Appendix — Colt Industries Operating Corp. Informal Plan for Plant Shutdown Benefits for Salaried Employees v. Henglein

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PILE TY

941331 FEB 2 1%

Morice OF THE CLERK

In THE

Supreme Court of the United States

Octoser Term 1994

Co Tt INDUSTRIES OPERATING CORPORATION INFORMAL PLAN For

PLANT SHUTDOWN BENEFITS For SALARIED EMPLOYEES,

Petitioner,

GeorcE W. HENGLEN, ET AL.,

Respondents.

On PETITION For Writ Or CERTIORARI

To Tue Unirep States Court Or APPEALS

For THe TuirD Circult

APPENDIX TO PETITION FOR WRIT OF CERTIORARI

Of Counsel: *WILLIAM H. Powner y, III

ANTHONY J. diBUONO Jones, Day, Reavis & PoGue

CotTec INpustriEs INC 500 Grant Street

430 Park Avenue Pittsburgh, PA 15219

-New York, NY 10022 (412) 391-3939

(212) 940-0574

Rosert A. Mason

JONES, Day, Reavis & PoGue

303 Peachtree Street, N.E.

Atlanta, GA 30308

(404) 521-3939

*Counsel of Record

CONTENTS

Page

Henglein v. Colt Industries Operating Corporation

Informal Plan for Plant Shutdown Benefits, No. 94-3074

(3d Cir. Nov. 4, 1994) (petition for rehearing denied).......... 1

Henglein v. Colt Industries Operating Corporation

Informal Plan for Plant Shutdown Benefits, No. 94-3074

(3d Cir. Sept. 26, 1994) (Henglein LID) ..ececccccccceseceececoceseess.... 2

Henglein v. Colt Industries Operating Corporation

Informal Plan for Plant Shutdown Benefits, No. 86-2021

(W.D. Pa. Feb. 10, 1994) (Henglein 3) (adopting defendant’s

findings of fact and conclusions of law and granting

defendant's motion for judgment) ...........ecccccccccsosesescecoseeees.. 22

Henglein v. Colt Industries Operating Corporation

Informal Plan for Plant Shutdown Benefits, No. 93-3219

(3d Cir. Jan. 13, 1994 (Henglein ID) ....c.cccccccsscsssscccesocscesecss... 33

Henglein v. Colt Industries Operating Corporation

Informal Plan for Plant Shutdown Benefits, No. 86-2021

(W.D. Pa. April 30, 1993) (Henglein 2) (adopting defendant’s

findings of fact and conclusions of law and granting

defendant's motion for judgment) .........-cecceccssssecoseeceeeececesss, 42

Henglein v. Informal Plan for Plant Shutdown Benefits,

974 F.2d 391 (3d Cir. 1992) (Henglein ]) veeccccccccccccceceeoeces..... 483

Henglein v. Colt Industries Operating Corporation

Informal Plan for Plant Shutdown Benefits, No. 86-2021

(W.D. Pa. May 17, 1991) (clarifying the order of

UE CE nisi 503

Henglein v. Colt Industries Operating Corporation

Informal Plan for Plant Shutdown Benefits, No. 86-2021

(W.D. Pa. April 30, 1991) (Henglein I) (granting defendant’s

motion for dismissal of plaintiffs’ complaint) ...................... 504

Henglein v. Colt Industries Operating Corporation

Informal Plan for Plant Shutdown Benefits, No. 86-2021

(W.D. Pa. May 25, 1989) (dismissing plaintiffs’ action

against the “Parity Plan” and permitting plaintiffs’

action against the “Informal Plan” to proceed).................... 511

Colt Industries Inc., v. Frenn, No. 86-2642

(W.D. Pa. Nov. 30, 1988) (dismissing defendants’ action

against the “Parity Plan” and permitting defendants’

action against the “Informal Plan” to proceed) .................... 515

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 94-3074

GEORGE W. HENGLEIN, et al.

vs.

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

SUR PETITION FOR REHEARING

Present: SLOVITER, Chief Judge,

BECKER, STAPLETON, MANSMANN, GREENBERG,

HUTCHINSON, SCIRICA, COWEN, NYGAARD, ALITO,

ROTH, LEWIS and McKEE, Circuit Judges.

The petition for rehearing filed by appellee in the above

entitled case having been submitted to the judges who par-

ticipated in the decision of this court and to all other avail-

able circuit judges of the circuit in regular active service,

and no judge who concurred in the decision having asked for

rehearing, and a majority of the circuit judges of the circuit

in regular active service not having voted for rehearing by

the court in banc, the petition for rehearing is denied.

BY THE COURT,

/s/ Caro, Los MANSMANN

Carol Los Mansmann

Circuit Judge

November 4, 1994

—

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT |

No. 94-3074 |

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.0. BAUER; E.E. BEST; H.W. BIGLEMAN;

C.R. BLAZIER; J.P. BRESSANELLI; G.D. BROWN; 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. FREDERICK; 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; 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, JR.; 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; J.L. MCKAIN; 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, JR.; 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. STRONSNIDER; 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, JR.; G.T. WEEKLEY;

E.M. WERRIES, JR.; D.L. WESTFALL;

J.A. WHITEHEAD; R.J. WHITTEN; C.K. WILDMAN;

T. WILLIAMS, JR.; T.H. WILLS, JR.; A.J. YANNI;

L.H. YOUNG, JR.; R.C. YOUNG; H.F. YUTE;

W.I. ZAZWIRSKY; JOHN K. DOUGLAS

Vs.

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

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. Bigleman; C.R. Blazier; J.P. Bressanelli; G.D. Brown;

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.

Frederick; 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; P.J.

Hannon; R.M. Hansen; M.I. Harpham; D.H. Heldman;

K.K. Hile; R.S. Hogsett; R.T. Hopper; H.M. Howell; W.M.

Hyams; J.M. Janke; C.L. Jobe, Jr.; 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; J.L. McKain; 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, Jr.; H.S. Pease, ITI;

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. Stronsnider; 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, Jr.;

G.T. Weekley; E.M. Werries, Jr.; D.L. Westfall; J.A.

Whitehead; R.J. Whitten; C.K. Wildman; T. Williams, Jr.;

medion

T.H. Wills, Jr.; A.J. Yanni; L.H. Young, Jr.; R.C. Young; H.F.

Yute; W.I. Zazwirsky, J.K. Douglas,

Appellants

Appeal from the United States District Court

for the Western District of Pennsylvania

(D.C. Civ. No. 86-cv-02021)

Argued

August 9, 1994

Before: MANSMANN, COWEN and McKEE, Circuit Judges.

(Filed September 26, 1994)

[*3] OPINION OF THE COURT

MANSMANN, Circuit Judge.

[*3] We revisit this case for the fourth time. Schake v.

Colt Indus., No. 85-3381 (3d Cir. May 14, 1986); Henglein v.

Informal Plan for Plant Shutdown Benefits, 974 F.2d 391

(3d Cir. 1992) (Henglein I); Henglein v. Colt Indus. Operat-

ing Corp. Informal Plan for Plant Shutdown Benefits, 93-

3219 (3d Cir. Jan. 13, 1994) (Henglein II). Colt Industries

closed its Midland Plant in 1982 and a number of its non-

union, salaried employees seek compensation under an in-

formal plan providing severance pay and benefits. Because

the district court failed to comply with our directives in

Henglein I and Henglein II, and because the district court’s

findings are not supported by the record, we will reverse

and remand for further proceedings.

The facts and prior proceedings have been previously

set forth in detail. Therefore, it is not necessary that we re-

state them here, but will do so only to the extent that it as-

sists our analysis.

In 1962, Crucible, Inc., the previous owner of the plant,

began an informal severance plan that provided retirement

benefits to its employees meeting specific requirements un-

til they reached eligibility for Social Security. In 1968, Cru-

cible distributed a memorandum entitled EARLY SEVER-

ANCE AND DISABILITY BENEFIT PROGRAM (“1968

plan”), which superseded the 1962 plan and _ [*4] provided

benefits to employees who met the various requirements.’

Crucible then merged with Colt Industries in 1969, and a

proxy statement was issued stating that “[blenefits under

1 The memo described an “early severance benefit,” an “early disability

benefit,” and a “20-30 year retirement.” The “20-30 retirement” is the |

program at issue here.

the various benefit, retirement and pension plans of Cru-

cible will not be affected by the consolidation.”

In 1969, Colt surreptitiously developed the Hardship

Retirement Guidelines (“1969 plan”), which purported to

terminate the 1968 plan. While warning that employees were

not to be informed of this action as they did not have a right

to the benefits, Colt’s management created new guidelines

for a discretionary benefit system. In 1972, Colt’s Board of

Directors rescinded the 1969 plan, again without informing

its employees. The Midland Plant closed in 1982 and the

employees who would otherwise be eligible for benefits un-

der the 1968 or 1969 plans sought the severance pay out-

lined in those plans.

II.

At the first trial the district court stated that in order to

have jurisdiction, it must initially find an ERISA-based plan.

After concluding that no ERISA plan existed, purportedly

using the standards espoused in Dillingham v. Donovan, 688

F.2d 1367 (11th Cir. 1982) (in banc), the district court dis-

missed the [*5] complaint for lack of subject matter juris-

diction.” The extent of the district court’s Dillingham analy-

sis was its acknowledgement of the discretionary nature of

the 1969 plan. The district court stated that it did not be-

lieve that a reasonable person could know who the intended

beneficiaries were or what the qualifications for eligibility

were under the 1969 plan. The court further found that there

was no intent on the part of the plan to actually pay any-

body anything at any time.

In Henglein I we held that the district court’s Dillingham

analysis was unduly narrow because it focused only on the

discretionary nature of the 1969 plan and the 1972 resolu-

2 In Dillingham, the court of appeals stated that in order to find a plan

“a court must determine whether from the surrounding circumstances a

reasonable person could ascertain the intended benefits, beneficiaries,

source of financing, and procedures for receiving benefits.” Dillingham,

688 F.2d at 1372.

tion. We also held that any denial of employee benefits after

1975 gives rise to federal jurisdiction even if the claims are

based on pre-1975 occurrences. We directed the district court

to again perform the “surrounding circumstances” test set

forth in Dillingham, considering all relevant information,

including any events subsequent to 1975, as well as the 1968

plan.

On remand, the district court, in a short memorandum

opinion, accepted verbatim Colt’s nearly 600 pages of Find-

ings of Fact and Conclusions of Law and then entered judg-

ment for Colt pursuant to Federal Rule of Civil Procedure

52(c). The court [*6] scrutinized the plaintiffs’ testimony

and concluded that the employees could not prove the exis-

tence of a plan or a benefits contract. The discretionary na-

ture of the 1969 plan was emphasized and because of it, the

court found that the employees could not have a reasonable

belief in the existence of a plan. The district court concluded

that the employees had not satisfactorily shown the exis-

tence of either the 1968 or 1969 plan and, therefore, were

not entitled to relief.

In Henglein II we found that the district court had not

met the previous directives of Henglein I and again remanded

the case to the district court for further consideration. We

expressly recognized four areas where the district court mis-

applied Henglein I. First, we held that the district court’s

focus on state contract law was incorrect and noted that the

court should instead have focused on the relevant facts as

determined by the Dillingham reasonable person standard.

Second, despite our statement in Henglein I that the em-

ployees’ unfamiliarity with the terms of the 1968 or 1969

plans was not dispositive, the district court held that each

plaintiff had to show knowledge of and reasonable reliance

on a benefits plan. Third, the district court failed to deter-

mine whether the 1968 or 1969 plans were properly pub-

lished. We held that although an unpublicized repeal of a

benefits plan is evidence of an intent not to maintain the

program, the public actions of the company must be consid-

ered in determining whether a reasonable person could as-

certain the elements of a plan. We emphasized that [*7]

a a et Seen eee ee eee

ac Ct taints tla nea sal ips rani eich ae tai wits leer NA Sa didi

publication of a program is strong evidence of its existence.

Finally, we held that the district court’s alternative reason

for denying the claims, that benefits under the 1968 and

1969 plans were discretionary in nature, was mistaken. We

pointed out, as we did in Henglein I, that even if a document

provides for only discretionary benefits, that document may

still create an employee-benefits program under Dillingham.

On remand for the third time, the district court again

adopted Colt’s nearly 600 pages of Findings of Fact and Con-

clusions of Law, made a merits finding in a short opinion,

and then entered judgment for Colt pursuant to Federal Rule

of Civil Procedure 52(c). The district court concluded:

It is crucial to realize that plaintiffs must establish by

credible and admissible evidence they had actual and

objectively reasonable expectations that an informal plan

was in place to provide the benefits they claim. Plain-

tiffs’ evidence must prove that a reasonable person would

have been able to ascertain indicia of the informal plan

existence and terms.

It is meaningless for plaintiffs to protest that they had

no knowledge of the rescission of the informal plan when

they are unable to establish as a threshold matter that

they had actual knowledge of, and objectively reason-

able expectations abcut, the informal plan. It is my con-

viction and finding that plaintiffs’ evidence, when ana-

lyzed in its entirety, establishes that none of the plain-

tiffs had actual, objectively reasonable knowledge of,

expectations about, or reliance upon the informal plan

before its elimination in 1972.

[*8] Henglein v. Colt Indus. Operating Corp. Informal Plan

for Plant Shutdown Benefits for Salaried Employees, No. 86-

2021, slip op. at 3 (W.D. Pa. Feb. 10, 1994).

We have jurisdiction over the district court’s final order

pursuant to 28 U.S.C. § 1291, and we review the court’s fac-

tual findings by the clearly erroneous standard. Henglein I,

974 F.2d at 397.

III.

In adopting verbatim Colt’s proposed Findings of Fact

and Conclusions of Law for the second time, the district court

failed to adhere to our opinion in Henglein II, as well as

Henglein I. Rather than review the errors discussed in

Henglein II in detail, we note the following:

First, the Findings of Fact and Conclusions of Law con-

tinue to apply Pennsylvania state law to events occurring

before the enactment of ERISA. Findings of Fact and Con-

clusions of Law at 45. See Henglein II, slip op. at 5. Cf.

Henglein I, 974 F.2d at 399 (discussing the distinction be-

tween a plan’s enforceability prior to ERISA and its exist-

ence).

Second, the adopted Findings of Fact and Conclusions

of Law required the employees to have an “objectively rea-

sonable expectation” that shutdown benefits were available,

see, e.g., Findings of Fact and Conclusions of Law at 187, or

“firsthand familiarity with the operation of the Informal

Plan.” Findings of Fact and Conclusions of Law at 15. This

requirement is [*9] contrary to our reasoning in Hen-

glein I and Henglein II. In both opinions we stated that

“ERISA does not require that a beneficiary have any know]l-

edge of a written plan’s terms, and our federal jurisprudence

has not imposed that requirement either.” Henglein I, 974

F.2d at 401; Henglein II, slip op. at 6.

Third, the adopted Findings of Fact and Conclusions of

Law did not address whether the 1968 plan or the 1969 plan

were properly published. Henglein II, slip op. at 7.

Fourth, the Findings of Fact and Conclusions of Law

continue to stress the importance of the discretionary na-

ture of the 1969 plan in violation of our directive in Hen-

glein II, slip op. at 6. See Findings of Fact and Conclusions

of Law at 35.

Further, the adopted Findings of Fact and Conclusions

of Law purport to apply a Dillingham analysis; however, it

fails as a matter of law. Although the Findings made cred-

ibility assessments of the employees’ testimony, it failed to

make the critical findings required for a Dillingham analy-

sis, and it failed to make the findings we directed in both

Henglein I and Henglein II. The district court misinterpreted

our mandate in Henglein I to the extent it believed we re-

quired the Dillingham analysis to involve only events occur-

ring after 1975. Findings of Fact and Conclusions of Law at

31. The court stated: “This analysis begins by focusing solely

on evidence of record as to events occurring in 1975 and there-

after.” Findings of Fact and Conclusions of law at 32. See

Henglein I, 974 F.2d at 401-402. In Henglein I we held that

the district court’s Dillingham [*10] analysis was unduly

narrow because it only considered the 1969 memorandum

and the 1972 resolution. Id. at 401. Now we hold it is unduly

narrow because it only considered events after 1975. The

Dillingham analysis must include all of the events, “sur-

rounding circumstances,” that could lead to the employees’

reasonable belief that a benefit plan was in effect.

Having found that the adopted Findings of Fact and

Conclusions of Law fail as a matter of law, we now turn to

the district court’s eleven-page opinion to determine whether

it comports with our directives in Henglein I and Hen-

glein II.

IV.

The district court found that the former Colt employees

had failed to prove the existence of an informal plan for the

payment of benefits to non-union employees. In so doing,

the district court made the assumption that the 1968 plan

had been revoked. “[A]s a result of the merger, Crucible, Inc.,

terminated the 1968 Informal Plan.... The 1969 Informal

Plan became the only Informal Plan in existence as of

May 16, 1969.” District court slip op. at 4. This finding, how-

ever, does not square with Crucible’s assurances to their em-

ployees that the merger would not affect the benefits pack-

age and management’s reassurances that the employees

would receive “as good or better benefits” as the union em-

ployees.

* The adopted Findings give lip service to considering events occurring

before 1975; however, our review of the application of the Dillingham

criteria reveals no such analysis.

[*11] In Henglein I we indicated that the district court

should focus on the publication, or lack thereof, of the 1969

plan in considering whether the 1968 plan was still main-

tained by the company. “[T]he district court did not deter-

mine whether the 1969 plan was widely circulated.... [I]f

the company deliberately failed to inform the employees of

the plan’s putative repeal, that too would indicate that the

company maintained the plan.” Henglein I, 974 F.2d at 401.

