Opposition Brief — Mobil Oil Corp. v. Christopher
Supreme Court brief1992
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No. 91-1881
IN THE * {HE Cirp, |
Supreme Court of the Wuited States ine
OCTOBER TERM, 1992
MoBIL OIL CORPORATION, THE RETIREMENT PLAN OF
MosiL OIL CORPORATION, and REX ADAMS,
Petitioners,
v.
GERALD W. CHRISTOPHER, CHARLES L. PRUNTY, and
BILLY G. TURNER,
Re spond NTS.
On Petition for Writ of Certiorari to the
United States Court of Appeals
for the Fifth Circuit
RESPONDENTS’ BRIEF IN OPPOSITION
WILLIAM E. TOWNSLEY RODNEY R. PATULA
TOWNSLEY, HANKS & (Counsel of Record
TOWNSLEY, P.C. [ELIZABETH C. MORAN
3550 Fannin Street MICHAEL G. BOHN
Beaumont, Texas 77701 BRADFORD J. LAM
(409) 832-3453 PRYOR, CARNEY & JOHNSON
A Professional Corporation
6200 South Svracuse Way, #400
Englewood, Colorado 80111
(303) 771-6200
July 27, 1992 Counsel for Respondents
WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001
COUNTERSTATEMENT OF QUESTION PRESENTED
Was the Court of Appeals correct in holding that for-
mer employees may establish standing to sue for being
involuntarily discharged in violation of $510 of the
Employee Retirement Income Security Act of 1974
(“RISA”) by proving, not merely alleging, that but for
the violation of § 510, they would be current employees
with a reasonable expectation of receiving benefits?
(i)
li
LIST OF PARTIES
Petitioners: (Defendants-Appellees below) :
Mobil Oil Corporation, a subsidiary of Mobil Corpor-
ation (a publicly held corporation). A list of Mobil
Oil Corporation’s non-wholly-owned subsidiaries has
been included in the Appendix to their petition [46a].
Retirement Plan of Mobil Oil Corporation
Rex D. Adams (a Vice President of Mobil Corporation)
Respondents: ( Plaintiffs-Appellants below) :
Gerald W. Christopher
Charles L. Prunty
Billy G. Turner
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED .__. ee Bratton o- i
a ccs hacvantucawennasvsesevsunpanebunvacnds il
MI I RR I ose nc cnncncsncsnsnsanonaneccoceces V
COUNTERSTATEMENT OF THE CASE ....... 1
I. COUNTERSTATEMENT OF THE FACTS...... 2
A. The July 1984 Plan Amendment ...._...__.. 2
B. The Six-Month “Window” Retirement Pro-
Teen ee ai cnCecasebnloss
C. The Seiten 1984 Plan Amendment . 4
D. Mobil’s Misrepresentations and Conceal-
ee ae ls as ogucnseveasaabsaabenion 5
E. Mobil’s Violations of ERISA § 510.0000... 6
II. COUNTERSTATEMENT OF PROCEED-
a cas is cai cuthnseandivanans 7
REASONS FOR DENYING THE WRIT..................... ‘ 8
I. THE CONTROLLING STATUTORY PROVI-
EE RE DD ea OE 9
II. THE FIFTH CIRCUIT’S DECISION IS CON-
SISTENT WITH FIRESTONE AND THE
ONLY INTERPRETATION OF FIRESTONE
CONSISTENT WITH SECTION 510 Bs 11
Ill. THE FIFTH CIRCUIT’S OPINION DOES
NOT CREATE STANDING BY A MERE
ALLEGATION OR CLAIM OF STANDING... 13
IV. THE FIFTH CIRCUIT’S OPINION DOES
NOT ALTER THE STATUTORY DEFINI-
TION OF “PARTICIPANT,” BUT DOES REC-
OGNIZE THAT THE PROOF REQUIRED TO
MEET THE DEFINITION DIFFERS DE-
PENDING UPON THE NATURE OF THE
ERISA CLAIM ASSERTED ........................ an 15
(iil)
a ee
iv
TABLE OF CONTENTS—Continued
Page
V. THE FIFTH CIRCUIT’S DECISION IS NOT
INCONSISTENT WITH PRECEDENT IN
OTHER CIRCUITS 20
VI. THE CIRCUIT COURTS HAVE ONLY RE-
CENTLY BEGUN TO ADDRESS THE ISSUE
PRESENTED HERE fate 22
Vil. THE FIFTH CIRCUIT’S OPINION DOES
NOT CREATE “UNCERTAINTY” OR “IN-
CONSISTENCY” IN THE ADMINISTRA-
TION OF ERISA PLANS 24
MIN a cok cieies we ale ndce accussAs nur sewua der iacebearaweasaay 26
APPENDIX
Christopher v. Mobil Oil Corp., 950 F.2d 1209 (5th
Rees crs. h Fh ccna dons paapcealiness eka aceastaiains la
Order Granting Motion for Judgment on the
Pleadings and Motion to Dismiss, Christopher v.
Mobil Oil Corp., Civ. No. B-89-0653-CA (E.D. Tex.
Tt ER ecsaer it chnncmaaandat cee
Order Granting Motion for Summary Judgment,
Christopher v. Mobil Oil Corp., Civ. No. B-89-
0653-CA (E.D. Tex. June 22, 1990) ..........00000000000... 28a
Order Denying Appellants’ Petition for Rehearing,
Christopher v. Mobil Oil Corp., No. 90-4562 (5th
os gree ees Re tee 30a
Reporter’s Transcript of Order Denying Motion
for Summary Judgment, Raymond v. Mobil Oil
Corp., No. 88-Z-2112 (United States District
Court, District of Colorado, June 25, 1992) ........... 32a
ERISA § 3(7), 29 U.S.C. § 1002 (7) ................2....2--- 38a
ERISA § 602, 29 U.S.C. § 1132 .................... lei-nertinpans 38a
ERISA § 610, 29 U.S.C. § 1260... sc ccccccccccrensesnese 45a
v
TABLE OF AUTHORITIES
CASES Page
Albemarle Paper Co. v. Moody, 422 U.S. 405
(1975) 19
Amalgamated Clothing & Textile Workers Union,
AFL-CIO v. Murdock, 861 F.2d 1406 (9th Cir.
1988) 15
Barrett Computer Services, Inc. v. PDA, Inc., 884
F.2d 214 (5th Cir. 1989) in 14
Berger v. Edgewater Steel Co., 911 F.2d 911 (3rd
Cir. 1990), cert. denied, 111 S. Ct. 1310 (1991) 18, 22
Bittner v. Sadoff & Rudoy, 490 F. Supp. 534 (E.D.
Wis. 1980) . 18, 19, 20
Boren v. Southwestern Bell Telephone Co., Ince.,
933 F.2d 891 (10th Cir. 1991) 15
Buchanan v. Foster Elec. Co., 1989 WL 157340
(N.D. Ill. 1989) 15
Calhoun v. Falstaff Brewing Corp., 478 F. Supp.
357 (E.D. Mo. 1979) 18
Christopher v. Mobil Oil Corp., 950 F. 2d 1209 (5th
Cir. 1992) ates passim
Conkwright v. Westinghouse Elec. Corp., 739 F.
Supp. 1006 (D. Md. 1990), aff’d, 933 F.2d 231
(4th Cir. 1991) pecuit ye ees
Deller v. Portland General Elec. Co., 727 F. Supp.
1369 (D. Or. 1989) LAY PEt) he
Deeming v. American Standard, Inc., 905 F.2d
1124 (7th Cir. 1990) 24
Donahue v. Custom Management Corp., 634 F.
Supp. 1190 (W.D. Pa. 1986) sss 24
Fischer v. Philadelphia Elec. Co., 1991 WL 36215
(ieee Dek Wee cca fe . 18,28
Firestone Tire and Rubber Co. : v. Bruch, 489 U.S.
101 (1989) _. __... passim
Fleming v. Ayers & Associates, 948 F. 2d 993 (6th
> | PE rt a A Ae SE 19
Flick v. Borg-Warner Corp., 392 F.2d 285 (3rd
RA SIO iovcccesscone tostueks ee eee ee 15
Folz v. Marriott Corp., 594 F . Supp. 1007 (W.D.
Bn, TO i a eee 18, 19, 20
vi
TABLE OF AUTHORITIES—Continued
Page
Freeman v. Jacques Orthopaedic & Joint Implant
Surgery Medical Group, Inc., 721 F.2d 654 (9th
CO ROI asec vecccccvccccncectoteee ee ee . 15, 21
Garry v. TRW, Inc., 603 F. Supp. 157 (N.D. Ohio
WE hiiscseivessisenevssncsaccecaccasavinhcis cea 18, 24
Gavalik v. Continental Can Co., 812 F.2d 834 (3rd
CSU ROM I AD scnvcnesscgnccsesssscocsccionsbeech eee eee 16, 24
Gilquist v. Becklin, 675 F. Supp. 1168 (D. Minn.
1987), aff'd mem., 871 F.2d 1093 (8th Cir.
RN escecscsenccosineesnscecdcouasceatees eee 15
Gladstone, Realtors v. Bellwood, 441 U. S. 91
6) ) Reena (iiavaxaccss¢heeedesieat oaeeeren eaten eat 14
Hager v. Veco Corp., 1 Employee Benefits Cas.
(BA) UGBT CRD, TE. RGR) xc ncviccccccsscccckccccensssss 15
Healy v. Axelrod Const. Co, Pension Plan & Trust,
787 F. Supp. 888 (N.D. Il. 1092) ....................:.... 24
Henry v. Black & Decker Inc., 779 F. Supp. 778
CTD, Fabs. OAD akcctontstcese eee eee 14
Ingersoll-Rand Co. v. McClendon, 111 S.Ct. 478
EEE sicrcicccescccnsncckescebcucrbreeb ae acai eaneee passim
Jones v. AT & T Co., 1992 WL 68266 (E. D. Pa.
ROE Sos icccscdtnn. ccna ee 23
Joseph v. New Orleans Elec. Pension & Retirement
Plan, 754 F.2d 628 (5th Cir. 1985) 2.0... 15
Kuntz v. Reese, 785 F.2d 1410, (9th Cir. 1986)
(per curiam), cert. denied, 479 U.S. 916
CIE vo cecdcsgicnccesdcacevccavesonntansnnceumeen ass ee 10, 15
Massachusetts Mut. Life Ins. Co. v. Russell, 473
Seis RI SID i sescncnre occsccecctoe ee sada 16,17
Mitchell v. Mobil Oil Corp., 896 F.2d 463 (10th
Cir.), cert. denied, 111 S.Ct. 252 (1990) .......... 7, 17, 20,
21, 23
Nemeth v. Clark Equipment Co., 677 F. Supp. 899
COR A BN BID hore sed eee 18
Nugent v. Jesuit High School of New Orleans, 625
je 8: Fi ee | ne. os ee 15
Raymond v. Mobil Oil Corp., Civil Action No. 88-
Z-2112 (D. Colo. June 25, 1992) .......................... 23
Saladino v. I.L.G.W.U. Nat’l Retirement Fund, 754
PBe Gre COR Gar BE wiisnews 15
Vii
TABLE OF AUTHORITIES—Continued
Page
Saporito v. Combustion Enginering, Inc., 843 F.2d
666 (2d Cir. 1988), vacated and remanded, 489
U.S. 1049 (1989), on remand No. 87-5144, slip.
op. (3d Cir. June 29, 1989) ........................ 18, 20, 22, 23
Sommers Drug Stores Co. Employee Profit Sharing
Trust v. Corrigan, 883 F.2d 345 (5th Cir.
i Re SIRNA a SAA as SENNA TE alse SSS EUR 15
Stanton v. Gulf Oil Corp., 792 F.2d 482 (4th Cir.
1) RUA a Ree eR a la Ce ROCIO PENS TRA SN Sp ecED ST EOS 15, 21
Teagardener v. ' Republic- Franklin Incorporated
Pension Plan, 909 F.2d 947 (6th Cir. 1990) ...... . 16,22
Vogel v Independence Federal Savings Bank, 692
F. Supp. 587 (D. Md. 1988), aff’d, 728 F. Supp.
po I Re eee Se ta ee ea ae | | |
West v. Butler, 621 F.2d 240 (6th Cir. 1980)... 24, 25
Winchester v. Pension Committee, 942 F.2d 1190
(7th Cir. 1991) - tia : yeas |
Woolsey v. Marion , Laboratories, “Inc., 934 F.2d
1452 (10th Cir. 1991) __.... pT IN PNM NRA ES 16
Yancy v. American Petrofina, Inc., 768 F.2d 107
See nn ne oe ee ee ee 15, 21
Young v. AT & T Transition Protection Payment
Plan, 1989 WL 675 (D. N.J. 1989)... 23
Zipf v. American Tel. & Tel. Co., 799 F.2d 889
pe a A eee ed AM Pe 16, 18, 25
STATUTES AND RULES
26 U.S.C. § 401 (a) (4)...... iA Sn nen DT AE HEM Sd oN 4
EE | Tete arbor Sanne nen nea en Senna onan 9,23
, Rik Fe Ft Se eae Pe sence 10
Be re eT onic ovo ees ssc siniscnesnnannee ae ie erence 15, 16
os ce caudbi cneinesunondavneaiente 7
pee FM 8D 5 2 ee anne eeee ee enenen 10
Be Meas Oe UO OF GORD oon case cecesenceececcsevencasnsccses 15
20 U.5.C. § 1132 (a) (i) (C) ...................... Pedra hes 15
29 U.S.C. § 1183 (a@) (2).......................... Sh aaa 15, 16
Bk Tee Be a } oars 10
Rte Som Bee fh Te 8 et | cnn nn nae 15
Viii
TABLE OF AUTHORITIES—Continued
Page
ee I ee eee 10
ED coc ce ea 2,9, 10, 20
ae sn ae 7
ERISA § 502 (a) ............ pee RAR AAP ISSR case NT INTO 19
I oan case cece eaves 10
SMA We UF oe accesso iccenccecncaeesevscsennevornvecncecs 8
Ue re 2 es ee passim
OTHER AUTHORITIES
2 Legislative History of the Employee Retirement
Income Security Act of 1974, 1641-42 (1976)... 18
Retirement Equity Act of 1984, Pub. L. No. 98-
397, § 302(d) (1), 98 Stat. 1426, 1451-52, (codi-
fied, as amended, 29 U.S.C. § 1001, Historical
and Statutory Notes) $
S. Rep. No. 93-127, 93d Cong., 2d Sess., Reprinted
in 1974 U.S. Code Cong. and Ad. News at 4871.. 9
IN THE
Supreme Court of the United States
OCTOBER TERM, 1992
No. 91-1881
MoBIL OIL CORPORATION, THE RETIREMENT PLAN OF
MoBIL OIL CORPORATION, and REx ADAMS,
‘ Petitioners,
GERALD W. CHRISTOPHER, CHARLES L. PRUNTY, and
BILLY G. TURNER,
Respondents.
On Petition for Writ of Certiorari to the
United States Court of Appeals
for the Fifth Circuit
RESPONDENTS’ BRIEF IN OPPOSITION
COUNTERSTATEMENT OF THE CASE
At issue here is whether the Court of Appeals correctly
held that standing to sue under ERISA $510 may be
established by former employees, notwithstanding their
receipt of a lump sum payment of all their accrued pen-
sion benefits, if they prove: (1) that their employer’s
misrepresentations and concealment of certain material
facts prior to the empolyees’ “retirement” decision caused
the retirements and rendered them involuntary in the
Same sense that an outright firing is an involuntary dis-
92
ee
charge; and (2) that but for the violation of § 510, the
respondents would in fact be current employees “eligible
to receive a benefit-of any type from an employee benefit
plan.” ERISA § 3(7).
I. COUNTERSTATEMENT OF THE FACTS.
Plaintiffs were each employed by Petitioner Mobil Oil
Corporation (“Mobil”) for more than 35 years. As par
of their compensation, they earned retirement benefits,
including a pension under a defined-benefit Retirement
Plan (the “Plan”). For many years, such pensions were
paid in the form of monthly annuities. But in 1977,
Mobil amended the Plan to allow retiring employees to
take their pensions in a lump sum, reduced to present
value using a 5% discount rate. To qualify for this
lump sum option, the retiring employee had to have
$250,000 in acerued pension or had to show a personal
net worth, exclusive of his Mobil pension, exceeding that
figure.
