Opposition Brief — Hechenberger v. Western Electric Co.

No. 84-933

In THE

Supreme Court of the United States

OctToBer TERM, 1984

RicHarD A. HECHENBERGER, et al.,

Petitioners,

vs.

Western Evectric Co., INc., et al.,

Respondents.

On Petition for 1 Writ of Certiorari to the United States

Court 0’ Appeals for the Eighth Circuit

SOUTHWESTERN BELL RESPONDENTS’

BRIEF IN OPPOSITION

Henry D. MENGHIN* EDGAR MAYFIELD

Rosert J. KrReneie! Leo E. Eicxnorr, Jr.

Evans & Dixon 100 North Tucker Bivd.

314 North Broadvay Room 630

St. Louis, MO 6102 St. Louis, MO 63101

(314) 621-7755 (314) 247-3353

Attorneys for Soutiwestern Of Counsel

Bell Respondents

*Counsel of Recor

a

&. Louls Law Printing Co. inc., 411 No. Tenth Street 63101 314-231-4477

QUESTIONS PRESENTED

1. Whether a finding of mootness based upon the cessation

of challenged conduct due to an intervening change in the law

presents an issue worthy or review, particularly when the con-

tentions presented in opposition to mootness were either not

fairly presented to the courts below or are unsupported by the

record.

2. Whether the contention that the Teamsters doctrine saves

this case from mootness when the rationale for that doctrine is

absent and the issue presented was never ripe for review presents

an issue worthy of review.

3. Whether the contention that claims for unpleaded special

damages and interest on an unliquidated sum saves a case from

mootness presents an issue worthy of review.

iil

TABLE OF CONTENTS

Ge re

anche dsknedeeerbebnbeestes

EC Seb phe ev bsecccrvccsccesseaese

Reasons for Denying the Writ ......................

Ne bbb ueeeie

TABLE OF AUTHORITIES

Cases:

Adickes v. S.H. Kress & Co., 398 U.S. 144(1970)......

Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504

ee aah bits chip adeebeeeds dee

Board of School Commissioners v. Jacobs, 420 U.S. 128

ee ee eee eee haere

Brown v. Hotel and Restaurant Employees, ____ U.S.

es PRR EOUED ob db vcs ccsccdcoseces

Continental Bank & Trust Co. v. American Bonding

Co., 630 F.2d 606 (8th Cir. 1980) ...............

Cowan v. Southwestern Bell Telephone Co., 529 S.W.

eked dendacdeéeeess

De Shields v. U.S. Parole Commission, 593 F.2d 354

ot awd wwe

Ellis v. Brotherhood of Railroad, Airline and Steamship

Clerks, ____ U.S. __, 80 L.Ed.2d 428 (1984) ....

Golden v. Zwickler, 394 U.S. 103 (1969)..............

12

13

16

15

15, 17

iv

Hechenberger v. Western Electric Co., Inc., 570

Pm Rk OR re a, 47, 38

Hechenberger v. Western Electric Co., Inc., 742 F.2d

I ah olan do bs 6c. en ceeen eset. 8

Hull v. Southwestern Bell Telephone Co., 565 S.W.2d

I EE Sd Soh neneso puss cue ena sa ave

Katsaros v. Cody, 744 F.2d 270 (2d Cir. 1984) ............. 11

Massachusetts Mutual Life Insurance Co. v. Russell,

No. 84-9, ____ U.S. __, 83 L.Ed.2d 29 (1984) ... 17

NLRB v. Amax Coal Co., 453 U.S. 322 (1981) ........ 10

North Carolina v. Rice, 404 U.S. 244(1971) .......... 5

Rogers v. Lodge, 458 U.S. 613 (1982) ................ 8

Russell v. Massachusetts Mutual Life Insurance Co.,

722 F.2d 482 (9th Cir. 1983), cert. granted, 83

SRS nk sc ak via nee kod ca8 bas 17, 18

Schneider Moving & Storage Co. v. Robbins, U.S.

pee eee 10

Socialist Labor Party v. Gilligan, 406 U.S. 583 (1972)6, 8, 15, 17

sosna Vv. lowe, 419 U.S. SIS CISTS) 2. ccc ccccccccces 5

Strohmeyer v. Southwestern Bell Telephone Co., 396

Dy ee EE, SED vn ccnncusvbbwauscusec 5

United Brotherhood of Teamsters v. United States, 431

oe 5, FOOT FEET LOR PELE PCT eC ETLe 12

United States v. Alaska Steamship Co., 253 U.S. 113

SE NCCT OPO UE TT TT TET TEP 6

United States v. W.T. Grant Co., 345 U.S. 629 (1953) .. 7

Walling v. Helmerich & Payne, Inc., 323 U.S. 37 (1944) 7

Western Casualty & Surety Co. v. Southwestern Bell

Telephone Co., 396 F.2d 351 (8th Cir. 1968)...... 14

Other Authorities:

