Belanger v. Wyman-Gordon Co.

• Decision Date: 07 November 1995
• Docket Number: WYMAN-GORDON,No. 95-1704,95-1704
• Parties: , 19 Employee Benefits Cas. 2307, Pens. Plan Guide P 23915I Edmund H. BELANGER, et al., Plaintiffs, Appellants, v.COMPANY, Defendant, Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 451

71 F.3d 451

64 USLW 2391, 19 Employee Benefits Cas. 2307,

Pens. Plan Guide P 23915I

Edmund H. BELANGER, et al., Plaintiffs, Appellants, v. WYMAN-GORDON COMPANY, Defendant, Appellee.

No. 95-1704.

United States Court of Appeals, First Circuit.

Heard Nov. 7, 1995.

Decided Dec. 14, 1995.

Mark I. Zarrow, with whom Lian, Zarrow, Eynon & Shea was on brief, Worcester, MA, for appellants.

John O. Mirick, with whom Mirick, O'Connell, DeMallie & Lougee was on brief, Worcester, MA, for appellee.

Before SELYA, Circuit Judge, ALDRICH, Senior Circuit Judge, and CYR, Circuit Judge.

SELYA, Circuit Judge.

This appeal requires us to decide what constitutes a benefit "plan" for purposes of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Secs. 1001-1467 (1988). The heart of the appellants' case is their contention that a series of four early retirement offers extended by their employer over a four-year period constitute an ERISA plan. The district court thought not, and dismissed the suit after a bench trial. We affirm.

I. Background

We take the underlying facts principally from the parties' pretrial stipulations.

Facing an uncertain economic future, defendant-appellee Wyman-Gordon Co. (the company) decided to reduce its work force in hopes of improving its overall financial outlook. The company made its first move in November 1987. Rather than simply laying off loyal minions, the company offered all age-qualified non-union workers (characterized as all "weekly and monthly salaried employees") an opportunity for early retirement (Offer No. 1). To make departing a sweeter sorrow, the company proposed to pay, over and beyond regular retirement benefits, a lump-sum bonus amounting to one week's pay for each year of service, plus two days' pay for each year of service in excess of fifteen years, multiplied by 110%. Offer No. 1 contained no cap on the number of service years that could be included in calculating the amount of the one-time bonus. Some eligible employees accepted the offer and some did not.

In January 1990, the company, still in the throes of downsizing, made a similar early retirement offer (Offer No. 2). It structured this offer in much the same manner, but devised a less complicated formula for computing retirement bonuses: one week's salary for each year of service. Like Offer No. 1, Offer No. 2 did not impose a ceiling on the number of service years that could figure into the calculation. Once again, some--but not all--of the eligible employees accepted the offer.

In corporate America, financial security is a consummation ardently sought but seldom achieved. When the company's prognosis remained gloomy, it sponsored yet another early retirement offer (Offer No. 3) in January of 1991. This offer contemplated that the amount of an individual's retirement bonus would be calculated by the same formula used for purposes of Offer No. 2 (multiplying one week's pay times the number of service years), but capped the number of years includable in the computation at twenty-five. Almost two-thirds of the weekly and monthly salaried employees who were eligible to do so accepted Offer No. 3, including the eighteen persons who appear here as plaintiffs and appellants (all of whom had spent more than twenty-five years in the company's service).

Despite the winnowing that occurred over time, the company--apparently convinced that strength lay in lack of numbers--undertook further cost-reduction measures in October of 1991. These included salary cuts and yet another early retirement offer (Offer No. 4). As with the two immediately preceding proposals, the carrot that the company dangled consisted of a bonus calculated on the basis of one week's salary for each year of service. This time, however, the company made the offer accessible to more employees (by lowering the minimum age for early retirement) and abjured any ceiling on the maximum number of service years includable in figuring the lump sum. Thirty-eight of forty-six eligible employees accepted Offer No. 4.

The appellants were displeased no little (and quite some) upon learning of the more generous terms embodied in Offer No. 4. Each of them had accepted a capped offer--Offer No. 3--as an inducement to take early retirement, and the cap effectively reduced their early retirement bonuses by an average of roughly $9,950 per retiree. They sued the company, alleging inter alia that the series of four early retirement offers constituted a plan under the terms of ERISA, 29 U.S.C. Sec. 1002; that the plan failed to comply with ERISA's imperatives, e.g, the company had not provided a written plan description or a protocol for amendment, see 29 U.S.C. Secs. 1022 & 1102; and that these violations entitled them to damages based on what they would have received had Offer No. 3 not been capped, together with interest, counsel fees, and other redress.

