# Amicus Curiae Brief — Cagna v. Weirton Steel Corp. Retirement Plan-Plan 001

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386001_0723%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2004
- **Citation:** 540 U.S. 1158

## Text

(2) VWUTIVN FILEU
DEC 2 9 2003

No. 03-771

In the

Dupreme Court of the United tates

ELLINORA V.CAGNA, in her capacity as Executrix of the
Estate of Leo Cagna, deceased and in her own right

Petitioner,
v.

WEIRTON STEEL CORPORATION RETIREMENT PLAN-
PLAN 001; RETIREMENT COMMITTEE OF THE
WEIRTON STEEL CORPORATION RETIREMENT PLAN-
PLAN 001; WEIRTON RETIREMENT PROGRAM-PLAN
056; RETIREMENT COMMITTEE OF THE WEIRTON
STEEL CORPORATION RETIREMENT PROGRAM-PLAN-
056; NATIONAL STEEL CORPORATION WEIRTON
RETIREMENT PROGRAM; RETIREMENT
ADMINISTRATIVE BOARD OF THE NATIONAL STEEL
CORPORATION WEIRTON RETIREMENT PROGRAM,

Respondents.

On Writ of Certiorari to the United States Court of Appeals for
the Third Circuit

BRIEF OF THE WOMEN’S INSTITUTE FOR A SECURE
RETIREMENT AS AMICUS CURIAE IN SUPPORT OF
PETITIONER

Lawrence E. Bolind, Jr., Esq.
(Counsel of Record)

238 Main Street

Imperial, PA 15126

(724) 695-8620

Attorney for Amicus Curiae

MOTION FOR LEAVE OF COURT BY THE
WOMEN’S INSTITUTE FOR A SECURE
RETIREMENT TO FILE AN AMICUS CURIAE BRIEF

Pursuant to Rule 37 of the Supreme Court of the
United States, Motion is hereby made to file the foregoing
Brief of the Women’s Institute for a Secure Retirement
(“WISER”) as amicus curiae in support of Petitioner:

1. WISER desires file an amicus curiae brief in the
foregoing matter

2. By the letter dated December 19, 2003, legal
counsel for amicus has sought the consent of all the parties to “
file an amicus curiae brief in accordance with Rule 37 of the
Supreme Court of the United States.

3. Petitioner has consented in writing to the filing of
such brief which letter dated December 23, 2003 has been
filed with the Clerk of this Court.

4. Neither Respondent has consented to the filing of
the amicus curiae brief.

5. The undersigned has filed his application to this
Honorable Court on December 23, 2003, which application is
pending.

WHEREFORE, the undersigned on behalf of WISER,
hereby respectfully requests that the attached Brief of the

-

Women’s Institute for a Secure Retirement as Amicus Curiae
in Support of Petitioner be accepted.

Respectfully submitted,

Na —~E Rot J

Lawrence E. Bolind, Jr.
238 Main Street
Imperial, PA 15126

TABLE OF CONTENTS

pages
TABLE OF AUTHORITIES .............. 11,i1i
INTEREST OF AMICUS CURIAE .........64.
REASONS FOR GRANTING THE WRIT....... 3
A. Certiorari Should Be Granted to
Resolve the Existing Circuit Splits
on the Two Questions Raised in the
Petition and to Establish Nationwide
Uniformity on Issues Directly
Affecting a Surviving Spouses 7
Rights Under ERISA............. S
B. ERISA Requirements Underlying A

Valid Waiver Of A QJSA Should Be

Strictly Enforced And Proof Of

Detrimental Reliance Should Never

Be Required Of A Surviving Spouse

To Recover A Share Of The QJSA

Since Detrimental Reliance is a Standard
developed under Contract Principles |
Rather than Trust Principles......... 7

NT cio Fh ree dietiewasedenedas 11

7

TABLE OF AUTHORITIES ~

Cases pages |
|

Boggs v. Boggs, 520 U.S. 833, 839 (1997)........ 6

Burke v. Kodak Retirement Income Plan and

Kodak Retirement Income Plan Committee

336 F.3d 103 (2d Cir. 2003), petition for cert.

filed, October 17, 2003 (No. 03-565) ........... 3,5

Daniels v. Thomas & Betts Corp., |
263 F.3d 66, 73 (3d Cir.2001).................. 9

Edwards v. State Farm Mutual Ins. Co. ;
852 F2d. at 134, 137 (6" Cir. 1988)............. 5

Egelhoff v. Egelhoff, 532 U.S. 141, 147-148 (2001). .6

Fort Halifax Packing Co. v.- Coyne,
oe et , Se er ee ee re 6

Gilbert v. United States, 370 U.S. 650, 655 (1962). . .9
Lorillard v. Pons, 434 U.S. 575, 580-81 (1978)..... 9

