UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 95-1704
EDMUND H. BELANGER, ET AL.,
Plaintiffs, Appellants,
v.
WYMAN-GORDON COMPANY,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge]
Before
Selya, Circuit Judge,
Aldrich, Senior Circuit Judge,
and Cyr, Circuit Judge.
Mark I. Zarrow, with whom Lian, Zarrow, Eynon & Shea was on
brief, for appellants.
John O. Mirick, with whom Mirick, O'Connell, DeMallie &
Lougee was on brief, for appellee.
December 14, 1995
SELYA, Circuit Judge. This appeal requires us to
SELYA, Circuit Judge.
decide what constitutes a benefit "plan" for purposes of the
Employee Retirement Income Security Act (ERISA), 29 U.S.C.
1001-1467 (1988). The heart of the appellants' case is their
contention that a series of four early retirement offers extended
by their employer over a four-year period constitute an ERISA
plan. The district court thought not, and dismissed the suit
after a bench trial. We affirm.
I.
I.
Background
Background
We take the underlying facts principally from the
parties' pretrial stipulations.
Facing an uncertain economic future, defendant-appellee
Wyman-Gordon Co. (the company) decided to reduce its work force
in hopes of improving its overall financial outlook. The company
made its first move in November 1987. Rather than simply laying
off loyal minions, the company offered all age-qualified non-
union workers (characterized as all "weekly and monthly salaried
employees") an opportunity for early retirement (Offer No.1). To
make departing a sweeter sorrow, the company proposed to pay,
over and beyond regular retirement benefits, a lump-sum bonus
amounting to one week's pay for each year of service, plus two
days' pay for each year of service in excess of fifteen years,
multiplied by 110%. Offer No. 1 contained no cap on the number
of service years that could be included in calculating the amount
of the one-time bonus. Some eligible employees accepted the
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offer and some did not.
In January 1990, the company, still in the throes of
downsizing, made a similar early retirement offer (Offer No. 2).
It structured this offer in much the same manner, but devised a
less complicated formula for computing retirement bonuses: one
week's salary for each year of service. Like Offer No. 1, Offer
No. 2 did not impose a ceiling on the number of service years
that could figure into the calculation. Once again, some but
not all of the eligible employees accepted the offer.
In corporate America, financial security is a
consummation ardently sought but seldom achieved. When the
company's prognosis remained gloomy, it sponsored yet another
early retirement offer (Offer No. 3) in January of 1991. This
offer contemplated that the amount of an individual's retirement
bonus would be calculated by the same formula used for purposes
of Offer No. 2 (multiplying one week's pay times the number of
service years), but capped the number of years includable in the
computation at twenty-five. Almost two-thirds of the weekly and
monthly salaried employees who were eligible to do so accepted
Offer No. 3, including the eighteen persons who appear here as
plaintiffs and appellants (all of whom had spent more than
twenty-five years in the company's service).
Despite the winnowing that occurred over time, the
company apparently convinced that strength lay in lack of
numbers undertook further cost-reduction measures in October of
1991. These included salary cuts and yet another early
3
retirement offer (Offer No. 4). As with the two immediately
preceding proposals, the carrot that the company dangled
consisted of a bonus calculated on the basis of one week's salary
for each year of service. This time, however, the company made
the offer accessible to more employees (by lowering the minimum
age for early retirement) and abjured any ceiling on the maximum
number of service years includable in figuring the lump sum.
Thirty-eight of forty-six eligible employees accepted Offer No.
4.
The appellants were displeased no little (and quite
some) upon learning of the more generous terms embodied in Offer
No. 4. Each of them had accepted a capped offer Offer No. 3
as an inducement to take early retirement, and the cap
effectively reduced their early retirement bonuses by an average
of roughly $9,950 per retiree. They sued the company, alleging
inter alia that the series of four early retirement offers
constituted a plan under the terms of ERISA, 29 U.S.C. 1002;
that the plan failed to comply with ERISA's imperatives, e.g, the
company had not provided a written plan description or a protocol
for amendment, see 29 U.S.C. 1022 & 1102; and that these
violations entitled them to damages based on what they would have
received had Offer No. 3 not been capped, together with interest,
counsel fees, and other redress.
