Madera v. Marsh Usa, Inc.

• Decision Date: 18 October 2005
• Docket Number: No. 05-1092.,05-1092.
• Citation: 426 F.3d 56
• Parties: Anthony MADERA, Plaintiff, Appellant, v. MARSH USA, INC. and J & H Marsh & McLennan, Inc. Severance Pay Plan, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

426 F.3d 56

Anthony MADERA, Plaintiff, Appellant, v. MARSH USA, INC. and J & H Marsh & McLennan, Inc. Severance Pay Plan, Defendants, Appellees.

No. 05-1092.

United States Court of Appeals, First Circuit.

Heard August 2, 2005.

Decided October 18, 2005.

Joseph P. Musacchio, with whom Anthony Tarricone and Sarrouf, Tarricone & Flemming, were on brief, for appellant.

Louis A. Rodriques, with whom Rheba Rutkowski and Bingham McCutchen LLP, were on brief, for appellees.

Before TORRUELLA, Circuit Judge, SILER,^* Senior Circuit Judge, and HOWARD, Circuit Judge.

TORRUELLA, Circuit Judge.

Plaintiff-appellant Anthony Madera here appeals the district court's grant of summary judgment for defendant-appellee Marsh U.S.A., Inc. ("Marsh") and defendant-appellee J & H Marsh & McLennan Severance Pay Plan ("Plan"), a severance pay plan adopted and maintained by Marsh in accordance with the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. (2000). Madera, a former senior vice president at Marsh, was fired "for cause" after providing certain information about the company to a competitor in violation of Marsh's written policies. Madera, however, contends that this firing "for cause" was merely a pretext used to deprive him of the severance pay he was due under the Plan. The district court, finding that Madera failed to exhaust the administrative remedies available to him prior to bringing this suit, granted summary judgment in favor of the defendant-appellees. We affirm.

I.

For approximately fourteen years, Madera was an employee of Sedgwick James ("Sedgwick"), a risk management and insurance brokerage company. In 1998, Sedgwick was acquired by Marsh, the United States operating subsidiary of Marsh Inc., a leading provider of risk management and insurance brokerage services worldwide. With the acquisition, Madera became a senior vice president within Marsh's Brokerage Risk Control Group. In his new role, Madera provided risk management consulting services to Marsh's clients in the New England region and oversaw the evaluation and professional development of sixteen individuals under his supervision.

In late 2000 and early 2001, Marsh began a series of reorganizations and consolidations, motivated in part by the need to eliminate redundant positions following acquisitions made in 1997 and 1998, including the Sedgwick acquisition. One of the organizational changes made was to eliminate Madera's Brokerage Risk Control Group. As a result, Madera was informed in mid-February 2001 that he was being reappointed to a new position — that of "Middle Market Sales Leader" for Marsh's consulting practice in the New England region.

Madera, however, was not happy with the change. He felt that Marsh's management did not provide him with a clear definition of his new role and that the company was not making the best use of his skills and experience. He informed Michael Golden, the head of Marsh's New England operations and its Boston office, of his unhappiness. After Golden reassured Madera about the strategic importance of his new position and his critical role in Marsh's operations, Madera agreed to do his best in his new job.

Shortly after this conversation, on or about March 9, 2001, Madera went on vacation. Before leaving, however, he sent several e-mails to Keith Smaldon, the Boston office head of the Hays Group ("Hays"), another risk management firm and a direct competitor of Marsh. Madera became acquainted with Smaldon when both men were employees at Sedgwick. Smaldon, like Madera, became a Marsh employee after the 1998 Sedgwick acquisition. Smaldon, however, left Marsh shortly afterwards to join Hays. After this move, Madera continued to have social contact with Smaldon. Madera maintains, however, that he had no intention of seeking employment with Hays and never raised the issue with Smaldon.

The e-mails sent by Madera contained important information about Marsh's business. For example, a message forwarded by Madera to Smaldon on March 1, 2001 contained various "Market Alert Memos" sent by Marsh to all of its employees in the United States. These memos discussed the lowering of ratings of certain insurance companies and advised Marsh personnel that clients insured by these companies should be notified of these developments. On March 8, Madera forwarded an e-mail that he, along with all other Marsh employees in Boston, received from Golden. This message contained announcements of promotions and reassignments within the Boston office. Madera explains that he sent Smaldon this e-mail because Smaldon was friendly with people receiving the promotions, some of whom were former Sedgwick colleagues. On the same day, March 8, Madera also forwarded to Smaldon an "Industry Practices Organizational Change" e-mail that had been previously sent to all Marsh employees in the United States (approximately 16,000 people) and that contained announcements of promotions and general goals. In total, Madera forwarded seven Marsh e-mails to Smaldon.

