# Petition — Sutton v. Weirton Steel Division of National Steel Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_1343%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1984 - **Citation:** 467 U.S. 1205 ## Text Ce ~ 1576 PILED | MAR 23 1964 No, __ ALEXANDER L. STEVAS. « IN THE Supreme Court of the Anited States TERM, 1984 EuGENE R. Sutton, et al., Petitioners, Ve WEIRTON STEEL Division of National Steel Corporation and INDEPENDENT STEELWORKERS UNION and PENSION AGREEMENT BETWEEN NATIONAL STEEL CORPORATION and INDEPENDENT STEELWORKERS UNION, Respondents. EDWARD DuayeRr, et al., Petitioners, Vv. WEIRTON STEEL Division of National Steel Corporation and INDEPENDENT STEELWORKERS UNION, Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT JOHN RANDOLPH SPON, JR. Counse! of Record KEITH A. FOURNIER Spon & FouRNIER Suite 904-911 AmeriTrust Bank Building Steubenville, OH 43952 (614) 282-3600 Counsel for Petitioners Eugene R. Sutton, et al., and Petitioners Edward Dhayer, et al. PRESS OF BYRON S. ADAMS PRINTING, INC., WASHINGTON, D.C. (202) 347-8203 i QUESTION PRESENTED FOR REVIEW Was the granting of Summary Judgment and Final Judg- ment erroneous under the totality of circumstances of this case, involving the largest Employee Stock Option Purchase in - the history of the United States, wherein National Steel Corporation, as employer and plan fiduciary, demanded 11th hour amendments to the pension plan as essential considera- tion for the sale of its own property, for reason that National Steel Corporation violated the strict fiduciary standards im- posed pursuant to Sections 404 and 406 of the Employees Retirement Income and Security Act of 1974? ’ 1 PEP aa ae ii PARTIES APPEARING BEFORE THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT Petitioners Eugene R. Sutton, et al., were Appellants be- fore the United States Court of Appeals for the Fourth Circuit in Case Nos. 83-1567 and 83-2002. Said Petitioners were the Plaintiffs in the United States District Court for the Northern District of West Virginia, Wheeling, West Virginia, in Civil Action No. 83-0035-W. They were hourly employees of Re- spondent National Steel Corporation. Petitioners Edward Dhayer, et al., were Appellants before the United States Court of Appeals for the Fourth Circuit in Case No. 83-2004. Said Petitioners were the Plaintiffs in the United States District Court for the Northern District of West Virginia, Wheeling, West Virginia, in Civi! Action No. 88- 0036-W. They were salaried employees of Respondent Nation- al Steel Corporation. Respondent Weirton Steel Division of National Steel Corporation, also referred to as National Steel Corporation, was an Appellee before the United States Court of Appeals for the Fourth Circuit and was a Defendant in the United States District Court for the Northern District of West Virginia in the cases mentioned above. Respondent /ndependent Steelworkers Union was an Appellee before the United States Court of Appeals for the Fourth Circuit and was a Defendant in the United States District Court for the Northern District of West Virginia in all cases mentioned above. Respondent Pension Agreement Between the National Steel Corporation and the Independent Steelworkers Union was an Appellee in the Sutton action in the United States District Court for the Northern District of West Virginia, mentioned above. iii TABLE OF CONTENTS Page QUESTION PRESENTED FOR REVIEW ...........ee00005 i PARTIES APPEARING BEFORE THE UNITED STATES Court OF APPEALS FOR THE FOURTH CIRCUIT ............ ii BALD OP BAITS. i's vo cadbacidc ceicseaecvdecs iv, Vv PETITION FOR A WRIT OF CERTIORARI ..........000055 1 IE hn Sis a So's doe) cae bean ehdawoeke 2 STATEMENT OF JURISDICTION ........cccccccccccccees 2 STATUTORY PROVISIONS INVOLVED ............0+: 2, 3, 4,5 OT SUMO. nc ccceescusbecenccsvcbees 5-13 REASONS FOR ALLOWANCE OF THE WRIT ............. 13-25 IN dels his cnc aul sane oaiede dh bae.s vee ewas 25-26 APPENDIX Opinion of the United States Court of Appeals for the Fourth Circuit (Case Nos. 83-1567 and 83-2003; 83- 1569 and 83-1895; 83-2004) .......... cece penne la-lla Orders and Opinions of the United States District Court of the Northern District of West Virginia in the Sutton action (Case No. 83-0035-W) ...... 13a-52a Orders and Opinion of the United States District Court for the Northern District of West Virginia in the Dhayer action (Case No. 83-0036-W) ........ 53a-83a Orders and Judgment Entry of the United States Dis- trict Court for the Northern District of West Virginia (Case Nos. 83-0035-W and 83-0040-W) ....... 84a-97a Judgment Entry of the United States District Court of the Northern District of West Virginia (Case No. SOD 65 Se ciicdcncvechbensadeseeies 98a-101a Judgment pees of the United States Court of Ap for the Fo Circuit (Case Nos. 83-1567 and 83- 0035-W, and 83-2004 and 83-0036-W; and No’s 83- 1569 and 83-0040) ..........cce cece ee eeees 103a-105a Notices of Appeal (Case No. 83-0035-W) ..... 106a-llla Notices of Appeal (Case No. 83-0036-W) ..... 112a-114a Affidavit of William W. Willoughby ......... 115a-119a Affidavit of David Kass ................0005 120a-122a my ’ ee iv TABLE OF AUTHORITIES CASES: Page Adickes v. S. H. Kress & Company, 398 U.S. 144(1970) 15 ieee Beats Wards Co., 295 F.2d 346 (4th Cir. Calhoun v. Falstaff Brewing C 478 F. Supp. 357 Sia Dependahl v. Fals C 491 F. Supp. 1188 (Mo. 1980), m pe wee oO palling F 5d 1208 (8th Cir. 1981), cert. den. U.S. 968 (1981) .... 16 Donovan v. Bierwirth, 680 F.2d 263 (2nd Cir. 1982) . i. ae Eaves v. Penn, 587 F.2d 453 (10th Cir. 1978) ...... 15, 20 Fentron Industires, Inc. v. National Shopmen Pension Fund 674 F.2d 1300 (9th Cir. 1982) ............. Flinchbaugh v. Chicago Penumatic Tool Co., 531 F. Sao. | TT MEE 04's bkis'n.ns Gad'p tenes baie ee cs 17 Freund v. Marshall & Ilisley Bank, 485 F. Supp. 629 a , SPM RP Reh CA ep Harless v. First National Bank in Fairmont, 246 S.E.2d 270(S. Ct. of Ap a x! .Va. 1978), later 289 S. E.2d 692 (S. Ct. of App. W.Va. 1962) ......cccccceccscces 24 Hurn v. Oursler, 289 U.S. 238 (1983) .........ceeeee 24 Marshall v. Kelly, 465 F. Supp. 341 (Okla. 1978) ... 20, 22 McDougall v. Donovan, 552 F. Supp. 1206 (Ill. 1982) 20, 22 Meinhard v. Salmon, 164 N.E. 545 (Ct. of App. N.Y. SEEN nvdundnd woe cotdnde ccaee ts sSn cnr canenies 17, 19 National Labor Relations Board v. Amazx Coal Co., 453 SPER COME» acs vca.s.cccoecnubiabebicneea’ 17, 19 Phoenix eavings s & Loan Inc. v. Aetna Casualty & Secu- rity Co., 381 F.2d 245 (4th Cir. 1967) ........... eee Sears, Roebuck & Co., 573 F.2d 976 (7th Cir. United Mine Workers v. Gibbs, 383 U.S. 715 (1966) .. 24 UMWA Health & Retirement Funds v. Robinson, 455 Chi EE LADUE. ob becdars cbc decheseseautbaus 14 Vv Table of Authorities Continued FEDERAL STATUTES: 29 U.S.C. Section 1101 ...... eae Lila aide wie ae 14 eg TT a ee 20 29 U.S.C. Section 1104 (§ 404) .......... 13, 14, 17, 19, 20 29 U.S.C. Section 1106 (§ 406) ............. 20, 21, 22, 23 29 U.S.C. Section 1140 (§ 510) ....... ccc eee c eens 24 OTHER AUTHORITIES: [1974] U.S. Code Cong. & Ad News 5089 (1974) ...... 22 West Virginia Code, Section 21-1A-l(a) ............. 24 IN THE Supreme Court of the Anited States TERM, 1984 nee EUGENE R. Sutton, et al., Petitioners, Vv. WEIRTON STEEL Division of National Steei Corporation and INDEPENDENT STEELWORKERS UNION and PENSION AGREEMENT BETWEEN NATIONAL STEEL CORPORATION and INDEPENDENT STEELWORKERS UNION, Respondents. EDWARD DHAYER, et al., Petitioners, Vv. WEIRTON STEEL Division of National Steel Corporation and INDEPENDENT STEELWORKERS UNION, Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT 2 OPINIONS BELOW The Opinions of the United States Court of Appeals for the Fourth Circuit in Case Nos. 83-1567 and 83-2003, and 83-2004, are contained in the Appendix at pages la to 12a. The Opinions of the United States District Court for the Northern District of West Virginia in Case Nos. 83-0035-W are contained in the Appendix at pages 13a —- 52a. The Opinions of the United States District Court for the Northern District of West Virginia in Case No. 83-0036-W are contained in the Appendix at pages 53a — 84a. STATEMENT OF JURISDICTION The Court’s jurisdiction is invoked under 28 U.S.C. Sec. 1254(1). * Sec. 1254. Courts of Appeals; Certiorari; appeals; certi- fied questions. * Cases in the courts of appar may be reviewed by the Supreme Court by the following methods: (1) By writ of certiorari granted upon the petition of ah ty to any civil action or criminal case before or after rendition of judgment or decree; STATUTORY PROVISIONS INVOLVED Sec. 404. (a)(1) Subject to sections 403(c) and (d), 4042, and 4044, a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and— (A) for the exclusive purpose of: (i) providing benefits to participants and their benefi- ciaries; and (ii) defraying reasonable expenses of administering the plan: 3 (B) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting ina like capacity and familiar with such matters would use imthe conduct of an enterprise of a like character and with like aims; (C) by diversifying the investments of the plan so as to minimize the risk of large losses, unless under the circum- stances it is clearly prudent not to do so; and (D) in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this title or title IV. (2) In the case of an eligible individual account plan (as defined in section 407(d)(3)), the diversification requirement of paragraph (1)(C) and the prudence requirement (only to the extent that it requires diversification) of paragraph (1)(B) is not violated by acquisition or holding of qualifying employer real property or qualifying employer securities (as defined in section 407(d)(4) and (5)). (b) Except as authorized by the Secretary by regulation, no fiduciary may maintain the indicia of ownership of any assets of a plan outside the jurisdiction of the district courts of the United States. (c) Inthe case of a pension plan which provides for individ- ual accounts and permits a participant or beneficiary to ex- ercise control over assets in his account, if a participant or beneficiary exercises control over the assets in his account (as determined under regulations of the Secretary)— (1) such participant or beneficiary shall not be deemed to be a fiduciary by reason of such exercise, and (2) no person who is otherwise a fiduciary shall be liable under this part for any loss, or by reason of any breach, which results from such participant’s, or beneficiary’s exercise of control. 4 PROHIBITED TRANSACTIONS Sec. 406 (a) Except as provided in section 408: (1) A fiduciary with respect to a plan shall not cause the plan to engage in a transaction, if he knows or should know that such transaction constitutes a direct or indirect— (A) sale or exchange, or leasing, of any property between the plan and party in interest; (B) lending of money or other extension of credit between the plan and a party in interest; (C) furnishing of goods, services, or facilities between the plan and a party in interest; (D) transfer to, or use by or for the benefit of, a party in interest, of any assets of the plan; or (E) acquisition, on behalf of the plan, of any employer security or employer real property in violation of section 407(a). (2)No fiduciary who has authority or discretion to control or manage the assets of a plan shall permit the plan to hold any employer security or employer real property violates section 407(a). (b) A fiduciary with respect to a plan shall not— (1) deal with the assets of the plan in his own interest or for his own account, (2) inhis individual or any other capacity act in any transac- tion involving the plan on behalf of a party (or represent a party) whose interests are adverse to the interests of the plan or the interests of its participants or beneficiaries, or (3) receive any consideration for his own personal account from any party dealing with such plan in connection with a transaction involving the assets of the plan. 5 (c) A transfer of real or personal property by a party in interest to a plan shall be treated as a sale or exchange if the property is subject to a mortgage or similar lien which the plan assumes or if it is subject to a mortgage or similar lien which a party-in-interest placed on the property within the 10-year period ending on the date of the transfer. STATEMENT OF THE CASE The issues which arise from these cases involve the largest Employee Stock Option Purchase (ESOP) in the history of the United States. On the date these original actions were filed National Steel Corporation owned and operated a facility known as the Weir- ton Steel Division. Suffering the fate that is endemic in the domestic steel industry in recent times, the Weirton Steel Division became unprofitable and the work force steadily de- clined. In view of the projected continued decline of the steel industry and the fact that approximately $1 Billion Dollars in capital improvements over the next ten years would be re- quired to modernize the facility to competitive levels, National Steel Corporation decided to divest itself of the Weirton facility. However, under a retirement program, known as “Plan 001” and administered by National Steel, such a divestiture would result in increased pension benefits to approximately 3,000 employees, in addition to extensive severance liabilities under collective bargaining agreements and managerial personnel policies. The total of such increased pensions and severance liabilities would approximate $123 million. The orchestration of this divestiture commenced on March 2, 1982, with the coercion of a threatened loss of jobs, when National Steel Corporation announced its intention to sell the Weirton Steel Division or reduce it to a finishing mill. This action would have resulted in permanent loss of jobs for 85 per cent of the existing employees. National also announced its intention to immediately commence discussions with the Inde- 6 pendent Steelworkers Union, the Independent Guards Union, and managerial employees of the Weirton Steel Division, for the purpose of arranging an employee purchase of the Weirton facility. On the same day, officials of the Independent Steel- workers Union met with managerial employees of the Weirton Steel Division to initiate discussions concerning the employee buy-out desired by National Steel Corporation and the collec- tive bargaining agreement which contained provisions relating to retirement rights and benefits, and severance benefits for affected hourly employees, including the Plaintiffs in the Sut- ton action. The salaried employees, including the Plaintiffs in the Dhayer action, were also participants in “Plan 001,” and were promised similar severance and pension benefits under National Steel’s managerial personnel policies. Among the benefits offered by National Steel were in- creased retirement benefits designated as “Increased Pension - Rule of 65” and “Increased Pension - 70/80” benefits, which had been extended to the employees for several years as an inducement to remain in the employ of National Steel. While one interpretation of these benefit provisions renders the benefits as conditional, the express language, nevertheless, established that the essence of the triggering condition giving rise to the benefits was simply the termination of the employer-employee relationship between National Steel and the employee. Specifically, the pension agreement’ stated, in pertinent part, that an employee, who is otherwise eligible, is entitled to an increased “Rule of 65” pension ifhis. . . service is broken by reason of a layoff... or . whose service is not broken and who is absent from work by season & . a layoff and whose return to active er or is declared u tkely by the Company . . . . who has not been offered suitable long-term employ- ! The “Pension agreement” referred to throughout this petition has, due to its length, been filed with this Honorable Court in a separate lodging. 