This case requires that we interpret a statute directing coordination of unemployment benefits with pension benefits. Plaintiff received a lump-sum pension payment under an employer-funded retirement plan. When plaintiff sought unemployment compensation, the Unemployment Agency
We hold that the governing statute, M.C.L. § 421.27(f)(1), mandates coordination of plaintiff's unemployment benefits with her pension benefits. We therefore reverse the judgment of the Court of Appeals and reinstate the decision of the Board of Review and the judgment of the circuit court.
I. Underlying Facts and Procedural History
Plaintiff began working for Ameritech in its Traverse City office in 1965. Thirty years later, Ameritech closed its Traverse City office and offered to continue plaintiff's employment in another office. She declined, electing instead to retire. Ameritech's retirement incentive program entitled plaintiff to a $1,052.95 monthly pension allowance, which Ameritech fully funded. In lieu of monthly payments, however, plaintiff elected to receive her pension in a lump-sum in the amount of $185,711.55. Plaintiff also chose to transfer the lump-sum directly into her individual retirement account (IRA).
Plaintiff then applied for unemployment compensation. Ameritech argued in response
Plaintiff thereafter appealed the redetermination. A referee reversed the decision of the Unemployment Agency on the ground that neither M.C.L. § 421.27(f)(1) nor (5) required coordination since plaintiff had transferred the pension funds directly into her IRA and thus had not "received" the funds within the meaning of the act. The referee relied on the Unemployment Agency's Revised Benefit Interpretation No. 20.641, which indicates that an employee who rolls a pension amount over into an IRA does not incur immediate income tax liability because the Internal Revenue Service does not consider the payment "received" for income tax purposes.
Ameritech appealed the referee's decision to the Michigan Employment Security Board of Review, which reinstated the Unemployment Agency's determination in a split decision. The Board of Review ruled that the taxability of plaintiff's pension benefit did not affect the operation of M.C.L. § 421.27(f) and that the lump-sum distribution was a "retirement benefit" under the plain language of the act. Accordingly, the board concluded that coordination was required under M.C.L. § 421.27(f)(1)(a).
One member of the Board of Review dissented, finding that plaintiff did not receive a retirement benefit because the lump-sum distribution had been rolled over into an IRA. The dissenting member relied on Revised Benefit Interpretation No. 20.641 and the United States Department of Labor's (USDOL) Unemployment Insurance Program Letter No. 22-97. The USDOL Letter No. 22-97 stated that pension amounts rolled over into an IRA within sixty days of receipt are not gross income for purposes of federal income taxation and thus are not "received" for purposes of 26 USC 3304(a)(15)(A) of the Federal Unemployment Tax Act (FUTA), 26 USC 3301 et seq.
The circuit court affirmed the Board of Review's decision. The Court of Appeals then granted leave to appeal
II. Standard of Review
This case requires us to ascertain the meaning and proper application of M.C.L. § 421.27. Issues of statutory interpretation are questions of law that we review de novo. Oade v. Jackson Nat'l Life Ins. Co., 465 Mich. 244, 250, 632 N.W.2d 126 (2001); Donajkowski v. Alpena Power Co., 460 Mich. 243, 248, 596 N.W.2d 574 (1999).
III. Relevant Statutes
MCL 421.27(f)(1) has existed in essentially the same form since 1954 PA 197. It states:
MCL 421.27(f)(1) thus requires an offset in unemployment compensation for retirement benefits if the employer charged with unemployment benefits funded the retirement plan. This type of reduction is known as "narrow coordination."
