source: Caselaw Access Project

author: THOMAS F. HOGAN, District Judge.

license: Public Domain

text:
    T.I.M.E.-D C, INC., Plaintiff, v. I.A.M. NATIONAL PENSION FUND, Defendant.
    Civ. A. No. 84-3068.
    United States District Court, District of Columbia.
    Aug. 6, 1985.
    Carl L. Taylor, Kirkland & Ellis, Washington, D.C., for plaintiff.
    Robert R. Osgood, Washington, D.C., for defendant.
   MEMORANDUM OPINION

THOMAS F. HOGAN, District Judge.

T.I.M.E.-D C, Inc. filed the complaint in this action against the defendant I.A.M. National Pension Fund (the “Machinists’ Fund’Vthe “Fund"), as the result of the defendant’s September 14,1984 assessment of “withdrawal liability” against the plaintiff under the terms of the Multiemployer Pension Plans Amendment Act of 1980 (the “Multiemployer Act’Vthe “MPPAA”), 29 U.S.C. §§ 1002(37)(A); 1301(a)(3) (1983). Specifically, the complaint as originally framed, sought a declaration that T.I.M. E.-D C, Inc. (“TIME-DC”/“TIME”) is involved in an on-going labor dispute with the International Association of Machinists and Aerospace Workers (the “Machinists’Vthe “Union”), excepting TIME from withdrawal liability under the “labor disputes” provision of the Multiemployer Act, 29 U.S.C. § 1383(a). The complaint also sought an injunction enjoining the Fund from prosecuting, enforcing, or collecting any claim for withdrawal liability against TIME.

The defendant Machinists Fund counterclaimed for declaratory relief, seeking a declaration that its claim for withdrawal liability was not barred by the MPPAA labor disputes exception on the basis that there was no on-going labor dispute between TIME and the Union, as well as a declaration that TIME could initially challenge the withdrawal assessment only through the MPPAA’s arbitration procedures.

By Memorandum Opinion and Order of November 6, 1984, 597 F.Supp. 256, this Court granted plaintiffs motion for a preliminary injunction insofar as enjoining the defendant from pursuing its September 14, 1984 claim of withdrawal liability against TIME-DC. In doing so, the Court held that the September 14, 1984 claim, assessing withdrawal liability as of March and April, 1982, was improper given the clear existence of a labor dispute between TIME and the Union during March and April of 1982. However, the Court reached no determination as to whether the labor dispute is on-going, but instead indicated only that the Fund, in assessing withdrawal liability against TIME, had not to date properly investigated the status of the labor dispute.

On January 16, 1985 a consent permanent injunction was entered with respect to the Fund’s September 14, 1984 claim, embodying the same terms as the preliminary injunction. Presently before the Court are several motions, filed both prior to and after entry of the consent permanent injunction, raising questions as to what remains of this action in light of the permanent injunction.

I.

First, prior to entry of the consent permanent injunction plaintiff filed a motion to amend the complaint. Unlike the original complaint, which simply set forth the claims for declaratory and injunctive relief without enumeration of counts, the amended complaint seeks to designate plaintiff’s claims for injunctive and declaratory relief as to defendant’s September 14, 1984 assessment of withdrawal liability “Count One,” while designating as “Count Two” plaintiff’s claims for declaratory and injunctive relief based on the allegation of a presently continuing labor dispute between itself and the Union. Although the proposed amended complaint more clearly delineates plaintiff’s claims, and is in conformity with this Court’s perception of the pertinent issues of this ease as identified in the treatment of plaintiff’s preliminary injunction motion, the amended complaint merely restructures the allegations of the original complaint without adding any new claims or issues. Accordingly, formal amendment of the complaint is not warranted.

II.

Likewise, prior to the entry of the consent permanent injunction plaintiff sought partial summary judgment with respect to defendant’s September 14,1984 assessment of withdrawal liability. With the filing of the consent permanent injunction plaintiff instead requested that its summary judgment motion be treated as a motion for entry of judgment in its favor pursuant to Rule 58 of the Federal Rules of Civil Procedure. The permanent injunction consented to by the parties has already been approved by the Court and incorporated in its order of January 16, 1985, and therefore is an order which the Court retains jurisdiction to enforce. No further action by this Court with respect to the September 14, 1984 withdrawal liability claim is necessitated.

III.

Defendant has also filed a motion with this Court to dismiss its counterclaim. Plaintiff opposes that motion unless the dismissal is with prejudice, precluding the Fund from later asserting that the labor dispute between TIME and the Machinists ended prior to October 25, 1984, the date of the filing of the counterclaim. In seeking dismissal with prejudice plaintiff merely argues that dismissal without prejudice would solve nothing at this point of the litigation. Defendant indicates on the other hand, that while it does not desire at this time to contest plaintiff's assertion that there is an on-going labor dispute, it does not wish to concede that point either, but instead wishes to reserve its right at some future time to assert, based on evidence that it may obtain in the future, that the labor dispute ended, and perhaps ended prior to October 25, 1984. This Court must agree that defendant’s assertion that it does not at this time contest the plaintiff’s position that a labor dispute is presently on-going should not be held against it as a binding concession. The defendant’s representation that it wishes only to re-evaluate any evidence of the situation that should come into its possession is precisely what this Court in ruling on the preliminary injunction motion indicated was the Fund’s proper role under the MPPAA. Accordingly, this Court does not find any compelling reasons why dismissal of defendant’s counterclaim without prejudice should not be permitted.

IV.

Given the entry of a consent permanent injunction as to the defendant’s September 14, 1985 withdrawal liability assessment and the dismissal of defendant’s counterclaim, this Court finds that plaintiff’s complaint does not present any further case or controversy appropriate for review by this Court. Plaintiff’s claim for a declaration that the labor dispute between itself and the Machinists is still ongoing, as well as the claim for an injunction precluding the defendant from seeking to enforce or collect any claim of withdrawal liability until that labor dispute ends, simply are not ripe for review in the absence of any further assertion of withdrawal liability by the Fund.

The ripeness doctrine considers whether the “conflicting contentions of the parties ... present a real, substantial controversy between the parties having adverse legal interests, a dispute definite and concrete, not hypothetical or concrete.” Railway Mail Assn. v. Corsi, 326 U.S. 88, 93, 65 S.Ct. 1483, 1487, 89 L.Ed. 2072 (1945). The ripeness doctrine therefore requires the Court to evaluate “both the fitness of the issues for judicial decision and the hardship to the parties of withholding consideration.” Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). In doing so, the Court must consider the reality and imminence of injury to the plaintiff. KVUE, Inc. v. Austin Broadcasting Corp., 709 F.2d 922, 927 (5th Cir.1983). A matter is not ripe for adjudication absent “the threat of significant and immediate impact on the plaintiff.” Kerr-McGee Chemical Corp. v. Dept. of the Interior, 709 F.2d 597, 600 (9th Cir.1983) (citing Toilet Goods Ass’n v. Gardner, 387 U.S. 158, 162-64, 87 S.Ct. 1520, 1523-24, 18 L.Ed.2d 697 (1967)).

In the absence of any pending claim for withdrawal liability the plaintiff is not threatened with sufficiently imminent injury to constitute a cognizable case or controversy—a Constitutional prerequisite for jurisdiction. To hold that this Court has jurisdiction to simply determine in the abstract whether a labor dispute is still on-going between TIME and the Machinists, and whether withdrawal liability may be asserted against TIME, would give this Court a function which the MPPAA intended to be performed in the first instance by the Fund. Moreover, to accept the plaintiff’s position would place this Court in a continuing role as an overseer of the relationship between TIME, the Machinists and the Fund, free simply to review from time to time, at a party’s request, whether the labor dispute was continuing at that particular time. This is a role clearly inappropriate under the Constitution’s “case and controversy” requirement of federal jurisdiction. Accordingly, all claims by the plaintiff not covered by the January 16, 1985 consent permanent injunction must be dismissed for lack of jurisdiction.

V.

Therefore, the only remaining matter pending before this Court is plaintiffs motion for attorneys fees and costs.

With respect to attorneys fees the MPPAA provides that “the court may award all or a part of the expenses incurred ..., including reasonable attorneys fees, to the prevailing party.” 29 U.S.C. § 1451(e). TIME-DC has moved the Court to enter an order awarding it costs and reasonable attorneys fees under section Í451(e) as the “prevailing party” on the issue of the Fund’s September 14, 1984 withdrawal liability assessment. In doing so, the plaintiff asserts that the Supreme Court’s decision in Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), interpreting the Civil Rights Attorneys Fees Awards Act of 1976, 42 U.S.C. § 1988, sets the standard “generally applicable to all cases in which Congress has authorized an award of fees to a ‘prevailing party’.” Id. at 433 n. 7, 103 S.Ct. at 1939 n. 7. Therefore, plaintiff maintains, under Hensley the prevailing party “should ordinarily recover an attorneys fee unless special circumstances would render such an award unjust.” Id. at 429, 103 S.Ct. at 1937.

The defendant asserts, however, that Hensley’s applicability to other statutes providing for an award of attorneys fees to the prevailing party is limited to Hensley’s instruction of how to calculate a reasonable award. In determining when an award of fees is appropriate, the defendant argues, instruction is more properly taken from cases construing the civil enforcement section of the Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132(g)(1), which like the MPPAA provision is specifically applicable to pension plans, than from Hensley and other eases considering awards of attorneys fees under the unique concerns of the civil rights statutes. See Shelter Framing Corp. v. Pension Benefit Guaranty Corp., 705 F.2d 1502, 1515 (9th Cir.1983), (citing ERISA fee award principles as applicable to MPPAA), rev’d on other grounds sub nom., Pension Benefit Guaranty Corp. v. R.A. Gray & Co., — U.S. —, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984); see also Person Co., Inc. v. Bakery Drivers & Salesmen Local 194, C.A. 82-4058, Mem.Op. (D.N.J. October 29, 1984) (applying ERISA fee award principles to MPPAA).

Cases awarding attorneys fees against pension plans under ERISA have generally focused on five factors in considering whether an award of fees is appropriate: (1) the losing party’s culpability or bad faith; (2) the losing party’s ability to satisfy a fee award; (3) the deterrent effect of such an award; (4) the value of the victory to plan participants and beneficiaries, and the significance of the issue involved, and (5) the relative merits of the parties’ positions. Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir.1980); see also Iron Workers Local No. 272 v. Bowen, 624 F.2d 1255, 1266 (5th Cir.1980); Eaves v. Penn, 587 F.2d 453, 465 (10th Cir.1978).

