Holland v. Burlington Industries, Inc., No. 84-2241
| Court | United States Courts of Appeals. United States Court of Appeals (4th Circuit) |
| Writing for the Court | Before HALL and WILKINSON, Circuit Judges, and BUTZNER; WILKINSON |
| Citation | 772 F.2d 1140 |
| Parties | 27 Wage & Hour Cas. (BN 548, 54 USLW 2146, 103 Lab.Cas. P 55,525, 6 Employee Benefits Ca 2129 Rose M. HOLLAND; Jean H. Stallings; Walter Burlington, Jr.; John C. Brooks, Commissioner of Labor of the State of North Carolina, Plaintiffs, and Bill N. Slack; Jimmy W. Aheron; Carol Aldridge; Pamila B. Apple; Carole Baggett; Thomas F. Bowden; Walter Brom; Nellie B. Burwell; Elizabeth S. Canada; Gary L. Carter; Irene Chandler; James J. Clifford; Linda S. Coble; James A. Crawford; Ruth Dixon; Octavia M. Driver; Edmund Foster; Richard C. Foy; Peggy A. Gerringer; Deville Goodman; Ada R. Griffin; Delanor M. Hamby; Mildred R. Hester; Evelyn H. Hilton; Peggy W. Hodge; Mary E. Hope; Joseph J. Houston; Don Huffman; Jeff Hughes, Yvonnie B. James; Melvin E. King; Norma M. Loy; Sara Copeland Maness; Linda Mooneyham; Cora N. Moore; Virginia M. Moore; Robert C. Moricle; Edna M. Murray; Faye F. Neese; Gladys J. Oakley; Patricia G. Page; Daniel E. Perry; Barbara P. Petty; P. Douglas Pierce; Betty Hornaday Ray; Ruth S. Rich; Mary Darlene Rierson; Fred Brewer Roberts; Ida B. Saul; William A. Seelman; Sylvia R. Shoe; Gladys H. Shore; Frances Simmons; Mary Foust Stansell; Peggy P. Stone; Sherman C. Summers; Frances B. Sykes; Barbara D. Thompson; Ronald F. Tyree; Hazel P. Walker; Mary Lou Whitfield; Rita P. Whitley; Sandra F. Wilson; Brownie A. Wright; Elsie B. Young; Bettie J. Boswell; Debbie M. Rascoe; Lemmer Sherdina Sellars; Jack T. Sullivan; Claude O. Anders; Eva Barr; Margaret Brindle; Hoyt Cheek, Sr.; Hubert Foltz; Clyde Jarrell; Robert Martin; Thelma Martin; Leslie Morehead; Gerald Moretz; Alice Nelson; Carolyn Rayfield; Daisy Rickey; Ethel Royal; Larry Wright; William K. Anders; Merilla L. Barrier; Diane L. Boehm; Henry M. Brown; Hilda K. Cox; Stephen E. Elmore, Jr.; Richard L. Hall; William Jones; Paul M. King; Robert E. May; William Robert Oman; Cecil A. Poff; John W. Quick; Clifton Smith; Mary Smith; J. Clay Stiles, III; Bobby S. Tew; Thurman A. Chriscoe; Roy F. Williamson; Betty |
| Docket Number | No. 84-2241 |
| Decision Date | 03 September 1985 |
Page 1140
103 Lab.Cas. P 55,525,
6 Employee Benefits Ca 2129
Jr.; John C. Brooks, Commissioner of Labor of the
State of North Carolina, Plaintiffs,
and
Bill N. Slack; Jimmy W. Aheron; Carol Aldridge; Pamila B.
Apple; Carole Baggett; Thomas F. Bowden; Walter Brom;
Nellie B. Burwell; Elizabeth S. Canada; Gary L. Carter;
Irene Chandler; James J. Clifford; Linda S. Coble; James
A. Crawford; Ruth Dixon; Octavia M. Driver; Edmund
Foster; Richard C. Foy; Peggy A. Gerringer; Deville
Goodman; Ada R. Griffin; Delanor M. Hamby; Mildred R.
Hester; Evelyn H. Hilton; Peggy W. Hodge; Mary E. Hope;
Joseph J. Houston; Don Huffman; Jeff Hughes, Yvonnie B.
James; Melvin E. King; Norma M. Loy; Sara Copeland
Maness; Linda Mooneyham; Cora N. Moore; Virginia M.
Moore; Robert C. Moricle; Edna M. Murray; Faye F. Neese;
Gladys J. Oakley; Patricia G. Page; Daniel E. Perry;
Barbara P. Petty; P. Douglas Pierce; Betty Hornaday Ray;
Ruth S. Rich; Mary Darlene Rierson; Fred Brewer Roberts;
Ida B. Saul; William A. Seelman; Sylvia R. Shoe; Gladys
H. Shore; Frances Simmons; Mary Foust Stansell; Peggy P.
Stone; Sherman C. Summers; Frances B. Sykes; Barbara D.