Before 1980, federal law did not address coordination of unemployment and retirement benefits. In March 1980, Congress amended 26 USC 3304(a)(15) of the FUTA to require the coordination of unemployment benefits with employer-funded retirement benefits, regardless of whether the employer who had funded the retirement benefits was the same employer whose account would be charged for the unemployment benefits. This type of coordination is known as "broad coordination." Section 3304, particularly subsection (a)(15), of the FUTA requires the states to conform to federal policy regarding coordination of unemployment benefits to insure eligibility for federal funds or tax credits. See Gormley v. General Motors Corp., 125 Mich.App. 781, 785-786, 336 N.W.2d 873 (1983). In response to the federal amendment, the Michigan Legislature promptly adopted broad coordination to the extent required by federal law. MCL 421.27(f)(5) states:
Notwithstanding any other provision of this subsection, for any week that begins after March 31, 1980, and with respect to which an individual is receiving a governmental or other pension and claiming unemployment compensation, the weekly benefit amount payable to the individual for those weeks shall be reduced, but not below zero, by the entire prorated weekly amount of any governmental or other pension, retirement or retired pay, annuity, or any other similar payment that is based on any previous work of the individual. This reduction shall be made only if it is required as a condition for full tax credit against the tax imposed by the federal
The federal mandate for broad coordination was short-lived. In September 1980, Congress amended 26 USC 3304(a)(15) to its present form, which requires only narrow coordination, i.e., that coordination specified in M.C.L. § 421.27(f)(1). Despite the federal amendment, the Michigan Legislature has never amended M.C.L. § 421.27(f)(5). MCL 421.27 thus retains both broad and narrow coordination provisions. We now address the interplay of those provisions.
IV. Principles of Statutory Interpretation
When interpreting statutory language, our obligation is to ascertain the legislative intent that may reasonably be inferred from the words expressed in the statute. Wickens v. Oakwood Healthcare System, 465 Mich. 53, 60, 631 N.W.2d 686 (2001). When the Legislature has unambiguously conveyed its intent in a statute, the statute speaks for itself, and judicial construction is not permitted. Huggett v. Dep't of Natural Resources, 464 Mich. 711, 717, 629 N.W.2d 915 (2001); Donajkowski, supra at 248, 596 N.W.2d 574. Because the proper role of the judiciary is to interpret and not write the law, courts simply lack authority to venture beyond the unambiguous text of a statute.
Courts must give effect to every word, phrase, and clause in a statute, and must avoid an interpretation that would render any part of the statute surplusage or nugatory. Wickens, supra at 60, 631 N.W.2d 686. Further, we give undefined statutory terms their plain and ordinary meanings. Donajkowski, supra at 248-249, 596 N.W.2d 574; Oakland Co. Road Comm'rs v. Michigan Property & Casualty Guaranty Ass'n, 456 Mich. 590, 604, 575 N.W.2d 751 (1998). In those situations, we may consult dictionary definitions. Id.
A. Interpretation of M.C.L. § 421.27(f)
The Court of Appeals determined that M.C.L. § 421.27(f)(5) controlled over M.C.L. § 421.27(f)(1):
Accordingly, the Court of Appeals held that M.C.L. § 421.27(f)(5) exempted plaintiff's benefits from coordination.
We believe that the language of M.C.L. § 421.27(f) is clear and unambiguous and must therefore be enforced as written. Huggett, supra at 717, 629 N.W.2d 915; Donajkowski, supra at 248, 596 N.W.2d 574. MCL 421.27(f)(1) provides, in pertinent part:
This text requires coordination where the claimant's unemployment benefits are chargeable to the employer who contributed to the financing of the claimant's retirement benefits. Thus, "narrow coordination" is required "notwithstanding any inconsistent provisions of this act...."
MCL 421.27(f)(5), on the other hand, requires "broad coordination" where necessary to conform to federal law:
This provision broadens the coordination required in M.C.L. § 421.27(f)(1) by compelling a reduction not only with regard to pension funds that the chargeable employer contributes, but also with regard to pension funds "based on any previous work," regardless of whether the chargeable employer contributed the funds. MCL 421.27(f)(5) requires such "broad coordination" only when necessary to conform to federal law.
Thus, contrary to the Court of Appeals analysis, M.C.L. § 421.27(f)(1) and (5) are not inconsistent, but can be harmonized. While M.C.L. § 421.27(f)(1) always requires coordination of pension benefits that the chargeable employer contributed, M.C.L. § 421.27(f)(5) may also require coordination of pension benefits on the basis
Our application of the plain language of these provisions does not render M.C.L. § 421.27(f)(5) nugatory. If Congress again chooses to require broad coordination, the additional reduction prescribed in subsection 27(f)(5) will be triggered. That federal law does not presently require the reduction does not render M.C.L. § 421.27(f)(5) nugatory and does not compel the Michigan Legislature to amend the statute.
