United States District Court, W.D. Pennsylvania
December 16, 2005.
SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 3, et al., Plaintiffs,
INDEPENDENCE MANAGEMENT COMPANY, INC., INDEPENDENCE ENTERPRISES, INC. and CENTRE CITY PARTNERS, L.P., Defendants.
The opinion of the court was delivered by: GARY LANCASTER, District Judge
MEMORANDUM AND ORDER
This is an action alleging violations of the Employee
Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1140, and
the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185.
Plaintiffs, Service Employees International Union ("SEIU"), and
nine individuals who are members of Local 3 (collectively
"plaintiffs"), allege that defendants, Independence Management
Company, Inc., Independence Enterprises, Inc. and Center City
Partners, L.P. (collectively "defendants") intentionally
interfered with plaintiffs' healthcare benefits and collective
In Count I, plaintiffs allege that defendants violated section 510 of ERISA, by intentionally interfering with their
health care benefits when defendants chose not to renew their
contract with plaintiffs' employer, St. Moritz Building Service,
Inc. ("BSI"). In Count III,*fn1 plaintiffs allege that
defendants violated section 301 of the LMRA, by tortiously
interfering with a collective bargaining agreement between
plaintiffs and BSI. Plaintiffs seek compensatory damages and
Defendants have filed a motion for summary judgment under
Fed.R.Civ.P. 56(c), arguing that plaintiffs cannot demonstrate an
ERISA or LMRA violation. Defendants argue that plaintiffs' ERISA
claim must fail because they cannot establish that defendants
engaged in "prohibited employer conduct." Defendants further
argue that plaintiffs cannot show that defendants' specifically
intended to violate ERISA. As to plaintiffs' claim for tortious
interference in violation of the LMRA, defendants argue that
plaintiffs cannot demonstrate that defendants purposely intended
to harm the existing contractual relationship between plaintiffs
and BSI. For the reasons that follow, defendants' motion will be
Except where indicated, the following material facts are undisputed.
At all relevant times, plaintiffs were employees of BSI. The
Local 3 SEIU is the union that represents the BSI employees.
Beginning in 1990, BSI contracted with defendants to provide
cleaning services at Centre City Towers. Under a series of
contracts between BSI and defendants, BSI employed the cleaners
working at Centre City Towers.
On December 31, 2003, the cleaning services contract between
BSI and defendants expired. Defendants chose not to renew their
contract with BSI, and instead, hired a non-union company to
provide cleaning services at Centre City Towers. Defendants
notified BSI of their decision not to renew their contract on
December 23, 2003, and on December 29, 2003, BSI instructed its
employees to vacate the building. The nine individual plaintiffs
were laid off following defendants' non-renewal of their contract
Plaintiffs claim that defendants' termination of their services
was an intentional interference with the plaintiffs' rights to
healthcare benefits they had become entitled to under the
collective bargaining agreement between SEUI and the Managers
Owners and Contractors Association ("MOCA").
II. STANDARD OF REVIEW
Fed.R.Civ.P. 56(c) provides that summary judgment may be granted if, drawing all inferences in favor of the
non-moving party, "the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment
as a matter of law." Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 247 (1986) (internal quotation marks omitted).
The mere existence of some factual dispute between the parties
will not defeat an otherwise properly supported motion for
summary judgment. Id. at 247-48. A dispute over those facts
that might affect the outcome of the suit under the governing
substantive law, i.e., the material facts, however, will preclude
the entry of summary judgment. Id. at 248. Similarly, summary
judgment is improper so long as the dispute over the material
facts is genuine. In determining whether the dispute is genuine,
the court's function is not to weigh the evidence or to determine
the truth of the matter, but only to determine whether the
evidence of record is such that a reasonable jury could return a
verdict for the nonmoving party. Id.
It is on the standard discussed above that the court has
reviewed defendants' motion and plaintiffs' response thereto.
Based on the pleadings and evidence of record, the arguments of counsel, and the briefs filed in support and opposition thereto,
the court concludes, as a matter of law, that there are no
genuine disputes over any material fact. Further, summary
judgment will be granted in favor of defendants.
