The opinion of the court was delivered by: GURFEIN
This is a diversity action in which the plaintiffs, former employees of Computer Technology, Inc. ("CT"), a Delaware corporation with its principal place of business in Texas, seek damages in lieu of retirement benefits from their former employer and from its parent, LTV Aerospace Corp. ("LTVA"), a Delaware corporation with its principal place of business in Texas, which allegedly guaranteed performance. CT/East, to be mentioned later, is a Delaware corporation not named as a defendant. The jurisdictional amount is properly alleged. A trial was had to the Court on May 1 and 2, 1973. The facts as stipulated and as adduced are as follows:
In 1969 the plaintiffs William H. Bird ("Bird"), a Connecticut citizen and Shelby H. Carter, Jr. ("Carter"), a New York citizen, were employed by International Business Machines Corp. ("IBM"). They both were then 38 years old. Bird had been employed by IBM for 11 1/2 years and Carter for 13 1/4 years.
Bird was first approached in January 1969 by William Woerner, President of CT, who told him that James Ling of LTVA had been talking to him about forming a subsidiary company of CT for computer servicing in New York. Woerner solicited Bird to become President of the New York subsidiary and, later, Carter to be an executive. Among other matters discussed was the point that the directors of IBM had voted in January 1969 for a new policy of retirement benefits. Under the new IBM plan, employees who had been employed ten years instead of the then required fifteen years, would be eligible for IBM retirement benefits. It was anticipated that the new policy of IBM would be submitted shortly to a shareholders meeting of IBM in April and ratified. The proxy statement was prepared in February. Both Bird and Carter were not then eligible for retirement benefits under the existing IBM plan, but would be shortly when the new plan was ratified.
In the course of the discussions, Bird and Carter were told that certain customer prospects of CT could not wait and that the plaintiffs had to come aboard promptly. Bird and Carter asked for and were given assurances by Woerner that they would have the same retirement benefits if they joined CT as they would have if they stayed with IBM.
Bird and Carter became employees of CT, leaving IBM before the shareholders meeting of IBM on April 28, 1969 that would have assured their retirement benefits after only ten years of service, but which had no retroactive effect. By leaving, Bird and Carter lost these rights.
They were given a standard form of employment contract by CT which did not specify retirement benefits. This was superseded by employment contracts effective as of March 31, 1969, which contained paragraph 5 reading as follows:
"5. Bird [Carter] as an employee of CT, shall be entitled to receive employee benefits at least equal to those provided under the various plans (other than any stock purchase or option plans) presently provided by LTV Aerospace Corporation, a Delaware corporation and the parent of CT, to its own employees. In respect to retirement, both Bird's [Carter's] eligibility for retirement benefits and the amount of his retirement benefit shall be determined first using his actual employment date of March 31, 1969 and then using an assumed employment date of October 13, 1957 [December 12, 1955]. Should the use of this assumed employment date produce a retirement benefit of larger amount and/or longer duration than his actual employment date, then Bird [Carter] will be entitled to receive supplemental payments directly from CT equal to the difference in duration and/or amount. These supplemental payments will be made at such times and in such manner as are provided for the payment of retirement benefits under the then existing retirement plan." (Ex. 3; Ex. 18; emphasis supplied).
Subject to later discussion of the admissibility of parol evidence, the evidence indicated the following:
Bird's and Carter's recollection concerning the communications with CT, through its President William Woerner differ somewhat, though not materially. At one point Bird testified that Woerner had actually told him in the course of one of the meetings that he, Bird, would be entitled to the retirement benefits "regardless of how long" Bird remained in the employ of CT (Tr. 172). Bird, however, retrenched a bit later in his testimony stating: "Your Honor, I probably should withdraw the point that I pinned him [Woerner] down as to whether or not I would have this vesting, if I left during the five year period. . . . It was more my understanding what vesting meant" (Tr. 174). In any event Bird was clear, as he had been at his deposition, that Woerner "made a commitment to us that, you will not lose any of your vesting" (Tr. 173).
