Becker v. Mack Trucks Inc Filed February 21, 2002
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-4414
LARRY BECKER; STEPHEN CAPKOVIC, III; LEE R.
CHRIST; JAMES DAQUISTO; MICHAEL DREHER; RANDY
FREY; ROBERT GASTON; CHARLES GROHOTOLSKI;
BARRY JONES; JOHN JUDD; DENNIS KNOPF; WAYNE
LABATY; WILLIAM LEHMAN; THOMAS LITCHAUER;
BRUCE MCFARLAND; MICHAEL MEYERS; SAMUEL
OLIVERIA; ROBERT PETERS; SHERWOOD PETERS;
THOMAS ROBERTS; KATHERINE TAKACS; SCOTT
TAKACS; ANTHONY TRATNYEK; CLAIRE WILLIAMS;
DENNIS C. ACKER; RICHARD BALLIET; ALEXANDER
BANDI, JR.; STEPHEN R. BECKER; TIMOTHY S. BELLER;
ANITA L. BELLES; THOMAS F. BENNER, JR.; JUDITH A.
BINDER; DAVID J. BOBO; JAMES P. BURGER, JR.;
RALPH A. CHRISTMAN; LAVERN R. CLATER; ALFRED W.
DILABIO; MICHAEL A. DILCHER; WAYNE R. ERNST;
DANIEL H. FREED; EDWARD A. FREED; JOHN L.
GOLDEN; MANUEL I. GUEDES; DENNIS P. HAFER;
SHEILA K. HANSLER; CLAYTOR HOWARD; JEFFREY
HUSACK; JAMES P. KALAVODA; JOZEF KAZIMIR; JOHN
S. KERBACHER; ANTHONY A. KISS; JOSEPH J. KISS;
STEPHEN J. KISS; MICHAEL KLUCAR; DENNIS G.
KOEHLER; ANDREW J. KORUTZ; RICHARD D. DRATZER;
THOMAS A. MARSHMAN; RONALD P. MARCKS; JAN A.
MERKEL; JANE L. MICHAEL; CHESTER C. MILLER; PAUL
J. MISHKO, JR.; DENNIS R. PASCOE; THOMAS E.
PRUZINSKY; JOSEPH M. RICE; BRUCE L. ROTHROCK,
JR.; EDWARD R. SAJT; GERALD ROBERT SCHUECK;
PETER M. SINCLAIR; DAVID W. SMITH; DALE R.
SNYDER; MARYANN J. SOSNOWSKI; DARREL C.
STOFFLET; GEORGE M. SZEP; JOHN J. SZILAGYI;
BRUCE TORRENCE; CHERYL A. YANDRASITS,
Appellants
v.
MACK TRUCKS, INC.
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action No. 00-cv-01338)
District Judge: Honorable Franklin S. VanAntwerpen
Argued September 26, 2001
Before: ROTH, AMBRO and FUENTES, Circuit Judge s
(Opinion filed: February 21, 2002)
Quintes D. Taglioli, Esquire (Argued)
Markowitz & Richman
512 Hamilton Street, Suite 200
Allentown, PA 18101
Attorney for Appellants
Edward T. Ellis, Esquire (Argued)
Jeanne L. Bakker, Esquire
David E. Brier, Esquire
Montgomery, McCracken, Walker &
Rhoads, LLP
123 South Broad Street
Philadelphia, PA 19109-1090
Attorneys for Appellee
Mary Ellen Signorille, Esquire
American Associaiton of Retired
Persons
601 E. Street, N.W.
Washington, D.C. 20049
Attorney for Amici-Appellants
American Association of Retired
Persons and National Employment
Lawyers Association
2
OPINION OF THE COURT
ROTH, Circuit Judge:
This case requires us to decide whether S 510 of the
Employee Retirement and Income Security Act, 29 U.S.C.
S 1140, applies to rehiring decisions. Plaintiffs are former
employees of defendant Mack Trucks, Inc., who lost their
jobs when Mack closed its Allentown plant in 1987. Some
plaintiffs had vested pension rights at the time they were
laid off. Others merely had credit for past service. In 1997,
when the economy had improved, Mack needed to hire
workers for its Macungie plant. By this time, all the
plaintiffs had either exhausted or forfeited any recall rights
with Mack. Mack declined to rehire plaintiffs because to do
so would create a future pension liability disproportionately
greater than that incurred by hiring employees without past
service or pension credit. Plaintiffs contend that Mack's
decision amounts to unlawful "discrimination" under S 510
of ERISA.
