The preemptive effects of ERISA are exceedingly broad, serving far too often to insulate bad-faith were egregious conduct from liability and to leave on remedied the injuries caused. But there are limits as shown by the Sixth Circuit's recent decision in Gardner v. Heartland Industrial Partners, LLP, No 11-2327 (May 10, 2013).
Heartland Industrial Partners, an investment firm, owned Metaldyne, an automotive supplier. Heartland agreed to sell Metaldyne to Ripplewood Holdings, another investment firm. The change of control of Metaldyne entailed by this sale triggered terms of a "Supplemental Executive Retirement Plan" (SERP), which required Metaldyne to have to pay the plaintiffs, who were Metaldyne executives, some $13 million dollars. When the snag arose, Ripplewood threatened to back out of the deal. The defendants, in response, canceled the SERP. Plaintiffs then filed suitpleading a single state law claim for tortious interference with contractual relations. The federal district court dismissed the case and ruled that plaintiffs' tortious interference claim was preempted by ERISA.
The Sixth Circuit reversed. Whether plaintiffs' claim was preempted was determined by a two-part test: (1) whether the complaint is about a denial of benefits to which the plaintiffs are entitled "only because of the terms of an ERISA-regulated employee benefit plan"; and, (2) whether the plaintiffs have alleged a violation of any "legal duty (state or federal) independent of ERISA or the plan terms [.]" The court ruled that the plaintiffs' claim was not preempted under the second prong:
Defendants'duty not to interfere with Plaintiffs' SERP agreement with Metaldyne arises under Michigan tort law, not the terms of the SERP itself. And more to the point Defendants' duty is not derived from, or conditioned upon, the terms of the SERP. Nobody needs to interpret the plan to determine whether that duty exists. Thus, Plaintiffs' claim is based on a duty that is "independent of ERISA [and] the plan terms [.]"
