Schoonejongen v. Curtiss-Wright Corp.

Opinions of the United
1998 Decisions States Court of Appeals
for the Third Circuit

4-29-1998

Schoonejongen v. Curtiss Wright Corp
Precedential or Non-Precedential:

Docket 97-5497

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Filed April 29, 1998

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

NO. 97-5497

FRANK C. SCHOONEJONGEN; WESLEY L. LOSSON;
JOHN S. DUNNING; WILLIAM MARTONE; WILLIAM V.
HANZALEK; EDWARD F. ZIEK; MELVIN DEBLOCK;
JOSEPH COLQUHOUN; JOSEPH MAJERSCAK; GERARD
ABBAMONT; and OLGA WOLSEY, on behalf of themselves
and all others similarly situated,

Appellants

v.

CURTISS-WRIGHT CORPORATION

ON APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(D.C. No. 84-cv-04542)

Argued March 17, 1998

Before: SLOVITER, RENDELL and SEITZ, Circuit Judges.

(Opinion Filed: April 29, 1998)

Nicholas F. Lewis, Esquire (Argued)
Everett E. Lewis, Esquire
Shirely Fingerhood, Esquire
Lewis, Greenwald, Clifton & Lewis
2l8 West 40th Street
New York, New York l0018
Attorneys for Appellants
 Stephen F. Payerle, Esquire (Argued)
Laurence Reich, Esquire
Carpenter, Bennett & Morrissey
100 Mulberry Street
Newark, New Jersey 07102-4079
Attorneys for Appellee

OPINION OF THE COURT

SEITZ, Circuit Judge.

The sole but important issue in this appeal, which stems
from an action alleging a violation of section 402(b)(3) of the
Employee Retirement Income Security Act of 1974, 29
U.S.C. S 1102(b)(3) ("ERISA"), has already been framed for
us by the Supreme Court in its mandate to our court on
remand.1 In particular, we will address the question directly
posed by the Supreme Court: "[W]hether Curtiss-Wright's
valid amendment procedure -- amendment `by the
company' -- was complied with in this case." Curtiss-Wright
Corp. v. Schoonejongen, 514 U.S. 73, 85 (1995). The parties
agree that we should apply principles of Delaware corporate
law to resolve that question. See Schoonejongen v. Curtiss-
Wright Corp., Nos. 92-5695, 92-5710 (3d Cir. Aug. 30,
1995) (unpublished opinion).

I. Factual Background

A. Procedural History

The long and contentious history of this case, which
spans over fourteen years of litigation, is set forth in
Schoonejongen v. Curtiss-Wright Corp., 18 F.3d 1034 (3d
Cir. 1994), when this court first considered the matter. To
summarize, the Curtiss-Wright Corporation ("CW") actively
maintained a retirement health benefits plan ("the Plan") for
_________________________________________________________________

1. The district court asserted subject matter jurisdiction pursuant to the
civil enforcement provisions in ERISA, 29 U.S.C. S 1132. Jurisdiction of
this court arises out of 28 U.S.C. S 1291 to review the district court's
final order granting summary judgment.

2
all non-bargaining unit employees who worked at its
production facilities, including one such plant in Wood
Ridge, New Jersey. These retirement health benefits,
granted in 1966, were governed by two principal
documents: the Plan Constitution and the Summary Plan
Description ("SPD"). In early 1983, CW purportedly issued
an amended SPD providing that upon the closure of a CW
plant, health benefits for that facility's retirees would be
terminated.2 Later that year, CW closed its Wood Ridge
plant and accordingly notified the plant's retirees of the
termination of health benefits. Mr. Richard Sprigle, who
was the Executive Vice President in charge of the facility's
operations, informed Wood Ridge retirees of this
termination under the amended SPD by a letter dated
November 4, 1983.

In 1984, the affected retirees instituted a class action in
the district court, alleging that CW had wrongfully
terminated their retirement health benefits and that they
had a vested right to these benefits for life. After six years
of litigation and a bench trial, the district court in 1990
dismissed most of the plaintiffs' claims, including one
contention that CW had contractually bound itself to
provide retirement health benefits for life. The district court
found, however, that the revised SPD language concerning
the termination of benefits constituted an "amendment" to
the Plan and therefore fell within ERISA's section 402(b)(3),
which requires that every employee benefit plan must
"provide a procedure for amending such plan, and for
identifying the persons who have authority to amend the
plan." 29 U.S.C. S 1102(b)(3). The district court then held
that, as an amendment, the relevant SPD language was not
adopted under an amendment procedure as required by
ERISA. Therefore, the district court concluded that the
terminations of health benefits under the amended Plan
were void ab initio and ordered CW to pay a significant
amount in retroactive benefits.
_________________________________________________________________

2. This addition to the SPD, found under the heading "Termination of
Health Care Benefits," reads: "Coverage under this Plan will cease for
retirees and their dependents upon the termination of business
operations of the facility from which they retired." App. at 334.

