Full opinion text
ORDER HOLMES, District Judge. This matter comes before the Court on Plaintiffs’ claims arising under 42 U.S. § 1140, the Employee Retirement Income Security Act (“ERISA”). A trial was held in this case April 19-29, 1999. Following the trial, a number of additional proceedings were conducted with respect to certain issues raised at trial. Based upon a review of the entire record, the Court hereby enters the following findings of fact and conclusions of law. I. FINDINGS OF FACTS 1. McDonnell Douglas Corporation (“MDC”) was a corporation headquartered in St. Louis, Missouri. In 1996, MDC was acquired by Boeing Corporation. 2. MDC manufactured and assembled military and commercial aircraft, missile systems, electronics and related products at facilities throughout the United States, and in foreign countries. . 3. MDC long maintained a plant in Tulsa, Oklahoma. The plant was owned by the U.S. Air Force, and was known as Air Force Plant No. 3. The plant was originally used for the manufacturing of bombers in World War II, and was later used by MDC to perform work under various military contracts with the United States Government. 4. MDC’s Tulsa facility was part of McDonnell Douglas Aerospace — East (“MDA-East”), an unincorporated operating division managed out of the St. Louis headquarters. The primary business of MDA-East was to manufacture and assemble military products, including fighter and attack aircraft, helicopters, and missile systems. 5. Plaintiffs are former employees of MDC at the Tulsa, Oklahoma plant. Plaintiffs were employed by MDC as of December 3, 1993, when the company announced the plant would be shut down. 6. While employed at MDC, Plaintiffs participated in one of MDC’s two Employee Retirement Income Security Act (“ERISA”) qualified retirement plans and one of MDC’s retiree health care plans. 7. Plaintiffs brought this class action alleging that MDC violated Plaintiffs’ rights under ERISA, 29 U.S.C. § 1001-1461. This Court certified this lawsuit as a class action of over 1,000 persons who were formerly employed by Defendant when it announced the Tulsa plant closing. Plaintiffs claim that MDC closed its Tulsa facilities for the purpose of depriving Plaintiffs of benefits covered by ERISA, in violation of section 510 of the statute. A. Background 8. In the late 1980’s and early 1990’s, the amount of government defense contracting work available to MDC and other defense contractors was declining. 9. On June 20, 1990, John McDonnell issued a memorandum to all employees entitled “The Hard Reality.” In this memo, Mr. McDonnell informed MDC employees that the company needed to reduce annual expenditures by $700 million a year. These expenditures were to come from all segments of the company and, according to the McDonnell memo, would include reductions in force that would affect the company’s employees, of which there were then about 130,000 worldwide. 10. In 1991, MDC became concerned that its orders for production of the F-15 fighter jet had diminished to the point that there was a possibility the production line could go dead. While the company worked on the remaining orders from the United States Air Force, the Saudi government in 1991 expressed an interest in placing a substantial order for F-15’s. The $9 billion Saudi order was of significant interest to employees at the Tulsa facility, where the F-15 aft-tail section for the planes was assembled, as well as the entire Tulsa community. The contract, however, was contingent upon approval by the United States Government in two respects: first, the President of the United States had to approve the sale, and second, the U.S. Congress thereafter had 30 days within which to pass a resolution overturning his decision. 11. In 1991 and 1992, Oklahoma’s political delegation had considerable influence on defense matters. MDC personnel would later describe Oklahoma’s delegation as follows: “Oklahoma’s public officials as a group make that state perhaps the most potentially dangerous politically.” Plt&.Tr.Ex. 71, M152 003 0859. 12. In order to gain the political support it needed to win approval of the F-15 contract, the company repeatedly represented that MDC would preserve the jobs of its Tulsa employees if the F-15 sale was approved by the government. 13. Such representations were contained in MDC’s 1991 Annual Report, which stated that award of the F-15 Saudi Arabia contract meant the preservation of “7,000 jobs” at the company: Saudi Arabia expressed an interest in 1991 in expanding its F-15 fleet with the purchase of additional 72 Eagles. U.S. Government approval of the Saudi request would extend production of the F-15 to 1997 and preserve 7,000 jobs at MDC and another 33,000 jobs at subcontractors and suppliers nationwide. Pltfs.Tr.Ex. 35, M152 005 0277. 14. MDC indicated that a substantial number of these “preserved jobs” would be in Tulsa. Tulsa plant manager Don Bittle testified: In early ’92 the company decided to have a series of U.S. Jobs Rally Now, of which Tulsa participated in, I believe it was May of ’92. We invited, and they did attend, not only the local politicians but the national politicians, including the Governor of Oklahoma, all met with us and we had a rally out at Air Force Plant 3 extolling the need to have this sale made to continue jobs here at Tulsa. We also had Warren Beaver [Owen Bie-ber] who was the national leader of the UAW was here, also extolling that position, that that sale needed to go through to preserve the jobs at not only at St. Louis, but at Tulsa for the parts we were building. Tr. 257. 15. At the rally in Tulsa, the employees, at Defendant’s request, all signed a “huge” letter, urging the President to approve the sale and Congress not to override this decision. After the rally, workers were asked on numerous occasions to continue to lobby their congressional representatives in favor of the sale. Plaintiff Vera Lehman testified: Yes, we had a rally — we had several rallies, but in May of ’92 we had the 50th anniversary of McDonnell Douglas being in Tulsa. We had several officials from McDonnell Douglas, the corporate office, including Mr. A1 Briggs and whatever, to lobby our congressmen that in the event that the president did offer them or suggest that they go ahead and sell that plane to the Saudis, that they would, you know, agree to that without any opposition. We signed a huge, huge letter, I mean all the employees signed this card that we sent to them, we wrote them, we called them. You know we were encouraged constantly to stay in contact with those people to have them to approve that sale. Tr. 64-65. 16. Named Plaintiffs James Millsap, Fred Davis and Vera Lehman were employees with many years of service at MDC’s Tulsa facility until the plant closed. Prior to the facility closing, they recalled being told on multiple occasions that if the company was awarded the F-15 contract with the Saudi government, the plant would be open for at least three more years. They were asked by the company to write letters and to sign cards, not only to their Congressmen but also to the President. 