Supreme Court case could pave way for Trammell Crow lawsuit

Last week, a group of University facilities employees sued Penn in federal court, challenging the University's plan to outsource their jobs on the grounds that the University and the outside company conspired to lower their benefits, violating the law. If they had filed such a lawsuit one year ago, a judge would've thrown it out right away, experts said. A recent U.S. Supreme Court decision, however, has eliminated that possibility. That means the employees, who sued the University and two units of Trammell Crow Co. in U.S. District Court in Philadelphia, will now have the chance prove what they claim. But that may not be an easy task, employment-law experts said. "If you're filing a suit, you've got to still prove that the intent, that the reason for the outsourcing was to deprive you of your attainment of benefits," said Mary Ellen Signorille, a staff attorney for the American Association of Retired Persons in Washington. Signorille wrote a brief supporting the plaintiffs in Inter-Modal Rail Employees Association v. Atchison, Topeka and Santa Fe Railway Co., the case attorneys for the University employees say provides the basis for their suit. The employees' suit falls under the Employee Retirement Income Security Act of 1974, a federal law governing employee benefits. "It's very rare where the only [reason for outsourcing] involved was benefits," Signorille added. University General Counsel Shelley Green said yesterday that the employees' "complaint is entirely without merit." A spokesperson for Dallas-based Trammell Crow declined to comment. Although the Supreme Court last May ruled in the Inter-Modal case that employers can't outsource workers to lower their pension and health benefit obligations, the court didn't question the general legal foundations for outsourcing, experts said. "The court ducked most of the hard issues and left them up to the remand," said Marc Machiz, an attorney with the U.S. Department of Labor. In its decision, the Supreme Court sent Inter-Modal back to the District Court in Pasadena, Calif., where it is still in early pre-trial stages. No court date has been set. But Inter-Modal isn't a smoking gun for invalidating outsourcing deals, Signorille and other experts said. The case merely forbids judges from throwing out similar lawsuits based on previous interpretations of the law, the experts said. The Inter-Modal case began when outsourced cargo-transporters sued their former employer, accusing the company of trying to duck their pension and health benefit obligations to the employees. The first judge to hear the suit threw out the case, but the Court of Appeals ruled that the relevant section of ERISA applies only to pension benefits. On further appeal, the Supreme Court clarified that the law covers pension and health, or "welfare," benefits. Jumping on that decision, attorneys for the three University employees and one employee's spouse -- who seek class-action status for the approximately 175 managers and support-staff affected by the deal -- claim that the University and Trammell Crow rigged the agreement "for the purpose of depriving University employees and beneficiaries of pension and welfare benefits," according to the complaint. The employees' case may rest largely on circumstantial evidence, depending on what happens during discovery, the period in which attorneys exchange relevant documents, Signorille said. James Parrot, a St. Louis attorney who represents the Inter-Modal plaintiffs with attorney Richard Schwartz, said the decision was "more narrow than we hoped for" but insisted that "it sends a message" to employers. And if there's evidence that officials broke the law, "somebody good will find it," he added.

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