Pane v. RCA Corp.
| Decision Date | 03 April 1989 |
| Docket Number | Nos. 88-5758,88-5872,s. 88-5758 |
| Citation | 868 F.2d 631 |
| Parties | , 10 Employee Benefits Ca 2079 Joseph PANE, Appellant, v. RCA CORPORATION, Appellee. |
| Court | U.S. Court of Appeals — Third Circuit |
Rapp, White, Janssen & German, Ltd., Henry H. Janssen (argued), Tanya M. Sweet, Philadelphia, Pa., for appellant, Joseph Pane.
Mark S. Dichter (argued), Michael L. Banks, and Janet Y. Gadient, Philadelphia, Pa., for appellee RCA Corp. (Morgan, Lewis & Bockius, of counsel).
Before GIBBONS, Chief Judge, SEITZ and GREENBERG, Circuit Judges.
Joseph Pane, an employee of RCA Corporation (RCA) appeals from a judgment in favor of RCA in his suit under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Sec. 1001 et seq. and New Jersey common law. In that suit Pane claims that RCA denied him a severance agreement awarded to many of its corporate managers, discriminated against him to prevent his eligibility for such an agreement, and retaliated against him because of his efforts to secure it. The district court rejected Pane's demand for a jury trial, and rejected his claims. We will affirm.
Pane, who is fifty-nine years old, is currently employed by RCA as Director of Special Programs. In 1985, he was division vice president and general manager of RCA's government volume production. Late in 1985, RCA learned that General Electric Company (GE) was considering making a tender offer for RCA's shares. At a special meeting of RCA's board of directors on December 8, 1985, its attorney advised the board that if a merger agreement was reached consummation of the merger would take at least nine months. Since after a merger some RCA executives might become superfluous, uncertainty about executives' employment future could have devastating effects on RCA's operations. To prevent the loss of key personnel during the transitional phase, the attorney recommended that the board authorize employment agreements and severance agreements to a small group of executives. He then reviewed the terms of the proposed agreements, and informed the board that RCA's president and chief executive officer, Robert Frederick, had identified certain individuals and categories of executives whom he would recommend be offered severance agreements if the board authorized them. The board authorized negotiations with GE, authorized employment agreements for some executives, 1 and adopted the following resolution regarding severance agreements:
RESOLVED, that it is advisable and in the best interests of the Corporation and its shareholders that the Corporation enter into severance agreements (the "Severance Agreements") with certain executives of the Corporation, substantially in the form presented and described to this Meeting and with the categories of persons described to this Meeting, and that the Chairman of the Board, the President and Chief Executive Officer and any Senior Vice President of the Corporation be, and each of them hereby is, authorized to execute and deliver the Severance Agreements, with such changes or amendments as any such person may deem necessary or advisable, the execution of any Severance Agreement or any amendment thereto conclusively to evidence due authorization thereof by the Board of Directors.
App. 2014. Pane's name was on the list of possible severance agreement candidates which Frederick had on December 8.
The board took no specific action with respect to that list. On December 9, 1985, Frederick met with RCA's senior vice president of employee relations to review the severance agreement list. Eight names were eliminated and nine names added. Pane's name was still on the December 9 list.
On December 11, 1985, the board convened again to consider a proposed merger agreement with GE, which was approved. Each director was given a revised form of severance agreement and a list of executives to be offered such agreement. Pane's name was on the list. The board took the following action:
RESOLVED, that it is advisable and in the best interests of the Corporation and its stockholders that the Corporation enter into severance agreements (the "Severance Agreements") with certain executives of the Corporation as described to this Meeting, such agreements to be substantially in the form of the agreement presented to the Board of Directors and described to the Board at this Meeting, and that the Chairman of the Board, the President and Chief Executive Officer and any Senior Vice President of the Corporation be, and each of them hereby is, authorized to execute and deliver the Severance Agreements, with such changes as any such person may deem necessary or advisable, the execution of the Severance Agreements or any amendments thereto conclusively to evidence due authorization thereof by the Board of Directors.
