# Appendix — Colt Industries Operating Corp. Informal Plan for Plant Shutdown Benefits for Salaried Employees v. Henglein > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386012_1245%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1995 - **Citation:** 514 U.S. 1036 ## Text 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, v. 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 5 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. I. 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. rr 7 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. 10 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 11 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. 12 [*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, 13 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. SS 14 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. 15 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). | 16 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). 2a & ; 18 [*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. 19 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. V. 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. — 20 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. 21 [*23] TO THE CLERK: Please file the foregoing opinion. /s/ CaroL Los MANSMANN Carol Los Mansmann Circuit Judge 22 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 23 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 24 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. 25 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- : 26 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- 27 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 28 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.) 29 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. 30 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- 31 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 32 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. 33 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 ————— 34 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 35 G 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. 36 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. I. 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 37 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 ay 38 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- 40 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. V. 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 = 42 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 W 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 g & a ee ee ee ee hs a Sie 45 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 il a co 46 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. 47 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 = 48 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 » 4 49 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 IIE itiiisthscierstesdesonlobudineciuidiie wet tei o 156 SIT daciivlseinsncabilsieadauiidesnce a wanes a 177 Beit iiahinicnninelbtinaenhesnicnsicadat cel aunt 188 PE icidessssisiesnnieaiassansiada ca oes ee 196 On TE) ere 204 Mi aitietiantipuninistinspsibiniibateiie ated ee 212 ie a ahs tihichinniscendisindessdncipbindiadiaicdatecculaccantionh toes 219 Ri iiiahiaiiiabaisuicissceatesscdeeivensacgsataniean cake ane 223 TT mn TS: 230 Rita idiahividbtestdaseianinststsnensinimiansesesitenatunsecoit: 246 WI i etsdinscrnssncenteneersinbesnseiassiesipanuenseisecakeadeunesce 252 EERE ene aE 258 SEE Ee 263 EN io niattecinsadesmbpaiacatateidoctiozattc coal 273 _., 55 EERIE Cameo mena IY | 279 See ee TaN ici 285 a eae 294 R. Ashenbaugh ..............cccccccesscscssocesecseseses (Vol. II) 302 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 Fe RI iiicscseriitiletcintnsunernemnssinsiinteaisenccasicsuis. (Vol. II) 345 50 Page Be, HII swisttinuiis tintnledaiincniakecciaiaanasamsatidbanaanne (Vol. II) 350 Fe PEE caticonsinccaondadiamemanan (Vol. IT) 356 Bis IIIT 330 including flyers, memoranda, and booklets. He specifically remembered receiving a flyer describing vision and dental insurance benefits. He testified that benefit booklets were sent through the interoffice mail. (V:186-87.) He also recalled receiving literature relating to his savings plan, and testi- fied that he focused on “how much it was worth, how many shares I increased since the last statement, general finan- cial.” (V:185.) Young’s testimony regarding events prior to 1975 adds no support to his claim for Informal Plan benefits, under the legal principles set forth supra. Parity Plan Testimony As noted in the discussion of the law, supra, plaintiffs’ Parity Plan testimony is irrelevant because the Parity Plan claims have been dismissed. For the sake of completeness, however, the testimony is summarized here. Young’s parity testimony begs the question: What rel- evance can parity have for someone who was never a union employee? Regardless, we forge ahead to analyze Young’s testimony. Young testified that he was assured that he would re- ceive equal, if not better benefits