In addition to receiving greater monetary benefits under the Rohm Agreement,
Gerow also assumed greater obligations. Section 10 of the Rohm Agreement binds Gerow to a
three-year non-compete clause. In consideration for Gerow’s non-compete obligations, Section
10(b) requires Rohm to place certain payments ($2,273,400) in a grantor trust for Gerow’s
benefit. Rohm Agreement, § 10(b). The Agreement further provides that the assets “will be
invested by the trustee of such trust in the same investment options as are available under the
Rohm and Haas Company Employee Stock Ownership and Savings Plan, or its successors, as the
Executive shall from time to time direct.” Jd. After execution of the Rohm Agreement, Rohm
contributed $2,273,400 to Gerow’s trust account pursuant to Section 10(b).

ANALYSIS

Summary judgment is proper when “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(c). This case involves various disputes regarding the meaning of
Gerow’s employment contracts with Rohm and Morton.’ Issues of contract interpretation are
ordinarily questions of law for the Court. Bourke v. Dun & Bradstreet Corporation, 159 F.3d
1032, 1036 (7th Cir. 1998). “Ifa contract is unambiguous, by definition no material issues of
fact exist regarding the contract’s interpretation; that interpretation is a question of law for the
court. But if the contract is ambiguous, the contract’s meaning is a question for the trier of fact.”
Brooklyn Bagel Boys, Inc. v. Earthgrains Refrigerated Dough Products, Inc., 212 F.3d 373, 377,

n.1 (7th Cir. 2000) (quoting Metalex Corp. v. Uniden Corp. of America, 863 F.2d 1331, 1333

> The parties do not dispute that Illinois law applies to their contracts.

4


as are available under the Rohm and Haas Company Employee Stock Ownership and Saving
Plan, or its successors, as the Executive shall from time to time direct.” Rohm Agreement, §
10(b). Gerow first asserts that Rohm breached Section 10(b) by not serving as the trustee of the
funds. However, nothing in Section 10(b) requires Rohm to serve as the trustee, and the Trust
Agreement executed by the parties (attached as Exhibit B to the Rohm Agreement) clearly
indicates that the trustee will be a bank.

Gerow also argues that Section 10(b) was breached because he was not provided
the “same investment options” as those available under the Rohm and Haas Company Employee
Stock Ownership and Savings Plan. At the time Gerow signed the Rohm Agreement, the Rohm
Plan included a Guaranteed Investment Contract (“GIC”) investment option. The GIC offered a
rate of return contractually guaranteed by an insurance company, which at the time was
approximately 6%. Gerow claims that, when agreeing to Rohm Agreement Section 10(b), he
specifically relied upon being able to invest his funds in the GIC.

According to Rohm, the actual Rohm Plan options are not open to ex-employees
(which Gerow disputes). What is undisputed, however, is that Gerow was offered a series of —
alternative investment options through Wachovia Bank, none of which was a GIC option. Gerow
ultimately chose to invest his funds in a U.S. Treasury money market account, which yielded an
approximately 4% rate of interest. Gerow now seeks damages equal to the 6% rate of return he
would have obtained under the GIC option, less the 4% rate of return his investments actually
experienced.

A plain reading of Section 10(b) dictates that Gerow was entitled to receive the

“same investment options” as those made available under the Rohm Plans. Because it is


oo yan

Gerow’s Entitlement To Additional Benefits Under Rohm Agreement Section 3

There is no dispute that upon Gerow’s termination, the Rohm Agreement entitled
him to the benefits outlined in Sections 5(d) and 10(b). Gerow contends, however, that he is also
entitled to the compensation and benefits outlined in Section 3 of the Rohm Agreement. We
disagree.

Section 3 of the Rohm Agreement, aptly captioned “Terms of Employment,” sets
forth a description of various employment terms and benefits (including annual compensation,
bonuses, vacation time, office space, and other benefits) applicable to Gerow during his tenure of
employment. See Rohm Agreement, §§ 3(a)-(b)(viii). A provision substantially similar to
Section 3 was also included in the Morton Agreement. See Morton Agreement § 4.

