A Delaware Superior Court judge ruled Monday that former employees of The Chemours Co. may sue for severance payments they said they were denied after allegedly being duped into taking a less generous buyout deal as the chemical firm downsized following its spinoff from DuPont.
The ruling came as a win for a class of former Chemours employees who saw a similar case dismissed in a Delaware federal court. The same plaintiffs—led by Mark Girardot, Gerhard Wittreich and Peter Butler—later brought their claims to state court, where they accused Chemours, among other things, of fraud, unjust enrichment and a breach of the Delaware Wage Payment and Collection Act.
Chemours moved to dismiss the alleged DWPCA violation in December, arguing that the law only applies to unpaid wages, and not severance benefits resulting from the employees’ termination.
But Delaware Superior Judge Mary Miller Johnston said Chemours’ position was based on an incomplete reading of the law. While severance payments are not explicitly mentioned in the statute, Johnston said, they do qualify as “wage supplements” under an amendment to the DWPCA, which requires employers to make the payments within 30 days of the date they were supposed to be distributed.
“A close reading of the statute and related case law reveal that wages are not the only form of payment recoverable under the DWPCA,” she wrote in a nine-page opinion.
The plaintiffs, who had all spent three decades with DuPont before transitioning to Chemours in the July 2015 spinoff, are seeking to represent a class of workers who opted to enter a voluntary separation program with Chemours that included a lump-sum payment tied to their time spent with DuPont. According to court documents, the package also included three months of medical insurance coverage and a prorated discretionary bonus payment in the months following the corporate separation.
According to Girardot, overall participation in the voluntary separation program, or VSP, was low because it had been rumored that the company was considering implementing an involuntary program with better benefits for terminated employees.
In a state court complaint filed in October, Girardot said Chemours downplayed those concerns in order to increase sign-ups for the voluntary scheme, telling employees that the mandatory severance package would mostly be in line with the VSP.
However, when Chemours rolled out its involuntary program, known as the Chemours Career Transition Program, or CTP, employees learned the new package offered an “even greater dollar value” than the VSP and more extensive benefits, including restricted stock units, stock options and a tuition assistance program, Girardot said.
The plaintiffs first filed in U.S. District Court for the District of Delaware, saying they would not have chosen to participate in the VSP had Chemours told them about the later plan with better benefits. They also challenged the VSP itself, arguing under the Employee Retirement Income Security Act that the plan required an ongoing administrative scheme to determine individuals’ eligibility based on subjective criteria.
U.S. District Judge Sue L. Robinson of the District of Delaware, however, dismissed the case last March, after finding that the VSP was not subject to ERISA because it involved an upfront payment that did not require Chemours to set up a new administrative structure.
In the state court action, the plaintiffs assert five counts against Chemours, though the company has so far only tried to toss the claim under the DWPCA.
An attorney for the plaintiffs was not immediately available to comment on Tuesday. An attorney for Chemours withheld comment because the client had not yet authorized counsel to speak on the case.
The plaintiffs are represented by Robert K. Beste and Jonathan Landesman of Cohen Seglias Pallas Greenhall & Furman.
Chemours is represented by Kathleen Furey McDonough and Stephanie E. O’Byrne of Potter Anderson & Corroon.
The case is captioned Girardot v. Chemours.