3
On appeal to our court, CW argued that the revised SPD
language was in fact adopted under an amendment
procedure contained in a standard reservation clause which
provided that "[t]he Company reserves the right at any time
and from time to time to modify or amend, in whole or in
part, any or all of the provisions of the Plan." CW
contended that this procedure was valid under section
402(b)(3) because it identified "the Company" with the
authority to amend the retirement benefits plan. This court
rejected that argument, reasoning that the purpose behind
the section 402(b)(3) requirement was to "ensure that all
interested parties will know how a plan may be altered and
who may make such alternations. Only if they know this
information will they be able to determine with certainty at
any given time exactly what the plan provides."
Schoonejongen v. Curtiss-Wright Corp., 18 F.3d 1034, 1038
(3d Cir. 1994). As a result, our court reasoned that section
402(b)(3) requires enumeration with specificity "what
individuals or bodies within the Company could promulgate
an effective amendment." Id. at 1039. Because simply
identifying "the Company" did not explicitly identify such
individuals or bodies, the court affirmed the district court,
holding that CW adopted the revised SPD under an
amendment procedure that failed to comply with ERISA
section 402(b)(3).

The Supreme Court granted CW's petition for certiorari
and reversed in a unanimous opinion. The Court observed
that the text of section 402(b)(3) contains only two
requirements: "a `procedure for amending [the] plan' and `[a
procedure] for identifying the persons who have authority to
amend the plan.' " Curtiss-Wright Corp. v. Schoonejongen,
514 U.S. 73, 78 (1995) (quoting 29 U.S.C. S 1102(b)(3))
(alteration and emphasis in original). Next, the Court held
that merely identifying "the Company" with the authority to
amend the plan comports with a literal reading of the
section, as nothing in the statute required an identification
with any more particularity. The Court noted, however, that
for "the Company" language to make sense, there must be
some reference to principles of corporate law in order to
determine who has authority to make decisions on behalf of
a company.3 Id. at 80-81. As to whether CW's reservation
_________________________________________________________________

3. The Supreme Court cited Judge Roth's concurring reasoning on this
point. See Curtiss-Wright, 514 U.S. at 80 (citing Schoonejongen, 18 F.3d
at 1039 n.3).

4
clause constituted a procedure for amending the plan, the
Court once again reasoned that the literal terms of section
402(b)(3) are ultimately indifferent as to the level of detail in
an amendment procedure or in an identification procedure.
Because the unilateral authority to terminate a plan is still
a "procedure" nonetheless, the reservation clause, in the
Court's view, satisfied this prong of section 402(b)(3).

The Court then remanded the case to our court to
determine "whether Curtiss-Wright's valid amendment
procedure -- amendment `by the Company' -- was complied
with in this case." Id. at 85. The Supreme Court instructed
us that "[t]he answer will depend on a fact-intensive
inquiry, under applicable corporate law principles, into
what persons or committees within Curtiss-Wright
possessed plan amendment authority, either by express
delegation or impliedly, and whether those persons or
committees actually approved the new plan provision
contained in the revised SPD." Id. If, the Court continued,
the revised plan is found not to have been properly
authorized when issued, the question would then arise
whether any subsequent actions attributable to CW could
serve to ratify the amendment ex post. The Court
specifically identified as a possible basis for ratification the
November 4, 1983 letter under Mr. Sprigle's name
informing individual retirees of the termination. Id.

On remand from the Supreme Court, both parties argued
before us that it was possible to decide the case on the
existing record. The panel, however, decided that a remand
to the district court was appropriate because of a factual
dispute -- namely, whether anyone at CW possessed the
actual or implied authority to amend the plan. See
Schoonejongen v. Curtiss-Wright Corp., Nos 92-5695, 92-
5710 (3d Cir. Aug. 30, 1995) (unpublished opinion). In
remanding, we rejected the argument raised by CW that the
Board in 1990 had retroactively ratified the Plan by
resolution so that there was no need to consider questions
of authority. We held that under Delaware corporate law a
"[r]atification cannot relate back so as to defeat intervening
rights of strangers to the transactions." Id. at 4 (quoting 2A
William M. Fletcher, Fletcher Cyclopedia of the Law of
Private Corporations S 782, at 647-48 (perm. rev. ed. 1992))

5
(alteration in original); see also Essential Enterprises Corp.
v. Automatic Steel Prods., Inc., 164 A.2d 437 (Del. Ch.
1960). Because the ex post ratification of the amended SPD
would defeat the rights of third parties, this court rejected
the 1990 attempted ratification by the board and
accordingly remanded the matter to the district court for
further proceedings with respect to the actual or implied
authority of CW to adopt the 1983 amendment or to ratify
it.

