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Anthuis v. Colt Industries Operating Corp.

filed: July 27, 1992; As Corrected.

JOHN W. ANTHUIS, JR. APPELLANT IN 91-3670 AND 91-3894
v.
COLT INDUSTRIES OPERATING CORPORATION, ADMINISTRATOR OF THE COLT INDUSTRIES OPERATING CORPORATION SEVERANCE PLAN AND THE COLT INDUSTRIES OPERATING CORPORATION SEVERANCE PLAN APPELLANTS IN NO. 91-3674; DONALD DALE GROSCOST APPELLANT IN 91-3675 AND 91-3893 V. COLT INDUSTRIES OPERATING CORPORATION, INDIVIDUALLY, AND AS SUCCESSOR TO CRUCIBLE INC., AND COLT INDUSTRIES OPERATING CORPORATION, ADMINISTRATOR OF THE COLT INDUSTRIES OPERATING CORPORATION KEY EXECUTIVE SEVERANCE PLAN, AND THE COLT INDUSTRIES OPERATING CORPORATION KEY EXECUTIVE SEVERANCE PLAN APPELLANTS IN NO. 91-3676



On Appeal from the United States District Court for the Western District of Pennsylvania. (D.C. Civil No. 84-01156). On Appeal from the United States District Court for the Western District of Pennsylvania. (D.C. Civil No. 84-01157)

Before: Hutchinson, Cowen, and Garth, Circuit Judges

Author: Garth

Opinion OF THE COURT

GARTH, Circuit Judge:

Once again,*fn1 we have been called upon to resolve issues raised by two agreements affecting employees of Colt Industries Operating Corporation's ("CIOC"). One agreement is known as the Severance Plan. The other has been designated the Continuance Agreement.*fn2 Both the Severance Plan and the Continuance Agreement have been discussed in detail in Frank v. Colt Industries, Inc., 910 F.2d 90 (3d Cir. 1990).

In the appeals before us, brought by appellants-cross-appellees John Anthuis and Donald Dale Groscost, we are obliged to dismiss Anthuis' appeal, because the order from which Anthuis took his appeal -- the district court's order of August 29, 1991 -- was not an appealable order. For a similar reason, we are obliged to dismiss CIOC's cross-appeal which was taken from an order of the district court dated October 1, 1991.

Groscost and CIOC's appeals initially raised jurisdictional problems. We have reached the merits of the Groscost appeals, however, and although we do not entirely agree with the analysis of the district court, we affirm the district court's judgment in so far as it awards severance pay and prejudgment interest to Groscost. We will vacate the district court's ruling which denied Groscost's motion for attorneys' fees to be assessed against CIOC.

I.

Anthuis and Groscost each filed an Amended Complaint against CIOC in the United States District Court for the Western District of Pennsylvania, after their respective complaints filed in the Pennsylvania Court of Common Pleas had been removed.

Both Anthuis and Groscost moved for partial summary judgment with respect to severance pay only. CIOC moved for summary judgment as to all counts, i.e., continuance salary payments and severance payments. On July 19, 1991, the district court, pursuant to its opinion rendered on that date, entered orders which denied CIOC's summary judgment motions, and which granted Anthuis severance pay of $19,125.00 and prejudgment interest of $16,738.44, and denied Anthuis' motion for attorneys fees. Anthuis' continuance salary count was not adjudicated. On the same date, the district court entered an order which granted Groscost's severance pay of $15,245.00 and prejudgment interest of $13,570.78. The district court also denied Groscost's claim against CIOC for attorneys' fees. Groscost's continuance salary count was not adjudicated.

Thereafter, on August 29, 1991, the district court certified for interlocutory appeal its grant of severance pay to Anthuis (Count I of Anthuis' complaint), pursuant to 28 U.S.C. § 1292(b), and on October 1, 1991, certified the same Count as a final Judgment under Fed. R. Civ. P. 54(b).

On September 30, 1991, Anthuis appealed at 91-3670 from the district court's order of August 29, 1991 (the district court's order purporting to certify the order of July 19, 1991 pursuant to 28 U.S.C. § 1292(b)).

On October 3, 1991, CIOC cross-appealed in the Anthuis proceeding at 91-3674 from the district court's order of October 1, 1991 (the district court's order purporting to certify the July 19, 1991 order pursuant to Fed. R. Civ. P. 54(b)).

