Court Gives Go Ahead for Benefits Interference Case

February 1, 2006 ( - The US District Court for the Northern District of Illinois has given three former employees the green light to continue their lawsuit alleging their former employer interfered with their right to pension benefits and breached its fiduciary duties when it laid off employees in 2004.

BNA reports that the judge refused to dismiss the lawsuit, rejecting the former employer’s contention that the suit was barred as a matter of law since the former employees signed releases when their employment was terminated and had failed to return the severance benefits they received in exchange.

The former employees alleged that the company implemented the layoffs in an effort to reduce its funding obligation for its pension plan.    According to the court, the employees alleged that after the company laid off the employees, it began hiring new employees and rehiring old employees at much lower wage rates and without the right to participate in the company’s pension plan.

The lawsuit charged the company with interfering with employees’ rights to pension benefits, in violation of Section 510 of the Employee Retirement Income Security Act (ERISA).    In addition, the employees alleged that the company’s actions amounted to breaches of fiduciary duties.

In upholding the plaintiffs’ right to continue with their claims, the court rejected the company’s argument that the breach of fiduciary duty claims should be dismissed because the employees failed to show that they detrimentally relied on its alleged misrepresentations when they were laid off.

In addition, the court denied the employer’s motion to strike the employees’ request for front pay as a remedy for the alleged ERISA violations. The company had argued that front pay is not an available remedy under ERISA because it is not an equitable remedy. 

The case is Fletcher v. ZLB Behring LLC, N.D. Ill., No. 05 C 2695, 1/27/06.