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BRIEF AMICUS CURIAE

TABLE OF CONTENTS

Table of ContentS...ccccccccccces

Table of AuthoritieS.......e.ece-

INTEREST OF AMICI... cc ccccvcvccece

INTRODUCTION wccccccccccccccccces

The PartieS...ccccccccccccccecses

The Procedural History.........

ARGUMENT... ccccccscveevescceesces

ot Fi 2) eee se ee ee ee

20

35

|

TABLE OF AUTHORITIES

Cases: PAGE

Blau v. Del Monte Corp., 748 F.2d

1346 (Sth Cir, 1906) 6cicrccccesnsse: SPpn7

California Association of Hospitals,

etc. v. Henning, F.2d (9th

Cir. 1985), Civ. Nos. 83-6381,

83-6416 (9th Cir. Sept. 6, 1985)... 30

Callanan v. United States, 364 U.S.

587 C996) } oc cence ee eewenneee eeee#*ee#ees. 26

Central States, Southeast and South-

west Areas Pension Fund, et al.

v. Central Transport, U.S. ’

53 U.S.L.W. 4811 (June 19, 1985)... 23,24

Donovan v. Dillingham, 688 F.2d

1367 (11th Cit. Tees oceeeneueenede 20,28

E.E.0.C. v. Westinghouse, 725 F.2d

211 (3d Cir. 1983), cert. den'd,

U.S. , 105 S.ct. 92 (1984).. 10,29

Equal Employment Opportunity

Commission v. Westinghouse

Electric Corporation, Civil Action

$64-6799 (B.D. Bed cccctccccecesesss

Gilbert v. Burlington Industries,

765 F.2d 320 (2d Cir. 1985)........ passim

Gilbert et al. v. Burlington

Industries (S.Ct. Dkt. Nos. 85-441

and SSnvGGC). o.1cca bees evaaeenanenee passim

4

Inc. v.

83-0274-B

1985)...

Marcal Paper Mills,

Action No.

(D. Maine August 27,

McDougall v. Donovan, 552 F. Supp.

1206 (N.D. | | pars ee

Nachman Corp. v. Pension Benefit

Guaranty Corp.,

eee loecceese

446 U.S.

NL Industries,

1357 (D.N.Jd.

Petrella v.

529 F. Supp. oY See

Massachusetts Mutual

722 F.2d 482 (9th

rev'd on other grds,

__, 53 U.S.L.W. 4938

(OS

Russell v.

Life Ins.

754 F.2d 1499

3) ere ee ee ee

Scott v.

(9th Cir.

Gulf Oil,

S.P.R.L. v. Imrex, et al.,

53 i ye ®

(July Ve 3) eee ee es ee ee

Sedima,

Delta Airlines,

85 (ER a ee ae ee

Shaw v.

Slack v. Burlington Industries,

(4th Cir.

Civ. Nos. 84-2241

84-2257 (4th Cir. September 3,

ete eee eee ehOee ee eee

(L) and

Smith v. CMTA-IAM Pension Trust,

746 F.2d 587 (9th Cir.

PAGE

29

21

pa im

26

26

2,23,

29

a?

29

33

21

iv

PAGE

STATUTES:

National Labor Relations Act,

29 eR oe i kt PP ee ee ee g

Employee Retirement Income

Security Act of 1974:

29 U.S.C. § 1001, et. SEG... cece passim

29 O.6.C. G VOOR FT ceccccsccscccess 26

29 0.8.C. S Veeetelosceecedeneuces ee 9

Age Discrimination in Employment

Act of 1967,

29 BU. B.C. BH GESTED S) cc isceccsssses 10

New York Labor Law § 198-c.......e--. 19

OTHER AUTHORITIES:

H. R. Rep. No. 93-533, reprinted in

1974 U.S. Code Cong. & Admin.

News (USCCANS), pp. 4643, 4650,

ry ok ee eer een ee eer. eee ae 26

H. R. Rep. No. 93-1280, reprinted in

1874 USCCANS, pp. 5076, 5164....... 27

Sen. Rep. No. 93-127, reprinted in

1975 USCCANS, pp. 4841, 4865, 4869,

4881, pe ae re ye ea ee 27

Sen. Rep. No. 93-383, reprinted in

1974 USCCANS, Pp. Setriacteseeen es ae 27

PAGE

Statement of Hon. Al Ullman,

reprinted in 1974 USCCANS,

LE Peer EC er erere ee eee ee TPCT eee TT 27

Statement of Hon. Harrison A.

