United States Court of Appeals,
Fifth Circuit.
No. 93-7566.
Bill J. GANN, Plaintiff-Appellee/Cross-Appellant,
v.
FRUEHAUF CORPORATION, Defendant-Appellant/Cross-Appellee,
and
Connecticut General Life Insurance Company, et al.,
Defendants/Cross-Appellees.
May 30, 1995.
Appeals from the United States District Court for the Southern
District of Mississippi.
Before REYNALDO G. GARZA, DeMOSS and BENAVIDES, Circuit Judges.
BENAVIDES, Circuit Judge:
The Appellant/Cross-Appellee Fruehauf Corporation ("Fruehauf")
appeals a jury verdict finding that Fruehauf wrongfully discharged
Appellee/Cross-Appellant Bill Gann ("Gann") in violation of
Washington state law and a Rule 11 monetary sanction imposed on its
counsel. Gann appeals the district court's entrance of summary
judgment in favor of Fruehauf and Cross-Appellees Connecticut
General Life Insurance Company ("Connecticut General"), Karen
Goralski ("Goralski"), Julie Szemborski ("Szemborski"), Carolyn
Robinson ("Robinson"), and Mongoose Administrators, Inc.
("Mongoose") on his claims that they violated the Employee
Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001,
and the Consolidated Omnibus Budget Reconciliation Act ("COBRA"),
29 U.S.C. § 1162. We AFFIRM in part and REVERSE in part.
1
FACTS AND PROCEDURAL HISTORY
Gann became an employee of Fruehauf in 1984 in California.
Fruehauf transferred Gann to its state of Washington branch in
April 1986. Gann hurt himself at work in January 1988, and filed
for worker's compensation benefits in Washington on July 15, 1988.
Fruehauf transferred Gann to its Mississippi branch in August 1988,
and terminated Gann's employment on November 2, 1988.
In April 1989, Gann filed this action in a federal court in
Mississippi. The defendants included Fruehauf (which maintained an
employee benefit plan in which Gann participated), Connecticut
General (which provided long-term group disability insurance to
Fruehauf in support of the employee benefit plan), Goralski (the
administrator of certain employee benefit plans for Fruehauf),
Szemborski (a benefit analyst for Connecticut General), Robinson (a
benefit analyst for Connecticut General) and Mongoose (the
administrator of Gann's continuation coverage under the employee
benefit plan established by Fruehauf).
In his complaint, Gann asserted that all the defendants
improperly denied his claim for disability benefits in violation of
ERISA and COBRA. Gann also asserted a claim of wrongful discharge
against Fruehauf in violation of a Washington statute,
Wash.Rev.Code § 51.48.025(1), claiming that Fruehauf discharged him
because he had filed for worker's compensation benefits.
The district court dismissed Gann's ERISA and COBRA claims on
a summary judgment motion by the defendants, but allowed Gann's
wrongful discharge claim to go to a jury. The jury rendered a
2
verdict in favor of Gann for $112,500.
Fruehauf's Appeal
Fruehauf raises several arguments on appeal contending that:
(1) the district court erred in applying Washington, instead of
Mississippi, law to the wrongful discharge claim; (2) the jury
verdict is against the overwhelming weight of the evidence; (3)
the damages awarded by the jury are not substantiated by the
evidence; (4) a J.N.O.V., New Trial, and/or Remittitur should have
been granted; and (5) the district court erred in imposing
sanctions on Fruehauf and its counsel.
I
Fruehauf argues that the district court erred in applying
Washington law to Gann's wrongful discharge claim. In his
complaint, Gann argues that Fruehauf wrongfully discharged him
because he pursued his rights for worker's compensation. Such
motivations behind a discharge are made actionable by a Washington
statute. Wash.Rev.Code § 51.48.025(1). Mississippi law, however,
does not recognize such a cause of action, as all employment
contracts for an indefinite term are terminable at will for any
reason. Green v. Amerada-Hess Corp., 612 F.2d 212, 214 (5th Cir.),
cert. denied, 449 U.S. 952, 101 S.Ct. 356, 66 L.Ed.2d 216 (1980).
The conflict of law rules of the state in which the district
court is located are to be used in determining the applicable law.
