11th Circ. Upholds Denial of Severance Claim by Former CSX Exec

In a unanimous decision, the U.S. Court of Appeals for the Eleventh Circuit upheld a lower court’s decision denying a severance package for Bryan Rhode, a former CSX executive. Like the lower court, the appellate rejected the plan participant’s allegations that a conflict of interest and a flawed investigation by a plan administrator led to the rejection of his claim.

The case is Bryan Rhode v. CSX Transportation Inc., Case Number 22-10909, U.S. Court of Appeals for the Eleventh Circuit.

Rhode served as CSX’s vice president of the public safety, health, and environmental team. However, after the CSX CEO died, he was demoted in 2018 to a position that left him with less authority. He then met with CSX’s chief legal officer to ask about his entitlement to severance benefits if he left the company due to changes in his position, based on a belief of entitlement to benefits if he left his job for good reason or was fired without cause. However, the chief legal officer advised him that he would not receive severance benefits if he decided to leave the company. Rhode sued CSX in May 2020 and claimed in his suit that CSX had him escorted from company property, as they believed that he had resigned.

On appeal, Rhode argued that the plan administrator abused her discretion in denying his severance benefits under the plan because he was involuntarily terminated. He also alleged that the plan administrator did not conduct a full and fair review of his claim because she failed to interview his coworkers and review his emails, files, and calendar entries to determine whether he quit or was fired. Furthermore, he argued that the plan administrator had a conflict of interest because she was a former CSX vice president and chief administrative officer and had an incentive to deny the claim to save costs.

During oral arguments in August, a three-judge panel of the Eleventh Circuit considered whether the lower court used the correct standard in determining whether CSX’s plan administrator properly denied benefits to Rhode under the severance plan for highly compensated employees and whether Rhode quit, or if CSX terminated him. Ultimately, the panel found no reversible errors in the lower court’s decision.

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