Mathews v. Chevron Corp.
| Decision Date | 26 March 2004 |
| Docket Number | No. 02-16209.,No. 02-15936.,02-15936.,02-16209. |
| Parties | Dwight D. MATHEWS; Charles N. Hord; Bill Buchanan; Everett M. Miller; Albert Munn; Tommie Lee Rush, Plaintiffs-Appellees, and Issiah Milton; Leroy P. Bateman; Otis C. Joiner; Ernest L. Oliver; Fred Smith; Carolyn Whatley; Raul Tovar; Ronald Morton; Thomas Moungovan; Jesse Ronald Carlock; Joseph S. Piazza; Daniel J. Dreesman; Milan Jerome Rapo, Sr., Plaintiffs, v. CHEVRON CORPORATION, Defendant-Appellant. Dwight D. Mathews; Otis C. Joiner; Ernest L. Oliver; Raul Tovar; Bill Buchanan; Joseph S. Piazza; Everett M. Miller; Albert Munn; Tommie Lee Rush; Milan Jerome Rapo, Sr., Plaintiffs, and Issiah Milton; Leroy P. Bateman; Fred Smith; Carolyn Whatley; Charles N. Hord; Ronald Morton; Thomas Moungovan; Jesse Ronald Carlock; Daniel J. Dreesman, Plaintiffs-Appellants, v. Chevron Corporation, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Howard Shapriro, Shook, Hardy & Bacon, New Orleans, LA, for the defendant-appellant/appellee.
Thomas G. Moukawsher, Moukawsher & Walsh, Groton, CT, for the plaintiffs-appellees/appellant.
Michael P. Doyle, Gary K. Stearman, Department of Labor, Washington, DC; Mary Ellen Signorille, AARP Foundation, Washington, DC, for the amicus curiae.
Appeal from the United States District Court for the Northern District of California, William H. Alsup, District Judge, Presiding, D.C. No. CV-00-04824-WHA.
Before: WALLACE, O'SCANNLAIN, Circuit Judges, and BEISTLINE, District Judge.*
At issue here is an alleged violation of section 404(a)(1) of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1104(a)(1), and the equitable relief awarded pursuant to ERISA section 502(a)(3), 29 U.S.C. § 1132(a)(3). Chevron Corporation (Chevron) appeals from the injunction requiring it to modify its retirement plan records to reflect that six plaintiffs were involuntarily terminated by Chevron Product Company's Richmond, California, Refinery (Richmond) and thus eligible for payment of a "Special Involuntary Termination Enhancement" (SITE) benefit. Eight plaintiffs who were denied relief — four pursuant to pre-trial summary judgment and four following trial — cross-appealed.
The district court's jurisdiction was based on 29 U.S.C. § 1132(e). We have jurisdiction over Chevron's timely appeal and the timely cross-appeal pursuant to 28 U.S.C. § 1291, and we affirm in part and reverse in part.
As part of an effort to reduce the workforce of its subsidiaries, Chevron officially adopted SITE in an important company-wide "blue-top" announcement on February 23, 1999. SITE provided a benefit enhancement to any Chevron Corporation Retirement Plan participant involuntarily terminated without cause between March 1 and December 31, 1999. Chevron's use of SITE at Richmond is the source of controversy here. Richmond is part of the Refining Division of the Chevron Products Company, an unincorporated division of Chevron U.S.A., Inc., which in turn is a wholly owned subsidiary of Chevron. Plaintiffs were all "rank-and-file" employees at Richmond whose retirements from Chevron became effective between September 30, 1998, and June 24, 1999.
Although only "involuntarily" terminated employees were eligible for SITE, local management could send their work-force preference letters to solicit expressions of interest in the program. In theory, employees who indicated a desire to be considered for involuntary termination (i.e., those who "self-tapped") would not be guaranteed termination and the consequent benefit. In practice, however, the vast majority of workers who "self-tapped" were involuntarily terminated and received SITE. Indeed, the parties stipulated that had the plaintiffs been "self-tapping" volunteers, they would have qualified.
Despite company-wide availability, the decision whether to send SITE preferences letters — at least as far as Chevron's "rank-and-file" employees were concerned — was made by local management. At Richmond, this authority rested with Bill Steelman, the refinery's general manager. Although Chevron initially adopted SITE, Steelman continued to rely on personnel rearrangements and attrition to improve efficiencies and achieve necessary downsizing. His unwavering mantra had been that, in return for a pledge of cooperation from Richmond's workforce with any downsizing and rearrangements, Richmond would not terminate any employee "involuntarily" except for cause.
