Facts
- Perry McClendon worked for Ingersoll-Rand for about nine years and eight months and was terminated shortly before his pension would have vested under an ERISA-covered plan.
- The employer attributed the termination to a company-wide reduction in force.
- McClendon alleged the principal reason for his discharge was to avoid pension contributions and benefit obligations.
- He sued in Texas state court under state tort and contract theories, seeking damages such as lost wages, mental anguish, and punitive damages rather than lost pension benefits.
- Texas trial and intermediate appellate courts ruled for the employer on at-will employment grounds.
- The Texas Supreme Court recognized a public-policy wrongful-discharge claim when the principal reason for termination is to avoid contributing to or paying pension benefits and remanded for trial.
- The U.S. Supreme Court granted review to determine ERISA preemption.
Issues
- Whether ERISA § 514(a) expressly preempts a state common-law wrongful-discharge claim that requires proving an ERISA-covered plan and a pension-defeating motive.
- Whether the state cause of action is also preempted because it conflicts with ERISA’s enforcement and remedies scheme, particularly § 510 and the exclusive civil enforcement provision in § 502(a).
Decision
- The Supreme Court unanimously reversed the Texas Supreme Court.
- The Court held the Texas wrongful-discharge cause of action is preempted by ERISA.
- The claim “relate[s] to” an ERISA plan under § 514(a) because liability depends on the existence and terms of an ERISA-covered plan and an inquiry directed to the plan.
- The claim is also preempted because the alleged conduct falls within ERISA § 510, and § 502(a) supplies the exclusive civil enforcement mechanism.
- State-law damages remedies (including punitive and mental-anguish damages) cannot supplement or alter ERISA’s remedial scheme for the same alleged interference with benefit rights.
Legal Principles
- A state-law cause of action “relates to” an ERISA plan, and is expressly preempted by ERISA § 514(a), when the existence of the plan is a critical element of liability and adjudication requires reference to the plan.
- Discharging an employee to interfere with the attainment of plan benefits is conduct addressed by ERISA § 510.
- ERISA § 502(a) provides the exclusive civil enforcement framework for redressing ERISA violations, including § 510 interference claims.
- State common-law claims that provide alternative or additional remedies for conduct actionable under ERISA conflict with Congress’s remedial design and are preempted, even if the plaintiff seeks damages other than plan benefits.
Conclusion
ERISA preempted Texas’s public-policy wrongful-discharge claim because it depended on the existence of an ERISA plan and targeted conduct covered by ERISA § 510; any remedy for termination intended to prevent benefit attainment must proceed, if at all, under ERISA’s exclusive civil enforcement provision in § 502(a).