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Howley v. Mellon Financial Corp.

January 29, 2008


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



This matter comes before this Court upon the parties' Cross Motions for Summary Judgment.*fn1 The case arises from a dispute regarding Plaintiff's entitlement to benefits under the Displacement Program offered by Defendant to employees who lose their jobs. The dispute relates to whether an employee whose division is sold to another company qualifies under the "Sale of Business" exception to the Displacement Program if the employee's job at the new company is terminated on his first morning as part of a reduction in force ("RIF") that had been planned, prior to the sale, by his former company, a Mellon subsidiary. For the reasons given below, the Court grants Plaintiff's Motion for Partial Summary Judgment, denies Defendants' Motion for Summary Judgment, dismisses Counts Three through Five of Plaintiff's complaint to the extent they relate to state law claims on grounds of ERISA preemption, and finds that the remainder of Plaintiff's claims are mooted by the grant of partial summary judgment.

I. Undisputed Factual Background*fn2

Plaintiff Robert Howley ("Howley" or "Plaintiff") was employed by a subdivision of Mellon Financial Corporation ("Mellon"). Howley's subdivision was originally an independent company called Buck and eventually, after it was purchased by Mellon, was renamed Mellon Human Resources and Investor Solutions ("Mellon HR&IS"). On May 25, 2005, Mellon HR&IS was sold to Affiliated Computer Services, Inc. ("ACS"). Through these name changes and changes in parent company, Howley had been employed by Buck/Mellon HR&IS for approximately 25 years. Because of his long service at the company, Howley was a grandfathered member of the Buck Pension Plan, which permitted early retirement at the age of 50 with 15 years of service. At the time of his termination, Howley was 11 months shy of early retirement. Thus, with his year of participation in the Displacement Plan, Howley would qualify for early retirement as of June 1, 2006.

In or about the Fall of 2004, Mellon decided to divest the group of businesses operating as Mellon HS&IS. Ultimately, Mellon negotiated a stock purchase agreement through which, among other things, ACS agreed to purchase Mellon's 100% stock interest in Mellon HS&IS. On May 25, 2005, the sale was completed and all "transferred employees" became employees of ACS.

On the morning of his first day of work for ACS, Plaintiff was told that he was fired and was given a few days to "wind up" his work and pass on his accounts. Mellon does not argue that Plaintiff was fired from ACS because of any action by Plaintiff. Rather, it is undisputed that Plaintiff was fired as part of a RIF. Although the parties disagree as to the specific decision-makers involved and whether the knowledge of the decision should be imputed to Mellon, nonetheless, the parties agree that the decision to terminate Plaintiff as part of the RIF was made at the Mellon subsidiary prior to the sale of Mellon HR&IS to ACS.

Mellon argues that because Plaintiff's employment transferred to ACS and the RIF was actually implemented by ACS, Mellon is not responsible for any decisions that ACS made about whether to continue to employ Plaintiff. Essentially, Mellon argues that Plaintiff received an "offer" of employment at ACS at the moment of the stock sale at 12:01 a.m. on May 25, 2005, and that Plaintiff transferred, without change in job, to ACS, where he was fired at approximately 10:00 a.m. on May 25, 2005 based on a list of employees selected for termination by Mellon HR&IS. Thus, Mellon asserts that the conditions of the Displacement Benefit Program were met when the "job offer" was made at 12:01 a.m. and that Plaintiff is thus not entitled to Displacement Benefits from Mellon.

Plaintiff notes that unlike any of the other 99 fired employees, he has long enough service with Mellon to obtain certain benefits by taking early retirement, but that he was a few months shy of early retirement immediately on May 25, 2005 -- the date he was purportedly "transferred." Under the Displacement Program at Mellon, he would have been entitled to continue in the 401k Plan and various other plans for the year following his termination, thus allowing him to take early retirement after turning 50. Importantly for Plaintiff, he was grandfathered into a plan in which the employer would pay 82.5% of his medical premiums during retirement. Thus, if the pre-planned RIF had occurred the day before the transfer of employees, Howley would have received benefits under Mellon's Displacement Program which would allow him to continue in the grandfathered Buck Retirement Plan and would entitle him to early retirement benefits which were substantially better than the benefits available to him through ACS's Displacement Program.

Throughout the negotiations related to the sale of Mellon HR&IS, Plaintiff was never informed that he had been selected for termination immediately upon the transfer of his division to ACS. The senior managers at Mellon HR&IS had clearly pre-determined the employees who had been selected for firing, but had not told them.

II. Analysis

A. Summary Judgment Standard

Pursuant to Fed. R. Civ. P. 56(c), a motion for summary judgment will be granted 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. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In other words, "summary judgment may be granted only if there exists no genuine issue of material fact that would permit a reasonable jury to find for the nonmoving party." Miller v. Indiana Hosp., 843 F.2d 139, 143 (3d Cir. 1988). A fact is material if it might affect the outcome of the case, and an issue is genuine if ...

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