had made a “reduction in work force,” and therefore the plaintiffs were entitled to severance benefits according to the termination pay plan. Firestone, the administrator and fiduciary of the benefit plan, denied the plaintiff’s claim because it determined the sale of a division was not a “reduction in work force” as defined by the termination pay plan. The plaintiff then brought a civil suit in the United States District Court for the Eastern District of Pennsylvania.The District Court granted Firestone’s Motion for Summary Judgment because the court believed that Firestone’s denial of the plaintiff’s claim was not arbitrary and caprious. The plaintiffs appealed to the Third Circuit Court of Appeals. The Appellate Court reversed the finding of the District Court holding that Firestone had a conflict of interest, and had failed to act impartially. The Third Circuit held that due to Firestone’s conflict of interest, as employer, administrator, and fiduciary of the plan, the correct standard of review should be a more complete, de novo review. The United States Supreme Court subsequently granted certiorari “to resolve the conflicts among the Court of Appeals as to the appropriate standard of review in actions under 29 U.S.C. 1132(a)(1)(B) and the interpretation of the term participant in 29 U.S.C. 1002(7).” Id. at 108. The Supreme Court affirmed the de novo review, but not due to the apparent conflict of interest. The U.S. Supreme Court held that the Firestone plan did not give the administrator discretionary authority to interpret the plan, particularly the term “reduction in work force.” Id. at 111. The Supreme Court also reversed the Third Circuit’s construction of the word “participant.” The Court held that “participant” did not apply to former employees who did not have a reasonable expectation to return to the ...
