Ernest S. Bins v. Exxon Company U.S.A., a Division of Exxon Corp. , 220 F.3d 1042 ( 2000 )

FERNANDEZ, Circuit Judge,

with whom O’SCANNLAIN and McKEOWN, Circuit Judges, join, concurring and dissenting:

I agree with parts A and C¹ of the majority opinion and with part B to the extent that it holds that the proper test for answering employee inquiries is the serious consideration test.² However, I cannot agree with the gloss, it puts on the test and especially disagree with the gloss on the “senior management” element of Fischer II, 96 F.3d at 1539, which in turn induces it to return this case to the district court for further, perhaps extepsiye and expensive, proceedings. That, itself, would not be so bad, although it is drear enough. However, it also portends ill for employers, who seek to know when they must disclose plans which are only a-hatehing at best.³

As Fischer II put it, the serious consideration test consists of three eléments: “(1) a specific proposal (2) is being discussed for purposes of implementation (3) by senior management with the authority to implement the change.” Id. The majority’s discussion of parts (1) and (2) of the test is troubling. It seems to suggest that when lower echelon employees look at a mere mix of possible options submitted by their underlings, that can be sufficient to satisfy the first two parts of the test. See maj. op. at 1050-51.⁴ But most troubling, and my focus here, is part (3) of- that formulation. See maj. op. 1051-53.

As Fischer II explained it, part (3) of the test was designed “[to focus] on the proper actors within the corporate hierarchy.” Id. at 1540. And by senior management Fischer II really meant “senior.” It noted that corporations, “employ individuals, including middle and upper-level management employees, to gather information and conduct reviews.” Id. Clearly, those were not the people intended. Certainly, Fischer II meant to. exclude anyone who did not “possess the authority to implement the proposed change.” Id. That would, exclude most employees, including some executives who might be part of senior -management. On the other hand, while it did not mean to ascend as high as the board of directors itself, it did mean to ascend to the heights of “senior management .with responsibility for the benefits area of the business,, and who ultimately will make recommendations to the Board regarding benefits operations.” Id.; see also Hockett v. Sun Co., Inc., 109 F.3d 1515, 1524 (10th Cir.1997). In other words, it was considering the very highest level of corporate management, but even further limited that to those high-level executives with benefits responsibility. It referred to people who were directly responsible to the board of directors of the company. Those are the people whom the board is most likely to rely heavily upon, and whose recommendations the board is least likely to deviate from.

That test might be difficult enough to apply in some circumstances.⁵ I see no reason to make it immeasurably more difficult by asking ourselves questions like: If the board of directors has delegated final decision-making authority to the true senior managers of the company, does senior management become a constructive board, while lower echelon employees become constructive senior management? Once we do that, we commit ourselves to an endless progression of questions of that nature. Especially is that true if we resort to puzzling over the test and begin asking ourselves in the abstract what the clause “authority to implement” is meant to accomplish, rather than seeing that phrase for what it is, viz, a limitation of the class of senior managers rather than an expansion to some class below the level of top management. We judges can live with the uncertainty, but we really should not have to do so. Companies must live with it, but they really should not have to do so.

Nor is the difference between the approach of Fischer II and the majority inconsequential. Here, for example, we know that EUSA was a mere division of Exxon. It was not a subsidiary and did not have its own board of directors. The titles or reviewing activities of the employees within that division should be of no real import. None of them were the senior managers of the company.⁶ We also know that the actual senior managers of Exxon did not give serious consideration to the SPOSA until January 26, 1996 at the earliest.⁷ By that time, it was too late for Bins- because he never asked a question after that date. True enough, EUSA officers had considered the change before that, but, again, they surely were not people who had the authority to go forward with anything. Just as surely, they were not the ones who were at the board-reporting level of the company. Clearly, then, they were not the ones to whom Fischer II referred. Again, I see no reason to expand the class beyond and below that set forth in Fischer II. The lofty position of the senior management class of executives serves to assure us that consideration of a plan has reached a truly serious level in a way that little else could.

