Opposition Brief — Hechenberger v. Western Electric Co.

No. 84-933 [1 | Spans con us

In THE JAN 19 1985

Supreme Court of the United DER L STEVAG,

OcToserR TERM, 1984

*.

RICHARD A. HECHENBERGER, WILLIAM V. WILKEN,

and CHARLES W. RAMSEY,

Petitioners,

vs.

WESTERN ELEctric Co., INc., now known as AT&T

TECHNOLOGIES, INC., and WESTERN ELECTRIC PLAN For

EMPLOYEES’ PENSIONS, DISABILITY BENEFITS AND DEATH BENEFITS,

now known in part as AT&T TECHNOLOGIES SICKNESS AND

ACCIDENT DISABILITY BENEFIT PLAN, SOUTHWESTERN BELL

TELEPHONE Co., INC. and SOUTHWESTERN BELL TELEPHONE PLAN

For EMPLOYEES’ PENSIONS, DISABILITY BENEFITS AND DEATH

BENEFITS, now also known in part as SOUTHWESTERN BELL

TELEPHONE SICKNESS AND ACCIDENT DISABILITY BENEFIT PLAN,

and RICHARD RousseLor, Director, Division of Workers’

Compensation, State of Missouri,

Respondents

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Eighth Circuit

BRIEF OF RESPONDENTS WESTERN ELECTRIC

CO., INC. (NOW KNOWN AS AT&T TECHNOLOGIES,

INC.) AND ITS SICKNESS AND ACCIDENT

DISABILITY BENEFIT PLAN IN OPPOSITION TO

THE PETITION FOR A WRIT OF CERTIORARI

D. J. SULLIVAN*

RICHARD A. AHRENS

JOHN J. MOELLERING

Lewis & RICE

611 Olive Street, Suite 1400

St. Louis, Missouri 63101

(314) 444-7600

Attorneys for Respondents

Western Electric Co., Inc., now known

as AT&T Technologies, Inc., and its

Plan.

*Counsel of Record

St. Louis Law Printing Co., Inc., 411 No. Tenth Street 63101 314-231-4477

QUESTION RESTATED

Whether this case was properly dismissed on grounds of

mootness where the challenged practice of reducing certain

workers’ compensation payments by the amount of benefits

previously paid under disability plans has not been and never

will be applied to petitioners because the respondent employers

abandoned the practice of asserting such offsets and the ap-

plicable state law has been amended to prohibit these offsets.

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TABLE OF CONTENTS

Page

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Reasons for Denying Certiorari ..................... 4

ELE RR i 6

TABLE OF AUTHORITIES

Amato v. Bernard, 618 F.2d 559 (9th Cir. 1980) ....... 5

Anderson v. Alpha Portland Industries, Inc., 727 F.2d

rey bcs kk dale ws awa eewe 5

Diffenderfer v. Central Baptist Church, 404 U.S. 412

ea nc kad ian wnenbaees 4

Franks v. Bowman Transportation Co., 424 U.S. 747,

a aes ak 6 kb oa ae se 588 00 4

SP OE MP CNDED wen ccc cciseccccsoese 4

Imler v. Southwestern Bell Telephone Co., 650 P.2d

US 5

Kross v. Western Electric Co., Inc., 701 F.2d 1238

Shes ke hbk banka en ee e 5

Massachusetts Mutual Life Insurance Co. v. Russell,

certiorari granted, No. 84-9, 53 U.S.L.W. 3235

Ee cone sda pbs pesdebhne cae se wade 5

NLRB v. Amax Coal Co., 453 U.S. 322 (1981) ........ 5

iv

Preiser v. Newkirk, 422 U.S. 395, 402 (1975) ..........

Schneider Moving & Storage Co. v. Robbins, 52

U.S.L.W. 4476 (U.S. Apr. 18, 1984) ............

Vitek v. Jones, 445 U.S. 480, 487 (1980) ..............

Weinstein v. Bradford, 423 U.S. 147(1975) ...........

Other Authorities

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Rule 28.1, Rules of the Supreme Court of the United

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No. 84-933

IN THE

Supreme Court of the United States

OCTOBER TERM, 1984

RICHARD A. HECHENBERGER, WILLIAM V. WILKEN,

and CHARLES W. RAMSEY,

Petitioners,

vs.

