Bank Benefits Denial Upheld After Computer Security Breach

The 8 ^th U.S. Circuit Court of Appeals upheld a decision by U.S. District Judge Ann D. Montgomery of the U.S. District Court for the District of Minnesota, which backed the decision by U.S. Bancorp to let go John T. Anderson for violating the firm’s code of conduct and subsequently to deny him severance benefits.

According to the court, the dispute arose when U.S. Bancorp merged with Firstar Corp. and offered a severance plan to provide benefits if a participant was terminated within two years of the merger. Those fired for cause were to be excluded, the company said.

Shortly after the merger, according to the ruling,  Anderson hinted in conversations with his supervisor that he knew certain confidential personnel information. Anderson later admitted accessing an organizational chart on an unrestricted shared computer drive. Also on the drive were employee files that did not carry password protection, the court said.

After he was fired,  Anderson applied for severance payments, but was denied because of the computer security violation. He sued the company under the Employee Retirement Income Security Act (ERISA). Montgomery ruled for the bank, saying its decisions were reasonable.

In affirming  Montgomery, the appellate court rejected Anderson’s contention that the court should apply a heightened standard of review because there was a “palpable conflict of interest” given that the plan’s administrative committee included employees of U.S. Bank’s human resources department who had approved Anderson’s firing.

The appellate ruling in Anderson v. U.S. Bancorp, 8th Cir., No. 06-3216, 4/24/07 is  here .