Supplemental Brief — Pietrowski v. Conkright (No. 08-826)

| “Stipreme Court U.S]

FILED

MAY 1 2 2009

OFFICE OF THE CLERK

Nos.

Supreme Court of the Anited States

MATTHEW D. ALFIERI, ET AL.,

Petitioners,

AND

KENNETH PIETROWSKI, ET AL.,

Petitioners,

SALLY CONKRIGHT, ET AL.,

Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Second Circuit

SUPPLEMENTAL BRIEF FOR PETITIONERS

BRENDAN S. MAHER

PETER K. STRIS

STRIS & MAHER LLP

1920 Abrams Parkway, #430

Dallas, Texas 75214

(214) 224-0091

SHAUN P. MARTIN

UNIVERSITY OF SAN DIEGO

SCHOOL OF LAW

5998 Alcala Park

San Diego, California 92110

(619) 260-2347

: , ,

Counsel for Pretrowski, etal

MICHAEL K. KELLOGG

Counsel of Record

GREGORY G. RAPAWY

KELLOGG, HUBER, HANSEN,

TODD, EVANS & FIGEL,

P.L.L.C

1615 M Street. N.W., Suite

Washington, D.C. 20036

(292) 326-7900

ROBERT H. JAFFE

MARK B. WATSON

ROBERT H. JAFFE &

ASSOCIATES, PLA

& Mountain Avenui

Soringfield, New Jersey O07

465

Alft

(973) 467-:

(Counse for

OS |]

AMENDED LIST OF

PARTIES TO THE PROCEEDINGS BELOW

The petition for a writ of certiorari in No. 08-803

correctly identified all the parties that participated

in the proceedings below but did not separately set

forth those specific individuals who are petitioners

here and who are seeking relief from the Second

Circuit’s decision below. Those 14 individuals are:

Matthew D. Alfieri

Lynn Barnsdale

Bruce D. Craig

Richard C. Crater

John L. Crisafulli

Charles R. Drannbauer

James D. Gagnier

Carol E. Gannon

Janice R. Heiler

Gerald A. Leonardo, Jr.

Andrew C. Matteliano

Walter J. Petroff

Irshad Quershi

Joseph E. Wright

In all other respects, the lst of parties

certiorari petition Is correct

i

TABLE OF CONTENTS

Page

AMENDED LIST OF PARTIES TO THE

ew ORD ES | ree 1

eg 8s) ree ll

ARGUMENT:

I. KENNEDY UNDERMINES THE DECI-

SION OF THE COURT OF APPEALS .......... 3

Il. KENNEDY PROVIDES AN_ ADDI-

TIONAL REASON FOR PLENARY

REVIEW ...........- pee cian rieiniicah den le wencuaboumboacconsines 9

ide eco Navseed <vervecaduvweaeevevasieusi 10

lll

TABLE OF AUTHORITIES

CASES

Bormann v. AT&T Communications, Inc.,

875 F.2d 399 (2d Cir. 1989)

Brandon v. Travelers Ins. Co., 18 F.3d 1321

A at cs |

Cuyler v. Sullivan, 446 U.S. 335 (1980)..................... 8

Egelhoff v. Egelhoff, 532 U.S. 141 (2001)

Finz v. Schlesinger, 957 F.2d 78 (2d Cir. 1992).........6

Kennedy v. Plan Administrator for DuPont

Sav. & Inv. Plan, 129 S. Ct. 865 (2009)....1, 2, 3, 4,

5, 6, 7, 8, 9, 10

Laniok v. Advisory Comm. of Brainerd Mfg.

Co. Pension Plan, 935 F.2d 1360 (2d Cir.

Lawrence v. Chater, 516 U.S. 163 (1996)

Lebron v. National R.R. Passenger

513 U.S. 374 (1995)

STATUTES AND RULES

Emplovee Retirement Income Security /

1974, 29 U.S.C. 1001 et seq.:

29 U.S.C. § 1056(d)(3)............

29 U.S.C. § 1102(a)(1)

29 U.S.C. § 1102(b)(4)

29 U.S.C. § 1104(a)(1)(D)

29 U.S.C. § 1132(a)(1)(B).....

Sup. Ct. R.

