Filed: Jul. 04, 2013
Latest Update: Feb. 12, 2020
Summary: Case: 12-20102 Document: 00512297025 Page: 1 Date Filed: 07/03/2013 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit FILED July 3, 2013 No. 12-20102 Lyle W. Cayce Clerk JOHN D. CLAYTON, Plaintiff-Appellant, v. CONOCOPHILLIPS COMPANY; WACHOVIA BANK, NATIONAL ASSOCIATION; JAMES D. MCMORRAN; THE AMENDED AND RESTATED BURLINGTON RESOURCES, INCORPORATED EMPLOYEE CHANGE IN CONTROL SEVERANCE PLAN, Defendants-Appellees. Appeal from the United States
Summary: Case: 12-20102 Document: 00512297025 Page: 1 Date Filed: 07/03/2013 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit FILED July 3, 2013 No. 12-20102 Lyle W. Cayce Clerk JOHN D. CLAYTON, Plaintiff-Appellant, v. CONOCOPHILLIPS COMPANY; WACHOVIA BANK, NATIONAL ASSOCIATION; JAMES D. MCMORRAN; THE AMENDED AND RESTATED BURLINGTON RESOURCES, INCORPORATED EMPLOYEE CHANGE IN CONTROL SEVERANCE PLAN, Defendants-Appellees. Appeal from the United States ..
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Case: 12-20102 Document: 00512297025 Page: 1 Date Filed: 07/03/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
July 3, 2013
No. 12-20102
Lyle W. Cayce
Clerk
JOHN D. CLAYTON,
Plaintiff-Appellant,
v.
CONOCOPHILLIPS COMPANY; WACHOVIA BANK, NATIONAL
ASSOCIATION; JAMES D. MCMORRAN; THE AMENDED AND
RESTATED BURLINGTON RESOURCES, INCORPORATED EMPLOYEE
CHANGE IN CONTROL SEVERANCE PLAN,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of Texas
Before STEWART, Chief Judge, and DAVIS and CLEMENT, Circuit Judges.
CARL E. STEWART, Chief Judge:
Plaintiff-Appellant, John D. Clayton brought suit against Defendants-
Appellees, ConocoPhillips Co. (“Conoco”); Wachovia Bank, N.A. (“Wachovia” or
the “Trustee”); James D. McMorran; and The Amended and Restated Burlington
Resources, Inc. Employee Change in Control Severance Plan (the “Plan”).1
1
Wells Fargo Bank, N.A. acquired Wachovia and assumed its role as Plan Trustee.
For simplicity, we use the defined term “Wachovia” to refer to both banks without distinction.
The parties and the district court have used the terms “Trustee” and “Administrator”
indiscriminately. We use the term “Trustee,” except when directly quoting a source that
already used “Administrator.” McMorran was Conoco’s Manager of Global Compensation and
Benefits during the events at issue in this case.
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On July 2, 2010, the district court granted summary judgment to Conoco,
Wachovia, and McMorran. On January 20, 2012, the district court granted
summary judgment to the Plan and entered final judgment against Clayton.
For the reasons provided below, we AFFIRM the district court’s final
judgment in full.
I. BACKGROUND
A. Facts
1. The Pre-Merger Period
In 1986, Clayton began work as a staff petroleum engineer for Meridian
Oil Inc., a corporate predecessor to Burlington Resources, Inc. (“Burlington”).
On March 31, 2006, Burlington merged into Conoco, a significantly larger
company. By the time of the merger, Clayton had risen within Burlington to
become its company-wide Director of Worldwide Acquisitions and Divestitures
(“A&D”).
2. The Plan
Burlington enacted a severance plan, which would provide benefits to
Burlington employees who experienced a termination of employment, caused by
a change in corporate control, within two years of that change. See Plan § 4.1(a)
(explaining the “Right to Severance Benefit”). The Plan covered resignation for
“Good Reason,” as defined by Plan § 2.12.2 Wachovia served as Trustee of the
2
The pertinent provisions of Plan § 2.12 state:
“Good Reason” shall mean the occurrence of any of the following
events or conditions:
...
(b) a reduction in the Participant’s annual base salary or a
material reduction in benefits provided employees immediately prior
to the Change in Control;
...
(e) a change in the Participant’s position or responsibilities
which represents a substantial reduction of the Participant’s position
or responsibilities immediately prior thereto. . . .
2
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Plan. Upon completion of the merger, Conoco assumed responsibility for
Burlington’s obligations under the Plan.
3. The Offer Letter and Waiver
For approximately three months preceding consummation of the merger,
Clayton participated as a member of the Conoco/Burlington “Integration
Leadership” team. In that role, he specifically worked on future business
development strategy for the soon-to-be integrated company.
On March 14, 2006, Conoco presented Clayton a written offer (the “Offer
Letter”) to become its post-merger “Mgr. of A&D” within its “U.S. Lower 48,
Exploration & Business Development” Organization. Other than providing his
title and department, the Offer Letter did not provide a specific, written job
description.
Conoco’s offer was contingent upon Clayton’s execution of a written waiver
and release (the “Waiver”) to any entitlement to severance benefits under the
Plan “as a result of” the merger. Conoco included the Waiver as the final page
of the Offer Letter. The Waiver did not extend to Clayton’s entitlement to
severance benefits under the Plan due to specified events or conditions “in the
future.”
Clayton executed the Waiver six days after receiving it, on March 20, 2006.
At the time, his severance benefits under the Plan were worth approximately
$600,000.
4. The Post-Merger Period
Shortly after the merger, Conoco reassigned Clayton to the role of
“Manager of Business Development.” The key difference between “A&D” and
“Business Development” is that the former concerns properties already yielding
petroleum output, while the latter concerns properties that remain in the
exploratory or developmental stage.
3
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Thus, whereas in his prior role, Clayton directed all acquisitions and
divestitures of petroleum-producing properties throughout the world for a
smaller company; in his new role, Clayton managed one department’s
acquisitions and divestitures of properties in the developmental or exploratory
stage within the continental United States for a much larger company. This
metamorphosis is at the heart of the parties’ dispute.
B. Proceedings
1. Clayton’s August 2006 Claim to Conoco Human Resources
Clayton became disgruntled with his new, post-merger role as early as
June 2006. He filed an initial claim on August 8, 2006, seeking severance
benefits for resignation for “Good Reason” pursuant to Plan § 2.12(e).3
McMorran denied Clayton’s claim on September 25, 2006 because Clayton had
not resigned his position with Conoco.
Notwithstanding his August 2006 claim, Clayton continued working at
Conoco until March 2008. Clayton gave notice of his resignation on March 4,
2008, and officially terminated his employment on March 18, 2008.
2. Clayton’s March 2008 Claim to the Trustee
On March 4, 2008, the same day he gave notice of his resignation, and less
than one month before the two-year deadline for filing a timely claim, Clayton
filed a renewed claim for severance benefits under Plan § 2.12(e).
