Washington — The ERISA Industry Committee (ERIC) filed an amicus brief with the U.S. Court of Appeals for the Second Circuit, supporting PepsiCo, Inc. in Noel v. PepsiCo, Inc. The brief asks the court to uphold the lower court’s decision to dismiss the lawsuit, which challenged PepsiCo’s tobacco-surcharge wellness program under ERISA.
The case is among the first of more than 50 tobacco-surcharge suits nationwide to reach a federal appeals court on the merits. PepsiCo’s plan lets employees avoid the surcharge for the full plan year by completing a free cessation course before a set annual deadline; those who finish later still get the surcharge lifted but not refunded for the months before. In February, the Southern District of New York rejected Plaintiff Krista Noel’s demand for a retroactive refund, holding that ERISA requires only one annual opportunity to earn the reward, not reimbursement.
“Tobacco cessation programs exist to help employees quit, not to generate retroactive refund claims months later,” said Doug Hinson, Executive Director of the ERIC Legal Center. “PepsiCo gives tobacco users a chance each year to avoid a surcharge. Reading the statute to also require retroactive reimbursement of its tobacco surcharge would turn a clear annual deadline into an open-ended obligation that would not have the intended effect of helping smokers quit. These class action suits eviscerate the intended effect of wellness programs aimed at smokers, and they discourage employers from offering these programs at all. Thus, these cases are bad for both employers and employees.”
The brief argues that ERISA gives employers flexibility to design tobacco-surcharge wellness programs, and that federal law requires a “reasonable alternative standard” only for participants who have a medical reason they cannot quit tobacco, not for every tobacco user, as a misguided regulation suggests. ERIC’s brief further contends that, after the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, courts owe no deference to a regulatory reading of the statute that contradicts its plain text.
Read the full brief here.