Key Trust Amicus Brief, in support of defendant-appellee
Case No. 01-3255
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UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
____________________________________________________
Benefits Committee of Saint-Gobain Corporation, et al.,
Plaintiffs-Appellants
v.
Key Trust Company of Ohio, N.A.,
Defendant-Appellee
____________________________________________________
Appeal from the United States District Court
for the Northern District of Ohio
____________________________________________________
BRIEF OF THE SECRETARY OF LABOR AS AMICUS CURIAE
IN SUPPORT OF DEFENDANT-APPELLEE KEY TRUST CO.
____________________________________________________
Howard Radzely
Acting Solicitor of Labor
Timothy D. Hauser
Associate Solicitor
William Zuckerman
Senior Trial Solicitor
Peter Dolan
Trial Attorney
P.O. Box 1914
Washington, D.C. 20013
(202) 693-5600
Attorneys for the Secretary of Labor as Amicus Curiae
INTEREST OF THE SECRETARY OF LABOR
The ESOP's Purchases of Furon Stock
Acquisition of Furon and Amendment of the ESOP Plan Document
Federal Cases:
Adams v. Avondale Indus., Inc., 905 F.2d 943 (6th Cir.), cert. denied, 498 U.S. 984 (1990)
Central States, Southeast & Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559 (1985)
Central Trust Co. v. American Avents Corp., 771 F. Supp. 871 (S.D. Ohio 1989)
Dairy Fresh Corp. v. Poole, 108 F. Supp.2d 1344 (S.D. Ala. 2000)
Donovan v. Bierwirth, 680 F.3d 263 (2d Cir.), cert. denied, 459 U.S. 1069 (1982)
Donovan v. Cunningham , 716 F.2d 1455 (5th Cir.1983), cert. denied, 467 U.S. 1251 (1984)
Donovan v. Williams, 4 EBC 1237 (N.D. Ohio 1983)
Eaves v. Penn, 587 F.2d 453 (10th Cir. 1978)
First Nat'l Bank of Chicago v. Retirement Trust, No. 90 C 3981, 1991 WL 285269 (N.D. Ill. Dec. 27, 1991)
Gilliam v. Edwards, 492 F. Supp. 1255 (D.N.J. 1980)
Herman v. Nationsbank Trust Co., 126 F.3d 1354 (11th Cir. 1997), cert. denied, 525 U.S. 816 (1998)
Hunter v. Caliber Sys. Inc., 220 F.3d 702 (6th Cir. 2000)
Kuper v. Iovenko, 66 F.3d 1447 (6th Cir. 1995)
Marshall v. Cuevas, 1 EBC 1580 (D.P.R. 1979)
Marshall v. Kelly, 465 F. Supp. 341 (W.D. Okla. 1978)
Marshall v. Mercer, 4 EBC 1523 (N.D. Tex. 1983), aff'd in part and rev'd in part on other grounds, 747 F.2d 304 (5th Cir. 1984)
Martin v. Feilen, 965 F.2d 660 (8th Cir. 1992), cert. denied, 506 U.S. 1054 (1993)
McMahon v. McDowell, 794 F.2d 100 (3rd Cir.), cert. denied, 479 U.S. 971 (1986)
Reich v. Compton, 57 F.3d 270 (3rd Cir. 1995)
Secretary of Labor v. Fitzsimmons, 805 F.2d 682 (7th Cir. 1986)
Utilicorp United, Inc. v. Kemper Financial Servs., Inc., 741 F. Supp. 1363 (W.D. Mo. 1989)
Federal Statutes:
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. 1001 et seq.
