BAY AREA LAUNDRY & DRY CLEANING PENSION TRUST FUND v. FERBAR CORP.
The Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) requires employers who withdraw from underfunded multiemployer pension plans to pay a "withdrawal liability," which is dischargeable with an arranged series of periodic payments. The Bay Area Laundry and Dry Cleaning Pension Trust Fund (Fund) is a multiemployer pension plan for laundry workers. The Ferbar Corporation contributed to the Fund, but ultimately ceased doing so. Subsequently, the Fund's trustees demanded payment of Ferbar's withdrawal liability. The trustees decided to allow Ferbar to satisfy its obligation by making monthly payments. However, Ferbar never made a payment. Ultimately, the District Court granted Ferbar summary judgment on statute of limitations grounds. The court noted that the trustees had filed suit eight days too late. This was the date Ferbar was to make its first payment. In affirming, the Court of Appeals held that the six-year period began to run on the date Ferbar withdrew from the Fund, in March 1985. Under this view, the trustees commenced suit nearly two years too late.
Does the Multiemployer Pension Plan Amendments Act of 1980's six-year statute of limitations begin to run on a pension fund's action to collect unpaid withdrawal liability on the date the employer withdraws from the plan?
Legal provision: 29 U.S.C. 1451
No. In a unanimous opinion delivered by Justice Ruth Bader Ginsburg, the Court held that the MPPAA's six-year statute of limitations on a pension fund's action to collect unpaid withdrawal liability does not begin to run until the employer fails to make a payment on the schedule set by the fund. Justice Ginsburg reasoned that a plan's interest in receiving withdrawal liability does not ripen into a cause of action triggering the limitations period until the trustees determine and demand payment and the employer defaults on an installment. The Court's conclusion prompted a second decision, that a pension fund's action to collect unpaid withdrawal liability is timely as to any installment payments that came due during the six years preceding the suit, but payments that came due prior to that time are lost.
Argument of Marsha S. Berzon
Chief Justice Rehnquist: We'll hear argument now in Number 96-370, the Bay Area Laundry and Dry Cleaning Pension Trust Fund v. Ferbar Corporation of California.
Mr. Berzon: Mr. Chief Justice, and may it please the Court:
The 1980 ERISA amendments set up a complicated, complex scheme for assuring the long-run stability of multiemployer plans, pension plans, when employers for many perfectly valid reasons, legal reasons, cease making contributions to the plans.
That scheme requires that some but not all withdrawing employers make withdrawal liability payments in amounts that are dictated by the statute under a periodic payment scheme that can extend for as long as 20 years, and that is also largely dictated by the statute.
The question before the Court in this case is when a cause of action to collect one or more of those unpaid withdrawal liability payments accrues under the 1980 act.
The answer to that question in our view is rather simple and straightforward, and it depends on two fundamental principles of statute of limitations law.
The first, and on this point I don't think there's any dispute among the parties, is that ordinarily a limitations period runs from when a cause of action accrues, and in this statute that's made quite explicit by 1451(a), and that means when the plaintiff can first file a lawsuit, not before.
The statute here so states in 1451(a) that the... there's a cause of action... in 1451(f), I'm sorry, that the limitations period runs from when the cause of action arose.
The second principle, and here the consensus among the parties I think somewhat collapses, is that a plaintiff's right to file suit ordinarily is triggered by some breach of duty by the potential defendant as defined by the relevant legal rules.
Here that's the 1980 act, and the rules that it sets up for determining when the defendant, potential defendant, the employer in this case, is required to make payments, so unless one knows when the employer has breached a legal obligation one really can't make a sensible decision about when the statute of limitations starts to run.
That is, there has to be a situation in which a court could issue a corrective order in favor of the plaintiff and against the defendant in order for a cause of action to accrue, so the limitations decision is really the flip side of a set of understandings about what obligations, duties, and rights the statute sets up to begin with and can't be looked at in isolation.
Unknown Speaker: Does interest run on withdrawal liability?
Mr. Berzon: Interest runs on withdrawal liability payments, but in an odd way that was described by this Court in Schlitz.
That is, once the demand has been made, once there has been an assessment and a demand and a stated period in which the payments have to be made, then interest runs on payments--
Unknown Speaker: So interest would not run from the date of withdrawal.
Mr. Berzon: --It doesn't run from the date of withdrawal, and if the fund does not assess the withdrawal for some period of time it runs only, as described by this court in Schlitz, as if the payment was made on the first day of the date following withdrawal no matter when they're actually made, even if it the demand isn't to make them until sometime later.
So to apply these general principles to this case, there are really three factors that are the most important.
The first is that the withdrawal itself is not a violation of any legal obligation, ceasing to make contributions is not the violation of any legal obligation, and that the date of withdrawal is often determined after the fact by a set of events that occur after what is later decided to be the date of withdrawal.
So the date of withdrawal is really a datum in a bunch of calculations, and not a date on which an employer is supposed to do anything, and what that means for purposes of the limitations inquiry here is that if the fund had tried to sue the employer on the date of withdrawal they would have been summarily dismissed from their lawsuit because no demand had been made for payment and the employer had no obligation to pay anything.
The second critical factor is that the employer does violate the statute once it fails to pay any withdrawal liability payment on the schedule that is set by the fund in the demand letter, again largely prescribed by the statute.
That is the schedule and the amount both.
So what we have here is sort of like a... any bill, like a telephone or a credit card or a legal bill or a hospital bill in which there is a liability that is incurred regarding facts that occur on a certain date, but until you get a bill that requires you to make a payment there's no obligation to pay, no obligation that has been breached, and no potential lawsuit until that date.
And this rule is a rule that, although the employer in this case seems to take issue with it, is one that has been understood by hundreds of courts over hundreds of years, including this Court in a series of cases including Rawlings v. Ray and others.
That is that ordinarily when you're dealing with a debt a cause of action accrues on a date that there is an obligation to pay the debt, and--
Unknown Speaker: So under your view, I mean, there would be a separate cause of action for each instalment payment.
Mr. Berzon: --Well, that's correct as well, although it was the third point that I was going to make, and--
Unknown Speaker: And that means that in theory it could continue on for 26 years or so.
Mr. Berzon: --There are two things to be said about that.
One is that the reason, of course, why it is possible that there could be suits for failure to pay, make payments for a long period, is because Congress allowed a long period in which these payments to be made.
In other words, Congress could have required that the payment be made up front, but in fact, and largely for the benefit of employers and so as not to require them to make huge payments immediately--
Unknown Speaker: And I suppose if there's an early default the plan's sponsor could accelerate the balance.
