DocketNumber： 91-2206
Filed Date： 6/17/1992
Status： Precedential
Modified Date： 9/21/2015
June 17, 1992
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No. 91-2206
RICHARD G. ALLEN, ET AL.,
Plaintiffs, Appellants,
v.
ADAGE, INC.,
Defendant, Appellee.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
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_________________________
Before
Selya, Circuit Judge,
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Campbell, Senior Circuit Judge,
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and Keeton,* District Judge.
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Ruth A. Bourquin, with whom Warren H. Pyle and Angoff,
__________________ _______________ _______
Goldman, Manning, Pyle, Wanger & Hiatt, P.C. were on brief, for
_____________________________________________
appellants.
John F. Welsh, with whom Jason Berger, Kerry M. Richard, and
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Testa, Hurwitz & Thibeault were on brief, for appellee.
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*Of the District of Massachusetts, sitting by designation.
SELYA, Circuit Judge. The fifty-four plaintiffs in
SELYA, Circuit Judge.
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this case sought payment of benefits under a severance pay plan
(Plan) maintained by their quondam employer, Adage, Inc. Their
claims were preferred pursuant to the Employee Retirement Income
Security Act of 1974 (ERISA), 29 U.S.C. 1001-1461 (1988), and
specifically, ERISA 1132(a)(1)(B). The district court granted
summary judgment in favor of the defendant. We affirm.
I. BACKGROUND
I. BACKGROUND
At the times material hereto, Adage manufactured, sold,
and serviced high performance graphics and CAD/CAM products. Its
field service unit employed approximately one hundred twenty
persons at more than thirty locations in the United States and
Canada. In 1988, as part of an effort to alter the focus of its
business, Adage opened negotiations with National Computer
Systems (NCS) for the sale of the field service unit.
Eventually, an agreement was reached. The principals
agreed that, as a condition precedent to any sale, no fewer than
eighty-five percent of Adage's field service employees would have
to accept continuing employment with NCS. A series of meetings
ensued. At those meetings, NCS extended individualized
employment offers to every field service employee. The workers
were given a very short time within which to respond to the
offers. All the plaintiffs, and virtually all the affected
2
members of the work force, agreed to join NCS.1 On August 12,
1988, the sale was consummated.
The parties agree that, without exception, the former
Adage employees were paid at least as much by NCS as they were
earning before the sale. They were given full credit for years
in service in NCS's calculation of vacation time. Waiting
periods with respect to health insurance and dental coverage were
waived. Other incidents of employment were roughly comparable.2
II. THE PLAINTIFFS' SUIT
II. THE PLAINTIFFS' SUIT
The plaintiffs, none of whom experienced any period of
unemployment during the transition, sought to collect benefits
under Part B of the Plan, which read in its entirety:
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1A special situation obtained in regard to plaintiff Clinton
B. Smith, Jr., Adage's director of field services. The Adage/NCS
agreement was expressly conditioned on Smith's acceptance of
employment with NCS. Smith balked at NCS's initial offer. When
NCS sweetened the pot, offering him a unique guarantee of
employment coupled with a golden parachute, Smith capitulated.
NCS and Adage also made special severance arrangements for three
other Adage managers.
2The record evidences some disagreement about whether
certain fringe benefits offered by NCS were commensurate with
those provided by Adage. These differences cut both ways. The
plaintiffs also claim that, although Adage had classified them as
"exempt" employees, NCS reclassified some of them as "non-
exempt." Since the district court was punctilious in "view[ing]
the entire record in the light most hospitable to the part[ies]
opposing summary judgment" and "indulging all reasonable
inferences in [their] favor," Griggs-Ryan v. Smith, 904 F.2d 112,
___________ _____
115 (1st Cir. 1990), we need not pursue the asserted disparities
in any detail. The dispute over these incidentals, while
"genuine," is not "material" in the Rule 56 sense. See, e.g.,
___ ____
Garside v. Osco Drug, Inc., 895 F.2d 46, 48 (1st Cir. 1990)
_______ ________________
(defining a material fact as "one that 'affect[s] the outcome of
the suit'") (citations omitted).