In a written decision issued July 14, 2008, the Trustee denied Clayton’s
renewed claim. Comparing the job Clayton actually performed after the merger
with the job Clayton accepted in the Offer Letter, the Trustee determined that
Clayton had not experienced a substantial reduction in his job position or
responsibilities. Thus, Clayton had not resigned for “Good Reason.”
3
Clayton erroneously filed his claim with Conoco Human Resources rather than with
the Trustee.
4
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3. Clayton’s State Court Claim and Conoco’s Removal to
Federal Court
Clayton filed suit in Texas state court in October 2008, asserting claims
against Conoco for breach of the Offer Letter and breach of its obligations under
the Plan.
Conoco removed on “complete preemption” grounds. Specifically, Conoco
argued that Clayton’s claim was “necessarily federal in nature” in light of the
civil enforcement provision of the Employee Retirement Income Security Act
(“ERISA”), 29 U.S.C. § 1132(a)(1)(B), and therefore was “completely pre-empted.”
See Aetna Health Inc. v. Davila, 542 U.S. 200, 220-21 (2004); Arana v. Ochsner
Health Plan,
338 F.3d 433, 439-40 (5th Cir. 2003) (en banc).
Clayton moved for remand, noting that ERISA only covers plans that
require “an ongoing administrative program to meet the employer’s obligation.”
See Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 11 (1987). He argued that,
under this Circuit’s precedent, the Plan does not require “an ongoing
administrative program” and, therefore, that ERISA does not cover the Plan.
The district court denied Clayton’s motion on March 23, 2009, holding that
the Plan does require “an ongoing administrative program.” Thus, the district
court determined that ERISA preempted Clayton’s claims against Conoco.
Clayton proceeded to amend his complaint twice. He added an ERISA civil
enforcement claim under Plan § 2.12(e), and added the Plan, Wachovia, and
McMorran as additional defendants.
4. Clayton’s Second Amended Complaint4
In his second amended complaint—the live complaint for purposes of this
appeal—Clayton again asserted claims against Conoco for breach of the Offer
4
In addition to the claims outlined below, Clayton stated claims under Plan § 2.12(b),
as well as claims for breach of the Offer Letter pertaining to Conoco’s failure to transition him
to certain post-merger employee benefits programs. Clayton has not pursued these claims on
appeal. We therefore do not address them in this opinion.
5
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Letter and breach of its obligations under the Plan. This time, Clayton
specifically placed those claims under the respective headings “CAUSES OF
ACTION: Count One — ConocoPhillips’ Breach of Contract (Offer Letter)” and
“CAUSES OF ACTION: Count Two—Breach of Contract (the Plan).”
That said, despite the phrasing of the count headings, Clayton did not
assert any specific claims, under either heading, for breach of contract
pertaining to a substantial reduction in his post-merger job position and
responsibilities. Rather, Clayton relied on general statements, placed directly
under the count headings, that incorporated-by-reference the entirety of his
designated background and jurisdictional information.5
Under the heading “Count Three—ERISA,” Clayton noted that “[t]o the
extent ERISA applies to [his] claim for severance benefits, Defendants have
violated ERISA, including 29 U.S.C. § 1132.” Clayton proceeded to attack the
Trustee’s July 14, 2008 decision as “arbitrary and capricious” and without
“support in the law or facts.”
Finally, Clayton asserted his entitlement to attorneys’ fees. At no point
in his complaint did Clayton specifically attack the validity or enforceability of
the Waiver.6
5. The Defendants’ April 2010 Motions for Summary Judgment
On April 19, 2010, all defendants moved for summary judgment. The
district court ruled on July 2, 2010.
5
Paragraphs 21-22 of Clayton’s background and jurisdictional information alleged that
Clayton’s post-merger “job responsibilities and position . . . were substantially reduced.”
6
That said, in paragraphs 17-19, under the heading “FACTUAL BACKGROUND,”
Clayton documented the existence of the Waiver. In paragraph 18, Clayton specifically noted
that the Waiver was expressly given “in consideration of my employment on the terms and
conditions set out [in the Offer Letter].” While imprecise, this arguably could be read as an
attack on the Waiver as unenforceable for inadequate consideration.
6
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The district court granted complete summary judgment to Conoco,
McMorran, and Wachovia.7 However, the district court granted only partial
summary judgment to the Plan because it found that the Trustee had failed to
address the issue of the Waiver’s validity in its July 14, 2008 decision.
a. Clayton’s Claim Against Conoco for Breach of the Offer
Letter
With respect to Clayton’s claim against Conoco for breach of the Offer
Letter, pertaining to a substantial reduction in Clayton’s post-merger job
position and responsibilities, the district court held that Clayton had waived his
claim for failure to plead it with specificity.
b. Clayton’s Claim Against Conoco for Breach of Its
Obligations Under the Plan
Without comment, the district court declined to address Clayton’s claim
against Conoco for breach of its obligations under the Plan. Presumably, the
district court did so because it had determined that ERISA preempted those
claims.
c. Clayton’s ERISA Civil Enforcement Claims Against All
Defendants-Appellees
With respect to Clayton’s ERISA civil enforcement claim under Plan §
2.12(e), the district court held “that the only proper defendant . . . is the Plan.”
Next, the district court split Clayton’s claim into distinct sub-claims (i)
comparing the job Clayton accepted in the Offer Letter with the job Clayton
actually performed at the time of his resignation (claims brought due to specified
events or conditions “in the future”); and (ii) comparing Clayton’s position and
7
The district court’s July 2, 2010 opinion did not expressly grant summary judgment
to Wachovia, as it did to Conoco and McMorran. However, in light of the district court’s
determination “that the only proper defendant for purposes of Clayton’s ERISA claim is the
Plan,” it appears from context that the summary judgment extended to Wachovia. On appeal,
Clayton has not challenged Wachovia’s assertion that it no longer is a proper party to these
proceedings. See Jul. 5, 2012 Letter from Wachovia’s Counsel. Accordingly, we treat any
challenge to the district court’s July 2, 2010 summary judgment—as extended to Wachovia—as
waived.
7
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No. 12-20102
responsibilities immediately before and after the merger (claims brought “as a
result of” the merger).
Regarding the first sub-claim, the district court upheld the Trustee’s July
14, 2008 decision that Clayton had not resigned for “Good Reason.”8 Regarding
the second sub-claim, the district court found that Clayton had previously
conceded, in his March 4, 2008 claim to the Plan, that the Waiver, if valid and
enforceable, covered the sub-claim.9 However, the district court found that the
Trustee had failed to reach the issue of the Waiver’s validity and enforceability
in its July 14, 2008 decision. The district court thus directed the parties to brief
the question of whether it should remand to the Trustee for a decision on validity
and enforceability in the first instance.
6. The Trustee’s Decision on Remand Concerning the Validity
and Enforceability of the Waiver
Upon further briefing, the district court stayed its proceedings, and
remanded to the Trustee for a decision on the validity and enforceability of the
Waiver. Before the Trustee, Clayton attacked the Waiver as invalid and
unenforceable due to fraud in the inducement, on account of material breach by
Conoco, and because the severance benefits to which Clayton already was
entitled under the Plan exceeded the consideration Conoco gave him in exchange
for the Waiver. On November 22, 2010, the Trustee issued its decision that the
Waiver was valid and enforceable.
