Paper Company Exec Loses Severance Benefit Fight

November 7, 2008 ( - A federal appellate court has cleared a paper company of wrongdoing in denying severance benefits of about $300,000 from a top hat plan to its former president over allegations he was disloyal to the firm during a business deal.

The 6 th U.S. Circuit Court of Appeals upheld a lower court decision against plaintiff Richard Whitescarver who was fired in 2003 “for cause”—a determinationSabin Robbins Paper Co. said precluded him from receiving benefits from itsSupplemental Executive Retirement Plan.

In an unsigned opinion, the appellate panel found that the former president acted in his own best interests by demanding Sabin meet his severance benefits demands. Sabin Robbins kept Whitescarver solely to work on a business deal with an investor group called Team Ten, after he was unseated as president.

To support its determination that Whitescarver deserved to be terminated “for cause,” Sabin claimed he withheld important information about the Team Ten deal negotiations to increase his leverage in his severance benefit talks with the company going on at the same time.

“Whitescarver stated at least twice that he would withhold assistance on the project until the company met his severance. He also gave the impression that he was withholding helpful information on the Team Ten agreement. Finally, Whitescarver made several statements indicating that he viewed the company as an adversary,” the appellate panel observed.

When Sabin Robbins finally severed its relationship with Whitescarver in October 2003, the company charged he had been disloyal because he refused to provide copies of his cell phone records, which Sabin Robbins believed would show that Whitescarver violated a directive not to speak to company vendors, customers, and employees.

Whitescarver v. Sabin Robbins Paper Co., 6th Cir., No. 07-4074, unpublished 11/5/08).