Court Opinion

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Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

8-24-2005

DiGiacomo v. Teamsters Pension
Precedential or Non-Precedential: Precedential

Docket No. 04-3510

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                                  PRECEDENTIAL

  UNITED STATES COURT OF APPEALS
       FOR THE THIRD CIRCUIT
             __________

                 No. 04-3510
                 __________

           ALFRED DIGIACOMO,

                           Appellant,

                      v.

  TEAMSTERS PENSION TRUST FUND
   OF PHILADELPHIA AND VICINITY,

                         Appellee.
                 __________

On Appeal from the United States District Court
   for the Eastern District of Pennsylvania
           (Civil Action No. 04-1090)
 District Judge: Honorable Legrome D. Davis
                   __________

        Argued: Friday, May 27, 2005
               ___________

 Before: SCIRICA, Chief Judge, ALITO and
          GARTH, Circuit Judges
              (Opinion Filed: August 24, 2005)
                        __________

                OPINION OF THE COURT
                      __________

DORIS J. DABROWSKI, ESQ. (Argued)
1500 Walnut Street, Suite 900
Philadelphia, PA 19102

Attorney for Appellant
Alfred DiGiacomo

SUSAN A. MURRAY, ESQ. (Argued)
Freedman & Lorry, P.C.
400 Market Street, Suite 900
Philadelphia, PA 19106

Attorney for Appellee
Teamsters Pension Trust Fund
of Philadelphia and Vicinity

Garth, Circuit Judge:

       Alfred DiGiacomo was a member of the Teamsters
Union and a participant in the Teamsters Pension Trust Fund of
Philadelphia and Vicinity (the “Fund”) (the appellee here). In
computing DiGiacomo’s accrued pension benefits, the Fund
disregarded some 10.5 years of his service time rendered prior

                             -2-
to the passage of the Employee Retirement Income Security Act
of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. In so doing, the
Fund relied on certain break-in-service provisions in its
governing pension plan, which explicitly permitted the Fund to
exclude DiGiacomo’s pre-ERISA service time accrued prior to
his break-in-service, as defined in the plan. DiGiacomo
thereupon brought this ERISA action against the Fund, alleging
that it incorrectly computed his accrued benefits by refusing to
aggregate his pre-break and post-break service time.

       The District Court granted the Fund’s motion to dismiss,
holding that ERISA permitted the Fund to disregard
DiGiacomo’s service time preceding his break-in-service, which
occurred before ERISA’s effective date of January 1, 1976. We
will reverse and remand to the District Court for further
proceedings.

                               I.

       The material facts underlying this appeal are
straightforward and uncontested.        From 1960 to 1971,
DiGiacomo earned a total of 10.5 years of benefit service for
“covered employment,” which is defined in the Teamsters
Pension Plan of Philadelphia and Vicinity, Amended and
Restated, effective June 1997 (the “Plan”), as “any employment
in a bargaining unit in a capacity for which Employer
Contributions on behalf of an Employee are payable to the Trust
Fund in accordance with the terms of a collective bargaining

                              -3-
agreement with the Union.” For the next five years, between
1972 and 1977, DiGiacomo worked outside covered
employment and did not return to covered employment until
some time in 1978. Upon returning to covered employment in
1978, he earned approximately eighteen years of additional
benefit service.

       DiGiacomo applied to the Fund for pension benefits on
February 4, 2000. The Fund Administrator approved his
application on March 17, 2000, crediting him with the
appropriate amount of service time for his post-1978
employment.1 The Fund, however, determined that the benefit
service DiGiacomo earned between 1960 and 1971 was forfeited
pursuant to the express provisions of the Plan.2 DiGiacomo had
incurred a break-in-service, as defined in the Plan, upon leaving
covered employment from 1972 to 1977. As a result, the Fund
was not required under the express provisions of the Plan to
aggregate DiGiacomo’s years of service credited before he
incurred the break-in-service (from 1972-1977) in determining

       1
          The record reveals that the Fund credited DiGiacomo with
18 years of vesting service and 16.8 years of contributory benefit
service. On April 24, 2003, the Fund adjusted the credits to 20 years
of vesting service and 18.81 years of benefit service.
       2
          In his appellate brief, DiGiacomo asserts that “the Fund
credited him with 10.5 years of service for purposes of accrual and
vesting.” App. Br. at 2. On this appeal, we decide only the issue
presented to us – whether the 10.5 years of pre-break service must be
included in the calculation of DiGiacomo’s accrued benefit.

