Tobin v. Ravenswood Aluminum Corp.

• Decision Date: 15 November 1993
• Docket Number: Civ. A. No. 6:92-0906.
• Citation: 838 F. Supp. 262
• Court: U.S. District Court — Southern District of West Virginia
• Parties: Arthur TOBIN, et al., Plaintiffs, v. RAVENSWOOD ALUMINUM CORPORATION, Defendant.

838 F. Supp. 262

Arthur TOBIN, et al., Plaintiffs, v. RAVENSWOOD ALUMINUM CORPORATION, Defendant.

Civ. A. No. 6:92-0906.

United States District Court, S.D. West Virginia, Parkersburg Division.

November 15, 1993.

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Fred F. Holroyd, Brian D. Yost, Scott Evans, Holroyd & Yost, Charleston, WV, for plaintiffs.

Ricklin Brown, Charles M. Love, III, Bowles, Rice, McDavid, Graff & Love, Charleston, WV, Peter G. Nash, Bernard P. Jeweler, Ogletree, Deakins, Nash, Smoak & Stewart, Washington, DC, for defendant.

David M. Goldenberg, James I. Stealey, Goldenberg, Goldenberg & Stealey, Parkersburg, WV, for movants.

MEMORANDUM OPINION AND ORDER

HADEN, Chief Judge.

Pending are cross motions for summary judgment filed by the Plaintiffs and the Defendant. For reasons discussed below, the Court GRANTS Defendant's motion with respect to the 721 workers who signed releases. Regarding the 184 remaining Plaintiffs, the Court DENIES the Defendant's motion for summary judgment on counts one and three, with the exception of the count one claim for punitive damages, and GRANTS the Defendant's motion for summary judgment on counts two and five. Lastly, the Court DENIES Plaintiffs' motion for partial summary judgment.

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper only:

"If the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to summary judgment as a matter of law."

A principal purpose of summary judgment is to isolate and dispose of meritless litigation. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). The moving party has the initial burden of showing the absence of a genuine issue concerning any material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 159, 90 S.Ct. 1598, 1609, 26 L.Ed.2d 142 (1970). If the moving party meets its initial burden, the burden then shifts to the nonmoving party to "establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. at 322, 106 S.Ct. at 2552. To discharge this burden, the nonmoving party cannot rely on its pleadings, but instead must offer evidence showing that there is a genuine issue for trial. Id. at 324, 106 S.Ct. at 2553. Based on this standard the Court denies Plaintiffs' motion for summary judgment and partially grants the Defendant's motion.

The Plaintiffs are 905 former replacement workers of Defendant Ravenswood Aluminum Corporation ("RAC"). These workers were dismissed following a strike settlement requiring RAC to rehire union employees ("Steelworkers").

On November 1, 1990, union employees of Ravenswood Aluminum initiated a strike, and the company began hiring temporary replacement workers to fill open positions. Pursuant to orientation meetings held December 2 and 3, 1990, RAC informed these workers they were being made permanent replacements. The company continued hiring permanent replacements until the strike ended on June 29, 1992.¹

At the conclusion of orientation meetings, each permanent employee signed an agreement stating the following (hereinafter the "Belknap Agreement"²):

"I hereby acknowledge that Ravenswood Aluminum Corporation made me a permanent employee effective immediately date. I understand that my permanent employee status is subject to a settlement with the union, a settlement with the National Labor Relations Board, or an Order of the National Labor Relations Board directing that Ravenswood Aluminum Corporation reinstate strikers."

All permanent replacements executed an employment application stating the following:

"I affirm that no oral representation has been made to me regarding the length of employment with Ravenswood Aluminum Corporation and that I understand that employment is not for a definite period of time and may be terminated with or without cause at any time."

