Jackson v. Sears, Roebuck and Co.

• Decision Date: 15 June 1981
• Docket Number: No. 80-7422,80-7422
• Citation: 648 F.2d 225
• Parties: 25 Fair Empl.Prac.Cas. 1684, 26 Empl. Prac. Dec. P 31,896, 2 Employee Benefits Ca 1425 Evelyn JACKSON, Plaintiff-Appellant, v. SEARS, ROEBUCK AND COMPANY, Defendant-Appellee. . Unit B
• Court: U.S. Court of Appeals — Fifth Circuit

Page 225

648 F.2d 225

25 Fair Empl.Prac.Cas. 1684,

26 Empl. Prac. Dec. P 31,896,

2 Employee Benefits Ca 1425

Evelyn JACKSON, Plaintiff-Appellant, v. SEARS, ROEBUCK AND COMPANY, Defendant-Appellee.

No. 80-7422.

United States Court of Appeals, Fifth Circuit.

Unit B

June 15, 1981.

Robert H. Stroup, Atlanta, Ga., for plaintiff-appellant.

Alston, Miller & Gaines, Anne S. Rampacek, Leah Sears-Collins, Atlanta, Ga., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before FAY and VANCE, Circuit Judges, and ALLGOOD ^*, District Judge.

ALLGOOD, District Judge:

Appellant seeks this court's reversal of the jury verdict entered in favor of appellee, Sears, Roebuck and Company (Sears) on her Age Discrimination in Employment Act (ADEA) claim. Appellant also challenges the district court's dismissal of her Employee Retirement Income Security Act (ERISA) claim. We affirm both the dismissal of appellant's ERISA claim and the judgment entered by the district court on her ADEA claim.

For more than twenty years appellant was employed by Sears, and for the last three years of her employment she worked as a catalog sales representative in the Newnan, Georgia store, and was compensated in part by salary and part on commission. Appellant was the "Home Appliance" catalog sales representative, and as such was responsible for promoting, selling and keeping informed about "big ticket" merchandise such as washing machines, dishwashers, window air conditioners and similar merchandise which could be delivered and installed without the services of an independent contractor. On the sale of such merchandise, appellant was eligible to earn a commission; as to all other merchandise, appellant was expected to assist in selling, or refer the customer to another salesperson with more knowledge of that particular merchandise, but no commission on those sales could be claimed by appellant.

Gene Chester was the second catalog sales representative in the Newnan store. Mr. Chester was the "Installed Home Improvement" salesman, and was responsible for central air conditioning, fencing and similar items installed for Sears by independent contractors. On the sale of such installed items, only Mr. Chester could earn a commission; however, he, like appellant, was to assist in the sale of all other merchandise on which no commission could be earned.

In order to be eligible for commission on a sale the salesperson must have had personal contact with the customer in effectuating the sale. This policy is not in dispute; however, the parties are in disagreement as to what satisfies the personal sale requirement.

On November 4, 1977, Jimmy Mann, the Newnan store manager, handled a customer complaint regarding installation of carpet sold by Mr. Chester. Also present was Glenn Collins, District Manager, who was in the Newnan store on a routine visit. The customer mentioned a washing machine he bought from Chester while Chester was in his home on the carpet sale. In checking on the washing machine sale, Mr. Mann noted that appellant had claimed the commission. The customer was then contacted and he informed Mann and Collins that he had not made any contact with appellant concerning the washing machine. Because Mann, as store manager, approved all sales when finalized, he had knowledge of a sale of a built-in oven which also involved appellant and Mr. Chester. In examining this sale, Mann and Collins learned that the customer dealt only with appellant, and yet the commission had been claimed by Chester.

In effect at all relevant times was an unwritten rule prohibiting employees from pooling, splitting, or swapping sales in order to receive a commission on a sale other than a personal sale. Because the sale of the washing machine involved personal contact by Chester and the allegedly unauthorized claiming of commission by appellant, and the reverse in the sale of the built-in oven, both Chester and appellant were confronted by Mann and Collins with violation of the "no swap" rule. Both employees conceded that they were aware of the company policy prohibiting the swapping of sales. ¹

On November 11, 1977, one week after Chester and appellant were confronted with the alleged violation, both employees signed written statements prepared by Sears summarizing the facts of the two sales in question. Each employee was then given the option of resigning or being terminated; Mr. Chester chose to resign, but appellant, refusing to resign, was terminated. At that time, appellant was forty-three years old, and Chester was thirty-seven.

