Free Order - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 On October 28, 2005, the Court issued a short order denying Defendants' Motion For 18 Reconsideration (Doc. #79) and granting Defendants' Alternative Motion For Interlocutory 19 Appeal (Doc. #79) with an opinion to follow. This is that opinion. 20 Pending before the Court is Defendants' Motion For Reconsideration and Clarification 21 and Alternative Motion To Allow Interlocutory Appeal (Doc. #79). Defendants challenge 22 the portion of the Court's March 31, 2005 Order (Doc. #71) granting summary judgment in 23 favor of Plaintiffs for its claims brought under ERISA §1054(g) ("anti-cutback claims"). 24 Defendants move for relief from judgment pursuant to Federal Rule of Civil Procedure 60(b) 25 based on (1) the Court's legal error in following Ninth Circuit precedent, which Defendants 26 claim is distinguishable, and (2) the enactment of new regulations interpreting ERISA § 27 28
Case 2:04-cv-00424-ROS Document 138 Filed 11/21/2005 Page 1 of 15

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

) ) ) Plaintiffs, ) ) vs. ) ) H O N E Y W E L L R E T I R E M E N T) ) EARNINGS PLAN, et al., ) ) Defendants. ) ) BARBARA ALLEN, et al.,

No. CV 04 0424-PHX-ROS ORDER

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1054(g). For the reasons set forth below, the Court will deny Defendants' Motion for Reconsideration and grant in a separate order its Motion To Allow Interlocutory Appeal. I. Background A. The Underlying Order

On March 31, 2005, the Court issued an Order granting in part and denying in part both Defendants' Motion to Dismiss the Complaint and Plaintiffs' Motion for Partial Summary Judgment, and granting Defendants' request to dismiss Count V of the Amended Complaint (Doc. #71). In its Order, the Court dismissed the following claims: (1) Plaintiffs' nonforfeitability claims brought under 29 U.S.C. § 1053; (2) Plaintiffs' anti-backloading claims brought under 29 U.S.C. § 1054; (3) Plaintiffs' claim that Defendants violated the terms of the Signal Retirement Plan by failing to apply the 1.25% Minimum Benefit Formula; (4) Plaintiffs' claim that Defendants violated the terms of the Signal Retirement Plan by failing to apply a 3.5% projection rate to Garrett participants eligible to commence benefits as of December 31, 1983; (5) Plaintiffs' claim that Defendants violated 29 U.S.C. § 1054(h) by failing to provide notice of the amendment of the Signal Retirement Plan to refer to the "Garrett Division" rather than the "Garrett Corporation;" (6) Plaintiffs' claim that Defendants violated 29 U.S.C. 1054(g) by amending the Signal Retirement Plan to refer to the "Garrett Division" rather than the "Garrett Corporation;" (7) Plaintiffs' claim that Defendants violated 29 U.S.C. § 1024(b)(4) by failing to timely provide them with copies of benefit calculation worksheets; and (8) Plaintiffs' claim that Defendants violated 29 U.S.C. § 1022 by failing to adequately disclose certain information in their SPDs.

In addition, the Court awarded summary judgment to Plaintiffs on the following claims: -2Document 138 Filed 11/21/2005 Page 2 of 15

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(1) Plaintiffs' claim that Defendants violated 29 U.S.C. § 1054(g) by amending the Garrett Retirement Plan to retroactively increase the interest rate used to project a portion of participant's Secured Benefit Account forward to age 65 for the purpose of calculating the Secured Benefit Account offset; applying a Social Security offset attributable to years of service worked prior to introduction of that offset; and eliminating the fractional reduction to the Secured Benefit Account offset for participants with more than 35 years of service; (2) Plaintiffs' claim that Defendants violated 29 U.S.C. §§ 1054(g) and (h) by amending the Signal Retirement Plan to provide for a Secured Benefit Account offset to the Plan's minimum benefit formulas; and (3) Plaintiffs' claim that Defendants violated the terms of the Signal Retirement Plan by applying a Secured Benefit Account offset to the Plan's minimum benefit formulas. Defendants challenge the Court's order granting summary judgment to Plaintiffs on claims involving violations of ERISA's anti-cutback provision in § 1054(g). For purposes of this Order, the challenged anti-cutback claims will be referred to as such, and the court's discussion and analysis in this Order will focus primarily on these claims. Defendants seek clarification of the Court's order regarding additional claims, which will be addressed in section C below. B. The Opinion

