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Former Employee of Wells Fargo Loses Claims for Benefits, ERISA Interference

Wednesday, August 21, 2013
A former Wells Fargo & Co. employee challenging the company's policy on work visas for foreign national employees failed to sustain his claims under the Employee Retirement Income Security Act, the U.S. District Court for the Northern District of California ruled in an opinion released publicly Aug. 19 (Karamsetty v. Wells Fargo & Co., N.D. Cal., No. 3:12-cv-01364-JCS, 8/19/13).

The employee resigned his position after learning that Wells Fargo had implemented a policy under which it would no longer be sponsoring employees' applications for renewed work visas. When the former employee was denied severance benefits following his resignation, he brought a claim for ERISA benefits and for wrongful interference with protected benefits in violation of ERISA Section 510.

Magistrate Judge Joseph C. Spero ruled against the employee, finding that Wells Fargo reasonably concluded the employee did not experience an elimination of his position that would entitle him to severance benefits. Spero also found that the employee could not demonstrate that Wells Fargo's stated reason for the visa policy was a pretext for its discriminatory intent to interfere with ERISA benefits. The decision was dated Aug. 7 but filed under seal and was publicly released Aug. 19.


Visa Sponsorship Program Discontinued
Vinay Karamsetty, a citizen of India, began working as a web developer for Wells Fargo in July 2007. At that time, the company would sponsor visa applications, extensions, and renewals for its employees, but in March 2009, it discontinued the practice.

In April 2009, Karamsetty inquired about the status of his employer-sponsored visa, which was scheduled to expire in June 2010. Karamsetty's supervisor told him that an exception would be requested on his behalf, but the request was never made. In February 2010, Karamsetty resigned his position at Wells Fargo.

In December 2010, Karamsetty submitted a claim for benefits under the company's severance plan. He argued that Wells Fargo's nonrenewal of his visa constituted an elimination of his position, which was a qualifying event entitling him to severance under the plan. Wells Fargo denied the claim, rejecting Karamsetty's assertion that his position had been eliminated.

After an unsuccessful internal appeal, Karamsetty filed a lawsuit seeking benefits under ERISA Section 502(a)(1)(B). He also stated a claim for benefit interference in violation of ERISA Section 510.


No Error in Denial of Severance Benefits
The court applied a heightened standard of arbitrary-and-capricious review to Wells Fargo's decision to deny Karamsetty severance benefits. It explained that the severance plan granted Wells Fargo discretionary authority to determine benefit eligibility, which warranted the application of deferential judicial review. However, because Wells Fargo operated under a structural conflict of interest in that it both evaluated and paid policy claims, the court applied an increased level of scrutiny to the decision.

Under this standard, the court found that Wells Fargo did not abuse its discretion in denying Karamsetty's claim. The court explained that Wells Fargo reasonably determined that Karamsetty's position had not been eliminated, noting that “after [Karamsetty] submitted his resignation, Wells Fargo had to hire a contractor to fill [his] position, which is evidence that [his] particular job was not eliminated.”

Karamsetty argued that the change in visa policy was a reduction-in-force that eliminated his position, but the court was not persuaded. It granted Wells Fargo's motion for summary judgment on Karamsetty's claim for ERISA benefits.


Benefit Interference Claim Fails
Karamsetty also argued that the change in visa policy constituted an impermissible interference with his right to protected benefits in violation of ERISA Section 510. Wells Fargo argued that this claim was untimely under California's two-year statute of limitations for claims of wrongful termination.

Wells Fargo took the position that Karamsetty's claim accrued in April 2009, when he learned of the policy, making his March 2012 lawsuit untimely. Karamsetty countered that his claim did not accrue until he learned he would not receive severance benefits in September 2010.

Although the court agreed with Wells Fargo that the claim accrued when Karamsetty learned of the allegedly unlawful policy in April 2009, it nevertheless found the claim to be timely under principles of equitable tolling.

With respect to the substance of the Section 510 claim, the court found that Karamsetty stated a valid claim, because he identified an adverse employment action, the visa policy, that prevented him from engaging in a statutorily protected activity--participating in the severance plan. However, Wells Fargo said the purpose of the policy was to “decrease Wells Fargo's reliance on employer-sponsored visas by utilizing the overall increased talent pool of individuals within Wells Fargo as a result of its merger with Wachovia Corporation.”

Because Karamsetty failed to provide sufficient evidence that this nondiscriminatory reason was a pretext for Wells Fargo's desire to interfere with his benefits, the court awarded Wells Fargo summary judgment on this claim, as well.

Karamsetty was represented by Allison H. Goddard and James R. Patterson of Patterson Law Group in San Diego. Wells Fargo was represented by Kathleen C. Slaught, D. Ward Kallstrom, and Michelle M. Scannell of Seyfarth Shaw in San Francisco.


Text of the opinion is available at http://www.bloomberglaw.com/public/document/Karamsetty_v_Wells_Fargo__Company_et_al_Docket_No_312cv01364_ND_C.

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