# Amicus Curiae Brief — Roberts v. Burlington Industries, Inc.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1985
- **Citation:** 474 U.S. 978

## Text

(’ ~\ | May
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Nos. 85-441 and 85-460 JOSEPH «

Iu the Supreme Court of ihe United States

OCTOBER TERM, 1985 -

LILLIAN ROBERTS, COMMISSIONER OF LABOR
OF THE STATE OF NEW YORK, APPELLANT

v.

BURLINGTON INDUSTRIES, INC.

IRVING GILBERT, ET AL., APPELLANTS
Uv.

BURLINGTON INDUSTRIES, INC.

ON APPEAL FROM THE
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES
AS AMICUS CURIAE

CHARLES FRIED
Solicitor General

CAROLYN B. KUHL
Deputy Solicitor General

CHRISTOPHER J. WRIGHT
Assistant to the Solicitor General
Department of Justice
Washington, D.C. 20530
(202) 633-2217
GEORGE R. SALEM
Deputy Solicitor of Labor

ALLEN H. FELDMAN
Associate Solicitor

BETTE J. BRIGGS
Attorney
Department of Labor
Washington, D.C. 20210

—

QUESTION PRESENTED

Whether an employer’s policy of providing severance
pay to eligible employees is an “employee welfare benefit
plan” under ERISA, thus preempting state statutory and
common law causes of action that relate to the severance

pay policy.

(I)

TABLE OF CONTENTS

ual es oes 1
ae SO al edinsaeuehiennios 7
SE Le LOSS RO Es RE Oe NE ET 22

TABLE OF AUTHORITIES
Cases:

Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504.. lu
Blau v. Del Monte Corp., 748 F.2d 1348, cert. de-

nied, No. 84-2009 (Oct. 7, 1985) _..........-00.222-2..-... 7,9,12
Burger King Corp. Vv. Rudzewicz, No. 83-2097 (May

Ot ASD den UD eee ai Se Od 8
Calhoon v. Bonnabel, 560 F. Supp. 101 ~................... 11
California Hospital Ass’n v. Henning, 770 F.2d

856, petition for cert. pending, No. 85-1648_...___... 17
Carpenters Health & Welfare Fund v. Kenneth R.

po ee a Sy ieee 11
Chevron U.S.A. Inc. v. Natural Resources Defense

I ss SN aes 13

Dependahl v. Falstaff Brewing Corp., 653 F.2d
1208, cert. denied, 454 U.S. 968, aff’g 491 F.2d

LL EEE Ania iS NE el ee eR RiGee iene SO Se 9,12
Donovan Vv. Dillingham, 688 F.2d 1367 .................. 4, 12,18
Federal Power Commission v. Panhandle Eastern

Bree Be Ce, Bt oan neneecacs--s--- 16
Franchise Tax Board V. Construction Laborers Va-

eG ie ee &
Franchise Tax Board v. United States Postal Serv-

a. ep EE Oa im ay ARETE AN oe 8
Goldstein v. Mangano, 99 Misc.2d 523, 417 N.Y.S.2d

(BAe CO te aan ECC NR i OR OER ids 11
Jung Vv. FMC Corp., 755 F.2d 708 ................---..--------- 9, 21
Metropolitan Life Insurance Co. v. Massachusetts,

Me. O4-355 (Jame Ss. 1908) ....................-............--. 10, 19

Motor Coach Employees v. Lockridge, 403 U.S. 274. 18
Murphy v. Heppenstall Co., 635 F.2d 233, cert. de-
“"¢ ii S Faerie: 20

IV
Cases—Continued : Page
Nachman Corp. v. Pension Benefit Guaranty Corp.,

PR i SR IRRr eens cee tran seneme Sem eRe ne chaune er aee nen een 19, 20
Pinto v. Zenith Radio Corp., 618 F.2d 110, aff’g,

GED FTI, TE aire sicicssintrceeecnctsiercerenerncn cneneoenstetee 10
Reiter v. Sonotone Corp., 442 U.S. 330 -................... 16
Scott v. Gulf Oil Corp., 754 F.2d 1499......6, 9, 12, 14, 15, 17
Sforza v. Kenco Constructional Contracting, Inc.,

Fr, Be I ia sts center recs rirnseetictiorwseen 11
Shaw v. Delta Air Lines, Inc., 463 U.S. 85 .............. 10, 19
Silkwood v. Kerr-McGee Corp., 464 U.S. 238 .......... 8,9
Sly v. P.R. Mallory & Co., 712 F.2d 1209 .................. 9

Sutton v. Weirton Steel Division of National Steel
Corp., 724 F.2d 406, cert. denied, 467 U.S. 1205.. 9-10
Trustees of Sheet Metal Workers’ International
Association Production Workers’ Welfare Fund
v. Aberdeen Blower & Sheet Metal Workers, Inc.,

oka vee ie eatieamasrersmmnciis 11
Rae WH, Fs, Be hats enn sacers ccs sececpenrerececs 13
Constitution, statutes, regulations and rule:
U.S. Const. Art. VI, Cl. 2 (Supremacy Clause) ........ 8
Employee Retirement Income Security Act of 1974,
29 U.S.C. (& Supp. II) 1001 et seq. .................... 3
aR Gly RIE 5 alee EO RRR eS 17
re cD oecctecs ni cciendabemansercacab schateal 3, 10, 12, 13
er ME OAD nsec inenpaspntecereioeauen 5, 10
29 U.S.C. 1002 (1) (B) ............ Se RE ala: 4,5, 10
ns ca eieceniaell 14
a dicen 10
. FOS BE) 2 Saar orEEEEReE EER EyTEE meer 12
29 U.S.C. (& Supp. II) 1021-1031 .......0022 22... 4
PE ns en icehianaveteuosdasamenens 13
AR Tt on 8 6 2 Ra aati een nn Dae Rene or none 13
BIR help! oS ) 4 RRR Neale coe eens 13
29 U.S.C. (& Supp. II) 1101-1114 ....................... 4
, git Sake: UL) 2 6) RRO eeMneD een Senne amianeS 13
BP ROT EY 1h 8 6G § pemecmmnemn cree 13
| cs By) - SIRI essipomnenseureeen ss Nemec eure inne 18
Fr SAC rere ce rreeevevwerevesensenccescowes 18, 19, 20-21 i
29 U.S.C. 1132 (2) ..--..cceescecceeceeeseeseeeseeceeeseeeeeeseeeees 21
Be coe cae ian sce aionecdconbeeypens eames 11 |

ee

Vv

Constitution, statutes, regulations

and rule—Continued: Page
Tr a 3, 10
29 U.S.C. (& Supp. IT) 1144(b) -...20 0. 10
29 U.S.C. 1144(b) (4) (§ 514(b) (4) ) ee... 11
enc eR arose cca ieareseloornen 20

