Aquin v. Bendix Corp.
| Decision Date | 30 May 1986 |
| Docket Number | No. 84-CV-3010-DT.,84-CV-3010-DT. |
| Citation | 637 F. Supp. 657 |
| Parties | Patricia AQUIN, Plaintiff, v. BENDIX CORPORATION, Defendant/Third Party Plaintiff, v. CROSS & TRECKER CORPORATION, Third Party Defendant. |
| Court | U.S. District Court — Western District of Michigan |
James E. Wynn, Milmet, Vecchio, Ward & Carnago, POC, Detroit, Mich., for plaintiff.
Thomas G. Kienbaum, Detroit, Mich., Attorney for Bendix.
David M. Hayes, Detroit, Mich., for Cross & Trecker.
This is an action to determine whether a decision by a welfare benefit plan administrator to deny severance benefits was "arbitrary and capricious." Plaintiffs are two groups of former Bendix Corporation (Bendix) employees. The initial plaintiffs are forty-one (fifty-eight, after the first amended complaint) former salaried employees of Bendix Machine Tool Corporation (BMTC), a wholly-owned subsidiary of Bendix. They are joined in the first amended complaint by a group of sixty-three former salaried employees of Bendix's Industrial Controls Division (ICD). Both groups were covered by Bendix's plan for Separation Allowance Benefits for Salaried Employees, Policy No. 1205 (the Plan). The Plan was adopted on February 1, 1978 and amended effective September 17, 1982 and covers the terms and conditions relating to payment of severance benefits.
On April 19, 1984, Cross & Trecker Corporation (C & T) purchased the assets of BMTC and ICD and at the same time hired plaintiffs.1 Plaintiffs did not lose a day's pay,2 continued in their same jobs, were paid 100% of their previous salaries with the Bendix units, and were not requested to relocate. However, their benefits were decreased and C & T does not have a severance plan. In August of 1984, C & T resold the ICD operation to Dynapath, Inc. (Dynapath), which is not party to the case, under conditions similar to the ICD sale to C & T.
The BMTC plaintiffs filed suit on June 28, 1984 alleging that they were terminated from employment with Bendix under conditions entitling them to severance pay as well as other benefits. On October 1, 1984 plaintiffs, at my suggestion, submitted a request for review of their claim for severance pay to the Bendix Separation Plan Committee (the Committee).3 On November 6, 1984, proceedings were temporarily stayed pending the Committee's decision. Plaintiffs had a hearing before the Committee on December 6, 1984. Relying on the written opinion of its special counsel, the Committee on December 28, 1984 denied plaintiffs' claim for severance pay as not covered by the Plan.
The BMTC plaintiffs amended the complaint on March 27, 1985, alleging that the Committee's decision was "arbitrary and capricious" and should be set aside. The amended complaint added Allied Corporation (Allied) as a defendant since it became the successor administrator of the Plan on August 13, 1984. The amended complaint also added the IDC plaintiffs. On May 30, 1985 the Committee held a hearing on the IDC employees' claim for severance pay. This claim was based on the original sale to C & T and the subsequent resale by C & T to Dynapath. The Committee denied the IDC plaintiffs' claim on August 13, 1985, adopting the reasoning of its earlier decision as to the BMTC employees.
Defendants Bendix and Allied have moved for partial summary judgment, Fed. R.Civ.P. 56, asking for a determination that they are not liable for severance pay to plaintiffs. Plaintiffs have filed a cross-motion for partial summary judgment on the same claim. Plaintiffs' claims for other benefits are not involved in the motion. There is no dispute that plaintiffs are both "participants" and "beneficiaries" under the Plan, 29 U.S.C. § 1002(7), (8), that defendants were and are the Plan "administrator," 29 U.S.C. § 1002(16), and that the severance pay policy is an "employee welfare benefit plan" as defined in 29 U.S.C. § 1002(1).
The moving parties on the motions have a heavy burden. Their papers must clearly show the true facts and exclude any real doubt as to the existence of any genuine issue of material fact. Sartor v. Arkansas Natural Gas Corp., 321 U.S. 620, 627, 64 S.Ct. 724, 728, 88 L.Ed. 967, reh'g denied, 322 U.S. 767, 64 S.Ct. 941, 88 L.Ed. 1593 (1944); 6 Moore's Federal Practice ¶ 56.153, at 56-466 to -467. Their papers must also show they are entitled to judgment as a matter of law. Ghandi v. Police Dep't of the City of Detroit, 747 F.2d 338, 344 (6th Cir.1984). Furthermore, the movants' papers are closely scrutinized, while the opponents' papers are indulgently treated. Watkins v. Northwestern Ohio Tractor Pullers Ass'n, Inc., 630 F.2d 1155 (6th Cir.1980). The evidence before me must be viewed and the inferences must be drawn in the light most favorable to the opposing party. Smith v. Hudson, 600 F.2d 60 (6th Cir.), cert. dismissed, 444 U.S. 986, 100 S.Ct. 495, 62 L.Ed.2d 415 (1979).
