Court Opinion

ID: 2960384
Source: CourtListenerOpinion
Date Created: 2015-09-17 17:48:27.848637+00
Date Added: 2024-06-11T15:01:12.369372
License: Public Domain

07-2658-cv
     Giordano v. Thomson

 1                          UNITED STATES COURT OF APPEALS
 2
 3                                FOR THE SECOND CIRCUIT
 4
 5                                     -------------
 6
 7                                   August Term 2008
 8
 9   Submitted: September 18, 2008                      Decided: April 27, 2009
10
11                         Docket No. 07-2658-cv, 07-2887-cv
12
13   --------------------------------------------------X
14
15   JOSEPH J. GIORDANO,
16
17                                Plaintiff-Appellant-Cross-Appellee,
18
19                  - against -
20
21   JOHN B. THOMSON, JR., THOMSON INDUSTRIES, INC., and DANAHER
22   CORPORATION,
23
24                                Defendants-Appellees-Cross-Appellants.
25
26   --------------------------------------------------X
27
28          Before:        FEINBERG, WALKER, and LIVINGSTON, Circuit
29                         Judges.
30
31                         WILLIAM DAN BOONE and Ngozi Evelyn Bolin, Bolin &
32                              Boone, New York, New York, for plaintiff-
33                              appellant-cross-appellee.
34
35                         JOHN    T. MORIN and Jennifer L. Marlborough,
36                                Wormser, Kiely, Galef & Jacobs LLP, New
37                                York, New York, for defendants-appellees-
38                                cross-appellants.
39
40   FEINBERG, Circuit Judge:

41          Plaintiff Joseph J. Giordano worked as the Chief Financial

42   Officer (CFO) of Thomson Industries, Inc. (hereafter “TII” or

43   “the company”) from September 2000 to October 2002.            During that
 1   period, while TII was in the process of selling itself to

 2   defendant Danaher Corporation (“Danaher”), Giordano made some

 3   inquiries as to whether he would receive some sort of payment for

 4   his role in the sale.               Some at TII perceived his behavior as

 5   counterproductive, and his employment was terminated.                          A little

 6   over a year later, Giordano brought this suit in the United

 7   States District Court for the Eastern District of New York.

 8   After a bench trial before Judge Joanna Seybert, the judge ruled

 9   in favor of TII and the two other defendants.                        We affirm.

10                                       I. BACKGROUND

11        TII    manufactured        a    number    of   products,         including    ball

12   bearings.       The company was founded by the father of defendant

13   John Thomson, Jr.; at the time of the sale to Danaher, Thomson

14   was TII’s sole shareholder.

15        Giordano started working on TII matters while he was a

16   partner at Coopers & Lybrand.             In 1993, Giordano left that firm

17   and began working for TII as a part-time consultant.

18        By    1999,    it   had    become    clear         that   TII    was    struggling

19   financially.       In early 2000, the company began discussions with

20   investment bankers to consider options for turning the company

21   around, since there were worries that the company would break

22   some of the covenants in its lending agreements.                            The options

23   included    a    sale    of    the    company,      a    recapitalization         and   a

                                              -2-
 1   restructuring of its debt.             TII eventually selected JPMorgan

 2   Chase (“JPMorgan”) to represent it in these matters.

 3          In 1999, as part of its turnaround efforts, the company

 4   hired Dr. Alex Beavers as its new CEO.                    Beavers, in turn,

 5   terminated Bartlett Polster, who was then the company’s CFO.

 6   Polster had worked full time and was paid roughly $170,000 per

 7   year.     In May 2000, Giordano was given the duties and title of

 8   the “acting CFO.”            In August 2000, Beavers asked Giordano to

 9   become    the    CFO,   in    part   because   (as   Senior   Corporate    Vice

10   President of Human Resources Patrick Mazzeo testified) it would

11   look better to the people involved in the effort to sell or

12   recapitalize the company to have an employee as CFO (as acting

13   CFO, Giordano was technically still a consultant). Giordano told

14   Beavers he would accept, but only if the role was part time and

15   temporary.      On this basis, Giordano became the company’s CFO on

16   September 1.      He was paid a yearly salary of $250,000.

17          As indicated above, defendant Thomson eventually decided to

18   sell     the    company      to   Danaher.     Giordano    assisted   in   the

19   transaction by helping TII negotiate with its lenders.                     The

20   company had defaulted on a loan payment and on a loan covenant.