than those of hourly work- ers. This was a general practice throughout his [*371] employment. He heard through newspapers and through union employees that the union employees had shutdown benefits. (V:176-79.) He obviously had no independent per- sonal knowledge of this. His testimony as to union shutdown benefits is mean- ingless; he testified that prior to 1982 he did not know what the union shutdown benefits were. (V:179-80.) He was aware that the union and salaried benefits packages differed in some respects. (V:180.) He eventually came to understand the union shutdown benefits to be a $400 kicker,” “[p]lus a 65 rule and a 70-80, which is 65. He felt he came under the 65 rule. He never inquired as to what his shutdown benefits should be as of 1970. Prior to 1982, he had no immediate knowledge of what the union shutdown benefits were. He was more concerned 331 about line of progression and scheduling. Prior to 1982 he had no specific knowledge about the union medical benefits. He only knew that the union got 13 weeks vacation. Young was aware that the salary benefit package was somewhat different from the union benefit package. (V:179-80.) Young’s testimony as to the benefit provided by the In- formal Plan is somewhat confused and mixed with Parity Plan type concepts. Understandably so, since he had no knowledge of the Informal Plan. He testified that he under- stood the union shutdown benefits to be a “$400 kicker,” “[p]lus a 65 rule, and a 70-80, which is 65. I felt I came un- der the 65 rule.” [*872] (V:179.) He testified that the so- called 65 rule applicable to him is different from the Rule of 65 provided to union employees, and instead is defined in the Informal Plan, consisting of benefits he earned from his 23 years of service credit, plus an insurance policy reduced. (V:182-85.) The Informal Plan never provided a Rule of 65 benefit. Young perhaps would not realize this, since he knew noth- ing about the Informal Plan to begin with. Young’s Parity Plan testimony does not add any support to his claim for Informal Plan benefits. [*373] JEROME P. BRESSANELLI Jerome P. Bressanelli was vice president of technical services at Midland as of 1982, having become vice-presi- dent in 1977. (VI:5.) He transferred to Midland as director of quality control in 1976 (VI:5) from the research lab (VI:54). He is a Group I plaintiff. 1975 and Thereafter There is no evidence that Bressanelli was misled by any knowledgeable and authorized management employee about the Informal Plan in 1975 or thereafter. He did not testify to any oral communications about the Informal Plan during that period. He testified that the only written documenta- tion he saw regarding the Informal Plan was in 1982, when he testified to seeing a copy of the first page of P].Ex.4 (the September 9, 1968 memorandum from B.H. Francis). 332 Bressanelli testified that he “may have” also seen that memo- randum at an earlier, unspecified time; he did not further elaborate on the circumstances of the earlier time when he “may have” seen it (see discussion infra). (V1:58-59.) Bressanelli specifically testified that no one (including any knowledgeable and authorized management employees) discussed severance, hardship or shutdown benefits with him after 1975 and prior to 1982. There was no discussion of pro- cedures for receiving benefits or funding of benefits. He tes- tified that he “assumed” that benefits would be paid under either the formal or the informal pension plan, which- ever [*374] was better for the employee. (V1:26.) Bressanelli thus described the Informal Plan as an alternative to the formal plan. At the time of the plant closing, Bressanelli did not ini- tiate the recommendation procedure for any of his subordi- nates. He testified that he “knew it would have been futile” since others who had applied had been told that there would not be any “immediate pension benefits.” (VI:21, 24-25.) He did not explain who had applied — indeed, none of plain- tiffs’ witnesses testified to any knowledge of anyone who had applied for Informal Plan benefits in 1982 (for himself or for any subordinate). Thus, Bressanelli’s reference for this hear- say testimony is entirely unclear. Bressanelli is not entitled to Informal Plan benefits, based on his testimony of events in 1975 and thereafter, and on the legal principles set forth supra. We turn to his testi- mony regarding events prior to 1975. Prior to 1975 Bressanelli testified that he was “told of’ a memoran- dum by B.H. Francis regarding hardship benefits provided in the case of plant shutdown for salaried personnel but did not recall when he was “told” or by whom. (VI:7.) The memo- randum Bressanelli was referring to is the cover memoran- dum appearing as the first page of P].Ex.4, to which a copy of the 1968 Informal Plan is attached. It is unclear — but the Court assumes for the purposes of this analysis — that the time frame [*375] was prior to 1975 (approximately 333 contemporaneous with the memorandum itself) and that this is not just another reference to Bressanelli seeing the memo- randum in 1982. Bressanelli