## Facts

- Clark Equipment Company operated manufacturing plants in Benton Harbor, Michigan (union), Asheville, North Carolina (non-union), and St. Thomas, Ontario.
- By the early 1980s, Clark faced serious financial difficulty and evaluated closing a plant to reduce overall operating costs and avoid bankruptcy.
- Clark conducted multi-year capacity and cost studies comparing plants; keeping Asheville open and closing Benton Harbor projected substantial operating-cost savings, with pension expense comprising roughly one-fifth of the difference.
- Clark viewed continued production in Ontario as necessary due to Canadian customs/duty conditions affecting market competitiveness.
- Benton Harbor’s workforce was older and more senior, making pension obligations higher than at other facilities.
- A Benton Harbor manager remarked that “the pension costs were killing us,” which plaintiffs cited as evidence of pension-related motive.
- Clark closed the Benton Harbor plant in February 1983, terminating 18 employees who were near qualifying for full pension benefits; the terminations prevented them from reaching age/service thresholds for more favorable pension benefits.
- Plaintiffs sued alleging (1) age discrimination under Michigan’s Elliott-Larsen Civil Rights Act and (2) interference with pension rights under ERISA § 510 (29 U.S.C. § 1140).
- A jury found for plaintiffs on the state-law age discrimination claim; the ERISA § 510 claim was tried to the court after removal to federal court.

## Issues

1. Whether Clark’s plant closure and resulting terminations violated ERISA § 510 by being motivated by a specific intent to interfere with employees’ attainment of pension benefits.
2. Whether evidence that a closure reduced pension costs and prevented near-retirees from qualifying for benefits, including statements about pension costs, sufficed to prove the required intent under § 510.
3. Whether Clark’s asserted economic justifications were a pretext for unlawful benefit interference.

## Decision

- The court entered judgment for Clark on the ERISA § 510 claim.
- The court held plaintiffs did not prove that interference with pension rights was a motivating or determinative factor in the closure decision.
- The court credited Clark’s evidence that the closure was based on overall economic considerations reflected in detailed cost and capacity studies, with pensions only one component.
- The court found the “pension costs were killing us” remark insufficient, in context, to establish that the purpose of the closure was to prevent benefit attainment.
- The court treated the state-law age discrimination verdict as analytically distinct and not dispositive of ERISA § 510 liability.

## Legal Principles

- ERISA § 510 requires proof of the employer’s specific intent to interfere with the attainment of benefits; incidental effects on pension expectations do not establish liability.
- Foreseeable benefit loss or pension-cost savings from a termination or plant closure, without more, does not satisfy § 510’s “for the purpose of interfering” requirement.
- An employer may consider pension expenses as part of broader cost analysis; § 510 is violated only if benefit interference is a motivating or determinative purpose.
- Under a burden-shifting approach, once an employer produces a legitimate business reason, the plaintiff must show that reason is a pretext masking prohibited benefit-interference intent.

## Conclusion

The court rejected ERISA § 510 liability for Clark’s closure of the Benton Harbor plant because plaintiffs failed to prove that preventing pension attainment was a motivating or determinative purpose; comprehensive evidence supported a legitimate, company-wide economic rationale even though the closure foreseeably harmed near-retirees’ pension prospects.


Nemeth v. Clark Equip. Co., 677 F. Supp. 899 (W.D. Mich. 1987)