Opinion
No. 03 Civ. 8688 (SHS).
August 30, 2004
OPINION AND ORDER
Daniel Kirk commenced this action in New York State Supreme Court, New York County, in October 2003, alleging that Schindler Elevator Corporation, the United States subsidiary of a Swiss corporation, had subjected him to constructive discharge, had withheld severance pay and unused vacation compensation to which he was entitled, and had defamed him. In November 2003, Schindler removed this action to this Court pursuant to 28 U.S.C. § 1446 on the ground that Kirk's state law claim for severance pay and unused vacation compensation was preempted by the Employee Retirement Income and Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. In April 2004, Kirk moved to remand this action to the state court on the ground that there was no federal subject matter jurisdiction. That motion was denied in an Order dated May 4, 2004.
Discovery proceedings have concluded and Schindler has now moved for summary judgment dismissing the Complaint in its entirety. Because there is no basis for a reasonable juror to find in Kirk's favor on his ERISA claim, Schindler's motion is granted as to Kirk's ERISA claim for severance pay and for unused vacation compensation. Moreover, because considerations of judicial economy, convenience, fairness and comity counsel against this Court's exercise of supplemental jurisdiction over Kirk's New York state claims for constructive discharge and for defamation, those claims are dismissed without prejudice to being refiled in state court.
BACKGROUND:
Kirk is a New Jersey citizen and has worked in the elevator repair and modernization industry since 1967. (Complaint at ¶ 1) Schindler manufactures and installs elevators. Its principal office and place of business is in also New Jersey. (Decision and Order of the National Labor Relations Board Clarifying Unit dated July 18, 2002 at 17) From 1977 until 2002, Kirk was employed by Millar Elevator Service Company, an elevator maintenance concern based in New York and a "sister" subsidiary of Schindler. (Plaintiff's Rule 56.1 Statement at ¶ 5) Kirk was promoted several times during his career at Millar. He became a Vice President in November 2001 and was placed in charge of Millar's mdernization department. (Id. at ¶ 14-15)
In early 2002, Schindler merged with Millar and absorbed Millar's operations and field employees. (Defendant's Rule 56.1 Statement at ¶ 47-50) As a result of that merger, Kirk became a regional modernization manager at Schindler and was placed in charge of all modernization projects in the New York City and Long Island region. (Id. at ¶ 54-55) Due to the high volume of modernization work in his region, Kirk faced a challenging task as the modernization manager. (Id. at ¶ 64-70; Plt. Stmt. at ¶ 21-42) The parties disagree, however, as to Kirk's performance in his new job.
According to Schindler, Kirk had difficulty grasping Schindler's internal procedures, with managing his subordinates and with Schindler's budgeting and forecast process. (Def. Stmt. at ¶ 47-50) Schindler also alleges that Kirk failed to notify his superiors about the potential for large overruns and surprised them in May 2003 with the news of overruns totaling more than half a million dollars. (Id. at ¶ 184-215) On his own behalf, Kirk asserts that under his leadership, the modernization department "exceeded its budget objective for the [fiscal year 2002] (which ended in May 2003) by 24% or $362,000." (Plt. Stmt. at ¶ 44) Kirk further asserts that, insofar as the cost overruns occurred, those incidents were not attributable to his performance. (Id. at ¶ 45-64) Finally, Kirk maintains that he had no trouble managing his staff or grasping Schindler's budgeting and forecast process. (Id. at ¶ 65-82)
After the May 2003 cost overruns at the modernization department came to light, Kirk's superiors, Michael Landis and Charles Gutowski, determined that Kirk "could not adequately handle his new responsibilities" and decided in early June 2003 to reassign Kirk to "a field superintendent position." (Def. Stmt. at ¶¶ 213, 216) That was a demotion because field superintendent was not a managerial position. Schindler claims that although that demotion was not supposed to be publicized immediately, the change in title nonetheless appeared in an internal directory released in mid-June 2003, due to a clerical error in the human resources department. (Id. at ¶ 248-253) Schindler asserts that no determination was made as to whether Kirk's salary would be reduced and that it "had no intention of terminating Kirk's employment." (Id. at ¶ 218-220) Schindler officers later contacted Kirk and requested him to remain with the modernization department at Schindler. (Kirk Dep. at 164-169)
Kirk, however, "was very upset" by the news of his demotion — both because he learned of it through the publication of the internal directory and not from his superiors and because he deemed it an unacceptable change in status. (Plt. Stmt. at ¶ 130-137) He went on vacation and then decided that "he could not return to Schindler because of the humiliating way that the company had treated him." (Id. at 139) Instead, Kirk searched for and found a position with Transel Elevators, a competitor, and started that position in August 2003. (Def. Stmt. at ¶ 343-346) His salary at Transel was approximately $110,000 per year, slightly less than his salary at Millar and Schindler, with similar benefits. (Id. at ¶ 347-450)
SUMMARY JUDGMENT STANDARD:
In evaluating a motion for summary judgment, the Court may not weigh the evidence but is required to "view the evidence in the light most favorable to the party opposing summary judgment, to draw all reasonable inferences in favor of that party" and to eschew credibility assessments. See Burke v. Kodak Retirement Income Plan, 336 F.3d 103, 109 (2d Cir. 2003). The moving party is entitled to summary judgment if the record, considered as a whole, "show[s] that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." See id. (citing Fed.R.Civ.P. 56(c)). An issue of fact is genuine if evidence "is such that a reasonable jury could return a verdict for the nonmoving party," and a fact is material if it "might affect the outcome of the suit under the governing law." See Overton v. New York State Div. of Military and Naval Affairs, 373 F.3d 83, 89 (2d Cir. 2004) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505 (1986)).
