Opposition Brief — Huppeler v. Oscar Mayer Foods Corp.

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NO. 94-1148 | | atid Lal aad eet |

IN THE

SUPREME COURT OF THE UNITED STATES

October Term. 1994

ROBERT A. HUPPELER.

EDWIN C. MAGLI. and

ELLWOOD SANDMIRE.

Petitioners.

OSCAR MAYER FOODS CORPORATION.

Plan Administrator. and

PENSION PLAN NO. |

Respondents

ON PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

RESPONDENTS’ BRIEF AND APPENDIX IN OPPOSITION

TO PETITION FOR WRIT OF CERTIORARI

DONALD K. SCHOTT

Counsel of Record

ERICA M. EISINGER

DANA L. O'BRIEN

QUARLES & BRADY

Firstar Plaza

One South Pinckney Street

P.O. Box 2113

Madison. WI 53701-2113

608) 251-5000

Attornevs for Respondents

BEST AVAILABLE COPY |

II.

Il.

1

QUESTIONS PRESENTED

Whether a case involving a pension plan's offset of a worker's

compensation award for permanent partial hearing loss under the

Employment Income Retirement Security Act of 1974 ("ERISA"),

29 U.S.C. §§ 1001-1461, warrants reexamination of this Court's

earlier unanimous holding in Alessi v. Raybestos-Manhattan, Inc..

451 U.S. 504 (1981).

Whether ERISA preempts any reliance on state law to determine

the character of worker's compensation benefits that are offset by

a pension plan subject to ERISA.

Whether the Seventh Circuit's judgment in favor of a pension

plan's offset of a worker's compensation award for permanent

partial hearing loss is correct under any state or federal law theory.

ii

RULE 29.1 LISTING

The ultumate parent of Oscar Mayer Foods, Corp. is Philip Morris

Companies, Inc.

ill

TABLE OF CONTENTS

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STATUTORY PROVISIONS INVOLVED ...............-.

py ys i ey | ot \

SUMMARY OF THE ARGUMENT ..............-------.

a ee ee ee ee

' THIS CASE IS NOT APPROPRIATE FOR

THE COURT'S’ EXERCISE OF

DISCRETIONARY JURISDICTION

SINCE THE LOWER - COURTS'

DECISIONS ARE CONSISTENT WITH

PRIOR SUPREME COURT PRECEDENT

AND THOSE OF OTHER FEDERAL

The Lower Courts’ Holdings in this

Case Are Perfectly Consistent with

this Court's Holding in Alessi ........

e Issue of Worker's

Compensation Offsets Is Not One

Involving Substantial Conflict

Federal Courts; Rather it

1V

I]. THE ISSUES ADDRESSED IN THIS

CASE DO NOT RISE TO A SUFFICIENT

LEVEL OF IMPORTANCE TO JUSTIFY

THIS COURT'S EXERCISE OF ITS

DISCRETIONARY JURISDICTION,

PARTICULARLY SINCE THIS EXACT

ISSUE HAS BEEN PREVIOUSLY

ADDRESSED AND DECIDED BY THIS

PEE ices oe aeaae ee eM eee 10

A. This Case Does Not Present Any

Issues Not Previously Settled by

WE 516i wack eee 1]

B. The Questions Presented in

Huppeler's Petition Are Not of

National Importance and Do Not

Have a Significant Impact on the

Operation of Most Retirement

rae hs as 13

ie To the Extent That Huppeler's

Position is Correct, the Internal

Revenue Service Will Address

These Offsets; Therefore, the

Supreme Court Need Not Review

ee 14

IIT. THE RESULT REACHED BY THE

SEVENTH CIRCUIT IN THIS CASE WAS

Pp a) gg. 15

CPI oN os cb ene doa heehee vaaNe recta eee tree tay 16

I hak 5 co ose hed eed si cere es saeeneee

Vv

TABLE OF AUTHORITIES

CASES

Po El ef). : . rer errr 1, 3-12, 15, 16

STCM CED IOC TD) .... ooo cece 14

Black v. Cutter Lab..

, ho Se ¢ TAC area e rem r ire irc ar 8

Bowen v, American Hosp. Ass'n,

Si ee rrr rrr ere ee ee se *

Ere CT See eee ee

rg 8 el. | | errr rer see rw re &

Estelle v. Gamble,

Rr ED viv ch ok accs t peka ase dae te eseayeca a 15

498 U.S. 52 (1990) Bertani he, Se ae ee eee 12

32 F.3d 245 (7th Cir. 1994)... Se eee |

Se ee I, BUDE) oivek ccs cecnss ceghe wen das 10

Kopko y. Raymark Indus., Inc., No. B-88-98, 1990 U.S. Dist.

LEXIS 13168 (D. Conn. September 4, 1990) ............. 10

950 F.2d 1395 (9th Cir. 1991) .... 00.00 eee. 3, 8-10

vl

Martin v. McCarthy.

520 F. Supp. 783 (D. Mass. 1981).................0..... 10

EME EUEE. «so os 2 ovis abe eh toccdolee weeds 12

902 F.2d 1148 (4th Cir. 1990) ..... 0.0000 ee. 9

848 F.2d 372 (2d Cir. 1988) ........00000000. 00.00... 9,10

Salyers v, Aled Corp.,

642 F. Supp. 442 (E.D. Ky. 1986) ........00.0000.0000..... 10

Serrato v. John Hancock Life Ins. Co.,

31 F.3d 882 Oth Cir. 1994) 200.0 eee. 10

Wj

ee CT PT oi i acces eee eadeuaevaewes 14

STATUTES AND REGULATIONS

TECH O BOUUIT «ooo on oe es ete 14

28 U.S.C. § 1254/1) oe rer ee re

Employment Ircome niaidions Security Act of 1974 ("ERISA"),

pS | re er ee: passim

Rev. Rul. 69-42 , Part 4(j)(4), 1969-2 C.B.59,72................ 8

Rev. Rul. 78-178, 1978-1 C.B.117,118 ...............00.. 4,5,8

OTHER AUTHORITIES

Pension and Welare Benefits Administration,

U.S. Dep't of Libor, Abstract of 199] Form 5500 .............. 13

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RULES

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Atel aI OLN LOY Mest te Ae Ph bee

FA ab Md aera,

07 sew ri FS pat

ik,

TO THE HONORABLE SUPREME COURT:

Respondents, OSCAR MAYER FOODS CORP., in its

Capacity as Administrator of Pension Plan No. 1, and PENSION

PLAN NO. 1 (For Active Hourly Employees of Oscar Mayer Foods

Corp. and Subsidiary Companies) (collectively referred to as "Oscar

Mayer"), respectfully request that this Court deny the Petition for Writ

of Certiorari submitted by the Petitioners, ROBERT A. HUPPELER.

EDWIN C. MAGLI, and ELLWOOD SANDMIRE.

OPINIONS BELOW

In a published opinion, the Seventh Circuit Court of Appeals

affirmed the decision of the District Court for the Western District of

Wisconsin granting summary judgment in favor of Oscar Mayer.

, 32 F.3d 245 (7th Cir. 1994).

The Seventh Circuit's decision is reproduced in the Petitioners'

Appendix to Huppeler's Petition for Writ of Certiorari (Pet. App.").

The District Court's opinion has not been published but is renorted at

1993 WL 730699 (W.D. Wis.) and is partially reproduced in the

Petitioners’ Appendix.’ -

JURISDICTION

Petitioners state they are seeking certiorari pursuant to 28

U.S.C. § 2101(c). Section 2101(c) addresses the time period within

which a petition for certiorari must be filed. It is not jurisdictional.

