Court Opinion

ID: 8969751
Source: CourtListenerOpinion
Date Created: 2022-11-27 10:26:24.423136+00
Date Added: 2024-06-11T17:10:24.822828
License: Public Domain

HANSON, Senior District Judge,
dissenting.
The issue in this case is whether RAC’s determination that plaintiffs were not entitled to severance benefits violated ERISA. The nine named plaintiffs consist of seven RAC employees who took employment with Olin immediately after their termination by RAC, and two employees who chose not to take such employment. All employees, including those who did not go on to work for Olin, were denied severance benefits.1 RAC denied the benefits under plan language which guarantees severance benefits to “employees terminated for lack of work” contending that employees were not termi*546nated for “lack of work” because Olm offered to hire all of them when it took over the plant. Plaintiffs contend that the lack or work requirement referred to “lack of work” with Remington only. In support of their position appellants offer a document prepared by RAC for Lake City employees which specifies that severance benefits will be granted even “[i]f the Company is successful in obtaining employment for a laid-off employee with another company, and there is no lost time between jobs”.
Firestone v. Bruch dictates that “a denial of benefits challenged under § 1132(a)(1)(B) of ERISA is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” — U.S. -, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989). In other words, unless the plan language specifies otherwise, courts should construe any disputed language “without deferring to either parties interpretation.” Id., 109 S.Ct. at 955.
There is nothing in any of the documents constituting the formal severance pay policy which, as a matter of contract or trust law, requires deference to RAC’s interpretation of the plan language at issue. The majority’s conclusion to the contrary rests entirely on one sentence from a Remington’s Service Manual which states only that “[t]he following material attempts to interpret the more usual situations that may arise in the application of the principles of the formal policy.” This is insufficient, under the standards enunciated in Bruch, to change the status of the parties on this issue. The sentence does nothing more than lead into a discussion of possible scenarios under which severance pay would be awardable. It does not change the balance between the parties so as to grant additional discretion to the plan administrator.
The majority’s suggestions that the district court made a finding on this issue and that plaintiff’s have conceded this issue are also at odds with the record. The statement by the district court that “[pjlaintiffs in this action * * * applied for but were denied severance pay pursuant to interpretations of the plant’s severance pay policy made by the Lake City plant manager” was not a finding of discretionary power. Instead, when read in context of the opinion, it is clear that it is nothing more than a statement identifying who the plaintiffs were. See Op. at 542. Similarly, the majority’s suggestion that appellants have conceded this issue in their brief by arguing that RAC’s interpretation of the plan was a “bad faith effort” is entirely without foundation. A substantial portion of appellants’ briefs are devoted to the assertion that there should be a de novo review of RAC’s interpretations. The “bad faith” assertion is simply an alternative argument offered by appellants to be considered by this court should it decide to review RAC’s actions under the arbitrary and capricious standard.
Thus, I believe the proper standard of review of the RAC’s actions must be the de novo standard embraced by Bruch. The district court, however, specifically predicated its finding that RAC had not violated ERISA, on the understanding that its function in reviewing RAC’s actions was only to determine whether RAC had acted arbitrarily and capriciously in denying the benefits. Accordingly, I believe the case should be remanded to the district court for further proceedings under the correct standard. I take no position on the merits of plaintiffs’ or defendant’s interpretation of the plan language.

. The majority's conclusion that “[n]one of the terminated RAC employees missed even a day of work as a result of RAC’s * * * terminating them” is at odds with the district court’s recognition that two plaintiffs did suffer unemployment when RAC ceased operation. Op. at 545.