In the
United States Court of Appeals
For the Seventh Circuit

No. 00-1109

Robert J. Matz, individually and on
behalf of all others similarly situated,

Plaintiff-Appellee,

v.

Household International Tax
Reduction Investment Plan,

Defendant-Appellant.

Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 96 C 1095--Joan B. Gottschall, Judge.

On Remand From
The United States Supreme Court

Submitted July 25, 2001--Decided September 7, 2001



  Before Bauer, Coffey, and Kanne, Circuit
Judges.

  Bauer, Circuit Judge. Robert J. Matz
filed an ERISA action, claiming
entitlement to benefits as a result of a
partial termination of a retirement
benefit plan. The district court held
that in determining whether partial
termination occurred: (1) both vested and
non-vested plan participants should be
counted, see Matz v. Household Int’l Tax
Reduction Inv. Plan, 1998 WL 851491, *5
(N.D. Ill. Dec. 1, 1998); and (2)
multiple plan years could be aggregated,
see 1999 WL 754659, *6 (N.D. Ill. Sept.
9, 1999). The Plan contested the district
court’s decisions on interlocutory
appeal, and in 227 F.3d 971 (7th Cir.
2000), we affirmed. The Plan petitioned
for writ of certiorari, which the Supreme
Court granted, thereby vacating and
remanding the case to us for further
consideration in light of United States
v. Mead Corp., 121 S. Ct. 2164 (2001). On
remand, we are faced with the question of
to what extent we must defer to the
interpretation of "partial termination"
by the IRS found in an amicus brief,
which is one of the agencies responsible
for administering the partial termination
statute.

  In Mead, the Supreme Court tried to
delineate levels of judicial deference
owed to actions by administrative
agencies. See id. at 2176. The Court held
that Chevron deference is mandatory when
Congress has expressly or implicitly
indicated that it intended an agency to
speak with the force of law on a matter,
and the agency’s position on that matter
is reasonable. See id. at 2171-72. The
Court explained that Congress generally
indicates its intention "when it provides
for a relatively formal administrative
procedure," such as "notice-and-comment
rulemaking or formal adjudication." Id.
at 2172-73. However, the Court left open
the possibility that Chevron deference
may be appropriate in some instances even
without such formality, although it did
not clearly outline these instances. See
id. at 2173.

  In delineating this spectrum of
deference, the Court confirmed its
holding in Skidmore v. Swift & Co., 323
U.S. 134 (1944) that "an agency’s
interpretation may merit some deference
whatever its form, given the ’specialized
experience and broader investigations and
information’ available to the agency . .
. ." Id. at 2175 (quoting 323 U.S. at
139). The Court instructed that
determining whether Skidmore deference is
owed turns on the "’thoroughness evident
in [the agency’s] consideration, the
validity of its reasoning, its
consistency with earlier and later
pronouncements, and all those factors
which give it power to persuade, if
lacking power to control.’" Id. at 2172
(quoting Skidmore, 323 U.S. at 140).
Generally, pursuant to Skidmore
deference, an agency’s position may be
accorded respect depending on its
persuasiveness. See id. at 2175-76.
  In our first opinion in this case we
echoed the district court’s sentiment
that if we were writing on a blank slate
we would be inclined to hold that only
non-vested participants ought to be
counted in determining whether partial
termination occurred. However, we felt
constrained by Chevron U.S.A., Inc. v.
Natural Res. Def. Council, Inc., 467 U.S.
837 (1984) to defer to the IRS’
reasonable interpretation of the partial
termination statute. In taking this posi
tion, we mimicked the reasoning in Weil
v. Retirement Plan Admin. Comm., 933 F.2d
106 (2d Cir. 1991). In Weil, the Second
Circuit asked the IRS to submit an amicus
brief regarding the meaning of "partial
termination." 933 F.2d at 107. Supported
by Revenue Rulings and its position in
the Plan Termination Handbook contained
in the Internal Revenue Manual, the IRS
submitted its interpretation that "’all
terminated participants, both vested and
non[-]vested, should be counted in
determining whether a partial termination
has occurred.’" Id. The Weil panel
deferred to the IRS’ offered position in
the amicus brief pursuant to Chevron.
And, in our first opinion in this case,
we deferred to the Weil court’s
deference.

