Meredith v. Navistar Intern. Transp. Corp.

• Decision Date: 18 June 1991
• Docket Number: No. 90-1989,90-1989
• Citation: 935 F.2d 124
• Parties: , 13 Employee Benefits Ca 2715 Albert L. MEREDITH, Plaintiff-Appellant, v. NAVISTAR INTERNATIONAL TRANSPORTATION CORPORATION, and Its Retirement Plan for Salaried Employees, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 124

935 F.2d 124

19 Fed.R.Serv.3d 1313, 13 Employee Benefits Ca 2715

Albert L. MEREDITH, Plaintiff-Appellant, v. NAVISTAR INTERNATIONAL TRANSPORTATION CORPORATION, and Its Retirement Plan for Salaried Employees, Defendant-Appellee.

No. 90-1989.

United States Court of Appeals Seventh Circuit.

Argued Jan. 8, 1991.

Decided June 18, 1991.

Patrick H. Mulvany, Indianapolis, Ind., for plaintiff-appellant.

Michael A. Bergin, Charles B. Baldwin, Locke, Reynolds, Boyd & Weisell, Indianapolis, Ind., for defendant-appellee.

Before BAUER, Chief Judge, WOOD, Jr., Circuit Judge, and ESCHBACH, Senior Circuit Judge.

BAUER, Chief Judge.

The issue in this appeal is whether Appellee Navistar International Transportation Corp. and its retirement plan (collectively "Navistar") discharged and/or discriminated against Appellant Albert Meredith in order to interfere with Meredith's pension rights, in violation of the Employee Retirement Income Security Act ("ERISA"). 29 U.S.C. Secs. 1001-1461. After a two-day bench trial, the district court found that Meredith had failed to produce any evidence of "any intent whatsoever on anybody's part" to interfere with his ERISA rights, and, therefore, entered judgment in favor of Navistar. Meredith appeals from that judgment. We affirm.

I.

After almost 25 years with Navistar (and its predecessors), Albert Meredith began to think about retiring. He had a weak ticker, and took a month off in early 1987 to get it checked out. His cardiologist told him he could go back to work, but he should avoid stress. From mid- to late 1987, Meredith, then age 56, gave it his best shot, but he still felt tired all the time. It did not help matters any that he had to commute every week from Louisville, Kentucky, where he lived with his wife and daughter, to Indianapolis, Indiana, where he worked as a millroom foreman.

Come November 1987, Meredith was doing more than just thinking about retiring. He already had discussed the idea several times with his supervisor, John Flora, and in November he asked Jim Graddy, the plant personnel manager, to work up what his pension benefits would be if he retired. Graddy gave Meredith more than one estimate, but all the estimates hovered at about $1,000 per month. Graddy also told Meredith that, beginning in 1988, the health insurance benefits for Navistar employees and their families would change, such that he would owe $75.00 per month in premiums. (Up to that time, health coverage had been free of charge.) If he retired before the end of 1987, he could avoid these payments. Also, Meredith, like every other Navistar employee, had heard rumors that a reduction in force was expected the following year. All of this was enough to convince Meredith. Before leaving on vacation in early December, he executed a "Request to Retire" form, listing his expected last day of work as December 23, 1987.

While Meredith was on vacation, Graddy called him with some bad news. It seemed that Graddy miscalculated Meredith's pension benefits. Graddy told him that the actual payment would be approximately $970 per month, about $150 per month less than Graddy's most recent estimate. Graddy also sent Meredith a copy of the revised estimate. Meredith was not at all happy. He told Graddy that he and his family could not live on that kind of money. Nonetheless, Meredith told Graddy to submit his Request to Retire form to Navistar's headquarters in Chicago. Meredith said he would await the response from the Chicago office, which had the authority to calculate the actual amount of pension payments.

When Meredith returned in mid-December from his vacation, he met with Graddy and his supervisors to make the final decision whether to retire. The trial testimony differed sharply on the nature and content of these meetings. Meredith claimed that he was told he had to retire or lose his job. Graddy and other Navistar management claimed that they told him there was a chance that part of his job would be eliminated in 1988, but if he chose to stay, there would be a job for him. In any event, the decision was made that Meredith would leave Navistar. Gary Stites, Meredith's superintendent, executed a letter stating that Meredith was to be "involuntarily separated as of December 31, 1987," due to a "reduction in Managerial force." The letter was back-dated so that it would pre-date Meredith's Request to Retire form. Stites and other Navistar management testified that they rigged-up this "separation" because they felt badly about the mis-calculation of Meredith's benefits and wanted to give him an extra bonus of some sort. Because of the "involuntary separation" ruse, Meredith was paid a $9,000 separation payment to which he would not have been entitled had he simply retired.

