Brian Pendleton v. Quiktrip Corporation

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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Nos. 08-2363/2434
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Brian Pendleton, *
*
Plaintiff – Appellant/ *
Cross –Appellee, *
* Appeals from the United States
v. * District Court for the
* Eastern District of Missouri.
QuikTrip Corporation, *
*
Defendant – Appellee/ *
Cross – Appellant. *
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Submitted: April 13, 2009
Filed: June 8, 2009
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Before MURPHY, HANSEN, and BYE, Circuit Judges.
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MURPHY, Circuit Judge
Brian Pendleton brought this action against QuikTrip pursuant to the Employee
Retirement Income Security Act of 1974 (ERISA), alleging that QuikTrip had
terminated his employment to prevent him from receiving benefits under the
company’s severance and stock plans. QuikTrip moved for summary judgment, and
the district court granted the motion after concluding that Pendleton was not entitled
to any benefits under the plans. The district court also denied QuikTrip’s motion for
attorney fees. Both parties appeal. We affirm.
Brian Pendleton worked at QuikTrip from 1989 until his termination in 2004.
He held several positions with the company, including his last post as a director of real
estate. In June 2004, Pendleton told his direct supervisor, Jeff Thoene, that he
intended to leave QuikTrip to pursue a career in private real estate development.
Thoene informed his boss, James Marchesano, about Pendleton’s plan to leave.
Marchesano then called Pendleton and asked him to reconsider. Although Pendleton
indicated that he did not want to stay at QuikTrip permanently, he agreed to postpone
his departure to assist with his replacement’s transition. Pendleton recommended to
Thoene that the new real estate director be someone with a background in real estate
and store development, rather than an insider who lacked such experience.
On July 23, 2004, Pendleton learned that his replacement would be Rodney
Loyd, a QuikTrip employee from the operations group at corporate headquarters.
That same day Pendleton held a meeting with his staff regarding the transition. After
announcing at the meeting that Loyd would succeed him, Pendleton then made
disparaging comments about Loyd and the company’s management. According to a
staff member who was present, Pendleton said that the selection of Loyd demonstrated
that QuikTrip “promote[s] operations people into positions where they don’t know
what they’re doing.” Pendleton also accused management of developing inbreeds and
referred to Loyd as a “twinkie bar” whose “only real estate experience was probably
buying a house, but not doing a sophisticated, complicated deal.”
Thoene and Marchesano quickly learned of Pendleton’s remarks at the staff
meeting. Thoene recommended to Marchesano that Pendleton be terminated
immediately “because he was just going to undermine [Loyd’s] ability to be able to
lead this group going forward.” QuikTrip’s president, Chet Cadieux, authorized
Marchesano to fire Pendleton if the comments were actually attributable to him.
Thoene and Marchesano met with Pendleton, who did not deny making the
statements, offer any excuses for his behavior, or apologize for his actions.
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As a result Thoene and Marchesano gave Pendleton a written dismissal notice
which stated that his termination was for “gross misconduct” and “insubordination.”
Marchesano also told Pendleton that his termination was “for cause.” Pendleton later
testified that he was not aware of any facts suggesting that Marchesano and Thoene
acted in bad faith in their decision to terminate him. Pendleton contends that Thoene
and Marchesano’s stated reasons for his termination were pretextual and that he was
actually fired so that QuikTrip could avoid paying him benefits under the company’s
severance and stock plans.
QuikTrip maintained an ERISA governed severance plan at the time that
Pendleton was terminated. The plan had undergone substantial revisions. The
original plan stated that “[s]everance pay based on tenure with QuikTrip will be
provided when a full-time employee terminates employment for any reason with the
exception of gross misconduct.” A revised plan was in place at the time of
Pendleton’s termination, however, which narrowed the availability of severance pay.
The policy section of the revised plan states that its primary purpose is to
“accommodate position eliminations/lay-offs.” The policy section also provides that
“[s]everance pay based on tenure with QuikTrip may . . . be provided to full time
employees who are physically unable to perform their job duties, meet the Rule of 75,
or upon death,”1 but states that employees terminated for cause are ineligible for
severance. The procedure section of the plan states that severance packages for
directors, such as Pendleton, “will be negotiated” but indicates that a director must
meet one of the criteria in the policy section, such as death or disability, even to
qualify for negotiations.