17. In response to these requests by MDC, the union and the company’s employees lobbied the Oklahoma political delegation with letters and calls. The promise of at least three more years of work was made not only to MDC employees, but also at the job rally at which the President of the United States and several members of the Oklahoma congressional delegation were present. These promises were repeated on other occasions by the President of McDonnell Douglas Aerospace, John Capellupo, and the former general manager of the plant, A1 Briggs, his successor, Don Bittle, and the plant director, Joe White. In addition, members of the Oklahoma political delegation were heard repeating the same promise to employees during their various visits to the plant. 18. On September 11, 1992, President Bush announced at a McDonnell Douglas job rally held in St. Louis that he had approved the $9 billion sale of the 72 F~ 15’s to the Saudi government. This message was broadcast to employees and the public at the Tulsa plant, where a similar rally was underway. 19. The company’s public relations staff took this occasion to repeat the representation from its 1991 Annual Report. The language was repeated almost verbatim from the Annual Report, only it specified that Tulsa was one of the locations where the work was to be preserved. The Tulsa World reported the company’s representation on September 12,1992: McDonnell Douglas said the sale will extend production of the F-15 for at least three years and preserve 7,000 jobs in Tulsa and St. Louis. Pltfs.Tr.Ex. 42 p. 1. 20. Such representations continued even after the Congressional disapproval period had expired. The company continued to feature its political campaign in its literature. It used a picture of members of its workforce standing under an American flag for the front and back cover of its 1992 Annual Report. This Annual Report contained a description of the event as: “Teammates celebrate announcement of an overseas sale, which will extend F-15 production for several years.” Pltfs.Tr.Ex. 50. 21. In 1991, a team was formed to study the production capabilities of MDA-East, and to recommend any changes which might be appropriate. This study team was lead by Baxter Tate. Mr. Tate’s group subsequently recommended that the Culver City, Torrence, and Columbus facilities be closed, and that recommendation was accepted by MDC’s ^management. The closing of Culver City was announced in February, 1991; the closing .of Torrence was announced in June, 1992; and, the closing of Columbus was announced in August, 1992. 22. At the time of the 1991 study, Tor-rence, Culver City and Columbus were all operating at about 25 to 30% of capacity. 23. In 1992, Peter Juliano assumed the duties of Vice-President and General Manager of MDA-East. Because of the decline in business and excess capacity within MDC’s facilities, Mr. Juliano was assigned, in late July, 1993, to study the capacity of MDA-East plants, and recommend any appropriate action. This review was named “Project M.” 24. The Project M team began actively studying the Tulsa plant as a candidate for closure by August 1993. 25. The Project M team was also charged with determining, if necessary, how to transition the MDC Tulsa work to another MDC facility. # ❖ H* # sfc 26. In a February 26, 1993 letter to “All Shareholders & Teammates” in the company’s 1992 Annual Report, Chairman McDonnell acknowledged the benefit it had received from the lobbying efforts by its employees: The Saudi Arabian F-15 win was a great example of teamwork at a grass-roots level. Thousands of people at MDC and its suppliers joined together in rallying U.S. Congressional and Presidential support for the sale. Pltfs.Tr.Ex. 50 M152 005 0329. Mr. McDonnell once again concluded his remarks by stating that the sale resulted in “preserving 7,000 jobs at MDC.” Id. 27. Later, on March 10, 1993, the company’s Director of Industrial Participation, James Caldwell, who was one of the company’s employees involved with lobbying the Oklahoma delegation, wrote to the Mayor of Tulsa, Susan Savage. Mr. Caldwell thanked Mayor Savage for the City’s help with the F-15 contract. Mr. Caldwell repeated the same three year commitment the company made to its Tulsa employees, the public and the political representatives: As you know, the Saudi F-15 program is a core business base that will keep us operating at Tulsa for the next three years. That program is proceeding and we are very close to getting a final contractual commitment from the Saudi government. Pltfs.Tr.Ex. 173. 28. Also, in 1993, the Air Force was talking with officials of the City of Tulsa concerning the possibility of transferring title to AF Plant No. 3 to the City, for nominal consideration. This would allow the City of Tulsa to act as the landlord for MDC and Rockwell International, the tenants of AF Plant No. 3. The City of Tulsa would then offer space to MDC and Rockwell at favorable terms to induce them to continue to occupy the building. if: ‡ sí? # % ‡ 29. Project M was headed by Peter Juliano, General Manger of Production Operations, who in turn reported to John Capellupo, President of McDonnell Douglas Aerospace. 30. The Project M team was comprised of at least 60 persons who were authorized to have access to its confidential studies. The Project M team examined the financial and non-financial impact of closing the MDC plant in Tulsa. One of the non-financial impacts assessed by the Project M team was the political ramifications of closing the plant. 31. Mr. Juliano’s Project M team gathered data from a variety of sources, and studied the feasibility of closing one or more of the MDA-East facilities. Tulsa was identified as a prime candidate for closure. According to MDC, St. Louis could not be closed as that was the company headquarters, the site for all engineering and technical support, the designated point of delivery for MDC’s products, and was too large to be absorbed into Tulsa or any other MDA-East facility; the Mesa, Arizona plant was not a prime candidate for closure as it was a relatively new facility which was owned by MDC, and had almost $100 million in costs sunk into the facility. It was also designated as the point of delivery for MDC’s helicopters, and had a firing range for testing helicopter armament; and the Titusville, Florida facility could not then be closed as MDC was bidding to become the sole source supplier of the Tomahawk cruise missile, which was manufactured and assembled in Titusville. 32. Mr. Juliano’s team was unable to identify any large program on the horizon which MDC might be able to obtain and put into Tulsa. 33. The Project M team prepared several drafts of its report, adding information that its members compiled from various sources within MDC. 34. The Project M team ultimately produced a condensed version of its report in an executive summary to Mr. Capellupo, recommending that MDC close its Tulsa facility. 35. Don Bittle, the General Manager of the Tulsa facility, was not involved in Project M, nor was he kept informed of the progress of Project M. 36. Mr. Capellupo testified that he made the ultimate decision to close Tulsa. Therefore, any significant meeting with Mr. Capellupo was, by definition, a meeting involving the ultimate decision makers. 37. Mr. Capellupo formally recommended that MDC close its Tulsa facility. Mr. Capellupo provided Chairman McDonnell and the MDC Executive Council with a condensed version of the Project M report. In accordance with his authorization, the Executive Council accepted Mr. Capellupo’s recommendation and ordered MDC Tulsa closed. 38. On December 3, 1993, MDC publicly announced its intention to close MDC Tulsa. In addition to the public announcement, MDC provided its reasons for closing Tulsa to the United States Government in a written Notice which was required by defense contract regulations. 