Court Opinion

ID: 9495348
Source: CourtListenerOpinion
Date Created: 2023-08-05 16:00:52.831461+00
Date Added: 2024-06-11T17:56:58.308295
License: Public Domain

CUDAHY, Circuit Judge,
dissenting.
Judge Williams for the majority has labored with great skill and ingenuity to overcome the efforts of Chief Judge Caroline Dineen King for a Fifth Circuit panel that came out the other way. See Spacek v. Maritime Ass’n, 134 F.3d 283 (5th Cir.1998). Though Judge Williams has put as persuasive a face as may be possible on the majority’s position, I still find Spacek quite compelling. Spacek, it seems to me, presents straightforward and plausible arguments, not susceptible to rebuttal by the sometimes tortured contentions of the majority.
The first pillar supporting the outcome in Spacek is the absence of the word “suspend” or its variants from 29 U.S.C. § 1054(g), the anti-cutback rule.1 Yet “suspend” or its variants appear side-by-side with “reduce” or its variants in numerous other sections of ERISA. If, as the majority argues, the concept of reduction includes suspension, then the use of “suspend” or its variants, in addition to “reduce” or its variants, in many other ERISA sections is redundant. There is no doubt that the drafters knew how to include the concept of suspension, in contrast to that of reduction, when they want*814ed to do so. I find this plain meaning argument to be quite convincing.
The majority attempts to rebut this argument with two points. First, it seems to say that a “suspension” is really a “reduction” because over time a “suspension” of the receipt of a benefit reduces the economic value of the total benefits received. Op. at 806. Of course, there is an economic loss from a suspension; if there were none, there would be no lawsuit. But, that does not mean that, as used in ERISA, a “suspension” is exactly equivalent to a “reduction” or is included within it. From the point of view of the recipient on the facts before us, the suspension of pension payments does not reduce the recipient’s current income because the temporarily lost pension income is replaced by earned income derived, as was the pension, from the very same construction industry. This elimination of “double-dipping” from the construction industry’s pockets seems substantially more equitable, and is certainly less burdensome to the pension recipient, than would be a reduction in the amount of the benefit unsupplemented by earned income. Hence, the broadening of the ban on “double-dipping” seems not inequitable.
Second, the majority attempts to dismiss the argument from redundancy based on the numerous ERISA provisions that contain both the words “reduction” and “suspension” by distinguishing those provisions as involving matters other than an amendment purporting to diminish benefits. Op. at 807-808. Thus, the majority apparently concludes that if a suspension is pursuant to an amendment that diminishes benefits, then the suspension is a reduction of benefits. Op. at 807-808. On the other hand, if a suspension is not pursuant to such an amendment, then, the majority concludes, it is not a reduction of benefits. Id. I do not follow this logic. While there may be more than one means of invoking a suspension, what constitutes a suspension — the meaning or definition of a suspension— should not change because the suspension was achieved by one method instead of by another method.
The majority’s subsequent argument that § 1054(g) concerns only amendments and thus it only bars suspensions pursuant to an amendment, Op. at 809, only makes sense if a suspension is a reduction of benefits. But, beside the majority’s ipse dixit, there is nothing to indicate that a suspension of benefits is a reduction of benefits as those terms are used in ERISA. Rather, as the analysis of Treasury Regulation 26 C.F.R. § 1.411(c) — 1(f), discussed infra, concludes, a suspension is not a reduction of benefits based on ERISA’s mode of calculating accrued benefits.
The legislative history involving the clear comments of Representative Clay firmly supports the interpretation based on plain meaning. The effort of the majority to explain away this comment is unconvincing. The comment appears to reflect an understanding at the time of the adoption of the anti-cutback rule that it not apply to adjustments made by the plan (perhaps in the interest of the plan’s financial integrity) to the rules involving suspension of benefits in the event of reemployment in the construction industry. With respect to the arguments of the majority depreciating the use of legislative history in general, these arguments become less weighty in the case of legislative history that fits so closely with the interpretation founded on plain meaning.
The plain meaning is also supported by the Internal Revenue Manual described by the majority in its footnote 17. Again, this bit of authority fits neatly into the interpretation derived from plain meaning. It is, therefore, hard to explain away.
That Spacek’s interpretation reflects the plain meaning of the statute is supported by the outcome in Whisman v. *815Robbins, 55 F.3d 1140 (6th Cir.1995). In Whisman, the appellant had qualified for a “ ’30-and-Out’ pension benefit, which [was] available to participants with thirty years of service, regardless of age.” Id. at 1143. He received $1,000 per month under the “30-and-Out” provision until he began working for the United States Postal Service in 1986, at which time, his pension benefit was suspended under the Plan’s re-employment provision. Id. The Sixth Circuit held that the re-employment provision, which suspends early retirement benefits if the participant is engaged in prohibited employment, was not contrary to the law. Id. at 1146-47 (citing Gardner v. Central States, Southeast & Southwest Areas Pension Fund, No. 93-3070, 1993 WL 533540 (6th Cir. Dec.21, 1993) (per cu-riam)). The court then dealt with Whis-man’s argument invoking the anti-cutback rule of ERISA.
Whisman counters that Gardner is inapplicable because at the time Whisman applied and qualified for pension benefits, [the reemployment provision], adopted in 1987, was not in effect. According to Whisman, the application of the amended reemployment provision violates the principle of Costantino v. TRW, Inc., 13 F.3d 969 (6th Cir.1994). We disagree. In Costantino, this Court held that a plan’s attempt to eliminate early retirement subsidies for retirees that had already qualified for the subsidy prior to plan amendment violates the anticutback rules of ERISA and the Tax Code. Costantino is based upon an application and enforcement of section 204(g) of ERISA, 29 U.S.C. § 1054(g), which prohibits employers from amending their pension plan to decrease or eliminate early retirement benefits or retirement type subsidies. Even assuming that the “30-and-Out” benefit contains an early retirement subsidy, Whisman’s argument is unpersuasive, because § 1054(g) and Costantino involve a reduction or elimination of accrued benefits and retirement-type subsidies, not a suspension, as is the case here.
