Robert A. STOKES, individually and as representative of all similarly situated former employees of Westinghouse Savannah River Company, Plaintiff-Appellant, v. WESTINGHOUSE SAVANNAH RIVER COMPANY, Defendant-Appellee, Christopher George Christos; Robert L. Bailey; James M. Pope; Lorin W. Ross; Alan M. Schwartzman; George A. Krist; James O. Sloan; Michael Cohen, Movants-Appellants.
No. 99-1543.
United States Court of Appeals, Fourth Circuit.
Argued: Jan. 26, 2000. Decided: March 14, 2000.
206 F.3d 420
“We review a district court‘s decision to grant or deny a party leave to amend for an abuse of discretion.” Edwards v. City of Goldsboro, 178 F.3d 231, 242 (4th Cir.1999). “Delay alone is an insufficient reason to deny leave to amend.” Id. But when a district court finds that a party‘s delay in moving to amend is accompanied by “prejudice, bad faith or futility,” it does not abuse its discretion in refusing to permit the amendment. Id.
International Paper filed its original complaint in July 1993; the district court granted it leave to amend that complaint in September 1994. The company did not seek to amend its complaint a second time until June 12, 1998—five years after it initiated this action and four years after it had been granted leave to file its first amended complaint. Moreover, International Paper did not request a second opportunity to amend its complaint until after it had unsuccessfully participated in lengthy international arbitration proceedings and numerous hearings before the district court.
The district court denied the motion, finding that the amendment would prejudice Schwabedissen; the court explained, “it is five years after you brought the suit, six years after you knew about [the new causes of action], when it could have been handled—already handled and now you want to start over.” International Paper demurred that the two theories it wished to add were not new but had been alleged in its earlier complaints; it also contended that the further amendment to the complaint simply sought “to clean up that pleading and to amplify the allegations already made.” The district court rejected this argument, explaining that if International Paper had indeed asserted the allegations in its earlier complaints, then the allegations should have been addressed in the arbitration proceedings; thus, the proposed amendment would be futile. The district court‘s reasoning was sound; it certainly did not abuse its discretion in refusing to permit the amendment.
V.
For all of these reasons, the judgment of the district court is
AFFIRMED.
Before NIEMEYER, Circuit Judge, HAMILTON, Senior Circuit Judge, and SMALKIN, United States District Judge for the District of Maryland, sitting by designation.
Affirmed in part, vacated in part, and remanded by published opinion. Judge NIEMEYER wrote the opinion, in which Senior Judge HAMILTON and Judge SMALKIN joined.
OPINION
NIEMEYER, Circuit Judge:
Upon his 1996 layoff from Westinghouse Savannah River Company as part of a reduction in force, Robert A. Stokes was provided an option to receive a lump-sum severance payment or a special retirement option, but not both. After electing the special retirement option, Stokes filed this action, contending that he was illegally denied a severance benefit in violation of the Age Discrimination in Employment Act of 1967 (“ADEA“), as amended by the Older Workers Benefits Protection Act (“OWBPA“), and the Employee Retirement Income Security Act (“ERISA“). He also contends that Westinghouse Savannah River Company selected him for layoff in part because of his age, in violation of the ADEA.
The district court granted summary judgment to Westinghouse Savannah River Company on all of Stokes’ claims. Because we conclude that the option presented to Stokes to elect receipt of either severance pay or the special retirement option was legal, we affirm the district court‘s summary judgment denying Stokes a severance benefit. On the claim that Stokes was selected for layoff in violation of the ADEA, we conclude that the record was inadequately developed to dispose of the issue on a motion for summary judgment. Accordingly, we vacate and remand that claim for further proceedings.
I
For a 22-year period ending in 1989, Robert A. Stokes worked for Westinghouse Electric Corporation (“WEC“). In 1989, he was transferred to work for Westinghouse Savannah River Company (“Westinghouse Savannah“), then a wholly-owned subsidiary of WEC which produced material for the fabrication of nuclear weapons. Westinghouse Savannah managed and operated the Savannah River site in South Carolina under a cost-reimbursement contract with the Department of Energy (“DOE“). At the time of his transfer to Westinghouse Savannah, Stokes qualified for a full pension from WEC payable in an unreduced amount beginning at age 65. With his transfer to Westinghouse Savannah, he also became eligible to earn a Westinghouse Savannah pension.