An opinion was rendered on July 19, 2005 setting forth the Court's rationale for its March 31, 2005 Order. (Doc. #73) ("Opinion"). In that Opinion the Court recognized the uniqueness of this case, because "Plaintiffs concede for purposes of summary judgment that they are better off on the whole after the amendments than they were before." Plaintiffs have since notified the Court that this is not their contention. See Plaintiffs' Reply To Defendants' Motion For Reconsideration p. 9 fn. 7. Rather, what Plaintiffs intended to say is that whether their net benefit is higher, as alleged by Defendants, or lower is of no consequence because the anti-cutback rule prevents a reduction in any component of a benefit formula. At issue, is the proper interpretation of the term "accrued benefit" for the purposes of the anti-cutback rule. Plaintiffs claim that the individual features of a benefit formula itself, like the method -3Document 138 Filed 11/21/2005 Page 3 of 15

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for determining an offset, are accrued benefits that may not be retroactively decreased under any circumstances by a plan amendment. On the other hand, Defendants argue that a participant's "accrued benefit" is the product of the plan's benefit formula taken as a whole at any given time, or the net annual benefit. The Court held that if this issue were one of first impression it would adopt the Defendants' interpretation, because it is based on common sense, consistent with the plain meaning of "accrued benefit" and legislative history of the anti-cutback rule, and prudent from a policy perspective in that it affords employers flexibility to reexamine existing plans and adopt new benefit formulas that, as a whole, benefit participants. See Opinion pp. 14-18. However, the Court noted that as sensible as this approach is, it is not the approach taken by the Ninth Circuit. As a result, the Court followed the Ninth Circuit's precedent as set forth in Michael v. Riverside Cement Co. Pension Plan, which found that a court may "look [] beyond the net effect of a plan amendment on annual benefit payments, to the features of the benefit formula itself, and [find] an impermissible reduction of an accrued benefit." 266 F.3d 1023, 1027 (9th Cir. 2001). Although the Court tried to do so, it could not find a means to distinguish Michael from the facts of this case. See Opinion pp. 18-25. The Court also recognized a then proposed (now in effect) Treasury Department regulation interpreting § 1054(g) that adopted the Defendants' interpretation of the anticutback rule. See id. at 17; 43 Fed. Reg. 47714 (1978).1 The proposed regulation provides that, "in determining whether a reduction [for the purposes of the anti-cutback rule] has occurred, all amendments with the same applicable amendment date . . . . are treated as one plan amendment." Id. In other words, if two amendments have the same amendment date and one amendment increases the participant's early retirement annuity, "and the other amendment decreases the early retirement factors that are used to determine the early retirement annuity, the amendments are treated as one amendment and only violate [the antiReorganization Plan NO. 4 of 1978, § 101, 43 Fed. Reg. 47714 (1978), 92 Stat. 3790, gives the Secretary of the Treasury the ultimate authority to interpret both § 1054(g) and the Internal Revenue Code's parallel anti-cutback rule, 26 U.S.C. § 411(6)(d). -4Document 138 Filed 11/21/2005 Page 4 of 15
1

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cutback] rule if the net dollar amount of the early retirement annuity after the two amendments is lower at any point in time than it would have been without the two amendments." Id. Because the regulation was only proposed and not in effect, however, the Court could not rely on it authoritatively. See Opinion p. 18. C. The Defendants' Motion For Reconsideration

On October 25, 2005, Defendants asked the court to reconsider its Order for Summary Judgment pursuant to Rule 60(b) based on the court's legal error in relying on Michael (Doc. #79). On August 12, 2005, the Secretary of the Treasury adopted final regulations regarding the scope of ERISA Section 1054(g) protected benefits (the "Regulations"). See Treas. Reg. § 1.411(d)-3 (2005), 70 Fed. Reg. 47109. Defendants filed a notice of new authority with the Court on August 22, 2005 (Doc. #80), which served as an additional basis for reconsideration under Rule 60(b). The Court ordered supplemental briefing by both parties on the impact of these Regulations (Doc. #83). On September 30, 2005, Defendants filed a second notice of new authority with the Court (Doc. #107), which included a district court opinion holding that Brand X requires deference to federal regulations despite contrary court precedent. On October 26, 2005, the Court heard oral argument on the issue of whether the Regulations apply, and also whether, upon issuance of a decision on this issue, the case should be certified for interlocutory appeal. II. Discussion A. Reconsideration 1. Legal Standard

The Court has discretion to reconsider and vacate its orders. See Barber v. Hawaii, 42 F.3d 1185, 1198 (9th Cir. 1994); United States v. Nutri-Cology, Inc., 982 F.2d 394, 396 (9th Cir. 1992). Motions for reconsideration are disfavored, however, and are not the place for parties to make new arguments not raised in their original briefs. See Northwest Acceptance Corp. v. Lynnwood Equip., Inc., 841 F.2d 918, 925-26 (9th Cir. 1988). Nor is it the time to ask the Court to rethink what it has already thought. See United States v.

