Millsap v. McDonnell Douglas Corp., 94CV633.

• Citation: 162 F.Supp.2d 1262
• Decision Date: 05 September 2001
• Docket Number: No. 94CV633.,94CV633.
• Parties: James R. MILLSAP, et al. Plaintiffs, v. MCDONNELL DOUGLAS CORPORATION, a foreign corporation, Defendant.
• Court: U.S. District Court — Northern District of Oklahoma

162 F.Supp.2d 1262

James R. MILLSAP, et al. Plaintiffs, v. MCDONNELL DOUGLAS CORPORATION, a foreign corporation, Defendant.

No. 94CV633.

United States District Court, N.D. Oklahoma.

September 5, 2001.

Joseph R. Farris, James David Mustain, Tony Michael Graham, Feldman, Franden, Woodward, Farris & Taylor, Tulsa, OK, J. Derek Ingle, Wilson, Cain & Acquaviva, Tulsa, OK, Michael M. Mulder, Joan H. Burger, Thomas R. Meites, Josie Raimond, Meites, Frackman, Mulder & Burger, Christopher G. Mackaronis, Bell, Boyd & Lloyd, Washington, DC, for Plaintiffs.

Thomas Dunn Robertson, S.M. Fallis, Jr., Carl D. Hall, Jr., Paula J. Lynch, John Edward Harper, Jr., Nichols, Wolfe, Stamper, Nally & Fallis, Tulsa, OK, for Defendant.

ORDER

HOLMES, District Judge.

This matter comes before the Court on Plaintiffs' claims arising under 42 U.S. § 1140, the Employee Retirement Income Security Act ("ERISA"). A trial was held in this case April 19-29, 1999. Following the trial, a number of additional proceedings were conducted with respect to certain issues raised at trial.

Based upon a review of the entire record, the Court hereby enters the following findings of fact and conclusions of law.

I. FINDINGS OF FACTS

1. McDonnell Douglas Corporation ("MDC") was a corporation headquartered

in St. Louis, Missouri. In 1996, MDC was acquired by Boeing Corporation.

2. MDC manufactured and assembled military and commercial aircraft, missile systems, electronics and related products at facilities throughout the United States, and in foreign countries.

3. MDC long maintained a plant in Tulsa, Oklahoma. The plant was owned by the U.S. Air Force, and was known as Air Force Plant No. 3. The plant was originally used for the manufacturing of bombers in World War II, and was later used by MDC to perform work under various military contracts with the United States Government.

4. MDC's Tulsa facility was part of McDonnell Douglas Aerospace — East ("MDA-East"), an unincorporated operating division managed out of the St. Louis headquarters. The primary business of MDA-East was to manufacture and assemble military products, including fighter and attack aircraft, helicopters, and missile systems.

5. Plaintiffs are former employees of MDC at the Tulsa, Oklahoma plant. Plaintiffs were employed by MDC as of December 3, 1993, when the company announced the plant would be shut down.

6. While employed at MDC, Plaintiffs participated in one of MDC's two Employee Retirement Income Security Act ("ERISA") qualified retirement plans and one of MDC's retiree health care plans.

7. Plaintiffs brought this class action alleging that MDC violated Plaintiffs' rights under ERISA, 29 U.S.C. § 1001-1461. This Court certified this lawsuit as a class action of over 1,000 persons who were formerly employed by Defendant when it announced the Tulsa plant closing. Plaintiffs claim that MDC closed its Tulsa facilities for the purpose of depriving Plaintiffs of benefits covered by ERISA, in violation of section 510 of the statute.

A. Background

8. In the late 1980's and early 1990's, the amount of government defense contracting work available to MDC and other defense contractors was declining.

9. On June 20, 1990, John McDonnell issued a memorandum to all employees entitled "The Hard Reality." In this memo, Mr. McDonnell informed MDC employees that the company needed to reduce annual expenditures by $700 million a year. These expenditures were to come from all segments of the company and, according to the McDonnell memo, would include reductions in force that would affect the company's employees, of which there were then about 130,000 worldwide.

10. In 1991, MDC became concerned that its orders for production of the F-15 fighter jet had diminished to the point that there was a possibility the production line could go dead. While the company worked on the remaining orders from the United States Air Force, the Saudi government in 1991 expressed an interest in placing a substantial order for F-15's. The $9 billion Saudi order was of significant interest to employees at the Tulsa facility, where the F-15 aft-tail section for the planes was assembled, as well as the entire Tulsa community. The contract, however, was contingent upon approval by the United States Government in two respects: first, the President of the United States had to approve the sale, and second, the U.S. Congress thereafter had 30 days within which to pass a resolution overturning his decision.

