Giordano v. Thomson
| Decision Date | 06 September 2005 |
| Docket Number | No. 03-CV-5672 (JS)(JO).,03-CV-5672 (JS)(JO). |
| Parties | Joseph J. GIORDANO, Plaintiff, v. John B. THOMSON, Jr., Thomson Industries, Inc., and Danaher Corporation, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
Ngozi E. Bolin, William Dan Boone, Esq., Bolin & Boone, New York, NY, for Plaintiff.
John T. Morin, Esq., Wormser, Kirly, Galef & Jacobs, LLP, New York, NY, for Defendants.
On November 10, 2003, Plaintiff Joseph Giordano commenced this action against his former employer, Thomson Industries Inc. ("TII"), John B. Thomson Jr., TII's former Chairman and sole shareholder, and Danaher Corp. for damages allegedly sustained when he was terminated as Chief Financial Officer ("CFO") of TII. Plaintiff is suing under the Employee Retirement Income Security Act ("ERISA") for: (1) failure to pay severance and supplemental executive retirement plan ("SERP") benefits; (2) retaliatory interference with his rights to these benefits; and (3) refusal to timely produce pertinent information regarding his severance and SERP benefits. In addition to these ERISA-based claims, Plaintiff alleges breach of contract and implied contract relating to bonus and additional salary. Plaintiff also makes a claim for unjust enrichment.
Currently pending before this Court are Defendants' motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. In addition, Plaintiff requests summary judgment on the improper denial of severance and SE RP benefits.
As a preliminary matter, this Court finds, as a matter of law, that TII's severance policy is an "employee welfare benefit plan" subject to ERISA. This Court also finds that TII's SERP is not an "unfunded excess benefit plan," and is also subject to ERISA. Aside from these findings, however, this Court denies summary judgment on the pending motions. In light of the competing factual evidence presented by the parties, material facts remain on all claims. The pending summary judgment motions are DENIED.
The following background facts are not in dispute. TII was acquired by Danaher Corp. in October 2002. Prior to its sale, it was owned solely by Defendant John B. Thomson. Plaintiff was an adviser and consultant to TII for approximately eight years before becoming its acting CFO on May 24, 2000. As of September 1, 2000, Plaintiff served as TII's CFO.
In 2002, Plaintiff was involved in arranging for the sale of the company. On October 16, 2002, while signing a number of sale-related documents, Plaintiff refused to sign a release statement. By signing the release, Plaintiff would have waived any potential claims against TII, Danaher, and those companies' respective officers. The potential claims included, but were not limited to, causes of action arising under ERISA. Plaintiff was terminated the following day, October 17, 2002. The instant action ensued.
Rule 56 of the Federal Rules of Civil Procedure provides for summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). It is the moving party's burden to demonstrate the absence of any genuine issue of material fact. Marvel Characters, Inc. v. Simon, 310 F.3d 280, 286 (2d Cir.2002)(citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)). Material facts are those which would "affect the outcome of the suit under governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
After the movant meets his burden, it is incumbent on the non-moving party to respond with "significant probative evidence" that a dispute remains. Id. at 249, 106 S.Ct. 2505. The non-moving party "may not rest upon the mere allegations ... of [its] pleading, but ... must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e).
In ruling on a motion for summary judgment, the Court's task is not to "weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249, 106 S.Ct. 2505. It is within this standard that the Court analyzes the instant motions.
Three of Plaintiff's six claims are brought under ERISA. Before reviewing the Plaintiff's claims, this Court must first, as a preliminary matter, address whether TII's severance and SERP plans are governed by ERISA.
