Court Opinion

ID: 2995222
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:19:07.437523+00
Date Added: 2024-06-11T11:45:23.902474
License: Public Domain

In the
United States Court of Appeals
For the Seventh Circuit

Nos. 00-1851 & 00-1932

WILLIAM A. BOWLES,

Plaintiff-Appellee, Cross-Appellant,

v.

QUANTUM CHEMICAL COMPANY,
a division of QUANTUM CHEMICAL
CORPORATION, a Hanson Company,

Defendant-Appellant, Cross-Appellee.

Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 95 C 2719--Rudy Lozano, Judge.

ARGUED FEBRUARY 27, 2001--DECIDED SEPTEMBER 11, 2001

  Before COFFEY, RIPPLE and EVANS, Circuit
Judges.

  RIPPLE, Circuit Judge. William Bowles
left his management position at Quantum
Chemical Company ("Quantum") after
Quantum was acquired by Hanson PLC ("Han
son"). Dr. Bowles sued Quantum to recover
severance benefits allegedly due to him
under Quantum’s severance protection plan
("the severance plan"). Following a bench
trial, the district court determined that
there was a diminution in Dr. Bowles’
authority, duties, responsibilities, and
status, which entitled Dr. Bowles to
benefits under the severance plan. The
court awarded Dr. Bowles $195,390, plus
attorneys’ fees and prejudgment interest.
Quantum appeals that award. Dr. Bowles
cross-appeals on the grounds that (1) he
also is entitled to a supplemental bonus
that the district court did not award him
and (2) the court’s award of attorneys’
fees was too low. For the reasons set
forth in the following opinion, we affirm
the district court’s award of severance
benefits as well as its denial of the
supplemental bonus. We vacate and remand
the issue of attorneys’ fees to the
district court for reconsideration.

I

BACKGROUND
A.   Facts

  Dr. Bowles, who holds a Ph.D. in
Chemistry, was employed by Quantum or one
of its predecessors from June 1976 until
the time he left his position on
September 30, 1994. At the time he
terminated his employment, Dr. Bowles was
serving as Quantum’s director of
polyolefins/1 research and technology
acquisition, which was a senior-level
management position.

  At trial, Dr. Bowles testified as to the
nature of his job prior to September 30,
1993. According to Dr. Bowles, he was
responsible for planning, organizing, and
supervising the major polyolefins
research projects at Quantum.
Approximately 200 people reported to him,
roughly half of whom were degreed
professionals. Dr. Bowles reported
directly to Dr. Michael Baldwin, the vice
president of research and development,
who in turn reported directly to Dr.
Ronald Yocum, Quantum’s president. The
total corporate research budget was
approximately $44 million, and
approximately $29 million of that was
allocated to Dr. Bowles’ department. Dr.
Bowles had a particular interest in the Q
Technology project, the purpose of which
was to find ways of making Quantum less
dependent on its competitors’ technology.
He had spent anywhere between twenty and
fifty percent of his time on that project
since its inception in the early 1990s.

  As a senior-level manager, Dr. Bowles
was eligible for certain bonuses and
benefits. Pursuant to its senior manager
performance plan ("the SMPP"), Quantum
gave annual incentive bonuses/2 to
certain employees if the company and the
employee met or exceeded business goals.
These bonuses were a certain percentage
of the employee’s base salary. Dr. Bowles
was slated to receive target bonuses in
1993 and 1994, and, although the
testimony on this point was conflicting,
it appears that those bonuses should have
been thirty percent of his base salary.
Although Quantum did not pay out target
bonuses in 1993, Dr. Bowles received a
target bonus of $37,551.60 in 1994.

  Additionally, Dr. Bowles was eligible to
participate in Quantum’s incentive award
deferral plan ("the deferral plan"). The
deferral plan allowed Dr. Bowles to
invest all or part of the bonuses he
received in the company’s general fund.
The money earned interest at a favorable
rate, and Dr. Bowles did not have to pay
taxes on it until the funds were paid out
to him at a time he specified, presumably
during his retirement when he would be in
a lower tax bracket. The deferral plan
contained a provision that required the
company to pay out any and all funds in
the plan thirty days after a change in
control. This provision was designed to
ensure that employees who had invested in
the fund would not lose their money if
the corporation became insolvent
following a takeover. During the course
of his employment at Quantum, Dr. Bowles
invested approximately $191,000 in the
deferral plan.

