Pactiv Corp. v. Rupert, 724 F.3d 999

Background

Reynolds Group acquired Pactiv in 2010; the acquisition agreement promised severance to non-union employees terminated without cause within a year.
After closing, Pactiv adopted a written severance plan that required a departing employee to sign a company-form "separation agreement" releasing claims and containing a one-year restrictive covenant.
Chad Rupert refused a relocation, was acknowledged eligible for severance, but refused to sign the separation agreement; Pactiv withheld benefits and sued for a declaration that conditioning benefits on the covenant was lawful.
At district court Rupert argued recovery under the acquisition agreement (not the ERISA plan); the court nonetheless awarded benefits based on the post-acquisition ERISA plan without giving Pactiv notice to address that theory.
On appeal the Seventh Circuit held the district court erred to decide on an unbriefed theory without notice, considered whether Rupert could still pursue ERISA-based relief, and remanded for the district court to give notice and consider the post-acquisition plan language.

Issues

Issue	Plaintiff's Argument (Rupert)	Defendant's Argument (Pactiv)	Held
Can Pactiv condition severance on signing the post-acquisition separation agreement (including restrictive covenants)?	Plan language is not part of the acquisition agreement; acquisition promise requires severance without such conditions.	The implemented ERISA plan permits (or allows) conditioning benefits on a company-acceptable separation agreement including restrictive covenants.	Remanded: district court must give notice and consider arguments on the written ERISA plan before deciding; appellate court did not resolve merits.
May the district court decide the case on a theory neither party pursued (award under ERISA plan when plaintiff disclaimed that theory)?	N/A (Rupert disclaimed reliance on ERISA plan at district court).	Pactiv argued district court should consider plan language but had no briefing when court ruled.	Court erred by deciding on an unraised theory without notice; litigants must get notice and opportunity to respond under Rule 56(f).
Is Rupert a third-party beneficiary of the acquisition agreement §6.4(d) severance promise despite §9.6(b) (no third-party beneficiaries)?	§6.4(d) creates enforceable rights for employees as third-party beneficiaries; §9.6(b) is ineffective under Delaware law.	§9.6(b) validly restricts who may enforce the agreement; §6.4(d) is not listed as an exception.	Rejected: Delaware law permits limiting non-signatory beneficiaries; district court correctly concluded Rupert is not a third-party beneficiary.
Is §6.4(d) itself an ERISA welfare-benefit plan (making employees direct beneficiaries)?	Even though skeletal, §6.4(d) should be treated as a plan (relying on Halliburton).	The acquisition language is too skeletal and was implemented by a later detailed ERISA plan; absent required plan terms it likely is not a stand-alone ERISA plan.	Not decided: court need not resolve on appeal; if district court upholds the post-acquisition plan, it must then consider whether §6.4(d) is independently an ERISA plan.

Key Cases Cited

Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73 (1995) (ERISA requires written plan document for employee welfare plans)
Cirulis v. UNUM Corp. Severance Plan, 321 F.3d 1010 (10th Cir.) (plan cannot be modified by unilateral, post-hoc demands not reflected in plan document)
Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (courts may enter summary judgment sua sponte only after giving notice and opportunity to present evidence)
Halliburton Co. Benefits Comm. v. Graves, 463 F.3d 360 (5th Cir.) (merger agreement language can amend an existing welfare plan; context-specific ruling)
Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987) (limitations on what employer promises create enforceable welfare benefits under federal law)
Bartholet v. Reishauer A.G., 953 F.2d 1073 (7th Cir.) (ERISA preemption can bar state-law claims about promises to create welfare-benefit plans)