Opinion

Concurring opinion issued January 19, 2012

In The

Court of

Appeals

For The

First District

of Texas

————————————

NO. 01-10-00113-CV

———————————

Tyco Valves & Controls, L.P., and TV&C GP Holdings, Inc. , Appellants

V.

Arsenio

Colorado, Steven Craig, Umit Davulcu, Richard Gonzales, Lanny Heinrich, Leonard

Hill, Andy Huynh, Chris Kahrig, Lay Keonakhone, Greg Lambousy, Tung Le, Chris

Luckey, Fernando Macias, Jorge Martinez, Raul Martinez, Kenneth Nash, Jimmy

Phoumlavanh, and Souk Vongsamphanh , Appellees

On Appeal from the 125th District Court

Harris County, Texas

Trial Court Case No. 2008-19895

CONCURRING OPINION

I

concur only in the judgment of reversing and rendering a take-nothing judgment

in favor of Tyco. The contract claims

arising from non-payment of severance “relate to” an employee benefit plan

governed by ERISA, and therefore the claims are substantively foreclosed by

that statute’s broad preemptive scope. A

take-nothing judgment should be rendered because no other legal theory supports

the employees’ claims.

The

Tyco International (US) Inc. Severance Plan for U.S. Employees was adopted

effective January 1, 2004. The Gimpel

employees do not dispute that they were covered by this ERISA-governed

severance plan at the time of its adoption. [1] Tyco’s severance plan was amended and

restated as of February 1, 2005.

Consistent with ERISA’s requirement that every employee benefit plan

shall “provide a procedure for amending such plan, and for identifying the

persons who have authority to amend the plan,” 29 U.S.C. § 1102 (b)(3), the plan

provided that it would continue until terminated pursuant to its own terms, and

also that it could be amended by the board of directors of Tyco International

Ltd. or by the board’s delegee. The plan

language effective as of February 1, 2005 also recited that its purpose was “to

provide Eligible Employees with certain compensation and benefits as set forth

in the Plan in the event the Eligible Employee’s employment with the Company or

a Subsidiary is terminated due to an Involuntary Termination.”

Tyco entered into Retention

Incentive Agreements with the appellees in connection with planning for the

transfer and sale of the assets of the Gimpel Unit. Under the terms of the RIAs, each employee

who signed an agreement and remained “an Active Employee of Tyco for the entire

Retention Period” would become entitled to a “retention incentive bonus.” The RIAs only referenced the payment of

severance “in the event that the Employee is not offered Comparable Employment

with Tyco.” In that event, the RIAs

provided for payment of “the standard Severance in accordance to the severance

schedule associated with the closure of this facility.”

The RIAs do not provide any

independent basis for determining the amount to be paid as the “standard

Severance,” and they do not identify “the severance schedule associated with

the closure of this facility.” The

Gimpel employees’ contract claims thus depend on a combination of the RIAs and

some other document that supplies the terms of the severance benefit. The Gimpel employees contend that the

referenced schedule is not Tyco’s severance plan, but instead it is a separate

one-page document created in the summer of 2006 by Holly Kriendler, then the

newly hired director of human resources for Tyco’s Americas region. However, a cause of action may not be based

upon written modifications of an ERISA plan that are not and do not purport to

be a formal amendment of a plan following the procedures required by section

1102(b)(3). See Borst v. Chevron Corp. , 36 F.3d 1308, 1323 (5th Cir. 1994); Greathouse v. Glidden Co. , 40 S.W.3d

560, 567 (Tex. App.—Houston [14th Dist.] 2001, no pet.). The appellees do not contend that Kriendler

was the board’s delegee for purposes of amending the ERISA plan (the undisputed

evidence showed this was Tyco’s senior vice president for human resources), nor

do they contend that Kriendler’s schedule was a valid amendment of the Tyco

ERISA plan. If the West Gulf Bank

Severance schedule was not the “severance schedule associated with the closure

of this facility” on its own terms, it did not become such by operation of the

RIAs. Accordingly, the Gimpel employees’

contract claims may not be based upon terms supplied by the so-called West Gulf

Bank Severance schedule. [2]

Instead, the only applicable

“severance schedule associated with the closure of this facility” that could

provide the basis for determining “the standard Severance” referenced by the

RIAs was Tyco’s ERISA-governed severance plan.