Following a corporate reorganization of Westinghouse Savannah driven by economic concerns, Stokes was selected for layoff from Westinghouse Savannah in December 1996. At that time, Stokes, who was 56 years old, qualified for a lump-sum severance payment, as well as an actuarially reduced pension, both payable by Westinghouse Savannah. The severance benefit was described in Westinghouse Savannah‘s employee manual in part as follows:
The program provides benefits to eligible employees terminated for lack of work. Employees who have attained at least one year of continuous service are eligible for severance pay. . . . An eligible employee with more than 1 year of service receives 1 week‘s severance pay for each full year of eligible service up to a maximum of 26 weeks.
In connection with his WEC pension, Stokes was given an option, because he had been laid off, to begin receiving his pension benefits immediately, thus enhancing the value of his full pension with WEC. WEC offered this “special retirement option” only to employees who satisfied age and service requirements.1 Under a coordinating agreement between WEC and Westinghouse Savannah, when employees laid off from Westinghouse Savannah qualified for and elected to take the WEC special retirement option, Westinghouse Savannah remitted to WEC the added cost of the special retirement option. Moreover, Westinghouse Savannah adopted a policy under which it reduced employees’ severance payments by the amount it remitted to WEC for the cost of the special retirement option. Thus, if a laid-off employee who qualified for the WEC special retirement option elected to take the option, he could not take the severance benefit from Westinghouse Savannah. Likewise, if the qualified employee elected to take the lump-sum severance payment, he could not take the special retirement option from WEC.
The special retirement option program offered by WEC was scheduled to terminate on December 31, 1996. Thus, while Stokes was notified of his layoff before December 31, 1996, the layoff would not become effective until February 1997, after the special retirement option program had expired. To give Stokes and others in his position the opportunity to participate in the special retirement option, Westinghouse Savannah gave Stokes and the others the option to advance their layoff date. In December 1996, it presented them with a form for that purpose, which reads:
I have been notified that I will be laid off as of February 16, 1997.
I understand that if I am laid off in 1997, I will not be eligible for the special retirement option of the Westinghouse Corporate Pension Plan . . . [and] that if I am laid off prior to January 1, 1997, I will be eligible for this program. Based on the above, I request one of the following options:
A. I request to be laid off as of December 31, 1996. I understand that I will forfeit any pay for the notice period beyond December 31, 1996. . . . I also understand I will not be eligible for severance pay from [Westinghouse Savannah].
[Space for employee signature]
B. I do not wish to be laid off as of December 31, 1996 and if I am to be laid off, I elect to have that date be February __, 1997. I understand I will be paid regular salary up to that date and be reassigned to the Resource Center. I also understand that I will not be eligible for the special retirement option of the Westinghouse Corporate Pension Plan . . . however, I will be eligible for severance pay from [Westinghouse Savannah].
[Space for employee signature]
Stokes elected option A, which provided him with the immediate benefit of his full WEC pension, without any reduction. In electing this option, however, Stokes forfeited any claim to severance pay. Had Stokes made no election or had he elected option B, he would have worked until February 16, 1997, at which time he would have received a lump-sum severance payment. He also would have qualified for a full WEC pension, with payments beginning at age 65, and a 90% Westinghouse Savannah pension, reduced because he was 56 years old.
Of the 20 potential class members, 8 filed consents to joinder and motions to intervene in the action. Thereafter, both Stokes and Westinghouse Savannah filed motions for summary judgment. By order dated March 25, 1999, the district court denied Stokes’ motion for class certification and the others’ motions to intervene and granted summary judgment in favor of Westinghouse Savannah. The order includes a statement that “[a] detailed Order setting out the basis for the court‘s rulings will be forthcoming.” Before issuing the “detailed order,” however, the district judge died.
This appeal followed.
