Opposition Brief — MacLachlan v. Exxonmobil Corp.

I

Supran, Quis

FILED I

'

i

a)

No. 03-1211

IN THE

Supreme Court of the United States

JOHN MAcLACHLAN, et al.,

Petitioners,

v,

ExxONMosiL CorporaTION, et al.,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES CourRT OF APPEALS FOR THE FIFTH CIRCUIT

BRIEF IN OPPOSITION -

Rosert B. McCNEAL Tony P. ROSENSTEIN

FRILOT, PARTRIDGE, KOHNKE Counsel of Record

& CLEMENTS, L.C. JOHN E. NESLAGE

3600 Energy Centre J. RoBerT Fow er II

New Orleans, LA 70163 Baker Botrts L.L.P.

(504) 599-8014 910 Louisiana

Davip M. RIVET Houston, TX 77002

NICHOLAS VINCENT (713) 229-1234

JOANN LEE

ExxONMobiL CorPORATION

800 Bell, Suite 1503K

Houston, TX 77002

(713) 656-5572

Attorneys for Respondents

187120

_ 6

@ BEST AVAILABLE COPY

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;

a

QUESTIONS PRESENTED |

The petition for writ of certiorari (the “Petition”) does

not present a question worthy of review by this Court.

Petitioners’ first question is whether a plan administrator

abuses his discretion in excluding coverage to employees,

whose status as common law employees is uncontested, and

who are not otherwise expressly excluded under the

employer’s ERISA governed plans. Petitioners’ second and

related question is whether a plan administrator abuses his

discretion in interpreting undefined plan terms contrary to

federal common law, or another statutory or regulatory

standard. Even though Petitioners’ framing of the questions

is contrary to the relevant facts of this case, each of the three

circuit courts that have addressed essentially these issues has

held that a plan administrator vested with discretion to

interpret a plan’s terms may reasonably conclude that only

employees issued a W-2 by the employer or paid on the

employer’s payroll are included as participants in a plan

which provides benefits to “employees of an employer,” and

that there is no requirement that “employee” when used in

an ERISA plan be interpreted to mean a common law

employee as defined in Nationwide Mutual Ins. Corp. v.

Darden, 503 U.S. 318 (1992). These decisions by the Ninth,

Fifth and First Circuits are also consistent with the principles

articulated by the Sixth and Seventh Circuits, and none of

the cases cited by Petitioners as evidence of an inter-circuit

conflict actually presents one.

Petitioners’ third question is whether common law

employees can be “discriminated against” as a class in a

benefits plan governed under ERISA. This question has been

definitively answered “Yes” by this court’s precedent and

it

the precedent of the circuit courts that have addressed the

issue. Petitioners have not presented any compelling

justification for overturning these well-settled precedents.

In short, Petitioners have not presented a compelling

reason for granting certiorari, as the Fifth Circuit’s decision

is not in conflict with any other circuit decisions or decisions

of this court and the result of its decision is consistent with

well-settled principles under ERISA.

A more appropriate phrasing of the question presented

by the Petition is as follows: Where an individual has worked

for an extended time providing services to a company while

on the payroll of a third-party contractor, being paid by the

third-party contractor, receiving benefits from the third-party

contractor and with a clear understanding that the company

would not be providing him benefits, will a plan administrator

abuse its discretion in denying the individual benefits under

an ERISA plan that provides benefits to “regular employees”

of the company?

lil

RULE 14.1(B) STATEMENT OF PARTIES

TO THE PROCEEDING

Petitioners/Appellants/Plaintiffs

1. John MacLachlan

2. James Brown

3. Stephen K. Manley

4. Alaina Spurlock

| 5. Bernd Stahr

6. Michael Zaiontz

' 7. The case was brought as a class action, but no class

4 has been certified

5

Respondents/Appellees/Defendants

1. ExxonMobil Corporation

2. Thomas C. Harrison

3. .The Mobil Oil Corporation Retirement Plan

4. The Mobil Oil Corporation Comprehensive Medical

Plan

5. The Mobil Oil Corporation Dental Assistance

Provisions

6. The Mobil Oil Corporation Dependent Group Life

Insurance Plan

iv

7. The Mobil Oil Corporation Disability Income Plan

8. The Mobil Oil Corporation Employee Stock

Ownership Plan

9. The Mobil Oil Corporation Employee Savings Plan

10. The Mobil Oil Corporation Life Insurance Plan

11. The Mobil Oil Corporation Pre-Social Security Plan

12. The Mobil Oil Corporation Termination Allowance

Plan

13. The Mobil Oil Corporation Employee Severance

Plan

14. The Mobil Oil Corporation Employee Separation

Benefit Plan

RULE 29.6 CORPORATE

DISCLOSURE STATEMENT

ExxonMobil Corporation is a publicly traded company

whose stock is listed on the New York Stock Exchange.