DISCUSSION:
Kirk's ERISA Claim for Severance Pay and for Unused Vacation Pay
During his tenure at Millar and at Schindler, Kirk was eligible for employment related benefits, including severance pay, pursuant to an Operation/Personnel Impact Plan (the "OPIP"). (Def. Stmt. at ¶ 23-29) Because the OPIP requires ongoing managerial discretion in its administration, requires the plan manager to make individualized benefits determination, and is capable of being perceived by a reasonable employee to provide ongoing benefits, this Court determined, in connection with its May 4, 2004 Order denying Kirk's motion for remand, that the OPIP is a "plan" under ERISA. See Tischman v. ITT/Sheraton Corp., 145 F.3d 561, 565-68 (2d Cir. 1998); Schonholz v. Long Island Jewish Med. Ctr., 87 F.3d 72, 76 (2d Cir. 1996).
Kirk characterizes his August 2003 resignation from Schindler as an involuntary termination or constructive discharge because his June 2003 demotion made "his working conditions [at Schindler] so intolerable that he had no choice but to tender his resignation." (Plt. Stmt. at ¶ 131-140) Kirk further alleges that his demotion was connected to the Millar/Schindler merger and integration because Schindler kept him as a modernization manager only to ensure a successful labor union consolidation and then "forced [him] to resign so that Schindler could replace him, a former Millar manager, with a former Schindler employee." (Id. at ¶ 142-47) According to Kirk, those circumstances attest to his entitlement to severance pay pursuant to the "`lack of work' provision of the OPIP," which provides severance benefits for Schindler employees laid off due to a lack of work. (Id. at ¶ 148-151)
In August 2003, Kirk's attorney wrote Michael Landis at Schindler seeking severance pay and other payments on Kirk's behalf. (Letter dated August 5, 2003) That request was rejected in a letter from Schindler's legal department, which stated that "Schindler has no severance policy applicable to changes in job positions or to resignations." (Letter dated August 8, 2003)
In support of its motion for summary judgment, Schindler contends that, at the outset, Kirk is not eligible for severance pay because his demotion was not covered by the "lack of work" provision or any other provision of the OPIP. Schindler further asserts that Kirk's claim for severance pay must be dismissed because Kirk had failed to exhaust administrative remedies and because his demotion did not create conditions sufficient for a constructive discharge.
A. Legal Standards
The language of the relevant provisions of the OPIP determines whether Kirk is entitled to severance benefits. See Donnelly v. Bank of New York Company, Inc., 801 F. Supp. 1247, 1252 (S.D.N.Y. 1992); see also, Kosakow v. New Rochelle Radiology Assoc., 273 F.3d 706, 737-39 (2d Cir. 2001); Reeves v. Continental Equities Corp. of Am., 912 F.2d 37, 43 (2d Cir. 1990). As a preliminary matter, the appropriate standard for this Court's review of Schindler's denial of Kirk's request for severance pay varies according to the character of that denial. If the August 8, 2003 rejection of Kirk's request is deemed to be a determination of the OPIP administrator and if the OPIP "confer[s] discretion upon the administrator to determine eligibility or interpret terms of the plan," the Court reviews the administrator's determination under a deferential "abuse of discretion standard." See Kosakow, 273 F.3d at 738. Otherwise, "a denial of benefits is to be reviewed under a de novo standard." See id.
