Benefits Committee Was Capricious by Not Reviewing Home Office Arrangement

August 15, 2006 ( - The 2nd US Circuit Court of Appeals ruled that a benefits committee acted capriciously and arbitrarily when it denied an employee severance benefits because he was not asked to relocate when a merger prompted the company to change offices, but was only offered the option to work from home.

Mark Pastore worked for Witco Corporation for 13 years. Before he retired in 2000, the company announced in 1999 it was merging with another company.

Witco’s severance plan would offer benefits to certain employees whose employment ended within one year of a change in control of the company. Employees were eligible for the severance benefits if, among other requirements, they resigned “after being required to relocate to an office” more than 50 miles from where they previously worked or from their home.

In early 2000, Pastore’s employers said they were relocating the office from Greenwich, Connecticut, to Middlebury, Connecticut – a 53 mile distance. Pastore’s home would then be 77 miles from the new location.

Witco denied Pastore’s request for a severance package on the grounds that he was offered the option of working from home.   Pastore then appealed to the board, saying that he would still be required to report to the new office four times a month; the company had not considered whether his home had enough space for an office; and he would not be able to perform his duties as a telecommuter.

A benefits committee discussed Pastore’s contentions at a meeting in February 2001 and denied them all. Pastore then filed a lawsuit under the Employee Retirement Income Security Act to attempt to get severance benefits.

The appeals court reversed a ruling by the US District Court for the Southern District Court of New York, which ruled in favor of the plan.   The appeals court said the committee should have considered whether Pastore’s home was suited for a home office.

For the full opinion go  here .