Maez v. Mountain States Tel. and Tel., Inc.

Decision Date19 April 1995
Docket NumberNo. 93-1184,93-1184
Parties19 Employee Benefits Cas. 1283, Pens. Plan Guide P 23912X Reuben A. MAEZ, Linnea K. Maestas, Janet M. Cowdrey, Paul Spieker, Individually and as Representatives of a Class, Plaintiffs-Appellants, v. MOUNTAIN STATES TELEPHONE AND TELEGRAPH, INC. d/b/a U.S. West Communications, Inc., a Colorado corporation; Enhanced Management Transition Program; Enhanced Management Transition Program Review Committee; Neal Greenhalgh; Fred L. Cook; A. Gary Ames; U.S. West, Inc., a Colorado corporation; U.S. West Management Pension Plan Employee Benefit Committee; John G. Shea, Defendants-Appellees.
CourtU.S. Court of Appeals — Tenth Circuit

Andrew T. Brake of Andrew T. Brake, P.C., (Lee Thomas Judd (with him on the brief) of Andrew T. Brake, P.C., Eugene Deikman (with him on the brief) of Eugene Deikman, P.C., and William D. Peterson (with him on the brief) of William D. Peterson P.C., Denver, CO), for plaintiffs-appellants.

D. Ward Kallstrom of Lillick & Charles, San Francisco, CA (Dirk W. de Roos (with him on the brief) of Faegre & Benson, and Leon Marks (with him on the brief) of U.S. WEST, Inc., Denver, CO), for defendants-appellees.

Before SEYMOUR, Chief Judge, McKAY, Circuit Judge, and BELOT, * District Judge.

BELOT, District Judge.

Plaintiffs/appellants appeal the dismissal of state law and ERISA claims by Judge Daniel B. Sparr of the United States District Court for the District of Colorado. The claims and allegations in these consolidated cases are similar to those made against defendants/appellees US WEST Management Pension Plan and John G. Shea in Averhart v. US WEST Management Pension Plan (No. 92-1317), Sandquist v. US WEST Management Pension Plan (No. 92-1321), and Sabell v. US WEST Management Pension Plan (No. 92-1375), three cases which were also decided by Judge Sparr. A separate panel of this court recently affirmed Judge Sparr's grant of summary judgment for the defendants in those cases. Averhart v. US WEST Management Pension Plan, 46 F.3d 1480 (10th Cir.1994), reh'g denied (10th Cir. Feb. 21, 1995).

I

Defendant Mountain States Telephone & Telegraph, Inc. ("Mountain Bell") is a former subsidiary of defendant US WEST Communications, Inc. ("US WEST"), a regional holding company formed after the court-ordered divestiture of AT & T. Plaintiffs were formerly employed as managers at Mountain Bell and participated in US WEST's Management Pension Plan.

In January 1987, US WEST sought to reduce its work force by offering its managers a severance pay plan called the "Enhanced Management Transition Program" or EMTP. EMTP was designed to encourage voluntary termination or early retirement and operated as an unfunded welfare benefit plan subject to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Secs. 1001 et seq. An Employee Benefits Committee ("EBC") was established to administer the program.

The EMTP offer consisted of two options: (1) immediate separation and one year's salary in severance pay; or (2) a three year leave of absence, with employee benefits, followed by separation and severance pay equal to fifty percent of one year's salary. On February 12, 1987, defendant A. Gary Ames, Mountain Bell's executive vice president, issued a "management bulletin" urging Mountain Bell managers to "consider our incentive offer carefully." Plaintiffs' App. at 9. Ames stated that Mountain Bell would be "lean, effective and market-driven" in the future and that anyone uncertain about being a part of that future should carefully consider accepting termination under EMTP. Id. Ames further stated that, in the future, "[i]f we have more employees than we need to staff the market units, and if normal attrition won't correct this force imbalance, we may offer incentives for people to leave voluntarily. But those payments will amount to no more than six months' salary." Id. Portions of Ames's comments were published in an article in the February 18, 1987 issue of the MB Times, an in-house newsletter distributed to Mountain Bell employees. Plaintiffs' App. at 11. Plaintiffs Maez, Maestas, and Spieker eventually decided to accept immediate separation from service under EMTP option (1). Plaintiff Cowdrey took a leave of absence under option (2).

In April 1989, US WEST implemented a voluntary severance program to reduce the number of director-level employees in the company. This program, called the Director's Program, offered certain director-level employees a choice of various severance pay options if they elected to retire or resign during 1989. This program was not available to managers like plaintiffs. Averhart v. US WEST Management Pension Plan, 46 F.3d 1480, 1483 (10th Cir.1994).