Petitioners in Alfiert v. Conkright, No. 08-803,

and Pietrowski v. Conkright, No. 08-826 (collectively,

“the Participants”), a group of current and former

employees in the Xerox Corporation Retirement

Income Guarantee Plan (“the Plan,” a respondent),

submit this supplemental brief! to present arguments

based on this Court’s recent decision in Kennedy v.

Plan Administrator for DuPont Savings and Invest-

ment Plan, 129 S. Ct. 865 (2009). In light of Ken-

nedy, it is now clear that the court of appeals labored

under a basic misunderstanding of the appropriate

relationship between the terms of an ERISA plan

and an agreement that purports to waive rights

to receive benefits under the terms of the plan. In

Kennedy, this Court held that such a waiver cannot

be given effect when doing so would contravene

ERISA’s several textual directives that benefits be

paid according to the documents that comprise the

plan. The Court's reasoning further relied on the

policy concern those directives embody: a strong fed-

eral interest in uniform and efficient plan interpreta-

tion without reference to extraneous documentation

that must be evaluated under contestable standards.

ERISA’s text is equally controlling in this case. As

challenged here, the judgment of the court of appeals

rests on its conclusion (contrary to that of the district

court) that certain reduction-in-force agreements

signed by the Participants waived all claims that

they held against the Plan and its administrators

(“the Plan Administrators,’ respondents). Because

of those waivers, the court of appeals held that,

|! Supplemental briefing is appropriate under this Court's

Rule 15.8 because Kennedy was handed down on January 26

2004, and therefore was not available at the time of the Partic-

pants’ last filing ix. this docket on December 23, 2008

~~

2

even though the Plan Administrators had previously

violated ERISA by paying lower benefits than the

controlling plan documents require (a violation that

respondents do not now dispute), the Participants

now have no remedy for that violation, and the Plan

and its Administrators may continue to pay the Par-

ticipants lower benefits than the applicable documents

specify. That is just the opposite of what ERISA, as

interpreted in Kennedy, requires.

The rule adopted by the court of appeals also runs

contrary to ERISA’s policies as explained in Kennedy.

That rule contemplates that, before determining

what benefits to pay a plan participant or benefici-

ary, plan administrators will not only seek out and

construe termination agreements between participants

and their employers for waivers of ERISA rights, but

also determine whether those waivers were knowing

and voluntary. Such a lengthy and uncertain process

will impede the timely collection of benefits — or,

alternately, will result in arbitrary enforcement of

walvers in a limited set of cases against only some

participants and beneficiaries.

This Court should grant the petitions for a writ

of certiorari, vacate the decision below insofar as

the court of appeals held that the Participants had

waived their claims, and remand that aspect of the

case for reconsideration in light of Kennedy. In the

alternative, Kennedy provides an additional reason for

plenary review of the decision below, as the decision

of the court of appeals now conflicts with a recent

decision of this Court on a question of nationwide

importance.

3

I. KENNEDY UNDERMINES THE DECISION

OF THE COURT OF APPEALS

In Kennedy, this Court confronted the question

whether a plan administrator should give effect toa

waiver of rights to receive pension benefits under

an ERISA plan as a beneficiary when that waiver is

not a qualified domestic relations order of the kind

described in 29 U.S.C. § 1056(d)(3). Before the Court

granted review on that question, the majority view

among the circuits had been that such waivers

should be given effect if the waiver had been volun-

tary as evaluated under federal common law. See,

e.g., Brandon v. Travelers Ins. Co., 18 F.3d 1321,

1326-27 (5th Cir. 1994), cited in Kennedy, 129 S. Ct.

at 870 n.5. In Kennedy, however, the Court rejected

that view and held that a plan administrator must

instead pay benefits according to the terms of the

plan itself, regardless of whether the person seeking

payment has previously signed a waiver that pur-

ports to waive the right to receive those benefits. See

129 S. Ct. at 874-78.

In reaching that conclusion, the Court rehed pri-

marily on the text and structure of ERISA. It found

controlling the statute’s instructions that a plan

must be “established and maintained pursuant to a

written instrument,” 29 U.S.C. § 1102(a)(1), which

must “specify the basis on which payments are made

from the plan,” id. § 1102(b)(4), and that the

plan administrator must act “in accordance with the

documents and instruments governing the plan,” 7d.