The Gimpel employees’ contract claims therefore “relate to” an ERISA

plan. [3] A state-law claim “‘relates to’ an employee

benefit plan, in the normal sense of the phrase, if it has a connection with or

reference to such a plan.” Shaw v. Delta Air Lines, Inc. , 463 U.S.

85 , 96–97 , 103 S. Ct.

2890, 2900 (1983). State-law claims

“having an effect on employee benefit plans relate to such plans and are

therefore preempted by ERISA.” Cathey v. Metro. Life Ins. Co. , 805

S.W.2d 387, 390 (Tex. 1991). The

contract claims at issue have the forbidden connection because the RIAs

reference and borrow terms from Tyco’s severance plan, [4] yet they also purport to

modify the eligibility parameters of the severance benefit provided under that

plan. Because they received continued

employment by Dresser Rand, the Gimpel employees were not eligible for

severance under the Tyco severance plan after the sale of the Gimpel Unit. As the Tyco ERISA severance plan explained:

An Eligible Employee will

not be eligible to receive severance benefits under any of the following

circumstances:

. . . .

(ix) The

Eligible Employee’s employment with the Employer terminates as a result of a

sale of . . . assets of the Employer . . . and the Eligible Employee accepts

employment . . . with the purchaser . . . .

The payment of Severance Benefits in the circumstances described in this

subsection (ix) would result in a windfall to the Eligible Employee, which is

not the intention of the Plan.

Tyco’s severance plan thus specifically withheld

severance benefits from employees who accepted employment from a purchaser,

describing severance payments in such a circumstance as an unintended

“windfall.” The appellees contend that

they are nevertheless entitled to receive the “standard Severance” despite

accepting employment with Dresser Rand, relying upon the different eligibility

language of the RIAs because they were not “offered Comparable Employment with

Tyco.” ERISA preempts any state-law

contract claim that would modify the terms of the plan in this unauthorized fashion. [5]

The foregoing analysis of how the

contract claims relate to an ERISA plan also explains why the employees’

state-law contract claims for payment of severance are not entirely independent

of an ERISA plan. The employees’

contract claims therefore cannot be analyzed under as if they were entirely

independent of an ERISA plan, as has been the case in other circumstances in

which a standalone severance agreement has been enforced because it was

independent of the employer’s separate ERISA plan providing severance benefits. [6]

Finally, the judgment in favor of

the Gimpel employees cannot be affirmed by treating their claims as if they

were claims for benefits under an ERISA plan.

In some circumstances a state-law contract claim preempted by ERISA can

be recharacterized as an enforcement action to obtain benefits under ERISA. See

29 U.S.C. § 1132 (a)(1)(B), (e)(1); Metro.

Life Ins. Co. v. Taylor , 481 U.S. 58, 66 , 107 S. Ct. 1542, 1547

(1987). But even if we recharacterized

the contract claims under the RIAs as claims for benefits under the Tyco

severance plan, as explained above, the employees would not be entitled to

severance payments because they were expressly excluded under the terms of the

Tyco plan. [7]

Because I conclude that the Gimpel

employees’ claims are preempted by ERISA, and they may not be recharacterized

as viable claims for benefits under ERISA, I concur only in the ultimate

judgment of reversing the trial court’s judgment and rendering judgment that

the Gimpel employees take nothing from Tyco. [8]

Michael

Massengale

Justice

Panel consists

of Justices Keyes, Sharp, and Massengale.

Justice Sharp,

dissenting in part.

Justice

Massengale, concurring only in the judgment.

[1] ERISA

applies to any employee benefit plan established or maintained by an employer

engaged in commerce. See 29 U.S.C. § 1003 (a)(1).

Severance plans are included within the definition of employee welfare

benefit plans. See id. § 1002(1)

(defining “employee welfare benefit plan” and “welfare plan” to include, among

other things, “any plan, fund, or program . . . established or

maintained by an employer . . . to the extent that such plan,

fund, or program was established or is maintained for the purpose of providing

for its participants . . . benefits in the event

of . . . unemployment”); 29 C.F.R. § 2510.3-1 (a)(3)

(definition of “welfare plan” includes “those plans which provide holiday and

severance benefits, and benefits which are similar”).

