IN THE UNITED STATES DISTRICT COURT 

FOR THE SOUTHERN DISTRICT OF OHIO 

WESTERN DIVISION 

 

SCOTT D. DALESANDRO and DIANE ) 

NOONAN, on behalf of themselves and : 

others, ) 

 : 

 Plaintiffs, ) 

 : Case No. C-1-01 109 

 vs. ) 

 : Judge Sandra S. Beckwith 

INTERNATIONAL PAPER COMPANY, ) 

 : 

 Defendant. ) 

 

DEFENDANT’S REPLY BRIEF IN SUPPORT OF ITS POSITION 

THAT CLASS MEMBERS HAVE ALREADY BEEN PAID 

INTERNATIONAL PAPER VACATION BENEFITS 

 

 Plaintiffs do not and cannot dispute that: 

(1) In the Asset Purchase Agreement, Smart Papers agreed “that all [Smart 

Papers’ offers to IP employees] shall provide that all earned but unused 

vacation of such employees who accept offers of employment from 

[Smart Papers] shall be honored by [Smart Papers]. Exhibit 3, Section 

4.1(a). 

 

(2) Smart Papers further agreed to “pay each such Hired Employee vacation 

pay for the time taken off at the rate that such Hired Employee would 

have received as of the day prior to the Closing date for accrued unused 

vacation earned prior to Closing.” Id. 

 

(3) IP advised Class Members of Smart Papers’ assumption of these vacation 

benefits before the sale of the Mill. Exhibits 5 and 6. 

 

(4) Smart Papers acknowledged in writing to Class Members its obligation to 

pay former IP employees the vacation benefits earned at IP. (Exhibits 7 

and 8). 

 

(5) “All former IP salaried employees who were hired by Smart Papers at the 

time of the sale of the Mill have been paid by Smart Papers for the earned 

but unused vacation that they carried over from IP to Smart Papers when 

Case 1:01-cv-00109-SSB Document 61 Filed 12/19/2003 Page 1 of 8
the Mill was sold.” Affidavit of Milton Lewis, Vice President and General 

Counsel of Smart Papers. (Exhibit 8, ¶ 5). 

 

(6) The Plan Administrator determined that IP vacation benefits were 

provided to Class Members by Smart Papers under its agreement with IP. 

(See, e.g., Exhibit 10 and Administrative Record generally). 

 

(7) Plaintiffs did not challenge the Plan Administrator’s specific 

determination that IP vacation benefits were paid by Smart Papers and 

the Court’s March 18, 2003 ruling did not consider this issue. 

 

(8) Plaintiffs did not request vacation benefits in the proposed class notice 

they submitted to the Court. 

 

 Nor can plaintiffs challenge that the “an obligor may effectively delegate performance to 

another who is willing to perform the delegated duty [and] if the delegate performs the duty, 

the duty is discharged.” Hendrick v. Rockwell Int’l Corp., 24 F.3d 1272, 1278 (10th Cir. 1994); see 

also Rest.2d of Contracts § 318. The Administrative Record fully supports the Plan 

Administrator’s conclusion that Smart Papers assumed the duty to pay earned but unused IP 

vacation and in fact paid these amounts. Plaintiffs have offered no evidence in the 

Administrative Record or elsewhere that would indicate the Plan Administrator acted 

arbitrarily in determining that Smart Papers honored IP’s vacation obligation. 

 Adams v. Avondale Industries, 905 F.2d 943 (6th Cir. 1990), clearly recognized that a 

delegatee’s assumption and performance of vacation obligations will discharge the original 

obligor. In Adams, “Trinity never agreed with Avondale to assume Avondale’s vacation pay 

obligations to the plaintiff . . . Furthermore, the Purchase and Sale Agreement provides in no 

uncertain terms that Trinity did not assume Avondale’s obligation to pay . . . any benefits still 

owing at the time of sale.” Id. At 952. In contrast with the facts in Adams, Smart Papers 

expressly assumed the obligation to pay earned but unused IP vacation, and both IP and Smart 

Case 1:01-cv-00109-SSB Document 61 Filed 12/19/2003 Page 2 of 8
Papers communicated this to Class Members in writing before they accepted employment with 

Smart Papers. 

 Class members who accepted employment with Smart Papers knew that the earned but 

unused IP vacation pay would be paid by Smart Papers, rather than in a lump sum. Their 

acceptance of Smart Papers’ offer and their acceptance of payment by Smart Papers – not 

withstanding their protests – constitutes a novation, substituted contract and substituted 

performance. See 18 Ohio Jur. Contracts § 247; Rest.2d Contracts §§ 279a, 280, and 280b. 

