Baker v. Kaiser Aluminum and Chemical Corp.

• Decision Date: 10 October 1984
• Docket Number: No. C-83-4226-WWS.,C-83-4226-WWS.
• Citation: 608 F. Supp. 1315
• Court: U.S. District Court — Northern District of California
• Parties: Emmett BAKER, Plaintiff, v. KAISER ALUMINUM AND CHEMICAL CORPORATION, a corporation, Does 1 through 100, inclusive, Defendants.

608 F. Supp. 1315

Emmett BAKER, Plaintiff, v. KAISER ALUMINUM AND CHEMICAL CORPORATION, a corporation, Does 1 through 100, inclusive, Defendants.

No. C-83-4226-WWS.

United States District Court, N.D. California.

October 10, 1984.

COPYRIGHT MATERIAL OMITTED

Herbert L. Michel, Jr., Los Angeles, Cal., for plaintiff.

Joe C. Creason, Jr., Anne E. Libbin, Pillsbury, Madison & Sutro, San Francisco, Cal., for defendants.

MEMORANDUM OF OPINION AND ORDER

SCHWARZER, District Judge.

Plaintiff Emmett Baker originally brought this action in state court against defendant Kaiser Aluminum and Chemical Corporation for wrongful discharge. Defendant removed the action to this Court and now moves for summary judgment.

FACTS AND PROCEDURAL BACKGROUND

Plaintiff was employed for 15 years by defendant at its San Leandro, California, plant. He was hired initially as an hourly employee and was promoted to shift foreman, a salaried position, in approximately April 1975. In January 1982, the San Leandro plant was experiencing problems with theft from the storeroom where tools and spare parts are kept. To remedy these problems, John Fuentes, the San Leandro Production and Maintenance Superintendent, held a special Saturday meeting on January 23, 1982, with all production and maintenance foremen. Plaintiff attended this meeting. Fuentes informed the foremen that the lock on the storeroom door had been changed, that only foremen and storeroom keepers would have keys, and that the foreman would accompany hourly employees to the storeroom at all times on the off-shifts to obtain needed equipment. The foremen were told that they were not to give their keys to non-salaried employees.

In March 1982, on two different occasions, plaintiff gave the storeroom key to a non-supervisory employee to obtain needed parts from the storeroom. Plaintiff asserts that he was unable to leave the floor to accompany the employee. Upon learning of these violations of his order, Fuentes terminated plaintiff on March 23, 1982. At the time that he was terminated, plaintiff was 51 years old and had two more years of service remaining before he qualified for defendant's early retirement benefits.

Plaintiff originally filed this action in state court. His second amended complaint states the following causes of action: (1) breach of implied-in-fact covenant of employment and benefits; (2) interference with a beneficial contractual relationship; (3) wrongful termination; (4) breach of the implied covenant of good faith and fair dealing.

In September 1983, defendant removed the action to this Court after defendant discovered through the taking of depositions that plaintiff intended to rely on language in employee benefit plans as a basis for his claimed right of employment and to claim that he was terminated in order to prevent him from obtaining early retirement benefits. Defendant contended that such claims would be pre-empted by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. The Court denied plaintiff's motion to remand on October 24, 1983. Defendant now moves for summary judgment.

DISCUSSION

Plaintiff's second amended complaint states claims pre-empted by ERISA as well as pendent state claims.

I. ERISA CLAIMS

A. Interference with Beneficial Contractual Relationship

The second cause of action alleges that defendant interfered with "written contracts with various third parties providing certain rights and benefits for employees ... and their spouses." It became clear in the course of depositions that the "contracts" to which plaintiff refers are defendant's pension and benefit plans promulgated in accordance with ERISA. Though plaintiff makes no reference to ERISA in his complaint, a complaint that is "artfully pleaded" to avoid federal jurisdiction may be recharacterized as one arising under federal law. Franchise Tax v. Construction Laborers Vacation Trust Board, 463 U.S. 1, 103 S.Ct. 2841, 2853, 77 L.Ed.2d 420 (1983). To determine whether a complaint is "artfully pleaded," the court is not bound to consider only the facts pleaded in the complaint, but may look elsewhere, as in deposition testimony, to ascertain facts that would appear in a well pleaded complaint. See Olguin v. Inspiration Consol. Cooper Co., 740 F.2d 1468, 1472 (9th Cir.1984).

Section 514(a) of ERISA provides that ERISA "supersedes any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a). The Supreme Court has held that state law is pre-empted as relating to an employee benefit plan "if it has a connection with or reference to such a plan." Shaw v. Delta Airlines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983). Plaintiff's claim that he had a contractual right to employment based on defendant's pension and benefit plans is a question that "relates to employee benefit plans" within Shaw's broad pre-emption scope.