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Rezzonico, 32 F. Supp. 2d 1112, 1116 (D. Ariz. 1998) (citing Above the Belt, Inc. v. Mel Bohannon Roofing, Inc., 99 F.R.D. 99, 101 (E.D.Va. 1983)). Because no judgment has been entered in this action, Federal Rule of Civil Procedure 60(b) governs the analysis of Defendants' Motion For Reconsideration. A Rule 60(b) motion for relief from an order may be granted only "upon a showing of (1) mistake, surprise, or excusable neglect; (2) newly discovered evidence; (3) fraud; (4) a void judgment; (5) a satisfied or discharged judgment; or (6) extraordinary circumstances which would justify relief." School Dist. No. 1J Multnomah County, Or. v. AcandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993); see Fed. R. Civ. P. 60(b); Allmerica Fin. Life Ins. & Annuity Co. v. Llewellyn, 139 F.3d 664, 666 (9th Cir. 1997) (stating that party must show "extraordinary circumstances" to obtain relief under Rule 60(b)(6)). The Ninth Circuit, unlike other circuits, holds that legal error is a "mistake" within the meaning of Rule 60(b)(1). See Liberty Mut. Ins. Co. v. E.E.O.C., 691 F.2d 438, 441 (9th Cir. 1982). 2. Analysis (a) Ground I - Legal Error & Michael

In its Motion for Reconsideration, Defendants argue that the Court improperly relied on Michael in finding that the plan amendments violated the anti-cutback statute. Although the Defendants do not specifically articulate the grounds for which relief is sought, they essentially argue that the Court committed legal error in relying on Michael. Defendants contend that the holding in Michael is based on section 1054(g)(2), which is not implicated in this case, and that the challenged amendments, unlike those in Michael, did not reduce or impair the pre-amendment value of Plaintiffs' accrued benefits. See Defendants' Motion For Reconsideration p. 2. Defendants' argument is the same one made in its Response to Plaintiff's Motion For Summary Judgment that was previously considered by this Court. See Opinion p. 21. A Motion For Reconsideration is not an opportunity to rehash previously made arguments or to ask the Court to rethink what it's already considered. See United States v. Rezzonico, 32 F. Supp. 2d 1112, 1116 (D. Ariz. 1998). The Court addressed this argument

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fully and will not reiterate it now. See Opinion p. 21-23. Defendants cannot establish clear error and as a result, fail to satisfy the standard for reconsideration on these grounds. (b) Ground Two - Treasury Regulations

Defendants' alternative ground for relief relies upon the recently enacted Treasury Regulations, which clarify that ERISA's anti-cutback rule does not protect individual components of a benefit formula, but rather, protects the benefit itself. As a result, plan amendments that alter a benefit formula do not violate the anti-cutback rule unless they reduce the net benefit. See Treas. Reg. § 1.411(d)-3 (2005), 70 Fed. Reg. 47109. In its Opinion, this Court recognized that the Secretary's interpretation of ERISA's anti-cutback rule conflicts with the Ninth Circuit's decision in Michael. See Opinion pp. 18-27. At the time, this conflict was immaterial, because the Court could not rely on a Regulation that was not yet enacted. However, now that the Regulation is in effect, the issue becomes whether in light of Brand X, the Regulation is controlling despite contrary circuit court precedent, and if so, whether the application of the Regulation presents any retroactivity concerns. In Chevron U.S.A., Inc. v. Natural Resources Defense Council, et al., the Supreme Court held that courts should accept an agency's construction of the statute, so long as the statute is ambiguous and the implementing agency's construction is reasonable, even if it differs from what the court believes is the best statutory interpretation. 467 U.S. 837, 843 (1984). In evaluating whether an agency's interpretation is lawful, the Supreme Court set forth a two-step procedure. The first step is to ask whether the statute's plain terms "directly address the precise question at issue." Id. If the statute is ambiguous on the point, then the Court should defer at step two to the agency's interpretation so long as it is "a reasonable policy choice for the agency to make." Id. This holding was later extended in National Cable & Telecomm. Ass'n v. Brand X Internet Serv., --- U.S. ----, 125 S.Ct. 2688, 2702 (June 27, 2005). Applying Chevron to the instant case, we must first ask whether the statute at hand directly addresses the precise question at issue, which is whether § 1054(g) precludes a plan amendment that reduces an element of the benefit formula, even if that amendment increases -7Document 138 Filed 11/21/2005 Page 7 of 15

