Phelps v. Field Real Estate Co.
991 F.2d 645 (10th Cir. 1993)

Facts:

  • Phelps began working as a commercial real estate division manager for Field Real Estate in February, 1985.
  • In November of 1986, he learned he was infected with HIV.
    • He had no symptoms of disease, it didn’t interfere with his ability to perform his job, and he kept his condition secret.
  • In March of 1988, the CEO found out by way of an anonymous letter on his desk.
  • Phelps was discharged for poor performance in August of 1989.
  • He then brought this action under Employee Retirement Income Security Act (ERISA) and Colorado handicap discrimination statute, alleging he was discharged because he had tested positive.

History:
The district court determined that Poole in fact was aware that Phelps had AIDS, but that this was not the motivating factor for Phelps’ discharge.

  • In this respect, the district court found that “sales performance was a serious problem in the summer of 1988.

Issue:
Whether Poole fired Phelps because “at least in part,” Poole wanted to protect the benefit plans from the effect of Phelps’ health condition.

  • Put bluntly, was Poole motivated to save the costs of health care, disability and death benefits as the expected consequences of the plaintiff’s developing AIDS?

Holding:
No. Affirmed.

Reasoning:

  • Section 510 of ERISA provides that:
    • “It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan … for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan….
  • Here, the court was of the opinion that decision to discharge Phelps was part of reorganization of his department and not to protect the benefit plan.
    • Phelps’ termination was not made until more than fourteen months after he first disclosed his medical condition.
    • In addition, there was evidence of poor performance – the commercial sales division failed to meet the expectations of Poole and his board of directors.

Rule: ERISA prohibits discrimination against participants of any employee benefit plan for the purpose of interfering with rights under such plan.

  • Discrimination need only be a motivating factor, NOT but for.