Hutchison, et al. v. Fifth Third Bancorp. United States Court of Appeals for the Sixth Circuit

The Sixth Circuit Court of Appeals (Sixth Circuit) recently affirmed a lower court’s ruling that a state law breach of contract claim against a party that is not, at the time of the contract, an ERISA fiduciary nonetheless still relates to an ERISA covered plan and therefore is preempted under ERISA. Hutchison, et al. v. Fifth Third Bancorp, 469 F.3d 583 (6th Cir. 2006). In this case, the Sixth Circuit found ERISA preemption of breach of certain contract claims brought by plan participants in the context of a successor plan sponsor’s alleged failure to keep commitments it made in its corporate capacity under the contractual terms of a merger agreement. This is the second case in a sixmonth period to deal with this issue, as the Fifth Circuit Court of Appeals (Fifth Circuit) came to a similar conclusion regarding a contract entered into by a company in a nonfiduciary capacity but which related to a qualified plan in Halliburton Company Benefits Committee v. Graves, 38 EBC 2249 (5th Cir. 2006).

Hutchison revolves around certain provisions in the merger agreement governing the acquisition of Suburban Bancorporation (Suburban) by Fifth Third Bancorp (Fifth Third). In 1997, Suburban and Fifth Third negotiated a merger agreement between the two companies. The merger agreement contained language relating to the unallocated shares held by the employee stock ownership plan (ESOP) maintained by Suburban. The merger agreement also provided that the ESOP would be maintained for the exclusive benefit of individuals who had become ESOP participants on or before the effective date of the merger (the class members). After reading the representations contained in the merger agreement, class members voted the ESOP’s shares in favor of the merger. The two companies merged in 1997.

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