# Amicus Curiae Brief — Sprague v. General Motors Corp.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1998
- **Citation:** 524 U.S. 923

## Text

Supreme Court, U.S.
No. 97-1639 (4 eit ED
In The MAY 6 1998
Supreme Court of the United Stratis _|
~>

October Term, 1997

ROBERT D. SPRAGUE, et ai.,
Petitioners,
— vs.
GENERAL MOTORS CORPORATION,

Respondent.

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

BRIEF OF AMICI CURIAE DONALD ARMBRUSTER, ET
AL. AND THE REPUBLIC STEEL SALARIED RETIREES
ASSOCIATION IN SUPPORT OF PETITIONERS

CHARLES T. RIEHL ALAN M. SANDALS
CHRISTOPHER GIBBON Counsel of Record
WALTER & HAVERFIELD PL.L. SCOTT M. LEMPERT

1300 Terminal Tower SANDALS, LANGER

50 Public Square & TAYLOR, LLP

Cleveland, Ohio 441 !3 One Liberty Place

(216) 781-1212 50th Floor

Philadelphia, Pennsylvania 19103

WILLIAM T. PAYNE (215) 419-6500

SCHWARTZ, STEINSAPIR,
DOHRMANN & SOMMERS, LLP CHARLES GOTTLIEB

3600 One Oxford Centre GOTTLIEB AND GOREN, P.C.
Pittsburgh, Pennsylvania 15219 26261 Evergreen
(412) 456-2008 Suite 460

Southfield, Michigan 48076
(248) 352-1880

Attorneys for Amici Curiae Donald Armbruster, et al. and
the Republic Steel Salaried Retirees Association

146291 (800) 274-3321 + (800) 359-6859 Engels
A DIVISION OF COUNSEL PRESS STCSS, MC.

TABLE OF CONTENTS

Page
Interests of the Amici Curiae ..................... l
RN i fed a OS a ge ie 2
Reasons for Granting the Writ .................... 4
I. Review Of The Decision Below Is Necessary To
Resolve Inter-Circuit Conflicts And Restore
Adherence To The Fundamental Protective
eee. pnw te ck re 4
ce oe seg RE Te EN EEE SUITE DOE el atee 11
TABLE OF CITATIONS
Cases Cited:
Anger v. Bender, 31 Ill. App. 3d 877, 335 N.E. 2d 122
og i, We REET PEO R ES rhe Pag Sree Ree e 10
Armbruster, et al. v. K-H Corporation, No. 97-CV- 75792
WD Noob i oie ire ces ee |
Bird v. Connecticut Power Co., 144 Conn. 456, 133 A.2d
ee NG ROPE yb Sins bo ck bea 7
Blackwell v. International Union, 9 Ohio App. 3d 179,
458 N.E. 2d 1272 (Ohio Ct. Ws SUEE Sas hkwcas 6

Branch-+- White, 99 N.J. Super. 295, 239 A.2d 665 (N.J.
WS ON 60 se Kae pi eNeb bie Kic ge oe 10

Contents

Cantor v. Berkshire Life Ins. Co., 171 Ohio St. 405, 171
DED. 2B Sa CIS Fe 6 vnc bcndcccccivesevises

Carlsen v. Masters, Mates & Pilots Pension Plan Trust,
80 N.J. 334, 403 A.2d 880 (N.J. 1979) ..........

Central States, Southeast and Southwest Areas Pension
Fund v. Central Transport, Inc., 472 U.S. 559 (1985)

e*eewp eevee eweeeeeeeeeeeeeeeeeeeseeeeneeeeeeeeeeee

Christensen v. Minneapolis Municipal Employees
Retirement Board, 331 N.W. 2d 740 (Minn. 1983)

Davilla v. Court Employment Project, Inc., 86 Misc. 2d
552, 383 N.Y.S. 2d 140 (N.Y. Kings County 1976)

Dulany Foods, Inc. v. C.M. Ayers, 220 Va. 502, 260 S.E.
2. 2, %.. Se ea

Ehrle v. Bank Bldg. & Equip. Corp. of America, 530
S.W. 2d 482 (Mo. App. 1975) ..........-.22058-

Elby v. Livernois Engrg. Co., 37 Mich. App. 252, 194
N.W. 2d 429 (Mich. App. 1971) ..............5.

