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Niebauer v. Crane & Co., Inc.

United States Court of Appeals, First Circuit

April 21, 2015

ROBERT NIEBAUER, Plaintiff, Appellant,
v.
CRANE & CO., INC.; CRANE & CO., INC. EXECUTIVE SEVERANCE PLAN, Defendants, Appellees

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. Michael A. Ponsor, U.S. District Judge.

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[Copyrighted Material Omitted]

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Robert A. Fisher, with whom Jonathan A. Keselenko, Christopher S. Feudo, and Foley Hoag LLP were on brief, for appellant.

David C. Casey, with whom Robert B. O'Brien and Littler Mendelson, P.C. were on brief, for appellees.

Before Barron, Selya, and Stahl, Circuit Judges.

OPINION

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STAHL, Circuit Judge.

In this case arising under the Employee Retirement Income Security Act (" ERISA" ), 29 U.S.C. § § 1001 et seq., Plaintiff-Appellant Robert Niebauer alleges that the administrator of his former employer's executive severance plan denied him severance benefits after erroneously determining that he had retired voluntarily from his position. See 29 U.S.C. § 1132(a)(1)(B). Niebauer further alleges that his former employer improperly interfered with his rights under the plan, in violation of 29 U.S.C. § 1140. The district court granted Defendants-Appellees summary judgment on both counts. See Niebauer v. Crane, 44 F.Supp.3d 147 (D. Mass. 2014).

Because we find that the plan administrator's decision to deny Niebauer's claim for benefits was both supported by substantial evidence and procedurally proper, we affirm the district court's judgment in that regard. However, we vacate the district court's judgment as to the interference claim and remand for application of the correct standard of review.

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I. Facts & Background[1]

At the time of the events in question, Robert Niebauer was the chief technology officer of Crane & Co., Inc. (" Crane" ). Headquartered in Dalton, Massachusetts, Crane produces specialty paper products, including the banknote paper used for printing United States currency.

Crane maintains an executive severance plan (" plan" ), under which severance benefits are available to designated employees who have been involuntarily terminated. Because the plan is an employee welfare benefit plan, it is governed by ERISA, 29 U.S.C. § § 1001 et seq. Employees who voluntarily leave Crane are entitled to benefits only if they do so for " good reason," which the plan defines as certain changes to an employee's position, such as relocation, significant reduction in salary, or substantial changes to the employee's job responsibilities.[2] The plan reserves to the administrator -- here, the compensation committee of Crane's board of directors -- " full discretionary power and authority to construe, interpret and administer the Plan [and] to make Benefit Eligibility determinations." As a Crane executive, Niebauer was covered by the plan.

In his capacity as chief technology officer, Niebauer reported to the chief executive officer (" CEO" ) of the company -- a position occupied, as of October 2011, by Stephen DeFalco, a recent hire. One of DeFalco's priorities upon taking office was repairing a frayed relationship with a significant client of the company, the Bureau of Engraving and Printing (" BEP" ), a division of the United States Department of the Treasury. Work on the latest BEP project, called " Type V," had stalled as a result of technological difficulties encountered in printing the paper used for $100 banknotes. To address the problems afflicting Type V, DeFalco launched a task force within Crane, referred to internally as " Project Momentum," and designated an employee named Rich Rowe as the project leader. As part of Project Momentum, DeFalco decided to station a Crane staff member at the BEP printing facility in Fort Worth, Texas, who would serve as the company representative and liaison to the Massachusetts headquarters.

On November 18, 2011, DeFalco asked Niebauer to serve as the Project Momentum deputy in Texas. Niebauer agreed, on the understanding that he was to be in Texas only to the end of the calendar year. However, after their conversation, DeFalco noted in an email to the BEP contact that Niebauer would " spend substantial time at [BEP] facilities until at least March [2012]." Niebauer began to have " second thoughts" about the length of the assignment, and also became concerned about personnel decisions that DeFalco had made in connection with Project Momentum, including his addition to the Massachusetts team of certain individuals whom Niebauer felt BEP distrusted.

Because of these concerns, Niebauer and DeFalco scheduled a phone call for November 22 to review the project's personnel and the length of Niebauer's commitment. The two characterize this call differently. According to DeFalco, Niebauer effectively attempted to extract severance benefits in exchange for agreeing to the Texas assignment. According to

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Niebauer, he communicated to DeFalco that he believed that his new Project Momentum role constituted a triggering event under the severance plan, entitling him to benefits. In response, Niebauer says, DeFalco called this claim " crazy talk," stating that severance was awarded only if an executive was fired, and Niebauer was not being fired. Niebauer admits to telling DeFalco that he was in a position of " maximum leverage" vis-à-vis securing severance benefits. In any event, Niebauer ultimately recommitted to the Texas assignment.

