stating that “in an ERISA federal common law case ... courts must be cautious not to create new causes of action out of whole cloth, in violation of the explicit statutory enforcement scheme which limits the causes of action available under the Act.”
How later courts described this case
- stating that “in an ERISA federal common law case ... courts must be cautious not to create new causes of action out of whole cloth, in violation of the explicit statutory enforcement scheme which limits the causes of action available under the Act.”
- holding that where “[t]he only way an employee could ascertain the procedures for obtaining benefits would be to refer to the [original plan documents],” employees cannot enforce terms of informal writings as free-standing ERISA plans
- holding that ERISA preempted plaintiffs fraud claim based on false statements made before an ERISA-covered plan came into existence because the fraud claim “clearly relatefd] to an ERISA-covered plan” (quotation omitted)
- explaining, in an action under ERISA, that"[o]ur reversal of the prior judgment also requires that we vacate the award of attor- neys' fees to Plaintiffs"
Written by the judges who cited it.
The opinion
WILKINS, Circuit Judge,
concurring:
I agree with the positions set forth in the opinion of Judge Williams issued for the en banc court. I write separately to express my belief that it is unnecessary for us to decide whether federal common-law theories as a companion to ERISA are applicable under the circumstances presented here. In my view, even if we were to hold that application of such theories is appropriate, Plaintiffs could not recover because on the undisputed facts they cannot demonstrate that they expected to receive contributions of more of the surplus than Cone Mills actually contributed. Consequently, I would enter judgment in favor of Cone Mills on this basis and reserve judgment on the difficult question of the appropriateness of fashioning common-law theories under ERISA.
*871 I.
In response to the concerns of Cone Mills’ employees regarding the proposed LBO by management, Cone Mills’ President and Chairman of the Board, Dewey Trogdon, issued various communications to the employees during the months preceding the LBO. Examination of these communications reveals that in all of the information provided to Cone Mills’ employees concerning the amount of the proposed pension reversion surplus it was estimated that the surplus was approximately $50 million and this amount would be contributed over the first two plan years.
The first of the communications at issue is a letter dated December 12, 1983 from Trog-don to all employees. The letter explains that Cone Mills’ board had approved the plan for management to purchase Cone Mills’ stock and had approved the adoption of the 1983 ESOP. The letter states in pertinent part, “Currently, it is difficult for me to give details, but subject to legal and tax rulings, it appears that in the first two years (1984-85), over fifty million dollars of stock could be contributed to your ESOP.”
The next communication with employees was a “Personal Letter to our Salaried Employees” authored by Trogdon on December 15, 1983 and mailed to all of Cone Mills’ salaried employees. Discussing the surplus, the letter provides in pertinent part:
If the management and bank proposal to buy the Company is successful, there is agreement among management and the banks that we will contribute the surplus, or its equivalent in Company stock, to the ESOP. When the transaction is executed and the contribution is made, you, I, and all other Cone employees will “take title” to a substantial asset in which we currently have no rights or ownership.
The December issue of The Textorian, Cone Mills’ company newspaper, presented highlights of the 1983 ESOP. It stated, “Over $50 million of stock could be contributed the first two years of the plan, if the plan is approved by the federal government.”
A videotaped communication viewed by Cone Mills’ employees in February 1984, informed employees:
[A] key part of the Cone reorganization will be a new employee stock ownership plan, or ESOP. Under this plan, it is anticipated that Cone will contribute over $50 million in stock to employees for 1983 and 1984_
Cone expects to contribute over $50 million of company stock to the ESOP for the years 1983 and 1984.
A question-and-answer pamphlet distributed to employees following the video presentation stated, “If all goes according to plan, over $50 million of stock will be contributed to the ESOP for the years 1983 and 1984.” And, the February 23 proxy statement, sent to salaried employees who participated in Cone Mills’ employee stock ownership plan, referred to “an estimated $50 million of surplus funding” in Cone Mills’ retirement plans.
On March 15, 1984, Trogdon sent a memo to salaried employees in which he addressed specific questions that management had received about the LBO. With respect to the amount of the contributions to the 1983 ESOP for the 1983 and 1984 plan years, Trogdon stated that the “contributions are estimated at $50 million.”
