Court: Resigned Employee Not Entitled To Severance

July 2, 2003 ( - An employee who resigned before being laid off has no standing to bring a claim for severance benefits.

>The US 3rd Circuit Court of Appeals remanded Miller v. Rite Aid Corp. to a judge in the US District Court for the Eastern District of Pennsylvania to dismiss the employee’s ERISA claim, ruling once the employee resigned he had no prospect of becoming eligible for benefits and therefore did not fall under ERISA’s definition of a participant.   Further, Circuit Judge D. Brooks Smith said that since the district court did not have jurisdiction to rule on the employee’s claim – because the employee had no standing – its ruling for the employer on the employee’s claim of breach of fiduciary duty must be thrown out, according to Washington-based legal publisher BNA.

Never Laid Off

>Anthony Miller was employed by Rite Aid as corporate director of store planning at a time the company decided to restructure its real estate development and construction departments.   Miller, along with others in his department, were slated to be laid off and were put on a list of potential position eliminations that would receive a severance package under Rite Aid’s ERISA-governed severance plan.

>On June 14, 2000, Miller’s supervisor informed Miller he would get his severance package when he was laid off.   However due to staffing shortages, he was not to be laid off at that time and no timetable for possible layoff was given to him.

>Two months later, August 18, 2000, Miller voluntarily resigned from Rite Aid to start another job, apparently aware that his severance benefits would not vest until his employment from Rite Aid was severed. Rite Aid never severed Miller’s employment and Miller filed a suit to recover the severance payments of 39 weeks of compensation he alleged were wrongfully withheld from him.

>The district court first determined Miller was not a participant in the severance plan because the plan provided benefits only to those employees who were laid off and Miller voluntarily resigned. Therefore, Miller had no standing to bring an ERISA suit for unpaid benefits under the severance plan. However, the district court went on to rule on Miller’s breach of fiduciary duty claim, finding that even if Miller had standing to bring the lawsuit, he still was not entitled to severance benefits because Miller’s supervisor did not breach his ERISA fiduciary duty by not laying off Miller after he was eligible for the company severance plan.

Not A Participant

>The appellate court found that under ERISA, a plan participant means any employee or former employee who is or may become eligible to receive benefits from an employee benefit plan.

>Rejecting Miller’s argument that he was a participant in the Rite Aid severance plan because he was on the list of people who had been approved for layoff, the court said, “Miller may be correct that for a fleeting period of time he met ERISA’s definition of participant; however, the District Court found that he did not meet that definition after he voluntarily left Rite Aid before the vesting of his benefits.”

“What Miller is now is a former employee of an employer … who might have become eligible to receive a benefit,” the court said. Since Miller was not a plan participant, he had no standing to bring an ERISA claim, the court said.

The case is Miller v. Rite Aid Corp., 3d Cir., No. 02-2464, 6/30/03.