Opinion ID: 679507
Heading Depth: 4
Heading Rank: 1

Heading: Prior to the satisfaction of liabilities

Text: 34 Although section 10A.2 does declare that Plan assets are not to revert to the employer, that language is qualified by the phrase prior to the satisfaction of all liabilities under the Plan. Plaintiffs maintain that this phrase creates, at best, an implied reversion; they contend that ERISA section 4044(d)(1) requires an explicit reversion provision, citing Albedyll. However, as noted, section 4044(d)(1) does not apply to partial terminations, and Albedyll was a final, not a partial, termination case. Further, the Albedyll plan contained a section which the court interpreted to provide for pro rata distribution of plan assets to the participants upon termination. In addition, an early outline of the plan clearly indicated that the company could recover none of the contributed assets. 35 Other cases, dealing with plans having language more similar to that now before us, but without an express employer reversion provision, have allowed an employer to recapture surplus assets upon termination of the plan. See Outzen v. Fed. Deposit Ins. Corp. ex rel. State Examiner of Banks, 948 F.2d 1184, 1186-87 (10th Cir.1991) (where plan provided funds could not be used other than for the exclusive benefit of participant prior to the satisfaction of all liabilities, court held later amendment adding express reversion provision was valid). 36 Plaintiffs mount a second attack on the prior to phrase of section 10A.2, claiming that it is mere boilerplate language required by tax law. The phrase in question was part of section 165(2) of the Revenue Act of 1938, and became section 165(2) of the Internal Revenue Code of 1939. 53 Stat. Sec. 165(2) (1939). It has been carried over into the present Internal Revenue Code. 18 Plaintiffs contend that Gulf's use of the language in the A & B Plan was mere repetition of the 1938 statute. 37 In response, Chevron argues that the legislative history of section 165 supports reading the A & B Plan to allow employer reversion. The prior to phrase was added to the Revenue Act of 1938 to allow employers to recapture surplus assets without losing their exempt status under the tax laws. 19 S. REP. No. 1567, 75th Cong., 3d Sess. 24 (1938), reproduced in 1939-1 C.B. 779, 796. Thus, the prior to language of section 165 of the 1938 Revenue Act did not require a rote phrase, without meaning or implication. Instead, it offered employers the ability, if desired, to establish a qualified pension plan in which the employer, upon final termination, received the surplus assets. 38 Based on the foregoing, we hold that in the context of section 10A-2 of the Plan, with its distribution allocation provisions not reaching surplus assets, the phrases until all liabilities under the Plan shall have been satisfied in full and prior to the satisfaction of all liabilities under the Plan at least implied the right to reversion in Gulf. We consider now whether any other language in the Plan limited or prohibited that right.