Opinion ID: 796835
Heading Depth: 3
Heading Rank: 4

Heading: analysis

Text: 34 It is well-settled that [t]he role of the courts in interpreting a statute is to give effect to Congress's intent. Rosenberg v. XM Ventures, 274 F.3d 137, 141 (3d Cir.2001). When interpreting statutes or regulations, the first step is to determine whether the language at issue has a plain and unambiguous meaning. Dobrek v. Phelan, 419 F.3d 259, 263 (3d Cir.2005). Because it is presumed the Congress expresses its intent through the ordinary meaning of its language, every exercise of statutory interpretation begins with an examination of the plain language of the statute. Rosenberg, 274 F.3d at 141. [T]he plain meaning of statutory language is often illuminated by considering not only the particular statutory language at issue, but also the structure of the section in which the key language is found, the design of the statute as a whole and its object.... Alaka v. Attorney General, 456 F.3d 88, 104 (3d Cir.2006) (internal quotation marks omitted); see also King v. St. Vincent's Hosp., 502 U.S. 215, 221, 112 S.Ct. 570, 574, 116 L.Ed.2d 578 (1991) (a statute is to be read as a whole . . . since the meaning of statutory language, plain or not, depends on context); M.A. ex rel. E.S. v. State-Operated Sch. Dist. of Newark, 344 F.3d 335, 348 (3d Cir.2003) (holding that it would be a mistake to squint[ ] myopically at the phrase in question and interpret it in isolation rather than in the context of the text and structure of the statute as a whole). Where the statutory language, on examination of the language itself, the specific context in which that language is used, and the broader context of the statute as a whole is plain and unambiguous, further inquiry is not required. Rosenberg, 274 F.3d at 141. 35 The requirement that [s]tatutes must be interpreted to receive a sensible construction, limiting application so as not to lead to injustice and oppression ... also guides us. Evcco Leasing Corp. v. Ace Trucking Co., 828 F.2d 188, 195 (3d Cir.1987). In this light, [s]tatutes should be interpreted to avoid untenable distinctions and unreasonable results whenever possible. American Tobacco Co. v. Patterson, 456 U.S. 63, 71, 102 S.Ct. 1534, 1538, 71 L.Ed.2d 748 (1982). 36 With these principles in mind, we again set forth the defined benefit plan anti-discrimination provision at issue: 37 [A] defined benefit plan shall be treated as not satisfying the requirements of this paragraph if, under the plan, an employee's benefit accrual is ceased, or the rate of an employee's benefit accrual is reduced, because of the attainment of any age. 38 29 U.S.C. § 1054(b)(1)(H)(i) (emphasis added). As we discussed at length above, the age discrimination component of this case comes down to the meaning of benefit accrual as applied to cash balance plans. ERISA does not define the phrase, and its plain meaning is not evident from the particular language at issue. However, while the meaning of that phrase may not be evident from a reading of the words benefit accrual in isolation, a consideration of the context in which Congress used the words and the object of the ERISA anti-discrimination provisions makes its meaning clear. 39 By engaging in this exercise in considering context, we reach the same conclusion as that of the court of appeals in Cooper for the reasons that follow. First, as we have explained, cash balance plans define the benefit in terms of a stated account balance, not as a series of monthly payments for life to begin at retirement like a traditional defined benefit plan. Burstein, 334 F.3d at 370 n. 6. Thus, the benefit as used in the phrase benefit accrual refers to the stated account balance as that is how the benefit is defined by cash balance plans. Once this proposition is grasped, it becomes clear that the accrual of benefit in section 1054(b)(1)(H)(i) refers to the credits deposited into the participant's cash balance accounts, i.e., the inputs. If we concluded otherwise we simply would ignore the characteristic of a cash balance plan distinguishing it from a traditional defined benefits plan, i.e., that a cash balance plan account is defined in terms of a stated account balance. Contrary to appellants' assertions, we do not believe that a cash balance plan's technical classification as a defined benefit plan compels us to disregard this critical distinction and thereby unreasonably interfere with employers in the crafting of pension plans. 11 40 Second, a comparison of the parallel defined benefit plan and defined contribution plan anti-discrimination provisions reinforces our interpretation. This comparison is particularly relevant in that both cash balance plans and defined contribution plans are defined in terms of their stated account balances, albeit one is hypothetical and the other is cash. In comparing the two anti-discrimination provisions, we agree with the analysis and conclusion reached by the court of appeals in Cooper. The provisions are nearly identical and prohibit the same behavior, i.e., the employer can't stop making allocations (or accruals) to the plan or change their rate on account of age. Cooper, 457 F.3d at 638. In this regard we point out that under ERISA section 204(b)(2)(A) a defined contribution plan is not age discriminatory if the rate at which amounts are allocated to the employee's account is not reduced, because of the attainment of any age. 29 U.S.C. § 1054(b)(2)(A). The PNC plan does not make such a reduction. Rather, the PNC plan calculates earnings credits based on points allocated for combined age and years of service 12 and interest credits with identical rates credited into the participants' accounts regardless of their age. 41 Contrary to appellants' assertions, there is simply no evidence that, by prohibiting discriminatory allocat[ions] in one provision and accrual[s] in the other, Congress intended to provide different metrics for detecting discrimination. Such a construction