Opposition Brief — Doe v. A Corp.

x)

No. 86-256 e Court, U.S,

LED

eadliesss OCT 14 1986

Supreme Court of the United F. SPANIOL, JR

CLERK

OCTOBER TERM, 1986

JOHN DOE,

Petitioner,

V.

A CORPORATION, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

RESPONDENTS’ BRIEF

IN OPPOSITION TO PETITION

D. STUART MEIKLEJOHN

125 Broad Street

New York, New York 10004

(212) 558-3665

Counsel for Respondents

Of Counsel:

Roy H. STEYER

Davip G. FEHER

SULLIVAN & CROMWELL

125 Broad Street

New York, New York 10004

(212) 558-4000

Question Presented

Petitioner’s nine questions reduced in the end to one:

were the two cases that are the subject of the petition

wrongly decided by the district court and the court of

appeals. This is resolved by reference in both cases to the

particular facts of petitioner’s situation and to the complete

absence of any legal basis for the claims asserted. Neither

inquiry is worthy of the exercise of this Court’s discretionary

jurisdiction.

Petitioner brought suit against his former clients on the

subject matters of his previous advice to them, and sought

from the outset to assert claims on behalf of others, even

after the district court and the court of appeals held that

he could not do so. His claim in one case was dismissed by

entry of summary judgment because (a) he was judicially

estopped from pursuing his claim having sworn, in an

affidavit submitted to the court that supervised his divorce

proceedings, that the property he claimed in this action was

his did not belong to him at a time when, under his claims

in this action, it did; (b) his unclean hands barred his claims

because his claims were inconsistent with legal advice he

had previously given respondents and he had persistently

flouted orders of the district court and the court of appeals;

and (c) his claim had no legal basis. His claim in the other

case was dismissed on grounds of mootness and unclean

hands, and because the regulations on which he relied are

inapplicable.

‘i

Statement Pursuant to Rule 28.1

The record in both cases has been sealed, on respondents’

motion, to preserve the anonymity of the parties and pro-

tect the confidences that respondents imparted to petitioner,

who was formerly their lawyer and who sued them on the

subject matters on which he advised them. The information

called for by Rule 28.1 has therefore respectfully been sub-

mitted separately, with a request that it be accepted under

seal.

TABLE OF CONTENTS

PAGE

I. Constitutional Provisions, Statutes, and Rules

EES ee ee eee l

Mi. Statement of the Case ........ccccescees 2

A. Petitioner’s Legal Advice to Respondents 2

B. Petitioner’s Pre-Litigation Threats ...... 3

C. Petitioner's Complaints ............... 3

D. The March 1982 Dismissals .......... 5

E. The Court of Appeals Affirmance and

ERI a are 6

F. Proceedings on Remand ..............

G. The Dismissal of Petitioner’s Individual

eek as pe) a6 as 20 oes 0 7

H. The Court of Appeals Affirmance ...... 10

III. Reasons for Denying the Petition ......... 10

A. The Savings Plan Action (Doe I) Does

Not Raise Any Substantial Question of

PUN MUNUIIGD vcs cece cw vcceee 10

1. Judicial Estoppel and Unclean Hands 11

2. The Legai Insufficiency of Petitioner’s

ae a ula ayo o'e ob 12

B. The Insurance Plan Action (Doe II) Does

Not Raise Any Legal Question at All ... 14

EE EE 15

NAS TTS E SECRETE EEE la

iV

PAGE

TABLE OF AUTHORITIES

Cases

Doe v. A Corporation, 709 F.2d 1043 (Sth Cir.

PPR i hac hoc dciws 6a Teenie eeseteean 3, 5, 6, 10

Doe v. A Corporation, 788 F.2d 759 (5th Cir.

-6 5 ea Kens Ns ek ee oe ee ‘10

Doe v. A Corporation, No. H-81-396 (S.D. Tex.

A) re oe ee re er ee passim

Doe vy. A Corporation, No. H-81-397 (S.D. Tex.

