Swinney v. General Motors Corp.

• Decision Date: 26 January 1995
• Docket Number: No. 93-3872,93-3872
• Citation: 46 F.3d 512
• Parties: , 18 Employee Benefits Cas. 2785, Pens. Plan Guide P 23905G Tim SWINNEY; Jeff Compton; Steve Durrough; Douglas Hampton; Richard Lipscomb; Robert Milligan; Michael Napier; Joseph Saylor; and Denise Pitts, Plaintiffs-Appellants, v. GENERAL MOTORS CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 512

46 F.3d 512

63 USLW 2544, 18 Employee Benefits Cas. 2785,

Pens. Plan Guide P 23905G

Tim SWINNEY; Jeff Compton; Steve Durrough; Douglas Hampton; Richard Lipscomb; Robert Milligan Michael Napier; Joseph Saylor; and Denise Pitts, Plaintiffs-Appellants, v. GENERAL MOTORS CORPORATION, Defendant-Appellee.

No. 93-3872.

United States Court of Appeals Sixth Circuit.

Argued Sept. 19, 1994.

Decided Jan. 26, 1995.

David G. Torchia (argued and briefed), Tobias & Kraus, Cincinnati, OH, for plaintiffs-appellants.

John D. Luken, John M. Kunst, Jr. (argued and briefed), Susan J. Luken, Dinsmore & Shohl, Cincinnati, OH, Daniel G. Galant, General Motors Corp., Office of the Gen. Counsel, Detroit, MI, for defendant-appellee.

Leonard R. Page (briefed), Associate Gen. Counsel, International Union, UAW, Detroit, MI, for International Union, United Auto., Aerospace and Agr. Implement Workers of America, UAW, amicus curiae.

Before: BROWN, MARTIN, and BOGGS, Circuit Judges.

BAILEY BROWN, Circuit Judge.

In this case, the plaintiffs, representing a class of former General Motors employees, claim that the defendant General Motors Corporation ("GM") breached its fiduciary duty to them under Sec. 404 of the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. Sec. 1001 et seq. The plaintiffs also claim that GM should be estopped under the federal common law of ERISA from denying them certain benefits. After a bench trial, the district court dismissed the plaintiffs' causes of action, and entered final judgment against them. The plaintiffs appealed. For the reasons set out below, we AFFIRM the judgment of the district court.

I.

The facts in this case are largely undisputed. In November of 1986, GM announced that it would gradually close its Fairfield, Ohio stamping plant. The gradual closing resulted in a surplus of labor at the Fairfield plant, which triggered the job security provisions of the collective bargaining agreement. As jobs were phased out, employees were placed in the Job Opportunity Bank-Security Program ("JOBS Bank") where they received full salary and benefits while performing non-traditional work such as community service. The JOBS Bank remained open while the plant was gradually shutting down its operations, but when the plant closed completely, so would the JOBS Bank.

JOBS Bank employees, while they were waiting for the plant to close completely, were presented with two basic options: they could either completely sever their employment relationship with GM in exchange for a lump sum payment under the Voluntary Termination of Employment Program ("VTEP"), or they could stay in the JOBS Bank until the plant fully closed, and then go on permanent lay off, receiving an assortment of temporary benefits, including health insurance, Supplemental Unemployment Benefits ("SUB benefits"), and a Guaranteed Income Stream ("GIS benefits") (hereinafter the "laid-off workers benefits"). ¹ At that time, GM told the plaintiffs that these choices were mutually exclusive: persons who took the VTEP would not be eligible for the laid-off workers benefits, and laid-off workers would not be eligible for the VTEP. The plaintiffs all chose the VTEP over the laid-off workers benefits.

In March of 1989, after the plaintiffs had accepted their VTEPs and eight months after the plant finally closed, GM began examining other ways of reducing its labor costs. The company created an ad hoc committee to study the problem, and the committee made several recommendations. GM offered, based on these recommendations and with the union's approval, a new VTEP (called a "window VTEP") to laid-off workers, including the laid-off workers at the Fairfield plant. The workers who took this window VTEP therefore had received laid-off workers benefits until that point in time when they received their lump sum VTEP payment.

After learning of this additional VTEP offer, the plaintiffs brought this suit on the basis of diversity jurisdiction, contending that they should receive the benefits the laid- off workers had received up to that point in time when the laid-off workers were offered their window VTEP. The plaintiffs' state law claims were based on fraud, negligent misrepresentation, and promissory estoppel. The district court dismissed these claims, finding they were preempted by federal law. The plaintiffs then amended their complaint, contending that GM had breached its fiduciary duty under ERISA by leading them into believing that laid-off workers could not receive a VTEP as well as laid-off workers benefits. They claimed that this misrepresentation resulted in the plaintiffs not receiving the health insurance, SUB benefits, and GIS benefits they would have received had they chosen to be laid off rather than bought out. In their suit, the plaintiffs ask for these benefits.