Erion v. Timken Co., 52 Ohio App. 2d 123, 368 N.E. 2d
93 Gibis bet. DO oss css

Feinberg v. The Pfeiffer Co., 322 S.W. 2d 163 (Mo. App.
RUED excnndtuscavddnes ctltcu be we ekeSekeneeekes

Page

10

10

8,9

ili
Contents

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101
fee se céus ES TRO EY as LOS ER” TCR EEA

Forrish v. Kennedy, 377 Pa. 370, 105 A.2d 67 (Pa. 1954)

TSeeC ae SPSASEDSHS OC EDA eOeee* ees e Cesceoesedv2e2eseas2es¢s

Franchise Tax Board v. Construction Laborers Vacation
EE Oo oe oe eS

Frank v. Day’s, Inc., 13 Wash. App. 401, 535 P.2d 479
NE IN NO as Sk Ch G hb dd ohne ace ee bs

Frietzsche v. First Western Bank & Trust Co., 168 Cal.
App. 2d 705, 336 P.2d 589 (Cal. App. 1959) .....

Fuller v. Fruehauf Trailer Corp., 168 F.R.D. 588 (E.D.
Ns as deka 5 ca cab bb ae S55 ews kW ose so 0s

Hart v. United Brotherhood of Carpenters & Joiners of
America Local 626, 352 A.2d 423 (Del. Super. 1976)

eeeoevoeeescevoeeeseeeeeeseeeeseeeveeeeseeeeeeeeveeveeeevee

Hurd v. Hutnik, 419 F. Supp. 630 (D. N.J. 1976) ....

In re Matter of Erie Lackawanna Railway, 548 F.2d 621
I UN od oa ha a's sh wi wee 6S a 0s Kwa wes

Ingersoll-Rand Co. v. McLendon, 498 U.S. 133 (1990)

fis inte oe, ie ee ne ee Se se Se ee ee eT ee eee se eS ee | 2 oe oe

Page

10

iv

Contents

John Hancock Mut. Life Ins. Co. v. Harris Trust & Sav.
SUS Wits ee SED 0s hea eek ns bas cietiw

Landro v. Glendenning Motorways, Inc., 625 F.2d 1344
COREG Se aoe ek ee WA ie ae

Law Enforcement Labor Services, Inc. v. County of
Mower, 483 N.W. 2d 696 (Minn. 1992) ..........

Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S.
SOG CUR on awe CEN Seo on ee cnsan bbe Oobeeren

Moch v. Durkin, 31 A.D. 2d 995, 297 N.Y.S. 2d 865
CORD, Pe. TO is a vic tes ie tncsees eee ew

Paddock Pool Co. v. Monseur, 23 Ariz. App. 451, 533
Fiae S20B CAS. OK: FETE oe oon cist vans een ta

Panto v. Moore Business Forms, Inc., 130 N.H. 730 A.2d
Be MIRE: TEE 005 ia Khe hea eA eis

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 101 (1989) ..

Psutka v. Michigan Alkali Co., 274 Mich. 318, 264 N.W.
See CHUN: SHOE Sse hS sh bawes ceeess See ek years

Rose City Transit Co. v. City of Portland, 271 Ore. 588,
eB ow ge Bt ME 2 ee er ee ee

Sheehy v. Seilon, Inc., 10 Ohio St. 2d 242, 227 N.E. 2d
BOO CY BOOED 8 RRR SER nak

Page

10

10

6,7

hpi HA AAS ee

axa

aC iis a oe

ig hilo ain crank Sytaiane 3 as tie 3 ch eet

Contents

Page
Sprague v. General Motors Corp., 133 F.3d 388 (6th
Ge SUE hakc co dtesy eea oe kaos ca be Se Al

Stopford v. Boonton Molding Co., Inc., 56 N.J. 169, 265
Pee Dat Seid. SOT os ha i ihc he ks Ce kk 7

United States v. Stuart, 489 U.S. 353 (1989) ........ 9
Varity Corporation v. Howe, 516 U.S. 489 (1996) ... 5, 11

Vastoler v. American Can Co., 700 F.2d 916 (3d Cir.

oa PRS COE err rey ge hr oee iene mre Sareea 7
West v. Hunt Foods, Inc., 101 Cal. App. 2d 597, 225

eae Dre Cee AO. 198 a i a a 7
Statute Cited:
We es PTO 6 GAN pA hoes eee teks 4
Rules Cited:
Pe RNONS WED BTS bis cove bok cv os oaks. 2
MNS CT Pe oh i Ci ink se kik l
Other Authorities Cited:
Corbin on Contracts, 1951, § 538 at 61............ 9

