Kolkowski v. Goodrich Corp.
| Decision Date | 18 May 2006 |
| Docket Number | No. 05-3339.,05-3339. |
| Citation | 448 F.3d 843 |
| Parties | Brian M. KOLKOWSKI, Plaintiff-Appellant, v. GOODRICH CORPORATION, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Kenneth B. Stark, Duvin, Cahn & Hutton, Cleveland, Ohio, for Appellee. Brian M. Kolkowski, Leroy, Ohio, pro se.
Before: SILER and GRIFFIN, Circuit Judges; TARNOW, District Judge.*
This case involves a dispute between plaintiff Kolkowski and defendant Goodrich Corporation concerning severance benefits. Kolkowski contends he is owed money under the company's Employee Protection Plan ("EPP"), because he was not offered comparable employee benefits by the acquiring company. The district court ruled that Kolkowski was entitled to vacation benefits,1 but not severance benefits. The district court's denial was based on finding that the plan was covered by ERISA2 and the application of federal law.
Kolkowski appeals from this part of the decision. He argues that the district court's ruling that federal and not Ohio law applies was based on the district court's application of the wrong test. Further Kolkowski argues even under federal law he should have been awarded benefits.
For the reasons that follow the decision of the district court granting partial summary judgment in favor of Goodrich is reversed and remanded.
In late 1997, Kolkowski received an offer of employment from Goodrich. Within months, Kolkowski joined the company as Patent Counsel. In addition to a salary and signing bonus, Kolkowski became eligible to join three select bonus programs, as well as the company's Stock Option Plan and the Employee Protection Plan ("EPP"). The EPP provided severance benefits to those who incurred "involuntary termination" within two years of a change in control in the company itself or a division of the company. The language of the EPP that is at the heart of the dispute, section 5(a), states:
Termination of the Covered Employee's employment with the Company without consent of the Covered Employee, for any reason other than cause . . . [I]f the purchaser of any business unit, division, or subsidiary of the Company which is sold after the date on which a Change in Control occurs offers employment to any Covered Employee, the termination of such Covered Employee's employment by the Company prior to or simultaneous with any such sale shall not be considered Involuntary Termination, unless either (1) the base salary offered to the Covered Employee by the purchaser is lower than the Covered Employee's highest base salary between the date immediately prior to the Change in Control and the date of sale, or (2) the employee benefits offered to the Covered Employee are not at least comparable to the benefits received immediately prior to the Change in Control. If either or both of the events described in the foregoing sentence occur, a Covered Employee will be deemed to have incurred an Involuntary Termination if such Covered Employee chooses not to accept the offer of employment made by such purchaser, or accepts the offer of employment, but voluntary terminates within sixty days following such event.
In April of 1999 a change of control took place, Goodrich shareholders approved a merger of their Performance Materials Segment ("PMS") division, the division that employed Kolkowski, with Coltec Industries. The approved merger transferred ownership of the two divisions to a group of investors named PMD Group ("PMD").
In anticipation of the date of sale, in early 2001, Goodrich distributed a newsletter entitled "PM Newsline" to all the employees of their PMS division, notifying them that they would cease being Goodrich employees on the closing date of sale, February 28, 2001. The newsletter also supplied the PMS employees with general information about their future employment opportunities with PMD. According to the newsletter, every employee would be offered the same base salary, the same bonus opportunities, the same time off policies for 2001, essentially the same health and welfare benefits, and the same severance program through April 9, 2001. The newsletter also stated that it would adopt a new severance program after the April 2001 date. This particular program was later finalized and became known as the Performance Materials Transition Arrangements Plan. The PM newsletter did not discuss the specifics of the bonus or benefits plans, nor did it discuss the availability of stock option plans to employees.
Kolkowski, who was entitled to discretionary stock option benefits while employed at Goodrich, became concerned with the lack of specificity in PMD's employment offer. He attempted to discuss this with Goodrich's administrator of the EPP but was unable to even determine who the plan administrator was. Instead, Kolkowski met with Terrence Linnert, the head of the legal department and human resources at Goodrich. Linnert was also unsure of PMD's employment offer but reminded Kolkowski that the EPP's provision allowed him to reject an employment offer if the position did not include at least the same salary and comparable benefits. At no time during the conversation did Linnert inform Kolkowski that the offer was substantially comparable.
