Gorini v. AMP Inc , 94 F. App'x 913 ( 2004 )

Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
4-16-2004
Gorini v. AMP Inc
Precedential or Non-Precedential: Non-Precedential
Docket No. 02-3431
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos: 02-3431 & 02-3900
JOSEPH B. GORINI
v.
AMP INCORPORATED or,
Its Successor In Interest, TYCO ELECTRONICS, INC.
TYCO ELECTRONICS, INC.,
Appellant
Appeal from the United States District Court
for the Middle District of Pennsylvania
(Civ. No. 99-2215)
District Court: Hon. Yvette Kane
Submitted Pursuant to Third Circuit LAR 34.1(a)
September 18, 2003
Before: McKEE and SMITH, Circuit Judges,
and SCHILLER, District Judge.*
OPINION
McKEE, Circuit Judge.
Tyco Electronics, Inc., appeals the district court’s judgment in favor of Joseph
Gorini on claims he brought under the Employee Retirement Income Security Act, 29
U.S.C. §§ 1001 et seq., (“ERISA”) and the Worker Adjustment Retraining and
*
The Honorable Berle M. Schiller, District Judge, Eastern District of Pennsylvania,
sitting by designation.
Notification Act, 29 U.S.C. §§ 2101 et seq., (“WARN”) as well as under state law. For
the reasons that follow, we will affirm.
I.
Because we write only for the parties, it is not necessary to recite the facts of this
case in detail. It is sufficient to note that Gorini was employed for more than four years
by AMP Incorporated, but was terminated in April 1999 following Tyco’s acquisition of
AMP. Gorini thereafter sued Tyco under ERISA for benefits he was allegedly due under
two employment severance plans that Tyco maintained. He also claimed that Tyco
should be penalized under ERISA § 502(c)(1)(B), and 29 U.S.C. § 1132(c)(1)(B), for its
failure to timely supply requested information regarding those plans, and he claimed that
he was entitled to relief under WARN for Tyco’s failure to timely notify him of this
layoff. He also sought pay for his unused vacation time. Tyco filed two counterclaims
seeking recovery of money it sent Gorini in September 1999 and of an overpayment
purportedly made to Gorini under one of the plans.
Gorini and Tyco filed cross motions for summary judgment, and the district court
granted partial summary judgment on both motions. Tyco was granted summary
judgment on Gorini’s claim that Tyco had failed to disclose an annual report for one of
the severance plans as required under ERISA. Gorini was granted summary judgment on
claims that Tyco did not disclose other documents relating to the plans, and the court
awarded a penalty of $160,780 under ERISA § 502(c)(1)(B) for four of the five
nondisclosures. The court otherwise denied both motions.
2
The district court disposed of the rest of the claims following a bench trial. It
found that Gorini was entitled to damages under WARN and to a portion of the claimed
vacation pay, but not to benefits under either severance plan. It also found for Tyco on its
first counterclaim regarding the September 1999 check, and against it on its other
counterclaim. Tyco now appeals the court’s final judgment. 1
II.
An order granting partial summary judgment merges into the final judgment.
Bushman v. Halm, 798 F.2d 651, 654 n.4 (3d Cir. 1986). We exercise plenary review
over a partial summary judgment when it is appealed as part of a final judgment. Hughes
v. Consol-Pennsylvania Coal. Co., 945 F.2d 594, 611 (3d Cir. 1991). We therefore
review any point on which summary judgment was granted to ensure that the party
granted judgment was entitled to it as a matter of law and that there was no genuine issue
of material fact. Bellas v. CBS Inc., 221 F.3d 517, 522 (3d Cir. 2000). We review a
court’s findings of fact following trial for clear error but conduct plenary review of its
conclusions of law, including those conclusions applied to the facts. See Feder v. Evans-
Feder, 63 F.3d 217, 222 n.9 (3d Cir. 1995); Fed. R. Civ. P. 52(a).
We review a court’s assessment of penalties pursuant to ERISA § 502(c)(1) for
abuse of discretion only. However, whether a case “falls in the range within which a
district court may exercise discretion is a matter of law, reviewable on a plenary basis.”
1
This was the second amended judgment that the court issued in this case. Tyco also
appealed the court’s amended judgment. We consolidated Tyco’s appeals.