Whisman, 55 F.3d at 1147 (emphasis added and footnote omitted). The court went on to conclude that Whisman would have lost even under the unamended plan. Id. While the majority dismisses Whisman as reaching its conclusion without analysis, perhaps the Whisman court thought that its conclusion was obvious from the plain meaning of § 1054(g).
The majority also seeks to rebut Spa-cek’s reliance on Treasury Regulation 26 C.F.R. § 1.411(c)-l(f) to establish that normal retirement benefits are not protected against suspension by amendment. The point Spacek makes is that, if normal retirement benefits are not protected, it is most unlikely that early retirement benefits would be protected.
Initially, to gain some perspective on the status of early retirement benefits in relation to normal retirement benefits, one should recognize that early retirees — here only 39 years old — would be much more likely to go back to work in construction than people normally retiring in their sixties. Hence, it would not be at all surprising that “double-dipping” by early retirees would, perhaps for reasons of the financial integrity of the plan, be dealt with more severely (and certainly not less severely) than would re-employment in the industry by workers retiring at a normal (and relatively advanced) age.2 It would appear *816more likely that normal retirees would be allowed to retain their pension payments than would early retirees.3 So one might logically expect employment restrictions on early retirees to be more onerous than those on normal retirees.
The Retirement Equity Act (REA), however, added the language of § 1054(g)(2), and, as Spacek states, “The legislative history of the REA indicates that the fundamental purpose behind the addition of paragraph (2) was to afford early retirement benefits and retirement-type subsidies the same form of protection from reduction by amendment afforded to accrued benefits.” I am therefore in accord with Spacek’s conclusion that, if an amendment, such as the one at issue here, would not violate § 1054(g) if it were applied to suspend fully accrued benefits, it plainly cannot violate § 1054(g) if applied to early retirement benefits. Spacek, in reaching that conclusion, starts with the proposition from the applicable treasury regulation that, “for the purposes of computing the actuarial equivalent of a retirement benefit available at normal retirement age, ‘[n]o adjustment of any accrued benefit is required on account of any suspension of benefits if such suspension is permitted under section 203(a)(3)(B) of the Employment Retirement Income Security Act of 1974 [29 U.S.C. § 1053(a)(3)(B)].’” Spacek, 134 F.3d at 290 (quoting 26 C.F.R. § 1.411(c)-l(f)). Therefore, in figuring a plan participant’s accrued benefit, where early retirement benefits are involved, the calculation of the accrued benefit need not account for the decrease in total benefits paid as a result of a suspension authorized by 29 U.S.C. § 1053(a)(3).
Spacek then notes the authorization under § 1053(a)(3)(B) of suspension of accrued benefits based on certain employment — as is the case here. At this point, Spacek goes on to conclude that an authorized suspension does not decrease accrued benefits. And, as earlier noted, to the extent that an amendment would not violate the anti-cutback provision rule if applied to fully accrued benefits, such an amendment cannot, based on the demonstrated intent of Congress, violate the rule if applied to early retirement benefits. The logic here seems inescapable.
As far as I can divine, the majority’s effort at refutation involves a simple attempt at bootstrapping. The majority says that the Spacek reasoning is inconsistent with the language of paragraph (2) of the anti-cutback rule, apparently because this provision requires that amendments that have the effect of eliminating or reducing early retirement benefits should be treated as reducing accrued benefits. Slip op. at 18. But, as has been demonstrated earlier, a “suspension” is not a “reduction” (although the majority would have it otherwise), and the alleged inconsistency therefore disappears. As far as I can determine, the remainder of the majority’s argument involving accrued benefits continues to rely on the false equation of “suspension” with “reduction.”
The majority also adds the point that, even though a suspension of benefit pay*817ments may not decrease accrued benefits (or become a forfeiture), a change in the rules governing suspensions may indeed decrease benefits. Slip op. at 20. This argument misses the mark because the provisions we are discussing are directed to what is permissible for changes in the plan. To change the rules governing suspensions is merely to create a suspension with a little different design than an earlier one. The rules addressing the consequences of invoking a suspension necessarily encompass changes leading to a new form of suspension.
The majority’s reliance on 26 C.F.R. § 1.411(d) — 4 interpreting 26 U.S.C. § 411(d)(6), an analogous anti-cutback rule in the Internal Revenue Code, is also unconvincing. Nothing in this regulation refers to a suspension or anything resembling a suspension. The majority seems to be arguing that the amendment under consideration here had something to do with “increasing conditions.” But there is no indication that anything in the cited regulation is relevant to the conditions of a suspension. Rather, the bar against “increasing conditions” appears to be a bar against increasing eligibility requirements for pension participation. See 26 C.F.R. § 1.411(d)-4 Q & A-6 (asking and answering whether a plan may “condition the availability of a section 411(d)(6) protected benefit on the satisfaction of objective conditions that are specifically set forth in the plan”). We have already held that a change in eligibility requirements could violate the anti-cutback rule. See Ahng v. Allsteel, Inc., 96 F.3d 1033, 1036-37 (7th Cir.1996) (so holding). But the Internal Revenue Manual discussed in footnote 17 of the majority opinion states unequivocally that an amendment pursuant to ERISA § 203(a)(3)(B), 29 U.S.C. § 1053(a)(3)(B), suspending benefits payments for periods of employment, as here, does not violate the anti-cutback rule of § 411(d)(6). The majority has nothing better to point out in refutation than a clumsy use of words in drafting some of the provisions of the manual. The intent of the manual provision, on the other hand, seems clear.
Spacek’s analysis relies on straightforward interpretations of statutory and regulatory language. The majority seeks to refute it with implausible and unconvincing arguments that do violence to the clear intent of the drafters.
As to considerations of policy and equity, it is true that my analysis may result in defeating in some instances the expectations of the plan participants. But this seems acceptable if they withdraw from retirement and return to the workforce, later to place additional demands upon the plan. They suffer no loss of regular income and are merely deprived of a bonus in the form of a dual recovery at the expense of the construction industry. Meanwhile, the financial integrity of the plan may be affected by continuing to make retirement provisions for participants who have not really retired.
I therefore respectfully dissent.