Thereafter, team members worked to get Project Momentum up and running, and scheduled meetings with BEP representatives in Fort Worth for Monday, December 5. Niebauer, who had not yet relocated to Texas, was slated to make the trip. In an exchange with Rowe over the preceding weekend, however, Niebauer began to express reluctance to travel and eventually decided not to go. In a December 4 email to Rowe, Niebauer said that he had " made some decisions that [he] must inform [Rowe] of." Niebauer also emailed DeFalco on December 4, asking to set up a meeting " concern[ing] a decision [he] ha[d] reached."

The ensuing December 5 phone call between Niebauer and DeFalco is a focal point of this litigation; the parties vehemently dispute the content and import of the conversation. Niebauer's account is that he called DeFalco on his cell phone and told him that his persistent concerns about the structure of Project Momentum left him no choice but to " at least consider retirement" if the project organization did not change.[3] At some point thereafter, the parties agree that the call was dropped. Niebauer asserts that, when the connection was reestablished, DeFalco rebuffed his offer to repeat what he had said; instead, DeFalco declared that he had heard enough, and that it was his policy not to try to talk an executive out of retirement. According to DeFalco, however, Niebauer told him that he was " retir[ing] now, effective immediately," since he was not going to receive severance at the conclusion of Project Momentum. DeFalco told Niebauer that he was disappointed but understood his decision to retire and wished him well.

In the aftermath of the December 5 phone call, both Niebauer and DeFalco sent emails to various individuals explaining what had happened. That afternoon, DeFalco emailed Charles Kittredge, the former CEO of Crane who had stayed on as chairman of the board, letting him know that Niebauer had just told DeFalco that " he would be retiring immediately." DeFalco also informed the Project Momentum team by email the next day that Niebauer had decided to retire and that his last working day was likely to be December 16.

For his part, Niebauer emailed his daughter the morning after his conversation with DeFalco, telling her that he had " made the announcement to [DeFalco] that [he did] not want to go live in Fort Worth for the next six months and want[ed] to retire." On the afternoon of December 5, Niebauer also forwarded to DeFalco an email from a BEP contact who was trying to schedule a phone call. In forwarding the email, Niebauer asked DeFalco for guidance in responding to the BEP email, noting that he wanted " this to be a smooth transition but under[stood] if [DeFalco wanted] to make it more abrupt." Niebauer then forwarded the email chain to

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his wife, who replied, " Sounds like you told [DeFalco] that retirement is route." [4]

Following the December 5 call, DeFalco instructed Jay Wickliff, the head of human resources at Crane, to reach out to Niebauer to discuss next steps. Wickliff and Niebauer met on the morning of December 6. The parties' characterizations of this meeting diverge. Niebauer claims that he told Wickliff that he had not voluntarily retired but rather DeFalco had " retired him" -- but that if he were going to retire, he would need to learn more about his financial options. Crane asserts that Niebauer reiterated his decision to retire, and that he and Wickliff discussed setting a retirement date that took into account Niebauer's remaining vacation time. Wickliff emailed DeFalco after the meeting, stating, " [Niebauer] confirmed to me this morning his decision to retire." Wickliff added, " We discussed having some kind of event to honor his career. At first he thought he did not want to do anything, but decided that a low key event . . . would be best."

Later that day, DeFalco posted a message on Crane's internal communications system formally announcing the launch of Project Momentum. Niebauer's name was not included in the list of team members. Shortly thereafter, a colleague wrote in an email to Niebauer that he had just seen the announcement, which " said it all." In the ensuing back-and-forth, Niebauer wrote that he believed that his last day of work would be the next day, December 7, and that his " [r]etirement day [would] most likely be February 1st." Niebauer explained to the colleague that his " decision to leave was that in [his] opinion, the company [had] become dishonorable." Niebauer also emailed Rowe, the leader of Project Momentum, stating, " I am assuming that you know about my pending retirement," [5] and that, since the announcement of the project team had been posted without his name, he expected that he would not attend upcoming team meetings.

Also on December 6, Niebauer met with Rick Kendall, who handled retirement calculations for Crane's executives in conjunction with an outside firm, Towers Watson, which acted as Crane's actuarial consultant. Niebauer and Kendall discussed different options for retirement dates. Kendall advised that obtaining a retirement calculation from Towers Watson did not commit him to retiring, but that if he did retire, he would not be eligible for severance. In email correspondence through December 9, Niebauer asked Kendall to use February 1, 2012 as a basis for a retirement calculation, and then later proposed March 1, 2012 as his retirement date. Kendall then told Niebauer via email on December 9 that his last day of work would be January 27, 2012, followed by five weeks of vacation, for a retirement date of March 1. Shortly thereafter, Niebauer wrote in an email to his wife that they could " kiss the severance option good bye."

Beginning on December 12, Niebauer began unambiguously portraying his retirement as involuntary. When a coworker, Chris Duquette, emailed him that day to congratulate him on his retirement, ...


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