Ronald Peck v. Selex Systems Integration, In , 895 F.3d 813 ( 2018 )


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  •  United States Court of Appeals
    FOR THE DISTRICT OF COLUMBIA CIRCUIT
    Argued March 23, 2018                   Decided July 17, 2018
    No. 17-7138
    RONALD E. PECK,
    APPELLANT
    v.
    SELEX SYSTEMS INTEGRATION, INC. AND SELEX SISTEMI
    INTEGRATI, INC. KEY EMPLOYEE DEFERRED COMPENSATION
    PLAN,
    APPELLEES
    Appeal from the United States District Court
    for the District of Columbia
    (No. 1:13-cv-00073)
    William R. Wilder argued the cause and filed the briefs for
    appellant.
    Timothy A. Hilton argued the cause for appellees. With
    him on the brief were Julianne P. Story, Michael T. Raupp, and
    Steven A. Neeley.
    Before: HENDERSON and SRINIVASAN, Circuit Judges, and
    EDWARDS, Senior Circuit Judge.
    Opinion for the Court filed by Circuit Judge SRINIVASAN.
    2
    SRINIVASAN, Circuit Judge: After working at SELEX
    Systems Integration, Inc. for over fifteen years, Ronald Peck
    was terminated for refusing to transfer to a different position in
    the company. He filed separate claims for benefits under
    SELEX’s deferred-compensation plan and its severance policy.
    Both claims were denied on the same ground: that Peck’s
    termination for refusing to transfer positions rendered him
    ineligible for benefits.
    Peck filed suit against SELEX and its Key Employee
    Deferred Compensation Plan (together, SELEX), alleging that
    the denial of benefits violated the Employee Retirement
    Income Security Act of 1974 and breached SELEX’s
    contractual duty to provide severance pay to eligible
    employees. The district court granted judgment in SELEX’s
    favor on both the deferred-compensation claim and the
    severance-pay claim. We vacate the district court’s judgment
    with regard to deferred compensation but affirm with regard to
    severance pay.
    I.
    For over fifteen years, Ronald Peck worked at SELEX
    Systems Integration, an international company that designs and
    produces aviation navigation, defense, and surveillance
    systems for governments, militaries, and industrial operators.
    Peck began his tenure with SELEX as the Director of Quality
    at the company’s U.S. headquarters in Overland Park, Kansas.
    Peck rose through the ranks of the quality department over the
    next eleven years, eventually assuming the role of Vice
    President of Quality and Engineering.
    Peck transitioned away from quality-control positions in
    conjunction with SELEX’s implementation of a five-year plan
    to expand its U.S. market. In March 2008, Peck became the
    Vice President of Business Development, responsible for all
    3
    marketing and sales in the U.S. market. Two years later,
    SELEX opened an office in Washington, D.C., to establish a
    presence near the Federal Aviation Administration and other
    D.C.-based clients. In connection with the opening, Peck
    became Vice President of Strategy and Product Planning,
    another marketing role. For the first year in the new position,
    Peck traveled frequently between Kansas and D.C. In October
    2011, Peck moved to D.C. full time, and in February 2012, he
    officially transferred to the company’s D.C. office.
    On August 23, 2012, SELEX’s Chief Executive Officer,
    Mike Warner, held a meeting with Peck. Warner informed
    Peck that he was being removed from the marketing position
    in D.C. due to poor performance. Warner offered Peck the
    option to transfer back to the Kansas office and assume the
    position of Vice President of Quality Control and Business
    Improvement. Warner memorialized the offer in a letter to
    Peck dated August 29, 2012. The letter confirmed that Peck’s
    removal from the “marketing leadership role” resulted from
    “recurring deficiencies in [his] performance” that could have
    “jeopardize[d] the continued success of the company’s
    business initiatives.” J.A. 86. The letter said that the company
    therefore “need[ed Peck] to transfer immediately back to
    Overland Park to assume the [quality-control] position,” which
    was “well suited to [his] expertise.” 
