Appendix — Buczynski v. General Motors Corp.
Supreme Court brief1980
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No. 80-193
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IN THE |
Supreme Court of the Wnitrd States
Ocroser Tern, 1980
HENRY BUCZYNSKI, ALEX BORUSOVIC and OTHER RETIREES
SIMILARLY SITCATED, Petitioners
chho ,
vs.
THE GENERAL MOTORS CORPORATION,
Respondent.
On Writ of Certiorari to the United States Court of Appeals
for the Third Circuit
JOINT APPENDIX
MARC C. GETTIS, LAURENCE REICH,
325 Westfield Avenue, East, 744 Broad Street,
Roselle Park New Jerscy 07204, Newark, New Jersey 07102,
(201) 245-8100 (201) 622-7711
Counsel for Petitioners. Counsel for Respondent,
WEINER, STAUBACH, EDELSON CARPENTER, BENNETT & MORRISSEY,
& HOPMAYER, “Itturncys for Respondent,
Attorneys for Petitioners. :
OTIS M. SMITH,
WILLIAM R. CAROSELLI, General Counsel,
McARDLE, CAROSELLI, SPAGNOLLI EUGENE L. HARTWIG,
& BEACHLER, DAVID M. DAVIS,
1100 Law & Finance Building, General Motors Corporation,
Pittsburgh, Pennsylvania 15219, 3044 West Grand Boulevard,
Uf Counsel, Detroit, Michigan 48202,
Of Counsel,
— ——
Petition For Certionant Firep Avovust 8, 1980
Certionarni Grantep Novemper 8, 1980
INDEX
PAGE
Docket Entries ibashdadeh acshcbaatdedlasi la
ING eciccectnshcenssriitthens onciielgpanaiialiadadaigieelaio 8a
Petition for Removal ................-.-- a? 18a
pM Ragen a ON We Sore Rae LAN WET OL ROE ETE 21a
Stipulation dated December 5, 1977 ............ccccccccceceeeeeeee 27a
Memorandum Opinion dated February 17, 1978 ....... 32a
Pretrial Order dated April 18, 1978 02... cecessssseseee 42a
Stipulation, dated May 9, 1978 .......-.....cscscssscsscsesescsceceee 49a
Order Certifying Class Action, dated August 9, 1978 52a
Memorandum Opinion, dated August 24, 1978 .0000...... 54a
Opinion, dated December 20, 1978 .............. eats = te
Order, dated December 20, 1978 ........0....--... . 80a
Letter Opinion, dated March 28, 1979 woo. 8la
Cron, Gamed Winrehe SB, TOTO acne 83a
Order, dated April 4, 1979.00.02... ... 80a
Amended Order, dated April 5, 1979 .o.ccccccceecceeeeee S6a
Notice of Appeal, dated April 12, 1979 . : 88a
Opinion of the United States Court of Appeals for
the Third Cireuit dated February 15, 1980 200000... 89a
Judgment, dated February 15, 1980 119a
Certified Judgment in Lieu of Mandate, dated March
27, 1980 12la
Order Granting Writ of Certiorari ....... 122a
Date
8/10/77
8/10/77
8/10/77
8/15/77
8/15/77
9/ 1/77
9/ 8/77
9/ 8/77
9/14/77
9/14/77
JOINT APPENDIX
Docket Entries
Proceedings
Petition for removal from Superior Court of
Union County with copies of Complaint and
order to show cause re preliminary injunction
filed 8-9-77.
Removal Bond, filed 8-9-77.
Notice of Allocation and Assignment filed. (New-
ark-Lacey ) -
Hearing on plaintiffs’ application for a tem-
porary restraining order. Ordered hearing con-
tinued to September 12, 1977. (Lacey) (8-11-77)
Plaintiffs’ notice of motion for a temporary
restraining order returnable August 11, 1977,
filed 8-11-77. (No brief)
Stipulation and order extending time of defend-
ant to answer complaint to 9-13-77, filed 8-31-77.
(Lacey) Notice mailed.
Affidavit of Virginia Triano, filed 9-7-77.
Affidavit of Walter Meissner, filed 9-7-77.
Hearing on plaintiffs’ application for a tem-
porary restraining order, Decision RESERVED.
(Lacey) (9-12-77)
Hearing on application of State of N.J. for leave
to intervene as defendant. Ordered hearing con-
tinued to a date to be fixed. (Lacey) (9-12-77)
[1a]
Date
9/14/77
10/ 6/77
10/11/77
10/18/77
11/16/77
12/ 9/77
1/9/78
2/27/78
2/27/78
3/ 9/78
3/ 9/78
3/ 9/78
2a
Docket Entries
Proceedings
Answer, filed 9-13-77.
Evipentiary Hearine on plaintiff’s application
for a preliminary injunction. Decision RESERVED.
(Lacey) (10-5-77)
Transcript of hearing held August 11, 1977,
filed.
Plaintiffs’ notice of motion to certify this action
as a class action returnable November 14, 1977,
proof of service filed. (Brief submitted)
At call for hearing on motion of plaintiffs to
certify this action as a class action, Court indi-
cated motion consented to. (Lacey) (11-14-77)
Stipulation, setting forth applicability of pen-
sions plan re retired employees, filed 12-7-77.
Transcript of hearing held 10-5-77 filed 1-6-78.
Memorandum opinion, filed 2-21-78. (Lacey)
(denying plaintiffs motion for preliminary in-
junction )
Order denying plaintiffs motion for preliminary
injunction, filed 2-21-78. (Lacey) Notice mailed.
Hearing on plaintiff’s motion for class action
certification. Ordered motion granted. Order
to be submitted. (Lacey) (3-6-78)
Ordered pre-trial conference set for April 10,
1978 before Judge Hunt. (Lacey) (3-6-78)
Ordered trial date set for May 1, 1978. Order
to be submitted. (Lacey) (3-6-78)
Date
4/19/78
4/21/78
4/28/78
5/11/78
5/17/78
5/25/78
5/25/78
5/30/78
8/10/78
8/25/78
3a
Docket Entries
Proceedings
Status Conference. (Lacey) (4-14-78) Ordered
trial date set for 5-15-78.
Pre-trial order, filed 4-19-78. (Hunt) (Directing
that State of N.J. may intervene as a party de-
fendant and acknowledging Judge Lacey’s order
to certify this action as class action.)
Pre-Trial Conference. (Hunt) (4-13-78)
Stipulation re Exhibits A, B, and C are desig-
nated as Joint Exhibits of Pensions Plans; joint
Exhibits D and E are true copies of Section 2
of Article IV of the 1958 and 1961 Pension Plans,
filed 5-10-78.
Evipentiary Heartne on plaintiffs’ application
for a permanent injunction. Decision RESERVED.
(Lacey) (5-15-78) |
Transcript of hearing held March 6, 1978, filed
5-24-78.
Transcript of hearing held May 15, 1978, filed
5-24-78.
Acknowledgment of service of copy of complaint
by the U.S. Department 01 Labor, Washington,
D.C., filed 5-26-78.
Order certifying Class Action, ete., filed 8-9-78.
(Lacey) Notice mailed.
Memorandum Opinion, filed 8-24-78. (Lacev)
(Granting plaintiff’s application for a permanent
injunction, ete.)
Date
9/18/78
9/27/78
10 /2/78
11/ 2/78
12/13/78
12/21/78
12/21/78
1/10/79
1/12/79
1/26/79
4a
Docket Entries
Proceedings
Hearing on defendant’s application to settle the
form of the order. Ordered hearing continued
to October 29, 1978. (Lacey) (9-15-78)
Transcript of hearing held September 15, 1978,
filed 9-26-78.
Defendant’s notice of motion for reconsidera-
tion of Memorandum Opinion of August 24, 1978
returnable October 30, 1978, proof of service
filed 9-29-78. (Brief submitted)
Transcript of hearing held September 12, 1977,
filed.
Hearing on defendant’s motion for reconsidera-
tion of Memorandum Opinion of August 24, 1978.
Ordered motion denied. (Lacey) (12-7-78).
Opinion filed 12-20-78. (Lacey) (the previous
decision is followed)
Order directing the previous decision of the
court embodied in opinion of August 24, 1978 is
adhered to, filed 12-20-78. (Lacey) Notice mailed.
Plaintiffs’ notice of motion for plaintiff’s coun-
sel fees and costs of action be charged against
defendant returnable Feb. 13, 1979 proof of serv-
ice, filed 1-9-79. (Memorandum submitted)
Substitution of attorney on behalf of plaintiff,
filed 1-11-79.
Defendant’s notice of motion to stay judgment
pending appeal returnable Feb. 13, 1979, proof
of service, filed 1-24-79. (Brief submitted)
Date
1/29/79
1/29/79
1/29/79
1/29/79
1/31/79
2/ 8/79
2/ 8/79
2/ 8/79
2/20/79
2/20/79
2/20/79
3/21/79
3/30/79
da
Docket Entries
Proceedings
Affidavit of Lester Weiner in support of plain-
tiffs’ motion for counsel fees and costs, ete., filed.
Affidavit of Lester Weiner of services and dis-
bursements, filed.
Affidavit of Mare C. Gettis for services ren-
dered, filed.
Affidavit of Joel B. Hopmayer for services ren-
dered, filed.
Transcript of hearing held December 7, 1978,
filed 1-30-79.
Affidavit of Richard Meyer filed. 2-6-79
Affidavit of Ray J. Wright filed. 2-6-79
Certificate of Service of affidavits filed. 2-6-79
Hearing on motion of plaintiffs’ for counsel fees
and costs of action Decision Resrrvep. (Lacey)
(2-13-79)
Hearing on motion of defendant to stay judg-
ment pending appeal. Decision Reservep
(Lacey) (2-13-79)
Continued hearing on defendant’s application to
settle the form of the order. Decision Rrsrrven.
(Lacey) (2-13-79)
Transcript of hearing held February 13, 1979
filed, 3-20-79.
Letter Opinion filed 3-29-79. (Lacey) (Denying
Plaintiffs’ motion for attorneys’ fees and grant-
ing defendant’s motion for stay
Date
3/30/79
4/10/79
4/10/79
4/20/79
4/20/79
5/10/79
8/ 1/79
9/14/79
10/31/79
Ga
Docket Entries
Proceedings
Order for permanent injunction in favor of
Plaintiffs, Henry Buezynski, Alex Borusovie and
other retirees similarly situated and against De-
fendant, The General Motors Corporation with
costs, and staying order during pendency of ap-
peal, filed 3-29-79. (Lacey) Notice mailed.
Order withdrawing order for permanent injunc-
tion filed 3-29-79 filed 4-5-79. (Lacey) Notice
Mailed.
Order for permanent injunction in favor of
plaintiffs, Henry Buezynski, Alex Borusovie and
other retirees similarly situated and against de-
fendant, The General Motors Corporation with
costs, and staying order during pendency of ap-
peal, filed 4-5-79. (Lacey) Notice Mailed.
Notice of appeal of defendant filed 4-12-79 at
3:40 P.M.
Copies of notice of appeal sent to U.S.C.A. and
Weiner, Staubach, Edelson & Hopmayer, Esqs.
Notice of motion of plaintiffs to tax costs ret.
5-10-79 and Bill of costs and disbursements, filed
5-9-79.
Briefs of defendant-appellant and amicus filed
with the Court of Appeals
Briefs of plaintiffs-appellees and amicus filed
with the Court of Appeals
Reply Briefs of defendant-appellant and amicus
filed with the Court of Appeals
Date
1 /8/80
2/15/80
3/ 3/80
3/19/80
3/27/80
5/30/80
6/ 2/80
8/ 8/80
8/18/80
8/20/80
10/ 2/80
11/ 3/80
Ta
Docket Entries
Proceedings
Argument of the case in the Court of Appeals
Judgment of the Court of Appeals for the Third
Cireuit entered; Opinion of the Court an-
nounced
Petition of plaintiffs-appellees for rehearing
en banc filed with the Court of Appeals
Petition for rehearing denied
Judgment of the Court of Appeals certified in
lieu of mandate
Application by plaintiffs-petitioners for an ex-
tension of time in which to file a Petition for a
Writ of Certiorari filed
Application granted by Order of Justice Bren-
nan
Petition for a Writ of Certiorari filed
Application by defendant-respondent for an ex-
tension of time in which to file a Brief in Opposi-
tion filed
Application granted
Brief in Opposition filed
Writ of Certiorari granted
8a
Complaint
Superior Court or New JERSEY
Cuancery Division: Union County
Crviz Action No. 77-1644
Henry Buozynsx1, ALEx Borusovic and
Orner Retirees Srmmarty Sirvaren,
Plaintiffs,
Vs.
THe GeneraL Motors Corporation,
Defendant.
>
Plaintiffs, Henry Buezynski who resides at 144 Willow
Avenue, in the Borough of Garwood, County of Union,
State of New Jersey, and Alex Borusovie who resides at
96 Longfellow Street, in the Borough of Carteret, County
of Middlesex, State of New Jersey for themselves and for
all other retired members of the International Union,
United Automobile Aerospace and Agricultural Implement
Workers of America, similarly situated say:
1. Plaintiffs were hourly employees of the General Mo-
tors Corporation with places of business located at 1300
Raritan Road, Clark, New Jersey; 1016 West Edgar Road,
Linden, New Jersey and Parkway Avenue, Trenton, New
Jersey.
9a
Complaint
2. Plaintiffs were hired by the defendant, General Mo-
tors Corporation as hourly rated production employees.
3. Plaintiffs became members of the International
Union, United Automobile Aerospace and Agricultural Im-
plement Workers of America.
4, The International Union, United Automobile Aero-
space and Agricultural Imp!ement Workers of America is
recognized by the defendant, General Motors Corporation,
as the sole bargaining agent for all hourly rated produc-
tion and maintenance employees of the New Departure
Hyatt Bearings Plant at Clark, New Jersey, the Linden
Assembly Plant in Linden, New Jersey, and the Fischer
Body Plant in Trenton, New Jersey.
5. Plaintiff, Alex Borusovie worked continuously for the
defendant, General Motors Corporation for a period of 22
years until March 31, 1973, at which time he retired.
Plaintiff, Henry Buezynski worked continuously for the
defendant, General Motors Corporation for a period of 34
years until January 1, 1972.
All other unnamed plaintiffs on whose behalf this action
is brought worked for the defendant, General Motors Cor-
poration for a number of years and retired prior to the
date of July 14, 1977.
6. The International Union, United Automobile Aero-
space and Agricultural Implement Workers of America
have had successive written Agreements covering the pen-
sion plan for hourly rated production and maintenance
employees of the International Union, United Automobile
Aerospace and Agricultural Implement Workers of
10a
Complaint
America and all hourly rated production and maintenance
employees who are members of the International Union,
United Automobile Aerospace and Agricultural Implement
Workers of America and are employees of the General
Motors Corporation. The most recent Pension Agreement
between the General Motors Corporation and the Inter-
national Union, United Automobile Aerospace and Agri-
cultural Implement Workers of America which was effec-
tive December 13, 1976, as modified November 22, 1976,
and is specifically designated as Exhibit A to Agreement
between General Motors Corporation and U.A.W. This
Agreement is still effective to this date.
7. The General Motors Corporation is responsible for
the maintenance, management and performance of the Pen-
sion Plan.
8. Plaintiffs completed and filed the written application
and complied with all required provisions to receive pen-
sion benefits.
9, All applications and requirements were complied with
by the plaintiffs and accepted by the Division of the Gen-
eral Motors Corporation.
10, Plaintiff, Henry Buezynski became eligible for bene-
fits under the Pension Plan on January 1, 1972.
Plaintiff, Alex Borusovie became eligible for benefits un-
der the Pension Plan on March 31, 1973.
All other plaintiffs in this action became eligible for
benefits under the Pension Plan prior to July 14, 1977.
11. Article IV, Section 2 of the Supplemental Agree-
ment covering the Pension Plan, more specifically Exhibit
lla
Complaint
A to the Agreement between the General Motors Corpora-
tion and Local 736 of International Union, United Auto-
mobile Aerospace and Agricultural Implement Workers of
America deals with deduction from the employees pension
for Workers’ Compensation and reads as follows in whole:
“In determining the monthly benefits payable un-
der this Plan, a deduction shall be made unless pro-
hibited by law, equivalent to all or any part of
Workmen’s Compensation (including compromise or
redemption settlements) payable to such employee
by reason of any law cf the United States, or any
political subdivision thereof, which has been or shall
be enacted, provided that such deductions shall be
to the extent that such Workmen’s Compensation has
been provided by premiums, taxes or other pay-
ments paid by or at the expense of the Corporation,
except that no deduction shall be made for the fol-
lowing:
(a) Workmen’s Compensation payments specifi-
cally allocated for hospitalization or medical ex-
pense, fixed statutory payments for the loss of any
bodily member, or 100% loss of use of any bodily
member, or payments for loss of industrial vision.
(b) Compromise or redemption settlements pay-
able prior to the date monthly pension benefits first
become payable.
(ce) Workmen’s Compensation payments paid un-
der a claim filed not later than two years after the
breaking of seniority.”
12. Plaintiff, Henry Buezynski filed a Claim Petition
for Workers’ Compensation Benefits on June 25, 1976.
r%
12a
Complaint
Plaintiff, Alex Borusovic filed a Claim Petition for
Workers’ Compensation Benefits on July 2, 1976.
All other plaintiffs in this action filed Claim Petitions
for Wokers’ Compensation Benefits prior to July 14, 1977.
13. Plaintiff, Henry Buczynski received a Judgment
from his Workers’ Compensation Claim on April 7, 1977,
entitling him to approximately $2,500.00 (a copy of the
judgment is attached herewith).
Plaintiff, Alex Borusovie received a Judgment from his
Workers’ Compensation Claim on February 11, 1977, en-
titling him to approximately $2,300.00 (a copy of the Judg-
ment is attached herewith).
All other plaintiffs in this action received Judgments
from their respective Workers’ Compensation Claims en-
titling them to various amounts of money for permanent
disability.
14, On or about June 22, 1977, plaintiff Henry Buezyn-
ski received an Authorization of Adjusted Monthly Bene-
fits calling for an offset or deduction of his Pension Bene-
fits from August 1, 1977, through January 1, 1978. (a copy
of the Authorization of Adjusted Monthly Benefits is at-
tached herewith).
