Borst v. Chevron Corp.

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

__________________

No. 91-2747

__________________

DEAN BORST, ET AL.,

Plaintiffs-Appellees

Cross-Appellants,

versus

CHEVRON CORP., ET AL.,

Defendants-Appellants

Cross-Appellees.

______________________________________________

Appeals from the United States District Court for the

Southern District of Texas

______________________________________________

( October 21, 1994 )

Before POLITZ, Chief Judge, GARWOOD and DAVIS, Circuit Judges.

GARWOOD, Circuit Judge:

This class action, brought under the Employee Retirement

Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. (ERISA),

arose out of the merger of Gulf Oil Corporation (Gulf) and Chevron

Corporation (Chevron) in 1984 and the subsequent merger of the

pension plans of the two companies in 1986. Plaintiffs,

approximately 40,000 former participants of the Pension Plan of

Gulf Oil Corporation (Gulf Plan), brought this action complaining

of various matters occurring in connection with the merger of the

two companies and their respective pension plans. Defendants

include Chevron, Gulf, the Gulf Plan, the Chevron Corporation

Retirement Plan (Chevron Plan), and the Benefits and Pension

Committees of the Gulf Plan, including the members of both

committees.

Both parties appeal portions of the district court's decision,

In re Gulf Pension Litigation, 764 F.Supp. 1149 (S.D. Tex. 1991).

Since oral argument before this court, the parties have settled

those portions of the district court's rulings which were the

subject of Chevron's appeal. Our primary concern is whether the

plaintiffs are entitled to the surplus assets in the Gulf Plan upon

a partial or full termination of the Plan.1 We conclude they are

not.

Factual Background

We begin with a brief excursion into the history of the Gulf

Plan, and the effect on it of Gulf's merger with Chevron. In 1944,

Gulf established the Annuities and Benefits Plan of Gulf Oil

Corporation (the A&B Plan). The A&B Plan was a defined benefit

plan, funded entirely with contributions made by Gulf.2 Gulf later

1

Surplus assets, or "residual assets" as termed in ERISA, are

"assets in excess of those necessary to satisfy defined benefit

obligations . . . ." Wilson v. Bluefield Supply Co., 819 F.2d

457, 464 (4th Cir. 1987). The parties concede that both the Gulf

and Chevron Plans are each, at this time, substantially

overfunded.

2

The district court explained the difference between defined

benefit plans and defined contribution plans:

"Unlike a defined contribution plan, under which the

benefits an employee receives are contingent upon the

funds contributed and the investment return on plan

assets, in a defined benefit plan the plan itself

defines the benefits to be paid. If the employer's

contribution and investment return are inadequate to

2

established two additional pension plans, each a defined

contribution plan: the Supplemental Annuity Plan of Mene Grande

Oil Company (SAP), established in 1957, and the Contributory

Retirement Plan (CRP), established in 1963 (a continuation of the

Employees' Savings Plan of Gulf Oil Corporation which had been

established in 1950).3 These latter two plansSQthe SAP and

CRPSQwere funded with contributions by Gulf as well as with

contributions by eligible employees. All three plans were designed

to satisfy the qualification requirements of the Internal Revenue

Code. 26 U.S.C. § 401(a).

In 1975, Gulf created the Gulf Plan by amending the three

former plans to provide for central administration of the plans.4

Although the Gulf Plan was governed by a single trust agreement

beginning in 1979, the trust funds for each plan remained separate,

and the benefits under each continued to be calculated

independently. The Gulf Plan continued under this arrangement

until July 1986, when it was amended to become part of the Chevron

Plan, an employer funded defined benefit plan.

In January 1984, Gulf learned that a group led by T. Boone

fund those benefits, normally the employer must make

additional contributions to the plan." In re Gulf

Pension Litigation, 764 F.Supp. at 1161-1162 n. 1.

In determining its taxable income for federal income tax

purposes, an employer generally may deduct its contributions to a

pension plan meeting federal qualifications.

3

Mene Grande Oil Company was a Venezuelan subsidiary of Gulf.

4

The 1975 amendments were also designed to ensure that the

Gulf Plan met the qualification requirements imposed by ERISA,

enacted in 1974.

3

Pickens planned a hostile takeover of the company. Gulf sought

protection from the takeover attempt by soliciting a friendly

merger with Chevron. The two companies signed a merger agreement

in March 1984. During a subsequent two-year interim period the two

companies operated independently under a standstill agreement while

the Federal Trade Commission and Chevron-Gulf integration teams

determined how to complete the merger.

On July 1, 1986, the assets of the Gulf Plan were commingled

with those of the 1933 Chevron Corporation Annuity Plan to create

the Chevron Plan. At the same time, defendants amended the Gulf

Plan to become a supplement to the Chevron Plan. As a result of

this amendment, the Gulf Plan became subject to section 18.d of the

Chevron Plan, which expressly provided for the reversion of surplus

assets to Chevron upon termination of the merged Plan.

In early 1986, participants in the Gulf Plan who had been

terminated due to the merger with Chevron, sought confirmation from

Chevron that a partial termination of the Plan had occurred,

entitling them to benefits under the Plan. These former Gulf

employees asked Chevron to allocate and distribute to them their

share of the Plan funds, including surplus assets, as though there

had been a full termination. Chevron refused both requests.

Proceedings Below

Plaintiffs, Dean Borst, et al., brought the present action in

November 1986 in the United States District Court for the Southern

District of Texas. Shortly thereafter, in April 1987, plaintiffs

Harry Back, et al., filed a similar suit in the United States

District Court for the Western District of Pennsylvania. On the

4

defendants' motion, the Back lawsuit was transferred to Texas and

consolidated with the Borst action. On February 26, 1990, the

district court certified the consolidated suit as a class action

pursuant to Federal Rule of Civil Procedure 23(b)(2).

In their lawsuit, plaintiffs sought reimbursement to the Gulf

Plan for claimed losses to the Plan as a result of alleged

violations of fiduciary duties by Gulf and Chevron.5 They also

alleged that Chevron, during merger negotiations, misrepresented

that it would, upon merger of the pension plans, set aside portions

of the Gulf Plan assets to establish a reserve for then-existing

retiree pensions. Furthermore, they asserted that a partial

termination of the Gulf Plan had occurred, entitling them to their

share of Plan funds as well as to a pro rata share of the surplus

assets of the Gulf Plan.

Following a bench trial, the district court determined that

Gulf and Chevron had breached certain fiduciary duties owed to

plaintiffs and ordered reimbursement to the Gulf Plan accordingly.

The court also agreed with the plaintiffs that a partial

termination of the Gulf Plan had occurred as a result of the merger

with Chevron. It found that those plaintiffs who were participants

in the CRP and SAP, the defined contribution portions of the Gulf

5

The alleged breaches of fiduciary duty concerned (i) the

effect, of assets transferred by the Gulf Plan to a pension plan

to be established by Cumberland Farms for certain former

employees of Gulf, on payments to be made to Chevron for the sale

of certain Gulf assets to Cumberland Farms, and (ii) the payment

of Gulf Plan management fees out of the assets of the Gulf Plan

rather than by Gulf. The parties have settled their claims

arising from these issues, removing them from our consideration

on this appeal.