Restatement (Second) of Contracts, § 90, cmt. b, illus. 4
COPPER: a is bee oa eb 4 AA ae Soa g

vi

Contents
Page
Restatement (Second) of Contracts, § 201(2)(b) (1979)

C. Fisk, Lochner Redux: The Renaissance of Laissez-Faire
Contract in the Federal Common Law of Employee
Benefits, 56 Ohio St. L. J. 153 (ISDS) cc cccsccns 10, 11

G. Flint, ERISA: Extracontractual Damages Mandated
for Benefit Claims Actions, 36 Ariz. L. Rev. 611 (1994)
sa Saline hg 0A WAS OUR wierd Sa kiea eRare 1]

W. Payne, Lawsuits Challenging Termination or
Modification of Retiree Welfare Benefits: A Plaintiffs’
Perspective, 10 The Labor Lawyer 91 (1994) ..... 1]

INTERESTS OF THE AMICI CURIAE'

Amici Donald Armbruster, et al., are long-service former
employees of a major industrial employer who are now litigants
seeking relief for reduction and denial of medical benefits their
employer represented would cover them after retirement for their
and their spouses’ lifetimes.? Amici Armbruster, et al., are
representative of tens of thousands of retired employees in this
country who have suffered reductions in retiree benefits after
they retired, despite having been led by their employers to
believe that the benefits for which they labored were secure.
The problem they confront is not unique to retiree medical
benefits, but relates to all benefits that are not governed by
ERISA’s bright line vesting rules. In addition, amici Armbruster,
et al. have a special perspective on benefits practices and
protections before and after enactment of ERISA due to the
fact that several of them personally served as benefits executives
and other company managers who were responsible for
explaining retiree medical benefits to employees in their
companies. In this capacity, they were fully informed about
employer intentions, employee understandings of the benefits,

1. Pursuant to Supreme Court Rule 37.6, amici curiae and their
counsel disclose that no counsel for a party authored the brief in
whole or in part, and that no person or entity, other than amici, their
members or their counsel, have made a monetary contribution to the
preparation or submission of the brief.

2. Amici Donald Armbruster, John Gustke, Robert Rawlings,
William Varney, Robert Butler, and Maynard Brandt are individual
named plaintiffs and proposed representatives of a class of former
salaried employees of Fruehauf Corporation. Armbruster, et al. v.
K-H Corporation, No. 97-CV- 75792 (E.D. Mich.). In a predecessor
action, amici Armbruster, et al. were certified as representatives of a
class seeking relief for benefits reductions and fiduciary
misrepresentations. See Fuller v. Fruehauf aventer Corp., 168 F.R.D.
588 (E.D. Mich. 1996).

2

and the expected legal protections that would apply to these
benefits should any dispute arise about them.

Amicus Republic Steel Salaried Retirees Association
(“RSSRA”) is a not-for-profit Ohio corporation composed of
retired salaried employees of Republic Steel. The purpose of
RSSRA is to protect the rights and interests of the Republic
Steel retired salaried employees, particularly their rights and
interests in insurance and pension benefits. RSSRA was involved
in the dispute, and the resolution thereof, caused by LTV’s
reduction of health and life insurance benefits to its retirees and
has a continued interest in judicial decisions and legislation
related to post-retirement employer reductions of health, life
and other welfare benefits.

As the experiences of amici demonstrate, the decision of
the Sixth Circuit Court of Appeals in Sprague v. General Motors
Corp., 133 F.3d 388 (6th Cir. 1998) (en banc), severely impairs
the rights of retired employees to valuable benefits promised to
them by their employers, both before and at the time of their
retirements. The Sprague decision effectively holds that
misleading benefits promises that induce reasonable reliance
by employees are not binding on employers, and that employers
may invoke disclaimers that they did not clearly disclose to the
employees. The decision thus contravenes the fundamental
protective purposes of ERISA.’

