Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
July 8 — Telecom manufacturer Ericsson Inc. doesn't owe severance benefits to a salesman who wiped his work laptop of company files after being terminated, an appeals court ruled ( Gomez v. Ericsson Inc. , 5th Cir., No. 15-41479, 7/8/16 ).
The July 8 decision by the U.S. Court of Appeals for the Fifth Circuit focused on whether the company's severance policies qualified as benefit plans governed by the Employee Retirement Income Security Act.
In finding the policies to be ERISA-governed, the court said that the relevant inquiry was whether the policies involved an “ongoing administrative program,” as opposed to a system of one-time payments triggered by discrete events. The Ericsson programs—which cover more than 10,000 employees—are a “far cry” from “single event” plans not subject to ERISA, the court said.
Under this framework, the Fifth Circuit upheld Ericsson's denial of benefits as reasonable under the plans.
In particular, the court declined to consider whether Gomez's deletion of company files violated the severance programs' requirement that terminated workers return company property before receiving benefits, as Ericsson had determined. According to the court, Gomez forfeited his right to challenge this characterization by failing to raise this argument on appeal.
Instead, the court considered Gomez's primary argument on appeal: that the plans conditioned severance only on the signing of a satisfactory waiver and release of claims. Since Gomez had signed a waiver and release of claims, he argued this was all he needed to do to receive benefits.
Although the court found “some force” to this argument, it ultimately saw enough ambiguity in the Ericsson plans to uphold the company's decision denying benefits.
Judge Gregg J. Costa wrote the decision, which was joined by Judges Jerry E. Smith and Rhesa H. Barksdale.
Sanford Firm represented Gomez. Ogletree Deakins Nash Smoak & Stewart PC represented Ericsson.
To contact the reporter on this story: Jacklyn Wille in Washington at email@example.com
To contact the editor responsible for this story: Jo-el J. Meyer at firstname.lastname@example.org
Text of the decision is at http://www.bloomberglaw.com/public/document/Mark_Gomez_v_Ericsson_Inc_Docket_No_1541479_5th_Cir_Oct_30_2015_C.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)