Romo v. Waste Connections US Inc. et al
Filing
41
MEMORANDUM OPINION AND ORDER granting 19 MOTION for Summary Judgment filed by Progressive Waste Solutions of TX Inc, Waste Connections US Inc.; denying as moot 30 MOTION to Strike in Part Plaintiff's Declaration filed by Progressive Waste Solutions of TX Inc, Waste Connections US Inc. (Ordered by Senior Judge Sidney A Fitzwater on 8/9/2019) (Senior Judge Sidney A Fitzwater)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
RAYMOND ROMO,
§
§
Plaintiff,
§
§ Civil Action No. 3:18-CV-0570-D
VS.
§
§
WASTE CONNECTIONS US, INC., and §
PROGRESSIVE WASTE SOLUTIONS §
OF TX, INC.,
§
§
Defendants.
§
MEMORANDUM OPINION
AND ORDER
Defendants move for summary judgment in this ERISA1 and breach of contract action.
The principal questions presented are whether the plan administrator abused her discretion
in denying plaintiff Raymond Romo (“Romo”) benefits under an employee severance plan
and whether Romo can prove that defendants breached other contractual equity awards. For
the reasons that follow, the court grants defendants’ motion and dismisses this action by
judgment filed today.
I
Romo worked as an accountant in the waste management industry for over 30 years.2
1
Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1461.
2
In deciding defendants’ summary judgment motion, the court views the evidence in
the light most favorable to Romo as the summary judgment nonmovant and draws all
reasonable inferences in his favor. See, e.g., Owens v. Mercedes-Benz USA, LLC, 541
F.Supp.2d 869, 870 n.1 (N.D. Tex. 2008) (Fitzwater, C.J.) (citing U.S. Bank Nat’l Ass’n v.
Safeguard Ins. Co., 422 F.Supp.2d 698, 701 n.2 (N.D. Tex. 2006) (Fitzwater, J.)).
In 2013 Romo began working for IESI MD Corporation (“IESI”), which was an operating
subsidiary of Progressive Waste Solutions, Ltd. (“Progressive”), as a district controller.
After one year, Romo was promoted to the position of area controller.
Romo’s
responsibilities included managing and providing analytical support for internal operations
and external transactions, overseeing internal control processes and budgeting, and
supervising other controllers and accountants.
In June 2016 Progressive merged with defendant Waste Connections US, Inc. (“Waste
Connections”), and IESI became an operating subsidiary of Waste Connections. Prior to the
merger, Romo was designated as a participant in several retention and incentive plans. Four
of these plans are at issue in the instant case: the 2014 President’s Award (“President’s
Award”); the 2015 Long Term Incentive Plan (“2015 LTIP”); the 2016 Long Term Incentive
Plan (“2016 LTIP”); and the 2016 IESI Change in Control Severance Plan – Tier II
(“Severance Plan”).
The Severance Plan is an ERISA plan designed by defendant
Progressive Waste Solutions of TX, Inc. (“Progressive TX”) to provide severance protection
for certain employees if their employment ended during a fixed protection period (February
2016 through June 2017).
After the merger, Romo continued to work for IESI, but his title changed to division
controller, and he directed the accounting and supporting financial functions for a 13-district
area. To assist with the transition to Waste Connections, Romo’s new direct supervisor,
Doug McDonald (“McDonald”), sent another Waste Connections division controller to
support and train Romo and his team. By the end of 2016, Romo had “become comfortable”
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with Waste Connections’ policies and procedures. Ds. App. 50.
A subset of the policies and procedures that Romo understood—and stressed to his
staff—was the importance of complying with reporting deadlines.