  We now hold that the IRS’ position in
the amicus brief was an informal agency
policy pronouncement not entitled to
Chevron deference. See Callaway v.
C.I.R., 231 F.3d 106, 132-33 (2d Cir.
2000) (following Auer v. Robbins,
recognizing that the court had previously
afforded Chevron deference to an agency’s
position in an amicus brief, but holding
that the agency’s position in the brief
was inconsistent with positions it had
previously taken); Ball v. Memphis Bar-B-
Q Co., Inc., 228 F.3d 360, 365 (4th Cir.
2000) (holding that the Secretary of
Labor’s interpretation of the Fair Labor
Standards Act urged in an amicus brief
was not entitled to Chevron deference);
Doe v. Mutual of Omaha Ins. Co., 179 F.3d
557, 563 (7th Cir. 1999) (discussing Auer
and Chevron regarding the amount of
deference an amicus brief is due);
Commonwealth Edison Co. v. Vega, 174 F.3d
870, 875 (7th Cir. 1999) (same); but see
Auer v. Robbins, 519 U.S. 452, 462 (1997)
(affording Chevron deference to the
Secretary of Labor’s interpretation of
the Fair Labor Standards Act in its
amicus brief because it was not a post
hoc rationalization and reflected the
agency’s fair and considered judgment);
Jones v. American Postal Workers Union,
192 F.3d 417, 427 (4th Cir. 1999)
(relying on Auer to hold that the EEOC’s
interpretation of Title VII in its amicus
brief was entitled to Chevron deference
because it was not a post hoc
rationalization and reflected the
agency’s fair and considered judgment,
and was a valid interpretation). Although
the Supreme Court indicated in Mead that
Chevron deference may apply to
interpretations developed from less
formal rulemaking procedures, it did not
expressly outline when this would be the
case. The IRS’ position in the amicus
brief was not born from a formal
policymaking procedure. We do not believe
that a position set forth in an amicus
brief, supported by some Revenue Rulings
and an agency manual are formal enough to
warrant Chevron treatment. In Mead, the
Court declined to give Chevron deference
to a tariff classification ruling issued
by the United States Customs Service. 121
S. Ct. at 2174. The Court explained that
deference was not due because Congress
did not indicate that it meant to
delegate authority to Customs to issue
classification rulings with the force of
law, Customs did not engage in notice-
and-comment practice when issuing the
rulings, and they were not binding on
third parties. See id. We do not consider
a position in an amicus brief to be more
deserving of Chevron deference than a
tariff classification ruling. Upon
reading Mead, we find that a litigation
position in an amicus brief, perhaps just
as agency interpretations of statutes
contained in formats such as opinion
letters, policy statements, agency
manuals, and enforcement guidelines, see
id. at 2175, are entitled to respect only
to the extent that those interpretations
have the power to persuade pursuant to
Skidmore.
  Therefore, since we are not bound by the
IRS’ position under Chevron, any
deference we afford it under Skidmore
depends on its thoroughness, validity,
consistency, and persuasiveness. As
noted, in our first opinion, although we
found the IRS’ position reasonable under
Chevron, we also found it unpersuasive.
As we noted, the meaning of "partial
termination" is unclear because the
statutory language is ambiguous, the
Treasury Regulation is not helpful, the
statutory framework offers no assistance,
and the legislative history provides
little more guidance. See Matz, 227 F.3d
at 974. Thus, we looked to the statute’s
purposes, which are to protect employees’
legitimate expectation of pension
benefits, and to prevent employers from
abusing pension plans to reap tax
benefits. See id. at 975. We agree with
the Plan that counting vested
participants "would further neither of
these purposes." Id. "Vested participants
do not need further protection for their
pension benefits and do not benefit from
a finding of partial termination. Their
benefits, by virtue of vesting, are
nonforfeitable. The employer gains
nothing either. No monies revert back to
it because the benefits are vested and
non[ ]forfeitable." Id. We agreed with
the notion voiced in Morales v. Pan Am.
Life Ins. Co., 718 F. Supp. 1297 (E.D.
La. 1989) and Weil that perhaps only non-
vested participants ought to be counted,
although neither court so held. Since we
indicated that if we were writing on a
blank slate we would have held
differently, we now adopt the rule that
only non-vested participants should be
counted in determining whether partial
termination of a pension plan has
occurred.

  Finally, the Plan asks us to reconsider
our holding that multiple plan years can
be aggregated in determining partial
termination. See Matz, 227 F.3d at 976-
77. We decline to do so. This aspect of
our holding paid no deference to the IRS
expressly because the IRS had not taken a
position on the issue. See Matz, 227 F.3d
at 977. Thus, since we analyzed the issue
without deference to the IRS, the Supreme
Court’s vacation and remand in light of
Mead did not implicate this holding;
therefore, it stands.

  Thus, we hold that only non-vested
participants should be counted in the
partial termination analysis, and hereby
Reverse and Remand this case to the
district court for further proceedings
consistent with this opinion.
