Richards v. General Motors Corp.

• Decision Date: 21 February 1995
• Docket Number: No. 91-CV-10104-BC.,91-CV-10104-BC.
• Citation: 876 F. Supp. 1492
• Parties: Robert RICHARDS, Plaintiff, v. GENERAL MOTORS CORPORATION, and General Motors Savings-Stock Purchase Program, Defendants.
• Court: U.S. District Court — Western District of Michigan

876 F. Supp. 1492

Robert RICHARDS, Plaintiff, v. GENERAL MOTORS CORPORATION, and General Motors Savings-Stock Purchase Program, Defendants.

No. 91-CV-10104-BC.

United States District Court, E.D. Michigan, Northern Division.

February 21, 1995.

COPYRIGHT MATERIAL OMITTED

Michael J. Forester, Saginaw, MI, for plaintiff.

David M. Davis, Birmingham, MI, for defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

CLELAND, District Judge.

I. Introduction

A non-jury trial of this case was held on January 17, 18, and 19, 1995. The court now finds in favor of the defendants and against the plaintiff.

Plaintiff was employed by General Motors Corporation ("GM") from June 1965 until he was fired in April 1990. While employed by GM, Plaintiff participated in General Motors Savings-Stock Purchase Program for Salaried Employees in the United States ("SSPP"). During the relevant time period, the S-SPP permitted employees to transfer, up to four times a year, their assets among the seven asset categories available under the plan — some of which carried guaranteed but low returns, while others provided higher yield and higher risk. GM's asserted reason for terminating Plaintiff's employment is that Plaintiff misused the program by backdating his asset transfer forms in order to benefit from favorable past stock valuations which were not available on the open market. Knowing past valuations permitted Plaintiff to move from higher risk asset categories to guaranteed return asset categories after a downturn in the market without experiencing the effect of the downturn, and to transfer to higher yield asset categories after learning of a market upswing.

A total of 21 GM employees in two locations in the United States¹ regularly backdated asset transfer forms; as a group, they earned approximately $1.4 million through backdating, according to GM's calculations. GM lost a corresponding amount. When GM discovered the practice, it fired the employees involved and froze their S-SPP accounts. GM then reconciled the S-SPP accounts, recovering $84,966.49 from Plaintiff's account.

Plaintiff admits that he backdated the forms to obtain more favorable valuations², but asserts that doing so was in no way dishonest or improper. Plaintiff testified that the local plan administrator, Kay Krager, suggested to him the idea of backdating as a legitimate way for him to avoid downturns in the market and make up for missed opportunities. He testified that he and others trusted Krager and relied on her for advice. He maintains that Defendants should be bound by Krager's alleged statement to Richards that backdating was permitted under the terms of the plan.

II. Background

This case's procedural history spans nearly four years of vigorous litigation by both parties, including a motion to dismiss for failure to state a claim on which relief can be granted, three motions for summary judgment, an appeal to the United States Court of Appeals for the Sixth Circuit, and a non-jury trial. The amount of money at issue is not great, approximately $85,000 in actual damages³, but it has become clear to the court that the principles at stake are of great concern to the parties. Plaintiff presents himself as an innocent whose only error was to place too much trust in GM. Defendants portray Plaintiff as a cheater — one who tried to get away with the ethical equivalent of betting on the winning horse after the race was over — all to the detriment of his employer.

Plaintiff filed his complaint against GM in Bay County Circuit Court on or about March 1, 1991, pleading three counts: breach of contract/wrongful discharge, deprivation of assets/conversion, and intentional infliction of emotional distress. Defendant timely removed the action to this court on April 9, 1991 on the basis that the action arose under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1132(a)(1)(B) and 1132(e). On June 17, 1991, Defendant filed a motion for summary judgment, arguing that Plaintiff signed a specific agreement making him an employee at will; that the conversion count was preempted by ERISA; that he failed to exhaust his administrative remedies; and that the undisputed facts show that Plaintiff cannot support a claim for intentional infliction of emotional distress. (D. 7). By order dated September 9, 1991 (D. 21), the court granted the defendant's motion for summary judgment on Counts I (wrongful discharge) and III (intentional infliction of emotional distress).⁴

On September 24, 1991, Plaintiff moved to amend his complaint and add a party defendant; the court granted the motion. Plaintiff's First Amended Complaint (D. 24) advanced three counts — breach of fiduciary duties, a claim under 29 U.S.C. § 1140, and deprivation of assets/conversion — and added Defendant General Motors Savings-Stock Purchase Program for Salaried Employees in the United States ("S-SPP"). Plaintiff then moved to withdraw his Count III (D. 31), and the court ordered that the count be dismissed. (D. 32).

