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ZYDEL v. DRESSER INDUSTRIES

December 5, 1991

STANLEY J. ZYDEL, HELMUT LEHMANN, ANTHONY HARASIMONWICZ, PATRICK MCDONOUGH, ROBERT L. PAWELSKI, ALLEN NOBLE, RONALD HOIER, JOHN A. FILIPSKI, PATRICIA A. SKRETNY, ANGELO
v.
ROMANO, SOPHIE EATON, AS EXECUTRIX OF THE ESTATE OF GERALD D. EATON, JOHN CLOSS, FRANK MACIEJEWSKI, PLAINTIFFS, V. DRESSER INDUSTRIES, INC., INGERSOLL-RAND COMPANY, DRESSER-RAND COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Curtin, District Judge.

BACKGROUND

Presently before the court are cross motions for reconsideration of the court's May 29, 1991, decision granting in part and denying in part defendants' motion for summary judgment. Zydel v. Dresser Indus., Inc., 764 F. Supp. 277, 287 (W.D.N Y 1991). Plaintiffs seek to reinstate plaintiff Stanley J. Zydel on the ground that the court overlooked Mr. Zydel's retained seniority under the United Steelworkers of America ("USWA") agreement when it dismissed him from the case. See id. at 286 n. 9. Plaintiffs also seek to revive their first and second claims which were dismissed by the court. See id. at 284-85. Defendants, on the other hand, ask the court to reverse its conclusion finding a genuine issue of fact precluding summary judgment on plaintiffs' third claim. Defendants offer additional affidavits to explain the pension plan provisions which the court found ambiguous. See id. at 282-83, 285-86. Defendants also seek to dismiss claims four and five, which the court did not reach in its earlier decision. Each of plaintiffs' five claims shall be reviewed.

DISCUSSION

Plaintiffs seek to revive claims one and two of their second amended complaint which were dismissed in this court's prior order. See id. at 285. With respect to plaintiffs' second claim — promissory estoppel — plaintiffs have cited no new authority which might indicate that the court's prior reasoning was faulty. Indeed, on further review, the court has discovered several additional cases similar to the facts here which have held that state actions for promissory estoppel or false misrepresentation are preempted by ERISA where plaintiffs have sought thereby to recover benefits under an employee benefit plan. Lee v. E.I. Dupont de Nemours & Co., 894 F.2d 755, 757 (5th Cir. 1990) (preempting claim of "plaintiffs [who] seek to recover benefits defined by their former employer's ERISA plan, benefits to which they would have become entitled but for a misrepresentation by their employer, during their employment, on which they relied to their detriment."); Bellino v. Schlumberger Technologies, Inc., 753 F. Supp. 391, 392 (D.Me. 1990) (preempting collection under severance pay plan on basis of promissory estoppel); Childers v. Northwest Airlines, Inc., 688 F. Supp. 1357, 1364 (D.Minn. 1988) (preempting plaintiffs' claim that they were fraudulently induced to accept wage cuts on basis of promise to include them in employee stock ownership plans); Pane v. RCA Corp., 667 F. Supp. 168, 172 (D.N.J. 1987), aff'd, 868 F.2d 631 (3d Cir. 1989) (finding alleged breach of promise to include plaintiff in severance plan preempted by ERISA). Even courts that do not find preemption on the facts before them recognize this principle. See, e.g., Perry v. P*I*E Nationwide, Inc., 872 F.2d 157, 162 (6th Cir. 1989), cert. denied, 493 U.S. 1093, 110 S.Ct. 1166, 107 L.Ed.2d 1068 (1990) (distinguishing facts of case on basis that "[p]laintiffs . . . do not seek plan benefits or an increase in plan benefits. . . .").

In this case, there is no dispute that by bringing their second claim, plaintiffs are seeking to recover benefits under an employee benefit plan. Plaintiffs allege that they were promised an opportunity to return to their union positions without loss of union benefits if their management positions were ever abolished or if they retired. Item 37, ¶ 24. Plaintiffs also allege that when they were first advised of the Dresser plant closing, they were told that they could collect the more favorable of union or management pension benefits. Id., ¶ 26. These alleged promises were not kept, and plaintiffs were therefore foreclosed from collecting 70-80 union pensions upon closure of the plant. As a remedy, plaintiffs seek to collect the same 70-80 pension benefits granted union members at the plant. Id., ¶ 30. This claim clearly "relate[s] to" the union pension plans, see Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 44-48, 107 S.Ct. 1549, 1551-53, 95 L.Ed.2d 39 (1987), and therefore, the court reaffirms its prior holding that this claim is preempted by ERISA.