Day & Zimmermann, Inc. v. Challoner, 423 U.S. 3, 4, 96 S.Ct. 167,
167-68, 46 L.Ed.2d 3 (1975). A district court's determination of
state law is reviewed de novo by an appellate court. Allison v.
3
ITE Imperial Corp., 928 F.2d 137, 139 (5th Cir.1991). Here, the
district court is located in Mississippi.1 Mississippi courts have
held that a "center of gravity" or "the most substantial
relationship" rule applies. White v. Malone Properties, Inc., 494
So.2d 576, 578 (Miss.1986).
In interpreting this rule for tort actions, Mississippi
courts have applied the criteria of §§ 6 and 145 of the Restatement
(Second) of Conflict of Laws. McDaniel v. Ritter, 556 So.2d 303,
310 (Miss.1989).2 Although § 145 lists it as the first factor to
1
Fruehauf cites French v. Beatrice Foods Co., 854 F.2d 964
(7th Cir.1988), as authority in support of his arguments.
However, French concerns the application of Illinois conflict of
law rules, and Fruehauf does not demonstrate the connection
between the doctrines of Illinois and Mississippi.
2
Section 6 provides:
(1) A court, subject to constitutional restrictions,
will follow a statutory directive of its own state on
choice of law.
(2) When there is no such directive, the factors
relevant to the choice of the applicable rule of law
include
(a) the needs of the interstate and international
systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested
states and the relative interests of those states
in the determination of the particular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the particular
field of law,
(f) certainty, predictability and uniformity of
result, and
4
be considered, the place of injury is not the sole determinative
factor. Mitchell v. Craft, 211 So.2d 509, 512-13 (Miss.1968).
Further, the criteria are not strict elements that must always be
present for a state's law to be applied, nor is the formula to be
precisely followed in every instance. "The principles of Sections
6 and 145 of the Restatement (Second) defy mechanical
application—they are less "rules of law' than generally-stated
guideposts." McDaniel v. Ritter, supra, at 310. A literal
interpretation of the two sections, however, would have the courts
focus upon the states picked out by the criteria of § 145. Allison
v. ITE Imperial Corp., supra, at 141. These states would then be
compared using the criteria of § 6. Id.
(g) ease in the determination and application of
the law to be applied.
Section 145 provides:
(1) The rights and liabilities of the parties with
respect to an issue in tort are determined by the local
law of the state which, with respect to that issue, has
the most significant relationship to the occurrence and
the parties under the principles stated in § 6.
(2) Contacts to be taken into account in applying the
principles of § 6 to determine the law applicable to an
issue include:
(a) the place where the injury occurred,
(b) the place where the conduct causing the injury
occurred,
(c) the domicile, residence, nationality, place of
incorporation and place of business of the
parties,
(d) the place where the relationship, if any,
between the parties is centered.
5
Mississippi is the state where the injury (termination)
occurred, § 145(2)(a), but we view the conduct causing the injury
to have occurred in Washington,3 § 145(2)(b). Section 145(2)(c),
the domicile, residence, place of incorporation, and place of
business of the parties, points to Mississippi as Gann's residence
at the time of his termination. Fruehauf, on the other hand,
conducted business in California, Washington, and Mississippi, and
had its principal headquarters in Michigan. Finally, § 145(2)(d),
the place where the relationship between the parties is centered,
points to Washington. Gann worked for Fruehauf in Washington, his
injury occurred in Washington, and the act which he claims prompted
his discharge by Fruehauf, the filing for and receiving of worker's
compensation benefits, occurred in Washington.
Although the parties had contacts with other states according
to the analysis of § 145, the states with the most interest in this
matter, a major component of the § 6 analysis, are Mississippi and
Washington. Fruehauf argues that Mississippi has the greater
interest, as the place of the injury is Mississippi, and Gann was
a resident of Mississippi at the time of the discharge. Further,
Fruehauf argues that Mississippi has a compelling interest in the
correct application of its employment laws to the employment
activities within Mississippi.
With respect to the facts of this case, we disagree with
3
Gann contends that it was his action in pursuing worker's
compensation benefits in Washington, while Fruehauf contends that
Gann's termination was the result of Gann's work performance in
Washington revealed by an internal audit.