5

Plan, were entitled to the surplus assets of those plans.6 On the

issue of entitlement to the surplus assets of the A&B portion of

the Gulf Plan, however, the court ruled that the plaintiffs were

not entitled to surplus assets because the Plan provided for

reversion of surplus assets to the employer.

Chevron appealed, and plaintiffs cross-appealed. Of the

variety of issues raised before the district court, most were

settled during and after trial or during the pendency of this

appeal. We consider here, inter alia, whether the plaintiffs are

entitled to a pro rata share of the surplus assets of the A&B

Plan.7

Discussion

I. Partial Termination of Gulf Plan

Plaintiffs contend that a partial termination of the Gulf Plan

occurred during the interim period between March 1984, when Gulf

and Chevron signed the corporate merger agreement, and July 1986,

when the two pension plans were finally merged. Accordingly, they

argue, this partial termination entitled them to a pro rata share

6

The district court provided for immediate distribution of

the surplus assets of the CRP and SAP based on its determination

that those plans were wasting trusts, as membership in them had

been closed, and no employee contributions had been made, since

December 31, 1970, and they were so substantially overfunded that

current earnings on their assets would alone be sufficient to pay

all benefits and still add to the surplus. The parties have

settled their claims concerning the CRP and SAP; we confine our

discussion of these plans to comparison with the A&B Plan.

7

For purposes of our discussion, references to the A&B Plan

also denote the A&B portion of the Gulf Plan as it existed in

1986 at the time of the merger into the Chevron Plan.

6

of the surplus assets in that Plan.8

The district court agreed with the plaintiffs that a partial

termination had occurred. It concluded that both vertical and

horizontal partial terminations of the Gulf Plan occurred during

the interim period between March 1984 and July 1986.9 The court

8

In situations where a plan provides for reversion of surplus

assets to the employer, the Internal Revenue Code allows such

reversion only upon a complete plan termination. 26 U.S.C. §

401(a)(2) (only after satisfaction of all liabilities). See also

26 C.F.R. § 1.401-2(b)(1) ("The intent and purpose in section

401(a)(2) . . . is to permit the employer to reserve the right to

recover at the termination of the trust, and only at such

termination, any balance remaining in the trust which is due to

erroneous actuarial computations . . . .") (emphasis added).

Section 411(d)(3) of the Internal Revenue Code requires that

a plan, in order to be qualified, provide that "upon its

termination or partial termination . . . the rights of all

affected employees to benefits accrued to the date of such

termination, [or] partial termination . . . to the extent funded

as of such date . . . are nonforfeitable." 26 U.S.C. §

411(d)(3).

9

The determination of whether a partial termination has

occurred is made "with regard to all the facts and circumstances

in a particular case." 26 C.F.R. § 1.411(d)-2(b)(1). Such facts

and circumstances may include: "the exclusion, by reason of a

plan amendment or severance by the employer, of a group of

employees who have previously been covered by the plan; and plan

amendments which adversely affect the rights of employees to vest

in benefits under the plan." Id. In addition, a partial

termination may be deemed to occur if, as a result of a cessation

or decrease in future benefit accruals under the plan, "a

potential reversion to the employer, or employers, maintaining

the plan . . . is created or increased." Id. at § 1.411(d)-

2(b)(2).

In general, the term "vertical partial termination" refers

to a partial termination involving the exclusion of a group of

participants from continuing coverage under a plan. The

determination of whether a vertical partial termination has

occurred generally is based on a consideration of the entire

period in question: here, from March 1984 through June 1986.

Affected employees are those who ceased participation in the Gulf

Plan, by termination of employment, during that period, other

than those employees whose termination was not the result of the

merger and those employees who were transferred to another

company. If either the number or the percentage of such excluded

employees is "significant," a vertical partial termination has

7

determined, however, that the partial termination did not entitle

plaintiffs to any part of the A&B Plan surplus assets. As to

vesting of benefits, the district court noted regarding the

vertical partial termination that Chevron agreed to vest in their

then accrued A&B Plan benefits all participants terminated from

Gulf employment during that March 1984 to July 1986 period, and

regarding the horizontal partial termination the court decreed that

all former Gulf employees employed by Chevron on July 1, 1986 were

vested in their then accrued A&B Plan benefits. The issues

concerning vesting of accrued benefits have been settled between

the parties and are not at issue on this appeal, and as a part of

the settlement plaintiffs do not defend the district court's

finding that horizontal partial termination occurred. Plaintiffs

do contend, however, that the district court, having correctly

(according to plaintiffs) found a vertical partial termination,

erred by holding that those former Gulf employees affected thereby

were not entitled to their pro rata share of the A&B Plan's surplus

assets.

occurred.

The term "horizontal partial termination" refers to a

partial termination involving a decrease or cessation in future

benefit accruals. The decision of whether a horizontal partial

termination has occurred is generally made by determining whether

a cessation or decrease in future benefit accruals has occurred,

and, if so, whether and to what extent a potential reversion to

the employer maintaining the plan is thereby created or

increased.

In the present case, the district court based its conclusion

that a vertical partial termination had occurred on its finding

that both the number of employer-initiated terminations of non-

vested participants (6,427, by one method of calculation) and the

percentage by which those terminations reduced the number of non-

vested participants (45.2 percent) were significant. In re Gulf

Pension Litigation, 764 F.Supp. at 1170.

8

Chevron had urged us to vacate the district court's ruling

that the A&B Plan had partially terminated as unnecessary to the

portions of its judgment still in issue because neither ERISA nor

the language of the Gulf Plan required distribution of surplus

assets to the plaintiffs in the event of either a partial or full

termination of the Plan.10 As discussed below, we conclude that the

10

Chevron's concern with this portion of the district court's

ruling was the potential tax effect should the Internal Revenue

Service (IRS) retroactively disqualify the Chevron Plan as a

result of the thus found partial termination.

Following the merger of the Gulf and Chevron Plans, Chevron

submitted an Application for Determination for Defined Benefit

Plan to the IRS, seeking a determination as to whether a partial

termination of the Gulf Plan had occurred during the interim

period between March 1984 and June 30, 1986. On December 7,

1987, the IRS issued an opinion letter finding that no partial

termination had occurred and, therefore, that the Gulf Plan was

not subject to the full vesting requirements of 26 U.S.C. §

411(d)(3). The district court concluded that it owed no

deference to the IRS determination, In re Gulf Pension

Litigation, 764 F.Supp. at 1172, and subsequently ruled that the

Gulf Plan had suffered both vertical and horizontal partial

terminations.

In light of the district court's decision, the IRS

subsequently reconsidered its earlier letter in favor of Chevron.

