Brown v. Ampco-Pittsburgh Corp.
| Decision Date | 07 June 1989 |
| Docket Number | AMPCO-PITTSBURGH,No. 88-1387,88-1387 |
| Citation | 876 F.2d 546 |
| Parties | Stephen BROWN, Douglas Shepard, Edward Schweikert, Thomas McCoy and Charles Tomasello, Plaintiffs-Appellants, v.CORP., Defendant-Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Phillip I. Frame, Jackson, Mich., for Stephen Brown, Douglas Shepard, Edward Schweikert, Thomas McCoy, and Charles Tomasello, plaintiffs-appellants.
Robert F. Best, Jackson, Mich., for Ampco-Pittsburgh Corp., defendant-appellee.
Before MERRITT and NELSON, Circuit Judges, and LIVELY, Senior Circuit Judge.
This case arises under ERISA, the Employee Retirement Income Security Act of 1974, 29 U.S.C. Sec. 1001 et seq. (1982). It concerns the right to severance pay benefits. The district court upheld the defendant employer's computation and payment of termination allowances under a plan promulgated in December 1985, effective January 1, 1986. The plaintiffs claimed they were entitled to larger allowances under "guidelines" circulated internally to management personnel in 1984. A remand is necessary because the district court reviewed the defendant's decision under a standard previously adopted by this court, but subsequently rejected by the Supreme Court.
The plaintiffs were salaried non-union employees at the Jackson, Michigan plant of Pittsburgh Forging Company, a subsidiary of the defendant, Ampco-Pittsburgh Corporation (Ampco). On May 1, 1985, the union employees at the Jackson plant went on strike. Shortly thereafter Ampco laid off non-union employees at Jackson, including the plaintiffs. The strike continued until May 30, 1986. The Jackson plant then resumed production with about one-half the hourly workforce it had employed at the beginning of the strike. On July 11, 1986, Ampco notified the plaintiffs in writing that they would not be recalled and advised them of the termination pay they would receive.
Believing they were entitled to a larger amount of termination pay, the plaintiffs filed this action in the district court. The complaint alleged that in May 1985 Ampco maintained a severance pay policy under which each salaried employee upon termination would receive one week's salary for each year of service to the company. The plaintiffs alleged that prior to being laid off they were assured that each would be paid according to the policy in effect in May 1985. During the plaintiffs' layoff, the complaint charged, Ampco unilaterally made changes in the severance pay policy that reduced by one-half the number of weeks' salary for each year of service. Ampco computed their benefits under the "new policy" when it terminated them in July 1986. The plaintiffs claimed breach of contract and sought $21,343 as damages, the total difference between the benefits to which they would be entitled under the 1984 plan and the amount they received under the 1986 plan.
In its answer Ampco admitted that the plaintiffs were "temporarily" laid off in May 1985 shortly after the strike began and were finally terminated on July 11, 1986. Ampco denied that it ever had a "policy" that provided one week of termination pay for each year of service. It claimed it had no termination allowance policy prior to institution of the 1986 plan. Between July 1984 and December 1985, according to Ampco, it had only "some nonmandatory guidelines." Since there was no policy in May 1985, no breach of contract occurred. Any oral assurances to the plaintiffs concerning termination allowances were made without authority from the company.
The record reveals that Ampco circulated an internal memorandum to various management personnel on June 20, 1984. The memorandum, marked "confidential," announced "termination allowance guidelines" for non-union salaried employees effective July 1, 1984. An attachment to the memo set forth terms and conditions for paying such allowances. The following provisions are pertinent to our inquiry:
1.0 Purpose
1.1 A salary termination allowance will be paid to only those employees whose services are terminated by the Company pursuant to a reduction in force.
2.0 General
2.1 A termination allowance will not be paid when the work force reduction is considered temporary, and the Company intends to recall the employee or employees who are laid off. However, if layoff continues for twelve (12) consecutive months, the reduction in force will be deemed permanent and the termination allowance will be paid.
2.2 Employees who at the time of termination are eligible for an immediate unreduced pension under any pension plan to which the Company contributes, or who have reached age 70 shall not be eligible for a termination allowance.