Despite this
understanding, Romo missed multiple reporting deadlines. McDonald spoke with Romo in
January 2017 about missing deadlines and Romo told McDonald that his team was making
a commitment to meet their deadlines, but Romo missed at least one deadline after this
conversation.3
At a similar time, Waste Connections was in the process of selling its assets in the
Washington, D.C. market as part of the original plan of merger with Progressive. The
Washington, D.C. districts were part of Romo’s 13-district area, and he was asked to assist
with the due diligence. Romo complied and completed the due diligence requirements, as
well as his regular job functions, without receiving additional, requested support. The
transaction closed in mid-February 2017.
After the divestiture of the Washington, D.C. districts, Romo was still responsible for
managing accounting functions related to that transaction. A portion of the accounting
functions involved reconciling and closing general ledger accounts, and, while performing
those functions, Romo identified a cash balance of approximately $400,000 in a zero-balance
account. Romo knew that the balance was unacceptably high and that it should have been
reconciled. Despite this knowledge and the fact that the balance sheet for the Washington,
3
The parties disagree about the cause and impact of the missed deadlines, but do not
dispute that deadlines were missed.
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D.C. districts was not complete, Romo signed off on the February 2017 balance sheet as
complete.
And the next month—again without reconciling the variance in the
account—Romo signed off on the March 2017 balance sheet as complete. During this time,
Romo did not ask for assistance and he did not note or otherwise maintain documentation
about the variance.
In April 2017 Romo, McDonald, and other Waste Connections executives toured the
Eastern Region.4 While on the region tour, McDonald discovered the variance in the zerobalance account. McDonald began investigating the discrepancy and asked Romo for his
documentation supporting the cash transfers that were wired during the process of
apportioning payments between Waste Connections and the buyer of the Washington, D.C.
districts. According to McDonald, no supporting documentation existed for the wires, which
made it impossible to properly reconcile the account. McDonald, Romo, and an assistant
region controller left the tour in an attempt to determine why the account was not balanced.
Ultimately, after spending part of two days working on the account reconciliation, Romo’s
employment was terminated.
Three months later, in July 2017, Romo’s counsel sent a demand letter to IESI in
which he requested payment of benefits under the President’s Award, 2015 LTIP, 2016 LTIP
(collectively, the “Equity Incentive Plans”), and the Severance Plan. Per the terms of the
Severance Plan, upon receipt of a written demand for benefits, IESI had 90 days to determine
4
The Eastern Region included, in part, the districts over which Romo was division
controller.
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whether benefits should be granted. Prior to the expiration of 90 days, in October 2017,
Susan Netherton, the plan administrator (“Plan Administrator”), notified Romo’s counsel that
she had been appointed by IESI to serve as the Plan Administrator for purposes of making
the benefits determination. The Plan Administrator also informed Romo’s counsel that she
was extending the response time, in accordance with the terms of the Severance Plan, by an
additional 90 days, to January 13, 2018.
The Plan Administrator did not issue her determination on or before January 13, 2018.
As a result, Romo’s counsel sent a letter to the Plan Administrator asserting that Romo’s
administrative remedies had been exhausted because he had not received a claim
determination within the time prescribed by the Severance Plan. But on January 23, 2018
the Plan Administrator provided Romo two letters. First, she sent a letter denying Romo’s
benefits claim under the Severance Plan and explaining the reasons for the denial. Second,
she sent a letter explaining that she had also been referred the determination whether to pay
Romo under the Equity Incentive Plans, and that, upon her review of the plans and
circumstances surrounding Romo’s termination, Romo’s claims under these plans were also
denied. A critical component of the Plan Administrator’s denials was her determination that
Romo was terminated for just cause as defined in three of the four plans in issue: the
Severance Plan, the 2015 LTIP, and the 2016 LTIP.
