Mead Corporation v. Tilley

PETITIONER:Mead Corporation
RESPONDENT:Tilley
LOCATION:National Treasury Employees Union

DOCKET NO.: 87-1868
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: United States Court of Appeals for the Fourth Circuit

CITATION: 490 US 714 (1989)
ARGUED: Feb 22, 1989
DECIDED: Jun 05, 1989

ADVOCATES:
Clifford L. Harrison – on behalf of Respondents
Patrick F. McCartan – on behalf of Petitioner

Facts of the case

Question

Audio Transcription for Oral Argument – February 22, 1989 in Mead Corporation v. Tilley

William H. Rehnquist:

We’ll hear argument next in No. 87-1868, Mead Corporation against Tilley.

Mr. McCartan, you may proceed whenever you’re ready.

Patrick F. McCartan:

Thank you, Mr. Chief Justice, and may it please the Court:

This case presents two questions for consideration by the Court.

The first and principal question is whether upon termination of a pension plan the Employee Retirement Income Security Act of 1974, ERISA, requires the payment of subsidized early retirement benefits before any surplus plan assets may revert to the employer.

We submit that ERISA imposes no such requirement.

But if the Court should disagree, then it would be necessary for the Court to decide whether the court below, the Fourth Circuit Court of Appeals, abused its discretion in reaching and deciding the damage issue, when that issue was not considered by the district court and was not raised, briefed or argued in the court of appeals.

The factual background against which the Court will decide this question is relatively simple.

The Respondents are six former salaried employees of the Petitioner, of the Lynchburg Foundry Company, formerly a previously… excuse me, a wholly-owned subsidiary of the Petitioner.

They were participants in a salaried employees retirement plan, which was a tax-qualified, single employer, defined benefit plan funded entirely by Mead.

Under the terms of the plan, normal retirement benefits became payable at age 65.

Employees became entitled to actuarially reduced early retirement benefits at age 55.

And employees became entitled to subsidized early retirement benefits if they had attained age 62 and completed 30 years of service at the time they severed their employment with Petitioner.

This benefit was subsidized in the sense that there was no actuarial reduction for the early commencement for the benefits.

In 1983, Petitioner sold the foundry, severed the employment of the Respondents, and terminated the plan.

Employees who had satisfied the requirements for receiving normal or subsidized early retirement benefits, received those benefits.

All employees who were ineligible for such benefits received their normal retirement benefit, payable at age 65, based upon their completed years of service on the date of plan termination.

In other words, the actuarial value of the normal retirement benefit.

The Respondents were in this latter group.

Five had completed 30 years of service but had not attained age 62.

One had 28 years of service and was only age 61 at the time of plan termination.

Prior to the actual termination of the plan, Mead requested and received from the Pension Benefit Guaranty Corporation a Notice of Sufficiency of Assets.

The IRS subsequently issued a favorable determination letter indicating the termination of the plan did not affect its tax-qualified status.

Having satisfied all liabilities of the plan, Mead then took a reversion of approximately $10.7 million, as provided by the terms of the plan.

This suit followed, Respondents claiming that Mead should have paid subsidized early retirement benefits before any surplus plan assets could revert to the Petitioner.

On cross-motions for partial summary judgment, the district court held that the Petitioner was not required to make payment of such benefits because they were not accrued benefits within the meaning of ERISA and the Respondents had not satisfied all terms and conditions of the plan.

The Fourth Circuit reversed, holding that upon plan termination, ERISA required payment of these subsidies even if those benefits were not accrued benefits within the meaning of the statute and even though Respondents had not satisfied all conditions under the plan for the receipt of such benefits.

For its sole statutory authority, the court of appeals relied on Section 4044(a)(6) of ERISA, which ranks the order in which assets must be allocated upon plan termination among six categories, the last being the payment of all other benefits under the plan.

In construing this category to create a substantive right to recover subsidized early retirement benefits, the court below relied upon Amato against Western Union, where the Second Circuit that Congress did not intend to limit this allegation category to accrued benefits within the meaning of the statute.

But, instead, intended that, if assets were available, they should be paid to meet the participant’s benefit expectations under the plan.

Patrick F. McCartan:

The court below then calculated the amount due each Respondent by taking a five percent actuarial reduction for each year that the individual is under the early retirement age at the time of plan termination.

Sandra Day O’Connor:

Mr. McCartan,–

Patrick F. McCartan:

Yes, Your Honor.

Sandra Day O’Connor:

–I guess we have here two different categories of employees.

Those who had worked the 30 years but weren’t yet 62, and those employees who were neither.

They hadn’t yet worked the 30 years and they weren’t 62.

Patrick F. McCartan:

That’s correct, Justice O’Connor.

Five of the Respondents.

Sandra Day O’Connor:

Now, is there possibly a distinction there?

Has somebody who has worked the 30 years in effect earned the retirement benefits?

Could you say they are accrued but not yet vested until they are 62?

Patrick F. McCartan:

I think not, Your Honor.

To begin with, a benefit can be earned only under the terms of the plan.

If it is a benefit which is mandated by ERISA to be paid, it must be an accrued benefit.

Under the terms of this plan, there were two conditions for the receipt of early retirement benefits.

The employee had to have 30 years of service and reach age 62 in service.

Now, once you make either the age or service expectations of the participants, rather than the terms of the plan, the touchstone of liability, there is no way for determining what the obligations of the plan are, and I submit there is no reason for disregarding the terms of one condition and not another.

Sandra Day O’Connor:

I guess you’ve read that Ashenbaugh decision out of what… the Third Circuit?

Patrick F. McCartan:

The Third Circuit, Your Honor.

That’s correct.

Sandra Day O’Connor:

And judge Mansmann’s opinion in that that tried to draw that distinction.

Patrick F. McCartan:

That’s correct.

In dissent.

Sandra Day O’Connor:

Uh-huh.

Patrick F. McCartan:

The majority opinion in that court… in that case, as I’m sure Your Honor is aware, held that subsidized early retirement benefits were not accrued benefits within the meaning of ERISA.

But, coming back to your original question, you cannot have the age or the service expectation of the participant determine the liability of the plan regardless of the terms of the plan.

In this case, it was an age-in-service expectation that we’re being asked to ignore.

In another case it may be a service requirement, as was the case in the Blessitt case in the Eleventh Circuit.

Anthony M. Kennedy:

Well, what’s an example of an accrued non-vested benefit?

Patrick F. McCartan:

I’m sorry, Justice Kennedy.

