Court Opinion

ID: 9474978
Source: CourtListenerOpinion
Date Created: 2023-08-05 05:13:55.149213+00
Date Added: 2024-06-11T17:44:26.234139
License: Public Domain

WELLFORD, Circuit Judge,
dissenting.
The issue in this case is a troubling one. Appellee, the employer contributor to an ERISA plan, seeks a return of its excess contributions to the plan after full satisfaction of all amounts due the employee participants in the plan. The latter, appellants in this case, seek the excess remaining in the plan representing contributions due to an actuarial miscalculation. The employer provided in the original plan, before amendment, that in no event would contributions revert to it. If successful, the employees would receive, in effect, a windfall toward which they made no payment and had no reasonable basis for expectation.
I find three cases affirmed without opinion by other circuits to be persuasive authority for the employer’s position, indicating that an affirmance of the district court’s decision would be appropriate.
The first case, In re C.D. Moyer Co. Trust Fund, 441 F.Supp. 1128 (E.D.Pa. 1977), aff'd without opinion, 582 F.2d 1273 (3d Cir.1978)1 also involved an employer funded pension plan providing for fixed participant employee benefits. The plan, not a part of a collective bargaining agreement, permitted amendments but was limited to make it “impossible ... for any of the trust corpus or income to be diverted to or revert to either of the employers or to be used for any purpose other than the exclusive benefit of the participants____” 441 F.Supp. at 1131 (emphasis added). The employer, despite this language, amended the plan when, upon proposed termination, it was learned that there was a substantial surplus in the plan above and beyond the fixed benefits provided for all participants. The amendment provided for refund to the contributing employer of the surplus assets due to “erroneous actuarial computations,” id., after full satisfaction to eligible employees. The court held that since it was not intended that there be excessive contributions due to actuarial miscomputation, a “mistake of fact,” the employer’s action was appropriate, and it could recover its mistaken excessive payments or contributions. Reference was made to Revenue Ruling 77-200 which permitted such employer actions despite both ERISA and I.R.C. “general prohibitions against diversion of assets” to employers under qualified plans. The court noted that this would not “penalize” a fully funding employer nor provide a “windfall” to employees “as a result of miscalculation.” Id. at 1133.
The second case, Pollock v. Castrovinci, 476 F.Supp. 606 (S.D.N.Y.1979), aff'd without opinion, 622 F.2d 575 (2d Cir.1980), involved an ERISA pension plan in which the employer made all contributions with a fixed formula for employee benefits. The plan did not provide expressly for employer recapture of excess contributions made beyond the amount necessary to provide for full specified employee benefits, and it contained the following provision:
The employer shall have power to amend the terms of this Plan in any way provided that no such amendment shall enable it to recover or divert from the exclusive benefit of the Participants the fund already deposited____
476 F.Supp. at 612 (emphasis added). The employer, nevertheless, amended the plan to provide that excess contributions would *125be distributed back to the employer. The court held that this did not violate ERISA principles, and like Moyer, was in accord with equitable principles under the circumstances. It cited another similar case allowing a retroactive amendment for reversion of excess plan assets to a contributing employer, Audio Fidelity Corp. v. Pension Benefit Guaranty Corp., No. 78-0623-12 (E.D.Va. Dec. 12, 1978).2
The third case, Waskington-Baltimore Newspaper Guild Local 35 v. Washington Star Co., 555 F.Supp. 257 (D.D.C.1983), aff'd without opinion, 729 F.2d 863 (D.C. Cir.1984) involved yet another similar factual situation under ERISA. The employer amended the plan to provide for reversion of excess pension plan trust assets to the employer after full satisfaction of plan benefits to employee participants despite the following language:
... no amendment shall divert the Trust Fund, as then constituted, nor any part thereof, to a purpose other than for the exclusive benefit of employees covered by the Plan____
555 F.Supp. at 258 (emphasis added). Washington Star Co. cited with approval Pollock which allowed reversion to the employer under like circumstances in accord with “the common law of trusts,” I.R.C., and “policies underlying the enactment of ERISA.” 555 F.Supp. at 260. Again, it was emphasized that non-contributing employees had no right to the extra benefits in the situation where the employees had received the full specified benefits; more than this would constitute a “windfall.” 555 F.Supp. at 265.
I am therefore disposed under the authority of these cases to affirm the district court decision, particularly with regard to the language set out in Section 13.1 of the Plan. If the language in Section 5.3 were construed to preclude the amendment and subsequent reversion to the employer, I would hold that the excess contributions should, nevertheless, not go to the employees as an undeserved windfall due to an actuarial miscalculation. Rather, I would hold that the excess contributions should be distributed to the Pension Benefit Guaranty Corporation which is charged with enforcing the responsibility under ERISA of providing employees generally the vested and/or specified benefits called for under employer pension plans.
ORDER
Upon receipt and consideration of the petition for rehearing filed herein by the defendants-appellees, the court concludes that it did not overlook the fact that the company amended the pension plan in 1976. To the contrary, this amendment was discussed at page three of the opinion. Further, the opinion did not hold that the appellee had not paid income tax on the recovered surplus from the pension trust. The opinion merely stated that there was no apparent requirement under the Internal Revenue Code for reporting this recovery as income and cited a proposed change in the Code to make certain that such recovered funds are taxed.
The petition for rehearing is denied.
Judge Wellford dissents.

. The continuing vitality of Moyer is somewhat questionable in light of Delgrosso v. Spang & Co., 769 F.2d 928 (3d Cir.1985). The latter case involved a collectively bargained for pension plan and contractually required contribution, and an amendment providing for reversion without any such amendment authority in the employer. The Third Circuit, however, itself distinguished the factual situation in Delgrosso from Moyer.

. Audio Fidelity was reversed by the Fourth Circuit at 624 F.2d 513 (1980). The latter decision was distinguished in Washington-Baltimore Newspaper Guild v. Washington Star Co., 555 F.Supp. 257, 262.