The District Court rejected plaintiffs' claims in their
entirety on a motion for summary judgment. We will affirm
that decision. We agree, as an initial matter, that those
plaintiffs without vested pension rights lack standing to
pursue their S 510 claim. See Shawley v. Bethlehem Steel
Corp., 989 F.2d 652 (3d Cir. 1993). Shawley does not
foreclose standing for those plaintiffs with vested rights,
however; thus, we reach the merits of their claims and
resolve the question left unanswered in Shawley: Whether
an employer's refusal to rehire based on a desire to avoid
increased pension liability is prohibited activity under
S 510. Id. at 655 n.5. We conclude that S 510 does not
proscribe Mack's refusal to rehire the vested plaintiffs.
I. FACTS
Defendant Mack Trucks manufactures and distributes
heavy-duty trucks. It operates an assembly plant in
Macungie, Lehigh County, Pennsylvania, and, until 1987,
operated machining and fabrication plants in Allentown,
3
Pennsylvania. Employees in both locations are and were
represented by the United Automobile, Aerospace and
Agricultural Implement Workers (UAW) and UAW Local 677.
The plants in Allentown and Macungie were covered by the
Mack-UAW Master Agreement as well as by local
agreements.
The Master Agreement includes, as Appendix A, the
Mack-UAW Pension Plan, which is subject to renegotiation
every time the Master Agreement itself is renegotiated. Prior
to January 1, 1989, an employee covered by the Plan
became vested under the Plan after ten years of service. On
and after January 1, 1989, employees became vested after
five years of service. The Plan also provided that any
rehired former employee would be entitled to credit for past
service no matter how long the break between employment
periods.
When Mack closed its facilities in Allentown in 1987, a
number of employees lost their jobs. Some transferred or
were absorbed into other Mack plants. Others, like the
plaintiffs, either accepted a cash "dislocation benefit" to
relinquish their seniority rights or were laid off and
eventually exhausted their recall rights. Some plaintiffs
were laid off before meeting the ten year vesting
requirement in place at the time; other plaintiffs were fully
vested by the time they were laid off.
In 1997, a combination of rising production needs and
workforce attrition made it necessary for Mack to hire new
employees at the Macungie plant. Although Mack's former
employees were initially the first to be offered new jobs,
Mack soon realized that a rehired former employee with
credited service under the Plan would receive a
disproportionately larger pension than would a newly hired
employee.
There are three reasons for this difference in pension
benefits between former employees and new hires. First,
former employees who had not vested under the Plan would
receive credit for past service and would become vested in
less than the five years applicable to new hires. 1 Second,
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1. Because the Plan's vesting period of ten years employment had been
reduced to five years in 1989, the unvested former employees with
between five and ten years credited service would be credited on rehire
with past service sufficient for vesting.
4
former employees were more likely to become eligible for
early retirement before age 62. Third, former employees
would be entitled to raise their pension rate on retirement
above the lower benefit rate in place as of the day they had
been laid off in 1987.
As a result, in July of 1997 Mack decided to stop hiring
former employees with credited service under the plan. All
78 plaintiffs are former Mack employees who were not
considered for re-employment due to Mack's pension
liability avoidance policy.
The plaintiffs brought a complaint seeking injunctive and
monetary relief based on allegations that Mack violated 29
U.S.C. S 1140 when it refused to rehire them. After Mack
filed a timely answer admitting the essential facts of the
complaint, the parties brought cross-motions for summary
judgment and asked the District Court to rule on a core set
of stipulated facts. On November 30, 2000, the District
Court found that Mack's decision not to rehire plaintiffs
was not unlawful and entered judgment in favor of Mack.
Plaintiffs filed a timely appeal.
II. JURISDICTION AND STANDARD OF REVIEW
We have federal question jurisdiction over this case
under 28 U.S.C. S 1331 because plaintiffs have alleged a
violation of S 510 of ERISA, 29 U.S.C. S 1140. We also have
appellate jurisdiction to review the District Court's
November 30, 2000, order granting summary judgment
under 28 U.S.C. S 1291.
