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04/22/87 Babcock & Wilcox Company, v. Babcock & Wilcox Company

April 22, 1987

APPELLATE COURT OF ILLINOIS, SECOND DISTRICT I. DEAN ARNOLD ET AL., PLAINTIFFS-APPELLEES

v.

BABCOCK & WILCOX COMPANY, DEFENDANT-APPELLANT



507 N.E.2d 218, 154 Ill. App. 3d 863, 107 Ill. Dec. 554 1987.IL.534

Appeal from the Circuit Court of Winnebago County; the Hon. David F. Smith, Judge, presiding.

APPELLATE Judges:

JUSTICE DUNN delivered the opinion of the court. HOPF and UNVERZAGT, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE DUNN

Plaintiffs are 25 former salaried employees of defendant, Babcock & Wilcox Company , at its Automated Machine Division facilities in Rockford, Illinois. In June 1982, defendant sold the AMD, at which time plaintiffs all became employees of the purchaser. At that time, defendant had in effect a policy regarding termination benefits known as policy and procedure No. 1414-A1.

Plaintiffs brought this action to recover termination allowance and pay in lieu of notice of termination allegedly due them under the policy. The complaint alleged breach of contract and was amended to allege violations of the Illinois Wage Payment and Collection Act (Ill. Rev. Stat. 1981, ch. 48, par. 39m-2) and the Employee Retirement Income Security Act of 1974 (29 U.S.C. sec. 1001 et seq. (1982)). After a bench trial, the court found that the policy in question was governed by ERISA. The court also found that defendant was arbitrary and capricious in denying plaintiffs' requested benefits and awarded termination allowance, pay in lieu of notice of termination, and attorney fees. We reverse.

Defendant operated the Rockford facility until June 18, 1982, when defendant sold the plant, along with the rest of the AMD, to Acme Precision Products, Inc. Plaintiffs were notified of the sale by a memorandum posted by Acme on June 17, 1982. The memo informed plaintiffs that on June 18 they would become salaried employees of Acme and that wages and benefits were to continue in force, but that Acme was considering the need to make some changes in benefits. Subsequently, Acme eliminated severance benefits and a thrift incentive plan.

At the time of the sale, defendant's policy and procedure No. 1414-A1 regarding termination benefits for salaried employees provided as follows:

"PURPOSE

To provide a guide for compensating permanently terminated salaried employees.

POLICY

Permanently terminated salaried employees, under certain circumstances, will be compensated to assist them financially during the re-employment adjustment period, provided termination is made by management through no fault of the employees.

Any exceptions to the termination allowances in this policy must be approved by the Division Head and the Vice President of Employee Relations.

GENERAL

Eligibility

Full-time salaried employees whose services are permanently terminated by the Company and who have either

a. One or more years of company service (if over 45 years of age), or

b. Five or more years of company service (regardless of age) are eligible under the following conditions:

1. Elimination of previously required services, due to consolidation of departments, mergers, abandonment of plants and offices, technological changes and declining business activity. No allowance may be paid where employee declines to accept transfer to a reasonably comparable position.

Limitations

1. Termination Allowances are not payable:

B. Under the following types of separation:

1. Temporary layoff where it is likely the employee will be ...


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