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February 12, 1996


The opinion of the court was delivered by: SCULLIN



 This action involves claims brought pursuant to the Employment Retirement Income Security Act (ERISA), 29 U.S.C. § 1132(a)(1)(B), as well as breach of contract claims, and an age discrimination claim brought pursuant to N.Y. Exec. Law § 296. More specifically, plaintiffs' ERISA claims are based upon the alleged failure of the defendants, The Ground Round, Inc. ("The Company") and The Ground Round, Inc., Severance Pay Plan ("The Plan"), to award them severance pay following their dismissals. *fn1"

 Plaintiffs also assert breach of contract claims against the defendant, The Ground Round, Inc., alleging that they had contracts wherein the defendant agreed to pay them accumulated vacation pay upon their termination and that no such payments were made following their dismissals. *fn2" Plaintiff, Jeffrey Eymer, also asserts a claim of age discrimination against the defendants pursuant to N.Y. Exec. Law § 296.

 Presently before the Court is defendants' motion for partial summary judgment as to Claims 1, 3, 5, 6, 7, 8, 9 & 10 of the Complaint. The Court heard oral argument on this motion at its November 3, 1995, Motion Calendar, at which time it granted the motion with respect to Claims 3 and 8, and reserved decision on the remaining claims. Following oral argument each party submitted supplemental briefing at the request of the Court.


 Plaintiff, Jeffrey Eymer, was employed by the defendant, The Ground Round, Inc., for 15 years and was a Vice President of Division Operations at the time of his termination. Plaintiff, Patrick Lappin, was employed by the defendant for 12 years, and was a Regional Director at the time of his termination. The defendant, The Ground Round, Inc., owns and operates full service, dine-in restaurants, throughout the country.

 In September 1986 both plaintiffs were issued a copy of The Ground Round's policy on "Business Ethics and Conflict of Interest." This policy states that a conflict of interest may occur where

an employee, directly or indirectly, [owns or has] and ownership interest in any business, firm, corporation or other organization which is in direct or indirect competition with the business conducted by the Company.
It is believed that the company's policies as set out are already well understood by all company personnel, but they are restated at this time as a reminder that undisclosed acts or conditions in conflict with the interests as above described shall be deemed sufficient grounds for dismissal of the individual involved.

 Def. Mem. Ex. 1 p.4. Both plaintiffs signed an "Acknowledgement of Receipt and Compliance" soon after receiving a copy of the policy. This was the only copy of the policy that was issued to, and signed by, the plaintiffs prior to their dismissals.

 In 1989 each plaintiff invested $ 7,500.00 in a Subway sandwich shop. Although neither plaintiff was involved in the control or management of the business of the shop, they each maintained a 25% ownership interest in the franchise. In March 1990 plaintiffs began to extricate themselves from their involvement in the Subway franchise, and in August 1990 obtained a hold harmless agreement from the person who operated the shop. Eymer Aff. Ex. A. Plaintiffs ultimately sold their interests in the Subway franchise in May 1991. Id. Ex. C.

 In October 1991, both plaintiffs were dismissed from their positions with The Ground Round, Inc. by then-President Michael O'Donnell. According to O'Donnell, both plaintiffs were dismissed for violating the Company's "Business Ethics and Conflict of Interest Policy." The violation at issue was the plaintiffs' ownership interest in the Subway franchise.

 In April 1993, each plaintiff submitted a written request for severance pay which they claimed they were entitled to under The Ground Round, Inc. Severance Pay Plan. *fn3" On July 20, 1993, the Plan Administrator denied each plaintiffs request in writing. Def. Mem. Exs. 8-9. On August 18, 1993, both plaintiffs requested a further review of the Administrator's decision to deny them severance pay. After submitting their request for a review of the decision, plaintiffs submitted arguments as to why they believed that they were entitled to severance benefits under the Plan. Id. Ex. 5. On January 24, 1994, the Plan Administrator notified both plaintiffs that their appeals had been denied. Id. Ex. 11.


 Summary Judgment Standard

 Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is warranted if, when viewing the evidence in the light most favorable to the non-movant, the court determines that there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 112 S. Ct. 2072, 2077, 119 L. Ed. 2d 265 (1992); Commander Oil v. Advance Food Serv. Equip., 991 F.2d 49, 51 (2d Cir. 1993). The burden of showing that no genuine issue of material fact exists rests on the moving party. Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir. 1987). Where the moving party does not bear the ultimate burden of proof at trial, the summary judgment burden may be satisfied by pointing out the absence of evidence to support the non-movant's claims. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). Once the movant shows the absence of such evidence, the burden of persuasion shifts to the non-movant to show that the record contains sufficient evidence to establish each element of its case. Id., at 322, 106 S. Ct. at 2552


 Plaintiffs' initial claims assert that the Company has violated the requirements of ERISA by refusing to award them severance benefits following their terminations. 29 U.S.C. § 1132(a)(1)(B).

 a. Standard of Review

 The threshold question for the Court is what is the appropriate standard to be applied in reviewing a denial of benefits under ERISA. The Supreme Court has clearly stated that

a denial of benefits challenged under § 1132(a)(1)(B) [of ERISA] is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe terms of the plan.

 Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 103 L. Ed. 2d 80, 109 S. Ct. 948 (1989). In accordance with this standard, the Second Circuit has held that "where the written plan documents confer upon a plan administrator the discretionary authority to determine eligibility, we will not disturb the administrator's ultimate conclusion unless it is 'arbitrary and ...

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