Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Gehrman v. Twin Rivers Paper Co.

United States District Court, D. Maine

October 5, 2016

JAMES GEHRMAN, et al., Plaintiffs,
v.
TWIN RIVERS PAPER COMPANY, Defendant

          FINDINGS OF FACT AND CONCLUSIONS OF LAW[1]

          John C. Nivison U.S. Magistrate Judge.

         In this action, Plaintiffs James Gehrman, Michael Reider, and Ronald Guay allege that Defendant Twin Rivers Paper Company breached their employment contracts by failing to make payments pursuant to a severance agreement.[2] The Court held a three-day trial, and the parties subsequently filed written closing arguments.

         Findings of Fact

         Based on the evidence at trial, the Court finds the following facts:

         1. In 2006, Fraser Papers Inc. (Fraser) developed a severance policy for its employees known as the Fraser Papers Inc. Severance Pay Guidelines (Fraser Papers Guidelines).

         2. The Fraser Papers Guidelines provide for a lump sum severance payment to eligible employees.

         3. In April 2010, Twin Rivers Paper Company (Twin Rivers or Defendant) acquired Fraser's assets. Following the acquisition, Twin Rivers continued to employ many former Fraser employees.

         4. Twin Rivers operates a pulp plant in Edmundston, New Brunswick, Canada, a paper manufacturing facility in Madawaska, Maine, and various saw mills and wood processing plants in New Brunswick and Maine.

         5. Plaintiffs are former management-level employees of Twin Rivers. Twin Rivers terminated Plaintiffs' employment as of June 7, 2013.

         6. After Twin Rivers' acquisition of Frasers' assets, Twin Rivers used the Fraser Papers Guidelines terms to pay severance to its employees, including former Fraser employees. In or about February or March 2011, Twin Rivers paid a former Fraser employee in a lump sum the full extent of the severance benefits payable under the Fraser Papers Guidelines.

         7. In May 2011, Twin Rivers modified the Fraser Papers Guidelines to provide that the former Fraser employees would be paid four additional weeks of severance rather than receiving a credit for the length of the employees' prior service with Fraser.

         8. At the time Twin Rivers acquired Fraser's assets, Twin Rivers' controlling shareholder was Brookfield Asset Management (Brookfield). Brookfield's principal location is Toronto, Canada.

         9. After the acquisition of Fraser, Brookfield attempted to sell Twin Rivers or, alternatively, sell its interest in Twin Rivers.

         10. At the time Brookfield was marketing Twin Rivers, Plaintiffs were members of Twin Rivers' management team. As an incentive to retain Plaintiffs' employment while Brookfield attempted to sell Twin Rivers, Twin Rivers proposed and Plaintiffs accepted the terms of a Change of Control agreement, which provided in pertinent part:

         In the event of a Change of Control of Twin Rivers Paper Company (defined as a person or entity other than a current shareholder acquiring control over greater than fifty per cent (50%) of the equity of the Company) and:

a. You are not offered employment on substantially the same terms and conditions, commencing forty-five (45) days after the Change of Control and lasting for a period of thirty (30) days thereafter, you will be entitled to resign your employment and receive a lump sum payment equal to fifteen (15) months of your base salary; or
b. You are not offered employment after the Change of Control, you will be entitled to receive a lump sum payment equal to fifteen (15) months of your base salary.

         11. The terms of the Change of Control agreement did not provide that the payment upon a change of control would be in lieu of or would substitute for any severance benefits to which Plaintiffs might be entitled. When presented with the draft Change of Control agreement for his review, Bill Peterson, Twin Rivers' human resources manager, asked company officials whether they wished to include such language. After considering the issue, company officials decided to proceed without any preclusion language in the Change of Control agreement.

         12. Brookfield entered into negotiations in May and June 2013 with a buyer for its controlling interest in Twin Rivers. As the result of the negotiations, Brookfield sold its interest in Twin Rivers to private equity firms Atlas Holding and Blue Wolf Capital Partners. After the sale, on June 7, 2013, Plaintiffs' employment with Twin Rivers was terminated.

         13. On June 6, 2013, the day before Plaintiffs' employment was terminated, upon Plaintiff Reider's request for a copy of the severance policy, Kim Lavoie, the Director of Corporate Human Resources for Twin Rivers, and the person responsible for the administration of and distribution of the company's policies, sent Plaintiff Reider a copy of the Fraser Papers Guidelines with a note that read: “Twin Rivers continues to use the severance pay guidelines that were established in 2006. In addition to the attached guidelines, for those that were employed by Fraser Papers they are entitled to an additional 4 weeks of severance pay.” 14. Upon termination of their employment, Plaintiffs were paid the benefit to which they were entitled under the Change of Control agreement.

         15. Twin Rivers' human resources manager, Bill Peterson, was responsible for updating the company's severance policy.

         16. Mr. Peterson drafted a document entitled Twin Rivers Paper Company Severance Benefit Plan and Summary Plan Description (the Summary Plan) in May 2011.

         17. Mr. Peterson shared with management a draft of the Summary Plan. Mr. Peterson intended to draft the Summary Plan to be a plan under the Employee Retirement Income Security Act (ERISA). The Summary Plan included the following provision:

B. Benefits under this Plan are not intended to duplicate such benefits as workers' compensation, wage replacement benefits, disability benefits, severance pay, or similar benefits under other benefit plans, severance programs, employment contracts, or applicable laws, such as the WARN Act. Should such other benefits be payable, the benefits under this Plan will be reduced accordingly or, alternatively, benefits previously paid under this Plan will be treated as having been paid to satisfy such other benefit obligations. In either case, the Plan Administrator will determine how to apply this provision, and may override other provisions in this Plan in doing so.
C. If an eligible employee has executed an employment or severance agreement with the Company which expressly provides for severance pay, the employee shall be entitled to the greater of the benefits under this Plan or the benefits under the agreement; you shall not be eligible to receive benefits under both.

         18. The Summary Plan was circulated among management personnel to solicit comment. After receiving comments, in June 2011, Mr. Peterson forwarded a copy of the draft to Pierre McNeil of Brookfield. Mr. McNeil reported that the draft was fine.

         19. In or around July 2011, the word “FINAL” was placed on the draft prepared by Mr. Peterson. The plan with the word “FINAL” was included among the documents in the data room for review by potential purchasers of Twin Rivers.[3]

         20. Certain email communications among some of the members of the management of Twin Rivers in 2011 included a copy of the Summary Plan with the designation of “FINAL, ” but the substance of the email communications demonstrates the Summary Plan had not been adopted at that time despite the “FINAL” designation. The email ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.