Vickery v. Conagra Foods, Inc. et al
Filing
79
MEMORANDUM AND ORDER..... IT IS HEREBY ORDERED that defendants' motion for summary judgment is GRANTED. [Doc. 45] IT IS FURTHER ORDERED that plaintiff's motion for summary judgment is DENIED. [Doc. 51]IT IS FURTHER ORDERED that plaintiff's first motion for interim attorneys' fees is DENIED. [Doc. 39] An appropriate judgment will accompany this Memorandum and Order. Signed by District Judge Charles A. Shaw on 6/16/2016. (MRC)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
MICHAEL KENT VICKERY,
Plaintiff,
v.
CONAGRA FOODS, INC., et al.,
Defendants.
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No. 4:15-CV-797 CAS
MEMORANDUM AND ORDER
This matter is before the Court on cross-motions for summary judgment filed by plaintiff
Michael Kent Vickery, and defendants ConAgra Foods, Inc. (“ConAgra”) and Ralcorp Holdings,
Inc. Severance Plan for Exempt Administrative Employees Eligible for the Ralcorp Holdings, Inc.
Management Bonus Plan (the “Severance Plan” or “Plan”) (collectively referred to as “defendants”).
The motions are fully briefed and ready for decision. Also ready for decision is plaintiff’s Motion
for Interim Attorneys’ Fees. For the following reasons, the Court will grant defendants’ motion for
summary judgment and deny plaintiff’s motions for summary judgment and for interim attorneys’
fees.
I. Factual and Procedural Background
This is an action under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C.
§§ 1001, et seq. Plaintiff alleges he was employed by Ralcorp Holdings, Inc. (“Ralcorp”) in its
Medallion Foods division as a Senior Manager–Quality (Grade 17). Plaintiff was eligible for
participation in the Ralcorp Severance Plan, an ERISA employee welfare benefit plan. ConAgra
purchased Ralcorp on January 29, 2013 and expressly assumed the obligations and fiduciary duty
of the Severance Plan.
After the purchase by ConAgra, plaintiff continued as Senior
Manager–Quality (Grade 17) in the Medallion Foods division until April 14, 2014, when ConAgra
sold Medallion Foods to Shearer’s Foods, LLC, “thereby involuntarily terminating plaintiff.”
Complaint at 2, ¶ 4. Plaintiff’s employment with Shearer’s was terminated nine days later, on April
23, 2014.
Under Article II, Section B(1) of the Severance Plan, if an employee who qualifies for
Ralcorp’s Management Bonus Program and does not hold a position of Vice President or above is
involuntarily terminated other than for cause within 24 months following a Change in Control, the
employee will receive the equivalent of 52 weeks of base pay plus one week of base pay per year
of service. Plaintiff alleges that Ralcorp’s purchase by ConAgra constitutes a change in control
triggering the Severance Plan, and that he is eligible for severance pay of approximately $136,000
representing 59 weeks of base pay, because ConAgra involuntarily terminated him other than for
cause when it sold Medallion Foods to Shearer’s Foods on April 14, 2014, within the 24-month
window.
Plaintiff filed a claim for benefits under the Severance Plan on May 19, 2014. ConAgra and
the Plan Administrator denied his claim on August 26, 2014. Plaintiff filed an appeal of the denial
of benefits which was denied by ConAgra and the Plan Administrator on November 24, 2014.
Plaintiff then filed this action alleging the defendants breached their fiduciary duties under ERISA
by failing to (1) pay severance benefits as required under the Severance Plan (Count I); (2) pay
plaintiff’s attorney fees and costs on an ongoing, as-incurred basis (Count II); and (3) require
Shearer’s Foods to assume the Severance Plan (Count III).
II. Legal Standard
The Eighth Circuit Court of Appeals has restated the applicable standards relating to
summary judgment as follows:
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Summary judgment is proper if the pleadings, the discovery and disclosure materials
on file, and any affidavits show that there is no genuine issue as to any material fact
and that the movant is entitled to judgment as a matter of law. The movant bears the
initial responsibility of informing the district court of the basis for its motion, and
must identify those portions of the record which it believes demonstrate the absence
of a genuine issue of material fact. If the movant does so, the nonmovant must
respond by submitting evidentiary materials that set out specific facts showing that
there is a genuine issue for trial. On a motion for summary judgment, facts must be
viewed in the light most favorable to the nonmoving party only if there is a genuine
dispute as to those facts. Credibility determinations, the weighing of the evidence,
and the drawing of legitimate inferences from the facts are jury functions, not those
of a judge. The nonmovant must do more than simply show that there is some
metaphysical doubt as to the material facts, and must come forward with specific
facts showing that there is a genuine issue for trial. 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.
Torgerson v. City of Rochester, 643 F.3d 1031, 1043 (8th Cir. 2011) (en banc) (internal citations
and quotation marks omitted).
Where parties file cross-motions for summary judgment, as here, each summary judgment
motion must be evaluated independently to determine whether a genuine dispute of material fact
exists and whether the movant is entitled to judgment as a matter of law. Husinga v. Federal-Mogul
Ignition Co., 519 F.Supp.2d 929, 942 (S.D. Iowa 2007). “[T]he filing of cross motions for summary
judgment does not necessarily indicate that there is no dispute as to a material fact, or have the effect
of submitting the cause to a plenary determination on the merits.” Wermager v. Cormorant Twp.
Bd., 716 F.2d 1211, 1214 (8th Cir. 1983).
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III. Undisputed Facts1
Plaintiff’s Employment and Termination
On January 29, 2013, ConAgra acquired Ralcorp. Prior to the acquisition, plaintiff was
employed by Ralcorp’s Medallion Foods division in the position of Senior Manager-Quality (Grade
17). Plaintiff continued working for ConAgra after the acquisition in the same position. In his
employment with both Ralcorp and ConAgra, plaintiff was eligible to receive severance benefits
under the Severance Plan, provided he met certain eligibility requirements. The Severance Plan is
an employee benefit plan governed by ERISA.
After ConAgra purchased Ralcorp, plaintiff continued as Senior Manager–Quality (Grade
17) in the Medallion Foods division until April 14, 2014, when ConAgra sold Medallion Foods to
Shearer’s Foods, LLC. Nine days later, on April 23, 2014, Shearer’s terminated plaintiff’s
employment for reasons that are not in the record. Under Section 10.3 of the Asset Purchase
Agreement between ConAgra and Shearer’s, former ConAgra employees later terminated by
Shearer’s were to be given credit for prior periods of service with Ralcorp and ConAgra as follows:
1
The facts are taken from Plaintiff’s Statement of Undisputed Facts Supporting Plaintiff’s
Motion for Summary Judgment as to Count I (Doc. 53), Defendants’ Statement of Uncontroverted
Material Facts in Support of their Motion for Summary Judgment (Doc. 47), Plaintiff’s Response
to Defendants’ Statement of Uncontroverted Material Facts in Support of their Motion for Summary
Judgment (Doc. 58), Defendants’ Response in Opposition to Plaintiff’s Statement of Undisputed
Facts in Support of his Motion for Summary Judgment (Doc. 67), Defendants’ Statement of
Uncontroverted Material Facts in Support of their Response in Opposition to Plaintiff’s Motion for
Summary Judgment (Doc. 66), Defendants’ Statement of Uncontroverted Material Facts in Support
of their Reply in Support of their Motion for Summary Judgment (Doc. 69), Defendants’ Reply to
Plaintiff’s Response to Defendants’ Statement of Uncontroverted Material Facts in Support of their
Motion for Summary Judgment (Doc. 70), Plaintiff’s Amended Statement of Undisputed Facts
Supporting Plaintiff’s Motion for Summary Judgment (Doc. 75), and Plaintiff’s Reply to
Defendants’ Statement of Uncontorverted [sic] Material Facts in Support of their Response in
Opposition to Plaintiff’s Motion for Summary Judgment (Doc. 76).
