Chacko v. Sabre, Inc.

• Decision Date: 21 December 2006
• Docket Number: No. 05-11445.,05-11445.
• Citation: 473 F.3d 604
• Parties: Ninan CHACKO, Plaintiff-Appellant, v. SABRE, INC.; Sabre, Inc. Severance Plan; Benefits & Equity of Sabre, Inc., As Plan Administrator; Benefits Administration Committee of Sabre, Inc. Appeal Committee; Benefits Administration Committee of Sabre, Inc.; Michael Haefner, As Member of the Benefit Administration Committee of Sabre, Inc.; Joseph V. Libonati, As Chairman-Appeals Committee of Sabre, Inc.; Manager Corporate Employee Relations of Sabre, Inc., As Plan Administrator; Named Fiduciary of Sabre, Incorporated Severance Policy, For Senior Vice Presidents; Sabre, Inc. Executive Severance Policy, For Senior Vice Presidents and Senior Vice President of Compensation; David Schwarte, As Member of the Benefit Administration Committee of Sabre, Inc.; Erin Speck, As Member of the Benefit Administration Committee of Sabre, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

473 F.3d 604

Ninan CHACKO, Plaintiff-Appellant, v. SABRE, INC.; Sabre, Inc. Severance Plan; Benefits & Equity of Sabre, Inc., As Plan Administrator; Benefits Administration Committee of Sabre, Inc. Appeal Committee; Benefits Administration Committee of Sabre, Inc.; Michael Haefner, As Member of the Benefit Administration Committee of Sabre, Inc.; Joseph V. Libonati, As Chairman-Appeals Committee of Sabre, Inc.; Manager Corporate Employee Relations of Sabre, Inc., As Plan Administrator; Named Fiduciary of Sabre, Incorporated Severance Policy, For Senior Vice Presidents; Sabre, Inc. Executive Severance Policy, For Senior Vice Presidents and Senior Vice President of Compensation; David Schwarte, As Member of the Benefit Administration Committee of Sabre, Inc.; Erin Speck, As Member of the Benefit Administration Committee of Sabre, Inc., Defendants-Appellees.

No. 05-11445.

United States Court of Appeals, Fifth Circuit.

December 21, 2006.

COPYRIGHT MATERIAL OMITTED

Robert E. Goodman, Jr. (argued), Dallas, TX, for Plaintiff-Appellant.

Karl G. Nelson (argued), Sarah Viola Toraason, Gibson, Dunn & Crutcher, Dallas, TX, for Defendants-Appellees.

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

Before JONES, Chief Judge, and DAVIS and GARZA, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Ninan Chacko ("Chacko") appeals the district court's grant of summary judgment in favor of several defendants, including his former employer Sabre, Inc. ("Sabre"), the Sabre, Inc. Severance Plan, and the administrator of the Sabre, Inc. Severance Plan (the "Administrator") (collectively, "Appellees"), on his claim for wrongful denial of severance benefits under § 502(a)(1)(B) of the Employment Retirement Income and Security Act of 1974 (ERISA), 29 U.S.C. § 1132(a)(1)(B). We affirm.

I

Chacko commenced his employment with Sabre in 1990. By 2003, Chacko, then a senior vice president of one of Sabre's divisions, had become concerned about his prospects of advancement within the company. Thus, when he learned in early September 2003 that Sabre intended to implement a company-wide layoff, he approached Eric Speck ("Speck"), Sabre's Chief Marketing Officer. Chacko informed Speck that he wanted assurances from Sabre's CEO that he was on track to becoming a company officer; if not, Chacko desired a severance package from Sabre in the upcoming layoff. On September 29, 2003, Speck informed Chacko that the CEO was not enthusiastic about Chacko's career path at Sabre. Sabre had therefore decided to offer Chacko a severance package. Speck told Chacko that Sabre's human resources department would contact Chacko with the details of the severance package. Chacko and Speck planned for Chacko's last day of work to be October 13, 2003 and agreed to work out the details and announcement of his departure.¹

At the time of Chacko's meeting with Speck on September 29, 2003, Sabre had in effect the Sabre, Inc. Severance Plan (the "General Severance Plan" or "GSP"), which set forth the terms and conditions upon which Sabre would provide severance benefits to involuntarily terminated employees. Specifically, the GSP provided for up to twenty-six weeks of salary benefits payable in a lump sum, conditioned upon the execution by the terminated employee of an "Agreement and General Release (`AGR') in a form determined by Sabre that release[d] all causes of action and claims against Sabre and related parties." When Chacko received a Separation Summary outlining the terms of his severance package the following day, however, it stated that he would be offered thirty-two weeks of salary benefits payable over an eight-month period, conditioned upon his signing an AGR containing non-compete and non-solicitation provisions (the "Expanded AGR").² Believing the non-compete and periodic payment provisions to be contrary to the GSP, Chacko refused to sign the Expanded AGR. Instead, over the course of the following week, he attempted to negotiate with Sabre over the terms and conditions of his severance package.

