United States District Court, E.D. Pennsylvania
NORMA L. SHAPIRO, District Judge.
Plaintiffs Robin Feeko ("Feeko"), Nelida Marengo ("Marengo"), and Janet Rodgers ("Rodgers") filed this action on July 1, 2011, on behalf of themselves and all other similarly situated persons against defendants Pfizer, Inc. ("Pfizer") and the Wyeth Special Transaction Severance Plan to recover severance benefits for themselves and all members of the class, with interest, under the Employee Retirement Income Security Act of 1974 ("ERISA"), §502(a)(1)(B), as amended, 29 U.S.C. § 1132(a)(1)(B). By memorandum and order of February 28, 2013, plaintiffs' motion for class certification and appointment of class counsel was denied for lack of numerosity. Plaintiffs filed a petition for permission to appeal the decision pursuant to Fed.R.Civ.P. 23(f); the U.S. Court of Appeals for the Third Circuit denied the petition on May 24, 2013. Before the court are defendants' Motion for Judgment on the Administrative Record (paper no. 40) or, in the alternative, for Summary Judgment, and plaintiffs' Motion for Summary Judgment (paper no. 41). For the reasons stated herein, defendants' motion will be granted and plaintiffs' motion will be denied.
Plaintiffs had been employees of Wyeth, a pharmaceutical company, for more than twenty years. Plaintiffs were Wyeth employees, on the Wyeth payroll, and participants in Wyeth's employee benefit plans, but they provided services to Benchmark Federal Credit Union ("Benchmark"), a federally chartered credit union and separate legal entity from Wyeth owned and controlled by its members. On January 14, 2009, Wyeth adopted a Special Transaction Severance Plan (the "Severance Plan"); if a Wyeth employee were terminated within twenty-four months of any "Change in Control" of the company, the Severance Plan provided that employee with certain severance benefits.
On October 15, 2009, Pfizer, a publicly traded biopharmaceutical company, acquired Wyeth in a $68 billion cash and stock transaction, and plaintiffs became Pfizer employees. Plaintiffs, on the Pfizer payroll and participating in Pfizer's benefit programs, continued working on Benchmark matters. Pfizer became the sponsor of the Severance Plan, with benefits paid by Pfizer. Pfizer's acquisition of Wyeth began the twenty-four month period when a terminated employee would be entitled to Severance Plan benefits.
The Severance Plan's stated purpose was to "provide certain employees... with benefits that will assist them with their transition during and following a Change in Control." Under the Severance Plan, if an eligible participant experienced a termination of employment during the twenty-four month period following the change in control, for any reason other than retirement or good cause ("Involuntary Termination of Employment"), the employee was entitled to receive severance benefits. Benefits became available provided that a participant's employment was not transferred to a "successor company of the Company or (any of its affiliates)...." Sev. Plan §1.19. The term "successor company" is not defined in the Severance Plan. Any former Wyeth employee involuntarily terminated from her employment prior to October 15, 2011 (the date marking the end of the twenty-four month period following Pfizer's acquisition) was entitled to submit a claim for severance benefits.
On or about March 20, 2010, Pfizer employees who worked on Benchmark matters, including plaintiffs, participated in a teleconference call with Pfizer Human Resources representatives and Benchmark's CEO. The employees were informed that, as of April 1, 2010, they would "transfer" to Benchmark and would no longer be Pfizer employees. They were informed that this action would not make them eligible for benefits under the Severance Plan because they were being transferred, not terminated. Employees were told this "transfer" would be governed by an Employee Continuity Agreement (the "Continuity Agreement") negotiated by Pfizer and Benchmark. The Continuity Agreement, effective April 1, 2010, was not an amendment to the Severance Plan; it guaranteed continued employment at a rate of pay at least equal to the rate of pay earned at the time of the transfer for a period extending from the date of transfer to October 15, 2011, and provided for severance benefits for any employee involuntarily terminated from employment by Benchmark prior to October 15, 2011.
Pfizer employees who worked on Benchmark matters received memoranda requesting personnel information in "preparation for the process of setting up all personnel records and payroll for Benchmark..." They were also required to complete an employment application and sign a form authorizing an investigation into all statements on the application "as may be necessary in arriving at an employment decision."
On March 31, 2010, Pfizer employees who were assigned to work at Benchmark ceased working for Pfizer. On April 1, 2010, those employees, including plaintiffs, officially became Benchmark employees. Plaintiffs remained in the same offices, sat at the same desks, and performed the same tasks; however, they were paid directly by Benchmark, benefits were provided by Benchmark, and all employment personnel decisions were made by Benchmark. Plaintiffs were required to surrender their Pfizer identification badges, lost access to certain Pfizer facilities, no longer received pay-checks or medical benefits from Pfizer, no longer received employer contributions to their defined benefit pension plans from Pfizer, and were no longer able to receive Pfizer prescription medications at no-cost.
On or about April 13, 2010, plaintiffs received election notices regarding COBRA continuation coverage stating that plaintiffs' health care benefits "ended on March 31, 2010 as a result of [their] termination of employment." Plaintiffs believed this change in employment amounted to an involuntary termination; defendants maintained that Benchmark employees had their employment transferred from Pfizer to Benchmark pursuant to the Continuity Agreement and that no termination had occurred.
In late May 2010, plaintiffs filed claims with Pfizer's Coordinating Office for benefits under Section 2.2 of the Severance Plan (the Coordinating Office was the Plan Administrator entity empowered to review initial claims). Plaintiffs, arguing they were no longer employees of Pfizer or one of its affiliates, requested severance benefits because they had been involuntarily terminated within twenty-four months of Pfizer's acquisition of Wyeth. On or about August 27, 2010, the Coordinating Office denied plaintiffs' claims because, "[T]heir employment was transferred to Benchmark, which is a successor employer' and a successor to Pfizer with respect to the outsourcing of its credit union work.'" According to the Claim Denial Letters, plaintiffs did not meet the eligibility criteria set forth in the Severance Plan for three reasons: (1) plaintiffs had been transferred to a "successor employer"; (2) plaintiffs had not experienced an employment loss; and (3) plaintiffs had not experienced a reduction in the base rate of pay or had their principal place of business changed.
In October 2010, plaintiffs appealed the denials of their benefit claims to Pfizer's Administrative Committee, the entity empowered to review and decide benefit claim appeals. All three plaintiffs argued that they had been terminated by Pfizer and hired by Benchmark, rather than transferred, because: (1) they were required to complete an employment application; (2) Benchmark was not an affiliate or successor company of Pfizer; (3) the letter denying their claims was based on a misreading of the Severance Plan; and (4) being newly employed by Benchmark did not disqualify them for severance benefits.
On or about December 16, 2010, the Administrative Committee denied plaintiffs' appeals in writing for substantially the same reasons the Coordinating Office gave in the original Claim Denial Letters. The Committee also noted, "this interpretation of the Plan is consistent with Wyeth's past practices... where Wyeth denied severance to employees transferred to another entity as a result of a sale if, like here, the entity to which employees were transferred provided services back to Wyeth." Plaintiffs were informed that the Committee's decision was final and that they had the right to challenge the adverse determination by bringing civil actions under ERISA, § 502(a).
Plaintiffs, alleging Benchmark is not a successor company of Wyeth or Pfizer, contend the Administrative Committee abused its discretion in denying their claims for severance benefits by failing to determine eligibility according to the provisions of the Severance Plan and by failing to construe its terms in good faith. The issue is whether the plaintiffs' ...