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participants' net benefits. A plain reading of the statute indicates that section 1054(g) cannot be read as unambiguously addressing this issue. In recognizing the various interpretations by other courts, Treasury responded to this ambiguity. Indeed, the Ninth Circuit's holding in Michael is merely one reading of the statute, and the Court did not find that the statute was unambiguous. Step Two of the Chevron inquiry states that if the statute is ambiguous on the point, then the Court should defer to the agency's interpretation so long as it is "a reasonable policy choice for the agency to make." For the same reasons articulated in its Opinion, the Court finds that the agency's interpretation is not only reasonable, but also correct. Defendants also point out that the Supreme Court recently extended Chevron's holding to require deference even in the face of contrary circuit court precedent. See National Cable & Telecommunications Association v. Brand X Internet Services, et al., 125 S.Ct. 2688 (June 27, 2005). In reaching this determination, the Supreme Court stated that such deference is warranted unless the deciding court specifically held that the statute unambiguously requires that particular construction. See id. at 2702. In its second notice of supplemental authority, Defendants directed the court's attention to AARP, et al., v. Equal Employment Opportunity Commission, a recent opinion applying the principles of both Chevron and Brand X. Case 2:05-cv-00509-AB (E.D.Pa. Sept. 27, 2005). In AARP, the district court vacated a previous order precluding the EEOC from enacting a regulation that was contrary to prior court precedent. Id. at 4-8. At the time the first order was issued, Brand X had not been decided. Upon EEOC's motion for reconsideration, the Court held that in light of Brand X, the EEOC was permitted to issue a regulation that was a departure from legal precedent, because the court did not hold that its interpretation was the only interpretation warranted under the statute. Id. at 12-13. The same can be said for the case at hand. In deciding Michael, the Ninth Circuit did not find that its interpretation was the only one warranted under the statute. Consequently, the agency interpretation should be afforded Chevron deference, and according to Brand X, this is true despite the Ninth Circuit's contrary interpretation as set forth in Michael.

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The focus then turns to issues of retroactivity, the caselaw around which is often confusing. There is a strong presumption against retroactivity, where regulations are ordinarily not given retroactive effect absent a clear expression of an intent to do so. See Bowen v. Georgetown Univ. Hosp., 488 U.S. 203, 208 (1988) ("administrative rules will not be construed to have a retroactive effect unless their language requires this result"); Kankamalage v. Immigration & Naturalization Serv., 335 F.3d 858, 862 (9th Cir. 2003) (stating that a regulation can only be applied retroactively when its language is "so clear that it could sustain only one interpretation."). At the same time, courts are constrained to follow the law in existence at the time the decision is rendered, even though that law was enacted after the events that gave rise to the suit. See Landgraf v. USI Film Products, 511 U.S. 244, 273 (1994). Although these two principles are seemingly contradictory, there is no conflict where the statute in question is unambiguous on the issue of retroactivity. See id. Even absent a legislative mandate, however, the "application of new statutes passed after the events in suit is unquestionably proper in many situations." Id. at 274. Deciding when a statute operates 'retroactively' is not always a simple or mechanical task. See id. at 267. "When a case implicates a federal statute enacted after the events in suit, the court's first task is to determine whether Congress has expressly prescribed the statute's proper reach. If Congress has done so, of course, there is no need to resort to judicial default rules." Id. at 280. If not, then the Court must ask whether the new provision attaches new legal consequences to events completed before its enactment. See id.. Regulations that create new legal rules are presumed not to apply retroactively, Landgraf v. USI Film Prods., 51, U.S. 244, 264 (1994), whereas those that interpret or clarify existing statutes or legal rules generally apply to disputes that occurred before the regulation was adopted. See US West Communications, Inc. v. D. Jennings, 304 F.3d 950, 957-58 (9th Cir. 2002) (holding that no retroactivity concerns exist where regulation merely interprets existing law); AT&T Communications Systems v. Pacific Bell, 203 F.3d 1183, 1187 (9th Cir. 2000); ABKCO Music Inc. v. LaVere, 217 F.3d 684, 689 (holding that "clarifying legislation is not