Williams, Jr., reprinted in 1974

USCCANS, Pp. af | Re i ener. 27

[ See ee ee EEE EEEEEEEEEEEEeEeeeeeeeeeeeeeeeerereeorererrmreererereeeeeereereeeeee

INTEREST OF AMICI

THE UNITED FARM WORKERS OF AMERICA, AFL-

CIO ("UFW") is a labor organization which re-

presents agricultural employees. Its member-

ship fluctuates in size from season to season

in a given year, but in the aggregate, it re-

presents over 100,000 workers, most of whom

live and work in the states of California,

Arizona, Florida and Texas.

Farmworkers receive no protection under

the National Labor Relations Act, and in most

states, their employment relations are theo-

retically left to the vagaries of the free

market. In practice, many growers receive

both direct and indirect government assistance

in various forms. To the extent employment

contracts (oral or written) exist in farm

labor, they are ordinarily enforceable by

means of common law or statutory remedies in

state courts. Hence, the UFW's interest in

aZeo

the Gilbert v. Burlington case: decisions

such as that of the Second Circuit Court of

Appeals in Gilbert, and of the Ninth Circuit

in Scott v. Gulf Oil, 754 F.2d 1499, threaten

the viability of the only remedies available

to many farmworkers. Such decisions create

the tangible, poignant irony that a law

(ERISA) designed to protect workers from

abuses in the administration of funds from

which they are to derive benefits, actually

deprives workers of remedies previously avail-

able. The UFW therefore respectfully requests

that it be permitted to join in the arguments

of amici herein, and that this brief amicus

curiae be accepted and considered by this hon-

orable Court.

THE COMMITTEE OF IWTERNS AND RESIDENTS

("CIR") is a labor union representing 5,000

salaried physicians in private and public hos-

mine

=Ja

pitals in New York and New Jersey who are not

organized pursuant to the National Labor Rela-

tions Act.

The Committee of Interns and Residents

seeks to join in the brief submitted by labor

organizations as amicus curiae on behalf of

appellants in this case because the issues

raised in the appellants’ jurisdictional

statements and this Court's decision of those

issues will have a substantial impact on the

day-to-day operation of amicus and long term

and profound implications for its operation

generally.

Specifically, if an employer's simple

promise or undertaking to pay benefits such as

severance pay, sick pay, holiday or personal

leave, is construed to constitute a “plan"

with the meaning of ERISA and, therefore, to

trigger pre-emption, amici will suffer or ob-

serve the following consequences: salaried

physicians not protected by collective bar-

-4-

gaining agreements negotiated under the NLRA

will lose the minimal protection of adminis-

trative and common-law remedies should employ-

ers defiult on promises to provide benefits.

Faced with the threat of becoming dependent

upon employer discretion and good will for

such benefits, salaried physicians will be re-

luctant to exercise their right to organize

into labor unions.

The Committee of Interns and Residents

therefore seeks to join appellants in urging

the Court to reverse the decision of the Court

of Appeals and to obtain a ruling that a sim-

ple contractual promise to provide benefits

such as severance pav does not constitute a

plan within the meaning of ERISA so as to pre-

empt the operation of state contractual or

statutory law in this field.

COMMUNICATIONS WORKERS OF AMERICA, AFL-

CIO, DISTRICT ONE ("CWA") is a labor union re-

presenting 125,000 workers ir the private and

public sectors in New York, New Jersey and the

New England States.

Communications Workers of America, Dis-

trict One seeks to join in the brief submitted

by labor organizations as amicus curiae on be-

half of appellants in this case because this

Court's decision of the issues they raise will

have a profound impact on the constituency

which the amicus seeks to serve.

CWA is specifically concerned about the

effect of a ruiing such as that of the Second

Circuit on its ability to organize new mem-

bers. The net effect of an expansive reading

of the term "plan" is to reduce an employee's

contractual right to a specific benefit to a

right to engage in costly litigation under

ERISA. Amici have found that decisions which

tend to make benefits less secure have a chil-

-6§-

ling effect on the exercise by workers of the

right to associate with union organizers and

others involved in the early stages of or-

ganizing.