On or about June 22, 1977, plaintiff Alex Borusovie re-
ceived an Authorization of Adjusted Monthly Benefits call-
ing for an offset or deduction of his Pension Benefits from
August 1, 1977, through January 1, 1978. (a copy of the
Authorization of Adjusted Monthly Benefits is attached
hereto).
All other piaintiffs in this action have received Author-
izations of Adjusted Monthly Benefits which indicate the
13a
Complaint
intent of the defendant to reduce the monthly pension bene-
fit of the plaintiffs.
15. On July 14, 1977, an act concerning Workers’ Com-
pensation and amending R.S. 34:15-29, specifically Assem-
bly No. 1309 was signed into law by Governor Brendan
Byrne (a copy is attached herewith). This law prohibits
deduction from an individuals pension for the right of com-
pensation granted by chapter 34 :15-29.
16. Defendani’s intention to reduce the pension benefits
of plaintiffs Henry Buezynski and Alex Borusovie as well
as all other plaintiffs similarly situated is unlawful and
will interfere with the plaintiffs’ right to collect those
monies which the plaintiffs are entitled to.
17. Defendant’s intent to reduce the pension benefits of
plaintiffs, Henry Buezynski and Alex Borusovie as well as
all other plaintiffs similarly situated will create an imme-
diate financial hardship to the plaintiffs.
18. Defendant’s intent to reduce the pension benefits of
the plaintiffs is unlawful and in violation of Assembly Bill
No. 1309.
19. Plaintiffs are entitled to the privilege of receiving
and enjoying those monies which they are entitled to un-
der Article II, Section 5 of the Supplement Agreement
covering the Pension Plan. Defendant will be depriving
and preventing the plaintiffs from the use of those monies
thereby do plaintiffs immediate substantial and irreparable
harm.
20. The unlawful acts complained of herein will be con-
tinued in the future as a means of coercion and duress
unless the acts are restrained by this Court.
y%
lida
Complaint
21. The.defendant, General Motors Corporation has and
is at the present time advising plaintiffs with pending
claims for Workers’ Compensation Benefits that their pen-
sion benefits will be reduced when plaintiffs receive a judg-
ment from their Workers’ Compensation Claims,
22. The character and extent of injury to the plaintiffs
is such that damages cannot adequately compensate for the
same and plaintiffs have no adequate remedy at law.
23. The unlawful acts of the defendant, General Motors
Corporation showing intent to withhold and refusal to pay
pension benefits to the plaintiffs is likely to continue unless
restrained.
24. As to each item of relief requested and granted
greater injury will be inflicted upon the plaintiffs by the
denial thereof than will be inflicted upon the defendant by
granting thereof.
25. Unless a temporary restraining order will be issued
without further notice, immediate substantial and irrepar-
able injury to the plaintiffs will be unavoidable.
W seEREFoRE, plaintiffs demand:
1. That the defendant be temporarily and permanently
enjoined and restrained as follows:
(A) From withholding any pension monies to which the
plaintiffs are entitled to receive.
(B) Permanently enjoining the defendant from directly
or indirectly fostering or causing the use or implementation
15a
Complaint
of Article IV, Section 2 of the Pension Plan now in exist-
ence.
(C) Permanently enjoining the defendant, General Mo-
tors Corporation from directly or indirectly fostering or
causing the use or implementation of a plan which results
in the withholding of any pension monies to which the
plaintiffs are entitled.
(D) Permanently enjoining the defendant from threaten-
ing or coercing plaintiffs in any manner with respect to
plaintiffs pension being affected due to their pending
Workers’ Compensation Claims.
(Ef) Granting to the plaintiffs such other relief as may
be just and equitable.
(F) Awarding to plaintiffs costs of this action.
Werner, Mrraseciur & GLENNON
By: Marc C, Gertis
Attorney for Plaintiffs
léa
Complaint
[Official Copy Reprint]
AssEMBLY, No. 1309
STATE OF NEW JERSEY
Introduced January 19, 1976
By Assemblymen Jackman and Pellecchia
Referred to Committee on Labor, Industry and
Professions
Aw Act concerning workmen’s compensation and
amending R.S. 34:15-29,
Br rr enacrep by the Senate and General Assembly of the
State of New Jersey:
1. R.S. 34:15-29 is amended to read as follows:
34:15-29. The right of compensation granted by this
chapter shall have the same preference against the assets
of the employer as is now or may hereafter be allowed by
law for a claim for unpaid wages for labor. Claims or pay-
ments due under this chapter shall not be assignable, and
shall be exempt from all claims of creditors and from levy,
execution or attachment *[, and shall not be set off or de-
duced from pension benefits or payments]* *The right of
compensation granted by this chapter may be set off against
disability pension benefits or payments but shall not be
set off against employees’ retirement pension benefits or
payments."
17a
Complaint
2. This act shall take effect immediately.
ExxpLanation—Matter enclosed in bold-faced brackets
[thus] in the above bill is not enacted and is intended to
be omitted in the law.
Signed by Governor Byrne on Thursday, July 14, 1977.
[Other Exhibits and Affidavits Omitted ]
18a
Petition for Removal
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
Civil Action No. 77-1644
To THE JUDGES OF THE Untrep States District Court
FOR THE District or New JERSEY:
The Petition of General Motors Corporation, for removal
of this action from the Superior Court of New Jersey,
Chancery Division, Union County, to the United States Dis-
trict Court for the District of New Jersey, respectfully
shows to this Honorable Court:
1. That your Petitioner, General Motors Corporation, is
the defendant in a civil action brought against it in the
Chancery Division of the Superior Court of the State of
New Jersey, Union County, entitled, “Henry Buezynski,
Alex Borusovic and other retirees similarly situated, Plain-
tiffs, vs. The General Motors Corporation, Defendant,” a
copy of the complaint (and annexed Affidavits) and Order
to Show Cause in which action are annexed hereto and made
parts hereof as Exhibits A and B, respectively, the same
constituting all the process, pleadings, and orders served
upon your Petitioner in said action.
2. That the aforesaid action was commenced by the
filing of said Complaint and Order to Show Cause on
August 5, 1977, said Complaint and Order to Show Cause
having been received by your Petitioner on August 9,
1977.
3. That your Petitioner was, at the time of the com-
mencement of the aforesaid action, and now is, a cor-
19a
Petition for Removal
poration duly organized and existing under and by vir-
tue of the laws of the State of Delaware, and an employer
and the administrator of an employee pension benefit plan
within the meaning of the Employee Retirement Income
Security Act of 1974, 29 U.S.C. §1001 et seq., and was
and is engaged in commerce within the meaning of Sec-
tion 301(a) of the Labor Management Relations Act, 1947,
29 U.S.C. §$185(a).
4. That the aforesaid action is a suit alleging a viola-
tion of the rights of the plaintiffs under a contract be-
tween an employee and a labor organization representing
employees in an industry affecting commerce and an action
by a participant or beneficiary of an employee pension
benefit plan to recover benefits due to him under the terms
of his plan, to enforce his rights under the terms of the
plan, or to clarify his rights to future benefits under the
terms of the plan, within the meaning of Section 502(a)
of the Employee Retirement Income Security Act of 1974,
29 U.S.C, §1132(a), and a civil action of which the United
States District Courts have original jurisdiction under and
pursuant to the provisions of Section 301(a) of the Labor
Management Relations Act, 1947, 29 U.S.C. §185(a), See-
tion 502(e) of the Employee Retirement Income Security
Act of 1974, 29 U.S.C. §1182(e)(1), and 28 U.S.C. §1331,
and a civil action which may be removed to this Court
pursuant to the provisions of 28 U.S.C. $1441.
5. That your Petitioner files and presents herewith a
bond, with good and sufficient surety, in the penal sum of
Five Hundred Dollars ($500.00), conditioned, as required
by 28 U.S.C. §1446(d), that Petitioner will pay all costs
and disbursements incurred by reason of these removal
proceedings should it be determined that this cause is
not removable or is improperly removed.
20a
Petition for Removal
Wuererorr, your Petitioner prays that this cause pro-
ceed in this Court as an action properly removed thereto.
Carpenter, Bennett & Morrissey
Attorneys for Defendant-Petitioner
General Motors Corporation
By Laurence Reicu
A Member of the Firm
Dated: August 9, 1977
2la
Answer
UNITED STATES DISTRICT COURT
District or New JERSEY
Civil Action No. 77-1644
Defendant, General Motors Corporation, by way of an-
swer to the Complaint of the plaintiff herein, says that:
1. It admits that it has places of business at 1300 Rari-
tan Road, Clark, New Jersey, 1016 West Edgar Road, and
Parkway Avenue, Trenton, New Jersey, and that plaintiffs
Henry Buezynski and Alex Borusovie were formerly hour-
ly employees of defendant; except as so admitted, it neither
admits nor denies the allegations of paragraph 1.
2. It admits the allegations of paragraph 2.
3. It has no knowledge or information sufficient to
form a belief as to the truth of the allegations of para-
graph 3, and, therefore, it neither admits nor denies the
same.
4. It admits that the International Union, United Auto-
mobile, Aerospace and Agricultural Implement Workers
of America is recognized by it as the collective bargain-
ing representative of all or substantially all of its hourly-
rated production and maintenance employees at its New
Departure—Hyatt Bearings Division plant at Clark, New
Jersey, its GM Assembly Division plant at Linden, New
Jersey, and its Fisher Body Division at Trenton, New
Jersey; except as so admitted, it neither admits nor de-
nies the allegations of paragraph 4.
5. It admits that plaintiff Alex Borusovie was employed
by it on or about July 16, 1951, and retired from its em-
22a
Answer
ploy effective April 1, 1973, and that plaintiff Henry
Buezynski was employed by it on October 10, 1938, and
retired from its employ effective January 1, 1972; except
as so admitted, it has no knowledge or information suf-
ficient to form a belief as to the truth of the allegations
of paragraph 5 and, therefore, it neither admits nor de-
nies the same.
6. It admits that on or about November 19, 1973, it
entered into a Supplemental Agreement Covering the Pen-
sion Plan which is Exhibit A to an Agreement between
it and the International Union, United Automobile, Aero-
space and Agricultural Implement Workers of America,
of the same date, which Supplemental Agreement, as
modified November 22, 1976, is presently in effect, and
that there were agreements between it and said Union
prior thereto covering the same subject matter; except
as so admitted, it neither admits nor denies the allegations
of paragraph 6 and refers to said Supplemental Agree-
ment for accuracy as to the contents thereof.
7. It neither admits nor denies the allegations of para-
graph 7, and refers to the aforesaid Supplemental Agree-
ment for accuracy as to the contents thereof.
8. It admits the allegations of paragraph 8 to the ex-
tent that the same refer to plaintiffs Henry Buezynski and
Alex Borusovie; except as so admitted, it neither admits
nor denies the allegations thereof.
9. It admits the allegations of paragraph 9 to the ex-
tent that the same refer to plaintiffs Henry Buezynski and
Alex Borusovie; except as so admitted, it neither admits
nor denies the allegations thereof.
23a
Answer
10. It admits the allegations of paragraph 10 to the ex-
tent that the same refer to plaintiffs Henry Buezynski and
Alex Borusovic, except that plaintiff Alex Borusovie be-
came eligible for benefits April 1, 1973; except as so ad-
mitted, it neither admits nor denies the allegations there-
of.
11. It admits that paragraph 11 sets forth the text of
Section 2 of Article IV of the aforesaid Supplemental
Agreement; except as so admitted, it neither admits nor
denies the allegations of said paragraph 11 and refers to
said Supplemental Agreement for accuracy as to the con-
tents thereof.
12. It admits the allegations of paragraph 12 to the ex-
tent that the same refer to plaintiffs Henry Buezynski and
Alex Borusovic; except as so admitted, it neither admits
nor denies the allegations thereof.
13. It admits the allegations of paragraph 13 to the ex-
tent that the same refer to plaintiffs Henry Buezynski and
Alex Borusovic; except as so admitted, it neither admits
nor denies the allegations thereof.
14. It admits the allegations of paragraph 14 to the ex-
tent that the same refer to plaintiffs Henry Buezynski and
Alex Borusovie; except as so admitted, it neither admits
nor denies the allegations thereof.
15. It admits that on July 14, 1977, Assembly Bill No.
1309 was signed by the Governor of the State of New Jer-
sey and thereby became Chapter 156 of the Public Laws of
the State of New Jersey of 1977 and that the copy of
Assembly Bill No. 1309 annexed to the Complaint sets forth
24a
Answer
in substance the contents thereof; except as so admitted,
it neither admits nor denies the allegations of paragraph
15 and refers to said Assembly Bill No. 1309 for accuracy
as to the contents thereof.
16.
17.
18.
19.
It denies the allegations of paragraph 16.
It denies the allegations of paragraph 17.
It denies the allegations of paragraph 18.
It denies the allegations of paragraph 19.
It denies the allegations of paragraph 20.
. It denies the allegations of paragraph 21.
It denies the allegations of paragraph 22.
. It denies the allegations of paragraph 23.
It denies the allegations of paragraph 24.
. It denies the allegations of paragraph 25.
First Separate Derense
The Complaint fails to state a claim upon which relief
may be granted by this Court.
Seconp Separate DEFENSE
Plaintiffs are barred and estopped by the action of their
duly authorized collective bargaining representative in en-
25a
Answer
tering into the Supplemental Agreement Covering the Pen-
sion Plan which is Exhibit A to the Agreement between
General Motors Corporation and the International Union,
United Automobile, Aerospace and Agricultural Imple-
-ment Workers of America, dated November 19, 1973, as
modified November 22, 1976, from contending herein that
defendant may not make deductions conforming to the
provisions of Section 2 of Article IV thereof.
Turrp SEPARATE DEFENSE
1. The Supplemental Agreement Covering Pension Plan
which is Exhibit A to the Agreement between General Mo-
tors Corporation and the International Union, United
Automobile Aerospace and Agricultural Implement
Workers of America, dated November 19, 1973, as modi-
fied November 22, 1976, is an employee benefit plan de-
scribed in Section 4(a) of the Employee Retirement In-
come Security Act of 1974 (hereinafter referred to as
“ERISA”), 29 U.S.C. §1003(a), and not exempt under Sec-
tion 4(b) of ERISA, 29 U.S.C. $1003(b).
2. By reason of the foregoing, the provisions of ERISA
supersede the provisions of Section 34:15-29 of the Re-
vised Statutes of the State of New Jersey, as amended by
Chapter 156 of the Public Laws of the State of New Jer-
sey of 1977.
3. By reason of the foregoing, plaintiffs are barred and
estopped from asserting that any actions taken by defend-
ant, General Motors Corporation, pursuant to the provi-
sions of Section 2 of Article IV of said Supplemental
Agreement, violates the provisions of Section 34:15-29 of
the Revised Statutes of the State of New Jersey, as
26a
Answer
amended by Chapter 156 of the Public Laws of the State
of New Jersey of 1977, or any other law of the State of
New Jersey.
FourtrH Separate DEFENSE
1. Defendant, General Motors Corporation, is an em-
ployer engaged in commerce within the meaning of the
provisions of the National Labor Relations Act of 1935, as
amended, 29 U.S.C. $151 e¢ seq.
2. By reason thereof, the provisions of said Act pre-
empt and supersede any state laws applicable to collective
bargaining agreements negotiated between employers and
the collective bargaining representatives of their em-
ployees, including specifically, but not limtied to, Section
34:15-29 of the Revised Statutes of the State of New Jer-
sey, as amended by Chapter 156 of the Public Laws of the
State of New Jersey of 1977.
3. By reason of the foregoing, plaintiffs are barred and
estopped from asserting that any actions taken by defend-
ant, General Motors Corporation, pursuant to the provi-
sions of Section 2 of Article IV of said Supplemental
Agreement, violates the provisions of Section 34:15-29 of
the Revised Statutes of the State of New Jersey, as
amended by Chapter 156 of the Public Laws of the State
of New Jersey of 1977, or any other law of the State of
New Jersey.
CarPenter, Bennetr & Morrissey
Attorneys for Defendant
By Laurence Reicx
A Member of the Firm
Dated: September 13, 1977
S
27a
Stipulation dated December 5, 1977
UNITED STATES DISTRICT COURT
District or New JERSEY
Civil Action No. 77-1644
Ir 1s, on this 5th day of December, 1977, Stipulated and
Agreed, by and between the undersigned counsel for plain-
tiffs and defendant in the above-entitled action, as follows:
1. Article TV, Section 2, of the General Motors Hourly-
Rate Employes Pension Plan (hereinafter referred to as
the “Pension Plan”) as set forth in Exhibit A-1 to the
Agreement between General Motors Corporation and the
International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America, dated No-
vember 19, 1973, as modified November 22, 1976, is the
same provision as that contained in Article IV, Section 2,
of the predecessor Pension Plans constituting Exhibit A-1
to the Agreements between said parties, dated November
19, 1973, and November 11, 1970, except that the 1970 ver-
sion thereof included the words “to an employee who re-
tires with benefits payable for months commencing on or
after April 1, 1971,” following the word “Plan.” True
copies of Article IV, Section 2, as it appeared in the 1970,
1973, and 1976 versions of the Pension Plan are annexed
hereto and made part hereof-as Exhibits A, B, and C,
respectively.
2. The application of Article TV, Section 2, of the Pen-
sion Plan to a particular retired employee is determined
by the effective date of his retirement. Any employee who
retired with benefits for months commencing on or after
April 1, 1971 would be subject to the provisions of Article
7%
28a
Stipulation, dated December 5, 1977
IV, Section 2, as constituted in the 1970, 1973, and 1976
versions of the Pension Plan.
Lester WEINER
Attorney for Plaintiffs
CaRPENTER, Bennett & Morrissey
Attorneys for Defendant
By: Laurence Reicu
A Member of the Firm
Exuisit A
Art. IV, 1(b)
therein, shall be considered as benefits for age or disability
under the Federal Social Security Act for the purposes of
the Plan.
(c) If an employe is eligible for a Federal Social Security
benefit for disability or an unreduced Federal Social Se-
curity benefit for age at the time of retirement or thereafter,
such employee shall provide the Corporation with evidence
of the effective date of entitlement to such”benefit.