After a bench trial, the district court granted judgment in favor of the defendant. The district court held that GM was not seriously considering the window VTEP when it informed the plaintiffs that the VTEP available to them was not available to laid-off workers. Relying on Drennan v. General Motors Corp., 977 F.2d 246 (6th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 2416, 124 L.Ed.2d 639 (1993), the district court held that GM did not breach its fiduciary duty to the plaintiffs because GM made no misrepresentations; the statements GM made concerning the initial VTEP offer had been true at the time. Plaintiffs appeal this decision.

II.

Before reaching the merits, we must first address the two objections GM now raises to what it terms as our "jurisdiction" to hear the appeal. First, GM argues that because another panel of this court recently held that GM's VTEP plan was not an ERISA plan, appellants have no claim under ERISA, and the appeal should be dismissed for that reason. Second, GM argues that, in any event, the plaintiffs are not "participants" within the meaning of the ERISA statute, and therefore, do not have standing to bring this action. Neither of these contentions has merit.

A.

After the district court's disposition of this case, but before oral argument here, a panel of this court issued the opinion in Sherrod v. General Motors Corp., 33 F.3d 636 (6th Cir.1994). In Sherrod, we held that GM's VTEP plan was not an ERISA employee welfare benefit plan because it did not require an administrative scheme to execute. Id. at 638. The district court had granted GM's motion for summary judgment for that reason, and we affirmed the district court. Id. at 637.

The holding in Sherrod must have been quite a surprise to the plaintiffs in the present case, because in Drennan, without objection from the parties, we had treated GM's VTEP plan as an ERISA plan. Therefore, the status of the VTEP plan was not an issue in that case. See Sherrod, 33 F.3d at 638. Furthermore, GM had argued in the district court that the instant case was governed by federal law in moving to dismiss the plaintiffs' state law claims, and the district court had agreed with GM. Throughout the trial, both parties and the district court were clearly under the assumption that ERISA was the applicable law, and the plaintiffs have not appealed the district court's dismissal of their state law claims.

After our opinion in Sherrod was filed, however, GM filed a motion to dismiss this appeal, arguing that because the claims under the VTEP plan were not governed by ERISA, the district court had had no subject matter jurisdiction under ERISA after all. GM therefore argues that, according to our Sherrod opinion, this case is governed by state law, and the district court erred (although at GM's urging) in dismissing the state law claims and treating this as an ERISA case. At oral argument, the plaintiffs seemingly agreed that Sherrod was controlling, and that we should remand the case for disposition under state law, even though the plaintiffs did not appeal the dismissal of their state law claims.

We conclude, however, that Sherrod does not apply to this case, and that the plaintiffs' claim actually is controlled by ERISA. We regard the plans truly at issue here, the plans under which the plaintiffs seek benefits, as the plans giving health insurance, SUB benefits, and GIS benefits to laid-off workers, i.e., the laid-off workers plans. The plaintiffs contend that GM's representations about the VTEP caused them to forego participating in the laid-off workers plans, and in their prayer for relief, the plaintiffs ask for these benefits, not for additional VTEP benefits. The issue this court addressed in Sherrod was whether the VTEP was an ERISA plan; it did not deal with the laid-off workers plans. Sherrod is therefore not controlling, and we have federal question jurisdiction of this case under ERISA so long as the laid-off workers plans are employee welfare benefit plans within ERISA's statutory definition. 29 U.S.C. 1002(1). They undoubtedly are.

The hallmark of an ERISA benefit plan is that it requires "an ongoing administrative program to meet the employer's obligation." Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 11, 107 S.Ct. 2211, 2217, 96 L.Ed.2d 1 (1987). As we stated in Sherrod:

In determining whether an ERISA plan exists, "[t]he pivotal inquiry is whether the plan requires an establishment of a separate, ongoing administrative scheme to administer the plan's benefits. Simple or mechanical determinations do not necessarily require the establishment of such a scheme; rather an employer's need to create an administrative system may arise where the employer, to determine the employees' eligibility for and level of benefits, must analyze each employee's particular circumstances in light of the appropriate criteria."

Sherrod, 33 F.3d at 638 (quoting Kulinski v. Medtronic Bio-Medicus, Inc., 21 F.3d 254, 257 (8th Cir.1994)). The need for an administrative scheme may also arise when the employer "assumes ... responsibility to pay benefits on a regular basis, and thus faces ......