Compliance

Employees No Longer Under Controlled Group Entitled to Enhanced Benefits

By Rebecca Moore editors@assetinternational.com | March 15, 2017
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The district court determined it need not go “beyond the words of Section 19.11(f) itself,” and concluded the only reasonable interpretation of the section entitled plaintiffs to enhanced benefits. Because the district court did not analyze the rest of the plan or the plan administrator’s written decision, Anheuser-Busch argues the district court failed to consider the plan as a whole and was “unaware of the Plan-based support for the Appeals Committee’s conclusion that Section 19.11(f) was intended to provide enhanced benefits only to those participants who lose their job, and not to participants who continue in the same job after a transfer.”

Anheuser-Busch proposes Sections 3.1 and 2.5 of the plan, providing conditions for “Severance from Service Date” and “Employee Transfers and Layoffs,” respectively, support its argument that Section 19.11(f) was not intended to apply to plaintiffs because they suffered no break in their employment. Section 3.1 defines vesting of benefits upon severance, and “include[s] for this purpose a termination of employment in connection with sale of part or all of its interest in an incorporated or unincorporated business or assets by a member of the Controlled Group.” Section 2.5 states that a transfer or “other change in . . . employment classification . . . shall [not] be treated as a Break in Service or a termination of employment.” It also provides that if a transfer shall result in an employee becoming ineligible for plan participation, that employee will “no longer accrue any benefits under the Plan.” The 8th Circuit found neither section demonstrates, as Anheuser-Busch contends, that “termination” should mean “loss of a job” in the sense that Anheuser-Busch wants the court to read it.

Second, Anheuser-Busch argues Section 19.11(f) is ambiguous because it “reasonably supports multiple interpretations” and the plan administrator’s interpretation must be upheld if it was reasonable. Anheuser-Busch proposes the phrase “with the Controlled Group” merely clarifies that the employment referenced in the section means the job that made the participant eligible for the plan. The appellate court did not dispute the phrase “with the Controlled Group” modifies the type of employment the plan was describing; however, “involuntar[y] terminat[ion]” of “employment with the Controlled Group” cannot reasonably be interpreted to exclude the circumstances in the present case.

“Plaintiffs here were all salaried participants in the plan, and on December 1, 2009, when the sale of BEC finalized, ‘without the plaintiffs’ consent and for reasons beyond the plaintiffs’ control,’ their employment with the Controlled Group was terminated. Whether plaintiffs’ employment continued in the same capacity once they were no longer employed by a member of the Controlled Group is irrelevant. Section 19.11(f) is unambiguous,” the appellate court concluded.