This Court need not determine whether the Hensley or Hummell standard is specifically applicable to attorneys fees awards under the MPPAA. Instead, this Court finds that even under the more restrictive standard of Hummell, an award of attorneys fees to TIME-DC is nevertheless appropriate in this case.

“No one of the Hummell factors ... is necessarily decisive, and some may not be pertinent in a given case.” Carpenters Southern California Administrative Corp. v. Russell, 726 F.2d 1410, 1416 (9th Cir.1984). The defendant, in seeking to avoid an award of attorneys fees in this case under Hummell, argues only that it did not act in bad faith in assessing withdrawal liability against TIME, and that this case did not resolve issues of broad legal significance.

It is not necessary to find that the Fund acted in bad faith to award attorneys fees under Hummell. Instead, while the existence of bad faith may be a compelling factor, requiring bad faith under § 1451(e), or any other statutory provision for attorneys fees, would render the statute virtually meaningless since “if the objective of Congress had been to permit the award of attorneys fees only against defendants who had acted in bad faith ‘no new statutory provision would have been necessary’ since even the American common law rule allows the award of attorneys fees in those exceptional circumstances.” Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 417, 98 S.Ct. 694, 698, 54 L.Ed.2d 648 (1978); see also Smith v. CMTA-IAM Pension Trust, 654 F.2d 650 (9th Cir.1984).

This Court’s ruling on the preliminary injunction, which served as the basis for the consent permanent injunction, found that the defendant “completely failed to give proper consideration to the labor disputes exception to withdrawal liability” adopting “the paradoxical argument that a labor dispute in fact existed, but that the labor disputes exception ... is nevertheless wholly inapplicable to the case hand.” Memorandum Opinion, at 15 (November 6, 1984). The Court further noted that the record contained various inconsistent explanations for the defendant’s conduct, id. at 10-11, but that none of the explanations overcame the lack of any evidence considered by the Fund indicating that the labor dispute had ended or that the Machinists had “walked away from the shop,” abandoning the labor dispute. Id. at 17.

Regardless of the presence or absence of bad faith, therefore, this Court finds that the Fund’s actions with respect to the September 14, 1984 assessment of withdrawal liability were both inconsistent and irrational, and that the failure to exercise its powers under the MPPAA responsibly, especially in light of the irreparable injury that the exercise of those powers may have, constitutes culpable conduct under Hummell warranting an award of attorneys fees to the plaintiff.

Likewise, regardless of the significance of the issues raised by this case, this Court finds that an award of attorneys fees to the plaintiff here may serve a deterrent effect, impressing upon this defendant and other pension funds the importance of responsibly exercising the statutory powers endowed upon them, especially in light of the impact that the exercise of those powers may have on their target.

The parties shall have 30 days in which to reach an agreement as to a reasonable sum of attorneys fees, after which time, in the absence of agreement, the plaintiff may file an appropriately documented petition for a judicial determination of the award.

      . Plaintiff had also filed a motion to compel discovery. The matters sought to be discovered, however, were revealed in defendant’s response to that motion, with plaintiff noting no dissatisfaction with the response given. Accordingly, plaintiffs motion to compel is moot.

      . In Shelter Framing the Court of Appeals upheld an award of attorneys fees to plaintiffs who had successfully challenged the MPPAA’s constitutionality. Pension Benefit Guaranty Corp. subsequently overruled the underlying decision which had made the plaintiffs prevailing parties, sustaining the MPPAA’s constitutionality. 104 S.Ct. at 2717-20.


author: HADEN, Chief Judge.

text:
    RIDGEWAY COAL COMPANY, INC., et al., Plaintiffs, v. FMC CORPORATION, et al., Defendants.
    Civ. A. No. 83-2366.
    United States District Court, S.D. West Virginia, Charleston Division.
    Aug. 6, 1985.

      James M. Cagle, Charles R. Garten, Charleston, W.Va., for plaintiffs.
    Charles Q. Gage, M. Blane Michael and Karen Speidel Rodgers, Jackson, Kelly, Holt & O’Farrell, Charleston, W.Va., for defendants.
   MEMORANDUM OPINION AND ORDER

HADEN, Chief Judge.

This is an action which was originally filed in the Circuit Court of Boone County, West Virginia. The action was removed to this Court, by the Defendants on July 27, 1984. Although a United Mine Workers Local and several of its members had joined the present Plaintiffs in bringing this suit, the Union and its members have settled their differences with the Defendants and, consequently, have been dismissed from the case. The remaining Plaintiffs are Ridgeway Coal Company, Inc. and Harold J. Henry, President and Chief Executive Officer of the Plaintiff corporation. The original Defendants were FMC Corporation, Bill Curry, an employee of FMC, William A. McMinn, Vice President of FMC, and Richard Roe, an unknown employee of FMC. When the Plaintiffs filed their amended complaint, Roe was dropped as a Defendant. Defendant William A. McMinn has never been served with process. Thus, only FMC and Curry remain as Defendants. These two Defendants now move the Court to dismiss the amended complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted.

I. Background

FMC, the Defendant corporation, is the owner of certain coal properties in Boone County, West Virginia. The particular property of the Defendant involved in this litigation is known as the “Orgas property.” Ridgeway Coal Company, Inc., the Plaintiff corporation, is a West Virginia corporation engaged in the business of coal mining. Most of its business is in Boone County. During the summer of 1982, Ridgeway, through its President, Henry, approached FMC and made known to FMC its interest in subleasing the Orgas property. The initial discussions between the parties culminated in a letter dated July 12, 1982, from Dale R. Silbernagel, an employee of FMC, to the Plaintiff Henry. In the letter, Silbernagel set forth several conditions which Ridgeway would have to satisfy before FMC would be willing to enter into negotiations regarding a sublease. The conditions were directed toward Ridgeway’s ability to effectively mine and sell the coal and the company’s general financial condition.

The Plaintiffs (Ridgeway and Henry) allege that they met the conditions spelled out in the July 12, 1982, letter. In their amended complaint, the Plaintiffs further allege that FMC “failed and refused to enter into good faith discussions or negotiations with the Plaintiffs, or to have a good faith, meaningful discussion with the Plaintiffs concerning the Orgas property.” Incorporating the Silbernagel letter into their complaint, the Plaintiffs claim the letter created a contractual relationship between themselves and FMC. Having met the letter’s conditions, the Plaintiffs view as a contractual breach the failure of FMC to either lease or negotiate with them.

Plaintiffs also seek relief under a civil conspiracy theory. They claim that FMC, Defendant Bill Curry and William McMinn “did combine and conspire together to maliciously, wrongfully and illegally deprive the Plaintiffs of their contractual rights and interests in the Orgas property.” In particular the Plaintiffs charge the Defendants with frustrating the Plaintiffs’ attempt to sublease the Orgas property. They allege, without elaboration, that the conspiracy was carried out by means of meetings, phone calls and conversations between the Defendants and others.

In their motion, the Defendants have assigned grounds attacking both of the Plaintiffs’ theories. First, the Defendants argue that their discussions with the Plaintiffs never resulted in a contractual relationship. At most, contend the Defendants, there was only an agreement to negotiate. They submit that such an agreement is not legally binding. Second, the Defendants argue that a corporation cannot conspire with its own employees. Because only FMC and its employee, Bill Curry, are before the Court as Defendants, the Defendants contend that the Plaintiffs’ complaint fails to state a cause of action under a civil conspiracy theory.

II. Discussion

As an initial matter, the Court notes its agreement with the Plaintiffs on the standard of review applicable to a motion to dismiss under Rule 12(b)(6). That standard is weighted heavily in the favor of the Plaintiffs. “In appraising the sufficiency of the complaint,” the Supreme Court stated in Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957), “a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the Plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Furthermore, in reviewing the Plaintiffs’ complaint, a court must assume as true any allegations set forth in support of the Plaintiffs’ theories. Johnson v. Mueller, 415 F.2d 354 (4th Cir.1969); see also Vance v. Bordenkircher, 533 F.Supp. 429 (N.D.W.Ya.1982); and Brock & Davis Co. v. Charleston National Bank, 443 F.Supp. 1175 (S.D.W.Va. 1977).

Although a court’s attention must be limited to the complaint in ruling on a Rule 12(b)(6) motion, it must be noted that a complaint can comprise more than numbered paragraphs of allegations. Rule 10(c) of the Federal Rules of Civil Procedure specifically provides that “[a] copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes.” The Plaintiffs in their amended complaint incorporated by reference the July 12, 1982, letter from Dale Silbernagel and attached it is an exhibit to their complaint. Therefore, that letter may be considered in conjunction with the amended complaint as the Plaintiffs’ theories are tested.

A. The Plaintiffs’ Contract Theory. The Plaintiffs allege in their amended complaint that the Defendant corporation contracted to sublease the Orgas property to the. Plaintiffs, or at a minimum agreed to conduct good faith discussions or negotiations with the Plaintiffs. As support for their contentions, they incorporate the Silbernagel letter into their complaint. This letter, which is attached to this Memorandum Opinion and Order as an appendix, would seem to be the mainstay of the Plaintiff’s contract theory.

It is recognized that parties can agree to agree in the future. To do so, however, it is necessary that the terms to be agreed upon in the future be substantially drawn from the initial agreement. Frank Horton & Co. v. Cook Electric Co., 356 F.2d 485 (7th Cir.) cert. denied 384 U.S. 952, 86 S.Ct. 1572, 16 L.Ed.2d 548 (1966). The terms must be determined “independent of a party’s mere ‘wish, will and desire ... ’ either by virtue of the agreement itself or by commercial practice or other useage or custom.” US. v. Orr Construction Co., 560 F.2d 765, 769 (7th Cir.1977) (quoting 1 Corbin on Contracts, § 95, at 402). The letter Plaintiffs present as the sole basis for their contractual theory does not begin to supply the terms of any possible sublease which may have been entered into between Ridgeway and FMC. The letter contains conditions, but these conditions were prerequisites to negotiation; for the most part they would not have carried over into any sublease which resulted from the negotiations.

The Plaintiffs alternatively claim that FMC contracted to negotiate with the Plaintiffs in good faith. Although the letter does speak of the willingness of FMC to enter into negotiations with the Plaintiffs, it does not create a contractual relationship between the parties. The letter is nothing more than an agreement to negotiate. As such, it is nothing more than negotiations itself. Wharf Restaurant, Inc. v. Port of Seattle, 24 Wash.App. 601, 605 P.2d 334 (1979). As the court said in Neff v. World Publishing Co., 349 F.2d 235 (8th Cir.1965), “[preliminary negotiations between parties who have in mind the execution of a formal written contract cannot themselves be construed as constituting a contract.”