1
The rule of 75 is a formula used by QuikTrip to determine the availability of
benefits. To qualify, an employee’s age combined with years of service must equal
75. For example, an employee who is 53 years of age and has worked at QuikTrip for
22 years would qualify (22 + 53 = 75).
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Several documents were circulated to QuikTrip employees in relation to the
revised severance plan, including a memorandum by QuikTrip’s president which
described the new severance plan as “a significant change” that would reduce benefits.
Nevertheless, an email written by the director of human resources stated that there was
“no change” for directors in the revised plan. She later testified that her email only
clarified that the amount of severance would not change but that it did not indicate that
all directors still qualified for severance pay.
QuikTrip also maintained a stock plan at the time of Pendleton’s termination.
In pertinent part, the stock plan states:
In the event that the relationship between the Participant and the
Company is terminated, either voluntarily or involuntarily . . . the
Company shall have the irrevocable options, exercisable within one
hundred eighty (180) days after the date of the payment of the final cash
severance benefit by the payment of cash, to purchase the shares of stock
of the Company owned by the participant at its book value of the stock
as of the end of the last month preceding the date of the payment of the
final cash severance benefit . . . .
(R. at 412). While the stock plan provides QuikTrip with the right to quickly
repurchase its stock within a 180 day period after termination, the plan allows specific
employees to slow the speed at which QuikTrip can repurchase its stock. Terminated
employees with 20 years or more with the company or employees who “retire” from
the company may retain ownership of some QuikTrip stock for more than 180 days.
An employee “retires” from the company if he satisfies the rule of 75, becomes
permanently disabled, or the board of directors specially places him in this category.
Pendleton contends that QuikTrip actually gave other real estate directors
generous severance payments and stock benefits when they left the company. Around
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the time of Pendleton’s termination, three other real estate directors, who voluntarily
left the company and did not meet any of the plans’ specific requirements, received
severance and stock benefits. QuikTrip maintains that Pendleton did not receive the
same benefits as the other directors because he was terminated for cause and did not
fulfill his promise to aid in his successor’s transition. In August, 2004, QuikTrip
offered Pendleton eight weeks of severance pay, which he refused to accept. Then in
December, 2004, QuikTrip attempted to repurchase Pendleton’s 4,517 shares of its
stock under the terms of the stock plan. Pendleton refused to tender his shares. Prior
to the initiation of this action, QuikTrip also paid Pendleton’s final salary, outstanding
bonuses, and related benefits.
Pendleton filed a complaint in district court alleging that QuikTrip had
terminated him to interfere with his rights to benefits under both the severance and
stock plans, in violation of § 510 of ERISA, 29 U.S.C. § 1140. The district court
granted QuikTrip’s motion for summary judgment after concluding that Pendleton
was not entitled to any benefits under QuikTrip’s plans. Pendleton appeals,
contending that the district court erred in granting summary judgment because genuine
issues of material facts exist as to Pendleton’s benefits under the company plans and
QuikTrip’s actual reasons for terminating Pendleton.
We review a district court’s grant of summary judgment de novo. Fischer v.
Anderson Corp., 483 F.3d 553, 556 (8th Cir. 2007). Summary judgment is
appropriate when the evidence, viewed in the light most favorable to the nonmoving
party, presents no genuine issue of material fact and the moving party is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586–87 (1986). Summary judgment should be
granted if any essential element of the prima facie case is not sufficiently supported
by specific facts to raise genuine issues for trial. Celotex Corp. v. Catrett, 477 U.S.
317, 324 (1986).
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Section 510 of ERISA makes it unlawful for an employer to discharge an
ERISA plan participant “for the purpose of interfering with the attainment of any right
to which such participant may become entitled under the plan.” 29 U.S.C. § 1140.
To prevail under § 510, Pendleton must show that QuikTrip “had a specific intent to
interfere with [his] benefits, but that may be shown by circumstantial evidence.”
Register v. Honeywell Fed. Mfg. &Tech., LLC, 397 F.3d 1130, 1137 (8th Cir. 2005).
Claims brought under § 510 are analyzed under the McDonnell Douglas burden
shifting framework. Fitzgerald v. Action Inc., 521 F.3d 867, 871 (8th Cir. 2008).
Under this analysis, if plaintiff makes a prima facie case of discrimination, then the
burden shifts to the defendant to articulate a nondiscriminatory reason for the
termination. Id. If the defendant does so, then the burden shifts back to the plaintiff
to prove that the defendant’s proffered reasons are actually pretextual. Id.
