Arivella v. Alcatel–lucent

755 F.Supp.2d 353

William F. ARIVELLA, et al., Plaintiffs,

v.ALCATEL–LUCENT, et al., Defendants.

Civil Action No. 08–CV–10398–PBS.

United States District Court, D. Massachusetts.

Dec. 22, 2010.

Dale James Morgado, Feldman, Fox & Morgado, P.A., Tampa, FL, Thomas G. Moukawsher, Ian O. Smith, Moukawsher & Walsh, LLC, Hartford, CT, Mala M. Rafik, Rosenfeld Rafik & Sullivan, P.C., Boston, MA, for Plaintiffs.Terence H. McGuire, John Houston Pope, Evan J. Spelfogel, Epstein Becker & Green, P.C., New York, NY, for Defendants.

FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER

SARIS, District Judge.

This case involves the elimination of jobs at defendants Alcatel–Lucent USA, Inc.'s (“Lucent's”) Merrimack Valley Works (“MVW”) manufacturing facility in North Andover, Massachusetts. In the course of roughly one year, Lucent downsized its MVW workforce by approximately ninety percent, from approximately 3,400 to 340, through multiple rounds of layoffs and buyouts. Twenty-seven plaintiffs, who accepted voluntary retirement packages in April 2001, have sued Lucent, alleging that it made various misrepresentations and material omissions in violation of the Employee Retirement Income Security Act (“ERISA”).

Plaintiffs brought this action after the Court (Lindsay, J.) declined to certify a class of former Lucent employees in a related case. See Fici v. Lucent Techs., Inc., No. 02–10536–RCL (D.Mass. Sept. 29, 2005) (denying class certification). Defendants moved for summary judgment on the grounds that (1) the buyout was not an ERISA plan; and (2) the action was barred by the statute of repose. The Court (Young, J.) denied the motion and the case was reassigned. To streamline the legal and factual issues for both parties, the Court elected to try only four plaintiffs, two chosen by each side, in a preliminary bench trial. The trial ran from June 7, 2010, through June 10, 2010, after which the parties submitted post-trial memoranda. The Court makes the following findings of fact and conclusions of law.

FINDINGS OF FACT

A. Bad Times

MVW was one of several facilities operated by Lucent to manufacture telecommunications equipment. Principally, the plant produced circuit packs and other items used in the assembly of conventional telephones. At its peak in the 1960s and 70s, the MVW facility employed more than 10,000 people. (Trial Tr. vol. 2, 64, June 8, 2010.) By 2000, however, the company was outsourcing much of its work to China and elsewhere, and was looking to lay off and buy out many of its employees. Between January 2000 and April 2001, Lucent's stock price declined steadily from approximately $75 per share to less than $10 per share. (Ex. 58.) Indeed, in April 2000, Lucent publicly announced a major shift in manufacturing strategy, indicating that it would “expand its relationship with contract manufacturing partners” as it sold, spun off, and outsourced substantial numbers of the more than 30,000 workers it employed domestically. (Ex. 3 at 1–2.) “The company estimate[d] that most of the transition w[ould] be completed in the next 18 to 24 months.” ( Id. at 2.)

At MVW, employees were worried because there was not enough work to do, reducing some workers to reading books, playing cards, and doing puzzles during their shifts. (Trial Tr. vol. 1, 106, June 7, 2010.) Lights were out at night, though there used to be three shifts. ( See id. at 156.) Rumors of bankruptcy floated, both workers and management expected layoffs, and the future of the plant was uncertain. ( See, e.g., Trial Tr. vol. 4, 16, 49–50, 52–53, June 10, 2010.)

B. The April 2001 Layoffs

All of the employees at Merrimack Valleys were members of the Communications Workers of America (“CWA”) Locals 1365 and 1366. In rough terms, Local 1365 represented production workers and Local 1366 represented administrative or office personnel. Three of the plaintiffs at issue here were members of Local 1365 and one (Payson) was a member of Local 1366. Lucent and CWA had agreed to pay certain severance benefits to laid off workers through a program in the Collective Bargaining Agreement known as the Lucent Career Transition Option Program (“LCTOP”). (Ex. 1.) Layoffs were conducted in inverse seniority order; low seniority workers were let go first. Under certain circumstances, layoffs triggered an obligation by the company to offer benefits to all employees to induce voluntary departures and minimize the number of involuntary layoffs.

