McLaughlin v. Reynolds

• Decision Date: 17 May 1995
• Docket Number: Civ. No. 94-0174-B.
• Parties: George W. McLAUGHLIN, Plaintiff, v. David W. REYNOLDS, Great Northern Nekoosa Employee Protection Plan, Great Northern Nekoosa Corporation, and Georgia-Pacific Corporation, Defendants.
• Court: U.S. District Court — District of Maine

886 F. Supp. 902

George W. McLAUGHLIN, Plaintiff, v. David W. REYNOLDS, Great Northern Nekoosa Employee Protection Plan, Great Northern Nekoosa Corporation, and Georgia-Pacific Corporation, Defendants.

Civ. No. 94-0174-B.

United States District Court, D. Maine.

May 17, 1995.

John W. McCarthy, Rudman & Winchell, Bangor, ME, for plaintiff.

Richard G. Moon, Moon, Moss, McGill & Bachelder, P.A., Portland, ME, for defendants.

Forrest W. Hunter, Alston & Baird, Atlanta, GA, for defendant Great Northern Nekoosa and Georgia-Pacific.

Randall A. Constantine, Elrod & Thompson, Atlanta, GA, for defendant GNN, Employee Protection Plan and David Reynolds.

ORDER AND MEMORANDUM OF DECISION

BRODY, District Judge.

Plaintiff George McLaughlin retired voluntarily from his job at a Georgia-Pacific mill in East Millinocket, Maine on August 2, 1991. He now brings suit alleging that he was denied vacation benefits owed him pursuant to his company's Employee Protection Plan ("EPP" or "the Plan"). That denial, McLaughlin contends, violates the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B), the Maine Employment Practices Act, 26 M.R.S.A. § 626, and the actual terms of the EPP.

Before the Court are several pending motions. David Reynolds, the individual who determined that McLaughlin was ineligible for vacation benefits, and Defendant Plan, jointly move for summary judgment alleging that the determination was proper pursuant to the terms of the plan, ERISA, and Maine law. In a separate motion for summary judgment, Great Northern Nekoosa Corporation ("GNN") and Georgia-Pacific Corporation advance the same arguments. In addition, they assert that they are not subject to suit because they are not proper parties with respect to McLaughlin's ERISA claim. Further, McLaughlin seeks summary judgment on his claim under the Maine Employment Practices Act. Finally, both McLaughlin and Defendants Reynolds and the Plan filed memoranda at the Court's request on the issue of whether Plaintiff is entitled to a trial by jury with respect to his ERISA claim.

I. Background

McLaughlin was employed by GNN, its subsidiaries, or Georgia Pacific, from 1961 until his voluntary retirement in August 1991. From 1985 through 1987, McLaughlin was deeply involved in an intense modernization project at the East Millinocket Mill where he worked. As a result of that involvement, McLaughlin and others worked long hours and were unable to use a large portion of their available vacation time. Accordingly, the Mill Manager permitted salaried employees such as McLaughlin to carry over standard vacation time that they were unable to use. The employees were allowed to bank such missed vacation time at a rate of two or three weeks a year and were to be compensated for that time with a cash payment upon their retirement or resignation. In addition, McLaughlin and these employees were permitted to tally their overtime hours and take compensatory time off for hours employed in excess of a normal work week. McLaughlin terms these tallied hours "Overtime Earned Vacation Compensation" ("OEVC"). McLaughlin recalls being told by his superiors that he could not recover cash for OEVC time that he did not take as compensatory time off.

In March 1990, Georgia-Pacific acquired a majority of the then outstanding shares of GNN's common stock. Five months prior to that takeover, GNN adopted the Employee Protection Plan, the employee welfare benefit plan under which McLaughlin seeks to recover his vacation benefits. The purpose of adopting the Plan was to protect company employees in the event of a takeover: to "provide reasonable financial protection to all full-time salaried employees who are employed by the Company at the time of a Change of Control...." (Reynolds Aff. Ex. A. § A.) The pertinent provisions of the Plan as they relate to this litigation are as follows:

§ B. Responsibility ... The vice president, employee relations, GNN, is responsible for interpretations of this plan.

. . . . .

§ D. Plan Implementation The Employee Protection Plan shall provide benefits only if there is a Change of Control and shall apply to a Covered Employee whose employment is terminated within two years of such Change of Control under the following circumstances:

1. The employee experiences a material reduction in responsibilities or authority or reduction in salary or benefits, and the employee voluntarily terminates ...

. . . . .

§ E. Plan Benefit ...

4. The severance benefit described in the Plan shall be payable in addition to, and not in lieu of, all other accrued or vested benefits, rights, options, or other forms of compensation which may be owed to an employee following termination, including but not limited to, accrued vacation....