7 Further, the Summary Plan Description, prepared by Na- tional Steel Corporation, clearly stated, with reference to “Rule of 65” benefits, that an otherwise eligible employee will receive such benefits when he has not been offered suitable long-term employment with the Company. Similarly, the pension agreement stated, in pertinent part, that an employee who is otherwise eligible, is entitled to an increased “70/80” pension if his . . . Service is broken by reason of a permanent shutdown of a plant, department or subdivision thereof or by reason of a layoff... or . . . whose service is not broken and who is absent from work because of ...a layoly and whose return to active employment is declared unlikely by the company .. . Under the terms of “Plan 001,” employees who retire under the “Rule 65” or “70/80” retirement provisions would receive their regular pensions, plus an additional $4 Hundred per month increase. Likewise, severance benefits under the collective bargain- ing agreement were conditioned, essentially, upon the termi- nation of the employer-employee relationship between Nation- al Steel Corporation and the employee. The collective bargain- ing agreement’ between National Steel and the Independent Steelworkers Union stated, in pertinent part: When in the sole judgment of the Company, it decides to close permanently a department or discontinue permanently a substantial portion thereof and terminate the employment of individuals, an employee whose em- ployment is terminated either directly or indirectly as a result thereof shall be entitled to severance allaow- ance.... ? The Collective Bargaining agreement referred to throughout this peti- tion has, due to its length, been filed with Honorable Court in a separate lodging. 8 The Summary Plan Description, required by the Employee Retirement Income Security Act of 1974, identified National Steel Corporation as the administrator and trustee of the plan. ... [National] is the pen administrator, trustee and ent for service of lega ess under the plan. . . . The plan administrator has the re ibility to manage the plan and act in the interest of the plan participants and must carry out its duties in accordance with the fiduciary standards of ERISA. Despite the fact that National Steel Corporation was the plan fiduciary, it continued to implement and orchestrate its intent to deprive plan participants of the “Rule 65” and “70/80” benefits provided for in the pension plan. The means to imple- ment National Steel’s twin objective of unloading its own un- profitable asset, the Weirton facility, and avoiding and abating the promised benefits attendant to such a divestiture, was to “negotiate with itself’ under a ruse of collective bargaining. The vehicle by which this would be accomplished was the creation of a joint committee comprised of National Steel man- agerial employees and union representatives, to form what later became known as the Weirton Joint Study Committee. The managerial employees on the Committee were under the day-to-day supervision of National Steel Corporation. The Joint Study Committee commissioned the consulting firm of McKinsey & Company to determine whether the Weir- ton Steel Division could survive as an independent company. On July 26, 1982, McKinsey and Company submitted a report which concluded that survival was possible. However, the report makes repeated reference to the risky nature of the venture. After the feasibility study was received, the Joint Study Committee hired the actuarial firm of Towers, Perrin, Forster & Crosby (hereinafter referred to as TPF&C) to examine certain pension matters. The TPF &C report’ set forth Nation- ’The TPF&C report referred to throughout this petition has, due to its length, been filed with Honorable Court in a separate lodging. 9 al Steel Corporation’s liability were it required to pay shut- down benefits: The actuarial present value on a Pre-Shutdown basis is $452.8 million. This figure is significant as a starting value, since it a ximates the measurement of plan obligations as National currently measures itself. On a Plant Shutdown basis (Weirton operations only), the actuarial present value increases from $452.8 million to $770.6 million. In other words, if National had shut down Weirton on January 1, 1982, the total worth of the benefits would have been $770.6 million. Of the $317.8 million increase ($770.6 - $452.8 = $317.8), $123.2 million repre- sents the worth of the $400 per month temporary supple- ments. The affidavit of TPF &C Actuary, David Kass, submitted in opposition to the Motion for Summary Judgment, refers to this unfunded shutdown liability as a plan asset.‘ The TPF&C report further noted that National Steel Corporation’s desire to avoid that additional liability of over $300 Million was a material consideration in establishing the purchase price of the Weirton facility: The employees of the Weirton Division of National Steel Corporation are considering purchasing the Weirton Di- vision from National. Unfunded pension obligations are a factor in determining a purchase price. The conclusion reached by the TPF &C report was confirmed by the testimony of Carl Valdiserri. He testified as follows: Now, during the period of time that the negotiations are going on, this for the establishment of the . was there also consideration being given to the liabilities or to the pension fund liabilities? A. Absolutely. Accordingly, the purchase price ultimately established was $66 Million, though the book value of the assets of the Weirton * The affadavit of David Kass is a part of the record below and is found in the appendix 120a-122a. 10 Division was $300 Million. The difference reflects considera- tion given by National in exchange for the avoidance by Na- tional of shutdown retirement benefits. The negotiations concerning the price and other terms of sale with National Steel was undertaken by the Joint Study Committee, which had assured employees that it would negoti- ate with National Steel to find a way to create an independent Weirton without compromising their pensions. However, it soon became apparent that a condition of sale imposed by National Steel Corporation was an agreement to forego the supplemental retirement benefits provided in the pension plan and relied upon by older workers. At the hearing on preliminary injunction, uncontroverted evidence established that over 3,000 Weirton Division employ- ees were eligible for “Rule of 65” and “70/80” benefits and that the liability of National Steel for these benefits was a “grave concern” to the Company. At the same hearing, evidence fur- ther established that the General Counsel of National Steel’s Weirton Division stated that National Steel would not agree to a sale if the Company would be required to pay shutdown benefits to employees of the newly created Weirton Steel Company. This was confirmed by the testimony of Joseph Robbins, a salaried employee at the Weirton Steel Division. Robbins stated that the Weirton General Counsel advised the salaried employees that the sale was conditioned on an agree- ment to forego shutdown pension benefits. Notes taken by employee Robbins at a meeting of salaried employees state, in pertinent part: Bill [Doepken, General Counsel of the Weirton Steel Divi- sion] said that they would not complete a deal if they were liable for these plans. National is demanding a contract — to take the plant shutdown liability off their The contract would have to be amended before a sale. Thus, the record is clear that, as a condition of sale, National insisted that the employees forego the “70/80” and “Rule of 65” retirement benefits promised in the retirement plan adopted 11 and administered by National. There was no evidence in the record of the extent to which the Joint Study Committee resisted National’s insistence that employees forego the shut- down retirement benefits. Nor was there an opportunity to develop any record with respect to the efforts, if any, made by the union to protect the negotiated rights of its members. What is clear in this abbreviated record is that the Joint Study Committee and the union acquiesced in and accepted National Steel’s terms with respect to the shutdown retirement provi- sions. The Agreement in Principle,’ reached between National Steel Corporation and the Joint Study Committee, specified that the sale of the Weirton facility would not give rise to either “70/80” or “Rule of 65” retirement benefits. Under the agree- ment, National’s shutdown liability would be limited to paying supplemental shutdown payments, but not severance pay, in the event of “a shutdown of Weirton of substantially all of its facilities; in effect, that Weirton shall cease to exist within five years from the closing date.” The agreement also contained the following provisions: National will neither reimburse Weirton nor pay Weirton Division employees a severance allowance in connection with +d closing or shutdown occurring on or after the clos- ing date. All union contracts with National will be amended to provide that they be read in conjunction with the agree- ment between the parties, and to the extent such contracts are inconsistent with such agreement, they will be amended. National will amend Plan 001 to provide that the sale of the Weirton Division assets does not constitute a shutdown and will amend its severance plans and poli- cies for nonrepresented employees to provide that the sale of the Weirton Division assets will not entitle such persons to severance payments. > The Agreement in Principle and ammendment thereto has been filed in a separate lodging with this Honorable Court. 12 The Agreement, therefore, permits National Steel to divest itself of the Weirton facility without incurring “Rule of 65” and “70/80” retirement liability or the obligation to pay severance benefits. On this limited record, the District Court granted partial Summary Judgments in favor of National Steel, its Retirement Program, and the Independent Steelworkers Union. Finding no just reason for delay, it entered Final Judgment, pursuant to Federal Rule of Civil Procedure 54(b), on the issues that it had considered. The companion case, styled Brunner, et al. v. National Steel, et al., was consolidated with the Sutton and Dhayer cases in the Lower Court and concerns similar issues. A sepa- rate writ of certiorari has been filed in that matter. Appeal was made to the Fourth Circuit Court of Appeals, which heard the matter on consolidation of all cases herein. On December 30, 1983, the Fourth Circuit Court of Appeals affirmed the judgments of the District Court, holding inter alia, that: 1. No genuine issue of fact remained in dispute, save one which the district court accepted as proved. 2. ERISA does not impose any fiduciary obligations to maintain allegedly contingent berefits. 3. The accrued benefits secured by ERISA do not en- compass unfunded, contingent early retirement benefits or severance pay. 4. The ERISA Act was not designed to prohibit modifi- cation of ancillary benefits. 5. The means, manner, mode, and timing of any 11th hour amendments are not to be reviewed by fiducia- ry standards. 6. National Steel Corporation did not transfer assets of the plan to a party-in-interest, deal with plan assets for their own account, or act in any [capacity in a transaction involving the plan on behalf of a party whose interests are adverse to the plan, and plain- 13 tiffs actuary’s affidavit opinion was not proof that National Steel’s contingent liability was an asset of the plan within the meaning of ERISA. 7. National Steel Corporation has not caused the bene- fit plan to engage in a transaction with respect to the contingent benefits. 8. The evidence conclusively established that the Inde- pendent Steelworkers Union did not breach its duty of fair representation. 9. The District Court committed only harmless error by granting summary judgment to the Independent Steelworkers Union without a pending motion under “Rule 56” and without affording plaintiffs the notice and protection afforded by Rules 12(b)(6) and 56. 