                                 -4-
his accrued pension benefit. See Plan Article I, Section S.3(a).3

       After appealing to the appropriate administrative
tribunals, and thereby exhausting his administrative remedies,
DiGiacomo filed the present action in federal court.4

                                   II.

       The question we have to decide is whether, for accrual of
benefit purposes, ERISA prevents pension plans from denying

       3
           The Plan provided, in pertinent part:

       3. Years of Benefit Service shall be aggregated, except in the
following situations:

                (a) Benefit Service credited before an Employee’s
                most recent Break in Service shall be forfeited.

Plan, Article I, Section S.3(a).
       4
           The District Court had subject matter jurisdiction over this
case pursuant to § 502(e) of ERISA, 29 U.S.C. § 1132(e). We have
jurisdiction over this appeal pursuant to 28 U.S.C. § 1291.
         As this Court is reviewing the District Court’s grant of a Rule
12(b)(6) motion to dismiss for failure to state a claim, the standard of
review is plenary. Unger v. Nat’l Residents Matching Program, 928
F.2d 1392, 1394 (3d Cir. 1991). In addition, all facts alleged in the
complaint and all reasonable inferences that can be drawn from them
must be accepted as true. Markowitz v. Northeast Land Co., 906 F.2d
100, 103 (3d Cir. 1990).

                                   -5-
credit for pre-ERISA service time accrued prior to a break-in-
service. DiGiacomo argues that ERISA (under § 204) trumps
the Plan’s break-in-service provisions, thus requiring the Fund
to aggregate his pre-break and post-break service in determining
his accrued benefit. The Fund contends that ERISA does not
override a pre-ERISA plan’s break-in-service provisions, but
rather permits the Fund (under § 203) to deny DiGiacomo credit
for 10.5 years of his pre-break service. Whereas DiGiacomo
relies on Section 204 of ERISA, 29 U.S.C. § 1054, which
governs the accrual of benefits, the Fund relies on Section 203
of ERISA, 29 U.S.C. § 1053, which regulates vesting.5

       In deciding this appeal, we must therefore examine the
relationship between the vesting (§ 203) and accrual of benefit
(§ 204) provisions of ERISA. As discussed more fully below,
Congress in enacting these provisions has left us with a
conundrum: § 203 specifically includes language permitting
plans or employers to disregard pre-ERISA service time
rendered before a break-in-service with regard to vested
benefits; § 204, by contrast, contains no such language with
regard to accrued benefits. While this appeal involves the
accrual of benefits, as distinct from vesting, the Fund
nonetheless urges us to read the relevant language in § 203

       5
         For ease of reference, throughout this opinion we will refer
to the vesting provision of ERISA as § 203 rather than 29 U.S.C. §
1053, and to the accrual provision of ERISA as § 204 rather than 29
U.S.C. § 1054.

                                 -6-
(allowing the disregard of service time prior to ERISA and prior
to a break-in-service for vesting purposes) into the text of § 204
(lacking similar language for accrual of benefit purposes).

                                 A.

         We begin by observing that the Supreme Court, in
Central Laborers’ Pension Fund v. Heinz, 541 U.S. 739, 749
(2004), articulated the important distinction between vesting and
accrual. Accrual, as the Supreme Court noted, is “the rate at
which an employee earns benefits to put in his pension account.”
Id. (citing 29 U.S.C. § 1054). Vesting is “the process by which
an employee’s already-accrued pension account becomes
irrevocably his property.” Id. (citing 29 U.S.C. § 1053 and
Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359,
366 n.10 (1980)). Vested benefits, then, are the “nonforfeitable”
subcategory of accrued benefits. 29 U.S.C. § 1002(19).6

       6
           29 U.S.C. § 1002(19) provides:

       The term “nonforfeitable” when used with respect to a
       pension benefit or right means a claim obtained by a
       participant or his beneficiary to that part of an immediate or
       deferred benefit under a pension plan which arises from the
       participant’s service, which is unconditional, and which is
       legally enforceable against the plan . . . .

Id.