In connection with its subsequent review of the matter, the IRS

considered: whether a partial termination had occurred; whether

the Chevron Plan should be retroactively disqualified; and, if

so, whether Chevron was entitled to relief under 26 U.S.C. §

7805(b), which permits the Secretary of the Treasury to prescribe

the extent to which a ruling should be applied without

retroactive effect.

In a Technical Advice Memorandum issued in 1992, the IRS

concluded that a vertical partial termination of the Gulf Plan

had occurred when, as a consequence of a single corporate event

(the merger), both a significant number and a significant

percentage of participants in the Plan were terminated without

being vested in their accrued benefits. The IRS found that no

horizontal partial termination had occurred. Finally, the IRS

determined that, because Chevron had relied in good faith on its

earlier ruling that no partial termination of the Gulf Plan had

occurred, Chevron was entitled to section 7805(b) relief for the

period beginning January 1, 1984, and continuing through December

31, 1991, at which time Chevron had fully vested all employees

affected by the vertical partial termination.

9

plaintiffs were not entitled to surplus assets under the A&B Plan

whether or not a partial termination, vertical or horizontal,

occurred.11

II. Entitlement to Surplus

Plaintiffs assert that they are entitled to a pro rata share

of the surplus assets in the A&B portion of the Gulf Plan. They

argue that ERISA prohibits reversion of any plan assets unless the

plan language contains an explicit reversion provision. Plaintiffs

rely upon ERISA section 403(c)(1), a part of section 403 which is

entitled "Establishment of Trust." Section 403(c)(1) directs that

"the assets of a plan shall never inure to the benefit of any

employer and shall be held for the exclusive purposes of providing

benefits to participants in the plan and their beneficiaries and

defraying reasonable expenses of administering the plan." 29

U.S.C. § 1103(c)(1). This provision, however, is subject to, inter

alia, ERISA section 4044(d)(1), which specifically addresses

allocation of surplus assets upon the final termination of a plan.

Section 4044(d)(1) provides:

"(1) Subject to paragraph (3) [addressing distributions

of plans containing employee contributions], any residual

assets of a single-employer plan may be distributed to

the employer ifSQ

"(A) all liabilities of the plan to participants and

11

Because we do not consider whether or not a partial vertical

(or horizontal) termination occurred, the district court's ruling

on this issue is not conclusive between the parties. Dow

Chemical v. United States Envtl. Protection Agency, 832 F.2d 319,

323 (5th Cir. 1987) ("`The federal decisions agree that once an

appellate court has affirmed on one ground and passed over

another, preclusion does not attach to the ground omitted from

its decision.'") (quoting 18 C. WRIGHT, A. MILLER & E. COOPER, FEDERAL

PRACTICE AND PROCEDURE § 4421 (1981)); RESTATEMENT (SECOND) OF JUDGMENTS §

27 cmt. o (1982).

10

their beneficiaries have been satisfied,

"(B) the distribution does not contravene any

provision of law, and

"(C) the plan provides for such a distribution in

these circumstances." 29 U.S.C. § 1344(d)(1) (emphasis

added).12

In contrast, section 4044(d)(3)(A) provides that "[b]efore any

distribution from a plan pursuant to paragraph (1) [above quoted],

if any assets of the plan attributable to employee contributions

remain after satisfaction of all labilities . . . such remaining

assets shall be equitably distributed to the participants who made

such contributions or their beneficiaries . . . ." (emphasis

added).

Plaintiffs also seek support for their claim in the common law

of trusts. Their premise for this argument is that, because

pension benefits are a source of additional compensation for

employees, the pension trust is not a gratuitous trust. Ball v.

Victor Adding Machine Co., 236 F.2d 170, 173 (5th Cir. 1956).

Indeed, under common law, where surplus assets remained at

termination of a trust established for consideration, a resulting

trust of the surplus arose in favor of the person furnishing the

consideration. RESTATEMENT (SECOND) OF TRUSTS § 434 (1959). However,

although plaintiffs have rendered consideration to Gulf in the form

of their services, this is not the situation envisioned by section

434. A trust established for consideration, in the context of that

12

Similarly, the Pension Benefit Guaranty Corporation

regulations providing a formula for distribution of surplus

assets at plan final termination to plan beneficiaries, 29 C.F.R.

§ 2618.32(a), apply only where the plan does not "provide[], as

of the date of plan termination, for the return of residual

assets to the employer" or where a provided for distribution

"violate[s] any provision of law." 29 C.F.R. § 2618.30(a).

11

section, is one in which the owner of the property transfers it

upon a trust to certain beneficiaries and receives consideration

for the transfer from a third party, not from the beneficiaries

themselves.

Further, while specified pension benefits in an employer

funded defined benefit plan may be viewed as compensation for

services rendered, an employer is not required by law to provide

such benefits and if it undertakes to do so it is not required to

do more than pay, or provide for payment of, those particular

benefits. See Malia v. General Electric Co., 23 F.3d 828, 832 (3d

Cir. 1994) ("'A defined benefit plan gives current and former

employees property interests in their pension benefits but not in

the assets held by the trust.'"). An entirely employer funded

defined benefit plan pension trust is therefore more akin to a

gratuitous trust so far as concerns surplus assets, as to which

ERISA so markedly distinguishes between those attributable to

employee contributions and those attributable to employer

contributions (thus suggesting that employer contributions are not

a form of recontributed wages for such purpose). Where a

gratuitous trust is fully performed without exhausting the trust

estate, a resulting trust of the surplus is presumed to arise in

favor of the settlor. RESTATEMENT (SECOND) OF TRUSTS § 430. This

principle has been looked to in holding an employer entitled to

surplus assets on termination of an employer funded defined benefit

pension plan. See Wilson v. Bluefield Supply Co., 819 F.2d 457,

464 (4th Cir. 1987) ("`Surplus' is the term used in the common law

of trusts to describe any remaining assets in a trust after its

12

purpose has been fulfilled. Under such circumstances, a `resulting

trust' for the benefit of the creator of the original trust arises

by operation of law, unless he manifested a contrary intent")

(citing RESTATEMENT (SECOND) OF TRUSTS § 430); Washington-Baltimore

Newspaper Guild v. Washington Star Co., 555 F.Supp. 257, 260

(D.D.C. 1983), aff'd mem., 729 F.2d 863 (D.C. Cir. 1984) ("the

common law of trusts provides that an employer can retain such a

surplus").

Plaintiffs claim that the language of the A&B Plan did not

contain an explicit reversion provision as they assert is required

by section 4044(d)(1), 29 U.S.C. § 1344(d)(1). They rely on

Albedyll v. Wisconsin Procelain Co. Revised Retirement Plan, 947

F.2d 246, 256 (7th Cir. 1991) ("unless the plan specifically

provides for reversion to the employer, surplus assets go to

beneficiaries and participants"). However, we note that section

4044(d)(1) merely requires that a plan "provide[]" for distribution

of surplus assets to an employer, it does not say that the

provision must be specific, explicit or express. In any event,

Albedyll is a total termination case,13 and section 4044(d)(1) does

not address a partial termination.14 Internal Revenue Code section

401(a)(2) allows employer reversion only on complete termination.

