Court Opinion

ID: 8999298
Source: CourtListenerOpinion
Date Created: 2022-11-27 12:55:14.787741+00
Date Added: 2024-06-11T17:11:08.084497
License: Public Domain

ALITO, Circuit Judge,
concurring.
I join the opinion of the Court, but I write separately to explain my understanding of the importance of tax regulations and rulings in an ERISA case involving a partial termination claim.
Under the Internal Revenue Code, a “qualified” trust (IRC § 401) enjoys substantial tax advantages. Under IRC § 411(d)(3)(A), a trust is not “qualified” unless “the plan of which such trust is a part provides that ... upon its termination or partial termination ... the rights of all affected employees to benefits accrued to the date of such termination [or] partial termination ... to the extent funded as of such date, or the amounts credited to the employees’ accounts, are nonforfeitable.” “As a result of this provision, all qualifying pension plans contain the assurances required by this section. Plaintiffs can then sue on the basis of the plan language.” Bruch v. Firestone Tire and Rubber Co., 828 F.2d 134, 151 (3d Cir.1987), aff'd. in part, rev’d. in part, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1988). This is precisely what took place in the present case. The plan at issue — presumably for the purpose of obtaining “qualified” status and the concomitant tax advantages — contains the assurances required by IRC § 411(d)(3)(A), and the plaintiffs are suing to enforce those assurances.
Since the plaintiffs seek enforcement of a plan provision that echoes the language of and was obviously inserted to satisfy IRC § 411(d)(3), it seems clear that the term “partial termination” in the plan was meant to have the same meaning as the same term in IRC § 411(d)(3) and related tax regulations and rulings. Thus, Treas. Reg. § 1.411(d)-2(b) is fully applicable here. Furthermore, because of the Internal Revenue Service’s statutory responsibilities, expertise, and experience in detecting partial terminations, an IRS determination that a partial termination has or has not occurred in a particular case, under either the “general rule” or the “special rule” (Treas.Reg. § 1.411(d) — 2(b)(1) and (2)), should be accorded deference by the courts.
This approach is particularly appropriate since IRC § 411(d)(3) and Treas.Reg. § 1.411(d)-2(b)(l) provide great leeway for determinations by the Commissioner. Neither IRC § 411(d)(3) nor any other provision of the Code defines the term “partial termination,” and as we noted in Bruch, 828 F.2d at 151:
[I]t is not easy to define the purpose of § 411(d)(3). Without a clear sense of the provision’s purpose it is difficult to decide what should and should not constitute a partial termination.
Treas.Reg. § 1.411(d) — 2(b) does not fully remedy this deficiency. For example, the general rule for determining whether or not a partial termination has occurred (Treas.Reg. § 1.411(d) — 2(b)(1)), provides very little concrete guidance. This provision states (emphasis added):
Whether or not a partial termination of a qualified plan occurs (and the time of such event) shall be determined by the Commissioner with regard to all the facts and circumstances in a particu*1187lar case. Such facts and circumstances include: the exclusion by reason of a plan amendment or severance by the employer, of a group of employees who have previously been covered by the plan; and plan amendments which adversely affect the rights of employees to vest in benefits under the plan.
Thus, if this provision is to be enforced, the courts must give substantial deference to the Commissioner’s determination. The “special rule” (Treas.Reg. § 1.411(d)-2(b)(2), provides somewhat more concrete guidance, but the available interpretive materials leave considerable uncertainty about its application in particular cases.
I do not believe that our prior holdings support the proposition that a “partial termination” for ERISA purposes may be a broader or narrower concept than a “partial termination” for tax purposes. Rather, I believe that our prior decisions properly held only that a partial termination under IRC § 411(d)(3) is a different concept from a termination under other, unrelated ERISA provisions. See United Steelworkers of America v. Harris and Sons Steel Co., 706 F.2d 1289 (3d Cir.1983) (termination under 29 U.S.C. § 1461); Chait v. Bernstein, 835 F.2d 1017 (3d Cir.1987) (termination under 29 U.S.C. § 1344). See also Bruch, 828 F.2d at 150-51 (discussing United Steelworkers).