A. The July 1984 Plan Amendment.
In late 1983 and early 1984, Mobil’s Executive Com-
mittee began consideration of changes to the lump sum
benefit. The 5% discount factor had made the lump sum
far more valuable—approximately 40% more valuable—
than the annuity benefit. The intervening years of in-
flation, including salary inflation, had made a majority
of Mobil’s employees eligible for the lump sum under the
$250,000 test. Utilization of the lump sum option was
becoming virtually universal. The Executive Committee
wanted to increase the discount factor and the eligi-
bility test or “threshold.”
By May 1984, however, Mobil knew that Congress was
likely to pass an amendment to ERISA that would pre-
vent “cutbacks” in defined benefits, including “optional”
forms of benefits such as Mobil’s lump sum option. The
proposed amendment, eventually enacted as part of the
3
Retirement Equity Act (“REA”), would not prohibit such
“cutbacks,” however, if made before July 30, 1984. Re-
tirement Equity Act of 1984, Pub. L. No. 98-397, § 302
(d) (1), 98 Stat. 1426, 1451-52 (codified, as amended, 29
U.S.C. § 1001, Historical and Statutory Notes).
Mobil’s Executive Committee acted quickly. On June
13, 1984, it adopted and on July 2, 1984, it announced a
Plan amendment: (a) increasing the discount factor from
5% to 9.5° for benefits accrued after February 1, 1985;
and (b) increasing the lump-sum eligibility threshold from
$250,000 to $450,000, also effective February 1, 1985,
to be increased thereafter by the consumer price index.
The change in the threshold eligibility requirement was
not made prospectively. That is, once the Plan amend-
ment became effective, the new eligibility test would
apply to all retirees and with respect to the entirety of
their pension.
B. The Sixth-Month “Window” Retirement Program.
Ostensibly as a matter of fairness, Mobil also announced
on July 2 1984, a special, six-month “window” retire-
ment program for those employees who were 55 or older
before the new Plan amendment became effective. They
could take their pension in a lump sum under the old
$250,000 test—but only if they retired by January 1,
1985. As part of this window “program,” Mobil waived
certain advance notice requirements for electing the lump
sum.
For more than 1,000 Mobil employees, the Plan amend-
ment and the six-month window operated as an “early
retirement” program—and an inexpensive one for Mobil,
since it was not required to pay any “incentives” to en-
courage the early retirements. Indeed, Mobil’s net sav-
ings for this “early retirement” program were nearly
$300 million.
At the time it announced the Plan amendment and the
“window” retirement program, Mobil informed its em-
4
ployees that the amendment was “subject to IRS approval”
—j.e. an IRS determination that the Plan, as amended,
would continue to meet the IRS’ criteria for ‘favorable
tax treatment.’’ The plaintiffs and their fellow ‘window
retirees’”” were led to believe that such IRS approval
would be routine. After all, Mobil had the right to adopt
the Plan amendment when it did. In fact, Mobil could
have abolished the lump sum benefit altogether—so long
as it did so before July 30, 1984, the effective date of the
REA’s “anti-cutback” provision.
To this point in events, Mobil’s conduct did not violate
ERISA. In particular, as to $510 of ERISA, if retire-
ment-eligible employees chose to “opt” for the lump sum
benefit and to give up their jobs to get the lump sum,
their retirements would not constitute unlawful discharges
in violation of $510. Instead, they would be making a
conscious, albeit unwanted, decision to retire and to re-
ceive all their retirement benefits earned through the
date of retirement.
C. The September 1984 Plan Amendment.
On July 16, 1984, Mobil submitted its application for a
determination letter to the IRS. The chief concern was
whether the new $450,000 threshold would “discriminate
in favor of highly compensated employees,” in violation
of 26 U.S.C. § 401(a) (4). In September, the IRS agent
reviewing the Plan amendment informed Mobil that he
would not approve it, because it would indeed favor
Mobil’s “highly paid executives.”
Although Mobil informed its Executive Committee of
the IRS’ rejection of the Plan amendment, it did not in-
form_its rank and file. Instead, in late September 1984,
it made a new amendment, incorporating into the amend-
ment proposed in July, a right of each employee to apply
for a waiver of the $450,000 threshold. This new Plan
amendment reserved to Mobil “sole discretion” to grant
such waivers “in individual cases for valid cause shown.”
5
However, Mobil has admitted that the purpose and in-
tended operation of the waiver clause was to prevent
“statistical” discrimination in favor of highly compen-
sated employees. Since eligibility for the lump sum option
among Mobil’s highly paid employees would be virtually
universal even under the $450,000 test—a fact Mobil knew
from internal and outside actuarial studies—-the prac-
tical effect of the waiver clause was inescapable: it would
negate the $450,000 threshold amendment.
D. Mobil’s Misrepresentations and Concealments.
The IRS informally approved the new amendment in
October. However, Mobil again made no announcement
to its rank and file. It did not inform the employees that
the IRS had rejected the originally proposed Plan amend-
ment, that a new amendment had been adopted—after the
July 30, 1984 effective date of the REA—or that employees
now had a right to apply for a waiver of the $450,000
requirement.
To the contrary, Mobil actively concealed these facts
from employees considering retirement under the “win-
dow” program. For example, in October 1984, Mobil pre-
pared two memoranda concerning the IRS’ approval of
the new Plan amendment. One was sent to Mobil’s Ex-
ecutive Committee and correctly described the amendment
as adopted the previous month, including the new waiver
clause. The second memorandum, addressed to Mobil’s
employee relations managers throughout the country—
who referred only to the Plan amendment in the form
announced on July 2, 1984.
Several employees, including plaintiffs, who were con-
sidering retirement under the window program asked
their respective employee relations departments about
possible exceptions to the $450,000 requirement. They
were consistently told that no exceptions were possible.
On November 12, 1984, one of Mobil’s executives pre-
pared a “confidential memorandum” concerning plans for
ee
6
administering the waiver clause. This document discusses
“adverse comments” made to the IRS about the July 2,
1984 version of the Plan amendment by employees who
were considering retirement under the window program.
The IRS had responded to the employees, explaining only
that the amendment “did not adversely affect the qualifi-
cation of the Plan.” This internal Mobil memorandum
then expresses relief that the IRS had made “no mention
of the additional amendment required by the IRS [i.e.,
the waiver clause].”
Mobil announced the IRS’ approval of the Plan amend-
ment to its employees on December 21, 1984—just ten
days before the end of the “window” program. This an-
nouncement specifically referred to the July 2, 1984
announcement and implied that the IRS had approved
the Plan amendment as announced in July. This Decem-
ber announcement also did not disclose the waiver amend-
ment or the date of its adoption.
E. Mobil’s Violations of ERISA § 510.
Plaintiffs and their fellow “window retirees” left Mobil
on January 1, 1985, believing that the Plan amendment
announced by Mobil the previous July had been approved
by the IRS and without knowing that the true Plan
amendment had been made in September 1984. Plaintiffs
also retired not knowing of their right under the Plan
amendment to apply for a waiver of the $450,000 re-
quirement. Had plaintiffs known of the IRS rejection,
they, through their unions and attorneys, would have
learned that their rights to the lump sum benefit under
the $250,000 test had been “grandfathered in” by the
REA. Similarly, had plaintiffs known of the right to
apply for a waiver, each would have done so, instead of
forfeiting his job—especially if provided information
about the purpose and intended operation of the waiver
clause.
|
7
Mobil never did announce the true Plan amendment in
the form adopted in September 1984. Instead, in October
1985, Mobil announced the “‘waiver clause,” without spec-
ifying when it had been adopted and without explaining
that it was part of the threshold amendment. Mobil made
this announcement only to then-current employees. Plain-
tiffs did not discover Mobil’s fraudulent conduct until
late 1988, as a result of discovery and trial in a case
brought by one of the “window retirees” in Colorado."
Il. COUNTERSTATEMENT OF PROCEEDINGS.
Plaintiffs brought this action on July 7, 1989, alleging
that Mobil’s conduct violated the Age Discrimination in
Employment Act (“ADEA”) and state law. Plaintiffs
also asserted that if their state law claims were pre-
empted by ERISA, then Mobil’s conduct constituted a
violation of ERISA, specifically § 510.
Mobil filed dispositive motions on all claims, including
a motion to dismiss plaintiffs’ ERISA claims on grounds
that plaintiffs were not “participants” seeking to recover
benefits under ERISA § 502, 29 U.S.C. § 1132, and they
therefore lacked standing to sue under ERISA. On June
22, 1990, the District Court granted summary judgment
for Mobil on the ADEA claims, finding those claims
barred by statutes of limitations. The trial court dis-
missed the state law claims based on ERISA preemption,
1 The Colorado action, denominated Mitchell v. Mobil Ow Corp.,
Civil Action No. 86-Z-585, asserted claims for violation of the Age
Discrimination in Employment Act, of ERISA, and of state law.
Mitchell’s theory was that Mobil’s July 2, 1984 announcement itself
worked a “constructive discharge” of Mitchell. Although Mitchell
also offered evidence of Mobil’s fraudulent conduct after the July 2,
1984 announcement—solely as a means of showing that the an-
nouncement was willful and intentional—he did not claim at trial
that his retirement had been fraudulently procured. Ultimately, his
“constructive discharge” theory failed under both ADEA and
ERISA. Mitchell v. Mobil Oil Corp., 896 F.2d 463 (10th Cir.), cert.
denied, 111 S.Ct. 252 (1990).
8
and it ruled that plaintiffs did not have standing to sue
as “participants” under ERISA § 502(a).
The Fifth Circuit affirmed the ADEA ruling and the
ERISA preemption ruling, but reversed and remanded
the district court’s dismissal of plaintiffs’ ERISA claims.
Christopher v. Mobil Oil Corp., 950 F.2d 1209 (5th Cir.
1992). The Court found that dismissal on the pleadings
of the contingent ERISA claims. was premature, as
plaintiffs’ allegations indicated that they may have been
discharged in violation of § 510 and that, but for Mobil’s
nondisclosures, they would be covered employees with
standing to sue under § 510. The Fifth Circuit observed
that it was possible plaintiffs could prove facts that
would establish standing under ERISA § 510. The Fifth
Circuit also noted that plaintiffs had sought reinstate-
ment on their ADEA claims, and did not affirmatively in-
dicate that reinstatement was not also sought under their
ERISA claims.
Upon remand, plaintiffs have amended their Complaint,
asserting claims under § 510 of ERISA. They allege that
Mobil fraudulently procured their involuntary discharges,
by interfering with their ERISA-protected right to re-
ceive the lump sum benefit under the $250,000 test, by
inducing them to believe that they could exercise their
right to the lump sum only by giving up their jobs, and
by concealing from them and thus preventing them from
exercising their right under the Plan to apply for a
waiver of the $450,000 requirement. Plaintiffs seek
equitable relief pursuant to ERISA § 502(a)(3) in the
form of a “make whole” remedy. The case is now pro-
ceeding in the District Court for the Eastern District
of Texas.
REASONS FOR DENYING THE WRIT
(1) The means by which a former employee may estab-
lish or prove his standing, as articulated by the Fifth
Circuit’s decision in this case, are consistent with the
9
statutory definition of “participant” under ERISA § 3(7)
and are not inconsistent with any applications of that
definition by this Court or any of the other circuits.
(2) The Fifth Circuit’s decisien on standing does not
threaten the certainty or uniformity of ERISA plan
administration.
(3) Review of the Fifth Circuit’s decision would be
premature. The grounds for standing recognized by the
Fifth Circuit require proeef of an ERISA § 510 claim that
in and of itself caused plaintiffs to cease being “current
employees.” Standing here is not based on a mere claim
or allegation of standing. Ultimately, plaintiffs may or
may not establish standing in the District Court, but in
any event the proper time for review by this Court would
be after the lower courts have fully adjudicated the issue.
(4) If the Court were to review the Fifth Circuit’s
decision on standing purely as a legal formulation, it
would find, again, that the formulation is not inconsist-
ent with any prior decisions of this Court or of the other
circuits; however, the principles articulated by the Fifth
Circuit have not been significantly developed by the lower
courts. In fact, in related litigation, the District Court
for the District of Colorado on July 21, 1992 certified
the very issue presented here for interlocutory review by
the Tenth Cireuit Court of Appeals under 28 U.S.C.
§ 1292(b). [32a.]
I. THE CONTROLLING STATUTORY PROVISIONS.
ERISA is comprehensive remedial legislation intended
to provide the full range of legal and equitable remedies
to redress and prevent violation of its provisions. S.Rep.
No. 93-127, 93d Cong., 2d Sess., Reprinted in 1974 U.S.
Code Cong. and Ad. News at 4871. As pertinent here,
standing to bring civil actions to enforce ERISA rights
and to redress violations is afforded to a “participant”
of an employee benefit plan. ERISA § 502(a) (1) & (3),
lle
10
29 U.S.C. § 1182(a) (1) & (3). A participant, as defined
by ERISA § 3(7), is “any employee or former employee
. who is or may become eligible to receive a benefit
of any type from an employee benefit plan.” (emphasis
added). 29 U.S.C. § 1002(7).
Under § 3/7), current employees who are eligible or
who in the future may become eligible for plan benefits
are “participants” for standing purposes. A former em-
ployee “may become eligible for benefits,” and is therefore
a “participant,” if he has a “reasonable expectation of
returning to covered employment” or a “colorable claim
to vested benefits.” Firestone Tire and Rubber Co. v.
Bruch, 489 U.S. 101, 117 (1989); Kuntz v. Reese, 785
F.2d 1410, 1411 (9th Cir. 1986).
In relevant part, ERISA § 510 provides:
It shall be unlawful for any person to discharge...
a participant . . . for exercising any right to which
he is entitled under the provisions of an employee
benefit plan [or] this Subchapter... or for the pur-
pose of interfering with the attainment of any right
to which such participant may become entitled under
the plan [or] this Subchapter. . . . 29 U.S.C. § 1140.
Mobil contends that a former employee cannot be a
“participant” under this or any other provision of ERISA
if he has received all the benefits he earned through the
date he left “covered employment”—regardless of whether
his departure was caused by his employer’s violation of
$510. Mobil asserts that the only “exception” to this
“rule” is where the former employee asks his employer
to reinstate him before he sues under ERISA. Under that
“exception,” the presuit request for reinstatement, ac-
cording to Mobil, may represent a “reasonable expecta-
tion of returning to covered employment,” but only if
the reinstatement would allow the employee to “satisfy
eligibility requirements” for a benefit not satisfied before
his wrongful discharge.
! |
11
These are the “rule” and the “exception”? Mobil urged
below and which it advances on its Petition. But neither
the decisions of this Court nor of the circuits support the
“rule” or the “exception.”
Il. THE FIFTH CIRCUIT’S DECISION IS CONSIST-
ENT WITH FIRESTONE AND THE ONLY INTER-
PRETATION OF FIRESTONE CONSISTENT WITH
SECTION 510.
Under Mobil’s argument, many persons who might be
harmed by conduct proscribed by § 510 would lack stand-
ing to sue under that section. Any employee discharged
for exercising his right to a fully vested ERISA benefit
necessarily would have already received the vested bene-
fit. He would no longer have a “colorable claim for
vested benefits.”” He would not have a “reasonable expec-
tation of returning to covered employment” to “attain
eligibility for the benefit’”’ because he had already obtained
eligibility. Also, his expectation of returning to covered
employment could be defeated by the employer or by cir-
cumstances entirely beyond the participant’s control (e.g.
if the employer goes out of business), making his request
for reinstatement “unreasonable.”
To illustrate, an employer offering a health plan and
maternity leave as its only ERISA benefits might inten-
tionally discharge a female worker immediately after her
return from maternity leave, for exercising her ERISA
rights. At the time of her discharge, she had received all
earned and vested benefits, yet her discharge is obviously
violative of § 510. She would lack standing, according to
Mobil, however, because she would have no claim, color-
able or otherwise, for ‘“‘vested benefits’ and no expecta-
tion of attaining eligibility for a vested benefit in the
future. Additionally, if the circumstances of her dis-
charge or events subsequent to the discharge made her
reinstatement unlikely or an “unreasonable expectation,”
then she would lack standing on this ground as well.
