Sixth Circuit: ERISA’s Whistleblower Provision Doesn’t Protect Giving Information

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The Sixth Circuit (in a 2-1 decision) recently held that ERISA Section 510 does not protect unsolicited employee complaints. See Sexton v. Panel Processing, Inc., 2014 U.S. App. LEXIS 8752 (6th Cir. May 9, 2014). Plaintiff Brian Sexton worked as a general manager for defendant Panel Processing and also served as a trustee for the company’s employee retirement plan. In 2011, Sexton and others campaigned on behalf of two employees running for the company’s board of directors. Although the two employees won the election, the board refused to seat them on the ground that the company’s bylaws limit the number of inside directors. The board also removed Sexton as a trustee of the retirement plan. Sexton subsequently emailed the chairman of the board and complained that he believed that the refusal to seat the employees as directors of the company and removing him as a Trustee of the retirement plan violated ERISA and other laws. Sexton was fired about six months later and commenced this suit, alleging, among other things, violations of ERISA Section 510.

In relevant part, ERISA Section 510 provides that: “It shall be unlawful for any person to discharge, fine, suspend, expel, or discriminate against any person because he has given information or has testified or is about to testify in any inquiry or proceeding relating to [the Act].” 29 U.S.C. § 1140 (emphasis added).

The Court first observed that neither party claimed that Sexton sent the email in the context of a “proceeding” or that it constituted “testimony.” As such, the only possibility was that Sexton had “given information. . . in any inquiry.” While the Court agreed that Sexton had given information, it concluded that he had not done so in connection with an “inquiry”—regardless of whether inquiry meant something formal or merely an inquiry in the colloquial sense. In so ruling, the Court observed that Congress had enacted approximately four dozen anti-retaliation laws and that most of them include two distinct types of prohibitions: (i) the type that protects employees who report unlawful practices; and (ii) the type that protects employees who participate in inquiries, proceedings, or hearings. With respect to ERISA Section 510, Congress only included the latter and that must be given effect.

The majority decision also criticized the dissent’s reliance on decisions from the Fifth, Seventh, and Ninth Circuits to argue that the circuits are split over whether the text of ERISA Section 510 is ambiguous as to protection of unsolicited internal complaints. After reviewing the language of those decisions, the majority found that none of them actually held that ERISA Section 510 contained such protections. To the extent there was any dicta to that effect in the decisions, the majority found it unpersuasive because the decisions failed to evaluate ERISA Section 510 against the backdrop of other federal whistleblower laws.

 

Topics:  Board of Directors, ERISA, Hiring & Firing, Retirement Plan, Section 510, Testimony, Trustees, Whistleblowers

Published In: Civil Procedure Updates, Civil Rights Updates, Finance & Banking Updates, Labor & Employment Updates

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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