Concrete Pipe and Products of California, Inc. v. Construction Laborers Pension Trust for Southern California Page 3

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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

Dennis R. Murphy:

If the--

Sandra Day O'Connor:

--And... and entered into on the date that was applicable here after ERISA had been enacted.

Dennis R. Murphy:

--I believe the case--

Sandra Day O'Connor:

Now, under that assumption, I assume that you would acknowledge that the company could be liable for withdrawal liability up to 30 percent of its net worth.

Dennis R. Murphy:

--If they understood at the 1976 that they were a defined benefit plan, they would have therefore, under force of statute, been constructively... had constructive knowledge that they would have been liable up to 30 percent.

Sandra Day O'Connor:

You acknowledge that.

Dennis R. Murphy:

Correct.

Sandra Day O'Connor:

Well, since you didn't raise the question about this not being a defined benefit plan, isn't that precisely how we have to view it here?

Dennis R. Murphy:

Well, we can view it as a defined benefit plan here, but what we are trying to do here as I understand it is to determine whether the application of the Multiemployer Pension Plan Amendment Act that was passed in 1980 is applicable... is constitutional under the substantive due process clause and the takings clause, and I think that that--

Sandra Day O'Connor:

Well, the only thing that added was that they could go up to 50 percent of the net worth.

Now, maybe you didn't anticipate that all right, but--

Dennis R. Murphy:

--Actually, it added it go up to any amount well over 50 percent--

Sandra Day O'Connor:

--In your circumstances--

Dennis R. Murphy:

--In our circumstances.

Sandra Day O'Connor:

--It amounts to 50.

Dennis R. Murphy:

But to assess us with the responsibilities under this act, we believe that they have to establish a nexus between our conduct and our promises and these payments, and what we're trying to demonstrate is that there was no reasonable... and as we state in our reply brief, if you were going to analogize to a joint venture or an insurance fund, there has to be some promise made, and there's no reasonable basis for asserting a promise.

The trust fund itself at that point in time was representing itself to be a defined contribution plan.

The trust fund itself represented to the employers that they would have no obligation for this.

The trust fund itself represented to the employees that there were no guaranteed benefits, and that was the... those were undisputed facts in this case, and based on those facts, there was no knowing or no constructive promise by Concrete Pipe and Products to pay the unfunded liability of employees of other employers.

Your Honor, I also... we've... I've touched upon it, we also assert that the fact that the statute imposes liability based on the amount of contributions is itself as demonstrated by the facts of this case unconstitutional and irrational.

We have demonstrated by the facts of this case that Concrete Pipe and Products has paid over two times the amount of money necessary to fund the credits earned by its employees, and that assumes all of its employees vest, and we know, of course, under the Ponds case that 96 percent don't ever vest, and we didn't have enough time in business for them to vest while on our employment.

David H. Souter:

Isn't it also the case that the more you pay indicates the more likelihood of proportionacely large claims down the road?

Isn't that fair to say?

Dennis R. Murphy:

If it was related... the more we pay related in some way to the credits or the vesting of employees, but--

David H. Souter:

Well, you're now... if I understand you, you're now turning to a second argument, and that is, during the period in which we paid our employees did not work long enough to have vested benefits, but it seems to me that that argument is foreclosed by the fact that the very point of the act was to aggregate the periods of employment, so I don't see how you can make that argument.

Dennis R. Murphy:

--The argument I'm making with that fact is that the point of the act and the point of prior decisions is that an employer must pay for the liabilities that arose as a result of its participation, and this formula does not determine or even come close to determining liabilities that arose as a result of its participation.

They concede in their opposing brief that as a result of our participation the employer not only funded all the credits earned by its own employees, but also twice that.

Antonin Scalia:

Well, isn't it enough if you have a reasonable plan that, in most cases, on average would indeed hit the employer with the liabilities that arose by reason of its participation?

Now, in some instances the scheme might not work out that way, as in your case, because your employees quit before the 10-year cliff vesting, but that doesn't make it an irrational scheme, does it, just because in some cases it won't work out perfectly?

Dennis R. Murphy:

Well, the law does not have to work out perfectly, but the law has to have some relationship between the harm... the legislation has to have some rational relationship between the harm that it is trying to address and the remedy that is provided.