Mr. Berzon: --Correct.
This provision has an express permissive acceleration clause which says that the plan's sponsor may accelerate upon a default as defined in the statute.
The statute defines default in a particular way so that there needs to be a notice, first, of delinquency and then 60 days from that notice before a default could be declared.
Unknown Speaker: So under your theory the statute of limitations in this case would have started to run 6 years after the nonpayment of the first instalment.
Mr. Berzon: On the first instalment, and on each instalment as it came due, because the debt was not in fact accelerated and because of the additional fact that under the more specific aspects of the statutory scheme it actually could not have been accelerated because although, as I said before, there is a permissive acceleration clause, it was not operative during the relevant periods in this case, and it wasn't operative because first it was too early, that is, the 60 days had not run at any period of time outside--
Unknown Speaker: Ms. Berzon, you keep mentioning the 60 days, but as I understand it, that's... that has never been passed on by any court.
We have a decision from the court of appeals that we are reviewing that puts you out of the ball park entirely because it dates the time from the withdrawal.
Mr. Berzon: --That's correct.
Unknown Speaker: The argument that you made in your brief about the 60-day period as I understand it was not passed on by any court below, so you may be wrong, or you may be right about it, but you are asking us to take a first view of that question, which ordinarily we don't.
Mr. Berzon: Let me see if I can understand.
There are two different time or issues that you might be referring to.
One is the question which, while not passed on by the court below because of the view it took that the date runs from withdrawal, has been addressed by other courts of appeals, that is, by the Third Circuit and by the Seventh Circuit, which is a purely legal issue, and that is, if one agrees that the limitations period runs from missed payments, not from the date of withdrawal, does it run as it would under the common law with respect to instalment payments generally--
Unknown Speaker: Why should we reach that question when the court we're reviewing hasn't reached it?
We don't know what position they would take if they hadn't gotten the first thing wrong, if they hadn't used the withdrawal date, and you're arguing... that's your basic proposition.
If the court of appeals is right about that, that's the end of the case.
If they're wrong about that, then there are further issues that other courts of appeals have addressed but this one never reached.
Mr. Berzon: --That's true.
I would argue that this is an area in which some guidance and certainty is of some use to the practitioners and to the funds, and there is, I would say... the issue is certainly presented by the facts of the case, and the overall issue of when the statute of limitations runs or begins to run and in what manner is presented by the case.
Unknown Speaker: But if you're right about the 60 days, so your whole thing would be timely, this other question about each instalment is academic in your case because it wouldn't matter.
Mr. Berzon: It's--
Unknown Speaker: The whole thing would be timely.
Mr. Berzon: --If... then I think that you are assuming a second issue, other than the time by... than the periodic-payment-by-periodic-payment issue, and that is whether or not the first payment... this lawsuit was timely with respect to the first payment, and we do argue that it was timely with respect to the first payment, and--
Unknown Speaker: Yes, and if you're right about that, that... the rest of it doesn't matter because you're in under the wire.
Mr. Berzon: --That's true.
There is some dispute as to whether that's the case, and if you accept our position that even as to the first missed payment this suit was timely, because the earliest that we could have required it to be paid was at the end of a 60-day period from the demand--
Unknown Speaker: Yes, and that's something that you have urged and that has not been passed on by any other court, so I understand that the first question is certainly before us, but I don't understand that anything else is because it hasn't... we would be acting as a court of first view, not a court of review.
Mr. Berzon: --All right, but that is separate from the issue of whether we necessarily prevail without deciding that question, and the answer is we do not necessarily prevail because of the schedule here, and perhaps I can clarify that.
We filed suit here on February 9, 1993.
That was within the 6-year period from the date on which the demand letter required the entire withdrawal liability to be paid if the employer so choose... chose under the prepayment option.
It was within 6 years of the date on which we understand the statute to have permitted the first payment to have been required, also 60 days, but the demand letter actually said February 1, 1987, so the only argument on which we possibly do not prevail on the entire debt... and here we're talking about a difference of $345... is if one views the lawsuit as not timely from the date of the first missed payment, because we said in our demand letter that it was due on February 1, although in our view that was a legal error.
Actually it was due on February 10, if that's at all clarified.
So there are views of this case on which it does matter whether the limitations period runs on a instalment-by-instalment basis, and other views on which it doesn't matter.
Unknown Speaker: But if you're right about even the first payment, that you were timely, then why should we get to the question of instalment or not?
Mr. Berzon: Well, if I'm right on the first payment being timely then you don't need to.
I'm saying that's in some dispute.
That question is in some dispute.
If I can go briefly to what I understand--
Unknown Speaker: Is... am I correct in understanding that the option that you think is correct is not any of the four that you listed in your cert petition, because you said your... first is the withdrawal date, second the date when the payment becomes overdue, you're not relying on that, then for each payment due, on the date the payment becomes overdue unless the plan's sponsor elects to evoke the statutory provision on acceleration or some other date, at some other date you think is right, is when the demand--
Mr. Berzon: --No.
Actually we believe that it is for each payment due on the date that the payment becomes overdue, unless the plan's sponsor elects to invoke--
Unknown Speaker: --And... but when does it become overdue, when it was not paid, or when you made a further demand?
Mr. Berzon: --When it was not paid is when that particular payment is not due, but that--
Unknown Speaker: Well, then you're not in time for the first payment.
Mr. Berzon: --I sort of hate to get side-tracked on it, because it's a $345 problem.
Unknown Speaker: Right.
Mr. Berzon: But we would maintain, and do in the briefs, that there is a view of the statute on which we were timely with respect to the first payment.
Unknown Speaker: But the view of the statute is it did not... you could not have sued on the date it became overdue if you didn't... you couldn't have sued until he--
Mr. Berzon: No, the view of the--
Unknown Speaker: --read the demand letter.
Mr. Berzon: --statute is that the statute required us to wait 60 days to collect the first missed payment, and that when we said that it was due on February 1 we were in error.
It couldn't have been that date.
It really had to be February 10.
Unknown Speaker: But was it not overdue on the first date?
Mr. Berzon: No.
We would maintain on that view that it couldn't have been overdue.
Unknown Speaker: It was not overdue until 60 days after the date you--
Mr. Berzon: Of the demand.
Unknown Speaker: --it was supposed to have been made.
Mr. Berzon: That's correct.
Unknown Speaker: Okay.
