Ronald Peck v. Selex Systems Integration, In

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 23, 2018 Decided July 17, 2018

No. 17-7138

RONALD E. PECK,

APPELLANT

v.

SELEX SYSTEMS INTEGRATION, INC. AND SELEX SISTEMI

INTEGRATI, INC. KEY EMPLOYEE DEFERRED COMPENSATION

PLAN,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:13-cv-00073)

William R. Wilder argued the cause and filed the briefs for

appellant.

Timothy A. Hilton argued the cause for appellees. With

him on the brief were Julianne P. Story, Michael T. Raupp, and

Steven A. Neeley.

Before: HENDERSON and SRINIVASAN, Circuit Judges, and

EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge SRINIVASAN.

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SRINIVASAN, Circuit Judge: After working at SELEX

Systems Integration, Inc. for over fifteen years, Ronald Peck

was terminated for refusing to transfer to a different position in

the company. He filed separate claims for benefits under

SELEX’s deferred-compensation plan and its severance policy.

Both claims were denied on the same ground: that Peck’s

termination for refusing to transfer positions rendered him

ineligible for benefits.

Peck filed suit against SELEX and its Key Employee

Deferred Compensation Plan (together, SELEX), alleging that

the denial of benefits violated the Employee Retirement

Income Security Act of 1974 and breached SELEX’s

contractual duty to provide severance pay to eligible

employees. The district court granted judgment in SELEX’s

favor on both the deferred-compensation claim and the

severance-pay claim. We vacate the district court’s judgment

with regard to deferred compensation but affirm with regard to

severance pay.

I.

For over fifteen years, Ronald Peck worked at SELEX

Systems Integration, an international company that designs and

produces aviation navigation, defense, and surveillance

systems for governments, militaries, and industrial operators.

Peck began his tenure with SELEX as the Director of Quality

at the company’s U.S. headquarters in Overland Park, Kansas.

Peck rose through the ranks of the quality department over the

next eleven years, eventually assuming the role of Vice

President of Quality and Engineering.

Peck transitioned away from quality-control positions in

conjunction with SELEX’s implementation of a five-year plan

to expand its U.S. market. In March 2008, Peck became the

Vice President of Business Development, responsible for all

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marketing and sales in the U.S. market. Two years later,

SELEX opened an office in Washington, D.C., to establish a

presence near the Federal Aviation Administration and other

D.C.-based clients. In connection with the opening, Peck

became Vice President of Strategy and Product Planning,

another marketing role. For the first year in the new position,

Peck traveled frequently between Kansas and D.C. In October

2011, Peck moved to D.C. full time, and in February 2012, he

officially transferred to the company’s D.C. office.

On August 23, 2012, SELEX’s Chief Executive Officer,

Mike Warner, held a meeting with Peck. Warner informed

Peck that he was being removed from the marketing position

in D.C. due to poor performance. Warner offered Peck the

option to transfer back to the Kansas office and assume the

position of Vice President of Quality Control and Business

Improvement. Warner memorialized the offer in a letter to

Peck dated August 29, 2012. The letter confirmed that Peck’s

removal from the “marketing leadership role” resulted from

“recurring deficiencies in [his] performance” that could have

“jeopardize[d] the continued success of the company’s

business initiatives.” J.A. 86. The letter said that the company

therefore “need[ed Peck] to transfer immediately back to

Overland Park to assume the [quality-control] position,” which

was “well suited to [his] expertise.” Id.

After initially declining Warner’s offer on the telephone,

Peck confirmed his decision in a letter dated September 3,

2012. Peck explained in the letter that the new position was

“not an equivalent position to [his] current role,” did not

“represent a logical step in [his] career progression,” and

“would . . . effectively [have] be[en] a regression in [his] career

with the Company.” J.A. 87. Peck nonetheless expressed his

willingness to continue in the D.C. marketing position.

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Warner responded in a letter dated September 14, 2012,

explaining that there was no longer a position for Peck in D.C.

Warner sought to assure Peck that the new position was not a

“regression” because Peck would report directly to Warner and

take on the new responsibility of directly supervising others.

J.A. 88. Warner thus urged Peck to “reconsider [his] refusal to

accept [the] new assignment” within two weeks. J.A. 89.

