Kristi Tousignant//Daily Record Legal Affairs Writer//November 24, 2013
//Daily Record Legal Affairs Writer
//November 24, 2013
A federal judge has denied two former Exelon Corp. employees’ quest for severance benefits, finding that they were not eligible because they were hired by an “affiliate” of the company that took over the power plants where they worked.
Under the severance plan, employees whose jobs were terminated were eligible for wages and benefits if they were “not offered any job by a Successor.”
The problem came in defining the word “successor.”
The plaintiffs had worked for power plants that were taken over in 2012 by Raven Power Holdings LLC. They were not offered jobs by Raven Power, but by Topaz Power Management, which manages the power plants owned by Raven Power’s parent company.
The judge found that Topaz was a “successor” under the plan’s definition, which is “any employer who purchases an Employer subsidiary/affiliate either through a stock or asset purchase.”
The employees’ attorney, Christopher G. Mackaronis of Brickfield Burchette Ritts & Stone P.C. in Washington, D.C., said he and his clients are still deciding their next steps in the case.
“We are disappointed and we are reviewing it now to determine what the next steps will be, if anything,” Mackaronis said.
An attorney for Exelon, Azeez Hayne of Morgan, Lewis & Bockius LLP in Philadelphia, Pa., declined to comment on the case.
The lawsuit was filed in U.S. District Court in Baltimore May 28 by John J. Strauch Jr., a former vice president for fuel procurement with the company, and Jason Endlich, a former finance manager, claiming unpaid wages and benefits under the Employee Retirement Income Security Act.
Strauch had been working at Constellation Energy Group Inc. since June 1982 and Endlich had been working there since June 2004. Both were still there when the company was acquired by Exelon in March 2012.
The two kept their jobs after the merger, but in November 2012, the power plants where they worked were sold to Raven Power. Per the terms of the purchase agreement, Raven Power offered jobs to 400 employees at the plants, which did not include Strauch or Endlich.
The two, however, were hired by Topaz Power Management.
Strauch, of Baltimore, and Endlich, of Crofton, claimed they were entitled to two years of wages and benefits under the severance pay plan initially adopted by Constellation and continued by Exelon after the merger.
Strauch and Endlich’s claims for benefits were denied this January and again in March by a plan administrator at Exelon.
Strauch and Endlich claimed Raven Power was the “successor” per the terms of the plan and because Raven Power itself did not hire them, they should be eligible for benefits.
“They were not hired by Raven,” Mackaronis said. “They were subsequently hired by a company hired by Raven to manage the facilities.”
Exelon, however, believed that Topaz was a successor because it is an “affiliate” of Raven Power.
“That’s a phrase their lawyers concocted for the first time in litigation,” Mackaronis said. “I don’t know what that means. Is that the landscaping company that cuts the grass at the company? Is that an affiliate?”
Judge James K. Bredar, however, agreed with Exelon.
“A ‘Successor’ would, therefore, include the direct purchasing employer, Raven Power, and any subsidiary/affiliate of that employer, which, in this case, is Topaz,” Bredar wrote in the memorandum explaining his ruling on Nov. 19.
Strauch and Endlich had also argued that they were eligible for wages and benefits because they were given jobs with fewer benefits and a reduced pension with Topaz.
The court, however, held that the service plan dictates that a former employee is ineligible for benefits if they take any position, regardless of benefits level, with a successor.
“The Service Plan’s use of the word ‘any’ denotes that an employee need not be offered an equivalent position with a successor to be ineligible for severance benefits,” Bredar wrote.
The two had sought declaratory relief from the court saying Exelon violated ERISA, injunctive relief requiring Exelon to provide them wages and benefits under the plan, interested accrued and attorney’s fees.
The case is Strauch et al. v. Exelon Corp. et al., No. 1:13-cv-01543-JKB, U.S. District Court, Baltimore.t