In Bellon v. PPG Emp. Life & Other Benefits Plan, PPG Industries, Inc. & the PPG Plan Administrator, the Northern District of West Virginia recently addressed whether a predecessor company may be held liable for a decision made by its corporate successor to terminate retiree life insurance coverage and related benefits following spin-off.

The retiree plaintiffs asserted that company-provided life insurance coverage was wrongly terminated after their former employer, defendant PPG, spun off its commodity chemicals division (to which they once belonged) into a separate public entity called Axiall Corp. Axiall assumed responsibility for certain benefits of PPG’s retirees and later terminated those benefits.

Rejecting that argument, the court granted summary judgment for defendant employer, PPG, its plan, and the plan administrator on all counts, finding plaintiffs’ claims for benefits, discrimination, interference, breach of fiduciary duty, refusal to furnish information, and common law breach of contract failed as a matter of law.

In so holding, the court recognized that taking necessary steps to complete a business transaction—here, predecessor PPG transferring benefits liabilities for its commodity chemicals division to a separate, newly created successor entity, Axiall Corp.—does not trigger PPG’s general fiduciary duties under ERISA, nor create liability for PPG where the terminated benefits were unvested, and where PPG was no longer associated with the plan.

The court also recognized that defendants could not be liable to retiree plaintiffs and their surviving spouses for benefits because defendants were not responsible for the benefits termination decision (the successor Axiall Corp. was) and plaintiffs were not participants in PPG’s plan when their retiree benefits terminated (they were participants in Axiall’s plan).

The court likewise rejected retiree plaintiffs’ arguments that their life insurance benefits vested under predecessor PPG’s plan so they could not be transferred or terminated, reiterating that an employer’s commitment to vest benefits must be stated in clear and express plan language.  Accordingly, the court found that plan language stating only that, “[t]his coverage is provided by the Company” could not establish a promise of lifetime benefits provided by the predecessor.

In denying plaintiffs’ claims, the court also reaffirmed that ERISA does not prohibit an employer from terminating or modifying benefits not vested nor does it prevent an employer from pursuing its business interests as employer when not administering the plan or making investments.

The case is Bellon et al. v. PPG Emp. Life & Other Benefits Plan, PPG Industries, Inc. & the PPG Plan Administrator, No. 5:18-cv-00114 (N.D. W.Va. June 28, 2021).

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Photo of René E. Thorne René E. Thorne

René E. Thorne is co-leader of the firm’s ERISA Complex Litigation group, and is a principal in the New Orleans, Louisiana office of Jackson Lewis P.C. René started the New Orleans office and was the managing principal for ten years.

Her national practice…

René E. Thorne is co-leader of the firm’s ERISA Complex Litigation group, and is a principal in the New Orleans, Louisiana office of Jackson Lewis P.C. René started the New Orleans office and was the managing principal for ten years.

Her national practice covers the full range of complex benefit litigation matters, including representation of employers, plans, plan fiduciaries, third party administrators, and trustees. In that regard, she has handled numerous ERISA class actions alleging breach of fiduciary duty; breach of the duty of loyalty; prohibited transactions; 401(k) plan asset performance, fees, and expense issues; defined benefit plan asset issues, accrual issues, and cut-back issues; cash balance plan issues; ESOP litigation; fiduciary misrepresentation claims; sophisticated preemption issues; executive compensation litigation, both pension and welfare claims; retiree rights litigation; severance plan claims; Section 510 cases; and complex benefit claim cases.

During the course of her national practice, she has been admitted pro hac vice in courts across the country, including Alabama, the District of Columbia, California, Florida, Illinois, Massachusetts, Michigan, Mississippi, Nevada, New Jersey, New York, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, and Wisconsin.

René also has been retained in complex ERISA breach of fiduciary duty, prohibited transaction, and cash balance cases. René has been qualified and testified on ERISA matters in federal court.

René is active on the Employee Benefits Subcommittee of the Labor and Employment Section of the American Bar Association, and was a management co-chair of the Employee Benefits Subcommittee Newsletter. She is a past instructor for the National Institute for Trial Advocacy, and a former barrister in the Thomas More Inn of Court.

While attending Loyola University School of Law, René was a member of the Loyola Law Review and Moot Court.