Section 3(14)(C), 29 U.S.C. §1002(14)(C)
Section 3(21)(A), 29 U.S.C. §1002(21)(A)
Section 403(c), 29 U.S.C. § 1103(c)
Section 404(a)(1), 29 U.S.C. § 1104(a)(1)
Section 404(a)(1)(A), 29 U.S.C. § 1104(a)(1)(A)
Section 404(a)(1)(B), 29 U.S.C. § 1104(a)(1)(B)
Section 404(a)(1)(D), 29 U.S.C. § 1104(a)(1)(D)
Section 406, 29 U.S.C. § 1106
Section 406(a), 29 U.S.C. § 1106(a)
Section 406(a)(1)(D), 29 U.S.C. § 1106(a)(1)(D)
Section 408, 29 U.S.C. § 1108
Section 408(b)(3), 29 U.S.C. § 1108(b)(3)
Section 502(a)(3), 29 U.S.C. § 1132(a)(3)
Other Authorities:
26 U.S.C. § 4975(d)(3)
H.R. Rep. No. 93-1280, 93rd Cong., 2d Sess. at 313 (1974), reprinted in 1974 U.S.C.C.A.N. 5038, 5093
S. Rep. No. 93-127 at 131, reprinted in 1974 U.S.C.C.A.N. 4838, 4867
26 C.F.R. § 54.4975-7(b)(5)
29 C.F.R. § 2550.408b-3
29 C.F.R. § 2550.408b-3(b )(2)
DOL Advisory Opinion 93-35A, 1993 WL 562217 (Dec. 23, 1993)
DOL Information Letter 0420, 1997 WL 1824020 (Dec. 17, 1997)
IRS Priv. Ltr. Rul. 9416043, 1994 WL 141568 (Jan. 28, 1994)
IRS Priv. Ltr. Rul. 8044074, 1980 WL 135505 (Aug. 11, 1980)
INTEREST OF THE SECRETARY OF LABOR
The Secretary of Labor ("the Secretary") has primary authority to interpret and enforce Title I of the Employee Retirement Income Security Act ("ERISA" or the "Act"), as amended, 29 U.S.C. §§ 1001 et seq., and therefore has a strong interest in ensuring that the ERISA fiduciary standards are correctly applied in the administration of assets of employee benefits plans. The Secretary's interests further include promoting the uniform application of the Act, protecting plan participants and beneficiaries, and ensuring the financial stability of plan assets. Secretary of Labor v. Fitzsimmons, 805 F.2d 682, 688-94 (7th Cir. 1986) (en banc). The Secretary has a heightened interest in transactions involving leveraged (debt-financed) employee stock ownership plans ("ESOPs"), as in the subject case, because Congress, in enacting ERISA, expressed particular concern about these transactions and directed the Secretary to give them "special scrutiny." H.R. Rep. No. 93-1280, 93rd Cong., 2d Sess. at 313 (1974), reprinted in 1974 U.S.C.C.A.N. 5038, 5093.
Acting as a fiduciary of the Furon Company Employee Stock Ownership Plan ("Plan" or "ESOP"), the Benefits Committee of Saint-Gobain Corporation ("Benefits Committee"), filed this action against Key Trust of Ohio, N.A. ("Key Trust" or "Trustee"), the ESOP's trustee. The ESOP is an employee benefit plan subject to ERISA, and the Benefits Committee brought the action under 29 U.S.C. § 1132(a)(3) to compel Key Trust to transfer specific ESOP assets to Saint-Gobain Performance Plastics Corporation ("Saint-Gobain Plastics"). Key Trust counterclaimed for a declaratory judgment that its fiduciary duties under ERISA preclude remittance of the demanded payment.
On cross-motions for summary judgment, the district court denied all of the Benefits Committee's claims and granted summary judgment to Key Trust on its counterclaim. The Benefits Committee timely appeals from this judgment.
The Secretary as amicus curiae adopts the district court's findings of fact, which are summarized below.
In 1990, the Furon Company ("Furon") established the ESOP as an employee benefit plan for its employees, designed to invest primarily in stock issued by Furon. R. 25 at 2-3. The Benefits Committee administers the ESOP, and Key Trust holds the ESOP's assets in trust. R. 25 at 2-3. Saint-Gobain Corporation ("Saint-Gobain"), which is a successor to Furon, appoints the Benefits Committee's members and also may remove them at will, with or without cause. R. 25 at 2 and 4-6; R. 19, Exh. A at § 13.4. [1] The Benefits Committee and Key Trust both are fiduciaries of the ESOP, within the meaning of ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A). R. 25 at 2.