                                 -7-
        ERISA § 204(b)(1)(D) provides for the accrual of
benefits for pre-ERISA service based upon an employee’s
“years of participation” in a plan. 29 U.S.C. § 1054(b)(1)(D).7
Moreover, § 204(b)(4) starts the clock for “participation” at “the
earliest date on which the employee is a participant in the plan”
and further notes that such participation is included in the
“period of service required to be taken into account” under §
202(b).8 As such, in calculating the credited service time for

       7
           This subsection states:

       Subparagraphs (A), (B), and (C) shall not apply with respect
       to years of participation before the first plan year to which this
       section applies but a defined benefit plan satisfies the
       requirements of this subparagraph with respect to such years
       of participation only if the accrued benefit of any participant
       with respect to such years of participation is not less than the
       greater of--

       (i) his accrued benefit determined under the plan, as in effect
       from time to time prior to September 2, 1974, or
       (ii) an accrued benefit which is not less than one-half of the
       accrued benefit to which such participant would have been
       entitled if subparagraph (A), (B), or (C) applied with respect
       to such years of participation.

29 U.S.C. § 1054(b)(1)(D).
       8
           Section 202(b) is cross-referenced in § 204(b)(4)(A), where
it is referred to as § 1052(b), as follows:

       For purposes of determining an employee’s accrued benefit,

                                     -8-
accrual purposes, the statute provides a cross-reference to §
202(b), which establishes the minimum participation standards
concerning employee benefit rights. That subsection provides,
with some exceptions, none of which are relevant here, “all
years of service with the employer or employers maintaining the
plan shall be taken into account in computing the period of
service for purposes of subsection (a)(1) of this section.” 29
U.S.C. § 1052(b)(1) (emphasis added).

       Pursuant to the plain language of the statute, the Fund
was required to credit DiGiacomo with “all years of service” in
computing his accrued pension benefits, including his 10.5 years
of pre-break service. Nothing in § 204 of ERISA allows the
Fund to apply its break-in-service provisions to the calculation
of accrued benefits.

       As noted, ERISA treats breaks-in-service differently for
vesting purposes. ERISA § 203(b) explicitly allows pension

       the term “year of participation” means a period of service
       (beginning at the earliest date on which the employee is a
       participant in the plan and which is included in a period of
       service required to be taken into account under section
       1052(b) of this title, determined without regard to section
       1052(b)(5) of this title) as determined under regulations
       prescribed by the Secretary which provide for the calculation
       of such period on any reasonable and consistent basis.

29 U.S.C. § 1054(b)(4)(A).

                                -9-
plans to apply break-in-service provisions to the calculation of
vested benefits arising from pre-ERISA service:

       (1) In computing the period of service under the plan for
       purposes of determining the nonforfeitable percentage
       under subsection (a)(2) of this section, all of an
       employee’s years of service with the employer or
       employers maintaining the plan shall be taken into
       account, except that the following may be disregarded: .
       ..

       (F) years of service before this part first applies to the
       plan if such service would have been disregarded under
       the rules of the plan with regard to breaks in service, as
       in effect on the applicable date . . . .

29 U.S.C. § 1053(b)(1)(F) (emphasis added).

        Were § 203 applicable here, the Fund would thus have
express statutory warrant to disregard DiGiacomo’s pre-break
service time. As it is, however, ERISA § 204 is the applicable
statute, and significantly, it contains no exclusion paralleling
that of § 203, 29 U.S.C. § 1053(b)(1)(F), i.e., permitting an
exclusion for years of service before ERISA, followed by a
break-in-service before ERISA.9

       9
         In arguing that § 204 is irrelevant to this appeal, we suggest
that Judge Alito has oversimplified the interplay between the vesting

                                 -10-
       We now proceed to examine whether this difference in
statutory language means, as DiGiacomo contends, that
Congress intended to treat accrued and vested benefits
differently respecting breaks-in-service.

                                  B.

       We are not a tabula rasa in approaching this question.
While we have never expressly held that Congress intended to
treat vesting and accrual of benefits the same with respect to
breaks-in-service, we have affirmed, without opinion, a district
court decision that has so held. See Haas & Cass v. Boeing Co.,
Civ. A. No. 90-7414, 1992 WL 221335, at *4-*7 (E.D. Pa. Sept.
4, 1992), aff’d without opinion, 993 F.2d 877 (3d Cir. 1993).
Such an affirmance, however, has no precedential value. See

(§ 203) and the accrual of benefit (§ 204) provisions. He assumes
that the loss of vesting credit for certain years of service necessarily
and unequivocally entails the loss of accrued benefit credit for those
same years of service. However, § 203(b)(1)(F) does not say that a
break-in-service leads to forfeiture of all previously accrued benefits.
Rather, the statutory scheme is somewhat more complex, providing
that all “years of service” prior to the break-in-service can be
disregarded in calculating the relevant period of service for vesting
purposes. To borrow Judge Alito’s helpful analogy, see dissenting
opinion at 2, DiGiacomo’s 10.5 years of accrued benefit credit might
be equated to chalk marks beside the employee’s name, but they are
not necessarily erased merely because related marks in a separate
category for vested benefit credits have been lost due to a break-in-
service.