11. In 1991 and 1992, Oklahoma's political delegation had considerable influence on defense matters. MDC personnel would later describe Oklahoma's delegation as follows: "Oklahoma's public officials as a group make that state perhaps the most potentially dangerous politically." Pltfs.Tr.Ex. 71, M152 003 0859.

12. In order to gain the political support it needed to win approval of the F-15 contract, the company repeatedly represented that MDC would preserve the jobs of its Tulsa employees if the F-15 sale was approved by the government.

13. Such representations were contained in MDC's 1991 Annual Report, which stated that award of the F-15 Saudi Arabia contract meant the preservation of "7,000 jobs" at the company:

Saudi Arabia expressed an interest in 1991 in expanding its F-15 fleet with the purchase of additional 72 Eagles. U.S. Government approval of the Saudi request would extend production of the F-15 to 1997 and preserve 7,000 jobs at MDC and another 33,000 jobs at subcontractors and suppliers nationwide.

Pltfs.Tr.Ex. 35, M152 005 0277.

14. MDC indicated that a substantial number of these "preserved jobs" would be in Tulsa. Tulsa plant manager Don Bittle testified:

In early '92 the company decided to have a series of U.S. Jobs Rally Now, of which Tulsa participated in, I believe it was May of '92. We invited, and they did attend, not only the local politicians but the national politicians, including the Governor of Oklahoma, all met with us and we had a rally out at Air Force Plant 3 extolling the need to have this sale made to continue jobs here at Tulsa. We also had Warren Beaver [Owen Bieber] who was the national leader of the UAW was here, also extolling that position, that that sale needed to go through to preserve the jobs at not only at St. Louis, but at Tulsa for the parts we were building.

Tr. 257.

15. At the rally in Tulsa, the employees, at Defendant's request, all signed a "huge" letter, urging the President to approve the sale and Congress not to override this decision. After the rally, workers were asked on numerous occasions to continue to lobby their congressional representatives in favor of the sale. Plaintiff Vera Lehman testified:

Yes, we had a rally — we had several rallies, but in May of '92 we had the 50th anniversary of McDonnell Douglas being in Tulsa. We had several officials from McDonnell Douglas, the corporate office, including Mr. Al Briggs and whatever, to lobby our congressmen that in the event that the president did offer them or suggest that they go ahead and sell that plane to the Saudis, that they would, you know, agree to that without any opposition. We signed a huge, huge letter, I mean all the employees signed this card that we sent to them, we wrote them, we called them. You know we were encouraged constantly to stay in contact with those people to have them to approve that sale.

Tr. 64-65.

16. Named Plaintiffs James Millsap, Fred Davis and Vera Lehman were employees with many years of service at MDC's Tulsa facility until the plant closed. Prior to the facility closing, they recalled being told on multiple occasions that if the company was awarded the F-15 contract with the Saudi government, the plant would be open for at least three more years. They were asked by the company to write letters and to sign cards, not only to their Congressmen but also to the President.

17. In response to these requests by MDC, the union and the company's employees lobbied the Oklahoma political delegation with letters and calls. The promise of at least three more years of work was made not only to MDC employees, but also at the job rally at which the President of the United States and several members of the Oklahoma congressional delegation were present. These promises were repeated on other occasions by the President of McDonnell Douglas Aerospace, John Capellupo, and the former general manager of the plant, Al Briggs, his successor, Don Bittle, and the plant director, Joe White. In addition, members of the Oklahoma political delegation were heard repeating the same promise to employees during their various visits to the plant.

18. On September 11, 1992, President Bush announced at a McDonnell Douglas job rally held in St. Louis that he had approved the $9 billion sale of the 72 F-15's to the Saudi government. This message was broadcast to employees and the public at the Tulsa plant, where a similar rally was underway.

19. The company's public relations staff took this occasion to repeat the representation from its 1991 Annual Report. The language was repeated almost verbatim from the Annual Report, only it specified that Tulsa was one of the locations where the work was to be preserved. The Tulsa World reported the company's representation on September 12, 1992:

McDonnell Douglas said the sale will extend production of the F-15 for at least three years and preserve 7,000 jobs in Tulsa and St. Louis.

Pltfs.Tr.Ex. 42 p. 1.

20. Such representations continued even after the Congressional disapproval period had expired. The company continued to feature its political campaign in its literature. It used a picture of members of its workforce standing under an American flag for the front and back cover of its 1992 Annual Report. This Annual Report contained a description of the event as: "Teammates celebrate announcement of an overseas sale, which will extend F-15 production for several years." Pltfs.Tr.Ex. 50.

* * * * * *

21. In 1991, a team was formed to study the...