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Dominic Anco v. Acco Brands Usa LLC

March 7, 2012

DOMINIC ANCO, PLAINTIFF,
v.
ACCO BRANDS USA LLC DEFENDANT.



The opinion of the court was delivered by: Judge Joan H. Lefkow

OPINION AND ORDER

Dominic Anco filed a one count complaint against his former employer, ACCO Brands USA LLC ("ACCO"),*fn1 in the Circuit Court of Cook County alleging that ACCO breached a November 30, 2009 agreement by prematurely discontinuing Anco's severance benefits. ACCO removed the case to this court under 28 U.S.C. § 1441(b) on the basis that Anco's state law breach of contract claim was completely preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. §§ 1001 et seq., and that federal question jurisdiction was proper under 28 U.S.C. § 1331. This court agreed and denied Anco's motion to remand. [Dkt. #12.] ACCO has now moved for summary judgment pursuant to Federal Rule of Civil Procedure 56. [Dkt. #30.] For the reasons set forth herein, ACCO's motion is granted.*fn2

BACKGROUND*fn3

ACCO is a supplier of office products. (Def.'s SoF ¶ 5.) On February 16, 1981, ACCO hired Anco as a Maintenance Foreman. (Id. ¶ 6.) Anco's employment ended on July 7, 2006 and he received a severance package totaling approximately $54,169.96, which represented eight months of severance pay. (Id.) His benefits were based in part on his February 16, 1981 hire date. (Id.) On September 17, 2007, ACCO rehired Anco as a Manufacturing Engineering Supervisor. (Id. ¶ 7; Def.'s Ex. 7.) He received an annual salary of $85,000, a signing bonus of $5,000, and was eligible to participate in ACCO's benefit programs. (Id.)

On May 4, 2009, ACCO informed Anco that it was closing its manufacturing facility and that he would be permanently laid off on December 31, 2009, or within 14 days thereafter. (Id. ¶ 8; Def.'s Ex. 9.) On the same day, ACCO sent Anco a personalized estimated severance benefits statement ("Estimate of Benefits"). (Def.'s SoF ¶ 8; Def.'s Ex. 10.) The Estimate of Benefits stated that "[t]he intent of this letter is to provide you an estimate of your severance benefit under the ACCO Brands Severance Plan and Summary Plan Description effective February 12, 2009 [("the Severance Plan")] . . . [and] [o]nly the Plan itself should be relied on for any actual severance coverage, eligibility requirements, benefits calculations and other questions." (Def.'s Ex. 9.) The Estimate of Benefits directed Anco to a human resources website where he could access the Severance Plan, and stated, "According to the Plan . . . your severance benefit would be based on your salary grade, years of service based on your most recent hire date, and your current base salary." (Id.) The Severance Plan similarly stated, "The amount of severance benefit payments for covered eligible employees will be calculated . . . based on salary grades and years of service . . . . Years of service will be measured only from an employee's most recent date of hire." (Def.'s Ex. 10 Attachment A.) According to the Estimate of Benefits, Anco was entitled to receive approximately $10,190.19 (representing six weeks of salary), six weeks of subsidized medical and dental benefits, and three months of outpatient services pursuant to the Severance Plan. (Def.'s SoF ¶ 9; Def.'s Ex. 9.)

On September 21, 2009, ACCO sent Anco a letter notifying him that he would be permanently laid off on November 30, 2009, or within 14 days thereafter. (Def.'s SoF ¶ 11; Def.'s Ex. 13.) On November 30, 2009, ACCO gave Anco a copy of a Letter Agreement along with a confidential waiver agreement, a general release, and a copy of the Severance Plan. (Def.'s SoF ¶ 12; Def.'s Ex. 14 & 15.) The Letter Agreement stated that "[s]everance benefits are governed by the terms of the ACCO Brands Severance Plan . . . and will be paid only in accordance with the Severance Plan." (Def.'s Ex. 14.) It also stated that Anco would receive 26 weeks of severance pay at his bi-weekly rate of $3,396.73, for a total severance benefit of $44,157.49, and 26 weeks of subsidized medical and dental benefits. (Def.'s SoF ¶ 12; Def.'s Ex. 14.) This amount was $33,967.30 more than the amount listed in his Estimate of Benefits. (See Def.'s Ex. 9.) Anco signed the Letter Agreement and executed the waiver and general release. (Def.'s Ex. 14 & 15.)

On December 11, 2009, Anco received his first severance payment of $3,057.05. (Def.'s SoF ¶ 13.) ACCO also subsidized the cost of Anco's medical and dental coverage from December 1, 2009 through January 10, 2010. (Id.)*fn4 Four days later, during an internal audit, ACCO discovered that the Letter Agreement did not accurately reflect the amount of benefits that Anco was entitled to under the Severance Plan. (Def.'s SoF ¶ 14.)*fn5 ACCO had mistakenly relied on Anco's original date of hire (February 16, 1981) to calculate his benefits, not his most recent date of hire (September 17, 2007) as required by the Severance Plan. (Id.) That same day, ACCO's representatives called Anco and informed him that (1) there was an error in the Letter Agreement; (2) ACCO would be sending him a revised letter agreement and a waiver and release with the correct severance benefit amount; and (3) his severance payments would cease until ACCO received the executed revised documents. (Id. ¶ 15.) The next day, ACCO sent Anco a Revised Letter Agreement, a waiver and a release via overnight delivery. (Id. ¶ 16.) Anco signed for the delivery but declined to execute the Revised Letter Agreement. (Id.) He then filed this lawsuit seeking to enforce the Letter Agreement.