6
Fruehauf's assessment. The relationship of the parties centers
mostly on Washington. Gann worked for Fruehauf in Washington for
approximately two and a half years, and it is in Washington where
Gann hurt himself and filed for worker's compensation benefits.
Although the termination occurred in Mississippi, the period of
time in which Gann resided in Mississippi was only three months.
We think it significant that the trial court found that the record
supports the finding that the contract of employment was made
between Gann and Fruehauf outside of Mississippi and prior to
Gann's arrival in Mississippi to perform his duties for Fruehauf.
We think that under the unique circumstances of this case
Washington's interest in this matter is paramount to that of
Mississippi. We note, additionally, that the right given by
Washington, to obtain worker's compensation benefits without
fearing discharge, would be unnecessarily diluted if workers could
be dispatched to other states so that they could be discharged in
contravention of the policies of the state of Washington.4
4
In finding the law of Washington to apply to this case, we
reject Fruehauf's reliance on McDaniel v. Ritter, supra, for the
proposition that the application of Washington law in this case
would be offensive to the public policy of Mississippi.
Mississippi courts have held that the laws of other states would
not be applied if the laws are antagonistic to the interests and
policies of Mississippi. In McDaniel, it was held that a foreign
contributory negligence regime would be offensive to the
comparative negligence regime of Mississippi because enforcement
of the foreign state law "would be offensive to the deeply
ingrained or strongly felt public policy of" Mississippi.
McDaniel v. Ritter, supra, at 316-17. However, the issue in this
case is whether a regime that recognizes a wrongful discharge
cause of action "would be offensive to the deeply ingrained or
strongly felt public policy of" Mississippi.
Where the specific public policy issue involves a
7
II
Fruehauf next argues that the jury verdict in favor of Gann
on the wrongful discharge cause of action was against the
overwhelming weight of the evidence and should be reversed.
In reviewing jury verdicts, the appellate court must view all
of the evidence in favor of the prevailing party. Gibraltar Sav.
v. LDBrinkman Corp., 860 F.2d 1275, 1297 (5th Cir.1988), cert.
denied, 490 U.S. 1091, 109 S.Ct. 2432, 104 L.Ed.2d 988 (1989).
"Weighing the conflicting evidence and the inferences to be drawn
from that evidence, and determining the relative credibility of the
witnesses, are the province of the jury, and its decision must be
accepted if the record contains any competent and substantial
evidence tending fairly to support the verdict." Id. "Substantial
evidence, while something less than the weight of the evidence, is
such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion, even if different conclusions
also might be supported by the evidence." Id.
In order to establish a prima facie claim under Washington
law for wrongful discharge, Gann must prove (1) that he exercised
his right for worker's compensation or told Fruehauf that he was
non-resident or a contract made outside of Mississippi,
Mississippi courts have held that its public policy concerns
are not implicated. Boardman v. United Services Auto.
Assn., 470 So.2d 1024, 1039 (Miss.), cert. denied, 474 U.S.
980, 106 S.Ct. 384, 88 L.Ed.2d 337 (1985). Here, the
district court found that the contract was made outside of
Mississippi. The record supports such finding.
Accordingly, McDaniel does not preclude the application of
Washington law in Mississippi, and because Washington has
the greater interest, we hold that the trial court correctly
applied the law of the state of Washington.
8
going to exercise his right; (2) that he was discharged; and (3)
that there was a causal connection between the exercise of his
legal right and the discharge. Wilmot v. Kaiser Aluminum &
Chemical Corp., 118 Wash.2d 46, 821 P.2d 18, 28-29 (1991). Once
Gann meets this standard, Fruehauf must articulate a legitimate
reason for the discharge. Id. 821 P.2d at 29. Gann must then
prove either that this legitimate reason was a pretext or that
retaliation was a substantial or important factor motivating the
discharge. Id. at 31.
The evidence of an improper motive need not be direct.
"Ordinarily the prima facie case must, in the nature of things, be
shown by circumstantial evidence, since the employer is not apt to
announce retaliation as his motive." Id. at 29. Further,
"[p]roximity in time between the claim and the firing is a typical
beginning point, coupled with evidence of satisfactory work
performance and supervisory evaluations." Id.