    Id. After initially
    declining Warner’s offer on the telephone,
    Peck confirmed his decision in a letter dated September 3,
    2012. Peck explained in the letter that the new position was
    “not an equivalent position to [his] current role,” did not
    “represent a logical step in [his] career progression,” and
    “would . . . effectively [have] be[en] a regression in [his] career
    with the Company.” J.A. 87. Peck nonetheless expressed his
    willingness to continue in the D.C. marketing position.
    4
    Warner responded in a letter dated September 14, 2012,
    explaining that there was no longer a position for Peck in D.C.
    Warner sought to assure Peck that the new position was not a
    “regression” because Peck would report directly to Warner and
    take on the new responsibility of directly supervising others.
    J.A. 88. Warner thus urged Peck to “reconsider [his] refusal to
    accept [the] new assignment” within two weeks. J.A. 89.
    Warner expressed that Peck’s refusal to do so “would
    constitute ‘cause’” for his termination. 
    Id. Although Peck
    , as
    an at-will employee, could be terminated without cause, a for-
    cause termination would affect his eligibility for certain
    deferred-compensation and severance benefits.
    Peck and Warner exchanged a few more letters, with Peck
    maintaining that his refusal to accept the quality-control
    position could not be considered “cause” for his discharge, and
    Warner maintaining the opposite stance. On September 30,
    2012, Warner terminated Peck’s employment with SELEX,
    and his marketing responsibilities were distributed among
    Warner and two D.C. consultants.
    After Peck’s termination, he submitted a claim for benefits
    under SELEX’s “Key Employee Deferred Compensation
    Plan.” Peck had joined the Plan as a “Key Employee” in July
    2008, when serving as the Vice President of Business
    Development.        The Plan is an unfunded, deferred-
    compensation plan. The Plan is of a type described as a
    “top-hat plan,” in that it allows employers to provide retirement
    benefits to select employees in excess of the benefits provided
    under typical retirement plans. See 29 U.S.C. § 1051(2).
    Under the Plan, Peck’s entitlement to benefits would
    ordinarily vest after five years of participation in the Plan. The
    Plan provided, however, that his right would vest before five
    years if, among other reasons, he was terminated by SELEX
    5
    without cause. As relevant here, the Plan defines “cause” as an
    employee’s “habitual neglect of or deliberate or intentional
    refusal to perform any of his or her material duties and
    obligations of his or her employment (including compliance
    with the Company’s Code of Conduct) with the Company.”
    J.A. 59.
    According to the Plan’s terms, the Administrative
    Committee has “discretionary authority and responsibility to
    interpret and construe the Plan” and to determine whether
    employees are eligible for payouts under the Plan. J.A. 67.
    Here, the Committee, composed at the time of CEO Warner,
    the Chief Financial Officer, and the Human Resources
    Director, denied Peck’s claim for benefits after concluding that
    he had been terminated for cause. In the Committee’s view,
    Peck’s “voluntary refusal of the assignment to the position of
    Vice President of Quality Control and Business Improvement”
    was a “deliberate or intentional refusal to perform any material
    duties and obligations of [his] employment.” J.A. 95-96. Peck
    administratively appealed the decision, but the Committee
    again denied his claim.
    Peck separately sought benefits under SELEX’s severance
    policy. See J.A. 79. Under the policy, SELEX agreed to
    provide “separation benefits” to eligible full-time employees
    “whose employment terminates due to lack of work,
    elimination of position, or change of control.” 
    Id. The policy
    further provided that an employee discharged for one of the
    three enumerated reasons would nonetheless be ineligible for
    severance pay if terminated for cause. 
    Id. For eligible
    high-
    level employees who had worked at the Company for over ten
    years, SELEX would pay nine months of severance benefits
    under the Policy. In response to Peck’s claim under the
    severance policy, SELEX stated that he was ineligible for
    6
    severance pay “[g]iven the circumstances of the termination of
    [his] employment.” J.A. 92.