On April 2, 2001, Lucent declared a “surplus” of 725 MVW employees and designated an equal number of workers as “at risk” of being laid off. (Ex. 86.) As required by the collective bargaining agreement, management offered voluntary leave packages through LCTOP to all remaining employees with more than two years of service, including plaintiffs, providing a financial benefit to any eligible employee who opted to retire or resign voluntarily. The voluntary plan permitted employees to take their payment as a lump sum (the optional term pay, or “OTP”), or through several weeks of additional paychecks (the Extended Compensation Option, or “ECO”), and permitted two additional options for a leave of absence that would culminate in the termination of employment. The incentive available differed based on each employee's age and length of service with Lucent, with a maximum lump sum payment of $30,500. (Exs. 121, 138, 157, 172.) All four of the plaintiffs were eligible to receive the maximum OTP payment or varying durations of continuing paychecks under the ECO program. ( Id.)

Employees eligible for the voluntary LCTOP program received a packet of paperwork describing the various options on April 2, 2001, including a personalized letter explaining their potential OTP and ECO benefits and an individual pension calculation. ( See Ex. 181.) These letters also told employees:

Your supervisor has been provided additional, more detailed, information on each option as well as individualized information to further assist you in making an informed decision. In addition, a series of informational sessions are being planned to help answer any questions you may have.

(Exs. 121, 138, 157, 172.) Each individualized letter also included an information packet, including election forms and explanation for each of the available options, including tax implications. (Ex. 181; Trial Tr. vol. 2, 107, June 8, 2010.) The April 2 letters permitted employees to elect (or revoke) any decision to participate in the voluntary departure program prior to April 17, 2001.

Lucent conducted informational sessions throughout April. Sessions held on April 5, 6, 9, and 10, 2001, targeted employees considering the voluntary LCTOP option.¹ (Ex. 19.) David Dunn, the plant manager, and Sheila Landers, the head of Human Resources (“HR”), presented at these sessions. Landers used pages of the informational packet distributed in employees' individualized offer letters as slides to brief the employees on the LCTOP options. She also fielded questions, assisted by Natasha Glendon–Crossley, who also was from HR, and Leon (Lee) Pratt, the plant's head of Workforce Relations. Employees asked repeatedly whether they could expect a better voluntary departure package in the future. Landers and the other management staff in the informational meetings stated that they could not and would not speculate about future circumstances. Some individual supervisors, however, told their employees to take the package because no better one would be forthcoming.

C. The Memorandum of Agreement

The CWA Locals distributed leaflets to their members with information about the LCTOP options and posted additional data on their respective bulletin boards and websites. An April 4, 2001, letter from Joseph Kanan, President of Local 1365, notified employees that the National CWA was negotiating an enhanced LCTOP with Lucent and advised employees interested in accepting the voluntary departure package to wait until the last possible day to accept the offer in order to avoid missing out on any expanded benefits. (Ex. 18.)

On April 12, 2001, Lucent informed MVW employees that the deadline for accepting the LCTOP offer was being extended to May 2, 2001, to allow Lucent and the Union to complete negotiations on potential enhancements to LCTOP. ( See Ex. 184.) The Union similarly advised its members that negotiations were ongoing, that it was likely the cap on lump sum payments would increase, and that they should hold off accepting LCTOP until a deal with done. ( Id.)

A week later, on April 19, 2001, Lucent and the Union reached an agreement, memorialized in a memorandum of agreement (the “MOA”), regarding benefits for MVW employees. ( See Ex. 26.) These negotiations took place at a national level; that is, the local union officers and local plant management were not involved.

Paragraph 4 of the MOA modified LCTOP by increasing the maximum payment available from $30,500 to $40,000. ( Id. at 2.) All four plaintiffs benefited from this increase in the cap, and it was applied automatically to the two plaintiffs (Simmons and Lacroix) who enrolled before the MOA was signed. ( See Exs. 140, 174.) The eligible employees, including plaintiffs, received individualized letters dated April 26, 2001, informing them of their available benefits under the enhanced LCTOP. ( See Exs. 122, 140, 159, 174.) Three of the plaintiffs qualified for the maximum $40,000 lump sum payment, and the fourth (Lacroix) was eligible for $38,122. (Ex. 140.)

Paragraph 5 of the MOA added a new provision to provide benefits for eligible employees who were involuntarily separated due to outsourcing or subcontracting of work. Those included (a) a five year age and service credit for pension plan eligibility; (b) a one-time Social Security reduction reimbursement related to early retirement; (c) a one-time lump sum special pension benefit equal to (depending on age and seniority) up to 234% of an employee's annual pay to be paid from the pension trust; (d) a...