specified that he was “told” of the memo- randum, rather than the Informal Plan itself. He did not testify as to any other representation about the Informal Plan. He testified that he first “saw” the Francis cover memo- randum in late 1981/1982 (VI:17, 24, 30), and that he did not read the Informal Plan itself before he left Crucible. (VI:30.) He testified that he expected, under the 1968 Infor- mal Plan, that service would be prorated towards the thirty- year pension for salaried employees with between twenty and thirty years of service. Bressanelli testified that the In- formal Plan provided for a small amount of continuing life insurance after retirement. (VI:19.) This is consistent with the summary in the Francis memorandum. P1.Ex.4. Bressanelli testified that benefits under the 1968 Infor- mal Plan became due three months after severance of em- ployment. (VI:20-21.) The basis for this assertion is unclear, since the Francis memorandum (Bressanelli’s only source of information about the Informal Plan) does not specify a three month delay. The Francis memorandum (the first page of P].Ex.4) does specify that benefits will be actuarially reduced if payments commence immediately at employment termi- nation. The Francis memorandum articulates the following ex- plicit reminder of the approval requirement: [*376] You will note that this benefit, like other ben- efits provided by our Informal Plan, must be initiated and approved by Management. Pl.Ex.4. To the extent Bressanelli was “told” of the Francis memorandum, or “saw” the Francis memorandum, Bressanelli must reasonably be credited with knowledge of the Francis memorandum in its entirety, including the cau- tionary reminder of management approval. Foes ee i ee peed ae 334 As a supervisor, Bressanelli never recommended or ap- proved Informal Plan benefits for any of his employees. (VI1:24.) In his role as supervisor, he did not specifically as- sure his employees that they would receive plant shutdown benefits. (VI:32.) He was unfamiliar with the procedures to be followed to obtain benefits under the 1968 Informal Plan, and offered testimony that (1) there are no exceptions to the documented procedure (VI:21-22); and (2) he did not know whether management would have waived the procedural requirements (V1:23-34). Bressanelli was not informed about, nor does he know of any changes to the 1968 Informal Plan. (VI:25.) Thus, he would have understood that the procedural requirements were intact. Bressanelli testified that he was not informed of the rescission of the Informal Plan. (V1:16, 29.) He also testified that he was first informed of the rescission at the time of the closing in 1982, (VI:9), approximately the time that he first “saw” the Francis memorandum. Thus, setting aside the vague hearsay testimony that Bressanelli was “told” of [*377] the Francis memorandum prior to 1982, his knowledge of the Informal Plan and its rescission were more or less simultaneous. He testified that as a vice president he attended staff meetings for key operating personnel, at which these em- ployees were kept informed of operational matters. They never discussed eliminating salaried shutdown benefits at these meetings. (V1:6-7.) Bressanelli does not remember any formal meetings prior to the closing at which changes in ben- efit plans were discussed. (V1:8.) This would seem to contra- dict the testimony of Robert Trbovich. (See V1:64-65, 88-89.) According to Bressanelli, benefit changes were announced with the distribution of new benefit booklets accompanied by a cover letter. Bressanelli never received any such docu- ment with respect to the salaried shutdown benefits. (VI:8.) Consistent with his testimony that his sole knowledge of the Informal Plan prior td 1981/82 was hearsay, Bressanelli did not receive documentation at the time the Informal Plan was implemented, nor at the time it was rescinded. - 335 There was no representation at staff meetings held when earlier departmental closings occurred that plant shutdown benefits would be paid to department employees. Those present at the staff meetings were told that employees would be transferred to other departments where possible and would be taken care of “as best they can.” Shutdown ben- efits were not discussed at staff meetings, even though Bressanelli was aware that union members received plant shutdown benefits. (VI:8, 33-34.) [*378] Bressanelli testified that his counsel had in- formed him that the question of plant shutdown benefits did not arise during previous departmental shutdowns at Mid- land because no one was eligible for the benefits at the time of the earlier shutdowns. (V1:33.) This testimony is patently inadmissible hearsay, serving only to prove that the witness was prepped by counsel. Bressanelli himself did not know of anyone who received benefits under the 1968 Informal Plan, even during earlier cutbacks, tending to confirm that Bressanelli had no contemporaneous knowledge of the In- formal Plan. (VI1:36, 38, 57-58.) He testified that he “read where people in the period between 1968 through 1972 or