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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT DONNA C. RICHARDS, individually, and on behalf of others similarly situated, Plaintiff v. FLEETBOSTON FINANCIAL CORP. ET. AL., Defendants. : : : : : : : : : :

CIVIL ACTION NO. 3:04-cv-1638 (JCH)

MARCH 31, 2006

RULING ON DEFENDANTS' MOTION TO DISMISS [Doc. No. 30] I. INTRODUCTION The lead plaintiff, an employee of the defendant corporation, complains that this corporation and its pension plan violated her rights under various sections of the Employee Retirement Income Security Act (ERISA). The defendants move to dismiss all six counts of the plaintiff's Complaint as failing to state a claim upon which relief may be granted. II. FACTS1 The lead plaintiff, Donna C. Richards ("Richards"), is an employee of defendant FleetBoston Financial Corp. ("Fleet Financial") and a participant in the defendant FleetBoston Pension Plan ("Fleet Amended Plan"). Richards was born on May 15, 1948. Richards was hired by Hartford National Bank in 1973. Following a series of mergers, she became a participant in the Shawmut Retirement Plan. In 1995, Fleet

See Part IV, infra, for a discussion of the pleadings and other docum ents the court considers and the inferences it draws in ruling on the present m otion.

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Financial Group acquired Shawmut, and Richards became a Fleet Employee participating in the Fleet Plan. Prior to January 1, 1997, Richards was a participant in a traditional defined benefits pension plan ("Traditional Plan"), under which retiring employees received a percentage of their final average pay for life. Effective January 1, 1997, Fleet amended the Traditional Plan such that it became a "cash balance" benefit.2 The new plan ("Amended Plan") calculates an employee's retirement benefits as follows. It first adds the employee's age plus years of vesting service to arrive at a number of "points." Pay credits to be added to an employee's hypothetical account each quarter are then calculated by multiplying the employee's compensation for that quarter by certain percentages, as indicated in the following chart, copied from the Amended Plan: Points Number of Points: Pay Credit Rate Applicable to Compensation Below the Social Security Wage Base 3% 3.5% 4.5% 5.5% 6.5% 7.5% Applicable to Compensation Above the Social Security Wage Base 6% 7% 9% 11% 13% 15%

less than 39 40 but less than 50 50 but less than 60 60 but less than 70 70 but less than 80 80 or more

For a general overview of cash balance plans, see Esden v. Bank of Boston, 229 F.3d 154, 15859 (2d Cir. 2000). See also Eaton v. Onan Corp., 117 F.Supp.2d 812, 816-18 (S.D.Ind. 2000) (discussing history of cash balance plans).

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Defs.' Mem. Supp. Mot. Dismiss, Ex. A [Doc. No. 32]. The employee also receives quarterly interest credits. The interest rate is uniform for all participants and is based on the average annual yield of one-year U.S. Treasury constant maturities for the month preceding the calendar quarter in which the pay period begins. The size of a participant's interest credit in a given quarter depends upon the interest rate, the participant's account balance, and the participant's pay credit for that quarter. When it adopted the Amended Plan in 1997, Fleet converted the benefits that Richards and other employees in her situation had earned under the Traditional Plan into an opening hypothetical cash balance.3 It arrived at this opening balance by computing the lump sum, actuarially equivalent value of the benefit payable at age 65 that the employee had accrued under the prior pension plans as of December 31, 1996. Amended Plan Summary Plan Description (SPD), Plf.'s Mem. Ex.1 at 22 [Doc. No. 40]. As the defendants admitted at oral argument on this motion, this opening balance did not include the value of a Traditional Plan participant's right to subsidized early retirement benefits. See Compl. ¶ 31. In calculating the opening balance, the Amended Plan applied a pre-retirement mortality discount, providing for the possibility of death prior to normal retirement, but provided no mechanism for crediting this discount back to participants' accounts as they grow older and the risk of pre-retirement mortality shrinks. Compl. ¶ 35. It employed a 7% interest rate in calculating the value of the frozen benefit derived from the Traditional Plan as an age-65 annuity, for

All references to em ployees' cash balance accounts in this opinion refer to hypothetical accounts that are used to calculate the em ployees' pension benefits upon term ination of em ploym ent. Fleet does not actually m aintain separate accounts for individual em ployees, but uses the hypothetical accounts to keep track of the benefits em ployees have accrued.

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purposes of arriving at an opening balance under the Amended Plan, but it provided no mechanism to adjust this balance when interest rates fall below 7%, as they have over the last five years. Id. The Amended Plan provided that, upon termination of employment with Fleet, an employee who had participated in both the Traditional Plan and the Amended Plan4 would receive the greater of her Cash Balance Account, under the Amended Plan, or her benefit under the Traditional Plan terms, frozen as of January 1, 1997 ("frozen benefit"). Id. at ¶ 32. This rule, combined with the fact that the Amended Plan converted less than the full value of the benefits that Richards and other former Traditional Plan participants had accrued under the Traditional Plan to opening account balances under the Amended Plan terms, meant that the value of retirement benefits available to such participants did not increase past the frozen benefit that they had already accrued as of December 31, 1996, until the amount in the cash balance account reached and then exceeded that amount. Id. at ¶ 33. This phenomenon, which Richards refers to as the "wear-away" effect, caused Richards and other employees to work for many years following 1997 without actually accruing any new benefits, despite the existence of a hypothetical cash balance account that showed benefits being added each quarter. Id. at ¶ 34. The use of the pre-retirement mortality discount and the 7% interest rate exacerbated this wear-away effect. Id. at 35.

Em ployees who had been active participants in the Traditional Plan as of Decem ber 31, 1996, and were not age 50 with at least 15 years of vesting service as of that date, becam e participants in the Am ended Plan. Am ended Plan Sum m ary Plan Description, Plf.'s Mem . Opp. Defs.' Mot. Dism iss, Ex. 1 at 21 [Doc. No.40]. The court's discussion of the wear-away effect refers to the rules governing the benefits of individuals in this group.

