2012 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

2-29-2012

Ronald Shaver v. Siemens Corp

Precedential or Non-Precedential: Precedential

Docket No. 10-4147

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

______________

Nos. 10-4147, 10-4279, 10-4791, 10-4792

______________

RONALD SHAVER; WILLIAM J. WHITNEY; JOE 

FEDELE; 

RALPH RIBERICH; ANTHONY P. KATZ, on behalf of 

themselves 

and others similarly situated,

v. 

SIEMENS CORPORATION; SIEMENS WESTINGHOUSE 

RETIREMENT

PLAN FOR UNION EMPLOYEES; SIEMENS 

WESTINGHOUSE RETIREMENT PLAN, 

______________

Appellants in No. 10-4147

RONALD SHAVER; WILLIAM J. WHITNEY; JOE 

FEDELE; 

RALPH RIBERICH; ANTHONY P. KATZ, on behalf of 

themselves 

and others similarly situated,

Appellants in No. 10-4279
2

v. 

SIEMENS CORPORATION; SIEMENS WESTINGHOUSE 

RETIREMENT

PLAN FOR UNION EMPLOYEES; SIEMENS 

WESTINGHOUSE RETIREMENT PLAN

______________

RONALD SHAVER; WILLIAM J. WHITNEY; JOE 

FEDELE; 

RALPH RIBERICH; ANTHONY P. KATZ, on behalf of 

themselves 

and others similarly situated,

v. 

SIEMENS CORPORATION; SIEMENS WESTINGHOUSE 

RETIREMENT

PLAN FOR UNION EMPLOYEES; SIEMENS 

WESTINGHOUSE RETIREMENT PLAN,

______________

Appellants in No. 10-4791

RONALD SHAVER; WILLIAM J. WHITNEY; JOE 

FEDELE; 

RALPH RIBERICH; ANTHONY P. KATZ, on behalf of 

themselves 

and others similarly situated,

 Appellants in No. 10-4792
3

v. 

SIEMENS CORPORATION; SIEMENS WESTINGHOUSE 

RETIREMENT

PLAN FOR UNION EMPLOYEES; SIEMENS 

WESTINGHOUSE RETIREMENT PLAN

______________

On Appeal from the United States District Court

for the Western District of Pennsylvania

(D.C. Civ. No. 2-02-01424)

District Judge: Honorable David Stewart Cercone

______________

Argued December 15, 2011

BEFORE: SLOVITER, VANASKIE, and GREENBERG, 

Circuit Judges

(Filed: February 29, 2012)

______________

David B. Rodes (argued)

John T. Terney, III

Goldberg, Persky & White,

1030 Fifth Ave., Third Floor

Pittsburgh, PA 15219

William T. Payne

Stember, Feinstein, Doyle & Payne

1007 Mt. Royal Blvd.,
4

Pittsburgh, PA 15223

 

 

Attorneys for Appellees-Cross Appellants

 

Ronald Shaver, William Whitney,

 

Joe Fedele, Ralph Riberich,

 

and Anthony Katz, on behalf

of themselves and others similarly situated

Frederick W. Bode, III

Thomas H. May

Dickie, McCarney & Chilcote

Two PPG Place

Suite 400 

Pittsburgh, PA 15222

David F. Dobbs

Dana L. Rust

Robert F. Holland

McGuire Woods

One James Center

901 East Cary Street

Richmond, VA 23219

Charles A. Rothfield (argued)

Michael B. Kimberly

Mayer Brown

1999 K Street, NW

Washington, DC 20006

Lauren R. Goldman

Mayer Brown
5

1675 Broadway

New York, NY 10019

 

 

Attorneys for Appellants-Cross Appellees

 

Siemens Corporation, Siemens

 

Westinghouse Retirement Plan for

 

Union Employees, and Siemens Westinghouse

Retirement Plan

Christopher J. Rillo

Schiff Hardin

One Market Street

Spear Street Tower, Suite 3200

San Francisco, CA 94105

Bradford P. Campbell

Suzanne M. Arpin

Diane M. Soubly

Schiff Hardin

1666 K Street, NW, Suite 300

Washington, DC 20006

Janet Jacobson

American Benefits Council

1501 M Street NW

Suite 600

Washington, DC 20005

 

 

Attorneys for Amici Curiae

 

American Benefits Council,

National Association of
6

 

 

Manufacturers, and

 

Chamber of Commerce of

______________

the United States

OPINION OF THE COURT

______________

GREENBERG, Circuit Judge.

I. INTRODUCTION

This matter comes on before this Court on four 

consolidated appeals and cross-appeals from an order of the 

District Court dated March 29, 2007, and entered on March 30, 

2007, denying defendants’ motion for summary judgment and 

granting in part and denying in part plaintiffs’ cross-motion for 

summary judgment. See Shaver v. Siemens Corp., No. 

2:02cv1424, 2007 WL 1006681 (W.D. Pa. Mar. 29, 2007). 

Plaintiffs, now the appellees/cross-appellants in this appeal,1

 1

As a matter of convenience, we refer to plaintiffs simply as 

“appellees.” 

Ronald Shaver, William Whitney, Joe Fedele, Ralph Riberich,

and Anthony Katz, on behalf of themselves and others similarly 

situated, brought this class action against defendants, now 

appellants/cross-appellees, Siemens Corporation (“Siemens”), 

appellees’ former employer, and its retirement plans, Siemens 

Westinghouse Retirement Plan for Union Employees and 

Siemens Westinghouse Retirement Plan, alleging that those 
7

entities violated the Employee Retirement Income Security Act 

of 1974 (“ERISA”) by refusing to provide appellees with 

Permanent Job Separation pension benefits (“PJS benefits”)

when Siemens terminated their employment. Appellees’ action 

has been partially successful in the District Court but remains 

unresolved as to the rest of the case. For the reasons that follow, 

we will reverse on one of Siemens’ appeals to the extent that the 

District Court denied it summary judgment for we conclude that 

Siemens was entitled to summary judgment on the entire case 

with respect to all appellees, and we will remand the case to the 

District Court for entry of judgment in favor of Siemens and its 

retirement plans. Entry of the order on the remand will bring 

this litigation to a close with respect to the substantive matters at 

issue.2

II. FACTUAL and PROCEDURAL HISTORY

On November 14, 1997, Westinghouse Electric 

Corporation (“Westinghouse”)3

 2

It is possible that the District Court will need to enter orders on 

some housekeeping matters such as the imposition of costs.

agreed to sell its Power 

Generation Business Unit (“PGBU”) to Siemensin a transaction 

to be effectuated through an Asset Purchase Agreement 

(“APA”). There was, however, a delay in the consummation of 

the transaction, and Siemens and Westinghouse did not execute 

3

Subsequently, Westinghouse changed its name to CBS, Inc., 

and it is now known as Viacom, Inc. 
8

the APA until approximately nine months later, on August 19, 

1998. As the APA contemplated, Siemens hired all 

Westinghouse PGBU employees who, on August 19, 1998, had 

been working actively, were on vacation, or were on short-term 

disability (“legacy employees”). Appellees are 227 legacy 

employees who transferred employment from Westinghouse to 

Siemens.

At the time that Siemens and Westinghouse executed the 

APA, Westinghouse sponsored and maintained a defined benefit 

pension plan for its employees, including the soon-to-be legacy 

employees (the “Westinghouse Plan”). Under section 19 of the 

Westinghouse Plan, employees who satisfied certain age and 

service requirements, but did not qualify for normal retirement 

benefits, and who were terminated by an “Employer, an 

Affiliated Entity, or Excluded Unit because of job movement or 

product line relocation or location closedown” were entitled to 

PJS benefits. J.A. 292, 345. Stated succinctly, PJS benefits 

provide for payment of an employee’s normal retirement benefit 

without actuarial reduction prior to normal retirement age, an 

additional monthly payment of $10.00 multiplied by the 

employee’s years of credited service if the employee’s special 

retirement date4

 4

A plan participant’s special retirement date under section 19 of 

the Westinghouse Plan is the first day of the month following 

the month in which Westinghouse terminates the participant’s 

employment due to job movement, product line relocation, or 

location closedown. 

was on or before January 1, 1995, and an 

additional monthly payment of $100.00 if the employee had 25 

years of eligibility service and his special retirement date was on 
9

or before January 1, 1995. See id. 345-50. As we later will 

explain, it is highly significant that the Westinghouse Plan 

defined an “Employer, Affiliated Entity, or Excluded Unit” as 

Westinghouse or any Westinghouse subsidiary or joint venture 

participating in the Westinghouse Plan. Id. 284, 288, 292. The 

definition did not, however, include any future employer, here 

Siemens, of Westinghouse employees. 

The Westinghouse Plan also contained two critical 

express limitations on the availability of PJS benefits: (1) a 

provision providing that “in no event shall a Permanent Job 

Separation occur if an Employee is offered continued 

employment by . . . a successor employer,” and (2) a so-called 

“sunset provision” providing that “[i]n no event shall a 

Permanent Job Separation occur after August 31, 1998.” Id.

293. Thus, in the absence of an amendment of the 

Westinghouse Plan, the plan would not provide for PJS benefits 

to an employee offered employment by a successor to 

Westinghouse, as happened here, or by reason of a separation 

after August 31, 1998, as was also the case here. 

The APA included many specific provisions governing 

the pensions and benefits of the legacy employees, which, so far 

as germane to this appeal, we explain in more detail below. At 

its broadest, however, the APA required that Siemens establish a 

defined benefit pension plan for the legacy employees “that 

contain[ed] terms and conditions that are substantially identical 

with respect to all substantive provisions to those of the 

Westinghouse Pension Plan as in effect as of the Closing Date” 

of the APA and that Siemens was to provide “compensation and 

benefit plans and arrangements which in the aggregate are 
10

comparable” to those of the Westinghouse Plan as of the closing 

date. Id. 137-38. Thus, Westinghouse and Siemens 

contemplated that the pension benefits for legacy employees 

essentially would continue unabated after consummation of the 

sale of the PGBU. There is, however, no suggestion in the APA 

or in any other document elsewhere in the record that 

Westinghouse and Siemens contemplated that the consummation 

of the sale would result in enhancement of the legacy 

employees’ pension benefits.

Although Westinghouse and Siemens did not execute the 

APA until August 19, 1998, prior to that date they adopted an 

amendment to the APA that provided that the closing date of the 

APA, though only for the purpose of pensions and benefits,

would be September 1, 1998.5

 5 The District Court found and the parties agree that Siemens 

and Westinghouse amended the APA to alter the closing date for 

pension and benefit purposes to September 1, 1998. In reality, 

however, the amendment was more specific than that and 

provided that “[a]ll references to ‘Closing Date’ in [s]ections 

5.5(d), (e) and (h) shall be changed to September 1, 1998.” J.A. 

154. In fact, however, there are provisions of the APA that deal 

with pensions and benefits that are not within the sections 

enumerated above. In particular, sections 5.5(a) and 2.3(a)

implicate pensions and benefits. In light of the parties’ longstanding agreement as to the import of the amendment, however, 

and for ease of reference, we insert September 1, 1998, as the 

closing date for all APA provisions dealing with pensions and 

benefits. We note, however, that the precise closing date of the 

APA is potentially relevant only as to our discussion in section

 In the same amendment 
11

Westinghouse and Siemens also amended the APA to provide 

that Westinghouse would amend its pension plan to offer the 

legacy employees, though only for benefit accrual purposes,

credit for service and compensation from August 19 through 

August 31, 1998, even though Siemens would become their 

employer as of August 19. In turn, Siemens agreed not to 

terminate any legacy employee other than for cause prior to 

September 1, 1998, and agreed that if it nevertheless did so it 

would “reimburse [Westinghouse] for any actuarial pension loss 

caused by any such termination.” Id. 156. Thereafter, 

Westinghouse amended its plan to reflect this amendment to the 

APA. 

On October 29, 1998, Siemens adopted separate but 

virtually identical defined benefit pension plans for union and 

non-union employees, which were made effective retroactively 

to September 1, 1998, the plans thereby becoming activated as 

of the time the Westinghouse Plan no longer would give the 

legacy employees credit for service and compensation. 

Consequently, the consummation of the Westinghouse-Siemens 

transaction left the legacy employees in the same position in 

which they had been prior to the closing of the transaction with 

regard to PJS benefits because under the Westinghouse Plan 

 

V(B)(3)(b) of this opinion concerning whether the APA 

contractually required Siemens to offer PJS benefits. We thus 

only address the disparate closing dates in that section of our 

decision and note that inserting August 19, 1998, as the closing 

date of the APA into sections 5.5(a) and 2.3(a) does not alter the 

outcome of this case. 
12

separation from service after August 31, 1998, could not result 

in a terminated employee being eligible for PJS benefits. 

As we have indicated, notwithstanding the sale of the 

PGBU to Siemens and the adoption of the Siemens Plans, after 

execution of the APA and to this day, the Westinghouse Plan 

has remained in existence and it continues to provide legacy 

employees the pension benefits they accrued under the 

Westinghouse Plan. Legacy employees who qualify for benefits 

thus receive two pension payments: one from the Westinghouse 

Plan for benefits accrued prior to September 1, 1998, and 

another from a Siemens Plan for benefits accrued from 

September 1, 1998 forward.6

 

In 1999, Siemens closed certain PGBU facilities and 

consequently terminated the employment of numerous legacy 

employees, including the appellees in this case. Upon their 

termination, 207 of the 227 appellees signed severance 

agreements in which they released Siemens from liability and 

promised not to sue it for any claims related to or arising out of 

their employment or termination. In exchange for their signing 

the agreement, Siemens paid the signatories varying amounts of 

severance pay. Though the validity of the releases was a major 

issue in the District Court, as will be seen we need not address 

that issue on this appeal. Notwithstanding having executed 

these releases, in March 2002 appellees submitted claims to the 

 6

As explained below, however, there are certain benefits which 

are considered to have “accrued” for purposes of ERISA section 

204(g) prior to September 1, 1998, for which Westinghouse is 

no longer liable. 
13

Siemens Plans for PJS benefits, but the Siemens Plans’ 

administrative committees denied those claims on the ground 

that neither Plan provided for PJS benefits, an undoubtedly 

correct decision so far as the terms of the Siemens Plans were 

concerned. 