B. The Meaning of "Liquidation"
Because M.C.L. § 421.27(f)(5) does not apply here,
The Court of Appeals determined that plaintiff's pension was not a retirement benefit within the meaning of M.C.L. § 421.27(f)(4)(a) because the fund was liquidated upon plaintiff's termination when Ameritech closed its Traverse City office. This factual conclusion was erroneous.
Although the Ameritech Traverse City office was closed, the record does not reflect that the pension fund was liquidated. Random House Webster's College Dictionary (2000) defines "liquidate" as "to settle or pay (a debt)," "to reduce (accounts) to order," "to dissolve (a business or estate) by apportioning the assets to offset the liabilities," "to convert (inventory, securities, or other assets) into cash," "to get rid of, esp. by killing," "to break up or do away with," and "to liquidate debts or accounts." The more pertinent of these definitions contemplate the elimination of an entire entity or the abolition of all assets or accounts within an entity. As such, liquidation would involve the Ameritech pension fund distributing all its assets. The distribution of a single employee's vested interest is not a liquidation of the pension fund. In addition, plaintiff could have elected to accept her pension benefits as a monthly annuity, which clearly refutes the Court of Appeals conclusion that the fund had been liquidated.
The meaning of the phrase in M.C.L. § 421.27(f)(4)(a)(ii) hinges on the word "liquidation." As discussed, the plain meaning of that term requires distribution of all assets held in the pension fund for all employees. The dissent contends that the term "liquidate" has many definitions, some of which may be interpreted to apply to a sole pension account, such as that belonging to plaintiff. A word is not rendered ambiguous, however, merely because a dictionary defines it in a variety of ways. Upjohn Co. v. New Hampshire Ins. Co., 438 Mich. 197, 208-209, n. 8, 476 N.W.2d 392 (1991). Rather, the doctrine of noscitur a sociis requires that the term "liquidation" be viewed in light of the words surrounding it. Herald Co. v. Bay City, 463 Mich. 111, 130, n. 10, 614 N.W.2d 873 (2000). "Contextual understanding of statutes is generally grounded in the doctrine of noscitur a sociis: `[i]t is known from its associates,' see Black's Law Dictionary (6th ed.), p. 1060. This doctrine stands for the principle that a word or phrase is given meaning by its context or setting." Brown v. Genesee Co. Bd. of Comm'rs (After Remand), 464 Mich. 430, 437, 628 N.W.2d 471 (2001), quoting Tyler v. Livonia Schs, 459 Mich. 382, 390-391, 590 N.W.2d 560 (1999).
In the context of the statute, the term "liquidation" pertains to multiple accounts rather than to an individual account. The statute exempts from the category of "retirement benefits" those amounts "paid to individuals in the course of liquidation of a private pension or retirement fund." Therefore, the text contemplates that liquidation pertains to multiple accounts and not merely the single account of an individual pensioner. In addition, the liquidation must occur because of "termination of the business or of a plant or department of the business." Such a termination would involve all employees within the business, plant, or department, and not merely a single employee. Therefore, in accordance with the doctrine of noscitur a sociis, the phrase "liquidation of a private pension or retirement fund" is not ambiguous; the language clearly refers to the distribution of all assets within the fund. Moreover, the dissent does not explain how the fund was liquidated where, as discussed above, plaintiff could have chosen to collect her pension benefits as a monthly annuity.
Further, the dissent asserts that M.C.L. § 421.27(f)(4)(a) is a remedial statute that we should construe liberally in favor of plaintiff. We do not apply preferential rules of statutory interpretation, however, without first discovering an ambiguity and attempting to discern the legislative intent underlying the ambiguous words. Crowe v. Detroit, 465 Mich. 1, 13, 631 N.W.2d 293 (2001). Only if that inquiry is fruitless, or produces no clear demonstration of intent, do we resort to a preferential or "dice-loading" rule.
Moreover, plaintiff chose to accept her pension benefits instead of relocating to another Ameritech office. Ameritech had offered plaintiff the opportunity to continue her employment in another location, but she declined to do so. The payout followed plaintiff's decision to retire rather than relocate. While the dissent contends that plaintiff had no choice but to accept her pension benefits, the record does not support this assertion. Accordingly, the condition set forth in M.C.L. § 421.27(f)(4)(ii), providing an exception to the term "retirement benefit," does not apply in this case.
