On Thursday February 9, 2023, Michael Bartolic argued the appeal of Carlson v. Northrop Grumman Severance Plan, No. 22-1764 (7th Cir.) to the United States Court of Appeals for the Seventh Circuit. The link to the audio of the oral argument appears here. The case centers around a clause in a severance plan stating as a condition to receive benefits, the laid off employee must receive a memo notifying them of their eligibility for the benefit from a Vice President of Human Resources.
In Carlson v. Northrop Grumman Severance Plan, No. 13-cv-2635, 2022 WL 971873 (N.D. Ill. Mar. 31, 2022), Plaintiffs sued under ERISA § 502(a) and ERISA § 510, contending Northrop Grumman owed the certified class of Plaintiffs benefits for severance, that it breached a fiduciary duty to disclose a change in severance plan term interpretation, and that it unlawfully interfered with obtaining those severance benefits. Plaintiffs contend the memo from the Vice President of Human Resources is an administrative notification the laid off employee meets the remaining eligibility criteria in the Plan, while Northrop Grumman contends it has unlimited discretion to decide to withhold the memo, and severance, from any employee, even if management already made the employee eligible for severance upon layoff. The District Court ruled in favor of Northrop Grumman, but the three-judge panel in the Seventh Circuit appeared critical of Northrop’s position and arguments.
After Michael Bartolic finished his argument, one judge asked Northrop Grumman’s attorney to explain the purpose of an “utterly discretionary” severance system. The judge stated “I had thought they were promises meant to induce reliance and continued service and so on. And you’re telling us this is a plan that allows management, when it’s no longer needed to serve that purpose, to abandon the benefits?” Another judge stated to Northrop Grumman’s lawyer “Grumman’s official policy to its employees is ‘Don’t count on us—we’ll sell you out in the end.’” While the judges have not indicated how they will rule in the appeal, they have made clear a plan operating as Northrop Grumman advocates this one operates does not appear to serve the purpose of an established severance plan.
Bartolic Law represents the class of laid off employees along with co-counsel R. Joseph Barton of Barton & Downes LLP. If you have been denied severance benefits under an established severance plan, speak to a skilled severance benefit attorney today.