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District Court Greenlights ERISA Lawsuit over Firing to Avoid Severance Pay Obligation

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No duty to pursue unavailable remedy

Birmingham, ALOn September 21, the District Court for the Northern District of Alabama denied AT&T’s motion to dismiss Roy Robinson’s ERISA lawsuit. Robinson v. AT&T Services, Inc alleged that the company fired Robinson to avoid paying him severance benefits. AT&T claimed that he had failed to exhaust internal company remedies before filing his lawsuit. The court’s decision does not address the merits of Robinson’s claim. It simply permits Robinson to proceed to settlement negotiations or to trial.

ERISA Section 510 provides that, “[i]t shall be unlawful for any person to discharge … a participant or beneficiary … for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan.” The legislative history of ERISA identifies this kind of abuse as one of the principal reasons for ERISA’s passage in 1974.

AT&T’s argument, on the other hand, focuses on a procedural issue under the Federal Rules of Civil Procedure (FRCP). More specifically, the company argues that Robinson failed to pursue internal company remedies before filing a lawsuit and thus could not to “raise a right to relief above the speculative level” as required by interpretations of FRCP Rule 8. The Court was called upon to weigh the competing goals of protecting workers’ rights versus the rules of sound pleading.

The Court’s answer is remarkably straightforward. A worker need not jump through administrative hoops when the effort would be pointless. Substance trumped process.

Laid off with no severance pay    

Robinson was a technical sales consultant at AT&T Services, Inc. In early 2020, the company implemented a program designed to reduce the workforce by 3,400 jobs. As part of that program, any terminated employee who had worked at the company for 23 years (rather than the typical 25 years) was eligible for the Severance Pay Plan and Management Transition Program (MTP program).

Robinson worked alongside eleven other technical sales consultants on his team. Three of those consultants volunteered to be terminated under the MTP program, but Robinson did not because he was less than two months shy of the 23 years required for eligibility. He told his supervisors why he made his decision.

Nevertheless, AT&T declined to accept the resignations of the three volunteers and fired Robinson, instead. Robinson, at that point, had worked for AT&T for over two decades, and had only 50 days to go before he could participate in the MTP program. He asked his supervisors for stop gap work to continue his employment for the time needed to qualify. His supervisors ultimately told him that “the word back from Dallas,” (headquarters) was to deny requests for special projects. He filed an ERISA lawsuit claiming that AT&T terminated his employment for the purpose of interfering with his attainment of rights in the MTP program in violation of ERISA Section 510.

Was Robinson required to pursue a claim within the company?  

In an effort to conserve judicial resources, plaintiffs in ERISA lawsuits must generally exhaust available administrative remedies before suing in federal courts. Exceptions to the general rule include situations where resort to an administrative scheme is unavailable, would be futile, or where the remedy would be inadequate. AT&T’s MTP Program appears to have outlined a process for requesting review of an adverse decision. Robinson did not follow those steps. Was he required to do so before filing his ERISA lawsuit?

In a Memorandum opinion from January 2021, the Northern District granted AT&T’s motion to dismiss the complaint because of inadequate service of process and because Robinson failed to plead that he had exhausted administrative remedies. Those deficiencies appear to have been cured by the time of the District Court’s decision in September 2021.

The District Court’s September decision focuses on the issue of whether the process for requesting a review of an adverse decision under the MTP Program was actually available to Robinson. It concludes that:

“Because AT&T Services discharged Plaintiff before he was eligible for MTP Benefits, it does not appear that Plaintiff was ever an ‘individual having a claim for benefits or of unfair treatment under [the] Plan.’ Instead, Plaintiff is an individual with an alleged wrongful discharge claim. He contends Defendant interfered with his attainment of MTP Benefits. Therefore, based on the pleadings, Plaintiff did not have an available administrative remedy to pursue under AT&T Services's Plan before filing this action.”
Once the fundamental service and pleading issues had been corrected, the District Court took the path that appears to have honored the basic legislative purpose of ERISA.


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