Magin v. Monsanto Co.
| Decision Date | 23 August 2005 |
| Docket Number | No. 04-2997.,04-2997. |
| Citation | 420 F.3d 679 |
| Parties | Jon MAGIN, Plaintiff-Appellant, v. MONSANTO COMPANY, Pharmacia Corporation and CP Kelco, Incorporated, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Craig E. Anderson (argued), Jacobson, Brandvik & Anderson, Chicago, IL, for Plaintiff-Appellant.
Mark S. Bernstein, Barack, Ferrazzano, Kirschbaum, Perlman & Nagelberg, Abraham C. Reich, Fox, Rothschild, O'Brien & Frankel, Philadelphia, PA, Lawrence L. Summers (argued), Vedder, Price, Kaufman & Kammholz, Chicago, IL, for Defendants-Appellees.
Before BAUER, RIPPLE and KANNE, Circuit Judges.
Jon Magin filed this action against Monsanto Company, Pharmacia Corporation1 and CP Kelco, U.S., Inc. ("CP Kelco") to recover severance benefits that he claimed were owed to him. In his second amended complaint, Mr. Magin alleged violations of the Employee Retirement Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., as well as state common law claims for breach of contract, promissory estoppel, promissory fraud and unjust enrichment. The district court granted summary judgment in favor of the defendants. Mr. Magin appealed. After oral arguments, we instructed each party to file a supplemental memorandum setting forth how its position is justified by the text of the Monsanto Company Divestiture Incentive Plan, the Monsanto Company Salaried and Non-Union Hourly Employees' Separation Plan ("Monsanto severance plan") and the Asset Purchase Agreement. For the reasons set forth in the following opinion, we now affirm the judgment of the district court.
On September 28, 2000, Monsanto/Pharmacia sold its Kelco biopolymers business ("Kelco Division") to CP Kelco pursuant to an Asset Purchase Agreement.2 At that time, Mr. Magin was the vice president of the Kelco Division. In an August 1999 letter, Monsanto/Pharmacia advised Mr. Magin of a new pay incentive it was offering in light of the upcoming sale:
A lot has happened over the last few weeks as we continue the process of preparing the [Kelco Division] for sale. . . . To stay focused on doing the right things for the business and to stay focused on your own personal key performance indicators takes discipline, focus, and yes, even incentives! To the latter point, it is our intent to be sure that the total incentive and compensation opportunity that exists for you at Monsanto is powerful and motivating enough to keep you focused on the task at hand throughout this transition. We hope that the combination of base pay, your annual common incentive plan, stock options, our established severance plans and now, a new Divestiture Incentive Plan, together, accomplish that goal.
R.50, Ex.C-1 at 1. The Divestiture Incentive Plan provided for two types of payments: (1) an incentive payment based on the performance of the Kelco Division up to the closing date of the sale, and (2) a "Go with Buyer" payment. In a second letter, the "Go with Buyer" payment was explained to Mr. Magin as follows:
[T]he "Go with Buyer" incentive payment will be tied to your employment status in the following manner:
• if you are offered a comparable job (defined as a job with the same base pay) . . . with the Buyer, you will be eligible for the "Go with Buyer" payment if you accept the offer and are employed for 12 continuous months following the date of close. The payment will be made 12 months after close. You will not be eligible for any Monsanto severance payment;
• if you are not offered a comparable position (as defined above) with either the new company or with Monsanto, you will be eligible for the Monsanto severance plan following the close of the sale; however, you will not be eligible for any "Go with Buyer" incentive payment;
• your severance will be determined based on negotiations with the Buyer. If your employment is terminated without cause by the Buyer within 12 months of the date of the close of the sale, you will receive no less than an amount equivalent in total to your "Go with Buyer" incentive . . . .,
• if you voluntarily terminate your employment with the Buyer within 12 months of the date of the close of the sale, you will not be eligible to receive the "Go with Buyer" incentive payment . . . .
Id., Ex.C-2 at 1. Soon after the sale of the Kelco Division, Monsanto/Pharmacia paid Mr. Magin a divestiture incentive payment of $250,000. When Mr. Magin was terminated by CP Kelco in February 2001, he requested and received a "Go with Buyer" payment of $65,000.