A. Count I: Intentional Interference with Healthcare Benefits
in Violation of Section 510 of ERISA
The thrust of plaintiffs' claim is that, by not renewing the
contract with BSI, defendants intentionally interfered with BSI's
employees' attainment of their healthcare benefits. Section 510
of ERISA protects against interference with protected rights by
providing, in pertinent part:
It shall be unlawful for any person to discharge,
fine, suspend, expel, discipline or discriminate
against a participant or beneficiary for exercising
any right to which he is entitled under the provision
of an employee benefit plan, . . . or for the purpose
of interfering with the attainment of any right to
which such participant may become entitled under the
29 U.S.C. § 1140. Thus, section 510 prohibits interference with
an employee's attainment of medical or disability benefits, as
well as the more traditional pension benefits. See generally
Blaw-Knox Retirement Income Plan v. White Consol. Indus., Inc.,
998 F.2d 1185
, 1191 (3d Cir. 1993). To establish a prima
facie case under ERISA § 510, "an employee must demonstrate (1)
prohibited employer conduct (2) taken for the purpose of
interfering (3) with the attainment of any pension right to which the employee may become entitled." Gavalik v. Continental Can
Co., 812 F.2d 834
, 852 (3d Cir.), cert. denied, 484 U.S. 979
(1987). "The essential element of proof under section 510 is
specific intent to engage in proscribed activity." Gavalik,
id. at 851. Because proof of specific intent to interfere with
an employee's pension benefits will rarely be proved by direct
evidence, the plaintiff may establish a violation of section 510
through the introduction of circumstantial evidence.
In Gavalik, the Court of Appeals held that in ERISA
discrimination cases, like employment discrimination claims under
Title VII, 42 U.S.C. § 2000e, the shifting burdens analysis
established by the United States Supreme Court in McDonnell
Douglas Corp. v. Green, 411 U.S. 792 (1973), should apply.
Consequently, plaintiff has the initial burden of establishing a
prima facie case by a preponderance of the evidence. Once
plaintiff has done so, a presumption of discriminatory intent
arises and the burden of production shifts to the employer to
introduce "admissible evidence of a legitimate nondiscriminatory
reason for its challenged actions." Gavalik, 812 F.2d at 853.
If the employer meets its burden of production and produces
evidence of a legitimate nondiscriminatory reason for its action,
"the presumption drops from the case and the [plaintiff] is
afforded the opportunity to demonstrate that the employer's articulated reason is pretextual. . . ." Id.
In their motion for summary judgment, defendants argue that
because they were not plaintiffs' employer, plaintiffs cannot
demonstrate prohibited employer conduct the first prong of a
section 510 ERISA violation. Plaintiffs counter that the statute
references unlawful conduct by "any person," and does not
specifically require employer misconduct. Plaintiffs have
failed to cite any authority for their position.
Relying on Gavalik and Fischer v. Philadelphia Elec. Co.,
96 F.3d 1533 (3d Cir. 1996), defendants argue that the Court of
Appeals has indicated that an employee-employer relationship is
necessary for a section 510 violation. As set forth above, in
Gavalik, when addressing the requirements for a prima facie
case under ERISA § 510, the court specifically stated that an
employee must demonstrate "prohibited employer conduct."
Gavalik, 812 F.2d at 852. "We have stated that Congress enacted
section 510 primarily to prevent `unscrupulous employers from
discharging or harassing their employees in order to keep them
from obtaining vested pension benefits.'" Id. at 851.
Similarly, in Fischer, the court stated that, "under the law of
this circuit, suits for discrimination under § 510 claims are
limited to actions affecting the employer-employee relationship."
Fischer, 96 F.3d at 1543.
The Court of Appeals has consistently focused on the necessary "employer-employee" relationship in its analysis of
ERISA § 510 claims. We agree that plaintiffs must demonstrate
"prohibited employer conduct" in order to sustain a claim under
Section 510. The record is clear that plaintiffs were employed by
BSI not defendants. Because plaintiffs were not employees of
defendants, plaintiffs cannot demonstrate "prohibited employer
conduct." As such, no genuine issue of material fact exists as to
whether plaintiffs were employees of the defendant pursuant to
section 510, and summary judgment is granted as to Count I.
