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Debbie Kvinlaug v. Claire's Stores

May 2, 2011

DEBBIE KVINLAUG, PLAINTIFF,
v.
CLAIRE'S STORES, INC., DEFENDANT.



The opinion of the court was delivered by: Judge Feinerman

AMENDED MEMORANDUM OPINION AND ORDER

Plaintiff Debbie Kvinlaug brought this action against her former employer, Defendant Claire's Stores, Inc., alleging that Claire's wrongfully denied her severance benefits due under the parties' Termination Protection Agreement. Earlier this year, Judge Guzman dismissed Kvinlaug's state law causes of action, leaving only her claim under section 502(a)(1)(B) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B). See 2010 WL 1325552 (N.D. Ill. Mar. 29, 2010). Claire's moved for summary judgment, and Kvinlaug responded on the merits and also with a motion pursuant to then-Rule 56(f) of the Federal Rules of Civil Procedure, which was re-codified as Rule 56(d) on December 1, 2010. Claire's Stores' motion is denied, and Kvinlaug's motion is denied as moot.

Background

Except where noted, the following facts are undisputed, either by the parties' agreement or because the objecting party failed to comply with Local Rule 56.1(b)(3). Claire's Stores is a multinational jewelry and accessories retailer. Kvinlaug was hired by Claire's Boutiques, Inc., a subsidiary of Claire's Stores, in May 1998. In May 2003, Claire's Stores promoted Kvinlaug to Territorial Vice-President ("TVP") of its Southeastern Territory, a position Kvinlaug held while living in Atlanta. Her initial salary as TVP was $105,000, and by 2006 had risen to a base of $165,000 and a bonus of $30,000.

In May 2006, Kvinlaug was offered and accepted a new position in the Claire's Stores organization, Group Executive Vice-President ("GEVP") for Switzerland, Austria, Germany, France, Spain, and Portugal. Kvinlaug's GEVP position was intrinsically temporary, intended to last no more than three years, and her assignment letter stated that she would be "[a]ssigned a comparable position [to the Southeastern TVP position] for Claire's North America upon completion of assignment and return to the U.S." As GEVP, Kvinlaug received a salary of $250,000 and $200 per month to help maintain her Atlanta residence, was eligible for a bonus, and had eight to ten weeks of paid vacation. Claire's also supplied her with a furnished apartment in Paris, a BMW automobile, and a parking space.

In Fall 2006, Claire's Stores and Kvinlaug (along with other senior employees) entered into a Termination Protection Agreement ("TPA"), which provided that she would receive severance benefits in the event she resigned for "Good Reason" following a change in control of Claire's Stores. The TPA defined "Good Reason" as, among other things, "any materially adverse alteration in Executive's title or in the nature or status of Executive's responsibilities or conditions of employment from those in effect immediately prior to such Change in Control," and provided that Kvinlaug "shall have one year from the time [she] first becomes aware of the existence of Good Reason to resign for Good Reason." In light of Kvinlaug's temporary GEVP assignment in Europe, she and Claire's Stores in March 2007 executed an Addendum to the TPA, which reads in pertinent part:

You and the Company hereby agree that, solely for purposes of your TPA with the Company, the term "Good Reason" shall be deemed to include (in addition to the terms currently provided under the TPA) the failure by the Company (or any successor thereto) following a Change in Control to provide you with a written offer at least [one month] prior to the end of the Term under the TPA [May 28, 2009] for continued employment with the Company upon your return to the United States from France on employment terms that are substantially similar to the terms of your employment that were in effect immediately prior to your current assignment in France.

Except as modified by this letter agreement, your TPA shall continue in full force and effect.

A "Change in Control" occurred on May 29, 2007, when Claire's Stores was acquired by a third party. Several management changes ensued. In May 2007, Mark Smith joined Claire's as President and Managing Director of Europe. Smith met with Kvinlaug in August 2007 and, although the details of the conversation are disputed, directed her to focus on France and also perhaps on Spain and Portugal. In addition, In-grid Osmundsen was named Chief Executive Officer of Europe, with Osmundsen reporting directly to Smith and Kvinlaug to Osmundsen. Michael Baur joined Claire's in January 2008, with the parties disputing whether, when, and to what extent Baur assumed Kvinlaug's responsibilities for Switzerland, Austria, and Germany.

Claire's announced a five-year plan for Europe at a presentation to its employees on March 13, 2008. Claire's centralized its European operations in the United Kingdom, identified a Senior Management Team to implement the initiative, and replaced Osmundsen with Paul Mildenstein. Claire's divided its European operations into three zones, with Baur leading the zone encompassing Switzerland, Austria, and Germany. Neither Kvinlaug nor her GEVP position was identified as part of the Senior Management Team. "Upset" and "humiliated" by this turn of events, Kvinlaug spoke with Mildenstein and Joe DeFalco, Senior Vice-President of Human Resources, Supply Chain and Logistics, regarding her continued role in Europe and future in the United States. The conversations conveyed that Kvinlaug would not be part of the "go forward" team in Europe.

The parties dispute whether the plan announced on March 13, 2008 materially altered Kvinlaug's GEVP role. Claire's maintains that, aside from having Kvinlaug's report to Mildenstein rather than Osmundsen, the plan did not significantly impact her role. According to Claire's, Kvinlaug continued to work full time; retained her title, salary, and benefits; assumed responsibility for roughly sixteen stores in Belgium; and was not instructed to cease performing any duties she performed prior to March 13, 2008, though she no longer conducted certain meetings and conference calls. Kvinlaug takes a different view, listing a variety of "supervising, managing, directing, overseeing, planning, training, and strategizing" responsibilities that she alleges were diminished or eliminated by the reorganization. Kvinlaug cites, among other things, the cessation of her responsibility for Switzerland, Austria, and Germany; her reduced role in Spain and Portugal; and a reduction in the number of stores and employees for which and for whom she was responsible.

In January 2009, Claire's offered Kvinlaug a position in the United States as a TVP for the Southwestern Region. Claire's told Kvinlaug she could continue residing in Atlanta, but Kvinlaug asserts that remaining in Atlanta while holding the Southwestern TVP position-with its responsibility for Texas, California, and Hawaii-would have entailed significantly longer travel times than her Southeastern TVP assignment. Kvinlaug adds that the Southwestern TVP assignment would have required unfavorable time zone changes, returning home from business trips as late as 2:00 a.m., and the obligation to comply with onerous California regulations.

On February 2, 2009, Kvinlaug sent a letter to Claire's expressing her view that the TPA's "Good Reason" clause had been triggered. A series of communications followed in which the parties disputed whether the clause, in fact, had been triggered. On March 9, 2009, Kvinlaug resigned from Claire's, although due to European labor laws she continued to work until June 2009. Claire's did not provide Kvinlaug ...


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