ERISA-Third Circuit Determines That An Employee Losing His Retirement Benefits Due To A Sale Of The Division In Which He Was Working Does Not Have A Claim Under Section 510 of ERISA

In Muth v. LSI Corporation, No. 10-2567 (3rd Cir. 2011) (Non-precedential Opinion), the defendant, LSI Corporation (“LSI”), discharged plaintiff, Edwin Muth (“Muth”), after nearly thirty years of employment. This termination resulted from LSI’s decision to sell the division of its business in which Muth worked (the Mobile Products Group, or “MPG”) to Infineon Technologies North America (“Infineon”). All MPG employees became Infineon employees on the day after the sale closed, so Muth was never left without a job. He did, however, lose all of his benefits under LSI’s retirement plan. He would have become entitled to the benefits if he had remained an LSI employee for one month more. The retirement plan was subject to ERISA. Muth unsuccessfully tried to negotiate with LSI for credit for that final month. Muth then sued LSI, claiming that LSI had violated ERISA § 510 by intentionally preventing him from obtaining retirement benefits. The district court granted summary judgment to LSI, and Muth appealed. The question: does Muth have a claim under § 510?

In analyzing this question, the Third Circuit Court said that the prima facie case for Muth’s § 510 claim requires that he produce evidence showing three elements: (1) the employer committed prohibited conduct (2) that was taken for the purpose of interfering (3) with the attainment of any right to which the employee may become entitled. The Court concluded that Muth showed elements (1) to (3). However, Muth provided no evidence that all or part of the purpose of his discharge by LSI, or the timing thereof, was interference with his receipt of ERISA benefits. There was ample undisputed evidence that Muth was terminated because he was part of the business group transitioning to Infineon, and not for any other reason. Muth did not present any evidence that such reason for his termination was a pretext to deny ERISA benefits. LSI’s failure to credit Muth with the final month needed for entitlement to the retirement benefits, despite Muth’s attempt to negotiate with LSI for this credit, does not give rise to a violation of § 510. As such, the Court affirmed the summary judgment granted to LSI by the District Court.

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