thereabouts did receive plant shutdown benefits” but could not recall when or where he “read” this information, or who the individuals were. He allowed that he may have acquired this information from counsel or from prior testimony in the trial. (VI:36-38.) As for his other benefits, Bressanelli is evidently eli- gible for a vested pension under the formal plan. He testi- fied to having received a “sizable amount” from the company savings plan. (VI:36.) As noted supra, Bressanelli viewed the Informal Plan as an alternative to the formal pension plan. (V1:26.) He was unclear whether the Informal Plan provided any benefits to employees who are entitled to benefits under the formal plan. (VI:20.) Thus, it is not possible to conclude that Bressanelli mistakenly relied upon a reasonable (albeit mistaken) be- lief [*379] that Informal Plan benefits were available to supplement his formal plan benefits. ao ss el 336 Indeed, Bressanelli testified that he stayed at Crucible because of his career expectations, working conditions, sal- ary and benefits. (VI:46-47.) He did not have a contract of employment; his employment could have been terminated at any time. (VI:57.) Bressanelli did not study or compare plan documents or booklets. He did not worry “about those kind of things” since he thought he was going to retire from the place. He did not worry about shutdown benefits prior to the closure of Mid- land. (V1:45-46.) The closing took him by surprise — he had not expected it. (VI:47-50.) This also tends to disprove any actual reliance — reasonable or not — on the Informal Plan on his part. Although he was a vice president, Bressanelli is not fa- miliar with the Colt policy and procedures manual or with the 2 page excerpt known as “74.1” (P].Ex.17). He first heard of its existence during the trial. He does not recall seeing it when he was at Midland. (VI1:51.) Thus, Bressanelli could not have relied — however tenuously or unreasonably — on Informal Plan benefits based on 74.1. There is no credible evidence under any objective stan- dard that Bressanelli was misled to believe, by any knowl- edgeable and authorized management employee, that the putative Informal Plan continued to exist, or that Bressanelli [*380] was automatically entitled to any ben- efit thereunder. Bressanelli was a vice president himself. He was clearly in a position to obtain complete and accurate information about his benefits. There is no credible evidence that he reasonably (or even actually) relied upon the Infor- mal Plan in any way. Bressanelli has not proven any right to Informal Plan benefits, based on his testimony of events prior to 1975 — alone or in combination with his prior testimony — under the legal principles set forth supra. Parity Plan Testimony As noted in the discussion of the law, supra, plaintiffs’ Parity Plan testimony is irrelevant because the Parity Plan claims have been dismissed. For the sake of completeness, however, the testimony is summarized here. 337 Bressanelli testified at length on the topic of parity. He understood “parity” to mean that “When the union would win some benefits ... salaried people would get [an] enhance- ment of their total package.” It was handled on a package basis and not on a benefit-by-benefit basis. (VI:41.) Indeed, Bressanelli himself did not ever assure any union employee that he would receive shutdown benefits. In his words (VI:42-44): Q: Did you ever tell anybody from the union that they would receive severance benefits? A: I personally did not. Q: Do you know of anyone who did? A: We generally told them they would be treated as well in a salaried position, as they would in an hourly position. [*381] Q: Is this the same theory of package that you just alluded to or were the union recruits on a different program than every other salaried employee? A: It was a matter of equal, I guess. We tried to sell them on the advantages of a salaried supervisory posi- tion. Q: Now, what were some of the advantages that you would sell them on? A: That if they were sick and they did not report to work, they would be paid. Q: Is that the only thing? A: That they had — their salaries would be compa- rable over — comparable or higher except in those cases where there was separate programs in the department, then the people in the department on an hourly basis, the base salary would be higher. Their work hours would be more uniform. They would not be rotating from shift to shift and so forth as they do in the union. Those are some of them. * * * Q: Did you ever go into detail with regard to the fringe benefit programs that these people would be provided in your recruiting? 