Central Laborers' Pension Fund v. Heinz

• Citation: 541 U.S. 739
• Decision Date: 07 June 2004
• Docket Number: No. 02-891.,02-891.
• Parties: CENTRAL LABORERS' PENSION FUND v. HEINZ ET AL.
• Court: United States Supreme Court

541 U.S. 739

CENTRAL LABORERS' PENSION FUND v. HEINZ ET AL.

No. 02-891.

Supreme Court of United States.

Argued April 19, 2004.

Decided June 7, 2004.

Respondents (collectively, Heinz) are retired participants in a multiemployer pension plan (hereinafter Plan) administered by petitioner. Heinz retired from the construction industry after accruing enough pension credits to qualify for early retirement payments under a "service only" pension scheme that pays him the same monthly benefit he would have received had he retired at the usual age. The Plan prohibits such beneficiaries from certain "disqualifying employment" after they retire, suspending monthly payments until they stop the forbidden work. When Heinz retired, the Plan defined "disqualifying employment" to include a job as a construction worker but not as a supervisor, the job Heinz took. In 1998, the Plan expanded its definition to include any construction industry job and stopped Heinz's payments when he did not leave his supervisor's job. Heinz sued to recover the suspended benefits, claiming that the suspension violated the "anti-cutback" rule of the Employee Retirement Income Security Act of 1974 (ERISA), which prohibits any pension plan amendment that would reduce a participant's "accrued benefit," ERISA § 204(g), 29 U. S. C. § 1054(g). The District Court granted the Plan judgment on the pleadings, but the Seventh Circuit reversed, holding that imposing new conditions on rights to benefits already accrued violates the anti-cutback rule.

Held: ERISA § 204(g) prohibits a plan amendment expanding the categories of postretirement employment that triggers suspension of the payment of early retirement benefits already accrued. Pp. 743-751.

(a) The anti-cutback provision is crucial to ERISA's central object of protecting employees' justified expectations of receiving the benefits that they have been promised, see Lockheed Corp. v. Spink, 517 U. S. 882, 887. The provision prohibits plan amendments that have "the effect of . . . eliminating or reducing an early retirement benefit." 29 U. S. C. § 1054(g)(2). The question here is whether the Plan's amendment had such an effect. Although the statutory text is not as helpful as it might be, it is clear as a matter of common sense that a benefit has suffered under the amendment. Heinz accrued benefits under a plan allowing him to supplement his retirement income, and he reasonably relied on that plan's terms in planning his retirement. The 1998 amendment undercut that reliance, paying benefits only if he accepted a substantial curtailment of his opportunity to do the kind of work he knew. There is no way that, in any practical sense, this change of terms could not be viewed as shrinking the value of Heinz's pension rights and reducing his promised benefits. Pp. 743-745.

(b) The Plan's technical responses are rejected. To give the anti-cutback rule the constricted reading urged by the Plan—applying it only to amendments directly altering the monthly payment's nominal dollar amount and not to a suspension when the amount that would be paid is unaltered—would take textual force majeure, and certainly something closer to irresistible than language in 29 U. S. C. § 1002(23)(A) to the effect that accrued benefits are ordinarily "expressed in the form of an annual benefit commencing at normal retirement age." And the Plan's argument that § 204(g)'s "eliminat[e] or reduc[e]" language does not apply to mere suspensions misses the point. ERISA permits conditions that are elements of the benefit itself but the question here is whether a new condition may be imposed after a benefit has accrued. The right to receive certain money on a certain date may not be limited by a new condition narrowing that right. Pp. 745-746.

(c) This Court's conclusion is confirmed by an Internal Revenue Service regulation that adopts the reading of § 204(g) approved here. Pp. 746-748.

(d) ERISA § 203(a)(3)(B), 29 U.S.C. § 1053(a)(3)(B)—which provides that the right to an accrued benefit "shall not be treated as forfeitable solely because the plan" suspends benefit payments when beneficiaries like respondents are employed in the same industry and the same geographic area covered by the plan—is irrelevant to the question here. Section 203(a) addresses the entirely distinct concept of benefit forfeitures. And read most simply and in context, § 203(a)(3)(B) is a statement about the terms that can be offered to plan participants up front, not as an authorization to adopt retroactive amendments. Pp. 748-751.

303 F. 3d 802, affirmed.

SOUTER, J., delivered the opinion for a unanimous Court. BREYER, J., filed a concurring opinion, in which REHNQUIST, C. J., and O'CONNOR and GINSBURG, JJ., joined, post, p. 751.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT.

