ERISA Can Be Key Defense in Severance Claims


Regardless of how carefully plaintiff’s counsel may attempt to disgise claims for severance in state law clothing, employers should remember that claims of entitlement to severance benefits by former employees under a plan established by the employer for the purpose of providing severance to employees are frequently ripe for dismissal as being preempted in their entirety by the Employee Retirement Income Security Act of 1974, 29 U.S. § 1001, et seq., (“ERISA”), as illustrated by a recent decision from the U. S. District Court Western District of Virginia.

In Woodruff v. Monumental Life Ins. Co., 2011 U.S. Dist. LEXIS 8250 (W.D. Va. 2011), a long time employee who retired from his job with an insurance company sued alleging that his former employer had withheld a severance package from him. The plaintiff filed suit in state court, making state law claims of breach of contract and quantum meruit. Monumental removed the case to federal court and moved to dismiss the action for failure to state a claim upon which relief can be granted. The District Court ruled that the plaintiff’s action was preempted by the ERISA, but granted plaintiff leave to file an Amended Complaint under that federal statute.

After plaintiff filed his Amended Complaint alleging violations of ERISA, a state statute, breach of contract and quantum meruit, the District Court again held that each of plaintiff’s state law claims seeking severance was preempted by ERISA and must be dismissed.

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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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