Manganaro v. Welfare Fund of Local 771,
21 F. Supp. 2d 284, 296 (S.D.N.Y. 1998).......... 11

Meinhard v. Salmon, 249 N.Y. 458,
ek ee eee 10

NLRB v. Amax Coal Co., 453 U.S. 322, 329-30 (1981).9

Zinermon v. Burch, 494 U.S. 113, 123 (1990)..... 8

Statutes and Regulations

BP Seb @ CURR Sica dae Rea Ce 2, 5,7,8,9
29 USK OR che tasee eee +

mo UD. GOO ooo ven eee t
muse. $417. ee ee +

20 C.F R.§ LATIN 6 oc once ccevccccu., 8
Miscellaneous

Blostin, Payment Options under Retirement Plans,
Bureau of Labor Statistics, April 28, 2003 atl....... 2

Forman, Pension Benefits for Widows, The Journal
Record, January 5, 1999 at5..................04. 3

The Charleston Gazette, October 22, 2003 at l,col.1..2

BRIEF OF THE WOMEN’S INSTITUTE FOR A
SECURE RETIREMENT AS AMICUS CURIAE IN —
SUPPORT OF PETITIONER

The Women’s Institute for a Secure Retirement
(“WISER”) respectfully submits this amicus curiae bref in
support of the Petitioner Ellinora V. Cagna. Correspondence
reflecting the Petitioner’s consent to the filing of amicus
curiae brief has been filed with the Clerk of Court.’
However, neither Respondent has consented to the filing of
this brief, thus, a Motion for Leave of Court to File an Amicus
Curiae Brief has been included herewith.

INTEREST OF AMICUS CURIAE

WISER is a nonprofit organization founded in 1996
which focuses exclusively on increasing awareness of the
structural barriers that prevent women from fair participation
in the nation’s retirement systems. WISER strives, through
education, to improve women’s opportunities to achieve a
secure retirement. WISER is a national organization which
was created by The Teresa and H. John Heinz III Foundation.
Since 1996, WISER has received financial support from
numerous individual donors and a host of charitable
foundations. In 1998, WISER was awarded a highly
competitive grant from the U.S. Administration on Aging.
WISER is an outgrowth of the Women’s Retirement
Initiative. The Women’s Retirement Initiative is part of the
Philanthropies’ continuing effort to raise the profile of critical
issues relating to pensions and retirement savings, particularly
with respect to women. WISER is the nation’s only nonprofit
organization wholly devoted to providing women with the
critical skills and information needed to improve their

' Pursuant to Rule 37.6, amicus states that no counsel for a party authored
this brief in whole or in part. No person or entity has made any monetary
contribution to the preparation and submission of this brief.

2

economic circumstances and plan for a financially sound
retirement.

Under a defined benefit plan, employees are given the
option of various payment methods at retirement. According
to data on benefits from the National Compensation Survey,
in 2000 virtually all employees covered by a defined benefit
plan were given the option of a joint and survivor annuity.’
Blostin, Payment Options under Retirement Plans, Bureau of
Labor Statistics, April 28, 2003 at 1.

Surviving spouses across the -United States have a
vital interest in the issues raised in this case given the
tremendous number of women who, at sometime during their
lives, will become a surviving spouse of an American worker
covered by a privately maintained pension plan. During
2003, approximately 20 million American workers were
covered by private pension plans containing the ERISA
mandated qualified joint and survivor annuity (“QJSA”).
Employee Benefits Survey, Incidence of Defined Benefit
Pension, United States Department of Labor, Bureau of
Statistics. The Weirton Steel Corporation Retirement Plan,
one of the respondents in this case, covers approximately
3,500 active employees and 10,000 retirees and their
dependents. The Charleston Gazette, October 22, 2003 at 1,
col. 1. The number of American workers and their spouses
affected by the issues in this case is unquestionably
substantial. Furthermore, women are especially affected by
the issues raised in the petition because women tend to live
longer than men and men tend to marry younger women.
Moreover, women are five times more likely to become

2 Under ERISA § 1055, defined benefit plans must make a qualified joint
and survivor annuity the normal form of benefit payment for married
participants. This method of payment provides the surviving spouse at
least one-half of the amount-of the employee’s benefit during the course
of the lifetime.

3

widowed than men. Forman, Pension Benefits for Widows,
The Journal Record, January 5, 1999 at 5.