Anthony M. Kennedy:

Is there a paradigmatic example of an accrued non-vested benefit?

Patrick F. McCartan:

An accrued non-vested benefit would be the example of an employee under this plan, which contains a 10-year cliff vesting provision, who had been in the employ of Mead for nine years.

If that employee leaves at nine years, he had an accrued benefit, but it was unvested.

He gets nothing.

Anthony M. Kennedy:

When did it begin to accrue?

Patrick F. McCartan:

It began to accrue upon the moment he became eligible to participate in the plan.

But it was an accrued benefit within the meaning of the statute, not a subsidized benefit.

What was accruing under the terms of the plan at that time was the annual benefit commencing at normal retirement age, not a subsidized early retirement benefit.

Because, if there is anything that is clear in this case, it’s that Congress in 1974 specifically decided not to include the subsidized early retirement benefit in the term “accrued benefit” within the meaning of the statute.

Sandra Day O’Connor:

Although normal retirement benefits accrue continuously during–

Patrick F. McCartan:

That’s correct, Your Honor, under Section 411(b).

–Did you have those in this case?

Patrick F. McCartan:

That’s right, Your Honor.

Anyone who had satisfied the requirements for the normal retirement benefit, which in effect was reaching 65, received that benefit.

That benefit has to be nonforfeitable under the statute.

Those who had not attained that age but had vested benefits, received an actuarially reduced value of their normal retirement benefit, based upon their years.

They were just accrued?

Patrick F. McCartan:

Those are the only benefits that accrue under the statute.

Byron R. White:

They were accrued.

Were they vested, the ones who hadn’t reached retirement age?

Patrick F. McCartan:

Yes, Your Honor.

Any time an employee reaches the 10-year cliff vesting provision in the plan–

I see.

Patrick F. McCartan:

–all benefits that have accrued become vested and nonforfeitable within the meaning of the statute.

Sandra Day O’Connor:

Now, for tax treatment of these pension plans, I gather that you calculate the contingent liability created by the early retirement provisions and IRS would take account of that?

Patrick F. McCartan:

I think not, Your Honor.

Under Section 401(a)(2) of the Revenue Code–

Uh-huh.

Patrick F. McCartan:

–which has been in place since 1938–

Uh-huh.

Patrick F. McCartan:

–upon plan termination, the plan sponsor must satisfy all plan liabilities before there can be any reversion of surplus assets to the employer.

The Treasury regulation implementing that section of the Code provides that that requires payment of all fixed and contingent liabilities.

And the IRS in a series of revenue rulings, dating from the late ’30s and early ’40s, has defined contingent liabilities as benefit credits accrued up to the time of termination.

Now, as a matter of administrative practice–

Sandra Day O’Connor:

So, what about Mead’s early retirement benefits under that–

Patrick F. McCartan:

–Well, prior–

Sandra Day O’Connor:

–IRS definition?

Patrick F. McCartan:

–Prior to ERISA, Your Honor, it was only the benefit that accrued under the plan which determined… which was based upon the terms of the plan.

Since ERISA, it is only the accrued benefit… I don’t mean to circular… which accrues over the life of the plan and the service of the employee.

But what the IRS required pre-ERISA as a matter of administrative practice, was that employers treat benefits which accrued ratably under the terms of their plan as contingent liabilities, which then had to be vested and satisfied upon plan termination.

Now, the same thing happens now, but by operation of law, Section 411(d)(3) of the Code.

Under that provision, and the corresponding provision in ERISA, the accrued benefit which has not vested, which is a contingent liability within the meaning of the IRS rulings, must vest upon termination of the plan.

So, the contingent liability, up until the time of plan termination, is converted into a fixed liability and must be paid by reason of 411(d)(3) of the Code.

Antonin Scalia:

Mr. McCartan,–

Patrick F. McCartan:

Yes, sir.

Antonin Scalia:

–why… show me where in the statute the ordinary retirement benefits accrue but the early retirement benefits don’t accrue.

I… I don’t see in the definition of accrued benefit any language that would lead me ineluctably to that conclusion.

Patrick F. McCartan:

I’d be happy to do that, Justice Scalia.

The accrued benefit is defined in Section 323(a) of ERISA and Section 411(a)(7) of the Code as,… and I quote,

“The employee’s accrued benefit under the plan and, except as provided in Section (c)(3), expressed in the form of an annual benefit commencing at normal retirement age. “

Antonin Scalia:

You’re relying on that phrase, normal retirement age?

Is that what you–

Patrick F. McCartan:

No.

The benefit commencing at normal retirement age.

But you will note the exception, Subsection (c)(3), and that’s what the plan administrator in this case had to look to because these employees were being taken out with lump-sum cash distributions.

They were not waiting until they reached age 65 to receive the normal retirement benefit.

Subsection (c)(3) instructs that when the accrued benefit–

William H. Rehnquist:

–Where can we find this in the briefs?

Patrick F. McCartan:

–Excuse me, Your Honor.

That appears in our brief appendix at page 5.

Patrick F. McCartan:

You will see in the–

The blue–

Patrick F. McCartan:

–appendix to the blue brief on page 4 we have set forth Section 323(a), 411(a)(7) of the code, and then 411(c)(3) appears in the appendix at page 5.

William H. Rehnquist:

–Thank you.

Patrick F. McCartan:

Subsection (c)(3), which the definition, Justice Scalia, of the accrued benefit refers the reader to, instructs that when the accrued benefit is to be determined as an amount other than an annual benefit commencing at normal retirement age, then the accrued benefit shall be the actuarial equivalent of such benefit.

The actuarial equivalent of a benefit commencing at normal retirement age necessarily excludes subsidized early retirement benefits because such benefits, by definition, are commencing prior to normal retirement age.

Treasury Regulation 1.411(a)-(7), which is cited and quoted on pages 32 and 33 of the blue… of the blue brief, I think makes this very clear and confirms that a subsidized early retirement benefit provided by the plan is not taken… is not to be taken into account in determining the accrued benefit within the meaning of the statute.

Example 1 to that regulation, which is set forth on pages 32 and 33, provides… and if I may, I’d like to read it because I think this is this case.

Sandra Day O’Connor:

Thirty-two and 33 of what?

Patrick F. McCartan:

Of our brief on the merits, Your Honor.

The brief I believe you have before you.

Now, bear in mind we started with the definition of accrued benefit within the meaning of the statute.

That definition takes us to 411 Subsection (c)(3).

