Recently, a federal judge in Pennsylvania ruled in favor of the plaintiffs in an action brought against DuPont and Corteva Inc. (defendants). The court held that the Defendants’ motion to dismiss was premature, and that the case could continue through the litigation process. The case concerns the claim brought by employees of DuPont and Corteva alleging that the companies acted in violation of ERISA’s fiduciary duties by changing their early retirement policy after a corporate merger. The Defendants attempted to dismiss the case by arguing that the workers who initiated the suit were not classified as “employees” and therefore ineligible for early retirement. The court disagreed, rejecting the motion, and stating that it was still too early in the suit to determine whether this was adequate grounds for dismissal, and that such a determination would be more appropriate in the summary judgment phase or left to a jury.
Additionally, the judge stated that the “Plaintiffs have pled sufficient[ly] to allege that the administrative committee did not act reasonably in terminating their rights to early retirement … and that they had a legally enforceable right to benefits under the plan.” The violations at issue concern the Defendants’ actions following corporate restructuring. After a merger between DuPont and Dow Chemical Co., three separate entities were created: Corteva, Dow Inc., and DuPont. The named Plaintiff, Cockerill, stated that he had structured his career relying on DuPont’s early retirement options. Cockerill has worked for the corporation for over 20 years under the Rule of 85 early retirement plan (“Plan”). The Plan provided that early retirement was available if the sum of an employee’s age and the years they had worked at the company totaled to 85. Thus, Cockerill would have been eligible for retirement at the age of 58. The issue arose when DuPont became Corteva, and the retirement plan’s time frame divested as Cockerill was considered terminated from DuPont and a new employee of Corteva. However, no changes to Cockerill’s job were made and he continued to perform in the same role he had for DuPont. After the switch to Corteva, Cockerill was informed that the earliest year in which he could retire had changed from 2027 to 2034 due to the change in retirement plan management.
Representation for the plaintiffs has proposed a subclass of DuPont employees who did not qualify for early retirement due to the merger, though had been fired from the companies for “lack of work.” In response, the Defendants argue that the suit must be dismissed, as the plans at issue only applied to “employees” for the “company,” and members of the subclass did not meet the requirements of the description. In order to be considered an “employee,” the Defendants argue that a worker must have been employed by the original E.I. DuPont de Nemours and Co. or a subsidiary. The subsidiary at issue in the case, Specialty Products, is argued to not qualify as it was not affiliated with the original DuPont at the time the company diverged.
The Plaintiffs disagree, arguing that the definition for “employee” should include past employees as there was no termination date in the definition, though there was a start date. Furthermore, the Plan provides in other sections that “employee” includes former employees, thus strengthening the argument that the definition in this section of the Plan should do so as well. The Supreme Court of the United States has also held that the term “employee” can be ambiguous; in Nationwide Mutual Ins. Co. v. Darden, the Court held that “employee” may be interpreted in numerous ways.
Due to the ambiguity of the term “employee,” the court stated that the proper inquiry of the case was whether the Defendants had acted reasonably in their management of the plan and revocation of the Plaintiffs’ rights to early retirement. The court held that the Plaintiffs had provided enough information to adequately allege that the Defendants’ actions could have been in violation of ERISA. The case now moves on to the process of discovery. If the court finds in favor of the Plaintiffs, ERISA provides that the Plaintiffs are entitled to equitable remedies due to the Defendants’ breach of their fiduciary duties.