  In the early 1990s, Quantum began
experiencing serious financial
difficulties. Quantum’s senior management
actively sought out another entity that
could help Quantum get its financial
affairs back on track. At the same time,
the company revised its severance plan
"to protect certain key managers from the
effects of an actual or possible Change
in Control." R.149, Pl.’s Ex.1 at 1.
Under the revised severance plan, an
employee who suffered a "loss of his or
her employment within one year following
a Change in Control" was entitled to
receive severance benefits. Id. As is
relevant here, there were two
circumstances in which an employee could
initiate the termination of his
employment and still receive severance
benefits for having suffered a loss of
employment. First, an employee would
receive benefits if he resigned following
"a diminution of [his] authority, duties,
responsibilities or status" ("the
diminution trigger"). Id. at 3.
Alternatively, the employee would receive
severance benefits if he resigned
following the acquiring company’s

failure to provide [him] with the
opportunity to participate, on terms no
less favorable than those existing
immediately prior to the Change in
Control, in any incentive bonus, savings,
pension or other employeebenefit plan of
Quantum in effect immediately prior to
the Change in Control (or plans and
benefits which are, in the aggregate, no
less favorable to [him] than those in
effect six months prior to the Change in
Control) [("the loss-of-benefits
trigger")].

Id. The occurrence of either trigger was
sufficient for an employee to receive
benefits under the severance plan.

  An employee entitled to receive benefits
under the severance plan also was
entitled to receive an annual incentive
bonus award. The drafter of the severance
plan, C. William Carmean, testified by
deposition that the purpose of this bonus
provision was to ensure that an employee
who had earned a bonus prior to a change
in control still would be paid that bonus
following the change in control. The rel
evant provision of the severance plan
provides:

Each eligible employee who becomes
entitled to benefits under the Plan shall
be paid an annual incentive bonus award,
as described below, with respect to each
year or portion thereof during the period
beginning the first full year preceding a
Change in Control and ending on the date
such employee loses his or her
employment. The annual incentive bonus
award with respect to such year or
portion thereof shall be the greater of
(a) the amount of any such award actually
granted to such employee with respect to
such period, and (b) the amount of the
award, if any, that would have been
granted to such employee with respect to
such period under the Senior Manager
Performance Plan . . . as such plan was
in effect with respect to bonuses granted
for the full year preceding the Initial
Year (the "Prior Year") and based upon
such employee’s target bonus for the
Prior Year . . . .

Id. at 1-2. Lastly, the severance plan
provided that "Quantum shall also pay all
legal fees and expenses incurred by an
eligible employee as a result of such
employee’s seeking to obtain or enforce
any right or benefit" under the plan. Id.
at 4.

  On September 30, 1993, Quantum was
acquired by Hanson. This acquisition
constituted a change in control that
triggered Quantum’s obligation to pay
severance benefits, provided that the
employee also suffered a loss of
employment within the meaning of the
severance plan. Dr. Bowles testified at
trial that, in his opinion, Hanson’s
acquisition of Quantum significantly
diminished his authority, duties,
responsibilities, and status. Dr. Bowles
believed that the most significant change
in his job following the acquisition was
the termination of the Q Technology
project. According to Dr. Bowles, the
company’s decision to discontinue the Q
Technology project "[b]asically gutted
[his job]. It ripped the heart out of
it." R.169-I at 38. Dr. Bowles perceived
the termination of the project as an
indication that the company no longer was
going to pursue researching and
developing its own technology. Not only
did Dr. Bowles believe that this decision
signified a decline in the importance of
independent research to the company, he
thought it was detrimental to the
company’s future.

  Dr. Bowles also explained that, in his
view, the restructuring inserted an extra
layer of management between himself and
the company president. Dr. Bowles’ direct
superior, Baldwin, who used to report
directly to President Yocum, now reported
to Gene Allspach, the vice president of
manufacturing and technology. According
to Dr. Bowles, this change in the
hierarchy detrimentally affected his own
position because Allspach, unlike
Baldwin, did not have a research
background. Consequently, Dr. Bowles had
to spend a significant amount of time
educating Allspach about research,
whereas that process was unnecessary when
Baldwin could go straight to Yocum on Dr.
Bowles’ behalf.

  Dr. Bowles also described other
deleterious changes to his job, such as a
lower research budget, lower expenditure
authorizations for him and his
subordinates, and the loss of
approximately twenty people in his
department, five of whom were degreed
professionals who performed important
research functions within the department.
Four additional employees who were
responsible for process modeling were
transferred out of the research and
development department into the
engineering department. According to Dr.
Bowles, these four employees maintained
the computers his department needed for
data acquisition in addition to their
process-modeling work. As a result of
their transfer, Dr. Bowles’ department
was left without anyone who could
maintain its computers on an emergency
basis, which hindered the advancement of
the department’s research and data
acquisition.

  In addition to these changes to his
daily responsibilities, Dr. Bowles lost
the opportunity to participate in the
deferral plan, which he believed entitled
him to severance benefits under the loss-
of-benefits trigger. Pursuant to its
terms, the deferral plan had paid out its
funds, including those Dr. Bowles had
invested, approximately thirty days after
the change in control. Because the funds
were distributed, Dr. Bowles had to pay
taxes on them, and his tax liability was
approximately $70,000. Prior to the time
Dr. Bowles terminated his employment,
Quantum did not implement a substitute
program that allowed employees to shelter
their bonuses the way the deferral plan
had allowed them to do./3 Hanson did,
however, introduce new employee benefits
that previously were unavailable. For
instance, it increased the company’s
401(k) contributions, increased
employees’ travel and accident insurance,
and added new employee discounts on a
range of Hanson products.