if Se" oo | Sererrererirrrer irri rs strstr 5

PR PEPE hac ccc cs baceaeicsusensrouany eras eee 18

PT Fs BENE Vict hse c ec vceess cuvceseeeouneasnde 2

TOUT UR bev caeccssveesebusdenaceenanen 3, 18

PUB BI vk oc bins bik cede ts ieesieancesies 13

ek, BG, Fee cd iccctvcndckenchpadiasaessanses 9

, & oe A Ppererrerrrrer rrr rece rr 15

, § Be Ss A. BPperwerrrerieer cr ere Tree. 1]

i Bek 5 Fpeperr errr yy reer 15

Oe ee 2. errr rrr rrr ire re ee 15

Missouri Revised Statutes

S257. 160.5 Glee. IGTS) «0 nv encsscccscvaveces 2,5, 10

Missouri Ann. Statutes

§287.160.3 (Vernon Supp. 1984) .............-... 5

ee ek | Serr reer rr rer TT eet 7

a a

No. 84-933

IN THE

Supreme Court of the United States

OCTOBER TERM, 1984

RICHARD A. HECHENBERGER, et al.,

Petitioners,

VS.

WESTERN ELEctric Co., INC., et al.,

Respondents.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the Eighth Circuit

SOUTHWESTERN BELL RESPONDENTS’

BRIEF IN OPPOSITION

Petitioners Richard A. Hechenberger, William V. Wilken,

and Charles W. Ramsey have asked this Court to grant a writ of

ceriiorari to review the judgment and opinion of the United

States Court of Appeals for the Eighth Circuit, entered on

August 28, 1984. The Court of Appeals affirmed the District

Court’s dismissal of petitioners’ action as moot.' Because the

' The Eighth Circuit’s opinion is reported at 742 F.2d 453, and is

reprinted in Appendix A (App. A) to the Petition for Writ of Cer-

tiorari (Pet./Cert.) The decisions of the District Court are reported at

570 F.Supp. 820, 823-25, reprinted in the supplemental appendix

(Supp. App.) at SA-2—SA-6, and at 573 F.Supp. 71, reprinted in the

Supplemental Appendix at SA-8—SA-10.

~~

decision below is correct and does not raise any questions war-

ranting review by this Court, Respdfidents Southwestern Bell

Telephone Company, Inc. (the Company) and the Southwestern

Bell Telephone Sickness and Accident Disability Benefit Plan

(the Plan), also collectively referred to hereinafte: as

‘‘Southwestern Bell respondents,’’ respectfully urge this Court

to deny the pending petition.

STATEMENT OF THE CASE

Petitioners’ ‘‘Statement of the Case’’ is inaccurate and omits

pertinent facts. Therefore Southwestern Bell respondents deem

it necessary to make the following statement of the case.

This action was filed in the Eastern District of Missouri as a

purported class action on January 29, 1982. Jurisdiction of the

District Court was invoked, in part, pursuant to Section 502 of

the Employee Retirement Income Securities Act (ERISA), 29

U.S.C. §1132. The complaint was amended twice, but the issue

presented remained the same: petitioners challenged, as a viola-

tion of ERISA, a practice of integrating weekly benefit

payments under the Plan for absence paid in excess of that re-

quired under the Missouri Workers’ Compensation Law for

healing period and absences (referred to under the law as ‘‘tem-

porary total disability’’) against awards for residual permanent

injury (referred to under the law as ‘‘permanent partial disabili-

ty’’). See Supp. App., pp. SA-8—SA-9. Offsets against perma-

nent partial disability awards were the only offsets petitioners

challenged. The challenged offsets had been authorized by a

then existing section of the Workers’ Compensation Law,

Mo.Rev.Stat. §287.160.3 (Supp. 1979). See App. A, p. A-3.

In their second amended complaint, petitioners alleged that

the challenged offset practice was not authorized by the terms

of the Plan; that respondents violated various ERISA notice re-

quirements by the manner in which the offset was claimed; that

ithe offset amounted to a denial of ERISA benefits; that Plan

— So

fiduciaries violated ERISA by asserting the offset and

delegating authority pertaining to benefit decisions; and that

ERISA pre-empted that portion of the Missouri Workers’ Com-

pensation Law under which the offset was claimed.’ Petitioners

sought injunctive and declaratory relief; imposition of construc-

tive trusts; accountings and interest thereon; punitive damages;

attorneys’ fees and costs pursuant to 29 U.S.C. §1132(g); and

further relief as deemed proper.’

Petitioners filed a motion for class certification on June 8,

1983, one week after the District Court had ordered them to do

so.‘ Aclass certification hearing was held pursuant to Wilken’s

and Ramsey’s motion on August 29, 1983.°

Prior to the certification hearing, the Company and the Plan

moved for summary judgment on the grounds of mootness and

lack of ripeness, based upon affidavits and exhibits establishing

that the offset at issue had never been taken against a perma-

nent partial award or settlement as to either petitioner Wilken or

Ramsey, nor would such an offset be asserted by the Company

in any pending or future Missouri Workers’ Compensation

case. Supp. App., pp. SA-9—SA-10. The announcement was

based, in part, upon an intervening change in the state law: the

statute authorizing the offset petitioners challenged was to be

repealed. See App. A, pp. A-3—A-4 and footnote 6, infra. On

October 17, 1983 the District Court granted the motion for sum-

? Second Amended Complaint, pp. 5-14. The complaint is contain-

ed in the clerk’s record, cited as ‘‘CR’”’ in the Petition at p.6n. 1. The

foregoing portions of the second amended complaint are at CR, pp.