The primary failing point of the contract claimed by the Plaintiffs, whether it be to sublease or merely to negotiate, is the inability of this Court to enforce the contract or to fashion any other remedy. When terms are so vague and indefinite that there is no basis or standard for deciding whether the agreement has been kept or broken, or to fashion a remedy, and no means by which such terms may be made certain, then there is no enforceable contract. Candid Productions, Inc. v. International Skating Union, 530 F.Supp. 1330 (S.D.N.Y.1982).

This Court cannot write a sublease between the parties. There is nothing to indicate what the terms of such a lease would be. How long would the lease run? What would be the consideration? What type of covenants would attach? The Court cannot write an agreement for the parties that they themselves would not have written. Neither can the Court enforce any promise to negotiate. “[A]n agreement to enter into negotiations in the future cannot be enforced because the court has no means to determine what sort of contract the negotiations would have produced.” Weitzman v. Steinberg, 638 S.W.2d 171, 175 (Tex.App.1982). The only possible exception to this principle is where the parties have agreed to basic terms, leaving only nonessential elements subject to negotiations. Eckles v. Sharman, 548 F.2d 905, 909 (10th Cir.1977). In this instance, however, not even the basic terms have been agreed upon. Much has been left to do. There is no enforceable contract.

In addition to enforcement of the alleged contract, Plaintiffs seek compensatory damages. The Plaintiffs cannot recover. For the reasons above mentioned, the amount of any compensatory damages to be given to the Plaintiffs would be pure conjecture. It is well settled that a party may not recover speculative damages. Sister v. Hawkins, 158 W.Va. 1034, 217 S.E.2d 60 (1975).

Although the Plaintiffs do not specifically mention the doctrine of promissory estoppel, they make much of the detriment they suffered in fulfilling the conditions of the Silbernagle letter. The Plaintiffs may have detrimentally relied upon the letter, but such reliance must be justified. Wharf Restaurant, Inc. v. Port of Seattle, 24 Wash.App. 601, 605 P.2d 334 (1979). It is important to note that Mr. Silbemagel concluded his letter by saying:

“You are also advised that FMC Corporation reserves the right, at any time, to negotiate with any and all other interested persons as to the subleasing or any other legal disposition of FMC’s interests in the Orgas property and to finalize and conclude on any such arrangement that is satisfactory to FMC.”

Hence, the Plaintiffs were put on notice that even if the conditions were met, they still might not get the sublease. The conditions must be viewed as entrance requirements to nonexclusive negotiations. Any reliance placed upon their subsequent satisfaction was at the Plaintiffs’ own risk.

B. The Plaintiffs’ Civil Conspiracy Theory. The Plaintiffs allege that FMC and its employees, Bill Curry and William A. McMinn conspired to illegally deprive the Plaintiffs of their contractual rights and interests in the Orgas property. McMinn was never served with the amended complaint and is not now before the Court. The Plaintiffs make mention in their amended complaint of “others” whom the Defendants associated with during the course of the alleged conspiracy, but paragraph 13 of said complaint accuses only FMC, Curry and McMinn of conspiracy.

It is a well-settled principle of law that civil conspiracy requires concerted action by two or more persons or entities. Dixon v. American Industrial Leasing Co., 162 W.Va. 832, 834, 253 S.E.2d 150, 152 (1979). Because of the requirement of more than one entity for actionable civil conspiracy, several courts have ruled that a corporation cannot conspire with its employees. A corporation can only act through its employees. To hold that a corporation can conspire with its employees would be to effectively hold that a corporation could conspire with itself. Any acts undertaken by Curry with respect to the Orgas property would have been in the course of his employment with FMC. His acts are the acts of FMC. Being but an agent of the corporation, he cannot be said to have conspired with it.

The Plaintiffs cite two cases in support of their civil conspiracy theory. They submit Transportation Co. v. Standard Oil Co., 50 W.Va. 611, 40 S.E. 591 (1902), for the proposition that a corporation can sue and be sued for torts such as civil conspiracy. The proposition is quite correct, but it does not help the Plaintiffs’ conspiracy theory. The case does not address at all the question of whether a corporation can conspire with its employees. The other case, Schoedler v. Motometer Gauge and Equipment Corp., 15 N.E.2d 958, 134 Ohio St. 78 (1938), appears to be the sole case which the Plaintiffs can point to in support of their position. The Schoedler court cited no authority in holding that officers of a corporation could be joined with the corporation in a petition alleging conspiracy to defame. The case goes against the weight of the authority and, indeed, is quite prior in time to most cases giving thoughtful consideration to the question.

III. Conclusion

Having carefully reviewed the Plaintiffs’ amended complaint and the legal arguments of counsel, the Court holds that the Plaintiffs could prove no state of facts which would entitle them to relief under the legal theories advanced. Accordingly, it is ORDERED that the Defendants’ motion to dismiss the amended complaint is hereby granted.

The Clerk is directed to send a certified copy of this Memorandum Opinion and Order to counsel of record.

      . Professor Corbin's words are quite pertinent to the instant case:
      "A court cannot enforce a contract unless it can determine what it is. It is not enough that the parties think they have made a contract; they must have expressed their intentions in a manner that is capable of understanding. It is not enough that they have actually agreed; if their expressions when interpreted in the light of accompanying factors and circumstances are not such that a court can determine what the terms of the agreement are.” 1 Corbin on Contracts, § 95 (2d Ed. 1963).

      . Bellamy v. Mason’s Stores, Inc., 508 F.2d 504 (4th Cir.1974); Greenville Publishing Co., Inc. v. Dailey Reflector, Inc., 496 F.2d 391 (4th Cir. 1974); Dombrowski v. Dowling, 459 F.2d 190 (7th Cir. 1972); Nelson Radio & Supply Co. v. Motorola, Inc., 200 F.2d 911 (5th Cir.1952) cert. denied 345 U.S. 925, 73 S.Ct. 783, 97 L.Ed. 1356 (1953); Eggleston v. Prince Edward Rescue Squad, 569 F.Supp. 1344 (E.D.Va.1983); Burch v. Snider, 461 F.Supp. 598 (D.Md.1978); Lattimore v. Loews Theatres, Inc., 410 F.Supp. 1397 (M.D.N.C.1975).

      . The only exception to the above rule is when an agent, employee or officer of a corporation has an independent personal stake in achieving the corporation’s illegal objective. Greenville Publishing Co., Inc. v. Daily Reflector, Inc., 496 F.2d 391 (4th Cir.1974). In Greenville Publishing, an officer of a' newspaper company was sued, together with the newspaper and other officers, for conspiring to put the plaintiff newspaper out of business in violation of the Sherman Act. The officer was found to have a substantial interest in another newspaper which would profit if the plaintiff newspaper collapsed. Accordingly, the conspiracy theory was found to be sufficient as to him. The Defendant Curry is not alleged to have any interest in the matters involved in this controversy other than those which concern his employment with FMC. Therefore, Curry does not fall under this exception.


author: WISEMAN, Chief Judge.

text:
    Ronald ADCOCK, et al. v. The FIRESTONE TIRE & RUBBER CO.
    No. 3-83-0037.
    United States District Court, M.D Tennessee, Nashville Division.
    Aug. 6, 1985.

      John L. Van Cleave, Robert E. Hoehn, Nashville, Tenn., for plaintiffs.
    William N. Ozier, Nashville, Tenn., for defendant.
   MEMORANDUM

WISEMAN, Chief Judge.

This Court must decide whether employees who have not lost a day of pay or any significant deviation in their job responsibilities are entitled to severence pay benefits when their former employer sells the employee’s place of employment to a successor corporation who immediately steps in and continues plant operations without an interruption in production. The case is brought by former nonunion, salaried employees of the Firestone Tire & Rubber Company pursuant to federal question jurisdiction, 28 U.S.C. § 1331, asserting claims under the Employment Retirement Income Security Act [ERISA], 29 U.S.C. § 1101, ef . seq. (1982), for the recovery of certain pension and severance pay benefits that allegedly were lost upon Firestone’s sale of its Lavergne tire facility in 1982. The focus of this memorandum is limited solely to the issue of severance pay benefits.

In 1982, Firestone sold its Lavergne facility as an ongoing operation to the Bridgestone Tire Company. Prior to the sale, all the plaintiffs were employees of Firestone and, upon consummation of the divestiture, became employees of Bridge-stone without losing a day of pay. During its operation of the Lavergne facility, Firestone maintained a severance pay plan for the benefit of its employees. Upon divestiture Firestone refused to pay such benefits, asserting that no contingency had occurred resulting in maturation of severance pay rights. Pending before the Court are cross motions for partial summary judgment on the severance pay issue. A hearing was held by the Court on Wednesday, April 10, 1985. The Court grants the motion for summary judgment of defendant Firestone and defines the rights and obligations of the parties.

I. Facts

At the time of divestiture, the plaintiffs were nonunion, salaried employees of Firestone. Firestone maintained a non-funded non-contributory severance pay benefit plan for its employees. The details of the plan are contained in two documents. The first document is the Salaried Employees Handbook, which was distributed to all employees. On page H-3, the handbook provides:

Termination pay.
If you are released from the company because you become unable to perform your job or because of a reduction in work force and you have not yet qualified for early retirement, you will be given termination pay. The amount of termination pay is based on your credited company service and specific reasons for your release.

No other details as to rights or the operation of the severance pay plan are provided in the handbook. The plaintiffs assert that Firestone’s sale of the facility to Bridge-stone and their “transfer” of employment to Bridgestone constituted a “reduction in work force” thereby giving rise'to a duty upon Firestone to pay severance benefits. Firestone denies a reduction in work force has occurred. Termination on account of a reduction in force is calculated at the rate of two weeks of pay per year of service with the corporation.

The second source of information on the severance pay plan is contained in the Firestone Salaried Personnel Manual. The Manual was maintained as a confidential document and was not distributed to employees. In contrast to the one paragraph description of severance pay rights contained in the employee handbook, the personnel manual contains approximately thirty pages of detailed information concerning the administration of the severance pay benefit plan.

At some point prior to the divesture of the Lavergne facility, but after specific requests for information by Firestone employees as to their right to severance pay in the event of Firestone’s divesture of the Lavergne facility, Firestone amended the confidential personnel manual to provide:

Job-offer Refusal.
An employee whose job is eliminated and who refuses an offer (not involving a geographical relocation) of a position having at least the same grade level and paying at least the same salary will be considered terminated as a resignation with no R.I.F. payment or benefits; or, if eligible, employee may retire.

Personnel Manual at Section 2.11.0(K) (revised November 1, 1982).

