Document: 446 U.S. 359 100 S.Ct. 1723 64 L.Ed.2d 354 NACHMAN CORPORATION, Petitioner,v.PENSION BENEFIT GUARANTY CORPORATION et al. No. 78-1557. Argued Jan. 7, 1980. Decided May 12, Rehearing Denied June 30, See 448 908, 3051. Syllabus * As one of the means protecting interests beneficiaries under private pension plans for employees, Title IV Employee Retirement Income Security Act 1974 (ERISA) created a plan termination insurance program that became effective in four successive stages. Section 4022(a) provides if benefits are "nonforfeitable" they insured by respondent Pension Benefit Guaranty Corporation (PBGC), and § 4062(b) PBGC has right to reimbursement from employer paid cover nonforfeitable benefits. 3 I ERISA "[f]or purposes this title [t]he term 'nonforfeitable' when used with respect benefit or claim obtained participant his beneficiary part an immediate deferred which arises participant's service, is unconditional, legally enforceable against plan." Petitioner employer, pursuant collective-bargaining agreement, established covering employees represented union at petitioner's plants, contained clause limiting benefits, upon plan, assets fund. Petitioner, closing such plant, terminated day before January 1, 1976, date on much effective, time fund were sufficient pay only about 35% vested those entitled thereto. thereafter filed action Federal District Court seeking declaration it no liability any failure all full, order enjoining taking actions inconsistent declaration. Granting summary judgment petitioner, held limitation was valid prevented issue being characterized as "nonforfeitable." The Appeals reversed, concluding, reliance definition "nonforfeitability," merely affected extent could be collected, without qualifying employees' rights plan. Held : plan's does not prevent thus covered program. Petitioner's argument determines IV, unless "unconditional" "legally plan," because elements satisfied, therefore forfeitable necessarily uninsurable, merit. Such supported literal reading relies, clear language, structure, purpose IV. Pp. 370-386. (a) To view describing quality rather than limit amount he may collect consistent accords interpretation adopted PBGC, agency responsible administering 370-374. (b) There evidence Congress intended exclude otherwise solely had disclaimed deficiency contrary, 4062(b), provision, makes worried terminations resulting business failures but also concerned underfunded plans, here, solvent employers. And fact provision 30% employer's net worth would meaningless direct demonstrates did intend disclaimer render "forfeitable" within meaning 4022. 374-382. (c) proposed construction statute, whereby cost-free authorized prior full promised thereafter, distort orderly phase-in statutory designed Congress. It appears discourage unnecessary even during period place reasonable ceiling potential cost principal life ERISA—the after 1976. 382-386. 592 F.2d 947 (7th Cir.), affirmed. Robert W. Gettleman, Chicago, Ill., petitioner. Henry Rose, Washington, D. C., Corp. M. Jay Whitman, Detroit, Mich., UAW. Mr. Justice STEVENS delivered opinion Court. 1 On September 2, 1974, following almost decade studying Nation's enacted (ERISA), 88 Stat. 829, 29 U.S.C. 1001 seq. predicate comprehensive reticulated statute,1 made detailed findings recited, part, "that continued well-being security millions their dependents directly these plans; [and] owing requisite funds have been accumulated, deprived anticipated . ." 2(a), 1001(a). beneficiaries, question case whether former petitioner fully notwithstanding 2 Stated terms, limits defined, amounts can provided prevents ERISA, 1322(a).2 If "nonforfeitable," (PBGC) IV.3 payable employer.4 interest avoiding gave rise declaratory injunctive relief. relevant facts undisputed. In 1960, its Chicago plant. amended time, payment monthly computed basis age years service retirement.5 Benefits "vested"—that say, employee's survive employment—after either 10 15 service. 