Nash v. Trustees of Boston University

• Citation: 946 F.2d 960
• Decision Date: 04 December 1990
• Docket Number: No. 90-1728,90-1728
• Parties: , 70 Ed. Law Rep. 763, 14 Employee Benefits Cas. 1701 Paul NASH, Plaintiff, Appellant, v. TRUSTEES OF BOSTON UNIVERSITY, Defendant, Appellee. . Heard
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

Page 960

946 F.2d 960

60 USLW 2293, 70 Ed. Law Rep. 763,

14 Employee Benefits Cas. 1701

Paul NASH, Plaintiff, Appellant, v. TRUSTEES OF BOSTON UNIVERSITY, Defendant, Appellee.

No. 90-1728.

United States Court of Appeals First Circuit.

Heard Dec. 4, 1990.

Decided Oct. 15, 1991.

Steven E. Snow with whom Partridge, Snow & Hahn, Providence, R.I., were on brief, for plaintiff-appellant.

Dennis C. Hart with whom Office of the General Counsel, Boston University, Boston, Mass., was on brief, for defendant, appellee.

Before BREYER, Chief Judge, CAMPBELL and CYR, Circuit Judges.

CYR, Circuit Judge.

Paul Nash, formerly a tenured professor at Boston University (otherwise: "BU"), appeals the dismissal of his complaint for breach of contract and for violation of the Employee Retirement Income Security Act ("ERISA"). The district court determined that since Nash fraudulently induced BU to enter into their so-called early retirement agreement (otherwise: "agreement") the agreement is subject to rescission and, assumedly, the ERISA claim is mooted.

I FACTS

Nash chaired BU's Department of Humanistic Education and Human Services ("HEHS"). On August 1, 1984, BU notified Nash that it intended to discontinue the HEHS program. As required by the collective bargaining agreement ("CBA"), the notice indicated that BU would make every effort to reassign Nash to a suitable position, with the same rank and salary, but that he would be discharged if no such position were available. After obtaining an offer of employment from the Rhode Island School of Design ("RISD"), Nash initiated a series of meetings with BU officials.

At the first meeting, on August 8, Nash met with BU President John Silber and expressed concern as to whether he would be retained as a faculty member. Nash testified that he told Silber about the RISD offer and that he was being urged to make a decision. Silber categorically denied that Nash ever told him about the RISD offer.

Prior to the next meeting, held on August 13 with BU Provost Jon Westling, Nash prepared a document indicating that he "was seeking, despite the termination of the program in [HEHS], to continue to teach at [BU] as a tenured professor." The document listed various departments in which Nash considered himself "competent and willing" to serve as a member of the BU faculty. At the August 13 meeting, Nash informed Westling that he had received a job offer from RISD.

On August 14, during a meeting with Joseph Meng, BU Vice President for External Programs, Nash for the first time mentioned early retirement, and the process was explained to him. At an August 27 meeting with Westling and Meng, Nash presented a written proposal for early retirement. ¹ Meng testified that Nash was asked specifically "about the job at [RISD]," and that Nash responded, "That's out of the question; I kept them waiting too long; they are talking to another candidate." Westling confirmed that Nash stated that he had let the RISD position pass. Nash denied any discussion of the RISD job at the August 27 meeting.

According to Meng, Nash was informed at the August 27 meeting that his employment at BU was secure, but expressed no interest in remaining, stating instead "that he wanted to retire from [BU], do consulting and writing and was now just absolutely interested in an early retirement deal." Although Nash contradicted Meng's testimony, it is not disputed that by August 27 Nash had given RISD his oral acceptance. On August 31, one day after Nash formally accepted the RISD position, Meng told Nash that "his job was secure after the termination of the HEHS program so he need not feel pressured into seeking early retirement." Nash did not tell Meng that he had accepted the RISD position.

On September 10, almost two weeks after his written acceptance of the RISD position, Nash and BU executed the early retirement agreement now in litigation. The agreement entitled Nash to a lump-sum payment of $88,230, the office of Professor Emeritus, and the right to arrange for an adjunct teaching position in the School of Education with compensation over and above the lump-sum payment provided under the agreement. Nash agreed to surrender all tenure rights, waive all claims against BU, and to serve as an advisor to HEHS students for the next two years.

The district court found BU's version of these events "infinitely logical." The court concluded that "Meng would never have negotiated an early retirement agreement if he knew Nash had secured for himself a job at RISD." As the court concluded that Nash's credibility had been undermined by several falsehoods, ² it rejected Nash's version of the events as "inconceivable."

