@mtbarra – Mary Barra – CAN I GET PHONE NUMBER TO GET MY (GMHE) RETIREMENT AND PERSON TO CALL FROM

LAMBERT A. LAMBERT JR. sent a message to Mary Barra that said:

CAN I GET PHONE NUMBER TO GET MY (GMHE) RETIREMENT AND PERSON TO CALL FROM THE SUPREME COURT RULINGS.INTEREST HIGH IN PENDING HUGHES RULING: SUPREME COURT EYES USE OF SURPLUS ASSETS

Reprints Print
WASHINGTON -- The Supreme Court could allow employers to use surplus pension fund assets, built on employee contributions, to set up new pension plans covering different workers.
Although that already is the conventionally accepted practice, a high court decision on the matter could free employers contemplating such a move from fears of lawsuits from plan participants seeking a share of the surplus.
That's why the pension community is paying close attention to a case the Supreme Court heard earlier this month --Hughes Aircraft Co. and Hughes Non-Bargaining Retirement Plan vs. Stanley I. Jacobson et al.
In the Hughes case, a group of retirees claims it is entitled to a share of a $1.2 billion surplus from the company's contributory pension plan. The company used the surplus to set up a new, noncontributory pension plan in 1991, concurrent with freezing its existing contributory plan.
The company, now part of Raytheon Co., said it simply had changed its benefit structure. But the retirees alleged it had terminated the old pension plan and created a new one.
The 9th U.S. Circuit Court of Appeals last year ruled in favor of the retirees, after a lower court rejected their claim.
examine how the company used its surplus pension assets to reduce the shortfall in a pension plan of a Rockwell International Corp. unit Boeing acquired some years ago.
UNSETTLING CASE
"If the Hughes argument is accepted, and the AT&T argument is accepted, there will never be the right to challenge the use or abuse of benefit plan assets in corporate reorganizations," observed Kent Cprek, partner in the Philadelphia law firm of Sagot, Jennings & Sigmond, who represents employees of all three companies.
But lawyers representing employers wishing to use those surplus pension assets find the Hughes case equally unsettling.
The ability of employees to challenge such corporate maneuvers "has created a lot of problems for companies," said a lawyer representing several employers hoping to use their surplus pension assets. "Deals are closing and things need to get done," said the lawyer, who asked not to be identified.
William F. Hanrahan, a partner in the Groom Law Group, Washington, anticipates the Supreme Court will rule unanimously in favor of Hughes, allowing employers to undertake such plan reconfigurations.
"That's always a dangerous prediction to make, but I didn't hear one word of sympathy from anyone on the court for Jacobson's position," he observed.
Robert N. Eccles, a partner in the Washington office of O'Melveny & Myers, concurred.
"I don't think there is anyone who thinks that the Supreme Court will do anything but reverse the 9th (U.S. Circuit Court of Appeals) principally because the questioning was so one-sided," he said.
But Christopher Landau, a partner with the Washington office of Kirkland & Ellis, which represents Hughes, sounded a more cautious note.
"We were pleased by the oral arguments and felt the justices had a very good grasp of the case," he said. But he noted the justices' line of questioning does not necessarily indicate how the court ultimately will rule.
SUPPORT FOR HUGHES
The Pension Benefit Guaranty Corp. supports the Hughes argument. In a friend-of-the-court brief, the PBGC noted no termination occurred because the company did not go through the formal process required when employers shut down their plans. (Pensions & Investments, May 4).
A group representing Hughes employees, as well as 900 Hughes retirees, also supports the company's position, noting if the company were forced to shut down its plan, as Mr. Jacobson and the other retirees want, it would hurt them because they would be forced to give up possible future inflationary increases in their pensions.
SECOND PENSION PLAN?
The central question in the dispute is whether Hughes created a second pension plan when it froze its contributory plan.
Paul T. Cappucio, a Kirkland & Ellis partner, testified before the Supreme Court there is "one silver bullet" that will kill all of the plaintiffs' claims -- that is, that Hughes had only one pension plan.
Associate Justice Stephen Breyer responded angrily to a statement by Seth Kupferberg, who represents the retirees. Mr. Kupferberg said a "circular, common sense test" could show whether there is a single pension plan or two plans based on who the participants are, what benefits they receive and what the source of funding is for those benefits.
Mr. Kupferberg, partner in the New York law firm of Sipser, Weinstock, Harper and Dorn, said a company amending its plan would in fact be creating a new plan when its amendments could have a "drastic effect" on the plan.
"So are we going to involve the federal courts in defining what is drastic?" Mr. Breyer asked Mr. Kupferberg.
Moreover, Associate Justice Antonin Scalia grilled Mr. Kupferberg about his claim that Hughes had violated federal pension law by keeping the pension fund surplus. "Why does it inure to the employer if it goes to a separate group of employees, but not to Hughes?" he asked Mr. Kupferberg.
Associate Justice John Paul Stevens seconded that reasoning, noting no money actually went into the company's coffers. The Hughes retirees had alleged that by using the pension surplus to set up the new plan, the company was able to shift its financial burden of otherwise paying out of its own pockets.
RECOMMENDED FOR YOU
Gender diversity is improving on FTSE 350 boards

Comments are closed.