Shaver, et al. v. Siemens Corporation, et al.

Case Updates

The U.S. Court of Appeals for the Third Circuit reversed the lower court's decision, and concluded that none of the appellees are entitled to permanent job separation benefits from the defendant.

Siemens Corp. bought a power plant from Westinghouse Corp., hiring all of the plant's then-active employees and providing them with retirement benefits that were substantially the same as had been provided under Westinghouse's pension plan. That plan offered permanent job separation (PJS) benefits until 1998. The plant was closed in 2002, and 227 former employees sued Siemens for termination benefits. The trial court agreed, ruling that Sections 204(g) and 208 of the ERISA prevented the company from cutting back on early retirement benefits.

In its brief, NCLC argued that ERISA's “spin-off” rule should not apply in this context because ERISA encourages plan sponsors to adopt employee benefit plans voluntarily and with flexibility. In addition, ERISA's Section 204(g) anti-cutback rule should not apply because the Siemens plan never included PJS benefits and compelling a purchaser to provide a seller's contingent benefit subsidy when the former employees remain ineligible for that benefit will discourage employers from entering into business transactions.