15-year vesting provisions complied minimum standards become 1976,6 4 agreed to, did, make regular contributions accruing liabilities, administrative expenses, amortize past over 30-year period.7 Consistent agreement accepted actuarial practice, completely funded until 1990. 5 retained terminate expired giving 90 days' notice intent do so. specified available funds, distributed classified seniority, available. critical Art. V, 3, stated: 6 "Benefits herein shall event Plan, there obligation Company further Trustee except contributions, any, termination, then accrued unpaid. App. 24.8 7 1975 decided close Its October 31, 1975, persons employed plant December required significant changes least At 135 average value approximately $77 per month. Those concededly "vested contractual sense."9 8 1976 contentions judgment. 436 F.Supp. 1334 (ND Ill.1977). 9 Seventh Circuit reversed. (1979). Relying ERISA,10 court concluded This conclusion buttressed review legislative history Judge Sprecher noted words "vested" interchangeably throughout congressional reports debates, specific protect kind risk presented here (insufficient termination), contrary holding "would totally subvert intent."11 Having construed statute confront Constitutional imposition retroactive unfunded, assumed violates Due Process Clause Fifth Amendment. wholly prospective applies existence Act. concluded, however, adequately tempered Act's burdens employers sufficiently justified public supporting legislation.12 11 petition certiorari sought both constitutional properly impose continuing lawfully ERISA. We granted certiorari, limited our question. 442 940, 99 2881, 61 310. 12 urges us adopt avoid necessity confronting questions,13 correctly points out new rules applying "should applied retroactively legislature plainly commanded result." Los Angeles Dept. Water & Power v. Manhart, 435 702, 721, 98 1370, 1382, 55 657. But reversal relies primarily language I, see n. 10, supra. Since expressly states "shall fund," argues satisfied. Therefore, uninsurable. Thus, concludes, liable anyone fund's inability submits result consonant Congress' decision postpone funding requirements interprets postponement having intended, among other things, allow opportunity harsh consequences statute's application freely terminating date. 13 must reject argument. first note supra, 365, read whole, disclaims imposes condition 8, 17, infra. purely structure we construe containing clause, cannot accept virtually eviscerating four-stage Congress, extraordinarily unintended burden operation consider textual divorced whole; next examine IV; finally explain how 14 "nonforfeitable terms plan" concedes sense." though insufficient them. key term, benefits," nowhere defined 3(19), definitions section applicable introductory phrase, "For title."14 Nothing tells why disclose, earlier versions what emerged unquestionably stake litigation, entire including provisions.15 assume original apply survived unexplained form definition, should likewise change substantive coverage Indeed, demonstrate,16 latter assumption history. assuming, arguendo, controls less is, three aspects itself refute character determined focusing assets. 16 First, subject word "claim"; benefit, itself, self-evident remain though, practical matter, collectible obligor. 17 Second, refers enforceability "the significance provide protection employer. With more hand. Giving qualify beneficiary's itself.17 18 Third, "forfeiture" normally connotes total loss consequence some person's rights. Each examples described causing forfeiture listed 203(a)(3), describes event—such death temporary re-employment—that might benefit. surely collect. 19 promulgated regulations unambiguous term18 paying 12,000 participants understanding responsibilities.19 contemporary PBGC20 careful examination underlying insure. II 20 One central enacting complex legislation "great personal tragedy"21 suffered whose terminated.22 found inadequacy current standards, soundness stability adequate endangered; benefits." 