Sixth Circuit Upholds Denial of Severance Benefits; Denies ERISA Claimant Right to Jury Trial

In Kramer v. Am. Elec. Power Exec. Severance Plan, No. 24-3174, __F.4th__, 2025 WL 444923 (6th Cir. Feb. 10, 2025), the Sixth Circuit Court of Appeals considered a challenge brought by a severance plan participant disputing the district court’s limitation of the scope of discovery for his ERISA benefits claim, striking his jury-trial demand, and granting judgment to American Electric Power Service Corporation (AEP) and the AEP Severance Plan. The Sixth Circuit affirmed the district court’s grant of judgment, and in so doing, determined that the plaintiff was not entitled to the discovery he sought or to a jury-trial for his ERISA denial-of-benefits claim.

Plaintiff-Appellant Derek Kramer was employed by AEP as Vice President and Chief Digital Officer of AEP Charge. In 2019, almost a year after his hiring, Kramer was offered participation in the AEP Executive Severance Plan, which provided severance payments under certain conditions such as involuntary termination or resignation for good reason. In 2020, Kramer’s employment was terminated following two key incidents: (1) an audit revealed his executive assistant misused her company credit card for personal expenses, which Kramer had approved; and (2) an investigation into Kramer’s company-issued cell phone found that the phone had been wiped clean during data extraction, which Kramer claimed was accidental.

AEP denied Kramer’s claim for severance benefits, asserting the termination was “for cause,” as defined under the Plan, due to Kramer’s failure to adhere to company policies and suspected misconduct regarding the phone incident. Kramer appealed the denial within the administrative framework of the Plan, but the appeal was also denied.

The court applied an arbitrary-and-capricious standard of review due to the Plan granting discretionary authority to the administrator. The court considered Kramer’s challenge of the district court’s decision: (1) limiting the scope of discovery for his ERISA denial-of-benefits claim; (2) striking his jury-trial demand; and (3) granting judgment to AEP and the Plan.

ERISA Discovery Limitations: Kramer argued for full discovery beyond the administrative record, including privileged documents. The district court allowed limited discovery regarding alleged bias but denied access to documents protected by attorney-client privilege. The court found the Plan met the criteria for a top-hat plan, providing deferred compensation for a select group of management or highly compensated employees. Because the Plan was a “top-hat” plan, it is exempted from ERISA’s fiduciary requirements, thereby nullifying Kramer’s claim to the fiduciary exception to attorney-client privilege.

Right to Jury Trial: Kramer asserted a constitutional right to a jury trial for his ERISA claim, which the court denied. The court reaffirmed that ERISA denial-of-benefits claims are equitable in nature, thus not entitled to a jury trial under the Seventh Amendment, following established precedents in the Sixth Circuit.

Motion for Judgment on the Administrative Record: The district court construed AEP’s motion for summary judgment as a motion for judgment on the administrative record, consistent with Sixth Circuit precedent in Wilkins v. Baptist Healthcare Sys., Inc., which precludes the application of Rule 56 in ERISA denial-of-benefits cases. Kramer’s contention that recent Supreme Court decisions undermined these procedures was rejected, as those decisions were not directly applicable to ERISA claims. The court found that Kramer failed to show that the denial of benefits was arbitrary and capricious since the Plan’s decision letters provided substantial evidence supporting their finding that Kramer was terminated for cause under the Plan’s terms.

For these reasons, the Sixth Circuit upheld the district court’s judgment in favor of AEP, affirming the denial of Kramer’s severance benefits claim.