Inter-Modal Rail Employees v. Atchison, T. & S.F. R. Co., 520 U.S. 510 (1997)

Inter-Modal Rail Employees Assn. v.

Atchison, Topeka & Santa Fe Railway Co.
No. 96-491

Argued March 17, 1997
Decided May 12, 1997
520 U.S. 510

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Syllabus

As employees of respondent Santa Fe Terminal Services, Inc. (SFTS), a wholly owned subsidiary of respondent The Atchison, Topeka and Santa Fe Railway Co. (ATSF), the individual petitioners were entitled, among other things, to pension, health, and welfare benefits under SFTS-Teamsters Union collective bargaining agreements. The resulting benefit plans were subject to the Employee Retirement Income Security Act of 1974 (ERISA). Ultimately ATSF bid the work being done by petitioners to respondent In-Terminal Services (ITS) and terminated SFTS employees who declined to continue employment with ITS. The ITS-Teamsters pension and welfare benefit plans were less generous than the SFTS-Teamsters plans. Petitioners filed suit, alleging that the terminations violated § 510 of ERISA, which makes it unlawful to

discharge . . . a [plan] participant . . . for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan.

(Emphasis added.) The District Court granted respondents’ motion to dismiss. Concluding that § 510 only prohibits interference with the attainment of rights that are capable of "vesting," the Court of Appeals reinstated petitioners’ claim for interference with pension benefits, but affirmed the dismissal of their claim for interference with welfare benefits, which do not vest.

Held: the Court of Appeals’ holding that § 510 bars interference only with vested rights is contradicted by § 510’s plain language, whose use of the word "plan" all but forecloses that position. ERISA defines "plan" to include an "employee welfare benefit plan," 29 U.S.C. § 1002(3), even though welfare plans are exempted from its stringent vesting requirements, see § 1051(1). Had Congress intended to confine § 510’s protection to "vested" rights, it could have easily substituted "pension plan" for "plan" or "nonforfeitable right" for "any right." The flexibility an employer enjoys to unilaterally amend or eliminate its welfare benefit plan, see Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78, does not justify a departure from § 510’s plain language. Such flexibility helps employers avoid the complicated administration and increased cost of vested plans, and encourages them to offer more generous benefits at the outset, since they can reduce benefits should economic conditions sour. Section 510 counterbalances this flexibility by requiring employers to follow a plan’s formal amendment process, thus ensuring that employers do not "circumvent the provision of promised benefits." Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 143. Any tension that might exist between an employer’s amendment power and a participant’s § 510 rights is the product of a careful balance of competing interests, not the type of "absurd or glaringly unjust" result, Ingalls Shipbuilding, Inc. v. Director, Office of Workers’ Compensation Programs, 519 U.S. 248, 261, that would warrant departure from § 510’s plain language. On remand, the Court of Appeals should have the first opportunity to evaluate respondents’ remaining arguments, including their argument that petitioners were eligible to receive welfare benefits under the SFTS-Teamsters plan at the time they were discharged and, thus, cannot state a § 510 claim. Pp. 514-517.

80 F.3d 348, vacated and remanded.

O’CONNOR, J., delivered the opinion for a unanimous Court.