22-31.

> CR, pp. 31-33. A review of the relief petitioners sought is also set

forth in Hechenberger v. Western Electric Co., Inc., 570 F.Supp. 820,

822 (E.D.Mo. 1983).

“CR, pp. 83 and 89-91.

* CR, p. 186.

a won

mary judgment and denied the motion for class certification.

Supp. App. p. SA-7. The Court of Appeals for the Eighth Cir-

cuit affirmed, holding that the case was moot. App. A, pp.

A-2—A-5.

REASONS FOR DENYING THE WRIT

I.

The writ should be denied because the intervening change

in the state law and cessation of the challenged conduct

renders all issues fairly presented below moot.

Petitioners characterize the issue presented below as broad,

while they assert that the effect of respondents’ actions is

limited. Neither contention is accurate. When correctly

presented, it is clear that petitioners’ claim presents nothing

worthy of review by this Court.

Read as a whole, the Petition gives the impression that peti-

tioners launched a broad spectrum of challenges with regard to

integration of Plan and law benefits. In fact, the key issue

presented in both the District Court and the Court of Appeals

was quite narrow: whether it was lawful under ERISA to offset

awards for permanent partial injuries under the Missouri

Workers’ Compensation Law with amounts paid under the Plan

that were in excess of the amounts required for temporary total

disability under the law. Because the Company announced it

would no longer engage in this offset practice, and because

neither Wilken nor Ramsey had an award for permanent partial

disability reduced by such an offset, their claims became moot.

The intervening change in the state law and the Company’s

change in policy ended the controversy between the parties. The

issue upon which their entire case was to turn was no longer pre-

sent.

a Bad

The Court of Appeals decision was correct under this Court’s

prior decisions. The power of federal courts to adjudicate

causes of action is confined by the Constitution to ‘‘cases’’ or

‘*controversies’’. U.S. Const. Art. III. It is well settled that a

‘‘case’’ or ‘‘controversy’’ must exist at all stages of litigation

and not merely at the time a complaint is filed. Golden v.

Zwickler, 394 U.S. 103, 108 (1969). It is equally well settled that

federal courts are prohibited from adjudicating moot claims.

North Carolina v. Rice, 404 U.S. 244, 246 (1971). Once cir-

cumstances arise which terminate the case or controversy bet-

ween the parties, the doctrine of mootness requires that the ac-

tion be dismissed as moot. Sosna v. lowa, 419 U.S. 393, 399

(1975). As a general rule, the mootness doctrine requires the

same result in a class action if the claim of the class represen-

tative become moot prior to certification of the class. Board of

School Commissioners v. Jacobs, 420 U.S. 128, 130 (1975).

The conduct petitioners challenged was previously sanctioned

by a provision in the Missouri Workers’ Compensation law

which allowed an employer a credit for certain sums paid an

employee on account of an injury. See Mo.R-v.Stat.

§287.160.3 (Supp. 1979). The Missouri courts construed this

section of the compensation law to allow an employer to claim a

credit for amounts paid under a benefit plan in excess of tem-

porary total disability payments required under the law, against

awards under the law for permanent partial disability. Hull v.

Southwestern Bell Telephone Co., 565 S.W.2d 809 (Mo.App.

1978); Cowan v. Southwestern Bell Telephone Co., 529 S.W.2d

485 (Mo.App. 1975); Strohmeyer v. Southwestern Bell

Telephone Co., 396 S.W.2d 1 (Mo.App. 1965). Effective

September 28, 1983, the provision allowing the offset peti-

tioners challenged was amended to prohibit the employer from

seeking ‘‘credit for wages or such pay benefits paid to the

employee or his dependents on account of the injury or death.”’

Mo.Ann.Stat. §287.160.3 (Vernon Supp. 1984).

—_

The Court of Appeals found that the challenged offset prac-

tice was abandoned ‘‘upon learning of the change in the state

statute.’’* App. A, p. A-4. The court further found that none

of petitioners had been subjected to the offset in a workers’

compensation proceeding.’ Jd. Because it was the challenged of-

fset that was the focus of petitioners’ entire cause of action, the

intervening change in the law* and the Company’s renunciation

of the offset, prior to using it to reduce whatever permanent

partial award Wilken or Ramsey might have received, rendered

their claims moot. /d. At that point, no class had been cer-

tified, and the Court of Appeals accordingly held that the class

claims were also moot. /d.

The court below merely applied this Court’s well-settled

mootness principles to the facts of this case. The offset peti-

tioners challenged had never been applied to them, and because

the statute authorizing the offset had been amended and the

Company renounced claiming the offset, no ‘‘injury’’ would

* This finding of fact is amply supported by the record with respect

to the Company which, as employer, had previously claimed the offset

pursuant to the repealed statute. See Affidavit of Leo Eickhoff, CR

pp. 141-143; Letter to Rousselot, CR p. 144.

