Opinion ID: 498491
Heading Depth: 2
Heading Rank: 3

Heading: Denial of Severance Benefits as Violations of ERISA

Text: 16 Appellants contend that if ERISA applies to the Special Separation Allowance, Shell's failure to provide them with severance benefits violates ERISA. Because, as will be explained below, the critical question is whether the denial of benefits was arbitrary and capricious, the district court's conclusion that Shell did not violate ERISA is a question of law, reviewed de novo. McConney, 728 F.2d at 1201. 17 The basic rule in this circuit is that decisions by the trustee of an employee benefit plan will not be reversed by the courts unless they are arbitrary, capricious, made in bad faith, not supported by substantial evidence, or erroneous on a question of law. Malhiot v. Southern California Retail Clerks Union, 735 F.2d 1133, 1135 (9th Cir.1984), cert. denied, 469 U.S. 1189, 105 S.Ct. 959, 83 L.Ed.2d 965 (1985). The arbitrary and capricious standard applies in this case. 18 Shell's denial of the Special Separation Allowance to its employees once the Houston move was cancelled was clearly not arbitrary and capricious. The SSRP authorizes the payment of severance benefits only as a means of maximizing Shell's efficiency. Shell's decision to provide benefits on the Houston move was based on its assessment of the realities of the job market: Without severance pay, the Ventura employees who wished to remain in Ventura would abandon ship at Shell as soon as another job came along, and jobs were plentiful. Shell's subsequent decision not to provide severance benefits on the move to Bakersfield was based on its assessment that with fewer jobs available in Ventura, nontransferring employees would be more likely to remain at the Ventura office until it closed, even without a special monetary incentive. Because efficiency did not require severance pay on the move to Bakersfield, Shell was entitled under the SSRP not to provide severance pay. Therefore, we affirm the district court's finding that the denial of benefits was not arbitrary and capricious.