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Duke v. Clean Harbors

June 30, 2006


The opinion of the court was delivered by: Simandle, District Judge


Plaintiff brought this breach of contract action to recover twenty-six weeks worth of severance benefits following his layoff in 2003. Defendant argues that Plaintiff is not entitled to those benefits under the severance plan in place when Plaintiff's employment was terminated. This matter is before the Court upon the cross-motions for summary judgment.*fn1

For the reasons explained below, the Court finds in the first instance that Plaintiff's state law claims for severance benefits are preempted by ERISA, and that they arise under Section 502(a) of ERISA, 29 U.S.C. § 1132(a). Next, the Court holds as a matter of law that Defendant objectively manifested a contractual intent to provide vested employee welfare benefits to Plaintiff equaling twenty-six weeks of pay. As Plaintiff accepted this offer by performance, the Court additionally finds that a unilateral contract was formed, obligating Defendant to honor the promised welfare benefits. Accordingly, Defendant's motion for summary judgment will be denied as to Plaintiff's ERISA claim and granted as to the state law claims, and judgment will be entered in favor of Plaintiff for payment of 26 weeks' severance pay.


The facts that bear upon these cross-motions are straight forward.

Plaintiff began working at the Logan Township Hazardous Waste Incinerator in 1970. (Pl. Ex. A.) At the time, the incinerator complex was owned by Rollins Environmental Services, Inc. ("Rollins"). In 1997, Rollins consolidated with Laidlaw Environmental Services ("Laidlaw"). Plaintiff claims that as part of his compensation package with Rollins, Plaintiff earned separation pay of one week for every year of service performed. (Pl. Ex. D.)

A short time after Rollins and Laidlaw consolidated, Laidlaw consolidated with Safety-Kleen Corporation ("Safety-Kleen"). According to an "Organizational Announcement" issued by Safety-Kleen to "All Notes Users North America" on August 18, 2000, the company "reinstitute[d] a Severance Plan in order to provide 'peace of mind' to all employees in the event that one would lose his/her job through no fault of their [sic] own." (Pl. Ex. F.) Additionally, the notice stated that the severance plan had been approved by the U.S. Bankruptcy Court in Delaware. According to that plan:

The payout, while unemployed, amounts to one (1) week of severance pay for each year of service (calculation based on the individual's completed months of service), with a minimum of two (2) weeks and a maximum of twenty-six (26) weeks pay. Thirty percent (30%) of an individual's total severance will be paid in a lump sum in his/her first severance paycheck following the execution of a Settlement and Release Agreement. No further severance will be paid until enough time has passed to offset the lump sum payment. At that time, if the individual is still unemployed and remains unemployed, he/she will receive the remainder of the total severance (including Health and Life Insurance benefits) through salary continuance on his/her normal payroll frequency.


On August 27, 2002, Plaintiff's employment with Clean Harbors Environmental Services, Inc. ("CH Environmental"), a subsidiary of Defendant Clean Harbors, Inc. ("Clean Harbors"), commenced after Clean Harbors purchased the assets of Safety-Kleen's Chemical Services Division through an asset acquisition agreement dated February 22, 2002 ("Agreement"). The Agreement stated the company's Purchaser Severance Policy, in part, as follows:

Clean Harbors will be responsible for any severance due, as a result of termination of an employment by Clean Harbors other than for Cause . . ., for all such employees who accept an offer of employment with Clean Harbors including those who accept such an offer and then are asked to relocate (which they can refuse). . . . Clean Harbors will also not pay severance for employees of the Business unless they accept the offer of employment with Clean Harbors and agree to continue such employment after the Closing.

All employees who are eligible for employment and severance, as set forth above, and who accept employment with Clean Harbors, will be eligible for the . . . severance plan.

(Pl. Ex. J.)

On September 16, 2003, an employee notice was distributed to all Clean Harbors employees, stating that the Board of Directors of Clean Harbors voted to terminate the Purchase Severance Policy contained in the Agreement. Effective September 19, 2003, Plaintiff's employment was terminated by CH Environmental. Plaintiff was offered four weeks severance pay ...

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