However, this Court's jurisdiction may be invoked under 28 U.S.C. §

1254(1).

' Unfortunately, Petitioners’ Appendix, apparently inadvertently,

omits selected portions of the District Court's opinion without indicating it has

done so. A corrected text incorporating the missing language is included as

part of the Respondents’ Appendix ("Resp. App.") with the language missing

from Petitioners’ Appendix underlined.

a

STATUTORY PROVISIONS INVOLVED

This case involves the nonforfeiture provisions in Section

203(a) of the Employment Retirement Income Security Act of 1974

("ERISA"), 29 U.S.C. § 1053(a), and the preemption provisions in

Section 514 of ERISA, 29 U.S.C. § 1144(a). The ERISA provisions

are set forth in Oscar Mayer's Appendix ("Resp. App."). Other

regulatory provisions are set forth in the Petition for Writ of Certiorari.

STATEMENT OF THE CASE

Oscar Mayer, a Delaware corporation headquartered in

Wisconsin, employed Huppeler, Magli and Sandmire in various

capacities in its plant at Madison, Wisconsin. While employed, all

three individuals were represented by Local 538 of the United Food

and Commercial Worker's International Union (the "Union"). As

members of the Union, all three individuals were covered by Pension

Plan No. 1, a defined benefit pension plan sponsored and administered

by Oscar Mayer and negotiated between Oscar Mayer and the Union.

The Pension Plan provides for normal retirement, early retirement, and

disability retirement benefits.

Pursuant to the terms of a 1985 negotiated agreement between

the Union and Oscar Mayer, a retiree's benefits paid from the Pension

Plan are offset, on a dollar-for-dollar basis, by all worker’s

compensation paid to such retiree, with the exception of payments

made "for the loss of a body member." As participants in the Pension

Plan, Huppeler, Sandmire and Magli were provided with summary

plan descriptions that described the operation of the worker's

compensation offset.

Huppeler retired from Oscar Mayer and commensed receiving

early retirement benefits on or about January 28, 1992. in February

1993, the Wisconsin Department of Industry, Labor and Human

Relations affirmed an award to Huppeler of 45.58 weeks of worker's

compensation payments at a rate of $144 per week. The award, which

resulted from a previously adjudicated 21.1% bilateral hearing loss,

was computed based on Huppeler's wage rate while at Oscar Mayer.

On May 14, 1993, Oscar Mayer notified Huppeler that his retirement

..*

benefits under the Pension Plan would be offset against the worker's

compensation benefits he had received on a dollar-for-dollar basis.

Sandmire and Magli have also retired from Oscar Maver and

are presently receiving retirement benefits from the Pension Plan.

Both Sandmire and Magli believe they have suffered permanent work-

related hearing losses; however, both say that they have refrained from

filing worker's compensation claims because of their understanding

that the pension benefits currently being paid to them under the

Pension Plan would be offset by any worker's compensation benefits

they may receive.

On June 2, 1993, Huppeler, Sandmire and Magli (collectively

referred to as “Huppeler"), filed an action against Oscar Mayer

alleging that the offset of worker's compensation awards for permanent

hearing impairment resulted in an impermissible forfeiture of benefits

in violation of Section 203(a) of ERISA, 29 U.S.C. § 1053(a).

Relying on the Ninth Circuit's decision in Losada v. Golden Gate

Disposal Co,, 950 F.2d 1395 (9th Cir. 1991),? Huppeler asserted that

his worker's compensation award could not be offset, because under

Wisconsin law the payments for partial hearing loss were made for

bodily impairment and not wage replacement.

Oscar Mayer argued that its offset was permitted under this

Court's unanimous decision in Alessi, 451 U.S. 504. Oscar Maver

also maintained that, in accordance with Alessi and other decisions of

this Court, ERISA preempts any examination of the state law character

of worker's compensation benefits. Finally, Oscar Mayer contended

that even if Huppeler's analysis was followed, the offset is permitted

since it is clear that the purpose of worker's compensation payments

under Wisconsin law is to compensate for actual or presumed wage

loss and not for bodily impairment.

* In Losada, the Ninth Circuit held that a pension plan could offset

only those worker's compensation awards in the nature of wage replacement,

not awards for bodily impairment, and that state law must be examined to

determine the character of each specific worker's compensation award. Id. at

1400-01.

-4-

The District Court granted summary judgment in favor of

Oscar Mayer on October 27, 1993. It concluded that ERISA

preempted Huppeler's reliance on the state law character of worker's

compensation payments at issue. Pet. App. at 134-35. In reaching its

conclusion, the District Court examined both the holding and the

analysis of this Court's opinion in Alessi and concluded that the "broad

holding in Alessi [is] that offsetting pension benefits by workers’

compensation awards is not prohibited by ERISA." Resp. App. at

A-8.° The District Court also premised its decision on the important

federal principles involved in upholding the terms of a collective

bargaining agreement and noted that Huppeler's worker's

compensation payment would have been a permitted offset under the

plans considered in Alessi. Pet. App. at 135.

Huppeler appealed the District Court's decision. In his briefs

to the Seventh Circuit, Huppeler advanced what he referred to as the

“correlation rule." While Oscar Mayer had consistently pointed out

that Alessi's approval of pension plan offsets was based in part upon

the Internal Revenue Service's conclusion that worker's compensation

benefits "matched up" or "correlated" with benefits available under a

qualified pension plan, Huppeler added his own twist to prior IRS

rulings. Huppeler first claimed that under the "correlation rule" each

element of a worker's compensation award must be examined

individually to determine whether it matches up with benefits provided

under a pension plan.* Secondly, Huppeler grafted on to prior IRS

> The above-quoted language is one of the passages of the District

Court's opinion which, for some reason, does not appear in Petitioners’

Appendix.

* Throughout this case, Huppeler has repeatedly misquoted Rev. Rul.

78-178, 1978-1 C.B. 117, 118, as support for his view of the correlation rule.

However, Huppeler fails to include all relevant portions of Rev. Rul. 78-178

anywhere in his Petition. Pet. at 5-6, 11. Had he done SO, it would be obvious

that Rev. Rul. 78-178 does not call for an examination of each element of a

worker's compensation payment; rather Rev. Rul. 78-178 confirms that

worker's compensation payments generally are matched up with benefits

provided under a pension plan and, therefore, are available for offset:

(continued...)

ee

NS IEE Cette a, Sl i BT DIN ct ibis

a.

rulings a requirement that state law be examined to discern the nature

of the payment at issue.

The Seventh Circuit refused to accept Huppeler's so-called

correlation rule. Pet. App. at 119. It affirmed the District Court,

concluding that Alessi should be read as deferring to the IRS's

interpretation of the nonforfeiture provisions in ERISA.’ Pet. App. at

118-19. The Seventh Circuit refused to reconsider its decision when

it denied Huppeler's request for a rehearing or rehearing en banc on

October 5, 1994.

* (...continued)

There are many types of benefits under public programs that

do not lend themselves to integration with private pension

plan benefits. Thus a correlated retirement system could not

exist. Only those programs which provide benefits that may

be provided under a qualified pension plan may be used as

an offset since only then could a correlated retirement

system exist. For example, the benefits payable under State

or Federal programs because of sickness and maternity, and

which include cash benefits and medical services, may not

be used as an offset to pension plan benefits because such

benefits may not be provided under a qualified pension

plan ....

