Opinion ID: 711160
Heading Depth: 1
Heading Rank: 2

Heading: Standing as a Participant

Text: 11 The term participant is statutorily defined as any employee or former employee ... who is or may become eligible to receive a benefit.... 29 U.S.C. Sec. 1002(7). The Supreme Court has construed this definition to cover either employees in, or reasonably expected to be in, currently covered employment, or former employees who have ... a reasonable expectation of returning to covered employment or who have a colorable claim to vested benefits. Firestone, 489 U.S. at 117-18, 109 S.Ct. at 958 (citations and internal quotation marks omitted). Because Panaras is neither currently employed by LCI nor reasonably expected to be so employed in the future, his claim must rest on a colorable claim to vested benefits. 12 The requirement of a colorable claim is not a stringent one. This circuit has noted that jurisdiction depends on an arguable claim, not on success and that only if any claim ... must be frivolous is jurisdiction lacking. Kennedy v. Connecticut General Life Ins. Co., 924 F.2d 698, 700 (7th Cir.1991). See also Sladek v. Bell System Management Pension Plan, 880 F.2d 972, 976-79 (7th Cir.1989) (Given the fact that a claimant need only have a 'colorable claim' that he might prevail, we believe that the most useful weapon in weeding out frivolous claims is not Rule 12(b)(1) [lack of subject matter jurisdiction] but Rule 12(b)(6).) A claim such as Panaras' which is based on violations of ERISA's disclosure requirements for a welfare benefit plan is clearly rooted in existing ERISA law. Andre v. Salem Technical Servs., 797 F.Supp. 1416, 1421 (N.D.Ill.1992). Indeed, courts have not infrequently dealt with similar claims involving severance benefits. See, e.g., Arnold v. Babcock & Wilcox Co., 123 Ill.2d 67, 121 Ill.Dec. 253, 525 N.E.2d 59 (1988); Blau v. Del Monte Corp., 748 F.2d 1348 (9th Cir.1984), cert. denied, 474 U.S. 865, 106 S.Ct. 183, 88 L.Ed.2d 152 (1985); Heidgerd v. Olin Corp., 906 F.2d 903 (2d Cir.1990); Howe v. Varity Corp., 36 F.3d 746 (8th Cir.1994), cert. granted, --- U.S. ----, 115 S.Ct. 1792, 131 L.Ed.2d 720 (1995); Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155 (3d Cir.1990); Kreutzer; Veilleux; Young. 13 Panaras' claim is not frivolous. He argues that he is entitled to severance benefits, in spite of his refusal to sign the release form, because the severance plan was modified without properly notifying him of the change so that he could adapt his financial planning accordingly. This legal theory is not so bizarre or so out of line with existing precedent--that he necessarily stumbles over the low threshold of the 'colorable' requirement. Andre, 797 F.Supp. at 1421. In this respect Panaras differs entirely from the plaintiffs in Sallee v. Rexnord Corp., 985 F.2d 927 (7th Cir.1993). There the plaintiffs sued for severance benefits in spite of the fact that they had voluntarily quit their employment during a corporate reorganization in order to commence other employment. We ruled in that case that the plaintiffs had no colorable claim to severance benefits for the simple reason that they had left their employment voluntarily. As we noted there, their actions were contrary to the very purpose of a severance plan which offers a carrot for departing at the employer's convenience and is a form of compensation for forgoing other employment opportunities. Id. at 929. Here, in contrast, Panaras complains of the way in which his employer administered the plan which it had provided to cover the involuntary termination which he in fact suffered. This type of claim is colorable under ERISA. 3 14 The more difficult issue in Panaras' case, and the grounds on which the district court denied standing, is the requirement that a participant have a colorable claim to vested benefits. Firestone, 489 U.S. at 117, 109 S.Ct. at 958. LCI urges, and the court below found, that Panaras lacks standing because the plaintiff's interest in the defendants' severance plan did not vest until the plaintiff signed a release. Dist.Ct.Mem.Op. at 6-7, 1995 WL 117967. 15 We disagree. As pointed out by Judge Shadur in his well-reasoned analysis in Andre, an overly technical and narrow reading of the Supreme Court's reference to vested benefits would lead to the result that no former employee could bring an ERISA claim for welfare benefits allegedly accrued during employment. 797 F.Supp. at 1422. We do not think either the Supreme Court or Congress intended such a result. The discussion of colorable claim to vested benefits in Firestone arises during the Court's explication of the statutory grant of standing to those former employees who may become eligible for benefits. In the same paragraph the Court stated that in order to establish that he or she 'may become eligible' for benefits, a claimant must have a colorable claim that (1) he or she will prevail in a suit for benefits, or that (2) eligibility requirements will be fulfilled in the future. Firestone, 489 U.S. at 117-18, 109 S.Ct. at 958. This language suggests not the narrow, technical reading of the phrase vested benefits adopted by the district court, but a more expansive interpretation. Under such an interpretation, standing is available to any former employee who has a colorable claim to benefits which the employer promised to provide pursuant to the employment relationship and which a non-frivolous argument suggests have accrued to the employee's benefit. Accord, Willett v. Blue Cross & Blue Shield, 953 F.2d 1335, 1342-43 (11th Cir.1992) (plaintiff was participant because he anticipated receiving plan benefits and was entitled to prompt notice of any disruption in the commencement of his anticipated plan benefits). See also Vartanian v. Monsanto Co., 14 F.3d 697, 703 (1st Cir.1994) (plaintiff who would have been entitled to greater benefits but for employer's breach of fiduciary duty was participant for standing purposes); Christopher v. Mobil Oil Corp., 950 F.2d 1209, 1221 (5th Cir.) (employer should not be able through its own malfeasance to defeat the employee's standing), cert. denied, 506 U.S. 820, 113 S.Ct. 68, 121 L.Ed.2d 35 (1992). 16 LCI had promised to provide severance benefits to its involuntarily terminated employees. Panaras was involuntarily terminated and now alleges that LCI's failure to notify him of changes in the plan's provisions prejudiced him to the extent that he should receive the benefit of the old plan upon which he relied in continuing his employment. Panaras thus presents a non-frivolous contention that severance benefits should have accrued to him upon his termination and that the ERISA violations of his employer excuse his refusal to sign the release form. This claim is sufficient to qualify Panaras as a participant for purposes of Sec. 1132(a) standing.