Raymond Romo v. Waste Connections US, Inc. ( 2020 )

Case: 19-11008 Document: 00515613810 Page: 1 Date Filed: 10/23/2020
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
October 23, 2020
No. 19-11008 Lyle W. Cayce
Clerk
Raymond Romo,
Plaintiff—Appellant,
versus
Waste Connections US, Incorporated; Progressive
Waste Solutions of TX, Incorporated,
Defendants—Appellees.
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:18-CV-570
Before KING, GRAVES, and OLDHAM, Circuit Judges.
James E. Graves, Jr., Circuit Judge:*
Plaintiff-Appellant Raymond Romo appeals from the district court’s
grant of summary judgment in favor of Defendant-Appellees. Finding his
appeal without merit, we affirm.
*
Pursuant to 5TH CIRCUIT Rule 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should not be published and is not precedent except under the limited circumstances set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 CIRCUIT Rule 47.5.4.
Case: 19-11008 Document: 00515613810 Page: 2 Date Filed: 10/23/2020
No. 19-11008
I. BACKGROUND
Mr. Romo worked as an accountant in the waste-management
industry for over 30 years. In 2013, he began working as a district controller
for IESI MD Corporation (“IESI”), an operating subsidiary of Progressive
Waste Solutions, Ltd. (“Progressive”). After one year, he was promoted to
the position of area controller. In that role, his responsibilities included
managing and providing analytical support for internal operations and
external transactions, overseeing internal control processes and budgeting,
and supervising other controllers and accountants.
In June 2016, Progressive merged with Waste Connections US, Inc.
(“Waste Connections”). Prior to the merger, Mr. Romo had been designated
as a participant in several retention and incentive plans. Four of those plans
are at issue here: the President’s Award; the 2015 Long Term Incentive Plan
(“2015 LTIP”); the 2016 Long Term Incentive Plan (“2016 LTIP”); and
the 2016 IESI Change in Control Severance Plan (“Severance Plan”). The
Severance Plan is an Employee Retirement Income Security Act (“ERISA”)
plan.
Mr. Romo continued to work for IESI post-merger, but his title
changed to division controller. In that role, he directed the accounting and
supporting financial functions for a 13-district area. To assist with the
transition to Waste Connections ownership, Mr. Romo’s new direct
supervisor sent another Waste Connections division controller to support
and train Mr. Romo and his team. A subset of the policies and procedures on
which Mr. Romo trained and that he communicated to his staff involved the
importance of complying with reporting deadlines. Mr. Romo nevertheless
missed multiple reporting deadlines. His direct supervisor spoke to him
about that issue in January 2017, but Mr. Romo missed at least one deadline
even after that conversation.
2
Case: 19-11008 Document: 00515613810 Page: 3 Date Filed: 10/23/2020
No. 19-11008
Around the same time, Waste Connections was selling its
Washington, D.C., assets as part of its merger with Progressive. Those
districts were part of Mr. Romo’s area, and he was asked to assist with the
due diligence. He did so in addition to his regular job functions but without
receiving the additional support he requested. The transaction closed in mid-
February 2017.
After the close of the sale, Mr. Romo remained responsible for
managing accounting functions related to the transaction. Among other
things, those functions involved reconciling and closing general ledger
accounts. While performing those functions, Mr. Romo identified a cash
balance of approximately $400,000 in a zero-balance account. Despite his
knowledge of that incongruity, he signed off on the February 2017 balance
sheet as complete. He did the same in March 2017, again without reconciling
the variance. During that time, he did not ask for assistance or otherwise note
the issue.
In April 2017, Mr. Romo, his direct supervisor, and other Waste
Connections executives toured the region. While on that tour, Mr. Romo’s
direct supervisor discovered the variance in the zero-balance account. The
supervisor investigated the discrepancy but found no supporting
documentation for the cash transfers that should have taken place during the
process of apportioning payments between Waste Connections and the buyer
of the Washington, D.C. districts. A few days later, Mr. Romo’s employment
was terminated.
Three months later, counsel for Mr. Romo sent a demand letter to
IESI requesting payments under the President’s Award, 2015 LTIP, and
2016 LTIP (collectively, the “equity incentive plans”). Mr. Romo also
sought payment under the Severance Plan. Under the terms of that plan, IESI
had 90 days to determine whether benefits should be granted. Prior to the
3
Case: 19-11008 Document: 00515613810 Page: 4 Date Filed: 10/23/2020
No. 19-11008
expiration of those 90 days, the plan administrator notified Mr. Romo’s
counsel that she had been appointed and that she was extending the response
time, in accordance with the terms of the plan, by an additional 90 days.
