Johnson v. U.S. Bancorp Broad-Based Change

• Decision Date: 12 October 2005
• Docket Number: No. 04-2656.,04-2656.
• Citation: 424 F.3d 734
• Parties: Nancy J. JOHNSON, Appellee, v. U.S. BANCORP BROAD-BASED CHANGE IN CONTROL SEVERANCE PAY PROGRAM; Severance Administration Committee, Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

424 F.3d 734

Nancy J. JOHNSON, Appellee, v. U.S. BANCORP BROAD-BASED CHANGE IN CONTROL SEVERANCE PAY PROGRAM; Severance Administration Committee, Appellants.

No. 04-2656.

United States Court of Appeals, Eighth Circuit.

Submitted: May 11, 2005.

Filed: September 9, 2005.

Rehearing and Rehearing En Banc Denied October 12, 2005.

David Leonard Hashmall, argued, Minneapolis, MN, for appellant.

John J. Curi, argued, Minneapolis, MN, for appellee.

Before WOLLMAN, BYE, and COLLOTON, Circuit Judges.

COLLOTON, Circuit Judge.

U.S. Bancorp Comprehensive Welfare Benefit Plan/Broadbased Change in Control Severance Pay Program and its administrator, the Severance Administration Committee ("Committee"), appeal from the district court's order granting summary judgment in favor of Nancy Johnson on her claim for benefits under the Plan. The Committee argues that the district court erred in granting summary judgment because the Committee's determination that Johnson was fired for cause was not an abuse of discretion. We agree, and therefore reverse.

I.

Johnson had been a long-time employee of U.S. Bancorp when her employment was terminated in April 2002. She was fired after viewing computer files in a folder maintained by her supervisor, Kathy Ashcraft. The path to the folder containing the files was "**INCFIN01*vol2:* Shared*CAP*Kathy Ashcraft*personnel." One of the files accessed by Johnson, labeled "2002 Performance Goals," contained performance information regarding other employees and information on future organizational changes. Three of the files, entitled "Please join us for our Wedding Rehearsal," "direction," and "G guestlist," were of a personal nature, and contained an invitation to Aschraft's wedding, directions to the event, and a guest list, respectively.

Around the time of Johnson's termination, U.S. Bancorp was involved in a merger with Firstar Corporation. U.S. Bancorp, in an effort to retain a number of valued employees in the face of the uncertainty caused by the pending merger, offered certain of them a severance plan (the "Plan") providing for severance pay in the event they were terminated as a result of the merger. The Plan provided that employees terminated for "Cause" would not receive severance pay under the Plan. Cause was defined in relevant part as follows:

[G]ross and willful misconduct during the course of employment... including, but not limited to, theft, assault, battery, malicious destruction of property, arson, sabotage, embezzlement, harassment, acts or omissions which violate the Employer's rules or policies (such as breaches of confidentiality), or other conduct which demonstrates a willful or reckless disregard of the interests of the Employer or its Affiliates .... Circumstances constituting Cause shall be determined in the sole discretion of [U.S. Bancorp].

Employees who were terminated without cause within twenty-four months of the merger were eligible for severance payments of up to the equivalent of 104 weeks' salary.

U.S. Bancorp had several policies in place governing employees' use of computer technology at the time Johnson accessed Ashcraft's files. One policy, entitled "Computer and Information Security," directed employees to "[e]nsure that all of your computer access is on a need-to-know basis and is limited to the information required to perform your job." (Appellant's App. at 77). This policy also emphasized that "[i]t is important to be familiar with all policies concerning computer systems, information and privacy. These policies are available on the intranet or from your manager or supervisor and should be reviewed carefully." (Id.). The policy also exhorted employees to "[e]nsure information is treated as a valuable Company asset and is disclosed only on a need-to-know basis," and to "not attempt to access data that you are not authorized to access." (Id.). Another policy on "Use of U.S. Bancorp Technology" required "[a]ll employees who use U.S. Bancorp's technology resources [to] become familiar with and understand the U.S. Bancorp Information Security Services policies and standards and support their enforcement." (Id. at 76).