It must be emphasized that the workers

affected and disadvantaged by this interpreta-

tion are precisely those most in need of pro-

tection, particularly those not represented by

labor unions and those whose continued employ-

ment is jeopardized by the actions of their

employers.

Communications Workers of America, Dis-

trict One, therefore seeks to join in the pe-

tition before the Court to reverse the deci-

sion of the Court of Appeals and to obtain a

ruling that a simple contractual promise to

provide benefits such as severance pay does

not constitute a plan within the meaning of

ERISA so as to pre-empt the operation of state

law in this field.

ah Phat 2 at ne wi Mani stsil ere

ar wl

ee MU Semel

ot

INTERNATIONAL LADIES’ GARMENT WORKERS'

UNION, AFL-CIO ("ILGWU") is a labor union re-

presenting hundreds of thousands of workers in

the apparel and clothing industries. These

industries have long been characterized by

sweatshops and worker exploitation. Employer

avoidance of payment of severance, holiday,

vacation, sick pay and the like is endemic to

these industries. In recent years, high lev-

els of imported garments made at rates of pay

as low as $0.16 per hour have aggravated this

serious problem,

ILGWU wishes to join in the amicus curiae

briefs submitted by oe organizations and

state attorneys general in support of the pe-

tition in this case because the issue pre-

sented for review has a significant effect on

the wages and working conditions which prevail

in the apparel and clothing industries. If

state statutes which effectively enforce

direct promises of employers to pay wage sup-

=~

plements, such as severance pay, are pre-

empted by federal statutes such as ERISA, such

promises will go largely unenforced and the

compensation of apparel employees will be fur-

ther depressed. This will adversely affect

the terms and conditions of employment of all

employees in tke apparel industries and make

it more difficult to improve the factory

conditions under which they labor.

Accordingly, International Ladies' Gar-

ment Workers' Union wishes to join in support-

ing the petition for review in this case which

seeks to reverse decisions of courts of ap-

peals which deprive states of jurisdiction to

enforce direct contractual promises by em-

ployers to make severance and other payments

to their employees.

UNITED ELECTRICAL, RADIO AND MACHINE

WORKERS OF AMERICA ("UE") is a labor organiza-

tion within the meaning of the National Labor

Relations Act as amended, 29 U.S.C. Section

uHo

152(5) and an employee organization within the

meaning of the Employee Retirement Income

Security Act of 1974, 29 U.S.C. Section

1002(4). It represents thousands of workers

employed by employers engaged in heavy and

light production in the electrical, radio,

electronics and machine industries with re-

spect to their wages, hours and other condi-

tions of employment, including retirement in-

come and welfare benefits. On behalf of these

employees UE has entered into collective bar-

gaining contracts with hundreds of employers

throughout the country including General Elec-

tric Company and Westinghouse Electric Corpor-

ation.

The interest of UE in this case is both

general and specific. Generally, it has an

interest in the working conditions of all em-

ployees in the industries with which it is

concerned whether or not they are organized

and members of the Union. The denial of prac-

=4Q<

tical legal assistance afforded to unorganized

workers by state agencies such as a Department

of Labor, a consequence of the decision sought

to be reviewed, is a matter of deep concern to

UE.

Specifically, UE is directly interested

in Equal Employment Opportunity Commission v.

Westinghouse Electric Corporation, Civil No.

#84-4799 (E.D. Pa.), wherein Westinghouse

Electric Corporation has raised as a matter of

defense that it is not obligated to pay

severance pay to certain of its employees

(including UE-represented individuals) because

it is excused therefrom under the Age Dis-

crimination in Employment Act of 1967, 29

U.S.C. § 623(£)(2) on the ground that the

severance pay arrangement is a bona fide em-

ployee benefit plan. Westinghouse Electric

Corporation raises this defense notwithstand-

Bctadibiin Mhedrtr eis eed UE d senetbindios +

ing a specific ruling in EEOC v. Westinghouse,

725 F.2d 211, 224-5 (3d Cir. 1983), an appeal

at t<

from a summary judgment in another case, that

the severance plan is not a bona fide employee

benefit plan.

The extent to which or whether the deter-

mination here sought to be reviewed by the

Supreme Court may impinge upon the definition

of a bona fide employee benefit plan in con-

texts apart from that of ERISA deeply concerns

UE and may well affect the interests of the

employees it represents.