  An additional benefit Hanson implemented
following the change in control was a
supplemental bonus program that granted
certain employees bonuses over and above
the target bonuses they received under
the SMPP. According to Myra Perkinson,
Quantum’s vice president of human
resources and communications, Hanson
added the supplemental bonus plan to
"continue the momentum" of the company’s
success. R.169-II at 184. Dr. Bowles
earned a $28,163.70 bonus for 1994 under
this supplemental bonus plan;/4 however,
Dr. Bowles never was paid this
bonus.Perkinson explained that employees
had to be employed by the company at the
time of payout to receive the
supplemental bonus, and employees who
were eligible forseverance benefits could
not receive a supplemental bonus.
Nevertheless, Dr. Bowles believed that,
because the annual incentive bonus
provision of the severance plan was
designed to protect any bonus an employee
had earned, he was entitled to receive
his supplemental bonus under the plan.
  Dr. Bowles informed Quantum’s management
that he was terminating his employment
and that he felt he was entitled to
severance benefits. Perkinson, who was
responsible for administering the
severance plan and determining whether
Dr. Bowles was entitled to severance
benefits, consulted Baldwin about the
scope of the changes to Dr. Bowles’ job
following the change in control.
Perkinson and Baldwin’s analysis of
whether Dr. Bowles’ job was diminished
appears to have employed the Hay
methodology, which Quantum used to
evaluate the size of its employees’ jobs.
That methodology determined the size of a
job by focusing on the "know how"
required to do the job, the problem
solving associated with the job, and the
job’s accountability. R.169-II at 158.
According to the trial testimony, the
most significant factor in rating
research positions under the Hay
methodology was the job’s know how, and
neither Perkinson nor Baldwin believed
that this element of Dr. Bowles’ job was
affected by Hanson’s acquisition of
Quantum. Thus, Perkinson, together with
Yocum and Quantum’s senior counsel,
concluded that Dr. Bowles’ authority,
duties, responsibilities, and status had
not been diminished following the change
in control.

  In addition, Quantum did not believe
that Dr. Bowles was denied the
opportunity to participate in an employee
benefit program under the loss-of-
benefits trigger simply because the
deferral plan had paid out its funds.
Quantum viewed the payout as the
fulfillment of the deferral plan rather
than as its termination. Quantum also
believed that, in the aggregate, the
benefits available to Dr. Bowles had
increased, which prevented the
application of the loss-of-benefits
trigger. For these reasons, Quantum
determined that Dr. Bowles was not
entitled to severance benefits. Dr.
Bowles then sued to enforce the terms of
the severance plan.

B.   Earlier Proceedings

  After holding a bench trial, the
district court entered findings of fact
and conclusions of law. The court first
concluded that the severance plan was an
employee benefit plan covered by the
Employee Retirement Income Security Act
("ERISA"), 29 U.S.C. sec. 1001 et seq.,
because it required "ongoing, case-by-
case administration by persons exercising
their judgment under standards not
capable of mechanical application." R.129
at 5. Then, the court found specifically
that Dr. Bowles’ authority, duties,
responsibilities, and status were
diminished within the year following the
change in control. The court referred to
the following facts as support for its
conclusion: (1) the budgets for the
research department in general and for
the polyolefins research group in
particular were reduced by seven-figure
amounts; (2) the Q Technology project,
which took up at least twenty percent of
Dr. Bowles’ time, was terminated; (3) Dr.
Bowles’ authority to approve expenditures
was reduced substantially, as was the
authority of the persons reporting to
him, which required Dr. Bowles to monitor
more closely the expenditures of others;
(4) an extra layer of management was
added between Dr. Bowles and Quantum’s
president; (5) several people who worked
for Dr. Bowles left the company and were
not replaced; and (6) Dr. Bowles’
supervisory position with respect to
process modeling was eliminated.