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Prior to January 1, 1997, Fleet gave no notice to plan participants that they would be experiencing a significant reduction in benefits as a result of the plan amendment. Moreover, the Amended Plan summary plan description ("SPD"), which was distributed to participants, does not mention the wear-away effect, nor state that that participants' benefit accruals under the Amended Plan would be reduced by advancing age.5 It told participants, "your cash balance benefit builds steadily throughout the time you work at Fleet. Each quarter Fleet makes pay credits and interest credits into an account in your name." Id. at ¶ 40. Fleet also answered a hypothetical plan participant question, "Can my pension benefit decrease under the new Fleet Pension Plan?," by saying "No." Id. at ¶ 41. It continued, "Whether you participate in the cash balance benefit or the traditional benefit, you will never receive less than the benefit you earned as of December 31, 1996," and did not mention the wear-away effect. Id. Similarly, it did not state that the rate of benefit accruals would decline with age. It stated it was adopting the Amended Plan because it "makes good sense for our employees." Id. The plaintiff alleges that, in practice, Amended Plan administrators frequently have informed retiring plan participants only of the value of their cash balance accounts, and not of the greater benefits to which they are entitled under the frozen benefit derived from the Traditional Plan terms. Id. at ¶ 36.

The plaintiff's theory of age discrim ination is based on the argum ent that em ployees' cash balance accounts grow at a decreasing rate as participants age, when the value of the participants' accounts is calculated as that of an annual benefit com m encing at age 65. This claim is discussed in m ore detail in Part IV.A, infra.

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III.

CAUSES OF ACTION Richards asserts a number of different claims against the defendants. In Count

I, she alleges that the cash balance terms of the Fleet Amended Plan violate ERISA § 204(b)(1)(H), prohibiting an employer from establishing or maintaining plan rules that reduce "the rate of an employee's benefit accrual . . . because of the attainment of any age." 29 U.S.C. § 1054(b)(1)(H). In Count II, she alleges that, by conditioning Richards' receipt of cash balance benefits on her foregoing early retirement benefits earned prior to the adoption of the cash balance amendment, the cash balance terms violate ERISA § 203(a), 29 U.S.C. § 1053(a), which requires that benefits are not forfeitable. In Count III, she alleges that, by causing participants who had begun to earn retirement benefits under the Traditional Plan prior to its amendment to experience years in which they accrue zero benefits followed by years in which they accrue actual benefits, the Amended Plan violates the "anti-backloading" rule in ERISA § 204(b)(1)(B), 29 U.S.C. § 1054(b)(1)(B). In Count IV, she alleges that the defendants failed to notify her and other participants of a significant reduction in the rate of future benefit accrual 15 days prior to the effective date of the Amended Plan, thereby violating ERISA § 204(h), 29 U.S.C. § 1054(h). In Count V, she alleges that the defendants failed to provide an adequate Summary Plan Description ("SPD"), in violation of ERISA § 102, 29 U.S.C. § 1022. Finally, in Count VI, she alleges that the defendants breached their fiduciary duty by failing to fully inform retiring plan participants of the funds they are owed under the frozen benefit derived from the Fleet Traditional Plan terms. See ERISA § 404, 29 U.S.C. § 1104.

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For each of these counts, she seeks relief under ERISA § 502(a)(3), which provides that, "A civil action may be brought . . . by a participant . . . (A) to enjoin any act or practice which violates any provision of this subchapter [which includes all of the substantive provisions of ERISA upon which Richards bases her claims] or the terms of the plan, or (B) to obtain other appropriate equitable relief (I) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan," 29 U.S.C. § 1132(a)(3), and, alternatively or additionally, under ERISA § 502(a)(1)(B), which states that a participant may bring suit "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan," 29 U.S.C. § 1132(a)(1)(B). The defendants have moved, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, for dismissal of all counts. IV. STANDARD OF REVIEW In deciding a rule 12(b)(6) motion to dismiss, the court takes the allegations of the Complaint as true, and construes them in a manner favorable to the pleader. Hoover v. Ronwin, 466 U.S. 558, 587 (1984); see Grandon v. Merrill Lynch & Co., 147 F.3d 184, 188 (2d Cir. 1998); Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overrruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984). In this case, the court also considers the 1997 FleetBoston Plan document, the Summary Plan Description, and the predecessor ("Traditional") Plan document. It may do so because these documents are integral to the complaint and the plaintiff relies upon them in her complaint. Rothman v. Gregor, 220 F.3d 81, 88 (2d Cir. 2000); Cortec Indus. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991), cert. denied, 503 U.S. 960 (1992). 7

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A Rule 12(b)(6) motion to dismiss tests the adequacy of the complaint. United States v. City of New York, 359 F.3d 83, 87 (2d Cir. 2004). Thus, such a motion can be granted only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). A Rule 12(b)(6) motion cannot be granted simply because recovery appears remote or unlikely on the face of a complaint. Bernheim v. Litt, 79 F.3d 318, 321 (2d Cir. 1996). "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Id. (quotation omitted). "[W]hile bald assertions and conclusions of law will not suffice to state a claim, the district court, before granting a motion to dismiss, must accept as true all of the factual allegations set out in plaintiff's complaint, draw inferences from those allegations in the light most favorable to plaintiff, and construe the complaint liberally." Tarshis v. Riese Org., 211 F.3d 30 (2d Cir. 2000) (internal citations omitted); see Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds, Davis v. Scherer, 468 U.S. 183 (1984). Although the defendants state that their motion to dismiss the plaintiff's complaint is brought pursuant to Rule 12(b)(6), Defs.' Mot. Dismiss [Doc. No. 30], they argue in part that Richards lacks constitutional standing to bring the claim in Count VI. "[A] district court must generally resolve material factual disputes and establish that it has federal constitutional jurisdiction, including a determination that the plaintiff has Article III standing, before deciding a case on the merits." Alliance for Envtl. Renewal v. Pyramid Crossgates Co., 436 F.3d 82 (citing Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 101 (1998)). Therefore, the court will treat the defendants' 8

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motion to dismiss Count VI as a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction. See, e.g., Franchi v. Manbeck, Civ. No. 90cv517 (PCD), 1991 WL 137276, at *3 n.2 (D.Conn. 1991) ("Inasmuch as this court could not consider the sufficiency of the complaint under Rule 12(b)(6), unless jurisdiction is established under Rule 12(b)(1), the motion will be treated first as one for dismissal for lack of subject matter jurisdiction."). A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it. In resolving a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), a district court . . . may refer to evidence outside the pleadings. A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists. Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000) (internal citations omitted). V. DISCUSSION A. Age Discrimination Claim (Count I) 1. Statutory Standing to Bring Claim Under ERISA §204(b)(1)(H)

The defendants argue that Richards may not bring her Count One claim under ERISA §204(b)(1)(H) because this subsection protects only plan participants who are age 65 or above, and Richards has not yet reached this age.6 In order to address this argument, the court must construe that Section. As the Supreme Court has instructed, "[t]he preeminent canon of statutory interpretation requires us to "presume that [the] legislature says in a statute what it means and means in a statute what it says there." BedRoc Ltd., LLC v. United States,

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Richards is currently age 58. See Part I, supra.