CIDPensauion jaws ang other occu ASE laws.

These benefits are payable upon an employee's disablement.

Section 1.401-1(b)(1)(i) of the regulations specifically

allows the payment of pension plan benefits upon disability.

Therefore, these programs may be used as an offset to plan

benefits.

Rev. Rul. 78-178 (emphasis added).

* While the Seventh Circuit interpreted Alessj as deferring to IRS

regulations rather than as a case interpreting Congressional intent, Oscar

Mayer argued below and remains convinced that the offset at issue would be

permitted under either analysis.

le

SUMMARY OF THE ARGUMENT

Huppeler's Petition for Writ of Certiorari should be denied

because it does not raise an issue appropriate for the Court's exercise

of its discretionary jurisdiction. Both lower court holdings are

correctly decided and are consistent with this Court's earlier decision

in Alessi and with the decisions of other federal courts that have

considered this issue, except for the one aberrant holding by the Ninth

Circuit. Moreover, the issues raised in this case do not rise to a level

of national importance to justify this Court's review.

In Alessi this Court addressed the exact issue raised by

Huppeler under an indistinguishable fact scenario. As such, one need

not look beyond Alessi to conclude that the lower courts' decisions are

correct.

ARGUMENT

I. THIS CASE IS NOT APPROPRIATE FOR THE

COURT'S EXERCISE OF DISCRETIONARY

JURISDICTION SINCE THE LOWER

COURTS' DECISIONS ARE CONSISTENT

WITH PRIOR SUPREME COURT

PRECEDENT AND THOSE OF OTHER

FEDERAL COURTS.

"A review on writ of certiorari is not a matter of right, but of

judicial discretion." Sup. Ct. R. 10.1. There must be "special and

important reasons" to grant review. Id. Among the reasons that the

Court considers in exercising its discretion are:

(a) When a United States court of

appeals has rendered a decision in

conflict with the decision of another

United States court of appeals on

the same matter: or has decided a

federal question in a way in conflict

with a state court of last resort; or

has so far departed from the

accepted and usual course of

OBI AE Bo abisalsetin Didt i

Pana 6 NMMATE AS i te BOT Nd te

RF

judicial proceedings, or sanctioned

such a departure by a lower court,

as to call for an exercise of this

Court's power of supervision. . . .

(c) When a state court or a United

States court of appeals has decided

an important question of federal

law which has not been, but should

be, settled by this Court, or has

decided a federal question in a way

Se ence f this Coun

Id. (emphasis added). Contrary to Huppeler's assertion, the lower

courts’ decisions in this case do not conflict with this Court's prior

decisions. Those decisions are also consistent with the decisions of all

other federal courts except one aberrant decision.

A. The Lower Courts' Holdings in this Case

Are Perfectly Consistent with this

Court's Holding in Alessi.

In Alessi, Justice Marshall, speaking for a unanimous Court,

held that pension plan offsets of worker's compensation payments do

not contravene ERISA's forfeiture provisions. 451 U.S. at 526. The

result reached by the lower courts in this case -- that Oscar Mayer may

offset Huppeler's worker's compensation benefits -- is squarely

premised on and is identical to the result reached by this Court in

Alessi.

Huppeler asserts that because the Seventh Circuit notes some

ambiguity in Alessi's reasoning (but not its holding), its decision

somehow conflicts with this Court's prior holding. Huppeler Pet. at

18.° However, this Court has indicated time and again that it "reviews

* In order to manufacture this conflict, Huppeler focuses on a

statement made in a footnote in the Solicitor General's amicus brief in Alessi.

(continued...)

-8-

judgments, not statements in opinions." Black v. Cutter Lab.. 351

U.S. 292, 297 (1956); see also Bowen v. American Hosp. Ass'n, 476

U.S. 610, 625 n.11 (1986):

Defense Council, 467 U.S. 837, 842 ( 1984). It is, therefore, the

Seventh Circuit's ultimate judgment which is at issue here -- a

judgment which upholds Oscar Mayer's offset of worker's

compensation payments just as such offsets were upheld by this Court

fourteen years ago in Alessi.

Both this case and Alessi arose from identical fact patterns

and indistinguishable pension plan offset provisions. In both cases,

retirees were receiving pension benefits from plans, the terms of which

were negotiated between their employers and unions representing the

retirees. In both cases the plans involved applied offset provisions

which contained identical exceptions for loss of a body member. In

both cases, a retiree's pension benefits were reduced, on a dollar-for-

dollar basis, after receipt of worker's compensation payments. Alessi,

451 U.S. at 507-08 n.1 & 2. As noted by the District Court below,

had Huppeler's worker's compensation payment been at issue in

Alessi, such payment would have been an allowable offset under the

plan approved by the Supreme Court in that case. Pet. App. at 135.

Most important, in neither case did the court find it necessary to

examine each element of the worker's compensation payment under

state law before approving the offset. Alessi, 451 U.S. at 520n.16.

* (...continued)

This footnote incorrectly summarizes Rev. Rul. 78-1 78, discussed supra at

note 3. Huppeler's entire case is premised on this footnote, which was later

incorrectly applied by the Ninth Circuit in Losada. Neither the text of Alessi

nor any of the IRS rulings cited by Huppeler indicate that each worker's

compensation payment should be independently examined to determine

whether it matches up with benefits that may be provided under a qualified

pension plan. Rather, all these rulings speak in terms of worker's

compensation payments generally, and conclude that offset of such payments is

permissible. See Rev. Rul. 78-178; see also Rev. Rul. 69-421, Part 4())(4),

1969-2 C.B. 59, 72. Moreover, it should be noted that while Huppeler's

arguments focus on Internal Revenue Code regulations and rulings, this case is

one brought under ERISA, an entirely distinct federal statute.

-9.

Since this case presents no conflict with prior Supreme Court

precedent, it is not an appropriate case for this Court's exercise of its

discretionary jurisdiction.

B. The Issue of Worker's Compensation

Offsets Is Not One Involving Substantial

Conflict among the Federal Courts;

Rather it Is a Situation in which all

Federal Courts but One Are _ in

Substantial Agreement.

Huppeler asserts that the Seventh Circuit's decision in this

case is in direct conflict with that of "numerous" courts of appeals.

Huppeler Pet. at 17. In support of this assertion, Huppeler completely

misrepresents the Second Circuit's holding in ;

848 F.2d 372 (2d Cir. 1988), and paints a picture of conflict and

confusion among the federal courts which simply does not exist.’ To

the contrary, published federal court holdings are unanimous on this

issue except for the aberrant decision of the Ninth Circuit.

Since the Supreme Court decided Alessi in 1981, the issue of

worker's compensation offsets has been considered by the Second,

Fourth, Sixth, Seventh and Ninth Circuit Courts of Appeals, and

several district courts. All except the Ninth Circuit have upheld the

offset of worker's compensation payments.

PPG Indus. Pension

Plan A (CIO) v. Crews, 902 F.2d 1148 (4th Cir. 1990) (pension plan

offset of permanent total disability worker's compensation awards

” Huppeler asserts that the Second Circuit's opinion in Reska is in

accord with the Ninth Circuit's opinion in Losada. Huppeler Pet. at 19.