On November 29, 1989, after plaintiffs had accepted termination under EMTP, the US WEST Board of Directors adopted a resolution authorizing the EBC to amend the Pension Plan, effective January 1, 1990, to provide certain special pension benefits to eligible employees who would elect between January 2 and January 31, 1990, to retire as of February 28, 1990. This amendment to the Pension Plan, known as the "5 + 5 amendment," provided for a "Minimum Benefit" of adding five years of age and five years of service to participants with five or more years of employment as of February 28, 1990 for purposes of calculating their pension benefits. Eligibility was generally limited to "active employee[s] on the payroll as of February 28, 1990, with five or more years of term of employment as of February 28, 1990." However, director-level employees who terminated during 1989 pursuant to the Director's Program also were permitted to take advantage of the 5 + 5 amendment. Averhart, 46 F.3d at 1483.

Although plaintiffs had already accepted termination under EMTP, they submitted claims for benefits under the 5 + 5 amendment. Their claims were denied. The Secretary of the EBC, defendant John G. Shea, determined that plaintiffs were ineligible for the benefits of the 5 + 5 amendment because they were not "active employees."

II

A somewhat detailed explanation of the tortured history of this case is necessary to place the issues in proper focus.

On April 9, 1990, plaintiffs filed a class action lawsuit against Mountain Bell in Colorado state court, specifically, the District Court for the City and County of Denver. Plaintiffs' App. at 1-8. Plaintiffs' complaint set forth state law claims of promissory estoppel predicated on allegations that plaintiffs were wrongfully induced to participate in EMTP and wrongfully denied 5 + 5 benefits. On May 3, Mountain Bell removed the state court action to federal court, asserting that plaintiffs' state law claims were preempted by the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Secs. 1001 et seq. Plaintiffs' App. at 12-15. The case was assigned to Judge Matsch of the United States District Court for the District of Colorado.

On May 21, 1990, Mountain Bell moved to dismiss the removed action on Rule 12(b)(6) grounds. Plaintiffs' App. at 28-31. Plaintiffs in turn moved to remand the action back to state court, contending that there was no ERISA preemption. Plaintiffs' App. at 32-35. Without undertaking to decide the preemption issues or the propriety of removal jurisdiction himself, Judge Matsch ordered that the case be remanded because the preemption issue was "not free from doubt" and needed to be addressed "as an affirmative defense to plaintiffs' complaint." Plaintiffs' App. at 78-79. Mountain Bell then petitioned this court for a writ of mandamus directing Judge Matsch to vacate his order of remand. Plaintiffs' App. at 81-103. This court dismissed Mountain Bell's petition on June 28, 1991, concluding that Judge Matsch's remand decision was not reviewable and that Judge Matsch had appropriately remanded the case pursuant to 28 U.S.C. Sec. 1447(c): "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." Plaintiffs' App. at 104-05.

Following remand to state court, plaintiffs moved for leave to file a "first amended complaint," and the state court granted the motion. Defendants' Supp.App. at 1-13; Plaintiffs' App. at 106-113. Mountain Bell moved to dismiss the "first amended complaint," asking the state court to decide the issue of ERISA preemption. Plaintiffs' App. at 114-17. On November 29, 1991, while defendants' motion to dismiss was still under advisement, plaintiffs filed a motion to further amend their first amended complaint. Plaintiffs' App. at 159-61. On the same day, plaintiffs also filed a second, entirely separate lawsuit in federal court against Mountain Bell, US WEST, US WEST Management Pension Plan and the other defendants listed in the caption above. Plaintiffs' App. at 175-84. As a preface to their complaint in this second lawsuit, plaintiffs stated This action is being filed for purposes of setting forth Plaintiffs' alternative claims, based upon the Employee Retirement Income Security Act of 1974 ... as alternative claims to Plaintiffs' state law claims, as postured in Civil Action No. 90 CV 3927, District Court for the City and County of Denver, which the Defendant therein is alleging are preempted by ERISA.

Id. at 175. The federal case was assigned to Judge Sparr.

On December 26, 1991, the state court held that plaintiffs' state law claims were preempted by ERISA (Plaintiffs' App. at 185-87), and, on January 2, 1992, Mountain Bell filed another notice of removal to federal court (Plaintiffs' App. at 188-92). Upon removal, plaintiffs' initial lawsuit was also assigned to Judge Sparr.

Plaintiffs filed motions in both state and federal court requesting reconsideration of the state court's ERISA preemption decision. Plaintiffs' App. at 209-232. The state court found that the case had already been removed to federal court and that it would be inappropriate to entertain plaintiffs' motion to reconsider without a...

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