ExxonMobil has no parent corporation, but has numerous

subsidiaries which are not publicly traded. No publicly held

company owns more than 10% of the stock of ExxonMobil

Corporation.

Vv

TABLE OF CONTENTS

Page

Questions Presented Jp Wikighind ib eo ee ae eee 1

Rule 14.1(B) Statement of Parties to the Proceeding

ET ee re Pe A te ee hy oe ill

Rule 29.6 Corporate Disclosure Statement ....... 1V

in ae CN og oi RR V

Table of Cited AminOTiiGs ... « <cae esie cece se es vi

ee ee LS ee a ame a: l

Petitioners’ Statement of the Case is Inaccurate ... ]

Reasons for Denying the Writ ............-..--- y

A. The Fifth Circuit’s Decision is Consistent

with the Decisions of Other Circuit Courts

and Properly Applies Established Principles

OU, gg kb cn ccnctepavasteseuacure 9

B. The Court Should Not Overturn the Well-

Settled Rule that an ERISA Plan Need Not

Cover all Common Law Employees of an

eee errr rrr ere 12

Comrie . oo. i kcdv ev nda cubeese enna seeeee 18

vi

TABLE OF CITED AUTHORITIES

Cases:

Abraham v. Exxon Corp., 85 F.3d 1126 (Sth Cir.

SOY 60 65 bas CE ere ees

Admin. Comm. of the Sea Ray Employees’ Stock

Ownership & Profit Sharing Plan v. Robinson,

164 F.3d 981 (6th Cir. 1999), cert. denied, 528

Oe ee | Peer err er re ree

Allen v. W. Conference of Teamsters Pension Trust

Fund, 788 F.2d 648 (9th Cir. 1986) ...........

Averhart v. US West Mgmt. Pension Plan, 46 F.3d

ee ee eer ere Trey

Bauer v. Summit Bancorp, 325 F.3d 155 (3d Cir.

yo PST ee NTE ees Cer eee ee

Bronk v. Mountain States Tel. and Tel., Inc., 140 F.3d

33> CHOU NA BOO eos soe ebcceenceeaesen

Capital Cities/ABC, Inc. v. Ratcliff, 141 F.3d 1405

(10th Cir. 1998), cert. denied, 525 U.S. 873 ....

Fink v. Union Central Life Ins. Co., 94 F.3d 489

fe | Pree ev eT eee ee

Firestone Tire and Rubber Co. v. Bruch, 489 U.S.

BOS CUED in. vvchuncddackedensar tare

Page

10

10

13

13

13

13

14

vil

Cited Authorities-

Page

Hensley v. Northwest Permanente P.C. Ret. Plan &

Trust, 258 F.3d 986 (9th Cir. 2001), cert. denied,

ORR oe) es ree 9,10, 11, 15

Kolling v. American Power_Conversion Corp.,

BAT F340 14 Cat Cit, BOGS) ac ccc ccccvnencsss 9,11

Lasser v. Reliance Standard Life Ins. Co., 344 F.3d

381 (3d Cir. 2003), petition for cert. filed, 72

U.S.L.W. 3553 (U.S. Feb. 19, 2004) (No. 03-1213)

nett ote eee re ea eas 11, 12

Lee v. E.l. du Pont de Nemours Co., 894 F.2d 755

eo) ee Peron eerre rer 16

Lockheed Corp. v. Spink, 517 U.S. 882 (1996) .... 12

MacLachlan v. ExxonMobil sie fa 350 F.3d 472

be oe) nn Sn eee ce passim

McGrath y. Auto-Body North Shore, Inc., 7 F.3d 665

‘2, ob S| eee ert eee tre 13

Nationwide Mutual Ins. Corp. v. Darden, 503 U.S.

i: ee errr ee .1,9, 13, 14

Schikore v. BankAmerica Supplemental Retirement

Plan, 269 F.3d 956 (9th Cir. 2001) ........... 10, 11

Shaw v. Delta Airlines, Inc. 463 U.S. 85 (1983) ... 12

Vill

Cited Authorities

Page

Trombetta v. Cragin Fed. Bank for Sav. Emplovee

Stock Ownership Plan, 102 F.3d 1435 (7th

Lt RE ns os 500 eS he ee eee 10, 14

Vizcaino v. Microsoft, 97 F.3d 1187 (9th Cir. 1996),

rev'd in part and aff'd in part, 120 F.3d 1006

(9th Cir. 1997) (en banc), cert. denied, 522 U.S.