    Peck filed a suit against SELEX in D.C. Superior Court.
    He raised three contract claims: one for severance pay in the
    amount of $151,549; a second for deferred-compensation
    benefits in the amount of $57,020; and a third for relocation
    expenses in the amount of $21,195. SELEX removed the case
    to federal district court and moved to dismiss Peck’s
    deferred-compensation claim, arguing that the claim was
    preempted by the Employee Retirement Income Security Act
    (ERISA). In response, Peck voluntarily dismissed the claim
    and, with leave from the district court, filed an amended
    complaint that added the Key Employee Deferred
    Compensation Plan as a defendant and pled the deferred-
    compensation claim as one arising under ERISA.
    SELEX moved for summary judgment on Peck’s
    deferred-compensation claim, and Peck moved for summary
    judgment on all three of his claims. The district court granted
    SELEX’s motion, holding that the Plan’s Administrative
    Committee reasonably determined that Peck’s refusal to
    transfer positions constituted cause for termination, thus
    rendering Peck ineligible for deferred compensation under the
    Plan. See Peck v. SELEX Sys. Integration, Inc. (Peck I), 172 F.
    Supp. 3d 171, 176-78 (D.D.C. 2016). The court also denied
    Peck’s motion for reconsideration. See Peck v. SELEX Sys.
    Integration, Inc. (Peck II), 
    270 F. Supp. 3d 107
    , 116-17
    (D.D.C. 2017).
    As for the remaining two claims, the district court found
    that there were genuine issues of material fact precluding
    summary judgment, so the parties proceeded to a bench trial.
    Following trial, the district court ruled in Peck’s favor on the
    7
    claim for relocation expenses. Peck 
    II, 270 F. Supp. 3d at 115
    -
    16. That claim is not at issue in the appeal now before us.
    The district court entered judgment in favor of SELEX on
    the severance claim. The court reasoned that, to collect
    payment under SELEX’s Separation Policy, Peck needed to
    show that he was terminated for one of the three enumerated
    reasons: “lack of work, elimination of position, or change in
    control.” 
    Id. at 115.
    The parties agreed that the sole issue in
    the circumstances presented was whether Peck was discharged
    due to the elimination of a position. The district court found
    that the evidence “clearly show[ed] that Peck was terminated
    because he would not return to Kansas to serve in a different
    capacity, not because SELEX was eliminating the marketing
    position in D.C.” 
    Id. As a
    result, the court held that Peck had
    not shown he was entitled to severance pay. 
    Id. II. On
    appeal, Peck challenges the district court’s entry of
    judgment against him on his deferred-compensation and
    severance-pay claims. We agree with Peck as to deferred
    compensation but disagree as to severance pay.
    A.
    Peck argues that SELEX acted unreasonably in
    determining that he was terminated for cause and was thus
    ineligible to receive deferred-compensation benefits. The
    company responds that Peck’s refusal to accept the offer of a
    new position amounted to cause for his termination under the
    terms of its deferred-compensation plan. We agree with Peck’s
    understanding: his refusal to accept a transfer to a new position
    could not reasonably be considered cause for terminating him.
    8
    1.
    At the outset, the parties disagree about the standard of
    review governing our consideration of Peck’s challenge. We
    generally review de novo the district court’s determination of
    an ERISA claim on summary judgment. Marcin v. Reliance
    Standard Life Ins. Co., 
    861 F.3d 254
    , 262 (D.C. Cir. 2017). We
    therefore apply the same standard that governed the district
    court’s review of the ERISA plan administrator’s challenged
    determination—here, the determination by the Plan’s
    Administrative Committee to deny Peck benefits. See 
    id. The courts
    of appeals, though, have adopted differing positions on
    the standard a district court should apply when reviewing a
    determination made by an administrator of a top-hat plan like
    the one at issue here. For the following reasons, we have no
    need in this case to decide between the competing approaches.
