{"id":67,"date":"2015-03-12T06:00:39","date_gmt":"2015-03-12T13:00:39","guid":{"rendered":"https:\/\/erisa-experts.com\/blog\/?p=67"},"modified":"2016-03-01T13:19:31","modified_gmt":"2016-03-01T21:19:31","slug":"is-williston-on-contracts-the-sacred-text-for-interpretation-of-erisa-plans","status":"publish","type":"post","link":"https:\/\/erisa-experts.com\/blog\/2015\/03\/12\/is-williston-on-contracts-the-sacred-text-for-interpretation-of-erisa-plans\/","title":{"rendered":"Is Williston on Contracts The Sacred Text for Interpretation of ERISA Plans?"},"content":{"rendered":"

By Joseph A. Garofolo<\/a><\/p>\n

Earlier this year, the Supreme\u00a0Court\u00a0emphasized that collective\u00a0bargaining agreements\u00a0establishing\u00a0ERISA\u00a0welfare plans generally\u00a0must be\u00a0construed in accordance with ordinary principles of contract interpretation.\u00a0 See M&G Polymers USA, LLC v. Tackett, <\/em>135 S. Ct. 926 (2015).\u00a0 \u00a0<\/em>The Court rejected the Sixth Circuit’s inferences in favor of vesting of retiree health care benefits outlined in International Union, United Auto, Aerospace, & Agricultural Implement Workers of America <\/em>v. Yard-Man, Inc.<\/em>, 716 F.2d 1476, 1479 (6th Cir. 1983).\u00a0 Counting the concurring opinion, the Court cited Williston on Contracts<\/em> no less than seven times when describing ordinary principles of contract interpretation.\u00a0 See<\/em> Tackett<\/em>, 135 S. Ct. at 933, 935-938 (citing R. Lord, Williston on Contracts<\/em> (4th ed. 2008 & 2012)).\u00a0 The\u00a0majority also cited Williston on Cont<\/em>racts<\/em> in US Airways, Inc. v. McCutchen<\/em>, 133 S. Ct. 1537, 1549 (2013),\u00a0and Justice Scalia cited the treatise\u00a0in his concurrence in Cigna Corp. v. Amara<\/em>, 131 S. Ct. 1866, 1884\u00a0(2011).<\/p>\n

ERISA practitioners familiar with the Supreme Court’s interpretive history\u00a0of the phrase “other appropriate equitable relief,”\u00a0as used in\u00a0ERISA \u00a7 502(a)(3),\u00a0will recall the Court’s frequent\u00a0references to\u00a0the Restatement of Trusts<\/em>, Bogert & Bogert’s Law of Trusts and Trustees<\/em>, and Scott\u00a0& Fratcher’s Law of Trusts<\/em> (now Scott & Ascher on Trusts<\/em>), sometimes referred to as\u00a0The Sacred Texts.\u00a0 See<\/em> Jacklyn Willie, Attorneys Reflect on 40 Years of ERISA’s Biggest Rulings<\/em>, Bloomberg BNA Pension & Benefits Daily, Sept. 9, 2014, at 2.<\/p>\n

In light of the Court’s\u00a0recent decisions, Williston on Contracts\u00a0<\/em>might be viewed as The Sacred Text\u00a0when it\u00a0comes\u00a0to benefit plan interpretation.\u00a0 But\u00a0this is by no means a foregone conclusion.\u00a0 The Supreme\u00a0Court has\u00a0characterized Corbin on Contracts<\/em>\u00a0as a\u00a0“standard current work[].”\u00a0 Great-West Life Annuity Ins. Co. v. Knudson<\/em>, 534 U.S. 204, 217 (2002).\u00a0 Indeed,\u00a0in\u00a0Tackett<\/em>,\u00a0135 S. Ct. at 936, the\u00a0Court also cited Corbin on Contracts<\/em>.\u00a0 Of course, Arthur Corbin and Samuel Williston famously disagreed on a number of fundamental principles\u00a0relating to\u00a0contractual interpretation, such as the proper application of the\u00a0parol evidence rule.\u00a0 See<\/em>\u00a0Eric A. Posner, The Parol Evidence Rule, the Plain Meaning Rule, and the Principles of Contractual Interpretation<\/em>, 146 U. Pa. L. Rev. 533, 568-69 (1998). \u00a0<\/em><\/p>\n

Moreover, “for the last few decades the academic literature has not taken Williston’s jurisprudence all that seriously.”\u00a0 Mark L. Movsesian, Rediscovering Williston<\/em>,\u00a062 Wash. & Lee L. Rev. 207, 209 (2005).\u00a0 While\u00a0Mark Movsesian, a contracts professor at St. John’s University School of Law,\u00a0concluded in 2005\u2014perhaps\u00a0presciently in the case of the Supreme Court’s recent ERISA jurisprudence\u2014that there had been a resurgence\u00a0of interest in Williston’s work, he\u00a0also explained the following:<\/p>\n

