Court Opinion

ID: 196475
Source: CourtListenerOpinion
Date Created: 2011-02-07 03:06:40+00
Date Added: 2024-06-11T10:35:01.941096
License: Public Domain

UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT

                                             

No. 95-1704

                   EDMUND H. BELANGER, ET AL.,

                     Plaintiffs, Appellants,

                                v.

                      WYMAN-GORDON COMPANY,

                       Defendant, Appellee.

                                             

           APPEAL FROM THE UNITED STATES DISTRICT COURT

                FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. Nathaniel M. Gorton, U.S. District Judge]
                                                                 

                                             

                              Before

                      Selya, Circuit Judge,
                                                    

                  Aldrich, Senior Circuit Judge,
                                                         

                     and Cyr, Circuit Judge.
                                                     

                                             

     Mark  I. Zarrow, with whom Lian, Zarrow, Eynon & Shea was on
                                                                    
brief, for appellants.
     John  O. Mirick,  with  whom Mirick,  O'Connell, DeMallie  &
                                                                           
Lougee was on brief, for appellee.
                

                                             

                        December 14, 1995
                                             

          SELYA,  Circuit  Judge.   This  appeal  requires us  to
                    SELYA,  Circuit  Judge.
                                          

decide  what constitutes  a benefit  "plan" for  purposes of  the

Employee  Retirement Income  Security Act  (ERISA), 29  U.S.C.   

1001-1467 (1988).   The heart  of the appellants'  case is  their

contention that a series of four early retirement offers extended

by  their employer  over a  four-year period constitute  an ERISA

plan.  The  district court  thought not, and  dismissed the  suit

after a bench trial.  We affirm.

                                I.
                                          I.
                                            

                            Background
                                      Background
                                                

          We  take  the  underlying  facts  principally from  the

parties' pretrial stipulations.

          Facing an uncertain economic future, defendant-appellee

Wyman-Gordon Co. (the company) decided  to reduce its work  force

in hopes of improving its overall financial outlook.  The company

made its first move in November  1987.  Rather than simply laying

off  loyal minions,  the company  offered all  age-qualified non-

union workers (characterized as  all "weekly and monthly salaried

employees") an opportunity for early retirement (Offer No.1).  To

make departing  a sweeter  sorrow, the  company proposed  to pay,

over  and beyond  regular retirement  benefits, a  lump-sum bonus

amounting to one  week's pay for each  year of service, plus  two

days' pay for each  year of service  in excess of fifteen  years,

multiplied by 110%.   Offer No. 1 contained no  cap on the number

of service years that could be included in calculating the amount

of  the one-time  bonus.   Some  eligible employees  accepted the

                                2

offer and some did not.

          In January  1990, the company,  still in the  throes of

downsizing, made a similar early retirement offer (Offer  No. 2).

It structured this offer  in much the same manner,  but devised a

less complicated  formula for computing retirement  bonuses:  one

week's salary for each year of  service.  Like Offer No. 1, Offer

No. 2 did  not impose a  ceiling on the  number of service  years

that could figure  into the calculation.  Once again,  some   but

not all   of the eligible employees accepted the offer.

          In   corporate   America,  financial   security   is  a

consummation  ardently  sought but  seldom  achieved.   When  the

company's  prognosis remained  gloomy,  it sponsored  yet another

early retirement offer (Offer  No. 3) in January  of 1991.   This

offer contemplated that the  amount of an individual's retirement

bonus would be calculated  by the same formula used  for purposes

of Offer  No. 2 (multiplying one  week's pay times the  number of

service  years), but capped the number of years includable in the

computation at twenty-five.  Almost  two-thirds of the weekly and

monthly salaried employees  who were eligible  to do so  accepted

Offer  No. 3, including the  eighteen persons who  appear here as

plaintiffs and  appellants  (all  of  whom had  spent  more  than

twenty-five years in the company's service).