10. The District Court committed only harmless error by denying plaintiffs further discovery. REASONS FOR ALLOWANCE OF THE WRIT I. Section 404 Of The Employees Retirement Income And Security Act Imposes Fiduciary Obligations And Restric- tions Which Are Intended To Protect Participants And Beneficiaries And Prohibit Plan Fiduciaries From Self- Dealing. The Fourth Circuit By Failing To Extend Those Fiduciary Obligations To This Transaction Erred As A Matter Of Law. The compelling reasons for allowance of this writ for review commence with the obvious ramifications of the precedent established by this case involving the largest Employee Stock Option Purchase (ESOP) in the history of the United States. Never before has this High Court been presented with these unique first impression issues involving the duties and para- meters of fiduciary conduct in an employee purchase con- ditioned upon the fiduciary’s demanded 11th hour amendments to a pension plan as essential consideration to the sale of its own depleted facility. The Fourth Circuit stated that issue succinctly in its opinion: The critical question, therefore, is whether ERISA im- poses any fiduciary obligations to maintain the con- 14 tingent benefits about which the appellants complain. If it does, summary judgment was ina ate, esoues in avoiding the payments through sale of the Division, Na- tional’s self-motivation, which the district court assumed for the purpose of this proceeding, cannot be reconciled with its fiduciary duties. However, the Court went on to narrowly define the reach of fiduciary protection, and thus left undaunted the Northern District’s sanction of National Steel’s tainted behavior, as a matter of law, and without affording petitioners any reason- able discovery in order to prove their assertions. Section 404 of the Employee Retirement and Income Securi- ty Act, 29 U.S.C. Section 1101 et seq., (hereinafter referred to as “ERISA”), specifically states, in pertinent part: Sec. 404(a)(1). . . a fiduciary shall discharge his duties with respect to a plan solely in the interest of the partici- pants and beneficiaries and ... (A) for the exclusive —— of: (i) providing benefits to participants and their ficiaries ... In the instant case, the Fourth Circuit held that, as a matter of law, it was not empowered to scrutinize National Steel Corporation’s conduct within the above fiduciary mandate be- cause: The Act was not designed to prohibit modification of these ancillary benefits. and, An employer may change such benefits without violoti ERISA. a oe ol for reason that National Steel Corporation has the right —e or amend . . . unfunded contingent bene- The Court Buttressed its ruling, primarily, upon United Mine Workers of America Health and Retirement Funds v. Robin- son, 455 U.S. 562 (1982). Petitioners submit that the Fourth Circuit was in error for the following reasons: 15 First, by implication, the Robinson Court stated that fiduciary review may be held if the collective bargaining proc- ess itself is tainted to the extent that it violates any command of Congress. In the instant case, National Steel Corporation negotiated an ESOP agreement. The alleged negotiations oc- curred between the National Steel Corporation and the Weir- ton Joint Study Committee, which Committee was at all times therein comprised, in part, of high-ranking National Steel executive officers. Under such circumstances, the alleged “col- lective bargaining” did not possess traditional elements of confidentiality and arms-length negotiations. Second, the alleged “collective bargaining” that occurred did not primarily concern itself with the traditional benefits of employment, but was concerned with the sale of the fiduciary’s own property, which sale was conditioned upon 11th hour amendments to the pension plan. Petitioners submit that the District Court’s granting of a summary judgment, while precluding discovery into the collec- tive bargaining process itself under such suspect circum- stances, contravenes the salutary objectives of ERISA." As so aptly stated by one Court: ee should be given a broad construction in order to rry out its purposes of a interest toe arGcine nts and =" aves v. Penn 453 (10th Cir. 1978 Collective bargaining, ae the unique circumstances of this case, implicates fiduciary standards imposed by Section 404 of ERISA for reason that the demanded amendments significant- ly affected the plan participants’ imminent shut down benefits. These benefits became imminent by the acts of the fiduciary itself, when it announced its intent to terminate 85 percent of the existing jobs. Rather than guard the participants’ immi- nent contingent benefits, it acted solely in its own interest by 6“The standard laid down for District Courts in passing on motions for summary judgment is strict.” Clarke v. Montgomery Ward & Company, 298 F. 2d 346, 348 (4th Cir. 1962). See, also Phoenix Savings & Loan, Inc. v. Aetna Casualty & Surety Co., 381 F. 2d 245 (4th Cir. 1967); Adickes v. S.H. Kress & Company, 398 U.S. 144 (1970). 16 demanding approval of amendments deleting those benefits from a majority of the bargaining unit employees. This major- ity was not eligible for “Rule 65” or “70/80” benefits. However, the petitioners, who constituted a minority of the bargaining unit, the older workers, had no choice in the matter. Thirdly, the petitioners represented in the Dhayer case, were not a part of the bargaining unit. Accordingly, their only protection was reliance on National’s status as a fiduciary in its relationship to their rights and benefits. That reliance was sorely misplaced. Amendments under certain circumstances have given rise to judicial intervention under fiduciary standards in similarly inequitable circumstances. In Calhoun v. Fallstaff Brewing Corp., 478 F. Supp. 257 (Mo. 1979), Opinion After Trial Sub. Nom. Dependahl v. Fallstaff Brewing Corp., 491 F. Supp. 1188 (Mo. 1980), Modified On Other Grounds, 653 F. 2d 1208 (8th Cir. 1981), Cert. Den. 454 U.S. 968 (1981), an employer sought to require an amendment which would discontinue severance benefits that otherwise would have been payable. The Court denied the employer defendant’s motion for sum- mary judgment and gave the plaintiffs the opportunity to prove their allegations that such an action constituted a breach of fiduciary duty. The Calhoun Court stated: ... an amendment of the plan as alleged by plaintiff clearly violates its fiduciary duty. The fiduciaries are to guard the interests of the participants and beneficiaries, not those of the employer. . . to argue that the employer may terminate such plans at any time without violating the statute is clearly not supportable in the statutory language nor in equity. 478 F. Supp. at 361. The Amendment to “Plan 001” covering the Petitioners and those similarly situated suffers the same vice as that con- demned in Calhoun. The demanded 11th hour modification of this pension agreement by the fiduciary for the sole purpose of withdrawing a benefit which was imminent absent such an amendment must give rise to fiduciary violations. To not apply 17 the standard set forth by Congress in Section 1104 to this unique and novel sequence of events would violate the clear remedial intention of the Act.’ The Fourth Circuit reasoning suffers several additional flaws. First, salaried employees, including the Dhayer petitioners, were not even represented for collective bargaining purposes and, with regard to these employees, National Steel, in its status as administrator, simply unilaterally amended this plan in order to deprive employees of these long-term entitlements. There was no negotiation, choice, nor bargaining involved. The older unionized employees, represented in the Sutton case, had little choice in “bargaining” over these benefits. This High Court in National Labor Relations Board v. AMAX Coal Company, 453 U.S. 322 (1981) explains the critic- al distinction between the conduct of a fiduciary and parties engaged in collective bargaining: “the atmosphere in which employee benefit trust funds fiduciaries must operate, as mandated by Section 302(c)(5) and ERISA is wholly inconsistent with this process of compromise and economic pressure.” 453 U.S. at 336. Here National Steel engaged in clear and unrelenting eco- nomic pressure arguably accepted in the collective bargaining context but which should be wholly inappropriate in any trust setting. The hallowed words of Justice Cardozo ery out for application in the context presented here, a trustee must be held to a higher standard than the “morals of the marketplace.” Mienhard vy. Salmon, 163 N.E. 545, 564 (Ct. of App. N.Y. 1928). 7A violation of Sec. 404 can only be discovered by careful analysis of relevant facts. This was not done here. Donovan v. Bierwirth, 680 F. 2d 263 (2nd Cir. (1982), Flinchbaugh v. Chicago Pneumatic Tool Co., 531 F. Supp. 110 (Pa. 1982). Summary Judgment precluded developing the record herein to develop this essential factual analysis. 18 National’s bargaining with Petitioner’s interests, in their early retirement benefits and long term employment entitle- ments states a classic case of breach of trust. It would state a cause of action even if the common law concepts of fiduciary duty and conflict of interest had not been specifically written into the ERISA statute. For example, in the case of Roberts v. Sears, Roebuck & Co. 573 F. 2d 976 (7th Cir. 1978), which involved a company’s overreaching in negotiating with a for- mer employee for rights to his invention, the court observed that factors giving rise to a relationship of trust include “dis- parity of age, education and business experience between the parties,” as well as “the existence of an employment rela- tionship and the exchange of confidential information from one party to the other.” Also crucial was the fact that the employer expected the employee to rely on various representations made to him. 573 F. 2d at 983. Similar factors and a similar reliance existed here. That an employer continues to act as fiduciary of its employ- ees’ pension plan, while engaged in a transaction affecting their interests, is an additional factor which brings the specific pro- visions of ERISA into play in this instance. Second, the Fourth Circuit erroneously reasons that “. . . if ERISA does not impose an obligation on National to main- tain the contingent benefits, National in its capacity as an employer could undertake to eliminate them.” Nothing in the Act can be read as limiting fiduciary standards to vested bene- fits or relegating shutdown retirement benefits to some lesser standards of fiduciary duty. The issue presented in this case is not whether National Steel Corporation would have been pro- hibited from modifying these “ancillary benefits,” but, rather how it went about this modification, namely, by demanding at the 11th hour that, unless these benefits were amended out of the plan, they would simply not sell the steel mill." The result would have been the loss of jobs for all employees. 8 The 4th Cir. Court’s summary dismissal of Sec. 404 implications was based solely on Fentron Industries, Inc. v. National Shopman Pension Fund, 674 F. 2d 1300 (9th Cir. 1982). Contrary to the reasoning of the 4th 19 The determination of when the generic fiduciary obligations of ERISA are implicated is admittedly a difficult task depen- dent on factual shadings and particular circumstances of the action under review. The Northern District Court, by its re- fusal to allow discovery, and the Fourth Circuit’s affirmation of the lower court’s decision precluded the type of record neces- sary to fairly address and resolve the issue in a monumental case of first impression. Never before has our society been confronted with the rapid transition from an industrial to a technological age, with its resultant decline of industrial jobs and abandonment of old industrial facilities. These sociological factors will precipitate continued efforts by major corporations to unload unprofitable facilities to desparate workers through ESOPs. While ESOPs were originally intended to provide protection to industrial workers, this case represents an ominous sign that ESOPs may now be utilitized as a weapon against the older workers, in particular. In reaching its conclusion that Section 404 of the Employees Retirement and Income Security Act was not violated in this instance, the Fourth Circuit failed to consider the totality of circumstances within which these amendments were exacted. This High Court in its AMAX opinion explained: “... @ trustee bears an unwavering duty of complete loyalty to the rat: iciary of the trust, to the exclusion of sts of all other parties. Restatement (Second of Trusts Section 170(1) (1957); 2 A Scott, Law of Trusts Section 170 (1967). To deter the trustee from al vempta- tion and to preveni any fraggnst injury to the beneficia the rule against a trus rx ay A his loyalties must be enforced with ‘uncomprom rye, hr idity.’ Meinhard v Salmon, 249 NY 458, 164, 16 164 NE 545, 346 (Cardozo C.J.) A fiduciary cannot ‘contend ‘that, although he had con- Cir., that opinion does not hold that modifying ancillary benefits never violates or implicates Sec. 404. Rather, it holds that such amendments are not “per se” violations. It is important to note that that decision was sent back on Remand for a closer factual review by the District Court to ascertain whether a breach of fiduciary obligations resulted. That is precisely what your petitioners herein request. 20 flicting interests, he served his masters _— well or that his primary loyalty was not weakened by t ll of his secondary one.’ Woods v. City National Bank & Trust sg ye tg 262, 269, 85 L Ed 820, 61S Ct. 493.” 453 U.S. a , 330. Referring to Section 404, the Court in Eaves v. Penn, Supra, noted that the “. . . provisions embody a carefully tailored law of trusts, including the familiar requirement of undivided loyalty to beneficiaries. . . .” 585 F. 2d at 457. Here, National Steel, though employer, administrator, fiduciary, and offeror of the Weirton Division, acted to deprive beneficiaries of long- term retirement benefits that would have otherwise been pay- able. The Company acted solely in its own interest and to the clear detriment of the plan participants. Neither the reasoning nor the authority cited by the Court justifies this departure from the Act. Accordingly, petitioners respectfully request that this Writ for review be granted. II. The Fourth Circuit Court Erred In Affirming The Lower Court’s Failure To Find A Violation Of Section 1106 Of ERISA In This Transaction. In addition to the generic standards governing fiduciary obligations, codified at 29 U.S.C. Section 1104, Congress also specifically proscribed certain conduct by plan fiduciaries. In McDougal v. Donovan, 552 F. Sup. 1206 (IL 1982), the Court observed: Rather than leaving all fiduciary transactions to be judged by the general Section 1104 standard, Congress also enacted Section 1106, which prohibited fiduciaries from causing the plan to engage in certain specified transactions. These prohibitions evidence Congressional desire to prevent transactions that offer a — potential for loss of ae assets or for insider abuse. Marshall v. Kelly, 465 F. Sup. 341, 354, (W.D. Okla., 1979).” 552 F. Sup. at 1214, 1215. “Party-in-interest” is defined in 29 U.S.C. Section 1002(14) and under the definition National is clearly a party in interest since it is both a fiduciary and an employer of employees 21 covered by a benefit plan. This High Court further reiterated the Congressional intent behind Section 1106 by stating in its AMAX decision: The legislative history of ERISA confirms that Congress intended in particular to prevent trustees ‘from engagi in actions where there would be a conflict of interest wit the fund, such as representing any party dealing with the fund.’ S Rep No. ae 18 31, 32 (1973). In short, the fiduciary sions of ERISA were designated to prevent a trustee Grom being put into a position where he has dual loyalties, and herdore, he cannot act exclusively for the ange of a plan’s participants and beneficiaries.’ H.R. pn . Rep No. 93-1280, supra, at 309.” 