Gagnon v . Blue Cross CV-93-602-M 03/31/95 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Lynn S . Gagnon, Plaintiff, v. Civil N o . 93-602-M Blue Cross and Blue Shield of New Hampshire, Defendant.

O R D E R

Plaintiff Lynn S . Gagnon brings this claim for severance pay

benefits under the Employee Retirement Income and Security Act of

1974 ("ERISA"),

et seq. She claims that

Defendant Blue Cross and Blue Shield of New Hampshire ("Blue

Cross"), owes her $13,650.00 in severance pay. Blue Cross has

moved for summary judgment, and, as explained below, its motion

is denied.

I. BACKGROUND

The facts, stated favorably to plaintiff, the party opposing summary judgment, are fairly summarized as follows. Blue Cross employed plaintiff for over twenty years, until approximately May 1 2 , 1993. From January 1 , 1990 until March 2 8 , 1993, she was employed as the administrative assistant to Executive Vice President Frank Greaney. On March 2 8 , 1993, Blue Cross abolished

Mr. Greaney's position and terminated his employment. As a

result, plaintiff's position as Greaney's administrative

assistant was also eliminated.

Plaintiff nevertheless remained in Blue Cross's employ for six additional weeks, during which she continued to receive full salary at "Pay Grade 39," the level applicable to her job as Greaney's assistant. Plaintiff intended to find another position within Blue Cross comparable in compensation, responsibility, and prestige to her eliminated position. Plaintiff sought two positions in particular: administrative assistant to the remaining Executive Vice President or executive secretary to Blue Cross's President. Each position carried a pay grade level of 39 or higher. Blue Cross offered her neither position, although both were available. Instead Blue Cross made three different positions available to her, each of lesser compensation and responsibility than her eliminated position.

What follows is the chronology of events leading up to

plaintiff's departure on Friday, May 1 4 , 1993. On Friday, May,

7 , 1993, one of the two positions that plaintiff had actively

2 sought, that of secretary to a remaining executive vice president

(pay grade level 3 9 ) , was filled by someone else. On Saturday,

May 8 , 1993, plaintiff met with Blue Cross's Director of

Personnel Administration, Ron Lanseigne ("Lanseigne"), and voiced

her frustration with being denied the level 39 executive

secretary position. Plaintiff also expressed disappointment over

the fact that her only apparent transfer option seemed to be a

position in the document processing department at an annual

salary $10,000.00 less than her grade 39 salary. Lanseigne was

sympathetic and told her that she was probably entitled to

severance pay, as her job had been abolished, but that "he would

have to check it out." Plaintiff's Deposition at p . 4 8 .

On Sunday, May 9, 1993, plaintiff, now confident that she

would be entitled to severance pay if she left Blue Cross rather

than accept a lesser position, removed her personal belongings

from her office.

at p . 5 5 . Lanseigne called later that

evening, but seemed less enthusiastic about plaintiff's

entitlement to severance pay.

at p . 5 6 . Plaintiff asserts

that Lanseigne said "he could not answer for this organization"

as it related to severance pay issues, but that he would still

check on whether she was so entitled.

Plaintiff informed

3 Lanseigne that she was not going to report to a lesser job in

document processing, as she had planned to d o , on Monday, May 1 0 ,

1993. Instead, she said that she would report to document

processing on the following day, Tuesday, May 1 1 , 1993, but only

if she was denied severance pay. Plaintiff's Objection to

Defendant's Motion for Summary Judgment, p . 4 ; Plaintiff's

Deposition at p . 5 8 .

On Monday, May 1 0 , 1993, plaintiff had three separate

conversations with Blue Cross's Vice President for Human

Resources, Carol Corcoran ("Corcoran"). Plaintiff's Objection to

Defendant's Motion for Summary Judgment at p . 5 . In their first

conversation, Corcoran, believing that plaintiff had quit over

the weekend, wanted to know if plaintiff had changed her mind.

Plaintiff's Deposition at p . 6 0 . Plaintiff told Corcoran that

she would not leave Blue Cross without severance pay.

Corcoran responded by saying, "[w]ell, then I expect you to

report to work at 8:00 a.m. [Tuesday] with a positive working

attitude in document processing," to which plaintiff agreed.

