in 1987 as sale was being contemplated, no response was offered. The ArtCarved officers never told Lenox that they believed any severance plan was in effect. These same officials now contend that a severance plan had been in effect continuously since 1982.
Lenox argues that even if ArtCarved maintained a severance plan, severance pay Is an unvested benefit under ERISA, and an employer may change, establish or eliminate a severance pay plan when it desires to do so. An unfunded severance plan is an "employee welfare benefit plan" under ERISA Reichelt v. Emhart Corp., 921 F.2d 425, 430 (2d Cir. 1990), cert. denied, 115 L. Ed. 2d 1022, U.S. 111 S. Ct. 2854 (1991). Welfare benefits are subject to much looser controls than are pension plans. Severance pay, part of welfare benefits, is an unvested interest on the part of the employee. An employer "has no continuing obligation to provide severance benefits; under ERISA, the employer has the right at any time to amend or terminate a severance pay plan." Since the employer has the right under ERISA to amend or eliminate a severance benefit plan at any time,"a fortiori it may do so in the context of the sale of a part of its business as a going concern." Reichelt at 430. In fact, several circuits have suggested that with respect to employees who continue comparable employment with the purchaser of the business, supplementing their salary checks from the purchaser with severance payments from the prior employer would bestow a windfall, because it would award severance pay to persons who never changed their jobs and were never out of work. Sejman v. Warner-Lambert Co., 889 F.2d 1346, 1350 (4th Cir. 1989), cert. denied, 112 L. Ed. 2d 19, 111 S. Ct. 43 (1990); for Lakey v. Remington Arms Co., 874 F.2d 541, 545 (8th Cir. 1989); Sly v. P.R. Mallory & Co., 712 F.2d 1209, 1211 (7th Cir. 1983); Independent Ass'n of Publishers' Emp. v. Dow Jones & Co., Inc., 671 F. Supp. 1365, 1368 (S.D.N.Y. 1987).
Lenox argues that it maintained a consistently-applied policy of not paying severance pay to employees of a division or a subsidiary when that division or subsidiary was sold and the employees were offered the opportunity of continued employment by the purchaser. In an affidavit sworn to by Stephen Lichtenstein, Lenox's General Counsel since October 1976, this policy was elaborated and confirmed, and in fact Lichtenstein noted that there has been no situation since 1976 in which Lenox ever paid severance pay when it sold an operating division and the employees of that division were offered the opportunity for continued employment. Lenox had no written severance policy at any time; any time that severance payments were made upon the sale of a division of Lenox, those payments were individually structured for the particular sale and were not used as models or precedent for any future sales. All the Lenox officers involved in the Keepsake sale to which plaintiffs repeatedly refer and upon which they tenaciously rely testified that this sale involved a one-time severance arrangement. The Keepsake liquidation plans relied upon no established policy, but instead represented a unique plan. Thus, no severance plan within the meaning of ERISA existed.
As the Supreme Court held in Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 12, 96 L. Ed. 2d 1, 107 S. Ct. 2211 (1987), "a one-time, lump-sum payment triggered by a single event requires no administrative scheme whatsoever to meet the employer's obligation." The employer incurs no obligation whatsoever to pay benefits on a regular basis through any one-time payments. Once this single obligation is fulfilled, the employer has no responsibilities that continue at any time into the future, so the payment can not be considered a "plan" under ERISA. Fort Halifax at 12.
In fact, only one employee from ArtCarved was not hired by CJC. The sale agreement's Amendment No. 2 had a clause eliminating whatever severance pay policy may have been arguably still extant. Lenox represents that CJC retained all the ArtCarved employees except for two people in the same jobs at the same pay after the sale, and that the two who were not hired by the buyer received salary continuation of two weeks' pay for each year of service. Also, Lenox argues that the decision to relocate to Texas had not been made prior to the sale, contrary to the plaintiffs' allegations. Lenox notes that the employees whose jobs were moved to Texas were offered the opportunity to relocate at buyer's expense and to retain their jobs, and that some 87 people who are now plaintiffs chose not to relocate and received salary continuation pay totaling $ 857,384, and that another large number remained in the same jobs in New York and are still employed.
Plaintiffs fail to present any evidence to corroborate their allegations that Lenox had a severance pay plan in effect at any time prior to its sale of ArtCarved; the 1982 manual has not been shown to have ever been implemented by Lenox, and the provisions of the Keepsake sale in 1986 have not been shown to have been anything other than a one-time agreement. Therefore, Lenox's motion for summary judgment is granted and the action is dismissed.
Dated: January 29, 1992
New York, New York
United States District Judge
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