365 S.W.3d 750
Tex. App.2012Background
- Gimpel employees sued Tyco for breach of contract after Tyco failed to pay severance promised under RIAs and oral agreements.
- Tyco created the West Gulf Bank Severance Schedule in 2006, claiming it set severance terms for the West Gulf Bank Facility.
- Retention Incentive Agreements promised a retention bonus and severance 'standard Severance' if not offered Comparable Employment with Tyco.
- Gempel Unit was sold to Dresser Rand; Asset Purchase Agreement required Tyco to pay preexisting severance while Dresser Rand offered comparable employment.
- Gimpel employees worked for Dresser Rand post-sale; Tyco paid retention bonuses but not severance; trial court ruled in plaintiffs' favor on breach claims.
- Court addressed whether ERISA preempts the claims and whether RIAs/oral agreements were independent of ERISA or related to it.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| ERISA preemption of breach claims | Gimpel employees argue RIAs/oral agreements are independent of ERISA and not preempted. | Tyco contends claims relate to ERISA plan terms and are preempted as plan benefits. | Not preempted; RIAs are independent of ERISA plan. |
| Relation of RIAs to Tyco's ERISA Plan | RIAs and West Gulf Schedule are separate from ERISA plan terms. | RIAs reference 'standard Severance' tied to ERISA plan and thus relate to it. | RIAs are independent and do not relate to the ERISA plan. |
| Validity of oral agreements | Tyco breached oral promises of severance to Gimpel employees. | No valid offer, acceptance, or meeting of the minds proven for oral agreements. | Oral agreements unenforceable; no breach damages from oral promises. |
| Meaning of 'standard Severance' in RIAs | Standard Severance referred to West Gulf Bank Schedule, independent of ERISA. | Standard Severance referred to Tyco ERISA plan terms. | Latent ambiguity resolved for West Gulf Bank Schedule; it is not ERISA-based. |
| Breach by Tyco under RIAs | Tyco breached by not paying severance per RIAs/West Gulf schedule. | Dresser Rand's involvement and asset sale altered obligations; Tyco satisfied via Comparable Employment. | Tyco breached RIAs; result of judgment take-nothing for plaintiffs on contract claims. |
Key Cases Cited
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (Supreme Court-1989) (ERISA aims to protect plan benefits and limits state-law claims)
- Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (Supreme Court-1983) (relates-to standard for ERISA preemption)
- Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (Supreme Court-1987) (one-time severance not requiring ongoing administrative scheme)
- Tinoco v. Marine Chartering Co., 311 F.3d 617 (5th Cir.-2002) (one-time severance not an ERISA plan due to no ongoing admin)
- Peace v. American General Life Ins. Co., 462 F.3d 437 (5th Cir.-2006) (severance plans not ongoing may be non-ERISA)
- Greathouse v. Glidden Co., 40 S.W.3d 560 (Tex.App.-Houston [14th Dist.]-2001) (ERISA preemption where plan requires ongoing administration)
- Crews v. Gen. American Life Ins. Co., 274 F.3d 502 (8th Cir.-2001) (severance contract independent of ERISA plan)
- Gresham v. Lumbermen's Mut. Cas. Co., 404 F.3d 253 (4th Cir.-2005) (separate severance benefits independent from ERISA plan)
- Eide v. Grey Fox Tech. Servs., 329 F.3d 600 (8th Cir.-2003) (severance outside ERISA plan not requiring ongoing admin)