The opinion
Opinions of the United
2001 Decisions States Court of Appeals
for the Third Circuit
8-10-2001
Henglein v. Colt Ind Operating
Precedential or Non-Precedential:
Docket 00-2529 & 00-2746
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Filed August 10, 2001
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 00-2529 & 00-2746
GEORGE W. HENGLEIN; L. C. ALBACKER; R. B.
ANDREWS; R. L. APPELDORN; R. H. ASHENBAUGH;
A. L. AUSTIN; J. W. BAGOSI; J.D. BALSER; A.
BARRASSO; J. O. BAUER; E. E. BEST; H. W. BIG LEMAN;
C. R. BLAZIER; J. P. BRESSANELLI; G. D. BROW N; F. C.
BUCHHOLZ; E. C. CALVIN; R. R. CAMPBELL; P. D.
CASTELLANO; J. L. CERASI; E. CHAPMAN; S. CHRISTY;
T. M. COSTELLO; C. A. DAUKA; A. J. DECOSTA; M. G.
DEGRANDE; A. S. DICCIO; A. P. DIMARZIO; C. J.
DIMARZIO; R. J. DOUGHERTY; M. DRUGA; E. P. ERATH;
E. P. FAHNERT; H. FARRINGTON; M. FERLAINO; R. D.
FEYDO; E. R. FINGER; J. N. FLARA; N. E. FRED ERICK;
J. P. FRENN; R. E. FRONKO; L. L. GIBBS; W. L.
GLEASON; L. E. GORDON; R. W. GOTT; J. E. GRIMM;
P. E. GRUBBS; E. R. GUERRA; A. J. GULUTZ; J. T.
HAAF; J. D. HAMACHER, JR.; P. J. HANNON; R. M.
HANSEN; M. I. HARPHAM; D. H. HELDMAN; J. K. HILE;
R. S. HOGSETT; R. T. HOPPER; H. M. HOWELL; W. M.
HYAMS; J. M. JANKE; C. L. JOBE; K. H. JOHNS; R. O.
JOHNSON, JR.; E. T. JONES; R. KAO; D. P. KERR, JR.;
P. A. KEYS; R. W. KNALLAY; E. E. KNAPEK; W. J.
KOFALT; S. W. KOHLER; T. KOMINITSKY; T. R. KRUPA;
P. R. KULLEN; J. R. KUNDICK; W. LAKE; D. F. LAVENE;
T. T. LEHMANN; R. H. LEWIS; R. A. LIPPERT; W. R.
LIVINGSTON; J. H. LUTTON; A. J. LYNN; D. B. MCCLAIN;
P. F. MCNICOL; E. L. MARSH; F. S. MATSUKAS; H. J.
MERCER; A. R. MIDDLETON; M. MITROVICH; M. A.
MOLCHAN; R. A. MONTGOMERY; R. T. MORELLI; A. N.
MORRISON; H. MRAUNAC; M. R. MUCKIAN; C. W.
MURRAY, III; C. J. MYERS; L. V. NAGLE; D. A. NOBERS;
J. A. NUZO; E. ORDICH; W. H. ORR; T. H. PARSONS;
A. J. PASKO; H. S. PEASE, III; G. J. PESCION ; G. V.
PETERSON; J. J. POPP; G. P. PORTO; G. POSTICH; D. E.
POWELL; R. W. PRENTICE; J. V. PRESUTTI; W. C.
PRICE; L. E. RAYKOVICS; T. R. REED; J. W. REIDER;
J. J. ROSE; A. J. ROSEPILLER; C. S. RUSSELL; K. E.
SANDERS; M. A. SARVER; P. K. SCHAKE; J. W.
SCHOLTZ; A. H. SCHELINE; M. L. SHERRY; F. R.
SHUSS; W. W. SIMPSON; A. E. SIX; J. E. SMITH ; E. H.
SPAZIANI; W. H. STEPHENS; C. D. STROSNIDER; J. F.
SUFFOLETTA; H. L. TAYLOR; K. E. THOMAS; F. S.
THORNBERRY, JR.; J. R. TICE; D. A. TOWNLEY; R.
TRBOVICH; R. T. TURNER; H. B. VAN FOSSEN; R. R.
VLAH; A. VRANES; S. VRANES; D. W. WARE; K. G.
WASSMAN; G. T. WEEKLEY; E. M. WERRIES; D. L.
WESTFALL; J. A. WHITEHEAD; R. J. WHITTEN; C. K.
WILDMAN; T. WILLIAMS, JR.; T. H. WILLS; A. J. YANNI;
L. H. YOUNG, JR.; R. C. YOUNG; H. F. YUTE,
Appellants/Cross-Appellees
v.
COLT INDUSTRIES OPERATING CORPORATION, informal
plan for plant shutdown benefits for salaried employees
and Colt Industries Operating Corporation Plan for
maintaining benefits for salaried employees in parity with
benefits granted to union represented employees.