B. Facts Discovered on Remand

Renewed discovery by the parties in the district court
revealed the following undisputed facts. CW is a Delaware
corporation and has adopted by-laws applicable at all times
here pertinent which gives the Chairman of the Board of
Directors, as Chief Executive Officer ("CEO"), "general and
active control of [the corporation's] business and affairs."
App. at 441. They expressly include the authority to sign all
contracts, obligations, and other instruments on behalf of
the corporation. Id. The by-laws further designate the
President as the Chief Operating Officer and bestow
"general and active control of [the corporation's]
operations," including the authority to execute contracts,
fix employee compensation other than primary officers, and
"all other duties and powers usually appertaining to the
office of president of a corporation," except as otherwise
stated in the by-laws. Id. at 441-43. Finally, the by-laws
provide that the Vice-Presidents "shall perform all such
duties and exercise all such powers as may be provided by
these by-laws or as may from time to time be determined by
the Board of Directors, ... the Chairman, or the President."
Id. at 443.

Mr. T. Roland Berner, who died in the spring of 1990,
long before remand to the district court, was CW's
Chairman of the Board, CEO, and President. Mr. Charles
Ehinger and Mr. Richard Sprigle, both now retired, were
CW's two Executive Vice Presidents. While the precise
responsibilities of Mr. Ehinger and Mr. Sprigle are the
subject of some disagreement between the parties to this
action, although not between the two Vice Presidents
themselves, it is not disputed that Mr. Ehinger generally

6
handled corporate staff issues for all CW employees and
Mr. Sprigle was essentially in charge of operations at the
Wood Ridge facility in New Jersey. App. at 181, 247.

Discovery before the district court also yielded the
following undisputed facts relating to the Plan's history.
CW's post-retirement and health benefits plan was
established, implemented, and administered without any
formal board action other than a 1976 authorization of an
undertaking to self-insure its health insurance plans and
an adoption of a Trust Agreement in connection with that
self-insurance. There is no written delegation of authority
over Plan matters to any particular corporate officer, either
by name or by title. On September 1, 1976, Mr. Ehinger
executed a Plan Constitution as the general instrument
governing welfare benefits, and thereby purported to create
a CW retirement benefits Plan that complied with ERISA.
The board took no part in this action, and its minutes are
completely silent as to Plan matters until November 8,
1990, when it sought to retroactively ratify the 1983 SPD
amendment at issue. In 1978 and 1981, Plan amendments
providing for an adjustment of health benefits had been
made by certain managers working under Mr. Ehinger's
direction. App. at 337-39. Again, corporate records do not
show formal involvement by either the board or Mr. Berner
with respect to these amendments.

It is undisputed that Mr. Richard A. DuBois, the
Corporate Manager for Benefits, and Mr. Aaron J. Carr,
CW's labor counsel, initially drafted the 1983 SPD
amendment providing for the termination of health benefits
for a closed plant's retirees. Here the parties' accounts
begin to diverge. CW contends, based on the deposition
testimony of Mr. Ehinger and Mr. Sprigle, that Mr. Berner,
the President, orally delegated the authority to deal with
Plan matters to Mr. Ehinger. It further argues that Mr.
Ehinger explicitly authorized Mr. DuBois and Mr. Carr to
draft the necessary language in the SPD amendment which
would provide for a termination of health benefits upon the
closing of a CW plant. CW points to Mr. Ehinger's
assertions in his deposition that he read the provision at
issue and approved it pursuant to his authority over Plan
administration. App. at 195-97. Plaintiffs, on the other

7
hand, strenuously dispute in their briefs the testimony of
Mr. Ehinger that he had intentionally amended the SPD
based on an oral delegation of authority by Mr. Berner.
Pointing to various alleged inconsistencies in Mr. Ehinger's
deposition, plaintiffs emphasize that CW issued the SPD
amendment without ever intending it to be a substantive
change in policy.

C. The District Court's Disposition on Remand

Based on the record developed on remand, the district
court considered the motions for summary judgment
submitted by the plaintiffs and by CW. In initially
addressing the issue of authority, the court found, relying
on its earlier opinion, that CW intended to amend the Plan
in 1983 and did not, as plaintiffs argued, merely seek to
clarify existing coverage.4 Second, the district court
identified Mr. Berner as one who possessed the express
authority to amend the SPD in 1983 based on its reading
of the corporate by-laws. The court further observed that
the corporation vested Mr. Ehinger with an implied
authority to undertake such action because he had
originally executed the Plan Constitution with the board's
knowledge. Notably, however, the district court refused to
find that Mr. Berner orally delegated authority to Mr.
Ehinger, despite Mr. Ehinger's deposition to that effect,
because there were "issues of credibility" which the court
considered inappropriate for resolution at the summary
judgment stage. Nevertheless, having concluded that Mr.
Ehinger possessed the necessary authority to amend the
SPD in 1983 based on the board's silence, the district court
held that a genuine issue of material fact existed as to
whether Mr. Ehinger actually approved the revised SPD
provisions under his authority. Here, the court once again
observed that the only support for Mr. Ehinger's actual
_________________________________________________________________

4. Plaintiffs on appeal continue to press their argument that CW never
intended to "amend" the Plan, but only sought to include this language
as a "clarification" of existing coverage. We agree with the district
court
and find this issue settled by its initial finding, after a bench trial,
that
"the language ... providing for a termination of benefits in the event of
a
plant closing constituted an amendment of the plan, not a clarification
of existing terms...." App. at 34.

