McMahon v. McDowell

Background

A group of Pennsylvania workers sued under the state Wage Payment and Collection Law to recover wages, fringe benefits, and pension plan contributions. The Court of Appeals for the Third Circuit held that those parts of the Pennsylvania law were preempted by federal ERISA §514(a), meaning state claims could not proceed alongside ERISA’s federal scheme. The Supreme Court denied review of that decision.

Reasoning

The Third Circuit reasoned that ERISA already provides a comprehensive mechanism for recovering delinquent pension contributions, and the employees in the case were trying to bypass that federal process by using state law instead. The court described the state law as effectively substituting a state regulation that would circumvent the enforcement scheme Congress created in ERISA. The Supreme Court’s denial of review left this conclusion in place for the Third Circuit’s jurisdiction.

Real world impact

Because the Supreme Court declined to take the case, employees in the Third Circuit region who seek unpaid pension contributions will generally have to use ERISA’s federal remedies rather than Pennsylvania’s state wage law. The decision also leaves an unresolved conflict with a New York court decision that reached the opposite conclusion about state remedies. The legal disagreement between jurisdictions therefore remains open and unsettled for now.

Dissents or concurrances

Justice White dissented from the denial of review and would have granted certiorari to resolve the direct conflict between the Third Circuit and the New York Court of Appeals over whether ERISA displaces state-law remedies.