Despite jury verdict, why this ERISA retaliation claim was upheld

Firing an employee for extensive use of medical benefits can prove very costly for the employer, who may be liable for such a claim even if the worker's claims of other types of discrimination fail.

In Kairys v. Southern Pines, the U.S. Third Circuit Court of Appeals affirmed judgement in favor of a plaintiff on an ERISA Section 510 retaliation claim, despite an advisory jury verdict finding against the plaintiff on that claim.  ERISA Section 510 forbids an employer from taking adverse employment action against employees as a result of, or to prevent, their exercising their rights under ERISA. Such claims were more frequent in the past in circumstances where employees were discharged shortly before they were to vest in their retirement benefits.  More recently, retaliation has been claimed where employees or their dependents incurred significant medical expenses that were to be paid by their employers.

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Here, the plaintiff incurred significant medical expenses arising from hip replacement surgery that caused his employer's self-insured medical plan costs to rise.  His position was purportedly eliminated four months later, but the company hired a new employee less than two months after that to cover some of the same duties plaintiff had been performing. The plaintiff brought a number of claims, of which multiple claims survived summary judgment, including ERISA Section 510 retaliation claims as well as claims under the Americans with Disabilities Act, Age Discrimination in Employment Act and state law. These claims have distinct elements of proof, and each required the jury to find that a different protected characteristic led to his termination. For example, a jury could find that the plaintiff was not fired for requesting time off — which would be an ADA issue — but was fired for using his medical benefits, the ERISA 510 issue.

The jury found against the plaintiff on most of his claims without explaining its verdict, including an advisory verdict in favor of the defendant as to the ERISA Section 510 retaliation claim. Because the plaintiff had no jury trial right on his ERISA retaliation claim, the district court asked the parties to submit post-trial briefs so that the court could decide the ERISA retaliation claim. The district court then found in favor of the plaintiff and awarded nearly $180,000 in damages and fees.

On appeal, the Third Circuit affirmed, holding that when certain claims (e.g., ERISA claims for which there is no right to a jury trial) are tried to the court simultaneously with claims for which there is a jury trial right, a "trial court retains full discretion to diverge from an advisory jury verdict (or to reach a result without the help of an advisory jury), so long as the factual findings underlying its contrary conclusion" are not inconsistent with those explicitly or implicitly found by the jury acting as the factfinder.  

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In other words, if the jury determines a particular fact to be true or false — or reaches a verdict that requires the fact to be true or false — the court's hands generally are tied. But if the jury does not make a specific finding and its conclusion does not necessarily require that a particular fact be true or false, the court can determine whether the disputed fact is true or false.  In Kairys, the Third Circuit held that the facts underlying the district court's liability finding were not inconsistent with the jury's verdicts on the other counts.

Kairys is a reminder that employers should be careful in discharging employees in proximity to significant benefit costs arising from the employees or their dependents.  Further, Kairys is a key case on the interaction between issues tried to the court and those tried to a jury in the same case.  To the extent courts allow jury trials related to ERISA claims for which there is no jury right generally (e.g., to avoid separate trials relating to the same course of events), the specific contours of this interaction will be of vital importance in forming trial strategy and arguments.