  The district court recognized that there
was conflicting testimony regarding
whether Dr. Bowles’ authority, duties,
responsibilities, and status were
diminished; however, the court "found the
testimony of [Dr.] Bowles to be credible
because he knew the most about what
happened to his job after the change in
control and appeared candid." Id. at 3.
The court explained further that its
findings were based "on the totality of
the evidence and the credibility of the
witnesses." Id. Because the court
determined that Dr. Bowles’ authority,
duties, responsibilities, and status had
been diminished in the year following the
change in control, it held that Dr.
Bowles was entitled to severance benefits
under the diminution trigger. It
calculated the amount of the benefits
owed to Dr. Bowles as $195,390./5

  Although the court’s finding that Dr.
Bowles was entitled to benefits under the
diminution trigger was sufficient to
support its award of severance benefits
to Dr. Bowles, the court went on to
address whether Dr. Bowles also was
entitled to benefits under the loss-of-
benefits trigger. In the district court’s
view, an employee was entitled to
benefits under the loss-of-benefits
trigger if he lost the opportunity to
participate in a benefit plan, unless the
benefits he retained were as favorable in
the aggregate as the benefits that were
available to him six months prior to the
change in control. The district court did
not believe that Dr. Bowles had
demonstrated that the benefits he
retained following the change in control
were less favorable in the aggregate than
those available to him six months prior
to the change in control. Thus, the court
held that Dr. Bowles was not entitled to
severance benefits under the loss-of-
benefits trigger.

  The court then held that Dr. Bowles was
not entitled to a supplemental bonus. The
court found it persuasive that the only
bonus mentioned in the severance plan was
the annual incentive bonus award, which
the court did not believe could be read
to include the supplemental bonus. The
court noted that, although Dr. Bowles had
tried to show through extrinsic evidence
that the supplemental bonus was part of
the same program as the annual incentive
bonus award explicitly mentioned in the
severance plan, he had not met his burden
of proof on this issue. Consequently, the
court declined to award Dr. Bowles the
$28,163.70 supplemental bonus he had
earned in 1994.

  Lastly, in accordance with the
attorneys’ fee provision in the severance
plan, the court awarded Dr. Bowles his
attorneys’ fees. Dr. Bowles had signed a
contingent fee agreement with his
attorney, under which Dr. Bowles agreed
to pay his attorney one-third of
everything he was awarded. The district
court awarded Dr. Bowles $64,478.70
inattorneys’ fees, which is slightly less
than one-third of the amount of the
severance benefits it awarded him. The
court also awarded Dr. Bowles prejudgment
interest in the amount of $51,363.88.

II

DISCUSSION

  Quantum appeals the district court’s
award of severance benefits, attorneys’
fees, and prejudgment interest to Dr.
Bowles. Dr. Bowles cross-appeals the
district court’s determination that he
was not entitled to a supplemental bonus;
he also argues that he was entitled to
receive one-third of the amount of the
prejudgment interest award as additional
attorneys’ fees.

  Following a bench trial, we review de
novo a district court’s conclusions of
law. See NRC Corp. v. Amoco Oil Co., 205
F.3d 1007, 1011 (7th Cir. 2000). However,
we afford great deference to the trial
court’s findings of fact, and we shall
reverse only if those findings are
clearly erroneous. See id. A finding is
clearly erroneous when the reviewing
court "’is left with a definite and firm
conviction that a mistake has been committed.’"
Central States, Southeast & Southwest
Areas Pension Fund v. Kroger Co., 226
F.3d 903, 910 (7th Cir. 2000) (quoting
United States v. U.S. Gypsum Co., 333
U.S. 364, 395 (1948)), cert. denied, 121
S. Ct. 1644 (2001). "If the district
court’s account of the facts is plausible
in light of the record viewed in its
entirety, we may not reverse that
decision even if we may have decided the
case differently." Id. "Furthermore, any
reasonable doubts we may harbor should be
resolved in favor of the district court’s
ruling ’in light of its greater immersion
in the case.’" Id. (quoting Cook v. City
of Chicago, 192 F.3d 693, 697 (7th Cir.
1999)). With these standards in mind, we
turn to the merits of the parties’
claims.

A.   Applicability of ERISA

  The parties dispute whether the
severance plan is covered by ERISA.
Quantum argues that ERISA applies because
the terms of the severance plan require
Quantum to maintain an ongoing
administrative scheme. Dr. Bowles, on the
other hand, argues that ERISA does not
apply because the application of the
severance plan does not require the
exercise of discretion; instead, the
severance plan provides for a one-time,
lump sum payment upon the occurrence of a
specified event./6 The district court
accepted Quantum’s argument and applied
ERISA. We agree with the district court’s
conclusion.

  ERISA will preempt a state law breach of
contract claim if the claim requires the
court to interpret or to apply the terms
of an employee benefit plan. See Collins
v. Ralston Purina Co., 147 F.3d 592, 595
(7th Cir. 1998). An employee benefit plan
can include severance payments. See 29
U.S.C. sec. 1002(1)(B); Fort Halifax
Packing Co. v. Coyne, 482 U.S. 1, 7 n.5
(1987). The decisive inquiry in
determining whether a severance plan
falls within ERISA’s coverage is whether
the plan requires an ongoing
administrative program to meet the
employer’s obligation. See Fort Halifax,
482 U.S. at 11-12; Collins, 147 F.3d at
595-96. ERISA applies when a severance
plan potentially places "periodic demands
on [an employer’s] assets that create a
need for financial coordination and
control." Fort Halifax, 482 U.S. at 12;
see also Collins, 147 F.3d at 596. In
contrast, "[t]he requirement of a one-
time, lump-sum payment triggered by a
single event requires no administrative
scheme whatsoever to meet the employer’s
obligation," and ERISA therefore does not
apply. Fort Halifax, 482 U.S. at 12.