§ 1104(a)(1)(D), save where those documents conflict

with ERISA itself. Kennedy, 129 S. Ct. at 875. The

Court also rehed upon ERISA’s policy of creating

“a uniform administrative scheme, {with] a set of

standard procedures to guide processing of claims

4

and disbursement of benefits.” /d. (quoting Egelhoff

v. Egelhoff, 5382 U.S. 141, 148 (2001)) (internal

quotation marks omitted, alteration in original). That

policy disfavors “enquiries into nice expressions of

intent” and protects the processing of claims from

invasion by “a multitude of external documents” or

htigation “over the meaning and enforceability of

purported waivers.” /d. at 875, 876 (internal quota-

tion marks omitted).

The court of appeals decided this case without

the benefit of Kennedy's exposition of the controlling

principles. Had it given those principles proper

weight, it would not have reached the same result.

Here, just as in Kennedy, a purported waiver un-

moored in the statute or the plan itself has been in-

terposed as a barrier to the payment of benefits that

would otherwise be required under the terms of the

plan (and that other plan participants will receive).

The court of appeals held that the waiver was en-

forceable because it was knowing and voluntary —

in that court’s view, the waiver was clear on its face,

the plaintiffs who signed had had time to consider

their decision and the opportunity to consult with an

attorney, and they received consideration for the

waiver. See Pet. App. 19a-20a.- The court reached

that conclusion despite its prior holding (unchallenged

in this Court) that the Plan Administrators had badly

misread the terms of the pre-1998 plan and had

failed to pay the Participants the benefits to which,

under the Plan documents, they were entitled. See

id. at Oa.

Citations to “Pet. App. refer to the appendix to the petition

in Ne

» OCOS-MOD

5

The decision below thus recognizes the purported

waivers signed by the Participants as a “basis on

which payments [may be] made ... from” — or not

made from, which amounts to the same thing — “the

plan,” 29 U.S.C. § 1102(b)(4), and as an unwritten

exception to the respondent Administrators’ obliga-

tien to act “in accordance with the documents and

instruments governing the plan,” rd. § 1104(a)(1)(D).

It therefore cannot be reconciled with a “straight-

forward rule of hewing to the directives of the plan

documents,” Kennedy, 129 S. Ct. at 875, to determine

what benefits to pay to whom. Further, this case,

like the one in Kennedy, is an “action ... to recover

benefits due ... under the terms of |the] plan,” 29

U.S.C. § 1132(a)(1)(B), a cause of action that “rein-

forces the directive” that a plan administrator must

determine the benefits that are due by reference to

the plan itself, Kennedy, 129 8S. Ct. at 875. The court

of appeals has held, and the Plan Administrators do

not now dispute, that they have failed to pay benefits

due under the Plan. See Pet. App. 6a.

Moreover, the rule applied by the court of appeals

creates just the same impediments to smooth and

efficient plan administration that this Court found

unacceptable in Kennedy. Consider the case of a

former Xerox emplovee who was not a plaintiff in

this case, but to whom the Plan Administrators have

applied their phantom-account offset. The district

court expressed the belief that the offset could not

lawfully be applied to such an individual, calling it

“beyond dispute ... that use of a ‘phantom account’

in the manner found unlawful by the Second Circuit

decision violates ERISA and cannot be used by any

plan.” and observing that “fijt is presumed that no

plan administrator would knowingly violate ERISA.”

