Noorily v. Thomas & Betts Corp.

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
8-25-1999
Noorily v. Thomas & Betts Corp.
Precedential or Non-Precedential:
Docket 98-6298, 98-6392, 98-6432
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Recommended Citation
"Noorily v. Thomas & Betts Corp." (1999). 1999 Decisions. Paper 234.
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Filed August 25, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 98-6298, 98-6328,
and 98-6432
PETER NOORILY; RAYMOND P. NASTAWA
v.
THOMAS & BETTS CORPORATION; EMPLOYEE
BENEFIT PLAN OF THOMAS & BETTS CORPORATION
(D.C. Civil No. 93-2227)
SIDNEY LEVY
v.
THOMAS & BETTS CORPORATION; EMPLOYEE
BENEFIT PLAN OF THOMAS & BETTS CORPORATION
(D.C. Civil No. 93-2228)
WILLIAM O. DECK
v.
THOMAS & BETTS CORPORATION; EMPLOYEE
BENEFIT PLAN OF THOMAS & BETTS CORPORATION
(D.C. Civil No. 93-2229)
Thomas & Betts Corporation; Employee
Benefit Plan of Thomas & Betts Corporation,
Appellants in No. 98-6298
PETER NOORILY; RAYMOND P. NASTAWA
v.
THOMAS & BETTS CORPORATION; EMPLOYEE
BENEFIT PLAN OF THOMAS & BETTS CORPORATION
(D.C. Civil No. 93-2227)
SIDNEY LEVY
v.
THOMAS & BETTS CORPORATION; EMPLOYEE
BENEFIT PLAN OF THOMAS & BETTS CORPORATION
(D.C. Civil No. 93-2228)
WILLIAM O. DECK
v.
THOMAS & BETTS CORPORATION; EMPLOYEE
BENEFIT PLAN OF THOMAS & BETTS CORPORATION
(D.C. Civil No. 93-2229)
Peter Noorily; Raymond P. Nastawa;
Sidney Levy; William O. Deck,
Appellants in No. 98-6328
PETER NOORILY; RAYMOND P. NASTAWA
v.
THOMAS & BETTS CORPORATION; EMPLOYEE
BENEFIT PLAN OF THOMAS & BETTS CORPORATION
(D.C. Civil No. 93-2227)
SIDNEY LEVY
v.
THOMAS & BETTS CORPORATION; EMPLOYEE
BENEFIT PLAN OF THOMAS & BETTS CORPORATION
(D.C. Civil No. 93-2228)
2
WILLIAM O. DECK
v.
THOMAS & BETTS CORPORATION; EMPLOYEE
BENEFIT PLAN OF THOMAS & BETTS CORPORATION
(D.C. Civil No. 93-2229)
Thomas & Betts Corporation; Employee
Benefit Plan of Thomas & Betts Corporation,
Appellants in No. 98-6432
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civ. No. 93-02227/28/29)
District Judge: Honorable Katharine S. Hayden
Argued: July 15, 1999
BEFORE: GREENBERG and ALITO, Circuit Judges,
and STAFFORD,* District Judge
(Filed: August 25, 1999)
Paul Z. Lewis (argued)
Lewis & McKenna
82 East Allendale Road
Saddle River, NJ 07458
Attorneys for appellants-cross
appellees Thomas & Betts Corp.
and Employee Benefit Plan of
Thomas & Betts Corp.
_________________________________________________________________
*Honorable William H. Stafford, Jr., Senior Judge of the United States
District Court for the Northern District of Florida, sitting by
designation.
3
Peter S. Pearlman (argued)
Audra DePaolo
Cohn Lifland Pearlman Hermann
& Knopf
Park 80 Plaza West One
Saddle Brook, NJ 07663
Attorneys for appellees-cross
appellants Peter Noorily,
Raymond P. Nastawa, Sidney
Levy, and William O. Deck
OPINION OF THE COURT
GREENBERG, Circuit Judge.