          Despite  the winnowing  that  occurred  over time,  the

company    apparently  convinced  that strength  lay  in lack  of

numbers   undertook further cost-reduction measures in October of

1991.     These  included  salary  cuts  and  yet  another  early

                                3

retirement  offer (Offer  No. 4).   As  with the  two immediately

preceding  proposals,   the  carrot  that  the   company  dangled

consisted of a bonus calculated on the basis of one week's salary

for each year of  service.  This time, however,  the company made

the offer accessible to more  employees (by lowering the  minimum

age  for early retirement) and abjured any ceiling on the maximum

number  of  service years  includable in  figuring the  lump sum.

Thirty-eight of  forty-six eligible employees accepted  Offer No.

4.

          The  appellants  were displeased  no little  (and quite

some)  upon learning of the more generous terms embodied in Offer

No. 4.  Each of them had accepted a capped offer   Offer No.  3  

as   an  inducement  to  take   early  retirement,  and  the  cap

effectively reduced their early  retirement bonuses by an average

of roughly $9,950 per  retiree.  They sued the  company, alleging

inter  alia  that  the series  of  four  early retirement  offers
                     

constituted a  plan under the  terms of ERISA, 29  U.S.C.   1002;

that the plan failed to comply with ERISA's imperatives, e.g, the

company had not provided a written plan description or a protocol

for amendment,  see 29  U.S.C.     1022  & 1102;  and that  these
                             

violations entitled them to damages based on what they would have

received had Offer No. 3 not been capped, together with interest,

counsel fees, and other redress.

          After conducting a  non-jury trial, the district  court

rejected  the central premise  underlying the  appellants' claim.

The  court  held  that  the  early  retirement  offer  which  the

                                4

appellants accepted did not constitute a plan for ERISA purposes,

and  that, therefore, the company was not obliged to heed ERISA's

requirements.   See Belanger v. Wyman-Gordon Co., 888 F. Supp. 9,
                                                          

12 (D. Mass. 1995).  The appellants assign error.1

                               II.
                                         II.
                                            

                            Discussion
                                      Discussion
                                                

                                A.
                                          A.
                                            

                        Standard of Review
                                  Standard of Review
                                                    

          The question whether a given employee benefit or set of

benefits is a plan  properly governed by the strictures  of ERISA

requires a  certain level  of judicial  versatility.   Because an

inquiring court must both assess the facts and apply the law, two

different standards of review  come into play.  "For  purposes of

appellate review, mixed questions of fact and law ordinarily fall

along  a  degree-of-deference  continuum,  ranging  from  plenary

review  for law-dominated  questions  to  clear-error review  for

fact-dominated questions."   Johnson  v. Watts Regulator  Co., 63
                                                                       

F.3d  1129,  1132 (1st  Cir.  1995).   At  the  near  end of  the

continuum, the district court's interpretation of the word "plan"

as it is used in ERISA poses a question of law subject to de novo

review.   At the  far end of  the continuum, the  court's inquiry

into the nature  and scope of the  benefits actually at issue  in

the instant  case  demands factfinding,  and  is to  that  extent

                    
                              

     1In  the district  court, the  appellants also  raised other
claims.   The  court  found  against  them  on  all  fronts,  see
                                                                           
Belanger,  888 F. Supp. at  12-13, and only  this ERISA claim has
                  
been preserved for review.

                                5

reviewable only for clear error.  In other words, as  long as the

trial court accurately applies  the relevant legal standards, the

existence vel non of an  ERISA plan is principally a question  of
                           

fact, and the court of appeals must defer to the district court's

judgment unless that judgment is clearly erroneous.   See Wickman
                                                                           

v. Northwestern Nat'l Ins.  Co., 908 F.2d 1077, 1082  (1st Cir.),
                                         

cert.  denied, 498 U.S. 1013  (1990); see also  Cumpiano v. Banco
                                                                           

Santander P.R.,  902 F.2d  148, 152 (1st  Cir. 1990)  (explaining
                        

that there is no clear error "unless, on the whole of the record,

[the court of appeals] form[s] a strong, unyielding belief that a

mistake has been made").

