Pension & Benefits News Fifth Circuit declines to revive ERISA retaliation claim against employer’s parent organization
Wednesday, November 18, 2020

Fifth Circuit declines to revive ERISA retaliation claim against employer’s parent organization

By Pension and Benefits Editorial Staff

A federal trial court did not err when it dismissed a terminated HR officer’s ERISA Sec. 510 retaliation claim against the parent organization of her employer, a charitable organization. While it’s possible to maintain a Sec. 510 claim against a non-employer, the employee failed to plead that the parent organization had terminated her within the meaning of ERISA Sec. 510.

An employee served as Vice President for Human Resources for United Way of Tarrant County (UWTC), a member organization of the worldwide charity United Way Worldwide. The employee alleged that she was terminated by UWTC after she reported to UWTC executives that she discovered UWTC had failed to pay employee benefits and comply with reporting requirements as required by ERISA. She also alleged her termination occurred because she opposed racial discrimination and because of her own race. She contacted UWW following her termination regarding these allegations but a UWW representative informed her they would take no action.

The employee filed suit in district court against both UWTC and UWW alleging violations of ERISA Sec. 510 and, with respect to the allegations of race discrimination, violations of 42 U.S.C. §1981. The court granted UWW’s motion to dismiss under Rule 12(b)(6) prior to trial, while the claims against UWTC were settled by joint stipulation after a jury trial. The employee appealed, hoping to revive her claims against the “parent” charity, UWW.

Treatment of non-employers. The Fifth Circuit upheld the lower court’s dismissal of the employee’s Sec. 510 claim against UWW. The appellate court acknowledged that six months after the district court observed that in the Fifth Circuit an employment relationship was an essential element of a Sec. 510 claim, the Fifth Circuit “specifically held that Section 510 claims ‘may be maintained against non-employers’” (Manuel v. Turner Indus. Grp., L.L.C., 905 F.3d 859 (5th Cir. 2018)).

Nevertheless, the Fifth Circuit declined to revive the claim against UWW. Even assuming that the employee’s “unsolicited internal complaint” was a statutorily protected activity, UWW did not “discharge, fine, suspend [or] expel” the employee within the meaning of ERISA Sec. 510. Further, no facts in the employee’s complaint set forth how UWW allegedly retaliated against her with respect to ERISA rights. Thus, dismissal was proper.

The appellate court also upheld the dismissal of the Section 1983 claim, concluding that the allegation that UWW could have played a role in her termination was insufficient to make the claim facially plausible.

Source: Sherrod v. United Way Worldwide (CA-5).

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