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PANE v. RCA CORP.

August 11, 1987

Joseph Pane, Plaintiff,
v.
RCA Corporation, Defendant



The opinion of the court was delivered by: COHEN

 In this action for damages and equitable relief, plaintiff Joseph Pane, Director of Special Programs for defendant RCA Corporation ("RCA"), alleges that RCA violated his rights under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., and under New Jersey tort and contract law. Presently before the Court are motions by defendant (1) to dismiss plaintiff's state law claims, pursuant to Fed. R. Civ. P. 12(b)(6), on the ground that they are pre-empted by ERISA, (2) to strike plaintiff's claim for punitive and exemplary damages because such damages are not recoverable under ERISA, and (3) to strike plaintiff's jury demand because ERISA claims do not afford a right to trial by jury.

 Plaintiff's complaint charges that, on or about December 8, 1985, RCA adopted an employee severance plan, under which its Vice Presidents and General Managers were to receive lump sum termination benefits. Complaint para. 4. At the time this plan was adopted, RCA and General Electric Company ("GE") were engaged in merger negotiations. Complaint para. 5. Plaintiff maintains that on December 13, 1985, while he was serving as Vice President and General Manager of RCA's Aerospace and Defense Government Volume and Production Division, he was offered a severance agreement pursuant to this plan, which he accepted. He further asserts that he later received oral and written confirmations of this agreement. Complaint paras. 5-11. He charges that defendant withheld from him the benefits of the severance plan and agreement, and that, when he attempted to exercise his rights thereunder defendant retaliated against him by, inter alia, demotions, reductions in compensation and false disparagements of his abilities to others. Complaint paras. 13-15.

 Count I of the complaint asserts that the plan adopted on December 8, 1985, is an employee benefit plan within the meaning of ERISA, and that defendant's conduct violated various provisions of ERISA. Count II charges a violation of defendant's agreement to provide plaintiff with a written severance agreement. Count III alleges a violation of the severance agreement itself, and Count IV seeks damages for the intentional infliction of emotional distress.

 Defendant, in addition to filing its Answer denying that plaintiff was a participant in the plan in question, also filed the instant motions, which we shall discuss in turn.

 I. Pre-emption of State Law Claims

 Defendant maintains that Counts II, III, and IV of the complaint, which contain state law claims, are pre-empted by ERISA and should be dismissed. Count II alleges breach of a contract to provide plaintiff with a severance agreement; Count III, a breach of the terms of defendant's severance plan itself; and Count IV, intentional infliction of emotional distress. The only other count is Count I, which seeks relief under ERISA, and which is not the object of defendant's motion to dismiss.

 ERISA pre-empts, with certain enumerated exceptions not applicable here, *fn1" "any and all state laws insofar as they may now or hereafter relate to any employee benefit plan" covered by ERISA, 29 U.S.C. § 1144(a). There are two steps to our analysis of whether plaintiff's state law claims are pre-empted. First, we must determine if defendant had an ERISA benefit plan as defined by the courts. If defendant did have such an employee benefit plan, then, second, we must analyze whether the state laws involved "relate to" this plan.

 A. Existence of an ERISA Plan

 The Supreme Court very recently addressed the meaning of "employee benefit plan" in the context of ERISA pre-emption in Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 107 S. Ct. 2211, 96 L. Ed. 2d 1 (1987). In Fort Halifax, the Court ruled that a Maine statute requiring employers to provide a one-time severance payment to workers in the event of a plant's relocation or closing was not pre-empted by ERISA. The Court held that the Maine statute did not establish an employee benefit "plan," and that only state laws relating to such plans were pre-empted by ERISA. The Court stated that a plan entails ongoing administrative systems to meet the employer's obligations, and that the purpose of ERISA pre-emption was to avoid the confusing and conflicting application of different state schemes. "Only a plan embodies a set of administrative practices vulnerable to the burden that would be imposed by a patchwork scheme of regulation," the Court stated. 107 S. Ct. at 2217. A company's program mandated by the Maine statute, requiring a single "lump-sum payment triggered by a single event requires no administrative scheme whatsoever," id. at 2218, and was held not to constitute a plan, and so the statute was not pre-empted by ERISA.

 The Court distinguished the Maine statutory program from a situation in which an employer agreed to pay severance benefits to each employee as he or she leaves the company's employ. In the latter case, an ongoing administrative scheme was necessary, since the employer made a separate analysis of each employee's eligibility for benefits and schedule of payments, and thus an ERISA plan was in existence. Id. at 2221 n.10.

 Defendant urges that an ERISA plan existed in the case presently before us, since its severance program entailed individual payments to each employee, based on that employee's eligibility. The severance agreement, which is attached as Exhibit A to the complaint, provides that an employee is entitled to these benefits only if a "triggering event" occurs, such as termination of an employee for reasons other than for cause. Thus, the circumstances of each employee's termination must be analyzed in light of these criteria, and an ongoing administrative system constituting an ERISA plan exists.

 Plaintiff maintains that the severance agreement attached to his complaint does not embody the terms of defendant's severance program, but is merely a contract issued pursuant to the overall program. Plaintiff asserts that defendant is withholding information regarding the terms of the severance program, and that without that information the court cannot evaluate whether an ERISA plan, see 29 U.S.C. § 1002(1), as defined in Fort Halifax, existed. *fn2" However, there is no doubt that, whatever the specific provisions of the defendant's severance program, they surely involve a separate determination of each individual's eligibility for benefits. This is not a situation, like that in Fort Halifax, where the company was obligated to make a single set of payments to all employees, and thus did not need an ongoing administrative system. Defendant did maintain a program to provide employees with ...


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