The practice of tax law can be reduced to one phrase: the application of a general statute to specific facts. See the Anheuser-Busch case below.
In 2008, InBev N.V. acquired Anheuser-Busch, including a subsidiary called Metal Container. In 2009, InBev sold four of the Metal Container plants to Ball Corporation. Under one of the sale agreements, former employees of Metal Container became employees of Ball Corporation. Their participation in the Anheuser-Busch ERISA plan ceased, although they had similar pension benefits at Ball Corporation.
Although the employee benefits at Ball Corporation were similar to those at Metal Container, someone read the Anheuser-Busch ERISA plan very, very carefully. The result of such careful reading was a lawsuit.
As you have concluded by now, the plaintiffs in the lawsuit were former employees of Metal Container who enjoyed pension benefits under the Anheuser-Busch ERISA plan (as part of a Controlled Group). The plan was amended in 2000 to add “change in control” provisions. One of these change in control provisions stated that the retirement benefits of plan participants in the Controlled Group would be enhanced if such employees were involuntarily terminated within three years after the change in control. Here, of course, the change in control was the InBev takeover.
The plaintiffs read the change in control literally. They argued that they should receive enhanced benefits under the Anheuser-Busch ERISA plan because they had been involuntarily terminated within three years of the change in control.
Before filing the suit, the plaintiffs made claims for enhanced benefits to the administrator of the Anheuser-Busch pension plan. The administrator concluded that there were no enhanced benefits due because enhanced benefits were limited to those participants who suffered loss of employment. In other words, there were no enhanced benefits because these employees had new employment with a new employer offering similar benefits.
The plaintiffs appealed the decision of the plan administrator to the federal district court, which found the change in control language of the plan ambiguous and held for Anheuser-Busch. The district court judge held, as did the plan administrator, that there was no loss of employment if there was new employment with a new employer with similar benefits.
The plaintiffs appealed to the 6th Circuit Court, which reversed the district court, finding no ambiguity in the change in control language. The 6th Circuit said that for enhanced benefits five elements had to be satisfied and that they were, in fact, all satisfied:
- The recipients of the enhanced benefits had to be plan participants
- Whose employment with Metal Container:
- Was involuntarily terminated
- Within three years
- After change in control
To the 6th Circuit, the transfer of employment to Ball Corporation was outside the four corners of the change in control provisions.
Was there ambiguity in the enhanced benefit language? No, but only because the 6th Circuit said there was no ambiguity, and the 6th Circuit was last in line.
What is the takeaway from this case? Specifically nothing, unless your practice extends to pension work. But generally the case tells us a great deal. It reminds us in our own work to constantly ask “what if,” “what if,” “what if,” and to drain all of our writing of ambiguity. But the Anheuser-Busch case also tells us to look for ambiguity in other writing—statutory or regulatory writing or other controlling authority. Find that ambiguity, exploit it to favor your client, and reveal the ambiguity on the face of the return (to the extent necessary). If you succeed, how could your client not be pleased?