THE LABOR EDUCATION AND RESEARCH PROJECT

("LERP") is a network of union activists and

others with an interest in the labor movement,

which informs its members about labor issues

and facilitates an exchange of information

about such subjects as organizing into unions,

contracts, bargaining, and labor-management

cooperation. LERP seeks to join in the brief

submitted as amicus curiae on behalf of appel-

wig

lants in this case because the Court's deci-

sion will have a substantial impact on all

workers.

Specifically, if an employer's simple

promise to pay benefits such as severance or

sick pay is construed to constitute a “plan"

within the meaning of ERISA and therefore to

trigger pre-emption, the workers with whose

interests the amici are concerned will find it

more difficult te enforce their contracts with

employers.

THE NATIONAL CONFERENCE OF BLACK LAWYERS

(NCBL) is a nation-wide organization of attor-

neys committed to using their skills to eradi-

cate the racism that continues to corrupt the

political, economic, social and legal institu-

tions of this country. NCBL is particularly

concerned about the decision of the Second

Circuit in Gilbert, et al. v. Burlington

Industries because it exemplifies one of the

ways in which apparently “color blind” rulings

«1 Ze

contribute to the continuing and, indeed, in-

creasing oppression of Black people. While

ostensibly not a case about race or discrimin-

ation, Gilbert will have a disparate impact on

Black workers, the vast majority of whom are

still not represented by labor unions and,

consequently, cannot rely on the National

Labor =e Act to enforce their contrac-

tual rights to severance pay. |

The question of severance pay is also one

which is of particular importance to NCBL be-

Cause as a resuit of a history of racial dis-

crimination in employment, Black workers are

often the last hired and first fired. Once

terminated, Black workers often face the prob-

lem of discrimination in securing new employ-

ment. The security of their right to sever-

ance pay is, therefore, an extremely important

concern to Black workers, as is the ability to

~1@=

use administrative mechanisms and state wage

collection laws to recover benefits unjustly

withheld.

NCBL therefore urges this Court to inter-

pret each of the distinct provisions of ERISA

as part of an integral scheme designed to in-

crease worker security and require the ful-

fillment of promises to provide benefits. To

do otherwise at this period in our history is

to wink at a subtle but potent form of dis-

crimination.

Introduction

Amici, representing collectively over

half a million organized workers active ina

wide variety of industries including manufac-

turing, communications, electronics, nealth

care, textiles and agriculture, file this

brief in support of plaintiffs-appellants and

the State of New York in Gilbert et al. v.

Burlington Industries, (hereinafter Gilbert)

(S.Ct. Dkt. Nos. 85-441 and 85-460) because

-15-

amici believe the issues raised by this case

and their resolution will have a substantial

impact on labor unions and their members in a

variety of ways detailed below. They seek,

therefore, to protect and vindicate their own

rights, and to fulfill the historic mission of

organized labor to protect the rights of all

workers, both organized and not-yet-organized.

They assert first, the importance of

maintaining a clear focus on the purposes for

which ERISA was enacted and the problems Con-

gress sought to resolve through this statute.

Secondly, they emphasize the unintentional but

seriously damaging effect decisions such as

that of the Second Circuit below and similar

decisions in other circuits will have on the

ability of labor unions to secure benefits for

their members. Finally, amici urge this Court

to consider the chilling effect of such deci-

sions upon their right and ability to organize

new workers into collective bargaining units.

-16- \

1. The Parties

The parties to this action in many ways

typify the antagonists that find themselves

locked ir some of the most difficuit labor-

management struggles today.

Thev represent, on the one hand, unorgan-

ized workers with no institution or agency to

assert and protect their rights or give voice

to their collective grievances, and, on the

other, a large corporate entity whose profit

margins are currently threatened by competi-

tion from imports from nations with signifi-

cantly lower labor costs. Amici are acutely

concerned about the larger question raised by

the plaintiffs-appellants -- whether an em-

ployer can avoid severance pay obligations by

contracting to, in effect, seil employees as

well as machines and stock to another corpora-

tion. Amici urge this Court not to lose sight

a

fe nes lied Bi on eed OO RINE a Ae

at a ttl totais Wi Had It

~17~

of these realities while giving direction to

lower courts lost in the toils oi intricate

statutory construction.

