Court Opinion

ID: 9001981
Source: CourtListenerOpinion
Date Created: 2022-11-27 13:14:38.810414+00
Date Added: 2024-06-11T17:11:13.105848
License: Public Domain

ROBERT E. COWEN, Circuit Judge,
concurring and dissenting.
I concur in the court’s opinion insofar as it dismisses Anthuis’ appeal and CIOC’s cross-appeal, both of which were taken from non-appealable orders of the district court. However, I respectfully dissent from section III of the opinion which affirms on the merits the decision of the district court with respect to Groscost. I would reverse the district court’s decision, and thus, I would not reach the issue of prejudgment interest and attorney’s fees.
I believe the majority opinion has read far too much into this court’s earlier decision in Frank v. Colt Industries, Inc., 910 F.2d 90 (3d Cir.1990), and neglected our subsequent decisions concerning employer discretion under ERISA. In Frank, this court examined the same benefit plan that is at issue in the case currently before us. There, we simply held that “the Continuance Bonuses were not alternative benefits, but rather were distinct agreements that had no effect on the plaintiffs’ rights to severance pay under the Plan.” Id. at 96 (emphasis in original). It is important to recognize that Frank did not require the payment of both severance and continuance benefits; all Frank held was that the payment of one benefit did not preclude the payment of the other benefit.
In Frank, CIOC first raised the discretion argument that is now before us. We noted that Colt’s argument raised “important issues of first impression concerning the ability of an employer to reserve complete discretion over employee eligibility for benefits under an ERISA plan.” Id. at 99 (emphasis in original). However, we did not address these admittedly important issues, since we held that Colt had waived them by raising them for the first time on appeal. Id. at 100.
This court has since allowed employers to reserve broad discretion in the payment of severance benefits “as long as that limitation is explicitly stated as part of the plan” and the reservation does not violate the policies underlying ERISA. Hamilton v. Air Jamaica, Ltd., 945 F.2d 74, 77-78 (3d Cir.1991), cert. denied, — U.S. -, 112 S.Ct. 1479, 117 L.Ed.2d 622 (1992).1 “Having concluded that ERISA permits an employer to reserve the right to make early retirement benefit determinations on an individual basis, nothing suggests we should treat severance pay differently.” Id. at 78 (emphasis added). Hamilton provided a detailed explanation of how employer discretion can be reconciled with thé goals of ERISA, and how discretion actually advances the interests of employees:
Employers are understandably more willing to provide employee benefits when *1014they can reserve the right to decrease or eliminate those benefits. To the extent that employees have sufficient bargaining power to obtain guaranteed benefits, ERISA will enforce those rights and will ensure — through its disclosure requirements — that employees know what benefits they will receive. Therefore, allowing employer reservations of the right to make individual benefit determinations takes nothing away from employees who can command guaranteed benefits and will allow other employees to obtain benefits the employer would refuse to provide on a guaranteed basis.
Id. at 79. The “almost unbounded discretion” given to employers to determine benefits is qualified by “no more than the minimal obligation of good faith.” Berger v. Edgewater Steel Co., 911 F.2d 911, 919 (3d Cir.1990), cert. denied, — U.S.-, 111 S.Ct. 1310, 113 L.Ed.2d 244 (1991). Because Frank explicitly left open the issue of employer discretion later decided in Hamilton, the two decisions must be read together.
In this case, unlike in Frank, CIOC presented the discretion argument to the district court, and thus, there was no procedural waiver. The district court, however, held that “the reservation of such broad discretion in the employer is invalid.”2 App. at 224. Given Hamilton, this is surely no longer an accurate statement of the law. Thus, the majority has wisely chosen not to adopt the district court’s analysis. Instead, the majority argues that the CIOC officers never exercised any discretion and decided eligibility for severance payments “not on a case-by-case evaluation, but by excluding all participants in the Continuance Agreements on the grounds that they had entered into Continuance Agreements.” Maj. op. at 1008.
The majority cites nothing in the record to support its theory that CIOC failed to exercise or improperly exercised its discretion.3 See Kotrosits v. GATX Corp. Non-Contributory Pension Plan for Salaried Employees, 970 F.2d 1165, 1173 (3d Cir. 1992) (“[Ajnyone urging that a court disregard that reservation [of discretion] has the burden of showing some reason to believe the exercise of discretion has been tainted.”). Had there been such a smoking gun in the record, I might have agreed with the majority. However, the only support for the majority’s theory is an excerpt from CIOC’s brief to this court. See Maj. typescript at 1008 (quoting CIOC Brief at 22). This excerpt is far from dispositive. Indeed, this excerpt could support a different conclusion, since it indicates that “the Division President, Group Vice President and corporate Vice President of Personnel decided ” not to award one type of benefit to employees who received the other type of benefit. The use of the word “decided” implies the exercise of some discretion by CIOC’s officers.
The majority views the proper exercise of discretion as requiring a thoughtful, *1015comprehensive, case-by-case evaluation of an employee’s eligibility for benefits. However, this court has previously recognized that case-by-case decisionmaking can take many forms. See Hamilton, 945 F.2d at 79 n. 6 (“Hamilton cannot credibly claim that, in awarding him the same severance pay that it awarded all similarly situated employees, Air Jamaica acted in bad faith.”); Berger, 911 F.2d at 919 (employer’s “failure to give individual attention to the Employees’ requests was without consequence”). The majority’s opinion is problematic, since it does not elaborate on what constitutes sufficient case-by-case evaluation, and thus fails to give specific guidance to employers on how they should evaluate an employee’s claim. Surely, the majority would not be satisfied with a mere perfunctory evaluation.
There is no evidence that CIOC failed to examine the individual merits of Groscost’s claim before denying him severance benefits. Nor is there any evidence that greater individual attention to Groscost’s claim would have affected CIOC’s decision to deny him benefits. Whatever case-by-case evaluation was required by the severance plan was qualified by a provision stating that employees “may become eligible” for severance benefits “[ujnder circumstances and conditions as defined by the Company.” App. at 220.
Lastly, I would point out that this court has given greater deference to an employer’s decision to deny benefits when the employer is acting in its capacity as an employer rather than as an ERISA fiduciary. Berger, 911 F.,2d at 918; see also Nazay v. Miller, 949 F.2d 1323, 1328 (3d Cir.1991) (“the creation of a benefit plan is a corporate management decision unrestricted by ERISA’s fiduciary duties”); Fletcher v. Kroger Co., 942 F.2d 1137, 1139-40 (7th Cir.1991) (employer’s decision to provide early retirement benefits to selected employees was permissible). “Business decisions can still be made for business reasons, notwithstanding their collateral effect on prospective, contingent employee benefits.” Dzinglski v. Weirton Steel Corp., 875 F.2d 1075, 1079 (4th Cir. 1989), cert, denied, 493 U.S. 919, 110 S.Ct. 281, 107 L.Ed.2d 261 (1989). Here, CIOC acted in its capacity as an employer in deciding not to award severance benefits, and thus, we should defer to CIOC’s decision.
This litigation has gone on far too long. Nevertheless, I would reverse the district court’s decision, since it was based on reasoning no longer valid in this circuit. Given the broad discretion enjoyed by employers after Hamilton, I cannot conclude that CIOC acted improperly in this case. At the very least, I would remand this case to the district court for a re-examination of CIOC’s exercise of discretion in light of Hamilton.
For the foregoing reasons, I respectfully dissent.

