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No. 95-4205
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William Jefferson, *
*
Appellant, * Appeal from the United States
* District Court for the
v. * District of Nebraska.
*
Vickers, Inc, a Delaware *
Corporation, J. Steven *
Whitworth, *
*
Appellees. *
*
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Submitted: September 12, 1996
Filed: December 17, 1996
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Before FAGG, BEAM, and MURPHY, Circuit Judges.
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BEAM, Circuit Judge.
In this appeal, an employment discrimination plaintiff
challenges the district court’s1 evidentiary rulings in his section
1981 jury trial and asserts error by the district court in finding
against him on his ERISA claims. We affirm.
I. BACKGROUND
Vickers, Inc. employed William Jefferson, a black male, first
as a Business Analyst and later as a Product Planning and Analysis
Manager. J. Steven Whitworth was Jefferson’s supervisor for most
of Jefferson’s employment. Vickers downsized in 1993; Jefferson
was terminated as part of that reduction in force. Jefferson
1
The Honorable Lyle E. Strom, United States District Judge,
District of Nebraska.
participated in two pension plans while at Vickers: the Vickers,
Inc. Retirement Program Part A2"the Part A Plan")and the Vickers,
Inc. Retirement Savings and Profit Sharing Plan3 ("the 401(k)
Plan"). The 401(k) Plan requires that employees serve five years
in order to vest in employer contributions to their accounts. When
he was discharged, Jefferson had been employed at Vickers for four
years, eight months and fifteen days. Jefferson asked if he could
vest despite falling short of five years of service. Vickers
offered to extend Jefferson’s severance benefits until after the
vesting date which would enable Jefferson to become fully vested.
In exchange for that accommodation, however, Vickers required
Jefferson’s release of any and all claims against the company.
Jefferson refused to sign the release and filed suit alleging race
discrimination in violation of 42 U.S.C. § 1981 and interference
with rights protected by section 510 of the Employee Retirement
Security Act (ERISA), codified at 29 U.S.C. § 1140.
The section 1981 claim was tried to a jury. Jefferson sought
to introduce evidence regarding the ERISA claims on the theory that
non-minority employees had been allowed to extend their severance
benefits without signing any release. The district court sustained
a motion in limine seeking to exclude the alleged ERISA violations
(such as the offered release) under Federal Rule of Evidence 403.
The jury returned verdicts in favor of Vickers and Whitworth on
April 25, 1995.
The ERISA claim was tried to the court. The court found that
Jefferson was vested in the Part A Plan and awarded him $853.69 as
2
This plan was discontinued while Jefferson was employed at
Vickers. Plan documents called for automatic vesting of
participants upon termination.
3
Section 401(k) plans (also known as cash-or-deferred
arrangements or CODAs) allow participants to have a portion of
their pre-tax earnings contributed to retirement savings. Vickers’
plan provided that the employer match employees’ contributions.
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his interest in that plan.4 The court further found that Jefferson
was not vested in the 401(k) Plan. On Jefferson’s claims of
discrimination under section 510 of ERISA, the court concluded that
Vickers had not intentionally interfered with Jefferson’s
attainment of benefits and entered judgment in favor of the
defendants.
Jefferson moved for judgment notwithstanding the jury’s
verdict or, in the alternative, for a new trial. The district
court denied both motions, and Jefferson initiated this appeal. He
argues that Vickers’ proposed settlement that required him to
release claims in exchange for continuation of benefits violated
ERISA and showed race discrimination.
II. DISCUSSION
A. Section 1981 Claim
Jefferson appeals the district court’s exclusion of evidence
regarding the alleged ERISA violation. Specifically, the court
refused to admit the release Vickers offered in exchange for an
extension of benefits. We review evidentiary decisions very
deferentially, reversing only upon a showing that the trial court
has "clearly abused its discretion." United States v. Johnson, 857
F.2d 500, 501 (8th Cir. 1988).
ERISA claims are properly tried to the court. Houghton v.
SIPCO, Inc., 38 F.3d 953, 957 (8th Cir. 1994). The district court
determined that evidence of unrelated ERISA claims in the section
1981 trial would have created a trial within a trial, diverting the
jury’s attention from the race discrimination claim. We cannot say
the district court abused its discretion in excluding the release
from the section 1981 trial.
4
That award has not been appealed.
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While it may be relevant to a claim of discrimination that a
minority employee was required to execute a release while others
were not, Jefferson has not presented that kind of evidence here.
Jefferson’s offer of proof failed to offer any evidence that
Vickers’ request was unique to Jefferson or to minority employees.
The testimony indicated that this was a standard release used by
the Vickers human resources department, and that no employee had
received extended severance benefits without executing a release.
The district court did not err in excluding the release from the
section 1981 case.
B. ERISA Claim
Jefferson first claims that he was vested in the 401(k) Plan
and that Vickers violated ERISA by refusing to pay out the
benefits. In the alternative, he argues that Vickers violated
ERISA by discharging him with the intent to prevent him from
vesting.
1. Vested Status in 401(k) Plan
The district court found that Jefferson was not fully vested
in Vickers’ 401(k) Plan at the time of his termination. This
finding constitutes a conclusion of law. John Morrell & Co. v.
United Food and Commercial Workers Int'l Union, 37 F.3d 1302, 1303
(8th Cir. 1994), cert. denied, 115 S. Ct. 2251 (1995). It is
therefore reviewed de novo. Sawheny v. Pioneer Hi-Bred Int’l,
Inc., 93 F.3d 1401, 1407 (8th Cir. 1996).