On August 15, 2002, appellees filed a complaint in the 

District Court against Siemens and the Siemens Plans, alleging 

that those entities’ denial of their claims for PJS benefits 

violated ERISA. The Court assigned the case to a Magistrate 

Judge for pretrial proceedings in accordance with the Magistrate 

Act, 28 U.S.C. § 636(b)(1)(A). Following discovery, the parties 

filed cross-motions for summary judgment, which led to the 

Magistrate Judge’s filing a report and recommendation on 

December 13, 2005, with the District Court. After the parties 

filed objections and responses, the Court entered the order 

which is the subject of this appeal. 

The Magistrate Judge recommended that the District 

Court grant appellees’ motion as to the 20 class members who 

had not signed releases (the “Non-Release Plaintiffs”) and grant 

Siemens’ motion as to the 207 members who had signed releases 

(the “Release Plaintiffs”). The Magistrate Judge concluded that 

Siemens violated ERISA sections 208, 29 U.S.C. § 1058, and 

204(g), 29 U.S.C. § 1054(g), a decision she based on two 

theories which we address in detail below. The Magistrate 

Judge determined, however, that Siemens had satisfied its initial 

burden with respect to the Release Plaintiffs of proving the 

waivers’ validity and further determined that appellees had 

failed to provide evidence that they did not knowingly and 

voluntarily execute the waivers. Consequently, the Magistrate 
14

Judge recommended that the Court grant summary judgment in 

Siemens’ favor with respect to the Release Plaintiffs. Thus, the 

gravamen of the Magistrate Judge’s recommendation was that

Siemens wrongfully denied all appellees PJS benefits but to the 

extent that appellees had waived their PJS claims by executing 

the severance agreements including releases of their PJS claims 

Siemens avoided liability.

The parties filed cross-objections and responses in the 

District Court to the report and recommendation as both sides 

were satisfied in part and dissatisfied in part with the report and 

recommendation. On March 29, 2007, the Court granted 

appellees’ summary judgment motion with respect to the NonRelease Plaintiffs and denied summary judgment to Siemens as 

to both classes of plaintiffs. Apparently adopting both of the 

Magistrate Judge’s theories of liability, the Court determined 

that Siemens violated ERISA in denying PJS benefits and that in 

the absence of their signing releases all appellees would be 

entitled to PJS benefits. The Court denied summary judgment to 

appellees as to the Release Plaintiffs, as it concluded that a 

determination of whether they knowingly and voluntarily 

waived their right to bring their claims for PJS benefits required 

a fact-intensive inquiry inappropriate for resolution on summary 

judgment proceedings as there were material disputes of fact on 

the waiver issue.

The District Court entered a final judgment pursuant to 

Federal Rule of Civil Procedure 54(b) on October 15, 2010, 

awarding the Non-Release Plaintiffs approximately $2 million in 

damages but denying a claim they asserted for certain retiree 

health and life insurance benefits that they contended should 
15

accompany PJS benefits.

7

 On October 15 the Court certified the 

portion of its March 29, 2007 opinion and order denying 

appellees’ motion for summary judgment as to the Release 

Plaintiffs for interlocutory appeal pursuant to 28 U.S.C. § 

1292(b). The Court also certified for interlocutory appeal 

Siemens’ appeal from the Court’s denial of its motion for 

summary judgment with respect to the Release Plaintiffs. The 

Court characterized the issue for the proposed interlocutory 

appeals as whether the Release Plaintiffs’ claim to PJS benefits 

could be waived as a matter of law and, if so, what proof must 

be presented to demonstrate that there had been a valid waiver. 

Both appellees and Siemens petitioned in this Court for 

permission to appeal, and on December 13, 2010, we granted 

both petitions. These appeals followed.8

III. JURISDICTION and STANDARD of REVIEW

The District Court had jurisdiction under 28 U.S.C. § 

1331 and 29 U.S.C. § 1132(e) and (f). We have jurisdiction 

 7

Inasmuch as we determine that appellees are not entitled to the 

PJS benefits we do not address their claim that they are entitled 

to attendant health and life insurance benefits. 

8

The parties filed four separate appeals but we have no need to 

explain their procedural history in more detail as we have 

consolidated them and our opinion in this consolidated case will 

bring these appeals and this litigation in its entirety to a 

substantive close. 
16

over the parties’ cross-appeals of the District Court’s entry of 

final judgment as to the Non-Release Plaintiffs pursuant to 28 

U.S.C. § 1291 and over the interlocutory appeals with respect to 

the Release Plaintiffs pursuant to 28 U.S.C. § 1292(b). 

“We exercise plenary review of a district court’s order 

granting or denying summary judgment, applying the same 

standard as the district court . . . .” Tri-M Grp., LLC v. Sharp, 

638 F.3d 406, 415 (3d Cir. 2011). We will affirm only if 

“drawing all reasonable inferences in favor of the nonmoving 

party, there is no genuine issue as to any material fact and . . . 

the moving party is entitled to judgment as a matter of law.” Id.

(quoting Ruehl v. Viacom, Inc., 500 F.2d 375, 380 n.6 (3d Cir. 

2007)). Because the District Court adopted in substance the 

Magistrate Judge’s report and recommendation, with the 

modifications we have set forth, in most respects effectively we 

are reviewing the Magistrate Judge’s proposed disposition of the

case. We thus reference primarily the Magistrate Judge’s report 

and recommendation rather than the opinion of the District 

Court though to a degree we treat the documents 

interchangeably.

IV. LEGAL BACKGROUND

Due to the complexity of this ERISA case, we think it 

best to set forth the background legal framework that governs 

this matter before we turn to a review of the District Court’s 

disposition of this case. We start from the core principle that it 

is well-established that “ERISA does not mandate the creation 
17

of pension plans.” Dade v. North Am. Philips Corp., 68 F.3d 

1558, 1561 (3d Cir. 1995). “Nor does ERISA mandate what 

kind of benefits employers must provide if they choose to have 

such a plan.” Lockheed Corp. v. Spink, 517 U.S. 882, 887, 116 

S.Ct. 1783, 1788 (1996); see also Smith v. Contini, 205 F.3d 

597, 602 (3d Cir. 2000) (“ERISA neither mandates the creation 

of pension plans nor in general dictates the benefits to be 

afforded once a plan is created.”). Instead, Congress enacted 

ERISA to ensure that “if a worker has been promised a defined 

pension benefit upon retirement — and if he has fulfilled 

whatever conditions are required to obtain a vested benefit — he 

will actually receive it.” Spink, 517 U.S. at 887, 116 S.Ct. at 

1788 (internal quotation marks omitted). Thus, “[o]nly the plan 

itself can create an entitlement to benefits.” Bellas v. CBS, Inc., 

221 F.3d 517, 522 (3d Cir. 2000). “Accordingly, we are 

required to enforce the [p]lan as written unless we find a 

provision of ERISA that contains a contrary directive.” Dade, 

68 F.3d at 1562; see also Smith, 205 F.3d at 602 (same).9

By their plain terms, the Siemens Plans do not provide 

for PJS benefits. The Magistrate Judge found, however, that 

ERISA sections 208 and 204(g) controlled the transactions that 

led to the creation of the Siemens Plans and that by reason of 

 9

In point of fact, since Congress originally adopted ERISA it has 

from time to time amended the statute to limit plan sponsors’ 

power to determine the ERISA benefits and collective 

bargaining agreements sometimes also address plans’ benefits. 

But the basic principle that the employer determines the benefits 

remains. 
18

those sections appellees are entitled to PJS benefits. We thus 

turn to those provisions. 

ERISA section 208 provides, in relevant part: 

A pension plan may not merge or consolidate 

with, or transfer its assets or liabilities to, any 

other plan after September 2, 1974, unless each 

participant in the plan would (if the plan then 

terminated) receive a benefit immediately after 

the merger, consolidation, or transfer which is 

equal to or greater than the benefit he would have 

been entitled to receive immediately before the 

merger, consolidation, or transfer (if the plan had 

then terminated). 

29 U.S.C. § 1058. In Gillis v. Hoechst Celanese Corp., 4 F.3d 

1137, 1150 (3d Cir. 1993), then-Judge Alito summarized in his 

concurring opinion the operation of section 208:

[Section 208 and its Internal Revenue 

Code counterpart, 26 U.S.C. § 414(l)

10

 10“When Title I of ERISA was enacted to impose substantive 

legal requirements on employee pension plans (including the 

anti-cutback rule), Title II of ERISA amended the Internal 

Revenue Code to condition the eligibility of pension plans for 

preferential tax treatment on compliance with many of the Title I 

requirements.” Central Laborers’ Pension Fund v. Heinz, 541 

U.S. 739, 746, 124 S.Ct. 2230, 2236-37 (2004). “The result was 

a ‘curious duplicate structure’ with nearly verbatim replication 

in the Internal Revenue Code of whole sections of text from 

] require us 
19

to compare (a) the benefits, if any, that the 

[participants] would have received if the 

[original] [p]lan had terminated just before the 

[merger or transfer] . . . with (b) the benefits, if 

any, that the [participants] would have received if 

the [successor] [p]lan had terminated just after the 

[merger or] transfer.

In order to determine the benefits that the 

[participants] would have received upon 

termination of the plans at these two points in 

time, it is necessary to look to Section 4044 of 

ERISA, 29 U.S.C. § 1344, which prescribes the 

order in which the assets of a single-employer 

defined benefit plan are allocated among 

participants and beneficiaries at termination. The 

effect of all of these provisions — 26 U.S.C. § 

414(l) and 29 U.S.C. §§ 1058 and 1344 — when 

read together [is] to require that any allocation of 

assets to the [participants’] early retirement 

benefits that would have occurred upon 

termination of the [original] [p]lan just before the 

[merger or] transfer not exceed the allocation of 

 

Title I of ERISA.” Id., 124 S.Ct. at 2237. Section 208 is 

replicated in 26 U.S.C. § 414(l) and section 204(g) in 26 U.S.C. 

§ 411(d)(6). When interpreting ERISA, we thus take guidance 

from the parallel provisions of the Internal Revenue Code, along 

with Treasury regulations and Revenue Rulings implementing 

and interpreting those provisions. See Gillis, 4 F.3d at 1144. 
20

assets to those benefits that would have occurred 

upon termination of the [successor] [p]lan just 

after the [merger or] transfer. 

Id. Thus, section 208 essentially requires that a plan participant 

receive no less benefits upon a hypothetical termination of the 

successor plan just following the merger or transfer of assets or 

liabilities than the participant would have received upon a 

hypothetical termination of his or her original plan just prior to 

the merger or transfer.

Section 204(g), known as the anti-cutback rule, “prohibits

an employer from decreasing or eliminating a participant’s 

accrued benefits by plan amendment.” Bellas, 221 F.3d at 522. 

Thus, section 204(g) follows the principles of section 208 in 

protecting plan participants. In the case of a defined benefit 

plan, ERISA defines, in a somewhat circular fashion, an 

“accrued benefit” as a participant’s “accrued benefit determined 

under the plan and . . . expressed in the form of an annual 

benefit commencing at normal retirement age.” 29 U.S.C. § 

1002(23)(A). Because early retirement benefits by definition 

commence prior to normal retirement age, those benefits were 

not considered “accrued” under ERISA prior to 1984. See

Bellas, 221 F.3d at 523 n.2 (citing Bencivenga v. Western Pa. 

Teamsters and Emp’rs Pension Fund, 763 F.2d 574, 577 (3d Cir. 

1985)). In 1984, however, Congress amended section 204(g) 

and extended the protection it afforded to early retirement 

benefits and retirement-type subsidies. See Retirement Equity 

Act of 1984, Pub. L. No. 98-397, § 301(a)(2), 98 Stat. 1426, 

1450-51. As amended, section 204(g) now provides:
21

(g) Decrease of accrued benefits through 

amendment of plan

(1) The accrued benefit of a participant 

under a plan may not be decreased by an 

amendment of the plan, other than an 

amendment described in section 

1082(d)(2) or 1441 of this title. 

(2) For purposes of paragraph (1), a plan 

amendment which has the effect of –

(A) eliminating or reducing an 

early retirement benefit or a 

retirement-type subsidy (as defined 

in regulations), or

(B) eliminating an optional form of 

benefit,

with respect to benefits attributable 

to service before the amendment 

shall be treated as reducing accrued 

benefits. In the case of a 

retirement-type subsidy, the 

preceding sentence shall apply only 

with respect to a participant who 

satisfies (either before or after the 

amendment) the preamendment 

conditions for the subsidy. 
22

29 U.S.C. § 1054(g). 

Although section 204(g) prohibits cutback of accrued 

benefits by plan amendment, a determination under section 208 

of a participant’s pension and benefits entitlement on a 

hypothetical termination basis requires that a court also consider 

section 204(g) because a plan termination is regarded as an 

“amendment” for the purposes of section 204(g). See Gillis, 4 

F.3d at 1145. As Judge Alito observed in his concurring opinion

in Gillis, “[w]hile neither [s]ection 204(g) of ERISA nor 

[s]ection 414(l) of the Internal Revenue Code expressly states 

that a termination must be regarded as an amendment for these 

purposes,” the Internal Revenue Service has concluded in a 

Revenue Ruling that plan terminations are subject to the 

provisions of section 204(g). Id. at 1150 (Alito, J., concurring) 

(citing Revenue Ruling 85-6). Furthermore, the Treasury 

regulations implementing the Internal Revenue Code 

counterpart to ERISA section 204(g), 26 U.S.C. § 411, provide 

that “[t]he prohibition against the reduction or elimination of 

section 411(d)(6) protected benefits already accrued applies to 

plan mergers, spinoffs, transfers, and transactions amending or 

having the effect of amending a plan or plans to transfer plan 

benefits.” 26 C.F.R. § 1.411(d)-4, A-2(a)(3)(i).11

 11As we observed in Dade, “the legislative history of the 1984 

amendments indicates that Congress intended early retirement 

benefits to have the same protection in a plan termination that 

they would have in an amendment.” 68 F.3d at 1563 n.2 (citing, 

e.g., S. Rep. No. 98-575, at 31, reprinted in 1984 U.S.C.C.A.N. 

