Daughtrey v. Honeywell, Inc.

• Decision Date: 07 October 1993
• Docket Number: No. 92-8221,92-8221
• Citation: 3 F.3d 1488
• Parties: 62 Empl. Prac. Dec. P 42,580, 62 USLW 2340 Jimmie Ruth DAUGHTREY, Plaintiff-Appellant, v. HONEYWELL, INC., Bull HN Information Systems, Talent Force, Inc., aka Temp Force, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1488

3 F.3d 1488

62 Empl. Prac. Dec. P 42,580, 62 USLW 2340

Jimmie Ruth DAUGHTREY, Plaintiff-Appellant, v. HONEYWELL, INC., Bull HN Information Systems, Talent Force Inc., aka Temp Force, Defendants-Appellees.

No. 92-8221.

United States Court of Appeals, Eleventh Circuit.

Oct. 7, 1993.

Jimmie Ruth Daughtrey, pro se.

Norman Stein, Tuscaloosa, AL, for plaintiff-appellant.

William Douglas Smith, Stepp Bowers & Smith, Atlanta, GA, for Honeywell, Inc. Stephen S. Lewenberg, Bull HN Information Systems, Inc., Billerica, MA, for Bull HN Information Systems.

Jesse P. Schaudies, Jr., Steven J. Whitehead, Troutman Sanders, Atlanta, GA, for Talent Force, Inc.

Appeal from the United States District Court for the Northern District of Georgia.

Before BIRCH, Circuit Judge, CLARK, Senior Circuit Judge, and HOEVELER ^*, Senior District Judge.

BIRCH, Circuit Judge:

Jimmie Ruth Daughtrey brought this action against Honeywell, Inc. and Bull HN Information Systems ("Honeywell") ¹ alleging violations of the Employee Retirement Income Security Act, 29 U.S.C. Sec. 1001 et seq. ("ERISA") and the Age Discrimination in Employment Act, 29 U.S.C. Sec. 621 et seq. ("ADEA"). ² The district court granted summary judgment in favor of Honeywell on all claims. We AFFIRM in part, REVERSE in part, and REMAND for further proceedings.

I. BACKGROUND

Daughtrey began working for Honeywell in May 1979 and was later employed at Honeywell's Contract Programming Center ("CPC") as a conversion specialist. On June 27, 1986, Honeywell laid off all fourteen employees of the CPC, including Daughtrey, and closed the CPC. For several months, Daughtrey attempted without success to find other employment as a computer programmer. Four former CPC employees, three of whom had accumulated no vested rights in Honeywell's pension plan, found employment with Innovation Systems Services ("ISS"), another division of Honeywell. In October 1986, Graybar Electric Company, Inc. ("Graybar") requested Honeywell's assistance in the development of a new computer system. Shortly thereafter, Daughtrey contacted Honeywell and signed a consultant agreement to provide services for the Graybar project.

Under the consultant agreement Daughtrey was to perform computer programming services at Honeywell's facilities under the direction of a Honeywell representative in exchange for an hourly wage. Item five provides as follows:

The CONSULTANT is an independent contractor and shall be free to exercise discretion and independent judgment as to the method and means of performance of the services in connection with the assignments made hereunder by HONEYWELL. The CONSULTANT is not an employee of HONEYWELL and shall not, by virtue of this Agreement, be entitled to any benefits or privileges provided by HONEYWELL to its employees.

R3-76 Ex. D. The initial term of the agreement was from November 3, 1986 to June 30, 1987.

In June 1987, Honeywell entered an agreement with Talent Force, Inc. ³ under which Talent Force would serve as paymaster for Honeywell with respect to the consultants working on the Graybar project. Talent Force disbursed funds according to Honeywell's instructions, retaining the appropriate federal and state tax withholdings, and was not otherwise involved in any employment decisions. Dissatisfied with Honeywell's progress, Graybar decided to complete the project at its home office in St. Louis, Missouri. Honeywell then terminated its agreements with ten to twelve consultants, including Daughtrey, effective January 29, 1988.

Proceeding pro se, Daughtrey filed a complaint against Honeywell under ERISA alleging that she was laid off in 1986 for the purpose of interfering with her employee benefits and seeking welfare and pension benefits for the period from 1986 to 1988 during which she was employed as a consultant. She also sought statutory penalties under 29 U.S.C. Sec. 1132(c) based on Honeywell's failure to provide her with a statement of her employee benefits within thirty days of her written request. By amended complaints, Daughtrey alleged that her layoff in 1986 and her termination in 1988 violated the ADEA.

