Play through the whistle: the scope of anti-retaliation protection for employee complaints pursuant to ERISA Section 510.

• Author: Coughlin, James

"There is an old saying: Keep playing until you hear the whistle...."--Ray Lewis

1. INTRODUCTION

   In the traditional employment relationship, either the employee or the employer may terminate the relationship for any reason, unless there is a contrary agreement. (1) During the past half-century, American courts began creating exceptions to the at-will employment doctrine for employee terminations that violated public policy. (2) Simultaneously, Congress began enacting statutes in furtherance of various public policy considerations, providing employees with protection from termination or adverse employment action for certain types of employee conduct. (3) One example of a federal statute that includes a wrongful discharge cause of action in the form of an anti-retaliation provision designed to protect employee whistleblowers is the Employee Retirement Income Security Act of 1974 ("ERISA"). (4)

   Section 510 of ERISA provides protection to employees from termination, suspension, or discrimination in retaliation for providing information or testimony in any "inquiry or proceeding" related to ERISA. (5) The federal circuit courts of appeals have reached different conclusions regarding the scope of employee action necessary to trigger the anti-retaliation provision of ERISA. (6) This circuit split has led to inconsistent remedies for aggrieved plaintiffs who have suffered adverse employment action, including termination, as a result of internal complaints of alleged ERISA violations. (7) Some circuits have held that an employee must partake in an actual governmental inquiry or proceeding, or a private suit regarding the employer's alleged ERISA wrongdoing, to receive ERISA anti-retaliation protection. (8) Alternatively, other circuits have ruled that information regarding an ERISA violation that is provided to an employer internally, alone suffices to trigger anti-retaliation protection under Section 510. (9)

   Part II of this Note addresses the history and enactment of ERISA, and analyzes the statutory language of Section 510 compared to other codified anti-retaliation provisions. (10) Part III addresses the emergence of a circuit split among the federal circuit courts of appeals concerning what employee conduct is protected pursuant to Section 510. (11) Part III.A discusses the circuit court decisions that have held that internal employee complaints are protected from retaliation, and Part III.B addresses the circuit decisions that deny protection to employees who complain about alleged violations of ERISA internally to the employer. (12) Finally, Part IV analyzes how the United States Supreme Court decision in Kasten v. Saint-Gobain Performance Plastics Corp., (13) which pertains to the scope of the Fair Labor Standards Act ("FLSA") anti-retaliation provision, may catalyze an eventual Supreme Court decision to resolve the circuit split surrounding ERISA's anti-retaliation protection. (14)

   This Note concludes that courts should interpret ERISA Section 510 narrowly and consistently with the plain meaning of the statute. (15) A narrow interpretation of Section 510 would continue to protect employees who report alleged ERISA violations externally to the government, or who file private law suits. (16) Until the Supreme Court rules on the scope of Section 510 protection, attorneys should counsel their clients to "play through the whistle" by reporting alleged violations of ERISA to the government, or institute a private suit, to obtain protection from retaliation. (17)

2. HISTORICAL PERSPECTIVE OF ERISA

   1. The Enactment of ERISA

      Congress enacted ERISA in 1974 as a "comprehensive" federal statute designed to protect employee interests in benefits plans that employers provide to employees. (18) Under ERISA, employee benefit plans include pension plans and welfare plans pertaining to employment. (19) Congress included various provisions designed to safeguard benefit plans and prevent employer abuse in ERISA's broad statutory scheme. (20) For example, ERISA mandates pension plan requirements concerning employee participation, funding, and vesting. (21) The statute also includes standards regarding the reporting, disclosure, and fiduciary duties related to the management of welfare and pension plans. (22) The regulations set forth under ERISA replaced state laws that were often inconsistent; thus, ERISA's enactment led to uniformity with the administration and regulation of various employee benefit plans. (23)

