Court Finds No Proof of Benefits Interference by Duke Energy

In affirming a lower court’s summary judgment ruling, the appellate court found Eric French’s claim under the Employee Retirement Income Security Act (ERISA) fails because he did not made 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.”   

In addition, French’s case falters because he cannot show a causal link between his termination as a reduction in force and the increased cost of his benefits or show intentional interference.   

According to the court opinion, the record does not support French’s claim that Duke interfered with his attainment of a right because it is not clear how French could have qualified for the early retirement pension enhancement. Under Duke’s retirement policy, employees qualified for the pension enhancement if their age added to the years of service equaled or exceeded 85.   

As part of its merger with Cynergy, where French previously worked, Duke offered an early retirement option under which employees got an additional three points for age and three points for service, if the employee had reached the age of 52 and had volunteered to retire before the plan window expired. Because French did not volunteer, it appears on the record that he would not have been eligible for the early retirement enhancement even if he had been retained.  

Further, French would have been too young to qualify for retirement, even if he had volunteered, because he did not turn 52 within the plan window.   

French complained that Duke did not make a special exception for him by awarding him more points or allocating his points differently. But, the court found, ERISA protects employees only from interference “with the attainment of any right to which such participant may become entitled under the plan . . . .” 29 U.S.C. § 1140. Therefore, the statute only protects entitlements that arise under the terms of a qualified pension plan, and does not require a company to alter its retirement plan on a case-by-case basis to accommodate those who do not otherwise qualify. In fact, such ad hoc application of a retirement plan could have run afoul of ERISA.  

Further, the six-point benefit given to employees “eviscerate[s] any inference attributable to temporal proximity as they have the effect of sweeping more employees into retirement, not fewer,” the court said.  

Duke did not deny employees retirement benefits, but instead offered a severance package that granted retirement benefits to those that otherwise did not qualify.