Mr. Berzon: And that is the view on which every... we are timely with respect to the... every... each and every payment, but as I say, that is really in some ways the least important problem here, because--
Unknown Speaker: Well, maybe it isn't important in this case, but you're saying it is certainly in the laws of some importance to people who practice in this area.
Mr. Berzon: --Right, exactly, and if you were to conclude that we were right about that, then you really wouldn't have to decide the payment-by-payment issue, and if you were not, then you would have to go on to decide whether, although the first missed payment had... was gone, every other payment was within the time period, as any instalment contract lawyer would, you know, quickly conclude.
I want to just very briefly, before reserving the rest of my time, to comment on one issue that the employer here has harped on quite frequently, and that is the contention that on our view of the statute, that is that it can... the limitations period cannot possibly run from the date of withdrawal, that there is some fundamental problem because then we are... we can indefinitely delay assessment, and the plain answer to that is that the Congress did deal with that problem.
It dealt with... saw the timeliness issues here as two different ones, one dealing with the timeliness of the demand and one dealing with the timeliness of the lawsuit.
With respect to the timeliness of the demand, the statute specifically provides that that has to be done as soon as practicable.
That is an enforceable provision of the statute like any other provision of the statute, and does not at all lead to the kinds of problems that the employer suggests.
Unknown Speaker: In this case, in the complaint didn't you ask to accelerate the entire amount?
Mr. Berzon: We... in the alternative.
Unknown Speaker: Doesn't that amount to an election of the option to--
Mr. Berzon: --The--
Unknown Speaker: --Maybe that's not going to bar you anyway, but--
Mr. Berzon: --I... it doesn't seem to me to amount to an election of the option for two reasons, first because it was a fourth cause of action which was simply for all the missed payments and a future injunction, and secondly because it was later in interrogatories in the case, which are not in the record before the Court, agreed that in fact that acceleration was improper.
It was improper both because it was too early and because there was a pending arbitration in the case, and under the PBGC's rules you cannot accelerate while there's a pending arbitration.
So even if one viewed the complaint as an attempt to accelerate, it was an ineffective attempt to accelerate, an invalid attempt to accelerate.
I'd like to reserve the remainder of my time.
Unknown Speaker: --Very well, Ms. Berzon.
Argument of William F. Terheyden
Mr. Terheyden: It's Mr. Terheyden, Your Honor... oh, I apologize, to Mr. DuMont, and to the Court.
Argument of Edward C. DuMont
Mr. DuMont: Thank you, Mr. Chief Justice, and may it please the Court:
This is a statutory collection action, and it may be helpful to return for a moment to the words of the statute at issue, which are reprinted at page 17a of the petitioner's brief.
29 U.S.C. section 1451(a)(1) gives a cause of action to a plan fiduciary... I'm eliding some material... a plan fiduciary who is adversely affected by the act or omission of any party under this subtitle who may bring an action for appropriate legal or equitable relief.
Now, our basic submission, along with that of petitioner's, is quite simple, first, that the only relevant adverse effects under the subtitle, under the statute, arose not from respondent's withdrawal from the plan, but from its failure to pay withdrawal liability on the schedule prescribed by the statute.
Unknown Speaker: Why don't you take the position that counsel for the petitioner does that the 60-day rule with respect to the first payment actually makes the date of adverse consequence the date upon which it could have been demanded... the date upon which it could have been collected rather than the date upon which they demanded the payment to be made?
Mr. DuMont: We... that is a conceivable reading of that section of the statute.
We don't think it's the best reading.
We think that the statutory section is best read to give that 60 days as a terminus before which the plan must make the payment due, but I think if you look at normal practice, from what I understand from the PBGC, and also the reported cases make this fairly clear, the normal practice is for plans to set a date that is within the 60 days but is not actually the sixty-first day from the date of demand.
And that makes a lot of practical sense, because what you... what the plan often wants to do is make the payment due on the same day that the payments normally were due before the withdrawal, or on some day that's convenient for accounting purposes, as opposed to being tied to a specific thirtieth or sixtieth day from the date of demand, which would unduly constrain either the date you want to send the notice or the date that you set the payment to be due, so we think the best reading is--
Unknown Speaker: But would... if they sued on the stated day, which was before the sixty-first day, would they be subject to a motion to dismiss?
Mr. DuMont: --We believe the payment is due on the day that is specified in the schedule--
Unknown Speaker: So the answer is no?
Mr. DuMont: --The answer is that suit would be timely if it was before the sixty-first day, but after the day that the payment was due under the schedule.
Unknown Speaker: Well, so you're saying that even though the schedule set forth a date before the sixty-first day, suit would be timely 6 years after the sixty-first day, and that there was a failure to pay?
Mr. DuMont: No.
The suit would have to be filed within 6 years of the day specified in the plan's schedule as the day the first payment was due, is our position, which is not the position the petitioners are taking.
Unknown Speaker: So you are rejecting their 60-day--under your reading of the statute, the first... they sued too late to recover the first payment, is that--
Mr. DuMont: That's correct, which is why in our view of the way the statute is best construed it is necessary for the Court to reach the question passed on by the Seventh Circuit, which is, was there only one cause of action and therefore when the first payment was missed was there a sort of automatic acceleration back to that point, so that if you missed the first payment you missed everything.
Unknown Speaker: --Then you think that 60-day is so clearly wrong on the petitioner's part that it shouldn't be something that we should remand to the court of appeals, which never considered it?
Mr. DuMont: I think it's perfectly within this Court's options to reject the rule that the Ninth Circuit came up with, which was running from the date of withdrawal, and to leave all the other issues for resolution below.
That would not be what we would think was the most appropriate outcome, and we think there are several questions that are fairly presented and fairly subsumed within the question, and that the Court could usefully make clear for the benefit of the bar, but certainly it would be proper for the Court merely to resolve the narrow question you suggest.
Unknown Speaker: This 60-day dispute for purposes of the present case is only relevant as to the first payment, but the issue, the issue of whether the 60 days is what counts or not, applies to every payment set under this scheme, doesn't it?
It's not just the first payment.
Mr. DuMont: That's correct.
I'm sorry, which 60 days, now, are we talking about there?
Unknown Speaker: Well, that's what I'm... as I read the statute, it says the failure of an employer to pay any overdue withdrawal liability payment, any payment, not just the first, within 60 days after the employer receives written notification from the plan's sponsor that the payment is overdue.
Isn't that the 60-day provision you're talking about?
Mr. DuMont: Well, no.