26 U.S.C. § 401(a)(2) (only after satisfaction of all liabilities).

13

As also is Rinard v. Eastern Company, 978 F.2d 265 (6th Cir.

1992), cert. denied, 113 S.Ct. 1843 (1993), which followed

Albedyll, and which involved the total termination of the

"Pension Plan for Hourly-Rated Employees of the Patin

Manufacturing Company." See Id. 978 F.2d at 266-267.

14

Nor do 29 C.F.R. §§ 2618.30(a) and 2618.32(a), see note 12

supra.

13

See also 26 C.F.R. § 1.401-2(b)(1). Internal Revenue Code section

411(d)(3) requires that a plan, in order to be qualified, provide

that "upon its termination or partial termination . . . the rights

of all affected employees to benefits accrued to the date of such

termination, [or] partial termination . . . to the extent funded as

of such date, or the amounts credited to the employees' accounts,

are nonforfeitable." As previously noted, all participants in the

A&B Plan who were terminated from Gulf during the March 1984-July

1986 period, and all former Gulf employees employed by Chevron on

July 1, 1986, have been fully vested in their accrued A&B Plan

benefits. Nothing in ERISA or the Internal Revenue Code mandates

a distribution of any surplus assets on a partial termination or

requires any particular provision in a plan in order to avoid such

a result. See, e.g., Chait v. Bernstein, 835 F.2d 1017, 1021 (3d

Cir. 1987) (in a partial termination § 411(d)(3) "should not be

extended to apply to surplus assets . . . in a defined benefit

plan"); Van Orman v. American Insurance Co., 680 F.2d 301, 313 (3d

Cir. 1982) (only rights to surplus are at complete termination

under § 4044); Walsh v. Great Atlantic & Pacific Tea Co. Inc., 96

F.R.D. 632, 652 (D. N.J. 1983) ("partial termination[] . . . would

only result in those benefits defined in the 'Benefits' portion of

the plan becoming non-forfeitable . . . . The persons affected by

the partial termination would not become entitled then and there to

a pro rata share of any excess assets. As long as the remainder of

the plan remains ongoing, 'excess assets' is a meaningless concept,

since the amount of any surplus can only be calculated after a

complete termination of the plan"), aff'd, 726 F.2d 956 (3d Cir.

14

1983). Nor can we construe "benefits accrued" under § 411(d)(3) to

encompass a right, not specified in the plan itself, to a share of

surplus assets in a defined benefit employer funded plan. Treasury

Regulation 1.411(a)-7(a) provides that in the case of a defined

benefit plan "accrued benefit" for purposes of § 411 generally

"refers only to pension or retirement benefits" and does "not

include ancillary benefits not directly related to retirement

benefits." 26 C.F.R. 1.411(a)-7(a).15 This conclusion likewise

follows from Malia, where the Court held that "benefits" under §

1344 does not include a right to residual assets. Id. 23 F.3d at

830-831. And, Malia cited with approval the district court's

opinion in the present case. Malia, 23 F.2d at 832. Further, in

15

Section 1.411-7(a) provides in part as follows:

"(a) Accrued benefit. For purposes of section 411

and the regulations thereunder, the term 'accrued

benefit' meansSQ

(1) Defined benefit plan. In the case of a

defined benefit planSQ

(i) If the plan provides an accrued benefit in the

form of an annual benefit commencing at normal

retirement age, such accrued benefit, or

(ii) If the plan does not provide an accrued

benefit in the form described in subdivision (i) of

this subparagraph, an annual benefit commencing at

normal retirement age which is the actuarial equivalent

(determined under section 411(c)(3) and § 1.411(c)-(5)

of the accrued benefit determined under the plan. In

general, the term 'accrued benefits' refers only to

pension or retirement benefits. Consequently, accrued

benefits do not include ancillary benefits not directly

related to retirement benefits such as payment of

medical expenses (or insurance premiums for such

expenses), disability benefits not in excess of the

qualified disability benefit (see section 411(a)(9) and

paragraph (c)(3) of this section), life insurance

benefits payable as a lump sum, incidental death

benefits, current life insurance protection, or medical

benefits described in section 401(h)."

15

Mead Corp. v. Tilley, 109 S.Ct. 2156, 2162 (1989), the Court held

that the comparable section 4044(a) "in no way indicates an intent

to confer a right upon plan participants to recover unaccrued

benefits" and that "all other benefits under the plan" as used in

section 4044(a)(6) "can refer only to the allocation of benefits

provided by the terms of the terminated plan." Finally, to

construe "benefits accrued" in section 411(d)(3) as including a

share in surplus assets would necessarily preclude an employer from

ever reserving the right to receive any residual assets under §

4044(d)(1).

Consequently, we conclude that plaintiffs' rights to a pro

rata share of residual or surplus assets on partial termination

must rest on some provision of the plan itself, and not merely on

section 4044(d)(1) or section 411(d)(3). We likewise conclude that

unless the plan itself provided for such rights or precluded

amendment providing for reversion of surplus to the employer on

complete termination, then the partial termination did not of

itself prevent such a reversionary amendment thereafter. See

Chait, 835 F.2d at 1022 ("we find no authority that holds that a

partial termination . . . precludes further plan amendments which

do not interfere with the employees' anticipated and calculated

rights under a defined benefit plan"). It is settled that a plan

amendment may validly provide for reversion of surplus assets to

the employer on final termination of an employer funded defined

benefit pension plan. See Outzen v. FDIC, 948 F.2d 1184 (10 Cir.

1991); Wilson, 819 F.2d at 465; Chait. Accordingly, we turn now to

the Plan language.

16

A. Language of the A&B Plan

Plaintiffs base their argument on the language of section 10A-

2 of the Plan, which governs the distribution of assets on

termination of the Plan, viz:

"Distribution of assets. Upon termination of the

Plan the rights of members to the benefits accrued under

the Plan to the date of such termination, to the extent

then funded, shall be nonforfeitable. All of the assets

held in trust, after provision for any properly

chargeable expenses, shall be used solely for the

members, pensioners, spouses, beneficiaries and joint

pensioners until all liabilities under the Plan shall

have been satisfied in full. The Benefits Committee

shall determine on the basis of an actuarial valuation

the share of the funds of the Plan allocable to each

member, pensioner, spouse, and joint pensioner in the

following order:

[there follows a six-tiered schedule of distribution

directives]

. . . .

In the event of a partial termination of the Plan

the provisions of this Section 10A-2 shall be applicable

to the members affected by such partial termination.16

In no event shall any part of the Plan assets held

in trust or any income on it, prior to the satisfaction

of all liabilities under the Plan, revert to the Company

or be used other than for the members, pensioners,

spouses, beneficiaries and joint pensioners." (emphasis

added)

The six-tiered schedule of distribution set forth in section

10A-2 as above indicated does not contain any direction for

distribution or allocation of surplus assets. Its allocations are

only up to the amount of accrued benefits.

