Onanuga v. Pfizer, Inc., 03 CIV.5405 CM GAY.

• Decision Date: 10 May 2005
• Docket Number: No. 03 CIV.5405 CM GAY.,03 CIV.5405 CM GAY.
• Citation: 369 F.Supp.2d 491
• Parties: Adebowale Christiana ONANUGA, Individually on behalf of and as Administrator of the Estate of Ebenezer Adebayo Onanuga, Plaintiff-Counterclaim Defendant, v. PFIZER, INC., Defendant-Counterclaim Plaintiff.
• Court: U.S. District Court — Southern District of New York

Page 491

369 F.Supp.2d 491

Adebowale Christiana ONANUGA, Individually on behalf of and as Administrator of the Estate of Ebenezer Adebayo Onanuga, Plaintiff-Counterclaim Defendant, v. PFIZER, INC., Defendant-Counterclaim Plaintiff.

No. 03 CIV.5405 CM GAY.

United States District Court, S.D. New York.

May 10, 2005.

COPYRIGHT MATERIAL OMITTED

Grant Aram Hanessian, Peter J. Engstrom, Susan Rigmor Knox, New York City, Peter J. Engstrom, San Francisco, CA, for Defendant-Counterclaim Plaintiff.

Solomon Oluseyi Bankole, Laurel, MD, for Plaintiff-Counterclaim Defendant.

MEMORANDUM DECISION AND ORDER GRANTING THE MOTION OF DEFENDANT FOR SUMMARY JUDGMENT DISMISSING THE COMPLAINT AND DENYING THE MOTIONS OF BOTH PLAINTIFF AND DEFENDANT ON THE COUNTERCLAIM

MCMAHON, District Judge.

The following facts are undisputed:¹

Ebenzer Adebayo Onanuga (plaintiff's decedent) worked for 22 years at a Nigerian subsidiary of defendant Pfizer, Inc. The subsidiary was named Pfizer Products, LLC (formerly known as Pfizer Products Ltd.).

Pfizer Inc. and Pfizer Products LLC were at all times separate corporate entities. To avoid confusion — of which there is far too much in this record, most of it on plaintiff's part — defendant will be referred to hereinafter as "Inc" and the subsidiary will be referred to as "LLC."

On May 14, 1997, Inc divested itself of its 60% shareholder ownership in LLC, selling out to the local management group of that company. Some of the employees of the subsidiary were reemployed by another Pfizer subsidiary, Pfizer Specialities Ltd. Most — including plaintiff's decedent — remained with Pfizer LLC. Thus, as of May 14, 1997, plaintiff's decedent ceased to have any affiliation with defendant.

At the time his employer ceased to be affiliated with Inc, plaintiff's decedent held options to purchase Pfizer stock. He was awarded these options in 1993, 1994, 1995 and 1996 pursuant to Inc's Stock and Incentive Plan ("the Plan"). The terms of the stock options were governed by the Plan, which contained several pertinent provision relating to the lapsing of options. First, the Plan provided, as did each respective option award letter, that Onanuga's options would lapse if he retired within one year following the date of the award. Assuming he remained employed for a year after each particular award, the Plan further provided that, "The option, to the extent not exercised, shall terminate ... when the optionee ceases to be an employee for any reason including retirement... however ... if the option so provides, in the event that the optionee has retired or is eligible for retirement under Sections 4a., b., or d. or the Company's Retirement Annuity Plan, as may be amended from time to time, or under any pension or retirement plan maintained by the Company or any of its subsidiaries, the optionee ... may elect to exercise the option at any time until such option expires by its terms...." The cited portions of the Pfizer Retirement Annuity Plan refer to "normal," "late," and "early" retirement, respectively; the word "Company" refers to Inc.

As of the date LLC ceased to be an Inc subsidiary, plaintiff's decedent had not exercised many of his stock options. Nor did plaintiff exercise them within a week of May 14, 1997, pursuant to a special resolution of Inc's Employee Compensation and Management Development Committee which administers the Plan, which had accelerated the vesting of all his unvested stock options and granted him (and other similarly situated employees of LLC) one additional week following the divestiture to exercise their options.

What did happen was this: On the same day that Inc divested itself of LLC — May 14, 1997 — plaintiff's decedent gave LLC, his employer, three months notice that he would be retiring effective August 14, 1997. The three months' notice was required by the terms of Onanuga's employment with LLC. Plaintiff's decedent thereafter worked for LLC — which soon changed its name to Neimeth International Pharmaceuticals (though for ease of reference I will continue to call it "LLC") — for the next three months. LLC accepted plaintiff's resignation, which took effect on August 14, 1997. LLC, which had retained the pension obligations under LLC's Retirement Plan, was responsible for the payment of Onanuga's pension. And less than a month after his retirement, LLC paid plaintiff's decedent his pension contribution, from LLC's longstanding defined contribution pension plan, together with separation pay, less than a month after his retirement.

