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

Annotate this Case

OCTOBER TERM, 1996

Syllabus

INTER-MODAL RAIL EMPLOYEES ASSOCIATION ET AL. v. ATCHISON, TOPEKA & SANTA FE RAILWAY CO., ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

No.96-491. Argued March 17, 1997-Decided May 12, 1997

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 SFTSTeamsters 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 § 51O'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


511

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.

Richard E. Schwartz argued the cause for petitioners.

With him on the briefs was James E. Parrot.

Cornelia T. L. Pillard argued the cause for the United States as amicus curiae urging reversal. With her on the brief were Acting Solicitor General Dellinger, Deputy Solicitor General Kneedler, J. Davitt McAteer, Allen H. Feldman, and Mark S. Flynn.

James D. Holzhauer argued the cause for respondents.

With him on the brief for respondents Atchison, Topeka & Santa Fe Railway Co. et al. was Alan E. Untereiner. Patrick W Jordan and Robin M. Schachter filed a brief for respondent In-Terminal Services. *

JUSTICE O'CONNOR delivered the opinion of the Court. Section 510 of the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 895, makes it unlawful to

*Mary Ellen Signorille, Melvin Radowitz, and Ronald Dean filed a brief for the American Association of Retired Persons et al. as amici curiae urging reversal.

Robert N. Eccles, Karen M. Wahle, Jan S. Amundson, Quentin Riegel, Robert W Blanchette, and Kenneth P. Kolson filed a brief for the Employers Group et al. as amici curiae urging affirmance.


512
Full Text of Opinion

Official Supreme Court caselaw is only found in the print version of the United States Reports. Justia caselaw is provided for general informational purposes only, and may not reflect current legal developments, verdicts or settlements. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or information linked to from this site. Please check official sources.