December 10, 1984) ......... eres pr rrre passim

Swaida v. IBM Retirement Plan, 570 F. Supp. 482

(S.D.N.Y. 1983), aff'd per curiam, 728 F.2d 159

(2d Cir.), cert. denied, 469 U.S. 874 (1984) ... 12-13

Statutes, Rules, and Regulations

a? UR OF CEO, on ons 8k es ee dives 1

a ee 11

26 C.F.R. § 1.410(a)-7(a)(1) (ii) 2.22.00... 1

26 C.F.R. § 1.410(a)-7(d) (1) (i)-(ii) 2.0.0... 1,13

yee Re ee ee 14

yr Bee) RR ft) ne ree 14

29 C.F.R. § 2520.104-20(b) (3) (iii) ......... 14

ae CPB SAR PEMD 668 06k cdeodewcen 14

8 Oe SS Pe ee rr re 1 en 2

IN THE

Supreme Court of the United States

October Term, 1986

No. 86-256

JOHN DOE,

Petitioner,

Vv.

A CORPORATION, ef al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

a

vv

RESPONDENTS’ BRIEF

IN OPPOSITION TO PETITION

I.

Constitutional Provisions, Statutes and Rules Involved

Many of the provisions that petitioner cites are irrele-

vant to these actions. The elapsed time regulations promul-

gated by the Department of the Treasury under the Em-

ployee Retirement Income Security Act of 1974, as

amended, 29 U.S.C. § 1001 et seg. (“ERISA”), which

appear at 26 C.F.R. § 1.410(a)-7(a) (1) (ii) and § 1.410

(a)-7(d) (1) (i)-(ii) (1982), are relevant, but are not cited

by petitioner. They are appended following this brief.

Il.

Statement of the Case

Petitioner seeks review of the affirmance by the Court

of Appeals for the Fifth Circuit of the entry of summary

judgment by the United States District Court for the South-

ern District of Texas (Honorable James DeAnda, D.J.),

pursuant to Fed. R. Civ. P. 56, dismissing two actions

brought by petitioner against his former clients, A Cor-

poration and A Pension and Welfare Benefit Plan (“Benefit

Plan” ).’

A. Petitioner’s Legal Advice to Respondents

Petitioner was employed by respondents as an attorney

from May 27, 1975 to March 31, 1980, when he elected to

leave and accept employment with another company. Dur-

ing much of this four year and ten month period, he pro-

vided legal advice to respondents’ personnel on subject

matters directly and substantially related to those on which

he based his claims in these lawsuits. Petitioner consulted

with and rendered advice to respondents’ personnel on

matters arising under the statutes on which he purported to

base his suits, and had full access to respondents’ files on

such matters. As petitioner said in an affidavit filed in both

actions in May 1981, his duties as legal counsel to the Plan

required him to study and become familiar with all the

Plan documents.

While he was employed by respondents, petitioner ren-

dered legal opinions annually, for the benefit of the Plan’s

1 The pseudonyms were placed in the style of the cases at respon-

dents’ request, as a part of the sealing of the record. Respondents

will refer to the parties by those pseudonyms as well as their posi-

tions on this petition. In one of the cases, petitioner also sued the

party designated in the caption as An Insurance Company, but none

of the questions petitioner presents to this Court concerns his claim

against that party.

|

auditors, on whether the Plan and the administration of the

Plan complied with ERISA. In all such opinions, petitioner

stated that the Plan and administration of the Plan com-

plied with ERISA and other applicable laws. The Plan

“administration” covered by these opinions included the

vesting provisions of the savings feature of the Benefit Plan.

B. Petitioner’s Pre-Litigation Threats

After leaving respondents employ, but before filing suit,

petitioner demanded payment to him of benefits he said

were Owed to him. When payment was refused, petitioner

threatened suit, on behalf of himself and a purported class,

if respondents did not pay him what he said he was owed,

make “restitution” to the purported class, and pay peti-

tioner a “contingent attorney fee” equal to ten percent of

a “fund” that petitioner claimed was worth “millions.”

Respondents did not pay, but instead reminded petitioner

that he should consider the ethical obligations he owed to

his former clients. He told them they should not be “naive,”

and reiterated his threat to bring suit. When no payment

was forthcoming, petitioner filed both actions. See Doe v.

