Kowalski v. L & F Products

• Citation: 82 F.3d 1283
• Decision Date: 02 May 1996
• Docket Number: No. 95-5101,95-5101
• Parties: , 11 IER Cases 1166, 20 Employee Benefits Cas. 1432, Pens. Plan Guide P 23921K Teresa KOWALSKI, Appellant, v. L & F PRODUCTS, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 1283

82 F.3d 1283

64 USLW 2703, 11 IER Cases 1166, 20

Employee Benefits Cas. 1432,

Pens. Plan Guide P 23921K

Teresa KOWALSKI, Appellant, v. L & F PRODUCTS, Appellee.

No. 95-5101.

United States Court of Appeals, Third Circuit.

Argued Dec. 11, 1995.

Decided May 2, 1996.

Appeal from the United States District Court for the District of New Jersey (D.C. Civil No. 94-cv-00448).

Timothy P. McKeown (argued), Schachter, Trombadore, Offen, Stanton & Pavics, Somerville, NJ, for Appellant.

Richard C. Cooper (argued), McCarter & English, Newark, NJ, for Appellee.

Before BECKER, ROTH and LEWIS, Circuit Judges.

OPINION OF THE COURT

LEWIS, Circuit Judge.

In this appeal, we must address the scope of § 510 of the Employment Retirement Income & Security Act ("ERISA") to determine whether appellant-employee Teresa Kowalski ("Kowalski") stands protected from her employer's alleged retaliatory discharge. Kowalski argues that the district court incorrectly granted summary judgment in favor of appellee-employer L & F Products ("L & F"). Kowalski has alleged that L & F terminated her for exercising her right to receive certain disability benefits.

We hold that Kowalski has raised a cognizable cause of action under § 510 for retaliatory termination notwithstanding the fact that she had received her benefits prior to being terminated. In addition, for the reasons set forth in section III of this opinion, we will vacate the district court's grant of summary judgment in favor of L & F.

I.

L & F employed Teresa Kowalski as a packaging operator from April 23, 1984 until January 29, 1993. Kowalski's duties as a packaging operator required her to spend the entirety of her eight and a half hour shift on her feet. In June 1991, Kowalski informed L & F's company nurse that she had developed bunions on each foot. On the advice of her doctor, Kowalski decided to undergo separate operations ¹ to remove each bunion. Between June 7, 1991 and October 21, 1991, Kowalski took a medical leave of absence for the first bunionectomy and received full medical benefits under L & F's Short Term Disability Plan (the "Plan"). Thereafter, Kowalski returned to work. Almost a year later, she took another leave of absence for the second bunionectomy and again received full medical benefits under the Plan.

During Kowalski's second leave of absence, L & F's human resource manager, Rob King, hired a private investigator to determine whether Kowalski was actually disabled and entitled to the benefits she was receiving. The investigator produced a report to King stating that Kowalski had been "clean[ing] professional offices" during her medical leave of absence. App. at 74-75. Relying on this report, L & F fired Kowalski on January 29, 1993. App. at 74.

In his deposition, King testified that he relied heavily on the investigator's summary of written statements made by two "witnesses," Diane Laich and Dr. Lapkin, both of which suggested only that Kowalski had contracted to provide cleaning services during the period of her disability. The investigator prepared a written synopsis of Laich's and Dr. Lapkin's statements, which summarily concluded that Kowalski was engaged in the performance of cleaning services during the period of her medical leave.

Neither Laich nor Dr. Lapkin testified or stated that they ever saw Kowalski performing cleaning services. Laich, in a certified statement to the district court, stated that Kowalski had contracted to provide cleaning services for a local church. App. at 50. Laich also stated that she was aware that Kowalski's son and another woman were providing cleaning services at the church. King admitted that he never compared the investigator's synopsis of Laich's and Dr. Lapkin's written statements to their actual statements prior to terminating Kowalski. App. at 73-75.

Despite his own testimony that it is important to consider an employee's version of events before deciding to terminate that employee, King refused to consider Kowalski's responses to the investigator's conclusions. In particular, Kowalski had informed King that she owned a cleaning service, but did not engage in providing cleaning services herself during the period of her disability. ² Nevertheless, King did not allow Kowalski the opportunity to provide any evidence to support her claim.

