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JORDAN v. SMITHKLINE BEECHAM

April 2, 1997

J. ST. GIRARD JORDAN, Plaintiff,
v.
SMITHKLINE BEECHAM, INC., Defendant.



The opinion of the court was delivered by: BUCKWALTER

 BUCKWALTER, J.

 April 2, 1997

 I. INTRODUCTION

 Plaintiff J. St. Girard Jordan ("Plaintiff") has brought this action against SmithKline Beecham, Inc. ("SmithKline") alleging discrimination and other claims related to his employment with SmithKline.

 Currently before the Court is defendant SmithKline's Motion for Summary Judgment and the response of Plaintiff thereto. For the following reasons, SmithKline's motion will be granted.

 II. STATEMENT OF FACTS1

 A. Plaintiff's Work History

 Plaintiff first joined SmithKline in 1963. Deposition of J. St. Girard Jordan ("Jordan Dep.") at 11. In 1970, Plaintiff left SmithKline in order to attend law school. Jordan Dep. at 12. Plaintiff returned to SmithKline in 1974 and worked as an attorney in SmithKline's Law Department until 1989, when he resigned under the terms of an enhanced separation package.

 B. The December 1988 VRIF

 In 1988 SmithKline underwent a reorganization. Jordan Dep. at 96. In addition, rumors circulated during this same time period regarding the possibility of a merger with a British company. *fn2" SmithKline's Motion at Exhibit A, P 9; Jordan Dep. at 96, 108-112. The reorganization and the likelihood of a merger caused uncertainty among SmithKline's executives and employees about job security, since it appeared that the company would have to change or eliminate positions. Id.

 In late 1988, SmithKline decided to offer employees in certain business groups the chance to voluntarily resign in exchange for enhanced severance benefits so that the company would have to fire fewer people, making the anticipated reorganization and/or merger smoother. The voluntary resignation program was titled "Voluntary Reduction in Force" ("VRIF"). SmithKline's Motion at Ex. A, P 2; Jordan Dep. at 97-99.

 In November 1988, the Chief Executive Officer of SmithKline sent a letter to employees from selected business groups, including Jordan's group, offering a VRIF opportunity. The VRIF package included the following terms:

 
1. The employee had to sign a general release in order to receive the benefits;
 
2. The employee had to sign up for the VRIF program by December 7, 1988;
 
3. The employee had to work until the completion of the assignment as specified by the Company, up to one year;
 
4. If a long-term employee (like Jordan) complied with the terms of the program, he or she would receive:
 
(a) Enhanced severance benefits
 
(b) Enhanced pension benefits
 
(c) A 6 month extension of medical and dental benefits
 
(d) Pay for 1989 vacation and personal days.

 See SmithKline's Motion at Exs. A-2, A-3 and A-4.

 Plaintiff decided to accept the VRIF package on December 7 or 8, 1988, with his last day of work to be in July 1989. Jordan Dep. at 107-110, 115. Plaintiff testified that he liked the company and that the decision to resign was a very difficult one that was motivated primarily by uncertainty concerning whether his position would survive the reorganization and/or the expected merger. Jordan Dep. at 135-38.

 C. The January 1989 Stock Option Grant

 In January 1989, after Jordan declared his decision to resign under the VRIF program, SmithKline granted stock options to designated management level employees who had either decided to remain with the company or had rescinded their acceptances of the VRIF package. SmithKline's Motion at Ex. A, PP 7-8. Consistent with this policy, SmithKline did not offer the stock option grant to Plaintiff or to any other employee who had accepted the VRIF package. Id.

 D. The January 1989 Board Resolution

 In late January 1989, the SmithKline Board of Directors passed a resolution which stated that the Corporate staff employees who had not taken the VRIF package or revoke their acceptances of it, would still be eligible for the enhanced VRIF separation package if there was a "change in control" of the corporation and their positions were involuntarily terminated during the following 24 months. See SmithKline's Motion at Ex. A-10. The resolution did not guarantee that any position would remain after the merger; in fact, it addressed what would happen to severance benefits if the company had to eliminate positions.

