Rizzo v. Caterpillar, Inc.

• Citation: 914 F.2d 1003
• Decision Date: 01 October 1990
• Docket Number: No. 89-2060,89-2060
• Parties: Richard P. RIZZO, Plaintiff-Appellee, v. CATERPILLAR, INC., Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 1003

914 F.2d 1003

Richard P. RIZZO, Plaintiff-Appellee, v. CATERPILLAR, INC., Defendant-Appellant.

No. 89-2060.

United States Court of Appeals Seventh Circuit.

Argued Feb. 26, 1990.

Decided Oct. 1, 1990.

John J. George, Dennis J. Aukstik, Robert T. Oleszkiewicz, Daley & George, Chicago, Ill., for plaintiff-appellee.

Marcia L. Andersen, Gerald D. Skoning, Michael A. Warner, J. Stephen Poor, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, Ill., Theodore R. Johnson, Caterpillar Inc., Peoria, Ill., for defendant-appellant.

Before BAUER, Chief Judge, and CUMMINGS and KANNE, Circuit Judges.

KANNE, Circuit Judge.

Richard P. Rizzo believes that Caterpillar, Inc. (hereinafter, "the Company" or "Caterpillar") owes him special early retirement benefits under its employee benefits plan. In pursuit of that belief, Rizzo filed an action against Caterpillar in Illinois state court alleging breach of contract. Because the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Secs. 1001 et seq., preempts Rizzo's state law claim in this context, federal jurisdiction in the district court was achieved via removal under 28 U.S.C. Sec. 1441. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987); Lister v. Stark, 890 F.2d 941, 943-44 (7th Cir.1989). The district court ultimately granted summary judgment in favor of Rizzo, concluding under Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) that Caterpillar's denial of early retirement benefits in Rizzo's case amounted to an abuse of discretion. Because we believe that a material question of fact exists with respect to the benefits offer Caterpillar extended Rizzo and because the appropriate standard of review in this circuit for reviewing Caterpillar's denial of benefits is "arbitrary and capricious," we reverse and remand for further proceedings.

I.

Richard Rizzo retired from his position in the accounting department of Caterpillar's Joliet facility on April 1, 1987. Rizzo believed that he was retiring under the terms of an early retirement plan which would entitle him to special early retirement benefits; the Company thought otherwise. Ultimately, Caterpillar denied Rizzo those supplemental retirement benefits. The basis for the confusion as to precisely what the terms of Rizzo's retirement package included are evident from the following description of the events which surrounded Rizzo's retirement.

In 1980, Caterpillar established the Special Retirement Supplement Plan ("the Plan") in an attempt to "increase the number of management retirements during a time of employment surplus and thereby reduce the number of management downgrades and layoffs." Under Sec. 2 of the Plan, Caterpillar was authorized to establish specific eligibility rules for early retirement programs at its various facilities. Those eligibility rules could include, but were not limited to, age, service, payroll classification, Hay-points, job-classification, functional area and salary level.

Due to a significant downturn in demand for its products, Caterpillar was forced in January of 1987 to downsize its salaried workforce. Pursuant to the authority granted in Sec. 2 of the Plan, Caterpillar instituted a special early retirement program known as the Salaried Workforce Adjustment Program ("SWAP"). Under SWAP, the plant manager at each of Caterpillar's local facilities was given the responsibility to submit a proposed reduction plan for that particular facility. Factors to be considered by the plant manager in formulating such a reduction plan were to include: the age of the employee considered for early retirement; the number of years of service which that employee had with Caterpillar; and whether that employee's job was "surplus." At Caterpillar's Joliet facility, the responsibility for formulating the proposed reduction plan fell on the shoulders of John Barrowman. After reviewing each of the proposed reduction plans submitted by the various facilities, a Central Committee at Caterpillar's headquarters in Peoria was given sole responsibility for making the final decisions regarding who would be offered the special early retirement benefits under SWAP.

