INTER MODAL RAIL EMPLOYEES ASSOCIATION v. ATCHISON, TOPEKA & SANTA FE RAILWAY CO.
Employees of Santa Fe Terminal Services, Inc. (SFTS), a wholly owned subsidiary of The Atchison, Topeka and Santa Fe Railway Co. (ATSF), were entitled to pension, health and welfare benefits under the terms of their collective bargaining agreements. These benefit plans were subject to the Employee Retirement Income Security Act of 1974 (ERISA). In 1990, ATSF awarded the work performed by SFTS to In Terminal Services (ITS), and terminated those SFTS employees unwilling to continue work with ITS. The benefit plan offered by ITS was less favorable than the SFTS plan, and SFTS employees brought suit under, alleging that they had been discharged "for the purpose of interfering with the attainment" of rights to which they would have "become entitled under [their SFTS] plan." ERISA Section 510. After the District Court dismissed the Section 510 claims, the Court of Appeals for the Ninth Circuit reinstated the employees' pension claims because Section 510 prevented interference with vested rights, but dismissed the employees' welfare benefit claims because such benefits did not vest.
Does Section 510 of ERISA bar interference only with vested rights?
Legal provision: Employee Retirement Income Security
No. The plain language of Section 510 indicates that the applicability of its interference clause is not limited to vested rights. Congress used the word "plan" to refer to both pension and welfare benefits, and at the same time indicated that welfare plans are exempt from ERISA's stringent vesting requirements. This statutory language forecloses the possibility that Congress meant to limit the protections of Section 510 to vested rights. The Court remanded the case to the Ninth Circuit for determination of whether the fact that the SFTS employees were eligible for welfare benefits meant that they had already "attained" such rights, so that any subsequent actions taken by SFTS could not "interfere" with the "attainment of . . . right[s] . . . under the plan."
Argument of Richard E. Schwartz
Chief Justice Rehnquist: We'll hear argument next in Number 96-491, Inter-Modal Rail Employees Association v. The Santa Fe Railway.
Mr. Schwartz, you may proceed whenever you're ready.
Mr. Schwartz: Mr. Chief Justice, and may it please the Court:
The railroad workers who are the petitioner in this case have been denied their day in court by the dismissal of their petition in the district court.
This case pleaded... presented today pleaded a unique, egregious conspiracy to deprive a particular group of employees of their welfare plan benefits.
They have pleaded specific intent to commit acts prohibited by section 510 of ERISA.
They have pleaded and their case involves the use of deceit leading to coercion used to implement this sham transaction.
The conduct pleaded fits squarely within the congressional intent in the enactment of section 510.
The railroad workers here have pleaded a conspiracy to interfere with the specificity sufficient to comply even with Rule 9 of the Federal Rules of Civil Procedure.
Unknown Speaker: Mr. Schwartz, is it true that this employer could not use the change route that you say could have been used to accomplish this purpose?
That is, these benefits do not vest.
Therefore, the plan could be amended to reduce them.
The benefits could be terminated.
Mr. Schwartz: Justice Ginsburg, these benefits were contractually vested as part of a Nation-wide multiemployer bargaining pattern with the Teamsters Union.
Unknown Speaker: That... so you are... the answer to my question is there was no amendment route here--
Mr. Schwartz: No.
Unknown Speaker: --because it was a multiemployer plan.
Therefore, suppose an employer wants to accomplish that objective just as a matter of cutting costs.
You're saying it's impossible.
Mr. Schwartz: It would be possible only if they were willing and able to go back and bargain for a change in the contractually agreed benefits and then, pursuant to that, make the necessary--
Unknown Speaker: But the same thing that you are calling a conspiracy and... could have been done were this only a single employer plan as distinguished from a multiemployer plan.
Mr. Schwartz: --I do not believe that's correct, because we're still dealing with the element of the contractual vesting of the benefits, Justice Ginsburg.
Unknown Speaker: Mr. Schwartz, some of us are having difficulty in hearing you.
I wonder, could you speak up a little more?
Mr. Schwartz: Certainly, Mr. Chief Justice, I will attempt to.
Unknown Speaker: Now, if there were no union agreement the law clearly allows the employer to just get rid of these welfare benefits under the plan.
Is that true?
Mr. Schwartz: --Provided that there is appropriate compliance with the amendment procedures, yes.
Unknown Speaker: Right, and the problem here is that there is a union agreement under which the... under the terms of which the employer must provide these benefits.
Is that the problem?
Mr. Schwartz: That's certainly an element in our contention, that they could not legally have gone about doing this had they not resorted to this subterfuge.
Unknown Speaker: Well, they could have legally done it for purposes of the ERISA statute, but in so doing, would have violated the union agreement.
Mr. Schwartz: They would have run afoul--
Unknown Speaker: Is that right?
Mr. Schwartz: --Yes.
Unknown Speaker: Well, then you're saying in effect that they could do in a... with a single employer plan, no contrary collective bargaining agreement, they could do in two steps what you're saying they can't do in one step here, because number 1, they could simply eliminate the benefits, and having eliminated the benefits they could then eliminate their division or fire all those employees who had been getting the benefits, and so the different... it seems to me that your argument is a very formalistic argument.
Mr. Schwartz: Justice Souter, I believe that we need to make a proviso... and I believe that the Government may talk about this.
There is some basis, I believe, for the opinion that even plan amendments can't be made without... when they're done for a specific discriminatory purpose.
I am not prepared to--
Unknown Speaker: Well, but why is it a discriminatory purpose simply to say I am... you know that they can be eliminated, period, can't they?
They're costing me too much.
There's no collective bargaining agreement that I would violate.
There's no multiemployer plan, so I have autonomy here, and I'm simply going to eliminate them.
That they can do as a general proposition.
Mr. Schwartz: --As a general proposition, yes.
Unknown Speaker: All right.
And what, then... if they can do that, why does it then become discriminatory when, having eliminated those benefits they say, I probably would be better off to have an outside company doing this work, so I will eliminate the employees, too.
How does that suddenly turn the prior action into a discriminatory one?
Mr. Schwartz: We're dealing with a situation here, what is generally called a fire and hire situation.
They wanted to keep these employees.
They're highly trained and productive.
But they wanted to keep them without the benefits, and therefore they had to go through this elaborate--
Unknown Speaker: Yes, but they... on your theory I guess they didn't.
All they had to do was to say there won't be any more benefits.
Mr. Schwartz: --Well, I think it's a great deal more complicated than that.
They have to make the necessary plan amendments and, making plan amendments, they incur consequences with their own workforce.
