Court Opinion

ID: 197317
Source: CourtListenerOpinion
Date Created: 2011-02-07 03:27:11+00
Date Added: 2024-06-11T15:11:13.747774
License: Public Domain

NOT FOR PUBLICATION
                                 NOT FOR PUBLICATION
                                                    
                UNITED STATES COURT OF APPEALS
                    FOR THE FIRST CIRCUIT
                                         
No. 96-1745

                    CARL M. BERKE, ET AL.,
                   Plaintiffs, Appellants,

                              v.
                       TAMBRANDS, INC.,

                     Defendant, Appellee.
                                         

No. 96-1830
                        DAVID A. FOX,

                    Plaintiff, Appellant,
                              v.

                       TAMBRANDS, INC.,
                     Defendant, Appellee.

                                         
        APPEALS FROM THE UNITED STATES DISTRICT COURT

              FOR THE DISTRICT OF MASSACHUSETTS
       [Hon. Robert B. Collings, U.S. Magistrate Judge]
                                                                  

                                         
                            Before

                    Boudin, Circuit Judge,
                                                     
                Aldrich, Senior Circuit Judge,
                                                         

                  and Lynch, Circuit Judge.
                                                      
                                         

James  E.  Grumbach  with  whom  Marc  E.  Verzani  and  Zimble  &
                                                                              
Brettler, LLP were on consolidated briefs for appellants.
                     
Roger E.  Podesta with  whom Harry Zirlin,  Debevoise &  Plimpton,
                                                                             
Richard  L.  Nahigian   and  Sullivan,  Sullivan   &  Pinta  were   on
                                                                   
consolidated brief for appellee.

                                         

                        April 24, 1997
                                         

     Per Curiam.  Plaintiffs appeal from the district court's
                           

summary judgment dismissal of their claims,  most importantly

that stock options and other incentive compensation  promised

by   their  employer,   Tambrands  Inc.,  should   have  been

accelerated--rather than forfeited--when  Tambrands sold  its

subsidiary Hygeia  Sciences, Inc., the company  for which the

plaintiffs directly worked.   Plaintiffs dispute the district

court's  reading  of  the  underlying  contracts;  they  also

challenge several discovery rulings.

     After reviewing  the briefs and the  record, we conclude

that the district court's thorough opinion correctly analyzed

and  resolved  the  questions   presented.    We  affirm  for

substantially  the reasons given below, separately discussing

below only three points which  were not squarely addressed in

the  district court.   Some  of the  issues presented  by the

appeal are fairly debatable,  but we see no reason  to repeat

in our words explanations that have been ably provided by the

district court.  

     1.  Plaintiffs argue on appeal that three plaintiffs who

continued  working for Hygeia  until the date  on which their

options would have vested if  they had remained in Tambrands'

employ completed  the requisite vesting period.   They assert

that the  contractual  requirement of  two  years'  continued

employment with "the Company,"  defined as "Tambrands and its

subsidiaries," should  be understood  to  mean employment  by

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Tambrands  and/or  the subsidiaries  it had  at the  time the

options were granted--not at the time of exercise.

     This theory,  although mentioned in  the complaint,  was

not discussed at length by the magistrate judge, who directed

his  attention to  a  broader claim,  namely,  that the  sale

triggered an acceleration of  the options.  However, assuming

that  the present theory was  fully preserved, at  the end of

two  years the plaintiffs  were no longer  working either for

Tambrands or  a subsidiary of Tambrands,  and therefore their

options  lapsed under  the  contract, which  allowed exercise

"only during the continuance of that Participant's employment

by the Company."

     2.   In  the  district  court,  in addition  to  express

contract claims,  the  plaintiffs pressed  implied  contract,

unjust  enrichment and  quantum  meruit claims.   They  based

these latter claims  on their allegation  that they had  made

unusual efforts  in  support of  the planned  sale of  Hygeia

during  1989  and  1990 and  as  a  result  deserve, or  were

impliedly  promised, the  reward  of  acceleration  of  their

options.   On appeal,  they have recast  this theory, arguing

that   their   contracts    were   impliedly   modified,   or

alternatively that Tambrands'  continuation of its  incentive

compensation programs  during  1989 and  1990  either  estops

Tambrands from refusing acceleration or constitutes a  waiver

of any right to refuse acceleration.

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     However, we agree  with the district court's  conclusion

that  the plaintiffs could  not prove either  that they could

reasonably have expected acceleration, or that the defendants

promised acceleration, in  exchange for their  sales efforts.

We  think   that  this   conclusion  supports  dismissal   of

plaintiffs' modification,  estoppel and waiver  arguments, as

well as the  implied contract and related claims more clearly

asserted  in   the  district  court  and   addressed  by  the

magistrate judge's opinion.

     3.   Finally, plaintiffs  contend on appeal  that public

policy  considerations  justify  accelerating their  options.

They  cite an  Iowa  case involving  somewhat similar  facts,

Hilgenberg v. Iowa Beef Packers, Inc., 175 N.W.2d 353, 362-63
                                                 

(Iowa  1970).   In  that case,  a  company that  had promised

options to employees  sold one  of its plants  to new  owners

before the options  vested.  In  the subsequent lawsuit,  the

court permitted  the  employees of  the plant  to exercise  a

portion of  their options,  even though the  supposed vesting

occurred after sale of  the plant.  The court  relied heavily

upon public policy.

     The difficulty is that the present agreement is governed

by New York law  as to the contract claims  and Massachusetts

law  as  to   noncontractual  claims.    The   New  York  and

Massachusetts  cases that are cited  to us are  not in point,

and our independent  research suggests that  the case law  in

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these two states  does not carry  the public policy  argument

quite  as far  as Hilgenberg.   See  Carlson v.  Viacom Int'l
                                                                         

Inc., 566 F. Supp. 289, 290-91 (S.D.N.Y. 1983); McCone v. New
                                                                         

England Tel. & Tel. Co., 471 N.E.2d 47, 49-50 (Mass. 1984).
                                   

     Affirmed.
                         

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