Participant too Late to Pursue Interference of Benefits Claim

January 15, 2010 (PLANSPONSOR.com) – A former retirement plan participant claiming he was terminated to prevent him from becoming vested in the plan has made his complaint too late.

The U.S. District Court for the Western District of Michigan said that although Employee Retirement Income Security Act (ERISA) § 510 does not have its own statute of limitations, courts should “apply the limitations period for the most analogous state law claim.” The court determined that the Michigan causes of action most analogous to a § 510 claim are an action for retaliation for the exercise of worker’s compensation rights or an action for wrongful discharge in violation of public policy, both of which are subject to a three-year limitations period.

The court ruled Donald W. Zappley, Sr.’s claim under § 510 occrued on February 21, 1987, when he was allegedly wrongfully discharged in order to preclude his plan benefits from vesting, more than twenty years before he filed his complaint. Zappley alleges that the plan requires 15 years of employment to qualify for a disability pension, and the court said that because Zappley knew at the time of his termination that he had been employed by Stride Rite for less than twelve years, he knew or should have known of his injury by Stride Rite at that time.

The court dismissed the § 510 claim, but rejected Stride Rite's that Zappley’s claim for benefits under the plan must also be dismissed because Zappley failed to exhaust his administrative remedies. "Because failure to exhaust administrative remedies is an affirmative defense, the existence of which does not appear on the face of Zappley’s complaint, the Court must deny Stride Rite’s motion to dismiss Zappley’s claim for benefits under ERISA § 502(a)(1)(B) for lack of exhaustion," the court said in its opinion.

Zappley was employed by Stride Rite from July 14, 1975, until February 21, 1987, and was covered by the Stride Rite Retirement Income Plan, which also included a disability component. On February 5, 1987, Zappley was injured when he was involved in a hit and run accident with a tractor trailer.

At the time of the accident, Zappley was working as the manager of Stride Rite’s Herald Square store in New York City. He had previously held the position of district manager, but Stride Rite assigned Zappley to the New York City store on December 19, 1986, after it became dissatisfied with his performance as district manager.

Stride Rite terminated Zappley’s employment on February 18, 1987. Zappley sued Stride Rite in February 1988 in New Jersey Superior Court. Stride Rite removed the case to the U.S. District Court for the District of New Jersey, and on December 20, 1989, that court entered an order of dismissal with prejudice, noting that the parties had resolved the case.

The case is Zappley v. Stride Rite Corp., W.D. Mich., No. 2:09-CV-198, 1/13/10.

Rebecca Moore
editors@plansponsor.com