3
Grode v. Mutual Fire, Marine & Inland Ins. Co., 8 F.3d 953, 957-58 (3d Cir. 1993). This
includes de novo review of whether a district court relied on improper factors in
exercising its discretion. In re Japanese Electronic Products Antitrust Litigation, 723
F.2d 238, 265-66 (3d Cir. 1983), rev’d on other grounds sub nomine Matshushita Elec.
Ind. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986).
A.
Tyco argues that the district court erred when it awarded Gorini summary
judgment on his claim that Tyco failed to disclose documents related to the severance
plans because Gorini was not a participant in either plan.
1.
A plan administrator has a duty to provide certain plan-related documents upon
request to any plan “participant.” ERISA §§ 104(b)(4), 502(c)(1) (29 U.S.C. §§
1024(b)(4), 1132(c)). A “plan participant” is defined as an employee or former employee
of the plan sponsor “who is or may become eligible to receive a benefit” under the plan.
ERISA § 3(7) (29 U.S.C. § 1002(7)). The Supreme Court has stated that this definition
includes a former employee who has “a colorable claim that. . . he or she will prevail in a
suit for benefits.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 117 (1989). We
have said that “the concept of a colorable claim necessarily encompasses situations in
which the requester has a reasonable basis for believing that he or she has a meritorious
claim but is in fact mistaken.” Daniels v. Thomas & Bette Corp., 263 F. 3d 66, 79 (3d Cir.
2001).
4
Tyco first argues that the district court did not apply Bruch properly when
analyzing whether Gorini could be considered a plan participant. It claims the court
applied a less rigorous standard, as indicated by the following language:
As discussed [above], it is premature to decide whether
Plaintiff was actually a participant in, and offered benefits
under, the 1991 Plan. However, no disputed questions of
material fact exist on the question of whether he was or might
become eligible for benefits under the Plan. That question
turns on whether Plaintiff had a colorable claim for benefits
when he requested information about the 1991 Plan. . . .
JA 21. According to Tyco, the court failed to consider the actual likelihood that Gorini
would succeed on the merits of his claim for benefits or the reasonableness of his claim.
This argument is meritless. Tyco tries to twist Bruch into a more rigorous
standard of probability of actual success on the merits of a claim. Under Bruch, the
district court needed only to determine whether there was enough evidence to establish a
colorable claim for benefits. This is a less rigorous standard than the “probability of
success” urged by Tyco. The district court properly determined that Gorini had a
colorable claim, and therefore properly refrained from inquiring into the actual likelihood
that he would succeed on the claim under Bruch.
2.
Second, Tyco argues that the district court relied on impermissible inferences to
find that Gorini was a participant under the severance plan established in 1991. This
claim is also meritless.
Tyco tries to claim that Gorini was never qualified for participation in the 1991
5
severance plan because the only people eligible for benefits under it were “regular, full-
time, salaried employees,” and Gorini made his request for severance benefits after Tyco
sent a letter notifying him that his employment was terminated. Tyco’s position if
adopted, would mean that only current employees could draw on severance plan benefits.
That is inconsistent with the very concept of severance benefits. The district court
correctly concluded that the severance plan covered regular, full-time salaried employees
who had been terminated.
Tyco also tries to argue that Gorini was not a participant in the 1991 plan because,
by the terms of the plan, he was only a potential participant unless he signed the release
Tyco sent him. Gorini counters noting that he received the April 29, 1999 letter from the
human resources department offering him “enhanced severance pay.” 2 This letter
indicates that he was entitled to severance pay, and states that he was eligible for
enhanced pay if he signed a release. This enhanced pay feature was only part of the 1991
plan. Finally, the company’s 1997 IRS Form 5500, its 1997 to 1999 summary annual
reports, and its employee handbooks back to 1995, state that all its current “regular, full-
time, salaried” employees were covered by the 1991 plan. The company also stated on
2
Tyco argues that it is odd that the “ambiguity” that the district court found in the
post-termination letters to Gorini supported a colorable claim for benefits but also created
an issue of material fact. It then quotes parts of the court’s order located at JA 18 and JA
22. However, this ambiguity has two succinct legal consequences. At JA 22, it is used to
analyze whether summary judgment is appropriate in Gorini’s claim that Tyco should
have disclosed the requested information about the plans. At JA 18, it is used to analyze
whether Gorini is entitled to benefits under those plans. This ambiguity creates the basis
for summary judgment in the former claim while creating a genuine issue of material fact
in the latter.