In March 2018, after additional correspondence between Romo’s counsel and counsel
for the defendants, Romo filed the instant suit against Waste Connections and Progressive
TX. Romo alleges that the defendants wrongfully denied his claim to benefits under the
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Severance Plan and the Equity Incentive Plans. Defendants now move for summary
judgement,5 contending that the Plan Administrator’s denial of benefits under the Severance
Plan was proper and that Romo cannot establish breach of the Equity Incentive Plans. Romo
opposes the motion.6
II
Defendants are moving for summary judgment on claims on which Romo has the
burden of proof. Because Romo has the burden of proof, defendants’ burden at the summary
judgment stage is to point the court to the absence of evidence of any essential element of
Romo’s claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once they do so,
Romo must go beyond his pleadings and designate specific facts demonstrating that there is
a genuine issue of fact. See id. at 324; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th
Cir. 1994) (en banc) (per curiam). An issue is genuine if the evidence is such that a
reasonable trier of fact could find in Romo’s favor. See Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). Romo’s failure to produce proof as to any essential element of the
5
Defendants also move to strike multiple statements in Romo’s declaration. Because
the court’s decision is not affected even if it assumes that Romo’s evidence is admissible, the
court overrules the objections as moot. See, e.g., Davidson v. AT&T Mobility, LLC, 2019
WL 486170, at *1 n.1 (N.D. Tex. Feb. 7, 2019) (Fitzwater, J.) (following similar approach);
Dall. Police Ass’n v. City of Dallas, 2004 WL 2331610, at *1 n.4 (N.D. Tex. Oct. 15, 2004)
(Fitzwater, J.) (same).
6
As part of Romo’s opposition, he offers some statements about being replaced by “a
younger and cheaper” employee, P. Br. 16-17, but Romo does not plead an age
discrimination claim or explain why such allegations would have any bearing on his ERISA
or breach of contract claims. Thus the court need not address these allegations.
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claim renders all other facts immaterial. TruGreen Landcare, L.L.C. v. Scott, 512 F.Supp.2d
613, 623 (N.D. Tex. 2007) (Fitzwater, J.). Summary judgment is mandatory if Romo fails
to meet this burden. Little, 37 F.3d at 1076.
III
The court turns first to the question whether Romo can demonstrate that the Plan
Administrator abused her discretion by denying Romo’s claim to benefits under the
Severance Plan.
A
Defendants maintain that the court should apply the abuse of discretion standard of
review to the Plan Administrator’s denial of benefits under the Severance Plan. Romo
contends that de novo is the standard to apply. The court concludes that abuse of discretion
is the proper standard of review.
“[A] denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de
novo standard unless the benefit plan gives the administrator or fiduciary discretionary
authority to determine eligibility for benefits or to construe terms of the plan.” Firestone
Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Here, the Severance Plan grants the
Plan Administrator discretionary authority to determine eligibility for Severance Plan
benefits and to interpret the terms of the Severance Plan, meaning that abuse of discretion
is the proper standard of review.
Romo contends, however, that de novo review is appropriate due to defendants’
“failure to render a timely decision” and “violation of one or more requirements of 29
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[C.F.R. §] 2560.503-1.”
P. Br. 20.
This is, in effect, an allegation that the Plan
Administrator violated ERISA procedural requirements.
Challenges to ERISA procedures are evaluated under the
substantial compliance standard. Lacy v. Fulbright & Jaworski,
405 F.3d 254, 256-57 & n.5 (5th Cir. 2005). This means that the
“technical noncompliance with ERISA procedures will be
excused so long as the purpose of section 1133 has been
fulfilled.” Robinson v. Aetna Life Ins., 443 F.3d 389, 393 (5th
Cir. 2006). The purpose of section 1133 is “to afford the
beneficiary an explanation of the denial of benefits that is
adequate to ensure meaningful review of that denial.” Schneider
v. Sentry Long Term Disability, 422 F.3d 621, 627-28 (7th Cir.
2005).
Wade v. Hewlett-Packard Dev. Co. LP Short Term Disability Plan, 493 F.3d 533, 539 (5th
Cir. 2007), abrogated on other grounds by Hardt v. Reliance Standard Life Ins. Co., 560
U.S. 242 (2010).