Under a de novo standard of review, Schindler bears the burden to show "that [Kirk's] interpretation of the [OPIP] is unreasonable." See Kosakow, 273 F.3d at 738 (internal citations omitted). Under the deferential abuse of discretion standard, on the other hand, a court "will not disturb the administrator's ultimate conclusion unless it is arbitrary and capricious," that is, if that determination is "without reason, unsupported by substantial evidence or erroneous as a matter of law." See Pagan v. NYNEX Pension Plan, 52 F.3d 438, 442 (2d Cir. 1995) (internal citations omitted).
B. Analysis
As a preliminary matter, the OPIP explicitly vests the administrator with the discretion to "interpret and construe provisions of the plan and [to] decide questions" regarding entitlement of benefits. (General Information section of the March 1999 About Your Benefits brochure at 3) The record is unclear, however, as to whether the August 8, 2003 letter from Schindler's legal department rejecting Kirk's request for severance benefits should be deemed a determination by the OPIP administrator. That letter does not contain any reference to the OPIP administrator; nor does it inform Kirk of his right of appeal, which is explicitly provided for in the OPIP and mandated by the relevant ERISA regulations. See 29 C.F.R. § 2560.503-1. The Court need not resolve this factual question, however, because, as set forth below, Kirk's claim for severance pay fails even under de novo review. See Criscuolo v. Seagram Sons, Inc., 02 Civ. 1302, 2003 WL 22415753 at *7 (S.D.N.Y. Oct. 21, 2003).
The OPIP provides that severance benefits are available for "eligible employees who are laid off due to certain specified reasons," including "location closedown," "product line relocation" and "lack-of-work layoff." (About Your Benefits brochure at 8) Discharge of an employee is a "lack-of-work layoff" if it is "due to lack of work because of reasons associated with the business." (Id.) That OPIP further emphasizes the "benefits you receive . . . depend on the reason you are laid off." (Id.) Kirk does not maintain that his demotion and resignation fit within the plain language definition of a "lack-of-work layoff" as he had a variety of challenging tasks as the regional modernization manager. Moreover, Schindler hired a replacement for Kirk as the regional modernization manager and did not eliminate that position. (Plt. Stmt. at ¶ 144)
Instead, Kirk proffers the following theory as to why his demotion and subsequent resignation should be deemed a "lack-of-work" layoff under the OPIP: former Millar employees laid off as a result of the Millar/Schindler integration process were eligible for "lack-of-work" severance benefits; Kirk's demotion was also part of that integration process; accordingly, Kirk is entitled to severance benefits. In support of his contention, Kirk tenders certain admissions of Michael Shields, Schindler's Human Resources manager, that former Millar employees discharged during the integration phase of the Millar/Schindler merger had been given severance benefits pursuant to the "lack-of-work" provision of the OPIP. (Plt. Stmt. at ¶ 150) Kirk further alleges that Schindler kept him as the modernization manager only as a ploy to obtain approval from the National Labor Relations Board (the "NLRB") to consolidate Millar and Schindler employees into a single labor union local. Once Schindler obtained that approval, according to Kirk, it immediately demoted him and appointed a former Schindler employee to be the modernization manager. (Id. at 141-47) Thus, Kirk concludes, his demotion was part of the integration process.
Kirk's argument fails because there is no basis for a reasonable jury to discern the link that he draws between his demotion and Schindler's need for NLRB approval. Two categories of evidence would permit a reasonable finding of the existence of such a link: first, because the NLRB decision refers to the intermingling of Millar and Schindler employees and managers, evidence of a pattern of demotions or layoffs of former Millar managers could support Kirk's allegation concerning existence of a conspiratorial ploy, see Reeves v. Continental Equities Corp. of Am., 912 F.2d at 43; second, evidence that the NLRB found Kirk's status relevant to its deliberation over whether to permit consolidation of Millar and Schindler employees would support Kirk's allegation as to Schindler's motive. However, Kirk has not adduced any evidence of either type.
First, Kirk has failed to point to a single instance of any other former Millar manager being laid off or demoted by Schindler in the wake of the NLRB's approval of the labor union consolidation. Reeves is instructive in this regard. There, the United States Court of Appeals for the Second Circuit found that the plaintiff's allegation of systematic discharges of all the employees of an acquired company, if substantiated through discovery, could amount to a "reduction in force" and thereby entitle Reeves to severance benefits. See id., 912 F.2d at 43. Here, in contrast, Kirk has obtained numerous affidavits from former Millar employees regarding their post-Schindler employment; yet, he is nonetheless unable to adduce any evidence that his demotion had been part of a pattern of demotions or outright layoffs of former Millar managers.
