Dennis L. Winger, et al. v. Life Technologies Corp.: Five high-ranking executives at a Norwalk company who were fired after the business changed ownership have been awarded $17.4 million.
The five plaintiffs worked for Applied Biosystems Inc. (ABI), which in 2008 was part of a $6 billion merger with the California company Invitrogen Corporation. Following the merger, the companies became Life Technologies Corp., which specializes in gene research and other biotechnology fields.
The plaintiffs each had individual “change-in-control” agreements written into their contracts that stated they could not be terminated for three years after a merger or change in ownership. If they were fired, they were to receive all benefits and compensation for that three-year period as if they had remained employed.
Despite the agreement, the five ABI executives were terminated after the merger. Though they received hefty severance packages, they say they were denied compensation for the company stock option plan, stock incentive plan and medical insurance benefits.
The employees were: Dennis L. Winger, senior vice president and chief financial officer; Barbara Kerr, senior vice president of human resources; Thomas P. Livingston, vice president and secretary (also an associate general counsel); Ugo DeBlasi, vice president and controller; and John Ostaszewski, vice president and treasurer.
The five former executives filed a complaint with the American Arbitration Association, per the terms of their change-in-control employment agreement, alleging breach of contract, breach of good faith and fair dealing, and a refund of unpaid wages. The plaintiffs sought $25 million in damages.
Specifically, they alleged that Life Technologies Corp. inherited all of the obligations spelled out in the change-in-control agreement that the executives entered into as employees with ABI.
One provision of the change-in-control agreements required Life Technologies to provide the plaintiffs with continued participation in all benefit plans, such as the stock incentive plans and health benefit plans, for up to three years after the merger.
Lawyers for the former executives, Scott Lucas and Jeff Bagnell, of Lucas Bagnell Varga LLC in Southport, claim that contrary to language in the change-in-control agreements, Life Technologies required that the plaintiffs exercise their stock options within 30 days, or forfeit them. Two of the executives ended up retiring, which lengthened the time they had to exercise their stock options, but any deadline was still contrary to the terms of the change-in-control agreements, said the lawyers.
The deadlines for exercising the stock options were even more critical given the national economic situation. The stock had lost value during the Wall Street meltdown, but rebounded significantly after the merger.
Additionally, the executives also were not afforded the option to keep their health benefits. Nor were they afforded any “reasonably equivalent benefit to their participation in Applied Biosystems’ stock option or health benefit plans in the ensuing continued benefit period, contrary to the terms of the change-in-control agreements,” said the lawyers in the complaint.
Lucas, lead trial counsel for the executives, said that the five terminated employees did receive lucrative severance payments that were in the neighborhood of a several million dollars each. He said Life Technologies argued that “these payouts were already large enough and the employees were overreaching” in their complaints about the stock options and medical benefits. The Life Technologies lawyers further argued that the executives were misreading their change-in-control agreements and were not entitled to continued stock-based benefit awards.
Life Technologies was represented by attorneys Robert J. Mathias and Ian Taylor of DLA Piper’s Baltimore office. The two defense lawyers did not return calls seeking comment last week.
Bagnell, who handled the damages aspect of the case at the hearings for the plaintiffs, said there was nothing in the way of settlement discussions between the two sides, and so the case went before a panel of three arbitrators on behalf of the American Arbitration Association. Those arbitrators were former Connecticut U.S. District Judge Alan H. Nevas, former state Superior Court Judge James F. Stapleton and attorney Emanuel N. Psarakis. Hearings took place in May and October over a period of six days, and the panel issued a written ruling earlier this month. The three arbitrators sided with the former executives.
“The burden was on the respondent [Life Technologies Corp.] to read the employment agreements and interpret them so that they understood what their obligations were, or could be,” Stapleton wrote on behalf of the panel. “The claimants are entitled to recover damages for the failure of the respondent to provide ‘substantially identical benefits’ for their loss of continued participation in the stock incentive plan of their former employer.”
The panel then awarded the five former executives a total of $17,449,154. Of that amount, Winger received the most, at nearly $7 million. Kerr received nearly $4.7 million.
The plaintiffs lawyers said they did not want to comment on what their clients are doing now after being terminated by Life Technologies Corp. At the time of the merger, Winger and Kerr resided in California but would sometimes travel to the Norwalk office. The other three executives lived and worked in Connecticut.
“We are very pleased with the outcome and are happy our clients will finally receive these sums, which they earned and are long overdue,” said Lucas. •