In assessing Clayton’s three attacks on the validity and enforceability of
the Waiver, the Trustee applied the common law presumption that a written
contract is integrated, Restatement (Second) of Contracts § 209(3) (1981), as well
as Texas’s parol evidence rule, Beijing Metals & Minerals Imp./Exp. Corp. v.
8
The Trustee only addressed the first sub-claim in its July 14, 2008 decision.
9
Clayton has not appealed this finding. Accordingly, the overriding question before
us, concerning the second sub-claim, is whether the Waiver was valid and enforceable.
8
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Am. Bus. Ctr., Inc., 993 F.2d 1178, 1182-83 (5th Cir. 1993) (citations and footnote
omitted). In doing so, the Trustee assessed Clayton’s attacks against only the
actual written terms of the Offer Letter.
a. Adequacy of Consideration
With respect to adequacy of consideration, the Trustee first determined
that Conoco had made a sufficient prima facie showing under Williams v.
Phillips Petroleum Co. that Clayton had received adequate consideration for the
Waiver. See Williams, 23 F.3d 930, 935 (5th Cir. 1994) (citing O’Hare v. Global
Natural Res., Inc.,
898 F.2d 1015, 1017 (5th Cir. 1990)). Next, the Trustee
determined that Clayton had not met his evidentiary burden to establish, inter
alia, that the value of the consideration Conoco had provided in exchange for
Clayton’s Waiver—namely, a post-merger job—had not exceeded the value of the
approximately $600,000 in severance benefits that Clayton otherwise would
have been entitled to under the Plan. The Trustee relied upon Chaplin v.
NationsCredit Corp.,
307 F.3d 368, 374-75 (5th Cir. 2002) (citing
O’Hare, 898
F.2d at 1017), in stating that “[i]f the severance plan had been the better deal,
presumably, [Clayton] would have taken it instead” of the job with Conoco.
As a distinct basis for rejecting Clayton’s adequacy of consideration
argument, the Trustee noted that “Clayton ratified [the Offer Letter] by
continuing to work for two years under its written terms.” See Grillet v. Sears,
Roebuck & Co., 927 F.2d 217, 220-21 (5th Cir. 1991), overruled on other grounds,
Digital Equip. Corp. v. Desktop Direct, Inc.,
511 U.S. 863, 867 (1994).
b. Fraud in the Inducement
With respect to fraud in the inducement, the Trustee determined that
Clayton had not satisfied his burden to prove each prong of Texas’s six-element
test for fraud. See Lane v. Halliburton, 529 F.3d 548, 564 (5th Cir. 2008)
(citations omitted). Furthermore, the Trustee reiterated that “[e]ven if the
contract were fraudulently induced, [Clayton’s] decision to continue working in
9
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the new position for nearly two years after he discovered the fraud ratified the
contract.” See Grillet, 927 F.2d at 220-21.
c. Material Breach
As noted above, the Trustee assessed Clayton’s material breach argument
against only the written terms of the Offer Letter. The Trustee rejected
Clayton’s material breach argument, concluding that “Clayton is alleging a
breach of the contract he wishes he had made, not the contract he actually
made.”
7. The Plan’s Renewed Motion for Summary Judgment
After the district court lifted its stay, the Plan again moved for summary
judgment. The same day, Clayton submitted a brief appealing the Trustee’s
decision on the validity and enforceability of the Waiver.
As an exhibit to his brief, Clayton submitted an application for attorneys’
fees pursuant to Plan § 8.1.10 Upon the Plan’s motion, the district court again
stayed its proceedings and remanded to the Trustee for a decision on the
attorneys’ fees issue.
8. The Trustee’s Decision on Remand Concerning Attorneys’
Fees
Before the Trustee, Conoco argued that Clayton was “not entitled to
reimbursement under [Plan § 8.1] because his status as a Plan Participant ended
when he resigned without [Good Reason].” Clayton replied that Conoco was
“judicially estopped” from arguing that Clayton was not a Participant because
10
Plan § 8.1 provides that:
The Company shall pay all legal fees and related expenses (including
the costs of experts, evidence and counsel) reasonably and in good
faith [i] incurred by a Participant as they become due [ii] as a result
of the Participant seeking to obtain or enforce any right or benefit
provided by this Plan upon or following his or her termination of
employment.
10
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No. 12-20102
Conoco “necessarily took the contrary position when it removed his state court
suit on the basis of ERISA preemption.”
The Trustee issued its decision on June 2, 2011, denying Clayton’s
application for attorneys’ fees. In reaching its decision, the Trustee concluded
that Clayton had failed to satisfy either prong of Plan § 8.1, which provides for
the recovery of attorney’s fees that are: (i) “incurred by a Participant as they
become due” or (ii) incurred “as a result of the Participant seeking to obtain or
enforce any right or benefit provided by this Plan.” The Trustee disregarded the
judicial estoppel issue, noting that whatever estoppel argument Clayton might
have in federal court would have no bearing on Clayton’s claim for attorneys’ fees
before the Trustee.
a. Incurred by a Participant
With respect to the first prong of Plan § 8.1, the Trustee noted that under
Plan § 3.2, a “Participant shall cease to be a Participant . . . if his employment
is terminated following a Change in Control under circumstances where he is not
entitled to a Severance Benefit under the terms of [the] Plan.” Moreover, under
Plan § 4.1(a)(C), no Severance Benefit “will be payable should the Participant’s
termination of employment be . . . initiated by the Participant for other than
Good Reason.” Since the district court already had decided the question of “Good
Reason” against Clayton in its July 2, 2010 ruling on summary judgment, the
Trustee reasoned that attorneys’ fees under Plan § 8.1 ceased to be available to
Clayton on March 18, 2008, the date he terminated his employment with Conoco
for other than “Good Reason.” Accordingly, the Trustee concluded that Clayton
could not satisfy the first prong of Plan § 8.1.
b. To Obtain or Enforce Any Right or Benefit Provided by
This Plan
With respect to the second prong of Plan § 8.1, the Trustee compared the
attorneys’ fees provision at issue in Creel v. Houston Industries, Inc., 124 S.W.3d
11
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742 (Tex. App. Hous. 2003), with the fees provision at issue in Ludwig v. Encore
Medical, L.P., 191 S.W.3d 285 (Tex. App. Austin 2006). In Creel, the fees
provision stated that:
It is the intent of the Company that the Executive not be
required to incur legal fees and the related expenses
associated with the interpretation, enforcement or defense
of [the] Executive’s rights under this Agreement by
litigation or otherwise. . . . Without respect to whether the
Executive prevails, in whole or in part, in connection with
any of the foregoing, the Company will pay and be solely
financially responsible for any and all attorneys’ and
related fees and expenses incurred by the Executive in
connection with any of the foregoing.
124 S.W.3d at 745-46 (emphasis omitted). Noting the broad and unqualified
language of the provision, the Creel appellate court affirmed the trial court’s
award of partial summary judgment to the plaintiffs on fees.