                                 -11-
Third Circuit Internal Operating Procedure § 5.7 (July 2002)
(explaining that only our published opinions have precedential
value).

          We have also issued one precedential opinion addressing
a similar issue. In Tanzillo v. Local Union 617, International
Brotherhood of Teamsters, 769 F.2d 140 (3d Cir. 1985), we held
that “ERISA . . . explicitly recognizes break-in-service forfeiture
of . . . credits which had been accrued prior to the effective date
of ERISA, if such break-in-service forfeiture is provided for in
the applicable plan document.” Id. at 145. In Tanzillo, though,
we never dealt with § 204, but rather we relied exclusively on §
203 – the vesting section – in upholding a plan’s break-in-
service rules. Id. at 144-45. For this reason, Tanzillo is not
controlling here.

        Accordingly, we have yet to address and answer, in a
precedential opinion, the question that DiGiacomo has brought
before us. That is not the case outside this Circuit – two of our
sister Courts of Appeals have already specifically examined and
analyzed the issue, reaching contrary conclusions. Compare
McDonald v. Pension Plan of the NYSA-ILA Pension Trust
Fund, 320 F.3d 151, 153 (2d Cir. 2003) (holding that ERISA §
204 trumps a plan’s break-in-service provisions that purport to
limit the accrual of benefits arising from pre-ERISA
employment) with Jones v. UOP, 16 F.3d 141, 143 (7th Cir.
1994) (refusing “to treat vesting and accrual of benefits
differently with respect to breaks in service” and denying credit

                               -12-
for pre-ERISA break-in-service time).10          As such, the
asymmetrical treatment of breaks-in-service in the statutory
language of ERISA §§ 203 and 204, although explainable as the
difference between vesting and accrual of benefits, has led to a
division of two of our sister Courts of Appeals in their
respective holdings. Not surprisingly, then, it has also led to a
division in this Court, in which our dissenting colleague Judge
Alito has concluded that § 203 should control this appeal. In
this respect, Judge Alito has aligned himself with the result
reached by the Seventh Circuit. See Jones, infra.

       While we admit that this question is a close and difficult
one, we hold, in accord with the Second Circuit, that the
question posed at the outset of this opinion – “whether, for
accrual of benefit purposes, ERISA prevents pension plans from
denying credit for pre-ERISA service time accrued prior to a
break-in-service” – is best answered by looking to the plain and
unambiguous text of the benefit accrual section of ERISA (§
204), as Congress has written it. Our answer is thus “yes,” as
that section requires that “all years of service” must be taken
into account in calculating an employee’s (DiGiacomo’s)
accrued benefit.

       10
         See also Redmond v. Burlington N. R.R. Co. Pension Plan,
821 F.2d 461, 466-67 (8th Cir. 1987).

                              -13-
                                1.

       In Jones v. UOP, the Seventh Circuit declined to treat
vesting and accrual of benefits differently with respect to
breaks-in-service, thus reading into § 204 (accrual of benefits)
the exclusion clause of § 203 (vesting). 16 F.3d at 143 (Posner,
J.). The Jones facts resemble those in this appeal in all essential
respects, with one possibly significant exception, having to do
with the likelihood of double recovery. See note 12 infra. Jones
began service with UOP in 1949. He left work in 1960, returned
to work in 1961, and continued working until retirement in
1985. UOP amended its plan (referred to in the opinion as the
1940 plan) in 1968 to base its benefits upon “credited past
service.” “Service” was defined as “an Employee’s last
continuous period of employment with the Employer.” Id. at
142. By the time Jones retired, UOP had become a wholly-
owned subsidiary of Signal Company, and the UOP plan merged
into the Signal Plan, which carried forward the same benefit
structure. Id. at 142-143.

        When Jones retired he was apparently entitled to two
benefits: the much larger benefit based on the then-current
Signal Plan, including all relevant years of service under the
predecessor plan (the UOP plan), and a much smaller
supplemental benefit attributable solely to his eleven years of
service from 1949 to 1960 under the former UOP plan. The
latter benefit, which had vested, consisted of Jones’ employee
contributions plus interest to his date of retirement. At issue in

                               -14-
the case was whether Jones was entitled to credited service for
the eleven years of employment from 1949 to 1960 so as to
increase the benefits to which he would be entitled under the
successor plan (the Signal Plan). From a purely contractual
standpoint, he was clearly not entitled to credit for that service
under the plan’s break-in-service provisions.