2547, 2577) (“Terminated Plans: The bill does not provide an 

exception to the prohibition against reduction of benefits or 

 
23

Those Treasury regulations apply with equal force to 

section 204(g). 29 U.S.C. § 1202(c) (“Regulations proscribed 

by the Secretary of the Treasury under sections 410(a), 411, and 

412 of Title 26 . . . shall also apply to [their ERISA 

counterparts].”); see also Heinz, 541 U.S. at 746-47, 124 S.Ct. at 

2237 (observing that section 411 regulations are applicable to 

section 204(g)). Accordingly, a plan participant’s benefits 

protected by section 204(g) under a plan amendment must be 

preserved and funded upon a hypothetical termination under 

section 208 and thus not decreased or eliminated by virtue of a 

plan merger or a transfer of assets or liabilities. 

The present case is unusual in that we already have had 

occasion to consider whether section 204(g) protects the precise 

benefits at issue here. In Bellas, a former employee brought suit 

against Westinghouse, by then CBS, and the Westinghouse 

Pension Plan, contending that certain amendments to the plan 

that narrowed the class of persons eligible for PJS benefits and 

enacted the sunset provision present also in the Westinghouse 

Plan at issue in this case violated ERISA section 204(g). 221 

F.3d at 520-21. On interlocutory appeal, we considered whether 

the PJS benefits constituted an early retirement benefit or 

retirement-type subsidy protected by section 204(g). Id.

 

elimination of benefits options in the case of a terminated plan. 

Accordingly, a plan is not to be considered to have satisfied all 

of its liabilities to participants and beneficiaries until it has 

provided for the payment of contingent liabilities with respect to 

a participant who, after the date of the termination of a plan, 

meets the requirements for a subsidized benefit.”). 

at 518. 

At that time, the Treasury had not, as section 204(g) 
24

contemplated that it would do, promulgated regulations defining 

these terms. Id. at 524. 

We first noted that “[b]ecause the $10.00 multiplied by 

[c]redited [s]ervice and the additional $100.00 benefit do not 

continue beyond normal retirement age, they cannot properly be 

considered a retirement-type subsidy as contemplated by section 

204(g),” and thus “could be the subject of amendment or 

elimination without violating section 204(g).” Id. at 536 n.17.12

Turning to the early payment of unreduced normal retirement 

benefits, we concluded that the portion of the PJS benefits that 

continues beyond normal retirement age and “that is equal to the 

actuarially reduced normal retirement benefit, constitutes an 

early retirement benefit protected by section 204(g) but is not a 

retirement-type subsidy,” and that the value of the PJS benefits 

that continue beyond normal retirement age “over and above the 

actuarially reduced value” is a retirement-type subsidy protected 

by section 204(g). Id. at 538.13

 12The district court in Bellas did not separately address this 

portion of the PJS benefits in its opinion nor do the parties here

separately address these benefits in their briefs. The distinction 

is of no consequence in the case at bar, however, as our holding 

applies to all facets of the PJS benefits. 

 We further determined that 

13In 2006, the Secretary of the Treasury enacted regulations 

defining these and other relevant terms for ERISA. Those 

regulations define “early retirement benefit” and “retirementtype subsidy” in the same manner as we did in Bellas. See 26 

C.F.R. § 1.411(d)-3(g)(6)(i) (“The term early retirement benefit 

means the right, under the terms of the plan, to commence 
25

those benefits “are accrued upon their creation rather than upon 

the occurrence of the unpredictable contingent event [i.e., the 

plan shutdown].” Id. at 532. We accordingly held that section 

204(g) protects the PJS benefits from cutback and therefore 

affirmed the district court’s conclusion that Westinghouse 

violated section 204(g) through enactment of the amendments. 

Id. at 540. We also point out that, as we discuss at length below, 

in Bellas we invalidated the sunset provision as to 

Westinghouse.

V. ANALYSIS14

 

distribution of a retirement-type benefit at a particular date after 

severance from employment with the employer and before 

normal retirement age.”); 26 C.F.R. § 1.411(d)-3(g)(6)(iii) (“The 

term retirement-type benefit means (A) [t]he payment of a 

distribution alternative with respect to an accrued benefit; or (B) 

[t]he payment of any other benefit under a defined benefit plan . 

. . that is permitted to be in a qualified pension plan, continues 

after retirement, and is not an ancillary benefit.”); 26 C.F.R. § 

1.411(d)-3(g)(6)(iv) (“The term retirement-type subsidy means 

the excess, if any, of the actuarial present value of a retirementtype benefit over the actuarial present value of the accrued 

benefit commencing at normal retirement age or at actual 

commencement date, if later, with both such actuarial present 

values determined as of the date the retirement-type benefit 

commences.”).

14At the outset of our analysis, we note that the Court of Appeals 
26

As we have already noted, the Magistrate Judge reached 

her conclusion that ERISA required Siemens to offer PJS 

benefits on the basis of two independent theories. First, the 

Magistrate Judge determined that Siemens created an ERISA 

“transition” plan for the legacy employees through the extension 

of the Westinghouse Plan from August 19 to August 31, 1998. 

See Shaver, 2007 WL 1006681, at *21-23. The Magistrate 

Judge concluded that adoption of the Siemens Plans functioned 

as an amendment of the ERISA “transition” plan and the

amendment eliminated the legacy employees’ PJS benefits in 

violation of section 204(g). See id., at *24-27. 

Second, the Magistrate Judge determined that 

Westinghouse transferred to Siemens through the APA a portion 

of Westinghouse Plan’s liabilities, thereby triggering the 

 

for the Eleventh Circuit in a not precedential opinion has 

weighed in on the Westinghouse-Siemens transaction in a 

factually-indistinguishable case and determined that the legacy 

employees are not entitled to PJS benefits. See McCay v. 

Siemens Corp., 247 F. App’x 172 (11th Cir. 2007). In 

accordance with our practice, however, we do not rely on that

opinion as it is not precedential. We nevertheless make 

reference to McCay because we think that it is important to note 

that Siemens does not contend that principles of claim or issue 

preclusion compel us to follow that case and thus we do not 

address that possibility. In this regard, we point out that not 

precedential opinions no less than precedential opinions can 

have preclusive effect.
27

applicability of section 208. See id., at *20. The Magistrate 

Judge appeared to conclude that independently of section 

204(g), section 208 required that the Siemens Plans “provide 

equal or greater benefits” than those of the Westinghouse Plan. 

See id., at *27. Turning to section 204(g), the Magistrate Judge 

concluded also that in light of our holding in Bellas that PJS 

benefits under the Westinghouse Plan are protected from 

cutback, section 204(g) also required that Siemens offer PJS 

benefits. Id., at *27-28. 

We first consider whether Siemens established an ERISA 

“transition” plan, the less complex of the two theories. We then 

proceed to the hyper-complicated question of the applicability of 

ERISA sections 208 and 204(g). 

A. AN ERISA TRANSITION PLAN 

ERISA applies to “any employee benefit plan if it is 

established or maintained . . . by any employer engaged in 

commerce . . . .” 29 U.S.C. § 1003(a). Surprisingly, however,

ERISA does not define the term “plan.” In the absence of a 

congressional definition, we have “adopted the test developed in 

Donovan v. Dillingham, 688 F.2d 1367 (11th Cir. 1982) (en 

banc), to determine whether informal written or oral 

communications . . . constitute a plan.” Smith v. Hartford Ins. 

Grp., 6 F.3d 131, 136 (3d Cir. 1993) (citing Deibler v. United 

Food & Commercial Workers’ Local Union 23, 973 F.2d 206, 

209 (3d Cir. 1992); Henglein v. Informal Plan For Plant 

Shutdown Benefits, 974 F.2d 391, 399-400 (3d Cir. 1992)). 

Under Donovan, an ERISA plan “is established if from the 

surrounding circumstances a reasonable person can ascertain the 
28

intended benefits, a class of beneficiaries, the source of 

financing, and procedures for receiving benefits.” 688 F.2d at 

1373. Looking to these factors, the Magistrate Judge concluded 

that Siemens adopted an ERISA “transition” plan for the 

thirteen-day period from August 19 to August 31, 1998, by 

virtue of Westinghouse’s extension of its pension plan to cover 

the legacy employees during that time.

Siemens challenges this conclusion on multiple grounds. 

It contends that ERISA plans are permanent or at least long-term 

programs and that the patently temporary nature of the thirteenday extension precludes it from being classified as an ERISA 

plan. Appellants’ br. at 53-54. Siemens also contendsthat even 

if a temporary extension of one ERISA plan could qualify as the 

establishment of a second and distinct ERISA plan, 

Westinghouse — not Siemens — was the plan sponsor and 

administrator during the thirteen-day period. Id. at 54-55. In 

this vein, Siemens points to the facts that Westinghouse was 

liable for any benefits that came due to a beneficiary under the 

plan during the thirteen-day period and Siemens’ only obligation 

with respect to that period was to reimburse Westinghouse for 

any actuarial pension losses caused by Siemens’ termination of a 

legacy employee without cause during that time. Id. at 56.

For the thirteen-day period at issue, a reasonable person 

could have ascertained the benefits under the Westinghouse 

Plan, identified the beneficiaries, the source of financing, and 

procedures for receiving benefits. We thus concur with the 

Magistrate Judge and, by extension with the District Court, that

there was an ERISA plan in place from August 19 to August 31, 

1998, for the legacy employees. The critical question, however, 
29

is not whether there was a sponsor maintaining an ERISA plan 

during the thirteen-day period; it is whether Siemens

“established or maintained” that plan, 29 U.S.C. § 1003(a), i.e., 

whether, in ERISA parlance, Siemens was the “plan sponsor,” 

see 29 U.S.C. § 1002(16)(B). 

The District Court found that Siemens maintained the 

plan because it determined that Siemens had administrative and 

financial responsibilities with respect to the plan during the 

thirteen-day period. But in reaching this conclusion, the Court 

relied solely on the fact that Siemens was obligated to reimburse 

Westinghouse for any actuarial pension loss that Siemens’

termination of a legacy employee caused during the period. We, 

however, are satisfied that, contrary to the District Court’s 

conclusion, Siemens’ duty to reimburse Westinghouse for any 

losses that Siemens caused by termination of a legacy employee 

from August 19 to August 31, 1998, demonstrates quite clearly 

that Siemens was not responsible for the pension obligations that

came due during this time period under the Westinghouse Plan. 

In fact, there is no factual dispute that at all times of the 

Westinghouse Plan’s existence, including the thirteen-day 

period, Westinghouse has been and is currently responsible for 

the maintenance, administration, and funding of its plan. 

Siemens’ singular promise of reimbursement to Westinghouse in 

the event that Siemens terminated a legacy employee describes 

the entirety of Siemens’ obligations in relation to the 

Westinghouse Plan from August 19 to August 31, 1998, and 

plainly does not constitute the administrative undertaking that an 

ERISA plan requires. After all, an obligation to make payments 

to a plan sponsor cannot possibly be equated with the 

obligations attendant to establishing or maintaining a plan.
30

On this issue, we take instruction from the Supreme 

Court’s seminal ERISA opinion in Fort Halifax Packing Co. v. 

Coyne, 482 U.S. 1, 107 S.Ct. 2211 (1987), in which the Court 

considered an ERISA preemption claim. Under ERISA, any 

state law that “relate[s] to any employee benefit plan described 

in [section] 1003(a)” is preempted. 29 U.S.C. § 1144(a). In 

Fort Halifax, the Court considered whether ERISA preempted a 

Maine statute requiring employers to provide a one-time 

severance payment to employees in the event of a plant closing. 

482 U.S. at 4-5, 107 S.Ct. at 2213-14. The Court concluded that 

ERISA did not preempt the Maine statute because it was not an 

ERISA “plan,” and in this regard stated: 

The requirement of a one-time, lump-sum 

payment triggered by a single event requires no 

administrative scheme whatsoever to meet the 

employer’s obligation. The employer assumes no 

responsibility to pay benefits on a regular basis, 

and thus faces no periodic demands on its assets 

that create a need for financial coordination and 

control. Rather, the employer’s obligation is 

predicated on the occurrence of a single 

contingency that may never materialize. The 

employer may well never have to pay the 

severance benefits. To the extent that the 

obligation to do so arises, satisfaction of that duty 

involves making a single set of payments to 

employees at the time the plant closes. To do 

little more than write a check hardly constitutes 

the operation of a benefit plan. Once this single 
31

event is over, the employer has no further 

responsibility. The theoretical possibility of a 

one-time obligation in the future simply creates 

no need for an ongoing administrative program 

for processing claims and paying benefits. 

Id. at 12, 107 S.Ct. at 2218 (emphasis in original). Fort Halifax

thus makes clear that the payment of benefits “do[es] not 

implicate ERISA unless [it] require[s] the establishment and 

maintenance of a separate and ongoing administrative scheme.” 

Angst v. Mack Trucks, Inc., 969 F.2d 1530, 1538 (3d Cir. 

1992); see also Kulinski v. Medtronic Bio-Medicus Inc., 21 F.3d 

254, 257 (8th Cir. 1994) (“The pivotal inquiry is whether the 

plan requires the establishment of a separate, ongoing 

administrative scheme to administer the plan’s benefits.”). 

To contrast with the simplicity of the single payment that 

the statute that the Court considered in Fort Halifax required, the 

Court provided substantial guidance on what constitutes an 

ERISA “administrative scheme,” an obligation that goes far 

beyond making a single payment. The Court elaborated:

An employer that makes a commitment 

systematically to pay certain benefits undertakes a 

host of obligations, such as determining the 

eligibility of claimants, calculating benefit levels, 

making disbursements, monitoring the availability 

of funds for benefit payments, and keeping 

appropriate records in order to comply with 

applicable reporting requirements. 
32

482 U.S. at 9, 107 S.Ct. at 2216. Thus, an ERISA 

administrative scheme “may arise where the employer, to 

determine the employee’s eligibility for and level of benefits, 

must analyze each employee’s particular circumstances in light 

of the appropriate criteria.” Kulinski, 21 F.3d at 257; Bogue v. 