would lead to a result that is not sensible. The effect of the cash balance design that appellants challenge (the accumulation of interest) is identical to the accumulation of interest on employer contributions under defined contribution plans. Accordingly, employer contributions in both instances ultimately are more valuable when those contributions are made to younger employees as the contributions have a longer time to grow. That unremarkable consequence of a contribution growing in value because of earnings on it is no different than that when a bank deposit is drawing interest. The longer the deposit remains in the bank in an interest bearing account, the more it is worth. We do not find any support for appellants' argument that Congress wanted to prohibit such a consequence with respect to cash balance plans, but legitimize it for defined contribution plans. Rather, the similarities of the anti-discrimination provisions governing defined benefit and defined contribution plans suggest that Congress was not seeking to prohibit the consequences of the time value of money in either circumstance, and appellants have not offered a reasonable explanation of why Congress would have wanted to do so. 42 While we agree with appellants that we are not permitted to rewrite a statute and we must adhere to the statutory text applicable to defined benefit plans, we have not rewritten anything here. The fact is that even though a cash balance plan's classification as a defined benefit plan is important, it is also important that it be understood that cash balance plans include attributes of both defined benefit and defined contribution plans. It seems to us that when dealing with a hybrid plan subject to defined benefit plan rules, a court should look to the parallel defined contribution plan anti-discrimination provision to clarify the meaning of benefit accrual within the cash balance plan context. Contrary to appellants' assertions, in doing so, we are not reclassifying cash balance plans as defined contribution plans nor are we ignoring the language of the statute, but, instead, we are looking to the parallel anti-discrimination provisions because the plain meaning of statutory language is often illuminated by considering not only the particular statutory language at issue, but also the structure of the section in which the language is found, the design of the statute as a whole and its object.... Alaka, 456 F.3d at 104 (internal quotation marks omitted). This is a fundament of statutory interpretation. 43 Finally, in our analysis of the discrimination issue we address appellants' remaining arguments (and those accepted by the minority courts). First, contrary to appellants' contention, accrued benefit, which section 1002(23)(A), defines as an annual benefit commencing at normal retirement age, is simply not the same thing as benefit accrual. We find no indication that Congress intended that courts and administrators use these phrases interchangeably. Additionally, we agree with the court of appeals in Cooper that [t]he phrase `benefit accrual' reads most naturally as a reference to what the employer puts in . . ., while the defined phrase `accrued benefit' refers to outputs after compounding. Cooper, 457 F.3d at 639. 44 Moreover, we are not persuaded by the appellants' position that the result we reach runs contrary to employee expectations, which, according to appellants, focuses on their retirement annuity and not their account balance. We have examined the summary plan description PNC distributed relating to the cash balance plan as this document provides the best insight into what the employees should expect from the plan. The plan description reveals the following. Each quarter, [the employees will] receive a statement showing the value of [their] account[s], including Earnings Credits and Interest Credits, app. at 224, which allows [the employees] to watch [their] retirement benefits grow from year to year, just as [they] do with [their] [Incentive Savings Plan] account, id. at 221. At the time an employee leaves PNC, so long as he is vested he has immediate access to his account balance and may take the cash balance account value either in the form of a lump sum payment (subject to income taxes and possibly penalties) or, at his election receive monthly annuity payments. Id. at 222, 229. It is clear from the summary plan description that the credit accruals in the cash balance account provided to each employee on a quarterly basis, and not the prospective (and optional) conversion to an age-65 annuity, best defines what the employees should expect from the PNC plan. In sum, we find that PNC's cash balance plan does not discriminate against participants because of age in violation of section 1054(b)(1)(H)(i). As the district court put it in Eaton, [t]he concept of the `benefit of accrual rate' does not have a single, self-evident meaning, especially in the complex world of pension plan regulation. Eaton, 117 F.Supp.2d at 830. 45 In applying the anti-discrimination provision in the context of cash balance plans, which defines the benefit in terms of the cash balance account, we are concerned with what PNC puts into an employee's account, not what the employee eventually may obtain from the plan on retirement. In evaluating the plan's inputs, PNC does not reduce contributions (in the form of either earnings or interest credits) to older employees. The circumstance that the same contribution in the form of interest credits may result in a more valuable annuity for a younger employee is not discrimination in whole or in part based on age; rather it is the completely appropriate consequence of the application of an age-neutral principle to an accumulating account of the time value of money. The fact is that rather than we rewriting the statute, it is the appellants that are doing so in order to accommodate their position. As is our obligation we are honoring the intent of Congress in reaching our result. 46