Atkins v. CB&I ( 2021 )

Case: 20-30004 Document: 00515790296 Page: 1 Date Filed: 03/22/2021
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
March 22, 2021
No. 20-30004 Lyle W. Cayce
Clerk
Mark Allan Atkins; Allen Wayne Eddins, Jr.; Douglas
Edward Haga; Chase Lloyd Somers; Neland Hardy
Singletary,
Plaintiffs—Appellants,
versus
CB&I, L.L.C.,
Defendant—Appellee.
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 2:19-CV-899
Before Jolly, Southwick, and Costa, Circuit Judges.
Gregg Costa, Circuit Judge:
A company agreed to pay a bonus to employees who worked until the
completion of a construction project. The question is whether this Project
Completion Incentive Plan is an ERISA plan.
I
Plaintiffs are five former employees of CB&I, L.L.C. who worked as
laborers on a construction project in Louisiana. They quit before the project
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ended, which made them ineligible to receive the Project Completion
Incentive under the terms of that plan. It provides:
CB&I will pay to CRAFT employees who meet the eligibility
requirements below a Project Completion Incentive payment
equal to five percent (5%) of the employee’s total earnings . . .
earned while working for CB&I . . . as a retention incentive to
continue working on the Project until their role on the project
is complete. The Project Completion Incentive is calculated
based on total earnings earned by the employee at the Project
site beginning the date employment begins at site until the eli-
gible employee is laid off in a reduction-in-force or CB&I
transfers the employee from the Project site when the em-
ployee’s role on the project is complete. Employees who quit,
transfer or terminate their employment for any other reason are
not eligible for the Project Completion Incentive payment.
CB&I will pay the Incentive payment to an eligible employee
on his/her final paycheck.
Plaintiffs nonetheless sued CB&I in Louisiana state court, seeking the
5% bonus for the period they worked. Plaintiffs concede that they are not
eligible for payment under the Plan terms because they did not work until the
end, but they argued that making such employees ineligible for bonuses
amounts to an illegal wage forfeiture agreement under the Louisiana Wage
Payment Act. LA. STAT. ANN. § 23:631, 23:632, 23:634.
CB&I removed the case to federal court on the ground that the Project
Completion Incentive Plan is governed by the Employee Retirement Income
Security Act of 1974, 29 U.S.C. § 1001 et seq. Plaintiffs never filed a motion
to remand, 1 but argued in response to the issuance of an ERISA case
1
CBI argues that this failure to seek remand in the district court forfeits Plaintiffs’
objections to jurisdiction on appeal. But subject matter jurisdiction can never be conferred
by forfeiture or waiver. 28 U.S.C. § 1447(c) (“If at any time before final judgment it
appears that the district court lacks subject matter jurisdiction, the case shall be
2
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management order that the Plan is not governed by ERISA because it does
not involve an ongoing administrative scheme. The district court disagreed,
concluding that the incentive program was an ERISA plan because it required
ongoing discretion and administration in determining whether a qualifying
termination took place. That jurisdictional determination also resolved the
merits. If ERISA applies, then federal law “supersede[s],” or preempts, the
Louisiana statute that is the basis for Plaintiffs’ suit. 29 U.S.C. § 1144(a); see
Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 62–63 (1987). And if federal
ERISA law governs, then everyone agrees the Plaintiffs do not have a claim
because they are not eligible for the bonus under the terms of the Plan.
II
So the only issue is whether ERISA governs the Project Completion
Incentive Plan. If it does, then this case belongs in federal court and CB&I
prevails. If it does not, then the case goes back to state court where Plaintiffs
can pursue their state law claim.
We thus must decide whether the employee benefit at issue—a bonus
for completing the project—is an employee benefit plan under ERISA.
Although there may be underlying factual issues relating to a plan, the
ultimate question of whether ERISA applies is a legal one we review de novo.
House v. Am. United Life Ins. Co., 499 F.3d 443, 448 (5th Cir. 2007).
