Baker v. BASF Corporation ( 1996 )


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  • UNPUBLISHED
    UNITED STATES COURT OF APPEALS
    FOR THE FOURTH CIRCUIT
    BILLY R. BAKER; THEODORE W.
    CAMDEN, JR.; ROBERT J. BUNTING;
    ROAMIE WEST; JAMES R.
    FREEMAN, JR.; CHARLES S. SMITH;
    BILLY R. THOMAS; JUDY S. TATE;
    ROBERT A. MCGINN; GORDON R.
    FINCHAM,
    No. 95-1353
    Plaintiffs-Appellants,
    v.
    BASF CORPORATION; BASF
    CORPORATION RETIREMENT PLAN OF
    JANUARY 1, 1987,
    Defendants-Appellees.
    Appeal from the United States District Court
    for the Eastern District of Virginia, at Newport News.
    James E. Bradberry, Magistrate Judge.
    (CA-94-40-4, CA-94-41-4, CA-94-42-4, CA-94-43-4, CA-94-44-4,
    CA-94-45-4, CA-94-46-4, CA-94-47-4, CA-94-48-4, CA-94-49-4)
    Argued: November 1, 1995
    Decided: April 22, 1996
    Before RUSSELL, WIDENER, and HALL, Circuit Judges.
    _________________________________________________________________
    Affirmed by unpublished per curiam opinion.
    _________________________________________________________________
    COUNSEL
    ARGUED: James Harrell Shoemaker, Jr., PATTEN, WORNOM &
    WATKINS, Newport News, Virginia, for Appellants. James Patrick
    McElligott, Jr., MCGUIRE, WOODS, BATTLE & BOOTHE, L.L.P.,
    Richmond, Virginia, for Appellees. ON BRIEF: Joseph Henry
    Latchum, Jr., PATTEN, WORNOM & WATKINS, Newport News,
    Virginia, for Appellants. David F. Dabbs, MCGUIRE, WOODS,
    BATTLE & BOOTHE, L.L.P., Richmond, Virginia, for Appellees.
    _________________________________________________________________
    Unpublished opinions are not binding precedent in this circuit. See
    Local Rule 36(c).
    _________________________________________________________________
    OPINION
    PER CURIAM:
    Ten individuals ("the Appellants") filed substantially identical
    complaints, which were consolidated, against BASF Corporation
    ("BASF") and the BASF Corporation Retirement Plan of January 1,
    1987. Seeking relief under the Employee Retirement Income Security
    Act of 1974 ("ERISA"), 
    29 U.S.C. § 1000
     et seq., as amended by the
    Retirement Equity Act of 1984 and the Tax Reform Act of 1986, the
    Appellants alleged that they were entitled to severance pay from
    BASF because their employment with BASF terminated when BASF
    sold its Williamsburg, Virginia plant ("the Plant") to Mann Industries.
    The district court entered summary judgment for BASF, finding that
    the written terms of BASF's severance plan comported with ERISA
    procedure.
    Appealing the district court's grant of summary judgment, the
    Appellants allege that BASF 1) failed to pay them severance pay to
    which they were entitled under a written severance plan; and 2) vio-
    lated ERISA's reporting and disclosure requirements by failing to
    fully inform them of their severance benefits rights. We review de
    novo the district court's grant of summary judgment regarding ERISA
    claims under 
    29 U.S.C. §1132
    . See Firestone Tire & Rubber Co. v.
    Bruch, 
    489 U.S. 101
    , 115 (1989). Upon review, we affirm the district
    court's order.
    2
    I.
    Four and one-half years after either having been let go or by volun-
    tarily resigning from Mann Industries, the Appellants sought sever-
    ance benefits from BASF. The Appellants had been salaried, non-
    union employees at BASF's Plant until November 17, 1989, when
    BASF sold its acrylic fibers Plant to Mann Industries. Upon the
    Plant's sale to Mann Industries, the Appellants' employment trans-
    ferred from BASF to Mann Industries.1 The Appellants continued
    working without interruption at the same pay received from BASF.