Armstrong v. Diamond Shamrock Corp., 455 N.E.2d 702 (Ohio Ct. App. 1982); Headrick v. 

Rockwell Int’l Corp., 24 F.3d 1272, 1278 (10th Cir. 1994). 

 Plaintiff’s argument rests entirely on the fact that payment was not made to Class 

Members in a lump sum at the time of the sale. But as explained here and in IP’s earlier brief, 

Class Members’ acceptance of Smart Papers’ employment offer created a novation, substituted 

contract and/or substituted performance, in which Class Members knowingly accepted 

payment of their IP benefits from Smart Papers rather than in a lump sum along with 

employment with Smart Papers. 

 Even if the Court were to conclude that no substituted contract was formed, it cannot be 

disputed that Smart Papers paid these earned but unused vacation benefits under its express 

written agreement to assume IP’s obligation to Class Members for earned but unused vacation. 

The Purchase Price paid by Smart Papers to IP was reduced under the Asset Purchase 

Agreement accordingly. (See Def.’s Brief, Exs. 3 and 4.) Smart Papers payment of these benefits 

was accepted by Class Members, and they cannot claim that IP has any duty to pay them again. 

Case 1:01-cv-00109-SSB Document 61 Filed 12/19/2003 Page 3 of 8
 At most, Class Members are like the obligee on a note where the obligor has agreed to 

pay the principal in a lump sum on February 1. Before the due date, the obligor advises the 

oblige that a delegatee has agreed to pay the principal, and delegatee does so, but only in 

periodic payments over one year, rather than in a lump sum on February 1. By accepting 

payment from delegatee, obligee extinguishes the duty of obligor to pay the principal of the 

note. At most, obligee has a claim for interest for the delay in payment. 

 Although payment of vacation benefits may have been delayed (under the Court’s 

ruling of March 18, 2003), payment was unquestionably made and accepted by Class Members 

throughout 2001 and no later than March 2002. Moreover, during this period Class Members 

received salary and other benefits from Smart Papers. Under these circumstances, any delay in 

payment is insubstantial. 

The severance benefits under Section 2 of Policy 828 are clearly distinguishable from the 

benefits under Section 7, including the vacation benefits under Section 7.1. Smart Papers did 

not assume the obligation to pay severance benefits to former IP employees it hired.1 Smart 

Papers did assume the obligation to pay vacation benefits to these employees. As set forth in 

Defendant’s Brief, this obligation has been discharged and Plaintiffs are not entitled to any 

further benefit. In addition, severance benefits are distinguishable from vacation benefits 

because an employee who rejected an offer of employment from Smart Papers at the same or 

higher salary was not eligible for severance pursuant to the Plan Administrator’s interpretation, 

 1

 To the contrary, Smart Papers agreed to assume part of the obligation to pay severance to 

former IP employees not hired if it failed to hire the Target Number under the Asset Purchase Agreement 

because the failure to offer employment to an employee triggered IP’s severance obligations. See Ex. E to 

Def.’s Brief, pp. 18-22, Section 4.1(f).

Case 1:01-cv-00109-SSB Document 61 Filed 12/19/2003 Page 4 of 8
but was eligible for a lump sum payout of earned but unused vacation benefits. These benefits 

are clearly not equivalent and should not be treated as such. 

Class Members Did Not Lose Any IP Vacation Benefits 

 Plaintiffs argue that Plaintiffs “lost” benefits because they took vacation earned in 2000 

in 2001 but did not concurrently earn or accrue from Smart Papers any additional vacation in 

2001 to be taken in 2002. Instead, Smart Papers implemented a new policy that provided 

effective January 1, 2002 that vacation would be earned in the same calendar year instead of the 

preceding year. This argument fails to assist Plaintiff’s claim. Plaintiffs did not “lose” any 

vacation benefits through this change, because the change in the accrual process did not affect 

their total vacation entitlement for 2002 in any manner. Although vacation accrued at a rate of 

1/12th of an employee’s vacation eligibility per month, Smart Papers also made clear that any or 

all vacation could be taken at any time during the year even though the employee has not 

technically accrued or earned all vacation eligibility at that time. (See Ex. 8, p. 4 and Ex. 9, p.1.) 

Therefore, just as under the IP policy, effective January 1, 2002, Smart Papers’ employees were 

entitled to take any or all of their vacation for that calendar year. Only if an employee resigned 

or terminated having exceeded their accrued vacation to date would he or she feel any 

detriment to this change, and Plaintiffs have not identified any Class Member who has suffered 

any such consequence. 