Id. at 754-55.
By contrast, in Ludwig, the fees provision stated that: “The Company
shall pay reasonable legal fees and expenses incurred by the Executive as a
result of her seeking to obtain or enforce any right or benefit provided by this
Agreement, promptly and from time to time, at her request as such fees and
expenses are incurred.”
Ludwig, 191 S.W.3d at 290. Expressly distinguishing
Creel, the Ludwig appellate court upheld the trial court’s denial of fees.
Id. at
296. The Ludwig court explained that it “reject[ed] Ludwig’s reading that under
this latently ambiguous provision Encore must reimburse legal expenses to
every executive who seeks benefits under the severance agreement, even under
circumstances where the agreement provides no benefits.”
Id. at 292-93.
Here, the Trustee observed that the language of Plan § 8.1 was much
closer to the “latently ambiguous” language of the fees provision in Ludwig, than
to the fees provision in Creel that provided for fees “[w]ithout respect to whether
12
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the Executive prevails.” Accordingly, the Trustee concluded that Clayton could
not satisfy the second prong of Plan § 8.1.
9. Clayton’s Renewed Motion for Remand to State Court
After the district court again lifted its stay, Clayton renewed his motion
for remand to state court and, in the alternative, appealed the Trustee’s denial
of his application for attorneys’ fees.
Clayton’s argument can be summarized as follows: ERISA standing is
determined at the time a claim is filed irrespective of the time the underlying
injury occurred. Therefore, if Clayton had ceased to be a Plan Participant upon
his March 18, 2008 termination, he would not have had ERISA standing at the
time he filed his initial October 2008 complaint in state court. Without ERISA
standing, there could not have been ERISA preemption. Accordingly, the district
court lacked subject matter jurisdiction and was obliged to remand to state
court.
In an opinion issued November 1, 2011, the district court denied Clayton’s
renewed motion for remand and alternative appeal of the Trustee’s decision on
attorneys’ fees.
10. The District Court’s Decision on the Plan’s Renewed Motion
for Summary Judgment
The Plan renewed its motion for summary judgment on the issue of the
validity and enforceability of the Waiver, which the district court granted on
January 20, 2012. The district court entered final judgment against Clayton,
and Clayton timely appealed.
II. STANDARD OF REVIEW
A. The Three Decisions of the Trustee
If “the Plan undisputedly gives the [Trustee] the discretionary authority
to construe the Plan’s terms and to render benefit decisions,” this Court reviews
the Trustee’s benefit decisions for abuse of discretion. Holland v. Int’l Paper Co.
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Ret. Plan, 576 F.3d 240, 246 (5th Cir. 2009) (footnote omitted) (citing, inter alia,
Firestone Tire & Rubber Co. v. Bruch,
489 U.S. 101, 115 (1989)).11 We review de
novo the Trustee’s interpretations of other contracts, including the Offer Letter
and Waiver. See Dial v. NFL Player Supplemental Disability Plan,
174 F.3d
606, 611 (5th Cir. 1999) (citation omitted).
Accordingly, we review de novo the Trustee’s decision that the Waiver was
valid and enforceable. We review for abuse of discretion the Trustee’s decision
that Clayton could not satisfy either prong of Plan § 8.1.
Ostensibly, our precedents would have us review for abuse of discretion
the Trustee’s ultimate decision that Clayton did not resign for “Good Reason,”
but review de novo the Trustee’s underlying interpretation of the Offer Letter.
In effect, this seemingly would amount to de novo review. We need not decide
the controlling standard of review because we would hold that Clayton did not
resign for “Good Reason” under either abuse of discretion or de novo review.
B. The District Court’s Denials of Clayton’s Motions for Remand
In general, the “denial of a motion to remand an action removed from the
state courts to the federal courts is a question of law,” which this Court reviews
de novo. In re Hot-Hed Inc., 477 F.3d 320, 323 (5th Cir. 2007) (per curiam)
(citation omitted). “[T]he burden of establishing federal jurisdiction rests on the
party seeking the federal forum.” Howery v. Allstate Ins. Co.,
243 F.3d 912, 916
(5th Cir. 2001) (citations omitted).
This Court reviews de novo “the question of whether a claim is preempted
under ERISA.” Lone Star OB/GYN Assocs. v. Aetna Health Inc., 579 F.3d 525,
529 (5th Cir. 2009) (citation omitted). Whether ERISA covers the underlying
plan is “a mixed question of fact and law.” House v. Am. United Life Ins. Co.,
499
F.3d 443, 449 (5th Cir. 2007) (citations omitted). “However, where the factual
11
On appeal, Clayton has not challenged the district court’s finding that the Plan
confers discretion upon the Trustee to determine claims eligibility.
14
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circumstances are established as a matter of law or undisputed, we have treated
the question as one of law to be reviewed de novo.” Id. at 448 (citation omitted).
C. The District Court’s Grants of Summary Judgment
This Court reviews ERISA summary judgments de novo, “applying the
same standards applied by the district court.” Baker v. Metro. Life Ins. Co., 364
F.3d 624, 627 (5th Cir. 2004) (citation omitted). “A grant of summary judgment
is proper if there is no genuine issue of material fact and the moving party is
entitled to judgment as a matter of law.”
Id. (citing, inter alia, FED. R. CIV. P.
56(c)). “In evaluating the existence of a genuine issue of material fact, we review
the evidence and inferences drawn from that evidence in the light most favorable
to the non-moving party.”
Id. at 627-28 (citation omitted).
III. DISCUSSION
Clayton raises seven issues on appeal. We address each of them in turn.
A. Whether the Waiver is invalid and unenforceable, for lack of
adequate consideration, because Clayton experienced a
substantial reduction in his post-merger job position and
responsibilities relative to the terms of the Offer Letter.
1. Standard of Review
Clayton attacks the Trustee’s November 22, 2010 decision that the Waiver
was valid and enforceable and the district court’s January 20, 2012 opinion
upholding the Trustee’s decision. We review this challenge de novo. Dial, 174
F.3d at 611 (citation omitted).
2. Analysis12
a. Presumption of Integration and Parol Evidence Rule
12
The analysis applicable to Clayton’s argument that the Waiver is invalid and
unenforceable for lack of adequate consideration is largely identical to the analysis applicable
to Clayton’s arguments that he resigned for “Good Reason” (Clayton’s first sub-claim under
Plan § 2.12(e)), and that the Waiver is invalid and unenforceable due to Conoco’s material
breach of the Offer Letter. Accordingly, the above analysis disposes of all three of these
arguments.
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No. 12-20102
Clayton flatly asserts that the Trustee wrongly applied the common law
presumption that a written agreement is integrated, as well as Texas’s parol
evidence rule. However, in his briefs, Clayton provides no on-point authority for
these positions—only attorney argument. We therefore conclude that Clayton
has waived any challenge to the Trustee’s application of the common law
presumption of integration or Texas’s parol evidence rule. See FED. R. APP. P.