Thompson; Ronald F. Tyree; Hazel P. Walker; Mary Lou
Whitfield; Rita P. Whitley; Sandra F. Wilson; Brownie A.
Wright; Elsie B. Young; Bettie J. Boswell; Debbie M.
Rascoe; Lemmer Sherdina Sellars; Jack T. Sullivan; Claude
O. Anders; Eva Barr; Margaret Brindle; Hoyt Cheek, Sr.;
Hubert Foltz; Clyde Jarrell; Robert Martin; Thelma
Martin; Leslie Morehead; Gerald Moretz; Alice Nelson;
Carolyn Rayfield; Daisy Rickey; Ethel Royal; Larry
Wright; William K. Anders; Merilla L. Barrier; Diane L.
Boehm; Henry M. Brown; Hilda K. Cox; Stephen E. Elmore,
Jr.; Richard L. Hall; William Jones; Paul M. King;
Robert E. May; William Robert Oman; Cecil A. Poff; John
W. Quick; Clifton Smith; Mary Smith; J. Clay Stiles, III;
Bobby S. Tew; Thurman A. Chriscoe; Roy F. Williamson;
Betty Albright; Nadine Albright; Boyce J. Asbill; Doris
S. Baughan; Larry C. Beane; Melodye Snow Beard; Susan
Beasley; Robert N. Blevins; Karen L. Boling; Wanda
Bowman; Linda B. Brady; Linda P. Bristow; David Brittain;
Marcella Jo Brittain; Mary R. Bullard; Betty S. Byrd;
Charles H. Byrd; George M. Byrum; Charles F. Cagle, Jr.;
Claude R. Cagle; Ann J. Campbell; Joe J. Cassett;
Kimberly Spoon Coats; Garland J. Cole; George C. Cole;
Ted Cooley; Clara M. Cox; Phyllis Ingold Cox; Cindy M.
Cranford; Tommy L. Cranford; Curtis L. Craven; Jackie
Nall Davis; Wayne L. Duggins; Nancy M. Ellison; Herman A.
Flynt; Cecil C. Gatlin; Earl Glover; Willard E. Gordon;
Rayford B. Grant; James L. Hammer; Donald L. Harshaw;
Larry Lee Highsmith; Tommy W. Hill; Kathryn Jeanette
Hogan; Carroll D. Hoyle; Sandra Hunsucker; Katherine R.
James; Linda Jordan Kennedy; Coy A. Kiser; Marilyn Hewitt
Knight; Robert N.W. Knott; Gaynell H. Ledwall; Marguerite
M. Lineberry; Shelby L. Logsdon; Marlene B. Lucas;
Barbara S. Miller; Juanita K. Moody; Grace H. McNeill;
Robert F. McWilliams; Susan B. Pack; Cathy D. Powers;
Betty M. Reeves; Van E. Rich; Edwin L. Ridge; Harry Rose;
Carol L. Savchak; Lenora C. Shaw; James W. Slaughter;
Bobby N. Smith; Mike S. Smith; Imogene N. Snider; John W.
Snider; Mary Edith Spoon; Jean A. Stafford; Mozelle A.
Stout; Harriett W. Summey; Brenda S. Thomas; Gerald D.
Thomas; Frances Freeman Tilley; Hazel S. Trogdon; Betty
C. Von Cannon; Myrle L. Walker; William Bullock; Eurika
Plummer; Terriel E. Wessinger, Jr.; Walter G. Williamson;
James L. Wilson, Jr.; Mildred C. York; Faye T. Yow; Brian
Dale Manuel; Raymond Claude Evans; A. Gene Heidel; Brenda
B. Herndon; Russell W. Herndon; Virginia H. Schulte;
Sandra G. Walker; Sharon G. Warren; Shirley W. Welch and
Roger Downs, Appellants
v.
BURLINGTON INDUSTRIES, INC.; Calvin A. Michaels; Charles
A. McLendon; Humberto L. Quintana; Appellees.
State of New York, Amicus Curiae.
Fourth Circuit.
Decided Sept. 3, 1985.
Page 1143
Marion G. Follin, III, Greensboro, N.C., Tiare B. Smiley, Asst. Atty. Gen., Raleigh, N.C. (Michael K. Curtis, Smith, Patterson, Follin, Curtis, James & Harkavy, Greensboro, N.C., Lacy H. Thornburg, Atty. Gen., John C. Brooks, Com'r of Labor, Thomas A. Harris, Director Wage and Hour Div., Raleigh, N.C., on brief) for appellants/intervenor.
