A federal judge ruled that 14 workers who accused their former employer of wrongfully telling them they must resign or retire to access their 401(k) plan accounts are not owed any back pay or benefits.
The ruling in Harris vs. Finch, Pruyn & Co. Inc. stems from a July 2005 complaint alleging several breaches of fiduciary duty by paper company Finch, Pruyn & Co. under the Employee Retirement Income Security Act of 1974 as well as reinstatement. The plaintiffs went on strike against Glens Falls, N.Y.-based employer from June 2001 through November 2001 and were not reinstated when the strike ended because the paper company had hired replacement workers. The plaintiffs then asked about accessing funds in their 401(k) accounts and claimed they were told they would have to resign or retire to do so.
On Tuesday, Judge Frederick Scullin Jr. of the U.S. District Court for the Northern District of New York ruled that the workers could not recoup back pay and lost benefits for the multiple years they did not work, because those claims “cannot be considered incidental to their claims for rescission and reinstatement.”
However, Judge Scullin did decide the case warranted a jury decision on the claim for rescission and reinstatement, so that part of the case will proceed.
he plaintiffs did not allege any injury to their retirement plan accounts. A U.S. Supreme Court ruling in James LaRue vs. DeWolff, Boberg & Associates Inc. earlier this year (BI, Feb. 25), on which the workers based their case, said plan participants can sue to recover individual account losses.
Judge Scullin wrote that the LaRue ruling did “not expand ERISA to allow individual claims that are not based on losses to plan assets.” He added that “in fact, the court explicitly warned that (the LaRue decision) does not provide a remedy for individual injuries distinct from plan injuries.”