Eligible Furon employees who participate in the ESOP own individual accounts in the ESOP, and the ESOP allocates to these accounts credits based on the Furon stock purchased by the ESOP. R. 25 at 2-4. The benefits payable by the ESOP are the balances in participants' accounts. R. 25 at 4 and 6.
The ESOP's Purchases of Furon Stock
The ESOP purchased blocks of Furon stock periodically during 1990-97. R. 25 at 3-4. Furon financed each purchase by lending to the ESOP each block's entire purchase price. R. 25 at 3-4. These stock purchase loans are called "Exempt Loans" because they satisfy exemptions from otherwise applicable prohibitions in the Internal Revenue Code ("Code") and ERISA. R. 25 at 3-4.
The Trustee did not allocate (or credit) this stock to participants' ESOP accounts immediately upon purchase but, instead, as provided in the ESOP's governing documents, held it in the ESOP's Suspense Subfund. R. 25 at 4. Furon stock in the Suspense Subfund is "Unallocated Stock," and the ESOP's proceeds from its sale are "Unallocated Proceeds." As the ESOP made loan repayments, it released Unallocated Stock from the Suspense Subfund to participants' ESOP accounts in proportion to the repayment amounts. R. 25 at 4.
Furon did not take a security interest in the ESOP's Unallocated Proceeds, and the Exempt Loans are unsecured. R. 25 at 4. For each Exempt Loan, Furon and the ESOP executed a written loan agreement (the "Loan Agreements"). Under the Loan Agreements, Furon promised to remit to the ESOP contributions sufficient to enable the ESOP to make timely loan payments; agreed that a scheduled loan payment not made solely because of Furon's failure to make such required contributions is not a default by the ESOP; and further agreed that, if it failed to make such required contributions, the ESOP Trustee's obligation to pay principal and interest due on the loans is suspended until Furon makes the necessary contribution. R. 25 at 13.
In construing the Loan Agreements, the district court found that Key Trust's obligation to repay the Exempt Loans is entirely dependent on Furon/Saint-Gobain Plastics making the anticipated contributions to the ESOP. R. 25 at 14. Absent those contributions, the district court found further, the Loan Agreements impose on Key Trust no duty to repay the Exempt Loans further. R. 25 at 14.
Acquisition of Furon and Amendment of the ESOP Plan Document
In 1999, Saint-Gobain purchased all of Furon's outstanding stock for cash, including the Unallocated Stock in the ESOP's Suspense Subfund and renamed Furon as Saint-Gobain Plastics. R. 25 at 5-6. On March 17, 2000, Section 15.4 of the ESOP's plan document was amended to provide in part that "[u]pon termination of the Plan . . . any unallocated proceeds . . . held in the Suspense Subfund shall, . . . to the extent permitted by the [Internal Revenue] Code and Regulations, be returned to the Company in full satisfaction of such Exempt Loan." R. 25 at 14-15. The district court found that this amendment did not grant Saint-Gobain Plastics a security interest in the ESOP's Unallocated Proceeds. R. 25 at 22.
After it amended section 15.4 of the plan document, Saint-Gobain Plastics terminated the ESOP and permanently ceased making contributions to it. R. 25 at 6-7, 11-13, and 14. As a consequence, the district court found, "[Key Trust's] obligation under the Loan Agreements to make payments on the Exempt Loans has been suspended" and suspended "permanent[ly]." R. 25 at 11 and 14. In a further finding, "because [Key Trust's] failure to repay [further] is solely a result of Saint-Gobain Plastics' failure to make further contributions," it "does not constitute a default. . . ." R. 25 at 13.
Relying on plan document section 15.4, as amended, the Benefits Committee then demanded that Key Trust pay approximately $2,300,000 of the ESOP's remaining Unallocated Proceeds to Saint-Gobain Plastics. Key Trust refused on the ground that its fiduciary duties preclude such payment. R. 25 at 6-7. The subject action ensued.