  We previously considered a severance
plan very similar to the plan involved in
this case and concluded that ERISA ought
to apply. See Collins, 147 F.3d at 595-
97. In Collins, we found it persuasive
that the employer "could not satisfy its
obligation by cutting a single check and
making a single set of payments to all of
its managers [covered by the plan] at
once." Id. at 595 (emphasis and internal
quotation marks omitted). Instead, the
employer was faced with a one-year period
in which it had to budget for the
prospect "of multiple payments to various
managers, at different times and under
different circumstances." Id. at 595-96
(emphasis omitted). Additionally, the
plan required the employer to consider
each manager’s job responsibilities
individually to determine whether those
responsibilities had been reduced
substantially. See id. at 596. We
concluded that, because the plan required
the employer to make "nonclerical
judgment calls" on multiple occasions, an
ongoing administrative scheme existed
that brought the plan within ERISA’s cov
erage. Id. at 597 (internal quotation
marks omitted).

  We do not believe that Quantum’s
severance plan is materially different
than the plan we considered in Collins.
Although the record does not reveal the
exact number of Quantum employees covered
by the severance plan, it is clear that
others in addition to Dr. Bowles were
covered. The covered employees had a one-
year period in which they could make a
demand for severance benefits, which
required Quantum to budget for the
possibility of making multiple payments
throughout the course of that year.
Perkinson also testified that, if Quantum
believed that its obligation to pay
severance benefits to a particular
employee had been triggered within the
year following the change in control,
Quantum would notify that employee of his
right to claim benefits. Thus, Quantum
also had to develop a mechanism for
monitoring the conditions of its
employees’ employment throughout the one-
year eligibility period.

  Additionally, Perkinson’s testimony
regarding the manner in which she
administered the severance plan with
respect to Dr. Bowles demonstrates that
the severance plan was not capable of a
mechanical application, but required the
exercise of discretion. Once Dr. Bowles
made his demand for severance pay,
Perkinson did far more than simply
calculate the amount of benefits to which
Dr. Bowles was entitled and issue him a
check. See Fort Halifax, 482 U.S. at 12
("To do little more than write a check
hardly constitutes the operation of a
benefit plan."). Instead, she consulted
with Baldwin regarding the changes in Dr.
Bowles’ employment following the change
in control and made a "nonclerical
judgment call" as to whether those
changes diminished Dr. Bowles’ authority,
duties, responsibilities, or status.
Collins, 147 F.3d at 597. Moreover,
Perkinson would have had to undergo a
similar process for each employee subject
to the severance plan who demanded sever
ance pay under the diminution trigger.
This individualized investigation and
assessment demonstrates that Quantum
could not fulfill its obligations under
the severance plan through a single,
mechanical, nondiscretionary application
of the plan’s terms. See Bogue v. Ampex
Corp., 976 F.2d 1319, 1323 (9th Cir.
1992) (holding that ERISA applied when
the employer could not carry out its
obligations under a severance benefit
plan with an "unthinking, one-time,
nondiscretionary application" of the
plan’s terms).

  We agree with the First Circuit that the
sort of discretion that brings a
severance plan within ERISA’s coverage is
a matter of degree, the assessment of
which often requires the court to draw
fine lines. See Simas v. Quaker Fabric
Corp. of Fall River, 6 F.3d 849, 854 (1st
Cir. 1993). We believe our decision that
Quantum’s severance plan falls on the
ERISA side of the line is supported not
only by our own precedent, see Collins,
147 F.3d at 595-97, but by the precedent
of other circuits that have considered
similar plans./7 Moreover, we believe
this case easily is distinguishable from
those cases that have fallen on the non-
ERISA side of the line. This case is not
one in which the administrator was
required simply to make an arithmetical
computation. See, e.g., Young v. Wash.
Gas Light Co., 206 F.3d 1200, 1203-04
(D.C. Cir. 2000) (holding that ERISA did
not apply to a severance plan when "the
determinations of eligibility and the
amount of the benefits to be paid were
purely mechanical" and were triggered
solely by the employee’s decision to
retire pursuant to the terms of the plan,
which left the employer with nothing to
do but "calculate the amount of the
separation payment" pursuant to a set
formula); Kulinski v. Medtronic Bio-
Medicus, Inc., 21 F.3d 254, 258 (8th Cir.
1994) (holding that ERISA did not apply
to a severance plan because "once a
hostile takeover occurred and [the
employee] resigned his employment for
what he regarded as a good reason, there
was nothing for the company to decide, no
discretion for it to exercise, and
nothing for it to do but write a check").
Nor is this a case in which the amount of
discretion exercised is insignificant.
See Velarde v. Pace Membership Warehouse,
Inc., 105 F.3d 1313, 1317 (9th Cir. 1997)
(holding that the "minimal quantum of
discretion" needed to determine whether
an employee had been terminated for cause
was insufficient to implicate ERISA);/8
see also Young, 206 F.3d at 1204 (holding
that the one discretionary act of
selecting an employee’s separation date
was insufficient to implicate ERISA). In
light of these considerations, it seems
clear to us that the severance plan at
issue here falls within ERISA’s coverage.