National Labor Relations Act, 29 U.S.C. 151 et seq... 19
Taft-Hartley Act of 1947:

mes TD a ceccicssccrctbasdpiioslaobancedasban 4,5, 10, 14, 15
Re IIE MED orice seccrresesniinccsnisericidesivavccodliaunccinons 10
Pub. L. No. 96-364, § 409, 94 Stat. 1807 --..00-2o 14
Be Ws MED ncisss isnstart tui aevcuckontbcpacaaanidedeabe lt 8,9
EE II 20 dicie cers cramsoccteanacsneciraiiaramaticyuataana te 22
N.Y. Lab. Law § 198-c (McKinney 1986) ....3, 6, 8, 9, 10, 11
29 C.F.R.:
Pt. 2509:
Section BGGG. 76-6 (CIGGO) oon. cccevccvevcnesccoecaee 4
Pt. 2510:
I 6
ee AGS 2) en eee ae 15-16
ee ge SE: | a ne ee Re 5, 14, 15
SY EES a OR ie. cc, 6, 15
Section 2510.3-1(b) (1) -00...0.... Riccatisusbaatcsnonthausacnee 16
es Tt ALT > 5 a a eee ee 16
ection 2510.3-1 (ib) (3B)... ---.. nce cccceeeececcceccccecee es 16
ES |) ane yan Ta oe 13
ie ee rice chests tasted 5

Miscellaneous:
120 Cong. Rec. (1974):

ee ae a ar a oe ee 20

I ips eee caae tere are ee a ee ea 20
126 Cong. Rec. 20208 (1980) ....................................-.. 14
Dep’t of Labor Advisory Op.:

Pee: Pee Cea. Sere)... 13

No. 81-55A (June 26, 1981) Be asaanminns & sites 13
PR Bk: ) Rear ene 4
H.R. Conf. Rep. 93-1280, 93 Cong., 2d Sess. (1974).. 20
H.R. Rep. 93-533, 93d Cong., Ist Sess. (1973) ......... 16

S. Rep. 93-127, 93d Cong., Ist Sess. (1973) -.............. 16

Iu the Supreme Court of the United States

OCTOBER TERM, 1985

No. 85-441

LILLIAN ROBERTS, COMMISSIONER OF LABOR
OF THE STATE OF NEW YORK, APPELLANT

Vv.

BURLINGTON INDUSTRIES, INC.

No. 85-460
IRVING GILBERT, ET AL., APPELLANTS
Vv.
BURLINGTON INDUSTRIES, INC.
ON APPEAL FROM THE

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES
AS AMICUS CURIAE

This brief is submitted in response to the Court’s in-
vitation to the Solicitor General to express the views of
the United States.

STATEMENT

1. In 1982 Burlington Industries, a textile manufac-
turer, sold its sock and hosiery divisions as going con-
cerns to Kayser-Roth Hosiery, Inc. Prior to the sale,
Burlington arranged for the individual appellants, 36
former Burlington employees who worked in 16 different
states but reported to Burlington’s merchandising head-
quarters in New York, to continue working With the di-
visions following their acquisition by Kayser-Roth. All

(1)

2

of the individual appellants, except one who retired, con-
tinued to hold the same positions with Kayser-Roth that
they previously held while employed by Burlington. J.S.
App. A5.'

Burlington maintained a severance pay policy which
was summarily described in an employee handbook and
fully set forth in a company policy manual. The sever-
ance pay policy provided that “regular full-time salaried
employees” experiencing either “job elimination” or cer-
tain other “involuntary terminations” were eligible for
severance payments.* The grant or denial of severance
pay occurred immediately upon termination of employ-
ment and benefits were payable from the company’s gen-
eral assets rather than from a separate fund. Burlington
determined that appellants were not eligible for severance
benefits under its policy because their jobs were not
terminated. J.S. App. A5-A7.*

2. Burlington’s former employees sought to obtain sev-
erance pay from the company on the theory that they be-
came entitled to benefits when they ceased working for

1The district court stated that appellants were employed by
Kayser-Roth “at the salaries or rates of pay received previously
from Burlington” (J.S. App. A22). The court of appeals, in
contrast, noted that appellants contend that Kayser-Roth employed
them at a lower rate of compensation (id. at A5).

2 The policy states that “job elimination” includes “terminations
due to circumstances such as elimination or modification of opera-
tions or other job elimination due to bona fide organizational
changes” and that “other involuntary terminations” include “termi-
nations due to unsatisfactory job performance which is not willful.”
J.S. App. A23. The amount of the severance payment is determined
from tables contained in the policy and depznds on factors such as
age, salary, and years of service (ibid.).

*’ Burlington agreed to provide severance pay to any employee
terminated by Kayser-Roth within six months after the sale (85-929
Pet. App. All). Appellants contend that about one-third of them
have been terminated by Kayser-Roth—presumably after the six-
month period—and that Kayser-Roth has no severance pay policy,
so that the terminated employees received little or no severance pay
(85-460 J.S. 4 n.3).

3

Burlington and began working for Kayser-Roth. In state
administrative proceedings, the New York State Commis-
sioner of Labor ordered Burlington to cgmply with claims
that ten of the individual appellants in this action had
filed with the State Department of Labor pursuant to Sec-
tion 198-c of the State Labor Law.‘ Burlington appealed
the Commissioner’s order to the New York State Indus-
trial Board of Appeals. Appellants then brought this
action in the United States District Court for the South-
ern District of New York, alleging four claims under
the Employee Retirement Income Security Act of 1974
(ERISA), 29 U.S.C. (& Supp. II) 1001 et seg., and, in
the alternative, seven state law causes of action. The
Commission intervened as a plaintiff, and the Board
stayed enforcement of the Commissioners order and
held the administrative appeal in abeyance pending de-
termination of the present action (J.S. App. A295)
Burlington sought dismiss! of appellants’ claims,

tending that their state law claims are preempted by <9
U.S.C. 1144(a), which provides that ERISA “sup:
sede[s] any and all State laws insofar as they * * * re
late to any employee benefit plan.” The district court «
missed the state law claims. It first held that Burling-
ton’s severance pay policy is an “employee welfare ben-
efit plan” within the coverage of ERISA (J.S. App. A26).
The court noted that Burlington did not contend that its
severance pay policy was a pension plan but that it was
a welfare plan as defined in 29 U.S.C. 1002(1).* Respond-

4 That statute makes it a misdemeanor for an employer to fail or
refuse to pay or provide “benefits or wage supplements,” which are
defined by the statute to include “reimbursement for expenses;
health, welfare and retirement benefits; and vacation, separation or
holiday pay.” N.Y. Lab. Law § 198-c (McKinney 1986).

