Court Opinion

ID: 6069
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:12:45+00
Date Added: 2024-06-11T12:03:24.815628
License: Public Domain

United States Court of Appeals,

                                               Fifth Circuit.

                                              No. 92-2577.

                                William R. PERDUE, Plaintiff-Appellant,

                                                    v.

 BURGER KING CORPORATION, Craig Bushey, and The Benefits Committee, Defendants-
Appellees.

                                              Dec. 1, 1993.

Appeal from the United States District Court for the Southern District of Texas.

Before JONES and DeMOSS, Circuit Judges, and BARBOUR1, District Judge.

          DeMOSS, Circuit Judge:

                                           I. BACKGROUND

          Burger King Corporation ("BKC") is the owner, operator and franchisor of Burger King fast

food restaurants. In March of 1981, William R. Perdue ("Perdue") went to work for BKC as a

restaurant manager. In 1987, Perdue was promoted to Franchise Area Manager ("FAM") for the

Houston office, a position in charge of all Houston-based Franchise District Managers. In April of

1989, BKC instituted an internal reorganization to eliminate several management tiers.

          To ease the impact of the reorganization on its employees, BKC created the Burger King Job

Elimination Program ("Program"). The Program provides that for a period of three years from the

date of implementation, any full-time employee who loses his job as a result of a job elimination plan

or reduction in workforce is entitled to receive certain severance benefits.

          BKC's reorganization eliminated the FAM position from all BKC regions. On April 3, 1989,

Perdue was approached by Craig Bushey ("Bushey"), the operations vice-president for the Houston

area, and Wes Garnett ("Garnett"), the human resources manager for that area. Bushey and Garnett

explained that the FAM position had been eliminated and that Perdue could either continue with BKC

as Franchise Operations Manager ("FOM") for the Houston area, or receive cash severance benefits

   1
       Chief District Judge of the Southern District of Mississippi, sitting by designation.
under the Program. Perdue immediately accepted the position as FOM, and performed that job until

July 31, 1989 when he was terminated by BKC.

          In mid-July, 1989, Bushey received a telephone call from Rita Battistoni ("Battistoni"), an

employee in the BKC accounting department in Los Angeles, California. Battistoni requested that

Bushey submit in writing his approval of an extension of time for Perdue to repay a travel advance

in the amount of $1,000 ("travel advance" or "advance"), outstanding since May of 1988. During this

conversation, Battistoni relayed that she had been informed by Perdue that Bushey had agreed to

extend repayment of the travel advance until September of 1989. Bushey denied that he had ever

approved an extension or even known of the advance.

          On July 31, 1989, Bushey and Garnett met with Perdue to discuss the advance. Perdue

claimed he told Battistoni that he could obtain approval for an extension of the advance, not that he

had already obtained approval. Bushey terminated Perdue's employment with BKC because Bushey

felt that Perdue was no longer trustworthy.

          Upon termination, Perdue demanded payment of severance benefits under the Program. The

Burger King Corporation Benefits Committee ("Benefits Committee" or "Committee") determined

that Perdue was ineligible to receive benefits under the Program because Perdue's termination did not

result from either a reduction in workforce or a job elimination plan.2 Thus, BKC denied payment.

          Perdue filed suit against BKC, the Committee and Bushey on September 28, 1989, seeking,

among other things, payment of severance benefits. He brought four claims under the Employee

Retirement Income Security Act of 19743 (ERISA): (1) a section 1132(a)(1)(B) claim for benefits

allegedly due him under the Program; (2) a section 1132(a)(3) claim for violation of ERISA

disclosure duties; (3) a breach of fiduciary duty claim under sections 1104, 1105 and 1109; and (4)

a claim for interference with ERISA benefits under section 1140. Perdue also asserted claims of

common law fraud and breach of an agreement to offer him a franchise.

   2
    Neither Bushey nor Garnett was a member of the Committee at the time the Committee
denied Perdue's eligibility to receive severance benefits under the Program.
   3
       29 U.S.C. § 1001, et seq. (1985 & Supp.1993).
          The defendants removed this cause to federal court on the ground that ERISA preempted the

state law claims. The district court granted BKC's summary judgment motion on each and every one

of Perdue's claims. On appeal, Perdue requests review of summary judgment on the section

1132(a)(1)(B) claim, the section 1140 claim, and the common law fraud and breach of contract

claims.

