SERP Participants’ Claims Not Preempted by ERISA

June 19, 2013 ( – A federal court ruled Supplemental Executive Retirement Plan (SERP) participants’ state law claims are not preempted by the Employee Retirement Income Security Act (ERISA).

The 6th U.S. Circuit Court of Appeals noted a claim is within the scope of ERISA § 1132(a)(1)(B) if two requirements are met: (1) the plaintiff complains about the denial of benefits to which he is entitled “only because of the terms of an ERISA-regulated employee benefit plan”; and (2) the plaintiff does not allege the violation of any “legal duty (state or federal) independent of ERISA or the plan terms[.]” The court found Heartland Industrial Partners’ duty not to interfere with the executives’ SERP agreement with Metaldyne arises under Michigan tort law, not the terms of the SERP itself, because participation in the SERP was part of an employment contract between the company and executives. “Nobody needs to interpret the plan to determine whether that duty exists,” the court said in its opinion.  

The 6th Circuit conceded that terms of the plan may need to be referenced to calculate any damages that may be owed to the executives, but this was irrelevant to establishing jurisdiction.  

The appellate court remanded the case back to a federal district court with instructions to remand the case to Wayne County Circuit Court in Michigan.  

In August 2006, Heartland agreed to sell its ownership interest in Metaldyne to another investment firm, Ripplewood Holdings. Ripplewood threatened to back out of the deal when it found out about the $13 million SERP obligation. In response, Heartland founders persuaded Metaldyne’s board (of which they were chairman and a member, respectively) simply to declare the SERP invalid. The board did so on December 18, 2006, though it did not notify plaintiffs of that fact at the time.  

A month after the deal closed, Metaldyne notified participants it had invalidated the SERP. In response, several executives filed lawsuits in the Wayne County, Michigan Circuit Court. The current case alleges a single state-law claim for tortious interference with contractual relations.  

The opinion in Gardner v. Heartland Industrial Partners is at