II
Stokes’ appeal raises several issues, all of which we address, but it reduces essentially to two basic points: (1) the manner in which severance pay was set off against pension benefits denied him severance pay in violation of the ADEA, as amended by the OWBPA, in violation of ERISA, and in breach of the contract between Westinghouse Savannah and the DOE; and (2) his selection for layoff as part of the reduction in force was based on age, in violation of the ADEA. We begin with Stokes’ claim that he was illegally denied a severance benefit, in violation of the ADEA, ERISA, and the contract between Westinghouse Savannah and the DOE.
A
All employees at Westinghouse Savannah who had more than one year of service were entitled to a severance benefit if they were laid off due to a lack of work. The amount of each employee‘s benefit was geared directly to the employee‘s time in service. Thus, when Stokes was laid off, effective February 16, 1997, he was entitled to the maximum severance benefit based on approximately 29 years of service. When Stokes was advised of his layoff, he also qualified for the special retirement option offered by WEC. The special retirement option, if elected, would allow Stokes to begin receiving WEC pension payments immediately, enhancing the value of this pension. But if he elected this option, he would not receive the severance pay to which he was otherwise entitled. Because the special retirement option program was to expire on December 31, 1996—before the effective date of the planned reduction in force at Westinghouse Savannah—Stokes would not, in the ordinary course, qualify for the special retirement option by its terms. In coordination with Westinghouse Savannah, however, WEC permitted him to advance his layoff date to December 31, 1996, so that he could participate in the special retirement option.
Viewed outside the context of the ADEA, it would appear that Stokes was not treated worse than younger persons. He could have chosen to receive the severance pay, after all, thereby receiving severance benefits under identical terms offered to younger employees laid off in the reduction in force. To the contrary, it would appear that Stokes was treated better than his younger colleagues because he could choose between severance pay and the special retirement option upon his layoff, whereas the younger workers were left with only the less valuable severance benefit. See May v. Shuttle, Inc., 129 F.3d 165, 175 (D.C.Cir.1997) (per curiam) (concluding that airline employees eligible for retirement who were furloughed and given a choice of a retirement package or a severance payment presented “no evidence that they were treated less favorably than younger employees“), cert. denied, 524 U.S. 927 (1998). An analysis under the ADEA leads to the same conclusion—that Westinghouse Savannah did not discriminate against Stokes by offering him the “either-or” option.
The ADEA makes it unlawful for an employer
to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual‘s age.
While “conditions” of employment regulated by the ADEA thus include the provision of fringe benefits such as life insurance, health insurance, and pensions—the costs of which are directly linked to age—the ADEA, which in the first instance prohibits all age-based employment decisions, provides exclusions and conditions that permit employers to maintain certain age-based plans. The ADEA as amended by the OWBPA provides that it is lawful for an employer
to observe the terms of a bona fide employee benefit plan—
(i) where, for each benefit or benefit package, the actual amount of payment made or cost incurred on behalf of an older worker is no less than that made or incurred on behalf of a younger worker, as permissible under section 1625.10, title 29, Code of Federal Regulations (as in effect on June 22, 1989); or
(ii) that is a voluntary early retirement incentive plan consistent with the relevant purpose or purposes of this chapter.
The ADEA as amended by the OWBPA proceeds to address specifically the coordination of severance payments and certain pension benefits when both are triggered by an event unrelated to age. See
It shall not be a violation of [the ADEA] solely because following a contingent event unrelated to age—
(i) the value of any retiree health benefits received by an individual eligible for an immediate pension;
(ii) the value of any additional pension benefits that are made available solely as a result of the contingent event unrelated to age and following which the individual is eligible for not less than an immediate and unreduced pension; or
(iii) the values described in both clauses (i) and (ii);
are deducted from severance pay made available as a result of the contingent event unrelated to age.