                                            II. DISCUSSION

          We concur in the district court's determination that the BKC Program is a limited benefits plan

within the meaning of section 1002(1) of ERISA.4 Therefore, subject matter jurisdiction to review

appellant's ERISA and pendant state claims is proper.5

A. Standard of Review for Denial of Eligibility Under an ERISA Plan

          A denial of benefits under an ERISA plan is reviewed either de novo or, where the plan

delegates discretionary authority to an administrator or fiduciary to determine eligibility for benefits

or to interpret the terms of the plan, for an abuse of discretion. Firestone Tire and Rubber Co. v.

Bruch, 489 U.S. 101, 115, 109 S. Ct. 948, 956, 103 L. Ed. 2d 80 (1989). Perdue contends that the

district court committed reversible error in reviewing the Committee's denial of benefits under

"summary judgment standards," instead of under either of the two ERISA standards.

          The parties agree that the district court should have reviewed the Committee's determination

   4
       29 U.S.C. § 1002(1) (1985 & Supp.1993).
   5
   In his motion filed June 12, 1992, Perdue suggests that federal subject matter jurisdiction
"may not be" proper by characterizing the BKC Program as a non-ERISA plan, analogous to the
non-ERISA plans in Fontenot v. NL Indus., Inc., 953 F.2d 960 (5th Cir.1992) and Wells v.
General Motors Corp., 881 F.2d 166 (5th Cir.1989), cert. denied, General Motors Corp. v.
Wells, 495 U.S. 923, 110 S. Ct. 1959, 109 L. Ed. 2d 321 (1990). We disagree.

                  In Whittemore v. Schlumberger Technology Corp., 976 F.2d 922, 923 (5th
          Cir.1992), this court distinguished the plans at issue in Fontenot and Wells, finding the
          Schlumberger plan to be an ERISA "employee welfare benefit plan" because it was not
          created with a preconceived closing date, was effective for an extended period of time,
          and required "some sort of an administrative set-up" to facilitate employee payments. Id.

                  The BKC Program was in effect for three years, applied to two nation-wide
          personnel reorganizations, and required an "administrative set-up" to monitor and facilitate
          provision of benefits. For these reasons, the BKC Program is an ERISA "employee
          welfare benefit plan."
for an abuse of discretion. Although this standard was not applied, the district court's de novo review

accorded the Committee's determination no deference and thus, could not possibly have harmed

Perdue. The district court's error is harmless and not a ground for reversal.

B. Perdue's Appeal of ERISA Section 1132(a)(1)(B) Claim

          Section 1132(a)(1)(B) of ERISA provides a private right of action for persons alleging

entitlement to benefits, or seeking to enforce or clarify rights, pursuant to the terms of an ERISA

plan.6 Perdue's section 1132(a)(1)(B) claim alleges that the Committee abused its discretion in

denying him eligibility to receive severance benefits under the Program. On appeal, he argues that

material fact issues were raised before the district court.

          The district court held that Perdue is precluded from bringing a section 1132(a)(1)(B) claim

for benefits because his termination did not result from either a workforce reduction or a job

elimination plan. We agree. The plain language of the BKC Program limits eligibility to employees

involuntarily terminated in connection with either a workforce reduction or job elimination plan.7

Because Perdue does not allege that his termination as FOM occurred under either of these two

circumstances, he fails to allege entitlement to benefits within the eligibility provision of the Program.8

   6
    29 U.S.C. § 1132 provides, in relevant part, that "[a] civil action may be brought—(1) by a
participant ... (B) to recover benefits due to him under the terms of the plan, [or] to enforce his
rights under the terms of the plan...." 29 U.S.C. § 1132(a) (1985 & Supp.1993). "Participant" is
defined by section 1002(7) as "any employee or former employee ... who is eligible ... to receive a
benefit of any type from an employee benefit plan which covers [such] employee[ ]." 29 U.S.C. §
1002(7) (1985 & Supp. I 1993).
   7
       The BKC Program provides as follows:

