Jacobs v. Pickands Mather & Co.
| Decision Date | 16 May 1991 |
| Docket Number | Nos. 90-5112,s. 90-5112 |
| Parties | Gerald E. JACOBS, Anthony E. Beauto, Thomas S. Bender, Daniel R. Chapman, Mark R. Christenson, Donald F. Dame, David J. DeLeo, Arthur J. Fenstad, Robert G. Hoffner, Jr., Michael H. Holmquist, Michael A. Indihar, Floyd L. Jeske, Vernon E. Johnson, Mary Jane Keller, Personal Representative of the Estate of George F. Keller; Robert K. Kosmalski, Robert S. Lemire, Jay R. Mackie, Albert E. Maddern, Richard A. Maddern, Jeffrey W. Maida, Clarence R. Manz, David J. Mealey, Christine R. Meyer, Steven A. Moyer, William B. O'Brien, Donna J. Pingeon, Mark A. Pruse, Gerald Rude, Stanley C. Salmi, Rolf N. Schulz, Thomas J. Stark, Steven A. Stepec, James E. Stone, James D. Torstenson, Peter M. Vander Veer, Chris J. Viola, Dennis M. Wagner, and Paul Wahlstrom, Appellees/Cross-Appellants, v. PICKANDS MATHER & CO., a Delaware corporation; and Pickands Mather Services, Inc., a Delaware corporation, Appellants/Cross-Appellees. Gerald E. JACOBS, Anthony E. Beauto, Thomas S. Bender, Daniel R. Chapman, Mark R. Christenson, Donald F. Dame, David J. DeLeo, Arthur J. Fenstad, Robert G. Hoffner, Jr., Michael H. Holmquist, Michael A. Indihar, Floyd L. Jeske, Vernon E. Johnson, Mary Jane Keller, Personal Representative of the Estate of George F. Keller; Robert K. Kosmalski, Robert S. Lemire, Jay R. Mackie, Albert E. Maddern, Richard A. Maddern, Jeffrey W. Maida, Clarence R. Manz, David J. Mealey, Christine R. Meyer, Steven A. Moyer, William B. O'Brien, Donna J. Pingeon, Mark A. Pruse, Gerald Rude, Stanley C. Salmi, Rolf N. Schulz, Thomas J. Stark, Steven A. Stepec, James E. Stone, James D. Torstenson, Peter M. Vander Veer, Chris J. Viola, Dennis M. Wagner, and Paul Wahlstrom, Appellees/Cross-Appellants, v. PICKANDS MATHER & CO., a Delaware corporation; and Pickands Mather Services, Inc., a Delaware corporation, Appellants/Cross-Appellees. Gerald E. JACOBS, Anthony E. Beauto, Thomas S. Bender, Daniel R. Chapman, Mark R. Christenson, Donald F. Dame, David J. DeLeo, Arthur J. Fenstad, Robert G. Ho |
| Court | U.S. Court of Appeals — Eighth Circuit |
Stanley Weiner, Dallas, Tex., for appellants/cross-appellees.
Joseph J. Mihalek, Duluth, Minn., for appellees/cross-appellants.
Before McMILLIAN and FAGG, Circuit Judges, and STROM, * District Judge.
In these consolidated proceedings, Pickands Mather & Co. ("PM") and Pickands Mather Services, Inc. ("PMSI") appeal from separate orders of the United States District Court for the District of Minnesota 1 awarding thirty-eight (38) individuals severance pay, prejudgment interest, and attorney fees. We affirm.
Employees of PMSI initiated this action pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. Secs. 1001-1461 (1985) ("ERISA"), to recover, among other things, nearly $1,000,000 in severance pay from PM and PMSI. The lawsuit was not filed as a class action, but rather, each of the thirty-eight (38) employees sought recovery individually from PM and PMSI. 2 On May 4, 1988, the district court granted PM and PMSI summary judgment on the employees' state and common law claims, concluding that the claims were preempted by ERISA. On February 14, 1990, after a bench trial, the district court awarded the employees severance pay in the amount of $881,659. 3 On May 2, 1990, the district court awarded the employees prejudgment interest from September 1, 1986, through February 13, 1990, in the amount of $227,738.95, pursuant to 28 U.S.C. Sec. 1961 (Supp.1990), and attorney's fees in the amount of $272,073.25, pursuant to 29 U.S.C. Sec. 1132(g) (1985). 4
PM is a mining corporation that had entered into service contracts with certain companies to provide technical and administrative assistance in furtherance of the companies' management needs. PM performed many of these services through its wholly owned subsidiary, PMSI, which it formed in 1985. In December, 1985, PMSI negotiated a five-year management contract with Reserve Mining Company ("Reserve"). Consummation of the PM-Reserve contract on April 1, 1986, resulted in the permanent termination of over one-hundred (100) Reserve employees who had previously performed the services to be covered by the PM-Reserve contract. PMSI subsequently determined that it needed forty-four (44) new employees to staff these service functions and hired former Reserve employees to fill these positions.