39. Subsequent to the Tulsa closing, MDC did not win the contract to be the sole source supplier for Tomahawk missiles, and thereafter announced the closing of the Titusville facility in March, 1995, with the plant actually closing in August, 1995. MDC announced the closing of one building at the St. Charles facility, which produced wire bundles, in March of 1995, with the facility actually closing in December, 1995. This left only three facilities in MDA-East: St. Louis, St. Charles, and Mesa. The process of reducing expenses, as announced in Chairman McDonnell’s “Hard Reality” program, resulted in the closing of four out of the seven facilities in MDA-East from 1991 through 1995. 40. MDC moved the F-15 work from MDC Tulsa to MDC’s St. Louis, Missouri facility. 41. Plaintiffs filed this lawsuit in June, 1994. B. Plaintiffs’ Affirmative Case i. Hard Reality 42. As noted above, beginning in 1990 and continuing in 1994, MDC implemented a series of layoffs and plant closings in connection with Chairman McDonnell’s “Hard Reality” program. 43. During this same time period, MDC’s pension plans were substantially overfunded. The surplus in the pension plans contributed to the company’s yearly earnings by generating income and favorably impacting the company’s bottom line. 44. From the beginning of “Hard Reality,” MDC discussed ways to maximize its pension surplus by focusing on the relationship between plant closings and older, more senior workers approaching eligibility for pension and other benefits. Within two days of the announcement of “Hard Reality,” Defendant was told by its outside actuaries that tremendous additional savings were available if the persons laid off were older and more senior. Thereafter, on almost a monthly basis, Defendant monitored the pension savings on its ongoing layoff and plant closing program. 45. The Tulsa plant was no exception. MDC was tracking its pension gains segment by segment from 1990 to 1994. Thus, it had information about past layoffs at Tulsa and the amount of the gains that had been achieved. The data provided the outside actuaries by the company allowed it to determine by segment or plant the average age and length of service of the employees it laid off. 46. Documents obtained from MDC’s outside accountants and actuaries demonstrate that from the outset of the “Hard Reality” program, MDC was aware of substantial cost reductions through pension and benefit savings. Many of the documents from the outside actuaries were sent to Richard Smoski, MDC’s director of pension, savings and payrolls, and William Chase, MDC’s treasurer. Mr. Chase in turn reported to the company’s chief financial officer, Herb Lanese, who in turn reported directly to Chairman McDonnell. 47. When deposed, Mr. Smoski acknowledged that he was involved in creating pension saving projections for the Chairman’s “Hard Reality” program. He participated in meetings with MDC’s outside actuaries, Alexander & Alexander, concerning how the pension gains would impact the company’s earnings. 48. Mr. Smoski and other MDC managers met with Alexander & Alexander to consider various “what if’ scenarios, analyzing the effect on costs and savings if the company decided to reduce heads. Mr. Smoski testified that the kinds of costs he analyzed included “pension cost, savings cost, savings plan cost, health care cost, and just direct overhead cost.” 02/03/98 Smoski Dep.Tr. at 7. “A lot of them were “what if,’ if we reduced — if head counts were reduced by one thousand, or two thousand, what impact did that have to do on the pension plan.” Id. at 5. According to Mr. Smoski, the actuarial analysis included whether these “what if’ scenarios would impact the company’s earnings. 49. MDC also asked its actuaries to study whether staff reductions would cause it to contribute to the pension plan earlier than expected and to make sure MDC’s government accounting people knew of the contribution situation. The outside actuaries looked at the impact of the layoffs on the company’s financial accounting with respect to its pension benefit obligations, and performed similar studies on the financial accounting for the retiree health care plans. In order for Alexander and Alexander to perform its analysis, Mr. Smoski provided it with current headcount data directly from his office and with projected-cuts data from the treasury area. ii. Memorandum On Demographics 50. Within two days of Chairman McDonell’s “Hard Reality” announcement, David Strom, an Alexander & Alexander actuary, sent a memorandum to Mr. Smo-ski entitled “Re: Layoffs.” The “Re: Layoffs” memo presented Alexander & Alexander’s calculation of MDC’s curtailment gains. A “curtailment gain” is an accounting and actuarial term which refers to corporate pension savings resulting from a reduction of a liability that is already booked in the financial statement of the company. MDC booked the pension surplus as an asset in its financial statements. In years when there were curtailment gains, the gains would be reflected in the company’s income statements. The company’s bottom line would be positively affected as net earnings were increased by the amount of the gain. 51. The memo from Mr. Strom informed Mr. Smoski that the layoffs would improve the funded status of the pension plans by extending the time the plans would be in full funding status. This was of interest to the company because in a fully funded status, MDC would not accrue any additional pension costs until such time as it was no longer fully funded. 52. In the “Re: Layoffs” memo, Mr. Strom linked the size of pension gains with the age and seniority of the workforce selected for closing. Mr. Strom told Mr. Smoski that Alexander & Alexander had previously estimated a $6.5 million curtailment gain attributable to a recent layoff of 2,300 salaried employees at Douglas Aircraft Corporation, a wholly-owned subsidiary of MDC. Mr. Strom’s memo informed Mr. Smoski that if the same demographics from an earlier reduction involving the Douglas Aircraft segment of the company applied to the mass layoffs projected under MDC’s “Hard Reality,” “the curtailment gain attributable to 20,000 layoffs company wide would be $57,000,000 ...” Pltfs.Tr.Ex. 2, Tr. 92. 53. Mr. Strom went on to project a total curtailment gain as high as $125 million, if the 20,000 layoffs were based on MDC’s particular demographics, rather than the younger demographics actually encountered in the earlier reduction. The attachment to the Strom memo showed that even small differences in the demographics of the population selected for layoff could make a large difference. The demographics of the earlier layoff involving the DAC segment had an average age of 39.84 and average service of 8.11. The across-the-board average used to project a $125 million gain was 40.3 years of age and 10.07 years of service. If an older population with greater service was terminated, the pension gain would be greater. 