Court Opinion

ID: 6930537
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:57:23.506303+00
Date Added: 2024-06-11T16:07:09.538271
License: Public Domain

ORDER ON REHEARING
Filed June 13, 1994
We have for consideration a petition for rehearing before the panel by the plaintiffs/appellees/eross-appellants, Jack R. Holland, et al. The panel denies that petition.
We also have for consideration a petition for rehearing with a suggestion for rehearing en banc presented to us by The Amalgamated Sugar Company and The Amalgamated Sugar Company Retirement Plan Committee, defendants/appellants. The panel denies that petition for rehearing for the reasons stated below.
According to Amalgamated, ERISA Section 4044(b)(5) [29 U.S.C. § 1344(b)(5)], *981which the court failed to cite in its opinion, requires that a participant’s “mandatory contributions” must be paid out first on termination of a pension plan such as here involved. Thus, Amalgamated asserts that under approved accounting procedures, practically no employee contributions remain for calculation in the distribution of the residue (excess assets) and that its accounting calculation should be approved.
We reject appellants’ contention that 29 U.S.C. § 1344(b)(5) requires reducing the employees’ mandatory contributions for purposes of 29 C.F.R. § 2618.31(b) (determining employees’ share of residual assets) by those amounts paid out to the participants prior to the spinoff termination, and that the district court thereby erred by failing to apply § 1344(b)(5) accordingly.
In our view, § 1344(b)(5) does not apply in the case of a spinoff termination, but applies only in an ordinary liquidation of an employee-participating pension plan. The rationale of § 1344(b)(5) is to ensure that in an ordinary liquidation, participating employees get back first at least what they paid into the plan. In the case of a spinoff termination, however, where the employer may be eligible to obtain residual assets, application of that provision operates to the detriment of the employees. Accordingly, § 1344(b)(5) does not apply upon the circumstances of this case.
The panel’s decision is amended at page 976, with the addition of footnote 15, to clarify that the discussion of computing mandatory employee contributions under the plan at issue is limited to the situation of a spinoff termination.
In accordance with Rule 35(b), Federal Rules of Appellate Procedure, the suggestion for rehearing en banc was transmitted to all of the judges of the court who are in regular active service. No member of the panel and no judge in regular active service on the court having requested that the court be polled on rehearing en banc, Rule 35, Federal Rules of Appellate Procedure, the suggestion for rehearing en banc is denied.