Warner expressed that Peck’s refusal to do so “would

constitute ‘cause’” for his termination. Id. Although Peck, as

an at-will employee, could be terminated without cause, a for-

cause termination would affect his eligibility for certain

deferred-compensation and severance benefits.

Peck and Warner exchanged a few more letters, with Peck

maintaining that his refusal to accept the quality-control

position could not be considered “cause” for his discharge, and

Warner maintaining the opposite stance. On September 30,

2012, Warner terminated Peck’s employment with SELEX,

and his marketing responsibilities were distributed among

Warner and two D.C. consultants.

After Peck’s termination, he submitted a claim for benefits

under SELEX’s “Key Employee Deferred Compensation

Plan.” Peck had joined the Plan as a “Key Employee” in July

2008, when serving as the Vice President of Business

Development. The Plan is an unfunded, deferred-

compensation plan. The Plan is of a type described as a

“top-hat plan,” in that it allows employers to provide retirement

benefits to select employees in excess of the benefits provided

under typical retirement plans. See 29 U.S.C. § 1051(2).

Under the Plan, Peck’s entitlement to benefits would

ordinarily vest after five years of participation in the Plan. The

Plan provided, however, that his right would vest before five

years if, among other reasons, he was terminated by SELEX

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without cause. As relevant here, the Plan defines “cause” as an

employee’s “habitual neglect of or deliberate or intentional

refusal to perform any of his or her material duties and

obligations of his or her employment (including compliance

with the Company’s Code of Conduct) with the Company.”

J.A. 59.

According to the Plan’s terms, the Administrative

Committee has “discretionary authority and responsibility to

interpret and construe the Plan” and to determine whether

employees are eligible for payouts under the Plan. J.A. 67.

Here, the Committee, composed at the time of CEO Warner,

the Chief Financial Officer, and the Human Resources

Director, denied Peck’s claim for benefits after concluding that

he had been terminated for cause. In the Committee’s view,

Peck’s “voluntary refusal of the assignment to the position of

Vice President of Quality Control and Business Improvement”

was a “deliberate or intentional refusal to perform any material

duties and obligations of [his] employment.” J.A. 95-96. Peck

administratively appealed the decision, but the Committee

again denied his claim.

Peck separately sought benefits under SELEX’s severance

policy. See J.A. 79. Under the policy, SELEX agreed to

provide “separation benefits” to eligible full-time employees

“whose employment terminates due to lack of work,

elimination of position, or change of control.” Id. The policy

further provided that an employee discharged for one of the

three enumerated reasons would nonetheless be ineligible for

severance pay if terminated for cause. Id. For eligible high-

level employees who had worked at the Company for over ten

years, SELEX would pay nine months of severance benefits

under the Policy. In response to Peck’s claim under the

severance policy, SELEX stated that he was ineligible for

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severance pay “[g]iven the circumstances of the termination of

[his] employment.” J.A. 92.

Peck filed a suit against SELEX in D.C. Superior Court.

He raised three contract claims: one for severance pay in the

amount of $151,549; a second for deferred-compensation

benefits in the amount of $57,020; and a third for relocation

expenses in the amount of $21,195. SELEX removed the case

to federal district court and moved to dismiss Peck’s

deferred-compensation claim, arguing that the claim was

preempted by the Employee Retirement Income Security Act

(ERISA). In response, Peck voluntarily dismissed the claim

and, with leave from the district court, filed an amended

complaint that added the Key Employee Deferred

Compensation Plan as a defendant and pled the deferred-

compensation claim as one arising under ERISA.

SELEX moved for summary judgment on Peck’s

deferred-compensation claim, and Peck moved for summary

judgment on all three of his claims. The district court granted

SELEX’s motion, holding that the Plan’s Administrative

Committee reasonably determined that Peck’s refusal to

transfer positions constituted cause for termination, thus

rendering Peck ineligible for deferred compensation under the

Plan. See Peck v. SELEX Sys. Integration, Inc. (Peck I), 172 F.

Supp. 3d 171, 176-78 (D.D.C. 2016). The court also denied

Peck’s motion for reconsideration. See Peck v. SELEX Sys.

Integration, Inc. (Peck II), 270 F. Supp. 3d 107, 116-17

(D.D.C. 2017).

As for the remaining two claims, the district court found

that there were genuine issues of material fact precluding

summary judgment, so the parties proceeded to a bench trial.

