Shaver v. Siemens Corp.., s. 10–4147

Citation52 Employee Benefits Cas. 1806,670 F.3d 462
Decision Date29 February 2012
Docket Number10–4791,10–4279,Nos. 10–4147,10–4792.,s. 10–4147
PartiesRonald SHAVER; William J. Whitney; Joe Fedele; Ralph Riberich; Anthony P. Katz, on behalf of themselves and others similarly situated, v. SIEMENS CORPORATION; Siemens Westinghouse Retirement Plan for Union Employees; Siemens Westinghouse Retirement Plan, Appellants in No. 10–4147.Ronald Shaver; William J. Whitney; Joe Fedele; Ralph Riberich; Anthony P. Katz, on behalf of themselves and others similarly situated, Appellants in No. 10–4279, v. Siemens Corporation; Siemens Westinghouse Retirement Plan for Union Employees; Siemens Westinghouse Retirement Plan.Ronald Shaver; William J. Whitney; Joe Fedele; Ralph Riberich; Anthony P. Katz, on behalf of themselves and others similarly situated, v. Siemens Corporation; Siemens Westinghouse Retirement Plan for Union Employees; Siemens Westinghouse Retirement Plan, Appellants in No. 10–4791.Ronald Shaver; William J. Whitney; Joe Fedele; Ralph Riberich; Anthony P. Katz, on behalf of themselves and others similarly situated, Appellants in No. 10–4792, v. Siemens Corporation; Siemens Westinghouse Retirement Plan for Union Employees; Siemens Westinghouse Retirement Plan.
CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)

OPINION TEXT STARTS HERE

David B. Rodes (argued), John T. Terney, III, Goldberg, Persky & White, William T. Payne, Stember, Feinstein, Doyle & Payne, Pittsburgh, PA, for AppelleesCross Appellants, Ronald Shaver, William Whitney, Joe Fedele, Ralph Riberich, and Anthony Katz, on behalf of themselves and others similarly situated.

Frederick W. Bode, III, Thomas H. May, Dickie, McCarney & Chilcote, Pittsburgh, PA, David F. Dobbs, Dana L. Rust, Robert F. Holland, McGuire Woods, Richmond, VA, Charles A. Rothfield (argued), Michael B. Kimberly, Mayer Brown, Washington, DC, Lauren R. Goldman, Mayer Brown, New York, NY, for AppellantsCross Appellees, Siemens Corporation, Siemens Westinghouse Retirement Plan for Union Employees, and Siemens Westinghouse Retirement Plan.

Christopher J. Rillo, Schiff Hardin, San Francisco, CA, Bradford P. Campbell, Suzanne M. Arpin, Diane M. Soubly, Schiff Hardin, Washington, DC, Janet Jacobson, Washington, DC, for Amici Curiae American Benefits Council, National Association of Manufacturers, and Chamber of Commerce of the United States.Before: SLOVITER, VANASKIE, and GREENBERG, Circuit Judges.

OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. INTRODUCTION

This matter comes on before this Court on four consolidated appeals and cross-appeals from an order of the District Court dated March 29, 2007, and entered on March 30, 2007, denying defendants' motion for summary judgment and granting in part and denying in part plaintiffs' cross-motion for summary judgment. See Shaver v. Siemens Corp., No. 2:02cv1424, 2007 WL 1006681 (W.D.Pa. Mar. 29, 2007). Plaintiffs, now the appellees/cross-appellants in this appeal,1 Ronald Shaver, William Whitney, Joe Fedele, Ralph Riberich, and Anthony Katz, on behalf of themselves and others similarly situated, brought this class action against defendants, now appellants/cross-appellees, Siemens Corporation (Siemens), appellees' former employer, and its retirement plans, Siemens Westinghouse Retirement Plan for Union Employees and Siemens Westinghouse Retirement Plan, alleging that those entities violated the Employee Retirement Income Security Act of 1974 (ERISA) by refusing to provide appellees with Permanent Job Separation pension benefits (“PJS benefits”) when Siemens terminated their employment. Appellees' action has been partially successful in the District Court but remains unresolved as to the rest of the case. For the reasons that follow, we will reverse on one of Siemens' appeals to the extent that the District Court denied it summary judgment for we conclude that Siemens was entitled to summary judgment on the entire case with respect to all appellees, and we will remand the case to the District Court for entry of judgment in favor of Siemens and its retirement plans. Entry of the order on the remand will bring this litigation to a close with respect to the substantive matters at issue.2

II. FACTUAL and PROCEDURAL HISTORY

On November 14, 1997, Westinghouse Electric Corporation (Westinghouse) 3 agreed to sell its Power Generation Business Unit (“PGBU”) to Siemens in a transaction to be effectuated through an Asset Purchase Agreement (“APA”). There was, however, a delay in the consummation of the transaction, and Siemens and Westinghouse did not execute the APA until approximately nine months later, on August 19, 1998. As the APA contemplated, Siemens hired all Westinghouse PGBU employees who, on August 19, 1998, had been working actively, were on vacation, or were on short-term disability (“legacy employees”). Appellees are 227 legacy employees who transferred employment from Westinghouse to Siemens.

