Opinion ID: 176713
Heading Depth: 1
Heading Rank: 3

Heading: analysis

Text: The Supreme Court has noted the centrality of ERISA's object of protecting employees' justified expectations of receiving the benefits their employers promise them. Cent. Laborers' Pension Fund v. Heinz, 541 U.S. 739, 743, 124 S.Ct. 2230, 159 L.Ed.2d 46 (2004). In keeping with this object, the substantive protections of ERISA are designed largely `to safeguard the financial integrity of employee benefit funds, to permit employee monitoring of earmarked assets, and to ensure that employers' promises are kept.' Alexander v. Brigham & Women's Physicians Org., Inc., 513 F.3d 37, 43 (1st Cir.2008) (quoting Belanger v. Wyman-Gordon Co., 71 F.3d 451, 454 (1st Cir.1995)). To that end, ERISA memorializes an anti-cutback rule, which provides in relevant part: Decrease of accrued benefits through amendment of plan (1) The accrued benefit of a participant under a plan may not be decreased by an amendment of the plan, other than an amendment described in section 1082(d)(2) or 1441 of this title. (2) For purposes of paragraph (1), a plan amendment which has the effect of  . . . (B) eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment shall be treated as reducing accrued benefits. 29 U.S.C. § 1054(g). A counterpart provision of the Internal Revenue Code mirrors this ERISA provision. See 26 U.S.C. § 411(d)(6)(B)(ii). The theme of the plaintiff's claim is that the December 2004 plan amendments eliminating the transfer option contravene this rule. A principal difficulty with this argument is that the Treasury Department, acting under a lawful delegation of authority from Congress, see id., has carved a number of exceptions out of the rule. Regulations lawfully promulgated by the Secretary of the Treasury (the Secretary), which interpret the anti-cutback rule, command an appreciable measure of judicial deference. See Cent. Laborers' Pension Fund, 541 U.S. at 747, 124 S.Ct. 2230; Hoult v. Hoult, 373 F.3d 47, 54-55 (1st Cir.2004). Included in the compendium of relevant Treasury Department regulations is a clear grant of safe passage for plan amendments that eliminate transfer options (even when the elimination may have the incidental effect of reducing benefits). The regulation states: Q-2. To what extent may section 411(d)(6) protected benefits under a plan be reduced or eliminated? . . . A-2. (b)(2)(viii) Provisions for transfer of benefits between and among defined contribution plans and defined benefit plans. A plan may be amended to eliminate provisions permitting the transfer of benefits between and among defined contribution plans and defined benefit plans. 26 C.F.R. § 1.411(d)-4, Q & A-2(b)(2)(viii). In this instance, both the profit-sharing plan and the retirement plan were amended to eliminate provisions permitting the transfer of benefits from one plan to the other. At first blush, then, resolving this case seemingly requires only that we travel the path that the Secretary already has beaten. The question posed here directly tracks Q-2 of the regulation: did the defendants violate the anti-cutback rule, ERISA § 204(g), by eliminating the transfer option, when that elimination had the incidental effect of significantly lowering the plaintiff's projected benefit? The answer, a clear no, directly tracks the teachings of A-2: [a] plan may be amended to eliminate provisions permitting the transfer of benefits between and among. . . plans, even if that elimination reduces an accrued (but unclaimed) benefit. Accordingly, as the district court recognized, the regulation insulates the challenged plan amendments from the anti-cutback rule. In an effort to blunt the force of this reasoning, the plaintiff posits that a series of obstacles block the path illuminated by the regulations. Before us, his primary contention is that other language in the relevant regulations has a limiting effect. He suggests that this language, which describes the authority exercised by the Secretary in promulgating the regulations, bars a plain meaning interpretation of the transfer option exception. This language reads in pertinent part: In general. The Commissioner may, consistent with the provisions of this section, provide for the elimination or reduction of section 411(d)(6) protected benefits that have already accrued only to the extent that such elimination or reduction does not result in the loss to plan participants of either a valuable right or an employer-subsidized optional form of benefit where a similar optional form of benefit with a comparable subsidy is not provided or to the extent such elimination or reduction is necessary to permit compliance with other requirements of section 401(a). . . . 