That is a different 60-day provision--
Unknown Speaker: Okay.
Mr. DuMont: --which is the 60 days--
Unknown Speaker: Now, which one are you talking about here?
Mr. DuMont: --We are talking about 1399(c)(2).
Unknown Speaker: Give me the U.S. Code cite, would you?
Mr. DuMont: It's... U.S. Code is 29 U.S.C. 1399(c)(2), and it's on page 15a of the petition... of the blue brief... which says the withdrawal liability is--
Unknown Speaker: Where in the blue brief?
Mr. DuMont: --Page 15a.
Unknown Speaker: (c)(2).
I have it.
Mr. DuMont: (c)(2).
Unknown Speaker: Good.
Mr. DuMont: Withdrawal liability is payable... this is the actually payable part... in accordance with the schedule set forth by the plan, beginning no later than 60 days after the date of the demand, notwithstanding any request for review or appeal.
This is part of what goes into the pay-now-dispute-later feature of the statute, which we think is quite important.
Unknown Speaker: Well now, why wouldn't--
Mr. DuMont: The 60 days that I believe you were referring to--
Unknown Speaker: --Yes.
Mr. DuMont: --is the 60 days that is incorporated in the definition of default, which is on the next page, page 16a, really carrying over from 15a, that default means failure of an employer to make, when due, any payment if the failure is not cured within 60 days, and our submission there, which is fairly important, is that that default... the definition of default is relevant for only one thing, and that is whether or not the plan is entitled under the statute to accelerate the entire remaining unpaid liability.
Unknown Speaker: I see.
Mr. DuMont: And that is quite different from the question of whether a particular payment or set of payments are overdue.
Unknown Speaker: You're saying it is a default, but not a default within the meaning of the provision of the act that allows acceleration.
Mr. DuMont: Right.
A missing of the first payment, yes, is exactly right.
It's an overdue... it's a delinquency rather than a default.
Unknown Speaker: May I just inquire, to be sure I understand what you're saying, the provision on page 15a, the (c)(2) provision, that 60 days in your view merely sets an outer limit on the time... on when the payment can become due.
That... when the plan may request payment.
It must fix a date within that 60-day period.
Mr. DuMont: The one on 15a----
Unknown Speaker: Yes.
Mr. DuMont: --(c)(2).
It only... our position is, it's for the protection of the beneficiaries, essentially.
It allows the plan some flexibility in setting the beginning of the schedule, but it sets an outer limit past which they may not go.
They must make the first payment due within that first 60 days, so it's really not for the protection of employers at all.
It's for the protection of the beneficiaries.
Really, in sum we have only four points to make, first that accrual, as is the general rule everywhere, follows the right to sue, and here the right to sue under the statute arises not from withdrawal, as the Ninth Circuit held, but from the failure to make a statutory payment when due under the statute, and that's the only thing the plan could ever have sued for, and that's all they sued for here.
The further consequences of that we think follow from a routine application of principles of... general principles of law under the statutes of limitations and acceleration law, and all of these rules I think importantly work together to support Congress' fundamental purpose here in this entire scheme, which is to protect beneficiaries of these plans by strengthening and stabilizing the multiemployer pension plan system by ensuring, to the extent possible, a steady flow of even payments on which the plan can count, and with full provision for protecting the employer after an arbitration and after any determination of defenses on the merits by making a refund available.
All we are talking about here is interim payments while a dispute on the merits goes forward.
The statute makes quite clear that those are due and payable now, and this action is timely to collect them.
Unknown Speaker: Is there an argument that the suit on the merits shouldn't go forward because an arbitration request, demand had been made and not responded to?
How does that play into this?
Mr. DuMont: When I speak of a dispute on the merits, I refer to a dispute before the arbitrator.
It is true that in the complaint, as a response to the complaint in this case, the employer raised an affirmative defense that there had been a failure to respond to the request for arbitration, and we think that is not well-taken, but certainly the court on remand could consider that.
We think the right result would be for it to go to arbitration and have all of the employer's objections to any particulars of the assessment here handled in arbitration between the parties.
Unknown Speaker: One minor question.
I'm thinking of the first payment... oh, well, forget it.
I'll ask the other... I'll ask--
--Thank you, Mr. DuMont.
Rebuttal of William F. Terheyden
Mr. Terheyden: Mr. Chief Justice, and may it please the Court:
Under petitioner's interpretation of the statute of limitations in this case the trust fund would have absolute and final control over the commencement of the statute of limitations, over the running of the statute of limitations.
Moreover, under their theory they would in effect ask the Court to extend what is now a minimum 6-year statute of limitations to some 26-plus years, and we submit that Congress could not and did not intend such a result.
We believe that... Your Honors, that the plain words of the statute, the plain reading of the--
Unknown Speaker: But the extension to 26 years would be only for the last $350.
Mr. Terheyden: --No.
I think what they're saying, that there are these individual statutes of limitations for each monthly payment.
Unknown Speaker: Right.
Mr. Terheyden: Which would allow them to, if they wanted to wait till year 18 and sue for 6 years prior to that, they could do.
Unknown Speaker: Well, they've pretty well conceded that if we don't read the statute that one way they lose the first payment.
I don't know why they wouldn't lose 59 payments if they waited another appropriate number of 59 months.
Mr. Terheyden: Well, I think that's one of the... you know, the fundamental issue here, one of the fundamental issues is, can they divide this up into separate statutes--
Unknown Speaker: Right.
Mr. Terheyden: --of limitations, or if they miss that first payment--
Unknown Speaker: And if they can, is one of the... then your 26-year statute of limitations applies to only $350, not to the entire amount.
Mr. Terheyden: --I suppose that's one way of--
Unknown Speaker: Well, how is... I mean, I thought it was... I have a 30-year mortgage, all right, and if I miss the 358th payment, which I guess would be in the year 2020, if I'm around, then I guess they could sue for that, and what they're saying is your interpretation would mean they're free to pay it or not.
I mean, the bank would... I think... I don't think the bank would be very happy if I took that view.
I'd say, I'm not going to pay you the 358th payment.
Unfortunately, the statute of limitations began to run when I took out the mortgage.
I mean, what kind of a law would that be, and why would Congress want such a law?
Mr. Terheyden: --Well, I don't think this is... can be really analogized to a mortgage situation, a loan mortgage situation.
