Opinion ID: 494615
Heading Depth: 1
Heading Rank: 1

Heading: the asset transfer suit

Text: 17 Vornado concedes that ERISA does not give an employer an absolute right to require a transfer of assets, but contends that the statute does provide a mechanism through which an employer may propose a transfer and have its request judged by a standard that is not unreasonably restrictive. Defendants, supported by amicus curiae, the Pension Benefit Guaranty Corporation, argue that ERISA does not require adoption of rules that permit an employer to obtain a transfer of assets and liabilities. 18 Section 4234(a) of ERISA provides in pertinent part: 19 A transfer of assets from a multiemployer plan to another plan shall comply with asset-transfer rules which ... 20 (1) do not unreasonably restrict the transfer of plan assets in connection with the transfer of plan liabilities, and 21 (2) operate and are applied uniformly. (with exceptions not relevant here) 22 29 U.S.C. Sec. 1414(a). 23 The district court succinctly stated the parties' conflicting readings of the statute. Plaintiffs contended that any asset transfer rules must be reasonable or to paraphrase the statute, cannot unreasonably restrict the transfer of assets and liabilities. Defendants, however, insisted that Sec. 1414 does not require the rules to permit the reasonable transfer of assets and liabilities, but only provides that if liabilities are transferred, the rules cannot unreasonably restrict a concomitant transfer of assets. 24 The difference between the contentions of the two parties is subtle but significant. Vornado argues that the required rules should govern all transfers of assets and liabilities. The trustees' reading of the statute, however, focuses on the phrase in connection with and comes to the conclusion that, only after the trustees have independently decided to transfer liabilities, must they apply rules which do not unreasonably restrict the transfer of assets together with those liabilities. 25 To resort to a description overused but cherished by legal writers, the statute is not a model of clarity. Although both sides can muster respectable argument, we are persuaded that the district court made the right choice. 26 The light of statutory purpose removes many of the shadows cast by otherwise ambiguous language. Title 29 U.S.C. Sec. 1414 is part of the Multiemployer Pension Plan Amendments Act, enacted by Congress in 1980 after the Pension Benefit Guaranty Corporation conducted a study of the difficulties faced by multiemployer plans. Withdrawals of contributors and transfers between funds had seriously affected the financial stability of these plans and had placed an increasing burden on the Pension Benefit Guaranty Corporation. Although the sparse legislative history of Sec. 1414 offers no help, the amendments as a whole clearly were meant to facilitate effective plan management and protect the interests of beneficiaries and participants. 27 Some significance lies in the fact that the statute refers to asset transfer rules, and not to asset and liability transfer rules. The statutory phrase in connection with may not be overlooked either. See Bell v. United States, 754 F.2d 490, 498-99 (3d Cir.1985); 2A Sutherland's Statutory Construction Sec. 46.06 (4th ed. 1984). (Every word should be given effect). Under Vornado's reading, in connection with becomes meaningless, adding nothing to the statute. 28 Other provisions of these same amendments show that Congress specified assets and liabilities in the conjunctive when that was its intent. For example, 29 U.S.C. Sec. 1415, governing the transfer of one plan to another because of a change in collective bargaining representation, provides that the old plan shall transfer assets and liabilities to the new plan. 29 Similarly, 29 U.S.C. Sec. 1412(c)(3) provides that in the case of certain transfers of liabilities from a multiemployer to a single-employer plan, the multiemployer plan shall not be liable to the Pension Benefit Guaranty Corporation if the assets also transferred were at a specified level. Section 1412 contains requirements designed to safeguard the interests of the beneficiaries, participants, and the contingent interest of the Pension Benefit Guaranty Corporation in the solvency of the plans. Thus, the structure of subsection (c)(3) is similar to the construction the district court gave to Sec. 1414. 3 30 The 1980 amendments provided that under Sec. 1411 a plan sponsor (the trustees) may cause a multiemployer plan to merge with another only if it complies with regulations of the Pension Benefit Guaranty Corporation, the benefits of participants are not adversely affected, and other statutory conditions are observed. Significantly, none of these sections evidences any inclination to require transfers at the instance of employers. A transfer is mandatory only when the collective bargaining representation has changed--an action taken by employees, not the employer. The provisions controlling transfers demonstrate congressional concern that plan insolvency may adversely affect the beneficiaries or employees, or require payments of benefits by the Pension Benefit Guaranty Corporation. 31 The plaintiffs' interpretation of Sec. 1414, however, would have the ultimate effect of requiring trustees to permit the transfer of liabilities and assets at the request of an employer when the circumstances came within the reasonable rules promulgated by the trustees. Thus, the trustees' discretion would be narrowed by rules which, although seemingly satisfactory at the time of enactment, might prove disadvantageous to the fund in particular circumstances. That undeniable shift in initiative from trustee to employer is inconsistent with the thrust of the 1980 amendments; they emphasize the interests of the beneficiaries and the Pension Benefit Guaranty Corporation, and lack any suggestion that Congress intended to increase the power of contributing employers. 32 The district judge's ruling leaves the possibility of a transfer of liabilities, with a concomitant transfer of assets, to the discretion of the trustees, acting in accordance with their fiduciary obligations and the statutory requirements. We believe this result comports with the congressional intent behind the 1980 amendments. 33 We are not persuaded by the plaintiffs' contention that this interpretation gives the trustees total discretion because they could refuse any liability transfer and thus avoid all asset transfers. The trustees must reach all decisions guided by their fiduciary responsibilities; they must consider the welfare of the fund and the beneficiaries and are not free to reject all proposed transfers. 34 In reaching his conclusion, the district judge felt that he owed great deference to the interpretation advanced by the Pension Benefit Guaranty Corporation, which presented its views as amicus curiae. We have reached our conclusion, however, on the basis of our independent judgment, exercising a plenary review of the purely legal questions presented. The Pension Benefit Guaranty Corporation's views have been helpful and informative, but we do not defer to its opinion in the sense that the result we reach is anything other than our own view of the proper interpretation of the statute. We acknowledge our duty to interpret statutory provisions and do not yield that responsibility to an entity outside the judicial branch. See Pension Benefit Guaranty Corp. v. Heppenstall Co., 633 F.2d 293 (3d Cir.1980); cf. United Steelworkers v. Harris & Sons Steel Co., 706 F.2d 1289 (3d Cir.1983).