Bins v. Exxon Co. U.S.A.

• Decision Date: 20 March 2000
• Docket Number: No. 98-55662,98-55662
• Citation: 220 F.3d 1042
• Parties: (9th Cir. 2000) ERNEST S. BINS, Plaintiff-Appellant, v. EXXON COMPANY U.S.A., a division of Exxon Corp., Defendant-Appellee. Office of the Circuit Executive
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1042

220 F.3d 1042 (9th Cir. 2000)

ERNEST S. BINS, Plaintiff-Appellant, v. EXXON COMPANY U.S.A., a division of Exxon Corp., Defendant-Appellee.

No. 98-55662

Office of the Circuit Executive

U.S. Court of Appeals for the Ninth Circuit

Argued and Submitted En Banc March 20, 2000--San Francisco, California

Filed August 10, 2000

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Thomas G. Moukawsher, Moukawsher & Walsh, LLC, Groton, Connecticut, for the plaintiff-appellant.

James Severson, Heather C. Beatty, Allyson W. Sonsenshine, McCutchen, Doyle, Brown & Enersen, LLP, Los Angeles, California, and David M. Rivet, Exxon Company, U.S.A., Houston, Texas, for the defendant-appellee.

Paul W. Crane, Jr., Paul, Hastings, Janofsky, Walker, San Francisco, California, for amicus California Employment Law Council

Appeal from the United States District Court for the Central District of California, Harry L. Hupp, District Judge, Presiding; D.C. No.CV-97-01654-HLH

Before: Procter Hug, Jr., Chief Judge, James R. Browning, Mary M. Schroeder, Diarmuid F. O'Scannlain, Ferdinand F. Fernandez, Andrew J. Kleinfeld, Michael Daly Hawkins, A. Wallace Tashima, M. Margaret McKeown, Kim McLane Wardlaw and Raymond C. Fisher, Circuit Judges.

OPINION

FISHER, Circuit Judge:

We must determine in this case the point at which an employer who administers a plan under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. S 1001, et seq., has a duty to inform plan participants that it is considering a proposal to offer more generous retirement incentive benefits.¹ Appellant Ernest Bins worked for Exxon, U.S.A. ("EUSA"), a division of Exxon Corporation ("Exxon"), for 15 years. In the months before he retired, Bins unsuccessfully attempted to confirm rumors that EUSA was considering offering eligible employees a lump-sum retirement incentive under an existing welfare benefit plan covered by ERISA. Two weeks after Bins retired, EUSA announced precisely the sort of retirement incentive about which Bins had inquired.

The nature and extent of an ERISA fiduciary's duties in these circumstances is a matter of first impression in this Circuit. We recognize, therefore, that the district court did not have any guidance from this Court when it made its ruling. We have jurisdiction under 28 U.S.C. S 1291. We review de novo a decision granting summary judgment, see Williams v. Caterpillar, Inc., 944 F.2d 658, 661 (9th Cir. 1991), and we reverse. We hold that when a plan participant inquires about potential plan changes, an employer-fiduciary has a duty to provide complete and truthful information about any such changes then under serious consideration. In the absence of an employee inquiry, however, the employer-fiduciary does not have an affirmative duty to volunteer information about any changes prior to their final adoption. We further hold that an employer does not have a duty to follow up with an employee if, subsequent to the employee's inquiry, the proposed changes reach the serious consideration stage, unless the employer agrees to do so.

FACTS²

Ernest Bins worked for EUSA as a Senior Mechanical Technician on an offshore oil drilling rig. He became eligible for retirement in the Summer of 1995 and decided to retire effective January 1, 1996. In the Fall of 1995, Bins began hearing rumors that, in addition to regular retirement benefits, EUSA would offer a lump-sum retirement incentive under the Special Program of Severance Allowances ("SPOSA"). The SPOSA is a pre-existing ERISA welfare benefit plan available on an as-needed basis that, once approved, would permit EUSA to pay special severance benefits to induce employees to retire early when EUSA decides to reduce its workforce.

Anxious to confirm the rumors, Bins asked everyone at EUSA to whom he had access and who he expected would have, or would be able to obtain, information about the likelihood of a SPOSA offering. He asked his supervisors, Mechanical Foreman Kelly Pease and Field Superintendent Jerry Odom, who told him that they had heard the same rumors but that they knew nothing about a SPOSA offering. Bins also asked his assigned benefits counselor, Becky Pilgrim, and a human resources advisor, Ray Julson. According to Bins, he had been instructed that either of these two individuals was a proper company representative through whom to direct questions to the company about employee benefits. They both told him truthfully that they knew nothing about a SPOSA offering.