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[Shearer’s] shall provide severance benefits to Hired Employees who are terminated
by [Shearer’s] . . . within the twelve (12) month period following Closing consistent
with the severance benefits payable under the severance policy maintained by
[Shearer’s] with respect to its other similarly situated employees and . . . [Shearer’s]
shall give credit for prior periods of service with [ConAgra] or its Affiliates.
In connection with the termination of plaintiff’s employment by Shearer’s, plaintiff and
Shearer’s entered into a Separation and Release Agreement (“Separation Agreement”) under which
Shearer’s agreed to (1) pay plaintiff’s base salary for a period of 16 weeks; (2) pay the cost of
plaintiff’s coverage under Shearer’s medical insurance plan through August 15, 2014; and (3) not
oppose plaintiff’s application for unemployment compensation benefits.
In paragraph 6 of the Separation Agreement, titled “Release,” plaintiff agreed to release
Shearer’s “together with any and all affiliated or related businesses or corporations, as well as its
and their predecessors, parents, subsidiaries, affiliates, agents” and others “from any and all claims,
demands, . . . proceedings, costs, expenses, causes of action, orders, obligations, contracts,
agreements . . . and liabilities whatsoever, . . . arising from the beginning of time through and
including the Effective Date” of the Separation Agreement, including but not limited to “any and
all Claims and/or demands for back pay, reinstatement, hire or re-hire, front pay, stock options,
group insurance, or employee benefits of whatsoever kind, . . . any and all Claims arising out of or
relating to the cessation of Employee’s employment” with Shearer’s, including but not limited to
claims under ERISA. Administrative Record (“AR”), Defs.’ Ex. A, AR000032.
Terms of the Severance Plan
The Severance Plan states at Article II, Section B(1) that “if an employee is involuntarily
terminated by the Company other than for Cause . . . within 24 months following a Change in
Control . . . then the Employee will receive the following: … Fifty-two (52) weeks of Base Pay plus
one (1) week of Base Pay per year of service.” The Severance Plan does not define the term
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“involuntarily terminated.” The Severance Plan also states at Article II, Section B(2) that other
benefits and payments are due to employees who are terminated in the context of a Change in
Control, including a company contribution towards the employee’s COBRA health insurance and
outplacement services.
The acquisition of Ralcorp by ConAgra on January 29, 2013 constituted the required
“Change in Control” as that term is defined in the Severance Plan, and ConAgra assumed the
Severance Plan when it acquired Ralcorp. Plaintiff was employed by ConAgra in the Medallion
Foods division until April 14, 2014, and his base salary was $119,885.00 per year when his
employment with ConAgra ended.
The terms of the sale of the Medallion Foods division from ConAgra to Shearer’s are
outlined in the Asset Purchase Agreement. The sale of the Medallion Foods division from ConAgra
to Shearer’s occurred within the 24-month period following a “Change in Control” described in the
Severance Plan. Plaintiff was terminated from his employment with Shearer’s on April 23, 2014,
less than 24 months after the Change in Control.
If a dispute arises between ConAgra Foods and an employee over whether benefits are owed,
the employee must file a claim for benefits in accordance with the procedure outlined in Article IV,
Section A of the Severance Plan. If the Plan Administrator denies the claim and the employee
disagrees with the denial, the employee may appeal to the Benefit Administration Committee
(“EBAC”). The appeal must state why the employee believes his or her claim should have been
approved and must be supported by relevant information or documents.
Article IV, Section A.8. of the Severance Plan gives the Plan Administrator and the EBAC
“the exclusive discretionary authority to construe and interpret the [Severance] Plan [and] to decide
all questions of eligibility for benefits,” including the discretion to decide whether an employee was
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“involuntarily terminated.” The Severance Plan states that the Plan Administrator and EBAC’s
“decisions on such matters are final, conclusive and binding on all parties,” and “[a]ny interpretation
or determination made pursuant to such discretionary authority shall be upheld on judicial review,
unless it is shown that the interpretation or determination was an abuse of discretion (i.e., arbitrary
and capricious).”
The attorneys’ fees provision in the Severance Plan—Article IV, Section B—states:
In connection with or after a Change in Control, the Company shall pay to the
Employee as incurred all legal and accounting fees and expenses incurred by the
Employee in seeking to obtain or enforce any right or benefit provided by this Plan
under Article II(B), unless the Employee’s claim is found by a court of competent
jurisdiction to have been frivolous. Any such reimbursements or payments that are
taxable to the Employee shall be subject to the following restriction: each
reimbursement or payment must be paid no later than the last day of the calendar
year following the calendar year during which the expense was incurred or tax was
remitted, as the case may be.
Plaintiff’s Claim for Severance Benefits
On May 19, 2014, after plaintiff’s employment was terminated by Shearer’s, he made a claim
to the Plan Administrator for benefits pursuant to the Severance Plan. Vickery alleged that ConAgra
involuntarily terminated his employment other than for Cause on April 14, 2014, when it closed on
its sale of Medallion Foods to Shearer’s, that the termination fell within the 24-month period
following the Change in Control effected by ConAgra’s purchase of Ralcorp, and that he otherwise
met the requirement for a “Termination in the Context of a Change in Control” under the Severance
Plan. Vickery claimed lump sum severance in the amount of 59 weeks of base pay ($136,023.37),
twelve weeks of ConAgra-subsidized COBRA health care continuation benefits, lump sum
acceleration of performance bonuses, and outplacement services for two years.
ConAgra as Plan Administrator, through its Executive Vice President and Chief Human
Resources Officer Nicole B. Theophilus, denied plaintiff’s claim for severance benefits on August
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26, 2014. The stated reason for denial was that the Plan Administrator determined the circumstances
of plaintiff’s “purported termination” did not qualify him for severance benefits because in
connection with the sale of Medallion Foods, plaintiff “was offered and accepted continuing
employment that was indistinguishable from his employment with Ralcorp/ConAgra Foods. He
suffered no period of unemployment or lack of work because of the transfer of ownership.” The
denial also noted that plaintiff’s “seniority with Ralcorp/ConAgra Foods was honored when he
already received severance compensation from Medallion.”
On September 26, 2014, plaintiff appealed the denial of his claim for benefits under the
Severance Plan. On appeal, plaintiff reiterated his position that ConAgra involuntarily terminated
his employment other than for Cause on April 14, 2014, when it closed on the sale of Medallion
Foods to Shearer’s, that the termination fell within the twenty-four month period following the
Change in Control effected by ConAgra’s purchase of Ralcorp, and that he otherwise met the
requirement for a “Termination in the Context of a Change in Control” under the Severance Plan.
Plaintiff’s appeal also challenged the basis of the Plan Administrator’s decision to deny his claim,
arguing that “nothing in the Severance Plan disqualifies an employee for suffering no period of
unemployment or lack of work after termination. Mitigation is not a factor for ‘Termination in the
Context of a Change in Control’ under the Severance Plan.” Plaintiff also alleged that his
“employment with the successor company clearly was never contemplated by the buyer,” as he was
terminated from Shearer’s on April 23, 2014.