These e-mail messages may very well have disappeared into the electronic ether if not for a telephone conversation shortly afterwards between Smaldon and Christopher Scontras, the head of Marsh's Portland office and a member of Golden's senior staff. During the course of this conversation, Smaldon mentioned certain organizational and personnel changes in Marsh's New England operations, information which had been communicated only internally at Marsh. In fact, Scontras believed that the information conveyed by Smaldon was known only by a "small" or "restricted" management group in the Boston office.

On March 12, Scontras attended a regularly scheduled meeting with several members of Marsh's management team, and there he informed Golden about his conversation with Smaldon. Golden, troubled by the fact that Smaldon had this information, ordered a search of Marsh's e-mail system to determine whether a Marsh employee had been passing company information to anyone at Hays. Within twenty-four hours, Marsh's Information Technology Department determined that Madera had forwarded seven e-mails to Smaldon. Golden was provided with copies of each of the e-mail messages that Madera had forwarded.

Upon reviewing the contents of these messages, Golden became concerned. Nearly all of the messages contained information that Marsh intended for internal distribution only; that, in effect, Madera had provided a competitor with access to internal, proprietary information. Golden's concern only increased with the knowledge that it was Smaldon who had access to this sensitive information. Smaldon now worked for Hays — at that time, a start-up operation in the Boston area. Hays was doing everything in its power to increase its size and grow its market share in the risk management business. The information conveyed in the e-mails would give Hays a real competitive advantage, especially in the areas of new employee recruitment, product marketing, and client development. And as a former Marsh manager, Smaldon would be particularly well positioned to make use of and understand the information in the messages conveyed by Madera.

Based on this review of the e-mails, Golden concluded that Madera had breached his duty of loyalty to Marsh and that he was no longer trustworthy. He believed that the number of e-mails sent indicated that the disclosures to Smaldon were not a mistake and that no reasonable manager could have believed that such a disclosure of company information to a competitor was appropriate. After consulting with his human resource managers and a Marsh in-house attorney, Golden decided to fire Madera.

Upon his return from vacation on March 19, Madera was called to a meeting with Golden, where he was informed that he had been identified as the source of the e-mails to Smaldon and that his employment with Marsh was to be terminated "for cause" because his conduct constituted "willful misconduct" within the meaning of the Plan, for failing to comply with company guidelines concerning conflicts of interest and the use and disclosure of confidential or proprietary information as set forth in Marsh's Employee Handbook ("Handbook"). Madera's response was that he did not think the information he had forwarded to Smaldon was sensitive; that he had simply "made a mistake"; and that he "did something stupid."

When these arguments proved unavailing and Madera realized that Golden's decision would not be reversed, he inquired about severance pay. He was informed that he was not eligible to receive it. The Plan did make provision for severance payments to eligible employees whose employment was terminated by Marsh. However, the Plan also stated explicitly that "[a]n individual is not eligible for benefits under [the] Plan if . . . his/her termination is for cause." The determination of what constituted "cause" was left to the Plan Administrator or his or her delegate; in this case, that delegate was Marsh's Human Resources Department. The Plan also stated that

[t]he Company . . . shall have the discretionary authority and responsibility to determine eligibility for benefits and the amount of such benefits, and to construe the terms of the Plan. The determinations and constructions of the Company. . . will be final, binding, and conclusive as to all parties, unless found by a court of competent jurisdiction to be arbitrary and capricious.

Officials at Marsh, pursuant to this authority, confirmed Golden's initial statement that Madera's firing was one "for cause."

Madera, however, believed that the "for cause" explanation was merely a pretext. He believed that Marsh was looking for a reason to discharge him "for cause" for the purpose of denying him severance benefits. He thought that the true reasons for his discharge were Marsh's decision to eliminate his supervisory position under a restructuring, his expressed displeasure with his undefined diminished status at the...