    By way of background, ERISA is silent on the standard
    that courts should use when reviewing a benefits determination
    made by the administrator of an ERISA plan. The Supreme
    Court addressed that issue in Firestone Tire & Rubber Co. v.
    Bruch, 
    489 U.S. 101
    (1989). Relying on principles from trust
    law, the Court held that “a denial of benefits challenged under
    § 1132(a)(1)(B) is to be reviewed under a de novo standard
    unless the benefit plan gives the administrator or fiduciary
    discretionary authority to determine eligibility for benefits or
    to construe the terms of the plan.” 
    Id. at 115.
    If a plan grants
    the administrator or fiduciary such authority, “a deferential
    standard of review [is] appropriate.” 
    Id. at 111.
    We have
    described that “deferential” standard as review for
    “reasonableness.” Wagener v. SBC Pension Benefit Plan—
    Non Bargained Program, 
    407 F.3d 395
    , 402 (D.C. Cir. 2005).
    The courts of appeals have reached different conclusions
    on whether Firestone’s deferential standard of review applies
    9
    in the case of a top-hat plan that grants the plan administrator
    discretion to interpret the plan’s terms. Some courts have
    declined to apply Firestone’s deferential standard in that
    context because of certain unique qualities of top-hat plans,
    including their general exemption from ERISA’s fiduciary
    requirements. See Craig v. Pillsbury Non-Qualified Pension
    Plan, 
    458 F.3d 748
    , 752 (8th Cir. 2006); Goldstein v. Johnson
    & Johnson, 
    251 F.3d 433
    , 442-44 (3d Cir. 2001). Other courts
    apply Firestone’s deferential standard to top-hat plans that vest
    administrators with discretion to interpret the plan’s
    provisions. See Comrie v. IPSCO, Inc., 
    636 F.3d 839
    , 842 (7th
    Cir. 2011); Sznewajs v. U.S. Bancorp Amended & Restated
    Supp. Benefits Plan, 
    572 F.3d 727
    , 733-34 (9th Cir. 2009),
    overruled in part on other grounds by Salomaa v. Honda Long
    Term Disability Plan, 
    642 F.3d 666
    , 673-74 (9th Cir. 2011);
    Paneccasio v. Unisource Worldwide, Inc., 
    532 F.3d 101
    , 108
    (2d Cir. 2008). It bears noting that, while the courts expressly
    disagree about the governing standard, e.g., 
    Comrie, 636 F.3d at 842
    , the extent to which the competing approaches result in
    a practical difference may be open to some question: even the
    courts to reject Firestone’s deferential standard still ultimately
    ask “whether the Plan’s decision was reasonable.” 
    Craig, 458 F.3d at 752
    ; see 
    Goldstein, 251 F.3d at 444
    .
    At any rate, we have no need in this case to explore the
    varying approaches or to choose between them. As we explain
    next, even assuming Firestone’s deferential standard of review
    applies in the context of this case, SELEX’s denial of Peck’s
    claim for deferred compensation still cannot be sustained as a
    reasonable determination under the company’s plan.
    2.
    Under SELEX’s Key Employee Deferred Compensation
    Plan, an employee’s entitlement to benefits vested after an
    10
    initial period of five years from the Plan’s establishment. But
    an employee’s right to deferred compensation vested before
    five years if he was terminated without cause. Because Peck
    was discharged within five years of the Plan’s establishment,
    his eligibility for benefits turns on whether his termination
    could be considered one for “cause” under the terms of the
    Plan.
    “Cause” for termination, the Plan provides, arises from an
    employee’s “habitual neglect of or deliberate or intentional
    refusal to perform any of his or her material duties and
    obligations of his or her employment (including compliance
    with the Company’s Code of Conduct) with the Company.”
