Adams v. Ford Motor Co., 92-CV-71403DT.

• Decision Date: 31 March 1994
• Docket Number: No. 92-CV-71403DT.,92-CV-71403DT.
• Citation: Adams v. Ford Motor Co., 847 F.Supp. 1365 (W.D. Mich. 1994)
• Parties: Paul ADAMS, Jerry Baggett, Ron Baskerville, Robert Coch, Ron Curl, Michael Empel, William Frederick, G.P. Gagon, Gus Kefalos, Richard Gish, Calvin Jackson, Kenneth Johnson, Leonardo Martinez, Jerry Michael Moss, Michael Mykeloff, Michael O'Neill, Robert Saroli, Joanne Sleath, James D. Sprague, Wayne Thomas, and Johnie C. Taylor, Jr., individually and on behalf of a class, Plaintiffs, v. FORD MOTOR COMPANY, a foreign corporation, and Rouge Steel Company, a Michigan corporation, jointly and severally, Defendants.
• Court: U.S. District Court — Western District of Michigan

847 F. Supp. 1365

Paul ADAMS, Jerry Baggett, Ron Baskerville, Robert Coch, Ron Curl, Michael Empel, William Frederick, G.P. Gagon, Gus Kefalos, Richard Gish, Calvin Jackson, Kenneth Johnson, Leonardo Martinez, Jerry Michael Moss, Michael Mykeloff, Michael O'Neill, Robert Saroli, Joanne Sleath, James D. Sprague, Wayne Thomas, and Johnie C. Taylor, Jr., individually and on behalf of a class, Plaintiffs, v.FORD MOTOR COMPANY, a foreign corporation, and Rouge Steel Company, a Michigan corporation, jointly and severally, Defendants.

No. 92-CV-71403DT.

United States District Court, E.D. Michigan, S.D.

March 31, 1994.

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Robert H. Golden, Lathrup Village, MI, for plaintiffs.

Arnold G. Shulman, Dearborn, MI, for defendants.

OPINION AND ORDER REGARDING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

ROSEN, District Judge.

I.INTRODUCTION

This case involves various employment contract and employee benefit claims brought by a class of past and present salaried employees of DefendantRouge Steel Company.The claims arise from DefendantFord Motor Company's ("Ford") sale of a majority of stock in its then wholly-owned subsidiary, DefendantRouge Steel Company("Rouge Steel"), to Marico Acquisition Corporation("MAC") on December 15, 1989.

II.PROCEDURAL HISTORY

In their Second Amended Complaint, filed on April 30, 1993, Plaintiffs allege that they represent "a class of persons, such persons being all of the salaried employees of Rouge Steel immediately prior to its sale to MAC."Count I alleges that Ford and Rouge Steel breached an implied contract with Plaintiffs to make a good faith effort to find other positions for them at Ford when Plaintiffs were allegedly terminated by Ford as a result of the sale of Rouge Steel to MAC.Count II alleges that the sale of Rouge Steel to MAC in 1989 illegally denied Plaintiffs the opportunity to make up wage concessions granted prior to the sale.Count III alleges that Defendants made misrepresentations upon which Plaintiffs relied regarding the effect of the sale of Rouge Steel to MAC on their wages and benefits.Count IV alleges that Ford violated ERISA, and the terms of Ford's own pension plan, by instituting a formula for determining which Rouge Steel employees would receive a Ford pension and which employees would receive a Rouge Steel pension.Finally, Count V alleges that Plaintiffs are entitled to benefits under Ford's Salaried Income Security Plan (SISP) because they were allegedly terminated from Ford employment when the sale of Rouge Steel to MAC took place.

This Court certified Plaintiffs' class on April 7, 1993.Discovery concluded on June 30, 1993.Defendants filed motions to dismiss all of Plaintiffs' counts on July 29 and September 21.¹Plaintiffs responded on August 12 and October 8.Defendants replied on October 14 and filed a correction of their September 21 Motion and Brief on November 18.Having reviewed the parties' briefs, and after hearing extensive oral argument from counsel on December 21, 1993, the Court is now ready to rule on Defendants' motion.This Memorandum Opinion and Order sets forth that ruling.

III.FACTUAL BACKGROUND

A.GENERAL BACKGROUND.

Prior to 1982, Rouge Steel was a division of Ford known as the "Steel Division."On January 1, 1982, Rouge Steel became a separate corporation wholly owned by Ford.All Steel Division employees were removed from Ford's employment rolls and were placed on the separate employment rolls of Rouge Steel.Although the employees filled out new employment applications as part of this change, they still retained or enjoyed Ford benefits, Ford identification cards, Ford profit sharing, and Ford lease plans.The parties also have stipulated to the following with regard to the 1982 creation of Rouge Steel as a wholly-owned subsidiary:

Upon transferring to Rouge Steel Company in 1982, the Plaintiffs and class members signed statements acknowledging that the terms and conditions of their employment with Rouge Steel Company would remain the same as they had been at Ford, except that wages and benefits might vary.