After the district court had entered its order respecting Groscost's claims on July 19, 1991, Groscost and CIOC entered into a Stipulation under Fed. R. Civ. P. 41(a), which dismissed Groscost's claim for continuance salary payments (Count II of Groscost's complaint) and which limited the amount of Groscost's severance pay claim (Count I) to $15,245.00. The Stipulation also provided that the voluntary dismissal with respect to Groscost's severance count did not affect Groscost's claim for interest, costs and attorneys fees, but only limited the amount of his severance benefit claim to $15,245.00.

On September 30, 1991, Groscost appealed the district court's decision denying him attorneys fees. His appeal at 91-3675 was taken from the district court's order of August 29, 1991, which had approved the Stipulation which Groscost and CIOC had signed.

On October 3, 1991, CIOC cross-appealed in the Groscost proceeding the district court's order awarding Groscost severance pay and prejudgment interest. CIOC's cross-appeal at 91-3676 was also taken from the district court's order approving the August 29, 1991 Stipulation.

II.

1. District Court Opinion

The district court in its two opinions dated July 19, 1991, one opinion in Anthuis, the other in Groscost, held among other things that CIOC had not waived its contention that Anthuis and Groscost had failed to meet the conditions precedent to eligibility for participation under CIOC's Severance Plan. In Frank v. Colt Industries, Inc., 910 F.2d 90 (3d Cir. 1990), this Court held that because CIOC had failed to raise its discretionary defense in the Frank case, CIOC had waived that issue. In the present actions brought by Anthuis and Groscost, CIOC had raised the discretionary argument in the district court, and the district court, as stated, held that the issue of discretionary approvals by CIOC officials was ripe for a merits decision.

The district court held that its reading of our decision in Frank required CIOC to pay severance benefits because the Continuance Agreements could not be construed to reduce or eliminate severance benefits under the Severance Plan. The district court went on to hold that the reservation of a broad discretion in an employer's Plan was in any event invalid and would cause a Plan with such a provision to violate ERISA. Hence, the district court entered summary judgment in favor of Anthuis for $19,738.44 in severance benefits and $16,738.44 in prejudgment interest. It entered summary judgment in favor of Groscost for $15,245.00 in severance benefits and $13,570.78 in prejudgment interest.

However, the district court then denied Anthuis and Groscost attorneys' fees which they sought pursuant to 29 U.S.C. § 1132(g)(1). It did so on the grounds that CIOC had not acted in bad faith and that its position was not meritless. The appeals to which we have referred earlier were then filed by all parties.

We have plenary review over the jurisdictional issues in both Anthuis and Groscost's appeals as well as the issues in Groscost concerning severance pay. Frank, 910 F.2d at 92. Our review of Groscost's prejudgment interest award is for abuse of discretion, Schake v. CIOC, 960 F.2d 1187 (3d Cir. 1992); Feather v. United Mine Workers of America, 711 F.2d 530, 540 (3d Cir. 1983), as is the denial of Groscost's motion for attorneys' fees. Schake, slip op. at 8.

2. Anthuis' Appeal

Anthuis Amended Complaint contained two counts. In Count I, Anthuis sought severance benefits under CIOC's Severance Plan. In Count II, Anthuis sought payment of additional salaries under a separate agreement -- the Continuance Agreement -- that he had made with Crucible Inc., the predecessor to CIOC.

Anthuis filed a motion for partial summary judgment limited to Count I (severance pay). CIOC filed a cross motion for summary judgment on both counts. On July 19, 1991, the district court granted Anthuis' motion for partial summary judgment on Count I, awarding Anthuis a severance benefit of $19,125.00 and prejudgment interest of $16,738.44, but denied Anthuis attorneys' fees and costs. The district court also denied CIOC's cross motion for summary judgment on both counts. The district court did not decide the second count in Anthuis' complaint. Thus, the July 19, 1991 order of the district court was not a final order from which appeal could be taken.

On August 21, 1991, both Anthuis and CIOC jointly moved "To Bifurcate Count I from Count II of Plaintiff's Amended Complaint and, Pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, to Enter Final Judgment on Count I, or alternatively, to Certify the Issuance of Summary Judgment as to Count I for Immediate Appeal pursuant to 28 U.S.C. § 1292(b)." An order signed by the district court on August 29, 1991, certified its July 19, 1991 order for immediate interlocutory appeal under 28 U.S.C. § 1292(b). The district court's order did not specify a controlling question of law as to which there was a substantial grounds for a difference of opinion, although the order did state without explanation that an immediate appeal would materially advance the ultimate termination of the litigation. Both of these statements are required by the statute and by our own local Rule 23, which also provides that

the controlling question of law presented for review shall be concisely stated in one sentence, if possible, expressed in the terms and circumstances of the case, but without unnecessary detail. The expression will be deemed to include every subsidiary question fairly comprised therein.