8
approval was his own testimony at deposition, which it also
concluded would not constitute an appropriate basis for
summary judgment because issues of credibility remained.

Because the district court did not find that anyone at CW
with authority to amend the Plan actually approved the
SPD amendment, it addressed whether the doctrine of
ratification provided an appropriate alternative basis to
hold the 1983 Plan amendment as a valid corporate act.
Here, the district court concluded that the 1983 letter
bearing Mr. Sprigle's name and on CW letter head served to
ratify the revised SPD. Reasoning that Mr. Sprigle
possessed the authority to act on behalf of the Wood Ridge
facility, the letter to that plant's retirees advising them of
the health benefits termination could be considered an
authorized act on behalf of CW. Thus, the district court
concluded that even if Mr. Carr and Mr. DuBois had revised
the SPD without authority from Mr. Ehinger, Mr. Sprigle's
subsequent actions constituted a valid corporate act
ratifying the Plan amendment.

Plaintiffs now appeal the district court's grant of
summary judgment in favor of CW. Our standard of review
is plenary. Hozier v. Midwest Fasteners, Inc., 908 F.2d
1155, 1158 (3d Cir. 1990).

II. Authority

As we have noted, the district court refused tofind, at
the summary judgment stage, that any corporate officer
with the appropriate authority actually authorized the 1983
SPD amendment, despite CW's argument to the contrary.
CW renews that same contention before us, which the
plaintiffs again oppose.

In considering the issue of a valid amendment procedure
under ERISA section 402(b)(3) -- amendment by "the
Company" -- the Supreme Court held that principles of
corporate law provide a ready-made set of rules for
identifying the natural persons authorized to make
decisions on behalf of a company. Curtiss-Wright, 514 U.S.
at 80. Thus, the Court's mandate requires us to determine
whether there was compliance with Curtiss-Wright's valid
amendment procedure, which necessarily entails a fact-

9
intensive inquiry into "what persons or committees within
Curtiss-Wright possessed plan amendment authority, either
by express delegation or impliedly, and whether those
persons or committees actually approved the new plan
provision contained in the revised SPD." Id. at 85 (citing 2
William M. Fletcher, Fletcher Cyclopedia of the Law of
Private Corporations S 444, at 397-98 (perm. rev. ed.
1992)). Indeed, as the Supreme Court emphasized, only
natural persons make decisions and the issue now before
us is whether, on the record, those persons who amended
the SPD in 1983 acted with corporate authority so that the
Plan's amendment is properly characterized as a valid
corporate act or, to use the parlance of ERISA section
402(b)(3), was an amendment by "the Company."

A. Who Possessed the Authority to Amend the Plan?

1. The Board's Authority to Amend the Plan and
Delegate Plan Matters

Because it is tacitly conceded that the board possessed
the authority to amend the Plan, see Del. Code Ann.
S 141(a), but never actually undertook such an amendment,
we pause to address the plaintiffs' argument that only the
board of directors had authority to adopt amendments to
the Plan in this case. The answer must be that unless
otherwise provided by the certificate of corporation and
subject to the limitations set forth in 8 Del. Code Ann.
S 141(c), the board may freely delegate the authority to
manage the business and affairs of the corporation. See 1
R. Franklin Balotti & Jesse A. Finkelstein, The Delaware
Law of Corporations & Business Organizations S 4.17, at 32
(collecting cases). Indeed, the ability to delegate is the
essence of corporate management, as the law does not
expect the board to fully immerse itself in the daily
complexities of corporate operation. See Grimes v. Donald,
673 A.2d 1207, 1215 (Del. 1996) (The board "retains the
ultimate freedom to direct the strategy and affairs of the
Company."); Cahall v. Lofland, 114 A. 224, 229 (Del. Ch.
1921) ("The duties of directors are administrative, and
relate to supervision, direction and control, the details of
the business being delegated to inferior officers, agents and

10
employees. This is what is meant by management."); 1
Balotti & Finkelstein, supra, S 4.17. The record does not
suggest that the board's delegation of the administration or
amendment of the Plan would violate CW's certificate of
corporation or the specific prohibitions embodied in section
141(c) of the Delaware code.

Nor do we agree with the plaintiffs' assertion that the
delegation of Plan matters, including its amendment, to a
corporate officer or agent would necessarily constitute an
abdication of managerial duties. The business decision of
appointing a corporate officer to manage retirement health
benefits for the corporation does not have the effect of
"removing from directors in a very substantial way their
duty to use their own best judgment on management
matters." Abercrombie v. Davies, 123 A.2d 893, 899 (Del.
Ch. 1956), rev'd on other grounds, 130 A.2d 338 (Del.
Super. Ct. 1957). Moreover, nothing in the record
demonstrates that a delegation of authority in this context
would "formally preclude the ... board from exercising its
statutory powers and fulfilling its fiduciary duty." Grimes,
673 A.2d at 1214 (citation omitted). The board's 1976
resolution with respect to the Plan's self-insurance
illustrates this conclusion. Therefore, contrary to the
plaintiffs' contentions, the board could freely delegate its
authority to administer and amend CW's retirement
benefits plan appropriately.