832, wanted correct making sure worker retirement—and fulfilled whatever conditions obtain benefit—he actually will receive it. major response problem. schedule prescribed conduct administrators certain possible adequate. nonetheless terminates them—within dollar limitations here—23 corporation. 21 Throughout history, initial proposals Conference Report, legislators consistently class ofpension benefits."24 recognizes, must, synonymously.25 neither uses nor defines "vested,"26 infer describe generally considered statute. normal usage field actual realization expected depend sufficiency assets, vested.27 22 strong contrary. understood ordinarily sort here.28 Given understanding, inapplicable most plans. few covered, providing insolvency.29 23 4062(b)(2), 1362(b)(2), 4, supra provision—demonstrates insolvency certainly focus concern. very 4062(b)(2) requires reimburse employers.30 Of greater worth. contemplates situation liability; deficiency, serve useful purpose.31 That 4022.32 24 meaningful cases involving insolvent liability. clearly shows employers, clauses widely used, ultimately contending create argument, foreclosed consideration increases associated terminations. offer Quite express III 25 previously care approached problem retroactivity U.S., 721-722, 40, S.Ct., 1382. increasingly severe yet carefully impact periods single-employer During each periods, extended same 26 soon 4082(a), 1381(a), indeed partially 4082(b), 1381(b). measure coverage, outset, difference between (subject 4022(b)(3), 23, ) However, 4062, period—June 30 1974. given recover deficiencies effective.33 27 second lasted 270 days enactment end 1975. Again, period. two important additional effective: creating 4004(f)(4), 1009, 1304(f)(4).34 waive entirely, reduce, payments who establish unreasonable hardship situations able, continue effect. 4004(f)(4) unequivocally deliberately imposed nine months pre-existing liability, way mitigate cases, since stop suing directly. Moreover, need insolvency, reason mitigation recovery impossible event. hand, typical protected source 4062's account unsatisfied excluding possibly difference. 28 third seven eligible waiver. contingent smaller fourth period, still measured outer unfunded Had waited another terminate, I's thereby increasing number vested, 6, insurable avoided Under dramatic just described. renders draconian consequences: first, entirely 1976; second, invalid flows command employees. suggesting ever outlaw use clauses.35 inclusion inexplicable deny stress 4062(b)'s occurring light attention various explicit mere transitionary role. bears emphasis declined suggestion corporate committed guarantee obligations exist termination.36 softer measure.37 31 sum, reads authorizing limitations. convinced envisioned quite different scheme. Act—the Although others half seem harsh, doubt intended. give special brief distorting remainder life. Accordingly, 32 Affirmed. 33 STEWART, whom WHITE, POWELL, REHNQUIST join, dissenting. 34 1301 seq., establishes system Title, "guarantee BENEFITS UNDER THE TERMS OF A [COVERED] PLAN WHICH TERMINATES."1 turn, sue company maintained "guaranteed" exceeded assets.2 35 Nachman several petitioner.3 therefore, narrow one: Whether, "under [the Nachman] benefits" excess plan.4 36 benefit" follows:5 37 "The plan."6 38 No contention arise services rendered participants. Rather, that, contested "[c]onditional" and/or [un]enforceable 39 For present purposes, now-terminated considered. sentence Fund." X, 40 "In remaining Fund, expenses Plan Fund allocated sufficient, retirement (Emphasis added.)7 41 These provisions, void termination,8 "conditional" every set hinged ability amount. Like specifically entitlement asset-sufficiency status defrayed assets.9 "condition" determining "nonforfeitability" benefits.10 42 By cited sentences funded. contract law, person pay. receive, particular 43 notes "[i]n unpaid." effect discussed above. purported participants, them concluding plan.11 What misses world Only ERISA.12 44 Three ERISA's strongly support discarded passing alternative insured, like now holds embodies true intent.13 Few principles compelling proposition sub silentio enact favor language. Gulf Oil Copp Paving Co., 419 186, 199-200, 95 392, 400-01, 378. 