Free Other Notice - District Court of Arizona - Arizona

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SUSAN MARTIN (AZ#014226) DANIEL L. BONNETT (AZ#014127) JENNIFER KROLL (AZ#019859) MARTIN & BONNETT, P.L.L.C. 3300 N. Central Avenue, Suite 1720 Phoenix, Arizona 85012-2517 Telephone: (602) 240-6900 [email protected] [email protected] [email protected] Attorneys for Plaintiffs IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

Barbara Allen; Richard Dippold; Melvin Jones; ) Donald McCarty; Richard Scates and Walter G. ) West, individually and on behalf of all others ) similarly situated, ) ) Plaintiffs, ) ) vs. ) ) Honeywell Retirement Earnings Plan; Honeywell ) Secured Benefit Plan; Plan Administrator of ) Honeywell Retirement Earnings Plan; and Plan ) Administrator of Honeywell Secured Benefit ) Plan, ) ) Defendants. ) )

No. CV04-0424 PHX ROS Plaintiffs Notice of Supplemental Citation of Authority Regarding Defendants November 16, 2007 Motion for Reconsideration

Plaintiffs submit this notice of supplemental authority with respect to Defendants Motion for Reconsideration, (Doc. 323), in order to call to the Court s attention IRS Revenue Ruling 79-325, 1979-2 C.B. 190, 1979 WL 51083. The Revenue Ruling negates Defendants argument that the 1984 amendments

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reducing Plaintiffs accrued benefits were somehow saved from violation of the anti-cutback rule (Section 204(g) of ERISA and IRC Section 411(d)(6)) by virtue of a Signal Retirement Plan provision (§4.10(c)(ii)). Plaintiffs demonstrated that the 1984 amendments resulted in a significant reduction of Plaintiffs accrued benefits as of the applicable amendment date. (See Doc. 361 pp. 12-17, Doc. 353 ¶ 17.) Defendants claimed that any reduction in accrued benefits was saved from violating ERISA by virtue of § 4.10(c)(ii), which Defendants had argued constituted a safe harbor that allegedly protected accrued benefits as of December 31, 1983 (the day before the 1984 amendments became effective). Plaintiffs argued that §4.10(c)(ii) was inapplicable and that, in any event, it did not save the challenged amendments from violating the anti-cutback rule because it failed to guarantee that Plaintiffs accrued benefits would not be reduced by an amendment of the plan and because it did not even purport to apply to accrued benefits either as of the plan amendments adoption date (which Defendants contend was February 4, 1984) or as of the amendments effective date (January 1,1984).

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Revenue Ruling 79-325 makes clear that the plan provision relied on by Defendants
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could not save the amendments from violating ERISA because the amendments were adopted
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during the plan year but made effective as of the beginning of the plan year and §4.10(c)(ii) did not protect accrued benefits on the later adoption date, nor on the earlier effective date. The ruling states: Section 411.-Minimum Vesting Standards, 26 CFR 1.411(d)-3: Other special rules. Reduction of accrued benefits. A plan amendment made during a plan year that does not satisfy the requirements of section 412(c)(8) of the Code and section 302(c)(8) of ERISA and that reduces a participant's accrued benefit to the accrued benefit at the beginning of such plan year violates section 411(d)(6) of the Code and section 204(g) of ERISA. Advice has been requested as to whether a plan amendment made during a plan year that reduces the accrued benefit of a participant to the accrued benefit at the beginning of such year and that does not satisfy the requirements of section 412(c)(8) of the Internal Revenue Code and section 302(c)(8) of the Employee Retirement Income Security Act of 1974 [Pub. L. 93-406, 1974-3 C.B. 1] (ERISA), violates section 411(d)(6) of the Code and section 204(g) of ERISA.
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A plan is amended during a plan year to reduce the accrued benefits of some or all participants to the accrued benefit that existed on the first day of such plan year. This amendment does not satisfy the requirements of section 412(c)(8) of the Code and section 302(c)(8) of ERISA. Section 411(d)(6) of the Code and section 204(g) of ERISA provide that an accrued benefit may not be reduced by a plan amendment other than an amendment described in section 412(c)(8) of the Code and section 302(c)(8) of ERISA. In this case, section 411(d)(6) of the Code and section 204(g) of ERISA apply even though the accrued benefit during a plan year is reduced to the accrued benefit as of some earlier date in such plan year. Also, the sole allowable exception from the requirements of section 411(d)(6), relating to sections 412(c)(8) of the Code and 302(c)(8) of ERISA, does not apply. Accordingly, such plan amendment violates section 411(d)(6) of the Code and section 204(g) of ERISA.

Respectfully submitted this 14th day of April, 2008.

MARTIN & BONNETT, P.L.L.C. By: s/Susan Martin Susan Martin Daniel L. Bonnett Jennifer L. Kroll 3300 North Central Avenue Suite 1720 Phoenix, AZ 85012-2517 Attorneys for Plaintiffs

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CERTIFICATE OF SERVICE I hereby certify that on April 14, 2008 I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: David B. Rosenbaum Dawn L. Dauphine Osborn Maledon, P.A. 2929 North Central Ave., Suite 2100 Phoenix, AZ 85012-2794 Michael Banks William Delaney John G. Ferreira Azeez Hayne Morgan Lewis & Bockius LLP 1701 Market Street Philadelphia, PA 19103 Howard Shapiro Proskauer Rose, LLP 909 Poydras St., Suite 1100 New Orleans, LA 70112 Amy Covert Proskauer Rose LLP th One Newark Center, 18 Floor Newark , NJ 07102-5211 Christopher Landau Eleanor R. Barrett Craig Primis Kirkland & Ellis LLP 655 Fifteenth Street, N.W. Washington, D.C. 20005 Attorneys for Defendants s/ Susan Martin

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