Such a construction of Firestone would vitiate § 510
and allow the employer, through his own conduct viola-
12
tive of § 510, to defeat the employees’ standing to remedy
the violation. The Fifth Circuit recognized this, and thus
rejected Mobil’s restrictive interpretation of Firestone—
the same interpretation advanced in its petition here. In
doing so, the court used the plaintiff in /ngersoll-Rand
Co. v. McClendon, 111 8.Ct. 478 (1990), as an example,
not unlike the female employee discharged after return-
ing from maternity leave:
The Supreme Court’s recent McClendon decision held
that |Section 510] would foreclose the development of
any state law cause of action for wrongful termina-
tion to prevent vesting of pension benefits. ... The
implication of the Court’s holding that the discharged
employee must look solely to ERISA for his remedy
is that he would have standing to do so. Neverthe-
loss, it is not readily apparent that he would have
standing under the construction of /irestone urged
by Mobil; he would be a former employee lacking
both a claim for vested benefits and (unless he re-
cuested reinstatement) a reasonable expectation of
returring to covered employment. It would be un-
usual if in that situation his ability to assert a claim
at all turned on whether or not his requested relief
included reinstatement; it would seem more logical
to say that but for the employer’s conduct alleged to
be in violation of ERISA, the employee would be a
current employee with a reasonable expectation of
receiving benefits, and the employer should not be able
through its own malfeasance to defeat the employee’s
standing. 950 F.2d at 1221 (citations omitted).
The Fifth Circuit recognized that, at the time of the
alleged $ 510 violation, each of these plaintiffs were “par-
ticipants” in Mobil’s Retirement Plan, and their standing
to sue for that alleged violation cannot be defeated by
the violation itself. Either their standing is to be deter-
mined as of time of the wrongful acts, i.e. when they
were still “current employees” and thus “participants,”
or they must be treated in law as if they had never left
covered employment.
i3
Stated another way, if plaintiffs can prove the § 510
claims they allege, then they—as a matter of law—aave
continued to earn or accrue vested benefits, i.e., addi-
tional pension accumulations, which were not paid to
them. Accordingly, they would then have claims for
vested benefits not paid. Also, plaintiffs would then have
more than merely a “reasonable expectation of returning
to covered employment.” They would have proven that
they never should have lost their jobs in the first place.
II]. THE FIFTH CIRCUIT’S OPINION DOES NOT CRE-
ATE STANDING BY A MERE ALLEGATION OR
CLAIM OF STANDING.
Mobil’s petition misapprehends an important aspect of
the Fifth Circuit’s decision in this case. The Fifth Cir-
cuit held that plaintiffs may establish standing to sue
under § 510 only if they prove that their status as “for-
mer employees” was the result of a § 510 violation and
not the result of their own actions. See especially, 950
F.2d at 1222. In other words, plaintiffs are required to
show that their apparently conscious decision to take early
retirement was in fact a fraudulently procured discharge
in which plaintiffs’ “conscious choice” was effectively
negated by fraud. Proof of such fraud is required to
render the “early retirements” truly involuntary in the
same sense that the outright firing in McClendon was
involuntary.
Thus, plaintiffs’ standing is not established by a mere
claim of fraudulent discharge. It requires proof of the
violation :
i'T\ be standing question and the merits of an em-
ployee’s claim are unavoidably intertwined to some
degree; whether a plaintiff has standing to assert
ERISA viehts may depend upon whether he can
es ublish a discharge or some other conduct in viola-
ion yf “RISA, but for which he would have standing.
959 ¥.2d at 1222 (emphasis added).
14
Thus, the Fifth Circuit did not run afoul of the princi-
ples in Firestone that plaintiffs either are or are not “par-
ticipants” and that they cannot establish their status as
“participants” by merely alleging or claiming that status.
Here, the plaintiffs either are or are not participants—
depending upon whether they actually prove that they
would not have left covered employment but for Mobil’s
fraud in violation of § 510.
Requiring proof of an underlying violation as a pre-
requisite to standing, so that standing cannot be deter-
mined except upon the merits of the case, is not foreign
to the law. Gladstone, Realtors v. Bellwood, 441 U.S. 91,
n.31 (1979) (“it sometimes remains to be seen whether
the factual allegations of the complaint necessary for
standing will be supported adequately by the evidence
at trial.”) ; Barrett Computer Services, Inc. v. PDA, Ine.,
884 F.2d 214, 218-19 (5th Cir. 1989) (“... in cases in
which the merits of the claims asserted are intertwined
with the jurisdictional issue of standing challenges to
standing are frequently resolved in summary judgment
proceedings . . . or at a trial on the merits.” ) See also,
Henry v. Black & Decker Inc., 779 F. Supp. 778, 784, n.4
(D.N.J. 1991).
In this case, the merits of respondents’ ERISA claim
are inextricably intertwined with the question of stand-
ing. The Fifth Circuit, in fact, held that: “[wle em-
phasize that we have not determined that appellants will
be able to establish a violation of $510, only that they
should be allowed to do so.” [25a.]
15
IV. THE FIFTH CIRCUIT’S OPINION DOES NOT
ALTER THE STATUTORY DEFINITION OF “PAR-
TICIPANT,” BUT DOES RECOGNIZE THAT THE
PROOF REQUIRED TO MEET THE DEFINITION
DIFFERS DEPENDING UPON THE NATURE OF
THE ERISA CLAIM ASSERTED.
Judicial interpretation of ERISA standing has devel-
oped, not under § 510, but in the context of claims for
breach of plan obligations—failure to provide plan docu-
ments,” denial of benefits,* or failure to meet fiduciary
obligations. Unlike § 510 claims, such claims arise from
the contractual rights created by benefit plans and have
their genesis in pre-ERISA jurisprudence: prior to
ERISA, actions challenging denial of benefits and other
2 29 U.S.C. §§ 1182(a)(1)(A) and (C); see, e.g., Firestone Tire
and Rubber Company v. Bruch, 489 U.S. 101; Winchester v. Pension
Committee, 942 F.2d 1190 (7th Cir. 1991); Flick v. Borg-Warner
Corp., 892 F.2d 285 (3d Cir. 1989); Kuntz v. Reese, 785 F.2d 1410
(9th Cir. 1986); Saladino v. 1.L.G.W.U. Nat'l Retirement Fund,
754 F.2d 473 (2d Cir. 1985) ; Nugent v. Jesuit High School of New
Orleans, 625 F.2d 1285 (5th Cir. 1980); Buchanan v. Foster Elec.
Co., 1989 WL 157340 (N.D. Ill. 1989); Hager v. Veco Corp., 1
Employee Benefits Cas. (BNA) 1827 (N.D. Il. 1979).
$29 U.S.C. § 11382(a)(1)(B); see, e.g., Firestone v. Bruch; Boren
v. Southwestern Bell Telephone Co., Inc., 933 F.2d 891 (10th Cir.
1991); Teagardner v. Republic-Franklin, Inc. Pension Plan, 909
F.2d 947 (6th Cir. 1990); Flick v. Borg-Warner Corp., 892 F.2d
285; Yancey v. American Petrofina, Inc., 768 F.2d 707 (5th Cir.
1985) ; Freeman v. Jacques Orthopaedic and Joint Implant Surgery,
721 F.2d 654 (9th Cir. 1983); Deller v. Portland General Elec. Co.,
727 F. Supp. 1369 (D. Or. 1989).
#29 U.S.C. §§ 1109, 1132(a)(2); see, e.g., Flick v. Borg-Warner
Corp., Sommers Drug Stores Co. Employee Profit Sharing Trust v.
Corrigan, 883 F.2d 345 (5th Cir. 1989); Amalgamated Clothing &
Textile Workers Union, AFL-CIO v. Murdock, 861 F.2d 1406 (9th
Cir. 1988) ; Stanton v. Gulf Oil Corp., 792 F.2d 432 (4th Cir. 1986) ;
Kuntz v. Reese; Joseph v. New Orleans Elec. Pension & Retirement
Plan, 754 F.2d 628 (5th Cir. 1985) ; Gilquist v. Becklin, 675 F. Supp.
1168 (D. Minn. 1987).
1d
pension plan rights were governed by principles of con-
tract law. Firestone, 489 U.S. at 112.
The conduct prohibited by § 510 is not merely the fail-
ure to meet plan obligations; a § 510 claim requires in-
terference with the employment relationship, with a spe-
cific intent to prevent attainment or to interfere with the
exercise of a right under ERISA or an ERISA-governed
plan. Gavalik v. Continental Can Co., 812 F.2d 834, 851-
52 (3rd Cir. 1987); Zipf v. American Tel. & Tel. Co.,
799 F.2d 889, 893 (3rd Cir. 1986). Thus, claims alleging
violation of $510 are more akin to common law actions
in tort for wrongs to the employment relationship. See,
Woolsey ». Marion Laboratories, Inc., 934 F.2d 1452,
1461 (10th Cir. 1991) (recognizing that § 510 “was de-
signed to protect the employment relationship which gives
rise to an individual’s pension rights.”); Vogel v. Inde-
pendeiice Federal Savings Bank, 692 F.Supp. 587, 595
(D.Md. 1988) (§ 510 creates the statutory equivalent of
tortious interference claim) ; see also, Vogel, 728 F. Supp.
1210, 1218 n.18 «(D. Md. 1990).
Section 510 was enacted to prevent interference with
the attainment or exercise of any right or benefit to
which a participant may become entitled, including the
opportunity to accrue additional benefits through contin-
ued employment. See, e.g., Conkwright v. Westinghouse
Elec. Corp., 933 F.2d 231, 236 (4th Cir.-1991). And
since the prohibitions of § 510 are not limited to conduct
that result in deprivation of benefits, but reaches as well
conduct that harms the employment relationship, a § 510
plaintiff need not present a claim for benefits at all.
Zipf, 799 F.2d at 898; see also, McClendon, 111 S.Ct.
at 486.°
5 Mobil cites Massachusetts Mut. Life Ins. Co. v. Russell, 473 US.
134 (1985) for the proposition that only “benefits” are recoverable
on a claim under ERISA. Petition at 16. Russell held that under
§ 1132(a) (2), an individual may bring a § 1109 suit for breach of
fiduciary duty to recover on behalf of the plan, but not for losses he
RP oA
17.
It is therefore not surprising that a wrongfully dis-
charged employee may prove that he has a “colorable
claim for vested benefits” and thus standing by a showing
that is different from the showing required a plaintiff
suing for the denial of benefits or for plan information.
The § 510 plaintiff may be considered a “current em-
ployee,” as a matter of law, or his standing as a “partici-
pant” may be determined as of the time the tort was
committed. He may prove that he should never have lost
his job, and upon such proof, establish a claim for vested
benefits he has earned in law though not in fact.
This does not mean that the statutory definition of
“narticipant” is different in a § 510 case, but it does
mean that the proof required to meet the definition may
indeed be different in a § 510 context than in a benefits
denial context.
The same result obtains under the other prong of the
Firestone formulation, i.e., whether the “former” em-
ployee has a “reasonable expectation of returning to cov-
ered employment.” The fact that a § 510 plaintiff does
not precede his suit by asking his employer to rehire him
cannot defeat his standing to bring an ERISA § 510
claim.® Reinstatement, whether through an informal, pre-
suit request for reemployment or otherwise, is nota pre-
has personally incurred. The majority opinion in Russell states that
the Court was not considering whether any other ERISA provision
—such as § 510-—-authorized recovery of extracontractual relief.
Vogel, 692 F. Supp. at 595, citing Massachusetts Mut. Life Ins. Co.
v. Russell, 473 U.S. at 139, n.5, 105 S.Ct. at 3088 n.5; see also, Vogel,
728 F. Supp. at 1218.
® Here, as the Fifth Circuit noted, respondents did request
reinstatement in connection with their age discrimination claim,
indicating that respondents “do desire court-ordered reinstatement.”
[2la.] On remand, they have also requested reinstatment on their
ERISA §510 claims—-which defeats Mobil’s argument against
standing in this case in any event. See, Mitchell, 896 F.2d at 474;
Christopher, 950 F 2d at 1223.
18
requisite to a cause of action under § 510.7. And the rem-
edies provided by $ 510 were designed to be administered
by the courts, not by the employer or the plan adminis-
trator. Zipf v. American T & T, 799 F.2d at 892, citing
2 Legislative History of the Employee Retirement Income
Security Act of 1974, 1641-42 (1976).°
Indeed; given the nature of the conduct actionable under
§ 510, a pre-suit request to be rehired is likely an exer-
cise in futility.’ Where employment has terminated be- -
cause of conduct in violation of § 510, reinstatement may
be a practical impossibility due to the former employee’s
age, illness or injury (whether related to the prohibited
conduct or not), hostility, or dissolution of the employer’s
business. If the employee asks the employer for reinstate-
ment, and the employer rejects the request, saying there
is “no chance” of reinstatement, then can the employee
ever prove a “reasonable expectation of returning to cov-
ered employment?”
The Fifth Circuit’s opinion in this case recognizes, in
effect, that “equitable” or constructive reinstatement is
the only realistic alternative in such cases. Section 510
7 See, e.g., Berger v. Edgewater Steel Co., 911 F.2d 911, 922 (3rd
Cir. 1990), cert. denied, 111 S. Ct. 1310 (1991); Saporito v. Com-
bustion Engineering, Inc., 843 F.2d 666, 672 (3rd Cir. 1988),
vacated and remanded, 489 U.S. 1049, on remand, No. 87-5144, slip
op. (3rd Cir. June 29, 1989); Fischer v. Philadelphia Electric Co.,
1991 WL 36215, at p. 5; Conkwright, 739 F. Supp. 1006, aff’d, 933
F.2d 231 (4th Cir. 1991); Nemeth v. Clark Equipment Co., 677
F. Supp. 899, 908 (W.D. Mich. 1987); Garry v. TRW, Inc., 603
F. Supp. 157, 164 (N.D. Ohio 1985); Folz v. Marriott Corp., 594
F. Supp. 1007, 1016 (W.D. Mo. 1984); Bittner v. Sadoff & Rudoy,
490 F. Supp. 534, 536 (E.D. Wis. 1980) ; Calhoun v. Falstaff Brewing
Corp., 478 F. Supp. 357, 360 (E.D. Mo. 1979).
‘In Zipf, the Third Circuit held that the plaintiff was not required
to submit her § 510 claim (which included a request for reinstate-
ment, back pay and other restitutionary relief) to the plan for
administrative determination. In so holding, the court drew a dis-
tinction between a claim under §510 and contractual claims for
yenefits or other contract-based rights under other provisions of
ERISA. 799 F.2d at 892.
19
contemplates that federal courts will fashion equitable,
“make whole’ remedies—in effect treating the wrong-
fully discharged employee as though he had never been
terminated. See, Folz v. Marriott, 594 F.Supp. at 1015;
Bittner v. Sadoff & Rudoy Industries, 490 F.Supp. at
536 (under the equitable power afforded the courts by
ERISA, the court is not limited in its ability to award
relief to mere restoration of pension plan benefits, but
has equitable power to put plaintiff “back into the posi-
tion he enjoyed before the discharge.”) ; accord, Fleming
v. Ayers & Associates, 948 F.2d 993, 998 (6th Cir. 1991),
citing Albemarle Paper Co. v. Moody, 422 U.S. 405,
418-19.
This Court’s decision in McClendon reaffirms the avail-
ability of the full panoply of equitable remedies to redress
$510 violations. Although McClendon did not address the
question of standing, this Court held that where a former
employee has been discharged in order to defeat pension
rights and he seeks—not benefits—but lost wages and
other compensatory relief, his remedy is not under state
law but under ERISA § 510:
There is no basis in § 502(a)’s language for lim-
iting ERISA actions to only those which seek “pen-
sion benefits.” It is clear that the relief requested
here [including loss wage» and other “extracontrac-
tual” relief] is well within the power of the federal
courts to provide.
111 S.Ct. at 486.°
McClendon requested neither an award of unpaid,
vested benefits nor reinstatement of his employment. He
9 The Fifth Circuit did not hold or even imply that McClendon
overruled or “superseded sub silentio” Firestone. The Fifth Circuit
merely reasoned that Mr. McClendon would have standing to sue
under the ERISA claim this Court said he possessed—under § 510.
That conclusion merely buttressed the circuit court’s construction
of Firestone in the context of a $510 claim. The Fifth Circuit's
opinion is consistent with both McClendon and Firestone, and these
two opinions are consistent with each other.
thes the ve
20
had neither a colorable claim for vested benefits nor a
reasonable expectation of returning to covered employ-
ment, but he nonetheless had suffered an injury for which
$ 510 provided a remedy.