The plaintiffs in Gilbert are thirty-six

unorganized workers who had been employed by

Burlington Industries for varying periods of

time, ranging from a minimum of seven years

anc seven months to thirty-three years (with

an average of seventeen years). At the time

they were severed from Burlington's payroll,

on January 4, 1982, all were employed by its

socks and hosiery division, which was sold as

a going concern to "a large manufacturer".

(Joint Appendix to Jurisdictional Statements

at 22), (hereinafter referred to as "Joint

Appendix").

At the time appellants were terminated by

Burlington, the employer's severance pay poli-

cy was contained in two documents: (1) an em-

ployee handbook and (2) a policy manual that

was made available, but not distributed, to

-18-

employees. Gilbert v. Burlington Industries,

765 F.2d 320, 323 (2d Cir. 1985). The policy

provided that "employees who met certain re-

quirements and were involuntarily terminated

from the Company", 765 F.2d at 323, would re-

ceive severance pay based upon age and length

of service, according to fixed rates. Employ-

ees terminated "due to circumstances such as

elimination or modification of operations or

other job eliminations due to bona fide organ-

izational changes", Joint Appendix at 23, were

entitled to severance pay. Appellants fall

inte that category.

2. The Procedural History

At this stage of the litigation the ulti-

mate question of whether the Burlington em-

ployees are entitled to recover their sever-

ance pay is not yet ripe for resolution. On

September 2, 1983, the New York State Depart-

ment of Labor ordered the employer to fulfill

ae

its severance pay obligations to its former

employees under New York's Wage Collection

Statute (New York Labor Law § 198-c).

Enforcement of that order has been enjoined,

however. Plaintiff-appellants come before

this Court seeking resolution of the threshold

question: were their benefits provided by

means of a “plan" under ERISA (29 U.S.C. §

/ 1001, et seg.) so as to preclude the applica-

tion of state law? The answer given by this

Court will determine whether millions of work-

ers are entitled to direct remedies against

: their employers as well as recourse against

_ their pension and welfare plans under ERISA.

Amici believe that this procedural his-

tory is telling. A large corporation has

forestalled payment of benefits to a group of

older workers who, during a four year period

of double-digit inflation, have already lost

significant value on their promised severance

benefits, and have incurred the expenses of

=26<

two years of federal litigation. Amici cannot

believe that those who drafted and enacted

ERISA foresaw or intended that their efforts

"to safeguard the well-being and security of

working men and women", Donovan v. Dillingham,

688 F.2d 1367, 1372 (11th Cir. 1982), would be

so distorted.

Argument

Amici do not seek to reargue the issue

raised by plaintiff-appellants. Rather, they

urge the Court to place the question presented

and its answer squarely within the context of

the Congressional intent and legislative his-

tory which inform ERISA as a whole. In order

to do this properly, the Court must both ana-

lyze Congressional statements of purpose and

review decisional law under ERISA, and frankly

consider the realities of this litigation.

Amici are persuaded that this Court will not

approve a statutory construction of isolated

soa MRA a OR a Sot

att~

terms of the Act that will undermine and viti-

ate its purposes. This, unfortunately, is

precisely the result of the approach urged by

the defendant-appellee and adopted by the

Court below.

While it appears elementary, amici cannot

overstate the importance of construing the

separate words and provisions of ERISA in

light of and in order to effect the purposes

for which the statute was enacted:

ERISA, like the Civil Rights

Act of 1871 and 1964, and the

Labor-Management Reporting and

Disclosure Act, is remedial

legislation which should be

liberally construed in favor of

protecting participants in em-

ployee benefits plans.

Smith v. CMTA-IAM Pension Trust, 746 F.2d 587

(9th Cir. 1984) (emphasis added). And see,

McDougall v. Donovan, 552 F. Supp. 1206, 1214

(N.D. Ill. 1982)("Each provision of ERISA must

be interpreted in light of the Congressional

intent underlying the Act.").

~ >

Prominent among the Congressional find-

ings and declaration of policy accompanying

the text of the statute is the specification

of the purposes for which ERISA was enacted,

including the protection of "the continued

well-being and security of millions of employ-

ees and their dependents" and the "stability

of employment and the successful development

of industrial relations." 29 U.S.C. § 1001.