Fruehauf claims that Gann failed to prove a causal connection
between his discharge and his filing for worker's compensation
benefits. Specifically, Fruehauf claims that Gann has not shown
that Fruehauf's stated reason for the discharge (that Gann
performed very poorly) was a pretext or that retaliation was a
substantial factor motivating the discharge. We disagree.
The proximity of Gann's pursuing worker's compensation
benefits and his discharge (three and a half months) together with
evidence that Gann's personnel file contained only positive
supervisory evaluations and that he had never received any
9
criticisms from anyone in Fruehauf concerning his work performance
support the jury verdict. In addition, there is testimony from
Gann that, after he had arrived in Washington, he had complained to
his superiors many times about the poor performance of certain
individuals, but that nothing had been done. Finally, Gann
testified that he was aware of a policy of Fruehauf to discharge
employees who had been injured on the job. Our review of the
record reveals that the jury could reasonably conclude that Gann's
discharge was made in retaliation and not for the reason advanced
by Fruehauf.
III
Fruehauf next contends that the damages awarded by the jury
were not substantiated by the evidence, and that the trial court
erred in failing to grant Fruehauf's motions for J.N.O.V., New
Trial, and/or Remittitur. In his instructions to the jury, the
trial judge provided that:
If ... you find by a preponderance of the evidence that Bill
J. Gann is entitled to a verdict, in arriving at the amount of
the award, you should include the amount of medical leave pay
and fringe benefits to which Plaintiff Gann was entitled as a
result of his employment with Defendant, Fruehauf Corporation,
but for his discharge, and you may consider the following
factors, if shown by a preponderance of the evidence, in
determining additional damages, if any, to be awarded to the
Plaintiff. Past, present and future emotional distress
sustained by Plaintiff Gann, if any, as a result of his
discharge.
After rendering a verdict in favor of Gann, the jury awarded Gann
$112,500 in damages. Fruehauf argues that the damages awarded were
unreasonable and excessive.
Under the court's instructions, the jury was allowed to award
10
not only medical leave pay and fringe benefits to which Gann was
entitled, but could also consider past, present, and future
emotional distress sustained by Gann as a result of his discharge.
Apart from any leave pay and fringe benefit evidence, there was
evidence that Gann suffered emotional distress due to the lost
benefits, the termination itself, the losing of his home in
Mississippi by foreclosure, and additional emotional distress by
having to relocate with his wife and having to be supported by his
mother. Accordingly, we reject Fruehauf's arguments that the
jury's decision is not supported by the evidence and is
unreasonable and excessive. We also reject Fruehauf's argument
that he is entitled to a J.N.O.V., New Trial, and/or Remittitur as
without merit.
IV
Fruehauf next argues that the district court erred in
imposing a sanction of $2,385.40 upon Fruehauf's counsel for
submitting a second Motion for Partial Summary Judgment in
violation of Rule 11. The record reveals that the district court
had denied Fruehauf's first Motion for Partial Summary Judgment as
to the retaliatory discharge claim in 1990. This claim was based
solely on Fruehauf's argument that Mississippi law applied and
precluded an action for retaliatory discharge based on the
Mississippi employment-at-will doctrine. In 1993, Fruehauf filed
a second Motion for Partial Summary Judgment seeking a dismissal of
the claim on the basis of Washington law, with Gann's poor
performance as the legitimate reason for his termination. Such
11
motion was supported by proper affidavit. Nonetheless, the order
sanctioning Fruehauf for this second motion provides in pertinent
part as follows:
This same argument was presented to the Court by Fruehauf's
earlier Motion for Partial Summary Judgment. The Court denied
that Motion by its Order dated March 9, 1990. Fruehauf's
present Motion has been filed unnecessarily for the purposes
of harassing Plaintiff and needlessly increasing the cost of
litigation.