   2. ERISA's Anti-Retaliation Provision: Section 510

      One of the measures that Congress implemented in ERISA to safeguard employee benefit plans and to prevent abuse by employers is the statute's anti-retaliation provision encompassed in Section 510. (24) The first provision of Section 510 prohibits an employer from taking adverse employment action against an employee who has exercised an entitled right under a benefit plan, and from interfering with an employee-entitled right under the plan. (25) The second provision of Section 510 prohibits an employer from taking adverse employment action against an employee because that individual has provided information or testimony, or plans to testify, in "any inquiry or proceeding" related to ERISA. (26) Section 510's purpose is to protect the attainment of employee rights under ERISA. (27) The focus of this Note is to interpret the second portion of the anti-retaliation provision contained in Section 510 and its impact on employees who report alleged violations of substantive ERISA regulations internally to an employer. (28)

   3. The Scope of Section 510 in Comparison to Title VII's Anti-retaliation Provision

      While ERISA's anti-retaliation provision provides broad protection in some circumstances to affected employees--e.g., when an employer attempts to deny benefits to any employee on a discriminatory basis--the statute does not provide extensive employee protection compared to other federal employment statutes with anti-retaliation provisions. (29) For example, Section 704 of Title VII of the Civil Rights Act of 1964 (30) extended broad statutory protection to individuals who manifest opposition internally to the employer regarding any employer action that is unlawful under Title VII. (31) This Note contends that the anti-retaliation language of Section 510 of ERISA is limited to external complaints only, and, therefore, that Section 510 is consequently narrower in scope than the more expansive protection afforded under Section 704 of Title VII. (32)

   4. Statutory Interpretation: General Principles

      The Supreme Court has established the general rule that statutory language should be regarded as conclusive unless Congress has manifested a clear intent otherwise. (33) The first step in statutory analysis is determining whether the language is clear and has unambiguous meaning. (34) If a court determines that the language is ambiguous on its face, it will then look to the surrounding language as well as the contextual application of the text. (35)

3. CIRCUIT SPLIT SURROUNDING PROTECTABLE EMPLOYEE ACTION UNDER ERISA

   The federal circuit courts of appeals that have interpreted the protection afforded to employees who make internal complaints to employers under ERISA Section 510 have reached divergent outcomes. (36) Some circuits have found that internal employee complaints made to employers regarding alleged violations of ERISA alone merit protection under the anti-retaliation provision in Section 510. (37) In contrast, other circuits have denied ERISA anti-retaliation protection to employees who only complained internally to their employer about alleged violations of the statute. (38)

   1. Unsolicited Internal Complaints Constitute Protected Action Pursuant to Section 510 of ERISA--Fifth and Ninth Circuits

      The first federal circuit to consider whether Section 510 of ERISA provided protection to employees who made internal complaints to their employers regarding ERISA wrongdoing was the United States Court of Appeals for the Ninth Circuit in Hashimoto v. Bank of Hawaii. (39) The plaintiff in Hashimoto asserted that, on several occasions, she complained internally about alleged violations of ERISA's requirements regarding reporting, disclosure, and fiduciary duties. (40) The court held that the plaintiff' s state-law cause of action for wrongful discharge based on this internal reporting was preempted by ERISA's broad preemption provision, and that ERISA in fact provided the remedy pursuant to Section 510. (41) The Ninth Circuit recognized that the intent behind the anti-retaliation provision of ERISA was to provide protection to whistle blowers, including an individual in the plaintiff s position, who made internal complaints about the alleged ERISA wrongdoing on the part of the employer, and who was subsequently fired for protesting the alleged violation. (42)

      The United States Court of Appeals for the Fifth Circuit followed the reasoning of the Ninth Circuit when it decided Anderson v. Electronic Data Systems Corp. (43) The plaintiff in Anderson was a cash fund manager responsible for approximately $1.3 billion in investments. (44) He alleged that the defendant employer asked him to commit illegal acts under ERISA. (45) He contended that his employer discharged him for refusing to violate the law and for his internal reporting of those illegal requests and other illegal conduct committed by a colleague. (46) Analogous to the court's reasoning in Hashimoto, the Anderson court held that the plaintiff s state law cause of action for wrongful termination was preempted by ERISA. (47) The Fifth Circuit concluded that ERISA's anti-retaliation provision found in Section 510 provided the appropriate cause of action. (48) The court further held that Section 510 broadly proscribes adverse employment action or discharge when an employee has "given information" related to ERISA. (49)

   2. Unsolicited Internal Complaints Do Not Merit Protection under Section 510 of ERISA--Second, Third, and...