1 

UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

STEVE BRACKETT, KEVIN MURPHY, 

DARIUSZ KEPCZYNSKI and BRUCE HARVEY, 

 Plaintiffs, 

Civil Action No. 2:09-cv-10048 

v. 

 HON. DENISE PAGE HOOD 

SIEMENS VDO AUTOMOTIVE 

CORPORATION, SIEMENS VDO 

CORPORATION and CONTINENTAL 

AUTOMOTIVE SYSTEMS US, INCORPORATED, 

 Defendants. 

____________________________________________/ 

FINDINGS OF FACTS AND CONCLUSIONS OF LAW 

I. JURISDICTION AND INTRODUCTION

This matter was removed to the United States District Court for the Eastern 

District of Michigan on January 7, 2009, on the basis of this Court=s federal question 

jurisdiction. 28 U.S.C. ' 1331 and '' 1441, 1446. The Complaint, originally filed 

in the State of Michigan Circuit Court for the County of Oakland, alleged two counts: 

Count I, Breach of Contract, and Count II, Violation of ERISA. Count I was 

dismissed by the Court prior to trial. A trial of this matter before the bench was 
2 

held. The Plaintiffs herein seek severance pay benefits under the Siemens VDO 

Automotive Corporation=s (“SVAC’s”) Severance Pay Plan (ASeverance Plan@) 

(Exh. D-1). The Severance Plan is a welfare benefit plan under ERISA. The 

Plaintiffs claim a violation of ERISA for SVAC=s failure to pay these benefits. 

SVAC denied payment claiming that the Plaintiffs are not entitled to these benefits 

under the Severance Plan: Plaintiff Harvey because he voluntarily retired; Plaintiffs 

Brackett, Kepczynski and Murphy because they were offered and accepted 

Asubstantially comparable employment@ Aimmediately following the divestiture@ of 

the business unit in which they were employed, pursuant to the Severance Plan. 

These are the findings of fact and conclusions of law of the court pursuant to Rule 

52 of the Federal Rules of Civil Procedure. 

II. FINDINGS OF FACT 

A. The Parties 

In this case, four plaintiffs, Steve Brackett, Kevin Murphy, Dariusz 

Kepczynski and Bruce Harvey, seek severance benefits from Defendants Siemens 

VDO Automotive Corporation (ASVAC@) and Siemens VDO Corporation (ASVI@) 

(known now as Continental Automotive Systems US, Incorporated) pursuant to the 

Employee Retirement Income Security Act of 1974 (AERISA@), 29 U.S.C. § 1132 et 

seq. SVAC is a United States corporation and SVI is a Canadian corporation. The 
3 

parent company for these entities was Siemens AG, a German corporation. SVAC 

and SVI were separate companies, sold by Siemens AG to Continental Automotive 

Systems US, Inc. in December 2008. Plaintiffs Brackett, Murphy and Kepczynski 

were full-time employees of SVAC working in the PAF Unit, until May 31, 2007. 

Plaintiff Harvey was also a full-time employee of SVAC working in the PAF Unit 

until his retirement date, March 31, 2007. 

All four Plaintiffs were employed by SVAC, located in Auburn Hills, 

Michigan. SVAC as noted is a subsidiary of Siemens AG, a German corporation. 

Plaintiffs worked in a Business Unit of Siemens AG called Power Train AM AF, but 

commonly referred to as PAF. This Business Unit dealt with motor vehicle air 

intake modules and air induction systems. The PAF Business Unit was sold to Mahle 

GmbH (“Mahle”) in May 31, 2007. Plaintiffs, in various ways, inquired about 

severance benefits, but Defendants denied Plaintiffs’ request for severance benefits. 

B. The Plan 

SVAC had an established Severance Pay Plan. It is undisputed that this 

Severance Plan was subject to ERISA. Each Plaintiff had a copy of the Severance 

Plan. Under the Severance Plan an employee was entitled to certain benefits upon 

the occurrence of certain events. The Severance Plan provides in pertinent part: 

I. About the Plan 
4 

1.1 This Severance Pay Plan (the APlan@) of Siemens 

VDO Automotive Corporation (ASVAC@) has been 

established to provide specified severance pay and 

benefits to all regular, non-bargaining unit, United 

States salaried employees of SVAC. 

* * * 

1.3 The Plan is administered by the Siemens VDO 

Automotive Corporation Severance Pay Plan 

Committee (the “Committee”). The Committee has 

full and final authority to administer, interpret and 

construe the Plan and to determine whether 

severance pay and benefits are payable under the 

Plan. 

* * * 

II. Eligibility 

* * * 

2.2 Subject to section 2.3 below, severance pay will be 

granted to eligible employees of SVAC whose 

termination is permanent and initiated by SVAC as 

a result of any one of the following AQualifying 

Events@: 

* * * 

b) Elimination of the employee=s position, unless the 

employee has rejected a comparable position within 

SVAC or an affiliated unit or Company of Siemens, 

as described in Section 2.3(e) below. 

* * * 

d) A separation for the convenience of SVAC for 
5 

business or other reasons. 

* * * 

2.3 An eligible employee will not be entitled to 

severance pay under this Plan if the employee=s 

termination is the result of: 

* * * 

c) The employee’s retirement (except that an 

employee who is to be terminated due to a 

Qualifying Event and who elects to retire under a 

retirement plan of SVAC shall be granted severance 

pay, nonetheless); 

d) The divestiture of a business unit of SVAC, or the 

sale of the stock or asset of SVAC or a business unit 

or subsidiary of SVAC, if the employee continues or 

is offered substantially comparable employment with 

the new employer immediately following the 

divestiture; 

* * * 

III. Severance Pay for Qualifying Terminations 

3.1 An eligible employee who is terminated as a result 

of a Qualifying Event shall receive Basic Severance 

Pay as provided under the following schedule. ... 