It is clear that the trial court sanctioned Fruehauf based upon an
erroneous conclusion that the argument presented in his latter
summary judgment motion was the same as that presented in his first
motion for summary judgment with respect to the wrongful
termination cause of action. Accordingly, we find that the
district court abused its discretion in sanctioning Fruehauf's
counsel and thereby set aside its sanction.5
Gann's Appeal With Respect To The Retaliatory Discharge Claim
V
Gann claims that the district court erred in not providing
reinstatement or a similar remedy and attorney's fees to Gann after
he prevailed in the jury trial. Gann argues that Washington law
authorizes the district court to award the prevailing plaintiff
"all appropriate relief" including reinstatement with back pay and
attorney's fees. Further, according to Gann, another Washington
statute, RCW 49.48.030, provides for attorney's fees in regards to
claims for back wages.
5
The district court's order of sanction also contained an
argument that was contained in Fruehauf's answer, but which was
not discussed in the motion for summary judgment for which
Fruehauf's counsel was sanctioned.
12
RCW 51.48.025, however, only states that the court has
jurisdiction to order such relief, not that it must order such
relief. Thus, Gann has not stated a claim here, as he has not
indicated how the district court abused its discretion.
Gann also argues that the district court erred in not
sanctioning Fruehauf for filing a counterclaim against Gann for the
purposes of harassment in violation of Rule 11. In support of his
arguments, Gann points to the fact that Fruehauf dismissed its
counterclaim for damages shortly before trial. Gann has failed to
show an abuse of discretion in the trial court's failure to impose
sanctions.
Gann's Other Appeals
BACKGROUND
On the same day that Gann was terminated, Fruehauf informed
him that his coverage under the employee benefit plan sponsored by
Fruehauf and administered by Connecticut General would cease on
November 30, 1988, and that he would be eligible under COBRA to
continue his group medical coverage for up to eighteen months if he
paid certain premiums. On January 30, 1989, Gann elected to have
such coverage, but on March 20, 1989, Mongoose, the administrator
of the continuation coverage, terminated the coverage because of
Gann's alleged nonpayment of premiums. Gann had also filed with
Fruehauf on November 30, 1988 a claim for certain disability
benefits. However, when Gann refused to submit to an independent
medical examination, Connecticut General denied the claim.
13
In his complaint, Gann brought forth seven causes of action.6
The district court entered summary judgment against Gann on all his
claims. Although Gann asserts that he is appealing the rulings on
all his claims, he only presents arguments on his claims that
Fruehauf, Connecticut General, Goralski, Szemborski, and Robinson
did not pay Gann disability benefits in violation of §
1132(a)(1)(B);7 and Fruehauf, Goralski, and Mongoose terminated
6
The claims brought forth by Gann are as follows:
(1) Goralski did not supply Gann with a requested copy
of an insurance policy in violation of 29 U.S.C. §§
1132(a)(1)(A) and 1132(c).
(2) Fruehauf, Connecticut General, Goralski,
Szemborski, and Robinson did not pay Gann disability
benefits in violation of § 1132(a)(1)(B).
(3) Fruehauf, Connecticut General, Goralski,
Szemborski, and Robinson breached their duties as
fiduciaries under the employee benefit plan.
(4) Fruehauf, Connecticut General, Goralski,
Szemborski, and Robinson failed to provide Gann an
individual statement setting forth the information to
be contained in a registration statement required by 26
U.S.C. § 6057(a)(2) and 29 U.S.C. § 1132(a)(4).
(5) Fruehauf, Goralski, and Mongoose terminated Gann's
continuation coverage in violation of COBRA.
(6) Connecticut General engaged in unfair and deceptive
trade practices in the business of insurance in
violation of Miss.Code Ann. § 83-5-29.
(7) Fruehauf willfully, intentionally, and in bad faith
tortiously interfered with the contractual rights of
Gann.
7
§ 1132(a)(1)(B) provides: "A civil action may be brought
by a participant or beneficiary to recover benefits due to him
under the terms of his plan, to enforce his rights under the
terms of the plan, or to clarify his rights to future benefits
under the terms of the plan...."
14
Gann's continuation coverage in violation of COBRA. Because he has
not advanced arguments in the body of his brief in support of his
appeal of his other claims, Gann has waived or abandoned these
claims. Yohey v. Collins, 985 F.2d 222, 224 (5th Cir.1993).