Following completion of the LBO in March 1984, Cone Mills began to make contributions to the 1983 ESOP. The district court found that Cone Mills contributed stock valued at a total of $54,796,638 to the 1983 ESOP for plan years 1983 and 1984.
II.
Cone Mills argues on appeal that even if this court were to hold that common-law theories should be applied to enable employees to enforce the representations made by Cone Mills, it is nevertheless entitled to judgment because the undisputed facts demonstrate that Plaintiffs could not have relied on contribution of an amount more than the approximately $55 million that Cone Mills actually contributed to the 1983 ESOP for the first two plan years. I find this argument persuasive.
*872 It is undisputed that in the months preceding the LBO no one knew the exact amount of the surplus, but everyone believed that the surplus was approximately $50 million. Indeed, the district court observed, “I think everybody thought [the surplus] was $50 million.” The district court noted that when Trogdon made the representations concerning the amount of the surplus to be contributed, “management knew that the ultimate amount would depend upon a number of factors, including fluctuating interest rates and annuity costs.” The district court stated, “For this reason, in describing the anticipated amount of [the] surplus, [Cone Mills] and the lending banks used such terms as ‘approximately $50 million,’ ‘over $50 million,’ or ‘$50 million or more.’ ”
Each of the representations to Plaintiffs concerning the amount of the surplus to be contributed to the 1983 ESOP used the $50 million estimate with qualifying language. The record is unassailable that Cone Mills and Plaintiffs acted at all times with the mutual understanding that the surplus amounted to approximately $50 million. Because in the only information available to Plaintiffs it was estimated that the amount of the surplus was approximately $50 million, Plaintiffs could not have relied upon receipt of a substantially greater amount.
Plaintiffs’ argument that they relied on the promise contained in Trogdon’s letter of December 15, which mentioned only the surplus without reference to any amount, lacks merit. Clearly, the estimated $50 million potential contribution, not a general reference to “the surplus,” was the single factor of importance to Plaintiffs. For example, if Cone Mills had promised to contribute the surplus, which it had estimated to be about $100, the promise of the surplus would have been insufficient to potentially influence Plaintiffs’ actions. Accordingly, in my view, the only reasonable construction of the undisputed evidence is that the estimated amount of the surplus was integral in inducing any possible reliance by Plaintiffs. *
Finally, the argument is made that even if Plaintiffs only relied on the $50 million estimated amount of the surplus, they are nevertheless entitled to the remainder of the surplus. This is so, the argument proceeds, because Plaintiffs were entitled to the surplus on the day the LBO was completed and were therefore entitled to any interest that accrued on the surplus after that date. In my view, this argument also lacks merit. None of the communications by Cone Mills to the employees represented that the surplus would be contributed to the 1983 ESOP on the day the LBO was completed. To the contrary, all of the representations concerning the time frame for contribution of the surplus indicated that the surplus would be contributed for the first two plan years (e.g., “in the first two years (1984-85)”; “the first two years of the plan”; “for the years 1983 and 1984”; “I urge you to take a look at how much stock is being put into the ESOP for 1983 and how much is planned for 1984”) and that Cone Mills’ employees would receive title to the surplus when the contribution was made. Accordingly, Plaintiffs could not have relied on receiving the surplus on the day the LBO was completed.
III.
In conclusion, Cone Mills contributed approximately $55 million to the 1983 ESOP for the first two plan years. It thus fulfilled any obligation it may have created by its representations to its employees. Permitting Plaintiffs to recover the remaining portion of the surplus, in my view, would result in an unjustified and unanticipated windfall.
Judge NIEMEYER and Judge WILLIAMS have advised that they join in this opinion.
I do not read the decision of the district court on this point as contrary to the position expressed in this concurrence. Rather, it appears that because the district court had expressly agreed to withhold any finding on reliance pending certification of the legal issues to this court, it believed it was constrained not to render any finding on reliance. While I believe it would have been justified in doing so prior to this appeal, I do not believe that anything in the decision of this court precludes it from doing so on remand.