* * * 

V. Administration of the Plan 

5.1 This Plan is a welfare plan under the Employee 

Retirement Income Security Act of 1974 (AERISA@) 

and benefits are paid from the assets of SVAC. 
6 

5.2 SVAC is the Named Fiduciary and Sponsor of this 

Plan. The Plan Administrator is the Siemens VDO 

Automotive Corporation Severance Pay Plan 

Committee, comprised of no less than three 

members who shall be appointed by the Plan 

Sponsor. All benefits payable under this Plan are 

unfunded and paid solely from the general assets of 

SVAC. 

5.3 The Committee has the sole right and authority to 

determine eligibility for benefits under the Plan and 

to construe the Plan’s terms. 

5.4 Any employee or former employee for whom no 

benefits have been authorized may appeal the 

decision to the Committee in writing, within 60 

days of receiving such notice, requesting the 

Committee to review and reconsider its 

determination. The Committee shall give the 

employee notice of its decision. The decision of 

the Committee to this appeal shall be final. 

(Exhs. P-1 & D-1, SVAC Severance Pay Plan) 

It is not disputed that all Plaintiffs were regular employees of SVAC subject 

to the Severance Plan. It is undisputed that each Plaintiff had a copy or access to a 

copy of the Plan Document and Summary Description. (Exh. D-1) 

C. The Plaintiffs’ Positions at SVAC 

Steve Brackett began as a Product Engineer at Bendix in 1986. Bendix 

became Siemens VDO in the early 2000s. In 2004, Brackett became the Director 

of Engineering VDO Automotive with global responsibility. He was an employee of 
7 

SVAC. His office was in Auburn Hills, Michigan although he often worked in 

Canada. After the sale of SVAC to Mahle, he became the Director of Engineering 

NAFTA for Mahle; essentially the same job responsibilities with regard to the same 

products. Brackett was involved in the due diligence for the sale of SVAC to Mahle. 

Kevin Murphy was employed by Bendix in1987. Bendix was acquired by 

Allied and then by SVAC. Following the purchase by SVAC, Murphy transferred 

to Auburn Hills, Michigan and he became part of the PAF as a Product Engineer and 

Program Leader in 1994. He took over Harvey=s position when Harvey retired. 

Murphy was offered a job with Mahle. 

Dariusz Kepczynski began at Siemens Automotive in 1998 in the sales group 

for PAF Product Group. He was eventually employed as an Account Manager for 

SVAC. He had his office in Auburn Hills, Michigan. Kepczynski spent about 

one-third of his time in Canada. He worked with Brackett=s group. Kepczynski 

was offered and accepted a position with Mahle. 

Bruce Harvey also started at Bendix, but in 1970. Bendix was acquired by 

Allied and then by SVAC. Eventually his office was located in Auburn Hills, 

Michigan. Harvey described himself as two levels down from Brackett when 

Brackett became Director of Engineering at SVAC. Harvey retired from SVAC 

effective April 1, 2007 prior to the final sale of SVAC to Mahle. He never received 
8 

an offer from Mahle because of his retirement. 

D. The Sale 

In May 2006, SVAC and Mahle began exploring the “synergies” for the two 

companies to work jointly or to combine in some fashion. Each had market strength 

in certain areas of the global market. In June 2006, Mahle expressed its interest in 

purchasing the PAF assets of Siemens VDO. The sale was effective May 31, 2007. 

III. CONCLUSIONS OF LAW 

A. Standard of Review

Section 1132 is the civil enforcement provision of ERISA which states, “[a] 

civil action may be brought ... by a participant or beneficiary ... to recover benefits 

due to him under the terms of his plan, to enforce his rights under the terms of the 

plan, or to clarify his rights to future benefits under the terms of the plan.” 29 

U.S.C. § 1132(a)(1)(B). A denial of benefits under an ERISA plan “is to be 

reviewed under a de novo standard unless the benefit plan gives the administrator or 

fiduciary discretionary authority to determine eligibility for benefits or to construe 

the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 103, 

115 (1989). De novo review is limited to the record before the administrator. The

court must determine whether the administrator “properly interpreted the plan and 
9 

whether the insured was entitled to benefits under the plan.” Hoover v. Provident 

Life and Acc. Ins. Co., 290 F.3d 801, 809 (6th Cir. 2002). 

In Wilkins v. Baptist Healthcare System, Inc., 150 F.3d 609 (6th Cir. 1998), 

pursuant to a majority decision, the panel set forth “Suggested Guidelines” to 

adjudicate ERISA actions. The Sixth Circuit stated that the Rule 56 Summary 

Judgment procedure is “inapposite to the adjudication of an ERISA action” because 

of the Circuit’s “precedents [which] preclude an ERISA action from being heard by 

the district court as a regular bench trial.” Wilkins, 150 F.3d at 619. “[I]t makes 

little sense to deal with such an action by engaging a procedure designed solely to 

determine ‘whether there is a genuine issue for trial.’” Id. The district court should 

use neither the summary judgment nor the bench trial procedures in deciding ERISA 

actions. Id. at 620. As to the merits of the case, the district court should conduct 

a review based solely upon the administrative record and render findings of fact and 

conclusions of law. Id. at 619. If a procedural challenge is alleged, such as lack 

of due process afforded by the administrator or bias on its part, only then may the 

district court consider evidence outside of the administrative record. Id. The 

discovery phase in an ERISA action will only cover the exchange of administrative 

record, and, if there is a procedural due process claim against the administrator, 

discovery is limited to evidence related to procedural challenges. Id. 
10 

The parties agree that this Court has jurisdiction under ERISA. (Doc. No. 