The EBAC met on November 21, 2014 to review plaintiff’s appeal, and upheld the Plan
Administrator’s denial of plaintiff’s claim for severance benefits. The members of the EBAC were
Nicole Theophilus, Charlie Salter, the Vice President of Compensation and Benefits, and Bart
Karlson, the Senior Director of Human Resources.
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The EBAC explained its reasoning for denying plaintiff’s appeal, stating first that it had the
discretionary authority pursuant to under Article IV, Section A(8) of the Plan to interpret and
construe the Plan. The EBAC stated its conclusion that plaintiff was not entitled to severance
benefits under the Plan because (1) plaintiff was not “involuntarily terminated” as required by the
Plan to obtain benefits because he accepted and continued employment with Shearer’s under terms
and conditions that were “nearly identical in all material respects to his employment with [ConAgra]
immediately prior to the sale”; (2) plaintiff’s “employment continued interrupted and without
incurring a termination of employment as required by the Plan”; and (3) the Sales Agreement
between ConAgra and Shearer’s was written to protect plaintiff and others similarly situated in the
event employment with Shearer’s ended following the sale, and if plaintiff were to receive severance
benefits from both ConAgra and Shearer’s, “he would be receiving an unjust windfall that was
neither contemplated nor supported by the Plan.” AR000065-66.
None of the individuals involved in making the decisions on plaintiff’s claims for benefits
exercised control over Severance Plan funds at any time, had a financial interest in the outcome of
the claims process, or received a bonus or other compensation based on the outcome of any claim
decision related to the Severance Plan.
Plaintiff’s Claim for Interim Attorneys’ Fees
The attorneys’ fees provision in the Severance Plan – Article IV, Section B – states:
Legal Fees/Accounting Expenses. In connection with or after a Change in Control,
the Company shall pay to the Employee as incurred all legal and accounting fees and
expenses incurred by the Employee in seeking to obtain or enforce any right or
benefit provided by this Plan under Article II(B), unless the Employee’s claim is
found by a court of competent jurisdiction to have been frivolous. Any such
reimbursements or payments that are taxable to the Employee shall be subject to the
following restriction: each reimbursement or payment must be paid no later than the
last day of the calendar year following the calendar year during which the expense
was incurred or tax was remitted, as the case may be.
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AR000012.
Plaintiff first contacted his attorneys in connection with this matter on April 17, 2014, before
he signed the Separation Agreement with Shearer’s, and a little over thirty days before he filed his
initial claim for severance benefits with ConAgra on May 19, 2014.
Plaintiff’s Claim for Breach of Fiduciary Duty - Count III
The “successors and assigns” provision of the Severance Plan – Article IV, Section G –
states:
Successors and Assigns. This Plan shall be binding upon the Company and any
successor to the Company, including any persons acquiring directly or indirectly all
or substantially all of the business or assets of the Company by purchase, merger,
consolidation, reorganization, or otherwise. Any such successor shall thereafter be
deemed to be the “Company” for purposes of this Plan, and the term “Company”
shall include Ralcorp Holdings, Inc. to the extent advantageous to the Employees by
providing them with the benefits intended under this Plan. However, this Plan and
the Company’s obligations under this Plan are not otherwise assignable, transferable,
or delegable by the Company. By written agreement, the Company shall require any
successor to all or substantially all of the business or assets of the Company
expressly to assume and agree to honor this Plan in the same manner and to the same
extent the Company would be required to honor this Plan if no such succession had
occurred.
AR000012-13. The “Overview” section of the Plan, Article I, Section A, defines the term
“Company” to mean “Ralcorp Holdings, Inc. or its participating subsidiaries and affiliates.”
AR000001.
The Asset Purchase Agreement between Medallion Foods, ConAgra and Shearer’s relates
to one facility only, located in Newport, Arkansas. Medallion’s Newport, Arkansas facility was one
of more than forty that ConAgra acquired when it purchased Ralcorp. Medallion Foods comprised
2% of Ralcorp’s total assets at the time of the sale of Medallion to Shearer’s.
Article X, Section 10.3 of the Asset Purchase Agreement only required Shearer’s to provide
severance benefits to former ConAgra employees consistent with the terms of its own severance
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policies, while giving credit for prior periods of service with ConAgra. Shearer’s severance policy,
as reflected in the Separation Agreement, provided plaintiff with sixteen weeks of his base
compensation and sixteen weeks of fully paid COBRA health coverage. Under ConAgra’s
Severance Plan, plaintiff claimed entitlement to fifty-nine weeks of base pay, twelve weeks of
subsidized COBRA health coverage, and two years of outplacement services.
IV. Discussion
A. Standard of Review
The Plan provides that ConAgra, as a plan fiduciary, shall have “the exclusive discretionary
authority to construe and interpret the [Severance] Plan [and] to decide all questions of eligibility
for benefits.” Where plan language grants an administrator this type of discretion, the Court must
review the “administrator’s construction of the plan terms for an abuse of discretion[.]” Silva v.
Metropolitan Life Ins. Co., 762 F.3d 711, 717 (8th Cir. 2014) (quoted case omitted); Firestone Tire
and Rubber Co. v. Bruch, 489 U.S. 101 (1989). “[A]n administrator’s decision is upheld if it is
reasonable, that is, supported by substantial evidence . . . [which] means ‘more than a scintilla but
less than a preponderance.’” Silva, 762 F.3d at 717 (quoting Darvell v. Life Ins. Co. of N. Am., 597
F.3d 929, 934 (8th Cir. 2010) (citations omitted)).
“Under the abuse of discretion standard of review, “we must uphold [a plan
administrator’s] decision so long as it is based on a reasonable interpretation of the
Plan and is supported by substantial evidence.” Hampton v. Reliance Standard Life
Ins. Co., 769 F.3d 597, 600 (8th Cir. 2014). A decision is reasonable “if a reasonable
person could have reached a similar decision, given the evidence before him, not that
a reasonable person would have reached that decision.” Midgett v. Wash. Grp. Int’l
Long Term Disability Plan, 561 F.3d 887, 897 (8th Cir. 2009) (quotation omitted).
. . . . Where a plan fiduciary offered a reasonable interpretation of a disputed plan
provision, “courts may not replace it with an interpretation of their own -- and
therefore cannot disturb as an ‘abuse of discretion’ the challenged benefits
determination.” King, 414 F.3d at 999 (quotation and alteration omitted).”
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Ingram v. Terminal Railroad Ass’n of St. Louis Pension Plan for Nonschedule Employees, 812 F.3d
628, 634 (8th Cir. 2016). “Any reasonable decision will stand, even if the court would interpret the
language differently as an original matter.” Manning v. American Republic Ins. Co., 604 F;3d 1030,
1038 (8th Cir. 2010) (cited cases omitted).
Here, ConAgra was responsible both for determining participants’ eligibility for benefits and
also for paying those benefits. “This dual role creates a conflict of interest.” Silva, 762 F.3d at 717
(citing Manning v. American Rep. Ins. Co., 604 F.3d 1030, 1038 (8th Cir. 2010)). Where such a
conflict exists it can “trigger a less deferential standard of review” by reviewing courts. Id. at 718;
see Firestone, 489 U.S. at 115. While the Eighth Circuit “has not definitively articulated what that
less deferential standard of review should be, . . . ‘a reviewing court should consider that conflict
as a factor’ when determining if an administrator has abused its discretion.” Silva, 762 F.3d at 718.
