A group of former Chrysler LLC executives who lost all or most of their supplemental retirement benefits when the automaker went bankrupt in 2009 won a court ruling that lets them proceed with age-bias claims.
The U.S. Court of Appeals in Cincinnati yesterday said a lower-court judge had incorrectly thrown out the claims. Unlike the former executives’ other state-law claims, their age-discrimination claims against Chrysler’s former parent company, Daimler AG, weren’t preempted by the federal Employee Retirement Income Security Act, the appellate panel said.
“Chrysler’s Supplemental Executive Retirement Plan is a top-hat plan,” U.S. Circuit Judge Jeffrey Sutton said in the ruling. “As such, many of ERISA’s otherwise-applicable protections, and rights of action, do not apply, which explains why plaintiffs have largely framed their claims under state law.”
The plaintiffs’ age-discrimination act isn’t preempted by the federal statute in so far as it preserves some state laws that “provide a means of enforcing a federal law’s commands,” according to the ruling.
The former executives allege that the benefits of some active Chrysler executives and selected retirees were protected when the company used assets from the retirement plan’s trust to buy annuities for them when Chrysler’s financial situation became precarious by 2005 and 2006.
When Chrysler filed for bankruptcy in 2009, the remaining assets in the trust became part of the bankruptcy estate. The active and retired executives whose benefits were securitized were on average younger than those whose benefits weren’t secured, according to the appellate court’s opinion.
“Daimler is still reviewing the decision, but we are pleased that the Court of Appeals has affirmed most of the district court’s rulings on our motion to dismiss,” Andrea Berg, a U.S. spokeswoman for the German automaker said in an e-mailed statement. “In any event, Daimler intends to continue to defend this case vigorously.”
Chrysler, based in Auburn Hills, Michigan, is majority-owned by Fiat SpA.
The case is Loffredo v. Daimler AG, 11-1824, U.S. Court of Appeals for the Sixth Circuit (Cincinnati).