ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (D.C. No. 84-cv-04542)
Before: Sloviter, Rendell and Seitz, Circuit Judges.
The opinion of the court was delivered by: Seitz, Circuit Judge
The sole but important issue in this appeal, which stems from an action alleging a violation of section 402(b)(3) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1102(b)(3) ("ERISA"), has already been framed for us by the Supreme Court in its mandate to our court on remand.*fn1 In particular, we will address the question directly posed by the Supreme Court: "[W]hether Curtiss-Wright's valid amendment procedure -- amendment `by the company' -- was complied with in this case." Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 85 (1995). The parties agree that we should apply principles of Delaware corporate law to resolve that question. See Schoonejongen v. Curtiss-Wright Corp., Nos. 92-5695, 92-5710 (3d Cir. Aug. 30, 1995) (unpublished opinion).
The long and contentious history of this case, which spans over fourteen years of litigation, is set forth in Schoonejongen v. Curtiss-Wright Corp., 18 F.3d 1034 (3d Cir. 1994), when this court first considered the matter. To summarize, the Curtiss-Wright Corporation ("CW") actively maintained a retirement health benefits plan ("the Plan") for all non-bargaining unit employees who worked at its production facilities, including one such plant in Wood Ridge, New Jersey. These retirement health benefits, granted in 1966, were governed by two principal documents: the Plan Constitution and the Summary Plan Description ("SPD"). In early 1983, CW purportedly issued an amended SPD providing that upon the closure of a CW plant, health benefits for that facility's retirees would be terminated.*fn2 Later that year, CW closed its Wood Ridge plant and accordingly notified the plant's retirees of the termination of health benefits. Mr. Richard Sprigle, who was the Executive Vice President in charge of the facility's operations, informed Wood Ridge retirees of this termination under the amended SPD by a letter dated November 4, 1983.
In 1984, the affected retirees instituted a class action in the district court, alleging that CW had wrongfully terminated their retirement health benefits and that they had a vested right to these benefits for life. After six years of litigation and a bench trial, the district court in 1990 dismissed most of the plaintiffs' claims, including one contention that CW had contractually bound itself to provide retirement health benefits for life. The district court found, however, that the revised SPD language concerning the termination of benefits constituted an "amendment" to the Plan and therefore fell within ERISA's section 402(b)(3), which requires that every employee benefit plan must "provide a procedure for amending such plan, and for identifying the persons who have authority to amend the plan." 29 U.S.C. § 1102(b)(3). The district court then held that, as an amendment, the relevant SPD language was not adopted under an amendment procedure as required by ERISA. Therefore, the district court concluded that the terminations of health benefits under the amended Plan were void ab initio and ordered CW to pay a significant amount in retroactive benefits.
On appeal to our court, CW argued that the revised SPD language was in fact adopted under an amendment procedure contained in a standard reservation clause which provided that "[t]he Company reserves the right at any time and from time to time to modify or amend, in whole or in part, any or all of the provisions of the Plan." CW contended that this procedure was valid under section 402(b)(3) because it identified "the Company" with the authority to amend the retirement benefits plan. This court rejected that argument, reasoning that the purpose behind the section 402(b)(3) requirement was to "ensure that all interested parties will know how a plan may be altered and who may make such alternations. Only if they know this information will they be able to determine with certainty at any given time exactly what the plan provides." Schoonejongen v. Curtiss-Wright Corp., 18 F.3d 1034, 1038 (3d Cir. 1994). As a result, our court reasoned that section 402(b)(3) requires enumeration with specificity "what individuals or bodies within the Company could promulgate an effective amendment." Id. at 1039. Because simply identifying "the Company" did not explicitly identify such individuals or bodies, the court affirmed the district court, holding that CW adopted the revised SPD under an amendment procedure that failed to comply with ERISA section 402(b)(3).