Unknown Speaker: But if they wanted to go to the... oh, you are quite right there's a countervailing sort of political consideration within the marketplace because you then end up with a bunch of employees who are mad, but if, as a matter of law, they want to accept that burden, they can... the employer could do that and couldn't have... could have done it here, I take it, is that right?
Mr. Schwartz: Certainly I do not think it is correct that the employer here could have done it without modification of their contract.
Unknown Speaker: All right, because you had a CBA, yes.
Mr. Schwartz: That's absolutely correct.
Unknown Speaker: May I ask this question?
I understood you to say earlier in your presentation that the rights at stake here had already vested, which puzzles me because you're relying on a statute that talks about being... losing... being discharged in order to prevent a right from becoming vested, or attainment and so forth.
Mr. Schwartz: Justice Stevens--
Unknown Speaker: Which is your view?
Are the rights vested or not?
Mr. Schwartz: --We believe that the rights are contractually vested for the duration of the collective bargaining agreement.
This was a--
Unknown Speaker: Oh, I see, being vested in an unusual sense.
Mr. Schwartz: --Yes.
Unknown Speaker: And if you had a vested right, why don't you just sue to recover that right?
You don't need the statute, it seems to me, to recover... to get compensation for the destruction of a vested right.
The statute is designed to prevent, discharged in order to avoid vesting.
Mr. Schwartz: Yes.
Unknown Speaker: And I'm not quite clear exactly what your position is on that.
Mr. Schwartz: The position is that they were vested for a limited period under the terms of the CBA, Justice Stevens.
Unknown Speaker: All right.
Give me an example of a particular individual who had a vested right and is not able to just sue for that right without relying on the statute.
Maybe he'd gone to the dentist and ran up a dental bill or something.
He had the right to have it paid.
Is it that sort of thing you're saying?
Mr. Schwartz: Well--
Unknown Speaker: --the right in the future if he wants to go to the dentist it will be paid?
Mr. Schwartz: --It's important to understand that within the context of the CBA, of course, we're dealing with section 301.
We're dealing with a lot of elaborate grievance and arbitration machinery, and exclusive remedies.
We're also dealing here with a bankrupt Teamsters local that was not able to share those burdens.
Unknown Speaker: Well, Mr. Schwartz, the question presented in your petition for certiorari is based entirely, as I would read the question, on section 510 of ERISA, and that certainly was the basis for the Ninth Circuit's decision, and some of my colleagues I think are expressing the view what has the collective bargaining agreement and all that got to do with it if you're claiming under section 510?
Mr. Schwartz: We are claiming exclusively under section 510.
We believe that the collective bargaining agreement, Mr. Chief Justice, is important in terms of understanding the context in which this arose.
Unknown Speaker: Those are kind of weasel words.
The... important in understanding the context in which it arose.
If it's based on 510, tell me specifically, if you would, what the collective bargaining agreement has to do with it.
Mr. Schwartz: I believe the collective bargaining agreement has to do with evaluating the respondent's arguments relating to targeting their claim for a judicially crafted exception to section 510.
Unknown Speaker: Well, as I read the respondent's brief they no longer support the reasoning of the Ninth Circuit in that respect, or at least they say you don't have to read the Ninth Circuit opinion in that view.
Mr. Schwartz: Our understanding is that they no longer support the Ninth Circuit's rationale for the decision in the case.
Unknown Speaker: You mentioned something about the bankrupt Teamsters Union, and as I understand it both the old employer, the Santa Fe group, and the new employer, the ITS, both were units that had Teamsters representing the workers.
Is that not so?
Mr. Schwartz: These workers in large part were given a last minute opportunity to apply for reemployment with the substitute employer, respondent Internal Services.
The Teamsters Union signed them to a contract with greatly reduced benefits.
Unknown Speaker: Is it... was it the same Local in both cases?
Mr. Schwartz: Yes, Justice Ginsburg, it was.
Unknown Speaker: And the union has not taken any position throughout these proceedings, these 510 proceedings?
Mr. Schwartz: None whatsoever.
Unknown Speaker: Strange, when you, whether for background or whatever reason, talk about labor law rights, and the union has not been heard from.
Mr. Schwartz: I believe it has to do with the internal Teamster struggles locally in Los Angeles and nationally, Justice Ginsburg.
Unknown Speaker: Well, what health and welfare benefits were actually reduced as a result of the restructuring of the work at Hobart Yard?
Mr. Schwartz: The health insurance coverage was dramatically reduced.
Unknown Speaker: Okay, but not for any coverage for things that had already occurred.
We're talking about future benefit opportunities.
Is that what we're talking about?
Mr. Schwartz: It occurred within a matter of a space of less than 2 weeks, Justice O'Connor.
Unknown Speaker: But we aren't talking about people who had incurred an injury and wanted medical benefits.
We're talking about people who might in the future incur injuries or illness and need medical benefits.
Mr. Schwartz: We... Justice O'Connor, we're talking about people who enjoyed for a period of at least 1 year longer before the implementation of this transaction an ongoing coverage of entire medical care.
Unknown Speaker: Well, they had health insurance, but we're not talking about people who had gotten sick and incurred medical bills already, and then they weren't paid.
We're talking about future opportunity to do that.
Mr. Schwartz: As far as we are aware the multiemployer health plan which was administered principally by the union management group continued to pay properly accrued claims up until--
Unknown Speaker: Right.
Mr. Schwartz: --the date of implementation.
Unknown Speaker: So we are talking about future opportunities for health care.
Mr. Schwartz: In addition, Justice O'Connor, we're dealing with a loss of vacation pay, a loss of sick pay, and the welfare--
Unknown Speaker: But not vacation pay that had already... there would be an obligation to pay, just future vacation pay.
It's a reduction in the amount of vacation pay that would be paid in the future, rather than cutting off some that had already been earned, is that correct?
You're kind of vague in your answer.
It's helpful to us if we get a categorical--
Mr. Schwartz: --The Teamsters contract is extremely elusive.
Unknown Speaker: --What is your answer?
Mr. Schwartz: The Teamsters contract is extremely elusive, because they went from the nationally bargained Teamster contract to what is known as a white paper contract, which was a very short, specifically focused contract--
Unknown Speaker: We're trying to talk about section 510, though.
We're not trying to talk to you about the union contract, because the claim is made under section 510 of ERISA, and that's what we're trying to find out from you, how to make it fit under section 510 of ERISA.
Mr. Schwartz: --We think--
Unknown Speaker: Your claim, that is.
