your argument in our second case nik versus computer science is good gratian sixteen sixteen zero six whenever the lawyers are ready fine you can wait a minute i've been in that spot where employees only protection are principles of contract law when c s e established a deferred compensation top that plan it made an offer to its employees loan us your present day compensation in exchange for a stable predictable and secure source of income when you ultimately retire the employees accepted this offer not by signing their name on the dotted line but through performance by remaining at the company until retirement and electing their payout scheme the day after they retired this appeal turn on whether a company is free to alter the terms of its retirement plan after an employee accepts them by completing performance and they not had that not occurred before no your honor the only amendment that occurred once before involved technical changes based on a requirement to the i r s code what happened here was different never before had this company applied the substantive amendments that they made you don't laterally in two thousand and twelve t already retired employees and the key the the there are three changes that the company made to this plan one involves the crediting rate of course but there are two fundamental additional changes that transformed this plan from the stable and predictable source of retirement income to this more volatile plan that they that they implemented as a cost cutting mechanism and the first is that the plate before two thousand and twelve the plan had never ever required at that point retired  es accounts be charged losses and after two thousand and twelve the company changed the language of the plan so that the plan not only the accounts not only would be charged gains that the market had but also losses and that factual question about that as well because there is even under the play and at the end why would that not have had to capture the losses that occurred along the way because because the accounting that went on where the ten year averaging of the merrill lynch crediting rate didn't actually wasn't actually accounted for in the last payout what the company did here though was quite different what it i'm sorry ye requirement of a far more active hands on management did and then to a more even doubt investment axis along the way it was my understanding that there are nevertheless swings in the market even in a more stable under a more stable investment vehicle and it was my understanding that that last payout at the the final payout was what was designed to reflect so sweet yes but not saying that correct is that correct not quite your honor the last payout was was designed to address marginal differences in the accounting that occurred now could it be less i mean let me maybe i'll answer it this way it could end up let me let me try to be clear it could end up under the under the terms that the employees accepted when they retire not the not the principle account it could end up happening is that there could be a slightly different annual payout that the employees received on their last payout but what could not happen is that a slightly lower or higher annual payout so under that under the plan the named plaintiffs in this case elected a ten or fifteen year payout and the plan guaranteed them each one of those annual payouts will be a fixed amount different ok i understand and let me let me again try to try to be clear although i don't want to lose sight of the third fundamental yes but the language changed and that's what we know happened there's no dispute that before two thousand and twelve said that that earnings shall be credited so any earnings under the merrill lynch averaging shall be credited to the account well first of all you make a quote cision of this is should be treated like a would at least answer it before relative to one of the three and so if you're talking incredibly great crediting rate with this if you're talking distribution top distribution or risk those are the three things that you make here and which of the three are you  yeah we know the plan changed we know that before two thousand and twelve on the risk the plan said only that the account in this is again at day four thirty three and thirty four that the put the earnings shall be credited the amendment change that language so after two thousand and twelve and this is that j two twenty six the the company amended the plan on this particular feature and it wrote the earnings shall be credited to and then it added or charged against and the problem that i have with that answer is that to say that earnings should be credited hast to proceed on the assumption that there are earnings and at the end there will be  to get to distribution yes so let me let me start with crediting and then i'll move to distribution before i answer that and i promise i'll answer it i just want to take a step back and say that judge we when you're absolutely correct that this is a unilateral contract and so it hinges ok it hinges on the promises that were made in the original plan and whether those promises were were defeated or diminished in some way after amendment on the crediting rate what this amendment did is it eliminated the key act yes your honor under principles of unilateral contracts to reserve the right to amend a plan terms of a plan after accept possibility no your honor i don't agree with that premise i think what happened here is that the employees accepted the credit rate that was offered to them under the original terms of the plan now the language you're referring to the right to change the crediting rate of course that's in the plan but it does not grant the company the explicit right to amend after acceptance now this is exactly because the company can change the crediting rate at any point up until except it w it's completely meaning yes yes your honor going forward but only going forward as to the active employees those have been anywhere in the plain there that there is not that distinction in the plan but the point of unilateral contracts and this is again the circuits are are uniform on this point that that acceptance locks in term into place the terms that are that are offered to the employees at the time they retire why there's yeah there's there are several position than rank and file employees to take care of themselves financially not so your honor and again the third circuit has no i don't disagree with let me clarify i don't disagree with what you just said