Because of the importance of these issues to WISER
and to surviving spouses across the United States, WISER
respectfully submits this brief urging the Court to grant the
petition for certiorari, reverse the decision below, and require
pension plans to comply with the Employee Retirement
Insurance Security Act of 1974 (“ERISA”), the Internal
Revenue Code of 1986, as amended (the “IRC’’) and the
implementing treasury regulations, especially providing a
written explanation as to the financial effects of waiving a
QJSA.

REASONS FOR GRANTING THE WRIT

The petition in this case presents two vital questions
of importance to American workers who participate in
privately operated employee benefit plans. Is a pensioner’s
waiver and a spouse’s consent to such waiver valid if the
ERISA fiduciary fails to comply with the disclosure
requirements contained under ERISA? Is it necessary for a
surviving spouse to prove she detrimentally relied on the
inaccurate financial information provided by the ERISA
fiduciary in order to succeed in her claim for a share of the
ERISA-mandated Qualified Joint and Survivor Annuity??
The decision below is fundamentally at odd with ERISA, the
IRC and the governing regulations as they apply to
pensioner’s waiver of, and a spousal consent to, a QJSA
offered by a private pension plan. In order to ensure full

> It should be noted the second question presented in the petition for
certiorari is virtually the same as the question presented in Burke v. Kodak
Retirement Income Plan and Kodak Retirement Income Plan Committee ,
336 F.3d 103 (2d Cir. 2003), petition for cert. filed, October 17, 2003 (No.
03-565). Thus, even the current petitions pending before this Court
evidence the fact that this issue will continue to recur unless resolved by
this Court.

4

disclosure of spousal rights to benefits, federal statutory and
regulatory requirements must be strictly applied.

The Third Circuit decision below not only goes far
beyond that of any other circuit that has addressed both issues
raised in the petition, it also directly contravenes the purpose
of REA. Congress intended a surviving spouse automatically
receive a 50% share of the QJSA unless certain rigorous
requirements were met in obtaining a participant’s waiver of
the QJSA and spousal consent thereto. See ERISA § 1055(c)
and IRC § 417. It is inconceivable that Congress and the
Treasury intended that a surviving spouse meet any standard
of proof when an ERISA fiduciary fails to follow the federal
requirements for validly effectuating a waiver of the ERISA
mandated QJSA and certainly not a strict standard such as the
detrimental reliance standard invoked by the Third Circuit
decision below. There is no indication in the text or history
of the REA amendments to ERISA that any modicum of
proof be imposed on a surviving spouse to succeed in a claim
for a share of the QJSA. The Court should grant this Petition
to resolve the sharp conflict among the circuits, to confirm
the spousal rights intended under REA and to make clear that
detrimental reliance is not a prerequisite to a spouse’s
recovery of her share of the QJSA. :

A. Certiorari Should Be Granted to Resolve the
Existing Circuit Splits on the Two Questions
Raised in the Petition and Establish Nationwide
Uniformity on Issues Directly Affecting a
Surviving Spouses Rights Under ERISA

The petition clearly demonstrates the sharp division
among the circuits on the two questions presented in this
case. The first question is addressed at length in the petition
and will be only briefly discussed here. At least nine circuits
have addressed the second question presented in the petition
applying an array of different legal standards.

The inconsistency among the circuits on the question
of an ERISA fiduciary’s failure to comply with the disclosure
requirements specified in ERISA § 1055, IRC §§ 401(a)(11),
417 and the governing treasury regulations flagrantly ignores
the congressional and treasury mandate in providing a spouse
with protection from an unwitting consent to a waiver of the
QJSA. After being on the books for nearly 20 years, the
breadth and scope of the spousal rights created under the
Retirement Equity Act of 1984 is now squarely before the
Court. WISER submits that the need for Court review in this
case is amplified, since most surviving spouses lack the
financial means or knowledge to enforce their nghts under
ERISA in the federal courts. The Court may not have the
opportunity again to confirm the Congressional and Treasury
mandate contained in ERISA § 1055, the IRC and the
governing regulations intended by REA.

The inconsistency among the circuits on the second
petition auvestion of whether detrimental reliance or the
prejudiciai standard should apply to a beneficiary’s claim will
clearly repeat itself unless this Court resolves the conflict. See
Burke v. Kodak Retirement Income Plan and Kodak
Retirement Income Plan Committee , 336 F.3d 103 (2d Cir.
2003), petition for cert. filed, October 16, 2003 (No. 03-565).
While. the answer to this federal question lacks a clear
congressional mandate, applying the detrimental reliance
standard to a surviving spouse’s claim for her share of the
QJSA is illogical. This Court should ensure the circuits do
not undermine the legislative command and treasury efforts
by imposing technical requirements on participants and their
spouses which requirements are virtually impossible to meet.
See Edwards v. State Farm Mutual Ins. Co. 852 F2d. at 134,
137 (6" Cir. 1988).