Following trial, the district court ruled in Peck’s favor on the

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claim for relocation expenses. Peck II, 270 F. Supp. 3d at 115-

16. That claim is not at issue in the appeal now before us.

The district court entered judgment in favor of SELEX on

the severance claim. The court reasoned that, to collect

payment under SELEX’s Separation Policy, Peck needed to

show that he was terminated for one of the three enumerated

reasons: “lack of work, elimination of position, or change in

control.” Id. at 115. The parties agreed that the sole issue in

the circumstances presented was whether Peck was discharged

due to the elimination of a position. The district court found

that the evidence “clearly show[ed] that Peck was terminated

because he would not return to Kansas to serve in a different

capacity, not because SELEX was eliminating the marketing

position in D.C.” Id. As a result, the court held that Peck had

not shown he was entitled to severance pay. Id.

II.

On appeal, Peck challenges the district court’s entry of

judgment against him on his deferred-compensation and

severance-pay claims. We agree with Peck as to deferred

compensation but disagree as to severance pay.

A.

Peck argues that SELEX acted unreasonably in

determining that he was terminated for cause and was thus

ineligible to receive deferred-compensation benefits. The

company responds that Peck’s refusal to accept the offer of a

new position amounted to cause for his termination under the

terms of its deferred-compensation plan. We agree with Peck’s

understanding: his refusal to accept a transfer to a new position

could not reasonably be considered cause for terminating him.

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1.

At the outset, the parties disagree about the standard of

review governing our consideration of Peck’s challenge. We

generally review de novo the district court’s determination of

an ERISA claim on summary judgment. Marcin v. Reliance

Standard Life Ins. Co., 861 F.3d 254, 262 (D.C. Cir. 2017). We

therefore apply the same standard that governed the district

court’s review of the ERISA plan administrator’s challenged

determination—here, the determination by the Plan’s

Administrative Committee to deny Peck benefits. See id. The

courts of appeals, though, have adopted differing positions on

the standard a district court should apply when reviewing a

determination made by an administrator of a top-hat plan like

the one at issue here. For the following reasons, we have no

need in this case to decide between the competing approaches.

By way of background, ERISA is silent on the standard

that courts should use when reviewing a benefits determination

made by the administrator of an ERISA plan. The Supreme

Court addressed that issue in Firestone Tire & Rubber Co. v.

Bruch, 489 U.S. 101 (1989). Relying on principles from trust

law, the Court held that “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 the terms of the plan.” Id. at 115. If a plan grants

the administrator or fiduciary such authority, “a deferential

standard of review [is] appropriate.” Id. at 111. We have

described that “deferential” standard as review for

“reasonableness.” Wagener v. SBC Pension Benefit Plan—

Non Bargained Program, 407 F.3d 395, 402 (D.C. Cir. 2005).

The courts of appeals have reached different conclusions

on whether Firestone’s deferential standard of review applies

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in the case of a top-hat plan that grants the plan administrator

discretion to interpret the plan’s terms. Some courts have

declined to apply Firestone’s deferential standard in that

context because of certain unique qualities of top-hat plans,

including their general exemption from ERISA’s fiduciary

requirements. See Craig v. Pillsbury Non-Qualified Pension

Plan, 458 F.3d 748, 752 (8th Cir. 2006); Goldstein v. Johnson

& Johnson, 251 F.3d 433, 442-44 (3d Cir. 2001). Other courts

apply Firestone’s deferential standard to top-hat plans that vest

administrators with discretion to interpret the plan’s

provisions. See Comrie v. IPSCO, Inc., 636 F.3d 839, 842 (7th

Cir. 2011); Sznewajs v. U.S. Bancorp Amended & Restated

Supp. Benefits Plan, 572 F.3d 727, 733-34 (9th Cir. 2009),

overruled in part on other grounds by Salomaa v. Honda Long

Term Disability Plan, 642 F.3d 666, 673-74 (9th Cir. 2011);

Paneccasio v. Unisource Worldwide, Inc., 532 F.3d 101, 108

(2d Cir. 2008). It bears noting that, while the courts expressly

disagree about the governing standard, e.g., Comrie, 636 F.3d

at 842, the extent to which the competing approaches result in

a practical difference may be open to some question: even the

courts to reject Firestone’s deferential standard still ultimately

ask “whether the Plan’s decision was reasonable.” Craig, 458

F.3d at 752; see Goldstein, 251 F.3d at 444.

