GM Wins Pension Benefit Challenge; Split Sixth Circuit Finds No ERISA Plan

General Motors Plant

A group of retired autoworkers lost their bid for additional pension benefits because the arrangement under which they sought benefits wasn't an ERISA plan, the U.S. Court of Appeals for the Sixth Circuit held in a 2-1 split ruling (Buchanan v. Gen. Motors, LLC, 2015 BL 3173, 6th Cir., No. 13-1664, unpublished 1/7/15).

The retirees—who all worked for General Motors Co., Robert Bosch LLC and Delphi Corp. throughout their careers—alleged that the companies impermissibly reduced their pension benefits in violation of a “Special Attrition Program” agreed to by GM, Delphi and the United Autoworkers.

Judge Eric L. Clay, writing for the two-judge majority, emphasized that the retirees claimed benefits only under the SAP and not under GM's larger pension plan. Because the SAP itself didn't provide retirement benefits and therefore didn't qualify as a plan governed by the Employee Retirement Income Security Act, Clay found that the retirees' claims were properly dismissed.

In a dissenting opinion, Judge Gilbert S. Merritt criticized the majority for reading the retirees' pleadings so strictly, saying he disagreed with the idea that the “entire issue of pension entitlement” could be avoided because the retirees didn't raise any claims under the GM plan. However, Merritt said that the retirees' “real problem” was their failure to exhaust the GM plan's administrative remedies, which left the factual record incomplete and unclear.

Retirees Seek Benefits

According to the retirees, the SAP promised them pension benefits based on their combined service between GM, Bosch and Delphi. When GM announced in 2010 that their pension benefits would be less than they expected, the retirees filed suit against the three companies.

The U.S. District Court for the Western District of Michigan dismissed Bosch from the case in 2013, finding that it wasn't a signatory to the SAP.

It later ruled in favor of GM on the remaining claims, finding that the SAP wasn't an ERISA plan.

Gain access to the most reliable source for comprehensive pension and benefits and executive compensation research with a free trial to the Benefits Practice Resource Center.