6

Id. at 47a n.9. Yet, under the rule applied by

the Second Circuit, the Plan Administrators could

still apply their unlawful offset if (but only if) the

employee had knowingly and voluntarily waived his

or her rights in the interim. To make that deter-

mination, the Plan Administrators would need to

determine that the waiver had been made in the

first place; determine whether by its terms it encom-

passed the claim that they had violated ERISA by

applying the phantom-account offset contrary to the

plan documents; and apply a nonexhaustive multi-

factor test to determine whether the waiver had been

knowing and voluntary. See td. at 15a-16a (the court

of appeals, citing Finz v. Schlesinger, 957 F.2d 78,

82 (2d Cir. 1992), which applied six factors); id. at

35a-36a (the district court, citing Bormann v. AT&T

Communications, Inc., 875 F.2d 399, 402-03 (2d Cir.

1989), which applied eight factors).*

Doing these things is not straightforward, as the

history of this case demonstrates. The language of

the waivers provided that the “consideration set forth

in this Release [was] in addition to anything of value

to which [a Participant is] entitled by law or Xerox

policy.” /d. at 80a (internal quotation marks omit-

ted). The district court and the court of appeals dis-

agreed about whether this language made the waiv-

ers ambiguous. The district court correctly observed

’ As set forth in the petitions (No. O&8-803, at 8-11; No. 08-826,

at L&), the court of appeals departed trom yvoverning principles

of federal common law tn its application of the factors set forth

in Fkinz. in Laniok v. Advisory Commuttee of Brainerd Manufac

turing Co Pension Plan, 935 F.2d 1360 (24 Cir 1991), and in

other cases. Clanfication of these principles remains of sutfi-

cient national importance to warrant plenary review. Aennedy,

however, calls sharply into question whether those principles

were even properly invoked in this cass

-~]

‘

that this language “suggests that [the Participants]

did not waive any then-pending claims alleging an

entitlement to some particular benefits,” id. at 40a,

and that, in light of the court of appeals’ earlier

holding, the Participants “were ‘entitled by law’ not

simply to receive some pension benefits, but to have

their benefits calculated without any reduction at-

tributable to a ‘phantom’ account,” id. at 38a. The

court then applied the established rule that “any

ambiguity [in the waivers] should be resolved against

Xerox, which drafted” them. id. at 39a, and held that

they did not bar the Participants’ claims.

The court of appeals, however, disagreed, reasoning

that the language on which the district court relied

dealt only with “the existence of consideration ade-

quate to render a release enforceable,” and not to “the

scope of claims thereby released.” J/d. at 17a-18a. It

apparently believed that, so long as the Plan Admin-

istrators had not “denfied] [the Participants] any

and all pension benefits,” id. at 18a, they had yiven

the Participants what they were entitled by law to

receive under the terms of the waiver. This Court

need not address the merits of that implausible con-

clusion in order to observe that federal judges dis-

agree over the proper reading of the waivers’ terms.

That disagreement is potent evidence that the court

of appeals’ rule, lke the one rejected in Kennedy,

would “destroy a plan administrator's ability to look

at the plan documents and records contorming to

them to get clear distribution instructions, without

going into court.” 129 S. Ct. at 876.

In sum, the rule apphed by the Second Circuit is

Incompatible with this Court’s intervening decision

8

in Kennedy.1 That decision is therefore an “interven-

ing development[] ... [that] reveal[s] a reasonable

probability that the decision below rests upon a

premise that the lower court would reject if given the

opportunity for further consideration”; further, “such

a redetermination may determine the ultimate out-

come of the litigation.” Lawrence v. Chater, 516 U.S.

163, 167 (1996) (per curiam). Indeed, the stark con-

trast between Kennedy's model of ERISA litigation

and the proceedings in this case demonstrates that

there is more than a “reasonable” probability of a

different result after remand. The conditions under

which this Court will vacate a decision and remand

for further consideration are thus fully met.®

4 The Participants’ argument based on Kennedy 1s properly

before this Court. The court of appeals held that the Partici-

pants’ purported waiver of their claims was knowing and volun-

tary and therefore that “the releases signed by [the Partici-

pants} are enforceable.” Pet. App. 20a. This reasoning endorsed

the proposition that the knowing-and-voluntary standard prop-

erly applies to this case under federal common law. “|Rleview

of an issue not pressed” below is consistent with this Court's

practice “so long as {that issue] has been passed upon.” Lebron

vu. National R.R. Passenger Corp., 513 U.S. 374, 379 (1995)

(internal quotation marks omitted, third alteration in original).