The Supreme Court granted CW's petition for certiorari and reversed in a unanimous opinion. The Court observed that the text of section 402(b)(3) contains only two requirements: "a `procedure for amending [the] plan' and `[a procedure] for identifying the persons who have authority to amend the plan.' " Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995) (quoting 29 U.S.C. § 1102(b)(3)) (alteration and emphasis in original). Next, the Court held that merely identifying "the Company" with the authority to amend the plan comports with a literal reading of the section, as nothing in the statute required an identification with any more particularity. The Court noted, however, that for "the Company" language to make sense, there must be some reference to principles of corporate law in order to determine who has authority to make decisions on behalf of a company.*fn3 Id. at 80-81. As to whether CW's reservation clause constituted a procedure for amending the plan, the Court once again reasoned that the literal terms of section 402(b)(3) are ultimately indifferent as to the level of detail in an amendment procedure or in an identification procedure. Because the unilateral authority to terminate a plan is still a "procedure" nonetheless, the reservation clause, in the Court's view, satisfied this prong of section 402(b)(3).
The Court then remanded the case to our court to determine "whether Curtiss-Wright's valid amendment procedure -- amendment `by the Company' -- was complied with in this case." Id. at 85. The Supreme Court instructed us that "[t]he answer will depend on a fact-intensive inquiry, under applicable corporate law principles, into what persons or committees within Curtiss-Wright possessed plan amendment authority, either by express delegation or impliedly, and whether those persons or committees actually approved the new plan provision contained in the revised SPD." Id. If, the Court continued, the revised plan is found not to have been properly authorized when issued, the question would then arise whether any subsequent actions attributable to CW could serve to ratify the amendment ex post. The Court specifically identified as a possible basis for ratification the November 4, 1983 letter under Mr. Sprigle's name informing individual retirees of the termination. Id.
On remand from the Supreme Court, both parties argued before us that it was possible to decide the case on the existing record. The panel, however, decided that a remand to the district court was appropriate because of a factual dispute -- namely, whether anyone at CW possessed the actual or implied authority to amend the plan. See Schoonejongen v. Curtiss-Wright Corp., Nos 92-5695, 92-5710 (3d Cir. Aug. 30, 1995) (unpublished opinion). In remanding, we rejected the argument raised by CW that the Board in 1990 had retroactively ratified the Plan by resolution so that there was no need to consider questions of authority. We held that under Delaware corporate law a "[r]atification cannot relate back so as to defeat intervening rights of strangers to the transactions." Id. at 4 (quoting 2A William M. Fletcher, Fletcher Cyclopedia of the Law of Private Corporations § 782, at 647-48 (perm. rev. ed. 1992)) (alteration in original); see also Essential Enterprises Corp. v. Automatic Steel Prods., Inc., 164 A.2d 437 (Del. Ch. 1960). Because the ex post ratification of the amended SPD would defeat the rights of third parties, this court rejected the 1990 attempted ratification by the board and accordingly remanded the matter to the district court for further proceedings with respect to the actual or implied authority of CW to adopt the 1983 amendment or to ratify it.
B. Facts Discovered on Remand
Renewed discovery by the parties in the district court revealed the following undisputed facts. CW is a Delaware corporation and has adopted by-laws applicable at all times here pertinent which gives the Chairman of the Board of Directors, as Chief Executive Officer ("CEO"), "general and active control of [the corporation's] business and affairs." App. at 441. They expressly include the authority to sign all contracts, obligations, and other instruments on behalf of the corporation. Id. The by-laws further designate the President as the Chief Operating Officer and bestow "general and active control of [the corporation's] operations," including the authority to execute contracts, fix employee compensation other than primary officers, and "all other duties and powers usually appertaining to the office of president of a corporation," except as otherwise stated in the by-laws. Id. at 441-43. Finally, the by-laws provide that the Vice-Presidents "shall perform all such duties and exercise all such powers as may be provided by these by-laws or as may from time to time be determined by the Board of Directors, ... the Chairman, or the President." Id. at 443.
Mr. T. Roland Berner, who died in the spring of 1990, long before remand to the district court, was CW's Chairman of the Board, CEO, and President. Mr. Charles Ehinger and Mr. Richard Sprigle, both now retired, were CW's two Executive Vice Presidents. While the precise responsibilities of Mr. Ehinger and Mr. Sprigle are the subject of some disagreement between the parties to this action, although not between the two Vice Presidents themselves, it is not disputed that Mr. Ehinger generally handled corporate staff issues ...