Lo eo | ere erry er eine: ieee 15

Wolf v. Coca-Cola, 200 F.3d 1337 (11th Cir. 2000)

oeeoeeoeeeeeeeeeeeeeeeeeewe ee wee we wee emhl ml hlUlc OhlUh Uh Ol

Statute:

Be WS ROTTED 4 a ho db acd one cenees 9

]

STATEMENT OF THE CASE

Petitioners’ Statement of the Case is Inaccurate

The Petitioners’ statement of the case is inaccurate and

incomplete. Respondents submit that the Fifth Circuit’s

opinion should be consulted as a more accurate and balanced

discussion of the undisputed facts underlying this dispute.

See MacLachlan v. ExxonMobil Corp., 350 F.3d 472, 472-

78 (5th Cir. 2003).

Clarifications of and supplements to the Petitioners’

statement of the case include:

l.

Respondents have not conceded that Petitioners were

common law employees of Mobil. Solely for purposes

of the motion for summary judgment granted below,

Respondents agreed to assume that Petitioners were

Mobil common law employees, because status as a

common law employee was not determinative of benefits

eligibility under the Mobil pians.

The contractors who employed Petitioners paid their

wages, withheld employment and income taxes on their

wages and provided their benefits. For example,

Petitioner John MacLachlan was provided a 401(k) plan

by Universal Technical Services (UTS) and was offered

medical insurance (although he declined to participate).

See 350 F.3d at 475.' MacLachlan also received vacation

and holiday pay.

1. Doc. 73, Ex. C-1 pp. 81-83. The District Court designated

the exhibits to Respondents’ Motion for Summary Judgment as

Document 73 in their entirety, and references to these exhibits are

(Cont'd)

eaten,

2

3. During his employment with Consolidated Technical

Services (CTS) and UTS from 1987 through 1999,

MacLachlan knew that he was not considered an

employee of Mobil for any purpose, that Mobil

employees were receiving benefits that he did not receive

and that Mobil did not intend to provide him benefits.’

Furthermore, MacLachlan signed an agreement with CTS

indicating that he was solely an employee of CTS and

barring him from becoming an employee of Mobii within

30 days following his termination of employment with

CTS.’ Mobil also entered into contracts with CTS and

the other contractor employers who hired Petitioners, and

these contracts provided that Petitioners were to be

(Cont’d)

made as “Doc. 73, Ex. .” The specific circumstances of each

of the other five Petitioners, including a description of the benefits

provided by their employers, are summarized in Appendix A to

Respondents’ Memorandum in Support of Motion for Summary

Judgment filed with the District Court. Doc. 73, Appendix A.

2. Doc. 73, Ex. C-1 pp. 105, 109, 113-114, 173-174, 179-180.

Similarly, from the time they began to provide services to Mobil, all

of the Petitioners were aware that they were not receiving

Mobil benefits, and that they were entitled to receive benefits only

through their payroll employers. Doc. 73, Ex. 8, Bates 196-214.

Like MacLachlan, Petitioners Manley, Brown and Spurlock signed

agreements with their third-party contractors acknowledging that they

were not entitled to Mobil employee benefits. Doc. 73, Ex. 19.

For example, Petitioner Stahr signed an employment agreement with

his contractor providing that he was “not entitled . . . to any benefits

under any employee benefit plan of Mobil corporation, its subsidiaries

or affiliates presently have in effect or may put into effect in the

future.” Doc. 73, Ex. 30.

3. Doc. 73, Ex. 20; Ex. C-1 p. 57.

3

considered employees of the contractors. See, e.g., 350

F.3d at 481.4

4. Nonetheless, in February 1999, MacLachlan’s attorney

sent a letter to Mobil requesting information about the

eligibility requirements for Mobil’s benefit plans.

Thereafter, a series of written communications occurred

between MacLachlan’s attorney and Doug Davies, a

Mobil benefits attorney. Davies provided plan excerpts

at no cost and other information in response to

MacLachlan’s counsel’s inquiries.* Shortly thereafter,

MacLachlan’s attorney filed a claim for benefits under

the Mobil plans, which claim was referred to Thomas C.

Harrison as the plan administrator of the Mobil plans.°

4. The contract between CTS and Mobil provided that CTS

employees such as MacLachlan would be “solely the servants and

employees” of CTS. Doc. 73, Ex. C-1, p.136; Ex. 1 Bates 517-519.

