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PIERSON v. HALLMARK MKTG. CORP.

June 23, 1997

LAWRENCE A. PIERSON
v.
HALLMARK MARKETING CORPORATION, et al.



The opinion of the court was delivered by: NEWCOMER

 Presently before this Court are defendants' Motion for Summary Judgment, and plaintiff's response thereto, and defendants' reply thereto. For the following reasons, the Court will grant defendants' Motion. Accordingly, the Court enters judgment in favor of defendants and against plaintiff.

 I. Introduction

 A. Plaintiff's Retirement

 The plaintiff is Lawrence A. Pierson, a former field sales employee of Hallmark Marketing Corporation ("Hallmark Marketing") for thirty-one years. The defendants are Hallmark Marketing, Hallmark Cards, Incorporated, *fn1" David Pylipow and Hallmark Marketing Corporation Voluntary Severance Pay Plan ("Voluntary Plan"). *fn2" This case grows out of a dispute between Pierson and Hallmark over Pierson's alleged right to participate in an enhanced severance package offered shortly after Pierson retired from Hallmark.

 In late December 1994 or early January 1995, plaintiff contacted Hallmark Regional Human Resources Manager Eric Herman to explore taking early retirement. On or about January 18, 1995, plaintiff met with Herman to discuss the possibility of retirement. At the meeting, plaintiff allegedly asked Herman whether he should delay his retirement date in order to take advantage of any planned changes to the retirement program. Plaintiff was allegedly told that there was no such plan being contemplated or that there was no such plan of which the supervisory personnel or human resources personnel were aware. Plaintiff was allegedly advised that there were no retirement packages available for field sales employees and that he would be "better off" retiring now rather than waiting for such a retirement program.

 At the meeting, plaintiff was offered a Severance Agreement, which included not only substantial benefits but also a lump sum payment of $ 61,312.50 (less appropriate payroll deductions) and an additional lump sum payment of $ 6,658.00 (less appropriate payroll deductions) for health insurance. Plaintiff executed that Severance Agreement and then chose a date for his retirement at the end of January 1995. At the request of his supervisor Roy Hass, plaintiff agreed to postpone his last day of employment to February 17, 1995, in order to complete the 1994 performance reviews for the employees who reported to plaintiff.

 On February 17, 1995, plaintiff retired from Hallmark. In addition to his Severance Agreement, plaintiff was entitled to receive and is receiving certain benefits through Hallmark Career Rewards Benefit Plans ("Career Rewards"). As part of Career Awards, plaintiff received or is receiving the following benefits: (1) a $ 675,487.00 lump sum profit sharing payment fully funded by Hallmark, (2) $ 864.20 per month for life, and if plaintiff predeceases his wife, $ 864.20 to plaintiff's wife for the remainder of her life, all of which is fully funded by Hallmark, (3) a $ 30,657.00 life insurance policy fully funded by Hallmark, and (4) medical, dental and vision coverage for life for plaintiff and his wife for $ 150.75 per person per month. Although plaintiff received or is receiving benefits under the Severance Agreement and Career Awards plan, plaintiff claims that he should be entitled to receive greater benefits under a voluntary severance plan that was developed and offered to eligible employees after he retired from Hallmark.

 B. Development and Implementation of a Severance Plan

 In 1994, Hallmark undertook a broad-based initiative focused on identifying ways to increase revenues and improve corporate profitability while reducing costs. This study became known as the Organizational Effectiveness Study ("OES"). Through the study, Hallmark wanted to make sure that the corporate structure was appropriate and that the proper resources were being devoted to profitability and the development of a more effective organization aimed at achieving the company's strategies.

 Throughout the fall of 1994, the Operating Committee charged with the responsibility for OES devoted its efforts to determining optimal strategies for enhancing profitability and reducing costs. By the late fall or early winter of 1994, the Operating Committee had begun to undertake a review of recommendations made by teams charged with different aspects of OES, ultimately agreeing on the overall parameters of an organizational restructure as one of the components of the OES process.

 On January 11, 1995, Hallmark's chief executive officer Irvine O. Hockaday announced the restructuring of senior management at Hallmark as a preliminary step in implementing the OES recommendations. As the next step in the process, senior management then developed the structure for mid-level management in early spring of 1995. In the field sales area in which plaintiff worked prior to his retirement, management was faced with restructuring its sales force in the spring of 1995.

