Sixth Circuit says ERISA does not preempt state law claim for fraudulent inducement.

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The Sixth Circuit recently held that ERISA did not preempt a plan participant’s claim for state law fraudulent inducement. McCarthy v. Ameritech Pub., Inc., No. 12-4510, 2014 WL 3930572 (6th Cir. 2014). Defendant-API’s decided to terminate Plaintiff’s employment and gave her two options: (1) she could leave and receive a lump-sum “termination payment”; or (2) she could enter API’s Employment Opportunity Pool, where she would receive priority consideration for another position while receiving reduced pay taken from her “termination payment.” Because Plaintiff’s husband was critically ill, Plaintiff’s decision depended on whether she had accrued enough employment service to retain her healthcare benefits upon leaving. Plaintiff’s supervisors falsely advised her that, notwithstanding the representations by API’s health and welfare plan administrators to the contrary, she was not entitled to retain her healthcare benefits unless she continued working for an additional nine months. As a result of Plaintiff’s decision to enter the employment pool, “API... received nine months of free labor from [Plaintiff].” Inter alia, the Sixth Circuit held that ERISA did not preempt  Plaintiff’s state law fraudulent inducement claim because Plaintiff was not seeking any benefits due under the health and welfare plan, but rather fair compensation for the work performed for the nine months she was allegedly induced to remain at API.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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