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Thompson v. Linvatec Corp.

June 22, 2010


The opinion of the court was delivered by: Neal P. McCURN, Senior U.S. District Court Judge


This class action was filed pursuant to 29 U.S.C. § 1001, et seq., the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), alleging denial of severance benefits, breach of fiduciary duty, and violation of ERISA summary plan description ("SPD") requirements. Currently before the court is a motion for summary judgment to dismiss the case in its entirety (Doc. No. 70) filed by defendants Linvatec Corporation ("Linvatec"), ConMed Corporation ("ConMed"), and ConMed Corporation Severance Plan (collectively, "defendants"); and a motion filed by defendants for class decertification, or in the alternative, modification of the class (Doc. No. 72). Also before the court is a motion for summary judgment filed by plaintiffs Annabelle Thompson ("Thompson"), Marc Basist ("Basist"), Dennis Koen ("Koen"), Paul Sullivan ("Sullivan"), and Robert Donaghue ("Donaghue") (collectively, "plaintiffs") requesting an order granting their ERISA § 502 (a)(1)(B) claim for benefits under the terms of the Linvatec Severance Plan (Doc. No. 71). In the interest of judicial economy, the court addresses the motion for class decertification and the cross motions for summary judgment herein. For the reasons stated below, the court grants defendants' motion to decertify the class, grants defendants' motion for summary judgment, and denies plaintiffs' motion for summary judgment.


The court presumes familiarity with the facts of the case, as set forth in the court's MDO issued on May 22, 2007 ("2007 MDO") (Doc. No. 50). The court reiterates those facts and any additional facts taken from the parties' numerous briefs and voluminous discovery materials on the new motions only as necessary to clarify its findings and to facilitate understanding of the matters at issue here.

In December of 1997, ConMed bought surgical instrument manufacturer Linvatec from Bristol Myers Squibb ("BMS"). Linvatec maintained an internal sales division that comprised approximately 160 employees, inclusive of plaintiffs. During the time that Linvatec was a subsidiary of BMS, its employees were covered by a severance plan, and all Linvatec employees were provided with a summary plan description of the severance plan in a BMS booklet called "Your Benefits." Doc. No. 70-10 at pp. 1-2.*fn1 As part of the Stock and Asset Purchase Agreement between ConMed and BMS, ConMed agreed to maintain benefits and the BMS severance policy at current levels for covered Linvatec employees for a continuation period of at least two years from the date of the sale. Doc. No. 70-12, pp. 2-3. ConMed agreed to "implement a severance pay formula which is substantially identical to the formula available to BMS employees." Id. at p. 3. ConMed did not issue a new SPD for Linvatec employees, and deposition testimony was heard from the named plaintiffs wherein they stated that they understood that the severance pay formula under ConMed remained substantially identical to the BMS severance plan, and would be continued for Linvatec employees for at least two years. Doc. No. 70-2 at p. 8 (citing relevant named plaintiff depositions).

In early 2000, Linvatec began laying off employees in its sales division, pursuant to the terms of the BMS employee benefit welfare plan (the "Plan") as updated by the Important Policy Update ("IPU") issued by ConMed, effective March 30, 2000. Doc. No. 70-12 at p. 5. Under the terms of the Plan, severance benefits were not paid following the sale of all or part the corporation's business assets if an otherwise eligible employee is offered employment by the acquirer of such assets. Complaint, ¶ 25; Doc. No. 70-12, p. 8. The IPU updated the maximum amount of severance to be paid, e.g., the maximum weeks of severance pay was decreased to 24 weeks from the former rate of 56 weeks. Id. at p. 5. ConMed asserts that it issued the IPU to bring the Linvatec severance pay in line with that given to ConMed employees.

Named plaintiffs are former Linvatec employees and sales representatives for Linvatec products who continued to be employed by Linvatec's sales division until March 31, 2003. On March 31, 2003, Linvatec outsourced its sales division, notifying its nationwide sales force at a training session in St. Petersburg, Florida. On that date, Linvatec implemented a plan*fn2 to outsource its sales division and terminate its sales team's employment. However, each sales representative, upon being told that he or she was being terminated, was offered a contract to work as sales representative with the new manufacturer's representative that had taken over the sales territories. In other words, Linvatec immediately offered the terminated employees a contract as an independent contractor/sales representative with the now-outsourced sales division. The manufacturer's representative was obligated to purchase the sample inventory in the field which was, due to the nature of Linvatec's products and sales, valued in the millions of dollars in March of 2003.

The named plaintiffs either refused outright (for various reasons) the offer to work as sales representatives, or in some instances, worked in that capacity before leaving the position. All filed for severance benefits and all were issued a letter dated June 9, 2006, denying their claim for severance benefits and advising them of their right to appeal. None of the plaintiffs filed an appeal from the denial of their claims. Doc. No. 70-1, pp. 5 -6.


As a threshold matter, defendants argue that plaintiffs' claims that they were likely prejudiced by the lack of a summary plan description should not proceed as a class action. Doc. No. 72-2 at p. 6. Plaintiffs concede, post discovery, that "the Class agrees that its Count Three SPD claim may be dismissed." Doc. No. 78 at p. 5. Accordingly, the court dismisses Count Three of the complaint with prejudice.

A. Decertification of the Class

"With respect to class certification requirements, numerosity, commonality, typicality, and adequacy of representation must be satisfied." Bezio v. Genereal Electric Co., 655 F. Supp. 2d 162, 164 (N.D.N.Y. 2009) (citing Cent. States Se. and Sw. Areas Health and Welfare Fund, 504 F.3d 229, 244 (2d Cir.2007)). In its 2007 MDO granting class certification, the court set forth the Second Circuit's clarification of the law governing class certification pursuant to Fed. R. Civ. P. 23, citing In re Initial Public Offering Securities Litigation ("In re IPO"),471 F.3d 24 (2d Cir. 2006) (petition for rehearing denied, 483 F.3d 70 (2d Cir. 2007). The court reiterates that information here in pertinent part. The Second Circuit addressed the heretofore "surprisingly unsettled" issue in this circuit as to what standards govern a district judge in adjudicating a motion for class certification under Rule 23. The Court of Appeals set forth the following standard:

(1) a district judge may certify a class only after making determinations that each of the Rule 23 requirements have been met; (2) such determinations can be made only if the judge resolves factual disputes relevant to each Rule 23 requirement and finds that whatever underlying facts are relevant to a particular Rule 23 requirement have been established and is persuaded to rule, based on the relevant facts and the applicable legal standard, that the requirement is met; (3) the obligation to make such determinations is not lessened by overlap between a Rule 23 requirement and a merits issue, even a merits issue that is identical with a Rule 23 requirement; (4) in making such determinations, a district judge should not assess any aspect of the merits unrelated to a Rule 23 requirement; and (5) a district judge has ample discretion to circumscribe both the extent of the discovery concerning Rule 23 requirements and the extent of a hearing to determine whether such requirements are met in order to assure that a class certification motion does not become a pretext for a partial trial of the merits.

In re Initial Public Offering Securities Litigation, 471 F.3d at 41 (2d Cir. 2006). "Additionally, a class action may be maintained only if it qualifies under at least one of the categories provided in Rule 23(b)." ...

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