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Access over workers' compensation decisions, including En Banc, Significant Panel Decisions, and writ-denied cases.

Case No. MISSING
Regular Panel Decision

In Re Yarn Liquidation, Inc.

This memorandum addresses the priority of severance pay claims filed by fourteen former employees of SCT Yarns, Inc., a debtor in a Chapter 11 liquidation case. The court examines whether these claims qualify for third priority under 11 U.S.C. § 507(a)(3) for compensation earned within 90 days pre-petition, or first priority as administrative expenses under 11 U.S.C. § 507(a)(1) for services rendered post-petition. Adopting the majority rule, the court determines that severance pay is an administrative expense only to the extent earned by service during the bankruptcy case and a third priority claim only if earned within the 90-day pre-petition period. The court calculates the amounts entitled to first priority as administrative expenses for eleven employees who continued service post-petition and acknowledges that the pre-petition severance pay for all fourteen employees may qualify for third priority, subject to a $4,000 limit.

Bankruptcy LawChapter 11 LiquidationSeverance PayPriority ClaimsAdministrative ExpensesEmployee CompensationBankruptcy Code § 507Pre-petition ClaimsPost-petition ClaimsCreditor Priority
References
14
Case No. MISSING
Regular Panel Decision

Kosakow v. New Rochelle Radiology Associates, P.C.

Nancy Kosakow sued her former employer, New Rochelle Radiology Associates, alleging FMLA violations and wrongful denial of severance pay under ERISA. The court previously found FMLA claims collaterally estopped but remanded the ERISA claim to the Plan Administrator for a determination on severance eligibility. The Administrator denied severance, finding Kosakow not "terminated" and, even if so, not entitled to severance. This court reversed the "not terminated" finding, stating Kosakow was terminated due to a reduction in force. However, the court affirmed the Administrator's denial of severance, concluding that the "where applicable" clause in the Plan gave the Administrator broad discretion and that Kosakow's circumstances did not warrant severance. The court found that the denial was not unreasonable, even when considering a severance payment made to another full-time employee under different circumstances.

ERISASeverance PayFMLATerminationSummary JudgmentDe Novo ReviewPlan Administrator DiscretionEmployee BenefitsReduction in ForcePolicy Manual
References
8
Case No. MISSING
Regular Panel Decision
Apr 12, 1989

In Re Microwave Products of America, Inc.

Joseph Scallon, former president of Microwave Products of America (MPA), sought payment for post-petition salary and expenses as an administrative claim after MPA filed for bankruptcy. He claimed extensive hours and travel costs for his services as president and CEO, along with two weeks of severance pay. Presiding Judge Bernice Bouie Donald meticulously scrutinized Scallon's application due to his fiduciary role. The court allowed a salary claim of $3,000 for one week of necessary services rendered to preserve the estate. However, Scallon's $6,000 severance pay claim was reclassified as a non-priority general unsecured claim, as it was deemed a gratuitous promise rather than a bargained-for or necessary expense. Additionally, $1,861.71 in post-petition expenses was allowed as a priority claim, contingent upon the submission of proper documentation to the U.S. Trustee and payment upon plan confirmation.

Bankruptcy AdministrationAdministrative ClaimsPriority ClaimsSeverance PayPost-petition ExpensesFiduciary DutyOfficer CompensationDebtor-in-possessionEmployee ClaimsClaim Scrutiny
References
12
Case No. 08-02-00452-CV
Regular Panel Decision
Oct 23, 2003

Jesse Davila v. Pay & Save Corporation D/B/A Lowe's Market Place, Inc.

Jesse Davila appealed a summary judgment against him in favor of his former employer, Pay & Save Corporation, doing business as Lowe's Market Place, Inc. Davila was fired after another employee accused him of sexual harassment. He sued Pay & Save, alleging defamation, negligence, invasion of privacy, fraud, and intentional infliction of emotional distress. The trial court granted summary judgment for Pay & Save on all claims. The Court of Appeals affirmed the trial court's judgment, finding Davila failed to establish error regarding his claims, and denied Pay & Save's motion for damages for frivolous appeal.

Sexual HarassmentWrongful TerminationSummary Judgment AppealDefamation ClaimNegligence ClaimInvasion of PrivacyFraud AllegationIntentional Infliction of Emotional DistressEmployer LiabilityScope of Employment
References
15
Case No. MISSING
Regular Panel Decision

Balding v. Tennessee Department of Employment Security

This case involves former employees of Wilson & Company who sought unemployment compensation benefits after their employment was terminated due to a plant closure. They had received severance pay according to a contract between their union, United Packing House Workers of America, and Wilson & Company. Initial administrative decisions and the Chancery Court denied benefits, ruling that severance pay disqualified them. The Tennessee Supreme Court reviewed whether severance pay constituted 'wages' for the post-severance period, disqualifying them under the Tennessee Employment Security Law. The Court held that severance pay was 'with respect to' personal services rendered prior to the severance date, not after. It concluded that the appellants were 'unemployed' as of the severance date and were eligible for benefits. Consequently, the Court reversed the decision of the chancellor.

Unemployment Benefits EligibilitySeverance PayWages DefinitionTennessee Employment Security LawStatutory InterpretationCollective Bargaining AgreementPlant ClosureAppellate ReviewDisqualification CriteriaEmployer Liability
References
3
Case No. MISSING
Regular Panel Decision
Apr 15, 1996

Eymer v. Ground Round, Inc.