5. Doc 73, Ex. 1, Bates 439-503. The undisputed facts contrast

with Plaintiffs’ assertion, without record citation, that MacLachlan

“unsuccessfully attempted to engage meaningful dialogue with the

administrator about his claim and to retrieve pertinent information,

including copies of the plans themselves upon request” before filing

his appeal. Petition, pp. 5-6.

6. Only John MacLachlan filed a claim for benefits pursuant to

the ERISA claims procedures provided for under the Mobil plans.

None of the other Petitioners filed a claim, asserting that the plan

administrator’s reasons for denying MacLachlan’s claim would apply

with equal force to them. The district court accepted this argument,

_concluding that the plan administrator’s determination regarding

MacLachlan applied with equal force to the other Petitioners. Doc. 73,

Ex. 21, 24, 25, 29, 30.

4

5. Harrison did not fail to investigate the background of

MacLachlan’s claim. The Fifth Circuit concluded thai

“Harrison conducted a thorough investigation of the plan

and the history of its administration,” and gives an

overview of the reasonable steps taken to reach his

decision:

Before the merger, Harrison was an Exxon employee

and had not previously reviewed a claim for benefits

under the Mobil plans. To make his decision, he

reviewed the terms of the Mobil plans described above

as well as MacLachlan’s employment history with

Mobil and CTS/UTS. Harrison also discussed the

history of the plan’s administration with Doug Davies,

an ExxonMobil attorney who worked in Mobil’s

benefits division before the merger.

Davies informed Harrison that there was no record

of Mobil’s paying benefits to similarly situated third-

party contractors. Davies also stated his belief that

MacLachlan was the first contractor to file a claim

seeking benefits. Harrison’s investigation revealed

that Mobil historically had mailed information about

benefits only to payroll employees. On the basis of

this record, Harrison concluded that contractors such

as MacLachlan are outside the plan’s definition of

“regular employees” and thus are ineligible for

benefits.

In March 2000, Harrison sent a letter to MacLachlan’s

attorney, formally denying benefits. Harrison

explained that Mobil was denying MacLachlan’s

claims because MacLachlan had been employed by

CTS/UTS and had not been on the Mobil payroll.

5

Moreover, as Harrison stated, even if MacLachlan had

been a common-law employee for tax purposes,

“Mobil has consistently limited benefits to persons

in a formal employment relationship with a

participating employer-corporation.”

Harrison also made specific findings with respect to

the different Mobil plans. MacLachlan was ineligible

for the Retirement and Savings Plan, Harrison found,

not only because MacLachlan was not on the payroll,

but also because the terms of the plan exclude any

person “retained by an employer-corporation under

written contract on a consulting basis” or “employed

by an employer corporation under a written contract

where the terms of such written contract exclude

participation in the Plan.” Harrison concluded that a

provision in MacLachlan’s contract with CTS was

intended to have this effect, because it stated that

MacLachlan was “solely” an employee of CTS.

Harrison also declared that MacLachlan was not

entitled to participate in the Severance Plan, because

that plan applied only to employees terminated on,

or within two years after, the date on which a change

in control of Mobil occurs. Here, the merger between

Exxon and Mobil did not occur until after MacLachlan

had been terminated. Accordingly, Harrison

concluded, MacLachlan would have been unable to

receive benefits under that plan, even if he had been

a Mobil employee at the time of his termination.

350 F.3d at 477-78 (footnote omitted).

6

6. Harrison’s decision to deny MacLachlan’s claim is

“amply supported by the record,” 350 F.3d at 481, which

included the following facts:

¢ MacLachlan’s contract with CTS provided that he

was solely the employee of CTS,’

¢ Mobil had a written agreement with CTS indicating

that individuals providing services under the contract

were exclusively the employees of CTS,

* Mobil had consistently construed its benefit plans to

only apply to its payroll employees, as evidenced by

who Mobil had actually provided benefits to in the

past and the structure of its human resources

administrative systems, which were not designed to

provide benefits to nonpayroll employees,*® and

¢ Mobil’s administrative policies clearly set out that

individuals not paid directly by Mobil were ineligible

for benefits.’

7. As the Fifth Circuit concluded, “[i]t is entirely reasonable

for an administrator to conclude that a person who performs services

for Mobil under such terms is not a “regular” employee of Mobil

corporation.” 350 F.3d at 481.

8. Doc. 73, Ex. 1, Bates 8009-015.

9. The Mobil employee classification policy provides under the

heading of “NONEMPLOYEES”: “[a] number of individuals who

are not employees may perform services for employer-corporations

or handle products of employer-corporations. Included are:...