’ This factual finding is also fully supported by the record. Peti-

tioner Wilken withdrew his compensation claim after consultation

with his attorney. Wilken Deposition Transcript, p. 21. Petitioner

Ramsey did not have a hearing on his claim, received no award, and

thus had no offset taken against the award. Class Certification Hear-

ing Transcript, p. 21; Affidavit of James Kennedy, CR, pp. 133-134.

* An intervening statutory amendment which eliminates the alleged-

ly offensive provisions of a statute renders an action challenging the

statute moot. See Socialist Labor Party v. Gilligan, 406 U.S. 583, 585

(1972); United States v. Alaska Steamship Co., 253 U.S. 113, 115-16

(1920). The Court of Appeals’ decision fully comports with these

decisions.

— yon

occur. App. A, p. A-4. Considering the foregoing, the Court of

Appeals correctly held that petitioners’ claims were moot.’

Petitioners, in an effort to save their case from mootness,

now belatedly add to their case herein a claim they never

presented below. They attempt to portray the offset issue as

broader than it was, by arguing that respondents are violating

ERISA by continuing to integrate Plan benefits with state law

temporary total disability benefits, thereby ‘‘recovering’’ Plan

benefit payments for the Company.'® Pet./Cert. at 9 and 11.

* See App. A, pp. A-4—A-5. Petitioners do not attempt to

demonstrate the inapplicability of the cases cited by the Court of Ap-

peals in support of its holding. They merely assert in summary man-

ner that insistence on the legality of the integration practice and the

freedom to return to it means that this case is not moot. Pet./Cert. at

8 n.8 and 11. The cases they cite are inapplicable because in this case

the resumption of the challenged conduct does not depend solely on

the company’s capricious actions by which it is free to return to its old

ways. See, e.g., United States v. W.T. Grant Co., 345 U.S. 629, 632

(1953); Walling v. Helmerich & Payne, Inc., 323 U.S. 37, 43 (1944).

Unlike the situation in those cases, the Company could return to the

challenged offset practice only if either Wilken or Ramsey is re-

injured, files a claim for workers’ compensation, the Company claims

the offset in violation of its prior announced renunciation and in

violation of the new Missouri statute prohibiting the offset, and the

Missouri Division of Workers’ Compensation decides to allow the off-

set, again in violation of the new statute. Petitioners do not show how

the Company could resume the challenged offset practice solely on its

own caprice. Thus, they totally fail to demonstrate how the decision

of the Court of Appeals conflicts with applicable decisions of this

Court. See Supreme Court Rule 17.1(c).

'° Petitioners cite the McGrath deposition transcript at p. 35, lines

5-15 as support for their assertion that respondents ‘‘recover’’ Plan

benefit payments in workers’ compensation proceedings. Pet./Cert.

at 11 n.11. Petitioners fail to inform this Court that, in response to

their own counsel’s questioning, Mr. McGrath explained that by

“*recover’’ he meant that the Company tried to give its workers the

better of Plan or law benefits. If the Plan paid more than the law re-

qu.red, the worker kept the difference: the Company did not go

against the worker to recover the differnce. McGrath Deposition

Transcript, p. 35, lines 22-25 and p. 36, lines 1-22.

om

As stated above, integration of Plan benefits with state law tem-

porary total disability benefits was never an issue in this case.

Petitioners not only did not challenge this offset practice in any

of the three complaints they failed in the District Court, they

even announced to the Eighth Circuit that offsets against tem-

porary total disability benefits were not an issue in this case.

Brief for Appellants at 6, Hechenberger v. Western Electric

Co., Inc., 742 F.2d 453 (8th Cir. 1984). Now, for the first time,

and contrary to their representation to the Court of Appeals,

they assert that offsets against temporary total disability awards

violate ERISA under certain circumstances. See Pet./Cert. at

11.

A claim that was not adequately presented in the courts below

and which was not considered there cannot present a ‘‘case’’ or

‘*‘controversy’’ when other issues are moot. Socialist Labor

Party v. Gilligan, 406 U.S. 583, 589 (1972). In an analogous

context, this Court has held that it ordinarily will noi review a

contention neither raised nor addressed in the courts below.

E.g. Rogers v. Lodge, 458 U.S. 613, 628 n.10 (1982); Adickes v.

S.H. Kress & Cu., 398 U.S. 144, 147 n.2 (1970). It follows that

this Court should not entertain an issue petitioners specifically

disavowed in the Court of Appeals.

By implying that their challenge in the courts below was

broader than it actually was, petitioners are able to characterize

the result of the Company’s renunciation of the offset at issue as

‘‘limited’’. In fact, the renunciation was as broad as the issue

presented: there was nothing left in controversy between the

parties.

In a similar manner, petitioners now assert that Southwestern

Bell respondents perpetrated a fraud on the Missouri courts in

the mid-1960’s. Pet./Cert. at 7-8. They cite nothing in the

record to support such a serious allegation, nor was this claim

ever pleaded as actionable conduct in their second amended

—

complaint filed below.'' Their recitation of what they claim to

be the Plan’s history, see Pet./Cert. at 6-7, is simply irrelevant:

none of the exhibits cited in support of this contention establish

that the Southwestern Bell Employee Benefits Committee ever

adopted, as its interpretation of the Southwestern Bell Plan’s

provisions, the recommendations of AT & T.'? Nor does it add

anything to Respondent’s unpleaded fraud claim.