         The Seventh Circuit began its analysis by observing that
the only two cases to have considered the issue at that point read
the exception for breaks-in-service found in § 203 as though the
same language appeared in § 204, but that they did so without
any analysis. Id. at 143 (citing Redmond v. Burlington N. R.R.
Co. Pension Plan, 821 F.2d 461 (8th Cir. 1987); Jameson v.
Bethlehem Steel Corp., 634 F. Supp. 688 (E.D. Pa. 1986), aff'd
without opinion, 802 F.2d 447 (3d Cir. 1986), cert. denied, 479
U.S. 1089 (1987)).11 The Seventh Circuit noted that “it would
be perilous to assume from the absence of an express reference
to breaks in service that section 204(b)(1)(D) was intended to
override them.” Id. This is particularly so, the court opined,
given that the “purpose of section 204 is to prevent the employer
from defeating the vesting section, which immediately precedes
it in the statute, by backloading benefits (that is, making benefits
accrue very slowly until the employee is near retirement age).”
Id. (citing Jeffrey D. Mamorsky, Employee Benefits Handbook
§ 18.16 (3d ed. 1992)). Inasmuch as “backloading” is a distinct

       11
          Jameson, like Haas & Cass, supra, is not a precedential
opinion in this Circuit. See 3d Cir. IOP § 5.7.

                               -15-
problem from breaks-in-service, the Seventh Circuit concluded
that, notwithstanding the absence of explicit statutory exclusion
for pre-ERISA break-in-service provisions, “there is no
indication that Congress in dealing expressly with the former
problem in section 204(b)(1)(D) meant for the latter problem to
be treated differently under section 204 than under section 203.”
Id. at 144.12

        12
           The Seventh Circuit initially took the view that the fact that
Jones’ rights (for the eleven years of service from 1949 to 1960) had
vested under the 1940 plan was insignificant to the calculation
concerning the credited service under the Signal Plan. But the fact
that Jones was effectively seeking “double credits” for 1949 to 1960
played some part in Judge Posner’s decision, although the extent of
its significance is unclear:

        [Jones] is seeking, in effect, double credits for 1949 to
        1960--the credit that he has already used to obtain a pension
        benefit under the 1940 plan and credit for the same years
        toward the pension he earned under the Signal Plan. There is
        nothing to suggest that section 204 was intended to confer
        such a windfall. That section should be read together with
        section 203 to protect the employee against efforts to
        circumvent section 203's vesting rules, rather than to defeat
        break in service provisions in plans adopted before ERISA
        was. There were no such efforts here.

Jones, 16 F.3d at 144. Here, of course, there is no issue concerning
double credits or the likelihood of a windfall in favor of the
beneficiary.
       We note that in McClain v. Retail Food Employers Joint
Pension Plan, 413 F.3d 582 (7th Cir. 2005), the Seventh Circuit

                                  -16-
                                 2.

        In McDonald v. Pension Plan of the NYSA-ILA Pension
Trust Fund, the Second Circuit parted from the Seventh Circuit,
declining to treat vesting and accrual of benefits the same with
respect to breaks-in-service. 320 F.3d at 159. McDonald, like
this case, involved a suit by a retiree who had suffered a break-
in-service under a pension plan’s pre-ERISA break-in-service
rules. He alleged that the plan’s calculation of accrued years of
service violated ERISA. The Second Circuit, focusing solely
upon the statutory language, concluded that § 204(b) is
unambiguous: “had Congress intended to permit pre-ERISA
break-in-service provisions to apply when calculating accrued
benefits, it could have done so.” Id. (citing ERISA §
203(b)(1)(F), 29 U.S.C. § 1053(b)(1)(F)). The court thus
refused to look beyond the plain text of the statute, in holding
that, under §§ 204(b) and 202(b), pre-ERISA break-in-service
provisions, which would disregard or deny credit for such
service, do not apply when calculating accrued benefits.13

recently reaffirmed its holding in Jones.
       13
          Hoover v. Bank of America Corp., 286 F. Supp. 2d 1326
(M.D. Fla. 2003), has expressly followed McDonald. Id. at 1344
(finding the Second Circuit’s decision in McDonald “more faithful to
the canons of statutory construction and thus more persuasive”).

                                -17-
                                C.