The cross-motions for summary judgment were
submitted with no dispute as to a core set of stipulated
facts, and the District Court resolved only issues of law in
its ruling. As a result the standard of our review for the
District Court's decision is plenary. See West American
Insurance Co. v. Park, 933 F.2d 1236, 1238 (3d Cir. 1991).
III. DISCUSSION
A. STANDING
We first address whether the non-vested plaintiffs have
standing to sue under S 510. A plaintiff may bring a civil
5
action under S 510 of ERISA if he is a "participant or
beneficiary" of a benefit plan. 29 U.S.C. S 1132 (a)(1)(B). The
statute defines a participant as "any employee or former
employee of an employer . . . who is or may become eligible
to receive a benefit of any type from an employee benefit
plan . . ." Id. at S 1002(7).
While there is no dispute that the non-vested plaintiffs
are former employees, it is unclear whether they are
"participants" under S 1002(7). To resolve this issue we
must decide whether the non-vested plaintiffs, as former
employees,2 have (1) a "reasonable expectation of returning
to covered employment" or (2) " `a colorable claim' to vested
benefits." Firestone Tire & Rubber Co. v. Bruch, 489 U.S.
101, 117 (1989). While it is clear that the vested plaintiffs
have standing under the second element, our opinion in
Shawley v. Bethlehem Steel Corp., 989 F.2d 652 (3d Cir.
1993), establishes that the non-vested plaintiffs fail both
elements of Firestone.
i. Do non-vested plaintiffs have a
reasonable expectation of returning to
covered employment?
Like the plaintiffs in Shawley v. Bethlehem Steel Corp.,
989 F.2d 652 (3d Cir. 1993), the non-vested plaintiffs lack
a reasonable expectation of returning to covered
employment. The plaintiffs in Shawley were a group of
former employees who had been laid off for several years.
When their previous employer considered rehiring them but
refused to do so, they sued under ERISA. The employees
claimed that the employer violated the law by basing its
hiring decision upon a desire to avoid increased pension
liability. Shawley, 989 F.2d at 654-55. Under those facts,
"where the collective bargaining agreement expressly covers
recall rights, and former employees were not hired before
the expiration of those rights--we believe plaintiffs had no
reasonable expectation of reemployment." Id . at 658.
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2. A current employee who is constructively discharged in violation of
ERISA need not show a reasonable expectation of returning to covered
employment to establish standing under ERISA. Berger v. Edgewater
Steel Co., 911 F.2d 911, 922 (3d Cir. 1990).
6
The non-vested plaintiffs here are indistinguishable. Their
collective bargaining agreement also covers recall rights. By
the time Mack considered rehiring them, all of their recall
rights had either expired or been waived in lieu of
dislocation benefits. Thus, under our holding in Shawley,
non-vested plaintiffs lack a reasonable expectation of
reemployment.
The non-vested plaintiffs contend nevertheless that their
reasonable expectation of reemployment and the
consequent vesting of their benefits would have been
realized "but for" Mack's refusal to rehire them. In support
of this proposition, they cite Christopher v. Mobil Oil Corp.,
950 F.2d 1209 (5th Cir. 1992). Their argument, however,
ignores our earlier rejection of standing for similarly
situated plaintiffs even under the Christopher "but for"
analysis. Shawley, 989 F.2d at 658-59. As we explained
there, the "but for" analysis grants standing only when the
employer's action "in and of itself divests aggrieved parties
of their status as covered employees." Id. (quoting
Christopher at 1222).
The "but for" test does not establish standing for former
employees who are not rehired after being laid off due to an
economic downturn:
Bethlehem Steel's refusal to rehire [plaintiffs] did not
"in and of itself " strip [them] of their employee status.
. . . Plaintiffs were not terminated, constructively
discharged, or tricked into retiring from Bethlehem
Steel--they were laid off because of an economic
downturn in the steel industry.
Shawley, 989 F.2d 659. Thus, even if there were situations
in which the "but for" test is applicable--a question we
need not resolve today--it does not support standing for
plaintiffs here. As in Shawley, Mack's refusal to rehire
former employees did not "in and of itself " strip them of
their employee status. The plaintiffs initially lost employee
status when they were laid off many years earlier.
ii. Do non-vested plaintiffs have a colorable
claim to vested benefits?