Later that day, plaintiff called Corcoran with further

inquiries regarding her entitlement to severance pay. Corcoran

4 allegedly responded angrily, asking plaintiff, "[w]hat is it with

you and the severance? You are not entitled to anything."

at 6 2 . Corcoran ended the conversation by telling plaintiff to

cool down and consult her husband.

Soon thereafter

plaintiff called Corcoran for the third time informing Corcoran

that she indeed "quit."

On the morning of Tuesday, May 1 1 , 1993, plaintiff did not

report to work at Blue Cross, but did have lunch with defendant's

Executive Vice President, Martin Mitchell ("Mitchell"). At that

meeting Mitchell told plaintiff that the position of legal

secretary to Lisa Olcott ("Olcott"), defendant's Vice President

and Legal Counsel, was open. Plaintiff's Objection to

Defendant's Motion for Summary Judgment at p . 5 . Plaintiff

responded positively, contacted Olcott, and accepted that job, to

begin the following day. Plaintiff's Deposition at p . 6 5 . On

Wednesday, May 1 2 , 1993, however, plaintiff had a change of heart

and decided that she did not want to return to defendant

corporation. She telephoned Lanseigne and asked that Olcott be

told that she was very "sorry . . . but that n o , [she] did not

want to return to Blue Cross and Blue Shield."

Two days

later, on Friday, May 1 4 , 1993, plaintiff signed defendant's

5 termination form stating that she was "unhappy with changes -

time to move on."

Blue Cross moves for summary judgment, arguing that its

severance pay policy does not apply to the plaintiff as she was not terminated due to job elimination, but rather, she

voluntarily quit. Plaintiff counters that summary judgment is

inappropriate, asserting that Blue Cross's severance policy is

applicable and genuine issues of material fact exist.

II. STANDARD OF REVIEW

Summary judgment is proper "if 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." Fed. R. Civ. P. 56(c). A material

fact "is one `that might affect the outcome of the suit under the

governing law.'" United States v . One Parcel of Real Property

with Bldgs.,

0 0 , 204 (1st Cir. 1992) (quoting Anderson

v . Liberty Lobby, Inc.,

4 2 , 248 (1986)). The moving

party has the burden of demonstrating the absence of a genuine

issue of material fact for trial. Anderson, 477 U.S. at 256.

6 The party opposing the motion must set forth specific facts

showing that there remains a genuine issue for trial,

demonstrating "some factual disagreement sufficient to deflect

brevis disposition." Mesnick v . General Electric Co.,

(1st Cir. 1991), cert. denied,

(1992).

This burden is discharged only if the cited disagreement relates

to a genuine issue of material fact. Wynne v . Tufts University

School of Medicine,

9 1 , 794 (1st Cir. 1992).

The terms of a severance pay plan are "to be reviewed under

a de novo standard unless the benefit plan gives the

administrator or fiduciary discretionary authority to determine

eligibility for benefits or to construe the terms of the plan."1

Firestone Tire & Rubber C o . v . Bruch,

0 1 , 115, 103

L.Ed.2d. 8 0 ,

(1989). If the plan does reserve

discretion to an administrator or fiduciary to determine benefit

eligibility, a more deferential, "abuse of discretion," standard

applies to judicial review of a denial of benefits. Firestone,

. The mere authority to interpret the terms of an

1 The court assumes that ERISA regulates the severance pay policy under which plaintiff seeks benefits as defendant raises no objection, and the policy appears to facially qualify as a "Welfare Benefit Plan" within the meaning of ERISA.

7 ERISA plan does not, without more, constitute delegation of

discretionary authority to determine benefit eligibility. Id. at

112. Rather, a benefit plan must clearly grant discretionary

authority to the administrator before decisions will be accorded

the deferential, arbitrary and capricious, standard of review.

Rodriguez-Abreu v . Chase Manhattan Bank, N.A.,

8 0 , 583

(1st Cir. 1993).

Here, Blue Cross's "Policies and Procedure Manual for

Management Personnel" provides as follows:

The intent of these policies is to increase understanding and to help in assuring consistency and fairness of policy application throughout the organization. Every member of the management team is responsible for the administration of these policies in a consistent and impartial manner.