INTRODUCTION

Amici wish to bring to the Court’s attention the stark
contrast between the legal protections that were available to
employees and retirees before enactment of ERISA and the
severely diminished protections that now would apply under

3. The written consent of each party has been filed with the
Clerk of the Court pursuant to Supreme Court Rule 37.3.

3

the decision below and other similarly-reasoned decisions. Amici
respectfully urge that the decision below is contrary to ERISA’s
fundamental purpose of strengthening the legal protections
available to employees and retirees to secure reasonably expected
benefits and deterring abusive practices by employers that
frustrate this statutory objective. As the Court has declared
previously, courts should avoid interpretations of ERISA that
afford less protection to employees and retirees than would have
applied under the state law principles applicable before ERISA’s
enactment. Yet the decision below follows the opposite approach
— replacing well-developed pre-ERISA state law protections
with a regime under which reasonable benefits expectations can
be frustrated and negated by hidden disclaimers and misleading
representations. This reversal of position has occurred despite
the repeated emphasis by the Congress and this Court to adhere
to ERISA’s fundamental protective purposes.

The ERISA statute has far-reaching affects on the daily
lives of virtually every working man and woman in this country.
The Sprague decision presents an exceptional opportunity for
the Court to instruct and resolve the analytic disarray in the
lower courts. Amici therefore strongly urge that the Court grant
the Petition for Writ of Certiorari so that these matters of
fundamental importance to employees, retirees, and employers
can be definitively addressed.

4

REASONS FOR GRANTING THE WRIT
I.

REVIEW OF THE DECISION BELOW IS
NECESSARY TO RESOLVE INTER-CIRCUIT
CONFLICTS AND RESTORE ADHERENCE TO THE
FUNDAMENTAL PROTECTIVE PURPOSES OF ERISA.

The Petition for Writ of Certiorari demonstrates the inter-
circuit conflicts and analytic disarray that prevails in the lower
courts. The analytic disarray in the lower courts is in part the
result of the relative infrequency with which this Court has had
an opportunity to address application of the substantive
protections of ERISA.

The Court has repeatedly emphasized ERISA’s fundamental
protective purposes. ERISA imposes “strict standards” on
benefits plan administrators and other fiduciaries. Central States,
Southeast and Southwest Areas Pension Fund v. Central
Transport, Inc., 472 U.S. 559, 570-72 & n.10 (1985). These
standards were enacted “[t]o help fulfill ERISA’s broadly
protective purposes,” which include safeguarding “the
continuing well-being and security of millions of employees
and their dependents.” John Hancock Mut. Life Ins. Co. v. Harris
Trust & Sav. Bank, 510 U.S. 86, 96 & n.5 (1993), quoting 29
U.S.C. § 1001(a). The Congress “repeatedly emphasized [the]
purpose to protect contractually defined benefits.” Massachusetts
Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 148 (1985). ERISA
therefore includes “safeguards to prevent abuse and ‘to
completely secure the rights and expectations brought into being
by this landmark legislation.’ ” Ingersoll-Rand Co. v.
McLendon, 498 U.S. 133, 137 (1990) (quoting legislative
history).

Cin

he it aac i ted Wo Be hide alia arts ib

5

Consistent with the fundamental protective purposes of
ERISA, the Court also has made clear that ERISA should be
interpreted and applied to avoid results that “afford less
protection to employees and their beneficiaries than they
enjoyed before ERISA was enacted.” Firestone Tire & Rubber
Co. v. Bruch, 489 U.S. 101, 114 (1989). As explained in the
legislative history, the courts are to develop a “federal common
law of rights and obligations under ERISA-regulated plans.”
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 101, 110 (1989);
Franchise Tax Board v. Construction Laborers Vacation Trust,
463 U.S. 1, 24 at n.26 (1983). In Varity Corporation v. Howe,
516 U.S. 489, 513 (1996), the Court again referred to the
congressional statement of purpose and declared, “ERISA’s basic
purposes favor a reading of the third subsection [ERISA Section
502(a)(3)] that provides the plaintiffs with a remedy.”

The decision below, and those others for which it stands as
a vivid exemplar, contravene the Court’s directives to adhere to
the statute’s fundamental protective purpose — safeguarding
the benefits entitlements and income security of employees and
retirees who have given years of service to their employers. As
interpreted and applied in the court below, ERISA no longer
preserves the level of protections that prevailed under pre-
ERISA state law. Rather, ERISA has supplanted these state law
protections with a regime under which long-promised retirement
benefits can be evaded by means of sharp practices such as
secret disclaimers and misleading drafting.

There is no doubt that the employer conduct at issue in
this case would not have been permitted under the state law
protections that prevailed at the time of ERISA’s enactment.
Firestone instructs that claims for promised benefits should be
reviewed by a court “as it would have reviewed any other
contract claim — by looking to the terms of the plan and other
manifestations of the parties’ intent.” 489 U.S. at 112-13.

