United States District Court, D. Maine
FINDINGS OF FACT AND CONCLUSIONS OF
C. Nivison U.S. Magistrate Judge.
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. The Court held a three-day
trial, and the parties subsequently filed written closing
on the evidence at trial, the Court finds the following
2006, Fraser Papers Inc. (Fraser) developed a severance
policy for its employees known as the Fraser Papers Inc.
Severance Pay Guidelines (Fraser Papers Guidelines).
Fraser Papers Guidelines provide for a lump sum severance
payment to eligible employees.
April 2010, Twin Rivers Paper Company (Twin Rivers or
Defendant) acquired Fraser's assets. Following the
acquisition, Twin Rivers continued to employ many former
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.
Plaintiffs are former management-level employees of Twin
Rivers. Twin Rivers terminated Plaintiffs' employment as
of June 7, 2013.
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
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
the time Twin Rivers acquired Fraser's assets, Twin
Rivers' controlling shareholder was Brookfield Asset
Management (Brookfield). Brookfield's principal location
is Toronto, Canada.
After the acquisition of Fraser, Brookfield attempted to sell
Twin Rivers or, alternatively, sell its interest in Twin
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:
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.
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
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.
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.
Twin Rivers' human resources manager, Bill Peterson, was
responsible for updating the company's severance policy.
Peterson drafted a document entitled Twin Rivers Paper
Company Severance Benefit Plan and Summary Plan Description
(the Summary Plan) in May 2011.
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
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.
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
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 ...