Due to the impending bankruptcy of one of Reserve's owners, closure of the Reserve mine, and the subsequent filing of bankruptcy by Reserve, appellees were laid off in late July and August of 1986. When Reserve's trustee in bankruptcy rejected the PM-Reserve contract, PM and PMSI ceased to provide management services to Reserve.
The effective date of appellees' termination was August 31, 1986. Each appellee, thereafter, submitted written requests for severance pay. On August 28, 1986, PMSI advised all appellees, except Christine Meyer and Daniel Chapman, that it did not have information on the status of severance pay. On October 21, 1986, PMSI notified each appellee, except Meyer and Chapman, that it was examining the issue of severance pay and that it would respond as soon as answers were available. When PMSI failed to respond, appellees commenced this action to collect severance pay under PMSI's severance plan.
Appellants' severance plan provides that "[s]everance will be paid on the basis of 2 weeks' pay for each year of service." (App. 20C). Each PMSI employee had a "PM Date" in their personnel file that reflected the date the employee started working for PMSI. The "PM Date" was used by PM and PMSI to determine employee benefits. Reserve employees who transferred to PMSI in 1986 were attributed with a "PM Date" that reflected the date they started work with Reserve, not merely the date they began work with PMSI.
Because appellants' severance plan does not grant discretionary authority to the plan administrator to determine eligibility for benefits or to construe terms of the plan, the district court conducted a de novo review of PM and PMSI's denial of benefits, in accordance with Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). The trial court found that appellants relied on the "PM date" assigned to each appellee in determining employee benefits, such as insurance and pension programs, and concluded that "service" within the meaning of the severance plan included appellees' years of service with Reserve, as well as the time they were employed by PMSI, and calculated appellees severance pay using the appellees respective "PM Dates."
On appeal, PM and PMSI first maintain that Bruch should not be applied retroactively. They argue, rather, that the district court should have applied the arbitrary and capricious standard which this court applied prior to the United States Supreme Court's decision in Bruch. See, e.g., DeGeare v. Alpha Portland Indus., 837 F.2d 812, 814-15 (8th Cir.1988), vacated and remanded, 489 U.S. 1049, 109 S.Ct. 1305, 103 L.Ed.2d 575 (1989).
We reject appellants' argument that Bruch should not be applied retroactively. This court has consistently applied Bruch retroactively sub silentio. See Harper v. R.H. Macy & Co., 920 F.2d 544, 545 (8th Cir.1990); Baxter v. Lynn, 886 F.2d 182, 187-88 (8th Cir.1989); Wallace v. Firestone Tire & Rubber Co., 882 F.2d 1327, 1329 (8th Cir.1989). Other circuits have similarly applied Bruch retroactively. See, e.g., Perry v. Simplicity Eng'g, Div. of Lukens Gen. Indus., 900 F.2d 963, 965 n. 2 (6th Cir.1990); Michael Reese Hosp. & Medical Center v. Solo Cup Employee Health Ben. Plan, 899 F.2d 639, 641 (7th Cir.1990); Orozco v. United Air Lines, Inc., 887 F.2d 949, 952-54 (9th Cir.1989). In addition, the Supreme Court has remanded cases for reconsideration in light of Bruch, clearly indicating the Court's intent that Bruch be applied retroactively. See Adams v. Avco, Corp., 490 U.S. 1103, 109 S.Ct. 3151, 104 L.Ed.2d 1015 (1989); DeGeare v. Slattery Group, Inc., 489 U.S. 1049, 109 S.Ct. 1305, 103 L.Ed.2d 575 (1989); Combustion Eng'g, Inc. v. Saporito, 489 U.S. 1049, 109 S.Ct. 1306, 103 L.Ed.2d 576 (1989).
Appellants next contend that the district court erred in applying principles of contract law to interpret the severance plan. Appellants maintain that the plan should have been interpreted in accordance with principles of trust law, therefore, giving deference to PM and PMSI's intent at the time the severance plan was established. A careful review of Bruch aptly disposes of appellant's argument. While Bruch clearly mandates that trust law dictate the standard under which a plan is reviewed, Bruch, 489 U.S. at 115, 109 S.Ct. at 956, a severance plan must be interpreted in accordance with contract principles. Id. at 112-13, 109 S.Ct. at 955; Harper, 920 F.2d at 545. "In other words, unless the plan language specifies otherwise, courts should construe any disputed language 'without deferring to either party's interpretation.' " Wallace, 882 F.2d at 1329 (quoting Bruch, 489 U.S. at 112, 109 S.Ct. at 955). "If a plan does 'not give the...
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