I think here the question is there's this underlying debt, this basic, fundamental debt, and it really is just one debt, one claim, and I don't think it can be broken up into a series of little claims, of small claims, so--
Unknown Speaker: But you could say the same thing about a mortgage securing a loan, that it's... you know, you borrow $50,000, and the lender puts up $50,000, but your duty to repay is not to repay $50,000 in any lump sum, but to pay so much each month, representing principal and interest.
Mr. Terheyden: --That's correct, but here when you have the one fundamental, underlying debt, and it's supposed to be paid on a certain period of time, whether it be a lump sum or the commencement of these... in the alternative the commencement of these monthly payments, when nothing is done, when nothing is paid within that time established under the law, under 1399(c)(2), I think there is no more opportunity to say, well, we really have a series of debts after that that we can collect on.
Unknown Speaker: Are you saying that the statute begins to run at the time of withdrawal?
Mr. Terheyden: That's what we're saying.
That's our fundamental point.
That is our fundamental position, that's true.
Unknown Speaker: On the whole thing, so it has the result in effect of accelerating the entire debt, even though there are provisions in the statute that expressly say it won't be accelerated unless this plan's sponsor takes certain action.
Mr. Terheyden: Well, which they did in this case.
They accelerated in this case.
They gave the notice, and then in the lawsuit is when the acceleration took place.
Unknown Speaker: So the consequence, I take it, of what you're saying is, going back to Justice Breyer's question, that if they pay all their installments for 6 years and the seventh year comes, and they start paying, there's no possible collection action.
Mr. Terheyden: That was a point that petitioners brought up, and it's a very good point.
In that situation they have effectively agreed to the whole payment process.
It's just like a contract.
There's a contract obligation.
This is what the Seventh Circuit has said, and the Ninth Circuit has said.
They've given their assent to this whole process, and in that situation--
Unknown Speaker: Oh, so we have a whole new agreement.
Mr. Terheyden: --You have a whole new agreement in that particular situation.
Without question, I don't think it would make sense--
Unknown Speaker: In what particular situation?
I don't know what particular situation you're--
Mr. Terheyden: --In the situation where they've made some payments.
They've made payments.
In that situation, they have given their assent to this payment process.
A new contract... a new contract has effectively been created, and then they can sue in that situation.
Unknown Speaker: --Then it becomes like a regular mortgage.
Mr. Terheyden: A regular contract.
Unknown Speaker: You can sue payment by payment.
Mr. Terheyden: Correct.
Unknown Speaker: So in this case, then, all you're saying is there's a special rule when you miss your first payment.
Anybody who misses the first payment's out of luck, and it's... for everybody--
Mr. Terheyden: If--
Unknown Speaker: --Everybody who makes a first payment, it... you agree with that.
Mr. Terheyden: --If you haven't made any payments whatsoever, then they have 6 years to do something.
Unknown Speaker: All right.
Out of curiosity, in respect to that first payment, I take it that you and the Solicitor General are reading (c)(2), there has to be a cause of action.
I take it everybody agrees you get 6 years from when the cause of action arises.
Then the question is, when does it arise, and (c)(2) begins by saying, withdrawal liability shall be payable in accordance with the schedule set forth by the sponsor, but the schedule can't extend it beyond 60 days, all right.
So that I looked at the schedule, and the schedule seems to say, on page 24, that they have a choice.
They can either have a schedule of payments, in which case the first one is due on February 1, or they could pay the whole thing in a lump sum 60 days thereafter, which I take it would be February 10.
Is that right?
Mr. Terheyden: I would take it it would be February 1, with all due respect.
Unknown Speaker: It says you may pay the withdrawal liability set forth in the preceding paragraph, that's 45,000 some odd dollars, by a single lump sum payment within 60 days after your receipt of this letter.
Mr. Terheyden: But they gave us the schedule here.
Unknown Speaker: Oh, that's right.
They said you may either do it... you don't know what my question is, so... I just want to be sure the factual premise is right.
The factual premise is that they told you that you could either do it in a lump sum 60 days after, which would be February... it doesn't say you may pay the withdrawal--
Mr. Terheyden: In their letter to us, they say you have until February 1, because they track... I think they track (c)(2).
Unknown Speaker: --Well, maybe I'm not reading the right letter.
My letter has a paragraph on page 24, you may pay in a lump sum within 60 days.
Then the next paragraph, the act also permits a schedule, in which case the first payment is due by February 1.
Am I reading the right thing?
Mr. Terheyden: If that's the December 12, 19--
Unknown Speaker: It's page 24.
If I'm reading the right thing, then I imagine it's now February 8.
I wondered how there could be a cause of action on February 8, since the trustee would not yet know which had been chosen.
If the trustee did not know which had been chosen, how would there be a cause of action yet, since they have till February 10 to make the election, and if there is no cause of action on February 8, then how can it be that the statute starts to run?
That was my question.
Mr. Terheyden: --Okay, and we're assuming that it doesn't run from the time of withdrawal in this situation.
Unknown Speaker: No, no, I will not make any assumption.
I'm saying, I read you the two paragraphs, and I said, that... I am assuming that they say you have till February 10 to make the election.
If that's so, it sounds as if on February 8 there was no cause of action yet, because they had till February 10.
Now, I'm putting it as a question.
I'm not making a statement.
I want to know what your response to that problem is.
You can it isn't a problem and explain why, whatever you'd like.
Mr. Terheyden: I guess we did view the letter as requiring either-or by February 1 and not February 10, in which case it would be... would have been late.
Unknown Speaker: The court of appeals also, has my reading of it on page 2a, it says it could either make a lump sum payment in 60 days, or it could begin installment payments on February 1.
But if that's a correct reading, then is that the end of this matter?
Mr. Terheyden: I don't know if that's... if it's... I don't know if it's the end of this matter, because we still have the ancillary question of whether it started at the time of withdrawal, which would set it all back at a time earlier.
Unknown Speaker: --Unless we say withdrawal, and if that's right then they can get the first payment and everything in your view, if we reject your argument as to the withdrawal.
Mr. Terheyden: Well, I guess I do view it as running, Your Honor, with one and the same time, February 1, and that the time of the first... the option was the time of the... February 1 a time when the payment schedules could be begin, or as an option, because it's an option here.
Congress has given them an option to do one or the other, and so I view those options as coming into place at one and the same time, and so if the schedule of monthly payments was to begin on February 1, then, since those options run at one and the same time, we view the time for the lump sum payment also to have begun on February 1.
Unknown Speaker: Well, what is your theory, Mr. Terheyden, as to why the statute of limitations should begin running from the date of withdrawal?