Mr. Schwartz: --Justice O'Connor, we think it's from the plain language and the underlying legislative history and the purpose of Congress in enacting ERISA that the second clause of section 510 covers this situation precisely.
The language, interference with the attainment of a right to which participant may become entitled--
Unknown Speaker: Wouldn't you say attainment, though, suggested something that was to be... to happen in the future?
Mr. Schwartz: --Yes, but it doesn't necessarily imply vesting, and in this particular situation, Mr. Chief Justice, we had a situation where people expected that if their children had doctor appointments in April or May they would be covered under the Teamsters plan.
If they needed to go in for a previously scheduled operation in June, that would have been covered prior to March 19, when the people were suddenly informed that they were going to have the opportunity with the new employer on April 1.
Unknown Speaker: But I suppose the employer's argument is that if something had not been attained as of the date this action was taken, it didn't violate that section, section 510.
Mr. Schwartz: I hesitate to speak for Mr. Holzhauer, but it's our understanding with their... they have... I believe they have essentially conceded and would no longer take the position that the welfare, health and welfare benefits such as are involved here are not covered by the second clause of 510.
I think that's apparent throughout their brief.
Unknown Speaker: No, I understood their argument to focus more on the phrase accompanying the word attainment.
Mr. Schwartz: I... what we find is the more interesting and perhaps troublesome issues deal more with their argument relating to targeting, Mr. Chief Justice.
Clearly, attainment and may become entitled indicate some element of maturity, certainly.
Unknown Speaker: I mean, supposing you've been working at a place 11 months and you don't get medical benefits until you've been there for a year.
It seems to me that would fit very nicely under the attainment clause.
You're fired at the end of 11 months because the employee doesn't want you to get medical benefits.
But that really isn't this case, is it?
Mr. Schwartz: No, it's not, because here... it might be the case that if you were working at that hypothetical employer under a contract that had another year and... another 13 months to go, instead of being an at-will employee.
Unknown Speaker: Can I ask you one hypothetical question?
Supposing there's no union agreement or anything involved, and the employer finds out that a segment of his workforce performing one specific task, they... they're entitled to welfare... health and... health benefits, and they find out that if they subcontracted all that work out to others they would save the cost of those benefits, and they decide that's the reason they want to make that change, and they do it.
Have they violated the statute?
Mr. Schwartz: I believe that's... they have, Mr. Justice Stevens, and I believe that that's pretty much what occurred here.
The railroad targeted the one group in the entire railyard that was dealing with... that was covered by ERISA-protected benefits rather than living under the... explicitly under the railroad retirement plans.
Unknown Speaker: But you would say, I take it, that if there had been further reasons, in addition merely to the cost of providing these benefits, for wanting to get rid of this division and contract out, that if the existence of those further reasons... say they were... they happened to have a bunch of very inefficient employees and so on... the existence of those further reasons would preclude a violation of the statute.
Mr. Schwartz: I think it's possible to draw a bright line distinction between legitimate efficiencies versus mere benefits... gains from the avoidance of benefits.
Unknown Speaker: Well, it is in theory, although it would be difficult in practice, because if you concede, and if we were to hold that so long as the avoidance of the medical... the cost of welfare benefits was only one among other reasons that that would be legitimate, then every employer who wanted to do what this employer did would simply claim other reasons, so it would be difficult of proof, even though in theory there would be a bright line.
Mr. Schwartz: Certainly I believe that the Court needs to be extremely careful not to open the floodgates to circumvention of the statute, yes.
Unknown Speaker: No, but I mean... don't you open... I don't know whether it's a floodgate or not, but don't you open the gate by conceding that if there are other reasons in addition to the ones given by the employer here, there wouldn't necessarily be any violation of the statute?
Mr. Schwartz: I suppose we would get into the shifting burden analysis and whether the other reasons given are protectural--
Unknown Speaker: No, but I just want to make sure I understand your argument.
Maybe I'm wrong, but I thought you had conceded that, that if there is--
Mr. Schwartz: --I hope I--
Unknown Speaker: --a generalized desire to save money, or to get more efficient work... work done more efficiently, and the desire to save money on the welfare plan is only one component among several others that add up to the reasons for wanting to make this change, I thought you conceded that under those circumstances the employer could do what this employer did, and it would not violate the statute.
Am I wrong?
Mr. Schwartz: --Justice Souter, I... if I gave that impression I regret that I... I spoke in error.
I believe that--
Unknown Speaker: Okay.
Mr. Schwartz: --simply the identification of another... one or more purported efficiencies is not sufficient.
I believe that the Court--
Unknown Speaker: Well, let's... but let's assume it's at least real.
Forget the question of proof now.
Let's just assume that there are these other reasons, but among them, one among them is the desire to save the cost of the welfare plan.
Does... and so the employer eliminates the division and contracts out.
Does that violate the statute?
Mr. Schwartz: --We would submit that in that situation the focus must and should be on whether or not the cost-savings reflect substantially more than the gain--
Unknown Speaker: Mr. Schwartz, I thought your position was, this is a pleading case and you did allege the employer did this for the specific purpose of, and if that's... if this is a determination to be made on the face of the complaint, then whether there were other reasons that you might fail as a matter of proof, but at this stage you made the allegation that you say should get you through the door.
Mr. Schwartz: --It is a pleadings case, and we believe it should be sufficient to give these railroad workers their day in court.
Unknown Speaker: Thank you, Mr. Schwartz.
Am I pronouncing your name correctly?
Argument of Cornelia T. L. Pillard
Mr. Pillard: Yes.
Thank you, Mr. Chief Justice, and may it please the Court:
Our position is that section 510 is not limited to pension rights or rights capable of vesting, but also covers rights to welfare benefits.
The court of appeals' holding to the contrary cannot be squared with the language of the statute.
Section 510 uses the general term, employee benefit plans, which the statute defines to include both pension plans and welfare benefit plans.
Unknown Speaker: Well, the respondent seems to pretty well agree with this much of your argument.
What do you do with my hypothetical case, just a clean-cut example of trying to cut costs among others by welfare... you know, by contracting out to save the money there?
That's clearly an economic motive, and there were no vested benefits in the sense that there were no unpaid medical bills based on injuries that had already occurred.
Mr. Pillard: In our view, generally that situation would not show proof of the prohibited purpose, with one caveat.
If the choice of the employees whose jobs were being contracted out were based on the fact that they were a group of employees who were imminently going to vest, or who the employer knew were ill, for example, as a result of--
Unknown Speaker: No, I'm assuming none of that... none of that.
