Habets v. Waste Management, Inc.

• Decision Date: 12 March 2004
• Docket Number: No. 03-20370.,03-20370.
• Citation: 363 F.3d 378
• Parties: Harry HABETS, an individual, Plaintiff-Appellant, v. WASTE MANAGEMENT, INC., a Delaware Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 378

363 F.3d 378

Harry HABETS, an individual, Plaintiff-Appellant, v. WASTE MANAGEMENT, INC., a Delaware Corporation, Defendant-Appellee.

No. 03-20370.

United States Court of Appeals, Fifth Circuit.

March 12, 2004.

Kevin N. Markow (argued), Becker & Poliakoff, Fort Lauderdale, FL, for Plaintiff-Appellant.

Fraser Angus McAlpine (argued), Akin, Gump, Strauss, Hauer & Feld, Houston, TX, for Defendant-Appellee.

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

Before EMILIO M. GARZA, DeMOSS and CLEMENT, Circuit Judges.

DeMOSS, Circuit Judge:

Plaintiff-Appellant Harry Habets ("Habets") seeks reversal of the district court's decision adopting the magistrate judge's recommendation and granting summary judgment to Defendant-Appellee Waste Management, Inc. ("WMI"). The district court concluded that Habets had no right to participate in WMI's Key Executive Severance Plan (the "KESP") once WMI's Board of Directors (the "Board") amended the list of KESP participants to remove Habets. On appeal, Habets argues first that the district court failed to review the magistrate judge's recommendation under a de novo standard, and second that the district court improperly granted summary judgment to WMI because the plain language did not favor WMI's interpretation of the KESP; if the KESP's terms were ambiguous, the extrinsic evidence did not favor WMI's interpretation; and a material issue of fact existed as to whether WMI removed Habets from the position of executive officer. Because we find that the district court conducted a proper de novo review of the magistrate's recommendation, the KESP's terms unambiguously granted the Board the discretion to specify who was and was not a participant in the KESP, and Habets was so removed as a participant in May 1992, we AFFIRM the decision of the district court.

BACKGROUND

WMI hired Habets in September 1985 as a general manager for its Chicago office. On January 10, 1990, Habets was appointed as President — Medical Services and Vice President of WMI. At that point, Habets became eligible to participate in a "golden parachute" benefits plan, the KESP. The KESP was created in 1986 and provided that if a participant of the KESP was terminated, which definition included voluntarily resigning from employment within three years of a change in control of company management, the participant would receive a generous severance compensation package. In March 1990, the Executive Compensation Committee of the Board formally named Habets as a participant in the KESP; his name was added to a company document entitled "Exhibit 1," which listed all participants. Habets's status as a regional officer of WMI was reflected in WMI's 1990 annual report, dated February 7, 1991. Habets also became eligible to participate in the Supplemental Executive Retirement Plan (the "SERP").

The KESP, which provided that Delaware law govern its interpretation, included the following key provisions:

1.1.4. Participant: The term "Participant" shall mean the officers of the Company or its subsidiaries who are listed on Exhibit 1 hereto and such additional officers of the Company or its subsidiaries as the Board of Directors of the Company may, by resolution duly adopted prior to any Change in Control from time to time specify as being a Participant in this Plan.

2.2. Amendments, Etc.: Prior to the expiration of the Plan Period, the Company shall not amend, terminate or suspend the Plan or any provision hereof, including without limitation this Section 2.2, without the prior written consent of any Participant adversely affected thereby....

2.3. Certain Limitations: Without limiting any rights which any Participant may have under any Other Plan, nothing in this Plan shall grant any Participant any right to remain an executive officer, director or employee of the Company and/or any of its subsidiaries, whether or not a Change in Control shall occur.

In late 1991 WMI underwent a corporate restructuring, which removed Habets as a regional top officer, after his region was combined with another. This restructuring also removed Douglas Allman ("Allman"), another WMI employee, as an executive officer. WMI's 1991 annual report omitted Habets from its list of officers. Habets kept his job title but reported to a regional officer, rather than to the president of the company, as he had formerly done. On May 29, 1992, the Executive Compensation Committee of the Board approved a new list of persons eligible to participate in the KESP; Habets's and Allman's names were removed from Exhibit 1. Allman received notice of his removal from the list; Habets did not.

