West v. Greyhound Corp.

• Decision Date: 25 March 1987
• Docket Number: No. 86-1888,86-1888
• Citation: 813 F.2d 951
• Parties: , 8 Employee Benefits Ca 1569 Donald WEST; Jerry Love, as individuals and on behalf of a class of persons similarly situated, Plaintiffs-Appellants, v. GREYHOUND CORPORATION; Armour Food Corporation; Armour and Company; Greynom, Inc.; Conagra, Inc.; Cag Susidiary, Inc.; Norbert Anderson; J.F. Grittner; Jack Forst, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 951

813 F.2d 951

55 USLW 2546, 8 Employee Benefits Ca 1569

Donald WEST; Jerry Love, as individuals and on behalf of a class of persons similarly situated, Plaintiffs-Appellants, v. GREYHOUND CORPORATION; Armour Food Corporation; Armour and Company; Greynom, Inc.; Conagra, Inc.; Cag

Susidiary, Inc.; Norbert Anderson;

J.F. Grittner; Jack Forst,

Defendants-Appellees.

No. 86-1888.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 13, 1987.

Decided March 25, 1987.

David A. Rosenfeld, San Francisco, Cal., for plaintiffs-appellants.

Jonathan H. Sakol, Thomas D. Wood, San Francisco, Cal., Roger J. Miller, Omaha, Neb., for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before ANDERSON, ALARCON and HALL, Circuit Judges.

ALARCON, Circuit Judge:

Donald West and Jerry Love as individual employees and as class representatives of the employees (the Union Workers) of Armour Food Company (Armour) ¹, appeal from the dismissal of their claims concerning welfare benefits, and the order granting summary judgment of the causes of action relating to pension benefits.

A judgment having been entered as to each claim and each party, this court has jurisdiction under 28 U.S.C. Sec. 1291.

The novel question we must address is whether, upon the sale of a business, the seller and purchaser violated Employee Retirement Income Security Act of 1974 (ERISA), as amended, where the employees were terminated with proper notice after a majority voted against reductions in the unaccrued and unvested welfare and pension benefits offered to them as a condition precedent to their being employed by the purchaser.

I. PERTINENT FACTS

On August 31, 1979, Armour entered into a collective bargaining agreement (the Master Agreement) with United Food and Commercial Workers International Union (AFL-CIO). The Master Agreement, along with its amendments, provided for: (1) severance pay, (2) health and welfare benefits, (3) retiree health and welfare benefits, and (4) pension benefits. The Master Agreement was extended by amendment to August 31, 1985. Article XXV of the Master Agreement provided that Greyhound had the right to close its 13 plants and permanently separate the employees after giving six months notice.

On June 17, 1983, Greyhound announced that it would close its plants in six months, on December 17, 1983. On June 28, 1983, Greyhound entered into an agreement with ConAgra, Inc. and its wholly owned subsidiary CAG Subsidiary, Inc. (ConAgra) to transfer most of Armour's assets, including the 13 plants, to ConAgra. ² In August 1983, ConAgra and the AFL-CIO agreed to modifications of the wages and unaccrued benefits contained in the Master Agreement. The Union Workers rejected the agreement. In November, 1983, a second contract was agreed to by ConAgra and the AFL-CIO. The Union Workers again rejected the proposed reductions to the employee benefits they had bargained for with Armour. On Friday, December 17, 1983, Greyhound closed the Armour plants and terminated the employees, including the Union Workers. Upon termination, Greyhound paid each employee all the severance benefits provided by the Master Agreement. The plants were reopened by ConAgra on Monday, December 19, 1983. Employees were hired under new terms and conditions.

II. THE UNION WORKERS' THEORY OF THE CASE

The Union Workers contend that "ConAgra through a joint plan with [Armour] terminated the Armour Master Agreement employees and refused to hire them when the plants reopened in December 1983 because of the employees' assertion and claim to employee welfare benefit plans." The Union Workers argue that this conduct constituted discrimination against them for exercising their rights protected by ERISA in violation of 29 U.S.C. Sec. 1140. They also assert that Armour violated its fiduciary duties as an employee benefit plan administrator, contrary to the requirements of 29 U.S.C. Sec. 1104, by attempting to force them to accept ConAgra's demand. We disagree and affirm.

III. DISCUSSION

A. Standard of Review

An order of dismissal for failure to state a claim upon which relief can be granted is reviewable de novo. Fort Vancouver Plywood Co. v. United States, 747 F.2d 547, 552 (9th Cir.1984). The district court should not dismiss a complaint "unless it appears beyond a reasonable doubt that the plaintiff could prove no set of facts in support of his claim which would entitle him to relief." McRorie v. Shimoda, 795 F.2d 780, 783 (9th Cir.1986).