Appellee/Cross-Appellant
ON APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
(D.C. No. 86-cv-02021)
District Judge: Honorable Donald J. Lee
2
Argued May 3, 2001
Before: NYGAARD, WEIS, Circuit Judges, and
KAUFFMAN,* District Judge
Filed August 10, 2001
James J. Ahearn (ARGUED)
825 B Morewood Avenue
Pittsburgh, Pennsylvania 15213
Attorney for Appellants/
Cross-Appellees
Mark G. Arnold (ARGUED)
Husch & Eppenberger, LLC
100 North Broadway, Suite 1300
St. Louis, Missouri 63102
William H. Powderly, III, Esq.
Metz Schermer & Lewis, LLC
11 Stanwix Street
Pittsburgh, Pennsylvania 15222
Attorneys for Appellee/
Cross-Appellant
OPINION OF THE COURT
WEIS, Circuit Judge.
In this appeal we determine that a ruling on a statute of
limitations issue in a declaratory judgment action had
preclusive effect despite the fact that other requests for a
declaration were denied because of unresolved factual
matters. As a consequence, the District Court erred in
applying a different limitations period in a related ERISA
_________________________________________________________________
* The Honorable Bruce W. Kauffman, United States District Judge for the
United States District Court for the Eastern District of Pennsylvania,
sitting by designation.
3
case and barring the claims of some of the employee
plaintiffs. We also conclude that the District Court properly
found that an ERISA plan was in existence and provided
benefits for employees at the time of a plant shutdown.
Accordingly, we will reverse in part, and affirm in part.
Plaintiffs are former non-union salaried employees of
Crucible, Inc. who worked at one of the company's steel
manufacturing facilities in Pennsylvania that closed in
1982. Most of the plaintiffs were at the Midland plant, and
most were terminated that year, with a few remaining in
their positions until as late as 1986. In 1982, Crucible
changed its name to Colt Industries Operating Corporation,
which today is a dormant corporation. We described in
detail the background facts leading up to this litigation in
Henglein v. Informal Plan for Shutdown Benefits for Salaried
Employees, 974 F.2d 391, 395-96 (3d Cir. 1992) ("Henglein
I"), and need not repeat them here.
The employees first filed suit against the employer in
August, 1983, presenting a number of claims. Those for
shutdown benefits were dismissed on appeal because the
complaint failed to name the proper defendant. Schake v.
Colt Indus. Operating Corp., No. 85-3381 (3d Cir. May 14,
1986).2
In September 1986, the employees filed the present
action ("Henglein") under ERISA section 502(a)(1)(B), 29
U.S.C. S 1132(a)(1)(B), against two plans alleged to be
administered by Colt, an "Informal Plan" and a"Parity
Plan." The complaint alleged that plaintiffs were entitled to
shutdown benefits pursuant to an Informal Plan that was
created by Crucible's 1962 plan, and amended by 1968 and
_________________________________________________________________
2. The closing of the Crucible plants generated an unusual amount of
appellate litigation. See Schake v. Colt Indus. Operating Corp., No. 85-
3381, (3d Cir. May 14, 1986); Anthuis v. Colt Indus. Operating Corp., 789
F.2d 207 (3d Cir. 1986); Ashenbaugh v. Crucible Inc., 1975 Salaried Ret.
Plan, 854 F.2d 1516 (3d Cir. 1988); Frank v. Colt Industries, Inc., 910
F.2d 90 (3d Cir. 1990); Henglein I, 974 F.2d 391 (3d Cir. 1992); Henglein
v. Informal Plan for Plant Shutdown Benefits for Salaried Employees, No.
93-3219, (3d Cir. Jan. 13, 1994) ("Henglein II"); Henglein v. Informal
Plan
for Plant Shutdown Benefits for Salaried Employees , No. 94-3074, (3d
Cir. Sept. 26, 1994) ("Henglein III").
4
1969 documents. In addition, some of the employees
sought a $400 monthly supplement under the so-called
Parity Plan.
As described in the complaint, the Informal Plan provided
plant closing benefits for older, long-time employees who
had not yet qualified for 30-year pension benefits under the
company's Formal Plan. These supplemental benefits were
to be paid monthly until the recipient reached the age when
Social Security benefits became available. The claim for
Parity Plan benefits was based on management's alleged
promise to equalize plant shutdown benefits between union
and non-union employees.
Rather than answering the employees' complaint, Colt in
its capacity as administrator of the putative Plans, filed a
declaratory judgment action seeking rulings that the
Informal Plan and Parity Plan did not exist, and the
employees' rights to a pension were governed solely by the
Formal Plan in effect in 1982. The District Court stayed the
employees' action and proceeded with the declaratory
judgment.
In November 1988, the District Court ruled that there
was no Parity Plan, and that the statute of limitations for
the employee claims was six years. Colt v. Frenn , No. 86-
2642 (W.D. Pa. Nov. 30, 1988). Colt's counts seeking
declarations of the non-existence of other benefit plans
were dismissed because unresolved material issues of fact
precluded summary judgment. Id. Neither party appealed.
The employees' suit (Henglein) then resumed. After taking
testimony, the District Court ruled that it lacked subject
matter jurisdiction because the employees had failed to
prove that an Informal Plan existed under ERISA. On
appeal we reversed and remanded for fact-finding to
determine whether the alleged Informal Plan straddled the
enactment of ERISA. We also held that the employees were
collaterally estopped from raising the Parity Plan matter
because of the ruling in the Frenn declaratory judgment.
Henglein I, 974 F.2d at 402.