21   When the company defaulted, the lenders had the right to obtain

22   a variety of extra payments.           Giordano, working with Bruce Treen

23   from JPMorgan, persuaded the lenders to waive their rights to

24   those additional payments.            This work was done mainly through

                                            -3-
 1   conference   calls;   Giordano   testified   that   these   took   place

 2   roughly once a week (sometimes more, sometimes less).         Giordano

 3   also initially fielded requests for due diligence information,

 4   but eventually he delegated this duty to a subordinate. Although

 5   Giordano claims that his work with the lenders went beyond what

 6   a CFO would normally be expected to do, Treen and Anthony Garvin

 7   (another JPMorgan banker) disagreed, opining that such work would

 8   be within the normal scope of a CFO’s duties.

 9        At trial, the deal participants disagreed regarding whether

10   Giordano was, in general, a competent CFO.      Treen testified that

11   Giordano generally “fulfilled the role of CFO.” By contrast, one

12   Danaher employee testified that Giordano was essentially not

13   doing his job and “not proficient in the financial matters of the

14   business other than at the very basic level.” Similarly, Richard

15   Cummins, an advisor to defendant John Thomson, testified that

16   Giordano “didn’t function as a CFO” and failed to “straighten out

17   the accounting department.”      Garvin stated that Giordano did all

18   the work normally expected from a CFO but that he was “somewhat

19   less involved than we would have liked to have seen for a company

20   in its circumstances.”

21        Defendants also note that, according to their calculations,

22   Giordano worked roughly 6.2 days per month between December 2000

23   and October 2002.      In addition, about one month before the

24   transaction closed, Giordano was away on vacation.

                                       -4-
 1          At some point, Giordano became aware that Danaher was not

 2   planning on keeping him as an employee after the purchase.

 3   Thereafter, he made several inquiries regarding whether he would

 4   receive an additional payment, beyond his salary, for his role in

 5   the sale of the company.       Some transaction participants thought

 6   he was threatening to block the sale if he was not paid the

 7   additional money; at trial Giordano denied making such threats.

 8   This process culminated in a dinner between Cummins and Giordano

 9   that   took    place   on   October    14,   2002,   shortly   before   the

10   transaction documents were signed.           As Cummins remembered it,

11   Giordano asked for $1 million or more, and Cummins said that

12   Thomson would never approve a payment in that range.              Cummins

13   also testified that Giordano threatened to “torpedo the closing”

14   by refusing to sign necessary documents if he was not paid.

15   Cummins also testified that he then called the law firm working

16   on TII’s behalf to tell it that TII was going to have to fire

17   Giordano.     Giordano testified that he did not threaten to block

18   the deal, and that Cummins agreed to recommend a payment of

19   $600,000.

20          On October 16, 2002, Giordano went to a “pre-closing,” at

21   which various participants were signing papers for the sale to

22   Danaher.      While there, Giordano signed all of the documents put

23   in front of him except a document under which he would have

24   released all of his claims against Thomson, TII and Danaher.

                                           -5-
 1   Under the release, Giordano would receive a $15,230 severance

 2   payment.       By the next day, he still had not signed the release.

 3          On October 17, Thomson heard that Giordano had not signed

 4   the release.          Thomson then decided that he had to terminate

 5   Giordano because the transaction could not be completed without

 6   a    release    and   “in   light   of    [Giordano’s]   prior    actions   and

 7   statements . . . he was going to torpedo the transaction.”

 8   Thomson terminated Giordano that day via a faxed letter from

 9   Mazzeo.      The parties to the sale then re-executed all of the

10   documents previously signed by Giordano, negotiated a provision

11   under which Thomson would indemnify Danaher for any claims made

12   against it by Giordano and completed the sale.