[2] Nor is the

West Gulf Bank Severance schedule the proper basis for analyzing the question

of ERISA preemption. The majority’s

analysis is simply misplaced to the extent it relies upon Kriendler’s one-page

schedule to define the contested severance benefit.

[3] See 29 U.S.C. § 1003 (a) (describing scope of

ERISA’s application to employee benefit plans).

“ERISA preemption applies not only to state laws but to all forms of

state action dealing with the subject matters covered by this federal

statute.” Cathey v. Metro. Life Ins. Co. , 805 S.W.2d 387, 390 (Tex. 1991)

(citing 29 U.S.C. § 1144 (c)(1)).

[4] Notably, the Gimpel employees’ claimed

damages are the same as would be due if severance were being claimed (and the

appellees were eligible to receive benefits) under Tyco’s ERISA plan. This factor has been relied upon by other

courts in concluding a claim was preempted by ERISA. See,

e.g. , Epps v. NCNB Tex. , 7

F.3d 44, 45 (5th Cir. 1993) (“When a court must refer to an ERISA plan to

determine the plaintiff’s retirement benefits and compute the damages claimed,

the claim relates to an ERISA plan.”); Cefalu

v. B.F. Goodrich Co. , 871 F.2d 1290, 1294 (5th Cir. 1989); Greathouse v. Glidden Co. , 40 S.W.3d

560, 569 (Tex. App.—Houston [14th Dist.] 2001, no pet.). My conclusion that Gimpel employees’ claims

are preempted by ERISA is therefore bolstered by the fact that the employees’

damages were based upon their stipulation at trial about “the calculated amount

of severance” under the terms of Tyco’s ERISA plan.

[5] See 29 U.S.C. § 1144 (a) (providing for ERISA

conflict preemption of “any and all State laws insofar as they may now or

hereafter relate to any employee benefit plan described in [ 29 U.S.C.

§ 1003 (a)] and not exempt under [ 29 U.S.C. § 1003 (b)]”).

[6] See, e.g. , Gresham v. Lumbermen’s Mut. Casualty Co. , 404 F.3d 253, 259 (4th

Cir. 2005) (relying upon “substantial differences” between contract benefit and

ERISA plan benefit and absence of indication that the contractual benefit would

be paid from funds allocated to the ERISA plan); Crews v. Gen. Am. Life Ins. Co. , 274 F.3d 502, 505 (8th Cir. 2001)

(relying upon “significant differences between the company’s existing plan and

the promised benefits, as well as the lack of any evidence linking them to each

other”). Eide v. Grey Fox Tech. Servs. Corp. , 329 F.3d 600 (8th Cir. 2003),

is distinguishable because the disputed benefits in that case “were not to be

delivered pursuant to” the relevant ERISA plan; instead, they were to be paid

as a lump-sum payment. Eide , 329 F.3d at 605 –06. In contrast, the claimed severance benefit

under the RIAs was to be paid “in accordance to the severance schedule

associated with the closure of this facility”—an ERISA plan which provided a

severance benefit paid in the form of “salary continuation” constituting “Base

Salary . . . in equal installments over the Severance Period, per

normal payroll cycles.” The Gimpel

employees therefore cannot rely upon the absence of any administrative scheme

regulating the payment of benefits over time to distance themselves from

ERISA’s preemptive scope, as did the claimants in Eide . See id. at 605 (citing Fort

Halifax Packing Co. v. Coyne , 481 U.S. 1 , 107 S. Ct. 2211 (1987)).

[7] The

problem is not that the claim would not be “cognizable under ERISA,” as Justice

Keyes characterizes my analysis, but simply that any such claim would necessarily

fail under the facts of this case.

[8] Upon a

determination that a state-law claim is preempted by ERISA, Texas courts have

entered or approved judgments that render a take-nothing judgment. See,

e.g. , Gorman v. Life Ins. Co. , 752 S.W.2d 710, 714 (Tex. App.—Houston [1st Dist.] 1988), aff’d in relevant part and rev’d on other

grounds , 811 S.W.2d 542 (Tex. 1991); Greathouse , 40 S.W.3d at 570 –71 (holding that state-law claims for severance pay were

preempted by ERISA and affirming trial court’s entry of take-nothing

judgment). Two justices have agreed on

this judgment of reversal and rendition of a take-nothing judgment, in satisfaction

of Tex. R. App. P. 41.1(a).