Consultants; and Employees of Contractors, Service Bureaus and

(Cont’d)

7

7. The 1990 memoranda, which Petitioners attached as

appendices D and E to the Petition, were written by the

General Counsel of a Mobil operating subsidiary and

are not interpretations of the Mobil plan documents.'°

Rather, these memoranda merely note that a plaintiff

could assert entitlement to benefits, and do not indicate

that such a claim would be proper in any way. As the

Fifth Circuit stated in rejecting Petitioners’ challenge to

the District Court’s reading of the memoranda:

Even if plaintiffs had challenged the district

court’s weighing of the evidence, we would not

have found the decision to be clearly erroneous,

because the documents do not support the reading

plaintiffs give them. The first memorandum,

from F. K. Joiner of the Office of General Counsel,

merely asserts one lawyer’s “concern[] that if a

Mobil independent contractor were deemed

an employee for tax reasons, that the employee

would then seek to obtain the other benefits of

employment” (emphasis added). The second

memorandum, from W. C. Whittemore of the same

(Cont'd)

Outside Agencies.” Under the heading “Employees of Contractors,

Service Bureaus and Outside Agencies,” the policy specifically

provides that “individuals whose remuneration 1s not paid directly

by Mobil Oil Corporation or its subsidiaries should not be considered

employees of Mobil Oil Corporation or its subsidiaries.” Doc. 73,

Ex. 43, Bates 3548.

10. These memoranda were issued by the Office of General

Counsel of Mobil Exploration & Production, U.S. (“MEPUS”), not

the General Counsel of Mobil Oil Corporation, which is the reference

made in the Mobil plans.

8

office, similarly recognizes that independent

contractors might one day seek to claim Mobil

benefits, and suggests strategies to “reduce or

eliminate your exposure.” These documents by no

means concede that the appellants were eligible

for benefits.

350 F.3d at 480-81.

Furthermore, these memoranda were not evidence “obtained

after the Administrative Record was closed and litigation

initiated.” Petition, p. 4. Instead, the undisputed testimony of

Stephen Manley, one of the Petitioners, was that he was given

copies of the memoranda by his supervisor while on a smoke

break in 1990. R. 358, 623-25. However, petitioners declined

to put these documents before the plan administrator, and

Doug Davies testified that they had never seen the documents

before his deposition. Doc. 73, Ex. 15, p. 139.

8. Despite Petitioners’ repeated references to the Mobil

General Counsel’s interpretative authority, the Fifth

Circuit noted that “[Petitioners] concede that the

administrator has the discretion and final authority to

determine eligibility for benefits and that the abuse of

discretion standard applies.” 350 F.3d at 479. The final

decision in applying the plan language to the Petitioners’

claim lies clearly within the ambit of the plan

administrator.

9. Petitioners assert in the statement of the case that

Harrison violated his fiduciary duties under ERISA.

Petition, pp. 6-7. However, Petitioners fail to point out

that the District Court dismissed Petitioners’ fiduciary

claims, and Petitioners did not appeal that dismissal.

9

Petition App. A, p. 2. This case solely involves a claim

for plan benefits under section 502(a)(1)(B) of ERISA.

29 U.S.C. § 1132(a)(1)(B).

REASONS FOR DENYING THE WRIT

A. The Fifth Circuit’s Decision is Consistent with the

Decisions of Other Circuit Courts and Properly

Applies Established Principles of ERISA

Petitioners are required to show a compelling reason for

granting a writ of certiorari, but the Petition fails to do so.

Despite the Petitioners’ attempt to create a circuit split, there

plainly is none. The only circuits that have directly addressed

the issue in question have held exactly as the Fifth

Circuit did: “employed by an employer” can reasonably be

interpreted to be limited to include those employees who are

paid on the employer’s payroll and receive a W-2 from the

employer, and not those who are paid by third-party leasing

companies but who might subsequently be determined to be

common law employees under the multifactor Darden test.

Hensley v. Northwest Permanente P.C. Ret. Plan & Trust,

258 F.2d 986, 1000-02 (9th Cir. 2001), cert. denied, 534 U.S.

1082 (2002) (not unreasonable to apply “W-2 employee”

definition of the phrase “employed by an employer’”’); Kolling

v. American Power Conversion Corp., 347 F.3d 11, 14 (1st

Cir. 2003) (“Where, as here, the Plan adopts a circular

definition of employee—‘Employee of the Employer’—the

Plan administrator has the discretion to reasonably determine

the meaning of that phrase”) and MacLachlan, 350 F.3d at

482 (“ERISA does not require Mobil to define its benefits

plans in such a way as to provide coverage for all employees

... To the contrary, it is well established that an employee

10

may be a common law employee for some purposes, yet not

entitled to benefits under a benefit plan’”)."'

