Hickey v. A.E. Staley Mfg.

• Decision Date: 01 June 1993
• Docket Number: No. 91-3584,91-3584
• Citation: 995 F.2d 1385
• Parties: 16 Employee Benefits Cas. 2387, Pens. Plan Guide P 23891K Michael HICKEY, Fred Jung, Michael Crowley, et al., Plaintiffs-Appellants, v. A.E. STALEY MANUFACTURING, formerly known as Staley Continental Incorporated, formerly known as CFS Continental, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1385

995 F.2d 1385

16 Employee Benefits Cas. 2387, Pens. Plan Guide P 23891K

Michael HICKEY, Fred Jung, Michael Crowley, et al., Plaintiffs-Appellants, v. A.E. STALEY MANUFACTURING, formerly known as Staley

Continental Incorporated, formerly known as CFS

Continental, Defendant-Appellee.

No. 91-3584.

United States Court of Appeals, Seventh Circuit.

Argued June 2, 1992.

Decided June 1, 1993.

Allen Weissman (argued), Chicago, IL, for plaintiffs-appellants.

Mark A. Casciari (argued), Condon A. McGlothlen, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, IL, for defendant-appellee.

Before BAUER, Chief Judge, COFFEY and RIPPLE, Circuit Judges.

COFFEY, Circuit Judge.

Michael Hickey, Fred Jung, Michael Crowley, Leonard Wall and Vincent Vitucci ("the plaintiffs") sued A.E. Staley Manufacturing Company ("the defendant") after being denied severance benefits under the defendant's severance pay plan ("the Plan"). The district court granted summary judgment for the defendant finding that the plaintiffs failed to satisfy the Plan's definition of participant ("employed by and located at the headquarters office"). The Plan is governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., which authorizes federal court jurisdiction. Id. § 1132(e). We affirm.

I. BACKGROUND

In November 1984, A.E. Staley ("Staley Manufacturing") acquired CFS Continental ("CFS"), a manufacturer and distributor of consumer goods and food products. Shortly thereafter, Staley created a new corporation, Staley Continental, Inc. ("SCI"), to serve as the parent and holding company of Staley Manufacturing and CFS. At this time, CFS was re-structured into three separate and distinct divisions: the CFS headquarters office (100 South Wacker Drive, Chicago, Illinois); the manufacturing division; and the distribution division. The plaintiffs in this case were employed at the manufacturing division and none of them were ever employed at the headquarters office on 100 South Wacker Drive.

The three divisions of CFS were not only geographically separated, but also fulfilled separate and distinct functions and maintained individual hierarchical structures. The CFS headquarters office group was known as the CFS headquarters staff, the CFS corporate staff, and "the Cohns' staff," (named after the chief officers of CFS, Robert and Alvin Cohn). Plaintiff Hickey testified that the CFS headquarters was located at 100 South Wacker Drive in Chicago, Illinois. The headquarters staff performed corporate administrative functions for all the divisions of CFS. The manufacturing division, located at 2550 North Clybourn Avenue in Chicago, Illinois, produced consumer products and foodstuffs. It was known as the CFS manufacturing group, the Staley Foodservice Company, the Staley Continental Foodservice Company, and "Hansen's staff," (named after its President, Don Hansen). The distribution division, located in Century City, California, distributed foodstuffs and consumer products. It was known as the CFS distribution group, the Continental foodservice division, the Continental Foodservice group and "Siegel's staff," (named for its President, Richard Siegel).

In 1986 and 1987, the plaintiffs were all employed in the manufacturing division on 2550 North Clybourn, Chicago, Illinois. The plaintiffs performed functions within the manufacturing division as part of "Hansen's staff." The plaintiff Michael Hickey, while reporting to Hansen, served as Vice President and Controller of the CFS manufacturing division from December 2, 1985 until his termination on October 31, 1988. The second plaintiff, Leonard Wall, reported to Hickey and acted as a financial analyst for Continental Coffee Products Company (a CFS manufacturing division company), and later served as Assistant Controller for the CFS manufacturing division until his termination on September 30, 1988. The third plaintiff, Fred Jung, also reported directly to Don Hansen while serving as Vice President of Planning and Development of CFS manufacturing division from February 3, 1986, until his discharge on August 31, 1988. The fourth plaintiff, Vincent Vitucci, reported to Hansen and was the Vice President of Management Information Systems for CFS manufacturing division from April 16, 1986 until his termination on November 30, 1988. Finally, the plaintiff Michael Crowley reported to Vitucci while managing systems development for CFS manufacturing division from July 2, 1986 until he was released on November 30, 1988.