Pure economic... everyone is healthy at the time that the decision is made, but it's just a little cheaper to do it this way.
Mr. Pillard: --In our view that would not be covered.
What is covered, however, and what we believe is a core case is a case of a person who the employer knows has become ill, and who is fired before that person has seen the doctor, and therefore before the right to medical care has actually accrued.
Unknown Speaker: This happens all the time?
Mr. Pillard: This is a very common scenario, where an employer has offered health care coverage with particular coverage levels, and when an employee becomes ill, although the employer would be free generally to amend the plan to eliminate coverage for an illness that seems too expensive or burdensome, instead, the employee keeps the plan in place with respect to other employees but discharges the employee to interfere with the attainment of the right to claim coverage under the plan.
Unknown Speaker: If you told me those are real life situations that happen often, you've answered a question I was about to ask.
That is, I was... I understand that the text covers health plans as well as other plans, but I couldn't really understand what real life situation they were addressing--
Mr. Pillard: That--
Unknown Speaker: --because I didn't know... the Chief Justice gave a hypothetical of a company that has a health plan but you only come under it after 1 year.
I'm not... you know, I don't think... I don't know of any that exist like that.
You could create one.
But I was trying to figure out what Congress had in mind bringing these other things in, and it's this situation that you've just described.
Or, for example, an employee who has a child with a serious heart condition, and the employer knows that to take care of that child is going to cost hundreds and hundreds of thousands of dollars worth of health care.
Now, if that happens, does that cause the employer's premiums to go up, basically?
Mr. Pillard: --It might with an experience-related plan, that's right.
Unknown Speaker: And so the employer might have a motive to get rid of the employee who has a child that would cost a lot of health care benefits in the future.
Mr. Pillard: That's exactly right.
Unknown Speaker: And that does happen.
Mr. Pillard: And that motive would arise even with the prospect of the medical care being undergone, and therefore before the right had itself accrued and become--
Unknown Speaker: But Ms. Pillard--
Mr. Pillard: --an enforceable right under the plan.
Unknown Speaker: --It wouldn't be a violation... if I understand your interpretation correctly, it wouldn't be a violation if you fire the employee after the child has already received some benefits, or if you fire the employee who himself has a serious condition after he's already gotten some of the benefits.
Mr. Pillard: That would be a violation--
Unknown Speaker: That would be.
Mr. Pillard: --Justice Scalia, under the first clause of section 510--
Unknown Speaker: Ms. Pillard--
Mr. Pillard: --which prohibits discharge for the purpose--
Unknown Speaker: --Attaining--
Mr. Pillard: --as a result of exercising a right.
Unknown Speaker: --Of exercising a right.
I hope we can get to this case, because the examples you've been given of retaliation, of discharging a particular employee because that employee is going to cost too much, there are a number of court of appeals cases dealing with that discrimination, but here we have something different.
We have not, we're going to discharge employee A because we've heard he has a heart disease.
It is en masse.
It is faceless.
It says, all of the workers in this unit go, and then we're going to have a subcontract.
That's quite different than what Congress had in mind when it says, don't fire the guy just before his pension vests, and you say that same thinking transposes to health and welfare benefits, but what about the significant difference that this isn't a case about discharging a particular employee.
Mr. Pillard: That's right, Justice Ginsburg, and I do want to get to this case, but I would note that as a prudential matter we don't think the Court should reach the alternative grounds, because they were not argued in the court of appeals.
They were not decided by that court.
They weren't raised in the petition, and they were not briefed in the brief in opposition.
Unknown Speaker: But aren't they troubling... isn't that issue troubling courts all over the land?
Mr. Pillard: In fact, there's very little development on the issue in the courts of appeals, and so that's one of the reasons that we think the Court need not read that issue, but I do want to address that--
Unknown Speaker: Well, but the question presented certainly covers that issue.
Mr. Pillard: --As a... yes, I think you're right that it is encompassed, it's fairly encompassed within the question presented.
Unknown Speaker: And if we accept the argument... assuming that, and if we accept the argument or the distinction that I thought you were drawing before, that distinction seemed to be that the... at least with respect to welfare benefits violation or not turned on whether there was a specific employee in mind, whether there was a specific accrual of benefit in mind, and if that's the case, then I suppose what the employer did here would be perfectly permissible under the statute.
Mr. Pillard: Justice Souter, in our view the core case includes the case where the employer has a specific employee in mind, but it also includes our case.
It's important to note that the court of appeals--
Unknown Speaker: Well, if it includes our case, then why do we bother about the specificity of the employee?
Mr. Pillard: --It's important to note that the court of appeals held that there was a claim for interference with pension benefits without any additional allegations beyond a general allegation of purpose.
Unknown Speaker: Right.
Mr. Pillard: And if that's enough on that side without a targeting or identification of an individual employee, we submit that it should be enough on this side.
Now, what we have here is a difference--
Unknown Speaker: So that the targeting of the individual is not essential to the answer, right?
Mr. Pillard: --Right.
Unknown Speaker: Okay.
Mr. Pillard: Although we have here, at the pleading stage we don't have the facts developed and so it's very difficult to say what kind of proof would suffice to be proof of purpose, really a lot of the discussion about whether targeting is required, or a foreseeable rise in cost is required, is a discussion that really goes to what counts as proof of purpose, whereas here we're at the pleading stage.
Unknown Speaker: I thought the--
Mr. Pillard: Given that--
Unknown Speaker: --Justice Kennedy I think has a question for you.
I thought your answer to Justice Stevens at the outset that if for sheer cost standpoints, because welfare benefits were expensive, these employees were terminated, the work was sent elsewhere, that that would not be a violation, and I want to know what is the test that you have that leads you to give him that answer.
Mr. Pillard: --Our test is that the purpose has to be a purpose to interfere with the attainment of benefits in the sense that the action has to be taken not just in spite of its impact on benefits but because of the impact on benefits.
It has to be a specific focus on benefits.
Now, let me focus on this case.
Unknown Speaker: Well, but that, it seemed to me Justice Stevens' case covered that.
Sure, that's the whole purpose, yes.
In my hypothetical that was the whole purpose.
Mr. Pillard: Not to focus on benefits as such.
Here you have--
Unknown Speaker: Well, his hypothetical was the benefits are expensive.
Mr. Pillard: --Right, and--
Unknown Speaker: And they look at these benefits and say, we can't afford these things.
Mr. Pillard: --That's right, and there's a general desire to save costs, and where the incidental effect of that, where the employer is indifferent as between saving those costs out of benefits or saving those costs in other ways, through greater efficiency or through diminution in salary, or what have you, there's--
Unknown Speaker: No, but that's changing Justice Stevens' hypo.