Furthermore, these three cases are supported in their

underlying analysis by decisions from other circuits. See, e.g.,

Trombetta v. Cragin Fed. Bank for Sav. Employee Stock

Ownership Plan, 102 F.3d 1435, 1439 (7th Cir. 1996)

(“Nothing in ERISA ... compels a plan to use the term

- ‘employee’ in the same way it is used in the statute’’) (citation

and internal quotation marks omitted); Admin. Comm. of the

Sea Ray Employees’ Stock Ownership & Profit Sharing Plan

v. Robinson, 164 F.3d 981, 986 (6th Cir. 1999), cert. denied,

528 U.S. 1114 (2000) (“To limit an administrator’s discretion

to only those terms explicitly defined would undermine the

administrator’s discretionary power or require companies to

write interminably long plans to account for every term’’).

The decision in Schikore v. BankAmerica Supplemental

Retirement Plan, 269 F.3d 956 (9th Cir. 2001), cited by

Petitioners as evidence of a circuit split, is inapposite and

not in conflict with these decisions. In fact, Schikore was

decided by the Ninth Circuit after Hensley, and was

specifically reconciled with Hensley. See 269 F.3d at 962

n.3. The Schikore court held that the common law mailbox

rule, which was at issue in that case, was a federal common

law evidentiary rule that was appropriate to apply to ERISA

plans absent language in the plan to the contrary. Jd. In

contrast, Hensley’s rationale was that plan administrators

should be allowed to construe plan terms, whether defined

or undefined, and the realm of possible definitions is not

confined to the common law definition of those terms. Jd.

11. See also Allen v. W. Conference of Teamsters Pension Trust

Fund, 788 F.2d 648, 650 (9th Cir. 1986) (upholding denial of benefits

even though administrators applied a definition of a plan term that

conflicted with its established statutory definition).

11

Petitioners argue that the Schikore panel did not need to

distinguish Hensley on the grounds that Hensley’s holding

regarding the reasonableness of a “W-2 employee” definition

of “employee” was superfluous, since the plan administrator

had made a finding in Hensley that the employees in question

were not common law employees of the plan sponsor.

However, this reading of Hensley is inconsistent with the

language of the Hensley decision, which specifically holds

that: “plan administrators should be given the full benefit of

the discretion afforded to them by their respective plans in

interpreting plan terms, be they defined or undefined, with

the reasonableness of those interpretations being evaluated

against the relevant factual and legal backgrounds.” 258 F.3d

at 1001. Petitioners’ view is also directly at odds with that of

the Ninth Circuit itself in its later characterization of Hensley,

since in Schikore the Hensley holding was described as

“our decision that a Plan Administrator need not apply a

common-law definition of a Plan’s term.” 269 F.3d at 962

n.3 (citing Hensley).

Furthermore, even if Hensley and Schikore are deemed

to be in tension, a writ of certiorari is not an appropriate

remedy for an intra-circuit conflict.

Similarly, the Third Circuit’s decision in Lasser v.

Reliance Standard Life Ins. Co., 344 F.3d 381 (3d Cir. 2003),

petition for cert. filed, 72 U.S.L.W. 3553 (U.S. Feb. 19, 2004)

(No. 03-1213), is not in conflict with Hensley, MacLachlan

or Kolling. The Lasser court recognized that if a term is

ambiguous, a reviewing court must defer to the plan

administrator’s interpretation. However, in the context of a

disability policy, the court held that the term “regular

occupation” was not ambiguous under the circumstances, and

even if it was, the plan administrator’s interpretation was

not reasonable because it was contrary to all case law and _

12

most other similar insurance policies. 344 F.3d at 385-87. In

contrast, the interpretation by the Fifth Circuit in MacLachlan

is consistent with all other case law addressing the meaning

of the word “employe” or the phrase “employed by an

employer” in an ERISA plan, and with the common

understanding (and, it is undisputed, the Petitioners’

understanding) of what the term “regular employee” meant

to Mobil.

Petitioners also refer in their description of the standard

of review to an alleged conflict of interest of Harrison on the

grounds that he was an employee of ExxonMobil. Petition,

pp. 9-10. Although Petitioners make no coherent argument

regarding how this supports granting the writ for a review of

the MacLachlan decision, Respondents would point to the

Fifth Circuit’s excellent and thorough discussion of this

potential conflict and how, even assuming there was a

conflict, the somewhat reduced deference afforded to the plan

administrator’s decision would not warrant its reversal.

