Opinion
Case 2:01-CV-879 TS.
July 14, 2003.
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
This matter is before the court on Defendant's Motion for Summary Judgment on the single remaining claim, for breach of contract.
UNDISPUTED FACTS
Plaintiff was employed by Delta Airlines (Delta) from May 1987 until her resignation in July 2000. From May 1987 until March 1998, Plaintiff was assigned to work at the Salt Lake City Airport branch of the Delta Employees Credit Union (DECU).
Plaintiff initially worked as a teller at DECU's Salt Lake City branch and was later promoted to Branch Manager in July 1988. In March 1998, Plaintiff transferred to Delta's Reservation Sales Department where she worked as a reservations Sales Agent until her resignation in July 2000.
In 1994, Delta was experiencing severe financial difficulties, which resulted in a reduction-in-force. In 1995, to avoid cutting more jobs, Delta instituted a system-wide pay cut of 5%. In 1996, this pay cut was reversed and, in that same year, Delta established incentive based programs to motivate certain of its employees to contribute to the success of Delta.
Specifically, in April 1996, Delta announced that pending shareholder approval, it intended to offer stock options, known as SkyShares, to eligible Delta employees. The SkyShares Plan had three option grant dates: October 30, 1996, October 30, 1997 and October 30, 1998.
The SkyShares Plan at issue is set forth in several documents. The first is the October 30, 1996 Summary Plan Information for the Delta Air Lines, Inc. DeltaShare Stock Option Plan (Summary Plan Information). Pl.'s Ex. A and Def.'s Ex. E. The Summary Plan Information provides information in a question-and-answer style. The second is the October 30, 1997, Summary Plan Information Delta Air Lines DeltaShare Stock Option Plan. Pl.'s Ex. B (1997 Summary Plan Information). The October 30,1997 Summary Plan Information does not differ in material respects from the October 30, 1996 Summary Plan Information. Therefore, the court will use quotes from the October 30,1996 Summary Plan Information for purposes of this order. The third is the DeltaShare Stock: Option Plan (the Plan). Def.'s Reply Mem. Ex. A. On its first page, under the title "DESCRIPTION OF THE PLAN," the Summary Plan Information provides: "The following summary of the DeltaShare Stock Option Plan is qualified in its entirety by reference to the full text of the Plan, which is attached to this document as Appendix A." Def.'s Reply Mem. Ex. A.
The SkyShares Plan is administered by the Personnel, Compensation Nominating Committee (Committee) of Delta's Board of Directors. As explained in the Summary Plan Information, the Committee is granted:
full authority to construe and interpret the Plan to determine the persons to whom to grant Stock Options; and to take all such steps and make all such determinations in connection with the Plan and the Stock Options as it may deem necessary or advisable to carry out the provisions and intent of the Plan.
Def.'s Ex. D at 7 (underlined emphasis added). The Committee delegated its authority to determine eligibility to the officers of Delta.
The DECU is a non-profit financial institution which operates separate and independent from Delta. DECU's performance does not impact the profitability and revenue of Delta, nor does it affect Delta's stock price. Instead, DECU operates as a benefit and for the convenience of Delta employees and other DECU members.
In May 1996, Delta determined the employees that were eligible to participate in the SkyShares Plan. At the same time, nearly five months before the stock option plan went into effect, all Delta employees assigned to the DECU (including Plaintiff) were advised that Delta had determined that they were not eligible to participate in the SkyShares program.
Again, on August 1, 1996, Delta sent another memorandum stating that DECU employees were not eligible to participate in Delta's SkyShares program. The memorandum included the following statement from Bob Adams, Delta Air Lines Vice President of Personnel:
The reason why Credit Union personnel are not participants in the Delta Stock Option Program is that we view the stock option program as a long-term compensation program for those personnel whose direct performance has an impact on the operation of the airline and, hence, its profitability and stock price. The program is intended to increase the ownership stake that these personnel have in the airline and more directly link the performance and compensation of these personnel with the performance of the Company.
Def.'s Ex. F.