Section One of the 1944 Agreement of Trust of the A&B Plan

echoes the language of section 10A.2:

16

This sentence was added to the Plan by a 1982 Plan

amendment.

17

"The Corporation hereby establishes with the Trustee

a trust, effective as of January 1, 1944, which shall

comprise such payments as shall from time to time be made

to the Trustee by or on behalf of the Corporation for the

purposes of the Plan . . . . Any and all contributions

made by the Corporation shall be irrevocable and no part

of the corpus of the Fund nor any income therefrom shall

at any time prior to the satisfaction of all liabilities

under the Plan revert to the Corporation or be used for

or diverted to purposes other than for the exclusive

benefit of participants, retired participants or their

beneficiaries under the Plan." (emphasis added)

In particular, plaintiffs rely on the language providing that

Gulf's contributions to the Plan were to be "irrevocable" and that

the funds were to be used "solely for" or "for the exclusive

benefit of" the plan participants. Defendants contend that these

phrases, and the rights created thereby, are qualified by the

phrases "until all liabilities under the Plan shall have been

satisfied in full" and "prior to the satisfaction of all

liabilities under the Plan." This language, defendants argue,

implies that reversion to the employer is contemplated once all

liabilities are satisfied.17

1. Prior to the satisfaction of liabilities

Although section 10A.2 does declare that Plan assets are not

to revert to the employer, that language is qualified by the phrase

"prior to the satisfaction of all liabilities under the Plan."

17

The A&B Plan contains no explicit statement prohibiting

employer reversion of surplus assets. In addition, as noted, the

formula set forth in section 10A.2 of the A&B Plan for

distribution of Plan assets does not contain any direction for

the allocation of surplus assets to participants.

In contrast, the CRP, for example, contained no language

impliedly reserving a right of reversion by Gulf, barred any

amendment that would permit such a reversion, and allocated

surplus assets to participants upon full termination of the plan.

In re Gulf Pension Litigation, 764 F.Supp. at 1192.

18

Plaintiffs maintain that this phrase creates, at best, an implied

reversion; they contend that ERISA section 4044(d)(1) requires an

explicit reversion provision, citing Albedyll. However, as noted,

section 4044(d)(1) does not apply to partial terminations, and

Albedyll was a final, not a partial, termination case. Further,

the Albedyll plan contained a section which the court interpreted

"to provide for pro rata distribution of plan assets to the

participants upon termination." In addition, an early outline of

the plan "clearly indicated that the company could recover none of

the contributed assets."

Other cases, dealing with plans having language more similar

to that now before us, but without an express employer reversion

provision, have allowed an employer to recapture surplus assets

upon termination of the plan. See Outzen v. Fed. Deposit Ins. Corp

ex rel. State Examiner of Banks, 948 F.2d 1184, 1186-87 (10th Cir.

1991) (where plan provided funds could not be used other than for

the exclusive benefit of participant prior to the satisfaction of

all liabilities, court held later amendment adding express

reversion provision was valid).

Plaintiffs mount a second attack on the "prior to" phrase of

section 10A.2, claiming that it is mere "boilerplate" language

required by tax law. The phrase in question was part of section

165(2) of the Revenue Act of 1938, and became section 165(2) of the

Internal Revenue Code of 1939. 53 Stat. § 165(2) (1939). It has

been carried over into the present Internal Revenue Code.18

18

26 U.S.C. § 401(a)(2) establishes that a trust may be

qualified

19

Plaintiffs contend that Gulf's use of the language in the A&B Plan

was mere repetition of the 1938 statute.

In response, Chevron argues that the legislative history of

section 165 supports reading the A&B Plan to allow employer

reversion. The "prior to" phrase was added to the Revenue Act of

1938 to allow employers to recapture surplus assets without losing

their exempt status under the tax laws.19 S. REP. No. 1567, 75th

Cong., 3d Sess. 24 (1938), reproduced in 1939-1 C.B. 779, 796.

Thus, the "prior to" language of section 165 of the 1938 Revenue

"if under the trust instrument it is impossible, at any

time prior to the satisfaction of all liabilities with

respect to employees and their beneficiaries under the

trust, for any part of the corpus or income to be . . .

used for, or diverted to, purposes other than for the

exclusive benefit of his employees or their

beneficiaries . . . ."

19

The 1942 Treasury Regulations discussing section 165 of the

1938 Revenue Act explain:

"The intent and purpose in section 165(a)(2) of the

phrase `prior to the satisfaction of all liabilities

with respect to employees and their beneficiaries under

the trust' is to permit the employer to reserve the

right to recover at the termination of the trust, and

only at such termination, such balance in the trust as

is due to erroneous actuarial computations during the

previous life of the trust. A balance due to an

`erroneous actuarial computation' is the surplus

arising because actual requirements differ from the

expected requirements based upon previous actuarial

valuations of liabilities or determinations of costs of

providing pension benefits under the plan in accordance

with reasonable assumptions as to mortality, interest,

etc., and correct procedures relating to the method of

funding, all as made by a careful person skilled in

calculating the amounts necessary to satisfy pecuniary

obligations of such a nature." Treasury Regulation §

29.165-2(b) (1942); 26 C.F.R. § 29.165-2(b) (1944

Cumulative Supplement at 6368) (emphasis added).

This regulation continues in effect today, without presently

relevant substantive change. 26 C.F.R. § 1.401-2(b)(1).

20

Act did not require a rote phrase, without meaning or implication.

Instead, it offered employers the ability, if desired, to establish

a qualified pension plan in which the employer, upon final

termination, received the surplus assets.

Based on the foregoing, we hold that in the context of section

10A-2 of the Plan, with its distribution allocation provisions not

reaching surplus assets, the phrases "until all liabilities under

the Plan shall have been satisfied in full" and "prior to the

satisfaction of all liabilities under the Plan" at least implied

the right to reversion in Gulf. We consider now whether any other

language in the Plan limited or prohibited that right.

2. Irrevocability provision

Plaintiffs assert that the "prior to" language discussed above

is inconsistent with the provision that Gulf's contributions to the

A&B Plan be irrevocable. The Plan has contained the "irrevocable"

language since its inception in 1944.20 Chevron claims that the

drafters of the Plan were merely parroting references in the tax

law as it existed in 1944 when the Plan was created. While the

1939 Internal Revenue Code did not specifically use the term

"irrevocable," it decreed that a trust forming part of a pension

plan would not be taxable under the Code

20

Section 10 of the 1944 Plan provided:

"In order further to implement the Plan the Corporation

has entered into an Agreement of Trust to the end that

such funds, as may be irrevocably contributed from time

to time for the payment of all or any part of the

annuities under the Plan, shall be segregated from the

Corporation's own assets and held in trust for the

exclusive benefit of the participants[.]"

21

"if under the trust instrument it is impossible, at any

time prior to the satisfaction of all liabilities with

respect to employees under the trust, for any part of the

corpus or income to be . . . used for, or diverted to,

purposes other than for the exclusive benefit of his

employees." Internal Revenue Code, 53 Stat. § 165(2)

(1939).