37, JFPTO, PageID.475) Normally, such a case would be decided on the 

administrative record as set forth above. In this instance, the Court in denying the 

parties’ cross-motions for summary judgment, found that there remained genuine 

issues of material fact whether PAF was a business unit of SVAC and whether 

SVAC possessed any assets of PAF that were sold to Mahle. (Doc. No. 31, Order, 

PageID.469) Plaintiffs allege that Defendants breached the fiduciary and other 

duties imposed upon them as Plan Administrators under ERISA. 

B. Exhaustion of Administrative Remedies 

Defendants claim that Plaintiffs failed to exhaust their administrative 

remedies under ERISA and the Severance Plan. The Severance Plan contains an 

administrative review process which is required by ERISA. (Exh. D-1, § 5.4) 

Under ERISA, the exhaustion of administrative remedies is required prior to the 

commencement of a suit to recover benefits claimed due under an employee welfare 

benefit plan. Baxter v. C.A. Muer Corporation, 941 F.2d 451, 453 (6th 1991). 

Defendants argue that Plaintiff Harvey never requested benefits prior to the filing of 

this lawsuit and never pursued any administrative remedies. There is no dispute 

that Harvey never specifically requested Severance Pay and never pursued any 

administrative remedy, having received no severance benefits. Subsequent to his 
11 

retirement in March 2007, Harvey consulted with an attorney regarding his rights 

under the Severance Plan. Harvey filed this lawsuit, but otherwise made no request 

for Severance Plan payments. He sought no administrative remedy after 

Defendants failed to pay as a result of the filing of the lawsuit. 

Defendants claim Plaintiffs Brackett, Murphy and Kepczynski made no 

request for severance benefits under the Severance Plan. However, Brackett 

testified he made verbal inquiries and Murphy testified he had sent an email. 

Defendants note that none of the Plaintiffs presented their offers from Mahle to 

SVAC, claiming that their offers of employment from Mahle were not Asubstantially 

comparable@ to their SVAC employment thereby triggering the payment of 

severance benefits from SVAC. Defendants assert this is especially true of Plaintiff 

Brackett who testified that he was Asatisfied@ with the compensation level offered by 

Mahle and even when dissatisfied with his discretionary bonus, made no claim that 

his Mahle employment package was not comparable. All met with counsel in 2007 

raising the issue of severance pay but took no action until filing this lawsuit. 

Plaintiff Brackett brought to the meeting with counsel a copy of an e-mail from Fred 

Roth to Julie Benton regarding severance pay but made no request for severance pay 

at that time. 

It is undisputed that no Plaintiff followed the administrative appeal procedure 
12 

set forth in the Severance Plan. Defendants claim this precludes Plaintiffs from 

seeking the judicial review pursued in this lawsuit. See, Id.; Moffitt v Whittle 

Communications, 895 F. Supp. 961 (E.D. Tenn. 1995); Graham v Federal Express 

Corp., 725 F. Supp. 429 (W.D. Arkansas 1989). 

Plaintiffs assert that the Severance Plan does not require that administrative 

remedies be exhausted. They claim that Defendants’ reliance on ' 5.4 is misplaced. 

Plaintiffs claim that ' 5.4 is Apermissive@ because it states, @[a]ny employee or former 

employee for whom no benefits have been authorized may appeal the decision to the 

Committee in writing, within 60 days of receiving such notice, requesting the 

Committee to review and reconsider its determination.” (Emphasis added) 

Plaintiffs further assert that ' 7.1(c ) provides to employees certain rights if a claim 

for benefits is denied or ignored, including “to appeal any denial, all within certain 

time schedules. ... If you have a claim for benefits which is denied or ignored ... 

you may file suit in a state or federal court. ...” (Exh. D-1)

 Plaintiffs claim two other reasons exhaustion is not required. First, they 

claim that even if exhaustion is required by the Severance Plan the undisputed facts 

of this case excuse such exhaustion, citing 29 C.F.R. ' 2560.503-1(1). This 

regulation provides that if the Plan Administrator fails to establish or follow claims 

procedures required by ERISA, including the failure to provide written notice of a 
13 

denial of benefits, employees “shall be deemed to have exhausted the administrative 

remedies available under the plan.” It is undisputed that SVAC provided no written 

notice of denial of benefits. It is also undisputed that three Plaintiffs made no 

written request for severance pay benefits, although they claim that no written 

request was required. The Court notes there is no provision in the Plan requiring a 

written request for severance pay benefits. Plaintiffs did not appeal in writing to 

the Severance Plan Committee for reconsideration of any verbal denial of benefits. 

In any event, Plaintiffs assert that the Court should reject Defendants=

argument because any attempt to exhaust administrative remedies would have been 

futile; such determination of futility being within the sound discretion of the court. 

Fallick v. Nationwide Mutual Ins. Co., 162 F.3d 410, 418 (6th Cir. 1998). The 

standard for determining whether exhaustion is futile is whether the employee can 

show there is a clear and positive indication of futility, not mere doubt. Id. 

Plaintiffs claim they have shown such futility, citing SVAC’s inconsistent positions 

relative to the payment of severance throughout this dispute: Roth=s email to Julie 

Benton of Human Resources indicating the Plaintiffs would be entitled to benefits 

under the Severance Plan; failure to respond to Plaintiff Harvey=s request for 

information; no written denial was ever issued; the failure to identify the 

Administrative Committee members under the Severance Plan; failure to clearly 
14 

identify the decision maker regarding either the denial or interpretation of the 

Severance Plan; failure to notify Plaintiffs of the right to appeal; ignoring Plaintiff 

Murphy=s e-mail request to Julie Benton for benefits. 

