Employees did not prove intent by seller and buyer companies to interfere with employees’ attainment of benefits

Terminated employees who were not rehired following a sale of an employer’s facilities did not present sufficient evidence to prove that their employer and the purchasing company had conspired to prevent the employees from obtaining and receiving pension benefits in violation of ERISA §510, according to the U.S. Court of Appeals in Denver (CA-10). The employees did not provide evidence that disproved the fact that the employer did not look at pension costs for the facilities until after the decision to sell was made.

An employer sold certain facilities to a separate company. On the day the sale closed, the employer terminated all of the employees working at the facilities—over 10,000. The next day the purchasing company hired more than 8,000 of the employees, who had been selected and recommended by the employer. Although the workforce before and after the sale was mostly older workers (age 40 and older), a lower percentage of older workers than younger workers (under age 40) were hired by the purchasing company.

A group of terminated employees brought suit, seeking to represent a class of about 700 terminated employees who were not hired by the purchasing company. The employees alleged numerous claims against the employer and the purchasing company, one of which was a violation of ERISA §510—an intentional interference with the employees’ attainment of pension benefits. The employees contended that the companies had worked together to prevent the employees from obtaining and receiving pension benefits. The district court granted summary judgment in favor of the companies. The district court also denied the employees’ motion for reconsideration. The employees appealed.

The appellate court explained that a claimant, such as these employees, must show that the determinative or motivating factor for an employer’s actions is to block attainment of benefit rights. If there are other legitimate business reasons for the employer’s actions, even if some employees who are laid off do not become eligible for pension benefits, there is no violation of ERISA §510.

Insufficient evidence of conspiracy to interfere with attaining benefits presented

The employees contended that their employer’s decision to sell and the purchasing company’s decision to buy were motivated by the companies’ desire to operate the facilities at a lower cost by reducing the companies’ pension obligations. This conspiracy was to be accomplished by not retaining older employees. The appellate court concluded that the employees did not present sufficient evidence to support this contention.

Although the employees argued that the companies studied pension costs and the demographics of the employees before deciding to sell the facilities, the court found that the employer did not look at pension costs until after the decision to sell was made. The court explained that the employees did not present any evidence to the contrary. According to the court, the fact that the companies examined the pension costs after the decision to sell in order to determine how much the employer was required to transfer to the purchasing company to cover the hired employees’ pensions did not say anything about their motivations for selling. Similarly, the companies’ hope to achieve savings by operating the facilities with a smaller workforce that would be paid less did not show a violation of ERISA §510. The court further stated that, to the extent that older workers suffered a disadvantage with the sale, the employees’ own evidence showed only isolated incidences of discrimination, not a scheme to get rid of employees for pension cost reasons. The appellate court affirmed the district court’s rulings concerning the ERISA §510 violation claim.

Source: Apsley v. The Boeing Company (CA-10).

For more information, visit http://www.wolterskluwerlb.com/rbcs.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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