After conducting a non-jury trial, the district court rejected the central premise underlying the appellants' claim. The court held that the early retirement offer which the appellants accepted did not constitute a plan for ERISA purposes, and that, therefore, the company was not obliged to heed ERISA's requirements. See Belanger v. Wyman-Gordon Co., 888 F.Supp. 9, 12 (D.Mass.1995). The appellants assign error. ¹

II. Discussion

A. Standard of Review

The question whether a given employee benefit or set of benefits is a plan properly governed by the strictures of ERISA requires a certain level of judicial versatility. Because an inquiring court must both assess the facts and apply the law, two different standards of review come into play. "For purposes of appellate review, mixed questions of fact and law ordinarily fall along a degree-of-deference continuum, ranging from plenary review for law-dominated questions to clear-error review for fact-dominated questions." Johnson v. Watts Regulator Co., 63 F.3d 1129, 1132 (1st Cir.1995). At the near end of the continuum, the district court's interpretation of the word "plan" as it is used in ERISA poses a question of law subject to de novo review. At the far end of the continuum, the court's inquiry into the nature and scope of the benefits actually at issue in the instant case demands factfinding, and is to that extent reviewable only for clear error. In other words, as long as the trial court accurately applies the relevant legal standards, the existence vel non of an ERISA plan is principally a question of fact, and the court of appeals must defer to the district court's judgment unless that judgment is clearly erroneous. See Wickman v. Northwestern Nat'l Ins. Co., 908 F.2d 1077 1082 (1st Cir.), cert. denied, 498 U.S. 1013, 111 S.Ct. 581, 112 L.Ed.2d 586 (1990); see also Cumpiano v. Banco Santander P.R., 902 F.2d 148, 152 (1st Cir.1990) (explaining that there is no clear error "unless, on the whole of the record, [the court of appeals] form[s] a strong, unyielding belief that a mistake has been made").

B.

The Meaning of "Plan"

The text of ERISA itself affords scant guidance as to what constitutes a covered "plan." The statute, 29 U.S.C. Sec. 1002(2)(A), merely constructs a tautology, defining an employee benefit plan as "any plan, program or fund" established or maintained by an employer that provides certain benefits to employees. Relying on the purposes undergirding the statute to give meaning to this cryptic language, the Supreme Court has made it very clear that an employee benefit may be considered a plan for purposes of ERISA only if it involves the undertaking of continuing administrative and financial obligations by the employer to the behoof of employees or their beneficiaries. See Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 12, 107 S.Ct. 2211, 2217-18, 96 L.Ed.2d 1 (1987); see also District of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 130 n. 2, 113 S.Ct. 580, 584 n. 2, 121 L.Ed.2d 513 (1992) (construing Fort Halifax as holding that a plan exists only if an employer has "some minimal, ongoing 'administrative' scheme or practice").

Fort Halifax is the beacon by which we must steer. There, the Court rejected an ERISA preemption challenge to a Maine statute requiring employers to tender a one-time severance payment to displaced employees in the event of a plant closing. The Court held that Maine's plant-closing law did not succumb to ERISA's preemptive force because the legislatively mandated tribute comprised no more than a "one-time, lump-sum payment triggered by a single event." 482 U.S. at 12, 107 S.Ct. at 2218. Consequently, the state statute neither "establishe[d], nor require[d] an employer to maintain, an employee benefit plan." Id. (emphasis in original).

Two of ERISA's cardinal goals--protection of employers and protection of employees--appear to have influenced the Court's interpretation of what constitutes a plan. As to the former goal, the Court acknowledged that Congress designed ERISA's preemption provision partially to protect employers from a "patchwork scheme" of regulations in respect to employee benefits. Id. This concern has little or no pertinence, the Court reasoned, in a one-time payment situation in which the employer's only obligation is to draw a single check. See id. By contrast, this concern is highly pertinent in respect to employee benefits that place "periodic demands" on employer assets, "creat[ing] a need for financial coordination and control." Id.

As to ERISA's other, more important goal, the Court recognized that, in general, ERISA's substantive protections are intended to safeguard the financial integrity of employee benefit funds, to permit employee monitoring of earmarked assets, and to ensure that employers' promises are kept. See id. at 15, 107 S.Ct. at 2219. Since a single-shot benefit requires no greater assurance than that the check will not bounce, ERISA's panoply of protections has virtually nothing to do with such a simple task. See id. at 16, 107 S.Ct. at 2219-20. More...