45 bill enacted, stated guaranteed covered" H.R.Rep.No.93-1280, p. 368 (1974), Leg. Hist. 4635. added.) unconditionally plan.14 46 delayed "minimum standards" "to profit-sharing adjust costs experienced, permit negotiated agreements transpire. S.Rep.No.93-127, (1973), U.S.Code Cong. Admin.News 4872, 622. Disregarding intent, today effectively rewrites promise did. 47 truly supports reached often materials. said significant, usually "vest" eligibility, length kinds conditions, affect determination traditional sense word. 48 many statements relied connection bills 13, bearing case, concerns Many originally passed House Representatives, document later Committee into law bill's standards. H.R. House, 93d Cong., 2d Sess., §§ 203, 409(b)(1) 3973-3979, 4024. id., 3293, 3347-3348 (explanation Chairman Education Labor). so proposed, never scheme substantial portion 49 gap involved (September through 1975) H.R.Conf.Rep.No.93-1280, pp. 48, 245 4323, 4515. discussing bill, Members equated rights.15 suppose refer post-1975 sense, standards.16 50 Finally, Court's assertion, types 1975: (1) All 1974;17 (2) 20% 1974.18 51 reasons discussed, respectfully dissent. 52 53 join STEWART's dissenting add majority opinions turns good faith representing Everyone according otherwise. 54 perfectly clear, me, plain conditioned adequacy acknowledges, condition. contends, ERISA—and respondent's own regulatory "nonforfeitable"—require mandate result. absence expression conclude meant alter arrangements parties. opinion, find ambiguous little beyond resolution case. opinions, affects substantially identical syllabus constitutes prepared Reporter Decisions convenience reader. United States Detroit Lumber 200 321, 337, 282, 287, L.Ed. 499. file periodic Secretary Labor, mandates participation, schedules, fiduciary administrators, civil criminal enforcement II, Internal Revenue Code 1954 pertaining qualification tax treatment, order, conform forth I. III, 3001-3042, 1201 contains coordinate efforts federal departments, study field. And, 4001-4082, lack full. provides, part: "Subject [dollar] subsection [see infra ], [PBGC] (other becoming plan) 4021 it." 1016. 4002(a), 1004, 1302(a), provides: "There Department Labor body known Corporation. carrying functions title, corporation administered chairman board directors accordance policies board. carried corporation, "(1) encourage continuation maintenance voluntary "(2) timely uninterrupted applies, "(3) maintain premiums 4006 lowest level title." 1029, 1362(b), "Any equal lesser of— "(A) "(B) allocable percent words, unable them, Alabama Co. Davis, 431 581, 593, 18, 97 2002, 2009, 595, "[p]etitioner's 'defined benefit' received fixed contribution adjusted necessary basic type contribution' employee receives contributed behalf provide." 4021(b)(1), 1321(b)(1), insufficiency 211(b)(2), 1061(b)(2). early unless, argues, disclaiming 1002(19). discussion Part infra, 384-385. Persons credit employment calculating eligibility pensions retirement. quoting sentences, creates impression Reading together, simply quotes distribution termination. Post, 389-390, 7. purport dissent wrong stating illegal post, 390, 8. superseded, 4044, 1344, 32, Brief 28. 833, 836, 1002, title: "(19) paragraph, derived treated 203(a)(3)." 1053(a)(3), re-employment participant. None relates funding. 203(a) treat virtue 203(a)(2), forfeiture. purports sanction reason, (a)(3), violate 958. "Perhaps distinguishing Minnesota Allied Structural Steel [Co. Spannaus, 438 234, 2716, 57 727] revealing Congressional attempt moderate imposed. represent rational achieve purpose. insure imposing abuses cure included motivated desire Legislative History 4741 (remarks Sen. Williams); 3382 Rep. Gaydos). promises higher bargaining leverage, knowing fulfill promise. S.Rep. 93-383, 1155. believed cause schedule. 1873 Griffin). considerations primary responsibility "Acknowledging verge bankruptcy unlikely take advantage insurance, 1362. devised temper Employers guaranteed. 