Defendants argue that the use of the term “may”, in the language of the 

Severance Plan does not excuse exhaustion, citing Garst v. Walmart Stores, Inc., 

Case No. 00-5951, 2002 U.S. App. LEXIS 4248 (6th Cir. March 12, 2002), Baxter 

v. C.A. Muer Corp, 941 F.2d 451, 453-54 (6th Cir. 1991), and Wert v. Liberty Life 

Assur. Co. of Boston, 447 F.3d 1060 (8th Cir. 2006). Defendants also argue there 

are only two exceptions to the prerequisite to exhaust: when a plaintiff challenges 

the legality of the plan, not just interpretation; and when defendant lacks authority 

to institute the decision plaintiff seeks. See Constantino v. TRW, Inc., 13 F.3d 969, 

975 (6th Cir. 1994); Hill v. BCBS of Michigan, 409 F.3d 710, 719 (6th Cir. 2005). 

Defendants contend that Plaintiffs have shown neither exception in this case. 

The Sixth Circuit has ruled that exhausting administrative remedies is 

improper where exhausting administrative remedies would amount to an exercise in 

futility. Hill, 409 F.3d at 718. “We have recognized a general exception to the 

exhaustion requirement for ERISA claims when the remedy obtainable through 

administrative remedies would be inadequate or the denial of the beneficiary’s claim 

is so certain as to make exhaustion futile.” Id. at 718-19. Allegations that a Plan’s 
15 

interest is aligned with the employer, not the beneficiaries, and failure to follow the 

Plan provisions in handling the claims, may support excusing exhaustion of 

administrative remedies. Id. at 719. 

 The Court finds that Plaintiff Murphy clearly made a request for severance 

pay in an email to Julie Benton, dated May 31, 2007. In this email, Murphy claims 

that the terms of his employment with Mahle are not comparable to those of his 

current position with Siemens VDO and that he expects severance pay from SVAC. 

Plaintiff Murphy=s email to Attorney Jeffrey Bullard includes a copy of the email to 

Benton and states that he never received any response from Benton. Each Plaintiff 

in Answers to Interrogatories denied that they had not requested benefits. 

The Court finds that exhaustion of administrative remedies would have been 

futile in this case. Testimony at trial was unclear about who were the members of 

the Committee for the Severance Plan; there was a failure to give written notice that 

no severance would be paid; there was a failure to notify of appeal; and, there was a 

failure to clearly identify the ultimate decision maker on the issue of severance pay. 

The Plan provides that if claim for benefits is denied or ignored, the employee may 

file suit in a state or federal court. (Exh. D-1, § 7.1(c)) The Court finds that on the 

issue of severance pay, the exhaustion of administrative remedies would have been 

futile. 
16 

C. Whether PAF was a business unit of SVAC 

The sale of PAF global assets in May 2007 is documented in the Master 

Purchase Agreement between Siemens AG and Mahle. SVAC and SVI are listed as 

“asset sellers” in the Master Purchase agreement. SVAC is also listed as the 

“Selling Siemens Legal Entity.” The assets being sold included equipment, 

inventory and accounts receivable located at the Grundy facility in Iowa. Supplier 

contracts related to the PAF business were also conveyed. Siemens and Mahle had 

also agreed that because of Mahle's limited personnel resources in North America, 

PAF employees would be "transferred" to Mahle. Neither Plaintiff nor Defendants 

point to any authority for such a "transfer," but it is clear that Mahle was interested 

in keeping "vital" employees of PAF. The Court finds that the Asset Sale and 

Transfer Agreement of May 2007, Section 5, clearly indicates that offers of 

employment will be made "immediately after the Effective Time" subject to the 

closing of the deal. This offer was made to "Business Employees" of the seller listed 

on an exhibit attached to the Asset Sale And Transfer Agreement. The Plaintiffs 

were listed on that exhibit. This is not inconsistent with Plaintiff Brackett's testimony 

regarding the due diligence and questions and issues raised during that time about 

employees considered by SVAC and Mahle to be vital to the ongoing operation of 

the PAF business. The cost and value of these employees was the subject of his 
17 

testimony. Section 5, however, supports Defendants' position that the Plaintiffs were 

immediately offered employment by Mahle. Whether that employment was 

substantially comparable such as to preclude severance pay under the Severance 

Plan is addressed later in this decision. 

Much was made at trial about whether any asset of SVAC was sold as a part 

of the Mahle acquisition of the PAF business. Plaintiffs argued that PAF was not a 

subsidiary of or business unit of SVAC. Plaintiffs claim that only assets of SVI or 

Siemens AG were part of the sale to Mahle. There appears to have been much intercorporate activity among these entities. Starting with the undisputed fact that the 

Plaintiffs were employed by SVAC but worked for the PAF business. Defendants in 

fact claim that the PAF business unit was owned by SVAC and PAF was SVAC's 

asset. The Asset Sale and Transfer Agreement is signed by SVAC as "Seller." The 

Grundy, Iowa job with General Motors is noted as an asset of SVAC that was sold 

in the Mahle deal. Plaintiffs claim the sale of the Grundy assets was too minuscule 

to thwart their receipt of severance benefits under the Severance Plan. However, 

nothing in the Severance Plan requires that the dollar value of the asset sold be 

significant. Section 2.3 of the Severance Plan only requires "divestiture of a business 

unit of SVAC, or the sale of the stock or asset of SVAC or a business unit or 

subsidiary of SVAC." (Severance Plan, Section 2.3 (emphasis added)) Although 
18 

Plaintiff Brackett's testimony tracks most of the assets, it does not support the 

Plaintiff's claim that no assets of SVAC were part of the sale to Mahle. 