“The simple fact a conflict exists, however, does not eliminate the administrator’s discretion or
change [a court’s] review of the administrator’s decision to de novo review.” Yafei Huang v. Life
Ins. Co. of N. Am., 801 F.3d 892, 898 (8th Cir. 2015).
B. Count I - § 1132(a)(1)(B) Claim
Section 1132(a)(1)(B) authorizes a plan participant such as plaintiff to bring a civil action
“to recover benefits due to him under the terms of his plan.” In Count I, plaintiff asserts a claim for
severance benefits under § 1132(a)(1)(B). Both parties moves for summary judgment on Count I.
Defendants argue that plaintiff is not entitled to “recover benefits due to him under the terms of his
plan” because the Plan’s terms required plaintiff to have been involuntarily terminated in order to
be eligible for severance benefits. Plaintiff argues that he was involuntarily terminated when
ConAgra sold Medallion Foods to Shearer’s, and that § 1132(a)(1)(B) entitles him to severance
benefits owed under the Plan.
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To succeed, plaintiff must show that ConAgra’s determination he was not “involuntarily
terminated” when the sale occurred was an abuse of discretion. See Silva, 762 F.3d at 718. Five
factors are relevant to determining whether the plan administrator’s decision is an abuse of
discretion: “(1) whether the administrator’s language is contrary to the clear language of the plan;
(2) whether the interpretation conflicts with the substantive or procedural requirements of ERISA;
(3) whether the interpretation renders any language in the plan meaningless or internally
inconsistent; (4) whether the interpretation is consistent with the goals of the plan; and (5) whether
the administrator has consistently followed the interpretation.” Manning, 604 F.3d at 1041-42. In
addition to the five factors, the Court must “keep in mind [ConAgra’s] conflict and weigh that
accordingly.” Silva, 762 F.3d at 718.
Here, plaintiff’s § 1132(a)(1)(B) claim turns on the following question: Was it an abuse of
discretion for ConAgra to interpret the undefined Plan term “involuntarily terminated [by the
Company]” to mean that where Medallion Foods’ purchaser initially retained plaintiff in his same
position, such that he suffered no period of unemployment as a result of the purchase, plaintiff was
not “involuntarily terminated” under the Plan when the purchaser ended his employment nine days
later?
Plaintiff contends he is entitled to severance benefits under the plain language of the Plan
because it provides that if an employee is involuntarily terminated other than for cause within 24
months of a Change in Control, the employee is entitled to severance pay and other benefits.
Plaintiff asserts it is uncontroverted that (1) the sale of Ralcorp to ConAgra in 2013 constituted the
requisite Change in Control, and (2) he was terminated other than for cause within twenty-four
months of that Change in Control, and therefore under the Plan’s plain language he is entitled to
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severance pay and benefits. Plaintiff argues that nothing in the Plan’s language requires him to
suffer a period of unemployment or a lack of work to be eligible for severance pay and benefits.
Defendants respond there is substantial evidence to support their determination that plaintiff
was not eligible for severance benefits under the Plan because he did not meet its eligibility criteria.
Defendants argue that plaintiff was not “involuntarily terminated” where he accepted employment
with Shearer’s, experienced no gap in employment because of the sale of Medallion Foods, and
maintained the same job title, base compensation and benefit entitlement.2 Defendants cite several
Eighth Circuit cases in support of their argument with respect to the requirement of a period of
unemployment: Lakey v. Remington Arms Co., 874 F.2d 541 (8th Cir. 1989); Harper v. R.H. Macy
& Co., 920 F.2d 544, 545 (8th Cir. 1990) (holding former employer did not permanently terminate
employees within meaning of the ERISA benefit plan to entitle them to benefits when they
continued in their employment with the purchaser uninterrupted and on comparable terms); Agee
v. Armour Foods Co., 834 F.2d 144 (8th Cir. 1987) (employees laid off by initial employer and
immediately rehired by employee’s successor are not entitled to severance pay); Acton v. Tosco, 815
F.2d 1161 (8th Cir. 1986) (same); Pabst Brewing Co. v. Anger, 610 F. Supp. 214 (D. Minn. 1985),
aff’d, 784 F.2d 338 (8th Cir. 1986) (same).
The defendants state that because the term “involuntarily terminated” is not defined in the
Plan, the Plan Administrator and EBAC have the exclusive authority to interpret its meaning, and
their interpretation was not an abuse of discretion where they considered that (1) plaintiff’s role
before and after the sale to Shearer’s was the same; (2) his employment continued uninterrupted;
2
Plaintiff argues that he did not have the same benefit entitlement with Shearer’s because it
did not offer the same severance benefits as Ralcorp/ConAgra. As stated above in the Facts section,
plaintiff was entitled to 59 weeks of base compensation under the Severance Plan, and received only
16 weeks of base compensation under the Separation Agreement he signed with Shearer’s.
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and (3) he experienced no change in his base compensation or benefit entitlement. Defendants also
assert that other Plan provisions indicate the Plan’s goal was to assist employees during periods of
unemployment and that an individual must be unemployed to receive benefits.
The defendants also state it was not an abuse of discretion to deny plaintiff’s claims for
benefits because the Plan Administrator and EBAC also considered that plaintiff filed a claim for
severance benefits only after he received a severance package from Shearer’s that gave credit to his
prior periods of service with ConAgra and Ralcorp. Defendants argue that plaintiff is not entitled
to receive severance benefits from both Shearer’s and ConAgra under the facts of this case, and to
award “double benefits” would constitute an unfair windfall.3 Finally, defendants state that the Plan
Administrator and EBAC considered that the Separation Agreement plaintiff signed with Shearer’s
upon the termination of his employment listed as included releasees all of Shearer’s predecessors.
As an initial matter, none of the Eighth Circuit cases defendants cite in support of their
assertion that a period of unemployment or lack of work is required under the Plan are controlling
under the facts of this case. Although the Eighth Circuit “has frequently held that the sale or
discontinuance of a business does not entitle employees to benefits under a severance plan if a new
or successor employer continues their employment without interruption under substantially identical
terms and conditions,” Schroeder v. Phillips Petroleum Co., 17 F.3d 1147 (8th Cir. 1994), in each
case the Eighth Circuit focused on the plan language at issue in the context of the facts presented.
“The plan, in short, is at the center of ERISA.” US Airways, Inc. v. McCutchen, 133 S. Ct. 1537,
3
While it would be an unfair windfall for plaintiff to receive a full 59 weeks of severance pay
from defendants under these circumstances, the Court disagrees with defendants’ assertion that
plaintiff’s recovery of any Plan severance benefits would necessarily constitute a windfall. As
previously stated, plaintiff received 16 weeks of base severance pay from Shearer’s, but was entitled
to 59 weeks of base severance pay under the Plan. It would not constitute a windfall if plaintiff were
to receive severance pay under the Plan, reduced by the amount of severance pay and the value of
the additional four weeks of COBRA benefits he received under the Separation Agreement.
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1548 (2013). A “claim for separation benefits is really a claim to enforce a contract.” Anstett v.
Eagle-Pilcher Indus., Inc., 203 F.3d 501, 403 (7th Cir. 2000).
