Court Opinion

ID: 9427910
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:22:14.227375+00
Date Added: 2024-06-11T17:23:10.471412
License: Public Domain

Mr. Justice Stewart,
with whom Mr. Justice White, Mr. Justice Powell, and Mr. Justice Rehnquist join,
dissenting.
Title IV of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U. S. C. § 1301 et seq., establishes a system of insurance to cover the termination of private pension plans. Under that Title, the Pension Benefit Guaranty Corporation (PBGC) must “guarantee the payment of all non-forfeitable benefits . . . under the terms of a [covered] plan which terminates.” 1 In turn, the PBGC may sue the company that maintained the plan for such part of the “guaranteed” payment as exceeded on the date of termination the value of the plan’s assets.2
*387The Nachman plan was terminated on December 31, 1975, several months after Title IY had become fully applicable to pension plans such as the one maintained by the petitioner.3 The issue in this case is, therefore, a narrow one: Whether, “under the terms of [the Nachman] plan,” the plan’s participants were entitled on the date of termination to “non-forfeitable benefits” in excess of the value of the funds that were then held by the plan.4
ERISA defines a “nonforfeitable benefit” as follows: 5
“The term ‘nonforfeitable’ when used with respect to a *388pension 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.” 6
*389No contention is made in this case that the benefits at issue did not arise from services rendered by the plan’s participants. Rather, the petitioner’s argument is that, in the words of the statute, “under the terms of [the Nachman] plan,” the contested benefits were both “ [conditional” and/or “legally [un] enforceable against the plan.”
For present purposes, only two provisions of the now-terminated Nachman plan need be considered. First, a sentence in Art. V, § 3, stated: “Benefits provided for herein shall be only such benefits as can be provided by the assets of the Fund.” Second, Art. X, § 3, stated:
“In the event of termination of the Plan, the assets then remaining in the Fund, after providing the accrued and anticipated expenses of the Plan and Fund . . . shall be allocated ... to the extent that they shall be sufficient, for the purposes of paying retirement benefits. . . .” (Emphasis added.)7
*390These two provisions, neither of which was void on the date of termination,8 rendered “conditional” every defined benefit set out in the plan. On termination, a participant’s right to any benefit defined in dollar terms was expressly hinged on the plan’s ability to pay that amount. Like any condition a plan might specifically place on a participant’s entitlement to *391a defined retirement benefit, this asset-sufficiency condition deprived the Nachman plan’s defined benefits of “nonfor-feitable” status to the extent that such benefits could not be defrayed by the plan’s assets.9 The Court does not explain why an asset-sufficiency limitation expressly set out in a pension plan is not a “condition” for purposes of determining the “nonforfeitability” of the plan’s pension benefits.10
By reason of the cited sentences in Art. V, § 3, and Art. X, § 3, it must also be concluded that the only defined benefits of the plan which on termination were “legally enforceable against the plan” were those that were fully funded. Under contract law, a person is liable only for that which he has promised to pay. The Nachman plan promised each participant that upon termination he would receive, not a particular retirement benefit defined in dollar terms, but rather such a benefit only if it could be funded out of the plan’s assets.
The Court notes that another sentence in Art. Y, § 3, of the plan provided that, “ [i]n the event of termination of this Plan, there shall be no liability or obligation on the part of the Company to make any further contributions to the Trustee except such contributions, if any, as on the effective date of such termination, may then be accrued but unpaid.” But this sentence had an entirely different effect from that of the two provisions discussed above. Since it only purported to limit the employer’s liability to the plan and not the plan’s obligation to the plan’s participants, the sentence in question neither *392made the benefits provided by the plan “[conditional” nor rendered them “legally [un] enforceable against the plan.” The Court is, therefore, quite correct in concluding that the sentence in question did not render “forfeitable” any of the retirement benefits provided by the Nachman plan.11 What the Court misses is the world of difference between the employer disclaimer clause and the provisions in the plan that limited what the plan itself promised to provide its participants. Only the latter made the retirement benefits “for-feitable” for purposes of ERISA.12