Pendleton’s ability to prove a prima facie case of discrimination with regard to
both the severance and stock plans rests on whether he can show that he was entitled
to the benefits under either ERISA protected plan and that he was terminated by
QuikTrip to avoid payment of these benefits. See Montgomery v. John Deere Co.,
169 F.3d 556, 561 (8th Cir. 1999). To determine if Pendleton was actually entitled
to benefits under either plan, we first examine the ERISA plan documents. Jenson v.
Sipco, Inc., 38 F.3d 945, 949 (8th Cir. 1994). If any part of the plan document is
ambiguous, the court looks at the entire document and even extrinsic evidence to
determine its intent and purpose. Id. at 950. Whether an employee is entitled to
benefits under ERISA is controlled by the plan documents and not the customs of a
company. See Cole v. Intern. Union, United Auto., Aerospace & Agr. Implement
Workers, 533 F.3d 932, 937 (8th Cir. 2008) (discussing the formal elements of an
ERISA plan document).
Pendleton first argues that QuikTrip terminated him to avoid paying severance
benefits. Pendleton contends that the severance plan is ambiguous because the plan’s
language is both prescriptive, in stating that severance packages for directors “will be
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negotiated,” and discretionary, in stating that “severance based on tenure with
QuikTrip may under certain circumstances also be provided.” Pendleton urges the
court to explore extrinsic evidence, such as QuikTrip’s payment of severance to other
directors and the email statements of company management, to prove that he was
actually entitled to benefits under the plan. Jenson, 38 F.3d at 945 (courts should
examine an ambiguous benefit plan “in light of all the circumstances”).
The district court properly held that Pendleton did not make a prima facie case
because he was not entitled to any benefits under the plain language of the severance
plan. The severance plan clearly states that “employees terminated for cause will not
receive severance.” Pendleton was terminated for cause, and he was therefore fully
excluded from severance benefits. Furthermore, even if Pendleton had separated from
QuikTrip without cause, he still would not have been entitled to benefits. He did not
meet any of the criteria in the plan to qualify for severance. His position was not
eliminated, he was not disabled, he did not meet the tenure rule of 75, and he did not
die. QuikTrip’s severance plan requires directors to fall within one of the listed
categories to even qualify for negotiations for severance benefits. Thus, whether the
benefits “will” or “may” be negotiated does not negate Pendleton’s need to meet the
eligibility requirements stated in the plain language of the plan.
The extrinsic evidence raised by Pendleton to show confusion and disparate
treatment by QuikTrip in its severance policy cannot create ambiguity in a plan that
clearly does not entitle him to benefits. See Palmisano v. Allina Health Systems, Inc.,
190 F.3d 881, 888 (8th Cir. 1999). The fact that several other directors received
severance benefits does not have any direct bearing on Pendleton’s entitlement to
those benefits. See Jefferson v. Vickers Inc., 102 F.3d 960, (8th Cir. 1996)
(providing that a company’s gratuitous severance payment to some employees does
not entitle other employees to the same treatment). Additionally, non plan
documents, such as the email from the director of human resources that signified “no
change” for directors in the revised plan, cannot create ambiguity in the actual
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severance plan. See Palmisano, 190 F.3d at 888. Pendleton’s proffered extrinsic
evidence does not raise genuine issues of material fact as to his entitlement to benefits
when he does not qualify for benefits under the clear and unambiguous language of
the plan.
In addition to claiming an entitlement to severance benefits, Pendleton contends
that the district court erred in denying him benefits under the stock plan. Pendleton
argues that the plan is ambiguous and that other directors were able to slow the speed
at which QuikTrip repurchased their stock, even though they did not meet the
requirements of the stock plan. He claims that these other directors were given special
privileges by the QuikTrip board. Pendleton submits that he was entitled to benefits
under the stock plan because the board would likely have given him the same benefit
as the other directors.
QuikTrip’s stock plan unambiguously states that QuikTrip may repurchase the
stock of terminated employees within 180 days. While there are exceptions to this
policy, they do not apply to Pendleton. One exception provides that employees who
are terminated after 20 years or more of employment with the company may slow the
rate at which QuikTrip can repurchase their stock. Since Pendleton only worked for
QuikTrip for 15 years, he does not fall into that category. The stock plan also slows
the rate of repurchase for employees who “retire” meaning they meet the rule of 75,
become permanently disabled, or are specially designated by the board. Pendleton
presents no evidence that he met the rule of 75, was permanently disabled, or was
specially designated by the board. Pendleton considers himself entitled to stock
benefits because the board could have made a special case for him since they did it for
other directors. By contending that he could have been deemed a special case,
Pendleton all but admits that his only hope for stock benefits would have been special
action by the board.