13          In    November    2003,   Giordano      brought   this    suit   against

14   defendants Danaher, Thomson and TII in the Eastern District

15   claiming that (1) he is owed money under TII’s severance plan,

16   (2) he was fired in violation of the anti-retaliation provision

17   of the Employee Retirement Income Security Act (“ERISA”), see

18   ERISA § 510, 29 U.S.C. § 1140, and (3) his work during the deal

19   unjustly enriched Thomson and TII.1              In September 2005, after

              1
               Giordano’s other claims in the district court are not
         before us on appeal. With respect to the third claim on appeal,
         that Giordano was unjustly denied compensation for the “extra”
         tasks he allegedly performed beyond his normal CFO duties, we
         note that Giordano left ambiguous in his brief whether he was
         appealing the dismissal of his unjust enrichment claim alone or
         the dismissal of his contract-based claims as well. However,
         unjust enrichment is the only legal basis Giordano explicitly
         articulates when arguing the third point in his brief.

                                              -6-
 1   defendants moved for summary judgment and Giordano moved for

 2   partial summary judgment on his ERISA claim, the district court

 3   held that TII’s severance plan constituted an “employee welfare

 4   benefit plan” subject to ERISA but denied the remainder of both

 5   motions, finding that there existed material issues of dispute

 6   for trial.        Giordano v. Thomson, 438 F. Supp. 2d 35, 40-43

 7   (E.D.N.Y. 2005).        Then, in October 2006, the court held a bench

 8   trial.      In May 2007, it dismissed all of Giordano’s claims.

 9   Giordano v. Thomson, No. 03-cv-5672, 2007 U.S. Dist. LEXIS 39117

10   (E.D.N.Y. May 29, 2007).        Specifically, the district court found

11   that (1) Giordano’s termination was not causually connected to

12   any exercise of his rights under ERISA, (2) TII’s denial of

13   severance payments to Giordano was not “arbitrary and capricious”

14   and   (3)   TII   had    not   been   unjustly   enriched   by   Giordano’s

15   employment during the Danaher sale.          Id.

16         Giordano then appealed, arguing that Judge Seybert should

17   not have dismissed certain of his claims.          Meanwhile, in a cross-

      Moreover, TII expressly alleges in its brief that Giordano
      appeals only the unjust enrichment issue, and Giordano does not
      contest this characterization in his reply brief.        Because
      Giordano fails to fully argue for reinstating his contract-based
      claims, we treat his third point on appeal as an argument for
      compensation based on unjust enrichment. See Norton v. Sam’s
      Club, 145 F.3d 114, 117 (2d Cir. 1998).

                                           -7-
 1   appeal, the defendants contend that Judge Seybert erred in her

 2   conclusion that TII’s severance plan is covered by ERISA.2

 3                                     II.   ANALYSIS

 4          We conclude that Giordano was not entitled to receive

 5   payments under TII’s severance plan, that he was not terminated

 6   in violation of ERISA’s anti-retaliation provision and that his

 7   unjust enrichment claim has no merit.              Thus, we need not (and do

 8   not)    decide    whether   the    district   judge      was   correct   in   her

 9   determination that TII’s severance plan was an ERISA plan.

10          A.     Standard of Review

11          After a bench trial, this Court reviews a district court’s

12   factual findings for clear error and its legal conclusions de

13   novo.       See, e.g., Grace v. Corbis-Sygma, 487 F.3d 113, 118 (2d

14   Cir. 2007).

15          B.     Giordano Is Not Entitled              to    Benefits   Under
16                 Thomson’s Severance Plan.

17          ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), provides

18   that a person to whom benefits are owed under an ERISA plan may

19   bring a civil action to recover them.              To prevail under § 502, a

20   plaintiff must show that (1) the plan is covered by ERISA, see

21   Guilbert v. Gardner, 480 F.3d 140, 145-46 (2d Cir. 2007),                     (2)

22   plaintiff is a participant or beneficiary of the plan, see Rocco

             2
            Giordano argues that defendants’ cross-appeal is frivolous
      and that the defendants “arrogated” to themselves a filing
      extension. These arguments are without merit.