Concurrent with, and subsequent to their respective orientation meetings, the permanent replacements claim RAC management made various written and oral promises of job security. For purposes of summary judgment, RAC concedes that employees were advised the company was committed to keeping replacement workers, that it intended to do everything in its financial and legal power to keep replacement workers, that the company did not intend to agree with the Steelworkers that the replacements would lose their jobs, that RAC believed it would win its case before the National Labor Relations Board ("NLRB"), so that replacements need not worry about an NLRB order requiring reinstatement of strikers, that if RAC lost its NLRB case the company intended to exhaust up to five years of appeal through the United States Supreme Court before any replacement worker lost his job, and that replacement workers should consider themselves permanent employees whose employment would terminate only if they quit, retired, or were fired for cause for violating company rules.³ The Court also notes letters from company management, press releases, articles from RAC's "Aluminator" newsletter, and deposition statements.⁴

On May 27, 1992, RAC reached tentative settlement agreements with the union and the National Labor Relations Board ("NLRB"). These agreements specifically required the return of all striking Steelworkers on June 29, 1992, and the dismissal of permanent replacement workers to allow for returning strikers.⁵ On May 29, 1992, Don Mancini, Director of Human Resources for RAC, notified permanent employees of the tentative settlement:

"RAC has submitted a final proposal to the Steelworkers which will be voted on in the next few weeks. If that proposal is accepted, it is likely that you will be separated from RAC to make room for returning Steelworkers.

In the event a separation of replacement workers does become necessary, a severance package will be provided to current employees who remain at work up to the day of their separation. That package will include the following:

1. One (1) month's pay;

2. Payment of accumulated vacation;

3. A continuation of the Company's contribution to medical insurance for three months for all employees who select coverage; and

4. Placement on a preferential hiring list, which will be considered when filling future job vacancies."

On June 16, 1993, RAC sent the following letter to employees:

"In case there is doubt, RAC's position was and is as follows:

Replacement workers who remain at work until they are released will be placed on a preferential hiring list. When and if vacancies occur, whether immediately or in the future, it is RAC's intent that they will be filled by qualified workers from that list before RAC considers other applicants."

Lastly, on June 23, 1992, Don Mancini sent a letter to permanent replacements conditioning the receipt of preferential hiring and medical coverage for August and September, 1992 on the replacements' willingness to execute a release of claims against RAC. A total of 721 replacement workers ultimately signed releases promising not to sue RAC.⁶ Pursuant to settlement agreements between RAC, the union, and the NLRB, permanent replacements were terminated on June 29, 1992.

Count one of the complaint asserts Plaintiffs were wrongfully discharged, in breach of an implied and express employment contract under which Plaintiffs were promised they would not be discharged or replaced by returning union workers. Count two claims RAC failed to fully compensate the Plaintiffs for earned fringe benefits and severance benefits, in violation of the West Virginia Wage Payment and Collection Act. W.Va.Code § 21-5-1 et seq. Count three alleges the Defendant failed to provide plaintiffs with sixty (60) days written notice of their termination, in violation of the Worker Adjustment and Retraining Notification Act ("WARN Act"). 29 U.S.C. § 2104(a)(5). Count four has already been dismissed pursuant to agreed stipulation. Lastly, count five asserts that RAC breached an implied covenant of good faith and fair dealing between the Plaintiffs and the company.

EMPLOYEE RETIREMENT INCOME SECURITY ACT

The first issue concerns severance benefits offered in the May 29 and June 23, 1992 letters. The Court notes "that plans established by an employer to provide severance benefits are employee welfare benefit plans within the meaning of the Employee Retirement Income Security Act ("ERISA")." Biggers v. Wittek Industries, Inc., 4 F.3d 291, 297 (4th Cir.1993); Holland v. Burlington Industries, Inc., 772 F.2d 1140, 1145-46 (4th Cir.1985). As a general rule, an employee welfare benefit plan includes plans which provide benefits in the event of unemployment. 29 U.S.C. § 1002(1)(A).

Based on Biggers and Holland, the May 29 and June 23 letters constitute employee welfare benefit plans under ERISA. One month's severance pay, extended medical coverage, and preferential hiring constitute severance benefits provided in the event of unemployment, and therefore meet ERISA's broad definition of a welfare benefit plan.

Under ERISA statute, state law is preempted to the extent it relates to any employee benefit plan. 29 U.S.C. § 1144(a). State law "relates to" an employee benefit plan "if it has a connection with or reference to such a plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983). ERISA preemption must be given broad effect because of what the Court of Appeals of this Circuit has characterized as "the unparalleled breadth of ERISA's preemption provision." Holland v. Burlington Industries, Inc., 772 F.2d at 1147.⁷ Thus ERISA preempts state actions for breach of contract, when the alleged breach relates to the payment of benefits under a severance plan. Biggers v. Wittek Industries, Inc., 4 F.3d at 297-98; Holland v....