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A former Rite Aid Corp. executive who claims the company reneged on its promise to lay him off with a severance package has lost his court battle to enforce the deal now that a federal appeals court has held that his resignation left him with no standing to sue under ERISA. In Miller v. Rite Aid Corp., a unanimous three-judge panel found that Anthony Miller lost his status as a “participant” in the company’s ERISA plan when his promised layoff was repeatedly delayed and he resigned to take a new job. Miller’s lawyer, Robert A. Klein of Conrad O’Brien Gellman & Rohn, argued that his client was a participant in the Rite Aid severance plan because he was on the list of employees to be laid off, his severance benefit had been approved; the plan administrator had been instructed to implement the plan, and his layoff was announced. But U.S. Circuit Judge D. Brooks Smith found that Miller’s argument “entirely misses a critical point” because he “had to be laid off to become ‘eligible’ for severance.” Since Miller never was laid off, Smith found that he “may be correct that for a fleeting period of time he met ERISA’s definition of participant,” but that “he did not meet that definition after he voluntarily left Rite Aid before the vesting of his benefits.” The ruling is a victory for attorneys A. James Johnston and Jonathan B. Sprague of Post & Schell, who defended Rite Aid in a non-jury trial before U.S. District Judge William H. Yohn Jr. and before the 3rd U.S. Circuit Court of Appeals. According to court papers, Rite Aid was in financial trouble in September 1999 and began to lay off employees at its corporate headquarters. In the reshuffling of personnel, Miller, then a senior executive, became the corporate director of store planning. Later that fall, a new management team decided to further restructure the company, and Miller’s boss ultimately proposed that Miller should be laid off with severance pay. At the time, Miller had already begun negotiations to join U.S. GlobalNet, an Arizona-based Internet start-up that was developing software products. By June 2000, Miller and GlobalNet had a written agreement in place. But under Rite Aid’s restructuring plan, Miller’s boss had complete discretion over the timing and order of the layoffs. Although Miller was officially told that he would be laid off, he was never given a date. When another executive resigned, Miller was told that his layoff was on hold due to staff shortages. Miller at first volunteered to stay on at Rite Aid headquarters in Harrisburg to manage the department during the restructuring period but also arranged to join GlobalNet by the end of July 2000. According to court records, in an e-mail, Miller’s boss wrote: “As soon as I can let you go, I will. And you will get a handsome package to take with you (assuming you stay around long enough to get it of course)!” When Miller informed his boss that his final day with the company would be July 28, he was warned that he would get no severance pay if the layoff had not come through. The e-mail exchanges grew testy. According to the opinion, Miller’s boss wrote: “The idea that being laid off and getting a severance package is somehow a ‘right’ that you have is preposterous. I have been telling you all along that your employment is still active and that I don’t know when that situation will change. If you choose to take your family somewhere other than Harrisburg, it is your choice. If you leave on July 28, it will be because you resigned not because you were being laid off. You will leave without a severance package.” Miller delayed his departure by several weeks, but ultimately resigned on Aug. 18, 2000. When Rite Aid refused to give him severance pay, Miller filed suit, alleging both contract and ERISA claims. Rite Aid’s lawyers moved for dismissal of the contract claim, arguing that it was pre-empted by ERISA. They also argued that because Miller was not an ERISA “participant,” he had no standing to bring an ERISA claim. Miller conceded that the contract claim should be dismissed but insisted that he had standing to bring the ERISA claim. Yohn held a non-jury trial to decide the factual and legal issue of whether Miller was a plan participant. Yohn entered judgment for Rite Aid after finding that Miller did not meet that definition of a plan participant after he voluntarily left Rite Aid before the vesting of his benefits. Miller argued on appeal that ERISA’s definition of a participant includes workers who “may become” eligible for a benefit. But the 3rd Circuit rejected Miller’s reading of the statute, finding that Yohn was correct in holding that his resignation ended his participation in the plan. Tracking the statutory language, Smith found that “once Miller’s severance was approved by management, but before he quit, Miller technically might have been an ‘employee … who may become eligible to receive a benefit.’ … However, Miller never actually became eligible.” Smith found that “what Miller is now” is a former employee who “might have” become eligible to receive a benefit. But ERISA, Smith said, “does not define a former employee who ‘might have’ become eligible for benefits as a participant under ERISA.” Smith’s opinion was joined by U.S. Circuit Judge Theodore A. McKee and visiting U.S. Circuit Judge Faith Hochberg of the District of New Jersey.

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