The 1969 plan stated that the employees were not to be told

about the availability of the new benefits, and that the in-

formation contained therein was to be restricted to particu-

lar management. There is no indication that any of the em-

ployees in this case received or had any notice about the

existence of the 1969 memo before the time of the plant shut-

down.

The district court acknowledged that the 1969 plan was

surreptitiously adopted and then terminated in 1972 with-

out notification to the affected employees. District Court slip

op. at 3. The district court concluded that the plan was le-

gally terminated pursuant to a Board of Directors’ resolu-

tion prior to the effective date of ERISA, and as a result,

none of the plaintiffs had any rights to benefits under either

the 1968 or 1969 plan because neither existed in 1975 or in

1982. See also Findings of Fact and Conclusions of Law at

12. In this regard the district court focused more on the 1969

plan’s legal termination rather than on its surreptitious cre-

ation. Such emphasis was contrary to our directive in

Henglein I that the [*12] district court focus its attention

on the expectations and reasonable beliefs of the employees

under Dillingham. It was also contrary to our third man-

date in Henglein II that the district court determine whether

the 1968 or 1969 plans were properly published — a crucial

element of the surrounding circumstances test under

Dillingham.

The employees argue that the oral representations made

by Crucible and Colt established the employees’ reasonable

belief as to the existence of a plan providing benefits. In ad-

dition, the employees’ testimony about receiving a copy of

the 1968 plan, and information pertaining to the 1968 plan,

and their reasonable beliefs about benefits being afforded to

them, should be considered.‘ In Henglein I and Henglein II

we stressed the importance of the oral representations that

added to the employees’ reasonable belief of an existing plan.

So long as they do not modify the terms of a written

plan, oral representations by a knowledgeable and au-

thorized management employee of the company may be

evidence of a benefits plan, especially if a representa-

tion incorporates by reference the terms of a document

or other plan....

* *k *

We emphasize that an oral representation cannot modify

a valid written plan. But where the oral remarks give

evidence of a [*13] separate plan not precluded by a

written plan, the district court may credit the represen-

tations as evidence of a plan. To do so is entirely consis-

tent with ERISA’s dual purpose of protecting the rea-

sonable expectations of plan participants while allow-

ing sponsors the flexibility to structure a plan with an

express limitation in writing. To do otherwise would cre-

ate a loophole inconsistent with ERISA by allowing a

plan sponsor to make any promise regarding benefits

without obligation, so long as the promise is not reduced

to writing.

Henglein I, 974 F.2d at 400-01. In Henglein II we reviewed

the foregoing discussion of Henglein I and then reiterated

the importance of considering the totality of the evidence

presented. Henglein II, slip op. at 4.

The district court acknowledged the evidentiary sources

we listed in Henglein I and Henglein II, then concluded that

the oral representation made by the employer, that the em-

ployees would have “as good or better benefits” as union

workers, was evidence of the parity plan that had been pre-

* Thomas Reed and Gary Weekley, two previous Colt employees, testi-

fied about the oral representations made to them. They both indicated

that they were told that their benefits would be as good or better than

union employees, and Mr. Weekley even indicated that this information

bolstered his decision to work for Colt as a salaried employee. Findings of

Fact and Conclusions of Law at 202, 214.

viously dismissed in Henglein I. See also Findings of Fact

and Conclusions of Law at 18-23. This conclusion on the part

of the district court was contrary to our mandate in Hen-

glein I and Henglein II.

We directed the district court in Henglein I to determine

whether the employees had ever received a “clear statement”

restricting benefits and excluding previous informal plan

documents. Henglein I, 974 F.2d at 400. See Henglein II, slip

op. at 4. Colt argues that because the Total Income-Protec-

tion booklet distributed to the employees in 1973 did not

include mention of any type of informal benefit plan, one did

not [*14] exist at the time of its publication. The employ-

ees counter that reasonable employees would not glean an

understanding of the rescission of the informal plan from

the absence of its mention in a booklet that purports to pro-

tect the employees against financial troubles. Instead, the

employees argue that they not only recall the publication of

the 1968 plan, but relied on its continuance until the plant

shutdown in 1982. Over 25 years after the publication of the

1968 memo, 10 employees testified that they recalled receiv-

ing the memo. In fact, when the plant shut down, two em-

ployees applied for and were denied the benefits described

in the 1968 plan. This action demonstrates the belief the

employees had that the plan was still in existence.®

Our review of the adopted Findings of Fact and Conclu-

sions of Law demonstrates that John C. Lobb, the President

of Crucible, promulgated a memo on September 12, 1968,

that stated, inter alia: “We are in the process of improving

our benefits programs including [a] provision for long-term

disability insurance and recently have revised our informal

5 Further, the district court held that Crucible management personnel

did not deliberately mislead any of the plaintiffs about their benefits or

about the non-existence of an informal plan. In fact, the reason given was

that, because the employees did not have any pre-existing knowledge about

the plan, they did not want to confuse them. Findings of Fact and Conclu-

sions of Law at 271. This finding is implicitly contrary to the record testi-

mony by management personnel that the “lack of shutdown benefits, would

have made it difficult to persuade union employees to accept salaried jobs.”

Findings of Fact and Conclusions of Law at 160.

retirement program to provide greatly improved payments

for those eligible salaried employees having more than 20

but less than 30 [*15] years of service.” B.H. Francis, the

Corporate Director of Benefits, attached a memo to the 1968

plan, both of which were promulgated to the employees, stat-

ing, “for employees with 20 to 30 years of service, this fea-

ture of the Informal Plan now provides that they may re- j

ceive an enlarged retirement benefit.” Many of the employ-

ees recall either the Lobb memo, the Francis memo, the 1968

plan, or some combination of the three.

The following are examples of the employees who testi-

fied to receiving a copy of the 1968 plan. Robert J. Witten

testified that the 1968 plan was distributed to the “person-

nel department” and “top executives,” and that it was “com-

municated” to the employees. (144). Paul K. Schake testi-

fied that he received a copy of the 1968 plan. (164). Theodore

Krupa testi‘ied that he received a copy of the 1968 plan in

its entirety. (193), Gasper P. Porto testified that he recalled

having seen the first page of the 1968 plan, and recalled

that anyone with 20 years’ service would receive a pension.

(298). He also stated that a document which stated that if

you had 20-30 years of service, you would receive pension

benefits, was passed around and shown to everyone in 1968.

(299). Robert Trbovich testified that the 1968 plan was widely

distributed. (386).’

[*16] The following employees testified to receiving both

the Lobb memo and the Francis memo. Edmund Werries,

Jr. testified that he saw the Lobb memo and the first page of

the Francis memo. (401-402). Albert N. Morrison testified

that he received the Francis memo with the 1968 plan at-

* The numerical references here are to the adopted Findings of Fact

and Conclusions of Law, documents 108 and 109 of the record.

7 Andrew J. Lynn testified that at the time he became a salaried em-

ployee his supervisor showed him a document which contained a pension

for between 20 and 30 years of service. (453). Gary Weekley testified hav-

ing seen information in the salary book that stated if an employee had 20

years of service, he would be eligible for benefits in the case of a plant

shutdown. One of the other foremen showed him the information. (199).

tached. (486). He also testified that he saw the Lobb memo.

(487). John A. Whitehead testified that he received a copy of

the Francis memo and that a copy of the Lobb memo was

mailed to his home. (496-97).

Several other employees testified to receiving only the

Lobb memo. John R. Kundick testified that he was aware of

the 1968 plan, and that he received a copy of the Lobb memo.

He also testified that he was aware that several employees

left the company and received benefits under the plan. (232-

34). Thomas M. Costello and Dallas P. Kerr, Jr. testified that

they both received the Lobb memo. (532). Kerr also testified

that a copy of the Lobb memo was posted on a bulletin board

in the superintendent’s office. (546).®

[*17] Other employees testified to receiving only the

Francis memo. George Henglein testified that he received a

one-page memorandum (Francis memo) from which he based

his knowledge of the plan. Jerome P. Bressanelli testified

that in 1982 he saw the first page of the Francis memo con-

cerning the 1968 plan, and that he may have seen the memo

at an earlier time. (373). He also testified that he was told

about the memorandum prior to 1975. (375). William L.

Gleason testified that he received a letter which recapped

the 1968 plan. He later identified this letter as the Francis

memo. (461-62).

The remainder testified that they either were told about

a benefits plan or heard about one. Daniel McClain testified

that he was told by the employee that recruited him that if

he had 20 years of service he would be guaranteed a pen-

sion. He testified that a secretary in the personnel office told

him the same information. “He just told me there was a pen-

sion plan for 20 years’ service.” (205-206). William Kofalt

testified that his supervisor told him that he would receive a

8 Other employees testified similarly:

Ralph Ashenbaugh testified that he knew about the Informal Plan and

the provisions that were spelled out therein. (303). He also testified that

he received a copy of the Lobb memo. (304). Ernest Guerra testified that

he recalled seeing a paper concerning the existence of the 1968 Plan. He

also testified that he saw something like the Lobb memo (335).

pension with 20 years of service. (253).®

[*18] We conclude that the district court did not appro-

priately consider the evidence leading to the possible exist-

ence of the 1968 plan. The court focused instead on the 1969

plan and events “after 1972,” failing to give proper weight to

any events that may have led the employees to believe the

1968 plan was in effect. The district court also erroneously

assumed that the 1969 plan implicitly revoked the 1968 plan.

* Many other employees testified to having been told about the 1968

plan:

Leroy Gibbs testified that he was told that he would have “guaranteed

pension rights” after 20 years of service. (414). James V. Presutti testified

that he was told he would receive “some sort of pension” once he had 20

years of service. (441). Ernest E. Knapek testified that he was told of the

20-30 year benefit in 1968, and that the supervisor had publicly announced

that the 20-30 year plan had been instituted. (590). Henry Farrington

testified he was told that with 20 years of service he would be covered by

a plan. He also testified that he refused another job offer in order to meet

the 20-year requirement. (395, 397). John L. McKain testified that he

was told about the 1968 pian in a meeting. He testified that he did not

actually see the memo, but remembers “having it read”. (311). Lawrence

Raykovicz testified that he was told about the 1968 plan in 1968 by his

immediate supervisor (391). He also testified that employees were told

that they would acquire pension benefits at 20 years of service (391).

Many others testified to having heard about the shutdown benefits plan:

Ralph Turner testified that he understood that in the event of a shut-

down, he would receive his 20-year portion of his pension. (526). Ray

Knallay testified that he understood that after 20 years of service, he was

entitled to a pension in the event of a shutdown. (557). Ronald W. Prentice

testified that he was aware of a 20-30 year pension plan under which he

would receive a portion of his pension in the event of a shutdown. (580).

James Tice testified that he heard of the Informal Plan from other work-

ers (475). George Postich testified that he was aware that there was pro-

tection for employees with between 20 and 30 years of service. (481). Rob-

ert C. Campbell testified that he was aware of shutdown benefits for em-

ployees with 20 years of service. (508). Anthony J. Rosepiler testified that

he had heard from other foremen that if he attained 20 years of service,

he would receive a portion of his pension if “something were to happen.”

(518). Anthony J. Guletz testified that he assumed he would be “safe” as

far as his pension was concered as long as he had 20 years of service.

(280). George Brown testified that he was aware of two employees who

had received the Informal Plan benefits. (288). He also testified that he

was aware of the existence of the 1968 plan. (290).

;

[*19] It is clear that the employees are claiming ben-

efits under either the 1968 plan or 1969 plan. However, in

order to consider the 1969 plan as affecting the employees’

claim for benefits under the 1968 plan, the district court

should first have reviewed the 1968 plan utilizing a proper

Dillingham analysis. If it correctly concluded that the 1968

plan was no longer in effect, only then may the district court

turn to our previous directives concerning the importance of

the discretionary language in the 1969 plan.

Our review of the Findings of Fact and Conclusions of

Law shows that under the Dillingham standard, the em-

ployees may have reasonably believed the plan to be in ef-

fect. First, a substantial number of the employees relied on

the information relayed to them about the 1968 plan." Al-

though the district court held that the merger between Colt

and Crucible terminated the 1968 plan, we note that it is

uncontroverted that the termination of the 1968 plan was

never communicated to the employees. Second, the creation

of the 1969 plan and its [*20] termination in 1972 were

never communicated to the employees. Therefore, because

the employees had no knowledge of Colt’s action, the sug-

gestion that the 1969 plan superseded the 1968 plan is un-

founded. Similarly, the termination of the 1969 plan by an

unpublished board resolution would have no effect on the

employees’ reliance on either the 1968 or the 1969 plan.

To that end we note the district court’s statement: “Fur-

thermore, this Court finds, as a matter of fact and of law,

that the putative Informal Plan is by definition limited to

In Henglein I we stated that a “plan participant may still seek review

of the denial of a benefit under an employee benefits plan, even if the

benefit is conditioned upon an administrator’s discretion.” Henglein I, 974

at 401. Ja Henglein II we also directed the district court to place less

emphasis on the discretionary nature of the document, stating “if a docu-

ment provides for only discretionary benefits, that document can still con-

stitute an employee benefits plan under Dillingham.... The court must

determine if an ERISA plan exists, and then determine if its benefits are

discretionary. If benefits are discretionary, the question is whether their

denial was an abuse of discretion.” Henglein II slip op. at 8-9.

1 See note 5 supra.

the benefits it specifically provided, as and when provided,

while it was in operation.” Findings of Fact and Conclusions

of Law at 27. It may be that the employees never believed

the 1968 plan ceased operating. The district court’s factual

finding “that none of the plaintiffs had actual, objectively

reasonable knowledge of, expectations about, or reliance upon

the informal plan before its elimination in 1972,” is not sup-

ported by the record and therefore is clearly erroneous.

As further support for its decision, the district court

emphasized that the plan benefits were financed from oper-

ating funds rather than funds of a “formal” pension plan.

The court noted that unfunded “pay-as-you-go” pension funds

are illegal, and that ERISA establishes rigorous funding re-

quirements for pension plans. That the alleged plan was in

violation of ERISA, the district court concluded, supported

its position that the [*21] benefits plan was non-existent

as of the passage of ERISA in 1975. See also Findings of

Fact and Conclusions of Law at 40-41, 43-45.

These assumed violations of ERISA do not support the

district court’s conclusion. In a similar case, Brown v. Ampco-

Pittsburgh Corp., 876 F.2d 546 (6th Cir. 1989), our sister

court of appeals concluded otherwise. One of the issues in

Brown concerned a “silent” plan, which the employer argued

did not communicate an offer to the employees; without an

offer, there could be no acceptance, and thus no contract. Id.

at 550. The court of appeals agreed with the plaintiff's argu-

ment that the silence was significant in that the plan was

maintained in violation of ERISA’s reporting and disclosure

requirements; however, the “silence” did not mean that the

plan was non-existent. Jd. The court noted that the plain-

tiffs were not seeking damages based on the employer’s fail-

ure to comply with ERISA’s procedural requirements; but

rather, their position was that the employer established an

employee welfare benefit plan, concealed it from its partici-

pants and beneficiaries, and then sought to evade its require-

ments by paying benefits under another plan adopted uni-

laterally and published later. Jd. at 550-51. —

Applying the Dillingham criteria, the court held that

the “silent” plan did create a plan for payment of termina-

tion benefits. The court concluded:

The plaintiff’s concession that the 1984 plan was silent

did not preclude their reliance upon the terms of that

plan as a basis for their claims.... “Once established,

[*22] ERISA operates to protect an employee’s interest

in the welfare benefit program regardless of whether

the employer complies with the administrative and re-

porting requirements detailed under ERISA.” It would

be unreasonable and antithetical to ERISA’s purposes

to hold that an employer can create an employee benefit

plan and then deny benefits on the ground that it never

communicated the plan to affected employees.

Id. at 551 (citation to quotation omitted).

We are persuaded by the analysis in Brown and find

that it is equally applicable here.

VI.

Therefore, because the district court did not follow our

directives in Henglein I and Henglein II, and because its fac-

tual findings are clearly erroneous, we will reverse and re-

mand for further proceedings.

We note that the district court has asked us not to re-

mand for further consideration upon a finding of error, but

rather to make a final decision and to remand for the deter-

mination of benefits. District Court slip op. at 11. Our diffi-

culty, however, is that the record before us is insufficient for

us to apply the Dillingham criteria. Rather than invade the

province of district court, we will remand for further analy-

sis and application of the standards set forth in that case.

[*23] TO THE CLERK:

Please file the foregoing opinion.

/s/ CaroL Los MANSMANN

Carol Los Mansmann

Circuit Judge

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

GEORGE W. HENGLEIN, et al., |

Plaintiffs

v. Civil Action

No. 86—2021

COLT INDUSTRIES OPERATING

CORPORATION INFORMAL PLAN FOR

PLANT SHUTDOWN BENEFITS FOR

SALARIED EMPLOYEES,

Defendant }

ORDER

AND NOW, this 10th day of February, 1994, for the rea-

sons set forth in the accompanying Opinion and Analysis,

and adopting the Findings of Fact and Conclusions of Law

submitted by the Defendant as permitted by Hayes v. Com-

munity General Osteopathic Hospital, 940 F. 2d 54, 57 (3d

Cir. 1991) which do constitute this Court’s Findings of Fact

and Conclusions of Law in compliance with Rule 52(a) of the

Federal Rules of Civil Procedure and the directive of Henglein

v. Informal Plan for Plant Shutdown Benefits, 974 F.2d 391,

403 (3d Cir. 1992), and having concluded that Plaintiffs have

failed in their case in chief to meet their burden of proving

the existence in 1982 of an employee benefit plan in accord

with the provisions of ERISA,

IT IS HEREBY ORDERED that:

(1) Defendant’s Motion for Judgement Pursuant to Rule

52(c) of the Federal Rules of Civil Procedure is GRANTED.