  Because we have determined that
Quantum’s severance plan is governed by
ERISA, we shall construe the plan in
accordance with the federal common law
under ERISA and shall apply general rules
of contract interpretation. See Grun v.
Pneumo Abex Corp., 163 F.3d 411, 419 (7th
Cir. 1998), cert. denied, 526 U.S. 1087
(1999). We note that federal courts "must
interpret the express terms of a plan ’in
an ordinary and popular sense as would a
person of average intelligence and
experience. . . .’" Id. (quoting Pitcher
v. Principal Mut. Life Ins. Co., 93 F.3d
407, 411 (7th Cir. 1996)).

B.   The Diminution Trigger

  We must first consider whether the
district court erred in awarding Dr.
Bowles severance benefits under the
diminution trigger. Quantum argues that,
as a matter of law, it is inherent in the
diminution trigger that trivial changes
in an employee’s job do not obligate
Quantum to pay severance benefits.
Quantum believes that the severance plan
makes little practical sense without such
a qualification. Dr. Bowles, on the other
hand, argues that the severance plan
itself does not quantify or qualify the
degree of diminution necessary to trigger
an award of benefits. Alternatively, Dr.
Bowles argues that the district court
found that the changes in his job were
significant.

  Even if we accept Quantum’s suggestion
that trivial changes in an employee’s job
are insufficient to trigger an award of
benefits, we agree with Dr. Bowles that
the district court considered the
diminution in his authority, duties,
responsibilities, and status to be
significant. Although the district court
stated in its opinion that "the severance
plan does not contain any express
language to qualify or quantify the
degree of diminution required to
establish the trigger," R.129 at 6, the
language the court used in discussing the
changes in Dr. Bowles’ job belies
Quantum’s assertion that the court
thought these changes were trivial. In
particular, the court found that (1) Dr.
Bowles’ budget was reduced by "seven-
figure amounts;" (2) the Q Technology
project, "a major research initiative
that [Dr.] Bowles was instrumental in,"
was terminated; (3) Dr. Bowles’ authority
to approve expenditures "was reduced
substantially;" and (4) Dr. Bowles’
"supervisory position with respect to
process modeling was eliminated." Id. at
2-3 (emphasis added). These emphasized
words indicate to us that the district
court considered the degree to which the
changes affected Dr. Bowles’ position and
believed that those changes had a
meaningful impact. Moreover, the court
also found that (1) the expenditure
authority of employees below Dr. Bowles
was reduced, which required Dr. Bowles to
monitor their spending more closely; (2)
an extra layer of management was added
between Dr. Bowles and President Yocum;
and (3) employees who worked for Dr.
Bowles left and were not replaced. Our
review of the record and the trial
testimony reveals that there is
evidentiary support for each of the
court’s factual findings. Thus, we are
unable to conclude that any of these
determinations are clearly erroneous.

  Quantum offers numerous reasons why the
changes we have just detailed were not
true diminutions in Dr. Bowles’ job. We
are unpersuaded by these explanations.
The district court specifically found
that the changes were diminutions. It has
been clear throughout this litigation
that Quantum, and those of its employees
responsible for administering the
severance plan, disagreed with Dr.
Bowles’ perception of the impact these
changes had on his job. However, the
district court stated explicitly that it
found Dr. Bowles’ testimony credible--
more credible than that of the severance
plan’s administrators--and we are not in
a position to ignore or second-guess that
finding. See United States v. Childs, 256
F.3d 559, 562 (7th Cir. 2001) ("If, in
making factual determinations, the
district court deems the testimony of one
witness more credible than that of
another witness and that testimony is
supported by the record, there can be no
clear error."). As a result, Quantum’s
attempt to explain away the district
court’s findings cannot succeed.

