Gomez v. Ericsson, Inc.

828 F.3d 367

Mark Gomez, Plaintiff–Appellant

v.Ericsson, Incorporated, Defendant–Appellee

No. 15-41479

United States Court of Appeals, Fifth Circuit.

Filed July 8, 2016

Brian Paul Sanford, David Bryan Norris, Sanford Firm, Dallas, TX, for Plaintiff–Appellant.

Michael Harman Bell, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Dallas, TX, for Defendant–Appellee.

Before SMITH, BARKSDALE, and COSTA, Circuit Judges.

GREGG COSTA, Circuit Judge:

Ericsson, Inc. laid off Mark Gomez. Gomez was eligible for severance compensation if he complied with the terms of a Release and Severance Agreement. Ericsson determined that he did not comply with a provision requiring the return of all Ericsson property because work files were missing on the company laptop he returned.

The lawsuit that followed requires us to answer two questions. Does the Employee Retirement Income Security Act (ERISA) govern this dispute? If so, did Ericsson abuse its discretion in concluding that Gomez was not eligible for severance pay?

I

Gomez sold Ericsson telecommunications services for about three years before being laid off. Shortly after Gomez's termination, Ericsson presented Gomez with the Severance Agreement. Under its terms, Gomez was required to waive certain claims against Ericsson and return Ericsson property in his possession. In exchange for doing so, Ericsson promised Gomez severance pay pursuant to the terms of both its Standard Severance Plan and Top Contributor Enhanced Severance Plan of 2010.

The Plans provide lump-sum payments funded by Ericsson's general assets. For salaried employees like Gomez, the payment from the Standard Plan provides four or eight weeks of “notice pay” (it depends on the length of service), plus a week of “severance pay” for each full year of service. Employees who are also eligible for the Top Contributor Plan receive an additional lump sum of 39 weeks of pay. In the event Ericsson rehires an employee during the period covered by the severance pay under either plan, there is a repayment contingency that basically prevents the employee from receiving both severance pay and pay for actual work during the same period. The Top Contributor Plan that applied to Gomez could result in a more complicated calculation, as it allows offsets and deductions for numerous reasons, including bonuses and property retained by the employee.

In addition to calculating the amount of any payment, the Plan Administrator makes the initial determination of employee eligibility. Both Plans apply to employees who are terminated because of a permanent layoff or reduction in force. The Standard Plan also applies to those who resign for “Good Reason.” “Good Reason” basically involves refusing to accept a new position that is either too far away from, or pays too much less than, one's current job. The Standard Plan provides quantifiable standards for these determinations and also notice requirements for such resignations. Finally, and what matters most for this case, eligibility under both Plans is conditioned on execution and nonrevocation of a “satisfactory waiver and release of claims in favor of Ericsson.”

This gets us back to the Severance Agreement with the “return of property” requirement. Gomez returned Ericsson's physical equipment. But before returning the company laptop, he wiped the hard drive of all files, including ones related to work. Gomez contends he did this because of safety concerns about the storage of unspecified personal information and confidential Ericsson data on the unencrypted laptop. Ericsson says the erased work files mattered because they were the only copies of the raw data supporting Gomez's final deliverables. As a result, Ericsson denied Gomez any severance benefits.

In response, Gomez provided Ericsson with a copy of his personal hard drive in hopes that it would contain the files, but he conceded that the files may not be there. Ericsson's technology staff found that the hard drive did not contain the deleted files, some of which it determined Gomez had manually deleted. Ericsson again denied benefits.

Gomez then unsuccessfully pursued administrative appeals as outlined in the Plans.

He next filed this lawsuit asserting an ERISA claim. Despite filing that federal claim in a federal forum, Gomez alternatively sought declaratory relief that ERISA did not govern this dispute over the Severance Plans. If Gomez obtained a ruling that ERISA did not govern, his plan was to file a contract claim in state court.

Soon after the scheduling conference, Gomez teed up that jurisdictional question. The district court ruled against him, concluding that ERISA governed the case. It later granted summary judgment in favor of Ericsson, ruling that the company had not abused its discretion in denying severance pay.

II

ERISA protects the beneficiaries of employee benefit plans “by establishing standards of conduct, responsibility, and obligation for fiduciaries ... and ... providing for appropriate remedies ... and ready access to the Federal Courts.” Varity Corp. v. Howe , 516 U.S. 489, 513, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996) (quoting 29 U.S.C. § 1001(b) ). It also benefits employers by allowing uniform administrative procedures for their plans without being subject to “conflicting and inconsistent State and local regulation.” Fort Halifax Packing Co. v. Coyne , 482 U.S. 1, 9, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987) (quoting 120 Cong. Rec. 29197 (1974)).