2. Mr. Berner's Authority to Amend the Plan Pursuant
to Board Delegation

Beyond the board of directors, the corporation may
validly act through its directors and officers as authorized
corporate agents. In general, an officer's powers stem from
the organic law of the corporation, or a board delegation of
authority which may be express or implied. 2 William M.
Fletcher, Fletcher Cyclopedia of the Law of Private
Corporations S 434, at 339 (perm. rev. ed. 1992). Express
authority to act on behalf of the corporation is usually
manifested through a statute, the certificate of corporation,
the by-laws, or a board or shareholder action. Id. S 434, at
339-40; Petition of Mulco Prods., 123 A.2d 95, 103 (Del.
Super. Ct.), aff'd sub nom., Mulco Prods., Inc. v. Black, 127

11
A.2d 851 (1956). Implied actual authority, which is express
authority circumstantially proved, may be found through
evidence as to the manner in which the business has
operated in the past, the facts attending the transaction in
question, circumstantial evidence of board declarations
surrounding the given transaction, or the habitual usage or
course of dealing common to the company. 2 Fletcher,
supra, S 437.2, at 353; Mulco, 123 A.2d at 103. Similarly,
authority will be implied when it is reasonably necessary
and proper to effectuate the purpose of the office or the
main authority conferred.2 Fletcher, supra, S 434, at 340.

Pursuant to these principles of corporate law, the
undisputed facts show that Mr. Berner, the CEO and
President of CW possessed the express authority to amend
the Plan without the board's prior approval. The corporate
by-laws, adopted by the board, affirmatively bestow on the
CEO the authority to take "general and active control of
[the corporation's] business and affairs," which specifically
includes the power to fix employee compensation. App. at
441-43. Delaware courts have held that attendant to this
unqualified grant of authority, the president as general
manager commands the power to "do anything the
corporation could do in the general scope and operation of
its business." Phoenix Finance Corp. v. Iowa-Wisconsin
Bridge Co., 16 A.2d 789, 793 (Del. Super. Ct. 1940); see
also Mulco, 123 A.2d at 104. It certainly follows that the
broad power to fix employee compensation subsumes the
authority to amend a specific type of compensation--
retirement health benefits governed by ERISA -- and logic
would consequently dictate that the board expressly
approved the CEO's authority to create, administer, or
amend CW's retirement plan. Indeed, Delaware courts have
been receptive to this line of reasoning, and have generally
upheld a general manager's action on behalf of the
corporation unless it is "unusual" or "extraordinary." See 1
Ernest L. Folk, Folk on the Delaware General Corporation
Law S142.6, at 6-7 (3d ed. 1997).

We once again pause to address plaintiffs' arguments
against finding express authority vested in Mr. Berner
pursuant to an express delegation by the board. Plaintiffs
assert that although Mr. Berner expressly commands the

12
authority to "fix employee compensation," the termination
of medical benefits would be an "extraordinary" exercise of
authority that would require explicit board approval.
Plaintiffs do not point to any record support for this
contention other than the allegation that it would be
"outside the ordinary course of business" for the CEO to
undertake such an action. This argument is unavailing
particularly in view of the board mandate allowing the CEO
to fix employee compensation and the complete absence of
any suggestion that the board intended Plan amendments
to be subject to its prior approval. In fact, the board
adopted the by-laws well before the Plan's creation and
acted in a manner perfectly consistent with the assumption
that the Plan was valid. If the board had considered the
Plan's creation as a reasonable act without its prior
authorization, then surely the board would not have
considered the Plan's amendment to be so "extraordinary"
that it was outside Mr. Berner's authority.

3. Mr. Berner's Delegation Under His Authority

As the record demonstrates, however, Mr. Berner did not
amend the Plan, which leaves us with the necessity to
decide whether another corporate officer or agent possessed
the requisite amendatory authority. It is, of course, firmly
established that an officer broadly charged with managing
the affairs of a corporation impliedly possesses the
authority to appoint subordinate agents under his control
to act on behalf of the corporation. See 2 Fletcher, supra,
S 503, at 598. Delaware is no stranger to this rule. See 8
Del. Code S 122(5); 1 Balotti & Finkelstein, supra, S 4.17.
Nevertheless, the power of delegation is not without limits,
and the language of case law generally focuses on whether
the delegated authority involves "ministerial" functions or
acts that require "the exercise of discretion" by the sub-
agent. See 2 Fletcher, supra, S 503, at 598. As the very
term "management" connotes, however, corporate officers
and subordinate agents must be afforded some level of
discretion when faced with the demands of supervising a
modern corporation. Thus, given the "necessities of the case
and usage," corporate law recognizes that many
"discretionary" acts will be carried out by officers and other

13
subordinates. 1 Balotti & Finkelstein, supra, S 4.17, at 35
(citing 2 Fletcher, supra, S 495, at 580); see also Kelly v.
Bell, 254 A.2d 62, 72 (Del. Ch. 1969), aff'd, 266 A.2d 878
(Del. 1970). The critical factors are often the complexity of
the corporation, see Kelly, 254 A.2d at 72, the intent of the
board, and the corporation's implied course of conduct. See
1 Balotti & Finkelstein, supra, S 4.17, at 35 (citing 2
William F. Fletcher, supra, SS 494-95).

