Berke v. Tambrands, Inc. ( 1997 )

NOT FOR PUBLICATION
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 96-1745
CARL M. BERKE, ET AL.,
Plaintiffs, Appellants,
v.
TAMBRANDS, INC.,
Defendant, Appellee.
No. 96-1830
DAVID A. FOX,
Plaintiff, Appellant,
v.
TAMBRANDS, INC.,
Defendant, Appellee.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Robert B. Collings, U.S. Magistrate Judge]
Before
Boudin, Circuit Judge,
Aldrich, Senior Circuit Judge,
and Lynch, Circuit Judge.
James E. Grumbach with whom Marc E. Verzani and Zimble &
Brettler, LLP were on consolidated briefs for appellants.
Roger E. Podesta with whom Harry Zirlin, Debevoise & Plimpton,
Richard L. Nahigian and Sullivan, Sullivan & Pinta were on
consolidated brief for appellee.
April 24, 1997
Per Curiam. Plaintiffs appeal from the district court's
summary judgment dismissal of their claims, most importantly
that stock options and other incentive compensation promised
by their employer, Tambrands Inc., should have been
accelerated--rather than forfeited--when Tambrands sold its
subsidiary Hygeia Sciences, Inc., the company for which the
plaintiffs directly worked. Plaintiffs dispute the district
court's reading of the underlying contracts; they also
challenge several discovery rulings.
After reviewing the briefs and the record, we conclude
that the district court's thorough opinion correctly analyzed
and resolved the questions presented. We affirm for
substantially the reasons given below, separately discussing
below only three points which were not squarely addressed in
the district court. Some of the issues presented by the
appeal are fairly debatable, but we see no reason to repeat
in our words explanations that have been ably provided by the
district court.
1. Plaintiffs argue on appeal that three plaintiffs who
continued working for Hygeia until the date on which their
options would have vested if they had remained in Tambrands'
employ completed the requisite vesting period. They assert
that the contractual requirement of two years' continued
employment with "the Company," defined as "Tambrands and its
subsidiaries," should be understood to mean employment by
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Tambrands and/or the subsidiaries it had at the time the
options were granted--not at the time of exercise.
This theory, although mentioned in the complaint, was
not discussed at length by the magistrate judge, who directed
his attention to a broader claim, namely, that the sale
triggered an acceleration of the options. However, assuming
that the present theory was fully preserved, at the end of
two years the plaintiffs were no longer working either for
Tambrands or a subsidiary of Tambrands, and therefore their
options lapsed under the contract, which allowed exercise
"only during the continuance of that Participant's employment
by the Company."
2. In the district court, in addition to express
contract claims, the plaintiffs pressed implied contract,
unjust enrichment and quantum meruit claims. They based
these latter claims on their allegation that they had made
unusual efforts in support of the planned sale of Hygeia
during 1989 and 1990 and as a result deserve, or were
impliedly promised, the reward of acceleration of their
options. On appeal, they have recast this theory, arguing
that their contracts were impliedly modified, or
alternatively that Tambrands' continuation of its incentive
compensation programs during 1989 and 1990 either estops
Tambrands from refusing acceleration or constitutes a waiver
of any right to refuse acceleration.
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However, we agree with the district court's conclusion
that the plaintiffs could not prove either that they could
reasonably have expected acceleration, or that the defendants
promised acceleration, in exchange for their sales efforts.
We think that this conclusion supports dismissal of
plaintiffs' modification, estoppel and waiver arguments, as
well as the implied contract and related claims more clearly
asserted in the district court and addressed by the
magistrate judge's opinion.
3. Finally, plaintiffs contend on appeal that public
policy considerations justify accelerating their options.
They cite an Iowa case involving somewhat similar facts,
Hilgenberg v. Iowa Beef Packers, Inc., 175 N.W.2d 353, 362-63
(Iowa 1970). In that case, a company that had promised
options to employees sold one of its plants to new owners
before the options vested. In the subsequent lawsuit, the
court permitted the employees of the plant to exercise a
portion of their options, even though the supposed vesting
occurred after sale of the plant. The court relied heavily
upon public policy.
The difficulty is that the present agreement is governed
by New York law as to the contract claims and Massachusetts
law as to noncontractual claims. The New York and
Massachusetts cases that are cited to us are not in point,
and our independent research suggests that the case law in
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these two states does not carry the public policy argument
quite as far as Hilgenberg. See Carlson v. Viacom Int'l
Inc., 566 F. Supp. 289, 290-91 (S.D.N.Y. 1983); McCone v. New
England Tel. & Tel. Co., 471 N.E.2d 47, 49-50 (Mass. 1984).
Affirmed.
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