Congress therefore found that minimum

standards must be established to regulate the

operation of pension and welfare plans lest

"employees and their beneficiaries [be]...

deprived of anticipated benefits." Id. Three

years after ERISA's enactment, the President

recognized that "ERISA is an essential step in

the protection of worker pension rights."1/

Message of the President, August 10, 1978,

printed at 29 U.S.C.A. § 1001, at 53. So much

of the statute's general purpose is almost in-

i/ The statute was, of course, designed to

protect rights to welfare benefits as well.

ad

ae VN SE AEN AH Ae ich aman

pe et hy ORR

TO NOE AT ote TR BN lO Wattle at ae gE A 0 i, Sacha? tne

ite

om

variably acknowledged, at least in passing.

See, e.g., Scott v. Gulf Oil Corp., 754 F.2d

1499, 1501 (9th Cir. 1985) ("ERISA is a remed-

tal statute designed to protect the interests

of employees in pension and welfare plans. .

-"). The problem is that no court to date has

given adequate consideration to what light

this purpose casts upon the meaning of the

word "plan", used as a term of art within the

Act.

This Court has signalled the importance

of resolving disputes concerning ERISA's scope

and effect in numerous discussions of "the

policy concerns behind ERISA." Central

States, Southeast and Southwest Areas Pension

Fund, et al. v. Central Transport, U.S. __,

53 L.W. 4811, 4813 (June 19, 1985). In Cen-

tral States, the Court referred to its deci-

sion in Nachman Corp. v. Pension Benefit Guar-

anty Corp., 446 U.S. 359 (1980), wherein it

recognized the underlying Congressional intent

=~)

"to correct this condition [i.e., insecurity

of benefits] by making sure that if a worker

has been promised a defined benefit upon re-

tirement . . . he will actually receive it."

446 U.S. at 375, cited in Central States, 53

U.S.L.W. at 4814.

In Nachman, this Court referred to Sena-

tor Bensten's evocation of the "great personal

tragedy suffered by employees whose vested

benefits are not paid when pension plans are

terminated." 446 U.S. at 374. The denial of

welfare benefits to a large group of employ-

ees, while perhaps of smaller dimensions, also

represents great personal tragedy, especially

for the older worker terminated through no

fault of his or her own, or the Black or other

minority worker terminated because of plant

reorganization and lack of seniority. Sever-

ance benefits, in such circumstances, may be

provided by means of a "welfare benefit plan",

29 U.S.C. § 1002(1), which is “established and

=|

maintained", id., within the meaning of ERISA,

or directly by an employer as a form of de-

ferred compensation, or both. ERISA was

enacted to ensure that the security provided

by benefit plans would not prove illusory.

State remedies and the NLRA are intended to

serve the same function with regard to direct

employer liability.

Employers who argue that ERISA's remedial

nature entitles them to a liberal construction

of the term “plan” are simply wrong. The rule

of lenity is to be applied in favor of the

beneficiaries of remedial legislation, and not

in favor of those who seek to escape its re-

quirements.2/ It is not a rule of first re-

2/ It is not an exaggeration to say that

employers, as a rule, prevail under ERISA. In

only one (Blau v. Del Monte, 748 F.2d 1348

(9th Cir. 1984)) of the sixteen cases

collected in Appendix B of Appellant Gilbert's

Jurisdictional Statement did employees'

benefit claims prevail over employers'

assertions that ERISA should be applied and

that an “arbitrary and capricious" standard of

review was appropriate. Two other employee

claims survived motions for summary judgment

(footnote continued)

IG

sort, but rather "comes into operation at the

end of construing what Congress has expressed,

not at the beginning as an overriding consi-

deration of being lenient to wrongdoers."

Callanan v. United States, 364 U.S. 587, 596

(1961) (footnote omitted).

Employers are equally wrong when they

argue that ERISA frees them from direct liabi-

lity under simple contracts with their em-

ployees. The legislative history is replete

with evidence that ERISA was intended to dis-

place the common law of trusts and replace it

with a more comprehensive set of principles

regarding the management of “employee benefit

trusts." See, e.g., H. R. Rep. No. 93-533,

reprinted in 1974 U.S. Code Cong. & Admin.

News (hereinafter "“USCCANS") 4643, 4650, 4651;

(footnote continued from previous page)

(Petrella v. NL Industries, Inc., 529 F. Supp.

1357, 1361 (D.N.J. 1982) and Russell v. Mass.

Mutual Life Ins. Co., 722 F.2d 482, 485 (Sth

Cir. 1982) rev'd on other grounds, U.S.