On February 22, 2001, Kolkowski received a more specific offer of employment from PMD's Human Resources head, Cheryl Fells. The offer included the same position, same base salary, the eligibility to participate in a pension plan and 401(k) plan, the unspecific opportunity to receive substantially comparable performance based cash incentives, and
employee welfare and other benefits (e.g. medical, dental, vision, life insurance, disability and accidental death and dismemberment insurance) that are substantially equivalent to the benefits provided to you by The B.F. Goodrich Company immediately before close.
The letter did not mention a stock option plan or a change in control severance protection agreement.
The next day, Kolkowski, unsatisfied with the specifics of the benefits outlined in PMD's offer, contacted Vice President Chris Clegg of the legal department for PMD. Clegg informed Kolkowski that he could not answer any questions but directed him to e-mail Fells with any specific questions, which he promptly did.
On February 27, 2001, one day before the close of sale, PMD's representative Fells finally responded to Kolkowski's email. She stated the details of the "substantially comparable bonus plan" would be available within the next sixty days, far later than the close of sale. On the same day, Kolkowski received a letter from Goodrich's General Counsel, Linnert, indicating that he would be terminated from Goodrich on the following day.
The next day, Goodrich completed the sale of its PMS division to PMD. Believing that he was not offered substantially comparable benefits, Kolkowski declined PMD's employment offer. He was subsequently discharged by Goodrich.
After waiting over fifteen days after the close of sale for his severance package from Goodrich, Kolkowski sent a letter to Linnert demanding his severance package. Neither Linnert nor Goodrich responded. Over the span of three weeks, three subsequent letters mailed by Kolkowski were also met with silence. On April 23, Kolkowski sent a final letter to Linnert, this time threatening legal action.
Four days later, senior counsel for Goodrich, Kevin Murphy, responded to Kolkowski's letters and demand for severance. The letter indicated that Linnert was on medical leave and that he was asked by Murphy to respond to Kolkowski's inquiries. Murphy stated that Kolkowski was offered employment that met the requirements of Section 5(a) of the EPP. He continued, "[a]s was explained to you prior to the date that PM was sold, you are not eligible for severance under EPP."
Kolkowski filed a complaint against Goodrich in the Court of Common Pleas in Cuyahoga County, Ohio alleging breach of contract arising from the company's failure to disperse severance benefits and vacation pay. The case was removed to the Northern District of Ohio. Cross motions for summary judgment were filed.
The district court issued an order granting partial summary judgment to both sides. The district court found that Kolkowski was entitled to his contractual vacation pay claims, which is not at issue here. The district court granted Goodrich's motion for summary judgment affirming its denial of severance to Kolkowski.
In arriving at its decision to affirm the denial of severance benefits, the district court determined that the severance benefits plan was an ERISA benefits plan, governed by federal law. Applying ERISA law, the district court then conducted de novo review of the denial of benefits looking first to the plan's plain language. After determining that the plan's language was ambiguous, the district court next turned to the materials that the plan administrator used to make his decision. The district court, noting that the case was difficult, determined that Kolkowski had been offered at least comparable benefits to those he received at Goodrich. Thus, the district court upheld the plan administrator's denial of severance benefits.
Kolkowski appeals this ruling.
Kolkowski asks this Court to review the district court's order granting defendant's motion for summary judgment. We review de novo the grant of summary judgment, using the same Rule 56(c) standard used by the district court, Williams v. Mehra, 186 F.3d 685, 689 (6th Cir.1999)(en banc)(citations omitted), and considering the record as it stood before the district court at the time of its ruling. Niecko v. Emro Marketing Co., 973 F.2d 1296, 1303 (6th Cir.1992). Similarly, we review the decision to deny benefits under ERISA de novo, unless the plan expressly commits discretion to determine eligibility and to construe the terms of the plan to the plan administrator....
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