    Each received in wages or salary, a sum greater than what each would
    have received in severance had BASF, instead of selling, closed its
    doors. Although Mann Industries offered no severance or retirement
    plan, it did provide its employees with health benefits and a 401(k)
    "matching" retirement plan.
    The Appellants now contend that BASF management beguiled
    them into accepting employment with Mann Industries by assuring
    them they would be "taken care of" and that those accepting employ-
    ment with Mann Industries would receive severance pay from BASF.
    Notwithstanding their allegations, at the time of the sale, only those
    salaried employees not offered jobs with Mann Industries and not
    transferred internally to another BASF division received severance
    pay from BASF. In sum, each salaried BASF employee continued
    working for either Mann Industries or another BASF division or
    received severance pay from BASF.
    _________________________________________________________________
    1 Three of the ten complainants worked at the Plant since its opening
    in 1958 by Dow Chemical. The remaining seven worked for all subse-
    quent owners aside from the original one. In 1966, the Plant was sold to
    a joint venture Dow-Badische (owned in equal shares by Dow and Badis-
    che Corporation). Dow-Badische sold the Plant outright to Badische in
    1976. During a corporate reorganization in 1985, BASF acquired the
    Plant from Badische. The appellants mischaracterize the '66 and '76
    sales as "restructurings," when in fact they were outright sales--the
    Plant's beneficial ownership affirmatively changed hands each time. Not
    a single appellant received severance pay from the Plant's previous
    owner when ownership transferred.
    3
    II.
    A.
    Despite the district court's finding that it was neither irrational nor
    clearly erroneous under ERISA for BASF to have denied severance
    to those salaried employees continuing employment with the purchas-
    ing concern when the division in which they worked was sold, the
    Appellants argue that genuine issues of material fact exist as to
    whether the language of the May 1989 plan was ambiguous and
    whether BASF arbitrarily and unreasonably interpreted the May 1989
    plan in violation of ERISA. Upon examination of the severance poli-
    cy's language, we affirm the decision of the district court.
    Employee eligibility for ERISA benefits is governed primarily by
    the plan's language. Lockhart v. United Mine Workers of America
    1974 Pension Trust, 
    5 F.3d 74
    , 78 (4th Cir. 1993). To prevail, there-
    fore, the Appellants must demonstrate that despite the beneficial
    change in ownership and their continued employment with the ongo-
    ing concern, they were eligible for severance pay under the May 1989
    plan in existence during the Plant's sale. The Appellants maintain that
    both the district court and BASF misinterpreted the May 1989 plan's
    language by finding them ineligible for severance benefits. The May
    1989 plan contains the following provision defining severance eligi-
    bility:
    Employees who have completed at least one year of contin-
    uous service, but who have been terminated for reasons such
    as declining business, elimination of position, or discontinu-
    ance of operations, where the continuance of employment
    ceases permanently will be eligible for the provisions out-
    lined in this policy.
    Under the plan's plain language, an employee cannot collect sever-
    ance unless his employment "ceases permanently." The Appellants'
    employment did not cease, but continued with the purchasing concern
    without interruption or hardship and at the same rate of pay.
    The Appellants insist, however, that the May 1989 plan's language
    is ambiguous and that the district court should have considered extrin-
    4
    sic evidence to illuminate the intent of the severance eligibility provi-
    sion. The Appellants rely on Fuller v. FMC Corp. , 
    4 F.3d 255
     (4th
    Cir. 1993), cert. denied, 
    114 S. Ct. 1062
     (1994), in support of their
    proposition. In Fuller, FMC Corp.'s severance plan provided sever-
    ance to terminated employees, who were parenthetically defined as
    those employees "laid off due to the closing of a plant or location."
    
    Id. at 259
    . Because we found the concept of"plant closing" to be
    ambiguous, we looked to extrinsic evidence of past practice to illumi-
    nate whether the sale of a plant constituted a plant closing. And upon
    reviewing every previous FMC plant sale it became apparent that
    FMC had never paid employee benefits to employees offered continu-
    ing employment with a purchaser. Accordingly, we held that the sale
    of the plant did not constitute a plant closing and to label the appel-
    lants "terminated employees" would unjustly award them severance
    to which they were not entitled. See Hickey v. Digital Equipment
    Corp., 
    43 F.3d 941
    , 947-48 (4th Cir. 1995).