A Corporation, 709 F.2d 1043, 1049-1050 (Sth Cir. 1983);

see also Doe Vv. A Corporation, No. H-81-396 (S.D. Tex.

June 27, 1985) (“Doe IT’), Petition at 5a-6a.

C. Petitioner’s Complaints

Petitioner filed complaints in both actions in February

1981. One complaint (the “Savings Plan” Action) (Doe I)

alleged claims with respect to the use and disclosure of the

credited service rules in the Benefit Plan that determine

when an employee’s right to the employer contributions to

his or her Savings Plan vests. The Savings Plan is a savings

feature of the Bencfit Plan that permits an employee to ask

for withholding and investment of a percentage of salary;

the employer matches that contribution, up to stated per-

centages. The Benefit Plan requires five calendar years of

4

service before the employee’s right to the employer matching

contribution vests. Petitioner worked at A Corporation for

four years and ten months. He claimed, however, that under

ERISA and regulations thereunder, the Benefit Plan was

required to give him credit for a full fifth year of service,

because (he said) he worked more than 1,000 hours in his

fifth year. This claim was based, alternatively, on the argu-

ments that (i) the statute requires one year of credit for

1,000 hours, and the “elapsed time” regulations promul-

gated under ERISA by the Department of the Treasury,

which permit benefit plans to count vesting service by calen-

dar years rather than 1,000 hour “years”, are invalid, or

(ii) the Benefit Plan was not drafted in terms that permit

it to rely on the elapsed time regulations and has not his-

torically used the elapsed time method of calculating vesting

service. See Doe v. A Corporation, No. H-81-397 (S.D.

Tex. December 10, 1984) (“Doe I’) Petition at 12a,

18a-21a.

The other complaint (the “Insurance Plan” Action)

(Doe IT) alleged claims concerning the contributory group

life insurance feature of the Benefit Plan. Petitioner alleged

that certain dividends and retroactive rate refunds paid to A

Corporation by the insurance carrier that provides cover-

age for, among other things, the contributory group life

insurance feature of the Benefit Plan, should not have been

retained by A Corporation as public reports filed by the

Benefit Plan showed they were, but should instead have

been paid to himself (and other plan participants). Peti-

tioner claimed a right to recover the portion of the premium

payments that he said was attributable to the dividends.

See Doe II, Petition 4a, 6a-7a.’

2 Petitioner also asserted claims based on respondents’ disclosures

of the life insurance conversion options available to a departing

(footnote continued on following page)

Petitioner sued in both actions on behalf of himself and

a purported class. He signed the complaints as co-counsel,

and sought not only broad equitable relief and damages

for the individual members of the alleged class, but also

special awards to himself personally “in excess of $300,000”

in the Savings Plan Action and one-third of any recovery

awarded the purported class in the Insurance Plan Action,

treble damages (claimed to be provided by statute) in the

Savings Plan Action, and a “reasonable attorney’s fee” in

both actions, to be calculated in the Insurance Plan Action

as a percentage of the “class” recovery. See Doe, 709 F.2d

at 1045.

A Corporation and the Benefit Plan denied all substan-

tive allegations, alleged several affirmative defenses, and

counterclaimed for injunctive relief based on petitioner’s

disability to pursue either action in any capacity because

of his former attorney-client relationships with them.

D. The March 1982 Dismissals

On March 30, 1982, the district court granted motions

by respondents for summary judgment and dismissed peti-

tioner’s complaints with prejudice as to petitioner but with-

out prejudice to any present or former employee of A Cor-

poration, granted respondents the injunctive relief they

sought, and sealed the record. The March 1982 judgments

followed a year of litigation in which (1) there was exten-

sive document and other discovery and an evidentiary hear-

ing, (2) petitioner moved (in the Savings Plan Action)

for summary judgment on his own behalf (though not that

(footnote continued from preceding page)

employee. The district court dismissed those claims because peti-

tioner knew, from his years of providing legal advice to respondents

about the Plan, that the Plan did not offer the conversion option he

claimed in the Insurance Plan Action. Doe II, Petition at 4a-Sa.

