Opinion ID: 848910
Heading Depth: 3
Heading Rank: 1

Heading: the term liquidation

Text: The MESA allows unemployment benefits payable under it to be reduced or eliminated where a claimant is receiving a retirement benefit. MCL 421.27(f)(1). It defines that term as a benefit, annuity, or pension of any type ... payable [when]... the individual was retired from employment. MCL 421.27(f)(4)(a)(ii). But the act expressly excludes as a retirement benefit any amounts paid to individuals in the course of liquidation of a private pension or retirement fund because of termination of the business or of a plant or department of the business of the employer involved.... Id. [1] In this case, plaintiff lost her job with defendant because defendant closed the facility where she worked. The question is whether her retirement funds fall within the statutory definition of retirement benefit or within the exception. The expression liquidation of a private pension or retirement fund in § 27(f)(4)(a)(ii) could mean a distribution of all pension monies that an employer holds for all its employees. Defendant here maintains that it did not liquidate its entire pension fund monies when it closed the facility where plaintiff worked and that the fund continues to exist. Under this interpretation and in this factual situation, plaintiff's pension distribution would constitute retirement benefits and she could not be paid unemployment benefits. On the other hand, the clause liquidation of a private pension or retirement fund could mean a distribution of all pension monies that an employer holds for one or more but not all of its employees. [2] As noted by the majority, the word liquidate has many definitions, including to settle or pay (a debt) and to convert (inventory, securities, or other assets) into cash. [3] Applying that definition here, defendant liquidated plaintiff's retirement fund when it distributed the entire contents and closed the account, settling its debt to plaintiff and converting her pension into cash. Hence, the distribution would not constitute retirement benefits and plaintiff could draw unemployment benefits. The majority offers no persuasive reasoning to support its conclusion that the more pertinent definition of liquidate is that contemplating the elimination of all corporate pension assets. The mere fact that it prefers this to a definition more favorable to plaintiff has no bearing on what the Legislature intended liquidate to mean. The varied definitions of the word leave room for reasonable minds to differ. It is inescapable that the statutory language is ambiguous. The majority's interpretation, that liquidation means a distribution of all pension monies held for all its employees, produces unconscionable results. For example, in this case, Ameritech would never liquidate all its pension fund monies by shutting down one or some of its facilities. Hence, no employee in plaintiff's situation could ever collect unemployment benefits. As an extreme example, if defendant discharged all its employees, it could distribute all but one dollar of the funds in the pension fund. Then, the fund would not have been liquidated under the majority's reading because all the assets would not have been distributed. In so doing, defendant could reduce or eliminate all its employees' unemployment benefits. The Legislature could not have intended the result in either example. The practical implications of the majority's reading of § 27(f)(4)(a)(ii) are enormously detrimental to employees like plaintiff. During plaintiff's hearing before the Michigan Employment Security Board of Review, defendant's human resources manager testified that there is a single common trust fund for pension monies to which both defendant and Michigan Bell contribute. Absent closure of the entire corporation and all its pension funds, whenever defendant shuts down one facility, it will always escape paying unemployment benefits to the employees who worked there. The majority distorts the facts of this case by portraying plaintiff's acceptance of her pension funds as a choice. Defendant offered plaintiff two other jobs in its corporation. However, both were located approximately two hours from her residence. When plaintiff declined them because the commute would be unreasonable, defendant distributed her retirement funds. She did not have the option to leave them in defendant's trust fund. She was obliged to have them rolled into an IRA or paid to her in a monthly annuity. [4] It is in light of these facts that defendant believes the funds were not liquidated within the meaning of M.C.L. § 421.27(f)(4)(a)(ii). My construction of § 27(f)(4)(a)(ii) is in keeping with the fact that the MESA is a remedial statute. As such, by principle, it should be liberally construed to afford benefits to a displaced employee. Empire Iron Mining Partnership v. Orhanen, 455 Mich. 410, 415-416, 565 N.W.2d 844 (1997). My construction also furthers the purpose of the act, which is to lighten the burden of economic insecurity on those who become unemployed through no fault of their own. Id. at 417, 565 N.W.2d 844.