Mark Girardot v. Chemours Co ( 2018 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 17-1894
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MARK GIRARDOT; GERHARD R. WITTREICH; PETER BUTLER,
on behalf of themselves and all others similarly situated,
Appellants
v.
THE CHEMOURS COMPANY
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On Appeal from the United States District Court
for the District of Delaware
(D. Del. No. 1-16-cv-00263)
District Judge: Honorable Sue L. Robinson
Submitted on February 8, 2018
Before: CHAGARES, SCIRICA, and RENDELL, Circuit Judges.
(Filed: April 30, 2018)
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OPINION*
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*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
CHAGARES, Circuit Judge.
Mark Girardot, Gerhard Wittreich, and Peter Butler (the “Employees”) brought
claims under the Employee Retirement Income Security Act (“ERISA”) against their
former employer, the Chemours Company (“Chemours” or “the Company”) related to an
employee severance plan. Chemours moved to dismiss the claim pursuant to Fed. R. Civ.
P. 12(b)(6), on the basis that the severance plan was not subject to ERISA. The United
States District Court for the District of Delaware granted the motion, and the Employees
now appeal the District Court’s decision. For the reasons stated below, we will affirm.
I.
Reviewing the District Court’s dismissal, we accept as true the factual allegations
in the complaint. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). In
October 2013, E. I. du Pont de Nemours (“DuPont”) announced its intention to spin off
parts of its Performance Chemicals business into a new company, Chemours. This
process concluded in July 2015. Girardot, Wittreich, and Butler, who previously had
been employed by DuPont, became employees of Chemours that month.
In September 2015, Chemours announced a voluntary reduction-in-force program
called the Chemours Voluntary Separation Program (“VSP”). The Company informed
employees that they could elect to be considered for the program between October 9 and
26 of that year. In a document made available to employees that October — the
Chemours Voluntary Separation Program Frequently Asked Questions — the Company
also stated that requests to participate in the VSP submitted outside the October window
“w[ould] be considered on a strict, exception only basis.” Appendix (“App.”) 31. The
Company also issued a seven-page summary of the VSP (“the Summary”). The
Summary provided that Chemours had sole authority and discretion to determine which
employees would be eligible to participate in the VSP, and that it would approve all of
the eligible employees no later than November 30, 2015. Once approved, employees in
the VSP were generally required to end their employment between December 1, 2015 and
March 31, 2016; however, the VSP contemplated that the Company could select some
employees to continue working part-time for up to six months after April 1, 2016.
Chemours had the discretion and authority to determine an employee’s separation date
within that range and whether an employee would be selected for a period of part-time
employment. Participants were required to complete “an appropriate knowledge transfer,
as defined by Business Unit or Function Leadership” and “execute a Release Agreement
which contains (i) a non-disparagement provision and (ii) a restrictive covenant
prohibiting the employee from working for a competitor for a period of one (1) year
unless Chemours, in its sole discretion, provides written approval otherwise.” Girardot
Br. 7. VSP participants were also ineligible for re-hire within twelve months, except that
Chemours had the sole discretion to rehire them for “specialty consulting projects.” Id.“Participants in the Chemours VSP were entitled to payment of a lump sum
severance benefit of one week of base pay for each full year of service, with both a
minimum benefit of two (2) weeks of base pay and a cap of twenty-six (26) weeks of
base pay, i.e., a maximum benefit of six (6) months of base pay.” App. 32. They were
also entitled to a “lump sum payment equal to the costs of three (3) months of COBRA
medical coverage” and to “the payment of a ‘prorated bonus’ for their year of separation
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[] to be made ‘in accordance with Chemours’ procedures and based on Company
performance.’” Id.The Employees brought ERISA claims related to the VSP against Chemours. The
Company moved to dismiss the claims pursuant to Fed. R. Civ. P. 12(b)(6), on grounds
that the VSP was not a “plan” within the meaning of ERISA. The District Court granted
the motion to dismiss. App. 15–25. The Employees then filed a timely appeal.
II.
The District Court exercised jurisdiction over this matter pursuant to 28 U.S.C. §
1331. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we exercise plenary
review over the District Court’s dismissal for failure to state a claim under Fed. R. Civ. P.
12(b)(6). Delaware Nation v. Pennsylvania, 446 F.3d 410, 415 (3d Cir. 2006).
III.
Under ERISA, an “employee welfare benefit plan” is:
any plan, fund, or program which was heretofore or is hereafter established
or maintained by an employer or by an employee organization, or by both, to
the extent that such plan, fund, or program was established or is maintained
for the purpose of providing for its participants or their beneficiaries, through
the purchase of insurance or otherwise, (A) medical, surgical, or hospital care
or benefits, or benefits in the event of sickness, accident, disability, death or
unemployment, or vacation benefits, apprenticeship or other training
programs, or day care centers, scholarship funds, or prepaid legal services,
or (B) any benefit described in section 302(c) of the Labor Management
Relations Act, 1947 (other than pensions on retirement or death, and
insurance to provide such pensions).
29 U.S.C. § 1002(1). “[S]everance benefits do not implicate ERISA unless they require
the establishment and maintenance of a separate and ongoing administrative scheme.”