When the LLC employees who remained with that company were separated from Inc on May 14, 1997, Inc's Human Relations Department coded Onanuga's employment status in its database, coding him as "retired" instead of "separated." As a result, plaintiff's decedent was actually able to exercise some of his options in March 1998; he realized almost $300,000 from that transaction. Onanuga did not exercise any other options prior to his death in 2001. He did continue to receive information about his stock option account from Merrill Lynch, which administered the Plan for Inc.

What Inc now describes as a "coding error" or "data entry error" was not discovered until January 2003, at which time plaintiff was attempting to exercise additional stock options on behalf of her husband's estate. By letter dated 30 April 2003, Inc notified the Onanuga family that the options had actually expired in May 1997. It also deactivated Onanuga's stock option account at Merrill Lynch.

Plaintiff, Onanuga's widow and executrix, now sues Inc for breaching its contract with her husband. Inc counterclaims for return of the $286,360 profit realized by Onanuga on the 1998 exercise of the ostensibly expired options. Inc has moved for summary judgment dismissing all of plaintiff's claims against it. Plaintiff has moved for summary judgment dismissing Inc's counterclaim against her.

Summary of Argument

Notwithstanding the incredible amount of paper filed with the Court by both sides, the dispute is really quite simple. Both parties agree (plaintiff somewhat reluctantly) that the contract that was allegedly breached is the Plan. By its clear terms, the Plan provides that Onanuga's stock options lapsed when he failed to exercise them by May 21, 1997. The only way around this rule would be if, prior to the time he "cease[d] to be a Company employee ...," Onanuga either "has retired or [was] eligible for retirement under ... any pension or retirement plan maintained by the Company or any of its subsidiaries...."

Plaintiff's decedent was the Company Secretary of LLC, and a sophisticated businessman. It seems clear to this court that, by submitting his three months' notice of intent to retire on the very day Inc spun off LLC, Onanuga was trying to bring himself within that exception to the usual rule. And indeed, plaintiff argues strenuously that "The message [plaintiff's decedent] wants this Court to hear is that he did not participate in the management buyout in 1997 either as an employee or owner of Neimeth [LLC], his employment with Pfizer was not terminated in 1997, and he neither worked nor retired from Neimeth [LLC]. He retired from Pfizer after 23 years of outstanding contributions and dedicated service to Pfizer." Pl. Memorandum of Law at 23.

I have no doubt that plaintiff's decedent gave LLC (his employer) 23 years of outstanding contributions and dedicated service. However, Onanuga clearly had not retired as of May 14, 1997, when Inc spun off LLC. Indeed, he did not even submit his retirement papers until that day. Per the undisputed facts, his retirement was not effective until three months later, on August 14, and he continued to work for LLC for that three month period, drawing his regular compensation. One is not "retired" until one's retirement is effective, and plaintiff's retirement was not effective until August 14, 1997. Moreover, during that three month period, Onanuga did not work for "Pfizer" in the sense of Inc, as plaintiff's papers suggest. Indeed, he never worked for Pfizer Inc. throughout all his 23 years of employment. Plaintiff's effort to conflate these two wholly separate, albeit once-affiliated, corporations (which is, of course, the reason I insist on calling the two corporations "Inc" and "LLC" and refuse to call either of them "Pfizer") does not alter reality.

The only question raised by the complaint (and it is a rather sophisticated question) is whether plaintiff's decedent either "retired" or was "eligible for retirement" in accordance with certain specified provisions of either Inc's Retirement Annuity Plan or under any pension or retirement of an Inc subsidiary that was "similar" to Inc's Retirement Annuity Plan. If he was, then it would appear that his options did not lapse. If he was not, then the options did lapse.

As there are no disputed issues of material fact, and Onanuga's eligibility for retirement hinges on the interpretation of certain documents (notably the LLC Retirement Plan), this case is appropriately decided on a motion for summary judgment. Under Rule 56(c) of the Federal Rules of Civil Procedure, the Court will grant summary judgment if the evidence offered shows that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The Court views the record in the light most favorable to the non-movant and resolves all ambiguities and draws all reasonable inferences against the movant. See United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962); Donahue v. Windsor Locks Bd. of Fire Commn'rs, 834 F.2d 54, 57 (2d Cir.1987).

Defendant is Entitled to Summary Judgment Dismissing the Complaint

Inc argues that plaintiff's decedent did not retire and was not eligible to retire under a qualifying retirement plan so as to extend the life of his otherwise lapsing stock...