                        This program applies to employees of the Company who work for Burger
                        King Corporation or its subsidiary.... In addition, to be eligible for the
                        program these employees must be regular full-time or part-time employees
                        who are involuntarily terminated by the Company because of a workplace
                        reduction or job elimination who continue to work until their services are in
                        the opinion of the Company no longer required, and who sign a General
                        Release.... This Program is not available: (a) to employees whose
                        employment is terminated for just cause or for reasons unrelated to
                        workforce reductions or job elimination....
   8
    Perdue's claim that the Committee abused it discretion is based on allegations that BKC
and/or the Committee failed to act in good faith, concealed the specific terms of the Program, and
inconsistently applied the Program's eligibility provision. These assertions are more appropriately
raised in connection with Perdue's section 1140 claim that BKC and/or the Committee wrongfully
        A BKC employee terminated for cause, or for reasons unrelated to a workforce reduction

or job elimination, is expressly ineligible to receive benefits under the Program, and, therefore, does

not have a claim for benefits under section 1132(a)(1)(B) of ERISA. The summary judgment

evidence establishes that Perdue's employment was terminated for cause, specifically because Bushey

no longer co nsidered Perdue trustworthy following the travel advance incident.9 Thus, summary

judgment on Perdue's section 1132(a)(1)(B) claim is proper.

C. Perdue's Appeal of Claim Under ERISA Section 1140

        Section 1140, in applicable part, makes it "unlawful for any person to discharge, ... expel, or

discriminate against a participant ... for the purpose of interfering with the attainment of any right to

which such participant may become entitled under the plan...."10 Perdue claims that Bushey induced

his acceptance of the FOM position and subsequently terminated his employment under the pretext

of cause, so that BKC could avoid payment of severance benefits. He appeals the district court's

failure to consider "suspect" circumstances surrounding his termination.11

        Section 1140 is concerned with acts taken against employees to prevent rights from ripening.

interfered with his attainment of rights under the Program.
   9
    A claimant under section 1132(a)(1)(B) has the initial burden of demonstrating entitlement to
benefits under an ERISA plan, or that a denial of benefits under an ERISA plan is arbitrary and
capricious. See Taylor v. Suburban Teamsters of Northern Illinois Fringe Ben. Funds, 613
F. Supp. 205, 209 (N.D.Ill.1985); Carr v. Trustees of Hotel & Restaurant Employees and
Bartenders Int'l Union Pension Fund, 585 F. Supp. 949, 950 (E.D.Pa.1984).

                As the nonmovant, Perdue is required to demonstrate a genuine issue of material
        fact on all matters for which he will bear the burden of proof at trial. Celotex Corp. v.
        Catrett, 477 U.S. 317, 324, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). Perdue failed
        to tender summary judgment evidence which would show that his termination was for
        reasons other than those alleged by the defendants.
   10
      29 U.S.C. § 1140 (1985 & Supp.1993). This section also makes it unlawful for an employer
to retaliate against an employee for exercising rights under an ERISA plan, and to retaliate against
any person for giving information relating to an ERISA plan. Perdue does not allege that
retaliatory acts were taken against him as a result of his exercise of Program rights or because he
provided information relevant to the Program.
   11
     The specific allegations raised by Perdue include the following: 1) that Bushey and Garnett
coaxed him to remain with BKC and accept the FOM position instead of exercising his right to
receive severance benefits; 2) that Bushey and Garnett were looking for an "excuse" to fire
Perdue since the time Perdue decided to remain with BKC; and 3) that the misunderstanding
surrounding the travel advance provided a pretext for terminating Perdue's employment.
The prohibitions under the statute do not extend per se to an employer who retains an employee so

as to avoid payment of severance benefits under an ERISA plan.12 See Garavuso v. Shoe Corp. of

America Industries, Inc., 709 F. Supp. 1423 (S.D.Ohio 1989), aff'd 892 F.2d 79 (6th Cir.1989).