CB&I’s completion bonus is akin to a severance plan. “Although
retirement and health plans are perhaps the better known examples of ERISA
plans, the statute contemplates that some severance plans fall within its
remanded.”); S J Associated Pathologists, P.L.L.C. v. Cigna Healthcare of Tex., Inc., 964 F.3d
369, 373–74 & n.3 (5th Cir. 2020) (remanding claims to state court for lack of subject matter
jurisdiction even though remand was not sought on that basis in district court or even on
appeal).
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reach.” Gomez v. Ericsson, Inc., 828 F.3d 367, 371 (5th Cir. 2016); see 29
U.S.C. § 1002(1)(B). But determining whether a severance plan is an ERISA
plan has challenged the courts. As the answer depends on the particulars of
each plan, some severance plans have qualified while others have not. See
Gomez, 828 F.3d at 371 (citing cases).
The key Supreme Court case is Fort Halifax Packing Co. v. Coyne, 482
U.S. 1 (1987). It addresses a state law requiring one-time severance payments
to employees if their plant closed. Id. at 3. The Court held that ERISA did
not govern this law because it required only a “one-time, lump-sum payment
triggered by a single event [which] requires no administrative scheme
whatsoever.” Id. at 12. ERISA governs only for a severance plan that
requires an “ongoing administrative program.” Id. The “complex
administrative activities” typical of such a plan may include “determining
the eligibility of claimants, calculating benefit levels, making disbursements,
monitoring the availability of fund for benefit payments, and keeping
appropriate records in order to comply with applicable reporting
requirements.” Id. at 9, 11.
Looking at the Project Completion Incentive Plan based on the record
before us, we do not see the ongoing administrative scheme characteristic of
an ERISA plan. That big-picture assessment can also be seen by considering
various factors we have used to determine whether a severance payment rises
to the level of an ERISA plan.
First, the Plan calls for only a single payment. Id. at 12; see also Peace
v. Am. Gen. Life Ins. Co., 462 F.3d 437, 440–41 (5th Cir. 2006) (“[O]ne-time
severance payments do not constitute an employee benefit plan under
ERISA.”). A one-time payment usually does not require an ongoing
administrative scheme because the “employer assumes no responsibility to
pay benefits on a regular basis, and thus faces no periodic demands on its
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assets that create a need for financial coordination and control.” Fort
Halifax, 482 U.S. at 12. Multiple payments, payments varying in amounts,
and payments made on an irregular basis are more indicative of ERISA-
governed plans. See, e.g., Crowell v. Shell Oil Co., 541 F.3d 295, 305–08 (5th
Cir. 2008) (finding an ERISA plan because the broader plan required
continuous payouts and calculations could have led to differing amounts). In
addition, some ERISA severance plans include additional benefits besides a
payment, like COBRA insurance coverage. Gomez, 828 F.3d at 373; see also
Clayton v. ConocoPhillips Co., 722 F.3d 279, 295 (5th Cir. 2013). There is
nothing like that here. The incentive benefit begins and ends with an eligible
employee’s receipt of a bonus in their final paycheck.
Also distancing the Plan from ERISA is the simplicity of calculating
the one-time payment. Figuring out the bonus amount just requires taking
5% of the employee’s earnings while working on the project (and then
accounting for tax withholding as with any other earnings). This “single
arithmetical calculation” is not the type of complex determination ERISA
plans often make. Cantrell v. Briggs & Veselka Co., 728 F.3d 444, 450 (5th
Cir. 2013) (quoting Velarde v. PACE Membership Warehouse, Inc., 105 F.3d
1313, 1316 (9th Cir. 1997)).
While the frequency and simplicity of payments do not resemble an
ERISA plan, the frequency of triggering events sends mixed signals. One the
one hand, because the payments have a clear end date—when the
construction project is completed—payments will not be triggered with
anything nearing the frequency of typical retirement, health, or even
severance plans when employees become eligible for benefits at different
times throughout a company’s existence. See Tinoco v. Marine Chartering,
Co., 311 F.3d 617, 621 (5th Cir. 2002); Gomez, 828 F.3d at 371–73. On the
other hand, there is not a single-day trigger as there would be for a plant
closing. See Fort Halifax, 482 U.S. at 12. Different CB&I workers may
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complete their work on the project at different times before the entire project
is done, as workers become eligible when “their role on the project is
complete.” Still, the fact that eligibility is tied to workers’ completion of
their duties on a discrete project makes this Plan different from most ERISA
plans.