453 U.S. a. 333, Here, National Steel announced that it would divest itself of the Weirton facility, thereby triggering shutdown retirement benefits. National then engineered a transaction for the pur- pose of relieving itself of such liability. National caused the plan to relinquish an asset in the form of payments required to be made to the plan for distribution to plan participants. Con- trary to the explicit command of Section 1106, it acted in a transaction affecting the plan in a manner adverse to the plan beneficiaries. Perhaps even more incredible is that in so doing, it benefitted itself as employer, while breaching its obligations as fiduciary. The afidavit of the actuary, David Kass,’ is not all the Petitioners submitted in support of their argument. How- ever, having been precluded from discovery, they were unable to develop a full record. The Fourth Circuit Court noted that a prudent fiduciary might consider National’s contingent liabil- ity but stated that “the actuary’s opinion is not proof that National’s contingent liability is an asset of the plan within the meaning of ERISA.” The argument is circuitous in that further proof was not allowed because the Petitioners were precluded from developing a record. Yet, again, based on a sparse and undeveloped record, the Appellate Court summarily stated: * Filed with this Court in the Appendix at 120a-122a. 22 National has not caused the benefit plan to engage in a transaction with respect to the contingent benefits. This is simply not the case. The plan was required to forfeit, in order to accommodate the interest of National Steel Corporation as employer, the sum of $300 Million, which would in effect, be given to National Steel as a part of the sale. Certainly, a loan of pian assets to the employer is prohibited by Section 1106. see, e.g. Freund v. Marshall & Illsley Bank, 485 F. Supp. 629 (Wis. 1979), Marshall v. Kelly, 465 F. Supp. 341 (Okla. 1978). To reflect in the final sale price of the Weirton facility the amount of the conditional benefits which would have otherwise been paid to participants, but for amendments, makes those benefits essential consideration for a contract to sell the employers depleted facility. This is precisely the type of behavior prohibited by Section 1106. In affirming the narrow reading of the term “transaction” utilized by the District Court, the Fourth Circuit clearly erred. Certainly, if plan assets were used by the Company as security for a sale by the Company of one of its divisions, Section 1106 was violated. Pursuant to McDougal v. Donovan, 552 F. Sup. 1206 (IL 1982), and its progeny, ERISA should be given a liberal construction to further the policies of the Act. In fact, the Congressional history reveals: “The statute prohibits the direct or indirect transfer of any plan income or assets to or for the benefit of a party-in- interest. It also prohibits the use of plan income or assets by or for the benefit of any party-in-interest. As in other situations, this prohibited transaction may occur even though there has not been a transfer of money or property between the plan and a party-in-interest. Por example, securities purchases or sales by a plan to manipulate the price of the security to the advantage of a party-in-interest constitutes a use by or for the benefit rf a party-in-interest of any assets of the plan.” [1974] U.S. Code Cong. & Ad. News 5089. The transaction occurring in Weirton, West Virginia, used plan assets, whether styled “vested,” “contingent,” or “ancilla- ry,” to benefit National Steel Corporation in the sale of its own depleted Weirton facility. 23 Even if the term “assets” is given a restrictive meaning, the terms of Section 1106 were still violated. Section 1106(b)(2) precludes a fiduciary from acting in a transaction on behalf of a party whose interests are adverse to the plan participants and beneficiaries. It was in National’s best interest to sell this Mill, but it was not in the best interests of the petitioners to amend these plans. The entire transaction was ridden with fiduciary implications and violations. Finally, the Appellate Court noted that “the Appellants have cited no case in support of their position.” This was not the case. Precedent was cited throughout the oral argument and written briefs. However, there simply is no case directly on point, and this is the reason that this Honorable Court is asked to review the holding of the Fourth Circuit. This transaction, which has resulted in the denial of Petitioners supplemental pension and severance benefits, constitutes the largest em- ployee purchase in history and could pave the way for further abuse by employers who stand as fiduciaries in future employ- ee purchases if left undaunted. Throughout its opinion, the Fourth Circuit Court indicated a concern for the Legislative history. It should be noted that the Committee explicitly stated its desire “not to discourage early retirement plans.” Without this Court’s intervention, the im- pact of the Fourth Circuit opinion will be to create a chilling effect on all early retirement plans which does not auger well for the future of older workers in basic industries such as steel. The conflict-of-interest provision, that the fiduciary not act “on behalf of a party . . . whose interests are adverse to the interests of the plan,” applies to “any transaction involving the plan.” 29 U.S.C. Sec. 1106(b)(2). This was just such a transac- tion and the actions of the fiduciary violated the Act. It is submitted that the holding of the Fourth Circuit to the contra- ry is in error. 24 III. The Court Below Erred In Affirming The Northern Dis- trict’s Dismissal Of Pendent Claims. In Paragraph V of its opinion, the Fourth Circuit summarily affirmed the lower court’s dismissal of pendent State claims in this action. No reason or explanation was given. On June 3, 1983, the trial court dismissed certain pendent claims which alleged that the respondents conduct violated the substantial public policy of the United States and the State of West Virgi- nia. Respondents’ violation of specific provisions of ERISA would contravene a substantial public policy of the State of West Virginia, as a matter of law, because West Virginia Code, Section 21-1A-1(a), deciares that it is the public policy of the State to “protect the rights of individual employees. . . .” It is clearly established under West Virginia law that an em- ployer may be held liable in tort and contract for damages occasioned by such employer’s acts when the unlawtul conduct is motivated by factors which contravene the substantial public policy of the State of West Virginia or the implied and ex- pressed promises of the employer. Harless v. First National Bank in Fairmont, 246 SE 2d 270 (W. Va. 1978); and later, 289 SE 2d 692. Further, Section 510 of ERISA specifically states in perti- nent part: “It shall be unlawful for any person to discriminate against a participant . . . for the purpose of interfering with the attainment o —— to which such participant may become entitled u the plan... .” Clearly, National Steel did interfere with just such a right. The right to supplemental benefits triggered by their own actions. Thus, there is a common nucleus of operative facts between the ERISA and pendent claims, in that the respective claims are such that the expectation is that they would be considered in one judicial proceeding. See, United Mine Work- ers v. Gibbs, 383 U.S. 715 (1966). Further, the State law claims were appropriate for Federal Court determination because they formed a separate but parallel, ground for relief also sought in the substantial Federal claim based on ERISA. Hurn v. Oursler, 289 U.S. 238 (1933). The provisions of the 25 plan, deleted by forced amendment, gave rise to additional benefits to these petitioners by right upon the severance of their employment with the National Steel Corporation. The dismissal of these pendent claims, as well as the sum- mary affirmation of the lower court’s grant of final judgment, constitutes a violation of substantial procedural due process. Accordingly, this High Court is respectfully requested to grant petitioners writ for review. CONCLUSION The Instant Petition presents this Honorable Court with complex first impression legal issues involving the application of fiduciary principles in the context of the largest employee purchase in history. In so doing, it presents a unique opportun- ity for this Court to chart a path for future transactions such as this by defining the appropriate boundaries within which a prudent fiduciary must operate in such a transaction. Here, a Federal Trial Court refused to allow discovery and on the basis of a sparse record, granted final judgment against the aggrieved petitioners. The Fourth Circuit Court of Appeals affirmed the trial court’s opinion and, thereby, con- doned the conduct of the fiduciary by erroneously reasoning that fiduciary principles, mandated both by Federal Law and the Common Law which it codified, simply did not apply to this transaction. 26 The petitioners assert that such judicial action simply ignored all precedent enunciated by the Supreme Court in its repeated opinions regarding the conduct of fiduciaries, as well as the mandates of ERISA; the Act’s Congressional History and every tenet of procedural Due Process. For all of the above reasons, the Writ of Certiorari should be granted. Respectfully submitted, JouN RANDOLPH Spon, JR. Counsel of Record KEITH A. FouRNIER SPON & FOURNIER Suite 904-911 AmeriTrust Bank Building Steubenville, OH 43952 (614) 282-3600 Counsel for Petitioners Eugene R. Sutton, et al., and Petitioners Edward Dhayer, et al. la APPENDIX A PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 83-1567 No. 83-2003 Eugene R. Sutton; Raymond Ludewig; Paul D. Alexander; Anthony J. Angelo; John P. Barlas; Thomas V. Barnhouse; William Bell; Walter Eirrell; Pete Brier and Camden Bumgarner, et al., Appellants, v. Weirton Steel Division of National Steel Corporation; Inde- pendent Steel Workers Union and Pension Agreement be- tween the National Steel Corporation and the Independent Steelworkers Union, Appellees. No. 83-1569 No. 83-1895 Gerald W. Brunner; Clarence Rifkee; Norman Clark; James Hoge and all others similarly situated, Appellants, v. National Steel Corporation; Independent Ster' ‘ers Union; Weirton Joint Study Committee, Inc. and Pensi. Agreement between the National Steel Corporation and the Independent Steelworkers Union, Appellees. 2a No. 83-2004 Edward Dhayer; Edward Bittner; Richard Blancato and James H. Browning, et al., Appellants, v. Weirton Steel Division of National Steel Corporation and Independent Steelworking Union, Appellees. Argued December 7, 1983 Before PHILLIPS and ERVIN, Circuit Judges, and BUTZ- NER, Senior Circuit Judge. Barry Laine (Anthony P. Sgambati, II, David Roloff, Green Schiavoni, Murphy, Haines & Sgambati Co. L.P.A. on brief) and John Randolph Spon, Jr. (Keith A. Fournier, Spon & Fournier on brief) for appellants; Carl H. Hellerstedt, Jr. (Joseph Mack, III, Brian J. Dougherty, Thorp, Reed & Arm- strong on brief); David L. Robertson (William Kiefer, Peter Rich, Bogarad & Robertson on brief); Anthony F. Phillips (Gerald Kerner, Brian E. O’Connor, Laurence H. Lenz, .Jr., Willkie Farr & Gallagher on brief) for appellees. Decided DEC 30 1983 3a BUTZNER, Senior Circuit Judge: This appeal of consolidated cases arises out of an agreement by National Steel Corp. to sell its Weirton Steel Division to a new company, Weirton Steel Corp., which is owned by the Division’s employees. The district court granted partial sum- mary judgments in favor of National, its Retirement Program, and the Independent Steelworkers Union.* Finding no just reason for delay, it entered final judgment pursuant to Federal Rule of Civil Procedure 54(b) on the issues that it had con- sidered. The appellants, a minority of the employees at the Division, assert that the district court erred by holding that National did not violate the Employee Retirement Income Security Act (ERISA), that the union did not breach its duty of fari representation, that class certification was inappropriate, and that the appellants were not entitled to injunctive relief. We find no cause for reversal in these assignments of error and affirm the judgments of the district court. In March 1982, National announced that it would reduce capital expenditures, production capacity, and employment at the Division. It also said it would consider a sale of the Division. The Weirton Joint Study Committee, Inc., was then estab- lished to study the possibility of forming a corporation owned by employees to purchase the Division. The committee in- cluded five representatives of management, twenty-one repre- sentatives of the Independent Steelworkers Union, and three representatives of the Independent Guard Union. The commit- tee retained legal counsel and commissioned consultants to make a feasibility study. It also engaged other firms to assist with aspects of the proposed transaction requiring particular expertise. *Dhayer v. Weirton Steel Division of National Steel Corp., 571 F. Supp. 316 (N.D. W.Va. 1983); Sutton v. Weirton Steel Division of National Steel Corp., 567 F. Supp. 1184 (N.D. W.Va. 1983). 4a The agreement of sale provided for modification of pension and severance benefits contained in the collective bargaining agreements for union employees and in National’s retirement program and personnel policies for salaried nonunion employ- ees. These benefits and the amendments are essentially the same for all employees. union members approved the changes in the bargaining agreements and other terms of sale. National unilaterally changed its program and policies for nonunion members. The benefits and the amendments affecting them are fully described in the opinions of the district court. For the purposes of this appeal they can be recepitulated as follows. All workers, whether they choose to work for the new company or not, will retain the normal retirement benefits earned through service with National before the sale. National will segregate all assets attributable to the Division and establish a separate trust available to pay normal retirement benefits to past and present Division employees. The new company will be responible for benefits accrued after the change in ownership. Whe an em- ployee who has worked at both companies retires, his years of service will be aggregated, an he will receive beneftis from National and the new company in proportion to his service for each. In addition to normal retirement benefits, National provided early retirement benefits and severance pay in the event of shutdown or layoff for employees with the requisite combina- tion of age and years of employment. For convenience, we will refer to these benefits and severance pay collectively as con- tingent benefits. These benefits were not funded. They were payable, if at all, from National’s corporate treasury. The agreement stipulates that the sale of the Division will not trigger payment of the contingent benefits if within five years of the sale Weirton Steel closes. Contingent benefits similar to those formerly available at National will be provided by the new company. 