        In Arthur Andersen LLP v. United States, 125 S. Ct. 2129
(2005), the Supreme Court, although construing a different
statute, employed the same principle we do today – “we must
simply interpret the statute as written.” Id. at 2135. Reading
ERISA § 204 as it is written, we are persuaded that our position
and that of the Second Circuit is more consistent with
established canons of statutory construction than the Seventh
Circuit’s position.

       Two canons of statutory construction particularly inform
our analysis. The first is that a court must begin with the
language of the statute. See Barnhart v. Sigmon Coal Co., 534
U.S. 438, 450 (2002) (citations omitted). “Absent a clearly
expressed legislative intention to the contrary, that language
must ordinarily be regarded as conclusive.” Consumer Prod.
Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980).

       With respect to the question presented here, the statutory
language is unambiguous. ERISA § 204 establishes permissible
accrual practices for pension plans. It makes no provision for
break-in-service rules. Nor does it provide for disregarding pre-
ERISA break-in-service time in calculating an employee’s
pension. Where Congress wanted to provide for break-in-
service provisions in ERISA, it did so explicitly, as illustrated by
§ 203.

                               -18-
       In view of Congress’s failure to include a section in §
204 for accrued benefits which parallels the section found in §
203 for vesting, we rely on a second canon of statutory
construction: “[I]t is generally presumed that Congress acts
intentionally and purposely when it includes particular language
in one section of a statute but omits it in another.” BFP v.
Resolution Trust Corp., 511 U.S. 531, 537 (1994) (quoting
Chicago v. Envtl. Defense Fund, 511 U.S. 328, 338 (1994)). We
are satisfied that none of the Fund’s arguments are strong
enough to overcome this presumption.

         The Fund relies, as it must, on outside interpretive
sources – i.e., related statutory terms, applicable regulations, and
relevant legislative history – in arguing that Congress intended
to treat vesting and accrual of benefits the same with respect to
breaks-in- service. The problem with such reliance, however, is
that these sources are ambiguous at best, and therefore fail to
evince clearly a congressional intent to give effect to break-in-
service rules precluding an employee from receiving certain
accrued benefits. In these circumstances, we venture no further
than the statutory language in deciphering congressional intent.14

       14
          Because, as we have stated, our decision is grounded in the
plain and unambiguous text of § 204, we see no reason to further
address secondary sources. For an exhaustive analysis of these
sources, concluding that they demonstrate Congress’s intent to treat
vesting and accrual differently with regard to breaks-in-service, see
McDonald v. Pension Plan of NYSA-ILA Pension Trust Fund, 153 F.
Supp. 2d 268 (S.D.N.Y. 2001). For an analysis of some of the same

                                -19-
As the Second Circuit noted, “ERISA is a complicated enough
statute without the courts soldering new sections onto it.”
McDonald, 320 F.3d at 159.

        Finally, we cannot say that the difference in language
enacted by Congress respecting vesting and accrual of benefits
is “so bizarre that Congress could not have intended it.”
Demarest v. Manspeaker, 498 U.S. 184, 191 (1991) (internal
quotation and citation omitted). Congress reasonably may have
concluded, when it comes to the problem of vesting, that an
employee, before he becomes entitled to pension or retirement
benefits, should serve his employer continuously for the
designated vesting period without departures or breaks-in-
service. It is not clear to us that the same principle holds true for
the accrual of an employee’s benefits. Once an employee has
become vested, Congress, by its explicit expression, has
determined that all the benefits whenever accumulated by that
employee, regardless of any discontinuity in service, should be
included in his retirement rights. Such disparate treatment of
vesting on the one hand and accrual on the other is neither
irrational nor arbitrary, but could very well reflect Congress’s
motive in maximizing employee benefits once entitlement
through vesting has been achieved. We have interpreted
Congress’s intent to that effect.

sources reaching the opposite conclusion, see Haas & Cass v. Boeing
Co., Civ. A. No. 90-7414, 1992 WL 221335 (E.D. Pa. Sept. 4, 1992).

                                -20-
        We recognize that there might also be sound policy
reasons for reaching the Jones result, and the result advocated
by Judge Alito. However, such reasons do not, in our view,
overcome the plain language of the statute. Change in
legislation is a task for Congress, and if our interpretation of
what Congress has said so plainly is now disfavored, it is for
Congress to cure. We do not sit here as a policy-making or
legislative body.

                              III.

       Accordingly, we will reverse the judgment of the District
Court dated July 29, 2004, and we will remand to the District
Court for further proceedings consistent with this opinion.