Defendant points out that its various pension and benefits plans include the following "Limitation on Rights" provision: "Participation in the Plan gives rise to no rights to continued employment by an Employer nor to any claim to any benefit hereunder except as expressly provided in this Plan." Ottenbacher Decl., Exhs. A, B & C, Defendant's Motion for Summary Judgment. Plaintiff's argument appears to assert that this language demonstrates an employment agreement between defendant and plaintiff which does not expressly reserve to defendant the right to terminate an employee without cause or before his benefits have vested.

Plaintiff's argument is without merit. The language of the "Limitation on Rights" provision does not constitute an employment agreement. The purpose of ERISA is not to guarantee employment; its purpose is to ensure the integrity of employee benefit plans and to protect the rights of plan participants to accrued benefits under those plans. See 29 U.S.C. § 1001(b). The mere fact that defendant provides employee benefit plans for its employees does not place it under a duty to maintain them in its employ. See Craig v. Bemis Company, Inc., 517 F.2d 677, 684 (5th Cir.1975); Shaw v. Kruidenier, 470 F.Supp. 1375, 1388 (S.D.Iowa 1979). The "Limitation on Rights" provision serves to alert employees to this fact.

B. Wrongful Discharge Depriving Plaintiff of Early Retirement Benefits

Plaintiff's claim that he was wrongfully discharged so as to deny him maximum pension benefits is pre-empted by ERISA. Section 510 of ERISA states that it is unlawful for an employer to "discharge ... a participant or beneficiary ... for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan." 29 U.S.C. § 1140. Section 1140 prevents an employer from arbitrarily discharging an employee whose pension rights are about to vest. See Lojek v. Thomas, 716 F.2d 675, 680 (9th Cir.1983). To recover under § 1140, plaintiff must show that defendant terminated him with the "specific intent" to interfere with his rights under defendant's benefit plans. Watkinson v. Great Atlantic & Pacific Tea Co., Inc., 585 F.Supp. 879, 883 (E.D.Pa.1984); Titsch v. Reliance Group, Inc., 548 F.Supp. 983, 985 (S.D.N. Y.1982).

Defendant asserts that the termination in no way interfered with plaintiff's vested pension rights. Plaintiff has been "one hundred percent" vested in defendant's Retirement Plan since 1977 when he completed 10 years of service with the company. A salaried employee with vested rights under the Retirement Plan can receive any one of three types of retirement, depending upon the circumstances with which he ends employment with defendant: (1) normal retirement (2) early retirement with actuarially reduced pension; (3) "deferred vested pension" applicable to an employee terminated before eligibility for early retirement. Payments begin at age 62, or reduced payments at age 55. Baker Dep. Exhibit 13, Defendant's Motion for Summary Judgment. At the time that he was terminated, plaintiff was entitled to benefits under the Deferred Vested Pension plan. Further, his benefits under the Supplemental Savings and Retirement Plan and a Tax Credit Employee Stock Ownership Plan were fully vested as soon as he became a participant in these plans.

Plaintiff does not dispute the fact that his pension rights had vested, but rather asserts that defendant terminated him to prevent him from qualifying for early retirement. Defendant contends that it terminated plaintiff for two violations of the storeroom key rule, a legitimate, business-related reason for discharge demonstrating no invidious intent. "No ERISA cause of action under § 1140 lies where the loss of ... benefits was a mere consequence of, but not a motivating factor behind, a termination of employment." Titsch v. Reliance Group, Inc., 548 F.Supp. at 985. Plaintiff responds that this reason is pretextual. He points to the "arbitrary and capricious" nature of the discharge. Plaintiff asserts that John Fuentes never stated that the penalty for giving out the storeroom key would be discharge. Baker Dep. 78:27-79:1, Plaintiff's Opposition to Summary Judgment Motion. John Fuentes had issued orders in the past and had never discharged anyone for violating those orders. Baker Dep. 78:1-78:28. Plaintiff also states that he was forced to give the key to a non-salaried employee, rather than go to the storeroom himself, because of emergency situations on the floor. Baker Dep. 166:1-179:28; 176:1-177:28.

It is undisputed that the reason given plaintiff for his termination was his violation of the storeroom key rule. The question raised is whether the reason given was pretextual. The court must be particularly cautious in deciding whether to grant summary judgment where issues of intent or motivation are involved. Haydon v. Rand Corp., 605 F.2d 453, 455 n. 2 (9th Cir.1979). In Watkinson v. Great Atlantic & Pacific Tea Co., Inc., supra, the district court addressed a similar claim where a...