II DISCUSSION

Sufficiency of Evidence of Fraud

In order to make out a claim of fraud in the inducement under Massachusetts law, BU was required to establish a false representation material to the negotiations upon which BU reasonably relied in entering into the agreement. See Turner v. Johnson & Johnson, 809 F.2d 90, 95 (1st Cir.1986). Nash disputes the sufficiency of the evidence establishing each of these elements, except the false representation element. We review the district court's findings of fact for clear error, United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 541-42, 92 L.Ed. 746 (1948); Chamberlin v. 101 Realty, Inc., 915 F.2d 777, 781 (1st Cir.1990); see Fed.R.Civ.P. 52(a), and find none.

According to Nash, BU entered into the agreement not because it was unaware of his employment by RISD but because BU feared he might prevail on a wrongful termination claim under the arbitration clause in the CBA. Nash points out that BU entered into early retirement agreements with other HEHS faculty members and that Meng testified that the purpose behind those agreements was to "obtain their release and waiver of claims that their termination was illegal and that the termination of the HEHS program violated the terms of the collective bargaining agreement." Nash further contends that, as the HEHS program director, he was in a far better position to challenge its termination than were his colleagues.

Nash's contention is predicated entirely on the assertion that he was wrongfully terminated. The district court found, however, that he was not terminated by BU but that he was expressly told that he was free to remain on the BU faculty. The record strongly supports the finding that Nash rejected BU's invitation to remain as a full-time BU faculty member, because he preferred to pursue the early retirement agreement. ³ Moreover, the record is devoid of evidence that a waiver of any potential legal claim for wrongful termination was ever a point of contention, or even of discussion, in Nash's negotiations with BU. ⁴ Conversely, several BU officials testified that Nash's alternative employment opportunities were broached in virtually every communication between the parties during the relevant period. Finally, ample evidence supported the district court finding that BU would not have entered into the agreement had Nash not concealed his newfound RISD employment. ⁵

The district court findings were not clearly erroneous.

ERISA Claims

The district court concluded that Nash's fraudulent inducement of the agreement obviated the need to consider the ERISA claims predicated on the agreement. Nash contends that the district court erred, ⁶ in that the agreement is an employee benefit plan ⁷ under ERISA and that his rights under the plan are therefore "nonforfeitable." 29 U.S.C. § 1053(a). Accordingly, in addition to attorney fees, Nash seeks "full restitution" under the agreement, notwithstanding the finding of fraud in its inducement.

Thus, the threshold hurdle Nash encounters is the district court ruling that BU's successful affirmative defense of fraud in the inducement of the early retirement agreement precluded his ERISA claims. For present purposes we assume, arguendo, that an agreement of the type executed by BU and Nash would constitute an "employee benefit plan" under ERISA. We likewise assume, again without deciding, that state law contract principles are preempted under ERISA. ⁸

ERISA contains no body of contract principles informing the interpretation and enforcement of employee benefit plans. Scott v. Gulf Oil Corp., 754 F.2d 1499, 1501-02 (9th Cir.1985) (acknowledging absence of contract principles); Rockney v. Blohorn, 877 F.2d 637, 643 (8th Cir.1989) (same). Congress intended instead "that a federal common law of rights and obligations under ERISA-regulated plans would develop." Pilot Life, 481 U.S. at 56, 107 S.Ct. at 1558. Kwatcher v. Massachusetts Service Employees Pension Fund, 879 F.2d 957, 966 (1st Cir.1989); Burnham v. Guardian Life Ins. Co., 873 F.2d 486, 489 (1st Cir.1989).

The ERISA claim presented by Nash depends on whether the body of federal common law contract principles Congress left to judicial development permissibly encompasses the affirmative defense of fraud in the inducement of the alleged ERISA plan. As we have recognized, "Congress specifically contemplated that federal courts, in the interests of justice, would engage in interstitial lawmaking in ERISA cases in much the same way as the courts fashioned a federal common law of labor relations under section 301 of [the Labor Management Relations Act]." Kwatcher, 879 F.2d at 966 (emphasis added); see Pilot Life, 481 U.S. at 55-56, 107 S.Ct. at 1557-58 (discussing legislative history). The approach is to be a flexible one. As the Supreme Court observed regarding the development of federal common law under section 301 of the Labor Management Relations Act:

[Some legal problems] will lie in the penumbra of express statutory mandates. Some will lack express statutory sanction but will be solved by looking at the policy of the legislation and fashioning a remedy that will effectuate that policy. The range of judicial inventiveness will be determined by the nature of the problem. Federal interpretation of...