These principles of corporate law, when applied to the
record before us, lead us to conclude that Mr. Berner
properly delegated to Mr. Ehinger, one of CW's Executive
Vice Presidents, the authority to amend the Plan. It is not
disputed that CW is a large, complex corporation with
operations well beyond its facilities in New Jersey. While
plaintiffs assert that the power to amend the Plan was
outside Mr. Berner's authority to delegate because it was
not "routine," we do not find this to be the case. To be sure,
the Plan's amendment required some level of discretion on
Mr. Ehinger's part, but this would not defeat a proper
delegation by Mr. Berner in view of his authority. The by-
laws specifically vest Mr. Ehinger, as Executive Vice
President, with the authority to "perform all such duties
and exercise all such powers as may be provided by ... the
President." App. at 443. Certainly, such a duty would
include significant changes to the Plan's retirement health
benefits and there is no indication on the record that the
board limited the Vice President's authority to "routine"
matters that would not include significant Plan
amendments. Moreover, the prior course of dealings
between Mr. Berner, Mr. Ehinger, and the board -- none of
which are disputed by the plaintiffs -- all show that Mr.
Berner and the board were well aware that Mr. Ehinger
established and administered the current Plan. In light of
these undisputed facts, we conclude that the validity of the
Plan's amendment did not depend upon the prior express
approval of Mr. Berner in his capacity as CW's President
and CEO.

The district court refused to find such a delegation of
authority to Mr. Ehinger in fact at the summary judgment
stage. It did so because, in its view, "issues of credibility"
remain as to Mr. Ehinger's deposition testimony that he

14
had received an oral authorization by Mr. Berner to manage
employee benefits. We therefore face the inescapable issue
of deciding whether there is a "genuine issue of material
fact" surrounding the delegation of amendatory authority
from Mr. Berner to Mr. Ehinger. Fed. R. Civ. P. 56(c). A fact
is "material" if, under the substantive law of the case, it is
outcome determinative. See Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 247-48 (1986). A "genuine" issue is one
where a reasonable jury, based on the evidence presented,
could hold in the nonmovant's favor with regard to that
issue. Id. This formulation reflects the same standard as is
applied in a directed verdict motion under Fed. R. Civ. P.
50(a), where the court inquires whether reasonable minds
may differ as to the verdict. Id. at 250. Once the moving
party has demonstrated that there is no genuine issue of
material fact, the nonmoving party must come forward with
"specific facts showing that there is a genuine issue for
trial." Fed. R. Civ. P. 56(e); Matsushita Elec. Indus. Co. v.
Zenith Radio Co., 475 U.S. 574, 586 (1986). Where the
record taken as a whole could not lead a rational trier of
fact to find for the nonmoving party, there is no"genuine
issue for trial." Id. (citation omitted).

Notwithstanding this well settled law, federal courts have
found difficulty in applying the summary judgment
standard when faced with certain questions of credibility.
See 10 Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure S 2726, at 115 (2d ed. 1983). It is
by now axiomatic that "a nonmoving party ... cannot defeat
summary judgment simply by asserting that a jury might
disbelieve an opponent's affidavit to that effect." Williams v.
Borough of West Chester, 891 F.2d 458, 460 (3d Cir. 1989)
(citing Liberty Lobby, 477 U.S. at 256-57); see also Hozier
v. Midwest Fasteners, Inc., 908 F.2d 1155, 1165 (3d Cir.
1990). On the other hand, certain scenarios may arise
where a material fact cannot be resolved without weighing
the credibility of a particular witness or individual -- such
as when the defendant's liability turns on an individual's
state of mind and the plaintiff has presented circumstantial
evidence probative of intent. Williams, 901 F.2d at 460. In
such a case, we have said that summary judgment is
inappropriate because there is a sufficient quantum of
evidence on either side for reasonable minds to differ and

15
therefore the issue is "genuine." Id. at 461; see also Hozier,
908 F.2d at 1165 ("[N]othing in Rule 56 prevents [the
nonmoving party] from creating a genuine issue of material
fact by pointing to sufficiently powerful countervailing
circumstantial evidence."). Indeed, the Advisory Committee
notes to the federal rules mirror this result. See Advisory
Committee Notes, 1963 Amendment to Fed. R. Civ. P. 56(e).
But, as the Advisory Committee notes also indicate, it is
important to emphasize that issues of credibility only defeat
summary judgment "[w]here an issue of material fact
cannot be resolved without observation of the demeanor of
witnesses in order to evaluate their credibility." Id.
(emphasis added). By logical implication from this rule, if a
moving party has demonstrated the absence of a genuine
issue of material fact -- meaning that no reasonable jury
could find in the nonmoving party's favor based on the
record as a whole -- concerns regarding the credibility of
witnesses cannot defeat summary judgment. Instead, the
nonmoving party must "present affirmative evidence in
order to defeat a properly supported motion for summary
judgment." Liberty Lobby, 477 U.S. at 256-57 (citation
omitted). Thus, summary judgment is particularly
appropriate where, notwithstanding issues of credibility, the
nonmoving party has presented no evidence or inferences
that would allow a reasonable mind to rule in its favor. In
this situation, it may be said that the record as a whole
points in one direction and the dispute is not "genuine."
Matsushita, 475 U.S. at 586.

