The primary issue on this appeal is whether a severance benefits plan was terminated by the corporation that sponsored the plan for the benefit of its employees. In an action by discharged employees of the sponsor corporation to recover benefits under the plan, pursuant to the Employees Retirement Income Security Act of 1974 (ERISA) § 502(a)(1)(B), the District Court for the Southern District of New York (Michael H. Dolinger, Magistrate Judge) determined that the plan had never been terminated. Defendants appeal from the final judgment entered on December 21, 1994, awarding plaintiffs benefits under the plan, prejudgment interest, and attorney’s fees. We affirm.
This case arose in the context of the sale by General Electric Co. (“GE”) of its subsidiary RCA Global Communications, Inc. (“RCAG”) to MCI Communications, Inc. (“MCIC”), effective May 16,1988. After the sale was complete, RCAG retained its identity as a corporation, all of whose stock was indirectly owned by MCI International, Inc. (“MCII”), which was in turn owned by MCIC.
Prior to the sale, RCAG maintained a Severance Allowance Plan for Non-Represented Salaried Employees (the “RCAG Plan”). Under the RCAG Plan, a covered employee who was laid off would receive a lump-sum severance benefit based on the employee’s salary and length of service with the company. The maximum severance benefit was equal to 52 weeks of the employee’s base salary. Plan documents unambiguously identified RCAG itself as the plan administrator, and provided that “[t]he Plan Administrator may terminate, suspend, withdraw, amend or modify the Plan in whole or in part at any time.”
Before RCAG was sold to MCIC, RCAG employees were covered by several benefit plans in addition to the RCAG Plan. Unlike the RCAG Plan, however, these other benefit plans were sponsored not by RCAG itself, but by the RCA Corporation, another subsidiary of GE that was not sold to MCIC. Pursuant to the Stock Purchase Agreement between GE and MCIC, RCAG was required to terminate the application of RCA Corporation-sponsored benefit plans to its employees effective at the closing of the sale, and the RCAG Board of Directors accordingly approved a resolution withdrawing from participation in such plans. However, the Stock Purchase Agreement provided for no similar termination of employee benefit plans sponsored and administered by RCAG itself, as opposed to the RCA Corporation, and neither the Board nor any officer of RCAG took any action to terminate the RCAG Plan prior to the effective date of the sale.
The sale of RCAG could not close until the Federal Communications Commission (“FCC”) gave its approval, and FCC rules and antitrust considerations precluded MCIC or its subsidiaries from exercising any management control over RCAG, its employees, or its benefit plans prior to the closing. MCIC nonetheless prepared for the purchase of RCAG by adopting a new severance plan of its own, the MCI Communications Corporation Severance Pay Plan (the “MCI Plan”), which went into effect on February 1, 1988, several months before the closing. The MCI Plan capped severance benefits at 30 weeks of an employee’s base salary, rather than the 52-week maximum allowed by the RCAG Plan. By its express terms, the MCI Plan covered employees of MCIC itself “and any of its subsidiary or affiliated corporations that have adopted the Plan with the approval of the Company [ie., of MCIC].” Thus, by its own terms, the MCI Plan did not cover any subsidiary until the subsidiary itself adopted the Plan and MCIC approved the adoption. At the time MCIC promulgated the MCI Plan, its president signed a “Consent” for MCII and two other subsidiaries— but not RCAG — to adopt the Plan.
Before the closing of the RCAG sale, personnel representatives from both MCII’s and RCAG’s human resources departments met with RCAG’s non-union employees to explain the benefits packages that would be provided by MCI upon completion of the sale. The parties dispute whether the MCI Plan was described at these meetings. It is undisputed, however, that no written documentation for the MCI Plan was provided.
After FCC approval was received, the sale of RCAG closed on May 16, 1988. Immediately thereafter, MCI sent out two kinds of letters to RCAG non-union employees: welcome letters assigning an employee to a new position in MCII, or termination letters informing an employee that he or she would be discharged effective May 30. The plaintiffs all received the latter type of letter. The discharged employees were given severance
Several weeks later, on June 28, 1988, MCIC’s president executed a Consent (the “June 28 Consent”) authorizing RCAG to adopt the MCI Plan, retroactive to the date of the sale. The June 28 Consent read in relevant part: “[RCAG] is hereby authorized to adopt the [MCI Plan] as of May 16, 1988, and shall participate in the Plan with respect to all of its employees who are eligible to participate in accordance with the terms of the Plan.” However, RCAG itself never took any action to adopt the MCI Plan.