That brings us to the issue of discretion, which is primarily why the
district court concluded ERISA governed. ERISA plans typically require
plan administrators to make “ongoing discretionary decisions based on
subjective criteria.” Tinoco, 311 F.3d at 622–23. We have found discretion
based on subjective criteria when eligibility for severance payments turned
on whether the employee had “good reason” to stop working or whether a
company’s termination was “for cause.” Gomez, 828 F.3d at 372 (finding “a
great deal of discretion” when administrator had to decide whether, among
other things, “good reason” existed for employee’s departure); Clayton, 722
F.3d at 295 (finding discretion when administrator “determin[ed] whether
‘good reason’ exist[ed] when a Participant terminat[ed] her employment”);
Wilson v. Kimberly-Clark Corp., 254 F. App’x 280, 282 (5th Cir. 2007)
(finding discretion when a plan stated: “The Committee . . . Shall have the
sole discretion to determine whether a termination is voluntary or
involuntary, and whether a Participant’s termination is for Cause.”). But
even a need to determine if someone was terminated “with cause” will not
always be enough to show a sufficient degree of discretion. Cantrell, 728 F.3d
at 447, 452 (holding that ERISA did not apply to plan providing for deferred
compensation even though former employees were not eligible if
administrator determined they were terminated with cause or were
competing with the company during the payout period).
It is difficult to discern a clear dividing line on when cause-type
determinations involve the requisite level of discretion. Compare id. at 447,
452 with Clayton, 722 F.3d at 295. But we need not investigate that question
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further because the Project Completion Incentive Plan does not require a
“for cause” assessment. Instead, a CB&I employee is eligible for the bonus
if the worker is “laid off in a reduction-in-force” or if the company transfers
the worker to another location “when the employee’s role on the project is
complete.” Determining whether an employee was transferred does not
seem to require a significant degree of discretion. And while the classification
of a layoff may entail some exercise of judgment, it is less subjective to
determine whether the company was undergoing a reduction in force than to
assign the cause of a particular employee’s departure. As even the latter may
not always entail more than a “modicum of discretion,” Cantrell, 728 F.3d
at 451, the reduction-in-force determination alone is not “sufficient to turn a
severance agreement into an ERISA plan,” id. at 452.
What is more, some eligibility determinations under the Plan will be
clear as day. It is for these Plaintiffs, who concede that they are not eligible
because they quit before construction had ended. No discretion is required
to determine that.
Consistent with the lack of complexity needed to answer the “who”
and “how much” questions about the bonus, we do not see any special
administrative apparatus dedicated to overseeing the Plan. Shearer v.
Southwest Serv. Life Ins. Co., 516 F.3d 276, 279 (5th Cir. 2008). A plan is more
likely to be governed by ERISA when it includes administrative procedures,
such as procedures for handling claims and appeals, Gomez, 828 F.3d at 372,
is administered on a large-scale to many employees, id., requires continuous
monitoring of payees, Cantrell, 728 F.3d at 452, or requires additional
oversight once the benefit has been paid, either because of continuing
insurance benefits or the possibility of clawing back severance payments if
the employee returns to work, Gomez, 828 F.3d at 373; Crowell, 541 F.3d at
305. The record shows none of that here.
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In sum, the Project Completion Incentive Plan involves a single and
simple payment. Determining eligibility might require the exercise of some
discretion, but not much. An administrative structure is not devoted to
overseeing the Plan. The Plan thus lacks the complexity and longevity that
result in the type of “ongoing administrative scheme” ERISA covers. Fort
Halifax, 482 U.S. at 12 (“To do little more than write a check hardly
constitutes the operation of a benefit plan.”); see also Cantrell, 728 F.3d at
451; Tinoco, 311 F.3d at 622 (both holding that a “one-time calculation using
a fixed formula” did not amount to an ongoing administrative scheme).
***
CB&I’s bonus plan is not an ERISA plan. That means there is no
federal jurisdiction over this lawsuit. We VACATE the judgment of the
district court and REMAND so the case can be returned to state court.
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