5 Section 1002(1) defines “employee welfare benefit plan” (or
“welfare plan”) to mean “any plan, fund, or program * * * estab-
lished or maintained * * * for the purpose of providing for its
participants or their beneficiaries, through the purchase of insur-
ance or otherwise, (4) medical, surgical, or hospital care or benefits,
or benefits in the event of sickness, accident, disability, death or
unemployment, or vacation benefits, apprenticeship or other training
programs, or day care centers, scholarship funds, or prepaid legal

4

ing to appellants’ argument that Burlington’s severance
pay policy is not a welfare plan ‘“‘because there is no plan
as such, but simply a naked promise to pay severance
benefits” (J.S. App. A27 (emphasis in original) ), the
court, following Donovan v. Dillingham, 688 F.2d 1367,
1372 (lith Cir. 1982) (en banc), concluded that Burling-
ton’s severance pay policy “is a plan, established by an
employer, for the purpose of providing * * * [a covered]
benefit to its participants, the Burlington employees,
thruogh the use of general corporate assets” (J.S. App.
A28). The district court also rejected appellants’ argu-
ments that welfare plans must be separately funded in
order to be covered by ERISA (id. at A28, A30).° And
the court concluded, contrary to appellants’ contentions,
that while the statute’s fiduciary and reporting provisions
establish responsibilities of plan fiduciaries and admin-
istrators, they do not set forth prerequisites for ERISA
coverage (id. at A29).7 The court added that an inter-
pretive bulletin issued by the Department of Labor stated
that welfare plans do not have to have a funding proce-
dure and that a statement accompanying proposed amend-
ments to ERISA regulations stated that “severance pay
plans would in virtually all cases be welfare plans” (id.
at A30, citing 29 C.F.R. 2509.75-5 (1980) and 44 Fed.
Reg. 11763 (1979) ).

Having determined that Burlington’s severance pav
policy is covered by ERISA, the court held that ERISA

services, or (B) any benefit described in section 186(c) of this
me? * e

®In that connection, the court explained (J.S. App. A29) that
although 29 U.S.C. 1002(1)(B) refers to benefits “described in”
29 U.S.C. 186(c), and that Section mentions “pooled * * * severance
or similar benefits,” that reference did not. mean that severance
pay benefits had to be pooled in order to be covered by Section
1002(1) (B). Appellants have abandoned this argument ‘see 85-460
J.S. 7-8 n.7).

7 ERISA imposes certain uniform standards on the design, admin-
istration, and operation of all employee benefit plans, including rules
concerning reporting, disclosure, and fiduciary responsibility. 29
U.S.C. (& Supp. II) 1021-1031, 1101-1114.

5

preempts appeliants’ state law claims because they “re-
late to” an employee benefit plan (J.S. App. A30-A31).°
The court therefore dismissed the state law claims and
permanently enjoined the state administrative proceed-
ings; it did not dismiss appellants’ ERISA claims. Pur-
suant to Fed. R. Civ. P. 54(b), the district court certi-
fied its decision for immediate review by the court of
appeals. J.S. App. A84-A35.

3. The Second Circuit affirmed (J.S. App. A1-A20).
The court agreed with the district court’s conclusion “that
Burlington’s severance pay policy was an ERISA plan”
(id. at A7). The court rejected appellants’ argument
that “a promise or agreement to pay severance benefits,
without more,” is not a welfare plan (id. at A9). The
court instead found that the severance pay policy is a
welfare plan under Section 1002(1) (A), which includes
plans providing unemployment benefits in the definition
of welfare plans, since severance pay is a type of unem-
ployment benefit (J.S. App. A10). The court also con-
cluded that the severance pay policy is a welfare plan
under Section 1002(1)(B) which refers to severance pay
by means of its reference to Section 186(c¢c), which spe-
cifically mentions severance pay (J.S. App. Al0). The
court noted that a Department of Labor regulation states
that welfare plans include plans that pay severance ben-
efits (id. at All, citing 29 C.F.R. 2510.3-1(a) (3) ), con-
cluding that that regulation is reasonable (J.S. App. A12).

The court also rejected .appellants’ argument that
ERISA covers only separately funded severance pay
plans (J.S. App. Al1-A12). And it rejected their argu-
ment that Burlington’s unfunded severance pay policy
should be considered to be a “payroll practice” which is
excluded from ERISA coverage under the Department of
Labor’s regulations (id. at A1l3).° As did the Ninth Cir-

8 Appellants have abandoned their argument that “heir state law
claims do not “relate to” an ERISA plan. See 85-441 J.S. 7 n.**;
85-460 J.S. 7-8 n.7.

® To clarify the definition of ‘welfare plan,” the regulation identi-
fies as outside the scope of the definition certain “payroll practices”
including arrangements whereby an employee continues to receive

6
cuit in Scott v. Gulf Oil Corp., 754 F.2d 1499, 1503
(1985), the court noted that the payroll practices enu-
merated in 29 C.F.R. 2510.3-1 cover payments made
“during the course of employment, while severance pay
occurs only after termination” (J.S. App. A13).

The court accordingly held that ERISA preempts ap-
pellants’ state common law claims and their claims based
on N.Y. Lab. Law § 198-c (McKinney 1986). It stated
that “[t]o hold otherwise would undermine the uniform-
ity in plan administration that [ERISA] was designed
to promote” (J.S. App. A17).?°

Finally, the court of appeals considered whether Bur-
ington should be estopped from raising the preemption
defense because, as appellants contend without contradic-
tion, Burlington failed to comply with ERISA’s reporting

compensation from an employer’s general assets during periods of
absence. 29 C.F.R. 2510.3-1(b). Severance pay is not included
among the “payroll practices” enumerated in the regulation.

10 Two hundred other Burlington employees affected by the sale
filed a similar action in the United States District Court for the
Middle District of North Carolina, alleging claims based on ERISA
and state law claims as well. As in this case, the employees first
obtained a favorable administrative ruling from state officials.
When federal court proceedings commenced, the Commissioner of
Labor for the State of North Carolina intervened in that action.
The district court held in that case that ERISA preempted the
plaintiffs’ state law claims. It also held that Burlington’s decision
to deny severance pay was not arbitrary or capricious and dismissed
their ERISA-based claims. It based its conclusion that the employ-
ees could not recover under ERISA on its finding that “Burlington
established its severance policy for the purpose of providing financial
support to employees whose jobs are lost through no willful fault of
their own and who might therefore be in need of financial resources
during a period of unemployment” (85-929 Pet. App. A61). The
Fourth Circuit affirmed (id. at Al-A43). It stated that because
“unemployment compensation was undoubtedly a major purpose of
the plan,” Burlington’s decision not to award severance pay, “though
not compelled by the plan’s language, is certainly a reasonable one”
(id. at A38-A39). The individual plaintiffs in this related case have
filed a petition for a writ of certiorari (No. 85-929) and the North
Carolina Commissioner has filed a jurisdictional statement (No. 85-
944), both of which are pending before the Court.