338 A: Only with salaried people that reported to me and, no, I would not go into detail. I would generally outline or summarize our various benefit programs. But, would tell them please to go see personnel, they will give you the details. This concept of parity (even if the Parity Plan had not already been dismissed) would not create any legally enforce- able obligation (nor even any reasonable expectation) regard- ing any particular benefit. According to Bressanelli, how- ever, nobody told him in 1974 or later that he would receive benefits under the 1968 Informal Plan “other than there was a practice of parity throughout the years at Crucible and that salaried people would be treated equal to or better than union Personnel. Otherwise, no one said anything about the 1968 Informal Plan.” (VI:25-26.) Thus, Bressanelli attempts to link the Informal Plan and the Parity Plan. This argu- ment fails, for the reasons of law discussed supra. [*382] Although Bressanelli testified that he could not recall any union benefits which were not subsequently given to salaried employes (VI:7, 31), he also acknowledged some differences. For example, salaried employees did not receive retiree medical benefits; union employees did. (VI:31, see also 40-41.) Bressanelli’s understanding was that the salaried savings plan was established as an alternative to the thir- teen week sabbatical benefit for union employees which the company believed and he agreed was inappropriate for man- agement people. (VI:59-61.) He was aware of differences in the pension plans; the union pension plan provided pensions based on a age and years of service which were not available in the formal plan for salaried employees. (V1:40-41.) He testified to an under- standing that the Informal Plan bridged some of those dif- ferences. (VI:39-40.) However, he did not adequately estab- lish that he had any contemporaneous knowledge of the In- formal Plan at all. Sée supra. He testified that parity was routinely discussed at staff meetings following signings of the union contract, and that the practice was to treat management employees on a par with union employees. He reported changes to his 350 sub- ordinates. (VI:7, 16.) Bressanelli testified that such hiring would have been impossible if union employees thought they were giving up major benefits particularly “in the latter part of the 1970s at Midland, in terms of plant shutdown, in my [*383] opinion.” (VI:42). However, this testimony is barely credible, in light of Bressanelli’s testimony that he was unconcerned about a shutdown, and did not make any assurances about shutdown benefits. Bressanelli’s Parity Plan testimony adds no support to his claim for Informal Plan benefits. [*384] ROBERT TRBOVICH Robert Trbovich was the vice president of purchasing and traffic at Midland as of 1982. (VI:62.) He is a Group I plaintiff. 1975 and Thereafter Although approximately 50 employees reported to Trbovich (VI:65), he apparently did not initiate the Informal Plan recommendations procedure for any of them at the time of the plant closing. (VI:80-81.) Indeed, he testified that “I don’t think I was even aware of hardship benefits as such.” (VI:80.) Trbovich did not recall receiving any written documen- tation or oral representations by authorized management employees indicating that the putative Informal Plan was in existence during that period. (V1:63, 77.) He neither re- quested information about the Informal Plan during that period, nor informed anyone else about its existence. (VI:77- 78.) Trbovich apparently kept himself informed about his benefits by reading benefit booklets that were distributed to him (VI:79, 64-65) and recalled attending meetings held to explain the benefits. (V1:64-65, 88-89.) Trbovich recruited employees to work in his department between 1975 and 1982 but did not recall describing plant shutdown or hardship benefits to them. He generally referred [*385] prospective employees to the personnel department to obtain details on their benefits. (VI:78.) He was also in- me, 340 volved in recruiting people and similarly had general dis- cussions with them about the benefits package, leaving more detailed explanations to the personnel department. (VI:87- 88) Approximately 50 employees reported to Trbovich, and while he sometimes discussed benefits with them (referring them to the personnel department for more detailed infor- mation) (VI:65), he provided no assurances to them about the Informal Plan. He did not know anybody who received Informal Plan benefits. (V1I:78-79, 89-90.) Based solely on his testimony of events occurring in or after 1975, Trbovich has not established the existence of the putative Informal Plan, nor his entitlement to benefits un- der the putative Informal Plan. There was no misrepresen- tation made to him during that time, nor did he make mis- representations to the employees in his department. Trbovich testified, however, that benefits became a topic of “discussion” in 1982. (V1:81, 86.) The discussion included the nonavailability of Informal Plan benefits. (V1I:86.) He did not recall whether or not he was shown any documents at that time. (VI1:86.) He testified that he requested additional benefits of himself at the time of the closing, (V1:81, 84-85,) making this request verbally to Mr. Kurcina, (V1:81-82, 94,) and indicating his belief that he was entitled to a portion of the thirty year retirement benefit and [*386] also that he was entitled to severance payment. (V1:85.) Kurcina replied that no additional benefits were