USCA1 Opinion
UNITED STATES COURT OF APPEALS
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT
_________________________
No. 95-1705
SHARON M. SMART,
Plaintiff, Appellant,
v.
THE GILLETTE COMPANY LONG-TERM DISABILITY PLAN,
Defendant, Appellee.
_________________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
___________________
_________________________
Before
Selya, Circuit Judge,
_____________
Aldrich, Senior Circuit Judge,
____________________
and Cyr, Circuit Judge.
_____________
_________________________
Richard L. Burpee, with whom Burpee & DeMoura was on brief,
__________________ ________________
for appellant.
John H. Mason, with whom Richard P. Ward, David T. Lyons,
______________ _______________ ______________
and Ropes & Gray were on brief, for appellee.
____________
_________________________
November 22, 1995
_________________________
SELYA, Circuit Judge. Plaintiff-appellant Sharon Smart
SELYA, Circuit Judge.
_____________
sued The Gillette Company Long-Term Disability Plan (Plan or LTD
Plan) for benefits she asserts were wrongfully denied her. The
district court ruled that Smart had waived her claim. See Smart
___ _____
v. The Gillette Co. Long-Term Disability Plan, 887 F. Supp. 383
___________________________________________
(D. Mass. 1995). We affirm.
I. BACKGROUND
I. BACKGROUND
We take the underlying facts principally from the
parties' pretrial stipulations. The Gillette Company (Gillette)
hired appellant in 1976. In time, she became a senior product
analyst. Her job involved travel in connection with the testing
of Gillette products. In 1986, appellant injured her left knee
in a work-connected automobile accident. Between 1986 and 1990,
she underwent four surgical procedures in hopes of repairing the
damage to her knee. She worked sporadically during the first
half of this period, but not at all after September 8, 1988.
On September 7, 1988, Gillette, bent on terminating
appellant's at-will employment at year's end as part of a
reduction in force, sent her a letter that outlined a proposed
severance arrangement. Under it, appellant for a time would
receive severance pay and assorted benefits to which she would
not otherwise be entitled, but would go quietly into
unemployment's dark night, releasing any and all federal and
state claims she might have against Gillette. The September 7
letter listed the LTD Plan among the extended benefits that
appellant would enjoy if she accepted the proposal.
2
Apparently concerned about her injured knee, appellant
did not immediately embrace the suggested severance terms, but,
rather, began a negotiation aimed at excluding workers'
compensation claims from the sweep of the requested release.
Gillette eventually acquiesced and, on December 16, 1988, sent
appellant a new letter that differed from the September 7 letter
in two important respects. First, it expressly excluded workers'
compensation claims from the general release. Second, it did not
mention the LTD Plan (an omission that had the effect of dropping
the Plan from the list of benefits that would continue during the
severance period).
Appellant reviewed the December 16 letter with her
lawyer and signed it on December 29. Gillette terminated her
employment effective December 31. As per the agreement,
appellant collected severance pay until November 4, 1989, and
received the other benefits listed in the December 16 letter
throughout the severance period (i.e., January 1 through November
4, 1989). During that same time frame, she settled her workers'
compensation claim for $43,750 and began collecting $887 per
month in social security disability payments.
On October 2, 1991, appellant filed an application for
benefits under the Plan, alleging that she had become
"permanently and totally disabled" during the severance period.
Gillette's corporate counsel denied the application out of hand.
After a series of fruitless requests for reconsideration,
appellant sued.
3
The district court did not reach any of the variegated
issues associated with whether appellant did (or did not) display
a total and permanent disability as defined by the LTD Plan while
still a participant in it. The court instead found in effect,
after an evidentiary hearing replete with stipulated facts, that
appellant's Plan participation ended when her employment ended
(December 31, 1988), and that, therefore, she had no cognizable
claim in respect to a disability that did not materialize until
sometime in 1989 at the earliest.
II. DISCUSSION
II. DISCUSSION
After careful examination of the record, the briefs,
and the applicable law, we hold that the severance agreement made
no provision for extended participation in the LTD Plan.
