Opinion ID: 545161
Heading Depth: 2
Heading Rank: 2

Heading: The Terms of the 1985 Plan

Text: 35 We now consider whether there exists a genuine issue of material fact as to plaintiffs' entitlement to benefits under the unamended 1985 plan. Defendants contend that there exists no genuine dispute that (1) the plan extends benefits at most to employees terminated because of the operational consolidation of Erico-Jones and KSM, and (2) plaintiffs were terminated well after that consolidation had been completed, for reasons unrelated to it. Therefore, they conclude, the summary judgment in their favor must be affirmed. Because we reject the first of these propositions, we must disagree. 36 With a good deal of force, defendants argue that the 1985 plan, as a matter of law, extends at most to employees terminated before the merger of Erico-Jones and KSM was completed. The plan itself is suffused with references to the merger. The cover page is entitled Severance Pay Erico Jones-KSM Merger. It states that the severance policy is to be used for the merger of Erico Jones and KSM, that the policy cancels out any other severance policy for the time frame involved in adjustment of workload and responsibilities that is involved in this merger, and that a letter drawn up by attorneys representing Erico and KSM, for the merger must be handed out to covered employees. 37 Pointing out that the formal merger of Erico-Jones and KSM did not occur until over four months after they had been terminated, plaintiffs respond that a plan developed for the merger of Erico Jones and KSM can reasonably be construed as providing benefits at least until those two companies have been formally merged, not just operationally consolidated. We believe that the reference in the 1985 plan to the time frame involved in adjustment of workload and responsibilities cuts against plaintiffs' proposed construction. Moreover, we note that defendants introduced direct and unqualified testimony that the policy as originally conceived extended only to employees fired as a result of the operational consolidation. Craven, who was on the committee that drafted the package, testified that it was developed specifically for the merger, a term defined as the consolidation of [the] two operations, App. 277, and that the plan applied only to people who were affected by this merger, App. 287. Annmarie Horan, KSM's personnel manager at the time in question, corroborated Craven's account. She testified that the plan was intended to apply to employees terminated only as a result of the consolidation. App. 387. 38 Plaintiffs introduced no direct evidence to the contrary. Although plaintiffs cannot survive summary judgment simply by asserting that the factfinder might disbelieve the testimony of defendants' witnesses on this potentially dispositive issue, see Liberty Lobby, 477 U.S. at 256-57, 106 S.Ct. at 2514, nothing in Rule 56 prevents them from creating a genuine issue of material fact by pointing to sufficiently powerful countervailing circumstantial evidence. See, e.g., Williams v. Borough of West Chester, 891 F.2d 458, 460-61 (3d Cir.1989) (Becker, J., announcing the judgment of the court). Here plaintiffs point to two types of evidence: first, the memo written by Horan in 1986, and second, several examples in which severance benefits consistent with the terms of the 1985 plan were awarded to employees laid off after the consolidation had been completed. Plaintiffs contend that this evidence is sufficient to create a genuine issue of material fact as to the scope of entitlements defendants intended to create, and did create, in promulgating the original plan. 10 We agree. 39 On August 29, 1986, Horan circulated a memo on EFS stationery to a select group of that company's executives. The memo included a copy of the same benefits schedule circulated over a year earlier in Claflin's 1985 memo. The cover page of Horan's memo was entitled Severance Pay Guidelines. It refers to the benefits schedule as EFS' severance pay guidelines. 40 We believe that this memo at least suggests that the 1985 plan was intended to extend beyond employees terminated as a result of the consolidation. Horan herself testified that the consolidation of Erico-Jones and KSM occurred between July 1985 and September 1986. App. 387. A reasonable factfinder could conclude that as of August 29, 1986, the consolidation was almost complete and Horan knew it. On that date, however, Horan circulated a memo about the severance pay guidelines of EFS, the merged entity, which contemplated future application of those guidelines but which made no hint whatsoever of their impending termination. Under these circumstances, such an omission seems odd, especially from someone with personal knowledge of the scope of the plan from its inception, App. 387. The omission seems less odd, however, on the assumption that the 1985 plan was to continue in effect through the future foreseeable as of August 29, 1986--for example, at least until the formal merger, which occurred over 15 months after the Horan memo was written. 41 We do not mean to suggest that the Horan memo is conclusive evidence to that effect. Obviously, an August 29, 1986 memo contemplating the future provision of benefits is reconcilable with Horan's deposition testimony that the plan covered only a consolidation completed in--and therefore continuing into--September 1986. Also, Horan's failure to mention the plan's imminent termination might simply have resulted from the brevity that frequently characterizes inter-office memoranda, rather than Horan's implicit assumption that the plan's termination was not imminent. Nonetheless, we think that the memo lends at least some support to plaintiffs' proposed interpretation of the plan, an interpretation further supported by defendants' practices during the period in which Neff and Hartmann controlled Midwest. 42 The summary judgment record indicates that during this period, at least nine employees of Midwest received severance benefits consistent with the terms of the 1985 plan. Accepting defendants' contention that the consolidation had been completed before Midwest was sold to Neff, it follows that each of these employees was paid benefits even though none was terminated as a result of the consolidation. Moreover, the decision to grant benefits was made in each case by Hartmann, who had been a member of the original EIC committee that created the 1985 package. During this same period, Hartmann decided not to grant benefits to at least six other employees terminated by Midwest. Of these, however, three left the company voluntarily to begin other joint ventures with Neff and Hartmann, and a fourth was apparently granted a consulting agreement in lieu of severance. 43 We believe that this evidence could support a finding that Hartmann, a member of the committee that created the 1985 severance package, believed that it obliged him to grant benefits to employees terminated before the merger was legally effected, even though the operational consolidation had already been completed. A similar belief might be imputed to Richard Ripley, another Midwest executive formerly a member of the 1985 committee, on the basis of a letter Ripley wrote to Midwest's counsel on July 25, 1987. The letter states that we need to know our position if we make further cuts but do not offer ... severance [pursuant to the 1985 package], App. 123, which at least suggests that Ripley too had some doubts in his mind. Moreover, we believe that a reasonable factfinder could deemphasize defendants' extrinsic evidence, which consists of testimony of officials who either are or were employees of defendants themselves. Finally, in light of plaintiffs' evidence regarding the Horan memo and Hartmann's 1987 practices, we believe that a reasonable factfinder could construe a plan created for the merger as continuing in effect at least until the merger has been legally consummated, despite the narrower construction suggested at first glance by the original plan's reference to the time frame involved in adjustment of workload and responsibilities that is involved in this merger. 44 We do not suggest, of course, that this is the correct, or even the most plausible, way to view the evidence in the summary judgment record. At this point, we are only concerned with whether a reasonable factfinder could synthesize all this evidence into a judgment for plaintiffs. Under the chain of reasoning outlined above, we conclude that it could, and that the district court therefore erred in granting summary judgment to defendants on plaintiffs' claim for benefits under the terms of the 1985 plan. 11