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541 U.S. 176, 183 (2004) (internal citation omitted); see Nicolaou v. Horizon Media, Inc., 402 F.3d 325, 329 (2d Cir. 2005) (citing BedRoc). "Thus, our inquiry begins with the statutory text, and ends there as well if the text is unambiguous." Bedroc, 541 U.S. at 183 (internal citations omitted). The plain language of section 204(b)(1)(H)(i) prohibits reductions in the rate of benefit accrual "because of the attainment of any age." 29 U.S.C. § 1054(b)(1)(H)(i).7
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This subsection states in full:

(i)Notwithstanding the preceding subparagraphs, a defined benefit plan shall be treated as not satisfying the requirem ents of this paragraph [discussing benefit accrual requirem ents for pension plans] if, under the plan, an em ployee's benefit accrual is ceased, or the rate of an em ployee's benefit accrual is reduced, because of the attainm ent of any age. (ii) A plan shall not be treated as failing to m eet the requirem ents of this subparagraph solely because the plan im poses (without regard to age) a lim itation on the am ount of benefits that the plan provides or a lim itation on the num ber of years of service or years of participation which are taken into account for purposes of determ ining benefit accrual under the plan. (iii) In the case of any em ployee who, as of the end of any plan year under a defined benefit plan, has attained norm al retirem ent age under such plan-- (I) if distribution of benefits under such plan with respect to such em ployee has com m enced as of the end of such plan year, then any requirem ent of this subparagraph for continued accrual of benefits under such plan with respect to such em ployee during such plan year shall be treated as satisfied to the extent of the actuarial equivalent of in-service distribution of benefits, and (II) if distribution of benefits under such plan with respect to such em ployee has not com m enced as of the end of such year in accordance with section 1056 (a)(3) of this title, and the paym ent of benefits under such plan with respect to such em ployee is not suspended during such plan year pursuant to section 1053 (a)(3)(B) of this title, then any requirem ent of this subparagraph for continued accrual of benefits under such plan with respect to such em ployee during such plan year shall be treated as satisfied to the extent of any adjustm ent in the benefit payable under the plan during such plan year attributable to the delay in the distribution of benefits after the attainm ent of norm al retirem ent age. The preceding provisions of this clause shall apply in accordance with regulations of the Secretary of the Treasury. Such regulations m ay provide for the application of the preceding provisions of this clause, in the case of any such em ployee, with respect to any period of tim e within a plan year. (iv) Clause (i) shall not apply with respect to any em ployee who is a highly com pensated em ployee (within the m eaning of section 414 (q) of title 26) to the extent provided in regulations prescribed by the Secretary of the Treasury for purposes of precluding

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The inclusion of the word "any," when given "its ordinary, common meaning," In re Caldor Corp., 303 F.3d 161, 168 (2d Cir. 2002) (internal citation omitted), renders this language unambiguous with respect to the question of whether it protects only employees who have reached age 65. By its own terms, this subsection applies to employees of any age. See Wells v. Gannett Retirement Plan, 385 F.Supp.2d 1101, 1102 (D.Co. 2005) ("The term is unambiguous, and there is no need to resort to legislative history or other sources for its interpretation. This provision applies to the attainment of `any age' and not just to the attainment of normal retirement age"). "The plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole." Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997). The court has reviewed the other provisions of ERISA cited by the defendants, and none create ambiguity as to whether "attainment of any age," ERISA § 204(b)(1)(H)(i), means what it says, or whether it means, as defendants suggest, "attainment of any age over 65." The court has considered all of the defendants' arguments and is not persuaded to read the statute other than as its plain meaning suggests.

discrim ination in favor of highly com pensated em ployees within the m eaning of subchapter D of chapter 1 of title 26. (v) A plan shall not be treated as failing to m eet the requirem ents of clause (i) solely because the subsidized portion of any early retirem ent benefit is disregarded in determ ining benefit accruals. (vi) Any regulations prescribed by the Secretary of the Treasury pursuant to clause (v) of section 411 (b)(1)(H) of title 26 shall apply with respect to the requirem ents of this subparagraph in the sam e m anner and to the sam e extent as such regulations apply with respect to the requirem ents of such section 411 (b)(1)(H). 29 U.S.C. § 1054(b)(1)(H).

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Because the text of the statute is not ambiguous, the court need not look beyond it. See BedRoc Ltd., LLC v. United States, 541 U.S. 176, 183 (2004) ("The preeminent canon of statutory interpretation requires us to "presume that [the] legislature says in a statute what it means and means in a statute what it says there. Thus, our inquiry begins with the statutory text, and ends there as well if the text is unambiguous.") (considering the statutory text but declining to consider legislative history) (internal citations omitted). The defendants argue that "courts regularly look to legislative history to interpret statutory language that might appear unambiguous on its face," Defs.' Reply Br. Supp. Mot. Dismiss at 7 [Doc. No. 45-1], but the only precedential opinion they cite for this proposition actually held that the court did not have to consider administrative rules and advisory committee notes because Congress's intent was clear from the face of the statute in question. See In re Caldor Corp., 303 F.3d 161, 171 (2d Cir. 2002). Only in dicta did the Court of Appeals "add that we find no tension between our reading of § 1109(b) and the rules and notes relied on by the Joint Liquidators." See id. Moreover, even if the court did take into account the legislative history and the statutory heading, it does not find that any of the defendants' arguments in those regards present "rare and exceptional circumstances" that would require the court to disregard the plain language of the statute. See Rubin v. United States, 449 U.S. 424, 430 (1981). Although the current language of section 204(b)(1)(H)(i) derives from a section of the Omnibus Budget Reconciliation Act of 1986 ("OBRA 1986") whose statutory heading reads, "Benefit Accrual Beyond Normal Retirement Age," the statutory heading alone (which is not in the codified statutory provision) is not sufficient to compel a reading of the statute not indicated by its unambiguous text. See Pennsylvania Dep't 12

