Court Opinion

ID: 9485747
Source: CourtListenerOpinion
Date Created: 2023-08-05 11:28:45.06049+00
Date Added: 2024-06-11T17:51:19.862221
License: Public Domain

MORRIS SHEPPARD ARNOLD, Circuit Judge,
dissenting.
I respectfully disagree with the court’s interpretation of § 5 of the agreement. It deals, in pertinent part, not only with a change in control of the corporation (as that is defined in the agreement), but also with a sale of “all or substantially all of the ... assets of ... any ... subsidiary thereof ...,” and it requires the defendant to cause any purchaser of a subsidiary to assume the agreement of which § 5 is a part. This is a wholly distinct and separate undertaking on the part of the defendant and has nothing to do with a change of control of the corporation itself. Its purpose was to ensure that the agreement would continue in force in the event a sale like the one to Ransomes was consummated and that Ransomes would specifically agree to be liable on it. The court’s construction draws no strength from its invocation of § 3(e)(v) of the agreement. That provision simply makes it plain that plaintiff could resign and nevertheless be entitled to severance pay following a change of control if the corporation failed to secure an assumption of the agreement. There was no change of control here and plaintiff did not resign.
Nor do I agree with the district court’s conclusion that the agreement did not permit plaintiff to accept employment with Ran-somes and then receive severance benefits from OMC. The purpose of § 5 was to ensure that plaintiff enjoyed the same job security as he enjoyed before the succession and that the successor itself assume the obligation for that security. It therefore cannot have been a requirement that he not take up employment after the succession before the remedies provided in § 5 were available to him.
We are therefore left with the question of whether the corporation lived up to its obligation under § 5 to require Ransomes “to expressly assume and agree to perform this Agreement in the same manner and to the *712same extent that the Corporation would be required to perform it if no such succession had taken place.” Following the sale of all the stock of Cushman, of course, Cushman remained liable on all its obligations. See Ruefenacht v. O’Halloran, 737 F.2d 320, 333 (3d Cir.1984), aff'd, 471 U.S. 701, 105 S.Ct. 2308, 85 L.Ed.2d 708 (1985), and Daily v. Morgan, 701 F.2d 496, 504 (5th Cir.1983). The Purchase Agreement entered into between defendant and Ransomes specifically mentions contracts that provide severance pay for employees, and does so in a way that makes it plain that Ransomes understood that Cushman was indeed obligated to plaintiff in the same manner as defendant had been. See § 2.13. But the fact that the severance obligations survived the transfer is of no particular relevance. The relevant question is whether Ransomes itself assumed those obligations. Under § 6.08 of the Purchase Agreement, Ransomes agreed to “cause ... the Cushman Companies ... to maintain ... severance arrangements for Employees of ... Cushman ... which are, in the aggregate, not less favorable to such individuals than those provided to them by Sellers or the Cushman Companies immediately prior to the Closing Date.” It is not clear that this adds anything whatever to Cushman’s legal obligations, and whatever it may add to Ransomes’ it is not an assumption of liability by them. It is not even a guarantee by Ransomes of Cushman’s performance.
I would therefore reverse the district court and remand for further proceedings on defendant’s asserted affirmative defenses.