This Court has acknowledged the unique importance
of ensuring uniformity and certainty under ERISA, given “the

comprehensive nature of the statute, the centrality of pension
and welfare plans in the national economy, and their
importance to the financial security of the Nation’s work
force.” Boggs v. Boggs, 520 U.S. 833, 839 (1997). ERISA
was enacted specifically to supplant the common-law system
of varying state-by-state regulation of employee benefit plans
with a single federal regulatory scheme, to provide
beneficiaries of such plans a measure of stability and security
in the enforcement of the laws governing employee benefit
plans. As this Court advised:

An employer that inakes a commitment systematically
to pay certain benefits undertakes a host of obligations, such
as determining the eligibility of claimants, calculating benefit
levels, making disbursements, monitoring the availability of
funds for benefit payments, and keeping appropriate records
in order to comply with applicable reporting requirements.
The most efficient way to meet these responsibilities is to
establish a uniform scheme, which provides a set of standard
procedures to guide processing of claims and disbursement of
benefits. Such a system is difficult to achieve, however, if a
benefit plan is subject to differing regulatory requirements in
differing States.

Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 9 (1987).

ERISA thus reflects a “congressional mandate for the
uniform and comprehensive regulation” of employee benefit
plans. Boggs, 520 U.S. at 836. Ensuring a system of
“nationally uniform plan administration” is a core...
concern” of the statute. Egelhoff v. Egelhoff, 532 U.S. 141,
147-148 (2001).

This case has the unique quality of proposing two
separate questions upon which the circuits are in disarray.
The current stark inconsistencies among the circuits as to the
breadth and scope of a surviving spouses rights under ERISA

ignores the congressional and regulatory mandate and the
chief concerns congress contemplated when it adopted REA.
Given the severe financial restrictions on most surviving
spouses, we will never know how many surviving spouses
have been unable to enforce their ERISA rights, since many
surviving spouses do not have the financial means to bring
and maintain a case in the federal courts. Further, absent a
mandate by this Court, pension plan fiduciaries will continue
to be careless about the financial disclosures made to a
participant and spouse at the time of retirement, since some of
the circuits are not strictly enforcing the ERISA § 1055
required disclosures. A surviving spouse’s success in-
recovering a share of the QJSA may depend upon which
circuit the spouse lives or where the spouse elects to sue.
This is patently unfair.

The split among the circuits on the second question
presented in the petition is even wider and deeper, as virtually
every circuit has had an opportunity to issue its own rule of
law. Suffice it to say that review in this case is especially
urgent given substantial number of Americans affected by the
issues raised in this case upon which the circuits are in sharp
divergence.

B. ERISA Requirements Underlying A Valid
Waiver Of A QJSA Should Be Strictly Enforced
And Proof Of Detrimental Reliance Should Never
Be Required Of A Surviving Spouse To Recover A
Share Of The QJSA Since Detrimental Reliance is
a Concept Under Contract Principles Rather than
Fiduciary Trust Principles

As the Petition correctly states, the Third Circuit
decision below takes the unprecedented step of extending the
detrimental reliance standard to a surviving spouse’s claim
for her ERISA-mandated QJSA. The detrimental reliance
standard usually is applied to a plaintiff seeking to obtain

benefits on the basis of statements or omissions in the
summary plan description, and usually in the context of a
conflict with the underlying plan documents. Under the Third
Circuit’s novel interpretation of the REA amendments to
ERISA, few, if any, surviving spouses could recover a share
of the ERISA mandated QJSA which has been unwittingly
waived by a pensioner.

The Third Circuit decision below fails to appreciate
the REA amendments to ERISA in a manner incompatible
with the statutory and regulatory scheme specified in ERISA,
the IRC and the governing regulations. At a minimum, the
surviving spouse should be given a written explanation of the
benefits that are being waived. If this does not occur, any
waiver of the QJSA, and consent to such waiver is not an
informed one. This Court and well as federal courts across
the country has a plethora of precedent in other areas of the
law requiring sufficient explanation and disclosure to enable a
person to make an knowing and intelligent decision. See for
example Zinermon v. Burch, 494 U.S. 113, 123 (1990).
Further, the Treasury regulations contemplate that a
participant’s consent be knowing by requiring the written
explanation the Third Circuit concluded was lacking. 26
C.F.R. § 1.417(e)-1(2)(i) provides in pertinent part, that “No
consent is valid unless the participant has received a general
description of the material features, and an explanation of the
relative values of, the optional forms of benefit available
under the plan...”