ALITO, Circuit Judge, dissenting:

       I agree that the relevant provisions of ERISA speak in
unambiguous terms, but I disagree with the majority about what
they say. In my view, the majority misreads § 204 by equating
the accrual of benefits with an unconditional right to receive
benefits, even though benefits become unconditional through
vesting, not accrual. Under the minimum vesting standards in
§ 203, the Plan was plainly allowed to treat benefits accrued
prior to 1972 as forfeitable upon a break in service. Since I
believe the plain text of the statute requires us to affirm the
District Court’s decision, I respectfully dissent.

                              -21-
                                I.

       The majority quotes at length from ERISA §§ 202 and
204, but these sections of the Act are largely irrelevant to the
appeal. DiGiacomo admits that the Fund properly credited him
with accrued benefits. An exhibit attached to his complaint
indicates that he accrued benefits pursuant to the terms of the
Plan at a steady rate for each year of service prior to 1972. App.
at 16. The notice also indicates, however, that these accrued
benefits were “lost” as a result of his “break in service” that
year. Id. Since DiGiacomo does not challenge the Fund’s
interpretation of the Plan, the only question we must decide is
whether the Fund could deny him benefits that accrued before
ERISA applied to the Plan and that were forfeited under the
terms of the Plan then in effect.

        ERISA clearly answers this question in the affirmative.
Section 203 provides that “for purposes of determining the
nonforfeitable percentage” of an employee’s “accrued benefit,”
a plan may permissibly disregard “years of service before this
part first applies to the plan if such service would have been
disregarded under the rules of the plan with regard to breaks in
service, as in effect on the applicable date.” 29 U.S.C.
§ 1053(a)(2), (b)(1)(F). The Plan in effect in 1972 was thus
entitled to treat all benefits DiGiacomo had accrued prior to his
break as “forfeitable” – that is, as conditional only. See ERISA
§ 3(19), 29 U.S.C. § 1002(19).

                              -22-
        The Plan did just that. Although it provided for benefit
accrual in each year of service, see App. at 20, it also provided
that a break in service would result in the loss of prior vesting
credit. See id. at 19. When DiGiacomo left covered
employment in 1972, his benefits accordingly became
forfeitable under § 203(b)(1)(F). Since the Plan further
provided that accrued benefits would be forfeited upon a break
in service, see App. at 20, DiGiacomo’s departure from covered
employment simultaneously resulted in the forfeitability and
forfeiture of his benefits.15

       Observing that ERISA’s minimum standards for vesting
and accrual differ, the majority concludes that “the Fund was
required to credit DiGiacomo with ‘all years of service’ in
computing his accrued pension benefits.” Maj. Op. at [[9]].
The majority seems to assume that ERISA also required the Plan
to include all of his accrued benefits in the calculation of his

        15
            The convergence of the conditions that led to the
forfeitability and forfeiture of DiGiacomo’s benefits illustrates why
§ 204 makes no mention of breaks in service. The majority ponders
this omission, but a close reading of the statute reveals that § 203’s
break-in-service provisions would be superfluous in § 204. The loss
of vesting credit as a result of a break in service under § 203(b)(1)(F)
leaves a participant’s pre-break accrued benefits forfeitable under the
terms of his plan, but nothing in ERISA prevents a plan from making
the break itself a forfeiture event. If a plan’s pre-ERISA break-in-
service provisions may disregard vesting credit earned prior to
ERISA’s effective date, it necessarily follows that the plan may call
for the forfeiture of accrued benefits protected by that vesting credit.

                                 -23-
pension, but ERISA says nothing of the kind. As the Supreme
Court explained in Central Laborers’ Pension Fund v. Heinz,
accrual is simply “the rate at which an employee earns benefits
to put in his pension account.” 541 U.S. 739, 749 (2004).
Accrued benefits, in other words, are like chalk marks beside the
employee’s name. They are conditional rights that do not
become “irrevocably his property” until they vest. Id. Only then
do they become “legally enforceable against the plan.” ERISA
§ 3(19), 29 U.S.C. § 1002(19). Prior to vesting, accrued
benefits can be, and in this case were, forfeited under the terms
of a participant’s plan.

       DiGiacomo alleges that he became a fully vested
participant after returning to covered employment,16 but nothing
in the Plan entitled him to restoration of his forfeited accrued

       16
          Although the complaint does not mention it, DiGiacomo’s
appellate brief appears to claim that some or all of his benefits had
vested even prior to the break in service. See DiGiacomo’s Br. at 16.
This claim, if true, would not affect the analysis above. Regardless
of how they were characterized under the 1972 version of the Plan,
DiGiacomo’s pre-break benefits were clearly “forfeitable” within the
meaning of ERISA, since the Plan provided for their forfeiture if a
break in service occurred. More to the point, ERISA did not require
the Plan to treat them as nonforfeitable. Under § 203(b)(1)(F), the
Plan could treat them as forfeitable if they accrued before ERISA
applied to the Plan and were so treated under the version of the Plan
then in effect. Because they were treated as forfeitable by the Plan in
1972, they could be forfeited upon the occurrence of any condition set
forth therein, including a break in service.