I. FACTUAL AND PROCEDURAL HISTORY
A. Introduction
This matter comes on before this court in this action
under the Employment Retirement Income Security Act
("ERISA"), 29 U.S.C. SS 1001 et seq ., on the defendants'
appeal from orders of the district court entered August 6,
1998, awarding severance benefits and October 19, 1998,
awarding the plaintiffs attorney's fees and prejudgment
interest. In addition, the matter is before this court on the
plaintiffs' cross-appeal from an order entered August 17,
1995, dismissing plaintiffs' appeal to the district court from
a magistrate judge's order imposing sanctions on the
plaintiffs and from a subsequent order of the district court
on June 23, 1998, expanding the sanctions by precluding
the plaintiffs from offering certain testimony at trial. This
litigation stems from the defendant Thomas & Betts ("T&B")
Corporation's decision to relocate particular business
operations and employees from Bridgewater, New Jersey, to
Memphis, Tennessee, and its related determination that
certain employees who refused to relocate would not receive
benefits under its severance plan. T&B manufactures and
sells connectors, fittings and wiring accessories for the
electrical and electronic industries. Plaintiffs Peter Noorily,
Raymond Nastawa, Sidney Levy and William Deck were
4
product engineers in T&B's Electrical Division in
Bridgewater who refused to relocate to Memphis.
B. Factual History
In November 1991, T&B signed an agreement to acquire
American Electric, a manufacturer of electrical products
and accessories. Inasmuch as T&B then decided to relocate
its Electrical Division to Memphis it held meetings in early
December 1991 to inform its employees of the impending
relocation. In at least one of these meetings T&B's
management, in response to a question posed by a product
engineer, stated that employees choosing not to relocate
would receive severance payments from T&B's unfunded
benefit plan. Additionally, Richard Lovell, then director of
Human Resources in T&B's Electrical Division, told Noorily
and Levy that T&B would make severance payments to
employees who decided not to relocate. Plaintiffs, however,
do not dispute T&B's assertion that it wanted them to
relocate to Memphis and they concede that "this action
does not involve any claims of discrimination." Br. at 21.
On December 6, 1991, Lovell issued a memorandum
discussing T&B's severance policy in connection with the
relocation. Although T&B marked the memorandum
confidential and intended it merely to be a guide to
managers seeking to answer employee questions, it
acknowledges that the memorandum was circulated widely
among the employees. The memorandum stated that T&B
would deny severance benefits only to employees who left
prior to the release date or who agreed to relocate and then
changed their minds. Moreover, it specified that employees
who chose not to relocate but who remained with T&B until
the release date would receive severance payments. At that
time, T&B's severance policy provided for benefits to
employees who were "involuntarily terminated" when "the
terminating manager believes the granting of such pay is
appropriate."
T&B's management made the statements concerning
severance benefits believing that a large majority of the 35
product managers and engineers in its Electrical Division
would relocate. T&B regarded their relocation as critical
because it viewed its product managers and engineers as
5
"key" employees. By the end of December 1991, however,
T&B's management recognized that many of the product
engineers did not want to relocate. T&B was concerned
about their reluctance as it considered that the engineers'
absence could affect the success of the pending merger.
Moreover, T&B's management decided that it would be
counterproductive to offer the engineers who refused to
relocate severance benefits as the benefits themselves
would encourage them not to relocate. Therefore, Kevin
Dunnigan, the president of T&B, determined that any
engineer whom T&B asked to relocate, but who refused,
would not receive severance benefits because T&B would
consider the refusal as a voluntary resignation. The
plaintiffs received a memorandum on January 6, 1992,
informing them of this decision but each objected to T&B's
position and refused to sign an attached document
indicating he was resigning. There can be no doubt that
T&B's stated wish that the engineers relocate was not
pretextual as T&B offered them substantial financial
incentives to do so.
The plaintiffs, however, for compelling personal reasons
decided not to relocate. All had longstanding ties to their
communities as well as obligations to family members.
