Concrete Pipe and Products of California, Inc. v. Construction Laborers Pension Trust for Southern California Page 2

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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

Sandra Day O'Connor:

I thought we took it on the assumption that it was not--

Dennis R. Murphy:

--That it's--

Sandra Day O'Connor:

--That it's a defined benefit plan.

You didn't raise that.

Dennis R. Murphy:

--We did not raise it, but we do not necessarily concede that it is a defined benefit plan.

This is not an issue that is before the Court as we argue the case today.

However--

Sandra Day O'Connor:

Well, I guess as we take it, we have to consider that it is not, even though perhaps it could have been argued differently below.

Dennis R. Murphy:

--Perhaps it could have been argued differently below, and it is... certainly to assess liability under the statute it has to be a defined benefit plan, and certainly it has been considered, I presume, by the deciding parties that it is a defined benefit plan in assessing liability, since the statute clearly states that there is no withdrawal liability with respect to a defined contribution plan.

And we are not here asserting that it is not a defined benefit plan, but we are asserting elements of it as it gave notice in 1976, because I believe as the original question was, what was the intent of the parties in 1976.

Sandra Day O'Connor:

Well, the only thing I can see that you might not have assumed the risk for back in joining the plan was that the withdrawal liability might take up to 50 percent of your net worth instead of 30 percent, as ERISA had limited.

Dennis R. Murphy:

In... it was a very contingent risk under the original statute.

Sandra Day O'Connor:

Under the original statute there was a contingent withdrawal liability of amounts up to 30 percent of the net worth.

Dennis R. Murphy:

But not as to defined contribution plans, and it's clearly conceded that in 1976 everyone believed this to be a defined contribution plan, so if you're asking what the intent of the parties were in entering this relationship and whether they agreed to become liable for this type of debt when they entered the plan on December 1, 1976, they did not agree to assume liabilities to other employees in 1976.

They had no notice of that.

The court from the very jurisdiction of which this case arises, the Central District of California, had just held that similar types of plans were defined contribution plans.

The allegations in our complaint, paragraph 14, alleges that it was a defined... understood to be a defined contribution plan, and the answer did not deny that.

The answer said that is basically true until 1978.

Antonin Scalia:

They were wrong about that.

They were just wrong about that.

Dennis R. Murphy:

But if you... if the issue is when they... there was no--

Antonin Scalia:

Well, the issue is what their reasonable expectations were, and you don't have a reasonable expectation that's contrary to the law.

Dennis R. Murphy:

--Well, you have a reasonable... they entered a plan and they did nothing contrary to the law.

Antonin Scalia:

No, but you're telling us you thought it was a defined benefit plan and it turned out not to be, or vice versa, and I mean, that's your problem.

I don't see how that renders the Government's ability to deal with you as someone charged with that knowledge who entered into that arrangement, I don't see how it changes the Government's ability to deal with you in that capacity.

Dennis R. Murphy:

Well, I think the Government's ability to deal with us depends... I think what we are pursuing in this action is that the Government has been recognized to be limited in its ability to deal with us, and the Government's ability to deal with us is that it can't charge one member of society for debts with which it is unrelated, and there must be some reasonable relationship in the legislation.

And in this instance we assert that there is no reasonable relationship between CP&P and those employees who... or those employees of other employers who will receive the benefit of these payments, and that is one of the primary thrusts of our argument before you, Justice Scalia.

As a matter of fact, it was interesting that in the Connolly argument Mr. Felner, arguing on behalf of the PBGC, indicated that it required the employer to pay for consequences of its own conduct, and when he was asked by one of the members of the court, what if it was not the fault of the employer, and he specifically stated that's not before us, and the takings clause involves transfers of the property between unrelated parties.

Sandra Day O'Connor:

Well, Mr. Murphy, let me put it this way.

Suppose... just suppose... that instead of your situation there had been a defined benefit plan and that's what the company entered into--