D. Offer of Comparable Work 

Defendants claim that Plaintiffs were offered substantially comparable 

employment and benefits at Mahle. Defendants further claim the Plan provided that 

eligible employees were not entitled to severance if the termination resulted from, 

d) The divesture of a business unit of SVAC, or the 

sale of the stock or asset of SVAC or a business Unit 

or subsidiary of SVAC, if the employee continues 

or is offered substantially comparable employment 

with the new employer immediately following the 

divesture. (Exh. D-1, page 4) 

Defendants argue that the sale to Mahler concluded May 31, 2007 and that 

Plaintiffs Brackett, Kepczynski and Murphy were offered the same employment 

position, job title and salary at Mahle. Defendants assert that these Plaintiffs 

accepted the position on June 1, 2007. Defendants also claim that similar 

employment benefits were offered to these Plaintiffs. 

Courts have found employment that includes the same or similar job duties, 

base salary and benefit packages “substantially comparable” under ERISA. Boss v. 

Advanstar Communs., 911 F. Supp. 109, 112 (S.D. N.Y. 1995); Blessing v. J.P. 

Morgan Chase & Co., 394 F. Supp. 2d 569 (S.D. N.Y. 2005); Jessup v. Alcoa, Inc., 

481 F.3d 1004, 1007-08 (8th Cir. 2007). Specifically relying on Boss, the court in 
19 

Kossig v. Timken, 2007 U.S. Dist. LEXIS 48718; 42 Employee Benefits Cas. (BNA) 

1334 (Conn. D. Ct. 2007), held reasonably comparable: slightly higher salary; less 

match on 401(k); less vacation time; fewer health benefits with higher premiums; 

elimination of seniority and severance benefits. The court in that case determined 

the plaintiffs should not be awarded severance benefits. Id. at *29. Defendants in 

this case claim that taken as a whole the Mahle offers to Plaintiffs were “substantially 

comparable.” 

Plaintiffs claim that they did not receive comparable employment at Mahle 

which thereby disqualified them from severance benefits. Plaintiffs first argue that 

the Plan does not speak to employment outside of SVAC or another unit of Siemens. 

And if outside the Plan, the decision of whether such employment and benefits are 

comparable does not rest with an employer other than SVAC or another unit of 

Siemens. 

The Court finds that the Plan anticipates a determination of “substantially 

comparable employment” by the Severance Plan Committee based on the express 

language in § 5.3 of the Plan which states that “[t]he Committee has the sole right 

and authority to determine the eligibility for benefits under the Plan and to construe 

the Plan’s terms.” The Plan in § 2.3(d) provides that an eligible employee is not 

entitled to severance pay under the Plan if the employee “is offered substantially 
20 

comparable employment with the new employer immediately following the 

divestiture.” (Exh. D-1, §2.3(d) (emphasis added)) 

Plaintiffs, consistent with their position that Mahle wanted employees to 

become employees of Mahle, ask the Court to consider that the offers of employment 

were “last minute” and designed to force employees into employment by Mahle and 

make them ineligible to seek other positions within a Siemens’ unit. Plaintiffs 

however, cite no case law to support a claim that this is a consideration in 

determining whether the employment and fringe benefits offered were “substantially 

similar.”1

 The Plan language in fact provides that the offer by the new employer be 

made “immediately following the divestiture.” Plaintiffs’ argument that the offers 

of employment were “last minute” and designed to force employees into 

employment by Mahle instead of being able to seek other positions within Siemens 

fails to establish that they are entitled to severance pay because the Plan language 

expressly states that such offer by the new employer be made after the sale of any 

asset or unit. 

Plaintiffs presented testimony to support their claim that the employment and 

benefits offers were not comparable and therefore they are entitled to severance. 

The evidence shows that Plaintiff Brackett’s base compensation was the same as his 

 

1 The Court understands that this argument is also used to support Plaintiffs’ claim of SVAC and Siemens 

malfeasance in the sale to Mahle. 
21 

prior compensation. He performed the same duties at Mahle. His pension, 

bonuses and other compensation were also substantially comparable. While at 

SVAC, Brackett received matching pension contributions. Mahle provided no such 

matching and in fact had no pension plan. Instead, Mahle offered a 401K plan with 

an employer match. Plaintiffs claim SVAC also had such a plan. Brackett had 

“cashed out” his pension from SVAC soon after he was employed by Mahle as that 

pension plan had vested. The bonus program parameters at Mahle were similar to 

those at SVAC. The projected bonus from SVAC in 2006 was a little over $49,000. 

The projected bonus from Mahle in 2007 were between $37,000 and $61,000. 

Mahle, however, did not pay a bonus in 2007, based on what Mahle claimed were 

negative year-end financial results. Brackett claimed he had no stock options at 

Mahle. 

 
22 

 SVAC MAHLE 

Salary/Compensation Same Same 

Pension Yes; SVAC contribution No; 401K w/Mahle matching 

Health/Dental Ins. Employee contribution No cost to employee 

Insurance Same Same 

Bonus Not paid/same calculation Same 

Short Term Disability Same Same 

Long Term Disability No cost to employee Employee contribution/optional

Stock Options Yes; 12,000 None 

Kevin Murphy also received the same salary under his agreement with Mahle. 