6
the 1997 IRS form that all Tyco employees were active participants3 in the 1991 plan.
Together, these facts provide support for the district court’s finding that “all
employees were participants in the 1991 Plan.” Thus, the district court did not err in
finding that they all had colorable claims under the plan. JA 18.
Although the defendant is correct when it states that there is ambiguity as to which
of the two plans provided the benefits, this does not preclude summary judgment on
Gorini’s claim for reasons we have already discussed. See Note 2, supra.
3.
Tyco argues that the district court erred in concluding that Tyco did not dispute
that Gorini was a participant in the 1998 plan and that Tyco was required to disclose
information to him about the plan under ERISA § 104(b)(2). Tyco states that the
evidence before the court was such that Gorini “could not have been entitled to receive
any further benefits under the 1998 Plan while his document request was pending.” Brief
at 30.
However, plan information must be disclosed to anyone who has a colorable claim
to plan benefits. Tyco admits that Gorini had received benefits under the 1998 plan
already. If a court later found that Gorini had a certain status (Tier 1 or 2) under the plan,
he would be entitled to additional benefits under this plan. Brief at 30-31. ERISA thus
required the plan administrator to provide information about the plan.
3
We need not consider Tyco’s argument that “participant” was a term of art in the
IRS form because it is raised for the first time on appeal. See Harris v. City of
Philadelphia, 35 F.3d 840, 845 (3d Cir. 1994)
7
B.
Tyco claims that the district court abused its discretion in assessing a penalty
against it for its failure to disclose plan information under ERISA § 502(c). However, a
district court has discretion to impose a penalty under ERISA § 502(c)(1)(B) when a plan
participant is denied plan documents he/she is entitled to. 29 U.S.C. § 1132(c); Daniels v.
Thomas & Betts Corp., 263 F.3d 66, 79 (3d Cir. 2001). This includes plan descriptions,
summary plan descriptions and annual reports. ERISA §§ 102, 103, 104 (29 U.S.C. §§
1022, 1023, 1024).
Tyco failed to report/disclose plan documents Gorini was entitled to including
descriptions of who was entitled to benefits under the 1998 plan and a summary plan
description for the 1991 plan. Given this failure and the court’s findings that Tyco acted
in bad faith to the prejudice of Gorini, the district court clearly did not abuse its discretion
in imposing a penalty under ERISA § 502(c)(1)(B).
Tyco correctly notes that it was free to design its 1998 plan as it wished. However,
it chose to create a plan that required schedules to be attached containing the names of
employees eligible for plan benefits. Once it adopted the plan in 1998, however, it had a
responsibility under ERISA to create the schedules in order to provide plan participants
with “complete and correct” copies of plan documents. See Eddy v. Colonial Life Ins. Co.,
919 F.2d 747, 750 (D.C. Cir. 1990).
Despite Tyco’s argument that it had simply not yet elected to “modify” its plan by
creating the schedules, the 1998 plan nevertheless remained incomplete without them.
8
Gorini thus had to guess about whether he was an intended beneficiary.
Tyco’s claim that ERISA does not require it to create and give participants
summary descriptions of its plans also fails. The plain text of ERISA states:
The administrator of each employee benefit plan shall cause
to be furnished in accordance with [29 U.S.C. 1024(b)] to
each participant… (1) a summary plan description described
in section 1022(a)(1) of this title.
***
A summary plan description of an employee benefit plan shall
be furnished to participants… .
29 U.S.C. §§ 1021(a)(1), 1022(a). Gorini was a participant under Bruch, when he
requested plan information because he had a colorable claim to benefits. Given Tyco’s
failure to properly disclose plan information, the district court exercised its discretion and
imposed statutory penalties under ERISA.
When considering whether to impose such penalties, the court can consider (1) bad
faith or intentional conduct of the plan administrator, (2) length of delay, (3) number of
requests made, (4) documents withheld, and (5) prejudice to the participant. Romero v.