Further, the plaintiffs considered their age and T&B's
refusal to guarantee them long-term work in Memphis as
reasons not to relocate. Thus, Noorily was 61 years old at
the time of the relocation and had worked for T&B for over
22 years. With his wife, he was responsible for caring for
both his mother and mother-in-law, who was nearly
bedridden. Nastawa was 45 years old in January 1992, and
had worked for T&B for 17 years. He also cared for his
extremely ill mother-in-law and had children attending
school in New Jersey. Furthermore, his wife had an
established career in the area. Levy had worked for T&B for
over 20 years at the time of the relocation and was 59 years
old. He and his wife provided care to his mother and
mother-in-law. Finally, Deck was 59 years old at the time
of the relocation and had worked for T&B for over 25 years.
Like the other plaintiffs, he had significant family
responsibilities as he was the primary caregiver for his ill
mother. Inasmuch as the plaintiffs would not relocate,
Noorily's and Nastawa's employment with T&B ended on
6
February 14, 1992, and Deck and Levy, each of whom
performed transition work for T&B, left the company in
June and September 1992, respectively.
C. Procedural History
Noorily and Nastawa originally filed suit in the Superior
Court of New Jersey alleging that T&B's refusal to pay them
severance benefits was a breach of their employment
contract. After T&B moved for dismissal on ERISA
preemption grounds, the parties executed a stipulation of
dismissal without prejudice. Then on May 19, 1993, Noorily
and Nastawa filed this action as plan participants in the
district court under ERISA S 502(a)(1)(B), 29 U.S.C.
S 1132(a)(1)(B), against T&B and its Employee Benefit Plan
seeking benefits they claimed were due to them under
T&B's severance plan.1 Levy and Deck filed separate,
similar complaints on that date in the district court. The
district court consolidated the three actions in June 1997
at plaintiffs' request. As a matter of convenience we refer to
the defendants simply as T&B.
On November 4, 1994, T&B moved for sanctions against
plaintiffs' attorneys for having allegedly improper ex parte
contacts with three former T&B employees. A magistrate
judge granted the sanctions motion on December 6, 1994,
and precluded plaintiffs from calling these witnesses at
trial. The plaintiffs then appealed to the district court
which, through Judge Bissell, on August 17, 1995, upheld
the order and dismissed the plaintiffs' appeal. At the outset
of the trial Judge Hayden, on T&B's motion, expanded the
scope of the sanctions by prohibiting the plaintiffs and their
witnesses from testifying at the trial with respect to
representations by these improperly contacted employees.
The parties tried the case at a bench trial before Judge
Hayden from June 23, 1998, to June 29, 1998. The court
ruled in favor of the plaintiffs on July 7, 1998, in a
comprehensive oral decision, finding that T&B had
involuntarily terminated the plaintiffs' employment and had
violated its fiduciary duty under ERISA by arbitrarily and
_________________________________________________________________
1. It appears that the case could have proceeded under ERISA in the
state courts. See ERISA S 502(e)(1), 29 U.S.C. S 1132(e)(1).
7
capriciously denying them severance benefits under its
severance plan. In an August 6, 1998 judgment order, the
court granted the plaintiffs substantial severance benefits,
which included severance pay and medical benefits
according to the schedule provided in T&B's plan. On
plaintiffs' post-trial motion, the court by an order of
October 19, 1998, awarded them attorney's fees, costs, and
prejudgment interest.
T&B has filed timely notices of appeal both from the
August 6, 1998 order awarding plaintiffs severance benefits
and from the October 19, 1998 order granting them
attorney's fees, costs, and prejudgment interest. The
plaintiffs have cross appealed from the order dismissing the
appeal from the imposition of sanctions against them as
well as from the determination limiting the use at trial of
evidence regarding the improperly contacted employees'
representations. The district court had subject matter
jurisdiction under ERISA S 502(e)(1), 29 U.S.C. S 1132(e)(1),
and 28 U.S.C. S 1331, and we have jurisdiction under 28
U.S.C. S 1291.
II. DISCUSSION
A. Standard of review
We exercise plenary review on this appeal because the
outcome determinative historical facts are not in dispute,
and we accept the district court's factual findings. Thus,
this case essentially involves questions of law"with respect
to the legal effect" of the severance plan. Atacs Corp. v.