The essence of this Code provision is that an employer may not

revoke, or use for his own purposes, any part of corpus or income

of the pension trust. Our reading of this provision, to require an

employer's contributions to be "irrevocable," is supported by the

immediately succeeding section of the 1939 Code, which governs

"Revocable Trusts."21 Thus, Gulf's use of the term "irrevocable"

in the A&B Plan is not extraordinary, as plaintiffs contend, but

merely a rephrasing of the then-current tax code provision

governing pension trusts.

Furthermore, we agree with Chevron that "revocation" and

"reversion" are not synonymous terms.

"A power to revest or revoke may in economic fact be the

equivalent of a reversion. But at least in the law of

estates they are by no means synonymous. For, generally

speaking, the power to revest or to revoke an existing

estate is discretionary with the donor; a reversion is

the residue left in the grantor on determination of a

particular estate." Helvering v. Wood, 60 S.Ct. 551, 553

(1940).

The full termination of the A&B Plan and the fulfillment of its

purpose by payment of accrued benefits to participants do not

constitute a revocation of the Plan or of any of Gulf's

21

This section, entitled "Revocable Trusts," provides:

"Where at any time the power to revest in the

grantor title to any part of the corpus of the trust is

vested . . . in the grantor . . . then the income of

such part of the trust shall be included in computing

the net income of the grantor." 53 Stat. § 166 (1939).

22

contributions to the Plan. When all liabilities are satisfied, the

Plan may terminate, and surplus assets revert to Chevron, without

causing a revocation of the Plan.

Because defendants, through the merger, have not caused a

revocation of the A&B Plan, the "irrevocable" provision does not

determine whether the Plan allowed employer reversion of surplus

assets.

3. Exclusive benefit clause

Plaintiffs claim that the A&B Plan could not provide for

employer reversion of surplus assets because Gulf's contributions

to the plan were to be used for the "exclusive benefit" of the plan

participants and their beneficiaries. Their argument fails to

recognize, however, that the "exclusive benefit" requirements of

tax law and ERISA are counterbalanced by provisions allowing

employer recapture of surplus assets.

Both tax law and ERISA require the funds of a pension plan be

used "for the exclusive benefit of" the plan participants. 26

U.S.C. § 401(a)(2); 29 U.S.C. § 1103(c)(1) ("for the exclusive

purposes of providing benefits . . . and defraying . . .

expenses"). Plaintiffs ignore the fact that both ERISA and the

Internal Revenue Code also contemplate employer reversion. The

ERISA "exclusive benefit" provision is expressly made subject to

the exception that when the plan finally terminates, surplus assets

may revert to the employer if three conditions are then met,

including that the plan provide for such a distribution. 29 U.S.C.

§ 1344(d)(1). The "exclusive benefit" provision of Section 165 of

the 1939 Revenue Code, quoted above, the law in effect in 1944 when

23

the A&B Plan was established, provided that a plan would be tax

exempt if under the trust instrument it is impossible, at any time

prior to the satisfaction of all liabilities with respect to

employees and their beneficiaries under the trust, for any part of

the corpus or income to be used for purposes other than for the

exclusive benefit of the participants or their beneficiaries.22

Internal Revenue Code, 53 Stat. § 165(2) (1939). The Treasury

Regulations originally promulgated for section 165(a), which

continue in effect without presently relevant substantive change,

make clear that, notwithstanding the "exclusive benefit" phrase,

the "prior to" language of that section permits the employer to

recover surplus assets upon termination of the plan if those assets

22

Treasury Regulations in force when the A&B Plan was adopted

explain the "exclusive benefit" requirement of section 165 of the

1939 Code:

"Under section 165(a)(2) a trust is not exempt unless

under the trust instrument it is impossible . . . for

any part of the trust corpus or income to be used for,

or diverted to, purposes other than for the exclusive

benefit of such employees or their beneficiaries. As

used in section 165(a)(2), the phrase `if under the

trust instrument it is impossible' means that the trust

instrument must definitely and affirmatively make it

impossible for the nonexempt diversion or use to occur,

whether by operation or natural termination of the

trust, by power of revocation or amendment, by the

happening of a contingency, by collateral arrangement,

or by any other means. It is not essential that the

employer relinquish all power to modify or terminate

the rights of certain employees covered by the trust,

but it must be impossible for the trust funds to be

used or diverted for purposes other than for the

exclusive benefit of his employees or their

beneficiaries." Treasury Regulation § 29.165-2(a)

(1942); 26 C.F.R. § 29.165-2(a) (1944 Cumulative

Supplement at 6368) (emphasis added).

This regulation continues in effect today without presently

relevant substantive change. 26 C.F.R. § 1.401-2(a)(1) & (2).

24

stem from actuarial error. See notes 19 & 22, supra.

Because both the Tax Code and ERISA require exclusive benefit

language and contemplate that an employer may recover surplus

assets after all plan liabilities are satisfied, the mere existence

of the exclusive benefit provision in the A&B Plan cannot prohibit

reversion to an employer.

Courts construing pension plans containing this "exclusive

benefit" language follow the rule that the phrase does not prohibit

reversion of surplus assets to the employer upon termination of the

plan. See, e.g., Chait v. Bernstein, 835 F.2d 1017, 1023 (3rd Cir.

1987) ("Thus, the text of ERISA itself demonstrates that the

`exclusive benefit' language of ERISA § 403 is not at odds with

reversion of the surplus of a single employer plan under §

4044(d)(1)(C)"); Washington-Baltimore Newspaper Guild Local 35 v.

Washington Star Co., 555 F.Supp. 257, 261 (D.D.C. 1983) ("section

4044(d)(1) of [ERISA] provides that an employer may retain a plan's

surplus without running afoul of the exclusive benefit rule"),

aff'd mem., 729 F.2d 863 (D.C. Cir. 1984); In re C. D. Moyer Co.

Trust Fund, 441 F.Supp. 1128, 1132 (E.D. Pa. 1977), aff'd without

published opinion, 582 F.2d 1273 (3d Cir. 1978).

The use of the "exclusive benefit" language in the A&B Plan

does not preclude reversion of surplus assets to Gulf.

B. Prohibition of Amendments Decreasing Employee Rights

Plaintiffs extend their argument that the A&B Plan did not

allow reversion of surplus assets to the employer, claiming that

the language of the Plan also prohibited amendments creating a

25

right of reversion in the employer.23

The amendment provision of the A&B Plan stated as follows:

"The Board of Directors reserves the right at any time

and from time to time to modify or to amend, in whole or

in part, any or all of the provisions of the Plan,

provided that:

"(a) No modification or amendment may be made which

will deprive any person of any benefit under

the Plan which has accrued on or prior to the

time of such modification or amendment, and

"(b) No such modification or amendment shall make

it possible for any part of the Trust Fund to

be used for, or diverted to, purposes other

than for the exclusive benefit of participants

and retired participants, or their

beneficiaries under the Plan." (Emphasis

added.)