  It is clear to us that the district
court believed that the changes in Dr.
Bowles’ authority, duties,
responsibilities, and status were
meaningful diminutions. Because we find
no clear error in the district court’s
findings, we uphold its award of
severance benefits to Dr. Bowles under
the diminution trigger./9

C.   The Supplemental Bonus

  Dr. Bowles argues that his damages award
should have included an additional
$28,163.70 that he earned under Hanson’s
supplemental bonus program. An employee
eligible for benefits under Quantum’s
severance plan also would receive an
annual incentive bonus award, the amount
of which was determined by the amount of
the target bonus that the employee
received under the SMPP. Dr. Bowles
admits that he received his target bonus
under the SMPP for 1994. However, he
believes that he also was entitled to
receive the supplemental bonus he earned
in 1994 because his ability to earn that
bonus was dependent upon his
participation in the SMPP. Dr. Bowles
also relies on the deposition testimony
of Carmean, the severance plan’s drafter,
to support his argument. Specifically,
Dr. Bowles contends that Carmean
testified that the provision of the
severance plan at issue here was designed
to protect any bonus the employee earned
prior to the change in control. Quantum
responds to Dr. Bowles’ argument by
pointing out that the severance plan only
mentions the annual incentive bonus
award, not the supplemental bonus.

  "[A]s a general rule, an unambiguous
contract should be construed without
reference to extrinsic evidence . . . ."
Grun, 163 F.3d at 420. "[I]f the language
of the contract provides an answer, then
the inquiry is over; parol evidence is
neither necessary nor admissible." Id.
The district court concluded that, as a
matter of law, "the proper interpretation
of the severance plan is that it does not
provide for payment of a supplemental
bonus." R.129 at 2-3. We agree with the
district court’s conclusion. The
operative documents do not suggest a
connection between the supplemental bonus
and the annual incentive bonus award
provided in the severance plan. The bonus
available under the severance plan is
defined in terms of the target bonus
available under the SMPP; the severance
plan makes no mention of the supplemental
bonus. Dr. Bowles correctly asserts that
he was only eligible for the supplemental
bonus because he was a participant in the
SMPP; however, the fact that eligibility
for both the target bonus and the supple
mental bonus was defined by reference to
the SMPP does not, in itself, establish
that the two bonuses were part of the
same overall bonus program. Without such
a connection between the two bonuses, we
are unable to conclude as a matter of law
that Dr. Bowles is entitled to the
supplemental bonus under the severance
plan.

  Even if we were to find ambiguity in
this provision of the severance plan and
therefore looked to extrinsic evidence to
determine its meaning, we would have to
conclude that Dr. Bowles did not meet his
burden of proving that the supplemental
bonus was part of the annual incentive
bonus award. Every indication in the
record is that the two programs were
entirely separate. The supplemental bonus
program did not exist at the time the
severance plan was drafted. Instead,
Hanson implemented the supplemental
bonuses after it had acquired Quantum.
The literature describing the target
bonuses available under the SMPP does not
mention supplemental bonuses. Moreover,
it appears that employees only could
receive a supplemental bonus after they
had earned all of the bonus money that
was available under the SMPP. In
addition, the target and supplemental
bonuses are itemized and labeled
separately on Dr. Bowles’ bonus summary
for 1994. Indeed, the only evidence Dr.
Bowles can offer to connect the two bonus
programs is Carmean’s testimony that the
severance plan was designed to protect a
bonus that the employee earned prior to
the change in control. However, that
testimony is not directly supportive of
Dr. Bowles’ argument because, when
Carmean made the statement, he was
referring specifically to the target
bonus program as discussed in the
provision of the severance plan
concerning the annual incentive bonus
award. As we already have indicated, that
provision of the severance plan makes no
mention of the supplemental bonus.

  In sum, we do not believe that Dr.
Bowles has demonstrated that the
provision of the severance plan that
grants eligible employees an annual
incentive bonus award encompasses the
supplemental bonus. Therefore, the
district court did not err in refusing to
include the supplemental bonus in its
calculation of Dr. Bowles’ damages.
D.   Attorneys’ Fees

  Dr. Bowles signed a contingent fee
agreement with his attorney that granted
his attorney one-third of the total
amount Dr. Bowles recovered, including
the prejudgment interest. In light of
this agreement, Dr. Bowles argues that
the district court’s award of attorneys’
fees should be increased by one-third the
amount of the prejudgment interest award.
Quantum responds that an award of
attorneys’ fees is within the discretion
of the district court, and the district
court did not abuse its discretion here.

  When an ERISA plaintiff seeks an award
of attorneys’ fees pursuant to ERISA’s
fee shifting provision, 29 U.S.C. sec.
1132(g)(1), we review the district
court’s award for an abuse of discretion.
See Bowerman v. Wal-Mart Stores, Inc.,
226 F.3d 574, 592 (7th Cir. 2000).
However, it appears that Dr. Bowles’
request for attorneys’ fees is
contractual, not statutory. The severance
plan specifically provides that

Quantum shall also pay all legal fees and
expenses incurred by an eligible employee
as a result of such employee’s seeking to
obtain or enforce any right or benefit
under [the] Plan, unless a court or
arbitrator finds such employee’s
challenge was without merit . . . .