(2) Judgment is entered as to Count I in favor of the

defendant, Colt Industries Operating Corporation Informal

Plan for Plant Shutdown Benefits for Salaried Employees,

and against each and everyone of the plaintiffs.

/s/ GLENN E. MENCER

Glenn E. Mencer

United States District Judge

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

GEORGE W. HENGLEIN, et al.,

Plaintiffs

v. Civil Action

No. 86—2021

COLT INDUSTRIES OPERATING

CORPORATION INFORMAL PLAN FOR

PLANT SHUTDOWN BENEFITS FOR

SALARIED EMPLOYEES,

Defendant }

OPINION AND ANALYSIS

(*1] I sincerely regret that I have been inept in explain-

ing on two previous occasions the legal reasons why I reached

the conclusion that no informal employee benefit plan ex-

isted in 1982. Further, I am sorry that my attempts to com-

ply with the directives of the Court of Appeals for the Third

Circuit have not yet been deemed to be in compliance with

those directives. This regret and sorrow flows beyond me to

the parties to this prolonged litigation who by any measure-

ment deserved a final resolution of the matter before now.

I will again endeavor to make the required analysis.

tries Operating Corporation (“Colt”) closed its Midland

plant in 1982. [*2] In 1969 Colt maintained an informal program

to pay benefits to salaried non-union workers in the event

of a plant shutdown. No such benefits were paid to the plain-

tiffs when the Midland plant closed.

Plaintiffs claim that the informal program became an

ERISA!’ plan and that under ERISA provisions, they are

‘Employees Retirement Income Security Act of 1974, 19 U.S.C. § 1001

et seq.

entitled to the plant shutdown benefits. It is elementary to

note that the plaintiffs have the burden of proof to prove

their claim and I have and do conclude that plaintiffs have

failed to prove the existence of an ERISA plan.

In my opinion of April 30, 1991, I employed the

Dillingham Test to reach my conclusion, a test approved by

the Court of Appeals for the Third Circuit in Henglein v. In-

formal Plan for Plant Shutdown Benefits, 974 F.2d 391 (3d

Cir. 1992). The Dillingham Test states that in order to find a

plan “a court must determine whether from the surround-

ing circumstances a reasonable person could ascertain the

intended benefits, beneficiaries, source of financing and pro-

cedures for receiving benefits.” Donovan v. Dillingham, 688

F.2d 1367, 1372 (11th Cir. 1982) (en banc).

My analysis in 1991 was that “[d]ue to the discretion in

awarding the benefits [under the provisions of the 1969 in-

formal plan] we do not believe that a reasonable person could

know who the intended beneficiaries were or what the quali-

fications for eligibility were. The plan evinces no intent to

actually pay anybody anything [*3] at any time. Moreover,

Colt’s board officially — though without notifying those af-

fected — rescinded the informal plan in 1972.”

While the lack of notice may have prevented the rescis-

sion from being an effective revocation under state law, I

concluded that the 1972 resolution put to rest any question

as to Colt’s intent to maintain an informal plan thereafter.

This happened, without question, three years prior to 1975

when ERISA came into effect.

It is crucial to realize that plaintiffs must establish by

credible and admissible evidence that they had actual and

objectively reasonable expectations that an informal plan

was in place to provide the benefits they claim. Plaintiffs’

evidence must prove that a reasonable person would have

been able to ascertain indicia of the informal plan existence

and terms.

It is meaningless for plaintiffs to protest that they had

no knowledge of the rescission of the informal plan when

they are unable to establish as a threshold matter that they

had actual knowledge of, and objectively reasonable expec- :

tations about, the informal plan. It is my conviction and find-

ing that plaintiffs’ evidence, when analyzed in its entirety,

establishes that none of the plaintiffs had actual, objectively

reasonable knowledge of, expectations about, or reliance upon

the informal plan before its elimination in 1972.

In 1962 Crucible Steel Corporation established an In-

formal Retirement Benefit Plan. In 1968 Crucible Steel Cor-

poration amended the Informal Plan. In 1969 Colt Indus-

tries acquired the capital [*4] stock of Crucible Steel cor-

poration and formed Crucible, Inc., as a wholly owned sub-

sidiary of Colt Industries. Through the merger with Cru-

cible Steel Corporation, Crucible, Inc., became the successor

in interest of the employee benefit plans of Crucible Steel

Corporation.

In 1969, as a result of the merger, Crucible, Inc., termi-

nated the 1968 Informal Plan. However, on May 16, 1969,

Crucible, Inc., adopted new Hardship Retirement Guidelines,

known as the “1969 Informal Plan.” The 1969 guidelines pro-

vided that employees with between 15 and 30 years of ser-

vice, whose employment was terminated by plant shutdown,

could obtain a pension benefit. The 1969 Informal Plan be-

came the only Informal Plan in existence as of May 16, 1969.

On December 1, 1972 the Board of Directors of Crucible, Inc.,

terminated the 1969 Informal Plan by resolution.

Plaintiffs dispute the effectiveness of the December 1,

1972 resolution rescinding the Informal Plan. However, the

resolution was duly executed and valid under applicable cor-

porate law. Plaintiffs themselves offered the resolution as

their trial exhibit No. 16 and did not offer any evidence that

the resolution was not properly adopted.

The plaintiffs’ position as to the resolution is one of es-

toppel, i.e., that defendant is estopped from asserting the

defense that the Informal Plan was rescinded, and hence

became nonexistent in 1972, on the grounds that plaintiffs

reasonably relied on its continuing existence.

(*5] It is also undisputed that prior to December 1, 1972,

all Informal Plan payments were made from operating funds

and not through the funds of the “formal” pension plan. (Tes-

timony of Paul K. Schake, Vice President of finance and con-

troller of Crucible on September 17, 1990, at transcript

page 25) Also, the testimony of plaintiffs’ witnesses estab-

lishes that they had no familiarity with or knowledge of the

1969 Informal Plan.

Our analysis includes the fact that the 1969 Informal

Plan was legally terminated by the December 1, 1972 reso-

lution prior to the effective date of ERISA and that there-

fore none of the plaintiffs had any right to benefits of an

Informal Plan that did not exist in 1975 nor in 1982.

The Court of Appeals for the Third Circuit in its opinion

of January 13, 1994 directed this Court, in the absence of

clear, properly published documents,’ to consider all other

evidence that would indicate the presence or absence of an

informal benefit plan.

?This Court is unmindful of any clear or published documents pertain-

ing to the 1969 Informal Plan. Illustrative of this aspect was George W.

Henglein, who was the credit manager at Crucible, and who testified that

he received no written materials regarding the Informal Plan. However, I

am aware of Plaintiffs’ Exhibit 7 which consists of two documents:

(1) a one-page memorandum from Dr. A. C. Hilton addressed to ten

individuals at various Crucible Divisions, copied to eight other individu-

als (none of whom are plaintiffs), and dated March 25, 1969; and (2) a

document entitled “Hardship Retirement Guidelines” bearing the date

February 10, 1969. This is the 1969 Informal Plan. None of plaintiffs’

witnesses testified to any familiarity with Plaintiffs’ Exhibit 7, except for

Robert J. Whitten, who worked in the personnel department, and John

Kundick, who worked in the labor relations department. The one-page

memorandum advises:

Attached is the procedure which may be used in cases where the

terminated employee is to be given consideration beyond the provi-

sions of the Restated Employees Retirement Plan (the Formal Plan).

Also attached is the language being submitted to the IRS, formally

revising vesting provisions of the Restated Employees Retirement

Plan, which provisions dovetail with the Hardship Retirement Guide-

lines.

Distribution of these procedures should be limited to those mem-

bers of management who have need to know.

eee

Examples of evidentiary sources were listed as follows:

[Ijnternal or distributed documents, oral representa-

tions, existence of a fund or account to pay benefits, ac-

tual payment of benefits, a deliberate failure to correct

known perceptions of a plan’s existence, the reasonable

understanding of employees, and the intentions of the

putative sponsor would all be relevant to determine

whether a plan existed.

[*6] Witness after witness testified for the plaintiffs that

the last thing they would have thought about was plant shut-

down benefits.

{*7] To a man, it never occurred to them that there

would be a shutdown of the Midland plant and that they

would not work at the plant until they were ready to retire.

Job security was totally assumed and therefore there was

Footnote 2 continued:

The 1969 Informal Plan document itself begins with the following in-

formation:

This is an informal procedure prepared to give management greater

freedom in making management decisions in situations where such de-

cisions might result in hardship for older and long service employees.

These guidelines may provide benefits for such employees where em-

ployment is terminated as a result of either or both of the following

circumstances:

a. Job elimination as a result of reorganization, or department or plant

shutdown.

b. Economic layoff deemed to be permanent.

NOTE that employees do not have a right to these benefits. Informa-

tion concerning these benefits should be restricted as far as possible to

management. Employees should not be told that they can elect these ben-

efits.

The present Informal Severance and Disability Plan of Crucible Steel

Corporation [1968 Informal Plan] has been terminated, except as to ben-

efits already approved. Proposals which have been submitted under the

Plan, but have not been acted upon, may be considered under these Guide-

lines. (emphasis in original.)

no need to think about, inquire about or determine what, if

any, shutdown benefits were available to them as a salaried

non-union employee.

There were no payments of benefits after 1972, when

the Informal Plan was terminated and there was no fund or

account to pay benefits. Certainly the intent of the putative

sponsor was fully evident by the December 1, 1972 resolu-

tion to terminate the plan. Also, the record is lacking evi-

dence of internal or distributed documents or oral represen- ;

tations to pay shutdown benefits and certainly not beyond

December 1, 1972. ,

Plaintiff after plaintiff testified that they made no in-

quiry of anyone relative to shutdown benefits and therefore,

defendant did not know of their perceptions, if any, of a plan’s

existence. The silent and unvoiced perception that did exist

among plaintiffs was that they would have “as good or bet-

ter benefits” as union workers. Count II of the Complaint

dealt with the parity plan argument and the Court of Ap-

peals directed that Count to be dismissed in Henglein, 974

F.2d at 402.

[*8] Dillingham requires evidence that a reasonable per-

son could ascertain the indicia that a benefit plan exists.

The “reasonable person” standard is an objective standard.

See, e.g., Langer v. Monarch Life Ins. Co., 966 F.2d 786, 798

(3d Cir. 1992); Gray v. York Newspapers, Inc., 957 F.2d 1070,

1079 (3d Cir. 1992) (reasonable person standard is objective

test).

Here there is no evidence that after 1972 Crucible un-

dertook to finance or fund Informal Plan benefits (for any

employee whose employment was terminated after the In-

formal Plan was rescinded), or to establish a procedure for

disbursing benefits (for any employee whose employment was

terminated after the Informal Plan was rescinded in 1972).

This record simply does not support that authorized and

knowledgeable Crucible Management personnel deliberately

misled plaintiffs about their benefits or about the

(non)existence of the Informal Plan. In addition, this record

does not in any way indicate that a reasonable person could

have ascertained after 1972, Informal Plan benefits intended

eer.

by the employer, a class of Informa! Plan beneficiaries, the

source of Informal Plan financing, and procedures for re-

ceiving Informal Plan benefits. See Dillingham, 688 F.2d at

1373.

When one thinks in terms of surrounding circumstances

before and after the commencement of ERISA, it becomes

clear that there existed a 10 year hiatus from the time the

employer by resolution terminated the Informal Plan on

December 1, 1972, and the Midland plant shutdown ifi 1982.

During this 10 year hiatus the employer did [*9] nothing

because it intended and believed there was nothing to do

following the termination. The plaintiffs did nothing during

this 10 year hiatus because they could not envision a plant

shutdown ever occurring.

We do know that the Informal Plan benefits in this case

were financed from operating funds and not through the

funds of the “formal” pension plan. (Testimony of Paul K.

Schake, Vice President of finance and controller of Crucible

on September 17, 1990, at transcript page 25). However,

under ERISA, an Informal Plan such as we are considering

here would be a type of pension plan. Unfunded “pay as you

go” pension plans are illegal. ERISA establishes rigorous

funding requirements for pension plans, inter alia, requir-

ing that the funds be placed in trust and held by a trustee.

ERISA § 302, 29 U.S.C. § 1082. This was not done here, which

is compatible with the contention that the Informal Plan was

nonexistent as of the passage of ERISA in 1975.

Over and over again I have tried to find the existence of

an ERISA plan in 1982 under the Dillingham test and the

“surrounding circumstances,” both pre-1975 and post-1975,

standard to which I have been directed by the Court of Ap-

peals for the Third Circuit. Over and over again I have con-

cluded that no ERISA plan existed in 1982 in this case.

My empathy has been and remains with the plaintiffs

and I have expressed it previously when in Obiter Dictum I

ended my April 30, 1991 Opinion as follows:

[*10] “Plaintiffs’ allegations may support some sort of

breach of contract claim. The representations plaintiffs acted

upon, however, were not the details of the 1969 plan. In-

stead, plaintiffs seem to have relied upon the general prom-

ises of their recruiters that their new salaried-employee ben-

efits would be as good or better than their union benefits, or

that they would be “taken care of.” Surely Colt knew of the

enormous trust these employees put in the company—many

plaintiffs’ families had worked for the plant for decades. Thus

it appears that plaintiffs may be able to support a claim under

contract law, promissory estoppel or some other state law or

equitable theory. If they can, however, it is not because of

any plan, but because of the promises made to the plaintiffs.

These promises were made before ERISA’s effective date and

are governed by state law. 29 U.S.C. § 1144 (b) (1). Even if

the “breach” of these promises occurred in 1982, after ERISA’s

effective date, our holding that no ERISA plan existed pre-

vents ERISA preemption provision from coming into play.

Thus, notwithstanding any contrary opinion expressed ear-

lier, we hold that such a claim is not preempted by ERISA.

See, Fort Halifax, supra; Pizlo, supra; Wells, supra; see also,

Perry v. PIE Nationwide, Inc., 872 F.2d 157 (6th Cir. 1989);

Hoefel v. Atlas Tack Corp., 581 F.2d 1 (1st Cir. 1978).

At most, what we have here is a promise, made before

ERISA and therefore not governed by ERISA, to create a

program that might have become subject to ERISA, at some

later date. With such a characterization, the case comes clos-

est to showing a plan, but [*11] even so, it remains quite a

distance away. A breach of this remote promise only pushes

the claim farther away from ERISA. Because the record does

not establish the existence of an ERISA plan, this Court has

no subject matter jurisdiction to proceed with the case.

Schake, et al. v. Colt Industries, et al., 85-3381 (3d Cir. 5/14/

86). Accordingly, we will dismiss the complaint for lack of

subject matter jurisdiction. We believe, however, that plain-

tiffs could pursue state law claims in state court by imple-

menting 42 PaCSA § 5103 (b) and/or 42 PaCSA § 5535.”

In conclusion, it would be my hope that on appeal of

this, my latest attempt to comply with the directive of the

Court of Appeals, that it will be decided that I reached the

correct conclusion perhaps for the wrong reasons, or that I

reached the wrong conclusion thereby warranting a remand

for the determination and award of benefits to the individual

plaintiffs.*

3] am aware that defendant has not yet had the opportunity to present

a defense since it made a Rule 52(c) Motion which was granted. Neverthe-

less, I am of the view that fairness would be served in concluding that

defendant’s defense has been fully set forth in Documents No. 108 and

109 of this record.

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 93-3219

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.

BIGLEMAN; C.R. BLAZIER; J.P. BRESSANELLI: G.D.

BROWN: F.C. BUCHHOLZ; E.C. CALVIN; RR.

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. DICICCIO; 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. FREDERICK; 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, JR.; 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. LANEVE;

T.T. LEHMANN; R.H. LEWIS; R.A. LIPPERT: W.R.

LIVINGSTON: J.H. LUTTON; A.J. LYNN; D.B.

MCCLAIN; J.L. MCKAIN; PF. 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. NUZZO; E. ORDICH; W.H.

ORR; T.H. PARSONS; A.J. PASKO, JR.; H.S. PEASE, III:

SS —————

G.J. PESCION; G.V. PETERSON; W.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; M.J. ROSE; A.J. ROSEPILER;

C.S. RUSSELL; K.E. SANDERS; M.A. SARVER; P.K.

SCHAKE; J.W. SCHOLTZ; A.H. SHELINE; 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; FS.

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, JR.; G.T. WEEKLEY; E.M. WERRIES, JR.;

D.L. WESTFALL; J.A. WHITEHEAD; R.J. WHITTEN;

C.K. WILDMAN; T. WILLIAMS, JR.; T.H. WILLS, JR.;

A.J. YANNI; L.H. YOUNG, JR.; R.C. YOUNG; H.F. YUTE;

W.I. ZAZWIRSKY; JOHN K. DOUGLAS,

Appellants

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

On Appeal from the United States District Court

for the Western District of Pennsylvania

(D.C. Civil Action No. 86-02021)

Argued December 3, 1993

Before: SCIRICA and ALITO, Circuit Judges

and BASSLER, District Judge*

(Filed January 13, 1994)

* The Honorable William G. Bassler, United States District Judge for

the District of New Jersey, sitting by designation.