Thus, whether Ameritech's payment to plaintiff was a "retirement benefit" depends on whether it was "a benefit, annuity, or pension of any type" payable to her "because [she] has qualified on the basis of attained age [or] length of service...." In defining a "retirement benefit," the Legislature has used words of common and ordinary meaning, and we apply them accordingly. Donajkowski, supra at 248-249, 596 N.W.2d 574; Oakland Co Rd Comm'rs, supra at 604, 575 N.W.2d 751. It is undisputed that plaintiff received a pension benefit on the basis of her age and years of service. Thus, she received a "retirement benefit" as contemplated in M.C.L. § 421.27(f)(4)(a).
C. The Meaning of "Receive or Will Receive"
The Court of Appeals also stated, in dictum, that even if plaintiff's distribution were a retirement benefit, it was exempt from coordination because "the Legislature did not intend the terms `receive or will receive' under § 27(f)(1) to include the direct rollover of a pension fund to an IRA...." The Court stated:
While this issue is one of first impression in the context of unemployment compensation, it has been addressed in the somewhat analogous context of worker's compensation. White v. McLouth Steel Products, decided sub nom Corbett v. Plymouth Twp., 453 Mich. 522, 556 N.W.2d 478 (1996).
Three justices dissented in White. They opined:
MCL 421.27(f)(1) is the unemployment compensation counterpart of M.C.L. § 418.354(1)(d), but it lacks the "after-tax amount" language on which the White majority relied in part. The question here is whether plaintiff "received" the transferred amounts. Random House Webster's College Dictionary (2000) defines "receive" as "to take into one's possession," "to have (something) bestowed, conferred, etc.," "to hold, bear, or contain," and "to take, get, accept, or meet with something." In light of these definitions, we conclude that plaintiff received her retirement benefits within the meaning of M.C.L. § 421.27(f)(1), notwithstanding the fact that Ameritech transferred the funds directly into her IRA. We disagree with our dissenting colleague that plaintiff did not take the pension funds into her possession within the meaning of the dictionary definition of "receive." The funds were transferred at plaintiff's direction. She is able to withdraw the funds at any time and use them as she sees fit. Ameritech clearly conferred the funds upon plaintiff, and plaintiff accepted those funds by directing them into an account of her choice. Accordingly, it is inescapable that plaintiff received the funds. Because the dissenting opinion in White is better reasoned,
Like, the Court of Appeals, the dissent would erroneously elevate a construction from an extratextual source above the unambiguous language of the statute itself. As we have stated repeatedly, courts may not look beyond the clear text of a statute to discover an unexpressed legislative intent. Sun Valley Foods Co. v. Ward, 460 Mich. 230, 236, 596 N.W.2d 119 (1999). Although this Court generally accords due deference to an administrative agency charged with executing a particular statute, we grant no deference here because the plain meaning of the statute controls. "An agency interpretation cannot overcome the plain meaning of a statute." Consumers Power Co. v. Public Service Comm., 460 Mich. 148, 157, n. 8, 596 N.W.2d 126 (1999). The plain and ordinary meaning of "receive" provides no basis to differentiate between funds that are taxable and those that are not. Therefore, M.C.L. § 421.27(f)(1) requires coordination whether or not the funds are subject to taxation when plaintiff received them by directing their deposit into her IRA account.
We conclude that M.C.L. § 421.27(f)(1) required coordination of plaintiff's unemployment benefits with her pension benefits. Plaintiff received a "retirement benefit" within the meaning of M.C.L. § 421.27(f)(1). That subsection required coordination, whether or not the funds were subject to taxation at the time of their receipt. Accordingly, we reverse the judgment of the Court of Appeals and reinstate the decision of the Board of Review and the judgment of the circuit court.
WEAVER, TAYLOR, and YOUNG, JJ., concurred with CORRIGAN, C.J.
MARKMAN, J., took no part in the decision of this case.
MICHAEL F. CAVANAGH, J. (concurring).