At the time that Siemens and Westinghouse executed the APA, Westinghouse sponsored and maintained a defined benefit pension plan for its employees, including the soon-to-be legacy employees (the “Westinghouse Plan”). Under section 19 of the Westinghouse Plan, employees who satisfied certain age and service requirements, but did not qualify for normal retirement benefits, and who were terminated by an “Employer, an Affiliated Entity, or Excluded Unit because of job movement or product line relocation or location closedown” were entitled to PJS benefits. J.A. 292, 345. Stated succinctly, PJS benefits provide for payment of an employee's normal retirement benefit without actuarial reduction prior to normal retirement age, an additional monthly payment of $10.00 multiplied by the employee's years of credited service if the employee's special retirement date 4 was on or before January 1, 1995, and an additional monthly payment of $100.00 if the employee had 25 years of eligibility service and his special retirement date was on or before January 1, 1995. See id. 345–50. As we later will explain, it is highly significant that the Westinghouse Plan defined an “Employer, Affiliated Entity, or Excluded Unit” as Westinghouse or any Westinghouse subsidiary or joint venture participating in the Westinghouse Plan. Id. 284, 288, 292. The definition did not, however, include any future employer, here Siemens, of Westinghouse employees.

The Westinghouse Plan also contained two critical express limitations on the availability of PJS benefits: (1) a provision providing that “in no event shall a Permanent Job Separation occur if an Employee is offered continued employment by ... a successor employer,” and (2) a so-called “sunset provision” providing that [i]n no event shall a Permanent Job Separation occur after August 31, 1998.” Id. 293. Thus, in the absence of an amendment of the Westinghouse Plan, the plan would not provide for PJS benefits to an employee offered employment by a successor to Westinghouse, as happened here, or by reason of a separation after August 31, 1998, as was also the case here.

The APA included many specific provisions governing the pensions and benefits of the legacy employees, which, so far as germane to this appeal, we explain in more detail below. At its broadest, however, the APA required that Siemens establish a defined benefit pension plan for the legacy employees “that contain [ed] terms and conditions that are substantially identical with respect to all substantive provisions to those of the Westinghouse Pension Plan as in effect as of the Closing Date” of the APA and that Siemens was to provide “compensation and benefit plans and arrangements which in the aggregate are comparable” to those of the Westinghouse Plan as of the closing date. Id. 137–38. Thus, Westinghouse and Siemens contemplated that the pension benefits for legacy employees essentially would continue unabated after consummation of the sale of the PGBU. There is, however, no suggestion in the APA or in any other document elsewhere in the record that Westinghouse and Siemens contemplated that the consummation of the sale would result in enhancement of the legacy employees' pension benefits.

Although Westinghouse and Siemens did not execute the APA until August 19, 1998, prior to that date they adopted an amendment to the APA that provided that the closing date of the APA, though only for the purpose of pensions and benefits, would be September 1, 1998.5 In the same amendment Westinghouse and Siemens also amended the APA to provide that Westinghouse would amend its pension plan to offer the legacy employees, though only for benefit accrual purposes, credit for service and compensation from August 19 through August 31, 1998, even though Siemens would become their employer as of August 19. In turn, Siemens agreed not to terminate any legacy employee other than for cause prior to September 1, 1998, and agreed that if it nevertheless did so it would “reimburse [Westinghouse] for any actuarial pension loss caused by any such termination.” Id. 156. Thereafter, Westinghouse amended its plan to reflect this amendment to the APA.

On October 29, 1998, Siemens adopted separate but virtually identical defined benefit pension plans for union and non-union employees, which were made effective retroactively to September 1, 1998, the plans thereby becoming activated as of the time the Westinghouse Plan no longer would give the legacy employees credit for service and compensation. Consequently, the consummation of the Westinghouse–Siemens transaction left the legacy employees in the same position in which they had been prior to the closing of the transaction with regard to PJS benefits because under the Westinghouse Plan separation from service after August 31, 1998, could not result in a terminated employee being eligible for PJS benefits.

As we have indicated, notwithstanding the sale of the PGBU to Siemens and the adoption of the Siemens Plans, after execution of the APA and to this day, the Westinghouse Plan has remained...

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