Mance v. Quest Diagnostics Inc. Voluntary Separation Agreement Plan

237 F.Supp.3d 217

Zoe MANCE, on behalf of herself and all others similarly situated, Plaintiff,

v.QUEST DIAGNOSTICS INCORPORATED VOLUNTARY SEPARATION AGREEMENT PLAN, and Quest Diagnostics Incorporated, as Plan Administrator, Defendants.

Civil Action No. 12–7361

United States District Court, D. New Jersey.

Signed February 21, 2017

Glen D. Savits, Green Savits, LLC, Florham Park, NJ, for Plaintiff.

Gregory C. Parliman, Theresa A. Kelly, Day Pitney, LLP, Parsippany, NJ, Richard H. Brown, III, Day Pitney, LLP, Morristown, NJ, for Defendants.

OPINION

John Michael Vazquez, United States District Judge.

This matter comes before the Court by way of the motions for summary judgment filed by Defendant Quest Diagnostics Incorporated ("Quest" or "the Company"),¹ and by Plaintiff Zoe Mance. D.E. 71, 72. The parties filed briefs in opposition and in reply.² The Court reviewed all submissions and held oral argument on both motions. For the reasons stated below, Defendants' motion for summary judgment is GRANTED and Plaintiff's motion for partial summary judgment is DENIED.

I. FACTUAL AND PROCEDURAL BACKGROUND

1. Factual Background³

Plaintiff was employed by Quest for seven years. In July 2009, Plaintiff, who was a district sales manager at the time, was placed on a performance improvement plan (a "PIP") after receiving the overall rating of "development needed" on her year-end review. DSOMF ¶ 7. After failing to complete all of the corrective actions specified in the PIP, Plaintiff was involuntarily terminated due to poor performance on September 12, 2009. Id. ¶¶ 9–10. Plaintiff did not ask for, and did not receive, severance benefits when she was terminated. Id. ¶ 11; PSOMF ¶ 53. In addition, Plaintiff was unaware of any procedure for filing a claim for severance benefits. DSOMF ¶ 15.

Three years after she was terminated, Plaintiff filed this lawsuit alleging that through its pattern and practice of providing certain employees severance benefits, Quest unwittingly created a voluntary separation agreement benefits plan that is governed by the Employee Retirement Security Act of 1974 ("ERISA"). Plaintiff alleges that Quest failed to offer benefits that she was entitled to receive under the plan. Quest does have a separate, ERISA–governed severance plan, which is not at issue.⁴ Specifically, Plaintiff contends that instead of being terminated, she should have been provided with an opportunity to voluntarily resign and receive a monetary severance payment based in part on the length of her employment at Quest. Plf's Br. at 13. Plaintiff alleges that she was eligible under the plan because (1) she was a managerial employee, (2) who was viewed as underperforming and (3) management decided to terminate her employment relationship. Id. at 14.

It is not disputed that in 2002, Quest created a document entitled "Voluntary Separation Agreement Process" (the "VSA SOP" or the "SOP"). PSOMF ¶ 1. The VSA SOP was a confidential, internal document that "outline[d] a standard process for executing voluntary separation agreements throughout [Quest]" and set forth the procedures that must be followed "[i]n cases where management decides it is in the Company's best interest to terminate the employment relationship through a [VSA]." DSOMF ¶ 27, Ex. B at 83 (emphasis added). According to the SOP, the employee's manager or the local human resources ("HR") manager/director must go through an approval process before a voluntary separation agreement ("VSA") is even offered to an employee. Most Quest business units had dedicated local HR staff that reported to a regional leader. The regional leaders reported to corporate HR. Id. ¶ 3. From 2003 to 2013, David Norgard was Quest's Vice President of HR "and was responsible for all HR matters on a company-wide basis." Id. ¶ 4. From 1999 to 2013, William Johnson was Senior Counsel for Quest and oversaw "all employment-related legal issues for the Company." Id.

If approved, the VSA typically, although not always, provides a lump-sum payment to the departing employee that "should be based on the appropriate dollar amount to allow the employee to begin an effective job search." Id. Ex. At 83. The payment could also include additional money for COBRA reimbursement, loan forgiveness, and outplacement services. Id. Next, the VSA SOP provides that Johnson must be contacted to draft the VSA. Id. A departing employee must agree to the offered terms and sign the VSA, which contained a release of potential claims and a confidentiality clause. DSOMF ¶¶ 33–34. In conjunction with the VSA SOP, Quest used a VSA Approvals Form (the "Approvals Form"). The Approvals Form must be completed before the VSA was offered to an employee and included a checklist as to the form and amount of consideration that would be offered. See, e.g. , Savits Decl. Ex. F. The VSA SOP is still utilized by Quest. PSOMF ¶ 25.

