Fired Sales Vice President Wins ERISA Retaliation Claim

​The 3rd U.S. Circuit Court of Appeals affirmed a judgment in favor of a Pennsylvania-based trucking company's former vice president of sales on a retaliation claim under the Employee Retirement Income Security Act (ERISA), including an award of nearly $112,000 in attorney fees and costs.

In March 2016, the company's owner and CEO recruited the sales vice president to grow the firm's cryogenic trucking services. In November 2017, the vice president had hip replacement surgery that was covered by the company's self-insured employee health plan. The employer's portion of the claim was $13,394.94, resulting in by far the highest weekly health care invoice during a six-month period. After the vice president returned to work in December, another executive advised him to "lay low" because the CEO was upset about the surgery.

In April 2018, the CEO fired the vice president, claiming the position was eliminated because the company had "maxed out" its potential in cryogenic trucking. Less than two months later, the company hired an individual to work part-time in operations, but also to perform part of the former vice president's role.

The fired employee sued the company, alleging that his termination was discriminatory and retaliatory contrary to various federal and state statutes.

The jury found for the company on the vice president's claims under the Americans with Disabilities Act (ADA), Age Discrimination in Employment Act (ADEA) and Pennsylvania Human Relations Act (PHRA). The employee prevailed on his Pennsylvania Wage Payment and Collection Law (WPCL) claim, and the jury awarded $5,384.62 in separation pay.

Since the employee had no right to a jury trial under ERISA, the jury also returned an "advisory verdict" for the company on the ERISA claim. But the trial court declined to accept the jury verdict, finding that the company had retaliated against the vice president for using ERISA-protected benefits and interfered with his right to future benefits. The court awarded the employee $67,500 in front pay and $111,981.79 in attorney fees and costs.

On appeal, the 3rd Circuit held that, in a suit with both equitable and legal claims, a trial court must determine whether the jury verdict on the legal claims necessarily implies the resolution of any common factual issues, even when the jury fails to make explicit findings of fact. If so, the court must follow the jury's implicit or explicit factual determinations in deciding the equitable claims.

In this case, the jury had made no specific findings of fact. Rather, the general verdict form asked only for a yes-or-no answer as to whether the employee had proved discrimination or retaliation because of a particular protected characteristic or activity.

Because the ADA, ADEA, PHRA and ERISA claims each have distinct elements of proof, the jury had to find that a different protected characteristic or activity was a determinative factor in the termination. That neither the vice president's arthritis nor his age was determinative did not necessarily mean that his use of benefits must not have been. Although the 3rd Circuit upheld the disability and age discrimination rulings, the verdict form was insufficient to say that the trial court's ERISA judgment was inconsistent with the jury's findings in the other claims.

ERISA Section 510 prohibits both retaliation for use of past benefits and interference with the right to future benefits. Offering no direct evidence of discriminatory intent, the vice president had to show that the company's legitimate, nondiscriminatory reason for termination was pretextual. The trial court's credibility determinations and related factual findings were not clearly erroneous, and its judgment on the vice president's equitable ERISA claim was supported by sufficient evidence, the 3rd Circuit held.

When the party entitled to attorney fees succeeds on only some claims, a trial court should reduce fees to accurately reflect the results, the 3rd Circuit said. Where that party's claims involve a common core of facts or are based on related legal theories, the court should focus on the overall relief obtained relative to the hours reasonably expended.

The trial court found that much of the evidence did overlap between the successful and unsuccessful claims and proportionately reduced the fees. On appeal, the company offered no reason why that reduction did not reflect the vice president's losses, and the 3rd Circuit found none. The time entries of the vice president's counsel were sufficiently detailed and not so duplicative to warrant further reduction. Fees associated with the ERISA claims were reasonably related to successful claims, the 3rd Circuit held. Nor was there any abuse of discretion in the trial court's award of costs.

Kairys v. Southern Pines Trucking Inc., 3rd Cir., Nos. 22-1783 & 22-2055 (July 25, 2023).

Margaret M. Clark, J.D., SHRM-SCP, is a freelance writer in Arlington, Va.