54. Strom’s “Re: Layoffs” memo was widely circulated within the company and was provided to MDC’s Treasurer, J.W. Chase, its Controller, R.C. Brand, Manager of Financial Reporting, Gary T. Gray, and Manager-Operating Plan, William J. Dowdy. iii. Tulsa Fit the Demographic Model 55. The employees at the Tulsa plant fit the demographic profile identified by MDC’s outside actuaries; on average they were the oldest and most senior employees in the company, as seen in Plaintiffs’ Demonstrative Exhibit 9: MCDONNELL DOUGLAS AVERAGE AGE AND SENIORITY BY FACILITY 1993 Hourly Employees Salaried Employees Average Average Average Years of Average Years of Facility Age Service Age Service (1) (2) (3) (4) Tulsa 50.95 19.68 49.27 18.71 Torrence 50.02 22.65 46.88 17.68 St. Louis 46.44 19.70 42.24 15.06 Columbus 46.32 4.89 44.02 6.51 St. Charles 45.58 16.04 44.06 15.86 Mesa 44.55 6.55 43.85 9.95 Titusville 43.52 10.11 44.71 12.70 56. Plaintiffs’ statistical expert, Leonard Cupingood, found the average age among Tulsa hourly employees was 50.95. That average age was the highest of the facilities reviewed for possible shutdown. Similarly, the average age of the Tulsa salaried employees at year end 1993 was 49.27. That average exceeded the average age of the salaried work force at MDC’s other plants. Tulsa also had salaried employees with the highest average length of service at 18.71 years. As for hourly employees, Tulsa had the second highest average years of service, second only to the Torrence facility, where the average years of service was 22.65 years compared to Tulsa’s 19.68 years. 57. At trial, Plaintiffs offered Lawrence Beebe as an expert witness. Mr. Beebe, a certified public accountant, specializes in employee benefit plans. Mr. Beebe testified that he had never advised his clients to lay off workers based on demographics and never would because it would interfere with the benefits to which the employees might be entitled. 58. In addition to the Strom memo, Plaintiffs introduced a number of other documents showing that the company was well aware of how the demographics of its employees could influence the amount of its pension surplus. Plaintiffs’ evidence at trial established that MDC was comparing its various plants by the number of employees each had in the 50-to-54-year-old age group with the 55 and above age group. By selecting a plant with a high number of employees in the 50-to-54-year-old age group, the company would achieve a higher gain. This is because, under the terras of the pension plan, employees who reached age 55 with 10 years of service would receive greater benefits by qualifying for an early or normal retirement. On the other hand, employees under 55 when they were laid off would receive a deferred vested pension, with the diminished amount of pension compared to those who reached age 55. 59. The study counting the number of employees who were approaching age 55 was entitled the “Voluntary Work Force Buffer Program” and was stamped “MDC SENSITIVE.” The study indicated that by 1994 the Tulsa workforce would shrink to about 1,500 employees. Of the remaining 1,500 approximately 300 would be in the 50 to 54 age group with 10 years or greater service. In this regard, Mr. Beebe testified that closing the Tulsa plant in January 1, 1994, before the 300 employees turned 55, would increase the company’s curtailment gain. 60. MDC also knew how much it would save if the individuals did not reach age 55 before they were laid off. In Plaintiffs’ Trial Exhibit 28, Mr. Strom, the company’s outside actuary, provided to Mr. Chase, MDC’s treasurer, the cost for offering such individuals early retirement. Mr. Strom estimated that these 50-54 year old employees would cost MDC from $79,000 to $86,000 per individual. According to Mr. Beebe, if the converse occurred, and these 50-54 year-olds left MDC before age 55, the company would achieve a savings in these same amounts. Thus, by closing down the Tulsa plant before 1994, and laying off roughly 300 aging workers, MDC stood to reap $18 million in pension savings. 61. Mr. Beebe testified that standards established by the Financial Accounting-Standards Board required that curtailment gains and losses be tracked and recorded on at least an annual basis. iv. Health Care Coverage Costs 62. MDC also priced the cost of providing medical benefits to the group who would cross over to 55 in 1994. In a July 31, 1991, letter from Mr. Strom to Mr. Smoski, the company considered providing health care coverage for employees age 50 to 54 who did not otherwise qualify for the benefit in a division of the company that had recently been sold. The Strom letter valued the cost of the medical benefit at $73,000. As with its pension analysis of groups crossing over to 55, if the company did not offer the benefit and instead laid off people in advance of the qualifying age of 55, it would save on average $73,000 a person. 63. If the Tulsa plant closed before 1994, and the projected 299 employees who were less than 55 were prevented from qualifying for medical benefits by being terminated before age 55, the company would save $6,717,000 in medical coverage expenses. 64. Closing the plant by 1994 would save the company both medical coverage ($6.7 million) and pension savings ($18 million), for a total of $24.7 million. That $24.7 million savings would certainly be material in a transaction where the company calculated the Tulsa plant closing would otherwise generate $19 million in savings over a five-year period. v. The Pension Surplus was Valuable to the Company 65. The documents also establish that the Defendant was interested in finding ways it could use or monetize the pension surplus. These considerations existed throughout the “Hard Reality” years and continued past the time the Tulsa plant was closed. For example, the company used the surplus to take care of the company’s concern with rising costs of health care insurance. 66. MDC’s Executive Council knew about the large surpluses in the salaried pension plan. The pension surplus continued to be an issue for MDC from 1991 through 1993. By early 1991, MDC focused on the cost of company-paid health care coverage for both its current and future retirees. MDC management employees Rich Smoski, James Proffitt, William Austin, Mike Becker and Ruth Reeg prepared studies of these costs and shared them with Chairman McDonnell and Chief Financial Officer Herb Lanese. 67. On October 8, 1992, effective January 1, 1993, MDC terminated company-paid retiree health care coverage for both current and future non-union retirees and their dependents. After this change the non-union salaried health care coverage was entirely funded by retiree contributions. 68. Mr. Smoski, one of the persons involved in preparing these studies, testified that what motivated MDC to terminate retiree health care coverage for its current and future salaried retirees was cost. The decision to end retiree health care coverage not only impacted MDC Tulsa retirees, but salaried members of the Plaintiff class who would no longer be entitled to have their health care paid for by the company when they retired. In addition, under the collective bargaining agreement hourly workers who had not crossed over the age of 55 when the plant closed received no retiree health care coverage. 69. Mark H. Allen also testified as an expert witness for Plaintiffs. Mr. Allen’s expertise was in the area of employee benefits and mergers and acquisitions. As a business lawyer, Mr. Allen conducts a broad range of business work and is involved with mergers and acquisitions and employee benefits. Mr. Allen testified that MDC pension plans were in an over-funded status and that the overfunded status of the plans resulted in value to the company. 