See 350 F.3d at 478-480. At best, Petitioners allege an

incorrect application of a correct standard of law, which does

not support a granting of the writ.

B. The Court Should Not Overturn the Well-Settled Rule

that an ERISA Plan Need Not Cover all Common Law

Employees of an Employer —

Petitioners acknowledge that this Court has concluded

that ERISA does not require that all common law employees

be covered or treated equally in an employer’s ERISA

plans. See Shaw v. Delta Airlines, Inc. 463 U.S. 85, 91

(1983) (“ERISA does not mandate that employers provide

any particular benefits, and does not itself proscribe

discrimination in the provision of employee benefits”);

Lockheed Corp. v. Spink, 517 U.S. 882, 887 (1996) (“Nothing

13

in ERISA requires employers to establish employee benefits

plans. Nor does ERISA mandate what kind of benefits

employers must provide if they choose to have such a plan”).

Similarly, the circuit courts that have addressed the

issue have repeatedly held in a number of contexts that not all

common law employees need to be covered by an ERISA plan.

See, e.g., Abraham vy. Exxon Corp., 85 F.3d 1126, 1130 (Sth Cir.

1996) (eligibility exclusions based on factors other than age or

length of service are permitted by ERISA); Wolf v. Coca-Cola,

200 F.3d 1337 (11th Cir. 2000) (same); Averhart v. US West

Mgmt. Pension Plan, 46 F.3d 1480, 1486-88 (10th Cir. 1994)

(permissible to design plan to exclude employees who were not

“active employees on the payroll’); Bronk v. Mountain States

Tel. and Tel., Inc., 140 F.3d 1335, 1338 (10th Cir. 1998)

(permissible to exclude leased telephone company workers);

Capital Cities/ABC, Inc. v. Ratcliff, 141 F.3d 1405, 1410-12

(10th Cir. 1998), cert. denied, 525 U.S. 873, 119 S. Ct. 173

(permissible to exclude newspaper delivery boys); McGrath v.

Auto-Body North Shore, Inc., 7 F.3d 665 (7th Cir. 1993)

(permissible to exclude employees by changing eligibility

standards); Fink v. Union Central Life Ins. Co., 94 F.3d 489,

491-92 (8th Cir. 1996) (permissible to exclude officer from

“receiving benefits under plan documents); Bauer v. Summit

Bancorp, 325 F.3d 155, 165 (3d Cir. 2003) (permissible to limit

coverage to salaried employees).

Furthermore, Petitioners have cited no authority for the

proposition that all employees are included as ERISA plan

participants unless specifically excluded, or that employees

who meet the Darden common law employee test may not

be excluded from participating in a plan.'’? The proper

12. Petitioners also assert that the Fifth Circuit’s decision is in

conflict with this court’s ruling in Darden. This simply is not the

(Cont’d)

14

analysis, consistent with this Court’s decision in Firestone

Tire and Rubber Co. v. Bruch, 489 U.S. 101 (1989), is that

taken by the Fifth Circuit in responding to Petitioners’

argument below that the lack of a specific exclusion for

employees hired as third party contractors meant that such

individuals must be included:

To be sure, plaintiffs’ reading of the Mobil plan

is at least plausible in that before the 1994

amendment, the plan did not specifically exclude

common law employees. But the plan does not

explicitly include such employees, either. The

remedy for such an ambiguity in a plan’s language

is not the compelled inclusion of all employees

who arguably fit within its scope, but rather,

the exercise of interpretive discretion by a duly

empowered administrator. Harrison’s decision that

third-party contractors are not included in the plan

was not an abuse of that discretion.

350 F.3d at 482."

(Cont'd)

case. Darden addressed the meaning of “employee” for purposes of

the ERISA statute itself, and nothing in this court’s jurisprudence

indicates that the term “employee” or “employed by an employer”

must be given the same meaning in an ERISA plan. See Trombetta,

102 F.3d at 1439 (“Nothing in ERISA . . . compels a plan to use the

term ‘employee’ in the same way it is used in the statute”).

13. See also 350 F.3d at 477-78, 81, finding the plan

administrator’s conclusion “amply supported by the record” and

based on a “thorough investigation of the plan and history of its

administration.”

15

Petitioners provide an extensive discussion of the

decision in Vizcaino v. Microsoft, 97 F.3d 1187 (9th Cir.