Romo does not aver—or produce any evidence suggesting—that the Plan
Administrator’s belated claim denial failed to give him an explanation of the denial or an
opportunity for fair review. The undisputed evidence instead shows that this is a textbook
case of substantial (although not perfect) compliance. See Kent v. United of Omaha Life Ins.
Co., 96 F.3d 803, 807 (6th Cir. 1996) (holding that plan administrator substantially complied
with ERISA’s procedural requirements despite, inter alia, an untimely denial). Moreover,
even if the belated claim denial amounted to a lack of substantial compliance, Romo’s
remedy would not be a modification of the standard of review.7 Indeed, the Fifth Circuit has
7
In this scenario, Romo’s remedy would likely be remand, see Lafleur v. Louisiana
Health Service and Indemnity Co., 563 F.3d 148, 157-59 (5th Cir. 2009), but the court does
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refused to modify the standard of review “based on the administrator’s failure to substantially
comply with the procedural requirements of ERISA.” Lafleur v. La. Health Serv. & Indem.
Co., 563 F.3d 148, 159 (5th Cir. 2009); see also Wade, 493 F.3d at 538 (“Wade has cited no
direct authority by the Supreme Court or the Fifth Circuit dictating a change in the standard
of review based upon procedural irregularities alone, and we see no reason to impose one.”).8
Thus the court reviews the Plan Administrator’s interpretations and determinations
under an abuse of discretion standard. See Rittinger v. Healthy All. Life Ins. Co., 914 F.3d
952, 955 (5th Cir. 2019) (per curiam); Vercher v. Alexander & Alexander Inc., 379 F.3d 222,
226 (5th Cir. 2004). At best, Romo appears to challenge the Plan Administrator’s factual
determination of his claim for benefits, not the Plan Administrator’s interpretation of the
Severance Plan.9 The court will reverse the Plan Administrator’s factual determinations only
if the decision is not rational or supported by substantial evidence in the record. See, e.g.,
Baker v. Aetna Life Ins. Co., 260 F.Supp.3d 694, 700 (N.D. Tex. 2017) (Fitzwater, J.); Green
not see any basis for remanding to the administrator on the current record.
8
The Fifth Circuit has expressly declined to answer the question whether flagrant
procedural violations of ERISA can alter the standard of review. See Burell v. Prudential
Ins. Co. of Am., 820 F.3d 132, 138 (5th Cir. 2016); Lafleur, 563 F.3d at 159 (explaining that
the Ninth Circuit, sitting en banc, has held that “procedural violations can alter the standard
of review from abuse of discretion to de novo,” but “express[ing] no opinion” on whether the
same would be true in the Fifth Circuit). Romo does not allege—and the evidence before the
court does not suggest—that the Plan Administrator’s failure to render a timely decision
amounts to a flagrant procedural violation; accordingly, the court does not address this open
question.
9
Romo’s response does not mention the Plan Administrator’s interpretation of the
Severance Plan or cite any case law that would allow the court to infer that he is challenging
the interpretation.
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v. Bert Bell/Pete Rozelle NFL Player Ret. Plan, 1999 WL 417925, at *2 (N.D. Tex. June 22,
1999) (Fitzwater, J.). “A plan administrator abuses its discretion where the decision is not
based on evidence, even if disputable, that clearly supports the basis for its denial.” Holland
v. Int’l Paper Co. Ret. Plan, 576 F.3d 240, 246 (5th Cir. 2009) (internal quotation marks
omitted). “[R]eview of the administrator’s decision need not be particularly complex or
technical; it need only assure that the administrator’s decision fall somewhere on a
continuum of reasonableness—even if on the low end.” Burell v. Prudential Ins. Co. of Am.,
820 F.3d 132, 140 (5th Cir. 2016) (quoting Vega v. Nat’l Life Ins. Servs., Inc., 188 F.3d 287,
297 (5th Cir. 1999) (en banc), overruled on other grounds by Metro. Life Ins. Co. v. Glenn,
554 U.S. 105, 119 (2008)).
B
Romo maintains that he should not be barred from recovery under the Severance Plan
because his division was intentionally understaffed and because any mistakes did not cause
“substantial injury to Defendants.” P. Br. 20. But even crediting Romo’s assertions as true,
they do not suggest that Plan Administrator’s decision was not rational or based on evidence.