available. (V1:94.) Trbovich did not receive approval for Informal Plan benefits from any division vice president or corporate vice president. (V1:96- 97.) Indeed, Trbovich himself was a vice president — a link in the Informal] Plan’s approval chain. There is evidence that Trbovich has received benefits to which he was entitled under the salaried benefit plans. He received a distribution of approximately $200,000 from the savings plan (VI:90), and while he testified that did not know whether he was eligible for a pension under the formal plan, he did acknowledge that he “believe[d]” he received a letter regarding his vested rights. There is no credible evidence that Trbovich was misled by any knowledgeable and authorized management employee 341 regarding Informal Plan benefits in or after 1975. There is no evidence that Trbovich mistakenly relied upon benefits from the putative Informal Plan — reasonably or not — in or after 1975. Trbovich has not proven any right to receive Informal Plan benefits based on his testimony regarding events in and after 1975, and the legal standards set forth supra. We turn, then, to the period prior to 1975. | Prior to 1975 Although Trbovich testified that the Informal Plan was widely disseminated in 1968 (VI:64), he did not keep a copy of it (VI:74-90), nor could he identify any of the Informal Plan [*387] documents shown to him (VI:7 4-75), nor could he identify the author or source of the document which he testified to having received. (VI:75-77). He had no recollec- tion of the particular document that he characterized as the 1968 Informal Plan. (VI:74-75). He did not explain when or how he had it (or why he did not retain it). He had no recol- lection of the procedures for obtaining benefits under the Informal Plan, or the terms and conditions of the Informal Plan. (V1:73-74.) All he could say about the Informal Plan is that it provided employees with a prorated portion of the thirty year retirement based on years of service with the company. (VI:64, 75.) Trbovich’s selective memory regarding his contempora- neous knowledge of the 1968 Informal Plan is self-serving and not credible. The only bit of information he seems to have retained about the 1968 Informal Plan — if he did have contemporaneous knowledge of it — is that it provided a prorated pension benefit. Any reading of the Informal Plan that would yield this information, would also allow the reader to discern that Informal Plan benefits were discretionary. This Court finds that Mr. Trbovich’s testimony regarding his contemporaneous knowledge of the 1968 Informal Plan is not credible. Trbovich also testified, in response to leading questions for which no proper foundation had been laid, that he was not informed prior to 1974, or subsequently, that the “plant shutdown benefits” for salaried employees had been [*388] OO, hh 342 eliminated.'® (VI:62-65.) Trbovich began attending staff meetings in 1974, and “significant changes” in benefits were discussed at those meetings. (VI:62-63). He testified that the 1968 Informal Plan was never discussed at the staff meet- ings he attended. (V1:67-68.) This testimonv has to be con- sidered in tandem with his testimony that he received no affirmative representations that any plant shutdown ben- efits were in existence. (V1:63, 76-77.) This Court finds Trbovich’s testimony regarding contem- poraneous knowledge of the Informal Plan not credible. Trbovich could not credibly explain or identify the source of his alleged contemporaneous knowledge. Moreover, he tes- tified that as of 1982 he was not “even aware of hardship benefits as such.” (VI:80.) Even if Trbovich did have some glimmer of knowledge regarding the Informal Plan based on the unknown unidentified document which he did not re- tain, this Court finds that a reasonable person in Trbovich’s position would not assume that a 1968 benefit program con- tinued in existence through 1982 under the circumstances that Trbovich described (i.e., he received no further infor- mation about it, no further notice or mention of it). Trbovich has not established any right to benefits from the putative Informal Plan based on his testimony of events prior to 1975 — alone or in combination with his [*389] testimony of events in and after 1975, under the legal prin- ciples set forth supra. Parity Plan Testimony As noted in the discussion of the law, supra, plaintiffs’ Parity Plan testimony is irrelevant because the Parity Plan claims have been dismissed. For the sake of completeness, however, the testimony is summarized here. Trbovich’s concept of parity seems more in line with that of Paul K. Schake and Frank Matsukas, than with that of most of the other witnesses. His idea of parity relates more to parity with employees at other companies in the industry, 10 This must be understood as a reference te the elimination of the Informal! Plan. i al & ee 343 rather than parity with union employees. Trbovich testified that the practice of parity was widely discussed at the staff meetings. If they did not have that policy they would lose their key people to the competition and would not be able to attract quality people from the union into the ranks of sala- ried employees. (VI:66.) Trbovich was generally aware of the package of benefits available to union members. He cannot recall having solicited anyone personally to come from the union to the salaried ranks. (VI:87.) Trbovich’s Parity Plan testimony adds no support to his claim for Informal Plan benefits. [*390] LAWRENCE RAYKOVICS Lawrence Raykovics became a salaried employee in May, 1967; he had previously been a member of the union workforce. (VI:107.) He is a Group I plaintiff. He commenced receiving a pension from the formal plan at age 55. (VI:107.) 