Larry Becker, et al. v. Mack Trucks, Inc.

This case requires us to decide whether S 510 of the
Employee Retirement and Income Security Act, 29 U.S.C.
S 1140, applies to rehiring decisions. Plaintiffs are former
employees of defendant Mack Trucks, Inc., who lost their
jobs when Mack closed its Allentown plant in 1987. Some
plaintiffs had vested pension rights at the time they were
laid off. Others merely had credit for past service. In 1997,
when the economy had improved, Mack needed to hire
workers for its Macungie plant. By this time, all the
plaintiffs had either exhausted or forfeited any recall rights
with Mack. Mack declined to rehire plaintiffs because to do
so would create a future pension liability disproportionately
greater than that incurred by hiring employees without past
service or pension credit. Plaintiffs contend that Mack's
decision amounts to unlawful "discrimination" under S 510
of ERISA.

The District Court rejected plaintiffs' claims in their
entirety on a motion for summary judgment. We will affirm
that decision. We agree, as an initial matter, that those
plaintiffs without vested pension rights lack standing to
pursue their S 510 claim. See Shawley v. Bethlehem Steel
Corp., 989 F.2d 652 (3d Cir. 1993). Shawley does not
foreclose standing for those plaintiffs with vested rights,
however; thus, we reach the merits of their claims and
resolve the question left unanswered in Shawley: Whether
an employer's refusal to rehire based on a desire to avoid
increased pension liability is prohibited activity under
S 510. Id. at 655 n.5. We conclude that S 510 does not
proscribe Mack's refusal to rehire the vested plaintiffs.

I. Facts

Defendant Mack Trucks manufactures and distributes
heavy-duty trucks. It operates an assembly plant in
Macungie, Lehigh County, Pennsylvania, and, until 1987,
operated machining and fabrication plants in Allentown, Pennsylvania. Employees in both locations are and were
represented by the United Automobile, Aerospace and
Agricultural Implement Workers (UAW) and UAW Local 677.
The plants in Allentown and Macungie were covered by the
Mack-UAW Master Agreement as well as by local
agreements.

The Master Agreement includes, as Appendix A, the
Mack-UAW Pension Plan, which is subject to renegotiation
every time the Master Agreement itself is renegotiated. Prior
to January 1, 1989, an employee covered by the Plan
became vested under the Plan after ten years of service. On
and after January 1, 1989, employees became vested after
five years of service. The Plan also provided that any
rehired former employee would be entitled to credit for past
service no matter how long the break between employment
periods.

When Mack closed its facilities in Allentown in 1987, a
number of employees lost their jobs. Some transferred or
were absorbed into other Mack plants. Others, like the
plaintiffs, either accepted a cash "dislocation benefit" to
relinquish their seniority rights or were laid off and
eventually exhausted their recall rights. Some plaintiffs
were laid off before meeting the ten year vesting
requirement in place at the time; other plaintiffs were fully
vested by the time they were laid off.

In 1997, a combination of rising production needs and
workforce attrition made it necessary for Mack to hire new
employees at the Macungie plant. Although Mack's former
employees were initially the first to be offered new jobs,
Mack soon realized that a rehired former employee with
credited service under the Plan would receive a
disproportionately larger pension than would a newly hired
employee.

There are three reasons for this difference in pension
benefits between former employees and new hires. First,
former employees who had not vested under the Plan would
receive credit for past service and would become vested in
less than the five years applicable to new hires. Second, former employees were more likely to become eligible for
early retirement before age 62. Third, former employees
would be entitled to raise their pension rate on retirement
above the lower benefit rate in place as of the day they had
been laid off in 1987.

As a result, in July of 1997 Mack decided to stop hiring
former employees with credited service under the plan. All
78 plaintiffs are former Mack employees who were not
considered for re-employment due to Mack's pension
liability avoidance policy.

The plaintiffs brought a complaint seeking injunctive and
monetary relief based on allegations that Mack violated 29
U.S.C. S 1140 when it refused to rehire them. After Mack
filed a timely answer admitting the essential facts of the
complaint, the parties brought cross-motions for summary
judgment and asked the District Court to rule on a core set
of stipulated facts. On November 30, 2000, the District
Court found that Mack's decision not to rehire plaintiffs
was not unlawful and entered judgment in favor of Mack.
Plaintiffs filed a timely appeal.

* * *

Click the case caption above for the full text of the Court's opinion.

Plaintiffs, in their ERISA claims, have attempted to
stretch ERISA's statutory language well beyond the purpose
intended by Congress. Today we decline their invitation to
extend the protections of S 510 of ERISA to cover Mack's
decision not to rehire plaintiffs. We will, therefore, affirm
the granting of summary judgment in favor of defendant
Mack Trucks, Inc.

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Kent Morlan

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