    J.A. 59. The Plan’s Administrative Committee determined that
    Peck’s refusal to accept the quality-control position afforded
    cause for terminating him under that definition. While the
    company offered no explanation of its interpretation at the time
    of the decision, it now explains that Peck was an at-will
    employee without any employment contract assigning him to a
    specific position or specific duties. Thus, the company
    maintains, the “material duties and obligations of [Peck’s]
    employment . . . with the Company” amounted to whatever
    duties he was directed to perform, including the direction to
    assume an entirely different position, with entirely different
    duties, in an entirely different locale (Kansas instead of
    Washington, D.C.). And by refusing to accept the new
    position, SELEX asserts, Peck engaged in a “refusal to
    perform” the “material duties and obligations” of his
    employment with the company.
    SELEX’s interpretation of the Plan cannot be correct. Its
    reading is incompatible with the terms of the Plan and upsets
    the parties’ reasonable expectations about the duties of a
    person’s employment with the company. See 
    Wagener, 407 F.3d at 404-05
    ; see also Shelby Cty. Health Care Corp. v. S.
    11
    Council of Indus. Workers Health & Welfare Trust Fund, 
    203 F.3d 926
    , 934 (6th Cir. 2000) (“[A] plan administrator must
    adhere to the plain meaning of [a plan’s] language, as it would
    be construed by an ordinary person.”). Under SELEX’s
    interpretation, an at-will employee’s “material duties and
    obligations” would be entirely unconnected to his or her
    current position. So a high-level manager, for instance, would
    give the company cause to terminate her if she declined to
    move across the country to perform an entirely different (and
    less desirable) role (perhaps in a much lower-ranking position
    on the organizational chart).
    Although the literal terms “employment with the
    company” in theory could encompass any position at all in the
    company, the surrounding words foreclose that unnatural
    reading. The phrase “material duties and obligations of [a
    person’s] employment” naturally refers to the set of
    responsibilities assigned to an employee.           And those
    responsibilities are necessarily tied to an employee’s position
    with the company. To avoid for-cause dismissal, then, an
    employee cannot refuse to fulfill the duties and obligations
    assigned to her, which means she cannot refuse to carry out the
    duties of the position she holds. But she does not “refuse to
    perform the material duties and obligations of her employment
    with the company” if she declines to accept materially different
    duties and obligations.
    Peck, consequently, did not refuse to perform the material
    duties and obligations of his employment with the company.
    After SELEX determined that he was unlikely to succeed in the
    D.C. marketing position he held, he was offered the
    opportunity to assume a different position in the quality-control
    department in Kansas. The offer involved a new set of
    “material duties and obligations.” In his marketing position, he
    oversaw all marketing and sales for the U.S. market, and he had
    12
    no duties related to quality control. The Kansas position, by
    contrast, involved supervising a team tasked with improving
    the quality of SELEX’s products and services. Peck’s refusal
    to accept that new position was not a “refusal to perform the
    material duties and obligations of his employment.”
    SELEX argues that the parenthetical clause in the “cause”
    definition—i.e., “material duties and obligations of his or her
    employment (including compliance with the Company’s Code
    of Conduct)”—shows that a person’s duties go beyond her
    specific position.     The parenthetical clause, however,
    establishes only that an employee’s material duties and
    obligations include adherence to the Code of Conduct. The fact
    that the Code of Conduct applies to all positions in the
    company does not somehow expand a particular employee’s
    scope of assignable duties to encompass the duties of every
    position throughout the company.
    Finally, SELEX, in a footnote in its brief, suggests that we
    should defer to the Administrative Committee’s finding that
    Peck waived his deferred-compensation claim when he
    voluntarily dismissed his state-law claim raising that issue (and
    substituted the ERISA claim we now consider). We decline to
    consider SELEX’s conclusory assertion of waiver, offered
    without supporting argument, discussion, or legal authority.
    See Washington Legal Clinic for the Homeless v. Barry, 
    107 F.3d 32
    , 39 (D.C. Cir. 1997).