Three aspects of ERISA’s legislative history strongly support this interpretation of the statutory scheme. First, Congress discarded on its way to passing the Act a number of alternative definitions of the benefits to be insured, several of which if enacted would have read very much like the definition the PBGC has adopted and which the Court now holds embodies Congress’ true intent.13 Few principles of statu*393tory construction are more compelling than the proposition that Congress does not intend sub silentio to enact statutory language that it has earlier discarded in favor of other language. See Gulf Oil Corp. v. Copp Paving Co., 419 U. S. 186, 199-200.
Second, the Conference Report, in describing the bill that finally was enacted, stated that “vested retirement benefits guranteed by the plan . . . are to be covered” by the Act’s insurance scheme. H.'R. Rep. No. 93-1280, p. 368 (1974), 3 Leg. Hist. 4635. (Emphasis added.) Only a benefit that is unconditionally promised by a plan is a benefit “guaranteed” by that plan.14
Third, Congress delayed the effective date of the Act’s “minimum vesting standards” in order “to provide sufficient time for pension and profit-sharing retirement plans to adjust to the new vesting and funding standards, to make provision for additional costs which may be experienced, and to permit negotiated agreements to transpire. . . .” S. Rep. No. 93-127, *394p. 36 (1973), 1 Leg. Hist. 622. Disregarding this intent, the Court today effectively rewrites the Nachman plan to make it promise more than it actually did.
Nothing in the legislative history, on the other hand, truly supports the result reached by the Court. The Court relies on the fact that the terms “nonforfeitable” and “vested” were often used interchangeably in the legislative materials. This usage is said to be significant, because in the pension field a benefit is usually said to “vest” when a pension plan participant has fulfilled all the specified conditions for eligibility, such as age and length of service. The existence of other kinds of conditions, such as the sufficiency of the plan’s assets, would not affect the determination of whether or not a benefit had “vested” in this traditional sense of the word.
But many of the statements in the legislative history relied upon by the Court were made in connection with proposed bills that were not enacted and whose express terms would have insured benefits “vested” in the traditional sense of the word. See n. 13, supra. These statements have no bearing on the present case, which concerns the construction of entirely different statutory language. Many of the other statements in the legislative history noted by the Court were made with respect to the bill that originally passed the House of Representatives, quite a different document from the bill that later emerged from the Conference Committee and was enacted into law as ERISA. The House bill provided that the insurance provision would cover only retirement benefits that were “nonforfeitable” by reason of the bill’s minimum vesting standards. H. R. 2, as passed by the House, 93d Cong., 2d Sess., §§ 203, 409 (b)(1) (1974), 3 Leg. Hist. 3973-3979, 4024. See 2 id., at 3293, 3347-3348 (explanation by Chairman of House Committee on Education and Labor). Under the legislation so proposed, there never would have been a time when the insurance scheme was in effect and a substantial portion of every plan’s “vested” benefits were not also “nonforfeitable.”
It was the Conference Committee that created the time gap *395involved in this case (September 2, 1974, through December 31, 1975) during which pension plans were subject to the Act’s insurance program but not to its minimum vesting standards. See H. R. Conf. Rep. No. 93-1280, pp. 48, 245 (1974), 3 Leg. Hist. 4323, 4515. In discussing the Conference Committee bill, certain Members of Congress also equated “vested” rights with “nonforfeitable” rights.15 But there is no reason to suppose that these statements did not refer to the post-1975 operation of ERISA, when many benefits, “vested” in the traditional sense, also became “nonforfeitable” by reason of the Act’s minimum vesting standards.16
Finally, contrary to the Court’s assertion, the construction that I would give to the Act would not render meaningless the decision of Congress to make Title IY fully applicable as of September 2, 1974. That Title insured the following types of benefits provided by plans terminated between September 2, 1974, and December 31, 1975: (1) All benefits made ex*396pressly “nonforfeitable” by the terms of plans in existence on January 1, 1974;17 and (2) at least 20% of the benefits required by the Act’s “minimum vesting standards” to be “non-forfeitable” under the terms of plans created after January 1, 1974.18
For all the reasons discussed, I respectfully dissent.

