Sharkey v. Ultramar Energy Ltd., Lasmo plc, Lasmo (AUL Ltd.)

• Decision Date: 16 November 1995
• Docket Number: D,No. 135,135
• Citation: 70 F.3d 226
• Parties: 19 Employee Benefits Cas. 2590, Pens. Plan Guide P 23914Y Daniel J. SHARKEY, Plaintiff-Appellant, v. ULTRAMAR ENERGY LIMITED, LASMO PLC, LASMO (AUL LTD), aka American Ultramar Limited, and Pension Committee of the Ultramar U.S. Employees Retirement Plan, Defendants-Appellees. ocket 94-9212.
• Court: U.S. Court of Appeals — Second Circuit

Page 226

70 F.3d 226

19 Employee Benefits Cas. 2590, Pens. Plan Guide P 23914Y

Daniel J. SHARKEY, Plaintiff-Appellant, v. ULTRAMAR ENERGY LIMITED, LASMO PLC, LASMO (AUL LTD), aka American Ultramar Limited, and Pension Committee of the Ultramar U.S. Employees Retirement Plan, Defendants-Appellees.

No. 135, Docket 94-9212.

United States Court of Appeals Second Circuit.

Argued Sept. 6, 1995.

Decided Nov. 16, 1995.

David S. Golub, Stamford, CT (Silver Golub & Teitell, Jonathan M. Levine, of Counsel), for Plaintiff-Appellant.

A.J. Harper II, Houston, TX (Fulbright & Jaworski, LLP, Ralph C. Dawson, New York City, of Counsel), for Defendants-Appellees.

Before: FEINBERG, KEARSE and LEVAL, Circuit Judges.

FEINBERG, Circuit Judge:

Plaintiff Daniel J. Sharkey appeals from a grant of summary judgment in the United States District Court for the Southern District of New York, Vincent L. Broderick, J., in favor of defendants-appellees Ultramar Energy Limited, Lasmo plc, Lasmo (AUL Ltd.), and the Pension Committee of the Ultramar U.S. Employees Retirement Plan. Sharkey sued for unpaid severance and pension benefits pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Sec. 1001 et seq., calculated on the basis that his employment was continuous from his original hiring date in December 1971 until July 31, 1992. Appellees contend Sharkey retired on June 1, 1988 and functioned as an independent contractor until reemployed on July 1, 1991 by Ultramar Energy Limited (UEL), a subsidiary of Ultramar plc (Ultramar).

The district court denied Sharkey's motions for summary judgment and granted appellees' motions in an opinion reported at 867 F.Supp. 258 (S.D.N.Y.1994). ¹ For reasons given below, we reverse the grant of summary judgment and remand for further proceedings.

I. Background

Sharkey was employed by UEL and another Ultramar subsidiary from December 1971 to June 1988, when he retired. At that time, Sharkey began receiving a monthly pension benefit of approximately $360 from the Ultramar U.S. Employees Retirement Plan (Retirement Plan) and also received a lump sum of approximately $126,700 from Ultramar's non-qualified pension plan. Sharkey also received a lump-sum severance payment of approximately $175,000 and signed a general release discharging all claims against the Ultramar companies. The release stated it applied to

all ... claims and demands whatsoever, in law, or equity ... which against the Ultramar Group [Sharkey] ... ever had, now ha[s] or hereafter shall, can or may have upon or by reason of any matter, cause or thing whatsoever from the beginning of the world to the date of this release arising out of his employment with the Ultramar Group ... including ... severance benefits, excluding any benefits payable under a pension plan.... (emphasis added)

At about the same time, Sharkey formed Dan-Mar Enterprises, which entered into a consulting agreement with UEL whereby Sharkey agreed to provide part-time consulting services. Under this agreement, Sharkey could not be required to work more than 15 days per month and was to be paid on a per diem basis, with no benefits and no tax withholding. Sharkey reported this income on his tax returns as self-employed income.

Sharkey presented evidence that within a week or two the consulting arrangement evolved into full-time employment because his intended replacement was transferred to California. UEL had no one available to fill Sharkey's position, so what was envisioned as a short term, part-time consulting arrangement quickly turned into a permanent, full-time arrangement with Sharkey working for the company precisely as he had done prior to his retirement. Appellees dispute exactly when Sharkey resumed full-time work.