26 C.F.R. § 1.411(d)-4, Q & A-2(b)(1). Specifically, the plaintiff asserts that the qualification that exceptions not result in the loss to plan participants of either a valuable right or an employer-subsidized optional form of benefit precludes a reading of the transfer option exception that allows the reduction of an accrued benefit. This asseveration is brand, spanking new. The plaintiff did not advance any argumentation based on this language in the district court. That omission works a forfeiture of the argument here. United States v. Leahy, 473 F.3d 401, 409-10 (1st Cir.2007); Clauson v. Smith, 823 F.2d 660, 666 (1st Cir.1987). The fact that, in the court below, the plaintiff challenged the defendants' reading of the regulation on a different theory does not preserve the new argument that he proffers here. See Cochran v. Quest Software, Inc., 328 F.3d 1, 11 (1st Cir.2003) (explaining that a party may not advance for the first time on appeal either a new argument or an old argument that depends on a new . . . predicate); Clauson, 823 F.2d at 665-66 (similar). We review forfeited claims for plain error  a hard-to-meet standard that is not appellant-friendly. Dávila v. Corporación de P.R. Para La Difusión Pública, 498 F.3d 9, 14 (1st Cir.2007). [W]e will resuscitate a forfeited argument only if the appellant demonstrates that `(1) an error occurred (2) which was clear or obvious and which not only (3) affected the [appellant's] substantial rights, but also (4) seriously impaired the fairness, integrity, or public reputation of the judicial proceedings.' Id. at 14-15 (quoting United States v. Duarte, 246 F.3d 56, 60 (1st Cir.2001)). We assume, for argument's sake, that plain error review is available here. [3] The plaintiff's suggestion that this earlier language somehow derails a straightforward application of the transfer option exception cannot satisfy this uncompromising standard. Section 1.411(d)-4, Q & A-2(b)(2)(viii) asks and answers the precise question on which the plaintiff's claim turns. It states unambiguously that transfer options may be eliminated even if such an action reduces a section 411(d)(6) benefit. We cannot say that, by applying this clear, direct language, according to its tenor, the district court committed an obvious error. The separate language of section 1.411(d)-4, Q & A-2(b)(1) does not change this calculus. The most that can be said is that section 1.411(d)-4, Q & A-2(b)(1) might help to support a challenge to the reasonableness of the transfer option exception. But the plaintiff acknowledged below that he was not making a reasonableness challenge, see Tasker, 2009 WL 4669936, at , so any such challenge is deemed waived. See Redondo-Borges v. U.S. Dep't of HUD, 421 F.3d 1, 6 (1st Cir.2005). Lastbut far from leasteven if we were inclined to overlook this waiver and inquire into the Secretary's authority to promulgate the transfer option exceptionand we are notthe answer to such a query would fail to demonstrate plain error. The Secretary has the ultimate authority to interpret the[] overlapping anti-cutback provisions of ERISA and the Internal Revenue Code. Cent. Laborers' Pension Fund, 541 U.S. at 747, 124 S.Ct. 2230. It is not obvious that the Secretary's broad authority falls short of encompassing the regulation at issue here. The plaintiff advances two other bases for reading section 1.411(d)-4, Q & A-2(b)(2)(viii) more narrowly than its language suggests. Both of these theories were preserved below. To begin, the plaintiff asks us to interpret the transfer option exception as permitting only the elimination of transfer options themselves. Under this reading, the transfer is the protected benefit, and any other diminutions resulting from that elimination remain prohibited by the anti-cutback rule. This reading is implausible. The anti-cutback rule describes with specificity the set of benefits that it safeguards: accrued benefits, early retirement benefits, retirement-type subsidies, and optional forms of benefits. See 26 U.S.C. § 411(d)(6); 29 U.S.C. § 1054(g). The rule does not afford protection for ancillary benefits, ... or any other benefits that are not described in section 411(d)(6). 26 C.F.R. § 1.411(d)-3(b)(3)(i). The described set of protected benefits does not include transfer options. Consequently, the transfer option is an ancillary benefit that may lawfully be eliminated through a permitted plan amendment (such as an amendment defenestrating a transfer option). The text of the regulation reinforces this interpretation of protected benefits. Under that phraseology, protected benefits may be reduced or eliminated by an amendment that eliminate[s] provisions permitting the transfer of benefits between and among defined contribution plans and defined benefit plans. Id. § 1.411(d)-4, Q & A-2(b)(2)(viii). The only sensible construction of this language is that even protected benefits may be reduced or eliminated to the extent that the reduction or elimination occurs as an incidental effect of eliminating a transfer option. The limitation that