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August 25, 1992


The opinion of the court was delivered by: MICHAEL B. MUKASEY



 In this action for employee benefits, the parties have taken profligate advantage of the availability of pretrial motions. Defendant The Bank of New York (hereinafter "defendant" or "the Bank") has moved for summary judgment pursuant to Fed. R. Civ. P. 56 (i) as to Count One on the ground that no material issue of fact remains in dispute, and (ii) as to Counts Two, Three, and Four on the ground that those state-law claims are preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. Defendant also has moved pursuant to Fed. R. Civ. P. 37 to dismiss the claims of plaintiffs Vincent C. Clark and Robert E. Snauffer for their alleged misconduct during discovery. Plaintiffs have cross-moved: (1) to strike the affidavit of Douglas J. Tantillo; (2) to add as a named defendant "Frank Peterson, as Administrator of the Irving Bank Corporation Separation Policy"; and (3) to require production of Joseph J. Tenicki's 1988 and 1989 telephone records at the Bank. Plaintiff Snauffer has moved for partial summary judgment as to Count One of the Complaint. Plaintiff Clark has moved to disqualify Saiber Schlesinger Satz & Goldstein ("SSS&G") as defendant's counsel. Finally, defendant has moved, pursuant to Fed. R. Civ. P. 11 and 28 U.S.C. § 1927, to sanction Clark for his disqualification motion. For the reasons set forth below, defendant's motion for summary judgment as to Count One is denied, as is defendant's motion to dismiss Clark's and Snauffer's claims; however, defendant's motion for summary judgment as to counts Two, Three, and Four is granted. Clark's motion to disqualify SSS&G will be the subject of a hearing as to the issue specified below, but is otherwise denied. The remainder of plaintiffs' cross-motions are denied. Decision on defendant's motion for sanctions is reserved until Clark's disqualification motion has been decided in full.


 Before defendant's hostile takeover of Irving Bank Corporation on November 28, 1988, plaintiffs Clark, Snauffer, and Michael G. Haggarty were members of the Irving Trust Public Finance Department ("the PFD"). The PFD, formed by Irving in or about 1985, sought to promote Irving as advisor, placement agent, or lead managing underwriter for securities offerings by issuers of tax exempt securities. (Tantillo Aff. P 6)

 Clark and Snauffer were investment bankers who specialized in bond issues for not-for-profit hospitals. (Clark Dep. at 57; Snauffer Dep. at 110-15, 125-30, 163) Haggarty had dual responsibilities at Irving in 1988: he was (1) the investment banker in charge of Irving's industrial development bond issues; and (2) assigned to help Snauffer market Irving's financial services to not-for-profit hospitals. (Haggarty Dep. at 20, 31, 38, 45)

 At the beginning of 1988, plaintiffs and five or six other employees were marketing officers; the remaining eight to ten members of the PFD were support personnel responsible for credit analysis and administration. (Clark Dep. at 83; Snauffer Dep. at 12) All of the employees in the PFD reported directly to Joseph J. Tenicki, a senior vice president of both Irving and the Bank. (Def. Statement Pursuant to Local Rule 3(g) PP 8, 9)

 On November 29, 1988, the day after defendant completed its hostile takeover of Irving, there were nine employees in the PFD: plaintiffs, Tenicki, two secretaries, and three other employees. (Id. P 3) By February 1989, two of those three other employees had resigned and the third had been reassigned to defendant's Municipal Bond Department. (Id. PP 4-6) That third employee was assigned again to the PFD in or about April 1989. (Id.)

 On April 18, 1989, plaintiffs submitted a memorandum to Tenicki, claiming that their duties and responsibilities had been diminished materially since defendant's takeover of Irving (Second Yeskoo Aff. Ex. A); plaintiffs also sent a copy of their April 18 memorandum to Douglas J. Tantillo, who was a vice president of the Bank, assigned to the Personnel Division. (See Id.) In that memorandum, plaintiffs claimed that their duties and responsibilities had been diminished materially in the following ways:

 -- Material diminution in manpower of the [Public Finance] Department;

 -- Removal of important internal operation and credit support;

 -- Elimination of credit approval process;

 -- Major reduction in market capability;

 -- Significant loss of deals due to the lack of commitment to the industry;

 -- No backlog of new business; and

 -- Severe jeopardy to [plaintiffs'] professional careers.


 Plaintiffs' April 18 memorandum put defendant on notice that plaintiffs intended to resign and submit claims for severance benefits under the Irving Corporation separation Policy ("the Plan"), which Irving had adopted in 1988. (Compl. P 9) Inter alia, the Plan provided severance benefits to Irving employees in the event control of Irving changed and, within two years of that change, the claiming employee's job duties and responsibilities materially diminished. (Compl. Ex. A §§ 4.1, 4.2(a)(iii), 4.3)

 In the morning of April 26, 1989, Clark and Haggarty met with Deno D. Papageorge, who was the senior executive vice president and chief financial officer of the Bank, as well as with Tenicki, Tantillo, and another member of the personnel department. Papageorge said that he had not yet "gotten around to the Public Finance Department," but that he intended to maintain the PFD and to restaff it with internal transfers. (Second Yeskoo Aff. Ex. D)