SCIRICA, Circuit Judge.

[*2] This is the third appeal brought by a group of sala-

ried employees suing for certain severance benefits under

an alleged informal plan maintained by Colt Industries. We

will not restate the facts and prior proceedings, as they are

adequately detailed in Schake v. Colt Indus., No. 85-3381

(3d Cir. May 14, 1986), and Henglein v. Informal Plan for

Plant Shutdown Benefits, 974 F.2d 391 (3d Cir. 1992)

(Henglein I). We acknowledge the extensive [*3] effort the

district court has already devoted to this case. But because

we believe the court misapplied the law set out in Henglein

I, we will vacate its judgment and remand for correct appli-

cation of the law.

The district court had jurisdiction of the Employees’

claims against the putative ERISA plan under 29 U.S.C. §

1132 (e)(1) (1988), and granted a judgment for the defen-

dant on partial findings under Federal Rule of Civil Proce-

dure 52(c). We have jurisdiction of the Employees’ appeal

under 28 U.S.C. § 1291 (1988).

The district court’s “[flindings of fact, whether based on

oral or documentary evidence, shall not be set aside unless

clearly erroneous, and due regard shall be given to the op-

portunity of the trial court to judge of the credibility of the

witnesses.” Fed. R. Civ. P. 52(a). The district court’s conclu-

sions of law are subject to plenary review. Gregoire v. Cen-

tennial Sch. Dist., 907 F.2d 1366, 1370 (3d Cir.), cert. denied,

498 U.S. 899 (1990).

II.

In Henglein I, we directed the district court to reexam-

ine the employees’ claim that an informal employee benefits

plan existed in 1982 under which they were entitled to ben-

efits. “That claim,” we said, “must be resolved not under state

law, but under ERISA, which refers to the surrounding cir-

cumstances to determine if a plan existed at the time ben-

efits were denied.” [*4] Henglein I, 974 F.2d at 398. We

outlined the inquiry for the district court, following Donovan

hatha Ne ee ee MS Sees pay See

neta

v. Dillingham, 688 F.2d 1367 (11th Cir. 1982), which stated,

“In determining whether a plan, fund or program (pursuant

to a writing or not) is a reality a court must determine

whether from the surrounding circumstances a reasonable

person could ascertain the intended benefits, beneficiaries,

source of financing, and procedures for receiving benefits.”

Id. at 1373 (quoted in Henglein I, 974 F.2d at 399).

First, we said, a district court should “determine what

written representations were made by a putative sponsor to

its employees over the course of their employment.” Hen-

glein I, 974 F.2d at 400. Ifa properly distributed summary

plan document contained a clear statement that there were

no severance benefits, or that such benefits were limited to

those provided for in a formal plan, that would be dispositive,

we said, because a written plan cannot be modified orally.

Widely distributed informal documents would also establish

a plan that could not be modified orally. Id.

In the absence of such clear, properly published docu-

ments, we directed the court to “consider all other evidence

that would indicate the presence or absence of an informal

benefit plan.” We listed examples of evidentiary sources:

(I]nternal or distributed documents, oral representa-

tions, existence of a fund or account to pay benefits, ac-

tual payment of benefits, a deliberate failure to correct

known perceptions of a plan’s existence, the reasonable

understanding of employees, and the intentions of the

putative sponsor would all be relevant to determine

whether a plan existed.

[*5] Id. The totality of such evidence should be considered if

there is no valid written plan limiting benefits.

ITI.

Although the district court applied the surrounding cir-

cumstances test to a certain extent, such as in its discussion

of post-1975 events, the application was incomplete and at

points inconsistent with Henglein I. First, it did not follow

our instruction to apply the Dillingham surrounding circum-

stances test rather than state law to events before the en-

actment of ERISA. We said in Henglein I, the “surrounding

a. ee ot ” , lla

circumstances include the company’s history of representa-

tions—a history that straddles the enactment of ERISA.”

Id. at 399. We explained that pre-ERISA evidence was rel-

evant to prove whether the plan existed in 1982, and such

evidence must be evaluated under ERISA standards.

“(A]lthough the existence of a plan is a prerequisite to recov-

ery under ERISA, the enforceability of that plan under the

state law of unilateral contracts is not. Thus, the district

court’s focus on the state law of unilateral contracts was

misplaced.” Id.

The district court, however, continued to apply state law

standards to pre-1975 events. It stated:

This court suggested in Frenn, however (and the Third

Circuit apparently agrees), that plaintiffs might estab-

lish a right to recovery if plaintiffs could establish a con-

tractually based right to estop Crucible from denying

the existence of the Informal Plan, then plaintiffs might

be able to prove that this contractual right ripened into

an ERISA “employee benefit plan” after ERISA’s effec-

tive date....

The premise of the Frenn analysis is that if the Infor-

mal Plan was an offer for a unilateral contract [*6]

under state contract law, then the 1972 board of direc-

tors resolution may have been ineffective to revoke the

offer....

Findings of Fact and Conclusions of Law 28, A.183 (“FFCL”).

As before, this “focus on the state law of unilateral contracts

was misplaced.” Rather, the court should analyze pre-1975

events under Dillingham’s surrounding circumstances test,

to determine whether a reasonable person in 1982 could as-

certain from these as well as from post-1975 events the de-

tails of an ERISA employee benefits plan.

Second, perhaps as a result of its state law focus, the

district court mistakenly insisted that each plaintiff had to

show knowledge of and reasonable reliance on a benefits plan.

In Henglein I we stated the employees’ unfamiliarity with

the terms of the 1968 or 1969 Memoranda was not dispositive.

“ERISA does not require that a beneficiary have any knowl-

edge of a written plan’s terms, and our federal jurisprudence

has not imposed that requirement either.” Henglein I, 974

F.2d at 401. One of the cases we cited was Brown v. Ampco-

Pittsburgh Corp., 876 F.2d 546, 551 (6th Cir. 1989), in which

a confidential management memorandum that set forth

terms and conditions for termination allowances was held

to be adequate “surrounding circumstances” under

Dillingham for ascertaining a plan, despite the employees’

unawareness of it.

Despite this, the district court on remand stated, “[w]hile

an ERISA plan would apply uniformly to all participants,

regardless of individual knowledge or state of mind, see 974

F.2d [*7] at 401, a contractual right — or a right based on

some theory of reliance or estoppel — would not.” FFCL at

27, A.182. It therefore required that “plaintiffs must each

prove that misrepresentations were individually and per-

sonally made to each one of them by knowledgeable and au-

thorized management employees, and that they each rea-

sonably relied on those misrepresentations.” Jd. at 31, A.186.

However, the employees are not making a state contract law

claim, but rather a claim that there is an ERISA plan, which

“would apply uniformly to all participants, regardless of indi-

vidual knowledge or state of mind.” To determine whether

an ERISA plan exists, the court needs to look to the sur-

rounding circumstances. The employees’ knowledge regard-

ing a plan is only one element of the surrounding circum-

stances, and as we said before, employees need not have

knowledge of a plan’s terms for the plan to exist. A plan may

also exist if some or even no employees know of it, if other

circumstances so indicate. See Brown, 876 F.2d 546.

Third, a crucial element of the surrounding circum-

stances has not yet been clearly addressed: whether the 1968

or 1969 memorandum outlining the Informal Plan was prop-

erly published. In Henglein I, we noted the importance of

determining which documents had been published. An

unpublicized repeal of a benefits plan might “evince some

intent not to maintain that program,” we explained, but

public actions of the company must also be considered to

determine “whether a reasonable person [*8] could deter-

mine the necessary elements of a plan by those actions.”

Henglein I, 974 F.2d at 401.

Although the court dealt extensively with the current

employees’ understanding regarding the plan, it is a sepa-

rate question whether these memoranda were widely dis-

tributed at the time they were written. The publication of a

plan document is strong evidence of its existence, even if,

decades later, employees are unfamiliar with the plan.

Finally, the district court’s repeated reference to the dis-

cretionary nature of shutdown benefits under the 1968 and

1969 Informal Plans as an alternative reason for denying

the Employees’ claims was mistaken. Henglein I made clear

that even if a document provides for only discretionary ben-

efits, that document can still constitute an employee ben-

efits plan under Dillingham, “so long as a reasonable person

can ascertain the contingent benefit and contingent benefi-

ciaries. If an intended benefit is discretionary, then benefi-

ciaries’ rights are limited, and review of a denial of benefits

will be for abuse of discretion.” Id.

The district court, however, did not recognize that dis-

cretionary benefits can be the basis of an ERISA claim. For

example, the court stated: “an ERISA plan which confers

benefits at the sole discretion of management (as the Infor-

mal Plan did) would confer no enforceable right to any em-

ployee before management actually gives its approval.” FFCL

at 46, A.201. And in reviewing under Dillingham whether

the class ofintended [*9] beneficiaries was discernible, the

court stated that since no employees were recommended for

benefits after 1972, there are no intended beneficiaries. Jd.

at 38-39, A.193-94. However, discretionary benefits do not

defeat the existence of a plan; they merely constitute a plan

that assigns discretionary benefits. The court must deter-

mine if an ERISA plan exists, and then determine if its ben-

efits are discretionary. If benefits are discretionary, the ques-

tion is whether their denial was an abuse of discretion.

IV.

Appellants move for Rule 11 sanctions against Colt

claiming that Colt’s Rule 52(c) motion ignored the law of the

case as set out in Henglein I. We will deny this request. The

52(c) motion had enough merit to be adapted verbatim by

the district court, so we can hardly say it was submitted in

bad faith.

We realize the district court has considered extensive

testimony and other evidence in this case. However, the

analysis we called for in Henglein I remains undone. The

district court must therefore review and reevaluate the evi-

dence following the principles set out in Henglein I and this

opinion. For this purpose we will vacate the district court’s

judgment in favor of defendant and remand for further pro-

ceedings consistent with this opinion.

[*10] TO THE CLERK:

Please file the foregoing opinion.

/s/ A.J. Sctr1ca

A.J. Scirica

Circuit Judge

Dated: January 13, 1994

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

GEORGE W. HENGLEIN, et al., )

Plaintiffs

Civil Action

COLT INDUSTRIES OPERATING No. 86-2021

CORPORATION INFORMAL PLAN FOR

PLANT SHUTDOWN BENEFITS FOR

SALARIED EMPLOYEES,

Defendant

PROPOSED ORDER

AND NOW, to wit, this 30th day of April, 1993, for the

reasons set forth in the Findings of Fact and Conclusions of

Law Submitted by Defendant Pursuant to Rule 52(c) for

Judgment on Partial Findings Because Plaintiffs Have Failed

in their Case in Chief to Make Out Prima Facie Proof of the

Existence of the Alleged Informal Plan, the Terms Thereof,

or Entitlement to Benefits Thereunder, which are hereby

adopted by the Court as the Court’s findings of fact and con-

clusions of law (and incorporated by reference herein) it is

hereby ORDERED, ADJUDGED and DECREED that

Defendant’s Motion for Judgment Pursuant to Rule 52(c) of

the Federal Rules of Civil Procedure be and hereby is

GRANTED.

JUDGMENT BE AND HEREBY IS ENTERED on be-

half of defendant Colt Industries Operating Corporation In-

formal Plan for Plant Shutdown Benefits for Salaried Em-

ployees as to Count I, the only remaining count in this law-

suit.

/s/ GLENN E. MENCER

Glenn E. Mencer

Judge

cm: All parties of record /s/A.M.W.

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

GEORGE W. HENGLEIN, et al.,

Plaintiffs

Civil Action

COLT INDUSTRIES OPERATING No. 86-2021

CORPORATION INFORMAL PLAN FOR

PLANT SHUTDOWN BENEFITS FOR

SALARIED EMPLOYEES,

Defendant

FINDINGS OF FACT AND CONCLUSIONS OF LAW

SUBMITTED BY DEFENDANT PURSUANT TO RULE

52(c) FOR JUDGMENT ON PARTIAL FINDINGS BE-

CAUSE PLAINTIFFS HAVE FAILED IN THEIR CASE IN

CHIEF TO MAKE OUT PRIMA FACIE PROOF OF THE

EXISTENCE OF THE ALLEGED INFORMAL PLAN,

THE TERMS THEREOF, OR ENTITLEMENT

TO BENEFITS THEREUNDER.

VOLUME II

ats

a ee ee ee ee hs a

Sie

VI. CONCLUSION

For all the reasons set forth above, judgment will be

entered on behalf of the defendant Informal Plan as to the

claims of all the plaintiffs.

/s/ GLENN EF. MENCER

Glenn E. Mencer

Judge

Date: April 30, 1993

ORDER

AND NOW, this 30th day of April, 1993, this Court

makes the foregoing Findings of Facts and Conclusions of

Law adopted verbatim from those proposed by the defen-

dant, Hayes v. Community General Osteopathic Hospital, 940

F.2d 54, 57 (3d Cir. 1991) and

IT IS ORDERED that said Findings of Fact and Con-

clusions of Law (Documents #108 and 109) be incorporated

by reference in support of this Court’s Order filed this date

at Document #107.

/s/ GLENN E. MENCER

Glenn E. Mencer

Judge

— ae eae: Ee. Ee RES UC ee ee

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

GEORGE W. HENGLEIN, et al.,

Plaintiffs

Civil Action

COLT INDUSTRIES OPERATING No. 86-2021

CORPORATION INFORMAL PLAN FOR

PLANT SHUTDOWN BENEFITS FOR

SALARIED EMPLOYEES,

Defendant

FINDINGS OF FACT AND CONCLUSIONS OF LAW

SUBMITTED BY DEFENDANT PURSUANT TO RULE

52 (© FOR JUDGMENT ON PARTIAL FINDINGS

BECAUSE PLAINTIFFS HAVE FAILED IN THEIR CASE

IN CHIEF TO MAKE OUT PRIMA FACIE PROOF

OF THE EXISTENCE OF THE ALLEGED INFORMAL

PLAN, THE TERMS THEREOF, OR ENTITLEMENT TO

BENEFITS THEREUNDER

VOLUME I

III.

TABLE OF CONTENTS

Page

PROCEDURAL BACKGROUND ........eecceccccceceecese 4

LEGAL ANALYSIS AND CONCLUSIONS

| ECR ORE AD ieee OR Oe ea 9

A. The Terms of the Putative “Informal Plan”... 10

B. The “Informal Plan” Distinguished from the

gS TNAR eRe eee 18

C. Plaintiffs’ Claims Are Individual ..................... 27

D. Legal Standard Applicable to Events

Occurring in and after 1975 ........ iabaniahiibinniantiti 31

1. Reasonable Person/Objective Standard........... 33

Se dics cocevonsiencoescoeenccnenses 36

3. Class of Beneficiaries ..................ccccccccccceccesseses 38

©, TOU WII occ ccscnscsesccsnsnecsocssessezecseseeees 40

5. Procedures for Receiving Benefits ................... 41

6. Individual versus Universal Application of

WON

Benefit Plans under the Dillingham Standard 42

ERISA Notice Requirements and the

Dillingham Standard .0...0..0.....cccccccccecessecceccece. 43

Legal Standard Applicable to Events Occurring

iMate cdi ci ninriesannaener 45

The First Aspect of the Informal Plan.............. 46

The Second Aspect of the Informal Plan ......... 53

Plaintiffs Had No Enforceable Right to Informal

Plan Benefits Under Either Aspect of the

EE EIT 54

4. Notice Requirements Imposed under Applicable

| REE aes ae 56

I 60

A. Plaintiffs Who Did Not Testify ....0.00.0.....ccc0.000. 61

B. Plaintiffs Who Became Salaried Employees

oe lg ag, OE ee ee ee 63

C. “Knowledgeable and Authorized Management

EE REAS TEAS Ito TA OL 64

Page

D. Plaintiffs Who Were Eligible to Receive

Immediate Thirty Year Retirement Benefits

A i iditeiinieiiiadesantilocnianiieniemaniediltedaabamncainsiiati 74

Bb. IID tasnnedetnntuiiamiiisininenitiemsneviosetcesens 76

F. Plaintiffs’ Damages Testimony is

EI cincccnsieitnshndaninicaiadintiiniaiensarienseveineess 77

G. Plaintiffs’ Testimony Offered without

Foundation and/or in Response to Leading

Questions Is of Little Probative Value............. 78

H. Plaintiffs’ Hearsay Testimony Is of Little

aa iaccscscchasicansasnciabtilaniinnsson 82

DOCUMENTARY EVIDENCE ....................cccceeeees 85

Fe RSET EIRENE ae 86

PE iiiivciisiisceimsvanionsduicsnsncbinedetuesien 87

EE siisicscnstsdnasbinnsiensestatoaiauiestsans 92

FP I viincinnisesoratcnssctsnninaneieneveneenies 93

I SIE OO vinctcsasencncncssscccccuntioncsenceneetces 99

I vciiscsicnnsnaininkarcnecunssaneentouevaasiin 102

, tS, TT RN ET 102

i, (gE IR I Ie nT 106

FE OF sniincciscornscccesissniserrcntosotennsets 107

I BO ov cnnsccsensnacnsecesecmassnshssansvonien 107

PED iistiicieindinscvabessniansbboensbeiienes 108

ins cicshiniinessssiinnecionnowesasanns 109

vos scnicickincctenenibasntanieieinannnacts 111

FD BO visleccicnecinnsnsssacevieenecasnivenineins 112

FI iscsi csncnsscsasndintipninniniiloninietn 113

I ain sriilivssLscileicsstnanancdbiinegtiuaians 117

PN IES 0 F nciiensincesnsvcttieuntcncicocssendctenamne 117

ica sacsmscineniiionil 121

Plaintiffs’ Exhibits 19-21 0000.00.00... eeeeeeeeeees 121

Plaintiffs’ Exhibits 22 and 23 ..................cccceeeee 122

B. Plaintiffs’ “Additional Exhibits” ....................... 122

“Additional Exhibit” 24 .........00cccccccccosesssssscosceses 123

“AGAOAGL TEES BO occenceesesivcescccsecsececceeneseass 124

TF TE Tei siitisectcsnecenicenensneniiiainanien 127

NT NOTE 128

Page

“Additional Exhibit” 28.00.00... .ccccccccccececcscocees... 129

“Additional Exhibit” 29.00.00... occccccccccccccoceee. 130

“Additional Exhibit” 30 ..0.0..0.0..ccccccccccccoceceeesss.. 130

“Additional Exhibit” 31 0.0.0.0... cccccccccccccsceseses.. 132

“Additional Exhibit” 32 .00.0.0..0...ccccccccccccccececess.. 133

“Additional Exhibit” 33.00.0000... .cccccccccccccccceceess.. 135

“Additional Exhibit” 34.00.0000... ccccccccceccccocececes.. 138

“Additional Exhibit” 35.0.0... .ccccccccccceccececees... 140

“Additional Exhibit” 36 ..0..0..0...ccccccccccecesceceeees... 141

WITNESS TESTIMONY ..0.o.o.occcececccsccececcececesesesn., 142

hgh og 2, MATER TEE OT nee 142

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Beit iiahinicnninelbtinaenhesnicnsicadat cel aunt 188

