In Gomez v. Ericsson, Inc., 828 F.3d 367, 369 (5th Cir. 2016), the central question was whether ERISA governed Ericsson’s Standard Severance Plan and Top Contributor Enhanced Severance Plan of 2010. The issue arose because, after plaintiff was laid off and signed a standard release, he wiped the hard drive on his company laptop before returning it. Ericsson asserted that the laptop had materials that did not exist elsewhere, and it denied plaintiff the benefits under the Plans. Plaintiff sued, and that brought up the question whether ERISA governed.
As the court noted, though retirement plans and health plans are quintessential ERISA plans, “the statute contemplates that some severance plans will fall within its reach.” The court observed that the primary guidance by the Supreme Court, Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 9, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987), is not terribly helpful because it did not involve an actual plan. Rather, Fort Halifax rejected an argument by an employer without a plan that ERISA preempted a state law requiring the employer to pay a lump-sum severance benefit following plant closures; the Supreme Court held that the “requirement of a one-time, lump-sum payment triggered by a single event requires no administrative scheme whatsoever to meet the employer’s obligation.” In other words, the state law did not compel the employer to establish an ERISA plan.
The Gomez court held that “[i]t is thus the existence or nonexistence of an ‘ongoing administrative program’ … that is the key determinant of whether severance plans are governed by ERISA” rather than the form of the payments. “Even for plans that result in only a lump-sum payment, that administrative scheme can be found in a number of other features that require discretion: the eligibility determination; calculations of the payment amount (such as deductions and detailed formulas); the provision of additional services beyond the severance payment (such as insurance); and the establishment of procedures for handling claims and appeals.”
One might assume that a severance plan that has been given an actual name with the word “plan” in the title would likely encompass a sufficient ongoing administrative program for ERISA to govern. And the court had no problem concluding that this was the case with the Ericsson Plans. They covered more than 10,000 employees nationwide, and likely “would result in hundreds of different events that the Plans have to administer.” Moreover, Ericsson established detailed review procedures within the Plans, and gave discretionary authority to the administrator.
After concluding that ERISA governed the Plans, the court upheld Ericsson’s determination that plaintiff’s act in wiping his hard drive disqualified him from benefits. Though the Plans did not expressly condition benefits on the return of property, “there is sufficient ambiguity in the Plans to support Ericsson’s interpretation that the return of property condition is not inconsistent with their terms.” Because the Plan did not expressly entitle plaintiff to benefits without regard to whether he returned property, and because the return of property is “reasonable and common” at the end of employment, the court held that the district court “did not err in ruling as a matter of law that the Plan allowed Ericsson to deny benefits on the ground that Gomez failed to meet the return of property condition.”