Appellate courts review summary judgments de novo, applying
the same standard as the district court. Bodenheimer v. PPG
Industries, Inc., 5 F.3d 955, 956 (5th Cir.1993). Summary judgment
shall be rendered if there is no genuine issue of material fact and
if the moving party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(c). In making its determination, the court must
draw all justifiable inferences in favor of the nonmoving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505,
2513-14, 91 L.Ed.2d 202 (1986).
VI
The district court held that one of the reasons why a refusal
to pay the benefits was justified was because Gann was not under
the care of a licensed physician at the time his claim was pending.
The Certificate of Insurance states that "[n]o Monthly Benefits
will be paid for a period of Total Disability when you are not
under care of a licensed physician." Gann has not responded to
this argument in this appeal. Although Gann has been under the
care of a chiropractor, chiropractors are not licensed to practice
"A denial of ERISA benefits by a plan administrator
challenged under § 502(a)(1)(B) of ERISA, 29 U.S.C. §
1132(a)(1)(B), is reviewed by the courts under a de novo
standard unless the plan gives the administrator
"discretionary authority to determine eligibility for
benefits or to construe the terms of the plan.' " Duhon v.
Texaco, Inc., 15 F.3d 1302, 1305 (5th Cir.1994).
15
medicine, and do not qualify according to the words of the
certificate. We thus affirm the trial court's summary judgment on
the disability benefits claim on this basis, and do not need to
reach Gann's other arguments with respect to such claim.
VII
Gann alleged in his complaint that Fruehauf, Goralski, and
Mongoose wrongfully terminated his continuation of coverage in
violation of COBRA, and appeals the district court's entrance of
summary judgment against Gann. The district court entered summary
judgment because it found that Gann owed one month's premium for
February 1989. We agree.
The due date for premiums was the first day of each month of
coverage. But 29 U.S.C. § 1162(2)(C) provides that a plan cannot
require the payment of any premium before forty-five days after the
day on which the beneficiary elected to have continuation coverage.
Gann elected to have coverage on January 30, 1989. Under §
1162(2)(C), the premiums due February 1 were not required to be
paid until March 17. The summary judgment evidence presented on
behalf of Fruehauf establishes that the February payment was not
made by Gann by March 17. Gann's summary judgment evidence on this
point was unable to specifically set out that his February payment
was made on or before March 17. Because no material issue of fact
was raised by the summary judgment proof, the district court
correctly found that Gann was not entitled to his cause of action
16
alleging a wrongful termination of his continuance of coverage.8
VIII
Gann argues that the district court erred in not allowing him
to supplement the record. After the district court issued its
order dismissing Gann's various claims on summary judgment, Gann
moved to supplement the record. Gann argues that the submitted
evidence would have raised genuine issues of material fact. The
lower court, however, disagreed and denied the motion.
Gann argues that the evidence that he wishes to add as
supplements is not new, but rather corroborates his arguments that
summary judgment is inappropriate. But Gann does not specify or
describe the evidence or how the district court abused its
discretion. Under such circumstances, no abuse of discretion is
shown. Moreover, as Gann describes the evidence as not new
8
Gann also argues that a grace period in his continuation
coverage provided that a period of thirty-one days will be
granted as a grace period for the payment of premiums after the
initial premium. The grace period provision states:
GRACE PERIOD. If, before a Premium Due Date, the
Policyholder has not given written notice to the
Insurance Company that the policy is to be cancelled, a
Grace Period of 31 days will be granted for the payment
of each premium after the initial premium. The policy
will stay in effect during that time.
Thus, according to Gann, because March 17 was the due date
for the February premium, which was not the initial premium,
the grace period extends the deadline thirty-one days past
March 17.
We disagree. The statutory extension to March 17 is an
extension for the payment of the premiums and not an
extension of the due date of the premiums, which remains the
first day of each month. Thus, the grace period of the
coverage operates thirty-one days from the due date, the
first day of each month.
17
evidence, but corroborative of his arguments, no harm is shown.
CONCLUSION
For the foregoing reasons, the judgment of the trial court is
AFFIRMED, except as to the award of sanctions against Fruehauf's
counsel, which is REVERSED.
18