i disagree that there are less protections the protections are that's that's exactly right there are and the first circuit have all said that when you're dealing with these top plans because they are unilateral contracts what do we make of this language the play n could be wholly or partially amended by the board from time to time in the sole and absolute discretion and the crediting rate including perspective and crediting write in particular was subject to amendment by the board yes and that allows the plant to make amendments up and took and apply them to employees up until the point that they camera with new valley from the third circuit but the last but my point is the language is the same almost identical in the in the bar case i mean it's not binding but it's persuasive and there's a reason why those court and come out the way that they have which is that these employees have no protection once they retire they are left only with the with the bargain that they had at the time that included the recognition that it could be a because they're unilateral contracts require something more now the company or could could in theory have granted itself the right to make this contract it is or e this if we take you argument on this there is a specific and that's and that's where judge ellis hinged his decision on no no your honor because because the republicans the requirement is the unilateral contracts require an explicit grant of a right to make amendment after acceptance to be both unlike distribution if you go back to distribution you might have an argument there that is not there and addressed it in this context because it looks like your time as well i will turn to that i'll turn to that now and i'm happy to come back and address lingering questions on rebuttal about the crediting rate but when it comes to the distribution scheme there is no specific amendment dr duncan like there was credit for the rate that allows the company specifically to alter or change the distribution payout schedule that these employees elected when they retire credit as well as risk we think with the distribution where you don't have a specific but the others you do we think not we think that it's a bright line rule that that that applies to all unilateral contracts we think that all three would would certainly fall or rise on the same rule however yes yes your honor however i think it's certainly the case that where the company here undertook and guaranteed equal distribution of these in your payments including both within the plan where there's language specifically saying that they shot that quote and i'm quoting from j four thirty three thirty four thirty four i'm sorry even distribution to the extent possible is that the reach out this is the language no your honor points the language that says that the that the pay equal payments quote shall be paid as specified in the election shall be paid yes your honor but that's an end but that's an administrative carve out that's what you're hanging your hat on with respect to the even up the true up provision at the into the plant i don't agree your honor i think that the true up provision is you're referring to it is very different from  refer to whether the accounts themselves are fundamentally shielded from the ups and downs of a volatile market option this is an option that allowed individuals upon retirement to take a look there was your honor i'm they are free to take the lump sum and invest that money elsewhere the protections in place exist to protect retired employees who don't have that same option thank you ar my name is deborah davidson and i represent the appellant i'm sorry the appellee i'd like to address first why the court should not the proposed you know lateral contract theory and second why the  rules and anti forfeiture rules and fiduciary rules that apply to what i would call traditional retirement plans like a pension plan or a four a one k plan but it is still subject to a risk as civil enforcement provision basis for the enforcement would be the terms of the plan and that's a claim under section five zero two one be a risk that allows participants the right to enforce their rights or clarify their rights under the terms of the plan and that's the claim that we have here with respect to the application of the amendment to disappearance who've already retired country like me you've got to go back to plan and look at the terms of the plan to do it and the circus and look at this and and you determine does this plan allow them to make such an amendment because you can have the it is no general rule that says you can't do it if you if the plan itself allows you to do it yes you can do yes and so it is can be got to look at the polling to see if this plant in fact allows you to do distribution does allow you to credit very very and does it allow you to men insofar as the risks absolutely it is the terms of the plan that control here and that's that's one of the reasons why we take issue with this unilateral contract theory because the appellants are asking the court to adopt a new rule that would then would require that a top hat plant can't be amended as to retire easy and less the plan specifically says we can amend even after you retire even if the plan already contains a general reservation of rights and so that theory would impose substantive requirements on the terms of topcat plans even though congress specifically exempted topcat plans from those types of substantive requirements that of other traditional arista retirement plan so that also you aren't i'm sorry it's also your argument as i understand it that you would prevail even under unilateral contract principles have only yes that's correct correct and that's because the plan defines the term participants to include both active employees and retirees and so the board's preservation of rights to amend the plan both in general and specifically with respect to the equal about these basements you get the small payments at the beginning and then you get the big get that in that's that's a whole different ballgame isn't it so the there and focus on the word share which yes not passages within the plan if we're going to go unilateral contract because you get one specifically dealing credit rating you get specific risk but distribution you've got this show in approximate equal payments and unless problem now is that under the four valuation funds that are in place from accrediting perspective it is not feasible to be able to project what the returns are going to be between