Third Circuit Affirms Judgment on ERISA Retaliation Claim in Favor of Employee Fired After Incurring Significant Medical Costs for Company

In Kairys v. S. Pines Trucking, Inc., No. 22-1783, __F.4th__, 2023 WL 4718509 (3d Cir. July 25, 2023), Defendant Southern Pines Trucking, Inc. appealed the district court’s judgment for Plaintiff Thomas Kairys on his ERISA § 510 retaliation claim and the court’s award of attorneys’ fees and costs. Plaintiff alleged that Southern Pines violated ERISA, the Americans with Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), and the Pennsylvania Human Relations Act (PHRA), when it fired him after his hip replacement surgery, which caused Southern Pines’ self-insured health costs to rise markedly. A jury returned a verdict for Southern Pines on the ADA, ADEA, and PHRA claims, and an advisory verdict in favor of Southern Pines on the ERISA claim. However, the district court granted judgment to Plaintiff on his ERISA claim, finding that he proved by the preponderance of the evidence that the Company retaliated against him for using his ERISA-protected benefits and interfered with his right to future benefits. The court awarded him $67,500 in front pay and $111,981.79 in attorneys’ fees and costs. Southern Pines appealed and the Third Circuit affirmed.

The court first determined that the district court’s judgment did not conflict with the jury’s factual findings on evidence common to all claims. Here, the jury did not make specific findings of fact. The parties did not proffer a special verdict form and the general verdict form only asked whether Plaintiff proved by the preponderance of the evidence that the Company discriminated or retaliated against him because of a particular protective characteristic or activity. The Third Circuit held that “in a suit with equitable and legal claims and facts common to both, a district court must determine whether the jury verdict on the legal claims ‘necessarily implie[s]’ the resolution of any common factual issues, even when the jury fails to make explicit findings of fact.” A court must then follow the jury’s implicit or explicit factual determinations in deciding the equitable claims. Though the district court did not analyze in the first instance whether the jury’s verdict on the ADA, ADEA, and PHRA claims necessarily implied the resolution of any factual issues common to the ERISA claim, the Third Circuit did so and found that each of the claims have distinct elements of proof. Though it is a close question, the court found that the jury’s ADA verdict does not necessarily imply that the Company did not discriminate against Plaintiff based on the cost of his medical expenses. In short, the district court’s judgment and findings on the ERISA claim were not inconsistent with the jury’s verdicts on the other claims.

The court then considered whether the evidence was sufficient to support the district court’s verdict for Plaintiff on his ERISA claim. The district court credited Plaintiff’s testimony that Bob Gallagher, the VP of Operations, told him to “lay low” after his surgery because Pat Gallagher (Bob’s brother and CEO) was upset about his surgery. The district court’s credibility determinations were not clearly erroneous. The district court also found weaknesses and inconsistencies in the Company’s explanation that Plaintiff’s firing was for a legitimate, nondiscriminatory business decision. The Company explained that Plaintiff’s position was unnecessary once the Southern Pines cryogenic fleet reached full utilization. But Plaintiff’s offer letter specifically incentivized full utilization with a $3,000 bonus and recognized that utilization could fluctuate. Pat Gallagher also fired Plaintiff unilaterally, something he only did when an employee performed poorly or misbehaved. However, Plaintiff was high-performing and had just earned a $11,458 bonus less than a week before he was fired. Finally, the Company brought over another employee from a sister company who performed some of Plaintiff’s old duties. The court found that the district court’s interpretation of the facts to find pretext has support in inferences that may be drawn from the facts in the record.

Lastly, the court found that the evidence supported the district court’s finding that the Company’s firing of Plaintiff was motivated by Plaintiff’s past and anticipated future use of ERISA health benefits. The Company’s healthcare invoices had Plaintiff’s hip replacement surgery costs highlighted, and though anonymized, it was not difficult for someone in the Company to identify Plaintiff and his expenses. Pat learned of Plaintiff’s healthcare expenses shortly before he was fired. Plaintiff also testified that he told Pat he would need a second hip replacement surgery and the court found Pat “evasive” when asked whether he knew Plaintiff would need more surgery. For these reasons, the district court’s judgment on Plaintiff’s equitable ERISA claim was supported by sufficient evidence.