Petitioners’ assertion that Southwestern Bell’s Employees

Benefits Committee violated ERISA by taking positions and

representing interests adverse to beneficiaries in workers’ com-

pensation proceedings is also without support in the record. In

fact, the record reveals that since 1972, the Benefits Committee

had no responsibility for making company decisions in workers’

compensation cases, and did not involve itself with claiming the

'' CR, pp. 22-31. Even under federal notice pleading, the cir-

cumstances constituting fraud must be alleged with particularity.

Fed.R.Civ.P. 9(b). The complaint is totally devoid of any fraud

allegations, either particular or general.

'2 An AT & T witness, Therese Pick, Director of Benefit Ad-

ministration and Secretary of the Employees’ Benefits Committee of

AT & T, testified that the various Bell Systems companies are not re-

quired to follow AT & T’s recommendations on benefit plans; that AT

& T Serial Letters, such as Serial 124, issued in 1942, were sent to the

companies merely so that they would have the beneift of AT & T’s

thoughts on the matter; that the sickness and accident benefits plans

of the various companies, while similar, are separate company plans;

and that an AT & T Benefits Committee communique, although bin-

ding on AT & T, is only a suggestion or recommendation as to the

Benefits Committees of the other companies. Pick Deposition

Transcript, p. 74, lines 6-24; p. 81, lines 7-20; p. 83, lines 3-10; p. 90,

lines 1-18. Petitioners’ assertions that AT & T’s plan ‘‘interpretation’’

somehow interpreted the Southwestern Bell Plan is simply contrary to

the testimony of AT & T’s witness. Furthermore, the exhibits cited in

footnote 5 of the Petition either do not involve the Company and its

Plan, or do no more than show that it was suggested that AT & T’s

recommendation be implemented.

din

‘ape aes

challenged offset.'? Workers’ compensation claims were not

submitted to the Benefits Committee: only final settlements of

such claims were submitted.'* Moreover, the attorneys who

uefended the workers’ compensation claims represented the

Company, not the Benefits Committee.'*

Finally, the repealed Missouri statute allowing the offset did

so with reference to the employer. See Mo.Rev.Stat. §287.160.3

(Supp. 1979). The Company is the employer of Wilken and

Ramsey, not the Benefits Committee. Under the repealed

statute, therefore, only the Company could claim and take the

offset.

The foregoing discussion demonstrates the inapplicability of

Schneider Moving & Storage Co. v. Robbins, ___. U.S. ___.,

80 L.Ed.2d 366 (1984) and NLRB v. Amax Coal Co., 453 U.S.

322 (1981), principally relied upon by petitioners. See

Pet./Cert. at 5, 12, 16-17, and 20-21. There is simply no factual

basis for petitioners’ repeated assertions of ‘‘dual loyalty’’ and

‘*fiduciary misconduct.’’ Quite to the contrary, both Wilken

an! Ramsey testified that they received all benefits due them

under the Plan, and neither of them had any claim for addi-

tional Plan benefits.'* The Benefits Committee had directed the

Plan to pay them these benefits, and had also invited Wilken to

appeal its decision to treat his claim for Plan benefits as a

'3 Brockman Deposition Transcript, pp. 56 and 76.

'* McGrath Deposition Transcript, p. 43.

'S CR, pp. 133 and 135-136; Hollie Deposition Transcript, pp. 5-6

and 11.

‘6 Wilken Deposition Transcript, p. 50; Ramsey Deposition

Transcript, pp. 17-18; Class Certification Hearing Transcript pp.

20-21 and 46.

—_

‘“‘sickness’’ rather than an ‘‘accident’’.'’ Wilken did not ap-

peal.'* The record in this case establishes that the Benefits

Committee fully discharged its fiduciary duties under the Plan.

The Eighth Circuit was not in error, therefore, for not con-

sidering fiduciary removal as an available ERISA remedy, as

petitioners contend. Pet./Cert. at 11. There was no basis in the

record for granting such a remedy, unlike the situation in Kat-

saros v. Cody, 744 F.2d 270 (2d Cir. 1984). In that case, there

was evidence of two imprudent loans of plan funds approved by

plan fiduciaries. Jd. at 281. In this case, the record reveals that

the members of the Employee Benefits Committee fully

discharged their fiduciary duties by paying Wilken and Ramsey

their Plan benefits and that the committee members were not in-

volved in workers’ compensation proceedings. Moreover, the

members of the Benefits Committee are not parties to this pre-

sent action, unlike Katsaros. The courts below could not have

considered their removal because they are not parties to this ac-

tion. See Fed.R.Civ.P. 19.

There is no basis for petitioners’ contention that the Court of

Appeals erred in holding that this case is moot. They present no

issue worthy of review by this Court.

'’ Affidavit of Mary Thompson, CR, pp. 138-139; 8/17/76 letter to

Wilken (Southwestern Bell Exhibit A, p. 5).

'* McGrath Deposition Transcript, p. 40.