ERISA's seminal purposes are to safeguard the interests of participants and to preserve the integrity of plan assets, and it is to these ends that courts must interpret and apply the Act's provisions. Gilliam v. Edwards, 492 F. Supp. 1255, 1261 (D.N.J. 1980). ERISA § 404(a)(1)(A) requires a fiduciary to "discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits to participants and beneficiaries." 29 U.S.C. § 1104(a)(1)(A). Fiduciary loyalty is "an unwavering duty on an ERISA trustee to make decisions with single-minded devotion to a plan's participants . . . .'' Adams v. Avondale Indus., Inc., 905 F.2d 943, 946 (6th Cir.), cert. denied, 498 U.S. 984 (1990). Thus, every action of both the Benefits Committee and Key Trust, as the ESOP's fiduciaries, must comport with those ends and "must be made with an eye single to the interests of the participants and beneficiaries." Donovan v. Bierwirth, 680 F.2d 263, 271 (2d Cir. 1982), cert. denied, 459 U.S. 1069 (1982) (describing "the complete loyalty to participants demanded of . . . trustees of a pension plan" under ERISA).
By remitting to the ESOP's sponsoring employer a payment which the ESOP has no obligation to make, Key Trust clearly would violate this duty of fiduciary loyalty. In this appeal, it is stipulated that, under the Loan Agreements, the ESOP's loan repayment obligation was suspended if Furon failed to make its promised contributions to the ESOP. It is further stipulated that Saint-Gobain Plastics permanently ceased all contributions to the ESOP after acquiring Furon. Indeed, as it must, the Benefits Committee concedes that, "[i]n short, [Saint-Gobain Plastics] has no enforceable right to repayment under the Loan Agreements." BC Br. at 23.
Any remittance of ESOP assets to Saint-Gobain Plastics in the guise of a "loan repayment" thus would be gratuitous. It is axiomatic that the transfer of plan assets where there is no obligation to do so or without equivalent consideration violates ERISA. Marshall v. Cuevas, 1 BNA Employee Benefits Cases ("EBC") 1580-81 (D.P.R. 1979) ((plan fiduciaries violated the loyalty provisions of ERISA § 404(a)(1)(A) by transferring plan assets to the destitute widow of a deceased trustee when they had no obligation to do so)); Reich v. Compton, 57 F.3d 270, 272-73, 290-91 (3rd Cir. 1995) (breach of fiduciary loyalty to transfer a plan asset for well under its accounting value).
Fiduciary loyalty also requires Key Trust to assert and defend the ESOP's rights under the Loan Agreements. In Dairy Fresh Corp. v. Poole, 108 F. Supp. 2d 1344 (S.D. Ala. 2000), where the sponsoring employer sued the ESOP to obtain one-half of its assets, the ESOP's trustee breached his duty of loyalty by initially acquiescing in the claim against the ESOP, by raising no defenses to the claim, and by failing to investigate its basis. Id. at 1352-53, 1359-61.
Accordingly, in assessing Key Trust's compliance with its fiduciary duty of loyalty should it comply with the Benefits Committee's demand for the payment, the district court correctly observed:
If [Key Trust] were to repay the Exempt Loans when it has no legal obligation to do so, it would not be acting solely in the interest of the participants of the Furon ESOP. For clearly it is in the participants' interest to maximize the amount of their benefits and not have their benefits reduced by payment of unsecured, unenforceable debts.
R. 25 at 22-23.
Remittance of the un-obligated payment additionally would breach Key Trust's duty of prudence, codified in ERISA § 404(a)(1)(B), "to discharge [its] duties . . . with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in like capacity and familiar with such matters would use . . . ." 29 U.S.C. § 1104(a)(1)(B). Because, as the district court found, the demanded payment would cause an unnecessary and permanent loss to the ESOP participants (R. 25 at 9-10 and 22-23), its remittance would be patently imprudent. See Compton, 57 F.3d at 272-73, 290-91; Hunter v. Caliber Sys., Inc., 220 F.3d 702, 723 (6th Cir. 2000) (a transaction is imprudent if it is not structured appropriately for the plan's interests).