. Section 1054(g)(2) also prohibits the elimination of benefits but the majority, and the parties on appeal, mainly deal with the prohibition against the reduction of benefits. Thus, I restrict my analysis to whether a suspension is a reduction of benefits. In any event, there is no elimination of benefits in this case. While it is true that a plan participant will not receive pension payments when he or she is engaged in disqualifying work, the entitlement to pension payments is only temporarily lost and not eliminated. The participant will receive pension payments again when the disqualifying work is finished.

. The exceptions in the anti-cutback rule, permitting an amendment that decreases accrued benefits in the cases of "substantial business hardship” or termination of a pension plan, deal more with business problems facing the firm sponsoring the plan and not the internal financial integrity of a plan that might be affected by "double-dipping” even in good economic times. Because suspensions do not decrease accrued benefits, see infra Op. at 816, ERISA allows plan administrators more *816flexibility in adjusting the provisions for suspensions to maintain the financial integrity of pension plans. Under the majority's approach that would limit the availability of adjustments in suspensions to “substantial business hardship” or termination of a plan, the plan administrator loses such flexibility.

. The significance of age in the policy of retirement systems towards retirees’ receipt of earnings is exemplified by the rules of the Social Security system. Retired persons, aged 65 to 70, lose their benefits if their earned income exceeds a stipulated amount, but, after they reach age 70, they are allowed to keep all their earnings in addition to their benefits. See Soc. Sec. Admin. Pub. No. 05-10069 (March 2002). One may surmise that pensioners are more likely to have significant earnings before age 70 than after.