 Title 29 U. S. C. § 1322 (a) more fully provides:
“[The PBGC] shall guarantee the payment of all nonforfeitable benefits (other than benefits becoming nonforfeitable solely on account of the termination of a plan) under the terms of a plan which terminates at a time when section 1321 of this title applies to it.”
Section 1322 (b) limits the amounts which the PBGC must so guarantee in respects not at issue here.

 29 U. S. C. § 1362 (b)(1):
“Any employer [who maintained a plan at the time it was termi*387nated, see § 1362 (a) and the exceptions provided therein] shall be liable to the corporation, in an amount equal to . . . —
“(1) the excess of—
“(A) the current value of the plan’s benefits guaranteed under this sub-chapter on the date of termination over
“(B) the current value of the plan’s assets allocable to such benefits on the date of termination. . . .”
A company’s liability under § 1362 (b) (1) may not, however, exceed “30 percent of the net worth of the employer determined as of a day, chosen by the [PBGC] but not more than 120 days prior to the date of termination, computed without regard to any liability under this section.” § 1362 (b)(2).

 See 29 U. S. C. § 1381 (a) (“The provisions of this subchapter take effect on September 2,1974”).

 If the answer to this inquiry is no, then under Title IV of ERISA the petitioner owes nothing to the PBGC. On the other hand, if the answer is yes, then the petitioner must pay the PBGC the amount by which the plan’s “nonforfeitable benefits” exceeded on the termination date the value of the plan’s assets, subject, of course, to the 30%-of-net-worth limitation contained in 29 U. S. C. § 1362 (b) (2) and the limitations set out in § 1322(b).

 29 U. S. C. §1002 (19).
As the Court notes, § 1002 states that the definitions set out therein are “[f]or purposes of [Title I].” That the § 1002 (19) definition of “non-forfeitable benefit” is not expressly made applicable to Title IV appears, however, to be attributable to nothing but inadvertence. In the bill that passed the House and was sent to the Conference Committee, the minimum vesting provisions and the termination insurance provisions were *388located under one Title. See H. R. 2, as passed by the House, 93d Cong., 2d Sess. (Table of Contents) (1974), 3 Leg. Hist. 3898-3899. The definition of “nonforfeitable” now contained in § 1002 (19) was made applicable to that entire Title. H. R. 2, §3 (1974), 3 Leg. Hist. 3903. The Conference Committee split the minimum vesting provisions and the termination insurance provisions into two separate Titles. As the definitional section had always been situated at the front of the minimum vesting provisions, it naturally followed those provisions .into Title I of the bill as enacted into law.
It would severely strain credulity to infer from these events that Congress decided to leave to pure chance the proper definition of “nonforfeita-ble” for purposes of Title IV. “Nonforfeitable” is used in Title I as a term of art. Congress used the same word in critical portions of Title IV. Had it intended “nonforfeitable” to carry one meaning in Title I and another in Title IV, Congress would presumably have said so, particularly since the two Titles were considered and enacted in tandem and were meant to function as an interrelated system of protection. Title IV, however, sets out no separate definition of “nonforfeitable,” even though that Title does contain a few definitions of its own. Furthermore, the Act’s legislative history reveals no suggestion that the word’s import should differ as between Title I and Title IV.
It follows that, insofar as the PBGC’s own definition of “nonforfeitable,” see 29 CFR §2605.6 (a) (1979), departs from § 1002 (19), it must be rejected. Nothing in the Act or its legislative history reflects a congressional intent to give the PBGC the authority to define the scope of its own entitlement to employer assets.
House and Senate bills and debates are reprinted, along with the House, Senate, and Conference Reports, in a three-volume Committee Print entitled Legislative History of the Employee Retirement Income Security Act of 1974, Subcommittee on Labor of the Senate Committee on Labor and Public Welfare, 94th Cong., 2d Sess. (1976) (cited supra and hereafter as Leg. Hist.).

 The Court asserts that the language contained in § 1002 (19) — “which arises from the participant’s service, which is unconditional, and which *389is legally enforceable against the plan” — modifies “claim” not “benefit.” I disagree. The definition reads: “The term 'nonforfeitable’ . . . means a claim ... to that part of a .. . benefit . . . which arises from the participant’s service, which is unconditional, and which is legally enforceable against the plan.” (Emphasis supplied.) But whether the operative language modifies “claim” or “benefit” would seem irrelevant 'for present purposes, in any event.