The non-vested plaintiffs also lack a colorable claim to
vested benefits. To satisfy this element, a claimant"must
7
have a colorable claim that (1) he or she will prevail in a
suit for benefits or that (2) eligibility requirements will be
fulfilled in the future." Firestone Tire & Rubber Co. v. Bruch,
489 U.S. 101, 117-18 (1989). We have held, under the
Firestone standard, that non-vested, credited service "gave
rise to only a forfeitable benefit," and that such a
"contingent claim for future benefits does not satisfy the
dictates of Firestone." Shawley, 989 F.2d at 657; see also
Agathos v. Starlite Motel, 60 F.3d 143, n.10 (3d Cir. 1995)
("We have previously held that a claim for credited service
does not give rise to a `colorable claim' to vested benefits.").
Shawley involved the denial of ERISA standing to a group
of non-vested former employees. They claimed that credited
service, which counted as an accrued, forfeitable benefit
under the rule of parity,3 established standing because that
benefit was not yet forfeited and would vest under the
requirements of the Internal Revenue Code if the plan were
to be terminated prior to the exhaustion of their credited
service. Shawley, 989 F.2d at 656-57. We rejected this
argument on the ground that such "contingent" benefits do
not establish a colorable claim to vested benefits under the
Firestone standard.
The non-vested plaintiffs attempt to distinguish Shawley
by claiming that the rule of parity does not apply to their
benefit agreement with Mack and that they cannot forfeit
their past credited service because they have the right to
retain it indefinitely after termination. This distinction is,
however, without significance. Whether past credited
service is forfeitable after a given period of time or never
forfeitable does not change the outcome. "Credited service"
is not the same thing as the "right to benefits." It is the
nonforfeitable right to benefits, not the contingent, albeit
nonforfeitable, right to credited service that is the relevant
standard under Firestone. And, indeed, when the former
employees in Shawley brought suit, they had not yet lost
their right to credit for past service; it remained a
contingent right until their re-employment within the period
designated by the rule of parity. Thus, in Shawley we
determined that a legally unenforceable claim to contingent
_________________________________________________________________
3. 29 U.S.C. S 1053(b)(3)(D)(i)(II).
8
benefits cannot establish a colorable claim to vested
benefits under Firestone. The benefits here, arising from the
non-vested plaintiffs' credited service, are materially
indistinguishable from those in Shawley. They are
contingent upon re-employment with Mack. For that
reason, the non-vested former employees lack standing.
Nor will we deviate from our opinion in Shawley based on
the Supreme Court's intervening decision in Inter-Modal
Rail Employees Assoc. v. Atchison, Topeka, and Santa Fe,
520 U.S. 510 (1997). Inter-Modal does not overrule or
otherwise limit the efficacy of the Court's earlier opinion in
Firestone or our standing analysis in Shawley. Inter-Modal
is distinguishable because it does not deal with the
threshold issue of standing and because it concerns not
vested pension benefits, but health and welfare benefits,
which do not vest, and whether health and welfare benefits
are protected by S 510. Id. at 513.
Thus we reject the non-vested plaintiffs' request for
standing under the binding authority of Firestone and
Shawley.4
Because the vested plaintiffs do have standing, however,
we will now turn to the merits of their claims.
B. MERITS
The vested plaintiffs allege that Mack violatedS 510 of
ERISA, 29 U.S.C. S 1140, when it refused to rehire them in
order to avoid increased pension liability. In order to
demonstrate a prima facie case under S 510, a plaintiff
must show "(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." Gavalik
v. Contintental Can Co., 812 F.2d 834, 852 (3d Cir. 1987).
In this case, the parties do not dispute that Mack acted
with the purpose of preventing pension benefit increases to
previously terminated employees. The only remaining issue,
_________________________________________________________________
4. The plaintiffs here and in Shawley did not have any enforceable right
to recall. We are not considering here what impact, if any, an enforceable
right to recall might have on the standing issue.
9
then, is whether Mack engaged in prohibited conduct under
S 510 in its refusal to rehire the vested plaintiffs.
