Tenth Circuit Affirms Award of Severance Benefits to Employee Whose Job Duties were Materially and Adversely Diminished Following a Change of Control

In Hoff v. Amended and Restated Anadarko Petroleum Corp. Change of Control Severance Plan, et al., No. 23-1361, 2025 WL 400517 (10th Cir. Feb. 4, 2025), an ERISA-governed severance plan appealed to the Tenth Circuit from a district court’s order in favor of the plaintiff finding that the plaintiff had experienced a material and adverse diminishment in duties following a change in control which entitled him to payment of severance benefits. The Tenth Circuit determined that under the terms of the plan, the plaintiff was entitled to benefits.

Plaintiff David Hoff was a seasoned Project Manager at Anadarko Petroleum, overseeing the Latham Gas Plant Project, Anadarko’s largest project at the time, with a $450 million budget and a team of over 300 people. Hoff had consistently received positive performance reviews since assuming his role in 2016. In August 2019, Occidental Petroleum (Oxy) acquired Anadarko, marking a significant corporate change. Post-acquisition, Hoff’s job title remained unchanged, but his responsibilities shifted drastically. He was assigned smaller projects, such as the Wattenberg Engine Overhaul Project and the Ramsey Slug Catcher Project, which required significantly less management experience and a smaller team. Additionally, Hoff was placed in a non-management role on the Mechanical Integrity team, primarily answering routine engineering questions. Believing that his job duties were materially and adversely diminished, Hoff filed a Good Reason Inquiry Form under Anadarko’s Change of Control Severance Plan. Despite his claims, Oxy denied him severance benefits, arguing that his duties remained the same on paper.

The court’s decision hinged on the interpretation of the severance plan’s “Good Reason” clause, which allowed for benefits if an employee’s duties were “materially and adversely diminished” after a change of control. The court applied de novo review, focusing on the factual differences in Hoff’s responsibilities before and after the acquisition.

The court examined the scale and scope of Hoff’s post-acquisition projects compared to his pre-acquisition responsibilities. It found the differences stark and significant, emphasizing that the reduction in duties was both material and adverse, contrary to Oxy’s assertion that project size variability was expected. Oxy contended that the pandemic, not the acquisition, led to the reduction in workload. However, the court dismissed this argument, noting that the severance plan only required the resignation to occur within a year of the change of control, thus tying it to the acquisition. The plan did not specify that the reduction must be directly caused by the acquisition itself. Oxy argued that Hoff’s reduced responsibilities were temporary and thus did not meet the criteria for “material” and “adverse” diminishment. The court countered this by highlighting that the plan did not specify that the diminishment had to be permanent, and Oxy could not retroactively impose such a condition. The court affirmed the decision of the district court in Hoff’s favor.