Other courts have held that "exclusive benefit" language in a

plan does not, by itself, prevent an employer from amending a plan

to allow reversion of surplus assets. In Chait, although the plan

contained a provision similar to that in the Gulf Plan, the Third

Circuit determined that the language of the plan did not prohibit

a reversionary amendment. Chait, 835 F.2d at 1022-26.24 The court

held that "a vested employee who has fully received his vested

benefits cannot rely on the `exclusive benefit' language, standing

23

Plaintiffs further assert, in the alternative, that even if

the terms of the Plan did allow a reversionary amendment, the

amendment of the Gulf Plan at the time of the merger resulting in

the Chevron Plan (with its express reversion provision) was

ineffective because it occurred after the partial termination of

the A&B Plan. We reject this contention for the reasons

previously stated.

24

The plan involved in Chait stated:

"no [amendment to the plan by the employer] shall

authorize or permit any part of the funds held under

the Plan to be used for or diverted to, purposes other

than for the exclusive benefit of the Employees."

Chait, 835 F.2d at 1022 (footnote omitted).

26

alone, to prevent an amendment reverting surplus plan assets" to

the employer. Id. at 1018. See also Outzen v. Federal Deposit

Ins. Corp., 948 F.2d at 1186, 1187 (allowing reversion amendment

despite exclusive benefit language, stating "[t]he cases which

allow reversion as well as those which preclude it all dictate that

strong, express prohibitory language is necessary to block employer

recapture of surplus pension funds in a defined benefit plan");

Wilson v. Bluefield Supply Co., 819 F.2d at 461-465 (allowing

reversion of surplus assets despite "exclusive benefit" language in

plan); Washington-Baltimore Newspaper Guild Local 35, 555 F.Supp.

at 260-262; In re C. D. Moyer Co. Trust Fund, 441 F.Supp. at 1131-

32.

Thus, a defined benefit plan must generally contain language

other than the "exclusive benefit" phrase in order to preclude an

amendment providing for employer reversion. For example, in Bryant

v. Int'l Fruit Products Co., Inc., 793 F.2d 118, 123 (6th Cir.),

cert. denied, 107 S.Ct. 576 (1986), the Sixth Circuit held that an

amendment to a defined benefit plan purporting to allow employer

reversion was ineffective in light of strong plan language

expressly prohibiting such an amendment. The plan contained, in

addition to the standard "exclusive benefit" phrase limiting

amendment, the phrase "[i]n no event and under no circumstances

shall any contributions to this Trust by the Employer, nor any of

the Trust Estate or the income therefrom, revert to or be repaid to

the Employer." Bryant, 793 F.2d at 120 (quoting agreement)

(emphasis added). The court found this language to be a unique,

"unequivocal" prohibition against employer recapture of any

27

contributions to the plan. Id. at 123. Language in the handbook

distributed to plan participants supported the Bryant court's

conclusion:

"Funds paid into the trust can never be refunded to the

Company and are for the exclusive benefit of the

employees under the Trust. . . . It is definitely

provided that the funds paid into the Trust are for your

exclusive benefit and can never, under any circumstances,

revert to the Company." Id. (quoting handbook) (emphasis

added).

We conclude that the language of the A&B Plan prohibiting

amendments other than for the exclusive benefit of the participants

does not, by itself, preclude an amendment expressly allowing

reversion to the employer. Furthermore, as discussed above, the

language of the Plan impliedly allowed such a reversion.25

The policies underlying ERISA support our conclusion.

"Employers will continue to fund their plans under ERISA

guidelines, but will not be penalized for overfunding in

`an abundance of caution' or as a result of a

miscalculation on the part of an actuary. Thus,

employees will continue to be protected to the extent of

their specific benefits, but will not receive any

25

Plaintiffs also rely on the summary plan description of the

A&B Plan, required by ERISA section 102(a), 29 U.S.C. § 1022(a),

for support of their claim that the plan did not allow employer

reversion and could not be amended to provide therefor. Our

court has ruled that the summary plan description controls if a

pension plan is ambiguous. Hansen v. Continental Ins. Co., 940

F.2d 971, 982 (5th Cir. 1991) ("hold[ing] that the summary plan

description is binding, and that if there is a conflict between

the summary plan description and the terms of the [plan], the

summary plan description shall govern").

We do not consider the language of the A&B Plan to be

ambiguous, nor do we find any conflict between its terms and

those of the summary plan descriptions. Indeed, the summary

descriptions of the A&B Plan, in the portions concerning changes

to the plan, track the language of the Plan itself, providing

that Gulf had the right to change the plan, but that it could not

"make any change that would allow the assets of the Plan to be

used for anything but the exclusive benefit of members or their

beneficiaries . . . ."

28

windfalls due to the employer's mistake in predicting the

amount necessary to keep the Plan on a sound financial

basis." In re C. D. Moyer Co. Trust Fund, 441 F.Supp. at

1132-33.26

Plaintiffs have received their expected benefits. An award of

surplus assets, in light of Plan provisions inferentially and now

expressly allowing employer reversion, would result in a windfall

to the plaintiffs and would encourage defendants to fund the

Chevron Plan more cautiously, to the potential detriment of present

and future participants and their beneficiaries.

III. Alleged Chevron Misrepresentations Concerning Reserve for Gulf

Plan

During the merger negotiations, Chevron's chairman stated in

a letter to Gulf's chairman that, if Chevron decided to combine the

pension plans upon merger of the companies, Chevron would set aside

assets of the Gulf Plan to provide sufficient reserves for then-

existing retiree pensions. Chevron repeated that statement orally

and in writing in response to inquiries from persons concerned

about the effects of the merger. In their complaint, plaintiffs

alleged that Chevron failed to set aside the promised reserves and

thus had breached its duty of loyalty under ERISA § 404(a).27 29

U.S.C. § 1104(a). The district court held that this claim was not

actionable under ERISA because plaintiffs' claims did not arise out

26

This language from In re C. D. Moyer Co. Trust Fund was also

quoted with approval in Washington-Baltimore Newspaper Guild

Local 35, 555 F.Supp. at 260.

27

According to the district court's opinion, no specific

reserves were established. Plaintiffs' own expert testified,

however, that the merged Chevron Plan had surplus assets in

excess of accrued benefits of more than $800 million which would

not be depleted below the full funding limit for a considerable

time. In re Gulf Pension Litigation, 764 F.Supp. at 1213.

29

of an ERISA plan. In addition, the court ruled that plaintiffs

stated no claim under common law.

The district court determined, and plaintiffs concede, that

Chevron's promises were not contained in a written plan document as

required by section 402(a)(1) of ERISA. 29 U.S.C. § 1102(a)(1).

That Chevron's statements were made in writing is irrelevant as

they do not profess to be plan amendments. ERISA requires that a

plan under its auspices "provide a procedure for amending such

plan, and for identifying the persons who have authority to amend

the plan." 29 U.S.C. § 1102(b)(3).