Bins decided to postpone his retirement to February 1, 1996, in part because of rumors about the new SPOSA offering and in part because he wanted to avoid a penalty for early withdrawal from his thrift account. In November 1995, Bins attended a retirement seminar conducted by Lea Connor, an Exxon attorney. During the seminar, Connor truthfully answered another prospective retiree's question by stating that she had no knowledge of a new SPOSA offering. At Bins' retirement party on his last day of work, December 27, 1995, Bins asked his supervisor's supervisor, Dave Lucas, whether EUSA was going to offer SPOSA benefits. Lucas replied -again, truthfully -that he had no knowledge of such an offering.

From December 27, 1995 until his retirement on February 1, 1996, Bins used accrued vacation time to supplement his scheduled off-duty days and did not return to work. Bins could have acted to change his retirement date at any time prior to February 1, 1996. After December 27, however, he made no further inquiries into the possibility of a SPOSA offering, and no one told him about the likelihood of a change in benefits.

In the Fall of 1995, EUSA had initiated an Organization Effectiveness Study ("OES") Team to determine ways to optimize the Production Department in which Bins was employed. In November 1995, the OES Team recommended a reorganization of the Production Department -creating a 200-employee surplus -and an accompanying SPOSA offering to induce early retirement of excess workers. After preparing several proposals for structuring the reorganization and SPOSA, the OES Team submitted them to EUSA management. On November 29, 1995, EUSA Vice-President J.H. Peery reviewed the proposals. As manager of the Production Department, Peery was authorized to implement the SPOSA offering after obtaining final approval from Exxon. EUSA Senior Vice-President M.E. Foster reviewed the proposals on December 1, 1995, and EUSA President Ansel Condray first reviewed the proposals on December 15, 1995.

The record before us does not reveal the exact date on which EUSA first submitted the proposals to Exxon, but we know that on January 11, 1996, Exxon Senior Vice-President Harry Longwell favorably reviewed the reorganization proposal. We also know that EUSA President Condray conducted a final review of the reorganization and SPOSA proposals on January 24, 1996 and, on the same day, gave his approval to the Production Department to proceed with securing endorsement of the reorganization and the SPOSA from Exxon. On January 26, 1996, Exxon Senior Vice-President Robert Wilhelm wrote a brief letter formally approving the proposed reorganization. On January 30, 1996, EUSA Human Resources Manager Asif Beg requested approval to implement the proposed SPOSA from Exxon Vice-President of Human Resources, D.S. Sanders. Sanders approved the SPOSA offering on February 2, 1996, and Beg received the approval on February 5, 1996.

On February 13, 1996, less than two weeks after Bins retired, EUSA publicly announced its reorganization plan and the availability of SPOSA benefits. Bins filed suit, contending EUSA had breached its duties as an ERISA fiduciary. Relying on Fischer v. Philadelphia Electric Co., 96 F.3d 1533 (3d Cir. 1996) ("Fischer II"), Bins argued that, once EUSA began "seriously considering" a proposal to offer enhanced benefits under the ERISA severance plan, it had a duty (1) to respond accurately and straightforwardly to his questions and to inform lower-level employees to whom he would turn with questions; (2) to follow up and notify him if serious consideration began after he made his inquiries; and (3) to volunteer information to all potential retirees even in the absence of specific questions.

EUSA moved for summary judgment. The district court applied Fischer II but, stressing the fact that EUSA could not approve the SPOSA, focused solely on the issue of when Exxon's senior management began serious consideration. With this focus, the district court concluded that there was no serious consideration of a proposal to offer SPOSA benefits as of December 27, 1995, the date of Bins' last inquiry. The district court held that serious consideration began on or about January 26, 1996 -the date Exxon Senior Vice-President Wilhelm formally approved the proposed reorganization. Although Bins had not yet retired as of January 26, the district court concluded that, because Bins had not specifically renewed his inquiry about SPOSA benefits, EUSA had no affirmative duty to inform him that it was considering such a proposal. Finding no breach of a fiduciary duty under ERISA, the district court granted summary judgment for EUSA.

DISCUSSION

Congress enacted ERISA to protect participants and beneficiaries of employee benefit plans without discouraging employers from offering such plans. See Varity Corp. v. Howe, 516 U.S. 489, 497 (1996). ERISA establishes "standards of conduct, responsibility, and obligation for fiduciaries," and provides plan participants and beneficiaries with "appropriate remedies . . . and ready access to the Federal courts." ERISA S 2(b), 29 U.S.C. S 1001(b) (quoted in Varity, 516 U.S. at 513). In enacting ERISA, Congress painted with a broad brush, expecting the federal courts to develop a "federal common law of rights and obligations" interpreting ERISA's fiduciary standards. Varity, 516 U.S. at 497 (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 110 (1989)) (internal...