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of Corrections v. Yeskey, 524 U.S. 206, 212 (1998) ("[T]he title of a statute . . . cannot limit the plain meaning of the text. For interpretive purposes, [it is] of use only when [it] shed[s] light on some ambiguous word or phrase.") (internal citation omitted) (ellipses and brackets in Yeskey); Cheung v. United States, 213 F.3d 82, 90 (2d Cir. 2000) ("Although mindful of the limited role of statutory headings in textual interpretation, this Court has recognized that statutory headings may be used to resolve ambiguities in the text.") (internal citation and quotation marks omitted). Similarly, the legislative history is not as clear as the defendants would make it out to be, and could lend some support to both sides. The defendants focus primarily on the statement in the OBRA 1986 Conference Report that: Under the conference agreement, the rules preventing the reduction or cessation of benefit accruals on account of attainment of any age are not intended to apply in cases in which a plan satisfies the normal benefit accrual requirements for employees who have not attained normal retirement age. H.R. Conf. Rep. No. 99-1012, at 379 (1986), reprinted in 1986 U.S.C.C.A.N. 3868, 4024. However, the Report immediately continues by explaining, beginning in the same paragraph: Under the benefit accrual rules, the rate of benefit accrual for an employee may vary depending on the number of years of service an employee may complete between date of hire and the attainment of normal retirement age. For example, under the fractional benefit accrual rule, an employee may accrue a benefit ratably for each year of service between the employee's date of hire and the employee's attainment of normal retirement age. If a plan has a normal retirement age of 65, under this fractional rule, an employee who is hired at age 45 would accrue the normal retirement benefit between age 45 and age 65 (normal retirement age). Thus, the employee would accrue the benefit over 20 years. On the other hand, an employee with the same salary hired at age 55 would accrue the same 13

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normal retirement benefit over 10 years (the number of years between date of hire and normal retirement age). In this example, when both employees have completed five years of service, they will have different accrued benefits because of the different rate of benefit accrual for each year of service. The conferees do not intend that the plan is to be treated as violating the general rule that benefit accruals cannot be reduced or ceased on account of the attainment of age merely because a younger employee has a lower accrued benefit than an older employee with the same number of years of service. Id. In light of this explanation and example, the sentence the defendants have quoted may at least arguably be stating a much different proposition than that urged by them. It is quite possible that the report used the phrase "for employees who have not attained normal retirement age" merely to modify the phrase "normal benefit accrual requirements," and not to limit the application of the new age discrimination provisions. This is consistent with the fact that the particular example of a "normal benefit accrual requirement" used in the second paragraph above, "the fractional benefit accrual rule," is a rule used to determine the required rate of benefit accrual for the years prior to normal retirement age. See id.; ERISA § 204(b)(1)(c)), 29 U.S.C. § 1054(b)(1)(c)).8

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A defined benefit plan satisfies the requirem ents of this paragraph if the accrued benefit to which any participant is entitled upon his separation from the service is not less than a fraction of the annual benefit com m encing at norm al retirem ent age to which he would be entitled under the plan as in effect on the date of his separation if he continued to earn annually until norm al retirem ent age the sam e rate of com pensation upon which his norm al retirem ent benefit would be com puted under the plan, determ ined as if he had attained norm al retirem ent age on the date any such determ ination is m ade (but taking into account no m ore than the 10 years of service im m ediately preceding his separation from service). Such fraction shall be a fraction, not exceeding 1, the num erator of which is the total num ber of his years of participation in the plan (as of the date of his separation from the service) and the denom inator of which is the total num ber of years he would have participated in the plan if he separated from the service at the norm al retirem ent age. For purposes of this subparagraph, social security benefits and all other relevant factors used to com pute benefits shall be treated as rem aining constant as of the current year for all years after such current year.

29 U.S.C. § 1054(b)(1)(C).

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Additionally, the court finds that the floor statements the defendants have cited, by of individual legislators who sponsored the bill, do not override the meaning arising from the clear statutory text.9 Finally, the IRS's recent interpretation of section 411(b)(1)(H) of Title 26 of the United States Code, which was passed into law at the same time as ERISA § 204(b)(1)(H) and uses exactly the same language, supports the court's reading of the latter statutory section. In an explanatory section in a 2002 notice of proposed rulemaking under section 411(b)(1)(H), the IRS stated, Section[] 411(b)(1)(H) . . . prohibit[s] cessation of accruals or allocations, and reduction in the rate of benefit accrual or allocation, because of the attainment of any age. Under th[is] section[], attainment of any age means a participant's growing older. Accordingly, these regulations, like the 1988 proposed regulations, would apply regardless of whether the participant is older than, younger than, or at normal retirement age. Some commentators have suggested that only cessations or reductions after attainment of normal retirement age are prohibited by these sections. This interpretation is not consistent with the language of the statute, which does not specify any minimum age at which the rule applies, and is not adopted under these proposed regulations.

67 Fed. Reg. 76,123-01, 76,124 (Dec. 11, 2002). While proposed regulations themselves "are not authoritative until finalized," Greenhalgh v. Putnam Sav. Bank, 140 F.3d 427, 430 n.4 (2d Cir. 1998), an interpretation of a statute by the agency charged with its administration, when not promulgated as a regulation, is nevertheless "entitled to respect" to the extent it has the "power to persuade." See Christensen v. Harris County, 529 U.S. 576, 587 (2000) (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140

It bears noting that, m erely because the Conference Report or a m em ber of Congress noted a purpose for the legislation, it does not m ean that was the only purpose.

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(1944)); Catskill Mountains Chapter of Trout Unlimited, Inc. v. City of New York, 273 F.3d 481 (2d Cir. 2001) (quoting Christensen). The court finds this interpretation to be persuasive, although the court's holding would be the same even in the absence of this notice of proposed rulemaking. Therefore, while recognizing that its decision on this issue is contrary to that of several other courts, see Tootle v. ARINC, Inc., 222 F.R.D. 88 (D.Md. 2004); Engers v. AT&T Corp., No. 98-3660 (NHP), 2001 U.S. Dist. LEXIS 25889, at *8-*13 (D.N.J. June 6, 2001); Eaton v. Onan Corp., 117 F.Supp.2d 812, 825-29 (S.D.Ind. 2000); see also Campbell v. BankBoston, N.A., 327 F.3d 1, 10 (1st Cir. 2003) (noting in dicta that "the ERISA age discrimination provision may not even apply to workers younger than the age of normal retirement"),10 the court concludes that Richards' age does not bar her from asserting a claim for age discrimination pursuant to ERISA § 204(b)(1)(H). 2. Age Discrimination Theory