In contrast to the present case where the focus is on the undefined term “involuntarily
terminated,” express plan language in each of defendants’ cited cases established that a lack of work
or a period of unemployment was a prerequisite to entitlement to severance benefits, or specifically
disqualified employees who had a continuity of employment with a successor employer.4 Because
the Severance Plan lacks this type of specific language, defendants cannot prevail merely by citing
to Eighth Circuit decisions. The Court believes the instant case presents a closer question as to
4
For example, in Lakey v. Remington Arms Co., Inc., 874 F.2d 541, 545 (8th Cir. 1989), the
severance plan provided in pertinent part:
4. Severance pay payments may not be made under any conditions unless and until:
a. the employee is terminated from the permanent roll of the company, and
b. the termination is caused by lack of work.
The Eighth Circuit concluded that both a termination and a lack of work “must be present to activate
[the] severance pay policy,” and that the “language in the policy document requiring a lack of work
as a prerequisite to severance pay is clear.” Id. In Harper v. R.H. Macy & Co., Inc., 920 F.2d 544,
545 (8th Cir. 1990), the plan provided a severance allowance when an employee is “permanently
terminated or laid-off for periods that exceed 90 days.” In Agee v. Armour Foods Co., 672 F. Supp.
1210, aff’d, 834 F.2d 144 (8th Cir. 1987) (per curiam), the policy provided separation pay to fulltime employees whose employment was terminated by Armour through no fault of the employee,
but specified that no separation pay would be paid to employees who refused a comparable job
offered by Armour, a subsidiary or successor company, “or if there is continuity of employment with
the successor company.” 672 F. Supp. at 1219. In Pabst Brewing Co. v. Anger, 784 F.2d 338, 338
(8th Cir. 1986) (per curiam), the Eighth Circuit stated the “question presented is whether the former
Pabst employees suffered a ‘layoff,’ defined as ‘a permanent, involuntary separation without cause,’
when they ceased to be employees of Pabst upon transfer of the Olympia brewery to Stroh’s.” Id.
Where the employees continued to work without interruption, some at a higher rate of pay –
although they lost certain Pabst benefits including the right to participate in its employee stock
ownership plan – the Eighth Circuit held it was reasonable for Pabst to interpret the term “layoff”
as not applying to this set of facts. Id. Finally, in Acton v. Tosco Corp., 815 F.2d 1161, 1162 (8th
Cir. 1986) (per curiam), the severance pay policy stated that “[a]t such times that layoffs, regretfully,
become necessary due to shifts in business direction, economic conditions, or other reasons, it is
Tosco’s policy to ease the transition for those employees who have been laid off by providing
severance pay[.]” The Eighth Circuit concluded it “cannot be said that Tosco’s decision to deny
benefits contravened the plain terms of the plan. Read as a whole, the severance plan anticipated
that the recipient of the benefits be without employment.” Id. at 1162-63.
16
whether the defendants’ decision to deny benefits was reasonable, and turns to consideration of the
five relevant factors.
First, the defendants’ interpretation is not contrary to the clear language of the Plan, although
it does read into the Plan a requirement that employees must suffer a period of unemployment in
order to receive severance benefits. Article II.B.1. of the Plan states that participants may be eligible
for benefits if they are “involuntarily terminated” within 24 months following a Change in Control,
or if they terminate their employment for “Good Reason.” While “Change in Control” and “Good
Reason” are defined terms in the Plan, “involuntarily terminated” is not. As a result, the term does
not have a clear meaning and under Article IV.A.8., the Plan Administrator and the EBAC have the
exclusive authority to interpret its meaning.
Thus, the question is whether the Plan Administrator and the EBAC’s interpretation of
“involuntary termination” is an abuse of discretion. Here, the Plan Administrator and the EBAC
considered several undisputed facts when deciding to deny plaintiff’s claim for benefits: (1)
plaintiff’s position before and after the sale to Shearer’s was the same; (2) his employment continued
uninterrupted; (3) he experienced no change in his base compensation; and (4) he received severance
pay from Shearer’s that was based on his years of employment with Ralcorp/Conagra. The Court
finds these facts constitute “substantial evidence” to support the Plan Administrator and the EBAC’s
determination that plaintiff was not “involuntarily terminated” within the meaning of the Plan.
Second, the defendants’ interpretation does not conflict with the substantive or procedural
requirements of ERISA, because “ERISA does not create any substantive entitlement to employerprovided severance benefits or any other kind of welfare benefits,” Curtiss-Wright Corp. v.
Schoonejongen, 514 U.S. 73, 78 (1996), and ERISA’s procedural requirements regarding the claims
17
and review process, see 29 U.S.C. § 1133, 29 C.F.R. § 2560.503-1(f) and (g), were satisfied through
the internal procedures under the Plan.
Third, the Plan Administrator and the EBAC’s interpretation does not render any language
in the Plan meaningless or internally inconsistent. It also appears to be consistent with inferences
that can be drawn from other Plan provisions. These provisions include requirements in the general
eligibility section, Article I, that an employee return all company property within ten days of
termination, Art. I.B.2., and cooperate in the efficient and orderly transfer of his or her duties to
other employees, Art. I.B.4., which would not apply to a person in plaintiff’s position who continues
working at the same facility in the same position. Other severance benefits provided by the Plan,
COBRA healthcare continuation coverage and outplacement services, are also consistent with the
interpretation that an employee must suffer a period of unemployment or lack of work to qualify for
the benefits, as a person who did not become unemployed is less likely to need these types of
benefits. In addition, the COBRA healthcare benefits are only payable “for a period of 12 weeks
. . . or until such time that Employee retains group health coverage under a subsequent employer
plan.” Art. II.3.a. This language contemplates that the person would be unemployed for a period
of time.
As to the fourth factor, the Plan does not expressly articulate its goals. When read in its
entirety and considering the provisions discussed immediately above, the Plan is susceptible to the
interpretation that it is intended to assist employees during periods of unemployment. As such, the
interpretation that an employee must suffer a period of unemployment or lack of work to qualify for
receipt of severance pay and benefits cannot be said to be inconsistent with the Plan’s goals.
18
There is no evidence in the record as to whether the Plan Administrator has consistently
followed the interpretation it implemented here, so the fifth factor is neutral in determining
reasonableness.
Finally, the Court considers the conflict of interest that exists as a result of ConAgra’s dual
role of determining eligibility for benefits and being the entity responsible for paying those benefits.
See Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 108 (2008). The significance of this factor
depends on the circumstances of the particular case. Id. When an insurer has a history of biased
claims administration, for example, the conflict may be given substantial weight. Id. at 117. When
an insurer has taken steps to reduce potential bias and promote accurate eligibility determinations,
the conflict should be given much less weight. Id.
Here, the record does not contain any evidence of biased claims administration. The
defendants presented evidence that none of the ConAgra employees involved in the claims or review
process on plaintiff’s claim for severance benefits (1) exercised control over Severance Plan funds
at any time, (2) had a financial interest in the outcome of the claims process, or (3) received a bonus
or other compensation based on the outcome of any claim decision related to the Plan. Plaintiff
contends it is “naïve and disingenuous” for defendants to assert that the committee, Plan
Administrator or EBAC were “walled off” from the financial repercussions of claim administration
on ConAgra, pointing to evidence that at the time his claim and appeal were denied, ConAgra’s
website stated that its operating profit had decreased significantly, it was facing “continued profit
challenges,” and it was “disappointed with fiscal 2014 overall, and . . . [had] a very focused sense
of urgency directed toward improving [its] results.” Plaintiff also asserts that the appeal process was
not separated from the claim process because the ConAgra employee who acted as Plan
Administrator also served as a member of the EBAC, and one of the members of the Severance Plan
19
Committee emailed the EBAC a summary document about the appeal “including recommendations,”
and stated she would appear at the EBAC meeting to “walk through the summary document” and
answer questions.
