United States District Court, D. Massachusetts
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
For Robert Niebauer, Plaintiff: Christopher S. Feudo, Jonathan A. Keselenko, Robert A. Fisher, LEAD ATTORNEYS, Foley Hoag LLP, Boston, MA.
For Crane & Co., Inc., Crane & Co., Inc. Executive Severance Plan, Defendants: David C. Casey, Robert B. O'Brien, Littler Mendelson P.C., Boston, MA.
MEMORANDUM AND ORDER RE: DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AND PLAINTIFF'S CROSS-MOTION FOR SUMMARY JUDGMENT (Dkt. Nos. 32 & 43)
MICHAEL A. PONSOR, U.S. District Judge.
Plaintiff Robert Niebauer brings this ERISA suit, 29 U.S.C. § 1132, against Defendants Crane & Co., Inc., and Crane & Co., Inc. Executive Severance Plan, comprising one claim for benefits (Count One) against both Defendants and one claim for interference with benefits (Count Two) against Defendant Crane & Co. Defendants have moved for summary judgment, arguing that the decision to deny benefits was not arbitrary or capricious and no evidence suggests that Defendants had any intent to interfere, or did interfere, with Plaintiff's right to benefits. (Dkt. No. 32.) Plaintiff has opposed that motion and has filed his own cross-motion for summary judgment. (Dkt. No. 43.)
On the surface, the dispute between the parties centers on whether Plaintiff was fired in December 2011 from his job as Chief Technology Officer at Crane & Co., as Plaintiff avers, or in fact retired from his job, as Defendants aver. As the discussion below will demonstrate, however, it is immaterial which version of the facts is correct. Because the court finds that, as a matter of law, Defendants' determination that Plaintiff retired -- mistaken or not -- was neither arbitrary nor capricious and that Plaintiff cannot establish intent to interfere with his rights to benefits, the court must allow Defendants' motion and deny Plaintiff's motion for summary judgment.
As mandated per Rule 56, the facts are recited in the light most favorable to the non-moving party. Fed.R.Civ.P. 56. The court will first summarize the severance plan, and then describe the events leading up to Plaintiff's last day of employment. Finally, the court will turn to Plaintiff's application for the severance benefit and his appeal of Defendants' denial.
A. The Executive Severance Plan
Defendant Crane & Co. first established Defendant Crane & Co., Inc. Executive Severance Plan in 2007 for the purpose of easing the financial hardships of eligible employees " whose employment [was] terminated involuntarily." (Crane & Co., Inc. Executive Severance Plan 1, § 1.01, Dkt. No. 34, Ex. 3 (hereinafter the " Plan" ).) Crane & Co. designated its Compensation
Committee as the plan administrator. Pursuant to Defendants' terms, a " terminated employee" was entitled to severance pay if, inter alia, he was involuntarily terminated from his position at Crane & Co. or left his position for " good reason." (Plan 4-5, § 3.02.) The Plan defined " good reason," in part, as the assignment of the employee to duties significantly inconsistent with his position and status, or relocation of the employee's job location to somewhere not within 75 miles of the previous job location. (Id. at 3, § 2.16(a) & (b).)
" Terminated employee" was defined as a former employee who experienced an " employment termination date." (Id. at 4, § 2.26.) " In no event shall an Employee be considered to have involuntarily terminated employment or to have experienced an Employment Termination Date for the purposes of the Plan if such employment with the Employer is terminated due to  voluntary cessation of employment (with or without notice) except for Good Reason. . . ." (Id. at 2, § 2.13.) Consequently, an executive who quit or retired was not entitled to the severance benefit because he or she did not meet the definition of " terminated employee."
The plan administrator had " full discretionary power and authority to construe, interpret and administer the Plan," as well as to make determinations on benefit eligibility. (Id. at 8, § 6.01.) " All decisions, actions and interpretations of the Plan Administrator shall be final, binding and conclusive upon the parties, subject only to determinations by individuals appointed by the Board to review denied claims for Benefits." (Id. at 9, § 9.01.) Eligible executives who believed they were entitled to benefits applied by filing a claim form with the plan administrator. Then, based on the information supplied by the employer, the plan administrator would determine whether the benefit should be paid. (Id.) If the benefit claim were denied, the plan administrator would provide a written decision to the employee, specifying the reasons for the decision and the particular Plan provisions upon which the administrator relied. (Id. at 9, § 9.01 & -.02.) Additionally, the notice of denial would inform the employee that he had a right to appeal the decision to the plan administrator.
To appeal a denial of benefits, the employee had to file a notice of appeal in writing, " set[ting] forth all of the facts upon which the appeal is based." (Id. at 10, § 9.02(a).) In preparing his appeal, the employee was entitled to review those documents relevant to the decision to deny benefits. (Id.) Should the plan administrator affirm the initial denial, its decision would be provided in writing to the employee and, again, include the specific reasons and plan provisions relied on for the decision. (Id., § 9.02(b).)