Second, the July 18, 2002 National Labor Relation Board Decision and Order, which permitted the absorption of the former Millar employees into the labor union local for Schindler employees as an "accretion," also does not support Kirk's characterization of Schindler's motive with respect to the union consolidation process. That NLRB determination was premised on two factual findings. First, the NLRB found that "the previous separate identities of the two units had been obliterated and that one combined bargaining unit was the sole appropriate unit" because there was "significant employee interchange" between former Millar units and Schindler units. (July 18, 2002 NLRB Decision and Order at 13 (internal quotations omitted)). Specifically, the NLRB deemed it "important" that the "rank-and-file" mechanics and unit employees "share[d] day-to-day supervision" and "perform[ed] similar types of work." (Id. at 15) Second, the NLRB also found that the Schindler employees, as a group, "clearly predominate[d]" in the merged entity. (Id. at 14) There is, however, not the slightest suggestion in the NLRB Decision that Kirk's continued managerial status in the merged company had been relevant to the NLRB's deliberation.
Absent a single piece of evidence to support his allegations of manipulation and bad faith, Kirk proffers mere generalized and conclusory assertions. As is well-recognized in this Circuit, mere speculations and "conclusory allegations or denials are ordinarily not sufficient to defeat a motion for summary judgment." See Saks v. Franklin Covey Co., 316 F.3d 337, 348 (2d Cir. 2003); Armstrong v. Liberty Mut. Life Assur. Co. of Boston, 273 F. Supp. 2d 395, 402 (S.D.N.Y. 2003). Because Kirk has failed to adduce sufficient evidence for a reasonable jury to link his demotion to the integration process subsequent to the Millar/Schindler merger, he is not eligible for severance benefits under the OPIP. Accordingly, Schindler is entitled to summary judgment as to Kirk's claim for severance pay.
Kirk's Claim for Unused Vacation Pay
As noted above, Kirk also claims compensation for unpaid vacation days. In response, Schindler has submitted detailed documentary evidence, including payroll records and a check, to support its position that no vacation pay is due. Kirk's rejoinder is merely to assert that "[a]ll documents concerning [his] unused vacation are in the possession of defendant Schindler." (Plt. Stmt. at ¶ 161)
Construed as a ground for opposing summary judgment, Kirk's response is clearly insufficient. The parties had a full opportunity to conduct discovery proceedings, which have concluded. During that time, Kirk could have utilized the mechanisms made available pursuant to the Federal Rules of Civil Procedure to obtain the relevant Schindler documents and, if they were not forthcoming, to move to compel production of relevant documents. Accordingly, Schindler is also entitled to summary judgment with respect to Kirk's ERISA claim insofar as it seeks unused vacation pay. Kirk's State Law Defamation and Constructive Discharge Claims
Because Kirk's ERISA is being dismissed because there is no genuine issue of material fact, this Court need not reach the issues of whether Kirk's claim should also be barred because he failed to exhaust administrative remedies or whether Kirk's resignation should be deemed the result of constructive discharge.
As Kirk and Schindler both appear to be citizens of New Jersey, there is no original federal jurisdiction over Kirk's New York state law claims for constructive discharge and for defamation. Because Kirk's federal ERISA claim for severance pay and vacation benefits is dismissed, this Court declines to exercise supplemental jurisdiction over the remaining New York law claims.See 28 U.S.C. § 1367(c)(3). As the Second Circuit recently emphasized, "[in general] where the federal claims are dismissed before trial, the state claims should be dismissed as well."Giordano v. City of New York, 274 F.3d 740, 754 (2d Cir. 2001) (quoting Marcus v. ATT Corp., 138 F.3d 134, 138 (2d Cir. 1998)); see also, Carnegie-Mellon University v. Cohill, 484 U.S. 343, 350 n. 7, 108 S.Ct. 614 (1988). The circumstances of this litigation offer little reason to depart from that general rule.
Neither Kirk's defamation claim nor his constructive discharge claim has required expenditure of any significant amount of judicial resources. Moreover, the discovery generated in this action relevant to those claims "would not be wasted if [this action were] refiled in state court [as] it would be available for use there."See Allard v. Arthur Andersen Co., 957 F. Supp. 409, 425 (S.D.N.Y. 1997). Accordingly, Kirk's state law claims are dismissed without prejudice to their being refiled in state court. See Lapides v. Tarlow, 01 Civ. 9319, 2002 WL 31622382 at *3 (S.D.N.Y. Nov. 27, 2002).
CONCLUSION
For the reasons set forth above, Schindler's motion for summary judgment is granted. Kirk's ERISA claim for severance pay and for compensation for unused vacation days is dismissed with prejudice. His claims for constructive discharge and for defamation are dismissed without prejudice to their being refiled in an appropriate state court.
SO ORDERED.