6

Whether analyzed pursuant to traditional contract principles,
the doctrine of promissory estoppel, or the strict trust law
fiduciary duties applicable to employers, courts applying pre-
ERISA law would have enforced the right to the medical benefits
General Motors promised to garner the loyal service of its
employees and encourage their early retirement.

Many of these federal and state decisions applying pre-
ERISA law relied on principles of consideration and contract.
See, e.g., Hoefel v. Atlas Tack Corp., 581 F.2d 1, 5-6 (1st Cir.
1978) (“even though the employer has reserved the right to
amend or terminate the plan, once an employee, who accepted
employment under such a plan, had complied with all the
conditions entitling him to participate in such a plan, his rights
become vested and the employer cannot divest the employee of
his rights thereunder”); Law Enforcement Labor Services, Inc.
v. County of Mower, 483 N.W. 2d 696, 701 (Minn. 1992)
(retired beneficiaries’ right to paid health care premiums for life
“cannot be altered absent the retiree’s express consent”); Panto
v. Moore Business Forms, Inc., 130 N.H. 730, 547 A.2d 260
(N.H. 1988) (promise of continuance of benefits for a period
of time after being laid-off constituted unilateral contract,
enforceable after employee completes service); Blackwell v.
International Union, 9 Ohio App. 3d 179, 181-82, 458 N.E.
2d 1272, 1275-76 (Ohio Ct. App. 1983) (where employee
repeatedly reassured of right to pension, offer of pension cannot
be withdrawn after many years of employment); Dulany Foods,
Inc. v. C.M. Ayers, 220 Va. 502, 512, 260 S.E. 2d 196, 202
(Va. 1979) (offer of severance pay plan not a gratuity, but “a
unilateral contract offer which is accepted if ti:e employee
continues in the employment”); Hart v. United Brotherhood of
Carpenters & Joiners of America Local 626, 352 A.2d 423,
426 (Del. Super. 1976) (promised pension benefits are
“consideration for continued employee service and loyalty;”
plan language to be construed in employee’s favor); Rose City

7

Transit Co. v. City of Portland, 271 Ore. 588, 593, 533 P.2d
339, 342 (Ore. 1975) (pension or disability plan is offer which
may be accepted by employee’s continued employment, which
“constitutes the underlying consideration for the promise”);
Ehrle v. Bank Bldg. & Equip. Corp. of America, 530 S.W. 2d
482, 491-92 (Mo. App. 1975) (program of disability benefits
became enforceable contract when employees acted in reliance
thereon); Frank v. Day’s, Inc., 13 Wash. App. 401, 405, 535
P.2d 479, 482 (Wash. App. 1975) (a vested employee cannot
have his pension benefits “altered to his detriment without
corresponding benefit to him”); Stopford v. Boonton Molding
Co., Inc., 56 N.J. 169, 184, 265 A.2d 657, 664 (N.J. 1970)
(employee’s satisfaction of requirements for retirement benefits
“constituted adequate consideration and brought about a vesting
of the right to the lifetime benefits as prescribed by the plan”);
Sheehy v. Seilon, Inc., 10 Ohio St. 2d 242, 243, 227 N.E. 2d
229, 230 (Ohio 1967) (“through the inducements and actions
of the employer these employees, upon retirement, acquired a
vested right” to promised medical benefits); Cantor v. Berkshire
Life Ins. Co., 171 Ohio St. 405, 409, 171 N.E. 2d 518, 521
(Ohio 1960) (retirement plans “will give rise to contractual rights
enforceable by the employee who has complied with all the
conditions of the plan;” “[a] retirement program has become a
basic part of an employee’s remuneration . . . and a consideration
flows to the employer”); Bird v. Connecticut Power Co., 144
Conn. 456, 463, 133 A.2d 894, 897 (Conn. 1957) (“the
employer may not defeat the employees’ reasonable expectations
of receiving the promised reward”); West v. Hunt Foods, Inc.,
101 Cal. App. 2d 597, 603, 225 P.2d 978, 982 (Cal. App.
1951) (employee who continues employment with knowledge
of plan offered by employer may enforce right to a pension).

