Singer v. Black & Decker Corp.

• Decision Date: 27 May 1992
• Docket Number: No. 91-1669,91-1669
• Citation: 964 F.2d 1449
• Parties: James J. SINGER; Richard Cawunder; Norma Wood; Ethel Myers; Albert Cooper; Robert L. Bixler, Sr.; Robert Hoffman, Plaintiffs-Appellants, v. The BLACK & DECKER CORPORATION; Black & Decker (U.S.) Incorporated; Black & Decker, Incorporated; Stephanie F. Page; M. Clayton Roop; James C. Davis; Sean C. James; Francis J. Rosenthal; Leonard A. Strom, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1449

964 F.2d 1449

James J. SINGER; Richard Cawunder; Norma Wood; Ethel Myers; Albert Cooper; Robert L. Bixler, Sr. Robert Hoffman, Plaintiffs-Appellants, v. The BLACK & DECKER CORPORATION; Black & Decker (U.S.) Incorporated; Black & Decker, Incorporated; Stephanie F Page; M. Clayton Roop; James C. Davis; Sean C. James Francis J. Rosenthal; Leonard A. Strom, Defendants-Appellees.

No. 91-1669.

United States Court of Appeals Fourth Circuit.

Argued Feb. 5, 1992.

Decided May 27, 1992.

W. Michael Pierson, Pierson, Pierson & Nolan, Baltimore, Md., argued (Robert L. Pierson, Baltimore, Md., Frederick H. Stalfort, Hampstead, Md., Lawrence A. Melfa, Towson, Md., Charles Lee Nutt, Baltimore, Md., on brief), for plaintiffs-appellants.

Virginia Wood Barnhart, Miles & Stockbridge, Towson, Md., argued (K. Donald Proctor, on brief), for defendants-appellees.

Before SPROUSE, WILKINSON, and WILKINS, Circuit Judges.

OPINION

WILKINS, Circuit Judge:

Appellants sued their former employer, Black & Decker, ¹ seeking a declaration that they were entitled to enhanced early retirement benefits. The district court granted summary judgment in favor of Black & Decker. It rejected the employees' claims alleging violations of federal common law under the Employee Retirement Income Security Act of 1974 (ERISA), as amended, 29 U.S.C.A. §§ 1001 et seq. (West 1985 & Supp.1992). In doing so, it repudiated the use of preempted state common-law causes of action in fashioning federal common law. It also found that even if the use of federal common law were appropriate, the evidence viewed in the light most favorable to the employees demonstrated that Black & Decker was entitled to judgment as a matter of law. Singer v. Black & Decker Corp., 769 F.Supp. 911, 916-18 & n. 8 (D.Md.1991). Agreeing with this latter reasoning, we affirm.

I.

In 1981 Black & Decker sought to reduce the work force at its Hampstead, Maryland facility. In order to ease the burden the cutback would have on long-time employees, it offered an optional early retirement program for qualified employees. Black & Decker amended its retirement plan, which provided for regular retirement at age 62, to offer a limited program known as the 1981 Special Retirement Program, extending early retirement to qualified employees who were then 58 years of age with at least five years of service and offering a cash payment to those employees who were already over age 62. This notice informing employees of this proposal stated that in order to qualify the employee must retire between specified dates in 1981. It also stated that "after July 1, 1981, this special retirement program will no longer be offered." In 1983, when additional reductions in the work force at the Hampstead facility became necessary, a similar early retirement program was offered. Again, Black & Decker amended its retirement plan and notified employees that the benefits were offered pursuant to a special program and that after a specified date the offer would no longer be available.

In 1985 Black & Decker decided to close the Hampstead facility. Terminated employees received one week of severance pay for each year of service with the company, but Black & Decker did not offer an optional early retirement program. ² A group of employees at the Hampstead facility brought this action in Maryland state court, arguing that they were entitled to enhanced early retirement benefits. In causes of action based on state law, they claimed that the offers in 1981 and 1983 of enhanced early retirement benefits constituted an implied representation that similar benefits would be offered in the future and that the previous offers, combined with the modernization of the Hampstead facility in 1983, induced employees, who were not retiring, to remain with the company rather than seek employment elsewhere when reductions in the work force began.

Black & Decker removed the action to the United States District Court for the District of Maryland, contending that these claims were preempted by ERISA. The district court agreed and instructed the employees to replead. The resulting complaint alleged five causes of action. Three counts alleged claims under federal common law-breach of contract, promissory estoppel, and equitable estoppel--while the remaining two counts alleged, respectively, that the ERISA plan was impliedly amended by the 1985 notice and that the plan administrators breached their fiduciary duty under ERISA by failing to offer enhanced early retirement benefits to the employees affected by the closing of the Hampstead facility.