 Article X, § 3, of the Plan more fully provided:
“In the event of termination of the Plan, the assets then remaining in the Fund, after providing the accrued and anticipated expenses of the Plan and Fund, (including without limitation, expenses of terminating the Plan), shall be allocated by the Board [of Administration] on the basis of present actuarial values to the extent that they shall be sufficient, for the purposes of paying retirement benefits (the amount of which shall be computed on the basis of Credited Service to the date of termination of the Plan) in the following order or precedence:
“ (a) To provide their retirement benefits to persons who shall have been Retired Employees and entitled to current benefits under the Plan prior to its termination, without reference to the order of retirement;
“(b) To provide Normal Retirement Benefits to Employees aged 65 or *390over on the date of termination of the Plan, without reference to the order in which they shall have reached age 65;
“(c) ....
“(d) ....
“(e) ....
“(f) ....
“If, after having made provision in the above order of precedence for some but not all of the above categories, the assets then remaining in the Fund are not sufficient to provide completely for the benefits for Employees in the next category, such benefits shall be provided for each such Employee on a pro-rata basis.” (Emphasis added.)
Contrary to the Court’s suggestion, nothing in 29 U. S. C. § 1344 (allocation of assets of terminated defined-benefit plans) operated in any way to void the asset-sufficiency language of this provision in the Nachman plan. Section 1344 simply changed the order in which the assets held by the Nachman plan had to be allocated on termination to the plan’s participants.

 The provisions would have been illegal after December 31, 1975, to the extent that they conflicted with the “minimum vesting standards” that came into effect for plans like the Nachman plan on January 1, 1976. See 29 U. S. C. §1061 (b)(2). Those standards mandate that covered pension plans provide their participants with specified levels of “nonfor-feitable” benefits. See § 1053. All covered plans must, for instance, “provide that an employee’s right to his normal retirement benefit is non-forfeitable upon the attainment of normal retirement age.” In addition, a covered plan must provide employees who have participated in the plan for certain periods of time with specified minimum “nonforfeitable” percentages of their accrued benefits.
The Nachman plan — as a “defined benefit plan,” see 29 U. S. C. §§ 1002 (23), (34), (35); Alabama Power Co. v. Davis, 431 U. S. 581, 593, n. 18— could not, after January 1, 1976, have continued to promise its fully vested participants a “nonforfeitable” right only to that part of their “accrued benefit” which could be funded by the plan. See 29 U. S. C. §§ 1002 (23), (34), (35), 1053, 1054.

 As the Chairman of the House Committee on Education and Labor explained with regard to an earlier bill’s definition of “nonforfeitable” almost identical to that contained in 29 U. S. C. § 1002 (19) as finally enacted: “The definition of the term ‘nonforfeitable’ is intended to preclude any conditions to receipt of vested benefits other than those noted in the definition.” 2 Leg. Hist. 3306 (statement of Rep. Perkins) (emphasis supplied).

 To the extent that the PBGC’s own self-serving definition in 29 CFR § 2605.6 (a) (1979) points in a different direction, it conflicts with the statute and can be accorded no weight. See n. 5, supra.

 Correspondingly, I agree that the sentence did not affect in any way the petitioner’s liability to the PBGC under 29 U. S. C. § 1362 (b). The sentence in question purported only to absolve the petitioner of liability to the plan’s trustee for asset shortfalls. Had the sentence also attempted to protect the petitioner from its liability to the PBGC under § 1362 (b), it would presumably have been void to that extent.

 I also agree, however, with the Court’s conclusion that nothing in ERISA nvllifies clauses that protect employers from direct liability to plan participants for deficiencies in plan assets.