By refusing to comply with the Benefits Committee's demand, Key Trust further comported with its fiduciary responsibility that, with exceptions not relevant here, "the assets of [an ESOP] plan shall never inure to the benefit of any employer . . . ." ERISA § 403(c)(1), 29 U.S.C. § 1103(c)(1). As the district court correctly noted: "[P]ayment of the Exempt Loans by [Key Trust] in this situation would benefit only Saint-Gobain Plastics -- precisely the party who is never intended to benefit from an ESOP." R. 25 at 23.
Moreover, solely because the ESOP's Unallocated Proceeds are not collateral for the Exempt Loans, Key Trust's use of them as a source for the demanded payment would in itself violate the Act. In advisory opinions on analogous facts, the Department of Labor has concluded that an ESOP fiduciary will breach its duties of loyalty and prudence under ERISA § 404(a)(1), among others, if it pays off ESOP-owed debt by using unallocated stock in which the lender does not have a security interest. DOL Advisory Opinion ("AO") 93-35A, 1993 WL 562217, at **2-3 (Dec. 23, 1993); DOL Information Letter ("IL") AO 0420, 1997 WL 1824020, at *3 (Dec. 17, 1997).
In sum, by remitting the demanded payment, Key Trust would breach multiple fiduciary duties. The district court correctly so held.
Except for the exempt transactions delineated in ERISA § 408, 29 U.S.C. § 1108, ERISA § 406(a)(1)(D) prohibits a plan fiduciary from knowingly causing a direct or indirect "transfer to, or use by or for the benefit of, a party in interest of any assets of the plan." 29 U.S.C. § 1106(a)(1)(D). By employing the ESOP's participants, Saint-Gobain Plastics is a statutory party in interest with respect to the Furon ESOP. ERISA § 3(14)(C), 29 U.S.C. § 1002(14)(C). Thus, unless exempted, Key Trust is prohibited from transferring any ESOP assets to or for the benefit of Saint-Gobain Plastics.
The demanded payment here cannot meet any exemption from, and therefore would violate, the prohibition of ERISA § 406(a)(1)(D). A loan to an ESOP and its repayment are exempt from the prohibitions of ERISA § 406(a) pursuant to ERISA § 408(b)(3) if, inter alia, the loan (including its repayment) "is primarily for the benefit of participants and beneficiaries of the plan." 29 U.S.C. § 1108(b)(3). Here, as the district court found, the remittance of an un-obligated "payment" on the Exempt Loans would result in an uncompensated and permanent loss to the ESOP's participants. Thus, the § 408(b)(3) exemption cannot apply and, consequently, § 406(a)(1)(D) prohibits the demanded payment of ESOP assets to Saint-Gobain Plastics. E.g., Marshall v. Mercer, 4 EBC 1523, 1535 (N.D. Tex. 1983), aff'd in part and rev'd in part on other grounds, 747 F.2d 304 (5th Cir. 1984); Donovan v. Williams, 4 EBC 1237, 1241-42, 1245 (N.D. Ohio, 1983); Marshall v. Kelly, 465 F. Supp. 341, 347, 351 (W.D. Okla. 1978).
In an attempt to evade the prohibition mandated by § 406(a)(1)(D), the Benefits Committee argues that the § 408(b)(3) exemption and the regulation issued thereunder, 29 C.F.R. § 2550.408b-3, must be interpreted to permit use of an ESOP's unallocated proceeds to repay an unsecured, exempt loan. BC Br. at 37-39. Otherwise, it contends, an ESOP cannot legally repay any exempt loan that is unsecured or, alternatively, that only loans secured by the ESOP's unallocated stock will satisfy the § 408(b)(3) exemption. BC Br. at 37-39.