B. Events Leading up to Plaintiff's Departure
Crane & Co. is the exclusive provider of currency paper to the U.S. Bureau of Engraving and Printing (BEP). Plaintiff began his career at Crane & Co. in 1979, creating new paper-making technology for use in Defendants' banknote and security paper business. In 2011, Plaintiff was Crane & Co.'s Chief Technical Officer, reporting to the Chief Executive Officer (CEO). He was an eligible employee under Defendant Executive Severance Plan.
Throughout 2011, Crane & Co. was working with the BEP on paper for the new $100 banknote. The production and use of the new paper encountered printing complications. In October 2011, Crane & Co. replaced its former CEO, Charlie Kittredge, with Stephen DeFalco, whose first order of business was addressing the ongoing difficulties with the BEP contract. DeFalco created a task force, called Project
Momentum, to address the problems, and he staffed it with technical specialists responsible for repairing both the paper problem and the frayed relationship with the BEP. (DeFalco Dep. 68:1-21, Dkt. No. 34, Ex. 2.) DeFalco designated Rich Rowe as the head of the Project Momentum working group. At the time, Rowe was the manager of Crane & Co.'s New Hampshire facility and in that capacity reported to an executive at least two levels below the CEO. (Id. at 70:15-21.) As head of Project Momentum, Rowe reported to a steering committee put together by DeFalco to oversee the task force. (Id. at 70:6-24 - 71:1-13.)
On November 18, 2011, DeFalco asked Plaintiff to be the " boots on the ground" company representative at the BEP facility in Texas. In his role as liaison on the Project Momentum team, Plaintiff was to report to Rich Rowe. Plaintiff agreed, and DeFalco sent out an announcement to the BEP of the assignment later that day. (DeFalco Dep. Ex. 48, Dkt. No. 47, Ex. 5 at 44.) Although it would not surface until after the announcement was released, Plaintiff and DeFalco had different conceptions about the duration of Plaintiff's liaison assignment. (Id.) Plaintiff thought he would be in Texas until the end of 2011; DeFalco expected the assignment in Texas to last until March 2012. (Id.)
On November 22, 2011, Plaintiff and DeFalco had a telephone conversation, the content and spirit of which they dispute. Plaintiff contends that he informed DeFalco of his concerns regarding the project and the length of time he was required to be in Texas. He also expressed his belief that the conditions of the assignment constituted " good reason" under the Plan for him to cease his employment, thus entitling him to severance if he decided to leave. In particular, Plaintiff concluded that reporting to Rowe, rather than the CEO, constituted a " substantial adverse alteration in the nature or status" of his employment under § 2.16(a) of the Plan. (Plan 3, § 2.16(a).)
Plaintiff proposed that he would nonetheless take the Texas assignment if DeFalco were to commit to paying Plaintiff severance if he postponed leaving until the end of the project. DeFalco responded that severance was for fired employees only, that he was not firing him, and that he wanted Plaintiff on the task force. When Plaintiff then posited that refusing the assignment would get him fired and then entitle him to severance, DeFalco retorted that, if Plaintiff were fired for insubordination for not taking the assignment, he would not be eligible for severance.
DeFalco believed that the exchange was an attempt by Plaintiff to use his favored relationship with the BEP to extract extra compensation (i.e., a promise of severance pay for which he was not eligible if he voluntarily retired) in return for his commitment to Project Momentum. (DeFalco Dep. 134:5-11, Dkt. No. 34, Ex. 2.) In his conversation with DeFalco, Plaintiff stated that he was in a position of " maximum leverage." (Niebauer Dep. 99:17-24, Dkt. No. 34, Ex. 5.) Nevertheless, at the end of the conversation, according to both Plaintiff and DeFalco, Plaintiff again agreed to the Texas assignment, with full knowledge of the longer time commitment.
As Project Momentum moved forward, several meetings were scheduled at the beginning of December, some in Texas and some in western Massachusetts. A meeting in Fort Worth, Texas was scheduled for December 5 and 6, 2011 (a Monday and Tuesday). As the BEP liaison, Plaintiff was expected to attend the meetings. (Niebauer Dep. 25:7-22, Dkt. No. 34, Ex. 5.) On Sunday morning, December 4, 2011, Plaintiff sent an email to Rowe concerning
Plaintiff's unwillingness to travel to Texas and ended the email stating, " I have made some decisions I must inform you of." (Niebauer Dep. Ex. 70, Dkt. No. 34, Ex. 5.) Later that morning, Plaintiff also sent DeFalco an email requesting a phone conversation to discuss " a decision [Plaintiff had] reached." (Exhibit K 3 (CRA 637), Dkt. No. 34, Ex. 12.) They agreed to talk at 3:00 p.m. the following day. Additionally, Plaintiff sent another email definitively stating that he was not able to make the trip to Texas and would not be present at the following day's meetings. (Niebauer Dep. Ex. 72, Dkt. No. 34, Ex. 5.)