However, as pointed out by the District Court below, Pet. App. at 132, the

Second Circuit decision in Reska is consistent with the holdings of the Fourth

and Sixth Circuits and completely contrary to that in Losada. In Reska, the

Second Circuit acknowledges that Alessi permits pension integration with a

worker's compensation awards such as that for the partial hearing loss

provided to the retiree in that case. Reska, 848 F.2d at 374. Moreover, the

Court noted that it need not even reach the question of Alessi's interpretation

since the plaintiff failed to establish any state law support for his allegations.

Id. at 375. The situation presented in the instant case is identical to that in

Reska.

OO rs _——

-10-

affirmed without examining character of awards); Reska, 848 F.2d

372 (pension plan offset of worker's compensation payment for partial

hearing loss is upheld as consistent with Alessi; affirming district court

that expressly rejected Losada ana ysis as contrary to the Supreme

Court's holding in Alessi): Kapuscinski v. Plan Adm'r, 658 F.2d 427

(6th Cir. 1981) (ERISA allows deduction of any worker's

compensation benefits from retiree's pension); Kopko v. Raymark

Indus., Inc., No. B-88-98, 1990 US. Dist. LEXIS 13168 (D. Conn.

September 4, 1990) (without examining state law, court holds that

retirement plan may offset lump sum worker's compensation benefits);

, 642 F. Supp. 442 (E.D. Ky. 1986) (offset of

disability pension benefits by worker's compensation benefits

approved without examination of character of benefits); Martin y.

McCarthy, 520 F. Supp. 783 (D. Mass. 1981) (pension plan may

offset amount of lump sum worker's compensation benefits).

In sum, only the Ninth Circuit diverges from the decisions

reached by the federal courts that have considered the issue of worker's

compensation offsets. If this creates a conflict in need of resolution,

a better vehicle would be a subsequent case from the Ninth Circuit.

rather than the correctly decided decision of the Seventh Circuit.*

II. THE ISSUES ADDRESSED IN THIS CASE DO

NOT RISE TO A SUFFICIENT LEVEL OF

IMPORTANCE TO JUSTIFY THIS COURT'S

EXERCISE OF ITS DISCRETIONARY

JURISDICTION, PARTICULARLY SINCE

THIS EXACT ISSUE HAS’ BEEN

PREVIOUSLY ADDRESSED AND DECIDED

BY THIS COURT.

Rule 10.1(c) of the Supreme Court indicates that one of the

considerations involved in determining whether certiorari should be

* In light of the Ninth Circuit's recent decisions regarding the broad

preemptive reach of ERISA, it is possible that Losada would be decided by

that court differently if brought today. See Vv

Co., 31 F.3d 882 (9th Cir. 1994) (adhering to ERISA's broad preemptive

reach that implements Congress's goal of uniform pension plan regulation).

sft.

granted is "[w]hen a state court or a United States court of appeals has

decided an i l : whi n

...." Sup. Ct. R. 10.1(c) (emphasis

added). The worker's compensation offset at issue in this case has

already been settled by this Court and does not rise to a level of

national importance justifying reconsideration.

A. This Case Does Not Present Any Issues

Not Previously Settled by This Court.

The facts in this case are identical in all material respects to

those present in Alessi. Before reaching its decision in Alessi, this

Court exhaustively examined the legislative history behind the

adoption of ERISA and recognized that ERISA reflected a

Congressional balance between two often competing goals -- the need

to enact necessary rules and restrictions on private pension plans and

the corresponding need to keep employer costs within reasonable

limits. Alessi, 451 U.S. at 514-16. In discussing integration with the

Social Security program, the Court noted the House Ways and Means

Committee's deliberation over ERISA's competing goals:

[YJour committee is very much

aware that many present plans are

fully or partly integrated [with the

social security program] and that

elimination of the integration

procedures could substantially

increase the cost of financing

private plans. Employees, as a

whole, might be injured rather than

aided if such cost increases resulted

in slowing down the growth or

perhaps even eliminat[ing] private

retirement plans.

Alessi, 451 U.S. at 415 (quoting H.R. Rep. 93-807, 93rd Cong., 2d

Sess., 69 (1974), II Leg. Hist. 3115, 3189),

After examining the intent of Congress when it enacted

ERISA, this Court unanimously determined that worker's

ofS.

compensation offsets were permitted. There is no reason to examine

this issue again.

Huppeler also argues that there is an "unsettled" issue of

whether the character of worker's compensation awards should be

determined as a matter of federal common law or with reference to

applicable state worker's compensation law. Of course, this "issue" is

only relevant if this Court first decides to overrule Alessi. For the

reasons stated elsewhere in this brief, there is no reason to do so.

Moreover, although this Court has not expressly addressed the

issue of state versus federal law as applied to the character of worker's

compensation payments for offset purposes, this Court's prior

decisions have consistently recognized ERISA's broad preemption of

state law. FMC Corp. v. Holliday, 498 U.S. 52, 58 (1990) ("The pre-

emption clause is conspicuous for its breadth. It establishes as an area

of exclusive federal concern the subject of every state law that

‘relate[s} to' an employee benefit plan governed by ERISA.")

(alteration in original); Pilot Life Ins. Co. v, Dedeaux, 481 U.S. 41, 46

(1987) (ERISA's preemption provisions are “deliberately expansive"

and intended to give federal authorities "sole power to regulate the

field of employee benefit plans"); Alessi, 451 U.S. at 523 (ERISA is

designed to "establish pension plan regulation as exclusively a federal

concern").

If the character of the worker's compensation payment impacts

upon the operation of a pension plan under ERISA, this Court's prior

decisions make it clear that ERISA's expansive preemptive reach

would necessitate determination of the character of worker's

compensation under federal law. Therefore, neither question presented

in Huppeler's Petition involves an issue that has not already been

addressed by this Court in its prior rulings.

-13-

B. The Questions Presented in Huppeler's

Petition Are Not of National Importance

and Do Not Have a Significant Impact on

the Operation of Most Retirement Plans.

Huppeler also asserts that this Court's resolution of the

worker's compensation offset issue will impact many thousands of

employees who suffer permanent work-related injuries every year.

Huppeler Pet. at 24. Huppeler provides absolutely no support for this

bald assertion, and there is no record evidence of how many retired

employees covered by plans with a worker's compensation offset have

been subject to such an offset.

In fact, worker's compensation offsets like the one at issue

here exist only in qualified retirement plans known as defined benefit

pension plans. Changes in the nature of the American workforce, and

the increasing regulation of defined benefit plans (resulting in

additional expense and complexity), have resulted in a significant

decrease in the number of defined benefit plans as a percentage of the

total number of plans and a significant decrease in the number of

active plan participants covered by defined benefit plans as a

percentage of all active plan participants.? The decrease in defined

benefit plans is coupled with a corresponding increase in employer-

sponsored defined contribution plans which, by their nature, do not

include worker's compensation offsets such as those at issue in this

case.

Moreover, those employees who are covered by defined

benefit plans under negotiated agreements can avoid inclusion of

worker's compensation offset Provisions in the plan through the

collective bargaining process, if they so desire. The worker's

compensation offset in the case at hand was expressly negotiated

* See Pension and Welfare Benefits Administration, U.S. Dep't of

Labor, , Private Pension Plan

Bulletin, Winter 1994, at Number 4, Tables E-1 and E-8: Celia Silverman,

Notes |] -3, (March 1994); see also Steven E. Schanes,

Pension World 4 (December 1993).