Kowalski filed this lawsuit alleging that her discharge violated § 510 of ERISA. The district court granted L & F's motion for summary judgment on the grounds that (1) Kowalski failed to show that L & F's legitimate nondiscriminatory reason for termination was pretextual; and (2) Kowalski failed to offer any evidence of L & F's intention to retaliate against her for exercising her right to medical leave benefits.

II.

As a threshold matter, we must determine whether Kowalski, as a plaintiff suing under § 510 of ERISA, has a cognizable cause of action notwithstanding the fact that she received her ERISA-protected benefits from her employer prior to termination. Our review of this issue of law is plenary. Gavalik v. Continental Can Co., 812 F.2d 834, 850 (3d Cir.1987).

Section 510 of ERISA provides that:

It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan, ... or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan.

29 U.S.C. § 1140.

Thus, the plain language of § 510 provides a cause of action for employees who have been discharged "for exercising any right" to which employees are entitled to under an ERISA-protected benefit plan. But section 510 also goes further, protecting employees from interference with the "attainment of any right to which [the employees] may become entitled." We have recognized that Congress enacted § 510 primarily to prevent employers from discharging or harassing their employees in order to keep them from obtaining ERISA-protected benefits. Gavalik, 812 F.2d at 851.

L & F argues that, because Kowalski had received all of her benefits prior to termination, her claim must fail. In particular, L & F argues that Congress enacted § 510 to prevent companies from avoiding their ERISA obligations and that a plaintiff who has received the benefits flowing from an employer's ERISA obligations is not entitled to protection under the statute.

Although few courts have addressed whether a plaintiff-employee has a cognizable ERISA cause of action where the plaintiff received his or her ERISA-protected benefits prior to termination, at least one Court of Appeals has indicated a willingness to recognize such a cause of action. In Kimbro v. Atlantic Richfield Co., 889 F.2d 869 (9th Cir.1989), the plaintiff claimed that he was unlawfully discharged because he had used his sick leave benefits. The Ninth Circuit ultimately determined that the plaintiff in Kimbro failed to establish a prima facie case; however, it also recognized a potential cause of action for "unfair reprisal for use of ERISA-protected benefits." Id. at 881; see also Bailey v. Policy Management Systems Corp., 814 F.Supp. 37, 39 (N.D.Ill.1992) (recognizing that a plaintiff who alleged that she was terminated for submitting approximately $40,000 in claims to her employer stated a claim under § 510 of ERISA).

Given the peculiar factual posture of this case and others like it, the dearth of case law directly on point is understandable. The district court recognized that:

It seems anomalous for an employer to pay all the benefits due an employee and then immediately terminate the employment relationship. Once an employer has made the investment in its employee by providing medical disability benefits, it seems only logical that the employer would hope the employee would return to work. To terminate an employee days after receiving full benefits is illogical (emphasis in original).

Dist. Ct. Op. at 12, 1995 WL 16783. Nonetheless, whether it is or is not logical for an employer to act a particular way is largely irrelevant for purposes of discerning whether Congress intended to protect employees from that particular type of employer behavior.

It is hard to imagine any rational construction of the "for exercising any right" language in § 510 that would indicate that Congress intended that the protections provided to employees by § 510 would not extend to the type of retaliatory discharge that is alleged in this case. There is simply no limiting language in § 510 that suggests that only future benefits are protected. We are bound to recognize and effectuate Congress' intent where it is clear from the language of a statute. See Connecticut Nat. Bank v. Germain, 503 U.S. 249, 253-54, 112 S.Ct. 1146, 1149-50, 117 L.Ed.2d 391 (1992) (courts must presume that "a legislature says in a statute what it means and means in a statute what it says there"); Moskal v. United States, 498 U.S. 103, 109-10, 111 S.Ct. 461, 465-66, 112 L.Ed.2d 449 (1990) (courts have a duty to "give effect, if possible, to every clause and word of a statute").

At oral argument, counsel for L & F argued that the "to which he is entitled" language that follows "for exercising any right" in § 510 is the limiting language which supports the company's suggested reading of § 510. This argument ignores the plain language of § 510, and implies that Congress intended "to which he is entitled" to actually mean only "to which he is entitled to receive in the future." If we were to read § 510 in this manner, it would render the remainder of the section, which prohibits employer interference "with the attainment of any right to which [the employee] may become entitled under the plan[ ]," superfluous. The Supreme Court has commented that its cases "express a deep reluctance to interpret a statutory provision so as to render superfluous other provisions in the same enactment." Pa....