Court Opinion

ID: 4670334
Source: CourtListenerOpinion
Date Created: 2021-03-23 00:00:23.491469+00
Date Added: 2024-06-11T08:01:54.604719
License: Public Domain

Case: 20-30004     Document: 00515790296         Page: 1     Date Filed: 03/22/2021

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

                                                                           FILED
                                                                      March 22, 2021
                                  No. 20-30004                        Lyle W. Cayce
                                                                           Clerk

   Mark Allan Atkins; Allen Wayne Eddins, Jr.; Douglas
   Edward Haga; Chase Lloyd Somers; Neland Hardy
   Singletary,

                                                           Plaintiffs—Appellants,

                                      versus

   CB&I, L.L.C.,

                                                           Defendant—Appellee.

                  Appeal from the United States District Court
                     for the Western District of Louisiana
                            USDC No. 2:19-CV-899

   Before Jolly, Southwick, and Costa, Circuit Judges.
   Gregg Costa, Circuit Judge:
          A company agreed to pay a bonus to employees who worked until the
   completion of a construction project. The question is whether this Project
   Completion Incentive Plan is an ERISA plan.
                                         I
          Plaintiffs are five former employees of CB&I, L.L.C. who worked as
   laborers on a construction project in Louisiana. They quit before the project
Case: 20-30004         Document: 00515790296                Page: 2       Date Filed: 03/22/2021

                                           No. 20-30004

   ended, which made them ineligible to receive the Project Completion
   Incentive under the terms of that plan. It provides:
           CB&I will pay to CRAFT employees who meet the eligibility
           requirements below a Project Completion Incentive payment
           equal to five percent (5%) of the employee’s total earnings . . .
           earned while working for CB&I . . . as a retention incentive to
           continue working on the Project until their role on the project
           is complete. The Project Completion Incentive is calculated
           based on total earnings earned by the employee at the Project
           site beginning the date employment begins at site until the eli-
           gible employee is laid off in a reduction-in-force or CB&I
           transfers the employee from the Project site when the em-
           ployee’s role on the project is complete. Employees who quit,
           transfer or terminate their employment for any other reason are
           not eligible for the Project Completion Incentive payment.
           CB&I will pay the Incentive payment to an eligible employee
           on his/her final paycheck.
           Plaintiffs nonetheless sued CB&I in Louisiana state court, seeking the
   5% bonus for the period they worked. Plaintiffs concede that they are not
   eligible for payment under the Plan terms because they did not work until the
   end, but they argued that making such employees ineligible for bonuses
   amounts to an illegal wage forfeiture agreement under the Louisiana Wage
   Payment Act. LA. STAT. ANN. § 23:631, 23:632, 23:634.
           CB&I removed the case to federal court on the ground that the Project
   Completion Incentive Plan is governed by the Employee Retirement Income
   Security Act of 1974, 29 U.S.C. § 1001 et seq. Plaintiffs never filed a motion
   to remand, 1 but argued in response to the issuance of an ERISA case

           1
             CBI argues that this failure to seek remand in the district court forfeits Plaintiffs’
   objections to jurisdiction on appeal. But subject matter jurisdiction can never be conferred
   by forfeiture or waiver. 28 U.S.C. § 1447(c) (“If at any time before final judgment it
   appears that the district court lacks subject matter jurisdiction, the case shall be

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                                          No. 20-30004

   management order that the Plan is not governed by ERISA because it does
   not involve an ongoing administrative scheme. The district court disagreed,
   concluding that the incentive program was an ERISA plan because it required
   ongoing discretion and administration in determining whether a qualifying
   termination took place. That jurisdictional determination also resolved the
   merits. If ERISA applies, then federal law “supersede[s],” or preempts, the
   Louisiana statute that is the basis for Plaintiffs’ suit. 29 U.S.C. § 1144(a); see
   Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 62–63 (1987). And if federal
   ERISA law governs, then everyone agrees the Plaintiffs do not have a claim
   because they are not eligible for the bonus under the terms of the Plan.
                                                II
           So the only issue is whether ERISA governs the Project Completion
   Incentive Plan. If it does, then this case belongs in federal court and CB&I
   prevails. If it does not, then the case goes back to state court where Plaintiffs
   can pursue their state law claim.
           We thus must decide whether the employee benefit at issue—a bonus
   for completing the project—is an employee benefit plan under ERISA.
   Although there may be underlying factual issues relating to a plan, the
   ultimate question of whether ERISA applies is a legal one we review de novo.
   House v. Am. United Life Ins. Co., 499 F.3d 443, 448 (5th Cir. 2007).
           CB&I’s completion bonus is akin to a severance plan. “Although
   retirement and health plans are perhaps the better known examples of ERISA
   plans, the statute contemplates that some severance plans fall within its

   remanded.”); S J Associated Pathologists, P.L.L.C. v. Cigna Healthcare of Tex., Inc., 964 F.3d
   369, 373–74 & n.3 (5th Cir. 2020) (remanding claims to state court for lack of subject matter
   jurisdiction even though remand was not sought on that basis in district court or even on
   appeal).