In addition, while an employee of Monsanto/Pharmacia, Mr. Magin had participated in the Monsanto severance plan. The plan's stated purpose was "to provide limited financial assistance to certain Employees who are Involuntarily Separated from an Employer" while they seek employment. Id., Ex.A-1 at 1. The plan established three categories of severance benefits:
3.1 An Employee who is Involuntarily Separated (other than under Section 2.10(e) []) and signs a Waiver shall be eligible to receive Enhanced Benefits.
3.2 An Employee who is Involuntarily Separated (other than under Section 2.10(e)) and does not sign a Waiver shall be eligible to receive Standard Benefits.
3.3 An Employee who is Involuntarily Separated under Section 2.10(e) shall be eligible to receive limited Benefits regardless of whether or not he executes a Waiver.
Id. at 4. The plan defined "involuntary separation" as termination of an Employee's employment with all Employers as a result of one of the following: (a) elimination of the Employee's job with no offer of a comparable job by an Employer; (b) divestiture by an Employer of the business or location where the Employee is employed with no offer of employment by the purchaser or an Employer; (c) job elimination with an offer of employment by an Employer which requires relocation (but only if the Employee rejects such offer); (d) expansion of an Employee's position beyond his skills as a result of organizational changes or requirements; or (e) the Employee's Poor Performance.
Id. at 3 (emphasis added). "Waiver" was defined as "the Agreement and Release form offered to an Employee who is Involuntarily Separated which releases an Employer from claims arising from such Employee's employment and termination of employment with such Employer." Id.
Also, a 1998 Summary Overview of the Monsanto severance plan, explained:
To what kinds of involuntary separations do the Enhanced and Standard Separation Benefits apply?
The Enhanced or Standard benefits are applicable to people who lose their jobs because of one of the following circumstances:
A person's job is eliminated with no offer of a comparable job;
A person's job is eliminated through a divestiture with no offer of comparable job by either the purchaser or Monsanto;
A person's job is eliminated and the comparable job offered requires relocation; or
The person's job has expanded beyond his/her skills as a result of organizational changes or requirements.
The summary also explained the different types of severance benefits available:
• Enhanced benefits are provided for certain involuntary separations if the person executes a waiver (Enhanced Separation Benefits).
• Standard benefits are provided for certain involuntary separations and the person refuses to execute a waiver (Standard Separation Benefits).
• Limited benefits are provided for involuntary separations due to inability to perform job. No waiver is required (Limited Separation Benefits).
The sale of the Kelco Division was governed by an Asset Purchase Agreement. The agreement provided that CP Kelco would offer employment to certain Monsanto/Pharmacia employees and would pay severance to those employees if they were terminated within a year of employment:
Section 6.1 Offers of Employment.
(a) Transferred Employees. No later than 30 days following the date hereof, Buyer shall offer employment . . . with Buyer, effective on the Closing Date, to all of the Employees who are actively employed as of the date of this Agreement. . . . Seller and its Affiliates agree to release from their employment those Employees who are offered and accept employment with Buyer ("Transferred Employees") to enable them to commence their employment with Buyer. Each offer of employment made by Buyer will be in writing (which does not need to be given individually to each Employee but may be given to groups of Employees who are similarly situated) and will at least equal the total compensation opportunity (including the Employee's salary or wages (including, as applicable, shift differentials, incentives and premiums)) provided by Seller to each Employee immediately prior to Closing Date . . . .
(b) Termination of Employees. If Buyer terminates the employment of any Transferred Employee without Cause during the 12-month period following the Closing Date or on such later date on which such Transferred Employee commences work for Buyer (the "Employment Date") and such Transferred Employee is not offered "comparable employment" by Buyer or an Affiliate of Buyer through the 12-month anniversary of the Employment Date, or, if prior to the 12-month anniversary of the Employment Date, Buyer terminates a Transferred Employee who has refused to consent to a request by Buyer for such Transferred Employee to relocate, Buyer shall pay to such Transferred Employee an amount at least equal to the base severance pay that such Transferred Employee would have received under Seller's severance plan disclosed on the Disclosure Schedule upon such a termination of employment of the Transferred Employee by Seller . . . . For purposes of this Section 6.1(b), "comparable employment" shall mean employment in accordance with Section 6.1(a), above.
Id., Ex.B at 31-32. To reflect that CP Kelco would pay severance...
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