Bellas v. CBS Inc.

• Citation: 221 F.3d 517
• Decision Date: 14 August 2000
• Docket Number: No. 99-3775,No. 98-1455,98-1455,99-3775
• Parties: (3rd Cir. 2000) HARRY BELLAS, v. CBS, INC.; WESTINGHOUSE PENSION PLAN, Appellants (D.C. Civ.)
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 517

221 F.3d 517 (3rd Cir. 2000)

HARRY BELLAS, v. CBS, INC.; WESTINGHOUSE PENSION PLAN, Appellants (D.C. Civ. No. 98-1455)

No. 99-3775

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued June 15, 2000

Filed August 14, 2000

On Appeal from the United States District Court for the Western District of Pennsylvania District Judge: Hon. Donetta W. Ambrose Attorneys for Appellants: Henry W. Ewalt George M. Medved David J. Kolesar Pepper Hamilton LLP 50th Floor, One Mellon Bank Center 500 Grant Street Pittsburgh, PA 15219-2502, Brian T. Ortelere Pepper Hamilton LLP 3000 Two Logan Square 18th and Arch Streets Philadelphia, PA 19103-2799, Andrew M. Kramer Glen D. Nager (argued) Gregory G. Katsas Charles V. Stewart Todd C. Amidon Jones, Day, Reavis & Pogue 51 Louisiana Avenue, NY Washington, D.C. 20001-2113, Dennis Derr CBS Corporation 11 Stanwix Street Pittsburgh, PA 15222-1384

Attorneys for Appellee: Theodore Goldberg David B. Rodes (argued) John T. Tierney, III Goldberg, Persky, Jennings & White 1030 Fifth Avenue Pittsburgh, PA 15219, William T. Payne Schwartz, Steinsapir, Dohrman & Sommers 1007 Mount Royal Boulevard Pittsburgh, PA 15223

Attorneys for Amicus Curiae Association of Private Pension and Welfare Plans: Trevor W. Swett Kent A. Mason Albert G. Lauber Michael T. Doran Jason K. Bortz Caplin & Drysdale One Thomas Circle, N.W. Washington, D.C. 20005-5802

BEFORE: GREENBERG and McKEE, Circuit Judges, and SHADUR,^* District Judge

OPINION FOR THE COURT

GREENBERG, Circuit Judge.

I. INTRODUCTION

This matter has been certified for interlocutory appeal to address a question of first impression in this court, i.e., whether a permanent job separation benefit contained within a pension plan constitutes an early retirement benefit or retirement-type subsidy protected by the anti-cutback provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. SS 1001 et seq., as amended by the Retirement Equity Act of 1984 ("REA") and the Omnibus Reconciliation Act of 1987. The district court had jurisdiction pursuant to 28 U.S.C. S 1331 and ERISA section 502(e), 29 U.S.C. S 1132(e).

On June 29, 1999, the district court granted plaintiff-appellee Harry Bellas's motion for partial summary judgment, see Bellas v. CBS, Inc., 73 F. Supp.2d 500 (W.D. Pa. 1999), and denied defendants-appellants CBS, Inc.'s and Westinghouse Pension Plan's motion to dismiss the complaint. See Bellas v. CBS, Inc., 73 F. Supp.2d 493 (W.D. Pa. 1999). On July 13, 1999, appellants filed a motion to certify the order granting Bellas's motion for partial summary judgment for an interlocutory appeal pursuant to 28 U.S.C. S 1292(b) which the district court granted on July 29, 1999. Subsequently, the appellants filed a petition for permission to appeal under section 1292(b), which we granted on September 10, 1999.

a. Parties and Factual Background

Bellas, a former employee of CBS and Westinghouse Electric Corporation, on August 31, 1998, filed this action on behalf of himself and all others similarly situated against CBS and the Westinghouse Pension Plan, alleging that the Westinghouse Plan was amended impermissibly by first the narrowing, and then the elimination entirely, of a "Special Retirement Provision" in the plan that was applicable to senior employees terminated as a result of a "Permanent Job Separation." See J.A. at 269. Because CBS is the plan sponsor and administrator and is a successor to Westinghouse, CBS and Westinghouse may be considered one entity for purposes of this appeal and thus we will refer to the corporate defendant as CBS even though Westinghouse previously employed Bellas. Bellas contends that these amendments had the effect of eliminating or reducing an early retirement benefit or retirement-type subsidy in contravention of the REA amendments to ERISA codified at section 204(g), 29 U.S.C. S 1054(g). Bellas further claims that in adopting and implementing these amendments, CBS violated its fiduciary duties of acting solely in the interest of plan participants and beneficiaries in administering the plan in accordance with both the governing documents and instruments and ERISA, and of exercising care, prudence, and diligence in the performance of its responsibilities and thereby violated ERISA.