Smith Kline Beecham, 309 F.3d 113, 120 (3d Cir. 2002) (citations omitted). Here, the
district court found that Tyco’s failure evinced a pattern of “conscious choices to decline
to disclose” and “recalcitrance”4 in providing documents Gorini was entitled to under
4
The district court apparently adopted this, and other phrases Gorini used in his Brief in
Support of his Motion for Summary Judgment. Tyco uses this to argue that the district
court impermissibly relied on unsworn statements in Gorini’s brief to impose the penalty.
As discussed, however, the district court clearly conducted an independent analysis and
marshaled the factual findings and legal conclusions necessary to decide that this penalty
was warranted. The court did not merely adopt Gorini’s unsworn opinions.
9
ERISA. JA 30-31. Although the court did not literally use the words “bad faith,” given
the analysis of Tyco’s conduct, it is difficult to reach any conclusion other than that Tyco
did act in bad faith.
Finally, Tyco argues that the district court abused its discretion in levying ERISA
penalties because “Gorini failed to show that the award of a penalty and that the amount
of the penalty would not be a windfall to him.” Brief at 37. However, we have never held
that a district court must consider the issue of a plan participant receiving a windfall in
this situation. Rather, a court may refrain from awarding a penalty if a windfall would
result. Hennessy v. F.D.I.C., 58 F.3d 908, 923-24 (3d Cir. 1995). Moreover, the burden
of proof is not on Gorini; he does not need to negate the contention of a windfall before
the court can levy this penalty. Id.C.
Tyco’s next argument is that the district court erred in treating geographically
diverse buildings in the greater Harrisburg area as a single site for purposes of the WARN
Act claim or, alternatively, in finding that enough people were laid off to make out a
WARN Act claim.
To make out a claim under the WARN Act, a plaintiff must prove the occurrence
of a “mass layoff.” A mass layoff is defined as a loss of employment that was not from a
plant closing at a single employment site during any 30-day period for either (1) 33
percent of the full-time employees involving at least 50 employees, or (2) at least 500
full-time employees. See 29 U.S.C. § 2101(a)(3). A “single site of employment” is not
10
defined by the statute. Accordingly, courts look to relevant Department of Labor
regulations. Ciarlante v. Brown & Williamson Tobacco Corp., 143 F.3d 139, 145 (3d Cir.
1998). DOL regulations define a single site of employment as either a single location or a
group of locations in reasonable geographic proximity under the same management with
the same operational purpose. 20 C.F.R. § 639.3(I) (2003).
Here, Tyco’s employees and former employees admitted that the Tyco layoffs that
included Gorini came under the WARN Act. Tyco was therefore obligated to provide
notice under the WARN Act and “notice pay.” JA 390, 438, 439. Those admissions are
consistent with the relation of the facilities in the “Harrisburg Campus” to each other.
Moreover, the district court did not need to find that the employment sites involved were
absolutely contiguous in order for the WARN Act to apply. It is sufficient that the sites
are all in the greater Harrisburg area in multiple contiguous,5 connected Tyco facilities.
The buildings were close together, and shared employees, job functions, and services.
Tyco admits that once all eight Tyco locations are found to be a single site of employment
that over 500 employees were laid off. Brief at 46.
D.
Tyco also argues that the district court erred by failing to offset Gorini’s severance
entitlement by notice pay he received under the 1998 Plan. It argues that the 1998 plan
5
We disagree with Tyco’s claim that certain sites were not contiguous because they were
separated by streets and highways. Pennsylvania law extends the title of property
abutting a street to the center of the street. City of Scranton v. People’s Coal Co., 256 Pa.
332, 335 (1917).
11
specifically requires that the severance pay received under it be offset by any WARN
penalties imposed. However, we have already stated that WARN penalties cannot be
offset by severance pay without defeating the punitive intent underlying WARN Act
penalties, see Ciarlante, 143 F.3d at 152. Gorini argues that offsetting severance pay by
WARN Act penalties produces the same net effect. We agree. The offset Tyco urges
would effectively gut the WARN Act and improperly undermine the precedent of
Ciarlante.
