Hickey v. Digital Equipment Corp.

Citation43 F.3d 941
Decision Date12 January 1995
Docket NumberNo. 94-1710,94-1710
Parties18 Employee Benefits Cas. 2762, Pens. Plan Guide P 23904R Pete HICKEY; Timothy O'Leary; Charles H. McKnight; Aaron Adams; Brian Adams; Linda Adams; Tony Adams; Michael Adragna; Keith Dean Aldridge; David Aldridge; Thomas H. Altman; Sarah Anderson; Shirley Arms; Hassie Atkins; Frederick Babb; Vicki Babb; Katherine Renee Bailey; Nurudeen Balogun; John David Barton; Frank Batson; Rodney E. Beeks; Cliff Bloise; Deborah B. Benson; Betty S. Boston; Hugh N. Brock, Jr.; Sheila Brooks; Sharon Brown; Jerry W. Bryant; Carla Buchanen; Camelia M. Buckheister; Donald R. Burton; Dianne Butler; Anita F. Byers; Rosie C. Byrd; Debbie A. Cabe; Linda Campbell; James L. Chastain; Jimmy D. Cisson; Kay R. Clay; Chandra Coker; Patricia Ann Copeland; Patsy Cox; Steven W. Cox; Geraleen Crawford; Gregory Cypert; Jerome Dames; Annette Davis; Anthony Bryan Davis; Gail E. Davis; Michael Davis; Miriam C. Davenport; Robert F. Deal; Shirley Dennis; Laura Dight; William Downs; Dan R. Driver; George A. Durham; Brenda B. Durrance; Toni Eaton; David Ellis; Lucy Fair; Larry M. Faust; William Ferrel; Cheryl Filiberti; Shirley J. Fisher; Edna M. Fowler; Kathie A. Gailey; Jane Gagnon; Linda G. Garner; Carl Gerhiser; Teresa A. Gilliam; Brenda Goldsmith; Rosemary Grant; Jimmy Gray; Wendy B. Gray; Barbara Green; Evelyn Green; Linda Green; Polly Green; Carolyn Griffin; R. Briggs Hamilton; Richard Mark Hanvey; Benny J. Hart; Sandra B. Hatcher; Thomas L. Hendricks; Daniel Holcombe; Gary C. Hooper; Martha Jane Hoover; Wayne H. Horne; Larry Hough; Valerie Houston; Carolyn Howell; Rick Huckaby; James Huff; Gail Hussey; Minnie I. Jackson; Michael G. James; Arthur W. Johns; Janice D. Johnson; Leroy C. Johnson; Shannon S. Johnson; Zonnie Jones; Sandra F. Kelly; Jan Kestner; Satish Kinariwala; Tony King; Keith G. Kitchens; Christopher B. Klugh; Edward R. Knipple; Richard Kurtz; Steve Laforest; Matt Lake; Terry M. Landers; Paulette Lane; Rickey Lanford; Anthony Lark; Damon Lashley; Melanie B. Lay; Lee A. Labarron; Helen
CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)

ARGUED: John Bowman McLeod, William David Conner, Haynsworth, Marion, McKay & Guerard, Greenville, SC, for appellants. C. David Vaughan, Vaughan & Murphy, Atlanta, GA, for appellee. ON BRIEF: L. Grey Geddie, Ogletree, Deakins, Nash, Smoak & Stewart, Greenville, SC, for appellee.

Before HALL and MICHAEL, Circuit Judges, and PHILLIPS, Senior Circuit Judge.

Affirmed by published opinion. Judge MICHAEL wrote the opinion, in which Judge HALL and Senior Judge PHILLIPS joined.

OPINION

MICHAEL, Circuit Judge:

This is a case brought under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Sec. 1001 et seq., against Digital Equipment Corporation (Digital) by a large group of its former employees who seek severance pay under Digital's 1991 Severance Pay and Benefits Plan (Plan). In 1992 Digital sold the plant where the employees worked, but the plant's operations were not disrupted by the sale. The employees either retained their same jobs or received severance pay from the buyer which was reimbursed by Digital under the purchase agreement.

The Plan's purpose is to provide severance pay to Digital employees who are terminated in workforce reductions undertaken by Digital. The former Digital employees here argued that they were eligible for benefits under a clause in the Plan which says an "employee of Digital shall be eligible to become a Participant in the Plan if his or her employment with Digital is terminated ... as a result of the closing of a Digital plant...." Digital's U.S. Employee Benefits Claim Appeal Committee (Committee) denied benefits, and the district court upheld that decision. The central issue is whether the Committee abused its discretion in concluding that, under the facts of this case, there was no "closing" of a Digital plant. Finding no error, we affirm.

I.
A.

Digital is an international supplier of networked computer systems, software, and services. In 1988 Digital had approximately 125,000 employees worldwide and, as of that year, had never laid off a single employee. Beginning in 1989, however, bad economic times forced Digital to reduce its workforce, both here and abroad. In connection with its downsizing efforts, Digital adopted the Plan in 1991.

The Plan, which is self-administered, was established "to provide severance pay and other benefits to certain employees described in Article 2 ... where employment with Digital is terminated as a result of Digital's efforts to streamline its workforce." JA 286. Article 2 provides the criteria for participation in the Plan and says that "a regular employee of Digital shall be eligible to become a Participant in the Plan if his or her employment with Digital is terminated ... as a result of," among other things, "the closing of a Digital plant...." Id. Article 16 gives the plan administrator discretionary authority to interpret the Plan and to determine eligibility for benefits.

Since 1989 Digital has been able to make substantial reductions in its workforce. By the end of fiscal year 1993 Digital had eliminated more than 35,000 jobs worldwide. Digital paid a substantial amount of severance benefits pursuant to the Plan.

B.

From 1982 through 1992 Digital owned a manufacturing plant in Greenville, South Carolina (GSO Plant), which produced printed wiring boards for use in Digital computers. In 1991, as a part of its worldwide reduction in force, Digital eliminated a number of positions at the GSO Plant and paid terminated employees severance benefits pursuant to the Plan. These employees are not involved in this case.

In late 1991 Digital was approached by AMP-AKZO Corporation (AMP-AKZO), an electronics manufacturer interested in buying the GSO Plant. Digital and AMP-AKZO negotiated an Asset Purchase Agreement (APA), whereby AMP-AKZO would buy the GSO Plant as a going concern and supply Digital with printed wiring boards. Significantly, the APA had several provisions protecting the employees at the plant. First, the APA required AMP-AKZO to offer them employment. Second, it required AMP-AKZO to provide them with compensation and benefits at least equal to what they would have received from Digital. Third, it respected their seniority, requiring AMP-AKZO to credit them for their past service with Digital. Fourth, if AMP-AKZO had to reduce its workforce at the GSO Plant within one year after the purchase date, the APA required Digital to reimburse AMP-AKZO for severance benefits for the first 150 employees laid off, with benefits equal to what they "would have been eligible for under the then current Digital ... Program." JA 335-36.

Digital's sale of the GSO Plant to AMP-AKZO closed on August 25, 1992. That same day the Digital sign at the plant was replaced by AMP-AKZO's, the employees were informed that they no longer worked for Digital, there was a brief interruption in the operation of the computer system while the system was used to take inventory, and the...

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