5a The appellants protest the agreement to eliminate Nation- al’s obligation for the contingent benefits upon the sale of the Division. It is their position that, regardless of their immediate employment by the new company, their status as employees of National will be terminated by the sale. In the absence of the agreement, they insist, the sale would entitle them to the contingent benefits. They point out that the shutdown benefits alone, without the severance pay, would aggregate approxi- mately $300,000,000 and that National has avoided this liability. II Summary disposition of the issues presented in this appeal was appropriate. All of the material facts, save one, were established by uncontradicted evidence. To fill the hiatus occa- sioned by the single dispute over a genuine issue of fact, the district court accepted as proved the allegations that Nation- al’s sole motivation for the sale was avoiding future pension obligations. See Dhayer, 571 F. Supp. at 326; Sutton, 567 F. Supp. at 1198. . . Though permitted by 29 U.S.C. § 1108(c)(3) to serve as an administator of its pension plan, National’s fiduciary obliga- tions were not diminished by its dual role. Donovan v. Bier- wirth, 680 F.2d 263, 271 (2d Cir. 1982). National was required to discharge its fiduciary duties “solely in the interest of the participants and beneficiaries.” 29 U.S.C. § 1104(a)(1). ER- ISA’s requirements “insulate the trust from the employer’s interest,” and, consequently, National was not permitted to assume a position where it had “dual loyalties” in the adminis- tration of the plan. NLRB v. Amax Coal Co., 453 U.S. 322, 333-34 (1981). By retaining liability for all normal retirement benefits and establishing a separate trust for their payment, National did not violate any provision of ERISA or any fiduciary obligation with respect to accrued benefits, which under the plan were payable at age 65. The critical question, therefore, is whether 6a ERISA imposes any fiduciary obligations to maintain the con- tingent benefits about which the appellants complain. If it does, summary judgment was inappropriate, because in avoid- ing the payments through sale of the Division, National’s seif- motivation, which the district court assumed for the purpose of this proceeding, cannot be reconciled with its fiduciary duties. On the other hand, if ERISA does not impose an obligation on National to maintain the contingent benefits, National in its capacity as an employer could undertake to eliminate them. Under ERISA’s vesting rules, only accrued benefits must be nonforfeitable. 29 U.S.C. § 1053(a). With respect to the issues raised by these appeals, ERISA defines an accrued benefit as an “annual benefit commencing at normal retirement age.” 29 U.S.C. § 1002(23). The accrued benefits secured by ERISA do not encompass unfunded, contingent early retirement benefits or severance payments. The Act was not designed to prohibit modification of these ancillary benefits. See H.R. Conf. R. No. 1280, 93d Cong., 2d Sess. 273, reprinted in 1974 U.S. Code Cong. & Ad. News 5038, 5054; H.R. Rep. No. 807, 93d Cong., 2d Sess. 60-61, reprinted ‘11 1974 U.S. Code Cong. & Ad New 4670, 4726. Rather, Congress believed that the “vesting of these ancillary benefits would seriously complicate the admin- istration and increase the cost of plans whose primary function is to provide retirement income.” H.R. Rep. No. 807, 93d Cong., 2d Sess. 60, reprinted in 1974 U.S Code Cong. & Ad News 4890, 4935. An employer may change such benefits with- out violating ERISA. See Fentron Industries, Inc v. National Shopmen Pension Fund, 674 F.2d 1300, 1306 (9th Cir. 1982). But cf. Dependahl v. Falstaff Brewing Corp, 491 F. Supp. 1188, 1196-97 (E.D. Mo. 1980), modified, 653 F.2d 1208 (8th Cir. 1981). Any right to payment of benefits before normal retirement age must be found in pertient employment agree- ments. Fine v. Semet, 699 F.2d 1091, 1093 (11th Cir. 1983). Consequently, National, in its capacity as an employer, did not violate ERISA. 7a Also, National, in its capacity as a fiduciary, did not violate ERISA. Congress authorized an employer to administer its pension plan, and in the discharge of its duties with respect to the plan, the employer must satisfy the exacting fiduciary standards imposed by ERISA. Congress, however, has not prohibited an employer who is also a fiduciary from exercising the right accorded other employers to renegotiate or amend, as the case may be, unfunded contingent benefits payable before normal retirement age. The changes, accomplished in this manner, are not to be reviewed by fiduciary standards. These conclusions are sustained by United Mine Workers Health and Retirement Funds v. Robinson, 455 U.S. 562, 573-76 (1982). Robinson dealt with the fiduciary obligations imposed by § 302 of the Labor Management Relations Act, 29 U.S.C. § 186, on trustees of a fund for employee benefits. Nevertheless, it is pertinent because the high fiduciary stand- ards exacted by both the Labor Act and ERISA are essentially the same. In Robinson, benefits created by the collective bargaining agreement were changed by renegotiation. The Court held that the changes were not to be reviewed under fiduciary standards, cautioning: “[WJhen neither the collective-bargaining process nor its end product violates any command of Congress, a federal court has no authority to modify the substantive terms of a collective-bargaining con- tract.” 455 U.S. at 576. Ill In addition to the general fiduciary standards imposed by § 1104, Congress also prohibited fiduciaries from engaging in certain specified conduct, including transferring assets of a plan to a party in interest, dealing with assets for their owh account, and acting in any capacity in a transaction involving the plan on behalf of a party whose interests are adverse to the plan. 29 U.S.C. § 1106. See NLRB v. Amaz Coal Co., 453 U.S. 322. 332-34 (1981). the appellants assert that the district court erred by holding that National did not violate these provisions of § 1106. They base their argument on two premises: first, 8a that National’s liability for the contingent benefits was an asset of the plan; and, second, that National illegally caused the plan to relinquish this asset by agreeing that the sale would not trigger payment of the contingent benefits. The appellants support their argument by the affidavit of an actuary who expressed the opinion that National’s liability was an asset of its pension fund. It may well be that a prudent actuary would consider Na- tional’s contingent liability for benefits in view of the domestic steel market. Certainly responsible management would want to know the magnitude of its exposure if the plant were shut down. But the actuary’s opinion is not proof that National’s contingent liability is an asset of the plan within the meaning of ERISA. No provision of the Act requires this contingent liabil- ity to be funded as an asset of the plan. The parties recognize that if National should become liable for the contingent bene- fits, the pension fund, which is dedicated to the payment of normal retirement benefits, cannot be diverted for this pur- puse. See Cutaiar v. Marchall, 590 F.2d 523, 528-30 (3d Cir. 1979). The only source of payment would be the company’s treasury. National in its capacity as the manager of its business can use its corporate treasury for general corporate business. Conversely, in its capacity as a fiduciary, National is not re- quired by ERISA to account for expenditures from its corpo- rate treasury that are disbursed for general corporate pur- poses. National has not caused the benefit plan to engage in a transaction with respect to the contingent benefits. The bene- fit plan covers the employees of several divisions. The segrega- tion of assets available for normal retirement of Division em- ployees and the establishment of a separate trust for this purpose is in essence a bookkeeping transaction. No funds held by the pension plan will be depleted or recouped by the com- pany because of the agreement not to trigger the contingent benefits. 9a In short, ERISA does not impress a trust upon National’s corporate treasury for the payment fo the contingent benefits. The appellants have cited no case in support of their position. It is the unfunded nature of National’s contingent liability that distinguishes this case from the cases, on which the appellants rely, where courts have found that fiduciaries have violated § 1106. See, e.g., Cutaiar v. Marchall, 590 F.2d 523 (3d Cir. 1979); McDougall v. Donovan, 522 F. Supp. 1206, 1212-16 (N.D. Ill. 1982). Accordingly, we conclude that the district court correctly ruled that National did not violate § 1106. IV The district court held that undisputed evidence established that the Independent Stellworkers Union did not breach its duty of fair representation by agreeing to the terms of sale. The appellants assign error to this aspect of the court’s judg- ment on both substantive and procedural grounds. The union had a statutory duty to represent fairly all of the Division employees in its bargaining with National. Ford Motor Co. v. Huffman, 345 U.S. 330, 337 (1953). To establish a breach of the duty of fair representation, the appellants must show that the union’s conduct was arbitrary, discriminatory, or in bad faith. Vaca v. Sipes, 386 U.S. 171, 190 (1967). Confronted with the prospect of the loss of several thousand jobs, the union through the Joint Committee participated in negotiating the Division's sale. The union relied on the advice of expert consultants. It agreed to the terms of sale only after its members had ratified the changes in the bargaining agree- ment that are the subject of the appellants’ complaint. the agreement treats all unio members equally, although it has an immediate effect on the appellants, who have sufficient service to qualify for the contingent benefits. It is enevitable in the give-and-take of collective bargaining that some employees will fare worse than others. But a union may compromise to achieve long-term advantages, even though individual employees may be affected differently by the 10a resulting agreement. See Humphrey v. Moore, 375 U.S. 335, 349-50 (1964); Ford Motor, 345 U.S. at 338; Ekas v. Carling Nat'l Breweries, /nc., 602 F.2d 664, (4th Cir. 1979). In concert with the district court, we hold that the evidence conclusively establishes that the union’s conduct was not arbitrary, discrim- inatory, or in bad faith. Consequently, the union did not breach its duty of fair representation. The appellants also contend that the court committed pro- cedural error by granting summary judgment to the union without a pending motion under rule 56 and without affording them the notice and protection afforded by rules 12(b))6) and 56. They also protest the court’s denial of further discovery. Ordinarily an assignment of error similar to the appellants’ would dictate vacating the district court’s judgment. But con- sidering the procedures followed in this case and the volumi- nous evidence the parties presented, we find no error that survives application of the harmless error provisions of rule 61. The trial court consolidated these cases for hearing, briefing, and argument. It denied the union’s motion for judgment on the pleadings without reaching the merits of the motion. In- stead, the court noted the relationship between the alleged illegal conduct of both National and the union, and it indicated that these issues must be considered together. At the direction of the court, all parties filed statement of issues, which in- cluded the question of the union’s representation. This ques- tion was again raised in National’s motion for summary judg- ment. Consequently, we are satisfied that the appellants has ample notice and full opportunity to participate without preju- dice in the procedure that the court subsequently followed in granting summary judgment. lla Vv In view of our conclusions about the prinicpal issues raised by the appellants, the remaining asssignments of error require no discussion. The district court did not err by dismissing pendent state claims or by denying class certification and in- junctive relief. The judgments of the district court are affirmed. 13a APPENDIX B IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA Civil Action No. 83-00-35-W EUGENE R. SUTTON, et als., Plaintiffs v. WEIRTON STEEL DIVISION OF NATIONAL STEEL COPRORATION; INDEPENDENT STEEL WORKERS UNION; PENSION AGREEMENT BETWEEN THE NATIONAL STEEL CORPORATION AND THE INDEPENDENT STEELWORKERS UNION, Defendants. Filed at U.S. District Court, Wheeling West Virginia Thomas Strafford, Clerk ORDER On the 13 day of April, 1983, came the named plaintiffs by counsel, and also came National Steel Corporation by counsel and Independent Steelworkers Union by counsel, and thereup- on in consideration of the matters offered in support of and in opposition to Plaintiffs’ Motion for a Temporary Restraining Order, Rule 65, Federal Rules of Civil Procedure, it is ORDERED that said Motion for Temporary Restraining Order be, and the same is hereby, DENIED for reasons ex- pressed by the Court on the record. It is further ORDERED that a Preliminary Injunction hear- ing is scheduled in the above styled civil action for a day in the week of April 25, 1983, a precise date to be ascertained by the Court and communicated to counsel as far in advance of the l4a preliminary hearing date is possible, the Court being unable at this time to establish a precise date for hearing Plaintiffs’ Motion for a Preliminary Injunction because of ongoing crimi- nal jury trials. ENTER: May 4th, 1983, as of April 13, 1983. Robert E. Maxwell United States District Judge l5a IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA Civil Action No. 83-0035-W EUGENE R. SUTTON, et als., Plaintiffs v. WEIRTON STEEL DIVISION OF NATIONAL STEEL COPRORATION; INDEPENDENT STEEL WORKERS UNION; PENSION AGREEMENT BETWEEN THE NATIONAL STEEL CORPORATION AND THE INDEPENDENT STEELWORKERS UNION, Defendants. Filed at U.S. District Court, Wheeling West Virginia Thomas Strafford, Clerk ORDER On the 27th day of April, 1983, came all of the named parties by counsel and thereupon the Court proceeded to consider all matters presented in support of and in opposition to Plaintiffs Motion for a Preliminary Injunction herein, and for the reasons stated by the Court at the conclusion of the presentation of evidence, supporting documents, affidavits and other plead- ings by all parties, it is ORDERED that Plaintiffs Motion for a Preliminary Injunc- tion be, and the same is hereby, DENIED. It is further ORDERED, in keeping with the oral motion made by counel for plaintiffs at the outset of the Preliminary Injunction hearing to file a First Amended Complaint herein, that the said first amended complaint be, and the same if hereby ORDERED filed and made a part of the above styled civil action, said first amended complaint being offered for the l6a purpose of adding as a party defendant Pension Agreement Between the National Steel Corporation and the Independent Steelworkers Union as reflected in paragraph #173(a). ENTER: May 4th, 1983, as of April 29, 1983. Robert E. Maxwell United States District Judge I hereby certify that the annexed in instrument is a true and correct copy of the orginal on file in my office, Attest: Thomas F. Stafford, Clerk, U.S. District Court, Northern District of West Virginia. Sue O. Abraham Deputy Clerk 17a IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA Civil Action No. 83-0035-W EUGENE R. SUTTON, et als., Plaintiffs v. WEIRTON STEEL DIVISION OF NATIONAL STEEL COPRORATION; et als, Defendants. Civil Action No. 83-0040-W GERALD W. BRUNNNER et als., Plaintiffs v. NATIONAL STEEL CORPORATION, et als, Defendants. U.S. DISTRICT COURT FILED AT WHEELING, W. VA. THOMAS F. STAFFORD Clerk MERMORANDUM OPINION AND ORDER This litigation grows out of the activities in connection with a proposed employee buy-out plan for the Weirton Steel Division of National Steel Corporation. Defendant National Steel has filed a motion for summary judgment and Plaintiffs in these cases and in Dhayer, et al, v National Steel Coproration, et al., C.A. No. 83-36-W (N.D. W.Va. filed April 8, 1983) have filed a motion to delay consideration of National's motion pursuant to Rule 56(f), Federal Rules of Civil Procedure. 