28(a)(9).
b. The Change in Clayton’s Title
Next, Clayton devotes four pages of briefing to the argument that Conoco’s
change of his title, from “Mgr. of A&D” to “Manager of Business Development,”
is highly probative evidence that Clayton experienced a substantial reduction in
his post-merger job position and responsibilities. This argument is superficially
appealing. However, Clayton selectively omits, other than in two sentences of
his reply brief, that the Offer Letter expressly noted that he would manage
“A&D” only within Conoco’s “U.S. Lower 48, Exploration & Business
Development” Organization. Clayton does not further develop this argument.
Even more troubling, Clayton provides only a minimal response to the
Plan’s documentation of multiple large projects Clayton participated in for
Conoco post-merger. After accounting for the fact that Clayton now worked for
a much larger company, these projects were substantively similar in both subject
area and role to the projects Clayton had participated in at Burlington pre-
merger. We therefore judge Clayton’s argument concerning his change in title
to be unpersuasive.
c. Texas “At Will” Employment Authority
Finally, Clayton contends that, under Texas law, “[a] promise of ‘at will’
employment alone cannot constitute adequate consideration.” In making this
rather broad contention, Clayton relies on the case of Light v. Centel Cellular Co.
of Texas, 883 S.W.2d 642, 644-45 (Tex. 1994) (citations and footnotes omitted).
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The problem, however, is that the Texas Supreme Court has revisited its holding
from Light no less than three times in the past decade. See Marsh USA Inc. v.
Cook, 354 S.W.3d 764 (Tex. 2011); Mann Frankfort Stein & Lipp Advisors, Inc.
v. Fielding,
289 S.W.3d 844 (Tex. 2009); Alex Sheshunoff Mgmt. Servs., L.P. v.
Johnson,
209 S.W.3d 644 (Tex. 2006). Moreover, Light—and all three
subsequent cases—concerned the nuances of enforcing covenants not to compete.
That is a wholly different issue than enforcing a waiver of change in control
severance benefits for a high-level manager who worked for almost two years,
and participated on the integration team, before resigning. Thus, we are
unpersuaded by Clayton’s “at will” employment argument, which is reliant upon
outdated and out-of-context Texas authority.
B. Whether the Waiver is invalid and unenforceable on account of
fraud in the inducement.
1. Standard of Review
Clayton attacks the Trustee’s November 22, 2010 decision that the Waiver
was valid and enforceable and the district court’s January 20, 2012 opinion
upholding the Trustee’s decision. We review this challenge de novo. Dial, 174
F.3d at 611 (citation omitted).
2. Applicable Law
We employ a two-step burden-shifting framework to assess a waiver’s
validity and enforceability:
Once a party establishes that his opponent signed a
release that addresses the claims at issue, received
adequate consideration, and breached the release, the
opponent has the burden of demonstrating that the release
was invalid because of fraud, duress, material mistake, or
some other defense. We examine the totality of
circumstances to determine whether the releasor has
established an appropriate defense.
Williams, 23 F.3d at 935 (emphasis added) (citing
O’Hare, 898 F.2d at 1017).
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We apply a six-factor balancing test to assess the “totality of the
circumstances.” O’Hare, 898 F.2d at 1017 (citations omitted).13 Finally, we
recognize a six-element test that a party asserting fraud must satisfy under
Texas law.14
Lane, 529 F.3d at 564 (citations omitted).
Here, Clayton challenges the validity and enforceability of the Waiver on
account of fraud in the inducement with respect to the consideration he received.
Under Williams, Conoco first must make a prima facie showing that Clayton
received adequate consideration for the Waiver. Conoco easily satisfies this first
Williams step by showing that Clayton received a job with Conoco, which he
performed for almost two years. Thus, the burden shifts to Clayton to show that
13
The six O’Hare factors are:
(i) the plaintiff’s education and business experience;
(ii) the amount of time the plaintiff had possession of or access to the
agreement before signing it;
(iii) the role of [the] plaintiff in deciding the terms of the agreement;
(iv) the clarity of the agreement;
(v) whether the plaintiff was represented by or consulted with an
attorney; and
(vi) whether the consideration given in exchange for the waiver
exceeds employee benefits to which the employee was already
entitled by contract or law.
898 F.2d at 1017 (citations omitted).
14
The six Lane elements are:
(i) that a material representation was made;
(ii) the representation was false;
(iii) when the representation was made, the speaker knew it was
false or made it recklessly without any knowledge of its truth and as
a positive assertion;
(iv) the speaker made the representation with the intent that the
other party should act upon it;
(v) the party acted in reliance on the representation; and
(vi) the party thereby suffered injury.
529 F.3d at 564 (citations and internal quotation marks omitted).
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the terms of the Offer Letter fraudulently induced him to execute the Waiver by
misrepresenting the actual job he would receive with Conoco.
3. Analysis
To satisfy the second Williams step, Clayton must apply the six O’Hare
factors and the six Lane elements. Clayton, however, presents no O’Hare or
Lane analyses in his briefs. He does not provide even a single citation to those
authorities.
Rather, Clayton argues that, both pre and post-merger, Conoco employed
two individuals who occupied the same role at Conoco that he had occupied at
Burlington. To Clayton, Conoco’s failure to make “any attempt to alter” those
individuals’ responsibilities is indicative that Conoco had planned all along to
make a substantial reduction to Clayton’s responsibilities. Clayton also critiques
Conoco’s “intensely bureaucratic structure.” Finally, Clayton alleges that at
least one Conoco official had represented to him that, from the beginning,
Conoco “had no intention” of paying him a severance benefit.
Relying on Arete Partners, L.P. v. Gunnerman, Clayton argues that
summary judgment was inappropriate because he presented circumstantial
evidence that Conoco never intended to give him the role promised in the Offer
Letter, but simply wanted him to sign the Waiver so it could avoid paying his
severance benefit. See 594 F.3d 390, 394-95 (5th Cir. 2010) (“Even slight
circumstantial evidence of fraud, when considered with the breach of promise to
perform, is sufficient to support a finding of fraudulent intent.” (citation and
internal quotation marks omitted)).
A quick examination of Clayton’s argument shows that it cannot withstand
scrutiny. First, Clayton points to post-merger redundancies as evidence of fraud.
However, were post-merger redundancies sufficient to allege fraud, then fraud
allegations could arise out of any merger. Moreover, Arete Partners requires a
“breach of [a] promise to perform.” Id. at 395-95. Yet, in Part A of
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this“Discussion” section, we explained that there was no such breach. Finally,
Clayton relies on the representation of a Conoco official that it “had no intention”
of paying him the severance benefits. Even if true, this statement, by itself, is
insufficient to create a genuine issue of material fact.
Clayton’s failure to address our actual tests for fraud in this
context—found in O’Hare and Lane—dooms his fraud in the inducement
challenge to the validity and enforceability of the Waiver. Clayton’s
circumstantial evidence that there were post-merger redundancies, and that a
Conoco official allegedly represented that Conoco “had no intention” of paying
him the severance benefits, is not enough to save his claim pursuant to Arete
Partners because there was no clear “breach of [a] promise to perform.”
