Raymond v. Mobil Oil Corp.

• Decision Date: 20 January 1993
• Docket Number: No. 92-1298,92-1298
• Citation: 983 F.2d 1528
• Parties: , 16 Employee Benefits Cas. 1321 Frederic J. RAYMOND, J.A. Morrison, Robert G. Jacobsen, Donald F. Hill, George H. Liveris, Robert A. Irwin, A.D. Bond, Virginia Howard, Ira S. Reavis, and Billy Rhea Sargent, for themselves and on behalf of others similarly situated, and others as opt in or consent plaintiffs pursuant to applicable federal law, Plaintiffs-Appellees, v. MOBIL OIL CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1528

983 F.2d 1528

61 USLW 2474, 16 Employee Benefits Cas. 1321

Frederic J. RAYMOND, J.A. Morrison, Robert G. Jacobsen,

Donald F. Hill, George H. Liveris, Robert A. Irwin, A.D.

Bond, Virginia Howard, Ira S. Reavis, and Billy Rhea

Sargent, for themselves and on behalf of others similarly

situated, and others as opt in or consent plaintiffs pursuant to applicable federal law, Plaintiffs-Appellees, v. MOBIL OIL CORPORATION, Defendant-Appellant.

No. 92-1298.

United States Court of Appeals, Tenth Circuit.

Jan. 20, 1993.

Rodney R. Patula (Elizabeth C. Moran, Gary J. Benson, and Ricardo M. Barrera, with him on the briefs), Pryor, Carney & Johnson, Englewood, CO, for plaintiffs-appellees.

Michael E. Tigar, Austin, TX (Loren Kieve and John G. Koeltl, Debevoise & Plimpton, New York City, Harold A. Haddon and Saskia A. Jordan, Haddon, Morgan & Foreman, P.C., Denver, CO, with him on the briefs), for defendant-appellant.

Before LOGAN, ANDERSON, and BALDOCK, Circuit Judge.

STEPHEN H. ANDERSON, Circuit Judge.

In this class action involving the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461, defendant/appellant Mobil Oil Corporation appeals under 28 U.S.C. § 1292(b) from an interlocutory order of the district court denying Mobil's motion for summary judgment on certain claims of plaintiffs, former employees of Mobil. ¹ Plaintiffs' action arose out of the same pension plan amendment involved in a previous decision of this court, Mitchell v. Mobil Oil Corp., 896 F.2d 463 (10th Cir.), cert. denied, 498 U.S. 898, 111 S.Ct. 252, 112 L.Ed.2d 210 (1990), as well as a recent decision of the Fifth Circuit, Christopher v. Mobil Oil Corp., 950 F.2d 1209 (5th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 68, 121 L.Ed.2d 35 (1992). Because we conclude that plaintiffs are not "participants" in an ERISA plan, and therefore lack standing to sue under ERISA, we reverse the district court's denial of Mobil's motion for summary judgment and remand for entry of summary judgment in favor of Mobil.

BACKGROUND

The essential undisputed facts relevant to this appeal are set forth in the Mitchell and Christopher opinions. We quote at some length from each:

Until 1977, Mobil provided retirement benefits only in the form of an annuity. In 1977, Mobil added a "lump-sum option" to its retirement plan, the terms of which, for the purposes of this case, appear in the Retirement Plan of Mobil Oil Corporation as of January 1, 1984 (the Plan). Under the Plan, an employee could elect to receive a lump-sum payment which had the same equivalent actuarial value, discounted at 5%, as the annuity. In the case of early retirement In February 1984, Mobil amended the lump-sum option. It raised the discount rate prospectively from 5% to 9.5% and increased the eligibility threshold from $250,000 to $450,000. It also linked the new threshold to the Consumer Price Index (CPI), projecting a rise in the threshold to correlate with a rise in the CPI. These changes, however, would not take effect until at least six months after Mobil announced them, pending approval by the IRS. The delayed effective date gave employees who were eligible for the lump-sum payment under the old criteria, but who might not meet the new threshold, the opportunity to decide whether to retire and take the lump sum or to continue working and accumulating more pension benefits with the possibility that they might not accumulate sufficient additional benefits to meet the new threshold requirement at the date of their retirement.

                the Plan reduced the lump-sum payment by 5% for each year of retirement prior to the age of sixty.   To qualify for the lump-sum option, an employee had to elect this option prior to retirement;  had to be over fifty-five;  and, at the date of his retirement, had to have a net worth of at least $250,000 or an accumulated lump sum in excess of $250,000
                

Mitchell, 896 F.2d at 466.