He performed the same duties at Mahle. He reported to the same supervisors. His 

bonus calculation was based on the same company performance as at SVAC. He 

did not receive a bonus for 2006-2007 based on negative year-end results. Murphy 

testified that his medical and dental benefits at Mahle were at no cost and that at 

SVAC an employee contribution was required. Both Mahle and SVAC provided 

life insurance benefits at two times base salary. The benefit for short term disability 

was the same at both companies. SVAC had provided long term disability at no 

cost, while Mahle provided an optional long-term disability benefit at the 
23 

employee’s cost. The pension benefits were the same as Brackett has noted. 

Murphy noted that the annual cost of his employee benefits was $2,849.20, noting 

that his cost at Mahle was less because of the long-term disability benefit. 

Darius Kepczynski accepted a position at Mahle with the same base salary. 

Like Brackett and Murphy, the discretionary bonus was on company performance. 

He describes the benefits package similarly to Brackett and Murphy, noting the cost 

of his benefits was $2,663.27, less than at SVAC because of the long-term disability. 

As noted above, several courts have found that where job duties, base salaries 

and similar benefit packages were substantially similar, that constituted comparable 

employment under ERISA as a matter of law. It is clear that “substantially 

comparable” does not require benefits to be “equal” or even the same. The Court 

finds that the salary, job duties and benefits received by Plaintiffs Brackett, Murphy 

and Kepczynski at Mahle were substantially comparable. The differences are not 

necessarily calculated by the dollar amount of the benefits. Even so, two Plaintiffs 

concluded that the dollar difference was driven by the cost of long-term disability. 

The Court would note that some cost was likely driven by the Mahle offering of a 

401K plan rather than a “pension” plan but taken as a whole the benefits were 

sufficiently “substantially comparable” to preclude the payment of severance to 

Plaintiffs by Defendants. 
24 

E. Plaintiff Harvey 

Plaintiff Harvey claims entitlement to severance benefits because his position 

was eliminated permanently by SVAC. Plaintiff Harvey argues that because 

everyone was told their positions at SVAC would be eliminated as a result of the 

sale to Mahle, he retired and therefore qualifies for severance pay under '2.2(b) of 

the Severance Plan. Defendants claim that Plaintiff Harvey is not entitled to any 

severance benefits because of his voluntary retirement on April 1, 2007 under 

Paragraph 2.3(c) of the Plan. 

Plaintiff Harvey was employed by SVAC as an engineer at the Auburn Hills 

office. He testified that there were rumors of the sale to Mahle even before January 

2007. Plaintiff Harvey began to consider retirement after the January 2007 meeting. 

He had worked for SVAC or a predecessor company for 37 years and was 59 years 

old. Harvey had also recently had a health challenge resulting in surgery. Harvey 

was concerned about his health benefits and his pre-existing medical condition. He 

claims he had a very narrow window within which to make his decision to protect 

those benefits. Harvey wrote a letter to Mark Behe, Director of Humans Resources, 

SVAC, dated March 12, 2007. In his letter, Harvey notes the announcement of the 

sale of SVAC to Mahle on January 8, 2007, and his frustration at his inability to 

make a decision to Aeither transfer to Mahle, retire from Siemens and work for 
25 

Mahle, or just retire.@ He stated that no information had been given regarding the 

conditions of employment at Mahle, including whether his employment would be 

Asubstantially comparable@ to his employment at SVAC. His letter also indicates 

that to protect his retirement plan Harvey intended to make March 31, 2007 his last 

day and that the process could be cancelled, but his retirement selections had to be 

made by March 22, 2007. 

Harvey testified that he contacted Human Resources to initiate the retirement 

process and thereafter applied for retirement benefits to take effect on April 1, 2007. 

Harvey admits he was on vacation from May 13-23, but his letter included his email 

and cell phone contact information. No one contacted him even though his letter 

was copied to three other people. 

On March 28, 2007, Plaintiff Brackett contacted Mark Behe via email 

concerning Harvey=s decision. (Exh. P-18) No other information was given to 

Harvey before he retired. On his on-line exit interview form, Harvey wrote, 

ASiemens VDO Automotive made the choice to separate me.@ (Exh. P-18) During 

his exit interview, Harvey agreed to change his form to state that he voluntarily 

retired from SVAC. He initialed the handwritten change. During this exit 

interview Harvey made clear his disappointment and dismay at not having sufficient 

facts to make a fully knowledgeable decision about whether to retire or to wait to 
26 

see what offer was made to him by Mahle. Plaintiff Harvey acknowledges that he 

never made a request for severance pay prior to the date of this lawsuit, December 

10, 2008, 20 months after his retirement. 

Under the terms of the Severance Plan, ' 2.3(c), an employee is not entitled 

to severance pay if the employee=s termination is the result of Aemployee=s 

retirement...@ Section 2.3 provides for an exception where Aan employee who is to 

be terminated due to a Qualifying Event and who elects to retire under a retirement 

plan of SVAC shall be granted severance pay, nonetheless.@ Plaintiff Harvey is 

correct in stating that he had insufficient information to decide among the choices 

he faced. However, the Defendants were not yet in a position to clarify his options 

for him. The sale of SVAC to Mahle was not finalized until May 31, 2007. Until 

that time there was no certainty about the closure of the deal and no definite plan for 

the transfer of employees. The testimony of the witnesses involved in the sale 

demonstrates the complicated nature of Mahle wanting all the SVAC assets, and 

resources available and the strained financial picture. While Plaintiff Brackett in 

hindsight testifies to the clarity of the deal, many loose ends still existed at the time 

of Plaintiff Harvey=s retirement. Among the choices, Plaintiff Harvey chose to retire 

voluntarily. The evidence just does not support the exception he claims; that he was 

to be terminated due to a qualifying event and therefore is entitled to severance. As 
27 

noted previously, the Plan provides that it is the new employer who makes the offer 

of substantially comparable employment “immediately following the divestiture.” 