McClendon, like the plaintiffs here, could establish his
standing if he proved his § 510 claim. Either his stand-
ing was to be determined at the time the tort (i.e., the
$510 violation) occurred, or, upon proof of the violation,
he could demonstrate his status in law as a “current
employee.” And even as a former employee in fact, upon
proof of the violation, he could establish a claim for un-
paid benefits and far more than a mere “expectation of
returning to covered employment.” '°
In sum however the Fifth Circuit’s standing decision is
analyzed, it is consistent with the definition of ‘“partici-
pant” under ERISA § 3(7), and it is not inconsistent with
Firestone or, as demonstrated in the next section, any of
Firestone’s progeny in the other circuits.
V. THE FIFTH CIRCUIT’S DECISION IS NOT INCON-
SISTENT WITH PRECEDENT IN OTHER CIR-
CUITS.
The Fifth Circuit’s analysis of standing in this case is
not inconsistent with Mitchell v. Mobil Oil Corp., 896 F.2d
463 (10th Cir.), cert. denied, 111 S.Ct. 252 (1990). or
With the decisions of other circuits on ERISA standing.
The requirement that plaintiffs here prove they were
involuntarily discharged as a result of fraudulent misrep-
resentations distinguish the cases Mobil cites. As the
Fifth Circuit observed:
|Plaintiffs’} allegations do at least suggest an
assertion that they were constructively discharged in
violation of section 510 and that but for Mobil’s non-
See, e.g., Folz v. Marriott, 594 F. Supp. at 1016; Saporito v.
Combustion Engineering, Inc., 843 F.2d at 672: Bittner v. Sadoff &
Rudoy Industries, 490 F. Supp. at 536.
an VAR cal lay A PE i Dar ORE
21
disclosure they would be covered employees with
standing to challenge the plan amendment. They
allege deceptive conduct by Mobil that might be found
to vitiate the voluntariness of their decision to retire
and that might distinguish the present case from
both Yancy and Mitchell.
Christopher, 950 F.2d at 1223. As the court adduced, it
is the involuntariness of plaintiffs’ termination that may
and, with proof, will distinguish this case from those
which Mobil claims are inconsistent with the Fifth Cir-
cuit’s opinion. See and compare, Yancy v. American
Petrofina, Inc., 768 F.2d 707, 709 (5th Cir. 1985). The
Mitchell and Yancy plaintiffs exercised a knowing and
legally voluntary (albeit unwanted! choice to retire and
accept.a lump-sum payment of their vested benefits in
lieu of continuing employment and later challenging their
employer’s conduct. See especially, 950 F.2d at 1227. That
defeated their standing. Here, the plaintiffs made no
such knowing choice. They were defrauded out of their
jobs—the legal equivalent of an outright firing. But that
is what they must prove in order to have standing.
Similarly, in Stanton v. Gulf Oil Corp., 792 F.2d 432
(4th Cir. 1986) and in Freeman v. Jacques Orthopaedic
& Joint Implant Surgery Medical Group, Inc., T24 F.2d
654 (9th Cir. 1983)—both pre-Firestone cases—the issue
was whether an employee who had never been a “partici-
pant” in the ERISA plan from which he was claiming
benefits could be treated as one if he claimed that he
would have become a “participant” but for the employer’s
alleged fraud. Aside from the fact that neither case is a
$510 discharge case, both make the very point articu-
lated in Firestone and followed by the Fifth Circuit in
this case: a person either is or is not a “participant.” A
mere allegation or claim that he would have had such
status but for his employer’s actions (or any other cir-
eumstance for that matter) does not establish standing.
Proof of the actual status is required. See also and com-
22
pare, Winchester v. Pension Committee, 942 F.2d 1190,
1193 (7th Cir. 1991) (mere assertion of claim to re-
instatement is not sufficient to establish a “reasonable ex-
pectation of returning to covered employment” and thus
standing) ; Teagardener v. Republic-Franklin ] ncorporated
Pension Plan, 909 F.2d 947, 949-50 (6th Cir. 1990) (for-
mer employees not entitled to additional benefits accruing
from termination of retirement plan after they voluntarily
retired and ceased to be “participants” ),
None of the cases cited by Mobil are inconsistent with
the Fifth Cireuit’s decision in this case.
VI. THE CIRCUIT COURTS HAVE ONLY RECENTLY
BEGUN TO ADDRESS THE ISSUE PRESENTED
HERE.
As the Fifth Circuit’s decision reveals, the circuits
have only begun to articulate the principles of standing
applied below. In Berger v. Edgewater Steel Co., 911
F.2d 911, 922 (3rd Cir. 1990), cert. denied, 111 S. Ct.
1310 (1991), the Court followed prior law in holding that
the former employees did not have Standing to sue for
the denial of additiona! benefits where they had retired
and accepted all their earned benefits in a lump sum and
had not asked for reinstatement. But on the $ 510 claim,
the court held:
Of course, we recognize that if the employees were
constructively discharged ‘as they do claim, they
would not necessarily have to return to work in order
to have standing to claim a make whole remedy.
The Third Circuit has voiced similar concepts in Saporito
v. Combustion Engineering, Inc., No. 87-5144, slip op. at
5 (3rd Cir. June 29, 1989), on remand, 489 U.S. 1049
(1989), after remand from this Court to reconsider stand-
ing in light of Firestone. On remand, the court reaffirmed
an even broader principle than that applied by the Fifth
Circuit in this case:
By its very nature a $510 claim will often involve
employees who claim that they did not receive benefits
23
because of the employer’s actions, and thus were de-
nied an opportunity to become participants in the
benefits. To require that the employees have the
status of participants where they allege that the em-
ployers’ acts effectively deprived them of such status
would undercut the provision |[i.e., § 510] and can-
not have been intended by Congress.
Other courts have reached the same result, but without
necessarily articulating the means of establishing stand-
ing in the same terms used as the Fifth and Third Cir-
cuits. See, e.g., Jones v. AT & T Co., 1992 WL 68266, at
5 (E.D. Pa. 1992); Fischer v. Philadelphia Elec. Co.,
1991 WL 36215 (E.D. Pa. 1991); Young v. AT & T
Transition Protecton Payment Plan, 1989 WL 675, at 1
(D.N.J. 1989) (former employee may maintain § 510
action where employer made false representations induc-
ing employee’s involuntary resignation and thereby de-
priving him of early retirement benefits available in plan
which was announced the day after his separation from
employment); Deller v. Portland General Elec. Co., 727
F.Supp. 1369, 13871 (D. Or. 1989) (plaintiffs who received
lump sum payment of vested retirement benefits upon
termination may state claim under § 510 by showing that
but for employer’s discriminatory conduct in calculating
termination dates they would have been employed and
eligible on date improved retirement benefits were made
available).
As mentioned earlier, the issue presented here has re-
cently been certified for interlocutory appeal under 28
U.S.C. § 1292(b)—at Mobil’s request—in the related case
of Raymond v. Mobil Oil Corp., Civil Action No. 88-Z-
2112, pending in the U.S. District Court for the District
of Colorado. In Raymond, a certified class action of
“window” retirees, the District Court ruled that the Fifth
Circuit’s decision in this case is not inconsistent with
Mitchell. If the Tenth Circuit grants Mobil’s petition for
immediate review, it will then rule on the issue. If the
Tenth Circuit were to reverse the District Court’s ruling,
then a conflict would exist between the circuits.
24
In the meantime, the ERISA $510 claims in this case
are now before the District Court and should be resolved
on their merits in due course. If plaintiffs establish their
Standing to the District Court’s satisfaction, the issue in
this case may return to the appellate courts—by which
time the Tenth Circuit and perhaps other circuits will
have also decided the issue. The lower courts should be
permitted to more fully develop the law on this issue
before this Court exercises its discretionary review juris-
diction. See also, Deeming v. American Standard, Ine.,
905 F.2d 1124, 1127 (7th Cir. 1990); Healy v. Axelrod
Const. Co. Pension Plan & Trust, 787 F. Supp. 838, 844-
45 (N.D. Ill. 1992) (noting that the “exact perimeters of
[Section 510] have not been fully developed judicially.” |
VII. THE FIFTH CIRCUIT’S OPINION DOES NOT CRE-
ATE “UNCERTAINTY” OR “INCONSISTENCY” IN
THE ADMINISTRATION OF ERISA PLANS.
Mobil contends that the Fifth Circuit’s standing analy-
sis will impair the “delicate balance” between the pro-
tection of employee benefits and the costs of administering
benefit plans. Mobil’s argument emphasizes only one
purpose of ERISA—to protect benefits—to the exclusion
of the purpose for which § 510 was enacted: protection of
the employment relationship that gives rise to the bene-
fits. West v. Butler, 621 F.2d 240, 245 (6th Cir. 1980) ;
Gavalik v, Continental Can Co., 812 F.2d 834, 851 (3rd
Cir. 1987); Garry v. TRW, Inc., 603 F.Supp. 157, 162
(N.D. Ohio 1985); Donahue v. Custom Management
Corp., 634 F.Supp. 1190, 1197 (W.D. Pa. 1986).
Congress viewed $510 as a crucial part of ERISA
because without it employers would be able to “circum-
vent the provision of promised benefits.” Ingersoll-Rand
Co. v. McClendon, 111 S.Ct. at 485 (1990). Section 510
was enacted “to prevent unscrupulous employers from
discharging or harassing their employees in order to
prevent them from obtaining their statutory or plan-based
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rights.” Zipf v. AT&T, 799 F.2d at 891, citing West v.
Butler, 621 F.2d at 244-46.
Mobil attempts to create a gap between preemption and
standing that was not intended by Congress. By its hold-
ing in McClendon, this Court reaffirmed that ERISA is
intended to provide a federal remedy for what previously
could only be litigated as a wrongful discharge claim
under state law. But this does not imply that employers
are now free to engage in fraud and concealment to pro-
cure the “retirement” of their employees with the intent
to deprive them of benefits or other rights under a plan.
Under Mobil’s analysis, as long as employers can dupe
employees into accepting payment of their currently ac-
erued benefits, immunity from $510 claims would be
guaranteed. And terminated employees, because of pre-
emption, would he left without state-law claims to redress
the employer’s misconduct.
Mobil would eviscerate the protections provided by § 510
in the name of administrative expense, legal predict-
ability, and certainty of p'an obligations. But the Fifth
Cireuit’s decision does not increase the legal or adminis-
trative burdens on ERISA plans or employers. The legal
obligation of the plan and the employer to employees under
§ 510 is to refrain from the conduct prohibited by § 510.
By definition, the means of proving “participant” status
recognized by the Fifth Circuit applies only to § 510
claims, and only to a limited, fact-specific subclass of § 510
cases—where the employer has taken prohibited action
against the employee and the prohibited conduct has itself
divested the emnloyee of his status as a current employee.
The opinion does not confer standing on every former
employee who has “second thoughts” about his early
retirement.
The Plan’s obligations to former employees remain un-
changed. Former employees asserting claims for denial
of benefits, for enforcemert of plan obligations, or for
92
yA ®)
refusal of plan information must continue to meet the
“colorable claim” or “reasonable expectation” tests estab-
lished by Firestone. Section 510 claimants must also meet
those tests. but they may do so by proof that the alleged
$510 violation did occur and that the violation is the
reason they are no longer current empioyees in fact.
CONCLUSION
For the foregoing reasons, the Petition should be denied.
Respectfully submitted,
WILLIAM E. TOWNSLEY RODNEY R. PATULA
TOWNSLEY, HANKS & (Counsel of Record)
TOWNSLEY, P.C. ELIZABETH C. MORAN
3550 Fannin Street MICHAEL G. BOHN
Beaumont, Texas 77701 BRADFORD J. LAM
(409) 832-3453 PRYOR, CARNEY & JOHNSON
A Professional Corporation
6200 South Syracuse Way, #400
Englewood, Colorado 80111
(303) 771-6200
July 27, 1992 Counsel for Respondents
APPENDIX
la
APPENDIX
Opinion of the United States Court of Appeals
for the Fifth Circuit, January 24, 1992
UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT
No. 90-4562
Jan. 24, 1992
GERALD W. CHRISTOPHER, CHARLES L. PRUNTY,
and BILLY G. TURNER,
Plaintiffs-A ppellants,
—vV.—
MoBIL OIL CORPORATION, RETIREMENT PLAN OF
MoBIL OIL CORPORATION and REx ADAMS.
Defendants-A ppellees.
Appeal from the United States District Court
for the Eastern District of Texas
Before:
HENLEY,* KING, and GARWOOD,
Circuit Judges.
GARWOOD, Circuit Judge:
Appellants brought claims under the Age Discrimina-
tion in Employment Act (ADEA) and the Employee Re-
* Circuit Judge of the Eighth Circuit, sitting by designation.
2a
tirement Income Security Act (ERISA), as well as var-
ious common-law claims including fraud, civil conspiracy,
and breach of the employment contract, against their
former employer Mobil Oil Corporation, based on Mobil’s
1984 amendment of its employee benefit plan and alleged
failure to disclose to appellants all of the options available
under the amended plan. The district court granted
Mobil’s motion for summary judgment on the ADEA
claims on the grounds that the claims were time-barred
and that as a matter of law appellants were not construc-
tively discharged in violation of ADEA. The district
court also granted Mobil’s request for judgment on the
pleadings on appellants’ state law claims on the ground
that they were preempted by ERISA, and dismissed the
ERISA claims on the ground that because appellants
were not participants seeking to recover benefits from
a retirement plan, the court lacked jurisdiction over their
ERISA claims. We affirm in part and reverse and re-
maid in part.
Facts and Proceedings Below
The following facts are drawn from the parties’ sub-
missions of undisputed facts in connection with Mobil’s
motions for summary judgment, judgment on the plead-
ings, and dismissal.
Mobil provides retirement benefits for its employees
through a defined benefit plan, under which employees
receive a pension based on years of service, salary his-
tory, and life expectancy. Until 1977, the standard
method of receiving these pensions was in the form of
an annuity. In that year, however, Mobile [sic] added a
lump sum option, enabling certain employees to receive
the actuarial equivalent of their annuity, discounted at
five percent, in one payment following retirement. To
be eligible for the lump sum option, an employee had to
have either an accrued lump sum pension benefit, or a
net worth independent of the pension, equal to at least
3a
$250,000. Also, the employee was required to be at least
fifty-five years old.
On July 2, 1984, Mobil announced changes to the lump
sum option of the retirement plan, including (1) an in-
crease in the discount rate from 5% to 9.5%, to operate
prospectively, i.e., to be applied to all earnings after
January 31, 1985; (2) an increase in the eligibility thresh-
old from $250,000 to $450,000; and (3) a linking of the
new threshold to the Consumer Price Index. These
changes, which were announced as subject to Internal
Revenue Service (IRS) approval, would apply to all em-
ployees retiring after January 31, 1985; thus, employees
otherwise eligible to retire had a six-month window in
which they could retire subject to the lower threshold and
lower discount rate. The choice was a significant one for
employees who met the $250,000 threshold but who were
uncertain ever to meet the indexed $450,000 threshold
because, with market interest rates well above 5%, the
lump sum pensions were worth 40% more than the an-
nuities. Appellants, Gerald Christopher, Charles Prunty,
and Billy Turner, were among the approximately 1,100
Mobil employees who elected to take early retirement
during the 6-month window. All three submitted their
retirement notices between August and October 1984, and
retired as of January 1, 1985.
On July 16, 1984, Mobil sought a determination from
the IRS that the plan as amended continued to meet the
Internal Revenue Code’s requirements for favorable tax
treatment, including the requirement that pension plans
not “discriminate in favor of highly compensated employ-
ees.” 26 U.S.C. § 401(a) (4). In meetings in late Sep-
tember 1984, the IRS reviewing agent expressed concern
that the amended plan could result in benefits favoring
highly compensated employees, and indicated that he
might need to seek technical advice from Washington. In
response, Mobil adopted another plan amendment ailow-
ing Mobil, in its sole discretion, to waive the eligibility
|
da
threshold in individual! cases for valid cause shown. After
insertion of this provision, the IRS issued to Mobil a
favorable determination letter on November 23, 1984,
noting that continued qualification of the plan would de-
pend upon its effect in operation.
Mobil announced the IRS approval to its employees
on December 21, 1984, but did not notify its employees
of the waiver provision until well after expiration of the
six-month window—October 1985. Because of a 1985
IRS revenue ruling and subsequent pronouncements, Mo-
bil eventually entirely deleted the lump sum eligibility
threshold in 1986.