Ampex Corp., 976 F.2d 1319, 1323 (9th Cir. 1992) (An ERISA 

“administrative scheme” is one in which “the circumstances of 

each employee’s termination [are] analyzed in light of [certain] 

criteria.”) (internal quotation marks and citation omitted). 

Factors relevant to determining whether an employer’s 

undertakings have created an ERISA plan also include whether 

the “undertaking requires managerial discretion, that is, whether

the undertaking could not be fulfilled without ongoing, 

particularized, administrative, analysis of each case” and 

whether “a reasonable employee would perceive an ongoing 

commitment by the employer to provide some employee 

benefits.” Kosakow v. New Rochelle Radiology Assocs., 274 

F.3d 706, 737 (2d Cir. 2001) (internal quotation marks and 

citation omitted). On the other hand, “[s]imple or mechanical 

determinations do not necessarily require the establishment of 

such an administrative scheme.” Kulinski, 21 F.3d at 257. 

The narrow scope of Siemens’ obligations with respect to 

the thirteen-day period when considered against the 

“administrative scheme” analysis of Fort Halifax makes it quite 

clear that Siemens did not establish or maintain the ERISA plan 

that was in place from August 19 to August 31, 1998. 

Westinghouse — not Siemens — determined a plan participant’s

eligibility for benefits arising under the Westinghouse Plan from 

August 19 to August 31, 1998, and Westinghouse calculated the 

quantum of those benefits and disbursed the funds due to the 
33

participants in that period. Further, Westinghouse funded the 

plan during that time and engaged in the extensive financial 

monitoring and record-keeping that the plan required. 

In contrast, during the thirteen-day period Siemens had 

only the contingent, discrete obligation to reimburse 

Westinghouse Plan in the event Siemens terminated a legacy 

employee without cause prior to September 1, 1998, and the 

terminated employees, if any, were merely a subset of the 

entirety of the legacy employees. That contingent financial 

burden — which notably Siemens never incurred as it did not 

terminate any legacy employee prior to September 1 — was 

“predicated on the occurrence of a single contingency that may 

never [and in this case did not] materialize.” See Fort Halifax, 

468 U.S. at 12, 107 S.Ct. at 2218. Siemens’ contingent 

obligation to reimburse Westinghouse after the fact did not 

require Siemens to make any administrative determination, see

id., much less require it to analyze the legacy employees’

particular circumstances and eligibility for benefits. While 

contingent or one-time pension or benefit obligations that 

require an administrative undertaking for their effectuation may, 

in some circumstances, constitute an ERISA plan, see Pane v. 

RCA Corp., 868 F.2d 631, 633-35 (3d Cir. 1989), in this case 

Siemens’ contingent, one-time obligation to reimburse 

Westinghouse did not. 

Although we are unaware of any earlier case in which we 

have considered an arrangement quite like the one here, in 

which after a successor employer employed legacy employees 

the original employer continued to offer for a brief period the 

legacy employees benefit credit for service and compensation, 
34

we find additional guidance from our decision in Angst. In that 

case, we considered whether a company’s offer of a one-time, 

lump-sum $75,000 severance payment and a one-year extension 

of benefits under its pension plan pursuant to a “buyout plan” 

aimed at encouraging senior employees to leave their 

employment voluntarily constituted an ERISA plan. 969 F.2d at 

1532-33. We concluded that in light of Fort Halifax the $75,000 

payment was not an ERISA plan because the arrangement 

“would require no ongoing administrative scheme.” Id. at 1538. 

We further determined that because the one-year extension of 

benefits was administered pursuant to a benefits plan that was 

already in existence and the extension “did not require the 

creation of a new administrative scheme, and did not materially 

alter an existing administrative scheme,” that facet of the buyout 

plan similarly did not implicate ERISA. Id. at 1539. As in 

Angst, here the extension of the already-extant Westinghouse 

Plan for thirteen days did not require Siemens to create a 

separate, new administrative scheme. Nor did that extension 

alter the Westinghouse Plan’s existing administrative scheme; it 

merely added a contingent step subsequent to the operation of 

the plan. 

Although we conclude that Siemens did not establish an 

ERISA “transition” plan by virtue of the thirteen-day 

arrangement from August 19 to August 31, 1998, because that 

arrangement did not require Siemens to perform the 

administrative undertaking that is the hallmark of an ERISA 

plan, we note that the short duration of the arrangement likewise 

counsels against finding that, if there had been any plan, it was

Siemens that established the plan. We have made clear that 

“[t]he crucial factor in determining whether a ‘plan’ has been 
35

established is whether [the employer has expressed an intention] 

to provide benefits on a regular and long-term basis.’” Deibler, 

973 F.2d at 209 (quoting Wickman v. Northwestern Nat’l Ins. 

Co., 908 F.2d 1077, 1083 (1st Cir. 1990)). Consistent with this 

pronouncement, the relevant Treasury regulations provide: 

The term ‘plan’ implies a permanent as 

distinguished from a temporary program. Thus . . 

. the abandonment of the plan for any reason other 

than business necessity within a few years after it 

has taken effect will be evidence that the plan 

from its inception was not a bona fide program for

the exclusive benefit of employees in general. 

26 C.F.R. § 1.401-1(b)(2) (emphasis added); see also 26 C.F.R. 

§ 1.401-1(b)(1)(i) (“A pension plan within the meaning of 

section 401(a) is a plan established and maintained by an 

employer primarily to provide systematically for the payment of 

definitely determinable benefits to his employees over a period 

of years, usually for life, after retirement.”). Although we 

cannot draw a bright temporal line dividing ERISA plans from 

short-term, discrete benefit arrangements that do not implicate 

ERISA, we are confident that the thirteen-day arrangement here 

is of the latter type. 

We note finally on the “transition” plan issue that 

Siemens’ status as the legacy employees’ actual employer during 

the thirteen-day window does not preclude us from concluding

that Westinghouse maintained an ERISA plan for those persons 

during that time. ERISA defines an employee pension benefit 

plan as one “established or maintained by an employer or by an 
36

employee organization, or by both.” 29 U.S.C. § 1002(2)(A). 

Under ERISA, however, “[t]he term ‘employer’ means any 

person acting directly as an employer, or indirectly in the 

interest of an employer, in relation to an employee benefit plan.” 

29 U.S.C. § 1002(5) (emphasis added). ERISA thus recognizes 

that entities other than the participant’s employer may establish 

or maintain an ERISA plan. See also Curtiss-Wright Corp. v. 

Schoonejongen, 514 U.S. 73, 78, 115 S.Ct. 1223, 1228 (1995) 

(“Employers or other plan sponsors are generally free under 

ERISA, for any reason at any time, to adopt, modify, or 

terminate welfare plans.”) (emphasis added). Here, 

Westinghouse acted “indirectly in the interest of an employer

[i.e., Siemens], in relation to an employee benefit plan” for the 

thirteen-day period. 29 U.S.C. § 1002(5). The circumstance 

that the beneficiaries of the Westinghouse Plan during that time 

period included persons whom Siemens then employed does not 

thereby make Siemens a co-sponsor of the plan when in reality 

Siemens neither funded nor administered the plan. 

In short, although there was an ERISA plan in place for 

legacy employees from August 19 to August 31, 1998, that plan 

was the Westinghouse Plan, which Westinghouse sponsored, 

funded, operated and administered. We thus conclude that 

Siemens did not establish an ERISA “transition” plan. 

Consequently, Siemens did not provide PJS benefits to its 

employees during that time, and its later adoption of the 

Siemens Plans, which lacked PJS benefits, could not constitute 

an “amendment” of a “transition” plan in violation of section 

204(g), as Siemens had not established any plan to amend. 

Therefore, we reject the Magistrate Judge’s first theory 

supporting Siemens’ liability because she founded that theory on 
37

the incorrect conclusion that Siemens created an ERISA 

“transition” plan containing PJS benefits for the period from 

August 19 to August 31, 1998. 

B. A TRANSFER OF LIABILITIES UNDER SECTION 208 

We now turn to the Magistrate Judge’s second theory 

supporting her belief that Siemens would be liable in the 

absence of the releases. She predicated this conclusion on her 

belief that Westinghouse through the APA transferred a portion 

of the Westinghouse Plan’s liabilities to the Siemens Plans and 

thus we now turn our attention to section 208. In considering 

this second theory we first address the applicability of section 

208, which applies where a plan “merge[s] or consolidate[s] 

with, or transfer[s] its assets or liabilities to” another plan. 29 

U.S.C. § 1058. Though appellees concede that the APA did not 

provide for a plan consolidation, merger, or a transfer of plan 

assets, they contend that section 208 applies because the APA 

provided for the Westinghouse Plan to transfer liabilities to the 

Siemens Plans. The District Court accepted this argument. 

 Section 208 does not set forth explicitly the 

circumstances in which there is a transfer of liabilities, nor do 

ERISA’s other provisions provide a definition of the term. We 

are not, however, without guidance on this point as the 

corresponding Treasury Regulation states:

A ‘transfer of assets or liabilities’ occurs when 

there is a diminution of assets or liabilities with 

respect to one plan and the acquisition of these 

assets or the assumption of these liabilities by 
38

another plan. For example, the shifting of assets 

or liabilities pursuant to a reciprocity agreement 

between two plans in which one plan assumes 

liabilities of another plan is a transfer of assets or 

liabilities. 

26 C.F.R. § 1.414(l)-1(b)(3). To determine whether there has 

been a transfer of plan liabilities within this definition in this 

case, we turn to the APA. 

1. RELEVANT PROVISIONS OF THE APA

At its broadest, the APA provided in paragraph 5.5(a)(ii) 

that 

Notwithstanding the more specific 

provisions set forth in this Section 5.5, [Siemens] 

shall provide compensation and benefit plans and 

arrangements which in the aggregate are 

comparable . . . to the compensation, Plans and 

Benefit Arrangements in effect for [the legacy 

employees] on [September 1, 1998] for a period 

of not less than two years following [September 1, 

1998]. 

J.A. 137 (emphasis added).15

 15Siemens points out that in a certification required by the APA 

it was stated that Siemens’ benefits were “in the aggregate 

comparable” to those provided by Westinghouse. Appellants’

br. at 11. That fact, however, is not material to our disposition 

 Paragraph 5.5(d)(i) 
39

provided in more precise terms that Siemens 

shall establish a defined benefit pension plan 

intended to qualify under Section 401(a) of the 

Code for the benefit of [the legacy employees] 

(the ‘Purchaser Pension Plan’) that contains terms 

and conditions that are substantially identical with 

respect to all substantive provisions to those of 

the Westinghouse Pension Plan as in effect as of 

[September 1, 1998] . . . and that credits 

compensation . . . and service for purposes of 

eligibility (including early retirement eligibility 

and any early retirement supplemental benefit), 

and vesting which was credited under the 

[Westinghouse] Pension Plan, provided, however, 

that the [Siemens] Pension Plan will include 

provisions which are consistent with (ii) through 

(iv) below and will be administered . . . so that the 

aggregate of the benefits under the 

[Westinghouse] Pension Plan and the [Siemens] 

Pension Plan are the same with respect to [the

legacy employees] as if the . . . [e]mployees 

continued employment with [Westinghouse or one

of its sold subsidiaries].

Id. at 138 (emphasis omitted and added).16

 

of this case. 

 

16Notably, there is some discord between the requirement in 

paragraph 5.5(a)(ii) that Siemens provide benefits “which in the 
40

The Magistrate Judge found that “the contractual 

obligation to provide substantially identical benefits to the 

transferring employees can be construed to be a transfer of 

[p]lan liability.” Shaver, 2007 WL 1006682, at *19. While 

paragraph 5.5(d)(i) may suggest that the parties intended to

impose liabilities on Siemens, Siemens’ contractual promise to 

provide substantially identical benefits surely does not constitute

an assumption of Westinghouse Plan’s liabilities, as an 

agreement to provide benefits is discrete from an agreement to 

assume another employer’s obligation to provide benefits. 

Indeed, as we have noted already, after September 1, 1998, the 

Westinghouse Plan remained in existence and continued to 

provide legacy employees with benefits that they accrued prior 

to that date. We therefore consider the more specific provisions 

of the APA, which require close examination.

 

aggregate are comparable” to the benefits of the Westinghouse 

Plan and the requirement in paragraph 5.5(d)(i) that Siemens 

provide “substantially identical benefits” to the legacy 

employees as it would seem to be obvious that benefits could be 

“comparable” without being “substantially identical.” While not 

a critical matter in light of the more detailed provisions of the 

APA, we believe that to the extent that the requirements are 

inconsistent the former takes precedence over the latter because 

paragraph 5.5(a)(ii) states that Siemens shall provide 

“comparable” benefits “[n]otwithstanding the more specific 

provisions set forth in . . . Section 5.5.” See Black’s Law 

Dictionary 1168 (9th ed. 2009) (defining “notwithstanding” as 

“[d]espite; in spite of”). 
41

Section 2.3 of the APA provides, in relevant part: 

(a) Assumed Liabilities. Upon the terms 

and subject to the conditions of this Agreement . . 

. , [Siemens] hereby agrees to assume, effective as 

of [September 1, 1998], and agrees to pay, 

perform and discharge when due all of the 

following Liabilities of [Westinghouse] (except 

Excluded Liabilities) arising out of, relating to or 

otherwise in respect of the Acquired Assets, the 

Business or the operations of the Business before, 

on or after [September 1, 1998] (collectively, the 

‘Assumed Liabilities’

. . . 

):

(vii) all liabilities arising under or 

in connection with any Plan or Benefit 

Arrangement

. . . 

; 

(b) Excluded Liabilities. Any provision of 

this Agreement to the contrary notwithstanding . . 

. , the following liabilities (the ‘Excluded 

Liabilities’

. . . 

) of [Westinghouse] and [its] Sold 

Subsidiaries are excluded and shall not be 

assumed or discharged by [Siemens]:

(x) any Liabilities with respect to 

Plans and Benefit Arrangements retained 

by [Westinghouse] under Section 5.5; and 

(xi) any other Liabilities not 

assumed by [Siemens] pursuant to the 

provisions of Section 2.3(a). 
42

J.A. 133-35 (some emphasis added). 

