Beasley v. Conopco, Inc.
| Decision Date | 21 July 2003 |
| Docket Number | No. CIV.A. 01-A-1524-N.,CIV.A. 01-A-1524-N. |
| Citation | 273 F.Supp.2d 1239 |
| Parties | David O. BEASLEY, Plaintiff, v. CONOPCO, INC., Defendant. |
| Court | U.S. District Court — Middle District of Alabama |
Randy Myers, Montgomery, AL, for Plaintiffs.
Walter T. Gilmer, Jr., G. Cameron Pfeiffer, McDowell, Knight, Roedder & Sledge, L.L.C., Mobile, AL, for Defendant.
This case is before the court on a Motion for Summary Judgment and a Motion to Strike filed by the Defendant, Conopco, Inc.
The Plaintiff, David O. Beasley ("Beasley"), originally filed a Complaint in the Circuit Court of Montgomery County. The case was removed to this court by the Defendant on the basis that subject matter jurisdiction exists because the Plaintiff's state law claims are completely preempted by the Employment Retirement Income Security Act ("ERISA"). No motion to remand was filed.1
The Plaintiff filed an Amended Complaint in this court alleging a breach of an ERISA plan. The Defendant subsequently filed a Motion to Dismiss, which was denied by this court. The Defendant then filed a Motion for Summary Judgment. In response to the exhaustion arguments raised by the Defendant, the court remanded the case to the plan administrator for a written determination of Beasley's claim.
On February 5, 2003, the chairman of the pension committee, Richard Bergeman ("Bergeman"), denied Beasley's claim. Beasley then filed a motion to re-open this case, which was granted, and a second Amended Complaint.
For the reasons to be discussed, the Motion to Strike is due to be GRANTED in part and DENIED in part, and the Motion for Summary Judgment is due to be GRANTED.
Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper "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." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
The party asking for summary judgment "always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the `pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Id. at 323, 106 S.Ct. 2548. The movant can meet this burden by presenting evidence showing there is no dispute of material fact, or by showing, or pointing out to, the district court that the nonmoving party has failed to present evidence in support of some element of its case on which it bears the ultimate burden of proof. Id. at 322-324, 106 S.Ct. 2548.
Once the moving party has met its burden, Rule 56(e) "requires the nonmoving party to go beyond the pleadings and by [its] own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Id. at 324, 106 S.Ct. 2548. To avoid summary judgment, the nonmoving party "must do more than show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). On the other hand, the evidence of the nonmovant must be believed and all justifiable inferences must be drawn in its favor. See Anderson v. Liberty Lobby, 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
After the nonmoving party has responded to the motion for summary judgment, the court must grant summary judgment if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c).
The submissions of the parties establish the following facts, viewed in a light most favorable to the non-movant:
Beasley was an employee of Bestfoods for over fifteen years. In January 2000, Beasley first became aware that Bestfoods might be taken over by another company. Beasley provides evidence of a press release from Bestfoods dated May 2, 2000 which announced that an offer had been made by Unilever P.L.C. ("Unilever") to acquire all of the outstanding shares of Bestfoods from stockholders for $66 per share.
Beasley was terminated from employment with Bestfoods in July of 2000. At the time of his termination, he was earning a salary in the mid forty thousand dollar range. Beasley Dep. at page 15. He made a claim for payment under the special severance program. Under this special severance program, salary and benefits would be continued for one year upon a change in control and in the event that an employee loses his or her position. Beasley presents a tape recording of a conference call and argues that during this call Richard Bergeman ("Bergeman"), the Vice President of Human Resources for Bestfoods, stated that there had been a change in control. Therefore, Beasley contends, he was eligible for the special severance plan. Beasley's claim, however, was orally denied. He was not paid under the special severance plan, but was paid under the old severance pay plan, which gave him only one weeks's salary for every year of service.
After his termination, Beasley worked in a job for five or six weeks "throwing newspapers" which he learned about from a friend. Id. at page 100. He did not get paid for this work. Id. Beasley then went to work with Servpro. Id. at page 102. He was employed there for five or six months. Id. at page 102-03. He then worked for Brown Printing Company, where he is currently employed. Id. at page 103. Beasley characterizes this position as the best job he has found since his termination. Id. at page 108. At the time of his deposition, he had made around thirty thousand dollars in the previous year with Brown Printing Company. Id. at 104.
According to Conopco, Beasley was not entitled to payment under the special severance program. Conopco argues that there was no tender offer or exchange and that the only change in control was a merger which occurred after Beasley's termination. Conopco points out that the Bestfoods shareholders approved a consensual merger with Unilever on October 2, 2002. Conopco, Inc. is the successor corporation.
Beasley argues that he was improperly denied benefits under the special severance plan under the heightened arbitrary and capricious standard of review of denials of ERISA benefits. Beasley also contends that Conopco should be equitably estopped from denying him benefits. The court will address each of these claims in turn.
Although ERISA does not provide district courts with a standard by which to review benefits decisions by benefit plan administrators, the United States Supreme Court has stated that a denial of benefits is to be "reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan...." Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). In discussing the standard of review, the Court also noted that a purported conflict of interest must be weighed as a factor in determining whether there is an abuse of discretion. Bruch, 489 U.S. at 115, 109 S.Ct. 948.
In applying Bruch, the Eleventh Circuit has developed three standards of review for plan interpretations: (1) de novo review which applies where the plan administrator is not afforded discretion; (2) arbitrary and capricious review where the plan administrator possesses discretion; and (3) heightened arbitrary and capricious review where the administrator has discretion, but there is also a substantial conflict of interest. See Marecek v. BellSouth Telecommunications, 49 F.3d 702, 704 (11th Cir.1995). The Eleventh Circuit has further interpreted Bruch to mandate de novo review unless the language of the plan expressly provides the administrator with discretionary authority to make eligibility determinations or to construe the plan's terms. Moon v. American Home Assurance Co., 888 F.2d 86, 88 (11th Cir.1989).
Beasley acknowledges that the administrator of the benefits plan has discretionary authority, but has argued that since the benefits to be paid under the special severance program were paid out of the assets of the employer, there was a conflict of interest. Conopco responds that Beasley has not provided any evidence to support its contention that a conflict of interest exists, and says as the majority of the pension benefits committee was made up of people who are not employees of Conopco, no conflict exists.
Conopco has not cited any authority for its argument that the fact that the committee members were not employees of Conopco means that there was no conflict of interest. In Yochum v. Barnett Banks, Inc. Severance Pay Plan, 234 F.3d 541, 544 (11th Cir.2000), the Eleventh Circuit concluded that a conflict of interest triggering heightened arbitrary and capricious review existed where severance benefits were paid out of an employer's assets. The court also noted, however, that "[a]t the same time, members of the Committee are NationsBank employees, and their decision to deny benefits saves NationsBank a large sum of money." Id. at 544. From the opinion, however, it appears that the fact that the committee members were employees added to the court's finding that there was a conflict of interest, but were not necessary to that determination. Immediately prior to this statement by the court is the statement that "[i]n this case, we find that there was a conflict of interest in the benefits decision by the Committee, because severance benefits are paid directly...
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