Opinion ID: 708053
Heading Depth: 2
Heading Rank: 2

Heading: The Severance Claim

Text: 18 The parties apparently agree, or at least they do not dispute, that the Severance Plan adopted in 1991 is governed by ERISA. The district court did not decide the issue, 3 evidently because in its view, as indicated above, Sharkey was not entitled to any relief regardless of whether the Severance Plan is governed by ERISA. However, as indicated below, the issue of whether ERISA applies to the Severance Plan is significant in construing the release given by Sharkey in 1988. Moreover, this issue is not a simple one, as is evident from our opinions in Reichelt v. Emhart Corp., 921 F.2d 425, 429-31 (2d Cir.1990), cert. denied, 501 U.S. 1231, 111 S.Ct. 2854, 115 L.Ed.2d 1022 (1991); James v. Fleet/Norstar Financial Group, Inc., 992 F.2d 463, 466-68 (2d Cir.1993); and Mullins v. Pfizer, Inc., 23 F.3d 663, 666 (2d Cir.1994). In Mullins, since the district court, as occurred here, erred in granting summary judgment, we remanded this issue, along with others, for the district court to consider. As will be seen in our discussion below, we believe the same disposition is appropriate here. 19 With regard to the Severance Plan, Sharkey principally argues to us that he cannot be denied severance benefits for his first 17 years of service because it is undisputed that he was an employee during those years. Appellees respond that the release Sharkey signed in 1988 waived any rights he may have had based on those years of service. 20 Under the Severance Plan, the plan administrator does not have discretionary authority to calculate benefits. Therefore, even if ERISA applies, the denial of severance benefits is subject to de novo review and the court must apply traditional principles of contract interpretation. Bruch, 489 U.S. at 112-13, 115, 109 S.Ct. at 955, 956. Moreover, summary judgment based upon construction of a contract is appropriate only if the meaning of the language is clear, considering all the surrounding circumstances and undisputed evidence of intent, and there is no genuine issue as to the inferences that might reasonably be drawn from the language. Healy v. Rich Products Corp., 981 F.2d 68, 72 (2d Cir.1992). 21 In this case, the district court did not address the severance claim separately from the pension claim or independently assess the basis for appellees' denial of severance benefits. The court did not discuss Sharkey's contentions that the Severance Plan did not specify either that an employee's years of service had to be continuous or that, where service had been interrupted, a severance benefit had to be calculated from the start of the most recent date of hire. The district court merely stated that it was implausible that Sharkey would expect to receive any retroactive benefits without a written agreement. 867 F.Supp. at 259. 22 Appellees claim that regardless of whether the Severance Plan applies to all of Sharkey's years as an employee, he signed a release in 1988 under which he specifically gave up the right to make any severance claim based on his years of service prior to the release. Sharkey responds that, as a matter of law, he could not have knowingly waived his right to credit for his pre-1988 employment under the Severance Plan, because the plan did not exist until 1991. Sharkey also claims that the release does not clearly and unambiguously waive benefits under plans adopted after he was rehired by the company. Sharkey also points to an affidavit submitted to the district court, which stated that he did not intend to waive such rights. The district court did not discuss the effect of the release. 23 The validity of a waiver of pension benefits under ERISA is subject to closer scrutiny than a waiver of general contract claims. Finz v. Schlesinger, 957 F.2d 78, 81 (2d Cir.), cert. denied, 506 U.S. 822, 113 S.Ct. 72, 121 L.Ed.2d 38 (1992); Laniok v. Advisory Committee of Brainerd Mfg. Co. Pension Plan, 935 F.2d 1360, 1367 (2d Cir.1991). The essential question is whether, in the totality of the circumstances, the individual's waiver of his right can be characterized as 'knowing and voluntary.'  Laniok, 935 F.2d at 1368. We see no reason to apply a lower level of scrutiny to waivers of severance claims under ERISA than we do to pension claims. Cf. Brown v. Van Nostrand Reinhold Co., No. 89-7309, 1991 WL 197592, at  7 (S.D.N.Y. Sept. 24, 1991). But see Rodriguez-Abreu, 986 F.2d at 587. Thus, if ERISA applies to the Severance Plan, it is quite apparent that, after being fully advised of the circumstances surrounding the execution of the release, the district court must subject it to the close scrutiny called for by the cases cited above. Even if ERISA does not apply, as a matter of judicial administration, the effect of the release should be decided by the district court in the first instance. 24 The parties also raise other issues regarding the severance claim. Appellees strongly urge that Sharkey is quasi-estopped from pursuing his severance claim under the plan adopted in 1991, having already received approximately $175,000 in 1988 as a severance benefit. They also urge that even if Sharkey is entitled to severance benefits under the 1991 Severance Plan for his pre-1988 service, those benefits must be offset by the severance payment he received in 1988. In response, Sharkey contends that appellees waived all such defenses, including the right to enforce the release, by rehiring him in 1991 as recommended by Bensen, without requiring him to repay the amounts he had received in 1988, and that, in any event, in view of his financial losses from his treatment as an independent contractor, it is fair to disregard the 1988 severance payment. This welter of claims obviously raises a number of hotly disputed issues--some obviously factual, others perhaps purely legal--that should be addressed by the district court. On this record, we have no doubt that summary judgment in favor of appellees on the severance claim was inappropriate.