Varity Corporation v. Howe - Oral Argument - November 01, 1995

Varity Corporation v. Howe

Media for Varity Corporation v. Howe

Audio Transcription for Opinion Announcement - March 19, 1996 in Varity Corporation v. Howe

Audio Transcription for Oral Argument - November 01, 1995 in Varity Corporation v. Howe

William H. Rehnquist:

We'll hear argument next in Number 94-1471, Varity Corporation v Charles Howe.

Mr. Abrams, you may proceed whenever you're ready.

Floyd Abrams:

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

This is an ERISA case, and I think it's useful at the outset to make clear what the case is not about.

This case does not involve any breach by Varity of any promise it made in any of its ERISA documents, or with respect to the nature and scope of any ERISA plan.

There was no dispute in any of the judicial opinions below about the proposition that the official ERISA plan documents did not provide for vested or lifetime welfare benefits, and there was a ruling, from which certiorari has not been sought from counsel for the plaintiffs in this case, that there was no entitlement to benefits in this case under section 502(a)(1)(B), the benefits section of ERISA.

The questions before this Court, then, are not whether benefits were due, or whether ERISA was violated because in some way there were improper misrepresentations made about plan documents.

William H. Rehnquist:

Well, Mr. Abrams, in your view, if you prevail here, would the respondents have some sort of remedy for these rather obviously fraudulent statements?

Floyd Abrams:

If we were to prevail in this court, respondents would have the following potential remedies.

They have a case pending in the Federal court in Iowa in which they purport to assert, and we will oppose it, of course, certain common law claims which they maintain are not preempted under ERISA, claims of nonfair dealing, claims of constructive dismissal.

William H. Rehnquist:

And your position is that those claims are preempted?

Floyd Abrams:

Actually, we have not argued that those claims are preempted.

It is not our position that those claims are preempted.

They also have a claim for fraud, and fraudulent misrepresentation and the like.

We believe those claims are preempted, but... so they have those potential claims.

There are two claims as to which the district court ruled against us on, as to which the court of appeals did not reach, and which are not before this Court because they weren't reached, a section 510 claim under ERISA, and an estoppel claim under ERISA.

Ruth Bader Ginsburg:

Did those go to the group to whom no misrepresentations were made but who were under a plan... unknown to them, they are placed under some other plan in another entity that proves insolvent?

Mr. Abrams, there was one footnote in your reply brief that I must say took me aback, and that was the one that said that, surely these people who were transferred from one entity to another without a word of notice, surely they have no complaint because no misrepresentation was made to them.

It was just done without even giving them any notice, any opportunity to say no.

Floyd Abrams:

There's no provision in ERISA, and there is no provision in any contract in this case, providing for notice.

We had an absolute right to terminate these individuals.

Ruth Bader Ginsburg:

But this wasn't a terminate.

Floyd Abrams:

It was... what happened here in fact was a termination and--

Ruth Bader Ginsburg:

Let me ask you this--

Floyd Abrams:

--Yes.

Ruth Bader Ginsburg:

--so we can be very clear that we're talking about the same, not entirely hypothetical case.

Employees work for a company under a plan, and they retire, and while they are in retirement, the trustee... we're dealing with a single employer plan... takes that plan, duplicates it, identical plan, puts it in another entity, which is tottering on the brink of bankruptcy, and then when these people claim their benefits tells them, oh, sorry, you're no longer under the entity that was able to pay for your benefits.

Floyd Abrams:

That is absolutely what you cannot do under a pension plan.

With respect to health benefits, since you have an absolute right to terminate, a right which was reserved explicitly here and which the law assumes any--

Ruth Bader Ginsburg:

But when you terminate, don't you have to give people notice so that they can find other insurance?