He... Justice Stevens' hypo as I understood it was, the only reason is to save these costs.
He may not wish his employees ill, perhaps, but his only reason is to save the costs.
Mr. Pillard: --Right.
Unknown Speaker: Now, you can't split it as fine, it seems to me, in his case as you're trying to do.
Mr. Pillard: Here... here you have more, Justice Souter.
Here you have a situation in which the employer had promised to continue to pay benefits at a certain level for a year, and--
Unknown Speaker: Under the CBA.
Mr. Pillard: --and it states... an instruction--
Unknown Speaker: Under the CBA.
Mr. Pillard: --This transaction--
Unknown Speaker: What has the CBA got to do with the meaning of 510?
Mr. Pillard: --It has to do with this.
Unknown Speaker: Maybe it's a violation of the CBA.
What's it got to do with that?
Mr. Pillard: It has to do with this.
The section does not cover any conceivable rights to which an employee may become entitled in the future, but it does cover the situation in which the employee has a concrete expectation.
In the individual case, that concrete expectation is supplied by the fact that the plan is continuing with respect to the other employees, and that expectation drops out when the plan is legitimately amended.
In this case, the concrete expectation is provided by the fact that the employer has bargained with, has promised the employees that it will continue the coverage for an additional year.
Where that's the case--
Unknown Speaker: Why is the expectation any more concrete simply because there happens also to be a CBA?
Why isn't there an equally concrete expectation when he simply establishes the plan and says, you work for me, you get the benefits of the plan?
Mr. Pillard: --There's not that concrete expectation precisely because where action is taken with respect to the whole workforce the plan could simply be terminated and in fact if the employer wanted to protect itself as a formal matter maybe it would terminate the plan and then fire the employees, or lay the employees off.
Here you have a situation that was structured to strip these employees--
Unknown Speaker: Thank you, Ms. Pillard.
Mr. Pillard: --of the rights they would have had for the additional year.
Unknown Speaker: --Ms. Pillard, your time has expired, and I expect you to sit down when I tell you your time has expired.
Mr. Pillard: I apologize, Mr. Chief Justice.
Unknown Speaker: Mr. Holzhauer, we'll hear from you.
Argument of James D. Holzhauer
Mr. Holzhauer: Mr. Chief Justice, and may it please the Court:
Petitioners claim that Santa Fe violated section 510 of ERISA by contracting out work in order to reduce benefit costs, exactly as Justice Stevens presented in his hypothetical.
Assuming for now that those allegations were correct, they do not state a claim under section 510 of ERISA.
Section 510 should not be interpreted to require employers to ignore a very real element of labor costs when they make fundamental business decisions about the scope and nature of their operation and whether they're going to do work in-house or subcontract work, whether they're going to have something done at all, or decide to close a particular operation.
The language of the statute--
Unknown Speaker: Well, Mr. Holzhauer, you take the position that the employer may decide that the cost of welfare benefits under the Railway Labor Workers Act is just too expensive, and if we can get rid of that whole requirement, we will be better off economically, and so we'll have this termination here.
Mr. Holzhauer: --That's correct, Your Honor.
Unknown Speaker: And that that is not prohibited by section 510.
Mr. Holzhauer: That's correct.
The employer here, an employer can determine that its obligation to continue its benefit costs, no matter where they're from, are too expensive, and we found out that we can subcontract the work and reduce those costs.
That does not violate section 510.
Unknown Speaker: So what do we do with the attainment... for the purpose of interfering with the attainment of any right language in 510?
Mr. Holzhauer: Well, the attainment language, interfering with the attainment of any right to which a participant may become entitled talks about becoming eligible, or in our view refers to becoming eligible, arriving at, or attaining a ripe old age is the way Black's defined it, citing some old cases, reaching or becoming eligible for a benefit.
And in section 510, like elsewhere in ERISA, attain and attainment are used regularly to talk about attaining a particular age, attaining years of service, attaining a qualification that's necessary to become eligible for a benefit.
Unknown Speaker: So the act has to be specific to the employee?
In other words, if it is specific to the employee... A is about to become 60 years old, B is about to have a tooth extracted, what-not.
That is the kinds of attainment that you're talking about here, and therefore the line is drawn between acts intended to... in effect to preclude benefits to specific individuals as opposed to acts on a more global scale.
Is that where you draw the line?
Mr. Holzhauer: I think that's generally correct, although I would say this.
First of all, I think the tooth extraction case might come under the exercising part of section 510, but in the Third Circuit case, the Gavelette case, the Court determined that the employer decided that a large group of employees at one plant were about to become vested at one point, or were subject to vesting and were about to reach the vesting point, which is possible, considering that vesting is over time.
It might be a plant that was just opened 5 years ago.
Under those circumstances I think an argument, a strong argument can be made that section 510 has been violated even though the decision is not on an individual basis.
Unknown Speaker: But I don't see how this squares with your attainment argument.
You began by saying attain means that you're about to reach something.
This is the Black's Law Dictionary.
But then you said, now of course this doesn't apply to... you had a wisdom tooth hypothetical, or Justice O'Connor's hypothetical of a very expensive particular case.
Suppose that that employee was receiving benefits.
He or she had attained the right in that sense, and the employer terminates in order to avoid the coverage.
Mr. Holzhauer: Well, I think that could quite likely be a violation of the exercising clause of section 510.
The attainment clause talks about attaining rights to which the participant may become entitled, and I think that's another future-oriented kind of reference in that provision.
Clearly, it would violate section 510 to fire someone because they filed a claim, an expensive claim relating to having their wisdom teeth extracted.
Unknown Speaker: But isn't it equally clear... let me just be sure I get one thing clear.
Mr. Holzhauer: Sure.
Unknown Speaker: That if you took my hypothetical and said, instead of health benefits, we're concerned that 90 percent of these people are about to reach 20 years of service and therefore have vested benefits, and you took out the whole division and substituted with a contract, that would clearly violate it, would it not?
Mr. Holzhauer: That would be correct.
I think vesting, the maximum period for vesting now is 10 years in a multiemployer, between 5 and 8 in other plans, but if it was on the cliff for vesting, and you said everybody in that plant... this plant was just opened 5 years ago, and everybody in that plant is about to vest, and therefore I'm going to close that plant and maybe open it up again next week or subcontract out the work or whatever, I think that would be a section 510 violation.
Now, Justice Kennedy, in your question, the person that had the tooth extracted clearly would violate section 510, the exercising clause, to fire him because he filed a claim.