Petitioner has not raised the issue in this Court.

of his purported class), and (3) all parties submitted affi-

davit and documentary evidence on respondents’ motions

for summary judgment and fully briefed all relevant issues.

The March 30, 1982 dismissals were based on the irre-

buttable presumption—created by the substantial relation-

ship between the subject matter of the actions and of peti-

tioner’s previous legal advice to A Corporation and the

Benefit Plan—that petitioner would, in prosecuting the

actions, use his former client’s confidences to his own

advantage and their disadvantage, in violation of ethical

Canons. See Doe, 709 F.2d at 1045.

E. The Court of Appeals Affirmance and Remand

On July 22, 1983 the court of appeals affirmed the dis-

missal of the complaints with respect to the class claims,

but held that petitioner was not precluded from pursuing

his individual claims solely by virtue of his status as re-

spondents’ former counsel, and remanded the case for

further proceedings. Doe, 709 F.2d at 1048, 1050-51.

F. Proceedings on Remand

Respondents moved on remand for a permanent injunc-

tion against disclosures of respondents’ confidences by peti-

tioner and his counsel, to ensure that there would be no

doubt about the existence of the obligation to maintain

confidentiality. Petitioner opposed entry of such an order,

arguing that prosecution of his individual claims made it

necessary for him to speak about the Benefit Plan with the

Department of Labor and others, and that an injunction

would somehow impede discovery. The district court

granted respondents’ motion.

In addition, the district court, emphasizing that under

the court of appeals decision petitioner could not sue on

behalf of anyone other than himself, entered an order

7

directing petitioner to amend his pleadings to delete refer-

ences to others, so that the nature and amount of his in-

dividual claims would be clear. Petitioner delayed in

amending his complaints, and once he did so, he included

all the items that had rendered the original complaints

objectionable: references to persons other than petitioner

and assertions that petitioner sued on behalf of others as

well as himself, claims for benefits under the A Corporation

annuity plan (when petitioner admitted that he himself

had no such claim), a request for an accounting (when

petitioner’s damages would be readily ascertainable), and

express prayers for relief on behalf of persons other than

petitioner. Respondents’ motions to strike these pleadings,

as inconsistent with the mandate of the court of appeals,

were granted. Further amended complaints were filed and

answered in November and December 1984. See Doe I,

Petition at 16a, and Doe II, Petition at 8a.

The parties conducted additional discovery in the Savings

Plan Action in July and August 1984. At his deposition

on July 27, petitioner testified, among other things, that

(1) in an affidavit he filed with a Texas court in 1979, at

a time when, according to his claim in the Savings Plan

Action, the employer contributions to his savings account

were vested, he swore that those contributions were not

vested (and were therefore not available to be divided with

his wife as community property), and (2) he knew that the

Plan was administered in accordance with the elapsed time

regulations when he advised respondents that the Plan was

administered in accordance with ERISA. See Doe I,

Petition at 13a-15a.

G. The Dismissal of Petitioner’s Individual Claims

On August 20, 1984 petitioner renewed his motion for

summary judgment in the Savings Plan Action. Respond-

ents filed a cross-motion for summary judgment on “ctober

9, 1984.

By memorandum and order dated December 10, 1984

the district court granted respondents’ cross-motion for

summary judgment, denied petitioner's motion, and entered

judgment for the respondents.

First, the district court held that the doctrine of judicial

estoppel foreclosed petitioner from claiming that the em-

ployer contributions to his Savings Plan account were

vested, because that claim was flatly inconsistent with his

prior sworn statements to the Texas court that adjudicated

his 1979 divorce proceeding. Doe I, Petition at 12a-14a.

Second, the district court concluded that petitioner’s

claims were barred by the doctrine of unclean hands. “The

totality of [petitioner’s] behavior in this case illustrates a

saga of deceit, dishonesty, and vexatiousness in the dis-

covery process, and a total disregard for the attorney-client

relationship.” Doe I, Petition at 14a-18a.