After conducting a non-jury trial, the district court
rejected the central premise underlying the appellants' claim.
The court held that the early retirement offer which the
4
appellants accepted did not constitute a plan for ERISA purposes,
and that, therefore, the company was not obliged to heed ERISA's
requirements. See Belanger v. Wyman-Gordon Co., 888 F. Supp. 9,
12 (D. Mass. 1995). The appellants assign error.1
II.
II.
Discussion
Discussion
A.
A.
Standard of Review
Standard of Review
The question whether a given employee benefit or set of
benefits is a plan properly governed by the strictures of ERISA
requires a certain level of judicial versatility. Because an
inquiring court must both assess the facts and apply the law, two
different standards of review come into play. "For purposes of
appellate review, mixed questions of fact and law ordinarily fall
along a degree-of-deference continuum, ranging from plenary
review for law-dominated questions to clear-error review for
fact-dominated questions." Johnson v. Watts Regulator Co., 63
F.3d 1129, 1132 (1st Cir. 1995). At the near end of the
continuum, the district court's interpretation of the word "plan"
as it is used in ERISA poses a question of law subject to de novo
review. At the far end of the continuum, the court's inquiry
into the nature and scope of the benefits actually at issue in
the instant case demands factfinding, and is to that extent
1In the district court, the appellants also raised other
claims. The court found against them on all fronts, see
Belanger, 888 F. Supp. at 12-13, and only this ERISA claim has
been preserved for review.
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reviewable only for clear error. In other words, as long as the
trial court accurately applies the relevant legal standards, the
existence vel non of an ERISA plan is principally a question of
fact, and the court of appeals must defer to the district court's
judgment unless that judgment is clearly erroneous. See Wickman
v. Northwestern Nat'l Ins. Co., 908 F.2d 1077, 1082 (1st Cir.),
cert. denied, 498 U.S. 1013 (1990); see also Cumpiano v. Banco
Santander P.R., 902 F.2d 148, 152 (1st Cir. 1990) (explaining
that there is no clear error "unless, on the whole of the record,
[the court of appeals] form[s] a strong, unyielding belief that a
mistake has been made").
B.
B.
The Meaning of "Plan"
The Meaning of "Plan"
The text of ERISA itself affords scant guidance as to
what constitutes a covered "plan." The statute, 29 U.S.C.
1002(2)(A), merely constructs a tautology, defining an employee
benefit plan as "any plan, program or fund" established or
maintained by an employer that provides certain benefits to
employees. Relying on the purposes undergirding the statute to
give meaning to this cryptic language, the Supreme Court has made
it very clear that an employee benefit may be considered a plan
for purposes of ERISA only if it involves the undertaking of
continuing administrative and financial obligations by the
employer to the behoof of employees or their beneficiaries. See
Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 12 (1987); see
also District of Columbia v. Greater Wash. Bd. of Trade, 113 S.
6
Ct. 580, 584 n.2 (1992) (construing Fort Halifax as holding that
a plan exists only if an employer has "some minimal, ongoing
`administrative' scheme or practice").
Fort Halifax is the beacon by which we must steer.
There, the Court rejected an ERISA preemption challenge to a
Maine statute requiring employers to tender a one-time severance
payment to displaced employees in the event of a plant closing.
The Court held that Maine's plant-closing law did not succumb to
ERISA's preemptive force because the legislatively mandated
tribute comprised no more than a "one-time, lump-sum payment
triggered by a single event." 482 U.S. at 12. Consequently, the
state statute neither "establishe[d], nor require[d] an employer
to maintain, an employee benefit plan." Id. (emphasis in
original).
Two of ERISA's cardinal goals protection of employers
and protection of employees appear to have influenced the
Court's interpretation of what constitutes a plan. As to the
former goal, the Court acknowledged that Congress designed
ERISA's preemption provision partially to protect employers from
a "patchwork scheme" of regulations in respect to employee
benefits. Id. This concern has little or no pertinence, the
Court reasoned, in a one-time payment situation in which the
employer's only obligation is to draw a single check. See id.