Even assuming arguendo that plaintiffs could satisfy the
first prong of an ERISA § 510 inquiry, plaintiffs' claim would
still fail because they have not offered any evidence to
demonstrate that defendants' decision not to renew their contract
with BSI was taken "for the purpose of interfering with the
attainment of any pension right to which the employee may become
entitled." See Gavalik, 812 F.2d at 852. To the contrary, the
record is void of any evidence that defendants' decision to
terminate its relationship with BSI at the end of the contract
term (December 31, 2003) was an intentional effort to deprive or
interfere with plaintiffs' benefits. Where as here, defendants
were in a contractual relationship with BSI not plaintiffs
defendants could not directly hire, fire or otherwise "interfere"
with plaintiffs' employment or right to benefits. For example, both parties admit in their statements of undisputed facts for
summary judgment that BSI never notified defendants whether any
of BSI's employees, including the individual plaintiffs, had
family or single coverage for health insurance; nor did BSI
provide defendants with a breakdown for wages or health benefits
of BSI's employees. See Defendants' Statement ¶ 37, Plaintiffs'
Statement ¶ 37.
In addition, defendants have cited several reasons, including
dissatisfaction with BSI's cleaning services and lower bids from
competitors, for their business decision not to renew the
contract with BSI. Neither party disputes that a third party,
P.F. Enterprise, submitted a bid for the 2004 Centre City Towers
cleaning contract that was considerably lower than figures
received from BSI and another cleaning company. See Defendants'
Statement ¶ 26, Plaintiffs' Statement ¶ 26. We find it reasonable
to conclude that defendants made a business decision, and that
any desire to preclude BSI's employees from obtaining their
healthcare benefits was not central to defendants' decision not
to renew their contract with BSI. See Schweitzer v. Teamsters
Local 100, 413 F.3d 533, 534 (6th Cir. 2005).
As such, we find that no genuine issue of material fact exists
as to whether defendants' specifically intended to engage in the
proscribed activity set forth in section 510. B. Count III: Tortious Interference with a Collective
Bargaining Agreement in Violation of Section 301 of the LMRA
By the same token, plaintiffs' claim for tortious interference
also fails to demonstrate the requisite specific intent by
defendants to harm the collective bargaining agreement between
BSI and plaintiffs.
In order to succeed on a claim for tortious interference under
section 301, plaintiffs must demonstrate: (1) the existence of a
contractual relation between the complainant and a third-party;
(2) purposeful action on the part of the defendant, specifically
intended to harm the existing relationship; (3) the absence of
privilege or justification on the part of defendant; and (4) the
occasioning of actual legal damage as a result of the defendant's
conduct. Reading Radio, Inc. v. Fink, 833 A.2d 199, 211
In this case, a contract existed between plaintiffs and BSI, a
third party. Pursuant to the collective bargaining agreement
between SEIU and MOCA, plaintiffs were entitled to healthcare
benefits paid for by their employer.*fn2 Thus, the first element is satisfied.
Defendants argue that summary judgment is appropriate because
plaintiffs cannot satisfy the second or third elements necessary
for a tortious interference claim. Specifically, defendants
contend that under their 2002-2003 cleaning contract with BSI,
defendants were expressly excluded from any role in the
employment relationship between plaintiffs and BSI. As such,
defendants had no control over the terms of plaintiffs'
employment with BSI.
We agree that the record does not set forth any evidence that
defendants specifically intended to harm the relationship between
plaintiffs and BSI created by the collective bargaining
agreement. Neither party disputes that the cleaning contract for
Centre City Towers between BSI and defendants expired by its
terms on December 31, 2003. Plaintiffs have not demonstrated that
defendants' non-renewal of the cleaning contract was done for the
specific purpose of harming the employment relationship between
plaintiffs and their employer, BSI. In other words, there is no
evidence that defendants' decision not to renew its contract with
BSI was intended to result in plaintiffs' termination by BSI or
subsequent loss of healthcare benefits. Because BSI was plaintiffs' sole employer,
BSI controlled whether the individual plaintiffs would remain
under its employ and continue to receive health benefits after
the non-renewal of the Centre City Towers contract.
Because plaintiffs cannot demonstrate the second element of
purposeful action by defendants intending to harm the existing
relationship between plaintiffs and BSI, summary judgment is
appropriate as to Count III.
Accordingly, this 16th day of December, 2005, upon
consideration of defendants' motion for summary judgment, IT IS
HEREBY ORDERED that defendants' motion [document #15] is GRANTED,
and the Clerk of Courts is directed to mark the case closed.
© 1992-2006 VersusLaw Inc.