Mr. Terheyden: Our theory there, Your Honor, is that Congress has spoken in section 1451(a).
We hunted around, could there be anything which says it only starts... any statutory provision that only starts at the time of the first missed payment.
We couldn't find anything, but section 1451 says that a fiduciary, in this case a trust fund, could bring a lawsuit, may maintain an action if it has been adversely affected by an act or omission of another party.
It may... Congress has said that.
It may bring an action.
Now, at the time the company, an employer withdraws, the trust fund at that time is adversely affected.
The contributions are no longer flowing in, in--
Unknown Speaker: But there is a substitute that the statute provides, this payment... the series of payments, isn't there?
Mr. Terheyden: --Well, that's--
Unknown Speaker: Isn't that a compensation?
Mr. Terheyden: --No.
That's an option.
Again, that's an option.
It's not... it's... I know petitioner has fixated, fixed in on the payment, but I think that's an option.
It's one or the other.
Unknown Speaker: Well, what would the suit say if the suit were filed the day after their withdrawal?
Mr. Terheyden: In the unlikely event that it was filed the day after the withdrawal they would be asking under 1451(a) for the amount to come from the employer, and I think it would be 1) in an amount of damages to be proved at trial, that's what it would say, and 2)--
Unknown Speaker: Well, what is the wrong?
Mr. Terheyden: --I think at that point in time it's not so much the... a wrong, but what has happened then is, Congress has said at the time... in 1381(a) at the time, employer, you withdraw, you are liable to the trust fund.
It's an instantaneous thing, and I think--
Unknown Speaker: Are you saying, then, you can have a claim for relief that's unripe?
I mean, do you agree that at the point when withdrawal liability kicks in the employer has done nothing wrong?
There's no wrong until there's a payment due that has not been paid.
Mr. Terheyden: --I don't think it's... of course not.
There's not a wrong.
It's not illegal to withdraw, but there's--
Unknown Speaker: So what's the claim for relief for, when all that's been done is something that the statute doesn't say is unlawful?
Mr. Terheyden: --The court has said there's a cause and effect... the court and the Congress has said there's a cause-effect relationship.
They're always speaking in the present tense.
When you withdraw, you are liable to the trust fund, and the court in the Gray case and the Concrete Pipe case--
Unknown Speaker: But liable for what?
Mr. Terheyden: --You have this obligation to pay your fair share--
Unknown Speaker: --But you don't know what it is.
Mr. Terheyden: --of the unfunded pension benefits.
Unknown Speaker: But you don't know what the obligation is until the plan sends out the notice.
Mr. Terheyden: But Congress did something in this case very wise.
It said, you may sue.
You've been adversely affected, but it also at the same time said--
Unknown Speaker: But that's a who--
Mr. Terheyden: --you have 6 years.
Unknown Speaker: --I was struck by what you said, and I looked at this section 1451(a) on page 17a, and it says, persons entitled to maintain actions, and I said, yeah, I recognize that.
That answers who, and then I looked, I find out a plan fiduciary, et cetera.
That's typical of statutory... there's a who question and a when question, and you are referring us to the who question to answer the when question.
Mr. Terheyden: But I think 1451(f) says it accrues... it talks about when the cause of action arises.
This is the one section which says when it arises.
When you read that in conjunction with 1381(a), and listening to what--
Unknown Speaker: Where does it say anything about where it arises?
It says persons entitled to maintain an action, and this--
Mr. Terheyden: --It says if you've been adversely affected.
I think that is crucial here.
A fund has been harmed.
It's been hurt at this time.
Unknown Speaker: --It says, when you are adversely affected, you are the people who can sue.
These are the people who can sue.
Why isn't this just such a familiar, who may sue, like standing, who has standing to sue, not when you begin your action?
Mr. Terheyden: I think it's the one possible definitional section in the statute which explains when the cause of action arises, and that this cause of action arises at the time... almost a traditional way that a cause of action can arise, when someone is harmed.
In this case the trust fund is harmed, or adversely affected at this point in time.
Unknown Speaker: But that's not necessarily true.
Supposing you paid the full amount of the withdrawal liability.
You would have paid for all the unfunded liability, your share of the unfunded liability.
Withdrawal doesn't necessarily harm the plan.
Mr. Terheyden: I think as no more contributions are coming in, that--
Unknown Speaker: No, but if you promptly paid the assessment, there would have been no harmful consequences to the plan from the withdrawal.
Mr. Terheyden: --Well, I think the minute there's a... I think the minute there's a stopping of this flow of contributions these unfunded vested benefits are just going to get worse.
Part of the contributions go to reduce the unfunded vested benefits.
Unknown Speaker: Well, is that true 100 percent of the time?
Does every employer who withdraws always have to pay an additional amount?
Mr. Terheyden: No, not every time.
Unknown Speaker: No, because sometimes the fund is adequate.
Mr. Terheyden: --No... is adequate--
Unknown Speaker: Sometimes it's... sometimes the fund is adequate for the... to pay the benefits.
Mr. Terheyden: --That's true.
That's true, but even... I think even if a fund is fully funded it is still harmed because these contributions are no longer coming in to fund these funded benefits, so--
Unknown Speaker: If there's any analogy to contract law it seems to me the most you can say about the... it's like an anticipatory breach, saying that in the future I'm not going to do something that I'm obligated, and for an anticipatory breach, that's at the election of the payee.
They can exercise it or not.
Isn't that true?
Mr. Terheyden: --In contract situations, but again here I don't believe that there is a contract situation, as the Seventh and Ninth--
Unknown Speaker: What is it, then, because when I read the petitioner's brief I said, well, the closest analogy is a contract, and so that's... there's a lot of merit to her argument.
Then I looked at your brief to see what is the analogous cause of action, the analogous type of wrong that you assert, and I couldn't find it.
Mr. Terheyden: --Well--
Unknown Speaker: I mean, is it some kind of breach of fiduciary duty, or something like that?
I... no, that doesn't work.
Mr. Terheyden: --I think it's... it's Congress saying, this is your right, trustees of trust funds.
This is... and you may sue to perfect that right, and you have 6 years to do it.
That's a very long time, and during the 6 years you have to make the calculation and the demand, something that is very easy to do, very simple to do.
Unknown Speaker: Except that a contract somehow springs into existence if the withdrawing employer makes the first payment.
Mr. Terheyden: Makes... that's what the... that's precisely what the Seventh Circuit said, and the Ninth Circuit here in the case below.
They have given their assent to this process.