Extensive District Court proceedings that followed
resulted in two more appeals to this Court. Henglein II, No.
93-3219 (3d Cir. Jan. 13, 1994); Henglein III , No. 94-3074
5
(3d Cir. Sept. 26, 1994). In both instances, we remanded
for additional consideration by the trial court. During the
pendency of the third appeal, the district judge who had
presided over the litigation retired; on remand another
judge was assigned the case. Following a bench trial, the
second judge filed extensive findings of fact and
conclusions of law, and entered the judgment now on
appeal. We will summarize the District Court's findings.
Evidence of the employer's representations and conduct
extended from before the 1975 effective date of ERISA up
until the time the claims arose in 1982. In 1968 Crucible
adopted an "Early Severance and Disability Program." This
document and a memorandum were distributed to the
employees. The 1968 Plan was amended in 1969 by the
"Hardship Retirement Guidelines," which, however, was not
generally distributed to the employees. In 1972, a board of
directors resolution purported to rescind the 1968 Early
Severance And Disability Programs. No notice of this action
was given to the employees.
In 1972, Crucible amended and rewrote its retirement
plan entitled "Crucible Inc. Retirement Plan for Eligible
Salaried Employees." It was printed in booklet form and
circulated to all salaried non-union employees. Various
amendments were made by the "1975 Salaried Retirement
Plan," which the employees received in 1976. Those
booklets failed to contain any statement that the employees'
benefits were limited to those described therein.
Crucible never issued to its employees in general any
written notice that the 1968 and 1969 Early Severance and
Disability Benefit Programs had been rescinded. In a 1973
memorandum, E. A. March, Group Vice President of
Crucible, Inc. wrote to division presidents, controllers,
personnel directors, and the retirement board informing
them that "there is no `Informal Pension Plan' to which new
names can be added." When advising the vice president of
Employee Relations for the Midland plant of this news,
March directed, "I don't want anyone to talk about it."
Three Crucible vice presidents who served as members of
the executive committee were never informed about the
cancellation of plant shutdown compensation for salaried
6
employees. John Vensel, president of Crucible's Alloy
Division at Midland, Pennsylvania, testified to his belief
that shutdown benefits for salaried employees were in
existence in 1982. Vensel also told the employees he
supervised that the benefits were available.
At various meetings during 1969 through 1982, senior
members of Crucible management told salaried employees
that their benefits would always equal or exceed in value
those extended to union members. The employees believed
this meant they would receive additional compensation in
the event of plant shutdown.
In conformance with its factual findings, and following
this Court's legal analysis in the three appeals, the District
Court concluded that the Informal Plan for Shutdown
Benefits for Salaried Employees was a defined benefit
employee plan at the time of the shutdown in 1982, and
was governed by the 1968 "Early Severance and Disability
Benefit Plan" as amended by the 1969 Hardship Benefits
Program. The Court also observed that the employees met
the requisite age and service criteria.
However, in considering an issue not raised in any of the
appeals, the Court concluded that the applicable statute of
limitations was three years. As a consequence the claims of
all but six of the 164 plaintiffs were time-barred.
In accordance with the parties' stipulation, the claims of
the six individuals were referred to the Plan administrator
for calculation of the benefits due. The Court approved the
awards to five of the employees, but disagreed with that of
the sixth employee, E. P. Fahnert, who was granted
monthly payments to age 65. Reviewing the administrator's
calculations, the District Court focused on the 1969 Plan's
use of the term "life income" and modified Mr. Fahnert's
award, directing that the payments continue for his
lifetime.
In reviewing the claims to the Parity Plan benefits, the
District Court reaffirmed the prior dismissal in accordance
with the directive in Henglein I.
Both parties have raised substantial issues on this
appeal. The employees challenge the ruling on the three
7
year statute of limitations, contending that the six year
period set out in Colt v. Frenn controls. They also renew
their claims for "parity payments" and assert that the Plan
administrator used an inappropriate basis for determining
the amounts due the successful plaintiffs.
The Plans defend the three year statute of limitations
ruling, but in their cross-appeal contend that the District
Court erred in allowing Fahnert a "double recovery." The
Plans also challenge the calculation of the benefits payable.
I.
This case comes to us after a non-jury trial. We review
the findings of fact under the clearly erroneous standard,
Fed. R. of Civ. Proc. 52(a), and the conclusions of law de
novo. Gregoire v. Centennial School Dist., 907 F.2d 1366,
1370 (3d Cir. 1990). The statute of limitations is the
predominant issue in this case, and we will therefore
address it first.3
The parties agree that ERISA contains no statute of
limitations applicable to the controversy at hand, and
conducted the litigation on the premise that the court
should look to the most analogous state provision, in this
case that of Pennsylvania.4 According to the Plans, the
Wage Payment and Collection Law, Pa. Stat. Ann. tit. 43,
SS 260.1-12, fills the gap. That statute defines wages to
_________________________________________________________________
3. The plaintiffs in Henglein were the same as those who had previously
been parties in the Schake case, which was filed within the three year
limitation. Had the Plans been joined in the Schake case after this Court
had dismissed the relevant counts in that litigation, the relation back
provisions of Federal Rule of Civil Procedure 15(c) would have eliminated
the statute of limitations problem. Plaintiffs, however, chose to file
this
separate Henglein case more than the three years after the 1982 plant
closings.