The court now turns to the question of whether Richards has stated a claim upon which relief may be granted in Count I of her complaint. She alleges in this count that, "the cash balance terms of the Fleet Plan" violate the age discrimination provision of
In both Eaton and Engers, the courts reasoned that the language reading, "rate of an em ployee's benefit accrual," was am biguous, but that issue is separate from the issue of age. Neither of these courts, nor the court in Tootle, offered any specific reason for treating the language pertaining to age as am biguous. Eaton stated only that, "although the statutory language does not expressly lim it the prohibitions to benefit accruals occurring after an em ployee reaches norm al retirem ent age, there are unusually strong indications in the legislative history that Congress intended they be so lim ited." 117 F.Supp.2d at 825. Tootle did not address at all the question of whether the statute was am biguous as to the age of protected em ployees. The court respectfully disagrees with the Tootle court's decision to inquire into the legislative history without first fully addressing the question of whether the plain language of the statute was unam biguous as to the specific issue of the age of em ployees protected by the statute. The court also notes that it does not consider an additional case cited by the defendants, Hurlic v. S. California Gas Co., No.CV05-5027 (C.D.Cal. Oct. 18, 2005), to be persuasive, because that case was dism issed without opinion. The defendants have not provided this court with any record of the court's reasoning in Hurlic.
10

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ERISA § 204(b)(1)(H), as quoted above. The defendants argue that this claim should be dismissed, even if the court reaches its merits, because the Amended Plan does not discriminate on the basis of age. Cash balance plans are a form of pension that have become increasingly prevalent in recent years. See Eaton, 117 F.Supp.2d at 816-18 (defining and discussing the history of cash balance plans). Thus, the issue of whether cash balance plans violate ERISA's age discrimination provision is one that courts have only recently begun to address. a. Meaning of "Rate of Benefit Accrual." The parties' main dispute, like that

of other parties to have litigated this issue, centers on the meaning of the phrase "the rate of an employee's benefit accrual," as it is used in ERISA Section 204(b)(1)(H)(i).11 If section 204(b)(1)(H) permits a participant's rate of benefit accrual to be "measured in terms of the change in the balance of each participant's hypothetical account," Eaton, 117 F.Supp.2d at 824, then the Amended Plan does not discriminate on the basis of age. In a particular quarter, given two employees who are identically situated except for their ages, the Amended Plan never allocates a smaller cash value to the older employee's hypothetical account than that allocated to the younger employee's hypothetical account. On the other hand, as the defendants conceded at oral argument, if section 204(b)(1)(H) requires "a participant's rate of benefit accrual to be measured solely in terms of an annuity payable at normal retirement age," Eaton, 117

Although Richards also asserts other claim s m ore specific to the Am ended Plan, particularly with regard to the m anner in which the Am ended Plan affects those em ployees who had accrued benefits under the Traditional Plan, but who were not perm itted to continue to accrue new benefits under the Traditional Plan after its am endm ent, she does not press these claim s as the basis for Count I.

11

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F.Supp.2d at 823, then the Amended Plan does add a greater value to the younger employee's hypothetical account than to the older employee's account. See id.; Cooper, 274 F.Supp.2d at 1016. Under the Amended Plan's cash balance terms, an older employee receiving the same dollar amount of contribution to her cash balance account in a given quarter as that received by a younger employee buys a smaller age65 pension annuity with that money. This phenomenon occurs because the older worker is closer to retirement, so the money contributed to her hypothetical account has less time to earn annual interest credits under the plan than does the money contributed to the younger worker's account. The Amended Plan's method of including age and years of service in the determination of quarterly pay credits, such that older employees tend to receive increasingly higher additions of cash value to their hypothetical accounts, mitigates this disparity in age-65 annuity value. See Compl. ¶ 25, 29. However, the pay credits do not increase quickly enough to eliminate the disparity, so employees experience an increasingly lower rate of benefit accrual as they age, if that rate is defined as the change in the value of their accrued benefit measured as an annual benefit commencing at normal retirement age. See id. at ¶ 29. The Second Circuit has not yet ruled on the manner in which ERISA requires courts to calculate the rate of benefit accrual, and district courts who have addressed it are divided. Compare Register v. PNC Financial Svcs. Group, No. 04-CV-6097, 2005 WL 3120268, at *4-*8 (E.D.Pa. Nov. 21, 2005); Tootle v. ARINC, Inc., 222 F.R.D. 88 (D.Md. 2004); Eaton v. Onan Corp., 117 F.Supp.2d 812 (S.D.Ind. 2000); with Cooper v. IBM Personal Pension Plan, 274 F.Supp.2d 1010 (S.D.Ill. 2003); see also Campbell v. BankBoston, N.A., 327 F.3d 1, 10 (1st Cir. 2003) (noting in dicta that "it is by no means 18

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clear that the annuity method is the only permitted method in this context"). The former group of district court opinions are not consistent with the Second Circuit's opinion in Esden v. Bank of Boston, 229 F.3d 154 (2d Cir. 2000), which provides an important guide to the court in determining the meaning of the terms Congress used in ERISA § 204(b)(1)(H)(i). The Esden court held that, even though cash balance plans "are designed to imitate some features of defined contribution plans, they are nonetheless defined benefit plans under ERISA." 229 F.3d at 158. "However `hybrid' in design a cash balance plan may be, it remains subject to a regulatory framework that is in many respects rigidly binary." Id. at 159 n.6. Indeed, the defendants concede that the Amended Plan, as a cash balance plan, must comply with ERISA provisions applicable to defined benefit plans. Defs.' Reply Br. Supp. Mot. Dismiss at 10 [Doc. No 45]. In Esden, the Second Circuit held that the classification of cash balance plans as defined benefit plans has "wide-reaching" "regulatory consequences." It specifically recognized that the appropriate definition of "accrued benefit" to use in regard to cash balance plans is that for defined benefit plans: "the individual's accrued benefit determined under the plan and . . . expressed in the form of an annual benefit commencing at normal retirement age." ERISA § 3(23)(A), 29 U.S.C. § 1002(23)(A). "Only for a defined contribution plan is `accrued benefit' defined as simply `the balance of an individual's account.'" Esden, 229 F.3d at 158 (citing ERISA § 3(23), 29 U.S.C. § 1002(23)(B)). It also held that cash balance plans, as defined benefit plans," "are subject to a series of parallel statutory constraints­under ERISA and I.R.C. [Internal Revenue Code]­from which defined contribution plans are exempted." Esden, 229 19

