Third Circuit Holds that duPont Family Did Not Create an ERISA Retirement Plan for Certain Domestic Employees

In Dunne v. Elton Corporation, et al., No. 23-1499, 2024 WL 4224619 (3d Cir. Sept. 18, 2024), the Third Circuit decided a dispute over pension benefits promised by the matriarch of the duPont family, Mary Chichester duPont, when she established a trust in the 1940s to pay pension benefits to certain domestic employees who worked for her, her children, or her grandchildren. T. Kimberly Williams, an employee of Helena duPont Wright (one of Mary’s grandchildren), filed a lawsuit under ERISA alleging that the Trust is an employee benefit plan governed by ERISA, and that its current and former trustees, and the grandchildren, are liable under ERISA for the Trust’s underfunding. The Third Circuit considered two threshold questions: “Does Williams have standing to sue under Article III of the Constitution? If so, has Williams shown that she participates in an employee benefit plan covered by ERISA?” The court concluded that Williams has standing but that the district court erred by holding that the Trust is an ERISA-governed employee benefit plan.

On the issue of Article III jurisdiction, the court explained that Williams must show that she: (1) suffered an injury-in-fact that is concrete, particularized, and actual or imminent; (2) Appellants “caused” her injury; and (3) her requested judicial relief would likely redress her injury. The court determined that Williams had standing to sue all employers, not just Wright, because the Trust is allegedly a single-employer plan covering eligible employees of the duPont family, or a multiple-employer plan for which each of the grandchildren owed statutory duties. Assuming the allegations as true, Williams alleges that each grandchild harmed the purported ERISA plan by depleting the Trust’s assets in violation of ERISA. The court also found that Williams has suffered an injury in fact that is concrete, particularized, and actual or imminent because, as the district court determined, the Trust would immediately exhaust its current assets if it placed in pay status all the participants currently entitled to receive pensions. And the grandchildren have repeatedly refused to fund the Trust that it is reasonable to infer that they will not do so absent judicial intervention.

On the issue of ERISA coverage, the court found that “Williams failed to show that Wright has the sort of bona fide connection to the other relevant duPonts needed to establish or maintain a multiple-employer plan under ERISA § 3(5), 29 U.S.C. § 1002(5).” If the plan is a single-employer plan, it must be sponsored only by her employer, Wright. ERISA only applies if Wright established or maintained the Trust. The court explained that Williams cites no facts suggesting that her employer, Wright, supported, continued, or cared for the Trust. As such, Williams did not show that the maintenance prong triggers coverage under ERISA § 4(a)(1), 29 U.S.C. § 1003(a)(1). The court left for another day the precise definition of what an employer must do to maintain an employee benefit plan under ERISA. The court concluded the district court erred by holding that the Trust is an employee benefit plan covered by ERISA and Appellants are entitled to judgment on all claims.