On October 7, 2003, Sabre's Benefits Administration Committee (the "Committee") adopted a resolution amending the GSP to grant expressly to Sabre the discretion (1) to include non-compete and non-solicitation provisions in the terminated employee's AGR; and (2) to pay severance benefits in periodic installments (the "Amendment").³ The resolution provided that the Amendment was effective immediately.

Chacko officially separated from Sabre on October 17, 2003.⁴ On November 3, 2003, he filed a claim for severance benefits, in which he expressed a willingness to sign an AGR in the form contemplated by the pre-Amendment GSP and demanded payment of his severance benefits in a lump sum. On November 6, 2003, Sabre informed Chacko that the Administrator had denied his claim for benefits "based on the fact that the [GSP], as amended and in effect on Mr. Chacko's termination date of October 17, 2003 . . . specifically allows for the execution of an [AGR] containing a non-compete provision as a condition of eligibility for benefits, and further specifically provides for the payment of benefits in periodic installments." Chacko appealed, and an independent appeals committee (the "Appeals Committee") was appointed to review the Administrator's decision. The Appeals Committee denied Chacko's appeal on the grounds that he had no vested rights under the GSP in effect on September 29, 2003; the GSP expressly granted Sabre the right to terminate or amend the GSP at any time; the October 7, 2003 Amendment to the GSP was validly executed; Sabre had complied with ERISA's notice requirements regarding the Amendment; and Chacko was not eligible for benefits under the governing GSP — the one in effect on October 17, 2003 — because he refused to sign the Expanded AGR.

Chacko brought suit against Appellees, claiming, inter alia, that he was wrongfully denied severance benefits under the GSP in violation of ERISA § 502(a)(1)(B). The district court granted Appellees' motion for summary upon finding that the Administrator's denial of severance benefits was not an abuse of discretion. On appeal, Chacko argues that (1) Appellees are precluded from denying his claim for benefits because they engaged in "inequitable conduct"; and (2) the Administrator abused its discretion by applying an incorrect legal standard — the Amendment — to his claim for benefits. Appellees respond that Chacko's claim is, in essence, a challenge to the Administrator's determination that the Amendment applied to Chacko's claim for benefits because he was "terminated" on the date his employment with Sabre actually ended (October 17, 2003), rather than on the date Speck informed him that Sabre had decided to terminate his employment (September 29, 2003). Appellees argue that the district court correctly held that the Administrator made a factual determination that Chacko was terminated on October 17, 2003 and that this factual determination was not an abuse of discretion.

II

We review grants of summary judgment de novo, applying the same legal standard used by the district court. MacLachlan v. ExxonMobil Corp., 350 F.3d 472, 478 (5th Cir.2003). Summary judgment is proper when the evidence demonstrates that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c).

A

Chacko first contends that "inequitable conduct" on the part of Appellees — namely, alleged breaches of their fiduciary duties — precludes them from denying him severance benefits under the GSP. More specifically, Chacko argues that Appellees "acted with a complete lack of integrity" by offering him a severance package under the Executive Plan one day before that plan became effective; that they failed to provide him with "full and complete material information" regarding the availability of severance benefits under the Executive Plan; that they breached a fiduciary duty of loyalty and engaged in self-dealing by conditioning his receipt of benefits upon the execution of a non-compete agreement; and that their decision to deny him benefits was not a "reasoned product of the exercise by [the GSP Administrator] of her fiduciary duty." Therefore, Chacko argues, the district court erred in granting summary judgment on his claim for benefits. In other words, Chacko contends that he is entitled to benefits under the GSP, regardless of whether he satisfies the terms of eligibility for those benefits, because Appellees allegedly breached their fiduciary duties.

Even if Chacko's allegations of "inequitable conduct" were supported by the summary judgment evidence, which they are not, Chacko's only claim on appeal is a claim for benefits under ERISA § 502(a)(1)(B).⁵ Section 502(a)(1)(B) provides an ERISA plan participant or beneficiary with a cause of action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B) (emphasis added). Chacko's argument — that he is entitled to benefits not because they are due to him under the terms of the GSP but rather because Appellees engaged in "inequitable conduct" and breached their fiduciary duties — is simply not cognizable under ERISA § 502(a)(1)(B).

B

Chacko also challenges the Administrator's denial of benefits under the terms of the GSP. A plan administrator's benefit determinations involve two tasks: construing the terms of the plan and determining the facts underlying the benefit claim. Where the plan expressly confers discretion on the plan administrator to construe the plan's terms, the administrator's construction is reviewed for abuse of discretion. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956-57, 103 L.Ed.2d 80 (1989); Gosselink v. AT&T, Inc., 272 F.3d 722, 726 (5th Cir.2001); Vega v. Nat'l Life Ins. Servs., Inc....