Plaintiff admits that she received the May 1996 and August 1996 memoranda from the DECU President, Joe Williams, which clearly stated that DECU personnel were not eligible to participate in the SkyShares plan.
Because SkyShares were not available to employees assigned to the DECU, in 1997, DECU established the Supplemental Performance Awards Plan (Awards Plan). Only DECU employees or full-time Delta employees assigned to the DECU were eligible to participate. See Def.'s Ex. U. The purpose of the Awards Plan was to ensure that productive DECU employees were recognized and rewarded for their contributions.
In addition to the Undisputed Facts, supra, the parties rely upon the following language from the SkyShares Plan:
1. What is the purpose of the Delta SkyShares Program?
The purpose of the SkyShares plan was to provide "eligible personnel with a greater incentive to make material contributions to the Company's success by increasing their proprietary interest in the Company."2. What does the Plan provide?
The Plan provides for the grant to eligible Delta People of . . . stock options.
* * *
ELIGIBILITY REQUIREMENTS
21. Who is eligible to participate in the Plan?
The Committee determines the eligibility requirements for participating in the Plan, and may establish different eligibility requirements with respect to each Grant Date.
22. What were the eligibility requirements for the Grant Date that occurred on October 30, 1996?
On October 30, 1996, Delta granted Stock Options under the Plan to generally all Delta people who, on that date, were . . . (1) domestic nonpilot U.S. dollar paid Delta personnel, . . . (2) were in permanent positions with Delta; (3) had completed at least one year of employment with Delta; and (4) were on active pay status . . .
Delta did not grant Stock Options under the Plan to Delta people in the following categories on October 30, 1996; associates, . . . personnel employed by a subsidiary, partnership, limited partnership, joint venture or similar entity involving Delta; . . .
23. How many Delta people received Stock Options under the Plan on October 30, 1996?
On October 30, 1996, Delta granted Stock Options to approximately 46,000 Delta people under the Plan. Delta sent a letter to participants in the Plan advising them of their Stock Option awards.
36. May the Plan be amended or terminated?
Delta's Board of Directors or the Committee may amend, alter or discontinue the Plan at any time. No amendment, alternation or discontinuation may be made that would impair the rights of a participant under a previously granted Stock Option without the participant's consent.
Def.'s Ex. D (Summary Plan Information) at 1, 8-9, 13 (italics in original and underlined emphasis added).
ANALYSIS
The standard for summary judgment is well-known,
"When applying this standard, we view the evidence and draw reasonable inferences therefrom in the light most favorable to the nonmoving party."
English v. Colo. Dep't of Corr., 248 F.3d 1002, 1007 (10th Cir. 2001) (quotation omitted). Summary judgment is appropriate only if the evidence shows "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c) (emphasis added). To successfully oppose summary judgment, the nonmoving party must show that there is a "genuine" issue of fact, which requires "more than simply show[ing] that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, (1986). "As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).Bartell v. Aurora Public Schools, 263 F.3d 1143, 1146 (10th Cir. 2001).
This case involves interpretation of a contract. The Plan is not governed by ERISA. Summary Plan Information at 12. Therefore, it is construed under general contract law. Georgia law applies to the Plan. Pl.'s Ex. A at A-7.
The court finds the contract is not ambiguous. Where the contract at issue is not ambiguous, the court may interpret it as a matter of law on summary judgment. Nel v. DWP/Bates Technology, LLC, 579 S.E.2d 842, 844 (Ga.App. 2003). See also WebBank v. American General Annuity Service Corp., 54 P.3d 1139, 1144 (Utah 2002) (same under Utah law).
Plaintiff attempts to raise an issue of fact by pointing out that in 1996 and 1997, DECU employees were not expressly excluded from the Plan. In support of this position, she cites the Summary Plan Information. Pl.'s Ex. A, at 9. Plaintiff contends as follows: There is a list of categories of employees who were granted stock option and those who were not granted stock options. The DECU employees are not listed on the excluded employees list. Plaintiff further contends that she falls within the description of the included employees because she was permanent, full-time, domestic, non-pilot employee who had worked longer than one year. It is Plaintiff's position that because DECU employees were not specifically listed as excluded, they must have been included. She also contends that the language of the Summary Plan Information's description of eligible employees is in the pass tense-therefore the Plan included her.
