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Saddler v. Elliott Co.

January 30, 2009


The opinion of the court was delivered by: Conti, District Judge.


Pending before the court is a motion for summary judgment (Doc. No. 18) filed by plaintiff Dennis Saddler ("Saddler"), and a motion for summary judgment (Doc. No. 20) filed by defendant Elliott Company ("Elliott"). Saddler brought this civil action for benefits allegedly due pursuant to section 502 of the Employee Retirement and Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § 1132(a)(1)(B). Saddler is seeking benefits due pursuant to the Elliott Company Severance Plan (the "Plan"), which is funded and administered by the employer, Elliott, and governed by ERISA. After consideration of the parties' submissions and arguments the court will deny the motion for summary judgment filed by Saddler, and grant the motion for summary judgment filed by Elliott for the reasons set forth herein.


The relevant facts of the case are not in dispute, and the parties stipulated to the following facts for purposes of their summary judgment motions:

Saddler is a participant in the Plan which is administered pursuant to the terms of the Plan and section 402 of ERISA (Joint Statement of Facts ("Facts") ¶ 1.) Saddler was employed at Elliott during two different time periods. (Id. ¶ 2.) On September 30, 2003, Saddler was employed in Elliott's Plant Air Packaging Group (the "PAP Group") as a project engineer and worked with the PAP Group in Elliott's Building 45 ("Building 45"). (Id. ¶¶ 3-4.)

On September 5, 2003, Elliott, as the seller, entered into an asset purchase agreement (the "Purchase Agreement") with F.S. Elliott Co. ("F.S. Elliott"), as the buyer, pursuant to which F.S. Elliot would purchase certain assets of Elliott, mainly the assets of the PAP Group (the "sale"). (Id. ¶ 5.) Article 11 of the Purchase Agreement outlined the provisions of the transfer of the PAP Group employees from Elliott to F.S. Elliott. (Id. ¶ 6.) The Purchase Agreement defined employee transfer as follows:

[I]n respect of any PAP salaried employee selected by the Buyer at its sole discretion, the termination of his/her employment with the Seller and his/her subsequent employment with the Buyer, whereby such PAP salaried employee's prior years of service with the Seller would be recognized by the Buyer for the purposes of vacation eligibility only, with no continuation of employment or pension benefits existing as of the Closing Date to be required of or assumed by the Buyer, and subject to the indemnification provisions related to such capital or transfers set forth in the Capital Agreement; and when used as a verb, shall have the similar import. (Id. ¶ 7.) Article 11.1.2 of the Purchase Agreement provided:

Effective as of 12:01 a.m. on the first Business Day after the Closing Date (the "Effective Time"), PAP salaried employees who have been selected for employment by the Buyer at its sole discretion shall be Transferred to the Buyer with such employment to be either 'at will' or pursuant to Employment Agreement; and any such Employment Agreements or employment relationships entered into between the Buyer and such relevant PAP salaried employees shall become effective.. It is the intention of the Parties that the Buyer shall not be required, by law (as between the Parties) or otherwise, to assume, continue, contribute to, or otherwise participate in any manner in the Seller's existing benefit plans, and thus shall not be required, by law (as between the Parties), or otherwise, to assume or otherwise be responsible for the Seller's liabilities whether existing or future under such benefit plans.. The Seller shall retain all obligations and liabilities in respect of all benefits accrued and obligations owed to such capital employees, including but not limited to any outstanding wages, unused vacation leave, employee loans, pension benefits, post-retirement medical insurance benefits, life insurance benefits, flexible benefit plans, that may have accrued or have been accrued prior to the Closing Date in accordance with Schedule 11.1.2 attached hereto and made a part hereof. (Id. ¶ 8.) Elliott completed the sale to F.S. Elliott on October 1, 2003, and F.S. Elliott continued the operations of the PAP Group in Building 45. (Id. ¶ 9.)

Prior to the sale, Elliott's managers held general meetings with the employees of the PAP Group that were being transferred to F.S. Elliott. During these meetings, the transfer-eligible employees of the PAP Group were told that they were not being laid off. (Id. ¶ 10.) The Elliott managers leading these meetings never stated that the sale of the PAP Group or the transfer of the PAP employees to F.S. Elliott occurred because of a decline in business or a technology improvement. (Id. ¶ 11.) On October 1, 2003, Saddler, along with numerous other employees of the PAP Group, was transferred to F.S. Elliott as part of the sale. (Id. ¶ 12.)

After the sale, the PAP Group employees who had been transferred to F.S. Elliot, including Saddler, continued working out of Building 45, pursuant to a lease agreement between Elliott and F.S. Elliott. (Id. ¶ 13.) After the sale, Saddler worked at F.S. Elliott, as he had at Elliot, as a project engineer in Building 45. (Id. ¶ 14.) After the sale, Saddler sat at the same desk, in the same location in Building 45, and had the same telephone number. (Id. ¶ 15.) Saddler had the same job responsibilities and duties that he had prior to the sale. (Id. ¶ 16.) Saddler's salary either stayed the same or was slightly increased after the transfer. (Id. ¶ 17.)

After the sale, Elliott laid off three PAP Group employees who were not transferred to F.S. Elliott. These three employees, Jim Hudson, Rick Dillon, and Albert Walczak, were paid severance pay benefits pursuant to the Plan. (Id. ¶ 18.)

While employed at F.S. Elliott, Saddler elected to begin collecting his unreduced retirement benefits from Elliott's pension plan in January 2004. (Id. ¶ 19.)

The Plan allowed payment of severance pay benefits only at Elliott's discretion and only if an employee lost his or her job for one of the following three reasons: (a) a decline in business; (b) a plant closing; or (c) a technology improvement. (Id. ¶ 20.) The Plan provided in relevant part:

Severance pay is given as compensation to an employee who has lost his/her job because of a decline in business, plant closing or technology improvement. It is paid at the company's ...

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