4. We therefore do not discuss the doctrine of laches under the law of
trusts. See Firestone Tire & Rubber Co. v. Bruch , 489 U.S. 101, 110-11
(1989) ("ERISA abounds with the language and terminology of trust law.
. . . In determining the appropriate standards of review for actions under
S 1132(a)(1)(B), we are guided by principles of trust law."). It appears
that
the overwhelming majority of Courts of Appeals apply a statute of
limitations in claims under ERISA S 502(a)(1)(B).
8
include fringe benefits due under ERISA plans, and
establishes a three year statute of limitations. Pa. Stat.
Ann. tit. 43, SS 260.2a, 260.9a. The Plans cite Syed v.
Hercules Inc., 214 F.3d 155, 159-62 (3d Cir. 2000), Gluck v.
Unisys Corp., 960 F.2d 1168, 1181 (3d Cir. 1992), and
Vernau v. Vic's Market, Inc., 896 F.2d 43, 45 n.3 (3d Cir.
1990), as supporting a three year limitations period for this
case. The Plans argue that despite its ruling in Frenn, the
District Court was obliged to apply the shorter statute of
limitations in the Henglein suit.
As noted earlier, the declaratory judgment action was
brought by Colt as Plan administrator, against Frenn and
one other employee, both named as plaintiffs in the then-
pending Henglein action. The complaint sought a
declaration that the Informal Plan and the Parity Plan did
not exist, and, therefore, the Henglein case should be
dismissed. In response, the employees sought summary
judgment on the basis that the Informal Plan and Parity
Plan were in effect in 1982. Both parties to the declaratory
judgment suit were represented by the same attorneys who
appeared in the Henglein case. There can be no question
about privity or identity of issues in the two cases.
As we mentioned previously, the first judge made several
rulings in the declaratory judgment action. Finding that a
Parity Plan did not exist, he entered judgment against the
employees on that claim. Whether the Informal Plan was
properly terminated in 1972, and whether it existed after
ERISA was enacted, however, depended upon disputed
issues of fact. Therefore, the Court denied the cross-
motions for summary judgment and dismissed the requests
for declarations on those points.
The district judge then turned to the question of the
employees' timeliness in filing the Henglein case: "Finally,
[Colt] contends that the Henglein action is time-barred."
After some discussion the judge concluded that "the
accrual of the statute of limitations did not begin until
1982." Next, he determined that the Pennsylvania six year
statute of limitations for actions on contracts was
applicable. "Here, the [employees] initially brought the
9
Henglein suit in 1986. Therefore, the [employees] properly
brought this suit within the applicable limitations period."5
II.
Although the Plans did not take an appeal from the Frenn
declaratory judgment, they contend that the ruling on the
statute of limitations issue should not be given preclusive
effect. They correctly identify the standard requirements for
collateral estoppel, more generally, termed issue preclusion:
"(1) the identical issue was previously adjudicated; (2) the
issue was actually litigated; (3) the previous determination
was necessary to the decision; and (4) the party being
precluded from relitigating the issue was fully represented
in the prior action." Raytech Corp. v. White , 54 F.3d 187,
190 (3d Cir. 1995); see also Restatement (Second) of
Judgments S 27 cmt. j (1982); Henglein I , 974 F.2d at 402;
Temple University v. White, 941 F.2d 201, 212 (3d Cir.
1991); Arab African Int. Bank v. Epstein, 958 F.2d 532, 535
(3d Cir. 1992); Gregory v. Chehi, 843 F.2d 111, 121 (3d Cir.
1988).
Preliminarily, we observe that much of the Plans'
argument rests upon a concept of "finality" that is unduly
rigid. In Dyndul v. Dyndul, 620 F.2d 409 (3d Cir. 1980) (per
curiam), we commented that " `[f]inality' for purposes of
issue preclusion is a more `pliant' concept than it would be
in other contexts." Id. at 412 (footnote omitted). We quoted
approvingly from Judge Friendly's opinion in Lummus Co. v.
Commonwealth Oil Refining Co., 297 F.2d 80, 89 (2d Cir.
1961): " `Finality' in the context here relevant may mean
_________________________________________________________________
5. The ruling on the statute of limitations, although quite forthright in
the memorandum opinion of the District Court, was not repeated in the
judgment itself. The parties have not raised the issue of non-compliance
with Federal Rule of Civil Procedure 58, requiring that judgments be set
forth on separate documents. We merely note the point to observe that
better practice would have been to follow the rule. In any event,
violations of Rule 58 are not jurisdictional and may be waived. Bankers
Trust Co. v. Mallis, 435 U.S. 381, 384 (1978) (per curiam); see also Buck
v. U.S. Digital Communications, Inc., 141 F.3d 710, 711 (7th Cir. 1998)
(if terms of declaratory relief appear in the opinion, final decision has
been reached); Metzl v. Leininger, 57 F.3d 618, 619-20 (7th Cir. 1995).
10
little more than that the litigation of a particular issue has
reached such a stage that a court sees no really good
reason for permitting it to be litigated again." Id. at 412 n.8.
