Luann James v. General Motors Corporation

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-4078
LUANN JAMES,
Plaintiff-Appellant,
v.
GENERAL MOTORS CORPORATION,
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 97-C-1676--John D. Tinder, Judge.
Argued September 7, 2000--Decided October 16, 2000
Before BAUER, POSNER, and EVANS, Circuit Judges.
EVANS, Circuit Judge. LuAnn James wants us to
determine that she was involuntarily terminated
without cause from her employment. It is not our
job to do that. This is a case arising under
ERISA, the Employee Retirement Income Security
Act of 1974 (29 U.S.C. sec.sec. 1132 et seq.),
and the employee welfare benefit plan we are
reviewing gave the plan administrator discretion
to interpret its terms. So our role is limited.
We may only determine whether the administrator
interpreted the plan in an arbitrary or
capricious manner when benefits were denied upon
a finding that Ms. James "quit" her job.
James was an office worker, apparently an
excellent one, for General Motors, first in
Detroit and then in Indianapolis, for 19 years,
from 1974 to 1993. In December 1993 GM sold the
Allison Gas Turbine facility where James was
working to the Allison Engine Company, which in
turn was acquired by Rolls Royce. By accepting a
job with AEC/Rolls, James was entitled for 3
years to certain continuing GM benefits. Plan
documents said that she was not entitled to GM
severance benefits if she voluntarily quit her
position at AEC, but she would be entitled to GM
severance benefits if she was terminated without
cause by AEC during the 3-year period.
During the 3-year period, in December 1995, AEC

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was sold to Electronic Data Systems, which at the
time was a wholly owned, independently managed
subsidiary of GM. James was offered employment
with EDS, but she refused. To no avail, she asked
to stay with AEC for lower pay. She asked AEC to
let her interview for a job with GM. (To ask for
permission was required under the terms of the
1993 sale from GM to AEC). Again, AEC refused.
James then sought severance benefits from GM,
arguing that she had been involuntarily
terminated from AEC without cause during the 3-
year window. The severance benefits consist of a
GM employment search or, if the search is
unsuccessful, a 6-month separation allowance. GM
denied the benefits, saying she was not entitled
to anything because she quit. James filed the
present suit. The district court granted GM’s
motion for summary judgment and James appeals.
As we have mentioned, GM’s benefit plan was an
"employee welfare plan" governed by ERISA. It
gave GM the authority to determine eligibility
for benefits and to construe provisions of the
plan. Consequently, GM’s interpretation may be
reversed only if it was arbitrary or capricious.
Firestone Tire & Rubber Co. v. Bruch, 489 U.S.
101, 115 (1989); Allison v. Dugan, 951 F.2d 828,
832 (7th Cir. 1992). We do not interfere with the
plan administrator’s decision unless he "not only
made the wrong call, but . . . a ’downright
unreasonable’ one." Chojnacki v. Georgia Pacific
Corp., 108 F.3d 810, 816 (7th Cir. 1997), quoting
Fuller v. CBT Corp., 905 F.2d 1055, 1058 (7th
Cir. 1990). A denial of benefits will not be set
aside if it was based upon a reasonable
interpretation of the plan documents. It does not
matter whether the result reached by the
administrator is one we would have arrived at in
the first instance. Ladd v. ITT Corp., 148 F.3d
753 (7th Cir. 1998).
In other words, it is hard to overturn a
decision of a plan administrator. And like many
before her, James does not succeed. We find that
the decision denying her benefits is neither
arbitrary nor capricious.
When it sold its turbine facility to AEC, GM
gave its employees a booklet titled "Your
Benefits and Status as a General Motors Salaried
Employee Following the Sale of Allison Gas
Turbine Division." Page 4 of the booklet contains
a template chart that indicates that salaried
employees with 10 or more years of GM service at
the time of the sale who "quit/terminated for
cause within three years" would receive no
separation allowance. However, employees
"terminated by company (other than for cause)
within three years" would receive placement in a

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GM job or a separation allowance.
James argues that by declining to go to work
for EDS she did not quit and was not terminated
for cause, and thus deserves the severance
benefits. GM argues that by refusing the EDS job,
James voluntarily terminated her employment--
i.e., she quit--and thus is not entitled to
severance benefits. This case, then, rests on how
"quit" is defined. James contends that her
situation does not fit the plain and ordinary
meaning of "quit." And perhaps in some sense it
does not. But neither does it seem that, in the
ordinary meaning of the words, she was
terminated. The terms as they are meant to be
applied in the plan documents may not be self-
defining in all situations, the one here for
instance. That is precisely why GM’s
interpretation that James quit is not arbitrary
and capricious. "When . . . the plan document
does not furnish the answer to the question, the
answer given by the plan administrator, when the
plan vests him with discretion to interpret it,
will ordinarily bind the court. That is implicit
in the idea of deferential review of the plan
administrator’s interpretation." Ross v. Indiana
State Teachers’s Ass’n Ins. Trust, 159 F.3d 1001,
1010 (7th Cir. 1998), quoting Gallo v. Amoco
Corp., 102 F.3d 918, 922 (7th Cir. 1996).
Furthermore, GM’s interpretation is bolstered by
its general employee handbook, called "Working
with General Motors." That booklet says severance
benefits were not applicable "for severance
arising out of the sale of a GM unit where the
employee continues, or is offered the opportunity
to continue, employment with the buyer." The
district court noted that the booklet defines
quit as: "A separation is classified as a quit
if: you resign from the Corporation and do not
retire; or you do not report to work at the end
of an approved leave of absence and in accordance
with the leave; or you are on layoff status and
do not accept a suitable offer of employment or
training as specified by GM policy." This
definition reinforces the conclusion that one
quits if she does not accept a suitable offer of
employment.
Nevertheless, James points out that people
sometimes receive severance benefits from their
old employer even if they have been offered a new
job with a different employer. She points to
Anstett v. Eagle-Picher Industries, Inc., 203
F.3d 501, 505-06 (7th Cir. 2000), in which Eagle-
Picher’s employees were immediately reemployed by
the buyer of its plastics division. Eagle-Picher
denied severance benefits, saying the spirit of
its benefits package was to provide severance
benefits for workers who lost their jobs. But the

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company’s benefits package said "[s]alaried
employees terminated other than for cause or
voluntary separation, due to the exigencies of
the business situation, will be entitled" to
severance benefits. At 502. Because the plan did
not grant discretion to the administrator, we
looked at it de novo and held Eagle-Picher to the
letter of its benefits package: "[T]he plan draws
no distinction between employees forced to go out
and find other employment and employees who are
re-hired by a purchaser, and we decline to write
one into the policy." At 505. If Eagle-Picher
employees received the benefits, why shouldn’t
she, says James. GM sees two reasons, with which
we agree. First, Eagle-Picher’s plan gave no
discretionary authority to the administrator and
thus our review of the situation was de novo, not
deferential. Second, the wording of Eagle-
Picher’s plan was absolute; it granted severance
benefits to anyone "terminated other than for
cause." By contrast, GM’s specific plan for the
turbine workers was not so clear, and its general
employee manual unambiguously denied severance
benefits to workers who retained their jobs with
successor companies after GM units were sold.
James’ final argument that GM violated its
fiduciary duty by denying severance benefits is
without merit. A fiduciary duty in this context
arises only when there is a failure to provide
material information regarding the plan and the
fiduciary’s silence is misleading. Chojnacki.
Accordingly, the decision of the district court
is
AFFIRMED.

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