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Gourley v. Board of Review

June 18, 2008

THOMAS A. GOURLEY, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON,*FN1 RESPONDENTS-RESPONDENTS.
SHIRLEY BELLINGER, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
ROBERT D. HIGHET, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
TARA Y. JOHNSON, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
DIANNA SMITH, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
THOMAS FAGAN, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
MARIA VAZQUEZ, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
DEBRA ESOLA, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
STEPHANIE KUCHARSKI, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
LINDA PALUMBO, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
JENNIFER ESPOSITO, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
NEIL R. SMITH, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
HOPE CALDERON, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
JOHN SIMOSKEVITZ, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
EMMA L. GOTHIE, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
PATRICIA HAMILTON, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
ANNIE D. LYTCH, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
BARRY W. MACKAY, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
DEBORAH R. THOMAS, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.
BETTYLYNN PELLETT, PETITIONER-APPELLANT,
v.
BOARD OF REVIEW, DEPARTMENT OF LABOR AND VERIZON, RESPONDENTS-RESPONDENTS.



On appeal from the Board of Review, Department of Labor.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted February 26, 2008

Before Judges Fuentes, Grall and Chambers.

These are back-to-back appeals, consolidated for the purpose of this opinion. Plaintiffs are former Verizon employees who voluntarily accepted severance or early retirement packages offered by Verizon in an attempt to reduce its staff in certain areas. Numerous employees accepted these packages for various reasons, including a fear of involuntary termination, if these incentive packages did not produce the staff reductions anticipated by Verizon.

Many of the employees who accepted these severance packages applied for unemployment compensation benefits. The Department of Labor ("DOL") Division of Unemployment Insurance, awarded benefits to some claimants, but denied benefits to others. These determinations were then appealed by either Verizon or the employees to the DOL's Appeal Tribunal. On appeal, the cases were consolidated; at the completion of a mass hearing, the Tribunal determined that all of the claimants were disqualified from receiving benefits under N.J.S.A. 43:21-5(a), because they had "voluntarily left work without good cause attributable to such work." The Board of Review affirmed the decision of the Appeal Tribunal. The cases before us here concern twenty claimants who have appealed the Board's decision.

Although these appeals have been consolidated for the purpose of addressing the legal issues raised therein, the unique facts of each case have been carefully and individually examined. We now affirm the final decision of the Board of Review as to all twenty cases before us.

During the time period relevant to this appeal, Verizon offered its employees two different voluntary separation packages: (1) the Management Voluntary Separation Program ("MVSP") to its management employees; and (2) the Enhanced Income Security Plan ("EISP") to its non-management or bargaining unit employees. The central issue before us is whether employees who accepted either the MVSP or the EISP, are eligible to receive unemployment compensation benefits.

Before addressing the individual claims, we will summarize, from a global perspective, the history of Verizon's staffing decisions, and how those decisions gave rise to the current state of affairs.

I. Merger and Layoff Protections

In 1996, Bell Atlantic, Verizon's predecessor in interest, was in the process of merging with Nynex. Representatives from the two collective bargaining agents, Communications Workers of America ("CWA") and the International Brotherhood of Electrical Workers ("IBEW"), Local 827, expressed concerns that the merger would negatively affect the terms and conditions of their members' employment status, specifically job security.

In response to these concerns, on November 5, 1996, Bell Atlantic entered into an agreement entitled "An Agreement Concerning Issues Related to the Bell Atlantic/Nynex Merger" with the CWA and the IBEW, Local 827. The agreements contained staffing level protections, specifying that the merger would not result in layoffs, forced transfers requiring a home relocation or downgrades or demotions as a result of any company initiated "process change." The term "process change" included events such as "process re-engineering initiatives, workplace consolidations, office closings, contracting, shifting of bargaining unit work, network upgrades, and other business changes developed to accommodate new technology or to improve productivity, efficiency or methods of operation."

The merger agreements were originally only valid until 1998; the agreement with CWA was extended until August 5, 2000 and the agreement with IBEW (Locals 827 and 1944) was extended to December 31, 2000.