The district court granted summary judgment in favor of Honeywell on all claims. The court concluded that Daughtrey had produced no evidence that Honeywell laid her off in 1986 based on her age or with the specific intent of interfering with her ERISA benefits. With respect to her claim for employee benefits for the period that she served as a consultant, the district court found that Daughtrey worked as an independent contractor, not an employee, and thus was not entitled to any benefits. Similarly, because she was not an employee at the time of her discharge, she could not maintain a claim for age discrimination for her termination in 1988. Finally, because Daughtrey had produced no evidence that she was prejudiced by Honeywell's failure to provide a timely statement of benefits, the district court granted summary judgment on her claim for penalties under section 1132(c).

II. DISCUSSION

A. ERISA Claims

1. 1986 Layoff

The district court determined that undisputed evidence established that closure of the CPC and the associated layoffs were motivated by Honeywell's desire to reduce operating expenses. ⁴ The court held that Daughtrey failed to present evidence that she was terminated with the specific intent of interfering with her employee benefits and granted summary judgment in favor of Honeywell.

Section 1140 of ERISA prohibits the discharge of a participant "for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan." 29 U.S.C. Sec. 1140. As anticipated by the district court, under section 1140, "[a] plaintiff must show that the employer had the specific intent to interfere with the employee's right to benefits." Seaman v. Arvida Realty Sales, 985 F.2d 543, 546 (11th Cir.1993); see also Owens v. Storehouse, Inc., 984 F.2d 394, 399 (11th Cir.1993). "This standard does not require the plaintiff to show that interference with ERISA rights was the sole reason for discharge but does require plaintiff to show more than the incidental loss of benefits as a result of a discharge." Seaman, 985 F.2d at 546.

Daughtrey supported her allegation that Honeywell intended to interfere with her employee benefits with evidence that three of the four former CPC employees who were later employed by ISS had no vested pension rights. Even within this small sample, one of the former CPC employees was vested when hired by ISS. Daughtrey presented no evidence that by hiring nonvested employees, who within five years would attain vested pension rights, Honeywell on balance reduced its outlays for employee benefits; the evidence equally supports the inference that Honeywell could have decreased its long term expenditures by retaining those employees already vested. Further, by virtue of the layoffs the vested employees of the CPC received credit for an additional three years of employment for the purpose of calculating the level of vested pension benefits. In Clark v. Coats & Clark, Inc., 990 F.2d 1217, 1224 (11th Cir.1993), discharged employees argued that an employer's proposal to streamline operations by reducing the number of salaried positions evidenced an intent to interfere with employee benefits. While the terminated employees were further into the pension plan than many of the retained employees, the plaintiffs failed to show that the employer obtained a reduction in expenditures by discharging those employees entitled to greater pension benefits upon termination. Id. We held that the plaintiffs failed to demonstrate a prima facia case under section 1140. Similarly, in Daughtrey's case the employment by ISS of three former CPC employees who were not vested does not support an inference of intent to interfere with Daughtrey's benefits.

In support of its motion for summary judgment, Honeywell offered several affidavits by Honeywell personnel stating that the closure of the CPC and the associated layoffs were motivated by an attempt to reduce operating costs. The documents submitted by Honeywell indicate that, as of June 1986, Honeywell believed that the CPC was not necessary to the continued operation of the company and yet represented high overhead costs. Daughtrey failed to rebut this evidence. "[M]easures designed to reduce costs in general that also result in an incidental reduction in benefit expenses do not suggest discriminatory intent. Instead, the employee must introduce evidence suggesting that the employer's decision was directed at ERISA rights in particular." Clark, 990 F.2d at 1224 (citations omitted). As in Clark, the evidence concerning the elimination of the CPC is "indicative of an attempt to cut costs in general rather than interference with the employees' ERISA rights." Id. at 1224. Because the evidence offered by Daughtrey shows only "the incidental loss of benefits as a result of a discharge," the district court properly granted summary judgment on Daughtrey's section 1140 claim for her layoff in 1986. Seaman, 985 F.2d at 546; see also Conkwright v. Westinghouse Elec. Corp., 933 F.2d 231, 239 (4th Cir.1991); Clark v. Resistoflex Co., 854 F.2d 762, 771 (5th Cir.1988).

2. Employee Benefits Claim

The district court granted summary judgment against Daughtrey on her claim for employee benefits for the period during which she served as a consultant on the ground that Daughtrey was an independent contractor, and thus not entitled to the benefits of an employee. The term "employee" as used in ERISA incorporates traditional agency law criteria for distinguishing an employment relationship from that of an independent contractor. Nationwide Mut. Ins. Co. v. Darden, --- U.S. ----, ----, 112 S.Ct. 1344, 1346, 117 L.Ed.2d 581 (1992). The Court adopted, for ERISA purposes, the common-law test articulated in Community for Creative Non-Violence v. Reid, 490 U.S. 730, 109 S.Ct. 2166,...