Blue Cross and Blue Shield of New Hampshire, Policies and

Procedure Manual for Management Personnel, executed January 1 ,

1992, at p . i . (emphasis added). There is no evidence that Blue

Cross's severance pay policy grants any discretion to

administrators to interpret plan terms or eligibility criteria in

determining eligibility for severance pay benefits. The policy

affirmatively states that:

8 Upon termination, all employees are entitled to receive termination pay, which includes a sum equivalent to the total days of accumulated annual leave, the floating holiday balance at the regular rate of earnings, plus all salary accrued since the last pay day.

at p . 61 (emphasis added).

Accordingly, the court will employ the de novo standard of

review in evaluating defendant's denial of severance benefits.

Under the de novo standard, the court must look "to the terms of

the plan and other manifestations of the parties intent, in

determining plaintiff's eligibility." Firestone,

; see also Burnham v . Guardian Life Ins. Co.,

(1st Cir. 1989) citing Sampson v . Mutual Ben. Life Ins. Co.,

0 8 , 110 (1st Cir. 1988) ("[the] straightforward

language in an ERISA-regulated [ ] policy should be given its

natural meaning."). "In short, de novo review looks to the

language of the plan (supplemented in appropriate cases by

evidence essential to resolving a relevant ambiguity), not to any

one party's interpretation of that language." Allen v . Adage,

Inc.,

(1st Cir. 1992).

9 III. DISCUSSION

Blue Cross argues that employee's are eligible for severance

benefits only where defendant corporation has: 1 ) eliminated the

employee's position; and 2 ) terminated the employee's employment.

Defendant's Motion for Summary Judgment, at p . 1 . Defendant

asserts that plaintiff's position was not eliminated and that she

was not terminated, but quit.

Plaintiff counters that her "position" for purposes of the

severance policy was secretary to M r . Greaney, and as result of

that position being eliminated she was terminated, entitling her

to severance benefits. Plaintiff's Memorandum Objecting to

Defendant's Motion for Summary Judgment at p . 3 , 4 . The

pertinent policy provisions are as follows:

Blue Cross and Blue Shield of New Hampshire provides a sixty day notice to employees whose position is being abolished, during which time the employee may consider an in- house transfer to any existing vacancies. If a transfer is not appropriate or possible, outplacement services are provided at the request of the employee.

Upon termination due to elimination of positions, employees are entitled to all accumulated vacation pay and the balance of their floating holidays plus all salary accrued since the last pay day.

10 Employees who work to the agreed upon termination date are granted Severance Pay which is paid the week after termination and includes one week of pay for every year of service . . .

Blue Cross and Blue Shield's Policies and Procedures Manual for

Management Personnel at p . 61 (emphasis added).

A . ELIMINATION OF PLAINTIFF'S POSITION

It appears to be undisputed that plaintiff's secretarial

position was eliminated when Blue Cross eliminated her superior's

Executive Vice President's position. At the same time, there is

no doubt that the position of secretary to Blue Cross's Legal

Counsel still exists, and so was not eliminated. Plaintiff's

Exhibit 2 , at 9 1 . Hence, an important initial question i s ,

"Which position did plaintiff hold when she left Blue Cross on

Friday, May 1 4 , 1993?"

Blue Cross maintains that plaintiff's last position, for

purposes of the severance policy, was that of legal secretary.

Memorandum of Law in Support of Defendant's Motion for Summary

Judgment at p . 3 . In support of its argument Blue Cross points

to plaintiff's deposition, in which she stated "I think I did

tell her [Lisa Olcott, Blue Cross's Legal Counsel] that I would

11 work for her. I'm sure I did." Plaintiff's Deposition at 6 5 .

Defendant asserts that plaintiff's "acceptance" extinguished any

right she might have had to severance pay benefits.

Plaintiff asserts that her alleged "acceptance" did not extinguish her rights, arguing that for severance pay purposes

her last position was the one she actually held, that of

secretary to M r . Greaney. She argues that by remaining at Blue

Cross for six weeks after her position with M r . Greaney was

eliminated, she took advantage of Blue Cross's clear severance

policy. The pertinent policy language supporting her argument is

as follows:

"Blue Cross provides a sixty day notice to employees whose position is being abolished, during which time the employee may consider an in-house transfer to any existing vacancies . . . [i]f a transfer is not appropriate or possible, outplacement services are provided . . . "

Manual at p . 61 (emphasis added).