The balance that Congress attempted to strike in allowing certain pension benefits to be set off against severance payments is illuminated by the discussions in the legislative history of the provision. See S.Rep. No. 101-263, at 22-26, reprinted in 1990 U.S.C.C.A.N. 1509, 1527-32. In the debate regarding whether it is appropriate to allow benefit coordination following contingent events such as shutdowns and layoffs, congressional committees concluded that pension benefits and severance pay serve different purposes and are therefore not fungible. See id. at 22, reprinted in 1990 U.S.C.C.A.N. at 1527. Whereas pension benefits provide “deferred income in the form of a long-term income supplement,” severance pay provides “short-term wage replacement to address the acute need of the dislocated employee who is searching for a new job.” Id. at 22, reprinted in 1990 U.S.C.C.A.N. at 1528. Congress crafted
In this case, the benefits choice presented to Stokes fully comported with
Stokes points out that his pension from Westinghouse Savannah, as distinct from his WEC pension, was actuarially reduced, because at the time of his layoff he was 56 years old and entitled to only 90% of his pension under terms of the Westinghouse Savannah plan. This particular benefit, however, was unaffected by either the layoff or the coordination of benefits. Nothing in the ADEA precludes an employer from providing an actuarially reduced pen-
Accordingly, we conclude that Westinghouse Savannah did not discriminate against Stokes because of his age when it provided him, at the time of his layoff, a choice between the special retirement option and a severance benefit. In reaching this conclusion, we have assumed both that the reduction in force was an economically driven decision and that the selection of Stokes for layoff was unrelated to age. While the parties do not dispute the former assumption, they do dispute the latter—a question we address below. If Stokes’ selection for layoff turns out to have been prompted by his age, he will be entitled to damages, and his benefits will have to be recomputed. Any such finding, however, would not render the benefit plans and their coordination illegal.
B
Stokes contends that the coordinating arrangement between WEC and Westinghouse Savannah—through which Westinghouse Savannah transferred to WEC the payments that it received from the DOE as reimbursement for severance benefits—violated
Stokes’ contention fails on numerous grounds. First, Stokes demonstrated no specially created trust funds held for the benefit of employees’ severance benefits, the transfer of which could have violated
Second, because we have concluded that the special retirement option was properly set off against these severance benefits—pursuant to Stokes’ election—Stokes was not entitled to any severance benefits.
Third, there is no indication that the transfer of money from Westinghouse Savannah to WEC left Westinghouse Savannah with assets of lesser value. If Stokes had elected to receive the severance benefit, Westinghouse Savannah would have paid the DOE reimbursement directly to him. Because Stokes instead elected the alternative benefit provided by WEC, Westinghouse Savannah paid the DOE reimbursement to WEC. In either case, Westinghouse Savannah‘s funds for other beneficiaries remained the same.
C
Finally, Stokes contends that the cost-reimbursement contract between Westinghouse Savannah and the DOE obligated Westinghouse Savannah to make severance payments to all of its laid-off employees, unconditionally. He seeks to enforce this obligation as a third-party beneficiary of the contract.
The contractual relationship between Westinghouse Savannah and the DOE provided for the management and operation of the Savannah River facility. As part of the contract, the DOE agreed to reimburse Westinghouse Savannah for specified personnel costs, including severance payments made to laid-off employees. The section of the contract that laid out “Allowable Personnel Administration Costs” included a severance-pay provision which provided that “[a]ll nontemporary employees of [Westinghouse Savannah] . . . whose services are no longer required under this contract due to reduction in workforce, shall receive severance pay based upon total service credit earned with the corporation, up to a maximum of 26 weeks.” This section of the contract also indicated that this reimbursement was among the personnel costs that were agreed to be “reasonable and reimbursable when incurred in the performance of the contract work.” In short, the provision in the contract between Westinghouse Savan-
South Carolina contract law, which applies to this claim, see Miree v. DeKalb County, 433 U.S. 25, 30 (1977), carries a presumption that an individual who is not a party to a contract may not enforce it. See Touchberry v. City of Florence, 295 S.C. 47, 367 S.E.2d 149, 150 (S.C.1988). This presumption may be overcome, however, by showing that the individual “was intended to be the direct beneficiary of the contract.” Id. The contract must be shown to create a “direct, not incidental or consequential, benefit to the third party.” Cothran v. Rock Hill, 211 S.C. 17, 43 S.E.2d 615, 617 (S.C.1947).
