Fort Halifax Packing Co., Inc. v. Coyne
482 U.S. 1 (1987)
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Rule of Law:
A state law requiring employers to provide a one-time, lump-sum severance payment upon a plant closing is not pre-empted by the Employee Retirement Income Security Act of 1974 (ERISA) because it does not create an 'employee benefit plan' requiring an ongoing administrative scheme.
Facts:
- Fort Halifax Packing Company operated a poultry packaging and processing plant in Winslow, Maine.
- The company's collective-bargaining agreement with the union representing its employees did not include a provision for severance pay.
- On May 23, 1981, Fort Halifax closed the plant and laid off over 100 employees, many of whom had worked there for over a decade.
- A Maine statute requires any employer that terminates operations at a plant with 100 or more employees to provide one week's severance pay for each year of service to all employees who have worked there for at least three years.
- The statute does not apply if an employee is covered by a contract that deals with the issue of severance pay.
Procedural Posture:
- Eleven former employees of Fort Halifax Packing Co. filed suit in Maine Superior Court seeking severance pay under a state statute.
- The Maine Director of the Bureau of Labor Standards initiated a separate enforcement action, which superseded the employees' lawsuit.
- The Maine Superior Court, a court of first instance, granted summary judgment in favor of the Director, finding Fort Halifax liable.
- Fort Halifax, as the appellant, appealed the decision to the Maine Supreme Judicial Court, the state's highest court.
- The Maine Supreme Judicial Court affirmed the lower court's judgment, holding the state statute was not pre-empted by federal law.
- The U.S. Supreme Court noted probable jurisdiction to hear the appeal from Fort Halifax Packing Co.
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Issue:
Does the Employee Retirement Income Security Act of 1974 (ERISA) or the National Labor Relations Act (NLRA) pre-empt a state law requiring employers to make a one-time, lump-sum severance payment to employees following a plant closure?
Opinions:
Majority - Justice Brennan
No. A state law requiring a one-time, lump-sum severance payment does not create an employee benefit 'plan' and is therefore not pre-empted by ERISA, nor does it interfere with the collective bargaining process protected by the NLRA. ERISA's pre-emption clause applies to 'employee benefit plans,' not merely to 'employee benefits.' The key characteristic of a 'plan' is the establishment of an ongoing administrative scheme to process claims and pay benefits, which protects employers from a patchwork of conflicting state regulations. The Maine statute does not require such a scheme; it mandates a single, one-time payment triggered by a specific event. This simple obligation to 'do little more than write a check' does not create the administrative burdens ERISA was designed to prevent. Similarly, the law is not pre-empted by the NLRA because it establishes a minimum substantive labor standard that applies to both union and non-union workers, serving as a backdrop for negotiations rather than an intrusion upon them, consistent with the Court's holding in Metropolitan Life Ins. Co. v. Massachusetts.
Dissenting - Justice White
Yes. The Maine statute should be pre-empted by ERISA because it plainly 'relates to' an employee benefit plan as contemplated by the statute. The majority invents an 'administrative scheme' requirement that is not present in the text of ERISA. The statute requires employers to pay severance benefits, which are explicitly covered by ERISA, thereby creating a 'plan.' By focusing on the administrative foresight of the employer, the Court creates a dangerous loophole that allows states to dictate a wide array of employee benefits by simply characterizing them as non-administrative, one-time payments. This undermines Congress's clear intent to make the regulation of employee benefits an exclusive federal matter to ensure uniformity.
Analysis:
This decision significantly narrows the scope of ERISA pre-emption by introducing the 'ongoing administrative scheme' test. It establishes a crucial distinction between a state-mandated 'benefit' and a 'plan,' allowing states to enact worker protection laws that provide for one-time, lump-sum payments without being automatically invalidated. This ruling creates a space for state regulation of employee benefits in situations that do not impose long-term, complex administrative burdens on employers who operate across state lines. The case thus preserves some state authority to address local economic problems, like mass layoffs, that might otherwise have been considered exclusively within the federal domain of ERISA.
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