1975 and Thereafter Raykovics testified that no one (including knowledge- able and authorized management employees) told him about shutdown benefits for salaried employees after 1975. He re- ceived no representations (or misrepresentations) about eli- gibility requirements. (VI:112.) Raykovics is not entitled to benefits from the putative Informal Plan, based on his testimony regarding events in 1975 and thereafter, and the legal analysis set forth supra. Prior to 1975 Raykovics’s testimony regarding his contemporaneous knowledge of the Informal Plan (in response to highly lead- ing questions on direct examination) is vague and contra- dictory. He testified (VI:108): Q: Wlelre you also aware of the existence of a plant shutdown benefit plan applicable to salaried employees? A: No. “_ Q: On the basis of your knowledge of the union plant shutdown benefits, you inferred that similar plans ex- isted for salaried employees? A: Yes. Q: On the basis of your knowledge of the union plant shutdown benefits, you inferred that similar plans ex- isted for salaried employees? [*391] A: right. Q: Do you have any recollection of the critical period of service that was essential to the receipt of plant shut- down benefit plans by the salaried employees? A: We were told we had to have 20 years to qualify. The time frame of Raykovics’ “awareness” is unclear. As a salaried employee, Raykovics testified that he received booklets communicating his benefits, read them, and felt that they adequately explained his benefits. (VI:114-15.) Raykovics also testified that he was familiar with the shut- down benefits for union employees since those benefits were described in the benefits booklet issued to union employees. (VI:111-12.) Raykovics testified to having ample documen- tation of both salaried and union benefits; it would be objec- tively unreasonable for him to make assumptions that sala- ried employees were entitled to benefits in the union book- lets, or vice versa. Raykovics testified that he was told by his immediate supervisor (whom he did not identify) in 1968 about the 1968 Informal Plan. (VI:110, 117-18.) This is unsubstantiated hear- say. He testified that the 1968 Informal Plan was explained to him in “general terms.” (VI:118-19.) He never requested a written description since he did not believe they would close the entire plant. (VI:117-18.) However, the Informal Plan does not condition benefit availability or eligibility on the closing of the entire plant — if this is how the Informal Plan was allegedly described to him, it was [*392] described in- correctly. He never saw documents pertaining to the 1968 Informal Plan (VI:110) or to the 1969 Informal Plan. (VI:113.) 345 On the other hand, Raykovics also testified that he was never told that there was a shutdown benefit for salaried employees. (VI:110.) In his words: “There was nothing spelled out as far as shutdown benefits.” (VI:110.) Raykovics testified that he was never informed of the rescission of the salaried shutdown benefit. (VI:110.) How- ever, he also testified that if he had received notice that the Hardship Retirement Guidelines and the Disability Retire- ment Guidelines (i.e., the 1969 Informal Plan) had been elimi- nated, he would not have known what was meant (VI:113) although he testified that he would have made an inquiry to the personnel department. (VI:113.) The point is that Raykovics does not appear to have actually relied upon the Informal Plan — reasonably or otherwise. He was not concerned about shutdown benefits and did not inquire about them from the personnel director. (VI:114.) He was never concerned that the Midland plant would close. (VI:112.) Raykovics’s testimony regarding events prior to 1975, alone or in combination with his testimony regarding events in and after 1975, does not establish any misrepresentation by knowledgeable and authorized management employee, that would lead a reasonable person to conclude that the Informal Plan was [*393] in existence (or automatically provided any benefit) as of 1982. Nor does this testimony establish actual or reasonable reliance on benefits from the putative Informal Plan, under the legal principles set forth supra. Parity Plan Testimony As noted in the discussion of the law, supra, plaintiffs’ Parity Plan testimony is irrelevant because the Parity Plan claims have been dismissed. For the sake of completeness, however, the testimony is summarized here. Raykovics testified