___, 53 U.S.L.W. 4938 (6/25/85)), but the vast

majority were denied outright.

ti Fun

Sen. Rep. No. 93-127, reprinted in 1974

USCCANS 46841, 4865, 4869, 4881, 4882; Sen.

Rep. No. 93-383, reprinted in 1974 USCCANS

4917; H. R. Rep. No. 93-1280, reprinted in

1974 USCCANS at pp. 5076, 5164; (Statement of

Hon. Al Ullman), 1974 USCCANS at p. 5171;

(Statement of Hon. Harrison A. Williams, Jr.),

1974 USCCANS at p. 5186.

There is not one iota of evidence, how-

ever, to support the position that ERISA was

ever intended to abolish the common law of

contracts as it applies to employer-employee

relations, or to displace state administrative

remedies that have long been available under

wage collection statutes. Surely, if this had

been one of Congress' objectives, it would

have left something more than "clanging si-

lence" as evidence of its intent. Sedima,

S.P.R.L. v. Imrex, et al., U.S. , ag

L.W. 5034, 5038 n. 23 (July 1, 1985).

-22-

Absent a clear indication by Congress

that it intended to eradicate the law of

direct employer liability on contract, one can

hardly countenance a construction of the Act

which accompiishes such a result.

Thus, as it did in Nachman, a careful

study of ERISA's legislative history and pur-

pose should once again guide the Court to re-

ject an interpretation of the statute which

limits rather than enhances the ability of em-

ployees to recover promised benefits and per-

mits employers to escape liability, whether

directly to their employees or indirectly to

employee plans.

This Court simply cannot be blind to the

identity of the parties most persistently in-

voking ERISA for purposes quite contrary to

the Congressional intent "to safeguard the

well-being and security of working men and

women", Donovan v. Dillingham, supra at 1372.

Increasingly, these parties include major em-

=-29—

ployers such as Gulf Oil [Scott v. Gulf Oil

Corp., supra -- severance pay denied], Del

Monte Corporation [Blau v. Del Monte Corp.,

748 F.2d 1348 (9th Cir. 1984) -- employer

sought to escape liability for "secret" sever-

ance pay obligation], Delta Airlines [Shaw v.

Delta Airlines, Inc., 463 U.S. 85 (1982) --

employer sought to escape duty of non-dis-

crimination imposed by Title VII], Westing-

house Corporation [E.E.0.C. v. Westinghouse,

725 F.2d 211 (3d Cir. 1983), cert. denied,

U.S. , 105 S.Ct. 92 (1984) -- employer

defended against an age discrimination claim

by asserting alleged discriminatory action

constituted a bona fide benefit plan under

ERISA], Marcal Paper Mills [Marcal Paper

Mills, Inc. v. Ewing, Civ. No. 83-0274-B, (D.

Maine August 27, 1985) -- employer sought to

escape obligations under plant closing

statute], and a host of others. The most

dramatic evidence of employer action to divert

=tia

ERISA from its intended purposes may be found

in the style of a single Ninth Circuit case

brought by the California Hospital Associa-

tion, the California Restaurant Association,

the California Manufacturers' Association, the

Merchants and Manufacturers’ Association, the

California Hotel and Motel Association, and

the California Chamber of Commerce. Thus

arrayed, these employers' associations joined

together to sue California's Commissioner of

Labor and to obtain an injunction prohibiting

enforcement of their obligations to provide

vacation pay on an accrued per diem basis.

They argued that all such obligations were en-

forceable solely by way of ERISA. California

Association of Hospitals, etc. v. Henning,

Commissioner of Labor, Civ. Nos. 83-6381, 83-

6416 (9th Cir. September 6, 1985).

The spectacle of major employers and em-

ployers' associations pretending to champion

ERISA's ability to protect workers should be

Te

=31<

treated with all the skept:icism due a fox's

protestations of expertise in the field of

chicken-watching.

Employers, envious of ERISA's vast

powers, seek both to ignore its mandates and

evade its responsibilities while distorting

the meaning of its terms. While Burlington's

failure to file the documents required by

ERISA should not relieve it of any duties the

statute imposes upon any bona fide plan it may

maintain, amici believe that this failure re-

veals its determination to avoid any and all

liability for benefits, however provided.3/

3/ Burlington filed none of the documents re-

quired by ERISA between 1974 and 1983. The

documents then filed reflect a hasty decision

to appear to comply with ERISA once its "pro-

tections" were sought. To characterize its

action as compliance with even the minimal

reporting and disclosure provisions of ERISA

which apply to welfare benefit plans is to

exalt form over substance. Information re-

sponsive to virtually every question was re-

fused as “not applicable".