Section 2. Deductions for Workmen’s Compensation
In determining the monthly benefits payable under this
Plan to an employe who retires with benefits payable for
months commencing on or after April 1, 197 1, a deduction
shall be made unless prohibited by law, equivalent to all or
any part of Workmen’s Compensation (including compro-
mise or redemption settlements) payable to such employe
29a
Stipulation, dated December 5, 1977
by reason of any law of the United States, or any political
subdivision thereof, which has been or shall be enacted,
provided that such deductions shall be to the extent that
such Workmen’s Compensation has been provided by pre-
miums, taxes or other payments paid by or at the expense
of the Corporation, except that no deduction shall be made
for the following:
(a) Workmen’s Compensation payments specifically allo-
cated for hospitalization or medical expense, fixed statutory
payments for the loss of any bodily member, or 100% loss
of use of any bodily member, or payments for loss of in-
dustrial vision.
(b) Compromise or redemption settlements payable
prior to the date monthly pension benefits first become
payable.
(c) Workmen’s Compensation payments paid under a
claim filed not later than two years after the breaking of
seniority.
Exuisit B
Art. IV, 1(¢)
retirement or thereafter, such employe shall provide the
Corporation with evidence of the effective date of entitle-
ment to such benefit.
Section 2. Deductions for Workmen’s Compensation
In determining the monthly benefits payable under this
Plan, a deduction shall be made unless prohibited by law,
30a
Stipulation, dated December 5, 1977
equivalent to all or any part of Workmen’s Compensation
(including compromise or redemption settlements) payable
to such employe by reason of any law of the United States,
or any political subdivision thereof, which has been or shall
be enacted, provided that such deductions shall be to the
extent that such Workmen’s Compensation has been pro-
vided by premiums, taxes or other payments paid by or at
the expense of the Corporation, except that no deduction
shall be made for the following:
(a) Workmen’s Compensation payments specifically allo-
cated for hospitalization or medical expense, fixed statutory
payments for the loss of any bodily member, or 100% loss
of use of any bodily member, or payments for loss of in-
dustrial vision.
(b) Compromise or redemption settlements payable prior
to the date monthly pension benefits first become payable.
(c) Workmen’s Compensation payments paid under a
claim filed not later than two years after the breaking of
seniority.
Article V
Financing
Section 1. Trust Fund
The Corporation shall execute a trust agreement with a
trustee or trustees selected by the Corporation to
sla
Stipulation, dated December 5, 1977
Exursir C
Art. IV, 1(¢)
retirement or thereafter, such employee shall provide the
Corporation with evidence of the effective date of entitle-
ment to such benefit.
Section 2. Deductions for Workmen’s Compensation
In determining the monthly benefits payable under this
Plan, a deduction shall be made unless prohibited by law,
equivalent to all or any part of Workmen’s Compensation
(including compromise or redemption settlements) payable
to such employe by reason of any law of the United States,
or any political subdivision thereof, which has been or shall
be enacted, provided that such deductions shall be to the
extent that such Workmen’s Compensation has been pro-
vided by premiums, taxes or other payments paid by or
at the expense of the Corporation, except that no deduction
shall be made for the following:
(a) Workmen’s Compensation payments specifically allo-
cated for hospitalization or medical expense, fixed statutory
payments for the loss of any bodily member, or 100% loss
of use of any bodily member, or payments for loss of indus-
trial vision,
(b) Compromise or redemption settlements payable prior
to the date monthly pension benefits first become payable.
(c) Workmen’s Compensation payments paid under a
claim filed not later than two years after the breaking of
seniority.
Article V
Financing
Section 1. Trust Fund
The Corporation shall execute a trust agreement with a
trustee or trustees by the Corporation to
Memorandum Opinion dated February 17, 1978
UNITED STATES DISTRICT COURT
District or New JrEersey
Civil No. 77-1644
I. Introduction
The instant action was originally commenced in the
Superior Court of the State of New Jersey, Chancery
Division, Union County. It was removed by the defendant
to this court pursuant to 28 U.S.C. 4 1441, after which
the plaintiffs moved for a temporary restraining order
on the basis of their complaint in the state action. At
that point, the Attorney General of the State of New Jer-
sey moved to intervene.? Subsequently, the court informed
*28 U.S.C. § 1441 provides in pertinent part that:
(a) Except as otherwise expressly provided by Act of
Congress, any civil action brought in a State court of which
the district courts of the United States have original juris-
diction, may be removed by the defendant or the defend-
ants to the district court of the United States for the dis-
trict and division embracing the place where such action
is pending.
(b) Any civil action of which the district courts have ori-
ginal jurisdiction founded on a claim or right arising under
the Constitution, treaties, or laws of the United States shall
be removable without regard to the citizenship or residence
of the parties. .
*The Attorney General of the State of New Jersey submitted
a memorandum of law to the court going to the merits of plain-
tiffs’ motion for a preliminary injunction, which has been fully
considered by this court. The court has also taken into account
the oral argument made before this court by a representative of
the Attorney General which also went to the merits of plaintiffs’
motion for a preliminary injunction,
33a
Memorandum Opinion dated February 17, 1978
the parties of its intention to treat plaintiffs’ motion as
one for a preliminary injunction, and the parties agreed
thereto. A hearing was held, at which time the parties
were given an opportunity to present evidence in support
of their respective positions. ‘Thereafter, plaintiffs moved
to have their action certified as a class action®. The par-
ties have supplemented the record of this case with a
stipulation of facts.
Thus, three motions are presently pending before this
court: (1) plaintiffs’ motion for a preliminary injunction;
(2) the Attorney General’s motion to intervene; and (3)
plaintiffs’ motion to have the instant action certified as
a class action. These motions wll be considered seriatim.
II. The Motion for a Preliminary Injunction
On a motion for a preliminary injunction the moving
party must demonstrate (1) a reasonable probability of
eventual success in the litigation and (2) that he will be
irreparably injured pendente lite if the motion is denied.
Two other factors which will be weighed, when relevant,
are (3) the possibility of harm to other interested persons
from the grant or denial of the injunction and (4) the
public interest. Obwrn v. Shapp, 521 F.2d 142, 147 (3d
Cir, 1975).
The two named plaintiffs in this action are retired em-
ployees of the defendant, General Motors Corporation.
After they retired, they began receiving monetary pay-
ments from the defendant pursuant to a pension plan
3 The plaintiff and defendant have signed a consent order certi-
fying the present action as a class action under Fed.R.Civ.P. 23
and have submitted the order to this court for its approval.
34a
Memorandum Opinion dated February 17, 1978
agreement* negotiated between the defendant and plain-
tiffs’ union, the International Union, United Automobile
Aerospace and Agricultural Implement Workers of Amer-
ica. The pension plan provides in relevant part as fol-
follows :°
In determining the monthly benefits payable under
this Plan to an employe who retires with benefits
payable for months commencing on or after April
1, 1971, a deduction shall be made wiless prohibited
by law, equivalent to all or any part of Workmen’s
Compensation (including compromise or redemption
settlements) payable to such employe by reason
*The parties have stipulated that “the application of . . . [a]
Pension Plan to a particular retired employee is determined by
the effective date of his retirement.” Stipulation, 2. Consequently,
this court concludes that plaintiffs’ pension rights were negotiated
while the plaintiffs were still employees of the defendant, and that
those rights were not renegotiated by the union on behalf of the
plaintiffs after the plaintiffs retired. From that, this court con-
cludes as a matter of law that the pension plan which governs the
rights and liabilities of the plaintiffs is the pension plan which
was in effect at the time the plaintiffs retired. Allied Chemical
& Alkali Workers v. Pittsburgh Glass Co., 404 U.S. 157, 181 n.20
(1971); Hurd v. Hutnik, 419 F.Supp. 630, 654 (D.N.J. 1976).
Plaintiff Buczynski retired on January 1, 1972, and plaintiff
Borusovic retired on April 1, 1973. At the time they retired, a
pension plan was in effect which had been negotiated and agreed
upon by the defendant and plaintiffs’ union on November 11, 1970,
The pension plan, rather than the two subsequent pension plans,
dated November 19, 1973 and November 22, 1976, is the plan
which governs the rights and liabilities of the plaintiffs.
® Pension Plan of November 11, 1970, Article 1, Section 2. See
n.4, supra,
35a
Memorandum Opinion dated February 17, 1978
of any law of the United States, or any political
subdivision thereof, which has been or shall be
enacted, provided that such deductions shall be to
the extent that such Workmen’s Compensation has
been provided by premiums, taxes or other payments
paid by or at the expense of the Corporation, ex-
cept that no deduction shall be made for the follow-
ing:
(a) Workmen’s Compensation payments specif-
ically allocated for hospitalization or medical ex-
pense, fixed statutory payments for the loss of any
bodily member, or 100% loss of use of any bodily
member, or payments for loss of industrial vision.
(b) Compromise or redemption settlements pay-
able prior to the date monthly pension benefits first
become payable.
(c) Workmen’s Compensation payments paid
under a claim filed not later than two years after
the breaking of seniority. (emphasis added)
Kach of the plaintiffs recovered a worker’s compensa-
tion award pursuant to New Jersey’s Worker’s Compensa-
tion Act, N.J.S.A. 34:15, and each of the plaintiffs’ pen-
sion benefits was reduced by the defendant in accordance
with the above-quoted provision of the pension plan.
The plaintiffs seek a preliminary injunction enjoining
the defendant from making the deductions in their retire-
ment pension benefits on the ground that a recently enacted
amendment to New Jersey’s Worker’s Compensation Act
36a
Memorandum Opinion dated February 17, 1978
outlaws such deductions®, That amendment provides as
follows’:
° The plaintiffs do not contend that the defendant is making
deductions contrary to the three exceptions of subdivisions (a),
(b) and (c) of Article IV, Section 2, of the Pension Plan. Ra-
ther, the plaintiffs argue that the deductions are being made in
violation of the “unless prohibited by law” language of Article IV ;
Section 2 of the Pension Plan. Plaintiffs’ theory is that the re-
cently enacted amendment to New Jersey’s Worker’s Compensa-
tion Act outlaws the deductions being made by the defendant, and
that defendant is therefore in breach of the pension plan agree-
ment, which provides that such deductions can be made “unless
prohibited by law.”
The plaintiffs’ action, then, is one for breach of a collective bar-
gaining agreement, pursuant to the Labor Management Relations
Act of 1947, 29 U.S.C. § 185(a), which provides that:
(a) Suits for violation of contracts between an employer
and a labor organization representing employees in an in-
dustry affecting commerce as defined in this chapter, or be-
tween any such labor organizations, may be brought in any
district court of the United States having jurisdiction of
the parties, without respect to the amount in controversy
or without regard to the citizenship of the parties.
Suits for breach of a collective bargaining agreement are governed
by federal law and “arise under” a federal statute, the National
Labor Relations Act, as amended. Avco Corp. v. Aero Lodge
No, 735, International Ass’n of Machinists and Aerospace Workers,
390 U.S. 557 (1968).
Since plaintiffs’ cause of action “arises under” a federal sta-
tute, and since this court would have had original jurisdiction over
that cause of action had plaintiffs chosen to institute suit in. this
court in the first instance, this court has removal jurisdiction un-
der 28 U.S.C. § 1441(a), (b). See n.1, supra.
* Assembly Bill No. 1309, enacted into law on July 14, 1977,
37a
Memorandum Opinion dated February 17, 1978
Be rr Enactep by the Senate and General Assembly
of the State of New Jersey:
1. R.S. 34:15-29 is amended to read as follows:
34:15-29. The right of compensation granted by
this chapter shall have the same preference against
the assets of the employer as is now or may here-
after be allowed by law for a claim for unpaid
wages for labor. Claims or payments due under
this chapter shall not be assignable, and shall be
exempt from all claims of creditors and from levy,
execution or attachment. The right of compensa-
tion granted by this chapter may be set off against
disability pension benefits or payments, but shall
not be set off against employees’ retirement pension
benefits or payments.
2. This act shall take effect immediately.
The defendant admits that the deductions it is making in
plaintiffs’ retirement pension payments are violative of the
above-quoted New Jersey statute. However, the defendant
contends that the statute is unconstitutional under the Su-
premacy Clause of the United States Constitution in that
it is pre-empted by two federal statutes, the [employee Re-
tirement Income Security Act of 1974, 29 U.S.C. § 1001
et seq. (ERISA), and the National Labor Relations Act of
1935, as amended, 29 U.S.C. § 151 et seg. (NLRA).
If the New Jersey statute is pre-empted by either of
those federal statutes, the defendant is acting properly
pursuant to the terms of the collective bargaining agree-
ment with plaintiffs’ union, and plaintiffs’ motion for a
preliminary injunction must be denied. If, on the other
hand, the New Jersey statute is not pre-empted by either
38a
Memorandum Opinion dated February 17, 1978
of those federal statutes, the defendant is in breach of its
collective bargaining agreement with plaintiffs’ union,® and
plaintiffs would be entitled to the injunctive relief they
seek, provided that the other three factors to be con-
sidered on a motion for a preliminary injunction weigh in
favor of the plaintiff. Oburn v. Shapp, supra.
This court, however, need not decide at this time whether
the New Jersey statute is pre-empted by ERISA or the
NLRA, since it is clear that plaintiffs’ motion for a pre-
liminary injunction must be denied on the ground that they
have failed to demonstrate that they will be irreparably
injured pendente lite if their motion is not granted, Should
it eventually be determined that the plaintiffs are entitled
to a permanent injunction against the deductions presently
being made in their retirement pension benefits, they can
be reimbursed for the money lost during the period of the
wrongful withholding. See generally, Leubsdorf, “The
Standard for Preliminary Injunctions,” 91 Harv.L.Rev. 525
(1978).
Accordingly, the plaintiffs’ motion for a preliminary in-
junction is denied.
III, The Attorney General’s Motion to Intervene
The Attorney General of the State of New Jersey has
moved to intervene to defend the constitutionality of the
recent amendment to N.J.S.A. 34:15-29, which the defend-
ant contends is pre-empted by federal law under the Su-
premacy Clause of the United States Constitution.
8 See n.6, supra.
39a
Memorandum Opinion dated February 17, 1978
Rule 24(b) of the Federal Rules of Civil Procedure pro-
vides as follows:
(b) Permissive Intervention, ... When a party to
an action relies for ground of claim or defense upon
any statute or executive order administered by a fed-
eral or state governmental officer or agency or upon
any regulation, order, requirement or agreement is-
sued or made pursuant to the statute or executive
order, the officer or agency upon timely application
may be permitted to intervene in the action. In ex-
ercising its discretion the court shall consider
whether the intervention will unduly delay or preju-
dice the adjudication of the rights of the original
parties. :
The first sentence of the above quotation was added in
1948 to codify the case of Securities Exchange Commission
v. United States Realty & Improvement Co., 310 U.S. 434
(1940), in which the Supreme Court sanctioned official in-
tervention in behalf of the public interest, and to avoid
“exelusionary constructions” of Rule 24(b) which some
lower courts continued to put on that rule after Securities
Exchange Commission. TA Wright & Miller, Federal Prac-
tice and Procedure, § 1912, at 547-48.
It is clear that the plaintiffs’ claim is grounded upon a
state statute, N.J.S.A. 34:15-29, as amended. It is equally
clear that the Attorney General of the State of New Jersey
has an interest in defending that statute from a constitu-
tional attack made by the defendant. Since intervention
by the Attorney General will not “unduly delay or preju-
dice the adjudication of the rights of the original parties,”
Fed.R.Civ.P. 24(b), the motion of the Attorney General
to intervene is granted. [See Miami Health Studios, Inc.
40a
Memorandum Opinion dated February 17, 1978
v. City of Miami Beach, 491 F.2d 98 (5th Cir. 1974) (inter-
vention of a state attorney general).] See Fed.R.Civ.P. 24
(a) ; 28 U.S.C. §2403(b).
IV. The Motion for Class Action Certification
The parties have submitted a consent order to this court
for its approval. The consent order provides as follows:
OrvereD that this action shall be and is certified as
a class action under Rules 23(b)(1) and/or Rule
23(b)(2) of the Federal Rules of Civil Procedure.
It is further Orperep that the class shall be and is
certified as those persons who were employed in New
Jersey by General Motors Corporation who are par-
ticipants in the General Motors Corporation Hourly
Rate Employees’ Pension Plan who have been, since
July 14, 1977, or may hereafter be subject to deduc-
tions under Section 2 of Article IV of such Pension
Plan from pension benefits payable to them other
than disability pension benefits.
It is further Orverep that the two named plaintiffs,
Henry Buezynski and Alex Borusovie, are hereby
certified as the representatives of the class.
The court agrees with the parties that the present action
should properly be maintained as a class action under Rule
23 of the Federal Rules of Civil Procedure. However, be-
fore the court decides which subdivision of Rule 23 is ap-
plicable, and the appropriate class to be certified, I will
wish to have the benefit of counsels’ written submissions
and oral argument. Please address yourselves to what sub-
divisions of Rule 23 are applicable and why, the mechanics
4la
Memorandum Opinion dated February 17, 1978
of notice, and the proper class. With regard to the sub-
ject of the proper class, I note that the parties have stipu-
lated that Article ITV, Section 2 of the General Motors
Hourly-Rate Employes Pension Plan dated November 11,
1970 is identical to Article ITV, Section 2 of the Pension
Plan dated November 19, 1973 and of the Pension Plan
dated November 22, 1976, except that the November 11,
1970 version contains the words “to an employe who retires
with benefits payable for months commencing on or after
April 1, 1971,” following the word “Plan.” In other words,
all three Pension Plans are the same in all material re-
spects. This raises the question of whether the class should
inelude all retired employees of General Motors who are
subject to either the 1970 Pension Plan, the 1973 Pension
Plan or the 1976 Pension Plan, and who were employees of
General Motors in New Jersey at the time they retired.
You may be able to agree upon a joint submission. In
any event, I will want briefs exchanged by February 27,
1978. Oral argument is set down for March 6, 1978 at
9 a.m.
You should also confer and advise the court of whether
additional testimony on either side will be required. Among
other things, you may wish to consider whether testimony
should be offered concerning the history of negotiations
relating to the “deduction” language, including the “unless
prohibited by law” phrase.
Freperick B. Lacey
United States District Judge
Dated: February 17, 1978
49°a
Pretrial Order dated Apri] 13, 1978
UNITED STATES DISTRICT COURT
District or New JERSEY
Civil Action No. 77-1644
April 13, 1978
Newark, New Jersey
Before the Honorable William J. Hunt
United States Magistrate
Appearances:
Mare C. Gettis, Esquire
Lester Weiner & Associates
For Plaintiffs.