PE icidessssisiesnnieaiassansiada ca oes ee 196

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Ri iiiahiaiiiabaisuicissceatesscdeeivensacgsataniean cake ane 223

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WI i etsdinscrnssncenteneersinbesnseiassiesipanuenseisecakeadeunesce 252

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a eae 294

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iit iacinisiicnich east ost tLe (Vol. II) 310

EIA RT (Vol. IT) 319

tas sniipicsinconiatictcssedenidacodddosaeteilccscuite (Vol. II) 325

i, aaa en ede (Vol. II) 329

Be iicinisnecnnisesdscavbdtessnsspleniidsmscsencarccs ts (Vol. II) 335

SII iss sinc cnscsneseedeicetensidasnadinesccoeicctcas ts (Vol. II) 340

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Page

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Se RII cincscincsscncpsikemrcdudianiieatiacaaaenen (Vol. II) 373

Bike: IE sexccicailanss suvenicounceivadsasaytemne aaa (Vol. II) 384

Bis MEE stcinccoviseveistonavccansidcieianersaieaialan (Vol. II) 390

Ba IEE srirsnasccsesnsioensroctneoersconiomanaees (Vol. II) 395

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he SIE Win cokeisientincaswtasseiaceteiatedesssncaencn (Vol. II) 406

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hy IE cadences. donsieuschioeasenasmaanuieesdaanal (Vol. II) 440

Fe PEL choceretieecssmnaniaencae (Vol. II) 447

Pi BE Goaseiviissintieunniiemmnancaae (Vol. II) 452

Ti IIE 6. 55s ca eran tencamnaberaaniaeee aaa (Vol. II) 461

Bi PE svviaiscsicusisnsvimiinaicomaicaaaneae (Vol. II) 470

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ie STII Xa sdistascstateiascscedicaienmescguistan eduieenenaiaaeaaein (Vol. II) 480

i SIE -citcichipheisaiaainctsdalientbiemnsieedaa gaan (Vol. II) 485

ee a iecididiees sited is eee (Vol. II) 491

iy IIE sciicsvinavsccnnsireiertanenceubucnmaaunal (Vol. II) 495

Pe I iisiis biiiis leanasncvstansasseinesucceudeteaeeueeel (Vol. II) 503

i IE cesacerccssssiieanuneonectsneekcianesennaaae (Vol. II) 506

Bi I iiss clas “dion yscesesiedinaesenneanninicecaiocioaiaaee (Vol. II) 512

IEE cinisccsandctsaterssiceneanteinttionceteatiee (Vol. II) 516

Bs IIE sins sin cendecnindunuveaeudansindsicaiconacaunian (Vol. II) 525

Fe I istitics caevccseeidevcucceeeeneneanene (Vol. II) 530

os MII ac AK. dusstsdonokscanbninadestieibadavmeavienchaucaienanl (Vol. II) 541

IE IIE isis tarkicsiccbiedinmonaaatiasaumemee (Vol. II) 546

Ba MUNIN iin inteissicnsemiatpacernconnneimenatbesmmmceanl (Vol. II) 551

Bi IED Gikscssidiorcitabussseanatmsanaennaaane (Vol. II) 556

TF I kaceescecseees TOR LEE. (Vol. II) 560

i PIE is. idunsaendasideneuacenncaic bende (Vol. II) 566

I TY bateniskcccsesiecteminnemetaiasbiaiela (Vol. II) 573

olan f a

SRT OE ier (Vol. II) 579

RET aN SMe eee, (Vol. II) 587

Po ,_ T e (Vol. II) 594

VI. CONCLUSION... ccccccccccccccesccecseceeses., (Vol. IT) 595

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

GEORGE W. HENGLEIN, et al.,

Plaintiffs

Civil Action

COLT INDUSTRIES OPERATING No. 86—2021

CORPORATION INFORMAL PLAN FOR

PLANT SHUTDOWN BENEFITS FOR

SALARIED EMPLOYEES,

Defendant

FINDINGS OF FACT AND CONCLUSIONS OF LAW

SUBMITTED BY DEFENDANT PURSUANT TO RULE

52 (c) FOR JUDGMENT ON PARTIAL FINDINGS

BECAUSE PLAINTIFFS HAVE FAILED IN THEIR CASE

IN CHIEF TO MAKE OUT PRIMA FACIE PROOF

OF THE EXISTENCE OF THE ALLEGED INFORMAL

PLAN, THE TERMS THEREOF, OR ENTITLEMENT TO

BENEFITS THEREUNDER

Putative defendant Colt Industries Operating Corpora-

tion Informal Plan For Plant Shutdown Benefits For Sala-

ried Employees (the “Informal Plan”) has moved for judg-

ment in favor of defendant on Count I — the sole remaining

count of plaintiffs’ Complaint — pursuant to Rule 52(c) of the

Federal Rules of Civil Procedure. Rule 52(c), which became

effective December 1, 1991, provides that:

If during a trial without a jury a party has been fully

heard with respect to an issue and the [*2] court finds

against the party on that issue, the court may enter judg-

ment as a matter of law against that party on any claim,

counterclaim, cross-claim or third-party claim that can-

not under the controlling law be maintained or defeated

without a favorable finding on that issue, or the court

may decline to render any judgment until the close of

all the evidence. Such a judgment shall be supported by

findings of fact and conclusions of law as required by

subdivision (a) of this rule.”

In Count I, plaintiffs claim entitlement to benefits from

and under the alleged Informal Plan. The elements of a claim

for benefits from an ERISA plan are (1) the existence and

terms of an ERISA plan; (2) the plaintiff's right to partici-

pate in the ERISA plan; and (3) the plaintiff’s right to ben-

efits due him under the terms of the ERISA plan. See James

v. National Business Sys., 721 F. Supp. 169, 174 (N.D. Ind.

1989). In most cases, the first element (the existence of an

ERISA plan) is undisputed. Here, defendant disputes that

the Informal Plan is even in existence.

Plaintiffs have the burden of proof to establish the ex-

istence of the Informal Plan. See generally 9 John H.

Wigmore, Evidence in Trials at Common Law § 2487

* Rule 52(c) applies after December 1, 1991 instead of Rule 41(b), even

for lawsuits commenced (as this one was) prior to December 1, 1991. See

Fecter v. Connecticut General Life Ins. Co., 1992 WL 203138, at *14 (E.D.

Pa. Aug. 20, 1992). The substantive standard is the same for purposes of

this motion. See id.; Poultry Processing, Inc. v. Old Orchard Ocean Pier

Co., 780 F. Supp. 846, 849 n.5 (D. Me. 1991).

* Rule 52(a) provides that: “In all actions tried upon facts without a

jury or with an advisory jury, the court shall find the facts specially and

State separately its conclusions of law thereon|{.]”

(Chadbourn rev. 1981) (proponent bears burden of proof).

For purposes of this Rule 52(c) motion, the standard is

whether plaintiffs have come forward with sufficient evidence

to require defendant to [*3] present a defense. 2 McCormick

on Evidence § 338, at 437 (4th ed. 1992) (party with burden

of proof “may in respect to a particular issue pass through

three stages of judicial hospitality: (a) where if she stops she

will be thrown out of court; (b) where if she stops and her

adversary does nothing, her reception will be left to the jury;

and (c) where if she stops and her adversary does nothing,

her victory [ ] is at once proclaimed [ ;”).

Defendant has reserved its right to enter evidence in its

defense, if its Rule 52(c) motion is denied.

On a motion under Rule 52(c), judgment may be entered

“based upon the failure of the party with the burden of proof

to satisfactorily bear that burden on an issue essential to

the relief requested.” Textile Dyeing and Finishing Co. v.

Commerce and Industry Ins. Co., 1992 WL 132508, at *2

(E.D. Pa. 1992). In evaluating defendant’s Rule 52(c) mo-

tion, the court is mindful of its role as trier of fact in this

nonjury context:

Rule 41(b) [i.e., Rule 52(c)] allows the court “as trier of

the facts” to determine the facts and the law “and ren-

der judgment against the plaintiff or ... decline to ren-

der any judgment until the close of all the evidence.” In

contrast, in considering a motion for a directed verdict,

the court does not weigh the evidence, but draws all fac-

tual inferences in favor of the nonmoving party. Ander-

son v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct.

2505, 2513, 91 L.Ed.2d 202 (1986) [quotation omitted].

Thus, although a court might, after reviewing the evi-

dence, decide in favor of the party moving for a dismissal

under Rule 41(b), that court might not take the same

case away from the jury because it might believe that

the jury could reasonably find for the nonmoving party.

[*4] Lytle v. Household Mfg., Inc., 110 S. Ct. 1331, 1338

(1990); see also Martin v. Wilks, 109 S. Ct. 2180, 2194 n.16

(1989).

I. PROCEDURAL BACKGROUND

Plaintiffs in this action brought suit against two puta-

tive ERISA plans: (1) the Informal Plan, and (2) the Colt

Industries Operating Corporation Plan for Maintaining Ben-

efits for Salaried Employees in Parity with Benefits Granted

to Union Represented Employees (the “Parity Plan”). After

this lawsuit was filed,’ the putative administrator of the de-

fendants Informal Plan and Parity Plan filed a complaint

requesting a declaratory judgment that neither of these plans

is in existence. This Court found, and issued a declaratory

judgment, that the Parity Plan is nonexistent. Colt Indus-

tries Inc. v. Frenn, No. 86-2642 (W.D. Pa. Nov. 30, 1988).

this court concluded that the alleged existence of the Infor-

mal Plan [*5] presented questions of materia) fact better

resolved in the context of the instant action for benefits; and

permitted this lawsuit to proceed on that basis.

In this action, plaintiffs have identified themselves as

either “Group I” or “Group II” plaintiffs. The “Group I” plain-

tiffs alleged claims both against the putative Informal Plan

(Count I of the Complaint), and against the putative Parity

Plan (Count II of the Complaint). The “Group II” plaintiffs

alleged claims only against the putative Parity Plan (Count

IT). All of the plaintiffs additionally alleged a claim for puni-

tive damages (Count III of the Complaint). This Court dis-

*This lawsuit actually had its genesis in the lawsuit styled Schake v.

Colt Industries, Inc., Civil Action No. 83-2510 (W.D. Pa.). Plaintiffs in

Schake claimed that the 1968 Informal Plan gave rise to an express con-

tract to provide benefits; they alleged liability based on estoppel and det-

rimental reliance. Plaintiffs also alleged an “implied contract”, the fac-

tual basis of which was unclear. They alleged that the terms of the al-

leged “implied contract” were the same as those of the 1962/68 Informal

Plans. Plaintiffs also claimed benefits under the 1969 Informal Plan. On

cross-motions for summary judgment, this Court found that the only ap-

plicable ERISA plan in existence as of 1982 was the so-called “Formal

Pension Plan.” On appeal, the Third Circuit held that plaintiffs’ claims

were properly characterized as claims for benefits which should have been

made against the “plan”, if it exists, and reversed and remanded with

instructions to dismiss as to Colt and Crucible. The Third Circuit Court

in effect held that the district court did not have jurisdiction because the

proper party was not before it.

missed Count II and Count III by Order dated May 25, 1989.

The May 25, 1989 Order was not immediately final nor ap-

pealable.

The Court then commenced a bench trial of the claims

alleged against the Informal Plan in Count I. On plaintiffs’

motion, the trial was bifurcated. See Order of June 5, 1990

(granting Plaintiffs’ Motion for Bifurcation). Quite simply,

damages cannot be determined until and unless there is a

factual finding that the putative Informal Plan did exist,

and until the terms of the putative Informal Plan are ascer-

tained (it has been disputed throughout whether the 1968

or 1969 version of the Informal Plan would be determina-

tive, see infra).

At the close of plaintiffs’ evidence (after eleven days of

testimony by 66 witnesses), the defendant Informal Plan

moved for involuntary dismissal pursuant to former Rule

41(b). This Court granted the motion and entered judgment

for [*6] defendant. Plaintiffs appealed. On appeal, the Third

Circuit remanded with the following instructions (Henglein

v. Colt Industries Operating Corp. Informal Plan for Plant

Shutdown Benefits for Salaried Employees, 974 F.2d 391,

402-03 (3d Cir. 1992)):

On remand, the district court should dismiss on the

merits both Count II, alleging the existence of a Parity

Plan, and Count III, seeking punitive damages. Further-

more, we will remand for any necessary presentation of

further evidence, after which the district court will de-

termine — under the standards and procedures articu-

lated in Parts VI and VII (B)‘ of this opinion — whether

an informal employee benefit plan existed in 1982 and,

if so, what benefits, if any, the employees may recover.

If, after the presentation of any additional, relevant evi-

dence, the employees have failed to prove either the ex-

istence of an employee benefit plan or any other neces-

sary element of their claim, the district court, on mo-

‘ As the opinion contains no Part VII(B), this analysis endeavors to

address the issues set forth in the appellate opinion as a whole.

tion, should find facts specially and separately state con-

clusions of law pursuant to Rule 52(a) before entering

judgment on the merits.

The Third Circuit apparently did not realize that this

Court had already dismissed Counts II and III by Order dated

May 25, 1989. In effect, the Third Circuit’s mandate simply

affirms this Court’s dismissal of Counts II and III, and re-

mands only for disposition of Count I. In accordance with

the Third Circuit’s mandate, final judgment has been en-

tered [*7] with respect to Counts II and III of the Com-

plaint, by Order dated November 19, 1992.

After remand, plaintiffs indicated to the Court, both by

letter and at a status conference, that they have no further

evidence they wish to present. Subsequently, on January 6,

1993, plaintiffs submitted a motion for summary judgment

pursuant to Rule 56(a). The Court notes that, since plain-

tiffs have already presented their case at trial — including

documentary exhibits and 11 days of testimony — summary

judgment under Rule 56(a) is improper at this juncture.

Plaintiffs submitted 13 “additional exhibits” in conjunction

with their January 6, 1993 motion for summary judgment.

The “additional exhibits” are offered without the benefit of

foundation or testimony, and defendant has objected to their

admission. Moreover, the “additional exhibits” appear to

have been culled from defendant’s exhibits (some of the “ad-

ditional exhibits” clearly bear defendant’s identifying tag).

Defendant had listed several hundred exhibits on its pre-

trial statement, and did not offer any of them for admission

at trial.° Plaintiffs cannot intercede on behalf of defendant

° It must be recalled that defendant has not yet presented a defense. If

defendant’s Rule 52(c) motion were denied, defendant would have the

opportunity to do so, and could introduce its exhibits then.

tooffer [*8] defendant’s exhibits into evidence. (VI:53, 70.)®

Because defendant has objected, and because the “additional

exhibits” are defendant’s exhibits, offered without testimony,

they are not admitted. However, for the sake of complete-

ness, each of these proffered “additional exhibits” — though

not admitted — is discussed infra along with the discussion

of plaintiffs’ exhibits that were properly admitted at trial.

Defendant has moved for judgment pursuant to Rule

52(c), accompanied by detailed proposed findings of fact and

conclusions of law for this Court’s consideration in accor-

dance with the directive of the Third Circuit.’ Defendant

requested entry of judgment on partial findings on the

grounds that plaintiffs failed in their case in chief to make

out a prima facie case for the existence of the Informal [*9]

Plan, its terms, or plaintiffs’ entitlement to benefits.* The

Court, upon consideration of plaintiffs’ testimony and evi-

dence in its entirety, makes the following detailed findings

of fact and conclusions of law.