To discern whether Congress intended in S 510 to
regulate rehiring decisions, "we examine the explicit
statutory language and the structure and purpose of the
statute." Ingersoll-Rand Co. v. McClendon, 498 U.S. 133,
138 (1990). Based on that evidence, we decline to expand
the reach of S 510 to cover the rehiring of former employees
with no right or expectation of future employment. See,
e.g., West v. Greyhound Corp., 813 F.2d 951, 955 (9th Cir.
1987) ("we hold that no violation of section 510 of ERISA is
shown where the seller of a business terminates
employment under the provisions of a collective bargaining
agreement and the purchaser refuses to hire any of the
employees because they refuse to accept a reduction of
unaccrued employee benefits"); Shawley v. Bethlehem Steel
Corp., 784 F. Supp. 1200, 1202-04 (W.D. Pa. 1992). Both
the text and purpose of S 510 support the result we reach
today.
i. The text of S 510
We begin, as we must, with the language of S 510:
Interference with protected rights. It shall be
unlawful for any person to discharge, fine, suspend,
expel, discipline, or discriminate against a participant
or beneficiary . . . for the purpose of interfering with
the attainment of any right to which such participant
may become entitled under the plan
. . . .
29 U.S.C. S 1140.
The plain language of S 510 omits a refusal to"rehire,"
"hire" or to take any action related to hiring from its
enumeration of prohibited acts. Plaintiffs argue that this
makes no difference because one definition of
"discriminate" -- "to make a difference in treatment . . . on
a basis other than merit," see Webster's Ninth New
Collegiate Dictionary (1986) -- encompasses hiring
decisions. We reject this invitation to construe the word
"discriminate" out of context. Instead, we heed the Supreme
10
Court's instruction that we "must not be guided by a single
sentence or member of a sentence, but look to the
provisions of the whole law, and to its object and policy."
United States National Bank of Oregon v. Independent
Insurance Agents of America, 508 U.S. 439, 455 (1993)
(quoting United States v. Heirs of Boisdore, 49 U.S. (8 How.)
113, 122, 12 L. Ed. 1009 (1849)). This background makes
clear that the inclusion of "discriminate" in the text was not
intended to bear the broad meaning suggested by plaintiffs.
The more limited meaning of "discriminate" becomes
clear when we consider the manner in which Congress
traditionally has proscribed discrimination in hiring under
employment regulatory schemes. When S 510 is compared
with the statute upon which it was modeled--section 8(a)(3)
of the National Labor Relations Act, 29 U.S.C. S 158(a)(3)5--
the omissions in S 510 reveal that Congress did not intend
to regulate hiring decisions under ERISA.
In the NLRA, Congress specifically stated that it"shall be
an unfair labor practice for an employer . . . (3) by
discrimination in regard to hire or to discharge any
individual or otherwise to discriminate against any
individual." Id. (emphasis added). Thus, Congress knows
how to forbid discrimination in hiring, and when it wishes
to do so it will use the word "hire." Cf. , Meghrig v. KFC
Western, Inc., 516 U.S. 479, 485 (1996) ("Congress . . .
demonstrated in CERCLA that it knew how to provide for
the recovery of cleanup costs, and that the language used
to define the remedies under the RCRA does not provide
that remedy.").
Based on Congress's past usage, if Congress intended
that S 510 apply to hiring practices, it would have included
the word "hire" in the string of denominated employment
practices. We agree with the District Court that the express
_________________________________________________________________
5. "The legislative history of ERISA does make clear . . . that the statute
was modeled on S 8(a)(3) of the National Labor Relations Act." Stiltner v.
Beretta U.S.A. Corp., 74 F.3d 1473, 1483 (4th Cir. 1996); 119 Cong. Rec.
30374 (Statement of Sen. Hartke), reprinted in 2 Legislative History of the
Employee Retirement Income Security Act of 1974, at 1775 (1976) ("The
language [of ERISA S 510] parallels section 8(a)(3) of the National Labor
Relations Act . . . .").
11
language used to regulate hiring practices in the NLRA, as
well as other employment statutes,6 implies that the
omission of such language from S 510 was deliberate.7
ii. The purpose of S 510
We are also convinced that we should reject the vested
plaintiffs' broad definition of "discriminate" because it
would "produce a result at odds with the purposes
underlying the statute." Watt v. Western Nuclear, 462 U.S.
