Opinion ID: 6492
Heading Depth: 3
Heading Rank: 1

Heading: e., as of December 31, 1986.

Text: After Rexene had submitted its amendments to the IRS for approval, however, outside counsel advised that it would be preferable instead to value the contribution as of the date it was - 10 - contributed to the trustee. As discussed infra, he advised that the contribution be re-appraised, to determine its value as of May 31, 1987, the last day of the month in which the stock certificate representing the 1986 contribution was delivered to the Bank. Using the May valuation date resulted in an appraisal of $158.37 per share, or approximately $16.2 million overall.10 Using this value caused only 11,775 shares to be allocated, with the remaining 90,019 being placed in the suspense account. Again, this allocation was significantly less than the amount that could have been allocated (even using the higher valuation) without violating § 415. Plan participants were advised of the new valuation by a bulletin board notice dated March 11, 1988. The notice also stated that the IRS had approved a revised allocation method for the 1986 contribution, and that the change was required by law. Finally, in early 1988, shares were allocated under the 6.32% formula, and statements distributed to participants, for Plan year 1986.11 When Rexene was sold in April 1988, the 90,019 suspense account shares were sold, with the Plan receiving $203.95 per share. These proceeds were allocated among all participants for Plan years 1987-1991, using the Fourth Amendment formula. In all, 10 As discussed infra, the higher the value attributed to the contribution, the larger the tax deduction for Rexene. The value of the contributed shares thus affected Rexene's value. As also noted, however, Rexene contends that this was not its primary motivation either in deciding to amend the Plan, or in deciding when to value the stock. 11 For its 1986 tax return, filed in September 1987, Rexene had taken a deduction for the 25,580 shares, using the more conservative $76.34 valuation. - 11 - 1986 participants received the equivalent of 82,248 of the 101,794share 1986 contribution. Plaintiffs -- 1986 participants -- brought this action in February 1991, under ERISA § 502, 29 U.S.C. § 1132.12 See, e.g., Christopher v. Mobil Oil Co., 950 F.2d 1209, 1220 (5th Cir.), cert. denied, ___ U.S. ___, 113 S. Ct. 68 (1992) (discussing § 1132, which provides for civil actions under ERISA). They sought to enforce ERISA § 204(g), 29 U.S.C. § 1054(g) (anti-cutback provision), and §§ 404 and 405, 29 U.S.C. §§ 1104, 1105 (fiduciary duty provisions). They claim, inter alia, that Rexene, the Corporation, and the Bank breached their fiduciary duties and violated ERISA's benefits protection provisions by failing to follow the Plan, amending the Plan, and re-valuing the 1986 contribution; and that this reduced the accrued benefits for 1986 participants. (The Plan was also named as a defendant, for the limited purpose of effectuating whatever relief was granted. The Plan, Rexene, and the Corporation are the Rexene defendants.) During a bench trial, at the conclusion of plaintiffs' case, the district court granted the Bank judgment as a matter of law. After trial, it held against the Rexene defendants, based on finding that the 1986 contribution was contributed on March 2, 1987, and accrued then, at the $76.34 value. In the alternative, 12 Several months after suit was filed, Rexene and the Corporation filed for bankruptcy. While the bankruptcy was pending, the district court certified the class, denied Rexene and the Corporation summary judgment, and stayed the case pending resolution of the bankruptcy proceedings. In April 1992, the bankruptcy court granted plaintiffs' motion to lift stay, and later did so to permit this appeal. - 12 - it found that the contribution accrued when Rexene gave participants the information necessary to calculate their individual balances. (The first bulletin board notices stating that participants would receive approximately one share for each $303 of 1986 compensation were posted in March 1987.) The court concluded that these accrued benefits were decreased by the Fourth Amendment, in violation of ERISA's anti-cutback provision, 29 U.S.C. § 1054, and in violation of Rexene's fiduciary duty under ERISA, 29 U.S.C. § 1104. The Rexene defendants moved to modify the judgment, or in the alternative for new trial; plaintiffs, to amend the findings of fact and conclusions of law. The district court entered amended conclusions of law and findings of fact, and denied the new trial. In an amended judgment, it awarded plaintiffs $4,807,636, together with $1,786,689 for lost interest and earnings, and $594,856.15 for attorneys' fees and costs. The award was offset partially by a credit awarded Rexene for the portions of the 1986 contribution allocated to 1986 participants post-Plan year 1986. Finally, the court denied the Bank attorney's fees.