On Friday, January 10, 1983, Firestone sold its Lavergne facility to Bridgestone. The following Monday the employees reported to work as usual, but were now producing Bridgestone products as Bridge-stone employees.

The former Firestone employees requested Firestone to provide severance pay in light of their termination of employment with the company. Firestone denied severance pay benefits to all employees, maintaining that no reduction of force occurred giving rise to a duty to pay such benefits. Plaintiffs subsequently brought suit in this Court claiming wrongful denial of their severance pay benefits in violation of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq. and, also, Tennessee contract law.

II. Jurisdiction

Plaintiffs invoke federal question jurisdiction of this Court, 28 U.S.C. § 1331, raising claims under the Employee Retirement Income Security Act. ERISA provides a private right of action to any beneficiary to enforce the terms of either a pension or a welfare benefit plan. 29 U.S.C. § 1132(a)(3)(B)(ii). Noting that the provisions of Firestone’s severance pay plan fall within ERISA’s definition of an “employee welfare benefit plan,” 29 U.S.C. § 1002(1); 29 U.S.C. § 186(c)(6); 29 C.F.R. § 2501.3-l, the Court determines that the plaintiffs claim that they were wrongfully denied severance pay benefits states a cause of action under ERISA sufficient to vest this Court with jurisdiction. 29 U.S.C. § 1132(e)(1).

Plaintiffs’ pendent state law claims are dismissed for failure to state a claim on which relief can be granted. Fed.R.Civ.P. 12(b)(6). ERISA preempts state law provisions concerning employee benefit plans, federalizing the area of pension rights and related ancillary welfare benefits by establishing uniform standards of fiscal responsibility for the administration of such plans. H.R.Rep. No. 93-533, 93d Cong. 2d Sess., in 1974 U.S.Code Cong. & Admin. News 4639 at 4639-40 [House Report]; Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523, 101 S.Ct. 1895, 1906, 68 L.Ed.2d 402 (1981); Dependahl v. Falstaff Brewing Corp., 653 F.2d 1208, 1215 (8th Cir.1981), cert. denied, 454 U.S. 968, 102 S.Ct. 512, 70 L.Ed.2d 384 (1981); Scott v. Gulf Oil Corp. 754 F.2d 1499 (9th Cir. 1985).

III. Applicable Law

A. Standard of Review on Summary Judgment.

A party moving for summary judgment bears the burden of demonstrating the nonexistence of any genuine issue of fact material to a judgment in his favor. Adickes v. S.H. Kress & Company, 398 U.S. 144, 147, 90 S.Ct. 1598, 1603, 26 L.Ed.2d 142 (1970); United States v. Article of Device ... “Diapulse”, 527 F.2d 1008, 1011 (6th Cir.1976). A party who demonstrates the absence of any material fact and that the applicable law warrants a judgment in his favor is entitled to an order of summary judgment as a matter of law.

In reviewing the materials submitted to the Court on the motion for summary judgment, the Court will evaluate the inferences that may be drawn from the underlying facts contained in the pleadings, affidavits, exhibits, and depositions, and will view those inferences in the light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962); Bohn Aluminum & Brass Corporation v. Storm King Corp., 303 F.2d 425 (6th Cir. 1962). The Court adheres to these procedural standards in its review of the facts and the application of the appropriate law.

B. The Employment Retirement Income Security Act—ERISA

1. Pension Plans and Welfare Benefit Plans Defined

In defining the nature of the plaintiffs’ rights under the Firestone severance pay plan, an initial distinction must be drawn between pension and welfare benefit plans. Pensions are a form of deferred compensation to which an individual employee accrues rights by providing a period of service to a particular employer. Pensions provide the employee a secured measure of income following his retirement from active employment, thereby assuring a source of economic resources during one’s later years of life. Welfare benefits plans, on the other hand, are not necessarily intended as deferred income to assure economic stability during one’s post-employment days. Rather, the plans often serve as a form of deferred, frequently contingent, benefit that is offered by virtue of one’s affiliation as an employee of a certain employer.

2. Pension Plans and Welfare Benefit Plans Distinguished “Vesting”

Despite the different purposes served by pension as compared to welfare benefit plans, ERISA mandates common reporting and disclosure requirements, 29 U.S.C. §§ 1021-31, and standards of fiduciary conduct, 29 U.S.C. §§ 1101-14, governing the employer’s administration of the plans. However, unlike pension plans, welfare benefits plans are not subject to any ERISA minimum substantive content provisions. If an employer chooses to offer his employees the option of joining a pension plan, ERISA mandates specific standards concerning the vesting of benefits, and participation and funding obligations. In contrast, if an employer offers a welfare benefit plan, such as severance pay or health insurance, ERISA does not require the plan to guarantee vesting rights, nor does it prescribe the fiscal structure of assets that support the plan. An employee “accrues” a vested interest in a pension plan upon meeting eligibility requirements to participate in such a plan. However, because welfare benefit plans are not subject to the vesting provisions of ERISA, an employee can never accrue “vested” rights to severance pay benefits under ERISA.

C. The Role of Federal Common Law

The dispositive issue therefore is whether, recognizing that ERISA does not prescribe the structure of or guarantee rights to an employer’s severance pay plan, if the employer chooses to offer such a plan may the employer later terminate the plan without incurring liability for the previously promised benefits? The Court concludes that while welfare benefit plans are not subject to the elaborate vesting and participation provisions of ERISA, an employee nevertheless may acquire a contractual interest in such benefits, enforceable under federal common law.

Omission of welfare benefit plans from the vesting provisions of ERISA does not reflect Congressional intent that welfare benefit rights are entitled to no protection under federal law. An employer may not terminate such a plan with absolute impunity. Cf. Northeast Department ILG-WU Health and Welfare Fund v. Teamsters Local Union No. 229 Welfare Fund, 764 F.2d 147 (3d Cir.1985) (Westlaw) (“The decision of trustees to incorporate an escape clause in a benefit plan—through which the plan attempts to escape liability if a participant or beneficiary is covered by another plan—constitutes arbitrary and capricious conduct.”) Congress intended to make the vesting provisions applicable solely to pension plans. The provisions are in response to myriad of problems encountered prior to ERISA’s enactment, ranging from misadministration of pension funds to the loss of employee pension rights if an employee left or lost his job prior to retirement, or the employer become insolvent. H.R.Rep. No. 93-807, 93d Cong., 2d Sess. reprinted in 1974 U.S.Code Cong. & Admin.News 4670, 4719. The legislative history reflects that Congress’ omission of welfare benefit plans from the vesting provisions of ERISA was based on a concern for containing the cost of pension plans and their ease of administration. Id. at 4935; A-T-O, Inc. v. Pension Benefit Guarantee Corp., 634 F.2d 1013, 1021 (6th Cir.1980) (ERISA “is a finely tuned balance between protecting pension benefits for employees while limiting the costs to employers”).

ERISA’s silence as to the legal status of severance pay rights creates a gap that must be filled by reference to federal common law. The complexity of labor relations and the variety of wage and benefit arrangements possible between an employer and its employees make it inevitable that gaps will appear in ERISA’s statutory regulation of employee benefit plans. “Congress intended that a body of Federal substantive law ... be developed by the court to deal with issues involving rights and obligations under private welfare and pension plans.” 120 Cong.Rec. 29942 (1974) (remarks of Senator Javits).

This Court rejects the truism which has emerged in the wake of Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), that is—there is not federal common law. While federal district court jurisdiction is narrowly circumscribed by statute, courts proceeding under federal question jurisdiction must often develop a body of federal common law to permit principled and consistent interpretation of federal statutes. The Supreme Court has recognized the propriety of district court formulation of federal common law to resolve issues arising under ERISA. Recently, in Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc., — U.S. —,—-—, 105 S.Ct. 2833, 2841-42, 86 L.Ed.2d 447 (1985), the Supreme Court held that trust beneficiaries had the right to inspect trust documents in scrutinizing a pension fund trustee’s administration of the trust’s assets. In defining the powers and duties of the trustee, the Court determined that Congress had enumerated only some of the trustee’s duties and powers under ERISA, and in light of the broad “policy of assuring the equitable character of the plans,” Congress intended to incorporate the common law of trusts—and for federal courts to draw on that source of law in reviewing the conduct of trustees. Id. And in a concurring opinion to the decision in Massachusetts Mutual Life Insurance Co. v. Russell, — U.S. —, —, n. 18, 105 S.Ct. 3085, 3098, n. 18, 87 L.Ed.2d 96 (1985) (Brennan, J. concurring), Justice Brennan stated:

“Where the courts are required themselves to fashion a federal rule of decision, the source of that law must be federal and uniform. Yet, state law where compatible with national policy may be resorted to and adopted as a federal rule of decision____ Here, of course, there is little federal law to which the court may turn for guidance. State regulation of insurance, pensions, and other such programs, however, provides a preexisting source of experience and experiment in an area in which there is, as yet, only federal inexperience. Much of what the states have thus far developed, particularly in the insurance field, is statutory. In certain areas of public concern, the state legislatures have been quite active in enacting comprehensive regulatory schemes, and state statutory sources of law will no doubt play a major role in the development of a federal common law under ERISA, particularly in defining rights under employee benefit plans.” Wayne Chemical, Inc. v. Columbus Agency Service Corp., 426 F.Supp. 316, 325 (N.D.Ind.), modified on other grounds, 567 F.2d 692 (7th Cir. 1977).

In Scott v. Gulf Oil Corp., 754 F.2d 1499 (9th Cir.1985), the court affirmed the district court’s dismissal without prejudice of former employee’s state law claims for breach of contract based on Gulf Oil’s refusal to honor alleged promises to pay severance pay benefits upon the sale of one of its refineries. The employees filed suit in federal court on diversity of citizenship jurisdiction alleging state law claims for breach of contract. The Court dismissed the claims holding that ERISA preempted the state law causes of action. But, at the same time, the Court granted the plaintiffs leave to amend their complaint, directing the employees to raise their claims under ERISA.

ERISA does not contain a body of contract law to govern the interpretation and enforcement of employee benefit plans. Instead, Congress intended for the courts, borrowing from state law where appropriate, and guided by the policies expressed in ERISA and other federal labor laws, to fashion a body of federal common law to govern ERISA suits.

Id. at 501-02.

The Ninth Circuit implied that although severance pay benefits are not enforceable as “vested” rights under ERISA, federal common law may provide a contractual basis for the enforcement of such rights.