Third, the district_court held that in any event the sub-

stantive law of ERISA and the terms of the Benefit Plan

were contrary to petitioner’s claims that the employer Sav-

ings Plan contributions were vested. The Benefit Plan pro-

vided, as ERISA permitted and as petitioner, a lawyer

familiar with the terms of the Plan, knew, that petitioner

had to work at A Corporation for five calendar years before

his right to those contributions vested, and it was undisputed

that he worked there fewer than five calendar years. Doe i,

Petition at 18a-21a.

On January 31, 1985, respondents moved the district

court for summary judgment in the Insurance Plan Action.

They did so on three grounds: petitioner’s claims were

without merit; petitioner’s unclean hands barred his claims;

and mootness. The mootness argument stemmed from

A Corporation’s and the Benefit Plan’s offer to allow judg-

ment to be taken against them in the full amount

($1,247.63) of the premiums petitioner paid for con-

tributory life insurance coverage while he was employed by

A Corporation as a lawyer. The offer was made solely for

the purpose of avoiding the expense and effort associated

with taking the action to trial. See Doe II, Petition at 7a.

Petitioner said, in a response filed with the district court,

that he would accept the amount offered subject to (i) his

application to the Court for attorneys’ fees and costs; (ii)

dismissal with prejudice of the respondents’ “cross-action;”

(iii) “cessation of all adverse employment recommenda-

tions” by respondents’ employees and agents; (iv) an agree-

ment by respondents not to file “any professional grievance”

against petitioner; and (v) an agreement by the “fiduciaries

of the Benefit Plan” to make “restitution without public

sanctions” under the regulations petitioner had cited in sup-

port of his “dividend” claims.

By Memorandum and Order dated June 27, 1985 the

district court granted respondents’ motion for summary

judgment.

First, the district court held that petitioner could not

claim injunctive or declaratory relief because he was no

longer a participant in the Plan and had no personal

cognizable legal interest in the present or future administra-

tion of the Plan. Doe II, Petition at 8a-9a.

Second the district court concluded that petitioner’s

individual damages—which were, as the court of appeals

had previously affirmed, all he could claim a right to recover

—consisted of no more than his claim to his share of the

alleged dividend. Petitioner was not entitled to an account-

ing because his share of any refund that might be owed

10

to him was readily ascertainable and “the only other ap-

parent purpose for such an accounting would be to im-

properly obtain information concerning the purported

claims of other Plan paris:pants.” Id.

Third, the district court held that the offer of judgment

by respondents A Corporation and Benefit Plan in the full

amount of his total premium payments mooted petitioner’s

claim for compensatory damages equal to the portion of

those payments characterizable as “dividends.” Id.

Fourth, as an “alternative basis” the district court held

that respondents were entitled to judgment on the grounds

of petitioner’s “bad faith and unclean hands.” Doe II,

Petition at 9a. The district court noted that petitioner’s

misconduct was evidenced by the totality of the record in

both actions and explicitly found that petitioner had

“ ‘attempted either to mulct or blackmail A Corporation.’ ”

Id. (quoting Doe, 709 F.2d at 1050).

H. The Court of Appeals Affirmance

The cases were consolidated for purposes of appeal.

Both were affirmed by the Court of Appeals for the Fifth

Circuit, without opinion, citing Rule 47.6 of the Rules of

that court. 788 F.2d 759 (Sth Cir. 1986). The mandate

issued June 2, 1986.

Reasons for Denying the Petition

A. The Savings Plan Action (Doe 1) Does Not Raise

Any Substantial Question of Public Importance.

The district court dismissed this action on three grounds:

judicial estoppel; unclean hands; and the legal insufficiency

of petitioner’s claims. Petitioner claims there was error in

11

the decision, affirmed by the court of appeals, in that (i)

the application of the doctrines of judicial estoppel and

unclean hands in an ERISA case was allegedly inconsistent

with holdings of other courts of appeals (Petition Pt. 3 at

30-32); and (ii) petitioner’s claim that he was entitled to

the employer contributions to his savings account was a

sound legal claim (Petition Pts. 1 and 2 at 25-29 and

29-30).

1. Judicial Estoppel and Unclean Hands

Petitioner does not challenge the district court’s holding

that there were grounds to invoke these doctrines, and

there is no basis for any such challenge. Petitioner’s claims

were inconsistent with his prior sworn statements to another

court, and before and during the lawsuit, he demonstrated

contempt for the ethical obligations he owed to his former

clients and to his duty, as an officer of the court, to abide

by its rulings.