In In re Brown, 951 F.2d 564, 569 (3d Cir. 1991), we
made the point clearly: "[u]nlike claim preclusion, the
effectiveness of issue preclusion, sometimes called collateral
estoppel, does not require the entry of a judgment, final in
the sense of being appealable." We also cited section 13 of
the Second Restatement of Judgments, which states that
"for purposes of issue preclusion, . . . `final judgment'
includes any prior adjudication of an issue in another
action that is determined to be sufficiently firm to be
accorded conclusive effect." Id.; see also Hawksbill Sea
Turtle v. Federal Emergency Mgmt. Agency, 126 F.3d 461,
474 n.11 (3d Cir. 1997); Restatement (Second) of
Judgments S 27 cmt. k.
We need not, however, rely on those applications of the
"finality" factor because here the basis is an even more
compelling one, the actual entry of a final judgment.
A. Appealability
In Henglein I, we observed that the employees did not
appeal Frenn's unfavorable ruling on the Parity Plan. 974
F.2d at 402. Because they did not do so, we held that "the
district court's ruling that a Parity Plan did not exist was a
final judgment on the merits," and collateral estoppel
barred further litigation on that issue. Id.
Despite the clear language in Henglein I, the Plans argue
that they could not have appealed the Frenn judgment
because the District Court's dismissal of the Informal Plan
count based on unresolved factual issues was an
interlocutory order. The Plans say also that they could not
have appealed because the ruling on the Parity Plan was in
their favor.
The Plans' arguments fail to appreciate the unique nature
of a declaratory judgment action. In a case of actual
controversy, the Declaratory Judgment Act provides that a
court "may declare the rights and other legal relations of
any interested party seeking such declaration, whether or
11
not further relief is or could be sought. Any such
declaration shall have the force and effect of a final
judgment or decree and shall be reviewable as such." 28
U.S.C. S 2201.
Once a judgment disposing of all issues on which the
parties sought a declaration is entered by a court, the case
is ripe for appeal. Even if the court decides in its discretion
that it will not entertain the case in any aspect whatsoever,
that ruling is subject to appeal. Wilton v. Seven Falls Co.,
515 U.S. 277, 288 (1995) ("In the declaratory judgment
context, the normal principle that federal courts should
adjudicate claims within their jurisdiction yields to
considerations of practicality and wise judicial
administration."); see also Exxon Corp. v. F.T.C., 588 F.2d
895, 900-02 (3d Cir. 1978).
Because it has discretion to decline jurisdiction over a
declaratory judgment action in its entirety, it follows that a
court may decide some of the issues raised and refuse to
rule on others. The maxim that the greater includes the
lesser applies; if the court may choose to rule on all or none
of the issues presented, it may decide only those it finds
appropriate for a declaration.
Once a district court has ruled on all of the issues
submitted to it, either deciding them or declining to do so,
the declaratory judgment is complete, final, and appealable.
Nothing remains for the trial court to do and the case is at
an end in that forum. See Catlin v. United States, 324 U.S.
229, 233 (1945).
We would not be understood to say, however, that every
ruling in a declaratory judgment is immediately appealable.
In Peterson v. Lindner, 765 F.2d 698 (7th Cir. 1985), the
trial judge entered an order on one phase of a declaratory
judgment action, but specifically left open significant issues
relating to damages and other relief. Moreover, he did not
enter a formal judgment. Id. at 701-02. In those
circumstances, the Court of Appeals held that the order
was interlocutory and non-appealable. Id. at 702-04.
Similarly, in Liberty Mutual Insurance Co. v. Wetzel, 424
U.S. 737, 742 (1976), the Supreme Court noted that an
order establishing liability, even if considered as a
12
declaratory judgment, was not final where the trial court
had not ruled on the injunction and damages that had been
requested. That, however, is not the situation here where
the court issued a judgment and a ruling on every issue
submitted.
The normal civil action differs from the declaratory
judgment in that courts deciding the latter are not required
to adjudicate the ultimate dispute between the parties.
Consequently, the disfavor generally shown to appeals from
partially-dispositive orders in the usual civil action, see,
e.g., Fed. R. of Civ. Proc. 54(b), is not present once a
declaratory judgment has been entered. In this sense, some
"loose ends" in the underlying controversy that would
negate finality for appellate purposes in most civil actions,
do not have that effect in the declaratory judgment setting.
See also Restatement (Second) of Judgments S 33 cmts. b,
e (noting that if declaratory judgment is valid and final, it
is conclusive with respect to matters declared).
In Frenn, the District Court could have chosen to decide
all of the issues, including resolution of the contested
factual issues on the existence of the Informal Plan. It is
understandable that the Court did not do so, more than
likely believing that the disputed factual matters were at
the heart of the Henglein case and would be better resolved
in that litigation.