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   reach.” Gomez v. Ericsson, Inc., 828 F.3d 367, 371 (5th Cir. 2016); see 29
   U.S.C. § 1002(1)(B). But determining whether a severance plan is an ERISA
   plan has challenged the courts. As the answer depends on the particulars of
   each plan, some severance plans have qualified while others have not. See
   Gomez, 828 F.3d at 371 (citing cases).
          The key Supreme Court case is Fort Halifax Packing Co. v. Coyne, 482
   U.S. 1 (1987). It addresses a state law requiring one-time severance payments
   to employees if their plant closed. Id. at 3. The Court held that ERISA did
   not govern this law because it required only a “one-time, lump-sum payment
   triggered by a single event [which] requires no administrative scheme
   whatsoever.” Id. at 12. ERISA governs only for a severance plan that
   requires an “ongoing administrative program.”             Id.   The “complex
   administrative activities” typical of such a plan may include “determining
   the eligibility of claimants, calculating benefit levels, making disbursements,
   monitoring the availability of fund for benefit payments, and keeping
   appropriate records in order to comply with applicable reporting
   requirements.” Id. at 9, 11.
          Looking at the Project Completion Incentive Plan based on the record
   before us, we do not see the ongoing administrative scheme characteristic of
   an ERISA plan. That big-picture assessment can also be seen by considering
   various factors we have used to determine whether a severance payment rises
   to the level of an ERISA plan.
          First, the Plan calls for only a single payment. Id. at 12; see also Peace
   v. Am. Gen. Life Ins. Co., 462 F.3d 437, 440–41 (5th Cir. 2006) (“[O]ne-time
   severance payments do not constitute an employee benefit plan under
   ERISA.”).     A one-time payment usually does not require an ongoing
   administrative scheme because the “employer assumes no responsibility to
   pay benefits on a regular basis, and thus faces no periodic demands on its

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                                   No. 20-30004

   assets that create a need for financial coordination and control.” Fort
   Halifax, 482 U.S. at 12. Multiple payments, payments varying in amounts,
   and payments made on an irregular basis are more indicative of ERISA-
   governed plans. See, e.g., Crowell v. Shell Oil Co., 541 F.3d 295, 305–08 (5th
   Cir. 2008) (finding an ERISA plan because the broader plan required
   continuous payouts and calculations could have led to differing amounts). In
   addition, some ERISA severance plans include additional benefits besides a
   payment, like COBRA insurance coverage. Gomez, 828 F.3d at 373; see also
   Clayton v. ConocoPhillips Co., 722 F.3d 279, 295 (5th Cir. 2013). There is
   nothing like that here. The incentive benefit begins and ends with an eligible
   employee’s receipt of a bonus in their final paycheck.
          Also distancing the Plan from ERISA is the simplicity of calculating
   the one-time payment. Figuring out the bonus amount just requires taking
   5% of the employee’s earnings while working on the project (and then
   accounting for tax withholding as with any other earnings). This “single
   arithmetical calculation” is not the type of complex determination ERISA
   plans often make. Cantrell v. Briggs & Veselka Co., 728 F.3d 444, 450 (5th
   Cir. 2013) (quoting Velarde v. PACE Membership Warehouse, Inc., 105 F.3d
   1313, 1316 (9th Cir. 1997)).
          While the frequency and simplicity of payments do not resemble an
   ERISA plan, the frequency of triggering events sends mixed signals. One the
   one hand, because the payments have a clear end date—when the
   construction project is completed—payments will not be triggered with
   anything nearing the frequency of typical retirement, health, or even
   severance plans when employees become eligible for benefits at different
   times throughout a company’s existence. See Tinoco v. Marine Chartering,
   Co., 311 F.3d 617, 621 (5th Cir. 2002); Gomez, 828 F.3d at 371–73. On the
   other hand, there is not a single-day trigger as there would be for a plant
   closing. See Fort Halifax, 482 U.S. at 12. Different CB&I workers may