On December 6, 1991, Defendants moved to dismiss Plaintiff's remaining counts for failure to state a claim on which relief can be granted. (D. 33). Defendants' motion argued as follows: (1) GM was not acting in a fiduciary capacity when it terminated the plaintiff's employment; (2) ERISA's fiduciary provisions do not provide relief for wrongful discharge claims; (3) Plaintiff's complaint acknowledges Defendants' authority to reject investment elections; (4) as a matter of law, a determination that the S-SPP does not allow backdated retroactive investment decisions cannot be deemed arbitrary and capricious; (5) to the extent Plaintiff asserts that he has been improperly denied S-SPP benefits, he has failed to exhaust the S-SPP appeal procedure; and (6) Plaintiff cannot show that he was exercising any right to which he was entitled under the provisions of the plan. On March 26, 1992, the court granted Defendants' motion to dismiss. (D. 42).

Plaintiff appealed to the Sixth Circuit, which affirmed in part, reversed in part, and remanded. The appeals court affirmed this court's holding that the plaintiff's at-will employment contract left him no cause of action under Michigan law but reversed the dismissal of Plaintiff's ERISA claims.

Plaintiff has raised a genuine issue of material fact under principles of agency law as to whether his transaction activity was tacitly authorized or approved by defendants; consequently, summary judgment is not proper at this point.⁵

Richards v. General Motors Corp., 991 F.2d 1227, 1236 (6th Cir.1993).

After remand, Defendants filed a motion for summary judgment, on March 29, 1994. (D. 95). Before that motion was resolved, a dispute arose over whether Plaintiff was entitled to a jury trial. Plaintiff's case was consolidated with Robert W. Campbell, Jr.'s case against GM.⁶ In an order filed March 31, 1994, the court ruled that the plaintiffs had no right to trial before a jury. (D. 98). The court also granted in part and denied in part Defendants' Motion to Dismiss Count II of Plaintiff Campbell's complaint, which alleged that Defendants breached their fiduciary duty imposed by 29 U.S.C. §§ 1104 and 1105 in terminating his employment. Campbell sought personal damages resulting from his termination and to obtain benefits under the S-SPP representing profits from his own backdated asset transfers. The basis for Defendants' motion was that "Plaintiff cannot maintain a personal action for damages based on a breach of the duty imposed by sections 404 or 405 of ERISA, 29 U.S.C. §§ 1104, 1105." (D. 10, Case No. 93-CV-10122-BC). The court agreed with the defendants and dismissed the portions of Campbell's Amended Complaint which asserted an individual action for breach of fiduciary duties. (D. 98). Plaintiff next filed a motion for advisory jury or reassignment to another judge on April 14, 1994. (D. 99). Defendants opposed the motion, which the court denied after oral argument on May 20, 1994. (D. 24).

Plaintiff did not timely respond to the defendants' March 29, 1994 motion for summary judgment, but on May 9, 1994 he filed his Motion to Dismiss Defendants' Exhaustion Defense. (D. 107). On June 22, 1994, Plaintiff filed his own motion for summary judgment. (D. 120). The court heard oral arguments on the cross motions for summary judgment on October 26, 1994, and on October 28, 1994 the court issued an order denying both motions. (D. 130). Plaintiff filed his Motion to Amend Complaint and Add Party Defendant on October 31, 1994⁷; in a later submission, Plaintiff's counsel represented that he mailed his motion to amend complaint and add a party defendant on October 28, 1994, before receiving the court's order denying the motions for summary judgment. Plaintiff's motion was granted in part and denied in part: he was permitted to file a second amended complaint containing some, but not all, of the proposed counts but was not permitted to add a new party. Plaintiff's Second Amended Complaint (D. 139) raises three counts: Count I is Equitable Estoppel; Count II is Breach of Contractual Duties; Count III, entitled "Section 1140 Violation," invokes 29 U.S.C. § 1140.

At trial, the court heard the testimony of William L. Cowell, the director of stock plans at GM; John B. Hulett, III, who was during the relevant period first the general supervisor of personnel administration and then the personnel director at the plant where Plaintiff worked; Richard Newberg, the director of audit during the relevant time period; and the plaintiff.

III. Findings of Fact

Overview

The court presents the following overview of the most salient material facts. Specific findings of fact, some of which are referred to in parentheses in the overview, follow.

In 1987, 1988, and 1989, Plaintiff submitted asset transfer forms which he intentionally "backdated," or filled in a date earlier than he actually signed and submitted the applications. (Fact 67). The reason he backdated the forms...