 Regardless of this hypothetical possibility, Plaintiff’s argument also fails because Smart 

Papers’ employees were not entitled to specific vacation benefits after 2001 under Policy 828. 

Plaintiff’s were entitled to IP vacation benefits earned but unused as of the sale of the Hamilton 

B Street Mill on February 9, 2001, but they had no entitlement to any vacation benefit from 

Case 1:01-cv-00109-SSB Document 61 Filed 12/19/2003 Page 5 of 8
Smart Papers. These IP vacation benefits were earned during calendar year 2000. Class 

members received these benefits during their employment with Smart Papers in 2001 (or in a 

lump sum if not hired by Smart Papers) and are not entitled to anything further. 

Class Members Could Have and Would Have Received a Lump Sum Vacation Payout If They 

Had Not Been Employed by Smart Papers 

 

 Plaintiffs argue that IP should have given Class Members the choice to take a position 

with Smart Papers or to take their lump sum vacation pay. Plaintiffs had exactly that choice. 

Unlike severance benefits, Plaintiffs did not forfeit earned but unused vacation benefits by 

failing to apply for employment or by turning down employment with Smart Papers. (See Ex. 2 

to IP’s Brief, Resp. 3.) Any former IP employee could have pursued other employment, taken 

their lump sum payout of vacation from IP, and negotiated or received vacation from a new 

employer, just as they seek in their Motion. IP did not impose any conditions that prevented 

them from doing this. IP advised all employees prior to the sale, however, that if they accepted 

employment with Smart Papers, their earned but unused vacation benefits would continue and 

be honored and paid by Smart Papers. (See Exs. 5 and 6 to IP’s Brief.) Each Class Member has 

received these benefits. (See Ex. 8 to IP’s Brief, ¶ 5.) 

Plaintiffs also argue that under IP’s reasoning, IP would have denied a lump sum 

vacation payout to former IP employees if they took a job with any other employer following 

their termination from IP. This argument is baseless and untrue. As stated above, any 

employee who chose not to go to work for Smart Papers was eligible to receive a lump sum 

payout of their earned but unused vacation. IP negotiated and obtained agreement from Smart 

Papers to honor vacation benefits for former IP employees for the employees’ benefit, and to 

Case 1:01-cv-00109-SSB Document 61 Filed 12/19/2003 Page 6 of 8
facilitate the sale of the Mill as an ongoing concern. IP clearly had no such negotiation power or 

purpose regarding any other employer and Plaintiff’s assertion that IP would have denied 

vacation benefits to employees continuing employment at any other employer is incongruous 

and incorrect. 

Conclusion 

For the reasons stated in Defendant’s Briefs, International Paper respectfully requests 

that Plaintiffs’ Motion for Supplemental Notice be denied, and that the Court find that 

International Paper has been relieved of any further duty to pay vacation benefits to Class 

Members. 

Respectfully submitted, 

 

 INTERNATIONAL PAPER CO. 

 

 

By: s / Michael Roberts__________ 

COUNSEL FOR DEFENDANT 

INTERNATIONAL PAPER CO. 

 Michael A. Roberts (OH Bar No. 0047129) 

 Graydon Head & Ritchey, LLP 

 1900 5th 3rd Center 

511 Walnut Street 

Cincinnati, Ohio 45202 

(513) 629-2799 

(513) 651-3836 – fax 

email:mroberts@graydon.com 

 

W. Carter Younger (VSB 01147) 

(Admitted Pro Hac Vice) 

James P. McElligott, Jr. (VSB 014109) 

(Admitted Pro Hac Vice) 

McGuireWoods LLP 

One James Center 

Richmond, VA 23219 

(804) 775-4363 

Case 1:01-cv-00109-SSB Document 61 Filed 12/19/2003 Page 7 of 8
CERTIFICATE OF SERVICE 

 

 I hereby certify that on this 19th day of December 2003, a true and complete copy of this 

document was delivered via electronic service to Counsel for Plaintiff, Theresa L. Groh, Esq., 

and John C. Murdock at Murdock, Goldenberg, Schneider & Groh, L.P.A., 700 Walnut Street, 

Suite 400, Cincinnati, Ohio, 45202. 

 

By: s / Michael Roberts__________ 

 

 

 

Case 1:01-cv-00109-SSB Document 61 Filed 12/19/2003 Page 8 of 8