Phillips v. Amoco Oil Co.

• Decision Date: 18 June 1985
• Docket Number: Civ.A. CV80-L-1416-S.
• Parties: Willie D. PHILLIPS, et al., Plaintiffs, v. AMOCO OIL COMPANY, corporation, et al., Defendants.
• Court: U.S. District Court — Northern District of Alabama

614 F. Supp. 694

Willie D. PHILLIPS, et al., Plaintiffs, v. AMOCO OIL COMPANY, corporation, et al., Defendants.

Civ.A. CV80-L-1416-S.

United States District Court, N.D. Alabama, S.D.

June 18, 1985.^*

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J. Gusty Yearout, G. Thomas Yearout, Yearout, Hardy & Myers, P.C., Birmingham, Ala., for plaintiffs.

William B. Hairston, Engel, Hairston, Moses & Johanson, Stephen E. Brown, James P. Alexander, Bradley, Arant, Rose & White, Birmingham, Ala., for defendants.

MEMORANDUM OF OPINION

LYNNE, Senior District Judge.

This is an action seeking the recovery of specified employee benefits, together with compensatory and punitive damages. It stems from the sale of a liquid propane gas operation by defendant Amoco Oil Company ("Amoco") to defendant Northern Propane Gas Company ("Norgas"). The plaintiffs have cast their net wide, alleging that the sale violated no less than eight sections of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et. seq. Moreover, in apparent recognition of the fact that such a wide net is bound to develop a few holes, the plaintiffs have tacked on certain state law claims as well. The jurisdiction of the Court is invoked under 29 U.S.C. § 1132, and the doctrine of pendent jurisdiction.¹

After numerous pleading amendments and four years of extensive discovery, the legal sufficiency of these claims may now be tested. Both Amoco² and Norgas have moved for summary judgment based upon the pleadings, affidavits, depositions, stipulations and other documents now on file.³ Upon careful review of the record as it now stands, the Court is convinced that all defendants are entitled to judgment as a matter of law on each and every claim asserted by the plaintiffs.

BACKGROUND

The following facts are undisputed. In the years before 1979, Amoco operated a business, in Alabama and elsewhere in the southeastern United States, which sold liquid propane gas ("LPG"). Each of the plaintiffs in this action was an employee of Amoco working in the LPG operation in Alabama. As employees of Amoco, the plaintiffs were eligible to participate in the Employee Retirement Plan of Standard Oil Company and Participating Companies (hereinafter referred to as "the Standard Plan" or "the Amoco Plan"). Prior to May, 1979, Amoco began to seek a purchaser for its Southeastern LPG operations. On May 4, 1979, defendant Norgas submitted an offer to purchase Amoco's LPG facilities in the southeastern United States, contingent upon approval of the Board of Directors of its parent company. In that offer, Norgas specifically noted that retirement benefits for LPG employees who became employees of Norgas would be based on their years of service with Norgas. In other words, Norgas' initial offer to purchase the Amoco operations contemplated that, although years of service with Amoco would be recognized by Norgas for certain employee benefit purposes, those prior years of service would not be recognized for benefit accrual purposes under the Norgas retirement plan.

By a letter dated May 10, 1979, Amoco accepted Norgas' offer. Amoco and Norgas then exchanged information and negotiated the definitive agreement. The parties signed the final sale contract on July 31, 1979. Section 2.5 of the sale contract provided in part:

Buyer Norgas agrees to offer employment to each regular full-time employee of Seller Amoco presently assigned to the business represented by the various assets subject to this Contract, except employees on long-term and/or permanent disability ... upon the following conditions: current salary and appropriate salary administration plan will be recognized; ... retirement benefits under the Buyer's Retirement Income Protection Plan will be based on years with Buyer except that continuous years of service with Seller immediately prior to the transfer date shall be credited by Buyer for vesting purposes....

The sale of Amoco's LPG operations to Norgas was closed effective 12:01 A.M. on September 4, 1979. The former Amoco employees, including plaintiffs, began their employment with Norgas on that date. Immediately after the sale of Amoco's LPG operations to Norgas, each plaintiff had the same job responsibilities and was compensated at the same rate of pay as he had enjoyed at Amoco. Exactly one year later, on September 4, 1980, this action ensued.

In this action, plaintiffs have spun a tangled web of arguably related and intertwined claims, portions of which are intended to trap Amoco alone, and other portions of which are intended to ensnare both Amoco and Norgas.⁴ The substance of these claims ranges from the honestly debatable to the utterly amorphous. The plaintiffs' failure to filter out the latter has rendered this litigation far more burdensome and unwieldly for the parties and the Court than it might otherwise have been.