that he attended meetings at the plant in connection with proposed mergers at which they were assured that the benefits they would get in the event of a merger would be the same as the union got if not better. (VI:109.) This is not only hearsay, it bears no correlation to 346 the proxy statement (P1.Ex.3.) According to Raykovics, Robert Whitten and John Kundick assured them at a meeting that they would always get the same benefits as the hourly employees. Neither of them testified to having made this promise at a meeting. Although Raykovicz testified that he knew of the 1968 In- formal Plan and that they were told that this was included in the assurances of parity, he did not credibly establish knowledge of the 1968 Informal Plan, or explain the infer- ence, or square it with his statement that “[t]here was noth- ing spelled out as far as shutdown benefits.” (VI:110.) He does not know of any other program that dealt with shut- down benefits for salaried [*394] employees. (VI:110.) He testified that Byron H. Lutton, chief of plant security, told him when he was being recruited to the salaried position that his benefits would be similar to the union benefits with the exception of the loss of one week of vacation due to dif- ferent vacation eligibility requirements. (V1I:107-08.) Lutton did not testify. In any event, Lutton was not authorized to make commitments as to benefits (actual or implied) other than those actually and explicitly provided by Crucible’s sala- ried plans. (See Wh:180.) Moreover, the alleged hearsay state- ments by Lutton are vague and any extrapolations based on those statements would be purely speculative. In addition, Raykovics knew of other differences between union and salaried benefits. Hourly workers were covered with Blue Cross & Blue Shield medical plan, salaried em- ployees were covered by Aetna. The vacation and retirement programs were different for hourly and salaried employees. (VI:115-16.) He did not receive COLA (cost of living adjust- ments) as a salaried employee. The meetings he attended to discuss their raises presented their benefits as being a “pack- age.” (VI:116-17.) Raykovics’s Parity Plan testimony adds no support to his claim for Informal Plan benefits. [*395] HENRY FARRINGTON Henry Farrington testified that his employment was terminated as a result of cutbacks in late 1981. If this is 347 correct, he was not terminated because of the Midland plant shutdown, but before it. Farrington supervised 350 people including 35-40 salaried personnel. (VI:119.) He was an op- erating superintendent. (VI:130). He is a Group I plaintiff. 1975 and Thereafter Farrington offered no testimony as to representations (misrepresentations) in 1975 or thereafter. He is not entitled to benefits from the putative Informal Plan based solely on his testimony regarding events in 1975 and thereafter, un- der the legal principles set forth supra. We turn to his testi- mony regarding events prior to 1975. Prior to 1975 Farrington testified that he had been told that there was a plan to cover them in the event “anything would hap- pen.” It was necessary to have 20 years of service to be cov- ered. (VI:120.) He told his subordinate supervisors of these assurances. The details would be explained to them at meet- ings which they attended and at which they were given the same assurances as he had been given. (VI:120-21.) He un- derstood that after 20 years of service he automatically quali- fied for a pension if anything happened to the company. (VI:124-25.) Upon the achievement of “the magic number of 20” pensions increased based on service plus age. (V1:125- 26.) [*396] As noted in the general discussion supra, prior to 1969 the formal pension plan provided that benefits would vest only upon the completion of 20 years of service. (See Pl.Ex.8 and Pl.Ex.12.) As of 1969, there was a gradual vest- ing schedule that permitted 50% vesting at age 40 and 10 years of service, building up to 100% vesting at age 50 or 20 years of service. Even then, 20 years of service remained an important threshold (i.e., 100% vesting with 20 years of ser- vice). Thus, “20 years” was indeed a “magic number” through December 1, 1972. At that time, the formal plan’s vesting schedule was compressed to allow 50% vesting at age 40 and 10 years of service, increasing to 100% vesting at age 45 and 15 years of service. (See P].Ex.13 and Pl.Ex.14.) And obvi- 348 ously, formal plan pensions generally increased with increas- ing service and age. It is not reasonable (or even rational) to assume that the “magic number” referred to the Informal Plan, when the formal pension plan had long had a 20 year vesting threshold. Farrington did receive a pension when he was termi- nated. He does not know how it was determined other than that years of service and earnings were taken into account. He has no reason to think that it is incorrect. (VI:126.) He understood once he had 20 years of service he was entitled to receive a pension but did not kno [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386012_1245%3A2. Public record. Not legal advice.