On Jan. 23, Gordon & Rees partner Ronald K. Alberts and senior counsel Jennifer L. Ghozland of Los Angeles successfully moved for partial summary judgment to eliminate a plaintiff’s claim for severance benefits. The elimination of this claim removed all uninsured damage exposure to the employer, a charitable, eleemosynary institution charged with fundraising.
In Hoffman v. Am. Soc'y for Technion-Israel Inst. of Tech., Inc., the plaintiff and employer filed cross-motions for partial summary judgment challenging the employer/plan administrator’s decision to deny severance benefits under 29 U.S.C. §1132(a)(1)(B). The court was tasked with determining whether the former employee’s decision to leave full-time employment based on illness was a “voluntary resignation,” thereby making her ineligible for severance benefits under the terms of the employer’s Personnel Practices Code (the plan).
While the court had not yet determined if an abuse of discretion or de novo standard was appropriate for reviewing this decision, the defendants agreed to the tougher de novo standard to avoid creating a disputed fact. Under a de novo standard of review the court decides for itself what a term means, instead of deciding whether the plan administrator was reasonable in how it construed the term. See Kearney v. Standard Ins. Co., 175 F.3d 1084, 1088 (9th Cir. 1999).
Under the de novo standard, the U.S. District Court for the Southern District of California adopted the defendants' argument that an employee’s decision to end full-time employment because of illness is a voluntary resignation, as that term is commonly understood. The court further agreed that the plan’s enumerated exclusions for severance benefits, including "malfeasance, retirement or voluntary resignation,” each pertain to a specific act by the employee that results in the termination of the employment relationship. Accordingly, the court agreed that a "voluntary resignation" refers to an act by the employee that severs the employment relationship, without any affirmative action by the employer.
Here, where health issues alone caused the employee to sever the full-time employment relationship, based on no act of the employer, the court found it was a "voluntary resignation" within the common meaning of the term. The court commented that although the employee may not have wished to leave employment, she nonetheless voluntarily decided to terminate the employment relationship, without any affirmative action by the employer. Accordingly, the employee did not qualify for severance benefits under 29 U.S.C. §1132(a)(1)(B).
In granting the defendants’ cross-motion for partial summary judgment, the court simultaneously denied the plaintiff’s cross-motion.
The published opinion on Gordon & Rees’s Cross-Motion for Partial Summary Judgment Re Severance Benefits can be found at Hoffman v. Am. Soc'y for Technion-Israel Inst. of Tech., Inc., 2013 U.S. Dist. LEXIS 9921 (S.D. Cal. Jan. 23, 2013).