-14-.

between Oscar Mayer and the union representing Huppeler. Union

members, including Huppeler, most assuredly received consideration

in exchange for the inclusion of the worker's compensation offset and

should not now be heard to decry the results of their negotiated

bargain.

a To the Extent That Huppeler's Position is

Correct, the Internal Revenue Service

Will Address These Offsets; Therefore,

the Supreme Court Need Not Review this

Issue.

Huppeler's position from the inception of this litigation has

been that the worker's compensation offset at issue does not comply

with Internal Revenue Service rulings (as such rulings are interpreted

by Huppeler) and, therefore, it violates ERISA. The unstated

assumption in Huppeler's argument is that the Internal Revenue Code

rules for determining whether a plan is tax qualified are coterminous

with the vesting rules under ERISA. If that assumption is accurate (a

qualified plan rulings has occurred, as Huppeler alleges, then the IRS

has the authority and ability to address this violation, and this Court

need not take it upon itself independently to examine this issue.

The IRS has an established system for individually identifying

and ruling upon specific plan language and operational compliance

with IRS requirements.'° If the IRS believed that Oscar Mayer's

'° Pursuant to 26 C.F R. § 601.201, the IRS issues advance

determinations with respect to a plan's compliance with IRS requirements for

favorable tax treatment, including compliance with the IRS vesting

requirements. In addition, if during a plan's ongoing operation, the IRS

determines that the plan is not complying with IRS requirements, the IRS is

empowered to disqualify the plan. The IRS is not reluctant to disqualify a plan

when a violation occurs. See, e.g., Wi Vv

Commissioner, 581 F.2d 1235 (7th Cir. 1978) (disqualification of plan for

failure to satisfy Code Section 401(a)); ' Vv issi , 59

T.C.M. (CCH) 482 (T.C. 1990) (disqualification for failure to timely amend

(continued...)

sae.

Pension Plan was not complying with IRS vesting requirements in

either form or operation, the IRS has the means available and would

have taken steps to disqualify the Plan. Yet Huppeler has never

alleged that the IRS has taken any action against Oscar Mayer

As the Supreme Court notes in Alessi. tax qualified plans are

subject to IRS regulation. 451 US. at 521 n.17. If Huppeler's

analysis regarding IRS rulings is correct, the IRS will deal with Oscar

Mayer's Pension Plan and any others like it. There is no need for this

Court to address Oscar Mayer's offset under ERISA.

III. | THE RESULT REACHED BY THE SEVENTH

CIRCUIT IN THIS CASE WAS THE

CORRECT ONE.

Although the correctness of the result reached in the lower

courts is not expressly described as a factor taken into consideration

in granting certiorari under the Supreme Court Tules, it has been

considered relevant to the Court's determination of whether or not to

grant certiorari in the past. As indicated by Justice Stevens. "[t}he

Court seldom takes a case merely to reaffirm settled law." Estelle y.

Gamble, 429 U.S. 97, 115 (1976) (Stevens, J.. dissenting), see also

Robert L. Stem et al., Supreme Court Practice 193-95 (7th ed. 1993)

As demonstrated above, a grant of certiorari in this case would

merely affirm a decision that is in accord with settled law. Therefore

to the extent that this Court deems the issues involved significant

enough to warrant review, it is respectfully Suggested that the more

appropriate vehicle for such review would be a subsequent decision

from the Ninth Circuit, which is the only Court of Appeals to have

deviated from this Court's prior precedent.

' (...continued)

plan); Buzzetta Constr. Corp. v. Commissioner, 92 T.C. 641 (T.C. 1989

(disqualification for failure to comply with requirements of Code Section 4! 5

NT —nmM'US| =i rms

«if.

CONCLUSION

Respectfully submitted this 2nd day of February, 1995.

DONALD K. SCHOTT

Counsel of Record

ERICA M. EISINGER,

DANA L. O'BRIEN

Quarles & Brady

Firstar Plaza

One South Pinckney, Suite 600

P.O. Box 2113

Madison, WI 53701-2113

(608) 251-5000

RESPONDENTS' APPENDIX

INDEX TO RESPONDENTS' APPENDIX

tale Al Bea

, No. 93-C-370-S.

Nanaiaainag, and Order (W. D. Wis. Oct. 27,1993) A-]

é. Sections 203(c) and 514 Employment Retirement re

Security Act ("ERISA") ...................... A-12

RESPONDENTS' APPENDIX

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF WISCONSIN

ROBERT ALLAN HUPPELER,

EDWIN C. MAGLI and .

ELLWOOD SANDMIRE,

Plaintiffs,

MEMORANDUM AND ORDER

v. 93-C-370-S

OSCAR MAYER FOODS CORP.,

Defendant.

Plaintiffs Robert Allan Huppeler, Edwin C. Magli and

Ellwood Sandmire commenced this action against defendant Oscar

Mayer Foods Corp. ("Oscar Mayer") for declaratory relief, deter-

mining that the offset of pension benefits by workers' compensation

benefits for partial hearing loss are improper forfeitures prohibited by

29 U.S.C. §1053(a).

Jurisdiction exists pursuant to 28 U.S.C. §1332.

The action is before this court on five motions. Defendant

Oscar Mayer moves the court to dismiss plaintiffs' complaint for

failure to state a claim upon which relief can be granted, for failure to

exhaust administrative remedies and for failure to name the proper

party defendant. Plaintiffs move for summary judgment in their favor.

declaring that offsets of pension benefits by the type of workers'

compensation benefits at issue are illegal forfeitures pursuant to 29

U.S.C. §1053. Finally, Oscar Mayer moves for summary judgment,

determining that its practice to offset pension benefits by workers'

compensation benefits is not prohibited by ERISA.

FACTS

Oscar Mayer employed plaintiffs Huppeler, Magli and

Sandmire at its plant in Madison, Wisconsin. While employed all

A-2

three plaintiffs were members of Local 538 of United Food and

Commercial Workers International Union ("Union"). As members of

the Union they were covered by Pension Plan | ("Pension Plan")

sponsored by Oscar Mayer and negotiated between Oscar Mayer and

the Union. Oscar Mayer is the administrator of said Plan which

provides benefits for normal retirement, early retirement and disability

retirement. Pursuant to the terms of a 1985 negotiated agreement

between the Union and Oscar Mayer a retiree's benefits paid from the

Pension Plan are offset on a dollar-for-dollar basis by workers's

compensation payments except for "ioss of a body member."

Huppeler and Sandmire are Subject to the 1985 agreement

which includes a provision for workers' compensation offsets because

they retired after 1985. Sandmire disputes that he is subject to said

agreement. All three plaintiffs have received early retirement or

retirement benefits from Oscar Mayer and have not received disability

benefits. All three plaintiffs allege they have suffered work related

permanent hearing loss. Only Huppeler has filed and received

workers’ compensation benefits for loss of hearing which he filed and

received after he retired.

The Department of Industry, Labor & Human Relations

(DILHR)'s Worker's Compensation Division awarded Huppeler an

award of 45.58 weeks of payments at a rate of $144 per week in a

lump sum payment of $6,563.62 based on Huppeler's wage rate while

at Oscar Mayer as a result of his 21] percent permanent partial

bilateral hearing handicap. The Labor & Industry Review

Commission (LIRC) affirmed DILHR and the award of workers’

compensation benefits on February 26, 1993. On May 14, 1993

Huppeler received a letter from Oscar Mayer's Employee Benefits

Manager where he was advised that his retirement benefits pursuant

to the Pension Plan would be offset dollar for dollar with the amount

received in workers' compensation. He was not advised of a claims or

review procedure, although said procedures applicable to the Pension

Plan are contained in the Pension Plan Summary Plan Description

provided to Plan participants. Huppeler never filed a claim pursuant

to the internal claims procedure. All three plaintiffs disclaim any

knowledge of an internal claims or review procedure. Huppeler has

not sought or obtained paid employment since retirement.