The cite count is high, but scholars have tended to look to Williston only in passing, referencing him when they have needed a source for some black-letter proposition or some point of legal history.\u00a0 In part, this indifference stems from the fact that most of Williston’s work is of a doctrinal and case-oriented style that has fallen out of vogue. . . . Over time, the conventional wisdom has lumped Williston together with the great villains of contemporary jurisprudence, the classical formalists, portraying him as a mindless reactionary obsessed with logic and conceptual abstraction.<\/p>\n

Id.<\/em> at 209-210.<\/p>\n

Elaborating upon\u00a0what some perceive to be failings of Williston’s work, Professor Movsesian pointed out that Harvard Law\u00a0Professor\u00a0Morton Horwitz has asserted that “Williston’s objective theory of contract acts to ‘disguise gross disparities of bargaining power under a facade of neutral and formal rules.'”\u00a0 Id.<\/em> at 226 (citation omitted).<\/p>\n

Back\u00a0to the realm of ERISA, in Tackett<\/em>,\u00a0the Supreme Court\u00a0suggested that\u00a0it would not\u00a0be appropriate to apply ordinary contract law principles when\u00a0such principles\u00a0are “inconsistent with federal labor policy.”\u00a0 135 S. Ct. at 933.\u00a0 And, in addition to the fact that ERISA expressly states\u00a0that one of its purposes is\u00a0to protect the interests of participants and beneficiaries,\u00a0some commentators have contended that ERISA plans are adhesion contracts.\u00a0 See,\u00a0e.g.<\/em>, John H. Langbein, Trust Law as Regulatory Law: The Unum\/Provident Scandal and Judicial Review of Benefit Denials Under ERISA<\/em>, 101 Nw. U. L. Rev. 1315, 1323 (2007) (“ERISA benefit plans are characteristic contracts of adhesion, offered on a take-the-plan-or-leave-the-job basis.”).<\/p>\n

Thus, it\u00a0is unclear whether\u00a0all of the principles of contractual interpretation associated with Samuel Williston are consistent with the \u201cspecial nature and purpose of employee benefit plans.\u201d\u00a0 V<\/em>arity Corp. v. Howe<\/i>, 516 U.S. 489, 497 (1997).<\/p>\n

Because\u00a0ERISA\u00a0cases frequently involve\u00a0disputes over benefit plan interpretation, we will likely have the opportunity to\u00a0observe whether the Court\u00a0will continue to rely upon Williston on Contracts <\/em>to articulate ordinary principles of contract interpretation.\u00a0 If this turns out to be the case, considering the fact that the treatise\u00a0currently\u00a0consists of\u00a031 volumes, there is certainly\u00a0plenty of material for the Court to draw from in\u00a0framing the “ordinary contract\u00a0principles” that\u00a0must be applied to employee benefit plans.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Joseph A. Garofolo Earlier this year, the Supreme\u00a0Court\u00a0emphasized that collective\u00a0bargaining agreements\u00a0establishing\u00a0ERISA\u00a0welfare plans generally\u00a0must be\u00a0construed in accordance with ordinary principles of contract interpretation.\u00a0 See M&G Polymers USA, LLC v. Tackett, 135 S. Ct. 926 (2015).\u00a0 \u00a0The Court rejected the Sixth Circuit’s inferences in favor of vesting of retiree health care benefits outlined in International Union, … <\/a><\/span><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14,17,16,10,9],"tags":[],"class_list":{"0":"entry","1":"post","2":"publish","3":"author-jgarofolo","4":"post-67","6":"format-standard","7":"category-401k-plans","8":"category-disability-plans","9":"category-health-plans","10":"category-plan-interpretation","11":"category-supreme-court-decisions"},"_links":{"self":[{"href":"https:\/\/erisa-experts.com\/blog\/wp-json\/wp\/v2\/posts\/67","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/erisa-experts.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/erisa-experts.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/erisa-experts.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/erisa-experts.com\/blog\/wp-json\/wp\/v2\/comments?post=67"}],"version-history":[{"count":41,"href":"https:\/\/erisa-experts.com\/blog\/wp-json\/wp\/v2\/posts\/67\/revisions"}],"predecessor-version":[{"id":281,"href":"https:\/\/erisa-experts.com\/blog\/wp-json\/wp\/v2\/posts\/67\/revisions\/281"}],"wp:attachment":[{"href":"https:\/\/erisa-experts.com\/blog\/wp-json\/wp\/v2\/media?parent=67"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/erisa-experts.com\/blog\/wp-json\/wp\/v2\/categories?post=67"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/erisa-experts.com\/blog\/wp-json\/wp\/v2\/tags?post=67"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}