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F.3d at 158; see id. at 159 (citing several examples). The Esden court recognized that "the governing statutes [including ERISA] and regulations were developed with traditional final-pay defined benefit plans in mind; they do not always fit in a clear fashion with cash balance plans and they sometimes require outcomes that are in tension with the objectives of those plans." Id. at 159. Nevertheless, it enforces the regulatory consequences that arise from the classification of cash balance plans as defined benefit plans. See id. at 158-59. The Eastern District of Pennsylvania, in a holding that conflicts with that of several other courts to have addressed this issue, held that "rate of benefit accrual" is the grammatically correct way of saying "the rate of accrued benefit," the phrase that is defined in ERISA § 3(23), and that the term "rate of benefit accrual" is therefore unambiguous. Cooper, 274 F.Supp.2d at 1016. This court concurs with the Cooper court's ultimate reading of the phrase "rate of benefit accrual," although the grammatical relationship between the terms "rate of benefit accrual" and "accrued benefit" is not the only reason for its holding. "The plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole." Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997). As the Second Circuit emphasized in Esden, ERISA has a binary structure, under which defined benefit plans face significantly different requirements from those applicable to defined contribution plans. 229 F.3d at 158 & n.6, 159. The structure of section 204(b) itself is binary. Whereas section 204(b)(1) states requirements for defined benefit plans, section 204(b)(2) states parallel requirements for defined 20

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contribution plans. Section 204(b)(2)(A) contains an age discrimination provision parallel to that of section 204(b)(1)(H). Whereas the latter prohibits a reduction in "the rate of an employee's benefit accrual," the former prohibits a reduction in "the rate at which amounts are allocated to the employee's account." "[W]hen the legislature uses certain language in one part of the statute and different language in another, the court assumes different meanings were intended." Sosa v. Alvarez-Machain, 542 U.S. 692, 712 n.9 (2004) (citing 2A N. Singer, Statutes and Statutory Construction § 46:06, p. 194 (6th ed.2000)). The court finds that Congress did not intend that "the rate of an employee's benefit accrual," as used in section 204(b)(1)(H)(i), to be measured as "the rate at which amounts are allocated to the employee's account." Congress' use of the latter phrase, which explicitly requires measurements involving an increase in account balances, in ERISA § 204(b)(2) demonstrates that Congress could have used the same phrase in the age discrimination provision governing defined benefit plans had it intended to apply the same measurement rule to defined benefit plans. Instead, it used a completely different phrase, "rate of benefit accrual." ERISA § 204(b)(1)(H)(i). In light of the great similarity that this phrase bears to the statutorily defined term "accrued benefit," and the fact that ERISA requires accrued benefit to be measured as an annual benefit commencing at normal retirement age for defined benefit plans, but requires accrued benefit to be measured as the balance of an individual's account for defined contribution plans, the term "rate of benefit accrual," as used in section 204(b)(1)(H)(i), refers to rate measured as a change in the annual benefit commencing

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at normal retirement age.12 The statute is unambiguous in this respect, and the court need not inquire further into its meaning. Defendants' primary arguments in support of measuring the "rate of benefit accrual" as the rate of change in hypothetical account balances, adopted from the reasoning in Eaton, focus on the practical consequences of the contrary interpretation or on the legislative history. In light of this court's holding that the meaning of this
Although not necessary to this holding, the following observations lend further support to the plaintiff's interpretation of Section 204(b)(1)(H)(i). First, in its com m entary accom panying final regulations issued in 2003, the IRS has interpreted the phrase "rate of future benefit accrual," as used in the notice provision of section 204(h), as follows: "an am endm ent to a defined benefit plan reduces the rate of future benefit accrual only if it is reasonably expected that the am endm ent will reduce the am ount of the future annual benefit com m encing at norm al retirem ent age (or at actual retirem ent age, if later) for benefits accruing for a year." 68 F.R. 17277, 17282 (2003) (em phasis added). Although the IRS has not issued final regulations on ERISA § 204(b)(1)(H)(i), its interpretation of the phrase "rate of future benefit accrual" suggests that it would sim ilarly interpret the phrase "rate of benefit accrual" as requiring m easurem ent using "the am ount of the future annual benefit com m encing at norm al retirem ent age (or at actual retirem ent age, if later)." Id. The IRS has jurisdiction over the interpretation of ERISA § 204, Greenlaugh v. Putnam Sav. Bank, 140 F.3d 428, 428 n.1 (2d Cir. 1998), and its interpretations are entitled to deference, Esden, 229 F.3d at 169. Second, section 204(b)(1)(G) states that "a defined benefit plan shall be treated as not satisfying the requirem ents of this paragraph if the participant's accrued benefit is reduced on account of any increase in his age or service." By using the statutorily defined term "accrued benefit" here, Congress clearly indicated that the question of whether an em ployee's pension benefits were reduced is to be answered with reference to an annual benefit com m encing at norm al retirem ent age. The fact that section 204(b)(1)(G) requires the overall value of the accrued benefit to be m easured as an annual benefit com m encing at norm al retirem ent age, in the context of determ ining whether age discrim ination is occurring, lends further support to the court's reading of "rate of benefit accrual" in the age discrim ination provision of section 204(b)(1)(H)(i) to m ean the rate of increase in this annual benefit com m encing at norm al retirem ent age. The defendants argue that m easuring the rate of benefit accrual as the rate of change in the annual benefit a participant would receive com m encing at age 65 is incorrect because it would invalidate section 204(c)(2)(B). Section 204(c)(2)(B) reads: In the case of a defined benefit plan, the accrued benefit derived from contributions m ade by an em ployee as of any applicable date is the am ount equal to the em ployee's accum ulated contributions expressed as an annual benefit com m encing at norm al retirem ent age, using an interest rate which would be used under the plan under section 1055(gg)(3) of this title (as of the determ ination date). 29 U.S.C. § 1054(c)(2)(B). The defendants argue that this rule perm its a plan to give equal cash am ounts of interest to two participants of different ages who m ade equal contributions to their accounts, and that the plaintiff's reading of section 204(b)(1)(H) would invalidate this treatm ent. However, section 204(c)(2)(B) appears to address only that part of accrued benefit that is derived from em ployee contribution, and does not im pose any requirem ent as to the total rate of benefit accrual.
12