The Court takes ConAgra’s conflict of interest into account and recognizes that the
defendants had a financial interest in denying plaintiff’s claim. The Court also recognizes that
ConAgra took steps to reduce potential bias by separating the persons involved in the claims and
review process from any financial role in connection with the Plan. Plaintiff does not offer any legal
authority to support his assertion that the conflict of interest is exacerbated by the overlap and
interaction of personnel between the claims and review processes. See, e.g., Brandis v. Kaiser
Aluminum & Chem. Corp., 47 F.3d 947, 950 (8th Cir. 1995) (employee can serve a dual role as
employee and plan fiduciary) (citing 29 U.S.C. § 1108(c)(3)); see also Barnhart v. UNUM Life Ins.
Co., 179 F.3d 583, 588 (8th Cir. 1999) (“ERISA itself contemplated the use of fiduciaries who might
not be entirely neutral”). The Court gives the conflict of interest some weight as one factor in the
analysis, but finds that its existence does not alter the outcome under the abuse of discretion
analysis.
Based on the relevant factors as discussed above, analyzed under the abuse of discretion
standard with the defendants’ conflict of interest in mind, the Court ultimately concludes the
defendants did not abuse their discretion in denying plaintiff’s claim for severance pay and benefits,
and the decision was reasonable as it is supported by substantial evidence. Although the Court
might well have reached a different decision under a de novo standard of review, the defendants’
interpretation of the term “involuntarily terminated” as requiring an employee to suffer a period of
unemployment or lack of work to be eligible for severance pay is reasonable under the facts of this
case: A reasonable person could have reached the same decision, and it is supported by substantial
20
evidence as that term is defined by the Eighth Circuit. See Silva, 762 F.3d at 717. The defendants
are therefore entitled to summary judgment on plaintiff’s ERISA § 1132(a)(1)(B) claim in Count
I.
In the alternative, if it was an abuse of discretion for defendants to interpret the term
“involuntarily terminated” to require a period of unemployment as eligibility for severance benefits
under the Plan, the Court finds that plaintiff released any claim against the defendants for Plan
severance benefits by virtue of the release provision contained in the Separation Agreement. That
broadly worded provision released Shearer’s and any of its predecessors from any and all claims
arising out of or relating to the cessation of plaintiff’s employment with Shearer’s, including claims
for employment benefits and causes of action under ERISA.
C. Count II - Breach of Fiduciary Duty - Attorneys’ Fees
In Count II, plaintiff asserts a breach of fiduciary claim under ERISA § 502(a)(3), 29 U.S.C.
§ 1132(a)(3), for defendants’ failure to pay his attorneys’ fees, as incurred, in compliance with
Article IV, Section B of the Severance Plan.
In relevant part, 29 U.S.C. § 1132(a) allows a civil action to be brought:
(1) by a participant or beneficiary—
(A) for the relief provided for in subsection (c) of this section, or
(B) 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;
....
(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates
any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate
equitable relief (i) to redress such violations or (ii) to enforce any provisions of this
subchapter or the terms of the plan;
29 U.S.C. § 1132(a)(1), (3).
21
The relevant Plan language states:
Legal Fees/Accounting Expenses. In connection with or after a Change in Control,
the Company shall pay to the Employee as incurred all legal and accounting fees and
expenses incurred by the Employee in seeking to obtain or enforce any right or
benefit provided by this Plan under Article II(B), unless the Employee’s claim is
found by a court of competent jurisdiction to have been frivolous. Any such
reimbursements or payments that are taxable to the Employee shall be subject to the
following restriction: each reimbursement or payment must be paid no later than the
last day of the calendar year following the calendar year during which the expense
was incurred or tax was remitted, as the case may be.
AR000011.
Plaintiff asserts that under the plain language of Article IV.B., he is entitled to payment “as
incurred [of] all legal and accounting fees and expenses incurred by the Employee in seeking to
obtain or enforce any right or benefit provided by [the] Plan under Article II(B), unless the
Employee’s claim is found to be frivolous . . . .” Plaintiff moves for summary judgment on this
claim asserting that the defendants have breached their fiduciary duty under ERISA § 404(a)(1)(D),
29 U.S.C. § 1104(a)(1)(D), by failing and refusing to pay his attorneys’ fees as incurred. Plaintiff
contends that because he has made a claim for severance pay and benefits, which has not been found
by a court to be frivolous, he meets all requirements of the Plan’s language and is entitled to
summary judgment on Count II.
Defendants assert they are entitled to summary judgment on plaintiff’s breach of fiduciary
duty claim for the denial of his attorneys’ fees for two reasons: (1) an ERISA plaintiff must exhaust
his administrative remedies before filing a claim for breach of fiduciary duty, and here plaintiff
failed to exhaust administrative remedies with respect to his claim for attorneys’ fees; and (2)
plaintiff cannot meet his burden to prove a breach of fiduciary duty, as he has no evidence the denial
was an abuse of discretion because he did not undertake any discovery into the Plan Administrator’s
rationale for denying his claim for attorneys’ fees.
22
In support of their administrative exhaustion argument, defendants cite Goewert v. Hartford
Life & Accident Insurance Co., 442 F.Supp.2d 724, 728 n.1 (E.D. Mo. 2006), Lindemann v. Mobil
Oil Corp., 79 F.3d 647, 649 (7th Cir. 1996), and Mason v. Continental Group, Inc., 763 F.2d 1219,
1227 (11th Cir. 1985). Defendants assert that although the Severance Plan requires a claimant to
exhaust administrative remedies before filing an action in court, plaintiff’s sole administrative claim
makes no mention of a request for or failure to pay attorneys’ fees, and only states plaintiff’s claim
for entitlement to severance pay and benefits. Defendants state that the first time plaintiff made a
request for attorneys’ fees was on the day he filed this action, and therefore this claim is barred.
Plaintiff responds that the Plan’s clear and unambiguous language does not require
administrative exhaustion before filing a legal claim related to attorneys’ fees. Plaintiff states that
while the Plan expressly requires administrative exhaustion for benefit claims, it is silent as to any
exhaustion requirement for other, non-benefit claims. Plaintiff points to the Plan’s administrative
exhaustion section, Article IV, Section A, titled “Claims Procedures When Your Benefits Are
Disputed,” and contends that the benefits the Plan was designed to provide are severance benefits.
Thus, plaintiff argues that under the Plan’s plain language, the administrative exhaustion procedures
apply only to claims for severance benefits and not to claims for attorneys’ fees. Plaintiff also states
that other language in the Plan’s administrative exhaustion section supports his position because it
contains references to disputes over entitlement to benefits, claims for benefits, claim
determinations, and adverse benefit determinations, but does not include any references to nonbenefit claims such as for attorneys’ fees.