Nor will it do to begin ruminating about whether the EUSA employees “resembled” senior management because, perhaps, the real senior management not only “resembled” a board of directors, but also acted as a mere overseer for a significantly autonomous or self managed division, whatever that means.⁸ Of course, I recognize that common law adepts are able to define anything at all into something else entirely. There is no good reason to do so here, and once we start down that path, I see no principled way to distinguish among divisions, departments, or even far flung groups that operate pretty independently on a day-to-day basis.⁹ More to the purpose, there is not the slightest hint in the record that the Exxon corporate officers were rubber stamps for EUSA.¹⁰ In fine, Fischer II injects enough uncertainty into this area of the law, but some uncertainty is inevitable when we are attempting to decide just when a misrepresentation has been made to an inquiring beneficiary of a plan. I see no reason to exacerbate the inevitable with the unnecessary; I see no reason to add this new peril to the already parlous ERISA seas.

Thus, while I concur in the adoption of the serious consideration test, I respectfully dissent from the glosses which the majority puts on that test, and which, in turn, result in the remand of this case.¹¹ In fíne, I would affirm the decision of the district court.

1 . Without meaning to be unduly captious, I, however, must indicate that nothing in this record suggests a determination that some special promise to disclose information as it developed was made to Bins by any representative of the employer. I see no reason to remand on that basis. See maj. op. 1053 and 1054.

2 . See Fischer v. Philadelphia Elec. Co. 96 F.3d 1533 (3d Cir.1996) (Fischer II).

3 . Fisher II itself is far from perfect, if employers of good will are to be encouraged to undertake "the formation of employee benefit plans.” Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54, 107 S.Ct. 1549, 1556, 95 L.Ed.2d 39 (1987). But I agree that we should accept it faute de mieux.

4 . That seems to reify a spirit lurking within the formulation,, which may tend to make Fischer II a mere ingredient in some sort of indeterminate mix. See maj. op. 1049-50. That, surely, would give litigants and courts more flexibility, but it would hardly help employers to plan their affairs.

5 . I recognize that there might, someday, be a case where an ill-disposed company will manipulate its structure in order to give itself the ability to make misrepresentations to its employees with apparent impunity. Should that eventuate, I am certain that the courts will be able to deal with the problem. Suffice it to say that any rule of law can be placed under ' pressure by the ill disposed; that does not mean that we should make every stated rule mushy. Cf. Vartanian v. Monsanto Co., 131 F.3d 264, 272 (1st Cir.1997). In any event, there is no indication that any manipulation affecting Bins occurred in this case.

6 . That, of course, includes Peery, the EUSA Vice-President of the Production Department. See maj.’ op. 1052 n. 9.

7 . That might well be too early — its earliness being unsupported in the record — because the record suggests a later date. But Exxon essentially adopts that date and certainly does not argue otherwise. Thus, for purposes of this appeal Exxon must be held to that. See Resorts Int'l, Inc. v. Lowenschuss (In re Lowenschuss), 67 F.3d 1394, 1402 (9th Cir.1995); Doty v. County of Lassen, 37 F.3d 540, 548 (9th Cir.1994).

8 . Perhaps it simply means that a board of directors puts great reliance upon its chief executive officers, and senior management might have put great reliance upon individuals at EUSA. If so, I still see no reason to destabilize the test by reading it that way. Indeed, do we even dare say that senior management is significantly independent and self governing vis-a-vis the board of directors?

9 . The majority does engage in a somewhat elaborate rumination upon the ALI's explication of the allocation of power between boards of directors and management. But that cannot conceal the fact that what the majority is doing is turning senior management of a corporation into a quasi board of directors, and lesser management into quasi senior management. The discussion does spread a distractingly diaphanous cloak over that dangerous determination, but it is no less disturbing to those who wish to, or must, see through that diaphragm and deal with the dragon beneath. Again, legally and factually speaking “subsidiary” and "division” are as different as "corporate entity” and "corporate employee,” or, if you will, chalk and cheese.

10 .vNeither A. Beg, the human resources manager of EUSA, nor W.M. Snow, the human resources operations manager of EUSA, saw Exxon management as a rubber stamp. Nor did they have authority to do anything without the approval of that management and its authorization. Nothing in the record is to the contrary, but we now send the case back to see if Bins can develop something.

11 . This would not, of course, foreclose potential relief in a situation where a corporation itself has vested decision making for the benefit change at issue in members of management below the most senior rank. Because of that possibility, there may be circumstances where a trial is necessary to determine whether a proposed change was under serious consideration by an appropriate officer. Nor, as indicated in footnote 5, does this preclude a claim that a company improperly invoked its corporate structure as a fig leaf to avoid disclosure obligations. Again, the record here demonstrates that this case simply does not fall into either category.