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Girardot v. The Chemours Co.

United States District Court, D. Delaware

March 29, 2017

MARK GIRARDOT, GERHARD R. WITTREICH, and PETER BUTLER, on behalf of themselves and others similarly situated, Plaintiffs,
v.
THE CHEMOURS COMPANY, Defendant.

          MEMORANDUM

         At Wilmington this 29th day of March, 2017, having reviewed defendant's motion to dismiss and the papers filed in connection therewith;

         IT IS ORDERED that defendant's motion to dismiss (D.I. 6) is granted, for the reasons that follow:

         1. Background. On October 24, 2013, E. I. du Pont de Nemours and Company ("DuPont") announced its intention to spin-off its Performance Chemicals business, which included DuPont's titanium technologies, fluoroproducts, and chemical solutions businesses, from the other businesses of DuPont. On July 1, 2015, this separation created a new, independent, publicly traded company named The Chemours Company ("Chemours"). In connection with the spin-off of Chemours, DuPont announced an involuntary reduction in force, under which it terminated a multitude of positions. The benefits awarded to the terminated employees included a maximum severance benefit of twelve months' salary.

         2. The remaining employees became employees of Chemours on July 1, 2015. In an effort to optimize its business and improve the efficiency of operations, Chemours announced in September 2015 a voluntary reduction in force program, called the Chemours Voluntary Separation Program ("VSP"). The VSP was formally announced in October 2015 through a letter, and was embodied in a seven-page program description entitled "Chemours Voluntary Separation Program ('VSP') October 2015" ("the VSP Summary"). The benefits provided under the VSP included "a lump sum payment equal to one week of base pay for each full year of service up to a maximum of 26 weeks and three months of COBRA coverage for medical insurance coverage, as well as a prorated discretionary bonus payment for the year of separation. (D. I. 7, ex. A at 3) The lump-sum payments were payable immediately following separation; the second, discretionary payment was payable following the year of the employee's separation date. (Id.)

         3. Chemours required a mechanism for employees to apply for the VSP benefit, for those applications to be approved, and for an end-date to be set. Consequently, the VSP provided that interested employees were required to submit a VSP Request Form between October 9, 2015 and October 26, 2015. Chemours had final say as to those accepted for the VSP, with notice to be provided to the applicants by November 30, 2016. The VSP Summary provided no appeal procedure or any other mechanism for challenging eligibility determinations made by Chemours. Each participant's separation date was determined by Chemours and fell between December 1, 2015 and March 31, 2016. (/d., ex. A at 2-3)

         4. At the close of the application and decision period for the VSP, Chemours announced that the voluntary reduction in force did not sufficiently reduce costs; consequently, Chemours instituted an involuntary reduction in force program call the Chemours Career Transition Program ("CTP"). In this suit, plaintiffs allege that they would not have elected to participate in the VSP had they been informed of the possibility that the CTP would be implemented with greater benefits.

         5. Standard of review.[1] The parties apparently agree that "the existence of an employee benefit plan is integral to the merits of plaintiffs' claims for benefits. Henglein v. Informal Plan for Plant Shutdown Benefits for Salaried Employees, 974 F.2d 391, 397-98 (3d Cir. 1992). Therefore, defendant's motion addressing whether or not the VSP is subject to ERISA should be brought and reviewed under Fed.R.Civ.P. 12(b)(6) (failure to state a claim). It is also appropriate for the court to consider the VSP Summary on defendant's motion to dismiss without converting it to a motion for summary judgment, because the VSP Summary was explicitly relied upon in the complaint and is undisputedly an authentic document. See In re Burlington Coat Factory Securities Litigation, 114 F.3d 1410, 1426 (3d Cir. 1997); Pension Ben. Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).

         6. "Whether a plan exists within the meaning of ERISA is a question of fact, to be answered in light of all the surrounding facts and circumstances from the point of view of a reasonable person." Deibler v. United Food and Commercial Workers' Local Union 23, 973 F.2d 206, 209 (3d Cir. 1992) (internal quotation omitted). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

         7. The issue to be resolved in this motion practice is whether the VSP fits within ERISA's definition of "employee welfare benefit plan, "[2] that is,

any plan, fund or program . . . established or maintained by an employer. . . 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 ... (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. . . .

29 U.S.C. § 1002(1). Plaintiffs start their discussion of the issue by emphasizing the broad construction accorded to the word "plan, " which is not defined by statute. See, e.g., Okun v. Montefiore Medical Center, 793 F.3d 277, 279 (2d Cir. 2015); Schonholz v. Long Island Jewish Med. Ctr., 87 F.3d 72, 75 (2d Cir. 1996) (noting the "[t]he term 'employee welfare benefit plan' has been held to apply to most. . . employer undertakings or obligations to pay severance benefits"). Defendant, for its part, relates the "strict requirements" for ERISA plans imposed by statute, including the requirements that every ERISA plan be established and maintained pursuant to a written instrument, provide a procedure for establishing and carrying out a funding policy, describe any procedure for the allocation of responsibilities for the operation and administration of the plan, specify the basis on which payments are made to and from the plan, comply with various reporting requirements, [3] and provide a Summary Plan Description ("SPD") to plan participants. 29 U.S.C. §§ 1002(16)(A)(ii), 1022, and 1102.

         8. Despite their different approaches to the dispute, the parties agree that not all severance programs are ERISA plans, a tenet consistent with the Supreme Court's analysis in Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1 (1987). Although in Fort Halifax the Court was reviewing a state statute that required the payment of severance benefits under certain circumstances[4] (rather than an employer-sponsored program), nonetheless, it is a critical starting point for the discussion at bar. The Court recognized in the first instance that "Congress intended pre-emption to afford employers the advantages of a uniform set of administrative procedures governed by a single set of regulations." Id. at 11. According to the Court,

[t]his concern only arises, however, with respect to benefits whose provision by nature requires an ongoing administrative program to meet the employer's obligations. It is for this reason that Congress pre-empted state laws relating to plans, rather than simply to benefits. Only a plan embodies a set of administrative practices vulnerable to the burden that would be imposed by a patchwork scheme of regulation.

Id. at 11-12. The Court concluded that the statute under examination did not establish or require an employer to maintain an ...


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