                                             -8-
 1   v. N.Y. State Teamsters Conference Pension & Ret. Fund, 281 F.3d

 2   62, 70-71 (2d Cir. 2002),            and (3) plaintiff was wrongfully

 3   denied   severance    pay    owed    under    the   plan,    see   Feifer   v.

 4   Prudential Ins. Co. of Am., 306 F.3d 1202, 1208 (2d Cir. 2002).

 5   Where    an   ERISA   plan   gives    an     administrator    discretionary

 6   authority to “determine eligibility for benefits or to construe

 7   the terms of the plan” we review the administrator’s decisions

 8   under the arbitrary and capricious standard.                  Paneccasio v.

 9   Unisource Worldwide, Inc., 532 F.3d 101, 108 (2d Cir. 2008)

10   (internal quotation marks omitted).           Where no such discretion is

11   conferred, we review the administrator’s decision de novo.                  See

12   id.

13         The parties disagree regarding which standard of review

14   should apply here, but we need not resolve the issue because

15   Giordano’s claim would fail under either standard. Judge Seybert

16   confirmed the propriety of TII’s decision to deny severance

17   benefits to Giordano. See Giordano, 2007 U.S. Dist. LEXIS 39117,

18   at *3-5.      She cited three reasons for this conclusion.            First,

19   TII’s deteriorating financial situation made it understandably

20   reluctant to pay severance benefits.           See id. at *4-5.      Second,

21   Giordano’s predecessor received only eight weeks of severance

22   payments even though he was a full-time employee (Giordano worked

23   part time) and had worked at the company for 20 years (Giordano

24   had been an employee for less than three years).              See id. at *5.

                                          -9-
 1   Finally, the judge determined that the company offered severance

 2   benefits only to employees who were not terminated for cause;

 3   Giordano, she found, was terminated for cause--specifically, his

 4   attempt to “torpedo” the Danaher sale.      See id. at *4, *6.

 5   After reviewing the record, we agree with Judge Seybert: Giordano

 6   was not entitled to severance payments.3

 7        C.   Giordano’s Retaliation Claim
 8
 9        ERISA § 510 provides that it is illegal to “discharge, fine,

10   suspend, expel, discipline, or discriminate against a participant

11   or beneficiary for exercising any right to which he is entitled

12   under the provisions of an employee benefit plan, this subchapter,

13   section 1201 of this title, or the Welfare and Pension Plans

14   Disclosure Act, or for the purpose of interfering with the

15   attainment of [such rights] . . . .”   29 U.S.C. § 1140 (internal

16   citation omitted).   To make out a prima facie case of retaliation

17   under § 510, Giordano must show that (1) he was engaged in a

18   protected activity, (2) TII was aware of that activity, (3) he

19   suffered from an adverse employment decision and (4) there was a

20   causal connection between the protected activity and the adverse

           3
            Giordano also argues that TII violated ERISA’s requirement
      that an ERISA plan participant whose claim has been denied be
      afforded a “full and fair review.” 29 U.S.C. § 1133(2). We
      need not reach this claim since “the typical remedy” for
      violations   of   this   provision   is  “remand   for   further
      administrative review,” but remand is unnecessary where it would
      be futile. Krauss v. Oxford Health Plans, Inc., 517 F.3d 614,
      630 (2d Cir. 2008). Remand would be fuitle here.

                                    -10-
 1   employment action.        See Manoharan v. Columbia Univ. Coll. of

 2   Physicians    &   Surgeons,   842   F.2d   590,    593   (2d   Cir.   1988).

 3   Moreover, Giordano must prove that TII had the specific intent to

 4   retaliate against him.      See Kouvchinov v. Parametric Tech. Corp.,

 5   537 F.3d 62, 66-67 (1st Cir. 2008); Dister v. Cont’l Group, Inc.,

 6   859 F.2d 1108, 1111 (2d Cir. 1988). Specific intent is determined

 7   under the burden-shifting framework outlined in McDonnell Douglas

 8   Corp. v. Green, 411 U.S. 792, 802-05 (1973). See Dister, 859 F.2d

 9   at 1111-13.

