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Rea v. Hershey Company 2005 Enhanced Mutual Separation Plan

March 12, 2007


The opinion of the court was delivered by: William W. Caldwell United States District Judge


I. Introduction

Plaintiff, Timothy A. Rea ("Rea"), filed an amended complaint (doc. 17) against his former employer, The Hershey Company ("Hershey") and the Hershey Company 2005 Enhanced Mutual Separation Plan ("the EMSP").*fn1 Plaintiff's complaint contains three counts for relief pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. Count I seeks relief pursuant to ERISA section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), for the denial of Rea's application to participate in the EMSP and its benefits. (doc. 17, ¶¶ 16-44). Count II alleges that the Hershey Company interfered with Rea's ERISA rights in violation of section 510, 29 U.S.C. § 1140. Id. ¶¶ 45-56. Count III is a breach of contract claim for the stock options and compensation available through other benefits plans which Rea claims he would have received had Hershey not denied his EMSP application. Id. ¶¶ 57-66.

Defendants have moved to dismiss two of the three counts of Plaintiff's amended complaint for failure to state a claim upon which relief may be granted. FED. R. CIV. P. 12(b)(6). As noted, the parties stipulated that Rea could amend the complaint after Defendants filed their motion to dismiss. Therefore, the parties agreed that we would consider Defendants' previously filed motion to dismiss with respect to Counts II and III of the amended complaint. See doc. 19, p. 2 n. 1. We will grant Defendants' motion to dismiss Counts II and III of the amended complaint.

II. Background

In reviewing Defendants' motion to dismiss, we accept as true the allegations contained in Rea's amended complaint and look to them for the relevant background.

Hershey hired Rea on May 6, 1996. By August 31, 2005, Rea had advanced to the position of Director of Food and Beverage Enhancers and Special Trade Channels. (doc. 17, ¶¶ 17, 18). As noted, Rea's lawsuit arises from the denial of his application to participate in the 2005 EMSP. On July 21, 2005, Hershey adopted the EMSP in order to "provide additional benefits and compensation . . . to certain employees of the Company, . . . who voluntarily elect to terminate their employment under the terms and conditions [of the Plan]." Id. ¶ 8 (quoting doc. 10, p. 1). Among other benefits, EMSP participants are eligible to receive: (1) separation pay consisting of three weeks of base pay for each year of employment; (2) participation in Hershey's retirement plan for the duration of the separation period;*fn2 (3) full vesting of all stock options granted to the employee through the Key Employee Incentive Plan ("KEIP"); and, pursuant to the Annual Incentive Plan ("AIP"), (4) payment of Hershey's annual bonus for 2005; and (5) payment of a prorated portion of the 2006 annual bonus. Id. ¶¶ 13, 14.

Full-time salaried employees as of July 21, 2005, who were hired before January 1, 2004 were eligible for the EMSP. Id. ¶ 9. To apply for participation, employees were required to submit a Separation Agreement, General Release, and an Acceptance Form signed by the employee and the employee's manager by September 8, 2005. Id. ¶ 11. In addition, the Hershey Executive Team ("HET"), a group of Hershey-designated executives, retained the authority to deny an EMSP application if it "determin[ed] that the termination of employment of such employee [would] have an adverse affect on the [Hershey] Company's ongoing business operations." Id. ¶ 10.

Rea's amended complaint alleges that he submitted the required forms to the Hershey Company Work Life Center on September 1, 2005. Id. ¶ 20. Rea also contends that Tom Hernquist, President of the U.S. Confectionary Division of Hershey, signed the Acceptance Form and agreed to Rea's proposed date to leave his position at Hershey. Id. ¶ 19. On that date, another Hershey employee, Eric Lent, announced that Rea would be leaving his job at Hershey Company pursuant to the EMSP. Id. ¶ 22.

On September 30, 2005, however, Rea received a letter informing him that the HET had rejected his application for the EMSP. The letter explained: "Your position was not eliminated (in your group's reorganization) and the Company would like you to continue in your position." Id. ¶ 25. A HET member's handwritten note on the Acceptance Form accompanying the letter stated: "For critical business needs, the employee's request to participate in the [EMSP] has been rejected." Id. Neither of these documents identified the critical business needs which would be affected by Rea's departure from Hershey. Id. ¶ 28.

On September 30, 2005, Rea left his position at Hershey and sent a request to the EMSP Administrator to review the HET's decision to deny his application. Id. ¶ 33. The Plan Administrator denied the appeal on November 28, 2005. Id. ¶ 35.

Rea filed a second appeal which the Administrator denied on March 21, 2006. Id. ¶ 38. Rea alleges that he has exhausted every avenue available for internal review of the denial of his application, and that further appeal to the Administrator would be futile. Id. ¶ 39.

Rea's amended complaint alleges that the Administrator wrongfully rejected his EMSP application. Rea's second count contends that the HET intentionally interfered with his ERISA rights by also denying his EMSP application. Third, Rea claims that by improperly denying his application, the HET breached a contract for his receipt of benefits under the KEIP and AIP benefit plans. Rea seeks damages including: the profit he would have received by exercising his stock options, the 2005 and prorated 2006 bonuses he would have received for participating in the EMSP, attorneys' fees, and costs.

III. Discussion

A. Standard of Review

A motion to dismiss for failure to state a claim tests the sufficiency of the allegations contained in the plaintiff's complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). A court will not grant a motion to dismiss pursuant to Rule 12(b)(6) unless it is apparent that the plaintiff cannot prove any set of facts in support of his claim which would entitle him to relief. Seinfeld v. Becherer, 461 F.3d 365, 367 n.1 (3d Cir. 2006). A court must accept as true all well-pleaded allegations in the plaintiff's complaint and draw all ...

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