3
In the event that an involuntary
termination is caused by reduction-in-force
the following guidelines have been
established to provide consistency in
severance provided to employees.
NON-EXEMPT
__________
Years of Continuous Service Severance
______________________________ _________
Salary
______
6 mon. - 3 years 2 weeks
4 - 5 years 3 weeks
5+ years 4 weeks
EXEMPT
______
All exempt employees will be entitled to a
minimum of four weeks salary plus one week
salary for each full year of continuous
service.
This provision for "consistency in severance" was the only
provision in the Plan relevant to the dispute over severance
benefits in this case.
After the pleadings were closed and discovery was
completed, the district court granted Adage's motion for summary
judgment under Fed. R. Civ. P. 56(c). The court assumed arguendo
________
that the plaintiffs had been subjected to "an involuntary
termination" of their employment with Adage, and focused on what
caused the termination. The court concluded that the phrase
"reduction-in-force" as used in the Plan was intended "to connote
a situation of unexpected loss of employment" as opposed to a
transfer from one payroll to another. Because the plaintiffs'
separation from Adage's service was not "caused by reduction-in-
force," no severance pay was due.
The district court subsequently refused to alter or
amend its judgment in light of our opinion in Bellino v.
_______
4
Schlumberger Technologies, Inc., 944 F.2d 26 (1st Cir. 1991).
________________________________
This appeal followed.
III. THE LEGAL LANDSCAPE
III. THE LEGAL LANDSCAPE
At the threshold, we consider both the criteria
governing the district court's adjudication of this case and the
standard of appellate review.
A.
A.
__
Except in those cases where a different level of
scrutiny is indicated in the benefit plan itself, the district
court considers a denial-of-benefits challenge afresh, without
deferring to the employer's interpretation of the plan. See
___
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989);
___________________________ _____
Bellino, 944 F.2d at 29; see also 29 U.S.C. 1132(a)(1)(B).
_______ ___ ____
Here, nothing in the Plan indicates that another approach is to
be used. Hence, the lower court appropriately afforded de novo
__ ____
review.
In examining benefit denials under ERISA plans, and in
interpreting such plans, a court should employ both trust and
contract principles. See Bruch, 489 U.S. at 110-12; Burnham v.
___ _____ _______
Guardian Life Ins. Co., 873 F.2d 486, 489 (1st Cir. 1989).
________________________
Withal, the court should keep in mind that severance pay plans
are employee welfare benefit plans, and thus, are not vested.
See, e.g., Adams v. Avondale Indus., Inc., 905 F.2d 943, 947 (6th
___ ____ _____ _____________________
Cir.) (citing cases), cert. denied, 111 S. Ct. 517 (1990).
_____ ______
Therefore, resolution of questions concerning employer
obligations under such plans must be tailored to avoid
5
undermining Congress's "considered decision that welfare benefit
plans not be subject to a vesting requirement." Id.
___
The question of whether a contract term is ambiguous is
one of law for the judge. See, e.g., ITT Corp. v. LTX Corp., 926
___ ____ _________ _________
F.2d 1258, 1261 (1st Cir. 1991); In re Navigation Technology
_____________________________
Corp., 880 F.2d 1491, 1495 (1st Cir. 1989). While "an argument
_____
between parties about the meaning of a contract is typically an
argument about a 'material fact,'" Boston Five Cents Sav. Bank v.