7

and disclosure requirements with respect to its severance
pay policy until after suit was filed in this case. The
court concluded that it would be undesirable to hold Bur-
lington estopped and therefore subject to inconsistent
treatment of claims under state law (J.S. App. A19).
The court did not consider appellants’ claims based on
ERISA, leaving that question for determination by the
district court on remand (zbid.)."

ARGUMENT

The court of appeals correctly determined that Bur-
lington’s severance pay policy is a welfare plan covered
by ER!ISA. Therefore, the court was also correct in hold-
ing that appellants must seek relief under federal, not
state, law. The decision below is consistent with the lan-
guage and legislative history of ERISA and the con-
temporaneous construction of the statute by the United
States Department of Labor, the agency charged with
responsibility for enforcing the reporting, disclosure, and
fiduciary obligations that ERISA imposes oii private em-
ployee benefit plans. Moreover, the court of appeals’ de-
cision is in accord with the decisions of all other courts

11 Following the approach adopted in Blau v. Del Monte Corp.,
748 F.2d 1348, 1354 (9th Cir. 1984), cert. denied, No. 84-2009 (Oct.
7, 1985), the court concluded that it would be appropriate to scruti-
nize Burlington’s decision not to award severance pay while at the
same time indicating that the arbitrary and capricious standard of
review should be applied in reviewing Burlington’s construction of
its severance pay policy. J.S. App. Al8-A19. Such an approach, the
court stated, “eliminates any incentive on the part of employers not
to comply with the Act’s reporting, disclosure and fiduciary require-
ments” (id. at Al9). In following Blau, the court contrested its
approach with the approach taken by the district court in the case
brought by Burlington employees in North Carolina (J.S. App. A18)
since that court applied the arbitrary and capricious standard with-
out considering Burlington’s failure to comply with ERISA’s report-
ing and disclosure provisions. The Fourth Circuit, in turn, which
issued its decision after the Second Circuit, stated that it applied
the arbitrary and capricious standard to all claim eligibility disputes
and saw “no reason to vary the standard based on procedural viola-
tions indicating bad faith, for such situations can be adequately
resolved under the traditional standard” (85-929 Pet. App. A37).

8

of appeals that have considered the issue, and does not
conflict with any decision of this Court. Therefore, al-
though in our view this case is properly brought as an
appeal, it does not warrant plenary review.

1. This case is prcperly brought as an appeal pursu-
ant to 28 U.S.C. 1254(2), which provides for review
“Tbly appeal by a party relying on a State statute held
by a court of appeals to be invalid as repugnant to the
Constitution, treaties or laws of the United States,” be-
cause the court of appeals has held Section 198-c of New
York’s Labor Law unconstitutional under the Supremacy
Clause. Franchise Tax Board vy. United States Postal
Service, 467 U.S. 512, 515 n.7 (1984); Franchise Tax
Board v. Construction Laborers Vacation Trust, 463 U.S.
1, 7 & n.6 (1983). Burlington argues that there is no
basis for appeal because this case is similar to Silkwood
v. Kerr-McGee Corp., 464 U.S. 238 (1984), in which the
Court held that appeai was not proper where a court of
appeals invalidated a punitive damages award because
federal law prohibited such an award. The Court ex-
plained its decision in Silkwood by stating that the court
of appeals “did not purport to rule on the constitution-
ality of the Oklahoma punitive damages statute. The
court did not mention the statute, and the parties did not
contest or defend the constitutionality of the statute in
their appellate briefs. While the award itself was struck
down, the statute authorizing such awards was left un-
touched.” Jd. at 247.

“Jurisdiction under 28 U.S.C. § 1254(2) is properly
invoked only where a court of appeals squarely has ‘held’
that a state statute is unconstitutional on its face or as
applied” (Burger King Corp. v. Rudzewicz, No. 83-2097
(May 20, 1985), slip op. 8 n.12 (emphasis in original) ).
This case falls in the Court’s appellate jurisdiction under
28 U.S.C. 1254(2). Section 198-c of New York’s Labor
Law provides that it is a misdemeanor for an employer
to refuse to pay benefits, including “separation * * *
pay,” and appellants seek to enforce that provision. Un-
like Silkwood, the court of appeals expressly recognized
that this case presents the issue whether Section 198-c is

9

preempted by ERISA (J.S. App. A8) and held that it is
preempted (id. at A1l6). Thus, Section 198-c is not left
“untouched,” like the Oklahoma punitive damage awards
statute in Silkwood. Rather the court of appeals has held
that the statute may not be used to enforce promises by
private employers to provide severance pay even though
it applies by its terms in such cases. Since the court of
appeals clearly held the statute unconstitutional as ap-
plied, this case is reviewable under Section 1254(2).”

2. Every court of appeals that has considered the ques-
tion has concluded that an employer’s unfunded severance
pay policy is an employee welfare benefit plan covered by
ERISA. In addition to the court below, the Fourth Cir-
cuit so held in the related case brought by other Burling-
ton employees (see note 10, supra), and the Ninth Cir-
cuit has repeatedly held that unfunded severance pay
policies are welfare plans. Jung v. FMC Corp., 755 F.2d
708, 710 & n.2 (9th Cir. 1985); Scott v. Gulf Oil Corp.,
754 F.2d 1499, 1502-1503 (9th Cir. 1985); Blau v. Del
Monte Corp., 748 F.2d 1348, 13852 (9th Cir. 1984), cert.
denied, No. 84-2009 (Oct. 7, 1985).'* Appellants have

12 Burlington’s other arguments in support of its contention that
this case does not present an appeal are insubstantial. Its argument
(Mot. to Dis. or Aff. 8-9) that Section 198-c does -9t provide a pri-
vate right of action appears to be wrong (see Appellants Jt. Br. in
Opp. to Mot. to Dis. or Aff. 1-2) and is in any event irrelevant since
the appellant in No. 85-441, the New York Commissioner of Labor,
plainly has standing to enforce the law. Nor does it matter that
appellants have abandoned the argument that their claims do not
“relate to” ERISA. Although the issue presented is whether
Burlington’s severance pay policy is a welfare plan under ERISA,
the parties agree that that question is significant because its answer
determines whether Section 198-c is preempted.

