Fici v. Lucent Technologies Inc.
| Decision Date | 10 September 2008 |
| Docket Number | Civil Action No. 02-CV-10536 RCL. |
| Citation | 581 F.Supp.2d 143 |
| Parties | Paul FICI and Anthony P. Boremi, Plaintiffs v. LUCENT TECHNOLOGIES INC., et al., Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Thomas G. Moukawsher, Moukawsher & Walsh, LLC, Hartford, CT, Mala M. Rafik, Rosenfeld & Rafik, PC, Boston, MA, for Plaintiffs.
Terence H. McGuire, Evan J. Spelfogel, Epstein Becker & Green, P.C., New York, NY, Christopher Novello, Foley & Lardner LLP, Boston, MA, for Defendants.
ORDER ON REPORT AND RECOMMENDATION
Order entered approving Report and Recommendations. Summary Judgment allowed. Judgment shall enter for the defendants.
REPORT AND RECOMMENDATION ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT OR DIMISSAL (Docket # 173)
On March 22, 2002, Plaintiffs Paul Fici and Anthony P. Boremi (collectively, "Plaintiffs") sued their former employer, Lucent Technologies Inc. ("Lucent")1, for breach of fiduciary duty under ERISA2 §§ 502(a)(1)(B)3 & (a)(3)4. Plaintiffs contend that Lucent breached its fiduciary duty by misrepresenting information and failing to disclose terms regarding a series of early retirement packages offered in mid to late 2001. Having elected early retirement in April and July 2001, Plaintiffs seek to recover the benefits of a more advantageous benefits package offered in September 2001.
Lucent now moves for summary judgment or dismissal contending, among other things, that Plaintiffs failed to establish the existence of an "ERISA plan." After reviewing the parties' submissions5, holding a hearing on the motion, and for the reasons detailed below, this Court concurs and RECOMMENDS that Lucent's motion for summary judgement be ALOWED.
Fici and Boremi worked for Lucent at the Merrimack Valley Works ("Merrimack Valley") manufacturing facility in North Andover, Massachusetts until 2001. Plaintiffs were members of the collective bargaining unit represented by the Communication Workers of America union ("CWA"). In early 2001, Lucent made known that it wished to outsource and subcontract much of the work performed at the Merrimack Valley facility. Lucent soon began negotiations with local branches of the CWA to discuss the fate of the Merrimack Valley employees—mainly the severance benefits to be offered in connection with anticipated work force reductions. The talks resulted in a Memorandum of Agreement ("MOA") that enhanced an existing early retirement benefits package (i.e. voluntary) known as the Lucent Career Transition Option Program ("LCTOP"). In addition, the fifth paragraph of the MOA included a summary of the benefits enumerated and reserved for involuntarily terminated employees.6 In effect, paragraph five of the MOA ("Paragraph Five")7 provided for a more generous benefits scheme than that allotted to individuals electing early retirement or another form of voluntary separation under the enhanced LCTOP provision of the MOA.8
As a way of advising employees of their enhanced LCTOP eligibility and informing them of voluntary separation options, Lucent sent two letters aimed at inducing selection of early retirement. Both the April 2, 2001, and July 12, 2001, letters offered eligible Merrimack Valley employees the LCTOP early retirement package enhanced by paragraph four of the MOA. However, neither letter disclosed information about the Paragraph Five benefits for involuntarily terminated employees. More than 500 eligible employees, including Plaintiffs, accepted early retirement upon receipt of the April and July letters. Lucent eliminated the remaining surplus, amounting to hundreds of other employees, by means of involuntary termination in reverse order of seniority. Accordingly, these individuals received the more substantial Paragraph Five benefits.
On September 25, 2001, after reaching a special agreement with the CWA, Lucent sent a third letter to all remaining Merrimack Valley employees. Pursuant to the new agreement, Paragraph Five benefits replaced the enhanced LCTOP benefits across the board. This time, unlike in April and July, even employees electing to leave voluntarily would receive the Paragraph Five benefits previously available only to employees involuntarily terminated. In response to this offer, over 1,200 eligible employees voluntarily ended their employment in September.
As discussed, although Lucent prepared and transmitted letters to Merrimack Valley employees in April and July highlighting the enhanced LCTOP benefits, it did not disclose the terms of the MOA concerning the Paragraph Five benefits until the September offer. Plaintiffs, who opted for early retirement in April and July, contend that had Lucent informed them of the Paragraph Five benefits at the time they made their retirement decisions, neither would have chosen to voluntarily separate. Plaintiffs assert that had they remained employed, they would have received Paragraph Five benefits either by involuntary termination in April or July or by voluntary separation after the revised September offer.
