retirement benefits

In 1951 Wilkes acquired an option to purchase a building and lot located on the corner of Springside Avenue and North Street in Pittsfield, Massachusetts, the building having previously housed the Hillcrest Hospital. Riche, an acquaintance of Wilkes, learned of the option and interested Quinn and Pipkin in joining Wilkes in his investment. The four men met and decided to participate jointly in the purchase of the building and lot as a real estate investment which they believed had good profit potential on resale or rental. They later determined that the property would have its greatest potential for profit if operated as a nursing home. Wilkes consulted his attorney who advised that if the four men were to operate the nursing home as planned they would be partners and liable for debts. On the attorney's suggestion ownership of the property was vested in Springside, a corporation organized under Massachusetts law. Each of the four men invested $1,000 and subscribed to ten shares of $100 par value stock in Springside. It was understood by all that each would be a director of Springside and each would participate actively in the management and decision making involved in operating the corporation. It was further understood that each would receive money from the corporation in equal amounts as long as each assumed an active and ongoing responsibility. The work was apportioned with Wilkes in charge of repair upkeep and maintenance of the physical plant and grounds, Riche supervising kitchen facilities and dietary aspects, Pipkin available for medical problems, and Quinn dealing with personnel and administrative aspects. Initially each received $35 a week which increased to $100 by 1955. In 1959 after a long illness Pipkin sold his shares to Connor who received the same weekly stipend and participated as a director and financial adviser. In 1965 the stockholders sold a portion of the corporate property to Quinn after Wilkes prevailed on a higher sale price, after which the relationship between Quinn and Wilkes began to deteriorate. In January 1967 Wilkes gave notice of his intention to sell his shares. In February 1967 at a directors meeting the board established salaries with a substantial weekly increase for Quinn and $100 for Riche and Connor but none for Wilkes. At the March 1967 annual meeting Wilkes was not reelected as a director or officer. On August 5, 1971, Wilkes filed a bill in equity for declaratory judgment in the Probate Court for Berkshire County naming Quinn, Riche, the executors of Connor and Springside as defendants seeking damages in the amount of the salary he would have received. A master issued his final report in late 1973 which was confirmed in late 1974 after Wilkes's objections were overruled resulting in judgment dismissing the action on the merits. The Supreme Judicial Court granted direct appellate review.

Interactive Data Corporation hired John Foley in June 1976 as an assistant product manager at a starting salary of $18,500. As a condition of employment Foley signed a confidential and proprietary information agreement. The company's president told Foley that if he performed his job well he would have a long and rewarding employment with the firm. Over the next six years and nine months Foley received steady salary increases, promotions, bonuses, awards, and superior performance evaluations, rising to branch manager of the Los Angeles office with an annual salary of $56,164 plus a merit bonus. In January 1983 Foley learned that his new supervisor, Robert Kuhne, was under investigation by the FBI for embezzlement from his former employer, Bank of America. Foley reported the information to Vice President Richard Earnest because he was worried about working for Kuhne in a supervisory position. Earnest told Foley not to discuss rumors and to forget what he had heard. In early March 1983 Kuhne informed Foley that the company had decided to replace him for performance reasons and offered a transfer to another division. Foley was later told he could continue as branch manager if he agreed to a performance plan, but when Kuhne met with him the next day Kuhne instead gave Foley the choice of resigning or being fired. Foley was discharged on March 13, 1983. Foley filed suit against Interactive Data Corporation alleging three causes of action: tortious discharge in violation of public policy, breach of an implied-in-fact contract to terminate only for good cause, and tortious breach of the implied covenant of good faith and fair dealing. The superior court sustained the company's demurrer without leave to amend and dismissed the action. The Court of Appeal affirmed the judgment. The Supreme Court granted review.

In 1997, General Dynamics Land Systems, Inc. entered into a collective-bargaining agreement with the United Auto Workers that eliminated the company's obligation to provide health benefits to subsequently retired employees, except as to then-current workers at least 50 years old. Respondents, a group of employees collectively referred to as Cline, were at least 40 years old but under 50 at the time of the agreement, so they fell within the age range protected by federal statute yet received no promise of benefits under the new terms. Some respondents retired before the change to obtain the prior advantage, some retired afterward with no benefit, and some continued working while knowing the contract would provide them no health coverage upon retirement. The respondents filed charges with the Equal Employment Opportunity Commission claiming the agreement discriminated against them with respect to compensation, terms, conditions, or privileges of employment because of their age. The Commission agreed with the charges and invited General Dynamics and the union to settle informally, but those efforts failed. The respondents then brought suit against General Dynamics in federal district court, combining claims under the federal age statute and state law. The District Court dismissed the federal claim, describing it as one of reverse age discrimination and relying on Seventh Circuit precedent that the statute does not protect the younger against the older. A divided panel of the Sixth Circuit reversed the dismissal. The Supreme Court granted certiorari to resolve the conflict among the circuits.

Donna Rae Egelhoff was married to David A. Egelhoff. Mr. Egelhoff was employed by the Boeing Company, which provided him with a life insurance policy and a pension plan. Both plans were governed by ERISA, and Mr. Egelhoff designated his wife as the beneficiary under both. In April 1994, the Egelhoffs divorced. Just over two months later, Mr. Egelhoff died intestate following an automobile accident. At that time, Mrs. Egelhoff remained the listed beneficiary under both the life insurance policy and the pension plan. The life insurance proceeds, totaling $46,000, were paid to her. Respondents Samantha and David Egelhoff, Mr. Egelhoff's children by a previous marriage, are his statutory heirs under state law. They sued petitioner in Washington state court to recover the life insurance proceeds. In a separate action, respondents also sued to recover the pension plan benefits. The trial courts, concluding that both the insurance policy and the pension plan "should be administered in accordance" with ERISA, granted summary judgment to petitioner in both cases. The Washington Court of Appeals consolidated the cases and reversed. Applying the statute, it held that respondents were entitled to the proceeds of both the insurance policy and the pension plan. The Supreme Court of Washington affirmed. Courts have disagreed about whether statutes like that of Washington are pre-empted by ERISA. The Supreme Court granted certiorari to resolve the conflict.