    In sum, we hold that Peck did not refuse to perform the
    duties of his employment with the company when he declined
    to assume the different duties of a different position in a
    different location. SELEX’s termination of him therefore
    could not have reasonably qualified as a termination for cause
    within the meaning of the Plan, meaning that Peck is entitled
    to deferred compensation under the Plan. See Wagener, 
    407 13 F.3d at 405
    (“Plan fiduciaries cannot claim deference for an
    interpretation of the Plan that . . . contradicts the Plan’s plain
    language.”).
    B.
    We turn now to Peck’s claim for severance pay under
    SELEX’s Separation Policy.         The Policy provided for
    severance pay to a full-time employee “whose employment
    terminates due to lack of work, elimination of position, or
    change of control.” J.A. 79. Peck asserts an entitlement to
    severance pay based solely on the second of those grounds: he
    contends that SELEX terminated him because it eliminated his
    marketing position.
    The district court concluded otherwise. Following a bench
    trial, the district court found that “Peck was terminated because
    he would not return to Kansas to serve in a different capacity,
    not because [SELEX] was eliminating the marketing position
    in D.C.” Peck 
    II, 270 F. Supp. 3d at 115
    . To prevail on his
    claim for severance pay, then, Peck needs to show that the
    district court erred in finding that his termination resulted from
    his refusal to accept the new position in Kansas and not from
    an elimination of his position in D.C. See Overby v. Nat’l Ass’n
    of Letter Carriers, 
    595 F.3d 1290
    , 1293-94 (D.C. Cir. 2010)
    (factual findings not set aside unless “clearly erroneous”).
    Peck, however, at no point contests the district court’s
    finding that he was terminated because he refused to accept the
    quality-control position and not because of the elimination of
    his position. Instead, he argues that the district court erred in
    finding that SELEX did not eliminate his marketing position.
    Peck contends that the marketing position in fact was
    eliminated. But that argument, even if persuasive, does not
    suffice to establish Peck’s entitlement to severance pay.
    Regardless of whether the company eliminated Peck’s
    14
    marketing position, he would still need to show that he was
    terminated because of the position’s elimination rather than
    solely because of his refusal to accept the quality-control
    position. Yet Peck raises no challenge to the district court’s
    finding that his termination resulted from his refusal to accept
    the new position and not from an elimination of his marketing
    position. Indeed, SELEX, in its brief, specifically pointed to
    Peck’s failure to raise such a challenge, but Peck still did not
    address the issue in his reply brief.
    Peck alternatively argues that SELEX should be estopped
    from claiming that Peck was terminated for a reason other than
    the elimination of position. Prior to the litigation, Peck
    contends, SELEX rested its denial of severance benefits on the
    ground that he refused to transfer to the quality-control
    position. According to Peck, SELEX now takes what he
    perceives to be a different position: that he is ineligible for
    severance pay because his termination was not due to an
    elimination of his position.
    Peck’s argument lacks merit. The doctrine of estoppel can
    prelude a party from switching positions on an issue if it would
    prejudice the opposing party. See Ward v. Wells Fargo Bank,
    N.A., 
    89 A.3d 115
    , 126 (D.C. 2014); cf. Konstantinidis v. Chen,
    
    626 F.2d 933
    , 938 (D.C. Cir. 1980) (discussing the concept of
    judicial estoppel). SELEX, however, has not changed its tune
    on the reason for denying Peck severance pay. In an October
    2012 letter, SELEX’s CEO advised Peck that his “employment
    with SELEX is terminated” “because you have continued to
    refuse your assignment to the position of Vice President of
    Quality Control and Business Improvement.” J.A. 92. SELEX
    continues to maintain that Peck was terminated solely because
    he refused to accept the new position. Peck’s estoppel
    argument thus cannot carry the day.
    15
    * * * * *
    For the foregoing reasons, we vacate the district court’s
    grant of summary judgment to SELEX on Peck’s
    deferred-compensation claim and remand for entry of
    judgment in Peck’s favor. We affirm the district court’s
    judgment in SELEX’s favor on Peck’s claim for severance pay.
    So ordered.