At any rate, we have no need in this case to explore the

varying approaches or to choose between them. As we explain

next, even assuming Firestone’s deferential standard of review

applies in the context of this case, SELEX’s denial of Peck’s

claim for deferred compensation still cannot be sustained as a

reasonable determination under the company’s plan.

2.

Under SELEX’s Key Employee Deferred Compensation

Plan, an employee’s entitlement to benefits vested after an

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initial period of five years from the Plan’s establishment. But

an employee’s right to deferred compensation vested before

five years if he was terminated without cause. Because Peck

was discharged within five years of the Plan’s establishment,

his eligibility for benefits turns on whether his termination

could be considered one for “cause” under the terms of the

Plan.

“Cause” for termination, the Plan provides, arises from an

employee’s “habitual neglect of or deliberate or intentional

refusal to perform any of his or her material duties and

obligations of his or her employment (including compliance

with the Company’s Code of Conduct) with the Company.”

J.A. 59. The Plan’s Administrative Committee determined that

Peck’s refusal to accept the quality-control position afforded

cause for terminating him under that definition. While the

company offered no explanation of its interpretation at the time

of the decision, it now explains that Peck was an at-will

employee without any employment contract assigning him to a

specific position or specific duties. Thus, the company

maintains, the “material duties and obligations of [Peck’s]

employment . . . with the Company” amounted to whatever

duties he was directed to perform, including the direction to

assume an entirely different position, with entirely different

duties, in an entirely different locale (Kansas instead of

Washington, D.C.). And by refusing to accept the new

position, SELEX asserts, Peck engaged in a “refusal to

perform” the “material duties and obligations” of his

employment with the company.

SELEX’s interpretation of the Plan cannot be correct. Its

reading is incompatible with the terms of the Plan and upsets

the parties’ reasonable expectations about the duties of a

person’s employment with the company. See Wagener, 407

F.3d at 404-05; see also Shelby Cty. Health Care Corp. v. S.

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Council of Indus. Workers Health & Welfare Trust Fund, 203

F.3d 926, 934 (6th Cir. 2000) (“[A] plan administrator must

adhere to the plain meaning of [a plan’s] language, as it would

be construed by an ordinary person.”). Under SELEX’s

interpretation, an at-will employee’s “material duties and

obligations” would be entirely unconnected to his or her

current position. So a high-level manager, for instance, would

give the company cause to terminate her if she declined to

move across the country to perform an entirely different (and

less desirable) role (perhaps in a much lower-ranking position

on the organizational chart).

Although the literal terms “employment with the

company” in theory could encompass any position at all in the

company, the surrounding words foreclose that unnatural

reading. The phrase “material duties and obligations of [a

person’s] employment” naturally refers to the set of

responsibilities assigned to an employee. And those

responsibilities are necessarily tied to an employee’s position

with the company. To avoid for-cause dismissal, then, an

employee cannot refuse to fulfill the duties and obligations

assigned to her, which means she cannot refuse to carry out the

duties of the position she holds. But she does not “refuse to

perform the material duties and obligations of her employment

with the company” if she declines to accept materially different

duties and obligations.

Peck, consequently, did not refuse to perform the material

duties and obligations of his employment with the company.

After SELEX determined that he was unlikely to succeed in the

D.C. marketing position he held, he was offered the

opportunity to assume a different position in the quality-control

department in Kansas. The offer involved a new set of

“material duties and obligations.” In his marketing position, he

oversaw all marketing and sales for the U.S. market, and he had

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no duties related to quality control. The Kansas position, by

contrast, involved supervising a team tasked with improving

the quality of SELEX’s products and services. Peck’s refusal

to accept that new position was not a “refusal to perform the

material duties and obligations of his employment.”

SELEX argues that the parenthetical clause in the “cause”

definition—i.e., “material duties and obligations of his or her

employment (including compliance with the Company’s Code

of Conduct)”—shows that a person’s duties go beyond her

specific position. The parenthetical clause, however,

establishes only that an employee’s material duties and

obligations include adherence to the Code of Conduct. The fact

that the Code of Conduct applies to all positions in the

company does not somehow expand a particular employee’s

scope of assignable duties to encompass the duties of every

position throughout the company.