R.149, Pl.’s Ex.1 at 4 (emphasis added).
Given that we have determined that Dr.
Bowles is entitled to severance benefits,
we cannot say that his claim was without
merit. Thus, the plain language of the
severance plan entitles him to his
attorneys’ fees, and the amount of those
fees is a matter of contract
interpretation, not a matter of
discretion. See Chojnacki v. Georgia-
Pacific Corp., 108 F.3d 810, 814 & 818
(7th Cir. 1997) (evaluating whether the
plaintiff was entitled to attorneys’ fees
under the provision of his severance
agreement that granted him "all
reasonable legal fees and expenses
actually incurred," without considering
the requirements for an award of
statutory fees under ERISA).

  That interpretation appears to us to be
straightforward. The severance plan
grants Dr. Bowles all his fees and
expenses. Here, Dr. Bowles’ attorneys’
fees will include one-third of the amount
of the prejudgment interest award;
therefore, Quantum is contractually
obligated to pay him that amount as part
of his attorneys’ fees. Because the
district court did not include this
additional amount as part of Dr. Bowles’
fee award, we vacate the attorneys’ fee
award and remand this issue to the
district court to allow it to modify its
judgment.

Conclusion

  Dr. Bowles is entitled to recover
severance benefits because he suffered a
diminution of his authority, duties,
responsibility, and status within the
meaning of Quantum’s severance plan. He
is not entitled to recover a supplemental
bonus. Additionally, the district court’s
award of attorneys’ fees should have
included one-third of the amount of
prejudgment interest awarded to Dr.
Bowles. This case is remanded to the
district court for further proceedings
consistent with this opinion.

AFFIRMED in part, VACATED in part,
and REMANDED

FOOTNOTES

/1 Polyolefins are low-cost plastics that are used
primarily in disposable items, such as garbage
bags.

/2 From our review of the record, it appears that
the parties also have referred to these bonuses
as "target bonuses." As we shall discuss later,
the severance plan gives employees eligible for
severance benefits an annual incentive bonus
award. Although we believe that the annual incen-
tive bonus award available under the severance
plan is related to the annual incentive bonus
award available under the SMPP, for the purpose
of clarity we shall refer to the bonuses under
the severance plan as annual incentive bonus
awards and, as the parties have done, we shall
refer to the bonuses under the SMPP as target
bonuses.

/3 The trial testimony indicated that Hanson may
have implemented a deferral plan that was more
favorable than the original after Dr. Bowles had
terminated his employment.

/4 This bonus appears to have covered the fiscal
year that ran from October 1, 1993, to September
30, 1994.

/5 The severance plan provided the following formula
for computing an employee’s severance benefits:
The amount of the employee’s 1993 salary plus his
1993 target bonus, divided by 52, and multiplied
by 65.

/6 Dr. Bowles has given us no indication of what law
he thinks ought to apply instead of ERISA. Howev-
er, it does not appear that the application of
state law principles would alter the result
reached in this case.

/7 See, e.g., Emmenegger v. Bull Moose Tube Co., 197
F.3d 929, 935 (8th Cir. 1999) (holding that a
severance benefits plan was governed by ERISA
when eligible employees might be terminated
singly or in groups of indeterminate size, termi-
nations could take place at any time, and bene-
fits were to be paid only to those employees who
were not terminated for disciplinary reasons and
who gave excellent service to the company);
Schonholz v. Long Island Jewish Med. Ctr., 87
F.3d 72, 76 (2d Cir. 1996) (holding that a
severance benefits plan was subject to ERISA when
it required the employer to determine whether the
employee (1) had been terminated involuntarily,
(2) had been terminated for either illegal con-
duct or substantially deficient performance, (3)
was making a reasonable effort to obtain other
employment, and (4) had obtained new employment
that was commensurate with his former position);
Bogue v. Ampex Corp., 976 F.2d 1319, 1323 (9th
Cir. 1992) (holding that, even though the employ-
er’s obligation to pay severance benefits was
triggered by the one-time event of a change in
control, the severance plan was covered by ERISA
because it required the employer to assess each
employee’s eligibility individually and at dif-
ferent times to determine whether the employee
had been offered a "substantially equivalent"
job).

/8 But see Tischmann v. ITT/Sheraton Corp., 145 F.3d
561, 567 (2d Cir. 1998) (holding that a severance
plan’s requirement that the employer determine
whether the employee had been terminated for
cause was a factor that suggested that ERISA
ought to apply); Simas v. Quaker Fabric Corp. of
Fall River, 6 F.3d 849, 853 (1st Cir. 1993) ("The
’for cause’ determination, in particular, is
likely to provoke controversy and call for judg-
ments on information well beyond the employee’s
date of hiring and termination," which could
implicate ERISA).

/9 Because we have determined that Dr. Bowles is
entitled to severance benefits under the diminu-
tion trigger, it is unnecessary for us also to
consider whether he is entitled to benefits under
the loss-of-benefits trigger.