Therefore, when Richmond employees inquired about SITE on its "Rumor Buster" website (a forum to submit questions anonymously), Richmond's responses conveyed Steelman's attrition-only edict. The topic of layoff retirement packages was first broached in a posting dated February 19, 1999. Richmond acknowledged that Chevron was developing a "Severance Plan," but explained that, as the decision on its implementation would be made locally, Richmond was "not planning to have a severance package ... [voluntarily or involuntarily] in the foreseeable future" (brackets in original). A March 1, 1999, "Rumor Buster" again recognized the need to reduce the number of Richmond employees, but repeated that the refinery had no "plans" to introduce SITE and that attrition would produce workforce reductions once the refinery could operate safely with fewer employees. Several weeks later, a third "Rumor Buster" reiterated Steelman's belief that Richmond was not yet capable of operating with less employees. Notably, each "Rumor Buster" explicitly stated it expressed Richmond's intentions "at this time." In addition to his "Rumor Busters," Steelman conveyed his resolve not to utilize SITE at Richmond orally during refinery town-hall meetings.
Meanwhile, Steelman faced pressure from his superiors to reduce Richmond's bloated workforce through SITE. Despite Steelman's considerable discretion over Richmond's personnel policies, he still had to report to Lance Gyorfi, a Chevron executive who coordinated employment policies at Chevron's United States refineries via quarterly "Refinery Guidance Team" (Team) meetings and intermittent conference calls. The Team first discussed SITE on February 26, 1999, three days after SITE's unveiling. Gyorfi stated that human resources (HR) personnel and "Group 1" management (over whom Chevron exercised more centralized control) may be offered SITE. The Team attempted, as its members traditionally did, to decide the SITE issue by consensus. During subsequent conference calls, the other five local managers warmed to the idea of utilizing SITE to cut HR employees. Steelman's position did not change, and on March 31, 1999, he obtained the Team's approval to send a letter to a Richmond union communicating the refinery's current intent not to use SITE among the union's members.
On April 14, Alan Preston, the general manager of Chevron Products Company HR, sent an e-mail to Steelman and other general managers proposing a plan to offer all HR personnel the option of "self-tapping." Steelman replied that making SITE available only to Richmond's HR staff would contravene his policy of treating all employees equally. Steelman reversed course the next day (April 22, 1999), however, and agreed to mail SITE preference letters to Richmond HR employees. He emphasized, though, that he was not committing himself to respond to their preferences due to his lingering equality concerns.
During a mid-May Team meeting in Pascagoula, Mississippi (mid-May Meeting), the Team decided to extend SITE to all management-level employees over whom they customarily exercised control. Steelman initially objected with regards to those currently stationed in Richmond, but acquiesced since he knew this decision was the Team's to make, not his. At this point, Steelman concluded that he would have to offer SITE universally at Richmond to avoid discriminating against rank-and-file employees. He therefore instructed Richmond's HR manager to notify imminent retirees of the policy change, sent out a formal notice to all employees on May 28, 1999, and scheduled a town-hall meeting to discuss SITE. Since most plaintiffs had already retired, they no longer were eligible for the attractive SITE benefit. This lawsuit ensued.
The interpretation of ERISA is a question of law reviewed de novo. Shaver v. Operating Eng'rs Local 428 Pension Trust Fund, 332 F.3d 1198, 1201 (9th Cir. 2003). To establish an action for equitable relief under ERISA section 502(a)(3), 29 U.S.C. § 1132(a)(3), the defendant must be an ERISA fiduciary acting in its fiduciary capacity, Varity Corp. v. Howe, 516 U.S. 489, 498, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996), and must "violate[] ERISA-imposed fiduciary obligations," id. at 506, 116 S.Ct. 1065.
It is uncontested that Chevron was and remains the plan sponsor and administrator of the Chevron Corporation Retirement Plan. See 29 U.S.C. § 1002(21)(A) (). On appeal, Chevron challenges the district court's holding "that the misinformation disseminated by Richmond management was done in its role as a fiduciary within the meaning of ERISA." The determination of Chevron's fiduciary status is a conclusion of law, see Varity, 516 U.S. at 498, 116 S.Ct. 1065(deeming a "legal conclusion" the lower court's decision that an employer was acting as a fiduciary), that we review de novo. Fiduciary conduct encompasses ...
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