Fuller v. FMC Corp.

4 F.3d 255, 1993 WL 280762
CourtCourt of Appeals for the Fourth Circuit
DecidedJuly 28, 1993
DocketNos. 92-1738, 92-2248
StatusPublished
Cited by22 cases

This text of 4 F.3d 255 (Fuller v. FMC Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fuller v. FMC Corp., 4 F.3d 255, 1993 WL 280762 (4th Cir. 1993).

Opinion

OPINION

NIEMEYER, Circuit Judge:

FMC Corporation sold a food machinery manufacturing plant in Woodstock, Virginia, to Agri-Tech, Inc., on September 30, 1985, and terminated its employment of the employees working at that facility. In accordance with the agreement between the corporations, Agri-Tech offered employment to all of the employees at the plant and all accepted, continuing work without interruption, but with Agri-Tech as their employer beginning on October 1, 1985.

[257]*257Robert F. Fuller and Ripley R. Click, two long-time sales employees of FMC Corporation who continued employment with Agri-Tech for yet another four years,1 sued FMC under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq., for (1) severance benefits that they claim became payable under FMC’s written policy when FMC sold the plant to Agri-'Tech; (2) additional retirement benefits that they claim are payable under an early retirement provision of FMC’s Salaried Employees Retirement Plan; and (3) a proportionate share of the excess assets of the retirement plan (approximately $726 million) that reverted to FMC after it paid pension liabilities, which they allege is payable by reason of 29 C.F.R. § 2618.30.

On cross-motions for summary judgment, the district court2 entered judgment in favor of Fuller and Click, 796 F.Supp. 909, awarding them severance benefits in the amount of $6,549 and $6,956, respectively; retirement benefits as calculated under FMC’s plan for early retirement; and a pro rata share of the $726 million fund that reverted to FMC after it paid plan liabilities. The court also awarded Fuller and Click attorney’s fees in the amount of $97,185. This appeal followed. For the reasons that follow, we reverse.

I

Under the purchase agreement for the Woodstock plant, Agri-Tech agreed:

to offer employment to all employees of the Business at comparable levels of compensation, with the same right to later change compensation that FMC has. Buyer will pay all terminated employees for any accrued vacation. FMC will retain all liabilities and obligations for its employees up to the Closing Date under its hourly and salaried pension plans applicable to the Business.

The purchase agreement closed on September 30, 1985, and at the end of the day, the employees formally ended work with FMC. The next day the former FMC employees began with Agri-Tech at the same jobs, with the same responsibilities, ■ and at the same salaries. While benefits were similar, Agri-Tech did not have any severance pay arrangement.3 At the time of the transfer, an FMC representative explained to several employees, including Fuller and Click, that they would not receive severance pay as the result of the sale because they had not been severed. At the time, FMC’s written policy for severance pay applicable to employees at the facility read in pertinent part:

Laid off employees and terminated employees (employees laid off due to the closing of a plant or location) will receive one weeks pay for each full year of service up to a maximum of twelve (12) weeks pay.

Deposition testimony of FMC employees, which remained uneontradicted in the record, established that severance benefits were utilized to minimize the hardship of, unemployment and, as a “consistent practice,” had not been used to provide additional compensation to employees who accepted other employment arranged by FMC or who continued in their same employment with a successor corporation. Moreover, the benefits were not provided to employees who quit or turned down other employment arranged by FMC.

The district court did not find it necessary to- construe the language of the severance policy in effect on September 30, but rather concluded as a matter of law that because the “nature of the employment benefits package with the successor company, from an employee[’]s point of view, was markedly different from and less favorable than the benefits package with FMC,” Fuller and Click should be considered to be terminated employees with a right to severance pay, applying our decision in Livernois v. Warner-Lambert Co., Inc., 723 F.2d 1148 (4th Cir.1983). In [258]*258reaching its conclusion, the district court held:

' It is the court’s view that where, as here, a selling company has a severance plan and the acquiring company does not, unless the employees who continue with the successor are provided such a plan, then however equal the successor’s compensation package is in all other respects, it is not “comparable” as that term was contemplated by the courts in Livemois and Sejman I.

Accordingly, the court awarded Fuller and Click benefits under FMC’s severance benefit plan.

FMC contends that the district court misapplied Livemois and erroneously interpreted the severance pay plan. We agree.

In Livemois, the court considered claims for severance pay benefits by former employees of Warner-Lambert, which had sold its Medical-Surgical Division to Professional Medical Products, Inc., (PMP) as a going concern. All the employees of the division were offered employment with PMP at their previous positions at comparable salaries and benefits, with the calculation of benefits, including severance pay, based on the original date of employment with Warner-Lambert. The Warner-Lambert severance pay policy, which the court interpreted under contract principles of South Carolina law, provided that a right to severance pay would arise upon “termination of employment either as a result of job elimination or by reason of Company convenience.” 723 F.2d at 1152. The court held that in the circumstances presented, the employees were not terminated by reason of the sale because they continued in employment under substantially the same terms and conditions. But the court concluded that Warner-Lambert could not avoid contractual obligations to pay benefits at some future time when employees were terminated by PMP. The employees’ claims for severance pay were therefore not yet ripe.

In Sejman v. Warner-Lambert Co., 845 F.2d 66 (4th Cir.1988) (Sejman I), the Liver-nois plaintiffs returned to court, alleging that their claims for severance pay had become ripe. Our intervening decision in Holland v. Burlington Industries, 772 F.2d 1140 (4th Cir.1985) (applying ERISA to severance plans), cert. denied sub nom. Slack v. Burlington Industries, 477 U.S. 903, 106 S.Ct. 3271, 91 L.Ed.2d 562 (1986) and aff'd sub nom. Brooks v. Burlington Industries, 477 U.S. 901, 106 S.Ct. 3267, 91 L.Ed.2d 559 (1986), however, had altered the law under which the case would be considered. ERISA was referred to in Livemois only in passing, and it played no role in the court's decision. In Holland,

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Bluebook (online)
4 F.3d 255, 1993 WL 280762, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fuller-v-fmc-corp-ca4-1993.