The opinion of the court was delivered by: THOMAS C. PLATT
By an order to show cause dated November 3, 1994, plaintiffs seek a preliminary injunction to stay a deadline imposed by defendants, (plaintiffs' present employers) by which plaintiffs must decide whether or not to retire from the company under the terms of a disputed employee severance pay plan.
On December 8, 1994, plaintiffs must choose whether they will resign voluntarily or remain in their jobs and face possible termination early in the New Year.
Although plaintiffs have indicated a likelihood of success on the merits of their claims, they have not shown that irreparable harm will result if the deadline is not stayed.
Accordingly, their motion for a preliminary injunction must be and is hereby denied. Furthermore, plaintiffs' motion for summary judgment and defendants' motions to dismiss the complaint are denied without prejudice to renew.
Prior to the merger Grumman employees were entitled to participate in an Employee Investment Plan ("EIP") and a Severance Payment Plan ("SPP"). The EIP held approximately one-third of Grumman's outstanding stock. Additionally, numerous employees owned outright between seven and seventeen percent of Grumman stock. The SPP, on the other hand, entitled the employees to one week's pay for every year that they had worked for the company. During the relevant time period, both before and after Northrop's and Martin Marietta's tender offers, the SPP provided for extensions of benefits in the event that control of Grumman changed hands. The differences between these provisions are what form the basis of this action.
On January 18, 1990, Grumman's Board of Directors authorized the company to revise the SPP to state:
In the event of a change in control of this Corporation any employee whose employment . . . is terminated within 30 months following such change of control . . . shall be entitled to severance benefits no less extensive and of no less value than those applicable to such employee immediately preceding the change of control.
Grumman thereafter amended its SPP, to be effective January 1, 1993, providing that the "severance pay policy would continue for 30 months following a change in control only in the event of a hostile change in control." (emphasis added). Plaintiffs allege that this change was made contemporaneously with Grumman's attempts to find a buyer and for the purpose of marketing the company as a more attractive purchase.
Following Grumman's acceptance of the Northrop tender offer, on September 1, 1994 Grumman terminated the SPP to be effective January 1, 1995. Grumman announced that employees who wished to receive the existing plan's benefits must voluntarily resign from the company by December 8, 1994. At that time Grumman also announced that a new severance pay policy would go into effect, a policy consistent with Northrop's and, as defendants admit, considerably less generous than Grumman's SPP. According to deposition testimony of representatives of both plaintiffs and defendants, it was generally understood that a merger would ultimately lead to layoffs.
The Trustees of the EIP, Messrs. Dunn, Denien and Foster were also senior executives of Grumman. Plaintiffs allege, and defendants do not dispute, that together with other Grumman officers, the Trustees stood to gain from generous Special Severance Agreements, commonly known as "golden parachutes," if the merger was successful. At the same time, it is undisputed that the Trustees, and other officers including Mr. Caporali, Grumman's Chief Executive and Chairman of the ...