Now, the regulation implementing that section in Example 1, and this is an example of how you determine the normal retirement benefit, provides… Plan A provides for a benefit equal to 1 percent of high five years’ compensation for each year of service and a normal retirement age of 65.

The plan also provides for a full unreduced, accrued benefit without any actuarial reduction for any employee at age 55 with 30 years of service.

That’s the Mead plan.

Even though the actuarial value of the early retirement benefit could exceed the value of the benefit at the normal retirement age, the normal retirement benefit would not include the greater value of the early retirement benefit because actuarial subsidies are ignored.

And that is exactly the kind of situation that we have in this case.

And I submit that the language of the statute and the implementing regulation interpreting that language read this way and are structured this way because Congress specifically addressed this issue in 1974.

Anthony M. Kennedy:

You’re not saying that’s unaccrued.

You’re just saying it’s an accrued benefit of a different sort?

Patrick F. McCartan:

While you can say it may be an accumulating benefit, it is certainly not an accrued benefit within the meaning of the statute, Your Honor.

And it is only the accrued benefit–

Anthony M. Kennedy:

It would be imprecise to say that it’s unaccrued?

Patrick F. McCartan:

–No, it would not be imprecise to say that it is unaccrued.

A benefit of this kind becomes earned all at once, when both conditions for the receipt of the benefits are satisfied.

This is very clear and I think confirmed from the legislative history.

The Senate, back in 1974, proposed a version of ERISA which took the subsidized early retirement benefit into account in determining what would be the accrued benefit.

And we have to bear in mind the accrued benefit is the benefit that this statute surrounds with all of the protection, the minimum standards that Congress required any plan sponsor meet.

The House disagreed.

Patrick F. McCartan:

The Administration disagreed because it old not want to deter employers from providing such benefits and wanted to maintain the cost of maintaining defined benefit plans of the kind that we have here.

The quotation from the House Committee on Education and Labor, which appears on page 33 of our brief, I think makes it very clear what the House position was.

The conference committee chose the House version and in the conference report said very clearly, and I quote,

“The accrued benefit does not include the value of the right to receive early retirement benefits. “

Now, the effect of this 1974 congressional choice, I submit, was to exclude subsidized early retirement benefits from the accrued benefit under ERISA and all the protections that statute provides, including that of Section 4111(c)(3) which requires that accrued benefits become vested and payable upon plan termination.

They are not accrued benefits within the meaning of the statute, they do not vest upon plan termination and, therefore, are not payable.

Your Honors, if I may, I would like to address the issue which really goes to the only basis for the holding of the court below, which is that Section 4044(a)(6) of ERISA creates substantive rights to the payment of subsidized early retirement benefits.

Section 4044 is entitled Allocation of Assets.

I submit there is nothing in the language of the statute, there is nothing in the implementing regulations of the statute, there is nothing in the structure of the statute, and there certainly is nothing in the legislative history of the statute which indicates that Congress intended to do anything in this provision other than to rank the order in which the assets of a plan generally with insufficient assets should be put upon termination of a plan.

Section 4044(a)(b) is the last of these categories.

It requires the plan administrator to allocate assets to satisfy, and I quote,

“all other benefits under the plan. “

Now, a benefit can be earned under the plan only if it satisfies the criteria of the plan.

Here the conditions outlined by the plan for the receipt of the subsidized early retirement benefit were not satisfied.

While five of the Respondents did have 30 years of service, they had not attained age 62 in the service of Mead.

The fifth had 28 years of service, but was 61 years of age at the time the plan terminated.

Antonin Scalia:

Of course, if you agree that (a)(b) does create new rights, then you’d be out of the… it wouldn’t be tied to accrual or not, so all of your other analyses would indeed be irrelevant.

So that is crucial.

I mean, you would acknowledge that if six creates new rights, all it says is all other benefits, it doesn’t say accrued–

Patrick F. McCartan:

It six creates new rights… and I think it would be strange indeed if it did when Congress made it very clear that the only benefit that was to be surrounded by the protection of the statute was the accrued benefit… the answer to your question is yes.

But I think it’s important to keep in mind here, Justice Scalia, that Congress in writing this statute was endeavoring to embrace and to enforce the terms of these plans, not to rewrite them or to disregard them.

And I submit if the Congress in this allocation category intended to create a whole new category of substantive rights based upon benefit expectations, it would have said so in the statute.

And I think there would be some indication in the legislative history.

I can’t think Congress intended that.

I don’t think Congress said that.

And the legislative history indicates that Congress wasn’t even thinking about doing that in Section 4044(a)(6).

Now, the court below found some comfort in the Second Circuit’s interpretation of the legislative history of Section 4044(a), the interpretation that the Second Circuit put on the legislative history in the Amato case.

There the court attached a great deal of significance to the fact that the adjective accrued was eliminated from the fourth category of the House bill.

But the fourth category of the House bill is in no way an analog for Category 6 of Section 4044(a).

The closest analog to Category 6 in the predecessor bills was Section 112(d)(2) of the House bill.

Patrick F. McCartan:

That was a provision for the payment of other benefits that vest upon… not that vest, that are payable upon plan termination.

The first indication that I can see in the legislative history for a predecessor to Category 6 is in the Administration’s recommendations to the conferees.

There, the Administration recommended that there be a category of this time.

And the bill emerges from conference with this catchall provision.

So, elimination of the adjective accrued from a section in the predecessor House bill that really is not the closest analog to Category (a)(6) proves very little.

In fact, I submit it proves nothing as to what Category 6 was intended to embrace.

John Paul Stevens:

–May I ask you a question–

Patrick F. McCartan:

Yes, Justice–

John Paul Stevens:

–that bothers me a little bit.

There is a provision, as I recall, in the statute that says before you get any reversion of the $10 million you’ve got to satisfy all liabilities, including contingent liabilities.

Patrick F. McCartan:

–That’s correct.

John Paul Stevens:

Why could it not be argued that whether or not it’s technically accrued or not you do have a contingent liability for this early retirement payment which you must fund?

The statute requires you to be actuarially sound and all the rest of it.

So why is that not a contingent liability?

Patrick F. McCartan:

I think this related to the question asked earlier by Justice O’Connor.

It we look at the implementing regulations and revenue rulings with respect to 401 (a)(2) of the Code, which is really the genesis of the contingent liability language, the Code merely provides that all liabilities be satisfied.

John Paul Stevens:

Right.