the plaintiff advocatesthat reductions resulting from the elimination of transfer options are still prohibitedis nowhere contained in the text of the regulation itself. This is especially significant because the Secretary did include similar restrictions in other parts of the same regulations. See, e.g., 26 C.F.R. § 1.411(d)-4, Q & A-2(a)(3)(ii) (explicitly limiting the permissible reductive effect of modifications to options to receive annuities as cash payments). That no such language limits the reductive effects of the elimination of a transfer option favors the conclusion that no such circumscription was meant. See Barnhart v. Sigmon Coal Co., 534 U.S. 438, 452, 122 S.Ct. 941, 151 L.Ed.2d 908 (2002) ([I]t is a general principle of statutory construction that when Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.) (internal quotations omitted); Morales v. Sociedad Española de Auxilio Mutuo y Beneficencia, 524 F.3d 54, 59 (1st Cir.2008) (explaining that canons of statutory construction are fully transferable to the construction of regulations); see also United States v. DiTomasso, 621 F.3d 17, 23-24, 2010 WL 3718849 (1st Cir.2010) [No. 08-2567]. The plaintiff's last argument is equally unavailing. He insists that, notwithstanding the language of section 1.411(d)-4, Q & A-2(b)(2)(viii), two other Treasury regulations forbid the elimination of a transfer option when doing so would result in a reduction of an accrued benefit. The first of these regulations states in pertinent part: The prohibition against the reduction or elimination of section 411(d)(6) protected benefits already accrued applies to plan mergers, spinoffs, transfers, and transactions amending or having the effect of amending a plan or plans to transfer plan benefits. Thus, for example, ... if an employee's benefit under a defined contribution plan is transferred to another defined contribution plan (whether or not of the same employer), the optional forms of benefit available with respect to the employee's benefit accrued under the transferor plan may not be eliminated or reduced except as otherwise permitted under this regulation. 26 C.F.R. § 1.411(d)-4, Q & A-2(a)(3)(i). The second regulation states in pertinent part: Section 411(d)(6) protected benefits may not be eliminated by reason of transfer or any transaction amending or having the effect of amending a plan or plans to transfer benefits. Thus, for example, except as otherwise provided in this section, an employer who maintains a money purchase pension plan that provides for a single sum optional form of benefit may not establish another plan that does not provide for this optional form of benefit and transfer participants' account balances to such new plan. Id. § 1.411(d)-4, Q & A-3(a). In the plaintiff's view, his situation is analogous to the situations described in these regulations because, in 2004, his annuity was estimated at $4,163.92 per month (if he used the transfer option full-scale), yet in 2008, after the transfer option was eliminated, his annuity was estimated at only $2,200 per month. If these other regulations mean what they say, the plaintiff asserts, the elimination of his option to transfer funds from his profit-sharing plan account to the retirement plan (and, thus, secure the higher annuity) must constitute a violation of the anti-cutback rule. The plaintiff's indignation is understandable, but his reliance on the cited regulations is misplaced. They merely recapitulate the anti-cutback rule, illustrating its application to plan mergers, transfers, and amendments. They do not deal, directly or inferentially, with the transfer option exception. To construe these general regulations to override a separate, highly specific regulation that clearly and unambiguously permits the elimination of a transfer option even when that elimination would have the incidental effect of reducing an accrued benefit would turn the regulatory scheme on its head. It is a conventional canon of legal interpretation that specific provisions trump more general ones, Harry C. Crooker & Sons, Inc. v. OSHRC, 537 F.3d 79, 84 (1st Cir.2008), and that canon applies here. This sockdolager is the inclusion, in the general regulations cited by the plaintiff and reproduced above, of the phrases except as otherwise provided in this section and except as otherwise permitted in this section. The elimination of transfer options is otherwise provided by section 1.411(d)-4, Q & A-2(b)(2)(viii) and, accordingly, plan amendments eliminating transfer options are otherwise permitted, even if their effect is to shrink accrued benefits. To sum up, none of the pitfalls proposed by the plaintiff would justify us in abandoning the path demarcated by the regulations. The only reasonable conclusion that can be drawn is that section 1.411(d)-4, Q & A-2(b)(2)(viii) permitted the defendants to eliminate the transfer option.