On December 5, 2011, Plaintiff and DeFalco had another conversation, this time by cell-phone. The substance of this call is, again, hotly contested by the parties. The call was complicated by the fact that the cell service cut out once, resulting in an interruption in their conversation. Plaintiff asserts that he intended to convey to DeFalco his grave concerns about the composition of the project team and his sentiment that he (Plaintiff) had no other option but to retire unless his concerns were addressed. (Niebauer Dep. 109:5-8 (" I think I said words to the effect that since I wasn't able to negotiate the severance, the only option that you are leaving me, Stephen, is to consider retiring. Something like that." ), Dkt. No. 34, Ex. 5.) Plaintiff states that, after the interruption due to the suspended cell service, he called back and DeFalco said that he never tried to talk an executive out of retiring and that Plaintiff should keep the conversation to himself and await a call from James Hackett, the company's general counsel, and James Wickliff, head of Human Resources (HR). Plaintiff's argument now is that, despite his references to retiring, he did not intend to retire as of the time of the phone call. Defendants maintain that Plaintiff informed DeFalco that, effective immediately, Plaintiff was retiring, in part because he was not going to receive severance pay for signing on to Project Momentum. (DeFalco Dep. 165:21-24 (" He said, 'If you're not going to let me have my severance at the end of the Project Momentum, then I'm just going to retire now effective immediately.'" ), Dkt. No. 34, Ex. 2.)
Despite this disagreement, no dispute exists that DeFalco believed that Plaintiff had announced his intention to retire. (Defs.' Statement of Material Facts in Supp. ¶ 4, Dkt. No. 34; Pl.'s Statement of Material Facts in Opp'n ¶ 29, Dkt. No. 46.) While Plaintiff contends that DeFalco's impression was actually a misunderstanding of what Plaintiff had been saying, he does not dispute that DeFalco (perhaps unreasonably, but certainly sincerely) left that conversation thinking that Plaintiff wanted to retire. (Niebauer Aff. ¶ 15, Dkt. No. 45.)
Shortly after their conversation on December 5th, Plaintiff forwarded an email to DeFalco from the BEP clients asking to set up a time to talk with Plaintiff. Plaintiff asked how he should respond to the inquiry, adding that he " would like this to be a smooth transition." (Ex. M (CRA 630), Dkt. No. 34, Ex 14.) The reference to " transition" evidences, at a minimum, Plaintiff's impression that his tenure with his employer was coming to an end. Plaintiff then forwarded the emails to his
wife, Gretchen. Later that day, Plaintiff received a reply from his wife, in which she stated, " Sounds like you told [DeFalco] that retirement is [the] route." (Eilers Dep. Ex. 61 (CRA 029), Dkt. No. 34, Ex. 7.)
The following morning, December 6, 2011, Plaintiff returned to work at his office at Crane & Co. and began sorting through his things. (Eilers Dep. Ex. 61 (CRA 132) (stating in an email that Plaintiff " spent the afternoon cleaning up [his] office and throwing out a lot of stuff that used to mean a lot to [him] but going forward have little value" ), Dkt. No. 34, Ex. 7.) When asked by a co-worker whether he decided to leave, Plaintiff replied that he had " been asked not to tell anyone." (Id. (CRA 030-31).) Later that morning, Plaintiff wrote to his daughter telling her that he informed his boss that he did not want to move to Texas and that he " want[ed] to retire."  (Niebauer Dep. Ex. 74 (CRA 612), Dkt. No. 34, Ex. 5.) He also wrote his wife that they could " kiss the severance option good bye," as the only way to get severance was to have negotiated it with DeFalco. (Eilers Dep. Ex. 61 (CRA 032), Dkt. No. 34, Ex. 7.)
Also on December 6, 2011, Plaintiff met with Wickliff, the head of HR, to discuss when Plaintiff's last day at work would be, as his retirement payouts would depend on this determination. Wickliff wrote DeFalco that Plaintiff confirmed that morning " his decision to retire," though Plaintiff was uncertain about his end date. (Wickliff Dep. Ex. 4 (CRA 226), Dkt. No. 34, Ex. 3.) Complicating the matter was Plaintiff's accrued vacation time for 2011, as well as vacation time he would become entitled to on January 1, 2012. Wickliff advised Plaintiff that he could exit the following day, December 7, 2011, and use his vacation time up to an official retirement date of February 1 or March 1, 2012. (Id.) Plaintiff confirmed this understanding in another email to a colleague, in which Plaintiff stated that his last day of work would be the following day, December 7, followed by eight weeks of paid vacation, with an official retirement day of February 1, 2012. (Eilers Dep. Ex. 61 (CRA 123), Dkt. No. 34, Ex. 7.)
In the late afternoon and evening of December 6, Plaintiff and DeFalco continued to send separate emails to people at Crane & Co. about Plaintiff's decision to retire. The word " retire" or " retirement" occurred regularly in both their communications. Plaintiff, for example, sent an email to Rowe, asking him if he was aware of Plaintiff's " pending retirement." (Niebauer Dep. Ex. 73 (CRA 561), Dkt. No. 34, Ex. 5.) Meanwhile, DeFalco sent an email to members of Crane & Co.'s board of directors announcing Plaintiff's retirement ...