Laurence Reich, Esquire
Carpenter, Bennett & Morrissey
For Defendant
1, Nature oF THE Actions This is an action for injune-
tive relief against the implementation by defendant of the
provisions of Article IV, Section 2, of the General Motors
Corporation Hourly-Rate Employees Pension Plan so as
to deduct certain New Jersey Workers Compensation Act
benefits payable to plaintiffs and other members of the
class represented by plaintiffs from retirement benefits
payable to such person under such Pension Plan. This is
an action removed pursuant to 28 U.S.C. §1441 of which
this Court has jurisdiction pursuant to 28 U.S.C. $1332,
by reason of the provisions of Section 301(a), and Section
502(e)(1) of the Employee Retirement Income Security
Act of 1974, 29 U.S.C. §1132(e) (1).
43a
Pretrial Order dated April 13, 1978
2. Exursrrs, ApMiss1ons AND Stipunations: Not later than
May 8, 1978, counsel will meet and confer and accomplish
the following:
(a) All exhibits are to be premarked and each side is to
prepare his or its own exhibit list in the usual form
used in this court.
(b) A complete set of exhibits is to be exchanged and
admissibility agreed upon. Where agreement can-
not be reached, the side offering the document should
set forth in letter form the exhibit being tendered,
why it is admissible, and the objections thereto.
This is to be presented to the Honorable Frederick
B. Lacey at the time of submission of trial mem-
oranda,
(c) Each side is to come to the aforesaid meeting with
his or its proposals for stipulation he or it seeks and
at the conclusion of the meeting a stipulation of
facts is to be prepared and signed by all counsel
and filed with the Clerk of the United States Dis-
trict Court not later than May 10, 1978.
8. Facruay anp Leaat Conventions or Puaintirrs: See
attached.
4. Facrvan anp Lecat Contentions oF DerenpANt: See
attached.
4A. Facruat anp Lecat ConTENTIONS OF THE INTERVENOR,
Srate or New Jersey: None submitted.
5. Cuarms as ro Damaces: Plaintiffs’ request injunctive re-
lief, enjoining and restraining the defendant from imple-
menting Article 4, Section 2 of the Pension Plan. Each
44a
Pretrial Order dated April 13, 1978
individual plaintiff should be entitled to damages in the
amount of the deductions which have been made from his
pension. Plaintiffs also seek costs from defendant in this
action.
6. AMENDMENTS TO THE PLEADINGS: On February 21, 1978,
the Honorable Frederick B. Lacey ordered that the State
of New Jersey may intervene as a defendant herein. On
March 26, 1978, the court granted the plaintiffs’ motion to
certify this action as a class action.
7. Lear Issues: Validity and enforceability of N.J.S.A.
34:15-29, as amended by Chapter 156 of Public Laws of
the State of New Jersey of 1977 in view of preemption
by the provisions of Section 514(a) of the IXmployee Re-
tirement Income Security Act of 1974, 29 U.S.C, §1144(a) ;
propriety of injunctive relief, damages.
8. Laat Issuers ABANDONED: None.
9. AppiTionaL Discovery: None.
10. Briers: Counsel are to submit not later than May 10,
1978, comprehensive trial memoranda setting forth in de-
tail the names of the witnesses each intends to call, the
background of each witness, and a detailed recital of the
testimony each witness will give. Each memorandum will
also contain in its factual portion an analysis of all the
documentation which will be submitted. Each memorandum
will deal comprehensively as well with applicable law, Pre-
liminaray proposed findings of fact and conclusions of law
will accompany the submission of trial memoranda.
11. Mortons: The parties may file cross-motions for sum-
mary judgment.
45a
Pretrial Order dated April 13, 1978
12. Opentna anp Criosina: Usual order.
13. Expert Wirnesses: None.
14. Estrmarep Leneru or Tria: Counsel have noted in
their respective pretrial memoranda that this action can be
determined on the pleadings, affidavits, and the stipulation
before the court as well as on the briefs and oral argu-
ment.
15. Trirat Counse.:
For the Plaintiffs: Lester Weiner & Associates
For the Defendant General Motors: Laurence Reich,
sq.
For the Defendant State of New Jersey: Michael 8.
Bokar, Esq.
16. Triat Dare: This matter has been listed for trial be-
fore the Honorable Frederick B. Lacey on May 15, 1978.
WituaM J. Hunt
United States Magistrate
FactruaL ConrTeNTIONS OF PLAINTIFFS
This is a class action brought by plaintiffs against Gen-
eral Motors Corporation. The class consists of those per-
sons who are retired members of the General Motors Cor-
poration Hourly Rate Retirees Pension Plan who retired
under the provisions of said Pension Plan as set forth in
Exhibit A-1 to the Agreement between General Motors
Corporation and the International Union, United Automo-
46a
Pretrial Order dated April 13, 1978
bile, Aerospace and Agricultural Implement Worker’s of
America, dated November 11, 1970, November 19, 1973 or
November 22, 1976, who retired with benefits payable for
months commencing on or after April 1, 1971 and who at
the time of their retirement, were employed by General
Motors Corporation in New Jersey. The defendant has
deducted and continues to deduct from plaintiffs’ retire-
ment pensions (General Motors Hourly Rate Retirees Pen-
sion Plan Exhibit A to agreement between General Motors
Corporation and UAW) in the amounts of judgments which
these plaintiffs have collected from defendant for occupa-
tional injuries, in the New Jersey Department of Labor and
Industry, Division of Worker’s Compensation.
Article IV, Section 2 of the Pension Plan allows such
deductions, “unless prohibited by Law.” Chapter 156 of
the New Jersey Laws of 1977 prohibits these deductions.
The defendant has continued to make said deductions, al-
leging that the New Jersey statute is preempted under
section 514(a) of E.R.I.S.A. and under section 301 of the
N.L.R.A.
Plaintiffs contends that this action is not preempted by
section 514(a) of E.R.LS.A., but rather fits within the
exception of section 514(b) of E.R.LS.A., in that plaintiffs
have causes of action which arose prior to J anuary 1, 1975
and defendant committed certain acts and omissions be-
fore January 1, 1975. The defendant’s acts and omissions
consisted of operating their three New Jersey plants
where the plaintiffs were exposed to loud noise and de-
leterious substances, resulting in compensable disabilities,
Plaintiffs collected for these disabilities, but defendant sub-
sequently deducted these amounts from plaintiff's pen-
sions. The plaintiffs are before this Court in an attempt
47a
Pretrial Order dated April 13, 1978
to re-coup these same monies and to enjoin defendant’s
conduct.
Plaintiffs contend that the State statute is not preempted
under the N.L.R.A. The Statute is not contrary to the
agreement between the parties but rather is incorporated
therein under the “unless prohibited by law” clause. The
statute was enacted for the purpose of regulating Work-
er’s Compensation, an area of local interest and responsi-
bility, where the State still has the power to act and regu-
late. The law is a legislative attempt to guarantee work-
ers their rights under the Worker’s Compensation laws.
Plaintiffs also contend that preemption of the state stat-
ute would deprive these plaintiffs of any legal remedy for
injuries arising in the course of employment. Worker’s
Compensation laws abrogate any common law right. Pre-
emption of the statute would effectively deny plaintiffs
their rights under Worker’s Compensation, since any pay-
ments thereunder could be offset against the employees
pensions.
Since Chapter 156 of the laws of 1977 is a proper exer-
cise of State power and is not preempted under Federal
Law, the defendant has been acting in violation of the law.
Injunctive relief is the proper remedy for the plaintiffs
in this action. For most of these plaintiffs, the monthly
pension is the sole source of income, with the exception of
Social Security. Deductions from pension benefits is caus-
ing these plaintiffs irreparable harm for which an injune-
tion is the appropriate remedy.
48a
Pretrial Order dated April 13, 1978
FactuaL AND Lecau ConTenTIONS
The applicable facts herein are not disputed. At all
times since April 1, 1971, to and including the date here-
of, the General Motors Corporation Hourly-Rate Em-
ployes Pension Plan (hereinafter referred to as the “Pen-
sion Plan”) adopted by defendant and the International
Union, United Automobile, Aerospace and Agricultural
Implement Workers of America, applicable to plaintiffs
and other members of the class represented by plaintiffs,
as provided, in Article IV, Section 2 thereof, for the de-
duction from benefits otherwise payable under the Pen-
sion Plan of certain Workmen’s Compensation payments
payable to a retired employee thereunder. Such deduc-
tions have been made by defendant in aceordance with
such provision of the Pension Plan, both prior and subse-
quent to July 14, 1977, the date of enactment and effective
date of Chapter 156 of the Public Laws of the State of
New Jersey of 1977, which amended the New Jersey Work-
ers Compensation Act, N.J.S.A. 34:15-29, to provide that:
“The right of compensation granted by this chap-
ter may be set off against disability pension benefits
or payments but shall not be set off against em-
ployees’ retirement pension benefits or payments.”
Plaintiffs contend that defendant is prohibited by
N.J.S.A. 34:15-29, as amended, from making deductions
from retirement pension benefits otherwise payable to
plaintiffs and other members of the class represented by
plaintiffs after July 14, 1977 pursuant to Section 2 of
Article IV of the Pension Plan. Defendant contends that
insofar as it purports to apply to the Pension Plan, which
is an employee benefit plan deseribed in Section 4(a) of
the Employee Retirement Income Security Act of 1974,
49a
Pretrial Order dated April 13, 1978
P.L. 93-406 (hereinafter referred to as “ERISA”), 29
U.S.C. §1003(a), and not exempt under Section 4(b) of
ERISA, 29 U.S.C. §1003(b), N.J.S.A. 34:15-29, as amended
by Chapter 156 of the Laws of 1977, is superseded and
preempted by reason of the provisions of Section 514(a)
of ERISA, 29 U.S.C. §1144(a). Therefore, N.J.S.A. 34:15-
29 may not be applied so as to preclude deductions by
defendant from retirement pensions of plaintiffs and other
members of the class represented by plaintiffs in accord-
ance with the provisions of Section 2 of Article IV of
the Pension Plan.
50a
Stipulation, dated May 9, 1978
UNITED STATES DISTRICT COURT
District or New Jrersey
Civil Action No. 77-1644
Ir 1s, on this 9th day of May, 1978, Srrpunarep AND
Acreep, by and between the undersigned counsel for plain-
tiffs and defendant in the above-entitled action, as fol-
lows:
1. The Stipulation of the parties dated December 5, 1977
and filed herein December 7, 1977, be and it hereby is in-
corporated herein by reference, and, the Pension Plans of
which Exhibits A, B, and C thereto are part are hereby
designated Joint Exhibits A, B, and C in this action.
2. Defendant is an employer engaged in commerce or
in an industry or activity affecting commerce.
3. The plaintiffs herein are all persons formerly em-
ployed by defendant in New Jersey who, on various dates
on or after April 1, 1971, retired from the employ of
defendant under the provisions of the General Motors
Hourly-Rate Employes Pension Plan (hereinafter and in
the aforesaid Stipulation dated December 5, 1977 referred
to as the “Pension Plan”). All of the named plaintiffs
have received awards of benefits under the New Jersey
Workers’ Compensation Act. All of the named plaintiffs
have had deductions made by defendant from the pension
benefits otherwise payable to them under the Pension Plan
since July 14, 1977 by reason of the receipt of such awards
and in accordance with the provisions of Section 2 of
Article IV of the Pension Plan.
dla
Stipulation, dated May 9, 1978
4, It is stipulated and agreed, without any stipulation
or agreement as to the relevance or significance thereof,
that Joint Exhibits D and E are true copies of Section
2 of Article IV of the 1958 and 1961 Pension Plans, re-
spectively.
LesTteR WEINER
Attorney for Plaintiffs
CarpeNTER, Bennetr & Morrissey
Attorneys for Defendant
By Laurence Reicu
A Member of the Firm
52a
Order Certifying Class Action, dated August 9, 1978
UNITED STATES DISTRICT COURT
For THE District or New JERSEY
(Hon. Frederick B. Lacey)
Civil Action No. 77-1644
— >>
Henry Buczynsx1, AtEx Borusovic anp Oruer RETIREES
Srurak.y SrrvatTep,
Plaintiffs,
—vVs—
THE Generat Morors Corporation,
Defendant.
This matter having been opened to the Court by Lester
Weiner, Esq., attorney for plaintiffs, on the application
of plaintiffs for an order certifying the above-entitled ac-
tion as a class action, and the Court noting the consent
of the parties hereto to the entry of this Order, and good
cause appearing,
Ir 1s, on this 9th day of August, 1978,
OnpeEReD, that this action be and it hereby is certified as
a class action pursuant to Rule 23(b)(2) of the Federal
Rules of Civil Procedure; and it is
53a
Order Certifying Class Action, dated August 9, 1978
FurtHer OrpereD, that the class be and it hereby is
certified as consisting of those persons who are retired
members of the General Motors Corporation Hourly-Rate
Employes Pension Plan who retired under the provisions
of said Pension Plan as set forth in Exhibit A-1 to the
Agreement between General Motors Corporation and the
International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America, datad No-
vember 11, 1970, November 19, 1973, or November 22, 1976,
who retired with benefits payable for months commencing
on or after April 1, 1971, and who, at the time of their
retirement, were employed by General Motors Corporation
in New Jersey; and it is
FurtHer Orperep, that the above-entitled action be and
it hereby is set down for Pretrial Conference before Hon-
orable William J. Hunt at 9:00 A.M. on April 10, 1978, and
for trial before this Court on May 1, 1978.
Freperick B. Lacey, U.S.D.J.
We hereby consent to the making and entry of the fore-
going Order.
Lester WEINER
Attorney for Plaintiffs
By: Marc C, Gerttis
CARPENTER, Bennett & Morrissey
Attorneys for Defendant
By: Laurence Reicu
A Member of the Firm
Joun J. DeGnNan
Attorney General of the State of
New Jersey
Attorney for Intervenor
By: Micuarei 8. Boxar
Deputy Attorney General
54a
Memorandum Opinion, dated August 24, 1978
UNITED STATES DISTRICT COURT
District or New Jersey
Civil No. 77-1644
»
_
Henry Buozynski, Avex Borusovic, and Orner RETIREES
Smuarvy Srrvatep,
Plaintiffs,
V.
Genera Motors Corporation,
Defendant.
>
Lacey, D.J.
Plaintiffs in this class action’ are retired employees of
defendant General Motors Corporation who had been re-
‘The certified class consists “of those persons who are retired
members of the General Motors Corporation Hourly-Rate Employees
Pension Plan who retired under the provisions of said Pension
Plan as set forth in Exhibit A-1 to the Agreement between General
Motors Corporation and the International Union, United Automo-
bile, Aerospace and Agricultural Implement Workers of America,
dated November 11, 1970, November 19, 1973, or November 22,
1976, who retired with benefits payable for months commencing on
or after April 1, 1971, and who, at the time of their retirement,
were employed by General Motors Corporation in New Jersey.”
See order filed August 9, 1978.
55a
Memorandum Opinion dated August 24, 1978
ceiving retirement pension benefits from the defendant
pursuant to a pension plan negotiated between the defend-
ant and plaintiffs’ union. After the plaintiffs received
worker’s compensation payments pursuant to New Jersey’s
Worker’s Compensation Act,’ the defendants reduced the
plaintiffs’ benefits under the plan by an amount equal to
those payments, pursuant to Article IV, Section 2, of the
p.an.
The plaintiffs contend that the defendant cannot law-
fully make such deductions in their pension benefits. They
seek reimbursement of all pension benefits thus withheld
and a permanent injunction against all such future deduc-
tions which are predicated upon the receipt of worker’s
compensation payments.
For the reasons set forth below, the plaintiffs are en-
titled to the relief they seek.
Dealing first with the issue of subject matter jurisdiction
in this removed matter, 28 U.S.C. § 1441, I conclude I have
such jurisdiction to decide the issues. Even were there
any question about the propriety of removal by the de-
fendant, neither side has questioned it. Since it is. clear
I would have had original jurisdiction over the claims pre-
sented here, a valid judgment can be entered with respect
to them.’ Grubbs v. General Electric Credit Corp., 405
U.S. 699, 702 (1972).
2N.J.S.A. 34:15 et seq.
° Thus, tiis court would have had original subject matter juris-
diction over the instant action under the Labor Management Rela-
tions Act of 1947, 29 U.S.C. § 185(a) and under the Employee
Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.
§§ 1132(f), 1132(a) (3).
Moreover, this court has removal jurisdiction over plaintiffs’ state
court action under 28 U.S.C. § 1441(a)(b), predicated upon 29
U.S.C. § 185(a). ,
56a
Memorandum Opinion, dated August 24, 1978
The complaint as filed alleges that the plaintiffs are re-
tired employees of the defendant, that they have been re-
ceiving pension benefits under a Pension Plan Agreement
between their union and the defendant, that they have ob-
tained judgments entitling them to worker’s compensation
benefits, and that the defendant threatens to reduce their
pension benefits because they have recovered worker’s com-
pensation benefits. The complaint sets forth Article IV,
Section 2 of the Pension Plan Agreement:
In determining the monthly benefits payable under
this Plan, a deduction shall be made unless prohibited
by law, equivalent to all or any part of Workmen’s
Compensation (including compromise or redemp-
tion settlements) payable to such employee by rea-
son of any law of the United States, or any political
subdivision thereof, which has been or shall be en-
acted, provided that such deductions shall be to the
extent that such Workmen’s Compensation has been
provided by premiums, taxes or other payments paid
by or at the expense of the Corporation, except that
no deduction shall be made for the following:
(a) Workmen’s Compensation payments specifi-
cally allocated for hospitalization or medical expense,
fixed statutory payments for the loss of any bodily
member, or 100% loss of use of any bodily member,
or payments for loss of industrial vision.
(b) Compromise or redemption settlements pay-
able prior to the date monthly pension benefits first
become payable.
(c) Workmen’s Compensation payments paid un-
der a claim filed not later than two years after the
breaking of seniority. (emphasis added)
“ 57a
Memorandum Opinion, dated August 24, 1978
The complaint then alleges that the deductions threat-
ened by the defendant are now in violation of a recent
amendment to New Jersey’s Worker’s Compensation Act*
which provides that:° “The right of compensation granted
by this chapter may bet set off against disability pension
benefits or payments but shall not be set off against em-
ployees’ retirement pension benefits or payments.” The
complaint concludes with a prayer for a permanent injunc-
tion against the threatened deductions.
