Woolsey v. Marion Laboratories, Inc.
| Citation | 934 F.2d 1452 |
| Decision Date | 04 June 1991 |
| Docket Number | No. 90-6011,90-6011 |
| Parties | Jim L. WOOLSEY, Plaintiff-Appellant, v. MARION LABORATORIES, INC.; Marion Laboratories, Inc., Profit Sharing Plan, Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (10th Circuit) |
Steven M. Angel, Oklahoma City, Okl., for plaintiff-appellant.
Keith M. Pyburn, Jr. of McCalla, Thompson, Pyburn & Ridley, New Orleans, La., (Howard Shapiro and Heather G. Magier of McCalla, Thompson, Pyburn & Ridley, New Orleans, La., and Page Dobson of Holloway, Dobson, Hudson and Bachman, Oklahoma City, Okl., with him on the briefs), for defendants-appellees.
Before McKAY, ANDERSON, Circuit Judges, and BROWN, * District Judge.
Jim L. Woolsey brought this action in district court against Marion Laboratories, Inc. ("Marion") and the Marion Laboratories, Inc. Profit Sharing Plan (the "Plan"), (collectively referred to as "defendants"), claiming that the form in which the Plan distributed his vested benefits violated 29 U.S.C. Secs. 1132 and 1140, part of the Employee Retirement Income Security Act ("ERISA"). On appeal, Woolsey, first, seeks reversal of the district court order granting summary judgment to the defendants and, second, claims that the district court erred in denying his motion to amend. We affirm.
Mr. Woolsey worked for Marion for over seventeen years until he resigned on November 11, 1985. Throughout Woolsey's employ, Marion maintained the Plan, subject to the provisions of ERISA, to pay benefits to eligible employees upon retirement, death, disability, or other separation from service. The Plan is funded with annual contributions from Marion, with all such monies, once contributed, belonging irrevocably to the Plan. The Plan Administrators, appointed by the Marion Board of Directors, also serve as officers of Marion. When Woolsey resigned, he was 100% vested in the Plan and was entitled to $234,631.82 in benefits.
In a letter dated November 27, 1985, Marion asked Woolsey whether he preferred to receive the portion of his vested benefit allocated to the Marion Fund (a particular fund invested primarily in Marion stock) in cash, stock, a combination of the two or periodic cash installment payments. Woolsey requested 50% of his benefit to be paid in cash and the remaining 50% in Marion stock. After a claims review meeting on February 24, 1986, the Administrators exercised the discretion reserved to them under Section 7.1 of the Plan and denied Woolsey's request. They then informed Woolsey of their decision and tendered checks to him for the full amount of his vested benefit. A short time later, a stock split occurred, significantly increasing the value of Marion stock.
Woolsey returned the checks to Marion and requested that Marion issue a check for half of the amount due from the Marion Fund ($109,856.65) and requested a review of the Administrators' decision regarding the form of the other half of his benefit payment. Marion complied and issued the check, noting that Woolsey's request had been denied because of the "special circumstances surrounding [his] termination." R. Doc. 41, Exh. B-6. Subsequently Marion advised Woolsey that a hearing would be held on December 15, 1986.
At the December hearing, the Administrators heard from Charlie Dalton, counsel for Marion, and two employees of Marion--Norm Craig, a regional manager, and Steve Krohne, manager of personnel support services. They presented the following evidence: In July, Woolsey had been informed by Myrna West, his new district manager, that she did not care how he had sold pharmaceuticals in the past, but she wanted to run a "clean ship" from then on. Woolsey allegedly told her that she would not discover any unethical activities as she reviewed the books. In early September, West told Craig that she had discovered that Woolsey had been selling pharmaceuticals outside his designated area for some time. Craig and Krohne flew down to Oklahoma to talk with Woolsey and get more information about what may have happened. Craig stated that he did not intend to "nail" Woolsey and, indeed, had a great deal of respect for Woolsey who had become a member of the Marion "M Club," "the most coveted [salesmanship] organization in th[e] company." R. Doc. 41, Exh. G at 22. Woolsey allegedly admitted to Craig that, after he had spoken with West, he had breached Marion policy and procedure by working outside the boundaries of his territory, essentially stealing sales from his coworkers, and adding samples and stock pharmaceuticals to regular orders in order to "sweeten the pot" and encourage pharmacists to place larger orders. Woolsey also allegedly admitted that he had falsely reported lost pharmacy orders to obtain the replacement drugs and to give large amounts of credit to his customers. Craig and Krohne stayed in Oklahoma for three days, talking with West, Woolsey and several other employees. They then returned to Kansas and reported their findings to the senior management at Marion. The Marion officials requested Woolsey to come to Kansas, presumably for further investigation and discussion. Woolsey then resigned and refused to go to Kansas.