We also review an order granting summary judgment de novo. Lopez v. Dean Witter Reynolds, Inc., 805 F.2d 880, 883 (9th Cir.1986). Viewing the evidence and inferences arising therefrom in the light most favorable to the non-moving party, we must determine whether the district court properly found that there was no genuine issue of material fact and that the moving party was entitled to judgment as a matter of law. Id.

The Union Workers filed for summary judgment in this matter on the discrimination claim. They do not argue before this court that there are genuine issues of material fact in dispute. Thus, our task is to determine whether the district court erred as a matter of law in dismissing certain counts and in granting summary judgment as to the remaining causes of action.

B. Discrimination Claim

The Union Workers argue that the termination of their employment by Greyhound and the refusal of ConAgra to hire them when the Armour plants reopened resulted from their refusal to vote for a collective bargaining agreement that would reduce unaccrued welfare and pension benefits contained in the Master Agreement. The Union Workers assert that section 1140 protects them from retaliation for asserting their rights to the employee benefits contained in the Master Agreement.

Section 1140 provides in relevant part:

It shall be unlawful for any person to discharge ... or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan ... or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan....

To qualify for relief under section 1140, the participant or beneficiary must show that he was exercising a "right to which he is entitled" or to which he "may become entitled." The Union Workers have failed to show any act of discrimination for asserting a right to which they were entitled or may become entitled under ERISA.

The modifications suggested by ConAgra did not affect any accrued or vested rights owed to them by Armour. The Union Workers conceded that "[a]ll severance obligations were met by Greyhound at closing."

One of the major purposes of ERISA is to ensure that employees receive their vested benefits when the pension plans are terminated. Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359, 374, 100 S.Ct. 1723, 1732, 64 L.Ed.2d 354 (1980). To assure the protection of vested pension benefits, ERISA prescribes vesting and accrual schedules and provides that an employee's right to his normal retirement benefit is "nonforfeitable." 29 U.S.C. Sec. 1053(a). ERISA, however, expressly exempts employee welfare benefit plans from the sections concerned with vesting and accrual. 29 U.S.C. Sec. 1051(1). While ERISA, in 29 U.S.C. Sec. 1322, also guarantees the payment of "all nonforfeitable benefits," this protection is applicable only to pension, stock bonus or profit-sharing plans. 29 U.S.C. Sec. 1321(a); 26 U.S.C. Sec. 401(a). There is no language in ERISA which provides for the accrual of welfare benefits or guarantee that such benefits are vested or nonforfeitable. Turner v. Local No. 302, Int'l Bhd. of Teamsters, 604 F.2d 1219, 1225 n. 5 (9th Cir.1979).

In Sutton v. Weirton Steel Div. of Nat'l Steel Corp., 724 F.2d 406 (4th Cir.1983), cert. denied, 467 U.S. 1205, 104 S.Ct. 2387, 81 L.Ed.2d 345 (1984), the defendant, National Steel Corporation, sold its Weirton Steel Division to the Division employees. National Steel Corporation would not pay the severance pay or early retirement benefits for the former employees under the terms of the sales contract, but the new company agreed to establish those benefit plans under the new employment contract. The union employees approved the changes in the bargaining agreement and the other terms of sale. National Steel Corporation unilaterally changed its policies for nonunion employees. All former employees were rehired by the new employer. The nonunion employees challenged that portion of the agreement which eliminated the defendant's obligation to pay early retirement or severance benefits. The nonunion employees alleged that the employer breached its fiduciary duty when it negotiated these terms into the contract.

In Sutton, the Fourth Circuit affirmed the denial of these claims and stated that "[u]nder ERISA's vesting rule, only accrued benefits must be nonforfeitable." With respect to the issues raised by these appeals, ERISA defines an accrued benefit as an "annual benefit commencing at normal retirement age." 29 U.S.C. Sec. 1002(23). The court in Sutton concluded that the defendant employer could "exercis[e] the right accorded other employers to renegotiate or amend, as the case may be, unfunded contingent benefits payable before normal retirement age. The changes, accomplished in this manner, are not to be reviewed by fiduciary standards." Id. at 411.

In the matter before us, ConAgra owed no fiduciary duty under ERISA to the Union Workers. We held in Bellingham Frozen Foods, Inc. v. NLRB, 626 F.2d 674, 678 (9th Cir.1980) that "a purchaser of assets is under no obligation to hire employees of a predecessor and is free to set the initial terms of employment for these employees should it decide to hire them. Employees are also free to accept or reject the terms offered." Thus, since ConAgra was free not to hire Union Workers and to control...