Our court has held that an oral agreement cannot sustain a

cause of action under ERISA. Cefalu v. B.F. Goodrich Co., 871 F.2d

1290, 1297 (5th Cir. 1989). See also Rodrigue v. Western and

Southern Life Ins. Co., 948 F.2d 969, 971-72 (5th Cir. 1991)

(holding plaintiff precluded from arguing that employer was

estopped from denying coverage based on oral modifications to

plan); Degan v. Ford Motor Co., 869 F.2d 889, 895 (5th Cir. 1989)

(ERISA precludes oral modifications to plan and as well as claims

of promissory estoppel in suit seeking to enforce rights to pension

benefits). This reasoning extends to written modifications or

promises which are not, and do not purport to be, formal amendments

of a plan following the procedures required by section 1102(b)(3).

See Alday v. Container Corp. of America, 906 F.2d 660, 665-666

(11th Cir. 1990) (holding that booklet summarizing benefits and

pre-retirement letters were insufficiently formal writings and did

not amend ERISA plan; interpreting 29 U.S.C. § 1102(b)(3) to

prohibit modification of plan by informal written agreement), cert.

30

denied, 111 S.Ct. 675 (1991). Chevron's statements did not purport

to be part of, or an amendment to, either company's pension plan,

nor is there any evidence that either Chevron or Gulf attempted to

amend either plan to include the promises. Chevron's statements,

therefore, are not part of any ERISA plan.28

In any event, the district court determined, and plaintiffs do

not here challenge, that plaintiffs did not establish that they

relied to their detriment on Chevron's promises and, even if they

had so relied, that they suffered any injury as a result of any

such reliance. Indeed, it is undisputed that the current reserves

of the Chevron Plan are more than sufficient, without any

additional contributions, to cover the benefits of both existing

and future Gulf retirees for a significant time to come.

The district court did not err in holding that plaintiffs'

claims for misrepresentation and breach of ERISA's duty of loyalty

were not actionable under ERISA or the common law.

IV. Seventh Amendment Right to Jury

Finally, plaintiffs challenge the district court's order

granting Chevron's motion to strike their jury demand. They argue

that several of their claims, particularly the claim for

distribution of surplus assets, seek a money judgment and thus are

legal in nature so as to entitle them to a jury trial.

28

Moreover, Chevron's statements were not shown to be made in

its fiduciary capacity, as to opposed to being statements of

intended action in its corporate nonfiduciary capacity as plan

sponsor or settlor. See, e.g., Malia, 23 F.3d at 833; Johnson v.

Georgia-Pacific Corp, 19 F.3d 1184, 1188 (7th Cir. 1994);

Phillips v. Amoco Oil Co., 799 F.2d 1464, 1470-71 (11th Cir.

1986).

31

"To determine whether a particular action will resolve legal

rights, we examine both the nature of the issues involved and the

remedy sought." Chauffeurs, Teamsters, and Helpers, Local No. 391

v. Terry, 110 S.Ct. 1339, 1345 (1990). This analysis consists of

two inquiries: (1) a comparison of the present statutory action to

18th-century actions in the courts of England before the merger of

the courts of law and equity; and (2) an examination of the relief

sought to determine whether it is legal or equitable in nature.

Id. Of the two, the latter inquiry bears more weight. Id.

Here, the first inquiry is relatively simple, as ERISA law is

closely analogous to the law of trusts, an area within the

exclusive jurisdiction of the courts of equity. Firestone Tire and

Rubber Co. v. Bruch, 109 S.Ct. 948, 954 (1989) ("ERISA abounds with

the language and terminology of trust law. ERISA's legislative

history confirms that the Act's fiduciary responsibility provisions

`codif[y] and make[] applicable to [ERISA] fiduciaries certain

principles developed in the evolution of the law of trusts'")

(internal citations omitted; brackets in original). We have held,

as have the majority of the other circuits, that ERISA claims do

not entitle a plaintiff to a jury trial. Calamia v. Spivey, 632

F.2d 1235, 1237 (5th Cir. 1980) (inquiry into whether plan

administrators acted arbitrarily and capriciously is action usually

performed by judges). See also Kirk v. Provident Life and Accident

Ins. Co., 942 F.2d 504, 506 (8th Cir. 1991) (summarily rejecting

jury trial argument); Blake v. Unionmutual Stock Life Ins. Co., 906

F.2d 1525, 1526 (11th Cir. 1990) (claim for money damages was in

effect claim for benefits plaintiffs were allegedly entitled to

32

under the plan, which is "traditionally equitable relief").

The second inquiry, although not as clear cut, also persuades

us that plaintiffs' claims sound in equity. Some relief sought by

plaintiffs is clearly equitable: they sought specific performance

as a remedy to cure the alleged breaches of the duty of loyalty

stemming from Chevron's promises to set aside reserves for Gulf

Plan participants.

Plaintiffs' requests for monetary recovery on other claims,

traditionally the form of relief offered in courts of law, do not

mandate a conclusion that their action is legal in nature.

Calamia, 632 F.2d at 1236-1237 ("The mere fact that the appellant

would receive a monetary award if he prevailed does not compel the

conclusion that he is entitled to a jury trial"). The Supreme

Court has recognized two exceptions to the general rule that a

claim seeking monetary recovery is legal in nature. In Terry, the

Court made clear that a request for monetary recovery sounds in

equity, and thus does not guarantee a jury trial, when it is

restitutionary in nature or is intertwined with claims for

injunctive relief. Terry, 110 S.Ct. at 1348. The first exception

is particularly relevant in this case. Plaintiffs' request for

distribution of surplus assets is analogous to an action for

disgorgement of improper profits. In this claim, as well as in the

now settled claims for breach of fiduciary duty, plaintiffs seek

restitution of money allegedly wrongly held by the defendants.

We hold that plaintiffs' claim is equitable in nature. The

district court did not err in striking plaintiffs' demand for a

33

jury.29

Conclusion

We conclude that under the circumstances here the partial

termination found by the district court of the A&B Plan, an

entirely employer funded defined benefit pension plan, neither

bestowed on plaintiffs any right to plan assets which were then

surplus (after providing for all accrued benefits as required by §

411(d)(3)) nor precluded subsequent plan amendment to expressly

provide that at final plan termination then surplus plan assets

would revert to the employer. We further hold that the A&B Plan

prior to the 1986 merger at least implied that at final plan

termination surplus assets would revert to the employer, and that

the plan amendment on merger expressly providing for such reversion

was authorized by, and not contrary to, the terms of the plan and

was consistent with law. Accordingly, we AFFIRM the district

court's determination that the plaintiffs are not entitled to

surplus assets of the A&B Plan. In addition, we AFFIRM the

district court's rulings that plaintiffs' misrepresentation claims

against Chevron were not actionable and that plaintiffs were not

entitled to a jury trial. Accordingly, the judgment of the

district court is

AFFIRMED.

29

Our conclusion is supported by the posture the case is now

in, following the settlement of most issues. Further, no issues

of fact remain to be decided by a jury.

34