The argument is inapposite to the facts in this record. First, the Benefits Committee nowhere attempts to suggest that, where, as the district court found here (R. 25 at 11 and 13-14), the lender's own actions have permanently suspended the ESOP's loan payment obligation, any further loan payments can be "primarily for the benefit of the participants and beneficiaries of the plan." 29 U.S.C. § 1108(b)(3), 29 C.F.R. § 2550.408b-3(b)(2). Second, the Benefits Committee overlooks a known method through which an ESOP can repay an unsecured, exempt loan consistently with ERISA. As the district court explained (R. 25 at 18 n.6), if, as here, the ESOP's loan payment obligation is limited to the employer's contributions to the ESOP, then the lender will receive all scheduled loan payments if the employer maintains the ESOP long enough to make the contributions necessary for the ESOP to make those scheduled payments. In such a structure, the lender could enforce a claim against the ESOP for payment from the ESOP's contribution receipts. Here, however, Furon chose to not secure the Exempt Loans and Saint-Gobain Plastics, Furon's successor, chose to terminate the ESOP before the loans matured. Ibid.
The Benefits Committee further posits that the fiduciary duties owed to the ESOP under ERISA § 404(a)(1) should not apply to exempt loans. But in doing so, it overlooks well-settled law to the contrary. An ERISA § 408 exemption does no more than avoid the prohibitions of § 406 of the Act; it does not exempt the transaction from the fiduciary duties mandated in ERISA § 404(a)(1). This Court and other circuits have repeatedly approved this construction of ERISA, which Congress explicitly set forth in ERISA's legislative history. Kuper v. Iovenko, 66 F.3d 1447, 1458 (6th Cir. 1995); Martin v. Feilen, 965 F.2d 660, 665 (8th Cir. 1992), cert. denied, 506 U.S. 1054 (1993); McMahon v. McDowell, 794 F.2d 100, 110 (3rd Cir.), cert. denied, 479 U.S. 971 (1986); Donovan v. Cunningham, 716 F.2d 1455, 1467 (5th Cir. 1992), cert. denied, 467 U.S. 1251 (1984); Eaves v. Penn, 587 F.2d 453, 459 (10th Cir. 1978); S. Rep. No. 93-127 at 31, reprinted in 1974 U.S.C.C.A.N. 4838, 4867.
Conceding that Saint-Gobain Plastics has no enforceable right to repayment under the Loan Agreements, the Benefits Committee argues that it is nevertheless entitled to receipt of the loan balance pursuant to Section 15.4 of the ESOP's plan document. [2] The argument ignores well established law.
ERISA § 404(a)(1)(D) requires plan fiduciaries to act "in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this title and title IV." 29 U.S.C. § 1104(a)(1)(D) (emphasis added). Because the demanded payment would be a fiduciary breach under § 404(a) (1) and a nonexempt transaction prohibited by § 406(a)(1)(D), the ESOP's governing documents cannot authorize the payment even though they purport to do so. "Trust [or plan] documents cannot excuse trustees from their duties under ERISA." Central States, Southeast & Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 568 (1985); Utilicorp United, Inc. v. Kemper Financial Services, Inc., 741 F. Supp. 1363, 1365-66 (W. D. Mo. 1989) (compliance with plan documents cannot be a defense to a charge of fiduciary breach). If acting in accordance with the plan document would result in a violation of the Act , a fiduciary must refrain from so acting. Herman v. Nationsbank Trust Co., 126 F.3d 1354, 1368-69 (11th Cir. 1997), cert. denied, 525 U.S. 816 (1998); Central Trust Co. v. American Avents Corp., 771 F. Supp. 871, 875-76 (S.D. Ohio 1989); First Nat'l Bank of Chicago v. Retirement Trust, No. 90 C 3981, 1991 WL 285269, at *2 (N.D. Ill. Dec. 27, 1991). Had Key Trust repaid the loan balance from the Unallocated Proceeds in reliance on the "authority" expressed in the ESOP plan document, it could not have escaped the consequences of its resulting fiduciary breach.