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phrase is clear from ERISA itself, and the fact that Esden requires this court to apply ERISA's defined benefit plan rules to cash balance plans even if they result in apparently unintended consequences, the court finds that inquiring any further into the practical consequences of the application of the section 3(23) "accrued benefit" definition would be inappropriate. See Esden, 229 F.3d at 159. None of the arguments advanced by the defendants or the cases they have cited would suggest "rare and exceptional circumstances," Rubin, 449 U.S. at 430, as to overcome the presumption that Congress "says in a statute what it means and means in a statute what it says there," BedRoc Ltd., LLC v. United States, 541 U.S. 176, 183 (2004) (internal citation omitted); see Nicolaou v. Horizon Media, Inc., 402 F.3d 325, 329 (2d Cir. 2005) (citing BedRoc), and permit the court to disregard the plain meaning of the statutory text. For example, the defendants argue that requiring the rate of benefit accrual to be measured as a rate of increase in an annual benefit commencing at age 65 would not make sense if applied to employees over 65. However, the plaintiff's interpretation of "rate of benefit accrual," applied to employees older than 65, does not necessarily lead to results that would contradict the Congressional intent expressed in the statutory text. Because the definition of "accrued benefit" for defined benefit plans is not explicitly limited to employees under 65, see ERISA § 3(23), it is reasonable to assume that Congress intended that "accrued benefits" be "expressed in the form of an annual benefit commencing at normal retirement age," even for employees older than 65. In applying this rule to the calculation of the "rate of benefit accrual" for an employee older than 65, one possibility would be that which the defendants suggest ­ to refer to an annuity projected backwards in time to age 65. 23

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This result would not necessarily be absurd. Congress' intent was to assure a benefit measured as of normal retirement age. The value of that benefit does not change, regardless of whether the employee is younger or older than normal retirement age. What it costs to provide the benefit may change depending on an employee's age. However, that was not Congress' concern when it prohibited the dimunition of the rate of accrual of the benefit expressed as an annual benefit commencing at normal retirement age. The court will not delve into the legislative history to seek a meaning for language that is unambiguous. It does note that it disagrees with the Eastern District of Pennsylvania's holding with respect to the OBRA 1986 Conference Report language. See Register v. PNC Financial Svcs. Group, No. 04-CV-6097, 2005 WL 3120268, at *7 (E.D.Pa. Nov. 21, 2005) (quoting general statement in OBRA 1986 Conference Report statement that "[p]resent law specifies certain requirements with respect to the rate at which benefits are accrued (i.e., earned) under a pension plan") (quoting H.R. Conf. Rep. No. 99-1012, at 375 (1986)). The conference report does not clearly address the issue of how the "rate of benefit accrual" should be measured, and certainly does not create "rare and exceptional circumstances" to ignore the plain language of the statute by reading in words that are not there. The defendants' additional argument that a court may not find age discrimination in the fundamental effects of the time value of money and that this effect is inherent in all cash balance plans is simply a restatement of the dispute between the parties. The defendants cite only two authorities for this argument, Eaton and Lunn v.Montgomery Ward & Co., 166 F.3d 880, 883 (7th Cir. 1999). The court has already discussed the 24

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reasons for its disagreement with Eaton. The Lunn court did observe that, "no one supposes . . . that defined benefit plans violate ERISA, or any other statute, merely because, depending on the age of the employee and his choice of whether to retire, the actuarial value of his retirement benefits may be less than if he had retired at the normal retirement age" and that it is "unlikely that ERISA would require a subsidy for older workers." 166 F.3d at 883. However, Lunn did not specifically consider the meaning of the phrase "rate of benefit accrual." In light of the Second Circuit's reasoning in Esden and the language and structure of ERISA itself, the court adheres to its conclusion regarding the reading of section 204(b)(1)(H). The court respectfully disagrees with the reasoning of the Eastern District of Pennsylvania in Register v. PNC Financial Svcs. Group, No. 04-CV-6097, 2005 WL 3120268 (E.D.Pa. Nov. 21, 2005), with respect to the manner in which cash balance plans are treated under ERISA: Cash balance plans accrue benefits differently than traditional defined benefit plans. Under a traditional defined benefit plan, the benefits are defined in terms of the age 65 annuity. Therefore, it follows logically that the rate of benefit accrual is the change in the accrued benefit. Cash balance plans are not defined in terms of an age 65 annuity, rather they are defined in terms of an account balance that grows with pay credits and interest. Therefore, it follows logically that the rate of benefit accrual is determined by the change in account balance. 2005 WL 3120268, at *7. This reasoning conflicts with Esden because it effectively treats cash balance plans as if they are defined contribution plans, when they ought to be treated as defined benefit plans. See Esden, 229 F.3d at 158-59. In sum, the court has considered all of the defendants' arguments, but finds them unpersuasive. ERISA itself requires the court to compare annual benefits 25

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commencing at normal retirement age when considering age discrimination in a cash balance plan under section 204(b)(1)(H). The court may not pick a different outcome, even one that may appear more sensible to some, when Congress has not chosen that course. b. Hazen Argument. The defendants argue further that Richards has failed

to state a claim even if section 204(b)(1)(H) does require that the "rate of benefit accrual" be measured in terms of an annual benefit commencing at age 65. They argue that changes in the value of benefits that correlate with age, but are not caused by age, cannot constitute unlawful age discrimination. Their argument in this respect relies on the Supreme Court's decision in Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993), which held that a disparate treatment claim under the related Age Discrimination in Employment Act (ADEA) must fail if the employer's adverse employment action was solely motivated by factors other than age, even if these factors were correlated with age. Id. at 611. However, Hazen Paper left open the question of whether the ADEA permitted suits on a theory of disparate impact. Id. at 610. The recent decision in Smith v. City of Jackson, 544 U.S. 228 (2005), held that section 4(a)(2) of the Age Discrimination in Employment Act does permit disparate impact claims, albeit in more narrow circumstances than Title VII. In light of City of Jackson, Hazen does not support the defendants' position, and they cite no authority to suggest that a claim under ERISA § 204(b)(1)(H) in particular would require a showing of improper motivation. The defendants cite as support for their argument the Eaton court's observation that, 26

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in OBRA 1986, Congress expressly permitted the rate of benefit accrual (however it is measured) to decline over time as long as the decline is tied to the participant's years of service rather than the participant's age (and despite the one-to-one correlation of age and years of service). Those pension age discrimination provisions all make clear that a defined benefit plan can even completely stop benefits from accruing to an employee if the plan has a dollar or percentage cap on benefits, or if the plan limits the number of years of service that will be counted in calculating benefits.