2.3 The amount of termination allowance shall be one week for each full year of service with a minimum of two weeks for less than three full years of service and a maximum of 26 weeks for 26 full years of service or more. The allowance is to be paid on regular paydays following the termination.
The guidelines were not distributed to any salaried non-union employees except the addressees of the memorandum. Nor did Ampco include the guidelines in a personnel policy manual or similar publication.
On December 30, 1985, Ampco announced a "termination allowance policy" for non-union salaried employees effective January 1, 1986. The policy was set forth in an attachment, and the addressees were instructed that "[t]his policy should be inserted into the Corporate Personnel Policy Manual." As pertinent here, the policy stated:
1.0 Purpose
1.1 A salary termination allowance will be paid to only those employees whose services are terminated by the Company due to a reduction in force.
2.0 Policy
2.1 A termination allowance will not be paid when the workforce reduction is considered temporary, and the Company intends to recall the employees who are laid off.
2.2 The amount of the termination allowance will depend on the number of full years of service and will be computed and paid at the individual's base weekly salary rate at the time of termination. The allowance is to be paid on regular paydays following the termination.
Length of Service Number of Weeks of Termination Allowance
Up to 5 years 2 Weeks
5 Years to 10 Years 4 Weeks
10 Years to 15 Years 6 Weeks
15 Years to 20 Years 8 Weeks
20 Years and Over 10 Weeks
Both the guidelines and the policy provided benefits only for terminations pursuant to a reduction in force. Neither provided payments during temporary layoffs. Both the 1984 guidelines and the 1986 policy treated all workforce reductions as temporary so long as "the Company intends to recall the employees who are laid off." The 1984 guidelines, however, "deemed" a reduction in force permanent if a layoff continued for twelve consecutive months. The 1986 policy had no similar provision for automatic qualification.
Ampco moved for summary judgment, asserting that there were no genuine issues of material fact and that it was entitled to judgment as a matter of law. It argued that both the guidelines and the policy provided for an allowance only in the event of termination; a layoff did not trigger entitlement. The plaintiffs were laid off, not terminated, during the period that the guidelines were effective. Ampco adopted the policy more than six months before it terminated the plaintiffs. Therefore, the plaintiffs' rights were governed by the 1986 policy. For these reasons, Ampco argued, it did not act arbitrarily and capriciously when it paid the plaintiffs termination allowances as provided by the 1986 policy.
Resisting the motion, the plaintiffs contended that Ampco acted arbitrarily and capriciously when it amended its severance pay policy to reduce benefits while the plaintiffs were laid off. The plaintiffs argued that both plans were "silent," in violation of ERISA's disclosure and reporting requirements. 29 U.S.C. Secs. 1021-31. The 1984 guidelines were silent because they were contained in a confidential internal memo that was not communicated to the affected employees. The 1986 policy was silent, the plaintiffs maintained, because it was not disclosed to them until they were terminated six months after its effective date.
The plaintiffs admitted that the 1986 policy was not directed at them--that it applied to over 1900 salaried non-union employees at more than 30 Ampco plants. Nevertheless, they argued that Ampco's failure to comply with procedural requirements of ERISA invalidated Ampco's attempt to substitute the 1986 policy for the 1984 guidelines. Although arguing that neither the guidelines nor the policy was properly disclosed to them, they contended that the alleged promise of benefits made at the time they were laid off entitled them to severance pay under the 1984 guidelines.
Ampco responded that the 1986 policy was not "silent" because it had been published in the personnel manual. Moreover, it made no difference that the plaintiffs had no knowledge of the policy's provisions. Even if Ampco had not disclosed the 1986 policy, this omission would not have harmed the plaintiffs. They were paid benefits as prescribed by the only plan in effect when they were terminated.
The district court granted Ampco's motion for summary judgment on March 16, 1988. It found that the plaintiffs had produced no evidence that the 1986 policy was silent. It had been adopted in December 1985 and published in the company's personnel manual. The court found that the plaintiffs' lack of knowledge of the 1986 policy was not controlling. That policy was in effect when Ampco terminated the plaintiffs, and it "modified, replaced or supplemented the provisions of [the] 1984 [guidelines]." Since Ampco did not single out the plaintiffs and direct the policy's reduced benefits at the plaintiffs specifically, Ampco did not act...
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