Patrick F. McCartan:

The IRS has said that that means both fixed and contingent liabilities.

John Paul Stevens:

Right.

Patrick F. McCartan:

The examples given repeatedly by the IRS are benefits that accrue ratably under the terms of a plan.

That’s pre-ERISA.

And as a matter of administrative practice pre-ERISA, the IRS would insist that the employer treat benefits which accrued ratably under the terms of the plan as the accrued benefit, post-ERISA, and require that they vest and be paid upon termination.

Now the same thing happens by operation of law, Your honor.

Under Section 411(d)(3) of the Code, the accrued benefit, which is now a defined term of ERISA, is the only benefit that must vest upon termination of the pension plan.

And I think the IRS interpretation of this section in the implementing regulations supports this position.

The IRS in this case issued a favorable determination letter.

John Paul Stevens:

I understand it.

Can I find anything in either… If I just looked at the statute and the terms of your plan, how would I know whether or not the potential liability to a retiree age 62 and over, and over 30 years of service, whether or not that’s a contingent liability?

Patrick F. McCartan:

I think the best place to look in the plan, Your Honor, would be Article VIII, which provides for benefits upon termination of employment.

You will note that in that article of the plan, which does appear in the joint appendix here, the only benefits that survive termination of employment, if you will, are the vested early retirement benefit and the vested normal retirement benefit.

Patrick F. McCartan:

And that has to be put in the context of termination of employment, not just termination of the plan.

But there is no provision there, as there is in Article V, Section 2(b) for the payment of subsidized early retirement benefits after separation from employment and reaching the required age.

John Paul Stevens:

Well, let me ask you another… put the question a little differently.

Supposing a man had 30 years of service and was 63 years old and there was a termination, would he not have a right to the early retirement benefit?

Patrick F. McCartan:

Absolutely, Your Honor.

That employee would–

John Paul Stevens:

Well, then why… at the time you’ve terminated this plan some of these people were in that very posture.

Why wasn’t there a contingent liability to them?

Patrick F. McCartan:

–Your Honor, they were not in that very posture.

As I understood your example, it was an individual who had attained age 63–

John Paul Stevens:

Oh, you’re right.

Patrick F. McCartan:

–and 30 years of service.

That individual would have earned that benefit under the plan.

John Paul Stevens:

Right.

Patrick F. McCartan:

It would be a liability of the plan and would be payable on termination.

John Paul Stevens:

But when that individual was 61 and had 20 years of service, there was no contingent liability for this premium?

Patrick F. McCartan:

With respect to that benefit, that’s correct.

John Paul Stevens:

You said there is no contingent liability.

Patrick F. McCartan:

There is no contingent liability.

John Paul Stevens:

I know it hadn’t vested.

I can see your Article VIII talks about vesting, but I’m not sure–

Patrick F. McCartan:

Because that benefit, Your Honor, is not earned until both conditions of the plan are satisfied.

And if the termination–

John Paul Stevens:

–In order to be actuarially sound you must have put away… you must have planned for that possibility of paying that person.

Patrick F. McCartan:

–The sponsor always funds for benefits that are projected liabilities of the plan, whether or not they are going to be earned.

John Paul Stevens:

But isn’t that because they are contingent liabilities?

Patrick F. McCartan:

Not because they’re contingent liabilities but because many of them never will be earned.

This is the AFL-CIO argument, and it proves too much.

In a defined benefit plan, an employer working on the basis of actuarial assumptions will fund for all projected liabilities of the plan, many of which will never be earned.

The actuary takes into account the fact that there are going to be deaths, they’re going to terminate–

John Paul Stevens:

They may never be earned, but in the period before they’re earned are they not contingent liabilities?

Patrick F. McCartan:

–No.

John Paul Stevens:

They’re not?

Patrick F. McCartan:

Not at that point.

The only–

John Paul Stevens:

What is the difference between liability and a contingent liability then?

Patrick F. McCartan:

–Because the only liability which accrues after ERISA is the accrued benefit.

When you are funding a defined benefit plan, Justice Stevens, you do it on an aggregate basis and not for the benefit of any individuals.

John Paul Stevens:

Well, I understand.

I understand.

Patrick F. McCartan:

And the assumptions take into account that Employees A, C, F and G may leave.

Some may die.

Some may advance into other ranks in management of the company.

And to say that because you are funding for the possibility of paying a liability that may never be earned, that therefore that becomes an accrued benefit, proves entirely–

John Paul Stevens:

Well, let’s leave out the words “accrued benefit”.

At the date of… when this plan was terminated your position is there was no contingent liability to these particular claimants?

Patrick F. McCartan:

–That’s correct.

By operation of law.

The contingent–

John Paul Stevens:

What about the day before the plan terminated?

Patrick F. McCartan:

–On the day before the plan, all benefits that had been accruing ratably under Section 411(b), which is the accrued benefit–

John Paul Stevens:

Now, they are the only contingent liabilities?

Patrick F. McCartan:

–were contingent liabilities.

John Paul Stevens:

They’re not only contingent, those are actual liabilities.

Patrick F. McCartan:

No they weren’t.

Not until they were vested.

And It the employee had not served ten years of credited service–

John Paul Stevens:

No, no.

I’m talking about people who have served mere than 10 years.

And all of them have vested rights, don’t they?

Patrick F. McCartan:

–All of those who served more than 10 years–

John Paul Stevens:

Yeah.

Patrick F. McCartan:

–do have vested rights.

That’s correct.

The contingent liabilities were the unvested accrued benefits to that point in time.

William H. Rehnquist:

Thank you, Mr. McCartan.

Patrick F. McCartan:

Thank you, Your Honor.

William H. Rehnquist:

Mr. Harrison, we’ll hear now from you.

Clifford L. Harrison:

Mr. Chief Justice, may it please the Court:

The critical issue for this Court is the determination of Section 1334 of ERISA.

And the one thing that.

I would like to get clear before this Court is that Mead spends most of its argument on an issue that we have already conceded.

We have conceded that this was not intended by Congress to be an accrued benefit.

And there is a perfectly good reason why it could not have been an accrued benefit, and that reason is to make this an accrued benefit would have destroyed this benefit.

In 1983 and in 1974 when ERISA was passed, the concept of an accrued benefit was tied to the concept of vesting… vesting… all accrued benefit; had to vest within the vesting rules.

The vesting rules had a maximum of a 10-year vesting schedule, 10-year cliff vesting.

That was the longest you could take.

What was that word?