In the spring of 1991, the former Chairman of Ultramar, Lloyd Bensen, reviewed Sharkey's employment status. Bensen recommended that Sharkey be reinstated to the UEL payroll as a full-time employee and be given full credit for all of his years of employment, including the 1988-91 consulting period. Bensen noted Sharkey's financial losses from his treatment as an independent contractor for three years, including lost salary increases, annual bonuses, vacation, and sick day benefits, and his development of the "Atmospheric Fuel Vacuum Gasoil Economies" program, a refining concept which substantially increased the company's profits. Bensen therefore recommended that Sharkey be reinstated without being required to repay all or any part of the severance payment received in connection with his early retirement.

Sharkey was reinstated to UEL's payroll as an employee on July 1, 1991 and the monthly pension payments he had been receiving under the Retirement Plan were stopped. At the time Sharkey was reinstated, Ultramar had just adopted a severance pay plan (Severance Plan). The plan provided benefits based upon "years of completed service" to employees terminated within two years of a change in ownership of Ultramar. The Severance Plan was a "poison pill," designed by Ultramar to deter hostile takeovers by making it costly to purchase the company and sell off its assets or reduce its operations. Sharkey became a participant under this plan.

In late 1991, Ultramar was acquired in a hostile takeover by Lasmo plc (Lasmo), and in July 1992, Sharkey's employment with UEL was terminated. Sharkey received a payment under the Severance Plan of $42,499, which reflected only his year of service from July 1991 to July 1992. He was also told that he would not receive pension service credit under the Retirement Plan for the period from June 1, 1988 to June 30, 1991 or pension salary credit for the earnings received during that time. As a result, Sharkey's pension benefit was calculated at $16,127 per year. Had the omitted three-year consulting period been counted, Sharkey contends his benefit would be approximately $43,000 per year.

Sharkey appealed the determinations of his Severance Plan and Retirement Plan benefits to the respective plan administrators. These appeals were rejected in letters from appellees' present counsel.

In March 1993, Sharkey instituted an action in the district court challenging these determinations. Thereafter, the parties filed cross-motions for summary judgment. In November 1994, the district court granted summary judgment to appellees and denied Sharkey's motions for summary judgment. The court held that (1) the papers submitted by Sharkey were insufficient to support his claim that he actually was an employee during the 1988-91 period; and (2) he could not succeed on this claim because he had acquiesced in his employer's treatment of him as an independent contractor. Sharkey then appealed to this court.

II. Discussion

Before us, Sharkey argues that the district court erred in granting appellees' motions for summary judgment and in denying his own. Summary judgment will be granted if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The burden is on the moving party to demonstrate that no genuine issue exists and all ambiguities must be resolved and all inferences must be drawn in favor of the party against whom summary judgment is sought. Gallo v. Prudential Residential Services, Ltd. Partnership, 22 F.3d 1219, 1223 (2d Cir.1994). We review a grant of summary judgment de novo to determine whether or not any genuine issue of material fact exists. Id. at 1224.

A. The Pension Claim

Sharkey claims he was reinstated in July 1991 with full retroactive benefits, including continuous service and salary credit for the three-year consulting period. In support of this claim in the district court, Sharkey submitted, in addition to his own affidavit: affidavits from Bensen and another former Ultramar executive directly involved in Sharkey's reinstatement; Bensen's contemporaneous, pre-reinstatement memorandum recommending such treatment; and contemporaneous, post-reinstatement documents confirming that the recommendation had been implemented. Appellees submitted an affidavit from a former Ultramar executive stating that the reinstatement did not include retroactive benefit credit, thus raising what seems to be a factual dispute. However, appellees argue that since the Pension Committee of the Retirement Plan (Pension Committee or Committee) had discretion to interpret and administer the plan, the only issue before the district court was whether the decision of the Committee was arbitrary and capricious. Appellees contend that any reinstatement with retroactive benefits required a written plan amendment because the express terms of the plan do not allow a participant to receive retiree benefits while also accruing additional benefits. Since there was no such amendment, appellees argue that the factual dispute is immaterial. Even accepting Sharkey's assertions as true, they say, the Committee's decision was neither arbitrary nor capricious.

Sharkey responds that the decision in 1992 concerning his pension benefit was not made by the Pension Committee, but by executives of Lasmo, the "hostile" company that had taken over Ultramar in 1991. In support of this claim, Sharkey submitted to the district court the deposition of a member of the Pension Committee and a memorandum sent by the Committee to two Lasmo executives who were not members of the Committee. The memorandum included four possible benefit calculations for Sharkey and the Committee's preferred calculation. According to the deposition, the Lasmo executives did not accept the Committee's recommendation and selected a scenario providing Sharkey with a smaller pension benefit. In addition, Sharkey argues that appellees did not produce a formal Pension Committee writing evidencing a vote or decision in 1992 on the benefit due him, although there...