A-3

Sandmire and the medical professionals he has consulted

believe he has suffered a work related hearing impairment. He

contacted an attorney to discuss filing a workers' compensation claim

concerning his hearing loss and was advised not to file because any

benefits would be offset against his pension benefits and after lawyers

fees he would actually lose money.

Magli believes he has suffered a permanent hearing loss which

is work related and has refrained from filing a workers' compensation

claim because he believes the benefits would be offset against his

pension benefits.

MEMORANDUM

The motions before this Court have raised five issues to be

decided.

Exhaustion

Defendant Oscar Mayer moves to dismiss plaintiffs’ complaint

alleging that defendant Huppeler has failed to exhaust his

administrative remedies. Plaintiff states he was not aware of any

internal claims or review procedures and notes that the letter from

Oscar Mayer informing him of the offset of his pension benefits did

not reference any review procedure by which he could challenge Oscar

Mayer's decision. Oscar Mayer argues that Huppeler did not utilize

the claims procedure described in the Summary Plan Description

which is provided to all pension plan participants.

In the absence of a Statutory mandate it is within the sound

discretion of the trial court to determine whether exhaustion of

administrative remedies will be required for a claim brought pursuant

to ERISA. The district court's decision will be reversed only for an

abuse of discretion. ‘ , 673

F.2d 931, 935 (7th Cir. 1982), cert. den. 459 U.S. 858 (1982), vac. on

other grounds 463 US. 1222 (1983); Powell v. AT.& T

Communications, Inc,, 938 F.2d 823, 825 (7th Cir. 1991). Exhaustion

"Is only appropriate where it is necessary to develop a full factual

record or to take advantage of agency expertise." Janowski, 673 F.2d

at 935. Where the issue is merely a question of Statutory

” tt _———E—EE i ——l,

A-4

interpretation, exhaustion is not required. Id. at 935. Exhaustion of

administrative procedures is also not required where the administrative

TC “ante Powell

Carter v. Signode Industries. Ine. 688 F.Supp. 1283 (N_D IL. 1988).

Dismissing this case to require exhaustion of administrative

Procedures would not be efficient, would not Serve justice, and would

likely prove futile Defendant Oscar Mayer, plan administrator,

asserts that controlling Supreme Court Precedent governs the dispute.

There is no doubt that the pending motions concern only a question of

law, the correct interpretation of - :

451 U.S. 504 (1981). Indeed, defendant has filed a motion for

Moreover, Oscar Mayer cannot be heard to complain that the

administrative procedures were not utilized where it did not inform

Huppeler of its review procedures in the letter to him when informed

that his pension benefits would be offset by the workers's

compensation award.

Proper Party Defendant

Proper party defendant.

Magli and Sandmire as proper parties

awards for hearing loss and as such they do not have a "controversy"

sufficient to join as Parties to this declaratory Judgment action.

9

|

A-5

A district court is without power to grant declaratory relief

unless an “actual controversy" within the meaning of the Declaratory

Judgment Act, 28 U.S.C. §400 exists. Maryland Casualty Co. v.

Pacific Coal & Co, 312 US. 270. 272 (1941). The difference

between an abstract question and a "controversy" is necessarily one of

degree. Id at 273.

Basically, the question in each case is whether the

facts alleged, under all the circumstances, show that

there is a substantial controversy, between parties

having adverse legal interests, of sufficient

immediacy and reality to warrant the issuance of a

declaratory judgment.

Id.

Plaintiffs Magli and Sandmire have stated in affidavits that

they have suffered hearing loss and have not filed workers'

compensation claims because of Oscar Mayer's policy which offsets

pension benefits by workers' compensation awards. The injury,

hearing loss, is not dependent on any factors; it has already occurred.

The legal interests are sufficiently adverse; Oscar Mayer wants to

continue to offset pension benefits with workers’ compensation awards

and plaintiffs Magli and Sandmire want Oscar Mayer's offset policy

to be declared illegal so they may file for workers' compensation

benefits without a resulting offset.

Motion to dismiss or summary judgment

Oscar Mayer asserts that this case should be dismissed for

failure to state a claim upon which relief can be granted because the

allegations in the complaint do not state a claim for relief. Plaintiffs

argue that summary judgment is proper because factual evidence other

than the assertions contained in the complaint are required for a proper

disposition of the case. Plaintiffs Magli and Sandmire joined

Huppeler's motion for summary judgment.

Pursuant to Rule 12(b)(6) of the Federal Rules of Civil

Procedure, if on a motion for dismissal for failure to state a claim,

“matters outside the pleadings are presented to and not excluded by the

court, the motion shall be treated as one for summary judgment." Fed.

A-6

R. Civ. P. 12(b)(6). The court has relied on matters outside the

pleadings, and this action will be treated as one for summary

Judgment.

Merits

Plaintiffs assert that offsetting pension benefits by workers'

compensation benefits awarded for permanent hearing impairment

violates 29 U.S.C. §1053(a), the nonforfeiture provision of the

Employee Retirement Income Security Act of 1974 (ERISA). Oscar

Mayer asserts that Alessi, the controlling Supreme Court precedent,

sanctions the offset of pension benefits by all workers' compensation

awards without regard to the character of said award.

Plaintiffs and defendant dispute the interpretation of Alessi as

have the Ninth, Fourth and Sixth Circuits. Plaintiffs essentially argue

that Alessi holds that pension benefits may be offset by workers'

compensation benefits which have the character of wage replacement,

but those benefits which provide "fixed sums for bodily impairment"

are not subject to integration. Defendant interprets Alessi as holding

pension benefits may be offset by any workers' compensation benefits

regardless of their character. Because plaintiffs argue that workers'

compensation awards for permanent partial hearing loss fit under the

rubric, "fixed sum for bodily impairment," it is necessary to decide

which of the competing interpretations is correct.

The Court held that in the enactment of ERISA Congress

contemplated and approved the kind of pension provisions challenged

in Alessi which permits offsets of pension benefits based on workers’

compensation awards. Id. at 526. The Court also held that the New

Jersey law that prohibited the integration of pension benefits with

workers' compensation was preempted by ERISA pursuant to 29

U.S.C. § 1144(a). Id. at 522. The Court found that ERISA was an

area of exclusive federal concern and noted that since ERISA leaves

integration of pension plans subject to the discretion of pension plan

advisors, which in this instance are the products of collective

bargaining agreements, there is an additional federal interest in

precluding state interference with labor-management negotiations. Id.

at 524-525.

—_—

A-7

The Alessi plaintiffs were retired employees whose pension

benefits were offset by their workers' compensation awards pursuant

to a provision in their pension plan resulting from collective

bargaining that required such offsets. Id. at 507-508.

The Court in Alessi made the broad assertion that pension

nce ae be offset by workers compensation awards. U.did not

This may suggest that the character of the workers’ saapanenticn

award is not an issue, especially where the class of plaintiffs was so

large. However, the Alessi Court did not explicitly state that pension

benefits may be offset by all workers' compensation awards,

regardless of their character.

