Defendant railroad transferred work from a wholly-owned subsidiary to an independent corporation. Several affected employees and their union sued, claiming, among other things, that the purpose of the transfer was to deprive them of pension and welfare benefits provided by collective bargaining agreements.The Ninth Circuit held that the plaintiffs had stated a claim for lost pension benefits under Sec. 510 of the Employee Retirement Income Security Act (ERISA), which prohibits employers from discharging or otherwise disciplining benefits plan participants "for the purpose of interfering with the attainment of any right to which [the] participant may become entitled under the plan." 29 U.S.C. Sec. 1140 (1994). The Ninth Circuit held, however, that plaintiffs had not stated a claim for lost welfare benefits. In the Ninth Circuit's view, since welfare benefits do not "vest," they are not protected by Sec. 510. This latter holding conflicts with decisions of the Seventh and Eleventh Circuits.
Question presented:
Certiorari was limited to: "Do allegations by employee-beneficiaries of a health and welfare benefit plan that their employer's parent company forced their employer to discharge them and to contract out their jobs to another employer in furtherance of a conspiracy to interfere with their right to receive health and welfare benefits, state a congnizable cause of action under Sec. 510 of ERISA?"
The Supreme Court unanimously held that § 510 applies to claims for lost welfare benefits as well as those for lost pension benefits. The Court relied heavily on ERISA's definition of a plan, which includes both an employee welfare benefit plan [and] an employee pension benefit plan, 29 U.S.C. § 1002(3). The Court also reasoned that the right of an employer in some circumstances to amend unilaterally or eliminate its welfare benefit plan does not justify a departure from the plain language of §§ 510 and 1002(3).
The NAM filed an amicus brief arguing that employers should not be prevented from making structural or organizational changes in their companies if such changes are based on consideration of the normal costs of maintaining employee benefit plans as contrasted to targeting of particular employees because of their benefit rights. Congress never intended to prohibit general cost concerns from affecting employment actions. Our brief was filed jointly with the California Employers Group and the Association of American Railroads.