I think a strong argument can be made that if the employer sees him coming down the hall with his claim form and a stack of medical bills with it, it might violate 510 then as well, and it might violate 510, the exercising clause, if the employee... employer knew that that employee has a particular illness or particular condition that is going to require, or has already required large expenditures or benefits.
But that's not what we have here.
What we have here is something very close, as counsel for petitioners acknowledge, to Justice Stevens' hypothetical, an employer who decides that benefit costs are too high.
Unknown Speaker: But why is that any different?
I mean, that's just like a lot of individual people who are submitting too many claims--
Mr. Holzhauer: It's not like a lot of--
Unknown Speaker: --and you said earlier that if you have a lot of individual people who are about to vest--
Mr. Holzhauer: --Right.
Unknown Speaker: --that would be a violation if you closed down that plant.
Why is it any different if you close down a plant because you have a lot of individual people who have already vested and are just sucking the money out of the company with a lot of claims?
Mr. Holzhauer: The reason why I think the Gavelette kind of situation, where people are about to vest, is different is because it focuses on the fact that a large number of people are about to attain eligibility for a benefit.
It's not that they're--
Unknown Speaker: There's an exercise clause as well, as you've just acknowledged.
Mr. Holzhauer: --There is--
Unknown Speaker: It's not just that clause.
It's also the exercise clause.
Mr. Holzhauer: --There is an exercising clause here, and perhaps one could make an argument that if a particular group of employees were exercising their benefits in a way that were different from other groups, or so forth.
But here what you have is a group that said, benefits are just too expensive.
I'm not going to pay those benefits, or I'm not going to pay that rich a benefit program.
I'm going to subcontract out work because subcontracting out work is going to reduce my benefit costs.
Unknown Speaker: Suppose Joe Jones is a person who, the employer looks one day and says, I'm afraid that fellow is going to get wisdom teeth pulled out, and before he even thinks about it, I'm going to cancel this benefit in his plan, which is there, before he gets the wisdom tooth problem.
Hasn't the employer fired him, or cancelled the benefit, or sent him somewhere else, in order to prevent him from attaining a right that he otherwise would have under the plan?
Mr. Holzhauer: No.
Unknown Speaker: Why not?
Mr. Holzhauer: No, he hasn't.
Unknown Speaker: Why not?
Mr. Holzhauer: Attainment of a right to which an employee or a participant may become entitled to, that language, and using that language, and considering that language in light of the particular context Congress was concerned with, refers to becoming eligible for a benefit.
Unknown Speaker: Is there any reason... assuming you could read it either way, and... I mean, I don't think it's contrary to English to say, I have a right to $2,000 of dental expenses if I get wisdom teeth pulled out, and my employer, before I have any toothache, says I'm going to fire him.
I don't want him to get that.
I think in English you could say he's fired me to prevent me from obtaining... or attaining... obtaining... you can do it.
Mr. Holzhauer: Yes.
Unknown Speaker: So I mean, it's more natural to say obtaining a right.
Mr. Holzhauer: Yes.
Unknown Speaker: But you can say attaining a right.
Mr. Holzhauer: Well--
Unknown Speaker: It's not English, not bad English.
So if I think it's fairly good English, or reasonable English, is there any reason Congress wouldn't have wanted to protect me in such a situation?
Mr. Holzhauer: --Well, first of all I think that flip from attaining or obtaining is very interesting, because I think that is one of the differences between the kind of language we're using here.
Congress was concerned about a particular circumstance, and we know that the language might not be limited to that circumstance, but becoming eligible for pension benefits, and vesting on pension benefits.
Whether the exercise clause might help that employee, I'm not sure.
Unknown Speaker: No, but I mean, why wouldn't, as long as... you know, I mean, these things are written in Congress.
The lawyers all look at them, and so they might have talked a lot about pensions, but they would have thought, it applies to welfare, too.
Mr. Holzhauer: Well, it applies--
Unknown Speaker: And unless there's some reason why--
Mr. Holzhauer: --Sure.
Unknown Speaker: --And it applies in my situation, the toothache situation.
Now, unless there's some reason why it wouldn't, why wouldn't it?
Mr. Holzhauer: Well, it applies in welfare situations.
There's a very strong reason why it wouldn't apply in your kind of situation, I think the same reason why it wouldn't apply in the situation that's before the Court.
Employers are not prohibited by ERISA, should not be prohibited by ERISA from making legitimate, cost-based economic decisions, and that's reflected in ERISA itself, the debates over ERISA, and the Court's decisions over ERISA.
ERISA involved a balancing of interests, particularly in the welfare--
Unknown Speaker: And then what they've said--
Mr. Holzhauer: --Sure.
Unknown Speaker: --I just would like your response on that point, is sure, you have a point.
It was made to Congress, and so Congress passes a statute to say you're worried about money?
Cancel the plan.
Go through steps A, B, and C.
Mr. Holzhauer: Well--
Unknown Speaker: Reduce the benefits.
But what we don't want you to do is this other way of trying to achieve a similar result, firing everybody, rehiring them.
That's a burden for you.
You have some burdens and you have some benefits.
It's a compromise.
Mr. Holzhauer: --Well, of course, there's nothing in section 510 that talks about employers being required to amend or terminate plans, but in many situations that's not going to be practically possible.
We might have a situation, for example, where an employer's obligations under a collective bargaining agreement require the employer to pay benefits and is not going to be able to unilaterally amend or terminate their plan, but that collective bargaining agreement might also provide that the employer is entitled to subcontract work, or the National Labor Relations Act might give them a right to subcontract work.
Same thing happens with wages.
Unknown Speaker: So if you want to have this right, you work it out with the union.
I mean, that's normal.
Mr. Holzhauer: Sure.
Unknown Speaker: Well, all right.
Bring it up on the table.
Say what we can do.
Amend the plan.
Why... why is it a problem for the employer?
I mean, I understand what they'd like--
Mr. Holzhauer: Sure.
Well, in some circumstances the employer might also take this position with regard to wages.
The union contract sets a certain wage but allows the employer to subcontract.
The employers... the collective bargaining agreement sets certain benefits, but the employer is allowed to subcontract, or the National Labor Relations Act gives a procedure or mechanism for subcontracting out work.
There are other circumstances where it makes no sense to amend or terminate a plan.
Often insurance contracts, if it's an insured plan, will provide that we want to cover all your employees.
We don't want you to carve out little groups of employees because we're afraid you might do it in a way that's to our disadvantage, or we just want the big business or no business at all.