Consequently, Smart's appeal fails. For ease in explanation, we
divide our analysis into moieties.
A. The Severance Agreement.
A. The Severance Agreement.
_______________________
Appellant argues that the terms of the severance
agreement did not include a surrender of Plan benefits, but that,
to the exact contrary, the parties intended to permit appellant
to enjoy such benefits as part of the consideration tendered by
Gillette for the release. We approach this contention mindful
that the December 16 letter agreement, signed by both parties,
represents a contract between Smart and Gillette that potentially
affects rights protected by the Employee Retirement Income
Security Act (ERISA), 29 U.S.C. 1001-1461 (1988), and, thus,
is likely subject to interpretation in accordance with tenets of
4
federal common law.1 See Pilot Life Ins. Co. v. Dedeaux, 481
___ ____________________ _______
U.S. 41, 56 (1987).
In construing the terms of contracts that are governed
by federal common law, we are guided by "common-sense canons of
contract interpretation." Burnham v. Guardian Life Ins. Co., 873
_______ ______________________
F.2d 486, 489 (1st Cir. 1989). One such canon teaches that
contracts containing unambiguous language must be construed
according to their plain and natural meaning. See id. "Contract
___ ___
language is usually considered ambiguous where an agreement's
terms are inconsistent on their face or where the phraseology can
support reasonable differences of opinion as to the meaning of
the words employed and obligations undertaken." Fashion House,
______________
Inc. v. K mart Corp., 892 F.2d 1076, 1083 (1st Cir. 1989).
____ _____________
Interpreting unambiguous terms is an activity that requires
judges to expound the law rather than to find the facts, and,
therefore, a trial court's interpretive determinations are
subject to plenary review. See, e.g., Allen v. Adage, Inc., 967
___ ____ _____ ___________
F.2d 695, 698 (1st Cir. 1992). In most cases, the question of
whether a contract term is ambiguous also presents a question of
law subject to plenary review. See id.; see also RCI Northeast
___ ___ ___ ____ _____________
Servs. Div. v. Boston Edison Co., 822 F.2d 199, 202 (1st Cir.
___________ __________________
1987).
____________________
1We need not probe this point too deeply. Because the
result here is unaffected by choice of law, we can simply assume
(as have the litigants and the lower court) that federal
statutory and common law supply the rules of decision. See
___
Fashion House, Inc. v. K mart Corp., 892 F.2d 1076, 1092 (1st
____________________ _____________
Cir. 1989).
5
If an inquiring court concludes that an ambiguity
exists in a contract, the ultimate resolution of it typically
will turn on the parties' intent. Exploring the intent of
contracting parties often (but not always) involves marshalling
facts extrinsic to the language of the contract documents. When
this need arises, these facts, together with the reasonable
inferences extractable therefrom, are together superimposed on
the ambiguous words to reveal the parties' discerned intent.
This construct ordinarily requires the judge in a non-jury case
to resolve questions of fact rather than questions of law. See
___
In re Newport Plaza Assocs., 985 F.2d 640, 645 (1st Cir. 1993)
____________________________
(stating that "the interpretation of [ambiguous] contract
language, itself acknowledged, becomes a question of fact for the
jury rather than a question of law for the judge"); RCI
___
Northeast, 822 F.2d at 202 (explaining that when "the plain
_________
meaning of a contract phrase does not spring unambiguously from
the page or from the context, its proper direction becomes one
for the factfinder, who must ferret out the intent of the
parties"). In such circumstances, a reviewing court will uphold
the factfinder's resolution of the question unless it is clearly
erroneous. See Fed. R. Civ. P. 52(a); see also In re Navigation
___ ___ ____ ________________
Technology Corp., 880 F.2d 1491, 1495 (1st Cir. 1989).
________________
In this case, appellant's assault focuses on the
following language in the severance agreement:
In consideration of the severance pay and
___
other benefits to be provided you as part of
______________________________
The Gillette Company's Restructuring Program,
you do hereby . . . release and agree to
6
indemnify and hold harmless [Gillette] . . .
from any and all claims, charges, complaints,
or causes of action, now existing, both known
and unknown or arising in the future,
including but not limited to, all claims of
breach of contract . . ., or [claims] arising
from alleged violations of . . . any . . .
local, state, or federal law, regulation or
policy or any other claim relating to or
arising out of your employment with
[Gillette] or termination thereof . . . .