Finally, SELEX, in a footnote in its brief, suggests that we

should defer to the Administrative Committee’s finding that

Peck waived his deferred-compensation claim when he

voluntarily dismissed his state-law claim raising that issue (and

substituted the ERISA claim we now consider). We decline to

consider SELEX’s conclusory assertion of waiver, offered

without supporting argument, discussion, or legal authority.

See Washington Legal Clinic for the Homeless v. Barry, 107

F.3d 32, 39 (D.C. Cir. 1997).

In sum, we hold that Peck did not refuse to perform the

duties of his employment with the company when he declined

to assume the different duties of a different position in a

different location. SELEX’s termination of him therefore

could not have reasonably qualified as a termination for cause

within the meaning of the Plan, meaning that Peck is entitled

to deferred compensation under the Plan. See Wagener, 407

13

F.3d at 405 (“Plan fiduciaries cannot claim deference for an

interpretation of the Plan that . . . contradicts the Plan’s plain

language.”).

B.

We turn now to Peck’s claim for severance pay under

SELEX’s Separation Policy. The Policy provided for

severance pay to a full-time employee “whose employment

terminates due to lack of work, elimination of position, or

change of control.” J.A. 79. Peck asserts an entitlement to

severance pay based solely on the second of those grounds: he

contends that SELEX terminated him because it eliminated his

marketing position.

The district court concluded otherwise. Following a bench

trial, the district court found that “Peck was terminated because

he would not return to Kansas to serve in a different capacity,

not because [SELEX] was eliminating the marketing position

in D.C.” Peck II, 270 F. Supp. 3d at 115. To prevail on his

claim for severance pay, then, Peck needs to show that the

district court erred in finding that his termination resulted from

his refusal to accept the new position in Kansas and not from

an elimination of his position in D.C. See Overby v. Nat’l Ass’n

of Letter Carriers, 595 F.3d 1290, 1293-94 (D.C. Cir. 2010)

(factual findings not set aside unless “clearly erroneous”).

Peck, however, at no point contests the district court’s

finding that he was terminated because he refused to accept the

quality-control position and not because of the elimination of

his position. Instead, he argues that the district court erred in

finding that SELEX did not eliminate his marketing position.

Peck contends that the marketing position in fact was

eliminated. But that argument, even if persuasive, does not

suffice to establish Peck’s entitlement to severance pay.

Regardless of whether the company eliminated Peck’s

14

marketing position, he would still need to show that he was

terminated because of the position’s elimination rather than

solely because of his refusal to accept the quality-control

position. Yet Peck raises no challenge to the district court’s

finding that his termination resulted from his refusal to accept

the new position and not from an elimination of his marketing

position. Indeed, SELEX, in its brief, specifically pointed to

Peck’s failure to raise such a challenge, but Peck still did not

address the issue in his reply brief.

Peck alternatively argues that SELEX should be estopped

from claiming that Peck was terminated for a reason other than

the elimination of position. Prior to the litigation, Peck

contends, SELEX rested its denial of severance benefits on the

ground that he refused to transfer to the quality-control

position. According to Peck, SELEX now takes what he

perceives to be a different position: that he is ineligible for

severance pay because his termination was not due to an

elimination of his position.

Peck’s argument lacks merit. The doctrine of estoppel can

prelude a party from switching positions on an issue if it would

prejudice the opposing party. See Ward v. Wells Fargo Bank,

N.A., 89 A.3d 115, 126 (D.C. 2014); cf. Konstantinidis v. Chen,

626 F.2d 933, 938 (D.C. Cir. 1980) (discussing the concept of

judicial estoppel). SELEX, however, has not changed its tune

on the reason for denying Peck severance pay. In an October

2012 letter, SELEX’s CEO advised Peck that his “employment

with SELEX is terminated” “because you have continued to

refuse your assignment to the position of Vice President of

Quality Control and Business Improvement.” J.A. 92. SELEX

continues to maintain that Peck was terminated solely because

he refused to accept the new position. Peck’s estoppel

argument thus cannot carry the day.

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* * * * *

For the foregoing reasons, we vacate the district court’s

grant of summary judgment to SELEX on Peck’s

deferred-compensation claim and remand for entry of

judgment in Peck’s favor. We affirm the district court’s

judgment in SELEX’s favor on Peck’s claim for severance pay.

So ordered.