App. 2035. Thereafter Frederick executed a form of the severance agreement for each executive on the list. The executed copy in Pane's name was never delivered to him.
On December 13, 1985, Pane attended a staff meeting of the RCA Aerospace and Defense Division at which John Rittenhouse, RCA's executive vice president explained and discussed the severance agreements. At the conclusion of this meeting, Donald Gillis, RCA's staff vice president of employee relations for Aerospace and Defense, met separately with Rittenhouse and suggested that Pane not receive a severance agreement. RCA contends, and Pane disputes, that the reason for Gillis' recommendation was a decision made before the merger talks with GE, that Pane was to be replaced as the manager of government volume production.
On December 27, 1985, Pane received from RCA a letter signed by its senior vice president and general counsel, Samuel Murphy, Jr., stating that the blank in a line in the December 11, 1985 severance agreement should be filled in with the name General Electric Company. The accompanying memorandum from a senior vice president administering the severance agreements stated that Murphy's letter "should be filed with the Limited Severance Agreement recently provided to you." App. 33. No such agreement had been provided to Pane. Additionally, on December 26, 1985, Pane received a three-page memorandum addressed to "Limited Severance Plan Participants" describing how such participants could increase the value of their severance payments by exercising any available stock options they held by the end of the year.
Pane exercised his RCA stock options, purchasing 234 shares at $37.875/share. He paid for the stock with the proceeds of a loan arranged by RCA from Bankers Trust Company. RCA reimbursed Pane for all interest expenses incurred in connection with this loan. The exercise of the option resulted in a gain for Pane of over $6,500. Pane, in fact, was never given a severance agreement.
Pane was later demoted from the position of general manager of RCA's government volume production to his present position.
Pane filed a complaint alleging that RCA's severance agreements are an employee benefit plan within the meaning of ERISA and that its withholding of such an agreement from him violated section 510, 29 U.S.C. Sec. 1140. He also pleaded state law claims for breach of contract (promissory estoppel), breach of covenants of good faith and fair dealing, and intentional infliction of emotional distress. He sought compensatory and punitive damages. The complaint contains a demand for jury trial. RCA moved to dismiss Pane's state law claims and his claim for punitive damages, and to strike his demand for a jury trial. These motions were granted on August 11, 1987. 667 F.Supp. 168 (D.N.J. 1987).
Thereafter both Pane and RCA moved for summary judgment on Pane's ERISA claim. Those motions were denied on March 2, 1988. A non-jury trial was held, and the court rendered a lengthy opinion finding no cause for action. Judgment in favor of RCA was entered on September 22, 1988. This appeal followed.
The district court dismissed Pane's New Jersey law claims, including his claim for punitive damages, on the ground that those claims are preempted by ERISA. Pane contends that this ruling was error. His argument in this respect is inconsistent with his reliance on ERISA as a basis for federal question jurisdiction. To support such jurisdiction he alleges that the severance agreements are an employee benefit plan under ERISA.
Section 514(a) of ERISA provides that it "shall supersede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. Sec. 1144(a) (1982). The term "relate to" has been construed broadly. "A law 'relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2899-2900, 77 L.Ed.2d 490 (1983). See also Pilot Life Ins. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 1553, 95 L.Ed.2d 39 (1987); Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 482 U.S. 1, 107 S.Ct. 1542, 1547, 95 L.Ed.2d 55 (1987). The term "employee benefit plan" was considered in Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987). The Court determined that a lump sum payment, triggered by a single event, requiring no administrative scheme, was not an employee benefit plan for ERISA. Negatively, Fort Halifax Packing suggests that RCA's plan for awarding severance agreements to certain key executives is such a plan. It came into being on December 8, 1985, when RCA's board of directors authorized the concept and RCA's management identified a potential class of participants. It required an administrative scheme. Thus the Court correctly held that the plan for awarding severance agreements is an ERISA employee benefit plan.
The remaining question is whether the three state law counts which...
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