Bell Atlantic and GTE merged to form Verizon in the summer of 2000. Verizon agreed to renew the layoff protections provisions in the agreements with CWA and IBEW Locals 827 and 1944, subject to certain enumerated modifications. Under this agreement, Verizon reaffirmed that it could not layoff, force transfers that required relocation, or downgrade employees because of a "process change." However, the modified agreement permitted Verizon to take these actions, if an employee surplus was caused by an "external event." By way of example, an "external event" would include a "state or federal regulatory change that causes the Company to abandon a line of business, an inter-exchange carrier take back of billings and collections, or the loss of a major telecommunications network contract."

II. 2002 EISP Offer and Layoffs

In September 2002, Verizon notified both IBEW Local 827 and CWA in writing of a staffing surplus, and its intention to offer an EISP as an incentive for separation. The notice also made clear that Verizon intended to proceed to involuntary layoffs, if the EISP offer did not reduce the workforce sufficiently. The notice did not specify that the staffing surplus was created by or attributable to an external event. However, Verizon advised the unions orally that the layoffs were due to an external event. Specifically, Verizon claimed that the staffing surplus was caused by external factors such as an economic recession, technological product substitution, state and federal regulatory changes, and competition.

The EISP package resolved the surplus involving CWA employees, but there remained a significant surplus of IBEW employees. Verizon informed IBEW that it intended to layoff "all temporary occasional term employees as well as regular employees with less than one year of service" effective November 6, 2002. Pursuant to the layoff procedure language in the IBEW contract, Verizon then made a second EISP offering. The secondary offering still did not resolve the surplus, and Verizon proceeded to layoff additional employees, effective December 19, 2002. In December 2002, Verizon also laid off union employees in New York and Pennsylvania.

Verizon laid off approximately four hundred New Jersey employees in November 2002 and December 2002, all of whom were members of IBEW Local 827. The IBEW challenged the layoffs first by seeking a federal court injunction, and then by filing a grievance seeking arbitration. IBEW challenged the layoffs on numerous grounds, including that the layoffs had not been triggered by an external event, as defined in the agreement.

Unions in New York and Pennsylvania, including the CWA in New York, had contracts containing similar language. These unions also challenged the layoffs, claiming that they were not triggered by an external event. The challenge brought by CWA in New York was the first resolved; an arbitrator ruled on July 10, 2003 that the layoffs were not based on "external events" as defined under the parties' agreement. Verizon was directed to reinstate the laid off New York employees and compensate them for their losses.

The language construed by the arbitrator in the New York agreement was remarkably similar to that included in the New Jersey CWA and IBEW agreements. Given the similarity in both the contract language and the factual circumstances, Verizon decided to offer reinstatement to all the New Jersey IBEW Local 827 employees who had been laid off in late 2002. The majority of the laid off employees returned to work on July 30, 2003.

Faced again with a staffing surplus, Verizon negotiated with both IBEW and CWA in New Jersey to include incentives in the labor contracts to induce employees to separate voluntarily from the company. Through negotiations, Verizon and the unions agreed that the layoff protections would not apply to employees hired after August 3, 2003, term employees, temporary employees, or occasional employees.

III. October 2003 MVSP Offer

In October 2003, Verizon offered two new voluntary separation packages: (1) a Management Voluntary Separation Program ("MVSP") to its management employees; and (2) another EISP to its non-management or bargaining unit employees.

In a notice dated October 1, 2003, Verizon announced the MVSP to management employees: "[w]e are pleased to inform you that you are among a group of employees who are eligible to volunteer for a reduction in force (RIF)." The MVSP offered both a pension enhancement and a severance program. Eligible employees had until November 14, 2003 to decide whether or not to elect to participate.

The MVSP was also offered to certain employees of Verizon Information Systems ("VIS"), who are covered by a separate collective bargaining agreement between the CWA and Verizon. The CWA collective bargaining agreement for VIS employees did not contain a "no layoff clause" precluding involuntary layoffs.

In early September 2003, Verizon had terminated between forty to fifty VIS information technology employees. The package sent to the VIS employees, describing the details of the MVSP, contained the following information in its "Questions and Answers" section:

2. Why is VIS providing the Voluntary Separation Program for Management Employees? The program was initially developed for Verizon Telecom business to reduce costs in that unit. Even though we do not have the same competitive and economic issues at VIS, we believe it is fair and right to offer employees the same opportunity that is being offered to employees elsewhere in Verizon. For us, this isn't about cost cutting or headcount reductions - it's about treating employees equitably and with respect.