___________________________
Secretary of Dept. of HUD, 768 F.2d 5, 8 (1st Cir. 1985), summary
_________________________
judgment is not necessarily foreclosed. "Even if there is
ambiguity in the language . . . the evidence presented about the
parties' intended meaning may be so one-sided that no reasonable
person could decide the contrary." Id.; see also American First
___ ___ ____ ______________
Inv. Corp. v. Goland, 925 F.2d 1518, 1522 (D.C. Cir. 1991)
___________ ______
("summary judgment may be appropriate in a contract case even if
the contract is ambiguous so long as there is no evidence that
would support a conflicting interpretation of the agreement").3
A good illustration of the rule is contained in Foster Medical
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Corp. Employees' Pension Plan v. Healthco, Inc., 753 F.2d 194
_______________________________ _______________
(1st Cir. 1985). There, the plaintiff alleged that the
defendants had failed to abide by certain provisions of an
agreement for the transfer of designated assets and liabilities.
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3The flip side of the coin is that, in situations where the
extrinsic evidence relevant to the interpretation of an ambiguous
contractual provision is contested or contradictory, summary
judgment will often be inappropriate. See, e.g., Space Master
___ ____ _____________
Int'l, Inc. v. City of Worcester, 940 F.2d 16, 19-20 (1st Cir.
___________ _________________
1991); Computer Sys. of America, Inc. v. International Business
_______________________________ ______________________
Machines Corp., 795 F.2d 1086, 1090-91 (1st Cir. 1986).
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6
We found the challenged provisions to be ambiguous, but noted
that defendants had adduced evidence probative of the parties'
intent while plaintiffs, for their part, had "offered no
substantive evidence to challenge [this proof]." Id. at 198. We
___
concluded that, in such circumstances, plaintiffs had "failed to
establish the existence of a genuine issue of material fact"
concerning the meaning of the agreement. Id. Accordingly, we
___
upheld a summary judgment in the defendants' favor,
notwithstanding the ambiguity. Id. at 198-99.
___
Here, Adage proffered evidence in connection with its
Rule 56 motion to the effect that several reductions in force
were conducted in the period 1987-1989, resulting in various
awards of severance benefits pursuant to the Plan. The affected
employees were not notified of their impending termination until
their last day of work. They were then furnished with layoff
notices and personnel documents advising that "[i]f you choose to
collect unemployment during such severance time, your severance
checks will stop immediately. You have the right to file for
unemployment at any time while unemployed." The appellants
neither challenged this description of Adage's past praxis nor
submitted evidence of any divergent practices. Because there was
no dispute concerning the underlying facts, insofar as those
facts were material, summary judgment might appropriately lie.
See Franklin v. Pitney Bowes, Inc., 919 F.2d 45, 47-48 (6th Cir.
___ ________ ___________________
1990) (noting that summary judgment was appropriate where
defendants had proffered evidence supporting their interpretation
7
of a plan, including past practice under that plan, and
plaintiffs had offered no contradictory evidence); Burger King
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Corp. v. Horn & Hardart Co., 893 F.2d 525, 528 (2d Cir. 1990)
_____ ___________________
(disposition by summary judgment is proper if the evidence of
intent submitted by one party "does not conflict with [the other
party's] evidence"); Burnham, 873 F.2d at 488 (determining that
_______
where the only "authentic controversy presented on appeal
concerns the parties' divergent interpretations of . . .
established facts," summary judgment was appropriate); Chambers
________
v. Prudential Ins. Co., 776 F. Supp. 1166, 1168, 1172 (S.D. Miss.
___________________
1991); cf. Adcock v. Firestone Tire & Rubber Co., 822 F.2d 623,
___ ______ ___________________________
626-28 (6th Cir. 1987) (same; using pre-Bruch test).4
_____
B.
B.
__
We subject the district court's grant of summary
judgment to plenary review, taking the record in the light most
congenial to the nonmovants and indulging all reasonable
inferences in their favor. Garside v. Osco Drug, Inc., 895 F.2d
_______ ________________
46, 48 (1st Cir. 1990). This standard applies unreservedly in
the ERISA context. See, e.g., Bellino, 944 F.2d at 29; Harper v.