. Other courts have also allowed broad reservations of discretion by employers. See, e.g., Cat-tin v. General Motors Corp., 955 F.2d 416 (6th Cir.1992); Reichelt v. Emhart Corp., 921 F.2d 425 (2d Cir.1990), cert. denied, — U.S.-, 111 S.Ct. 2854, 115 L.Ed.2d 1022 (1991); Alday v. Container Corp. of America, 906 F.2d 660 (11th Cir.1990), cert. denied, — U.S..-, 111 S.Ct. 675, 112 L.Ed.2d 668 (1991); Young v. Standard Oil (Indiana), 849 F.2d 1039 (7th Cir.), cert. denied, 488 U.S. 981, 109 S.Ct. 529, 102 L.Ed.2d 561 (1988).

. The district court also held that "the receipt of a continuance benefit is not relevant to eligibility for the severance benefits ... whether that receipt is considered an automatic disqualification from severance benefits or merely a factor in a discretionary decision to deny them.” App. at 223 (emphasis added).

. The severance plan states in at least three places that CIOC reserves discretion over the approval of severance benefits:
Under circumstances and conditions as defined by the Company, subject employees whose employment is terminated for specified reasons may become eligible for a severance allowance.
Approvals — A severance allowance is payable only when prior approval is obtained from the Division President, Group Vice President and the corporate Vice President of Personnel.
The procedures and allowances contained herein are not to be automatically applied to any employment termination, and the application of these procedures and allowances to an incident of employment termination shall not serve as a precedent for any subsequent employment termination. Each incidence of employment termination will be evaluated as an isolated occurrence and the Company shall determine in each instance the applicability of these allowances.
App. at 220-21 n. 5 (emphasis added). Thus, I disagree with the majority’s assertion that CIOC has imported new conditions into its benefits plan, without giving prior notice to employees. See Maj. op. at 1008.