Similarly. the petitions for certiorari (filed before Kennedy was

decided) raise the question of the appropriate federal common

law principles that apply here. Whether any such principles

properly apply is a “predicate to an intelligent resolution” of

that question. Cuvler v. Sullivan, 446 U.S. 335, 342 n.6 (1980)

(internal quotation marks omitted)

Vacatur and remand are appropriate only in Nos. 08-803

and 08-826, and the Participants urging: vacatur include only

those individuals whom the court of appeals held had waived

their claims and who are petitioners under those two docket

numbers. Aennedy has no relevance to the questions presented

in No. O8-810 The former and current employees who are

respondents there and whose claims have not been held waived

9

ll, KENNEDY PROVIDES AN ADDITIONAL

REASON FOR PLENARY REVIEW

In the alternative, this case is an excellent vehicle

for this Court to clarify immediately that its holding

in Kennedy prohibits the federal courts from giving

effect to putative federal common law waivers not

merely in the specific context of domestic relations,

but whenever such a waiver is interposed as a bar-

rier to the payment of benefits according to the terms

of ERISA plan documents. The principles set forth in

Kennedy apply to both contexts, but it would blink

reality to suggest that employers and plans around

the country will accept Kennedy in cases unrelated to

domestic relations without further litigation.

This case presents that broadly significant ques-

tion in a particularly important fact pattern. Layoffs

of the kind that occurred here are regrettably com-

mon in today’s economic environment, as are term1-

nation agreements that purport to waive all claims

an employee may have against a former employer in

exchange for a severance package, salary continu-

ance, or other financial relief to soften the blow of the

lavoff. The question whether workers who are laid

off and who sign (as practically all do) a standard-

form release should obtain the benefit of a judicial

determination of the meaning of their pension plan

— or, instead, be bound by common law waiver to

a plan administrator's erroneous and unlawful con-

struction — is therefore of importance beyond the

facts of this case. See Pet. 9-11.

For the reasons set forth above, the decision of

the court of appeals conflicts with Kennedy, a recent

certainly do not seek vacatur but rather have explained in

detail why the petition tn No. O8-S10 should be denied

10

decision of this Court. Further, the appropriate ap-

plication of Kennedy to these facts is an important

question of federal law that has not been, but should

be, decided by this Court. That 1s particularly so

because of the strong federal! interest in the “nation-

ally uniform ... administration” of ERISA plans,

Egelhoff, 532 U.S. at 148. Accordingly, if this Court

chooses not to vacate and remand for further consid-

eration in light of Kennedy, plenary review is appro-

priate.

CONCLUSION

This Court should grant the petitions for a writ

of certiorari! in Nos. 08-803 and 08-826, vacate the

decision below insofar as the court of appeals held

that the Participants had waived their claims, and

remand that aspect of the case for further considera-

tion in light of Kennedy. In the alternative, those

two petitions for a writ of certiorari should be

eranted and the case should be set for argument on

the merits.

BRENDAN S. MAHER

PETER K. STRIS

STRIS & MAHER LLP

1920 Abrams Parkway, #430

Dallas, Texas 75214

(214) 224-0091

SHAUN P. MARTIN

UNIVERSITY OF SAN DIEGO

SCHOOL OF LAW

5998 Alcala Park

San Diego, California 92110

(619) 260-2347

Counsel for Pietrowski, et al.

11

Respectfully submitted.

MICHAEL K. KELLOGG

Counsel of Record

GREGORY G. RAPAWY

KELLOGG, HUBER, HANSEN,

TODD, EVANS & FIGEL,

P.L.L.C.

1615 M Street, N.W.,

Washington, D.C. 20036

(202) 326-7900

ROBERT H. JAFFE

MARK B. WATSON

ROBERT H. JAFFE &

ASSOCIATES, P.A.

8 Mountain Avenue

Springfield, New Jersev 07081

(973) 467-2246

Counsel for Alfieri, et al.

Suite 400