Plaintiffs’ action, therefore, is predicated upon an alleged
breach or violation of the “unless prohibited by law” clause
of the Pension Plan Agreement. Thus they argue that,
since Article IV, Section 2 of the Pension Plan Agreement
bars the defendant from offsetting pension benefits against
worker’s compensation benefits where “prohibited by law,”
and the New Jersey Worker’s Compensation Act embodies
such a prohibition, the continued deductions violate the ex-
press provisions of the Pension Plan Agreement.
The complaint did not advance a claim founded upon a
theory that the offset provision is unlawful under ERISA.
That claim was first raised indirectly when plaintiffs’ coun-
sel brought to this court’s attention the recently decided
* There is no allegation that defendant threatens to make the de-
ductions in plaintiffs’ pension benefits contrary to the three excep-
tions to the offset provision contained in subdivisions (a), (b),
or (c) of Article IV, Section 2 of the Pension Plan Agreement.
®L. 1977, c. 156 § 1, eff. July 14, 1977, amending N.J.S.A.
34:15-29,
* Subsequent to the filing of the complaint, the defendant has been
making the deductions in plaintiffs’ pension benefits and has made
it clear that it will continue to do so.
58a
Memorandum Opinion, dated August 24, 1978
Utility Workers Union of America v. Consumers Power
Co., No. 7-71747 (E.D.Mich., filed June 13, 1978). The
defendant’s response was not a claim of prejudice by rea-
son of a belated addition to plaintiffs’ bag of legal theories
of recovery.’ Instead, the defendant responded by refer-
ring the court to another case’ in the same court, the East-
ern District of Michigan, which was decided contrary to
the Utility Workers case.
The defendant, as I have noted, admits all of the ma-
terial allegations necessary to a decision on the question
of whether ERISA itself bars the offset involved, includ-
ing that the pension plan falls within the coverage of
RISA. See 29 U.S.C. § 1003.
Thus, I perceive no prejudice to the defendant in ad-
dressing the issue of the lawfulness of the offsetting in
question under 29 U.S.C. § 1053 of ERISA. See 5 Wright
& Miller, Federal Practice and Procedure, Civil, 4 1219.
* The defendant contended only that the ERISA claim was “en-
tirely outside the scope of the pleadings and proof now before the
court” and that the Utility Workers case was therefore irrelevant.
Letter to Court, dated July 26, 1978.
* Bordine v. Evans Product Co., No. 7-71652 (E.D. Mich., filed
April 6, 1978). |
*Once a federal court has removal jurisdiction, a party may
amend his complaint to assert a federal claim that could not have
been presented in the state court. Freeman v. Bee Machine Co.,
319 U.S. 448 (1943). This court has removal jurisdiction over
plaintiffs’ breach of contract claim which was asserted in state court.
See n.3 supra. Thus, under Freeman, the plaintiffs could have
amended their complaint here to assert the unlawfulness of the offset
provision under ERISA, 29 U.S.C. § 1053, a claim over which
this court has original subject matter jurisdiction under 29 U.S.C.
§ 1132(f).
59a
Memorandum Opinion, dated August 24, 1978
The Offset Provision of the Pension Plan Is
Unlawful Under ERISA
The minimum vesting standards provision of ERISA,
29 U.S.C. § 1053, provides in pertinent part that:
(a) Each pension plan shall provide that an em-
ployee’s right to his normal retirement benefits is
nonforfeitable upon the attainment of normal retire-
ment age and in addition shall satisfy the require-
ments of paragraphs (1) and (2) of this subsection.
(1) A plan satisfies the requirements of this
paragraph if an employee’s rights in his accrued
benefit derived from his own contributions are non-
forfeitable.
(2) A plan satisfies the requirements of this
paragraph if it satisfies the requirements of sub-
paragraph (A), (B), or (C).
(A) A plan satisfies the requirements of this
subparagraph if an employee who has at least
10 years of service has a nonforfeitable right to
100 percent of his accrued benefit derived from
employer contributions.”
1° Subparagraph (B) provides for an alternate pension plan under
which an employee can obtain a nonforfeitable right to an increas-
ingly higher percentage of his accrued benefit derived from employer
contributions depending upon his years of service. For example,
an employee who has served at least 5 years would have a non-
forfeitable right to 25% of his accrued benefit, while an employee
who had served at least 15 years would have a nonforfeitable right
to 100% of his accrued benefit.
(Footnote continued on following page)
60a
Memorandum Opinion, dated August 24, 1978
In Utility Workers, it was held that a provision in a pen-
sion plan falling within the coverage of ERISA which pro-
vides that retirement pension benefits are to be offset
against worker’s compensation benefits is unlawful under
ERISA, 29 U.S.C. § 1053. This court is in full agreement
with the well-reasoned opinion in that case.”
Under ERISA, a pension plan must provide that an
employee’s rights in his accrued benefits derived from his
own contributions is nonforfeitable.’* The pension plan
must also provide that an employee has a nonforfeitable
right to a certain percentage of his accrued benefit derived
(Footnote continued from preceding page’
Subparagraph (C) provides for yet a third alternate pension
plan under which an employee can obtain a nonforfeitable right to
an increasingly higher percentage of his accrued benefit derived
from employer contributions depending upon his years of service
and his age. For example, where an employee has served at least
5 years and the sum of his age and service is at least 45, he has
a nonforfeitable right to 50% of his accrued benefit; but where
an employee has at least 10 years of service and the sum of his
age and service is at least 55, he has a nonforfeitable right to 100%
of his accrued benefit.
It is immaterial whether plaintiffs’ pension plan is one predi-
cated upon subparagraph (A), (B), or (C) of 29 U.S.C. § 1053
(a) (2).
1! This court rejects the contrary holding in the case of Bordine,
supra note 9, at 4.
1% ERISA does not provide for any exceptions to the nonforfeit-
ability requirement in the case of accrued benefits derived from
employee contributions.
6la
Memorandum Opinion, dated August 24, 1978
from employer contributions,” the particular percentage
depending upon (1) his years of service or (2) his years
of service and his age.
When a pension plan, such as the one under considera-
tion here, makes the employee’s right to a certain per-
centage of his accrued benefit derived from employer con-
tributions conditional upon a factor other than years of
service or years of service and age, the plan is unlawful,
unless the factor is one of those set forth in 29 U.S.C.
§ 1053(a) (3).
The pension plan herein makes the plaintiffs’ rights to
their accrued benefits conditional upon their not obtaining
worker’s compensation benefits. Such a factor is not one
of those set forth in 29 U.S.C. § 1053(a)(3). As a result,
the pension plan is unlawful.”
8 The court will assume that plaintiffs’ pension plan is fully
funded by the defendant.
#29 U.S.C. § 1053(a) (3) legalizes pension plans which provide
that an employee’s right to an accrued benefit is forfeitable if he
dies, if he is employed in certain types of industries, if certain
amendments are made retroactive, or if he withdraws any amount
attributable to the benefit derived from mandatory contributions
made by him.
* In addition to Utility Workers, see also Riley v. MEBA Pen-
sion Trust, 570 F.2d 406, 409 (2d Cir. 1977).
62a
Memorandum Opinion, dated August 24, 1978
The Offset Provision of the Pension Plan
Is Void Under the “Unless Prohibited By
Law” Clause of the Pension Plan
As noted previously, the Pension Plan Agreement be-
tween the defendant and the plaintiffs’ union provides
that retirement pension benefits may be offset against
worker’s compensation benefits “unless prohibited by law.”
At the final hearing in this case on May 15, 1978, the
testimony established that after a number of years’ ab-
sence from the General Motors’ pension plan, the offset
provision reappeared in the 1970 pension plan.’® The
testimony also established that it was the defendant which
proposed the reinsertion of the offset provision into the
pension plan because there had been a “deluge” of work-
er’s compensation cases from which the defendant sought
“relief.”"7_ The “unless prohibited by law” clause was
also proposed by the defendant. The “unless prohibited
by law” clause “meant just as the language indicated,
pure and simple, that if there were states then having
state laws which prohibited an offset and if in the future
there would be state laws that prohibited offset that would
be applicable and it was just that pure and simple."
‘© The offset provision was continued in the 1973 and 1976 pen-
sion plans. All three plans contain the “unless prohibited by law”
clause. Stipulation of December 7, 1977.
™ Testimony of Hubert Clodfelder, Union Negotiator, Hearing
of May 15, 1978, Tr. at 8. The pension plan being negotiated was
to apply to 130 General Motors’ plants located in at least thirty
States.
18 Jd. at 10.
63a
Memorandum Opinion, dated August 24, 1978
The defendant admits that the deductions it is making
in plaintiffs’ retirement pension benefits are prohibited
by the recent amendment to New Jersey’s Worker’s Com-
pensation Act. The defendant contends, however, that
that amendment is unconstitutional under the Supremacy
Clause of the United States Constitution, in that it has
been preempted by ERISA, 29 U.S.C. § 1144(a),’® which
provides that:
(a) Except as provided in subsection (b) of this
section, the provisions of this subchapter and sub-
chapter III of this chapter shall supercede any and
all State laws insofar as they may now or hereafter
relate to any employee benefit plan described in
section 1003(a) of this title and not exempt under
section 1003(b) of this title. This section shall take
effect on January 1, 1975.
As I have already indicated in the preceding section of
this opinion, the offset provision of the pension plan is un-
lawful under ERISA, 29 U.S.C. § 1053. The New Jersey
statute, insofar as it is merely duplicative of ERISA, is
preempted by that federal statute. Rogers v. Larson, 563
F.2d 617, 621 (3d Cir. 1977), appeal filed, 46 U.S.L.W. 3529
(U.S. Jan. 20, 1978).
1°The defendant also contends that the New Jersey statute is
preempted by the National Labor Relations Act, as amended, 29
U.S.C. § 141 et seg. This contention, however, is without merit,
since the parties specifically agreed that the offset provision of the
pension plan would be inapplicable if it was prohibited by state
law. By applying the recent amendment to New Jersey’s Worker’s
Compensation Act to bar the offset of pension benefits against
worker’s compensation benefits, this court would be doing nothing
more than enforcing the agreement between the parties reached
after the give and take of collective bargaining.
64a
Memorandum Opinion, dated August 24, 1978
However, assuming arguendo that ERISA does not out-
law the offset provision of the pension plan, it becomes
necessary to determine whether the specific preemptive
language of ERISA, 29 U.S.C. § 1144(a), renders the New
Jersey statute null and void as applied to the facts of this
ease. If the New Jersey statute is not preempted by
ERISA, the offset provision of the pension plan was ren-
dered null and void by the “unless prohibited by law” clause
of the pension plan when the recent amendment to New
Jersey’s Worker’s Compensation Act became effective on
July 14, 1977.
In determining whether the New Jersey statute is pre-
empted,” this court is guided by the opinion of the Court
of Appeals for the Third Circuit in the case of Rogers v.
Larson, supra at 620-21, wherein the court discussed the
three preemption “tests”:
The Supreme Court has... established three grounds
upon which a local statute may be deemed pre-
empted by federal law. It will be pre-empted (1)
if “Congress has unmistakenly so ordained,” or (2)
if “the nature of the regulated subject matter per-
mits no other conclusion” but pre-emption, or (3)
if it violates the Supremacy Clause by standing “as
an obstacle to the accomplishment and execution of
20The court reiterates that this discussion is predicated upon
the assumption that the offset provision of the pension plan is not
unlawful under ERISA.
65a
Memorandum Opinion, dated August 24, 1978
the full purposes and objectives of Congress.” (cita-
tion omitted )**
The touchstone of all three preemption tests is Congres-
sional intent to preempt. Rogers v. Larson, supra at
621 n.8.
The defendant contends that the New Jersey statute is
preempted under the first preemption test, in that Con-
gress, through the specific preemptive language of ERISA,
29 U.S.C. § 1144(a), “unmistakenly” intended to preempt
this state law.”
It is true that under ERISA, 29 U.S.C. § 1144(a), all
state laws which “relate to” any employee benefit plan
covered by ERISA are superseded. Although the New
1 With respect to the last two tests, the court explained that:
We understand the second test to mean that the subject
matter of the federal and local laws is such that the two
laws or regulatory schemes must inherently either conflict
or be duplicative. That is, under this test it is impossible
for there to be local regulation in the subject area that does
not conflict with or duplicate federal regulation.
The third test is applied when there is room in the sub-
ject area for both federal and local regulation. This test
requires the court to examine both statutory schemes to de-
termine if they can co-exist or if they conflict.
Rogers v. Larson, 563 F.2d 617, 621 (3d Cir. 1977), appeal filed,
46 U.S.L.W. 3529 (U.S. Jan. 20, 1978).
22The defendant does not argue that the New Jersey statute is
preempted under either preemption test (2) or (3). It is clear
to this court that the statute is not preempted under either of those
tests.
66a
Memorandum Opinion, dated August 24, 1978
Jersey statute undoubtedly “relates to” pension plans in
the broadest dictionary sense of that term, this court can-
not agree with the defendant that the New Jersey statute
“relates to” pension plans within the meaning of ERISA,
29 U.S.C. § 1144(a). Congress, to be sure, must have in-
tended by that language to occupy the entire field of pen-
sion plan law to the exclusion of all state regulation. See
Allied Structural Steel Co. v. Spannaus, 46 U.S.L.W. 4887,
4889 n.8 (U.S. June 28, 1978); Malone v. White Motor
Corp., 46 U.S.L.W. 4295 n.1 (U.S. April 3, 1978) ; Marshall
v. Chase Manhattan Bank, 558 F.2d 680, 683 (2d Cir. 1977).
However, the New Jersey statute at issue here is in no
way concerned with pension plans qua pension plans. On
the contrary, the New Jersey statute is solely concerned
with protecting the employee’s right to worker’s compensa-
tion disability benefits. This is clear from the language
of the statute itself. The statute provides that worker’s
compensation benefits may be set off against disability
pension benefits, but not against retirement pension bene-
fits. Thus, under the statute an employee is not entitled
to double compensation for a work-related disability, once
under the Worker’s Compensation Act, and once under
his pension plan. On the other hand, an employee is en-
titled to be compensated at least once for his work-related
disability. It is self-evident that if an employee can receive
compensation for his work-related disability under New
Jersey’s Worker’s Compensation Act just to have an equal
amount taken away from his retirement pension benefits,
the employee, in reality, has been deprived of compensation
for his work-related disability.** Utility Workers Union
*8It is obvious that an employer could not justify, upon any
rational basis, giving one employee less retirement pension benefits
than another employee solely on the basis that the former employee
has a work-related disability while the latter does not.
67a
Memorandum Opinion, dated August 24, 1978
of America v. Consumers Power Co., supra, slip op. at 16
n.12. The New Jersey statute forbids such a result.
Congress, by enacting ERISA, and the specific pre-
emptive language of 29 U.S.C. 4 1144(a), could not have
intended to prohibit states from protecting an employee’s
state-created right to worker’s compensation benefits by
enacting laws such as the one New Jersey enacted here.
That Congress recognizes state law preeminence in the
field of worker’s compensation law is clear from ERISA
itself which exempts from the coverage of ERISA an
employee benefit plan “maintained solely for the purpose
of complying with applicable workmen’s compensation
laws. . . .” 29 U.S.C. § 1003(b) (4).24
That New Jersey had a strong interest in enacting the
recent amendment to its Worker’s Compensation Act can-
not be denied. That Act “was intended to place the cost
of accidental injuries which are work-connected upon em-
ployers, who may provide for them as operating expenses.
Renshaw v. United States Pipe € Foundry Co., 30 N.J.
458 (1959); Tocci v. Tessler and Weiss, Inc., 28 N.J. 582
(1959).” Daniello v. Machise Express Co., 119 N.J. Super
20, 24 (LawDiv. 1972), aff’d, 122 N.J. Super 144 (App.
Div. 1973). Where a disability is compensable under that
statute, a common law suit by the employee against his
employer is unavailable. Dudley v. Victory Lynn Lines,
Inc., 32 N.J. 479 (1960). Consequently, if an employer can
avoid his statutory duty to provide compensation to his
*4 This court assumes that plaintiffs’ pension plan is not such
a plan. Nevertheless, 29 U.S.C. § 1003(b)(3) is relevant to de-
termining Congressional intent with respect to the term “relate to”
in 29 U.S.C. § 1144(a).
68a
Memorandum Opinion, dated August 24, 1978
employees for work-related disabilities, the employee is
without any remedy at all. If an employer can reduce an
employee’s retirement pension benefits by an amount equal
to the employee’s award of worker’s compensation disabil-
ity benefits, the employer has accomplished just that—he
has avoided his statutory obligation to compensate the em-
ployee for his work-related disability. Thus, New Jersey
had a strong interest in closing that “loophole” in its Work-
er’s Compensation Act by enacting the recent amendment
under consideration here.
In Farmer vy. Carpenters, 430 U.S. 290, 362 (1977), the
Supreme Court stated that:
Our cases indicate, however, that inflexible applica-
tion of the [preemption] doctrine is to be avoided,
especially where the State has a substantia: interest
in regulation of the conduct at issue and the State’s
interest is one that does not threaten undue inter-
ference with the federal regulatory scheme.
While it is true that the Court in that case was speaic-
ing of the National Labor Relations Act, as amended,
which, unlike ERISA, does not contain specific preemptive
language, the statement is nevertheless relevant in dis-
cerning Congvessional intent with respect to the term
“relate to” in ERISA, 29 U.S.C. 4 1144(a).
The State of New Jersey’s substantial interest in enact-
ing the recent amendment to its Worker’s Compensation
Act has already been demonstrated. Moreover, this court
cannot discern how that amendment threatens any inter-
ference with the federal regulatory scheme of ERISA,
let alone undue interference. Finally, since the amend-
ment simply does not relate to pension plans qua pension
plans, but is instead directed towards protecting an em-
Re,
69a
Memorandum Opinion, dated August 24, 1978
ployee’s right to worker’s compensation benefits, this court
concludes that Congress did not intend to preempt the
amendment by enacting ERISA and the preemptive lan-
guage of 29 U.S.C. § 1144(a).*
CoNncLUSION
I hold as follows:
1. Plaintiffs are entitled to the relief they seek be-
cause the offset provision of their pension plan is
unlawful under ERISA, 29 U.S.C. § 1053.