1322(b)(3). 1323 optional desires grants discretion arrange 1367. Thus unlike statutes invalidated Contract 'limitations amount, circumstances, need.' B. Worthen Thomas, 292 [426,] 434, [816,] 819, [78 1344]. record Steel, 'the presumption favoring "legislative reasonableness measure" ' allowed govern here. 247, 2724. Turner Elkhorn Mining Usery, 428 [1,] 19, 96 2882 [49 752]; Williamson Lee Optical 348 483, 488, 75 461, 464, 563 (1955). satisfies Nachman's Process." F.2d, 962-963 (footnotes omitted). See, e. g., Rescue Army Municipal Court, 331 549, 568-569, 67 1409, 1419-20, 91 1666. (19) reinforced occasionally incorporated reference 4021(a)(1), 1321(a)(1), "this which, year (as paragraph Act). " incorporation suggests elsewhere force, reflect Titles. example, introduced "a legal subsequent receipt flowing right, longer service." 1st 3(20) 94th (Comm.Print 1976) (hereinafter Leg.Hist). nn. 24-27, rely contributions. instead fund" recoverable dissenters presumably agree hinge formal precisely apart dissenters' unavailable regardless full; shortage resulted defalcation trustees fund, unilateral funded, unavailable. text, validity explanation. STEWART "asset-sufficiency limitation," 391, context example explanation force formulation. Merely assert "world difference" forms considering believe availability —is unacceptable approach Understandably, suggest anything turn nonforfeitable, (or beneficiary) satisfied him submission application, retirement, [or] completion waiting C.F.R. 2605.6(a) loses accurately reflects footnote brief, word, "payable," modifies "benefit" disclaimed. chosen strangely vague manner known. Treasury Department's 1.411(a)-4(a) (1979), "Rights partial nonforfeitability recourse toward satisfaction Corporation." Because governed quoted regulation. views, PBGC's approved Department. 36, course, condition, forfeiture, Cf., E. du Pont de Nemours Collins, 432 46, 55, 2229, 2234, 100. quotation statement Senator Bentsen, member Senate Finance active sponsoring reprinted Leg.Hist. 4793. Williams, sponsor version ERISA: "Another expectations illusory shut down, meet claims recourse. "A classic shutdown Studebaker operations South Bend, Ind., 1963, 4,500 workers lost 85 liabilities. "While spectacularly tragic instance, unique. Last year, P. Ballantine Sons, contributor multiemployer sold withdrew "Because hundred lose "These, isolated cases. According recently-issued Departments Treasury, 19,000 last insufficiently plans." 1599-1600. 1017, 1322(b)(3), participant, exceeds annuity commencing 65 gross income consecutive calendar (or, less, actively participates dividing 1/12 sum income, $750 multiplied fraction, numerator base (determined 230 Social Act) denominator non-basic worker's wage best five month (adjusted living), whichever lower. 4022(c), 1322(c). 4639, 588, 610; H.R.Rep.No.93-533, 14, (1973) 2349, 2361, 2372; Summary Differences Version 7-9 5213-5215; 4635: "Under conference substitute [which Houses], termination) acknowledges 393, draws unsupportable inference He emphasizes 'vested insured. emphasized Committee, nature distinguish rejected narrower 368, 954, 9. tracks 4022 verbatim "nonforfeitable"—merely underscores 28-29: 'vested' 'nonforfeitable'. S. reported April 1973, 3(26), 494-495, provisions: 'Nonforfeitable right' predecessor "insurance 402(a), 532. substitution "vested." only. Appeals' plausible: explained testimony members hearings. testified 1973 'there defining [W]e probably get consistency well insurance.' Hearings Subcommittee Private Plans Finance, 93rd 437. Bentsen responded definitions, although emphasizing Id., 443. 'nonforfeitable,' 'vested,' regulation pre-ERISA. Treas.Reg. 1.401-6 (1963)." 955, 10. liabilities," "[t]he liabilities' nonforfeitable." 3(25), 837, 1002(25). Although, earlier, suffices say synonymous easier task purposes. pre-ERISA terminology, author clarified trust, conditional rights: 'In contradiction pure concept vesting, usual survival principle, property embodied bonds promissory honored maturity financial promisor. essence, individual's age.' "D. McGill, Preservation Rights, (1972). Study Terminations 1972, (1973)." 