Appellants filed age discrimination charges against
Mobil with the Equal Employment Opportunity Commis-
sion (EEOC) on March 1, 1989. They alleged that Mo-
bil’s conduct in amending the plan and concealing the
Waiver provision was a concerted scheme to reduce its
work force. By purporting to increase the lump sum
threshold and concealing its awareness that applicable
tax law precluded that action, appellants charged, Mobil
induced hundreds of older employees into retirement with-
out the need to pay them an early retirement bonus. The
EEOC dismissed the charges as untimely filed. Appel-
lants then commenced this suit on July 7, 1989. They
alleged that Mobil’s conduct constituted age discrimina-
tion in violation of ADEA, 29 U.S.C. §§ 621 et seq., as
well as common-law fraud. civil conspiracy, unlawful in-
terference with contract rights, breach of the employ-
ment contract, negligence, and gross negligence. In the
event that appellants’ state law claims were held to be
preempted by ERISA, the complaint alleged in brief and
conclusory fashion that Mobil’s conduct violated ERISA,
apparently ERISA § 510, 29 U.S.C. § 1140, prohibiting
interference with an employee’s attainment of a right
under ERISA. For all claims, appellants sought the
wages and employment benefits they would have received
had they continued working until normal retirement age.
Va
On the ADLA claims, appellants also requested reinstate-
ment.
Mobil moved for summary judgment on the ADEA and
state law claims. The district court granted the motion,
finding that the ADIXA and state law claims were time-
barred, that appellants had not been constructively dis-
charged in violation of the ADEA, and that appellants’
claims of discrimination arose from changes in fringe
benefits available under a bona fide retirement plan, not
from discrimination in nonfringe aspects of employment,
and thus were not within the purview of the ADIZA ac-
cording to ADEA § 4(f)(2), 29 U.S.C. § 623(f) (2}.
Simultaneously, Mobil moved for judgment on the plead-
ings under I*ederal Rule of Civil Procedure 12(c) on the
state law claims on the ground that they were preempted
by ERISA, and dismissal under Federal Rules of Civil
Procedure 12(b) (1) & (6) of the contingent ERISA
claim on the ground that appellants were not “partici-
pants” seeking to recover benefits under ERISA § 502,
29 U.S.C. § 1132, depriving the court of jurisdiction. The
district court granted this motion as well.
Discussion
I. ADEA Claims
We first examine the district court’s grant of sum-
mary judgment on the ADEA claims on the ground that
they were time-barred. In reviewing a grant of sum-
mary judgment, all legitimate factual inferences pre-
sented by the record are drawn in favor of the party op-
posing the motion. Bozé v. Branstetter, 912 F.2d 801, 804
(5th Cir. 1990) (per curiam). We can uphold the sum-
mary judgment only if our review demonstrates that no
genuine issue of material fact remains and that the mov-
ing party is entitled
Id.
. , e
d to judgment as a matter of law.
It is not disputed that the applicable statutes of limi-
tations require an employee ‘o file an age discrimination
{ piO) §
————————— ee eee
6a
charge with the EEOC within 300 days after the alleged
unlawful practice occurred, 29 U.S.C. § 626(d) (2), and
to file a lawsuit within 3 years after the alleged unlaw-
ful practice occurred, 29 U.S.C. §§ 255(a), 626(e). Ap-
pellants argue, however, that a genuine issue of material
fact exists as to when their awareness of the facts con-
stituting the alleged age discrimination was sufficient to
commence the running of the limitations period. See
Pruect Production Co. v. Ayles, 784 F.2d 1275, 1279 (5th
Cir. 1986) (“[T]he statute does not begin to run until
the facts which would support a cause of action are ap-
parent or should be apparent to a person with reason-
ably prudent regard for his rights.” (quoting Reeb v.
Economic Opportunity Atlanta, Inc., 516 F.2d 924, 930
(5th Cir. 1975))). Specifically, they argue that Mobil’s
negotiation of a revised plan in October 1984 only came
to light in 1988 when counsel for another former em-
ployee, Porter Mitchell (Mitchell), suing Mobil in federal
district court in Colorado, discovered the correspondence
between Mobil and the IRS. It was only when this fact
became publicly known at the trial of Mitchell v. Mobil
Oil Corp. in December 1988,’ appellants argue, that they
nad any reason to know of Mobil’s concealment of the
1The alleged fraud was not part of Mitchell’s claims against
Mobil. He argued, rather, that the plan amendment itself consti-
tuted a constructive discharge and was a willful violation of the
ADEA. He also argued that Mobil had breached its fiduciary duties
under ERISA § 404, 29 U.S.C. § 1104, and had violated ERISA’s
anti-cutback provision, ERISA 204(g), 29 U.S.C. § 1054(g), by
retroactively limiting his right to the lump sum option, an accrued
benefit. The jury found in favor of Mitchell on his ADEA claim
and awarded him damages for back pay, front pay, and lost benefits.
The district court held in favor of Mitchell on the ERISA claims
as well, awarding him compensatory and liquidated damages. On
appeal, the Tenth Circuit reversed, holding that Mitchell had failed
to prove that Mobil’s proffered justification for the plan amend-
ment was a mere pretext for discrimination, and that Mitchell was
not a participant with standing to assert ERISA claims. Mitchell
v. Mobil Oil Corp., 896 F.2d 463, 471-74 (10th Cir.), cert. denied,
—— U.S. ——, 111 S.Ct. 252, 112 L.Ed.2d 210 (1990).
7a
waiver option. Appellants’ EEOC filing in March 1989
and their commencement of this suit in July 1989 would
both have been timely if the statute of limitations had
commenced running in December 1988.
Evaluating the appellants’ claim that the statute of
limitations did not commence until December 1988 re-
quires an analysis of the nature of their ADEA claim.
The ADEA forbids an employer to “discharge any in-
dividual or otherwise discriminate against any individual
with respect to his compensation, terms, conditions, or
privileges of employment, because of such individual’s
age.” 29 U.S.C. § 623(a) (1). A “discharge” within the
meaning of this section may be constructive if a reason-
able person in the employee’s position would have felt
compelled to resign under the circumstances. Bodnar v.
Synpol, Inc., 843 F.2d 190, 192 (5th Cir.), cert. denied,
488 U.S. 908, 109 S.Ct. 260, 102 L.Ed.2d 248 (1988).
An attractive early retirement offer, however, is not a
constructive discharge merely because it creates a strong
incentive to retire; an early retirement option can con-
stitute a constructive discharge only if the employee
shows that it sufficiently alters the status quo that each
choice facing the employee makes him worse off. Mitchell
v. Mobil Oil Corp., 896 F.2d 463, 467 (10th Cir.), cert.
denied, ——- U.S. ——, 111 S.Ct. 252, 112 L.Ed.2d
210 (1990) ; Bodnar, 843 F.2d at 193.
The gist of appellants’ prima facie ADEA claim is as
follows. The adoption of the 1984 plan amendment pre-
sented appellants with a choice between unfavorable op-
tions; they faced the choice of retiring within the six-
month window or staying on at Mobil but possibly for-
going eligibility for the lump sum payout. Either could
be regarded as less favorable than staying on at Mobil
until normal retirement age with the assurance of eli-
gibility for the lump sum payout, which was the “status
quo” when the amendment was adopted. The asserted
discriminatory character of the amendment to the plan
8a
arises from the fact that only employees over the age
of fifty-five were put to that choice. Employees under
fifty-five did not presently qualify for retirement, so al-
though the plan amendment may have defeated an ex-
pectation for them, they were not confronted with the
possibility of losing a benefit for which they were then
qualified. See Mitchell, 896 F.2d at 496.
This much of the ADEA theory was evident in July
1984 upon the initial announcement of the plan. The
unfavorable choice to which it put “window” employees
and its particular impact on employees over fifty-five
were both apparent on the face of the plan amendment.
Indeed, the theory outlined above was precisely Mitchell’s
claim against Mobil, accepted by the Tenth Circuit.
Mitchell filed a complaint with the EEOC on April 25,
1985, with no knowledge of Mobil’s alleged concealment
of the waiver provision. Moreover, another employee,
Frederic J. Raymond (Raymond), filed a similar charge
with the Ohio Civil Rights Commission and the EEOC
on May 10, 1985. Therefore, unless appellants can show
that Mobil’s alleged concealment adds a material element
to their ADEA claim, the statute of limitations should
have commenced running in July 1984.
Appellants have offered no theory under which the
alleged nondisclosure is a necessary element. They refer
us to the Fourth Circuit case of Stone v. University of
Maryland Medical System Corp., 855 F.2d 167 (4th Cir.
1988), for their argument that “where, as here, the em-
ployee surrenders his job as a proximate result of fraud
and deceit by the employer, the voluntariness of the re-
tirement or resignation is fundamentally vitiated.” Stone
is one of a series of cases where resignations have been
held to be involuntary based on an employer’s misrepre-
sentations about or nondisclosure of an employee’s rights.
Others include Covington v. Department of Health and
Human Services, 750 F.2d 937 (Fed. Cir.1984), and
Scharf v. Department of the Air Force, 710 F.2d 1572
(Fed.Cir.1983).
9a
We do not believe that these cases avail appellants,
however. As appellants’ phrasing of their argument re-
flects, the effect of a showing of fraud in these cases is
to render an otherwise voluntary choice involuntary.
Stone and related cases involve disputes in which public
employees were entitled to certain procedural protections
if they were to be terminated involuntarily; they were
required to show that their retirement was involuntary
to invoke the jurisdiction of the Merit Systems Protec-
tion Board or to establish a “deprivation” under the
due process clause. Here, by contrast, appellants allege
a constructive discharge arising from the choice to which
they were put by the plan amendment. To further argue
that the actual election made was involuntary because it
was based on incomplete information would be superflu-
ous; involuntariness is implicit in appellants’ argument
that they were coerced into early retirement by the
threatened removal of the lump sum option. Assuming,
arguendo only, that appellants’ allegations of nondisclo-
sure would serve to estop Mobil from raising in defense
the claim that appellants’ retirement was voluntary, nev-
ertheless the asserted nondisclosure does not form a ma-
terial part of appellants’ constructive discharge theory
that would prevent the statute of limitations from com-
mencing.
Appellants’ arguments that this Court should apply
equitable tolling or equitable estoppel fail for similar
reasons. These doctrines provide for tolling of the statute
of limitations when a plaintiff’s unawareness of his abil-
ity to bring a claim—either unawareness of the facts
necessary to support a discrimination charge or unaware-
ness of his legal rights—is due to defendant’s miscon-
duct. See Rhodes v. Guiberson Oil Tools Division, 927
F.2d 876, 878-79 (5th Cir.), cert. denied, —— U.S. ——_.
112 S.Ct. 198, 116 L.Ed.2d 158 (1991); Kale v. Com-
bined Insurance Co., 861 F.2d 746, 752 (1st Cir. 1988).
Here, the knowledge allegedly concealed from the employ-
ees was that they had a third option—to continue their
eid
10a
employment and apply for a waiver from the higher lump
sum requirement. Therefore, the facts as known to the
employees in 1984 actually gave them a better ADEA
claim than they would have had with full knowledge.
Whatever nondisclosures Mobil is guilty of would not
have lulled appellants into postponing assertion of their
rights; if anything, it would have made them more likely
to assert that they were constructively discharged.
Finally, appellants argue that although they knew in
1984 of the plan amendment and retirement window,
they were misled into belteving that they had no cause
of action by Mobil’s plausible justifications for its amend-
ment of the plan, 7.e., that the threshold was changed to
adjust for intervening inflation and that the discount
rate was raised to align Mobil’s practice with that of its
competitors and to more realistically reflect current in-
terest rates. In other words, appellants contend that
although the discriminatory effect of the amendment was
apparent in 1984, it was only upon learning of the con-
cealment of the waiver option that they had reason to
believe the plan amendment was actuated by age bias and
that the alleged concerted scheme to reduce the work
force began to take shape.
We find this argument unpersuasive as well. First,
we fail to see how the deception alleged by appellants
calls into question Mobil’s proffered justifications for the
plan amendment. The evidence does not create a genuine
dispute as to the factual accuracy of Mobil’s proffered
justifications. Even if appellants’ allegations are true
respecting Mobil’s having deceived its employees about
the validity under applicable tax law of the plan amend-
ment and about the waiver provision, there is no evidence
showing that Mobil’s announced reasons for the plan
amendment were deceptive. This is an issue on which
appellants would have had the burden at trial, and they
were hence required to meet Mobil’s summary judgment
motion with summary judgment evidence that would sus-
lla
tain a jury finding in their favor on the issue. See
Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548,
91 L.Ed.2d 265 (1986); Blumberg v. HCA Management
Co., Inc., 848 F.2d 642, 644 (5th Cir.1988), cert. denied,
488 U.S. 1007, 109 S.Ct. 789, 102 L.Ed.2d 781 (1989).
In any event, a showing of deception as to motive sup-
ports equitable estoppel only if it conceals the very fact
of discrimination; equitable estoppel is not warranted
where an employee is aware of all of the facts constitut-
ing discriminatory treatment but lacks direct knowledge
of the employer’s subjective discriminatory purpose.
Thus, where an employee was told that he was being dis-
charged because industry economic downturn required
reduction of the work force, and was told that he would
be considered for re-hiring, we applied equitable estoppel
to hold that limitations on his ADEA claim did not com-
mence until he learned that he had been replaced by a
younger employee. Rhodes, 927 F.2d at 880-82; see also
Coke v. General Adjustment Bureau, Inc., 640 F.2d 584,
595 (5th Cir.1981) (en bane) (employer’s misrepresenta-
tion that employee would be reinstated induced foresee-
able forebearance in filing ADEA claim) ; Meyer v. Riegel
Products Corp., 720 F.2d 303, 307 (3d Cir.1983) (em-
ployer’s explanation to employee that he was dismissed
as part of a reorganization furnished grounds for equi-
table tolling in an ADEA suit until discharged employee
learned that a younger replacement had been hired), cert.
dismissed, 465 U.S. 1091, 104 S.Ct. 2144, 79 L.Ed.2d 910
(1984). By contrast, where an employee knew that he
was discharged and replaced by a younger employee, his
allegation that the company concealed from him the true
reason for his discharge and that it was not until sub-
sequent hirings that the “pattern of age discrimination”
became evidence was held insufficient to support equitable
estoppel. Pruet Production Co., 784 F.2d at 1279-80;
accord Chapman v. Homco, Inc., 886 F.2d 756, 758 (5th
Cir.1989), cert. denied, 494 U.S. 1067, 110 S.Ct. 1784,
12a \
108 L.Ed.2d 785 (1990); Blumberg, 848 F.2d at 645.’
The showing required for a prima facie employment dis-
crimination claim is minimal, see Pruet Production Co.,
784 F.2d at 1279, and when “facts that would support a
cause of action are or should be apparent,” the statute
commences even if the employee is not aware of all the
evidence that he will ultimately rely upon at trial. Blum-
berg, 848 F.2d at 645 (emphasis added). The showing
required at the stage of filing charges with the EEOC is
even more lenient, because the purpose of the filing is
only to initiate an EEOC investigation. Pruet Production
Co., 784 F.2d at 1279.
Applying those principles here, we conclude that what-
ever concealment Mobi! may have been guilty of did not
deceive appellants as to the facts of the alleged discrimi-
nation. Rather, appellants were able to evaluate the
propriety of their alleged constructive discharge for
ADEA purposes immediately. Just as in individual dis-
charge cases the prima facie showing is only that the
employee has been discharged and replaced by a younger
worker, leaving exploration of an employer’s motives for
the EEOC investigation or pretrial discovery, here the
appellants’ prima facie case for constructive discharge
was that older employees alone were put to the unfavor-
able choice of early retirement or loss of the lump sum
option. This fact, apparent in July 1984, was sufficient
to put appellants on notice of possible age discrimination
(as it did other Mobil employees) and to require them
to assert their rights.
For these reasons, even accepting for purposes of our
review of the summary judgment appellants’ charges of
nondisclosure, we do not believe that a genuine issue of
2 This view is consistent with this Circuit’s rule in Title VII
cases that the limitations period starts running when the plaintiff
knows of the discriminatory act, not when the plaintiff perceives a
discriminatory motive behind the act. See Merrill v. Southern
Methodist University, 806 F.2d 600, 605 (5th Cir.1986).
13a
material fact exists as to when the statute of limitations
on the ADEA claims commenced. Concluding that the
district court’s grant of summary judgment is supported
on that ground, we do not reach the district court’s fur-
ther holding that as a matter of law appellants were not
constructively discharged in violation of the ADEA.
