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Economu v. Borg-Warner Corp.

decided: September 16, 1987.


Appeal from two rulings of the United States District Court for the District of Connecticut (Dorsey, J.) in this employment discrimination action. The first granted defendants' motion to dismiss plaintiff's claims under the Age Discrimination in Employment Act, and the Connecticut Unfair Trade Practices Act; the second granted summary judgment to defendants on plaintiff's remaining claims. Affirmed.

Oakes, Meskill, and Pratt, Circuit Judges.

Author: Pratt

PRATT, Circuit Judge:

Ralph C. Economu appeals from two separate but related rulings of the United States District Court for the District of Connecticut, Peter C. Dorsey, Judge. Economu commenced this action against his former employer, Burns International Security Services, Inc. ("Burns"), and Burns's corporate parent, Borg-Warner Corporation ("Borg-Warner"), alleging various claims relating to termination of Economu's employment by Burns. The first ruling from which Economu appeals is an order dated December 19, 1985, that dismissed Economu's claim under the Age Discrimination in Employment Act, 26 U.S.C. § § 612-34 ("ADEA"), as not having been timely filed, as well as his claim under the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. Ann. § § 42-110a to - 110q (West 1987) ("CUTPA"), for failure to allege a nexus with the general consuming public. The second ruling, dated January 28, 1987, granted summary judgment to defendants on Economu's remaining claims, including fraud and deceit, promissory estoppel, breach of contract, and the intentional infliction of emotional distress.

Finding no merit in any of Economu's arguments on appeal, we affirm.


In May 1976 Burns hired Economu as corporate controller. Two years later Economu was elected to Burn's board of directions, and approximately four months after that was appointed executive vice president-finance and chief financial officer.

In 1980 Burns became a candidate for corporate acquisition, which prompted its board to provide certain senior executives, including Economu, with protective employment agreements, sometimes called "golden parachutes". Economu signed his agreement on December 21, 1981. It provided, inter alia, that Economu would continue to receive his salary and benefits for a three-year period commencing on the date of any "change in control" of Burns, and that any dispute arising form the employment agreement would be resolved exclusively through arbitration. Economu claims that as a member of the board of directors he voted to approve those employment agreements on the representation of other directors that having senior management available and bound to continue in place would make Burns more attractive to a corporate suitor.

Borg-Warner first became interest in acquiring Burns in the summer of 1981. After various discussions and reviews of corporate documents, Borg-Warner and Burns agreed to the terms of a sale in early 1982. In April of that year two vice presidents of Borg-Warner, Donald Trauscht and Robert LaRoche, met with Burns' management to inform them of the acquisition. Among the items discussed at that meeting was Borg-Warner's stated intention to retain the management of Burns and to allow Burns to operate independently of Borg-Warner. After the Burns board of directors unanimously voted its approval, the merger was consummated on May 19, 1982.

In his complaint, Economu alleged that, contrary to the representations of Trauscht and LaRoche, Borg-Warner and Burns had privately conspired to terminate Burns's senior management officers soon after the merger. Economu contends that the defendant corporations surreptitiously sought to replace the older executives of Burns, including himself, with younger individuals in an effort to avoid payment of higher salaries, pensions, and other fringe benefits.

In fact, soon after the change in control, Burns hired a new controller, Richard Duch, who was scheduled to assume several of Economu's duties. Although conceding that Duch was younger than Economu, Burns denied that the reduction in Economu's duties had anything to do with age but rather asserted that the reduction was the result of Economu's poor work performance in the early part of 1982.

On June 18, 1982, Economu wrote a letter to Robert Gordon, executive vice president and chief operating officer of Burns, setting forth his understanding from their meeting three days earlier with Burns's chief executive officer that Duch would be assigned several of the duties for which Economu had previously been responsible as senior vice president-finance. Furthermore, Economu explained his belief that the changes in his responsibilities constituted an "involuntary termination" under his employment agreement, and expressly stated that his continuation in employment would not constitute a waiver of any rights under that agreement. The employment agreement defines the term "involuntary termination" to include a discharge by Burns or a resignation by the executive following a material breach of the agreement, such as "any significant reduction by the Company in the [executive's] duties".

On June 25, Gordon set to Economu a new table of organization for Burns's financial department, reflecting "all the changes that are transpiring." In the accompanying memorandum Gordon stated that "[t]here will probably be adjustments but this is the way we will operate for the time being." The organizational chart indicated that while Economu would retain a position of substantial authority as vice president-finance to whom the insurance department, internal audit department, and a portion of the financial services department would report, Duch as the new vice president-controller would be responsible for several other subdivisions that had previously reported to Economu-financial reporting, management information systems, and another portion of the financial services department.

After receiving the new organizational chart and accompanying memorandum, Economu met with Gordon on June 28. In his pretrial deposition Economu stated that the reason for that meeting was to resolve the ambiguity and uncertainty surrounding his job status and responsibilities. Gordon, however, did not make any more definite statement regarding Economu's position. Stating that he could not work under such tenuous circumstances, Economu related to Gordon that while he was on vacation during the first two weeks of July Gordon should communicate with Economu's personal attorney, Donald Wilmot, so that, in ...

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