II. LEGAL ANALYSIS AND CONCLUSIONS OF LAW

This case is complex, both in terms of legal analysis and

in regards to testimony and evidence. Moreover, there are

over 100 plaintiffs — 66 of them testified — who each have

alleged individual claims. For reasons discussed more fully

® As the Court noted to plaintiffs’ counsel] at trial (V:70):

Is it your view [] we can force at this time the defendant to move

the admission of exhibits? When he has not yet presented his case? We

realize that oftentimes defendant exhibits are offered, are admitted dur-

ing the plaintiff’s case. But, we shall also have the understanding and

belief that that is something that is somewhat under the discretion and

control of the defendants. When and if they offer exhibits.

Now, we do not believe the Court can require that.

7 A trial court may adopt verbatim the proposed findings of fact and

conclusions of law submitted by a party; no “heightened scrutiny” is re-

quired upon review. Hayes v. Community General Osteopathic Hosp., 940

F.2d 54, 57 (3d Cir. 1991).

8 Defendant has reserved its right to present evidence in its defense, if

this motion is denied.

es hel " ae rene te

below, the testimony of each of the witnesses is analyzed

individually so as to convey a complete and thorough under-

standing of the Court’s conclusions; each of plaintiffs’ exhib-

its is also given specific consideration,

Therefore, to better guide the reader through this analy-

sis, this opinion departs from the usual format of setting

forth factual findings (for each of the 66 witnesses) and then

setting forth conclusions of law. Instead, the Court begins

by noting its ultimate conclusion, after thorough analysis of

the testimony of each witness and exhibit, that plaintiffs —

individually or collectively — have failed to establish the

existence of the Informal Plan as of 1982 under the legal

standard set forth by the Third Circuit in Henglein v. Colt

Industries Corp. Informal Plan for Plant Shutdown [*10]

Benefits for Salaried Employees , 974 F.2d 391, 402-03 (3d

Cir. 1992)).

The Court begins here by setting forth findings and con-

clusions that apply generally and collectively to the claims

of all the plaintiffs. With this framework established, the

documentary evidence, and the testimony presented by each

individual plaintiff is then weighed in its entirety.

These findings and conclusions are arranged in this

manner to facilitate the reader’s understanding. It should

be understood, however, that in practice the analysis of the

facts did precede the analysis of the law — the factual evi-

dence was examined at length and in detail in arriving at

the legal conclusions set forth here.

A. The Terms of the Putative “Informal Plan”

The very existence of the putative Informal Plan is in

dispute in this lawsuit. Plaintiffs identified the Informal Plan

as being embodied by documents attached as Exhibits A-C

to their complaint, and introduced at trial as Exhibits 2,4

and 7. In Colt Industries Inc. v, Frenn, No. 86-2642, slip op.

at 4-5 (W.D. Pa. Nov. 30, 1988) (footnotes omitted), this Court

described the Informal Plan as follows:

In 1962 Crucible Steel Corporation established an In-

formal Retirement Benefit Plan (“Informal Plan”). In

1968 Crucible Steel Corporation amended the Informal

Plan (“1968 Informal Plan). However, in 1969 Colt In-

dustries acquired the capital stock of Crucible Steel

Corporation and formed Crucible Inc., as a wholly owned

subsidiary of Colt Industries. [*11] Through the

merger with Crucible Steel Corporation, Crucible, Inc.,

became the successor in interest of the employee ben-

efit plans of Crucible Steel Corporation.

In 1969, as a result of the merger, Crucible, Inc. termi-

nated the 1968 Informal Plan. However, on May 16, 1969

Crucible, Inc. adopted new Hardship Retirement Guide-

lines, known as the “1969 Informal Plan.” The 1969

guidelines provided that employees with between fifteen

and thirty years of service, whose employment was ter-

minated by plant shutdown, could obtain a pension ben-

efit. The 1969 Informal Plan became the only Informal

Plan in existence at that time. (The defendants contest

the proper termination of the 1968 plan, this Court as-

sumes for purposes of this motion, but does not decide,

that the 1969 Plan was the only plan allegedly in exist-

ence in 1982.”) However, on December 1, 1972 the Colt

board of directors terminated the 1969 Informal Plan

by Resolution.®

The evidence at trial was consistent with this Court’s

summary of the Informal Plan in Frenn. Plaintiffs introduced

testimony that the Informal Plan was adopted in 1962, was

set down in writing, was operating according to the terms

set forth in those documents, was modified in writing sev-

* As is evident from the face of Plaintiffs’ Exhibit 16, it was the board of

directors of Crucible that rescinded the Informal Plan.

eral times in the course of its existence,”° and was rescinded

by resolution of the board with directors of Crucible effec-

tive [*12] December 1, 1972. See Plaintiffs’ Exhibit 16. There

is no dispute that the 1962 version of the Informal Plan was

completely superseded by the 1968 version of the Informal

Plan; plaintiffs make no claim under the 1962 version of the

Informal Plan. There has been some uncertainty regarding

whether the 1968 or 1969 version of the Informal Plan, or

some combination thereof, would be the one operative as of

1982. See infra.

Plaintiffs have disputed the effectiveness of the Decem-

ber 1, 1972 resolution rescinding the Informal Plan. The reso-

lution, however, appears to be duly executed, see infra, and

valid under applicable corporate law. Indeed, plaintiffs have

offered the resolution as an exhibit (Plaintiffs’ Exhibit 16),

and have not offered any evidence to demonstrate that the

resolution is facially improper. The point plaintiffs raise is

more in the nature of an estoppel — i.e., that defendant is

estopped from asserting the defense that the Informal Plan

was rescinded (and hence is nonexistent) on the grounds that

plaintiffs reasonably relied on its continuing existence."

One of the plaintiffs’ witnesses, Robert J. Whitten, was

intimately familiar with the structure and procedures of the

Informal Plan. (Transcript of testimony of Robert J.

'° This is not a case where Informal Plan documentation is unavailable.

Here, the Informal Plan’s terms are readily determinable from its docu-

mentation. Cf. Flick v. Borg-Warner Corp., 892 F.2d 285, 288 (3d Cir. 1989)

(“It is elementary that the loss of a copy of a document does not foreclose

establishing its contents through the testimony of the draftsman, those

who read the plan, or others who might have knowledge of its provisions.”)

" Since the Informal Plan was always a discretionary program, see infra,

the possibility of objectively reasonable reliance on Informal Plan ben-

efits is problematic. The legal effect of this supposed reliance is compli-

cated by the fact that the time span involved encompasses both the peri-

ods when the governing law was state law (pre-1975) and then ERISA

(1975 and thereafter). The application of governing law to the Informal

Plan is discussed infra.

Whitten, [*13] given February 7, 1991, at 4, 34-35, 40-44,

46, 66-67, 76-77, 151-52, 228-29 [the transcript of Whitten’s

testimony is hereinafter indicated with the notation “Wh:”].)”

He testified that: “[W]e followed the Informal Plan as it was

written.” (Wh:229.)

According to Whitten, the procedures under the 1962,

1968 and 1969 versions of the Informal Plan were essen-

tially the same. (Wh:44, 59-60, 64, 74.) First, an employee’s

supervisor had to elect to initiate the process with a written

recommendation, which then had to be approved by the head

of the division. If approved, the director of employee ben-

efits submitted the recommendation to the Retirement Board

for its majority approval. (Wh:41-44, 64, 74, 138; see also

Plaintiffs’ Exhibits 2, 4, 7, 9.) Whitten identified his signa-

ture on approval forms, consistent with these proce-

dural [*14] requirements. (Wh:40, 61, 63-64.) The proce-

dures were implemented and strictly followed — Informal

Plan benefits were not “automatic.” (Wh:40-44, 46, 59-60,

66, 75, 151-52, 228-29.) No employee had any right to ben-

efits under the Informal Plan unless and until the Retire-

ment Board gave its approval (Wh:228-29), and no benefits

could be obtained unless an employee’s supervisor under-

took to initiate the process. (Wh:41.)

It is undisputed that none of the plaintiffs was chosen

or approved by management to receive Informal Plan ben-

2 Trial transcripts will be indicated throughout by notations indicating

the sequential days of testimony, as follows: Trial transcript of September

17, 1990 is hereinafter indicated with the notation “I:”; trial transcript of

September 18, 1990 is hereinafter indicated with the notation “II:”; trial

transcript of September 19, 1990 is hereinafter indicated with the nota-

tion “III:”; trial transcript of September 20, 1990 is hereinafter indicated

with the notation “IV:”; trial transcript of September 21, 1990 is hereinaf-

ter indicated with the notation “V:”; trial transcript of January 30, 1991 is

hereinafter indicated with the notation “VI:”; trial transcript of Janu-

ary 31, 1991 is hereinafter indicated with the notation “VII:”; trial tran-

script of March 11, 1991 is hereinafter indicated with the notation “VIII:”;

trial transcript of March 12, 1991 is hereinafter indicated with the nota-

tion “IX:”; trial transcript of March 13, 1991 is hereinafter indicated with

the notation “X:”; trial transcript of April 1, 1991 is hereinafter indicated

with the notation “XI:”.

efits, according to the requirements and procedures set forth

in the Informal Plan.

Plaintiff Paul K. Schake’s testimony was consistent with

Whitten’s testimony. Schake was the vice president of finance

and controller of Crucible. He testified that Informal Plan

payments were made from operating funds, and not through

the funds of the “formal” pension plan. (I:25.) This is consis-

tent with Informal Plan documentation. Schake testified

that, in his supervisory role, he approved Informal Plan pay-

ments for departing employees reporting to him. After iden-

tifying his signature on an Informal Plan benefit [*15]

application form, Schake testified, “we all had to approve

these.” (1:35.)8

None of plaintiffs’ other witnesses credibly established

firsthand familiarity with the operation of the Informal Plan.

In particular, none of plaintiffs’ other witnesses supplied

credible testimony that the Informal Plan operated in a

manner other than described in its documentation. The evi-

dence of record overwhelmingly indicates that the Informal

Plan operated in accordance with its written terms while it

was in effect. This Court finds accordingly.

There has been some dispute as to whether the 1968, or

the 1969, version of the Informal Plan would be the one ap-

plicable. The benefits provided by the two versions are dif-

ferent — in some instances the 1968 version is more advan-

tageous, and in other respects the 1969 version provides more

generous payments. See infra. Plaintiffs argue that the 1968

version should apply, but only as improved by the 1969 ver-

sion, thus combining the most generous features of both

versions.

'S There is a complete absence of evidence that Schake or any of the

other supervisor plaintiffs ever undertook to initiate the Informal Plan

approval process for any of their subordinates in 1982. This evidence of

inaction tends to confirm that these plaintiffs knew the Informal Plan

had ceased to exist. Additionally, since other plaintiffs (such as Henglein

and Krupa) reported to Schake, Schake’s failure to initiate the approval

process for these plaintiffs would cause their claims to fail.

[*16] The legal theory supporting this claim (plaintiffs’

claim must, after all, have some support in the law) is based

on the factual assertion that some of the plaintiffs had some

actual knowledge of the 1968 version, but not of the 1969

version. Indeed, plaintiffs represented in discovery responses

that: “The Plaintiffs were unaware of the existence of the

1969 Hardship Retirement Guidelines [i.e., the 1969 Infor-

mal Plan] until, in the course of the actual shutdown.in 1982

itself, a few of them by chance came upon a copy of the docu-

ment.” Plaintiffs’ Responses to Defendant’s First Set of Re-

quests for Admission and Related Interrogatories, No. 34

(copy attached as Exhibit A to the Amended Motion to Com-

pel Responses to Defendant’s First Set of Requests for Ad-

mission and Related Interrogatories, Defendant’s Supple-

mental Interrogatory and Related Request for Production of

Documents and Things, and Defendant’s Special Interroga-

tory (February 8, 1990). This is consistent with the testi-

mony of Robert Whitten, who worked in the personnel de-

partment, and testified that he could not explain how plain-

tiffs obtained copies of the 1969 Informal Plan. He testified

unequivocally that “it wasn’t from our department.”

(Wh:213.) The personnel department did not distribute it

“*cause nobody had the authorization to do that.” (Wh:213-

14.) The testimony of plaintiffs’ witnesses confirms that plain-

tiffs (with the exception of Whitten and possibly Schake) had

no familiarity with (or even knowledge of) the 1969 Infor-

mal Plan.

[*17] The 1968 version of the Informal Plan was some-

what more prominent in the testimony of plaintiffs’ wit-

nesses. A limited number of the plaintiffs testified (credibly

or not) to having some awareness (however vague) to the

1968 version of the Informal Plan. Many of the plaintiffs did

not even have any awareness of the 1968 version of the In-

formal Plan. Some of the plaintiffs candidly admitted at trial

that they did not know even about the Informal Plan until

their counsel informed them of it after the closing. (See tes-

timony of Ashenbaugh, Van Fossen, Young, Haaf,

Kominitsky.)

Presumably, to the extent any of the plaintiffs assumed

that an Informal Plan continued in existence, they would

have assumed that it was the 1968 version and the 1968

terms that remained in effect (since the 1968 version is the

one that more of them testified to having knowledge of).

Plaintiffs propose that, to the extent benefits were reduced

in the 1969 version, those reductions would be ineffective

because of ongoing reliance. Plaintiffs simultaneously pro-

pose that the improvements implemented in the 1969 ver-

sion are effective even though plaintiffs had no knowledge

of them.

This is illogical since plaintiffs’ theory of recovery is es-

sentially grounded in reliance. As a basic principle, it is im-

possible to rely without preliminary knowledge — reliance

presupposes knowledge — and most of the plaintiffs had

little [*18] or no knowledge of the 1968 Informal Plan in

the first instance, and no knowledge of the 1969 Informal

Plan. It is unnecessary to explore this point more thoroughly,

however, because plaintiffs’ claims fail for other reasons set

forth below.

Finally, if it exists, the Informal Plan would be a type of

pension plan within the meaning of ERISA section 3(2), 29

U.S.C. § 1002(2), rather than a welfare plan within the mean-

ing of ERISA section 3(1), 29 U.S.C. § 1002(1). While certain

“severance pay arrangements” do fall within the welfare plan

definition, the Informal Plan does not. Severance pay plans

cannot extend payment more than 24 months after employ-

ment termination (or 24 months after normal retirement

age). DOL Reg. § 2510.3-2(b) (1) (iii); 29 C_F.R. § 2510.3-2(b)

(1) (iii). The 1968 and 1969 Informal Plans both contemplate

that Informal Plan payments may extend beyond that time

(in most cases, for the remainder of the employee’s life).

Therefore, the Informal Plan would be a type of pension plan

rather than a type of severance/welfare plan. This point is

discussed further infra.

B. The “Informal Plan” Distinguished from the “Parity

Plan”

This Court issued a declaratory judgment in Colt In-

dustries Inc. v. Frenn, No. 86-2642 (W.D. Pa. Nov. 30, 1988),

that the Parity Plan is nonexistent. The Third Circuit has

agreed with this Court that Frenn is binding here, and that

all [*19] claims against the putative Parity Plan were con-

clusively adjudicated in Frenn. Therefore, Count II of this

lawsuit has been dismissed.

It is imperative to understand the difference between

the putative Informal Plan and the putative Parity Plan.

Unlike the Informal Plan, the alleged Parity Plan was never

documented or put into operation. While the alleged Infor-

mal Plan did exist (in the manner described in Informal Plan

documents) and was implemented for a period of time (from

1962 to 1972), there is no credible evidence that the alleged

Parity Plan, as such, ever existed or was implemented by

Crucible.

In Count II of their Complaint, plaintiffs described the

alleged Parity Plan as a vehicle to provide salaried employ-

ees with benefits comparable to, or in “parity” with, the ben-

efits of Crucible’s union employees:

17. The Parity Plan, as administered throughout the

course of the plaintiff-employees’ careers at Midland,

consistently resulted in the granting to salaried employ-

ees of benefits identical to or substantially equal in value

to the benefits won by union employees in virtually all

areas including pension, health care, life and disability

insurance, vacations, holidays, severance pay and ex-

tending to such relatively insignificant benefits as safety

shoe allowances. The only benefits granted to union

employees which were not extended to salaried employ-

ees were benefits of a nature inappropriate to employ-

ees with management responsibilities and were coun-

terbalanced by other benefits and protections more in

keeping with the role and status of management em-

ployees, i.e., Supplemental Unemployment Benefits

which were deemed not necessary for management em-

ployees who were largely sheltered from the risks of lay-

offs; COLA, the mechanical nature of which was at

odds_ [*20] with the merit increases granted salaried

employees; and the periodic thirteen-week paid sabbati-

cal in effect on January 1, 1964 which would have seri-

ously disrupted functioning of the mills if extended to

salaried employees, who in lieu thereof were granted

the profit sharing and savings plan known as the Cru-

cible Fund which was also in effect on January 1, 1964.

Complaint, 417. The specific benefit that plaintiffs

sought to obtain through the alleged Parity Plan was a $400

per month supplement (emphasis added):

19. The $400 monthly supplement granted to long-

term, older union employees following the 1982 plant

shutdown was the only nonwage benefit won by union

employees which the Parity Plan ever withheld from

long-term, older salaried employees without prior no-

tice having been given that such benefit would be with-

held or given to salaried employees in the form of an-

other benefit considered to be more appropriate.

Complaint, 919.

This Court’s opinion in Frenn described the alleged Par-

ity Plan consistent with the allegations of plaintiffs’ com-

plaint:

The [plaintiffs here] further allege that the 1968, 1969

Informal Plan provided a $25 dollar per month supple-

ment until the age of social security eligibility and that

through a separate “Parity Plan” the defendants

were [*21] entitled to the increased $400 per month

supplement awarded to the non-salaried employees, at

the time of plant shutdown in 1982. The [plaintiffs here]

contend that Colt created by their conduct a “Parity

“ The Court notes that the $400 supplement was not a benefit newly

conceived at the time of the shutdown. Apparently, it had been provided

in the bargaining unit pension plan prior to the shutdown, and was set

forth in informational material provided to bargaining unit employees.