the volatile exactly the concern for the individuals who had assumed that they would have the benefit of a fairly stable income stream although our do not believe that the options that you have offered approximate that relatively stable income stream although it seems some would come closer to the others but they do not approximate that to the extent that they did under the previous plan but there was nothing in the plan that guaranteed that rate of return or the continued use of the merrill lynch index to the contrary the crediting rate was say he doesn't have much to strip discretion what words i got i got in terms of distribution so he got discretion he can do a shelf unit in he gets to sort of even it out but the plan the current method though is as close value if you if you assume a level rate of return now as to the actual payments those may vary from year to year and that's completely dependent on the investment choices by the participant and the performance of those invest and i guess  'll only i guess you argue that there's flexibility in approximate to correct my question my question would be you do get to change plans at any point in the you can change plans  you're converting you converting retirees into active investors knew that they they are making me to day decisions based on the volatility of the market when they went into their their retirement thinking that they had an option that would obviate the need but they were always on notice of the board's right to amend that rate and there was very specific language in the booklets that were provided to plan participants warning them before the amendments that were issue here was your choice of plans that are investment vehicles that they could choose from or with or just the no it was just the one ok and of these four one must have been much more than most range in how aggressive they are not right erect and and these are just off back questions i don't think so i don't i wasn't clear on and when you say that they could choose to go to a new one at any time is that just at the beginning or end of the year e j any day the year ok and when you when the administrator is making this determination about making approximately equal payments and it was decided that is close to equal is reasonably administrative feasible was an ok interpretation of that is that determination within the administrators discretionary authority yes that's in that would be sort of standard arista law absolutely absolutely and foul and the t list gave us a dramatic variation in terms of volatility in asia but there was one that i would imagine was it the money market there was one that was where i would imagine the is a target date on which is sixty five percent stocks thirty five percent bonds and then there's an s and p index of s and p five hundred index fund which tracks the performance of the s and p five hundred so participants who chose that investment option two thousand and three there was a two thousand and three amendment to the crediting right which for stablished merrill lynch crediting rate there is no evidence that that amendment was applied any differently to retirees versus employees to the contrary  was told that that was in response to r s certain r s that was a different amendment your honor but i'm talking the plan amendment it we're talking about the earlier about ten years earlier yes and there was also no differentiation between current and former employees correct and sorry no go ahead to one point i think it's in the reply brief assert that under the terms of your argument c s e could modify the client to provide for a negative ten percent crediting and so that guy that gets us to the delimitation there is a limitation on the board's  authority to amend the plan in that it could not enact an amendment that would reduce the balance of participants account as of the date of the amendment so it and this is not what happened here but if there were an amendment that as of january one two thousand and thirteen we're applying a minus ten percent if that would result result in the reduction as of the effective date of the amendment and participants account we might have a different issue here that's not what happened here now but they could go minus ten percent if the hole in the future but there's nothing in the planned it that guarantees against losses in the future or market fluctuations as is the case with the notional funds and that's because the earnings on it through the merrill lynch index up through january one two thousand and thirteen those that's remained in place so this is only forward looking and so depending on the performance of the funds the participants choose they might end up with greater balances they may end up with losses but that's subject to their choosing in the performance of those funds in getting top p ans or in the top plans roughly total i think it's active and retired i think i think around a thousand with respect to the retirees i believe it's two hundred something the proposed class is around one forty one sixty but i want to address a couple of other points that were made by mr west or first with respect to the unilateral contract case law or any there holds the the unilateral contract principles don't apply well there's only been one circuit court that has actually adopted this theory  you gotta look at the contract you can't give it an unreasonable interpretation of the language of the country who's playing what is what are you what do you want to use if you don't you you know well the terms of the plan and the problem that we have with the you don't lateral contract theory is that it starts with a presumption that benefits can't be amended after a participant retires that's the same type of presumption that the supreme court and this court has rejected in the context of retiree medical benefit plans because this is a can't a minute after retirement unless you look at the plan and it provides and allows for an amendment that seems to be clean what what what is the problem what they are looking for is a requirement reservation of amendment and yet if you look at the plan you see something specific in it why not why would you just let that truck and not look at him well there is both a general in this case there is both a general reservation if i can say it doesn't matter correct you look at distribution while in distribution then you get then that brings us back to the question of the administrative feasibility and that's a general term that you've got the specific language specifically