18 The Seventh and Eighth circuits, in ruling on ERISA claims
involving severance pay provisions set forth in employer policy
manuals, have implicitly held that informal, unfunded severance
pay policies are covered by the statute. Sly v. P.R. Mallory & Co.,
712 F.2d 1209, 1210 & n.l (7th Cir. 1983); Dependahi v. Falstaff
Brewing Corp., 653 F.2d 1208 (8th Cir.), cert. denied, 454 U.S. 968
(1981), aff’g, 491 F. Supp. 1188, 1190, 1196 (E.D. Mo. 1980); see
also Sutton v. Weirton Steel Division of National Steel Corp., 724

10

cited no case that conflicts with the decision below, and
we are not aware of any. Because severance pay policies,
whether funded or unfunded, are welfare plans, appel-
lants’ state law claims are preempted by ERISA.

a. ERISA defines two categories of “employee benefit
plans”: employee welfare benefit plans and employee pen-
sion benefit plans. 29 U.S.C. 1002(3). Employee welfare
benefit plan, the category relevant to this case, is defined
as “any plan, fund, or program * * * established or
maintained by an employer” for the purpose of providing
specified benefits, including medical, disability, death, un-
employment, and vacation benefits (29 U.S.C. 1002
(1) and (A)), and “any benefit described in section
186(c) of [Title 29]” (29 U.S.C. 1002(1) (B)). Section
186(c), enacted as part of the Taft-Hartley Act of 1947,
enumerates the types of contributions an employer may
legally make to a union trust fund, and includes contri-
butions “paid by any employer to a trust fund established
by such representative for the purpose of pooled vacation,
holiday, severance or similar benefits” (29 U.S.C. 186
(c) (6) (emphasis added) ).

As this Court has several times observed, Congress in-
tended ERISA to occupy the field of benefit plan regula-
tion to the exclusion of the states in order to foster the
development of such plans by relieving employers of po-
tentially conflicting state requirements. See Metropolitan
Life Insurance Co. V. Massachusetts, No. 84-325 (June 3,
1985), slip op. 138; Shaw v. Delta Air Lines, Inc., 463 U.S.
85, 105 & n.25 (1983); Alessi v. Raybestos-Manhattan,
Inc., 451 U.S. 504, 522-523, (1981). ERISA therefore
preempts (with certain exceptions not applicable here,
see 29 U.S.C. (& Supp. II) 1144(b)) “any and all State
laws” that “relate to any employee benefit plan” as de-
fined in the Act. 29 U.S.C. 1144(a).™ If the Burlington

F.2d 406, 409 (4th Cir. 1983), cert. denied, 467 U.S. 1205 (1984) ;
Pinto v. Zenith Radio Corp., 618 F.2d 110 (7th Cir. 1980) (Table),
aff’g 480 F. Supp. 361 (N.D. Ill. 1979).

14 Appellants did not raise, and the courts below did not consider
the issue whether N.Y. Lab. Law § 198-c (McKinney 1986) is saved

11

severance pay policy is an “employee benefit plan” with-
in the meaning of ERISA, the New York state law must
be held to be preempted, because that law’ requires pay-
ment of separation benefits and thus clearly “relate[s]
to” the company’s policy."

Appellants’ primary contention is that Burlington’s sev-
erance pay policy cannot be considered a “plan, fund, or
program” within the meaning of ERISA’s definition of
“employee benefit plan.” 85-460 J.S. 8-11; 85-441 J.S.

from preemption by the exception in Section 514(b) (4) of ERISA
for “any generally applicable criminal law of a State.” 29 U.S.C.
1144(b) (4). The government agrees with other courts that have
considered the question, however, that by limiting this exception to
laws of “general” applicability, Congress expressed an intent to pre-
empt state laws, such as Section 198-c, which are directed specifically
at employee benefit plans. Trustees of Sheet Metal Workers’ Inter-
national Association Production Workers’ Welfare Fund v. Aberdeen
Blower & Sheet Metal Workers, Inc., 559 F. Supp. 561, 563 (E.D.
N.Y. 1983) (N.Y. Lab. Law §198-c (McKinney 1986), is not a
criminal law of general applicability); see also Sforza v. Kenco
Constructional Contracting, Inc., 629 F. Supp. 489, 491-492 (D.
Conn. 1986) (and cases cited). Moreover, as one court has held,
even if N.Y Lab. Law § 198-c (McKinney 1986) were considered a
generally applicable criminal law, ERISA’s criminal law exception
cannot be construed to save civil actions implied from state criminal
statutes. See Calhoon v. Bonnabel, 560 F. Supp. 101, 109 (S.D.N.Y.
1982). But see, e.g., Goldstein v. Mangano, 99 Misc.2d 523, 417
N.Y.S.2d 368 (Civ. Ct. 1978) (since Section 198-c is a generally
applicable criminal law as defined by New York law, it is saved from
ERISA preemption).

15 While appellants do not argue that their state law claims do
not relate to ERISA, state amici argue (Br. 16-17) that there is a
conflict in the circuits on the issue of whether ERISA preempts
related state law claims, citing Carpenters Health & Welfare Fund
v. Kenneth R. Ambrose, Inc., 727 F.2d 279 (3d Cir. 1983). The court
in that case decided a pendent state law claim in an action to collect
delinquent pension contributions under the terms of a collective
bargaining agreement. Jd. at 281. The Third Circuit rejected with-
out discussion the employer’s argument that ERISA preempted the
state law claim. Jd. at 282 n.5. In the absence of any indication
from the Third Circuit as to the basis of its holding, the decision in
that case cannot be read as creating a conflict with cases holding,
as Section 1144 plainly commands, that state law claims related to
ERISA are preempted.

12

10-13. They argue that the court of appeals simply did
not consider the threshold issue of the existence of a plan,
and indeed that “[t]here is not a single case, nor a sin-
gle court, that has truly addressed [this] issue” (85-460
J.S. 11). These contentions are simply incorrect. In
Donovan V. Dillingham, 688 F.2d 1367 (1982) (en banc),
the leading case construing the term “plan” for purposes
of applying ERISA’s definitions and coverage provisions,
the Eleventh Circuit squarely addressed the question of
what constitutes the establishment of a plan under
ERISA. The court concluded that “a ‘plan, fund, or pro-
gram’ under ERISA is established if from the surround-
ing circumstances a reasonable person can ascertain the
intended benefits, a class of beneficiaries, the source of
financing, and procedures for receiving benefits” (id. at
1373). The Dillingham formulation gives a common
sense meaning to the statutory language which connotes
an identifiable benefit policy without specifying what
form that policy must take. The district court in this
case expressly followed Dillingham (J.S. App. A27-A28)
and the court of appeals affirmed, noting its approval of
the district court’s “well-considered opinion * * * that
Burlington’s severance pay policy was an ERISA plan”
(id. at A7). The standards articulated in Dillingham
also have been followed uniformly by all the courts of
appeals that have considered the question of whether an
employer’s benefit policy constitutes an ERISA plan.
Scott, 754 F.2d at 1503-1504; Blau, 748 F.2d at 1352;
see also Dependahl, 491 F. Supp. at 1195.

