Cattin v. General Motors Corp.

• Decision Date: 30 January 1992
• Docket Number: Nos. 90-1016,90-1051 and 90-1052,s. 90-1016
• Citation: 955 F.2d 416
• Parties: 14 Employee Benefits Cas. 2769, 17 UCC Rep.Serv.2d 583 Gary L. CATTIN and Thomas F. Omans (90-1016), Plaintiffs-Appellants/Cross-Appellees, v. GENERAL MOTORS CORPORATION (90-1051); Electronic Data Systems Corporation (90-1052), Defendants-Appellees/Cross-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 416

955 F.2d 416

14 Employee Benefits Cas. 2769, 17 UCC

Rep.Serv.2d 583

Gary L. CATTIN and Thomas F. Omans (90-1016) Plaintiffs-Appellants/Cross-Appellees, v. GENERAL MOTORS CORPORATION (90-1051); Electronic Data Systems Corporation (90-1052) Defendants-Appellees/Cross-Appellants.

Nos. 90-1016, 90-1051 and 90-1052.

United States Court of Appeals Sixth Circuit.

Argued Nov. 22, 1991.

Decided Jan. 30, 1992.

Jules B. Olsman (argued and briefed), Woll, Crowley, Berman, Olsman & Nolan, Royal Oak, Mich., for plaintiffs-appellants/cross-appellees.

David M. Davis (argued and briefed), Terence V. Page (argued and briefed), Hardy, Lewis, Pollard & Page, Birmingham, Mich., for defendants-appellees/cross-appellants.

Before JONES and MILBURN, Circuit Judges, and ENGEL, Senior Circuit Judge.

MILBURN, Circuit Judge.

Plaintiffs Gary L. Cattin and Thomas F. Omans appeal a second time from the district court's judgment holding that they are not entitled to early retirement benefits. Defendants General Motors Corporation ("GM") and Electronic Data Systems Corporation ("EDS") cross-appeal from the district court's ruling that plaintiffs are allowed to participate in a Stock Incentive Plan.

For the purpose of clarity, we have restated the five issues raised in this appeal by the plaintiffs as follows: (1) whether the Retirement Equity Act of 1984, amending 29 U.S.C. § 1054(g)(2)(A) and (B), prevented GM from amending its retirement program to eliminate the rights of plaintiffs to accrue credit under certain early retirement provisions of the GM retirement program; (2) whether recent amendments to the Internal Revenue Code, specifically 26 U.S.C. § 411(d), prohibited GM from altering its retirement plan to plaintiffs' detriment; (3) whether the district court erred in holding that plaintiffs had no contractual right to participate in GM's early retirement program; (4) whether the trial court erred in holding that a Closing Agreement issued by the Internal Revenue Service in this case required no modification of the district court's prior decision of August 8, 1986; and (5) whether the trial court erred in denying plaintiffs' motion for attorney's fees and costs pursuant to 29 U.S.C. § 1132(g).

On their cross-appeal, defendants present three issues: (1) whether the district court erred in holding "unconscionable" a release of claim provision inserted by defendants in their offer to plaintiffs to participate in a Stock Incentive Plan; (2) whether the district court erred in granting plaintiffs relief under "General Equity" theories when such broad equitable claims were never before the court; and (3) whether the district court erred by failing to differentiate between equitable claims and equitable relief. For the reasons that follow, we affirm.

I.

A. Facts

Plaintiffs are former employees of GM who worked for over twenty-seven years in a data processing department at GM. On September 21, 1984, GM announced to its shareholders its intention to acquire EDS, a large data processing firm. According to the plan, EDS would assume responsibility for all GM data processing work and offer employment to data processing personnel of GM. The plan of merger provided that employees of EDS would not participate in GM's employee benefit plan, including the retirement plan, and that EDS employee benefit plans would remain in effect. After the GM shareholders approved the proposal, GM acquired EDS on October 18, 1984, and EDS became a wholly-owned subsidiary of GM.

Seven thousand GM employees employed in data processing were transferred to EDS on January 1, 1985. However, in order to resolve questions about these employees' retirement benefits, GM amended its retirement plan for salaried employees ("GM retirement plan") on October 1, 1984. The GM retirement plan, established in 1950, consists of two parts. Part A, derived from employer contributions, provides a monthly basic benefit equal to the years of credited service completed under the program multiplied by a basic benefit rate. For example, the monthly basic benefit rate payable for a retirement commencing in October 1986 for salaried employees, level five or above, equals years of credited service multiplied by $22.20. Thus, an employee who had completed twenty-seven years of credited service would have an entitlement of monthly basic benefits of twenty-seven multiplied by $22.20 or $599.40 per month.