Under the terms of ERISA, a "vested right" is one that is
"nonforfeitable." See, e.g., 26 U.S.C. § 411(a)(2). Vickers’
401(k) Plan required employees to have five years of service with
the company before vesting. There is no dispute that at the time
of Jefferson’s termination, he had worked for Vickers for four
years, eight months and fifteen days. Since Jefferson had not
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completed five years of service, he had not vested and therefore
forfeited the employer contributions to his 401(k) account.
Jefferson argues that the Vickers plan does not meet the
minimum vesting standards set by Congress. Section 203(b)(2)(A) of
ERISA provides:
[T]he term "year of service" means a calendar year, plan
year, or other 12-consecutive month period designated by
the Plan . . . during which the participant has completed
1,000 hours of service.
29 U.S.C. § 1053(b)(2)(A).
Jefferson’s position is that under the latter provision, if a
participant completed 1000 hours of service in the "12-consecutive
month period designated by the Plan," he or she would accrue one
year of service for vesting purposes. Jefferson argues that he is
entitled to credit for a year of service even though he was not
employed for an entire twelve-consecutive month period because he
had performed over 1000 hours of service since his last employment
anniversary date. In essence, Jefferson contends that ERISA itself
requires qualified pension plans to determine vesting by
calculating an employee’s hours of service rather than the time
elapsed since employment.
This argument ignores the Treasury Regulations which expressly
allow use of the elapsed-time method. See 26 C.F.R. § 1.410(a)-7.
The argument Jefferson makes here has already been rejected.
"ERISA was a carefully considered statute, and if its framers had
intended to wipe out the elapsed-time method of computing pension
entitlements we think they would have chosen a more conspicuous
method than the obscure wording of the definitional provision on
which [the plaintiff] relies." Coleman v. Interco Inc. Divisions’
Plans, 933 F.2d 550, 552 (7th Cir. 1991). We agree. We conclude
that ERISA allows vesting to be calculated by either the hours of
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service method or the elapsed-time method. The Vickers plan had
selected the elapsed-time method, and Jefferson had not fulfilled
the plan’s vesting requirements.
2. Intentional Interference Under Section 510
The district court found that Vickers had not discharged
Jefferson with the intent to interfere with his pension rights. It
therefore entered judgment in favor of the defendants on
Jefferson’s section 510 claim. Jefferson asserts this finding was
erroneous.
Claims brought under section 510 of ERISA are analyzed under
the three-stage burden-shifting paradigm articulated by the United
States Supreme Court in McDonnell Douglas Corp. v. Green, 411 U.S.
792, 802-05 (1973). Rath v. Selection Research, Inc., 978 F.2d
1087, 1089-90 (8th Cir. 1992). The district court found that
Jefferson had established a prima facie case of discrimination
under McDonnell Douglas, thus creating a presumption of
discrimination. The court went on to find that Vickers had
rebutted that presumption by articulating a legitimate, non-
discriminatory reason for Jefferson’s discharge in that it was
undergoing a reduction in force. Jefferson does not challenge that
finding on appeal.
Section 510 plaintiffs are "required to present evidence that
[an employer] acted with "specific intent" to interfere with their
rights" to overcome an employer’s legitimate, non-discriminatory
reason. Brandis v. Kaiser Aluminum & Chemical Corp., 47 F.3d 947,
950 (8th Cir. 1995). This specific intent can be shown with
circumstantial evidence, but must be more specific than mere
conjecture. Kinkead v. Southwestern Bell Tel. Co., 49 F.3d 454,
456 (8th Cir. 1995). Jefferson has failed to adduce this evidence
of intent.
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Jefferson relies on three facts to establish specific intent.
First, he argues that Vickers’ offer to extend his benefits in
exchange for a release is evidence of intentional interference. An
employer does not violate ERISA when it conditions the receipt of
early retirement benefits upon the participants’ waiver of
employment claims. Lockheed Corp. v. Spink, 116 S. Ct. 1783, 1791
(1996). The requested release alone does not establish the intent
to violate ERISA.
Second, Jefferson argues that Vickers’ intent is demonstrated
by the extensions granted other employees who did not execute a
release. As noted above, Jefferson submitted no evidence to
support his assertion that other employees received extensions
without executing releases. Furthermore, even if proven, the
incidents would not impose section 510 liability. As the court in
McGath v. Auto-Body North Shore, Inc., 7 F.3d 665 (7th Cir. 1993)
explained:
Because the plan must be administered according to its
terms, [plaintiff] cannot complain because he is held to
those terms; this is true even if the rules were bent for
another individual. ERISA § 510 affords protection from
discrimination that interferes "with the attainment of
any right to which such participant may become entitled
under the plan." [Plaintiff] does not have a right to
treatment that is contrary to the terms of the plan, even
if those terms are breached for others.
Id. at 670 (emphasis added) (footnote omitted). Vickers offered to
allow Jefferson to vest in benefits to which he was not legally
entitled. An employer does not violate ERISA by offering a
gratuity to one employee that is less generous than a gratuity
bestowed on another. Such an offer itself does not establish
intentional interference with ERISA rights.
Finally, Jefferson claims that Vickers’ refusal to pay his
(now admittedly) vested Part "A" Plan benefits is evidence of
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intent to interfere with his pension rights. Jefferson offers no
evidence on this point other than Vickers’ failure to pay. Were
this evidence alone enough to state a claim under section 510,
every error in determining entitlement to benefits would be
actionable under section 510. That is clearly not the purpose of
this section of ERISA.
III. CONCLUSION
For the foregoing reasons, the decision of the district court
is affirmed.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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