They have agreed that they can be... that this sum can be paid over a period of time.
They have agreed that suit may be brought at a later stage... points in time, but until that happens there is no mutual agreement as you would have in an ordinary contract situation.
Unknown Speaker: Is this implied in fact, or implied in law?
I mean, do you really... is this supposed to be an estimation of what was genuinely in the mind of whoever made the first payment?
Mr. Terheyden: Implied in... I--
Unknown Speaker: Well--
Mr. Terheyden: --I... the Ninth Circuit--
Unknown Speaker: --I mean, you could say... you could say that.
You could say, you know, by doing this you have agreed to, but is it true?
Mr. Terheyden: --That's true--
Unknown Speaker: I mean, have they agreed to it because you say so, or have they agreed to it because somehow the making of the payment--
Mr. Terheyden: --The making of the payment--
Unknown Speaker: --genuinely represents some contractual undertaking?
Mr. Terheyden: --It... that is an implied agreement with this process.
It's... I think the Ninth Circuit looked at Korman and they said the act of paying can be an implied agreement with the... in this case with the process.
Unknown Speaker: All right, so I--
Mr. Terheyden: That's how the contract impliedly arises.
Unknown Speaker: --All right, so either they do... on your theory... I'm just interested in your theory.
On your theory, they agree to the schedule of payments or they don't.
Mr. Terheyden: Correct.
Unknown Speaker: Okay.
Now you're saying, if they do, then fine.
Then we have the bank collecting the mortgage.
But if they don't, now, then what?
That's what I want to know.
Imagine they don't.
They're never going to agree to this condition of all the payments.
They're always never going to agree to it.
Very well, then on that theory why isn't it the case that they withdraw, then they get a notice, then they have 60 days from that time, since they're never going to agree to the schedule, and then they can bring their lawsuit, and on that theory it would still be timely.
It would have been until February 10 they would have had.
Mr. Terheyden: I--
Unknown Speaker: So how does your theory work on that branch of your--
Mr. Terheyden: --On that, I... you know, I could well understand somebody... someone saying the employer hasn't absolutely refused yet, I suppose.
Unfortunately the alternative to that, Mr. Justice Breyer, is that it leaves it entirely up into the hands of the petitioner to start this process going.
Unknown Speaker: --Oh, yes, just as for example, if I make a--
Mr. Terheyden: You could never have a statute of limitations.
Unknown Speaker: --Well, it's rather like the bank.
Let's say we get into an odd agreement... I grant you this would be a little odd, but I don't have to make my first mortgage payment until the bank requests it.
Well, I guess that would be up to them.
You're right, the thing would never come to rest as long as they didn't ask me to make my first payment.
But however, they might see a problem with that.
I mean, they might ask, and I guess the trustee's in the same boat.
Mr. Terheyden: Yes, I mean--
Unknown Speaker: Or a demand promissory note.
There's no due date, and so whenever the holder of the note says, okay, I want payment now, in 60 days, that triggers the running of the statute.
It's not a concept unknown in our legal system.
Mr. Terheyden: --Again... I don't want to beat this point into the ground.
Again, that would be a contract situation, which we don't have here.
Unknown Speaker: Well, I actually think a demand note runs from the time it's made, but there are a number of... not a number, but there are some instances where there is a continuing wrong, and the statute of limitations is in effect in the hands of the plaintiff, because the plaintiff demands that you cease the wrong and can sue from that point.
Mr. Terheyden: I don't think this is a continuing obligation situation, as petitioner has submitted, and--
Unknown Speaker: Well, I was trying to think of an instance in which the statute of limitations is really in the hands of the plaintiff, and that's what I came up with.
Mr. Terheyden: --I think here... this whole law was enacted at a time of crisis for trust funds.
Employers were bailing left and right, and so Congress I think really wanted to see that these funds move as swiftly as possible.
Under our view, under our theory of the case, we're putting some teeth into Congress' exhortation to say act as soon as practical to go ahead and collect this.
We're putting some teeth into--
Unknown Speaker: Well, but the very idea of a 6-year statute of limitations suggests that they did not regard it as terribly urgent.
I mean, we have 6-month statutes of limitations.
6 years suggested that they were willing to have people take their time.
Mr. Terheyden: --6 years in which they have to file suit.
Here we have almost 8 years before the suit was filed.
Unknown Speaker: But on their view they had nothing to sue for because there was nothing... no wrong was done, no obligation was incurred until there was a payment schedule.
Mr. Terheyden: That's true there was... in our view there is no obligation that... there's an underlying obligation, but not an obligation to pay pursuant to a payment schedule.
There is a--
Unknown Speaker: Are there other examples where a statute of limitations starts to run before the claim ripens, at a point where we don't know whether there's going to be any claim?
Mr. Terheyden: --I think... you know, I can't think of one precisely, but in this situation, as you know, we say the claim has ripened, but I think--
Unknown Speaker: But it hasn't, because you would... I thought you conceded that if the complaint were to be filed the day after the withdrawal, the permanent withdrawal occurred there would be no relief possible because the employer hasn't done anything to be obligated to pay anything.
Mr. Terheyden: --But I think, Your Honor, if this was a... if it were the last of the 6 years, the last day of the sixth year and the trust fund hadn't done anything, I think certainly it could--
Unknown Speaker: But we're talking about when the claim accrued, not the last day of the 6 years.
We're talking about the starting gun.
Mr. Terheyden: --Yes.
Unknown Speaker: And I don't know of a situation where the starting gun goes off before you have a claim, before you have a ripe claim.
Mr. Terheyden: In the... this is--
Unknown Speaker: Before the runners know in which direction to run, so to speak.
Or how far.
Mr. Terheyden: --I understand.
This is what happened in the Joyce case, which... one of the main cases petitioner relies on.
The trust fund sent out the demand on the very same day they filed the lawsuit, and the issue was brought up there, was this premature or not, and the reason... the trust fund said the reason we did it is because we weren't sure when the statute of limitations ran, but we'd better make sure we protect our rights, and I think that's what the fund would have to do here.
It could file the suit to protect it--
Unknown Speaker: And they... and then Joyce gave them an answer, right, and the answer was the claim doesn't accrue until the first payment is due, until there's a... payment is due.
Mr. Terheyden: --But by then it was no... yes, and then it was no longer premature.
I think here they could file the suit and the court could--
Unknown Speaker: I mean, when you... I'm not following your example of Joyce, because Joyce was presented, as you say, in a climate where the law was uncertain, so... but there was a determination of the payments that were due.