Gerow argues that he is entitled to the Section 3 benefits (in addition to the
benefits in the Section 5(d) termination provision) because Section 3 applies during the entire
“Employment Period,” regardless of termination. The Agreement defines “Employment Period”
to include the three-year period from July 31, 1999 through July, 2002. Gerow contends that
because Section 3 itself does not explicitly state that, in the event of termination, its benefits do
not continue through the entire “Employment Period,” he is thus entitled to the reasonable value
of all the benefits outlined in Section 3 through July 2002, despite his termination.

Gerow is particularly interested in receiving benefits under Section 3(b)(iii) of the
Agreement, which would entitle him to certain retirement benefits commensurate with those
received by other “peer executives.” Rohm Agreement, § 3(b)(iii). According to Gerow, these
“peer executives” include Morton CEO Stewart and President Johnson, and the value of the

additional benefits Gerow thinks he deserves exceeds $2 million. The parties contest whether


(7th Cir. 1988)). A contract is ambiguous “only if the language used is reasonably or fairly
susceptible to having more than one meaning . . . A contract is not rendered ambiguous simply
because the parties do not agree on the meaning of its terms.” Id. (citing Flora Bank & Trust v.
Czyzewski, 222 Ill. App.3d 382, 583 N.E.2d 720 (1991)). Further, Courts should not examine
contract provisions in isolation, but rather should “examine [the contract] as a whole, giving
effect, to the extent possible, to all contractual provisions. In so doing, the [contractual] language
will be interpreted according to its plan, ordinary and popular meaning.” Jd. (quoting O’Rourke
v. Access Health, Inc., 282 Tl. App.3d 394, 404, 668 N.E.2d 214, 220 (1996)).

In the complaint, Gerow claims that Rohm: (1) breached the Rohm Agreement by
failing to provide Gerow compensation and benefits in addition to those outlined in Section S(d)
(Count 1); (2) breached the Rohm Agreement by failing to provide Gerow all the benefits he was
entitled to under Section 5(d) itself (Count J); (3) breached Section 10(d) of the Rohm Agreement
by failing to provide Gerow the “same investment options” that were available under the Rohm
and Haas Stock Ownership and Savings Plans (Count 1); (4) breached the Morton Agreement by
failing to pay him accrued bonuses in full (Count Ill); and (5) breached the Rohm Agreement by
miscalculating benefits owed under Section 5(d) (Count V). For the reasons outlined below, we
grant summary judgment in Rohm’s favor on claims (1) and (2) above. We grant summary
judgment in Gerow’s favor as to liability on claim (3) but reserve for trial the issue of damages,
and grant summary judgment in Gerow’s favor on claims (4) and (5) and award interest on late
payments made by Rohm.

Counts I and IV of the Complaint address attorneys’ fees issues that the parties

represent have been resolved. We therefore dismiss these counts without prejudice.


in Section 3(b), this entitles him to all benefits under Section 3(b). Plaintiff's Response and
Cross-Motion, p. 16-17. The reason for Gerow’s receipt of some Section 3(b) benefits, however,
is clear: Section 5(d)(iii) specifically reserves for a terminated Executive two categories of
benefits described in Section 3(b): (1) welfare benefits (Section 3(b)(iv)); and (2) a fringe benefit
payment (Section 3(b)(vi)). Gerow received these benefits by operation of Section 5(d), and this
does not entitle him to all the benefits outlined in Section 3.

Gerow’s Entitlement To Retirement Benefits Under Section 5(d)

Gerow alternatively argues that even if he is not generally entitled to the benefits
in Section 3(b), he still should receive pension and other benefits equal to those of Johnson and
Stewart pursuant to Section 5(d)(iii). In his brief, Gerow emphasizes language in Section
5(@)(iii) that grants an Executive the “most favorable plans, practices, programs or policies of the
Company . . . applicable to other peer executives.” Plaintiff's Response and Cross-Motion, p. 21.
What Gerow ignores, however, is that Section 5(d)Gii) is not directed to any “plans, practices,
programs, or policies,” but rather is limited only to the “plans, programs, practices and policies
described in Section 3(b)(iv) and (vi) of this Agreement.” Rohm Agreement, § 5(d)(iii).