2. Assuming arguendo that Congress did not out-
law the offset provision by enacting ERISA, Con-
gress did not intend ERISA to prohibit the states
from outlawing such offset provisions. Conse-
quently, the plaintiffs are entitled to the relief they
seek because the offset provision of the pension plan
was rendered null and void by the “unless prohibited
by law” clause of the pension plan when the State
of New Jersey amended its Worker’s Compensation
Act on July 14, 1977 so as to prohibit offsets of re-
tirement pension benefits against worker’s compen-
saiton benefits.
Freperick B. Lacey
United States District Judge
Dated: August 24, 1978
*6 Plaintiffs’ contention that 29 U.S.C. § 1144(a) is inapplicable
to the case at bar by reason of 29 U.S.C. § 1144(b)(1) is without
merit. That provision provides as follows:
(b)(1) This section shall not apply with respect to any
cause of action which arose, or any act or omission which
occurred, before January 1, 1975.
Consequently, this court has found it necessary to consider the
meaning of 29 U.S.C. § 1144(a) as applied to the facts of this
case.
70a
Opinion, dated December 29, 1978
UNITED STATES DISTRICT COURT
District or New JERSEY
Civil No. 77-1644
— >
Henry BuczynskI, et al.,
Plaintiffs,
Vv.
GeneraL Motors Corporation,
Defendant.
Lacey, D.J.
The defendant moves for reconsideration of this court’s
decision embodied in an opinion and order filed August
24, 1978. That decision invalidated reductions by the de-
fendant in the pension payments made to the plaintiffs in
an amount equal to the value of payments received under
the New Jersey Worker’s Compensation Act, N.J.S.A. 34:15
et seq. Struck down was the pension plan’s provision al-
lowing this offset, Article IV, Section 2, on two separate
grounds: first, that the offsets were unlawful under 29
U.S.C. § 1053; second, even if Congress did not forbid these
pension deductions, New Jersey was not barred by the
preemption doctrine from passing a law which effectively
7la
Opinion, dated December 20, 1978
outlawed this offset under the “unless prohibited by law”
clause of the plan.
The defendauat, in its motion to reconsider, challenges
both rationales upon which the earlier decision was
grounded.
29 U.S.C. § 1053
The defendant’s action, I previously had held, violated
the minimum vesting section of ERISA, 29 U.S.C. § 1053,
by failing to make nonforfeitable the plaintiffs’ rights to
their retirement benefits. The defendant, arguing that the
offsets do not constitute a forfeiture within the meaning
of ERISA, relies on Treas. Reg. § 1.411(a)-4(a), which
provides:
Furthermore, nonforfeitable rights are not to be
considered to be forfeitable by reason of the fact
that they may be reduced to take into account bene-
fits which are provided under the Social Security
Act or under any other Federal or State law and
which are taken into account in determining plan
benefits.
Two courts have applied this regulation to hold that
deducting worker’s compensation payments from pension
payments does not offend ERISA’s nonforfeitability re-
quirement. Bordine v. Evans Products Co., 453 F.Supp.
19 (E.D. Mich. 1978) ; Pavlovic v. Chrysler Corp., Civ. No.
7-70438 (E.D. Mich. January 10, 1978).
Plaintiffs have placed in issue the validity of the afore-
said regulation. Although Treasury Regulations are ac-
* Contra, Utility Workers Union v. Consumers Power Co., 453
F.Supp. 447, 455 n.11 (E.D. Mich. 1978).
72a
Opinion, dated December 20, 1978
corded great respect and are not lightly overruled, see
Bingler v. Johnson, 394 U.S. 741, 479-51 (1969), a Treasury
Regulation that is inconsistent with Congressional enact-
ments cannot stand. United States v. Cartwright, 411 U.S.
546, 557 (1973). A regulation will be struck down if it is
inconsistent with the plain wording of a federal statute,
Busse v. Commissioner, 479 F.2d 1147, 1152-53 (7th Cir.
1973), or if the regulation “conflict[s] with the philosophy
and avowed purpose of legislation.” New York Shipbuild-
ing Corp. v. United States, 237 F.Supp. 995, 999 (D.N.J.
1965), aff'd, 362 F.2d 551 (3d Cir. 1966) (per curiam),
Thus, the existence of a regulation does not end the inquiry.
First, the plaintiffs claim the Secretary of the Treasury
is powerless to prescribe regulations affecting pension
rights under 29 U.S.C. § 1053. This contention is without
merit.
Thus, 29 U.S.C. § 1202(c) provides:
Regulations prescribed by the Secretary of the
Treasury under sections 410(a), 411, and 412 of Title
26... shall also apply to the minimum participation,
vesting, and funding standards set forth in parts 2
and 3 of subtitle B of subchapter I of this chapter.
Treas. Reg. § 1.411(a)-4(a) was issued to give guidance
in interpreting 26 U.S.C. § 411; and 29 U.S.C. § 1053, en-
titled “minimum vesting standards,” is located in part 2
of subtitle B of subchapter I. Accordingly, the Secretary
of the Treasury had the authority to promulgate a binding
regulation regarding § 1053.
Next to be considered is whether the aforesaid regula-
tion is consistent with ERISA. The defendant’s argument
that it is requires careful analysis. First, the defendant
points to 26 U.S.C. § 401, which states the requirements
73a
Opinion, dated December 20, 1978
for qualifying a pension plan. One requirement is that
the plan be nondiscriminatory. A plan is not considered
discriminatory “merely because the contributions or bene-
fits .. . differ because of any retirement benefits created
under State or Federal law.” § 401(a)(5). In interpreting
this statute, the Internal Revenue Service has ruled that
a plan could provide that worker’s compensation benefits
could be offset against pension benefits without the plan
being discriminatory. Rev.Rul. 68-243. Next, the defend-
ant notes that Congress, in enacting ERISA, did not mod-
ify of 26 U.S.C. § 401(a)(5). Also, Congress explicitly
stated that it “intend[ed] that the anti-discrimination rules
of present law in areas other than the vesting schedule are
not to be changed.” H.R. Rep. No. 93-1280, 93rd Cong., 1st
Sess., reprinted in [1974] U.S. Code Cong. & Ad. News
5038, 5058. Thus, defendant argues, because the pre-
ERISA rules permitted deductions for worker’s compen-
sation benefits and this policy regarding nondiscrimination
was continued by Congress, it therefore follows that Treas.
Reg. § 1.411(a)-4(a) is consistent with ERISA generally
and with § 1053 in particular.
This convoluted skein of reasoning is unconvincing. First,
it is questionable that Congressional intent concerning 26
U.S.C. § 401 indicates anything at all about Congressional
intent as to nonforfeitability under § 1053. See Riley v.
MEBA Pension Trust, 570 F.2d 406, 409 n.3 (2d Cir. 1977).
The legislative history of ERISA underscores this. Under
the heading of “permitted forfeitures of vested rights,”
Congress declared that “an employee’s rights, once vested,
are [with certain exceptions] not to be forfeitable for any
reason. An employee’s rights to benefits attributable to
his own contributions may never be forfeited.” H.R. Rep.
No. 93-1280, 93rd Cong., 1st Sess., reprinted in [1974] U.S.
T4a
Opinion, dated December 20, 1978
Code Cong. & Ad. News 5038, 5052. The report then lists
a series of exceptions to the principle that an employee’s
vested rights are not forfeitable. None of these exeptions
mention worker’s compensation.
Another difficulty with the defendant’s interpretation
results from ERISA’s handling of the term nonforfeitable.
29 U.S.C. § 1002(19) provides the definition.? Under this
section only the exceptions specifically included in § 1053
are consistent with nonforfeitability. Worker’s compen-
sation does not appear. Only deductions included in § 1053
(a)(3) are exceptions to § 1002’s definition of nonforfeit-
ability. See Riley v. MEBA Pension Trust, supra, 570
F.2d at 409; Utility Workers Union v. Consumer Powers
Co., supra, 453 F.Supp. at 456; Keller v. Graphic Systems
of Akron, Inc., 422 F.Supp. 1005, 1008 (N.D. Ohio 1976).
Based on these cases, I must conclude it is clear that
Congress expected that pension benefits would generally
be nonforfeitable, and that employees would forfeit benc-
fits only under narrowly defined circumstances. Regu-
lations promulgated must assist in achieving this goal.
See United States v. Bacto-Undisk, 394 U.S. 784 ( 1969) ;
New York Shipbuilding Corp. supra. Treas. Reg. §1.411(a)-
* The term “nonforfeitable” when used with respect to a pension
benefit or right means a claim obtained by a participant or his bene-
ficiary to that part of an immediate or deferred benefit under a
pension plan which arises from the participant’s service, which is
unconditional, and which is legally enforceable against the plan.
For purposes of this paragraph, a right to an accrued benefit from
employer contributions shall not be treated as forfeitable merely
because the plan contains a provision described in § 1053(a) (3)
of this title.
75a
Opinion, dated December 20, 1978
4(a), by impeding the attainment of this goal, is incon-
sistent with the statute. Accordingly, the defendant’s
reliance on it as a source of expanding the scope of per-
missible deductions from pension payments is misplaced.
Section 1053 forbids the offsets found in the defendant’s
plan.’
8 The defendant makes two other arguments to sustain its posi-
tion. Noting that the same phrase appears in both 26 U.S.C. § 401
(a)(5) and in 29 U.S.C. § 1082(c)(4)(A), the defendant takes
this as evidence of the continued vitality of Rev.Rul. 68-243, which
upheld offsets for Worker’s Compensation as not being discrimi-
natory for the purposes of 26 U.S.C. § 401(a)(4), suggesting that
§ 1053 also allows offsets. As was said in Utility Workers Union,
supra: “The language of the statute is clear and unambiguous.
The reasoning of the defendant is tenuous and speculative. The
Court chooses to follow the plain meaning of the statutory language.”
453 F.Supp. at 456.
The defendant also refers the court to 29 C.F.R. § 2605, stress-
ing the language in the definitions in subsection 2:
“Pension Benefit” means a benefit payable as an annuity,
or one or more payments related thereto, to a participant
who permanently leaves . . . which payments by themselves
or in combination with Social Security, Railroad Retire-
ment, or workmen’s compensation benefits provide a sub-
stantially level income to the recipient.
Under this regulation, the defendant argues, the Pension Benefit
Guarantee Corporation (PBGC) has authorized reducing pension
benefits if worker’s compensation is provided. This regulation
suffers from the same defects as does the Treasury Regulation,
(Treas, Reg. § 1.411(a)-4(a), except that it is without a statutory
basis and derives no support from the legislative history.
76a
Opinion, dated December 20, 1978
N.J.S.A. 34:15-29
The defendant also argues that the court erred in find-
ing that the New Jersey law forbidding the offsets* (L.
1977, ¢.156 § 1, eff. July 14, 1977, amending N.J.S.A.
34:15-29) was not preempted by ERISA. The Third Cir-
cuit Court of Appeals recently enumerated the three
grounds for preempting a state statute. In its motion
for reconsideration, the defendant strongly contends that
the New Jersey statute is invalid due to the second ground:
“‘the nature of the regulated subject matter permits no
other conclusion’ but pre-emption.” Rogers v. Larson,
963 F.2d 617, 621 (3d Cir. 1977), appeal filed, 46 U.S.1..W.
3029 (U.S. Jan. 20, 1978) (citations omitted). Elaborat-
ing further, the court stated that this basis for preemp-
tion existed when “the subject matter of the federal and
local laws . . . must inherently either conflict or be dupli-
*The defendant again argues that preemption should be found
under 29 U.S.C. § 1144(a) because the New Jersey law “relates
to” pension plans. The defendant cites several cases in which
preemption has been found. While those cases are useful in il-
luminating the Congressional intent underlying ERISA, the cases
are not dispositive. “Our prior cases on pre-emption are not pre-
cise guidelines in the present controversy, for each case turns on
the peculiarities and special features of the federal regulatory scheme
in question.” City of Burbank v. Lockheed Air Terminal, Inc.,
411 U.S. 624, 639 (1973) (citations omitted). The same is also
true with respect to the state regulation in question, for whether
preemption by ERISA can be found will depend on the exact nature
of the state laws. Compare National Carriers’ Conference Comm.
v. Heffernan, 454 F.Supp. 914 (D. Conn. 1978) and Standard Oil
Co. of Cal. v. Agsauld, 442 F.Supp. 695, 707 (N.D. Cal. 1977)
with Stone v. Stone, 450 F.Supp. 919, 931-33 (N.D. Cal. 1978 )
and Gast v. State, 47 U.S.L.W. 1067 (Oct. 31, 1978 Oregon). The
court's conclusion that the New Jersey Worker’s Compensation Law
docs not “relate 10” pensions will be adhered to. See also Johnston
v. Johnston, 47 U.S.L.W. 2331 (Oct. 27, 1978 California).
77a
Opinion, dated December 20, 1978
cative. That is, under this test it is impossible for there
to be local regulation in the subject area that does not
conflict with or duplicate federal regulation.” Jd.
For the purpose of analyzing preemption, this court, in
its earlier opinion, assumed arguendo that ERISA did
not forbid the offsets and that the New Jersey law was
not on its face inconsistent with the federal enactment.
If Congress had plainly declared that deductions for
worker’s compensation payments were allowed, or if the
New Jersey law frustrated the Congressional purpose,
then the Supremacy Clause would compel the striking
down of New Jersey’s law. Ray v, Atlantic Richfield Co.,
46 U.S.L.W. 4200, 4201 (1978). Thus, in treating the
preemption question, it will continue to be assumed that
Congress has not addressed the permissibility of offsets,
either to allow them or to prohibit them.’ Under this
assumption, it is clear the New Jersey statute is not pre-
empted, based upon the wording of the second ground of
Rogers v. Larson, supra. It neither duplicates nor con-
flicts with ERISA.
This conclusion, aside from being compelled by Rogers
v. Larson, supra, also follows from general principles
of preemption. In a field historically falling within the
sphere of state regulation, preemption will not be found
unless a clear Congressional intent to preempt is found.
Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977). As
determined in my earlier opinion, that clear expression
5 Consonant with the earlier opinion, the court still views the
legislative history as being one consistent with the forbidding of
offsets. To the extent that this history reveals Congressional intent
to be unclear, in no way can the legislative history be said to sup-
port the contrary conclusion, that offsets were to be permitted.
78a
Opinion, dated December 20, 1978
of intent is absent. New Jersey’s statute lies within the
allowable range of police activity that gives rise to the
presumption against preemption.
States possess broad authority under their police
power to regulate the employment relationship to
protect workers within the State. Child iabor laws,
minimum and other wage laws, laws affecting oc-
cupational health and safety, and workmen’s com-
pensation laws are only a few examples.
De Canas v. Bica, 424 U.S. 351, 356 (1976) (emphasis
added)
After noting that the California statute challenged as
being preempted belonged in the category of traditional
state police powers, the Court found no preeinption unaer
the preemption test that “the nature of the . . . subject
matter permits no other conclusion.” Id., quoting Florida
Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132
(1963). Rogers v. Larson, supra, derives from this por-
tion of De Canas its seconu ground for preemption; this
shows that New Jerscy’s strong interest in worker’s
compensation will be a significant factor militating against
finding preemption.
Another important rule in deciding preemption cases
is that state and federal regulatory schemes should be
harmonized, if possible. “[W]Jle may not overlook the
body of law relating to the sensitive interrelationship
between statutes adopted by the separate, yet coordi-
nate, federal and state sovereignties.” Merrill Lynch
Pierce Fenner & Smith, Inc. v. Ware, 414 U.S. 117, 127
(1973). The Court then went on to hold that California
could apply its statute voiding restraints ov competition,
TWa..
Opinion, dated December 20, 1978
despite the fact that the rule which the petitioner sought
to enforce had been promulgated pursuant to federal
statute. The Court observed that “California has mani-
fested a strong policy of protecting its wage earners from
what it regards as undesirable economic pressures af-
fecting the employment relationship. This policy pre-
vails in the absence of interference with the federal regu-
latory scheme.” Jd. at 139-40.
Accordingly, given that the New Jersey statute neither
duplicates nor conflicts with ERISA, that Worker’s Com-
pensation forms an area of strong public interest to New
Jersey, see Memorandum Opinion at 9-10, and that the
court is under a duty due to the nature of the federal
system to try to validate proper exercises of the state
police power, preemption does not exist. The offsets by
the defendant are therefore barred by the “unless pro-
hibited by law” clause.
CoNncLUSION
Upo™ reconsideration, the previous decision of this court
is followed.
Freperick B. Lacey
United States District Judge
Dated: December 20, 1978
80a
Order, dated December 20, 1978
Unitep States Disrricr Courr
Disrricr or New JERSEY
Crvit 77-1644
Defendant having moved for reconsideration of this
court’s decision of August 24, 1978, and reconsideration
having been given;
Ir 1s Heresy Orperep this 20th day of December, 1978
that the previous decision of this court embodied in the
opinion of August 24, 1978 is adhered to.
Freperick B. Lacey
United States District Judge
8la
Letter Opinion, dated March 28, 1979
Unrrep Stares Disrricr Courr
Disrrict or New Jprsey
Chambers of
Frederick B. Lacey
Judge
United States Court House
Newark N. J. 07101
March 28, 1979
Lester Weiner Associates
325 Westfield Avenue, FE.
Roselle Park, NJ 0724
Carpenter, Bennett & Morrissey, Esqs.
744 Broad Street
Newark, NJ 07102
Re: Buezynski v. General Motors Corporation
Civil No. 77-1644
Gentlemen:
Plaintiffs brought this suit challenging the defendant’s
policy of offsetting workers’ compensation awards against
pension payment. On August 24, 1978 this court issued
an opinion granting the plaintiffs the relief they sought.
This decision was adhered to in an opinion issued on De-
cember 20, 1978 on the defendant’s motion for reconsidera-
tion. The parties are now before the court after having
made various motions concerning the form of the order.
