Fawvor v. Kerr McGee Corp ( 2001 )

UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 00-30061
J KIM FAWVOR,
Plaintiff-Appellant,
VERSUS
KERR MCGEE CORP,
Defendant-Appellee.
Appeal from the United States District Court
For the Western District of Louisiana
(98-CV-1089)
May 8, 2001
Before REYNALDO G. GARZA, STEWART, and DENNIS, Circuit Judges:
PER CURIAM:*
J. Kim Fawvor appeals the district court’s order granting
summary judgment to his former employer, Kerr-McGee Corporation
(Kerr-McGee), and finding that the Kerr-McGee Corporation Benefits
Committee (the Administrator) did not abuse its discretion in
denying Fawvor severance benefits under the Restated Kerr-McGee
Corporation 1996/1997 Restructuring Plan (the Plan).1 After
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this
opinion should not be published and is not precedent except under
the limited circumstances set forth in 5TH CIR. R. 47.5.4.
1
The plan was originally effective October 1, 1996, and was
amended and restated effective March 1, 1997.
reviewing the record and the briefs, we find that the Administrator
did not abuse its discretion, and we AFFIRM the judgment of the
district court granting summary judgment to Kerr-McGee.
FACTS AND PROCEDURAL HISTORY
Fawvor worked for Kerr-McGee in various capacities between
1979 and September 22, 1997. Although Fawvor began his employment
with Kerr-McGee as a roustabout, he was promoted to “Production
Foreman” in 1991. As of October 1996, Fawvor was “assigned to
assist in the development and implementation of the SEMP [Safety
and Environmental Management Program] plan.”2 His duties included
onshore and offshore work, such as conducting safety audits,
training field personnel, and developing written operating and
maintenance procedures. Although Fawvor initially spent most of
his time at Kerr-McGee’s Lafayette office, his officially
designated job location throughout his employment with the SEMP was
“offshore.”3
On October 1 1996, Kerr-McGee underwent restructuring and
moved its Exploration and Production Department (E & P) offices,
2
According to Production Manager Darrell Holleck, SEMP’s goal
was to address potential safety and environmental issues in
operations being conducted in the Gulf of Mexico.
3
A series of Personnel Action Forms from June 11, 1996 to
September 30, 1997 indicate that Fawvor’s job location was, at all
times, listed as “# 279.” Internal Correspondence from Kerr-McGee
indicates that “#279" is company code for “offshore out of Morgan
City.” Fawvor does not challenge this designation but argues
merely that his work location was a “fiction,” as demonstrated by
his actual work location.
2
the division under which Fawvor was employed, from Lafayette to
Houston. As part of the restructuring, Kerr-McGee promulgated the
Plan, under which employees terminated not later than September 30,
1997, were eligible to receive severance benefits. The Plan
defines “Eligible Employees” as those “regular full-time U.S.
domestic employees of Kerr-McGee whose employment has been
terminated.” The term “Eligible Employees” does not, however,
extend to those “[e]mployees whose employment is terminated due to
. . . voluntary resignation.” The term also excludes “[e]mployees
who decline an offer of a Comparable Job within Kerr-McGee
Corporation or an affiliate.” “Comparable Job means a position
with Kerr-McGee . . . that requires similar knowledge, skills, and
experience, will not result in lower Base Pay, and the work
location is 50 miles or less from the current work location.”
On November 21, 1996, Kerr-McGee issued a bulletin stating,
“Most local employees will be offered transfers; however, the
company wants to emphasize that Kerr-McGee’s offshore workers, some
200 in all, who live and work in the Lafayette/Morgan City area
will not be affected by the move.” At the time of the
reorganization, Kerr-McGee determined that Fawvor could most
effectively be employed as a production foreman working a “regular
7/7 hitch offshore,” which included SEMP duties and other projects
within the operations department. Darrell Holleck, Fawvor’s
supervisor, assured Fawvor, however, that his job was not scheduled
for termination. After the reorganization, Fawvor continued at the
3
same pay grade as a production foremen.
On September 22, 1997, Fawvor submitted a letter of
resignation in which he stated that he had “found some business
opportunities within our industry and want[ed] to explore them.”
Fawvor made a claim for severance benefits, but the Administrator,
which had “the authority to interpret the Plan, manage its
operation and determine all questions arising in the
administration, interpretation and application of the Plan,”
concluded that Fawvor was not eligible for benefits because he was
not an “Eligible Employee” as he had “voluntarily terminated” his
employment. The Administrator also concluded that because Fawvor’s
job position was located offshore prior to the reorganization, the
closing of the Lafayette office did not affect Fawvor’s
eligibility.
Fawvor filed suit in the Western District of Louisiana against
Kerr-McGee pursuant to the Employee Retirement Income Security Act
(ERISA), 28 U.S.C. § 1101 et. seq., to recover benefits under the
Plan. Fawvor claimed that because the Plan excludes employees from
eligibility who decline comparable employment, it must, as a
corollary, include employees who decline non-comparable employment
and resign. Fawvor claimed his new job was not comparable because
of the change in his work schedule and because his new work
location is more than fifty miles from Lafayette. Both Fawvor and
Kerr-McGee moved for summary judgment. In Kerr-McGee’s motion it
argued that Fawvor failed to exhaust his administrative remedies
4
under the Plan. The district court dismissed Fawvor’s suit without
prejudice and remanded the case to the Administrator. After Fawvor
exhausted his administrative remedies, the district court granted
Kerr-McGee’s motion for summary judgment on the merits. The
district court held that the Administrator had not abused its
discretion in finding that Fawvor voluntarily terminated his
employment and that Fawvor’s job position was comparable under the
Plan. Fawvor now appeals to this court.
