131 F.3d 264 (1st Cir. 1997), 97-1556, Vartanian v. Monsanto Co.

Docket Nº:97-1556.
Citation:131 F.3d 264
Party Name:Leo VARTANIAN, Plaintiff--Appellant, v. MONSANTO COMPANY, et al., Defendants--Appellees.
Case Date:December 15, 1997
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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131 F.3d 264 (1st Cir. 1997)

Leo VARTANIAN, Plaintiff--Appellant,


MONSANTO COMPANY, et al., Defendants--Appellees.

No. 97-1556.

United States Court of Appeals, First Circuit

December 15, 1997

Heard Oct. 8, 1997.

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John C. Sikorski, Springfield, MA, with whom Robinson Donovan Madden & Barry, P.C., was on brief, for appellant.

Richard J. Pautler, St. Louis, MO, with whom Peper, Martin, Jensen, Maichel and Hetlage, Francis D. Dibble, Jr., Springfield, MA, and Bulkley, Richardson and Gelinas, were on brief, for appellees.

Before TORRUELLA, Chief Judge, LYNCH, Circuit Judge, and STEARNS, [*] District Judge.

STEARNS, District Judge.

This appeal involves a question of first impression in this circuit, namely, the standard to apply in determining when an employer's consideration of an employee severance program gives rise to a fiduciary duty of disclosure under the Employee Retirement Income Security Act of 1974, 29 U.S.C.

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§ § 1001-1461 ("ERISA"). Plaintiff-Appellant Leo Vartanian alleges that his former employer, Monsanto Chemical Company ("Monsanto"), misled him by failing to respond adequately to his inquiries about a severance package that was under internal corporate consideration when he retired from the company on May 1, 1991. A benefits package for which Vartanian would have otherwise been eligible was approved by the Monsanto Board of Directors on June 28, 1991.

Vartanian filed a complaint against Monsanto in 1992 alleging two counts of breach of fiduciary duty under ERISA, one count of unlawful discrimination in violation of § 510 of ERISA, and one count of common law negligent misrepresentation. The district court, Ponsor, J., 1 granted Monsanto's motion to dismiss the action on the grounds that, having taken a lump sum distribution of all the vested benefits to which he was entitled, Vartanian could not qualify as a "plan participant" with standing to assert ERISA violations. Vartanian v. Monsanto Co., 822 F.Supp. 36, 41 (D.Mass.1993). This Court reversed, holding, inter alia, that because Vartanian was a plan member at the time the alleged misrepresentations were made, he had standing to sue under ERISA. Vartanian v. Monsanto Co., 14 F.3d 697, 703 (1st Cir.1994) (Vartanian I).

On remand Judge Ponsor dismissed Vartanian's claim that Monsanto had breached an ERISA duty by failing to disclose its prospective plans to reduce staffing, but permitted the claims of misrepresentation about the possibility of an early retirement incentive plan to proceed. Vartanian v. Monsanto Co., 880 F.Supp. 63, 70-71 (D.Mass.1995). After discovery, Judge Ponsor granted Monsanto's motion for summary judgment, holding that because no enhanced severance package that would have affected Vartanian was under "serious consideration" at the time he retired, no actionable misrepresentation had been made. Vartanian v. Monsanto Co., 956 F.Supp. 61, 66 (D.Mass.1997). We affirm.


Our review of a motion for summary judgment is de novo. Associated Fisheries of Maine, Inc. v. Daley, 127 F.3d 104, 108-09 (1st Cir.1997). Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Inferences are drawn in the light most favorable to the nonmoving party. Reich v. John Alden Life Ins. Co., 126 F.3d 1, 6 (1st Cir.1997). The nonmovant may not, of course, defeat a motion for summary judgment on conjecture alone. "The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986).

The following undisputed material facts are drawn from the parties' Joint Statement of Stipulated Facts, Defendant-Appellee Monsanto's Statement of Undisputed Facts, and Plaintiff-Appellant Vartanian's Response to Defendant's Statement of Undisputed Facts. After thirty-six years at Monsanto, Vartanian in December 1989 announced his intention to retire on January 1, 1991 (later amended to May 1, 1991). Vartanian was then employed at Monsanto's plastics facility at Indian Orchard, Massachusetts. Vartanian elected to take a lump sum distribution of his Salaried Employee's Pension Plan benefits. During past restructurings of its business, Monsanto had offered early retirement incentives, sometimes on a company-wide basis and sometimes to specific groups of employees.