Plaintiffs move for attorneys’ fees. 29 U.S.C. § 1132(g¢)
provides that the court may, in its discretion, allow rea-
82a
Letter Opinion, dated March 28, 1979
sonable attorneys’ fees, This court, after having examined
the affidavits submitted by plaintiff’s counsel in support of
this motion, finds them deficient under the standards set
by the court of appeals of this circuit. Accordingly, the
plaintiff’s motion is denied without prejudice to renewal
upon compliance with this circuit’s standards.
Defendant moves for a stay of judgment pending ap-
peal. Fed.R.Civ.P. 62(¢) provides that a district court
after a final judgment granting an injunction “in its dis-
cretion may suspend, modify, restore, or grant an injune-
tion during the pendency of the appeal upon such terms
as to bond or otherwise as it considers proper for the se-
curity of the rights of the adverse party.” The parties
agree as to the criteria to be used in determining whether
a stay should be granted—they disagree as to the result in
applying those criteria to the defendant’s motion. Chief
among the criteria is probability of sueceess. The issues
presented in this were novel and difficult. This court con-
cludes that there is at least a reasonable probability that
the defendant will prevail on appeal. Accordingly, the de-
fendant’s motion for a stay will be granted.
Very truly yours,
Frederick B. Lacey
FBL:abw
88a
Order, dated March 28, 1979
Unitrep States Disrricr Courr
Disrrict or New JERSEY
Civin No. 77-1644
The matter having come for trial before Honorable Fred-
erick B, Lacey, U.S.D.J., upon the verified complaint and
action for injunction of plaintiffs, Henry Buezynski and
Alex Borusovie, and the class represented by them (Lester
Weiner and Associates, Esqs., appearing for the plain-
tiffs, and Carpenter Bennett and Morrissey, Esqs., appear-
ing for defendant), and the court having certified the action
as a class action, and the court having considered the tes-
timony, stipulations of fact, briefs, memoranda, and argu-
ments of counsel, and the court having filed a memorandum
opinion on August 24, 1978 and the court having given
reconsideration to its decision upon defendant’s motion
for reconsideration, and the court having filed its opinion
on December 20, 1978;
Iv 1s Heresy Orverep that the defendant, General Motors
Corporation, is hereby permanently enjoined from making
any deductions from retirement pensions payable to the
plaintiffs and class members pursuant to Article IV, sec-
tion 2 of the General Motors Corporation Llourly-Rate
Employees Pension Plan; and
Ir 1s FurrHer Orverep that defendant shall pay over to
each plaintiff and class member the amount of money de-
ducted from his or her basic pension benefits, which bene-
fits have been made payable as a result of having reached
normal retirement age, (together with interest from the
date of deduction) within 30 days from the date of the
Order; provided that in the event this court’s judgment
84a
Letter Opinion, dated March 28, 1979
that the deduction violates 29 U.S.C. § 1053 is reversed,
that defendant shall pay over within 30 days from the date
of the entry of this Order all sums deducted from any re-
tirement benfits (together with interest from the date of
deduction) on or after July 14, 1977; and
Iv 1s Furraer Orpverep that the provisions of this order
are stayed during the pendency of the appeal.
Freperick B. Lacey
United States District Judge
Dated: March 28, 1979
85a
Order, dated April 4, 1979
Unrirep Srates Distrricr Court
District or New JERSEY
Civil Action No. 77-1644
This Court having filed an Order in the above-entitled
cause on March 28, 1979, and good cause appearing,
Ir 1s on this 4 day of April, 1979,
OrpereD, that the Order filed by the Court herein on
March 28, 1979, be and it hereby is withdrawn.
Freperick B. Lacey
United States District Judge
86a
Amended Order, dated April 5, 1979
Unrrep States District Court
For tHe District or New Jersey
Civil Action No. 77-1644
The matter having come for trial before Honorable Fred-
erick B. Lacey, U.S.D.J., upon the verified complaint and
action for injunction of plaintiffs, Henry Buczynski and
Alex Borusovic, and the class represented by them (Lester
Weiner and Associates, Esqs., appearing for the plaintiffs,
and Carpenter, Bennett & Morrissey, Esqs., appearing for
defendant), and the court having certified the action as a
class action, and the court having considered the testimony,
stipulations of fact, briefs, memoranda, and arguments of
counsel, and the court having filed a memorndum opinion
on August 24, 1978 and the court having given recon-
sideration to its decision upon defendant’s motion for
reconsideration, and the court having filed its opinion on
December 20, 1978;
Iv 1s Heresy Orverep that the defendant, General Mo-
tors Corporation, is hereby permanently enjoined from
making any deductions from retirement pensions payable
to the plaintiffs and class members, other than benefits
payable by reason of disability, pursuant to Article IV,
section 2 of the General Motors Corporation Hourly-Rate
Employes Pension Plan; and
Ir 1s Furraer Orverep that defenant shall pay over
to each plaintiff and class member the amount of money
deducted from his or her basie pension benefits, which
benefits have been made payable as a result of having
reached normal retirement age (together with interest from
the date of deduction) within 30 days from the date of
87a
Amended Order, dated April 5, 1979
the Order; provided that in the event this court’s judg-
ment that the deduction violates 29 U.S.C. § 1053 is re-
versed, that defendant shall pay over within 30 days from
the date of the entry of this Order all sums deducted from
any retirement plan benefits, other than benefits payable
by reason of disability (together with interest from the
date of deduction), on or after July 14, 1977; and
Ir 1s FurrHer Orperep that the provisions of this order
are stayed during the pendency of the appeal.
Freperick B, Lacey
United States District Judge
Dated: April 3, 1979
SSa
Notice of Appeal, dated April 12, 1979
Unitep States Districr Court
Distict or New JERSEY
Civil Action No. 77-1644
Notice 1s Heresy Given that General Motors Corpora-
tion, the defendant above named, hereby appeals to the
United States Court of Appeals for the Third Circuit from
the Amended Order entered in this action on the 5th day
of April, 1979.
CarPENTER, Bennett & MorrissEy
Attorneys for Defendant
By: Laurence Reicr
A Member of the Firm
Dated: April 12, 1979
89a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 79-1668
HENRY BUCZYNSKI, ALEX BORUSOVIC, and
OTHER RETIREES SIMILARLY SITUATED,
Appellees
v.
THE GENERAL MOTORS CORPORATION,
Appellant
STATE OF NEW JERSEY,
Intervenor
(D.C. Civil No. 77-1644)
No. 79-1534
JOSEPH ALESSI, RAYMOND BUISSON,
STEPHEN MICHALSKI, CHARLES REPKA,
HELEN VOGT and T. EDWARD WHITE,
Appellees
Vv.
RAYBESTOS-MANHATTAN, INC.,
and RAYBESTOS-MANHATTAN, INC.
EMPLOYEE RETIREMENT PLAN,
jointly, severally or in the alternative,
Appellants
STATE OF NEW JERSEY,
Intervenor
90a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
(D.C. Civil No. 78-0434)
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
Argued: January 8, 1980
Before: GIBBONS, ROSENN and GARTH, Circuit Judges
WEINER, STAUBACH, EDELSON & HOPMAYER
LESTER WEINER, ESQ.
MARC C. GETTIS, ESQ. (Argued)
325 Westfield Avenue, East
Roselle Park, NJ 07204
Attorneys for Appellees
Buczynski and Borusovic
GELMAN & GELMAN
MICHAEL S. SCAROLA, ESQ. (Argued)
45 Church Street
Paterson, New Jersey 07505
Attorneys for Appellees
Alessi, Buisson, Michalski
‘Repka, Vogt and White
JOHN J. DEGNAN
ATTORNEY GENERAL OF NEW JERSEY
STEPHEN SKILLMAN, ESQ.
ASSISTANT ATTORNEY GENERAL
MICHAEL S. BOKAR (Argued)
DEPUTY ATTORNEY GENERAL
State House Annex
Trenton, NJ 08625
Attorneys for Intervenor
State of New Jersey
9la
Opinion of the United States Court of Appeals
for the Third Circwit dated February 15, 1980
J. RICHARD LAUVER, ESQ.
CHARLES R. SMITH, ESQ.
J. MICHAEL EWING, ESQ.
KIRKPATRICK, LOCKHART, JOHNSON
& HUTCHISON
1500 Oliver Building
Pittsburgh, PA 15222
Attorneys for Shenango, Inc.
As Amicus Curiae
JAMES T. CARNEY, ESQ.
United States Steel Corporation
600 Grant Street, Rm. 6082
Pittsburgh, PA 15230
Attorneys for US Steel Corp.
As Amicus Curiae
WILLIAM R. CAROSELLI, ESQ.
McARDLE, CAROSELLI, SPAGNOLLI
& BEACHLER
1100 Law & Finance Building
Pittsburgh, PA 15219
Attorneys for Gargon, Doumont
Milanovich, Banks, Rarna,
Miller, Zihol
As Amicus Curiae
CARPENTER, BENNETT & MORRISSEY
LAURENCE REICH, ESQ. (Argued)
JOHN C. HEAVEY, ESQ.
744 Broad Street
Newark, NJ 07102
Attorneys for Appellant
General Motors Corporation
92a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
PITNEY, HARDIN & KIPP
S. JOSEPH FORTUNATO, ESQ.
WARREN J. CASEY, ESQ. (Argued)
ARNOLD S. COHEN, ESQ.
163 Madison Avenue
Morristown, NJ 07960
Attorneys for Appellants
Raybestos-Manhattan, Inc.
M. CARR FERGUSON
ASSISTANT ATTORNEY GENERAL
WILLIAM A. FRIE.DLANDER, ESQ.
MICHAEL J. ROACH, ESQ.
ROBERT J. DEL TUFO,
UNITED STATES ATTORNEY
Tax Division
Department of Justice
Washington, D.C. 20530
Attorneys for the United States
As Amicus Curiae
WILLIAM L. STANDISH, ESQ.
WILLIAM H. POWDERLY, III, ESQ.
PATRICK W. RITCHEY, ESQ.
CHARLES R. HERPICH, JR., ESQ.
REED, SMITH, SHAW & McCLAY
747 Union Trust Building
Pittsburgh, PA 15219
Attorneys for Crucible Inc.,
Jones & Laughlin Steel Corp.
Mesta Machine Company
Pullman-Standard and
Wheeling-Pittsburgh Steel Corp.
‘ As Amicus Curiae
93a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
PAUL S. NATHANSON, ESQ.
BRUCE K. MILLER, ESQ.
NEAL S. DUDOVITZ, ESQ.
National Senior Citizens Law Center
1636 West 6th Street, Suite 201
Los Angeles, CA 90017
Attorneys for Amicus Curiae
Gray Panthers
OPINION OF THE COURT
(Filed February 15, 1980)
GARTH, Circuit Judge
These two appeals pose a single question: whether
the Employee Retirement Income Security Act of 1974
(ERISA) or the laws of New Jersey invalidate the provi-
sion of the pension plans of defendants General Motors
and Raybestos-Manhattan authorizing reduction, or off-
set, of pension benefits by amounts received by the pen-
sioner under a Workmen’s Compensation statute. We
conclude that these offset provisions are not unlawful
under ERISA, and that the New Jersey statute prohibit-
ing them is preempted by ERISA. We therefore reverse
the district court orders which enjoined such offsets and
which required payment to pension beneficiaries of
those amounts which the pension trustees had offset in
the past.
I.
Both these cases present similar fact patterns,’
and procedural histories. General Motors (GM) and
1. No material facts are in dispute in either case. In Alessi, all
facts were stipulated. In Buczynski, the parties filed a stipulation of
facts and the plaintiffs presented, at the instance of the district
94a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
Raybestos-Manhattan (Raybestos) maintain pension
plans covered by ERISA, 29 U.S.C. §1001 et seq. (1976).
Both pension plans provide that, under certain circum-
stances, benefits will be reduced by the amount of Work-
men’s Compensation payments received by plan
participants. ?
NOTE 1 — (Continued)
court, the testimony of Hubert Clodfelter. Clodfelter was a union
negotiator for the United Auto Workers in 1970 when the GM pen-
sion plan was under consideration. He testified about the meaning
of the “unless prohibited by law” clause in the GM offset provision.
See note 2 infra.
2. The GM offset clause provides:
Section 2. Deductions for Workmen’s Compensation
In determining the monthly benefits payable under this Plan, a
deduction shall be made unless prohibited by law, equivalent to
all or any part of Workmen's Compensation ( including compro-
mise or redemption settlements) payable to such employee by
reason of any law of the United States, or any political subdivi-
sion thereof, which has been or shall be enacted, provided that
such deductions shall be to the extent that such Workmen’s
Compensation has been provided by premiums, taxes or other
payments paid by or at the expense of the Corporation, except
that no deduction shall be made for the following:
(a) Workmen’s Compensation payments specifically allo-
cated for hospitalization or medical expense, fixed statutory
payments for the loss of any bodily member, or 100% loss of use
of any bodily member, or payments for loss of industrial vision.
(b) Compromise or redemption settlements payable prior
to the date monthly pension benefits first become payable.
(c) Workmen's Compensation payments paid under a
claim filed not later than two years after the breaking of
seniority.
The Raybestos offset clause provides:
All Retirement Income payments shall be reduced by the
entire amount of any and al] payments the Member is eligible to
receive under any and all statutes pertaining to workmen's
compensation, occupational disease, unemployment compen-
sation, cash sickness benefits, and similar laws, other than pri-
mary Social Security benefits, presently in effect or which may
95a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
In 1977, New Jersey enacted a statute expressly
prohibiting such offset provisions. The statute, which
became effective July 14, 1977, added the underscored
sentence to N.J. Stat. Ann. §34:15-29 (Supp. 1979), a
part of New Jersey’s Workmen’s Compensation pro-
gram. The complete section now provides:
The right of compensation granted by this chapter
shall have the same preference against the assets of
the employer as is now or may hereafter be allowed
by law for a claim for unpaid wages for labor. Claims
or payments due under this chapter shall not be as-
signable, and shall be exempt from all claims of
creditors and from levy, execution or attachment.
The right of compensation granted by this chapter
may be set off against disability pension benefits or
payments but shall not be set off against employees’
retirement pension benefits or payments.
Shortly after this statute went into effect, the plain-
tiffs brought class actions® against the defendants in the
be enacted from time to time, which payments are paid concur-
rently with the Retirement Income.
3. In Alessi, the request for class certification was abandoned
after the case was removed to the federal courts, and the action was
continued on behalf of the named plaintiffs only. In Buczynski, the
following class was certified by consent of the parties:
The certified class consists “of those persons who are re-
tired members of the General Motors Corporation Hourly-Rate
Employees Pension Plan who retired under the provisions of
said Pension Plan as set forth in Exhibit A-1 to the Agreement
between General Motors Corporation and the International
Union, United Automobile, Aerospace and Agricultural Imple-
ment Workers of America, dated November 11, 1970, Novem-
ber 19, 1973, or November 22, 1976, who retired with benefits
payable for months commencing on or after April 1, 1971, and
who, at the time of their retirement, were employed by General
Motors Corporation in New Jersey.” See order filed August 9.
1978.
Buczynski v. General Motors Corp., 456 F. Supp. 867, 868 n.1
(D.N.J. 1978).
96a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
New Jersey state courts. The named plaintiffs in each
suit were former employees of the defendants who had
recovered Workmen's Compensation judgments against
the defendants and whose pension benefits were being
reduced as a result.4 The suits sought permanent in-
junctions against the offsets and recoupment damages
for those offsets, alleged to be unlawful, which had al-
ready been made.
Both cases were removed by the defendants to the
United States District Court for the District of New Jer-
sey. Both district judges to whom the respective cases
were assigned, reached the same result. The district
court judge in Buczynski issued two published opinions.
The first opinion is reported at 456 F. Supp. 867 (D.N.J.
1978). The second opinion, which denied reconsider-
ation, is reported at 464 F. Supp. 133 (D.N.J. 1978). The
district court judge in Alessi issued a single, un-
published letter opinion.
Although the complaints in both cases challenged
the offsets only on the basis of the New Jersey statute,
both courts found the offset invalid under §203(a) of
ERISA, 29 U.S.C. §1053(a) (1976) (hereinafter
§1053(a)). In so holding, both courts invalidated a regu-
lation issued by the Treasury Department expressly au-
thorizing the offset clauses, 26 C.F.R. §1.411(a)-4(a)
(1979).° They also held that the New Jersey statute was
4. One of the Aless: plaintiffs, Helen Vogt, had not vet begun to
receive her plan benefits (which were deferred termination benefits
rather than retirement payments) by the time suit was filed. and
thus had not vet suffered the impact of the offset clause. She was
scheduled to begin receiving termination benefits on February 1}.
1979
5. The Buczynski court's first opinion made no mention of the
Treasury regulation. The regulation was only considered and found
invalid in the opinion responding to GM's motion for reconsider-
ation. See 464 F. Supp. at 134-36.
97a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
not superseded by ERISA’s preemption clause, 29
U.S.C. §1144 (1976).®
General Motors and Raybestos bring these appeals,
challenging the district courts’ conclusions that the off-
sets are invalid under ERISA and that the New Jersey
statute is not preempted. We address these issues in
turn. |
The plaintiffs claim that the defendants’ offset is
rendered unlawful by ERISA’s antiforfeiture provision,
29 U.S.C. §1053(a) (1976). This section provides in per-
tinent part:
(a) Each pension plan shall provide that an
employee's right to his normal retirement benefit is
6. The Buczynski court also held that it need not reach the pre-
emption claim since it had already found that the offset was invalid
under ERISA itself. See 456 F. Supp. at 872. Preemption was dis-
cussed, however, by assuming arguendo that the offset was not
invalid under ERISA, see id. The court concluded that the New Jer-
sey statute was not preempted, id. at 872-74.
After the Buczynski and Alessi opinions were issued, still an-
other opinion of the district court of New Jersey addressing these
questions was filed. Carpenter Technology Corp. v. Boyton, No.
K 78-1415 (D.N.J., Dec. 12, 1979). Carpenter diverged from
Buczynski and Alessi by holding that ERISA did, indeed, preempt
the New Jersey statute. See our discussion infra at Part III. The
Carpenter court reached the same result as its predecessors, howev-
er, by holding that the Workmen's Compensation offset was prohib-
ited by ERISA itself.
7. The State of New Jersey has intervened in both Alessi and
Buczynski. In addition, several amicus briefs have been filed in
Buczynski. The United States as amicus urges reversal of the dis-
trict court. So do several steel companies, who are involved in litiga-
tion on this same issue in the Western District of Pennsylvania.