Angst v. Mack Trucks, Inc., 969 F.2d 1530, 1538 (3d Cir. 1992) (citing Fort Halifax
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Packing Co. v. Coyne, 482 U.S. 1, 12 (1987)). The “crucial factor” in determining
whether a program constitutes an ERISA plan is whether the employer expresses the
intention “to provide benefits on a regular and long-term basis.” Shaver v. Siemens
Corp., 670 F.3d 462, 478 (3d Cir. 2012) (quoting Deibler v. United Food & Commercial
Workers’ Local Union 23, 973 F.2d 206, 209 (3d Cir. 1992)). Illustrating this concept,
the Supreme Court in Fort Halifax noted:
[The relevant benefits package] neither establishes, nor requires an employer
to maintain, an employee benefit plan. The requirement of a one-time, lump-
sum payment triggered by a single event requires no administrative scheme
whatsoever to meet the employer’s obligation. The employer assumes no
responsibility to pay benefits on a regular basis, and thus faces no period
demands on its assets that create a need for financial coordination and
control. Rather, the employer’s obligation is predicated on the occurrence of
a single contingency that may never materialize. The employer may well
never have to pay the severance benefits. To the extent that the obligation to
do so arises, satisfaction of that duty involves only making a single set of
payments to employees at the time the plant closes. To do little more than
write a check hardly constitutes the operation of a benefit plan. Once this
single event is over, the employer has no further responsibility. The
theoretical possibility of a one-time obligation in the future simply creates
no need for an ongoing administrative program for processing claims and
paying benefits.
482 U.S. at 12. More recently, we posited that “simple or mechanical determinations do
not necessarily require the establishment of [] an administrative scheme.” Shaver, 670
F.3d at 477 (quoting Kulinski v. Medtronic Bio-Medicus, 21 F.3d 254, 257 (8th Cir.
1994)). ERISA plans “involve administrative activity potentially subject to employer
abuse,” reflecting the statute’s purpose to protect the administrative integrity of benefit
plans. Fort Halifax, 482 U.S. at 16.
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Per Appellants’ allegations, when creating the VSP, Chemours did not express an
intention to provide regular and long-term benefits. On the contrary, the allegations
suggest that Chemours merely entered into an obligation to provide lump-sum payments
to a class of employees over a defined and relatively brief period. Determining the
amount of these lump sum payments did not require a new administrative body or the
exercise of discretion — rather, it involved the mechanical application of a simple
formula based on time of employment with the Company. This aspect of the VSP fits
squarely within the Fort Halifax analysis and does not indicate the need for an ongoing
administrative scheme. Nor does the potential payment of prorated bonuses imply such a
need. Chemours was under no obligation to pay bonuses, and because it would be paid
— if at all — “per usual company practices” and on a one-time basis, there was no need
to create a new administrative program to determine eligibility or amounts. See Angst,
969 F.2d at 1540–41 (distinguishing the creation of a new administrative scheme from
the continuation of an existing procedure and noting that the latter did not subject a plan
to ERISA).
We are likewise unconvinced that Chemours’ individualized determinations of the
employees’ eligibility to participate in the VSP — which involved denying VSP
applications of those employees that the Company needed to retain for business reasons
— make the VSP an ERISA plan. While this process unquestionably involved an
exercise of discretion and constituted more than a simple or mechanical decision, the
selections took place in a period of less than two months. We cannot say that this
involves long-term or ongoing administrative processes; eligibility, once determined, was
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not conditioned on the occurrence of any future event that would require administrative
consideration or adjudication. Moreover, we conclude that the selection process did not
create a risk of employee abuse or mismanagement of the VSP.
In addition, none of the ancillary rights granted or obligations imposed upon VSP
participants subject the plan to ERISA. The knowledge transfer requirement did not
mandate indefinite responsibilities subject to oversight by an administrative scheme, but
rather reflected a short-term obligation for outgoing employees to pass on institutional
knowledge prior to separation. This time-limited obligation simply did not implicate
ongoing administration, and seemingly required only the Company’s passive and
ministerial observation. The Employees have failed to allege adequately that this
requirement necessitated Chemours to institute a new and ongoing administrative
scheme. Similarly, the VSP’s non-compete and non-disparagement provisions do not
implicate such a scheme because they are untethered from any ongoing payment or
adjudication of benefits. Finally, the possibility of rehiring does not change the analysis.
The right of an VSP participant to reapply under the exception does not (1) require a new
administrative process outside of Chemours’ pre-existing hiring framework; (2) impact
the participant’s entitlement to a benefit, which would already have been paid;1 or (3)
create a risk of employee abuse.
1
The complaint notes that an employee rehired within the relevant twelve-month period
“may be required to pay back a portion of the VSP benefits depending on the timing.”
App. 31. Because the VSP does not require such an employee to return to work at the
will of the Company, this provision cannot be interpreted as a contingent limitation on
the receipt of the lump-sum benefits. Additionally, such a rehire would not necessitate
the establishment of a new or ongoing administrative process.
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For these reasons, we conclude that the VSP is generally akin to a Fort Halifax
plan and does not involve a new or ongoing administrative scheme. Consequently, the
VSP is not subject to ERISA and the District Court properly dismissed the complaint.
IV.
For the reasons stated above, we will affirm the Order of the District Court.
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