There is no requirement under the Plan that an eligible employee must have advance 

information prior to any divestiture as to the new employer’s terms of the offer. The 

Court finds in favor of Defendants and against Plaintiff Harvey on his claim for 

severance benefits because Harvey chose to retire before any employment offer was 

made by Mahle. 

F. Whether ERISA was Violated or any Fiduciary Duty Breached

SVAC did not violate ERISA either by not paying severance pay under the 

Severance Pay Plan, nor by breaching any fiduciary duty required by ERISA. There 

is no dispute that the SVAC Severance Pay Plan is a beneficiary plan under ERISA. 

Beneficiaries under such a plan are entitled to bring an action in federal court to 

recover benefits due under the plan. 29 U.S.C. § 1132(a)(1)(B). Federal courts apply 

federal common law governing contracts to plans under ERISA. Perez v Aetna Life 

Ins. Co., 150 F.3d 550, 556 (6th Cir. 1998); Pitcher v. Principal Mutual Life Ins. 

Co., 93 F.3d 407, 411 (7th Cir. 1996). Courts must interpret a plan’s provision 

according to the plain meaning of the plan in the ordinary and popular sense. Regents 

of the University of Michigan v. Agency Rent-A-Car, 122 F.3d 336, 339 (6th Cir. 

1997). Unambiguous terms must be given their effect. And a court is not allowed 
28 

to re-write a plan under the guise of judicial interpretation. Perez, supra. Usually the 

court gives deference to the interpretation of the contract by the plan administrator, 

but this deference is only owed where there is some ambiguity. In instances where 

the plan administrator, the ultimate decision maker, has a conflict of interest, the 

court may consider that conflict as an additional factor when reviewing a decision 

to deny benefits. Firestone Tire and Rubber, Co. v Bruch, 489 U.S. 101, 115 

(1989). A conflict arises when the entity that administers the plan also determines 

whether benefits are paid and is the same entity that pays the benefits from its pocket. 

Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 112-13 (2008). In this case it is 

clear that SVAC has such a conflict and the court considers that in deciding whether 

SVAC properly denied severance pay to these Plaintiffs. 

A plan administrator under ERISA must discharge its duties solely in the 

interest of the plan participants and beneficiaries. 29 U.S.C. §1104(a)(1); Glenn, 

supra. A conflict of interest is weighed differently if it appears the conflict played 

a greater role in the decision making; but will have less significance in those cases 

where steps were taken by the plan administrator to protect against such conflict. 

Glenn, supra. In a case where there are inconsistent positions taken in the decisionmaking process, a conflict of interest is given greater weight. See, Killiam v. Health 

Source Provident Administrators, 152 F.3d 514 (6th Cir. 1998). 
29 

Under ERISA, a plan administrator must fairly address an employee’s claim 

for benefits. A decision to deny benefits must be in writing and give specific reasons 

for the denial under 29 U.S.C. § 1133. There must also be a reasonable opportunity 

for review of the decision denying the claim. Id. 29 C.F.R. Sec 2560.503-1(g) 

requires written notice of a benefit decision including, in the case of a denial, specific 

reasons for the denial, citing the specific plan provision and a description of the 

review procedure. Under 29 C.F.R. 2560.503-1(1), the remedy for failure to 

establish and follow plan procedures is that the procedural process is deemed 

exhausted. 

SVAC’s administration of the Severance Plan was at best spotty. It is unclear 

whether the ERISA Committee existed or was administrating the Plan. It is unclear 

whether Fredrick Roth was the decision maker in administrating the Plan and 

Plaintiffs claim that Roth deemed the denial of severance a “business decision” 

inferring that the Plan Administrator did not apply the Plan in the interest of the 

participants. 

Defendants argue, as Plaintiffs expect, that: the plan required Plaintiffs to 

make a claim for severance; that no Plaintiff made a claim for benefits; that no 

Plaintiff complained that their offers from Mahle were not for substantially 

comparable work and benefits; that the Plaintiffs waited too late to pursue their 
30 

claims for severance; that Plaintiffs failed to exhaust their administrative remedies; 

and, that the process for claims for severance and the review process are all included 

in the Severance Pay Plan available to the Plaintiffs. There is testimony that a 

meeting was held with the Plaintiffs at SVAC where Frederick Roth, General 

Counsel, explained the decision to deny severance benefits and distributed copies of 

the Severance Plan which outlines the appeal/review process. It is not clear whether 

Roth made the decision to deny benefits (which two of Defendants’ witnesses claim) 

or the decision came from Siemens AG, the parent company, also involved in the 

sale. 

The failure of SVAC to adequately address the claims for severance under 

ERISA ultimately goes to whether SVAC fulfilled its fiduciary duty to apply the 

plan for the benefit of the participants and to whether the decision to deny severance 

benefits was arbitrary and capricious. The denial of ERISA benefits is generally 

reviewed de novo. But if the plan administrator has discretionary authority to

determine eligibility for benefits, the denial of benefits is reviewed under the 

arbitrary and capricious standard of review. The Court has already noted how it must 

also consider any conflict of interest. 

The Severance Pay Plan at SVAC provides that the Severance Pay Plan 

Committee, comprised of three members appointed by the Plan Sponsor, has the sole 
31 

right and authority to determine eligibility for benefits under the Plan. An appeal 

may be taken if a claim is denied and the appeal must be in writing. Notice of the 

decision on Appeal must be given to the employee. There is no dispute that under 

these circumstances, the arbitrary and capricious standard applies. 