Under paragraph 2.3(a)(viii), Siemens assumed “[a]ll 

[l]iabilities arising under or in connection with any Plan or 

Benefit Arrangement.” The APA defines “Plan” as:

any plan, program, agreement or arrangement, 

whether or not written, that is or was an 

‘employee benefit plan’ as such term is defined in 

Section 3(3) of ERISA, whether or not subject to 

ERISA and whether or not maintained in the U.S., 

and (a) which is maintained by [Westinghouse] or 

[its] Sold Subsidiaries, (b) to which 

[Westinghouse] or [its] Sold Subsidiaries 

contribute or fund or provide benefits; or (c) 

which provides or promises benefits to any person 

who performs or who has performed services for 

[Westinghouse] or [its] Sold Subsidiaries and 

because of those services is or has been (i) a 

participant therein or (ii) entitled to benefits 

thereunder.

Id. 127. The Westinghouse Plan is a “plan” within the meaning 

of paragraph 2.3(a)(viii). Accordingly, Siemens assumed all of 

Westinghouse Plan’s liabilities except those which 

Westinghouse retained under section 5.5. 

In relevant part, section 5.5 provided that the 

“[Westinghouse] Pension Plan shall retain liability with respect 

to [the legacy employees] for their accrued benefit calculated as 
43

of [September 1, 1998], subject to [certain adjustments].” Id.

138-39. Paragraph 5.5(d)(iv), however, qualifies 

Westinghouse’s retention of accrued-benefit liability by stating:

[Siemens] Pension Plan shall be solely 

responsible for (and the [Westinghouse] Pension 

Plan shall not provide for) (A) any early 

retirement supplement that becomes payable with 

respect to a [legacy employee] retiring after 

[September 1, 1998] that is the result of a 

‘Pension Event’ as defined in subsection (v)[17

 17Paragraph 5.5(d)(v) in turn defined a “Pension Event” as 

encompassing “(A) a Disposition, (B) a closing of a plant or 

plants by [Siemens] or a reduction in the number of [legacy 

employees] employed by [Siemens] and its Affiliates as a result 

of action requiring the filing of a notice under the Worker 

Adjustment and Retraining Notification Act . . . , or (C) any 

action of [Siemens] or its Affiliates that provides an incentive to 

[legacy employees] to terminate or retire prior to their Normal 

Retirement Date.” J.A. 140. Relatedly, paragraph 5.5(d)(v) 

stated that Siemens “shall indemnify [Westinghouse] for any 

actuarial losses . . . with respect to the [Westinghouse] Pension 

Plan resulting from [any early retirements triggered by the 

enumerated Pension Events].” Id.

]

. . 

. , (B) any benefits pursuant to Section 19 [the 

PJS provision] of the [Westinghouse] Pension 

Plan and the corresponding provision of the 

[Siemens] Pension Plan, in excess of the benefits 

that would otherwise be payable if those sections 
44

did not apply, with respect to a [legacy employee] 

who retires or terminates employment with 

[Siemens] and its Affiliates after [September 1, 

1998], and (C) any other early retirement subsidy 

or supplement with respect to [legacy employees] 

that is not described in [Section 5 of the 

Westinghouse Pension Plan]. 

Id. 139-40. The additional provisions of section 5.5 added by 

amendment to the APA delineate further Siemens’ and 

Westinghouse’s respective scopes of liability from August 19 to 

August 31, 1998; however, they do not alter the pre-existing 

provisions of section 5.5 recited above.

Taken together, paragraphs 2.3(a)(viii), 5.5(d)(iii), and 

5.5(d)(iv) demonstrate that Siemens assumed a portion of 

Westinghouse Plan’s pension obligations. Specifically, after 

adoption of the APA, Siemens was and is liable for the early 

retirement supplements that come due because of a “Pension 

Event,” for any PJS benefits payable under the Westinghouse 

Plan with respect to a legacy employee who retires after 

September 1, 1998,18

 18Of course, the liability for PJS benefits was dependent on such 

benefits being due, and as we explain later the APA did not 

impose liability for PJS benefits for job separations after August 

31, 1998. Plainly, in the complex APA Westinghouse was 

covering itself on this point as paragraph 5.5(d)(iv) made 

Siemens liable only for “any” PJS benefits after September 1, 

1998, language that readily accommodates a situation in which 

there are no such benefits. Moreover, the sunset provision that 

and any other early retirement subsidy or 
45

supplement besides that provided for in section 5 of the 

Westinghouse Plan.19 In this regard, the Westinghouse Plan’s 

liabilities have been diminished, thus triggering the applicability 

of section 208. 

Siemens presents an array of arguments that it contends 

precludes a finding that the APA provided for the Westinghouse 

Plan to transfer liabilities to the Siemens Plans in accordance 

with section 208. It contends that because paragraph 5.5(d)(iv) 

“addressed only a tiny subset of retirement benefits offered by 

Westinghouse — those providing special early retirement for 

certain employees who retired prior to age 62 — that are not 

claimed by [appellees] here and are not at issue in this case,” any

liabilities transferred for those benefits are irrelevant. 

Appellants’ br. at 47. In a somewhat contradictory argument, 

Siemens contends that even if Westinghouse transferred some 

obligations to Siemens, “the contingent and inchoate 

responsibility for PJS benefits and early retirement supplements 

. . . [are] not ‘liabilities’ within the meaning of [s]ection 208.” 

 

was in existence when the APA was executed, though as we will 

explain we later invalidated, made it clear that there could not be 

PJS benefits for job terminations after September 1, 1998.

19One example of such an early retirement supplement for which 

Westinghouse is apparently no longer responsible lies in section 

20 of the Westinghouse Plan, which provides for a “Special 

Early Retirement Supplement,” based on age and years of 

service, to be paid as a monthly pension until the employee 

reaches sixty-two years of age. J.A. 351. 
46

Id. at 50. Finally, Siemens contends that the APA could not 

have provided for a transfer to Siemens of a portion of 

Westinghouse Plan’s liabilities because a transfer of liabilities 

without a transfer of equivalent assets “would leave both plans 

out of compliance with statutory and regulatory requirements.”20

Id. at 41. These contentions are unconvincing. 

Though the events here differ from the ordinary scenario 

that triggers the applicability of section 208, we can find nothing 

within section 208 or the applicable Treasury regulations 

indicating that only a transfer of all of a plan’s assets or 

liabilities will activate that provision. Indeed, 26 C.F.R. § 

1.414(l)-1(b)(3) defines a transfer of liabilities as “a diminution

of . . . liabilities,” not a total elimination of liabilities. See

Black’s Law Dictionary 524 (9th ed. 2009) (Diminution means 

“[t]he act or process of decreasing, lessening, or taking away.”). 

Furthermore, as shown above, Siemens assumed liability for 

any PJS benefits that became payable under the Westinghouse 

Plan for an employee who was terminated after September 1, 

1998.21

 20This argument is remarkable because it seems to be predicated 

on the principle that parties could not do anything illegal 

because to do so would be illegal. Oh that this would be so. On 

the other hand, though unlikely, it might mean that in a case of 

ambiguity the scope of a party’s undertakings should be 

measured in such a way that they are lawful.

 

21As we explain below, Siemens’ assumption of this liability 

was effectively hollow, as an employee who Siemens terminated 

would not be eligible for PJS benefits under the Westinghouse 
47

Siemens’ contention that responsibility for PJS benefits 

and other early retirement benefits do not constitute liabilities 

within the meaning of section 208 is likewise unavailing. As we 

have indicated, section 208 does not define liabilities. In the 

Senate Report to the 1984 amendments, however, Congress 

made clear its view that contingent or otherwise putative 

obligations constitute “liabilities” on a plan termination basis 

under ERISA. See S. Rep. No. 98-575, at 31, 1984 

U.S.C.C.A.N. at 2577 (“[A] plan is not to be considered to have 

satisfied all of its liabilitiesto participants and beneficiaries until 

it has provided for the payment of contingent liabilities with 

respect to a participant who, after the date of the termination of 

a plan, meets the requirements for a subsidized benefit.”)

(emphasis added); see also Gillis, 4 F.3d at 1147 (treating 

liability for early retirement benefits as “liabilities” under 

section 208).

Finally on this point, we note that section 208 applies 

when a pension plan “transfer[s] its assets or liabilities” to 

another plan, 29 U.S.C. § 1058 (emphasis added), and thus 

plainly does not require a transfer of assets to trigger its 

provisions. The question of whether Westinghouse’s transfer of 

liabilities without a concomitant transfer of assets rendered the 

Westinghouse Plan and Siemens Plans non-compliant under 

ERISA is not the issue before us on appeal.

Inasmuch as we have concluded that Westinghouse 

 

Plan. Nevertheless, Siemens could seek to cover itself on this 

point.
48

transferred liabilitiesto the Siemens Plans within the meaning of

section 208, we turn to the distinct question of what effect, if 

any, that transfer had on Siemens’ obligation, vel non, to 

provide PJS benefits. As noted, the Magistrate Judge appeared 

to conclude that, without regard for section 204(g), because 

Westinghouse transferred liabilities to Siemens, section 208 

required that the Siemens Plans “provide equal or greater 

benefits,” including PJS benefits, to the benefits of the 

Westinghouse Plan. See Shaver, 2007 WL 1006681, at *27. 

The Magistrate Judge also determined that section 208 triggered 

section 204(g), which required Siemens to offer PJS benefits. 

We review each of these conclusions in turn.

2. THE REQUIREMENTS OF SECTION 208 

As we described above, section 208 guarantees that if a 

pension plan consolidates with another plan or transfers its

assets or liabilities to another plan, the benefits to which plan 

participants are entitled will not be reduced and the actual value 

of those benefits will not be diminished. See Bigger v. Am.

Commercial Lines, 862 F.2d 1341, 1344 (8th Cir. 1988) 

(Section 208 “establishes a ‘rule of benefit equivalence.’ The 

value of the benefit before and after the [transaction triggering 

section 208] must be equal.”) (citing 26 C.F.R. § 1.414(l)-1(n)). 

In the House Report to section 208, Congress explained the 

effect of section 208 and the hypothetical termination analysis it 

requires: 

Under the bill as passed by the House, a plan must 

provide protection to participants in the case of a 

merger of the plan with another plan or the 
49

transfer of assets or liabilities from a plan. The 

value of benefits to the participant and the extent 

to which the benefits have been funded is to be 

protected by comparing what the participant's 

benefit would be if the plan had terminated 

immediately before the merger and what the 

participant's benefits would be under the merged 

plan had the merged plan been terminated just 

after the merger. The postmerger termination 

benefit may not be less than the premerger 

termination benefit.

H.R. Rep. No. 93-1280, at 385 (1974) (Conf. Rep.), reprinted in

1974 U.S.C.C.A.N. 5038, 5163. 

Most often, section 208 is implicated in cases of plan 

mergers or so-called “spinoff” plans, in which one plan splits 

into two or more plans, see 26 C.F.R. § 1.414(l)-1(b)(4). See, 

e.g., Bigger, 862 F.2d at 1344 (Section 208 “provides a specific 

standard that employers can rely upon in allocating assets to 

spunoff plans.”). In these circumstances, “[s]ection 208 

essentially requires the employer to contemplate a hypothetical 

plan termination, take a ‘snapshot’ of the benefits each 

participant of the plan would receive in the event of a 

termination, and then provide the aggregate present value of 

these benefits to the spun-off plan.” Systems Council EM-3 v. 

AT&T Corp., 159 F.3d 1376, 1380 (D.C. Cir. 1998). 

There is, however, no basis to hold that the APA 

contemplated the creation of a spinoff plan. The Westinghouse 

Plan retained liability for the majority of the legacy employees’ 
50

accrued benefits, and Siemens is not responsible for those 

benefits. The Treasury regulation counterpart to section 208 

provides, however, that “[a]ny transfer of assets or liabilities 

will for purposes of section 414(l) be considered as a 

combination of separate mergers and spinoffs . . . .” 26 C.F.R. § 

1.414(l)-1(o). “First, the transfer is treated as a spin-off of a 

new plan . . . [and] [a]ssets are therefore to be allocated to 

participants’ benefits on a termination basis.” Stephen R. Bruce, 

Pension Claims: Rights and Obligations 511 (2d ed. 1993). 

“Second, the transfer of these assets and the associated benefit 

liabilities to the second plan is treated as a merger of the spunoff plan and the second plan.” Id. Thus, as in the case of a plan 

spinoff or merger, to ascertain whether and to what extent 

Siemens was obligated to provide appellees PJS benefits we 

necessarily must determine the extent to which the legacy 

employees would have been entitled to those benefits upon a 

hypothetical termination of the Westinghouse Plan prior to 

Westinghouse’s transfer of its liability for those benefits. Cf.

Brillinger v. Gen. Elec. Co., 130 F.3d 61, 63 (2d Cir. 1997) 

(“[S]ection [208] deals with the level of post-merger benefits, 

and in dealing with this issue resort must be had to those parts of 

the termination provisions which deal with the analogous 

subject — i.e. the level of benefits following termination.”). As 

we explained previously, that determination necessarily entails 

reference to section 204(g), which protects accrued benefits, 

including early retirement benefits and retirement-type 

subsidies, in the event of a plan amendment or a plan 

termination. 

This is all to say that section 208 is more nuanced than 

the Magistrate Judge recognized. The section does not, as the 
51

Magistrate Judge determined, impose a blanket requirement that 

Siemens adopt verbatim the Westinghouse Plan (or a more 

generous pension plan). Rather, it protects appellees’ accrued 

benefits with those benefits determined as of a hypothetical 

termination of the Westinghouse Plan just prior to the transfer of 

liabilities.22 Whatever else may be said about this case, the 

determination of those benefits so far as the Westinghouse Plan 

by its terms provided for them is not complicated.