3. Is VIS trying to eliminate a specific number of jobs?

No, because that's not why VIS is offering this option. Instead VIS wants to be fair to our employees by giving them the same opportunities other Verizon employees receive.

In the same "Questions and Answers" section Verizon addressed whether the employees could receive unemployment compensation. The answer given to this question was less than clear. The document merely indicated that the decision to award unemployment benefits was made by state agencies; it also noted that "[m]ost states disqualify applicants who leave employment voluntarily" and it advised the employees to contact their local unemployment agency.

Employees accepting the MVSP signed a separation agreement and release, acknowledging that they were voluntarily leaving and receiving separation benefits, and that they were not relying on any representations, other than those contained in the agreement. One hundred and three VIS employees accepted the MVSP and voluntarily resigned. They received a cash separation payment, one year of continued medical benefits, outplacement services and a five percent pension enhancement.

IV. October 2003 EISP Offer

On October 8, 2003, Verizon announced the EISP to both IBEW Local 827 and the CWA. Verizon again asserted the existence of a staffing surplus; the EISP was intended to entice the union employees to voluntarily separate from the company. Unlike the letters addressing the 2002 EISP, this letter was silent as to whether Verizon intended to proceed to layoffs if the EISP did not adequately reduce its workforce.

Here, Verizon claims it did not intend to layoff employees if the EISP did not eliminate the surplus. It maintains that the circumstances in 2003 were similar to those in 2002. The company was thus precluded, under the New York arbitrator's determination, from laying-off employees. If Verizon intended to layoff employees, it had to provide thirty days notice under the CWA or the IBEW contract.

On October 9, 2003, Verizon sent a company-wide e-mail to all its Mid-Atlantic*fn2 region employees, including those employed in New Jersey, informing them that there was a staffing surplus of about 2850 employees in the Mid-Atlantic states. In the first paragraph, the e-mail stated that "[t]here will be no layoffs, forced transfers outside of transfer areas, or reductions in an employee's compensation as a result of a downgrade in this surplus declaration."

Unfortunately, this e-mail message was not also sent by ordinary mail to employees who were out sick or on maternity leave. However, a similar bulletin was sent to management on the afternoon of October 8, 2003. The bulletin directed management to share this message with those employees who did not have access to e-mail.

On October 14, 2003, Verizon sent the 2003 EISP offer via regular mail to all eligible employees. Under this offer, an employee was eligible for the EISP if he had one year of credited service. A letter included with the package informed the reader that "[y]our job is in a work group that is subject to a force adjustment." The letter also explained the details of the EISP offer. Another part of the package apprised the reader that "[y]ou will be notified in advance if the Company determines that business needs warrant a reduction in force or reassignment of jobs that results in the elimination or change in your job." Unlike the October 9, 2003 e-mail, this letter was silent as to the possible need for layoffs.

The 2003 EISP offered $2200 per year of credited service for up to thirty years, for a maximum of $66,000; a voluntary termination bonus of $10,000; six months of continued medical coverage; a lump-sum pension cash-out option; and a five percent pension band increase. Participation in the EISP was voluntary.

There was also a "Questions and Answers" section in the package; one of the questions asked "[i]f I volunteer to leave Verizon under an EISP offer, will I be eligible for Unemployment Compensation?" The answer stated: "[y]our eligibility for these benefits is determined according to the various state laws and handled by state agencies, subject to their regulations and interpretations. You should talk with your local unemployment office."

On October 23, 2003, Verizon sent a bulletin extending the acceptance date for the EISP to November 16, 2003. Employees could also revoke their acceptance of the offer up until this date.

On November 3, 2003, the DOL issued a bulletin advising its "adjudication staff" that those Verizon employees who accept the offered EISP plan are eligible for unemployment benefits under N.J.A.C. 12:17-9.6. On December 11, 2003, the DOL sent a second bulletin advising that management employees from Verizon were not eligible for unemployment, because their positions had not been identified as surplus. These advisory bulletins are intended to provide guidance to DOL personnel; they are not determinative or binding as to who may be deemed eligible for benefits.

Verizon received a significant response to the 2003 EISP; in fact, it was forced to deny some employees participation, to avoid a shortage of workers in certain areas; other areas remained in surplus status. More than 3200 Mid-Atlantic employees were accepted for the EISP package, including 1096 in New Jersey. On a company wide basis, the number of EISP ...


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