The Court discussed IRS rulings on pension plan integration

which it held were embraced by Congress when enacting ERISA. See

Alessi, 451 U.S. at 519-521. After stating that the IRS has allowed

offsets for workers' compensation benefits the Court then notes that

funds received for "bodily impairment" or as reimbursement for

medical expenses may not be used to offset pension benefits. The

Court cites to Revenue Ruling 78-178 as authority for this proposition,

see Id. at 520-521, which does not state that workers' compensation

awards for "bodily impairment" may not be used to offset pension

benefits. It does provide, however, that awards for sickness and

maternity may not be used as offsets because these benefits do not

correspond to benefits allowed under a qualified sp paneion ~—

Rev. Rul. 78-178 : ”

Ruling 78-178 also states that pace oo nape ener may be

used to offset pension plan benefits for they correlate with the benefits

which may be provided under an ERISA qualified pension plan

because workers' compensation awards are provided upon disablement

and ERISA allows for pension plans to pay benefits upon disablement.

Id.

Any ambiguity is intensified in Alessi when the Court notes

that sums received for "bodily impairment" may not be used to offset

pension benefits and that the pension plan covering General Motors’

employees "avoids any ambiguity on this point" because it provides for

the offset of pension benefits by all workers' compensation awards, but

not workers' compensation awards for medical expenses, fixed

A-8

statutory payments for the loss of any bodily member or 100% loss of

use of any bodily member, or payments for the loss of industnal

vision. See Alessi. 451 U.S. at 521 n. 17; 451 US. at 507-508 n. 1.

The Court goes on to state that Raybestos does not have a similar

limitation in its clause providing for the offset of pension benefits by

workers’ compensation but states that this clause "is of course subject

to IRS regulation". Id. at 521 n. 17.

We accordingly are left with a broad ee in ay that

yoo: the Alessi Court, given a broad group ) of

plaintiffs, did not examine the character of the awards. Alessi does not

contain a definition of "bodily impairment." At a minimum, however,

it must mean loss of a body member or loss of 100% use thereof or

loss of industrial vision. See id.

The Ninth Circuit has interpreted Alessi other than have the

Second, Fourth, and Sixth Circuits. The Ninth Circuit in Losada v.

Golden Gate Disposal Co., 950 F.2d 1395 (1991) interpreted Alessi

as holding that only workers' compensation awards in the nature of

wage replacement may be used to offset pension benefits and that

workers’ compensation awards in the nature of bodily impairment may

not be offset against pension benefits, id. at 1400. The Ninth Circuit

held that state law must be examined to determine the character of the

workers' compensation award, id. at 1400-1401, and reasoned that

since the workers' compensation award occurred after retirement, any

lost wages would have been negligible, thus the award was for bodily

impairment and not subject to an offset. Id. at 1400.

In contrast, the Fourth Circuit in PPG Industries v. Crew, 902

F.2d 1148 (1990) held that under Alessi offsets of pension benefits by

a workers' compensation award for a permanent total disability were

valid. The plaintiffs in PPG suffered from permanent dust pneumonia

and the workers’ compensation claims were filed approximately eleven

years after retirement. The award covered the period of time from

retirement to the date of the award. The Court did not discuss the

character of the workers' compensation award under state law. Id. at

1149.

A-9

Similarly in Kapuscinski v. Plan Administrator, 658 F.2d 427

(1981) the Sixth Circuit held that the offset of pension benefits by

workers’ compensation awards was valid under Alessi's interpretation

of ERISA. The Court made no distinction between the types of

workers' compensation awards. The opinion did not contain a

discussion of why plaintiff received workers' compensation and the

fact that the plaintiff filed for workers' compensation after he retired

did not influence the Sixth Circuit's analysis.

Finally, in Reska v. Pension Plan, 848 F.2d 372 (1988), the

Second Circuit faced facts almost exactly as here. Plaintiff received

a workers’ compensation award for a twenty percent hearing loss, id.

at 373, asserting said hearing loss was "bodily impairment" and could

not be subject to an offset under Alessi. Id. at 374. The Court refused

to decide whether Alessi or relevant IRS rulings apply to all or only

some workers’ compensation awards. |d. at 375. The Second Circuit

stated "[e]ven assuming arguendo, that Alessi only applies to workers'

compensation awards ‘in the nature of wage replacement,' appellant

has failed to demonstrate that his award for partial hearing loss was

not provided for wage replacement." Jd. The Court then examined

state law and determined that in New York even scheduled awards

were intended to compensate for loss of presumed earning power and

the offset was proper. Id.

Plaintiffs Huppeler, Magli, and Sandmire assert that awards

for permanent partial hearing loss are awards for "bodily impairment"

under Wisconsin case law, that awards received after retirement are not

in the nature of wage replacement and are accordingly awards for

"bodily impairment."

Given the broad preemption of state law by ERISA in the field

of pension plans state law is not examined. The Supreme Court in

Alessi noted that ERISA contains an explicit congressional statement

concerning the preemptive effect of ERISA:

A-10

[T]he provisions of this subchapter...shall supersede

any and all State laws insofar as they may now or

hereafter relate to any employee benefit plan.

Alessi, 451 U.S. at 522 quoting 29 U.S.C. §1144(a). The Court stated

that this provision was "meant to establish pension plan regulation as

exclusively a federal concern." Jd. at 523. Moreover, nowhere in the

entire opinion did the Court in Alessi discuss the character of workers'

compensation awards under state law. Given the strong federal

interest in the uniform enforcement of ERISA, this court declines to

engage in a practice that would lead to different rulings in different

circuits on whether all workers' compensation awards may be used to

offset pension benefits based on the varying character of the workers'

compensation awards under state law. Under Alessi state laws which

prohibit offsets of pension benefits by workers’ compensation are

preempted. This Court will not accept a practice whereby a state may

provide its workers’ compensation awards for bodily impairment,

thereby avoiding preemption by ERISA and reversing the IRS and

Supreme Court practice of sanctioning pension plan integration of

workers' compensation awards.

There is another important federal interest here at risk. There

is a reluctance to interfere with the relationship between labor and

management by changing an agreement in which defendant Oscar

Mayer and the Union negotiated an offset provision. See id. at 525.

The agreement provided for the offset of pension benefits by workers’

compensation awards, except awards for "loss of a body member."

Had defendant and the Union intended to exempt compensation

awards for partial hearing loss from pension benefits, they would have

done so clearly. This Court refuses to rewrite the labor agreement.

Further, the offset of workers' compensation awards for partial

hearing loss would not have violated the agreement approved by the

Court in Alessi. An award for hearing loss would have been subject

to an offset under the agreement in Alessi because hearing loss would

not have been included under the rubric of loss of a body member.

Accordingly, the offset of pension benefits by workers’

compensation awards for partial loss of hearing does not violate

ERISA.

eS ae ee ee Vana A ek sgt ate ts A «tn eT Sh Mi petits a 0 ie

A-1]

ORDER

IT IS ORDERED that the motion of defendant Oscar Maver

to dismiss for failure to exhaust administrative procedures is DENIED

IT IS FURTHER ORDERED that motion of defendant Oscar

Mayer to dismiss for failure to name a proper party defendant is

DENIED.

IT IS FURTHER ORDERED that motion of plaintiffs

Huppeler, Magli and Sandmire for summary judgment is DENIED

IT IS FURTHER ORDERED that motion of defendant Oscar

Mayer for summary judgment is GRANTED.