___ ____ _______ ______
____________________
4We note that the Third Circuit has taken a more restrictive
slant. See Taylor v. Continental Group Change in Control
___ ______ _______________________________________
Severance Pay Plan, 933 F.2d 1227, 1232, 1236 (3d Cir. 1991)
___________________
(holding that the meaning of ambiguous terms in an ERISA plan is
a question of fact forestalling brevis disposition); Schoch v.
______
First Fidelity Bancorporation, 912 F.2d 654, 656 (3d Cir. 1990)
______________________________
("If the opposing party asserts a reasonable reading differing
from that of the district court, then the meaning of the contract
must be resolved at trial."). We decline to follow this course,
believing that these decisions are at variance with the approach
we have charted in cases such as Burnham and Boston Five Cents
_______ _________________
Savings Bank.
____________
8
R.H. Macy & Co., 920 F.2d 544, 545 (8th Cir. 1990). To affirm a
_______________
grant of summary judgment, we must be satisfied that there is no
genuine dispute concerning a material fact and that the movant is
entitled to judgment as a matter of law. Burnham, 873 F.2d at
_______
488.
This protocol, while generous to summary judgment
opponents, does not free them from all obligations. When
nonmovants bear the burden of proof on particular issues, they
must "reliably demonstrate that specific facts sufficient to
create an authentic dispute exist." Garside, 895 F.2d at 48.
_______
IV. ANALYSIS
IV. ANALYSIS
The appellants' argument has two main ingredients.
First, they contend that the district court erred in finding the
term "reduction-in-force" ambiguous. Second, they contend that
the court compounded its initial error by resolving the perceived
ambiguity incorrectly, thereby skewing the Plan.
A.
A.
__
We start with the certainty vel non of the words
___ ___
"reduction-in-force." The district court, finding an amphiboly,
felt free to place an interpretive gloss on the phrase. In
appellants' view, this freelancing offended both our holding in
Bellino and the dictates of plain meaning. We disagree.
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The Effect of Bellino
The Effect of Bellino
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We think this case is distinguishable from Bellino.
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Although both cases arose out of similar fact patterns and the
9
Bellino court ruled that the term "reduction in force" had a
_______
clear, unambiguous meaning, Bellino, 944 F.2d at 30, that ruling
_______
was made against the backdrop of a particular set of plan
provisions. By its very nature, ambiguity is not an abstract
concept. Rather, it concerns meaning in relation to some
identified issue or issues. To illustrate, saying that
"reduction-in-force" has a clear, unambiguous meaning in relation
to the disputed issue in Bellino is not to say that it has a
_______
clear, unambiguous meaning in relation to all similar issues in
all other cases, regardless of the particular characteristics of
the severance pay plans under consideration.
Schlumberger's severance pay plan, scrutinized in
Bellino, spelled out the reach and rationale of the term
_______
"reduction in force" for Schlumberger's purposes. The relevant
___________________________
language of the Schlumberger plan merits reproduction here:
Reduction in Force
From time to time, Schlumberger may need to
terminate an employee for lack of work, poor
business conditions, or change in business
focus. Should such terminations become
necessary, Schlumberger will provide
employees with salary and benefits
continuation for a specified period of time.
Bellino, 944 F.2d at 30. The very language of the Schlumberger
_______
plan made clear that personnel actions taken in response to
certain enumerated events would comprise a reduction in force.
The case before us is at a considerable remove. Adage's plan
contains neither an explanation of the phrase nor any effort to
define it.
Contrary to appellants' insinuations, the Bellino court
_______
10
did not presume to announce a rule of construction mandating that
"reduction in force" was henceforth to be deemed a denotatively
rigid term of art. This much is obvious from the panel's
repeated limitation of its discussion to the facts of record.