C. Whether Clayton ratified any alleged fraud, thereby preserving
the validity and enforceability of the Waiver regardless.
1. Standard of Review
Clayton attacks the Trustee’s November 22, 2010 decision that the Waiver
was valid and enforceable and the district court’s January 20, 2012 opinion
upholding the Trustee’s decision. We review this challenge de novo. Dial, 174
F.3d at 611 (citation omitted).
2. Analysis
The Plan argues that, even if Conoco had fraudulently induced Clayton to
execute the Waiver, a disgruntled ERISA claimant alleging “wrongful
inducement” must “seek rescission shortly after discovering the
misrepresentation.” Grillet, 927 F.2d at 221 (citations and internal quotation
marks omitted). Because Clayton submitted a claim to Conoco Human
Resources as early as August 2006, but then continued working at Conoco until
March 2008, the Plan argues that Clayton ratified any alleged fraud.
Clayton, in turn, argues that ratification is limited only to those
circumstances where the party alleging fraud retained monetary consideration
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without seeking prompt rescission. In support of this argument, Clayton cites
to Faris v. Williams WPC-I, Inc., 332 F.3d 316, 322-23 (5th Cir. 2003), as an
example of a case that involved monetary consideration.
The Plan has the better argument. In light of the authority from Grillet,
Clayton ratified any alleged fraud by continuing to work at Conoco for
approximately two years after filing his initial claim with Conoco Human
Resources. Clayton’s argument that both Faris and Grillet involved monetary
consideration, and therefore are inapposite, is unavailing. After all, no language
in either of those cases even implies that their logic is limited to circumstances
involving monetary consideration. Despite having had ample opportunity to
brief the issue of ratification, Clayton instead just repeats that monetary
consideration was the gravamen of Faris and Grillet. For clarification, we
expressly hold that Faris and Grillet are not limited to circumstances involving
monetary consideration. There is no apparent logic or reason for such a
limitation.
Accordingly, Clayton ratified any alleged fraud even if Conoco had
fraudulently induced Clayton to execute the Waiver, which it did not.
D. Whether ERISA’s civil enforcement provision “completely
preempts” Clayton’s state law claims against Conoco because the
Plan requires “an ongoing administrative program.”
1. Standard of Review
Clayton attacks the district court’s March 23, 2009 opinion denying his
first motion for remand. We review this challenge de novo. Lone Star, 579 F.3d
at 529 (citation omitted);
House, 499 F.3d at 448-49 (citations omitted).
2. Applicable Law
We apply the following three-element test to determine whether a
particular plan is covered by ERISA:
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(i) whether from the surrounding circumstances a
reasonable person could ascertain the plan’s intended
benefits, beneficiaries, source of financing, and procedures
for receiving benefits;
(ii) whether the plan falls outside of the ERISA exemptions
promulgated by the Department of Labor in 29 C.F.R. §§
2510.3-1(j)(1)-(4); and
(iii) whether an employer established or maintained the
plan with the intent to provide benefits to its employees.
See generally Meredith v. Time Ins. Co., 980 F.2d 352, 355-56 (5th Cir. 1993)
(citations, footnotes, and internal quotation marks omitted). “If any part of [this]
inquiry is answered in the negative, the submission is not an ERISA plan.”
Id.
at 355.
a. Clayton’s Arguments
Narrowing the issues, Clayton notes that only the first prong of the
Meredith test is in dispute here. He argues that, in practice, this first Meredith
prong limits ERISA coverage only to those plans that require “an ongoing
administrative program to meet the employer’s obligation.” Fort Halifax, 482
U.S. at 11. Clayton emphasizes that in Fort Halifax, the Supreme Court held
that “[t]he requirement of a one-time, lump-sum payment triggered by a single
event requires no administrative scheme whatsoever to meet the employer’s
obligation.”
Id. at 12. He likens the severance benefits at issue here to the one-
time, lump-sum payment at issue in Fort Halifax, in which there was no ERISA
preemption.
More specifically, Clayton points to Wells v. General Motors Corp., 881
F.2d 166, 176 (5th Cir. 1989), in which we expressly applied Fort Halifax to a
General Motors severance benefit available in either a one-time, lump-sum
payment or in two annual installments at the employee’s election. Clayton also
points to Fontenot v. NL Industries, Inc.,
953 F.2d 960, 962-63 (5th Cir. 1992),
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in which we similarly applied Fort Halifax to a terminated employee’s suit for
change in control severance benefits.
Clayton dismisses Conoco’s position that this case’s complexity actually
demonstrates the necessity of an ongoing program to administer the Plan.
Instead, he concludes that it is the Waiver that has made this case complicated,
“not the terms of the Plan.”
b. Conoco’s Arguments
In turn, Conoco argues that severance plans can constitute employee
benefits plans governed by ERISA. See Massachusetts v. Morash, 490 U.S. 107,
116 (1989) (citations omitted). Conoco then submits that in Fontenot, this Court
expressly predicated its analysis on the fact that the plan at issue “require[d] no
administrative scheme because those employees included in the plan were to
receive benefits upon termination regardless of the reason for termination.”
Fontenot, 953 F.2d at 963. In its briefs, Conoco notes that here, by contrast:
(i) the Trustee “must exercise discretion in determining
whether ‘Good Reason’ exists when a Participant
terminates his or her employment”;
(ii) the Trustee “must follow administrative procedures to
calculate the severance benefit for each Participant”;
(iii) “the Plan does not rely on a single event to trigger
benefits since a Participant can claim benefits any time
during a two-year period after a change in control”; and
(iv) “the Plan provides for ongoing benefits,” including a
bonus, severance pay, various insurance coverages, and
outplacement assistance.
Having distinguished Fontenot and, by extension, Wells, Conoco puts forth
that, in this Circuit, ERISA covers those severance plans that: (i) only grant
benefits to employees terminated under specified criteria; (ii) confer discretion
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upon the Trustee to determine whether an employee has met those criteria; and
(iii) are effective for an extended period of time, or require some sort of
administrative apparatus. See Crowell v. Shell Oil Co., 541 F.3d 295, 302-07
(5th Cir. 2008); Perdue v. Burger King Corp.,
7 F.3d 1251, 1253 n.5 (5th Cir.
1993) (citation omitted); Whittemore v. Schlumberger Tech. Corp.,
976 F.2d 922,
923 (5th Cir. 1992).
Conoco concludes by referring to additional authority from our sister
circuits, which have held that severance plans comparable to the Plan require
ongoing administrative programs and, therefore, constitute ERISA plans. See,
e.g., Petersen v. E.F. Johnson Co., 366 F.3d 676, 679-80 (8th Cir. 2004); Cassidy
v. Akzo Nobel Salt, Inc.,
308 F.3d 613, 616-17 (6th Cir. 2002); Emmenegger v.
Bull Moose Tube Co.,
197 F.3d 929, 934-35 (8th Cir. 1999); Tischmann v.
ITT/Sheraton Corp.,
145 F.3d 561, 567 (2d Cir. 1998); Bogue v. Ampex Corp.,
976 F.2d 1319, 1323 (9th Cir. 1992) (Wisdom, J., sitting by designation)
(expressly distinguishing Fontenot on the basis of the administrator’s discretion).