At all times during her employment with Sears, appellant was a timecard, or hourly, employee. At the time of appellant's discharge, the only retirement program at Sears in which timecard employees were eligible to participate was the "Savings and Profit Sharing Fund" which had been established in 1916. Also in effect at the time of appellant's discharge was a "Supplemental Pension Plan" which was established in 1944. The pension plan, however, did not cover timecard employees, and this fact is conceded by appellant. In March of 1977, prior to appellant's termination, an amendment to the pension plan was announced which would extend coverage for the first time to timecard employees. The effective date of the amendment was January 1, 1978.

On March 30, 1979, appellant filed suit against Sears alleging that Sears had violated both the ADEA and ERISA when it willfully terminated her at age forty-three after more than twenty years of employment, and within one and one-half months of receiving vested rights to pension benefits (pursuant to the implementation of the pension plan amendment). The complaint further alleged that appellant's work evaluations had always been satisfactory; that she had never received a reprimand; and that she was willfully replaced by a younger employee under the age of thirty. Sears filed an answer denying appellant's allegations, and on January 4, 1980, filed a motion to dismiss the ERISA claim and a motion for summary judgment on the ADEA claim.

By order dated February 15, 1980, the district court granted Sears' motion to dismiss the ERISA claim. The court found that appellant was not a "participant" within the statutory definition of the Act. The motion for summary judgment on the ADEA claim, however, was denied by the court in the same order.

On February 25-27, 1980, the ADEA claim was tried to a jury resulting in a defendant's verdict for Sears. Judgment was entered in favor of Sears on February 27, 1980. Thereafter, appellant timely filed a motion for a new trial which was denied by order dated May 2, 1980. This appeal followed.

On appeal, several issues have been raised by appellant: (1) whether the district court erred in dismissing appellant's ERISA claim; (2) whether the court's charge to the jury was defective; and (3) what standard of "willfulness" should be applied to 29 U.S.C. § 626(b) regarding the recovery of liquidated damages under the ADEA.

I. THE ERISA CLAIM.

Appellant argues that the district court erred in determining that she was not a "participant" within the meaning of ERISA. Under the Act, only a "participant" or a "beneficiary" or a "fiduciary" of an employee benefit plan may bring a private civil action. 29 U.S.C. § 1132. The term "participant" is defined in 29 U.S.C. § 1002(7) as follows:

(A)ny employee or former employee of an employer, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer

Id. (emphasis added.)

Appellant concedes that she was not covered by the pension plan in effect at the time of her termination; however, she was a participant of Sears' Savings and Profit Sharing Fund (and following her discharge received all monies due her under such fund). Appellant argues that the pension plan and profit sharing plan constitute a single retirement program, and that because appellant was a participant in the profit sharing plan, she would have been eligible to receive benefits under the pension plan on the effective date of the pension plan amendment "but for" her termination. Appellant leans heavily on the "may become eligible" language in the definition of "participant" at 29 U.S.C. § 1002(7).

Sears submits that the pension plan and profit sharing fund are separate plans. Further, Sears argues that in order for appellant to be a participant in the pension plan she must first have been covered by such plan, and must also have satisfied the age and length of service participation requirements under the plan. Because the pension plan in effect at the time of appellant's discharge did not cover timecard employees, Sears urges that there can be no question but that appellant, as a timecard employee, was not covered and could not be a participant in the pension plan. We agree.

We find that at the time of appellant's termination, Sears' pension plan and profit sharing fund were separate and distinct plans. Such a finding is not inconsistent with 29 U.S.C. § 1002(2) of the Act which states:

The terms "employee pension benefit plan" and "pension plan" mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program

(A) provides retirement income to employees, or

(B) results in a deferral of income

Id. (emphasis added.) We find further support for the proposition that an employer may maintain more than one plan in 29 U.S.C. § 1058 of the Act which contemplates mergers and consolidations of plans by an employer.

In Nugent v. Jesuit High School, 625 F.2d 1285 (5th Cir. 1980), we discussed the issue of whether a former employee whose pension benefits were not vested at the time of her termination was a "participant" within the meaning of ERISA. We concluded that she was not. In Nugent,...