LEGAL STANDARD

Summary judgment obviates the need for a trial where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). To determine whether any genuine fact exists, the court must pierce the pleadings and assess the proof as presented in depositions, answers to interrogatories, admissions, and affidavits that are part of the record. Id. While the court must construe all facts in a light most favorable to the non-moving party and draw all reasonable inferences in that party's favor, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986), where a claim or defense is factually unsupported, it should be disposed of on summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323--24, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The party seeking summary judgment bears the initial burden of proving there is no genuine issue of material fact. Id. at 323. In response, the non-moving party cannot rest on bare pleadings alone but must use the evidentiary tools listed above to designate specific material facts showing that there is a genuine issue for trial. Id. at 324; Insolia v. Philip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000). "When there are no triable issues of fact . . . contract interpretation is a subject particularly suited to disposition by summary judgment." Hickey v. A.E. Staley Mfg., 995 F.2d 1385, 1389 (7th Cir. 1993) (internal quotation marks and citation omitted). "However, if the parties dispute the extrinsic evidence on an ambiguous contract, then a fact-finder must be called upon to determine the intent of the parties." Bock v. Computer Assocs. Int'l, Inc., No. 99 C 5967, 2000 WL 310288, at *5 (N.D. Ill. Mar. 24, 2000) (citation omitted) (Bock I), rev'd 257 F.3d 700 (7th Cir. 2001) (Bock II).

ANALYSIS

This court previously ruled that Anco's breach of contract claim was preempted by ERISA because interpretation of the Letter Agreement necessarily required reference to the Severance Plan, which is an ERISA-qualified plan. (Dkt. #12.)*fn6 As such, Anco's claim for benefits is analyzed as one brought under ERISA section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). See New v. Verizon Commc'n, 635 F. Supp. 2d 773, 782 (N.D. Ill. 2008) ("[W]here a claimant seeks to recover severance benefits under a company's ERISA plan, § 502(a) of ERISA is the claimant's sole method of relief." (citing Bowles v. Quantum Chem. Co., 266 F.3d 622, 630--33 (7th Cir. 2001)). The court will "focus on traditional contract principles in light of ERISA-specific concerns" in resolving Anco's claim. Young v. Verizon's Bell Atl. Cash Balance Plan, 667 F. Supp. 2d 850, 894 (N.D. Ill. 2009) (Young I), aff'd 615 F.3d 808 (7th Cir. 2010) (Young II). These principles "are not those of any particular state's contract law, but rather are a body of federal common law tailored to the policies of ERISA." Mathews v. Sears Pension Plan, 144 F.3d 461, 465 (7th Cir. 1998) (citations omitted).

ACCO urges the court to use an "abuse of discretion" standard to review ACCO's determination, citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S. Ct. 948, 103 L. Ed. 2d 80 (1989) ("[A] denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." ) This is not an administrative review situation in which the administrator has exercised discretion in interpreting the terms of the plan and applied them to facts as it found them. Rather, the court is making an independent decision as to what the Letter Agreement means. See Krolnik v. Prudential Ins. Co. of America, 570 F.3d 841, 843 (7th Cir. 2009) ("[L]instigation under ERISA by plan participants seeking benefits should be conducted just like contract litigation, for the plan and any insurance policy are contracts. In a contract suit the judge does not 'review' either party's decision. Instead the court takes evidence (if there is a dispute about a material fact) and makes an independent decision about how the language of the contract applies to those facts."). This court will proceed accordingly.

The issues presented are whether the severance pay contained in the Letter Agreement, which is based on Anco's original date of hire rather than most recent date of hire as provided in the Severance Plan, reflects the intent of the parties and, if not, what to do about it. ACCO asks the court to reform the contract by characterizing the Letter Agreement as having merely a scrivener's error. See Young I, 667 F. Supp. 2d at 894 ("The contract law doctrine of 'scrivener's error,' or mutual mistake, allows a court of equity to reform a contract where a written agreement does not reflect the clear intent of the parties due to a drafting error"); (citing 27 WILLISTON ON CONTRACTS § 70:93 (4th ed.)); WILLISTON, id. ("[A] scrivener's error . occurs when the intention of the parties is identical at the time of the transaction but the written agreement does not express that intention because of that error."); RESTATEMENT (2D) CONTRACTS § 152 (1981). ("(1) Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in § 154[;*fn7 ] (2) [i]n determining whether the mistake has a material effect on the agreed exchange of performances, account is taken of any relief by way of reformation, restitution, or otherwise.").*fn8

Anco argues that there was no scrivener's error or mutual mistake because he understood the agreement as one providing him 26 weeks of severance pay, not the six set out in the Revised Letter Agreement. Anco refers to the careful review ACCO's representative made of the agreement before Anco signed it and his own expectation that it would be a little more than 26 weeks based on recent service ...


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