=-32=

This Court can and must restore ERISA to

its original intent: safeguarding the inte-

grity and viability of employee benefit plans.

This task can only be accomplished by insist-

ing that each term of the statute be read in

light of that purpose. Thus construed, it is

clear that ERISA may not be used as the de-

fendant-appellee desires -- as a shield by em-

ployers against direct contractual liability

to their employees.

It is no answer that the employees in

Gilbert have not yet lost their claims under

ERISA. They have been deprived of benefits

due over three years ago; they have been

denied the right to enforce an order awarding

them those benefits; and they have been forced

to bear the additional expense and uncertainty

of litigation. Once the case returns to the

district court on the merits, the employer

will surely argue that they must prove not

only the existence of an obligation to provide

a%3a

benefits and a failure to fulfill that obliga-

tion, but also that the denial of benefits was

"arbitrary and capricious." See, Slack v.

Burlington Industries, Civ. No. 83-274-G (4th

Cir. Oct. 17, 1985), a companion case to

Gilbert, in which the Fourth Circuit judged

Burlington's denial of benefits under an "“ar-

bitrary and capricious" standard and found no

liability for severance benefits .4/

Amici certainly recognize that ERISA does

not guarantee that every employee will receive

every benefit available to employees general-

ly. What it does attempt to guarantee is

fairness in the administration of benefit-pro-

viding mechanisms in order to enhance the

security of the workforce. To adopt the con-

struction proposed by Burlington converts

ERISA into a device for creating insecurity

4/ amici understand that the employees in

Slack will seek review in this Court on sever-

al grounds, including the importation of the

“arbitrary and capricious” standard from trust

law into the field of employee benefit mechan-

isms not established or operated as trusts.

-34-

among workers. Not only does it undermine the

certainty that they will receive benefits due

by taking away direct employer liability under

state statutes and common law, but it makes

their receipt of benefits at all subject to

the total discretion of an employer acting

solely in its own best interest .5/

The interests of all working people, or-

ganized and not-yet-organized, are seriously

damaged by any device that makes their ability

to collect benefits contingent upon employer

discretion. This is doubly so in the case of

workers participating in organizing campaigns

prior to formal union affiliation and certifi-

cation. The mere knowledge that benefits are

contingent upon an employer's discretion will

have a substantial chilling effect on the abi-

5/ ERISA contemplates the establishment of a

separate entity operated according to the

fiduciary standards imposed by the federal

common law of trusts developed under ERISA.

It does not contemplate giving employers who

control the payment of benefits through an

automatic payroll practice the benefit of the

“arbitrary and capricious” standard.

=35=

lity of workers to fully associate with repre-

sentatives of organized labor according to the

mandates and policy of the NLRA.

CONCLUSION

For all the foregoing reasons, the gques-

tions presented by the appeals in Roberts v.

Burlington Industries, Inc. and Gilbert, et

al. v. Burlington Industries, Inc. should be

given plenary consideration.

Respectfully submitted,

DIANNA LYONS

Counsel of Record

United Farm Workers

Appellate Division

1201 24th Street

Sacramento, CA 95816

(916) 442-1862

Of Counsel:

Ira L. Gottlieb, Esq.

United Farm Workers of America, AFL-CIO

P.O. Box 30

Keene, CA 93531

(805) 822-5571

=36-

Irwin Geller, General Counsel

Committee of Interns and Residents

386 Park Avenue South

New York, NY 10016

(212) 725-5500

Ann F. Hoffman, Counsel

District One

Communications Workers of America, AFL-CIO

80 Pine Street

37th Floor

New York, NY 10005

(212) 509-0918

Max Zimny, General Counsel

International Ladies’ Garment Workers'

Union, AFL-CIO

1710 Broadway

New York, NY 10019

(212) 265-7000

Robert Z. Lewis, General Counsel

United Electrical, Radio and Machine

Workers of America

11 East 51st Street

New York, NY 10022

(212) 753-1960

Dr. Gerald Horne,

National Director

National Conference of Black Lawyers

126 West 119th Street

New York, NY 10026

(212) 864-4000