Plaintiffs also seek reconsideration of the court's dismissal of their first claim — that "defendants' `policy and practice' of guaranteeing to former union members who accepted promotion to management positions the greater of union or management pension benefits upon retirement was an `employee benefit plan' under ERISA." Zydel, 764 F. Supp. at 284. In my prior opinion, I concluded that "policy and practice" could not create an employee pension plan because of ERISA's requirement that "`[e]very employee benefit plan shall be established and maintained pursuant to a written instrument.'" Id. (quoting 29 U.S.C. § 1102(a)(1)). Given the fact that union pension plans had existed, in writing, since before these plaintiffs joined the company, I further held that

  to the extent plaintiffs are unable to show, in
  writing, that they are entitled to benefits under
  these plans, their claim that the company's "policy
  and practice" established an entitlement to pension
  benefits is an assertion that these plans were
  modified orally to bring plaintiffs within the
  plans' ambit. Plaintiffs cannot maintain a cause of
  action for such an oral modification.

Id. at 285 (emphasis added and in original). Cases now cited by plaintiffs affirm these conclusions. See Kane v. Aetna Life Ins. Co., 893 F.2d 1283, 1285 n. 3 (11th Cir.), cert. denied, ___ U.S. ___, 111 S.Ct. 232, 112 L.Ed.2d 192 (1990) (noting the "rule that estoppel may not be invoked to enlarge or extend the coverage specified in a contract"); Amato v. Western Union Int'l, Inc., 773 F.2d 1402, 1420 (2d Cir. 1985), cert. dismissed, 474 U.S. 1113, 106 S.Ct. 1167, 89 L.Ed.2d 288 (1986), abrogated on other grounds, Mead Corp. v. Tilley, 490 U.S. 714, 109 S.Ct. 2156, 104 L.Ed.2d 796 (1989) (distinguishing New York case that refused to create a contract by estoppel). Plaintiffs therefore no longer claim, per their complaint, Item 37, ¶¶ 7-22, that defendants' "policy and practice" created a plan. Nor do they contend that defendants' union pension plans were modified by the oral promises allegedly made to them. Rather, plaintiffs now argue that defendants' pension plans are ambiguous and must be "interpreted" by reference to defendants' alleged policy and practice of returning former management employees to the union. See Kane, 893 F.2d at 1286; Amato, 773 F.2d at 1420. Although oral modifications to pension plans are barred by ERISA, see Zydel, 764 F. Supp. at 284-85 (citing cases), oral promises which merely interpret ambiguous pension plan language are not, plaintiffs claim.

In evaluating claim three in my prior opinion, I looked to the language of the pension plans to determine whether plaintiffs could qualify thereunder for the 70-80 retirement benefits they sought. Id. Eligibility for 70-80 benefits is defined in § 4.04 of both the USWA and Office and Professional Employees International Union ("OPEIU") pension plans. Item 70, Exhs. 26, 27, § 4.04. To be eligible under § 4.04, a person must have (1) been a "Participant" in one of those plans, (2) had ten years of "Participation Service," and (3) met a combined age and years of participation service requirement totalling either 70 or 80. See id. In addition, the "Participant" must have been severed from service by reason of a permanent shutdown of the plant, department or subdivision thereof, or for another reason not applicable here. Id. As I noted in my prior order, these last three requirements would not appear to bar at least some plaintiffs from being eligible for 70-80 pensions. Zydel, 764 F. Supp. at 286. The real question was whether plaintiffs qualified as "Participant[s]" in these union plans.

To put this question in context, I quote extensively from the prior opinion:

  Both plans define a "Participant" as "any Employee
  participating in the Plan in accordance with
  provisions of Section 3.01." Item 70, Exh. 26, §
  1.24; Item 70, Exh. 27, § 1.30. An "Employee" is
  defined as a person who, on or after the Effective
  Date — February 16, 1985, the day Dresser Industries
  officially acquired the plant — has performed an hour
  of service for the company and is receiving
  remuneration for such service. See Item 70, Exh.
  26, §§ 1.16, 1.18; Item 70, Exh. 27, §§ 1.22, 1.24.
  Section 3.01 provides:
      Eligibility for Participation. Any hourly-paid
    Employee who is a member of the bargaining unit
    represented by the Union and who is employed by the
    Employer's Worthington Compressor Division at
    Buffalo, New York, shall become a Participant
    immediately as of the Effective Date or, if later,
    as of his Employment Commencement Date.
      Further provided, the term Participant shall also
    include persons who, as of the Effective Date, were
    participating in the Predecessor Company Plan and
    whose seniority rights under the existing
    collective ...

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