§ F. Full Settlement and Indemnification ... If a Covered Employee in good faith institutes any legal action in seeking to obtain or enforce ... the validity or enforceability of any right or benefit provided by this Plan, the Company will pay for all reasonable legal fees and expenses actually incurred by such employee.

. . . . .

§ I. Governing Law The validity, interpretation, construction and performance of the Plan shall in all respects be governed by the laws of the United States and, to the extent not preempted by such laws, by the laws of the State of Maine without regard to its conflict of laws rules.

(Reynolds Aff. Ex. A.)

II. Discussion

It is not in dispute that: there was a change in control when Georgia-Pacific acquired a majority of GNN common shares of stock; McLaughlin voluntarily retired within two years of the change of control; and McLaughlin was a covered employee under the EPP at the time of the change of control. (See id. § D.) The parties do dispute, however, whether McLaughlin suffered a material reduction after the change of control, either with respect to his responsibility on the job or his vacation benefits. (See id. § D.(1).)

A. McLaughlin's Position

McLaughlin asserts that he suffered both a material reduction in his job responsibilities and his vacation benefits. With respect to his job responsibilities, McLaughlin alleges that for sixteen months, starting in April 1989, he assumed significant responsibilities because the Mill lacked a General Production Superintendent. (Pl.'s Opp'n Reynolds' Mot. Summ.J. at 6.) In August 1990, after the Georgia-Pacific takeover, the company hired a permanent production manager and, as a result, McLaughlin's job responsibilities decreased. (Id. at 7.) "After the change of control, not only did Mr. McLaughlin lose material additional responsibilities and authority that he had had for sixteen months after April of 1989, but he also lost material responsibilities and authority that he had had ... prior to April of 1989." (Id. at 8-9 (citing McLaughlin Aff. ¶ 26).)

With respect to his vacation benefits, McLaughlin asserts that after the change in control, the new Mill manager, installed after the change of control, announced that any unused, accumulated vacation time not taken before December 31, 1990 would be forfeited. (Id. at 10 (citing Reynolds Aff. Ex. R.).) McLaughlin alleges that this change in policy caused him to lose 19 weeks of regular banked vacation time as well as 51 weeks of OEVC vacation time he otherwise could have taken after December 31, 1990. (Id. at 11.) In light of these alleged reductions in responsibilities and benefits, McLaughlin contends that the EPP requires that he be paid for his owed, accrued vacation time.

B. Defendants' Positions

Defendants Reynolds and the EPP respond that during the period in which McLaughlin purportedly assumed greater job responsibilities, it was Mr. Lee Bingham, and not McLaughlin, who performed the duties and responsibilities of the vacant managerial position. (Reynolds and EPP's Mem. Supp.Mot.Summ.J. at 15.) "Plaintiff merely performed routine matters for Mr. Bingham on the few occasions he was away...." (Id.) Accordingly, Reynolds and the EPP argue that once the company hired a permanent production manager, McLaughlin's responsibilities did not materially decrease.

As to McLaughlin's alleged decrease in vacation benefits, Reynolds and the EPP argue simply that the "alleged OEVC was accrued from 1985 through 1987 ... Whatever claims plaintiff may have for OEVC relate to a practice that predated the Change of Control and had been eliminated as of the Change of Control." (Id. at 19.) They assert in addition that Plaintiff admits "that he was paid in full for those nineteen weeks of regular paid vacation after his resignation." (Reynolds and EPP's Reply at 4.)

Given the parties' conflicting assertions and characterizations, it is clear to this Court that there are material questions of fact with respect to whether McLaughlin suffered either a reduction in benefits or a reduction in job responsibilities. The Court's inquiry, however, is not over. Despite the factual questions that remain, Defendants all argue that they are entitled to judgment, in any event, because Reynolds's determination as to McLaughlin's eligibility was not arbitrary and capricious.

C. Standard of Review

The standard of review in an ERISA action is determined according to the terms of the plan under which the benefits were allegedly denied. Thus, a "district court reviews ERISA claims arising under 29 U.S.C. § 1132(a)(1)(B) de novo unless the benefit plan in question confers upon the administrator `discretionary authority to determine eligibility for benefits or to construe the terms of the plan.'" Rodriguez-Abreu v. Chase Manhattan Bank, 986 F.2d 580, 583 (1st Cir.1993) (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956-57, 103 L.Ed.2d 80 (1989)). See also Allen v. Adage, Inc., 967 F.2d 695, 697 (1st Cir.1992) ("Except in those cases where a different level of scrutiny is indicated in the benefit plan itself, the district court considers a denial-of-benefits challenge afresh, without deferring...