Plaintiffs Jeffrey Eymer and Patrick Lappin sued The Ground Round, Inc. and its Severance Pay Plan, asserting claims under ERISA for denied severance pay, breach of contract for unpaid vacation days, and age discrimination for Eymer. Defendants moved for partial summary judgment on multiple claims. The court granted summary judgment for the defendants on Claims 3 and 8 but denied it for the remaining ERISA severance pay, breach of contract for vacation pay, and age discrimination claims. The court found material issues of fact existed regarding the arbitrary and capricious nature of the severance pay denial, disputes over vacation pay policy application, and a potential discriminatory animus concerning age, warranting further proceedings.

ERISAAge DiscriminationBreach of ContractSeverance PayVacation PaySummary Judgment MotionConflict of Interest PolicyEmployment LawEmployee BenefitsArbitrary and Capricious Standard
References
17
Case No. MISSING
Regular Panel Decision
Apr 10, 1985

Adcock v. Firestone Tire & Rubber Co.

Former nonunion, salaried employees of Firestone Tire & Rubber Company sued their former employer after Firestone sold its Lavergne tire facility to Bridgestone Tire Company. The employees were immediately re-employed by Bridgestone without a loss of pay, but sought severance benefits from Firestone, arguing the sale constituted a 'reduction in work force' under their severance pay plan governed by ERISA. The U.S. District Court for the Middle District of Tennessee, presided over by Chief Judge Wiseman, acknowledged that employees acquire a contractual right to severance pay under federal common law, derived from Firestone's employee handbook. However, the court ruled that continued employment with the successor corporation, Bridgestone, meant the 'reduction in work force' condition for immediate severance pay had not been met. Consequently, the court granted summary judgment to Firestone, denying the immediate payment of benefits, but clarified that Firestone maintains a continuing contingent liability for severance pay if these former employees are later terminated by Bridgestone for reasons specified in Firestone's original plan.

ERISASeverance PayEmployee BenefitsWelfare Benefit PlanReduction in ForceFederal Common LawFiduciary DutySummary JudgmentEmployer LiabilityCorporate Acquisition
References
42
Case No. 88 Civ. 1534
Regular Panel Decision

Barbagallo v. General Motors Corp.

Plaintiff Thomas L. Barbagallo filed a class action lawsuit against General Motors Corporation (GM) in New York, alleging age discrimination related to its Special Separation Program. The program offered varied separation incentives based on employee age and length of service, notably restricting severance pay to employees under age 53. GM sought summary judgment, asserting that its program, including severance pay provisions, falls under the federal Employment Retirement Income Security Act (ERISA), thus preempting New York's age discrimination laws. The Court analyzed whether the severance pay provisions, both in isolation and as an integrated part of the overall program, constituted an employee welfare benefit plan under ERISA, differentiating it from one-time severance payments. Concluding that GM's Special Separation Program, with its severance pay components, is governed by ERISA, the Court found Barbagallo's state law age discrimination claim preempted and granted GM's motion for summary judgment.

Summary JudgmentERISA PreemptionAge DiscriminationSeverance PayEmployee Welfare Benefit PlanSpecial Separation ProgramFederal Rules of Civil ProcedureEmployment LawState Law ClaimsStatute of Limitations
References
18
Case No. MISSING
Regular Panel Decision

Weisler v. Metal Polishers Union & Metal Production & Novelty Workers Union 8A-28A

The plaintiff, Weisler, a former president of the Metal Polishers Union and administrator of its Pension and Welfare Funds, sued the Union and the Funds over various compensation and benefits. Weisler sought unpaid pension, deferred compensation, vacation pay, and severance pay from the Union. The Funds counterclaimed, asserting Weisler's compensation as administrator was excessive and violated ERISA. The Union also counterclaimed for $2,000 in severance pay already paid to Weisler. The Court ruled in favor of Weisler for bonus pay ($484.63) from the Union but granted the Union's counterclaim for $2,000 in severance pay. All of Weisler's claims against the Funds were denied, and the Funds' counterclaims for excessive compensation were granted, requiring Weisler to repay $91,714.47.

ERISAFiduciary DutyPension BenefitsDeferred CompensationSeverance PayBonus PayUnion OfficialPlan AdministratorExcessive CompensationArbitrary and Capricious Standard
References
20
Case No. MISSING
Regular Panel Decision

Saunders v. Big Bros.

Dawn Saunders sued her former employer, Big Brothers, for two weeks' severance pay after being discharged for incompetence. Ms. Saunders, employed for over a year, was denied severance pay despite Big Brothers' personnel manual stipulating it for employees discharged for incompetence after a year, arguing she was still on probation. The court found that the manual's plain language entitled Ms. Saunders to the pay, as probation was not mentioned as a disqualifier. Distinguishing from termination-at-will cases, the court held that employer-issued manuals detailing benefits are binding, especially when explicitly incorporated into the employment contract. The court ruled in favor of Ms. Saunders, ordering Big Brothers to pay the severance, attorney's fees, and costs, plus a $50 forfeiture to the State.

Employment LawSeverance PayPersonnel ManualImplied ContractEmployee BenefitsProbationary PeriodEmployer PolicyContract InterpretationUnconscionabilityWages
References
9
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