In April 2002, an employee notified management at U.S. Bancorp that rumors about organizational changes resulting from the pending merger with Firstar were circulating in the Finance Division. U.S. Bancorp's Information Security division investigated whether employees had accessed computer files that would have contained such information. The investigators determined that several employees, including Johnson, had accessed the computer file entitled "2002 Performance Goals." When confronted by a Human Resources representative about accessing the files in Ashcraft's directory, Johnson admitted that she "had no business reason for accessing and viewing the files in question." U.S. Bancorp's Controller, Terrance Dolan, then made the decision to fire Johnson. Johnson was presented with a "Notice of Termination" stating that her termination was "deemed a termination for cause" as defined in the Plan, and that she therefore would not receive severance pay. The Notice cited "unethical conduct" that violated U.S. Bancorp's Code of Conduct as the basis for Johnson's termination.

Despite the Notice's disclaimer, Johnson applied for severance pay under the Plan on June 25, 2002, arguing that her termination was not for cause. The Committee denied her request on August 26, 2002, reasoning that Johnson's conduct in accessing the personnel information in Ashcraft's directory "violated U.S. Bancorp's policies in its Employee Handbook." (Appellant's App. at 87). The policy provisions violated, according to the Committee, included the Computer and Information Security policy, which mandates that all employee "computer access is on a need-to-know basis and is limited to information required to perform your job," and the Code of Ethics and Conduct on the Job, which requires that "[t]he use of any information stemming from your employment shall be restricted to that which is absolutely necessary for the legitimate and proper business purposes of U.S. Bancorp," that "employee information... be treated as highly confidential in all cases," and that "employees treat all company resources with the respect befitting a valuable assert [sic] and ... that such resources should never be used in ways that could be interpreted as imprudent or improper." (Appellant's App. at 87).

Johnson appealed for reconsideration of the Committee's determination, but in a decision issued on October 29, 2002, the Committee upheld its earlier determination. The Committee rejected Johnson's argument that she did not know the files she accessed were confidential, reasoning that the location of the files in Aschcraft's personnel file and the labels on these files made it "obvious" that Johnson was not authorized to view them. (Appellant's App. at 130). The Committee wrote that in addition to viewing Johnson's conduct as "gross and willful misconduct," it believed that her actions "demonstrated a willful or reckless disregard of U.S. Bancorp's interests." (Id.).

Following the Committee's denial of her appeal, Johnson brought a civil action in the District of Minnesota pursuant to 29 U.S.C. § 1132(a)(1)(B), alleging that the Committee had abused its discretion in denying Johnson severance pay. The district court agreed, granting summary judgment for Johnson on August 11, 2003. On June 15, 2004, the district court awarded Johnson $122,399.18 in severance wage benefits plus interest, $20,211.75 for welfare benefits, and $42,090.00 in pre- and post-judgment attorney's fees.

II.

ERISA permits a participant in an ERISA-regulated plan to bring a civil action "to recover benefits due to [her] under the terms of [her] plan, to enforce [her] rights under the terms of the plan, or to clarify [her] rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). The district court's review of plan determinations is de novo, unless the plan grants discretionary authority to the plan administrator "to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). In such a case, the district court is required to review the plan administrator's interpretation of the terms of the plan for abuse of discretion. Id. U.S. Bancorp's Plan gives the Committee full discretion to "interpret and administer the terms and conditions of the Plan, decide all questions concerning the eligibility of any persons to participate in the Plan, [and] grant or deny benefits under the Plan," (Appellant's App. at 35), so the district court was required to review the Committee's interpretation of the Plan for abuse of discretion. See Firestone, 489 U.S. at 115, 109 S.Ct. 948; King v. Hartford Life & Accident Ins. Co., 414 F.3d 994, 999 (8th Cir.2005) (en banc). The Committee's application of the plan to Johnson's factual situation is reviewed to determine whether it is supported by substantial evidence, that is, "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Id. (internal quotation omitted).

In its Memorandum Opinion and Order, the district court acknowledged that the Committee's decision should be reviewed for abuse of discretion. The court, however, concluded that no reasonable person could have found that U.S. Bancorp had cause to terminate Johnson's employment. It reasoned that because U.S. Bancorp had "absolutely no safeguards in place to prevent Johnson from viewing the so-called `confidential information,'" the information could not have been confidential. (Add. at 8). The court also concluded that Johnson was authorized to access the files she viewed because "nothing prevented her access whatsoever." (Id.). The court held that while Johnson "may have been nosy, and her common sense should have prevented her access," her conduct did not...