Trans World Communications, Inc., 155 F.3d 659, 665 (3d
Cir. 1998).
B. Was T&B Acting as a Fiduciary When It Decid ed That It
Would Not Provide the Plaintiffs with Severance Benefits
Under Its Severance Plan?
We first address T&B's contention that its determination
to deny the plaintiffs severance benefits was a "business
decision" immune from the standards that section 404 of
ERISA, 29 U.S.C. S 1104, establishes for fiduciaries. In
considering this point we note that T&B acknowledges that
its severance policy was a "welfare plan" as that term is
8
defined in ERISA S 3(1), 29 U.S.C. S 1002(1). T&B's dual
role as the plan's administrator as well as the employer,
however, complicates our analysis. The plan clearly reflects
this dual role as it provides that "[a]ll fringe benefits
covered under this policy are administered by the Corporate
Benefits Committee" which consists of certain T&B officers.
On the other hand, the plan provides that an award of
severance pay is made when "the terminating manager
believes the granting of such pay is appropriate."
When an employer makes decisions about the design of
a welfare plan, such as a severance plan, it functions as an
employer and not as an administrator and thus it is not
acting as a fiduciary. See Hlinka v. Bethlehem Steel Corp.,
863 F.2d 279, 285 (3d Cir. 1988). Accordingly, an employer
can create a plan that furthers its business interests, and
it can act according to these interests in amending or
terminating the plan. See Hozier v. Midwest Fasteners, Inc.,
908 F.2d 1155, 1162 (3d Cir. 1990). Moreover, to the
degree that the plan gives an employer discretion, the
employer is not a fiduciary when it makes determinations
according to the plan's terms that affect employees'
eligibility for benefits. See Berger v. Edgewater Steel Co.,
911 F.2d 911, 918 (3d Cir. 1990). Thus, in Berger, we held
that the employer was not acting in a fiduciary capacity
when it determined, as the plan permitted it to do, that the
early retirement of certain employees was not in its best
interest. See id. at 918-19. However, when the employer is
administering the plan and paying out benefits, it acts as a
fiduciary and must act in the interest of the plan's
participants. See Hozier, 908 F.2d at 1158-59 (citing ERISA
S 404, 29 U.S.C. S 1104, which establishes fiduciary
standards under ERISA).
In sum, then, the employer acts as a fiduciary when
administering a plan but not when designing a plan or
making business decisions, even though in all three
situations its determinations may impact on its employees.
It is important to keep these distinctions in mind when
considering an ERISA case.
As we have indicated, the severance plan in this case
provided T&B with discretion in determining whether to
award severance benefits for it provided for an award only
9
if the terminating manager thought that it was
"appropriate" to do so. Inasmuch as the plan gave this
discretion to T&B as an employer through its terminating
manager rather than as an administrator through its
Corporate Benefits Committee, T&B is correct in its
contention that it was not acting in a fiduciary capacity
when it determined that granting severance benefits to the
plaintiffs would not be "appropriate" because it was not in
T&B's interest to do so. Once T&B made this management
determination, T&B as the administrator through its
Corporate Benefits Committee was obliged to implement the
decision and thus cannot be deemed to have violated its
fiduciary duties by acting according to the "employer's"
determination. See Berger, 911 F.2d at 918-19. Similarly, if
T&B as employer had determined to award severance
benefits then its Corporate Benefits Committee would have
been obliged to implement that decision. The district court
therefore erred in concluding that T&B had breached its
fiduciary duties to the plaintiffs.