Instead, a section 1140 claimant is required to demonstrate that the employer discharged the claimant

"with the specific intent of interfering with ... ERISA benefits." Simmons v. Willcox, 911 F.2d 1077,

1081-82 (5th Cir.1990), citing Clark v. Resistoflex Co., 854 F.2d 762, 770 (5th Cir.1988)

(speculative allegations that an employer had something to gain by terminating an employee are

insufficient to create a genuine issue of material fact). Perdue has failed to point to specific facts

which indicate that Bushey induced Perdue's acceptance of the FOM position, or terminated Perdue's

employment, with the specific intent of interfering with Perdue's attainment of rights under the

Program.

        Furthermore, at the time of Perdue's discharge, Perdue did not have rights under the Program

with which the defendants could interfere. Upon acceptance of the FOM position, Perdue's right to

severance benefits under the Program ceased to exist. Thereafter, any Program rights which Perdue

might have would arise only if BKC were to institute either a workforce reduction or a job elimination

plan involving the FOM position. Thus, Bushey and BKC did not interfere with Perdue's rights within

the meaning of ERISA section 1140. Summary judgment on this claim is proper.

D. Perdue's Appeal of State Law Claims

                                      1. Common Law Fraud

        Perdue appeals the district court's ruling that his common law fraud and breach of contract

claims are preempted by ERISA, or, alternatively, are void as within the statute of frauds. The

district court correctly decided that ERISA preempts Perdue's common law fraud claim because the

only damages recoverable under the claim "relate to" the value of the severance benefits waived by

Perdue upon acceptance of the FOM position. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58,

62-63, 107 S. Ct. 1542, 1546, 95 L. Ed. 2d 55 (1987) (ERISA preempts common law claims that

   12
     The parties concur that on April 3, 1989, BKC informed Perdue that he could either receive
severance benefits under the Program or accept the FOM position. Perdue chose to accept the
position as FOM and to forego his right to receive benefits.
"relate to" the recovery of benefits under an ERISA plan.).13

                         2. Breach of Oral Agreement to Offer a Franchise

        The district court incorrectly determined that ERISA preempts Perdue's claim for breach of

an agreement to confer a franchise because this common law claim does not "relate to" the BKC

Program. Nevertheless, summary judgment on this claim is proper as the statute of frauds bars

enforcement of the alleged promise.14

                                        III. CONCLUSION

        Thus, we hold that the district court's grant of summary judgment is AFFIRMED.

   13
     ERISA preempts those laws that "relate to" employee benefit plans. 29 U.S.C. § 1144(a)
(1985 & Supp.1993). A law "relates to" an employee benefit plan "if it has a connection with or
reference to such a plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S. Ct. 2890,
2899-2900, 77 L. Ed. 2d 490 (1983).

                Perdue attempts to avoid ERISA preemption of his fraud claim by pleading
        damages for the value of his future employment with BKC, a claim not "related to" the
        Program. Texas courts do not recognize a common law fraud claim for the lost value of
        future employment based on an oral employment agreement. Webber v. M.W. Kellogg
        Co., 720 S.W.2d 124, 129 (Tex.App.—Houston [14th Dist.] 1986, writ ref'd n.r.e.) (An
        oral employment agreement is barred by the statute of frauds, even where artfully framed
        as a claim for fraud.).
   14
     The oral promise to confer a franchise after ten years employment with BKC could not be
performed within one year of its making, and is therefore within the statute of frauds and
unenforceable as a matter of law. TEX.BUS. & COMM.CODE ANN. § 26.01 (Vernon 1987 &
Supp.1993); Wiley v. Bertelsen, 770 S.W.2d 878 (Tex.App.—Texarkana 1989, no writ).

                Perdue contends the statute of frauds does not bar enforcement of the oral
        agreement because the agreement was subsequently memorialized in an August 4, 1983
        memorandum. The memorandum states in its entirety: "Based on commitments [sic]
        made during Randy's interview process with Burger King Corporation, I am making the
        following adjustments: Randy's anniversary date for service pin awards will be July 19,
        1976. Randy is given 507 credit, (28 months) for his 56 months of franchise service
        towards the 10 year franchising requirement." Contrary to Perdue's contention, the
        memorandum does not satisfy the statute of frauds because it is not "complete within itself
        in every material detail, ... so that the contract can be ascertained from the writing without
        resorting to oral testimony." Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex.1978).