verdict for the plaintiff does not change that fact.
As Judge Posner explained in Rekhi, “[t]he injustice would be” to deny the party moving for summary judgment on the basis of a legal defense the opportunity to reassert that defense on appeal because “most defenses ... would have no function if all [they] did was bar meritless suits.” Id. Accordingly, a defense must “remain[ ] available ... even when the plaintiff, having survived summary judgment, goes on to win a judgment on the merits.” Id. (citing cases). “Defenses are not extinguished merely because” they are “denied at the summary judgment stage.” Id. Rather, “[i]f the plaintiff goes on to win [at trial], the defendant can reassert the defense on appeal.” Id.
For this reason, many of our sister circuits, including five of the eight on which we relied in Chesapeake, have specifically refused to extend the Chesapeake rule the way the majority does here. Indeed, they allow review of the denial of summary judgment if the denial was based on a pure question of law, rather than a determination as to evidentiary sufficiency. See, e.g., Rothstein v. Garriere, 373 F.3d 275, 284 (2d Cir.2004) (“A critical distinction exists between summary judgment motions raising the sufficiency of the evidence to create a fact question for the jury and those raising a question of law that the court must decide. Where a motion for summary judgment based on an issue of law is denied, appellate review of the motion is proper even if the case proceeds to trial and the moving party fails to make a subsequent Rule 50 motion.”) (internal quotation marks omitted); Chemetall GMBH v. ZR Energy, Inc., 320 F.3d 714, 719 (7th Cir.2003); Pavon v. Swift Transp. Co., 192 F.3d 902, 906 (9th Cir.1999); White Consol. Indus, v. McGill Mfg. Inc., 165 F.3d 1185, 1189-90 (8th Cir.1999); McPherson v. Kelsey, 125 F.3d 989, 995 (6th Cir.1997); Ruyle v. Continental Oil Co., 44 F.3d 837, 841-42 (10th Cir.1994).1
Here, we need not go so far as to allow review of all questions of law decided at summary judgment, and I see no reason to adopt this view in the case at hand. But see supra note 1. I would hold, however, that when, as here, a district court denies a motion for summary judgment based entirely on a legal defense, a subsequent trial does not eliminate the movant’s right to assert that defense on appeal. Substantial authority supports appellate review in these circumstances, see, e.g., Rekhi, 61 F.3d at 1318 (res judicata); Ruyle, 44 F.3d at 841-42 (collateral estoppel); see also Paschal v. Flagstar Bank, FSB, 295 F.3d 565, 571-72 (6th Cir.2002) (statute of limitations); Lenz v. Dewey, 64 F.3d 547, 550 (10th Cir.1995) (qualified immunity), and the majority has failed to cite a single case *427that rejects it. Certainly the rule articulated in Chesapeake does not prohibit (nor does the dicta in that case counsel against) such review. Indeed, as many of our sister circuits have held, the rationale for the Chesapeake rule simply does not support the unwise and unjust expansion of that rule articulated by the majority.2

. Although some dicta in Chesapeake disapproves the reasoning in these cases, see Chesapeake, 51 F.3d at 1235-36, contrary to the suggestion in Chemetall, 320 F.3d at 721, Chesapeake’s actual holding does not prohibit such a rule. Chesapeake involved the review of a denial of summary judgment on the ground that the plaintiff had presented sufficient evidence to go to trial. See id. at 1233. While defendant Stone & Webster ''claim[ed] that its motion sought partial summary judgment on a discrete legal issue, ... in actuality, its motion sought resolution of the conflicting factual inferences from the competing contract documentation on the central issue of which document governed the rights and liabilities of the parties.” Id. at 1235. Thus, despite its dicta, the holding in Chesapeake would not prevent us from adopting in a future case the view espoused by many of our sister circuits.

. Refusing Honeywell the right to assert its legal defense on appeal works a particular injustice because its preemption defense is, in fact, meritorious. ERISA does preempt Dr. Varghese’s state law severance pay claim because Honeywell's separation plan requires an ongoing administrative scheme not triggered by a single one-time event but by the termination for one of three reasons of any salaried employee. See, e.g., Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 14 n. 9, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987); Bowles v. Quantum Chem. Co., 266 F.3d 622, 631-33 (7th Cir.2001) (and the cases cited therein).