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Gillis v. Hoechst Celanese Corp.

filed: September 7, 1993.

LEONARD GILLIS, FOR THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, AS A CLASS; VALDO A. SARGENI, FOR THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, AS A CLASS
v.
HOECHST CELANESE CORPORATION; HOECHST CELANESE RETIREMENT PLAN, A FEDERAL EMPLOYEE PENSION BENEFIT PLAN AND TRUST, THIRD-PARTY PLAINTIFFS V. AMERICAN MIRREX CORPORATION, A DELAWARE CORPORATION; AMERICAN MIRREX RETIREMENT PLAN, A FEDERAL EMPLOYEE BENEFIT PLAN AND TRUST, THIRD-PARTY DEFENDANTS LEONARD GILLIS AND VALDO SARGENI, FOR THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, APPELLANTS



Appeal from the United States District Court for the Eastern District of Pennsylvania. D.C. Civil No. 90-05542.

Before: Stapleton, Alito and Seitz, Circuit Judges.

Author: Seitz

Opinion OF THE COURT

SEITZ, Circuit Judge.

Leonard Gillis and Valdo Sargeni ("plaintiffs") are former employees of the Hoechst Celanese Corporation ("Hoechst"). They allege that Hoechst and the Hoechst Celanese Retirement Plan ("Hoechst Retirement Plan") have failed to comply with certain provisions of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461. They also advance two state law claims.

The district court had jurisdiction over the ERISA claims under 29 U.S.C. § 1132 and jurisdiction over the state law claims under 28 U.S.C. § 1367 (a). We have jurisdiction over plaintiffs' appeal from a final order of the district court pursuant to 28 U.S.C. § 1291.*fn1

I. BACKGROUND

Hoechst sold its PVC Division in Delaware City, Delaware to the American Mirrex Corporation ("American Mirrex") in 1989. It is not disputed that plaintiffs, who were employed in the PVC Division, have continued to work in their same positions for their new employer, American Mirrex.

In August of 1990, plaintiffs filed the complaint in this action advancing six separate claims arising from the sale. The district court granted plaintiffs' request for certification as class representatives for their claim under ERISA that Hoechst improperly denied them severance pay and their state law claim that Hoechst improperly denied them vacation pay. The district court denied plaintiffs' request for certification as class representatives for their claim under ERISA that Hoechst and the Hoechst Retirement Plan (collectively "defendants") failed to transfer sufficient funding to the American Mirrex Retirement Plan to fund their early retirement benefits and for their claim that defendants should be penalized for reporting and disclosure violations of ERISA.*fn2 Each plaintiff brought one of the two remaining claims in his individual capacity.

Plaintiff Sargeni alleged that Hoechst breached a contractual obligation to provide him with counseling concerning his benefit options at the time it sold the PVC Division. Plaintiff Gillis contended that Hoechst violated ERISA by failing to give him seniority credit for two years that he worked at a Hoechst plant in Canada.

In June of 1992, defendants filed a motion seeking summary judgment or dismissal of all claims. The district court issued a memorandum and order granting summary judgment for defendants on all claims except the vacation pay claim and the breach of contract claim which were both based on state law. It dismissed those claims for lack of subject matter jurisdiction. It also denied plaintiffs' motion for partial summary judgment. Plaintiffs then filed this timely appeal.

II. DISCUSSION

On this appeal from a grant of summary judgment, "the non-movant's allegations must be taken as true and, when these assertions conflict with those of the movant, the former must receive the benefit of the doubt." Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 50 L. Ed. 2d 748, 97 S. Ct. 732 (1977). In addition, "inferences to be drawn from the underlying facts contained in the evidential sources submitted to the trial court must be viewed in the light most favorable to the party opposing the motion." Id. Our review is plenary. Id.

We turn first to a review of that portion of the district court's order granting summary judgment for defendants.

A. Claims Disposed of By Summary Judgment

1. Severance Benefits

Simply stated, plaintiffs argue that their employment with Hoechst was "severed" when the PVC Division was sold and, therefore, they are entitled to severance pay. Hoechst's Corporate Human Resource Department ("the Department") denied plaintiffs' request for severance pay and the district court granted summary judgment for Hoechst on this claim after concluding that the Department's denial was not arbitrary or capricious.