Plaintiff also responds that this count involves a statutory claim, and argues that exhaustion
is not required of ERISA statutory claims, citing Spinedex Physical Therapy USA Inc. v. United
Healthcare of Arizona, Inc., 770 F.3d 1282, 1294 (9th Cir. 2014). In addition, plaintiff responds that
23
the Plan’s attorneys’ fees provision implicitly contemplates that legal action has already been taken
to enforce a participant’s rights under the Plan and, therefore, requiring administrative exhaustion
of his attorneys’ fee claim is “nonsensical” because he could not simultaneously exhaust his claims
for benefits and for attorneys’ fees. Plaintiff also asserts, however, that he actually exhausted his
attorneys’ fees claim by sending ConAgra two invoices for attorneys’ fees in September and
December 2014, prior to filing this action in May 2015.
Defendants respond that plaintiff’s assertion the administrative exhaustion procedures apply
only to claims for severance benefits is actually an argument that the Plan did not explicitly put him
on notice of his obligation to administratively exhaust his breach of fiduciary claims. Defendants
state that the Eighth Circuit has held exhaustion is required whenever a plan provides a contractual
review procedure, citing Wert v. Liberty Life Assurance Co. of Boston, Inc., 447 F.3d 1060, 106263 (8th Cir. 2006). Defendants state that as long as a plan participant has notice of the review
procedure, he is required to exhaust administrative remedies “even if the plan, insurance contract,
and denial letters do not explicitly describe the review procedure as mandatory or as a prerequisite
to suit.” Id.
In Wert, the Eighth Circuit reiterated and clarified its position that exhaustion of contractual
review procedures is a prerequisite to bringing a suit in federal court for denial of benefits. The
exhaustion requirement “stems from the sound policy of not wanting courts to review plan
administrators’ decisions based on initial, often succinct denial letters in the absence of complete
records” and serves the purposes of “giving claims administrators an opportunity to correct errors,
promoting consistent treatment of claims, providing a non-adversarial dispute resolution process,
and decreasing the cost and time of claims resolution.” Id. at 1066 (internal quotation omitted). The
24
Eighth Circuit has “consistently imposed an exhaustion requirement where there is notice and where
there is no showing that exhaustion would be futile.” Id. at 1065.
Subsequent to Wert, this Court held that ERISA breach of fiduciary duty claims are subject
to the administrative exhaustion requirement, even in the absence of plan language providing
explicit notice of the requirement. Goewert, 442 F.Supp.2d at 728 n.1 (citing Simmons v. Willcox,
911 F.2d 1077, 1081 (5th Cir. 1981), and Drinkwater v. Metropolitan Life Ins. Co., 846 F.2d 821,
825 (1st Cir. 1988)). The Court adheres to its prior holding in Goewert and concludes plaintiff was
obligated to administratively exhaust his claim for attorneys’ fees.
In light of the foregoing Eighth Circuit and district precedent, plaintiff’s argument that the
Plan’s plain language does not require exhaustion of his attorneys’ fee claim must fail. The Court
is also not persuaded by plaintiff’s citation to the Ninth Circuit’s decision in Spinedex, 770 F.3d
1282. While the Spinedex case is not binding precedent on this Court, it is readily distinguishable.
The Ninth Circuit concluded the plaintiffs’ complaint was not merely a disguised claim for benefits
because it sought injunctive relief that would “clearly . . . benefit the Plans,” id. at 1294, and alleged
the defendant committed “willful and systematic” statutory violations of not following claims
regulations, not considering all relevant information, inappropriately denying claims, and
inappropriately delaying payment on valid claims.5 Id. As a result, the Ninth Circuit concluded
exhaustion was not required. Id. Here, in contrast, plaintiff does not seek injunctive relief that
would benefit the Plan, does not allege willful and systematic conduct by the defendants, and asserts
a claim for attorneys’ fees under the Plan that he characterizes as a breach of fiduciary duty.6
5
See Spinedex Physical Therapy, U.S.A., Inc. v. United Healthcare of Ariz., Inc., 2012
WL 8147128, at * 4 (D. Ariz. Oct. 24, 2012).
6
The Court questions plaintiff’s unsupported assertion that his claim for attorneys’ fees under
the Severance Plan’s Legal Fees/Accounting Fees provision is not a claim for benefits under the
25
Plaintiff’s assertion that administrative exhaustion is not required because the Plan implicitly
contemplates that a legal action will have been filed before a claim for attorneys’ fees is made is not
supported by evidence or legal authority and is unconvincing. The facts of plaintiff’s own case
indicate the assertion is faulty, because the record evidence shows that plaintiff obtained legal
counsel and began incurring attorneys’ fees in April 2014, prior to filing his initial claim for
benefits. Plaintiff could have made claims for his attorneys’ fees as incurred – the relief he seeks
in Count II – and also administratively exhausted his claim for attorneys’ fees.
Finally, plaintiff’s assertion that he exhausted his attorneys’ fee claim by sending pre-suit
invoices to ConAgra is not supported by any record evidence. Unsupported statements of counsel
are not evidence and cannot support summary judgment. The Court therefore does not address this
assertion further.
In summary, the Severance Plan has an exhaustion requirement, plaintiff was on notice of
the requirement, and plaintiff failed to follow the Plan’s requirement with respect to his breach of
fiduciary duty claim for attorneys’ fees.
“[W]here a claimant fails to pursue and exhaust
Plan. The defendants’ obligation to pay plaintiff’s attorneys’ fees is derived exclusively from the
Severance Plan and therefore could be considered one of the benefits the Plan provides. Section
1132(a)(3) “permits plan participants and beneficiaries to ‘seek equitable remedies in [their]
individual capacit[ies] for a breach of fiduciary duty not specifically covered by other enforcement
provisions of section 1132.’” Pichoff v. QHG of Springdale, Inc., 556 F.3d 728, 731 (8th Cir. 2009)
(alterations in original) (quoting Kerr v. Charles F. Vatterott & Co., 184 F.3d 938, 943 (8th Cir.
1999), and citing Varity Corp. v. Howe, 516 U.S. 489, 512 (1996), and 29 U.S.C. § 1104).
However, “where a plaintiff is provided adequate relief by the right to bring a claim for benefits
under § 1132(a)(1)(B), the plaintiff does not have a cause of action to seek the same remedy under
§ 1132(a)(3)(B).” Geissal ex rel. Estate of Geissal v. Moore Med. Corp., 338 F.3d 926, 933 (8th Cir.
2003) (quoting Conley v. Pitney Bowes, 176 F.3d 1044, 1047 (8th Cir. 1999)) (internal quotation
marks omitted). See also Drinkwater v. Metropolitan Life Ins. Co., 846 F.2d 821, 825 (1st Cir.
1988) (reasoning that improper denial of benefits also constitutes breach of fiduciary duty under
ERISA and exhaustion requirement would be rendered meaningless if plaintiffs could simply
recharacterize their claims for benefits as claims for breach of fiduciary duty)). The defendants do
not argue that plaintiff’s fiduciary duty claim for attorneys’ fees is a disguised claim for benefits,
however, and the Court does not address it further.
26
administrative remedies that are clearly required under a particular ERISA plan, his claim for relief
is barred.” Midgett v. Washington Group Int’l Long Term Disability Plan, 561 F.3d 887, 898 (8th
Cir. 2009) (quoted case omitted). Defendants are therefore entitled to summary judgment on
plaintiff’s claim in Count II for breach of fiduciary duty with respect to the failure to pay his
attorneys’ fees as incurred. As a result, the Court does not reach defendants’ second argument, and
plaintiff’s motion for interim attorneys’ fees will be denied.
