Court Opinion

ID: 9498396
Source: CourtListenerOpinion
Date Created: 2023-08-05 17:16:33.27224+00
Date Added: 2024-06-11T17:58:48.806079
License: Public Domain

BYE, Circuit Judge,
dissenting.
I respectfully dissent. I believe the Severance Administration Committee (Committee) clearly abused its discretion when it determined Nancy Johnson’s conduct in accessing files located on a shared computer drive constituted “cause” under the terms of the severance plan (Plan). I would therefore affirm the district court’s grant of summary judgment in favor of Nancy Johnson.
To constitute “cause,” the Plan required Johnson’s misconduct to be both “gross and willful.” Glaringly lacking from the Committee’s determination is any discussion of how Johnson’s conduct constituted “gross” misconduct. Wfiiile the Plan defines “gross and willful” misconduct to include “acts or omissions which violate the Employer’s rules policies,” it cannot follow that every violation of a rule or policy constitutes “gross and willful” misconduct. Otherwise, inadvertent rule violations would be considered “willful” violations, and the Plan’s inclusion of the word “will-*741M” would be rendered meaningless. By the same token, the word “gross” is rendered meaningless if minor rule violations constitute “gross” misconduct.
The Court contends the Committee was not bound to apply a definition of the term “gross and willful misconduct” which might govern in other contexts. While I agree, I do not view that as the relevant inquiry. The relevant inquiry is whether the Committee neglected to give any meaning to the term “gross” in the Plan. When reviewing the Committee’s decision we must necessarily consider whether its “interpretation renders any language in the Plan meaningless or internally inconsistent.” Torres v. UNUM Life Ins. Co. of Am., 405 F.3d 670, 680 (8th Cir.2005) (citing Shelton v. ContiGroup Cos., Inc., 285 F.3d 640, 643 (8th Cir.2002)). An ERISA fiduciary abuses its discretion when it renders Plan language meaningless. Id.
The Court’s conclusion the Committee was free to interpret “gross and willful” misconduct to include all violations of company policy necessarily renders the terms “gross” and “willful” meaningless, and offends my sense of justice. To call every inadvertent or unknowing violation a “willful” violation is absurd. Likewise, it is absurd to call every violation, no matter how trivial or insignificant, a “gross” violation. For example, the same area of the Employee’s Handbook containing the Computer and Information Security policy relied upon by the Committee to deny Johnson’s substantial severance benefits also contains a policy on Business Appearance. The Business Appearance policy requires employees “to use good judgment and dress in a professional manner that is appropriate to your work surroundings and suited to your particular job.” Under the Court’s view, the Committee would not have abused its discretion if it determined any and all violations of the Business Appearance policy to constitute “gross and willful misconduct” which that would justify a denial of severance benefits.
In my view, because the Plan does not specifically define a “gross” rule violation, the term should be given its ordinary meaning. Mansker v. TMG Life Ins. Co., 54 F.3d 1322, 1327 (8th Cir.1995). In interpreting the meaning of an ERISA plan, we should also look to the “federal common law.” Reid v. Connecticut Gen. Life Ins. Co., 17 F.3d 1092, 1098 (8th Cir.1994). Turning to analogous federal statutes which employ the undefined terms is “surely a promising source in a search for the federal common law.” Camelot Care Ctrs., Inc. v. Planters Lifesavers Co., 836 F.Supp. 545, 548 (N.D.Ill.1993).
There is a relatively large source of federal common law interpreting what constitutes “gross misconduct.” Under the Consolidation Omnibus Budget Reconciliation Act of 1985, a covered employer has an obligation to provide an employee with continued health care coverage unless the employee is terminated for “gross misconduct.” 29 U.S.C. § 1163(2). Because § 1163(2) does not otherwise define what constitutes “gross misconduct,” courts have had to fashion “federal common law” to address the issue.
While there is no generally applicable or binding judicial interpretation of gross misconduct, Bryant v. Food Lion Inc., 100 F.Supp.2d 346, 375 (D.S.C.2000), the courts agree mere lapses in good judgment on isolated occasions cannot constitute gross misconduct. See Richard v. Indus. Commercial Elec. Corp., 337 F.Supp.2d 279, 282 (D.Mass.2004) (indicating gross misconduct to be something “flagrant and extreme” and “out of all measure; beyond allowance; not to be excused; flagrant; shameful” and something “more than that conduct which comes about by reason of error of judgment or lack of diligence.”) *742(internal citations omitted); Cotte v. Cooperativa de Ahorro y Credito Yabucoena, 77 F.Supp.2d 237, 241 (D.P.R.1999) (“[G]ross means outrageous, extreme or unconscionable, conduct is gross misconduct if it is so outrageous that it shocks the conscience.”) (internal citation and quotations omitted); Zickafoose v. UB Services, Inc., 23 F.Supp.2d 652, 656 (S.D.W.Va. 1998) (indicating misconduct is not “gross” unless “the employee intended harm to the employer [and] the nature of the conduct itself is reasonably outrageous to the employer.”); Collins v. Aggreko, Inc., 884 F.Supp. 450, 454 (D.Utah 1995) (“Gross misconduct may be intentional, wanton, willful, deliberate, reckless or in deliberate indifference to an employer’s interest. It is misconduct beyond mere minor breaches of employee standards, but conduct that would be considered gross in nature.”).
In Paris v. F. Korbel & Bros., Inc., 751 F.Supp. 834 (N.D.Cal.1990), the court addressed a breach of confidentiality somewhat similar to Johnson’s conduct. Leigh Paris worked for a winery and was given access to the “poolhouse,” a place where executives met and sometimes discussed employees. Paris was instructed whatever she may overhear in the poolhouse was confidential, and she was not to share it. On one occasion, she heard executives discussing a particular employee who had asked to work part time for personal reasons. Paris, who happened to be friends with the employee’s wife, told her friend the company was going to allow her husband to work part time. The executives discovered the employee was upset with his boss for sharing his personal information. Paris was identified as the source of the leak, and terminated. Paris, 751 F.Supp. at 835-36.
When Paris applied for COBRA benefits under § 1163(2), the issue was whether her breach of confidentiality should be considered “gross misconduct” which would disqualify her for continuing health care coverage. The court said no, concluding gross misconduct required a showing Paris “had an ‘evil design’ to injure Korbel” and exercising “poor judgment” on one occasion was not enough. Id. at 839. Similarly, here, Johnson may have shown poor judgment in briefly peeking at the files located on the shared computer drive. But there was no evidence Johnson even shared this information with other employees. Her isolated instance of poor judgment evinced no “evil design” to injure U.S. Bancorp, and was clearly not flagrant, extreme, all out of measure, or so outrageous it shocks the conscience.
The federal common law governing ERISA plans mandates an employee’s misconduct must be severe, i.e., flagrant, extreme, all out of measure, or so outrageous it shocks the conscience, to be considered “gross.” Isolated lapses of judgment which do not have a significant impact on the employer clearly do not suffice. No reasonable person would conclude Johnson’s conduct amounted to anything more than a minor rule violation, with little or no adverse impact on U.S. Bancorp. Her conduct clearly was not outrageous or conscience-shocking. To the contrary, what does shock my conscience is that the Plan would insist upon enforcing such a minor rule violation so as to justify it precluding this long-term, exemplary employee a financial benefit of approximately $150,000 in severance pay.
I respectfully dissent.