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Anthuis v. Colt Industries Operating Corp.

April 28, 1986

JOHN W. ANTHUIS, JR., APPELLEE
v.
COLT INDUSTRIES OPERATING CORPORATION, ADMINISTRATOR OF THE COLT INDUSTRIES OPERATING CORPORATION SEVERANCE PLAN AND THE COLT INDUSTRIES OPERATING CORPORATION SEVERANCE PLAN, APPELLANTS; DONALD DALE GROSCOST, APPELLEE V. COLT INDUSTRIES, INC., COLT INDUSTRIES OPERATING CORPORATION SEVERANCE PLAN AND COLT INDUSTRIES OPERATING CORPORATION, AS ADMINISTRATOR OF THE COLT INDUSTRIES OPERATING CORPORATION SEVERANCE PLAN, APPELLANTS



On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Nos. 84-1156/57)

Author: Garth

Before GARTH and STAPLETON, Circuit Judges and BISSELL, District Judge*fn*

GARTH, J., Circuit Judge:

In these consolidated cases, Colt Industries, Inc. (Colt), the Colt Industries Operating Corporation Severance Plan (Severance Plan), and Colt Industries Operating Corporation as Administrator of that Plan (Plan Administrator) appeal from a judgment awarding severance benefits and bonuses to two former executives of Colt Industries Operating Corporation (CIOC), John W. Anthuis, Jr. and Donald Dale Groscost, CIOC, formerly Crucible, Inc., is a subsidiary of Colt, and is the sponsor and Administrator of the Severance Plan.

A threshold problem on this appeal is that the proceedings below were confused to the point that we cannot adequately review the judgment. Our difficulty is compounded by the fact that the district court disposed of this case by an order unaccompanied by any explanation of its reasoning. Without reaching any conclusions on the merits of the disputes between the parties, we will therefore remand this action to the district court with instructions to ensure that an appropriate complaint is filed and served against the proper defendants, that these defendants are given an opportunity to respond to the claims against them, that a trial be held if necessary, and that the reasoning underlying any eventual judgment is explained.

I.

The Severance Plan provided "Key Executive Severance Benefits" for certain non-union salaried divisional management employees.*fn1 This Severance Benefit provided for a maximum severance payment of 4-1/2 months of the employee's base salary upon termination, on condition that the employee not accept another job upon termination. Sometime after March 10, 1982, the Key Executive Severance Benefit was amended to provide that eligible employees with 25 or more years of service, such as Groscost, would receive an increased maximum benefit of six months' salary instead of 4-1/2 months' salary.

On March 10, 1982, CIOC announced the impending cessation of its operations at the Midland, Pennsylvania plant where Anthuis and Groscost were employed. At this time, it made available to certain employees, including Anthuis and Groscost, a Continuance Bonus designed to provide an incentive to those employees to remain in the employ of CIOC, both because Colt hoped to sell the plant as a going concern and because in the absence of a sale it would need the services of its essential personnel to assure an orderly winding down. Eligible employees were required to enter into a written continuance Agreement, pursuant to which they would agree to remain employees for a specified period of time. The Continuance Bonus, provided for by that Agreement, was a lump-sum amount equal to one month's base salary for each month of such extended employment until the date specified in the individual's employee's Agreement.

Groscost and Anthuis were both Key Executives who entered into Continuance Agreements. Groscost's Agreement provided, in relevant part, as follows:

It is agreed that should you [Groscost] voluntarily continue full employment at Crucible Stainless and Alloy Division for the Agreement Period, you shall receive your current compensation and benefits and upon July 30, 1982, should separation be necessary, you shall receive an accrued continuance bonus equal to a month's salary for each month of continued employment up to July 30, 1982 (five (5) months accrued).

App. 73. Groscost's Agreement, signed on March 17, 1982, provided for a bonus of five months' salary for the period from March 1, 1982 to July 30, 1982. Anthuis entered into a similarly worded Agreement providing for a bonus of 10 months' salary for the period from March 1, 1982 to December 31, 1982. App. 79.

Both Groscost's and Anthuis' employment with CIOC terminated on March 31, 1983. At that time, CIOC required them to choose between receiving the amount due as a Key Executive Severance Benefit and the amount due as a continuance Bonus. CIOC claimed that these were two alternative options under the Severance Plan. Both Anthuis and Groscost opted for and received the Continuance Bonus, which provided a larger sum than the Key Executive Severance Benefit.

Anthuis and Groscost subsequently initiated contract actions against Colt in Pennsylvania state court claiming that Colt owed each of them their Key Executive Severance Benefit, because the Continuance Bonus was not in substitution of, but was rather in addition to, the Key Executive Severance Benefit. Anthuis further demanded that Colt pay him additional Continuance Bonus monies equal to three months' salary for the three months that he continued to work after December 31, 1982, the date on which has employment was to terminate.

The parties agreed that Anthuis' and Groscost's claims were governed by ERISA, and the cases were therefore removed to federal court. Colt then moved for dismissal of the actions, arguing that it was not a proper party defendant inasmuch as the Severance Plan and the Plan Administrator were the ...


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