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GASPAR v. LINVATEC CORP.

February 7, 1997

LARRY GASPAR for himself and all others similarly situated, Plaintiffs,
v.
LINVATEC CORPORATION, BRISTOL-MYERS SQUIBB COMPANY, BRISTOL-MYERS SQUIBB COMPANY PENSION COMMITTEE, BRISTOL-MYERS SQUIBB COMPANY RETIREMENT INCOME PLAN, and BRISTOL-MYERS SQUIBB COMPANY SEVERANCE PLAN, Defendants.



The opinion of the court was delivered by: ALESIA

 Before the court are cross-motions for summary judgment by all defendants and plaintiffs. For the reasons that follow, the court grants defendants' motion for summary judgment, denies plaintiffs' motion for partial summary judgment, and enters judgment in favor of defendants and against plaintiffs in this case.

 I. BACKGROUND1

 Plaintiff Larry Gaspar ("Gaspar") and the 18 other class plaintiffs worked for Linvatec Corporation ("Linvatec"), a subsidiary of Bristol-Myers Squibb ("Bristol-Myers"). On September 24, 1993, Bristol-Myers announced that it would be closing Linvatec's Chicago facility, where Gaspar had worked since 1979, and several other facilities as part of a corporate downsizing.

 Bristol-Myers maintained a severance plan for involuntarily terminated employees. The severance plan excluded from eligibility employees who left the employ of the company voluntarily or because of mandatory or disability-caused retirement. Under the basic severance plan, employees were entitled to four weeks of pay. However, employees who executed general releases, giving up any right to sue defendants based on any acts occurring prior to the employees' signing the releases, would receive up to an additional 52 weeks of supplemental severance pay.

 Also on September 24, 1993, Bristol-Myers announced a limited-time offer of special incentives to encourage the voluntary early retirement of eligible employees ("Voluntary Retirement Program," or "VRP"). Eligible employees received a packet of information about the VRP, including a summary plan description that explained the terms of the VRP. The summary plan description stated in bold type: "Severance benefits do not apply if you elect VRP." The cover letter accompanying the packet of VRP information also stated that employees electing VRP benefits were not eligible for severance benefits. Employees selecting VRP benefits also were required to execute a general release of their rights to sue defendants based on any acts occurring prior to the employees' signing the release.

 Gaspar and 18 other employees happened to be eligible for both severance benefits, because they were among the employees at the facilities that Bristol-Myers was closing, and VRP benefits, because they had met the age and length-of-service requirements set forth in the VRP. Bristol-Myers' representatives held meetings with plaintiffs and other Linvatec employees to explain to them their benefits options. At these meetings, plaintiffs were offered a choice between severance benefits and VRP benefits, but not both.

 The 18 class plaintiffs other than Gaspar executed releases and selected either supplemental severance or VRP benefits. Gaspar, through his attorney, repeatedly attempted to select both supplemental severance and VRP benefits. On November 12, 1993, Gaspar's counsel wrote Linvatec that Gaspar was electing supplemental severance benefits, but did not enclose an executed release; rather, she asserted that the release violated the Older Workers Benefit Protection Act ("OWBPA") because no additional consideration was given for the release of rights under the Age Discrimination in Employment Act ("ADEA").

 On November 15, 1993, Gaspar's attorney again wrote to Linvatec, asserting that Gaspar was entitled to receive benefits under the VRP in addition to supplemental severance benefits. Again, Gaspar's attorney did not include a release executed by Gaspar.

 On November 22 and December 1, 1993, Linvatec's counsel wrote to Gaspar's attorney, explaining that Gaspar must sign a release to be awarded supplemental severance benefits, and that Gaspar could not elect both supplemental severance and VRP benefits. On December 14, 1993, counsel for Bristol-Myers wrote Gaspar's attorney, offering Gaspar a final opportunity to elect either supplemental severance or VRP benefits, even though the time for electing VRP benefits had expired.

