Heath v. Varity Corp., 95-2159

• Decision Date: 30 November 1995
• Docket Number: No. 95-2159,95-2159
• Citation: 71 F.3d 256
• Parties: , 19 Employee Benefits Cas. 2209, Pens. Plan Guide P 23915U Allan T. HEATH, Plaintiff-Appellant, v. VARITY CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 256

71 F.3d 256

64 USLW 2363, 19 Employee Benefits Cas. 2209,

Pens. Plan Guide P 23915U

Allan T. HEATH, Plaintiff-Appellant, v. VARITY CORPORATION, Defendant-Appellee.

No. 95-2159.

United States Court of Appeals Seventh Circuit.

Argued Nov. 3, 1995.

Decided Nov. 30, 1995.

Lawrence M. Shindell (argued), Anne B. Shindell, Sally A. Piefer, Shindell & Shindell, Milwaukee, WI, for Plaintiff-Appellant.

James R. Scott, Charles P. Stevens (argued), Lindner & Marsack, Milwaukee, WI, for Defendant-Appellee.

Marc I. Machiz, Thomas S. Williamson, Jr., Karen L. Handorf, Susan M. Green, Department of Labor, Office of the Solicitor, Washington, DC, for Amicus Curiae.

Before EASTERBROOK, DIANE P. WOOD, and EVANS, Circuit Judges.

EASTERBROOK, Circuit Judge.

This appeal presents a single question: whether Sec. 510 of the Employee Retirement Income Security Act (ERISA), 88 Stat. 895, 29 U.S.C. Sec. 1140, applies to unvested benefits. Section 510 provides:

It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan, this title, section 3001, or the Welfare and Pension Plans Disclosure Act, or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan, this title, or the Welfare and Pension Plans Disclosure Act....

Massey Ferguson Parts Company fired Allan T. Heath shortly before he was to become eligible for early retirement. (Varity Corporation has succeeded to Massey Ferguson's obligations, and AGCO Corporation to its operations; we use the original name.) The discharge did not affect Heath's pension, long vested under the terms of the employer's plan and ERISA itself. But it did prevent him from becoming eligible for additional benefits. Heath believes that Massey Ferguson acted "for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan"--that is, the early retirement package. Heath also believes that his employer discriminated on account of age, in violation of the Age Discrimination in Employment Act. The district court granted summary judgment against Heath under ERISA but reserved the ADEA claim for trial. 869 F.Supp. 1379 (E.D.Wis.1994). Later the court entered a partial final judgment under Fed.R.Civ.P. 54(b), a permissible step because the ERISA claim is distinct from the ADEA claim on both factual and legal grounds. See NAACP v. American Family Mutual Insurance Co., 978 F.2d 287, 291-93 (7th Cir.1992). The district judge concluded that even if Massey Ferguson fired Heath for the purpose of preventing him from becoming eligible for early retirement benefits, such a step would not violate Sec. 510 because the employer could have abolished the entire early retirement plan. The greater power to abolish the plan entails the lesser power to deny benefits to particular persons, the court held. 869 F.Supp. at 1385-94, 1396-1401.

Under the district court's approach, Sec. 510 protects only persons who lay claim to (or seek to qualify for) vested benefits, which ERISA prevents an employer from abolishing. This is a possibility that we have considered, and rejected, before. Kross v. Western Electric Co., 701 F.2d 1238, 1241-43 (7th Cir.1983); see also Teumer v. General Motors Corp., 34 F.3d 542, 544-45 (7th Cir.1994). Accord, Seaman v. Arvida Realty Sales, 985 F.2d 543 (11th Cir.1993); Conkwright v. Westinghouse Electric Corp., 933 F.2d 231, 236-38 (4th Cir.1991); Dister v. Continental Group, Inc., 859 F.2d 1108, 1110-11 (2d Cir.1988). Kross deals with life insurance and medical benefits, Teumer with benefits under a plan providing income to laid-off employees; nothing in Sec. 510 justifies treating early retirement benefits differently.

The district court was aware of these cases but declined to follow them, explaining:

This Court believes ... that the contradiction between the treatment of plan amendments and employee discharges under Sec. 510, a contradiction which apparently was not argued or discussed before the 7th Circuit during its consideration of the issue, is the key to recognizing the error in extending Sec. 510's protection to the unaccrued benefits of vested employees. Had this contradiction and corresponding analysis been brought to the 7th Circuit's attention, Kross may have been decided differently.

869 F.Supp. at 1387 n. 3. The district court's approach is not appropriate in a hierarchical judiciary. Although we willingly take account of new arguments, e.g., United States v. Hill, 48 F.3d 228 (7th Cir.1995), reassessment rarely leads to overruling. Few predictions of change in legal doctrine come true. To avoid heaping needless costs and delay on the litigants, a district court should apply existing precedents while explaining why it believes that innovation is in order. Gacy v. Welborn, 994 F.2d 305, 310 (7th Cir.1993). Courts of appeals that believe decisions of the Supreme Court to be mistaken are under identical marching orders. Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 484, 109 S.Ct. 1917, 1921, 104 L.Ed.2d 526 (1989); Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533, 535, 103 S.Ct. 1343, 1344, 75 L.Ed.2d 260 (1983); Hutto v. Davis, 454 U.S. 370, 102 S.Ct. 703, 70 L.Ed.2d 556 (1982). Today's case shows why. The district court erred in thinking Kross wrongly decided, this case has been sidetracked, and Heath has been put to substantial expense simply to receive the benefit of settled law.

Section 510 does not distinguish between vested and unvested benefits. It forbids adverse action "for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan". "Plan" includes both pension and welfare plans; the former category includes some vested benefits, the latter does not. The district court conceded that the statute's most natural reading is the one Kross gave it, but it then conducted an extended tour of ERISA's legislative history. Such a journey is inappropriate. Unless an ambiguous term needs construction, a court should stop with the statutory language.

Interpretation is a contextual enterprise, and the principal context of Sec. 510 is the remainder of ERISA. The district court thought that the statute as a whole contains a contradiction: why must an employer that is free to modify or abolish a plan ensure that each employee receives its full benefits? To resolve this supposed contradiction the district court limited Sec. 510 to the sort of benefits that an employer cannot affect by changing or abrogating the plan. Yet a court should endeavor to apply all parts of a statute whenever possible. Tensions among statutory provisions are common. Legislation reflects compromise among competing interests. That employers won a battle and secured the right to modify plans, while employees prevailed in a different skirmish and secured the right to qualify for benefits under existing plans, shows no more than that each side could claim some victories. It upsets the legislative balance to push the outcome farther in either direction. Just as a court should not use Sec. 510 and ERISA's other fiduciary obligations to curtail the employer's right to modify a plan, see Johnson v. Georgia-Pacific Corp., 19 F.3d 1184 (7th Cir.1994), so a court should not use the employer's power to amend as a reason to curtail Sec. 510. One need not treat ERISA as an interest-group bargain to see this. Flexibility in amending plans may encourage employers to make more generous promises, to the advantage of their workers. If firms were stuck with terms that in retrospect proved to be excessively costly, they would err initially on the side of omission. The mutual benefits of allowing employers to amend plans does not imply, however, that promises actually in place are illusory. Employers want to make credible promises of benefits, to attract and keep good workers; Sec. 510 helps to make promises credible.

ERISA draws a line between an employer's right...