Petitioner argues instead that the supersedure clause in

ERISA, 29 U.S.C. § 1144(a), must be read to prohibit a

district court from applying such doctrines to ERISA

claims. Petitioner claims that other courts of appeals have

held that under ERISA’s preemption clause such doctrines

cannot be applied to ERISA claims.

Petitioner’s argument is absurd, and the supposed conflict

among the circuits does not exist. What the district court

did was to apply judicial rules of general application to

petitioner’s conduct, and bar his claims when, measured by

those rules, his conduct was found wanting. One of the

rules is that a litigant cannot make claims that contradict

earlier sworn statements the litigant has made to another

court. This serves the salutary purpose of inhibiting the

urging of falsehoods on courts. See Doe I, Petition at

12a-14a. The other rule is that there are limits to the

12

extent to which a court will allow claims by a lawyer against

his former clients when the claims contradict advice the

lawyer gave the clients, and when the lawyer has attempted

to blackmail the clients before suit was filed and has per-

sisted in the litigation in efforts to inflate his own claims in

an effort to put pressure on the defendants to settle. See

Doe I, Petition at 14a-18a.

No court has held anything that is inconsistent with the

district court’s holdings. ERISA plaintiffs, like all other

plaintiffs, are subject to rules of general application govern-

ing the conduct of judicial proceedings. ERISA preempts

state laws that contain substantive provisions on pension

and welfare benefit matters. But ERISA does not immunize

ERISA plaintiffs from rules that constrain their behavior

as litigants, any more than it immunizes them from any

other form of disability to sue, such as releases they give,

which are in the form of contracts made under state law.

2. The Legal Insufficiency of Petitioner’s Claims

Even if the significance of petitioner’s elapsed time argu-

ments were not diminished in this case by the existence of

other grounds for dismissal, the arguments would be an

insufficient basis for granting a writ of certiorari. Petitioner

claimed that the elapsed time regulations were invalid, that

the Benefit Plan was drafted in such a way that it could not

take advantage of them, and that the Plan did not in fact

use the elapsed time method.

a. The Elapsed Time Regulations

Although the petition fails to acknowledge it, this Court

has previously denied a petition for a writ of certiorari in

a case that raised squarely the issue of the validity of the

elapsed time regulations. Swaida v. IBM Retirement Plan,

570 F. Supp. 482 (S.D.N.Y. 1983), aff'd per curiam, 728

13

F.2d 159 (2d Cir.), cert. denied, 469 U.S. 874 (1984),

held that the elapsed time regulations were a valid exercise

of the rulemaking authority delegated to the Departments

of Labor and the Treasury The plaintiff therefore erred in

arguing that pension plans could not require that an em-

ployee work a full calendar year to get a year’s credit for

vesting purposes.

b. The Text of the Benefit Plan

Petitioner also argued that the Benefit Plan was not

properly drafted to take advantage of the elapsed time regu-

lations because it uses the term “year of service” rather than

the term “period of service” to describe the length of time

an employee must work to get a year’s credit for vesting

purposes. This issue is hardly of public importance, inas-

much as it involves the drafting of the vesting provisions

of one benefit plan. And the district court properly char-

acterized petitioner’s argument as “nonsense, both linguis-

tically and legally.” (Doe I, Petition at 21a). The elapsed

time regulations use the term “year of service” inter-

changeably with “period of service,” (see, e.g., 26 C.F.R.

§ 1.410(a)-7(d)(1)(i)), presumably because a year of

service is a period of service.

c. The Benefit Plan’s Use of Elapsed Time

Finally, petitioner’s argument that in fact the Benefit

Plan did use the 1,000 hour rule is a total fabrication, as

the district court found. Doe I, Petition at 21a. As peti-

tioner knew from many years of rendering legal advice to

his clients on Benefit Plan matters, the Plan has always used

elapsed time. The way in which it filled out the Form

EBS-1, on which petitioner places so much weight, is, as

the district court found, of no relevance whatever to peti-

tioner’s individual claims. The form sought information,

in the early stages of administration of the statute, about

various aspects of benefit plan administration. It was not

14

known at the time whether there would be any elapsed time

regulations, and the form called only for a number of hours

required for a year of service credit; A Corporation, which

uses a 1,000 hour rule for seasonal employees, therefore

filled in “1,000” as the number of hours. How petitioner

thinks this helps him is not clear, but it does not. As he

knew from the text of the plan, the Benefit Plan uses and

has always used elapsed time to compute vesting service.

