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December 18, 1989

MARK E. ADAMS, et al., Plaintiffs

The opinion of the court was delivered by: SMITH


 This matter is before the Court on defendants' Motion for Partial Summary Judgment. Defendants Ampco-Pittsburgh Corporation, Greenlease Holding Company, and Greenville Steel Car Company Termination Allowance Plan (Plan) urge the dismissal of Counts II and III of plaintiffs' complaint, which seek severance benefits allegedly due under a termination plan subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA), 29 U.S.C. § 1001 et seq. The Plan is an unfunded welfare plan exempt from the vesting and funding standards imposed on funded plans by ERISA. See 29 U.S.C. §§ 1051(2), 1081(a)(3). The Plan is subject to ERISA's reporting and disclosure requirements. 29 U.S.C. §§ 1021-1031.

 The plaintiffs are former salaried, nonunion employees of Greenville Steel Car Company, a wholly owned subsidiary of Ampco-Pittsburgh Corporation. On December 18, 1986, the assets of Greenville Steel Car Company were sold to Trinity Industries, Inc., pursuant to a purchase agreement dated December 9, 1986. Trinity continued to operate the Greenville, Pennsylvania, rail car manufacturing plant without interruption by hiring most of Greenville Steel Car Company's employees, including all of the plaintiffs seeking recovery under counts II and III. Greenville Steel Car Company ceased its operations at the Greenville plant, and changed its name to the Greenlease Holding Company.

 The plaintiffs were originally covered by a termination plan dated July 1, 1984, which provided:

1.1 A salary termination allowance will be paid to only those employees whose services are terminated by the company pursuant to a reduction in force.

 The plan provided that benefits would be paid at the rate of one week's pay for each full year of service, with a minimum of two weeks' benefits, and a maximum of twenty-six weeks' benefits.

 The termination plan was revised by a document dated December 30, 1985, effective January 1, 1986. The revised plan provided a reduced schedule of benefits, and eliminated the provision that layoffs of more than twelve consecutive months would be deemed permanent and would trigger benefits payments. As amended, the layoff provision read:

2.1 A termination allowance will not be paid when the workforce reduction is considered temporary and the Company intends to recall the employees who are laid off.

 The language of Section 1.1, providing that payments would be made only pursuant to a reduction in force, was unchanged.

 The termination plan was revised once again, after this litigation commenced, by a resolution of the directors of the Greenlease Holding Company, on March 1, 1988, with a retroactive effective date of January 1, 1986. The revisions made it explicit that the "benefits of the Plan will be paid out of the assets of the Company," and that the Company was the administrator of the Plan, except for decisions regarding claims and appeals. The Greenlease resolution appointed John F. Toole, Sr., as Plan Administrator, and Robert Schultz, Ampco-Pittsburgh's director of Industrial Relations, as Appeal Administrator. Toole and Schultz were the principal drafters of the 1984 and 1986 plans, which were used by each of the divisions of Ampco-Pittsburgh.

 Plaintiffs made their first claim for termination allowance pay in September 1987. Based on its interpretation of the termination plan, Greenlease Holding Company denied termination benefits to plaintiffs on the grounds that the total sale of assets of the Greenville Steel Car Company to Trinity Industries and the continuation of the operations of the Greenville plan did not constitute a reduction in force. Plaintiffs then filed suit in the Court of Common Pleas of Mercer County, on September 14, 1987, naming only Ampco-Pittsburgh as a defendant. After this matter was removed to this Court, the parties jointly agreed to stay this action to allow plaintiffs to exhaust their administrative remedies under the Plan. It appears that the administrative claims were submitted to John Toole, Sr., in February, 1988, and denied by him in March, 1988. Plaintiffs' appeals of Toole's denials of claims were submitted to Robert Schultz, who affirmed Toole's denial of benefits in May, 1988. Toole and Schultz provided the same explanation for the denial of termination benefits, namely, that plaintiffs were not eligible because they had not been terminated pursuant to a reduction in force. As Schultz explained:

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