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subject to any presumption against retroactivity and is applied to all cases pending as of the date of its enactment."). In this situation, the case is pending and no final judgment has been rendered. Application of the regulation may present retroactivity concerns, however, because it affects the interpretation of a retirement plan that was created prior to its enactment date. Under the Landgraf inquiry, the Court must first determine whether Congress has defined the proper reach for the regulations. The effective date language in the statute provides, in pertinent part: (j) Effective dates - (1) General effective date. Except as otherwise provided in this paragraph (j), the rules of this section apply to amendments adopted on or after August 12, 2005. The Effective Date Section of the Introduction also states: These final regulations apply to amendments adopted and effective after August 12, 2005 . . . . Plan amendments adopted before August 12, 2005 are to be evaluated in light of the applicable authorities without regard to these regulations. [Emphasis added.] The word "amendments" is referring to retirement plan amendments adopted on or after

15 August 12, 2005, which means it cannot apply to the plan in this case. Because Congress, 16 through Treasury, has explicitly indicated that the regulations should only apply 17 prospectively, the Court does not need to reach the second inquiry. The Court acknowledges 18 that regulations that are interpretive by effect as opposed to rule-making do not present 19 retroactivity concerns in pending cases and can be relied upon as authoritative law. 20 However, this is not the case where the agency expressly states that amendments enacted 21 before the effective date should be evaluated in light of applicable authorities and without 22 regard to these regulations. 23 Defendants rely on Smiley v. Citibank, N.A., 517 U.S. 735, 744 n.3 (1996), as 24 authority for this Court to disregard the effective date language. 25 Supplemental Brief Regarding Secretary of the Treasury's Final Regulations pp. 9-10. In 26 Smiley, the Supreme Court held that the Comptroller of the Currency's interpretation of the 27 National Bank Act was entitled to deference, even though its interpretation was expressed 28 - 10 Case 2:04-cv-00424-ROS Document 138 Filed 11/21/2005 Page 10 of 15

See Defendants

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in a regulation that had been adopted in response to ongoing litigation. Id. In a footnote, the Court acknowledged that the application of the regulation might have an impermissibly retroactive effect, but disagreed, stating that "it would be absurd to ignore the agency's current authoritative pronouncement of what the statute means." Id. However, Smiley is distinguishable from this case. Here, the agency has expressly decided against retroactive application. In fact, Smiley's failure to address this issue has been noted by the Ninth Circuit before. See Pauly v. U.S. Dept. of Agriculture, 348 F.3d 1143, 1152 (9th Cir. 2003) ("Smiley also says nothing about whether a rule may be applied retroactively when the agency has expressly decided against retroactive application."). In Pauly, the Ninth Circuit found that the district court erred in compelling the USDA to apply its regulations retroactively, despite the agency's express decision against a retroactive application. Id. at 1152. In reaching its determination, the Court noted that under the district court's approach, "it would be impossible for an agency to promulgate a rule that was not retroactive, unless it expressly contradicted a prior rule." The Court refused to adopt this approach, and stated that in doing so, it would create a presumption in favor of retroactivity. See id. Although Pauly involved a rule-making as opposed to an interpretive statute, it is still controlling for the principle that a court may not choose to apply regulations retroactively where an agency has expressly spoken against it. In choosing to word the "effective date" section, Treasury could have used generic language stating that the statute applied prospectively from the date of enactment. Such language would permit application of the Regulations to any amendments that were challenged on or after the enactment date. Instead, Treasury chose more limited language, stating that the rules apply to amendments adopted on or after August 12, 2005. It is instructive that the language focuses on the date of the amendment rather than the date of the Regulations. Treasury's use of the word "rules" instead of "regulations" might support Defendants' argument that this language should be limited to rule-making regulations only, if not for the additional language in the Introduction.