D. Sources of a Rule of Federal Common Law

In formulating a federal rule of decision in this case, the policies underlying ERISA as reflected in the legislative history provide the primary source of guidance. Reference to state law decisions on fringe benefits also is particularly instructive. Cf. Cattin v. General Motors Corp., 612 F.Supp. 948 (E.D.Mich.1985) (Westlaw) (denying motion for summary judgment on contract claim for wrongful denial of early retirement benefits, holding that insofar as ERISA preempts state contract law the Court will first look to ERISA to define the rights of the parties and when no protection is afforded under that statute, the Court may refer to the federal common law of contract guided by principles derived from state law); Menhorn v. Firestone Tire & Rubber Co., 738 F.2d 1496, 1499 (9th Cir.1984).

A principle objective of ERISA is to safeguard the integrity of all employee benefit plans by establishing uniform standards that protect employee entitlements to such benefits from the exercise of arbitrary decisions of particular employers. Recognition of a federal common law contractual basis for enforcing the terms of welfare benefit plans—given their exclusion from the vesting and participation provisions under ERI-SA—is entirely consistent with the policies of ERISA and does not impose unreasonable costs or administrative burdens on the employer.

A district court in the Sixth Circuit recently considered the role of federal common law in determining the legal status of benefits conveyed by an employer under a welfare benefit plan. In Hansen v. White Farm Equipment Co., 5 EBC 2130, 42 B.R. 1005 (N.D.Ohio 1984), expedited appeal granted (April 15, 1985), suggestion of bankruptcy filed staying appeal (June 24, 1985), the district court reversed a bankruptcy court’s denial of welfare plan benefits to retiree petitioners. The Court referred to federal common law to determine the status and content of the retiree’s rights under a comprehensive welfare benefit plan originally promised by their former employer. Retirees of the corporation had commenced the action under the Bankruptcy Act seeking retroactive reinstatement of welfare benefits, including life, health and welfare insurance, following termination of the benefits by a successor corporation to the retiree’s former employer. The Bankruptcy Court had entered summary judgment in favor of the employer, finding that Congress had expressly excluded welfare benefit rights from the vesting and participation standards of ERI-SA, 29 U.S.C. § 1051, and therefore excluded such benefits from the concept of “accrued benefits”, 26 C.F.R. § 1103(1)(2), thereby permitting the corporation’s unilateral termination of the retiree’s rights.

In a well annotated opinion by Judge Aldrich the district reversed, holding that ERISA did not expressly exclude welfare benefit plans from ERISA’s vesting provisions, but rather omitted mention of them creating a gap in the statutory protection of such rights and requiring reference to federal common law to aid the Court in interpreting the nature and enforceability of the rights. Hansen, 5 EBC at 2137-38, 42 B.R. 1005.

The creation of a federal common law governing employee benefit plans not specifically regulated by ERISA may be implied, moreover, from the statutory scheme itself. Where state law is preempted and no specific federal provision governs, a court is forced to make law or leave a void where neither state nor federal law applies. In such a sitaution it is a reasonable inference that Congress intended some law, and therefore federal law, to apply____” “[T]he court concludes that the statutory scheme, as well as the legislative history of ERISA, support the “reasonable inference” that this Court is mandated to formulate and apply a federal rule of decision in this case.”

Id. at 2139, 42 B.R. 1005, quoting Wayne Chemical v. Columbus Agency Service Corp., 426 F.Supp. 316, 322 (N.D.Ind.), aff’d and modified, 567 F.2d 692 (7th Cir. 1977); accord Holliday v. Xerox Corp., 555 F.Supp. 51, 55 (E.D.Mich.1982), aff’d 732 F.2d 548 (6th Cir.1984), cert. denied, — U.S. —, 105 S.Ct. 294, 83 L.Ed.2d 229 (1984). (“[NJothing in ERISA indicates that Congress intended to make contracts unenforceable. Rather, if the state law is preempted, then the contract must be construed in accordance with federal law, in this case the federal law of contract.”); cf. Teamsters Local §48 Health and Welfare Fund v. Kohn Beverage Co., 749 F.2d 315, 319 n. 5 (6th Cir.1984) (“[i]n actions arising under federal statutes, federal common law, rather than state law, controls with respect to the availability of the estoppel defense.”).

Concluding that formulation of a federal rule of law was warranted, the Hansen Court considered the sources of common law, determining that reference should be made to the policies underlying ERISA and, where consistent with such policies, pre-ERISA state law on welfare and retirement benefits. Hansen, 5 EBC at 2140, 42 B.R. 1005. The Court found that the retirees had obtained a contractually enforceable right to their welfare benefits. Id. at 2141, 42 B.R. 1005. Refering to the welfare benefits in the context of a “pension” plan (but not as ERISA defines pension as a legal term of art), the Court stated:

The modern view [is] that the promise of a pension constitutes an offer which, upon performance of the required service by the employee, becomes a binding obligation.

Id. at 2141, 42 B.R. 1005, quoting Hoefel v. Atlas Tack Corp., 581 F.2d 1, 4 (1st Cir. 1978) cert. denied, 440 U.S. 913, 99 S.Ct. 1227, 59 L.Ed.2d 462 (1979).

This Court will analyze the plaintiff’s claims as they arise under ERISA, considering the enforceability of the asserted rights referring to federal common law where appropriate.

III. Discussion

A. Plaintiffs Possess a Contractual Right to Severance Pay Benefits

“The employer/employee relationship is contractual in nature.” Hamby v. Genesco, Inc., 627 S.W.2d 373, 375 (Tenn.App. 1981), cert. denied, (Tenn.1982). Fringe benefits' offered under such an arrangement usually are not construed as mere gratuities, but as rights resulting from a bargained for exchange. . This Court therefore must consider whether the severance pay benefits at issue in this ease are enforceable contractual rights and, if so, identify the source from which such rights arise.

To create a binding contract there must be a communicated offer and an acceptance of the offer, both of which supported by sufficient consideration. In this case, the offer of severance pay benefits was conveyed in Firestone’s employee handbook, which provided that severance pay would be awarded if an employee either was unable to perform his job or because of a reduction in work force, and one had not yet qualified for early retirement. Salared Employees Handbook at p. H-3. The Firestone employees accepted Firestone’s offer of the severance pay benefits by continuing to work for Firestone. In Hamby v. Genesco, Inc., 627 S.W.2d at 375-76, the Tennessee Court of Appeals affirmed the chancellor’s determination that provisions contained within the Genes-co employee handbook constituted an offer that was accepted by the employees’ continued employment with the firm and, as such, became a binding term of the employer/employee contractual agreement. Similarly, in Simmons v. Hitt, 546 S.W.2d 587, 592 (Tenn.App.), cert. denied, (Tenn.1976), the Tennessee Court of Appeals held that unfunded pension and retirement plans are not merely gratuities offered by the employer, but created legal rights upon the employees’ notice that such benefits are being offered and the employees’ performance of the terms necessary for acceptance. The Simmons court stated:

We hold a non-contributing pension plan is not a gratuity. It is an offer of additional deferred compensation to the employee as an incentive toward continuing better service and loyalty; the offer is accepted by the employee remaining in the employment of the employer, which is sufficient consideration to support the employer’s promise to pay the benefits and is therefore a contract enforceable by the employee.

Id. at 592, quoting Johnson v. Mueller Co. (1974) (Matherne, J., unreported). This Court holds that Firestone extended an offer of a severance pay plan to its employees which was accepted by each employee upon his or her continuing service with the company. The plan was but one aspect of the employee’s compensation.

Judicial pronouncements from other jurisdictions overwhelmingly support the plaintiffs’ position that the provisions in the Firestone handbook constituted an offer that was accepted by each employee’s continued employment for the company. Dulany Foods, Inc. v. C.M. Ayers, 220 Va. 502, 260 S.E.2d 196, 200-03 (Va.1979) (“severance pay is a matter of contract between the parties ... [and a] promise [reflected in a personnel policy statement] amounts to an offer, which, if accepted by performance of the service, fulfills the legal requirements of a contract”); Dahl v. Brunswick Corp., 277 Md. 471, 356 A.2d 221, 224 (1976) (awarding severance pay to employees of predecessor corporation despite continued employment with successor); Willets v. Emhart Mfg. Co., 152 Conn. 487, 208 A.2d 546 (1965) (corporate personnel policy on severance pay deemed to have become part of understood employment agreement); Chapin v. Fairchild Camera and Instrument Corp., 31 Cal.App.3d 192, 107 Cal.Rptr. 111, 114-15 (1973); Adams v. Jersey Central Power & Light Co., 36 N.J.Super. 53, 71, 114 A.2d 776, affd, 21 N.J. 8, 120 A.2d 737 (1956); Gaydos v. White Motor Corp., 54 Mich.App. 143, 220 N.W.2d 697, 700 (1974); Dangott v. ASG Industries, Inc., 558 P.2d 379 (Okla.1976).

In sum, the Court finds that the plaintiffs in this case acquired a contractual right cognizable under federal common law to benefits under the Firestone severance pay plan. The rights are to a deferred and contingent benefit. The plan is subject to the procedural protections contained in ER-ISA, that is, reporting and disclosure requirements and fiduciary standards, but with substantive rights governed by common law contract principles.

B. Provisions of the Confidential Personnel Manual are Not Binding Terms on the Firestone Employee Rights.

The Court will look only to the employee handbook to construe the terms of the offer and will not consider the confidential Firestone’s Salaried Personnel Manual. Although the Manual contains considerably more detail as to the severance pay plan, the fact that Firestone kept the Manual confidential from its employees demonstrates that its terms were not communicated to the employees and, therefore, its provisions were not part of the offer or the agreement.

Sound policy under ERISA also requires exclusion of the manual from the Court’s consideration. ERISA mandates express reporting and disclosure procedures aimed at safeguarding employee interests by assuring that employees have adequate access to the terms and conditions affecting their rights to deferred income benefits. 29 U.S.C. § 1021-31. Firestone does not dispute that it failed to distribute the manual to its employees or that its personnel managers lacked any formal training or instruction as to the requirements of ERI-SA, and therefore, were unaware of their legal obligation to make such disclosures.

In light of Firestone’s delinqencies, the Court finds it highly inequitable to give effect to those provisions contained in the confidential manual that would operate to limit the scope or amount of the plaintiff employees’ severance pay benefits. For example, the Court gives no effect to an amendment to the Manual that denies severance pay to employees who refuse offers of comparable employment made by a purchasing corporation of a Firestone plant— in this case, Bridgestone.

During Firestone’s negotiations with Bridgestone on the sale of the Lavergne facility, certain employees began raising questions with management personnel concerning their right to severance pay if the sale was consummated. In response, Firestone replied in writing that if such a contingency occurred present employees at the Lavergne facility would not be entitled to severance pay assuming they were offered equivalent positions with Bridge-stone. The response was followed by Firestone’s amendment to its confidential manual (of which the plaintiffs were given no notice) which provided:

K Job-Offer Refusal.
An employee whose job is eliminated and who refuses an offer “not involving a geographic relocation” of a position having at least the same grade level and paying at least the same salary will not be considered terminated as a resignation with no RIF payment or benefits; or, if eligible, employee may retire.

