Court Dismisses Reduction-In-Force ERISA Suit

April 22, 2005 ( - The employer of an employee who received an e-mail about a reduction-in-force program but was not selected for the program did not violate the Employee Retirement Income Security Act (ERISA), a federal judge has ruled.

Judge Juan Sanchez of the US District Court for the Eastern District of Pennsylvania has granted   summary judgment in favor of the employer, PPL Electric Utilities Corp, ruling that “ERISA is not offended when a plan reserves to the company the   discretion to pick and choose among its employees those to whom itoffers benefits.”

Sanchez, in his ruling, said that PPL did not act arbitrarily and capriciously in not selecting the employee to participate in the program. The program offered enhanced retirement benefits to employees.

The case revolved around   Richard Tobias, 59,   who had worked at PPL for 42 years. PPL announced a   reduction-in-work force program in 2002, which was known as the Operational Improvement   Assessment 2002 Separation Program (OIA). Under the program, workers were offered better benefits for retiring early.

Tobias was not canvassed regarding the   OIA; however, Tobias received an e-mail with information regarding the   program because of a clerical error. On the day the program was publicly announced, Tobias was told by a superior that he was not included. He then filed an appeal with the company for the failure to include him; the appeal, however, was denied, and Tobias retired with regular benefits in 2003.

Following his retirement, Tobias filed suit, alleging a violation of both ERISA and the Age   Discrimination in Employment Act.

In an earlier decision by the court, it was ruled that Tobias had exhausted his   administrative remedies, and thus could proceed with his action for benefits.   Another decision granted summary judgment to the employer on the agediscrimination claim, but allowed the ERISA claim to allowed to proceed.

When ruling, Sanchez noted that a slightly   heightened arbitrary and capricious standard applied because of an   inherent conflict of interest because OIA benefits were paid out of PPLcorporate funds.

Despite this slightly higher standard, however, Sanchez ruled that   PPL did not promiseTobias enhanced benefits; Tobias only received one e-mail regardingbenefits based on a clerical error, he ruled, and “a general e-mail   sent in error cannot be binding on PPL.”