3. THE LEGACY EMPLOYEES’ ENTITLEMENT ON 

 22Reference to the corresponding Treasury regulation governing 

section 208 transactions bears the point out. That regulation 

provides that in the case of a plan spinoff, 

the requirements of section 414(l) will be satisfied 

if (i) [a]ll of the accrued benefits of each 

participant are allocated to only one of the spun 

off plans, and (ii) [t]he value of the assets 

allocated to each of the spun off plans is not less 

than the sum of the present value of the benefits 

on a termination basis in the plan before the 

spinoff for all participants in that spun off plan.

26 C.F.R. § 1.414(l)-1(n)(1). In the case of a merger of two 

ERISA plans, “[i]f the sum of the assets of all plans is not less 

than the sum of the present values of the accrued benefit 

(whether or not vested) of all plans, the requirements of section 

414(l) will be satisfied by merely combining the assets and 

preserving each participant’s accrued benefits.” 26 C.F.R. § 

1.414(l)-1(e)(1).
52

A TERMINATION BASIS 

At this stage of our opinion and before we turn to the 

required hypothetical termination analysis we have described 

above, we address our description of PJS benefits in Bellasfor it 

is obvious that our characterization of the benefits in that case 

clouded the disposition of this case in the District Court. For the 

purposes of section 204(g), early retirement benefits and 

retirement-type subsidies are considered accrued benefits and

therefore section 204(g) protects them from cutback. See 29 

U.S.C. § 1054(g). Section 204(g)(2) states, however, that “[i]n 

the case of a retirement-type subsidy, [section 204(g)(1)’s 

protection] shall apply only with respect to a participant who 

satisfies (either before or after the amendment) the 

preamendment conditions for the subsidy.” 29 U.S.C. §

1054(g)(2). Section 204(g) does not provide that same explicit 

qualifier on the protection of early retirement benefits. As 

noted, in Bellas we conceptually bifurcated the PJS benefits, 

holding that the portion of the Westinghouse PJS benefits that is 

“equal to the actuarially reduced normal retirement benefit” is 

an early retirement benefit, while any benefits paid in excess of 

the actuarially reduced value constitutes a retirement-type 

subsidy. 221 F.3d at 538. We further concluded that PJS 

benefits are accrued upon their creation — not upon the 

happening of the contingent event (i.e., the job separation) —

and that section 204(g) accordingly protects those benefitsfrom 

cutback. Id. at 532. Relying on Bellas’s division of PJS 

benefits into an early retirement subsidy and a retirement-type 

subsidy and section 204(g)(2)’s provision regarding satisfaction 

of preamendment conditions as to retirement-type subsidies, the 

Magistrate Judge determined that appellees were required to 
53

establish that they would have been eligible for the PJS benefits 

under the terms of the Westinghouse Plan upon a hypothetical 

termination of that plan as to the portion of those benefits 

constituting a retirement-type subsidy but they were not required 

to do so as to that portion constituting an early retirement 

benefit. See Shaver, 2007 WL 100681, at *20. But the 

Magistrate Judge predicated her approach on a misreading of 

section 204(g). 

We recognize that, regrettably, section 204(g)(2) is 

ambiguous, and in isolation its explicit statement that section 

204(g) protects retirement-type subsidies from cutback for a 

participant who satisfies, preamendment or postamendment, the 

preamendment conditions placed upon the subsidy could be read 

to mean that that qualifier does not apply to early retirement 

benefits, particularly in view of the circumstance that section 

204(g)(2)(A) addresses both “an early retirement benefit or a 

retirement-type subsidy.” Thus, it might be thought that section 

204(g) protects from cutback a participant’s early retirement 

benefit even if the participant does not at the time of plan 

amendment (or in this case plan termination) and cannot in the 

future satisfy the conditions for that benefit. We have made

clear, however, that “the [Retirement Equity Act of 1984] does 

not override the conditions originally imposed by the [p]lan 

which defined the early retirement benefits when they were 

created.” Dade, 68 F.3d at 1562. Describing the import of 

section 204(g), we explained that “the fact that [amendments 

eliminating or reducing early retirement benefits or retirementtype subsidies] will now be ‘treated as reducing accrued 

benefits’ does not mean that Congress intends to foreclose 

employers from circumscribing the availability of such optional 
54

benefits when they are being created.” Ashenbaugh v. Crucible 

Inc., 854 F.2d 1516, 1527 (3d Cir. 1988). 

As is evident from our foregoing explanation, especially 

our case law, “ERISA [section] 204(g) can protect an 

entitlement to benefits, but it cannot create an entitlement to 

benefits when no entitlement exists under the terms of the 

[p]lan.” Hein v. FDIC, 88 F.3d 210, 217 (3d Cir. 1996)

(emphasis added). Indeed, notwithstanding our conceptual 

division of PJS benefits in Bellas, in that case we assumed that 

section 204(g) protects early retirement benefits, along with 

retirement-type subsidies, only to the extent a plan participant 

satisfied or could satisfy the preamendment conditions placed 

upon the early retirement benefit. We stated: 

After 1984, a plan sponsor could eliminate 

prospectively an early retirement benefit by 

amendment, but under section 204(g) the 

amendment could not adversely affect that portion 

of an early retirement benefit that already had 

accrued to a plan participant who satisfied the 

pre-amendment conditions for the benefit either 

before or after the amendment. See 29 U.S.C. § 

1054(g); Dade, 68 F.3d at 1562. Thus, if the 1994 

Westinghouse Plan amendments reduced or 

eliminated early retirement benefits or retirementtype subsidies, the amendments would have had 

to allow employees who remained employed by 

CBS after the amendments to ‘grow into’ the 

benefit. See id. at 1562. 
55

221 F.3d at 524 (emphasis added); see also Bruce, Pension 

Claims 185 (“When an early retirement benefit, a retirementtype subsidy, or a benefit option is protected against reduction or 

elimination, the protection is for the benefits that would be 

provided under the benefit option based on the accrued benefits 

up to the date of change, assuming that the participant has met 

or later meets any special eligibility (or vesting) requirement for 

the benefit.”) (emphasis partially omitted and partially added). 

The legislative history to section 204(g) is consistent with 

our precedent and reveals Congress’ intent that section 204(g) 

protect only those benefits — whether classified as early 

retirement benefits or retirement-type subsidies — for which a 

participant meets the plan requirements. The Senate Report

states, in relevant part:

The bill generally protects the accrual of 

benefits with respect to participants who have met 

the requirements for a benefit as of the time a plan 

is amended and participants who subsequently 

meet the preamendment requirements

. . . 

. The bill 

does not, however, prevent the reduction of a 

subsidy in the case of a participant who, at the 

time of separation from service (whether before or

after the plan amendment), has not met the 

preamendment requirements. 

Accordingly, the bill makes it clear that the 

prohibition against reduction of a benefit subsidy 

(the excess of the value of a benefit over the 

actuarial equivalent of the normal retirement 
56

benefit) applies to a participant only if the 

participant meets the conditions imposed by the 

plan on the availability of the subsidy. If the 

protection is afforded, an employee’s accrued 

benefit is not to be less than the protected level or 

the accrued benefit determined under the plan 

without regard to the protection, whichever is 

greater. For example, if a plan is amended to 

eliminate a subsidized early retirement benefit for 

employees who have completed 30 years of 

service, then the plan would not be required to 

provide the subsidy to an employee who never 

completes 30 years of service and it would not be 

required to provide benefits to such an employee 

before the normal retirement age. 

S. Rep. No. 98-575, at 28, 1984 U.S.C.C.A.N. at 2574 

(emphasis added). The provision of benefits to an employee 

“before the normal retirement age” apart from the “subsidy” is, 

of course, an early retirement benefit as we defined that term in 

Bellas. See 221 F.3d at 538 (“[The] portion paid that is equal to 

the actuarially reduced normal retirement benefit[] constitutes an 

early retirement benefit.”). It is thus apparent that despite 

section 204(g)’s focus on satisfaction of preamendment 

conditions for retirement-type subsidies, Congress assumed in 

passing section 204(g) that the provision only would protect 

early retirement benefits to the extent that an employee satisfied 

or can satisfy the plan conditions for the benefit.

If there was any question as to the proper interpretation 

of section 204(g), the Treasury regulation implementing the 
57

Internal Revenue Code counterpart to section 204(g), 26 U.S.C. 

§ 411, surely answers that question. As noted, Treasury 

regulations implementing the Internal Revenue Code version of 

the anti-cutback rule apply with equal force to section 204(g). 

See 29 U.S.C. § 1202(c). The implementing regulation to 

section 411 provides: 

Except as provided in this section, a plan is 

treated as decreasing an accrued benefit if it is 

amended to eliminate or reduce a section 

411(d)(6)(B) benefit as defined in paragraph 

(g)(15) of this section. This paragraph (b)(1) 

applies to participants who satisfy (either before 

or after the plan amendment) the preamendment 

conditions for a section 411(d)(6)(B) protected 

benefit.

26 C.F.R. § 1.411(d)-3(b)(1)(i) (emphasis added). In turn, a 

section 411(d)(6)(B) protected benefit is defined as “the portion 

of an early retirement benefit, retirement-type subsidy, or an 

optional form of benefit attributable to benefits accrued before 

the applicable amendment date.” 26 C.F.R. § 1.411(d)-3(g)(15)

(emphasis added). Accordingly, an early retirement benefit is 

considered accrued for purposes of section 411, and thus for 

purposes of section 204(g), only where the plan participant at 

some point satisfies the preamendment conditions for the 

benefit.

In sum, we find that section 204(g) does not protect from 

cutback an early retirement benefit for a plan participant who 

has not satisfied and never can satisfy the conditions for 
58

receiving the benefits that are subject to the cutback. Indeed, 

were we to conclude otherwise our opinion would have the 

bizarre result that it would treat section 204(g) as protecting the 

benefits of a plan participant from cutback in circumstances in 

which the participant never will be eligible for those benefits. 

Thus, our opinion would extend section 204(g)’s protection on 

paper only to a set of phantom benefits which never actually will 

vest for the participant, or, result, directly contrary to our 

opinions in Ashenbaugh, Dade, and Hein, in going further in 

creating an entitlement under section 204(g) where none 

otherwise would exist under the terms of the plan. The first 

result is unreasonable and the second is contrary to wellestablished ERISA principles. See Spink, 517 U.S. at 887, 116 

S.Ct. at 1788 (ERISA guarantees that “if a worker has been 

promised a defined pension benefit upon retirement — and if he 

has fulfilled whatever conditions are required to obtain a vested 

benefit — he will actually receive it.”) (emphasis added) 

(internal quotation marks and citation omitted); Firestone Tire 

and Rubber Co. v. Bruch, 489 U.S. 101, 113, 109 S.Ct. 948, 956 

(1989) (ERISA was enacted “to protect contractually defined

benefits.”) (internal quotation marks and citation omitted) 

(emphasis added). 

(a) Appellees did not and could not satisfy 

the conditions for PJS benefits.

Inasmuch as we have determined that we must analyze 

appellees’ entitlement to PJS benefits upon the basis of a 

hypothetical termination of the plans as to the entire portion of 

PJS benefits, we finally turn to the crux of this segment of our 

opinion and consider whether appellees would have been 
59

entitled to PJS benefits upon a hypothetical termination of the 

Westinghouse Plan just prior to the transfer of liabilities. In 

relevant part, the Westinghouse Plan provides that:

For periods on or after January 1, 1997 and before 

September 1, 1998, a Permanent Job Separation 

means solely the termination of the employment 

of an Employee with an Employer, Affiliated 

Entity, or Excluded Unit because of job 

movement or product line relocation, or location 

closedown, as those terms are defined below.

J.A. 292. The Plan defines “Employer, Affiliated Entity, or 

Excluded Unit” as Westinghouse or any Westinghouse 

subsidiary or joint venture participating in the Westinghouse 

Plan. Id. 284, 288, 292. The Plan, however, contains the 

additional express limitation that “in no event shall a Permanent 

Job Separation occur if an Employee is offered continued 

employment by . . . a successor employer.” Id. 293. 

If the Westinghouse Plan had been terminated just prior 

to transferring a portion of its liabilities under the APA on 

September 1, 1998, appellees plainly would not have been 

eligible for PJS benefits. As of that date, appellees were 

Westinghouse employees who were “offered continued 

employment by . . . a successor employer,” namely, Siemens. 

Nevertheless, as noted previously, under section 204(g) a plan 

participant need not satisfy at the time of a plan’s termination 

the conditions placed on an early retirement benefit or 

retirement-type subsidy. If following the transfer of liabilities 

appellees potentially could have been eligible for the 
60

Westinghouse Plan’s PJS benefits in the future, section 204(g) 

would have protected those benefits, and appellees’ benefits 

upon a hypothetical termination of the Westinghouse Plan prior 

to the transfer of liabilities thus would have included PJS 

benefits. Accordingly, section 208 would have protected 

appellees’ PJS benefits from elimination or reduction by virtue 

of the Siemens-Westinghouse transaction. Here, however, the 

bar to entitlement that would have existed in a pretransfer 

situation remains. Appellees did not after the transfer of 

liabilities become eligible nor will they ever be eligible for PJS 

benefits under the Westinghouse Plan for the same reason they 

were not eligible for those benefits just prior to Westinghouse’s 

transfer of liabilities — they were offered continued 

employment by Siemens. Accordingly, section 204(g) did not 

protect appellees’ PJS benefits from cutback and thus appellees’ 

benefits upon a hypothetical termination of the Westinghouse 

Plan just prior to the transfer of liabilities would not have 

included PJS benefits. 

Notwithstanding this seemingly insurmountable obstacle 

to appellees’ claim, the Magistrate Judge concluded that the 

successor-employer limitation on PJS benefits was not fatal to 

appellees’ claim, as she stated that “Gillis held that satisfaction 

of pre-amendment conditions does not have to occur until 

separation from service [and] as in Gillis, no separation from 

service occurred until Siemens terminated the transferred 

employees.” Shaver, 2007 WL 1006681, at *28. The 

Magistrate Judge did not, however, proceed to analyze whether 

appellees would have satisfied the conditions for PJS benefits 

upon Siemens’ termination of appellees. Rather, she concluded 

that “the APA extends the PJS benefits by contractual 
61

agreement,” such that the prohibitive language in the 

Westinghouse Plan did not bar appellees’ claim. Id. These 

conclusions plainly were wrong.