These steel companies are: Crucible, Inc., Jones & Laughlin Steel
Corp.. Mesta Machine Co., Pullman-Standard, Shenango. Inc..
United States Steel Corp., and Wheeling-Pittsburgh Steel Corp.
The individual steelworkers, who are suing their employers on this
issue, urge affirmance. The steelworkers are Carmen F. Gargon.
Frank E. Doumont, Robert Milanovich, Wayne C. Banks, Michael
E. Barna, Paul J. Miller, and George Zihol. The Gray Panthers. one
of the amici permitted to file in Buczynski, urge affirmance as well.
98a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
nonforfeitable upon the attainment of normal retire-
ment age and in addition shall satisfy the require-
ments of paragraphs (1) and (2) of this subsection.
A Treasury regulation, however, addresses the per-
missibility of offsets under ERISA’s antiforfeiture provi-
sion and expressly authorizes such offsets, declaring
them not to be prohibited forfeitures. This regulation
provides in pertinent part:®
Furthermore, nonforfeitable rights are not consid-
ered to be forfeitable by reason of the fact that they
may be reduced to take into account benefits which
8. This Treasury regulation was not issued under ERISA's
antiforfeiture requirement found at 29 U.S.C. §1053(a) (1976), but
rather under an antiforfeiture provision included in the Internal
Revenue Code requirements for pension plans, 26 U.S.C. §411(a)
(1976). The tax code requirement for pension plans was enacted in
Title I] of ERISA. ERISA expressly provides that Treasury Depart-
ment regulations under the tax code pension provisions shall apply
to the analogous provisions of ERISA codified in Title 29 of the
United States Code. 29 U.S.C. §1202(c) (1976) provides
(c) Regulations prescribed by the Secretary of the Treas-
ury under sections 410(a), 411, and 412 of Title 26 (relating to
minimum participation standards, minimum vesting stan-
dards, and minimum funding standards, respectively) shall
also apply to the minimum participation, vesting, and funding
standards set forth in parts 2 and 3 of subtitle B of subchapter |
of this chapter [which include 29 U.S.C. §1053(a)}. Except as
otherwise expressly provided in this Act, the Secretary of Labor
shall not prescribe other regulations under such parts, or apply
the regulations prescribed by the Secretary of the Treasury un-
der sections 410(a), 411, 412 of Title 26 and applicable to the
minimum participation, vesting, and funding standards under
such parts in a manner inconsistent with the way such regula-
tions apply under sections 410(a), 411, and 412 of Title 26.
We thus conclude that the Treasury regulation issued under
the antiforfeiture requirement of 26 U.S.C. §411(a) (1976) must, if
valid, control our interpretation of 29 U.S.C. §1053(a) (1976) as
well. None of the parties here contends otherwise. This issue is dis-
cussed at greater length in Baker v. Otis Elevator Co., No. 79-1185,
slip. op. at 5-8 (3d Cir., Nov. 13, 1979).
99a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
are provided under the Social Security Act or under
any other Federal or State law and which are taken
into account in determining plan benefits.
26 C.F.R. §1.411(a)-4(a) (1979).
In determining the legality of the Workmen’s Com-
pensation offset, then, we must begin our inquiry with
this regulation, which, if held to be valid, would require
us to sustain the offset provisions in the General Motors
and Raybestos pension plans.
A.
In assessing the validity of 26 C.F.R. §1.411(a)-4(a)
(1979), we first turn to a consideration of the character
of the regulation. In this court’s recent opinion in Baker
v. Otis Elevator Co., No. 79-1185 (3d Cir., Nov. 13,
1979), which also concerned the validity of a Treasury
regulation interpreting a provision of ERISA, we recog-
nized a distinction between two types of administrative
regulations, with a corresponding distinction in the ap-
propriate standard of review. We there stated:
There can be no question but that the regula-
tion with which we are here concerned is a legisla-
tive regulation which was issued pursuant to a clear
delegation of rule making authority, see U.S.C.
§ 1202(c) (1976). As Professor Davis has explained,
A legislative rule is the product of an exer-
cise of delegated legislative power to make law
through rules. An interpretative rule is any rule
an agency issues without exercising delegated
legislative power to make law through rules. |
The distinction between the two kinds of
rules is fundamental. . . . Valid legislative rules
have about the same effect as valid statutes;
they are binding on courts... .
[By contrast, however,] [clourts always
have power to substitute their judgment for ad-
100a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
ministrative judgment as to the content of in-
terpretative rules, but they refrain in varying
degrees from substituting judgment in various
circumstances... .
2 K.C. Davis, Administrative Law Treatise,
§7:8 at 36-37 (1979). We recognize the distinc-
tion in the nature of the two types of rules, lead-
ing in turn to a distinction in our standard of re-
view. Our scope of review of legislative rules is
far more restricted than the scope of our review
of interpretative rules. See id., at 37.
Slip. op. at 9-10.
After an analysis of the Supreme Court’s decision in
Batterton v. Francis, 432 U.S. 416 (1977), which ad-
dressed the same issue, we concluded in Baker that, to
sustain a legislative regulation, “we need only determine
... that its promulgation is not an abuse of discretion,
that it is neither arbitrary or capricious, nor contrary to
the governing statutory section and ERISA as a whole,”
slip op. at 11-12.
As in Baker, the Treasury Department regulation at
issue here is plainly legislative in nature; it was issued
pursuant to the same delegation of rule-making power
as the regulation in Baker, which was there held to be
legislative. See slip op. at 9; 29 U.S.C. 1202(c) (1976). It
is thus subject to the limited review prescribed in
Baker.®
The plaintiffs contend that the Treasury regulation
must be struck down because it is inconsistent with the
9. Neither district court here recognized that 26 C.F.R.
§1.411(a)-4(a) (1979) is a legislative regulation. Other courts that
have invalidated this regulation have failed as well to recognize this
salient characteristic. See note 10 infra. By failing to accord this
regulaton the appropriate degree of deference, these courts have
impermissibly substituted their own judgment as to the interpreta-
tion of the statute for that of the Treasury Department.
101la
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
governing statutory provision, ERISA’s antiforfeiture re- _
quirement, 29 U.S.C. §1053(a) (1976). Before turning
to their claim, we think it is appropriate to acknowledge
that fidelity to the standard of review set forth in Baker
and Batterton, supra, requires that a legislative regula-
tion be invalidated only for a clear and manifest conflict
with the governing statute. Overturning a legislative
regulation where the statute may arguably be given
conflicting readings, or where the conflict between the
regulation and the statute is not plain, does violence to
the congressional intent to delegate rule-making author-
ity to the administrative agency. Approached from this
perspective, the conclusions reached by the district
courts in Buczynski and Alessi, that the regulation is in-
consistent with 29 U.S.C. §1053(a) (1976), cannot be
sustained: The legislative history affirmatively supports
the Treasury regulation, and, at the very least, any con-
flict between the regulation and the statute, if one
indeed exists, is clearly insufficient to mandate
invalidation.
B.
The district courts here, as well as the other courts
that have invalidated this regulation,’ make similar syl-
logistic arguments to demonstrate the conflict with
ERISA which they perceive. They begin with §1053(a),
which provides broadly that pension benefits must be
10. In addition to Buczynski and Alessi, offset provisions have
been declared unlawful, and the Treasury regulation has been in-
validated, in Strong v. Bucyrus-Erie, 472 F. Supp. 1089 (E.D. Wis.
1979); Utility Workers’ Union v. Consumers Power Co., 453 F.
Supp. 447 (E.D. Mich. 1978), appeal docketed, No. 78-1402 (6th
Cir., August 2, 1978); and Carpenter Technology Corp. v. Boyton.
No. 78-1415 (D.N.J., Dec. 12, 1979). Offset provisions, and the
Treasury regulation authorizing them, have been upheld in Bordine
v. Evans Products Co., 453 F. Supp. 19 (E.D. Mich. 1978); Pavlovic
v. Chrysler Corp., No. 7-70438 (E.D. Mich., Jan. 10, 1978), and
Carlson v. Bundy Corp., No. 6-72272 (E.D. Mich. 1977).
102a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
nonforfeitable. They then focus on §1053(a)(3), which
specifically exempts certain pension plan provisions
from the nonforfeitability rule. The list of these excep-
tions includes, inter alia, nonpayment of benefits if the
plan participant dies, §1053(a)(3)(A), and suspension of
benefits if the participant takes a job with an employer in |
the same industry, §1053(a)(3)(B). This list, however,
does not include offsets for Workmen’s Compensation.
Finally, these district courts add to §1053(a) the defini-
tion of “nonforfeitable” found in 29 U.S.C. §1002(19)
(1976), which provides:
(19) The term “nonforfeitable” when used
_ with respect to a pension benefit or right means a
claim obtained by a participant or his beneficiary to
that part of an immediate or deferred benefit under
a pension plan which arises from the participant’s
service, which is unconditional, and which is legally
enforceable against the plan. For purposes of this
paragraph, a right to an accrued benefit derived
from employer contributions shall not be treated as
forfeitable merely because the plan contains a pro-
vision described in section 1053(a)3) of this title.
(emphasis added).
Armed with these provisions, these district courts
reason as follows: all reductions in benefits are forfei-
tures; all forfeitures are prohibited by §1053(a), with the
sole exceptions being those listed in §1053(a)(3); Work-
men’s Compensation offsets are not included in the list
of permissible forfeitures in §1053(a)(3); ergo, Work-
men’s Compensation offsets are prohibited forfeitures.
Thus, they conclude that the Treasury regulation au-
thorizing offsets for benefits provided under Federal or
State law is in conflict with ERISA, and is therefore
invalid, because it expands the class of permissible
forfeitures beyond those specifically set forth in
103a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
§1053(a)(3). The Buczynski district court, in its second
opinion, makes the argument as follows:
Another difficulty with the defendant’s inter-
pretation results from ERISA’s handling of the term
“nonforfeitable”. 29 U.S.C. §1002(19) provides the
definition. Under this section, only the exceptions
specifically included in §1053 are consistent with
nonforfeitability. Worker’s compensation does not
appear. Only deductions included in §1053(a)(3)
are exceptions to §1002’s definition of nonfor-
feitability.
Based on these cases, I must conclude it is
clear that Congress expected that pension benefits .
would generally be nonforfeitable, and that employ-
ees would forfeit benefits only under narrowly
defined circumstances. Regulations promulgated
must assist in achieving this goal. Treas.Reg.
§1.411(a)-4(a), by impeding the attainment of this
goal, is inconsistent with the statute. Accordingly.
the defendant’s reliance on it as a source of expand-
ing the scope of permissible deductions from pen-
sion payments is misplaced. Section 1053 forbids
the offsets found in the defendant’s plan.
464 F. Supp. at 135-36 (footnotes and citations omitted).
Thereafter, the district court in Alessi, relying on
the Buczynski opinions, reached the same result. See
Alessi v. Raybestos-Manhattan, No. 78-0434, slip op. at
5 (D.N.J., Feb. 15, 1979).
While this argument is not without some superficial
appeal, the courts’ syllogism is defective, and we must
reject it. Understanding this defect, however, requires
some explanation of the regulation of pension plans by
the Internal Revenue Service before and after ERISA
was enacted.
Prior to enactment of ERISA in 1974, the Internal
Revenue Code set forth a variety of requirements that
had to be met by pension plans in order to qualify for fa-
104a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
vorable tax treatment. One requirement was that the
plans be nondiscriminatory. This tax code requirement
was set forth in 26 U.S.C. §401(a)(4) & (5). On the pas-
sage of ERISA, these sections were amended, but the
amendments did not alter the basic aim of the statute.
Discrimination in contributions or benefits under a pen-
sion plan was still prohibited. These sections now pro-
vide in pertinent part:
(a) Requirements for qualification. — A trust
created or organized in the United States and
forming part of a stock bonus, pension, or
profit-sharing plan of an employer for the exclusive
benefit of his employees or their beneficiaries shall
- constitute a qualified trust under this section—
* a *
(4) If the contributions or the benefits pro-
vided under the plan do not discriminate in favor of
employees who are—
(A) officers,
(B) shareholders, or
(C) highly compensated.
6 ° *
(5)... [A] plan [shall not] be considered dis-
criminatory . .. merely because the contributions or
benefits of or on behalf of the employees under the
plan .. . differ because of any retirement benefits
created under State or Federal law. . .
Under these sections, the IRS prior to ERISA had
extensive experience with a pension plan provision simi-
lar to the offset clause challenged here. That provision
was the offset of Social Security benefits against pension
benefits. In its interpretation of the clause excerpted
above from 26 U.S.C. §401(a)(5), the IRS had long
permitted pension plans to offset pension benefits by the
amount of Social Security benefits that a plan partici-
105a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
pant received. The first such regulation was issued in
1943, and it simply reiterated the statutory language
quoted above. The current version of this regulation, is-
sued in 1960, provides as follows:
(b) A plan .. . under which the contributions
or benefits differ because of any retirement benefit
created under State or Federal law, will not be dis-
criminatory because of such exclusion or differ-
ence, provided the total benefits resulting under the
plan and under such law establish an integrated
and correlated retirement system satisfying the
tests of section 401(a).
26 C.F.R. §1.401-4(b) (1979).
The parties do not dispute that this regulation per-
mits offset of pension benefits by the amount of Social
Security benefits received.
In enacting ERISA, Congress was familiar with the
practice of the IRS allowing such offset provisions. Con-
gress was also aware that the IRS, while allowing such
offsets, would not permit any increase in the rate of off-
set based upon any increase in the level of Social Securi-
ty benefits occurring after a retiree began to receive his
pension. Congress sought to codify this administrative
practice of not permitting an increased offset based upon
increased Social Security benefits, and did so by enact-
ing §1021(e) of ERISA, which is codified at 26 U.S.C.
§401(a)(15) (1976). This section provides:
(1S) a trust shall not constitute a qualified trust
under this section unless under the plan of which
such trust is a part... such benefits are not de-
creased by reason of any increase in the benefit lev-
els payable under title II of the Social Security Act
or any increase in the wage base under such title II,
if such increase takes place after September 2,
1974, or (if later) the earlier of the date of first re-
106a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
ceipt of such benefits or the date of such separation,
as the case may be. (emphasis added).
Congress’s understanding in enacting this section
is made clear in the report of the House Ways and
Means Committee:
Protection is given to retired individuals and in-
dividuals who are separated from the service of the
employer against reductions in private plan benefits
when social security benefit levels increase. In gen-
eral, under present integration [i.e., offset] proce-
dures, social security benefits attributable to em-
ployer contributions are treated as though they were
part of the private plan. As a result when the level of
social security benefits increases, some integrated
plans have reduced the amount of the retirement
benefits that they provide for covered employees.
Present law under administrative practice pro-
vides that qualified plans may not use increases in
social security benefit levels to reduce the benefits
that they pay where the employees concerned are
retired and are already receiving integrated plan
benefits. The bill codifies this treatment for retired
persons. It also extends the prohibition against re-
ducing plan benefits where social security benefit
levels are increased to cases where the individuals
concerned are separated from service prior to retire-
ment and have deferred nonforfeitable rights to plan
benefits. This provision is effective for increases in
social security benefits which take place after the
date of enactment or on the date of the first receipt
of plan benefits or the date of separation from serv-
ice (whichever is applica _ ) if that date is later.
These changes do not affect the ability of plans
to use the integration procedures to reduce the
benefits that they pay to individuals who are cur-
rently covered when social security benefits are
liberalized.
107a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
H.R. Rep. No. 93-807, 3 U.S. Code Cong. & Admin.
News 4670, 4695-96 (1974).
Despite certain misgivings about offset, or integra-
tion practices expressed later in this report, Congress
chose not to bar the Social Security offset entirely, but
merely to prohibit increases in the amount of the offset
based on increases in the amount of Social Security
benefits.
A number of conclusions can be drawn from this
history, conclusions which shed light on the analysis on
which the Alessi and Buczynski courts relied in striking
down the Treasury regulation. In choosing only to limit
increased Social Security offsets rather than bar them
entirely in §401(a)(15), Congress gave its implicit ap-
proval to the practice of permitting offsets against pen-
sion plan benefits — in that instance, an offset of Social
Security benefits against pension plan benefits. Further,
since §401(a)(15) was enacted at the same time as
§1053(a)’s requirement that pension benefits be
nonforfeitable, we must conclude that the offset of So-
cial Security benefits implicitly approved in the former
section was not simultaneously rendered illegal by the
latter section’s requirement of nonforfeitability.
This conclusion reveals the primary defect in the
Buczynski/Alessi district court analyses. Those courts
reasoned, as noted above, that all benefit reductions are
forfeitures, and all forfeitures are impermissible except
for the four exceptions listed in §1053(a)(3). Yet Con-
gress has approved the Social Security offset, and that
offset does not appear among the permissible forfeitures
under §1053(a)(3). Thus, the district courts’ reasoning
runs afoul of Congress's approval of the Social Security
offset. If all reductions in benefits are forfeitures, and all
forfeitures are prohibited with the exceptions listed in
§1053(a)(3). then, under the district courts’ reasoning,
Social Security offsets should also be prohibited. Yet, as
we have seen, this is not the case. It is true, as the courts
108a
Opinion of the United States Court of Appeals
for the Third Circuit dated February 15, 1980
reasoned, that all forfeitures are prohibited with the ex-
ception of those listed in §1053(a)(3), but it cannot be
true that all reductions in benefits are necessarily forfei-
tures. Congress’s implicit approval of the Social Security
offset compels the conclusion that such an offset is not a
forfeiture. Thus, the very basis on which the district
courts found the Treasury regulation in issue here to
conflict with §1053(a) is in error.
The plaintiffs contend, however, that the Work-
men’s Compensation offset cannot be sustained on the
strength of Congress’s approval of the Social Security
offset. They contend that even if the Social Security off-
set is not a forfeiture under ERISA, the Workmen's
Compensation offset is. Social Security benefits and
pension benefits, they point out, are both designed to
compensate for wages lost as a result of old age, and
therefore the Social Security offset simply avoids a dupli-
cation of benefits directed to the same end. Workmen’s
Compensation, by contrast, is designed to compensate
for losses flowing from employment related injuries;
thus, the Workmen’s Compensation offset, unlike the
Social Security offset, cannot be defended as a means to
avoid duplication of benefits.
The plaintiffs’ argum
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