Clifford L. Harrison:

Vesting.

Ten-year cliff vesting.

Cliff?

What does that mean?

Clifford L. Harrison:

Okay.

A cliff vesting is that you don’t vest any benefits until you actually reach the 10 years.

Then you just fall off the cliff and you’re vested.

Two Fs?

Clifford L. Harrison:

Two Fs.

[Laughter]

It’s what is called 10-year cliff vesting.

Instead of a gradual slope vesting, it’s a cliff.

Clifford L. Harrison:

You just fall right off it and you vest.

And that’s the problem.

There has to be something exciting in these cases.

[Laughter]

Clifford L. Harrison:

And that was the problem with making this benefit a… a subject to the accruals.

If you subject… if you subjected the accruals to this benefit, you would eliminate this benefit, because this benefit had 30 years’ cliff vesting.

An early retirement benefit is a benefit who vest longer than what the accrual rules will permit.

So, Congress did not subject the early retirement benefits to the accrual, and allowed the employers and employees to fashion this type of benefit.

The accrual rules were merely the minimum rules on the basic type benefits payable to age 65, which Congress was going to require employees to be subject to the vesting rules.

The early retirement benefits are specifically included.

That doesn’t mean that Congress intended to leave out early retirement benefits.

No, no, no.

Congress specifically, in the definition of normal retirement benefits, includes early retirement benefits, in that definition.

William H. Rehnquist:

In what section of the statute is that, Mr. Harrison?

Clifford L. Harrison:

One-zero-zero-two, subparagraph 22.

William H. Rehnquist:

Where will we find that?

Clifford L. Harrison:

We find that on, I believe, page 10 of the red brief.

I correct… it’s on page 8.

I’m reading at the very bottom of the page.

It extends over to page 9.

is what it begins with.

And we skip down a few sentences,

“For the purposes of this paragraph. “

I’m reading now at the top of page 9.

“The early retirement benefit under a plan shall be determined without regard to any benefit of the plan which the Treasury. “

fine.

And they also talk about–

William H. Rehnquist:

That doesn’t immediately strike me as proving exactly–

Clifford L. Harrison:

–Well, pardon me, Your Honor.

–exactly what you said.

Clifford L. Harrison:

Really what I needed to cite is at the top of… at the top of page 8 there.

Well, that’s at the bottom of page 8.

“The term “normal retirement benefit” means the greater of the early retirement benefit under the plan or the benefit under the plan commencing at normal retirement age. “

It’s the greater of the early retirement benefit or the normal retirement benefit at normal retirement age.

William H. Rehnquist:

But on the early retirement benefit under the plan–

Clifford L. Harrison:

That’s correct, sir.

William H. Rehnquist:

–doesn’t that mean it would have to comply with all the terms of the plan?

Clifford L. Harrison:

No, Your Honor.

The quintessential case on that is the Sutton cases.

And this is also reflected in the legislative history.

William H. Rehnquist:

Well, that’s a case from the Fourth Circuit, isn’t it?

Clifford L. Harrison:

That’s correct, Your Honor.

Certainly not binding on this Court.

The benefit under the plan language refers to a benefit that’s provided under the plan, as opposed to a benefit which is provided outside of the plan.

On page 10, middle paragraph, you have a section which talks about ancillary benefit, such as medical or life insurance benefits, which are sometimes provided for in connection with a pension plan and are sometimes provided separately.

There are benefits that can be provided for under the plan, and there are benefits… there are employee benefits, such as salary, which are provided for outside of an employee benefit plan.

Obviously, you would not pay benefits which were not provided under the plan out of the trust fund of the plan.

And that was the Sutton case.

We had an early retirement benefit which was funded out of the corporate treasury and not out of a benefit plan.

The employees in Sutton sought to take the money out of the trust fund, feeling that was a stronger case.

And the Sutton court held no, that a benefit under the plan has got to be a benefit that is provided for in the plan.

And in the Sutton case, the court specifically held that since the benefits were not funded under the plan, then the benefits were not provided in the plan and there was no recovery.

They did hold that the employees could maintain an action, if they felt they had one, against the employer’s corporate treasury.

Now, what these employees are asking for, what they’re asking this Court for, is the funds that are set aside for these early retirement benefits.

Mead promised these employees an early retirement benefit in the hopes that they would work at least 30 years.

And they old.

Every year the employees performed their part of the bargain, year by year, by remaining in Mead’s employment.

And every year Mead funded that benefit, little by little, to pay for it, as it was required under ERISA.

This went on for years and years until a large sum of money developed in the trust fund specifically allocated to pay that benefit.

Now, the question for the Court today is–

Antonin Scalia:

Were they required to accumulate in order to pay that benefit?

Clifford L. Harrison:

–Yes.

Antonin Scalia:

How so?

Clifford L. Harrison:

The funding requirements of ERISA requires the funding of early retirement benefits.

While they may not vest, they are required to be funded.

Antonin Scalia:

Where… where is that provided?

Does it say specifically you will fund early retirement benefits?

Clifford L. Harrison:

The… no, it doesn’t say that specifically.

It talks about the plan experience, which has been determined in the regulations–

Uh-huh.

Clifford L. Harrison:

–to include funding of early retirement benefits.

And, of course, that was done in this case.

You’ve got to fund the plan’s liabilities.

You cannot, based on what the… what–

Antonin Scalia:

Excuse me.

Are they funding… when you say they are funding it… for every employee who is currently on the payroll?

Are they setting aside enough money that if that employee stays until he’s 63 and until he’s had 30 years, they’ll have money for him?

Or, rather, do they just have to put aside enough money that on the basis of experience that number of people who normally would do that, stay that long and reach that age, would be covered?

Which is it?

Clifford L. Harrison:

–Clearly the latter, Justice–

Antonin Scalia:

Clearly the latter?

Clifford L. Harrison:

–Clearly the latter.

Antonin Scalia:

Well, that’s quite a bit different then, isn’t it?

Clifford L. Harrison:

Oh, absolutely.

What we are asking this Court for is not payment of the benefit.

We’re asking for the money that was set aside to pay these benefits.

The present value of that benefit, if you would, because that is what the allocation section holds.

Sandra Day O’Connor:

Mr. Harrison, the Pension Benefit Guaranty Corporation supports your opponent in this case.

Isn’t that right?

Clifford L. Harrison:

That’s absolutely correct, Your Honor.

Sandra Day O’Connor:

And that’s the agency that presumably is mere familiar with this statute than other agencies might be?