A modification of benefit rights contained in a confidential manual will not be given effect. Dependahl v. Falstaff Brewing Corp., 491 F.Supp. 1188, 1196-97 (E.D.Mo. 1980) (“[a] change [in severance pay policies] is not permissible when made expressly in contemplation of actions which would otherwise entitle employees to the previously provided benefits.”); Calhoun v. Falstaff Brewing Corp., 478 F.Supp. 357, 360-61 (E.D.Mo.1979) (holding amendment of severance pay plan contemporaneous with negotiations for the sale of a plant facility constituted a clear violation of the employer’s fiduciary duty under ERISA). Because the plaintiffs were not advised of the terms of the Manual or of the Manual’s amendment, the provisions of the document are unenforceable and are not material to this Court’s construction of the plaintiffs’ substantive rights.

C. Firestone’s Failure to Comply with ERISA’s Reporting and Disclosure Provisions Has Not Imposed a Substantive Harm on the Plaintiffs.

ERISA requires Firestone to disclose and report to all employees a summary plan description of its severance pay policy and information relevant to coverage, claims procedures, amendments to the plan, and other information material to the employees’ rights. 29 U.S.C. §§ 1021-1031. Firestone, while acknowledging that it failed to comply with ERISA’s reporting and disclosure provisions, argues that its failure does not rise to the level of imposing a substantive harm upon the plaintiffs thereby entitling them to payment of their severance benefits. The Court agrees.

This case is distinguishable from the reporting violations found in Blau v. Del Monte Corporation, 748 F.2d 1348 (9th Cir.1985), in which the Ninth Circuit reversed the district court’s award of summary judgment to the employer defendant who had denied payment of severance pay upon the sale of a plant as an ongoing concern. As in this case, the plaintiffs were nonunion, salaried employees who claimed that Del Monte’s written, but confidential, severance pay policy manual constituted a violation of the employer’s fiduciary duties to comply with the reporting and disclosure provisions of ERISA. The Ninth Circuit concluded that Del Monte had “flouted” ERISA’s procedural provisions in such a wholesale and flagrant manner as to “alter the substantive relationship between the employer and the employee” thereby working a substantive harm probative of the fact the “Del Monte’s denial of severance pay benefits was arbitrary and capricious.” Id. at 1354. See also Gilbert v. Burlington Industries, Inc., 765 F.2d 320 (2d Cir.1985), (Westlaw), (adopting Blau standard of review for reporting violations but deferring decision on the merits to district court determination); Anderson v. Ciba-Geigg Corp., 759 F.2d 1518, 1520 (11th Cir.1985).

Blau establishes a very high threshold for determining arbitrary and capricious conduct vis-a-vis noncompliance with ERI-SA’s procedural requirements. Accepting all the plaintiffs’ allegations as true, this Court concludes that Firestone’s conduct is not so culpable as to satisfy the Blau threshold. In Blau, the employer kept all aspects of the severance pay plan confidential and refused to disclose a claims procedure by which employees could seek severance pay benefits. The Court found that the procedural violations were so pervasive as to demonstrate the employer’s bad faith. In this case, the Court finds that while Firestone is culpable for certain procedural irregularities, the failure the comply with ERISA is not flagrant and pervasive; therefore, of itself not sufficient to warrant a finding that Firestone acted arbitrarily and capriciously in denying severance pay benefits.

D. Firestone Did Not Breach its Fiduciary Duties By Denying the Plaintiffs’ Requests for Severance Pay Benefits.

An employer who maintains a welfare benefit plan offering severance pay benefits to its employees is subject to the statutorily prescribed fiduciary standards of care in its administration of the plan. 29 U.S.C. § 1101. The plaintiffs in this case have a federal common law right to the deferred and contingent benefit of severance pay. The next question this Court must consider is whether Firestone, as administrator of the plan, violated its fiduciary duty by denying the plaintiffs’ requests for payment of severance pay benefits.

1. Judicial Deference to an Employer’s Administration of an Employee Benefit Plan.

Defendant Firestone asserts that well-established federal case law precedent upholds its denial of payment and that, as a matter of law, an employer/administrator is never under an obligation to pay severance pay benefits upon the sale of an ongoing operation when its former employees immediately are employed by the successor corporation without any significant loss in earnings or benefits. See Sly v. P.R. Mallory & Co., 712 F.2d 1209 (7th Cir.1983); Sutton v. Weirton Steel Division of National Steel Corp., 724 F.2d 406 (4th Cir. 1983), cert. denied — U.S. —, 104 S.Ct. 2387, 81 L.Ed.2d 345 (1984). The Court believes defendant’s position is too broad; each case must be judged on its own merits, such that the decision to deny severance pay must be analyzed in view of the terms of the welfare benefit plan and the-contingencies that the claimants argue give rise to an obligation to pay. Livernois v. Warner-Lambert Co., Inc., 723 F.2d 1148, 1151-52 (4th Cir.1983); Pinto v. Zenith Radio Corp., 480 F.Supp. 361, 363-64 (N.D.Ill. 1979), aff’d 618 F.2d 110 (7th Cir.1980) (severance pay is not automatic, but must be determined on a case-by-case basis).

The Court concludes that while certain evidence demonstrates culpable conduct on the part of Firestone in administering the severance pay plan, its decision to deny the plaintiffs’ request for severance pay benefits did not violate its fiduciary duties under ERISA. Federal courts extend great deference to the administrator of a welfare benefit plan, and will not vacate an administrator’s decision unless such action is shown to be arbitrary and capricious, or made in bad faith. Jung v. FMC Corp., 755 F.2d 708 (9th Cir.1985); Blau v. Del Monte Corp., 748 F.2d 1348 (9th Cir.1985). Certain circumstances, however, may warrant a more searching review by the Court. In Jung, the Ninth Circuit affirmed the district court’s award of summary judgment to the defendant employer, upholding the employer’s refusal to pay severance pay benefits upon the sale of a plant as an ongoing concern. But in reviewing the employer’s denial, the court noted: “[wjhere, as here, the employer’s denial of benefits to a class avoids a very substantial outlay, the reviewing court should consider that fact in applying the arbitrary and capricious standard of review. Less deference should be given to the trustee’s decision.” During the hearing in this case, defense counsel estimated the potential liability of Firestone on the severance pay plan to be approximately $2-2.5 million. Hence, while this Court applies the arbitrary and capricious standard in this case, it notes that the substantial potential liability prompts a closer review of the facts as presented by the parties.

In reviewing Firestone’s denial of benefits to the plaintiffs, the Court will consider two principal factors in assessing whether Firestone has discharged its fiduciary obligations to the plaintiffs: (1) the express terms of the severance pay plan, and (2) Firestone’s past practices at other plant facilities with regard to payment of severance pay benefits. See 29 U.S.C. § 1104(a)(1)(B) (defining the execution of an administrator’s fiduciary duty as careful and diligent action in accordance with documents and instruments governing the plan).

2. Defining “Reduction in Force”

The employee handbook states that termination pay shall be made in the event that Firestone imposes a “reduction in force” involuntarily terminating the employment of a particular worker. Plaintiffs maintain that upon the sale of the Lavergne plant, Firestone imposed a reduction in force terminating the employment of its salaried employees. The confidential personnel manual defines “reduction in force” as an involuntary termination of employment due to “reduced work load or economic necessity.” Personnel Manual at 1.5 (Feb. 2, 1982 rev.) (Exhibit A, Deposition of Thomas Robinson, filed November 14, 1984). The Court finds the concepts of “reduced work load” or “economic necessity” to provide little guidance in defining the term “reduction in force.”

The Court therefore considers case law pronouncements involving similar facts as they define the term “reduction in force.” In Trotter v. Amalgamated Association of Street Electric Railway and Motor Coach Employees of America, 309 F.2d 584, 586 (6th Cir.1962), the Sixth Circuit Court of Appeals stated without explanation that a “reduction in the forces of labor” did not occur upon the sale of suburban bus lines between two bus operators. The Court therefore denied union employees requests for enforcement of benefits under a collective bargaining agreement that would have been triggered by a reduction in force. In Dhayer v. Weirton Steel Division of National Steel Corp., 571 F.Supp. 316, 330 (N.D.W.Va.1983), the district court held that nonunion salaried employees were not entitled to severance pay benefits solely on the basis of a transfer of ownership because “the fundamental bases for this benefit [were] not necessarily put into play by such a transfer of ownership; namely, the permanent abolishment of positions or reductions in the salaried work force.” In that case, the court held that the immediate reemployment by the successor corporation precluded a finding of a reduction in the work force thereby triggering the right to severance pay.

This Court agrees with the approach taken by a majority of the federal courts facing similar fact situations; that is, continued employment with a successor corporation following the transfer of ownership, although characterized by a termination of employment with the predecessor corporation, does not constitute an involuntary reduction in work force by the predecessor corporation thereby entitling the employees to severance pay benefits.

a. Firestone’s Past Practices

At the outset, the Court notes that the parties are in sharp disagreement as to the appropriate characterization of Firestone’s past practices. Nevertheless, the Court finds that the dispute between the parties as to the interpretation of these practices is not a material issue precluding summary judgment at this time. In light of the deferential standard (arbitrary and capricious) of review, past practice will be probative of a violation of an employer’s breach of fiduciary duty only to the extent that the challenged conduct departs radically from the employer’s pattern of conduct in the past. In this case, taking plaintiffs’ allegations as true, plaintiffs nevertheless fail to demonstrate that Firestone’s denial of severance pay at the Lavergne facility constituted a significant departure from prior conduct under similar circumstances.

Plaintiffs point to Firestone’s payment of monies at the Conover, North Carolina facility and at the Arlington, Texas facility as illustrative of Firestone’s payment of severance pay in similar circumstances. While the Court, at this point of the proceeding, is not in a position to determine the actual nature of the sales of the facilities, the depositions and affidavits submitted with the motions in this case do demonstrate that the factual settings were somewhat different at each of these facilities.

At the Conover, North Carolina facility Firestone paid a “service recognition award” to former employees. In that situation, Firestone divested itself of a facility to a successor corporation who offered significantly reduced wages and benefits to the former Firestone employees. Plaintiffs maintain that this “service recognition award” was calculated at the same rate the severance pay benefit and, therefore, is merely a matter of semantic characterization to cover up Firestone’s payment of severance pay in a similar circumstance. In this case, although Bridgestone does not offer severance pay, its salary and benefits are comparable to those previously provided by Firestone.