I concur with the result in this case that M.C.L. § 421.27(f)(1) required coordination of plaintiff's unemployment benefits with her pension benefits. However, I write separately because in reaching this result, it is not necessary for the majority to adopt the dissent's approach from White v. McLouth Steel Products, decided sub nom Corbett v. Plymouth Twp., 453 Mich. 522, 556 N.W.2d 478 (1996), and to overruleWhite to the extent that it is inconsistent with today's holding. In White, this Court construed M.C.L. § 418.354(1)(d) of the Worker's Disability Compensation Act (WDCA), which provided that worker's compensation benefits be coordinated with "[t]he after-tax amount of the pension or retirement payments received or being received...." (Emphasis added.) The White Court stated:
The instant case involves an unemployment benefits statute that is similar to the worker's compensation statute in White, but does not contain the "after-tax" language. Although the remaining language in these statutes is similar, it is not identical. The two statutes are clearly different; they contain materially different language and arguably serve different purposes.
Because of the differences between these statutes, the majority does not need to address White. The White Court clearly stated that its holding was based on the "after-tax" language in the WDCA statute it was construing.
MARILYN J. KELLY, J. (dissenting).
I respectfully disagree with the majority's conclusion that plaintiff's unemployment compensation benefits should be eliminated because she has received retirement benefits as defined by the Michigan Employment Security Act (MESA). MCL 421.1 et seq. The majority reads the relevant statutory language as unambiguous, despite strong indications to the contrary. It fails to consider the entirety of the sentence in which the word "liquidation" appears and disregards interpretive letters that define "receive." In so doing, the majority misconstrues the meaning of M.C.L. § 421.27(f)(4)(a).
The Court of Appeals advanced the correct interpretation. I would affirm its holding that plaintiff did not receive a "retirement benefit" within the meaning of the act and that her unemployment compensation benefits should not be eliminated as a consequence.
I. STATUTORY CONSTRUCTION
When construing a statute, our primary goal is to ascertain and give effect to the intent of the Legislature in writing it. Turner v. Auto Club Ins. Ass'n, 448 Mich. 22, 27, 528 N.W.2d 681 (1995). While judicial interpretation usually is not permitted where statutory language is clear, a literal construction must yield when it produces absurd and unjust results. See Salas v. Clements, 399 Mich. 103, 109, 247 N.W.2d 889 (1976). Judicial interpretation is also appropriate when reasonable minds can differ regarding the meaning of the language. Adrian Sch. Dist. v. Michigan Pub. Sch. Emp. Retirement System, 458 Mich. 326, 332, 582 N.W.2d 767 (1998). If judicial interpretation is necessary, legislative intent is determined by giving the statutory language a construction that is both reasonable and that best accomplishes the purpose of the statute. Frankenmuth Mut. Ins. Co. v. Marlette Homes, Inc., 456 Mich. 511, 515, 573 N.W.2d 611 (1998).
A. THE TERM "LIQUIDATION"
The MESA allows unemployment benefits payable under it to be reduced or eliminated where a claimant is receiving a "retirement benefit." MCL 421.27(f)(1). It defines that term as "a benefit, annuity, or pension of any type ... payable [when]... the individual was retired from employment." MCL 421.27(f)(4)(a)(ii). But the act expressly excludes as a retirement benefit any amounts paid to individuals "in the course of liquidation of a private pension or retirement fund because of termination of the business or of a plant or
In this case, plaintiff lost her job with defendant because defendant closed the facility where she worked. The question is whether her retirement funds fall within the statutory definition of "retirement benefit" or within the exception.
The expression "liquidation of a private pension or retirement fund" in § 27(f)(4)(a)(ii) could mean a distribution of all pension monies that an employer holds for all its employees. Defendant here maintains that it did not liquidate its entire pension fund monies when it closed the facility where plaintiff worked and that the fund continues to exist. Under this interpretation and in this factual situation, plaintiff's pension distribution would constitute retirement benefits and she could not be paid unemployment benefits.
On the other hand, the clause "liquidation of a private pension or retirement fund" could mean a distribution of all pension monies that an employer holds for one or more but not all of its employees.
The majority offers no persuasive reasoning to support its conclusion that the "more pertinent" definition of "liquidate" is that contemplating the elimination of all corporate pension assets. The mere fact that it prefers this to a definition more favorable to plaintiff has no bearing on what the Legislature intended "liquidate" to mean. The varied definitions of the word leave room for reasonable minds to differ. It is inescapable that the statutory language is ambiguous.
