Court Opinion

ID: 2964647
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:28:49.395868+00
Date Added: 2024-06-11T15:02:03.454093
License: Public Domain

USCA1 Opinion

	

                                 NOT FOR PUBLICATION
                                 NOT FOR PUBLICATION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
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            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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