Other decisions rested on the doctrine of promissory
estoppel. See, e.g., Vastoler v. American Can Co., 700 F.2d
916, 918 (3d Cir. 1983) (promise to include past service in

8

pension benefit when asked to transfer from hourly to
supervisory position enforced under principle of promissory
estoppel); Landro v. Glendenning Motorways, Inc., 625 F.2d
1344, 1353-55 (8th Cir. 1980) (ambiguity in pension plan
construed against employer-drafter; principle of promissory
estoppel required employer’s promise of pension benefits to be
enforced); Jn re Matter of Erie Lackawanna Railway, 548 F.2d
621, 627 (6th Cir. 1977) (“Clearly, under our economic system,
an employer cannot offer a retirement system as an inducement
to employment and, after an employee has accepted employment
under such circumstances, withdraw or terminate the program
after an employee has complied with all the conditions entitling
him to retirement rights thereunder”); Hurd v. Hutnik, 419 F.
Supp. 630, 637 (D. N.J. 1976) (“where employers have given
other assurances of a lifetime pension and employees elect to
retire in reliance thereon, the doctrine of promissory estoppel
bars such a later termination of the fund”); Christensen v.
Minneapolis Municipal Employees Retirement Board, 331 N.W.
2d 740, 749 (Minn. 1983) (under doctrine of promissory
estoppel, after employee met original service requirement,
promise of pension benefits cannot be amended to delay benefits
until beneficiary reaches a prescribed age); Feinberg v. The
Pfeiffer Co., 322 S.W. 2d 163, 168-69 (Mo. App. 1959)
(although promise of pension benefits did not consist of
contractual obligation and plaintiff admitted that she would have
continued to work regardless of promise of pension benefits,
court, citing Section 90 Rest. of Contracts, illus. 2, found that
retirement based on reliance of promise of pension precluded
employer from later rescinding offer).*

4. The conclusion that an employee or retiree has an
enforceable contractual right to promised benefits inducing action
or forbearance was so unexceptionable under pre-ERISA law that
the Restatement (Second) of Contracts set forth this Illustration:

(Cont'd)

9

Still other decisions invoked the law of trusts and fiduciaries
to require full and accurate disclosure of benefits information
and to preclude employer invocation of undisclosed terms. See,
e.g., Carlsen v. Masters, Mates & Pilots Pension Plan Trust,
80 N.J. 334, 341, 403 A.2d 880, 884 (N.J. 1979) (adverse
disqualifying rule “should have been disclosed explicitly and
unmistakably”); Erion v. Timken Co., 52 Ohio App. 2d 123,
132, 368 N.E. 2d 312, 317 (Ohio App. 1976) (employer had
fiduciary duty to bring pertinent points about benefits to

(Cont'd)
A has been employed by B for 40 years. B promises to
pay A a pension of $200 per month when A retires. A
retires and forbears to work elsewhere for several years
while B pays the pension. B's promise is binding.

Restatement (Second) of Contracts, § 90, cmt. b, illus. 4 (1979).
According to the Reporter's Note, the illustration is based on
Feinberg v. Pfeiffer Co., 322 S.W. 2d 163 (Mo. App. 1959).

Even without resort to the doctrine of promissory estoppel,
familiar contract principles governing “manifestations of the parties’
intent”, Firestone, likewise would direct enforcement of the promise
to pay medical benefits. Where the parties have attached different
meanings to a promise,

it is interpreted in accordance with the meaning attached
by one of them if at the time the agreement was made
(b) that party [the employee] had no reason to know of
any different meaning attached by the other [the
employer], and the other had reason to know the meaning
attached by the first party.

Restatement (Second) of Contracts, § 201(2)(b) (“Whose Meaning
Prevails”) (1979); see also Corbin on Contracts, 1951, § 538 at 61.
This is “hornbook contract law.” United States v. Stuart, 489 U.S.
353, 367 at n.7 (1989) (quoting same section of Restatement).

10

attention of employees, even if no specific questions posed by
employees); Moch v. Durkin, 31 A.D. 2d 995, 297 N.Y.S. 2d
865, 867 (N.Y. App. 1969) (plan fiduciaries had “affirmative
duty” to notify employees about plan procedures); Branch v.
White, 99 N.J. Super. 295, 307, 239 A.2d 665, 671 (N.J. Super.
1968) (plan fiduciaries “under a duty to fully inform the
beneficiaries of the trust of all facts relating to the subject matter
of the trust which were essential for the protection of the
beneficiaries’ interests”); Davilla v. Court Employment Project,
Inc., 86 Misc. 2d 552, 555-56, 383 N.Y.S. 2d 140, 142 (N-Y.
Kings County 1976) (employer may not avoid liability for
benefits on “theory that plaintiff is bound by something he has
no notice of and which is more restrictive than the notice actually
given him”).