In February 1988, Meredith signed the necessary papers to make his retirement final. Soon thereafter, Meredith received his lump sum payment of $9,000, and began receiving his monthly pension checks from the Navistar fund. He also retained full health insurance coverage for his family at no cost to him. He did not remain idle, however. Even before he left the employ of Navistar, Meredith had lined up a job in Elizabethtown, Kentucky, much closer to home. Meredith continues to work at that job.

At trial, Navistar's director of employee pensions testified as to the effect on the pension fund of Meredith's early retirement. Because Meredith took early retirement, the fund will pay him, if he lives until age 80, over $20,000 more than if he would have worked until age 62 and then retired, which is what he claims he wanted to do. Meredith also will save over $11,000 in insurance premiums that he would have owed. These facts, plus the $9,000 separation payment, mean that Meredith is in a much better financial position in terms of his retirement benefits--and Navistar in a correspondingly worse position--than if he would have continued working.

Not wanting to let Navistar's good deed go unpunished, Meredith sued Navistar under ERISA. Meredith claimed that Navistar unlawfully interfered with his pension rights by discharging him and/or forcing him into early retirement. See 29 U.S.C. Sec. 1140. This claim went to trial before the district court in March 1990. After hearing testimony from Meredith and various Navistar employees, the court found that Meredith had failed to prove that his "separation" was arranged with the intent to interfere with his pension rights, nor did he prove that he was forced into early retirement. The court found instead that Meredith chose to retire early, at least in part because of the financial gain he would reap from that decision. The court also found that "the evidence is without dispute that the pension fund would have been many thousands of dollars better off had [Meredith] continued in his employment," and that Navistar management employees went "out of their way to help [Meredith] by giving him this extra separation pay."

In accordance with these findings, the court entered judgment dismissing Meredith's claim. The court did not award attorney's fees to Navistar, as Navistar withdrew its request for such fees. (Pursuant to Sec. 502(g)(1) of ERISA, 29 U.S.C. Sec. 1132(g)(1), the district court, in its discretion, could have awarded Navistar a reasonable attorney's fee and costs of action, provided that Navistar was the prevailing party and Meredith's position was not substantially justified or no special circumstances were present that would have made a fee award unjust. See Davis v. Chicago Municipal Employees Credit Union, 891 F.2d 182, 184 (7th Cir.1989).) Meredith filed a timely appeal.

II.

Section 510 of ERISA provides, in pertinent part:

It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary ... for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan....

29 U.S.C. Sec. 1140. "By its terms Sec. 510 protects plan participants from termination motivated by an employer's desire to prevent a pension from vesting." Ingersoll-Rand Co. v. McClendon, --- U.S. ----, 111 S.Ct. 478, 485, 112 L.Ed.2d 474 (1990). See also Conkwright v. Westinghouse Electric Corp., 933 F.2d 231, 237 (4th Cir.1991) ("[I]t has been recognized that the primary focus of Sec. 510 is to prevent unscrupulous employers from discharging or harassing their employees in order to keep them from obtaining vested pension rights.") (quotations omitted).

Meredith could recover under Sec. 510 if he could show that he was terminated or forced to retire by Navistar "because of a specific intent to interfere with ERISA rights ...; no action lies where the alleged loss of rights is a mere consequence, as opposed to a motivating factor behind the termination." Dytrt v. Mountain State Telephone and Telegraph Co., 921 F.2d 889, 896 (9th Cir.1990) (citations omitted). See also Turner v. Schering-Plough Corp., 901 F.2d 335, 347 (3d Cir.1990) ("To recover under Sec. 510 the employee must show that the employer made a conscious decision to interfere with the employee's attainment of pension eligibility or greater benefits."). If Meredith had made a prima facie showing that Navistar discharged or harassed him, and that the desire to reduce his pension benefits was a "determinative factor" in that action, the burden would have shifted to Navistar to articulate a permissible reason for its action. See id.

The district court found that Meredith fell short of meeting his burden of proving a Sec. 510 violation for (at least) three reasons: 1) the evidence showed that Navistar did not terminate Meredith or force him to take early retirement, but rather that Meredith chose to retire; 2) the evidence showed that Navistar did not harbor the specific intent to interfere with Meredith's ERISA rights, but rather went out of its way to get him additional benefits; and 3) the evidence showed that Meredith...