what vested and what rights were still reserved by the plan sponsor and here there was always the right reserve by the plan sponsor to amend the plan in general and the crediting rate specifically and the distributions aren't you can't separate the that they said we elect to get equal payments we know what we're getting now you made this big disparity in terms of what they're getting and that doesn't change distribution in a material way the distribution can't be separated from the performance of the crediting rate right and you have to reach the point you have to construe the plan as a whole and the current system is the best way to reconcile the change in the crediting rate with the distribution options and to make those payments as close to approximately equal as is feasible given all of the variations in terms of how participants might choose to allocate their investments to you from the your answers to my earlier questions that there are is that yes that's one thirty six and one sixty one through one sixty six in the factual record it's also addressed in the district court's opinion there's your colleagues on the other side are going to have a chance to get up and tell us what they that this is the time to tell us that there's a problem with those figures or earth how they could be looked at differently while there was certainly a an existing conflict between those putative class members and the plaintiffs there also plan participants there were eight as at the time of the district court's ruling who had been paid out completely and were better off and so they certainly don't have an interest in potentially having to repay the additional money that they received under the amended plan and the conflicts here are not specific just to damages or remedies the conflicts relate to liability in the first sentence i understand and i wasn't really going to the class action i was really just going to the underlying index that tracked it was a call call it the treasury index it was similar at least in concept to the merrill lynch index so for to do it yes that was it was only the one correct so w so you could estimate it on any annual basis and then just divide the total by the number of installments here that you can change plans i mean change investment vehicles that is the primary reason that the old system doesn't work anymore just a few brief points your honor in response i just want to pick up on george wins questioning of the risk element of this plan it's not just that the language in the plan balland the company to  pay to to to pay out based on the elections at these employees made it's also in the letters that they sent confirming the payouts judge duncan you asked about this question is true up feature of the plan and i point the court to j get three hundred one of them is three hundred sixty three and some of dollars per year except in the last year of that payout scheme we can make some adjustments based on how that averaging interest affects how much we owe you but the key language in that letter which confirms that this is a binding promise that this company made and that was accepted by performance by these employees is the sentence below the table in that document and it says your annual payments will remain the same until your last payment that constitutes a binding promise that was accepted when the when these employees retired and elected to pay out scheme there's no dispute that the company has utterly changed that payout mechanism the annual payments now are up and down up and down it's if i did that that's not what i intended to do but i also i object to the premise that there is a winner and a loser here doing better on an indian and year to year basis is not what these employers created what  the thing though is it's still driven by the investment vehicles that the individual chooses and they can't they can change every day and they can change more significantly percentage use among  every day you're on i understand what this vehicle allows obviously it's also it's in the money market which is safe but you cannot you cannot stay in the in the in the one option that you had and expected and and excepted when you retired and so the injury here if we're talking about fact in the credit mechanism but it's not just the credit mechanism right it's any i mean just a just response pacifically to your you know you can mix and match and play the markets every day and change the allotment that's not what these employees wanted with their retirement act right and so and so they were so that they fundamentally now are being forced into a version of this retirement that was not to them and that they did not except when they retire now i don't think that would be actually even even disputed by the company in this case i think this case does hinge on whether under unilateral contract principles the amendment clause the generic language that we've been going back and forth over is sufficient to allow the company to make these changes post retirement and i would suggest and i think the cases bear this out that if this court  embraces that principle it would be the first appellate court in the country to do so and it would be adopting a novel rule that has never been applied in the context of unilateral contracts there's not a single case if i could just finish this last thought a single case c has cited that supports an interpretation of this generic amendment language to unambiguously allow for post retirement amendments there just isn't the closest they come is an unpublished case called cra and in that case they say that so is that we're right the the there there was a definition of participant that the court seized on there so it's similar but the one difference and again this is crucial is that it in addition to the definition of participant actual amendment language the the clause said and these changes can be applied to both active and retired employees there under these principles of unilateral contracts there needs to be some explicit grant of the right to amend otherwise as the third circuit has explained the disk the terms that were in effect when the employees retired are in revokable and the only way to overcome that rule is to include a specific grant of authority that the changes can be made after retirement and there is no dispute  the language in this plan did not hand the company that right if the court has no further questions thank you thank you very much for your argument we will come down and greet the lawyers and then we'll take a short recess