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DEANGELIS v. WARNER LAMBERT CO.

August 4, 1986

JOHN C. DeANGELIS, WILLIAM B. BELL, JESSE BICKNELL, GROVER CORNELIUS, VINCENT CONNORS, THEODORE GILL, JOSEPH GORSSI, CHARLES HOUGHTALING, WILLIAM IANNONE, DONALD MARSH, JAMES McCAULEY, ANTHONY F. MOSCHETTO, HUGH PARTRIDGE, DAVID PARTINGTON, SALVATORE PRISCO, LOUIS S. SCARANO, WILLIAM D. WARD, HENRY WETSTEIN, CHARLES R. WHITEHEAD, HELEN WILLIAMS, Plaintiffs,
v.
WARNER LAMBERT COMPANY, Defendant



The opinion of the court was delivered by: STANTON

LOUIS L. STANTON, D.J.

Plaintiffs in this action were all employees of Nepera Chemical Company, Inc. ("Nepera") on September 15, 1976 when defendant Warner-Lambert Company ("Warner-Lambert"), Nepera's parent company, sold all of its Nepera stock to ASAG, Inc. ("ASAG"). (Stipulated Facts, PP 2-4; Defendant's Rule 3(g) Statement, P 2.) *fn1" While Nepera was a Warner-Lambert subsidiary, certain of its employees enjoyed the benefits of the Warner-Lambert severance policy, as did employees of most Warner-Lambert subsidiaries. Plaintiffs assert a single claim under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., alleging that the sale by defendant of its Nepera stock constituted a termination of plaintiffs' employment which entitled them to severance benefits under the Warner-Lambert severance policy. That policy provides for payments to "terminated" employees, the amount of the payments being based upon an employee's earnings at the time of termination, and their duration being based upon the length of his continuous service.

 Defendant moves pursuant to Fed. R. Civ. P. 56(b) for summary judgment on all plaintiffs' claims, and in the alternative for dismissal of Helen Williams' claim as time barred. *fn2" Defendant's motion for summary judgment as to all plaintiffs' claims is granted.

 The stock purchase agreement provided that ASAG would cause Nepera to offer to those persons employed there on the date of the stock sale the opportunity to continue as Nepera employees. (Defendant's Rule 3(g) Statement, P 3.) *fn3" All of the plaintiffs retained their positions at Nepera after the stock sale, though some of them have retired from the company since 1978. (Stipulated Facts, PP 3, 5, 6.)

 The parties agree that Warner-Lambert's severance policy is an "employee welfare benefit plan" governed by the provisions of ERISA, 29 U.S.C. § 1002(1). (Second Amended Complaint, P 6; Answer to Second Amended Complaint, P 6.) ERISA was enacted to improve the equitable character and soundness of private employee benefit plans and to establish minimum standards of fiduciary conduct for those who administer such plans. H.R. Rep. No. 533, 93d Cong., 2d Sess., reprinted in 1974 U.S. Code Cong. & Ad. News 4639, 4655; see also Amato v. Bernard, 618 F.2d 559, 567 (9th Cir. 1980) (Congress intended that under ERISA a body of federal law would be developed by the courts "to deal with issues involving rights and obligations under private welfare and pension plans."). In actions challenging the denial of benefits under an ERISA plan, the court is limited to determining whether the plan administrator acted arbitrarily or capriciously in denying a plaintiff's claim. See Miles v. New York State Teamsters Conference Pension and Retirement Fund Employee Pension Benefit Plan, 698 F.2d 593, 599 (2d Cir.), cert. denied, 464 U.S. 829, 78 L. Ed. 2d 108, 104 S. Ct. 105 (1983); Riley v. MEBA Pension Trust, 570 F.2d 406, 410 (2d Cir. 1977); Prusak v. Bethlemhem 1980 Salaried Pension Plan, 618 F. Supp. 530, 531 (W.D.N.Y. 1984).

 A party is entitled to summary judgment under Rule 56 only upon a demonstration "(1) that there is no genuine issue of material fact to be tried in the case and (2) that the moving party is entitled to judgment as a matter of law." Seymore v. Reader's Digest Ass'n, Inc., 493 F. Supp. 257, 262 (S.D.N.Y. 1980); see also Universal City Studios, Inc. v. Nintendo Co., Ltd., 746 F.2d 112, 115 (2d Cir. 1984). The moving party bears the burden of showing the absence of any material issue of fact, and in reviewing a Rule 56 motion the court must draw all reasonable inferences and resolve all ambiguities in favor of the non-movant. Eastway Construction Corp. v. City of New York, 762 F.2d 243, 249 (2d Cir. 1985); National Bank of Canada v. Artex Industries, Inc., 627 F. Supp. 610, 613 (S.D.N.Y. 1986).

 Though plaintiffs have asserted that issues of fact remain to be tried, the material facts, those which resolve the issues which have been raised by the parties in this case, are uncontested. See Quarles v. General Motors Corp. (Motors Holding Division), 758 F.2d 839, 840 (2d Cir. 1985)(per curiam) (existence of factual issues not material to claims does not preclude grant of summary judgment).

 On the date of the stock sale all the plaintiffs were covered by the Warner-Lambert severance policy, which provided, in relevant part:

 PURPOSE: To assure fair treatment to an employee terminated by the Company as a result of job elimination, work performance, or other reasons of Company convenience except for violations of Company rules and regulations.

 (Stipulated Facts, P 3; Exh. 2.) All the plaintiffs were aware of the severance policy, though they were not informed by the defendant of all its details. (Plaintiffs' Aff., March 11, 1983, P 30; Plaintiffs' Aff., Jan. 16, 1986, P 4.) *fn4"

 The written agreement by which Warner-Lambert's stock in Nepera was sold to ASAG provided, in relevant part:

 [ASAG] agrees to cause Nepera to offer those employees of Nepera Company engaged in the Nepera business on [September 15, 1976] the opportunity to continue as employees of Nepera Company on terms, including fringe benefits and credits for length of service, reasonably similar to those heretofore in effect.

 (Stipulated Facts, P 4; Exh. 3.) After the stock sale all the plaintiffs continued to work at Nepera in their same positions without interruption and received compensation and benefits comparable to those in force at Nepera before the sale. (Stipulated Facts, PP 5, 6.) After the sale Nepera offered the same severance benefits to plaintiffs as they enjoyed previously, and those who were Nepera employees in September, 1976 and who have since been terminated received severance benefits based ...


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