II. ERISA Preemption of State Law Claims
We next address the district court’s grant of judgment
on the pleadings on appellants’ state law claims. Appel-
lants charged that Mobil’s actions in amending the plan
and withholding information about the waiver provision
fraudulently induced them to surrender their jobs, were
taken pursuant to a plan to reduce Mobil’s work force,
and breached the duty of good faith and fair dealing
owed to appellants by Mobil under their employment con-
tracts. This conduct, appellants alleged, gave rise to
claims for fraud, civil conspiracy, breach of the employ-
ment contract, unlawful interference with contract rights,
negligence, and gross negligence. The district court held
these claims were preempted because they “relate to Mo-
bil’s Retirement Plan, which is governed by ERISA, and
directly overlap with provisions of ERISA.” We turn
to the first ground relied upon by the district court,
namely tkat appellants’ claims “relate to” an ERISA-
governed retirement plan.
ERISA’s provisions “supersede any and all State laws
insofar as they may now or hereafter relate to any em-
ployee benefit plan.” ERISA § 514(a), 29 U.S.C. § 1144
(a). The Supreme Court has consistently emphasized the
expansiveness of the “relate to” standard and its purpose
of establishing the regulation of pension plans as an ex-
clusively federal concern. See, e.g., Ingersoll-Rand Co. v.
McClendon, USS. , 111 S.Ct. 478, 482, 112 L.Ed.
2d 474 (1990); FMC Corp. v. Holliday, —— USS. ;
111 S.Ct. 403, 407, 112 L.Ed.2d 356 (1990); Pilot Life
Insurance Co. v. Dedeavx, 481 U.S. 41, 107 S.Ct. 1549,
EEE
l4a
1552-53, 95 L.Ed.2d 39 (1987); Shaw v. Delta Air Lines,
Inc., 463 U.S. 85, 103 S.Ct. 2890, 2899-2901, 77 L.Ed.2d
490 (1983). The words “relate to” are to be given their
“broad common-sense meaning,” Metropolitan Life Insur-
ance Co. v. Massachusetts, 471 U.S. 724, 105 S.Ct. 2380,
2389, 85 L.Ed.2d 728 (1985), and a state law will be
pre-empted “if it has a connection with or reference to
such a plan.” Shaw, 103 S.Ct. at 2900. This Circuit has
held that the fact that a claim sought damages measured
by pension benefits sufficed as the requisite “connection”
to an employee benefit plan for preemption purposes.
Cefaiu v. B.F. Goodrich Co., 871 F.2d 1290, 1294 (5th
Cir. 1989). But see Memorial Hospital System v. North-
brook Life Insurance Co., 904 F.2d 236, 247 (5th Cir.
1990); Pizlo v. Bethlehem Steel Corp., 884 F.2d 116,
120-21 (4th Cir.1989). :
The complaints here focus on Mobil’s amendment of
an ERISA-governed employee benefit plan and Mobil’s
disclosure to its employees of the terms of the plan. In
addition to calculating their damages by computing lost
benefits under the plan, a court adjudicating appellants’
claims of a fraudulent scheme to reduce the work force
would have to examine, at a minimum, the operation of
the plan prior to the amendment, the language of the
= plan amendments, and Mobil’s communication to its em-
ployees about the terms of the plan amendments. Given
the breadth of the section 514(a) test, we find that these
connections are adequate to warrant preemption.
This conclusion is buttressed by decisions of this and
other courts addressing claims of fraudulently induced |
retirement and wrongful termination, which are the crux
of appellants’ state law claims here. In the closely analo- |
gous case of Lee v. E.J. DuPont de Nemours and Cea., |
894 F.2d 755 (5th Cir.1990), the plaintiffs alleged that |
they had retired in reliance on their employer’s repre-
sentations that the company was not preparing to adopt
an early retirement incentive plan, and they sued their
15a
former employer for fraud and negligent misrepresenta-
tion in that respect. We held that the claims were pre-
empted under section 514(a). Id. at 758; see also Cefalu,
871 F.2d at 1295 (breach-of-contract claim for oral mis-
representation that retirement options offered equivalent
benefits was preempted) ; Degan v. Ford Motor Co., 869
F.2d 889, 895 (5th Cir.1989) (claim for breach of an
oral agreement to pay early retirement benefits was pre-
empted). In a case almost identical to the present one,
the Third Circuit held that where employees alleged that
an employer’s notification of proposed plan amendments
misrepresented to them that they would lose a retire-
ment benefit if they did not retire in a window period
before the amendments became applicable, their claims
were preempted. Berger v. Edgewater Steel €o., 911 F.2d
911, 923 (8d Cir.1990), cert. denied, —— U.S. ——,
111 S.Ct. 1810, 113 L.Ed.2d 244 (1991).
In addition, the Supreme Court recently spoke deci-
sively to the question whether a tort claim premised on
wrongful discharge to prevent vesting of pension benefits
could survive independently of ERISA. In Ingersoll-Rand
Co. v. McClendon, -—— U.S. ——, 111 S.Ct. 478, 483,
112 L.Ed.2d 474 (1990), the Court found that the claim
“related to” an ERISA-covered plan under section 514
(a). Appellants here seek to distinguish their “wrong-
ful discharge by fraud” claim from the tort claim at
issue in McClendon. They argue that whereas the ex-
istence of a pension plan is a necessary element of the
cause of action considered in McClendon (discharge to
prevent vesting of pension benefits), here the pension
plan was merely the subject of Mobil’s fraud. The fraud
claim itself, they argue, is conceptually identical to a
fraud claim concerning any other subject matter, and
ERISA cannot generally preempt state laws prohibiting
employers from fraudulently inducing employees to give
up their jobs. Appellants rely on Mackey v. Lanier Col-
lections Agency and Service, 486 U.S. 825, 108 S.Ct. 2182,
100 L.Ed.2d 836 (1988), in which the Court noted that
16a
lawsuits based on “run-of-the-mill state-law claims such
as unpaid rent, failure to pay creditors, or even torts
committed by an ERISA plan” are not preempted merely
because the suits are brought against an ERISA plan.
Id. 108 S.Ct. at 2187.
We do not find this argument persuasive. We have
previously noted that preempted state law includes any
state law cause of action as it relates to an employee
benefit plan, even if it arises under a general law which
in and of itself has no connection to employee benefit
plans. Cefalu, 871 F.2d at 1292 n. 5. Although there
would undoubtedly be eases of fraudulently induced re-
tirement that were not preempted, the specific conduct
here, as in Lee, Cefalu, and Degan, relates directly to
the operation of an ERISA plan. Superimposing state
law fraud standards on the elaborate ERISA provisions
governing the content and timing of notice of plan pro-
Visions and amendments, see ERISA §§ 102, 104(b) (1),
29 U.S.C. $$ 1022, 1024(b), would undercut the goal of
uniform national regulation in the manner that section
514(a) seeks to prevent. See Memorial Hospital System,
904 F.2d at 245 (observing that preemption is proper
where the state law claims address areas of exclusive
federal concern, and where they directly affect the rela-
tionship among the traditional ERISA entities). In our
view, this makes the conduct at issue here a far ery from
the “run-of-the-mill” claims alluded to in Mackey.
3 Appellants also cite Greenblatt v. Budd Co., 666 F.Supp. 735
(E.D.Pa.1987), which does provide more direct support for their
argument than the fact that the subject of the alleged fraud is
pension benefits is incidental and does not waarant preemption.
See id. at 742. However, we agree with the Seventh Circuit that
Greenflatt is not consistent with our Circuit’s holding in Cefulu.
See Lister v. Stark, 890 F.2d 941, 945 n. 10 (7th Cir.1989), cert.
denied, ———~ U.S. 111 S.Ct. 579, 112 L.Ed.2d 584 (1990).
Therefore, we, like the Seventh Circuit, decline to follow Green-
blatt. See id. at 945.
17a
For the same reason, appellants’ reliance on Hartle v.
Packard Electric, 877 F.2d 354 (Sth Cir.1989) (per
curiam) is misplaced. In Hartle, a discharged employee
brought suit for wrongful termination and civil conspir-
acy to unlawfully terminate his employment. Because
the general rule in Mississippi was employment at will,
he argued that his participation in an employee benefit
plan had removed his employment from employment-at-
will status and had effectively given him a tenured posi
tion. However, because the employer’s complained-of
conduct did not pertain to the operation of an ERISA
plan, we observed that Hartle’s claim did “not in any
manner implicate the federal regulation of employee
benefit plans” and held that preemption was not proper.
Id. at 356. Here, the employer’s conduct does relate to
the pension plan, and federal regulation of retirement
plans is implicated to a much greater degree.
Finally, appellants argue that even if their state law
claims are preempted to the extent that the damages
sought are deemed to be “benefits,” the preemption
would not bar the claims in their entirety, and that the
claims for lost wages, exemplary damages, and the like,
would survive as state law claims. They rely on several
cases finding partial preemption only. One is Kravse v.
Dresser Industries, Inc., 910 F.2d 674 (10th Cir. 1990),
in which a terminated employee filed claims under the
ADEA and for breach of an implied contract for ten-
ured job security. The district court entered summary
judgment for the defendant on the breach-of-contract
claim insofar as it sought lost pension, health insurance,
or life insurance benefits, on the grounds of ERISA pre-
emption. The Tenth Circuit upheld a verdict for the
plaintiff on the claim for lost salary, however, stating.
“We are at a loss to see how a breach of contract claim
solely for lost salary is at all related to an emplovee ben-
efit plan,” and holding that there was no preemption of
that claim. Jd. at 680 (citing Hartle, supra). Likewise, in
Sorosky v. Burroughs Corp., 826 F.2d 794 (9th Cir.
1987), the Ninth Circuit held that an employee’s claim
—
18a
of breach of contract and wrongful discharge in part
relied on theories independent of the benefit plan and
thus was not entirely preempted. Jd. at 800. Finally,
appellants cite Clark v. Coats & Clark, Inc., 865 F.2d
1237, 1245 (11th Cir. 1989), for the proposition that the
same set of operative facts can give rise to both pre-
empted and unpreempted causes of action.
We conclude that this type of partial preemption is
inappropriate in the present case, however. Unlike
Krause, this case is not one where the main nexus to an
employee benefit plan is only the calculation of damages.
Once stripped of its link to the pension plan provided
by the measure of damages, the Krause plaintiff’s claim
survived as a suit for lost salary based upon breach of
an implied contract of continued employment. Here,
by contrast, the basis of the claims themselves is the
operation of the pension plan: if appellants’ claims were
stripped of their link to the pension plans, they would
cease to exist. The Sorosiky and Clark courts employed
a similar analysis which would support complete pre-
emption in the present case. In Sorosiy, the court held
that Sorosky’s claim that Burroughs agreed to provide
him with monthly retirement benefits and then sought
to prevent him from acquiring those benefits was pre-
empted: it was only breach-of-contract or wrongful dis-
charge theories “that have no relationship to the benefit
plan” that survived as independent state law claims.
Sorosky, 826 F.2d at 800. The Clark court confronted
an employee’s claim that his termination, in addition
to being effected for the purpose of interfering with
his attainment of pension benefits in violation of ERISA
$510, 29 U.S.C. $1140, was carried out in a malicious
manner that inflicted severe emotional distress upon him.
The court held that the tort claim, though it “allude[d]
to conduct which was proximate (for even concurrent)
in time to the alleged ERISA violation,” was “wholly
remote in content’; the employee had “not alleged any
conduct on the part of Coats & Clark which relates to
19a
the processing of any ERISA covered benefit or claim.”
Clark, 865 V.2d at 1243. However, Clark carefully dis-
tinguished the employee ’s claim there from a claim that
a refusal to pay pension benefits was itself so outrageous
as to amount to intentional infliction of emotional dis-
tress, which the court had found to be preempted in
Howard v. Parisian, Inc., 807 F.2d 1560 (11th Cir.
1987).
Because the underlying conduct at issue here cannot
be divorced from its connection to the employee benefit
plan, we uphold the district court’s judgment that the
state law claims are preempted in their entirety.
III. ERISA Standing
ERISA grants standing to a “participant” to bring
civil action to enforce his rights under the terms of
plan or to enforce the provisions of ERISA. ERISA
> 502, 29 U.S.C. $1132. The district court granted
Mobil’s motion to dismiss appellants’ ERISA claims on
the ground that appellants were not “participants”
within the meaning of that section and therefore were
not empowered to sue. See Nugent v. Jesuit High School
of New Orleans, 625 F.2d 1285, 1286 & n. 8 (5th Cir.
1980).
ERISA defines the term “participant” to include “any
employee or former employee . . . who is or may be-
come eligible to receive a benefit of any type from an
employee benefit plan.” ERISA §3(7), 29 U.S.C.
$ 1002(7). The Supreme Court recently addressed the
meaning of the “former employee” component of that
definition. In Firestone Tire and Rubber Co. v. Bruch,
489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), the
Court observed that the definition referred to “former
employees who ‘have . . . a reasonable expectation of
returning to covered employment’ or who have ‘a color-
able claim’ to vested benefits.” Jd. 109 S.Ct. at 958
(quoting Auntz v. Reese, 785 F.2d 1410, 1411 (9th Cir.)
20a
(per curiam), cert. denied, 479 U.S. 916, 107 S.Ct. 318,
93 L.Ed.2d 291 (1986)). The Court also construed the
“may become eligible” language of section 3(7) to mean
that “a claimant must have a colorable claim that (1) he
or she will prevail in a suit for benefits, or that (2) eligi-
bility requirements will be fulfilled in the future.” Jd.
Mobil argues that appellants do not have standing
because they have neither a colorable claim for vested
benefits nor a reasonable expectation of returning to
covered employment. In Mitchell’s suit against Mobil,
the Tenth Circuit denied ERISA standing to the plain-
tiffs on the ground here urged by Mobil. Mitchell v.
Mobil Oil Corp., 896 F.2d 468, 474 (10th Cir.), cert.
denied, —— USS. , 111 S.Ct. 252, 112 L.Ed.2d 210
(1990).
The first part of this conclusion finds support in the
decisions of this Circuit. We have held that where, as
here, retired employees received in a lump sum benefits
that were concededly all to which they were entitled
under a plan as it existed at their retirement, their claim
is for damages, not vested benefits. Yancy v. American
Petrofina, Inc., 768 F.2d 707, 708-09 (5th Cir.1985) (per
curiam); Joseph v. New Orleans Electrical Pension &
Retirement Plan, 754 F.2d 628, 630 (5th Cir.), cert.
denied, 474 U.S. 1006, 106 S.Ct. 526, 88 L.Ed.2d 458
(1985); accord Kuntz, 785 F.2d at 1411. In Yancy, the
employer announced its intention to modify the interest
rate factor used to calculate lump sum retirement bene-
fits, but gave employees approximately three months in
which to retire under the older, more generous discount
rate. We denied standing to an employee who took early
retirement during the three months, received his lump
sum payment, then sued alleging that the amendment of
the plan violated fiduciary duties imposed by ERISA.
We held that, lacking a claim for vested benefits, he
could not be deemed a plan “participant.” Yancy, 768
F.2d at 709.
21a
For the second part of its conclusion—that the plain-
tiff lacked a reasonable expectation of returning to cov-
ered employment—the Mitchell court relied on the fact
that the plaintiff had not sought reinstatement. Mitchell,
896 F.2d at 474; see also Berger v. Edgewater Steel Co.,
Y1l F.2d 911, 922 (3d Cir.1990), cert. denied, U.S.
» 111 S.Ct. 1810, 113 L.Ed.2d 244 (1991); Kuntz,
785 t'.2d at 1411. In the present case, the only request
for reinstatement in appellants’ original complaint is in
the ADEA claim, which we have held to be barred by
the statute of limitations. See section I, supra. However,
this request does indicate that appellants do desire court-
ordered reinstatement.
We are not convinced that Firestone can be read to
reduce the standing question to a straightforward for-
mula applicable in all cases. This seems particularly so
in cases involving allegations of discharge. ERISA
$510, 29 U.S.C. § 1140, makes it unlawful for an
employer to “discharge, fine, suspend, expel, discipline,
or discriminate against a participant” for exercising a
right provided by ERISA or “for the purpose of inter-
fering with the attainment” of a right provided by
ERISA. The Supreme Court’s recent McClendon deci-
sion held that this provision would foreclose the devel-
opment of any state law cause of action for wrongful
termination to prevent vesting of pension benefits.
