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Ahng v. Allsteel

September 25, 1996




Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 95 C 214 Wayne R. Andersen, Judge.


DIANE P. WOOD, Circuit Judge.



Section 204(g) of the Employment Retirement Income Security Act, 29 U.S.C. sec. 1054(g), prohibits an employer from enacting amendments to its pension plan that result in the reduction of accrued benefits. The question to which we return today is whether the anti-cutback rule of the Retirement Equality Act of 1984, Pub. L. No. 98-397, 98 Stat. 1426 (1984), which amended sec. 204(g), should be interpreted to prohibit pension plan amendments or terminations that reduce or eliminate an employee's ability to participate in early retirement benefits. In 1993, this Court concluded that early retirement benefits were not "accrued benefits" within the meaning of ERISA and thus were not protected by sec. 204(g). Meredith v. Allsteel, Inc., 11 F.3d 1354 (7th Cir. 1993). Seven other courts of appeals have now come to the opposite conclusion. See Richardson v. Pension Plan of Bethlehem Steel, 67 F.3d 1462, 1467-68 (9th Cir. 1995); Costantino v. TRW, Inc., 13 F.3d 969, 977 (6th Cir. 1994); Hunger v. AB, 12 F.3d 118, 120 (8th Cir. 1993), cert. denied, 114 S.Ct. 2676 (1994); Gillis v. Hoechst Celanese Corp., 4 F.3d 1137, 1143-44 (3d Cir. 1993), cert. denied, 114 S.Ct. 1369 (1994); Harms v. Cavenham Forest Indust., Inc., 984 F.2d 686, 692 (5th Cir.), cert. denied, 510 U.S. 944 (1993); Aldridge v. Lily-Tulip, Inc., 953 F.2d 587, 590 (11th Cir. 1992); and Amato v. Western Union Int'l, Inc., 773 F.2d 1402, 1410 (2d Cir. 1985), cert. denied, 474 U.S. 1113 (1986). Having carefully considered both the arguments of the parties before us and the opinions of those courts, we have decided to overrule this part of our prior decision in Meredith. *fn1 Because we find no alternative ground on which to uphold the district court's judgment, we reverse and remand for further proceedings.

Allsteel is an Illinois company that manufactures steel office furniture. In 1974, it adopted a pension plan for its employees, the All-Steel Pension Plan No. 1. Section 1.3 of the plan provides that the administrator (Allsteel) shall administer the plan in a manner consistent with the terms of the plan and any applicable pension agreement arrived at through collective bargaining. Section 11.1 of the plan provides that, subject to any applicable pension agreement arrived at through collective bargaining, the plan may be amended at any time by agreement of the parties to the plan. In accordance with these provisions, the parties entered into pension agreements in their collective bargaining agreements over the years. All of the plaintiffs except James Blencoe and Richard Reynolds retired from Allsteel in or after April 1994, with either 10 years of service and 55 years of age or over 30 years of service. Blencoe and Reynolds are current employees at Allsteel who have over 30 years of service. All plaintiffs are participants in the All-Steel Pension Plan No. 1.

In 1988 and 1991, Allsteel entered into collective bargaining agreements that provided supplemental early retirement benefits for certain employees. The 1988 agreement provided:

The following supplemental benefits shall be payable to certain retired members on the first day of each month during the period of April 1, 1988, to March 31, 1991 ("the payment period") . . . .

(c) Any Member who retires on or after April 1, 1988 shall be entitled to a supplemental benefit commencing on July 1, 1988 or at later retirement and for each month thereafter while he is living during the payment period in the amount of $900 until such Member attains age 65. (Emphasis added.)

In 1991, the language of the collective bargaining agreement changed, to read instead:

2. Employees who retired on or after 4/3/88 and prior to 3/31/91 shall be entitled to continue to receive a $900 pension supplement until they reach Age 65. (Emphasis added.)

Allsteel and the plaintiffs agree that the 1989 and the 1991 collective bargaining agreements effected proper plan amendments under the terms of the All-Steel Pension Plan No. 1. See ERISA sec. 402(b)(3), Curtis-Wright Corp. v. Schoonejongen, 115 S.Ct. 1223, 1231 (1995). This case therefore does not present the more difficult question under what circumstances a collective bargaining agreement itself might be a plan for ERISA purposes.

The litigation in Meredith was brought by employees who allegedly had not retired in time to meet the March 31, 1991, deadline in the 1991 agreement. Most of this Court's opinion addressed the question whether the time an employee "retired" was the same as the "retirement date" for purposes of benefits under the plan. This was important because the employees alleged that most of them had actually left their jobs during the month of March 1991. Allsteel had asserted that regardless of the literal last day of work, the "retirement date" for March retirees was April 1, 1991, and therefore they missed the window period for supplemental early retirement benefits that was part of the 1991 plan (and, according to Allsteel, part of the 1988 plan as well). Ruling for the employees, this Court found that the district court had erred in granting summary judgment for Allsteel on the theory that the word "retire" and the phrase "retirement date" necessarily had the same meaning under the contract. Thus, the Meredith ...

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