In 1987 and 1988, SCI began negotiations to sell CFS (Tate & Lyle took over SCI in April 1988 and sold CFS to the Sysco Corporation in June 1988). In the course of the Sysco acquisition, the CFS headquarters office was moved from 100 South Wacker Drive, Chicago, Illinois, to another location in the One Continental Towers Building, in Rolling Meadows, Illinois. During this period of transition, the manufacturing division offices were moved to another floor of the One Continental Towers. The plaintiffs continued to work in the manufacturing division at the Rolling Meadows offices until their termination.

On April 7, 1987, in anticipation of a future takeover of CFS, SCI established The CFS Continental Severance Pay Plan to protect CFS headquarters employees. Staley's Vice President of Human Resources, Robert W. Pirsein directed Staley's human resources attorney, Mary E. Busch to draft the Plan, which he later approved. In affidavits filed with the district court, both Pirsein and Busch assert that Pirsein "intended the Plan to cover only the positions at the CFS headquarters' office in April 1987 ... because [they] believed that in the event of a takeover of CFS, the CFS headquarters' office positions would be less secure than the CFS divisional staff positions." Pirsein Affidavit pp 5-6 in Appellee's Appendix at 2; Busch Affidavit p 6 in Appellee's Appendix at 8. At the time the Plan was written, CFS's headquarters office was still located at 100 South Wacker Drive, Chicago, Illinois. The "Purpose" section of the Plan states:

Staley Continental, Inc. ("Company") has established the CFS CONTINENTAL SEVERANCE PAY PLAN (the "Plan") to provide certain employees of CFS Continental, a division of the Company ("CFS") minimum compensation and benefit rights in the event that employment is terminated as a result of change in corporate control.

Section I. The definitions section limits participation to

any employee who (i) is employed by and located at the headquarters office of CFS; (ii) customarily works thirty-two or more hours per week; and (iii) is not entitled to receive benefits from the company pursuant to a retention agreement.

Section II(2.1) (emphasis added).

The plaintiffs disagreed with Pirsein's and Busch's interpretation of the term "Participant" in the Plan ("to cover only the positions at the CFS headquarters' office in April 1987"), yet the plaintiffs failed to offer any evidence or affidavits to refute Staley's definition of "Participant." In fact, Hickey testified

[W]e knew that the 100 South Wacker Drive was going to close and there was only going to be one corporate office. It's really at that time it's my understanding that when the initial severance pay plan was put together was because of that. They knew it was going to close and certain people would wind up leaving and certain would not.

Appellee's Brief at 12 (quoting Hickey Deposition at 21).

In February 1989, plaintiff Hickey filed a claim for benefits under the Plan and the plaintiff Crowley filed a similar claim two months later in April of 1989. Staley denied both of their claims in letters from the Manager of Compensation and Benefits. Plaintiffs Fred Jung, Leonard Wall, and Vincent Vitucci never saw fit to file separate benefit claims, but joined with Hickey and Crowley in filing this action against Staley. ¹

All of the plaintiffs were terminated from CFS after the Sysco acquisition. They argue that they are entitled to welfare benefits under the CFS severance Pay Plan because they were "employed by and located at the headquarters' office of CFS." Section II(2.1). The record reveals that no manufacturing or distribution division employees have ever received severance benefits under the Plan, but three distribution division employees negotiated "separation agreements" in order that they might receive some compensation upon their termination.

II. ISSUES

The plaintiffs, on appeal, argue that the district court grant of summary judgment to the defendant was improper. Specifically, the plaintiffs claim that the trial court erred in determining that the Plan was intended to cover only corporate headquarters employees at 100 South Wacker Drive. Secondly, the appellants contend that the court erred in establishing an eligibility date for severance benefits of April 7, 1987.

III. DISCUSSION

A.

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). This court reviews "issues decided on summary judgment de novo, and ... resolve[s] all reasonable inferences in favor of the nonmoving party," Kennedy v. United States, 965 F.2d 413, 417 (7th Cir.1992), "[h]owever, the non-moving party may not simply rest on his pleadings, but must demonstrate by specific evidence that there is a genuine issue of triable fact." Swanson v. Village of Lake in the Hills, 962 F.2d 602, 603-04 (7th Cir.1992). "A genuine issue of material fact exists only when there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." County of Vernon v. United States, 933 F.2d 532, 534 (7th Cir.1991). Rule 56(c) requires entry of summary judgment if the nonmoving party fails to come forth with evidence to refute the allegations of the...