Clifford L. Harrison:

That’s correct, Your Honor.

Sandra Day O’Connor:

Don’t we normally defer to agency interpretation of these complicated matters?

Clifford L. Harrison:

That’s correct, Your Honor.

There are reasons why you should not in this case, first of which is that the Internal Revenue Service also looks at these matters.

And in an identical case, the Amato case which was before this Court but never argued because it was dismissed by stipulation, the Internal Revenue Service on this very issue filed an amicus in support of the employee’s position.

Certainly more important–

Is that still the government’s view?

Clifford L. Harrison:

–Mead suggested that it isn’t.

Mead suggested that it isn’t.

But I would proffer to this Court that what Mead has cited for authority in that proposition in no way holds that.

There is no published authority whatsoever… to my knowledge, no private authority whatsoever for that basis.

Anthony M. Kennedy:

Was there an amicus brief by the government here?

Clifford L. Harrison:

Only by the PBGC.

Anthony M. Kennedy:

And who represented them?

Clifford L. Harrison:

The PBGC?

Uh-huh.

Clifford L. Harrison:

I do not remember the attorney’s name, Your Honor.

But I do have it in front of me.

It was Gary M. Ford General Counsel.

Now–

Harry A. Blackmun:

But certainly not the Solicitor General?

Clifford L. Harrison:

–No.

Antonin Scalia:

Mr. Harrison, can I pursue the line of questioning–

Clifford L. Harrison:

Sure.

Antonin Scalia:

–I started earlier as to what is set aside under… under the the ERISA rules.

For people who have cliff vested, they’ve been there 10 years–

Clifford L. Harrison:

Yes.

Antonin Scalia:

–it’s required that for each individual you have to set aside each year a specific allocable amount of money because–

Clifford L. Harrison:

That’s correct.

Antonin Scalia:

–Okay.

For people who have not yet cliff vested, employees who are there but haven’t yet been there 10 years, you don’t set aside any particular amount for each individual, do you?

You just… but you have to set aside something on the basis of how many of those people are likely to hang around for 10 years.

Isn’t that what’s done?

Clifford L. Harrison:

That’s correct, and they get that amount of money on termination.

Antonin Scalia:

Do they get that on termination–

Clifford L. Harrison:

Oh, yes.

Antonin Scalia:

–if they haven’t cliff vested?

I thought that–

Clifford L. Harrison:

Yes.

Absolutely.

It’s under Priority Category 5.

Antonin Scalia:

–Under 5.

Clifford L. Harrison:

Let me explain the PBGC’s position here.

The PBGC agreed with me that in ERISA on two basic fallacies… that accrued categories occur in Category 6.

Now, first of all, Congress at one point considered that very issue.

Category 5.

Clifford L. Harrison:

And an earlier draft of the House bill had the word “accrued” In the final catchall category.

They took it out.

In the final draft of ERISA they took the word “accrued” out.

For this Court to rule with the PBGC, they’re going to have to take a pen and pen it right back in.

Secondly, when it refers to all other non… it is a physical impossibility for all other accrued benefits to occur in Category 6.

The PBGC on page 20 of its brief admits that the benefits that Justice Scalia was referring to… and that is accrued benefits which are nonforfeitable solely because of termination.

And I may be overstepping myself one step.

These are nonforfeitable… all accrued benefits vest on termination.

Antonin Scalia:

But I thought it was not accrued until you’re there for 10 years?

I’m talking about people who… I’m talking about people who haven’t been there for 10 years yet.

Now, I thought you told me that you are not setting aside for each of them a certain amount of money every year.

Clifford L. Harrison:

That’s correct.

Antonin Scalia:

You’re just setting aside an amount that will cover the number of them that are likely to stay ten years and, therefore, to be entitled to the plan’s benefit.

Clifford L. Harrison:

However, at termination, if you have an accrued benefit of even one year… even one year… that becomes a vested benefit solely because of termination.

Now, if you were to leave service or anything else happened other than termination before the ten years, your benefit is gone.

It’s considered forfeitable.

Subject to determination.

But if there is termination?

Clifford L. Harrison:

But in termination… and that’s on page 20 of the PBGC brief… that becomes vested.

It’s vested solely because of termination.

William H. Rehnquist:

Well, that exactly did your client… your clients had all worked there, what?

Nearly 30 was it–

Clifford L. Harrison:

No.

–at the time–

Clifford L. Harrison:

They’d worked all over 30 years except one, who was 28 years.

William H. Rehnquist:

–And they had… none of them had reached… reached age 62?

Clifford L. Harrison:

None had reached age 62.

William H. Rehnquist:

And so what… what did they in fact get from Mead voluntarily when the plan was terminated?

Clifford L. Harrison:

They got the actuarially reduced value of their accrued benefit.

William H. Rehnquist:

Oh, accrued pension benefit?

Clifford L. Harrison:

Accrued pension benefits.

William H. Rehnquist:

And you–

Clifford L. Harrison:

And none of the contingent liabilities.

William H. Rehnquist:

–And so how much was that roughly?

Clifford L. Harrison:

The exact numbers are–

William H. Rehnquist:

What order of magnitude?

Clifford L. Harrison:

–The exact numbers are on the last page of the red brief.

There is a fold-back section labeled Appendix 1.

And the exact benefits to Bernard Tilley was $87,000; to W. L. Crotts, $87,000.

William H. Rehnquist:

That’s the “Benefit Paid” column you’re reading from?

Clifford L. Harrison:

That’s correct.

William H. Rehnquist:

And the amount you say they should have paid is in the next column over?

So that Tilley got $87,000, but he should have gotten $100,000 in your view?

Clifford L. Harrison:

Well, had he been… had they based the early retirement benefit on age 62.

Now, of course, damages was a question.

And that… that particular theory of damages does not go to Justice Scalia’s point of that… you wouldn’t fully pay this… there wouldn’t be money set aside to fully pay this benefit.

Actually, under our argument that… we are looking for the funds that are allocated for this benefit.

There wouldn’t be funds completely sufficient to pay this benefit.

But there would be funds in the pension plan.

But–

Clifford L. Harrison:

Because this case was decided on a summary judgment, we never did get to the issue of exactly how much funds–

William H. Rehnquist:

–But the… but the two–

Clifford L. Harrison:

–was actually there.

William H. Rehnquist:

–the two columns are correct, in at least the order of magnitude.

When I say that, it might be 87, it might be 88, it might be 100, it might be 101.