B. The Insurance Plan Action (Doe II) Does Not Raise

Any Legal Question at All.

As with the Savings Plan Action, the Insurance Plan

Action was dismissed on grounds in addition to the merit-

less nature of petitioner’s legal claims. But the only question

petitioner presents to this Court is whether his claims are

sound. They are not.

Petitioner claimed that A Corporation owed a refund of

dividends that it had received from the insurance carrier.

As the public reports filed by A Corporation make clear,

the dividends were received on account of a group of insur-

ance plans that included not only the plan to which peti-

tioner and other A Corporation employees contributed but

also plans for which A Corporation paid the full amount of

the premium. It was therefore nct possible to say that the

refunds were attributable to contributions by petitioner or

other plan participants (and in fact they were not). More

significantly, the legal basis on which petitioner proceeded

was simply inapplicable. He cited regulations that confer

on certain small plans an exemption from disclosure require-

ments if those plans choose to return certain dividends to

plan participants. See 29 C.F.R. §§ 2520.104-20, 104-

20(a), 104-20(b) (3) (iii) and 104-21(a). The Benefit

Plan is too big to fit within the regulations, and has never

sought such an exemption. Petitioner pointed to no other

source of the alleged obligation to pay over the dividends,

and none exists.

15

IV.

Conclusion

These cases should never have been brought. They were

from their inception egregious examples of a lawyer trying

to browbeat his former clients into paying him off based

on imaginary claims in areas of the law in which petitioner

had done legal work for them and had given them legal

advice that, like a sworn statement he had made to another

court, was inconsistent with his claims in these actions.

The petition should be denied.

Respectfully submitted,

D. STUART MEIKLEJOHN

125 Broad Street

New York, New York 10004

(212) 558-3665

Counsel for Respondents

Of Counsel:

Roy H. STEYER

Davip G. FEHER

SULLIVAN & CROMWELL

125 Broad Street

New York, New York 10004

(212) 558-4000

October 14, 1986

Appendix

26 C.F.R. § 1.410(a)-7(a) (1) (ii) provides:

(ii) Under the alternative method set forth in this

section, by contrast, an employee’s statutory entitle-

ment with respect to eligibility to participate, vesting

and benefit accrual is not based upon the actual com-

pletion of a specified number of hours of service dur-

ing a 12-consecutive-month period. Instead, such

entitlement is determined generally with reference to

the total period of time which elapses while the em-

ployee is employed (i.e., while the employment rela-

tionship exists) with the employer or employers main-

taining the plan. The alternative method set forth in

this section is designed to enable a plan to lessen

the administrative burdens associated with the

maintenance of records of an employee’s hours of

service by permitting each employee to be credited

with his or her total period of service with the em-

ployer or employers maintaining the plan, irrespective

of the actual hours of service completed in any 12-

consecutive-month period.

26 C.F.R. § 1.410(a)-7(d) (1) (i)-(i1) provides:

(d) Vesting-(1) General rule. (i) For purposes

of section 411(a)(2), relating to vesting in accrued

benefits derived from employer contributions, a plan

which determines service to be taken in account on

the basis of elapsed time shall provide that an em-

ployee is credited with a number of years of service

equal to at least the number of whole years of the

employee’s period of service, whether or not such

periods of service were completed consecutively.

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Appendix

(ii) In order to determine the number of whole

years of an employee’s period of service, a plan shall

provide that non-successive periods of service must be

aggregated and that less than whole year periods of

service (whether or not consecutive) must be aggre-

gated on the basis that 12 months of service (30 days

are deemed to be a month in the case of the aggrega-

tion of fractional months) or 365 days of service equal

a whole year of service.