By contrast, this concern is highly pertinent in respect to
employee benefits that place "periodic demands" on employer
assets, "creat[ing] a need for financial coordination and
7
control." Id.
As to ERISA's other, more important goal, the Court
recognized that, in general, ERISA's substantive protections are
intended to safeguard the financial integrity of employee benefit
funds, to permit employee monitoring of earmarked assets, and to
ensure that employers' promises are kept. See id. at 15. Since
a single-shot benefit requires no greater assurance than that the
check will not bounce, ERISA's panoply of protections has
virtually nothing to do with such a simple task. See id. at 16.
More elaborately structured benefits, however, raise a different
set of concerns. As the Court observed, ongoing investments and
obligations are uniquely vulnerable to employer abuse or employer
carelessness, and thus require ERISA's special prophylaxis. See
id.
The upshot is that, in the albedo of Fort Halifax, the
existence of a plan turns on the nature and extent of an
employer's benefit obligations. Withal, making particularized
judgments in this area on the basis of vague etchings of policy
is no mean feat. As we wrote on an earlier occasion, "so long as
Fort Halifax prescribes a definition based on the extent and
complexity of administrative obligations, line drawing . . . is
necessary and close cases will approach the line from both
sides." Simas v. Quaker Fabric Corp., 6 F.3d 849, 854 (1st Cir.
1993).
There is no authoritative checklist that can be
consulted to determine conclusively if an employer's obligations
8
rise to the level of an ERISA plan. While a wide array of
factors may be suggestive, typically "no single act in itself
necessarily constitutes the establishment of the plan, fund or
program." Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th Cir.
1982) (en banc). Yet, some factors tend to be more indicative of
the existence of a plan than others.
One very important consideration is whether, in light
of all the surrounding facts and circumstances, a reasonable
employee would perceive an ongoing commitment by the employer to
provide employee benefits. See Henglein v. Informal Plan for
Plant Shutdown Benefits for Salaried Employees, 974 F.2d 391, 400
(3d Cir. 1992); Donovan, 688 F.2d at 1373; cf. Johnson, 63 F.3d
at 1135 (advocating that courts should judge the question of
whether an employer "established or maintained" a benefit plan
within the scope of ERISA "from the employees' place of
vantage"). Thus, evidence that an employer committed to provide
long-term or periodic benefits to its employees will often be
telling. See Henglein, 974 F.2d at 400; see also Kenney v.
Roland Parson Contracting Corp., 28 F.3d 1254, 1258-59 (D.C. Cir.
1994) (explaining that a plan may be created, even in the absence
of formal documentation, by "an employer's representation that a
plan has been established, in conjunction with any action, such
as withholding wages for contribution to such a plan, that tends
to confirm its representations"). Anticipating this reality,
this court stated in Wickman, 908 F.2d at 1083, that the "crucial
factor in determining if a `plan' has been established is whether
9
the [proffering of an employee benefit] constituted an expressed
intention by the employer to provide benefits on a regular and
long term basis."
We end where we began. In this cloudy corner of the
law, each case must be appraised on its own facts. All that can
be stated with assurance is that Fort Halifax controls. Thus, so
long as a proffered benefit does not involve employer obligations
materially beyond those reflected in Fort Halifax, see Simas, 6
F.3d at 853-54, the benefit will not amount to a plan under the
ERISA statute.2
C.
C.
Analysis
Analysis
Viewed against this backdrop, the district court's
conclusion that ERISA did not apply to the series of early
retirement offers is eminently supportable. Nothing in the
offers, whether they are assessed individually or in the
aggregate, reflects the company's assumption of an ongoing
administrative or financial obligation to its employees within
the purview of Fort Halifax.
