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BECKER v. SIMPSON BLDG. SUPPLY CO.

November 27, 1987

Benjamin P. Becker, Sr., et al., Plaintiffs
v.
Simpson Building Supply Company, et al., Defendants



The opinion of the court was delivered by: CONABOY

 Richard P. Conaboy, United States District Judge

 Introduction

 This is an action by former employees of Simpson Building Supply Company ("Simpson Building") under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., for severance pay arising out of the sale of the facility where they were employed to the Hudson Building Supply Company. Plaintiffs' claim that the sale of the facility entitles them to severance pay despite the fact that they continued their position at the facility with Hudson without any period of unemployment.

 Procedural History

 On November 27, 1985, Plaintiffs originally filed this action in the Luzerne County Court of Common Pleas alleging that Simpson's failure to pay severance benefits violated the Pennsylvania Wage Payment and Collection Law, 43 P.S. § 260.1 et seq. and breached an agreement with its employees. Simpson removed the case to this Court asserting that Plaintiffs' complaint pleaded an action for welfare benefits arising exclusively under ERISA. On July 30, 1986, this Court granted Defendants' motion for a non jury trial. On October 7, 1986, Plaintiffs filed an amended complaint which withdrew all of Plaintiffs' state law claims. The amended complaint asserts that Simpson's decision not to pay severance benefits violated ERISA.

 This matter is currently before the Court upon cross motions for summary judgment filed by the Plaintiffs and the Defendants. To facilitate our review of this matter, the parties, after a full opportunity for discovery, entered into the following stipulation of facts.

 Stipulation of Facts

 1. Plaintiffs are former employees of Defendant, Simpson Building. Plaintiffs worked at Simpson Building's Wilkes-Barre, Pennsylvania distribution center. Fourteen of the Plaintiffs were salaried employees, and twelve of the Plaintiffs were hourly employees on the final date of their employment with Simpson Building.

 2. Simpson Building is a wholly owned subsidiary of Simpson Timber Company ("Simpson Timber"), a privately owned timber, wood and paper products company headquartered in Seattle, Washington.

 3. In the early 1980's, Simpson Building operated ten regional distribution centers at the following locations: Wilkes-Barre, Pennsylvania; Louisville, Kentucky; Wichita, Kansas; Elkhart, Indiana; St. Charles, Illinois; Shelton, Washington; Arcata, California; Kirkland, Washington; Cerritos, California; and San Clara, California. The distribution centers were wholesale outlets responsible for the distribution of timber products produced by Simpson Timber and others to customers.

 4. In the early 1980's Simpson Building shut down the Louisville, St. Charles, Shelton, and Arcata facilities. Employees who retained jobs with Simpson did not receive severance pay. Salaried employees who lost their jobs as a result of plant shutdowns received severance pay based on a uniform schedule applicable to employees of Simpson Timber. Unionized hourly employees who lost their jobs as a result of the plant shutdown received severance pay based on the outcome of collective bargaining negotiations between Simpson Building and their union representatives. Non-unionized hourly employees who lost their jobs as a result of the plant shutdowns received severance pay of one week's pay for each year of service.

 5. As of September, 1984, the most recently published version of Simpson Timber's severance pay policy was that contained in the 1982 version of the policy appearing in the Simpson Management Guide. *fn1"

 6. Between 1982 and September, 1984, Simpson Timber's management made severance payments to salaried employees on a slightly different schedule, not on the basis of the schedule of benefits set forth in the Management Guide. *fn2"

 7. In late 1982 or early 1983, Simpson Building's management decided to sell the three remaining Eastern distribution branches of Simpson Building, consisting of the Wilkes-Barre, Kansas, and Indiana branches.

 8. Albert W. Fortener was the Corporate Labor Relations Manager for Simpson Timber and the individual who had the responsibility of providing personnel services to Simpson Building at this time.

 9. On July 13, 1983, Fortener wrote a memorandum to Larry Fleming, then Simpson Building's Operating Manager, containing his recommendations with regard to severance pay and other matters pertaining to benefits to employees affected by the possible sale of Simpson Building's Eastern branches. *fn3"

 11. On July 2, 1984, Fleming wrote a memorandum to Furman Moseley, Simpson Timber and Building's president, incorporating Fortener's recommendations with regard to severance pay and other matters pertaining to employees' benefits and to employees affected by the sale of the Eastern branches of Simpson Building. Moseley approved Fleming's recommendations. *fn4"

 12. On September 8, 1984, Simpson Building entered into an agreement of sale with Hudson Building Supply Company ("Hudson"), a corporation unrelated to Simpson for the sale of the Eastern branches.

 13. On September 16, 1984, Simpson Building completed the sale of the Wilkes-Barre facility as well as the facilities in Indiana and Kansas to Hudson.

 14. Simpson did not at any time prior to the sale to Hudson tell any of the Plaintiffs that they would be eligible for severance pay if the branch was sold and ...


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