36, 56 (1983); see also Brotherhood of Locomotive Engineers
v. Atchison, Topeka, and Santa Fe Railroad, 516 U.S. 152,
157 (1996) (interpreting statute in accordance with purpose
of statutory scheme). ERISA is designed to protect benefits
promised to an employee arising from a pre-existing
employment relationship. Though the vested plaintiffs once
had an employer-employee relationship with Mack, their
complaint does not address a deprivation of any pre-
existing ERISA or recall rights arising out of their former
employment.
Instead, plaintiffs seek protection as job applicants. Such
protection is inconsistent with Congress's purpose in
enacting ERISA, as evidenced by express statutory
language, opinions interpreting S 510, and by that
provision's legislative history. See generally James F.
Jorden, Waldemar J. Pflepsen, Jr., & Stephen H. Goldberg,
Handbook on ERISA Litigation S 8.01 [B]-[C] (2d ed. 2000
Supplement).
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6. Other employment statutes that proscribe discriminatory hiring, such
as Title VII, the Age Discrimination in Employment Act, and the
Americans with Disabilities Act, do so explicitly. See, e.g., 42 U.S.C.
S 2000e-2(1) (employer may not "fail or refuse to hire . . ."); 29 U.S.C.
S 623(a)(1)(same); 42 U.S.C. S 12112 (a) & (b)(5)(B) ("No covered entity
shall discriminate . . . in regard to job application procedures, the hiring,
advancement, or discharge of employees; the "term`discriminate'
includes--(B) denying employment opportunities to a job applicant or
employee who is an otherwise qualified individual . . .") (emphasis
added).
7. Thus we need not reach the question of whether"discriminate" is
similar in nature to the preceding terms "discharge, fine, suspend . . ."
under the ejusdem generis canon of statutory construction.
12
As an initial matter, it is axiomatic that "ERISA neither
mandates the creation of pension plans nor in general
dictates the benefits to be afforded once a plan is created."
Smith v. Contini, 205 F.3d 597, 602 (3d Cir. 2000). It is only
after an employer chooses to provide a pension plan that
ERISA mandates vesting and other rights designed to
safeguard employees' expectations with regard to promised
benefits. Indeed, the explicitly stated policy behind ERISA is
Congress's desire to protect employees' promised benefits.
29 U.S.C. S 1001(a).
Section 510 establishes an important check on
employers' ability to undermine ERISA's protections for
promised benefits: "Congress viewed [S 510] as a crucial
part of ERISA because, without it, employers would be able
to circumvent the provision of promised benefits." Ingersoll-
Rand Co. v. McClendon, 498 U.S. 133, 143 (1990); Inter-
Modal Rail Employees Ass. v. Atchison, Topeka, and Santa
Fe, 520 U.S. 510, 515 (1997) ("S 510 helps make promises
credible") (citing Heath v. Varity Corp., 71 F.3d 256, 258
(7th Cir. 1995)). Section 510 safeguards promised benefits
by prohibiting "unscrupulous employers from discharging
or harassing their employees in order to keep them from
obtaining vested pension benefits." Gavalik , 812 F.2d at
851. Congress has also provided stiff criminal penalties for
employers that take coercive action to prevent employees
from obtaining benefits. 29 U.S.C. S 1141; West v. Butler,
621 F.2d 240, 243 (6th Cir. 1980).
While termination of employment is the prototypical
action Congress intended to cover in S 510, that section
also reaches employee harassment which falls short of
firing. Legislative history reveals that the term
"discriminate" was used in order to reach conduct "which
does not say that one is fired, but makes living such a hell
that a person wishes he did not have to hang on and
endure," 119 Cong. Rec. 30374 (Statement of Sen. Hartke),
reprinted in 2 Legislative History of the Employee Retirement
Income Security Act of 1974, at 1774-75 (1976); 8 see also
_________________________________________________________________
8. Plaintiffs also claim that S 510's legislative history supports a broader
interpretation of the term "discriminate." We disagree. The provisions
upon which they rely discuss "interfer[ence] with [an employee's] rights
13
McGath v. Auto-Body North Shore, Inc., 7 F.3d 665, 669 (7th
Cir. 1993) (S 510 "protects the employee not only against
the classical forms of employer harassment that might
occasion the loss of benefits, but also against the more
atypical forms of employer misconduct that can produce
the same result.").9 Congress's intent to provide a broad
array of safeguards for existing employment relationships
by no means suggests, however, that it intended to regulate
actions taken against a potential employee.