 Under the arbitrary and capricious standard, a district court must uphold the 

benefit determination if it is “rational in light of the plan’s provisions.” Jones v 

Metropolitan Life Ins. Co., 385 F.3d 654, 661 (6th Cir. 2004). If there is a 

reasonable explanation based on the evidence for the particular outcome, that 

outcome is not arbitrary and capricious. Darland v Fortis Benefits, Ins. Co., 317 F.3d 

516, 527 (6th Cir. 2003). Usually under Perez, SVAC would make that 

determination. So, here, SVAC having not followed the procedure outlined in its 

Plan and the Plaintiffs having been excused of exhausting their administrative 

remedies (as Defendants note they had no opportunity before the lawsuit to 

determine whether the Plaintiffs qualified under the Plan or whether the work they 

were offered at Mahle was comparable work), it falls to the court to make that 

determination applying the federal law of contracts and ERISA. 

The Court, applying the arbitrary and capricious standard of review finds that 

an asset of SVAC, however small, was sold during the acquisition by Mahle, 

eliminating Plaintiffs from recovery of severance pay under the Severance Pay Plan, 
32 

§ 2.3(d). The Court further finds that the Plaintiffs were offered substantially 

comparable employment with the new company, Mahle, immediately following the 

sale. The Court finds that in the course of preparing for the sale, a number of 

scenarios and contingencies were considered, including, what employees would be 

brought in Mahle and funds set aside to cover issues like those that have arisen in 

this lawsuit. The Court is not bound by any testimony that SVAC thought benefits 

should be paid, as they did not pay them, and the Court must rely on the contractual 

language of the Plan and the facts regarding the sale and SVAC’s participation in it. 

As the Court find no violation of ERISA in the context of the Severance Pay Plan, 

no benefits are awarded. The Severance Pay Plan Committee’s denial of severance 

pay to Plaintiffs, even though such denial was not in writing, was not an arbitrary 

nor capricious decision. 

IV. PLAINTIFFS’ MOTION TO STRIKE AND EXCLUDE TESTIMONY 

Plaintiffs seek to strike and exclude the testimony of defense witness Gary 

Fell as a substantive fact witness. Plaintiffs claim Defendants never listed Fell as a 

witness in any pre-trial witness lists. Defendants listed Fell as a possible “Records 

Custodian” in the Joint Final Pre-Trial Order. Plaintiffs assert that Fell’s testimony 

went beyond that of a “Record Custodian.” Plaintiffs further assert that through 

Fell, Defendants presented proposed documents which Defendants never disclosed 
33 

to Plaintiffs prior to trial, contained in Defendants’ Proposed Exhibit 25, and marked 

separately as Defendants’ Proposed Exhibits 28, 29, 30a, 30b, 31, 32 and 33. 

Plaintiffs seek to strike Fell’s testimony and these exhibits. 

 Defendants claim that Fell was listed as a “will call” witness, therefore there 

is no “surprise” that he would be called at trial. Defendants assert that Fell’s 

testimony is relevant to the “surprise” testimony of Brackett and Caroline Harvey. 

Defendants argue that Fell’s testimony generally was to authenticate SVAC’s 

documents maintained in the ordinary course of business. 

 The issue of what assets were sold to Mahle was central to the summary 

judgment motion ruled on by the Court and at trial. Any document related to the 

sale was relevant and should have been provided during discovery. The actions or 

inaction taken by the parties during discovery will not now be litigated. However, 

because identifying Fell as “Custodian of Records” and not listing the documents in 

Proposed Exhibit 25 and other related documents in the Joint Final Pretrial Order 

support Plaintiffs’ claim that Fell went beyond the “Custodian of Records” role in 

his testimony by identifying documents which were not produced during discovery. 

Even if these documents were used to “impeach” the “surprise” testimony of 

Brackett and C. Harvey, these documents should have been produced during 

discovery. The Court grants Plaintiffs’ motion. The Court has not considered 
34 

Fell’s testimony and the documents identified by Fell during trial which were not 

produced during trial. 

V. CONCLUSION/ORDER 

 Based on the findings of fact and conclusions of law set forth above, the Court 

finds Plaintiffs have not carried their burden that Defendants’ decision in denying 

Plaintiffs severance pay under the Severance Plan was arbitrary and capricious. 

The Court finds in favor of Defendants and against Plaintiffs of no cause of action. 

Accordingly, 

 IT IS ORDERED that this action is DISMISSED with prejudice against 

Plaintiffs STEVE BRACKETT, KEVIN MURPHY, DARIUSZ KEPCZYNSKI and

BRUCE HARVEY. 

IT IS FURTHER ORDERED that the Motion to Strike and Exclude Gary 

Fell’s Testimony and Defendants’ Exhibit 25 (DE #44) is GRANTED as it relates 

to Defendants’ Exhibit 25 and related documents. 

IT IS FURTHER ORDERED that a Judgment be entered in favor of 

Defendants Siemens VDO Automotive Corporation (now known as Continental 

Automotive Systems US, Inc.) and Siemens VDO Corporation and against Plaintiffs 

Steve Brackett, Kevin Murphy, Dariusz Kepczynski and Bruce Harvey. 

IT IS FURTHER ORDERED that this action is designated as CLOSED on 
35 

the Court’s docket. 

 S/Denise Page Hood 

 DENISE PAGE HOOD 

 Chief United States District Judge 

DATED: May 15, 2019 

I hereby certify that a copy of the foregoing document was served upon counsel of 

record or party on May 15, 2019, by electronic and/or ordinary mail. 

S/Kim Grimes 

Case Manager Supervisor