 As Director of Employee Relations, David Pylipow was directly involved in the implementation of the work force restructuring in field sales and the reduction in work force. Faced with this task of eliminating employment positions, Pylipow gave serious thought to the complex issues involved while on vacation the week of March 20, 1995. During that week, Pylipow first gave consideration to the idea of offering an early retirement incentive as part of the restructuring of the field sales work force. This fact is uncontradicted.

 Upon returning from vacation, Pylipow discussed the possibility of an early retirement incentive with Michael Johnson, Human Resources Director - Retail Development, and Jerry Kenefake, Director of Compensation and Benefits. On March 31, 1995, Pylipow discussed his idea for an early retirement incentive package at a meeting attended by Kenefake, Theresa Hupp, Assistant General Counsel, and James Overman. Following the meeting, a preliminary draft of the Voluntary Plan was prepared. In early April 1995, the possible early retirement incentive was discussed with Hallmark sales managers who would be impacted by the loss of senior employees who might opt for the early retirement incentive package.

 Before the Voluntary Plan could be implemented, it had to be approved by Hallmark's North American Management Team ("NAMT"). On April 7, 1995, Pylipow made a presentation about the Voluntary Plan to the NAMT. The April 7 meeting was the first time that the NAMT gave consideration to the Voluntary Plan. At this meeting, the NAMT gave Pylipow its approval for the completion and implementation of the Voluntary Plan. On April 17, 1995, the Voluntary Plan became effective.

 On April 25, 1995, Kenefake issued a letter about the Voluntary Plan to eligible employees, enclosing a copy of the Summary Plan Description and inviting them to make a decision no later than June 15, 1995, about participation in the Plan. Ultimately, 87 out of the 142 eligible employees elected to participate in the Voluntary Plan.

 On February 3, 1995, Pylipow did present a severance proposal to the NAMT. The severance proposal was a comparison of involuntary severance packages at other companies with a proposal that Hallmark could utilize as soon as the divisions, including field sales, had completed their strategies for addressing work force reductions. The chart attached to the NAMT minutes of February 3, 1995 reflect that severance was only being considered at that point on an involuntary basis. There was no discussion at that meeting about a voluntary severance package. At this meeting, NAMT voted not to implement any involuntary plan because Hallmark was not certain that there would be a significant number of employee layoffs, and any consideration of an involuntary severance package was thus premature.

 Ultimately, Hallmark did adopt an involuntary severance plan, entitled the Hallmark Marketing Corporation Field Sales Employee Severance Pay Plan ("Involuntary Plan"), after the adoption of the Voluntary Plan. Hupp distributed the first draft of the Involuntary Plan on April 3, 1995, along with the initial draft of the Voluntary Plan.

 C. Plaintiff's Claim to Entitlement under the Voluntary Plan

 In late April 1995, plaintiff became aware of the Voluntary Plan and wrote to Hallmark requesting that he be included in the Voluntary Plan. *fn3" By letter dated May 9, 1995, plaintiff was advised by Pylipow that he was not eligible for the Voluntary Plan. Pylipow enclosed a copy of the Summary Plan Description with his May 9 letter, and invited plaintiff to submit a letter explaining his claim pursuant to the Voluntary Plan's claims procedure. Plaintiff admits that he received Pylipow's May 9 letter and the Summary Plan Description.

 On May 16, 1995, plaintiff wrote Pylipow a letter, setting forth his claim to benefits under the Voluntary Plan. In essence, plaintiff argued that as a life-long employee he should be entitled to participate in the Voluntary Plan due to the fact that Hallmark was considering the Voluntary Plan at the time he was still employed by Hallmark, especially in light of the fact that he had asked Herman whether Hallmark was considering any severance packages. *fn4" On June 5, 1995, Pylipow, acting as Plan Administrator, wrote plaintiff a letter in which he rejected plaintiff's claim to benefits under the Voluntary Plan. In his letter, Pylipow explained plaintiff's appeal rights under the Voluntary Plan. Plaintiff admits that he received this letter. Plaintiff did not appeal his claim to the Claims Board.

 By letter dated February 16, 1996, counsel for plaintiff requested of Donald Hall and Pylipow that the prior decision be reconsidered. By letter dated March 14, 1996, plaintiff's counsel was advised by Hupp that plaintiff's renewed request was denied. In response, plaintiff filed suit against defendants in the ...


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