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DAVIS v. PRECOAT METALS

July 23, 2004.

NICHOLAS DAVIS, L.C. ALEXANDER, DEON PAGE & GEORGE HOLLINS Plaintiffs,
v.
PRECOAT METALS, a division of SEQUA CORPORATION Defendant.



The opinion of the court was delivered by: NAN NOLAN, Magistrate Judge

MEMORANDUM OPINION & ORDER

Plaintiffs Nicholas Davis, L.C. Alexander, Deon Page and George Hollins have sued their former employer, Precoat Metals ("Precoat"), claiming that Precoat discriminated against them due to their race/national origin and retaliated against them for engaging in statutorily protected activities, thus violating Title VII of the Civil Rights Act, 42 U.S.C. § 2000e et seq., and 42 U.S.C. § 1981. While the lawsuit was pending, Precoat shut down the plant where plaintiffs had been employed. Plaintiffs then filed an amended complaint, adding an allegation that the severance agreement Precoat offered to employees when the plant closed was discriminatory and retaliatory.*fn1 That severance agreement is the subject of the parties' cross motions for partial summary judgment that are presently before the court. The parties have consented to the jurisdiction of the United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). Plaintiffs Davis, Page, Hollins and Alexander ask the court to find that the severance package Precoat offered (1) is discriminatory per se under Title VII and/or (2) has a disparate impact on African-American employees. Precoat, on the other hand, asks the court to find as a matter of law that the severance agreement is neither discriminatory nor retaliatory. More specifically, Precoat asks the court to find that (a) the severance agreement is not facially discriminatory, (b) plaintiffs have offered no evidence of unequal treatment or intentional discrimination or retaliation, (c) plaintiffs' disparate impact claim is not properly before the court, and (d) even if it were, plaintiffs cannot establish that the severance agreement had a disparate impact on African-American employees.*fn2

For the reasons explained below, plaintiffs' motion for partial summary judgment is denied and defendant's cross motion for partial summary judgment is granted.

  I. BACKGROUND*fn3

  Plaintiffs Davis, Alexander, Page and Hollins, who are African-American, were members of the United Steelworkers of America ("Union") while they were employed by Precoat. The terms and conditions of their employment were governed by a Collective Bargaining Agreement ("CBA"). After filing charges of discrimination with the Equal Employment Opportunity Commission ("EEOC") and receiving right-to-sue letters, plaintiffs commenced this lawsuit on July 21, 2001.*fn4

  On or about November 30, 2001, Precoat informed the Union and the employees that a decision had been made to close Precoat's Chicago facility and layoff all employees at that facility effective January 31, 2002. Article 25 of the CBA states:
In the event of liquidation of the Company or a sale in which operations are removed from Chicago, Illinois, and employees have no opportunity to transfer to the new location, the Company agrees that it will promptly notify the Union of its intention. Upon request of the Union, the Company will meet for the purpose of negotiating severance pay and any other conditions affecting employees due to the plant closing or removal.
Pursuant to Article 25, the Union asked to meet with Precoat to negotiate potential severance. Prior to the negotiations, Precoat made a decision to offer severance payments in exchange for releases as a way to settle possible claims, whether filed or not, arising out of the operation of the Chicago facility.*fn5 Representatives from the Union and Precoat subsequently met several times to negotiate possible severance. During those negotiations, Precoat and the Union exchanged proposals regarding possible severance. Ultimately, Precoat and the Union agreed that all severance payments would be conditioned on the execution of a Waiver and Release Agreement ("Release"). On or about February 11, 2002, the Union and Precoat reached an agreement to amend the CBA ("Agreement") to set severance pay and conditions affecting the Precoat employees. The Agreement states: "The parties acknowledge that during the negotiations that resulted in this Agreement, each had the unlimited right and opportunity to make demands and proposals with respect to severance pay and other conditions affecting employees due to the plant closure." The Agreement further states: "Individual severance payments will be contingent on each employee signing a severance agreement." (Emphasis in original.)