At the Arlington, Texas facility, Firestone sold its assets to another corporation, but did not sell its facility as an ongoing concern without an interruption in actual production at the facility. The Court finds that even though certain payments were made at other facilities the factual settings differ sufficiently enough for the Court to conclude that Firestone did not radically depart from prior practices in denying severance pay at its Lavergne facility and, therefore, did not act arbitrarily in denying payments.

E. Firestone’s Continuing Liability

Firestone is subject to a continuing, contingent liability for severance pay in the event that Bridgestone finds it necessary to terminate one of the former Firestone employee/plaintiffs for reasons specified under the Firestone termination pay plan. The plaintiffs in this case possess an inchoate right to the deferred benefit of severance pay plan contingent upon a termination because of a reduction in force or an inability to perform one’s work responsibilities, as set forth under the terms of the Firestone employee handbook.

The Court deems this arrangement the most fair and just and concludes that despite the fact that Firestone is no longer the employer, it is within this Court’s equitable power to declare that Firestone remains primarily liable on its contractual obligations even though Bridgestone is now the entity capable of triggering the contingency that would result in the severance pay obligations coming due. A similar declaration of rights holding the predecessor corporation responsible for contingent severance pay benefits was made in Livemois v. Warner-Lambert Co., Inc., 723 F.2d 1148, 1155-57 (4th Cir.1983) (applying state law).

The sale of the Lavergne facility to Bridgestone did not terminate the plaintiffs enforceable contract right to such welfare benefit; rather, it merely established the end date to which the amount of severance pay would be calculated on—that is, from the date on which the employee started with Firestone until the date on which Firestone sold the Lavergne facility to Bridge-stone. No danger of “double dipping” is presented under the current facts; Bridge-stone does not offer a severance pay plan, and even if it did, assuming its calculation for benefits followed the same formula as that used by Firestone, the amount of severance pay would be based on a calculation dating from its purchase of the Lavergne facility until the time of the termination. Equity is served by this decision. Neither the plaintiffs nor the defendant shall enjoy a windfall nor suffer a forfeiture—the plaintiffs shall not receive a lump sum in view of their continued employment with Bridgestone and Firestone will not be relieved of a contingent liability solely because it has disassociated itself from its former employees.

IV. Conclusion

The Court recognizes the enforceable contractual right of the former Firestone employees, but holds that no contingency has yet occurred giving rise to a maturation of the right to payment of the severance benefits. Because Firestone has not breached its fiduciary duty in denying a valid request for payment, the Court denies the plaintiffs’ request for relief and will not order payment on the severance pay plan. However, assuming that a former Firestone employee is terminated by Bridge-stone because of a reduction in force or other contingency specified in the Firestone Employee Handbook, that employee would have the right to request payment from Firestone of their earned, deferred benefit. The decision today does not prevent a terminated, former Firestone employee from suing in federal court to enforce his or her rights. Firestone currently administers pension plans and welfare benefit plans and therefore has sufficient expertise and resources to assure the proper discharge of its statutory duties as to the contingent liabilities in this case.

The Court therefore grants Firestone’s motion for summary judgment.

      . In Gilbert v. Burlington Industries, Inc., 765 F.2d 320 (2d Cir.1985) (available on Westlaw), the Second Circuit rejected plaintiffs position that the employer’s severance pay policies were merely a "payroll practice” and therefore not subject to ERISA. "When ties that bind an employee to his or her company are severed by the employer, unemployment to the employee— whether fleeting or permanent—is an inexorable consequence. Thus, in our view severance pay is an unemployment benefit and an unfunded severance pay policy constitutes an 'employee welfare benefit plan' under § 1002(1)(A).’’ Id. at 325 (citing cases). The court affirmed the district court’s dismissal of plaintiffs’ state law claims holding that ERISA preempted a New York state law authorizing the Commissioner of Labor to order the employer to make severance payments to terminated employees.
      At the time of the interlocutory appeal, the district court had not yet decided the remaining substantive issues under ERISA concerning whether the plaintiff employees were entitled to severance pay upon the sale of their place of employment as an ongoing concern when the plaintiffs were retained in their positions with the successor corporation.

      . ERISA defines a welfare benefit plan as follows:
      The terms "employee welfare benefit plan" and "welfare plan” mean any plan, fund or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization or by both, to the extent that such plan, fund or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (B) any benefit described in section 188(c) of this title (other than pensions on retirement or death, and insurance to provide such pensions). 29 U.S.C. § 1002(1).
      ERISA defines a pension plan as follows: The terms “employee pension benefit plan" and "pension plan" mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program—
      (A) provides retirement income to employees, or
      (B) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond, regardless of the method of calculating the contributions made to the plan, the method of calculating the benefits under the plan or the method of distributing benefits from the plan.
      29 U.S.C. § 1002(2).

      . In making its recommendation for the passage of the ERISA bill, the Senate Committee on Finance made the following observations concerning why welfare benefits were not included within the statute’s vesting provisions:
      Accrued benefits.—Under the committee bill, the vested employee is protected in his rights to all, or a certain percentage, of his "accrued benefit.” This term refers to pension or retirement benefits and is not intended to apply to certain ancillary benefits, such as medical insurance or life insurance, which are sometimes provided for employees in conjunction with a pension plan, and are sometimes provided separately. To require the vesting of these ancillary benefits would seriously complicate the administration and increase the cost of plans whose primary function is to provide retirement income. Also, where the employee moves from one employer to another, the ancillary benefits (which are usually on a contingency basis) would often be provided by the new employer, whereas the new employer normally would not provide pension benefits based on service with the old employer.
      S.Rep. No. 93-383, 93d Cong., 2d Sess., reprinted in 1974 U.S.Code Congressional and Admin.News 4890, 4935.

      . A number of federal courts have reviewed similar fact situations to the one presented in the instant case. The holding in some of the cases has been to deny the severance pay claims on the ground that employees cannot accrue "vested” rights in welfare benefit plans under ERISA. See e.g., Sly v. P.R. Mallory & Co., 712 F.2d 1209 (7th Cir.1983); Dhayer v. Weirton Steel Division of National Steel Corp., 571 F.Supp. 316 (N.D.W.Va.1983) aff’d sub nom., Sutton v. Weirton Steel Division of National Steel Corp., 724 F.2d 406 (4th Cir.1983), cert. denied, — U.S. —, 104 S.Ct. 2387, 81 L.Ed.2d 345 (1984). The Court believes that these decisions fail to adequately appraise the policies underlying ERISA—that is, to afford employees protection of their earned, but deferred and/or contingent benefits.

      . Unfunded pension plan benefits are similar to severance pay benefits insofar as the employee is not required to contribute to any fund and acquires a right to such deferred income, usualy calculated on the basis of the employee’s length of service with his employer.

      . The Court rejects any argument that may be made by Firestone that it should not be held liable for severance pay benefits calculated for the period prior to its promulgation of the severance pay policy. As the Court noted in Anthony v. Jersey Central Power & Light Co., 51 N.J.Super. 139, 143 A.2d 762, 764-66 (1958):
      It makes no difference that the severance pay plan was promulgated after the plaintiffs had been employed for some time by defendant. Since the employment was always at will, any announcement of a change in or addition to compensation of the .employees of any form followed by the continuance of the employees in employment constituted an effective and binding agreement at the new terms for the services rendered thereafter. Consequently, once the defendant improved the terms of compensation for the plaintiffs’ work by announcing the institution of the severance pay plan it must be assumed that plaintiffs were thereafter working for that benefit as much as for any other benefit or item of compensation held out to them as compensation by the employer.

        Accord Delaney Foods, Inc. v. Ayers, 220 Va. 502, 260 S.E.2d 196, 201-02 (1979). The Tennessee Supreme Court recently affirmed the employment at will doctrine in Clanton v. Cain-Sloan Co., 677 S.W.2d 441 (1984). Accordingly, Firestone is contractually obliged to honor its severance pay plan commitments to each employee based upon his years of service with the corporation up until the date of divestiture, even if the period of service extends back prior to Firestone’s promulgation of its severance pay policies.

      . ERISA defines the employer/administrator’s fiduciary duties as follows:
      [A] fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and—
      (a) for the exclusive purpose of:
      (i) providing benefits to participants and their beneficiaries; and
      (ii) defraying reasonable expenses of administering the plan;
      (b) with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; and
      (d) in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this subchapter or subchapter III of this chapter.
      29 U.S.C. § 1104(a)(1).

      . As discussed above, the Court will not consult the confidential personnel manual to obtain guidance to the extent that such substantive information would compromise the rights of the Firestone employees. In this situation, however, the definition of reduction in force is relatively neutral, indeed ambiguous, and provides little guidance to the Court in defining the meaning of the term.

      . Additionally, Firestone distinguishes Arlington from the Lavergne facility claiming that in the Bridgestone sale Firestone ardently negotiated with Bridgestone to save the jobs and received a contractual commitment by Bridgestone that the employees would remain in their positions. Firestone maintains that this conduct is relevant to the issue of their good faith. The Court rejects this notion. In Livernois v. Warner-Lambert Company, Inc., 723 F.2d 1148, 1151 n. 5 (4th Cir.1983), the Court considered the relative merit of the defendant employers negotiation of assurances that the successor corporation would employ the defendant's former employees.
      Some needless energy has been expended in jousting whether Warner-Lambert was displaying the traits of a benevolent and enlightened employer or had solely selfish personal aggrandizement in mind. Of course, smoothing the way of employees by actively securing for them continued employment without dim-munition of benefits was a commendable step on Warner-Lambert’s part. At the same time, the purchase price for the medical-surgical Division was probably enhanced by a step designed to reassure the purchaser that the change of ownership would be accomplished with a minimum of interruption of continuity or dislocation of production. “It is a matter of common knowledge that the most valuable attraction a manufacturing plant can offer a prospective purchaser is a well-trained, efficient, loyal and contented group of employees.” Dulaney Foods, Inc. v. Ayers, 220 Va. 502, 508, 260 S.E.2d 196, 200 (1979).
      In short, what Warner-Lambert did was good for everyone concerned, itself included. Judgmental considerations of "good" and/or “bad” simply are not appropriate.
      Similarly, in this case, Firestone was divesting itself of a highly technical production facility that had significantly greater value as a producing operation as compared to its value based solely on the worth of the machinery and equipment contained in the buildings. It would seem that Bridgestone, in deciding to purchase the facility, would be acutely interested in obtaining a work force qualified to operate the specialized equipment of the plant.


author: TROUTMAN, Senior District Judge.

text:
    Kelly DAMRON v. Calvin SMITH, Vincent A. Guarini (Warden of Lancaster County Prison), Lancaster County Prison Board and Lancaster County Board of Commissioners.
    Civ. A. No. 84-474.
    United States District Court, E.D. Pennsylvania.
    Aug. 6, 1985.