The Plans' arguments dance nimbly around the fact that
the determination of the statute of limitations was adverse
to them, and was independent of the ruling on the
unresolved factual disputes. If, in the main Henglein case,
the Plans had moved for summary judgment alleging non-
existence of the Informal Plan, an order denying the motion
because of the presence of factual disagreement would have
been interlocutory and non-appealable order. But since the
Plans chose to use the declaratory judgment vehicle, they
are bound by its differing characteristics as to finality.6
_________________________________________________________________
6. The fact that a declaratory judgment may be used by a party to, in
effect, make an end run around the non-appealability of otherwise
interlocutory orders in existing litigation may be a factor counseling a
district court to decline to entertain such a case. See James W. Moore,
13
B. Necessity
Generally, to have preclusive effect, the challenged ruling
must be necessary to the prior judgment. Multiple issues
are frequently presented in declaratory judgment actions,
however, and on appeal all of those decided lie within the
scope of review. The Plans, nonetheless, contend that the
statute of limitations decision was entirely irrelevant and
unnecessary to the ruling on the Informal Plan because
"some plaintiffs had filed timely claims even under the
three year statute."
The fact that the 158 employees would have been barred
by a shorter period demonstrates that the limitations
question was a substantial one for both parties. In addition,
the issue was separable from the others presented, and
potentially dispositive. Therefore, the decision to resolve the
question in the declaratory judgment was appropriate. It
does not matter if the limitations period was irrelevant in
part to some other phases of the case.
The necessity principle has diminished importance in the
declaratory judgment setting. Wright, Miller and Cooper
make the reasoning for this clear:
"Multiple findings also may figure in declaratory
judgment actions. Since the very purpose of
declaratory relief is to achieve a final and reliable
determination of legal issues, there should be no
quibbling about the necessity principle. Every issue
that the parties have litigated and that the court has
undertaken to resolve is necessary to the judgment,
and should be precluded."
18 Wright, Miller & Cooper, Federal Practice & Procedure
S 4421 (1981).
In this case, each individual ruling on the multiple issues
presented was subject to appeal and preclusive effect.
_________________________________________________________________
12 Moore's Federal Practice S 57.42[3] n.36 (Matthew Bender 3d ed.
2001) (piecemeal litigation not favored). We are not called upon to decide
whether the District Court should have refused to decide the declaratory
judgment action in view of the pending Henglein case in the same court
raising the same issues.
14
Because the Plans were free to appeal the ruling on the six
year statute of limitations, and having failed to do so, they
are bound by it, and precluded from attempting to secure
a more favorable ruling at this late date.
C. Actually Litigated
The Plans' final objection -- that the issue was not
actually litigated -- is belied by the District Court's specific
statement in its Memorandum Opinion, "[f]inally [Colt]
contends that the Henglein action is time-barred . . . ." The
opinion then discussed both the question of when the
cause of action accrued and the choice of the most
analogous state limitation period. We have no doubt that
the statute of limitations was contested and was done so at
the instance of Colt as administrator of the Plans.
D. Unmixed Question of Law
As a final matter, we address briefly an exception to
normal application of issue preclusion called the"unmixed
question of law" reservation, articulated in United States v.
Moser, 266 U.S. 236, 242 (1924). There, the Court wrote
that res judicata "does not apply to unmixed questions of
law." Id.; see Restatement (Second) of Judgments S 28(2).
This exception has been discussed by courts, but none
has yet delineated its boundaries very well. United States v.
Stauffer Chem. Co., 464 U.S. 165, 170 (1984). Significantly,
the Supreme Court has "had no trouble finding[the
exception] inapplicable [where there is] close alignment in
both time and subject matter" between the two cases. Id.
Because the declaratory judgment addressed the same
facts and claims between the same parties, there was
precise alignment between the decision in Frenn and the
pending Henglein case. To recognize an exception in these
circumstances would eviscerate the doctrine of issue
preclusion.
We conclude, therefore, that the holding in Frenn
precluded the Henglein parties from relitigating the six year
statute of limitations. Consequently, the second judge erred
in subsequently holding that the employees' claims in
15
Henglein were time-barred by the three year statute of
limitations.
III.
Because the District Court concluded that a three year
period applied, it had no occasion to address the question
of whether a group of employees who joined the suit after
1988 were barred by the six year statute of limitations.7 The
arguments as to these employees are the same, however, as
were considered by the Court with respect to application of
the three year limitation: that the statute of limitations was
tolled, and that the application of the "continuing violation"
theory would permit recovery. See Meagher v. International
Ass'n of Machinists and Aerospace Workers Pension Plan,
856 F.2d 1418, 1423 (9th Cir. 1988).
In its general discussion of the statute of limitations
issue, the District Court concluded that there had been no
tolling because at the time the employees were terminated,
they were advised that they would not receive shutdown
benefits. According to the Court, the statute of limitations
began to run at the time of that notice. See Adamson v.
Armco, Inc., 44 F.3d 650, 653-54 (8th Cir. 1995).
The employees also contended that the Plans were guilty
of a continuing violation that extended the limitations
period, but the Court concluded that that theory was not
applicable.
The employees asserted that the Plans had an obligation
to provide benefits through a series of monthly payments.
