ERISA preemption of state law is complicated, and it gets even murkier in state court. We advise our clients and our litigation partners to immediately refer anything that smells like an ERISA action to our ERISA team, so that the matter can be timely removed to federal court. State courts do not routinely handle ERISA matters, and this litigation tends to not go very well there. Barnett v. SKF USA, Inc. demonstrates what can happen.
In this case, non-union plaintiffs claim that back in 1991, they were promised a pension plan “creep benefit.” The pension plan allowed early retirement at age 45 with 20 years of service. The employer announced its intention to close a plant. Pursuant to collective bargaining regarding the closure, the employer amended the plan to include a “creep benefit” whereby union employees who had 20 years of service and attained age 45 after plant closure, but prior to the end of the collective bargaining agreement, would be treated as age 45. Plaintiffs learned about this, and asked for it. They claim that the employer promised them the same benefit, and that they remained employed to get this benefit. (The request, purported promise, and decision to remain employed transpired in 44 days.) In 1993, two years after terminating employment, and without even submitting a claim for benefits much less exhausting administrative procedure, plaintiffs filed a purported breach of contract claim in state court.
For reasons unclear, the case was not removed to federal court, discovery was permitted, and discovery dragged on through 1997. In 2004, the employers filed a motion for summary judgment on the basis of ERISA preemption in 2004, and the motion was denied. The employer made another motion in 2007, which was again denied. The employer appealed to the Superior Court, which affirmed the denial. Finally, the case reached the Pennsylvania Supreme Court. The Pennsylvania Supreme Court held that the pension plan creep benefit claim was preempted by ERISA.
It took 19 years to establish in state court that a Pennsylvania pension plan creep benefit claim is preempted by ERISA, and presumably this is just the precursor to a CIGNA v. Amara-inspired ERISA Section 502(a)(3) claim. Don’t let this happen to you.