In a decision illustrating the importance of a deferential standard of review in an ERISA plan document, the Second Circuit affirmed the dismissal of severance claims by a disabled employee, concluding that the complaint pled facts showing that the denial of benefits was reasonable. Soto v. Disney Severance Pay Plan, No. 20-4081 (2d Cir. Feb. 16, 2022).

Plaintiff suffered several serious medical issues before her employment was terminated by Disney. Although she received disability benefits, Disney refused to pay her severance benefits under its ERISA-governed severance plan (Plan). Following two levels of internal claim review and denial, she filed suit against Disney, the Plan, and the Plan administrator. The district court dismissed her claims because she admitted that she had not received the requisite notice of eligibility from the Plan and had, therefore “pled herself out of court.” On appeal, the Second Circuit affirmed the dismissal but on different grounds. The Second Circuit addressed the issue of whether the denial of severance benefits to Soto was improper, concluding that it was not.

District Court Dismisses for Lack of Notice

Plaintiff’s benefit entitlement hinged on whether she had experienced a “Layoff,” defined by the Plan as an “involuntary termination of employment . . . except for reasons of poor performance or misconduct.” The Plan administrator determined (and the Plan’s review committee agreed) that plaintiff’s “inability to return to work on...

Read Full Story: https://www.natlawreview.com/article/deferential-review-determinative-severan...