Ingersoll-Rand Co. v. McClendon
498 U.S. 133 (1990)
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Rule of Law:
The Employee Retirement Income Security Act of 1974 (ERISA) pre-empts state common law claims for wrongful discharge when the claim is premised on the employer's alleged motive to interfere with an employee's attainment of benefits under an ERISA-covered plan.
Facts:
- Ingersoll-Rand Company employed Perry McClendon as a salesman.
- After McClendon had worked for the company for nine years and eight months, Ingersoll-Rand fired him.
- The company's stated reason for the termination was a companywide reduction in force.
- McClendon's pension benefits were scheduled to vest upon his completion of 10 years of service, which would have occurred four months after his termination.
- McClendon alleged that a principal reason for his termination was Ingersoll-Rand's desire to avoid its obligation to make contributions to his pension fund.
Procedural Posture:
- Perry McClendon sued Ingersoll-Rand Company in a Texas state trial court.
- The trial court granted summary judgment in favor of Ingersoll-Rand.
- McClendon appealed to the Texas Court of Appeals, an intermediate appellate court, which affirmed the trial court's decision.
- McClendon then appealed to the Supreme Court of Texas, the state's highest court.
- The Texas Supreme Court reversed the lower courts and remanded the case for trial, recognizing a new state common law claim for wrongful discharge.
- Ingersoll-Rand (petitioner) successfully petitioned the U.S. Supreme Court for a writ of certiorari to review the decision of the Texas Supreme Court.
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Issue:
Does the Employee Retirement Income Security Act of 1974 (ERISA) pre-empt a state common law wrongful discharge claim alleging that an employer terminated an employee primarily to avoid contributing to the employee's pension plan?
Opinions:
Majority - Justice O’Connor
Yes. The state common law cause of action is pre-empted by ERISA. The Court found two distinct grounds for pre-emption. First, under ERISA's express pre-emption clause, § 514(a), the Texas cause of action "relate[s] to" an ERISA plan because its existence depends entirely on the existence of a pension plan. To prevail, a plaintiff must plead and prove that an ERISA plan exists and that the employer had a pension-defeating motive, making the plan a critical element of the claim, not merely an incidental factor. Second, even if there were no express pre-emption, the claim is pre-empted by conflict pre-emption because it conflicts directly with ERISA's own remedial scheme. Section 510 of ERISA specifically makes it unlawful for an employer to terminate an employee for the purpose of interfering with the attainment of pension rights, and § 502(a) provides the exclusive civil enforcement mechanism for such violations. Allowing a state-based claim would undermine this carefully integrated and exclusive federal remedy that Congress established to ensure national uniformity in pension plan regulation.
Analysis:
This decision significantly broadened the understood scope of ERISA's pre-emption clause, cementing its role as one of the most powerful pre-emption statutes in federal law. The Court's interpretation of "relate to" means that state laws are pre-empted not just when they directly regulate employee benefit plans, but also when the existence of a plan is a critical element of the cause of action. The ruling channels nearly all claims involving interference with benefits into the exclusive federal framework of ERISA, limiting plaintiffs to the remedies provided by that statute and preventing states from creating parallel, and potentially more generous, causes of action. This promotes national uniformity for employers in administering benefit plans but restricts the legal options and potential damages available to aggrieved employees.
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