During 1990 and 1991, Monsanto's sales stagnated and net income shrunk. Rumors began circulating among Monsanto employees that the company was pondering an early retirement program as a cost-cutting device.

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These intensified when in October of 1990 Monsanto Agricultural Company (a separate Monsanto operating unit) offered a severance program to some of its employees as part of a reorganization plan. In the first quarter of 1991, Robert Potter, the president of Monsanto, began discussing with his senior managers various proposals to streamline operations at Monsanto Chemical. These included the closing of several plants, but not the Indian Orchard facility where Vartanian worked. No plans were drawn up to implement a severance package, 2 although Frank Reining, Monsanto's vice-president of finance, prepared an estimate of the cost of offering severance benefits to some 400 hypothetical employees.

In March of 1991, Vartanian asked Charles Eggert, his immediate supervisor, if the rumors about an early retirement plan were true. After investigating, Eggert reported to Vartanian that Monsanto was not contemplating any severance program for which he would be eligible. On March 25, 1991, Vartanian and his wife executed an Affidavit, General Release, and Agreement in anticipation of the release of the lump sum benefits.

During the week of April 15-21, 1991, after gossip about a possible severance plan revived, Vartanian contacted both Eggert and Lori Heffelfinger, the personnel representative for his employee group. Eggert and Heffelfinger told Vartanian that they had been unable to confirm the rumors, and did not personally believe that any early retirement package was in the works. Vartanian does not dispute the truthfulness of either statement.

Between April 21 and May 1, 1991, the Monsanto Management Board met six times, eventually deciding to recommend to the Board of Directors the closure of six plants. No presentation concerning early retirement incentives was made at any of these meetings, and no document analyzing or proposing a severance program was prepared. Three alternate plans were drawn up for restructuring Monsanto's multiple product lines. None of the product lines in Vartanian's Plastics Division was recommended for discontinuance. Vartanian retired on May 1, 1991.

On May 7, 1991, Potter met with the Monsanto Executive Management Committee, which endorsed in principle his proposal to restructure the company. On May 16, 1991, John Manns, the director of employee benefits, was asked to develop a severance program for potentially impacted employees. Manns asked Monsanto's actuaries, Towers, Perrin, Forster & Crosby ("TPF & C"), to gather the necessary data. On May 24, 1991, Manns gave TPF & C an outline of his proposal. On May 28, 1991, Manns met with Robert Abercrombie, the corporate benefits director, and Barry Blitstein, a corporate vice president, to discuss a concrete severance plan. It was at this meeting that the idea of extending an offer of early retirement to all Monsanto employees was first raised.

Coincidentally, on May 28, 1991, a St. Louis-based Plastics Division employee who had decided to retire on June 1, 1991, was assured by letter that he would receive the value of any increase in benefits if an early retirement program for which he would otherwise have been eligible was adopted within three months of his retirement date. On June 12, 1991, another St. Louis-based Plastics Division employee who planned to retire on July 1, 1991, was given a similar written assurance. Both employees were eventually paid the additional benefits from Monsanto's corporate treasury.

On June 3, 1991, Monsanto's Executive Management Committee endorsed the idea of a company-wide early retirement program, and authorized further development work on the project. Potter told his division managers that they were to make the final decision whether to offer the program to their respective employees. John Tuley, the manager of Vartanian's division, decided not to participate. Tuley's decision was reversed by his successor, Arthur Fitzgerald, in mid-June of 1991. The retirement plan was finalized on June 27, 1991, and approved by Monsanto's Board of Directors on June 28, 1991. Had

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Vartanian been eligible to participate, he would have received an additional $174,700 in pension benefits. 3


Although this Court, in Vartanian I, stated that Monsanto had "a fiduciary duty not to mislead Vartanian as to the prospective adoption of a plan under serious consideration," 14 F.3d at 702, it had no occasion to reach the question of what exactly constitutes "serious consideration." The district court on remand adopted the standard espoused by the Third Circuit in Fischer v. Philadelphia Elec. Co., 96 F.3d 1533 (3d Cir.1996) (Fischer II), cert. denied, --- U.S. ----, 117 S.Ct. 1247, 137 L.Ed.2d 329 (1997), that serious consideration obtains when "(1) a specific proposal (2) is being discussed for purposes of implementation (3) by senior management with the authority to implement the change." 956 F.Supp. at 66 (quoting Fischer II, 96 F.3d at 1539). Finding that "[t]he undisputed facts reveal that none of this occurred at Monsanto until weeks after...

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