The Plan Administrator outlined the evidence—and Plan provisions10—on which she relied
10
The Plan Administrator explained that, according to the Severance Plan, an
employee is only eligible to receive severance benefits if, inter alia, he is terminated from
employment “without Just Cause.” Ds. App. 190. The Plan Administrator also stated that
“Just Cause” is defined in the Severance Plan as a circumstance where an employee
(i) willfully fails to perform his/her duties with the Company or
any affiliates; (ii) commits theft, fraud, dishonesty or
misconduct involving the property, business or affairs of the
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in making her decision. She further explained that she viewed the evidence as establishing
that Romo’s employment “was terminated due to his exceedingly poor work performance and
willful failure to perform his duties.” Ds. App. 190. And she maintained that the evidence
substantiated a “‘Just Cause’ termination under the Severance Plan, which preclude[d] Mr.
Romo from receiving severance benefits under the Plan.” Id. at 192. This conclusion is both
rational and supported by evidence in the record. Thus the Plan Administrator did not abuse
her discretion in denying Romo’s claim to benefits under the Severance Plan.
Accordingly, the court grants defendants’ motion for summary judgment on Romo’s
ERISA claim.
IV
The court turns next to the question whether a reasonable trier of fact could find that
defendants breached the Equity Incentive Plans by refusing to pay Romo under the plans.
A
“A breach of contract claim under Texas law requires proof of four elements: (1) the
existence of a valid contract, (2) plaintiff’s performance of duties under the contract, (3)
Company or any of its affiliates or in the performance of his/her
duties; (iii) willfully breaches or fails to follow any material
term of his or her employment agreement; (iv) is convicted of a
crime which constitutes an indictable offense; or (v) engages in
conduct which would be treated as cause by a court of
competent jurisdiction in the jurisdiction in which the Eligible
Employee is employed.
Id. (citing the Severance Plan, Ds. App. at 169).
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defendants’ breach of the contract, and (4) damages to plaintiff resulting from the breach.”
Orthoflex, Inc. v. ThermoTek, Inc., 983 F.Supp.2d 866, 872 (N.D. Tex. 2013) (Fitzwater,
C.J.) (citation and internal quotation marks omitted), aff’d sub nom. Motion Med. Techs.,
L.L.C. v. ThermoTek, Inc., 875 F.3d 765 ( 5th Cir. 2017).11
Under Texas law, the court’s primary concern when interpreting
a contract is to ascertain the parties’ intentions as expressed
objectively in the contract. In doing so, the court must examine
and consider the entire writing in an effort to harmonize and
give effect to all contractual provisions, so that none will be
rendered meaningless. Language should be given its plain and
grammatical meaning unless it definitely appears that the
parties’ intention would thereby be defeated. Where the
contract can be given a definite legal meaning or interpretation,
it is not ambiguous, and the court will construe it as a matter of
law. A contractual provision is ambiguous when its meaning is
uncertain and doubtful or if it is reasonably susceptible to more
than one interpretation. Whether a contract is ambiguous is a
question of law for the court to decide by looking at the contract
as a whole, in light of the circumstances present when the
contract was entered.