18a The Court greatly appreciates the efforts of all counsel in the exhaustive briefing of the issues presented. The record in this litigation includes the pleadings and ex- hibits thereto; various affidavits offered in support of as well as in opposition to this motion and other previous motions; and evidence adduced in the form of testimony and documents at two hearings conducted on April 13, 1983, at the Elkins point of holding court and on April 27-29, 1983, at the Wheeling point of holding court. From these matters of record, the Court finds the following facts are significant to the issues to be decided: The Weirton Division of National Steel is the single largest private sector employer in the State of West Virginia. At one time, shortly after World War II, the Division had 16,000 workers, but the recent market for steel produced in the United States has reduced employment to some 11,000 in 1980, and about 7,000 currently. In March, 1982 National Steel announced it would no longer make significant capital investment in its Weirton Division facilities, and that those facilities would be “downsized” over a period of time with a resulting level of employment of 1,200 to 2,000 workers in the late 1980’s. The President of National Steel indicated the announcement was not an attempt to win labor cost concessions, but reflected the business decision of National to place its investment capital in other areas. In addition to National’s announced intention to downsize the Weirton facilities, the options for the Division seemed to in- clude finding a buyer or to devise a plan for an employee buy-out. National’s management indicated a willingness to explore either of these options. On the day of National’s announcement, the International Steelworkers Union announced its intention to work with Weirton Division management to study the possibilities of employee buy-out, and, if feasible, to open negotiations with National Steel. The Weirton Joint Study Committee was incor- porated to study the employee buy-out option and coordinate related efforts. The Committee’s board of directors consists of 19a five representatives of the Weirton Division management team, twenty-one representatives of the Independent Guard Union. Funds for the various activities of this Committee were raised from the unions involved, community donations, grants from the State of West Virginia, and other sources. In April, 1982, after a competitive selection process, the Joint Study Committee hired the consulting firm of McKinsey & Co. to conduct a feasibility study on the economic viability of an independent, employee-owned Weirton Steel company. In July 1982, McKinsey & Co. released a report concluding that such a venture could be successful, but only iflabor and produc- tion costs were reduced and if substantial capital improve- ments could be effected over a period of ten years. The employee buy-out option preferred by the Joint Study Committee and the one pursued included an Employee Stock Ownership Plan (ESOP), which will allow the new employee owned corporation to borrow funds to finance the sale from National and permit employees who satify minimum hours of work to earn shares of stock as initial loans are paid. An ESOP presents an opportunity for significant tax savings for the proposed company under the Internal Revenue Code. As the employee buy-out plan progressed, the Joint Study Commi:*tee hired other consultants to assist in formulating various complex aspects of the procedure. These include the law firm of Ludwig & Curtis, of San Francisco, to advise on the structure of an ESOP; the law firm of Wilkie, Farr & Gal- lagher, of New York, tc represent the Committee and the proposed new corporation in negotiations with National Steel regarding acquistion of the Weirton Division assets; the in- vestment banking firm of Lazard Freres & Co., of New York, to assist with all questions of finance; the accounting firm Towers, Perrin, Foster & Crosby, of Pittsburgh, to conduct an audit of National’s pension plans for Weirton Division employ- ees. All of these consulting firms, and others involved in the study, enjoy national or international reputations for expertise in the fields for which they were hired. 20a During the summer of 1983, the Independent Steelworkers Union conducted elections which resulted in a new Union lead- ership team, and by virtue thereof, new Union representation on the Joint Study Committee. The former president of the Union, Richard Arango, filed unfair labor practice charges against National Steel and the Independent Steelworkers Union with the National Labor Relations Board on April 5, 1983. The charges alleged representatives of the employer (National Steel) have participated on a negotiating committee which purports to represent bargaining unit employees in col- lective bargaining negotiations with the employer. The Court presumes the “negotiating committee” means the Joint Study Committee, on which Arango formerly served as co-chairman by virtue of his Union presidency. One of the Sutton plaintiffs, William Willboughpy, served on the committee’s board of directors until he was voted out of his Union office of Vice Chairman, Tin Mill Division. On March 11, 1983, National Steel and Wilkie, Farr & Gal- lagher (the law firm hired to negotiate a sale of Weirton Divi- sion assets for the Joint Study Committee) announced an agreement in principle for the terms of sale from National to Weirton Steel Corporation (the proposed employee-owned company). The agreement has been amended by an addendum announced April 8, 1983. During 1983, Wilkie, Farr & Gal- lagher formed a “shell” corporation in the State of Delaware in anticipation of the success of the employee buy-out venture. In order to carry out the provisions of the agreement in principle, as amended, and to implement the employee buy- out, members of the Independent Steelworkers Union and the Independent Guard Union must conduct an election to modify existing collective bargaining agreements with National Steel. Both the mechanisms of the employee buy-out and the implica- tions of such a venture are extremely complex. In order to inform union memberships of the various aspects of the propos- al, the Joint Study Committee and its consultants have taken steps to produce a “disclosure document” which they hope will reveal all of the facts necessary to an understanding of the 2la venture and its ramifications for the employees of the new Weirton Steel company. Should the employee buy-out be implemented, Weiton Steel Corporation will succeed National Steels’s Weirton Division as the largest private-sector employer in West Virginia. It will also be one of the largest corporations in the United States and the largest employee-owned corporation in the country. As all the parties are aware, the venture (like any large corporate undertaking) is not without risk. Consultants for the Joint Study Committee believe success is possible, given certain economic and social circumstances. However, it must be real- ized that such expressions are only educated forecasts. Long term success depends upon general economic trends, as well as trends specifically involving markets for the products at the Weirton facility. For members of the Independent Steelworkers Union and the Independent Guard Union, two personal choices must be made before an employee-owned company can become a real- ity. First, as mentioned earlier, a majority of the Union mem- bers must decide to vote in favor of amendments to the existing collective bargaining agreement which will reflect the terms of sale from National to the New Weirton Steel company. Second, each member must make a personal decision on whether to become an employee of the new company. For some workers, the second decision will be made more difficult be- cause of the opportunity for immediate retirement from Na- tional with totally predictable pension and other benefits for the future. The terms of sale, as amended, include provisions that employees meeting the chronological age and years of service requirements, for some of the types of retirement in the applicable pension plan, for some of the types of retirement in the applicable pension plan, may elect to retire five days after the union votes referred to above. Such decision to retire will be effective as of April 30, 1983, a date before the transfer of ownership, but a date set for accounting purposes. All workers, whether they choose to work for the new com- pany or not, will retain the pension benefits earned through = service with National Steel prior to the tranfer of ownership (with the exception of certain “safety net” features to be dis- cussed below) will be the responsibility of the new employee- owned company. Plaintiffs express the concern that pension rights earned after transfer to the new compnay will not be as secure as those earned under National Steel, which has a proven record of corporate stability. Of course, the union members may decide not go forward with the proposed employee buy-out and in such event the underlying issues will be moot. While the alternative appears to be massive unemployment in the tri-state community, the workers may feel that the risks of a new steel production venture in an uncertain market are too high. In short, the ultimate decision on whether to go forward with the employee buy-out rests with the members of the union through their approval or disapproval of the terms of sale and other aspects of the new venture. STATEMENT OF THE ISSUES This litigation focuses on the propriety of terms of sale regarding pension and severance pay benefits for members of the Independent Steelworkers Union. Amendments to exist- ing pension and collective bargaining agreements must be approved before a transfer of the Weirton Division from Na- tional Steel to an employee-owned entity can be effected. Defendant National Steel filed a proposed statement of the issues and requested expeditious consideration of them. This was followed by the instant motion for summary judgment. Counsel for Plaintiffs in the Sutton case have also filed a statement of the issues. The Court believes the issues pre- sented by National's motion are fair statements of the major claims of the complaint in Brunner and many of the claims in Sutton, and those claims that should be decided before union members are asked to vote on the proposed employee buy-out. Not all of the issues raised in Sutton and Brunner are included in the request for summary judgment, and, therefore, the 23a Court views National's motion as a motion for partial summary judgment. The remaining, less issues presented by the com- plaints can be resolved through later proceedings. As will be more carefully detailed below, the terms of sale between National Steel and an employee-owned company spe- cify that the transfer of ownership, without more, will neither trigger entitlements to 70/80 retirements of Rule of 65 retire- ments under the applicable pension plan nor establish sever- ance allowance payments under the applicable collective bargaining agreement. The terms also limit eligibility to 70/80 and Rule of 65 retirement after the transfer. The complaints in Brunner and Sutton charge, inter alia, that the failure of the transfer to trigger rights to these employee benefits violates various provisions of the Employee Retirement Income Secu- rity Act (ERISA), various other provisions of labor law, and the terms of the applicable pension and collective bargaining agreements. In general, the motion for summary judgment presents the legal issue of whether the terms of sale, which are proposed to amend existing pension and collective bargaining agreements, deprive any Plaintiff of a right or benefit guaran- teed by law. From examination of the pleadings, the motion for summary judgment, and other matters of record, the Court defines the following two specific issues for resolution by this partial sum- mary judgment proceeding: 1. Whether the terms of sale proposed to amend the Rule of 70/80,and Rule 65 retirement provisions of the pension agree- ment between National Steel Corporation and the Indepen- dent Steelworkers Union violates: a. provisions of ERISA relating to prohibited trans- actions; b. provisions of ERISA relating to ficuciary duties im- posed upon National Steel or the pension plan; ¢c. provisions of ERISA relating to vested accrued bene- fits or non-forfeitable benefits; 24a ¢. provisions of the pension or collective bargaining agreements, or 2. Whether the terms of sale proposed to amend severance allowance provisions of the collective bargaining agreement between National Steel Corporation and the Independent Steelworkers Union violates: a. provisions of ERISA relating to prohibited trans- actions; b. provisions of ERISA relating to fiduciary duties im- posed upon National Steel; ¢c. provisions of ERISA relating to vested accrued bene- fits or non-forfeitable benefits; d. provisions of the collective bargaining -7reement, or e. other provisions of labor law as specified in the com- plaints. As various points in the Brunner and Sutton complaints it is alleged that National Steel and the Independent Steelworkers Union acted in concert. Although the instant