See, e.g., id. (agreeing that the plan language "is clear and
___ ____ ___
unambiguous as applied to the facts of this case") (emphasis
________________________________________
supplied); id. at 30-31 (concluding that "appellees' terminations
___
constituted a 'reduction in force' within the meaning of the
___________________________
plan") (emphasis supplied); id. at 32 (referring to the necessity
_____ ___
of discerning the meaning of questioned terms by considering them
within the context of the particular plan). Indeed, after
examining the diverse interpretations of "reduction in force"
interspersed throughout the case law, the Bellino court concluded
_______
that judges, instead of crafting "rigid definitions," should
strive to "construe ERISA plans by employing accepted principles
of contract and trust law." Id. at 31.
___
In sum, while we do not retreat from Bellino or
_______
question its rationale, we agree with the court below that
Bellino does not foretell the interpretation to be accorded to
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the entirely distinct plan here at issue.
Plainly Unplain
Plainly Unplain
_______________
Lacking the authority of Bellino to support their
_______
argument that the phrase "reduction-in-force" is inherently
unambiguous, appellants' contentions are left with little
foundation. The Plan itself contains no elaboration of the
phrase. Dictionary definitions are inconclusive. Ordinary usage
11
points toward the district court's construction. Last but not
least, common sense counsels against the appellants' position.
Whatever the exact ramifications of the highly nuanced phrase
"reduction-in-force," that term would rarely be thought to cover,
for severance pay purposes, the selling of a division to another
company under circumstances in which the work force is kept
solidly in place by the purchaser, doing roughly comparable work
for roughly comparable wages. Indeed, several courts have so
held. See, e.g., Adcock, 822 F.2d at 626-27 (holding that the
___ ____ ______
sale of a division, not resulting in displacement of employees,
did not constitute a reduction in force; noting split among
courts on the issue); Lesman v. Ransburg Corp., 719 F. Supp. 619,
______ ______________
621 (W.D. Mich. 1989) (holding that the sale of an entire
business to a new employer did not constitute a reduction in
force), aff'd, 911 F.2d 732 (6th Cir. 1990); see also Awbrey v.
_____ ___ ____ ______
Pennzoil Co., ___ F.2d ___, ___ (10th Cir. 1992) [1992 WL 69070,
____________
at *4] (holding that employees of a division sold by a
corporation were not entitled to severance benefits from their
former employer); Lakey v. Reminington Arms Co., 874 F.2d 541,
_____ _____________________
545 (8th Cir. 1989) (similar).
To be sure, cases can be found that reach the opposite
result. But, the point is not whether cases such as Adcock and
______
Lesman are inevitably correct. The point is that those cases
______
which flatly reject the notion that the sale of a business unit
constitutes a reduction in force, triggering payment of severance
benefits, when the sale does not result in any period of
12
unemployment or significant loss of income for the seller's
former employees convincingly demonstrate that the phrase
"reduction-in-force," shorn of built-in definitional trappings or
compelling context, does not have a single plain and unambiguous
meaning. In our view, a phrase which, like this one, is
susceptible to differing, but nonetheless plausible,
constructions, depending in part on the context in which it is
used, is ambiguous. See Fowler v. Boise Cascade Corp., 948 F.2d
___ ______ ___________________
49, 54 (1st Cir. 1991) ("Contract language is ambiguous when it
is reasonably prone to different interpretations."); In re
______
Navigation Technology Corp., 880 F.2d at 1495 (similar).
___________________________
So here. The phrase "reduction-in-force" is
sufficiently imprecise in the present setting that its meaning
must be considered unplain. Refined to bare essentials, the
extent of Adage's liability to its former employees for severance
pay, if any, cannot definitively be ascertained from the language
of the
Plan alone. Because appellants' interpretation of the disputed
phrase is only one of several possible meanings reasonably
available on an unvarnished reading of the Plan and, in the
bargain, among the least persuasive of that cadre5 the
____________________
5Of course, appellants cannot win by simply persuading the
court that "reduction-in-force" is unambiguous. They must
proceed to show that their proposed interpretation of the
allegedly unambiguous term is correct. In this case, if we were
to assume no ambiguity and consider only whether appellants'
proposed interpretation is supportable, we would nevertheless
affirm because appellee and the district court have proposed an
interpretation of "reduction-in-force" that is more reasonable
than appellants' proposed interpretation.