Carter testified that at his first meeting with CT representatives, he had been reassured by a Robert Kelly as well as Woerner, by their statement to the effect: "You don't have to worry about leaving IBM, your vested rights, your salaries, because you know you get the same contract we all have, a five year contract" (Tr. 87). Carter testified that by the third meeting, he and Bird "were getting a little more interested in the proposition [of joining CT] obviously or we wouldn't be there and by the third time we talked about the unique position that Bill Bird and I were in in that we had more than ten and less than fifteen years with IBM and the new vesting was going to be passed and they [Woerner] said because of that we [CT] will write you a special contract or special clause, as I said earlier, stating that your date of rank would be in my case December 12, 1955 for retirement and vested rights purposes and I said fine" (Tr. 89; see Tr. 19).
Both Bird and Carter testified that they had advised Woerner of their reluctance at leaving IBM on the eve of the change in the vesting requirements at IBM but that Woerner impressed upon them the urgency of their joining CT at once (Carter Tr. 23, 26; Bird Tr. 117).
At trial Bird recalled Woerner as having said "We need the people. We have some very imminent contracts to be signed and then serviced by people here in New York, and this [vesting problem] will be taken care of, no problem, as though we went to work for CT in 1957" (Tr. 117).
In part because they were impressed with the urgency of their signing immediately and in part because they understood that the ten year vesting requirement of CT would be satisfied by their previous employment with IBM, Bird and Carter say they resigned from IBM prior to the change in the IBM retirement plan and joined CT in the end of March or beginning of April.
CT also arranged for Bird to talk to representatives of Goldman, Sachs & Co., investment bankers, about the viability of the proposed CT subsidiary.
There followed a series of meetings between representatives of CT (Roger Kelley and William Woerner) and LTV (John Dixon, Vice President of LTV) (Tr. 112-13) which were attended by both Bird and Carter and a third IBM employee, Bill Brown.
These meetings took place at the Regency Hotel in a suite owned by LTV. It was during these meetings that the conversations concerning vesting and rights to retirement benefits, alluded to above, took place. It was at the last meeting that Woerner impressed upon Bird and Carter the urgency of their joining CT.
Prior to the third meeting, Carter testified that he and Bird flew to Dallas where they met representatives of CT (Tr. 22-23). Bird was less clear, but recalled he may have taken a second trip to Dallas (Tr. 108). Carter also testified that he received a blank standard employment agreement from CT (Tr. 22).
Following the third meeting at the Regency, Bird and Carter each resigned from IBM (Tr. 24, 117). They then flew to Skokie, Illinois, where they signed the initial version of the employment agreement (Exs. 2, 17). That agreement became ineffective upon execution of the employment agreement dated effective March 31, 1969, outlined above (Exs. 3, 18). This new agreement was unconditionally guaranteed by LTVA, which guaranty was accepted by the plaintiffs in lieu of a promised guaranty by LTV, the parent of LTVA (Tr. 144).
On June 30, 1969 an agreement of amendment was signed by both Bird and Carter (Exs. 4, 19). And on June 30, 1969 Bird and Carter each signed agreements assigning their contracts to CT/East (Exs. 5, 20).
It was stipulated prior to trial that LTVA consented to the agreements dated June 30, 1969 which assigned the employment agreements to CT/East (PTO 2(p)(q)). There was no evidence adduced, however, that LTVA actually executed the form of guaranty provided on the assignment (see Exs. 5, 20).
CT/East did not get off the ground. It became known that efforts were being made to sell it and it was later sold. Both plaintiffs became discouraged and left during the first year of their five year contracts.
Bird's salary at IBM at his termination was $62,116.27 (excluding bonuses) as Regional Marketing Director. Carter's salary was $51,400 (excluding bonuses) as District Manager of Manhattan.
Bird claims that the cost of purchasing benefits equal to those to which he is entitled under the CT/LTVA plan is $55,623, and on the same basis, Carter claims $53,392. On a historical basis of earnings the ...