Hoffman v. L&M Arts, 774 F.Supp.2d 826, 832-33 (N.D. Tex. 2011) (Fitzwater, C.J.) (citing
Bank One, Tex., N.A. v. FDIC, 16 F.Supp.2d 698, 707 (N.D. Tex. 1998) (Fitzwater, J.)), aff’d
11
The Equity Incentive Plans each provide that they are to be “governed by and
construed in accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein.” E.g., P. App. 71 (President’s Award). But neither party relies
on or invokes Ontario law. Defendants expressly rely on Texas law and explain that “the
prima facie elements for establishing a breach of contract claim in Ontario are not materially
different from those required under Texas law,” Ds. Br. 20 n.6, and Romo does not cite any
law in support of his breach of contract claims. The court thus applies Texas law. See, e.g.,
Arthur W. Tifford, PA v. Tandem Energy Corp., 562 F.3d 699, 705 n.2 (5th Cir. 2009)
(explaining that parties forfeited any choice of law argument by failing to brief any other
state’s law).
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in part, rev’d in part on other grounds, 838 F.3d 568 (5th Cir. 2016). “A contract is not
ambiguous merely because the parties have a disagreement on the correct interpretation.”
REO Indus., Inc. v. Nat. Gas Pipeline Co. of Am., 932 F.2d 447, 453 (5th Cir. 1991) (footnote
omitted). Courts are to construe contracts “‘from a utilitarian standpoint bearing in mind the
particular business activity sought to be served’ and ‘will avoid when possible and proper a
construction which is unreasonable, inequitable, and oppressive.’” Frost Nat’l Bank v. L &
F Distribs., Ltd., 165 S.W.3d 310, 312 (Tex. 2005) (quoting Reilly v. Rangers Mgmt., Inc.,
727 S.W.2d 527, 530 (Tex. 1987)).
B
Romo contends that defendants breached each of the Equity Incentive Plans—the
President’s Award, the 2015 LTIP, and the 2016 LTIP—by refusing to pay him as required
under the plans.
1
Regarding the President’s Award, defendants maintain that Romo was not entitled to
receive any shares because he was not employed at the vesting date. The President’s Award
provides that “the [shares awarded to Romo] will cliff vest three years after the grant date,
the vesting date is April 1, 2018,” and that the employee “must be employed on the vesting
date in order to receive the value of the shares.” P. App. 64.12 The President’s Award also
12
“Cliff vesting is the process by which employees earn the right to receive full
benefits from their company’s qualified retirement plan account at a specified date, rather
than becoming vested gradually over a period of time.” Cliff Vesting, Investopedia (Apr. 12,
2019), https://www.investopedia.com/terms/c/cliffvesting.asp.
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made clear that “[d]etermination of the final payment is at the discretion of the CEO.” Id.
Romo was terminated from employment prior to the vesting date. But he avers that
the 2016 merger between Progressive and Waste Connections constitutes a “Change of
Control” that caused the shares to “become fully vested immediately” as a result of the terms
of the 2015 Equity Retention Plan. Id. at 74. The President’s Award does provide that its
shares “are governed by” the text of the 2015 Equity Retention Plan. Id. at 64. Defendants
contend, however, that the change-of-control provision does not modify the vesting date
provided in the President’s Award letter.
Whether or not the shares vested upon a change of control, Romo’s termination
triggered a “forfeit[ure of] all rights, title and interest with respect to all Awards.” Id. at 74.
Romo acknowledges this termination provision but posits that it means only that “termination
before vesting would forfeit such an award.” P. Br. 20. Yet this termination provision draws
no distinction between vested and unvested awards—or between a termination with or
without just cause. The plain language of the President’s Award letter (i.e., that the CEO has
discretion to determine the final payment) and the 2015 Equity Retention Plan (i.e., that a
termination triggers forfeiture of all awards) thus can only be construed as prohibiting Romo
from recovering the President’s Award. Accordingly, the court grants summary judgment
in favor of defendants on Romo’s claim for breach of the President’s Award.