Under those circumstances the employer may not be able to amend or terminate.
It also might not solve the situation at all in a variety of circumstances.
Suppose an employer had two different plants, and it had to decide which one to close.
They both had health insurance benefits, but one was very costly, and one was less costly, perhaps because of the region of the country they were in.
Under those circumstances that would be a violation of section 510 to make that decision based on benefit costs if you followed the petitioner's argument, but it would be just a legitimate economic decision based on what's more expensive for the employer.
There's no evidence in the legislative history of ERISA, and there's certainly no requirement, even if we can flip from obtain to attain and argue that that clause can be read much more broadly than it is, there's certainly no requirement in section 510, no language that would dictate that we reach a result that would require employers to ignore very real economic costs that they face, and costs that employers base very similar decisions on every day.
Unknown Speaker: --Mr. Holzhauer, I take it from your argument, and please correct me if I'm wrong, that the reasoning you've just developed, the motive is simply to cut cost, not to retaliate against any employees, would apply to pensions that haven't yet vested as well as health and welfare arrangements, is that right?
Mr. Holzhauer: It would apply to pension benefits generally in the sense that, suppose we had a workforce that had vested pensions, or not vested pensions, but were just accruing pension benefits rateably over time.
There was no circumstance where we were focusing on people who were about to vest, but we just decided that the benefit costs of that plan are too expensive, and the benefit costs that we were concerned about in that plan were pension benefits.
Under those circumstances I still say that that would not violate section 510.
Unknown Speaker: So you're rejecting the Ninth Circuit line in two ways.
First you say that there isn't this distinction between pension plans and health and welfare plans.
Mr. Holzhauer: No.
Unknown Speaker: No, and that as far as the pension plan goes, the Ninth Circuit was wrong, although you didn't take a cross-appeal.
Mr. Holzhauer: Well, the Ninth Circuit held... again, the Ninth Circuit's treatment of both of these issues was rather cursory, so it's really hard to understand exactly what their reasoning was, but quoting Ingersoll-Rand, the Ninth Circuit held that 510 protects plan participants from termination motivated by an employer's desire to prevent a pension from vesting.
Santa Fe saw no need to cross-petition on that issue, because it's quite confident that when it goes back on remand it's going to be able to show that it didn't take any action to prevent pensions from vesting.
We thought that that's what the Court talked about as the pension part of 510, on remand we'll be fine.
If they're using the term more broadly than they say they were using it, the same argument would apply.
Now, section 510 was adopted as a corollary to ERISA's vesting requirement, which was essential to the statutory scheme put in place by Congress, and for the first time Congress required that pension benefits become nonforfeitable after a set period of time.
Congress recognized that employers might circumvent that vesting requirement by discharging employees who were about to become vested, and they installed section 510 to deal with that problem.
It makes perfect sense in that context to say it protects you, the attainment clause of section 510 protects you until you become eligible for the benefits, but doesn't provide you with meaningful protection thereafter, although the exercising clause might.
Unknown Speaker: Well, do you say that it covers the individual situation, where the employer foresees that a given employee is going to be very costly in terms of medical care, either the employee or a member of the employee's family?
Mr. Holzhauer: If the employee is already eligible for those benefits, and--
Unknown Speaker: Well, the employee is covered by a health plan.
Mr. Holzhauer: --Right.
Unknown Speaker: The employee has a child, and the child then is diagnosed as having a very serious--
Mr. Holzhauer: Right.
Unknown Speaker: --medical condition that is going to cost megabucks, and the employer says, I don't want to have that effect on my health costs.
You're out of here.
Mr. Holzhauer: I think under those circumstances the employer would already be eligible for those benefits.
If there was a violation--
Unknown Speaker: Not eligible, will become--
Mr. Holzhauer: --No--
Unknown Speaker: --eligible when the child goes to the doctor for surgery.
Mr. Holzhauer: --I think the attainment clause talks about whether the employer... the employee will become eligible for health insurance, will become eligible for dental insurance, will become eligible for a pension, or a vested pension.
Under the way I interpret section 5--
Unknown Speaker: Just answer my question.
Mr. Holzhauer: --Sure.
Unknown Speaker: Under that circumstance, is section 510 violated if the employer says, you're fired because I don't want that obligation in the--
Mr. Holzhauer: Yes.
The exercising clause could be violated by that.
The attainment clause, no.
I don't believe that would involve the attainment clause, because that would not involve becoming eligible for benefit.
I also disagree with--
Unknown Speaker: --I'm not sure that the exercise clause would kick in either, because the child hasn't gone to the hospital for the surgery yet.
Mr. Holzhauer: --Well, I think that a strong argument can be made, and it's not involved in this case at all, but a strong argument can be made certainly that... well, clearly it would violate section 510 to fire that employee just after they file that claim, because they filed that expensive claim.
Can an employer circumvent the exercising clause by doing it just before they file the claim?
I think one can make a strong argument that it would.
I also strongly disagree with the Government's representation that that hypothetical is in any sense real.
The reality of that hypothetical ignores COBRA benefits.
An employer, once an employee is terminated, the employee generally is entitled to COBRA benefits which will keep insurance in place--
Unknown Speaker: But they're not... they're often less than what the plan would give.
Mr. Holzhauer: --Often... more often they get exactly what the plan gives.
The most common COBRA benefits is exactly the health insurance that they get.
They don't get the other kinds of benefits, but they would get the health insurance.
Unknown Speaker: Mr. Holzhauer, given your response to Justice O'Connor's question, of what use is the application of the attainment clause to plans other than pension plans?
Mr. Holzhauer: Justice Scalia, earlier you asked whether it was ever... whether it was common to have plans that allow you to get health insurance after being there for a year, or after passing a probationary period, which might be 90 days.
It's very common.
That's common throughout industry, and that could very well be the kind of situation.
An employee often has to work a certain period of time in the sense of hours per week, or hours over an accumulated period of time, in order to become a full-time employee for benefits purposes.
It could violate section 510's attainment clause to stop somebody from working over that threshold.
Unknown Speaker: And you think that's what Congress was worried about, that there are a lot of employers who keep--
Mr. Holzhauer: I think--
Unknown Speaker: --90 days, firing people after 89 days?
Mr. Holzhauer: --I think Congress was concerned about vesting pension benefits, but Congress talked about employee benefit plans, and I think there could be analogous circumstances under which section 510's attainment clause would apply to welfare benefits as well, and that's one very analogous circumstance.
Unknown Speaker: But you insist it applies only to eligibility.
But then why, in answer to Justice O'Connor, did you get into the question of circumvention?