Demonstrating the congressional view of the importance of these interests, for claims like the one Gomez asserts under 29 U.S.C. § 1132(a)(1)(B),¹ ERISA is one of the rare examples of a federal statute that does not just preempt state law claims involving a plan in the sense that it provides the governing law. It also “completely preempts” any otherwise applicable state law, meaning the claim is treated as a federal one that provides federal jurisdiction in an exception to the well-pleaded complaint rule. Haynes v. Prudential Health Care , 313 F.3d 330, 334 (5th Cir. 2002) ; Giles v. NYLCare Health Plans, Inc. , 172 F.3d 332, 337 (5th Cir. 1999).

The parties don't dispute this preemptive force of ERISA, but disagree about whether the Severance Plans are covered by the statute. Although retirement and health plans are perhaps the better known examples of ERISA plans, the statute contemplates that some severance plans will fall within its reach. Fort Halifax , 482 U.S. at 7, 107 S.Ct. 2211 (citing 29 U.S.C. § 1002(1)(B) ). Indeed, we have determined that a number of severance plans are covered by ERISA. See, e.g. , Clayton v. ConocoPhillips Co. , 722 F.3d 279, 296 (5th Cir. 2013) ; Wilson v. Kimberly–Clark Corp. , 254 Fed.Appx. 280, 283–85 (5th Cir. 2007) ; Suda v. BP Corp. N. Am. , No. 05–20253, 2006 WL 1049224, at *1 (5th Cir. Apr. 19, 2006) ; Perdue v. Burger King Corp. , 7 F.3d 1251, 1253 n. 5 (5th Cir. 1993) ; Whittemore v. Schlumberger Tech. Corp. , 976 F.2d 922, 923 (5th Cir. 1992). And this isn't the first time the ERISA question has been posed for Ericsson's Plans. Two federal courts have held that they are subject to the statute. See Ahuja v. Ericsson , Inc. , 277 Fed.Appx. 300 (4th Cir. 2008) (addressing claims under Ericsson's Standard and Top Contributor Plans of 2004 as a claim for benefits under an ERISA plan); Ebenstein v. Ericsson Internet Applications, Inc. , 263 F.Supp.2d 636, 642 (E.D.N.Y. 2003) (holding that Ericsson's plans fell under ERISA and thereby gave rise to federal jurisdiction).

Gomez correctly points out, however, that we have held that some severance payment plans fell outside the scope of ERISA. See, e.g. , Fontenot v. NL Indus., Inc. , 953 F.2d 960, 962–63 (5th Cir. 1992) (holding that a lump sum severance payment, contingent on a single event that may never occur, is not a “plan” for purposes of ERISA); Wells v. Gen. Motors Corp. , 881 F.2d 166, 168, 176 (5th Cir. 1989) (holding that a one-time procedure by which “employees could opt for a severance payment in lieu of preserving their seniority and rehire rights” during layoffs at a particular plant was not an ERISA plan because it did not require any ongoing administration).

How to tell the difference? The fault line can be found in the Supreme Court's decision in Fort Halifax. Unlike all the cases just cited, Fort Halifax did not consider a particular employer's severance plan. It instead considered whether ERISA excused a poultry plant that did not have its own severance policy from complying with a Maine law that required “one-time severance payment[s] ... in the event of a plant closing.” Fort Halifax , 482 U.S. at 3–4, 107 S.Ct. 2211. The Supreme Court rejected the employer's argument for federal preemption on the ground that the state “requirement of a one-time, lump-sum payment triggered by a single event requires no administrative scheme whatsoever to meet the employer's obligation.” Id. at 12, 107 S.Ct. 2211. That absence meant that two of the important ERISA interests were not implicated as there was no administration of benefits that might give rise to “employer abuse” (id . at 16, 107 S.Ct. 2211 ), nor any risk of “conflicting regulation of benefit plans” (id. at 14, 107 S.Ct. 2211 ).

It is thus the existence or nonexistence of an “ongoing administrative program” (id. at 11, 107 S.Ct. 2211 ) that is the key determinant of whether severance plans are governed by ERISA.² Clayton , 722 F.3d at 296. Even for plans that result in only a lump-sum payment, that administrative scheme can be found in a number of other features that require discretion: the eligibility determination; calculations of the payment amount (such as deductions and detailed formulas); the provision of additional services beyond the severance payment (such as insurance); and the establishment of procedures for handling claims and appeals. See Fort Halifax , 482 U.S. at 9, 107 S.Ct. 2211 (mentioning “determining the eligibility of claimants” and “calculating benefit levels” among other indicia of an administrative scheme);...