The writ should be denied because the rationale for the

Teamsters doctrine is inapplicable to this case and the issue

presented in not ripe for review.

Petitioners’ contention that the ‘‘discouragement”’ doctrine is

applicable to this case misconstrues the basis for this Court’s

holding in United Brotherhood of Teamsters v. United States,

431 U.S. 324 (1977). The doctrine announced in that case arose

out of an action filed pursuant to Title VII. That statute pro-

hibits discrimination in employment.

In this case, on the other hand, ERISA does not prohibit in-

tegration of ERISA benefits and state law benefits. Integration

of ERISA regulated plan benefits with those payable under state

law is lawful, even when integration results in the reduction or

denial of ERISA benefits. Alessi v. Raybestos-Manhattan, Inc.,

451 U.S. 504, 510-21 (1981). In this case, Wilken admitted that

he received his ERISA benefits and had no claim for additional

sums against the Plan.'? He was not ‘‘discouraged,”’ therefore,

from applying for and receiving ERISA benefits. His claim was

not based upon a reduction or denial of ERISA benefits, but

upon a potential reduction or denial of a possible permanent

partial disability award under the state workers’ compensation

law.

Teamsters did not hold that an empioyee who had received all

of his ERISA benefits had a cause of action under ERISA

because he was ‘‘discouraged’’ from pursuing a possible award

of workers’ compensation. The holding of Teamsters was

premised upon the fact that the statute involved prohibited the

very conduct which ‘‘discouraged’’ persons from applying for

positions with an employer. ERISA does not prohibit integra-

tion: it allows it. Alessi, supra. Furthermore, the ‘‘discourage-

'? Wilken Deposition Transcript, pp. 26, 49, 50; Class Certification

Hearing Transcript, p. 46.

=

ment’’ doctrine appellants seek to engraft upon this case is inap-

plicable because it arises out of cases involving parties in une-

qual bargaining positions. Wilken, however, had both counsel

and a forum to protect his interests, and was before the forum

with a filed claim. He could have proceeded with his claim and

challenged the offset. He did not do so. Instead, he withdrew

his claim after consultation with his attorney, and never asked

the Division of Workers’ Compensation to withdraw the

dismissal of his claim.”° The concern of Teamsters with protec-

ting persons in unequal bargaining positions is simply not ap-

plicable to this case.?'

Moreover, the decision of the Court of Appeals is correct in

light of this Court’s recent decision in Brown v. Hotel and

Restaurant Employees, U.S. ____, 82 L.Ed.2d 373 (1984).

In that case, this Court vacated the judgment of the Seventh

Circuit that held, in part, that a New Jersey statute was pre-

empted by ERISA, 29 U.S.C. §1144(a). This Court held that

the pre-emption issue was not ripe for review because, although

the state commission had asserted its authority to impose a sanc-

tion under the challenged statuie on a union, it had never done

so, and this Court was ‘‘presented with no concrete application

of state law.’’ Jd. at 390. In the same manner, the Company’s

request for the challenged offset pursuant to the now repealed

Missouri statute in Wilken’s compensation proceeding was not

ripe for review because the Company never imposed the offset

° Wilken Deposition Transcript, pp. 21-22.

*! That concern is even less applicable here because Wilken had

three forums available: the Division of Workers’ Compensation, ar-

bitration under the collective bargaining agreement (See 1980 Agree-

ment of General Application Between Communication Workers of

America and Southwestern Bell, Art. VII, Pensions, Disability

Benefits, and Death Benefits) and the Employers Benefit Claims

Review Committee (see Exhibit 1 attached to Southwestern Bell’s

answers to plaintiff’s interrogatories at §3, 43). The foregoing sections

are printed in Southwestern Bell’s Appendix.

—

on whatever permanent partial disability award, if any, Wilken

might have obtained. See App. A, p. A-4. Under Brown, the

Court of Appeals’ decision was correct, and petitioners present

no issue worthy of review by this Court.

The writ should be denied because claims for damages

never properly presented below do not save this case from

mootness.

Petitioners argue that their claims for ‘‘non-benefit

damages’”’ and ‘‘extra contractual compensatory damages,”’ in-

cluding prejudgment interest, were not mooted by the cessation

of the offset practice they challenged. Pet./Cert. at 11-12 and

17-20. Most of these claims were never pleaded below, and were

injected into this case only as an afterthought to avoid

mootness.

Petitioners list the following as damages they now claim: time

(wages) lost from work to attend depositions taken in this case;

wages Hechenberger and Ramsey lost to attend state workers’

compensation proceedings, and attorneys fees incurred in those

proceedings; and prejudgment interest on the amount of offset

claimed. Pet./Cert. at 17-18. With the exception of prejudg-

ment interest, none of these items was pleaded or claimed in the

second amended complaint.