Ingersoll-Rand Co. v. McClendon, USS. , lll
S.Ct. 478, 485, 112 L.Ed.2d 474 (1990). The implication
of the Court’s holding that the discharged employee
must look solely to ERISA for his remedy is that he
would have standing to do so. Nevertheless, it is not
readily apparent that he would have standing under the
construction of Firestone urged by Mobil: he would be a
former employee lacking both a claim for vested bene-
fits and (unless he requested reinstatement) a reasonable
expectation of returning to covered employment. It
would be unusual if in that situation his ability to assert
a claim at all turned on whether or not his requested
relief included reinstatement; it would seem more logical
to say that but for the employer’s conduct alleged to be
in violation of ERISA, the employee mould be a current
employee with a reasonable expectation of receiving ben-
efits. and the employer should not be able through its
own malfeasance to defeat the employee's standing. Cf.
Amalgamated Clothing and Textile Workers v. Mur-
dock, 861 F.2d 1406, 1418 (9th Cir.1988) (“Tt would be
ironie if the very acts of benefit payment and plan ter-
mination that allegedly resulted in a fiduciary personally
obtaining ill-gotten profits should also. serve to deny
plan beneficiaries standing . . . to redress the fiducia-
ries’ alleged breach of the duty of loyalty.” ).*
Therefore, recognizing that we are anchored at one
end by Yancy, we also believe that Yancey does not
extend so far as to encompass situations such as the one
at issue in McClendon. The question then hecomes
where on that axis the present case falls. A few per-
tinent distinctions between the two cases bear emphasis.
Yancy’s position as a retired employee who had received
lump sum benefits was largely of his own making. He
was informed of the plan amendment and of the effects
of each option open to him. Our holding in the case
amounts to a decision that he could not both accept the
offered inducement for early retirement and then later
complain of the choice to which he had been put, if he
felt that he was entitled to continue to work and then
retire at the time of his choice with a lump sum calcu-
lated at the old rate, he was obligated to act consistently
with his desired relief by remaining a covered employee
4We do not mean to imply that an employee’s entitlement to
certain remedies might not turn on whether or not he was willing to
return to work. If, for example, he claimed entitlement to the fully
vested pension as damages, it might be perfectly reasonable to re-
quire that he return to work at least for the additional length of time
required for the pension to vest. However, a wrongful discharge
might give rise to other damages as well, for which reinstatement
would not seem to be a logical prerequisite.
23a
and challenging the plan amendment. The violation he
alleged—an amendment of the retirement plan that
amounted to a breach of fiduciary duty under ERISA
§ 409, 29 U.S.C. §1109—was not one that in and of
itself divested aggrieved parties of their status as cov-
ered employees able to sue. McClendon, on the other
hand, had no such choice. A discharge to prevent vesting
of benefits in violation of section 510 by definition must
be challenged by someone other than a current employee
or someone with a claim to vested benefits. Thus, the
standing question and the merits of an employee’s claim
are unavoidably intertwined to some degree; whether a
plaintiff has standing to assert ERISA rights may
depend upon whether he can establish a discharge or
some other conduct in violation of ERISA, but for
which he would have standing. See Amalgamated Cloth-
ing, 861 F.2d at 1410.
The Third Circuit alluded to this problem in its recent
Berger decision. There, Edgewater Steel amended its
retirement plan to eliminate two benefits: a lump sum
payment in place of the first three months of pension
benefits, and a supplemental payment given as an early
retirement benefit to employees whose retirement was in
the mutual interests of the company and the retiree and
was approved by the company. Upon announcement of
these changes, Berger and the other plaintiffs chose to
retire before the amendments became effective. They
each received the three-month lump sum provided auto-
matically to all retirees, but none were approved for the
supplemental payment. Among the plaintiffs’ allegations
were a charge that the elimination of the three-month
lump sum amounted to the elimination ef an accrued
benefit in violation of ERISA § 204(g), 29 U.S.C.
§1054(¢), and a charge that the amendment constituted
an intentional interference with their right to both bene-
fits, in violation of ERISA § 510, 29 U.S.C. $1140. The
court, citing Aunt: and Yancy, held that the plaintiffs
24a
did not have standing to assert their section 204(g)
claim because they had retired and accepted the benefits
in a lump sum, and had not asked for reinstatement.
Berger, 911 F.2d at 921-22. However, the court noted
the contingency of this conelusion on the denial of the
plaintiffs’ section 510 claim. /d. at 922. It stated: “Of
course, we recognize that if the Employees were con-
structively discharged as they do claim, they would not
necessarily have to return to work in order to have
standing to claim a make whole remedy.” /d.°
On the record before us, we cannot say where on the
spectrum between Yancy and McClendon this case falls.
Because appellants pleaded their ERISA claims only as
contingent on preemption of their state law claims, and
because the district court did not rule on the merits of
the ERISA claims, appellants have not fleshed out their
IK RISA claims and theories, or even identified with pre-
5A Third Circuit decision in a pre-Firestone case provides an
even more direct illustration of the contingency of standing on the
nature of the ERISA violation alleged. In Saporito v. Combustion
Engineering Inc,, 843 F.2d 666 (3d Cir.1988), vacated, 489 U.S.
1049, 109 S.Ct. 1306, 103 L.Ed.2d 576 (1989), the plaintiffs claimed
that they had been induced to retire under one retirement. plan
While the employer concealed the development of a second plan with
more favorable terms. The court held that they did not have standing
as participants in the first plan to sue for breach of fiduciary duties
because they had retired and received all of the benefit to which they
were entitled in a lump sum. 7d. at 671. However, the court did hold
that they had standing as participants in the second plan to argue
that they had been tricked into retiring in violation of section 510,
because they alleged that “but for the selective divulgence of in-
formation, they would have been members of [the second plan],
and, for the purposes of standing to bring an action under ERISA,
should be considered as such.” Jd. at 672; see also id. at 672 n. 7
(distinguishing Stanton v. Gulf Oil Corp., 792 F.2d 482 (4th Cir.
1986), in which the plaintiff urged “but for” participant standing,
but his claim was rejected because the events precluding standing
were under his control). Saporito was vacated and remanded by the
Supreme Court for further consideration in light of Firestone,
489 U.S. 1049, 109 S.Ct. 1306, 103 L.Ed.2d 576 (1989).
25a
cision which sections of ERISA they claim were vio-
lated. However, their allegations do at least suggest an
assertion that they were constructively discharged in vio-
lation of section 510 and that but for Mobil’s nondisclo-
sure they would be covered employees with standing to
challenge the plan amendment. They allege deceptive
conduct by Mobil that might be found to vitiate the vol-
untariness of their decision to retire and that might dis-
tinguish the present case from both Yancy and Mitchell.
Appellants also sought reinstatement in their ADEA
action, and did not affirmatively indicate that reinstate-
ment was not sought under their ERISA claims. For
these reasons, we cannot now foreclose the possibility
that they could prove facts that would create standing
for them, and we believe that the trial court’s dismissal
on the pleadings of the ERISA claims was premature.
Of course, appellants can, and doubtless should, be
required to plead their ERISA claims with greater speci-
ficity.
We emphasize that we have not determined that
appellants will be able to establish a violation of section
510, only that they should be allowed to attempt to do
so, We reverse the trial court’s dismissal of appellants’
ERISA claims and remand for further proceedings con-
sistent with this opinion.
Conclusion
lor the reasons stated above, we affirm the district
court’s grant of summary judgment to Mobil on the
ADEA claims and its grant of judgment on the plead-
_ings for Mobil on all of appellants’ state law claims.
However, we reverse and remand the district court’s dis-
missal of appellants’ ERISA claims.
AFFIRMED In Part; ReverseED And REMANDED In
Part.
linen
26a
Order of the United States District Court for the
Eastern District of Texas granting Motion for
Judgment on the Pleadings and Motion to Dismiss,
June 22, 1990
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TEXAS
BEAUMONT DIVISION
Civ. No. B-89-0653-CA
June 22, 1990
GERALD W. CHRISTOPHER, et al.,
Plaintiffs,
|
MosBIL OIL CORPORATION, eft al.,
Defendants.
ORDER
1. CAME ON to be considered the Motion for Judg-
ment on the Pleadings and Motion to Dismiss filed by
defendants Mobil Oil Corporation, the Retirement Plan
of Mobil Oil Corporation and Rex Adams (collectively,
“Mobil’’) ; and the Court, having considered such Motion,
the supporting memorandum, and plaintiffs’ opposition
thereto, finds:
A. Plaintiffs’ state-law claims are preempted by
the Employee Retirement Income Security Act of
1974 (“ERISA”) because those claims relate to
Mobil’s Retirement Plan, which is governed by
ERISA, and directly overlap with provisions of
ERISA;
27a
B. Plaintiffs are not participants seeking to re-
cover benefits under Mobil’s Retirement Plan and
therefore have no cause of action under ERISA
§ 502; and
C. The Court lacks jurisdiction over plaintiffs’
ERISA claim because plaintiffs do not have a cause
of action under ERISA.
2. Based on these findings, the Court is of the opinion
]
that said motion should be in all things GRANTED.
3. It is therefore OrDERED, ADJUDGED and DECREED
by the Court that defendants’ Motion for Judgment on
the Pleadings and Motion to Dismiss be, and the same
hereby is, GRANTED and the case dismissed in its entirety
with prejudice, at plaintiffs’ cost.
SIGNED THIS 22nd DAY oF JUNE, 1989 [sic].
S/ Richard A. Schell
United States District Judge
28a
Order of the United States District Court for the
Eastern District of Texas granting Motion for
Summary Judgment, June 22, 1990
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TEXAS
BEAUMONT DIVISION
Civ. No. B-89-0653-CA
June 22, 1990
GERALD W. CHRISTOPHER, et al.,
Plaintiffs,
|
MosIL OIL CORPORATION, ef al..
Defendants.
ORDER
1. CAME ON to be considered the Motion for Sum-
mary Judgment filed by defendants Mobil Oil Corpora-
tion, the Retirement Plan of Mobil Oil Corporation and
Rex Adams (collectively, “Mobil”): and the Court, hav-
ing considered such Motion, the supporting memoran-
dum, statement of undisputed facts, declaration and
affidavit, and plaintiffs’ opposition thereto, finds:
A. Plaintiffs’ Age Discrimination in Employment
Act (“ADEA”) claims are time-barred because (7)
plaintiffs did not file an age-discrimination charge
with the Equal Employment Opportunity Commis-
sion within 300 days after the alleged discrimination
occurred (29 U.S.C. §$ 626(d)(2)), and (ii) plain-
29a
tiffs did not file a lawsuit under ADEA within three
years after the alleged discrimination occurred (29
U.S.C. $$ 255(a), 626(e)):
B. Plaintiffs’ state-law claims are time-barred by
applicable statutes of limitations;
C. Plaintiffs were not constructively discharged
in violation of ADEA; and
D. Plaintiffs’ claims of discrimination arise from
changes in the fringe benefits available under
Mobil’s bona fide Retirement Plan, not from any
conduct related to the nonfringe-benefit aspects of
plaintiffs’ employment, and are therefore not within
the scope of ADEA pursuant to 29 U.S.C. § 623(f)
2).
2. Based on these findings, the Court is of the opinion
that said motion should be in all things GRANTED.
3. It is therefore ORDERED, ADJUDGED and DECREED
by the Court that defendants’ Motion for Summary
Judgment be, and the same hereby is, GRANTED and the
case dismissed in its entirety with prejudice, at plain-
tiffs’ cost.
SIGNED THIS 22nd DAy OF JUNE, 1989 [sic].
s/ Richard A. Schell
United States District Judge
80a
Order of the United States Court of Appeals for the
Fifth Circuit denying appellants’ petition for rehearing,
February 24, 1992
is COURT OF APPEALS
IN THE UNITED STATE
FIFTH CIRCUIT
FOR THE FI
No. 90-4562
Filed: Feb. 24, 1992
GERALD W. CHRISTOPHER, CHARLES L. PRUNTY and
BILLY G. TURNER,
Plaintiffs-A ppellants,
versus
Mori OL CORPORATION, RETIREMENT PLAN OF
MosBIL OIL CORPORATION AND REX ADAMS,
Defendants-A ppellees.
Appeal from the United States District Court
for the Eastern District of Texas
ON PETITION FOR REHEARING
Before:
HFENLEY*, KING, and GARWoop,
Circuit Judges.
* Circuit Judge of the Eighth Circuit, sitting by designation.
3la
PER CURIAM:
IT IS ORDERED that appellants’ petition for rehearing
filed in the above entitled and numbered cause be and
the same is hereby DENIED.
ENTERED FOR THE COURT:
s/ Will Garwood
United States Circuit Judge
32a
Denial of Motion for Summary Judgment of the
United States District Court for the
District of Colorado, dated June 25, 1992
11] IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action Ne, 88-Z-2112
FREDERIC J. RAYMOND, et al.,
Plaintiffs,
VS.
Monit OU. CORPORATION, et al.,
Defendants,
REPORTER’S TRANSCRIPT
(Hearing on Motion for Summary Judgment)
Proceedings before the HONORABLE ZITA L. WEIN-
SHIENK, Judge, United States District Court for the
District of Colorado, commencing at 9:50 a.m., on the
25th day of June, 1992, Courtroom C-502, United States
Courthouse, Denver, Colorado.
APPEARANCES
PryorR, CARNEY, and JOHNSON, P.C., by RopNey R.
PATULA and ELIZABETH MORAN, Attorneys at Law, 6200
South Svracuse Way, Suite 400, Englewood, Colorado,
80155, appearing for the plaintiffs.
HADDON, MorRGAN & FOREMAN, P.C., by HARoLp A.
HADDON and MAUREEN A. CAIN, Attorneys at Law, 150
East Tenth Avenue, Denver, Colorado, 80203; LoREN
33a
KIEve, Attorney at Law, Debevoise & Plimpton, 555 13th
N.W., Washineten, D.C., [2] 20004, and MICHAEL
FE. TiGAr, Attorney at Law, 727 East 26th Street, Austin,
Texas, 78705, appearing for the defendant.
St reet
* * * *
THE COURT: Thank you.
[ think perhaps we should start, if you want to just
have a seat for a moment—
MR. TIGAR: Yes, your Honor.
THE COURT: —by my telling you how this looks to
me on the briefing and on the paper. This is a motion for
summary judgment on the ERISA claims, and it appears
to me from looking at the briefs, from looking at the
claims, from reviewing the Christopher v. Mobil Ov! case
in the Fifth Cireuit and the [3] Mitchell v. Mobil Oil
case in this circuit and all of the other cases that have
been decided, including Firestone, that what Plaintiff has
done in pleading this ERISA or these ERISA claims is
to fit them as closely as possible under the rulings of
Christopher and trying to avoid in the pleading the ad-
verse effects of rulings of Mitchell. And it appears to me
also that reading Christopher carefully, there are factual
issues which were left open under Christopher, which
were not discussed in Mitchell, which probably this court
is going to have to try.
Now, that’s how it looks on paper; and I’m certainly
going to listen to the arguments of the defendants as to
why this is not the case. But I think we have some pri-
mary cases here to consider. Well, the two core cases
that were argued in the briefs were the Chinstopher case
and the Mitchell case. But if this case is fit very care-
fully under the ruling in Christopher and does not appear
to be covered by the ruling in Mitchell, then the motion
will have to be denied.
7 * 7 aa
34a
[38]
RULING
THE COURT: Well, let me address Boren. Mr.
Boren was not an employee within the meaning of
ERISA; and when he asked to be treated as if he were a
former employee, he is asking for a determination that he
was at one time an employee, as opposed to the position of
the plaintiffs. As I understand Plaintiffs’ theory is saying
that but for the actions of Defendant, they still would
be employees of Defendant; and this case is predicated on
the fact that they were employees at one time, unlike
Boren.
I realize that Judge McKay, who this court has the
most high respect for—and I do for Judge Moore, too,
and all the Tenth Circuit judges—made some statements
in Boren which appear to be fairly broad statements. But
indeed, in looking at the facts of Boren, they were talking
about a factual situation which does not appear to me, at
least, to apply in this case.
There are many rules and many cases about granting
motions for summary judgment, and I think judges some-
times overlay on this law their own experiences with sum-
mary judgment. Having been a judge for a long time,
I have an overlay; and that is, it’s sort of like the old
“T know it when I see it,’ which used to be the rule in
pornography cases. When I am [39] comfortable that
there are no factual issues and when I can grant some-
thing as a matter of law, when I have that feeling that
there are no factual issues, when I have to decide the
case on summary judgment and all the facts and the
arguments convince me of that, then I grant the motion
for summary judgment—yvou know—considering all of
the other cases that are there on summary judgment.