13
district court did not err in determining that the phrase was
ambiguous.
B.
B.
__
This determination does not end our inquiry. Even
though the Plan is ambiguous, we must still consider whether the
district court appropriately resolved the ambiguity.
Appellants' Assertions
Appellants' Assertions
______________________
Appellants urge that we should apply the doctrine of
contra proferentem and resolve the ambiguity against Adage, as
__________________
the draftsman. But in most ERISA cases, resort to contra
______
proferentem contradicts the combined principles of the law of
___________
trusts and de novo review. In Bruch, the Court analogized ERISA
__ ____ _____
benefit plans to trust agreements and observed that trust
agreements are to be construed "without deferring to either
party's interpretation." Bruch, 489 U.S. at 112. The clear
_____
implication of Bruch is that courts should not defer to either
_____
side in interpreting severance pay plans. See Bellino, 944 F.2d
___ _______
at 31-32; Brewer v. Lincoln Nat'l Life Ins. Co., 921 F.2d 150,
______ ____________________________
153-54 (8th Cir. 1990), cert. denied, 111 S. Ct. 2872 (1991);
_____ ______
Avondale Indus., 905 F.2d at 950. In short, de novo review looks
_______________ __ ____
to the language of the plan (supplemented in appropriate cases by
evidence essential to resolving a relevant ambiguity), not to any
one party's interpretation of that language.6
____________________
6It is true that the doctrine of contra proferentem has been
__________________
applied to insurance contracts in the ERISA environment. See,
___
e.g., Masella v. Blue Cross & Blue Shield of Connecticut, Inc.,
____ _______ _______________________________________________
936 F.2d 98, 107 (2d Cir. 1991); Kunin v. Benefit Trust Life Ins.
_____ _______________________
Co., 910 F.2d 534, 539-41 (9th Cir.), cert. denied, 111 S. Ct.
___ _____ ______
14
Equally unavailing is appellants' bootstrap argument
that Adage should lose because it was required to memorialize in
writing any exceptions or amendments to the grant of severance
pay contained in the Plan. The central fallacy of this argument
is that it presumes the validity of a proposition that we have
already discarded. In order to know that something is an
exception or amendment, one must assume that he knows exactly how
far the basic document reaches. But, this is precisely what we
do not know from the face of the Plan which is, as we have said,
ambiguous in respect to the sweep of the term "reduction-in-
force."
The Meaning of the Phrase
The Meaning of the Phrase
_________________________
Putting these assertions to one side, we must still
determine the meaning of the ambiguous phrase. In doing so, we
are bound to construe the language of the plan "as interpreted in
light of all the circumstances and such other evidence of the
intention of the settlor . . . as is not inadmissible," Bruch,
_____
489 U.S. at 112 (citation omitted), and in a manner consistent
with the method of Rule 56. Thus, we must satisfy ourselves that
the evidence presented about the parties' intended meaning would
not support conflicting interpretations of the disputed phrase.
____________________
581 (1990), reh'g denied, 111 S. Ct. 802 (1991). But we, like
_____ ______
other courts, believe that application of the doctrine in ERISA
cases generally would be inappropriate. See Taylor, 933 F.2d at
___ ______
1233-34; Brewer, 921 F.2d at 154 n.2. In fact, the Ninth Circuit
______
appears recently to have limited Kunin in much the way we
_____
suggest. See Eley v. Boeing Co., 945 F.2d 276, 279-80 (9th Cir.
___ ____ __________
1991) (noting that contra proferentem is applied to insurance
__________________
contracts, but not "automatically or universally . . . to other
[ERISA] contracts").