Taken singly, the early retirement offers involve
2Simas involved a situation in which an employer had to
fulfill, under state law, obligations analogous to, but
materially beyond, those imposed under the Maine statute at issue
in Fort Halifax. The Massachusetts statute addressed in Simas,
unlike the Maine statute, required individualized employer
determinations, based on at least one nonmechanical criterion,
over a prolonged time period. See Simas, 6 F.3d at 853. Thus,
we held that ERISA preempted the Massachusetts statute because
the statute imposed obligations on the employer equivalent to
those involved in an ERISA plan. See id. at 853-54.
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precisely the kind of one-time, lump-sum payment that the Fort
Halifax Court clearly excluded from the pantheon of ERISA plans.
See 482 U.S. at 12. The company's offers hinged on a purely
mechanical determination of eligibility and, if accepted,
required no complicated administrative apparatus either to
calculate or to distribute the promised benefit. The offers
pivoted on a single, time-specific event. They did not involve
promises that had to be kept over a lengthy period, nor did the
company thereby make any lasting financial commitment of a type
that might implicate ERISA's substantive protections. The bottom
line is that the company did no more than propose to write a
single check to each eligible employee who accepted an early
retirement offer. If this is not Fort Halifax redux, it is
sufficiently close to the Fort Halifax model that it falls
outside ERISA's sphere. See Fort Halifax, 482 U.S. at 12; see
also Kulinski v. Medtronic Bio-Medicus, Inc., 21 F.3d 254, 258
(8th Cir. 1994) (holding that a severance plan involving a one-
time payment is not an ERISA plan); Angst v. Mack Trucks, Inc.,
969 F.3d 1530, 1539 (3d Cir. 1992) (similar); Fontenot v. NL
Indus., Inc., 953 F.2d 960, 962-63 (5th Cir. 1992) (similar).
The more intriguing question in this case is whether
the incidence of serial offers the fact that the company made
not a lone offer but a succession of offers over a period of
roughly four years changes the result. We do not believe that
it does. Each of the four early retirement offers, in and of
itself, is beyond ERISA's reach. The appellants have not
11
advanced any convincing reason why the sheer number of ERISA-
exempt early retirement offers, without more, serves to alter the
Fort Halifax analysis. To be sure, in some circumstances a
parade of early retirement offers might constitute a plan under
ERISA where, for example, employees rely on the promise of
future offers. Cf. Moeller v. Bertrang, 801 F. Supp. 291, 294-95
(D.S.D. 1992) (emphasizing the importance of employee reliance on
employer promises of future benefits). But this record reveals
no such concatenation of circumstances. Here, the whole is no
greater than the sum of the parts.
Three pieces of information confirm this conclusion.
First, the administration of the offers neither required a
special mechanism nor engendered a need for nonmechanical
decisionmaking. Second, the record is devoid of any evidence
that the serial offers were the product of a prearranged design
or that the company ever represented to its work force that they
were linked in a defined sequence. Consequently, the employees
had no promises of financial obligation on which to rely, and,
thus, no need for ERISA's substantive protection. The finishing
touch is the district court's factual finding that the offers did
not impose continuing obligations of either an administrative or
a financial nature. See Belanger, 888 F. Supp. at 12. The
appellants have pointed to no facts that remotely contradict this
factual finding.
To sum up, it appears that the company devised each
offer without giving thought to possible future offers, and that
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each offer was motivated by a bona fide need to reduce costs.
Just as four eggs, without more, do not make an omelette, four
independent early retirement offers, without visible ties to each
other and without proof of an enduring obligation owed by the
employer to the employees, do not make an ERISA plan.3
III.
III.
Conclusion
Conclusion
We need go no further. The district court found, as a
matter of fact, that the company's four early retirement offers
involved no continuing administrative or financial obligation on
its part, and thus concluded, as a matter of law, that the offers
together did not constitute a plan under ERISA. On this record,
we emphatically agree.
Affirmed.
Affirmed.
3Although the appellants press heavily on the fact that the
same executive designed each retirement offer, this does nothing
to prove that he did so as part of an ERISA plan. Indeed, the
uncontroverted evidence strongly suggests that successive offers
were necessary only because the corporate profit-and-loss
statement failed to recuperate in the projected time frame.
13