Nevertheless, our conclusion that T&B did not act in a
fiduciary capacity in its determination to deny severance
benefits does not end the case because the plaintiffs are not
suing simply for breach of fiduciary duty. Rather, their
complaint and their arguments at trial and in this court
show that they believe that they are entitled to benefits
under the plan and that T&B misapplied the plan in
denying them benefits. Thus, they have predicated their
claims on breach of contract principles and, upon a proper
showing, the claims could be upheld on that basis under
ERISA. See Kemmerer v. ICI Americas Inc., 70 F.3d 281,
287 (3d Cir. 1995). Of course, if we agree with the plaintiffs
on their contract theory we can affirm even though we are
rejecting the district court's reasoning that T&B violated its
fiduciary obligations. See United States v. Soberon, 929
F.2d 935, 940 (3d Cir. 1991).2
_________________________________________________________________
2. T&B argues that plaintiffs cannot recover on contract principles as the
severance plan does not create "vested contractual" rights. In view of our
result we have no need to address this point.
10
C. Does T&B's Severance Plan Entitle the Plain tiffs to
Severance Benefits?
T&B argues that in rejecting the plaintiffs' claims for
severance benefits, it properly exercised the discretion the
plan allowed to it. In focusing upon the discretion granted
in the plan, T&B invokes a body of case law providing that
in cases brought under ERISA S 502(a)(1)(B), 29 U.S.C.
S 1132(a)(1)(B), a court applies de novo review in construing
an employee benefit plan unless "the benefit plan gives the
administrator . . . discretionary authority to determine
eligibility for benefits or to construe the terms of the plan."
Ulmer v. Harsco Corp., 884 F.2d 98, 101 (3d Cir. 1989)
(citing Firestone Tire and Rubber Co. v. Bruch, 489 U.S.
101, 111, 109 S. Ct. 948, 954-55 (1989)). If the plan does
grant such discretion, then a deferential standard of review
is appropriate. See Bruch, 489 U.S. at 111-14, 109 S.Ct. at
954-57. However, these cases apply only to decisions
reached by administrators or fiduciaries, not employers. As
T&B itself has argued that it did not act as a fiduciary in
denying benefits, it cannot now rely on this case law.
Accordingly, in evaluating the plaintiffs' claims on breach of
contract principles, these cases are not controlling.
The district court held that T&B involuntarily terminated
the plaintiffs and that its decision to deny them benefits
was arbitrary and capricious. Thus, the parties regard the
court as having held that T&B "constructively discharged"
plaintiffs, although in its opinion of July 7, 1998, the court
did not explicitly so hold.3 In the circumstances the parties
quite naturally focus on the constructive discharge issue.
But we need not review the district court's decision that the
plaintiffs were involuntarily terminated because, assuming
without deciding that the district court was correct on that
point, the plan provides for the granting of severance pay
only when "the terminating manager believes the granting of
such pay is appropriate."
Unquestionably ERISA permits corporations to create
welfare plans that give their managers wide discretion. See,
_________________________________________________________________
3. The court did suggest, however, during oral argument at the
conclusion of the trial that a constructive discharge and an involuntary
termination were the same thing. App. at 1802.
11
e.g., McNab v. General Motors Corp., 162 F.3d 959, 962 (7th
Cir. 1998). Indeed, it might be possible to read T&B's plan
to render unreviewable the terminating manager's decision
to deny severance benefits. Nevertheless we have no reason
to consider that possibility for the district court's factual
findings make it clear that T&B's decision to deny plaintiffs
severance benefits was not "arbitrary or capricious" and
thus we must uphold it. Of course, we refer to arbitrary or
capricious with respect to T&B's conduct as an employer
not as a fiduciary for, as we have explained, the cases
establishing a standard for reviewing a fiduciary's conduct
are not controlling. Clearly, there is a class of decisions
that might be arbitrary when considered from the point of
view of a plan participant that are perfectly appropriate for
an employer.
T&B argues that we should use a "bad faith" standard in
reviewing its conduct. This argument is substantial because
in Berger, after we rejected the application of a fiduciary
standard with respect to an employer's decisions denying
requests for retirement, we indicated that the employer's
determination nevertheless was "subject to no more than
the minimal obligation of good faith." Berger, 911 F.2d at
919. We are aware, however, that other courts have applied
an "arbitrary and capricious" standard for judicial review in
circumstances similar to those here. See McNab, 162 F.3d
at 962. While a "bad faith" standard would be more
deferential than the "arbitrary or capricious" standard, we
have no need to consider if it is applicable here as T&B did
not act arbitrarily or capriciously and therefore it cannot
possibly have acted in bad faith. Finally, on the standard of
review issue, we point out that we cannot conceive how a
court could impose a more exacting standard than that the
employer's decision not be arbitrary or capricious.
