State of New York Supreme Court : County of Monroe _______________________________ John E. Stern and Sharon Stern, Plaintiffs, - against - Index No. 1999/9008 Eastman Kodak Company, Defendants. __________________________________ MEMORANDUM DECISION ANDREW V. SIRACUSE, J. There are several quite separate issues in this case, although only one is truly dispositive. Plaintiff John Stern began this action by alleging that in early 1998 he was laid off from defendant Eastman Kodak, where he had been a long-term employee, and forced into a Termination Allowance Plan (TAP) because he was disabled, having had a bilateral hip replacement in 1994 and having returned to work in 1995 with substantial restrictions on his activities. Defendant Kodak unsurprisingly denies this contention, but goes further. During Mr. Stern's final weeks at Kodak he removed certain tools from the plant where he worked. Kodak investigated, interviewed Mr. Stern, and after concluding that he had indeed stolen the tools amended his termination record to specify discharge for cause. It then refused to pay the agreed-upon benefits under the TAP. Plaintiffs argue that, even though the involuntary termination was itself improper, it was also wrong for Kodak to cancel the benefits under that plan. They argue that the TAP plan was a pension plan under ERISA, not a welfare plan, and that Mr. Stern was vested in its benefits and could not be deprived of them. Plaintiffs further assert that the conduct of the Kodak investigation was improper, that Mr. Stern was misled into believing that his benefits would be intact if he were cooperative with the investigators, and that Kodak is liable because of its actions for false imprisonment, intentional infliction of emotional distress, prima facie tort, and other causes of action. Plaintiffs claim that Kodak acted contrary to its fiduciary duty towards TAP beneficiaries by retaining the TAP benefits for its own use, citing a comment in the investigators' report that Kodak would save approximately $50,000 by canceling his payments. Both parties have moved for summary judgment, the plaintiffs for declaratory judgment that the TAP program is a pension program and that Mr. Stern's benefits under it were vested and could not be forfeited, and the defendant for summary judgment dismissing the complaint. After reviewing the extensive submissions, and oral argument having been had, the court rules with the defendant; regardless of the manner of plaintiff's original layoff, Kodak was within its rights to investigate the theft and to terminate Mr. Stern on that basis. Further, the TAP program was clearly a welfare benefit plan, not a pension plan, and Mr. Stern's benefits were not vested. The question of the nature of the benefits is an important one, because pension benefits under ERISA are vested and cannot be forfeited whereas welfare benefits are dependent and can be. Plaintiffs have advanced several arguments in favor of their interpretation, but all of them elevate form over substance. It is clear that the benefits provided under TAP are welfare-type benefits, and they are not consequences of retirement. One does not have to retire to be eligible, unless the definition of retirement is stretched to include involuntary layoff. In addition, the court notes that the plan provides for termination of benefits should the employee be rehired by Kodak during the duration of the assistance. This would hardly be the case in an actual retirement plan. Since Mr. Stern's benefits were not vested, Kodak was not acting in violation of ERISA when it terminated his participation in the plan upon discovery of the theft. The plaintiffs have made much of the timing of the defendant's actions. The interview regarding the theft took place after Mr. Stern's termination date, and plaintiffs suggest that this was improper; they go so far as to accuse Kodak of fraud and forgery in this regard. It should be noted, however, that the interview was to have taken place earlier; it was postponed because of Mr. Stern's absence and for his convenience. In any event, the plaintiffs' argument would appear to be that the timing of Kodak's action renders it ineffective. The court cannot agree; to adopt the plaintiffs' position would be tantamount to permission to steal, if only one can avoid detection or confrontation for a few weeks. Plaintiffs make no factual challenge to the allegation of theft, and their counsel conceded this at oral argument. Carried to its limit, plaintiffs appear to argue that once an employee is scheduled for layoff he cannot lose this status regardless of his conduct before his or her last working date. This is an untenable assertion, to say the least. Many of the plaintiffs' complaints arise from the conduct of the interview itself. They claim, for example, that Mr. Stern was lied to when Kodak investigators told him that his only chance of returning to Kodak on good terms was to cooperate with the investigation, and that threats of calling in the police if he did not cooperate were tantamount to coercion. Because Kodak employees threatened him with loss of TAP benefits unless he confessed, Mr. Stern argues, he was being imprisoned by being led to believe that the only way he could keep his benefits was his continued presence with the investigators. These points are without merit. Corporate security chief Gary Birkahn did state that the police might be called if Mr. Stern was not truthful, and that the results of the interrogation and Mr. Stern's attitude would affect what Kodak decided to do. These are neither threats of a coercive nature nor misrepresentations. While it was certainly true that an admission of theft was unlikely to leave Mr. Stern the option of returning to his former employer, it is also true that anything other than complete candor would also have resulted in termination for cause. The interview was not without psychological pressure, but the court can find nothing to suggest any fraud, overreaching, coercion, or misconduct that would render it improper or would substantiate plaintiffs' claims of false imprisonment, intentional infliction of emotional distress, or prima facie tort. Kodak, therefore, was acting within its rights in terminating Mr. Stern for cause and thereupon revising his personnel record and terminating his TAP benefits. By violating the rule against employee theft he lost his right to participation in that program. By so terminating him Kodak was not evading its responsibilities as a fiduciary; Birkahn's statement that the value of the investigation to Kodak was some fifty thousand dollars is not evidence to the contrary. Placed in context, Birkahn's notation indicated that because Mr. Stern had forfeited this amount in benefits the company saw no point in further punishing him by seeking restitution. Since Kodak acted properly in terminating Mr. Stern for cause, any claim he may have had with respect to his original layoff and inclusion in TAP is mooted. The court is troubled by the process Kodak followed; the uniform low scores--the lowest scores possible--that Mr. Stern received as managers reviewed department employees for possible layoff are inconsistent with his employment record, which showed excellent technical skills but some behavior and attitude difficulties. The absence of any differential between technical skill scores and behavior scores in the review document is suspicious at the very least. Nonetheless, even unfair treatment at the hands of an employee cannot justify theft. Had the case been limited to Mr. Stern's initial layoff, the court might have been inclined to deny summary judgment. Since there is no doubt that he committed theft, however, Kodak was entitled to discharge him, and under the facts presented there were permitted to do so retroactively even after the date of his last employment. The complaint is dismissed, with costs. Counsel for Kodak may prepare the order. DATED: Rochester, New York August 30, 2000 Andrew V. Siracuse, J.S.C. Design © 1997 Michael Steinberg. No copyright subsists in the decision texts, which are government documents. HOME GUIDES CASES ISSUES INDEX