Sutton v. Bellsouth

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
09/22/99
THOMAS K. KAHN
No. 98-9328 CLERK
Non-Argument Calendar
________________________
D. C. Docket No. 1:96-CV-1842-HTW
D. BARRY SUTTON,
Plaintiff-Appellant,
versus
BELLSOUTH TELECOMMUNICATIONS, INC.;
BELLSOUTH TELECOMMUNICATIONS, INC.,
COMPETITIVE MANAGEMENT RESTAFFING
PLAN, et al.,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
_________________________
(September 22, 1999)
Before COX, BLACK and MARCUS, Circuit Judges.
PER CURIAM:
Appellant Barry Sutton brought this action pursuant to the enforcement
provisions of the Employee Retirement Income Security Act of 1974 (ERISA), 29
U.S.C. § 1132. He claims that Appellee BellSouth Telecommunications, Inc. (the
Company) terminated him in violation of the express provisions of the
Competitive Management Restaffing Plan (the Restaffing Plan), which is an
employee welfare benefit plan established and maintained pursuant to ERISA. The
district court rejected Appellant’s claims and granted summary judgment in favor
of the Company and the other Appellees. The district court reasoned that the
Company’s decision to terminate Appellant occurred apart from the decision to
offer him severance benefits under the Restaffing Plan and therefore did not trigger
ERISA’s remedial provisions. Based upon our review of the record, we affirm.
We exercise a complete and independent review of the district court's grant
of summary judgment to determine whether there are any genuine issues of
material fact which preclude judgment as a matter of law in favor of the moving
party. See Rayle Tech, Inc. v. Dekalb Swine Breeders, Inc., 133 F.3d 1405, 1409
(11th Cir. 1998).
The Company is engaged in an ongoing effort to reduce its management
workforce to ensure it maintains its competitive advantage in the marketplace. As
part of this effort, the Company utilizes a process known as the Management Panel
2
Evaluation Process (the Panel Process) to continually rank and classify employees
to determine their relative abilities. Pursuant to the guidelines governing the Panel
Process, the Company identifies the group, or “universe,” of employees who will
be considered for termination. A universe is a group of employees in a specific job
grade who lack specific skills necessary to the Company, such as competitive
market experience or market segment expertise. Employees within the relevant
universe are then ranked by evaluators with at least six months' significant
exposure to the employees within the preceding three-year period.
In May 1995, Charles Coe, the Group President of Customer Operations,
determined that supervisory employees at job grade 64 in the customer operations
organization, which included Appellant, lacked sufficient expertise in several
areas, including competitive market experience and experience in the wireless
communications industry. Coe decided that three vacancies were necessary to
address this deficit and that the Company should offer severance pay and health
insurance coverage for a specified period to employees who terminated
employment to create vacancies to be filled by individuals with the needed critical
skills. At Coe's request, the Vice-President of Human Resources, Rebecca Dunn,
approved the use of the Restaffing Plan and sent the following memorandum
(Dunn Memorandum) to Company officers:
3
a. The [Restaffing Plan] provides for involuntary separation of a
predetermined number of managers in a defined group, where the
group has been identified as having a deficit in understanding of
technology, market expertise, or competitive market intelligence.
b. Under the [Restaffing Plan],
(1) [C]reated vacancies must be backfilled with external hires,
(2) [C]reated vacancies may not be used for lateral or promotional
movement, and
(3) [I]ncumbents in the defined groups will be rated utilizing the
[Panel Process].
The Company thereafter identified 21 employees in the relevant universe to
be evaluated by the Panel Process. Three individuals evaluated Appellant and he
was subsequently offered severance benefits under the Restaffing Plan in exchange
for agreeing to sign a release of all claims against the Company. Appellant
appealed the Company's decision to terminate him pursuant to an internal review
procedure established under the Restaffing Plan. His claim was denied and he
subsequently signed a partial release to receive severance benefits.1 Meanwhile,
the Company filled Appellant’s position by promoting a BellSouth employee rather
than by seeking an external candidate for the position.
A beneficiary of an ERISA plan may bring an action in federal court “to
recover benefits due to him under the terms of his plan, to enforce his rights under
1
The Company permitted Appellant to sign the release and agreed not to assert it as a bar
to a lawsuit brought pursuant to ERISA, provided that the suit did not exceed the scope of the issues
raised in the internal review procedure.
4
the terms of the plan, or to clarify his rights to future benefits under the terms of
the plan.” 29 U.S.C. § 1132(a)(1)(B). Additionally, a beneficiary may seek relief
for breach of a fiduciary obligation for “any act or practice which violates any
provision of [ERISA] or the terms of an ERISA plan.” 29 U.S.C. § 1132(a)(3); see
also Varity Corp. v. Howe, 116 S. Ct. 1065, 1076-77 (1996).
Appellant contends these remedial provisions provide him with a cause of
action under federal law to challenge the decision to terminate him from
employment. He contends the Restaffing Plan, which is governed by ERISA,
incorporates the Panel Process by reference and thereby subjects his dismissal to
review under ERISA. He argues the Restaffing Plan incorporates the Panel
Process because: (1) the Dunn Memorandum discusses the termination process as
part of the severance payments under the Restaffing Plan; and (2) the Restaffing
Plan itself refers to the process for terminating employees.2 Sutton therefore
contends the Company violated his rights under ERISA by violating its guidelines
for the Panel Process by: (1) improperly including him in the relevant universe of
employees; (2) filling his position with a BellSouth employee rather than with an
external candidate; (3) evaluating him with someone who had no personal
2
For instance, the Restaffing Plan states that employees will be evaluated by a “procedure
selected by the Participating Company.” Additionally, the Restaffing Plan refers to a “rat[ing] and
rank[ing]” process.
5
knowledge of his work; and (4) failing to afford a full or fair review of the
Company’s decision to terminate him.
We conclude that the termination process is not governed by ERISA because
it occurred apart from and was distinct from the process to offer severance benefits
to terminated employees. Significantly, those employees selected for termination
are not even required to participate in the severance pay plan. They may choose
not to participate in the plan, in which case they are terminated without benefits
and may pursue other remedies against the Company.
Our conclusion is also supported by the general proposition that corporate
managerial decisions are not governed by ERISA because they do not involve
discretionary acts regarding plan administration. See, e.g., Local Union 2134,
United Mine Workers of America v. Powhatan Fuel, Inc., 828 F.2d 710, 713-714
(11th Cir. 1987) (“One assumes fiduciary status only when and to the extent that
they function in their capacity as health plan fiduciaries, not when they conduct
business that is not regulated by ERISA.”) (quotation and citation omitted). In this
case, Appellant is not seeking to recover benefits or to enforce or clarify his rights
under the terms of a plan. He is seeking redress for the Company’s decision to
terminate him. Such an action does not exist under state law here because Georgia
courts have refused to create a claim for wrongful termination of an at will
6
employee. See Borden v. Johnson, 395 S.E.2d 628, 628-29 (Ga. Ct. App. 1990)
(refusing, in the absence of a relevant statute, to create a wrongful termination
claim for an at will employee). We refuse to create such a claim under ERISA in
this case because the termination decision occurred apart from the management or
administration of the ERISA plan. See Varity Corp., 116 S. Ct. at 1072-1073.
In sum, the Company's termination decision did not involve any aspect of an
ERISA plan. We therefore affirm the district court’s grant of summary judgment
in favor of Appellees.
AFFIRMED.
7