The district court in reaching its result indicated that
T&B's policy always has been to pay terminated employees,
except those who left voluntarily, severance pay. Thus,
when T&B moved its Electronic Division to South Carolina
in 1990 it made severance payments to employees who
declined to move.4 The court understandably also indicated
_________________________________________________________________
4. The Electronic Division is apparently distinct from the Electrical
Division.
12
that each of the plaintiffs had a compelling personal reason
to decline T&B's offer of employment in Memphis.
Moreover, the court indicated that "[o]ther than the
engineers in the engineering department, all employees who
did not move to Memphis received severance payment[s] in
accord with [T&B's] policy."
The court further stated that T&B's management
considered the plaintiffs to be critical employees but that
T&B was thinking of its interests rather than those of the
plaintiffs' in wanting them to move to Memphis. 5 Thus, the
court said that it was only when T&B discovered the extent
of the reluctance of the engineers to move that it
determined that "anyone who did not transfer his position
would not receive severance and would be considered as
having resigned." Yet the court recognized that T&B
perceived that its employees' unanticipated decision not to
relocate was threatening its decision to move its Electrical
Division.
Significantly, the court made the following findings:
The management decision in this case which isolated
the engineers who declined to transfer out of all others
directly affected the administration of severance to all
employees who did not relocate, and as such I find that
it was a breach of fiduciary duty to administer the plan.
I find the act of applying the severance plan benefits
to all employees, whether they were going or staying,
whether they were in transition, not in transition, was
an act of welfare plan administration, and in so
undertaking that act I find under the [Hozier v. Midwest
Fasteners, 908 F.2d 1155] analysis that the company
had a fiduciary duty to administer the plan with the
benefit of the employees in mind and not its own
management welfare in mind.
_________________________________________________________________
5. The plaintiffs contend that they were not critical to T&B and that
subsequent events have demonstrated it has prospered without their
services. While plaintiffs may be correct in that assertion, their
argument
is immaterial because the significant fact is that, as the district court
found, T&B thought that the engineers were critical, and we judge T&B's
conduct on the basis of its view of the situation.
13
I find therefore that by arbitrarily denying welfare
benefits to certain employees whose jobs were
significantly affected by the acquisition and conferring
those benefits arguably to people equally affected by the
acquisition was a breach of that duty.
The court also indicated that "the uncontroverted testimony
supports my analysis that in an effort to combat a threat to
its management decision to [acquire] the Tennessee based
company, management decided in midstream to administer
its severance policy in a way that perverted the spirit and
intent of the severance plan under ERISA and its own
written policy."
Ultimately the court concluded that:
Overall then, I find the acquisition of American
Electric created a termination event that required
administration of severance plan to all employees.
Those employees choosing to accept . . . an offer of
continued employment were not terminated. Those
declining the offer were effectively terminated under the
circumstances established by the evidence, which
include geographical distance of the relocation, the
certainty of continued employment unameliorated by
management, and foreseeable effects on family life
which was specifically not considered on a individual
basis by management.
Thus, the court believed "that management's withholding of
these employees' severance pay was based on punitive
coercive motives designed solely to protect and benefit the
employer to the detriment of plaintiffs." Consequently, in
the court's view the plaintiffs were entitled to severance
benefits.
We cannot accept the district court's legal conclusions.
First of all, of course, for the reasons we already have set
forth we reject the district court's application offiduciary
standards here. Moreover, we see no reason for concluding
that "the terminating manager [who did not] believe[ ] the
granting of [severance] pay [was] appropriate" was arbitrary
or capricious in reaching that conclusion. In Berger we
indicated "that only the employer determines whether an
employee's retirement is in the company's best interest.