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Pendleton’s ability to prove a prima facie case is undermined by the lack of
evidence that he was entitled to benefits under either the severance or stock plans.
Moreover, Pendleton has also not shown that the stated reasons for his termination
were pretexutal. Fitzgerald, 521 F.3d at 871. After Pendleton announced his intent to
leave QuikTrip, Marchesano asked him to remain with the company to help with the
transition. Pendleton offered no evidence to show that QuikTrip abruptly forced him
out as a means to avoid giving him benefits. No evidence suggests that QuikTrip’s
management even considered the financial impact to the corporation of terminating
Pendleton. Indeed, Pendleton admitted that he did not have knowledge that
Marchesano and Thoene were acting in bad faith.
QuikTrip offered Pendleton eight weeks of severance pay before litigation
began, which he declined. His termination gave QuikTrip the unequivocal right to
repurchase Pendleton’s stock under the plan. QuikTrip states that it will pay
Pendleton $677,956.53 in exchange for his shares and Pendleton does not contest that
amount. Finally, QuikTrip did not withhold any payment of salary, bonuses, or other
benefits upon Pendleton’s departure. QuikTrip gave Pendleton all the benefits that he
was entitled to under the terms of the severance and stock plans. We conclude that
QuikTrip was entitled to summary judgment on Pendleton’s § 510 claim.
At the conclusion of the trial, QuikTrip moved for attorney fees in the amount
of $50,000. The district court denied the motion. We review de novo legal issues
related to an award of attorney fees, Advantage Media, L.L.C. v. City of Hopkins,
Minn., 511 F.3d 833, 836 (8th Cir. 2008), and an actual award of attorney fees for
abuse of discretion. Roemmich v. Eagle Eye Dev., LLC., 526 F.3d 343, 354 (8th Cir.
2008).
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Under § 502(g) of ERISA, a court may in its discretion award reasonable
attorney fees and costs to the prevailing party. 29 U.S.C. § 1132(g) (2006). In
determining whether or not to award fees, we have outlined several factors for district
courts to consider, but these factors need not be applied mechanically. Martin v. Ark.
Blue Cross & Blue Shield, 299 F.3d 966, 969 (8th Cir. 2002). The court should look
at the degree of parties’ culpability, the ability to satisfy an award of attorney fees,
whether an award of fees could deter other persons, whether the case involves a
significant question regarding ERISA, and the relative merits of the parties’ case.
Lawrence v. Westerhaus, 749 F.2d 494, 496 (8th Cir. 1984).
The district court’s decision to deny attorney fees in this case was entered on
the docket as “ordered denied without authority.” This statement could be interpreted
as a determination that QuikTrip had not made a sufficient showing of factors in its
favor to authorize an award of fees, but it is not free of ambiguity. Trial courts have
many demands on their time, but nonetheless a district court should state the factors
it is relying on in deciding an ERISA fee motion. See e.g. Toy v. Plumbers &
Pipefitters Local Union No. 74 Pension Plan, 2009 WL 692398, *2 (3d Cir. 2009);
Riley v. Adm’r of Supersaver 401K Capital Accumulation Plan for Employees of
Participating AMR Corp. Subsidiaries, 209 F.3d 780, 782 (5th Cir. 2000).
Although the district court did not discuss the factors in this case, its ruling is
supported by the record made by the parties. The record does not reflect that
Pendleton brought this action in bad faith. He responded to QuikTrip’s summary
judgment motion and vigorously defended his claims throughout. The evidence
suggests that Pendleton believed that he had a valid claim under § 510 of ERISA. See
Maune v. Int’l Broth. of Elec. Workers, Local No. 1, Health & Welfare Fund, 83 F.
3d. 959, 964 (8th Cir. 1996) (holding that when a plaintiff brings a claim in good faith
it can be sufficient to deny an award of attorney fees to the other party). Finally, the
amount of fees sought would be equivalent to a not insignificant amount of the
benefits he was owed.
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Accordingly, we affirm the judgment of the district court.
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