The plan administrator did not issue her determination within the
extended response time. But 10 days after the extended deadline, she sent
Mr. Romo two letters. The first denied benefits under the Severance Plan
and explained the reasons for the denial. The second explained that she had
also been referred the determination regarding whether to pay Mr. Romo
under the equity incentive plans and that his claims under those plans were
also denied. As part of those determinations, the plan administrator
emphasized that Mr. Romo had been terminated for just cause as defined in
the Severance Plan, the 2015 LTIP, and the 2016 LTIP.
Two months later, Mr. Romo sued Waste Connections and
Progressive Texas (collectively, “Waste Connections”). He alleged that the
defendants wrongly denied his claim to benefits under the Severance Plan
and the equity incentive plans. Waste Connections moved for summary
judgment, and the district court granted the motion in full. Mr. Romo
appealed, arguing that the district court erred in (1) reviewing his ERISA
claim under an abuse-of-discretion standard; and (2) granting summary
judgment in favor of Waste Connections on his breach-of-contract claims.
Both arguments are without merit.
II. STANDARD OF REVIEW
We review a summary judgment de novo, applying the same standards
as the district court. Mason v. Lafayette City-Parish Consol. Gov’t, 806 F.3d
268, 274 (5th Cir. 2015) (citation omitted). “The court shall grant summary
judgment if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). “A dispute is genuine if the evidence is such that a
4
Case: 19-11008 Document: 00515613810 Page: 5 Date Filed: 10/23/2020
No. 19-11008
reasonable jury could return a verdict for the nonmoving party.” Westfall v.
Luna, 903 F.3d 534, 546 (5th Cir. 2018) (internal quotation marks and
citation omitted). A fact “is material if its resolution could affect the outcome
of the action.” Sierra Club, Inc. v. Sandy Creek Energy Assocs., L.P., 627 F.3d
134, 134 (5th Cir. 2010) (citation omitted).
At summary judgment, all reasonable doubts must be resolved against
the moving party. Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888 (1990).
“The evidence of the non-movant is to be believed, and all justifiable
inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255 (1986).
III. DISCUSSION
This court must address whether Waste Connections is entitled to
summary judgment as to both the Severance Plan and the equity incentive
plans. We conclude that it is.
A. The Severance Plan
With respect to the Severance Plan, Mr. Romo makes two arguments:
First, that the district court erred by reviewing only for abuse of discretion;
second, that there was a genuine dispute as to material facts. Neither
argument succeeds.
When a benefit plan governed by ERISA grants the plan administrator
“discretionary authority to determine eligibility for benefits or to construe
the terms of the plan”—as is the case here—courts review the plan
administrator’s decision for abuse of discretion. Firestone Tire & Rubber Co.
v. Bruch, 489 U.S. 101, 115 (1989). While Mr. Romo contends that de novo
review was appropriate because the plan administrator failed to render a
timely decision, this court has repeatedly declined to modify the standard of
review “based on the administrator’s failure to substantially comply with the
5
Case: 19-11008 Document: 00515613810 Page: 6 Date Filed: 10/23/2020
No. 19-11008
procedural requirements of ERISA.” Lafleur v. La. Health Serv. & Indem.
Co., 563 F.3d 148, 159 (5th Cir. 2009); see also Wade v. Hewlett-Packard Dev.
Co., 493 F.3d 533, 538 (5th Cir. 2007), abrogated on other grounds by Hardt v.
Reliance Standard Life Ins. Co., 560 U.S. 242 (2010) (“Wade has cited no
direct authority by the Supreme Court or the Fifth Circuit dictating a change
in the standard of review based upon procedural irregularities alone, and we
see no reason to impose one.”).1 Our review, like that of the district court, is
therefore for abuse of discretion alone.
Under that standard, “[e]ven if an ERISA plaintiff support[s] his
claim with substantial evidence, or even with a preponderance, he will not
prevail for that reason. Rather, it is the plan administrator’s decision that
must be supported by substantial evidence, and, if it is, the administrator’s
decision must prevail.” Foster v. Principal Life Ins. Co., 920 F.3d 298, 304 (5th
Cir. 2019) (emphasis, citation, and quotation marks omitted). “Substantial
evidence is more than a scintilla, less than a preponderance, and is such
relevant evidence as a reasonable mind might accept as adequate to support
a conclusion.” Id. (citation omitted). A plan administrator’s decision is
arbitrary only when it is “made without a rational connection between the
known facts and the decision or between the found facts and the evidence.”