Sections 3(b) (iv) and 3(b)(vi) describe health benefits and the fringe benefit payment.
Therefore, under Section 5(d)(iii), the Executive is entitled to the most favorable plans and
practices in effect for his peers with respect only to those particular programs.

Rohm’s Failure to Provide Investment Options Under Section 1 O(b)

Section 10(b) of the Rohm Agreement provides that in consideration for Gerow’s
covenant not to compete Rohm would place over $2.2 million in a grantor trust and that the

assets of the trust would be “invested by the trustee of such trust in the same investment options


5
Minute Ord

ler Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge Sitting Judge if Other
vor Magistrate Judge Matthew F. Kennelly than Assigned Judge
CASE NUMBER 00 C 6538 DATE 9/28/2001
CASE STEPHEN A. GEROW vs. ROHM AND HAAS COMPANY et al
TITLE
[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.)
DOCKET ENTRY:
(63) go Filed motion of [ use listing in “Motion” box above.]

(2) im} Brief in support of motion due
(3) oO Answer brief to motion due. . Reply to answer brief due
(4) o Ruling/Hearing on set for at
(5) a Status hearing set for 10/10/01 at 9:30A.M..
(6) im Pretrial conference[held/continued to] [set for/re-set for] on set for at .
(7) Qo Trial[set for/re-set for] on at
(8) a [Bench/Jury trial] [Hearing] held/continued to at
(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) (General Rule21 CIFRCP41(a)(1) [© FRCP41(a)(2).
do) =o {Other docket entry) _ENTER MEMORANDUM OPINION AND ORDER: Each party’s motion
for summary judgment [21-1, 34-1 and 38-1] is granted in part and denied in part. Plaintiff's motion to
strike [45-1] is denied. Defendants’ motion for leave to file brief in excess of 15 pages [26-1] is
terminated as moot.
(il) @ [For further detail see order attached to the original minute order.]
No notices required, advised in open court.
No notices required. umber of notices
Notices mailed by judge’s staff. SEP 28 mM.
Notified counsel by telephone. date dockeied
oY | Docketing to mail notices. a
Mail AO 450 form. w wh
Copy to judge/magistrate judge. Os

date mailed notice
courtroom °

deputy’s
initials

TBK

Date/time received in
central Clerk’s Office

ailing deputy initials



attorneys’ fees by Rohm. Rohm has apparently agreed to pay Gerow’s attorneys’ fees and, as
Gerow agrees, the attorneys’ fees issue is now moot. Counts II and IV therefore are dismissed
without prejudice.
Claims For Interest

Gerow has two claims for interest. The first is on a $50,800 payment made by
Rohm approximately two years after Gerow’s termination. The untimeliness of Rohm’s payment
of the $50,800 appears to be undisputed, and Gerow is therefore entitled to the interest he seeks,
at the Illinois statutory rate of 5% per annum. See 815 ILCS 205/2. Gerow also claims that
Rohm erred in calculating the lump sum pension enhancement set forth in Section 5(d)Gi)(B) of
the Rohm Agreement. Plaintiff's Response and Cross-Motion, p. 26. Rohm has since
recognized its error and has submitted the $3,000 deficiency to Gerow, without interest. Gerow
is also entitled to interest on this payment at the statutory amount. We will leave it to the parties
to calculate these figures and submit an appropriate order.
Gerow’s Motion To Strike

Gerow also filed a motion to strike portions of the Defendants’ response to
Gerow’s statement of additional material facts. The Court did not rely upon the disputed
portions of Rohm’s responses in reaching its decision, and Gerow’s motion to strike is therefore

denied as moot.

11



undisputed that Gerow was not provided the same investment options as were offered under the
Rohm plans (in particular the GIC option), we grant summary judgment in Gerow’s favor on this
issue. With respect to Gerow’s damages claim, Rohm argues that Gerow should have mitigated
his damages by selecting some other fixed income investment option with a higher rate of return.
There is a genuine factual dispute regarding the amount of Gerow’s damages, and we reserve the
award of damages on this claim for trial.