In effect, such obligations are similar to installment
agreements, or as some courts have termed them,
"continuing contracts." An agreement to provide support for
life may be termed a continuing contract, and so may be an
_________________________________________________________________
7. Our review of the District Court's record discloses that the employees
in this category are Ronald A. Montgomery, Michael Druga, William
Hyams, David A. Nobers, Patrick F. McNichol, Alexander Urames, Henry
B. Van Fossen, Ezra E. Vest, and Sylvester Vranes.
16
insurance policy to pay a monthly sum of money during a
period of disability.8
The recurring question with such agreements is whether
failure to pay each installment establishes a separate cause
of action on each occasion a payment is withheld, or
whether only one cause of action accrues for breach of the
contract. Corbin on Contracts devotes substantial
discussion to the subject and suggests simply that much
depends on the circumstances. The treatise pithily
comments, " `[a]ccrual of the cause of action' has not one
eternal and exclusively correct meaning, ordained by God
or by the legislature. There is no `infallible logic' that
compels one application rather than another." 4 Arthur L.
Corbin, On Contracts S 989, at 969 (1951).
In Vernau, this Court considered whether the statute of
limitations barred a non-fiduciary claim for past due
employer contributions to a pension fund. We concluded
there was no tolling because plaintiffs had not been
reasonably diligent. 896 F.2d at 45-47. The question of
accrual in Vernau was raised only in connection with the
tolling argument, but we noted that even if each
delinquency gave rise to a separate claim, the plaintiffs
were on "inquiry notice" that the terms of the plan had
been breached. Id. at 46-47.
Two years after Vernau, we had occasion to again
consider the proper statute of limitations in a section
502(a)(1)(B) ERISA claim. In Gluck, we noted that differing
factual situations require consideration of varying periods,
and that the controlling limitations period in Vernau should
not be "rotely" applied. Gluck, 960 F.2d 1179-82. As an
_________________________________________________________________
8. As we observed in Henglein I, the definition at 29 U.S.C. S 1002(1)
does not point to state contract law to determine whether a plan existed
at the time ERISA was enacted. 974 F.2d at 398. There is no
inconsistency, however, once a plan is established in analogizing to
contract law to determine whether a plaintiff may"recover benefits due
to him under the terms of his plan . . . ." 29 U.S.C. S 1132(a)(1)(B); see
Tester v. Reliance Standard Life Ins. Co., 228 F.3d 372, 375 (4th Cir.
2000) ("In reviewing the terms of an ERISA plan, we are mindful that
ERISA plans are contractual documents, and established principles of
contract and trust law govern their interpretation.").
17
example, we commented on the incongruity of classifying
future benefits as "wages" under the Pennsylvania Wage
Payment and Collection Law, "because it provides no period
of repose to an employer." Id. at 1181. A current claim for
an ERISA violation affecting the retirement benefit of a
hypothetical twenty year-old employee thus might accrue at
age 65. Id. The opinion stated, "we are unwilling to open
the door to a 48-year limitations period." Id .
Although neither of these cases squarely addressed the
continuing violation theory, both pointed to problems
inherent in such an approach. In the circumstances here,
where there was an outright repudiation at the time the
employees' services were terminated, it is reasonable to
expect that the statute of limitations began to run at that
point.9 We conclude that the District Court correctly
rejected the tolling and continuing violation theories.
Other facts not revealed by the record before us, however,
might be relevant in the late-comers' claims. The parties
have not advised us of circumstances that may have
affected timeliness of those claims. Moreover, because the
District Court ruled that the three year limitation applied,
it had no occasion to consider the status of the employees
who joined the Henglein litigation after the six year period.
We, therefore, must remand this particular matter to the
District Court for resolution.
IV.
The language of the 1968 Early Severance Plan
incorporated by reference the administrative provisions
found in the text of the 1957 Restated Employee's
Retirement Plan. Both documents refer to an entity called
the "Retirement Board," which was directed to calculate
benefits due. Based on that finding, the District Court
instructed the Board to interpret the provisions of the Plans
_________________________________________________________________
9. A similar result would obtain under trust law. See Restatement
(Second) of Trusts S 219(2) (1959) ("The beneficiary is not barred merely
by lapse of time from enforcing the trust, but if the trustee repudiates
the trust to the knowledge of the beneficiary, the beneficiary may be
barred by laches from enforcing the trust.").
18
in light of all the circumstances and such other evidence of
the intention of the sponsor as was not inadmissable.
The employees do not object to the general standard set
by the Court, but do challenge the findings that the
applicable formulas were those found in the 1957 Plan.
According to the employees, the Court should have looked
to the Formal Plan in existence in 1982, which was more
favorable to them.
The employees did not raise this issue in the District
Court and, therefore, we need not consider it now. But we
do observe that the 1968 and 1969 documents did not
provide for incorporation of plan provisions that might exist
at some future time.
Although the employees contend that the benefits due
should take account of the inflation that occurred between
1972 and 1982, the District Court correctly pointed out
that there was no basis in the plan provisions for such an
adjustment. The courts are not at liberty to rewrite the
terms of an ERISA plan. Ryan v. Federal Express Corp., 78
F.3d 123, 126 (3d Cir. 1996).
We conclude that the District Court properly approved
the calculations by the Retirement Board based on the
references to the 1957 Plan and we will affirm the awards
granted to five of the employees. We do not, however,
approve the ruling as to Mr. Fahnert.
V.
In reviewing the claim of E. P. Fahnert, the District Court
rejected the retirement board's calculation. Because he had
not reached the eligibility age, Mr. Fahnert was not eligible
for early retirement under the 1957 Plan. Therefore, using
the terms of the 1969 Severance Plan, the Board calculated
his claim as a specified reduction of the normal monthly
retirement benefit, to be paid from the time of the plant
shutdown until he reached the age of 65.10 At that point he
would be eligible for 100 percent of the normal retirement
benefit and the severance benefit would cease.