The ‘‘extra-contractual’’ damages claim petitioners coniend

saves this case from mootness was never pleaded in their second

amended complaint, nor was this claim raised in the counter af-

fidavit of petitioners’ counsel and the other material filed in op-

position to respondents’ summary judgment motion.?? When

22 CR, pp. 145-148. Furthermore, the damages claimed are special

damages. Petitioners admit that they seek ‘‘non benefit’’ and ‘‘extra-

contractual’? damages. It is clear that such a claim is for special

damages. See, e.g., Western Casualty & Surety Co. v. Southwestern

Bell Telephone Co., 396 F.2d 351, 356 (th Cir. 1968) (attorneys’

ni errr

— po

all issues litigated below are moot, save one that received no at-

tention in petitioners’ complaint or affidavit and other material

filed in response to the summary judgment motion, that issue

does not save the case from mootness. Social Labor Party v.

Gilligan, supra. This belated claim does not save the case from

mootness.”*

In addition, the claim for wages lost for time petitioners spent

in depositions taken in this case is not a proper element of

Camages. It is axiomatic that a party who initiates a lawsuit

cannot claim as damages expenses or losses incurred by reason

of discovery properly engaged in by his opponent.”*

fees). As such, they must be specifically stated in the pleadings.

Fed.R.Civ.P. 9(g). Nowhere in the second amended complaint did

petitioners allege wage losses or attorneys’ fees incurred in state com-

pensation proceedings. They cannot now attempt to inject these

unpleaded claims into this case in order to avoid mootness. See De

Shields v. U.S. Parole Commission, 593 F.2d 354, 356 (8th Cir. 1979)

(compensatory damage claim did not destroy mootness of injunction

claim when malice or personal involvement necessary tu recover had

not been alleged).

3 Petitioners’ reliance on Ellis v. Brotherhood of Railway, Airline

& Steamship Clerks, ___. U.S. ___, 80 L.Ed.2d 428 (1984) for the

proposition that their claims are not moot because of a lack of

specificity in the damage portion of their pleading is misplaced. In

Ellis there was a claim for ‘‘monetary damages for injuries sustained

as a result of defendants’ unlawful and unwarranted interference with

and deprivation of their constitutional, civil, statutory and contrac-

tual rights.”’ Jd. at 438 n.5. No such claim for compensatory damages

is contained in petitioners’ second amended complaint. Moreover,

Rule 54(c) is inapposite. Judgment was rendered in favor of

respondents, not petitioners.

** Petitioners do not contend that the depositions they attended

were conducted in bad faith, so as to justify sanctions against

respondents. See Fed. R. Civ. P. 30(d). Nor does the record reveal

any such claim was made below.

——_

Petitioners’ argument that their claim for prejudgment in-

terest avoids mootness is also infirm. They argue that because

the amount of the offset claimed was not an issue, prejudgment

interest orc narily would be allowable. Pet./Cert. at 18-19. The

amount of the offset claimed, however, is not what was at issue.

The Company contested Ramsey’s claim that he had sustained a

temporary total or permanent partial disability as a result of his

accident.?22 The Company also contested Wilken’s claim, deny-

ing that he had suffered a job-related accident and further deny-

ing that he suffered any permanent partial or temporary total

disability.2° Thus, neither petitioner was assured of any award

of compensation. Only if they received an award equal to or

greater than the offset would the amount of offset claimed be

the same as the amount of offset actually allowed. What peti-

tioners really sought was that amount of a potential state

workers’ compensation award that would not have been paid

because the offset at issue was allowed the Company. If the

amount of the award had been less than the offset asserted, it

would be the amount of the award that would be sought here,

not the amount of the asserted offset.

The foregoing demonstrates that prejudgment interest would

not be allowed in this case. The compensation claims were unli-

quidated and Missouri law has no provision authorizing interest

on potential and unliquidated claims for compensation. See

Continental Bank & Trust Co. v. American Bonding Co., 630

F.2d 606, 612 (8th Cir. 1980).

> Exhibit 11

*° Exhibit 21

—,

Petitioners’ argument is further flawed because it assumes not

only that there was a sum certain (the amount of offset

claimed), but that Southwestern Bel! respondents ‘‘held’’ it. In

fact, the record establishes that the Plan held nothing. It had

paid ail ERISA benefits owed. The Company likewise held

nothing. It contested the compensation claims of Wilken and

Ramsey. Until those claims were reduced to awards, Wilken

and Ramsey were not entitled to anything. In Wilken’s case

especially, if the Administrative Law Judge had determined that

he did not have a job-related injury, he would have received no

award of compensation. However, because no award had been

made to either Wilken or Ramsey, there was nothing for the

Company to ‘“‘hold’’. Thus Ellis v. Brotherhood of Railway,

Airline & Steamship Clerks, » ULB. ccne OO L.d.2d 423

(1984) is inapposite because the claim for interest in that case

was based upon sums of money illigally held for a period of

time. Jd. at 438. Nothing was held in this case.

Petitioners further contend that this Court should hold their

petition for decision pending disposition of the grant of cer-

tiorari in Massachusetts Mutual Life Insurance Co. v. Russell,

No. 84-9, os , 83 L.Ed.2d 29 (1984). There is no

basis for granting petitioners’ request.