Id. (citing Holland v. Int’l Paper Co. Ret. Plan, 576 F.3d 240, 246–47 (5th Cir.
2009)).
Here, the Severance Plan provides that an employee may be fired for
just cause if he
1
Moreover, if the plan administrator had not substantially complied with ERISA,
the appropriate remedy would be remand to the plan administrator—not a change in the
standard of review. See Lafleur, 563 F.3d at 157 (“Remand to the plan administrator for full
and fair review is usually the appropriate remedy when the administrator fails to
substantially comply with the procedural requirements of ERISA.”)
6
Case: 19-11008 Document: 00515613810 Page: 7 Date Filed: 10/23/2020
No. 19-11008
(i) willfully fails to perform his/her duties with the Company
or any of its affiliates; (ii) commits theft, fraud, dishonesty or
misconduct involving the property, business or affairs of the
Company or any of its affiliates or in the performance of
his/her duties; (iii) willfully breaches or fails to follow any
material term of his or her employment agreement; (iv) is
convicted of a crime which constitutes an indictable offense; or
(v) engages in conduct which would be treated as cause by a
court of competent jurisdiction in the jurisdiction in which the
[e]ligible [e]mployee is employed.
The plan administrator’s denial letter explained that she had made the
following findings:
• Mr. Romo missed several key deadlines;
• “[J]ust before the termination of his employment, Mr. Romo failed to
perform several key tasks that were central to an important business
divestiture, including failing to keep journal entry records or any other
records to account for the movement of millions of dollars of [c]om-
pany funds between business accounts”;
• Mr. Romo’s supervisor “repeatedly counseled him on the need to
meet deadlines and perform as expected”; and
• “[T]here were incidents where subordinate employees of Mr. Romo
experienced confusion or frustration because Mr. Romo was not re-
sponsive to their needs.”
Those details, which are not in dispute, led the plan administrator to
conclude that the facts fully supported a “just cause” termination under the
Severance Plan, which precluded Mr. Romo from receiving severance
benefits.
7
Case: 19-11008 Document: 00515613810 Page: 8 Date Filed: 10/23/2020
No. 19-11008
Given the facts before the plan administrator, her finding can hardly
be characterized as arbitrary. As such, Waste Connections is entitled to
summary judgment with respect to the Severance Plan claims.
B. The Equity Incentive Plans
Mr. Romo also argues that the district court erred by granting
summary judgment in favor of Waste Connections as to the equity incentive
plans: the 2014 President’s Award, 2015 LTIP, and 2016 LTIP. We conclude
that summary judgment in favor of Waste Connections was appropriate as to
these claims.
1. Legal Standards
“Under Texas law, the essential elements of a breach of contract
claim are the existence of a valid contract, performance or tendered
performance by the plaintiff, breach of the contract by the defendant, and
damages sustained as a result of the breach.” Innova Hosp. San Antonio, Ltd.
P’ship v. Blue Cross & Blue Shield of Ga., Inc., 892 F.3d 719, 731 (5th Cir. 2018)
(internal quotation marks and citation omitted). “A contract is not
ambiguous merely because the parties have a disagreement on the correct
interpretation.” REO Indus., Inc. v. Nat. Gas Pipeline Co. of Am., 932 F.2d
447, 453 (5th Cir. 1991). Courts are to construe contracts “‘from a utilitarian
standpoint bearing in mind the particular business activity sought to be
served’ and ‘will avoid when possible and proper a construction which is
unreasonable, inequitable, and oppressive.’” Frost Nat’l Bank v. L & F
Distribs., Ltd., 165 S.W.3d 310, 312 (Tex. 2005) (quoting Reilly v. Rangers
Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987)).
8
Case: 19-11008 Document: 00515613810 Page: 9 Date Filed: 10/23/2020
No. 19-11008
2. The President’s Award
With respect to the President’s Award, we conclude that Mr. Romo
was not entitled to receive any shares because he was not employed on April
1, 2018, the vesting date provided in the award letter.