70. Based upon a review of the Defendant’s summary plan descriptions and annual reports, Mr. Allen found that the plans were substantially overfunded in 1992 and 1993. Mr. Allen identified a number of reasons why it would be good for an employer to have an overfunded pension plan. The predominant reason to overfund a plan is to effectuate the prepayment of future retirement benefits, while the monies invested in the plan accrue income tax free. 71. Once a company like MDC has an overfunded plan, the company may use the surplus funds for corporate purposes. For example, the MDC annual report showed the overfunding was used to pay retiree health benefits. MDC was able to monetize the $385 million from the pension plans because it was able to use plan assets, instead of other cash to pay for health insurance benefits. In this way, the company was able to use the surplus to assist its cash flow. The paragraph entitled “corporate cash flow” addressed this issue stating: Assuming that after any transfer of the pension plan continues to be in full funding, MDC would clearly improve its corporate cash flow for some period of time. Retiree medical benefit dollars that would have been paid from company assets would now come from pension assets. Tr. 188, Pltfs.Tr.Ex. 6. 72. Both Mr. Beebe and Mr. Allen stated that MDC’s overfunded pension surplus could be used to establish an Employee Stock Ownership Plan (“ESOP”). Mr. Allen also testified that, in addition to the main advantage of having pension expenses prepaid, the other possible uses of the asset of pension overfunding were to pay to retirees, as MDC had done after it ceased providing health care insurance to salaried retirees; to terminate the plan and recapture the overfunding; in a merger setting, the purchaser can use the over-funding if it has an underfunded plan, and there are different plan mergers vehicles to effect this end. 73. The financial community noted MDC’s use of the surplus cost to reduce its health care costs. For example, on November 12, 1993, Morgan Stanley reported the following: Pension Uses MD’s pension fund remains significantly overfunded. The company has already used the surplus to reduce health care cost and will continue to pursue other similar avenues to monetize the asset. Pltfs.Tr.Ex. 80. 74. Defendant reviewed the option of other ways to monetize the pension surplus. The company’s treasurer, Mr. Chase, also considered terminating the pension plan, transferring the surplus and using the excess assets to establish an employee stock ownership plan. According to Mr. Beebe, the pension surplus also would have made the company an attractive merger candidate. 75. An overfunded plan may also have value in the merger and acquisition context. A target company may be more attractive to a purchaser because it has an overfunded pension plan. An overfunded plan is an asset of the target company. 76. In the case of the merger or acquisition of MDC by Boeing Corporation, it was not necessary to merge the pension plans in order to realize the value in MDC’s plan. Overfunded plans such as MDC’s generate net income which favorably impacts the balance sheet. The over-funded plan stands as an asset and a potential source of income in its own right. From Boeing’s standpoint, it is desirable to acquire an overfunded plan like MDC’s, which was generating net income. 77. Mr. Allen testified that if MDC had recaptured the overfunding, it would have had to pay significant federal and state taxes. vi. Recapture of the Tulsa Surplus 78. In addition to the $24.7 million in pension and medical savings the company would reap from closing Tulsa, the company stood to recapture the pension surplus from the Tulsa segment of its business. In closing the Tulsa plant, MDC recaptured pension fund assets in excess of $11 million. 79. The Federal Acquisition Regulations (“FAR”) contain a provision that required MDC to “promptly notify the Contracting Officer in writing when it determines that it will terminate a defined benefit plan or otherwise recapture such pension fund assets.” FAR 52.215-27. Defendant failed to notify promptly the United States Government that it had recaptured the Tulsa pension surplus through closing that segment of its business. 80. As early as 1992, MDC opposed the government’s position that it should, on the basis of past contributions it made to funding MDC’s pension plans, receive an equitable share of the recapture of excess pension • plan assets. MDC’s opposition policy was circulated to the contract administration at Tulsa and it warned employees not to sign any government contract containing such a sharing provision, so as not to jeopardize the company-wide policy that the surplus was owned solely by the company. 81. More specifically, since at least 1992, MDC’s government contracting department was aware that the government was claiming a share of pension surplus arising from a “segment closing” of its business, like the closing of its Tulsa segment. 82. It was not until January 11, 1996, after the Defense Contract Audit Agency raised the issue concerning the Tulsa pension surplus, that MDC provided the government with its segment accounting. Documents prepared by Ernst & Young in conjunction with the audit show that MDC reaped a $25 million ($15 million salaried and $10 million hourly) pension surplus when it closed Tulsa. Mr. Beebe testified that MDC’s segment accounting showed that the actuarial asset value of the benefits was $33,199,000 as of November 11, 1994. As of that date, the Tulsa asset was combined with the assets of another segment of the company known as McAir. The liability associated with the $33 million asset was also transferred, amounting to $22 million resulting in a pension surplus of over $11 million. vii. Closing the Tulsa Plant 83. As described above, in 1993 MDC initiated “Project M.” 84. Richard Smoski, as the MDC executive in charge of its pension plans, periodically received data on the pension gains from the reductions in force. It was not uncommon for Mr. Smoski to be instructed by MDA-East’s Chief Financial Officer, William Austin, to calculate the impact of a plant closing, particularly whether there would be costs, a change in funding or a drop in earnings. Mr. Austin was a Project M team member. 85. While MDC claimed it never took the demographics of the plants into account, the “Project M Out Brief” on the Florida Missile Plant in Titusville, Florida listed “demographies” as one of the study’s significant considerations. 86. MDC claimed it examined all kinds of costs and benefits in its Project M analysis, including: (a) the cost of deactivating the plant and returning it to its original state; (b) the costs of any write-offs associated with any excess equipment, under-appreciated building improvements, and/or excess inventories; (c) the cost of moving equipment, tooling work in process, inventories, and selected employees to new work sites; (d) the costs associated with rearrangements at new work sites; (e) the costs associated with the disruption of the production lines; (f) the impact on total costs and on labor and overhead rates at the new work sites; and (g) the impact of any incentives associated with the movement of work such as state tax incentives or union concessions related to wage rates and job classifications. 87. While studying nearly every conceivable type of cost attributable to Tulsa, Project M analyst Mark Meyerhoff, who reported to Laurette Koellner, the head of Overhead Rates and Budgets, denied that he had looked at personnel costs associated with the plant closing such as accelerated pension effects, testifying under oath that he “never thought about it.” Meyer-hoff Dep.Tr. 52. 