Moreover, it is clear that Congress intended WARN Act penalties to be added to,
not offset by, benefits such as severance pay under ERISA. The WARN Act provides as
follows:
Any employer who orders a plant closing or mass layoff in
violation of section 3 of this Act shall be liable to each
aggrieved employee who suffers an employment loss as a
result of such closing or layoff for-- (A) back pay for each day
of violation...; and (B) benefits under an employee benefit
plan described in section 3(3) of the Employee Retirement
Income Security Act of 1974. . . .
29 U.S.C. § 2104(a)(1) (2003).
E.
Tyco argues that the district court erred when it found that Gorini was entitled to
pay in lieu of vacation time he did not use. It claims that Gorini could be paid for
vacation that he accrued per Tyco’s vacation policy, as stated in the AMP Employee
Handbook, but not for the additional vacation he negotiated with his supervisor without
the approval or knowledge of Tyco’s Human Resources Department. According to Tyco,
12
Gorini failed to prove that the parties agreed to apply the “pay-in-lieu-of-vacation-time”
policy to this additional vacation. Gorini argues that the district court did not err when it
found that his supervisor gave him extra days of vacation because the additional vacation
would be subject to AMP’s policy of paying for unused time. We agree. Moreover, there
is support in the record for the district court’s conclusion that AM P/Tyco knew it would
be bound by the supervisor’s promises to Gorini. JA 185, 418-19. Based on the letter at
JA 185, it is clear that this promise of additional vacation was part of AMP’s job offer to
Gorini. Tyco’s insistence that the agreement for extra vacation days was a sort of
“gentlemen’s agreement” binding only Gorini’s division of AMP is unavailing because
Gorini’s supervisor had the authority to bind the company to this additional contract term,
and he did. JA 51.
F.
Tyco's last argument is that the district court erred in concluding that Gorini did
not release his claims against Tyco when he cashed a check for enhanced severance from
Tyco. This is essentially an argument that Gorini accepted Tyco’s offer to settle his
claims against it when he cashed its check and that there was an accord and satisfaction.
However, accord and satisfaction requires “a clear and unequivocal offer of
payment in full satisfaction” of a disputed debt. Fleming v. CNA Ins. Co., 52 F. Supp. 2d
499, 502 (E.D. Pa. 1999) (citing to the clear and unequivocal requirement for a waiver of
legal rights stated in Paramount Aviation Corp. v. Agusta, 178 F.3d 132, 148 (3d Cir.
13
1999)). Tyco argues it made such a clear and unequivocal offer to Gorini. It claims the
offer occurred because (1) Gorini had been told in his May termination letter that he
would be entitled to enhanced severance of two months’ pay if he signed a release of
claims; (2) Gorini received a second check equivalent to two months’ pay marked
“severanc” (sic); and (3) Gorini knew from his counsel that Tyco sent him this check
mistakenly believing he had signed a release of his claim, but that Tyco said he could
keep it if he did settle his claims. According to Tyco, Gorini thus accepted the offer by
cashing the check.
The record indicates that Gorini thought he was due more money in straight, not
enhanced, severance pay at the time he received the check; that the check bore no
notations other than “severanc” (sic), and was not accompanied by a release. Gorini’s
counsel wrote to Tyco and asked what the check was for but never received a response.
Tyco’s counsel later told Gorini’s counsel: “When we sent your client this check, we
thought we’d get rid of you,” or “When we gave you that check, we thought you’d go
away.” JA 403-04. Gorini’s counsel testified that nobody at Tyco ever said the check was
sent in error. JA 404.
The district court found that Gorini was confused about the significance of this
payment and its connection to the release, and that finding is not clearly erroneous. The
check could reasonably have been seen as an attempt to give him enough money that he
would lose interest in pursuing his claims and just “go away.” It could also be viewed as
14
an attempt to pay him some of the severance pay he believed he was due. The purpose of
the check is unclear, given its notations, its separation in time from the earlier letter
regarding enhanced severance pay in exchange for a release, and Tyco’s failure to include
language of “release” with the check. Tyco did not attempt to clarify the meaning of
check despite a request from Gorini to do so. Tyco could merely have printed a release
above an endorsement line of the check yet failed to do so.
The district court found that this check was just a mistaken overpayment by Tyco,
and that Gorini had to return the money. JA 186-87. That finding is not clearly
erroneous.
III.
For all of the above reasons, we will affirm the district court.
15
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