With an eye toward the "natural meaning" and

"straightforward language" of the policy, plaintiff could have

legitimately interpreted Blue Cross's policy as affording two

months within which to find acceptable, comparable opportunities

12 at Blue Cross, failing which severance pay benefits, as defined,

could be obtained. Firestone,

; Burnham,

. Blue Cross concedes that notwithstanding the fact that

plaintiff's secretarial position had been eliminated, she was

still paid at her previous grade 39 salary during this entire

period. She was never paid at the reduced salary associated with

the legal counsel secretarial position. Memorandum of Law in

Support of Defendant's Motion for Summary Judgment at 1 .

Secondly, plaintiff points to Blue Cross's response to an

interrogatory asking it to "list the supervisors [plaintiff] had

from January 1 , 1990 through the time her employment ceased."

Blue Cross answered that plaintiff had been supervised by M r .

Greaney. That Blue Cross concedes that Greaney and not M s .

Olcott (Legal Counsel) was plaintiff's supervisor, would seem to

raise an issue of material fact relevant to whether a "transfer"

ever took place within the meaning of the severance pay policy.

Plaintiff has at least raised issues of material fact as to

which position she actually held at the time she terminated,

whether any "transfer" occurred, and whether the transfer was

"appropriate," within the meaning of those terms as used in the

policy [plan].

13 B. TERMINATION OF POSITION

Blue Cross argues that even if plaintiff's position was in

fact eliminated, plaintiff would still not be entitled to

severance pay benefits, because she "voluntarily quit" her newly

accepted job as secretary to the legal counsel. Memorandum of Law in Support of Defendant's Motion for Summary Judgment at 1 .

In support of its argument, Blue Cross cites plaintiff's

statement that she "quit" the legal secretary's job.

Blue

Cross contends that employees who voluntarily quit become

ineligible for severance pay. The policy language does not

appear to specifically address that point. However, a reasonable

reading of the language used might be that an employee whose job

has been eliminated may indeed "quit" rather than accept an

"inappropriate" transfer and still receive severance benefits,

while one who obtains an "appropriate" transfer and then

voluntarily quits would not be eligible.

Plaintiff concedes using the word "quit" in describing her

departure from Blue Cross but says that her departure was based

solely on her inability to secure an appropriate position within

Blue Cross and, implicitly, that the "quit" was from the

eliminated position, the only one she ever performed at Blue

14 Cross. Plaintiff's Memorandum Objecting to Defendant's Motion

for Summary Judgment at 7 . She says that upon finally realizing

she was not going to be transferred to a comparable position in

terms of compensation, responsibilities, and prestige, she simply

chose, after some false starts, to end her association with Blue

Cross.

at 7 . Plaintiff may well have considered the legal

secretary's position as a viable option at one point, and may

have changed her mind and decided instead to leave Blue Cross

rather than accept a position paying substantially less than her

previous salary. See e.g., Plaintiff's Deposition at 1 9 .

Whether those circumstances, if indeed that is what occurred,

constitute a separate and distinct voluntary "quit" or merely

represent a continuing decisional process ultimately resulting in

a refusal to accept an inappropriate internal job transfer, are

not issues resolvable on these pleadings.

In addition, the record currently before the court is

unclear as to whether plaintiff was accurately informed as to her

option to receive severance pay under the policy. It appears to

be at least arguable that she was led to believe that she was not

entitled to severance pay by Blue Cross and that her options were

limited to accepting the lesser secretarial position or leaving

15 Blue Cross's employ without severance. These are fact related,

if not fact driven, issues and their resolution might well prove

significant in resolving this matter.

IV. CONCLUSION

The court finds that genuine issues of material fact exist

for trial precluding summary judgment at this stage of the

proceedings. Accordingly, Blue Cross's Motion for Summary

Judgment is denied.

SO ORDERED.

Steven J. McAuliffe United States District Judge

March 3 1 , 1995

cc: Michael J. Sheehan, Esq. Edward M . Kaplan, Esq.

16