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June 17 — ConAgra Foods Inc. didn't abuse its discretion when it denied severance benefits to a manager who alleged he was entitled to them because his employment was involuntarily terminated, the U.S. District Court for the Eastern District of Missouri ruled ( Vickery v. Conagra Foods, Inc. , 2016 BL 192869, E.D. Mo., No. 4:15-cv-00797 CAS, 6/16/16 ).
In granting ConAgra's motion for summary judgment, Judge Charles A. Shaw held June 16 that the plan's administrator was reasonable in interpreting the term “involuntarily terminated” as requiring an employee to have a period of unemployment or lack of work to be eligible for severance pay. Because the manager didn't have a period of unemployment, he wasn't eligible for benefits, Shaw said.
The dispute stems from ConAgra's 2013 acquisition of Ralcorp Holdings Inc. During his employment with ConAgra and Ralcorp, senior manager Michael Kent Vickery was covered under a severance plan sponsored by ConAgra.
Vickery was fired by Ralcorp nine days after it sold the division where Vickery worked to Shearer's Foods LLC. Vickery entered into a separation and release agreement with Shearer's under which he received 16 weeks of his salary and other benefits.
Vickery then submitted a claim for severance benefits, arguing that he was involuntarily terminated when Ralcorp sold the division to Shearer's and thus he was entitled to a lump sum severance of $136,023, 12 weeks of health-care continuation and other benefits.
ConAgra denied Vickery's claim, reasoning that he didn't suffer a period of unemployment caused by the transfer of ownership. Vickery sued ConAgra to recover benefits under the Employee Retirement Income Security Act.
Noting that the plan didn't define the term “involuntarily terminated,” the court said the administrator had the exclusive authority to interpret its meaning.
In ruling for ConAgra, the court said that the administrator's interpretation didn't render any language in the plan meaningless or intentionally inconsistent. Moreover, the plan's language contemplated that the individual would be unemployed for a period of time, the court said.
Despite the fact that the plan didn't expressly articulate its goals, the court noted that it was susceptible to the interpretation that it was intended to assist employees during periods of unemployment.
As such, the administrator's interpretation of the term “involuntarily terminated” as requiring an employee to be out of work to be entitled to benefits was reasonable, the court concluded.
Hammond & Shinners PC and Stange Law Firm represented Vickery. Husch Blackwell LLP represented ConAgra.
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