Appeal from the United States District Court for the District of New Jersey. (D.C. Civil No. 76-2082).
Aldisert, Gibbons and Higginbotham, Circuit Judges.
In this appeal we are asked to construe an important provision of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. The district court determined that a provision of the Act timebarred both the individual appellant, Andrew Reuther, and the corporate appellant, Reuther Material Co., Inc., which is partly owned by the individual appellant, from successfully asserting a claim for the return of contributions mistakenly paid into a pension fund. The court granted summary judgment in favor of the trustees of the pension fund,*fn1 holding that the contributions were made by a mistake of fact and the claim for refund is thus barred by 29 U.S.C. § 1103(c)(1)-(2)(A):
(c)(1) Except as provided in paragraph (2) . . ., the assets of a plan shall never inure to the benefit of any employer and shall be held for the exclusive purposes of providing benefits to participants in the plan and their beneficiaries and defraying reasonable expenses of administering the plan.
(2)(A) In the case of a contribution which is made by an employer by a mistake of fact, paragraph (1) shall not prohibit the return of such contribution to the employer within one year after the payment of the contribution.
Because we hold that these provisions do not bar appellants' claim, we reverse the district court judgment.
The facts are not in dispute. Andrew Reuther was employed by the Reuther Material Co. as a truck driver from 1947 until 1965. He subsequently served as a managerial employee of the company and is now vice president and part owner. From 1957 until April 2, 1976, the company made contributions on behalf of Andrew Reuther to a pension plan known as the Trucking Employees of Passaic and Bergen County Welfare Fund. The plan is a "defined benefit" plan under 29 U.S.C. § 1002(35), that is, "a pension plan other than an individual account plan", which antedated the effective date of the relevant portions of ERISA, January 1, 1975.
Although Reuther applied for a pension in December 1975, it was not until April 8, 1976, that the trustees denied the application. In justifying the denial, the trustees stated that Reuther was "an integral part of the management" and thus was neither entitled to service credit after 1965, the year he became a managerial employee, nor eligible for a pension. Denied the pension, Reuther demanded the refund of $12,320.12, an amount representing all contributions made by the company for the hours he had worked. The trustees offered him $1,686.22, a sum representing contributions made for the year ending April 5, 1976, but refused to refund the remainder on the ground that the application for the return of the contributions was barred by ERISA § 1103(c)(1)-(2)(A).
ERISA provides for comprehensive federal regulation of employee pension plans. For the purposes of this case, certain statements of congressional findings and policy declarations assume special significance:
(a) The Congress finds that the growth in size, scope, and numbers of employee benefit plans in recent years has been rapid and substantial; . . . that despite the enormous growth in such plans many employees with long years of employment are losing anticipated retirement benefits owing to the lack of vesting provisions in such plans; that owing to the inadequacy of current minimum standards, the soundness and stability of plans with respect to adequate funds to pay promised benefits may be endangered; that owing to the termination ...