WESTERN ELEctric Co., INc., now known as AT&T

TECHNOLOGIES, INC., and WESTERN ELECTRIC PLAN For

EMPLOYEES’ PENSIONS, DISABILITY BENEFITS AND DEATH BENEFITS,

now known in part as AT&T TECHNOLOGIES SICKNESS AND

ACCIDENT DISABILITY BENEFIT PLAN, SOUTHWESTERN BELL

TELEPHONE Co., INc. and SOUTHWESTERN BELL TELEPHONE PLAN

FoR EMPLOYEES’ PENSIONS, DISABILITY BENEFITS AND DEATH

BENEFITS, now also known in part as SOUTHWESTERN BELL

TELEPHONE SICKNESS AND ACCIDENT DISABILITY BENEFIT PLAN,

and RICHARD RoussELoT, Director, Division of Workers’

Compensation, State of Missouri,

Respondents

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Eighth Circuit

BRIEF OF RESPONDENTS WESTERN ELECTRIC

CO., INC. (NOW KNOWN AS AT&T TECHNOLOGIES,

INC.) AND ITS SICKNESS AND ACCIDENT

DISABILITY BENEFIT PLAN IN OPPOSITION TO

THE PETITION FOR A WRIT OF CERTIORARI

STATEMENT OF THE CASE

The petitioners are three individual employees, one of whom,

Richard A. Hechenberger,' was an employee of respondent

Western Electric.? They seek review of a decision of the Eighth

Circuit that dismissed a challenge to an administrative practice

of the Missouri Division of Workers’ Compensation on grounds

of mootness. Under the challenged practice, a Missouri

employer had been permitted to reduce the amount of certain

payments made to an employee under the Missouri state —

workers’ compensation law by amounts that had been previous-

ly paid to the employee under the employer’s disability plan.

Petitioners claimed that the state law permitting these offsets

was preempted by the Employee Retirement Income Security

Act of 1974, 29 U.S.C. Sec. 1001 ef. seg. (“SERISA’’) and that

the fiduciaries of the Western Electric and Southwestern Bell

disability plans at issue would have violated their duties to peti-

tioners if they had asserted these ‘‘offset’’ claims against them.

' Although the claims of all three petitioners are frivolous, respon-

dent Western Electric’s interest is, of course, confined to petitioner

Hechenberger’s claims.

? Statement Required by Rule 28.1: Respondent Western Electric

Company, which changed its name to AT&T Technologies, Inc. on

January 1, 1984, is a wholly-owned subsidiary of American Telephone

and Telegraph Company (‘‘AT&T’’). AT&T has no parent company.

In addition to its other wholly-owned subsidiaries, AT&T has owner-

ship interests either directly or through wholly-owned subsidiaries in

the Cuban American Telephone and Telegraph Company, Inc.; Ing.

C. Olivetti & C., S.P.A.; Gold Star Fiber Optics Co., Ltd.; Western

Electric Saudi Arabia, Ltd.; Gold Star Semiconductor, Ltd.; Com-

munications Software Development, Inc.; AT&T and Philips

Telecommunications, B.V.; and Share Tech, Inc.

The basis for the Eighth Circuit’s holding that the petitioners’

substantive claims are moot is that the challenged practice has

never been and never will be applied to any of the petitioners.’

Each petitioner was paid the full amount of his benefits under

the respective disability plan, and Western Electric announced

that it had abandoned its practice of seeking offsets while peti-

tioner Hechenberger’s workers’ compensation claim was still

pending before the Missouri Division of Workers’ Compensa-

tion. Most fundamentally, the Missouri legislature has amended

its workers’ compensation statute to prohibit the offsetting of

disability benefits against workers’ compensation benefits, so

there is no possibility that the practice could be applied to

Hechenberger (whose workers’ compensation claim is still pen-

ding) or any other employee in the future in Missouri.

> The District Court dismissed the individual claims as moot before

it ruled on the motions for class certification. (Supplemental appendix

to Petition, p. SA-4—SA-5)

otiu

REASONS FOR DENYING CERTIORARI

The Eighth Circuit’s decision neither possesses national im-

portance nor is otherwise review-worthy. Rather, it is simply a

correct application of well-established principles of Federal

jurisdiction. Few propositions are better settled than that a

Federal court may not adjudicate the legality of a practice

where, as here, the challenged conduct has ceased, there is no

‘reasonable expectation’’ that the challenged practice will

recur, and the challenged conduct had no direct or other conse-

quences for the individual plaintiffs. Preiser v. Newkirk, 422

U.S. 395, 402 (1975); Accord, Vitek v. Jones, 445 U.S. 480, 487

(1980). Indeed, the Court has repeatedly held that where, as

here, a challenged provision of a state statute has been amended

so as to afford the relief requested by the individual plaintiffs,

the claim is moot and must be dismissed. See e.g., Hall v. Beals,

396 U.S. 45 (1969); Diffenderfer v. Central Baptist Church, 404

U.S. 412 (1972).‘

* The fact that petitioners purported to bring a class action has no

pertinence to the application of the mootness doctrine here. As the

Eighth Circuit observed below, nothing prevented an employee actual-

ly subjected to an offset, prior to the amendment of the state statute,

from suing on the basis of such practice. The Court further noted:

Precisely such an action is currently pending in the United

States District Court for the Eastern District of Missouri, and is

docketed as Clemens v. Southwestern Bell Telephone Co., No.