(Emphasis supplied.)
According to appellant, the underscored phrase is ambiguous
because the agreement makes no reference to the LTD Plan, leaving
up in the air whether Smart will retain coverage during the
severance period as a part of the consideration ("severance pay
and other benefits") for the general release. Thus, appellant's
thesis runs, the trial court should have mulled extrinsic
evidence including the September 7 letter to resolve the
uncertainty, and, had it done so, would perforce have concluded
that the phrase "other benefits" in the December 16 letter
encompassed extended coverage under the LTD Plan.
Appellant's mental gymnastics are nimble, but they
score low marks for substance. Accepted canons of construction
forbid the balkanization of contracts for interpretive purposes.
See Fashion House, 892 F.2d at 1084 (examining agreement as a
___ _____________
whole to interpret one part); see also Restatement (Second) of
___ ____ _______________________
Contracts 202 cmt. d (1981) (explaining that "[w]here the whole
_________
can be read to give significance to each part, that reading is
preferred"). Here, when the phrase "other benefits" is read in
the full context of the document, the language is not ambiguous
at all. The preceding paragraphs of the letter agreement spell
7
out precisely which benefits, in addition to severance pay,
appellant will receive in exchange for the release. They
include, with various qualifications, extended participation in
employee health and dental plans, life insurance, a savings plan,
and an employee stock ownership plan. Viewed against this
backdrop, it is pellucid that the later use of the "other
benefits" terminology refers to the benefits enumerated in the
______
text of the document itself.
___________________________
We think that this case is a classic example of a
situation in which the hoary maxim expressio unius est exclusio
_____________________________
alterius is helpful. The maxim instructs that, when parties list
________
specific items in a document, any item not so listed is typically
thought to be excluded. See, e.g., FDIC v. Singh, 977 F.2d 18,
___ ____ ____ _____
22-23 (1st Cir. 1992) (applying expressio unius rule). While
________________
this interpretive maxim is not always dispositive, it carries
weight; and when, as now, there is absolutely nothing in the
agreement's text that hints at some additional item lurking
beyond the enumerated list, we see no reason why the maxim should
not be controlling. We conclude from what is written within the
four corners of the severance agreement, therefore, that the
phrase "other benefits" simply and unambiguously describes the
benefits enumerated in the agreement itself (and, hence, does not
include continued coverage under the Plan).
Appellant has a fallback position. She doggedly
insists that, regardless of the language of the December 16
letter, evidence from the parties' negotiations and "course of
8
performance" reveals that they actually intended to include
extended coverage under the Plan as part of the consideration for
the release. This insistence is misplaced.
As a general rule, a court should not consider
extrinsic evidence to give meaning to a contract unless the
contract's terms are vague or ambiguous. See Rodriguez-Abreu v.
___ _______________
Chase Manhattan Bank, 986 F.2d 580, 586 (1st Cir. 1993); Bellino
_____________________ _______
v. Schlumberger Technologies, Inc., 944 F.2d 26, 32 (1st Cir.
________________________________
1991). However, if the evidence is not offered to infuse the
contract with meaning, but only to demonstrate that a term is
vague or ambiguous in the first place, then the situation may be
different; courts sometimes may ponder extrinsic evidence to
determine whether an apparently clear term is actually
uncertain.2 See Restatement (Second), supra, 212 cmt. b
___ _____________________ _____
(suggesting that determinations of ambiguity are best "made in
the light of the relevant evidence of the situation and relations
of the parties, the subject matter of the transaction,
preliminary negotiations and statements made therein, usages of
trade, and the course of dealing between the parties"); E. Allan
Farnsworth, Farnsworth on Contracts 7.12, at 277-78 (1990)
________________________
(approving this view); see also Arthur L. Corbin, Contracts 579
___ ____ _________
(1960) (to like effect). But this exception is narrow at best,
and is inapposite here. In the most permissive of jurisdictions,
extrinsic evidence will be considered for the purpose of
____________________
2In our view, this possibility should not alter or affect
the rule that the determination of ambiguity is, in the first
instance, a question of law for the judge.