88. However, several Project M documents called for the pension costs to be evaluated along with each of the other kinds of costs Mr. Meyerhoff admitted to evaluating. Defendant’s outside actuaries Alexander & Alexander and Ernst & Young had told MDC that it would maximize its overfunded pension plans by focusing on plants with more senior and older workers. Much of that correspondence was directed to Richard Smoski, MDC’s director of pensions. 89. Contrary to Mr. Meyerhoffs testimony, his Project M meeting notes state that he was directed by the Project M Team to contact Mr. Smoski about the Tulsa plant closing’s effect on pension cost savings. Mr. Meyerhoffs meeting notes of September 10, 1993, reflect the following: “ * (2) call Rich Smoski (Pension benefits) effect on cost/earnings?” Pl.Tr.Ex. 58. 90. Mr. Juliano’s “Option Analysis” states that it “will be used as a decision-making aid for consolidation of McDonnell Douglas facilities,” in particular “considerations for the potential closure of the Tulsa, Oklahoma, facility.” Pltfs.Tr.Ex. 62. In the financial section is a page dated September 20, 1993 (within ten days of the date of Mr. Meyerhoffs notes) stating (§ 5.2.5) that the financial analysis of the effect of closing Tulsa will include a pension analysis: This category shows an estimate of the potential out-of-the-ordinary personnel related costs of closing the facility. An estimate will be prepared of severance liabilities for the FEP or CBU employees and accelerated pension effects. Pltfs.Tr.Ex. 62, M152 002 0290 (emphasis added). A later version of the “Project M Option Analysis,” dated November 10, 1993, contains identical language calling for the same pension analysis to be performed. C. Defendant’s Claimed Basis for Its Decision 91. At trial, MDC made two affirmative claims as to its reasons for closing Tulsa. First, it contended — as it had throughout the pretrial phase of the case— that pension considerations played no part in its decision. Second, it advanced as the sole reason for closing the contention that it closed the Tulsa plant for excess capacity reasons based upon economic and financial considerations presented to Mr. Capel-lupo by members of the Project M Team at a meeting on October 22,1993. 92. Following the trial, MDC has argued that certain evidence established that Tulsa was the logical candidate for closing, including the following: • MDC’s financial condition was serious; • Overcapacity was a problem throughout MDA-East; • No single product was produced completely by Tulsa and only at Tulsa; • MDC had tried to give Tulsa an anchor product line with the A-12, but that effort was unsuccessful; • Three plants had been closed before Tulsa; • St. Louis was not a realistic selection for closure; • The Mesa plant was designed strictly for helicopter manufacturing, and MDC had almost one-quarter billion dollars invested in the building; • The Titusville plant was competing for a winner-take-all contract to build the Tomahawk cruise missile, and closing Titusville before that contract was awarded would have severely damaged MDC’s chances of winning that contract; and • Tulsa was a leased facility. The federal government was undertaking to rid itself of such GOCO facilities. i. Record of Corporate Dishonesty 93.At trial, Plaintiffs contended that MDC’s stated reasons for closing Tulsa lacked credibility in part because they were embedded in a culture of corporate dishonesty. In addition to being dishonest about the reasons for the plant closure, MDC misrepresented to its work force, Oklahoma’s political leadership, and the public that it would remain open for three to five years if the Saudi contract were approved. Based on the evidence at trial, the Court concluded that a culture of dishonesty existed at the company and referred to testimony that “in some places is almost knee buckling in the way in which it evidences an abject disregard for people’s representations to their employees, their ‘teammates,’ people’s representations to the public and people’s representations to public officials.” Tr. 1143. 94. As set forth in the background facts above, MDC repeatedly represented that the fate of the Tulsa plant was directly tied to the success of the Saudi F-15 contract. On numerous occasions, Defendant represented that if the contract was won the company would operate the plant for at least three more years. 95. According to Baxter Tate, the company’s expert on government contracts and pricing, these representations were not true when they were made. Mr. Tate testified that during 1992, while Defendant was soliciting worker lobbying efforts in support of the Saudi F-15 contract by promising to assign the F-15 work to Tulsa and therefore keep the plant open for at least 3 years if the contract was approved, it had already decided that in fact the Saudi contract was not enough. In addition, Tulsa would have to receive both the F/A-18 modification contract and component work to stay open. These additional contingencies were never disclosed to the work force; to the contrary, employees were told over and over that if they helped MDC get the F-15, and it did, their jobs would be secure. 96. MDC kept its plans regarding the plant closing secret from its Tulsa plant manager, Don Bittle. At trial, Mr. Bittle testified that in retrospect the statements that Tulsa would stay open to do the F-15 work were untrue when made. He also testified that he had been kept in the dark by his superiors in St. Louis, and thus knew nothing about the Executive Council’s decision that in fact Tulsa would close unless the F/A-18, as well as additional component work, was obtained. Mr. Bittle also testified it was misleading to tell someone that if the F-15 contract was not won by the company, it would have to close the plant, without saying at the same time that the contract does not guarantee anything, unless additional work was obtained. 97.At trial, the Court inquired about why the company would keep a general manager in the dark about business issues where thousands of jobs were at stake: THE COURT: I’m having some difficulty understanding how a business decision can be made without the person responsible for the business at least getting a presentation opportunity to demonstrate why the business should be maintained. MR. BITTLE: The best I can explain to, Your Honor, is that we report to • the Vice President of Production Operations in his St. Louis, which was A1 Briggs and then later Pete Juliano. So it was my belief that any presentation on behalf of Tulsa would have been made by that organization to the people in St. Louis. I was not involved in that, I think, for one probably specific reason. If I did not have the knowledge that these studies were at this extent of going on, then if I were asked by the press or somewhere about a rumored shutdown of Tulsa I would not have the latest knowledge what was going on in Tulsa as to what the extent of that study was.... THE COURT: So you were told then that in fact you were not informed because they wanted to make sure that nobody — that you could answer truthfully nobody knew; right? MR. BITTLE: That’s correct. THE COURT: So in fact when you say whether or not there was an intentional effort to maintain a silence in order to maintain what turned out to be a false appearance, then you are telling me in fact there was such an intentional effort; right? You were told that. MR. BITTLE: Uh-huh. Tr. 297-300. Mr. Bittle also acknowledged that management in St. Louis was “knowing and witting of the false representations he was giving.” Tr. 317. 