The majority's interpretation, that "liquidation" means a distribution of all pension monies held for all its employees, produces unconscionable results. For example, in this case, Ameritech would never "liquidate" all its pension fund monies by shutting down one or some of its facilities. Hence, no employee in plaintiff's situation could ever collect unemployment benefits. As an extreme example, if defendant discharged all its employees, it could distribute all but one dollar of the funds in the pension fund. Then, the fund would not have been liquidated under the majority's reading because all the assets would not have been distributed. In so doing, defendant
The practical implications of the majority's reading of § 27(f)(4)(a)(ii) are enormously detrimental to employees like plaintiff. During plaintiff's hearing before the Michigan Employment Security Board of Review, defendant's human resources manager testified that there is a single common trust fund for pension monies to which both defendant and Michigan Bell contribute. Absent closure of the entire corporation and all its pension funds, whenever defendant shuts down one facility, it will always escape paying unemployment benefits to the employees who worked there.
The majority distorts the facts of this case by portraying plaintiff's acceptance of her pension funds as a choice. Defendant offered plaintiff two other jobs in its corporation. However, both were located approximately two hours from her residence. When plaintiff declined them because the commute would be unreasonable, defendant distributed her retirement funds. She did not have the option to leave them in defendant's trust fund. She was obliged to have them rolled into an IRA or paid to her in a monthly annuity.
My construction of § 27(f)(4)(a)(ii) is in keeping with the fact that the MESA is a remedial statute. As such, by principle, it should be liberally construed to afford benefits to a displaced employee. Empire Iron Mining Partnership v. Orhanen, 455 Mich. 410, 415-416, 565 N.W.2d 844 (1997). My construction also furthers the purpose of the act, which is "to lighten the burden of economic insecurity on those who become unemployed through no fault of their own." Id. at 417, 565 N.W.2d 844.
B. THE PHRASE "IS RECEIVING OR WILL RECEIVE"
I also disagree with the majority's rejection of the Court of Appeals finding that, within the meaning of M.C.L. § 421.27(f)(1), the funds were not "received." Once again, the majority brushes aside reasonable interpretations other than its own and characterizes a word as unambiguous.
The facts of this case show that plaintiff did not take the pension funds into her possession within the dictionary definition of "receive." Instead, defendant transferred the funds directly into an individual retirement account in her name.
The Court of Appeals decision interpreted "receive" by relying in part on interpretive letters issued by the United States Department of Labor (USDOL)
The majority ignores these letters, choosing instead to construct a definition of "receive" on the basis of a dissenting
The majority offers no cogent reason to deviate from the administrative agencies' interpretations, which provide a reasonable construction of the statutory language consistent with the purpose and the policy of the MESA. This Court should accord that interpretation due deference and hold that plaintiff did not receive a retirement benefit within the meaning of § 27(f) of the MESA.
II. PUBLIC POLICY
The controversy here regarding the correct interpretation of the statutory definition of "retirement benefit" is best resolved by considering the public policy expressly declared in the MESA. It provides:
The majority disregards this part of the act despite the fact that the Legislature's declaration of public policy contained there is of paramount importance. Plaintiff lost her position with defendant as a result of defendant's decision to close the facility where she worked. She had vested pension benefits that defendant distributed and treated as hers prematurely.
Had defendant offered plaintiff reasonable employment, plaintiff could have left her pension benefits undisturbed. Instead, it terminated plaintiff's employment and prevented her from drawing unemployment benefits. It required her to choose between paying her current living expenses or preserving her retirement monies, contrary to the explicit public policy of the state. Defendant's scheme only exacerbated plaintiff's economic insecurity.
Ambiguity exists in the statutory language of § 27(f)(4)(a) of the MESA that defines a "retirement benefit" as not including
The meaning of "receive" is also subject to differing reasonable interpretations. In construing it, this Court should defer to the meaning that the state and federal agencies responsible for administering unemployment compensation have given to it. The majority ignores this principle, preferring a definition constructed from a dissenting opinion and dictionary definitions, which it contends is in keeping with the plain meaning of the statute. This approach is contrary to the reasonable interpretation advanced by the administrative agencies and to the purpose of and the policy underlying the MESA. The term should be construed as not inclusive of retirement funds transferred directly into an individual retirement account.
I would affirm the Court of Appeals holding that plaintiff was entitled to unemployment compensation benefits under the MESA.