9
determining whether an ambiguity exists only if it suggests a
meaning to which the challenged language is reasonably
susceptible. See Farnsworth, supra, 7.12, at 278. In no event
___ _____
may extrinsic evidence be employed to contradict explicit
contract language or to drain an agreement's text of all content
save ink and paper. See Burnham, 873 F.2d at 489 (admonishing
___ _______
that "courts have no right to torture language in an attempt to
force particular results or to convey delitescent nuances the
contracting parties neither intended or imagined").
In this case, the extrinsic evidence to which appellant
points reveals nothing remotely resembling an amphiboly in the
contextual meaning of "other benefits." That evidence falls into
two categories. The first category juxtaposes the September 7
and December 16 letters, and asks us to remark the fact that
extended Plan participation was included as part of the first
offer, and then deleted without special mention from the offer
which appellant actually accepted. But even if remarked this
fact confirms, rather than refutes, that LTD Plan benefits were
intended to be outside the "other benefits" explicitly promised
in the December 16 agreement. Put another way, Gillette's
deletion of the Plan from the list of preserved benefits bolsters
the applicability of the expressio unius maxim.
_______________
The second category of extrinsic evidence to which
appellant adverts is cobbled together from a series of letters
written by Gillette's counsel in the process of denying
appellant's claim for LTD Plan benefits on its merits. Appellant
10
maintains that these missives prove that, in the course of
performing the terms of the severance agreement, the Plan
administrator interpreted the agreement as commemorating
appellant's potential eligibility for benefits. Although courts
sometimes rely on such "course of performance" evidence to
interpret ambiguous contract terms, see, e.g., Agathos v.
___ ____ _______
Starlite Motel, 977 F.2d 1500, 1509 (3d Cir. 1992); Schultz v.
_______________ _______
Metropolitan Life Ins. Co., 872 F.2d 676, 679 (5th Cir. 1989), we
__________________________
do not find appellant's evidence useful here.
For one thing, the correspondence in question postdates
the accrual of the dispute between the parties indeed, it came
into being only after the severance agreement itself had expired
whereas course-of-performance evidence typically involves "the
conduct of the parties before the advent of a controversy."
______
Schultz, 872 F.2d at 679 (emphasis supplied). For another thing,
_______
the targeted correspondence, which seems to assume appellant's
eligibility under the Plan in September of 1989, involves only a
single claim for benefits. These communiques, whether read
singly or in the ensemble, do not affirmatively acknowledge
either an extension of coverage or appellant's generic
entitlement to benefits. On the whole, therefore, the
correspondence falls short of evincing the repeated dealings that
might constitute a course of performance between the parties
sufficient to indicate that "other benefits" means something
different than what the contract itself discloses. See generally
___ _________
Restatement (Second), supra, 202(4) (explaining that "course of
____________________ _____
11
performance" is relevant "[w]here an agreement involves repeated
occasions for performance"); id. cmt. g (noting that course of
___
performance "is not conclusive of meaning," and that such conduct
"must be weighed in the light of the terms of the agreement and
their possible meanings").
To sum up, whether or not we refer to extrinsic
evidence, the severance agreement is free from ambiguity. That
agreement effectively extinguishes appellant's claim in that,
contrary to appellant's advertisement, it does not include a
promise to extend Plan coverage. The remaining issue, then,
concerns the validity of the severance agreement.
B. The Putative Waiver.
B. The Putative Waiver.
___________________
Appellant labors to convince us that the agreement she
signed was invalid because it amounted to a waiver, and the
waiver, in turn, was unenforceable under ERISA. We think that
this formulation misconstrues the issue. As we see it, no waiver
is in play here. Appellant signed a severance agreement under
which Gillette promised her some extended benefits (but not LTD
Plan benefits). That agreement could not have waived her right
to participate in the Plan during the severance period because
she had no such right unless the employer affirmatively agreed to
___________________________________________
enlarge her eligibility under the Plan. As we have ascertained,
_______________________________________
see supra Part II(A), Gillette did no such thing.