Reading in context the severance-pay provision, it becomes readily apparent that Westinghouse Savannah‘s employees are merely incidental beneficiaries of this provision. The contract evinces neither an expressed nor an implied intent on the part of Westinghouse Savannah or the DOE to directly benefit employees at the Savannah River site. Because Stokes is not a third-party beneficiary of the severance-pay provision, he cannot seek to enforce any obligations created by it.
Similarly, policy proclamations issued by the DOE about the contract, declaring that employees at the Savannah River site are entitled to severance payments, do not create rights in employees enforceable against Westinghouse Savannah because Westinghouse Savannah made no promise with respect to such policy statements.
III
Stokes also contends that Westinghouse Savannah selected him for layoff because of his age, in violation of the ADEA,
Stokes sought to prove his ADEA claim through the three-step proof scheme established in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). That scheme requires that he establish, by a preponderance of the evidence, a prima facie case of discrimination. See id. at 802. Once he establishes a prima facie case, the burden shifts to Westinghouse Savannah to “rebut the presumption of discrimination” by producing evidence that the employment action in question was taken “for a legitimate, nondiscriminatory reason.” Texas Dep‘t of Community Affairs v. Burdine, 450 U.S. 248, 254 (1981). Finally, if Westinghouse Savannah meets its burden of production, the presumption raised by the prima facie case is rebutted and “drops from the case,” id. at 255 n. 10, and Stokes then bears the ultimate burden of proving that he has been the victim of intentional discrimination, see St. Mary‘s Honor Ctr. v. Hicks, 509 U.S. 502, 506-11 (1993).
In Mitchell v. Data Gen. Corp., 12 F.3d 1310 (4th Cir.1993), we set forth the elements of a prima facie case of age discrimination applicable in the context of a reduction in force where performance was the announced criterion for selection. We stated that an employee must show that, at the time of his layoff, “(1) the employee was protected by the ADEA; (2) he was selected for discharge from a larger group of candidates; (3) he was performing at a level substantially equivalent to the lowest level of those of the group retained; and (4) the process of selection produced a residual work force of persons in the group
We now turn to the circumstances before us. It is uncontested that Stokes, at age 56, was a member of the statutorily protected age group, see
Stokes presented evidence that one project manager who was retained, Samuel Speight, was younger than Stokes and had received lower evaluation scores than had Stokes during the period of 1994-96. Westinghouse Savannah, however, countered with evidence that Speight received a lower evaluation score than Stokes only in 1994, two years before Stokes’ layoff, and that at that time Speight was at a different salary grade level than Stokes. Stokes also claims that Westinghouse Savannah retained a younger project manager, Robert Moen, who had a lower evaluation score than Stokes. Westinghouse Savannah notes, however, that Moen was not retained in Stokes’ former division.
From our review of the record, it appears that at this stage the evidence in the record is ambiguous or is inadequately developed to resolve this ADEA claim. Unfortunately, Senior Judge Charles E. Simons, Jr., who decided the motions for summary judgment, died before issuing the “detailed order setting out the basis” for his rulings, as he had intended. We therefore conclude that it is necessary to remand this claim to the district court for further development of the record on the issue of whether Stokes’ selection for layoff was because of his age in violation of the ADEA,
IV
Finally, Stokes argues that the district court abused its discretion (1) in denying class certification, both under
Stokes sought to represent a class of 20 fellow employees who, he alleged, were similarly situated. Not only can members of so small a class just as well present their own claims, there is ample evidence from which to conclude that their circumstances differed in material respects. For example, a fellow employee, Robert L. Bailey, was 59 years of age, qualifying him for a full pension from Westinghouse Savannah. Stokes on the other hand, at age 56, qualified only for a 90% pension. Stokes’ reduced pension formed an important part of his legal argument.
For similar reasons, the district court was well within its discretion in denying the motions for intervention. The applicants for intervention failed to make a sufficient showing that the disposition of this action would “impair or impede” their ability to protect their interests, a showing that would be necessary to justify their intervention as of right under
In short, we affirm in part and vacate in part and remand for further proceedings consistent with this opinion.
AFFIRMED IN PART, VACATED IN PART, AND REMANDED