Joint Final Pre-trial Order¶ 4B.

In 1989, Ford entered into negotiations with MAC for the sale of 80% of the stock of Rouge Steel.MAC then merged with Rouge Steel to form Marico-Rouge Steel (hereinafter "Rouge Steel").The sale was eventually consummated on December 15, 1989.

In an effort to keep the Rouge Steel work-force intact, Defendants offered each Plaintiff as much as $6,000 in incentive pay if they would stay at Rouge Steel.Joint Final-Pretrial Order¶ 4M.At the hearing on Defendants' motion, it was established that at least all deposed class members had accepted this payment.Rouge Steel made another retention payment up to a maximum of $7,000 per employee in December, 1992.Id.At least all deposed class members accepted this second retention payment as well.

B.FACTS IMPLICATED IN COUNT I.

At the time of the sale, a number of class members unsuccessfully attempted to transfer to Ford pursuant to language in Ford's Supervisor Manual (hereinafter "Ford Manual" or "Manual").This Manual was applicable to all of Ford's salaried employees for the entire period involved in this case, and provided, inter alia:

The policies, practices, and procedures included in the statements of this Manual are subject to change without notice.Nothing in this manual is intended to create or constitute an employment agreement with any employee.All decisions by the Company as to the interpretation or application of such policies and all determinations of fact by the Company with respect to the application of such policies shall be final and binding upon the employees affected.The contents of this Manual shall not, under any circumstances, be deemed to be a part of any employment agreement with any employee.* * *

A "termination" occurs whenever an employee is separated from the salaried employment rolls for any reason.The various types of terminations, which are discussed in detail in the following pages, are:

* Quit

* Layoff

* Retirement

* Discharge

* Death

* Release

* * * * * *

An employee may be "Released" from the Company for any of the following reasons:

* At Company Option or Under Mutually Satisfactory Conditions * * *

* Approved move to a subsidiary.* * *

Employees who have been notified of their pending separation from the Company as a result of a reduction in force (layoff) are considered "available."In certain circumstances, employees who are to be released may be made "available."* * *

Each staff or division must make every effort to place qualified "available" employees within the component before placement elsewhere in the Company is considered.Supervisors with position openings must consider such employees before looking outside the Company.Every reasonable effort must be made to place these employees in open positions with the same salary and comparable responsibility, or, if this fails, open positions paying at least 80% of the current salary.

Manual, pp. ii, 1000, 1001, 1009 (bold emphasis in original; underlining emphasis added).

The requests by those class members who sought a transfer under the Manual's placement policy quoted above were denied on the ground that the policy did not apply to them.SeePlaintiffs' Brief, Exhibit 3.²Plaintiffs challenge this decision in Count I of their complaint.

C.FACTS IMPLICATED IN COUNT II.

Important to Count II of Plaintiffs' complaint are the following facts: In 1981 and again in 1983, Defendants received wage and benefit concessions of an undetermined amount from Plaintiffs.Plaintiffs claim that at the time the concessions were given to Ford, they received representations that the concessions would be returned upon better economic performance by Ford.SeeDefendants' Brief, Exhibit 3 (answers to Interrogatory # 28).According to Plaintiffs, the sale of Rouge Steel to MAC unlawfully deprived them of the opportunity to make good on these representations.

D.FACTS IMPLICATED IN COUNT III.

Just prior to the sale of Rouge Steel to MAC, Plaintiffs received a letter and attachment dated November 30, 1989, from J.C. Hausman, Ford's Vice President for Employee Relations ("Hausman letter").The Hausman letter states:

Marico plans to continue employment of virtually all Rouge Steel employees and to provide pay and benefits basically at levels you enjoy today.Generally, existing Rouge Steel salaried programs will continue following the sale.In some cases, separate plans will have to be established to reflect the change of ownership.Participation in Ford programs will continue on an interim basis until the new programs are in place.* * *

Marico/Rouge Steel Company reserves the right to determine the terms of its plans and programs and the right to amend or terminate them at any time.

Hausman letter; attachment to letter, p. 4(found in Defendants' Brief, Exhibit 4).

Since 1989, Plaintiffs have experienced some erosion of their employee benefits.SeePlaintiffs' Brief, Exhibit 5 (notice that as of August, 1992, Rouge Steel would no longer pay for increases in optional life insurance premiums), Exhibit 6 (notice dated February 23, 1990, stating that Rouge Steel would not be providing a vehicle lease program), and Exhibit 7 (bulletin dated June 18, 1991, stating that Rouge Steel would temporarily suspend its matching contributions to the salaried employees savings plan).They have also not received wage increases in line with those granted by Ford since the sale.Defendants' Brief, Exhibit 3 (answers to InterrogatoryNo. 37).In Count III of their complaint, Plaintiffs claim that they should receive these lost benefits and other damages because the representation in the Hausman letter above that Rouge Steel would provide them with basically the same benefits as they had before the sale was fraudulent.

E.FACTS IMPLICATED IN COUNT IV.

Ford's General Retirement Plan ("GRP") gives the board of...