15
In deciphering the words "reduction-in-force," we think
it is important to remember that, typically, reductions in force
are permanent layoffs undertaken for budgetary or economic
reasons. Adams v. Ampco-Pittsburgh Corp., 733 F. Supp. 998, 1001
_____ ______________________
(W.D. Pa. 1989). It is also important in this case to remember
that the words appear in a severance pay plan and that the usual
purpose of such a plan is, first and foremost, to provide
employees with a buffer against the privations which so often
attend unforeseen layoffs. See, e.g., Awbrey, ___ F.2d at ___
___ ____ ______
[1992 WL 69070, at *4]; Bradwell v. GAF Corp., 954 F.2d 798, 801
________ _________
(2d Cir. 1992); Adcock, 822 F.2d at 626-27; Jung v. FMC Corp.,
______ ____ __________
755 F.2d 708, 713 (9th Cir. 1985); Sly v. P.R. Mallory & Co., 712
___ __________________
F.2d 1209, 1211 (7th Cir. 1983). While unemployment resulting
from a reduction in force is not always a necessary condition for
receipt of severance benefits, Bellino, 944 F.2d at 31, it is
_______
probable, in the absence of language indicating otherwise, that a
severance pay plan is geared to sheltering loyal workers from a
precipitous loss of income.
This probability is enhanced when the district court's
recension of the phrase is contrasted with the alternative
reading advocated by the appellants. It is surpassingly
difficult to fathom why an employer would provide a trouvaille
for employees who, when separated from its service, are
simultaneously transferred en masse, by prearrangement, to
another employer's payroll, without any temporal hiatus or
significant diminution of earnings or benefits. Accord Awbrey,
______ ______
16
___ F.2d at ___ [1992 WL 69070, at *4] (listing cases); Bradwell,
________
954 F.2d at 801 ("in the context of the sale of a business where
the buyer retains the former owner's employees, it would give a
windfall to award severance pay to employees who never changed
their jobs, and were never out of work"). We think it beggars
credulity to impute such altruistic beneficence to an employer
without some clear indication to that effect in the plan
documents.
The extrinsic evidence, though not robust, is one-sided
and points unerringly in the same direction. As mentioned
earlier, see supra p. 7, Adage offered uncontroverted proof of
___ _____
its past practice under the Plan.7 Although past practice may
not have as much probative value after Bruch as theretofore, see
_____ ___
Avondale Indus., 905 F.2d at 950, it is still frequently used by
_______________
courts as a device for deciphering the meaning of ambiguous plan
provisions. See, e.g., Taylor, 933 F.2d at 1233; Franklin, 919
___ ____ ______ ________
F.2d at 47; Garavuso v. Shoe Corps. of America Indus., Inc., 709
________ ____________________________________
F. Supp. 1423, 1428 (S.D. Ohio), aff'd, 892 F.2d 79 (6th Cir.
_____
1989). The lower court was entitled to look to such "past
practice" evidence in its effort to establish the meaning of the
phrase "reduction-in-force."
____________________
7We do not consider, under the rubric of past practice, the
statements of Adage officials concerning the meaning of the Plan.
These officials were not the Plan's draftsmen nor otherwise
involved in its formulation. Notwithstanding our disregard of
this evidence, we agree with the district court that, "[e]ven
without these statements of the Adage officials . . . there is
ample objective, undisputed evidence contained in the record to
establish the true intent of Adage's policy."
17
Here, the evidence of Adage's past practice in layoff
situations confirmed that the Plan's primary goal was to aid
terminated workers who faced the hardships of unemployment, not
merely to reward past service. Typically, Adage gave very little
notice to employees prior to layoff and it conditioned receipt of
severance pay upon loss of income, i.e., nonreceipt of
unemployment insurance benefits. This is strongly indicative of
a view that the Plan was meant to provide a cushion to workers
faced unexpectedly with the rigors of sudden unemployment. While
Adage had not previously sold a segment of its operations, and
thus, had no track record in identical situations, we think that
its previous method of handling layoffs had appreciable probative
value.