But you’re not talking about 200 as opposed to 100?

Clifford L. Harrison:

Oh, no.

It’s a relatively small benefit.

William H. Rehnquist:

Well, the increment of what you claim over what you got is a minor percentage of what you got.

Clifford L. Harrison:

That’s correct.

It is a minor percentage of what we actually received.

And is that what’s described as the subsidized early retirement?

Clifford L. Harrison:

That is the subsidized early retirement benefit.

The key funding provision… this is a matter of funding.

Where Mead and where the employees look at the case differently is that Mead feels that the benefit must be payable.

The employees feel that the benefit merely need to be funded.

And if one looks at Section 1344(a), which is or page 9 of the employee’s brief… okay… wait a minute.

I’m looking for 1344(a), and that was not it; 1344(a) is an allocation section.

Now, what we are asking for is the trustee to allocate benefits to us.

That is on page 7 of employee’s brief, the red brief.

Or, a better place to look to see how the assets should be allocated, then look at the statute.

And the statute says the trustees shall allocate the assets in the following order, and it sets forth six priority categories.

The sixth category is all other benefits under the plan.

Clifford L. Harrison:

The fifth category, curiously enough, is all other nonforfeitable benefits.

The PBGC rests its case on the idea that only nonforfeitable benefits occur in Category 6.

Now, that may seem completely ridiculous because 5 says all other nonforfeitable benefits.

But that is where they rest their case.

The PBGC’s argument is that even though the benefits are nonforfeitable by reason of termination, they’re forfeitable so long as the plan is continuing, so we will treat them as forfeitable.

For this Court to rule with the PBGC it’s going to have to use both ends of the pencil.

It’s going to have to do some erasing on Category 5, and it’s going to have to do some penciling in on Category 6.

The problem with the PBGC, as they state on… in page 20 of their brief, they admit that all accrued benefits vest on termination, and all vested benefits are nonforfeitable.

Therefore, all accrued benefits on termination must reside no lower than Category 5.

Now, the PBGC tries to dance around that–

Antonin Scalia:

Excuse me.

Every accrued benefit is nonforfeitable?

Clifford L. Harrison:

–On termination only.

That’s correct.

Antonin Scalia:

On termination–

Clifford L. Harrison:

Every accrued benefit.

Antonin Scalia:

–On termination only?

Clifford L. Harrison:

And the PBGC admits to that.

Antonin Scalia:

Does nonforfeitable there mean nonforfeitable on termination, presumably?

Clifford L. Harrison:

That’s correct.

All other nonforfeitable benefits under the plan at that point.

One through 4 is your basic nonforfeitable benefits.

Five is all other nonforfeitable benefits, which has been interpreted to mean benefits nonforfeitable solely by termination.

Byron R. White:

I thought you argued by saying you… you concede that what you’re talking about here is not an accrued benefit?

Clifford L. Harrison:

That’s correct, because we’re in 6 and not 5.

The PBGC is saying that only accrued benefits occur in 6.

Physical impossibility.

Accrued benefits can go no lower than 5.

Since all accrued benefits are vested and all vested benefits are nonforfeitable, all other nonforfeitable benefits on termination occur in priority Category 5.

That leaves priority Category 6 with nothing in it.

Clifford L. Harrison:

Absolutely nothing.

And it’s not like… Congress considered putting accrued benefits there.

They had it earlier in the statute.

They’ve got the word “accrued” in two of the other priority categories.

They knew what it was.

They just purposely left it out in this category, and for good reason.

The way that the statute is drafted you’re not going to get any accrued benefits in priority Category 6.

It’s an allocation section.

And what it asks the trustee to do is to take the assets of the plan and allocate them in this fashion.

It’s not whether or not the benefits is payable, it’s take the assets under the plan and allocate them in this fashion.

And to extent that there was benefits under the plan to pay this benefit, they should be allocated in Number 6, all other benefits, under the plan.

Byron R. White:

Well, I suppose then any person who had been… who had been… any person who was 50 years old and who had only worked for five years ought to get something.

Clifford L. Harrison:

Yes, but if they’ve only worked for five years you’re talking about a very small amount of money.

Byron R. White:

Well, I know, but it doesn’t have to vested, it doesn’t have to be anything.

It’s just a… they just… all you say is they were setting aside a certain amount of money–

Clifford L. Harrison:

That’s correct.

Byron R. White:

–for this person.

And there it was, and there it is, and he ought to have his share.

Clifford L. Harrison:

He should have his share.

That is our position.

Now,–

John Paul Stevens:

Would you just… let me back up right there for a minute.

Say you’ve got an employee in this particular plan who works six years.

He had something that accrued.

Did he get any money out of this distribution?

Clifford L. Harrison:

–Yes.

John Paul Stevens:

He did?

They agree with that?

Because I… frankly, when I read page 20 of the PBG brief, I don’t… it doesn’t come across to me–

Clifford L. Harrison:

Oh, absolutely.

John Paul Stevens:

–clear as a bell that that happened.

Clifford L. Harrison:

There–

John Paul Stevens:

But that’s undisputed, that–

Clifford L. Harrison:

–Undisputed.

–Okay.

Clifford L. Harrison:

Two types of benefits.

An accrued benefit which has to apply to the vesting rules, and one of the rules of the vesting rules… and one of the problems in this case is that Mead uses the rules of an ongoing plan concurrently with the rules of a terminated plan.

Two different rules.

In the rules of a terminated plan, so vested.

And so, if you had six years of credited service… service, you had six years of an accrued benefit, you got paid six years of an accrued benefit–

No.

Clifford L. Harrison:

–when this plan terminated.

But you say that that same person ought to get his share of the early retirement–

Clifford L. Harrison:

To the extent–

–set aside.

Clifford L. Harrison:

–To the extent there are funds allocated.

Of course, there will be, at that point, an extremely small benefit.

Well, nevertheless–

Clifford L. Harrison:

But it would be… it would be a benefit.

–$10 is $10.

Clifford L. Harrison:

Yes.

It would be a benefit under the plan.

It would be funds allocated.

John Paul Stevens:

But wouldn’t that mean that for every employee covered by the plan who was… hadn’t reached 62… or is 55, that the calculation of the retirement benefit would be based on the early retirement for him rather than the ordinary retirement date because it would always be larger, wouldn’t it?

Clifford L. Harrison:

It would always be larger.

That’s correct.