Finally, courts adopted rules of construction mandating that
benefits promises be construed most strongly in favor of
employees. See, e.g., Paddock Pool Co. v. Monseur, 23 Ariz.
App. 451, 453, 533 P.2d 1188, 1190 (Ariz. App. 1975); Anger
v. Bender, 31 Ill. App. 3d 877, 880, 335 N.E. 2d 122, 125 (Il.
App. 1975); Elby v. Livernois Engrg. Co., 37 Mich. App. 252,
253, 194 N.W. 2d 429, 430 (Mich. App. 1971); Frietzsche v.
First Western Bank & Trust Co., 168 Cal. App. 2d 705, 707,
336 P.2d 589, 590 (Cal. App. 1959); Forrish v. Kennedy, 377
Pa. 370, 376, 105 A.2d 67, 70 (Pa. 1954); Psutka v. Michigan
Alkali Co., 274 Mich. 318, 320, 264 N.W. 385, 386 (Mich.
1936) (death benefit plan’s ambiguities are to be construed
against employer; provision in plan allowing employer to
change benefits not applicable to employees or their dependents
who are receiving benefits).

Commentators have also noted that there was a well-
developed body of protective state law in existence at the time
of ERISA’s enactment. See C. Fisk, Lochner Redux: The
Renaissance of Laissez-Faire Contract in the Federal Common

1]

Law of Employee Benefits, 56 Ohio St. L. J. 153, 230-34
(1995); G. Flint, ERISA: Extracontractual Damages Mandated
for Benefit Claims Actions, 36 Ariz. L. Rev. 611, 649-56 (1994);
W. Payne, Lawsuits Challenging Termination or Modification
of Retiree Welfare Benefits: A Plaintiffs’ Perspective, 10 The
Labor Lawyer 91, 93-97 (1994).

The Court has repeatedly noted the general guiding
principles of ERISA interpretation and enforcement, including
the charge to be at least as protective as the pre-ERISA
protections discussed above. But what is the actual status of
enforcement of ERISA’s “broadly protective purposes” in this,
its 25th year? Under the Sprague decision, courts will provide
no remedy to employees who gave years of service to their
employer and retired in reliance on promises of valuable medical
benefits that they reasonably expected to be secure. Under the
lower court’s application of ERISA, fundamental benefits rights
can be frustrated by hidden disclaimers in documents never
disclosed to employees, and benefits can be misrepresented in
order to retain and later retire thousands of employees. Although
this type of conduct would “create[ ] liability even among
strangers,” Varity, 516 U.S. at 506, and General Motors would
not tolerate it in its own commercial dealings, the lower court’s
misapplication of ERISA permits the company to escape its
ERISA fiduciary and contractual responsibilities and creates a
safe harbor for this conduct. Under pre-ERISA law, this outcome
would be inconceivable. It is not the result intended by ERISA.

CONCLUSION

Without intervention by the Court, the decision in Sprague
will be heralded and followed in the lower courts as authorizing
a decisional approach that is contrary to ERISA’s remedial goals.
For the foregoing reasons, amici curiae support and respectfully
urge the Court to grant the petition for certiorari.

12
Respectfully submitted,

ALAN M. SANDALS

Counsel of Record

SCOTT M. LEMPERT
SANDALS, LANGER

& TAYLOR, LLP

One Liberty Place

50th Floor

Philadelphia, Pennsylvania 19103
(215) 419-6500

CHARLES GOTTLIEB
GOTTLIEB AND GOREN, P.C.
26261 Evergreen

Suite 460

Southfield, Michigan 48076
(248) 352-1880

CHARLES T. RIEHL
CHRISTOPHER GIBBON
WALTER & HAVERFIELD P.L.L.
1300 Terminal Tower

50 Public Square

Cleveland, Ohio 44113

(216) 781-1212

WILLIAM T. PAYNE
SCHWARTZ, STEINSAPIR,
DOHRMANN & SOMMERS, LLP
3600 One Oxford Centre
Pittsburgh, Pennsylvania 15219
(412) 456-2008

Attorneys for Amici Curiae
Donald Armbruster, et al. and
the Republic Steel Salaried
Retirees Association

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386006_1350%3A5. Public record. Not legal advice.