In fine, the ambiguity in the wording of Adage's
severance pay plan was susceptible to clarification by resort to
ordinary usage, the realities of commerce, and the company's past
practice. These factors convince us that, in the utter absence
of elaborate definitions or explicit statements of aspiration to
reward myrmidons for past service regardless of the circumstances
surrounding termination, the phrase "reduction-in-force" was
manifestly intended to have an economic dimension, requiring loss
of income or, at least, unemployment as a sine qua non for
____ ___ ___
coverage. Thus, appellants' interpretation of the Plan is
insupportable on this record.
To sum up, the Plan must be accorded its natural
construction and interpreted to comport with the root purpose of
18
severance pay plans generally. Given the uncontradicted facts,
the district court correctly concluded on summary judgment that
Part B of the Plan did not cover former Adage employees who,
coincident with their separation from service, began comparable
employment at comparable wages with NCS (the company that had
acquired the relevant unit of Adage's business operations).
Accord Harper, 920 F.2d at 545-46 (holding that employees
______ ______
immediately rehired by a terminating employer's successor under
terms comparable to those previously in effect were not entitled
to severance pay benefits).
V. CONCLUSION
V. CONCLUSION
We need go no further.8 On what we have before us,
there is no disputed issue of material fact. The Plan and past
practice under it combine to reflect the intended meaning of the
phrase "reduction-in-force." The appellants, who did not come
within that meaning, were not entitled to receive the severance
benefits for which they sued.
Affirmed.
Affirmed.
________
____________________
8The parties have raised a number of other arguments in
connection with this matter. Our disposition of the plaintiffs'
appeal renders consideration of most such points unnecessary.
The remainder do not warrant discussion.
19
In Re Navigation Technology Corporation, Debtor. Victor W. ... , 880 F.2d 1491 ( 1989 )
duvoisin-thomas-e-v-kennerly-montgomery-howard-and-finley-kennerly , 911 F.2d 732 ( 1990 )
Leroy D. Schoch v. First Fidelity Bancorporation and ... , 912 F.2d 654 ( 1990 )
Chambers v. Prudential Insurance Co. of America , 776 F. Supp. 1166 ( 1991 )
Lesman v. Ransburg Corp. , 719 F. Supp. 619 ( 1989 )
Joan C. Burnham, Etc. v. The Guardian Life Insurance ... , 873 F.2d 486 ( 1989 )
James Bellino v. Schlumberger Technologies, Inc. , 944 F.2d 26 ( 1991 )
James W. Sly and Schorling Schneider on Behalf of ... , 712 F.2d 1209 ( 1983 )
Daniel Kunin v. Benefit Trust Life Insurance Company , 910 F.2d 534 ( 1990 )
Sandra L. Eley v. Boeing Company King County Medical Blue ... , 945 F.2d 276 ( 1991 )
robert-p-brewer-natural-guardian-and-duly-appointed-next-friend-of-robert , 921 F.2d 150 ( 1990 )
Harry Jung, Individually and on Behalf of All Other Persons ... , 755 F.2d 708 ( 1985 )
Reed Franklin v. Pitney Bowes, Inc. , 919 F.2d 45 ( 1990 )
Gerald Griggs-Ryan v. Beulah Smith, Gerald Griggs-Ryan v. ... , 904 F.2d 112 ( 1990 )
andy-l-lakey-jr-lwana-j-rush-george-e-rush-robert-w-harshner-james , 874 F.2d 541 ( 1989 )
The Boston Five Cents Savings Bank v. Secretary of the ... , 768 F.2d 5 ( 1985 )
Itt Corporation v. Ltx Corporation , 926 F.2d 1258 ( 1991 )
Burger King Corporation v. The Horn & Hardart Company , 893 F.2d 525 ( 1990 )
Computer Systems of America, Inc. v. International Business ... , 795 F.2d 1086 ( 1986 )