Court Opinion

ID: 8975200
Source: CourtListenerOpinion
Date Created: 2022-11-27 10:53:11.786683+00
Date Added: 2024-06-11T17:10:31.712293
License: Public Domain

K.K. HALL, Circuit Judge,
concurring in part and dissenting in part:
I concur in the majority opinion to the extent that the dismissal of the Sejman plaintiffs’ claims is affirmed. I respectfully dissent with respect to the Givens plaintiffs, however, because I believe the majority opinion overstates the reach of our prior *1351decision in Sejman v. Warner-Lambert Co., 845 F.2d 66 (4th Cir.1988) [Sejman I].
In Sejman I, we remanded the case to allow the district court to review Warner-Lambert’s denial of benefits to its former employees in light of ERISA. On remand, the district court focused on the Warner-Lambert plan’s limitation of coverage to “all full-time exempt employees” and dismissed the claims because the plaintiffs were obviously no longer Warner-Lambert employees. In Sejman I, however, we did not overrule that portion of Livernois v. Warner-Lambert Co., Inc., 723 F.2d 1148 (4th Cir.1983), which held that, notwithstanding the sale of the division to PMP, a contract existed between Warner-Lambert and its former employees for the payment of severance pay. Warner-Lambert’s belated claim of ERISA preemption did “not challenge this Court’s previous analysis” in Livernois that such a contract existed. Sejman I, 845 F.2d at 69. The Sejman I panel also noted that the preemption claim could be determined “without disturbing the Livernois assessment of contract rights.” Id. at n. 7. The majority, however, attaches no significance to this holding and, instead, decides the case as if these opinions had never been written. The proper analysis should be whether the former employees, considered as still being covered by Warner-Lambert’s severance pay policy, would be eligible for benefits in light of the employment-related events at PMP.
The district court employed an analysis which essentially holds that no Warner-Lambert employee who transferred to PMP after the sale of the Medical-Surgical Division could ever receive severance pay from Warner-Lambert. The majority’s adoption of the analysis employed by the lower court flies in the face of our specific refusal in Sejman I to overturn the Livernois holding that there existed a contract between Warner-Lambert and its former employees. The contract which was found in Liv-ernois and which survived Sejman I bound Warner-Lambert to provide benefits under its 1981 severance pay policy to those employees who transferred to PMP. Eligibility for benefits is clearly governed by ERISA under the de novo standard enunciated in Firestone Tire and Rubber Co., Inc. v. Bruch, — U.S. —, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), but the district court was not free to reexamine the viability of the severance pay contract itself under ERISA.
Nothing in the ERISA statutes prohibits a company from contracting, as part of a sale of a division to another company, to bind itself to the payment of severance payments to employees who choose to accept employment with the successor company. By inducing the employees to transfer to PMP, Warner-Lambert was able to better guarantee to PMP that the Medical-Surgical Division’s employees would accept new jobs with PMP. As the court noted in Livernois, the purchase price paid by PMP was probably enhanced in return for Warner-Lambert’s assurances that PMP was getting a well-trained group of employees. 723 F.2d at 1151 n. 5. In recognition of the primary purpose of severance pay, we held in Livernois that the obligation of Warner-Lambert would not ripen until the former employees had actually suffered a “job elimination” within the meaning of the then-current Warner-Lambert severance pay policy. Id. at 1157. The majority now completely overrules Livernois and implies that a company may not, under ERISA, contract with employees to provide an incentive to such employees to accept positions with a successor company. ERISA preemption, however, does not compel this result.
In the instant case, the Sejman plaintiffs (except a single retiree) continued in their employment at PMP. The district court found that the level of benefits remained comparable to those existing at Warner-Lambert as of January 20, 1982. Clearly no “job eliminations” had occurred under the 1981 severance pay policy at Warner-Lambert. Livernois, 723 F.2d at 1156. I concur, therefore, in the lower court’s order to the extent that these plaintiffs’ claims were dismissed.
The Givens plaintiffs’ claims present a different situation. Caputo and Robinson were terminated by PMP, purportedly for *1352unsatisfactory work performance. Under Sejman I, the district court should have reviewed these claims to determine only whether or not the employees would have received severance pay under the 1981 Warner-Lambert policy if they had been fired by Warner-Lambert for the reasons given by PMP. Givens and Brannon were terminated due to job elimination. This would appear to entitle them to benefits under Warner-Lambert’s 1981 policy. I would reverse the district court’s order dismissing the claims of the Givens plaintiffs and remand for reconsideration. Such reconsideration, moreover, should consider the claims as if the 1981 Warner-Lambert severance pay policy still applied to them. If Warner-Lambert would have granted severance pay under the same circumstances, then the claimant should be awarded the difference between what the Warner-Lambert policy would have paid and what PMP actually paid.
The majority correctly notes that severance pay benefits are, under ERISA, contingent and unaccrued and, therefore, a company may unilaterally amend a severance pay plan’s provisions. At 1348. Livernois, however, squarely held that the sale of the division to PMP was accompanied by a contractual agreement between Warner-Lambert and its employees to maintain coverage under the then-current plan in effect at Warner-Lambert. Sejman I did not disturb this holding, nor does ERISA compel us to overturn it. Until the court sitting en banc decides otherwise, that decision remains the controlling one in this case.