On July 16, 1984, Mobil sought a determination from the IRS that the plan as amended continued to meet the Internal Revenue Code's requirements for favorable tax treatment, including the requirement that pension plans not "discriminate in favor of highly compensated employees." 26 U.S.C. § 401(a)(4). In meetings in late September 1984, the IRS reviewing agent expressed concern that the amended plan could result in benefits favoring highly compensated employees, and indicated that he might need to seek technical advice from Washington. In response, Mobil adopted another plan amendment allowing Mobil, in its sole discretion, to waive the eligibility threshold in individual cases for valid cause shown. After insertion of this provision, the IRS issued to Mobil a favorable determination letter on November 23, 1984, noting that continued qualification of the plan would depend upon its effect in operation.

Mobil announced the IRS approval to its employees on December 21, 1984, but did not notify its employees of the waiver provision until well after expiration of the six-month window--October 1985.

Christopher, 950 F.2d at 1213. ²

Porter Mitchell, the plaintiff in Mitchell, was a fifty-six year old Mobil employee who retired during the six-month window period, and took his retirement benefits under the lump-sum $250,000 option, for which he qualified. ³ He brought suit, claiming that, by amending its retirement plan, Mobil had willfully violated the Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621-634, by constructively discharging him because of his age, had "breached its fiduciary duties under ERISA and had violated ERISA's anti-cutback provision, 29 U.S.C. § 1054(g), by retroactively limiting his right to the lump-sum benefit, an accrued benefit." Mitchell, 896 F.2d at 466. He also claimed that Mobil violated § 510 of ERISA, 29 U.S.C. § 1140, which prohibits discrimination against or discharge of a participant in an ERISA-covered benefit plan "for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan."

After receiving a favorable jury verdict awarding him substantial damages, this We held that Mitchell lacked standing under ERISA to challenge the plan amendment, and therefore reversed the award. We observed that the definition of "participant" under ERISA "excludes ... former employees who have received a lump-sum payment of all their vested benefits because 'these erstwhile participants have already received the full extent of their benefits and are no longer eligible to receive future payments.' " Mitchell, 896 F.2d at 474 (quoting Joseph v. New Orleans Elec. Pension & Retirement Plan, 754 F.2d 628, 630 (5th Cir.), cert. denied, 474 U.S. 1006, 106 S.Ct. 526, 88 L.Ed.2d 458 (1985)). And we held Mitchell lacked standing as a former employee with a "reasonable expectation of returning to covered employment," Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 117, 109 S.Ct. 948, 958, 103 L.Ed.2d 80 (1989), because he had never sought reinstatement.

                court reversed the award on appeal.   We held that Mitchell had established that he had been constructively discharged because of his age, but that he had failed to prove that Mobil's proffered justification for its plan amendment was a mere pretext for discrimination. 4  Accordingly, his ADEA claim failed
                

The Christopher plaintiffs also elected to retire during the six-month window period, opting for the lump-sum benefit under the old $250,000 criteria. They similarly filed suit, claiming that Mobil's conduct surrounding the plan amendment constituted age discrimination in violation of the ADEA, as well as "common-law fraud, civil conspiracy, unlawful interference with contract rights, breach of the employment contract, negligence, and gross negligence." Christopher, 950 F.2d at 1213. The plaintiffs' complaint also alleged "in brief and conclusory fashion" that Mobil's conduct violated ERISA. Id. ⁵

The district court granted Mobil's motion for summary judgment on the ADEA claims, holding that they were time-barred and granted Mobil's motion for judgment on the pleadings on the state law claims, holding that they were preempted by ERISA. It granted Mobil's Fed.R.Civ.P. 12(b)(1) and (6) motion to dismiss the contingent ERISA claim on the ground that plaintiffs were not "participants" under ERISA. On appeal, the Fifth Circuit affirmed the grant of summary judgment on the ADEA claims because they were time-barred, affirmed the dismissal of the state law claims as preempted by ERISA, but reversed the dismissal of plaintiffs' ERISA claims and remanded the matter to permit plaintiffs to plead their ERISA claims with greater specificity. The court specifically noted that it had "not determined that appellants [plaintiffs] will be able to establish a violation of section 510, only that they should be allowed to attempt to do so." Christopher, 950 F.2d at 1223.

Plaintiffs in this case are a class of former employees who retired on or before January 1, 1985, who were not told of the waiver option, and who assert that they would not have lost their jobs had they known of their right to apply for a waiver. They also allege that they were unaware of the fact that the $250,000 threshold could be "grandfathered" for each of them, by virtue of the enactment of the Retirement Equity Act ("REA"), effective July 31, 1984. ⁶ Specifically, they argue that Mobil interfered with their right to the lump sum benefit under the $250,000 test by fraudulently leading plaintiffs to believe that that right was conditioned on an additional requirement, namely that plaintiffs retire early, when in fact that additional condition did not really exist. Plaintiffs were also discharged for the exercise of their right to the lump sum benefit under the $250,000 test and the right to be free from the cutback of that benefit. And Mobil fraudulently caused plaintiffs' discharges so that they could not attain the right under the Plan to apply for a waiver of the...