In August 1992 WMI attempted to terminate the KESP for all participants, except those working overseas. In this process, WMI's executives sought counsel from Herbert Getz ("Getz") who then served as a Vice President, Secretary, and Assistant General Counsel. Getz advised offering stock options to the KESP participants in exchange for their waiving their rights under the KESP. WMI followed Getz's recommendation. Habets received stock options but was not among those persons from whom WMI requested a waiver. In contrast, Allman did waive any rights he had under the KESP for stock options.

In July 1998 WMI merged with a subsidiary of USA Waste. As part of the merger, the SERP was terminated and WMI agreed to pay a lump sum to employees with SERP benefits. Habets was eligible for this SERP payment but disputed WMI's calculation of the amount he was due under the SERP. Habets sent a memo to WMI on December 1, 1998, advising it of the SERP calculation errors based on his years of membership in the KESP. WMI responded that the KESP was terminated and could not be used in conjunction with calculating SERP benefits. Habets did not accept this and continued to correspond with WMI about his KESP and SERP rights. On December 22, 1998, WMI sent Habets a letter offering to increase Habets's SERP payment by two additional years of service credit if he would release any claims under the KESP. In early 1999 WMI sent Habets two checks totaling $348,189.34, which reflected its calculated SERP distribution of $281,555,89 and the supplemental compromise amount of $66,234.39. Habets cashed the checks but refused to sign a waiver of his KESP rights.

On July 27, 1999, Habets resigned from WMI. At that time, Habets requested severance pay due him under the KESP and the SERP. On December 8, 1999, Habets's attorney sent WMI a demand letter requesting it pay Habets his KESP benefits. WMI responded on February 29, 2000, stating that WMI's lump sum SERP payment to Habets in 1999 constituted a satisfaction of WMI's obligations as to both the KESP and the SERP, and Habets had waived his KESP rights in connection with the receipt of the August 1992 stock options. On October 30, 2000, WMI reiterated these assertions by letter to Habets.

Habets filed the instant suit in July 2001, alleging that WMI breached the KESP and the SERP by not fully compensating him pursuant to these plans after he resigned. WMI denied that it owed Habets any benefits under either plan. On July 1, 2002, WMI moved for summary judgment. The district court referred the matter to a magistrate judge, who on February 12, 2003, recommended granting WMI's motion for summary judgment. On March 3, 2003, Habets filed objections to the magistrate's recommendation. On March 4, 2003, the district court adopted the magistrate's recommendation in its entirety. Final judgment was entered the next day, and Habets timely appealed only the determination of his rights under the KESP.

DISCUSSION

Whether the district court conducted a proper de novo review of the magistrate judge's recommendation.

Section 636(b)(1) of Title 28 and Federal Rule of Civil Procedure 72(b) provide that within ten days after a magistrate judge issues her recommendation, a party may file specific written objections. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b). The district court must then "make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made" before accepting, rejecting, or modifying those findings or recommendations. 28 U.S.C. § 636(b)(1).

Habets contends that the district court here did not undertake the requisite de novo review of the magistrate's recommendation. Habets asserts that because the district court entered its two-sentence order adopting the magistrate's recommendation without any opinion or analysis only one day after it received Habets's objections which included a 200-page appendix and because the issues presented to the magistrate were complex, the district court must have merely "rubber stamped" the magistrate's recommendation.

WMI responds that the district court followed proper procedure in assigning the motion for summary judgment to the magistrate judge and in permitting Habets to file objections to the magistrate's recommendation before entering summary judgment in favor of WMI. WMI claims that given the simplicity of the issues before the district court, the district judge had ample time to conduct a de novo review of the magistrate's recommendation before adopting it.

With respect to the district court's expeditiousness, we have expressly ruled against Habets's position in McGill v. Goff, 17 F.3d 729, 732 (5th Cir.1994), overruled on other grounds, Kansas Reins. Co., Ltd. v. Congressional Mortgage Corp. of Texas, 20 F.3d 1362, 1373-74 (5th Cir.1994). In McGill, this Court considered whether a district court committed reversible error when it adopted a magistrate's recommendation just one day after receiving the recommendation, and before the defendants had an opportunity to file any objections. Id. at 731. We found any error harmless because adoption of the recommendation after one day did not imply a lack of review, and the district court could have conducted a meaningful review without any objections. Id. at 731-32. M...