Court: Defrocked Exec Not Entitled to Severance

October 9, 2002 ( - A defrocked executive of Zippo Manufacturing Co. forced out over allegations he misappropriated company funds is out of luck when it comes to collecting deferred compensation and severance benefits, a federal appeals court ruled.

The US 2 nd Circuit Court of Appeals ruled that Zippo had not created an ERISA-protected severance plan even though it had paid severance to other departing executives, according to Washington-based legal publisher BNA.

The court noted that when the company had made severance payments in the past, it had not done so in situations where an employee, like plaintiff James Baldo, was asked to resign.

According to the ruling, Baldo worked for Zippo for 10 years before being asked to resign in 1998 when he was vice president of sales.

Three years after he resigned, Baldo filed a federal lawsuit in the US District Court for the Northern District of New York claiming a right under ERISA to deferred compensation and severance plan benefits. The federal judge dismissed Baldo’s lawsuit and Baldo appealed.

In upholding the lower court, the appeals jurists first noted that Baldo failed to submit a written contract supporting his claim to deferred compensation benefits. The court also noted that the district court had examined a “supplemental post-retirement compensation agreement” that would have entitled Baldo to deferred compensation benefits if he retired after the age of 65.

Finding that Baldo was not 65 or older and had not “retired” from the company, the appeals court agreed with the lower court that Baldo was not entitled to deferred compensation benefits.

The case is order Baldo v. Zippo Manufacturing Co., 2d Cir., No. 02-7005, unpublished 10/4/02.