514 U.S. 73 (1995), 93-1935, Curtiss-Wright Corp. v. Schoonejongen

Docket Nº:No. 93-1935
Citation:514 U.S. 73, 115 S.Ct. 1223, 131 L.Ed.2d 94, 63 U.S.L.W. 4201
Case Date:March 06, 1995
Court:United States Supreme Court

Page 73

514 U.S. 73 (1995)

115 S.Ct. 1223, 131 L.Ed.2d 94, 63 U.S.L.W. 4201




No. 93-1935

United States Supreme Court

March 6, 1995

Argued January 17, 1995



Petitioner Curtiss-Wright Corp. amended its employee benefit plan to provide that the postretirement health care coverage it had maintained for many years would cease for retirees upon the termination of business operations in the facility from which they retired. In ruling for respondent retirees in their ensuing suit, the District Court found, among other things, that the new provision constituted an "amendment" to the plan; that the plan documents nowhere contained a valid "procedure for amending [the] plan, and for identifying the persons who have authority to amend the plan," as required by § 402(b)(3) of the Employee Retirement Income Security Act of 1974 (ERISA); and that the proper remedy for this violation was to declare the provision void ab initio. The Court of Appeals affirmed, holding that the standard reservation clause contained in Curtiss-Wright's plan constitution—which states that "[t]he Company reserves the right . . . to modify or amend" the plan—is too vague to be an amendment procedure under § 402(b)(3).


1. Curtiss-Wright's reservation clause sets forth a valid amendment procedure. Pp. 78-86.

(a) The clause satisfies the plain text of § 402(b)(3)'s two requirements. Since ERISA's general definitions section makes quite clear that the term "person," wherever it appears in the statute, includes companies, the clause appears to satisfy § 402(b)(3)'s identification requirement by naming "[t]he Company" as "the perso[n]" with amendment authority. This outright identification necessarily indicates a procedure for identifying the person as well, since the plan, in effect, says that the procedure is to look always to the company rather than to any other party. The reservation clause also contains a "procedure for amending [the] plan." Section 402(b)(3) requires only that there be an amendment procedure, and its literal terms are indifferent to the procedure's level of detail. As commonly understood, a procedure is a "particular way" of doing something, and a plan that says in effect it may be amended only by "[t]he Company" adequately sets forth a particular way of making an amendment. Principles of corporate law provide a ready-made set of rules for deciding who has authority to act on behalf of the company. But to read § 402(b)(3) as requiring a plan to specify

Page 74

on its face who has authority to act on the company's behalf might lead to the invalidation of myriad amendment procedures that no one would think violate the statute. Pp. 78-81.

(b) There is no support for respondents' argument that Congress intended amendment procedures to convey enough detail to serve beneficiaries' interest in knowing their plans' terms. Section 402(b)(3)'s primary purpose is to ensure that every plan has a workable amendment procedure, while ERISA's goal of enabling plan beneficiaries to learn their rights and obligations under the plan at any time is served by an elaborate scheme, detailed elsewhere in the statute, which specifies that a plan must be written, meet certain reporting and disclosure requirements, and be made available for inspection at the plan administrator's office. Pp. 81-85.

2. On remand, the Court of Appeals must decide whether Curtiss-Wright's valid amendment procedure was complied with in this case. The answer will depend on a fact-intensive inquiry, under applicable corporate law principles, into who at Curtiss-Wright had plan amendment authority and whether they approved the new provision. If the new provision was not properly authorized when issued, the question would arise whether any subsequent actions served to ratify it ex post. Pp. 85-86.

18 F.3d 1034, reversed and remanded.

Laurence Reich argued the cause for petitioner. With him on the briefs were Stephen F. Payerle and Aaron J. Carr.

Richard P. Bress argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Days, Deputy Solicitor General Kneedler, Allen H. Feldman, and Ellen L. Beard.

Thomas M. Kennedy argued the cause for respondents. With him on the brief were Everett E. Lewis, Nicholas F. Lewis, Daniel Clifton, Ira Cure, and Shirley Fingerhood.[*]

Page 75

Justice O'Connor delivered the opinion of the Court.

Section 402(b)(3) of the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 875, 29 U.S.C. § 1102(b)(3), requires that every employee benefit plan provide "a procedure for amending such plan, and for identifying the persons who have authority to amend the plan." This case presents the question whether the standard provision in many employer-provided benefit plans stating that "The Company reserves the right at any time to amend the plan" sets forth an amendment procedure that satisfies § 402(b)(3). We hold that it does.


For many years, petitioner Curtiss-Wright voluntarily maintained a postretirement health plan for employees who had worked at certain Curtiss-Wright facilities; respondents are retirees who had worked at one such facility in Wood-Ridge, New Jersey. The specific terms of the plan, the District Court determined, could be principally found in two plan documents: the plan constitution and the Summary Plan Description (SPD), both of which primarily covered active employee health benefits.

In early 1983, presumably due to the rising cost of health care, a revised SPD was issued with the following new provision: "TERMINATION OF HEALTH CARE BENEFITS. . . . Coverage under this Plan will cease for retirees and their dependents upon the termination of business operations of the facility from which they retired." App.49. The two main authors of the new SPD provision, Curtiss-Wright's director of benefits and its labor counsel,

Page 76

testified that they did not think the provision effected a "change" in the plan, but rather merely clarified it. Id., at 70-71, 79. Probably for this reason, the record is less than clear as to which Curtiss-Wright officers or committees had authority to make plan amendments on...

To continue reading