Summary Judgment is appropriate when "the pleadings, affidavits, admissions, answers to interrogatories, and other materials, viewed in the light most favorable to the nonmoving party, reveal no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Bacou Dalloz USA, Inc. v. Cont'l Polymers, Inc., 344 F.3d 22, 26 (1st Cir.2003); Fed.R.Civ.P. 56. In order for summary judgment to be granted on a particular count, the moving party must show that "there is an absence of evidence to support" the nonmoving party's claim. Desrosiers v. Hartford Life & Acc. Ins. Co., 354 F.Supp.2d 119, 123 (D.R.I.2005) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). The nonmoving party cannot rest on its pleadings in response to the motion for summary judgment but must "set forth specific facts demonstrating that there is a genuine issue for trial" as to the claim that is the subject of the summary judgment motion. Id. (quoting Oliver v. Digital Equip. Corp., 846 F.2d 103, 105 (1st Cir. 1988)). "[C]onclusory allegations, improbable inferences, and unsupported speculation" are insufficient to establish a genuine dispute of fact. Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990).
Plaintiffs raise their claims under ERISA §§ 404 and 502, alleging Lucent breached its fiduciary duty by violating the prescribed standard of care9. In order for Plaintiffs to sue Lucent for failing to comply with an ERISA mandate, Plaintiffs must establish that an ERISA plan exists. See ERISA § 502(a)(1)(B). Thus, in order to determine if Plaintiffs have an ERISA claim, this Court must first determine if the LCTOP as modified by the MOA, or the MOA itself, are ERISA plans. Quite simply, in the words of United States District Judge Woodlock, "if there is no ERISA `plan', there is no ERISA claim." White v. Bell Atl. Yellow Pages, No. 01-10157-DPW, 2004 U.S. Dist. WL 594957, at *7 (D.Mass. Mar. 23, 2004).
ERISA defines a plan as a "an employee welfare benefit plan or an employee pension benefit plan," or a plan which is both. See ERISA § 3(3)10; see also White, 2004 WL 594957, at *7. The Supreme Court clarified this rhetorical definition in Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987), by holding that an employee benefit package is an ERISA plan only if its "provision by nature requires an ongoing administrative program to meet the employer's obligation." Id. at 11, 107 S.Ct. 2211. The First Circuit applied the Fort Halifax test to benefit plans at issue in Belanger v. Wyman-Gordon Co., 71 F.3d 451 (1st Cir.1995) modified on other grounds, Rodowicz v. Mass. Mut. Life Ins. Co., 195 F.3d 65 (1st Cir.1999), Rodowicz v. Mass. Mut. Life Ins. Co., 192 F.3d 162 (1st Cir.1999), and O'Connor v. Comm. Gas Co., 251 F.3d 262 (1st Cir.2001) ("O'Connor II"). Given the similarities between the enhanced LCTOP and Paragraph Five severance benefits of the MOA and those benefits analyzed in the aforementioned cases, a brief examination of these First Circuit precedents is particularly instructive.
In Belanger, a group of employees who accepted "capped offer-Offer No. 3-as an inducement to take early retirement," sued their former employer after learning that "Offer No. 4" embodied far more generous terms. 71 F.3d at 453. The Belanger plaintiffs alleged that the series of offers constituted an ERISA plan, that the plan fell short of ERISA's mandates, and that the shortcomings entitled plaintiffs to damages based on what they would have received had "Offer No. 3" not been capped. Id. United States District Court Judge Gorton concluded that ERISA did not apply and entered judgment for the employer. Id. at 455. On appeal, Judge Selya of the First Circuit upheld Judge Gorton's conclusion stating that "[n]othing in the offers, whether they are assessed individually or in the aggregate, reflects the company's assumption of an ongoing administrative or financial obligation to its employees within the purview of Fort Halifax." Id.
Four years later, plaintiff retirees in Rodowicz appealed United States District Judge Ponsor's dismissal of a similar ERISA claim filed against their former employer. 192 F.3d at 166. The Rodowicz plaintiffs alleged their employer violated ERISA when it failed to inform them, at the time of their retirement, that a more favorable retirement package was forthcoming. Id. The First Circuit affirmed the District Court's dismissal holding that a one-time lump sum severance payment did not require the sort of long term financial commitment or administrative burden and expense contemplated by the Supreme Court in establishing the Fort Halifax test. Id. at 171.
In 2001, the First Circuit in O'Connor II again declined to conclude that ERISA applied to a benefits package that consisted...
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...the benefits involve the sort of ongoing discretion as to eligibility at issue in Simas. Notably, the court in Fici v. Lucent Techs., Inc., 581 F.Supp.2d 143, 151–52 (D.Mass.2008), concluded that the MOA was not an ERISA plan. After trial, I agree. A finding that the LCTOP and paragraph 5 o......