Fontenot v. NL Industries, Inc., 91-2731

• Decision Date: 19 February 1992
• Docket Number: No. 91-2731,91-2731
• Citation: 953 F.2d 960
• Parties: John E. FONTENOT, Plaintiff-Appellant, v. NL INDUSTRIES, INC., Defendant-Appellee. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 960

953 F.2d 960

John E. FONTENOT, Plaintiff-Appellant, v. NL INDUSTRIES, INC., Defendant-Appellee.

No. 91-2731

Summary Calendar.

United States Court of Appeals Fifth Circuit.

Feb. 19, 1992.

William H. Bruckner, Sylvia Davidow, Bruckner & Sykes, Houston, Tex., for John E. Fontenot.

Jack G. Carnegie, Emil T. Baydo, Christina Richard, Holtzman & Urquhart, Houston, Tex., for NL Industries, Inc.

Appeal from the United States District Court for the Southern District of Texas.

Before GOLDBERG, JOLLY, and JONES, Circuit Judges.

GOLDBERG, Circuit Judge:

This ERISA case is on appeal from the district court's entry of summary judgment in favor of the defendant NL Industries. The district court dismissed plaintiff John E. Fontenot's complaint which alleged that NL Industries had violated ERISA, 29 U.S.C. § 1001, et seq., by excluding him from the company's senior executive severance plan. The court held that the severance plan was not a "plan" within the meaning of ERISA, and accordingly, ERISA provided no basis for relief. Alternatively, the court held that Fontenot waived his entitlements to any and all benefits under the severance plan. Because we agree that the severance plan is not a "plan" within the meaning of ERISA, we affirm the judgment below without reaching the waiver issue.

The facts underlying this case are largely uncontested, and for purposes of this appeal, are basically irrelevant. Suffice it to say that Fontenot was employed with NL Industries since July 1978 as a manager of mechanical engineering. Over time, he received several promotions, rising to the position of vice president of the newly organized NL Baroid Technology. NL Industries, in the meantime, was the target of a takeover. In an effort to stymie any takeover attempts, NL Industries instituted the NL Senior Executive Severance Plan (the "severance plan"). In Wall Street terms, the severance plan was a "golden parachute," providing that if an executive was terminated within two years of a change of control, the company would pay the executive a lump sum cash payment of three times his highest annual compensation for the preceding three years, as well as a three year continuation of certain benefits. Only a limited number of executives at NL Industries were included in the severance plan; Fontenot was not one of them.

When NL Industries was taken over in June 1986, Fontenot learned that he had no parachute: he had not been included in the severance plan. One year later, he was terminated. At that time, Fontenot entered into an outplacement arrangement with NL Industries under which he stayed on the company payroll for six months while seeking out new employment. As a condition of participation, Fontenot signed a document waiving his rights to "vacation entitlement, separation allowance, as well as participation in any incentive plan."

Fontenot eventually requested benefits under the severance plan which request was denied. He then brought this lawsuit alleging his entitlements to the severance benefits under the auspices of ERISA. The district court dismissed his claims on defendant NL Industries' motion for summary judgment. Relying on the Supreme Court's decision in Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 11, 107 S.Ct. 2211, 2217, 96 L.Ed.2d 1 (1987) and our decision in Wells v. General Motors Corp., 881 F.2d 166, 176 (5th Cir.1989), cert. denied, 495 U.S. 923, 110 S.Ct. 1959, 109 L.Ed.2d 321 (1990), the district court held:

[T]he NLSES Plan required Defendant to make only a one-time lump sum payment to certain employees. The requirement to pay was triggered by a single event. This single event--the change of control in NL Industries, Inc.--was a contingency that may never have materialized. Defendant may potentially never have had to make severance payments pursuant to the NLSES Plan. This theoretical possibility of a one-time obligation in the future created no need for an on-going administrative program to process claims and pay benefits. Consequently, the NLSES Plan is not an employee benefit plan and therefore is not governed by ERISA.

District court op. at 7.

Fort Halifax held that a lump sum severance payment, triggered by a single event that may never occur, is not a "plan" for purposes of ERISA:

The requirement of a one-time lump sum payment triggered by a single event requires no administrative scheme whatsoever to meet the employer's obligation. The employer assumes no responsibility to pay benefits on a regular basis, and thus faces no periodic demands on its assets that create a need for financial coordination and control. Rather, the employer's obligation is predicated on the occurrence of a single contingency that may never materialize. The employer may well never have to pay the severance benefits. To the extent that the obligation to do so arises, satisfaction of that duty involves only making a single set of payments to employees at the time the plant closes. To do little more than write a check hardly constitutes the operation of a benefit plan. Once this single event is over, the employer...