motion has been propounded only be Defendant National Steel, the Court must necessarily examine actions by the Union to reach the issues persented. It is important at this point to specify matters the Court does not consider in its decision on the motion for partial summary judgment. Several claims by the Plaintiffs have earlier been resolved on motion to dismiss, and need not be further con- sidered here. These include the claim that the Joint Study Committee exceeded its corporate charter, as was alleged in the Brunner complaint, and the claims that the actions of Defendants violated the West Virginia Labor Management Relations Act and other policies of the Government of West Virginia, as alleged in the Sutton complaint. In addition, as has previously been mentioned, Richard Arango, who is not a party to this litigation, but who is repre- sented by counsel who is represented by counsel who is also 25a representing the Brunner. Plaintiff has filed unfair labor prac- tice charges before the National Labor Relations Board (NLRB). Several allegations charging violations of federal law in the Brunner complaint at §§ 21, 36, and 43, and in the Sutton complaint at §§ 210, etc., involve the same factual and legai questions as have been presented to the NLRB in the above- referenced unfair labor practices charges. The Court is of the opinion that those claims which directly relate to the legality of the Independent Steelworkers Union and the Independent Guard Union joining forces with Weirton Division manage- ment, through the Joint Study Committee, to negotiate terms of the sale of the Weirton Steel Division to a proposed employee-owned corporation should await a decision by the NLRB, the administrative body having special competence in this area. Finally, the Court would note that this litigation has focus- sed on the effects of the proposed sale on the Independent Steelworkers Union and its members to the exclusion of mem- bers of other unions and nonunion, salaried employees at the Wierton Division of National. The answer of Defendant Union in Sutton denies that all Plaintiffs in that civil action are actual- ly members of the Union. That is a factual issue that must be left for later resolution. This Opinion and Order will only affect those Plaintiffs who are members of the Independent Steel- workers Union who are production, maintenance, and hourly- rated clerical employees. The litigation has also focussed on the legality of the terms of sale which, if approved, will modify terms of existing pension and collective bargaining agree- ments to the exclusion of such terms of employment, compen- sation, etc., for workers of the new employee-owned company that may be negotiated by the Union and management repre- sentatives of the proposed company. ISSUES AFFECTING BOTH PENSION AND SEVERANCE CLAIMS The specific issues presented by the instant motion must be decided in the context of an employer desiring to close a sub- stantial portion of a major steelmaking plant and the employ- ees taking steps to pursue an employee buy-out, with the 26a support and aid of the community. There are some underlying principles of law which will control the Court’s decision on both the pension and severance allowance questions. At the outset, the Court would note that unions are, and should be, permitted to pursue unique procedures and mechan- isms to avoid loss of employment for union members when faced with crisis-type situations, such as an impending plant closure. See United Steelworkers of America v. United States Steel Corp., 492 F. Supp. 1, 9-10 (N.D. Ohio), affd in part, rev'd in part, 631 F.2d 1264 (6th Cir. 1980). It has been held that unions and employers in such circumstances may take steps not contemplated in existing documents controlling nor- mal labor relations. See Ekas v. Carling Nat'l Breweries, 602 F.2d 664, 666-667 (4th Cir. 1979), cert denied, 444 U.S. 1017 (1980). Indeed, the parties here are exploring relatively un- charted waters. The employee buy-out, if approved and im- plemented, apparently will result in the largest employee- owned company in the nation. All parties agree that the March 2, 1982, announcement by National Steel that it would no longer invest in its Weirton Division was not a ploy to coerce workers into giving labor cost concessions. It was an economic decision by the corporation to place its investment capital in other areas. It is further uncon- troverted that National expressed willingness to explore an employee buy-out or other option. (Bish Affidavit, Brunner case, Paper 5, § 8); (Willoughby Affidavit, Sutton case, Paper 21, § 12); The Independent News, March 16, 1982, at 1 (Plain- tiffs’ exhibit 10, hearing of April 27, 1983); Letter of Richard Arango (Plaintiffs’ Exhibit 9, hearing of April 27, 1983). In general, it would appear the employer and the employees took appropriate positions and pursued appropriate activities in the circumstances. Though not concerned with National’s econom- ic decision to phase-out Weirton Division, employer and em- ployees began to explore avenues to ameliroate the effects of the decision. See generally, First National Maintenance Corp. v. N.L.R.B., 452 U.S. 666 (1981). 27a As earlier stated, the terms of sale at issue here must be approved by a union vote as amendments to existing agree- ments with the employer before they can be implemented. There have been claims by Plaintiffs that it is unlawful to modify in any way the employees rights created under an existing agreement. (See, e.g., Sutton complaint at §§ 214, 219, 221; Brunner complaint, at § 48.) The collective bargain- ing agreement (at Article XXI) contains provisions allowing amendments and modifications. In addition, it is clearly per- missible for union leadership to recommend to the membership a modification to an existing agreement, See Ford Motor Co. v. Huffman, 345 U.S. 330 (1953), even where the contract does not provide for amendments. See Battle v. Clark Equipment Co., 579 F.2d 1338, 1347 (7th Cir. 1978). Modifications to existing contracts are frequently negotiated wher. the union is faced with a plant closing or phase-out. Jd. and Ekas v. Carling Nat. Breweries, supra, 602 F.2d at 666-67. Further, it is not per se unlawful to modify prospective pension or severance pay benfits, provided that no ERISA or other labor law is violated by the change. See Fentron Indus- tries v. Nat. Shopmen Pension Fund, 674 F.2d 1300, 1306 (9th Cir. 1982). Nor is it impermissible to negotiate for changes in such benefits when an employer announces a plant closing or partial closing. N.L.R.B. v. North Carolina Coastal Motor Lines, Inc., 542 F.2d 637, 638 (4th Cir. 1976). It is the view of the Court that the issues of labor organiza- tion law raised by these complaints boil down to whether the Independent Steelworkers Union leadership’s acceptance of the terms of sale, involving severance allowances and pension benefits, as negotiated by the Joint Study Committee con- sultants, and the expected Union recommendation to its mem- bership that it vote in favor of the terms of sale, is a breach of the Union’s duty of fair representation. (See Brunner com- plaint at §§ 35-36, 45-48; Sutton complaint at §§ 200, 209-210, 212.) It is well established that labor unions have a statutory duty to fairly represent all employees in the bargaining unit in 28a collective bargaining and enforcement of bargaining agree- ments. The duty includes an obligation to serve all members without discrimination and to exercise union discretion with good faith and honesty, and to avoid arbitrary conduct. Vaca v. Sipes, 386 U.S. 171, 177 (1967). The breach of such duty occurs only when a union’s conduct is arbitrary, discriminatory, or in bad faith. Jd. at 190. On the basis of reasoning set forth below, the Court con- cludes that the proposed amendments to the pension agree- ment and to severance pay allowance provisions in the collec- tive bargaining agreement violate neither ERISA nor the terms of existing agreements. Therefore, it cannot be said that the Union will act in bad faith in recommending the terms of sale, with the amendments to said agreements, to its mem- bership. Because the amendments apply to all Union members equally (indeed, most amendments apparently will affect all employees at National’s Weirton Division, whether Indepen- dent Steelworkers members or not), it cannot be said that the Union acted with discrimination toward any sub-group of the membership. See generally, Ekas v. Carling Nat. Breweries, Inc., supra, 602 F.2d 664. There is no doubt that the Joint Study Committee is union- dominated. (See Articles of Incorporation, Exhibit to Affidavit of Walter Bish, Brunner case, Paper 5.) The evidence adduced at the two hearings on preliminary injunctive relief earlier conducted has impressed the Court with the quality and scope of consulting firms employed by the Joint Study Committee. It appears that each major step in the complex process or arrang- ing for the proposed employee buy-out — feasibility, financing, auditing existing labor costs, corporate structure, terms of sale, etc., — has been entrusted to firms with national or international repurtations. Testimony adduced indicates that the Committee extensively relied on the work of the experts hired. Plaintiffs have made no specific allegation that the deci- sion to recommend the severance allowance and pension bene- fit amendments was arbitrary, and, under the circumstances, it would appear that such an allegation would be insubstantial. 29a In conclusion, the Court is satisfied that the Union violated no duty of fair representation with regard to severance allow- ance and pension benefit amendments in the Sutton and Brun- ner cases. In addition, union fiduciary duties in regard to employee welfare plan participants and beneficiaries arising under ER- ISA or other federal labor law are not necessarily when union leadership participates in negotiations for amendments to ex- isting agreements and recommends the products of such negotiations to union membership. See NLRB v. Amazx Coal Co., 453 U.S. 322 (1981), Carr v. Learner, 457 F.2d 135 (1st Cir. 1976). See generally, UMWA Health & Retirement Funds v. Robinson, 455 U.S. 562 (1982). This Court is of the view that this principle applies in the instant, unique situation when agents negotiate with the employer on behalf of a union- dominated committee. PENSION BENEFIT ISSUES Under the existing pension agreement between National Steel and the Independent Steelworkers Union, there are eight distinct types of retirement, of methods of determining eligibility for a pension.' For normal retirement; 62/15 retire- ment; 30-year retirement, and 60/15 retirement, the plan parti- cipant becomes elibible simply through acheivement of certain ' National Steel Corporation maintains a pension plan (referred to in the record as Plan 001) for all types of employees (union and non-union) at various corporate facility locations including the Weirton Division. A copy of the plan has been made part of the record in each case before the Court as Exhibit A, Affidavit of John A. McCreary. The Independent Steelworkers Union has negotiated a pension agreement for their members which provides substantially the same benefits as Plan 001. A copy of this agreement has been made a part of the record in each case as Plaintiffs’ Exhibit 4, hearing of April 27, 1983. Unless the corporate plan is specifically mentioned, the Court relies upon the language of the Union pension agreement for all purposes having to do with this motion for summary judgment. Thus, whether the Court refers to pension plan or pension agreement, reference is made to the Union pension agreement. 30a chronological age and years of service factors. Participants with 15 years of service who become permanently in- capacitated, as defined in the plan, are eligible for permanent incapacity retirement. Persons with 10 years with 10 years of service whose continuous service is broken for any reason are elibible to receive a deferred vested pension after reaching age 62 or 65, depending on the particpant’s age at the time service was broken. The remaining types of retirement, rule of 65 retirement and 70/70 retirement, are the subject of the pension issues in this litigation. While age and years of service are aspects included in determining eligibility, other factors are as follows: 70/80 Retirement 2.6 Any particpant who has not attained the age of 62 years and who shall have had least 15 years continous service and (i) shall have attained the age of 55 years and whose combined age and years of continuous service shall equal 70 or more, or (ii) whose combined age and years of continuous service shall equal 80 or more, and (a) whose continuous service is broken by reason of a permanent shutdown of a plant, department or sub- division thereof or by reason of a layoff or physical disability, or (b) whose continuous service is not broken and who is absent from work by reason of: (1) a layoff resulting from his election to be placed on layoff status pursuant ot the provisions of the Basic Agreement applicable in the event of a permanent shutdown, or (2) a physical disability or a lavoff other than a layoff reulting from an election referred to above and whose return to active employment is declared unlikely by the Company, or (ec) whose continous service is not broken and who, while on layoff status by reason of his election to be placed on (d) 3la such status pursuannt to the provision of the Basic Agreement applicable in the event of a permanent shut- down, accepts a job with the Company and, prior to the expiration of 90 consecutive calenday days from the first day worked on such job, elects to retire, or who considers that it would be in his interest to retire, and the Company considers that such retirement would likewise be in its best interest and it approves an appli- cation for retirement under mutually satisfactory con- ditions, shall be eligible to retire on or after July 31, 1980 and shall upon his retirement (hereinafter “70/80 retirement”) be eligible for a pension. Rule-of-65 Retirement 2.6 Any participant (i) who shall have had at least 20 years (a) (b) (ec) (d) of continous service as of his last day worked, (ii) who had not attained the age of 55 years, and (iii) whose combined age and years of continuous service shall equal 65 or more but less than 80, and whose continuous service is broken by reason of a layoff or disability, or whose continuous service is not broken and who is absent from work by reason of a layoff status pursuant to the privisions of the Basic Agreement applicable in the event of a permanent shutdown, or whose continuous service is broken and who is absent from work by reason of a physical disability or a layoff other than a layoff resulting from an election