In Gillis, Hoechst Corporation sold a division of its 

business and transferred all assets and liabilities of its ERISA 

plan attributable to that division to American Mirrex. 4 F.3d at 

1140. There was, in other words, a plan spinoff. The American 

Mirrex Plan provided that employees of that division who 

transferred to American Mirrex were to “receive the same early 

retirement benefits subject to the same conditions as [the 

Hoechst Retirement Plan].” Id. at 1149 (Alito, J., concurring). 

Plaintiffs were transferred employees who, at the time of 

transfer, had not met the age and years-of-service requirements 

to qualify for early retirement benefits under the Hoechst Plan. 

Id. at 1143. Plaintiffs sued Hoechst and its pension plans, 

alleging that Hoechst’s failure to transfer sufficient assets to 

American Mirrex to fund plaintiffs’ early retirement benefits 

violated section 208. Id. They contended that notwithstanding 

their insufficient age and years-of-service at the time they 

transferred employment to American Mirrex they could qualify 

for the early retirement benefits provided under the Hoechst 

Plan through their subsequent service with American Mirrex, 

and that Hoechst’s contrary interpretation of its plan amounted 

to an amendment of the plan in violation of section 204(g). Id.

at 1144. Hoechst countered that it was not required to credit 

service with American Mirrex and because plaintiffs could not 

satisfy the conditions for receiving those benefits section 204(g) 

did not protect them from cutback. Id. at 1144.

Finding scant guidance in the text of section 204(g), we 
62

turned to pertinent Internal Revenue Service Rulings to resolve 

the case. Id. at 1144-45. Based on a Revenue Ruling that 

concluded that under section 204(g) an employee could satisfy 

following a plan termination the plan’s age and years-of-service 

pretermination conditions for early retirement benefits and that 

those benefits thus had to be funded before residual assets could 

revert to the employer, we determined that had Hoechst 

continued to employ the plaintiffs after terminating its plan the 

plaintiffs still would have been able to qualify for the early 

retirement benefits at some future date and Hoechst would have 

had to have allowed the employees to “grow into” those 

benefits. Id. at 1145-46. Relying on a further Revenue Ruling 

that determined that a “separation from service” does not occur 

upon an employee’s transfer to a successor employer, we 

concluded that because the plaintiffs continued in the same job 

for a successor employer, they could continue to accumulate 

years of service under the Hoechst Plan through their subsequent 

employment with American Mirrex and potentially satisfy the 

age and years-of-service requirements for the early retirement 

benefit. Id. at 1144-47. Accordingly, we held that section 208 

required that Hoechst transfer sufficient assets to American 

Mirrex to fund the early retirement benefits. Id. at 1147. 

Gillis confirmed that satisfaction of benefit conditions 

can occur after a plan termination or amendment. It is equally 

clear from that case, however, that a plan participant 

nevertheless must, at some point, meet all of the conditions 

placed upon those benefits to receive them. Appellees contend 

that the Magistrate Judge correctly found their claims viable 

under Gillis notwithstanding the absence of any analysis of 

appellees’ eligibility because under Gillis “transferred 
63

employees may treat service for a successor employer as service 

for the plan sponsor for the purpose of qualifying for early 

retirement benefits.” Appellees’ br. at 9. But this statement is 

not correct for Gillis does not stand for the broad proposition 

that service with a successor employer may be treated as service 

for the plan sponsor to the end that all conditions the plan 

sponsor places upon retirement benefits are obviated. 

We concluded in Gillis that employees who continue in 

the same job for a successor employer that has assumed the 

assets and liabilities of the original employer’s plan may work 

towards satisfying the age and years-of-service requirements of 

the original employer’s plan while working for the successor 

employer. 4 F.3d at 1147. But in Gillis, there was no bar to the 

plaintiffs’ eligibility for the benefits under the Hoechst Plan 

other than their inadequate age and years of service at the time 

they ceased employment for Hoechst and plaintiffs could meet 

those requirements with the progression of time. Here, 

however, we do not have a plan spinoff, and age and years-ofservice requirements are not the impediments to appellees’ PJS 

benefits eligibility under the Westinghouse Plan. Rather, the 

“successor employer” provision of the Westinghouse Plan is an 

explicit bar to eligibility that, quite aside from the sunset 

provision in the Westinghouse Plan, forever disqualifies 

appellees from receiving PJS benefits under that plan and is a 

prohibition that the passage of time cannot cure. 

Notwithstanding the timing of appellees’ “separation from 

service,” appellees became ineligible for PJS benefits upon 

being offered continued employment by Siemens. Stated 

another way, appellees could not fulfill the conditions required 

to obtain the PJS benefits as one of those conditions was that a 
64

successor employer not offer a plan participant continued 

employment and that is precisely what happened here. 

Accordingly, we are at a total loss as to how, as appellees urge 

that we do, we can circumvent this explicit condition of the 

Westinghouse Plan by somehow treating appellees’ service with 

Siemens as uninterrupted service with Westinghouse and, 

directly contrary to the terms of the Westinghouse Plan, ignore 

appellees’ employment by Siemens. We decline to engage in 

such judicial alchemy.

Though our result does not depend on this point, we note 

also that upon termination by Siemens appellees faced the 

additional bar to PJS eligibility that “solely” a termination by 

Westinghouse, a Westinghouse subsidiary, or a joint venture 

participating in the Westinghouse Plan allowed for PJS benefits 

under the Westinghouse Plan. J.A. 292. Siemens is not a 

Westinghouse subsidiary nor is it a joint venture participating in 

the Westinghouse Plan. 

Once before, in Gritzer v. CBS, Inc., 275 F.3d 291, 293-

94 (3d Cir. 2002), we considered whether termination by a 

successor employer entitles former Westinghouse employees to 

PJS benefits under the Westinghouse Plan. In that case, the 

plaintiffs were former Westinghouse employees who had 

transferred employment to Industrial Ceramics, Inc.,

(“Ceramics”) upon Westinghouse’s sale of a facility to 

Ceramics. Id. at 293. Section 14(f)(1) of the relevant 

Westinghouse Plan provided that the plan managers “may . . . 

and to the extent they consider advisable, treat service with [a 

successor company] as service with [Westinghouse] for 

purposes of [vesting and eligibility for pensions and benefits].” 
65

Id. at 297. Pursuant to the sale, Ceramics and Westinghouse 

also executed a Reciprocal Service Agreement (“RSA”) 

providing that Westinghouse would grant to transferred 

employees “service credit for their service with [Ceramics] for 

the purposes of pension eligibility under any applicable 

[Westinghouse] pension plan in which the employe[e]s may 

have been participating, but not for purposes of pension benefit 

accrual thereunder.” Id. at 293. Ceramics later closed the 

facility, and the plaintiffs sued Westinghouse, by then, CBS for 

PJS benefits. Id. at 294. 

We observed that the Westinghouse Plan requires that the 

“Employer” terminate an employee for purposes of PJS 

eligibility and that “‘Employer’ means simply Westinghouse.” 

Id. at 297. We concluded that, “any other successor company . . 

. does not qualify as an ‘Employer’ under the express terms of 

the Plan,” and that this fact was a “seemingly fatal flaw” in the 

plaintiffs’ argument because a termination by Ceramics was 

plainly not a qualifying termination under the PJS benefits 

provision. Id. We then rejected the plaintiffs’ contention that 

“Westinghouse, by extending some benefits under the Plan 

through its RSA with Ceramics, automatically or necessarily by 

virtue of [section] 14(F)(1) extended [PJS] benefits,” id. at 298, 

and we thus held that the plaintiffs could not qualify for PJS 

benefits, id. at 298-99. 

As was true with respect to a successor employer to 

Westinghouse in Gritzer, Siemens’ termination of appellees was 

not a termination that triggered a possible claim for the PJS 

benefits provision under the Westinghouse Plan. This fact 

serves as an additional and independent bar to appellees’ 
66

eligibility under the Westinghouse Plan apart from the successor 

employer provision. It is important to recognize that appellees’ 

ineligibility for PJS benefits is not rooted in the sunset provision 

of the Westinghouse Plan that we struck down in Bellas, and 

that congruently the invalidation of the sunset provision cannot 

possibly make the appellees eligible for PJS benefits from the 

Westinghouse Plan or thus eligible for benefits under the 

Siemens Plans. Rather, with or without the sunset provision, 

there simply is no escape from the conclusion that appellees 

could not satisfy the requisite conditions for receiving PJS 

benefits under the Westinghouse Plan. Moreover, appellees do 

not challenge the validity of these other requisite conditions. 

Accordingly, because appellees could not satisfy at the 

time of a hypothetical termination of the Westinghouse Plan nor 

could they have satisfied at a later date the conditions for 

receiving PJS benefits under the Westinghouse Plan, section 

204(g) did not protect those benefits upon a hypothetical 

termination of the Westinghouse Plan. Thus, appellees’ benefits 

upon a hypothetical termination of the Westinghouse Plan just 

prior to the transfer of liabilities would not have included PJS 

benefits. Furthermore, upon a hypothetical termination of the 

Siemens Plans just following the transfer of liabilities, 

appellees’ benefits also would not have included PJS benefits. 

Hence, appellees would have received no less upon a 

hypothetical termination of the Siemens’ Plans following the 

transfer of liabilities than they would have received upon a 

hypothetical termination of the Westinghouse Plan just prior to 

the transfer of liabilities. Consequently, Siemens’ omission of a 

provision for PJS benefits and appellees’ consequent lack of 

entitlement to PJS benefits upon a hypothetical termination of 
67

Siemens Plans just following the transfer of liabilities did not 

diminish appellees’ benefits and neither section 208 nor section 

204(g) required that Siemens provide appellees with PJS 

benefits. 

(b) The APA did not contractually require 

Siemens to offer PJS benefits.

But the Magistrate Judge had more arrows in her quiver 

than sections 208 and 204(g) because she found alternatively 

that appellees were not required to meet the terms of the 

Westinghouse Plan because “the APA extends the PJS benefits 

by contractual agreement.” Shaver, 2007 WL 1006681, at *28. 

In theory, such an agreement could have supported her 

recommendation. Appellees understandably rely heavily on this 

contractual theory as they contend that the APA provision 

requiring Siemens to adopt a pension plan for the legacy 

employees “that contains terms and conditions that are 

substantially identical with respect to all substantive provisions 

to those of the Westinghouse Pension Plan as in effect as of 

[September 1, 1998],” J.A. 138, contractually bound Siemens to 

provide PJS benefits to appellees apart from any specific ERISA 

provision. At oral argument in support of this contention 

appellees brought to our attention the Court of Appeals for the 

Fifth Circuit’s recent decision in Evans v. Sterling Chemicals 

Inc., 660 F.3d 862 (5th Cir. 2011). 

But before considering Evans and the rest of the details 

of appellees’ argument that the APA required Siemens to 

provide for PJS benefits for legacy employees terminated after 

August 31, 1998, it is useful to make an overview of the 
68

argument. When Siemens entered into the APA it knew of the 

sunset, successor employer, and termination of employment by 

Westinghouse23 provisions of the Westinghouse Plan. Thus, if it 

had contractually obligated itself to extend PJS benefits to the 

legacy employees it would have been engaging in a rare, indeed 

inexplicable act of corporate benevolence as it would have been 

lifting three preexisting bars to the legacy employees advancing 

PJS claims after that date. It is, of course, perfectly obviousthat 

Siemens had the exact opposite intent as it unmistakably 

revealed by contracting for the closing date for the purpose of 

pensions and benefits of the APA to be September 1, 1998. By 

the use of that date Siemens ensured that it would not become 

the employer for ERISA purposes until after the sunset 

provision had eliminated the legacy employees’ potential claims 

for PJS benefits.24

Having completed our overview we now address Evans

 23By referencing Westinghouse we are including its subsidiaries 

and participating joint ventures in accordance with the 

Westinghouse Plan.

. 

24 Lest it be thought that we are ascribing to Siemens a 

motivation that it did not have in adopting the September 1, 

1998 closing date we refer to an internal Siemens memorandum 

dated August 12, 1998, that indicated that among the advantages 

of having Siemens “lease” Westinghouse employees until 

August 31, 1998, Siemens “would not need to even include 

Section 19 (PJS) in new pension plan, as it would have expired 

before employees joined Siemens.” J.A. 477.
69

In Evans, Cytec Industries, Inc., sold a portion of its business to 

Sterling Fibers, Inc., and pursuant to that sale, a number of 

Cytec employees continued employment with Sterling and 

became participants in Sterling’s benefit plans.25 Id. at 864-65. 

Section 5.05(f) of the asset purchase agreement required 

Sterling to provide postretirement medical and life insurance 

benefits to employees who continued employment with Sterling 

on a level at least equal to that of the Cytec Plan and required 

that Sterling obtain the written consent of Cytec prior to 

reducing benefits. Id. at 865. Sterling’s Plan, however, did not 

include the relevant consent provision, and, in fact, provided 

that Sterling could amend the plan at any time by action of the 

plan committee. Id. Some years after the transaction, Sterling 

entered bankruptcy, and during the course of those proceedings, 

the bankruptcy court approved Sterling’s “rejection” of the 

purchase agreement as an executory contract. Id. at 866. Soon 

thereafter, Sterling raised the transferred employees’ benefit 

premiums beyond the premiums that the Cytec Plan had set 

without Cytec’s written consent. Id. at 866-67. The employees 

sued Sterling, claiming that section 5.05(f) constituted a valid 

amendment to the Sterling Plan but not an executory contract, 

and thus it could not be rejected during the bankruptcy 

proceedings. Id. at 868. 

Relying on its holding in a similar case, 

 25There were three related companies all including the name 

“Cytec” and it is unclear which one or whether they all made the 

sale to Sterling. The point, however, is not significant and as a 

matter of convenience we refer to one of the companies, Cytec 

Industries, as the vendor.