The Benefits Committee's argument additionally ignores countervailing provisions in the ESOP's trust agreement that specifically relieve Key Trust from following the provisions of section 15.4. By their terms, the ESOP's plan document and trust agreement must be construed as a single, integrated document. R. 25 at 15. Section 3.2(d) of the trust agreement provides:
Notwithstanding any other provision of the Trust Agreement, the Trustee shall not be required to comply with any provision of the Trust Agreement that is not consistent with the requirements of Title i of ERISA.
The Benefits Committee's argument to the contrary notwithstanding, then, the ESOP's governing documents in terms do not require Key Trust, as the ESOP trustee, to comply with plan document section 15.4 where, as here, compliance would cause a fiduciary breach.
Finally, in arguing that section 15.4 of the plan document requires Key Trust to make the demanded payment, the Benefits Committee relies on two private letter rulings ("PLRS") issued by the Internal Revenue Service ("IRS"). IRS Priv. Ltr. Rul. 9416043, 1994 WL 141568, at *3 (Jan. 28, 1994); IRS Priv. Ltr. Rul. 8044074, 1980 WL 135505, at *3 (Aug. 11, 1980). This excise tax exemption and its subsidiary Treasury regulation incorporate the same criteria as the ERISA § 409(b)(3) exemption and its exempt loan regulation cited above. [3]
These PLRS have no application, however, to fiduciary breach issues concerning the demanded payment in issue here. First, as the IRS expressly noted in both PLRS, its jurisdiction there extended only to excise tax questions so that it could express no opinion on any fiduciary standards imposed by Title I of ERISA. 1980 WL 135505 at *4; 1994 WL 141568 at *4.
Second, these two PLRS differ from this case factually. They concern ESOPs with enforceable loan payment obligations, unlike the Furon ESOP which, solely because of Saint-Gobain Plastics' own failure to make promised contributions to the ESOP, has no further loan payment obligation. Additionally, unlike the Furon ESOP's unsecured Exempt Loans, PLR 8044074 does not indicate whether the ESOP's unallocated stock secured the exempt loan.
For the foregoing reasons, the judgment below should be affirmed.
HOWARD RADZELY
Acting Solicitor of Labor
TIMOTHY D. HAUSER
Associate Solicitor
WILLIAM ZUCKERMAN
Acting Counsel for Special Litigation
___signed________
PETER B. DOLAN
Trial Attorney
Plan Benefits Security Division
Office of the Solicitor
U. S. Department of Labor
P.O. Box 1914
Washington, D.C. 20013
(202) 693-5600
Attorneys for the Secretary of Labor as amicus curiae
Dated: 22 June, 2001
CERTIFICATE OF COMPLIANCE WITH RULE 37(a)(7)(C)
This brief is printed in proportionally spaced, 14-point, Times New Roman type, contains 3538 words as measured by Word Perfect 8, and complies with the type-volume limitations imposed by Fed. R. App. P. 37(a)(7(c) and 29(d).
___signed____
Peter B. Dolan
I hereby certify that on June 22, 2001, copies of the foregoing
BRIEF OF THE SECRETARY OF LABOR AS AMICUS CURIAE
IN SUPPORT OF DEFENDANT-APPELLEE
KEY TRUST COMPANY OF OHIO, N.A.
were sent by overnight delivery to:
Mr. Michael L. Banks |
John W. Edwards II |
___signed_____
Peter B. Dolan
Footnotes
[1] "R. 19 Exh." denotes an exhibit to the parties' Stipulations of Fact, which are record entry 19.
[2] The district court found that section 15.4, as amended, did not grant Saint-Gobain Plastics a security interest in the Unallocated Proceeds. R. 25 at 22.
[3] Compare 26 U.S.C. § 4975(d)(3) to 29 U.S.C. § 1106(a)(1)(D), and compare 26 C.F.R. § 54.4975-7(b)(5) to 29 C.F.R. § 2550.408b-3.