Bank One Division Sale Not Intended to Undermine Severance Benefits

July 3, 2007 ( - The 7th U.S. Circuit Court of Appeals ruled that an employer did not wrongfully deny two Bank One employees the right to severance benefits, because the workers had turned down positions at a RBC Mortgage Co., which purchased the division from Bank One.

When Bank One decided to sell its brokerage mortgage loan sales division to RBC, the terms of the agreement prevented Bank One from recruiting those employees to which RBC had offered jobs. Bank One brokers Elizabeth Deich-Keibler and Larry Haler got job offers from RBC, but turned them down, and instead went on to seek other positions at Bank One – a move that the sales agreement prohibited.

According to the opinion, Bank One had a severance plan that provided benefits those employees terminated in connection with the sale of a division, in which the purchasing company did not offer the employee a job. Both employees’ claims for benefits under the plan were denied because they were offered jobs at RBC.

Diech-Keibler and Haler filed suit against both Bank One and RBC. The two claimed that Bank One breached Section 510 of the Employee Retirement Income Security Act (ERISA) by structuring the sale of the division in a way that prevented them from obtaining severance benefits.

The suit also said that Bank One violated ERISA’s disparate treatment theory in awarding benefits or allowing other employees of the division who did not request benefits under the plan to remain at Bank One.

The U.S. District Court for the Southern District of Indiana granted judgment in favor of Bank One and RBC.

The appeals court affirmed the lower court decision saying that the only way the employeescould prove a breach of ERISA was submitting evidence as to whether Bank One intended to discriminate against their particular division because of some characteristic of the severance plan, the court said.

The unpublished opinion is Deich-Keibler v. Bank One ,7th Cir., No. 06-3802, 6/26/07.