    In the instant case, we need not examine extrinsic evidence of past
    practice because the plan's severance eligibility provision is unambig-
    uous. The clear and unambiguous severance plan language controls.
    See Gillis v. Hoechst Celanese Corp., 
    4 F.3d 1137
    , 1142 (3rd Cir.
    1993), cert. denied, 
    114 S. Ct. 1369
     (1994). The May 1989 plan
    clearly precludes severance unless "the continuance of employment
    cease[d] permanently." Here, the Appellants' employment never
    ceased, nor was it interrupted for a day or even a pay period.
    Once employees of the selling company became employees of the
    purchasing concern, the selling company was no longer obligated to
    provide them severance with respect to subsequent layoffs. Hickey, 
    43 F.3d at 947
    ; see Holland v. Burlington Industries, Inc., 
    772 F.2d 1140
    (4th Cir. 1985) (holding no job termination under a severance policy
    where the plaintiffs continued employment with the purchaser of a
    plant), aff'd mem., 
    477 U.S. 903
     (1986); Sejman v. Warner-Lambert
    Co. Inc., 
    889 F.2d 1346
     (4th Cir. 1989) (holding that when purchaser
    later laid off plaintiffs and plaintiffs sought severance from former
    employer/seller, denial of severance was justified because termination
    of plaintiffs was done by the purchaser not by the original employer),
    cert. denied, 
    498 U.S. 810
     (1990). We affirm, therefore, the district
    court's finding that BASF's decision denying severance pay to sala-
    ried employees offered continuing employment in the purchasing
    5
    company when the division in which they worked was sold was nei-
    ther an irrational nor clearly erroneous decision under ERISA.2
    B.
    The Appellants alternatively argue, in the event that we found the
    language of the May 1989 plan unambiguous, that BASF should be
    fined for violating ERISA's reporting and disclosure requirements by
    intentionally and secretly withholding details of the May 1989 sever-
    ance plan. 
    29 U.S.C. § 1132
    . Their grievance arises from BASF's
    1988 modification of the pre-existing severance policy, known as the
    Badische policy.3 The Appellants contend that 
    29 U.S.C. § 1024
    (b)(1)(A) entitled them to view the May 1989 plan within 90
    days after they became beneficiaries under that plan--essentially 90
    days after the May 1989 plan's effective date.
    The Appellants cite only one case, Blau v. Del Monte Corp., 
    748 F.2d 1348
     (9th Cir. 1984), cert. denied, 
    474 U.S. 865
     (1985), in sup-
    port of their proposition that BASF intentionally and secretly with-
    held details of the May 1989 severance plan. Blau, however, is readily
    distinguishable from the case at hand. In Blau , the management com-
    pletely concealed the benefits policy. The employer neither published
    the policy nor informed the plaintiffs of its existence, contents, or
    terms and such intentional deceitfulness caused plaintiffs to suffer
    substantial and irreparable harm. 
    Id. at 1351
    . In contrast, BASF did
    _________________________________________________________________
    2 The district court held, in the alternative, that the Appellants' allega-
    tion that BASF informed them either directly or indirectly that they
    would receive severance pay constituted an oral modification to the sev-
    erance contract; acknowledging that, under Virginia law, such contract
    modifications are governed by a three-year statute of limitations, the dis-
    trict court barred the Appellants' action against BASF. The Appellants
    now argue, however, that the extrinsic evidence was not submitted to
    suggest that oral modifications to the severance plan existed, but to prove
    that questions of material fact existed evidencing BASF's intent regard-
    ing their severance benefits. We need not address this issue because we
    affirm on different grounds.
    3 The Appellants contend that BASF surreptitiously revised its 1983
    severance plan--the "Badische policy--"into the "May 1989" plan,
    before Mann Industries purchased the Plant.
    6
    not withhold the May 1989 plan from Plant employees as contended.