There was no comparable provision in the salaried formal plan, nor in the

formal plan documentation provided to salaried employees.

Plan,” to provide the same pension benefits for salaried

employees as for the hourly bargaining unit.

Frenn, slip op. at 20-21. This Court found in Frenn that:

[I]n no way could a reasonable person ascertain from

the surrounding circumstances, that they would receive

a $400 supplement in 1982. Therefore, the alleged Par-

ity Plan $400 supplement never existed under the

Donovan and Anderson analyses.

Frenn, slip op. at 24. Anderson uv. John Morrell & Co.,

830 F.2d 872 (8th Cir. 1987) was one of the authorities cited

in Frenn. Anderson was based on allegations strikingly simi-

lar to those made here, with the plaintiff in Anderson alleg-

ing that “When he was hired from the union ranks, he was

told that his salary would be based upon his performance,

but his fringe benfits would always be as good as, or better

than, those he would have received if he would have stayed

in a union position.” Id. at 873. The Eighth Circuit refused

to impose an obligation on the employer “to maintain the

plan indefinitely([,]” finding that “there must be a specific, if

not written, expression of the employer’s intent to be bound.”

Id. at 877.

Frenn’s holding is the very one that the Third Circuit

found to be dispositive. See Henglein, 974 F.2d at 402 (Frenn’s

ruling on nonexistence of Parity Plan is a conclusive ruling

on the merits).

[*22] This Court is mindful of the Third Circuit’s state-

ment that: “So long as they do not modify the terms of a

written plan, oral representations by a knowledgeable and

authorized management employee of the company may be

evidence of a benefit plan, especially if a representation in-

corporates by reference the terms of a document or other

plan.” Henglein, 974 F.2d at 400-01 (citation omitted). The

general import of the Third Circuit’s opinion seems to be

that the existence of a formal, written, documented pension

plan does not preclude the existence of a separate “infor-

mal” (lower case) pension plan, and that the terms of such

an informal plan may be drawn from both written materials

and oral representations.

Here, however, there was a specific “Informal Plan” that

was documented and operated strictly according to its docu-

mentation while it was in effect. The Informal Plan provided

certain specific benefits, upon the satisfaction of certain spe-

cific conditions, including a detailed management approval

process. The issue presented is whether the Informal Plan

continued in effect (through the operation of an estoppel prin-

ciple) after it was rescinded by Crucible’s board of directors.

This Court finds no credible evidence of record that would

make the putative Informal Plan a vehicle to provide any

benefits other than those benefits which the Informal Plan

documents identify, and which the Informal Plan provided

while Crucible maintained it. Cf. Henglein, 974 F.2d at 401

(“an oral representation cannot modify a valid written

plan”). [*23] There is no evidence at all, for example, that

any “knowledgeable and authorized management employee”

represented specifically that the Informal Plan would pro-

vide any benefits other than those the documents specifi-

cally described — either while the Informal Plan was in ef-

fect or at any time thereafter. Nor is there any credible evi-

dence that Crucible ever deviated from the documented ben-

efits and terms of the Informal Plan, during the time that

Crucible maintained the Informal Plan.

The Third Circuit’s opinion implies something more; it

implies the possibility that Crucible’s Informal] Plan might

be part of a larger “informal plan” that would also include

additional benefits described by the oral representations of

“knowledgeable and authorized management employees”

(and not included in the written materials). See Henglein,

974 F.2d at 401 (“where the oral remarks give evidence of a

separate plan not precluded by a written plan, the district

court may credit the representations as evidence of a plan

[ ]”). The only benefits plaintiffs seek which are not part of

the Informal Plan are those benefits which they defined as

encompassed within the “Parity Plan.”

[*24] Although they declined to present additional tes-

timony,”* plaintiffs have now suggested that the Informal

Plan (or “informal plan”) be redefined to encompass the $400

monthly supplement previously defined as a Parity Plan

benefit. However, in declaring the Parity Plan to be nonex-

istent in Frenn, this Court explicitly declared that the $400

supplement was to be provided by the Parity Plan. Plain-

tiffs cannot nullify Frenn by redefining the parameters of

the Informal Plan.

Plaintiffs might have alleged their claims against one

“global” ERISA plan to encompass both what has been de-

fined here as the Informal Plan, and what has been defined

here as the Parity Plan. But they did not. Plaintiffs defined

the Informal Plan based on its documentation, and the Par-

ity Plan as an undocumented plan to provide the $400 supple-

ment and benefits “the same as” union benefits. Indeed, at

trial plaintiffs’ counsel represented to the Court at trial (con-

sistent with plaintiffs’ complaint) that the Informal Plan was

defined by its documentation (II:147 (emphasis added)):

[*25] We are not claiming the employees did know of

the 1969 plan. But we are saying that an informal plan

had come into effect in 1968 and continued either in that

form or an enhanced form as a result of the 1969 docu-

ment.

The existence of both plans (the Informal Plan and the

Parity Plan) as of 1982 was disputed from the beginning.

Frenn held that the Parity Plan to be nonexistent.

After the Frenn decision, this Court dismissed the Par-

ity Plan claims (Count II of the complaint), and thereby dis-

missed the claims against the alleged plan allegedly provid-

16 As noted supra, plaintiffs proffered 13 of defendant’s exhibits as “ad-

ditional exhibits” in support of their January 6, 1993 motion for summary

judgment. Defendant has objected to the “additional exhibits,” which are

submitted without supporting testimony. The “additional exhibits” —

though not admitted — are discussed for the sake of completeness along

with the discussion of plaintiffs’ original exhibits. Even if admitted, they

would have added no support to plaintiffs’ claims.

ing the $400 monthly supplement (and generally benefits in

“parity” with the union benefits).

The Informal Plan, as documented and implemented,

never provided the $400 supplement. The telling point is —

if the Parity Plan is not the $400 supplement and any other

benefits provided by the union benefit plans, then what is

it? And if the Parity Plan is not the $400 supplement and

any other benefits provided by union benefit plans, then what

preclusive effect does Frenn have? The obvious answer is

that the Parity Plan does include the $400 supplement (and

generally benefits in “parity” with the union benefits). This

Court finds (and the Third Circuit apparently agrees) that

any claims to the $400 supplement (or any other benefit fea-

tures of the union plans) have been conclusively determined

by Frenn’s holding that the Parity Plan is not in existence.

The question might arise: Could the Informal Plan (or a

more generic “informal plan”) provide the $400 supple-

ment [*26] independent of the Parity Plan? The answer,

given this Court’s decision in Frenn, is “No.” It is possible to

postulate dozens of different putative plans to provide the

$400 supplement in addition to the Parity Plan (the “$400

Supplement Plan,” the “Shutdown Benefit Plan,” the “Sala-

ried Pension Supplement Plan,” and so forth). This would be

futile.

Once it is determined that there is no hypothetical, un-

documented plan to provide the $400 supplement, the mat-

ter is settled as to all putative undocumented plans, no mat-

ter how denominated. The matter is also settled as to hypo-

thetical, undocumented enlargements of other plans (such

as a hypothetical, undocumented enlargement of the writ-

ten Informal Plan). Indeed, it is more difficult to prove the

enlargement of a documented plan (such as the Informal

Plan) than the existence of an independent undocumented

plan (i.e., the Parity Plan). See Henglein, 974 F.2d at 401

(“We emphasize that an oral representation cannot modify a

valid written plan. Confer, 952 F2d at 43. But where the

oral remarks give evidence of a separate plan not precluded

by a written plan, the district court may credit the represen-

tations as evidence of a plan.”).

Second, there is no basis to find that the scope of the

Informal Plan exceeded its terms. Since the evidence does

not give rise to a separate Parity Plan (as found in Frenn),

then it also does not give rise to an (undocumented) expan-

sion of the Informal Plan. Plaintiffs defined the Parity Plan

asa _ [*27] separate plan providing the $400 monthly supple-

ment — to bring Informal Plan benefits in parity with union

benefits. This claim was dismissed, regardless whether in-

dependently, or as an enlargement of the Informal Plan.

Thus, this Court finds specifically that, due to the res

judicata effect of the Frenn decision, the Informal Plan does

not encompass a $400 montly supplement comparable to that

provided in the union pension plan. Furthermore, this Court

finds, as a matter of fact and of law, that the putative Infor-

mal Plan is by definition limited to the benefits it specifi-

cally provided, as and when provided, while it was in opera-

tion.

C. Plaintiffs’ Claims Are Individual

Plaintiffs brought this lawsuit, not as a class action, but

rather as a series of individual claims. Therefore, each of

the plaintiffs must prove his or her own individual case.

Certain of the plaintiffs do share common circumstances

which are of overriding importance. For example, as dis-

cussed infra, a number of the plaintiffs became salaried

employees after the Informal Plan was eliminated in 1972,

or even after 1975.

While an ERISA plan would apply uniformly to all par-

ticipants, regardless of individual knowledge or state of mind,

see 974 F.2d at 401, a contractual right — or a right based

on some theory of reliance or estoppel — would not. The

analysis here is complicated by the fact that the rel-

evant [*28] facts encompass both pre-ERISA and post-

ERISA time frames. Defendant has argued, in part, that the

Informal Plan was duly eliminated under applicable state

law in 1972 before ERISA ever came into effect, that none of

the plaintiffs had any right to Informal Plan benefits as of

1972, and that no rights arose thereafter because the Infor-

mal Plan was no longer in effect.

This Court suggested in Frenn, however (and the Third

Circuit apparently agrees), that plaintiffs might establish a

right to recovery if plaintiffs could establish a contractually

based right to estop Crucible from denying the existence of

the Informal Plan, then plaintiffs might be able to prove that

this contractual right ripened into an ERISA “employee ben-

efit plan” after ERISA’s effective date. The analysis attempted

to blend pre- and post-ERISA principles to provide plaintiffs

an opportunity to prove the threshold element of their ERISA

claims: the existence of an ERISA plan.

The premise of the Frenn analysis is that if the Infor-

mal Plan was an offer for a unilateral contract under state

contract law, then the 1972 board of directors resolution may

have been ineffective to revoke the offer if plaintiffs couid

establish that they (1) did not receive actual or construciive

notice of the 1972 rescission; (2) detrimentally (and reason-

ably) relied upon the offer; and (3) fulfilled of all the condi-

tions stated in the offer, so as to form a unilateral contract.

See also Gridley v. Cleveland Pneumatic Co., 924 F.2d 13 10,

1319 & 1319 n.8 (3d Cir. 1991) (reliance [*29] must be rea-

sonable and must be detrimental). Frenn made clear, more-

over, that even if plaintiffs could prove the contractual com-

ponent of Frenn, plaintiffs still had to prove the existence of

an ERISA “plan” under the test set forth in Donovan v.

Dillingham, 688 F.2d 1367 (11th Cir. 1982). See infra.

Under the Frenn analysis, reasonable reliance (based

on credible assurances of authorized personnel) can suffice

to establish the employer’s intent to maintain a plan. Defen-

dant has disputed this standard. See, e.g., Hozier v. Midwest

Fasteners, 908 F.2d 1155, 1165 n.10 (3d Cir. 1990) (“implied

representations” that certain benefits “would continue to be

provided” in contradiction to the terms of a plan are not “ex-

traordinary circumstances” that create an estoppel effect).

Regardless of the correctness of the legal standard, plain-

tiffs nevertheless were unable to provide factual support for

it. Plaintiffs failed to prove that: (1) the Informal Plan was

ever communicated to them as an offer (except to the lim-

ited extent it was communicated as a discretionary benefit

provided upon the recommendation and approval of man-

agement); (2) they reasonably and detrimentally relied on

the availability of Informal Plan benefits; (3) they fulfilled

all of the terms and conditions of the Informal Plan; and (4)

the Informal Plan existed after the effective date of ERISA

under the test set forth in Dillingham.

Moreover, returning to the individual nature of plain-

tiffs’ claims, it must be noted that the Frenn analysis [*30]

does not give complete license to mix apples and oranges. If

Crucible had established or maintained the Informal Plan

as an ERISA plan, then the Informal Plan would be uni-

formly applicable to all salaried employees regardless of the

state of mind of any individual employee. Cf. Henglein, 974

F.2d at 401 (“ERISA does not require that a beneficiary have

any knowledge of a written plan’s terms, and our federal

jurisprudence has not imposed that requirement either.” (ci-

tations omitted)). But plaintiffs have resorted to evidence of

continuing reliance on the existence of the Informal Plan

(based upon alleged misrepresentations) precisely because

it is clear that the sponsor (Crucible) did not affirmatively

maintain the Informal Plan after 1972.

It makes no sense to propose that, just because one em-

ployee (out of hundreds) might have received misrepresen-

tations and reasonably relied on them, then an ERISA plan

has been created which provides benefits to all other em-

ployees (whether they be tens, hundreds, or thousands), in-

cluding employees who received no misrepresentations and

perhaps even knew perfectly well that no such benefit plan

existed. Even if five or ten or twenty employees could prove

such misrepresentations and reliance, it is patently improper

to compel the employer to provide identical benefits to all

other employees when the basis for recovery is the communi-

cations and reasonable understanding of only some of the

employees.

[*31] It would be contrary to the very legal principle

upon which liability is established, to impose liability on an

employer who neither implemented an ERISA plan nor ob-

jectively misled a particilar employee to rely upon nonex-

istent benefits. Cf. Nationwide Ins. Co. v. Darden, 112 S. Ct.

1344, 1350 (1992) (criticizing imposition of liability based

plang[ ]” and hamper employers in “figur[ing] out” their pen-

sion fund liability). Thus, plaintiffs must each prove that

D. Legal Standard Applicable to Events Occurring in

and after 1975

The Third Circuit has directed this Court to focus spe-

cifically on evidence of the existence of the so-called Infor-

mal Plan subsequent to the effective date of ERISA, in 1975.

Henglein, 974 F.2d at 401-02. As plaintiffs have no additional

evidence to present!* the Court must glean what it can from

the record they have already made.

[*32] This analysis begins by focusing solely on evidence

of record as to events occurring in 1975 and thereafter. Be-

cause plaintiffs (individually and collectively) have not

proven the existence of the Informal Plan based on evidence

as to events occurring in or after 1975, this analysis also

considers whether pre-1975 events somehow gave rise to

rights and liabilities, individually or collectively, which sur-

vived the enactment of ERISA. Plaintiffs’ documentary evi-

dence is considered in detail infra. The testimony of plain-

tiffs’ witnesses is considered individually infra. In each case,

the testimony as to post-1975 events is highlighted sepa-

rately.

'* As noted supra, in support of their motion for summary judgment

submitted January 6, 1993, plaintiffs proffered 13 of defendant’s exhibits

as “additional exhibits.” Defendant has objected to the “additional exhib-

Plaintiffs have failed — individually or collectively —

to establish the existence of the Informal Plan in or after

1975, based solely on evidence and testimony as to events

occurring in or after 1975. The standard for determining

whether an ERISA benefit plan exists (in or after 1975) is

set forth in Donovan v. Dillingham 688 F.2d 1367 (11th Cir.

1982). See Henglein, 974 F.2d at 399. The articulated crite-

ria are that “a reasonable person can ascertain the intended

benefits, a class of beneficiaries, the source of financing, and

procedures for receiving benefits.” Dillingham, 688 F.2d at

1373 (emphasis added).

[*33] 1. Reasonable Person / Objective Standard

Dillingham requires evidence that a “reasonable per-

son” could ascertain the indicia that a benefit plan exists.

The “reasonable person” standard is an objective standard.

See, e.g., Langer v. Monarch Life Ins. Co., 966 F.2d 786, 798

(3d Cir. 1992) (under a “reasonable expectations” standard,

“[plaintiff’s] subjective expectations do not control; rather

we must consider what a reasonable person in [plaintiff's]

shoes would have expected [ ]”); Gray v. York Newspapers,

Inc., 957 F.2d 1070, 1079 (3d Cir. 1992) (reasonable person

standard is objective test).

Since the Dillingham standard is an objective standard,

it of course requires evidence that the employer took action

to implement the plan in question:

Acts or events that record, exemplify or implement the

decision will be direct or circumstantial evidence that

the decision has become reality — e.g., financing or ar-

ranging to finance or fund the intended benefits, estab-

lishing a procedure for disbursing benefits, assuring

employees that the plan or program exists — but it is

the reality of a plan, fund or program and not the deci-

sion to extend certain benefits that is determinative.

Dillingham, 688 F.2d at 1373.

There is no credible evidence that, after 1975, Crucible

undertook to finance or fund Informal] Plan benefits (for any

[*34] There is no credible evidence that authorized and

knowledgeable Crucible management personnel deliberately

and routinely misled plaintiffs about their benefits, and spe-

cifically about the (non)existence of the Informal Plan. Fur-

thermore, there is no credible evidence that a reasonable

person could have ascertained (in 1975 and thereafter) in-

tended Informal Plan benefits, a class of Informal Plan ben-

eficiaries, the source of Informal Plan financing, and proce-

dures for receiving Informal Plan benefits. Dillingham, 688

F.2d at 1373 (emphasis added).

