Court overturns lower court decision upholding ERISA benefit denial where employer's decision was "arbitrary and capricious."
Former employees of a subsidiary of Anheuser-Busch filed suit against the company after they were allegedly wrongfully denied pension benefits after a hostile takeover by the a Belgian Corporation. The employees argued that under the plan language, since there was a "change in control" of their employer when it was sold from one company to another, a plan provision entitled them to re-computation of their benefits because their employment with the Anheuser-Busch controlled companies ended within three years of the change in control.
The District Court had ruled that the retirement agreement language at issue was ambiguous, and agreed with the employer that the employees' acceptance of employment with the successor corporation relieved Anheuser-Busch of any promise to enhance their surviving pension interest. The Court of Appeals rejected this analysis, which it deemed "flawed." The higher court held that the only reasonable interpretation of the plan language favored the employees claims: since their employment with Anheuser-Busch controlled companies was "involuntarily terminated" within the three-year time limit, they were entitled to the promised ERISA benefit re-determination.