3. Analysis
We agree with Conoco that ERISA’s civil enforcement provision
“completely preempts” Clayton’s state law claims against it. Had Fontenot and
Wells been our last word on the proper application of Fort Halifax, this issue
might have come out differently. After all, the severance benefits at issue here
are “a one-time, lump-sum payment triggered by a single event.” Fort Halifax,
482 U.S. at 12. Nevertheless, Conoco convincingly distinguishes Fontenot and
Wells to show that “an ongoing administrative program” is necessary because of
the instant Trustee’s claims eligibility discretion. See
Crowell, 541 F.3d at 302-
07.
Additionally, we are persuaded by the analysis of the district court in
Wimsatt v. Burlington Resources, Inc., No. 2:08-cv-00269, slip op., at *8-10
(D.N.M. Sep. 30, 2008), which concluded that ERISA covers the same Burlington
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Resources severance plan at issue here. The Wimsatt court is the only other
court to have construed the Plan. Similarly, we are persuaded by the learned
analysis of our sister circuits in Petersen, Cassidy, Emmenegger, Tischmann, and
Bogue, which addressed ERISA preemption in circumstances comparable to the
ones at issue here.
In light of the above, we conclude that ERISA “completely preempts”
Clayton’s state law claims against Conoco. For this reason, we also conclude
that the district court did not err by denying Clayton’s first motion for remand.
E. Whether Clayton can be a “Participant” as defined by ERISA for
purposes of determining preemption, but not a “Participant” as
defined by Plan § 8.1 for purposes of recovering attorneys’ fees
under the Plan.
1. Standard of Review
Clayton attacks the district court’s November 1, 2011 opinion denying his
renewed motion for remand. We review this challenge de novo. Lone Star, 579
F.3d at 529 (citation omitted);
House, 499 F.3d at 448-49 (citations omitted).
2. Applicable Law
As noted above in the “Background” section of this opinion, Clayton’s
argument can be summarized as follows: ERISA standing is determined at the
time a claim is filed irrespective of the time the underlying injury occurred.
Therefore, if Clayton had ceased to be a Plan Participant upon his March 18,
2008 termination, he would not have had ERISA standing at the time he filed
his initial October 2008 complaint in state court. Without ERISA standing,
there could not have been ERISA preemption. Accordingly, the district court
lacked subject matter jurisdiction and was obliged to remand to state court.
a. The District Court’s November 1, 2011 Opinion
The district court rejected this argument. It explained that, under the
ERISA statute, a “Participant” includes “any employee or former employee of an
employer . . . who is or may become eligible to receive a benefit of any type from
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an employee benefit plan which covers employees of such employer . . . or whose
beneficiaries may be eligible to receive any such benefit.” 29 U.S.C. § 1002(7).
The district court further explained that, for purposes of determining ERISA
standing, the Supreme Court has held that Section 1002(7) is inclusive of
“former employees who . . . have [i] a colorable claim [ii] to vested benefits.”
Firestone, 489 U.S. at 117 (citation and internal quotation marks omitted).
Adopting the Seventh Circuit’s analysis from Panaras v. Liquid Carbonic
Industries, Inc., 74 F.3d 786 (7th Cir. 1996), the district court restated the
Firestone standing test to include claims brought by a former employee who “has
a colorable claim to benefits which the employer promised to provide pursuant
to the employment relationship and which a non-frivolous argument suggests
have accrued to the employee’s benefit.”
Panaras, 74 F.3d at 791 (citing, inter
alia, Christopher v. Mobil Oil Corp.,
950 F.2d 1209, 1221 (5th Cir. 1992) (“[T]he
employer should not be able through its own malfeasance to defeat the
employee’s standing.” (citation and footnote omitted))).
The district court further adopted the Seventh Circuit’s analysis from
Jackson v. E.J. Brach Corp., 176 F.3d 971 (7th Cir. 1999). In Jackson, the
Seventh Circuit concluded that the plaintiffs had ERISA standing under the
restated test from Panaras, even though they had refused to sign releases on
which the disputed ERISA benefits were conditioned, because their claims
alleged that the employer had “promised to provide them with severance benefits
if they were involuntarily terminated.”
Jackson, 176 F.3d at 979 (citing
Panaras, 74 F.3d at 791). Here, the district court determined that Clayton had
similarly asserted “a colorable claim to severance benefits that vested when he
resigned within two years after the merger and, in his view, with ‘Good Reason.’”
Finally, the district court flatly rejected Clayton’s contention that the
court’s ruling that he was a “Participant,” as defined by the ERISA statute,
necessarily impelled a finding that he was a “Participant,” as defined by the
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Plan, for purposes of recovering attorneys’ fees under § 8.1. The district court
explained that:
The definition of Participant for purposes of ERISA
jurisdiction, which includes any former employee with a
colorable claim to ERISA benefits, is much broader than
the definition of Participant under the Plan, which is
restricted to current employees and those employees who
terminate their employment under circumstances where
they are actually entitled to benefits under the Plan.
b. Clayton’s Arguments on Appeal15
Clayton challenges the district court’s reliance on Firestone’s “colorable
claim to vested benefits” rule. See 489 U.S. at 117-18 (citation and internal
quotation marks omitted). He argues that Firestone only applies to give the
benefit of the doubt to a plaintiff when his status is uncertain.
Furthermore, Clayton argues that to distinguish between the meaning of
“Participant” for purposes of determining ERISA preemption, and “Participant”
for purposes of recovering attorneys’ fees, “is nonsensical on its face.” He
submits that:
The Plan does not create any benefits for nonparticipants
and it does not create any category of persons who could
become beneficiaries in the future. Since no benefits are
available under the Plan except to those who are
“participants” as the Plan defines them, it would be
15
Clayton makes additional arguments, which are predicated on inapposite caselaw.
He argues that Miller v. Rite Aid Corp., 334 F.3d 335 (3d Cir. 2003), and Weaver v. Employers
Underwriters, Inc.,
13 F.3d 172 (5th Cir. 1994), support his position that he lacks ERISA
standing simply because he is not a “Participant,” as defined by the Plan, for purposes of
recovering attorneys’ fees under Plan § 8.1. However, what Miller and Weaver stand for is
that the bare ipse dixit of a plan claimant is insufficient to support ERISA standing,
irrespective of whether ERISA happens to cover the plan in question. Unlike the claimants
in Miller and Weaver, Clayton has ERISA standing to pursue his claim for severance benefits.
He just does not qualify under the specific language of Plan § 8.1 for the additional recovery
of attorneys’ fees. Miller and Weaver are therefore distinguishable.
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impossible to be a “participant” for ERISA jurisdictional
purposes without being a “participant” of the Plan.