 For instance, the bill originally passed by the Senate insured retirement benefits that were “nonforfeitable” under the terms of the plan. H. R. 2, as passed by the Senate, 93d Cong., 2d Sess., § 422 (a) (1974), 3 Leg. Hist. 3702. Only one definition of “nonforfeitable” was contained in the bill. This provided that a “nonforfeitable benefit” was a benefit “which, notwithstanding any conditions subsequent which would affect receipt of any benefit flowing from such right, arises from the participant’s covered service under the plan and is no longer contingent on the participant remaining covered by the plan.” Id., § 502 (a) (20), 3 Leg. Hist. 3745. See also S. 4, 93d Cong., 1st Sess., §§ 3 (26), 3 (35), 401 (b), 402 (a), 502 (a) (20) (1973) (bill as reported by Senate Committee on Labor and. Public Welfare), 1 Leg. Hist. 494-495, 497, 532, 543; S. 4, 93d Cong., 1st *393Sess., §§ 3 (26), 3 (35), 401 (b), 402 (a), 502 (a) (20) (1973) (bill as originally introduced in Senate), 1 Leg. Hist. 103,105,137,148.
Similarly, the bill reported to the House on October 2, 1973, by the House Committee on Education and Labor provided termination insurance for “vested liabilities.” See H. R. 2, as amended, §§401 (b), 402 (a), 404 (b) (1973), 2 Leg. Hist. 2320, 2320-2321, 2325. Under the bill, “vested liabilities” were defined as “the present value of the immediate or deferred benefits available at regular retirement age for participants and their beneficiaries which are nonforfeitable and which are no longer contingent on continued service or any other obligation to the employer, sponsoring organization or other party in interest.” H. R. 2, as amended, § 3 (25), 2 Leg. Hist. 2256. In turn, the bill defined “nonforfeitable benefit” as a benefit “which arises from the participant's service and is no longer contingent on continued service or any other obligation to the employer, sponsoring organization, or other party in interest.” H. R. 2, as amended, §3 (19), 2 Leg. Hist. 2251-2252.

 See also 3 Leg. Hist. 4668 (Rep. Dent) (Termination insurance “will provide a backup guarantee to every pension plan that, regardless of the economic fortunes of the companies sponsoring the plan, its obligations will be met.” (Emphasis supplied.)).

 See, e. g., 3 Leg. Hist. 4734, 4735, 4741 (Sen. Williams); id., at 4752, 4758 (Sen. Javits); id., at 4800 (Sen. Nelson); id., at 4678 (Rep. Ullman) ; id., at 4694 (Rep. Brademas); id., at 4702 (Rep. Tieman).

 The Court’s theory that the term “nonforfeitable” as used in ERISA means no more than “vested” in the traditional sense must fail on an additional account. According to the definition of “vested” cited by the Court, “the Benefit under a pension plan that is described as vested, is, in the usual case . . . contingent . . . upon survival ... of the individual involved to the earliest date at which he can validly claim a pension. Thus, the right can be terminated by death. After retirement, each monthly payment is contingent upon survival of the individual. . . .” D. McGill, Preservation of Pension Benefit Rights 6 (1972). Under the Court’s theory, therefore, a benefit that is contingent on survival is by definition “nonforfeitable.” But were this the case, 29 U. S. C. § 1053 (a) (3) (A) would be wholly superfluous. That section provides that “[a] right to an accrued benefit derived from employer contributions shall not be treated as forfeitable solely because the plan provides that it is not payable if the participant dies (except in the case of a survivor annuity which is payable as provided in section 1055 of this title).” The fact that Congress felt it necessary to include this provision in the Act must be given weight in determining the proper meaning of “nonforfeitable.”

 For instance, had the Nachman plan simply not contained the provisions in Art. V, § 3, and Art. X, § 3, discussed above, it would have promised its participants a defined monthly benefit that was “nonforfeitable.” The petitioner would then have been liable to the PBGC for whatever portion of those benefits were “guaranteed” by the PBGC pursuant to 29 U. S. C. § 1322 and exceeded the value of the plan’s assets on termination. This liability would have been unaffected by the fact that a clause in the plan absolved the petitioner of any personal obligation to the plan’s participants or to the plan’s trustee.

 Title 29 U. S. C. § 1061 (a) provides that the “minimum vesting standards” of Title I of ERISA are applicable beginning September 2, 1974, to pension plans set up after January 1, 1974. Title 29 U. S. C. § 1322 (b) (8) states that “nonforfeitable” benefits provided by a plan that has been in effect for less than five years are “guaranteed” to the extent of 20% or $20 per month (whichever is greater) for each year of plan existence.