Plaintiff's position ignores several facts. First, during the five months before the date of the Plan Summary Information, Plaintiff and the other DECU employees were twice informed that they were not participants. Thus, by the time they received the Summary Plan Information, the discretionary decision had already been made that DECU employees were not included and the DECU employees had been informed of that decision by the written memorandums. Second, that Plan Summary Information's description of included employees is not absolute for those persons who fall within the listed categories. Instead, it is qualified as follows: "On October 30, 1996, Delta granted Stock Options under the Plan to generally all Delta people who, on that date, were. . . ." Def.'s Ex. D (Summary Plan Information) at 8-9 (underlined emphasis added).
Plaintiff's position that the Summary Plan Information states, in the past tense, that the eligibility had been determined supports the plain reading of the documents. Under that reading, the absolute discretion to determine eligibility had been exercised and the included participants had been so notified by letter. As noted, it is undisputed that Plaintiff had been notified that the Delta employees assigned to the DECU were not eligible.
According to Delta, it granted eligibility to those employees who were directly linked to the core business and operation of the airline and whose performance would likely have the greatest impact on the profitability and stock price of Delta. Whipple Aff. at ¶ 8. Whatever reason that the Plan administrators determined for inclusion or exclusion of various employee, the Plan and the Summary Plan Information gave the Committee absolute discretion to determine eligibility. The Committee delegated that discretionary function and a determination was made and communicated to the affected employees prior to their receipt of the Summary Plan Information and the Plan.
Plaintiff cites Vizcaino v. Microsoft Corp., 120 F.3d 1006 (9th Cir. 1997), in support of her position. In Vizcaino, Microsoft had two stock option purchase plans that included all employees. The plaintiffs in Vizcaino were persons who thought they were independent contractors for Microsoft. The IRS later determined that they were employees, not independent contractors. The former independent contractors then applied to participate in the stock option purchase plans open to all employees. The Ninth Circuit held that the Microsoft plans were offered to all employees, the former independent contractors were subsequently determined to be employees and, therefore, they had a right to participate in the plans. 120 F.3d at 1014-15.
In a similar case, the Tenth Circuit examined a claimed right to participate in a Plan brought by persons working under an agency contract. Capital Cities/ABC, Inc. v. Ratcliff, 141 F.3d 1405 (10th Cir. 1998). The persons were formally independent contractors. They subsequently signed agency agreements changing their status. Among other things, the new agency contracts waived their rights to receive benefits, including the right to participate in ERISA-qualified benefit plans. The IRS later determined that persons working under the agency agreements were common law employees and they sought a declaration that they were entitled to participate in the benefit plans. The Tenth Circuit held that, despite the IRS determination that they were employees, the plaintiffs therein had nonetheless waived their right to participate in the plans by signing the agency agreement providing that they would receive no benefits. 141 F.3d at 1410-11.
The court finds that the Vizcaino and Capital Cities cases are both distinguishable from this case because the present case does not involve a claim of waiver nor does it involve a plan that was open to all employees. Instead, the present case involves a plan that was offered to only certain employees. That Plan, as explained in the Summary Plan Information, grants the Committee absolute discretion to determine which employees are eligible. Delta's announcement to its DECU employees that they were ineligible came five months before the stock option program was approved by Delta shareholders in October 1996 and before any stock options were granted. These facts are not disputed. Accordingly, Delta is entitled to summary judgment on Plaintiffs breach of contract claim as a matter of law.
CONCLUSION AND ORDER
There being no material issues of fact and having determined that defendant Delta Airlines is entitled to judgment as a mater of law, it is therefore
ORDERED that defendant Delta Air Lines' Motion for Summary Judgment is GRANTED. It is further
ORDERED that defendant Delta Air Lines is entitled to judgment in its favor on Plaintiff's single remaining claim for breach of contract.