Opinion ID: 486618
Heading Depth: 1
Heading Rank: 2

Heading: analysis

Text: 5 A. Is the forfeiture clause enforceable? 6 The parties agree that ERISA governs this action. Clark, however, urges us in deciding this case to incorporate into ERISA Oregon law with regard to non-competition clauses. Clark's premise, that the Company's forfeiture clause would fail under Oregon law, is quite likely in error. But the point is irrelevant. This case is controlled by Lojek v. Thomas, 716 F.2d 675 (9th Cir.1983), which held on very similar facts that ERISA preempts state law with respect to non-competition forfeiture clauses. Id. at 678. State law plays no part in assessing the validity of such a clause in an ERISA plan. Id. 7 As to federal law, a non-competition forfeiture clause is valid so long as the plan provides that benefits accrued after ten years of service cannot be forfeited. Id. at 678-79; see 29 U.S.C. Sec. 1053(a)(2)(A). In a plan that so provides, ERISA requires no pension benefits at all for employees with less than ten years of service. 716 F.2d at 678. If such a plan vests employees with pension benefits before their tenth year and is thus more liberal than ERISA demands, the employer may condition his liberality with a non-competition requirement. Id. at 678-79. That is the situation here. 1 8 B. Did Brown breach his fiduciary duties in applying the clause to Clark? 9 Clark next tries to make a breach-of-duty argument against the Company's enforcement of the forfeiture clause in his case. Clark alleges that Company president Brown had a pecuniary interest in the forfeited benefits and that Brown was trying to punish Clark for accepting work with Jantzi. 10 No doubt the effect of a non-competition forfeiture clause is punishment of employees who take work with competitors. But repeating this fact states no claim, once it is accepted that such clauses are enforceable. This is not a case like Frary v. Shorr Paper Production, Inc., 494 F.Supp. 565 (N.D.Ill.1980), in which there was no express non-competition clause and the plan administrator unilaterally imposed penalties on employees who took jobs with competitors. 11 No facts are alleged here suggesting that Brown enforced the clause against Clark more strictly or severely than against other employees. Nor does Clark contend that he had worked for ten years, or that Jantzi is not a competing company. Thus he concedes the applicability of the forfeiture clause in his case. It follows that Brown's enforcement of it was not a breach of duty; indeed, had Brown failed to enforce the clause, he might well have breached his fiduciary obligations. 12 We sympathize with Clark, who was so close to attaining his ten-year nonforfeitable benefits. And we note that ERISA firmly prohibits discharge of a plan participant for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan. 29 U.S.C. Sec. 1140. However, Clark has never disputed the Company's motives in laying him off, and thus Sec. 1140 is inapplicable here. 13 Instead Clark challenges the Company's motives in applying the forfeiture clause. On this point the district court correctly ruled that the Company was simply enforcing a valid term of its plan. 14 AFFIRMED.