Under the 1950 retirement plan, an employee could retire and receive benefits at or after the attainment of age fifty-five or after the completion of thirty years of credited service ("thirty-and-out"). Employees retiring after thirty years of service, but before they reached age sixty-two, would also receive under Part A of the program an early retirement supplement called the social security make up benefit ("social security supplement"). The social security supplement was designed to supplement employees' retirement benefits until they were eligible to receive social security. Although the Part A social security supplement generally was payable commencing at retirement and continuing until attainment of age sixty-two, it could be forfeited or reduced if the employee was discharged for cause, if the employee had earnings in excess of certain prescribed annual limitations, or if the employee became eligible for social security disability benefits. In any event, the social security supplement was to end at age sixty-two. Part B of the program provided a primary benefit, in addition to benefits under Part A, for those participants who elected to make monthly contributions to their retirement account.

Prior to October 1984, all benefits under the GM retirement plan were also extended to the employees of wholly-owned subsidiaries of GM. However, on October 1, 1984, GM amended its retirement plan pursuant to section 8A of the plan which states: "The Corporation reserves the right, by and through its Board of Directors, to amend, modify, suspend, or terminate the program in the future." The October 1, 1984, amendment excluded from the GM retirement plan "[e]mployees of any directly or indirectly wholly-owned or substantially wholly-owned subsidiary of the Corporation formed or acquired on or after March 1, 1984, unless specifically approved by the General Motors Corporation Board of Directors." The effect of this amendment was to preclude the employees who were transferring to EDS from accruing additional credited service under the GM retirement plan. Essentially, what the transferring employees lost was (1) the ability to continue to accrue credited service with GM while working with EDS and, therefore, the right to early retirement, and (2) the right to the social security supplements which would have been payable upon one's retirement after thirty years served while under sixty-two years of age.

The information regarding the changes to the GM retirement program was conveyed to the transferring employees in a booklet entitled "Statements of Your General Motors Benefits after Joining the New EDS." At a meeting on November 1, 1984, the transferring employees were also shown video tapes featuring various GM personnel who outlined the changes that would be made by the acquisition of EDS. In particular, they were informed as to the manner in which the transfer would affect their retirements. Employees having more than thirty years of service with GM were allowed to transfer to EDS or to retire with such benefits as they had accrued under the GM retirement plan. Employees in plaintiffs' position, who had not already qualified for retirement by working for thirty years, were told that upon transfer, their active participation in the GM retirement plan would cease. They would remain entitled to the accrued benefits of the GM retirement plan based upon their years of credited service, and, as transferring employees, they were to be allowed immediate participation in the EDS benefit plan. In the event any GM employee refused to transfer to EDS, his or her employment with GM would be terminated.

As earlier stated, plaintiffs had worked for GM in the data processing department for over twenty-seven years when they were transferred to EDS. As their only alternative to the transfer to EDS was termination by GM, they elected to transfer. After the transfer, they were unable to qualify for and take advantage of GM's thirty-and-out early retirement program and the social security supplements payable under it.

Prior to their transfers on January 1, 1985, transferring employees, including the plaintiffs, were advised by defendants of a Stock Incentive Plan whereby they would be given the opportunity to purchase EDS stock at a "nominal price of 10 cents per share." Defendants never indicated in any way prior to plaintiffs' transfer to EDS that plaintiffs would be required to execute a release as a condition to their participation in the purchase of the stock. However, on February 15, 1985, when plaintiffs were provided with the opportunity to purchase the stock, the stock purchase agreement contained a release clause providing that the signer would give up any and all claims under state and federal law against GM and EDS for any matter arising out of the transfer, including but not limited to the claims set forth in plaintiffs' complaint. As stated, the release clause was never disclosed to plaintiffs until after their transfer to EDS. As both plaintiffs refused to sign the stock agreement because of the presence of the release clause, neither plaintiff was allowed to purchase the shares of stock specified in defendants' letters of November 12, 1984.

B. Procedural History

Plaintiffs commenced this action in the district court on November 19, 1984. Plaintiffs initially challenged the loss of their early retirement benefits under the theory that such benefits were guaranteed to plaintiffs by GM and that the rights plaintiffs held were vested and non-forfeitable under 29 U.S.C. § 1053(a) of...