But when I have this lingering feeling that there may
be factual issues, even though I think probably there is
going to be a difficult time, there is going to be a difficult
effort of plaintiff to prove these factual issues—-I don’t
35a
think it’s going to be easy; I think it’s going to be most
difficult—when I have this nagging feeling that well, I’m
not sure as a matter of law that we've really taken care
of all factual issues, then I simply have to resolve it by
denying the motion for summary judgment.
Now, what we have here are two very important cases,
one in the Tenth Circuit and one in the Fifth Circuit.
And the question is, can they be distinguished? Does the
Fifth Cireuit carve out an area which was not considered
by the Tenth Circuit and which has to be considered by
this court, even in view of the strong ruling of the Tenth
Circuit?
And I will admit, as much respect as I do have for the
judges that decided Mitchell v. Mobil, I really do wonder
if they read my opinion carefully on the ERISA claims
in finding [40] that he didn’t seek reinstatement—that
Mr. Mitchell didn’t.
Be that as it may, that’s the rule. I’m bound by that
decision. I have no intent to be overruled in the Tenth
Circuit, if I can uphold it; and what we have, then, is
the Fifth Circuit carving out a little area from Mobil
and saying, if I can just paraphrase what they say on
1223 of their opinion—and maybe I better put this on the
record. For the record, Christopher v. Mobil is 950 F.2d
1209, Fifth Circuit, 1992. What they say is here’s an
area that might—might; it isn’t for sure—might distin-
guish this case from Mitchell, and that is if a plaintiff is
alleging deceptive conduct which vitiates the voluntariness
of the decision to retire, the “but for” test, that might
distineuish this case from Mitchell.
Plaintiffs have fit in this case right to that exception;
and they say, We are alleging and we intend to prove—
now, I don’t know if they’re going to be able to prove
it; it’s going to be tough—but we are alleging and we
intend to prove deceptive conduct which will show that
none of these plaintiffs would have retired, had they not
been deceived, had they not been defrauded. We're talk-
ing about fraud here.
iii
36a
Maybe it was hinted at in Mi/chell, and I don’t know
what you folks argued; but it really didn’t come out that
way, it seems to me, in the trial that strongly.
So here’s an area: Mitchell (sic), they’re arguing,
we're alleging, committed fraud on us, deceived us. We
would [41] not have retired had we known the truth,
had we not been deceived, had we not been defrauded.
The Fifth Circuit, good judges, say this distinguishes
or this might distinguish this case from Mitchell. All
these circuit judges are supposed to be really experts in
the law, may be experts in the law more than the trial
judges. At least they have the last word. So here are the
judges, the three judges on the Fifth Circuit saying,
Here’s an area that’s different, might be distinguished.
I’m not going to say it can’t be distinguished. I’ve got
that feeling that boy, I’m not sure. I’m not sure that they
can't prove it. And if they can they can prove it, they
have to have the chance to prove it.
I think one must read the law also with good common
sense and good judgment; and if, indeed, hypothetically
an employee has been deceived by an employer—I’m not
talking about Mobil now, but just what is the policy, what
should be the law. If an employee has been deceived, de-
frauded by the employer, and retires because of that de-
ceit when they never would have retired, does that mean
they can’t sue under 510, just because they’ve taken bene-
fits? And common sense tells us there have to be—there
has to be an exception to the flat rule stated in Mitchell,
and this deceptive conduct certainly from a matter of
policy, from a matter of good common sense, seems to
be that area.
[42] So even though there might be a bright line rule
in Mitchell, there appears to this court that there might
very well be, as stated by the Christopher court, a way
of distinguishing that; and that is if there is deceptive
conduct.
Now, if the plaintiffs can prove it—I don’t know if
they can prove it sufficiently—but if they can prove it,
ee a
37a
then I think we do have a distinguishing feature and I
think they have brought their case in an area that fits
under—fits under the Christopher case and may very well
be an area which would cause the Tenth Circuit to Say,
You know, we didn’t really mean that. We really didn’t
mean that if there is something promised the following
year and then they're defrauded and they’re retiring be-
cause they're defrauded that the ERISA—that they’re
foreclosed from suing under ERISA.
So looking at the statute with good judgment and what
the policy should be, which is to protect the employees,
looking at the fact that these were employees, their alle-
gation is that they would not have retired. They have
brought this case under the very narrow confines of
Christopher.
I don’t feel I can grant the motion for summary judg-
ment; and accordingly, the motion for summary judgment
on the ERISA claims will be denied and we'll have to
hear what the facts are.
Now, one more thing: We now no longer have motions
for directed verdict in Federal Court. We have motions
for [43] judgment on the law. The rules have been
changed. So if, indeed, this proof does not come forward,
I’ll be hearing your argument, maybe not even at the end
of the plaintiffs’ case maybe in the middle of the plain-
tiffs’ case, when they have a chance to go through ERISA,
whichever one they’re going to prove first. But this is
something that I’m sure that will come'up for argument
in the trial case—in the trial.
* * * *
88a
STATUTORY PROVISIONS
ERISA § 3(7), 29 U.S.C. § 1002(7)
For purposes of this subchapter:
(7) The term “participant” means any employee or
former employee of an employer, or any member or
former member of an employee organization, who is or
may become eligible to receive a benefit of any type from
an employee benefit plan which covers employees of such
employer or members of such organization, or whose bene-
ficiaries may be eligible to receive any such benefit.
ERISA § 502, 29 U.S.C. § 1132
(a) Persons empowered to bring a civil action
A civil action may be brought—
(1) by a participant of beneficiary—
(A) for the relief provided for in subsection (c¢)
of this section, or
(B) to recover benefits due to him under the terms
of his plan, to enforce his rights under the terms of
the plan, or to clarify his rights to future benefits
under the terms of the plan;
(2) by the Secretary, or by a participant, beneficiary
or fiduciary for appropriate relief under section 1169 of
this title;
(3) by a participant, beneficiary, or fiduciary (A) to
enjoin any act or practice which violates any provision
of this subchapter or the terms of the plan, or (B) to
obtain other appropriate equitable relief/7) to redress
such violations or (ii) to enforce any provisions of this
subchapter or the terms of the plan;
39a
(4) by the Secretary, or by a participant, or benefi-
clary for appropriate relief in the case of a violation of
[section] 1025(e) of this title;
(5) except as otherwise provided in subsection (b) of
this section, by the Secretary (A) to enjoin any act or
practice which violates any provision of this subchapter,
or (B) to obtain other approrpiate equitable relief (i) to
redress such violation or (ii) to enforce any provision of
this subchapter; or
(6) by the Secretary to collect any civil penalty under
subsection (¢) (2) or (i) or (1) of this section.
(b) Plans qualified under Internal Revenue Code; main-
tenance of actions involving delinquent contributions
(1) In the case of a plan which is qualified under sec-
tion 401(a), 403(a), or 405(a) of Title 26 (or with re-
spect to which an application to so qualify has been filed
and has not been finally determined) the Secretary may
exercise his authority under subsection (a) (5) of this
section with respect to a violation of, or the enforcement
of, parts 2 and 3 of this subtitle (relating to participa-
tion, vesting, and funding), only if—
(A) requested by the Secretary of the Treasury,
or
(B) one or more participants, beneficiaries, or
fiduciaries of such plan request in writing (in such
manner as the Secretary shall prescribe by regula-
tion) that he exercise such authority on their behalf.
In the case of such a request under this paragraph
he may exercise such authority only if he determines
that such violation affects, or such enforcement is
necessary to protect, claims of participants or bene-
ficiaries to benefits under the plan.
(2) The Secretary shall not initiate an action to en-
force section 1145 of this title.
40a
(c) Administrator's refusal to supply requested infor-
mation; penalty for failure to provide annual report in
complete form
(1) Any administrator (4) who fails to meet the re-
quirements of paragraph (1) or (4) of section 1166 of
this title or section 1021(e) (1) of this title with respect
to a participant or beneficiary, or (2) who fails or refuses
to comply with a request for any information which
such administrator is required by this subchapter to fur-
nish to a participant or beneficiary (unless such failure
or refusal results from matters reasonably beyond the
eontrol of the administrator) by mailing the material
requested to the last known address of the requesting
participant or beneficiary within 30 days after such
request may in the court’s discretion be personally liable
to such participant or beneficiary in the amount of up
to $100 a day from the date of such failure or refusal,
and the court may in its discretion order such other
relief as it deems proper.
(2) The Secretary may assess a civil penalty against
any plan administrator of up to $1,000 a day from the
date of such plan administrator’s failure or refusal to
file the annual report required to be filed with the Secre-
tary under section 1021(b) (4) of this title. For purposes
of this paragraph, an annual report that has been re-
jected under section 1024(a) (4) of this title for failure
to provide material information shall not be treated as
having been filed with the Secretary.
(3) Any employer maintaining a plan who fails to
meet the notice requirement of section 1021(d) of this
title with respect to any participant or beneficiary or
who fails to meet the requirements of section 1021(e) (2)
of this title with respect to any person may in the court’s
discretion be liable to such participant or beneficiary or
te such person in the amount of up to $100 a day from
the date of such failure, and the court may in its discre-
tion order such other relief as it deems proper.
4la
(d) Status of employee benefit plan as entity
(1) An employee benefit plan may sue or be sued
under this hea ea as an entity. Service of summons,
subpoena, or other legal process of a court upon a trustee
or an ne eS ine tor of an .employee benefit plan in his
capacity as such shall constitute service upon the em-
ployee benefit plan. In a case where a plan has not desig-
nated in the summary plan description of the plan an
individual as agent for the service of legal process, service
upon the Secretary shall constitute such service. The
Secretary, not later than 15 days efter receipt of service
under the preceding sentence, shal] notify the adminis-
trator or any trustee of the plan of receipt of such
service,
(2) Any money judgment under _ this subchapter
against an employee benefit plan shall be enforceable
only against the plan as an entity and~shall not be en-
forceable against any other person unless liability against
such person is established in his individual capacity under
this sube hap ver,
(e) Jurisdiction ii a
(1) Except for actions under subsection (a) (1+(B) of
this section, the district courts of the United States shall
]
have exclusive jurisdiction Of ely ictions under this
subchapter brought by the Secretary or by a participant
beneficiary, or fiduciary. mane courts of competent juris-
diction and district courts of the United States shall have
concurrent jurisdiction of setines under subsection
(ai {1l)'B) of this section.
(2) Where an action under this subchapter is brought
in a district court of the United States. it may be brought
“4 +i sat 77 + rt] 5" + 1, , ]. , ‘ In : m + . ] * Re . i
in the district where the pidal Is aAUCMINIstered, where tne
1 ? _ rin Le ‘ Fai ‘ + . ~ 7)
breach took place, or where a defendant resides o1
e . 20% ’ _ re % ‘ rT ee
be found, and process may be served in any 0 her district
Where a defendant resides or may be found.
~
~
tc
‘
42:
(f) Amount in controversy; citizenship of parties
The district courts of the United States shall have ju-
risdicion, without respeet to the amount in controversy
or the citizenship of the parties, to grant the relief pro-
vided for in subsection (a) of this section in any action.
(xg) Attorney's fees and costs; awards in actions involv-
ing delinquent contributions
(1) In any action under this subchapter (other than
an action described in paragraph (2)) by a participant,
beneficiary, or fiduciary, the court in its discretion may
allow a reasonable attorney's fee and costs of action to
either party.
(2) In any action under this subchapter by a fiduciary
for or on behalf of a plan to enforce section 1145 of this
title in which a judgment in favor of the plan is awarded,
the court shall award the plan—
(A) the unpaid contributions,
(B) interest on the unpaid contributions,
(C) an amount equal to the greater of
(1) interest on the unpaid contributions, or
(ii) liquidated damages provided for under
the plan in an amount not in excess of 20 per-
cent (or such higher percentage as may be per-
mitted under Federal or State law) of the
amount determined by the court under subpara-
graph (A),
(I1)) reasonable attorney’s fees and costs of the
action, to be paid by the defendant, and
(Ig) such other legal or equitable relief as the
court deems appropriate.
For purposes of this paragraph, interest on unpaid
contributions shall be determined by using the rate pro-
vided under the plan, or, if none, the rate prescribed
under section 6621 of Title 26.
43a
(h) Service upon Secretary of Labor and Secretary of
Treasury
A copy of the complaint in any action under this sub-
chapter by a participant, beneficiary, or fiduciary (other
than an action brought by one or more participants or
beneficiaries under subsection (a) (1)(B) of this section
which is solely for the purpose of recovering benefits
due such participants under the terms of the plan) shall
be served upon the Secretary and the Secret: iry of the
Treasury by certified mail. Either secretary shall have
the right in his discretion to intervene in any action,
except that the Secretary of the Treasury may not in-
tervene in any action under part 4 of this subtitle. If
the Secretary brings an action under subsection (a) of
this section on behalf of a participant or benefici: iry, he
shall notify the Secretary of the Treasury.
(i) Administrative assessment of civil penalty
In the case of a transaction prohibited by section 1106
of this title by a party in interest with respect to a plan
to which this part applies, the Secretary may assess a
civil penalty against such party in interest. The amount
of such penalty may not exceed 5 percent of the amount
involved in each such transaction (as defined in section
4975(f) (4) of Title 26) for each year or part thereof
during which the prohibited transaction continues, ex-
cept that, if the transaction is not corrected (in such
manner as the Secretary shall prescribe in regulations
which shall be consistent with section 4975(f) (5) of Title
26) within 90 days after notice from the secretary (or
such longer period as the Secretary may permit), such
penalty may be in an amount not more than 100 percent
of the amount involved. This subsection shall not apply
to a transaction with respect to a plan described in sec-
tion 4975(e) (1) of Title 26.
(j) Direction and control of litigation by Attorney
General
In all civil actions under this subchapter, attorneys
appointed by the Secretary may represent the Secretary
44a
(except as provided in section 518(a) of Title 28), but
all such litigation shal! be subjeet to the direction and
control of the Attorney General.
(k) Jurisdiction of actions against the Secretary of
Labor
Suits by an administrator, fiduciary, participant, or
beneficiary of an employee benefit plan to review a final
order of the Secretary, to restrain the Secretary from
taking any action contrary to the provisions of this
chapter, or to compel him to take action required under
this subchapter, may be brought in the district court of
the United States for the district where the plan has its
principal office, or in the United States District Court
for the District of Columbia.
(7) Civil penalties on violations by fiduciaries
(1) In the case of—
(A) any breach of fiduciary responsibility under
(or other violation of) part 4 by a fiduciary, or
(B) any knowing participation in such a breach
or violation by any other person,
the Secretary shall assess a civil penalty against such
fiduciary or other person in an amount equal to 20 per-
cent of the applicable recovery amount.
(2) For purposes of paragraph (1), the term “appli-
cable recovery amount” means any amount which is re-
covered from a fiduciary or other person with respect
to a breach or violation described in paragraph (1)—
(A) pursuant to any settlement agreement with
the Secretary, or
(B) ordered by a court to be paid by such fi-
duciary or other person to a plan or its participants
and beneficiaries in a judicial proceeding instituted
45a
by the Secretary under subsection (a) (2) or (a) (5)
of this section.
(3) The Secretary may, in the Secretary’s sole dis-
cretion, waive or reduce the penalty under paragraph
(1) if the Secretary determines in writing that—
(A) the fiduciary or other person acted reasonably
and in good faith, or
(B) it is reasonable to expect that the fiduciary
or other person will not be able to restore all losses
to the plan without severe financial hardship unless
such waiver or reduction is granted.
(4° The penalty imposed on a fiduciary or other per-
son under this subsection with respect to any transaction
shall be reduced by the amount of any penalty or tax
imposed on such fiduciary or other person with respect
to such transaction under subsection (i) of this section
and section 4975 of Title 26.
ERISA § 510, 29 U.S.C. § 1140
It shall be unlawful for any person to discharge, fine,
suspend, expel, discipline, or discriminate against a par-
ticipant or beneficiary for exercising any right to which
he is entitled under the provisions of an employee bene-
fit plan, this subchapter, section 1201 of this title, or the
Welfare and Pension Plans Disclosure Act [29 U.S.C.
s 301 et seq.], or for the purpose of interfering with the
attainment of any right to which such participant may
become entitled under the plan, this subchapter, or the
Welfare and Pension Plans Disclosure Act. It shall be
unlawful for any person to discharge, fine, suspend, ex-
pel, or discriminate against any person because he has
given information or has testified or is about to testify
in any inquiry or proceeding relating to this chapter or
the Welfare and Pension Plans Disclosure Act. The pro-
visions of section 1132 of this title shall be applicable in
the enf«rcement of this section.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.