10                1.   Giordano Was Not Fired for Refusing to Forfeit
11                     Severance Benefits Under the Plan
12
13         Giordano’s first argument regarding retaliation is that he

14   was terminated for failing to waive his claim for ERISA benefits

15   when he declined to sign the release. Judge Seybert rejected this

16   claim, finding that Giordano was terminated because his behavior

17   during the Danaher deal was determined to be counterproductive.

18   Giordano, 2007 U.S. Dist. LEXIS 39117, at *6-7.            This finding is

19   a   reasonable    one,   particularly   given     our   determination   that

20   Giordano was not, in fact, entitled to any severance benefits

21   under the plan.      We find no error (clear or otherwise) in the

22   district court’s findings on this issue.

23
24              2.     ERISA § 510 Does Not Create a Cause of Action
25                     for Enforcing the Older Workers Benefit
26                     Protection Act
27

                                         -11-
 1          Giordano’s second, and less conventional, argument appears

 2   to be related to the amount of time he was given to review the

 3   waiver of his claims against defendants and to 29 U.S.C. § 626(f),

 4   a provision of the Older Workers Benefit Protection Act (OWBPA).

 5   That provision provides that “[a]n individual may not waive any

 6   right or claim under [the Age Discrimination in Employment Act of

 7   1967 (ADEA)] unless the waiver is knowing and voluntary.”      29

 8   U.S.C. § 626(f)(1).   It then states that a waiver is not “knowing

 9   and voluntary” unless, among other things, the individual is given

10   21 days to review the waiver (a 45-day period applies in some

11   cases).   Id. § 626(f)(1)(F).   Giordano appears to argue that TII

12   is liable under ERISA § 510 for retaliating against him in

13   response to his exercise of his OWBPA right to review the release

14   for 21 days.

15          This argument is mistaken.   ERISA § 510 does not create a

16   cause of action for violations of OWBPA.    ERISA § 510 prohibits

17   only retaliation against a plaintiff who exercises a right derived

18   from: (1) an employee benefits plan, (2) “this subchapter,” (3)

19   29 U.S.C. § 1201 or (4) the Welfare and Pension Plans Disclosure

20   Act.    Id. § 1140.   Because the OWBPA right to a 21-day review

21   period under 29 U.S.C. § 626(f) does not fall within any of these

22   four categories, there is no ERISA § 510 cause of action for a

23   violation of § 626(f).
24
25

                                  -12-
 1        D.     Giordano’s Unjust Enrichment Claims Are Without
 2               Merit

 3        “Under New York law, a plaintiff asserting a claim of unjust

 4   enrichment must show that the defendant was enriched at the

 5   plaintiff’s expense and that equity and good conscience require

 6   the plaintiff to recover the enrichment from the defendant.”

 7   Golden Pac. Bancorp v. FDIC, 375 F.3d 196, 203 n.8 (2d Cir. 2004).

 8   Recovery on such a claim is “limited to the reasonable value of

 9   the services rendered by the plaintiff.”         Collins Tuttle & Co. v.

10   Leucadia, Inc., 544 N.Y.S.2d 604, 605 (App. Div. 1989).

11        Here, it is clear that the reasonable value of the services

12   provided by Giordano was not more than the actual amount he was

13   paid.     Giordano was paid $250,000 per year for part-time work,

14   whereas his predecessor, who worked full time, was paid only

15   $170,000.      Moreover,   according     to   some   (but      not    all)   deal

16   participants,    Giordano’s   performance      as    a   CFO    was    somewhat

17   disappointing.    And while Giordano claims the work he did with

18   TII’s lenders was beyond the normal scope of a CFO’s duties, none

19   of the other deal participants who testified on the matter agreed.

20   We cannot say that the judge erred in believing the latter group.

21   Thus, Giordano’s unjust enrichment claim is without merit.

22                              III.   CONCLUSION

23        For the reasons stated above, we AFFIRM the district court’s

24   dismissal of Giordano’s claims.           Defendants’ cross-appeal is

                                       -13-
1   DISMISSED as moot; as noted, we express no opinion on whether

2   TII’s severance plan was an ERISA plan.

                                 -14-