Termination Before Selloff not Intentional Benefits Interference

April 3, 2008 (PLANSPONSOR.com) - The U.S. District Court for the Middle District of Pennsylvania has found that an employer was not motivated by a desire to deprive an Employee Stock Ownership Plan participant of benefits when it terminated him to move along a sell of one of its units to another company.

In granting summary judgment to Waypont Insurance Group, Inc. the court said the record contained no evidence from which a reasonable jury could conclude that Waypoint’s decision to terminate Toby G. Breon was motivated by a desire to deprive him of benefits. Waypoint correspondence dated more than a week before Breon’s termination confirmed it began to consider terminating him because of the potential financial impact of his continued refusal to sign an employment agreement with Clair Odell Insurance Agency, LLC, the opinion said.

The court rejected Breon’s argument that a cost savings to Waypont from not being required to make annual contributions to his ESOP account was a motivating factor behind his termination, finding the purported cost savings was not of sufficient size to prove the allegation.

Additionally, the court turned aside Breon’s claim that the temporal proximity between his termination and the date he would have been vested in his ESOP benefits provides evidence of intentional benefits interference. However, the fact that the closing date for the sale of Waypont’s unit to Odell was prior to Breon’s vesting date “lends credence to Waypoint’s argument that its decision was prompted by the looming closing deadline with Odell,” the opinion said.

The case is Breon v. Waypoint Insurance Group Inc., M.D. Pa., No. 1:06-CV-2204, 3/31/08.