                                 -24-
benefits. ERISA certainly does not require their restoration. To
the contrary, § 203 recognizes the enforceability of pre-ERISA
break-in-service provisions as applied to benefits accrued prior
to the Act’s effective date. See Tanzillo v. Local Union 617,
Int’l Bhd. of Teamsters, 769 F.2d 140, 145 (3d Cir. 1985).
Under the Fund’s unchallenged interpretation of the Plan,
DiGiacomo was permanently stripped of any accrued benefits
when his break in service occurred.

        DiGiacomo’s authorities to the contrary are unpersuasive.
The Second Circuit in McDonald v. Pension Plan of the NYSA-
ILA Pension Trust Fund concluded that the plain text of §§ 202
and 204 required a plan to provide for benefit accrual in every
year of an employee’s participation. See 320 F.3d 151, 156-57
(2d Cir. 2003); cf. 29 C.F.R. § 2530.210(a)(2) (requiring
qualified plans to take into account “all years of
participation . . . for purposes of section 204”). This conclusion
simply begs the question. The question is not whether benefits
must accrue in every year of participation but whether benefits
accrued in years prior to ERISA’s effective date may be
forfeited under break-in-service provisions then in effect. The
answer supplied by § 203(b)(1)(F) is clearly affirmative.

                               II.

                              -25-
       Although I agree that the Court’s inquiry should begin
and end with the statute’s plain text, I note that the legislative
history of §§ 203 and 204 confirms my interpretation. The
reports on the embryonic legislation usually do not discuss
accrual or, when they do, discuss it only under the rubric of
vesting. See, e.g., S. Rep. No. 93-383, 1974 U.S.C.C.A.N.
4890, 4929, 4935-36; H.R. Conf. Rep. No. 93-1280, 1974
U.S.C.C.A.N. 5038, 5049, 5054-57; cf. S. Rep. No. 93-383,
1974 U.S.C.C.A.N. at 4890 (explaining, without reference to the
concept of accrual, that the legislation was designed “to make
sure that those who do participate in [retirement] plans do not
lose their benefits as a result of unduly restrictive forfeiture
provisions”); H.R. Rep. No. 93-807, 1974 U.S.C.C.A.N. 4670,
4671 (same).

       Congress evidently understood accrual as simply the
handmaiden to vesting. As the Senate report on S. 1179
explains, “[i]t is necessary to provide a statutory definition of an
‘accrued benefit’ because, unless this is a defined amount,
vesting of an ‘accrued benefit’ in whatever form is specified by
the plan has little, if any, meaning.” S. Rep. No. 93-383, 1974
U.S.C.C.A.N. at 4935; see also H.R. Conf. Rep. No. 93-1280,
1974 U.S.C.C.A.N. at 5055 (explaining that accrual standards
are necessary to “limit the extent of ‘back-loading’ permitted
under the plan”); Jones v. UOP, 16 F.3d 141, 143-44 (7th Cir.
1994) (same); 1 Jeffrey D. Mamorsky, Employee Benefits
Handbook § 17:36 (2004) (“The minimum vesting standards of
the Code would be rendered meaningless if the plan sponsor

                               -26-
were free to backload the plan . . . because a mandated large
percentage of nothing is still nothing.”).

        This history confirms that § 204 was not designed to
afford any right to a guaranteed retirement benefit apart from the
Act’s minimum vesting standards. Under those minimum
vesting standards, the Plan was entitled to treat DiGiacomo’s
benefits as forfeitable because they accrued before ERISA
applied to the Plan and because they were so treated under the
terms of the Plan then in effect. See § 203(b)(1)(F). Having
permissibly deemed them forfeitable, the Plan could, and did,
call for their forfeiture.

                               III.

       Because ERISA provides DiGiacomo no right to receive
the benefits that were forfeited under the Plan’s break-in-service
provisions in effect at the time the benefits accrued, his
complaint fails to state a claim on which relief can be granted.
The District Court correctly granted the Fund’s motion to
dismiss it. The majority errs in reversing that decision, and I
respectfully dissent.

                              -27-