 When it became clear in early April 1989 that a change was imminent, Henry Wendt, the Chief Executive Officer, circulated a memorandum to "All Corporate Staff Employees" (of which Jordan was one) which announced the substance of this resolution -- namely that they (the corporate staff) would be entitled to the enhanced severance package if their jobs were eliminated within 24 months from January 25, 1989. See SmithKline's Motion at Ex. A, PP 10-11; Ex. A-11; Ex. B, P 6; and Exhibit C, P 4. Plaintiff testified that he does not recall having seen this memorandum "but if it went to all corporate staff employees, I should have seen it." Jordan Dep. at 347. Plaintiff also testified that he had no reason to believe that this document did not go to all corporate staff employees and stated that "often times the policy was to or procedure, I should say, was posted on the Board, it may have been posted or it may have gone out, but if someone said that they did either one, I would accept that." Jordan Dep. at 347.

 A very limited number of SmithKline employees, who like Plaintiff, took the VRIF package in December 1988, later decided to revoke their resignations. SmithKline's Motion at Ex. A, P 5. Plaintiff testified that he understood that he could have revoked his VRIF election and that he had discussions with his supervisors about it. Jordan Dep. 144-51. He decided not to revoke his acceptance, however, because he did not receive assurances that his position would survive a reorganization or a potential merger and he was concerned that he would lose the VRIF benefits. Jordan Dep. at 151-52. Plaintiff remained as a SmithKline employee until July 14, 1989, at which point his resignation became effective.

 E. The Release

 Pursuant to his VRIF election, Plaintiff signed a general release which contained a covenant not to sue. *fn3" See SmithKline's Motion at Ex. A-5. During Plaintiff's exit interview with Sheila McDowell on or about June 14, 1989, Plaintiff acknowledged that he had signed the release and that he had completed his agreed-upon term of employment so that he was eligible for the enhanced severance package. See SmithKline's Motion at Exs. B-4 and B-5. The severance election form, which plaintiff signed during this interview, informed those who resigned voluntarily: "You will not receive severance pay if you do not execute the General Release form." SmithKline's Motion at B-5; Jordan Dep. at 163-64. Plaintiff testified that he understood that he was obligated to "sign and return the General Release form and work until the conclusion of [his] assignment" in order to receive the benefits. Jordan Dep. at 180.

 F. SmithKline's Payments to Plaintiff

 Following his last day of employment in July 1989, Plaintiff received $ 172,437 in severance pay plus back vacation pay, an enhanced pension program, continued medical benefits and all of the other promised components of the VRIF package. Jordan Dep. at 118-119; SmithKline's Motion at Ex. A, P 12. To this date, Plaintiff has never offered to refund the corporation for the enhanced severance benefits he received. SmithKline' Motion at Ex. A, P 12.

 In addition, Plaintiff negotiated a 2 1/2 year consulting arrangement and stayed on as a consultant for the SmithKline Consumer Product Division. Jordan Dep. at 147, 218-24. Pursuant to this consultant's agreement, Plaintiff was to earn $ 2,550 per week for 25 1/2 hours of work or approximately $ 132,600 per year. Jordan Dep. at 223-24. In early 1990, approximately eight months into Plaintiff's consulting arrangement, SmithKline underwent another reorganization and had to terminate Plaintiff's agreement. Jordan Dep. at 229-30. Although Plaintiff stopped working for SmithKline at that time, he later received a final payment in 1990 of $ 137,222 under this agreement. Jordan Dep. at 231-33. That same year, SmithKline also gave Plaintiff a bonus of $ 23,300 for the seven and a half months he worked at the company in 1989. SmithKline's Motion at Ex. A, P 13.

 As set forth above, between December 1988 (when Plaintiff announced his decision to resign) and the middle of 1990 (when Plaintiff's consulting agreement ended), Plaintiff received the following compensation from SmithKline:

 
* Seven and a half months worth of his annualized salary of over $ 104,507 for his seven and a half month period of employment in 1989
 
* Severance pay of $ 172,437
 
* Continued medical and dental payments, payment for unused vacation days and eligibility for ...

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