The standard of review to be applied to the Committee's decision has been variously described as whether its interpretation of the Plan is arbitrary, capricious, in bad faith, erroneous as a matter of law, or unsupported by substantial evidence. Blakeman v. Mead Container, 779 F.2d 1146, 1149-50 (6th Cir.1985); Moore v. Reynolds Metal Co. Retirement Program for Salaried Employees, 740 F.2d 454, 457 (6th Cir.1984), cert. denied, ___ U.S. ___, 105 S.Ct. 786, 83 L.Ed.2d 780 (1985); Rhoton v. Central States Southeast & Southwest Areas Pension Fund, 717 F.2d 988, 989 (6th Cir.1983); Rolando v. Babcock & Wilcox Co., No. 84-CV-5009-DT, slip op. at 3 (E.D.Mich. Feb. 20, 1986) Available on WESTLAW, DCTU database. In conducting the review, I should focus on the language of the provisions at issue to see if they can support the Committee's interpretation. Rhoton, 717 F.2d at 990.
The parties dispute the proper scope of my inquiry under the arbitrary and capricious standard. Defendants agree with plaintiffs that my "inquiry into the facts is to be searching and careful," Bowman Transp., Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974), but they argue for a "narrow inquiry." Id. The Court of Appeals for the Sixth Circuit has recently defined the standard of review in a severance pay case as whether the interpretation of the administrator is "grounded on any reasonable basis." Blakeman, 779 F.2d at 1150. Defendants also agree with plaintiffs that I may focus on the process the Committee used in reaching its determination and whether the process shows evidence of bad faith.
Plaintiffs, on the other hand, argue that I should not be so deferential to the Committee's decision. They argue that a "combination of danger signals," Maggard v. O'Connell, 671 F.2d 568 (D.C.Cir.1982), rebuts the presumption that the Committee has acted regularly and requires a higher level of judicial scrutiny. See also Gilbert v. Burlington Indus., Inc., 765 F.2d 320, 328-29 (2d Cir.1985); Jung v. FMC Corp., 755 F.2d 708, 711-12 (9th Cir.1985); Blau v. Del Monte, 748 F.2d 1348, 1353 (9th Cir.1984), cert. denied, ___ U.S. ___, 106 S.Ct. 183, 88 L.Ed.2d 152 (1985). The "danger signals" in plaintiffs' view include violations of ERISA procedural requirements, inconsistent applications of the Plan, undue bias toward Bendix and Allied by the Committee, the avoidance of a very substantial outlay by denying benefits, and "rubber-stamping" of the special counsel's recommendation by the Committee.
Even if I should give less deference to the Committee's decision under these circumstances, I do not find that the "danger signals" here rise to a level that requires more than a "reasonable" explanation. See Anderson v. Ciba-Geigy Corp., 759 F.2d 1518, 1521 (11th Cir.), denial of reh'g, 767 F.2d 938, cert. denied, ___ U.S. ___, 106 S.Ct. 410, 88 L.Ed.2d 360 (1985); Jung v. FMC Corp., supra. Applying the "reasonable basis" standard, I find that the Committee's interpretation of the Plan is reasonable and, therefore, plaintiffs are not entitled to severance benefits.
The stated purpose of the Plan is:
To establish procedures governing the separation of salaried employees from employment with Bendix and to provide allowances and payments to assist eligible employees during the resulting transition period or alleviate conditions of hardship resulting from loss of employment.
The Plan as amended in 1982 provides that benefits will be paid in case of a reduction in force (RIF). A RIF (as opposed to a quit) is defined in paragraph C.4 of the Plan as follows:
(Emphasis added.) Quit is defined earlier in paragraph C.2 of the Plan as "a separation initiated by, and voluntary on the part of the employee."
As described above, the Plan explicitly specifies how to treat employees in a number of situations, including:
To continue reading
Request your trial
-
Henne v. Allis-Chalmers Corp.
...v. Zenith Radio Corporation, 480 F.Supp. 361, 364 (N.D.Ill.1979), aff'd, 618 F.2d 110 (7th Cir.1980). See also Acquin v. Bendix Corporation, 637 F.Supp. 657, 660 (E.D.Mich.1986) ("The stated purpose of the Plan is: To establish procedures governing the separation of salaried employees from ......
-
Bowman v. Firestone Tire & Rubber Co.
...claimant, only the Secretary of Labor has standing to complain about violations of ERISA's procedural requirements." Aquin v. Bendix Corp., 637 F.Supp. 657 (E.D.Mich.1986). The court holds upon de novo review of the plan terms as those terms relate to plaintiffs Smith and Dunn, that plainti......
-
City of Manchester v. National Gypsum Co.
... ... Gypsum Co ... William Tocchi, Manchester, N.H., for Fibreboard Corp ... Alan Rindler, Morrison, Mahoney & Miller, Boston, Mass., for W.R. Grace Co ... ...
-
Awbrey v. Pennzoil Co.
...pay plans is to aid terminated employees through periods of unemployment when employee is without income); Aquin v. Bendix Corp., 637 F.Supp. 657, 662 (E.D.Mich.1986) (reasonable view of severance pay plan's purpose is to minimize hardship caused by unemployment). Such authorities lend supp......