Gloria Lane v. Amoco Corp. ( 1998 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 97-2069
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Gloria Lane; Shirley Spalla; John *
Lucas; Jan Slagle; Tommie Lillie; *
Melanie Holsinger *
*
Plaintiffs - Appellants *
*
v. * Appeal from the United States
* District Court for the
Amoco Corporation; Amoco Oil * Southern District of Iowa
Company; Amoco Credit Card Center *
*
Defendants - Appellees. *
*
*
*
*
*
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Submitted: November 21, 1997
Filed: January 13, 1998
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Before BOWMAN and MURPHY, Circuit Judges, and CONMY1, District Judge.
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BOWMAN, Circuit Judge.
1
The Honorable Patrick A. Conmy, United States District Judge for the District
of North Dakota, sitting by designation.
Appellants, representatives of a certified class of former "at-will"
employees of Amoco's credit card facility located in Des Moines, Iowa,
appeal from an order of the District Court2 granting summary judgment to
Amoco on their claims for bonus payments for 1994. We affirm.
I.
Beginning in 1993, appellants worked under a bonus program, the Amoco
Variable Incentive Pay Program ("VIP Plan"), under which they were paid an
annual cash bonus if the company met certain goals. The VIP Plan remained
in effect for employees of the Des Moines facility until September 20, 1994,
when the facility was sold to a third party. As a result of this sale, the
employment relationship between appellants and Amoco was terminated, and
appellants began working for the facility's purchaser.
Appellants contend that, because they worked for Amoco for nine months
during 1994, they are entitled to receive a pro rata share of the bonus paid
under the VIP Plan for 1994. Amoco disagrees, arguing that the plain
language of the VIP Plan, a copy of which was distributed to each appellant
at the time the Plan was instituted, provides that, to receive a bonus under
the Plan, an employee is required to be "actively employed" by the company
on the last day of the year for which benefits are sought.3 According to
Amoco, because none of appellants was an Amoco employee on December 31,
1994, none is eligible to receive a bonus payment for 1994.
2
The Honorable Charles R. Wolle, Chief Judge, United States District Court for
the Southern District of Iowa.
3
Amoco's VIP Plan states in relevant part: "If you participate, you are eligible
to receive a cash payout from the Variable Incentive Plan for a plan measurement
period if: You are actively employed on the last day of the plan measurement period."
Joint App. at 83. The "plan measurement period" is the calendar year. Id.
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The District Court granted Amoco's motion for summary judgment finding
that the "unambiguous" language of the VIP Plan required appellants to be
employees of Amoco on the "allocation date" of December 31, 1994, in order
to qualify for bonus payments under the Plan. Joint App. at 384-85
(District Ct. Order). The former employees appeal, arguing that this
conclusion is contrary to Iowa law.4 We review de novo a district court's
grant of summary judgment, see Blaise v. Fenn, 48 F.3d 337, 339 (8th Cir.
1995), as well as a district court's determination of state law, see Salve
Regina College v. Russell, 499 U.S. 225, 231 (1991).
II.
Appellants argue that Amoco's unilateral act of selling the Des Moines
facility prevented them from fulfilling the condition precedent of year-end
employment necessary to receive benefits under the Plan, and that Iowa law
provides that their failure to comply with the terms of the agreement should
be excused. Appellants rely on a number of Iowa cases to support their
position. Amoco argues that these cases are distinguishable primarily
because each plaintiff in the cited cases had an "individually negotiated"
employment contract which the employer subsequently breached. Appellees'
Br. at 6. We conclude that the cases cited by appellants are
distinguishable. We therefore hold that the plain, unambiguous language of
the VIP Plan requiring year-end employment for receipt of benefits should
be enforced as written in accordance with Iowa law. See Lange v. Lange, 520
N.W.2d 113, 117 (Iowa 1994) ("When a contract is not ambiguous, we are
obliged to enforce it as written.").
4
The parties agree that appellants' claim for benefits under Amoco's VIP Plan is
not governed by ERISA, but is an issue of contract interpretation governed by Iowa
law.
-3-
In Dallenbach v. Mapco Gas Prods., Inc., 459 N.W.2d 483 (Iowa 1990),
the plaintiff sued for breach of contract alleging that his employer had
wrongfully reduced his 1985 bonus. The employer announced in January 1986,
that the plaintiff's bonus would be reduced retroactively for the reporting
year of 1985. The court prevented the employer from unilaterally changing
its previously announced bonus formula after the year in which the bonus was
earned had ended and after the employee had performed his end of the
bargain. The court also noted that Dallenbach originally was induced to
accept the employment position by his employer's promise of a specifically-
calculated bonus--a promise on which the employer could not later renege.
Appellants argue that this case stands for the proposition that "[a] year-
end bonus is always an inducement to an employee to remain in the services
of an employer, and should not be retroactively tampered with." Appellants'
Br. at 22.
We disagree with appellants' characterization of the Dallenbach
decision, which in our view stands merely for the proposition that a bonus
arrangement should be enforced according to its terms. Contrary to the
facts in Dallenbach, appellants were not induced to accept new positions or
new methods of salary computation by Amoco's promise of a bonus, and Amoco
did not attempt to retroactively alter the terms of the VIP Plan.
Appellants also rely on Kollman v. McGregor, 39 N.W.2d 302 (Iowa
1949), in which an employer was required to pay its former employee a pro
rata share of a bonus promised for a year's employment. The employee in
Kollman was working under a specific, one-year employment contract and was
fired by his employer, without cause, after only eight months. The court
in Kollman required the employer to make the bonus payment because the
employee had a one-year contract--"an agreement for a bonus for continuous
service for a specified time." Id. at 304.
Again, appellants' reliance is misplaced. Kollman is factually
distinguishable from the present situation because the plaintiff was
operating under a specific, one-year
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employment contract and was not, as is the case here, an at-will employee.
The existence of a durational employment contract, which is lacking in
appellants' case, was crucial to the court's decision in Kollman and,
consequently, the Kollman decision fails to bolster appellants' argument.
In Hilgenberg v. Iowa Beef Packers, Inc., 175 N.W.2d 353 (Iowa 1970),
the two plaintiffs were former hourly-paid employees who were induced
individually by IBP into accepting supervisory positions with lower salaries
based on promises by the company of year-end bonus payments. In October
1965, IBP sold the plant and refused to pay bonuses for the year 1965. The
plaintiffs sought, and were awarded, a pro rata share of their 1965 bonuses
based largely on IBP's "promise to pay a bonus as an inducement to accept
different work and a different method and rate of payment." Id. at 356.
Because the employees in Hilgenberg were induced by the employer to
accept new supervisory positions in part based on the employer's promises
of year-end bonuses, this case is distinguishable from the present case.
Appellants were not induced by promises made in the VIP Plan to alter their
employment relationships with Amoco. The employer in Hilgenberg could not,
in the circumstances presented, abrogate its individually-negotiated bonus
arrangements with the employees who had agreed to become supervisors in
reliance on the company's promise of year-end bonus payments. Amoco made
no such promise to induce appellants to change their employment status.
In sum, we conclude that the cases cited by appellants fail to support
their position and that Iowa law requires enforcement of the terms of the
VIP Plan as written. See Berryhill v. Hatt, 428 N.W.2d 647, 654 (Iowa
1988). The District Court did not err in granting summary judgment to
Amoco.
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III.
We affirm the judgment of the District Court.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT
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