 Gaspar's attorney responded on December 21, 1993, stating that Gaspar was entitled to elect benefits under both plans because neither plan document explicitly precluded an employee from receiving both. Gaspar's attorney also included an executed release under the supplemental severance plan, but asserted in the letter that Gaspar signed the release "under protest and solely because of [Bristol-Myers'] refusal to pay him his money." Gaspar's counsel claimed that the release was invalid because it violated the ADEA and OWBPA, and that Gaspar intended to file a claim against Bristol-Myers. Gaspar did not tender a release under the VRP.

 On January 21, 1994, a human resources manager of Linvatec wrote Gaspar, informing him that his claim for both VRP and supplemental severance benefits was being denied. The human resources manager informed Gaspar that his signed release was invalid because it clearly was not voluntary. Because Gaspar's counsel indicated in her letter that the release was not voluntary, Bristol-Myers considered the release ineffective under the terms of the severance plan. Gaspar was paid four weeks of basic severance pay at the time of the plant closing.

 Gaspar appealed to the plan administrator from the denial of VRP and supplemental severance benefits. On May 24, 1994, the plan administrator concluded that all of the written materials sent to employees regarding the terms of the VRP and severance plan clearly and unambiguously stated that employees could not select both VRP and severance benefits. She concluded that Gaspar had no right to both VRP and severance benefits, and that he never properly elected benefits under either plan. The plan administrator found that Gaspar had been given numerous opportunities to cure his invalid elections, but had failed to do so. She found that although Gaspar had submitted a signed general release, the accompanying letter negated the effectiveness of the release and the election of supplemental severance benefits because it indicated the execution to be under protest and not voluntary.

 On May 23, 1996, this court certified the first two counts as a class action, with Gaspar and the 18 other employees who were eligible for both VRP and severance benefits as class plaintiffs.

 Defendants now move for summary judgment on all counts, and plaintiffs move for partial summary judgment on Counts I and II.

 II. DISCUSSION

 A. Standard for deciding a motion for summary judgment

 A motion for summary judgment must be granted if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). The burden is on the moving party to show that no genuine issues of material fact exist. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S. Ct. 2505, 2514, 91 L. Ed. 2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986).

 Once the moving party presents a prima facie showing that it is entitled to judgment as a matter of law, the party opposing the motion may not rest upon the mere allegations or denials in its pleadings but must set forth specific facts showing that a genuine issue for trial exists. Anderson, 477 U.S. at 256-57, 106 S. Ct. at 2514; Celotex, 477 U.S. at 324, 106 S. Ct. at 2553; Schroeder v. Lufthansa German Airlines, 875 F.2d 613, 620 (7th Cir. 1989). All reasonable factual inferences must be viewed in favor of the non-moving party. Holland v. Jefferson Nat'l Life Ins. Co., 883 F.2d 1307, 1312 (7th Cir. 1989).

 B. Defendants' motion for summary judgment and plaintiffs' motion for partial summary judgment on Counts I and II

 Defendants and plaintiffs argue that they deserve summary judgment in their favor on Counts I and II. In Count I, plaintiffs allege that defendants deprived plaintiffs of benefits due to them under the severance plan and VRP by forcing plaintiffs to elect either severance or VRP benefits, when they were entitled to benefits under both plans. In Count II, plaintiffs allege that defendants breached their fiduciary duties to plaintiffs by telling plaintiffs that they were required to choose between the severance plan and VRP, and by failing to communicate to them the material fact that plaintiffs were not required to make such an election under the terms of the plans.

 Defendants contend that the plan administrator acted reasonably in concluding that Gaspar and, by extrapolation, the other plaintiffs were not entitled to benefits under both the VRP and severance plan, because VRP and severance plan documents made clear that this was the case. Plaintiffs counter that the actual VRP and severance plan did not explicitly state that a participant in one plan could not receive ...


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