The record here is replete with evidence showing that Mr.
Berner had in fact orally delegated the authority to amend
and administer the Plan to Mr. Ehinger, even apart from
Mr. Ehinger's own testimony to that effect. Mr. Sprigle,
CW's other Executive Vice President, testified under oath
that based on his experience in the corporation Mr. Berner
had divided responsibilities among Vice Presidents and that
Mr. Ehinger was delegated matters relating to human
resources and plan administration. App. at 249. Similarly,
Mr. Carr, the corporation's labor counsel, submitted an
affidavit showing that he always understood Mr. Ehinger to
command operating authority with respect to Plan
amendments, based on a delegation from Mr. Berner. App.
at 420. Moreover, it is undisputed that both the human

16
resources department and welfare benefits group reported
directly to Mr. Ehinger and not to Mr. Berner. App. at 109-
10. It is also not disputed that Mr. Ehinger had previously
amended the Plan and reported to Mr. Berner about Plan
administration. App. at 207.

Against all these affidavits, deposition testimony, and
undisputed facts, the plaintiffs, who would bear the burden
of proof on this issue at trial,5 have not set forth even the
slightest quantum of evidence or reasonable factual
inference to support a jury finding that Mr. Ehinger had no
authority to amend Plan benefits. Nor does the record
reflect any reasonable inference, whether through
circumstantial evidence or otherwise, that Mr. Ehinger did
not act under Mr. Berner's oral delegation of authority.
While the plaintiffs argue that the absence of a written
delegation creates an inference against authority, corporate
law clearly allows for oral delegations of authority, see 2
Fletcher, supra, S 444, at 398 (citing Hessler, Inc. v. Farrell,
226 A.2d 708 (Del. 1967)), and the plaintiffs have offered no
reason why this lack of writing would seem suspicious. As
a result, we conclude that plaintiffs did not raise a
"genuine" issue as to the delegation of authority, even on
an implied basis, to Mr. Ehinger regarding Plan
amendments.6 The district court's conclusion that the
_________________________________________________________________

5. As CW correctly points out, because plaintiffs seek affirmative relief
in
this action, they must establish the invalidity of the amendment in 1983
under both ERISA law, see Hozier, 908 F.2d at 1163, and under general
corporate law. See 2 Fletcher, supra, S 437.3.

6. We recognize that in certain situations discovery for a nonmoving
party may be particularly difficult where the party seeking summary
judgment has exclusive possession of all the material facts, thereby
diminishing the nonmovant's ability to show a genuine issue. See, e.g.,
10A Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure S 2740, at 536-37 (2d ed. 1983); 6 James W. Moore, Moore's
Federal Practice S 56.24, at 796 (2d ed. 1996). The plaintiffs have never
contended, however, that they faced such a problem during any
discovery phase of litigation. Cf. Fed. R. Civ. P. 56(f) (allowing a
district
court to, among other things, "refuse application for judgment" if it
appears "from the affidavits of a party opposing the motion that the
party cannot for reasons stated present by affidavit facts essential to
justify the party's opposition"). Indeed, we note that the plaintiffs

17
evidence of delegated authority to Mr. Ehinger by Mr.
Berner consisted solely of Mr. Ehinger's testimony is too
narrow a view, based not only on the evidence in the
record, but also on the realities of modern corporations and
applicable corporate law.

B. Did the Persons with the Necessary Authority
Actually Approve the Amended Plan?

Having identified the persons with the necessary
authority to amend CW's retirement benefits Plan, we must
decide whether a person so situated actually exercised that
authority in 1983. The record, as described above, shows
that the analysis must focus on the authority delegated to
Mr. Ehinger in his capacity as the corporation's Executive
Vice President. We now turn to that record.

It is not disputed that Mr. DuBois, the Corporate
Manager for Benefits, and Mr. Carr, CW's labor counsel,
initially drafted the 1983 SPD amendment at issue
providing for the termination of health benefits for a closed
plant's retirees. As the parties agree, it is quite clear that if
Mr. DuBois and Mr. Carr acted without the specific
authorization of Mr. Ehinger, then the SPD amendment,
without more, cannot be considered a valid corporate act
on any delegation theory. The question then is primarily
factual in nature -- did Mr. Ehinger actually authorize the
amendment to the Plan in 1983 terminating benefits? Once
again, the district court denied summary judgment to CW
on this question because, in its view, "the only evidence in
the record on this issue is the deposition testimony of
Ehinger [and] questions of credibility remain."
_________________________________________________________________

exercised their right to cross-examine most material witnesses during
their depositions. Consequently, the defendant was entitled to summary
judgment in its favor notwithstanding the "desire... for an opportunity
to cross examine the [defendant's] witnesses in the hope of turning up
something ..., at least in the absence of a showing, such as is
contemplated by Rule 56(f), that all of the facts were necessarily within
the exclusive knowledge of the plaintiffs and not accessible to the
defendants." United States ex rel. Kolton v. Halpern, 260 F.2d 590, 591
(3d Cir. 1958) (Maris, J.).