The September 2015 letter conferring the President’s Award upon
Mr. Romo stated (1) that the shares granted therein would be held in a trust
until they vested on April 1, 2018; and (2) that Mr. Romo had to be employed
on that date in order to receive the value of the shares. Mr. Romo was
terminated in April 2017, a year before the April 2018 vesting date. He
concedes that fact, but argues that the 2016 merger between Progressive and
Waste Connections triggered a change-of-control provision that caused the
shares to become fully vested at that time. We disagree.
The change-of-control provision appears in the text of the 2015 LTIP,
which the President’s Award letter incorporates. But “[i]t is a fundamental
axiom of contract interpretation that specific provisions control general
provisions.” Baton Rouge Oil & Chem. Workers Union v. ExxonMobil Corp.,
289 F.3d 373, 377 (5th Cir. 2002) (citation omitted). Here, the President’s
Award incorporates the LTIP, but itself identifies “the specifics of the plan.”
Second on the list of specific provisions is that “[i]f a participant leaves prior
to the completion of the three year period, all shares are forfeited except for
a qualified retirement.”
We therefore affirm the district court’s grant of summary judgment in
favor of Waste Connections as to the President’s Award.
3. 2015 and 2016 LTIPs
Mr. Romo likewise contends that Waste Connections breached the
2015 and 2016 LTIPs by refusing to pay. We agree with Waste Connections,
9
Case: 19-11008 Document: 00515613810 Page: 10 Date Filed: 10/23/2020
No. 19-11008
however, that it is not required to pay because Mr. Romo was terminated for
just cause.
The 2015 and 2016 LTIPs have identical “just cause” clauses, which
read:
“Just Cause” has the meaning set out in the employment
agreement of the Participant, if applicable, and otherwise
means the Participant (i) willfully fails to perform his duties
with the Corporation; (ii) commits theft, fraud, dishonesty or
misconduct involving the property, business or affairs of the
Corporation or any of its affiliates or in the performance of
his/her duties: (iii) willfully breaches or fails to follow any
material term of his or her employment agreement; (iv) is
convicted of a crime which constitutes an indictable offence; or
(v) engages in conduct which would be treated as cause by a
court of competent jurisdiction in the jurisdiction in which the
Participant is employed.
Mr. Romo “concedes [that] accounting mistakes were made” but
alleges that a genuine dispute as to a material fact exists because “the
principal problem was brought on by Defendants’ intentional understaffing
of Plaintiff’s [d]ivision by dumping the jobs of multiple people onto Plaintiff,
their refusal to retain key personnel who could have avoided the errors, and
mistakes by its own staff which were never punished.” However, he cites no
evidence in support of these statements, which are therefore inadequate. See
Nat’l Ass’n of Gov’t Emps. v. City Pub. Serv. Bd. of San Antonio, Tex., 40 F.3d
698, 713 (5th Cir. 1994) (“Conclusory allegations unsupported by specific
facts . . . will not prevent an award of summary judgment; the plaintiff
[can]not rest on his allegations . . . to get to a jury without any significant
10
Case: 19-11008 Document: 00515613810 Page: 11 Date Filed: 10/23/2020
No. 19-11008
probative evidence tending to support the complaint.” (quotation marks and
citation omitted)).
Mr. Romo further argues that “there is reason to doubt the
[d]efendants’ stated reasons” for firing him, as “age related comments and
a practice of firing older workers to be replaced by cheaper and younger
employees casts doubt on the credibility of Defendants’ denial of benefits.”
Mr. Romo cites no case law supporting his attempt to graft the pretext
analysis from the Age Discrimination in Employment Act into a breach of
contract claim. Moreover, the deposition testimony and affidavit he cites do
not provide any support for his own conclusory statements. His argument
therefore fails. See E.E.O.C. v. Exxon Shipping Co., 745 F.2d 967, 976 (5th Cir.
1984) (“[P]retext cannot be established by mere ‘conclusory statements’ of
a plaintiff who feels he has been discriminated against.” (citation omitted));
Nat’l Ass’n of Gov’t Emps. 40 F.3d at 713 (“Conclusory allegations
unsupported by specific facts . . . will not prevent an award of summary
judgment[.]”). Waste Connections has satisfied its burden and is entitled to
summary judgment as to the LTIPs.
IV. CONCLUSION
The district court’s entry of summary judgment in favor of
Defendant-Appellees is AFFIRMED.
11