McNeill Smith, Greensboro, N.C. (Ben F. Tennille, Smith, Moore, Smith, Schell & Hunter, Greensboro, N.C., on brief) for appellee.
Robert Hermann, Sol. Gen., O. Peter Sherwood, Deputy Sol. Gen., Albany, N.Y., Carlin Meyer, Jane Lauer Barker, Andrew Schultz, Asst. Attys. Gen., Robert Abrams, Atty. Gen., New York City, on brief) for amicus curiae.
Before HALL and WILKINSON, Circuit Judges, and BUTZNER, Senior Circuit Judge.
WILKINSON, Circuit Judge:
Former employees of Burlington Industries, Inc. Socks and Hosiery Divisions brought suit seeking to recover severance pay allegedly due upon Burlington's sale of the divisions to Kayser-Roth Corporation. The court below granted summary judgment for defendant after finding that the severance pay policy at issue was subject to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Sec. 1001 et seq., that ERISA preempted state law, and that Burlington's decision to deny severance pay was neither arbitrary or capricious. Finding no error in these holdings, we affirm.
The 200 appellants were employees of Burlington's Socks and Hosiery Divisions on January 3, 1982, when Burlington sold the divisions to Kayser-Roth as going concerns. Pursuant to agreement with Burlington, Kayser-Roth offered employment to virtually all employees of these divisions, including appellants, who continued to work without interruption. The five employees not offered employment with Kayser-Roth received severance pay under the plan described below, and Burlington agreed to provide severance pay to any employee terminated by Kayser-Roth within six months of the transfer of ownership.
Burlington has maintained a severance pay plan for salaried employees since at least 1953. At the relevant time, the terms of the plan appeared in the company's Policy Manual, available to employees on request, and in the Salaried Employees' Handbook. The Handbook described the plan in general terms, providing that two weeks' to twelve months' severance pay would be available to "full time employees who involuntarily leave the company." 1
Page 1144
The Policy Manual discussed the plan in more detail. In addition to setting out payment schedules for severance pay based on an employee's age and length of service, the Manual established eligibility requirements for severance pay. The most relevant requirement was that of "job termination," said to include "terminations due to circumstances such as elimination or modification of operations or other job elimination due to bona fide organizational changes." 2Appellants sought severance pay under this plan when Burlington sold the divisions to Kayser-Roth, asserting that they were entitled to the pay because their jobs with Burlington were terminated, and that their immediate re-employment by Kayser-Roth was irrelevant under the plan. Burlington denied that it owed severance pay, contending that there had been no "job elimination" as required by the Policy Manual.
Appellants initially sought redress in North Carolina state court, relying on common law claims of breach of contract and estoppel and several state statutes, including the North Carolina Wage and Hour Act, N.C.Gen.Stat. Sec. 95-25.7. The action was removed to federal court on Burlington's petition that the claims arose under ERISA. The plaintiffs amended their complaint to assert further claims based on ERISA. The Commissioner of Labor of the State of North Carolina ("Commissioner") intervened.
On appeal, the Commissioner primarily argues that the severance pay plan is not covered by ERISA, and that ERISA does not preempt state law. On this score, he is joined by officials from ten states and the District of Columbia as amici curiae. The 200 individual appellants contend that the denial of severance pay violated ERISA. 3
The Commissioner, joined by amici, asserts that ERISA simply does not apply to Burlington's severance pay policy, and that such a plan is therefore governed solely by state law. We reject this contention, and hold that Burlington's severance pay plan falls within the provisions of ERISA as an "employee welfare benefit plan." Moreover, ERISA governs employer severance pay plans whether funded from general assets, as here, or from a special trust.
Congress enacted this complex legislation to federalize much of employee pension and benefit law. It characterized plans covered by ERISA as either "employee pension benefit plans," 29 U.S.C. Sec. 1002(2) or "employee welfare benefit plans," 29 U.S.C. Sec. 1002(1), both of which must comply with ERISA's reporting and disclosure requirements, 29 U.S.C. Secs. 1021-1031, and its fiduciary standards for management of plan assets, 29 U.S.C. Secs. 1101-1114. The former are subject to
Page 1145
more stringent requirements than the latter, including the statute's vesting and funding requirements, 29 U.S.C. Secs. 1053, 1082. None of the parties contends that the severance pay provision qualifies as an employee pension benefit plan. Rather, the issue is whether it constitutes an employee welfare benefit plan or a mere "payroll practice"--as defined by Department of Labor regulations, 29 C.F.R. Sec. 2510.3-1--that falls outside the scope of ERISA.The statutory language supports the designation of severance pay as an employee welfare benefit plan. Such plans, as defined in Sec. 3(1) of ERISA, 29 U.S.C. Sec. 1002(1), include:
[A]ny plan, fund or program ... maintained by an employer ... for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or...
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