                                B.
                                          B.
                                            

                      The Meaning of "Plan"
                                The Meaning of "Plan"
                                                     

          The text of ERISA itself  affords scant guidance as  to

what  constitutes a  covered "plan."   The  statute, 29  U.S.C.  

1002(2)(A), merely  constructs a tautology, defining  an employee

benefit  plan  as "any  plan,  program  or  fund" established  or

maintained  by  an employer  that  provides  certain benefits  to

employees.   Relying on the purposes undergirding  the statute to

give meaning to this cryptic language, the Supreme Court has made

it very clear that an employee  benefit may be considered a  plan

for  purposes of  ERISA only  if it  involves the  undertaking of

continuing  administrative  and  financial  obligations   by  the

employer  to the behoof of employees or their beneficiaries.  See
                                                                           

Fort  Halifax Packing Co.  v. Coyne, 482  U.S. 1,  12 (1987); see
                                                                           

also District of Columbia  v. Greater Wash. Bd. of  Trade, 113 S.
                                                                   

                                6

Ct.  580, 584 n.2 (1992) (construing Fort Halifax as holding that
                                                           

a  plan exists  only if  an employer  has "some  minimal, ongoing

`administrative' scheme or practice").

          Fort  Halifax is  the beacon  by which  we  must steer.
                                 

There, the  Court  rejected an  ERISA preemption  challenge to  a

Maine statute requiring employers  to tender a one-time severance

payment to displaced employees  in the event of a  plant closing.

The  Court held that Maine's plant-closing law did not succumb to

ERISA's  preemptive  force  because  the  legislatively  mandated

tribute  comprised no  more  than a  "one-time, lump-sum  payment

triggered by a single event."  482 U.S. at 12.  Consequently, the

state statute neither "establishe[d], nor require[d] an  employer

to  maintain,  an employee  benefit  plan."    Id.  (emphasis  in
                                                            

original).

          Two of ERISA's cardinal goals   protection of employers

and  protection  of employees     appear to  have  influenced the

Court's interpretation of  what constitutes  a plan.   As to  the

former  goal,  the  Court  acknowledged  that  Congress  designed

ERISA's preemption provision partially to protect employers  from

a  "patchwork  scheme"  of  regulations in  respect  to  employee

benefits.   Id.   This concern has  little or no  pertinence, the
                         

Court  reasoned, in  a one-time  payment situation  in  which the

employer's only obligation is  to draw a  single check.  See  id.
                                                                           

By  contrast, this  concern  is highly  pertinent  in respect  to

employee  benefits  that  place  "periodic  demands" on  employer

assets,  "creat[ing]  a  need  for  financial  coordination   and

                                7

control."  Id.
                        

          As  to ERISA's  other, more  important goal,  the Court

recognized that, in general, ERISA's  substantive protections are

intended to safeguard the financial integrity of employee benefit

funds, to permit employee monitoring of earmarked  assets, and to

ensure that employers' promises are kept.   See id. at 15.  Since
                                                             

a single-shot benefit requires no greater assurance than that the

check  will  not  bounce,  ERISA's  panoply  of  protections  has

virtually nothing to do with such a  simple task.  See id. at 16.
                                                                    

More elaborately structured benefits, however,  raise a different

set  of concerns.  As the Court observed, ongoing investments and

obligations are uniquely vulnerable to employer abuse or employer

carelessness, and thus require  ERISA's special prophylaxis.  See
                                                                           

id.
             

          The  upshot is that, in the albedo of Fort Halifax, the
                                                                      

existence  of  a plan  turns  on  the  nature  and extent  of  an

employer's  benefit obligations.   Withal,  making particularized

judgments in this area on  the basis of vague etchings  of policy

is no mean feat.  As we wrote on an earlier occasion, "so long as

Fort  Halifax prescribes  a definition  based on  the extent  and
                       

complexity  of administrative obligations, line drawing  . . . is

necessary and  close  cases  will approach  the  line  from  both

sides."   Simas v. Quaker Fabric Corp., 6 F.3d 849, 854 (1st Cir.
                                                

1993).