Halliburton Co. 
70

Benefits Committee v. Graves, 463 F.3d 360 (5th Cir. 2006), the 

court of appeals determined that section 5.05(f) of the asset 

purchase agreement constituted a valid amendment under 

ERISA of Sterling’s benefit plan and that Sterling thus was 

required to abide by the terms of that provision. 660 F.3d at

874. In this regard, the court concluded that although the asset 

purchase agreement was extrinsic to the Sterling Plan and the 

provision itself was not included within the plan, the agreement 

constituted a valid plan amendment because the agreement was 

in writing, contained a provision directed to an ERISA plan, and 

the purchase agreement otherwise satisfied the formal procedure 

required for a plan amendment under the Sterling Plan. Id. at 

871-72.

Appellees’ reliance on Evans is misplaced. What 

appellees fail to recognize is that even if we were to conclude 

that the APA constituted a valid plan amendment of the Siemens 

Plans (a remarkable conclusion as they were not so incidentally 

non-extant as of the APA’s execution) or that the APA

otherwise defined Siemens’ ERISA obligations, there is no 

provision within the APA requiring that Siemens provide PJS 

benefits to appellees, and, as we have indicated, it has not done 

so. Thus, Westinghouse and Siemens simply did not make an 

agreement providing for the extension of PJS benefits to the 

legacy employees. 

In relevant part, paragraph 5.5(d)(iv) of the APA 

provides that Siemens “shall be solely responsible for . . . any 

benefits pursuant to Section 19 [the PJS provision] of the 

[Westinghouse] Pension Plan and the corresponding provision 

of the Siemens Pension Plan” with respect to legacy employees 
71

after September 1, 1998, J.A. 139-40, but we already have 

concluded that appellees are not entitled to PJS benefits under 

section 19 of the Westinghouse Pension Plan. Although 

paragraph 5.5(d)(iv) may assume that Siemens would enact a 

corresponding PJS benefits provision, it does not require 

Siemens to do so and thus differs from the purchase agreement 

provisions at issue in Evans and Halliburton.

26 Cf. Evans

 26Siemens argues that the APA contains language referencing a 

corresponding PJS benefit provision in the Siemens Plans 

because that language was drafted at a time when the parties 

believed that the transaction would close before the effective 

date of the sunset provision in the Westinghouse Plan. Under 

that belief that ultimately proved to be mistaken with respect to 

pensions and benefits, Siemens represents now that, to be in 

conformity with the Westinghouse Plan, it did intend to provide 

PJS benefits under its plans to the legacy employees from the 

date of closing through August 31, 1998, and the portion of 

paragraph 5.5(d)(iv) that implies that Siemens would provide 

PJS benefits is a vestige of that belief. Thus, Siemens views the 

language as contractually obsolete. While the long delay in 

completing the PGBU transaction suggests that Siemens’ 

contention may be true, our conclusion regarding the import of 

the APA does not mean that we are accepting Siemens’ 

representation for the reason of the mention of PJS benefits in 

the APA. 

, 660 

F.3d at 865 (“[Sterling] shall continue to provide postretirement 

medical and life insurance benefits for such [qualifying] 

Acquired Employee[s] that are no less favorable to such 

Acquired Employee[s] than those benefits provided by [Cytec] 

under the [Cytec benefit plans] . . . and [Sterling] shall not 
72

reduce the level of such benefits without the prior written 

consent of [Cytec] . . . .”); Halliburton, 463 F.3d at 365 

(“[Halliburton] shall . . . take all corporation action necessary to: 

(i) maintain with respect to eligible participants . . . the 

[acquired company’s] retiree medical plan, except to the extent 

that any modifications thereto are consistent with changes in the 

medical plans provided by [Halliburton] and its subsidiaries for 

similarly situated active employees . . . .”). 

Appellees’ invocation of paragraph 5.5(d)(i) is likewise 

unavailing. That provision required that Siemens “establish a 

defined benefit pension plan . . . that contains terms and 

conditions that are substantially identical with respect to all 

substantive provisions to those of the Westinghouse Pension 

Plan as in effect as of [September 1, 1998].” J.A. 138 (emphasis 

added). We already have noted that paragraph 5.5(a)(ii), which 

requires Siemens to “provide compensation and benefit plans 

and arrangements which in the aggregate are comparable . . . to 

the compensation, Plans and Benefit Arrangements,” of the 

Westinghouse Plan, id. 137 (emphasis added), supersedes 

paragraph 5.5(d)(i) to the extent they set forth disparate 

standards governing Siemens’ pension obligations. As we 

observed previously, the amendment to the APA that changed 

the closing date to September 1, 1998, for pension and benefit 

purposes did not specifically include section 5.5(a), and the 

closing date for purposes of section 5.5(a) thus technically 

remained August 19, 1998. On that date, the Westinghouse Plan

included the sunset provision, which provided that “[i]n no 

event shall a Permanent Job Separation occur after August 31, 

1998.” Id. 293. Thus, even if we contorted section 5.5(a)’s “in 

the aggregate comparable” standard to require adherence to all 
73

terms of the Westinghouse Plan, including the PJS benefits 

provision, section 5.5(a) would have required that Siemens offer 

PJS benefits to the legacy employees only through August 31, 

1998. As the parties agree that Siemens did not terminate a 

legacy employee prior to September 1, 1998, Siemens’ failure to 

offer PJS benefits from August 19, 1998 to August 31, 1998, did 

not deprive any legacy employee of benefits to which they were 

entitled. 

If we focus on paragraph 5.5(d)(i), as appellees urge, the 

closing date of the APA for that paragraph was changed to 

September 1, 1998. As of September 1, 1998, the Westinghouse 

Plan still included the sunset provision. As complicated as this 

case might be, on this point the English language meaning of the 

Westinghouse Plan could not be clearer. Accordingly, even if 

we were to conclude that the APA constituted an amendment of 

the Siemens Plans or otherwise imposed upon Siemens pension 

obligations independent of any specific ERISA provision 

requiring that Siemens provide PJS benefits, paragraph 5.5(d)(i)

of the APA did not require Siemens to provide PJS benefits to 

the legacy employees, because section 5.5(d) defines Siemens’ 

pension obligations in relation to the Westinghouse Pension 

Plan as of September 1, 1998, and as of September 1, 1998, a 

permanent job separation could not occur under the 

Westinghouse Plan by virtue of the sunset provision.27

 27 On September 9, 1998, Westinghouse retroactively amended 

its plan to provide, among other things, a new date by which PJS 

benefits would be eliminated under the sunset provision. See

J.A. 107 (Joint Statement of Undisputed Facts). The September 

9 amendment, which was retroactively effective as of August 

 
74

Appellees nonetheless urge that because we held in 

Bellas

 

31, 1998, provided that “[i]n no event shall a Permanent Job 

Separation occur after April 30, 2000.” J.A. 466 (Amendment 

to the Westinghouse Plan). The parties agree that Siemens did 

not participate in Westinghouse’s decision to enact this 

amendment, see J.A. 107, and appellees do not contend that 

Westinghouse’s independent amendment of its plan bound 

Siemens. Nevertheless, we observe that although the September 

9 amendment was retroactively effective to August 31, 1998,

and paragraph 5.5(d)(i) provided that Siemens would offer a 

pension plan substantively identical to the Westinghouse Plan as 

of September 1, 1998, Westinghouse’s unilateral retroactive 

amendment to its plan more than a week after September 1, 

1998, did not alter Siemens’ contractual undertaking in 

paragraph 5.5(d)(i) of the APA. By the plain terms of the 

Westinghouse Plan as they existed on September 1, 1998, the 

date Siemens was required to reference under paragraph

5.5(d)(i), PJS benefits were no longer available under the 

Westinghouse Plan by virtue of the original sunset provision, 

which eliminated those benefits following August 31, 1998. 

that the sunset provision was an illegal cutback under 

ERISA, Westinghouse’s liability for PJS benefits extending past 

August 31, 1998 existed “as a matter of law” at the time of the 

APA’s execution. Appellees’ br. at 13. They contend that the 

sunset provision thus could not have limited Siemens’ promise 

to provide substantially identical benefits. But as we have 

explained the legacy employees are not entitled to PJS benefits 

from Siemens without regard to the sunset provision and thus 

the invalidation of the sunset provision is of no help to them. In 

any event, we do not agree with appellees’ expansive view of 
75

the effect of Bellas on this point. 

We recognize that nearly one year after the execution of 

the APA, the District Court for the Western District of 

Pennsylvania held that the sunset provision violated section 

204(g), see Bellas v. CBS, Inc., 73 F. Supp. 2d 500 (W.D. Pa. 

1999), and one year later we affirmed that disposition, see

Bellas, 221 F.3d at 517. We grant that at the time of the APA’s 

execution, Westinghouse was nonetheless legally obligated 

under ERISA to allow for a permanent job separation to take 

place following August 31, 1998, notwithstanding the 

Westinghouse Plan’s plain language to the contrary which 

neither we nor the district court yet had struck down. The terms

of the Westinghouse Plan, however, did not obligate 

Westinghouse to provide PJS benefits after August 31, 1998, 

and it is the terms of the Westinghouse Plan measured as of 

September 1, 1998 — not Westinghouse’s underlying ERISA 

obligations — that Siemens promised effectively to match in the 

APA. See J.A. 138 (“substantially identical with respect to all 

substantive provisions to those of the Westinghouse Pension 

Plan as in effect of [September 1, 1998]”). Considering that 

those terms had not yet been called into question by Bellas, we 

find that our holding in that case cannot alter the plain language 

of the APA. 

Fundamentally, the APA is a contract. A basic principle 

of contract construction is that we must interpret and enforce 

unambiguous agreements according to their terms. See

McDowell v. Philadelphia Hous. Auth., 423 F.3d 233, 238 (3d 

Cir. 2005); Morais v. Central Beverage Corp. Union Emps.’ 

Supplemental Retirement Plan, 167 F.3d 709, 712 (1st Cir. 
76

1999) (“[C]ontracts containing unambiguous language must be 

construed according to their plain and natural meaning[.]”)

(quoting Smart v. Gillette Co. Long-Term Disability Plan, 70 

F.3d 173, 178 (1st Cir. 1995)).28 In no uncertain terms, Siemens 

agreed to provide benefits “substantially identical to” those 

provided under the Westinghouse Plan as of September 1, 1998,

and the Westinghouse Plan did not provide PJS benefits for 

employees terminated after August 31, 1998, even putting aside 

the fact that it did not ever require Westinghouse to pay benefits 

to employees terminated by a successor employer. Our later 

invalidation of the sunset provision as to Westinghouse could

not change the parameters of Siemens’ contractual undertaking

either with respect to the termination date of the separations for 

PJS eligibility or with respect to the entity terminating the 

employment, i.e., a Westinghouse employer. Nor, of course, 

could it change the Westinghouse Plan’s provision that there 

would not be a permanent job separation of an employee offered 

continued employment by a successor employer. 

In short, there are three separate reasons why appellees 

are not entitled to PJS benefits from Siemens: (1) the sunset 

 28Because the APA is a contract that “potentially affects rights 

protected by [ERISA] . . . [it] is likely subject to interpretation in 

accordance with tenets of federal common law.” Smart, 70 F.3d 

at 178 (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56, 

107 S.Ct. 1549, 1557 (1987)); cf. Morais, 167 F.3d at 711 (“[I]t 

is well settled that federal common law applies both to interpret 

the provisions of an ERISA benefit plan and to resolve ‘[i]ssues 

of relinquishment of rights and waiver’ when such side 

agreements affect the benefits provided by an ERISA plan.”). 
77

provision cut-off date of August 31, 1998; (2) the provision that 

the terminating employer had to be a Westinghouse affiliate; and

(3) the provision that there would not be a permanent job 

separation if a successor employer offered employment to a 

terminated employee. If somehow in a way beyond our 

conception the APA could be deemed to have been modified by 

our invalidation of the sunset provision in Bellas, the remaining 

two bars nevertheless would remain in place to the end that 

appellees could not obtain PJS benefits from Siemens. Thus, as 

complicated as this case seems to be in the end the result that we 

must reach is quite clear.

VI. SUMMARY

In summary, we hold that appellees are not entitled to 

PJS benefits from Siemens. First, we conclude that Siemens did 

not adopt the Westinghouse Pension Plan as an ERISA

“transition” plan from August 19 to August 31, 1998, and thus 

did not violate section 204(g) when it adopted the Siemens 

Plans, which lacked PJS benefits. Second, we conclude that 

because appellees had not satisfied the conditions for PJS 

benefits upon a hypothetical termination just prior to 

Westinghouse’s transfer of liabilities to Siemens and could not 

satisfy in the future the conditions for those benefits, sections 

204(g) and 208 did not protect those benefits from cutback and 

appellees’ benefits would not have included PJS benefits upon 

Westinghouse Plan’s hypothetical termination. Consequently, 

Siemens’ omission of PJS benefits from its Plans and appellees’ 

resulting lack of entitlement to PJS benefits under Siemens 
78

Plans upon a hypothetical termination basis just following the 

transfer of liabilities did not diminish appellees’ benefits in 

violation of section 208. Finally, we conclude that Siemens did 

not obligate itself in the APA to provide PJS benefits to the 

legacy employees. Finding no ERISA provision that requires 

otherwise, we must enforce the Siemens Plans as written, and 

beyond any reasonable dispute those Plans do not entitle 

appellees to PJS benefits. 

VII. CONCLUSION

For the foregoing reasons, we will reverse the District 

Court’s March 30, 2007 order to the extent that it denied 

Siemens’ summary judgment and granted appellees summary 

judgment. Because we conclude that none of the appellees are 

entitled to PJS benefits from Siemens, we need not reach the 

questions certified for interlocutory appeal regarding the validity 

of the Release Plaintiffs’ waivers as they did not have any PJS 

benefits to waive and we thus dismiss the certified interlocutory 

appeals. We likewise need not address appellees’ related 

contention that the District Court erred in denying appellees’ 

claim that they were entitled to retiree medical and life insurance 

benefits that they contended must accompany PJS benefits as 

there are no PJS benefits to accompany and we will dismiss the 

appeal relating to that issue. In sum, Siemens is entitled to 

summary judgment as to both the Release and the Non-Release 

Plaintiffs, i.e., all appellees, and we therefore will remand the 

case to the District Court to enter summary judgment for 

Siemens and for the Siemens Plans. The entry of that order will 

terminate this litigation on the substantive matters in issue.