Both parties then moved for summary judgment. The district court ruled that there were no genuine issues of material fact and that Black & Decker was entitled to judgment as a matter of law. See Singer, 769 F.Supp. at 915-19. With respect to the first three counts, the court reasoned that it was inappropriate to employ federal common law to provide a remedy for a wrong that was cognizable under a preempted, state common-law cause of action and that even if the federal common- law theories were accepted by the court, the employees' claims would not give rise to liability. See id. at 916-18 & n. 8. The district court also found that there were no disputed issues of material fact and that Black & Decker was entitled to judgment as a matter of law in the two remaining counts based on alleged ERISA violations. Id. at 918-19. The employees appeal.

II.

In enacting ERISA, Congress established a comprehensive statutory scheme to govern employee benefit plans. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 44, 107 S.Ct. 1549, 1551, 95 L.Ed.2d 39 (1987). Congress, however, intended that the courts would "develop a 'federal common law of rights and obligations under ERISA-regulated plans.' " Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 110, 109 S.Ct. 948, 954, 103 L.Ed.2d 80 (1989) (quoting Pilot Life Ins. Co., 481 U.S. at 56, 107 S.Ct. at 1557); see Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 156-57, 105 S.Ct. 3085, 3097-98, 87 L.Ed.2d 96 (1985) (Brennan, J., concurring) (discussing legislative history demonstrating congressional intent that courts develop federal common law). It has proved a difficult task delineating those situations in which federal common law is a desirable companion to ERISA from those in which federal common law imposes an unwarranted and unacceptable expansion of those rights and remedies established by ERISA.

Several principles have emerged as guides for the courts in demarking those situations in which the development of federal common law is inappropriate. Importantly, courts must be conscientious to fashion federal common law only when it is " 'necessary to effectuate the purposes of ERISA.' " Provident Life & Accident Ins. Co. v. Waller, 906 F.2d 985, 992 (4th Cir.) (quoting U.S. Steel Mining Co. v. District 17, United Mine Workers, 897 F.2d 149, 153 (4th Cir.1990)), cert. denied, --- U.S. ----, 111 S.Ct. 512, 112 L.Ed.2d 524 (1990). Thus, resort to federal common law generally is inappropriate when its application would conflict with the statutory provisions of ERISA, discourage employers from implementing plans governed by ERISA, or threaten to override the explicit terms of an established ERISA benefit plan. See id. at 992-93. And, courts should remain circumspect to utilize federal common law to address issues that bear at most a tangential relationship to the purposes of ERISA. Id. at 992.

With these principles in mind, we conclude that the district court painted with too broad a brush in stating categorically that courts should not look to state common-law causes of action that have been preempted by ERISA in fashioning federal common law. While it is inappropriate to " 'use state common law to re-write' " ERISA, id. (quoting Nachwalter v. Christie, 805 F.2d 956, 960 (11th Cir.1986)), it is also inappropriate to hold that state common-law causes of action that have been preempted by ERISA may not be used to assist in shaping a body of federal common law. See Holland v. Burlington Indus., Inc., 772 F.2d 1140, 1147 n. 5 (4th Cir.1985) (noting that Congress intended for the courts to borrow from state law when appropriate in fashioning federal common law to govern ERISA), aff'd sub nom. Brooks v. Burlington Indus., Inc., 477 U.S. 901, 106 S.Ct. 3267, 91 L.Ed.2d 559, and cert. denied sub nom. Slack v. Burlington Indus., Inc., 477 U.S. 903, 106 S.Ct. 3271, 91 L.Ed.2d 562 (1986). In fact, the district court opinion conflicts in this respect with our opinion in Provident Life, in which we recognized a remedy under the federal common law of ERISA by drawing on the preempted, state common-law doctrine of unjust enrichment. See Provident Life & Accident Ins. Co., 906 F.2d at 992-94.

In enacting the preemption provisions of ERISA, Congress sought "to ensure that plans and plan sponsors would be subject to a uniform body of benefit law; the goal was to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government." IngersollRand Co. v. McClendon, --- U.S. ----, 111 S.Ct. 478, 484, 112 L.Ed.2d 474 (1990). The preemption of state laws relating to employee benefits guarantees that plans and plan sponsors are subject to only a single, federal set of requirements. The potential for plans and plan sponsors to be subject to irreconcilable conflicting requirements is not presented by courts employing recognized state common-law doctrines to assist in shaping the federal common law of ERISA. In fashioning federal common law, courts do not look to the law of a particular state, but rather should apply common-law doctrines best suited to furthering the goals of ERISA. Consequently, federal common law should be consistent across the circuits. To the extent that inconsistencies arise, Congress and the Supreme Court are capable of harmonizing them. Thus, the prediction of the...