Breach of the Morton Agreement

In Count III of the complaint, Gerow argues that the defendants breached the
Morton Agreement, which was in effect from June 21, 1999 until the effective date of the Rohm
Agreement, by failing to pay an accrued long-term bonus in the amount of $50,800. This amount
has since been paid. As discussed below, Gerow is entitled to interest on this amount.

Although it is not entirely clear in his briefs, Gerow also seems to suggest that he
is somehow entitled to all the retirement programs of his peer executives under the Morton
Agreement, even after execution of the Rohm Agreement. See, e.g., Plaintiff's Reply in Support
of Cross-Motion, p. 10. However, there can be no dispute that the Rohm Agreement superseded
the Morton Agreement as the operative employment contract, a fact that Gerow recognizes in the
first paragraph of his complaint: “Following Morton’s takeover by Rohm, Mr. Gerow was
offered a replacement employment contract with a term of three years, which he accepted.”
Complaint, { 1. Accordingly, we decline to enforce the Morton Agreement after the effective
date of the Rohm Agreement.

Claims For Attorneys’ Fees

Counts II and IV of the Second Amended Complaint seek payment of Gerow’s

10


Johnson and Stewart actually constitute “peer executives” vis a vis Gerow. We need not reach
this issue, however, because we find that Gerow is not entitled to the benefits outlined in Section
3, except for those specifically referenced in Section 5(d).

Gerow urges us to read Section 3 in isolation and find that he is entitled to the
Section 3 benefits for the entire Employment Period because the Section itself does not provide a
cessation of those benefits in the event of termination. Gerow’s position would be plausible only
if we were to completely ignore the existence of Section 5. As previously noted, Section 5(d)
provides that “[i]f, during the Employment Period” the Company terminates an Executive other
than for cause, the Executive is to receive a clearly-defined laundry list of payments and benefits.
The event contemplated by Section 5(d) is precisely what happened here. Gerow was
undisputedly terminated without cause, and he subsequently received the benefits outlined in
Section 5(d). Read as whole, the contract plainly provides for certain defined benefits in the
event an employee is terminated. The fact that Section 3 itself does not explicitly curtail the
“Employment Period” in the event of termination is immaterial when, only a few pages later, the
Agreement so clearly provides what happens in the event of a termination.

In short, we believe that Gerow’s interpretation of the Rohm Agreement that,
post-termination, he is entitled to termination benefits and employment benefits is not
reasonable, and therefore find as a matter of law that he is not entitled to additional compensation
and benefits under Section 3. See Bourke, 159 F.3d at 1037 (where one interpretation of a
contractual provision is reasonable and the other is not, there is no ambiguity to resolve and the
court may interpret the contract as a matter of law).

Gerow alternatively argues that, because Gerow received some benefits outlined


provides that “{i]f, during the Employment Period,’ the Company shall terminate the Executive’s
employment other than for Cause or Disability,” Rohm will pay Gerow: (1) all “Accrued
Obligations”;? (2) a lump sum severance payment of $947,250; and (3) a lump sum pension
enhancement of $447,774. Section 5(d) also entitles Gerow to:
[B]enefits . . . at least equal to those which would have been provided to [Gerow]
in accordance with the plans, programs, practices and policies described in
Section 3(b)(iv) and (vi) of this Agreement if the Executive’s employment had not
been terminated in accordance with the most favorable plans, practices, programs
or policies of the Company and its affiliated companies applicable to other peer
executives and their families during the 90-day period immediately preceding
[July 31, 1999] or, if more favorable to the Executive, as in effect at any time
thereafter with respect to other peer executives of the Company and its affiliated
companies and their families.
Rohm Agreement, § 5(d)(iii). Section 3(b)(iv) of the Rohm Agreement provides for the
continuation of “welfare benefits” for Gerow and his family (e.g., health, dental, and life
insurance benefits) for the entire “Employment Period.” Section 3(b)(vi) provides for the
payment of $42,500 to Gerow in lieu of fringe benefits (e.g., club memberships, annual
physicals).
On August 27, 1999, Rohm paid Gerow his “Accrued Obligations” in the amount
of $251,210 and the fringe benefits, lump-sum severance, and pension enhancement payments

outlined in Section 5(d). In addition, Rohm subsequently sent Gerow a letter outlining the

welfare benefits to which he was entitled through July 30, 2002.