117 F.Supp.2d at 831-32 (citing 29 U.S.C. §§ 623(I)(2), 1054(b)(1)(H)(ii); 26 U.S.C. § 411(b)(1)(H)(ii)). The cited ERISA provision, section 1054(b)(1)(H)(ii) of Title 29 of the United States Code, reads: A plan shall not be treated as failing to meet the requirements of this subparagraph solely because the plan imposes (without regard to age) a limitation on the amount of benefits that the plan provides or a limitation on the number of years of service or years of participation which are taken into account for purposes of determining benefit accrual under the plan. Section 411(b)(1)(H)(ii) of Title 26 is the parallel provision from the Internal Revenue Code, identical to that of ERISA. This provision does permit a pension plan to take into account years of service or participation in determining benefits, and perhaps to place an absolute ceiling on the total benefits available under a plan. Richards, however, does not allege that the Amended Plan violates section 204(b)(1)(H) for these reasons. She alleges that "an older worker with the same rate of pay and years of service as a younger worker, receiving the same dollar amount of contribution to her cash balance account, buys an increasingly smaller age-65 pension annuity with that money because the closer the older worker gets to retirement age the less time the money contributed has to earn annual interest credits under the plan." Compl. ¶ 29. Years of service or participation and the value of previously accrued benefits may tend to correlate with age, but they are not perfectly correlated therewith. An older employee may have fewer 27

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years of service and participation than a younger employee and may have accrued fewer benefits than a younger employee with more years of service. In contrast, the number of years between an individual's age and age 65 is always perfectly correlated with age. The defendant presents no authority that persuades the court that Richards has failed to make out a claim in Count I.13 The court finds that Count I states a claim upon which relief may be granted. It denies the defendants' motion to dismiss insofar as it is premised on the substantive claim in Count I. B. Violation of ERISA § 203(a) Non-Forfeitability Provision (Count II): Wear-Away

In Count II, Richards asserts a claim under ERISA § 203(a), which requires that "[e]ach pension plan shall provide that an employee's right to his normal retirement benefit is nonforfeitable upon the attainment of normal retirement age" and sets forth specific requirements for determining whether a benefit satisfies the requirements of this paragraph. 29 U.S.C. § 1053(a). ERISA § 3(19) states in relevant part, The term "nonforfeitable" when used with respect to a pension benefit or right means a claim obtained by a participant or his beneficiary to that part of an immediate or deferred benefit under a pension plan which arises from the participant's service, which is unconditional, and which is legally enforceable against the plan. 29 U.S.C. § 1002(19).

The court notes that the other authority that the defendants cite for their Hazen argum ent, Cam pbell v. BankBoston, N.A., 206 F.Supp.2d 70, 78 (D.Mass. 2002), did not address any claim under ERISA. On appeal, the First Circuit Court of Appeals did express som e doubt on the theory of liability that Richards advances here, but it refused to decide the issue because it had not been presented to the lower court. Cam pbell v. BankBoston, N.A., 327 F.3d 1, 9-10 (1st Cir. 2003).

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Richards claims that the Amended Plan's cash balance terms violate section 203(a) because they "condition Richards' receipt of cash balance benefits on her foregoing the early retirement benefits she earned prior to the adoption of the cash balance amendment." Compl. ¶ 44. Although the defendants did not raise a substantive challenge to this Count in their initial memorandum, they do raise a substantive challenge in responding to arguments in the plaintiff's opposition brief. The defendants argue that the plaintiff has failed to allege facts that would state that the Amended Plan requires a forfeiture. They argue that the Amended Plan does not require a choice between alternative benefits, because "participants who accrued a benefit prior to the conversion to a cash balance formula receive one benefit which is always the greater of (1) their cash balance account benefit and (2) their benefit accrued under the Traditional Plan as of December 31, 1996." Defs.' Reply Br. at 14 [Doc. No. 45-1]. They further argue that, "because the only benefit that participants are entitled to under the cash balance formula is the greater of their benefit under the old plan or under the cash balance formula, there is never a `forfeiture of any accrued benefit." Id. at 14-15. The Supreme Court has held that defining the "content of the benefit that, once vested, cannot be forfeited" is a "threshold issue" that must be resolved in order to determine if a plan violates section 203(a). Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 511 (1981): [W]hat defines the content of the benefit that, once vested, cannot be forfeited? ERISA leaves this question largely to the private parties creating the plan. That the private parties, not the Government, control the level of benefits is clear from the statutory language defining nonforfeitable rights as well as from other portions of ERISA. ERISA 29

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defines a "nonforfeitable" pension benefit or right as "a claim obtained by a participant or his beneficiary to that part of an immediate or deferred benefit under a pension plan which arises from the participant's service, which is unconditional, and which is legally enforceable against the plan." 29 U.S.C. § 1002(19). In construing this definition last Term, we observed: "[T]he term `forfeiture' normally connotes a total loss in consequence of some event rather than a limit on the value of a person's rights. Each of the examples of a plan provision that is expressly described as not causing a forfeiture listed in [§ 1053(a)(3)] describes an event-such as death or temporary re-employment-that might otherwise be construed as causing a forfeiture of the entire benefit. It is therefore surely consistent with the statutory definition of "nonforfeitable" to view it as describing the quality of the participant's right to a pension rather than a limit on the amount he may collect." Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. [359,] 372-373 . . . . Similarly, the statutory definition of "nonforfeitable" assures that an employee's claim to the protected benefit is legally enforceable, but it does not guarantee a particular amount or a method for calculating the benefit. As we explained last Term, "it is the claim to the benefit, rather than the benefit itself, that must be `unconditional' and `legally enforceable against the plan.' " Id., at 371 . . . . Id. at 511-12; see Williams v. Caterpillar, Inc., 944 F.2d 658, 664 (9th Cir. 1991) ("[C]ourts have uniformly relied on Alessi to uphold the formulas by which employers compute the amount of their employees' benefits, so long as the pension plans in question satisfy ERISA's guidelines"). The terms14 of the Amended Plan itself state that an employee in Richards' position, upon termination of employment, will receive the greater of the balance in her hypothetical cash balance account and the frozen benefit derived from the Traditional Plan. Thus, the Amended Plan terms give Richards no claim to benefit accrual during the years in which her hypothetical account balance is

The plaintiff does allege that the plan adm inistrators frequently fail to follow the plan term s, which specify that a retirin