referred to above and whose return to active employment is de- clared unlikely by the Company, or who considers that it would be in his interest to retire, and the Company considers that such retirement would 32a likewise be in its interest and it approves an application for retirement under mutually satisfactory conditions, and who has not been offered suitable long-term employ- ment as difined in Appendix A, shall be eligible to retire on or after July 31, 1980, and shall upon his retirement (hereinaf- ter “rule-of-65 retirement”) be eligible for a pension; pro- vided, however, that if at the time of application ofr retire- ment the Company has not yet determined whether the participant will be offered suitable long-term employment, the participant will not be eligible to retire until the earlier of the date on which the Company advises the participant that he will not be offered suitable long-term employment or the date on which the particpant occurs a break in continous service. In addition, among the provisions in the plan for calculating the amount of pension under the various types of retirement, increased pensions are described for 70/80 and rule of 65. With certain exceptions, the monthly amount determined under the regular rules is now increased by $400.00 for beneficiaries of 70/80 and rule of 65 retirement. The terms of sale from National to the employee-owned company will require a number of changes in the existing pension agreement, However, no change will be affected that will decrease @» accrued benefit as determined under the existing plan, am National Steel shall remain liable for all accrued benefits “earned” prior to the closing date. Under the terms of sale, National will segregate the liabilities and assets of the existing fund attributable to Weirton Division employ- ees (the existing fund covers employees at other National Steel Divisions in addition to Weirton) and establish a separate trust fund and insurance contract which will only be available to pay benefits to Weirton Division employees, including those already retired, those transfering to the new company, and those on layoff status. Those employees of National Steel who remain working under the new employee-owned company will, in effect, look to 33a both National and the new company for pension benefits upon retirement. The terms of sale provide a method of calculating benefits payable by each company, which is based on an in- dividual’s years of service with each employer. Especially pertinent to this litigation are the terms which modify the eligibility for 70/80 retirement and rule of 65 retire- ment and the increased pension benefits for these types of retirement. For transferred employees only (those who were employees of National and who choose to become employees of the new company), conditions giving rise to eligibility for 70/80 and rule of 65 retirement will be limited to a permanent shut- down, as defined in existing pension and collective bargaining aggreements, which occurs within five years of the transfer of ownership date for accounting purposes (May 1, 1983). The increased pension ($400 per month) will only be payable if a permanent shutdown occurs. The terms of sale also require that the pension and collective bargaining agreements be mod- ified to reflect the fact that the sale and transfer of ownership does not constitute a shutdown for purposes of pension or retirement benefits or severance allowance. (Thus, the sale and transfer of ownership, without more, will not trigger elibi- bility to any of these benefit programs. ) The Court earlier stated that it is not per se unlawful to alter a pension plan with respect to prospective benefits, provided the change doesn’t violate other ERISA requirements. The Court must now decide whether the amendments proposed to 70/80 retirement and rule of 65 retirement violate the Act’s minimum requirements for vesting, accured benefits, or non- forfeitablility. In general terms, the labor law provisions of ERISA provide a system of safeguards designed to strengthen private employ- ee pension and welfare bemefot benefit plans. (The provisions of ERISA made part of the Internal Revenue Code are gener- ally not at issue here.) ERISA does not require an employer to offer any type of benefit, but if it does so, the plan must comply with the minimum requirement of the Act. 34a With regard to pensions, ERISA imposes no obligation ona plan to pay benefits before an employee reaches normal retire- ment age. Any right to earlier benefits must be found in the individual agreement. Fine v. Semet, 699 F.2d 1091, 1093 (11th Cir. 1983) (citing Pompano v. Michael Schiayone & Sons, 680 F.2d 911 (2nd Cir.), cert. denied, U.S. , 74 L.Ed.2d 607 (1982). Under ERISA, normal retirement age means the earlier of normal retirement age under the plan or thelater of the time the participant attains age 65 or reaches the 10th anniversary of participation in the plan. 29 U.S.C. § 1002(24). The plan is issue defines normal] retirement age as 65. An accrued benefit is the interest in the plan to which a participant has become entitled. AmJr.2d Pension Reform Act § 73 (1975). In the case of a defined plan, such as at issue here, it means an individual's right to a retirement benefit determined under the plan, expressed in the form of an annual benefit starting at normal retirement age. 29 U.S.C. § 1002(23)(A) (emphasis supplied). A non-forfeitable pension benefit or right is 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 uncondi- tional, and which is legally enforceable against the plan. 29 U.S.C. § 1002(19) (emphasis supplied). In sum, ERISA is de- signed to protect plan benefits for normal age retirement which are unconditional. Accrued benefits under ERISA do not include such things as conditional benefits, permiums for medical and life insurance payable as a lump sum, or the value of the right to receive early retirement benefits. See H.R. Report No. 93-807, 93rd Cong., 2d Sess. , reprinted in 1974 U.S. Code, Cong. & Ad. News 4670, 4726. Am. Jur. 2d Pension Reform Act § 73 (1975). See generally, Petrella v. NL Industries, 529 F. Supp. 1357, 1365-1366 (D.N.J. 1982). These are ancillary benefits which may be amended or deleted without violating ERISA. /d. 35a An examination of the eligibility requirements for 70/80 and rule of 654 retirement reveals they are conditional and in the nature of early retirement benefits and cannot be considered non-forfeitable or as an accrued benefit. Capocci v. General Motos Corp., 44 F. Supp. 1306, 1307-1308 (D. Hawaii 1978). Since the increased $400.00 per month pension payment is conditional upon eligbility for 70/80 or rule of 65 retirement, it cannot be considered non-forfeitable. The Court has con- sidered the potential applicability of 29 U.S.C. § 1056(a) and finds that it does not require a contrary mandate on the issues raised here. Under ERISA, “vesting” is a term that is tied to the term “accrued benefit.” To prevent any possible misunderstanding of the Court’s language in the previous paragraph, the pro- posed terms of sale with regard to 70/80 and rule of 65 retire- ment and the increased pension payments thereunder do not violate any minimum vesting standards under ERISA. This is because the terms of sale affecting pensions do not disturb the normal retirement benefit or the deferred vested pension benefit, See 29 U.S.C. § 1053, and since the terms of sale provide that all accrued benefits shall become vested upon transfer of ownership. See 26 U.S.C. s411(d)(8). In short, Congress did not intend to impose upon a plan a requirement that any benefits be payable before reaching age 65 or the normal retirement age 965 in this case) under the plan. Riley v. MEBA Pension Trust, 452 F.Supp. 117, 120 (S.D.N.Y.) aff'd, 586 F.2d 968 (2nd Cir. 1978). Plaintiffs in the Sutton litigation also allege Defendants have failed to provide sufficient information about the proposed amendments and thus allege a violation of ERISA. The Court is unable to find any provision of the Act that would mandate an employer ot supply information regarding amendments before the amendments are effected. 29 U.S.C. §§ 1022, 1024 See 29 C.F.R. §§ 2520.104b-3 and -4. Further, it appears uncon- troverted that each member of the Independent Steelworkers Union was supplied with a copy of the agreement in principle setting forth the terms of sale (including those proposed ot 36a amend pension agreements) prior to the Plaintiff also claim amendments to the pension plan violate the basic terms of the agreement itself. The corporate plan document includes addi- tional administrative provisions beyond those included in the Union pension agreement. Those provisions include, in Section VIII, National’s power to amend or modify the program within certain bounds not applicable here. (The Court presumes the section on amendments is part of the pension agreement appli- cable to Union members. In any case, all pension plans subject to ERISA must include a provision for plan amendment. 29 U.S.C. § 1102(b).) The current collective bargaining agree- ment also provides for amendments in Article XXI. Plaintiffs allegation that the amendments violate the plan itself would seem to assume that all provisions in the agree- ment are “written in stone,” and never subject to change. Such is not sound law. See generally, UMWA Health & Retirement Funds v. Robinson, 455 U.S. 562 (1982). As the Court under- stands, a proposed amendment would only violate the lan- guage of the agreement when a particular individual's uncon- ditioned rights are affected (or the amendment is unreason- able). Rochester Corp. v. Rochester, 450 F.2d 118 (4th Cir. 1971). In other contexts, but in cases arising under ERISA, the Supreme Court has said, “it is the claim to the benefit rather than the benefit itself that must be ‘unconditional’ and ‘legally enforceable against the plan’” Alessi v. Raybestor- Manhattan, Inc., 451 U.S. 504, 512 (1981). Nachman Corp. v. P.B.G.C., 446 U.S. 359, 371 (1980). Since the Court has earlier found that any rights a particular Plaintiff might have under 70/80 and rule of 65 retirement are contingent and conditional, it must also find that a proposed amendment to the provisions for these types of retirement do not violate the terms of the agreement itself. Further, the proposed changes must be seen as reasonable. They are proposed in the context of an anticipated change in ownership where the majority of active workers will immedi- ately become employees of the new owner. Since a “shutdown” of National’s Weirton Division is not anticipated, in any sense, 37a it is reasonable to propose amendments which would clarify existing language regarding shutdown and suitable long-term employment. The present eligibility for 70/80 and rule of 65 retirement conditions also include such things as layoff, dis- ability, and other matters involving the discretion of the em- ployer. Since the amendments proposed only affect a situation that would arise after a transfer of ownership, the Court must find that eliminating such conditions are reasonable since they are properly the concern of the relationship between the new employer and the employee. (Indeed, it is uncontroverted that it is presently the plan of the Union to demand substantially the same pension benefits as presently exist from the new employ- er.) Plaintiffs have not directed the Court’s attention to any provision of the collective bargaining agreement which would preclude any amendments, or the specifically proposed amend- ment, to the pension agreement. The Court perceives no aspect of the collective bargaining agreement which would bar pension agreement modifications. Therefore, the terms of.sale that propose to amend the pension agreement do not violate the terms of the collective bargaining agreeemet between Na- tional Steel and the Independent Steelworkers Union. The terms of sale negotiated on behalf of the Joint Study Committee include what has been labelled by counsel as a “safety net” feature. In effect, National will continue to offer its former employees 70/80 and rule of 65 retirements if, and only if, the new company should suffer a shutdown of sub- stantially all of its facilities within five years of the closing or transfer date. National Steel was not required to extend this “safety net” feature of its former employees under ERISA. This is merely a term of sale negotiators acting for the Joint Study Committee were able to extract from National Steel on behalf of those employees who will transfer employment to the new company. Plaintiffs contend that the terms of sale, if carried out, will result in a prohibited transaction an a violation of fiduciary 38a duties under ERISA. (Brunner Complaint §§ 14, 16, 17, 30; Sutton Complaint §§ 186, 211.) These allegations appear to have several bases. First, one of the Plaintiffs in Sutton asserts that the sole motivation of National Steel in desiring to divest “obligations” to employees. (Affidabit of Willoughby, Sutton case, Paper 21.) This allega- tion is also made in the Brunner complaint at § 17. This asser- tion is contrary to other evidence offered by Plaintiffs in sever- al respects. (See, e.g., Letter of Richard Arango, Plaintiffs’ Exhibit 9, hearing of April 27, 1983; The Independent News, March 16, 1982, at 1, Plaintiffs’ Exhibit 10, hearing of April 27, 1983; Proposals for Acquistion from National Steel, etc., at Section III, Exhibit to amended complaint in Sutton, Paper 11; National Steel Corporation Affadavit of Willoughby dated June 28, 1983.) ) Second, Plaintiffs assert that “vested inchoate pension bene- fits” are being “sold” or constitute part of the sale proposed between National Steel and a new company. (See, e.g., Sutton case, Paper 22 at § 3.) This assertion is directly contrary to other evidence offered by Plaintiffs. The terms of sale pro- posed in the agreement in principle announced March 11, 1983, clearly indicate that all assets and liabilities of National Steel’s pension that affect any former or present, Weirton Division employee will be segregated and transferred to a separate trust, fund, and/or insurance contract, which will be available only to pay benefits to Weirton Division employees. No “vested inchoate pension benefits” will be sold by National to anyone. The Court recognizes that pension issues are a factor considered by all parties to the proposed sale (See pension calculations audit by Towers, Perrin, Forster & Crosby at 1, Plaintiffs’ Exhibit 23, hearing of April 27, 1983.), but no pen- sion “obligations” are being transferred from National Steel to the new employee-owned company. Grant of summary judgment is precluded where there is a genuine dispute as to material facts in issue, [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_1343%3A1. Public record. Not legal advice.