Contrary to the contentions of appellants and state
amici (85-460 J.S. 17; States Amici Br. 13) nothing in
the language or structure of ERISA suggests that in
order to meet the definition of ‘‘employee welfare benefit
plan” a severance pay policy must be funded. The stat-
ute’s definitional and coverage provisions contain no fund-
ing requirements or limitations. See 29 U.S.C. 1002(1)
and 1003(a). Had Congress intended to limit coverage
of the Act to separately funded plans it could have so
stated. Instead, Congress defined “welfare plan” broadly
to include not just any “fund,” but any “plan, fund or

13

program” that provides covered benefits. 29 U.S.C.
1002(1). Moreover, in defining the statute’s pattern of
regulation, Congress repeatedly distinguished between
funded and unfunded plans. For example, the statute’s
requirement that plan fiduciaries be bonded expressly
does not apply “where such plan is one under which the
only assets from which benefits are paid are the general
assets of a union or of an employer.” 29 U.S.C.
1112(a) (1). Obviously such an exemption would be su-
perfluous if Congress had defined employee welfare bene-
fit plans to include only benefit plans that have a sepa-
rate source of funding. Welfare plans also are exempted
altogether from ERISA’s specific funding requirements.
29 U.S.C. 1081(a)(1).1° These provisions amply demon-
strate that Congress intended ERISA to regulate welfare
plans irrespective of their method of financing.

The Department of Labor has consistently interpreted
the definition of “welfare plan” to include unfunded
severance pay plans. The Department published regula-
tions less than a year after the Act’s passage construing
ERISA’s coverage provisions. 29 C.F.R. Pt. 2510. The
regulations clarify that severance pay plans generally
are categorized as “welfare plans” rather than “pension
plans” and thus are not subject to the funding and other
requirements that ERISA imposes on pension plans. 29
C.F.R. 2510.3-2(b). And, in advisory opinions interpret-
ing the Act, the Department has consistently found that
unfunded severance plans are governed by ERISA. See,
e.g., Advisory Op. 81-55A (June 26, 1981); Advisory
Op. 76-66 (June 2, 1976). This longstanding interpre-
tation of the Act by the agency charged with its admin-
istration is entitled to deference. Chevron U.S.A. Inc. V.
Natural Resources Defense Council, Inc., 467 U.S. 837,
842-845 (1984); see also Udall v. Tallman, 380 U.S. 1,
16 (1965).

16 See also, e.g., 29 U.S.C. 1051(2), 1081(a) (3), 1101(a) (1)
(excepting unfunded deferred compensation plans from the Act’s
participation and vesting, funding, and fiduciary responsibility
provisions).

14

In 1980 Congress ratified the Department’s interpreta-
tion by amending 29 U.S.C. 1002(2) expressly to au-
thorize the Department to treat severance pay arrange-
ments as welfare plans. The amendment provided that
“Tt]he Secretary may by regulation prescribe rules con-
sistent with the standards and purposes of this Act
providing one or more exempt categories under which—
(1) severance pay arrangements * * * shall, for purposes
of this title, be treated as welfare plans rather than
pension plans” (Pub. L. No. 96-364, § 409, 94 Stat.
1307). See also, 126 Cong. Rec. 20208 (1980) (joint ex-
planation of amendments). Thus Congress, by adopting
this amendment after the Department had promulgated
its regulations, effectively approved the Department’s in-
terpretation of the Act to cover unfunded severance pay
plans, as the Fourth Circuit recognized in the related
case arising from Burlington’s sale of its sock and hosiery
divisions to Kayser-Roth (85-929 Pet. App. A21-A22).
That court and the Ninth Circuit have expressly rejected
arguments, similar to those raised by appellants here,
that a severance pay plan must be funded in order to be
covered by the Act. Scott, 754 F.2d at 1503.

The Department’s regulations also clarify that although
the definition of “welfare plan” refers to “any ben-
efit described in [29 U.S.C.] 186(c)” which in turn
lists “pooled severance [and other] benefits” (emphasis
added), this language does not indicate that severance
benefits must be funded separate from the general assets
of the employer in order to be covered by ERISA. 29
C.F.R. 2510.3-1(a) (3). As analyzed by the regulations,
“the effect of [the cross-reference] is to include within
the definition of ‘welfare plan’ those plans which provide
* * * severance benefits, and benefits which are similar”
(ibid.). This conclusion is quite clearly correct. The
word “pooled” is used in Section 186(c) in the context of
“money * * * paid by any employer to a trust fund
established by such representative,” meaning money paid
to a fund set up by a union or other employee repre-
sentative. Thus if the reference to Section 186(c) were
taken to encompass not just the type of benefit but also

15

the arrangement for payment of benefits described in
Section 186(c), ERISA’s coverage would be limited not
just to funded severance benefit plans but to “pooled”
severance benefit plans set up by a union or some other
entity separate from the employer. Thus the argument
that the reference to Section 186(c) requires severance
plans to be funded or “pooled” in order to be covered by
ERISA proves too much. Indeed appellants have aban-
doned this argument."”

b. Appellants argue (85-441 J.S. 16-18) that Burling-
ton’s severance pay policy is a “payroll practice” that is
excluded from ERISA’s definition of “employee welfare
benefit plan” by the Department of Labor’s regulations.
This argument is incorrect. The court of appeals here
(J.S. App. A13) and the other courts of appeals that have
considered the issue uniformly and correctly have held
that the payment of severance benefits from general as-
sets does not constitute a “payroll practice’ under 29
C.F.R. 2510.3-1(b). 85-929 Pet. App. A22-A24; Scott,
754 F.2d at 1502-1503. As we have shown, the Depart-
ment of Labor has consistently interpreted ERISA to
cover unfunded severance pay plans. The same regula-
tions that specifically interpret the definition of “welfare
plan” to include severance pay plans, 29 C.F.R. 2510.3-
1(a) (3), make no mention of severance pay in the im-
mediately following provision identifying payroll prac-
tices that are excluded from that definition. 29 C.F.R.
2510.3-1(b).'* These provisions must be construed to-

17 As noted above (see note 6, supra), appellants have aban-
doned any argument based on Section 186(c)’s reference to “pooled”
severance benefits. Rather, they argue here that as a general
matter Congress sought only to regulate those welfare plans that
are constituted as a separate entity. But, as we understand their
argument, this is merely another way of saying that ERISA only
covers plans that are separately funded. The appellant in the
related case argues that an ERISA plan must have a separate
identity (85-944 J.S. 14-19) and that the plan must “be funded
(id. at 20-23).