      Anthony S. Federico, Jr., Harrisburg, Pa., for plaintiff.
    J. Michael Flanagan, Lancaster, Pa., for defendants.
   MEMORANDUM AND ORDER

TROUTMAN, Senior District Judge.

This is a diversity action instituted against defendants, Calvin Smith, Vincent A. Guarini, Warden, Lancaster County Prison Board and Lancaster County Board of Commissioners, alleging negligence on their part which resulted in defendant Calvin Smith attacking and seriously injuring plaintiff. Defendants Guarini, the County Prison Board and County Commissioners have moved for judgment on the pleadings. A court will entertain a motion for judgment on the pleadings only after pleadings have been closed. A motion for judgment on the pleadings is appropriate only when there are no issues of material fact and one party is entitled to judgment as a matter of law. Flora v. Home Federal Savings and Loan Association, 685 F.2d 209 (7th Cir. 1982). Despite plaintiffs contention a review of the pleadings by the Court reveals no issues of material fact presented with regard to the moving defendants. Vincent Guarini was Warden at the time of the incident and all claims against him are directed at him in his official capacity. The allegations against the Prison Board as well as the County Commissioners are couched in the theory of respondeat superi- or. Plaintiff claims that Warden Guarini was negligent in (1) failing to segregate defendant Smith and (2) not having sufficient prison personnel to supervise plaintiff and defendant Smith. Plaintiff also alleges that the Prison Board is responsible for the acts of Guarini and the County is responsible for actions of the Prison Board.

Defendants claim the action is barred pursuant to the governmental immunity and official immunity provisions of the Political Subdivision Tort Claims Act, 42 P.C. S.A. § 8541 et seq. and, therefore, they are entitled to judgment as a matter of law. We agree.

The Act provides that no local agency shall be liable for any damages on account of any injury to a person or property caused by any act of the local agency or an employee thereof or any other person. 42 P.C.S.A. § 8541. The act also provides eight exceptions to this governmental immunity pursuant to 42 P.C.S.A. § 8542. A local agency includes any government unit other than the Commonwealth government. 42 P.C.S.A. § 8501. Plaintiff contends that the Prison Board and Board of Commissioners are not local agencies under § 8542. We disagree. The Commonwealth Court of Pennsylvania recognized a county operated rehabilitation center as a local agency under § 8501, and found the center to be protected under § 8542 from suit for negligence in the care and supervision of its elderly patients in Morris v. Montgomery County Geriatric Center, 74 Pa.Cmwlth. 363, 459 A.2d 919 (1983).

The Commonwealth Court has also found a school district to be a local agency and immunized under the Political Subdivision Tort Claims Act from injuries sustained by a student which were caused by a fellow student due to the negligence in supervision on the part of the school district. Auerbach v. Council Rock School District, 74 Pa.Cmwlth. 507, 459 A.2d 1376 (1983).

Therefore, this Court concludes that the County Prison Board and the County Board of Commissioners are local agencies within the purview of the Political Subdivision Tort Claims Act. It follows that the Warden as an employee of a local agency is liable for civil damages on account of injury caused by acts performed within the scope of his office or duties only to the same extent as his employing agency. 42 P.C.S.A. § 8545. The Warden is, therefore, immunized for injuries resulting from actions performed in his official capacity.

In the alternative, plaintiff challenges the constitutionality of the Political Subdivision Tort Claims Act as violative of Art. I § 11 of the Pennsylvania Constitution and equal protection of the law. However, the Pennsylvania Supreme Court has upheld the constitutionality of the statute on both grounds in Carroll v. County of York, 496 Pa. 363, 437 A.2d 394 (1981). We, therefore, dismiss plaintiffs argument on this point.

This Court concludes that plaintiffs claims asserted against the Warden, The Prison Board and Board of County Commissioners are barred by the Political Subdivision Tort Claims Act.


author: TERENCE T. EVANS, District Judge.

text:
    ST. AGNES HOSPITAL, Plaintiff, v. Irene M. JAECKEL, Steven P. Sager, and Sager & Sharpe, S.C., Defendants. and Irene M. JAECKEL, Third-Party Plaintiff, v. BLUE CROSS & BLUE SHIELD UNITED OF WISCONSIN, Third-Party Defendant.
    Civ. A. No. 84-C-1201.
    United States District Court, E.D. Wisconsin.
    Aug. 6, 1985.

      Carmen Caruso, Purtell, Purcell, Wilmot & Burroughs, S.C., Milwaukee, Wis., for plaintiff.
    Steven P. Sager, Sager & Sharpe, S.C., Fond du Lac, Wis., Jonathan Zell, Asst. Regional Counsel, Jan Kearney, Asst. U.S. Atty., Milwaukee, Wis., and Dept. of Health & Human Serv., Chicago, Ill., for defendants.
   DECISION and ORDER

TERENCE T. EVANS, District Judge.

St. Agnes Hospital seeks to foreclose on a hospital lien created by § 779.80, Wis.. Stats., against proceeds of a $25,000.00 insurance settlement for injuries suffered by Irene Jaeckel which necessitated her treatment at the hospital. The action was originally filed in Fond du Lac County Circuit Court. Defendant Jaeckel, however, brought a third-party claim against Blue Cross & Blue Shield United of Wisconsin (BC/BS), the plaintiff’s designated Medicare fiscal intermediary, in order to compel Medicare payment of her hospital bills. BC/BS removed the case to federal court. Currently pending are plaintiff’s motion for summary judgment and the motion of BC/BS for summary judgment.

On October 24, 1983, Irene Jaeckel was seriously injured in an automobile-pedestrian collision in Fond du Lac, Wisconsin. She was hospitalized from that, date until January 9, 1984, and the hospital charges were $70,963.33. On December 5, 1983, her daughter, Virginia Fellman, contacted defendant Steven P. Sager, an attorney in the firm Sager & Sharpe, S.C. An agreement was reached under which Sager would represent Jaeckel on any claims she might have as a result of the accident. After that time, settlement negotiations began with Heritage Mutual Insurance Company of Sheboygan, the automobile liability carrier for the driver of the automobile, Richard C. Higgins. The policy limits on Higgins’ insurance'were $25,000.00. On February 10, 1984, the final details of a settlement with Heritage, were agreed upon. On February 20, Heritage sent a draft for $25,000.00 to Jaeckel. The draft, however, was made payable to Jaeckel and St. Agnes Hospital, because apparently between February 10 and February 20 Heritage had been served with a hospital lien. The check has been deposited with the Clerk of Court pending the outcome of this litigation.

Jaeckel is covered by Medicare. However, to date Medicare has not made any payment on her hospital bills.

St. Agnes Hospital filed a hospital lien pursuant to Wisconsin statutes, and brought this action to foreclose upon that lien. It claims it should be awarded all the proceeds of the draft subject to the limited right to attorney’s fees and costs claimed by defendant Sager pursuant to the rule of priority set forth in § 779.80(5), Wis.Stats. In addition, St. Agnes claims it is entitled to actual attorney’s fees incurred in this litigation because the defendants have violated Rule 11 of the Federal Rules of Civil Procedure.

Jaeckel argues that because at the time the settlement was reached there was no hospital lien, the issuance of the check with St. Agnes Hospital as a payee violates the settlement agreement. Jaeckel also feels that Medicare should have paid her hospital bills. She contends that under the Wisconsin rule articulated in Rimes v. State Farm Mutual Insurance Co., 106 Wis.2d 263, 316 N.W.2d 348 (1982), she is not required to, in effect, turn over her settlement from Heritage to satisfy the subrogation rights of the Medicare program. She argues that it is quite clear that the settlement did not make her whole; that because Higgins himself has filed bankruptcy there is no chance she will be made whole; and that therefore under Rimes Medicare cannot be awarded any part of the inadequate $25,-000.00 settlement.

BC/BS, arguing the Medicare point of view, invokes the federal statutes which have been recently amended to read:

Payment under this title may not be made with respect to any item or service to the extent that payment has been made, or can reasonably be expected to be made promptly (as determined in accordance with regulations), with respect to such item or service, under a Workmens Compensation law of the United States or a state or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no-fault insurance. The statute has recently been amended to include payment anticipated under an automobile or liability insurance policy.

It goes on to argue that in situations in which state law stands as an obstacle to the accomplishment of the purposes and objectives of Congress, the state law is preempted to the extent that it conflicts with federal law.

Federal law preempts state law. Silkwood v. Kerr-McGee Corp., et al., 464 U.S. 238, 104 S.Ct. 615, 78 L.Ed.2d 443 (1984). Thus, 42 U.S.C. § 1395y(b) preempts the Rimes rule. In a similar situation, the Wisconsin Court of Appeals has recognized that federal law preempts state common law rules. Coplien v. Dept. of Health & Social Services, 119 Wis.2d 52, 349 N.W.2d 92 (C.A.1984). In addition, § 779.80, Wis.Stats., gives the hospital a lien on the proceeds of the settlement minus the legal fees and costs incurred in procuring it.

There simply is not enough money to go around. Jaeckel has $70,000.00 in hospital bills; she has received $25,000.00 in settlement of her claim against an underinsured driver who has been discharged in bankruptcy. Under her agreement with her attorney, defendant Sager, one-fourth of the settlement plus costs is to be his. The legal fees are one-fourth of $25,000.00, or $6,250.00 plus costs of $4.63, leaving $18,-745.37 in settlement, subject to the hospital lien. Under 42 U.S.C. § 1395y(b), Medicare need not pay anything the insurer can be expected to pay. Presumably Medicare is then responsible for the hospital bill of $70,963.33 minus $18,745.37, or $52,217.96.

St. Agnes also requests its actual attorney’s fees in this litigation because of what the hospital perceives as defendants’ violation of Rule 11, F.R.C.P. The Rule 11 claim falls far short of the mark. The request for sanctions under Rule 11 is denied.

IT IS ORDERED that the motion of St. Agnes Hospital for summary judgment is GRANTED. St. Agnes must be paid $18,-745.37 from the settlement check plus three-fourths of the interest earned since the time the check has been deposited with the Clerk.

IT IS FURTHER ORDERED that the motion of Blue Cross & Blue Shield United for summary judgment denying Jaeckel’s claim against Blue Cross & Blue Shield United to the extent of the $18,745.37 paid by Heritage is GRANTED.