Indiana Employer Wins Mixed Ruling in Benefits Case

May 18, 2009 ( - An Indiana manufacturer has received a mixed ruling from a federal judge in a lawsuit alleging its misdeeds in the handling of its benefits program constituted a fiduciary breach.

While U.S. District Judge Philip P. Simon of the U.S. District Court for the Northern District of Indiana threw out several of the Employee Retirement Income Security Act (ERISA) allegations against Sanlo Manufacturing Co., he ruled that plaintiff Keith Lewalski could move forward with other charges.

Simon ruled that Lewalski, who retired in March 2006 from the Michigan City, Indiana, manufacturer of wire rope and cable assemblies, could not move forward with his claim that his employer breached its fiduciary duties by miscalculating participants’ benefits. Simon said ERISA (502(a)(1)(B) already provided a remedy for that problem so the issue could not be “tacked on” as a redundant fiduciary breach claim.

On reaching retirement Lewalski requested that his benefits be paid in a lump sum, but his request was denied because although Sanlo’s defined benefit pension plan provided for such distributions, the plan was underfunded, the court said.

According to the court, Sanlo determined that Lewalski was a highly compensated employee and the plan could deny his request for a lump-sum distribution unless he first provided a bond, letter of credit, or other form of security to the plan. Lewalski alleged Sanlo improperly denied the request.

However, Simon ruled against the employer in asserting the former employee could go forward with claims that Sanlo provided misinformation, delayed benefit statements, discriminated against some of its highly compensated employees, and exposed its defined benefit pension plan to federal tax violations.

The case is Lewalski v. Sanlo Manufacturing Co.,N.D. Ind., No. 3:08-CV-311 PPS.