The evidence is that any reasonable inquiry, conducted

at any time within the 10 years prior to the 1982 closing,

would have yielded the information that the Informal Plan

had been rescinded. (Wh:109-10, 175-80 (Robert Whitten and

other personnel department employees would have re-

sponded to inquiries by telling querants that the Informal

Plan no longer existed). ) Furthermore, the evidence is that

any reasonable inquiry, conducted while the Informal Plan

was in effect from 1962 through 1972, would have yielded

the information that the Informal Plan provided certain spe-

cific benefits under certain specific conditions and contin-

gent upon management approval. (See Wh:34, 46, 64-66,)!”

[*35] This last point is important. It is clear from all

Informal Plan documentation that Informal Plan benefits

were extended only with the recommendation and approval

of management." Any reasonable person who consulted In-

” See also, e.g., Hozier v. Midwest Fasteners, 908 F 2d 1155, 1165 n.10

(3d Cir. 1990) (“implied representations” that certain benefits “would con-

tinue to be provided” in contradiction to the terms of the plan are not

“extraordinary circumstances” that create an estoppel effect).

'* Some of plaintiffs’ witnesses testified to having received, read or un-

derstood only information that declared there was a benefit, but simulta-

neously disclaimed receipt, awareness, or understanding of the approval

requirement. This testimony of selective awareness is addressed in detail

individually. See also infra discussion of Plaintiffs’ Exhibits 4 and 5.

formal Plan documentation would have understood that In-

formal Plan benefits — to the extent they were provided while

Crucible maintained the Informal Plan — were provided only

when management authorized payment to a particular indi-

vidual. Any reasonable inquiry (for example, to the person-

nel department) would have provided this same information.

(E.g., Wh:151-52, 228-29.)

There is no evidence whatsoever that any employees

were approved to receive Informal Plan benefits after 1972

(which encompasses the time period after 1975). Payments

continued to be made to employees who had already received

approval prior to 1972, but no new names were added. No

witness credibly testified that the Informal Plan continued

to exist or continued to operate in or after 1975. On the con-

trary, a number of witnesses acknowledged that they knew

the Informal Plan had been eliminated, or that they had no

basis to believe the Informal Plan was in existence in or af-

ter 1975.

[*36] 2. Intended Benefits

Plaintiffs — individually or collectively — have not es-

tablished that Crucible intended to make Informal Plan ben-

efits available at any time after 1972 (and, hence, at any

time after 1975). The focus in on the employer’s intent, be-

cause “[t]he pension scheme as originally conceived by Con-

gress and enforced by ERISA is essentially voluntary.” Hlinka

v. Bethlehem Steel Corp., 863 F.2d 279, 283 (3d Cir. 1988);

accord Alessi v. Raybestos-Manhattan, 451, U.S. 504 (1981).

The Third Circuit suggests, in effect, that some sort of

estoppel operates if there are sufficient objective (and au-

thoritative) manifestations of contrary intent. See Henglein,

974 F.2d at 401 (“if the company had continued to promise to

pay the plan’s benefits, the company’s promises would be

evidence that the company had maintained the plan, despite

the resolution. Similarly, if the company deliberately failed

ye? feos sigs te iash 5 peti a ik Taal ae

hap Dina sia sti Sait leet Ba : i"

to inform the employees of the plan’s putative repeal, that

too would indicate that the company maintained the plan.”)."

The documentary and testimonial evidence, which is re-

viewed in detail infra, does not establish that level of objec-

tive manifestations of contrary intent.

[*37] Moreover, the Third Circuit did not suggest that

the Informal Plan’s management approval requirement

would be negated in any way. The management approval

requirement is an integral part of the Informal Plan, and it

would presumptively remain incorporated in the Informal

Plan unless an estoppel operates against the employer to

make Informal Plan benefits automatic. However, the docu-

mentary and testimonial evidence, discussed in detail infra,

does not establish that management misled employees to

believe that Informal Plan benefits could be obtained with-

out management approval.

Finally, as discussed supra, the Informal Plan provided

certain specific benefits under certain specific conditions. It

should be noted that, under ERISA, the Informal Plan could

not permissibly have continued to provide the same benefits

it provided while it existed under state law. ERISA requires

that a pension plan — such as the Informa] Plan — provide

a normal retirement benefit that accrues over time and be-

comes nonforfeitable within certain minimum time frames.

See ERISA §§ 3(22)-(25), 202-06, 29 U.S.C. §§ 1002(22)-(25),

1052-56. Informal Plan benefits did not vest, and did not

accrue over time — benefits accrued only at the instant in

time when an employee was approved to receive the benefit.

Thus, the Informal Plan could not continue to exist as a free-

standing pension plan under ERISA. It would have had to

have been significantly modified to have remained freestand-

ing — or would have had to have been imported into the

’* This legal analysis, of course, presupposes that the employees first

credibly established preexisting knowledge of — and objectively reason-

able expectations about — the Informal Plan and Informal Plan benefits.

formal salaried pension [*38] plan.” Either course would

have entailed modification of a written pension plan.

The Third Circuit has cautioned against imputing such

implied modifications of written pension plans. Henglein, 974

F.2d at 400. Modifications changing the essential nature of

the Informal] Plan cannot be imputed. The fact that Crucible

did not undertake sua sponte to make the substantial modi-

fications required to bring the Informal Plan into compli-

ance with ERISA, tends to establish that the Informal Plan

did not exist as of 1975 or thereafter. We do not think that

the Third Circuit intended this Court to undertake to modify

and shape the Informal Plan’s terms and benefits — cer-

tainly not without adequate factual evidence that plaintiffs

actually and reasonably relied on specific benefits.

3. Class of Beneficiaries

At best, the Informal Plan beneficiaries (i.e., partici-

pants) are limited to those employees who were approved to

receive Informal Plan benefits. The Informal Plan clearly

established a detailed procedure of recommendation and

approval [*39] of beneficiaries.”' There is no evidence that

any additional recommendations or approvals were made at

any time after 1972; and thus there is no evidence that the

class of beneficiaries expanded at any time after 1972 (in-

cluding any time after 1975).

»” There is evidence that Crucible did include a type of hardship benefit

in the 1972 version of its formal salaried pension plan, see infra discus-

sion of Plaintiffs’ Exhibit 14, and that the special benefit was removed

from the 1975 version of the formal salaried pension plan, perhaps at the

request of the Internal Revenue Service.

21 To be within the class of employees eligible for consideration for speci-

fied benefits under the 1968 Informal Plan, an employee must have at-

tained age 60, been under age 65, and have had 15 or more years of ser-

vice, or must have been less than 65 years old with more than 20 and less

than 30 years of service. To be within the class of employees eligible for

consideration for specified benefits under the 1969 Informal Plan, an em-

ployee must have (1) attained age 60 with 15 to 30 years of credited ser-

vice, or (2) been between age 50 and 60 with 15 to 30 years of service, or

(3) be eligible for 30 year retirement under the formal pension plan.

Moreover, the same reasoning set forth above regarding

“intended benefits” under the Dillingham standard applies

equally here. Under ERISA, the Informal Plan could not

permissibly have continued to exist as a freestanding plan

providing the same benefits it provided while it existed un-

der state law. See ERISA §§ 3(22)-(25), 202-06, 29 U.S.C.

§§ 1002(22)-(25), 1052-56. The Informal Plan would have had

to have been significantly modified to have remained free-

standing — or would have had to have been imported into

the formal salaried pension plan. Either course would have

entailed the modification of a written pension plan — modi-

fications which the Court cannot freely impute. Henglein,

974 F.2d at 400.

[*40] 4. Source of Financing

According to the Informal Plan documentation, Infor-

mal Plan benefits were financed from operating funds. Plain-

tiff Schake, who was the vice president of finance and con-

troller of Crucible, confirmed that Informal Plan payments

were made from operating funds, and not through the funds

of the “formal” pension plan. (I:25.) Thus, while the source

of financing appears to be clearly identifiable, that same in-

formation tends to disprove the existence of the Informal

Plan.

Under ERISA, the Informal Plan is a type of pension

plan, and not a welfare plan. See supra.” Unfunded “pay as

you go” pension plans like the Informal Plan were made ob-

solete and illegal by ERISA. See S. Rep. No. 127, 93d Cong.,

1st Sess. 21 (1973), reprinted in 1 Subcommittee on Labor,

Legislative History of the Employee Retirement Income Se-

curity Act of 1974, at 607 (1976). ERISA prohibits employ-

ers from paying most retirement benefits out of operating

funds. Instead, ERISA establishes rigorous funding require-

ments for retirement plans (and not for welfare plans), inter

alia requiring that the funds be placed in trust and held by

* The Third Circuit appears to have misunderstood the nature of the

Informal Plan. See Henglein, 974 F.2d at 399 ( implying that the Informal

a trustee. ERISA § 302, 29 U.S.C. § 1082. Thus, to maintain

the Informal Plan after ERISA became effective, Crucible

would have been required to comply with funding require-

ments. Crucible, [*41] consistent with its intent and un-

derstanding that it had abolished the Informal Plan, did not

bring the Informal Plan (including funding) into compliance

with ERISA (as Crucible did for the formal pension plan).

This tends to establish that the Informal Plan was nonexis-

tent as of the passage of ERISA in 1975.

5. Procedures for Receiving Benefits

Informal Plan documentation describes a detailed pro-

cedure of recommendation and approval. Robert J. Whitten

testified on behalf of plaintiffs that the procedure was imple-

mented and strictly followed — Informal Plan benefits were

not “automatic” — and that no employee had any right to

benefits under the Informal Plan unless and until the Re-

tirement Board gave its approval, as the last stage of the

approval process. (Wh:40-44, 46, 59-60, 66, 75, 151-52, 228-

29.) Similarly, if an employee’s supervisor did not undertake

to initiate the process, no rights could be obtained. (Wh:41.)

This testimony and documentation are unrefuted. The evi-

dence conclusively indicates that the procedure for obtain-

ing benefits is the procedure described in the Informal Plan

documents.

It is undisputed that none of the plaintiffs was approved

by management to receive Informal Plan benefits, accord-

ing to the requirements and procedures set forth in the In-

formal Plan.

[*42] In summary, while the procedures for receiving

benefits (as well as the intended benefits, the class of benefi-

ciaries, and the source of financing) are all ascertainable from

the Informal Plan documents for the time period when the

Informal Plan was in effect, there was no procedure for ob-

taining benefits at any time after 1972 (and hence, in 1975

and thereafter). Likewise, the intended benefits, at any time

after 1972 (and after 1975) are nil. There were no additional

beneficiaries, and there was no source of financing, at any

time after 1972 (and therefore at any time after 1975).

6. Individual versus Universal Application of Benefit

Plans under the Dillingham Standard

The Dillingham criteria focus on whether the employer

has established (through the employer’s actions including

but not limited to its communications) a benefit program

with objectively defined specific features — such as intended

benefits for an intended class of beneficiaries available

the Informal Plan continued to exist.

Even under such circumstances, the Informal Plan

would have to have the features ( intended benefits and so

forth) that the employer intended, in a form that could and

would comply with ERIS . This conclusion ives rise to a

7. ERISA Notice Requirements and the Dillingham

Standard

If an employer has established a documented ERISA

plan, and if the plan administrator has complied with

ERISA’s notice requirements, see ERISA §§ 101-10, 29 U.S.C.

§§ 1021-30, then of course there is no factual question as to

the existence [*44] of the ERISA plan. If the employer has

established a documented ERISA plan, but has failed to com-

ply with ERISA’s notice requirements in some way, then the

plan exists, and remedies for inadequate notice are provided

by ERISA. See ERISA § 502(c), 29 U.S.C. § 1132(c).

Here, the employer has not purposefully undertaken to

establish an ERISA plan — the employer undertook to elimi-

nate the Informal Plan as of 1972 and did not undertake to

maintain it or to bring it into compliance with ERISA after

that time. Naturally, since the employer believed and un-

derstood that the Informal Plan had long since been elimi-

nated, the employer did not undertake to provide ERISA

notice regarding the Informal Plan.

There is no evidence at all that Crucible was made aware

that any salaried employees might have believed that the

Informal Plan continued to exist. No witness testified to alert-

ing management to this possibility, or even to inquiring about

the Informal Plan, at any time during the period beginning

in 1975.

Plaintiffs have proposed that they should have been

given more explicit notice of the rescission of the Informal

Plan. ERISA was not effective as of 1972, and its notice re-

quirements do not apply retroactively. Obviously, ERISA did

not impose any requirement on Crucible as of 1972 to pro-

vide [*45] any particular form of notice.“ Where there is

no notice requirement, failure to notifiy cannot create liabil-

ity under Dillingham.

There is no statutory or regulatory requirement in

ERISA that the employer (or any other entity) provide no-

tice of plans or programs that had been eliminated before

23 The applicable law in 1972 (and applicable notice requirements) is

discussed infra.

ERISA ever became effective. It is not necessary here to

speculate whether any such extra-statutory, implied require-

ment could or should be imposed if there is a widespread,

objectively reasonable expectation among employees that a

particular plan continues to exist. The evidence, which is

examined in detail infra, simply does not factually establish

such a scenario. It is too late, at this point in the proceed-

ings, to impose extraordinary standards based on unwar-

ranted assumptions.

E. Legal Standard Applicable to Events Occurring Prior

to 1975

The so-called Informal Plan, as it existed and to the ex-

tent it existed before 1975 when ERISA became effective,

was governed in all respects by the applicable laws of the

Commonwealth of Pennsylvania. The so-called Informal Plan

under Pennsylvania law was technically not a “plan” at all.

There were two aspects to its nature under Pennsylvania

[*46] 1. The First Aspect of the Informal Plan

First, the so-called Informal Plan was in the nature of a

unilateral offer over which the offeror retains complete con-

trol — traditionally referred to in legal terminology as an

“illusory” offer. See 1 A. Corbin, Corbin on Contracts § 16

(1963) [“Corbin”]; see also 11 S. Willison, A Treatise on the

Law of Contracts § 1442, at 975-76 (Jaeger 3d ed. 1957).

There is nothing pejorative about the term “illusory;” it

simply describes the nature of the offer. The offeror (Cru-

cible) retained complete discretion over whether, when and

to whom it chose to grant payments under the Informal Plan.

It is axiomatic that “illusory” offers are unenforceable — they

confer no rights. 1 Corbin, § 145, at 632-33 (“As matter of

course, no action will lie against the party making the illu-

sory promise. Having made no promise it is not possible for

him to be guilty of a breach.” (citations omitted)). Similarly,

an ERISA plan which confers benefits at the sole discretion

of management (as the Informal Plan did) would confer no

enforceable right to any employee before management actu-

ally gives its approval. This aspect of benefit entitlement

correlates, not to the “mere gratuity” aspect of pensions un-

der pre-ERISA law, but rather to the “illusory offer” (i.e.,

offeror discretion) nature of this particular type of program

under pre-ERISA law. See Henglein, 974 F.2d at 399.

[*47] Gratuitous offers and illusory offers are two dif-

ferent animals. An illusory offer is unenforceable because

the offeror retains control — in a sense, it is not an effer at

all. A gratuitous offer might otherwise be enforceable, ex-

cept for its “gratuitous” nature — i.e., it is not supported by

adequate consideration to bind the offeror. Courts once

viewed promises to pay pensions as gratuitous. However, a

promise to pay a pension might have been gratuitous with-

out being illusory. If the employer offered to provide a spe-

cific pension if he decided to do so when the employee re-

tired — then under the traditional analysis that is an illu-

sory promise. If the employer offered to provide a specific

pension when the employee retired — then under the tradi-

tional analysis that is merely a gratuitous promise. Courts

then began to develop theories that the employee’s contin-

ued employment and/or reliance served as adequate consid-

eration to make the offer non-gratuitous, or to transform

the pension into a form of deferred compensation, or to es-

top the employer from withholding the “gratuity.” See, e.g., 9

Williston § 1019, at 223. Gratuitous promises — unlike prom-

ises that were merely illusory — could be enforced. See

Langer v. Superior Steel Corp., 161 A. 511, 105 Pa. Super.

579, 585 (1932). Even so, benefits could be forfeited; for ex-

ample, an employee who accepted employment with a com-

petitor might forfeit his pension. ERISA did away with these

frameworks entirely.

[*48] Lest this seem unduly noncommittal, it must be

remembered that the offeror, Crucible, concurrently and

separately maintained a nondiscretionary “formal” pension

plan which applied uniformly to all employees and was a

true (non-illusory) unilateral offer that gave rise to enforce-

able rights based on an employee’s age and years of service.

The formal pension plan provided for vesting of benefits,

without requiring any form of management approval. There

is every indication that detailed information regarding the

formal pension plan was provided to the salaried employ-

salaried pension plan (which was widely disseminated) had

contained a vesting requirement of 20 years of service. In

quirement of 20 years of service to a graded scale beginning

with 50% vesting at age 40 with 10 years of service, and

increasing to 100% vesting at age 50 with 20 years of ser-

vice. (See Plaintiffs’ Exhibits 8 and 12 (discussed infra).) As

of December 1, 1972, [*49] the vesting schedule was com-

pressed, so that 50% vesting at age 40 with 10 years of ser-

vice increased to 100% vesting at age 45 and 15 years of

service. (See Plaintiffs’ Exhibit 14 (discussed infra).) Never-

theless, 20 years of service was an important threshold for

full vesting through December 1, 1972; it is understandable

that there would be widespread awareness of the 20 year

threshold among employees.

Prior to 1974, it was perfectly permissible under appli-

cable law for Crucible to maintain a separate supplemental

discretionary policy (the Informal Plan). Indeed, Crucible

had no independen

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