Workers who claim they were fired by employers seeking to avoid paying their pension benefits may not sue in state court, where they may have a better chance of winning large damage awards, but are limited to seeking recovery under federal law, the Supreme Court ruled unanimously yesterday.
In an opinion by Justice Sandra Day O'Connor, the court said such state court suits are preempted by the federal law governing pensions, the Employee Retirement Income Security Act of 1974 (ERISA).
The federal law itself makes it illegal for companies to discharge employees in order to interfere with their pension rights. But under that law, workers probably would not be able to obtain punitive damages or damages for emotional distress, or get a jury trial.
The case decided yesterday, Ingersoll-Rand Co. v. McClendon, had been closely watched by corporate pension lawyers who feared that a ruling allowing such lawsuits to proceed under state law could expose companies to massive liability.
The case involved Perry McClendon, a Texas man who was fired after working for the company for nine years and eight months. He was four months short of eligibility for pension benefits. The company claimed he was let go as part of a company-wide reduction in force.
He filed a wrongful discharge suit in state court. The Texas Supreme Court, voting 5 to 4, allowed the case to proceed, saying ERISA did not preempt the state claim because McClendon was "not seeking lost pension benefits" but rather "future lost wages, mental anguish and punitive damages."
In reversing that ruling yesterday, the court said Congress, in enacting ERISA, intended to have claims like McClendon's heard in federal court and said it was "clear that the relief requested here is well within the power of federal courts to provide."
The decision is also the first in which the newest justice, David H. Souter, voted.
In other action yesterday, the court refused to kill a lawsuit against a California community college accused of violating the free-speech rights of a drama professor and students for barring the performance on campus of a racially charged play. The case, Matthews v. DiBona, now proceeds to trial.