First, the plaintiffs allege a number of state law claims. Thus, plaintiffs claim that at various times Amoco made misrepresentations regarding plaintiffs' future job security, the security of their employee benefits, and the existence of plans by Amoco to divest itself of the LPG operation, thereby inducing plaintiffs to remain "in place" so as to enhance the value of Amoco's LPG operation as a salable "going concern." (Pretrial Order at 10-11). Moreover, plaintiffs allege that they had contracts for lifetime employment with Amoco, which Amoco breached when it sold the going LPG operation to Norgas and terminated plaintiffs' association with Amoco. (Pretrial Order at 10). Finally, plaintiffs claim that Amoco and Norgas conspired to misrepresent certain facts regarding the Amoco-Norgas sale — specifically, the fact that plaintiffs' years of service with Amoco would not be credited by Norgas for purposes of calculating retirement benefits under the Norgas retirement plan. (Pretrial Order at 12).

Although the state law claims are asserted vigorously by the plaintiffs, the heart of this litigation consists of a veritable barrage of ERISA claims. Plaintiffs contend that the terms of the Amoco-Norgas sale and the manner in which it was negotiated and effectuated violated at least eight sections of ERISA: 29 U.S.C. § 1022, § 1024, § 1056, § 1060, § 1104, § 1106, § 1140, and § 1141.

In the face of these allegations, the defendants contend that, based upon an extensive record developed through four years of ample discovery, defendants are entitled to judgment as a matter of law with respect to each of the plaintiffs' claims. For the reasons set forth below, the Court must agree with the defendants.

DISCUSSION

I. The State Law Claims

A. Lifetime Employment Contract

The Court will first address the state law claims, which may be disposed of without reaching the merits. The first of these claims concerns an alleged "lifetime employment contract" between plaintiffs and Amoco. Amoco has fervently denied entering into any lifetime employment contracts with the plaintiffs. However, assuming for purposes of this motion that such contracts existed, it is apparent as a matter of law that they were not breached on the undisputed facts of this case.

Although lifetime employment contracts are relatively rare in industry today, they do exist and they have been recognized by several states to be valid and binding. Generally, of course, the typical employment contracts which contain no fixed period of employment are construed as terminable at will by either party. See Peacock v. Virginia-Carolina Chemical Co., 221 Ala. 680, 130 So. 411 (1930). Under certain circumstances, however, employment contracts which purport to be terminable only at the will of the employee will be held to create a valid and binding contract of "permanent" or "lifetime" employment in favor of the employee. See Alabama Mills, Inc. v. Smith, 237 Ala. 296, 186 So. 699 (1939). Nevertheless, Alabama law on this question follows that of most other states which recognize lifetime employment contracts, and holds that there are certain limitations implied by law with regard to such contracts. Specifically, even where a lifetime employment contract is legally enforceable, the law implies the condition that the contract lasts only so long as the employer remains in the business for which the employee was hired and needs the particular services the employee was hired to perform. Alabama Mills, 186 So. at 701, 702. Accord, Bates v. Jim Walter Resources, Inc., 418 So.2d 903, 906 (Ala.1982); United Security Life Ins. Co. v. Gregory, 281 Ala. 264, 201 So.2d 853, 854-55 (1967); Jordan v. Mallard Exploration, Inc., 423 So.2d 896, 898-99 (Ala.App.1982).

In the present case, it is undisputed that Amoco sold its retail LPG business to Norgas, and abandoned the retail LPG business in Alabama. Prior to the sale, the various plaintiffs had held positions as salesmen, sales office supervisors, and sales and service representatives in various retail sales branches of Amoco's LPG operations.⁵ After the sale, it is uncontroverted on the record that Amoco no longer engaged in the retail sales of liquid propane, and no longer needed the services the plaintiffs had been hired to perform.⁶ This being so, the above-cited authorities make it clear as a matter of law that Amoco is entitled to summary judgment on the plaintiffs' claims for breach of lifetime employment contracts. Even assuming that such contracts were made, they were not breached, since they terminated as a matter of law when Amoco left the retail LPG business in Alabama. Cf. Jordan v. Mallard Exploration, Inc., 423 So.2d at 897-99.

The plaintiffs attempt in vain to escape the burden of the long line of precedents mandating this result. First, the plaintiffs argue that Amoco still does some business in Alabama, and that even after leaving the business of retail sales of liquid propane, Amoco was under a contractual duty to transfer the plaintiffs to some other type of work in some other...