___ _____
To be sure, the waiver argument can be recast in terms
of appellant's release of all claims she might have against
Gillette a release that purportedly surrenders claims under
12
ERISA for the wrongful denial of benefits. This is at best a
bootstrap approach to creating a justiciable waiver issue, for
one can scarcely release claims that one does not possess. And,
moreover, we are at loss to see how an employer can "wrongfully"
deny benefits to which an employee (or, more precisely put, an
ex-employee) is not entitled in the first place. See Ronald J.
___
Cooke, ERISA Practice and Procedure 2.08, at 2-28 (1995)
______________________________
(emphasizing that "ERISA affords no rights or protections to
those who are not participants" in a benefit plan).
At any rate, even if we assume that we are dealing with
an actual rather than an ersatz waiver, the waiver is
permissible. Congress passed ERISA in part to protect the rights
of employees who choose to participate in welfare benefit plans.
See 29 U.S.C. 1001; see also Firestone Tire & Rubber Co. v.
___ ___ ____ ____________________________
Bruch, 489 U.S. 101, 113 (1989). To achieve that end, the
_____
statute establishes a private right of action for employees who
allege that a plan administrator wrongfully denied a claim for
benefits due under the provisions of the plan. See 29 U.S.C.
___
1132(a). But Congress did not go so far as to prohibit an
employee from waiving her right to participate in an employee
welfare benefit plan. See Rodriguez-Abreu, 986 F.2d at 587; Finz
___ _______________ ____
v. Schlesinger, 957 F.2d 78, 81 (2d Cir.), cert. denied, 113 S.
___________ _____ ______
Ct. 72 (1992); Laniok v. Advisory Comm. of the Brainerd Mfg. Co.
______ ________________________________________
Pension Plan, 935 F.2d 1360, 1364-66 (2d Cir. 1991); Lumpkin v.
____________ _______
Envirodyne Indus., Inc., 933 F.2d 449, 455 (7th Cir.), cert.
_________________________ _____
denied, 502 U.S. 939 (1991); Leavitt v. Northwestern Bell Tel.
______ _______ ______________________
13
Co., 921 F.2d 160, 161-62 (8th Cir. 1990).
___
Of course, despite the fact that employee waivers are
not forbidden, ERISA evinces Congress's intent to preserve
employee pension and benefit rights. See, e.g., Laniok, 935 F.2d
___ ____ ______
at 1367. In ERISA cases, therefore, courts should scrutinize an
ostensible waiver with care in order to ensure that it reflects
the purposeful relinquishment of an employee's rights. See Finz,
___ ____
957 F.2d at 81; In re Heci Exploration Co., 862 F.2d 513, 523
___________________________
(5th Cir. 1988). At a minimum, such waivers, to be effective,
must be "knowing and voluntary." Rodriguez-Abreu, 986 F.2d at
_______________
587.
In Finz, building on Laniok, the Second Circuit crafted
____ ______
a compendium of six factors that are often relevant to this
inquiry.3 We find this list helpful rather than conclusive.
Generally, no single fact or circumstance is entitled to
talismanic significance on the question of waiver. Only an
inquiry into the totality of the circumstances can determine
whether there has been a knowing and voluntary relinquishment of
an ERISA-protected benefit. See, e.g., Leavitt, 921 F.2d at 162.
___ ____ _______
____________________
3These six factors include: (1) the plaintiff's education,
business experience, and sophistication; (2) the parties'
respective roles in deciding the final terms of the arrangement;
(3) the agreement's clarity; (4) the amount of time available to
the plaintiff to study the agreement before acting on it; (5)
whether the plaintiff had independent advice such as the advice
of counsel when she signed the agreement; and (6) the nature of
the consideration tendered in exchange for the waiver. See Finz,
___ ____
957 F.2d at 82; Laniok, 935 F.2d at 1368.
______
14
For that reason, every case is sui generis.4
___ _______
The inquiry into waiver consists of two questions:
whether a party actually knew she was relinquishing a benefit,
and whether she acted voluntarily in doing so. Answering these
companion questions is a fact-intensive exercise, and the trier's
factfinding is entitled to deference (unless it is tainted by a
mistake of law). See Irons v. FBI, 811 F.2d 681, 684 (1st Cir.