There is also no dispute that since 2000, Quest provided certain departing employees with a VSA. Quest maintains that VSAs are ad hoc arrangements with certain employees that were "used as a discretionary tool to secure a release of claims from a terminating employee in exchange for personalized consideration." Def's Br. at 7. Johnson testified that between 2000 and 2013, he prepared approximately 200 VSAs, or about ten to twelve per year.⁵ DSOMF ¶ 35. Quest also alleges that whether to offer a VSA and the terms of the VSA were within the Company's sole discretion. Id. Quest does not dispute that VSAs were at times used for performance-based terminations, however, "[d]efficient performance in and of itself ... did not require the Company to offer an employee a VSA." DSOMF Ex. C at T125:18–24.

In the Second Amended Complaint ("SAC"), Plaintiff names ten former Quest employees that were allegedly eligible for and received a VSA, and who were similarly situated to Plaintiff. SAC ¶ 31. But Plaintiff's awareness of these employees and their VSAs is based on "rumors" and "innuendos." She has no personal knowledge of the circumstances regarding their termination from Quest or the terms of their VSAs. DSOMF ¶¶ 16, 18. Plaintiff also identified four employees who were supposedly eligible for VSA benefits, but like Plaintiff, were not provided with a VSA. SAC ¶¶ 32–33.

2. Procedural History

Plaintiff filed this lawsuit on November 30, 2012, alleging that Quest's pattern and practice of providing VSAs to departing employees created an employee welfare benefit plan within the meaning of ERISA, 29 U.S.C. § 1102, and that the decision to deny her a VSA is an ERISA violation pursuant to 29 U.S.C. § 1132(a)(1)(B). D.E. 1. Quest moved to dismiss Plaintiff's complaint, and Judge Cavanaugh granted the motion on September 11, 2013 because Plaintiff did not have standing to pursue her ERISA claim. D.E. 26. Plaintiff filed a motion for reconsideration. D.E. 28. On November 6, 2013, Judge Cavanaugh denied Plaintiff's motion for reconsideration on the merits but provided her with an opportunity to file an amended complaint. D.E. 30. Plaintiff filed an amended complaint on December 6, 2013, and on January 17, 2014, Quest filed a second motion to dismiss. D.E. 31, 34. Judge Salas granted the motion because Plaintiff failed to establish statutory standing but provided her with a second opportunity to amend her pleading. D.E. 40.

Plaintiff filed her SAC on October 3, 2014, which Quest also moved to dismiss. D.E. 43, 45. Judge Salas, however, denied this motion. Judge Salas determined that the SAC cured the previously identified pleading deficiencies such that Plaintiff had alleged a "colorable claim to vested benefits." D.E. 49 at 1. Judge Salas determined that the critical point of contention concerned whether the VSA plan is an ERISA plan, which should be addressed through a motion for summary judgment, not a motion to dismiss. Id. As a result, Judge Salas scheduled a Rule 16 conference and permitted the parties to take limited discovery to resolve whether the VSA plan was in fact an ERISA plan. Id. at 2. The parties were permitted to take discovery as to the ten employees named in the SAC who were allegedly similarly situated to Plaintiff. The parties were also permitted to conduct discovery into the VSAs provided to twenty additional, randomly selected former employees. D.E. 54.

After this limited discovery concluded, the parties filed these motions for summary judgment. The Court will address the parties' specific arguments below, but generally, Quest maintains that summary judgment must be granted because the Company did not create an informal ERISA severance plan. D.E. 71. Plaintiff alleges that through its practice of providing VSAs to some employees, Quest unwittingly created an ERISA plan. Plaintiff alleges that summary judgment should be entered with the finding of an informal plan. D.E. 72.

II. SUMMARY JUDGMENT STANDARD

A moving party is entitled to summary judgment where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact in dispute is material when it "might affect the outcome of the suit under the governing law" and is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Disputes over irrelevant or unnecessary facts will not preclude granting a motion for summary judgment.

Id. "In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of the evidence; instead, the nonmoving party's evidence ‘is to be believed and all justifiable inferences are to be drawn in his favor.’ " Marino v. Indus. Crating Co. , 358 F.3d 241, 247 (3d Cir. 2004) (quoting Anderson , 477 U.S. at 255, 106 S.Ct. 2505 ). A court's role in deciding a motion for summary judgment is not to evaluate the evidence and decide the truth of the matter but rather "to...