Laid-off union workers fail to advance conspiracy claim under ERISA Sec. 510

ERISA does not provide an express or implied cause of action for conspiracy to violate ERISA §510 and also preempts any attempt to premise such a claim on state law, the U.S. Court of Appeals in Chicago (CA-7) has ruled. Thus, laid-off union workers who lost future pension seniority rights when a railroad terminated its outsourcer’s contract and moved jobs “in house” failed to advance their claim that the transaction amounted to a conspiracy to interfere with their benefits in violation of ERISA §510.

Background

A railroad terminated its contract with the outsourcer that operated one of its rail yards, electing instead to bring those jobs “in house.” The outsourcer informed the workers and their union that their jobs would be eliminated. The workers were invited to apply to work directly for the railroad, but, under the railroad’s new agreement with a different union, salary and benefits for these “new” jobs would include lower wages and a 401(k) plan instead of a pension plan.

The union and several employees filed suit against the railroad, the outsourcer and the new union, alleging violations of ERISA §510, as well as a conspiracy to violate ERISA §510. The district court granted the defendant’s 12(b)(6) motion to dismiss.

Conspiracy claim

The appellate court affirmed the lower court, ruling that ERISA does not contain an express cause of action for conspiracy to violate ERISA §510. Further, the court reasoned, there’s no basis for recognizing an implied cause of action for conspiracy to violate ERISA §510. In addition, ERISA §514(a) preempts any effort to ground a conspiracy claim in state law.

Sec. 510 violations

Turning from claims of conspiracy to examine whether ERISA §510 violations occurred, the court noted that the amended complaint rests entirely on allegations of wrongful “discharge.” “Discharge” presupposes an employment relationship. Thus the complaint as written doesn’t support an action against the railroad or the union. (The court was careful to note that a properly pleaded ERISA §510 claim can be made against a union or other non-employer.)

With regard to the claim against the outsourcer who employed the workers, the court explained that to support an ERISA §510 claim, intent to frustrate the attainment of benefits must have been at least a motivating factor for the adverse action. Here the workers alleged no facts showing their dismissal stemmed from any cause other than the railroad’s decision to terminate the outsourcer’s contract.

Source: Teamsters Local Union No. 705 v. Burlington Northern Sante Fe, LLC (CA-7).

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