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   complete their work on the project at different times before the entire project
   is done, as workers become eligible when “their role on the project is
   complete.” Still, the fact that eligibility is tied to workers’ completion of
   their duties on a discrete project makes this Plan different from most ERISA
   plans.
            That brings us to the issue of discretion, which is primarily why the
   district court concluded ERISA governed. ERISA plans typically require
   plan administrators to make “ongoing discretionary decisions based on
   subjective criteria.” Tinoco, 311 F.3d at 622–23. We have found discretion
   based on subjective criteria when eligibility for severance payments turned
   on whether the employee had “good reason” to stop working or whether a
   company’s termination was “for cause.” Gomez, 828 F.3d at 372 (finding “a
   great deal of discretion” when administrator had to decide whether, among
   other things, “good reason” existed for employee’s departure); Clayton, 722
   F.3d at 295 (finding discretion when administrator “determin[ed] whether
   ‘good reason’ exist[ed] when a Participant terminat[ed] her employment”);
   Wilson v. Kimberly-Clark Corp., 254 F. App’x 280, 282 (5th Cir. 2007)
   (finding discretion when a plan stated: “The Committee . . . Shall have the
   sole discretion to determine whether a termination is voluntary or
   involuntary, and whether a Participant’s termination is for Cause.”). But
   even a need to determine if someone was terminated “with cause” will not
   always be enough to show a sufficient degree of discretion. Cantrell, 728 F.3d
   at 447, 452 (holding that ERISA did not apply to plan providing for deferred
   compensation even though former employees were not eligible if
   administrator determined they were terminated with cause or were
   competing with the company during the payout period).
            It is difficult to discern a clear dividing line on when cause-type
   determinations involve the requisite level of discretion. Compare id. at 447,
   452 with Clayton, 722 F.3d at 295. But we need not investigate that question

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                                    No. 20-30004

   further because the Project Completion Incentive Plan does not require a
   “for cause” assessment. Instead, a CB&I employee is eligible for the bonus
   if the worker is “laid off in a reduction-in-force” or if the company transfers
   the worker to another location “when the employee’s role on the project is
   complete.” Determining whether an employee was transferred does not
   seem to require a significant degree of discretion. And while the classification
   of a layoff may entail some exercise of judgment, it is less subjective to
   determine whether the company was undergoing a reduction in force than to
   assign the cause of a particular employee’s departure. As even the latter may
   not always entail more than a “modicum of discretion,” Cantrell, 728 F.3d
   at 451, the reduction-in-force determination alone is not “sufficient to turn a
   severance agreement into an ERISA plan,” id. at 452.
          What is more, some eligibility determinations under the Plan will be
   clear as day. It is for these Plaintiffs, who concede that they are not eligible
   because they quit before construction had ended. No discretion is required
   to determine that.
          Consistent with the lack of complexity needed to answer the “who”
   and “how much” questions about the bonus, we do not see any special
   administrative apparatus dedicated to overseeing the Plan.          Shearer v.
   Southwest Serv. Life Ins. Co., 516 F.3d 276, 279 (5th Cir. 2008). A plan is more
   likely to be governed by ERISA when it includes administrative procedures,
   such as procedures for handling claims and appeals, Gomez, 828 F.3d at 372,
   is administered on a large-scale to many employees, id., requires continuous
   monitoring of payees, Cantrell, 728 F.3d at 452, or requires additional
   oversight once the benefit has been paid, either because of continuing
   insurance benefits or the possibility of clawing back severance payments if
   the employee returns to work, Gomez, 828 F.3d at 373; Crowell, 541 F.3d at
   305. The record shows none of that here.

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                                   No. 20-30004

          In sum, the Project Completion Incentive Plan involves a single and
   simple payment. Determining eligibility might require the exercise of some
   discretion, but not much. An administrative structure is not devoted to
   overseeing the Plan. The Plan thus lacks the complexity and longevity that
   result in the type of “ongoing administrative scheme” ERISA covers. Fort
   Halifax, 482 U.S. at 12 (“To do little more than write a check hardly
   constitutes the operation of a benefit plan.”); see also Cantrell, 728 F.3d at
   451; Tinoco, 311 F.3d at 622 (both holding that a “one-time calculation using
   a fixed formula” did not amount to an ongoing administrative scheme).
                                       ***
          CB&I’s bonus plan is not an ERISA plan. That means there is no
   federal jurisdiction over this lawsuit. We VACATE the judgment of the
   district court and REMAND so the case can be returned to state court.

                                         8