After presentation of this information, Woolsey and his attorney were allowed to enter the room and submit any information or arguments for reversal of the Administrators' prior decision regarding the form of payments to Woolsey. Woolsey's counsel argued that the acts taken by the Administrators were not in the best interests of the beneficiaries, that they had acted improperly because of an alleged conflict of interest and that any discipline for Woolsey's alleged misconduct should have been part of his termination proceedings, not part of his benefit payment proceedings. He also argued that Woolsey had been deprived of a property right in his vested benefits and that an employee's conduct should serve as the basis for the Plan's vesting requirements, not for determining the form of vested payments.
The Administrators subsequently informed Woolsey that they affirmed their prior decision that "special circumstances" existed justifying the denial of the stock distribution. Such circumstances included The Administrators believe that if they were to reward associates leaving under less than admirable conditions by granting them Marion stock, the stock price would likely decrease to the detriment of the remaining participants in the Plan, which would have not only an adverse monetary affect on the overall value of the Plan, but an adverse affect on associate morale as well.
but were not limited to, a number of Woolsey's abuses of company policy: pursuing and obtaining orders for Marion products outside his assigned territory; supplying customers with sample and stock pharmaceuticals to persuade them to increase or place an order with himself; writing unauthorized credits to pharmacies for "lost" product; and, obtaining additional product to "buy orders" from customers. In addition, they noted that Woolsey had been advised that he must discontinue such practices by his superior and had not. They stated:
The defendants admit that this is the first time that the Administrators have ever denied an otherwise eligible associate's request for payment of half of his benefits in stock.
Woolsey filed his complaint on April 18, 1988 alleging that he had been denied his vested benefit rights in violation of 29 U.S.C. Sec. 1132 and that the Plan had discriminated against him in violation of 29 U.S.C. Sec. 1140. On March 31, 1989, the defendants filed a motion to dismiss, or in the alternative, for summary judgment. Both parties extensively briefed that motion. On September 16, 1989, nearly 17 months after the filing of the complaint, Woolsey filed a motion for leave to file an amended complaint adding new parties and another cause of action against the defendants for having failed to provide him with requested information regarding the denial of benefits and the appeal of that denial as required under ERISA. The district court denied that motion on October 13, 1989 because it would necessitate additional delay and expense to the parties and because "[n]o evidence is available now which Woolsey was not aware of or could have been aware of when the case was filed." R.Vol. I, Tab 64.
On December 11, 1989, after oral argument on the issue, the district court held that there was no evidence indicating that Marion and the Plan acted arbitrarily or capriciously in determining the form of benefit payments to Woolsey or that they had discriminated against him in order to prevent him from exercising his pension rights. R.Tab 68. Finding no genuine issue of material fact supporting Woolsey's claims, the district court granted defendants' motion for summary judgment.
Woolsey now appeals both of the district court's holdings and reurges his arguments on appeal.
Woolsey contends that the district court erred in granting the defendants' motion for summary judgment and argues that there are substantial factual disputes which should be litigated at trial. We disagree.
On appeal from a summary judgment order, we apply the same standard employed by the district court in reviewing the Administrators' decision. Applied Genetics Int'l, Inc. v. First Affiliated Secur., Inc., 912 F.2d 1238, 1241 (10th Cir.1990); Jung v. FMC Corp., 755 F.2d 708, 710 (9th Cir.1985). Thus, we will affirm if we determine that, viewing the facts in the light most favorable to the opposing party, there is no genuine issue of material fact in dispute and the moving party should prevail as a matter of law. Applied Genetics Int'l, Inc. v. First Affiliated Secur., Inc., 912 F.2d at 1241; Jung v. FMC Corp., 755 F.2d at 710.
Woolsey first challenges the trial court's grant of summary judgment regarding the Administrators' alleged violation of 29 U.S.C. Sec. 1132 in...
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