Algie v. RCA Global Communications, Inc.

891 F. Supp. 839

Thomas ALGIE, Anthony Amelio, Wallace Carnegie, Joseph A. Coppola, William Crouch, George Eccleston, Edward Edelson, Joseph Fezza, Joseph Gleitman, Jack Gold, Henrietta Greco, Calvin Gum, Dean Heunisches, Vincent Ingoglia, James Patrick, Carl Reddo, Pedro Richards, Stephen G. Safka, Jr., John H. Sharp, Eugene Stanley, Mark Stein, George Tropiano, and Aristedes Zagorianos, Plaintiffs, v. RCA GLOBAL COMMUNICATIONS, INC. and MCI International, Inc., Defendants.

No. 89 Civ. 5471 (MJL).

United States District Court, S.D. New York.

April 12, 1994.

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John C. Lankenau, Lankenau, Kovner & Kurtz, New York City.

Christine H. Perdue, Hunton & Williams, Fairfax, VA, for defendants.

MEMORANDUM AND ORDER

DOLINGER, United States Magistrate Judge:

This lawsuit is being prosecuted by twenty-three former employees of RCA Global Communications, Inc. ("RCAG"). All were terminated, effective May 30, 1988, following the stock purchase of RCAG by MCI Communications Corporation ("MCIC") on May 16, 1988.¹ Asserting four claims under the Employee Retirement Income Security Act, 29 U.S.C. ? 1001 et seq. ("ERISA"), plaintiffs complain principally that they were entitled to severance benefits under the RCAG severance benefits plan, and they seek the difference between those benefits and the payments that were in fact made to them under the less generous severance plan of MCIC. In addition, thirteen plaintiffs assert a claim under section 104 of ERISA based on defendants' alleged failure to provide requested plan documents and information in a timely fashion.

Following the completion of discovery in this case, plaintiffs have moved for summary judgment on three of their four claims. In their turn, defendants seek summary judgment with respect to each of plaintiffs' four claims.

A. Plaintiffs' Claims

Plaintiffs were all long-term non-unionized employees of RCAG. They allege that RCAG was the sponsor and administrator of a severance benefits plan that was in effect at the time that the stock of RCAG was sold to MCIC. According to plaintiffs, they were informed within one to three days after the May 16, 1988 closing that they were being terminated effective May 30, 1988, and in fact they were so terminated, assertedly without ever having been called upon to perform any services for the purchasing corporation or its subsidiaries. Claiming that they were therefore entitled to benefits under the RCAG severance plan, plaintiffs allege that they were paid substantially less, on the purported basis that only the MCIC severance plan applied to them.

Based on these events, the "Third Amended Complaint"² asserts three claims for denial of benefits. The first claim is asserted under 29 U.S.C. ? 1132(a)(1)(B) and is premised on the contention that, at the time of termination, plaintiffs were still participants in the RCAG severance plan and entitled to be paid under its terms rather than at the lower level authorized by the MCIC plan. (See Third Amended Complaint at ?? 23-25) (Pltffs' Exh. 1). The second claim, based on the same denial of benefits, asserts that defendants breached their fiduciary duties under 29 U.S.C. ? 1104. The remaining claim devoted to the denial of severance benefits is the fourth claim, which alleges that defendants conspired to deny plaintiffs their benefits under the RCAG plan by deliberately withholding the announcement of their termination until after the closing of the stock sale of RCAG. Based on their contention that they were, in effect, "hired to be fired," plaintiffs asserted a claim under 29 U.S.C. ? 1140 for unlawful discharge or discrimination intended to interfere with their right to benefits. (See Third Amended Complaint at ? 48.) In response to defendants' summary judgment motion, however, plaintiffs concede that this claim should be dismissed for lack of proof of intent. (Plaintiffs' Memorandum of Law in Opposition to Defendants' Motion for Summary Judgment at pp. 2-3) ("Pltffs' Memo.Opp.").

The remaining claim, asserted by thirteen of the plaintiffs, is premised on the alleged failure of RCAG to comply with a request for information made on those plaintiffs' behalf by their attorney. Plaintiffs allege that RCAG failed to turn over a number of plan documents, including "the terminal report and a board of directors' resolution of defendant RCA Globcom purporting to terminate the RCA Globcom Severance Plan" (Third Amended Complaint at ? 38), in violation of 29 U.S.C. ? 1024(b)(4). They therefore seek a statutory penalty of $100.00 per day for each day of delay in providing the requested items.

B. The Factual Record

Since both sides have moved for summary judgment, our principal focus must be on the extent of the undisputed factual record. The following summary reflects, in principal part, those purportedly material facts that are not in genuine dispute. To the extent that any potentially significant facts are not conceded, I will note the nature of the dispute.