Aware of the SWAP program and the fact that the Company was offering some employees early retirement benefits, Rizzo informed Jim Miller, a supervisor within the accounting department, that he would like to retire on April 1, 1987. Miller, in consultation with his immediate supervisor, T.W. Willingham, determined that Rizzo would not be eligible for early retirement benefits in April of 1987 in that his position within the accounting department would not be "surplus" for purposes of the SWAP program until December of 1987. Accordingly, they recommended that Rizzo wait until December to retire when he would be eligible for special early retirement benefits under SWAP. John Barrowman was informed of this decision and relayed it to the Central Committee as part of the recommended reduction plan for the Joliet facility. Referring to Rizzo's request for early retirement benefits as of an April retirement date, Barrowman's proposed reduction plan stated:

This employee plans to retire as early as April 1987 (with or without early retirement package). Although we believe we can reduce the number of building accountants by 4th quarter 1987, it is critical that we not downsize prior to this date. We plan to negotiate employee staying to December in exchange for early retirement package.

Thus, there is no question that the Central Committee was generally aware of the Joliet facility's stance that Rizzo's position would not be "surplus" until December of 1987.

On February 10, 1987, Rizzo received--via his immediate supervisor, Marylean Abney--a sealed envelope which contained his offer of special early retirement benefits. The envelope contained five pages of information, the first of which was a summary of benefits as applied specifically to Rizzo. The retirement date shown on that summary was "March 1, 1987." A two-page document entitled "Special Retirement Supplement" was also included. Pertinent portions of that document stated:

The employment reduction proposal submitted by your facility has been approved.

Part of this proposal includes an opportunity for certain employees in areas where there are surpluses to voluntarily retire under a Special Retirement Supplement Arrangement. You are one of the employees being offered the opportunity to retire under these favorable conditions.

. . . . .

If you elect to retire under this special arrangement, your retirement date would be the date shown on the attached summary. Forms are also attached for your signature indicating your acceptance of the special arrangement and its terms (emphasis added).

When Rizzo received this packet of information from Ms. Abney, he was informed that he would have to wait until December 1, 1987 to retire if he wished to participate in the early retirement benefits program. He was also instructed that he should contact the Company's benefits representative regarding any questions he might have about the special retirement program.

On February 16, Rizzo took Ms. Abney's advice and met with Caterpillar's Personnel Assistant at the Joliet facility, William Morrison. While acknowledging that he had been told by his supervisors that his participation in the early retirement program was contingent upon his continued employment with the Company through December of 1987, Rizzo told Morrison that he would prefer to retire on April 1, 1987. Aware of Rizzo's offer which seemed to indicate a retirement date of March 1, 1987, Morrison enrolled Rizzo for the early retirement benefits as of April 1, 1987.

On February 18, after becoming aware of the fact that Rizzo had opted for retirement on April 1 with special early retirement benefits, T.W. Willingham called a meeting with Rizzo for the purpose of reiterating the Company's position that his offer of early retirement benefits was contingent upon a December 1, 1987 retirement date. Shortly thereafter, George Stybr, the Personnel Services Manager at Caterpillar's Joliet facility, voided the lump sum payment form which Rizzo had executed accepting the Company's offer of early retirement benefits.

Notwithstanding all of the confusion surrounding the terms of his retirement package, Rizzo chose to retire on April 1, 1987. True to its promises, Caterpillar has refused to pay Rizzo any special early retirement benefits under the SWAP program.

II.

Because our review in this appeal is of a successful motion for summary judgment, we proceed under a de novo standard. Continental Corp. v. Aetna Casualty & Surety Co., 892 F.2d 540, 543 (7th Cir.1989). Under the standard for summary judgment as set forth in Fed.R.Civ.Pro. 56(c), we first determine whether there are any genuine issues of material fact. If there are such issues, summary judgment may not be granted. In the absence of any such issues, we determine whether the moving party is entitled to judgment as a matter of law. Thomas v. United Parcel Service, Inc., 890 F.2d 909, 914 (7th Cir.1989). Underlying our analysis in this context is a recognition that we must "view the record and all inferences drawn from it in the light most favorable to the party opposing the motion." Holland v. Jefferson Nat. Life Ins. Co., 883 F.2d 1307, 1312 (7th Cir.1989).

The district court's grant of summary judgment in favor of Rizzo was premised primarily upon a legal determination that the written offer of retirement benefits indicating a March 1, 1987 retirement date was not subject to modification by his supervisor's statements that the offer was contingent upon his remaining with the Company until December of 1987. A necessary...