Barnett v. SKF USA, Inc.

38 A.3d 770, 614 Pa. 463, 52 Employee Benefits Cas. (BNA) 2554, 2012 WL 540084, 2012 Pa. LEXIS 347
CourtSupreme Court of Pennsylvania
DecidedFebruary 21, 2012
StatusPublished
Cited by10 cases

This text of 38 A.3d 770 (Barnett v. SKF USA, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Barnett v. SKF USA, Inc., 38 A.3d 770, 614 Pa. 463, 52 Employee Benefits Cas. (BNA) 2554, 2012 WL 540084, 2012 Pa. LEXIS 347 (Pa. 2012).

Opinions

OPINION

Justice TODD.

In this appeal, we consider whether Section 514(a) of the Employee Retirement Income Security Act of 1974 (“ERISA” or the “Act”),1 29 U.S.C. § 1144(a), preempts the breach of contract claim asserted by Appellees Lawrence J. Barnett, Christine Cookenback, James M. Defeo, and Madlin Laurent against Appellant SKF USA, Inc. (“SKF” or “Company”) under Pennsylvania law. For the reasons stated below, we hold that Appellees’ claim is preempted, and, accordingly, we reverse the Superior Court’s order affirming the trial court’s denial of summary judgment in favor of SKF.

At all relevant times, Appellees were salaried, non-unionized, employees of SKF, working in its Philadelphia plant. The Company also employed hourly unionized employees (“union workers”) at the plant. In January 1991, SKF announced its decision to shut down the plant and terminate the employment of all those working there in relatively short order. Over the course of the ensuing year, the effect of the closing on employee retirement rights and benefits became a subject of collective bargaining between SKF and its union workers, and a matter of discussion between Appellees and their supervisors.

Appellees’ retirement and pension rights were set forth in the “Pension Plan for Salaried Employees of SKF Industries, Inc.” (the “Plan”), an ERISA plan,2 which SKF maintained and administered.3 Articles 4 and 5 of the Plan covered “Retirement Dates” and “Retirement Benefits,” respectively. Under Section 4.01, a member’s “Normal Retirement Date” was the last day of the month during which he or she reached age 65, and, under Section [773]*7735.01, a member who retired at that age was entitled to a “Normal Form of Retirement Benefit.” Section 4.02(b) provided for “Early Retirement Without Actuarial Reduction” and entitled a member, who was not yet 65 years of age, but whose service with SKF ceased by reason of a permanent plant shutdown, to retire and receive an immediate pension, as long as he or she had a specified number of years of service and had reached a specified age. For the Philadelphia plant, a Section 4.02(b) retirement required 20 years of service and 45 years of age as of the date of the cessation of a member’s service. Article 6 covered “Termination of Service” and set forth the benefit rights of a member whose service with the Company terminated for any reason other than death or retirement. Under Section 6.01, a member with at least 10 years of service was entitled to a deferred vested retirement benefit, payable for life, commencing upon his or her normal retirement date at 65 years of age or any month following his or her 55th birthday. If a member elected to receive benefits at any point upon reaching age 55, but before reaching age 65, the benefit amount to be paid was his or her deferred vested retirement benefit multiplied by a factor, ranging from .5000 for a retirement age of 55 to .9838 for a retirement age of 64.

When SKF announced its decision to shut down the Philadelphia plant, each of the Appellees had 20 years of service with the Company, but would not reach 45 years of age by the time of the anticipated closure. Consequently, for Appellees, early retirement under Section 4.02(b) of the Plan would not be available and their rights of retirement would be governed, instead, by Section 6.01.

Appellees became aware that, as a result of collectively bargaining the effects of plant closing, SKF agreed that any union worker with 20 years of service and 45 years of age, as of March 10, 1993, the date on which the collective bargaining agreement then in effect expired, would be entitled to receive an immediate and full pension. This entitlement was referred to as the “creep provision” or “creep benefit” because it permitted certain employees to “creep” into retirement rights and pension benefits that a separate ERISA pension plan SKF maintained and administered for its union workers did not provide. Deposition of John Dobrzanski (Exhibit H to SKF’s Renewed Motion for Summary Judgment), at 65. Prior to the plant closing, the pension plan covering SKF’s union workers was amended to incorporate the creep provision.

Appellees approached SKF’s Director of Human Resources to inquire whether they too would be given the creep provision, since they would satisfy its requirements. According to Appellees, on two occasions, in order to induce them to remain with the Company until the plant closing, the Director of Human Resources orally stated, when asked about the Company’s intention regarding the creep provision: “If the Union gets it, you’ll get it.” Deposition of James M. Defeo (Exhibit B to SKF’s Renewed Motion for Summary Judgment), at 33, 42, 51. In a letter dated June 17, 1991, sent to the plant’s manager, Appellees stated:

This letter is a request to clarify our status as Salary employees affected by the so-called “Creep Provision” that was offered to the hourly employees.... We recognize the fact that we are not a party to the Company/Union agreement, however, we believe that it is morally correct that we receive the same consideration. All of us have been loyal employees of SKF and will have the required 20 years of service and age requirement of 45 years by the [774]*774end of the labor agreement in March 1993.

Deposition Exhibit Dobrzanski-1 (letter dated June 17, 1991). By September 1, 1991, Appellees’ employment with SKF was terminated, and, in December 1991, the Philadelphia plant closed. The Plan was not amended to contain the creep provision.

In January 1992, Appellees Defeo and Barnett both received a letter from SKF’s Compensation and Benefits Manager informing them that they met the Plan’s requirements for a deferred vested pension. Reflecting the terms of Section 6.01 of the Plan, the letter stated they could each begin receiving their pension on their normal retirement date of age 65, or on their early retirement date of age 55, or on a retirement date in between ages 55 and 65. After advising them of the pension amount they would receive in monthly payments for their lifetimes if they elected to have their pensions start at age 65, the letter stated: “If you elect to have your pension start at age 55, you [will] receive 50% of [that amount]. If you elect to have your pension start between age 55 and age 65, your pension amount [will] be greater than 50%, but less than 100% of [that amount] depending upon your age.” Deposition Exhibit Defeo-7 (Letter dated January 23, 1992); Exhibit Barnett-4 of Deposition of Lawrence J. Barnett (Letter dated January 23, 1992) (Exhibits B & D to SKF’s Renewed Motion for Summary Judgment). Subsequently, in 2002, Appel-lees Defeo and Barnett, both 55 years of age, each submitted an “Application for Pension” with SKF. The Applications were consistent with the letters received in 1992 from SKF’s Compensation and Benefits Manager and did not contemplate the receipt of a full pension, but, rather, set forth a pension amount that was multiplied by an “actuarial factor of 50%.” Appel-lees’ Expert Report (Attachments 1 and 2, Exhibit I to SKF’s Renewed Motion for Summary Judgment).

Two years after their employment with SKF was terminated, and prior to the submission of pension applications, on September 29,1993, Appellees Defeo, Barnett, Cookenback and Laurent commenced a breach of contract action against SKF in the Montgomery County Court of Common Pleas.

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Cite This Page — Counsel Stack

Bluebook (online)
38 A.3d 770, 614 Pa. 463, 52 Employee Benefits Cas. (BNA) 2554, 2012 WL 540084, 2012 Pa. LEXIS 347, Counsel Stack Legal Research, https://law.counselstack.com/opinion/barnett-v-skf-usa-inc-pa-2012.