1. The Events Leading to Termination

Until the May 16, 1988 stock purchase by MCIC, RCAG was a wholly-owned subsidiary of GE Subsidiary 21, Inc., which was in turn a wholly-owned subsidiary of General Electric Company ("GE"). (See Pltffs' Exh. 5; Defts' Exh. 2.) RCAG was thus separate and distinct from RCA Corporation ?€” apparently another subsidiary of GE ?€” although the precise relationship between the two is not specified in the record.

The plaintiffs all worked for RCAG for many years as non-union employees in various departments of the company.³ By no later than 1984 RCAG had adopted an employee severance benefit plan for non-represented salaried employees. (See Defts' Answers to Pltffs' Second Set of Interrogatories # 19.) The plan was both sponsored and administered by RCAG. (See Pltffs' Exh. 3.) Under its terms, an eligible employee would be entitled to payments measured in terms of years of service and salary, with a maximum cap on benefits of 52 weeks of pay. (Pltffs' Exh. 4 at p. 3.) According to the "Procedure" that described the RCAG "Severance Allowance for Non-Represented Employees," the benefits would be paid if the employee's "active employment" were "terminated" in any of the following circumstances:

a. Reduction in force.

b. Organizational realignment.

c. Discontinuance of an operation.

d. Loss of contract or sale of an operation to another company.

e. Lack of work.

f. Location closing.

(Pltffs' Exh. 4 at p. 1.)⁴ The plan also specified several situations in which benefits would not be paid to laid-off employees. As summarized by the SPD, it provided for no benefits

* * * * * *

if you: are offered a job by a company to which RCA Global Communications, Inc. has lost a contract or sold a business operation in which you have been working at substantially the same or higher level of work and at a level of compensation and benefits which RCA Global Communications, Inc. deems to be substantially the same or better than you are receiving.

(Defts' Exh. 17 at p. 2.)

As for the amount of severance benefits payable under the plan, employees with a total service credit of two to fifteen years would be paid two weeks of base salary "for each completed year of service." (Id.) Employees with a service credit of sixteen to twenty-one years were entitled to receive three weeks of salary "for each completed year of service over 15 years up to and including 21 years." (Id.) For employees with a service credit of twenty-two or more years, the specified benefits were "52 weeks (Maximum)." (Id.)

The plan provided that "RCA Globcom may amend or terminate this Policy at any time." (Pltffs' Exh. 4 at p. 4.) It did not, however, specify any procedure for such amendment or termination.

On September 3, 1987 it was announced that GE and MCIC had signed a letter of intent for the sale of a GE subsidiary to MCIC. (See Defts' Exh. 1.) On October 29, 1987, GE and MCIC signed a Stock Purchase Agreement under which, subject to approval by the Federal Communications Commission, GE agreed to sell to MCIC all outstanding capital stock in a wholly-owned subsidiary identified as GE Subsidiary, Inc. 21 or "Globcom Prime." (Defts' Exh. 2 & Pltffs' Exh. 5 at ? 1.1.) Globcom Prime was the parent of RCAG, which was its only subsidiary. (Id. at ?? 1.1, 3.1(e).)

The agreement specifically referred to, and included as a schedule, a list of "all Current Benefit Plans" for which any "member of the Globcom Group" was a sponsor. (Id. at ? 3.1(o) & Sch. F.) Among the plans so listed was the severance benefits plan sponsored and administered by RCAG.

In its specification of covenants, the agreement obligated the seller to accept certain undertakings with respect to some of the listed plans. Thus, section 4.3(h) stated as follows:

Globcom RCAG and certain other members of the Globcom Group are employers included and participating in the RCA Retirement Plan for Employees of RCA Corporation and Subsidiary Companies ("RCA Retirement Plan"), RCA Income Savings Plan ("RCA Savings Plan"), Retirement Plan for Certain International Employees of Certain Subsidiaries of RCA ("Offshore Plan"), and welfare benefit plans for employees of RCA Corporation and its present or former subsidiary companies ("RCA Welfare Benefit Plans").

Apart from noting that Schedule F contained a listing of all of these RCA Corporation plans, section 4.3(h) specified the agreed-upon resolution of the Globcom Group's participation in those plans.

With respect to the RCA Retirement Plan, the contract provided that, "effective at or immediately prior to the Closing Date, employee-members of the Globcom Group will no longer be eligible to participate in the RCA Retirement Plan because the Globcom Group will no longer be subsidiaries of Seller and the Seller will cause each member of the Globcom Group included in the RCA Retirement Plan to terminate the Plan as to its respective employees." (Id. ? 4.3(h)(i).)⁵ The contract...