3. Analysis
Clayton’s arguments are unconvincing—both with respect to the dual
definitions of “Participant” and with respect to the proper interpretation of
Firestone.
a. The Proper Interpretation of Firestone
As Clayton argues, Firestone could be read as an effort by the Supreme
Court to err on the side of an ERISA plaintiff’s standing when in doubt. The
natural corollary to liberal federal standing would be liberal federal preemption
of corresponding state law claims. Otherwise, ERISA plaintiffs could have it
both ways, notwithstanding the doctrine of “complete preemption.”
b. The Dual Definitions of “Participant”
A “Participant” as defined by the ERISA statute, 29 U.S.C. § 1002(7), is
not necessarily the same as a “Participant” as defined by a plan document. This
is because, if a plan document alone could define “Participant,” then it would
have been redundant for ERISA to have done so as well. After all, almost any
covered plan would include a definition of “Participant” like the one found in
Plan §§ 2.15 and 3.2. We will not read as fundamental a provision to the ERISA
statutory scheme as the definition of “Participant” to be mere surplusage.
In addition, and perhaps more fundamentally, the instant Plan provides
a substantive contractual right to recover attorneys’ fees, but only for claims
brought within the contours of §§ 2.15, 3.2, 8.1, etc. It would be strange indeed
to say that the Plan could create a right to fees but not define the contours of
that right.
ERISA, through its civil enforcement mechanism, simply provides a
statutory process for vindicating whatever substantive rights a covered plan
creates (as well as standards, to ensure that vested benefits are properly
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safeguarded until those rights are vindicated). Thus, there is nothing at all
discordant about Clayton qualifying as a “Participant” for purposes of ERISA
preemption but not qualifying as a “Participant” for purposes of recovering
attorneys’ fees under the Plan. The district court correctly denied Clayton’s
renewed motion for remand.
F. Alternatively, whether Clayton can satisfy both prongs of Plan §
8.1 and, therefore, is entitled to recover attorneys’ fees under the
Plan.
1. Standard of Review
Clayton attacks the Trustee’s June 2, 2011 decision denying his
application for attorneys’ fees and the district court’s November 1, 2011 opinion
upholding the Trustee’s decision. We review this challenge for abuse of
discretion. Holland, 576 F.3d at 246 (citations and footnote omitted).
2. Analysis
First and foremost, Clayton addresses only the first prong of Plan § 8.1 in
his briefs. Because Clayton must satisfy both prongs of § 8.1, and the Trustee
determined that he had satisfied neither, Clayton’s failure to brief the second
prong necessarily results in affirmance of the Trustee. Moreover, Clayton
addresses the first prong only in his reply brief. Therefore, Clayton has waived
even his arguments with respect to the first prong. See, e.g., Jones v. Cain, 600
F.3d 527, 540-41 (5th Cir. 2010) (citations omitted) (“Arguments raised for the
first time in a reply brief are generally waived.”).
In his reply brief, Clayton argues that the Trustee’s June 2, 2011 decision
engrafted a “success requirement” for the recovery of attorneys’ fees, when only
a “good-faith” or “colorable” claim should have been necessary under the Plan’s
contractual language. Put differently, Clayton argues that whether or not he
resigned for “Good Reason” goes to the heart of his claim for severance benefits,
and that even if he loses on that question, the adverse “Good Reason”
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determination should not then be used to deny him “Participant” status for
purposes of fee-recovery.
We make one brief observation as to this argument. While Clayton’s
“success requirement” argument may superficially resonate, in that allowing fees
only upon a determination of “Good Reason” might deter litigation of the “Good
Reason” issue in the first place, it warrants noting that Burlington/Conoco had
no obligation to include any contractual fee-shifting provision in the Plan.16
Thus, Clayton has waived any challenge to the Trustee’s June 2, 2011
decision denying his application for attorneys’ fees, and the district court’s
November 1, 2011 opinion upholding the Trustee’s decision. Furthermore,
Clayton’s argument concerning the first prong of Plan § 8.1 would be unlikely to
prevail were we to reach it.
G. Whether Clayton waived his claim for breach of the Offer Letter,
pertaining to a substantial reduction in his post-merger job
position and responsibilities, for failure to plead with specificity.
1. Standard of Review
Clayton attacks the district court’s July 2, 2010 determination that he had
waived this claim for failure to plead it with specificity. This challenge presents
a question of law, which we review de novo. See Shaikh v. Holder, 588 F.3d 861,
863 (5th Cir. 2009) (citation omitted).
2. Applicable Law
Clayton challenges the district court’s determination that he waived his
non-ERISA claim for breach of the Offer Letter, pertaining to a substantial
reduction in his post-merger job position and responsibilities, for failure to plead
with specificity. In making this argument, Clayton relies heavily on the liberal
16
To be clear, attorneys’ fees still may be available under the ERISA statute itself.
See, e.g., 29 U.S.C. § 1132(g)(1) (“Attorney’s fees and costs”). We take no position on Clayton’s
eligibility for fees under this provision.
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notice pleading requirements of Federal Rule of Civil Procedure 8(a)(2) and the
allowance for adoption by reference in Rule 10(c).
Conoco responds that Clayton’s exclusive reliance upon a provision that
incorporated-by-reference the entirety of his background and jurisdictional
information was insufficient to provide notice under Rule 8(a)(2),
notwithstanding Rule 10(c)’s allowance for at least some adoption by reference.
Additionally, Conoco submits that Clayton ratified any breach of the Offer
Letter by continuing to work at Conoco for almost two years. In short, Conoco
asserts that any deviation from the Offer Letter amounted to a contract
modification, which Clayton then proceeded to ratify.
Finally, Conoco argues that even if Clayton had not waived his claim for
breach of the Offer Letter, the claim is a disguised ERISA claim because
damages would be measured by severance benefits owed. Accordingly, the claim
would be conflict-preempted regardless.
3. Analysis
For the same reasons discussed in Part C of this “Discussion” section,
Clayton ratified any breach of the Offer Letter by continuing to work at Conoco
for approximately two years. Therefore, Conoco would prevail on ratification
alone.
Nevertheless, Conoco also would prevail on failure to plead with
specificity. Under Clayton’s interpretation, Rules 8(a)(2) and 10(c) could be read
to allow for a plaintiff to write an indiscriminate background section in lieu of
particularized pleadings. Taken to its logical conclusion, this interpretation is
not acceptable. After all, even liberal notice pleading still requires at least some
pleading. See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Atl. Corp. v.
Twombly,
550 U.S. 544, 555-56 (2007) (citations omitted). At least on these
facts, where Clayton already had amended his complaint twice, Rule 10(c) did
not allow for his incorporation-by-reference of the entire background section with
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Case: 12-20102 Document: 00512297025 Page: 32 Date Filed: 07/03/2013
No. 12-20102
only minimal indication as to what he actually pled. Rule 8(a)(2) requires at
least some precision in pleading. Accordingly, Clayton did not plead with
sufficient specificity, and Conoco prevails on that basis as well.
On a final note, in light of Clayton’s ratification and failure to satisfy Rule
8(a)(2), we need not address conflict preemption in this opinion.
IV. CONCLUSION
For the foregoing reasons, we AFFIRM the final judgment of the district
court in full.
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