"There is no question that a program to pay severance benefits may constitute an `employee welfare benefit plan'" as specified by ERISA § 3, 29 U.S.C § 1002. James v. Fleet/Norstar Financial Group, Inc., 992 F.2d 463, 464, 467-68 (2d Cir.1993); see also Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 7 & n. 5, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987) (). The touchstone of an ERISA plan is the presence of an "ongoing administrative program" to meet the employer's obligation. Davis v. Commercial Bank of New York, 275 F.Supp.2d. 418, 423-424 (S.D.N.Y.2003); see also Kosakow v. New Rochelle Radiology Associates, 274 F.3d 706, 737 (2d. Cir.2001). The Second Circuit has held that when determining whether a severance plan constitutes an ERISA plan the following factors shall be considered: (1) whether the employer's undertaking or obligation requires managerial discretion in its administration; (2) whether a reasonable employee would perceive an ongoing commitment by the employer to promote benefits; and (3) whether the employer was required to analyze the circumstances of each employee's termination separately in light of certain criteria. Tischmann v. ITT/Sheraton Corp., 145 F.3d 561, 566 (2d Cir.1998) (citing Schonholz v. Long Island Jewish Medical Center, 87 F.3d 72, 76 (2d Cir.1996)). The Second Circuit has not found any of these factors determinative. Schonholz, 87 F.3d at 76.
Given the stated "purpose of ERISA to protect workers from abuses in the administration and investment of private employee welfare and retirement plans," Bennett v. Gill & Duffus Chemicals, Inc., No. 85-CV-4119, 1987 WL 34256, at *3 (S.D.N.Y. December 29, 1987)(citing H.R.Rep. No. 93-533, 93d Cong.2d Sess., as reprinted in 1974 U.S.C.C.A.N. 4639), this District has found that even an "unpublished severance benefits package [is] cognizable under ERISA." Clay v. ILC Data Device Corp., 771 F.Supp. 40, 45 (E.D.N.Y.1991); see also Blau v. Del Monte Corp., 748 F.2d 1348, 1352 (9th Cir.1984). "An ERISA plan may be created without the adoption of a formal plan, even unintentionally." Aiena v. Olsen,. 69 F.Supp.2d 521, 532 (S.D.N.Y. 1999). An employer's past practice of awarding severance may establish that a plan exists. Donovan v. Dillingham, 688 F.2d 1367, 1372-73 (11th Cir.1982); Blau, 748 F.2d at 1355.
The Plaintiff argues that TII's severance policies meet the Schonholz criteria in light of TII's internal memorandum "Severance Practices at Thomson" (Pl.Ex. D), TII's performance over the past 12 years in awarding severance, and Plaintiff's executive-level knowledge of decision-making at TII. The Defendants, denying that the criteria are met, rely primarily on the fact that the policy was unpublished. However, the case law does not support Defendants' argument. In light of the evidence presented, this Court finds that the Schonholz criteria are met.
On its face, TII's internal memo regarding severance states that the Vice President for Human Resources, Patrick M. Mazzeo, had the "discretion to bargain the terms of individual separation agreements" for involuntarily terminated non-union employees. Def. Marl. Aff. Ex. F at 3, ¶G. Discretion similarly played a role in rewarding "extraordinary service." Def. Marl. Aff. Ex. F at 3, F. Defendants, while noting that Mazzeo's "flexibility to operate outside [the] guidelines [had] been ... dramatically tightened," do not deny Mazzeo's discretion in these matters. Def. Mem. in Opp. at 13; Def. Marl. Aff. C-M Ex. F at 123.
Plaintiff argues that he knew from firsthand experience that TII had a severance policy by virtue of the procedures followed during the 2001 involuntary termination of Mr. Mark Levine, who reported directly to Plaintiff. Pl.Ex. I at 130, 134. Plaintiff further notes that the severance arrangements were in effect "since at least 1989," Pl.Ex. D at 1, and were incorporated into the final purchase and sale agreement of TII to Danaher, "acknowledging that TII considered ... the [s]everance [p]ractices .. an ... obligation that require[s] disclosure to Danaher." Pl. Mem. in Supp. at 12; Pl.Ex. R. ¶ c.
Defendants argue that Plaintiff had been told by Mazzeo that "it is [TII's] policy to not have a policy." Def. Marl. Aff. C-M Ex. F at 118. Defendants also emphasize that Plaintiff testified that he had not seen the severance practices memorandum. Def. Marl. Aff. C-M Ex. G at 130.
The Defendants' assertions fail to directly challenge the evidence of Plaintiff's cognition of TII's practices and his reasonable expectation that there was a long-term commitment to pay severance.
Plaintiff argues that TII's severance practices memorandum depicts the use of discretion in awarding severance packages "according to ... criteria ... described as `guidelines' or `benchmarks...
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