18
We reiterate at the outset that the burden of showing the
unauthorized nature of the SPD amendment falls squarely
on the plaintiffs. See Hozier v. Midwest Fasteners, Inc., 908
F.2d 1155, 1163 (3d Cir. 1990). In support of its motion for
summary judgment, CW points to Mr. Ehinger's testimony
that he approved the SPD termination language during its
drafting. App. at 207-208. In addition to the deposition
testimony of Mr. Ehinger, Mr. Carr also submitted an
affidavit that Mr. Ehinger approved the decision to
terminate benefits. App. at 421. Further, it is not disputed
that the decision to amend the Plan was the result of
similar issues raised by litigation that occurred over the
earlier closing of CW's Marquette facility in Cleveland. App.
35. Indeed, plaintiffs do not deny that Mr. Ehinger and the
benefits group played a significant role in that litigation and
anticipated a change in the present Plan description to
avoid future litigation. App. at 115.

Against this evidence, plaintiffs point to only two relevant
instances in the record which they claim would allow a
reasonable jury to conclude in their favor and therefore
render the issue genuine. First, plaintiffs again emphasize
that there is no documentation -- whether a memorandum,
resolution, or otherwise -- reflecting Mr. Ehinger's actual
exercise of authority. As we have stated before, however,
the law recognizes an oral delegation or exercise of
authority, which may be proved by parol evidence. See, e.g.,
2 Fletcher, supra, S 444, at 398 (citing Hessler, Inc. v.
Farrell, 226 A.2d 708 (Del. 1967)); Restatement (Second) of
Agency SS 26, 33 (1958). Thus, while we agree that CW's
record keeping is not a paragon of desirable corporate
practice, the plaintiffs have offered no reason why the
absence of documentation, when the law requires none,
should be subject to suspicion or provide a basis for a
reasonable inference in their favor, particularly in view of
the corporation's established practices to the contrary. Cf.
Ansin v. River Oaks Furniture, Inc., 105 F.3d 745, 755 (1st
Cir. 1997) (where a transaction would ordinarily leave a
"heavy paper trial," an inference of fact arises from a
"complete absence of contemporaneous documentation");
Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155, 1165-66
(3d Cir. 1990) (where a memorandum written in
contemplation of a merger does not include a new ERISA

19
benefits schedule, a factual inference is created because the
author had personal knowledge of the transaction and the
omission seemed "odd" from the circumstances of the case).
But on the undisputed evidence of CW's corporate practice,
we conclude that the absence of record documentation
reflecting the nature and exercise of Mr. Ehinger's authority
is not sufficiently probative that it provides, without more,
a basis for a reasonable inference in favor of the plaintiffs.

Plaintiffs also point to Mr. Ehinger's deposition testimony
in 1986 where he stated:

It had been the policy of the Curtiss-Wright
Corporation, which was put in practice in closing the
East Paterson facility in 1971 ... [and] the Marquette
facility, that post-retirement insurance would terminate
at the closing of the facility.

I expected my personnel to reflect such policy in
such documents. I did not myself read the individual
policies or question them where does it say what in it.

App. at 136 (emphasis added by plaintiffs). Plaintiffs argue
that Mr. Ehinger's admission of not having read the
individual benefits policies supports their contention that
he did not specifically authorize the Plan amendment in
1983. We believe plaintiffs' conclusion is a non sequitur.
Simply because Mr. Ehinger did not read the individual
retirement health benefits policies does not mean that he
did not authorize the change in the language of the
amendment. In fact, Mr. Ehinger specifically states that he
"expected [his] personnel to reflect such[a] policy in [the]
documents," which at least raises an inference that he
authorized any changes in the Plan that would conform to
his expectations. Id. We therefore do notfind this
deposition testimony to create a genuine issue of material
fact in the plaintiffs' favor.

Beyond these two arguments, which lack merit, plaintiffs
do not identify any other instance in the record developed
on remand that would render the question of Mr. Ehinger's
exercise of authority a "genuine" dispute. This is not a case
where a material issue of fact "cannot be resolved without
observation of the demeanor of witnesses in order to
evaluate their credibility." Advisory Committee Notes to Fed.

20
R. Civ. P. 56(e). The record points in but one direction and,
as a result, summary judgment for CW was proper.

III. Ratification

In view of our conclusions, we need not address the
district court's reliance on the doctrine of ratification and
its application to this case.'

IV. Conclusion

For the aforementioned reasons, the judgment of the
district court in Curtiss-Wright's favor will be affirmed.

A True Copy:
Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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