' The Agreement defines “Employment Period” in part as the “period commencing on the
Effective Date [July 31, 1999] and ending on the third anniversary of such date or such later date
as mutually agreed to by the Parent, the Company and the Executive prior to such anniversary.”

“Accrued Obligations” is a term defined in the Agreement and includes such things as
Gerow’s base salary though termination and bonuses calculated pursuant to formulas. See Rohm
Agreement § S(a).


that provided Gerow certain benefits and compensation in the event of a change in control of
Morton. In January 1999, Morton and Rohm and Haas entered into a merger agreement pursuant
to which Morton was to become a wholly-owned subsidiary of Rohm. Following shareholder
approval, the merger became effective on June 21, 1999. This transaction constituted a “change
in contro!” that triggered the Morton Agreement between Gerow and Morton.

On June 18, 1999, Morton CEO and Chairman, Jay Stewart, and Morton COO
and President, William Johnson, informed Gerow that he would be terminated following the
merger. Shortly thereafter, Rohm proposed to Gerow that he enter into a new employment
agreement with Rohm that would replace the existing Morton Agreement. Under this alternative
employment agreement (the “Rohm Agreement”), Gerow would receive greater compensation
and benefits upon termination, but he would also be required to assume obligations beyond those
contained in the Morton Agreement. For example, the Rohm Agreement required Gerow to
accept a longer non-compete agreement (3 years as opposed to 2 years in the Morton Agreement)
and to relinquish his right to sue Rohm for age discrimination.

During late June and early July, Gerow, with the assistance of counsel, reviewed
the Rohm Agreement and the benefits it provided, and he also met with a benefits consultant who
assisted him in comparing the Rohm and Morton Agreements. On July 14, 1999, Gerow sent
Rohm a letter agreeing to the proposed Rohm Agreement, and he signed the Agreement on
August 25, 1999. By its terms, the Rohm Agreement was effective on July 31, 1999, and
Gerow’s employment with Morton was terminated without cause that same date.

The Rohm Agreement, like the Morton Agreement, contains provisions

specifically directed to the termination of executives. Section 5(d) of the Rohm Agreement


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

STEPHEN A. GEROW

Plaintiff,

DOCKETED

vs. Case No. 00 C 6538 SEP 2 8 2004
ROHM AND HAAS COMPANY,

a Delaware Corporation, and MORTON
INTERNATIONAL, INC., an Indiana
Corporation,

weve erverwerverwerwerr

Defendants.

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

Plaintiff Stephen Gerow, a former executive with Morton International, sued
Morton and its successor company Rohm and Haas Company for breach of his employment
contract. This case is before the Court on Rohm’s motion for summary judgment and Gerow’s
cross-motion for summary judgment. Gerow has also moved to strike portions of Rohm’s
responses to his statement of additional material facts. For the reasons outlined below, the Court
grants in part and denies in part each party’s motion for summary judgment, and denies the
motion to strike.

FACTUAL BACKGROUND

Between 1990 and July 31, 1999, Gerow was employed by Chicago-based Morton

International in various executive-level positions. At the time Gerow signed on with Morton in

1990, he and Morton entered into an executive employment contract (the “Morton Agreement”)


CONCLUSION
For the reasons stated above, each party’s motion for summary judgment [docket
items 21-1, 34-1, and 38-1] is granted in part and denied in part. Plaintiffs motion to strike
[item 45-1] is denied. Defendants’ motion for leave to file brief in excess of 15 pages [item 26-

1] is terminated as moot.

Dated: September 28, 2001

MATTHEW F. KENNELLY
United States District Judge

12