          There  is  no  authoritative  checklist  that   can  be

consulted to determine conclusively if an employer's  obligations

                                8

rise to  the level  of an  ERISA plan.   While  a  wide array  of

factors may  be suggestive,  typically "no  single act  in itself

necessarily constitutes  the establishment  of the plan,  fund or

program."   Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th Cir.
                                           

1982) (en banc).  Yet, some factors tend to be more indicative of

the existence of a plan than others.

          One very important consideration  is whether, in  light

of  all the  surrounding  facts and  circumstances, a  reasonable

employee would perceive an ongoing  commitment by the employer to

provide  employee benefits.   See Henglein  v. Informal  Plan for
                                                                           

Plant Shutdown Benefits for Salaried Employees, 974 F.2d 391, 400
                                                        

(3d Cir. 1992);  Donovan, 688 F.2d at 1373;  cf. Johnson, 63 F.3d
                                                                  

at  1135 (advocating  that courts  should judge  the  question of

whether an  employer "established  or maintained" a  benefit plan

within  the   scope  of  ERISA  "from  the  employees'  place  of

vantage").  Thus, evidence that an  employer committed to provide

long-term or  periodic benefits  to its employees  will often  be

telling.   See  Henglein, 974  F.2d at  400;  see also  Kenney v.
                                                                        

Roland Parson Contracting Corp., 28 F.3d 1254, 1258-59 (D.C. Cir.
                                         

1994) (explaining that a plan may be created, even in the absence

of formal documentation, by  "an employer's representation that a

plan  has been established, in  conjunction with any action, such

as  withholding wages for contribution to such a plan, that tends

to  confirm  its representations").   Anticipating  this reality,

this court stated in Wickman, 908 F.2d at 1083, that the "crucial
                                      

factor in determining if a `plan' has been established is whether

                                9

the [proffering of an  employee benefit] constituted an expressed

intention  by the employer to  provide benefits on  a regular and

long term basis."

          We  end where we began.   In this  cloudy corner of the

law, each case must be  appraised on its own facts.  All that can

be stated with assurance is that Fort Halifax controls.  Thus, so
                                                       

long as a proffered benefit does not involve employer obligations

materially beyond those  reflected in Fort Halifax, see  Simas, 6
                                                                        

F.3d at 853-54,  the benefit will not amount to  a plan under the

ERISA statute.2

                                C.
                                          C.
                                            

                             Analysis
                                       Analysis
                                               

          Viewed  against this  backdrop,  the  district  court's

conclusion  that ERISA  did  not apply  to  the series  of  early

retirement  offers  is eminently  supportable.    Nothing in  the

offers,  whether  they  are   assessed  individually  or  in  the

aggregate,  reflects  the  company's  assumption  of  an  ongoing

administrative  or financial obligation  to its  employees within

the purview of Fort Halifax.
                                     

          Taken  singly,  the  early  retirement  offers  involve

                    
                              

     2Simas  involved a  situation in  which an  employer  had to
                     
fulfill,  under   state  law,  obligations   analogous  to,   but
materially beyond, those imposed under the Maine statute at issue
in Fort  Halifax.  The Massachusetts statute  addressed in Simas,
                                                                          
unlike  the  Maine   statute,  required  individualized  employer
determinations, based  on at  least one nonmechanical  criterion,
over a prolonged time period.  See  Simas, 6 F.3d at 853.   Thus,
                                                   
we held  that ERISA  preempted the Massachusetts  statute because
the  statute imposed  obligations on  the employer  equivalent to
those involved in an ERISA plan.  See id. at 853-54.
                                                   

                                10

precisely the kind  of one-time, lump-sum  payment that the  Fort
                                                                           

Halifax Court clearly excluded from  the pantheon of ERISA plans.
                 