Moreover, neither Anthuis nor CIOC complied with Federal Rule of Appellate Procedure 5(a) which requires that a petition for permission to appeal be filed with this court within ten days after entry of 28 U.S.C. § 1292(b) certification by the district court. Thus, not having received this court's certification permitting an interlocutory appeal pursuant to 28 U.S.C. § 1292(b), the Notice of Appeal filed by Anthuis on September 30, 1991, was not effective and jurisdiction did not vest in this court.

The record does not reveal any appeal taken by Anthuis from the district court's order of October 1, 1991, which purported to certify the July 19, 1991 order under Fed. R. Civ. P. 54(b). Even if Anthuis had sought to appeal this latter certification, the district court's failure to furnish reasons for its certification under Rule 54(b), as we explain below, would have rendered such an appeal ineffective.

3. CIOC's Cross-Appeal

On October 1, 1991, the district court also signed an order entering judgment on Count I of Anthuis' Complaint, pursuant to Rule 54(b). The district court stated that "since there is no just reason for delay, final judgment be and hereby is entered pursuant to Rule 54(b) of the Federal Rules of Civil Procedure." (A 308-09). Fed. R. Civ. P. 54(b) does permit "entry of a final judgment as to one or more but fewer than all the claims or parties . . . upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment."*fn3

The district court, in entering its order, gave no reasons to support its exercise of discretion. By failing to do so, the district court failed to comply with this court's requirements set forth in Allis-Chalmers Corp. v. Philadelphia Electric Co., 521 F.2d 360, 364 (3d Cir. 1975) that,

A proper exercise of discretion under Rule 54(b) requires the district court to do more than just recite the 54(b) formula of "no just reason for delay." The court should clearly articulate the reasons and factors underlying its decision to grant 54(b) certification. ". . . It is essential . . . that a reviewing court have some basis for distinguishing between well-reasoned Conclusions arrived at after a comprehensive consideration of all relevant factors, and mere boiler-plate approval phrased in appropriate language but unsupported by evaluation of the facts or analysis of the law . . ." Protective Committee v. Anderson, 390 U.S. 414, 434, 20 L. Ed. 2d 1, 88 S. Ct. 1157 . . . (1968).

Allis-Chalmers also announced the principles which guide a district court's decision in issuing a Rule 54(b) certification:

(1) the burden is on the party seeking final certification to convince the district court that the case is the "infrequent harsh case" meriting a favorable exercise of discretion; (2) the district court must balance the competing factors present in the case to determine if it is in the interest of sound judicial administration and policy to certify the judgment as final; (3) the district court must marshall and articulate the factors upon which it relied in granting certification so that prompt and effective review can be facilitated.

521 F.2d at 365.

By placing the burden on the parties seeking final certification, we recognize that district court Judges must necessarily depend upon counsel to assist them by identifying the factors, considerations and reasons for the entry of a final judgment on less than all issues. The ultimate responsibility falls, of course, on the district court, but we would be unrealistic if we did not recognize that counsel must shoulder the burden of identifying the particular factors, considerations and reasons so that the district court may, in its discretion, properly evaluate the Rule 54(b) application.

When "faced with an appeal from a Rule 54(b) certification of finality, we must 'scrutinize the district court's evaluation of such factors as the interrelationship of the claims so as to prevent piecemeal appeals in cases which should be reviewed only as single units.'" Cemar, Inc. v. Nissan Motor Corp. in America, 897 F.2d 120 (3d Cir. 1990), quoting Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 10, 64 L. Ed. 2d 1, 100 S. Ct. 1460 (1980).

Here, as in Allis-Chalmers, and Cemar, the district court did not explain its analysis nor did it explain the basis for its statement that there was no just reason for delay. Nor did the district court assure us, by a statement of its reasons, that this was the "infrequent harsh case" in which final certification should be granted. In particular, we note that even after the entry of the October 1, 1991 order, and after we had requested supplemental briefing from counsel addressed to the issue of jurisdiction, neither Anthuis' counsel not. CIOC's counsel made reference to the requirements of Allis-Chalmers. Indeed, that authority was not even cited in the primary briefs, let alone the supplemental briefings of the parties.*fn4

Because we lack a competent Rule 54(b) certification, the district court's order of October 1, 1991 lacks finality. We are, therefore, ...


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