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Employee Fired for Making Unsolicited Internal Complaint Not Retaliation Victim

By Amanda C. Van Wieren  6/19/2014
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Upholding summary dismissal of an Employee Retirement Income Security Act (ERISA) retaliation claim, the 6th U.S. Circuit Court of Appeals held that an employee’s unsolicited, internal complaint was not in an “inquiry” within the meaning of ERISA’s anti-retaliation provision and was therefore not protected conduct.

Former general manager of Panel Processing Inc.’s Coldwater, Mich., facility, Brian Sexton, served as a trustee for the company’s employee retirement plan. Sexton and another employee-trustee, Rob Karsten, campaigned on behalf of two other employees for the company’s board of directors. When the employees won the election, however, the company refused to seat them, claiming that doing so would violate the company’s bylaws limiting the number of inside directors. Simultaneously, the board removed Sexton and Karsten from the retirement plan’s trusteeship.

Sexton e-mailed the chairman of the board two days later, stating, “I believe that your actions ...  removing Rob Karsten and me as Trustees [is a] violation of ERISA,” and threatened to lodge a complaint with the U.S. Department of Labor unless the board took appropriate remedial action. Neither the board nor Sexton took any further action, and six months later, the company terminated Sexton.  

Sexton brought suit in Michigan state court for violations of Michigan’s Whistleblower Protection Act and breach of his employment contract. Making a complex procedural argument, however, the company re-characterized Sexton’s whistle-blower claim as an ERISA retaliation claim and removed the case to the federal District Court for the Eastern District of Michigan. The company then moved for summary judgment on the grounds that, even if it had terminated Sexton because of his internal ERISA complaint, such a complaint was not protected conduct under ERISA’s anti-retaliation provision, 29 U.S.C. Section 1140. The district court agreed and dismissed Sexton’s suit in its entirety.  

On appeal to the 6th Circuit, the court reasoned that the viability of Sexton’s ERISA retaliation claim depended on whether his internal complaint amounted to “giv[ing] information ... in any inquiry” as required by section 1140. While the court and parties agreed that Sexton had “given information,” the court employed several methods of statutory construction to determine the scope of the term “inquiry.”  First, considering the ordinary meaning of “inquiry,” the court noted that Sexton’s e-mail was not transmitted in the course of an official investigation or in answer to any question or request for information. Second, looking to the text of roughly 40 other federal anti-retaliation statutes, the court concluded that Congress had purposefully declined to extend ERISA’s protections to persons “who oppose, report or complain about unlawful practices.”

Finally, rebuffing Sexton’s argument that excluding his complaint from section 1140’s protections contravened ERISA’s legislative history, legislative purpose and public policy, the court noted that its interpretation of “inquiry” was consistent with “the centrality of hearings to the administration of retirement plans” under ERISA. Accordingly, the court affirmed the district court’s ruling finding that Sexton’s internal complaint was not “giv[ing] information ... in any inquiry,” and therefore was not protected by ERISA’s anti-retaliation provision.

Sexton v. Panel Processing Inc., 6th Cir., No. 13-1604 (May 9, 2014).

Professional Pointer: Given that the interaction between whistle-blowing and wrongful discharge claims and ERISA is still unsettled in some circuits, employers should be mindful of their liability under other state and federal anti-retaliation laws.

Amanda C. Van Wieren is an attorney in the Portland, Ore., office of Ogletree Deakins, an international labor and employment law firm representing management.

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