_________________________________________________________________
10. Specifically, benefits began the fourth month after shutdown and
continued until the 3rd month following his 65th birthday.
19
The District Court noted that the 1969 Plan provided for
a "life income starting immediately and actuarily reduced
under the Restated [1957] Plan." Finding no ambiguity, the
Court directed that Mr. Fahnert receive the severance
benefits for the remainder of his life in addition to a
pension under the Formal Plan. The net result would be
that Mr. Fahnert would receive 100 percent of the normal
pension at age 65, plus the actuarily reduced severance
benefit.
The District Court's interpretation is inconsistent with
the provisions of the plan documents when read as a whole.
The 1969 Plan refers in several instances to the Restated
Formal Plan of 1957, and it is apparent that the benefits
under the two plans are to be coordinated.
In the event of plant shutdown, the 1969 Plan granted a
beneficiary the right to an immediate actuarily reduced
pension based on what he would have received at age 65.
The Plan appendix sets out the amounts applicable for
various age and service categories and further provides that
a portion of early retirement pay is to be paid through the
1957 Restated Plan and part by the 1969 Plan.
The appendix explains that the percentages were
calculated so that the employees would receive "exactly the
same income" under the 1969 Plan that they would receive
under the new vesting provisions. "[N]o additional value"
was thus provided. "The only thing which the Guidelines
provide for the employees in this portion of the table is a
right to receive immediately an income which is the
actuarial equivalent of the income which they would
otherwise receive only at age 65."
Reduced to its simplest terms, the 1969 Plan provides
that in the event of plant shutdown, a person in Mr.
Fahnert's position would immediately receive a reduced
pension until reaching the age of sixty-five, at which time
the full permanent pension would commence. In Mr.
Fahnert's case, the reduced pension was $396.89, which
was 92.3 percent of his normal age sixty-five pension of
$430 per month. Because he was not eligible for early
retirement under the 1957 Restated Plan, none of those
benefits could come from that source.
20
We conclude that, read in its entirety, the 1969 Plan's
provision for a "life income" incorporates the interim
payments followed by the normal retirement payments
commencing at age sixty-five for the lifetime of the
employee. That being so, the District Court's award of the
supplemental benefits for life was not supported by the
1969 Plan's provisions. Accordingly, the Court's order in
favor of Fahnert will be modified to reinstate the retirement
Board's award in the amount of $53,183, representing the
total amount of the severance pension he would have
received until age 65. To this sum shall be added accrued
interest.
VI.
In their brief, the employees devote considerable
discussion to their alleged rights to supplemental payments
under the so-called "Parity Plan." But that claim was
rejected in Frenn and just as the employees are entitled to
invoke issue preclusion on the statute of limitations count,
so are they bound by the declaratory judgment on the
Parity Plan claim. We made that point clear in Henglein I,
directing that "[o]n remand the district court should
dismiss the Parity Plan claim on the merits." 974 F.2d at
402. The employees have given us no basis to reconsider
that ruling.
VII.
After a lengthy trial, and following the approach used in
Donovan v. Dillingham, 688 F.2d 1367 (11th Cir. 1982), as
we directed in Henglein I, Henglein II , and Henglein III, the
District Court determined that the 1968 and 1969
Hardship Plans were in existence in 1982. When the plant
shutdown occurred thereafter, the non-union salaried
employees became entitled to benefits under those
arrangements.
The Plans again repeat their arguments that the Crucible
severance benefits were abolished before ERISA came into
existence. These contentions, however, simply reiterate the
points unsuccessfully advanced in Henglein I, Henglein II,
and Henglein III.
21
The Plans' position has been effectively undermined by
the comprehensive findings of fact by the District Court
which are supported by the record. They establish that
Crucible established a benefits plan in 1968 which it
published and distributed to its employees. In the following
year that Plan was amended, but that fact was deliberately
not made known to the employees. Similarly, in 1972, the
Board of Directors purported to abolish the Informal Plan
but concealed that action from the employees.
Despite these surreptitious attempts to revise and revoke
the benefits plans, company executives continued their oral
representations that benefits were available for the
employees. Indeed, in recruiting union workers to accept
salaried positions, superintendents consistently promised
that benefits would equal or exceed those established by
collective bargaining agreements.
In its publication of Formal Plans in 1972 and 1976, the
Company did not state that those booklets described all of
the benefits available. To the contrary, company executives
in the years following told the employees that shutdown
benefits not mentioned in those publications were available.
We find no error in the District Court's conclusion that a
shutdown benefit plan was in effect in 1982.
VIII.
The case will be remanded so that the District Court may
award benefits due for those employees who qualify under
the six year statute of limitations. The District Court's order
of August 23, 2000 establishing benefits for Fahnert will be
modified and the Retirement Board's calculation of $53,183
plus interest will be reinstated. The Court will also
determine whether any of the employees who joined the
litigation at a later stage are entitled to recover, and if so
refer the claims to the plan administrator for appropriate
computations. In all other respects, the judgment of the
District Court will be affirmed.
22
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
23