In Russel! plaintiff sued to recover damages on a number of

theories. Russell v. Massachusetts Mutual Life Insurance Co.,

722 F.2d 482, 484 (9th Cir. 1983), cert. granted, 83 L.Ed.2d 29

(1984). In this case, petitioners sued for equitable relief,

primarily for injunctions and impressment of trusts. See

Hechenberger v. Western Flectric Co., Inc., 570 F.Supp. 820,

822 (E.D. Mo. 1983). Their claim for ‘‘extra-contractual!’’

damages was raised as an afterthought to avoid mootness.

Unlike Russell, no live controversy exists with respect to these

belated damage claims, for they cannot now be asserted to

resurrect a moot case. See Socialist Workers Parter v. Gilligan,

supra. Accordingly, the Fighth Circuit’s decision does not con-

—_ ve

flict with that of the Ninth Circuit,?’ nor does this contention

otherwise present an issue worthy of this Court’s review.

2’ Petitioners did seek attorneys’ fees and costs pursuant to ERISA

29 U.S.C. §1132(g), and punitive damages. Hechenberger v. Western

Electric Co., Inc., 570 F.Supp. 820, 822 (E.D. Mo. 1983). The Court

of Appeals held that the request for fees and costs did not save peti-

tioners’ case from mootness. App. A, p. A-S. Petitioners do not chal-

lenge that holding in their petition, and it does not present an issue wor-

thy of review. The District Court struck petitioners’ punitive damage

claim because, among other reasons, it was not supported by a suffi-

cient allegation: petitioners merely alleged ‘‘deliberate’’ conduct.

Hechenberger v. Western Electric Co., Inc., supra. The District

Court’s holding on this ground and the affirmance by the Court of

Appeals presents no issue conflicting with the Ninth Circuit's decision

in Russell. The Ninth Circuit expressly held that 29 U.S.C. §1109

authorizes an award of punitive damages only when a plan fiduciary

‘acted with actual malice or wanton indifference to the rights of a

participant or beneficiary.’’ Russell v. Massachusetts Mutual Life In-

surance Co., 722 F.2d 482, 492 (9th Cir. 1983). Such conduct was

neither alleged by petitioners nor is it evidenced by the record.

Moreover, petitioners did not invoke the provisions of §1109 as a basis

for their action. Pet./Cert. at 2. There is nothing presented by this

claim warranting review in this Court.

a"

CONCLUSION

The decision of the Court of Appeals is correct and fully com-

ports with the decisions of this Court, and is not in conflict with

the decisions of any other Circuit Court of Appeals. The Peti-

tion for a Writ of Certiorari presents no issue worthy of this

Court’s consideration, and it should be denied.

Respectfully submitted,

Henry D. Menghini*

Robert J. Krehbiel

Evans & Dixon

314 North Broadway

St. Louis, Missouri 63102

(314) 621-7755

Attorneys for Southwestern

Bell Respondents

Edgar Mayfield

Leo E. Eickhoff, Jr.

100 N rth Tucker Blvd., Rm 320

St. Louis, Missouri 63101

(314) 247-3353

Of Counsel

*Counsel of Record

APPENDIX

APPENDIX A

1980 Agreements, Communication Workers of America and

Southwestern Bell, Article VII.

ARTICLE VII

PENSIONS, DISABILITY BENEFITS, AND

DEATH BENEFITS

During the term of this Agreement, no change may be

made without the consent of the Union in the existing

**Plan for Employees’ Pensions, Disability Benefits, and

Death Benefits’? which would reduce or diminish the

benefits or privileges provided thereunder. Any claim that

such benefits or privileges have been so diminished or

reduced may be presented as a grievance and if not resolv-

ed by the parties under their grievance machinery may be

submitted to arbitration pursuant to the provisions of Arti-

cle IV hereof but in any such case any decision or action of

the Company shall be controlling unless shown to have

been discriminatory or in bad faith and only the question

of bad faith or discrimination shall be subject to the

grievance procedure or arbitration.

_—* oe

APPENDIX B

Southwestern Bell Telephone’s Exhibit 1 (Sickness and Accident

Disability Benefit Plan, §3, {3), attached to answers to

plaintiff’s interrogatories.

SECTION 3. ADMINISTRATION

3. a. If the authority to grant or deny claims is retained by

the Employees’ Benefit Committee and not delegated to an

Area Benefit Committee, the Company shall appoint an

Employees’ Benefit Claim Review Committee, consisting

of one or more persons who are not members of the

Employees’ Benefit Committee.

b. Any participant whose claim for benefits has been

denied may, within 60 days after receipt of notice of

denial, submit a written request for review of the decision

denying the claim. In such case, the Review Committee, or

the Employees’ Benefit Committee, if denial was by an

Area Benefit Committee, shall

(i) make a full and fair review of such decision within

60 days after receipt of the written request for review,

or within an additional 60 days, provided the clai-

mant is notified of the delay and the reasons for re-

quiring such additional time; and

(ii) notify the claimant in writing of the review deci-

sion, specifying the reasons for such decision.

c. Any participant whose claim for benefits has been

denied shall have such further rights of review as are pro-

vided in Section 503 of ERISA and regulations pro-

mulgated thereunder, and the Review Committee and

Employees’ Benefit Committee or Area Benefit Committee

shall retain such right, authority and discretion as is pro-

vided in or not expressly limited by said Section 503 of

ERISA and the regulations thereunder.