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There is nothing else Treasury could have said to make its intentions clearer. Defendants cite no case law, and the Court could find none, that would permit disregarding language so explicit. The fact that the agency expressly recognized contrary interpretations adopted by courts and cited these decisions as justification for enacting the Regulations suggests that the agency intended the effective date language to apply to all Regulations regardless of whether they were rule-making or interpretive. Further, it suggests that Treasury was aware of what the "applicable authorities" are and the outcome that could result in following them. Had Treasury intended for the regulations not to apply to this or any other similarly situated case, it could have stated that the regulations do not apply to any or all plans that existed prior to August 2005, except for matters pending before the court, but it did not. As a result, its intentions are clear, and the Court is left to consider the amendments in light of applicable authorities, which includes Michael. Case law relied upon by Defendants involves whether an agency is permitted to interpret a statute that is contrary to prior court precedent, and if it does, whether a court can rely on that regulation. The answer to this inquiry is yes. However, none of these involve the discreet issue here, which is whether a regulation issued pursuant to the agency's interpretive authority (as opposed to its rulemaking authority) can apply in evaluating a plan amendment enacted prior to the effective date of the regulation where the agency expressly states that the regulations apply only to amendments enacted prospectively. The issue is not one of retroactivity but of whether the Regulations apply despite language explicitly precluding them from such. Defendants are asking the Court to defer to one part of the Regulations the part interpreting section 1054(g) - and reject another - the effective date language. The Court can not pick and choose favorable sections where the agency clearly intends for the statute not to apply. B. Interlocutory Appeal 1. Legal Standard

Defendants alternatively request that the Court certify its March 31 and July 19 Orders for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). Section 1292(b) provides: - 12 Document 138 Filed 11/21/2005 Page 12 of 15

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When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals which would have jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within ten days after the entry of the order: Provided, however, that application for an appeal hereunder shall not stay proceedings in the district court unless the district judge or the Court of Appeals or a judge thereof shall so order. Certification is proper under §1292(b) when a district court decision (1) involves a "controlling question of law," (2) as to which there are "substantial grounds for difference of opinion," and (3) where an immediate appeal may "materially advance the ultimate termination of the litigation." In Re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1982). The Court will address these factors in turn. 2. Legal Analysis

As Defendants point out, "all that must be shown in order for a question to be 'controlling' is that resolution of the issue on appeal could materially affect the outcome of the litigation in district court." See Defendants' Motion For Reconsideration p. 12, citing In Re Cement Antitrust Litig. at 1026. The Court has already characterized its anti-cutback ruling as "the main issue in this case." See Opinion p. 48. In addition, it presents pure questions of law, which makes it ideal for resolution by interlocutory appeal. Should the Ninth Circuit find in favor of Defendants, most of Plaintiffs' significant claims will be eliminated. As the Court explained in its Opinion, there are substantial grounds for a difference of opinion. The Court identified at least five independent reasons why Michael should not govern this case and why its interpretation is simply incorrect. See Opinion pp. 14-16. This is supported by the fact that the Regulations were enacted to address the ambiguity in the statute and on-going litigation interpreting § 1054(g). 70 Fed. Reg. 47111. Certification would permit the Ninth Circuit to decide whether Michael is controlling in this case, and if so, whether it should be revisited, clarified, or overturned in light of the recent Regulations.

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Finally, an immediate appeal will materially advance the outcome of the litigation. As previously noted, the proper interpretation of §1054(g)(1)'s anti-cutback provision directly affects Plaintiffs' most significant claim. If the Ninth Circuit agrees with Defendants, then this claim will not survive. On the other hand, if the case is not appealed, parties will expend a substantial amount of time and resources on matters such as class certification, discovery, and eventual trial. Accordingly, the Court certifies the issues for appeal: (1) whether Michael governs this action, (2) whether the effective date language of the Regulations precludes its application to the amendments at issue, and (3) for purposes of determining whether a violation of § 1054(g)(1) has occurred, whether an "accrued benefit" includes the net annual benefit of the plan amendments taken as a whole, or each component of the benefit. C. Clarification

The Defendants seek clarification of its order to confirm that, in granting partial summary judgment, the Court ruled only that Defendants had breached 29 U.S.C. §§ 1054(g) and (h) by making the challenged plan amendments, and did not intend to foreclose Defendants from taking discovery on an asserting affirmative defenses related to individual putative class members' claims. The Court did not. Defendants' understanding of the Court's decision as set forth in its Motion For Reconsideration and Clarification is correct. The parties may otherwise proceed with the litigation of this case.

Accordingly, IT IS ORDERED that Defendants' Motion For Reconsideration is DENIED. IT IS FURTHER ORDERED that Defendants' Motion For Interlocutory Appeal is GRANTED, the Court having determined under 28 U.S.C. § 1292(b) that the Court's summary judgment ruling in favor of Plaintiffs on the anti-cutback claims in Doc. #71, and its denial of Defendants' Motion for Reconsideration in this Order, involve a controlling question of law as to which there is substantial ground for difference of opinion and that an

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immediate appeal from this order and from Doc. #71 and Doc. #77 may materially advance the ultimate termination of the litigation.

DATED November 18, 2005.

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