___ _____ ___
1987) ("Where the conclusions of the trial court depend on its
election among conflicting facts or its choice of which competing
inferences to draw from undisputed basic facts, appellate courts
should defer to such fact-intensive findings, absent clear
error.").
Measured against this standard, the lower court's
findings are irreproachable. The court correctly synthesized the
law. It then surveyed, inter alia, the six Finz factors. See
_____ ____ ____ ___
Smart, 887 F. Supp. at 386. It found appellant to be well-
_____
educated and commercially sophisticated (she had a college
degree, some postgraduate business courses, and over ten years of
professional experience at Gillette), and to have negotiated the
specific terms of the severance agreement. Those terms provided
her with benefits that Gillette was not otherwise obligated to
____________________
4In Rodriguez-Abreu, for example, the plaintiff was a
_______________
manager who knew that he could not accept the severance package
while at the same time retaining long-term disability benefits,
and who had consulted with an accountant before making his
decision. We upheld a finding that he had validly waived
continued participation in a long-term disability plan as part of
his acceptance of a voluntary severance package. See Rodriguez-
___ __________
Abreu, 986 F.2d at 588.
_____
15
furnish. The final version of the agreement was very clear, and
appellant reviewed it with an attorney of her choosing before
signing it. Without exception, these findings which cover five
of the six Finz factors are supportable.
____
The court's remaining finding that appellant had
adequate time to review the severance agreement before she
executed it is not quite so clear-cut. Nevertheless, it
implicates only one of several factors that are involved in the
decisional calculus, and, in any event, we do not think that the
court committed clear error in determining that the time
available to Smart was sufficient to permit a complete,
thoughtful perscrutation of the operative version of the
agreement. We explain briefly.
The lower court rested the controverted finding on the
notion that appellant had over three months to review the
agreement before signing it. See id. This temporal computation
___ ___
assumes that the relevant interval began with appellant's receipt
of the September 7 letter. Appellant attacks the court's
underlying premise on the ground that the relevant interval began
with her receipt of the December 16 agreement, leaving her less
than two weeks in which to review the proposal.
This is a case of the glass being half-empty or half-
full, depending on how the observer opts to characterize it.
Appellant did have more than three months within which to
consider the prospect of early, forced retirement and to mull
those provisions peculiarly important to her condition (like
16
workers' compensation and LTD Plan benefits). One could
reasonably expect her to have been especially attentive to such
provisions in reading the revised version of the document. What
is more, a twelve-day period seems ample to permit a
sophisticated businesswoman and her lawyer carefully to review
the terms of a fairly straightforward severance agreement even if
the review had to proceed from scratch.
In fine, taking into account the total complex of
events, the district court's fact-based finding that appellant
knowingly and voluntarily waived her claim to benefits under the
Plan is supportable.5
III. CONCLUSION
III. CONCLUSION
We need go no further. Appellant negotiated and signed
a contract that unambiguously excluded her from extended
participation in Gillette's LTD Plan. In so doing she
simultaneously relinquished any ERISA-protected claims. The
trial court found that her actions were both knowing and
voluntary. Discerning no error, we will not disturb the
judgment.
____________________
5Although appellant admitted that she understood when she
signed the severance agreement that she was waiving all claims
under both federal and state law, she also testified that she
"did not know what ERISA was when she signed the release; that
she did not know that she was releasing any rights under ERISA;
and that she did not intend to release any rights under ERISA."
This testimony does not diminish our respect for the district
court's finding of waiver. An employee does not need to know
about her rights under ERISA to know that she is waiving her
____________
rights under a benefit plan that ERISA happens to protect. Once
____________________
appellant intentionally let slip her opportunity to participate
in the benefit plan, she no longer possessed a substantive
"right" protected by ERISA.
17
Affirmed.
________
18