Concrete Pipe and Products of California, Inc. v. Construction Laborers Pension Trust for Southern California Page 13

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Media for Concrete Pipe and Products of California, Inc. v. Construction Laborers Pension Trust for Southern California

Audio Transcription for Oral Argument - December 01, 1992 in Concrete Pipe and Products of California, Inc. v. Construction Laborers Pension Trust for Southern California

Carol Connor Flowe:

That's correct, Justice White, after the Court--

Byron R. White:

So... but do you happen to know whether the opposition to certiorari suggested that the trustee presumption was not at issue in the case?

Carol Connor Flowe:

--It did not.

Byron R. White:

Okay.

Thanks.

Carol Connor Flowe:

The scheme that Mr. Murphy is suggesting be used with respect to these assumptions simply wouldn't work.

This is a very technical and complicated process, the establishment of actuarial assumptions.

There's a good reason that Congress assigned this task to actuaries.

It had first done so in 1974 as a part of its enactment of ERISA, where the assumptions were to be set by the actuary for purposes of funding all kinds of defined benefit pension plans, and after 6 years of experience in using the actuaries in that fashion, it again assigned this task to them in 1980.

The... there is a range of reasonableness, that's true, but it's not by no means as broad a range as Mr. Murphy would suggest.

What the actuary has to do... and there's many assumptions here, not just the interest rate assumption to be examined, but what the actuary has to do is really consider what liabilities are going to have to be paid by this particular plan over 30, 40, 50, maybe even 60 years into the future, as the various participants retire.

Also in a plan like this one that was very seriously underfunded, the actuary can't simply pick an interest rate that may reflect what the current day's investment returns are going to be, because he knows that there's going to be money coming into the plan to make up for that underfunding over all of that many years into the future, and that he has to be very conservative about what the rate of return might be able to be 40 years down the road.

If there wasn't some presumption of reasonableness afforded these actuarial assumptions, what we would be talking about is a situation where the employer could make the plan have to come in and prove every element of these complicated determinations in every single case, and it would completely defeat Congress' purpose in trying to limit the amount of unnecessary litigation in these withdrawal liability collection actions to let the plans do the matter expeditiously.

Turning, then, briefly to petitioner's other constitutional challenges today, in response to a question you raised earlier, Justice O'Connor, it was clear in ERISA in 1974 when ERISA was enacted what a defined benefit plan was and what a defined contribution plan was.

Congress plainly provided that a defined contribution plan was a plan that provided an individual account for each employee and that a defined benefit plan was any other plan... that is, any plan that didn't provide an individual account for individual employees.

Contrary to Mr. Murphy's contention here this morning, it was never conceded, certainly by PBGC, that this plan was anything other than a defined benefit plan.

The same disclaimer clause that's quoted in the briefs that was in the plan in 1976 and thereafter, also noted that the plan was paying premiums to PBGC's insurance program, which of course it had to do only as a defined benefit plan, but under protest.

I believe it was Justice Scalia who noted that yes, there were a couple of erroneous district court decisions early on, but the law was clear, and we believe that Concrete has to be charged with notice of what the law was and what the plan was it was joining.

We would simply suggest that the substantive due process and takings challenges in this case are both governed by and resolved by the Court's prior decision in Connolly and Gray, and I thank you.

William H. Rehnquist:

Thank you, Ms. Flowe.

Mr. Miller, you have... pardon me, Mr. Murphy, you have a minute remaining.

Dennis R. Murphy:

Your Honor, the SDA presumptions, the... page 54 of the appendix clearly shows that the trustees made a determination that the withdrawal occurred in 1981 and the issue was whether the plant was mothballed or permanently closed, and that was a determination that the trustees made and it was challenged throughout the entire proceedings and the presumptions... there is no disclaimer that the presumptions were not issued in their favor and clearly the arbitrator was aware of the presumptions because he cited the presumptions at page 400 and 401 of the joint appendix in issuing his second decision, so it was a decision of fact, it was raised, it is before the Court, and it needs to be determined whether the trustee's decision on the A presumption is appropriate.

With respect to the statement that Concrete Pipe is on notice of the actuaries in 1976, there was no multiemployer Pension Plan Amendment Act even at the time they closed their plant, and there was no presumptive formula to apply it to at that time, so there was... obviously to say that at the time they entered the plan they were fully aware of all the unfunded liability calculations is not accurate.

Thank you.

William H. Rehnquist:

Thank you, Mr. Murphy, the case is submitted.