Unlike a discharge or other workplace harassment, a
failure to hire does not amount to a circumvention of
promised benefits because job applicants who have yet to
be hired have not been promised any benefits. In fact, we
have held that "discriminate" as used in S 510 is "limited to
actions affecting the employer-employee relationship."
Haberern v. Kaupp Vascular Surgeons Ltd., 24 F.3d 1491,
1503 (3d Cir. 1994); accord Fischer v. Philadelphia Elec.
Co., 96 F.3d 1533, 1543 (3d Cir. 1996) ("under the law of
this circuit, suits for discrimination under S 510 are `limited
to actions affecting the employer-employee relationship' ");
see also Anderson v. Chrysler Corp., 99 F.3d 846, 856 (7th
Cir. 1996) ("S 510 applies only in instances in which an
employer wrongfully alters the employment relationship to
prevent benefits rights from vesting"); Woolsey v. Marion
Labs, Inc., 934 F.2d 1452, 1461 (10th Cir. 1991) (plaintiff
had no actionable claim under S 510 when "Administrators'
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which are protected under the Act," or "discriminatory conduct toward
participants and beneficiaries which is designed to interfere with the
attainment of vested benefits or other rights under the bill" H.R. Conf.
Rep. No. 93-1280, 93d Cong., 2d Sess. (1974) (Joint Explanatory
Statement of the Committee of Conference), reprinted in 1974
U.S.C.C.A.N. 5038, 5110 & 5188. These passages contain no suggestion
that Congress intended to protect the rights of job applicants in addition
to the rights arising from an employer-employee relationship.
9. To draw on an example from popular culture, consider the plight of
Milton in Michael Judge's movie Office Space. Although Milton's
employer had decided to lay him off years ago, his manager never
bothered to formally discharge him. Instead the company attempted to
realize its desire to be rid of Milton by moving his office to a dark
basement and asking Milton to help to get rid of the cockroaches there.
14
denial has not affected Woolsey's employment situation").10
The language enacted by Congress simply does not extend
to actions taken before an employer-employee relationship
exists.
Our recent decision in Eichorn v. AT&T Corp., 248 F.3d
131 (3d Cir. 2001), is not to the contrary. That case
involved a restrictive covenant preventing employees of a
divested subsidiary company from returning to the parent
corporation group until after their pension bridging rights
had lapsed. Id. at 149. The stated purpose of the restrictive
covenant was to prevent experienced employees from
leaving the subsidiary when it was purchased by a third-
party. The third-party, however, determined not to offer a
defined pension benefit program. Thus, the restrictive
covenant had the effect of separating the employees from
the parent company in a manner that eliminated their
accrued pension benefits. We concluded that plaintiffs had
averred sufficient facts to state a claim against the parent
company under S 510.
In sum, S 510 simply does not require that employers
blind themselves to the effect on future pension liability
when making hiring decisions. Thus we will implement
Congress's policy by following the construction ofS 510 that
is best supported by the text and by the limited purpose of
ERISA.
IV. CONCLUSION
Plaintiffs, in their ERISA claims, have attempted to
stretch ERISA's statutory language well beyond the purpose
_________________________________________________________________
10. The Fifth and Sixth Circuits have stated thatS 510 "reaches further
than the employment relationship" in cases where plaintiffs are
discriminated against because they have exercised their ERISA rights.
Mattei v. Mattei, 126 F.3d 794, 804 (6th Cir. 1997); Heimann v. Nat'l
Elevator Industry Pension Fund, 187 F.3d 493, 507 (5th Cir. 1999). We
reject these cases to the extent they conflict with our decision in
Haberern, which is binding and, we believe, correctly decided. Moreover,
both the Fifth and Sixth Circuit's holdings are distinguishable from the
case at hand. They address rights stemming from a pre-existing
employment relationship, rather than rights arising from a prospective
employment relationship.
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intended by Congress. Today we decline their invitation to
extend the protections of S 510 of ERISA to cover Mack's
decision not to rehire plaintiffs. We will, therefore, affirm
the granting of summary judgment in favor of defendant
Mack Trucks, Inc.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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