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DRANCHAK v. AKZO AMERICA

February 16, 1993

RONALD J. DRANCHAK, Plaintiff,
v.
AKZO AMERICA, INC., Defendant.



The opinion of the court was delivered by: MARVIN E. ASPEN

MEMORANDUM OPINION AND ORDER

 MARVIN E. ASPEN, District Judge:

 Plaintiff, Ronald J. Dranchak ("Dranchak") brings this action against defendant Akzo America, Inc. ("Akzo"), for breach of contract and for violations of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 621 et seq., and Employee Retirement and Security Act ("ERISA"), 29 U.S.C. §§ 101 et seq.. Akzo now seeks summary judgment on all counts of the first amended complaint.

 I. Summary Judgment Standard

 Under Federal Rule of Civil Procedure 56(c), summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Moreover, we must view the record and all possible inferences in the light most favorable to the non-moving party. See United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S. Ct. 993, 994, 8 L. Ed. 2d 176 (1962); Williams v. Williams Electronics, Inc., 856 F.2d 920, 922 (7th Cir. 1988). Summary judgment should be denied "where there is reason to believe that the better course would be to proceed to a full trial." Anderson v. Liberty Lobby, 477 U.S. 242, 255, 106 S. Ct. 2505, 2513, 91 L. Ed. 2d 202 (1986).

 II. Factual Background

 In April, 1988, Akzo Chemicals, Inc., Akzo's predecessor company, hired the 49-year old Dranchak as Director of Human Resources. By an agreement dated April 13, 1988, Akzo Chemical guaranteed Dranchak certain severance benefits, including a year's severance pay and other fringe benefits. These benefits, however, would not apply if Dranchak was fired for cause. In April, 1991, Dranchak became Vice President - Human Resources of Akzo. As Vice President, Dranchak was in charge of compensation packages for Akzo officers.

 After beginning as vice president, Dranchak began discussing his own severance package with the company president, John C. Jadel ("Jadel"). The chairman and chief executive officer of the company, Richard C. Clarke ("Clarke"), was aware of the ongoing discussions.

 On September 9, 1991, Clarke informed Jadel, a twenty year employee, that Jadel's position as Akzo's president was being terminated. Jadel Aff. at P 2; Jadel Dep. at p. 185. The next day, September 10, Dranchak approached Jadel to discuss his (Dranchak's) severance benefits. *fn1" Dranchak told Jadel that he was considering quitting, if he did not receive a more favorable severance package. Wanting to retain Dranchak, who Jadel considered a valued employee, the outgoing president discussed severance benefits with Dranchak.

 On September 11, 1991, having gone back and forth on possible packages, Jadel and Dranchak signed a document entitled "Retention Incentive," containing a severance agreement. The agreement entitled Dranchak, who had been with Akzo for 3 1/2 years, to seven years of additional pension credit, the right to retire at 55 without financial disincentives, and 32 months of severance pay. By all accounts, this was a very favorable severance package. Moreover, as Dranchak understood it, the September 11 - 12 agreement allowed him to quit and still receive all of its benefits.

 On September 12, 1991, Dranchak asked Jadel for an additional memo clarifying the benefits to which he was entitled under the September 11 agreement. Jadel complied, and sent Dranchak an explanatory memo, which the two men then signed. Both agreements provided that Dranchak would not receive any benefits if he was terminated for cause. Neither document explained what constituted "cause."

 Later that day, Jadel gave a copy of Dranchak's agreements to Hans Arnoldy ("Arnoldy"), a member of the Supervisory Committee, of which Clarke was the chair. Jadel Dep. at pp. 168-170, 172. At the same time, Dranchak gave Robert McCarthy ("McCarthy"), Director of Special Projects and Expatirate Relations, a copy of the September 11 agreement. *fn2"

 On September 13, 1991, Clarke called Dranchak long-distance, and told him about Jadel's termination. Clarke informed Dranchak that as Vice President, he would now report directly to Clarke. Clarke then asked Dranchak to meet with Jadel to determine what sort of severance agreement Jadel wanted and to work on the agreement with Peter Gold ("Gold"), General Counsel of Akzo. In the meeting between Clarke and Dranchak, Clarke never asked, and Dranchak did not volunteer, that Dranchak had recently negotiated a favorable severance package for himself with Jadel. Dranchak Dep. at pp. 222-23.

 After meeting with Jadel, Dranchak reported back to Clarke that Jadel wanted a 36-month lump sum payment. *fn3" Upset at the amount, Clarke asked Dranchak whether other people had received similar deals. *fn4" Id. Dranchak told him that a former employee named Ed Morrison had received more than Jadel was requesting, but did not ...


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