84-0756C(3). Class certification has been requested in that case.

(Appendix A to Petition, p. A-5)

A second action involving the challenged practice is also pending in

the United States District Court for the Eastern District of Missouri.

Wilken v. AT&T Technologies, Inc., No. 83-2198C(3).

Moreover, because the offset issue is not one that is ‘‘capable of

repetition, yet evading review’’ and because no decision was made on

class certification before the individual plaintiffs’ claims were

mooted, there could be no basis for adjudicating plaintiffs’ claims in

any event. See Franks v. Bowman Transp. Co., 424 U.S. 747, 754-56

(1976); Weinstein v. Bradford, 423 U.S. 147 (1975).

=

Three additional questions that petitioners attempi to raise

are each also foreclosed by the Eighth Circuit’s holding on

mootness.

Petitioners first argue that the courts below should have ad-

dressed whether the plans’ fiduciaries were guilty of dual loyalty

and adversarial conduct. The short answer to this claim is that

the fiduciaries engaged in no conduct that injured petitioners.

Each petitioner was timely paid all benefits due under the pians

and the respondent employers did not and could not offset

those payments in the workers’ compensation proceedings ad-

ministered by the Missouri Division of Workers’ Compensa-

tion.°

Petitioners next argue that the Court of Appeals erred in not

deciding whether ERISA provides a remedy to so called

‘*discouragees’’—employees allegedly discouraged by fiduciary

misconduct from seeking plan benefits. Yet none of the peti-

* Further, despite the fact that Western Electric’s employee,

Hechenberger, claims that he has been denied benefits under the plan,

he never filed a claim with the Employees’ Benefit Committee (which

administers the plan), nor was any denial of an asserted claim ever

presented to that committee for review. It is fundamental that an in-

dividual who seeks benefits under ERISA must first exhaust his plan

remedies, in order to afford the plan fiduciaries an opportunity to

review the claim and so obviate judicial action. Anderson v. Alpha

Portland Industries, Inc., 727 F.2d 177 (8th Cir. 1984); Kross v.

Western Electric Co., Inc. 701 F.2d 1238 (7th Cir. 1983). See Amato

v. Bernard, 618 F.2d 559 (9th Cir. 1980); Jmler v. Southwestern Bell

Telephone Co., 650 P.2d 712 (Kan. App. 1982).

Hechenberger’s inability to show that he has been harmed by any

act or decision of Respondents makes NLRB v. Amax Coal Co., 453

U.S. 322 (1981) and Schneider Moving & Storage Co. v. Robbins, 52

U.S.L.W. 4476 (U.S. Apr. 18, 1984), wholly inapposite. Quite simp-

ly, Hechenberger’s claims, which were never ripe for presentation,

were rendered moot in the subsequent course of events. Similarly,

Massachusetts Mutual Life Insurance Co. v. Russell, certiorari

granted No. 84-9, 53 U.S.L.W. 3235 (Oct. 2, 1984) is inapposite.

Whatever this Court decides in Massachusetts Mutual, the decisive

point is that that case was not moot and this case is.

~~ pe

tioners was a discouragee because all petitioners sought and

received all payments due them under the plans. This is

especially so in the case of Western Electric’s employee,

Hechenberger, for he sought benefits under both the plan and

workers’ compensation; indeed his workers’ compensation

claim is currently pending.

Finaliy, petitioners assert that the courts below should have

decided whether ERISA allows additional so-called ‘‘extracon-

tractual’’ damages for violations of respondents’ benefit plans

and for the offset practice. Because petitioners suffered no in-

jury either under the plans (from which they received full

payments) or from the offset practice (which was not applied to

them), there is no basis for any claim of extracontractual

damages. It too is moot.

CONCLUSION

For all the reasons stated herein, ‘he Petition for Writ of Cer-

tiorari should be denied.

Respectfully submitted,

LEWIS & RICE

D. J. Sullivan*

Richard A. Ahrens

John J. Moellering

611 Olive Street, Suite 1400

St. Louis, Missouri 63101

314/444-7600

Attorneys for Respondents

Western Electric Co., inc.

now known as AT&T

Technologies, Inc. and its Plan

*Counsel of Record

January 16, 1985