1996), rev'd in part and aff'd in part, 120 F.3d 1006

(9th Cir. 1997) (en banc), cert. denied, 522 U.S. 1098 (1998),

as support for their view of rights that should follow from

common law status. However, Vizcaino did not require the

inclusion of all common law employees in an ERISA plan

(or require. express exclusionary language). The en banc

decision in Vizcaino required inclusion of the plaintiffs in

the Microsoft Stock Purchase Plan, which was not an ERISA

plan, but rather subject to regular rules of contract

interpretation under state law. 120 F.3d at 1013-14. The

ERISA plan claims were remanded to the plan administrator

for consideration of the meaning of the plan’s eligibility

language, which, in critical part, read any “common law

employee ... who is on the United States payroll of the

employer.” /d. at 1010 (ellipsis in original). Furthermore, as

the district court noted below, the Vizcaino decision involved

individuals hired directly by Microsoft, not through third-

party contractors. Petition, App. A at p. 13; 97 F.3d at 1189."

Petitioners further misstate the question as being whether

a plan administrator can “retroactively” exclude a common

law employee from plan participation. But the concept of a

“retroactive” exclusion assumes the individuals were at one

time intended to be participants. Mobil consistently applied

its plans to cover only employees actually on the payroll who

received a W-2 from Mobil, and this was consistent with

both parties’ expectations. None of the Petitioners testified

that he or she expected to receive benefits from Mobil, nor

would it have been reasonable for them to expect such

14. In the end, to the extent there is any tension with Hensley,

it is once again only an intra-circuit issue, and is not a circuit split

worthy of correction via writ of certiorari.

16

benefits given the structure of Petitioners’ relationship with

Mobil. If any decision would have had “retroactive” effect,

it would have been to include Petitioners in Mobil plans when

there was never any intent to do so.

Petitioners attempt to paint discrimination against

“common law employees” as an evil that ERISA is designed

to prevent. Although not clear from the Petition, presumably

the alleged evil is limited to individuals who are not classified

as employees of the employer for whatever reason, but later

are determined to be employees under the common law, 20-

factor test.'° To the contrary, a rule that would require plan

coverage of individuals who were not considered by either

party to the relationship to be employees, but who later are

determined to be employees, would defeat an employer’s

reasonable expectations regarding obligations under its

employee benefit plans and potentially jeopardize the health

of the trusts which fund the plans. ERISA was designed to

not only give employees assurance that promised benefits

would in fact be provided, but also to encourage employers

to provide benefits by assuring employers that only promised

benefits would in fact have to be provided. See, e.g., Lee v.

E.I. du Pont de Nemours Co., 894 F.2d 755, 758 (5 Cir.

1990). Neither purpose would be served by Petitioners’

proposed rule, which would present an untenable “catch-22”

situation for employers without validating any reasonable

expectation on the part of employees.

Adopting Petitioners’ proposed rule would also upset

long-settled expectations. As Petitioners note, “common law

employment is usually only identified after a history of

15. Obviously, the employees Mobil intended to and did, in fact,

cover in its plans were also common law employees of Mobil.

3

as

as 3 aS DESPRE ARIRE EY AES NE

17

behavior has been developed over an extended period of time.”

Petition, p. 28. Furthermore, because the standard for common

law employment is “facts and circumstances” driven, it is often

not obvious from the outset whether or not an individual meets

the 20-factor test of common law employment. Thus, in a

situation where the employer and the individuals have entered

into a service relationship based on the expectation that no

benefits would be provided, and both sides have worked under

that understanding for many years, Petitioners are proposing

that those expectations should be dramatically upset to avoid

additional “discrimination” against common law employees.

ERISA was not intended to allow the type of windfall that

Petitioners suggest, and Petitioners’ attempt to create a “suspect

class” out of common law employees is in conflict with the

policies underlying ERISA.

18

CONCLUSION

For all the foregoing reasons, the petition for a writ of

certiorari should be denied.

Respectfully submitted,

Rosert B. McNEAL Tony P. ROSENSTEIN

FRILOT, PARTRIDGE, KOHNKE Counsel of Record

& CLEMENTS, L.C. JOHN E. NESLAGE

3600 Energy Centre J. ROBERT FOWLER II

New Orleans, LA 70163 Baker Bortrts L.L.P.

(504) 599-8014 910 Louisiana

Houston, TX 77002

(713) 229-1234

Davi M. RIVET

NICHOLAS VINCENT

JOANN LEE

ExxoNMosii CorPORATION

800 Bell, Suite 1503K

Houston, TX 77002

(713) 656-5572

Attorneys for Respondents

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