  The Release, agreed to by the Union and Precoat, states that the severance allowance and supplemental payment for health care "are not otherwise due to me, but are provided by [Precoat] in return for the full and complete release of any and all claims by me, as broadly defined by Paragraph 2 of this Agreement."*fn6 (Release, Defs.' L.R. 56.1 Statement of Material Facts, Ex. B.) Paragraph 2 states, in relevant part, that the employee released, waived and discharged Precoat "from any and all claims of any kind that I may have in any way arising out of my employment with [Precoat]" (subject to an exemption for workers' compensation claims).*fn7 (Id.) "This release includes, but is not limited to, all claims under federal, state or local laws prohibiting age, sex, race, national origin, disability, religion, retaliation, or any other form of discrimination, such as Age Discrimination in Employment Act." (Id.) There were 46 Union employees still working at the Chicago plant when the plant closed on January 31, 2002, including plaintiffs Davis, Alexander and Page. (Plaintiff Hollins, on the other hand, had resigned from Precoat in June 2001.) Of those employees, 14 were African-American, 23 were white and 9 were Hispanic. All 46 employees received the Agreement, together with the attached Release. Only those employees that executed the Release received severance payments. Davis, Alexander and Page, who were the only employees with discrimination claims pending against Precoat when the Agreement was finalized, were the only employees who refused to sign the Release. As a result, they were the only employees who did not receive severance payments.

  II. DISCUSSION

  Summary judgment is proper only 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 judgment as a matter of law." Fed.R.Civ.P. 56(c). Once the movant sets forth its argument, properly supported by the record, that there is no genuine issue of material fact requiring trial, the burden shifts to the nonmovant to identify specific facts that preclude summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). "[U]nless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party," there is no issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

  A. Plaintiff Hollins Has No Claim Based on the Severance Agreement

  As an initial matter, the court grants summary judgment against plaintiff Hollins for any and all claims relating to the severance benefits, the Agreement, and the Release. Hollins voluntarily resigned from Precoat in July 2001, several months before Precoat announced the plant closing in November 2001 and before the Agreement was negotiated. As a former employee, Hollins was not eligible for any benefits under the Agreement. Just as an employer cannot be liable under Title VII*fn8 for failing to promote an employee if that employee is not qualified for the position, Bragg v. Navistar Int'l Transp. Corp., 164 F.3d 373, 377 (7th Cir. 1998), an employer cannot be liable under Title VII for failing to pay severance benefits to a former employee who is not eligible for severance benefits. No reasonable jury could find that Precoat unlawfully denied Hollins severance benefits when he was not even eligible for severance benefits under the Agreement.

  B. The Severance Agreement is Not Facially Discriminatory

  Plaintiffs*fn9 argue that withholding severance benefits from those who refused to release Precoat from Title VII claims constitutes a per se violation of Title VII. (Pls.' Mem. Supp. Mot. Summ. J. at 1.) Specifically, plaintiffs argue that they had a contractual right to severance, which they were unlawfully denied. Alternatively, they contend that even if their right to severance was not contractual, the benefits were part and parcel of the employment relationship, and thus, could not be doled out in a discriminatory or retaliatory manner. According to Precoat, however, none of the employees had a contractual right to severance benefits under the CBA prior to negotiation of the Agreement. Further, Precoat argues, the Agreement is not facially discriminatory or retaliatory because it was offered to every one of the 46 remaining employees, all of whom were required to sign a general release of claims in order to receive severance benefits. The court agrees with Precoat.

  Withholding benefits to which an employee is otherwise entitled can support a retaliation claim. Equal Employment Opportunity Comm'n v. Cosmair, Inc., 821 F.2d 1085, 1089 (5th Cir. 1987); Carney v. Am. Univ., 151 F.3d 1090, 1095 (D.C. Cir. 1998). Thus, as plaintiffs correctly argue, "a severance agreement is retaliatory if the employer takes away a severance to which the employee was already entitled." (Pls.' Reply in Support of Mot. Summ. J. at 17.) The ...


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