John Paul Stevens:

So that this… so that although your suit only involves five or six people who were, you know, very close to the cliff, or the second cliff, actually, the principle at stake affects everybody in the plan.

Is that right?

Clifford L. Harrison:

That would be correct.

I see.

Clifford L. Harrison:

Everyone with an entitlement to benefit who could have possibly qualified for the early–

Yes.

Clifford L. Harrison:

–retirement benefit.

John Paul Stevens:

So it would… but it would seem to me that everybody in the plan would, would profit by getting the… by having the pension calculated on the basis of early retirement rather than ordinary retirement.

Clifford L. Harrison:

Absolutely.

However, I’d like to state that what we are asking for is the funds that would set aside for that benefit.

The funds–

John Paul Stevens:

Yes, but there aren’t funds aside employee by employee, as you’ve explained in your colloquy with Justice Scalia.

You actually set aside a large amount of money based on the actuary’s computation of how many are apt to stay in the… in the company–

Clifford L. Harrison:

–That’s correct.

John Paul Stevens:

–for so long.

And so you don’t have sums of money allocated to each employee.

You have just a lump of funds.

So, how can you… how can you–

–So I don’t know how much–

–pay these few people?

You’d probably run out of money.

Clifford L. Harrison:

Your Honor?

Byron R. White:

There… there are a lot of other… there should be a lot of other claimants to this fund.

Clifford L. Harrison:

Well, there would be some other claimants to this fund.

But–

Byron R. White:

Well, how much… how, how much do you pay each one?

Clifford L. Harrison:

–Okay.

To the extent that it is actuarially funded.

Antonin Scalia:

Which is… which will… nobody will get anywhere near the full amount.

Clifford L. Harrison:

That would be correct, Your Honor.

Antonin Scalia:

Because you’re assuming that 90 percent of them will leave before… before the early retirement then.

Clifford L. Harrison:

That would be absolutely correct, Your Honor.

The fair market value of that benefit at that time would be much less than the full value of the benefit.

Antonin Scalia:

It wouldn’t… it wouldn’t pay an employer to have such a plan then because that means that any surpluses… even though these people have no entitlement to this money… you say it’s likely not to be there… any surpluses in the fund, because of conservative accounting practices on, on, on the other matters, all those surpluses will go to these people.

Antonin Scalia:

The employer will never get them back.

Clifford L. Harrison:

Well, that’s absolutely incorrect.

Mead makes–

Well–

Clifford L. Harrison:

–that argument.

Antonin Scalia:

–Well, isn’t that what happens?

It… it comes in under, under and the employer doesn’t get the reversion of it.

Clifford L. Harrison:

No.

To the extent that there are benefits there for… money set aside for benefit, it would go under 6.

If it was overfunded, maybe we’d get the reversion.

And Mead makes the argument that this particular law will basically end trust law as we know it, and that’s completely wrong.

One thing it fails to point out, that since 1984 this is the law in the United States of America.

The REA amendments basically enacted that.

And he cite to basically the PBGC regulations which enact that law.

All we’re dealing with is whether or not this law was the state of the law before the REA amendments.

The idea that this would completely end reversions is just wrong.

Anthony M. Kennedy:

Well, then doesn’t your argument make the REA amendment a nullity?

Clifford L. Harrison:

No, Your Honor.

The REA amendment, specifically in its legislative history, knew of the conflict and they… the legislative history states that we do not take any position on whether or not this either codifies present law or changes it.

They just took no position.

The present Congress at that time decided that that’s what they wanted the law to be.

Sandra Day O’Connor:

Haven’t there been any number of plans that have terminated with the consent and approval of IRS and the Pension Benefit Guaranty Corporation, where your position just wasn’t followed?

They let the surplus be paid back to the employer.

Clifford L. Harrison:

No, Your Honor.

And that’s something I do want to emphasize.

What the IRS actually gives… what the employer gives the IRS is Form 5310.

The Form 5310 has a blank statement on it,

“We have complied with Rule 411 of the Internal Revenue Code. “

And based on that blanket compliance the Internal Revenue Service, who simply does not have the manpower that it would take to investigate all this, issues a letter that the plan is still qualified.

Based on that information.

Clifford L. Harrison:

It does not require the employer to give that detailed information of the exact benefit formula.

And, similarly, the PBGC–

Antonin Scalia:

They haven’t checked out one of these cases?

Do you know of one case where they’ve gotten an employer for this violation?

Clifford L. Harrison:

–Yes.

Amato.

The Amato case before this Court.

They specifically… in fact, the Amato brief is set forth in appendix to the yellow brief of Mead, the Amato PBGC brief.

And in Amato they held that in a pre-REA case… they held that this was not permissible.

In Amato, for some reason, they did look into it and they did go into it and found that… they felt the Section 411 requirements were not complied with.

The basic issue for this Court is whether or not they are going to reward an employer for terminating a pension plan.

To give the employer money that would have… that was set aside for benefits, and they would have had to pay for benefits had this plan continued.

Are you going to give it to the employees who earned that money through their years of service?

This is not like the Blessitt case.

The Blessitt case involved employees asking for benefits which they have not yet earned through their years of service.

Byron R. White:

What happens if an employee just leaves the company?

Does he get anything?

Clifford L. Harrison:

Prior to termination?

Yes.

Clifford L. Harrison:

If he has an accrued benefit that is vested, he would get something.

Byron R. White:

How about early retirement?

Clifford L. Harrison:

If he was not age 62 and with 30 years of credited service, he would forfeit that benefit.

Byron R. White:

Well, just by leaving?

Even though the money was set aside for it him and there it is?

Clifford L. Harrison:

That’s correct, because the actuary takes into account the fact that some people will leave.

Uh-huh.

Clifford L. Harrison:

And the present value of the benefit, it is a contingent benefit, and the plan is ongoing… if you leave, you get nothing.

That is the nature of the benefit.

But on termination, Mead, who had promised these benefits to an employee… to employee… they should have to pay the fair market value of these benefits.

After all, these employees stayed with Lynchburg Foundry Company in cases up to 35 years anticipating this benefit.

Clifford L. Harrison:

And, in fact, Bernard Tilley, who did not lose his job as a result… no one lost their job.

Mead sold the company but everyone stayed in their same desk.

Bernard Tilley is alive today in this room and retired at age 62 from the Lynchburg Foundry Company at the same desk he had been at for the last 35 years.

If there are no further questions–

William H. Rehnquist:

Thank you, Mr. Harrison.

The case is submitted.