ANALYSIS
“Summary judgment is appropriate if ‘the record discloses that
there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.’” Duhon
v. Texaco, Inc., 15 F.3d 1302, 1305 (5th Cir. 1993) (quoting
Rodriguez v. Pacificare, Inc., 980 F.2d 1014, 1019 (5th Cir. 1993)).
In reviewing a district court’s grant of summary judgment, we
employ a de novo standard of review, id. (citing FDIC v. Ernst &
Young, 967 F.2d 166, 169 (5th Cir. 1992)), and “apply the same
standard of review as did the district court.” Id. (citing
Rodriguez, 980 F.2d at 1019).
“A denial of ERISA benefits by a plan administrator . . . is
[also] reviewed under a de novo standard unless the plan gives the
administrator ‘discretionary authority to determine eligibility for
benefits or to construe the terms of the plan.’” Id. (quoting
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)).
5
“Challenges to the plan administrator’s interpretations of plan
terms . . . are reviewed under an abuse of discretion or ‘arbitrary
and capricious’ standard if the plan grants the administrator the
authority to make a final and conclusive determination of the
claim.” Id. A decision is arbitrary and capricious only if “it
is made without a rational connection between the known facts and
the decision or between found facts and the evidence.” Meditrust
Fin. Servs. Corp. v. Sterling Chems., Inc., 168 F.3d 211, 213-14
(5th Cir. 1999). A decision should be affirmed if it is supported
by substantial evidence. Id. Eligibility for benefits under any
ERISA plan is governed in the first instance by the plain meaning
of the plan language. Threadgill v. Prudential Sec. Group, Inc.,
145 F.3d 286, 292 (5th Cir. 1998) (citing Nickel v. Estate of Estes,
122 F.3d 294, 298 (5th Cir. 1997)).
Because the Administrator had “the authority to interpret
the Plan, manage its operation and determine all questions arising
in the administration, interpretation and application of the Plan”
and because this challenge is, in essence, a challenge to the
Administrator’s interpretation of plan terms, we employ an abuse of
discretion standard of review.4
4
We note, as the court in Duhon did, that some cases employ a
two-pronged test in addressing the question of whether the
Administrator abused its discretion. Duhon, 15 F.3d at 1307 n.3.
That is, to determine if the Administrator’s interpretation was
legally correct, a court must look to “(1) whether the
administrator has given the plan a uniform construction; (2)
whether the interpretation is consistent with a fair reading of the
plan; and (3) any unanticipated costs resulting from different
6
Fawvor’s challenge is, at base, two-fold: (1) that he
qualifies as an “Eligible Employee” and (2) that because his job
after the reorganization was non-comparable, his voluntary
resignation does not preclude him for recovering severance
benefits.
As the district court held, “the Administrator did not abuse
its discretion in finding that plaintiff’s resignation rendered him
ineligible for severance benefits under the foregoing Plan
provision.” Fawvor was not terminated as a result of the E & P
reorganization. Fawvor’s contention that voluntary resignation
does not preclude eligibility under the Plan is belied by the
expressly stated purpose of the Plan. The first section of the
Plan states that “[t]he purpose of this Kerr-McGee Corporation
1996/1997 Restructuring Plan as amended and restated (the ‘Plan’)
is to provide Eligible Employees . . . severance benefits upon
termination of employment by Kerr-McGee Corporation or any of its
interpretations of the plan.” Rhorer v. Raytheon Eng’rs &
Constructors, Inc., 181 F.3d 634, 640 n.7 (5th Cir. 1999). If the
court determines that the Administrator’s interpretation was
legally incorrect, then it must examine three additional factors to
determine whether the Administrator’s error constitutes an abuse of
discretion: “(1) the internal consistency of the plan under the
administrator’s interpretation; (2) any relevant regulations
formulated by the appropriate administrative agencies; and (3) the
factual background of the determination and any inferences of bad
faith.” Id. at 643 (citation omitted). Like the Duhon court,
however, we recognize that “the reviewing court is not rigidly
confined to this two-step analysis in every case.” Duhon, 15 F.3d
at 1307 n.3. As it is clear from the record that the Administrator
did not abuse its discretion, we decline to employ the two-step
analysis.
7
affiliates. . . .” (emphasis added). Fawvor’s employment was not
terminated by Kerr-McGee; Fawvor voluntarily resigned.
Even if we were to find that Fawvor is an “Eligible Employee”
under the Plan, we express doubt as to whether Fawvor’s job after
the reorganization was so non-comparable as to allow him to resign
without excluding himself from benefits. Before the
reorganization, Fawvor was an offshore foreman who assisted in the
development and implementation of the SEMP for offshore workers.
Because his regular work location was “offshore,” the relocation of
the E & P Office from Lafayette to Houston had no impact on his
eligibility. Fawvor’s duties were a function of the needs of the
SEMP at a particular time. Although for a while Fawvor did spend
the majority of his time in the Lafayette office, Fawvor’s job
description, both before and after the reorganization, was as an
“offshore” worker.
Similarly, although Fawvor’s duties evolved over time, his
position as a “Production Foreman” did not change as a result of
the reorganization. In fact, Fawvor’s “Job Title,” (i.e.,
“Production Foreman”) remained the same from 1991 until his
voluntary departure. Similar knowledge and skills were required,
and his base pay remained unchanged after the relocation of the
E & P office.
CONCLUSION
8
For the foregoing reasons, we affirm the district court’s
grant of summary judgment to Kerr-McGee.
AFFIRMED.
9