Finally, in November 1988, several of the plaintiffs wrote a letter addressed to “Administrator, RCAG Plan” requesting additional severance benefits in accordance with the terms of the RCAG Plan. In response to this and subsequent inquiries, MCII executives replied that the RCAG Plan had terminated on the effective date of the sale, so that at the time the plaintiffs were discharged, they were covered by the MCI Plan, not the RCAG Plan.
District Court Proceedings. The plaintiffs subsequently commenced this action in the District Court alleging several causes of action under state law and ERISA and naming RCAG and MCII as defendants. By joint motion of the parties, the case was transferred to a magistrate judge for all purposes, pursuant to 28 U.S.C. § 636(c)(1) (1988), and was assigned to Magistrate Judge Dolinger. All but one of plaintiffs’ claims were eventually dismissed; plaintiffs do not challenge any of these dismissals on appeal. The sole surviving count was a claim under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) (1988), for denial of benefits due to plaintiffs under the RCAG Plan.
On cross-motions for summary judgment, the District Court granted partial summary judgment to plaintiffs on their allegation that RCAG had never terminated the RCAG Plan. Magistrate Judge Dolinger recognized that unfunded severance benefit plans are not subject to ERISA’s detailed vesting and accrual rules governing pension plans, and that in principle the RCAG Plan could have been terminated unilaterally by RCAG. On two independent bases, however, the Magistrate Judge concluded that RCAG had never exercised its power to terminate. First, in reliance on Schoonejongen v. Curtiss-Wright Corp., 18 F.3d 1034 (3d Cir.1994), which has since been reversed by the Supreme Court, — U.S. -,
The Magistrate Judge also determined that there was a genuine dispute with respect to plaintiffs’ employment status at the time of their discharges. He therefore ordered a jury trial on the question of whether plaintiffs were still employed by RCAG, rather than MCII, at the time they received their termination letters and, if not, whether on the facts of this case their transfer to MCII-employee status represented a lay-off from RCAG on the date of the sale, thereby triggering benefits under the RCAG Plan.
After the jury had returned its special verdict, defendants moved for judgment as a matter of law. They argued that certain evidence presented for the first time at trial — including the June 28 Consent, which had not been submitted to the court before it ruled on the parties’ summary judgment motions — showed that the RCAG Plan had been
Defendants also argued in their post-trial motions that the RCAG Plan Administrator’s denial of benefits was subject to deferential review under the arbitrary and capricious standard. The Magistrate Judge rejected this argument on the basis of the language of the RCAG Plan. Finally, the Magistrate Judge granted plaintiffs’ motion for attorney’s fees and prejudgment interest.
Discussion
Defendants argue that the District Court erred insofar as it ruled that the RCAG Plan had never been terminated and that deference was not due to the plan administrator on this issue. Defendants also contend that the District Court abused its discretion in awarding attorney’s fees and prejudgment interest.
We affirm on the basis of the comprehensive and carefully reasoned opinions of Magistrate Judge Dolinger,
We affirm on the basis of the Magistrate Judge’s alternative theory: that there was no evidence “that RCAG, through its Board of Directors or by any other means, [ever] acted to terminate” the RCAG Plan.
The judgment of the District Court is affirmed.
Notes
. An alternative version of the amendment clause was substantially identical: “RCAG Globcom [i.e., RCAG] may amend or terminate this Policy at any time, but no such amendment or termination will affect the severance allowances granted up to the effective date of such amendment or termination."
. The Magistrate Judge overruled defendants' motion to strike plaintiffs’ request for a jury trial. On appeal, defendants waive any challenge to the decision to allow a jury trial.
. Because we agree with the Magistrate Judge that, by its own terms, the June 28 Consent neither adopted the MCI Plan for RCAG nor terminated the RCAG Plan, see 891 F.Supp. at