Opinion ID: 561305
Heading Depth: 2
Heading Rank: 1

Heading: The Federal Policy Underlying ERISA

Text: 15 Before reviewing the specific legal controversies at issue in the case, it is worthwhile to place this case in perspective. First and foremost, the dispute in this case arose in the shadow of ERISA, the complex, comprehensive federal statute passed by Congress to protect the pension rights of employees. Thus the dispute here arose between one party, the plaintiff employees, whose right to pension benefits has been explicitly protected by Congress in the enactment of a comprehensive legislative scheme, and the defendant, a corporation whose liability for such pension benefits is contested under ERISA and under principles of both contract and corporate law. 16 Whether plaintiffs' claims under ERISA and Section 301 of the LMRA are meritorious is not for us to decide. Our task is limited to a review of Judge Moran's decision to grant the defendant's motion to dismiss. Clearly the plaintiffs have stated a cause of action under both federal statutes. First of all, Section 301 of the LMRA authorizes district courts to decide suits for violation of contracts between an employer and a labor organization, and it is uncontested that plaintiffs were representing all former employees belonging to the Progressive Steel Workers Union or other bargaining units. 4 In turn, ERISA Section 502 provides for civil enforcement, permitting pension plan beneficiaries to bring a private action to recover benefits due to them under the terms of a benefit plan. Specifically, ERISA provides that [a]n employee benefit plan may sue or be sued under this title as an entity. ERISA Section 502(d)(1), codified at 29 U.S.C. Sec. 1132(d)(1). 17 The plaintiff class cites other sections of ERISA in support of its claims. Section 203 sets forth the minimum vesting standards for pension benefits. ERISA requires that [e]ach pension plan shall provide that an employee's right to his normal retirement benefit is nonforfeitable upon attainment of normal retirement age. ERISA Section 203(a), codified at 29 U.S.C. Sec. 1053. Section 204(g) protects accrued benefits from being decreased by amendments to the specific pension plan. ERISA Section 204(g)(1), codified at 29 U.S.C. Sec. 1054. Finally, the plaintiffs refer in their appeal to Section 206(d)(1), ERISA's anti-alienation provision. This section, heavily relied upon by the plaintiffs in their brief and at oral argument, requires that [e]ach pension plan shall provide that benefits provided under the plan may not be assigned or alienated. ERISA Section 206(d)(1), codified at 29 U.S.C. Sec. 1056(d)(1). 18 The plaintiffs place particular weight on this last section, the anti-alienation provision, which they believe protects the employees of the Division from either expressly or impliedly waiving their right to pension benefits by entering into the Settlement Agreement. ERISA's anti-alienation provision assertedly protects them from such an unknowing waiver of pension benefits, for the release, if it includes Envirodyne, would operate to deny the plaintiffs their pension benefits for the period after the Division was sold to the subsidiaries of Envirodyne. 19 Plaintiffs' analysis begs the question. The issue is not whether the anti-alienation provision contained in ERISA prevents plaintiffs from waiving their pension benefits. It clearly does not. Rather, the question here is whether the plaintiffs released their claims against Envirodyne by settling their claims with EDC and WSC. Interpreting a settlement agreement presents a question of contract law, in which [t]he primary object in construing a contract is to give effect to the intention of the parties. Air Line Stewards and Stewardesses Ass'n v. American Airlines, Inc., 763 F.2d 875, 877-878 (7th Cir.1985), certiorari denied, 474 U.S. 1059, 106 S.Ct. 802, 88 L.Ed.2d 788, citing Schek v. Chicago Transit Auth., 42 Ill.2d 362, 364, 247 N.E.2d 886, 888 (1969). Absent clear language in the Settlement Agreement to resolve a dispute over the proper construction of a contract, a court may go outside the four corners of the contract and consider extrinsic and parol evidence presented by the parties. This requires the district court to then conduct fact-finding so that it may resolve the ambiguities inherent in the contract. LaSalle Nat'l Bank v. Service Merchandise Co., 827 F.2d 74, 78 (7th Cir.1987). 20 The former employees of the Division, who comprise the plaintiff class, have no other recourse to recover the pension and welfare benefits due to them from their service to the Division from 1977 to 1980. The anti-alienation provision, while clearly manifesting Congress's intent to protect workers from unknowingly signing away their vested pension benefits, does not impose a bar on settlement agreements wherein pension claims are knowingly and intentionally resolved by employees. Fair v. International Flavors & Fragrances, Inc., 905 F.2d 1114, 1115-1116 (7th Cir.1990); Nichol v. Pullman Standard, Inc., 889 F.2d 115, 121 (7th Cir.1989). To apply the anti-alienation provision in this case would establish the untenable rule that ERISA prevents plaintiffs from ever entering into a settlement in a dispute over lost pension benefits. 21 The plaintiffs' position, favoring a rigid application of the anti-alienation provision, is not defensible. They cite the Supreme Court's recent decision in Guidry v. Sheet Metal Workers Pension Fund, 493 U.S. 365, 110 S.Ct. 680, 107 L.Ed.2d 782, for the proposition that there is no exception to this [anti-alienation] policy ever. (Plaintiffs' Br. at 19 (emphasis in original)). If this were true, then the Settlement Agreement, in which the plaintiffs plainly recovered a portion of their pension claims, would be invalid so long as any amount of unrecovered pension benefits remained at issue. This no-exception rule, if applied here, would render a Settlement Agreement valid only on the continued approval of the plaintiffs, a result that is surely inconsistent with the whole purpose of encouraging settlement agreements to resolve legal claims. 22 While the anti-alienation provision of ERISA does impose a firm rule preventing pensioners from alienating their benefits, this case is simply outside the realm of the provision. The legal question in this case revolves not around the proper construction of a specific provision in ERISA, but rather around legal questions of corporate and contract law. As the defendant rightly points out, the anti-alienation provision protects individuals who pledge their pension benefits as collateral or squander their benefits before retirement (Defendant's Br. at 20). 5 The Settlement Agreement in this case does not fall into either category. Instead, the question on appeal is whether the employees can recover pension benefits earned between 1977 and 1980 from Envirodyne under the theory that the release in the Settlement Agreement does not extend to Envirodyne and that Envirodyne can be held liable for the pension and welfare benefits under an alter ego theory. 23