The schedule was out, right?
Mr. Terheyden: --Yes, but the employer hadn't refused at that point, at time they filed suit, and they were able to stay into court, because by the time it came up through the court, the district court system, they... there was no payment by the employer, so they were legitimately able to file their lawsuit the same day they sent the payment.
Unknown Speaker: So... but there was a claim by the employer's... on the employer's part that that claim was untimely, right, in Joyce, because it wasn't within 6 years from when the withdrawal liability... from when the withdrawal occurred.
Mr. Terheyden: That's true.
They were saying, I think... there the employer said, as we do here, it adhered back to the time of the actual withdrawal.
But I think my point there is there's nothing to really... to stop them to meet this long 6-year statute of limitation where nothing has been done, where no... to meet this statute of limitation, where they haven't done anything to protect their rights and the court could very easily stay the action.
They could very easily... otherwise, I'm afraid it's just going to go further and further into the future.
They could... they'd come back and if nothing's done in 8 years or in 10 years--
Unknown Speaker: If... you say there's nothing that impels the trustee, the plan trustees to do this faster?
I mean, they are losing at least interest, aren't they?
Mr. Terheyden: --They said, you know... that's true.
They're losing some interest.
They say perhaps a suit for breach of fiduciary obligation can be brought against the trustees, but our view, Your Honor, gives it some teeth.
It says there's a penalty here.
If you don't do anything here in 6 years you will incur a penalty.
And look what happens when it goes on beyond the 6 years.
When nothing is done is what happened in this case.
Unknown Speaker: Well, not as to penalty.
You say there's no liability at all because it's time-barred.
Mr. Terheyden: --That's right.
They would lose it all, Your Honor.
They would lose it all, and here if this keeps going beyond the 6 years, what you have in this case, by this time you have an insolvent trust fund and a defunct employer because it's gone on so long.
Unknown Speaker: Yes, but the delay during this period is all to the advantage of the person who is obligated to pay.
I mean, there's an incentive on the part of the trust, that if trustees are doing their job they'll get moving.
The longer they take, the better off you are.
You get an interest-free loan for this whole period of time.
Mr. Terheyden: But I think policy wise the longer it goes on the employers could move, the employers could go out of business--
Unknown Speaker: Sure.
Mr. Terheyden: --the employers could become defunct--
Unknown Speaker: The employers may be able to escape the liability, but that's certainly not anything they should be complaining about.
Mr. Terheyden: --No, but that certainly doesn't serve the purposes of the act, serve the purposes of the beneficiaries, I don't believe, if that happens.
If there's nothing that actually compels them to do it--
Unknown Speaker: Well, they have a duty to act as soon as practical, or whatever the statute says.
Mr. Terheyden: --Yes, that's true, as soon as practical, and I give absolute pause with that exhortation by Congress to act as soon as practical.
Unknown Speaker: But it's sort of a strange way to penalize them to say that if you don't act promptly we'll let the employer... let the contributor off the hook.
That doesn't make any sense to me.
Mr. Terheyden: Well, I think it really compels them to move forward and do something.
I think it really gives them some real, definitive, objective hammer, if you will, that they'd better act now, especially in a situation where there's been nothing, nothing done.
I understand it's different in a schedule payment situation where there has been something done.
There's been an effort, and that's why in those situations certainly you can... it can go on for a longer period.
If there's no further questions, I'll yield back the balance of my time.
Unknown Speaker: Thank you, Mr. Terheyden.
Mr. Terheyden: Thank you very much.
Unknown Speaker: Ms. Berzon, you have 3 minutes remaining.
Rebuttal of Marsha S. Berzon
Mr. Berzon: I'd like to address two things.
First, it's important to be clear that... and I think it is clear that this is a statutory obligation.
That is, the schedule is a statutory obligation, and the employer, while it has the option to prepay under 1399(c)(4), it doesn't have the option to not pay and say that it has chosen a total payment option but it isn't doing it.
The statute isn't set up that way.
The statute is set up with a baseline obligation to pay on a schedule, a periodic payment basis, and the only way that the employer doesn't have to meet that payment-by-payment obligation is if it prepays the entire amount.
This employer has not prepaid the entire amount, and therefore it had a prepay... a payment-by-payment obligation which was not contractual, which should not depend upon it making the first payment at all, but which went into effect with the demand letter and stayed there for the entire period that the payments were due.
That's the first point.
And the second point is, which is related, is to respond to Justice Breyer's dealing with this case in particular, and I would agree with perhaps the slight twist in the explanation.
On page 24 of the joint appendix the demand letter does, indeed, say that $45,570 can be paid within 60 days after the receipt of this letter, which was actually probably sometime after February 10 would have been due, and then says that there is an option to make a payment-by-payment instalment instead.
If, in fact, for all the reasons we stated, it is the payment-by-payment obligation which is the statutory obligation, and absent a permissive acceleration by the fund at a time when it can make the acceleration, which it couldn't here, that's the only obligation.
But if somehow one thought that there was another obligation, i.e., a lump sum payment, we know when that was one due, and it was due within the limitations period, so there's no way to take the failure--
Unknown Speaker: No, but according to the letter it would have been due before... they gave them... you gave them up to February 10, 60 days from December 12.
Mr. Berzon: --It was actually 60 days from when they received the letter, so it would have been a little after that.
Unknown Speaker: Well, but in any event you gave them beyond February 1.
Mr. Berzon: Exactly.
Unknown Speaker: So that the... under his reading and my reading of that paragraph you lose the first payment.
Mr. Berzon: I--
Unknown Speaker: Because they had no obligation to do anything--
Mr. Berzon: --That may be if you do it on a payment-by-payment--
Unknown Speaker: --because they had an option to pay in full on February 8, because that's what you asked for.
Mr. Berzon: --On February 8 they didn't have an obligation to pay in full.
They only had an obligation--
Unknown Speaker: They didn't have an obligation, they had an option.
They had an option, because you demanded payment in full within 60 days, or if you don't do it you can pay monthly.
Mr. Berzon: --That's correct, but on February--
Unknown Speaker: So on February 8--
Mr. Berzon: --8 we don't know whether they're going to pay in full on February--
Unknown Speaker: --That's right, so you could not have sued.
Chief Justice Rehnquist: Thank you, Ms. Berzon.
Mr. Berzon: --Thank you.
Chief Justice Rehnquist: The case is submitted.
Unknown Speaker: The honorable court is now adjourned until Wednesday, November12 at ten o'clock.