    At informal information gatherings, BASF told employees of the exis-
    tence of the May 1989 severance plan, explained the schedule of ben-
    efits available under the policy, and explained the circumstances
    under which benefits would or would not be provided. Thus said, we
    turn to a discussion of ERISA's reporting and disclosure require-
    ments.
    An employer may not arbitrarily deprive its employees of critical
    information regarding their benefit and retirement plans. See 
    29 U.S.C. § 1132
    (c) (imposition of civil penalties upon employers refus-
    ing to furnish information to employees who have requested informa-
    tion). Sections 1022(a)(1)4 and 1024(b) provide guidelines as to when
    and how often an employer must disseminate benefits information to
    its employees. Section 1024(b)(1)(A) states:
    (b) Publication of summary plan description and annual
    report to participants and beneficiaries of plan.
    Publication of the summary plan descriptions and
    annual reports shall be made to participants and benefi-
    ciaries of the particular plan as follows:
    (1) The administrator shall furnish to each
    participant, and each beneficiary receiving
    _________________________________________________________________
    4 Section 1022(a)(1) reads:
    (a)(1) A summary plan description of any employee benefit
    plan shall be furnished to participants as provided in section
    1024(b) of this title. The summary plan description shall include
    the information described in subsection (b) of this section, shall
    be written in a manner calculated to be understood by the aver-
    age plan participant, and shall be sufficiently accurate and com-
    prehensive to reasonably apprise such participants and
    beneficiaries of their rights and obligations under the plan. A
    summary of any material modification in the terms of the plan
    and any change in the information required under subsection (b)
    of this section shall be written in a manner calculated to be
    understood by the average plan participant and shall be furnished
    in accordance with section 1024(b)(1) of this title.
    7
    benefits under the plan, a copy of the sum-
    mary, plan description, and all modifica-
    tions and changes referred to in section
    1022(a)(1) of this title--
    (A) within 90 days after he becomes a par-
    ticipant, or (in the case of a beneficiary)
    within 90 days after he first receives
    benefits, . . . .
    
    29 U.S.C. § 1024
    (b)(1)(A). The 90-day window requires the
    employer to furnish plans to new participants within the first 90 days
    after they become a participant.
    The Appellants argue that BASF violated § 1024(b)(1)(A) by not
    permitting them to view the benefits plan within 90 days of its effec-
    tive date. The Appellants, however, were preexisting participants in
    a preexisting plan--the Badische policy. In their failure to read
    § 1024(b)(1) in its entirety, the Appellants missed the last sentence of
    § 1024(b)(1), which states:
    If there is a modification or change described in section
    1022(a)(1) of this title, a summary description of such modi-
    fication or change shall be furnished not later than 210 days
    after the end of the plan year in which the change is adopted
    to each participant, and to each beneficiary who is receiving
    benefits under the plan.
    
    29 U.S.C. § 1024
    (b)(1). Thus, once a benefits plan undergoes modifi-
    cation or change, the employer has 210 days after the end of the plan
    year to notify each participant and beneficiary of the modifications
    and changes.
    BASF's May 1989 Plan, was not a new plan, but a revision of a
    pre-existing benefits policy. Pursuant to § 1024(b)(1), BASF had 210
    days from the plan's year end to furnish the Appellants, with any
    modifications or adopted changes. The plan year did not end until
    December 31, 1989.5 Accordingly, BASF had until at least July 1990
    _________________________________________________________________
    5 Absent evidence of how BASF calculates its taxable year, we calcu-
    late the plan year as the calendar year. See 
    52 Fed. Reg. 22716
     (June 15,
    1987) (to be codified at 26 C.F.R. Part 1).
    8
    to disseminate plan modifications and changes to employee beneficia-
    ries and participants. By July 1990, the Appellants were employees
    of Mann Industries. Because the Appellants were no longer BASF
    employees, they were no longer qualified participants in the severance
    plan. Thus, the district court did not err in finding that BASF did not
    violate ERISA procedure.
    III.
    For the foregoing reasons, the district court's order granting BASF
    summary judgment is
    AFFIRMED.
    9