 On April 26, sometime after they met with Papageorge in the morning, Clark, Snauffer, and Haggarty submitted letters of resignation, as well as formal requests under the Plan for separation benefits. (Id. P 7 and Ex. E)

 Frank L. Peterson, who was a senior vice-president in charge of defendant's personnel division, served as plan administrator. (See Peterson Dep. at 18) In his capacity as plan administrator, Peterson delegated primary responsibility for investigating plaintiffs' claims for severance benefits to Tantillo. (Id. 17-18) Tantillo apparently investigated plaintiffs' claims only by discussing plaintiffs' April 18 memorandum with Tenicki. In addition, Peterson discussed plaintiffs' claims with Papageorge and John A. Ross, who was an executive vice-president of the Bank. According to Peterson, both Papageorge and Ross told him that "very much they wanted [plaintiffs] to stay and [Peterson] should try to convince them to stay with the bank and that we very much wanted to stay in that business." (Id. at 11-12)

 In memoranda dated May 2, 1989 from Tantillo to Peterson, Tantillo asserted that each plaintiff's claim under the Plan should be denied because defendant had:

 (1) a commitment to continue in the healthcare finance business in the not for profit sector, which was communicated to said employee by the Sector Head, Deno D. Papageorge, SEVP, and Joseph J. Tenicki, SVP, Department Head, on the morning of April 26, in Mr. Papageorge's office, and;

 (2) a commitment to restaff the function to a level commensurate with the Corporations [sic] strategic plan if further resignations occurred; also communicated to the employee at the same time as (1) above.

 (Second Yeskoo Aff. Ex. F)

 In identical letters dated July 24, 1989, defendant denied plaintiffs' respective claims. Each of those letters stated that defendant was denying the claim for severance benefits because,

 in our opinion, there has been no material diminution of duties and responsibilities so as to occasion the payment of benefits.

 More specifically, on April 26, 1989, Mr. Deno D. Papageorge, Sector Head and SEVP, and Mr. Joseph Tenicki, Department Head and SVP, met with you to discuss your concerns. Mr. Papageorge was there specifically to reassure you of The Bank of New York Inc.'s commitment to continue in the healthcare finance business in the not-for-profit sector. In addition, you were also notified that there was no change in your duties and responsibilities.

 Recognizably, the merger has impacted business to the extent that we have had some unanticipated turnover in staffing. However, a further commitment was made to restaff the function to a level commensurate with the corporation's strategic plan if further resignations occurred.

 Therefore, as there was no change in your job responsibilities and not even the prospect of further diminution, you are not eligible for severance benefits and your claim is denied.

 (Id. Ex. G)

 Plaintiffs requested that Manufacturers Hanover Trust Company, which was the trustee of the Irving Benefits Protection Trust (alternatively "the Trust" or "the Benefits Protection Trust"), review defendant's denial of their claims for separation benefits. The Benefits Protection Trust was established to "provide a legal defense fund to protect the specific benefits" promised to Irving employees under the Plan. (Id. Ex. I) "The trustee will have a fiduciary responsibility to negotiate and litigate legitimate claims on behalf of employees." (Id.) In the case at hand, the trustee determined as to each plaintiff that, "under the terms of the Trust, it would be inappropriate to apply further Trust assets to attempt to enforce your claim on your behalf, and we have instructed our legal counsel accordingly. Of course, you are free to engage independent legal counsel and pursue your claim yourself." (Tantillo Aff. Ex. E)

 On or about June IS, 1990, plaintiffs instituted this case. They allege claims pursuant to ERISA, as well as pendent state-law claims.


 Fed. R. Civ. P. 56(c) requires a summary judgment if the evidence demonstrates that "there is no genuine issue as to any material fact and [that] the moving party is entitled to judgment as a matter of law." Anderson v. Liberty Lobby Inc., 477 U.S. 242, 250, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). "Summary judgment is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to 'secure the just, speedy and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986) (quoting Fed. R. Civ. P. 1).

 In determining whether there is a genuine issue of material fact, a court must resolve all ambiguities, and draw all inferences, against the moving party. See United States v. Diebold. Inc., 369 U.S. 654, 655, 8 L. Ed. 2d 176, 82 S. Ct. 993 (1962) (per curiam); Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir. 1987). However, the mere existence of disputed factual issues is insufficient to defeat a motion for summary judgment. Knight v. United States Fire Ins. Co., 804 F.2d 9, 11-12 (2d Cir. 1986), cert. denied, 480 U.S. 932, 94 L. Ed. 2d 762, 107 S. Ct. 1570 (1987). The disputed issues of fact must be "material to the outcome of the litigation," id. at 11, and must be backed by evidence that would allow "a rational trier of fact to find for the non-moving party." Matsushita Electrical Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). The non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts." Id. With respect to materiality, "substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson, 477 U.S. at 248.


 Plaintiffs cross-move pursuant to Rule 56(e), Fed. R. Civ. P., to strike Tantillo's affidavit. I have addressed this cross-motion first because its disposition determines what evidence is to be considered on defendant's motion for summary judgment as to Count One.

 Rule 56(e) requires that, "Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein."


 Defendant moves for summary judgment as to Count One on the ground that no material issue of ...

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