14
Neither the plan administrator nor the pension board have
the authority to override the company's business decision."
Berger, 911 F.2d at 918.
The T&B plan provided that the test for granting
severance pay upon involuntary termination was whether
the terminating manager believed "the granting of such pay
is appropriate." We fail to see how the denial of severance
pay was inappropriate as a business decision reached by
T&B. Plainly, there was nothing arbitrary or capricious
about T&B's decision to discourage employees it regarded
as critical from terminating their employment. Indeed, the
sincerity and reasonableness of T&B's decision was
demonstrated by its willingness to absorb substantial
expenses to relocate the plaintiffs.
The fact that in some other circumstances T&B awarded
severance pay to other employees who would not relocate in
no sense required it to find that it was appropriate to do so
in plaintiffs' cases. Obviously, an employer may make a
determination as to the appropriateness of granting
severance pay based on the circumstances of each case and
thus past practice cannot control its exercise of discretion
in other circumstances. See McNab, 162 F.3d at 961-62;
Nevill v. Shell Oil Co., 835 F.2d 209, 211 (9th Cir. 1987); cf.
Nazay v. Miller, 949 F.2d 1323, 1336 (3d Cir. 1991)
(administrator's decision). The district court's reasoning
was flawed as it considered whether T&B was acting
arbitrarily or capriciously as a fiduciary, and thus the court
was taking into account only the interests of the employees
as plan participants or beneficiaries. Viewed from the
correct prospective, T&B plainly was not arbitrary or
capricious in denying severance benefits and accordingly it
is entitled to a judgment in its favor.
T&B also argues that the district court abused its
discretion by awarding plaintiffs attorney's fees and costs
under ERISA S 502(g)(1), 29 U.S.C. S 1132(g)(1), as well as
prejudgment interest. Obviously, we have no need to linger
on this point as the reversal of the award of severance
benefits compels the reversal of the award of prejudgment
interest and attorney's fees and costs because plaintiffs are
no longer prevailing parties. Finally, T&B argues that the
15
district court erred in certain evidentiary rulings, but in
view of our result this issue is moot.
We carefully have examined plaintiffs' cross-appeal with
respect to the sanctions and find that it is clearly without
merit. In any event, we find nothing in plaintiffs' brief to
support a conclusion that the excluded evidence if admitted
could have created a record that would have led us to reach
a different result than the one we set forth. While plaintiffs
suggested at trial that the testimony would establish T&B's
liability, in view of our conclusions which are predicated on
legal determinations based on the plan itself, we reject this
contention.6
III. CONCLUSION
In closing our opinion we emphasize that while we are
treating this case as involving involuntary terminations and
that our result for this reason may seem harsh, the term
"involuntary termination" must be understood in the
context of this case. The parties agree that T&B wanted the
plaintiffs to remain in its employ, and thus T&B offered
them significant incentives to move to Memphis.
Accordingly, this case is not one in which the employees
were intentionally set adrift by an uncaring employer.
Moreover, this case in no sense involved oppressive or
intolerable employment conditions such as might have
constituted a constructive discharge in a discrimination
case. Quite to the contrary, this case concerns the effect on
the plaintiffs of T&B's unassailable business decision to
move its Electrical Division to Memphis. At bottom, then,
this case involves nothing more than an employer
determining that it is not appropriate to grant severance
benefits to employees leaving their employment when the
employer wishes them to remain.7 We will not reject such a
decision.
_________________________________________________________________
6. It is questionable whether plaintiffs have preserved the sanctions
issue
as they apparently intend to pursue it only if we remand the case for "a
new trial." Br. at 51 n.10; Reply Br. at 1 n.1. Of course, we are not
remanding for a new trial. Nevertheless, we are rejecting their
contentions on the merits.
7. We also point out that the decision to deny severance pay did not
nullify the plaintiffs' pension rights.
16
For the foregoing reasons the orders of August 6, 1998,
and October 19, 1998, will be reversed, and the order of
August 17, 1995, will be affirmed. The matter will be
remanded to the district court for entry of a judgment in
favor of T&B.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
17