18 The “payroll practices” regulation identifies payroll and other
practices that do not constitute welfare plans. 29 C.F.R. 2510.3-

16

gether in order to give effect to each, and one provision
should not be construed so as to negate the other. See
Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979) ;
Federal Power Commission v. Panhandle Eastern Pipe
Line Co., 337 U.S. 498, 514 (1949). Under appellants’
reading of the regulations, however, the “payroll prac-
tices” exception would largely nullify the effect of the
preceding provisions construing ‘welfare plan” by ex-
cluding from coverage all unfunded severance benefit
plans.

Appellants acknowledge that the regulations do not ex-
pressly identify severance benefits as a payroll practice.
They contend, however, that there is “no logical basis”
for treating severance benefits differently than sick leave
and holiday and vacation pay, types of benefits that are
excluded from coverage by the payroll practice regulation
when paid from an employer’s general assets (85-441
J.S. 17-18). Their argument misapprehends both the
purpose and the effect of the Department’s regulations.

Congress did not intend to make ERISA a vehicle for
regulating ordinary wage practices. Rather Congress
sought in ERISA to regulate the wide variety of fringe
benefit programs that had developed as ‘a means of
compensating workers in lieu of increased wages” as a
result of wage freezes imposed during World War II and
the Korean conflict. S. Rep. 93-127, 93d Cong., 1st Sess.
3 (1973); see H.R. Rep. 93-533, 98d Cong., Ist Sess. 2-4
(1973). The Department’s purpose in exempting payroll
practices is to give effect to the fundamental distinction
Congress recognized between wages (and similar types of
compensation), which Congress did not intend ERISA to
regulate, and fringe benefit compensation, which Congress
sought to bring under federal control. Severance benefits,

1(a) (1). The “payroll practices” enumerated in the regulation in-
clude standard forms of employee compensation, such as overtime
pay and shift, holiday or weekend premiums (29 C.F.R. 2510.3-
1(b) (1)), and various paid leave arrangements, such as sick leave,
holidays, and vacations, whereby an employee continues to receive
compensation out of the employer’s general assets during pericds
of absence (29 C.F.R. 2510.3-1(b) (2) and (3)).

17

unlike vacation pay, holiday pay, and sick leave, are
invariably paid after or at the time the en ployee leaves
employment. Thus severance benefits are more like un-
employment benefits (a type of fringe benefit also listed
in the Section 1002 definition of welfare plans) than like
wages for days an employee would otherwise be working
but for the employer’s willingness to excuse him for vaca-
tion or sickness. As the Ninth Circuit aptly observed
in Scott, in contrast to severance benefits, “[t]he prac-
tices described in the! [payroll practices] regulations
require disbursements of funds easily analogized to ordi-
nary wages, and the payments involved invariably take
place during the term of employment” (754 F.2d at 1503).

Congress had two broad concerns in enacting ERISA:
failure to pay promised fringe benefits to employees, and
mismanagement of funds accumulated to finance employee
benefits. The Department’s regulations exclude from cov-
erage unfunded plans providing vacation and holiday pay
and sick leave because, unlike severance benefits, such
payments are like ordinary wages and do not reflect ei-
ther of Congress’s concerns. See California Hospital
Ass’n V. Henning, 770 F.2d 856 (9th Cir. 1985), petition
for cert. pending, No. 85-1648. The regulations do in-
clude within ERISA’s coverage plans establishing trust
funds for payment of vacation and holiday pay and sick
leave; but they do so not because welfare plans must be
funded in order to be covered by ERISA, but rather be-
cause such trust funds raise the second of Congress’s
concerns, avoiding mismanagement of benefit funds.
Therefore the Labor Department’s regulations provide no
basis for concluding that severance payments are not em-
ployee welfare benefit plans within the meaning of
ERISA.

ce. Appellants and state amici argue (85-460 J.S. 17
& n.15; States Amici Br. 12, 14) that to be covered by
ERISA, welfare plans must have certain “basic,features”
suggested by the statutory requirements for covered pen-
sion plans. Another way of stating this ai'gument is that
an employer shovild not be able to rely on ERISA’s pre-
emption provision if the employer has not complied with

18

ERISA’s reporting, disclosure, and fiduciary require-
ments. But whichever way one states the argument, it
has no support in the statute; indeed it stands the statute
on its head.

As the district court stated (J.S. App. A28), “[t]he
existence of a ‘plan’ under ERISA is to be determined
solely by an examination of the Act’s ‘coverage’ and ‘defi-
nitional sections.” The ERISA provisions that state “the
responsibilities of fiduciaries and administrators of plans
covered by ERISA * * * do not set forth prerequisites
for ERISA coverage” (J.S. App. A29 (emphasis in orig-
inal) ). In other words, if an employer’s benefit policy
meets the definition of employee welfare benefit plan set
forth in ERISA, then the employer must comply with
ERISA’s reporting, disclosure, and other requirements.
He cannot exempt himself from ERISA by refusing to
comply with the statute. The Eleventh Circuit has rec-
ognized the obvious incongruity of permitting persons
who establish or maintain informal or unwritten plans
to circumvent the Act merely because an administrator
failed to satisfy applicable reporting or fiduciary stand-
ards (Dillingham, 688 F.2d at 1372). And appellants
have not been able to point to anything in the statute
or legislative history suggesting that an exception to
ERISA’s preemption provision should be created as a sort
of remedy for noncompliance with ERISA. To the con-
trary, the remedies for noncompliance are expressly set
forth in the statute itself. Section 1132(a) of Title 29
provides injunctive remedies to compel compliance with
ERISA, and Section 1131 provides criminal penalties for
willful violation of the reporting and disclosure require-
ments for employee welfare benefit plans.

d. Appellants and state amici argue (85-460 J.S. 10-
11; States Amici Br. 5) that Congress could not have in-
tended ERISA to cover, and therefore preempt, state
regulation of unfunded severance pay plans because to do
so would upset the traditional balance of federal-state
regulation in the labor relations field as recognized by
this Court in cases such as Motor Coach Employees Vv.
Lockridge, 403 U.S. 274, 289 (1971). However, cases

19

construing the National Labor Relations Act (NLRA),
29 U.S.C. 151 et seg., and other federal statutes govern-
ing labor-management relations are irrelevant to the
question of whether ERISA preempts state laws that
relate to covered employee benefit plans. As this Court
recently noted, “[u]nlike ERISA, the NLRA contains no
statutory preemption provision,” and “there is no sug-
gestion in the legislative history of the [NLRA] that
Congress intended to disturb the myriad state laws then
in existence that set minimum labor standards, but were
unrelated in any way to the processes of bargaining or
self-organization.” Metropolitan Life Insurance Co., slip
op. 22, 30.