953-954. S.Rep.No.92-634, Interim Report Activities Welfare Study, 1971, Public Welfare, 74 (1972): "Employers make." remarks Representative Erlenborn, 3388: "At foundation sets up trust trust. described; not, it; gets something less. pension, contributions." Cf. 4846, 596, noting "critics termination," implies largely due proposal adopted. opted run PBGC. Affidavit Joseph Ellinger, Director Office Program Operations PBGC: "Since 136 78 limitation-of-liability lawsuit." 74. view, liable, uninsured. Accepting difference, Williams conference, 4741-4742: possibility abuse shift program, extends worth." acting vacuum. threat real. 1972 terminations, published reported, great claimants losses, high-priority claimants, losses." "[o]ver-all, losses where while 71 1,000 claimant 61. repeatedly 596; 22, ; Thompson, conferees final 4665. fear expressed debates too placed growth discouraged. 3403. pays and, all. obviously irrelevant. Another indication priority allocation fifth "all categories involve well, expect. Subsection (b)(2) rule "are satisfy individuals [in categories], pro rata date) respective administratively automatic distribution, does, adding gleaned indicates thought event, difficult identify conditioning clause. "(f) addition powers may— "(4) sections 4063, 4064 reduce on, waiver reduction prohibition 28, Service model issued guidance drafting post-1976 CCH 1977 Guide ¶ 30,782.96. Further, adopt, payments. deemed lawsuits brought 1322(a) "[The PBGC] 1321 1322(b) respects 1362(b)(1): [who terminated, 1362(a) exceptions therein] .— subchapter company's 1362(b)(1) exceed "30 day, 120 regard section." 1362(b)(2). 1381(a) ("The 1974"). answer inquiry no, owes nothing yes, subject, 30%-of-net-worth 1362(b)(2) 1322(b). notes, 1002 therein [Title I]." 1002(19) appears, attributable inadvertence. sent located Title. Sess. (Table Contents) 3898-3899. 3903. split separate definitional always situated front naturally followed law. severely strain credulity events leave chance proper "Nonforfeitable" art. portions carry so, particularly Titles tandem function interrelated protection. contain own. Furthermore, reveals word's import differ follows insofar CFR departs 1002(19), rejected. authority define scope reprinted, along Senate, Reports, three-volume Print (1976) (cited hereafter Hist.). asserts 1002(19)—"which "claim" "benefit." disagree. reads: supplied.) operative irrelevant Article provided: (including limitation, Plan), Board [of Administration] values (the Credited Plan) precedence: "(a) Retired Employees retirement; "(b) Normal aged 65; "(c) .. "(d) "(e) "If, above precedence categories, category, pro-rata basis." Contrary suggestion, 1344 (allocation defined-benefit plans) operated changed conflicted came levels 1053. "provide attainment age." addition, participated percentages plan—as "defined 1002(23), (34), (35); 595—could "accrued (35), 1053, 1054. enacted: preclude definition." 3306 (statement Perkins) (emphasis supplied). self-serving (1979) direction, conflicts accorded weight. 5, Correspondingly, 1362(b). absolve trustee asset shortfalls. attempted extent. agree, nullifies 422(a) 3702. bill. "which, 502(a)(20), 3745. 3(35), 401(b), 502(a)(20) (bill Welfare), 497, 532, 543; Senate), 103, 105, 137, 148. Similarly, liabilities." amended, 404(b) 2320, 2320-2321, 2325. liabilities" organization party interest." 2256. "which organization, 2251-2252. 4668 (Rep. Dent) (Termination "will backup economic fortunes companies met." supplied.)). 4734, 4735, (Sen. 4752, 4758 Javits); 4800 Nelson); 4678 Ullman); 4694 Brademas); 4702 Tiernan). theory fail account. individual earliest validly pension. death. After monthly, individual. Rights theory, 1053(a)(3)(A) superfluous. "[a] dies (except survivor 1055 title)." felt include weight above, 1322 unaffected absolved trustee. 1061(a) beginning 1322(b)(8) $20 (whichever greater) existence.

Category: 7