IT IS FURTHER ORDERED that judgment be entered in

favor of defendant Oscar Mayer Foods Corp. against the plaintiffs

Robert Allan Huppeler, Edwin C. Magli and Ellwood Sandmire

DISMISSING plaintiffs' complaint and all claims contained therein

with prejudice and costs.

Entered this 27th day of October, 1993.

BY THE COURT:

JOHN C. SHABAZ

District Judge

A-12

Employee Retirement Income Security Act ("ERISA")

ERISA § 203. Minimum vesting standards

(a) Nonforfeitability requirements. Each pension plan shall

provide that an employee's right to his normal retirement benefit is

nonforfeitable upon the attainment of normal retirement age and in

addition shall satisfy the requirements of paragraphs (1) and (2) of this

subsection.

(1) A plan satisfies the requirements of this paragraph if

an employee's rights in his accrued benefit derived from his

own contributions are nonforfeitable.

(2) A plan satisfies the requirements of this paragraph if

it satisfies the requirements of subparagraph (A), (B), or (C).

(A) A plan satisfies the requirements of this

subparagraph if an employee who has at least 5 years

of service has a nonforfeitable right to 100 percent of

the employee's accrued benefit derived from

employer contributions.

* (B) A plan satisfies the requirements of this

subparagraph if an employee has a nonforfeitable

right to a percentage of the employee's accrued

benefit derived from employer contributions

determined under the table:

The nonforfeitable

Years of service: percentage is:

. eae ee NaE ep Tet Ly 20

Moc boule vise ieeaeee 40

aa ee ar een PSE eet > 60

eis ene pete 80

We eR ee eee 100

(C) A plan satisfies the requirements of this

subparagraph if --

(3)

A-13

(i) the plan is a multiemployer plan

(within the meaning of section

3(37)), and

(ii) under the plan --

(I) an employee who is

covered pursuant to a

collective bargaining

agreement described in

section 3(37)(A)(ii) and

who has completed at least

10 years of service has a

nonforfeitable right to 100

percent of the employee's

accrued benefit derived

from employer contri-

butions, and

(II) the requirements of

subparagraph (A) or (B)

are met with respect to

employees not described in

subclause (1).

(A) A right to an accrued benefit derived from

employer contributions shall not be treated as

forfeitable solely because the plan provides that it is

not payable if the participant dies (except in the case

of a survivor annuity which is payable as provided in

section 205 [29 USCS § 1055}).

(B) A right to an accrued benefit derived from

employer contributions shall not be treated as

forfeitable solely because the plan provides that the

payment of benefits is suspended for such period as

the employee is employed, subsequent to the

commencement of payment of such benefits --

A-14

(1) in the case of a plan other than a

multiemployer plan, by an employer who -

maintains the plan under which such

benefits were being paid; and

(11) in the case of a multiemployer plan, in

the same industry, in the same trade or craft,

and the same geographic area covered by the

plan, as when such benefits commenced.

The Secretary shall prescribe such regulations as may

be necessary to carry out the purposes of this

subparagraph, including regulations with respect to

the meaning of the term "employed".

(C) A right to an accrued benefit derived from

employer contributions shall not be treated as

forfeitable solely because plan amendments may be

given retroactive application as provided in section

302(c)(8) [29 USCS § 1082(c)(8)].

(D) (i) A mght to an accrued benefit derived

from employer contributions shall not be

treated as forfeitable solely because the plan

provides that, in the case of a participant

who does not have a nonforfeitable nght to

at least 50 percent of his accrued benefit

derived from employer contributions, such

accrued benefit may be forfeited on account

of the withdrawal by the participant of any

amount attributable to the benefit derived

from mandatory contributions (as defined in

the last sentence of section 204(c)(2)(C) [29

USCS § 1054(c)(2)(C)]) made by such

participant.

(11) Clause (i) shall not apply to a plan

unless the plan provides that any accrued

benefit forfeited under a plan provision

described in such clause shall be restored

PORES hth, Sieh Lo Tha dle

PA el AS tet

SN, Dean ob eat

.

A-15

upon repayment by the participant of the full

amount of the withdrawal described in such

clause plus, in the case of a defined benefit

plan, interest. Such interest shall be

computed on such amount at the rate

determined for purposes of section

204(c)(2)(C) [29 USCS § 1054(c)(2)(c)] (if

such subsection applies) on the date of such

repayment (computed annually from the

date of such withdrawal). The plan

provision required under this clause may

provide that such repayment must be made

(I) in the case of a withdrawal on account of

separation from service, before the earlier of

5 years after the first date on which the

participant is subsequently re-emploved by

the employer, or the close of the first period

of 5 consecutive l-year breaks in service

commencing after the withdrawal; or (II) in

the case of any other withdrawal. 5 years

after the date of the withdrawal.

(ii) In the case of accrued benefits derived

from employer contributions which accrued

before the date of the enactment of this Act

[enacted Sept. 2, 1974], a nght to such

accrued benefit derived from employer

contributions shall not be treated as

forfeitable solely because the plan provides

that an amount of such accrued benefit may

be forfeited on account of the withdrawal by

the participant of an amount attributable to

the benefit derived from mandatory

contributions, made by such participant

before the date of the enactment of this Act

[enacted Sept. 2, 1974] if such amount

forfeited is proportional to such amount

withdrawn. This clause shall not apply to

any plan to which any mandatory

contribution is made after the date of the

(E)

A-16

enactment of this Act [enacted Sept. 2,

1974]. The Secretary of the Treasury shall

prescribe such regulations as may be

necessary to carry out the purposes of this

clause.

(iv) For purposes of this subparagraph, in

the case of any class-year plan, a withdrawal

of employee contributions shall be treated as

a withdrawal of such contributions on a plan

year by plan year basis in succeeding order

of time.

(v) Cross reference. For nonforfeitability

where the employee has a nonforfeitable

right to at least 50 percent of his accrued

benefit, see section 206(c)[29 USCS

§1056(c)].

(i) A mght to an accrued benefit derived

from employer contributions under a

multiemployer plan shall not be treated as

forfeitable solely because the plan provides

that benefits accrued as a result of service

with the participant's employer before the

employer had an obligation to contribute

under the plan may not be payable if the

employer ceases contributions to the

multiemployer plan.

(11) A participant's nght to an accrued

benefit derived from employer contributions

under a multiemployer plan shall not be

treated as forfeitable solely because--

(1) the plan is amended to reduce

benefits under section 4244A or

4281 [29 USCS §§ 1425 or 1441],

or

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(II) benefit payments under the

plan may be suspended under

section 4245 or 4281 [29 USCS §§

1426 or 1441].

(F) A matching contribution (within the meaning

of section 401(m) of the Internal Revenue Code of

1986) shall not be treated as forfeitable merely

because such contribution is forfeitable if the

contribution to which the matching contribution

relates is treated as an excess contribution under

section 401(k)(8)(B) of such Code [Code Sec.

401(k)(8)(B)], an excess deferral under section

402(g(2)(A) of such Code [Code Sec.

402(g)(2)(A)], or an excess aggregate contributions

under section 401(m)(6)(B) of such Code [Code Sec.

401(m)(6)(B)].

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ERISA § 514. Other laws

(a) Supersedure; effective date. Except as provided in

subsection (b) of this section, the provisions of this title and title IV

shall supersede any and all State laws insofar as they may now or

hereafter relate to any employee benefit plan described in section 4(a)

{29 USCS § 1003(a)] and not exempt under section 4(b) [29 USCS §

1003(b)]. This section shall take effect on January 1, 1975.