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CCH® PENSION — 02/28/12

Terminated employee's claim failed because he did not show that employer interfered with his retirement benefits

A terminated employee who had failed to attain the required age for early retirement benefits even after an enhancement of the age requirements for the benefits failed to establish a claim of interference with protected benefit rights because he did not show that the employer had interfered with his receipt of early retirement benefits, according to the U.S. Court of Appeals in Cincinnati (CA-6).

After two companies announced their merger, qualifying employees of one of the two companies were given the opportunity to voluntarily take an early retirement pension enhancement under the company's pension plan within a certain period of time. Under a "Rule of 85," an employee could qualify for early retirement benefits if he or she had attained age 52, was vested, and the employee's age and years of service equaled 85. However, as part of the merger, there was a relaxation of the "Rule of 85" and an additional three points for age and three points for years of service were provided. A long-time employee requested an adjustment to the enhancement that would grant him additional points or a change to the formula for points --four points to age and two points to service. The employer was advised by counsel that this request could not be lawfully honored. The employee was later terminated.

The terminated employee brought suit in district court, alleging, among other things, interference with his receipt of early retirement benefits, in violation of ERISA §510. The district court granted the employer's motion for summary judgment, dismissing all claims. The court found that temporal proximity alone was insufficient to establish the ERISA claim because the employee failed to show that he was close to attaining the benefits. The employee appealed.

No showing of interference by employer

The appellate court concluded that the grant of summary judgment and dismissal were proper because the employee did not demonstrate a genuine issue of fact that the employer interfered with the employee's early retirement benefits. The employee needed to make a prima facie showing of "the existence of (1) prohibited employer conduct (2) taken for the purpose of interfering (3) with the attainment of any right to which the employee may become entitled." The appellate court stated that the employee's claim faltered on the second part of the above interference requirements because he could not "show a causal link between the termination and the increased cost of his benefits, or show intentional interference." According to the court, the case record did not support the employee's claim that the employer interfered with his attainment of a right because it was not clear how the employee could have qualified for the early retirement pension enhancement. Because the employee did not volunteer to retire, the employee would not have been eligible for the early retirement enhancement even if he had been retained as an employee. In addition, it appeared that he was too young to qualify for retirement, even if he had volunteered, because he did not become 52 within the time period for volunteering. Thus, the employee did not appear to have qualified for the early retirement option.

The court further explained that ERISA only protects employees from interference with rights attained under a plan. Therefore, to the extent that the employee complained that the employer did not make a special exception for him by adjusting the points, he failed to carry his burden. ERISA does not require a company to alter its retirement plan for a particular employee to help the employee to otherwise qualify. The court noted that such an ad hoc accommodation could run afoul of ERISA. Finally, the six-point benefit given to employees "eviscerate[s] any interference attributable to temporal proximity" because the points allow more employees, not fewer, to retire. Because the employee was not entitled to special treatment, he failed to show that his inability to make use of the benefit of the extra points constituted an ERISA violation. The appellate court affirmed the district court's grant of summary judgment.

Source: Gambill v. Duke Energy Corporation (CA-6).

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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