The equitable principle of promissory estoppel and the
use of the detrimental reliance standard may be appropriate
for extra plan benefits promised under a summary plan
description, but certainly that standard is not applicable to
spousal benefits guaranteed under ERISA § 1055. The
conclusion that, in enacting REA, Congress intended a
surviving spouse must detrimentally rely on the plan
fiduciaries’ failure to provide a written explanation in a

“pensioner’s retirement election form is fundamentally at odds
with the congressional judgments reflected in ERISA and the
IRC. This is not a case of extra-plan benefits based upon a
summary plan description, but survivor income benefits
mandated under ERISA. These survivor income benefits are
automatic under ERISA unless a knowing waiver and consent
is obtained from a participant and spouse.

With specific regard to the case at bar, no tnal
occurred since the case was decided on summary judgment
by the district court and affirmed by the Third Circuit. Thus,
no finding of fact was ever made with respect to whether
petitioner relied on the fiduciaries incomplete disclosures or
whether petitioner would have refused to consent to a waiver
of the QJSA had complete disclosure be made.

The most glaring defect in the Third Circuit’s
reasoning is its application of contract principles rather than
trust principles to govern whether a surviving spouse is
entitled to her share of the QJSA. Detrimental reliance has its
genesis in the promissory estoppel area of contract law.
However, the genesis of ERISA’s fiduciary standards is in the
common law of trusts, Congress plainly intended the courts to
apply under ERISA the same standard of review that prevails
under trust law. NLRB v. Amax Coal Co., 453 U.S. 322, 329-
30 (1981); see Lorillard v. Pons, 434 U.S. 575, 580-81
(1978); Gilbert v. United States, 370 U.S. 650, 655 (1962).
The Third Circuit decision below improperly places the
burden of proof on the surviving spouse, rather than on the
ERISA fiduciary. In the case at issue, the pension plans
never complied with the federal statutory and regulatory
requirements of a clear and comprehensible written
explanation of the effects of a waiver of a QJSA. The
fiduciary prepared and presented the form containing the
retirement options. The Third Circuit’s failure to discuss the
other federal cases decided under ERISA § 1055 and its

reliance on Daniels v. Thomas & Betts Corp., 263 F.3d 66, 73

No ee taatA MACK en em

ot ¥

10

(3d Cir.2001), a case which did not involve ERISA§ 1055 is
not only absurd, but also patently unfair.

The importance of the fiduciary duties under ERISA
when presenting retirements to a retiree - and the
nonparticipant spouse is without question. Justice Cardozzo’s
now famous articulation of the fiduciary obligation captures
the essence of the duty owed to retirees and their spouses:

Many forms of conduct permissible in a
workaday world for those acting at arm’s
length, are forbidden to those bound by
fiduciary ties. A trustee is held to something
stricter than the morals of the marketplace.
Not honesty alone, but the punctilio of an
honor the most sensitive, is then the standard
of behavior. © .

Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545, 546
(1928).

It cannot be clearer that fiduciary obligations require
ERISA fiduciaries, at a minimum, to follow the federal
statutory and regulatory guidelines in disclosing retirement
benefit options to retirees and their nonparticpant spouses.

_~ The option form prepared and presented to Leo and
Ellinora by the Weirton Steel and National Steel plan is faulty
as a matter of law and, therefore, Leo’s waiver and Ellinora’s
consent is ineffective under ERISA § 1055. However, if as
the Third Circuit suggests, it is relevant for Ellinora to prove
what Leo would have elected to do had full disclosure been
made, to require a showing of detrimental reliance imposes an
insurmountable burden on a surviving spouse. Because Leo
has died, Ellinora cannot ask him whether he relied on the
faulty form to show detrimental reliance. When detrimental

reliance cannot be proven, possible or probable prejudice is

11

the standard. See, e.g. Manganaro v. Welfare Fund of Local
771,21 F. Supp. 2d 284, 296 (S.D.N.Y. 1998).

The current inconsistencies evidenced by the circuits
in enforcing spousal rights disserves REA, the implementing
treasury regulations and the entire body of work which has
evolved. Allowing the circuits to inconsistently enforce
spousal nights to a share of the QJSA will result in
undeserved windfalls to privately maintained pension plans at
the expense of unwitting participants and their spouses.

CONCLUSION

For these reasons, the petition for a writ of certiorari
should be granted.

Respectfully submitted,

cRL/

eee

awrence E. Bolind, Jr., Esq.
238 Main Street
Imperial, Pennsylvania 15126
December 26, 2003

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386001_0723%3A2. Public record. Not legal advice.