2
As to the 2015 and 2016 LTIPs, defendants contend that Romo is not entitled to
receive any shares because he was terminated for just cause. Romo opposes this position on
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two grounds: first, that he was terminated without just cause; and, second, that regardless
whether or not he was terminated for just cause, he should have been paid the share value
because the shares vested upon consummation of the merger in 2016.
i
The court begins with the plain language of the LTIPs. Both the 2015 LTIP and the
2016 LTIP provide that just cause means that the plan participant:
(i) willfully fails to perform his duties with the Corporation; (ii)
commits theft, fraud, dishonesty or misconduct involving the
property, business or affairs of the Corporation or any of its
affiliates or in the performance of his/her duties; (iii) willfully
breaches or fails to follow any material term of his or her
employment agreement; (iv) is convicted of a crime which
constitutes an indictable offence; or (v) engages in conduct
which would be treated as cause by a court of competent
jurisdiction in the jurisdiction in which the Participant is
employed.
P. App. 25-26 (2015 LTIP); id. at 47-48 (2016 LTIP). And if the employment of a plan
participant is terminated for just cause, “the Participant shall forfeit all rights, title and
interest with respect to all unvested Awards. In addition, all of the vested Options and
tandem Share Appreciation Rights held by the Participant shall immediately terminate in
their entirety and shall thereafter not be exercisable to any extent whatsoever.” Id. at 32
(2015 LTIP); id. at 54 (2016 LTIP).
Defendants maintain that the uncontroverted evidence—including deposition
testimony from Romo admitting to missing deadlines and dishonest acts—shows that Romo
was terminated for just cause, which precludes him from recovering under either LTIP.
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Romo responds that he was not terminated for just cause because he was never placed on a
performance improvement plan or other written disciplinary plan and because extenuating
circumstances exist that, in effect, excuse his accounting mistakes.
The undisputed evidence shows that although Romo was responsible for—and
understood the importance of—ensuring that various reports were regularly and timely
submitted, he nonetheless missed multiple reporting deadlines. The undisputed evidence
further shows that at least one of the missed deadlines occurred after speaking with
McDonald about the need to meet deadlines. Moreover, Romo does not dispute that he
signed off on February and March 2017 balance sheets as having “no variance” despite
knowing that there was a variance.
Romo points to a variety of extenuating circumstances, but does not point to any
evidence that raises a genuine issue of material fact on the issue of just cause. See, e.g., Nat’l
Ass’n of Gov’t Emps. v. City Pub. Serv. Bd. of San Antonio, Tex., 40 F.3d 698, 713 (5th Cir.
1994) (“Conclusory allegations unsupported by specific facts . . . will not prevent an award
of summary judgment; ‘the plaintiff [can]not rest on his allegations . . . to get to a jury
without any significant probative evidence tending to support the complaint.’” (quoting
Anderson, 477 U.S. at 249 (internal quotation marks omitted))). In fact, much of Romo’s
argument relies on an attempt to read additional requirements into the contractually defined
term “just cause.”
For example, Romo avers that his “termination could not have been for any ‘willful’
breach of employment duties without adequate prior warning specific to some misconduct
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leading to [his] termination.” P. Br. 3. But no “prior warning” requirement is present in the
definition of just cause (or anywhere else in the Severance Plan for that matter). And even
if “prior warning” were required, Romo conceded in his deposition testimony that McDonald
spoke with him about the need to meet deadlines, but that he missed at least one deadline
after this conversation.
Romo also states that it is his belief that he was terminated without cause because he
was “intentionally understaffed” and because “[t]here was no material adverse effect on the
accounting records.” Id. at 17. As with the “prior warning” argument addressed above, there
is no requirement in the definition of just cause that there be a “material adverse effect” on
particular records. And although crediting Romo’s statement that he was intentionally
understaffed may negate, in part, his willful failure to perform certain duties, this assertion
does not change the fact that he conceded to “dishonesty or misconduct . . . in the
performance of his[] duties,” which is sufficient to meet the definition of just cause. See P.
App. 25-26 (2015 LTIP); id. at 47-48 (2016 LTIP).