D. Count III - Breach of Fiduciary Duty
In Count III, plaintiff asserts a breach of fiduciary claim under ERISA § 502(a)(3)(B), 29
U.S.C. § 1132(a)(3)(B), alleging that defendants violated the Plan’s terms requiring a successor
company to assume the Severance Plan. Article IV, Section G of the Plan provides:
Successors and Assigns. This Plan shall be binding upon the Company and
any successor to the Company, including any persons acquiring directly or indirectly
all or substantially all of the business or assets of the Company by purchase, merger,
consolidation, reorganization, or otherwise. Any such successor shall thereafter be
deemed to be the “Company” for purposes of this Plan, and the term “Company”
shall include Ralcorp Holdings, Inc. to the extent advantageous to the Employees by
providing them with the benefits intended under this Plan. However, this Plan and
the Company’s obligations under this Plan are not otherwise assignable, transferable,
or delegable by the Company. By written agreement, the Company shall require any
successor to all or substantially all of the business or assets of the Company
expressly to assume and agree to honor this Plan in the same manner and to the same
extent the Company would be required to honor this Plan if no such succession had
occurred.
AR000012-13. The “Overview” section of the Plan, Article I, Section A, defines the term
“Company” as used therein as “Ralcorp Holdings, Inc. or its participating subsidiaries and
affiliates.” AR000001.
Plaintiff states that under the Successors and Assigns provision, the “Company” is both
ConAgra and Medallion Foods, and Shearer’s is a “successor.” Plaintiff alleges that defendants
breached their fiduciary duty by failing to require Shearer’s to “assume and agree to honor”
27
ConAgra’s Severance Plan. Instead, the Asset Purchase Agreement between ConAgra and Shearer’s
only required Shearer’s to provide severance benefits to former ConAgra employees consistent with
the terms of its own severance policies. Relying on the plain language of Article IV, Section G,
plaintiff asserts he is entitled to summary judgment in the form of the severance benefits he claims
are due to him under the Plan.
Defendants move for summary judgment asserting that (1) plaintiff failed to exhaust his
administrative remedies with respect to this breach of fiduciary duty claim, and (2) plaintiff cannot
show that the Plan Administrator’s decision not to require Shearer’s to assume the Severance Plan
was an abuse of discretion.
1. Plaintiff Failed to Exhaust Administrative Remedies
For the reasons discussed above with respect to Count II, the Court concludes that plaintiff
was required to exhaust his administrative remedies with respect to this claim for breach of fiduciary
duty. Plaintiff’s sole administrative claim does not mention a breach of fiduciary duty or a request
for severance benefits under Article IV, Section G, and instead only asserts a claim for benefits
under Article II, B.1. As with Count II, this claim does not seek injunctive relief or to benefit the
Plan as a whole and does not allege willful and systematic conduct by the defendants. Further,
plaintiff asserts a claim for severance pay in this count that he characterizes as a breach of fiduciary
duty. Because plaintiff failed to pursue and exhaust administrative remedies required under the
Plan, his claim for relief in Count III is barred. See Midgett, 561 F.3d at 898. Defendants are
therefore entitled to summary judgment on Count III.
28
2. ConAgra’s Decision to Not Require Shearer’s to Assume the Severance Plan Was
Not an Abuse of Discretion
In the alternative, assuming for purposes of summary judgment that plaintiff was not required
to exhaust administrative remedies with respect to his breach of fiduciary duty claim based on
ConAgra’s failure to require Shearer’s to assume the Severance Plan upon purchasing Medallion
Foods, the Court concludes that ConAgra’s failure to do so was not an abuse of discretion.
Plaintiff’s motion for summary judgment on Count III is supported only by his interpretation
of the language of the Successors and Assigns provision of the Plan. As stated previously, the
Severance Plan grants the Plan Administrator and EBAC the exclusive discretionary authority to
construe and interpret the Plan’s terms. Where plan language grants an administrator this type of
discretion, the Court must review the “administrator’s construction of the plan terms for an abuse
of discretion[.]” Silva, 762 F.3d at 717. Thus, the Court reviews for an abuse of discretion
ConAgra’s determination that the Plan’s terms did not obligate it to require Shearer’s to assume and
agree to honor the Severance Plan as part of the sale of Medallion Foods.
Defendants contend that the language of the Severance Plan does not mandate that ConAgra
require each and every company that buys any portion of its business to assume the Severance Plan.
Rather, they contend the Successors and Assigns provision requires only that ConAgra ensure
assumption of the Severance Plan by a successor that acquires “all or substantially all of the business
or assets of the Company.” Defendants state the record evidence shows that Medallion Foods was
not “all or substantially all” of Ralcorp, as it was just one of more than forty facilities ConAgra
acquired when it purchased Ralcorp, and when ConAgra sold Medallion Foods to Shearer’s, it
represented only two percent of all of Ralcorp’s assets.
29
After considering the relevant factors, the Court concludes the defendants’ decision not to
require Shearer’s to assume the Severance Plan was not an abuse of discretion. First, defendants’
interpretation of the Successors and Assigns provision is not contrary to the clear language of the
Plan, as the Plan only requires that a successor to “all or substantially all of the business or assets
of the Company” be required to assume the Severance Plan. This phrase is not defined in the Plan,
and therefore defendants have the exclusive discretion to define its meaning. Although plaintiff
argues that the “Company” in this phrase means Medallion Foods, all of which was sold to
Shearer’s, his interpretation is not the only one that can be reasonably derived from the Plan’s
language. Defendants’ interpretation of the Successors and Assigns provision as referring to the sale
of all or substantially all of ConAgra’s business is reasonable and supported by substantial evidence,
as defendants have established that the Medallion Foods division constituted a very small portion
of ConAgra’s entire business or assets.
The defendants’ interpretation of the Successors and Assigns provision does not conflict with
the substantive or procedural requirements of ERISA, because ERISA does not create any
substantive entitlement to employer-provided severance benefits or to having a successor employer
adopt a severance plan, and the Plan’s review procedures meet ERISA’s requirements. The
defendants’ interpretation does not render any language in the Plan meaningless or internally
inconsistent, or run contrary to Plan goals. There is no evidence in the record as to whether
ConAgra required any other purchaser to assume the Severance Plan, so the Court does not consider
this factor. The Court also considers ConAgra’s conflict of interest, but finds this conflict does not
overcome the reasonableness of the determination.
30
The Court therefore holds in the alternative that defendants are entitled to summary judgment
on Count III because the decision not to require Shearer’s to assume and honor the terms of the
Severance Plan upon the sale of Medallion Foods was not an abuse of discretion.
V. Conclusion
For the foregoing reasons, the Court concludes that defendants are entitled to summary
judgment on all of plaintiff’s claims. Defendants’ motion for summary judgment will therefore be
granted and plaintiff’s motion for summary judgment will be denied. Plaintiff’s first motion for
interim attorneys’ fees will be denied.
Accordingly,
IT IS HEREBY ORDERED that defendants’ motion for summary judgment is GRANTED.
[Doc. 45]
IT IS FURTHER ORDERED that plaintiff’s motion for summary judgment is DENIED.
[Doc. 51]
IT IS FURTHER ORDERED that plaintiff’s first motion for interim attorneys’ fees is
DENIED. [Doc. 39]
An appropriate judgment will accompany this Memorandum and Order.
CHARLES A. SHAW
UNITED STATES DISTRICT JUDGE
Dated this 16th day of June, 2016.
31
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