98. Furthermore, Mr. Bittle gave the following testimony at trial: THE COURT: Do you think, looking back on it, sir, that you were an instrument of misrepresentations, both to the work force and to the community of Tulsa? MR. BITTLE: That I was a misrepresentation? THE COURT: That you were an instrument of misrepresentation. THE WITNESS: Looking back on it, yes, I can see that that would be the deduction made, yes. Tr. 301. 99. MDC also engaged in sham negotiations with the City of Tulsa and the United States Government over the lease of the Tulsa facility. Specifically, Peter Juliano, who headed the Project M Team, admitted at trial that MDC had short-circuited the lease negotiations in bad faith. 100. Mr. Juliano gave the following testimony at trial: THE COURT: Is it fair to say, under those circumstances and his conduct in accordance with your instructions that that was not a quote “good faith negotiation,” when somebody is told whatever you do, you can’t enter into — you keep saying relationship, what you mean is a legally binding agreement; right? THE WITNESS: Correct. THE WITNESS: Correct, correct. THE COURT: So if you can’t — if you enter into negotiations but in fact you " can’t agree, is that a good faith negotiation? THE WITNESS: Sir, I don’t know as a matter of law. I would assume so. THE COURT: I’m just saying from your standpoint. You’re a businessman? THE WITNESS: Yes, sir. THE COURT: If you entered into something and you found out later they had no authority, in fact they were expressly told they couldn’t enter an agreement with you, but you had been sitting there talking about price and conditions and terms, would you consider that you had been involved in a good faith negotiation? THE WITNESS: Probably not. THE COURT: Probably not. I mean, do you think the mayor was wrong when she characterized those as good faith negotiations? She didn’t know it. THE WITNESS: Yes. THE COURT: But she was wrong? THE WITNESS: Right. Tr. 929-931. 101.Within days of the December 3, 1993 announcement of the Tulsa plant closing, representatives of the state of Oklahoma, the City of Tulsa and the impacted unions sought to remind Chairman McDonnell of the efforts they had undertaken to win the F-15 contract. Mayor Savage stated in her December 13, 1993 correspondence to the Chairman, “UAW President Owen Bieber” along with the community and elected officials “provided their combined full political support to assist the company in obtaining new F-15 work at the end of the Bush administration.” Pltfs.Tr.Ex. 90 at M152 002 0146. The Mayor concluded that “because of the previous concessions of UAW Local 1093, and the efforts of all with regard to the F-15, Tulsa deserves to have the F-15 work performed in Tulsa.” Id. at M152 002 0147. 102. MDC was aware of the substantial contribution made by the Oklahoma delegation to the company’s F-15 campaign. Indeed, Defendant’s Project M documents indicate that if its attempt to “weave a corporate-wide strategy” to escape its promises failed it might be “politically required” to leave the F-15 work in Tulsa with a small disadvantaged business subcontractor 103. The Department of Defense and its officials are direct customers of MDC. Congress is also viewed as an important piece of the puzzle because it appropriates the funds for the Defense Department’s budget. In 1993, there were 45 to 50 persons working in the company’s Washington offices, with six to eight performing the functions of congressional liaison. Chairman McDonnell was generally MDC’s final spokesperson, vis-a-vis Congress and the Department of Defense. Chairman McDonnell testified at trial that he did not believe he ever made an assessment of the nature and content of the communications that were made to the Oklahoma political delegation to determine whether MDC had made express representations inconsistent with closing the Tulsa facility. 104. Chairman McDonnell recalled meeting with the Mayor of Tulsa and seeing her letter, in which she expressed the belief that she was having a productive lease negotiation with MDC when the announcement to close the plant was made. He admitted that it was “probably not good judgment” to have entered into negotiations without informing the City that in fact the company’s representatives were instructed to avoid making any agreements. Mr. McDonnell also admitted receiving the newspaper articles containing Mr. Bittle’s statements that there would be a long-term relationship between MDC and Tulsa. Mr. McDonnell conceded that management should have told Mr. Bittle not to make such statements. As for his own role, the Chairman admitted that while he was ultimately responsible for approving the closure of the Tulsa plant, he never considered whether or not the community, public officials, or MDC’s own employees believed that they had been led to a conclusion that there was a long-term relationship with the company following the approval of the Saudi F-15 contract. ii. Claim that Pension Considerations Played No Part 105. In its opening statement, MDC took the position that an “element of cost ... that was not considered in the decision to close Tulsa was the cost of employee pensions.” Tr. 22. According to MDC, it had grossly overfunded pension plans and used zero dollar pension costs in all of its operational and budget planning, including Project M. 106. It was true that MDC pension plans were overfunded. The evidence showed, however, that MDC was committed to maximizing the surplus and monetizing it for the company’s own benefit. MDC monitored the surplus and the gains from the layoffs on a monthly basis. MDC was being advised how the age and service demographics of older segments of the work force with greater service could greatly increase the surplus when compared with a younger-shorter service segments of the workforce. 107. Mr. Meyerhoff testified that pension cost savings were not factored into the company’s financial analysis of the plant closing. The Court finds that this testimony is not credible. 108. There is evidence showing that pensions were valued in the financial analysis contrary to Defendant’s claim at trial. Mr. Meyerhoff signed an affidavit on October 23, 1998 which was filed in response to the Court’s request at summary judgment for the precipitating documents. Mr. Meyerhoffs affidavit stated that in preparing the financial analyses “he reviewed and analyzed the elements of expense savings listed on the pages M152 003 0604-0610,” contained in Defendant’s Trial Exhibit 19. One of the cost items listed in Defendant’s Trial Exhibit 19 called for an accounting of the accelerated pension benefits effect from the plant closing. When asked whether he provided Mr. Juliano with the pension study called for in Defendant’s Trial Exhibit 19, Mr. Meyerhoff responded: “If it’s something I could have given him on any of those pages, I might have given it to him. I did not ever give him anything with respect to accelerated pension benefits.” Tr. 470-471. Mr. Mey-erhoffs answer is contradicted by his affidavit in which he said he “analyzed the elements of expense and savings listed” in Trial Exhibit 19. Even though Mr. Mey-erhoff denied performing the calculation, he admitted knowing that an accelerated pension effect could occur when employees were laid off. Further, he testified that there could well be an accelerated pension effect, even when his other calculations included pension as a zero in his overhead studies of the plant closing. 