In sum, Romo has failed to designate specific facts demonstrating that there is a
genuine fact issue, and the evidence before the court would only permit a reasonable trier of
fact to find that Romo was terminated for just cause.
ii
Romo also posits that, regardless whether his termination was for cause, the shares
granted to him under both LTIPs vested upon the consummation of the merger between
Progressive and Waste Connections and should have been paid to him in 2017. Under the
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2015 LTIP, Progressive granted Romo 721 Performance Share Units and 569 Restricted
Share Units; under the 2016 LTIP, Progressive granted Romo 1165 Performance Share Units
and 595 Restricted Share Units.
With respect to the Performance Share Units, each LTIP provides:
If the Change in Control occurs prior to the Vesting Date, the
Participant’s Performance Share Units and related Dividend
Performance Shares Units shall be deemed to be earned at the
target level, and shall be redeemed at the earlier of the Vesting
Date and the termination of employment by the Corporation
without Just Cause or if the Participant resigns in circumstances
constituting constructive termination . . . , in each case, within
twelve months following a Change of Control.
P. App. 35 (2015 LTIP); id. at 57 (2016 LTIP). Romo’s reading of this provision is that “the
Performance Share Units vested upon the consummation of the merger, and should have been
paid out no later than June 1, 2017 regardless of whether the termination was for cause.” But
the plain language of this provision does not state or imply that a change in control would
alter the vesting dates—April 1, 2018 for the 2015 LTIP and February 22, 2019 for the 2016
LTIP. Rather, it concerns the performance metrics on which the vesting dates were
conditioned. See id. at 29 (defining the vesting date of the Performance Share Units granted
under the 2015 LTIP to be “conditional on achievement of the Performance Measures and
the satisfaction of any additional vesting conditions established by the committee[.]”); id. at
51 (same for 2016 LTIP). Thus because Romo was neither employed at the vesting dates,
nor terminated without just cause, he is not entitled to the 2015 LTIP or 2016 LTIP
Performance Share Units.
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With respect to the Restricted Share Units, each LTIP provides:
[i]f the Change in Control occurs prior to the Vesting Date: (i)
If the employment of a Participant is terminated by the
Corporation without Just Cause or if the Participant resigns in
circumstances constituting constructive termination . . . , in each
case, within twelve months following a Change of Control, the
Restricted Shares shall become fully vested; and (ii) If the
surviving, successor or acquiring entity does not assume or
substitute for the Restricted Shares on substantially the same
terms and conditions (which may include settlement in the
common stock of the successor corporation), the Restricted
Shares shall become fully vested immediately upon the Change
of Control if the Participant is then employed by the Corporation
or a subsidiary.
Id. at 36 (2015 LTIP); id. at 58 (2016 LTIP). Romo points to a presentation given to
management employees before the merger as evidence that “the latter of these two options
was elected” and the restricted shares vested upon the change in control. P. Br. 22. The
presentation states “IF [Change in Control] and termination, calculated on the basis it is fully
vested. If so: RSUs: calculated at share price at termination, subject to sale in the market.”
P. App. 88. The plain language of this presentation does not support Romo’s argument.
Indeed, the language supports the opposite conclusion, because it discusses a change in
control and termination, which can only implicate the first option, mandating vesting if
employment is terminated without just cause within 12 months following a change of control.
Romo was terminated within 12 months following a change of control. Yet, as described
supra at § IV(B)(2)(i), the evidence before the court only permits the conclusion that Romo
was terminated for just cause. Thus Romo is not entitled to recover the 2015 LTIP or 2016
LTIP Restricted Share Units.
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Accordingly, the court grants defendants’ motion for summary judgment on Romo’s
claims for breach of the 2015 LTIP and breach of the 2016 LTIP.
*
*
*
For the reasons explained, the court grants defendants’ motion for summary judgment
and enters judgment in favor of defendants dismissing this action with prejudice.
SO ORDERED.
August 9, 2019.
_________________________________
SIDNEY A. FITZWATER
SENIOR JUDGE
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