Court Finds No ERISA Preemption In Wrongful Discharge Claim

July 31, 2003 (PLANSPONSOR.com) - Even though ERISA did not completely preempt wrongful discharge claims by a former employee, a federal appeals court found ERISA provisions still do not apply.

>Vacating a lower federal court’s decision, the US 4th Circuit Court of Appeals found that because the former employee’s complaints made to her supervisor did not satisfy ERISA Section 510’s provision of “inquiry or proceeding” when determining wrongful discharge cases, there was no ERISA preemption.  “Because none of King’s actions are protected under section 510, the only potentially relevant provision, ERISA does not provide a federal cause of action for King’s allegations,” the court concluded in sending the case back to a Maryland state court, according to Washington-based legal publisher BNA.

“[T]he use of the phrase ‘testified or is about to testify’ does suggest that the phrase ‘inquir[ies] and proceeding[s]’ referenced in section 510 is limited to the legal or administrative, or at least to something more formal than written or oral complaints made to a supervisor,” Circuit Judge J. Michael Luttig said, in writing for the court.

Health Transfer

>Karen King worked in Marriott International Inc.’s benefits department, when in 1999 she learned that her supervisor had recommended the company transfer millions of dollars from its employee health plan to the company’s general corporate reserve account. King consulted with her supervisor, informing him that she felt the transfer would violate ERISA.

In 2000, King’s supervisor again proposed transferring money from Marriott’s health plan to its corporate account. King’s employment was terminated shortly after she made further complaints to her supervisor about the proposed transfer, according to the court.

>King brought a lawsuit against Marriott in a Maryland state court alleging her employment was wrongfully terminated in violation of Maryland law. Marriott removed the case to federal court, arguing that King’s claims were preempted by ERISA. A judge in the US District Court for the District of Maryland granted summary judgment to Marriott after finding that King’s wrongful discharge claim was preempted by ERISA.

>ERISA Section 510, which prohibits employers from, among other things, discharging employees who give information or testify “in any inquiry or proceeding” under ERISA, did not provide King with a cause of action because there was no “inquiry or proceeding” involved in King’s complaint. Instead, King merely made intra-company complaints to her supervisor, the appellate court ruled.

The case is King v. Marriott International Inc., 4th Cir., No. 02-2139, 7/28/03.