109.Mr. Meyerhoffs Project M team notes reflect that he was instructed who to contact to determine the pension benefit effect of the plant closing on cost/earnings. This person was Rich Smoski who, in addition to being in charge of pension and payrolls, had been the contact person for the outside actuarial reports on maximizing the pension surplus through the demographics of the plant or segment of the population selected for lay off. Mr. Mey-erhoff claims he never made contact with Mr. Smoski. However, in light of the emphasis the company placed on tracking the pension surplus, the fact that the Project M team’s own documents called for the pension analysis, Mr. Meyerhoffs October 23, 1998 affidavit in which he states he performed the analysis, and his notes directing him to contact Mr. Smoski, the Court finds that Mr. Meyerhoffs testimony in this regard is not credible. As discussed next, Mr. Meyerhoffs credibility is further diminished by his testimony with respect to the financial analysis the company performed concerning the two options it reviewed for closing the Tulsa facility. iii. Affirmative Reasons Advanced by Defendant are not Credible 110. Defendant’s second contention was that its sole reason for closing the plant was the alleged non-pension and benefit savings. According to the trial testimony, on October 22, 1993, Peter Juliano and William Austin met with John Capellu-po to discuss closing MDC’s Tulsa plant. At that meeting, Mr. Juliano handed Mr. Capellupo Defendant’s Trial Exhibit 28, a seven page summary presenting two options for closing the Tulsa plant. Option 1 was to close the Tulsa plant and shift the F-15 AFT fuselage work to St. Louis, and Option 2 would leave that work in Tulsa with a “small disadvantaged business” contractor. Page six of the summary, captioned “Cost Impacts,” was blank. 111. Mr. Austin, who presented the financial aspects of Project M at the Capel-lupo briefing, testified that he carried the financial analysis of Option 1 to the meeting. Mr. Austin testified that in sensitive projects, like Project M, the company did not want the financial information widely dispersed within the company. According to Mr. Austin, he wanted the cost impacts to be run by his staff, without outside influence from any other part of MDC. For those reasons, he did not release a copy of the cost impacts, but instead carried that with him to the Capellupo briefing. 112. According to Mr. Austin, at the October 22, 1993 Capellupo briefing, he was asked no questions concerning Option 2 of Defendant’s Trial Exhibit 28. 113. Mr. Austin presented Mr. Capel-lupo with Exhibit 88, a one-page document titled “MDA-East Consolidation Project, Impact on Programs,” which only addressed the briefing memo’s Option 1. Mr. Capellupo turned to Mr. Austin and asked: “Is this a good business deal?” Mr. Austin stated, “[TJhis is a good business deal.” Tr. 918. 114. Mr. Austin and Mr. Juliano each testified that he had no reason to believe that any financial analysis used during the October 22, 1993, briefing, or relied upon in the decision to close Tulsa, was destroyed. Mr. Meyerhoff testified that, during the course of discovery, he turned over every document in his possession related to Project M. Mr. Meyerhoff further testified that while he destroyed some Project M documents in the normal course of business, he destroyed no significant financial analysis related to Project M, was never asked to destroy any such documents, and had no reason to believe that any such analysis had been destroyed by anyone else at MDC. Ms. Koellner likewise testified that she did not destroy any financial analysis related to Project M, and was unaware of the destruction of any such an analysis. 115. Other witnesses were not sure whether the seven page summary and the one-page supplement were the documents presented at the meeting. Mr. Capellupo testified that he does not remember what documents he was given. On cross examination, Mr. Tate, who testified he was at the meeting with Mr. Capellupo, backed away from his earlier identification of Exhibit 88, stating that he did not see the document Mr. Austin held. Mr. Juliano stated he was not given a copy of the financial information at the meeting, and on cross-examination testified that he did not hand the financial information to Mr. Capellupo, as Mr. Austin had only one copy of the document. 116. Mr. Juliano testified that no document containing a financial analysis of Option 2 of Defendant’s Trial Exhibit 28 was in the briefing of October 22, 1993. Mr. Juliano further testified that Mr. Austin brought to the meeting a single sheet of paper, Defendant’s Trial Exhibit 88. Mr. Austin testified that he took only Defendant’s Trial Exhibit 88 to the meeting. 117. As for the seven page summary, Exhibit 28, Mr. Juliano insisted during cross-examination that he was certain it was the precipitating document he took into the meeting and presented to Mr. Capellupo. However, that testimony is completely inconsistent with his deposition testimony, where he said he had “no idea” whether the document was the final summary of the recommendation Project M presented to Mr. Capellupo. 118. MDC did not even include either Defendant’s Trial Exhibit 88 or Exhibit 28 in its initial summary judgment filing, relying instead on Defendant’s Trial Exhibit 21. It was only when the Court required a complete copy of the comprehensive Project M report that the Exhibits 28 and 88 explanation was offered by a letter to the Court dated October 9,1998. 119. Rather than relying on Exhibits 28 or 88 on summary judgment, MDC instead appended to its summary judgment papers a one-page undated, unsigned summary analysis which, in an accompanying affidavit, Mr. Juliano averred was the financial basis of the decision to close Tulsa. The document (later identified as Defendant’s Trial Exhibit 21) is a five-year projection (1993-97) that shows an ultimate $20-million-plus gain from closing Tulsa 120. When John Capellupo, the primary decision maker, was deposed, he could not recall seeing.this summary analysis. Indeed, he testified that he saw it for the first time in preparing for his deposition. Mr. Capellupo further testified that the one-page summary analysis advanced by Mr. Juliano as the basis for the Tulsa closing decision would not have provided him with sufficient detail to decide the closing issue. Mr. Capellupo stated, “You need more information than this. You just can’t make a decision with this— on this basis.” Capellupo Dep.Tr. 116— 117. He said that the summary financial analysis also contained calculations that he could not explain and which appeared to be erroneous. 121. When the company shifted to Defendant’s Trial Exhibits 28 and 88 as the documents upon which the decision was based, the problems with this revised explanation were readily apparent. For one, Exhibit 88 does not fit in any way with Exhibit 28, the seven-page report it supposedly complements. The evidence shows that if Exhibit 28 was in fact the basic document, it would have contained the financial information necessary for Mr. Capellupo to make his decision. 122. Mr. Capellupo recognized at trial that it was unusual for the final executive summary to have a blank page where the financial analysis should be. Whe