As a threshold matter, we must consider plaintiffs' argument that the district court erred when granting summary judgment by relying upon a document identified by Hoechst as the Hoechst Celanese Separation Pay Policy. Plaintiffs allege that this document was fabricated by Hoechst after the date on which plaintiffs requested severance pay. The authenticity of this document is important for two reasons. First, the district court relied on the document when determining the eligibility requirements for severance pay. Second, the district court also relied on this document when determining the degree of scrutiny with which it reviewed the decision by the Department to deny these benefits. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 103 L. Ed. 2d 80, 109 S. Ct. 948 (1989) (holding that a court should review a plan administrator's denial of benefits under a de novo standard unless the plan grants the administrator discretion when making eligibility decisions, in which case an arbitrary and capricious standard applies).

Because plaintiffs have no direct evidence that the document was fabricated after-the-fact, they rely exclusively on circumstantial evidence. Plaintiffs first assert that the document was not distributed to the employees at the PVC Division and was not produced until after they made their claim for severance pay. Indeed, defendants concede, as they must, that "there is, in the record below, an admitted failure to supply a copy of the [separation pay] plan on a timely basis to the plaintiffs." (Tr. of oral argument at 32). However, standing alone, the fact that the separation pay policy document was not distributed to the employees is "irrelevant in determining entitlement to benefits." Gridley v. Cleveland Pneumatic Co., 924 F.2d 1310, 1319 (3d Cir.), cert. denied, 115 L. Ed. 2d 1023, 111 S. Ct. 2856 (1991).

Plaintiffs also note that the document pre-dates the Supreme Court's decision in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 103 L. Ed. 2d 80, 109 S. Ct. 948 (1989), and yet utilizes the "arbitrary and capricious" standard which was adopted by the Bruch Court. However, use of the arbitrary and capricious standard was not uncommon in the years before Bruch was decided. See Bruch, 489 U.S. at 107 (stating that, at the time Bruch was decided, "most federal courts [were] reviewing the denial of benefits by ERISA fiduciaries and administrators under the arbitrary and capricious standard").

We conclude that plaintiffs' circumstantial evidence is insufficient to create a genuine issue of material fact as to the authenticity of the separation pay policy document produced by Hoechst. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-52, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Accordingly, we turn to a review of the terms of that document.

The Hoechst Celanese Separation Pay Policy contains the following provision:

Administration and Interpretation

The Corporate Human Resources Department is responsible for administering this policy, issuing procedures and local guidelines, and handling any questions of policy interpretation, as well as determining the rights of any person to benefits under this policy. The decisions of the Corporate Human Resources Department shall be binding unless arbitrary and capricious.

(J.A. at 2708).

Under this provision, the Department was given discretion to interpret the terms of the separation pay policy when making eligibility determinations. Consequently, we apply the arbitrary and capricious standard when reviewing the Department's determination to deny plaintiffs' request for benefits. See Bruch, 489 U.S. 101, 103 L. Ed. 2d 80, 109 S. Ct. 948 ; Stoetzner v. United States Steel Corp., 897 F.2d 115, 119 (3d Cir. 1990) ("The arbitrary and capricious standard [applies] because the plan contains provisions which give[] the administrator discretion in making eligibility determinations.").

We have explained that when the arbitrary and capricious standard applies the decisionmaker's determination to deny benefits must be upheld unless it was "clear error" or not "rational." Shiffler v. Equitable Life Assurance Soc'y, 838 F.2d 78, 83 (3d Cir. 1988). To determine whether the Department's denial of plaintiffs' benefits was irrational or clearly erroneous here, we turn to an examination of the pertinent separation pay policy provisions governing eligibility.

The Hoechst Celanese Separation Pay Policy states:

1. Policy

It is the policy of Hoechst . . . to provide separation pay to eligible employees resulting from certain types of involuntary terminations of employment. . . .

2.1 Eligibility

All regular, full-time, salaried employees . . . who are involuntarily terminated from active employment due to

- sale of all or part of a business (where the acquiring or purchasing company does not offer continued employment)

are eligible for separation pay.

2.2 All regular, full time, salaried employees who are ...


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