Section 20 of the pre-1994 version of the Westinghouse Plan provided a "Special Retirement Provision" for employees meeting stated age and service requirements who were terminated as a result of a "Permanent Job Separation" (the "PJS Benefit"). In particular, Section 20 of the pre-1994 version of the plan provided in relevant part:

B. 1. An Employee whose employment is terminate d as a result of a Permanent Job Separation, who at the time of such Permanent Job Separation does not satisfy any of the requirements for retirement pursuant to Section 2 of the Plan, may retire on his Special Retirement Date or on the first day of any month following his Special Retirement Date if, by the end of the calendar year in which he is separated, he would have satisfied one of the age-and-service combinations set forth below had he remained continuously employed to the end of such year:

-- Age 50 or over with twenty-five (25) or more years of Eligibility Service,

-- Age 51 or over with twenty-two (22) or more years of Eligibility Service,

-- Age 52 or over with nineteen (19) or more years of Eligibility Service,

-- Age 53 or over with sixteen (16) or more years of Eligibility Service,

-- Age 54 or over with thirteen (13) or more years of Eligibility Service,

-- Age 55 or over with ten (10) or more years of Eligibility Service.

2. The amount of monthly pension payable to an Employee who satisfies the requirements set forth in Subsection 20.B.1 above shall be the sum of (a), (b) and (c) below:

(a) Any amounts computed pursuant to Section 4 of the Plan [Section 4 is entitled "Normal Retirement Pension"].

(b) Ten ($10.00) dollars multiplied by his Credited Service.

(c) If the Employee had twenty-five (25) years of eligibility Service and his Special Retirement Date is on or before September 1, 1994, an additional $100.

The amounts calculated in accordance with Subsection 20.B.2 above shall be based on the provisions of the Plan in effect on the Employee's Special Retirement Date.

3. The amount calculated in accordance with Subsection 20.B.2 (a) shall be payable for the lifetime of the Employee and shall be subject to all of the optional forms of payments described in Section 10.

4. The amounts calculated in accordance with Subsections 20.B.2 (b) and 20.B.2 (c) shall be payable up to and including the month in which the Employee attains his 62nd birthday. These amounts shall not be subject to any of the optional forms of payment described in Section 10, except the Lump Sum form described in Subsection 10.C.5.

J.A. at 74-75.

The pre-1994 version of the Westinghouse Plan, in pertinent part, defined the term "Permanent Job Separation" as meaning "the termination of the employment of an Employee . . . through no fault of his own through lack of work for reasons associated with the business for whom [the employer] determines there is no reasonable expectation of recall." Id. at Section 1, J.A. at 38. Further, the Pre-1994 Summary Plan Description explains with respect to this provision:

[t]he amount of your special retirement pension is the full amount you have earned to the date you are permanently separated. There are no reductions applied to your pension, even though you are retiring early. If you are under age 62, you receive a monthly early retirement supplement of $10 for each year of credited service. This supplement stops when you turn age 62.

If you have at least 25 years of eligibility service, you receive an additional $100 per month until you turn age 62. This additional $100 per month is available only if your special retirement pension begins on or before September 1, 1994.

J.A. at 110.

The pre-1994 version of the Plan also contained a "Normal Retirement Pension" provision and an "Early Retirement Pension" provision. See pre-1994 version of the Westinghouse Plan, Sections 4-5, J.A. at 42-48.

On January 1, 1994, the Westinghouse Plan was amended to alter participants' entitlement to the PJS Benefit in two respects: (1) the amendments made it harder to qualify for the PJS Benefit after January 1, 1997, by narrowing the definition of "Permanent Job Separation" to apply only if an employee's employment termination was due to a job movement, product line relocation, or location close-down and (2) the amendments eliminated the PJS Benefit in toto for terminations on or after September 1, 1998.¹ More specifically, the definition of the term "Permanent Job Separation" was redefined in the 1994 version of the plan, in relevant part, to read as follows:

Permanent Job Separation means, for periods prior to January 1, 1997, the termination of the employment of an Employee with an Employer . . . through no fault of his own for lack of work for reasons associated with the business for whom such Employer . . . determines, on a uniform and nondiscriminatory basis, that there is no reasonable expectation of recall.

. . . .

For periods on or after January 1, 1997 and before September 1, 1998, a Permanent Job Separation means solely the termination of the employment of an Employee with an Employer. . . because of job movement or product-line relocation, or location closedown, as those terms are defined below. . . . Layoffs due to adjustments in the workforce caused by changes in production requirements, manufacturing processes, sales volume, inventory levels, make or buy decisions, decisions to discontinue a product line, or any other reasons associated with the business shall not be a job movement or product-line relocation. . . . In no event shall a Permanent Job Separation occur after August 31, 1998.

1994 Version of the Westinghouse Plan, J.A. at 131-32.

CBS employed Bellas in its nuclear division...