ERISA, unlike the NLRA, explicitly sets forth an ex-
pansive preemption command, the legislative history of
the Act confirms Congress’s intent to occupy the field of
employee benefit plan regulation, and this Court has in-
terpreted the operative statutory phrase, “relate to any
employee benefit plan,” in a broad, literal fashion. Shaw,
463 U.S. at 95-100. Moreover, contrary to appellants’
and state amici’s assertions, the court of appeals’ holding
does not federalize the entire area of state wage regula-
tion. Rather, it merely precludes state regulation of
those specialized forms of compensation covered by
ERISA. Nothing in ERISA precludes the states from
continuing to regulate routine wage or salary arrange-
ments, or other practices described in the payroll prac-
tices regulatioi.'®

19 Relying on this Court’s decision in Nachman Corp. v. Pension
Benefit Guaranty Corp., 446 U.S. 359 (1980), appellants (85-441
J.S. 15) and state amici (Br. 15-16) argue that the decision below,
by precluding state law claims of entitlement to severance benefits,
improperly limits a participant’s remedies for alleged denial of
benefits to an ERISA action to enforce the plan’s liability while
foreclosing an action to enforce an employer’s liability under the
plan. This argument is without merit. ERISA plainly authorizes
plan participants “to enforce * * * the terms of the p¥an” against
any proper defendant from whom relief is available. 29 U.S.C.
1132(a). As appellants recognize, implicit in Nachman is the
recognition that ERISA authorizes causes of action against an
employer as wel! as against a plan. However, as the court below

20

To permit state law actions for recovery of benefits
under an employee benefit plan would run afoul of
ERISA’s preemption provision because it would subject
ERISA plans and fiduciaries to potentially conflicting
benefit liabilities and varying requirements for plan ad-
ministration depending on the state in which an action
was brought.*° With respect to the single plan at issue
in this case, for example, Burlington could be subject to
differing duties and responsibilities and liable for differ-
eni benefits in as many as 16 different states. Congress
preempted state laws in ERISA precisely to free plans
and their administrators from such inconsistent and
varying legal requirements. A participant’s or benefi-
ciary’s right to benefits under a plan, therefore, must be
enforced, if at ail, pursuant to ERISA.”!

pointed out, “Nachman and its progeny were based on federal rather
than state law” (J.S. App. Al6). The Court in Nachman did not
address, nor did it have occasion to consider, questions concerning
ERISA preemption of state law actions premised on an employer’s
liability under an unfunded welfare benefit plan. While ERISA
preempts state law claims, it expressly provides that it does not
“alter, amend, modify, invalidate, impair, or supersede any iaw of
the United States” (29 U.S.C. 1144(d)). Therefore, the fact that
an employer is subject to a federal law claim that relates to ERISA
does not mean that an employer is subject to a state law claim
relating to ERISA. For this reason, state amici’s reliance (Br.
17-19) on Murphy v. Heppenstall Co., 635 F.2d 233 (3d Cir. 1980),
cert. denied, 454 U.S. 1142 (1982), is similarly misplaced, since the
court there acknowledged that “[t]he employees’ contract claim
against the employer is not a state law claim” (635 F.2d at 237).

20 The legislative history of the Act demonstrates that Congress
intended contract claims involving ERISA plans to be determined
under federal common law. Thus, the sponsors of the Act envi-
sioned that the federal courts would develop “a body of Federal
substantive law * * * to deal with issues involving rights and
obligations under private welfare and pension plans.” 120 Cong.
Rec. 29942 (1974) (remarks of Sen. Javits). See also H.R. Conf.
Rep. 93-1280, 93d Cong., 2d Sess. 327 (1974) ; 120 Cong. Rec. 29933
(1974) (remarks of Sen. Williams).

21 Contrary to state amici’s claims (see, e.g., States Amici Br. 4-
6), participants and beneficiaries are not powerless to enforce
ERISA. They are expressly authorized to bring suit by 29 U.S.C.

21

Appellants and state amici advert to the irony that,
while intending to protect the interests of plan partici-
pants and beneficiaries, Congress, by constituting em-
ployee benefit plans as exclusively a federal concern, has
preempted state statutes that may in some situations pro-
vide greater protections than those afforded by the fed-
eral statute. But, as we have shown, Congress plainly
intended ERISA to cover severance pay plans and con-
sciously preempted all state laws that relate to covered
plans in order to provide a favorable environment for
the growth of such plans. As the Fourth Circuit con-
cluded in the related case brought by other former Bur-
lington employees, “[t]he fact that employees may some-
times wish to forego [the] advantages of ERISA cover-
age in favor of arguably more generous state statute[s]
does not allow us to escape the clear direction of Con-
gress”) 85-929 Pet. App. A24-A25).*

1132(a) and may obtain attorney’s fees in appropriate cases under
29 U.S.C. 1132(g).

22 The former Burlington employees who brought suit in North
Carolina contend in their petition for a writ of certiorari (85-929
Pet. 24-28) that the courts of appeals have created varying legal
rules under ERISA to construe severance pay provisions, and that re-
view by this Court is warranted for that reason. As we have noted
(see note 11, supra), the Second Circuit in this case decided that
Burlington’s construction of its severance pay policy ought to be
scrutinized because of its failure to comply with ERISA’s reporting
and disclosure provisions, while the Fourth Circuit in the related
case determined that Burlington’s construction of its policy is not
arbitrary and capricious. The Ninth Circuit has stated that “less
deference” is due an employer’s construction in circumstances such
as those presented here. Jung, 755 F.2d at 712. While there are
differences in the language used by the courts, as petitioners note,
each court purports to apply the arbitrary and capricious standard.
It is not clear whether any differences in result will occur, since the
Second Circuit has not rejected Burlington’s construction of its
severance pay provision but. instead left that issue for initial deter-
mination by the district court. In our view, the question of the
appropriate standard of review to apply in cases involving the con-
struction of terms in unfunded welfare plans would benefit from
further development by the lower federal courts. If the Court
disagrees, it should grant the petition in No. 85-929, limited to
Questions 1 and 2,

22

CONCLUSION

The judgment of the court of appeals should be af-
firmed. If the Court concludes that an appeal is improper,
and treats the jurisdictional statements as petitions for
a writ of certiorari pursuant to 28 U.S.C. 2103, the peti-
tions should be denied.

Respectfully submitted.

CHARLES FRIED
Solicitor General

CAROLYN B. KUHL
Deputy Solicitor General
CHRISTOPHER J. WRIGHT
Assistant to the Solicitor Gexzral
GEORGE R. SALEM \
Deputy Solicitor of Labor

ALLEN H. FELDMAN
Associate Solicitor

BETTE J. BRIGGS
Attorney
Department of Labor

May 1986

YY U. S. GOVERNMENT PRINTING OFFICE; 1986 491507 20235

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_0264%3A5. Public record. Not legal advice.