See 482  U.S. at  12.   The company's offers  hinged on  a purely
             

mechanical  determination  of   eligibility  and,  if   accepted,

required  no  complicated  administrative  apparatus   either  to

calculate or  to distribute  the promised  benefit.   The  offers

pivoted on a single,  time-specific event.  They did  not involve

promises that had to be  kept over a lengthy period, nor  did the

company thereby make  any lasting financial commitment  of a type

that might implicate ERISA's substantive protections.  The bottom

line is  that the company  did no  more than propose  to write  a

single  check to  each  eligible employee  who accepted  an early

retirement  offer.   If this  is not  Fort Halifax  redux,  it is
                                                            

sufficiently  close  to  the  Fort Halifax  model  that  it falls
                                                    

outside  ERISA's sphere.  See  Fort Halifax, 482  U.S. at 12; see
                                                                           

also Kulinski v.  Medtronic Bio-Medicus, Inc.,  21 F.3d 254,  258
                                                       

(8th Cir. 1994) (holding  that a severance plan involving  a one-

time payment is not an  ERISA plan); Angst v. Mack  Trucks, Inc.,
                                                                          

969  F.3d 1530,  1539 (3d  Cir. 1992)  (similar); Fontenot  v. NL
                                                                           

Indus., Inc., 953 F.2d 960, 962-63 (5th Cir. 1992) (similar).
                      

          The more  intriguing question  in this case  is whether

the incidence of serial  offers   the fact that the  company made

not a  lone offer but  a succession  of offers over  a period  of

roughly four years   changes the  result.  We do not believe that

it does.   Each of the  four early retirement  offers, in and  of

itself, is  beyond  ERISA's  reach.    The  appellants  have  not

                                11

advanced  any convincing  reason why the  sheer number  of ERISA-

exempt early retirement offers, without more, serves to alter the

Fort  Halifax  analysis.   To be  sure,  in some  circumstances a
                       

parade  of early retirement offers  might constitute a plan under

ERISA    where,  for example,  employees rely  on the  promise of

future offers.  Cf. Moeller v. Bertrang, 801 F. Supp. 291, 294-95
                                                 

(D.S.D. 1992) (emphasizing the importance of employee reliance on

employer promises of  future benefits).  But this  record reveals

no  such concatenation of circumstances.   Here, the  whole is no

greater than the sum of the parts.

          Three  pieces of  information confirm  this conclusion.

First,  the  administration  of  the offers  neither  required  a

special   mechanism  nor  engendered  a  need  for  nonmechanical

decisionmaking.   Second, the  record is  devoid of  any evidence

that the serial offers  were the product of a  prearranged design

or that the company ever represented  to its work force that they

were linked in  a defined sequence.  Consequently,  the employees

had  no promises of financial  obligation on which  to rely, and,

thus, no need for ERISA's substantive protection.  The  finishing

touch is the district court's factual finding that the offers did

not impose continuing obligations  of either an administrative or

a  financial nature.   See  Belanger, 888  F. Supp.  at 12.   The
                                              

appellants have pointed to no facts that remotely contradict this

factual finding.

          To sum up,  it appears  that the  company devised  each

offer  without giving thought to possible future offers, and that

                                12

each  offer was motivated  by a bona  fide need to  reduce costs.

Just as four eggs,  without more, do not  make an omelette,  four

independent early retirement offers, without visible ties to each

other and without  proof of  an enduring obligation  owed by  the

employer to the employees, do not make an ERISA plan.3

                               III.
                                         III.
                                             

                            Conclusion
                                      Conclusion
                                                

          We need go no further.   The district court found, as a

matter of fact,  that the company's four  early retirement offers

involved no continuing administrative or  financial obligation on

its part, and thus concluded, as a matter of law, that the offers

together did not constitute a plan under ERISA.  On this  record,

we emphatically agree.

          Affirmed.
                    Affirmed.
                            

                    
                              

     3Although the  appellants press heavily on the fact that the
same executive designed each  retirement offer, this does nothing
to prove that he did  so as part of  an ERISA plan.  Indeed,  the
                                                            
uncontroverted evidence strongly  suggests that successive offers
were   necessary  only  because   the  corporate  profit-and-loss
statement failed to recuperate in the projected time frame.

                                13