Thomas C. Goldstein argued the cause for petitioner. With him on the briefs were Jeffery M. Wilday, Patrick J. O'Hara, and Amy Howe.

John P. Elwood argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Olson, Assistant Attorney General O'Connor, Deputy Solicitor General Kneedler, Kenneth L. Greene, and John A. Dudeck, Jr.

David M. Gossett argued the cause for respondents. With him on the brief were Charles A. Rothfeld and Gery R. Gasick.^*

JUSTICE SOUTER delivered the opinion of the Court.

With few exceptions, the "anti-cutback" rule of the Employee Retirement Income Security Act of 1974 (ERISA) prohibits any amendment of a pension plan that would reduce a participant's "accrued benefit." 88 Stat. 858, 29 U. S. C. § 1054(g). The question is whether the rule prohibits an amendment expanding the categories of postretirement employment that trigger suspension of payment of early retirement benefits already accrued. We hold such an amendment prohibited.

I

Respondents Thomas Heinz and Richard Schmitt (collectively, Heinz) are retired participants in a multiemployer pension plan (hereinafter Plan) administered by petitioner Central Laborers' Pension Fund. Like most other participants in the Plan, Heinz worked in the construction industry in central Illinois before retiring, and by 1996, he had accrued enough pension credits to qualify for early retirement payments under a defined benefit "service only" pension. This scheme pays him the same monthly retirement benefit he would have received if he had retired at the usual age, and is thus a form of subsidized benefit, since monthly payments are not discounted even though they start earlier and are likely to continue longer than the average period.

Heinz's entitlement is subject to a condition on which this case focuses: the Plan prohibits beneficiaries of service only pensions from certain "disqualifying employment" after they retire. The Plan provides that if beneficiaries accept such employment their monthly payments will be suspended until they stop the forbidden work.¹ When Heinz retired in 1996, the Plan defined "disqualifying employment" as any job as "a union or non-union construction worker." Brief for Respondents 6. This condition did not cover employment in a supervisory capacity, however, and when Heinz took a job in central Illinois as a construction supervisor after retiring, the Plan continued to pay out his monthly benefit.

In 1998, the Plan's definition of disqualifying employment was expanded by amendment to include any job "`in any capacity in the construction industry (either as a union or non-union construction worker).'" Ibid. The Plan took the amended definition to cover supervisory work and warned Heinz that if he continued on as a supervisor, his monthly pension payments would be suspended. Heinz kept working, and the Plan stopped paying.

Heinz sued to recover the suspended benefits on the ground that applying the amended definition of disqualifying employment so as to suspend payment of his accrued benefits violated ERISA's anti-cutback rule. On cross-motions for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), the District Court granted judgment for the Plan, only to be reversed by a divided panel of the Seventh Circuit, which held that imposing new conditions on rights to benefits already accrued was a violation of the anti-cutback rule. 303 F. 3d 802 (CA7 2002). We granted certiorari, 540 U. S. 1045 (2003), in order to resolve the resulting Circuit split, see Spacek v. Maritime Assn., 134 F. 3d 283 (CA5 1998), and now affirm.

II

A

There is no doubt about the centrality of ERISA's object of protecting employees' justified expectations of receiving the benefits their employers promise them.

"Nothing in ERISA requires employers to establish employee benefits plans. Nor does ERISA mandate what kind of benefits employers must provide if they choose to have such a plan. ERISA does, however, seek to ensure that employees will not be left emptyhanded once employers have guaranteed them certain benefits. . . . [W]hen Congress enacted ERISA, it `wanted to . . . mak[e] sure that if a worker has been promised a defined pension benefit upon retirement—and if he has fulfilled whatever conditions are required to obtain a vested benefit—he actually will receive it.'" Lockheed Corp. v. Spink, 517 U. S. 882, 887 (1996) (quoting Nachman Corp. v. Pension Benefit Guaranty Corporation, 446 U. S. 359, 375 (1980); citations omitted).

See also J. Langbein & B. Wolk, Pension and Employee Benefit Law 121 (3d ed. 2000) (hereinafter Langbein & Wolk) ("The central problem to which ERISA is addressed is the loss of pension benefits previously promised").

ERISA's anti-cutback rule is crucial to this object, and (with two exceptions of no concern here²) provides that "[t]he accrued benefit of a participant under a plan may not be decreased by an amendment of the plan. . . ." 29 U. S. C. § 1054(g)(1). After some initial question about whether the provision addressed early retirement benefits, see Langbein & Wolk 164, a 1984 amen...