You've either attained or you haven't attained.
Mr. Holzhauer: I was talking about circumventing the exercise clause.
Unknown Speaker: The exercise clause.
If we allow that the exercise clause can be circumvented, how do we draw... that circumvention of the exercise clause would state a violation, how do we draw the line?
Why doesn't that swallow the attainment issue?
Mr. Holzhauer: Well, I think the exercising clause was intended to deal with a kind of individual... not global plant closing or plan design situation, but an individual situation where you were focusing and targeting a particular individual and saying, that person's going to be too expensive.
I am going to terminate that person because their benefits are too high.
Clearly, it does violate the exercising clause by any reading to do that after the employee has started filing those benefits... oh, he's exercised his right to benefits too much, I'm going to fire him as a consequence of doing that.
The question is whether, in the very same circumstances, where you're looking at an individual employee who's about to file a lot of claims because he has bad wisdom teeth, or he has other problems, whether that would violate the exercising clause in section 510, and I think an argument could be made that it would.
Unknown Speaker: So do it on the specific employee basis.
Mr. Holzhauer: The specific employee, rather than a global, cost-based organizational change.
What has been going on in this case was a fundamental change in the way Santa Fe operated its business.
It was no longer going to be using its own employees to do that work.
It was subcontracting that work out to other employees.
Unknown Speaker: Which clause is it that covers if my pension benefit's vested.
Mr. Holzhauer: Yes.
Unknown Speaker: I'm entitled to it.
Mr. Holzhauer: Right.
Unknown Speaker: And by the way, if I worked 2 more years and have a promotion, it doubles in amount, so they fire me so I don't get the doubling in amount.
Now, which part of the... is that the fail to exercise clause?
Mr. Holzhauer: Well--
Unknown Speaker: Is that failure to attain a benefit, or do you think they could do it?
Mr. Holzhauer: --I think that there certainly... there are circumstances... generally speaking, pension benefits are required under the statute to accrue rateably over time, not to have these kinds of cliffs in which you're entitled under the plan to additional money.
Unknown Speaker: You see what I'm driving at.
Mr. Holzhauer: Yes.
There are circumstances... for example, I think the Heath case was one of those, in the Seventh Circuit, where an employee was entitled to early retirement, additional benefits if they reached a certain age, and I think that he would become eligible for those benefits if they stayed on the workforce.
Unknown Speaker: What you're saying the Court did say there.
Mr. Holzhauer: That's right.
Unknown Speaker: It's an attainment matter.
Mr. Holzhauer: That's an attainment matter.
Unknown Speaker: And therefore the normal thing in getting an amount of money when a certain event happens under a plan that has vested, at least in the pension area, seems to be to call it an attainment.
Mr. Holzhauer: Right.
Unknown Speaker: Well, if you follow the same reasoning here, you're going to say getting that amount of money under a plan that has vested when the toothache occurs--
Mr. Holzhauer: No, no.
We're not talking about getting that amount of money.
We're talking about becoming eligible for a new benefit.
Unknown Speaker: --All right.
Mr. Holzhauer: An employee who was not entitled to an early retirement benefit.
Unknown Speaker: All right.
Did you have something you wanted to say about purpose, because the only reason I ask that is that seems to have come up, and I'm not certain we should reach it here, but I know it's been argued.
Mr. Holzhauer: Yes.
Unknown Speaker: And maybe you'd be better to do it with facts, or with amici, or whatever, but if you did make a point about it--
Mr. Holzhauer: Well, I think the purpose of the overall statute was to deal with the vesting circumstance, and then to prevent people from circumventing someone from vesting, and I think when there are analogous circumstances like someone about to become eligible for early retirement benefits, under those circumstances that would be a similar eligibility threshold, and crossing that eligibility threshold would be involved, but nothing like that is going on here.
This is a global prospects change.
Unknown Speaker: --So are you saying that the D.C. Circuit approach in the Andes case, they didn't even need to get to anything like, what does the word discharge mean?
Mr. Holzhauer: Yes, I agree with that.
I found that decision puzzling, because the Court said on the one hand these employees weren't discharged and we didn't... Congress didn't use the words layoff and termination in that case, but then it said that well, there might be some circumstances where a particular attribute of that workforce might call it into play.
I assume they were referring to the Gavelette case, or that kind of hypothetical in their situation, where it would apply.
Well, if it's not a termination to subcontract out work under these circumstances, how would it be a termination or a discharge under those second set of circumstances?
I think the D.C. Circuit was struggling with what several other courts have struggled with as how to fit section 510, how to square section 510 with these kinds of fundamental business changes, cost-based changes that employers ordinarily do, and this is very much like the kind of change that Peter Drucker talked about in his Wall Street Journal article some years, Sell the Mailroom.
These kinds of changes are not the kind of thing that ERISA was intended to encompass.
Unknown Speaker: Would your attainment test have resolved the Andes case in favor of the employer?
Mr. Holzhauer: Yes, it would have.
Yes, it would have.
Unknown Speaker: I wonder, because in paragraph 30 they specifically argue, or allege that benefits... they suffered a reduction of benefits from their pension plan and health and welfare plans.
There's that allegation in the complaint.
Mr. Holzhauer: Yes.
Unknown Speaker: And how do you... I mean, if that's true, that's a vested right that was--
Mr. Holzhauer: Well, they claim that they suffered welfare... they claim that they were... that Santa Fe took this action in order to reduce a wide spectrum of benefits, salary, vacation, sick leave benefits, things that are not ERISA-included.
Unknown Speaker: --It covered at least some hypothetical cases of individual vestings.
Mr. Holzhauer: Well, they... I don't think it does.
I don't think the pleading covers individuals.
It talks about terminating welfare and pension--
Unknown Speaker: Suffered a reduction of contributions to and benefits from pension plans and health and welfare plans.
Mr. Holzhauer: --Right.
What they were talking about is the fact that under the new ITS Teamsters contract there was a reduction in contributions.
Unknown Speaker: Well, but they say benefits.
Mr. Holzhauer: And a commensurate reduction in benefits, but it was not something that interfered with their attainment of eligibility for a particular category of benefits.
Unknown Speaker: Well, that is the difference between you and the Government on how you read that paragraph, I guess.
Mr. Holzhauer: Well, it could be, but I think if you look at the entire complaint, you look at what petitioners have said in their briefs and in this argument, it's clear that basically what this case comes down to is the hypothetical you raised early on in the argument.
If there are no further questions.
Chief Justice Rehnquist: Thank you, Mr. Holzhauer.
The case is submitted.